File No. 69-409
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM U-3A-2
STATEMENT BY HOLDING COMPANY CLAIMING EXEMPTION UNDER RULE U-3A-2 FROM
THE PROVISIONS OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
To Be Filed Annually Prior to March 1
EASTERN SYSTEMS CORPORATION
................................................................................
(Name of Company)
hereby files with the Securities and Exchange Commission, pursuant to Rule 2,
its statement claiming exemption as a holding company from the provisions of the
Public Utility Holding Company Act of 1935, and submits the following
information:
1. Name, State of organization, location and nature of business of
claimant and every subsidiary thereof, other than any exempt wholesale generator
("EWG") or foreign utility company in which claimant directly or indirectly
holds an interest.
Claimant:
Eastern Systems Corporation
414 Summers Street
Charleston, West Virginia 25301
The Claimant is a West Virginia corporation and a wholly owned
subsidiary of Energy Corporation of America, a West Virginia
corporation. It was incorporated to be a holding company for
Mountaineer Gas Company.
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Subsidiaries of the Claimant:
A. Mountaineer Gas Company
414 Summers Street
Charleston, West Virginia 25301
Mountaineer Gas Company ("Mountaineer") is a West Virginia
corporation, wholly owned by Claimant, engaged in the distribution of
natural gas in the State of West Virginia through a 3,600 mile
distribution system, principally in Charleston, Beckley, Huntington and
Wheeling, West Virginia. Mountaineer is a public gas utility.
i. Mountaineer Gas Services, Inc.
414 Summers Street
Charleston, West Virginia 25301
Mountaineer Gas Services, Inc. is a West Virginia
corporation, wholly owned by Mountaineer, engaged primarily in
producing and marketing natural gas to Mountaineer.
ii. Mapcom Systems, Inc.
7345 Whitepine Road
Richmond, Virginia 23237
Mapcom Systems, Inc. is a Virginia corporation,
wholly owned by Mountaineer, engaged in automated mapping
facilities management and geographical information systems
software development and services.
2. A brief description of the properties of claimant and each of its
subsidiary public utility companies used for the generation, transmission, and
distribution of electric energy for sale, or for the production, transmission,
and distribution of natural or manufactured gas, indicating the location of
principal generating plants, transmission lines, producing fields, gas
manufacturing plants, and electric and gas distribution facilities, including
all such properties which are outside the state in which claimant and its
subsidiaries are organized and all transmission or pipelines which deliver or
receive electric energy or gas at the borders of such state.
Oil and gas producing facilities at Mountaineer Gas Services,
Inc. are located in Kanawha, Cabell and Jackson Counties, West
Virginia. These facilities include wellhead equipment, gas gathering
lines and associated equipment and compression equipment.
The gas distribution facilities of Mountaineer cover the main
2
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population centers of the State of West Virginia and include pipelines,
regulators, meters and other equipment needed for distribution. Gas
purchased from suppliers is received from interstate pipelines,
including Columbia Gas Transmission Corporation and Tennessee Gas
Pipeline, and other sources at points within the State of West
Virginia. Suppliers include Equitable Resources Marketing Company,
Coastal Gas Marketing, Texaco Gas Marketing, Cabot Oil & Gas
Corporation, Noble Gas Marketing, Valero Gas Marketing, Eastern
Marketing Corporation and Eastern American Energy Corporation.
3. The following information for the last calendar year with respect to
claimant and each of its subsidiary public utility companies:
(a) Number of kwh. of electric energy sold (at retail or
wholesale), and Mcf. of natural and manufactured gas distributed at
retail.
64,560,827 Mcf of natural gas.
(b) Number of kwh. of electric energy and Mcf. of natural or
manufactured gas distributed at retail outside the State in which each
such company is organized.
None
(c) Number of kwh. of electric energy and Mcf. of natural or
manufactured gas sold at wholesale outside the State in which each such
company is organized, or at the State line.
None
(d) Number of kwh. of electric energy and Mcf. of natural or
manufactured gas purchased outside the State in which each such company
is organized or at the State line.
27,743,438 Mcf of natural gas.
4. The following information for the reporting period with respect to
claimant and each interest it holds directly or indirectly in an EWG or a
foreign utility company, stating monetary amounts in United States dollars:
3
<PAGE>
(a) Name, location, business address and description of the
facilities used by the EWG or foreign utility company for the
generation, transmission and distribution of electric energy for sale
or for the distribution at retail of natural or manufactured gas.
Not applicable.
(b) Name of each system company that holds an interest in such
EWG or foreign utility company; and description of the interest held.
Not applicable.
(c) Type and amount of capital invested, directly or
indirectly, by the holding company claiming exemption; any direct or
indirect guarantee of the security of the EWG or foreign utility
company by the holding company claiming exemption; and any debt or
other financial obligation for which there is recourse, directly or
indirectly, to the holding company claiming exemption or another system
company, other than the EWG or foreign utility company.
Not applicable.
(d) Capitalization and earnings of the EWG or foreign utility
company during the reporting period.
Not applicable.
(e) Identify any service, sales or construction contract(s)
between the EWG or foreign utility company and a system company, and
describe the services to be rendered or goods sold and fees or revenues
under such agreement(s).
Not applicable.
4
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EXHIBIT A
A consolidating statement of income and surplus of the Claimant and its
subsidiary companies for the last calendar year, together with a consolidating
balance sheet of Claimant and its subsidiary companies as of the close of such
calendar year is attached hereto as Exhibit A.
EXHIBIT B
A Financial Data Schedule is attached hereto as Exhibit B.
EXHIBIT C
Not applicable.
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The above-named Claimant has caused this statement to be duly executed
on its behalf by its authorized officer on this 26th day of February, 1998.
EASTERN SYSTEMS CORPORATION
---------------------------
(Name of claimant)
By: /s/ Richard L. Grant
---------------------------
Name: Richard L. Grant
Title: President
CORPORATE SEAL
Attest:
/s/ Michael S. Fletcher
- ---------------------------------------
Name: Michael S. Fletcher
Title: Secretary
Name, title and address of officer to whom notices and correspondence concerning
this statement should be addressed:
Michael S. Fletcher
Secretary/Treasurer
Eastern Systems Corporation
414 Summers Street
Charleston, West Virginia 25301
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<PAGE>
EXHBIT A
<TABLE>
<CAPTION>
EASTERN SYSTEMS CORPORATION
CONSOLIDATING INCOME STATEMENTS
For the Twelve Months Ended December 31, 1997
Unaudited
<S> <C> <C> <C> <C> <C> <C>
Eastern Mountaineer Mountaineer Mapcom Eastern
Systems Gas Gas Services Systems, Consolidating Systems Corp.
Corporation Company Inc. Inc. Entries Consolidated
------------ ----------- ---------- ------- ------------ -----------
Revenues
Utility gas sales and transportation -- $173,396,655 -- -- -- $173,396,655
Oil and gas sales -- -- 3,782,580 -- -- 3,782,580
Well and service operations -- -- 7,616,688 -- -- 7,616,688
Other -- -- -- 646,614 -- 646,614
------------ ----------- ---------- ------- ------------ -----------
Total revenues -- 173,396,655 11,399,268 646,614 -- 185,442,537
------------ ----------- ---------- ------- ------------ -----------
Costs and Expenses
Utility gas purchased -- 93,438,142 -- -- -- 93,438,142
Field and lease operating -- -- 8,019,918 -- -- 8,019,918
Utility operations and maintenance -- 21,531,097 -- -- -- 21,531,097
General and administrative 650,917 14,254,320 837,961 444,602 (627,756) 15,560,044
Taxes, other than income taxes -- 14,359,166 436,521 -- -- 14,795,687
Depletion and depreciation -- 6,689,110 511,008 31,678 1,021,577 8,253,373
------------ ----------- ---------- ------- ------------- -----------
Total operating expenses 650,917 150,271,835 9,805,408 476,280 393,821 161,598,261
------------ ----------- ---------- ------- ------------- -----------
Operating Income (Loss) (650,917) 23,124,820 1,593,860 170,334 (393,821) 23,844,276
Other (Income) Expense
Interest 9,795,154 6,514,577 -- 9,774 (151,272) 16,168,233
Other (income) expense (4,588) 80,128 (32,324) -- -- 43,216
Equity in earnings/dividend income
from subsidiaries (11,420,000) (1,076,297) -- -- 12,496,297 --
------------ ----------- ---------- ------- ------------- -----------
Income Before Income Taxes 978,517 17,606,412 1,626,184 160,560 (12,738,846) 7,632,827
Provision (benefit) for income taxes (4,176,524) 5,684,899 649,498 60,949 (97,019) 2,121,803
------------ ----------- ---------- ------- ------------ -----------
Net Income $5,155,041 $11,921,513 $976,686 $99,611 ($12,641,827) $5,511,024
============ =========== ======== ======= ============ ==========
</TABLE>
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<TABLE>
<CAPTION>
EASTERN SYSTEMS CORPORATION
CONSOLIDATING INCOME STATEMENTS
As of December 31, 1997
Unaudited
<S> <C> <C> <C> <C> <C> <C>
Eastern Mountaineer Mountaineer Mapcom Eastern
Systems Gas Gas Services Systems, Consolidating Systems Corp.
Corporation Company Inc. Inc. Entries Consolidated
------------ ----------- ---------- ------- ------------- -----------
ASSETS
Current Assets
Cash $62,912 ($1,056,753) $1,358,128 $174,970 $1,056,753 $1,596,010
Accounts receivable
Utility gas and transportation -- 30,806,076 -- -- -- 30,806,076
Oil and gas -- -- 687,615 -- -- 687,615
Other -- 3,137,874 425,334 432,710 -- 3,995,918
Allowance for doubtful accounts -- (447,741) -- -- -- (447,741)
Due from (to) affiliates 4,183,545 -- -- -- -- 4,183,545
Inventory -- 17,894,404 -- -- -- 17,894,404
Income tax receivable 805,149 4,516,395 -- -- (189,168) 5,132,376
Deferred income tax 504,761 4,460,568 (15,687) -- -- 4,949,642
Prepaid and other -- 3,395,266 16,844 21,495 -- 3,433,605
------------ ----------- ---------- ------- ------------- -----------
Total current assets 5,556,367 62,706,089 2,472,234 629,175 867,585 72,231,450
------------ ----------- ---------- ------- ------------- -----------
Property, Plant and Equipment
Oil and gas property -- -- 7,788,838 -- (138,395) 7,650,443
Utility and transmission plants -- 240,364,144 5,058,853 -- (78,780,837) 166,642,160
Other -- -- -- 1,397,294 -- 1,397,294
------------ ----------- ---------- ------- ------------- -----------
240,364,144 12,847,691 1,397,294 (78,919,232) 175,689,897
Accumulated depreciation, depletion
and amortization -- (112,181,727) (2,932,170) (31,678) 95,931,922 (19,213,653)
------------ ----------- ---------- --------- ------------- -----------
Property, plant & equipment, net -- 128,182,417 9,915,521 1,365,616 17,012,690 156,476,244
------------ ----------- ---------- --------- ------------- -----------
Other Assets
Investment in subsidiaries 64,091,184 10,559,752 -- -- (74,650,936) --
Deferred financing costs 2,848,825 -- -- -- 2,848,825
Deferred charges -- 18,184,493 400,000 -- (813,651) 17,770,842
------------ ----------- ---------- ------- ------------ -----------
Total other assets 64,091,184 31,593,070 400,000 -- (75,464,587) 20,619,667
------------ ----------- ---------- ------- ------------ -----------
Total Assets $69,647,551 $222,481,576 $12,787,755 $1,994,791 ($57,584,312) $249,327,361
============ ============ =========== ========== ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EASTERN SYSTEMS CORPORATION
CONSOLIDATING INCOME STATEMENTS
For the Twelve Months Ended December 31, 1997
Unaudited
<S> <C> <C> <C> <C> <C> <C>
Eastern Mountaineer Mountaineer Mapcom Eastern
Systems Gas Gas Services Systems, Consolidating Systems Corp.
Corporation Company Inc. Inc. Entries Consolidated
------------ ----------- ---------- ------- ------------- -----------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $305,146 $12,357,594 $2,094,323 $244,387 $1,056,753 $16,058,203
Short-term borrowings -- 43,086,000 -- -- -- 43,086,000
Accrued taxes payable -- 2,986,843 1,311,405 61,663 -- 4,359,911
Overrecovered gas costs -- 8,171,886 -- -- -- 8,171,886
Other current liabilities 347,835 7,610,486 8,343 131,538 -- 8,098,202
------------ ----------- ---------- ------- ----------- -----------
Total current liabilities 652,981 74,212,809 3,414,071 437,588 1,056,753 79,774,202
------------ ----------- ---------- ------- ----------- -----------
Long-term and Other Liabilities
Long-term debt -- 60,000,000 -- -- -- 60,000,000
Deferred income taxes -- 20,389,366 -- -- 2,751,577 23,140,943
Other long-term liabilities -- 5,552,553 371,135 -- 6,561,703 12,485,391
------------ ----------- ---------- ------- ------------ -----------
Total long-term liabilities -- 85,941,919 371,135 -- 9,313,280 95,626,334
------------ ----------- ---------- ------- ------------ -----------
Stockholders' Equity
Preferred Stock 35,000,000 -- -- -- -- 35,000,000
Common Stock 1,000 29,617,560 100 120,400 (29,738,060) 1,000
Additional paid-in capital 42,730,528 -- 7,372,861 1,337,192 (8,710,053) 42,730,528
Retained earnings (8,736,958) 32,709,288 1,629,588 99,611 (29,506,232) (3,804,703)
------------ ----------- ---------- ------- ------------ -----------
Total stockholders' equity 68,994,570 62,326,848 9,002,549 1,557,203 (67,954,345) 73,926,825
------------ ----------- ---------- ------- ------------ -----------
Total Liabilities and
Stockholders' Equity $69,647,551 $222,481,576 $12,787,755 $1,994,791 ($57,584,312) $249,327,361
============ ============ =========== ========== ============ ============
</TABLE>
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EXHIBIT B
FINANCIAL DATA SCHEDULE
Period-Type Year
Fiscal-Year-End Jun-30-1998
Period-Start Jan-01-1997
Period-End Dec-31-1997
Book-Value Per-Book
Total-Assets 249,327,361
Total-Operating-Revenue 185,442,537
Net-Income 5,511,024
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