-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Tn+xOTzDdSIf8YTXVCGCgB9Ha47mo1GvKczZNmJ2lnymDoGBR3QdmXcKg7klTSy7 SEkLQpJHDzp7u7ypv/Yt8A== 0000014407-94-000008.txt : 19940815 0000014407-94-000008.hdr.sgml : 19940815 ACCESSION NUMBER: 0000014407-94-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EASTERN EDISON CO CENTRAL INDEX KEY: 0000014407 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 041123095 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08480 FILM NUMBER: 94543165 BUSINESS ADDRESS: STREET 1: 110 MULBERRY ST CITY: BROCKTON STATE: MA ZIP: 02403 BUSINESS PHONE: 5085801213 FORMER COMPANY: FORMER CONFORMED NAME: BROCKTON EDISON CO DATE OF NAME CHANGE: 19790729 10-Q 1 FORM 10-Q OF EECO FOR 6/30/94 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30,1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period _________________ to ___________________ Commission File Number 0-8480 EASTERN EDISON COMPANY (Exact name of registrant as specified in its charter) Massachusetts 04-1123095 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 110 Mulberry Street, Brockton, Massachusetts (Address of principal executive offices) 02402 (Zip Code) (508)580-1213 (Registrant's telephone number including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes...X......No.......... Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Class Outstanding at July 31, 1994 Common Shares, $25 par value 2,891,357 shares
PART I - FINANCIAL INFORMATION Item 1. Financial Statements EASTERN EDISON COMPANY CONSOLIDATED CONDENSED BALANCE SHEETS (In Thousands)
ASSETS June 30, December 31, 1994 1993 Utility Plant in Service $ 788,739 $ 784,664 Less: Accumulated Provision for Depreciation and Amortization 239,178 226,391 Net Utility Plant in Service 549,561 558,273 Construction Work in Progress 11,545 6,779 Net Utility Plant 561,106 565,052 Current Assets: Cash and Temporary Cash Investments 7,055 697 Accounts Receivable - Associated Companies 15,727 11,220 - Other 36,252 37,153 Materials and Supplies 7,765 9,838 Other Current Assets 11,110 10,848 Total Current Assets 77,909 69,756 Deferred Debits and Other Non-Current Assets 104,540 107,465 Total Assets $ 743,555 $ 742,273 LIABILITIES AND CAPITALIZATION Capitalization: Common Stock, $25 Par Value $ 72,284 $ 72,284 Other Paid-In Capital 47,249 47,249 Common Stock Expense (43) (43) Retained Earnings 107,612 103,515 Total Common Equity 227,102 223,005 Redeemable Preferred Stock - Net 29,665 29,670 Preferred Stock Redemption Cost (4,706) (4,846) Long-Term Debt - Net 264,178 264,134 Total Capitalization 516,239 511,963 Current Liabilities: Accounts Payable - Associated Companies 4,872 4,221 - Other 22,016 22,611 Taxes Accrued 616 4,225 Interest Accrued 7,039 6,136 Other Current Liabilities 9,847 10,150 Total Current Liabilities 44,390 47,343 Deferred Credits & Other Non-Current Liabilities 64,600 65,361 Accumulated Deferred Taxes 118,326 117,606 Total Liabilities and Capital $ 743,555 $ 742,273 See accompanying notes to consolidated condensed financial statements.
EASTERN EDISON COMPANY CONSOLIDATED CONDENSED STATEMENTS OF INCOME (In Thousands)
Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 Operating Revenues $ 102,002 $ 100,776 $ 212,390 $ 206,357 Operating Expenses: Fuel 23,244 20,389 46,381 40,809 Purchased Power 27,795 29,369 57,724 60,603 Other Operation and Maintenance 25,388 26,904 49,787 51,411 Depreciation and Amortization 6,457 6,644 12,872 13,288 Taxes - Other Than Income 2,645 1,864 5,600 4,317 - Current Income 2,498 1,031 7,761 5,913 - Deferred Income 970 2,150 2,439 2,595 Total 88,997 88,351 182,564 178,936 Operating Income 13,005 12,425 29,826 27,421 Allowance for Other Funds Used During Construction 62 75 111 138 Other Income - Net 433 264 820 617 Income Before Interest Charges 13,500 12,764 30,757 28,176 Interest Charges: Interest on Long-Term Debt 4,636 6,283 9,216 12,613 Other Interest Expense 1,875 487 2,772 884 Allowance for Borrowed Funds Used During Construction(Credit) (83) (82) (151) (152) Net Interest Charges 6,428 6,688 11,837 13,345 Net Income 7,072 6,076 18,920 14,831 Preferred Dividend Requirements 497 790 994 1,696 Consolidated Net Earnings $ 6,575 $ 5,286 $ 17,926 $ 13,135 See accompanying notes to consolidated condensed financial statements.
EASTERN EDISON COMPANY CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In Thousands)
Six Months Ended June 30, 1994 1993 CASH FLOW FROM OPERATING ACTIVITIES: Net Income $ 18,920 $ 14,831 Adjustments to Reconcile Net Income to Net Cash Provided from Operating Activities: Depreciation and Amortization 13,741 14,932 Amortization of Nuclear Fuel 1,471 2,860 Deferred Taxes 2,406 2,562 Investment Tax Credit, Net (460) (536) Allowance for Other Funds Used During Construction (111) (138) Other - Net (591) 168 Change in Operating Assets and Liabilities (4,748) (13,850) Net Cash Provided From Operating Activities 30,628 20,829 CASH FLOW FROM INVESTING ACTIVITIES: Construction Expenditures (9,683) (10,925) Net Cash (Used in) Investing Activities (9,683) (10,925) CASH FLOW FROM FINANCING ACTIVITIES: Issuances: Long-Term Debt 100,000 Redemptions: Long-Term Debt (105,000 Preferred Stock (15,600) Increase in Short-Term Debt 5,337 Premium on Reacquisition & Financing Expenses (61) (7,077) Common Stock Dividends Paid to EUA (13,532) (11,103) Preferred Dividends Paid (994) (1,811) Net Cash (Used in) Financing Activities (14,587) (35,254) Net Increase (Decrease) in Cash and Temporary Cash Investments 6,358 (25,350) Cash and Temporary Cash Investments at Beginning of Period 697 25,519 Cash and Temporary Cash Investments at End of Period $ 7,055 $ 169 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest (Net of Capitalized Interest) $ 9,202 $ 15,654 Income Taxes $ 11,229 $ 5,162 See accompanying notes to consolidated condensed financial statements.
EASTERN EDISON COMPANY NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS The accompanying Notes should be read in conjunction with the Notes to Consolidated Financial Statements appearing in Eastern Edison Company's (Eastern Edison or the Company) 1993 Annual Report on Form 10-K and the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1994. Note A - In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of June 30, 1994 and December 31, 1993, and the results of operations for the three and six months ended June 30, 1994 and 1993 and cash flows for the six months ended June 30, 1994 and 1993. Certain reclassifications have been made to prior period financial statements to conform with current classifications. In November 1992, the Financial Accounting Standards Board issued Statement No. 112, "Employers' Accounting for Post-employment Benefits." The Company was required to adopt this standard no later than January 1, 1994. The estimated impact of this standard on the Company is immaterial and therefore no liability has been recorded. Note B - Results shown above for the respective interim periods are not neces- sarily indicative of results to be expected for the fiscal years due to seasonal factors which are inherent in electric utilities in New England. A greater proportionate amount of revenues is earned in the first and fourth quarters (winter season) of most years because more electricity is sold due to weather conditions, fewer day-light hours, etc. Note C- Commitments and Contingencies: Rate Activity On March 21, 1994, Montaup Electric Company (Montaup), the wholesale electric generating and transmission subsidiary of Eastern Edison, filed an application with the Federal Energy Regulatory Commission (FERC) for authorization to reduce its wholesale rates by $10.1 million, or three percent. Montaup supplies electricity at wholesale rates to Eastern Edison and its affiliated retail electric utilities - Blackstone Valley Electric Company and Newport Electric Corporation (Newport) - and to two non-affiliated municipal utilities. This application is designed to match more closely Montaup's revenues with its decreasing cost of doing business resulting from, among other things, a reduced rate base, lower capital costs and successful cost control efforts. As part of the rate filing, Montaup is seeking authorization to become an "all-requirements" supplier for Newport. Previously, Montaup provided only a portion of Newport's electricity requirements. FERC allowed Montaup to implement the rate reduction on May 21, 1994, and Montaup began billing Newport as an all-requirements customer on that date, pending final adjudication and approval. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following is Management's discussion and analysis of certain significant factors affecting the Company's earnings and financial condition for the interim periods presented in this Form 10-Q. Overview Second quarter and six months ended June 30, 1994 Consolidated Net Earnings increased $1.3 million or 24.4% and $4.8 million or 36.5%, respectively, as compared to the same periods of a year ago. Decreases in interest expense and preferred dividend requirements resulting from Eastern Edison's 1993 financing activity, growth in kilowatthour (kWh) sales of electricity and lower operations and maintenance expenses as discussed below were the major contributors toward these increases. Total retail kWh sales posted gains of 1.7% and 2.5% in the second quarter and year-to-date periods, respectively. Increases in kWh sales to industrial customers of 7.0% and 6.1% in the respective periods highlighted the overall kWh sales increase and is an indication of economic recovery in the Company's service territory. Despite this strong sales performance, the Company anticipates a slow economic recovery for the foreseeable future. Operating Revenues Operating Revenues increased for the second quarter and six months ended June 30, 1994 by $1.2 million and $6.0 million, respectively, as compared to the same periods in 1993. Eastern Edison's kWh sales growth, as discussed above, accounted for growth in base revenues in the second quarter of approximately $1.7 million. Additionally, second quarter revenues were impacted by recoveries of increased fuel expenses of approximately $2.6 million and increased transmission wheeling revenues of $0.5 million. These second quarter increases were partially offset by a decrease in recoveries of purchased power expense of approximately $1.9 million along with the impacts of Montaup's rate reduction effective May 21, 1994. Likewise, in the year-to-date period Eastern Edison's base revenues grew by $1.5 million, the Company recovered an additional $5.2 million and $1.9 million of increased fuel and conservation and load management expenses, respectively, and wheeling revenues grew by $1.0 million. These year-to-date increases were partially offset by a decrease of approximately $2.2 million in recoveries of purchased power expense along with the impact of Montaup's rate reduction. Operations Expense Fuel expense for the second quarter and six months ended June 30, 1994 as compared to the same periods in 1993 increased $2.9 million or 14.0% and $5.6 million or 13.7%, respectively. These increases were due primarily to increased generation by Company owned units in 1994 as a result of outages experienced during 1993. Canal Unit 2, which is 50% owned by Montaup, began a scheduled outage on February 13, 1993 and returned to service on April 5, 1993 while Somerset Unit 6, a wholly owned unit of Montaup had been out of service for essentially all of 1993 due to waterwall restoration. Offsetting these impacts on fuel expense somewhat were decreases in the average cost of fuel of 9.6% and 4.3% for the respective periods. Purchased Power demand expense for the second quarter and for the six months ended June 30, 1994 decreased approximately $1.6 million or 5.4% and $2.9 million or 4.8%, respectively, as compared to the same periods in 1993. These decreases are due primarily to a decrease in costs billed by Montaup's suppliers of approximately $1.4 million and $2.5 million, respectively. Other Operation and Maintenance expenses for the second quarter and six months ended June 30, 1994 decreased by approximately $1.5 million or 5.6% and $1.6 million or 3.2%, respectively, from the same periods in 1993. These changes were primarily due to decreases in Canal Unit 2 maintenance expense of $1.4 million and $2.4 million (see discussion above) and decreases in EUA Service Corporation (EUA Service) allocated charges recorded as operation and maintenance expense of $0.7 million and $1.4 million in the second quarter and six month periods, respectively. Offsetting the six month period decreases was an increase in conservation and load management expense of $2.2 million. Taxes Other Than Income Taxes other than income for the three and six month periods ended June 30, 1994 increased $0.8 million and $1.3 million, respectively, when compared to the same periods of 1993. Contributing to these increases were EUA Service allocated payroll taxes and property taxes previously recorded as operation and maintenance expenses aggregating approximately $0.3 million and $0.7 million for the respective periods. The remaining increase in both periods relates to a $0.5 million New Hampshire Nuclear Property Tax Abatement recorded by the Company in the second quarter of 1993. Interest Charges Interest on long-term debt decreased by $1.6 million or 26.2% and $3.4 million or 26.9%, respectively, in the second quarter and six months ended June 30, 1994 as compared to the same periods in 1993. These decreases are due to Eastern Edison's refinancings of $195 million of long-term debt in 1993 at substantially lower interest rates. Preferred Dividend Requirements Preferred Dividend Requirements decreased $0.3 million or 37.1% and $0.7 million or 41.4% in the three and six month periods ended June 30, 1994 as compared to the same periods of 1993. These decreases are a result of Eastern Edison's redemption of all of its outstanding 4.64%, 8.32%, 9.00% and 9.80% series of Preferred Stock aggregating $41.6 million and subsequent issuance of $30 million of 6 5/8% series of Preferred Stock. Liquidity and Sources of Capital Eastern Edison's and Montaup's need for permanent capital is primarily related to the construction of facilities required to meet the needs of their existing and future customers. Traditionally, cash construction requirements not met with internally generated funds are obtained through short-term borrowings which are ultimately funded with permanent capital. EUA System companies, including Eastern Edison and Montaup, maintain short-term lines of credit with various banks aggregating approximately $140 million. These credit lines are available to other affiliated companies under joint credit line arrangements. At June 30, 1994 and December 31, 1993, these unused EUA System short-term lines of credit amounted to approximately $104.5 million and $102.8 million, respectively. Year-to-date June 30, 1994 and 1993 internally generated funds amounted to $22.1 and $21.6 million, respectively, while cash construction requirements for the same periods were $9.7 and $10.9 million, respectively. PART II -- OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - None (b) Reports on Form 8-K - None filed in the quarter ended June 30, 1994 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the under signed thereunto duly authorized. Eastern Edison Company___________ (Registrant) Date: August 11, 1994 /s/ Richard M. Burns_____________ Richard M. Burns, Vice President (on behalf of the Registrant and as Chief Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----