-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D0KSKdK+O60ce5QmlqNhrDBv0k2I/oFeD8+49BVUIX6pwVQ2/k2oYcuT8QknUiWh BVx18eVls8wk8LH8cJWPPw== 0000031224-00-000018.txt : 20000502 0000031224-00-000018.hdr.sgml : 20000502 ACCESSION NUMBER: 0000031224-00-000018 CONFORMED SUBMISSION TYPE: U5S PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EASTERN UTILITIES ASSOCIATES CENTRAL INDEX KEY: 0000031224 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 041271872 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U5S SEC ACT: SEC FILE NUMBER: 001-05366 FILM NUMBER: 615206 BUSINESS ADDRESS: STREET 1: ONE LIBERTY SQ STREET 2: P O BOX 2333 CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6173579590 U5S 1 ANNUAL REPORT ON FORM U5S - 1999 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. FORM U5S ANNUAL REPORT For the Year ended December 31, 1999 Filed pursuant to the Public Utility Holding Company Act of 1935 by Eastern Utilities Associates, P.O. Box 2333, Boston, Massachusetts 02107 04-1271872 (I.R.S. Employer Identification No.) FORM U5S-ANNUAL REPORT For the Calendar Year 1999 ITEMS FORM U5S-ANNUAL REPORT For the Calendar Year 1999 ITEMS ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF DECEMBER 31, 1999
% of Name of Company Number of Common Voting Issuer Owner's (add abbreviation used herein) Shares Owned Power Book Value Book Value Eastern Utilities Associates Publicly Owned (1) $358,028,883 $ (EUA or the Association) EUA Service Corporation 100 100% (2) 2,658,003 2,658,003 (EUA Service) Blackstone Valley Electric 184,062 100% (2) 44,605,387 44,605,387 Company (Blackstone) Newport Electric Corporation 1,000,000 100% (2) 26,193,826 26,193,826 (Newport) Eastern Edison Company 2,891,357 100% (2) 260,647,925 260,647,925 (Eastern Edison) Montaup Electric Company 586,000 100% (3) 133,590,336 133,590,336 (Montaup) Preferred Stock (3) 1,500,000 1,500,000 Debenture Bonds (Unsecured) (3) 60,575,000 60,575,000 Pollution Control Bonds (Unsecured) - Net (3) 27,677,201 27,677,201 EUA Cogenex Corporation 1,000 100% (2) 42,008,241 42,008,241 (EUA Cogenex) EUA Citizens Conservation Services, Inc. 10,000 100% (4) 69,626 69,626 Northeast Energy Management, Inc. 10,000 100% (4) 8,290,997 8,290,997 (NEM) EUA Cogenex West 10,000 100% (4) 4,183,098 4,183,098 (formerly EUA Highland Corporation)
ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF DECEMBER 31, 1999 (Continued)
% of Name of Company Number of Common Voting Issuer Owner's (add abbreviation used herein) Shares Owned Power Book Value Book Value APS Cogenex L.L.C. 50% (5) 187,409 187,409 EUA Cogenex-Canada Inc. 100 100% (4) $691,728 $691,728 (Cogenex Canada) EUA Cogenex-Canada Energy Services Inc. 100 100% (6) EUA WestCoast L.P. 50% (7) 883,649 883,649 EUA Energy Capital and Services I 50% (8) 10,868,116 10,868,116 EUA Energy Capital and Services II 50% (8) 9,759,262 9,759,262 EUA FRC II Energy Associates 50% (8) 871 871 EUA Energy Investment Corporation 100 100% (2) (41,461,692) (41,461,692) (EUA Energy) EUA BIOTEN, Inc. 100 100% (9) 11,514,827 11,514,827 BIOTEN GPM (11) 2 100%(11) BIOTEN Operations, Inc. (11) 1,000 100%(11) 1,020 1,020 Renova, L.L.C. (12) 100% (5) 83,582 83,582 EUA Ocean State Corporation 1 100% (2) 17,510,466 17,510,466 (EUA Ocean State) Ocean State Power I 29.9% 29.9% (8) 27,163,259 27,163,259 Ocean State Power II 29.9% 29.9% (8) 21,331,798 21,331,798
On April 19, 2000, EUA completed its merger with National Grid USA (formerly New England Electric System or NEES). National Grid USA purchased all of the outstanding common shares of EUA for $31.459 per share, or approximately $634 million. On August 30, 1999, EUA TransCapacity, a wholly-owned subsidiary of EUA Energy, sold all of its assets in TransCapacity L.P. and at the same time dissolved the TransCapacity L.P. In addition, EUA Energy Services, Inc. Eastern Unicord Corporation, EUA Compression Services, Inc., EUA Telecommunications Corporation and Eastern Edison Electric Company were dissolved in 1999. ________ (1) Cumulative Voting. (2) Wholly-owned by EUA. (3) Wholly-owned by Eastern Edison as of December 31, 1999. In February 2000, the securities of Montaup were transferred from Eastern Edison to EUA. (4) Wholly-owned by EUA Cogenex. (5) Limited Liability Corporation. (6) Wholly-owned by EUA Cogenex-Canada Inc. (7) Limited Partnership. (8) General Partnership. (9) Wholly-owned by EUA Energy. (10) Effective June 1, 1998, EUA BIOTEN, Inc. increased its profits and voting interests in BIOTEN Partnership to 80%. The Partnership was dissolved on February 25, 1999. (11) Wholly-owned by EUA BIOTEN, Inc. BIOTEN General Partnership was dissolved on February 25, 1999. BIOTEN GPM and BIOTEN Operations, Inc. are now direct subsidiaries of EUA BIOTEN, Inc. (12) On September 30, 1999, EUA Energy Investment sold certain of Renova L.L.C. assets to its management. The dissolution of Renova L.L.C. is in process. ITEM 2. ACQUISITIONS OR SALES OF UTILITY ASSETS Brief Description Name of Company of Transaction Consideration Exemptions (1) (2) (3) (4) Montaup Electric Company Somerset Station $49,050,000 Section 32 (C) Wyman Unit 4 1,885,000 Section 32 (C) Seabrook Unit I 4,086,065 Section 32 (C) ITEM 3. ISSUE, SALE, PLEDGE, GUARANTEE OR ASSUMPTION OF SYSTEM SECURITIES Date and Type of Form of Name of Issuer Security Transaction Consideration Exemption (1) (2) (3) (4) (5) None. The following refers to short-term borrowing by EUA system companies during 1999: Highest Effective Balance at Balance Date of Average Year-end During Year Highest Interest Rate (000's) (000's) Balance For Year $143,955 $148,780 12/6/99 5.5% EUA Cogenex is required under certain contracts with various government entities and utility companies to maintain either a letter of credit or performance bond to collateralize performance under the contract. These contingent liabilities will only be drawn by the customer if EUA Cogenex fails to perform under the construction contract. For the letters of credit, the highest amount outstanding during 1999 was approximately $3.4 million and the year end balance was zero. For the performance bonds, the highest amount outstanding during 1999 and the year end balance was approximately $13.4 million. ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES
Name of Company Acquiring, Name of Issuer Redeeming Number of Shares or and or Retiring Principal Amount Title of Issue Securities Acquired, Redeemed, Consideration Authorization (1) (2) or Retired (3) (4) (5) Blackstone: Blackstone First Mortgage Bonds: 9 1/2% due 2004 $1,500,000 $1,500,000 (a) Eastern Edison: Eastern Edison First Mortgage and Collateral Trust Bonds: 6 7/8% due 2023 40,000,000 40,000,000 (a) 8% due 2023 40,000,000 40,000,000 (a) 6.35% due 2003 8,000,000 8,000,000 (a) Secured Medium Term Notes: 7.78% due 2002 35,000,000 35,000,000 (a) Newport: Newport First Mortgage Bonds: 8.95% due 2001 650,000 650,000 (a) 9.0% due 1999 1,386,000 1,386,000 (a) 8.95% due 1999 8,000,000 8,000,000 (a) Small Business Administration Loan: 6.5% due 2005 532,684 532,684 (a) EUA Cogenex: EUA Cogenex Unsecured Notes: 9.6% due 2001 3,200,000 3,200,000 (a) 10.56% due 2005 3,500,000 3,500,000 (a) EUA Service: EUA Service Secured Notes: 10.20% due 2008 1,100,000 1,100,000 (a) EUA Ocean State: EUA Ocean State Unsecured Notes: 9.59% due 2011 2,476,660 2,476,660 (a) (a) Rule 42
ITEM 5. INVESTMENTS IN SECURITIES OF NONSYSTEM COMPANIES
% of Number of Shares Voting or Principal Book Name of Owner Name of Issuer Security Owned Power Amount Owned Value (1) (2) (3) (4) (5) (6) Eastern Edison Massachusetts Capital Stock less than 1,040 shares $ 10,400 Business one Development Corp.* Montaup Yankee Atomic Capital Stock 4.5 6,903 shares 708,303 Electric Co. ** " " Conn. Yankee Capital Stock 4.5 15,750 shares 4,711,136 Atomic Power Co.** " " Vermont Yankee Capital Stock 2.5 9,801 shares 1,306,653 Nuclear Power Corp. ** " " Maine Yankee Capital Stock 4.0 20,000 shares 3,126,808 Atomic Power Co. ** " " NE Hydro Trans. Capital Stock 3.3 102,197 shares 1,546,014 Electric Co. *** " " NE Hydro Capital Stock 3.3 491 shares 878,843 Trans. Corp. *** ___________ * Development company. ** Regional nuclear generating company. *** Owner of Transmission Facilities.
ITEM 6. OFFICERS AND DIRECTORS Part I. As of December 31, 1999. Names of System Companies with which Connected
Blackstone Eastern EUA Valley Newport Eastern Montaup Utilities Service Electric Electric Edison Electric Associates Corporation Company Corporation Company Company Marc J. Aronson Boott Mills South 100 Foot of John Street Lowell, MA 01852 Russell A. Boss One Albion Road TR Lincoln, RI 02865 Richard Bower 37 Linden Terrace Ottawa, Ontario, Canada K1S1Z1 J. Thomas Brett 275 Slater St., Ste 1700 Ottawa, Ontario, Canada K1P 5H9 John D. Carney P.O. Box 543 EVP D,EVP D,P D,P D,P D,EVP W. Bridgewater, MA 02379 Paul J. Choquette, Jr. 7 Jackson Walkway TR Providence, RI 02940 Peter S. Damon 41 Long Wharf Mall TR Newport, RI 02840 Janice P. DeBarros Boott Mills South 100 Foot of John Street Lowell, MA 01852 Peter B. Freeman 100 Alumni Drive TR Providence, RI 02906 Barbara A. Hassan P.O. Box 543 D,VP VP VP VP W. Bridgewater, MA 02379 Clifford J. Hebert, Jr. P.O. Box 543 T,S D,VP,T,S,C D,T,S D,T,S D,T,C T,C W. Bridgewater, MA 02379 Michael J. Hirsh P.O. Box 543 VP VP VP VP W. Bridgewater, MA 02379 Darcy L. Immerman 100 Foot of John Street Lowell, MA 01852 Kevin A. Kirby P.O Box 543 D,VP VP VP VP D,VP W. Bridgewater, MA 02379 Larry A. Liebenow 1082 Davol Street, 5th Fl. TR Fall River, MA 02720
ITEM 6. OFFICERS AND DIRECTORS - Continued Names of System Companies with which Connected Part I. As of December 31, 1999.
Blackstone Eastern EUA Valley Newport Eastern Montaup Utilities Service Electric Electric Edison Electric Associates Corporation Company Corporation Company Company Edward T. Liston Boott Mills South D, VP 100 Foot of John Street Lowell, MA 01852 Marc F. Mahoney P.O. Box 543 VP VP VP VP W. Bridgewater, MA 02379 Jacek Makowski One Center Plaza, Ste 360 TR Boston, MA 02108 Wesley W. Marple, Jr. 413 Hayden Hall TR 360 Huntington Avenue Northeastern University Boston, MA 02115 Stephen Morgan Boott Mills South 100 Foot of John Street Lowell, MA 01852 Donald G. Pardus P.O. Box 543 TR,CH,CEO D,CH D,CH D,CH D,CH D,CH W. Bridgewater, MA 02379 Robert G. Powderly P.O. Box 543 EVP D,EVP D,EVP D,EVP D,EVP D,EVP W. Bridgewater, MA 02379 Donald T. Sena P.O. Box 543 AS AT,AC,AS AT,AS AT,AS AT,AS AT,AC W. Bridgewater, MA 02379 Dennis St. Pierre P.O. Box 543 VP W. Bridgewater, MA 02379 Margaret M. Stapleton P.O. Box 111 TR Boston, MA 02117 John R. Stevens P.O. Box 543 TR,COO,P D,P D,VCH D,VCH D,VCH D,P W. Bridgewater, MA 02379 W. Nicholas Thorndike 10 Walnut Place TR Brookline, MA 02445 Mark S. White Boott Mills South 100 Foot of John Street Lowell, MA 01852
ITEM 6. OFFICERS AND DIRECTORS - Continued Part I. As of December 31, 1999 Names of System Companies with which Connected
EUA EUA Energy EUA Cogenex Investment Ocean State Corporation Corporation Corporation Marc J. Aronson Boott Mills South VP 100 Foot of John Street Lowell, MA 01852 Russell A. Boss One Albion Road Lincoln, RI 02865 Richard Bower 37 Linden Terrace Ottawa, Ontario, Canada K1S1Z1 J. Thomas Brett 275 Slater St., Ste 1700 Ottawa, Ontario, Canada K1P 5H9 John D. Carney P.O. Box 543 D,EVP D,EVP EVP W. Bridgewater, MA 02379 Paul J. Choquette, Jr. 7 Jackson Walkway Providence, RI 02940 Peter S. Damon 41 Long Wharf Mall Newport, RI 02840 Janice P. DeBarros Boott Mills South 100 Foot of John Street Lowell, MA 01852 Peter B. Freeman 100 Alumni Drive Providence, RI 02960 Barbara A. Hassan P.O. Box 543 W. Bridgewater, MA 02379 Clifford J. Hebert, Jr. P.O. Box 543 D,T,C D,T,C T,S W. Bridgewater, MA 02379 Michael J. Hirsh P.O. Box 543 W. Bridgewater, MA 02379 Darcy L. Immerman Boott Mills South VP 100 Foot of John Street Lowell, MA 01852 Kevin A. Kirby P.O Box 543 D,VP W. Bridgewater, MA 02379 Larry A. Liebenow 1082 Davol Street, 5th Fl. Fall River, MA 02720
ITEM 6. OFFICERS AND DIRECTORS - Continued Part I. As of December 31, 1999 Names of System Companies with which Connected
EUA EUA Energy EUA Cogenex Investment Ocean State Corporation Corporation Corporation Edward T. Liston Boott Mills South D,P 100 Foot of John Street Lowell, MA 01852 Marc F. Mahoney P.O. Box 543 W. Bridgewater, MA 02379 Jacek Makowski One Center Plaza, Ste 270 Boston, MA 02108 Wesley W. Marple, Jr. 413 Hayden Hall 360 Huntington Avenue Northeastern University Boston, MA 02115 Stephen Morgan Boott Mills South 100 Foot of John Street Lowell, MA 01852 Donald G. Pardus P.O. Box 543 D,CH D,CH D,CH W. Bridgewater, MA 02379 Robert G. Powderly P.O. Box 543 D,EVP D,EVP D,EVP W. Bridgewater, MA 02379 Donald T. Sena One Liberty Square AT,AC AT,AC AT,AS Boston, MA 02109 Dennis St. Pierre P.O. Box 543 W. Bridgewater, MA 02379 Margaret M. Stapleton P.O. Box 111 Boston, MA 02117 John R. Stevens One Liberty Square D,VCH D,P D,P Boston, MA 02109 W. Nicholas Thorndike 150 Dudley Street Brookline, MA 02146 Mark S. White Boott Mills South EVP,ACM,AC 100 Foot of John Street Lowell, MA 01852
ITEM 6. OFFICERS AND DIRECTORS - Continued Part I. As of December 31, 1999 Names of System Companies with which Connected
EUA Northeast EUA Citizens EUA EUA Cogenex- Energy Conservation Cogenex BIOTEN, Canada Inc. Management, Inc. Services Corp. West Corp. Inc. Marc J. Aronson Boott Mills South VP 100 Foot of John Street Lowell, MA 01852 Russell A. Boss One Albion Road Lincoln, RI 02865 Richard Bower 37 Linden Terrace D Ottawa, Ontario, Canada K1S1Z1 J. Thomas Brett 275 Slater St. Ste 1700 D Ottawa, Ontario, Canada K1P5H9 John D. Carney P.O. Box 543 D, EVP W. Bridgewater, MA 02379 Paul J. Choquette, Jr. 7 Jackson Walkway Providence, RI 02940 Peter S. Damon 41 Long Wharf Mall Newport, RI 02840 Janice P. DeBarros Boott Mills South VP 100 Foot of John Street Lowell, MA 01852 Peter B. Freeman 100 Alumni Drive Providence, RI 02906 Barbara A. Hassan P.O. Box 543 W. Bridgewater, MA 02379 Clifford J. Hebert, Jr. One Liberty Square T,S T,C T,C T,C D,T,C Boston, MA 02109 Michael J. Hirsh P.O. Box 543 W. Bridgewater, MA 02379 Darcy L. Immerman Boott Mills South VP VP 100 Foot of John Street Lowell, MA 01852 Kevin A. Kirby P.O Box 543 W. Bridgewater, MA 02379 Larry A. Liebenow 1082 Davol Street, 5th Fl. Fall River, MA 02720
ITEM 6. OFFICERS AND DIRECTORS - Continued Part I. As of December 31, 1999 Names of System Companies with which Connected
EUA Northeast EUA Citizens EUA EUA Cogenex- Energy Conservation Cogenex BIOTEN, Canada Inc. Management, Inc. Services Corp. West Corp. Inc. Edward T. Liston Boott Mills South D,P D,P D,EVP D,P 100 Foot of John Street Lowell, MA 01852 Marc F. Mahoney P.O. Box 543 W. Bridgewater, MA 02379 Jacek Makowski One Center Plaza, Ste 270 Boston, MA 02108 Wesley W. Marple, Jr. 413 Hayden Hall 360 Huntington Avenue Northeastern University Boston, MA 02115 Stephen Morgan Boott Mills South P 100 Foot of John Street Lowell, MA 01852 Donald G. Pardus P.O. Box 543 CH D,CH D D D,CH W. Bridgewater, MA 02379 Robert G. Powderly P.O. Box 543 D,EVP W. Bridgewater, MA 02379 Donald T. Sena P.O. Box 543 AT,AC AT,AC W. Bridgewater, MA 02379 Dennis St. Pierre P.O. Box 543 W. Bridgewater, MA 02379 Margaret M. Stapleton P.O. Box 111 Boston, MA 02117 John R. Stevens P.O. Box 543 VCH D,VCH D D D,P W. Bridgewater, MA 02379 W. Nicholas Thorndike 150 Dudley Street Brookline, MA 02146 Mark S. White Boott Mills South EVP, EVP EVP, EVP, 100 Foot of John Street AT,ACM ACM,AC ACM,AC Lowell, MA 01852
ITEM 6. OFFICERS AND DIRECTORS - Continued Part I. As of December 31, 1999. KEY: CH -Chairman of the Board T - Treasurer VCH -Vice Chairman of the Board TR - Trustee P - President CM - Comptroller EVP - Executive Vice President AT - Assistant Treasurer SVP - Senior Vice President S - Secretary VP - Vice President AS - Assistant Secretary C - Clerk AC - Assistant Clerk D - Director CEO - Chief Executive Officer COO - Chief Operating Officer ACM - Assistant Comptroller ITEM 6. OFFICERS AND DIRECTORS (continued)
Part II. As of December 31, 1999. Position Held Name of Name and Location of in Financial Applicable Officer or Director Financial Institution Institution Exemption Rule (1) (2) (3) (4) Russell A. Boss Fleet Bank Director Rule 70(a) Providence, RI Paul J. Choquette, Jr. Fleet Financial Group Director Rule 70(a) Providence, RI Peter S. Damon Bank of Newport Trustee, Rule 70(a) Newport, RI Vice Chairman of Financial Services _____________________ (Note: In the answer to this Part II of Item 6, the phrase "financial connection within the provisions of Section 17(C) of the Act" is regarded as being limited by the definitions in Paragraph (h) of Rule 70 under the Act as in effect a t December 31, 1999).
ITEM 6. OFFICERS AND DIRECTORS (continued) Part III. (a) Information is set out below as to cash compensation paid by the Association and its subsidiaries for the years 1999, 1998, and 1997 to each of the five highest paid executive officers of each Company whose annual salary and bonus for the year exceeded $100,000.
Long-Term All Compensation Other Name and Annual Compensation Restricted Compen- Principal Fiscal Incentive Stock sation Position Year Salary Bonus Other(1) Awards(2) (3) EUA Service Corporation Donald G. Pardus 1999 $461,265 $ - (4) $13,313 $ - $18,577 Chairman and Chief 1998 443,525 351,311 14,100 511,106 14,865 Executive Officer 1997 428,525 167,112 12,747 232,617 13,775 John R. Stevens 1999 $360,025 $ - (4) $12,743 $ - $14,305 President and Chief 1998 346,025 296,026 16,696 408,811 11,462 Operating Officer 1997 334,325 133,665 11,763 232,617 10,726 Robert G. Powderly 1999 $199,025 $64,492 $13,671 $ - $6,842 Executive Vice 1998 191,025 145,743 10,726 142,105 5.907 President 1997 184,025 51,249 10,240 116,322 5,560 John D. Carney 1999 $195,525 $64,492 $9,157 $- $6,961 Executive Vice 1998 187,525 145,743 11,302 142,105 6,085 President 1997 179,525 51,249 10,502 87,235 5,624 Clifford J. Hebert, Jr. 1999 $162,625 $53,774 $- $- $5,039 Treasurer and Secretary 1998 148,025 138,140 - 90,056 4,699 1997 136,025 28,417 - 116,322 4,078
Blackstone, Eastern Edison and Newport Electric The Chief Executive Officer and the four other most highly compensated executive officers of Blackstone, Newport and Eastern Edison hold the same or similar positions with EUA Service and are not paid directly by any of Blackstone, Newport or Eastern Edison. The information required by this item is the same as shown above under EUA Service Corporation. ITEM 6. OFFICERS AND DIRECTORS (continued)
Long-Term All Compensation Other Name and Annual Compensation Restricted Compen- Principal Fiscal Incentive Stock sation Position Year Salary Bonus Other(1) Awards(5) (3) EUA Cogenex Corporation Edward T. Liston 1999 $197,500 $75,600 $10,089 $ - $18,963 President 1998 180,000 - 11,146 - 12,586 1997 168,525 - 11,146 82,195 8,966 Mark S. White 1999 $146,669 $47,250 $10,526 $ - $10,622 Executive 1998 132,504 - 10,077 - 8,390 Vice President 1997 115,950 - 9,437 44,514 5,998 Mark J. Aronson 1999 $110,833 $77,400 $9,076 $ - $7,747 Vice President Darcy L. Immerman 1999 $121,665 $- $9,131 $ - $9,668 Vice President 1998 110,000 - 9,458 - 6,826 1997 100,025 40,629 316 37,681 5,048 ___________________ (1) Represents amounts reimbursed for tax liability accruing as a result of personal use of company-owned automobiles. (2) Aggregate amount and value (including the value reflected in the table under "Restricted Stock Awards") of shares held under the Association's Restricted Stock Plan to the officers listed above are as follows: Mr. Pardus, 43,841 shares, including 20,965 shares granted in 1998, 8,989 shares granted in 1997 and 13,887 shares granted in 1995, $1,328,930; Mr. Stevens, 34,565 shares, including 16,769 shares granted in 1998, 8,989 shares granted in 1997 and 8,807 shares granted in 1995, $1,047,752; Mr. Powderly, 13,412 shares, including 5,829 shares granted in 1998, 4,495 shares granted in 1997 and 3,088 shares granted in 1995, $406,551; Mr. Carney, 12,363 shares, including 5,829 shares granted in 1998, 3,371 shares granted in 1997 and 3,163 shares granted in 1995, $374,753; and Mr. Hebert, 9,834 shares, including 3,694 shares granted in 1998, 4,495 shares granted in 1997 and 1,645 shares granted in 1995, $298,093. Dividends are paid on these shares. All of the restricted shares became immediately vested upon the completion of EUA's merger with NEES. (3) Contributions made under the Association's Employees' Savings Plan. (4) The EUA Board voted to award Messrs. Pardus and Stevens a Merger Completion Bonus to be paid on the closing of the EUA-NEES merger. This bonus is in lieu of an annual incentive payment for 1999. The bonus payment to Messrs. Pardus and Stevens is $500,000 and $425,000, respectively. (5) Aggregate amount and value (including the value reflected in the table under "Restricted Stock Awards") of shares held under Cogenex's Restricted Stock Plan to the officers listed above are as follows: Mr. Liston, 3,693 shares granted in 1997, $111,944; Mr. White, 2,000 shares granted in 1997, $60,625; Mr. Aronson, 1,271 shares granted in 1997, $38,527; Ms. Immerman, 1,693 shares granted in 1997, $51,319. As of December 31, 1999, 1/3 of the shares of Restricted Stock granted in 1997 were held. All of the restricted shares became immediately vested upon the completion of EUA's merger with NEES. Dividends are paid on these shares.
(b) Securities Interest Common Shares of the Association Beneficially Owned at January 1, 2000(1)
Executive Employees Stock Jointly Savings Grant Individual Owned(2) Plan Plan Total Mark J. Aronson 280 - 1,380 423 2,083 Russell A. Boss 1,000 - - - 1,000 John D. Carney 5,846 - 2,287 8,992 17,125 Paul J. Choquette 4,255 - - - 4,255(3) Peter S. Damon 400 409 - - 809(4) Peter B. Freeman 2,500 - - - 2,500 Clifford J. Hebert, Jr. 3,386 3,042 2,906 5,339 14,673 Darcy L. Immerman - - 1,197 564 1,761 Larry A. Liebenow - 5,000 - - 5,000(5) Edward T. Liston 8,145 - 3,072 1,231 12,448 Jacek Makowski 200 - - - 200 Wesley W. Marple 2,585 - - - 2,585(6) Donald G. Pardus 8,989 21,028 6,931 34,852 71,800 Robert G. Powderly 9,320 310 2,863 8,917 21,410 Margaret M. Stapleton 1,781 - - - 1,781 John R. Stevens 4,952 139 3,006 25,576 33,673 W. Nicholas Thorndike 2,146 - - - 2,146 Mark S. White - - 2,267 666 2,933 Trustees and Executive Officers as a Group 55,928 29,928 25,909 86,560 198,182(7) (1) Unless otherwise indicated, beneficial ownership is based on sole investment and voting power. Each individual's ownership represents less than four-tenths of one percent of the outstanding common shares of the Association. (2) Jointly owned with spouse. (3) In addition, Mr. Choquette's spouse owns 150 EUA common shares. Mr. Choquette disclaims any beneficial interest in such shares. (4) Jointly owned with spouse, except for 400 shares held individually. (5) In addition, Mr. Liebenow's spouse owns 500 common shares. Mr. Leibenow disclaims any beneficial interest in these shares. (6) In addition, Mr. Marple's spouse owns 363 EUA common shares. Mr. Marple disclaims any beneficial interest in such shares. (7) Represents approximately 1.0 percent of the outstanding common shares of the Association.
ITEM 6. OFFICERS AND DIRECTORS (continued) (C) Contracts and Transactions with System Companies See Section (e) below regarding severance agreements. (d) Indebtedness to System Companies None. (e) Participation in Bonus and Profit Sharing Arrangements. The Employee's Retirement Plan of Eastern Utilities Associates and its Affiliated Companies (the "Pension Plan") is a tax-qualified defined benefit plan available to employees who have completed one year of service and have attained the age of twenty-one. All of the officers referred to in the preceding Summary Compensation Table participate in the Pension Plan. Trustees who are not also employees of EUA and its subsidiaries (the "EUA System") are not covered by the Pension Plan. The benefits of participants become fully vested after five years of service. Annual lifetime benefits are determined under formulas applicable to all employees, regardless of position, and the amounts depend on length of credited service and salaries prior to retirement. Benefits are equal to one and six-tenths percent of salaries (averaged over the four years preceding retirement) for each year of credited service up to thirty-five, reduced for each year by one and two-tenths percent of the participants' estimated age sixty-five Social Security benefit, plus seventy-five hundredths percent of salaries for each year of credited service in excess of thirty-five years up to the Pension Plan maximum of forty years. Any contributions to provide benefits under the Pension Plan are made by the EUA System in amounts determined by the Pension Plan's actuaries to meet the funding standards established by the Employee Retirement Income Security Act of 1974. Any contributions are actuarially determined and cannot appropriately be allocated to individual participants. The annual benefits shown in the table below straight life annuity amounts, without reduction for primary Social Security benefits as described below. Federal law limits the annual benefits payable from qualified pension plans in the form of a life annuity, after reduction for Social Security benefits, to $130,000 for 1999 plus adjustments for increases in the cost of living. The number of years of service credited at present under the Pension Plan to Messrs. Pardus, Stevens, Carney, Powderly and Hebert are thirty-seven, thirty-four, thirty-three, twenty and twenty-three, respectively. Pension Plan Table: Years of Service Average Annual Salary 15 20 25 30 35 40 $100,000 $24,000 $32,000 $40,000 $48,000 $56,000 $59,750 200,000 48,000 64,000 80,000 96,000 112,000 119,500 300,000 72,000 96,000 120,000 144,000 168,000 179,250 400,000 96,000 128,000 160,000 192,000 224,000 239,000 500,000 120,000 160,000 200,000 240,000 280,000 298,750 600,000 144,000 192,000 240,000 288,000 336,000 358,500 ITEM 6. OFFICERS AND DIRECTORS (continued) EUA also has a Key Executive Plan for certain officers of EUA and its subsidiaries. This plan provides for the annual payment of supplemental retirement benefits equal to 25% of the officer's base salary when he retires or EUA terminates the executive's employment without cause, for a period of fifteen (15) years following the date of retirement. In addition, in the event of the death of the participant prior to retirement an amount equal to 200% of the officer's base salary at that time will be paid to his beneficiary. In 1999, EUA amended the Key Executive Plan to provide five (5) additional years (from fifteen (15) to twenty (20) years) of benefits continuation for Messrs. Pardus and Stevens. EUA maintains Retirement Restoration Plans for Members of the Employees' Retirement Plan of Eastern Utilities Associates and its Subsidiary Companies and EUA Employees' Savings Plan (the "Restoration Plans") and the Supplemental Retirement Plan for Certain Officers of EUA and its Affiliated Companies ("SERP") as unfunded retirement plans to restore benefits under the qualified plans' formulas which are not covered under the qualified plan trusts due to federal limitations on either earnings, contributions or benefits. Payments or contributions which exceed the applicable federal limitations are made outside the qualified plans in the same manner and under the same conditions as are applicable to benefits payable from, or contributions payable to, the qualified plans. A grantor trust has been established by EUA to help ensure the performance of its payment obligations under these plans. Any amounts not covered by trust payments or otherwise will be paid from funds available to the EUA System. In 1999, EUA amended and restated the Restoration Plans and SERP to provide for an increase in the benefit payable to Messrs. Pardus, Stevens, Powderly, Carney and Hebert by adding five (5) additional years of age and service when determining their retirement benefits under such plans. The additional years of service used in such calculation for Mr. Pardus was limited to a maximum for forty (40) years. (f) Rights to Indemnity Article 32 of EUA's Declaration of Trust, as set forth in Exhibit B-1(a) to Form U5S of EUA for the year ended December 31, 1986, is incorporated herein by reference. ITEM 7. CONTRIBUTIONS AND PUBLIC RELATIONS Accounts Charged if any, Per Books Name of Recipient of Disbursing Name of Company or Beneficiary Purpose Company Amount (1) (2) (3) (4) (5) Blackstone United Way Donations 426.1 $21,000 Blackstone Miscellaneous Donations 426.1 50,297 donations less than $10,000 Blackstone David Gulvin Lobbying 426.4 17,061 Blackstone Tillinghast, Collins Lobbying 426.4 19,250 & Graham Expenditures Blackstone David Correira, Esq. Lobbying 426.4 $23,100 Expenditures Blackstone Edison Electric Lobbying 426.4 18,504 Institute Expenditures Eastern Edison United Way Donations 426.1 40,765 Eastern Edison YMCA Donations 426.1 12,955 Eastern Edison Good Neighbor Donations 426.1 10,813 Energy Fund Eastern Edison Miscellaneous Donations 426.1 11,980 donations less than $10,000 Eastern Edison Edison Electric Lobbying 426.4 38,701 Institute Expenditures Eastern Edison Correy Associates Lobbying 426.4 50,000 Legislative Services Expenditures Eastern Edison Miscellaneous Lobbying 426.4 3,060 donations less Expenditures than $10,000 Newport United Way Donations 426.1 10,000 Newport Miscellaneous Donations 426.1 22,592 donations less than $10,000 Newport Edison Electric Lobbying 426.4 7,507 Institute Expenditures Newport Tillinghast, Collins Lobbying 426.4 8,250 & Graham Expenditures Newport David Correira, Esq. Lobbying 426.4 9,900 Expenditures Newport David Gulvin Lobbying 426.4 6,885 Expenditures Montaup Miscellaneous Donations 426.1 6,867 donations less than $10,000 Montaup Seabrook #1 Lobbying 426.4 1,209 Expenditures Montaup Millstone #3 Lobbying 426.4 3,876 Expenditures Montaup Edison Electric Lobbying 426.4 2,268 Institute Expenditures ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS Part I. None. Part II. No. Part III. No. ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES None. ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS (*Filed herewith) The following financial statements and supplemental schedules are filed as a part of this Annual Report. FINANCIAL STATEMENTS 1 - Consolidating Balance Sheets - December 31, 1999 of Eastern Utilities Associates and Subsidiary Companies, Eastern Edison Company and Subsidiary, EUA Cogenex Corporation and Subsidiaries, and EUA Energy Investment Corporation and Subsidiaries. 2 - Consolidating Statements of Capitalization - December 31, 1999 of Eastern Utilities Associates and Subsidiary Companies, Eastern Edison Company and Subsidiary, EUA Cogenex Corporation and Subsidiaries, and EUA Energy Investment Corporation and Subsidiaries. 3 - Consolidating Income Statements for the year ended December 31, 1999 of Eastern Utilities Associates and Subsidiary Companies, Eastern Edison Company and Subsidiary, EUA Cogenex Corporation and Subsidiaries, and EUA Energy Investment Corporation and Subsidiaries. 4 - Consolidating Statements of Cash Flows for the year ended December 31, 1999 of Eastern Utilities Associates and Subsidiary Companies, Eastern Edison Company and Subsidiary, EUA Cogenex Corporation and Subsidiaries, and EUA Energy Investment Corporation and Subsidiaries. 5 - Consolidating Statements of Retained Earnings and Other Paid-In Capital for the year ended December 31, 1999 of Eastern Utilities Associates and Subsidiary Companies, Eastern Edison Company and Subsidiary, EUA Cogenex Corporation and Subsidiaries, and EUA Energy Investment Corporation and Subsidiaries. 6 - Notes to Consolidated Financial Statements (page 53). Exhibits Exhibit A - (incorporated herein by reference) A-1 Form 10-K of EUA for 1999 File No. 1-5366. Exhibit B - B-1 Declaration of Trust of EUA, dated April 2, 1928, as amended (Exhibit A-3, File No. 70-3188; Exhibit 1 to EUA's 8-K reports for April in each of the years 1957, 1962, 1966, 1968, 1972, and 1973, File No. 1-5366; Exhibit A-1 (a), Amendment No. 2 to Form U-1, File No. 70-5997, Exhibit 4-3, Registration No. 2-72589; Exhibit 1 to Certificate of Notification, File No. 70-6713; Exhibit 1 to Certificate of Notification, File No. 70-7084; Exhibit 3-2, Form 10-K of EUA for 1987, File No. 1-5366). B-2 Charter of Blackstone (formerly Blackstone Valley Gas and Electric Company), as amended (Exhibit (a)(1) and (a)(2), Form 1-A filed March, 1957, File No. 24B-970; Exhibit A-2, Form U5S of EUA for the year 1958, File No. 1-5366; Exhibit (1), Form 8-K for March, 1965 File No. 0-2602; Exhibit A-2, Form U5S of EUA for the year 1966, File No. 1-5366 and Exhibit (1), Form 8-K for June 1976, File No. 0-2602; Exhibit (1), Form 10-Q for quarter ended June 30, 1988, File No. 0-2602); Exhibit 3-3, Form 10-K of Blackstone for 1989, File No. 0-2602). B-3 By-Laws of Blackstone, (Exhibit A-2, Form U-1 filed October 16, 1990, File No. 70-7769). B-4 Restated and Amended Articles of Organization of Eastern Edison, (Exhibit B-4 to Form U5S of EUA for 1993). B-5 By-Laws of Eastern Edison, as amended (Exhibit 3-2, Form 10-K of Eastern Edison for 1980, File No. 0-8480). B-6 Charter of Montaup Electric Company ("Montaup"), as amended (Exhibits A-6(a), A-6(b) and A-6(c) to Post Effective Amendment No. 18 to Form U-1, File No. 70-5388; Exhibit 3, Form 10-K of EUA for 1977, File No. 1-5366; and Exhibit 6 to Form U5S of EUA for 1979). B-7 By-Laws of Montaup, as amended (Exhibit 4, Form 10-K of EUA for 1977, File No. 1-5366). B-8 Charter of EUA Service Corporation (Exhibit A-1, File No. 37-67). B-9 By-Laws of EUA Service Corporation, as amended (Exhibit 2, Form 10- K of EUA for 1977, File No. 1-5366). B-10 Charter of EUA Cogenex Corporation, as amended (Exhibit A-1, File No. 70-7287, Exhibit B-15 to Form U5S of EUA for 1986). B-11 By-Laws of EUA Cogenex Corporation, as amended (Exhibit A-2, File No. 70-7287, to Form U5S of EUA for 1986). B-12 Agreement of Limited Partnership among Onsite Energy and EUA Cogenex Corporation dated as of November 30, 1988 (Exhibit A-4 to Post-Effective Amendment No. 3 of Form U-1, File No. 70-7825, dated October 21, 1991). B-13 EUA/FRCII Energy Associates Agreement of Limited Partnership dated as of September 19, 1989 (Exhibit A-5 to Post-Effective Amendment No. 3 of Form U-1, File No. 70-7825, dated October 21, 1991). B-14 Micro Utility Partners of America, L.P., Agreement of Limited Partnership dated as of December 20, 1988 (Exhibit A-6 to Post- Effective Amendment No. 3 of Form U-1, File No. 70-7825, dated October 21, 1991). B-15 Energy Capital and Services I, LP, Agreement of Limited Partnership dated as of April 10, 1990 (Exhibit A-7 to Post-Effective Amendment No. 3 of Form U-1, File No. 70-7825, dated October 21, 1991). B-16 EUA/SYCOM General Partnership Agreement dated as of September 20, 1989 (Exhibit A-9 to Post-Effective Amendment No. 3 of Form U-1, File No. 70-7825, dated October 21, 1991). B-17 Articles of Organization of EUA Energy Investment Corporation (Exhibit B-14 to Form U5S of EUA for 1987). B-18 By-Laws of EUA Energy Investment Corporation (Exhibit B-15 to Form U5S of EUA for 1987). B-19 Articles of Organization of EUA Ocean State Corporation (Exhibit B- 16 to Form U5S of EUA for 1988). B-20 By-Laws of EUA Ocean State Corporation (Exhibit B-17 to Form U5S of EUA for 1988). B-21 Charter of Newport, as amended (Exhibit B-18 to Form U5S of EUA for 1990). B-22 By-Laws of Newport (Exhibit B-19 to Form U5S of EUA for 1990). B-23 Ocean State Power Amended and Restated General Partnership Agreement among EUA Ocean State, Ocean State Power Company, TCPL Power Ltd., Narragansett Energy Resources Company and NECO Power, Inc. (collectively, the "OSP Partners") dated as of December 2, 1988, as amended March 27, 1989 (Exhibit 10-107, Form 10-K of EUA for 1989, File No. 1-5366, Exhibits 10-3.12, 10-4.12 and 10-5.12, Form 10-K of EUA for 1994, File No. 1-5366). B-24 Ocean State Power II Amended and Restated General Partnership Agreement among EUA Ocean State, JMC Ocean State Corporation, Makowski Power, Inc., TCPL Power Ltd., Narragansett Energy Resources Company and Newport Electric Power Corporation (collectively, the "OSP II Partners") dated as of September 29, 1989 (Exhibit 10-110, Form 10-K of EUA for 1989, File No. 1-5366). B-25 Articles of Incorporation of Cogenex Canada (Exhibit A-1 File No. 70-8441). B-26 By-Law No.1 of Cogenex Canada (Exhibit A-2 File No. 70-8441). B-27 Articles of Organization of NEM (Exhibit A-2 File No. 70-8255). B-28 By-Laws of NEM (Exhibit A-3 File No. 70-8255). B-29 Articles of Organization of EUA Highland (Exhibit A-2 File No. 70- 8523). B-30 By-Laws of EUA Highland (Exhibit A-3 File No. 70-8523). B-31 Articles of Organization of EUA Citizens Conservation Service, Inc. (Exhibit A-1 File No. 70-8473). B-32 By-Laws of EUA Citizens Conservation Services, Inc. (Exhibit A-2 File No. 70-8473). B-33 Articles of Organization of EUA BIOTEN, Inc. (Exhibit A-1 File No. 70-8617). B-34 By-Laws of EUA BIOTEN, Inc. (Exhibit A-2 File No. 70-8617). B-35 Certificate of Formation of APS Cogenex, L.L.C. (Exhibit A-1 File No. 70-8663). B-36 Limited Liability Company Operating Agreement for APS Cogenex, L.L.C. (Exhibit B-2 File No. 70-8663). Exhibit C - (a) C-1 Form of 8% Debenture Bonds due 2000 of Montaup (Exhibit 4-10, Registration File No. 2-41488). C-2 Form of 8-1/4% Debenture Bonds due 2003 of Montaup (Exhibit B-3, Form U5S of EUA for 1973). C-3 Form of 10% Debenture Bonds due 2008 of Montaup (Exhibit 5-3, Registration No. 2-65785). C-4 Form of 10-1/8% Debenture Bonds due 2008 of Montaup (Exhibit 4-13, Form 10-K of EUA for 1983, File No. 1-5366). C-5 Form of 12-3/8% Debenture Bonds due 2013 of Montaup (Exhibit 4-13, Form 10-K of EUA for 1983, File No. 1-5366). C-6 Form of 9% Debenture Bonds due 2020 of Montaup (Exhibit 4-10, Form 10-K of Eastern Edison for 1990, File No. 0-8480). C-7 Form of 9-3/8% Debenture Bonds due 2020 of Montaup (Exhibit 4-11, Form 10-K of Eastern Edison for 1990, File No. 0-8480). C-8 Indenture of First Mortgage and Deed of Trust dated as of September 1, 1948 of Eastern Edison (Exhibit 4-1, Registration No. 2-77468), and twenty-seven supplements thereto (Exhibit A, File No. 70-3015; Exhibit A-3, File No. 70-3371; Exhibit C to Certificate of Notification, File No. 70-3371; Exhibit D to Certificate of Notification, File No. 3619; Exhibit D to Certificate of Notification, File No. 70-3798; Exhibit F to Certificate of Notification, File No. 70-4164; Exhibit D to Certificate of Notification, File No. 70-4748; Exhibit C to Certificate of Notification, File No. 70-5195; Exhibit F to Certificate of Notification, File No. 70-5379; Exhibit C to Certificate of Notification, File No. 70-5719; Exhibit 5-24 Registration No. 2- 65785; Exhibit F to Certificate of Notification, File No. 70-6463; Exhibit C to Certificate of Notification, File No. 70-6608; Exhibit C to Certificate of Notification, File No. 70-6737; Exhibit F to Certificate of Notification, File No. 70-6851; Exhibit 4-31, Form 10-K of EUA for 1984, File No. 1-5366; Exhibit F to Certificate of Notification, File No. 70-7254; Exhibit C to Certificate of Notification, File No. 70-7373; Exhibit C to Certificate of Notification, File No. 70-7373; Exhibit C to Certificate of Notification, File No. 70-7373; Exhibit F to Certificate of Notification, File No. 20-7511; Exhibit 4-34, Form 10-K of Eastern Edison for 1990, File No. 0-8480; Exhibit 4-24, Form 10-K of Eastern Edison for 1992, File No. 0-8480; Exhibit 4-35, Form 10-K of Eastern Edison for 1990, File No. 0-8480; Exhibit 4-36, Form 10-K of Eastern Edison for 1990, File No. 0-8480; Exhibit C-33 to Form U5S of EUA for 1993; Exhibit C-34 to Form U5S of EUA for 1993; Exhibit 4-29.08, Form 10-K of Eastern Edison for 1994, File No. 0-8480; Exhibit 4-1.09, Form 10-K of EUA for 1997, File 1- 5366). C-9 First Mortgage Indenture and Deed of Trust dated as of December 1, 1980 of Blackstone (Exhibit A, Form 8-K of EUA dated January 14, 1981, File No. 1-5366). C-10 First Supplemental Indenture dated as of August 1, 1989 of Blackstone (Exhibit 4-33, Form 10-K of EUA for 1989, File 1-5366). C-11 Second Supplemental Indenture dated as of November 26, 1990 of Blackstone (Exhibit 4-3, Form 10-K of Blackstone Valley Electric for 1990, File No. 0-2602). C-12 Loan Agreement between Rhode Island Industrial Facilities Corporation and Blackstone dated as of December 1, 1984 (Exhibit 10-72, Form 10-K of EUA for 1984, File No. 1-5366). C-13 Note Purchase Agreement dated as of January 13, 1988 of Service (Exhibit 4-38, Form 10-K of EUA for 1987, File No. 1-5366). C-14 Note Agreement dated as of June 28, 1990 of EUA Cogenex with the Prudential Insurance Company of America (Exhibit 4-46, Form 10-K of EUA for 1990, File No. 1-5366). C-15 Note Agreement dated as of October 29, 1991 between EUA Cogenex and Prudential Insurance Company of America (Exhibit 4-55, Form 10-K of EUA for 1991, File No. 1-5366). C-16 Indenture dated September 1, 1993 between EUA Cogenex and the Bank of New York as Trustee (Exhibit 4-4.10, Form 10-K of EUA for 1993, File No. 1-5366). C-17 Guaranty, dated June 28, 1990, made by Eastern Utilities Associates in favor of The Prudential Insurance Company of America (Exhibit B- 2 to Form U-1, File No. 70-7655, dated June 14, 1990). C-18 Indenture of First Mortgage dated as of June 1, 1954 of Newport, as supplemented on August 1, 1959, April 1, 1962, October 1, 1964, April 1, 1967, September 1, 1969, September 1, 1970, June 1, 1978, October 1, 1978, May 1, 1986, December 1, 1987 and November 1, 1989 (Exhibit 4-49, Form 10-K of EUA for 1990, File No. 1-5366). C-19 Indenture of Second Mortgage dated as of September 1, 1982 of Newport, as supplemented on December 1, 1988 (Exhibit 4-51, Form 10-K of EUA for 1990, File No. 1-5366). C-20 Note Purchase Agreement dated as of January 16, 1992 between EUA Ocean State Corporation and John Hancock Mutual Life Insurance Company (Exhibit 4-56, Form 10-K of EUA for 1991, File No. 1-5366). C-21 Guaranty, dated January 16, 1992 made by EUA in favor of John Hancock Mutual Life Insurance Company (Exhibit 10-125, Form 10-K of EUA for 1991, File No. 1-5366). C-22 Power Purchase Agreement entered into as of September 20, 1993 by and between Meridian Middleboro Limited Partnership and Eastern Edison Company (filed as Exhibit 10-3.08 to Eastern Edison's Form 10-K for 1993, File No. 0-8480). C-23 Inducement Letter dated July 14, 1993 from Eastern Edison to the Massachusetts Industrial Finance Agency and Goldman, Sachs & Company and Citicorp Securities Markets, Inc. (filed as Exhibit 10- 4.08 to Eastern Edison's Form 10-K for 1993, File No. 0-8480). C-24 Indenture dated September 1, 1993 between EUA Cogenex and the Bank of New York as Trustee (filed as Exhibit 4-4.10 to EUA's Form 10-K for 1993, File No. 1-5366). C-25 Loan Agreement between the Rhode Island Port Authority and Economic Development Corporation and Newport Electric Corporation dated as of January 6, 1994 (filed as Exhibit 4-14.14 to EUA's Form 10-K for 1993, File No. 1-5366). C-26 Trust Indenture between the Rhode Island Authority and Economic Development Corporation and Newport Electric Corporation dated as of January 1, 1994 (filed as Exhibit 4-5.14 to EUA's Form 10-K for 1993, File No. 1-5366). C-27 Letter of Credit and Reimbursement Agreement among Newport and the Canadian Imperial Bank of Commerce dated January 6, 1994 (filed as Exhibit 4-6.14 to EUA's Form 10-K for 1993, File No. 1-5366). (b) None. *Exhibit D - Tax allocation agreement for 2000 pursuant to Rule 45(c). Exhibit E - Other documents. None. Exhibit F - Report of Independent Accountants (EUA 10-K for 1999, File No. 1-5366). *Exhibit G - Financial Data Schedules. Filed electronically via EDGAR. Exhibit H - None. Exhibit I - None. SIGNATURE The undersigned system company has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized, pursuant to the requirements of the Public Utility Holding Company Act of 1935. EASTERN UTILITIES ASSOCIATES and Subsidiaries By /s/ Clifford J. Hebert, Jr. Clifford J. Hebert, Jr. Treasurer April 28, 2000 Financials Statements EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES CONSOLIDATING BALANCE SHEETS (1 of 2) DECEMBER 31, 1999
Blackstone Eastern EUA Valley Newport EUA Utilities Service Electric Electric ASSETS Consolidated Eliminations Associates Corporation Company Corporation Utility plant and other investments: Utility plant in service $735,943,433 $ $ $32,064,148 $143,769,662 $80,522,035 Less accumulated provision for depreciation and amortization 290,962,408 14,373,908 63,517,768 26,671,262 Net utility plant in service 444,981,025 17,690,240 80,251,894 53,850,773 Construction work in progress 9,033,131 43,907 4,039,823 697,921 Net utility plant 454,014,156 17,734,147 84,291,717 54,548,694 Non-utility property 101,417,067 227,060 Less accumulated provision for deprec. 58,773,332 27,628 Net non-utility property 42,643,735 199,432 Investments in subsidiaries (at equity) 64,004,325 352,206,067 352,206,067 Excess of carrying values of investments in subsidiaries 17,489 17,489 Other 44,352,404 1,000 Total Utility Plant and Other Investments 605,032,109 352,206,067 352,224,556 17,734,147 84,491,149 54,548,694 Current Assets: Cash and temporary cash investments 7,479,751 90,889 762,084 99,297 59,541 Notes receivable 22,000,273 59,687,334 59,687,334 Accounts receivable - Net: Customers 53,862,763 10,731,989 5,515,098 Accrued unbilled revenue 6,384,729 1,530,195 945,241 Others 24,713,965 8,427,165 239,536 1,102,022 391,931 Accounts receivable - associated companies 31,660,556 317,424 15,904,551 599,927 321,354 Materials and Supplies (at average cost): Plant materials and operating supplies 3,997,185 54,699 1,000,747 821,608 Other current assets 5,256,235 828,813 847,461 139,486 478,726 333,548 Total Current Assets 123,694,901 100,603,868 60,943,108 17,100,356 15,542,903 8,388,321 Deferred Debits: Unamortized debt expense 1,915,602 30,997 484,402 308,960 Unrecovered regulatory plant costs (Note A) 45,955,085 Other deferred debits 691,254,984 41,469,543 3,745,018 51,500,806 8,108,625 Total Deferred Debits 739,125,671 41,469,543 3,776,015 51,985,208 8,417,585 Total Assets $1,467,852,681 $452,809,935 $454,637,207 $38,610,518 $152,019,260 $71,354,600 * Companies dissolved in 1999. The accompanying notes are an integral part of the financial statements.
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES CONSOLIDATING BALANCE SHEETS (2 of 2) DECEMBER 31, 1999
EUA EUA Eastern EUA Energy EUA EUA Telecomm- Edison Cogenex Investment Energy Srvc. Ocean State unications ASSETS Consolidated Consolidated Consolidated Corporation* Corporation Corporation* Utility plant and other investments: Utility plant in service $479,270,049 $ $317,539 $ $ $ Less accumulated provision for depreciation and amortization 186,399,470 Net utility plant in service 292,870,579 317,539 Construction work in progress 4,251,480 Net utility plant 297,122,059 317,539 Non-utility property 2,388,393 84,016,674 14,784,940 Less accumulated provision for depreciation 9,697 44,463,015 14,272,992 Net non-utility property 2,378,696 39,553,659 511,948 Investments in subsidiaries (at equity) 12,277,169 188,654 3,043,446 48,495,056 Excess of carrying values of investments in subsidiaries Other 66,322 44,285,082 Total Utility Plant and Other Investments 311,844,246 84,027,395 3,872,933 48,495,056 Current Assets: Cash and temporary cash investments 788,103 5,293,992 347,901 37,944 Notes receivable 17,160,690 4,839,583 Accounts receivable - Net: Customers 30,091,670 7,492,379 31,627 Accrued unbilled revenue 3,909,293 Others 14,277,788 12,217,939 4,911,914 Accounts receivable - associated companies 14,510,577 1,269 5,454 Materials and Supplies (at average cost): Plant materials and operating supplies 2,015,746 104,385 Other current assets 3,596,240 513,419 165,749 10,419 Total Current Assets 69,189,417 42,784,073 10,302,228 48,363 Deferred Debits: Unamortized debt expense 590,255 165,285 335,703 Unrecovered regulatory plant costs (Note A) 45,955,085 Other deferred debits 583,547,161 1,959,796 924,035 Total Deferred Debits 630,092,501 2,125,081 924,035 335,703 Total Assets $1,011,126,164 $128,936,549 $15,099,196 $ $48,879,122 $ * Companies dissolved in 1999. The accompanying notes are an integral part of the financial statements.
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES CONSOLIDATING BALANCE SHEET (1 of 2) DECEMBER 31, 1999
Blackstone Eastern EUA Valley Newport EUA Utilities Service Electric Electric LIABILITIES Consolidated Eliminations Associates Corporation Company Corporation Capitalization: Common equity $358,038,971 $352,206,068 $358,082,883 $2,658,003 $44,605,387 $26,193,826 Non-redeemable preferred stock of subs. 6,900,625 6,129,500 771,050 Redeemable preferred stock of subsidiaries - net 29,664,502 Preferred stock redemption cost (1,305,448) Long-term debt - net 104,235,236 4,000,000 30,500,000 8,575,000 Total Capitalization 497,533,886 352,206,068 358,082,883 6,658,003 81,234,887 35,539,876 Current Liabilities: Long-term debt due within one year 83,126,660 1,100,000 1,500,000 650,000 Notes payable 143,955,100 59,687,334 90,830,000 1,740,000 990,000 Accounts payable 35,146,011 6,000 385,824 4,979,335 1,973,589 Accounts payable - associated companies 31,660,556 2,308,529 246,393 3,859,574 14,329,817 Customer deposits 2,391,613 736,846 538,808 Taxes accrued 2,564,784 8,427,165 2,408,793 228,963 4,173,585 2,047,790 Interest accrued 4,529,091 828,812 922,219 260,100 708,906 85,496 Dividends accrued 79,396 72,188 7,208 Purchased power contract buyout payable 75,697,865 Other current liabilities 58,265,210 620,519 2,098,371 2,872,575 1,908,720 Total Current Liabilities 405,755,730 100,603,867 97,096,060 4,319,651 20,643,009 22,531,428 Other Liabilities: Unamortized investment credit 10,211,700 2,025,746 954,336 Other deferred credits and other liab. 408,041,231 881,292 26,420,936 35,714,412 2,463,996 Total Other Liabilities 418,252,931 881,292 26,420,936 37,740,158 3,418,332 Accumulated deferred taxes 146,310,134 (1,423,028) 1,211,928 12,401,206 9,864,964 Commitments and contingencies (Note J) Total Liabilities and Capitalization $1,467,852,681 $452,809,935 $454,637,207 $38,610,518 $152,019,260 $71,354,600 ( ) Denotes Contra * Companies dissolved in 1999. The accompanying notes are an integral part of the financial statements.
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES CONSOLIDATING BALANCE SHEET (2 of 2) DECEMBER 31, 1999
EUA EUA Eastern EUA Energy EUA EUA Telecomm- Edison Cogenex Investment Energy Service Ocean State unications LIABILITIES Consolidated Consolidated Consolidated Corporation* Corporation Corporation* Capitalization: Common equity $260,647,925 $42,008,241 ($41,461,692) $ $17,510,466 $ Non-redeemable preferred stock of sub. 75 Redeemable preferred stock of subsidiaries - net 29,664,502 Preferred stock redemption cost (1,305,448) Long-term debt - net 40,000,000 21,160,236 Total Capitalization 329,006,979 42,008,316 (41,461,692) 38,670,702 Current Liabilities: Long-term debt due within one year 77,400,000 2,476,660 Notes payable 47,060,000 155,100 59,687,334 3,180,000 Accounts payable 24,480,091 3,225,701 94,071 1,400 Accounts payable - associated companies 10,300,648 86,321 511,501 17,773 Customer deposits 1,115,959 Taxes accrued 353,906 74,891 (11,607) 1,715,628 Interest accrued 1,233,017 1,123,244 828,813 196,108 Dividends accrued Purchased power contract buyout payable 75,697,865 Other current liabilities 45,435,457 5,328,818 750 Total Current Liabilities 205,676,943 87,394,075 61,110,112 7,588,319 Other Liabilities: Unamortized investment credit 7,231,618 Other deferred credits and other liab. 339,887,929 2,076,911 595,755 Total Other Liabilities 347,119,547 2,076,911 595,755 Accumulated deferred taxes 129,322,695 (2,542,753) (5,144,979) 2,620,101 Commitments and contingencies (Note J) Total Liabilities and Capitalization $1,011,126,164 $128,936,549 $15,099,196 $ $48,879,122 $ ( ) Denotes Contra * Companies dissolved in 1999. The accompanying notes are an integral part of the financial statements.
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF CAPITALIZATION (1 of 2) DECEMBER 31, 1999
Blackstone Eastern EUA Valley Newport EUA Utilities Service Electric Electric Consolidated Eliminations Associates Corporation Company Corporation Common Equity: Common shares, $5 par value of Registrant (1) $102,179,985 $79,058,006 $102,179,985 $1,000 $9,203,100 $11,368,779 Other paid-in capital 220,694,395 163,812,579 220,694,395 2,000,000 17,907,931 9,000,000 Common share expense (3,930,679) (742,214) (3,886,767) (742,214) Retained earnings 39,095,270 110,077,697 39,095,270 657,003 17,494,356 6,567,261 Total Common Equity 358,038,971 352,206,068 358,082,883 2,658,003 44,605,387 26,193,826 Non-Redeemable Preferred: 4.25%, $100 par value, 35,000 shares (2) 3,500,000 3,500,000 5.60%, $100 par value, 25,000 shares (2) 2,500,000 2,500,000 3.75%, $100 par value, 7,689 shares (2) 768,900 768,900 $.01 par value, 7,500 shares (3) 75 Premium, net of expense 131,650 129,500 2,150 Total Non-Redeemable 6,900,625 6,129,500 771,050 Redeemable Preferred: 6.625%, $100 par value, 300,000 shares (4) 30,000,000 Expense, net of premium (335,498) Preferred stock redemption cost (1,305,448) Total Redeemable 28,359,054 Long-Term Debt: Secured Notes: 10.2% due 2008 5,100,000 5,100,000 Unsecured Notes: 9.59% due 2011 23,636,896 7% due 2000 50,000,000 9.6% due 2001 6,400,000 10.56% due 2005 21,000,000 Variable Rate Bonds: Demand due 2014 (5) 6,500,000 6,500,000 Revenue Refunding due 2011 (5) 7,925,000 7,925,000 Pollution Control Revenue Bonds: 5.875% due 2008 40,000,000 First Mortgage Bonds: 9.5% due 2004 (Series B) 7,500,000 7,500,000 10.35% due 2010 (Series C) 18,000,000 18,000,000 8.95% due 2001 1,300,000 1,300,000 187,361,896 5,100,000 32,000,000 9,225,000 Less portion due within one year 83,126,660 1,100,000 1,500,000 650,000 Total Long-Term Debt 104,235,236 4,000,000 30,500,000 8,575,000 Total Capitalization $497,533,886 $352,206,068 $358,082,883 $6,658,003 $81,234,887 $35,539,876 (1) Authorized 36,000,000 shares, 20,435,997 shares outstanding. (2) Authorized and Outstanding. (3) The Preferred Stock shall be entitled to an annual dividend per share at a rate equal to 33% of the net income of Citizens Conservation Services divided by 7,500. (4) Authorized 400,000 shares, outstanding 300,000. (5) Weighted average interest rate was 3.3% for 1999. * Companies dissolved in 1999. The accompanying notes are an integral part of the financial statements.
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF CAPITALIZATION (2 of 2) DECEMBER 31, 1999
EUA Eastern EUA EUA EUA EUA Telecomm- Edison Cogenex Energy Inv. Energy Service Ocean State unications Consolidated Consolidated Consolidated Corporation* Corporation Corporation* Common Equity: Common shares, $5 par value of Registrant (1) $58,485,025 $100 $1 $ $1 $ Other paid-in capital 78,048,527 47,046,923 999 9,808,199 Common share expense (43,912) Retained earnings 124,158,285 (5,038,782) (41,462,692) 7,702,266 Total Common Equity 260,647,925 42,008,241 (41,461,692) 17,510,466 Non-Redeemable Preferred: 4.25%, $100 par value, 35,000 shares (2) 5.60%, $100 par value, 25,000 shares (2) 3.75%, $100 par value, 7,689 shares (2) $.01 par value, 7,500 shares (3) 75 Premium, net of expense Total Non-Redeemable 75 Redeemable Preferred: 6.625%, $100 par value, 300,000 shares (4) 30,000,000 Expense, net of premium (335,498) Preferred stock redemption cost (1,305,448) Total Redeemable 28,359,054 Long-Term Debt: Secured Notes: 10.2% due 2008 Unsecured Notes: 9.59% due 2011 23,636,896 7% due 2000 50,000,000 9.6% due 2001 6,400,000 10.56% due 2005 21,000,000 Variable Rate Bonds: Demand due 2014 (5) Revenue Refunding due 2011 (5) Pollution Control Revenue Bonds: 5.875% due 2008 40,000,000 First Mortgage Bonds: 9.5% due 2004 (Series B) 10.35% due 2010 (Series C) 8.95% due 2001 40,000,000 77,400,000 23,636,896 Less portion due within one year 77,400,000 2,476,660 Total Long-Term Debt 40,000,000 21,160,236 Total Capitalization $329,006,979 $42,008,316 ($41,461,692) $ $38,670,702 $ (1) Authorized 36,000,000 shares, 20,435,997 shares outstanding. (2) Authorized and Outstanding. (3) The Preferred Stock shall be entitled to an annual dividend per share at a rate equal to 33% of the net income of Citizens Conservation Services divided by 7,500. (4) Authorized 400,000 shares, outstanding 300,000. (5) Weighted average interest rate was 3.3% for 1999. * Companies dissolved in 1999. The accompanying notes are an integral part of the financial statements.
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES CONSOLIDATING INCOME STATEMENTS (1 of 2) FOR THE YEAR ENDED DECEMBER 31, 1999
Blackstone Eastern EUA Valley Newport EUA Utilities Service Electric Electric Consolidated Eliminations Associates Corporation Company Corporation Operating Revenues $553,766,589 $82,474,674 $ $ $127,081,842 $60,543,498 Operating Expenses: Operation 394,427,131 136,028,966 1,765,926 53,906,529 96,445,973 42,546,392 Maintenance 19,192,597 1,173,033 1,957 1,173,729 3,182,885 2,124,273 Depreciation and amortization 44,509,707 1,364,479 2,545 1,367,615 6,492,512 2,872,989 Taxes Other than income 21,473,100 2,753,443 12,048 2,767,187 7,898,874 4,021,753 Income Taxes - Current (credit) 1,400,772 122,829 28 254,933 3,081,283 1,864,961 - Deferred (credit) 17,496,006 (93,104) (216,810) (50,048) 399,019 566,750 Total Operating Expenses 498,499,313 141,349,646 1,565,694 59,419,945 117,500,546 53,997,118 Operating Income 55,267,276 (58,874,972) (1,565,694) (59,419,945) 9,581,296 6,546,380 Other Income and Deductions: Interest and dividend income 7,670,329 4,321,117 3,239,932 6,816 63,168 25,118 Energy Related Asset Adjustments (24,868,190) Income Tax Impact of Energy Related Asset Adjustments 8,210,261 Equity in earnings of jointly- owned companies 9,232,740 16,230,136 16,230,136 Allowance for other funds used during construction 276,406 97,951 10,072 Other (deductions) income - net 512,536 59,385,709 4,807,131 60,201,552 (146,889) 25,891 Total Other Income 1,034,082 79,936,962 24,277,199 60,208,368 14,230 61,081 Income Before Interest Charges 56,301,358 21,061,990 22,711,505 788,423 9,595,526 6,607,461 Interest Charges: Interest on long-term debt 21,550,967 520,200 2,874,523 1,029,516 Amortization of debt expense and premium 1,308,699 11,398 82,024 71,136 Other interest expense (principally short-term notes) 14,710,516 4,831,854 5,793,203 6,010 972,804 985,065 Allowance for borrowed funds used during construction - (credit) (492,210) (76,496) (40,120) Total Interest Charges 37,077,972 4,831,854 5,793,203 537,608 3,852,855 2,045,597 Net Income 19,223,386 16,230,136 16,918,302 250,815 5,742,671 4,561,864 Preferred Dividends Requirement 2,305,084 288,750 28,834 Earnings available for common shareholder $16,918,302 16,230,136 $16,918,302 $250,815 $5,453,921 $4,533,030 Earnings per EUA Common Share: 20,435,997 weighted average shares outstanding $0.83 ( ) Denotes Contra * Companies dissolved in 1999. The accompanying notes are an integral part of the financial statements.
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES CONSOLIDATING INCOME STATEMENTS (2 of 2) FOR THE YEAR ENDED DECEMBER 31, 1999
EUA Eastern EUA EUA EUA EUA Telecomm- Edison Cogenex Energy Inv. Energy Service Ocean State unications Consolidated Consolidated Consolidated Corporation* Corporation Corporation* Operating Revenues $394,566,408 $49,398,567 $4,650,948 $ $ $ Operating Expenses: Operation 288,490,019 39,339,954 7,682,466 8,502 265,185 5,151 Maintenance 12,743,813 1,130,029 4,049 355 4,356 184 Depreciation and amortization 24,374,553 10,349,954 328,890 71,807 3,300 10,021 Taxes Other than income 8,760,366 709,150 47,691 317 8,913 244 Income Taxes - Current (credit) 7,376,871 (4,213,598) (5,955,389) 433 (925,059) 39,138 - Deferred (credit) 14,422,489 1,409,832 879,706 (7,964) (72) Total Operating Expenses 356,168,111 48,725,321 2,987,413 81,414 (651,269) 54,666 Operating Income 38,398,297 673,246 1,663,535 (81,414) 651,269 (54,666) Other Income and Deductions: Interest and dividend income 2,777,095 5,276,413 601,074 12 1,812 6 Energy Related Asset Adjustments (5,133,251) (19,734,939) Income Tax Impact of Energy Related Asset Adjustments 1,303,032 6,907,229 Equity in earnings of jointly- owned companies 838,798 (266,664) 8,660,606 Allowance for other funds used during construction 168,383 Other (deductions) income - net 1,877,419 (1,166,449) (3,223,273) 144,892 (2,819,306) 197,277 Total Other Income 5,661,695 279,745 (15,716,573) 144,904 5,843,112 197,283 Income Before Interest Charges 44,059,992 952,991 (14,053,038) 63,490 6,494,381 142,617 Interest Charges: Interest on long-term debt 7,860,748 6,840,860 2,425,120 Amortization of debt expense and premium 1,116,166 27,975 Other interest expense (principally short-term notes) 7,736,243 652,863 3,204,730 28,404 151,568 11,480 Allowance for borrowed funds used during construction - (credit) (187,841) (187,753) Total Interest Charges 16,525,316 7,305,970 3,204,730 28,404 2,604,663 11,480 Net Income 27,534,676 (6,352,979) (17,257,768) 35,086 3,889,718 131,137 Preferred Dividends Requirement 1,987,500 Earnings available for common shareholder $25,547,176 ($6,352,979) ($17,257,768) $35,086 $3,889,718 $131,137 Earnings per EUA Common Share: weighted average shares outstanding ( ) Denotes Contra * Companies dissolved in 1999. The accompanying notes are an integral part of the financial statements.
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS (1 of 2) FOR THE YEAR ENDED DECEMBER 31, 1999
Blackstone Eastern EUA Valley Newport EUA Utilities Service Electric Electric Consolidated Eliminations Associates Corporation Company Corporation CASH FLOW FROM OPERATING ACTIVITIES: Net Income $19,223,386 $16,230,136 $16,918,302 $250,815 $5,742,671 $4,561,864 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and amortization 51,332,569 1,840,498 1,379,014 7,065,686 2,787,885 Amortization of nuclear fuel 3,667,114 Deferred taxes 8,616,537 (1,010,145) (50,048) 423,334 578,620 Non-cash expenses/(gains) on sales of investment in energy savings projects 14,717,829 Energy related asset adjustments 22,765,478 Investment tax credit, net (6,179,053) (176,390) (84,618) Allowance for other funds used during construc. (276,405) (97,950) (10,072) Collections and sales of project notes and leases receivable 7,932,991 Other - net (27,110,940) (1,554,337) (13,141,625) 492,415 (104,647) (1,250,026) Changes in Operating Assets and Liabilities: Accounts receivable (5,943,328) 843,780 1,962,520 (2,911,721) 1,003,264 998,562 Materials and supplies 8,737,678 1,104 (143,672) 12,094 Notes receivable 5,858,725 (7,211,213) (7,718,863) Accounts payable 6,927,004 (3,615,171) 1,013,902 (142,711) (5,486,741) 7,381,151 Accrued taxes (11,639,751) 2,771,391 2,408,793 221,710 2,680,614 1,360,791 Regulatory asset - purchased power contract buyout, Net (51,801,450) Other - net 6,605,010 (1,003) (188,724) 496,263 (1,713,997) (481,552) Net Cash Provided from (Used in) Operating Act. 53,433,394 7,463,583 2,084,658 (263,159) 9,192,172 15,854,699 CASH FLOW FROM INVESTING ACTIVITIES: Construction expenditures (57,039,322) (146,884) (6,965,422) (3,010,114) Collections on notes and lease receivables of EUA Cogenex 14,732,529 Proceeds from the sale of generation assets 62,346,065 250,000 560,000 Proceeds from the sale of Day division 2,893,749 Investments in subsidiaries 216,274 (16,899,993) (16,899,993) Net Cash Provided From (Used in) Investing Act. 23,149,295 (16,899,993) (16,899,993) (146,884) (6,715,422) (2,450,114) CASH FLOW FROM FINANCING ACTIVITIES: Redemptions of common stock (23,000,007) Redemptions of long-term debt (145,345,345) (1,100,000) (1,500,000) (10,568,685) Capital contribution from EUA Parent 40,000,000 EUA common share dividends paid (33,923,776)(14,774,796) (33,923,776) (150,000) (2,506,924) (1,660,000) Subsidiary preferred dividends paid (2,305,083) (288,750) (28,833) Net increase (decrease) in short-term debt 80,381,589 7,211,213 48,830,000 1,740,000 (1,230,000) Net Cash (Used in) Provided from Financing Act. (101,192,615) 9,436,410 14,906,224 (1,250,000) (2,555,674) (13,487,518) NET INCREASE (DECREASE) IN CASH (24,609,926) 90,889 (1,660,043) (78,924) (82,933) Cash and temporary cash investments at beginning of year 32,089,677 2,422,127 178,221 142,474 Cash and temporary cash investments at end of year $7,479,751 $ $90,889 $762,084 $99,297 $59,541 Cash paid during the year for: Interest (net of amount Capitalized) $28,607,999 $3,039,822 $582,181 $2,932,655 $1,316,417 Income Taxes (Refund) $17,421,019 ($6,457,690) ($301,447) $218,956 $510,018 Conversion of investments in energy savings projects to notes and leases receivable $1,922,000 ( ) Denotes Contra * Companies dissolved in 1999. The accompanying notes are an integral part of the financial statements.
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS (2 of 2) FOR THE YEAR ENDED DECEMBER 31, 1999
EUA EUA EUA Eastern EUA Energy Energy EUA Telecomm- Edison Cogenex Investment Services Ocean State unications Consolidated Consolidated Consolidated Corporation* Corporation Corporation* CASH FLOW FROM OPERATING ACTIVITIES: Net Income $27,534,676 ($6,352,979)($17,257,768) $35,086 $3,889,718 $131,137 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and amortization 27,914,332 10,673,820 (352,737) 27,975 (3,904) Amortization of nuclear fuel 3,667,114 Deferred taxes 11,493,365 1,780,693 (4,301,577) (297,633) (72) Non-cash expenses/(gains) on sales of investment in energy savings projects 14,717,829 Energy related asset adjustments 3,030,539 19,734,939 Investment tax credit, net (5,918,045) Allowance for other funds used during construc. (168,383) Collections and sales of project notes and leases receivable 7,932,991 Other - net (25,372,786) 1,625,632 8,641,897 79,208 339,294 25,361 Changes in Operating Assets and Liabilities: Accounts receivable (9,791,689) 4,409,834 (1,249,701) 433,207 46,176 Materials and supplies 7,948,639 23,798 895,715 Notes receivable 6,366,375 Accounts payable 291,257 1,473,234 (1,212,173) (3,558) 716 (3,244) Accrued taxes (17,006,782) 15,792 (15,254) 1,465,976 Regulatory asset - purchased power contract buyout, Net (51,801,450) Other - net 26,655,907 1,222,177 (19,361,730) (5,982) (16,249) (2,106) Net Cash Provided from (Used in) Operating Act. (4,553,845) 40,553,360 (8,112,014) 537,961 5,409,797 193,348 CASH FLOW FROM INVESTING ACTIVITIES: Construction expenditures (13,902,173) (33,014,729) Collections on notes and lease receivables of EUA Cogenex 14,732,529 Proceeds from the sale of generation assets 61,536,065 Proceeds from the sale of Day division 2,893,749 Investments in subsidiaries 216,274 Net Cash Provided From (Used in) Investing Act. 47,850,166 (15,388,451) CASH FLOW FROM FINANCING ACTIVITIES: Redemptions of common stock (23,000,007) Redemptions of long-term debt (123,000,000) (6,700,000) (2,476,660) Capital contribution from EUA Parent 40,000,000 EUA common share dividends paid (7,532,872) (2,925,000) Subsidiary preferred dividends paid (1,987,500) Net increase (decrease) in short-term debt 47,060,000 (15,953,338) 7,907,898 (540,195) (10,000) (211,563) Net Cash (Used in) Provided from Financing Act. (68,460,379) (22,653,338) 7,907,898 (540,195) (5,411,660) (211,563) NET INCREASE (DECREASE) IN CASH (25,164,058) 2,511,571 (204,116) (2,234) (1,863) (18,215) Cash and temporary cash investments at beginning of year 25,952,161 2,782,421 552,017 2,234 39,807 18,215 Cash and temporary cash investments at end of year $788,103 $5,293,992 $347,901 $ $37,944 $ Cash paid during the year for: Interest (net of amount capitalized) $11,427,088 $7,171,247 $1,881 $2,136,708 Income Taxes (Refund) $26,549,478 ($3,709,730) ($112,356) $706 $722,628 $456 Conversion of investments in energy savings projects to notes and leases receivable $1,922,000 ( ) Denotes Contra * Companies dissolved in 1999. The accompanying notes are an integral part of the financial statements.
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL (1 of 2) December 31, 1999
Blackstone Eastern EUA Valley Newport EUA Utilities Service Electric Electric Consolidated Eliminations Associates Corporation Company Corporation Balance of Retained Earnings at Beginning of year $56,465,505 $108,887,118 $56,465,505 $456,189 $14,547,359 $3,694,230 Additions: Net Income (Loss) 19,223,386 16,230,136 16,918,302 250,815 5,742,671 4,561,864 Total 75,688,891 125,117,254 73,383,807 707,004 20,290,030 8,256,094 Deductions: Dividends: Preferred - subsidiaries 2,305,084 288,750 28,834 Common - subsidiaries 14,674,796 50,000 2,506,924 1,660,000 Common - registrant - $1.66 per share 33,923,776 33,923,776 Total Dividends 36,228,860 14,674,796 33,923,776 50,000 2,795,674 1,688,834 Other 364,761 364,761 364,761 Total Deductions 36,593,621 15,039,557 34,288,537 50,000 2,795,674 1,688,834 Balance of Retained Earnings at End of Period $39,095,270 $110,077,697 $39,095,270 $657,004 $17,494,356 $6,567,260 Other Paid-In Capital at Beginning of Year $218,959,339 $218,959,339 Additions: Amortization restricted stock costs 1,642,164 1,642,164 Other 92,892 92,892 Other Paid-In Capital at End of Year $220,694,395 $220,694,395 ( ) Denotes Contra * Companies dissolved in 1999. The accompanying notes are an integral part of the financial statements.
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL (2 of 2) December 31, 1999
EUA EUA Eastern EUA Energy EUA EUA Telecomm- Edison Cogenex Investment Energy Service Ocean State unications Consolidated Consolidated Consolidated Corporation* Corporation Corporation* Balance of Retained Earnings at Beginning of year $106,508,742 $1,314,197 ($24,204,924) ($35,086) $6,737,548 ($131,137) Additions: Net Income (Loss) 27,534,676 (6,352,979) (17,257,768) 35,086 3,889,718 131,137 Total 134,043,418 (5,038,782) (41,462,692) 10,627,266 Deductions: Dividends: Preferred - subsidiaries 1,987,500 Common - subsidiaries 7,532,872 2,925,000 Common - registrant - $1.66 per share Total Dividends 9,520,372 2,925,000 Other 364,761 Total Deductions 9,885,133 2,925,000 Balance of Retained Earnings at End of Period $124,158,285 ($5,038,782) ($41,462,692) $ $7,702,266 $ Other Paid-In Capital at Beginning of Year Additions: Amortization restricted stock costs Other Other Paid-In Capital at End of Year ( ) Denotes Contra * Companies dissolved in 1999. The accompanying notes are an integral part of the financial statements.
EASTERN EDISON COMPANY AND SUBSIDIARY CONSOLIDATING BALANCE SHEETS December 31, 1999
Eastern Eastern Montaup Edison Edison Electric ASSETS Consolidated Eliminations Company Company Utility plant and other investments: Utility plant in service $479,270,049 $ $252,307,153 $226,962,896 Less accumulated provision for depreciation and amortization 186,399,470 103,500,297 82,899,173 Net Utility plant in service 292,870,579 148,806,856 144,063,723 Construction work in progress 4,251,480 2,444,509 1,806,971 Net utility plant 297,122,059 151,251,365 145,870,694 Non-utility property 2,388,393 105,735 2,282,658 Less accumulated provision for depreciation 9,697 9,697 Net non-utility property 2,378,696 96,038 2,282,658 Investments in subsidiaries (at equity) 12,277,169 223,342,536 223,342,536 12,277,169 Other 66,322 10,405 55,917 Total Utility Plant and Other Investments 311,844,246 223,342,536 374,700,344 160,486,438 Current Assets: Cash and temporary cash investments 788,103 244,271 543,832 Accounts receivable - Net: Customers 30,091,670 21,002,013 9,089,657 Accrued unbilled revenue 3,909,293 3,031,538 877,755 Others 14,277,788 2,457,787 11,820,001 Accounts receivable - associated companies 14,510,577 10,023,042 2,990,672 21,542,947 Materials and supplies (at average cost): Plant materials and operating supplies 2,015,746 1,793,099 222,647 Other current assets 3,596,240 843,771 2,752,469 Total Current Assets 69,189,417 10,023,042 32,363,151 46,849,308 Deferred Debits: Unamortized debt expense 590,255 573,042 17,213 Unrecovered Regulatory Plant Costs (Note A) 45,955,085 45,955,085 Other deferred debits 583,547,161 35,377,058 548,170,103 Total Deferred Debits 630,092,501 35,950,100 594,142,401 Total assets $1,011,126,164 $233,365,578 $443,013,595 $801,478,147 ( ) Denotes Contra The accompanying notes are an integral part of the financial statements.
EASTERN EDISON COMPANY AND SUBSIDIARY CONSOLIDATING BALANCE SHEETS December 31, 1999
Eastern Eastern Montaup Edison Edison Electric LIABILITIES Consolidated Eliminations Company Company Capitalization: Common equity $260,647,925 $133,590,335 $260,647,925 $133,590,335 Redeemable preferred stock - net 29,664,502 29,664,502 Redeemable preferred stock of subsidiaries- net 1,500,000 1,500,000 Preferred Stock Redemption Cost (1,305,448) (1,305,448) Long-term debt - net 40,000,000 88,252,201 40,000,000 88,252,201 Total Capitalization 329,006,979 223,342,536 329,006,979 223,342,536 Current Liabilities: Long-term debt due within one year Notes payable 47,060,000 34,560,000 12,500,000 Accounts payable 24,480,091 11,131,030 13,349,061 Accounts payable - associated companies 10,300,648 7,625,917 16,211,995 1,714,570 Customer deposits 1,115,959 1,115,959 Taxes accrued 353,906 468,242 (114,336) Interest accrued 1,233,017 2,397,125 1,158,755 2,471,387 Purchased power contract buyout payable 75,697,865 75,697,865 Other current liabilities 45,435,457 8,342,988 37,092,469 Total Current Liabilities 205,676,943 10,023,042 72,988,969 142,711,016 Other Liabilities: Unamortized investment credit 7,231,618 3,008,025 4,223,593 Other deferred credits and other liabilities 339,887,929 16,044,862 323,843,067 Total Other Liabilities 347,119,547 19,052,887 328,066,660 Accumulated deferred taxes 129,322,695 21,964,760 107,357,935 Total liabilities and capitalization $1,011,126,164 $233,365,578 $443,013,595 $801,478,147 ( ) Denotes Contra The accompanying notes are an integral part of the financial statements.
EASTERN EDISON COMPANY AND SUBSIDIARY CONSOLIDATING STATEMENTS OF CAPITALIZATION December 31, 1999
Eastern Eastern Montaup Edison Edison Electric Consolidated Eliminations Company Company Common Equity: Common shares $58,485,025 $42,140,000 $58,485,025 $42,140,000 Other paid-in capital 78,048,527 21,238,000 78,048,527 21,238,000 Common share expense (43,912) (43,912) Retained earnings 124,158,285 70,212,336 124,158,285 70,212,336 Total Common Equity 260,647,925 133,590,336 260,647,925 133,590,336 Redeemable Preferred: 6.625%, $100 par value, 300,000 shares 30,000,000 30,000,000 Redeemable preferred stock of subsidiaries 1,500,000 1,500,000 Expense, net of premium (335,498) (335,498) Preferred stock redemption cost (1,305,448) (1,305,448) Total Redeemable 28,359,054 1,500,000 28,359,054 1,500,000 Long-Term Debt: Pollution Control Revenue Bonds: 5.875% due 2008 40,000,000 40,000,000 Debenture Bonds: 8% due 2000 8,500,000 8,500,000 8.25% due 2003 12,800,000 12,800,000 10% due 2008 9,275,000 9,275,000 10.125% due 2008 27,677,200 27,677,200 9% due 2020 5,000,000 5,000,000 9.375% due 2020 25,000,000 25,000,000 Total Long-Term Debt 40,000,000 88,252,200 40,000,000 88,252,200 Total Capitalization $329,006,979 $223,342,536 $329,006,979 $223,342,536 The accompanying notes are an integral part of the financial statements.
EASTERN EDISON COMPANY AND SUBSIDIARY CONSOLIDATING INCOME STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999
Eastern Eastern Montaup Edison Edison Electric Consolidated Eliminations Company Company Operating Revenues $394,566,408 $122,604,836 $253,914,217 $263,257,027 Operating Expenses: Operation 288,490,019 122,604,836 209,061,338 202,033,517 Maintenance 12,743,813 5,980,536 6,763,277 Depreciation and amortization 24,374,553 10,965,727 13,408,826 Taxes Other than income 8,760,366 4,787,093 3,973,273 Income Taxes - Current 7,376,871 5,723,643 1,653,228 - Deferred 14,422,489 3,656,635 10,765,854 Total Operating Expenses 356,168,111 122,604,836 240,174,972 238,597,975 Operating Income 38,398,297 13,739,245 24,659,052 Other Income and Deductions: Interest and dividend income 2,777,095 12,436,120 11,491,522 3,721,693 Equity in earnings of jointly-owned companies 838,798 13,835,274 13,835,274 838,798 Allowance for other funds used during construction 168,383 168,383 Other (deductions) income - net 1,877,419 (129,479) 2,006,898 Total Other Income 5,661,695 26,271,394 25,197,317 6,735,772 Income Before Interest Charges 44,059,992 26,271,394 38,936,562 31,394,824 Interest Charges: Interest on long-term debt 7,860,748 10,608,812 7,860,748 10,608,812 Amortization of debt expense and premium 1,116,166 17,659 1,098,507 Other interest expense (principally short-term notes) 7,736,243 1,827,308 3,642,614 5,920,937 Allowance for borrowed funds used during construction - (credit) (187,841) (119,134) (68,707) Total Interest Charges 16,525,316 12,436,120 11,401,887 17,559,549 Net Income 27,534,676 13,835,274 27,534,675 13,835,275 Preferred Dividends Requirement 1,987,500 1,987,500 Earnings Available for Common Stockholders $25,547,176 $13,835,274 $25,547,175 $13,835,275 Weighted average shares outstanding 2,339,401 Earnings per share $10.92 ( ) Denotes Contra The accompanying notes are an integral part of the financial statements.
EASTERN EDISON COMPANY AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1999
Eastern Eastern Montaup Edison Edison Electric Consolidated Eliminations Company Company CASH FLOW FROM OPERATING ACTIVITIES: Net Income $27,534,676 $13,835,274 $27,534,675 $13,835,275 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 27,914,332 10,897,590 17,016,742 Amortization of nuclear fuel 3,667,114 3,667,114 Deferred taxes 11,493,365 3,703,775 7,789,590 Investment tax credit, net (5,918,045) (301,776) (5,616,269) Allowance for other funds used during construction (168,383) (168,383) Other - Net (25,372,786) (11,593,709) (11,416,139) (25,550,356) Changes in Operating Assets and Liabilities: Accounts receivable (9,791,689) 54,869,727 17,844,889 27,233,149 Materials and supplies 7,948,639 159,694 7,788,945 Accounts payable 291,257 (52,156,981) (29,565,723) (22,300,001) Accrued taxes (17,006,782) 2,698,685 (19,705,467) Liability - Purchase Power Contract Buyout (51,801,450) (51,801,450) Other - net 26,655,907 (2,712,746) (4,124,711) 28,067,872 Net Cash Provided from Operating Activities (4,553,845) 2,241,565 17,430,959 (19,743,239) CASH FLOW FROM INVESTING ACTIVITIES: Construction expenditures (13,902,173) (10,515,181) (3,386,992) Proceeds from the Sale of Generation Assets 61,536,065 61,536,065 Decrease in Other Investments 216,274 54,750,000 54,750,000 216,274 Net Cash Used in Investing Activities 47,850,166 54,750,000 44,234,819 58,365,347 CASH FLOW FROM FINANCING ACTIVITIES: Redemptions: Common Stock (23,000,007) (24,750,000) (23,000,007) (24,750,000) Long-term debt (123,000,000) (29,729,382) (123,000,000) (29,729,382) Eastern Edison common share dividends paid (7,532,872) (2,449,480) (7,532,872) (2,449,480) Preferred dividends paid (1,987,500) (62,699) (1,987,500) (62,699) Capital Contribution from EUA Parent 40,000,000 40,000,000 Net Decrease in short-term debt 47,060,000 34,560,000 12,500,000 Net Cash (Used In) Financing Activitities (68,460,379) (56,991,561) (80,960,379) (44,491,561) NET DECREASE IN CASH (25,164,058) (19,294,601) (5,869,457) Cash and temporary cash investments at beginning of year 25,952,161 25,798,213 153,948 Cash and temporary cash investments at end of year $788,103 $ $6,503,612 ($5,715,509) Cash paid during the year for: Interest (Net of Accounts Capitalized) $11,427,088 $13,391,138 $11,095,770 $13,722,456 Income Taxes $26,549,478 $3,595,437 $22,954,041 ( ) Denotes Contra The accompanying notes are an integral part of the financial statements.
EASTERN EDISON COMPANY AND SUBSIDIARY CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL December 31, 1999
Eastern Eastern Montaup Edison Edison Electric Consolidated Eliminations Company Company Balance of retained earnings at begin. of year $106,508,742 $58,889,241 $106,508,742 $58,889,241 Additions: Net Income 27,534,676 13,835,275 27,534,676 13,835,275 Total 134,043,418 72,724,516 134,043,418 72,724,516 Deductions: Dividends: Preferred 1,987,500 62,700 1,987,500 62,700 Common 7,532,872 2,449,480 7,532,872 2,449,480 Total Dividends 9,520,372 2,512,180 9,520,372 2,512,180 Other 364,761 364,761 Total Deductions 9,885,133 2,512,180 9,885,133 2,512,180 Balance of retained earnings at end of period $124,158,285 $70,212,336 $124,158,285 $70,212,336 ( ) Denotes Contra The accompanying notes are an integral part of the financial statements.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING BALANCE SHEETS (1 of 2) December 31, 1999
EUA EUA EUA EUA Day Metrix Cogenex Cogenex Day (fka Day I & II) NEM ASSETS Consolidated Elimination (Division) (Division) (Division) Inc. Utility Plant and Other Investments: Non-utility property $84,016,674 $ $40,330,346 $ $ $7,554,950 Less accumulated provision for deprec. 44,463,015 23,517,499 3,535,345 Net non-utility property 39,553,659 16,812,847 4,019,605 Investments in subsidiaries (at equity) 188,654 34,826,048 35,014,702 Notes receivable 21,888,154 20,286,969 Leases receivable 13,610,720 9,492,622 Other 8,786,208 3,775,824 Total Utility Plant and Other Investments 84,027,395 34,826,048 85,382,964 4,019,605 Current Assets: Cash and temporary cash investments 5,293,992 3,291,274 345,470 106,962 Notes receivable 14,733,923 8,931,731 23,393,994 Leases receivable 2,426,767 1,444,041 Accounts receivable - Net: Customers 7,492,379 3,315,741 297,335 Others 12,217,939 (630,170) 9,274,200 (223,745) Accounts receivable - associated companies 1,269 1,269 Materials and supplies (at cost): Plant materials and operating supplies 104,385 15,354 Other current assets 513,419 47,477 472,607 2,160 Total Current Assets 42,784,073 8,349,038 41,208,480 345,470 182,712 Deferred Debits: Unamortized debt expense 165,285 165,285 Other deferred debits 1,959,796 755,269 955,600 Total Deferred Debits 2,125,081 920,554 955,600 Total Assets $128,936,549 $43,175,086 $127,511,998 $345,470 $ $5,157,917 The accompanying notes are an integral part of the financial statements.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING BALANCE SHEETS (2 of 2) December 31, 1999
EUA EUA EUA Cogenex EUA EUA EUA EUA EUA Cogenex Citizens West MUPA WestCoast FRC II EC&S I EC&S II ASSETS Canada Corporation Corporation (Partn.) (Partner.) (Partner.) (Partner.) (Partnership) Utility Plant and Other Investments: Non-utility property $9,795 $4,377,722 $1,763,267 $ $ $ $11,744,881 $18,235,713 Less accumulated provision for depr. 1,500 1,557,097 640,998 3,975,388 11,235,188 Net non-utility property 8,295 2,820,625 1,122,269 7,769,493 7,000,525 Investments in subsidiaries (at equity) Notes receivable (71,606) 1,227,998 444,793 Leases receivable 526,289 1,182,396 993,132 1,416,281 Other 14,629 96,933 4,439,552 15,539 396,441 47,290 Total Utility Plant and Other Invest. 477,607 2,917,558 7,972,215 15,539 9,603,859 8,464,096 Current Assets: Cash and temporary cash investments 31,946 452,987 53,682 871 298,848 711,952 Notes receivable 32,834 211,308 27,518 Leases receivable 39,840 390,340 100,480 452,066 Accounts receivable - Net: Customers 317,827 920,278 1,288,534 978,443 374,221 Others 183,526 928,939 751,335 391,136 282,378 Accounts receivable - associated comp. Materials and supplies (at average cost): Plant materials and operating supplies 89,031 Other current assets 843 5,988 79,298 Total Current Assets 606,816 1,855,205 3,262,833 53,682 871 1,796,425 1,820,617 Deferred Debits: Unamortized debt expense Other deferred debits 5,759 181,132 62,036 Total Deferred Debits 5,759 181,132 62,036 Total Assets $1,090,182 $4,953,895 $11,297,084 $ $69,221 $871 $11,400,284 $10,284,713 The accompanying notes are an integral part of the financial statements.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING BALANCE SHEETS (1 of 3) December 31, 1999
EUA EUA EUA EUA Day Matrix Cogenex Cogenex Day (fka Day I & NEM LIABILITIES Consolidated Elimination Corporation (Division (Division) Inc. Capitalization: Common equity $42,008,241 $13,324,150 $38,932,429 $3,164,513 $ $8,290,997 Redeemable preferred stock of subsidiaries - net 75 Partnerships' capital 21,511,898 Long-term debt - net Total Capitalization 42,008,316 34,836,048 38,932,429 3,164,513 8,290,997 Current Liabilities: Long-term debt due within one year 77,400,000 77,400,000 Notes payable 155,100 8,931,731 Accounts payable 3,225,701 (630,170) 1,457,874 9,349 Accounts payable - associated comp. 86,321 99,791 (13,470) Taxes accrued 74,891 8,035 Interest accrued 1,123,244 47,477 1,123,244 Other current liabilities 5,328,818 5,370,755 (2,819,043) Total Current Liabilities 87,394,075 8,349,038 85,459,699 (2,819,043) (4,121) Deferred Credits: Other deferred credits 2,076,911 (10,000) 1,871,102 Total Deferred Credits 2,076,911 (10,000) 1,871,102 Accumulated deferred taxes (2,542,753) 1,248,768 (3,128,959) Total Liabilities and Capitalization $128,936,549 $43,175,086 127,511,998 $345,470 $ $5,157,917 ( ) Denotes Contra The accompanying notes are an integral part of the financial statements.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING BALANCE SHEETS (2 of 3) December 31, 1999
EUA EUA EUA Cogenex EUA EUA Cogenex Citizens West MUPA WestCoast LIABILITIES Canada Corporation Corporation (Partner.) (Partnership) Capitalization: Common equity $691,728 $69,626 $4,183,098 $ $ Redeemable preferred stock of subsidiaries - net 75 Partnerships' capital 883,649 Long-term debt - net Total Capitalization 691,728 69,701 4,183,098 883,649 Current Liabilities: Long-term debt due within one year Notes payable 155,100 2,831,659 6,100,072 Accounts payable (116,911) 1,472,352 296,803 (834,428) Accounts payable - associated comp. Taxes accrued 66,836 20 Interest accrued 13,169 34,308 Other current liabilities 130,393 325,267 1,580,910 20,000 Total Current Liabilities 235,418 4,642,467 8,012,093 (814,428) Deferred Credits: Other deferred credits 169,218 Total Deferred Credits 169,218 Accumulated deferred taxes (6,182) 241,727 (898,107) Total Liabilities and Capitalization $1,090,182 $4,953,895 $11,297,084 $ $69,221 ( ) Denotes Contra The accompanying notes are an integral part of the financial statements.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING BALANCE SHEETS (3 of 3) December 31, 1999
EUA EUA EUA FRC II EC&S I EC&S II LIABILITIES (Partner.) (Partner.) (Partnership) Capitalization: Common equity $ $ $ Redeemable preferred stock of subsidiaries - net Partnerships' capital 871 10,868,116 9,759,262 Long-term debt - net Total Capitalization 871 10,868,116 9,759,262 Current Liabilities: Long-term debt due within one year Notes payable Accounts payable 347,088 (36,596) Accounts payable - associated comp. Taxes accrued Interest accrued Other current liabilities 185,080 535,456 Total Current Liabilities 532,168 498,860 Deferred Credits: Other deferred credits 26,591 Total Deferred Credits 26,591 Accumulated deferred taxes Total Liabilities and Capitalization $871 $11,400,284 $10,284,713 ( ) Denotes Contra The accompanying notes are an integral part of the financial statements.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF CAPITALIZATION (1 of 3) December 31, 1999
EUA EUA EUA EUA Day Matrix Cogenex Cogenex Day (fka Day I & NEM Consolidated Elimination Corporation (Division) (Division) Inc. Common Equity: Common Shares, $.01 par value $100 $1,400 $100 $ $ $1,100 Other Paid-In Capital 47,046,923 9,774,016 44,213,315 2,833,608 4,252,050 Retained Earnings (5,038,782) 25,351,306 (1,803,060) 330,904 (3,477,928) 4,037,847 Total Common Equity 42,008,241 35,126,722 42,410,355 3,164,512 (3,477,928) 8,290,997 Non-Redeemable Preferred: $.01 par value, 7,500 shares (1) 75 Total Non-Redeemable 75 Long-Term Debt: Unsecured Notes: 7.00% due 2000 50,000,000 50,000,000 9.6% due 2001 6,400,000 6,400,000 10.56% due 2005 21,000,000 21,000,000 77,400,000 77,400,000 Less portion due within one year 77,400,000 77,400,000 Total Long-Term Debt Total Capitalization $42,008,316 $35,126,722 $42,410,355 $3,164,512 ($3,477,928) $8,290,997 (The Preferred Stock shall be entitled to an annual dividend per share at a rate to 33% of the net income of Citizens Conservation Services divided by 7,500.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF CAPITALIZATION (2 of 3) December 31, 1999
EUA EUA EUA Cogenex EUA Cogenex Citizens West MUPA Canada Corporation Corporation (Partnership) Common Equity: Common Shares, $.01 par value $100 $100 $100 $ Other Paid-In Capital 5,521,966 Retained Earnings 982,302 69,526 (1,338,967) Total Common Equity 982,402 69,626 4,183,099 Non-Redeemable Preferred: $.01 par value, 7,500 shares (1) 75 Total Non-Redeemable 75 Long-Term Debt: Unsecured Notes: 7.00% due 2000 9.6% due 2001 10.56% due 2005 Less portion due within one year Total Long-Term Debt Total Capitalization $982,402 $69,701 $4,183,099 $ (The Preferred Stock shall be entitled to an annual dividend per share at a rate to 33% of the net income of Citizens Conservation Services divided by 7,500.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF CAPITALIZATION (3 of 3) December 31, 1999
EUA EUA EUA EUA West Coast FRC II EC&S I EC &S II (Partnership) (Partnership) (Partnership) (Partnership) Common Equity: Common Shares, $.01 par value $ $ $ $ Other Paid-In Capital Retained Earnings 883,649 872 10,868,117 9,759,262 Total Common Equity 883,649 872 10,868,117 9,759,262 Non-Redeemable Preferred: $.01 par value, 7,500 shares (1) Total Non-Redeemable Long-Term Debt: Unsecured Notes: 7.00% due 2000 9.6% due 2001 10.56% due 2005 Less portion due within one year Total Long-Term Debt Total Capitalization $883,649 $872 $10,868,117 $9,759,262 (The Preferred Stock shall be entitled to an annual dividend per share at a rate to 33% of the net income of Citizens Conservation Services divided by 7,500.
The accompanying notes are an integral part of the financial statements. EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING INCOME STATEMENTS (1 OF 3) FOR THE TWELVE MONTHS ENDED December 31, 1999
EUA EUA EUA EUA Day Matrix Cogenex Cogenex Day (fka Day I & NEM Consolidated Elimination Corporation (Division (Division) Inc. Operating Revenues $49,398,567 $ $15,367,438 $7,474,022 $45,156 $3,680,794 Operating Expenses: Operation 39,339,954 13,891,829 7,541,898 849,401 178,503 Maintenance 1,130,029 482,591 12,722 Depreciation and amortization 10,349,954 5,321,758 244,539 115,004 564,272 Taxes - Other than income 709,149 320,463 218,153 27,370 - Income (credit) (4,213,598) (5,105,669) 643,065 - Deferred 1,409,833 1,029,578 325,562 Total Operating Expenses 48,725,321 15,940,550 8,004,590 991,775 1,724,124 Operating Income 673,246 (573,112) (530,568) (946,619) 1,956,670 Other Income and Deductions: Interest and dividend income 5,276,413 831,719 5,196,275 156,487 Energy Related Assets Adjustment (5,133,251) (5,133,251) Income Tax Impact of Energy Related Assets Adjustments 1,303,032 1,303,032 Other (deductions) income - net (1,166,449) 3,033,271 1,845,091 264 Total Other Income 279,745 3,864,990 3,211,147 156,751 Income (Loss) Before Interest Charges 952,991 3,864,990 2,638,035 (373,817) (946,619) 1,956,670 Interest Charges: Interest on long-term debt 6,840,860 6,840,860 Other interest expense (principally short-term notes) 652,863 831,719 647,145 93,090 194,721 Allowance for borrowed funds used during construction (credit) (187,753) (84,526) (20,712) Total Interest Charges 7,305,970 831,719 7,403,479 72,378 194,721 Net (Loss) Income ($6,352,979) $3,033,271 ($4,765,444) ($446,195) ($1,141,340) $1,956,667 The accompanying notes are an integral part of the financial statements.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING INCOME STATEMENTS (2 OF 3) FOR THE TWELVE MONTHS ENDED December 31, 1999
EUA EUA EUA Cogenex EUA Cogenex Citizens West MUPA Canada Corporation Corporation (Partner) Operating Revenues $585,045 $12,722,048 $4,852,260 $ Operating Expenses: Operation 574,348 11,286,969 4,477,703 Maintenance 53,549 (9,756) 54,068 Depreciation and amortization 8,849 585,559 564,165 Taxes - Other than income 2,971 91,965 48,227 - Income (credit) (7,467) 136,774 119,699 - Deferred (6,182) 92,118 (31,243) Total Operating Expenses 626,068 12,183,629 5,232,619 Operating Income (41,023) 538,419 (380,359) Other Income and Deductions: Interest and dividend income 37,503 291,861 Energy Related Assets Adjustment Income Tax Impact of Energy Related Assets Adjustments Other (deductions) income - net (8,800) (244) (60,372) Total Other Income 28,703 (244) 231,489 Income (Loss) Before Interest charges (12,320) 538,175 (148,870) Interest Charges: Interest on long-term debt Other interest expense (principally short-term notes) 2,855 185,058 361,713 Allowance for borrowed funds used construction (credit) (45,902) (36,613) Total Interest Charges 2,855 139,156 325,100 Net (Loss) Income ($15,175) $399,019 ($473,970) $ The accompanying notes are an integral part of the financial statements.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING INCOME STATEMENTS (3 OF 3) FOR THE TWELVE MONTHS ENDED December 31, 1999
EUA EUA EUA EUA WestCoast FRC II EC&S I EC&S II (Partnership) (Partner.) (Partner.) (Partnership) Operating Revenues $230,966 $ $1,912,535 $2,528,303 Operating Expenses: Operation 21,881 38 421,186 96,198 Maintenance 20,479 146,315 370,061 Depreciation and amortization 113,918 800,500 2,031,390 Taxes - Other than income - Income (credit) - Deferred Total Operating Expenses 156,278 38 1,368,001 2,497,649 Operating Income 74,688 (38) 544,534 30,654 Other Income and Deductions: Interest and dividend income 111,134 141,971 172,901 Energy Related Assets Adjustment Income Tax Impact of Energy Related Assets Adjustments Other (deductions) income - net (150) 124,393 (33,360) Total Other Income 110,984 266,364 139,541 Income (Loss) Before Interest charges 185,672 (38) 810,898 170,195 Interest Charges: Interest on long-term debt Other interest expense (principally short-term notes) Allowance for borrowed funds used construction (credit) Total Interest Charges Net (Loss) Income $185,672 ($38) $810,898 $170,195 The accompanying notes are an integral part of the financial statements.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF CASH FLOWS (1 of 3) FOR THE TWELVE MONTHS ENDED December 31, 1999
EUA EUA EUA EUA Day Matrix Cogenex Cogenex Day (fka Day I & NEM Consolidated Elimination Corporation (Division) (Division) Inc CASH FLOW FROM OPERATING ACTIVITIES: Net (Loss) Income ($6,352,979) $3,033,271 ($4,765,444 ($446,195) ($1,141,340) $1,956,670 Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operating Activities: Depreciation and amortization 10,673,820 5,645,623 244,539 115,004 564,268 Deferred taxes 1,780,693 1,400,438 325,562 Gains on sales of investments in energy savings projects paid for with notes leases receivable (2,240,282) (1,837,014) Costs of energy savings cash sales type projects 16,958,111 5,800,818 Loss on disposition of Day & DayMetrix division assets 3,487,591 (9,673) 3,477,918 Undistributed Equity earnings of sub. (457,052) (3,033,271 (3,490,323) Collections of prin port of project notes and leases receivable 7,932,991 4,775,470 Other - net 1,625,632 4,482,915 3,919,235 1,776,314 12 Net Changes to Working Capital: Accounts receivable 4,409,834 9,435,545 10,441,090 624,709 Materials and supplies 23,798 18,489 (33,037) Accounts payable 1,473,234 (6,749,809 (2,464,447) (430,219) Accrued taxes 15,792 2,351 (10,830) Accrued interest (64,552) (1,116,780 (64,553) Other - net 1,286,729 (2,264,187 (2,545,368) (2,160) Net Cash Provided from (Used in) Oper. Activities 40,553,360 3,778,011 20,295,794 1,582,317 (1,059,373) 3,038,842 CASH FLOW FROM INVESTING ACTIVITIES: Expenditures for investments in energy savings projects (33,800,076) (18,900,475 (2,643,326) Collections on financing notes and leases receivable 14,732,529 14,732,529 Proceeds from sale of Day division assets 2,893,749 (1,787,014) 47,362 1,059,373 Investments in subsidiaries 785,347 9,448,824 10,234,171 Net Cash (Used in) Provided from Invest. Activities (15,388,451) 7,661,810 6,066,225 (2,595,964) 1,059,373 CASH FLOW FROM FINANCING ACTIVITIES: Redemption of Long-term debt (6,700,000) (6,700,000) Dividends declared (3,575,000) (2,800,000) Partner's contribution (withdrawal) (5,873,821) Net (decrease) increase in short-term debt (15,953,338) (1,991,000 (16,160,000) (150,000) Net Cash (Used in) Provided from Financial Activities (22,653,338) (11,439,82 (22,860,000) (2,950,000) NET (DECREASE) INCREASE IN CASH 2,511,571 3,502,019 (1,013,647) 88,842 Cash and temporary cash investments at beginning of year 2,782,421 (210,746) 1,359,116 18,120 Cash and temporary cash investment at end of year $5,293,992 $ $3,291,273 $345,469 $ $106,962 Cash paid during the year for: Interest (net of amounts capitalized) $7,171,247 $7,171,247 Income Taxes ($3,709,730) ($3,874,172) $212,275 Conversion of investments in energy savings projects to notes and leases receivable $1,922,492 $1,901,214 ( ) Denotes contra The accompanying notes are an integral part of the financial statements.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF CASH FLOWS (2 of 3) FOR THE TWELVE MONTHS ENDED December 31, 1999
EUA EUA EUA Cogenex EUA Cogenex Citizens West MUPA Canada Corporation Corporation (Partnerhip) CASH FLOW FROM OPERATING ACTIVITIES: Net (Loss) Income ($15,175) $399,019 ($473,970) $ Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operating Activities: Depreciation and amortization 8,852 585,558 564,166 Deferred taxes (6,182) 92,118 (31,243) Gains on sales of investments in energy savings projects paid for with note and leases rec. (191,903) (150,000) Costs of energy savings cash sale type projects 393,136 7,427,833 2,997,391 Loss on disposition of Day & DayMetrix division assets Undistributed Equity earnings of subsidiaries Collections of prin port of project notes and leases rec. 64,661 2,358,415 Other - net 103,955 1,353 355,164 11,574 Net Changes to Working Capital: Accounts receivable (199,519) 143,143 (481,653) (15,552) Materials and supplies 38,346 Accounts payable 153,241 684,732 (1,021,440 3,949 Accrued taxes 32,663 (159) (8,233) Accrued interest (437,444) (679,335) Other - net (48,909) 106,006 1,415,631 23,749 Net Cash Provided from (Used in) Operating Activities 294,820 9,002,159 4,883,239 23,720 CASH FLOW FROM INVESTING ACTIVITIES: Expenditures for investments in energy savings projects (787,337) (7,367,647 (3,633,283 ) Collections on financing notes and leases receivable Proceeds from sale of Day division assets Investments in subsidiaries Net Cash (Used in) Provided from Investing Activities (787,337) (7,367,647 (3,633,283 ) CASH FLOW FROM FINANCING ACTIVITIES: Redemption of Long-term debt Dividends declared (775,000) Partner's contribution (withdrawal) (23,720) Net (decrease) increase in short-term debt 207,420 (887,000) (954,758) Net Cash (Used in) Provided from Financing Activities 207,420 (1,662,000 (954,758) (23,720) NET (DECREASE) INCREASE IN CASH (285,097) (27,488) 295,198 Cash and temporary cash investment at beginning of year 317,043 27,488 157,788 Cash and temporary cash investment at end of year $31,946 $ $452,986 $ Cash paid during the year for: Interest (net of amounts capitalized) Income Taxes $31,865 ($79,698) Conversion of investments in energy savings projects to notes and leases receivable ($227,826) ( ) Denotes contra The accompanying notes are an integral part of the financial statements.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF CASH FLOWS (3 of 3) FOR THE TWELVE MONTHS ENDED December 31, 1999
EUA EUA EUA EUA WestCoast FRC II EC&S I EC&S II (Partnership) (Partner.) (Partner.) (Partnership) CASH FLOW FROM OPERATING ACTIVITIES: Net (Loss) Income $185,672 ($38) $810,898 $170,195 Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operating Activities Depreciation and amortization 113,918 800,503 2,031,389 Deferred taxes Gains on sales of investments in energy savings projects paid for with notes and leases receivable (61,365) Costs of energy savings cash sales type projects 134,968 203,965 Loss on disposition of Day & DayMetrix division assets Undistributed Equity earnings of subsidiaries Collections of prin port of project notes and leases rec. 117,526 160,759 456,160 Other - net 35,602 (84,668) (9,994) Net Changes to Working Capital: Accounts receivable 749,706 (35,602) 231,491 2,387,566 Materials and supplies Accounts payable (1,080,823 (82,325) 147,519 (1,186,762) Accrued taxes Accrued interest Other - net (3,817) (22,318) (51,108) 150,836 Net Cash Provided from (Used in) Operating Activities 82,182 (104,681 2,088,997 4,203,355 CASH FLOW FROM INVESTING ACTIVITIES Expenditures for investments in energy savings project 202,740 82,325 (601,530) (151,543) Collections on financing notes and leases receivable Proceeds from sale of Day division assets Investments in subsidiaries Net Cash (Used in) Provided from Investing Activities 202,740 82,325 (601,530) (151,543) CASH FLOW FROM FINANCING ACTIVITIES Redemption of Long-term debt Dividends declared Partner's contribution (withdrawal) (320,419) (29,682) (1,750,000 (3,750,000) Net (decrease) increase in short-term debt Net Cash (Used in) Provided from financing Activities (320,419) (29,682) (1,750,000 (3,750,000) NET (DECREASE) INCREASE IN CASH (35,497) (52,038) (262,533) 301,812 Cash and temporary cash investments at beginning of year 89,182 52,909 561,381 410,140 Cash and temporary cash investments at end of year $53,685 $871 $298,848 $711,952 Cash paid during the year for: Interest (net of amounts capitalized) Income Taxes Conversion of investments in energy savings projects to notes and leases receivable $249,104 ( ) Denotes contra The accompanying notes are an integral part of the financial statements.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL (1 of 3) December 31, 1999
EUA EUA EUA EUA Day Matrix Cogenex Cogenex Day (fka Day I & NEM Consolidated Elimination Corporation (Division (Division) Inc. Balance of retained earnings at beginning of year $1,314,197 $28,676,183 $2,962,384 $777,099 ($2,336,588) $2,081,178 Additions: Net Income (Loss) ($6,352,979) 3,033,271 (4,765,444) (446,195) (1,141,340) 1,956,669 Other additions 290,673 Total (5,038,782) 32,000,127 (1,803,060) 330,904 (3,477,928) 4,037,847 Deductions: Dividends 775,000 Partners withdrawals 5,873,821 Total 6,648,821 Balance of retained earnings at end of period (5,038,782) 25,351,306 (1,803,060) 330,904 (3,477,928) 4,037,847 Other Paid-In Capital at beginning of year 47,046,923 12,574,016 45,949,391 1,097,532 7,052,050 Additions: Other (1,736,076) 1,736,076 Total 47,046,923 12,574,016 44,213,315 2,833,608 7,052,050 Deductions: Return of Capital 2,800,000 2,800,000 Total 2,800,000 2,800,000 Other Paid-In Capital at end of period $47,046,923 $9,774,016 $44,213,315 $2,833,608 $4,252,050 ( ) Denotes Contra The accompanying notes are an integral part of the financial statements.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL (2 of 3) December 31, 1999
EUA EUA EUA Cogenex EUA Cogenex Citizens West MUPA Canada Corporation Corporation (Partnership) Balance of retained earnings at beginning of yr. $706,804 $445,507 ($864,998) $23,720 Additions: Net Income (Loss) (15,175) 399,019 (473,969) Other additions 290,673 Total 982,302 844,526 (1,338,967) 23,720 Deductions: Dividends 775,000 Partners withdrawals 23,720 Total 775,000 23,720 Balance of retained earnings at end of period 982,302 69,526 (1,338,967) Other Paid-In Capital at beginning of year 5,521,966 Additions: Other Total 5,521,966 Deductions: Return of Capital Total Other Paid-In Capital at end of period $5,521,966 ( ) Denotes Contra The accompanying notes are an integral part of the financial statements.
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL (3 of 3) December 31, 1999
EUA EUA EUA EUA West Coast FRC II EC&S I EC &S II (Partnership) (Partnerhip) (Partnership) (Partnership) Balance of retained earnings at beginning of year $1,018,396 $30,592 $11,807,219 $13,339,067 Additions: Net Income (Loss) 185,672 (38) 810,898 170,195 Other additions Total 1,204,068 30,554 12,618,117 13,509,262 Deductions: Dividends Partners withdrawals 320,419 29,682 1,750,000 3,750,000 Total 320,419 29,682 1,750,000 3,750,000 Balance of retained earnings at end of period 883,649 872 10,868,117 9,759,262 Other Paid-In Capital at beginning of year Additions: Other Total Deductions: Return of Capital Total Other Paid-In Capital at end of period ( ) Denotes Contra The accompanying notes are an integral part of the financial statements.
EUA ENERGY INVESTMENT AND SUBSIDIARY CONSOLIDATING BALANCE SHEETS (1 of 2) December 31, 1999
EUA EUA Energy Energy Eastern Investment Investment EUA Unicord ASSETS Consolidated Eliminations Corporation Transcapacity* Corporation* Utility plant and other investments: Utility plant in service $317,539 $ $317,539 $ $ Less accumulated provision for depreciation and amortization Net utility plant in service 317,539 317,539 Non-utility property 14,784,940 Less accumulated provision for depreciation 14,272,992 Net non-utility property 511,948 Investments in subsidiaries (at equity) 3,043,446 (11,431,245) (8,387,799) Total Utility Plant and Other Investments 3,872,933 (11,431,245) (8,070,260) Current Assets: Cash and temporary cash investments 347,901 327,430 Notes receivable 4,839,583 14,584,543 19,324,126 Accounts receivable - Net 4,943,541 4,321,277 Accounts receivable - associated companies 5,454 891,848 897,302 Other current assets 165,749 1,029,586 1,186,316 Total Current Assets 10,302,228 16,505,977 26,056,451 Deferred Debits: Other deferred debits 924,035 937,917 Total Deferred Debits 924,035 937,917 Total assets $15,099,196 $5,074,732 $18,924,108 $ $ ( ) Denotes Contra * Companies dissolved in 1999.
EUA ENERGY INVESTMENT AND SUBSIDIARY CONSOLIDATING BALANCE SHEETS (2 of 2) December 31, 1999
EUA EUA Compression ASSETS Bioten Renova Services* Utility plant and other investments: Utility plant in service $ $ $ Less accumulated provision for depreciation and amortization Net utility plant in service Non-utility property 14,784,940 Less accumulated provision for depreciation 14,272,992 Net non-utility property 511,948 Investments in subsidiaries (at equity) Total Utility Plant and Other Investments 511,948 Current Assets: Cash and temporary cash investments 20,471 Notes receivable 100,000 Accounts receivable - Net 372,264 250,000 Accounts receivable - associated companies Other current assets 9,019 Total Current Assets 472,264 279,490 Deferred Debits: Other deferred debits 22 (13,904) Total Deferred Debits 22 (13,904) Total assets $984,234 $265,586 $ ( ) Denotes Contra * Companies dissolved in 1999.
EUA ENERGY INVESTMENT AND SUBSIDIARY CONSOLIDATING BALANCE SHEETS (1 of 2) December 31, 1999
EUA EUA Energy Energy Eastern Investment Investment EUA Unicord LIABILITIES Consolidated Eliminations Corporation Transcapacity* Corporation* Capitalization: Common equity ($41,461,692) ($11,431,245) ($41,461,692) $ $ Total Capitalization (41,461,692) (11,431,245) (41,461,692) Current Liabilities: Notes Payable 59,687,334 14,584,543 59,687,334 Accounts payable 94,071 6,200 Accounts payable - associated companies 511,501 891,848 494,720 Taxes accrued (11,607) Interest accrued 828,813 1,029,586 828,812 Total Current Liabilities 61,110,112 16,505,977 61,017,066 Deferred Credits: Other deferred credits and other liabilities 595,755 406,000 Total Deferred Credits 595,755 406,000 Accumulated deferred taxes (5,144,979) (1,037,266) Total liabilities and capitalization $15,099,196 $5,074,732 $18,924,108 $ $ ( ) Denotes Contra * Companies dissolved in 1999.
EUA ENERGY INVESTMENT AND SUBSIDIARY CONSOLIDATING BALANCE SHEETS (2 of 2) December 31, 1999
EUA EUA Compression LIABILITIES Bioten Renova Services* Capitalization: Common equity ($11,514,827) $83,582 $ Total Capitalization (11,514,827) 83,582 Current Liabilities: Notes Payable 14,584,543 Accounts payable 87,871 Accounts payable - associated companies 891,848 16,781 Taxes accrued (11,607) Interest accrued 1,029,587 Total Current Liabilities 16,593,849 5,174 Deferred Credits: Other deferred credits and other liabilities 189,755 Total Deferred Credits 189,755 Accumulated deferred taxes (4,094,788) (12,925) Total liabilities and capitalization $984,234 $265,586 $ ( ) Denotes Contra * Companies dissolved in 1999.
EUA ENERGY INVESTMENT AND SUBSIDIARY CONSOLIDATING STATEMENTS OF CAPITALIZATION (1 of 2) December 31, 1999
EUA EUA Energy Energy Eastern Investment Investment EUA Unicord Consolidated Eliminations Corporation Transcapacity* Corporation* Common Equity: Common shares $1 $1 $1 $ $ Other paid-in capital 999 (2,135,708) (2,134,718) Retained earnings (41,462,692) (9,295,538) (39,326,975) Total Common Equity (41,461,692) (11,431,245) (41,461,692) Total Capitalization ($41,461,692) ($11,431,245) ($41,461,692) $ $ * Companies dissolved in 1999.
EUA ENERGY INVESTMENT AND SUBSIDIARY CONSOLIDATING STATEMENTS OF CAPITALIZATION (2 of 2) December 31, 1999
EUA EUA Compression Bioten Renova Services* Common Equity: Common shares $1 $ $ Other paid-in capital 9 Retained earnings (11,514,837) 83,582 Total Common Equity (11,514,827) 83,582 Total Capitalization ($11,514,827) $83,582 $ * Companies dissolved in 1999.
EUA ENERGY INVESTMENT AND SUBSIDIARY CONSOLIDATING INCOME STATEMENTS (1 of 2) FOR THE YEAR ENDED DECEMBER 31, 1999
EUA EUA Energy Energy Eastern Investment Investment EUA Unicord Consolidated Eliminations Corporation Transcapacity* Corporation* Operating Revenues $4,650,948 $ $ $418,666 $ Operating Expenses: Operation 7,682,466 241,408 2,234,184 Maintenance 4,049 1,756 Depreciation and amortization 328,890 39,861 175,738 Taxes - Other than income 47,691 9,603 532 Income Taxes - Current (credit) (5,955,389) (10,124,283) 4,168,644 - Deferred (credit) 879,706 795,527 (12,645) Total Operating Expenses 2,987,413 (9,036,128) 6,566,453 Operating Income (Loss) 1,663,535 9,036,128 (6,147,787) Other Income and Deductions: Interest and dividend income 601,074 1,338,854 1,875,215 5,006 Energy related asset adjustments (19,734,939) (5,350,000) Income tax impact of energy related asset adjustments 6,907,229 1,872,500 Equity in earnings of jointly-owned company (266,664) 5,355,286 5,088,622 Allowance for other funds used during construction Other income (deductions) - net (3,223,273) (26,651,032) 16,491,238 1,841,592 Total Other Income (15,716,573) 6,694,140 (23,164,695) 16,496,244 1,841,592 Loss Before Interest Charges (14,053,038) 6,694,140 (14,128,567) 10,348,457 1,841,592 Interest Charges: Other interest expense (principally short-term notes) 3,204,730 1,338,854 3,129,199 483,613 Total Interest Charges 3,204,730 1,338,854 3,129,199 483,613 Net Income (Loss) (17,257,768) 5,355,286 (17,257,766) 9,864,844 1,841,592 Earnings (Loss) Available for Common Shareholders ($17,257,768) $5,355,286 ($17,257,766) $9,864,844 $1,841,592 EUA Energy Common Shares outstanding 100 Loss per share ($172,577.68) ( ) Denotes Contra * Companies dissolved in 1999.
EUA ENERGY INVESTMENT AND SUBSIDIARY CONSOLIDATING INCOME STATEMENTS (2 of 2) FOR THE YEAR ENDED DECEMBER 31, 1999
EUA EUA Compression Bioten Renova Services* Operating Revenues $ 4,232,282 $ Operating Expenses: Operation 249,479 4,956,154 1,241 Maintenance 2,293 Depreciation and amortization 53,672 45,390 14,229 Taxes - Other than income 2,170 35,318 68 Income Taxes - Current (credit) 250 - Deferred (credit) 96,824 Total Operating Expenses 305,321 5,136,229 15,538 Operating Income (Loss) (305,321) (903,947) (15,538) Other Income and Deductions: Interest and dividend income 57,138 2,569 Energy related asset adjustments (14,384,939) Income tax impact of energy related asset adjustments 5,034,729 Equity in earnings of jointly-owned company Allowance for other funds used during constr. Other income (deductions) - net 394,298 4,411,487 289,144 Total Other Income (8,898,774) 4,414,056 289,144 Loss Before Interest Charges (9,204,095) 3,510,109 273,606 Interest Charges: Other interest expense (principally short-term notes) 798,033 114,860 17,879 Total Interest Charges 798,033 114,860 17,879 Net Income (Loss) (10,002,128) 3,395,249 255,727 Earnings (Loss) Available for Common Shareholders ($10,002,128) $3,395,249 $255,727 EUA Energy Common Shares outstanding Loss per share ( ) Denotes Contra * Companies dissolved in 1999.
EUA ENERGY INVESTMENT AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (1 of 2) FOR THE YEAR ENDED DECEMBER 31, 1999
EUA EUA Energy Energy Eastern Investment Investment EUA Unicord Consolidated Eliminations Corporation Transcapacity* Corporation* CASH FLOW FROM OPERATING ACTIVITIES: Net (Loss) Income ($17,257,768) $5,355,286 ($17,257,766) $9,864,844 $1,841,592 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: Depreciation and Amortization (352,737) (221,888) Deferred Taxes (4,301,577) 558,553 (12,645) Energy Related Asset Adjustment 19,734,939 Other - Net 8,641,897 (5,355,266) (1,562,438) 969,305 424,672 Changes in Operating Assets and Liabilities: Accounts receivable (1,249,701) (667,997) (4,794,049) 1,451,218 1,642 Material and supplies 895,715 Notes receivable 6,366,375 16,609,422 14,744,839 Accounts payable (1,212,173) 667,997 414,539 (42,937) (2,120) Accrued taxes (15,254) Other - net (19,361,730) (21) (40,620) (256,292) (20,690) Net Cash (Used In) Provided from Operating Activities (8,112,014) 16,609,421 (8,158,830) 11,973,493 2,245,096 CASH FLOW FROM FINANCING ACTIVITIES: Net increase in short-term debt 7,907,898 (16,609,421) 8,470,621 (12,477,640) (2,245,096) Net Cash Provided From Financing Activ. 7,907,898 (16,609,421) 8,470,621 (12,477,640) (2,245,096) NET INCREASE IN CASH (204,116) 311,791 (504,147) Cash and temporary cash investments at beginning of year 552,017 15,641 504,147 Cash and temporary cash investments at end of year $347,901 $ $327,432 $ $ Cash paid during the year for: Interest (Net of Amounts Capitalized) $1,881 $1,881 Income Taxes (Refund) ($112,356) ($116,418) $716 $864 ( ) Denotes Contra * Companies dissolved in 1999.
EUA ENERGY INVESTMENT AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (2 of 2) FOR THE YEAR ENDED DECEMBER 31, 1999
EUA EUA Compression Bioten Renova Services* CASH FLOW FROM OPERATING ACTIVITIES: Net (Loss) Income ($10,002,128) $3,395,249 $255,727 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: Depreciation and Amortization (125,235) (5,614) Deferred Taxes (5,016,450) 96,823 72,142 Energy Related Asset Adjustment 14,384,939 5,350,000 Other - Net 3,274,586 160,663 19,843 Changes in Operating Assets and Liabilities: Accounts receivable 224,573 1,141,832 57,086 Material and supplies 895,715 Notes receivable 8,158,000 72,958 Accounts payable 627,836 (1,498,348) (43,146) Accrued taxes (15,254) Other - net (12,258,121) (6,766,924) (19,104) Net Cash (Used In) Provided from Operating Activities (732,000) 2,832,714 336,934 CASH FLOW FROM FINANCING ACTIVITIES: Net increase in short-term debt 732,000 (2,844,474) (336,934) Net Cash Provided From Financing Activ. 732,000 (2,844,474) (336,934) NET INCREASE IN CASH (11,760) Cash and temporary cash investments at beginning of year 32,229 Cash and temporary cash investments at end of year $ $20,469 $ Cash paid during the year for: Interest (Net of Amounts Capitalized) Income Taxes (Refund) $2,026 $456 ( ) Denotes Contra * Companies dissolved in 1999.
EUA ENERGY INVESTMENT AND SUBSIDIARY CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL (1 of 2) December 31, 1999
EUA EUA Energy Energy Eastern Investment Investment EUA Unicord Consolidated Eliminations Corporation Transcapacity* Corporation* Balance of retained earnings at begin. of yr. ($24,204,924) ($16,786,541) ($24,204,924) ($9,864,843) ($1,841,592) Additions: Net Income (Loss) (17,257,769) 5,355,286 (17,257,769) 9,864,843 1,841,592 Balance of retained earnings at end of period ($41,462,693) ($11,431,255) ($41,462,693) $ $ ( ) Denotes Contra * Companies dissolved in 1999.
EUA ENERGY INVESTMENT AND SUBSIDIARY CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL (2 of 2) December 31, 1999
EUA EUA Compression Bioten Renova Services* Balance of retained earnings at begin. of yr. ($1,512,709) ($3,311,669) ($255,728) Additions: Net Income (Loss) (10,002,128) 3,395,251 255,728 Balance of retained earnings at end of period ($11,514,837) $83,582 $ ( ) Denotes Contra * Companies dissolved in 1999.
Notes To Consolidated Financial Statements December 31, 1999 (A) Nature of Operations and Summary of Significant Accounting Policies: General: Eastern Utilities Associates (EUA) is a public utility holding company headquartered in West Bridgewater, Massachusetts. Its subsidiaries are principally engaged in the generation, transmission, distribution and sale of electricity; energy related services such as energy management; and promoting the conservation and efficient use of energy. See "Generation Divestiture" below for a discussion of EUA's divestiture its of generating capacity. On April 19, 2000, EUA completed its merger with National Grid USA (formerly New England Electric System or NEES). National Grid USA purchased all of the outstanding common shares of EUA for $31.459 per share, or approximately $634 million. Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications: Certain prior period amounts on the financial statements have been reclassified to conform with current presentation. Basis of Consolidation: The consolidated financial statements include the accounts of EUA and all subsidiaries. All material intercompany transactions between the consolidated subsidiaries have been eliminated. System of Accounts: The accounts of EUA and its consolidated subsidiaries are maintained in accordance with the uniform system of accounts prescribed by the regulatory bodies having jurisdiction. Jointly Owned Companies: Montaup Electric Company (Montaup) follows the equity method of accounting for its stock ownership investments in jointly owned companies including four regional nuclear generating companies. Montaup's investments in these nuclear generating companies range from 2.5% to 4.5%. Three of the four facilities, Yankee Atomic, Connecticut Yankee and Maine Yankee, have been permanently shut down and are in the process of decommissioning. Montaup's share of total estimated costs for the permanent shutdown, decommissioning and recovery of the investment in Yankee Atomic, Connecticut Yankee and Maine Yankee is $1.1 million, $19.3 million and $25.5 million, respectively. These amounts are included with Other Liabilities on the Consolidated Balance Sheet as of December 31, 1999. Also, due to anticipated recoverability, a regulatory asset has been recorded for the same amount and is included with Other Assets. Montaup is currently entitled to electricity produced from the remaining facility, Vermont Yankee, based on its ownership interest and is billed for its entitlement pursuant to a contractual agreement which is approved by the Federal Energy Regulatory Commission (FERC). Vermont Yankee is under agreement to be sold to AmerGen Energy Company. Montaup also has a stock ownership investment of 3.27% in each of two companies which own and operate certain transmission facilities between the Hydro Quebec electric system and New England. EUA Ocean State Corporation (EUA Ocean State) follows the equity method of accounting for its 29.9% partnership interest in the Ocean State Power Project (OSP). Also, EUA Energy Investment Corporation (EUA Energy) follows the equity method of accounting for its 20% stock ownership in Separation Technologies, Inc. This ownership interest and Montaup's stock ownership investments are included in "Investments in Jointly Owned Companies" on the Consolidated Balance Sheet. Plant and Depreciation: Utility plant is stated at original cost. The cost of additions to utility plant includes contracted work, direct labor and material, allocable overhead, allowance for funds used during construction and indirect charges for engineering and supervision. For financial statement purposes, depreciation is computed on the straight-line method based on estimated useful lives of the various classes of property. On a consolidated basis, provisions for depreciation on utility plant were equivalent to a composite rate of approximately 3.7% in 1999 based on the average depreciable property balances at the beginning and end of each year. Beginning in 1998, coincident with billing a contract termination charge (CTC) to its retail affiliates, Montaup commenced recovery of its net investment in generation related assets through the CTC over a twelve-year period. The difference between the annual recovery and annual depreciation expense pursuant to generally accepted accounting principles is being deferred. Non-utility property and equipment of EUA Cogenex Corporation (EUA Cogenex) is stated at original cost. For financial statement purposes, depreciation on office furniture and equipment, computer equipment and real property is computed on the straight-line method based on estimated useful lives ranging from five to forty years. Project equipment is depreciated over the term of the applicable contracts or based on the estimated useful lives, whichever is shorter, ranging from five to fifteen years. Allowance for Funds Used During Construction (AFUDC) and Capitalized Interest: AFUDC represents the estimated cost of borrowed and equity funds used to finance the EUA System's construction program. In accordance with regulatory accounting, AFUDC is capitalized as a cost of utility plant in the same manner as certain general and administrative costs. AFUDC is not an item of current cash income but is recovered over the service life of utility plant in the form of increased revenues collected as a result of higher depreciation expense. The combined rate used in calculating AFUDC was 8.5% in 1999. The caption "Allowance for Borrowed Funds Used During Construction" also includes interest capitalized for non-regulated entities in accordance with FASB Statement No. 34. Operating Revenues: Utility revenues are based on billing rates authorized by applicable federal and state regulatory commissions. Eastern Edison Company (Eastern Edison), Blackstone Valley Electric Company (Blackstone) and Newport Electric Corporation (Newport) (collectively, the Retail Subsidiaries) accrue the estimated amount of unbilled revenues at the end of each month to match costs and revenues more closely. Montaup recognizes revenues when billed. In 1998, Montaup and the Retail Subsidiaries also began recording revenues in an amount management believes to be recoverable pursuant to provisions of approved settlement agreements and enabling state legislation. Provisions of the approved restructuring settlement agreements in conjunction with accounting provisions of SFAS 71 allow Montaup and the retail subsidiaries to accrue and/or defer revenue related to the future recovery of certain items. Montaup has accrued revenues and recorded associated regulatory assets and liabilities for certain items during 1999 commencing with the implementation of the aforementioned settlement agreements and billing of the Contract Termination Charge (CTC), January 1, 1998 in Rhode Island and March 1, 1998 in Massachusetts. Also, Montaup is normalizing the difference between GAAP depreciation expense on generation plant assets prior to divestiture and the recovery level included in the settlement agreements. Montaup normalizes for the difference in actual versus estimated CTC variable components costs and revenues. Montaup was authorized to accrue an amount of lost revenue equal to the difference in revenues Montaup would have collected under its previously approved rates and revenues collected pursuant to the settlement agreements. As directed by the settlement agreements, Montaup ceased accruing lost revenues, with the completion of the divestiture of its fossil generating assets, which occurred with the sale of the Somerset generating plant on April 26, 1999. The settlements also provide Montaup with a nuclear PBR provision under which Montaup normalizes expenses and revenues for 80% of going forward operations of Montaup's nuclear interests. Montaup was also allowed to accrue a return enhancement related to stranded investments charged to its Rhode Island retail affiliates during the generation divestiture period as an incentive to divest. Beginning in 1999, Montaup began accruing a similar revenue enhancement related to standard investments charged to its Massachusetts retail affiliate, Eastern Edison. Montaup has also accrued revenue related to the two-month delay in implementing the Massachusetts settlement agreement from January 1, 1998 to March 1, 1998. The retail companies normalize the difference between revenue and expenses from energy conservation programs. The retail companies normalize the difference between amounts billed to customers and the costs for standard offer/default service. The retail companies also normalize the difference between CTC revenue and expenses. Montaup refunds to the retail companies previous over or under recoveries related to the CTC rate mechanism. Montaup also accrues interest on reconciliation account balances owed to the retail companies. Settlement provisions and SFAS 71 also provide for Eastern Edison to accrue revenue equal to the approved deferral of standard offer costs which will be collected in the future. The following table reflects the nature and amount of accrued and/or deferred revenue and the associated balance sheet placement (000's). 1999 Balance Sheet Placement Depr. Normalization (GAAP vs. 12 year Straight line) (6,635) Other Liabilities/Regulatory Liabilities CTC Normalization (28,992) Other Liabilities/Regulatory Liabilities Lost revenue 24,599 Other Assets/Accrued CTC Assets Nuclear PBR 5,730 Other Assets/Other Regulatory Assets R.I. Return True-up 3,652 Other Assets/Accrued CTC Assets Mass. Mitigation Incentive 1,445 Other Assets/Accrued CTC Assets Mass. Delay Credit 768 Other Assets/Accrued CTC Assets CCA Normalization (5,019) Other Liabilities/Regulatory Liabilities Standard Offer/Default Service Deferral 13,917 Other Assets/Regulatory Assets Retail CTC Differential 4,322 Other Assets/Regulatory Assets Reconciliation Account Refund 7,141 Other Assets/Other Regulatory Assets Interest on Reconciliation Account (3,060) Other Liabilities/Regulatory Liabilities EUA Cogenex's revenues are recognized based on financial arrangements established by each individual contract. Under paid-from-savings contracts, revenues are recognized as energy savings are realized by customers. Revenue from the sale of energy savings projects and sales-type leases are recognized when the sales are complete. Interest on the financing portion of the contracts is recognized as earned at rates established at the outset of the financing arrangement. All construction and installation costs are recognized as contract expenses when the contract revenues are recorded. In circumstances in which material uncertainties exist as to contract profitability, cost recovery accounting is followed and revenues received under such contracts are first accounted for as recovery of costs to the extent incurred. Federal Income Taxes: EUA and its subsidiaries generally reflect in income the estimated amount of taxes currently payable, and provide for deferred taxes on certain items subject to temporary timing differences to the extent permitted by the various regulatory agencies. EUA's rate-regulated subsidiaries amortize previously deferred investment tax credits (ITC) over the productive lives of the related assets. Beginning in 1998, Montaup is amortizing previously deferred ITC related to generation investments recoverable through the CTC over a twelve-year period. Unamortized ITC related to the sales of generating units are reversed to Other Income on the Consolidated Income Statement at the time of sale pursuant to IRS regulations. Cash and Temporary Cash Investments: EUA considers all highly liquid investments and temporary cash investments with a maturity of three months or less when acquired to be cash equivalents. Accounts Receivable: Accounts Receivable - Customers, Net includes an allowance for doubtful accounts of approximately $1.1 million in 1999. Other Assets: The components of Other Assets at December 31, 1999 are detailed as follows: ($ in thousands) 1999 Regulatory Assets: Unamortized losses on reacquired debt $11,852 Unrecovered plant and decommissioning costs 48,659 Deferred FAS 109 costs (Note B) 40,922 Deferred FAS 106 costs 6,685 Mendon Road judgment (Note J) 6,154 Manufactured Gas Production Environmental Liability 21,158 Unrecovered CTC plant assets 209,667 Accrued CTC assets 262,607 Other regulatory assets 44,667 Total regulatory assets 652,371 Other deferred charges and assets: Split dollar life insurance premiums 33,721 Unamortized debt expenses 1,916 Goodwill 6,230 Other 44,888 Total Other Assets $739,126 Regulatory assets represent deferred costs for which future revenues are expected in accordance with regulatory practices. These costs are expensed when the corresponding revenues are received in order to appropriately match revenues and expenses. Unrecovered CTC plant assets increased in 1999 as a result of the divestiture of generation assets in 1999. Accrued CTC assets increased in 1999 as a result of the transfer of power contracts to various non-affiliated parties in 1999. Other Liabilities: The components of Other Liabilities at December 31, 1999 are detailed as follows: 1999 Unamortized investment tax credits $10,212 FAS 109 liability 8,122 FAS 106 liability 16,339 Decommissioning liabilities of jointly owned companies 45,955 Pension liability 33,925 Accrued CTC liabilities 41,391 Proceeds from divestiture of generation assets 109,525 Contract buyout payables 96,454 Manufactured gas production environmental liability 21,158 Other 35,172 Total Other Liabilities $418,253 Regulatory Accounting: Core Electric companies are subject to certain accounting rules that are not applicable to other industries. These accounting rules allow regulated companies, in appropriate circumstances, to establish regulatory assets and liabilities which defer the current financial impact of certain costs that are expected to be recovered in future rates. In light of approved restructuring settlement agreements and restructuring legislation in both Massachusetts and Rhode Island, EUA has determined that Montaup no longer will apply the provisions of Financial Accounting Standards Board's (FASB) Statement of Financial Accounting Standards No. 71 (FAS71), "Accounting for the Effects of Certain Types of Regulation" for the generation portion of its business. Montaup ceased applying SFAS 71 to its ongoing generation portion of its business effective January 1, 1998. Approved restructuring settlement agreements with parties in Massachusetts and Rhode Island, the two states in which Montaup operates, allow Montaup full recovery of stranded generation investments as of December 31, 1997 and as such Montaup incurred no asset impairment. As disclosed below in Generation Divestiture, Montaup has divested all of its generation assets and power purchase agreements with the exception of its 4.0% (46mw) ownership interest in the Millstone 3 nuclear station and its 12 mw entitlement from the Vermont Yankee nuclear unit. Post-divestiture ongoing generation operations will include the two aforementioned nuclear units in which Montaup will continue to have an interest. The approved settlement agreements also provide Montaup with recovery of 100% of embedded nuclear investments as of December 31, 1997 and recovery of 80% of its post 1997 on going nuclear generation operations. Because only 20% of Montaup's remaining nuclear operations will no longer be subject to the accounting treatment pursuant to SFAS 71 and would be subject to market risk, management believes that the discontinuation of SFAS 71 for Montaup's post-divestiture generation business will not have a material impact on EUA's results of operations or financial position. EUA believes its transmission and retail distribution businesses continue to meet the criteria for continued application of FAS71. Generation Divestiture: Terms of approved electric utility restructuring settlement agreements provide that EUA exit the electric generation business. Through separately negotiated agreements, EUA has completed the transfer of all of its non-nuclear generation assets and power purchase contracts to various non-affiliated parties, with the exception of its 4.0% (46 mw) ownership interest in the Millstone 3 nuclear station. Vermont Yankee has agreed to sell the 540-mw nuclear unit in which Montaup has a 2.5% equity (12 mw) interest. The sales of EUA's generating assets totaling 509 mw amounted to $133.2 million in aggregate. The net proceeds from the sales, as defined in the settlement agreements, have been recorded as a regulatory liability at the time of sale and will be returned to customers via a Residual Value Credit (RVC) through the year 2009. EUA has also agreed to make contribution payments to two parties in exchange for their assumption of all future obligations under six purchased power contracts. These fixed monthly payments ranging from $850,000 to $2.6 million, will be made from the effective date through 2009. EUA recorded a liability for these fixed contributions, and a regulatory asset for a like amount due to recoverability. In addition, in July 1999, EUA agreed to a buyout of its obligations under the Pilgrim Nuclear purchased power contract in conjunction with the sale of the unit by Boston Edison Co. (BEC) to Entergy Nuclear Generating Co. (Entergy). This agreement included a buyout payment by EUA to BEC of $111.7 million, along with a short-term, fixed-price purchased power agreement with Entergy for declining shares of the unit's output beginning with 11% in 1999 and ending with 5.5% in 2004. Entergy will assume all future operating and decommissioning obligations. Accordingly, in the third quarter of 1999, Montaup recorded a regulatory asset of approximately $111.7 million, a corresponding current liability of $105.6 million, and a long-term liability of $6.1 million. EUA will continue to attempt to sell and/or transfer its minority interest in Millstone 3. Until such time as this and the Vermont Yankee units are divested, EUA will share 80% of the operating costs and revenues associated with the units with customers and 20% with shareholders. (B) Income Taxes: EUA adopted FASB Statement No. 109, "Accounting for Income Taxes" (FAS109), which requires recognition of deferred income taxes for temporary differences that are reported in different years for financial reporting and tax purposes using the liability method. Under the liability method, deferred tax liabilities or assets are computed using the tax rates that will be in effect when temporary differences reverse. Generally, for regulated companies, the change in tax rates may not be immediately recognized in operating results because of ratemaking treatment and provisions in the Tax Reform Act of 1986. Total deferred tax assets and liabilities for 1999 include the following: Deferred Tax Deferred Tax Assets Liabilities (In thousands) 1999 1999 Plant Related Plant Related Differences $14,085 Differences $117,444 Deregulation 12,877 Refinancing NOL Costs 1,247 Carryforward 2,554 Deregulation 62,681 Employee Benefit Employee Accruals 5,686 Benefit Accruals 5,791 Acquisitions 3,018 Other 18,475 Other 21,108 Total $205,638 Total $59,328 As of December 31, 1999, EUA has recorded on its Consolidated Balance Sheet a regulatory liability to ratepayers of approximately $8.1 million. These amounts primarily represent excess deferred income taxes resulting from the reduction in the federal income tax rate and also include deferred taxes provided on investment tax credits. Also at December 31, 1999 a regulatory asset of approximately $41.0 million, has been recorded, representing the cumulative amount of federal income taxes on temporary depreciation differences which were previously flowed through to ratepayers. NOTE B - INCOME AND DEFERRED TAXES: Components of income and deferred tax expense for Eastern Utilities Associates and Subsidiary Companies for 1999 are as follows:
Blackstone Eastern EUA Valley Newport Eastern EUA Utilities Service Electric Electric Edison Consolidated Associates Corporation Company Company Consolidated Federal: Current $606,826 $28 $76,877 3,257,527 $1,866,869 $6,601,250 Deferred 14,327,748 (216,810) 37,164 368,753 566,751 11,515,044 Investment tax credit, Net (1,264,364) 0 0 (176,390) (3,966) (1,084,008) 13,670,210 (216,782) 114,041 3,449,890 2,429,654 17,032,286 State: Current 2,058,310 0 55,227 146 2,052 1,859,628 Deferred 3,168,259 0 5,892 30,266 0 2,907,445 5,226,569 0 61,119 30,412 2,052 4,767,073 Charged to Operations (Federal & State) 18,896,779 (216,782) 175,160 3,480,302 2,431,706 21,799,359 Charged to Other Income: Current 215,947 (1,694,338) 0 (24,699) (5,273) (2,021,101) Deferred (8,879,475) (794,328) 0 0 0 (2,977,120) Investment Tax Credit, Net (4,914,696) 0 0 0 (80,658) (4,834,038) Total $5,318,555 ($2,705,448) $175,160 3,455,603 $2,345,775 11,967,100 Federal income tax expense was different than the amounts computed by applying the statutory rates to book income subject to tax for the following reasons: Tax Computed at Statutory Rates $8,589,681 ($706,048) $149,091 3,219,396 $2,417,674 13,825,622 (Decrease) Increase in Tax From: Equity Component of AFUDC (96,742) (34,283) (3,525) (58,934) Depreciation of Equity AFUDC 2,181,208 4,242 271,952 103,228 1,766,879 Amortization and Utilization of ITC (6,179,060) (176,390) (84,624) (5,918,046) State Tax, Net of Federal Income Tax Benefit 3,040,966 0 39,727 19,768 1,334 2,697,265 Other (2,217,498) (1,999,400) (17,900) 155,160 (88,312) (345,686) Total $5,318,555 ($2,705,448) $175,160 3,455,603 $2,345,775 11,967,100 * Companies dissolved in 1999.
NOTE B - INCOME AND DEFERRED TAXES: (Continued) Components of income and deferred tax expense for Eastern Utilities Associates and Subsidiary Companies for 1999 are as follows:
EUA EUA EUA EUA Energy Energy EUA Telecom- Cogenex Investment Services Ocean munications Consolidated Consolidated Corpor. Corpor. Corporation* Federal: Current ($4,349,788) ($5,959,745) ($273) ($925,057) $39,138 Deferred 1,204,966 859,919 0 (7,967) (72) Investment tax credit, Net 0 0 0 0 (3,144,822) (5,099,826) (273) (933,024) 39,066 State: Current 136,190 4,361 706 Deferred 204,867 19,789 0 341,057 24,150 706 Charged to Operations (Federal & State) (2,803,765) (5,075,676) 433 (933,024) 39,066 Charged to Other Income: Current 656,085 191,296 0 3,113,681 296 Deferred 365,667 (5,181,144) 0 (292,550) 0 Investment Tax Credit, Net 0 0 0 Total ($1,782,013) (10,065,524) $433 $ 1,888,107 $39,362 Federal income tax expense was different than the amounts computed by the rates to book income subject for the following reasons: Tax Computed at Statutory Rates ($2,847,247) ($9,563,153) $12,432 $2,022,239 $59,675 (Decrease) Increase in Tax From: Equity Component of AFUDC Depreciation of Equity AFUDC (6,182) 41,089 Amortization and Utilization of ITC State Tax, Net of Federal Income Tax Benefit 263,638 17,213 459 1,266 296 Other 807,778 (519,584) (12,458) (176,487) (20,609) Total ($1,782,013) ($10,065,524) $433 $1,888,107 $39,362 * Companies dissolved in 1999.
NOTE B - INCOME AND DEFERRED TAXES (continued): Components of income and deferred tax expense for Eastern Edison Company and Subsidiary for 1999 are as follows:
Eastern Eastern Montaup Edison Edison Electric Consolidated Company Company Federal: Current $6,601,250 $4,963,904 $1,637,346 Deferred 11,515,044 2,106,727 9,408,317 Investment tax credit, Net (1,084,008) (301,776) (782,232) 17,032,286 6,768,855 10,263,431 State: Current 1,859,628 1,061,515 798,113 Deferred 2,907,445 1,549,908 1,357,537 4,767,073 2,611,423 2,155,650 Charged to Operations (Federal & State) 21,799,359 9,380,278 12,419,081 Charged to Other Income: Current (2,021,101) (21,978) (1,999,123) Deferred (2,977,120) 0 (2,977,120) Investment Tax Credit, Net (4,834,038) 0 (4,834,038) Total $11,967,100 $9,358,300 $2,608,800 Federal income tax expense was different than the amounts computed by applying the statutory rates to book income subject to tax for the following reasons: Eastern Eastern Montaup Edison Edison Electric Consolidated Company Company Tax Computed at Statutory Rates $13,825,622 $8,070,196 $5,755,426 (Decrease) Increase in Tax From: Equity Component of AFUDC (58,934) 0 (58,934) Depreciation of Equity AFUDC 1,766,879 (246,741) 2,013,620 Amortization and Utilization of ITC (5,918,046) (301,776) (5,616,270) State Tax, Net of Federal Income Tax Benefit 2,697,265 1,694,903 1,002,362 Other (345,686) 141,718 (487,404) Total $11,967,100 $9,358,300 $2,608,800
NOTE B - INCOME AND DEFERRED TAXES (continued): Components of income and deferred tax expense for EUA Cogenex and Subsidiary Companies for 1999 are as follows:
EUA EUA Cogenex EUA EUA EUA Cogenex Corporation Cogenex Cogenex Cititzens West Consolidated Corporation NEM Inc. Canada Corporation Corporation Federal: Current ($4,349,788) ($5,181,694) $642,609 ($7,468) $102,724 $94,041 Deferred 1,204,966 827,962 316,455 (6,182) 93,918 (27,187) (3,144,822) (4,353,732) 959,064 (13,650) 196,642 66,854 State: Current 136,190 76,026 456 0 34,050 25,658 Deferred 204,867 201,616 9,107 0 (1,800) (4,056) 287,205 277,642 9,563 0 32,250 21,602 Charged to Operations (Federal & State) (2,803,765) (4,076,090) 968,627 (13,650) 228,892 88,456 Charged to Other Income: Current 656,085 656,085 0 0 0 0 Deferred 365,667 365,667 0 0 0 0 Total ($1,782,013) ($3,054,338) $968,627 ($13,650) $228,892 $88,456 Federal income tax expense was different than the amounts computed by applying the statutory rates to book income subject to tax for the following reasons: Tax Computed at Statutory Rates ($2,847,247 ($3,945,851) $1,023,854 ($10,089) $219,769 ($134,930) (Decrease) Increase in Tax From: Depreciation of Equity AFUDC (6,182) 0 0 (6,182) 0 0 State Tax, Net of Federal Income Tax Benefit 263,638 222,418 6,216 0 20,963 14,041 Other 807,778 669,095 (61,443) 2,621 (11,840) 209,343 Total ($1,782,013 ($3,054,338 $968,627 ($13,650) $228,892 $88,456
NOTE B - INCOME AND DEFERRED TAXES (continued): Components of income and deferred tax expense for EUA Energy Investment and Subsidiary Companies for 1999 are as follows:
EUA Energy EUA Energy Eastern EUA Investment Investment EUA Unicord EUA Compression Consolidated Corporation Transcapacity* Corpor.* Bioten Services* Federal: Current ($5,959,745) ($10,125,848) $4,166,103 $ $ $ Deferred 859,919 872,564 (12,645) 0 0 0 Investment tax credit, Net 0 0 0 0 0 0 (5,099,826) (9,253,284) 4,153,458 0 0 0 State: Current 4,361 1,820 2,541 0 0 0 Deferred 19,789 19,789 0 0 0 0 24,150 21,609 2,541 0 0 0 Charged to Operations (Federal & State) (5,075,676) (9,231,675) 4,155,999 Charged to Other Income: Current 191,296 0 596,382 (412,578) 7,492 Deferred (5,181,144) (236,836) 0 (5,016,450) 72,142 Total ($10,065,524) ($9,468,511) $4,155,999 $596,382 ($5,429,028) $79,634 Federal income tax expense was different than the amounts computed by applying the statutory rates to book income subject to tax for the following reasons: Tax Computed at Statutory Rates ($9,563,153) ($10,040,210) $4,907,295 $853,291 ($5,400,905) $117,376 Increase (Decrease) in Tax From: State Tax, Net of Federal Income Tax Benefit 17,213 14,046 1,652 0 1,219 296 Other (519,584) 557,653 (752,948) (256,909) (29,342) (38,038) Total ($10,065,524) ($9,468,511) $4,155,999 $596,382 ($5,429,028) $79,634 * Companies dissolved in 1999.
(C) Capital Stock: The Agreement and Plan of Merger dated February 1, 1999 by and among New England Electric System (NEES) and EUA, which was approved by EUA shareholders and is subject to various regulatory agencies' approval, provides for NEES to purchase all of the outstanding EUA shares for $31 per share in cash. The transaction was completed on April 19, 2000. The merger agreement contained an upward price adjustment because the merger did not close within six months from May 17, 1999, the date EUA shareholders approved the merger plan. Therefore, since November 17, 1999, NEES paid an additional $0.003 per day per share for EUA's outstanding common stock, or $31.459 per share. There was no change in the number of common shares outstanding during 1999. As permitted, the Company accounts for its stock-based compensation, as discussed below, using the method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB25) and as permitted under FASB Statement No. 123, "Accounting for Stock-Based Compensation" (FAS123). The Company established a Restricted Stock Plan in 1989. Under the Restricted Stock Plan, executives and certain key employees may be granted restricted common shares of the Company. In 1998, 1997 and 1995, approximately 74,000 shares, 95,000 shares, and 61,000 shares, respectively, of restricted common shares, valued at approximately $1.8 million and $2.4 million, and $1.4 million respectively, were granted. The issued shares are restricted for a period ranging from two to five years and all shares are subject to forfeiture if specified employment services are not met. There are no exercise prices related to these share grants. During the applicable restriction period, the recipient has all the voting, dividend, and other rights of a record holder except that the shares are nontransferable. The annual compensation expense related to these grant awards was approximately $1.6 million in 1999 and 1998 and was immaterial for 1997. There are no material differences in the Company recording its annual compensation expense under APB25 from the requirements under FAS123. All of the restricted shares became immediately vested upon the completion of EUA's merger with NEES. The preferred stock provisions of the Retail Subsidiaries place certain restrictions upon the payment of dividends on common stock by each company. At December 31, 1999 each company was in excess of the minimum requirements which would make these restrictions effective. In the event of involuntary liquidation, the holders of non-redeemable preferred stock of the Retail Subsidiaries are entitled to $100 per share plus accrued dividends. In the event of voluntary liquidation, or if redeemed at the option of these companies, each share of the non-redeemable preferred stock is entitled to accrued dividends plus the following: Company Issue Amount Blackstone: 4.25% issue $104.40 5.60% issue 103.82 Newport: 3.75% issue 103.50 In July 1999, EUA filed an application under the Public Utility Holding Company Act with the Securities and Exchange Commission (SEC) requesting authorization for Eastern Edison to transfer all its investment in Montaup, including Montaup's preferred stock, common stock and debenture bonds, to EUA. Montaup would then become a wholly-owned subsidiary of EUA. Also related to this transfer, Eastern Edison filed a Petition for Approval of the transfer or Request for Alternative Findings of No Jurisdiction with the DTE. A public hearing was held at the DTE on October 18, 1999 at which no one from the public intervened. Eastern Edison received an order from the DTE on January 4, 2000, approving the transfer. SEC approval was received on February 4, 2000 and the transfer of Montaup from Eastern Edison to EUA was consummated with a filing at the DTE on February 17, 2000. (D) Redeemable Preferred Stock: Eastern Edison's 6 5/8% Preferred Stock issue is entitled to an annual mandatory sinking fund sufficient to redeem 15,000 shares commencing September 1, 2003. The redemption price is $100 per share plus accrued dividends. All outstanding shares of the 6 5/8% issue are subject to mandatory redemption on September 1, 2008, at a price of $100 per share plus accrued dividends. In the event of liquidation, the holders of Eastern Edison's 6 5/8% Preferred Stock are entitled to $100 per share plus accrued dividends. (E) Long-Term Debt: The various mortgage bond issues of Blackstone, Eastern Edison, and Newport are collateralized by substantially all of their utility plant. In April 1999, Montaup completed the sale of its Somerset Station to NRG Energy Inc. for approximately $55 million. In July 1999, Montaup used the proceeds from this sale to redeem $54.8 million of its outstanding securities wholly-owned by Eastern Edison. Eastern Edison used these proceeds along with a capital contribution from EUA to redeem $40 million of 8%, $40 million of 6 7/8%, and $8 million of 6.35% First Mortgage and Collateral Trust Bonds. These First Mortgage bonds were collateralized by securities of Montaup, which were wholly-owned by Eastern Edison. The principal amount of Montaup securities wholly-owned by Eastern Edison at December 31, 1999 was approximately $134 million. See Note C -Capital Stock for a discussion of Eastern Edison's transfer of its investment in Montaup to EUA in February 2000. In August 1999, Eastern Edison used short term borrowings to redeem its $35 million 7.78% Secured Medium Term notes. In September 1999, Newport used short-term borrowings to redeem $1.4 million of 9% and $8 million of 9.8% First Mortgage Bonds at maturity. In November 1999, Newport used available cash to redeem the remaining balance of approximately $440,000 of its 6.5% Small Business Administration Loan. Blackstone's Variable Rate Demand Bonds are collateralized by an irrevocable Letter of Credit which expires on July 31, 2000. The letter of credit permits an extension of one year upon mutual agreement of the bank and Blackstone. Newport's Variable Rate Electric Energy Facilities Revenue Refunding Bonds are collateralized by an irrevocable Letter of Credit which expires on January 6, 2000, and permits an extension of one year upon mutual agreement of the bank and Newport. EUA Service Corporation's (EUA Service) 10.2% Secured Notes due 2008 are collateralized by certain real estate and property of the company. The EUA System's aggregate amount of current cash sinking fund requirements and maturities of long-term debt, (excluding amounts that may be satisfied by available property additions) for each of the five years following 1999 are: $62.5 million in 2000, $14.2 million in 2001, $10.4 million in 2002, $11.9 million in 2003, and $11.5 million in 2004. EUA Cogenex was not in compliance with the interest coverage covenant contained in certain of its unsecured note agreements at December 31, 1999. EUA Cogenex is seeking a waiver from note holders. Under the terms of these note agreements, since EUA Cogenex was not in compliance with certain covenants, the note holders may, with written notice to EUA Cogenex, declare the notes immediately due and payable. Accordingly, $20.7 million of long-term debt has been reclassified as current maturities of long-term debt on the Consolidated Balance Sheet as of December 31, 1999. It is anticipated that EUA Cogenex will be in compliance by the end of the second quarter of 2000. EUA Cogenex is marketing the sale of a portfolio of certain of its project cash flows. EUA Cogenex is currently negotiating the terms of a sale agreement with interested lenders. In early 2000, EUA filed a request with the SEC to allow for EUA's guarantee of EUA Cogenex's ongoing performance obligations related to the projects to be sold. SEC approval of EUA's guarantee is expected in late March or April of 2000 and the sale of the portfolio is expected to be completed in the second quarter of 2000. EUA Cogenex intends to redeem all of its long-term debt of approximately $77 million with the proceeds from the sale. (F) Fair Value Of Financial Instruments: The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate: Cash and Temporary Cash Investments: The carrying amount approximates fair value because of the short-term maturity of these instruments. Long Term Notes Receivable and Net Investment in Sales-Type Leases: The fair value of these assets are based on market rates of similar securities. Preferred Stock and Long-Term Debt of Subsidiaries: The fair value of the System redeemable preferred stock and long-term debt were based on quoted market prices for such securities at December 31, 1999. The estimated fair values of the System's financial instruments at December 31, 1999 were as follows: Carrying Fair ($ in thousands) Amount Value 1999 1999 EUA Cash and Temporary Cash Investments $ 91 $ 91 Redeemable Preferred Stock - - Long-Term Debt - - EUA Service Cash and Temporary Cash Investments 762 762 Redeemable Preferred Stock - - Long-Term Debt 5,100 5,250 Blackstone Cash and Temporary Cash Investments 99 99 Redeemable Preferred Stock - - Long-Term Debt 32,000 33,936 Newport Cash and Temporary Cash Investments 60 60 Redeemable Preferred Stock - - Long-Term Debt 9,225 9,244 Eastern Edison - Consolidated Cash and Temporary Cash Investments 788 788 Redeemable Preferred Stock 30,000 30,525 Long-Term Debt 40,000 39,666 EUA Cogenex - Consolidated Cash and Temporary Cash Investments 5,294 5,294 Redeemable Preferred Stock - - Long-Term Notes Receivable and Net Investment in Sales-Type Leases 35,499 35,603 Long-Term Debt 77,400 79,293 EUA Energy - Consolidated Cash and Temporary Cash Investments 348 348 Redeemable Preferred Stock - - Long-Term Debt - - EUA Ocean State Cash and Temporary Cash Investments 38 38 Redeemable Preferred Stock - - Long-Term Debt 23,637 24,860 (G) Lines Of Credit: In July 1997, several EUA System companies entered into a three-year revolving credit agreement allowing for borrowings in aggregate of up to $225 million, as amended in November 1999, from all sources of short-term credit. On November 23, 1999, Eastern Edison and Montaup entered into a $60 million credit agreement to facilitate the buy out of the Pilgrim Station purchase power agreement between Montaup and Boston Edison and for other general corporate purposes. As of December 31, 1999, various financial institutions have committed up to $75 and $60 million under each of the respective credit facilities. In addition to the $135 million available under these credit facilities, EUA System companies maintain short-term lines of credit with various banks totaling $90 million for an aggregate amount available of $225 million. At December 31, 1999, the EUA System had unused short-term lines of credit of approximately $81.0 million. During 1999, the weighted average interest rate for short-term borrowings was 5.5%. (H) Jointly Owned Facilities: At December 31, 1999, in addition to the stock ownership interests discussed in Note A, Nature of Operations and Summary of Significant Accounting Policies - Jointly Owned Companies, Montaup had direct ownership interests in the following electric generating facility: Accumulated Net Utility Provision for Utility Construction Percent Plant in Depreciation Plant in Work in ($ in thousands) Owned Service & Amortization Service Progress Montaup: Millstone Unit 3 4.01% $178,359 $64,785 $113,574 $485 The foregoing amounts represent Montaup's interest in Millstone Unit 3, including nuclear fuel where appropriate, and are included on the like- captioned lines on the Consolidated Balance Sheet. At December 31, 1999 Montaup's total net investment in nuclear fuel amounted to $2.2 million. Montaup's share of related operating and maintenance expenses of Millstone Unit 3 reflected in the preceding table are included in the corresponding operating expenses. (I) Financial Information By Business Segments: Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information (SFAS 131), requires disclosure of certain financial and descriptive information by operating segments. The Core Electric Business includes results of the electric utility operations of Blackstone, Eastern Edison, Newport and Montaup. Energy Related Business includes results of our diversified energy-related subsidiaries, EUA Cogenex, EUA Ocean State and EUA Energy. EUA Telecommunications and EUA Energy Services, which were included in Energy Related Business, were dissolved in 1999. Corporate results include the operations of EUA Service and EUA Parent. EUA does not have any intersegment revenues. Financial data for the business segments are as follows: Year Ended December 31, 1999 ($ in thousands) Core Electric Energy Related Corporate Total Operating Revenues $499,717 $54,050 $ $553,767 Pre-Tax Operating Income 82,237 (5,922) (2,152) 74,163 Income Taxes 17,769 (9,920) (2,530) 5,319 Depreciation and Amortization 33,740 10,764 6 44,510 Cash Construction Expenditures 23,877 33,015 147 57,039 Equity in Subsidiary Earnings 839 8,394 9,233 Net Interest Charges 21,353 9,932 5,793 37,078 Net Interest Income 1,774 5,879 17 7,670 Net Earnings 35,534 (19,638) 1,022 16,918 Years ended December 31, ($ in thousands) 1999 Total Plant and Other Investments Core Electric $450,885 Energy Related 136,395 Corporate 17,753 Total Plant and Other Investments 605,033 Other Assets Core Electric 768,183 Energy Related 56,513 Corporate 38,124 Total Other Assets 862,820 Total Assets $1,467,853 (J) Commitments And Contingencies: Nuclear Fuel Disposal and Nuclear Plant Decommissioning Costs: The owners (or lead participants) of the nuclear units in which Montaup has an interest have made, or expect to make, various arrangements for the acquisition of uranium concentrate, the conversion, enrichment, fabrication and utilization of nuclear fuel and the disposition of that fuel after use. The owners (or lead participants) of United States nuclear units have entered into contracts with the Department of Energy (DOE) for disposal of spent nuclear fuel in accordance with the Nuclear Waste Policy Act of 1982 (NWPA). The NWPA requires (subject to various contingencies) that the federal government design, license, construct and operate a permanent repository for high level radioactive wastes and spent nuclear fuel and establish a prescribed fee for the disposal of such wastes and nuclear fuel. The NWPA specifies that the DOE provide for the disposal of such waste and spent nuclear fuel starting in 1998. Objections on environmental and other grounds have been asserted against proposals for storage as well as disposal of spent nuclear fuel. The DOE now estimates that a permanent disposal site for spent fuel will not be ready to accept fuel for storage or disposal until as late as the year 2010. In early 1998, a number of utilities filed suit in federal appeals court seeking, among other things, an order requiring the DOE to immediately establish a program for the disposal of spent nuclear fuel. On May 5, 1998, the Court of Appeals denied several motions brought in the proceeding, including several motions for injunctive relief brought by the utility petitioners. In particular, the Court denied the requests to require the DOE to immediately establish a program for the disposal of spent nuclear fuel. In late October and early November 1998, the U.S. Court of Federal Claims issued rulings with respect to Yankee Atomic, Maine Yankee, and Connecticut Yankee finding that the DOE was financially responsible for failing to accept spent nuclear fuel. These rulings clear the way for Yankee Atomic, Connecticut Yankee and Maine Yankee to pursue at trial their individual damage claims. The DOE filed a motion to stay the case pending resolution of its appeal request granted by the Appeals Court. In October 1999, the Court issued a stay order on the damage claims. Montaup owns a 4.01% interest in Millstone 3. Northeast Utilities, the operator of the units, indicates that Millstone 3 has sufficient on-site storage facilities which, with rack additions, can accommodate its spent fuel for the projected life of the unit. The Energy Policy Act of 1992 requires that a fund be created for the decommissioning and decontamination of the DOE uranium enrichment facilities. The fund will be financed in part by special assessments on nuclear power plants in which Montaup has an interest. These assessments are calculated based on the utilities' prior use of the government facilities and have been levied by the DOE, starting in September 1993, and will continue over 15 years. This cost is passed on to the joint owners or power buyers as an additional fuel charge on a monthly basis and is currently being recovered by Montaup through rates. Montaup has a 4.5% equity ownership in Connecticut Yankee, a nuclear generating facility which is in the process of decommissioning. Montaup's share of the total estimated costs for the permanent shutdown, decommissioning, and recovery of the investment in Connecticut Yankee is approximately $19.3 million. On August 31, 1998, a FERC law judge rejected Connecticut Yankee's filed plan to decommission the plant. The judge claimed that estimates of clean-up costs were flawed and certain restoration costs were not supported. The judge also said Connecticut Yankee could not pass on spent fuel storage costs to rate-payers. The judge recommended that Connecticut Yankee withdraw its decommissioning plan and submit a new plan which addresses the issues cited by him. FERC will review the judge's recommendations and issue a decision on this case in the coming months. If FERC concurs with the judge's recommendation, this may result in a write down of certain of Connecticut Yankee plant investments. Montaup cannot predict the ultimate outcome of FERC's review. Also, Montaup is recovering through rates its share of estimated decommissioning costs for Millstone 3. Montaup's share of the current estimate of total costs to decommission Millstone 3 is approximately $24.8 million in 1999 dollars. This figure is based on studies performed for Northeast Utilities, the lead owner of the unit. Montaup also pays into decommissioning reserves pursuant to contractual arrangements with other nuclear generating facilities in which it has an equity ownership interest. Such expenses are currently recoverable through rates. Pensions: EUA maintains a noncontributory defined benefit pension plan (Retirement Plan) covering most of the employees of the EUA System. Retirement Plan benefits are based on years of service and average compensation over the four years prior to retirement. It is the EUA System's policy to fund the Retirement Plan on a current basis in amounts determined to meet the funding standards established by the Employee Retirement Income Security Act of 1974. Total pension (income) expense for the Retirement Plan, including an amount related to the 1997 voluntary retirement incentive offer, for 1999 included the following components: (In thousands) 1999 Service cost $3,051 Interest cost 10,776 Expected return on assets (16,797) Net amortization: Prior service cost 763 Net actuarial gain (556) Transition asset (274) Net periodic pension income $(3,037) Subsidiary curtailment* Total periodic pension income expense $(3,037) * During 1999, Montaup recorded a regulatory asset of approximately $2.7 million related to the cost of offering an early retirement plan and a $700,000 gain due the curtailment of the plan. This amount will be recovered as part of Montaup's CTC billed to its retail affiliates. Assumptions to determine pension costs: 1999 Discount rate 6.75% Compensation increase rate 4.25% Long-term return on assets 9.50% The following tables set forth the actuarial present value of projected benefit obligations, fair value of assets and funded status at December 31, 1999: Reconciliation of Projected Benefit Obligation (In thousands) 1999 Beginning of year benefit obligation $159,458 Service cost 3,051 Interest cost 10,776 Actuarial (gain) loss (20,760) Disbursements (10,959) Plan amendments 3,656 Special benefit termination cost 2,676 Curtailment gain (1,038) End of year benefit obligation $146,860 Reconciliation of Fair Value of Assets (In thousands) 1999 Beginning of year fair value of assets $212,837 Actual return on plan assets 46,796 Disbursements (10,959) End of year fair value of assets $248,674 Reconciliation of Funded Status (In thousands) 1999 Projected benefit obligation (PBO) $(146,860) Fair value of plan assets (FVA) 248,674 PBO less than FVA (funded status) 101,814 Unrecognized prior service cost 6,714 Unrecognized net transition obligation (asset) (387) Unrecognized net actuarial (gain) (105,049) Net amount recognized $3,092 The discount rate used to determine pension obligations, effective January 1, 2000 was changed from 6.75% to 7.75% and was used to calculate the plan's funded status at December 31, 1999. At December 31, 1999, approximately $2.5 million was included in other liabilities for unfunded non-qualified pension benefits related to the 1997 voluntary retirement incentive. EUA also maintains non-qualified supplemental retirement plans (Supplemental Plans) for certain officers and trustees of the EUA System. Benefits provided under the Supplemental Plans are based primarily on compensation at retirement date. EUA maintains life insurance on certain participants of the Supplemental Plans, and policy cash values and death benefits may be available to offset EUA's obligations under the Supplemental Plans. As of December 31, 1999, approximately $8.2 million was included in accrued expenses and other liabilities for these plans. Expenses related to the Supplemental Plans were $2.2 million in 1999. EUA also provides a defined contribution 401(k) savings plan for substantially all employees. EUA's matching percentage of employees' voluntary contributions to the plan, amounted to $1.7 million in 1999. Post-Retirement Benefits: Retired employees are entitled to participate in health care and life insurance benefit plans. Health care benefits are subject to deductibles and other limitations. Health care and life insurance benefits are partially funded by EUA System companies for all qualified employees. The total cost of post-retirement benefits other than pensions, including an amount related to the 1997 voluntary retirement incentive offer, for 1999 includes the following components: (In thousands) 1999 Service cost $1,091 Interest cost 4,822 Expected return on assets (2,352) Net amortization: Net actuarial (gain) (266) Transition obligation 2,841 Net periodic postretirement benefit cost 6,136 Subsidiary curtailment * Voluntary retirement incentive * Total periodic postretirement benefit cost $6,136 * Montaup recorded a regulatory asset of approximately $5.5 million due to a loss resulting from the curtailment of the plan, and $200,000 related to the cost of offering an early retirement plan. This amount will be recovered as part of Montaup's CTC billed to its retail affiliates. Assumptions to determine post-retirement costs: Discount rate 6.75% Health care cost trend rate - near-term 6.00% - long-term 5.00% Compensation increase rate 4.25% Long-term return on assets - union 8.50% - non-union 7.50% The following tables forth the actuarial present value of accumulated postretirement benefit obligation, fair value of assets and funded status at December 31, 1999. Reconciliation of Accumulated Post-retirement Benefit Obligation (In thousands) 1999 Beginning of year benefit obligation (January 1) $69,628 Service cost 1,091 Interest cost 4,821 Participant contributions 145 Actuarial (gain) loss (6,389) Disbursements (3,707) Special benefit termination cost 205 Curtailment gain (746) End of year benefit obligation (December 31) $65,048 Reconciliation of Fair Value Assets (In thousands) 1999 Beginning of year fair value of assets (January 1) $30,195 Actual return on plan assets 2,762 Company contributions 6,173 Participant contributions 144 Disbursements (3,707) End of year fair value of assets (December 31) $35,567 Reconciliation of Funded Status (In thousands) 1999 Accumulated post-retirement benefit obligation (APBO) $(65,048) Fair value of plan assets (FVA) 35,567 APBO (in excess of) FVA (Funded Status) (29,481) Unrecognized net transition obligation 36,938 Unrecognized net actuarial gain (20,500) Net amount recognized $(13,043) Effect of 1% Change in Assumed Health Care Cost Trend Rate One Percent (In thousands) Increase Decrease Effect on 1999 service and interest cost components of net-periodic costs $917 $(728) Effect on 1999 accumulated post-retirement benefit obligation $ 8,440 $ (6,855) The discount rate used to determine post-retirement benefit obligations effective January 1, 2000 was changed from 6.75% to 7.75% and was used to calculate the funded status of post-retirement benefits at December 31, 1999. Long-Term Purchased Power Contracts: The EUA System is committed under long- term purchased power contracts, expiring on various dates through September 2021, to pay certain charges whether or not energy is received in addition to other amounts that depend on the actual amount of energy delivered. In 1999, these purchased power contracts, with the exception of the nuclear entitlements, were transferred to third parties under terms that result in fixed payments through 2009. In addition, Montaup's obligations to Boston Edison under the Pilgrim contract have been essentially reduced to its share of the property tax settlement with the town of Plymouth, and Montaup is obligated to Entergy under the replacement contract only for energy actually delivered. It is anticipated that in 2000, Montaup will make a payment to terminate its purchase obligation from Vermont Yankee. Under terms in effect as of December 31, 1999, the aggregate commitments under the long-term purchased power contracts are approximately $46 million in 2000, $37 million in 2001, $39 million in 2002, $23 million in 2003, $24 million in 2004 and $98 million for the ensuing years. These amounts, which also include certain continuing obligations (primarily for decommissioning) to Vermont Yankee and the retired nuclear plants, are currently fully recoverable through rates. Environmental Matters: There is an extensive body of federal and state statutes governing environmental matters, which permit, among other things, federal and state authorities to initiate legal action providing for liability, compensation, cleanup, and emergency response to the release or threatened release of hazardous substances into the environment and for the cleanup of inactive hazardous waste disposal sites which constitute substantial hazards. Because of the nature of the EUA System's business, various by-products and substances are produced or handled which are classified as hazardous under the rules and regulations promulgated by the United States Environmental Protection Agency (EPA) as well as state and local authorities. The EUA System generally provides for the disposal of such substances through licensed contractors, but these statutory provisions generally impose potential joint and several responsibility on the generators of the wastes for cleanup costs. Subsidiaries of EUA have been notified with respect to a number of sites where they may be responsible for such costs, including sites where they may have joint and several liability with other responsible parties. It is the policy of the EUA System companies to notify liability insurers and to initiate claims. EUA is unable to predict whether liability, if any, will be assumed by, or can be enforced against, the insurance carriers in these matters. On December 13, 1994, the United States District Court for the District of Massachusetts (District Court) issued a judgment against Blackstone, finding Blackstone liable to the Commonwealth of Massachusetts (Commonwealth) for the full amount of response costs incurred by the Commonwealth in the cleanup of a by-product of manufactured gas at a site at Mendon Road in Attleboro, Massachusetts. The judgment also found Blackstone liable for interest and litigation expenses calculated to the date of judgment. The total liability is approximately $5.9 million, including approximately $3.6 million in interest which had accumulated since 1985. Due to the uncertainty of the ultimate outcome of this proceeding and anticipated recoverability whether through rates, insurance providers or other parties, Blackstone recorded an asset for the amount funded under the escrow agreement (discussed below) consistent with provisions of SFAS 5, specifically paragraphs 3, 10, and 13 and SFAS 71, specifically paragraphs 3 and 9. This amount is included with Other Assets on the Consolidated Balance Sheets at December 31, 1999 and 1998. Should the EPA determine the substance to be non-toxic, the company may be able to retain the entire escrowed amount and would relieve both the asset and liability from its balance sheet at that time. However should the EPA determine that the substance is hazardous, the company would amortize its asset, net of amounts recovered through insurance proceeds or from other parties, over a five year period in accordance with the company's established rate recovery mechanisms of similar costs. Blackstone filed a Notice of Appeal of the District Court Judgment and filed its brief with the United States Court of Appeals for the First Circuit (First Circuit) on February 24, 1995. On October 6, 1995, the First Circuit vacated the District Court's judgment and ordered the District Court to refer the matter to the EPA to determine whether the chemical substance, ferric ferrocyanide (FFC), contained within the by-product is a hazardous substance. On January 20, 1995, Blackstone entered into an escrow agreement with the Commonwealth whereby Blackstone deposited $5.9 million with an escrow agent who transferred the funds into an interest bearing money market account. The distribution of the proceeds of the escrow account will be determined upon the final resolution of the judgment. No additional interest expense will accrue on the judgment amount. On January 28, 1994, Blackstone filed a complaint in the District Court, seeking, among other relief, contribution and reimbursement from Stone & Webster Inc., of New York City and several of its affiliated companies (Stone & Webster), and Valley Gas Company of Cumberland, Rhode Island (Valley) for any damages incurred by Blackstone regarding the Mendon Road site. On November 7, 1994, the Court denied motions to dismiss the complaint which were filed by Stone & Webster and Valley. This proceeding was stayed in December 1995 pending final EPA determination as to whether FFC is a hazardous substance. In addition, Blackstone has notified certain liability insurers and has filed claims with respect to the Mendon Road site, as well as other sites. Blackstone reached settlement with one carrier for reimbursement of legal costs related to the Mendon Road case. In January 1996, Blackstone received the proceeds of the settlement. As of December 31, 1999, the EUA System had incurred costs of approximately $9.5 million (excluding the $5.9 million Mendon Road judgment) in connection with the investigation and clean-up of these sites, substantially all of which relate to Blackstone. These amounts have been financed primarily by internally generated cash. Blackstone is currently amortizing all of its incurred costs over a five-year period consistent with prior regulatory recovery periods and is recovering certain of those costs in rates. EUA estimates that additional costs of up to $2.2 million (excluding the $5.9 million Mendon Road judgment) may be incurred at these sites through 2000, $1.4 million of which of which relates to Blackstone and $800,000 which relates to sites at which Blackstone is a potentially responsible party. Estimates beyond 2000 cannot be made since site studies, which are the basis of these estimates, have not been completed. As a result of the recoverability of cleanup costs in rates and the uncertainty regarding both its estimated liability, as well as its potential contributions from insurance carriers and other responsible parties, EUA does not believe that the ultimate impact of the environmental costs will be material to the financial position of the EUA System or to any individual subsidiary and thus no loss provision is required at this time. During the second quarter of 1999, EUA identified four new sites related to the production of manufactured gas at which certain environmental conditions may exist. Three sites are associated with Blackstone and one site is associated with Eastern Edison. EUA has conducted a preliminary assessment of the potential cost of remediation at these sites. An engineering model was recently obtained by the Company to provide the estimated potential costs. Since site specific studies have not yet been performed, EUA has recorded a minimum liability for each of these sites based on this engineering model to recognize risk assessment, monitoring, and legal and administrative costs. In addition, EUA has recorded estimated environmental remediation liabilities for two previously-identified manufactured gas plant sites associated with Blackstone. The sites are the Tidewater site, the location of a former electric generating station and manufactured gas plant in Pawtucket, Rhode Island, and the Hamlet Avenue Site, a former manufactured gas plant site located in Woonsocket, Rhode Island. Estimates were not previously recorded for these locations since site-specific studies had not been completed and a reliable engineering model deemed essential to develop a reasonable estimate was not previously available. With respect to the Tidewater site, EUA completed its site investigation study during the third quarter of 1999 to determine the nature and extent of contamination. The study identified elevated levels of hazardous substances over an extended area of both the surface and subsurface. The Hamlet Street site assessment has not yet been finalized. However, the assessment conducted to date has determined that varying degrees of hazardous substances are present at that site. Therefore, in the third quarter of 1999, a total estimated remediation liability of $21.2 million was recorded as a long-term liability with a corresponding charge to a regulatory asset on the Consolidated Balance Sheet. Blackstone and Eastern Edison are currently recovering certain environmental cleanup costs in rates. In addition, the Company will seek recovery of certain costs from its insurance carriers and other possible responsible parties. The Company expects, based on prior regulatory approvals, to recover such costs in future rates. As a result, the Company does not believe that the ultimate impact of the cleanup costs associated with these sites will be material to the results of its operations or its financial position. See Note A, Nature of Operations and Summary of Significant Accounting Policies - Generation Divestiture regarding EUA's divestiture of generation assets. A number of scientific studies in the past several years have examined the possibility of health effects from Electric and Magnetic Fields (EMF) that are found wherever there is electricity. While some of the studies have indicated some association between exposure to EMF and health effects, many others have indicated no direct association. Some states have enacted regulations to limit the strength of EMF at the edge of transmission line rights-of-way. The Rhode Island legislation has enacted a statute which authorizes and directs the Rhode Island Energy Facility Siting Board to establish rules and/or regulations governing construction of high voltage transmission lines of 69 kv or more. Management cannot predict the ultimate outcome of the EMF issue. Guarantee of Financial Obligations: EUA has guaranteed or entered into equity maintenance agreements in connection with certain obligations of its subsidiaries. EUA has guaranteed the repayment of EUA Cogenex's $24.5 million, 10.56% unsecured long-term notes due 2005 and EUA Ocean State's $26.1 million, 9.59% unsecured long-term notes due 2011. In addition, EUA has entered into equity maintenance agreements in connection with the issuance of EUA Service's 10.2% Secured Notes and EUA Cogenex's 9.6% Unsecured Notes. Under the December 1992 settlement agreement with EUA Power, EUA reaffirmed its guarantee of up to $10 million of EUA Power's share of the decommissioning costs of Seabrook I and any costs of cancellation of Seabrook I or Seabrook II. EUA guaranteed this obligation in 1990 in order to secure the release to EUA Power of a $10 million fund established by EUA Power at the time EUA Power acquired its Seabrook interest. EUA has not provided a reserve for this guarantee because management believes it unlikely that EUA will ever be required to honor the guarantee. Montaup is a 3.27% equity participant in two companies which own and operate transmission facilities interconnecting New England and the Hydro Quebec system in Canada. Montaup has guaranteed approximately $3.7 million of the outstanding debt of these two companies. In addition, Montaup and Newport have minimum rental commitments which total approximately $10.5 million and $1.3 million, respectively, under a noncancelable transmission facilities support agreement for years subsequent to 1999. Other: Since early 1997, fourteen plaintiffs brought suits against numerous defendants, including EUA, for injuries and illness allegedly caused by exposure to asbestos over approximately a thirty-year period, at various premises, including some owned by EUA companies. The total damages claimed in all of these complaints is $34 million in compensatory and punitive damages, plus exemplary damages and interest and costs. Each complaint names between fifteen and twenty-eight defendants, including EUA. These complaints have been referred to the applicable insurance companies. Counsel has been retained by the insurers and is actively defending all cases. Six cases have been dismissed as against EUA companies. EUA cannot predict the ultimate outcome of this matter at this time. A pending class action, filed on March 2, 1998, in the Massachusetts Supreme Judicial Court naming all Massachusetts electric distribution companies, including Eastern Edison, and certain Massachusetts state agencies as defendants, seeks to invalidate certain sections of the Electric Utility Restructuring Act of 1997. The Act directs the Massachusetts Department of Telecommunications and Energy to impose mandatory charges on all electricity sold to customers, except those served by a municipal lighting plant, to fund energy efficiency activities and to promote renewable energy projects. In addition to declaratory judgment, plaintiffs seek remittance of monies paid by customers to each distribution company by customers for renewable projects together with any interest earned. The outcome of this class action is unknown at this time however, Eastern Edison is vigorously defending the lawsuit. On February 15, 2000, the United States Attorney for the District of Massachusetts informed the Company that his office is investigating possible criminal conduct, including mail fraud by EUA Cogenex and/or its employees. The conduct in question involves alleged intentional overbilling by EUA Cogenex of certain cogeneration customers during 1994 and 1995, when EUA Cogenex owned cogeneration projects, and filing false information with FERC in order to maintain the facilities' status as qualifying facilities under the Public Utility Regulatory Policies Act of 1978. EUA Cogenex is fully cooperating with the United States Attorney's investigation. Although the Company cannot predict the ultimate outcome of this investigation, the Company does not believe that it will have a material effect on the financial position of the Company. EX-99 2 EXHIBIT D TAX ALLOCATION AGREEMENT Exhibit D EASTERN UTILITIES ASSOCIATES AND AFFILIATED CORPORATIONS Federal Income Tax Allocation Agreement Pursuant to Rule 45(c). Public Utility Holding Company Act of 1935 and I.R.C. Regulation Section 1.1552-1(a) (1) and Section 1.1502-33(d)(3) This agreement made as of April 6, 2000, among Eastern Utilities Associates (the designation of the trustees for the time being under a Declaration of Trust dated April 2, 1928, as amended) (EUA); Eastern Edison Company, a Massachusetts corporation (Eastern); Blackstone Valley Electric Company, a Rhode Island corporation (Blackstone); Newport Electric Corporation, a Rhode Island corporation (Newport); Montaup Electric Company, a Massachusetts corporation (Montaup); EUA Service Corporation, a Massachusetts corporation (EUA Service); EUA Cogenex Corporation, a Massachusetts corporation (Cogenex); EUA Energy Investment Corporation, a Massachusetts corporation (EUA Energy); EUA Ocean State Corporation, a Rhode Island corporation (Ocean State); Eastern Unicord Corporation, a Massachusetts corporation (Unicord); Northeast Energy Management, Inc., a Massachusetts corporation (NEM); EUA TransCapacity, Inc., a Massachusetts corporation (TransCapacity); EUA Cogenex-Canada, Inc., a Canadian corporation (Cogenex-Canada); EUA Bioten, Inc., a Massachusetts corporation (Bioten); EUA Cogenex-West Corporation, a Massachusetts corporation (Cogenex- West); EUA Citizens Conservation Services, Inc., a Massachusetts Corporation (CCS); EUA Energy Services, Inc. a Massachusetts corporation (EUA ESI); EUA Compression Services, Inc., a Massachusetts corporation (Compression); and EUA Telecommunications, Inc, a Massachusetts corporation (Telecommunications). W I T N E S S E T H T H A T: WHEREAS, the term "AFFILIATES" as used herein shall be deemed to refer to Eastern, Blackstone, Newport, Montaup, EUA Service, Cogenex, EUA Energy, Ocean State, Unicord, NEM, TransCapacity, EUA Cogenex-Canada, Bioten, Cogenex-West, CCS, EUA ESI, Compression and Telecommunications, the AFFILIATES together with EUA, and the CONSOLIDATED AFFILIATES as a collective taxpaying unit is sometimes referred to as the "GROUP" and WHEREAS, EUA owns directly or indirectly at least 80 percent of the issued and outstanding shares of each class of voting common stock of each of the AFFILIATES; each of the CONSOLIDATED AFFILIATES is a member of an affiliated group within the meaning of Section 1504 of the Internal Revenue Code of 1954, as amended (the "Code"), of which EUA is the common parent; and the GROUP presently participates in the filing of a consolidated income tax return. Definitions A. Corporate Tax Benefit - The amount by which the consolidated tax is reduced by including a net corporate tax loss or other net tax benefit in the consolidated return. The value of the benefit of the operating loss shall be determined by applying the then current corporate income tax rate to the amount of the loss. The value of a credit is the actual tax savings (100%). The value of capital losses used to offset capital gains shall be computed at the then current tax rate applicable to capital gains for corporations. The value of any corporate tax benefit to be reimbursed to a member shall be reduced by the amount of any alternate minimum tax attributable to such member. B. Separate Return Tax - The tax on the corporate taxable income of an affiliate company computed as though such company were not a member of the consolidated group. C. Excess Tax Credits - The investment tax credit, alternate minimum tax credit, research and development credit, energy tax credit or other similar credit that would be allowable in the consolidation (were it not for a limitation provided by law) in excess of the amount of such credits which could be utilized on a separate return basis with regard to such limitations. EUA and the AFFILIATES agree as follows: Allocation Procedures in Accordance with I.R.C. Regulation Sections 1.1552-1(a)(1) and 1.1502-33(d)(3) A. General Rule Step 1 - The consolidated tax liability shall be apportioned among the companies in the ratio that each member's separate taxable income bears to the sum of the separate taxable incomes of all members having taxable income. Step 2 - An additional amount will be allocated to the members at 100% of the excess of the member's separate tax liability over the consolidated tax liability allocated to the member under Step 1. Under no circumstances shall the tax allocated to a member exceed its separate tax liability. Step 3 - The total of the amounts allocated under Step 2 is credited to those members who had "corporate tax benefits" as follows: (a) Those members having a negative allocation under Step 2; (b) If the total of the "corporate tax benefits" is greater than the total reduction in the consolidated tax, then the benefits arising from the inclusion of negative taxable incomes in the consolidated return shall be recognized and paid prior to the benefits arising from excess tax credits. (c) If the total benefits attributable to the negative taxable incomes of the members are not absorbed in the consolidated return, the benefit allocated to each company shall be in proportion to their respective negative taxable incomes. (d) If the total benefits attributable to the excess tax credits are not applied in the consolidated return, the benefit allocated to each company shall be in proportion to their respective excess tax credits. Step 4 - If the total consolidated tax liability shall result in an "Alternative Minimum Tax" liability position then an additional amount will be added to Steps 1 and 2. This additional amount will be allocated to the members based upon their proportionate amounts of alternate minimum taxable income. Step 5 - Reimbursement - Benefiting members will reimburse the others no later than 90 days after the filing of the consolidated tax return. B. Unused Corporate Tax Benefits A member that is entitled to payment for a tax benefit, but does not receive such payment because of the rules in Step 3 shall retain such right for the future to the extent that such benefit can be applied against the consolidated tax liability. Uncompensated corporate tax benefits arising from negative taxable income shall have priority over the benefits attributable to excess tax credits. C. Tax Adjustments In the event of any adjustments to the tax returns of any of the CONSOLIDATED AFFILIATES filed (by reason of an amended return, a claim for refund or an audit by the Internal Revenue Service), the liability, if any, of each of the AFFILIATES under Section A shall be redetermined to give effect to any such adjustment as if it had been made as part of the original computation of tax liability, and payments between EUA and the appropriate AFFILIATES shall be made within 120 days after any such payments are made or refunds are received, or, in the case of contested proceedings, within 120 days after a final determination of the contest. Interest and penalties, if any, attributable to such an adjustment shall be paid by each AFFILIATE to EUA in proportion to the increase in such AFFILIATE'S separate return tax liability computed under Section A of this Agreement that is required to be paid to EUA. In any situation in which the Group's tax liability is adjusted by a revenue agent's report or a court settlement and an item-by-item modification is not made, the Group shall consult its accountants for assistance in determining a fair allocation of the adjusted liability. D. Subsidiaries of Affiliates If at any time, any of the AFFILIATES acquires or creates one or more subsidiary corporations that are includible corporations of the Group, they shall be subject to this Agreement and all references to the AFFILIATES herein shall be interpreted to include such subsidiaries as a group. E. Successors This Agreement shall be binding on and insure to the benefit of any successor, by merger, acquisition of assets or otherwise, to any of the parties hereto (including but not limited to any successor of EUA or any of the AFFILIATES succeeding to the tax attributes of such corporation under Section 381 of the Code) to the same extent as if such successor had been an original party to this agreement. F. Special Rule In making the tax allocations provided for in this agreement, notwithstanding any of the foregoing, no corporate tax benefits shall be allocated to EUA. Although the separate corporate taxable income or taxable loss of EUA and any tax credits attributable to EUA will be included in the consolidated return, only the tax savings attributable to such items shall be allocated to the other AFFILIATES as if EUA were not a member of the Group. In making this allocation, the tax savings of EUA shall be allocated only to members of the Group having taxable income. Also, in making the tax allocations, only those tax consequences attributable to non-affiliated transactions shall remain with EUA Service Corporation in accordance with Section A of this Agreement. All others will be allocated to the other AFFILIATES. G. Termination Clause This Agreement shall apply to the taxable year ending December 31, 1999, unless all of the members of the Group agree in writing to terminate the Agreement prior to the end of the taxable year. The Agreement shall be renewable on a year to year basis for subsequent taxable years, provided all of the members of the Group agree in writing, prior to the end of the immediately preceding taxable year, to extend the Agreement one additional year. Notwithstanding any termination, this Agreement shall continue in effect with respect to any payment or refunds due for all taxable periods prior to termination. IN WITNESS WHEREOF, the duly authorized representatives of the parties have set their hands this 6th of April, 2000. EASTERN UTILITIES ASSOCIATES By /s/Donald G. Pardus Donald G. Pardus Title: Chairman of the Board EUA SERVICE CORPORATION EUA COGENEX-CANADA By /s/Robert Powderly By /s/Edward Liston Robert Powderly Edward Liston Title: Executive Vice President Title: President BLACKSTONE VALLEY ELECTRIC COMPANY EUA ENERGY INVESTMENT CORPORATION By /s/John Carney By /s/John R. Stevens John Carney John R. Stevens Title: President Title: President EASTERN EDISON COMPANY EASTERN UNICORD CORPORATION By /s/ Michael Hirsh By /s/John R. Stevens Michael Hirsh John R. Stevens Title: Vice President Title: President MONTAUP ELECTRIC COMPANY EUA TRANSCAPACITY, INC. By /s/Kevin Kirby By /s/John R. Stevens Kevin Kirby John R. Stevens Title: Vice President Title: President EUA COGENEX CORPORATION EUA BIOTEN, INC. By /s/Edward Lsiton By /s/John R. Stevens Edward Liston John R. Stevens Title: President Title: President NORTHEAST ENERGY MANAGEMENT, INC. EUA OCEAN STATE CORPORATION By /s/ Edward Liston By /s/Clifford J. Hebert, Jr. Edward Liston Clifford J. Hebert, Jr. Title: President Title: Treasurer EUA COGENEX WEST CORPORATION NEWPORT ELECTRIC CORPORATION By /s/ Mark White By /s/Michael Hirsh Mark White Michael Hirsh Title: Executive Vice President Title: Vice President EUA CITIZENS CONSERVATION SERVICES, INC. EUA ENERGY SERVICES, INC. By /s/Mark White By /s/Kevin Kirby Mark White Kevin Kirby Title: Executive President Title: Vice President EX-27 3 EX G, EUA FDS
UT 1000 12-MOS DEC-31-1999 DEC-31-2000 PER-BOOK 454014 151018 123695 739126 0 1467853 102180 216764 39095 358039 28359 6901 104236 143955 0 0 83127 0 0 0 743236 1467854 553767 18897 479603 498500 55267 1034 56301 37078 19223 2305 16918 33924 21551 53433 .83 0
EX-27 4 EX G, BVE FDS WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
UT 1000 12-MOS DEC-31-1999 DEC-31-1999 PER-BOOK 84292 199 15543 51985 0 152019 9203 17908 17494 44605 0 6130 30500 1740 0 0 1500 0 0 0 67544 152019 127082 3480 114021 117501 9581 15 9596 3853 5743 289 5454 2507 2875 9192 0 0
EX-27 5 EX. G, FDS EECO WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
UT 1000 12-MOS DEC-31-1999 DEC-31-1999 PER-BOOK 297122 14722 69189 630093 0 1011126 58485 78005 124158 260648 28359 0 40000 0 0 0 0 0 0 0 682119 1011126 394566 21799 334369 356168 38398 5662 44060 16525 27535 1988 25547 7353 7861 (4554) 0 0
EX-27 6 EX G, FDS NEWPORT
UT 1000 12-MOS DEC-31-1999 DEC-31-1999 PER-BOOK 54549 0 8388 8418 0 71355 11369 8258 6567 26194 0 771 8575 990 0 0 650 0 0 0 34175 71355 60543 2432 51565 53997 6546 61 6607 2045 4562 29 4533 1660 1030 15855 0 0
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