-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, qZCwz9ql3HHHdbFaeyTVFT7Kaz7U7yEL53dzEPT6rXbvt+mfx9I1gYh0UYSAq1w9 BC6+05CaAnqTi69osXRHWw== 0000071297-95-000015.txt : 19950515 0000071297-95-000015.hdr.sgml : 19950515 ACCESSION NUMBER: 0000071297-95-000015 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19950216 SROS: BSE SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND ELECTRIC SYSTEM CENTRAL INDEX KEY: 0000071297 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 041663060 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1/A SEC ACT: 1935 Act SEC FILE NUMBER: 070-08475 FILM NUMBER: 95512198 BUSINESS ADDRESS: STREET 1: 25 RESEARCH DR CITY: WESTBOROUGH STATE: MA ZIP: 01581 BUSINESS PHONE: 5083669011 U-1/A 1 File No. 70-8475 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 AMENDMENT NO. 1 TO FORM U-1 APPLICATION/DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 NEW ENGLAND ELECTRIC SYSTEM and NEW ENGLAND ELECTRIC RESOURCES, INC. (Name of company filing this statement) 25 Research Drive, Westborough, Massachusetts 01582 (Address of principal executive offices) NEW ENGLAND ELECTRIC SYSTEM (Name of top registered holding company parent in system) Michael E. Jesanis Robert King Wulff Treasurer Corporation Counsel 25 Research Drive 25 Research Drive Westborough, Massachusetts 01582 Westborough, Massachusetts 01582 (Names and addresses of agents for service) Item 1 is amended and restated in its entirety as follows: "Item 1. Description of Proposed Transaction: - --------------------------------------------- NEERI is pursuing a joint arrangement with Separation Technologies, Inc., a Massachusetts corporation (STI), and the developer of a process for separating unburned carbon from coal ash. In connection with this joint arrangement, NEERI will be called on to invest in STI projects and to provide certain consulting services to STI. The STI Technology ------------------ In New England, a large amount of electrical generation is coal-fired, resulting in coal ash waste products. Ash from burning coal and oil accounts for the largest volume of solid wastes produced by generating facilities owned by New England Power Company (NEP), an affiliate of NEERI. Given this large quantity of ash, it is highly desirable to encourage the development of recycling techniques to convert this ash waste to productive uses. As part of NEESPLAN 4, the System's latest planning study, the System has established coal ash recycling as a key initiative and has a stated goal of recycling 100% of its coal ash by the year 2000. NEP has entered into a contract with STI to permit STI to process ash waste from its Salem Harbor generating station and is negotiating a contract with STI for its Brayton Point generating station. NEP's contracts with STI do not involve any equity participation by NEP. Although NEP desires the continued development of coal ash recycling technology, NEP does not believe that this development would be an appropriate risk to be supported by its electric customers. STI has developed a system of economically separating unburned carbon from coal (or fly) ash produced by utility generating plants. The separated carbon can be reburned by the utility. The processed ash can be sold as a cement substitute in the manufacture of concrete. In order to be viable as a cement substitute, processed ash must have a carbon content of 3% or less; STI's technology is capable of consistently and economically producing processed ash of this quality. Additional technical details concerning STI's technology are provided in Exhibit J hereto. NEERI's participation in this joint arrangement with STI is functionally related to the System in that it will promote the continued development of technology for reducing waste ash disposal costs, and will reduce fuel costs through the reburning of carbon. NEERI's work with STI will also enable the System to further its solid waste recycling efforts committed to as part of its NEESPLAN 4 planning study. NEP's electrical generation activities at its Salem Harbor and Brayton Point generating facilities produce approximately 300,000 tons of coal ash annually. NEP, in addressing the disposal issue raised by these ash byproducts, decided to explore STI's coal ash processing concepts at NEP's Salem Harbor plant. As a result, the first commercial-scale continuous demonstration and test of a carbon separation process was achieved through STI and NEP's joint efforts. This project required the fabrication of processing equipment for, and site preparation at, Salem Harbor. The demonstration and test of the ash processing installation proved the viability of the concept and suggested areas for technical enhancement. NEP plans to adapt the processing equipment for use as a production unit in the recycling of processed ash from Salem Harbor. NEP is negotiating to install similar ash processing equipment at its Brayton Point facility. The development of the commercial scale ash processing system at Salem Harbor was a natural outgrowth of NEP's desire to recycle ash produced as a byproduct of its electrical generation business. NEP's contributions to the fabrication and test of the ash processing equipment helped STI to prove the commercial viability of its process for other major coal-fired generation facilities. Further improvement in ash processing technology is essential for the NEES system to efficiently and economically meet its stated goal of recycling 100% of its coal ash by the year 2000. Although NEP desires such continued development, NEP does not believe that such development is a suitable risk to be supported by NEP's electric customers. NEERI's affiliates and their customers would benefit from NEERI's joint arrangement with STI by the availability of improved ash processing technology to address their disposal concerns and to lower fuel costs, and by taking advantage of new markets for their processed ash streams. Accordingly, NEERI believes that its investment in STI meets the criteria set forth by the commission for ownership of a non-utility functionally related business (see CSW Credit Inc. HCAR No. 25995 and Jersey Central Power & Light HCAR No. 24348) as follows: NEERI's investment will evolve from the overall electric utility business of the NEES system; NEERI's investment in STI will not be significant in relation to the system's total financial resources; and the successful development, manufacture and marketing of STI's ash processing technology has the potential to benefit NEERI's affiliates and their electric customers, as well as be a beneficial investment for NEERI. The NE/NY Project ----------------- As part of its joint arrangement with STI, NEERI proposes to enter into a project with STI and STI Projects, a Florida general partnership between STI and Oxbow Carbon International, Inc., a Delaware corporation (STIP), involving the processing of coal ash at an electric generation facility in the New England/New York region (the NE/NY Project) owned by a non-affiliated electric company (Owner). NEERI plans to invest $700,000 in the NE/NY Project in return for 15% of the following NE/NY Project revenues for a seven-year period: - ash processing fees paid to STIP by Owner; and - sales by STIP of processed ash products (both high and low carbon content) to third parties or to Owner. NEERI expects to recover its investment in the NE/NY Project according to the following schedule of payments to NEERI from STIP, STI, or both: 4th year after investment: $175,000 5th year after investment: $175,000 6th year after investment: $175,000 7th year after investment: $175,000 NEERI shall also provide consulting services to STI and/or STIP in connection with the NE/NY Project. Such services may include marketing, sales, higher value product research and development and engineering consultation on balance of plant equipment matters. For the NE/NY Project, NEERI will receive $20,000 per year for the first two years of the NE/NY Project in payment for consulting services. NEERI will provide no more than 13 days per year of consulting services to the NE/NY Project in each of these two years. The contracts between Owner and STIP and NEERI and STIP are still being negotiated. Exhibits L and M represent preliminary agreements between STIP and Owner, and STIP and NEERI, respectively. STIP will be responsible for processing the ash at the Owner's facility. Future Projects --------------- NEERI proposes to enter into similar joint arrangements with STI and STIP at other locations where STI equipment will be installed. NEERI's investment in these other utility locations is anticipated to range between $0.5 and $2.0 million per installation. NEERI's investments in such future projects with STI may take the form of, without limitation, joint ventures, general partnerships, limited partnerships, teaming agreements, royalties or other revenue sharing, special purpose entities, loans, and equity participation. NEERI and STI intend to perform research to further refine the carbon- rich and low carbon processed waste streams and to find other applications for the STI separation process in recycling. Such further refinement of the waste streams is expected to improve the value of those waste streams and the profitability of the STI process investments. Examples of such higher value waste stream products include particle size classification for higher strength concrete products, substitutes for plastics fillers materials, and substitutes for carbon black products. Research in recycling will involve the use of the STI process in plastics recycling. NEERI intends to offer marketing and engineering advice and consulting services to STI and STIP. The consulting services provided by NEERI to STI and/or STIP will include marketing, sales, higher value product research and development, engineering consultation on balance of plant equipment matters, and consulting with utilities on ash stream optimization. NEERI's consulting fee will not exceed $2000 per day depending upon the nature of the task undertaken by NEERI and the qualifications of individuals used by NEERI in providing the consulting service. A geographic breakdown of potential project sites is provided in Exhibit K. Exhibit N provides a business discussion of the risks and benefits associated with the joint arrangement between NEERI, STI and STIP. Purchase of Equity in STI ------------------------- NEERI intends to purchase equity shares of STI pursuant to a subscription agreement (the Agreement) with STI. The Agreement shall be substantially in the form attached hereto as Exhibit O. NEERI intends to buy shares of STI's 6% cumulative convertible preferred stock (the Shares) at a price of $6.50 per share, for a total equity investment not exceeding $1 million. All or any portion of the Shares shall be convertible at any time, or from time to time, at NEERI's option, into the same number of shares of STI common stock. The Shares will automatically convert to shares of common stock upon the closing of an initial public offering of STI common stock in which STI's aggregate gross proceeds from such offering exceed $5,000,000 and in which the share offering price is $6.50 or more. Dividends on the Shares will accrue cumulatively at a rate of 6% per annum of the price per Share from the date of payment for the Share to the date of its conversion, if any, to common. This 6% cumulative dividend is paid in STI common shares upon conversion of the Shares to common. NEERI will have the right to exercise one vote per Share on all matters submitted to a vote of STI common stock generally. NEERI will have protection against dilution of the Shares for a period of five years after their purchase as provided in paragraph 4 of the Agreement. NEERI's investment in the Shares will result in NEERI's ownership of not more than 5% of the voting securities of STI. NEERI will have the option to appoint one member of the STI Board of Directors. Currently, the STI Board of Directors has five members; should NEERI decide to appoint a member of the STI Board, STI will increase its Board membership. Authority Requested ------------------- NEERI requests authorization for the following activities: a. to participate in the NE/NY Project with STI and STIP; b. to invest up to $700,000 in the NE/NY Project with STI and STIP. c. to invest up to $2,000,000 per project in other utility coal ash separation projects with STI and/or STIP with a cumulative investment not to exceed $10 million. NEERI's investment in such projects may involve the acquisition of not exceeding 9.9% of voting securities or interests. d. to perform research and development activities in high value product development and recycling in an amount not to exceed $1 million. e. to invest $1,000,000 in the purchase of the Shares. In connection with projects which exceed the funding limits in item (c) above, NEERI will seek further authority from the Commission prior to investing any equity funds in such other projects. As NEERI enters into additional projects with STI and/or STIP, NEERI shall provide details of these projects in its quarterly filings with the Commission under Rule 24. NEERI will also break down the STI and STIP investments from its other investments in its quarterly financials filed at that time. Personnel --------- No employees of NEERI's affiliated companies will be assigned to a NEERI project if such assignment would interfere with the normal operation of NEES. Utility operating companies affiliated with NEERI will at all times have first priority in the use of employees, including employees of New England Power Service Company. By its Order dated April 13, 1994 (Release No. 35-26017), the Commission approved NEERI's proposal that, during the course of a calendar year, NEERI's affiliated companies not assign more than the full-time equivalent of five percent of their aggregate employees to service projects for NEERI and NEERI now proposes that this restriction include the NEERI projects involving STI and/or STIP. Financing by NEES ----------------- The Commission originally granted authority for NEES to provide financing to NEERI in an amount not to exceed $1 million. (See Order dated September 4, 1992, Release 35-25621.) The Commission later granted authority for NEES to provide additional financing to NEERI in the amount of $1 million (see Order dated April 1, 1994, Release No. 35-26017) and in the amount of $250,000 (See Order dated May 25, 1994, Release No. 35-26057.) NEES proposes to provide additional financing for NEERI by making capital contributions up to an additional $12,700,000 and/or by lending to NEERI from time to time additional amounts not to exceed $12,700,000 at any one time, such loans to be in the form of non-interest bearing subordinated notes. The aggregate amount of all investments (including amounts previously authorized by the Commission) by NEES in NEERI shall not exceed $14.95 million." Item 3 is amended by adding the following: "Section 22 and Rule 104 are believed to be applicable to NEERI's and NEES' objection to the public disclosure of Exhibits J, K, L, M, N, and O filed herewith." Item 6 is amended by supplying the following exhibits: I Form of Subordinated Promissory Note J STI Process Technical Data K Potential Project Locations L Letter Agreement between STIP and Owner M Letter Agreement between STIP and NEERI N Discussion of Benefits and Risks O Form of Subscription Agreement Pursuant to Section 22 and Rule 104, NEERI and NEES hereby object to the public disclosure of any part or parts of Exhibits J, K, L, M, N and O and request confidential treatment therefor. The information contained in Exhibits J, K, L, M, N and O is commercially sensitive and the public disclosure of any information contained therein has the potential to harm the development of commercial prospects for projects involving the STI process, and would disclose valuable and proprietary information and techniques developed at great cost to STI, STIP and/or others. Since the contents of Exhibits J, K, L, M, N, and O are of a technical nature or concern the rights and obligations as between the private parties to the relevant agreements, public disclosure of such information is not necessary or appropriate in the public interest or for the protection of consumers or investors. Item 6 is further amended by providing the following financial statements: 1-A Balance Sheet of NEES at September 30, 1994, Actual and Pro- forma 1-B Statement of Income and Retained Earnings for NEES for twelve months ended September 30, 1994 2-A Balance Sheet of NEERI at September 30, 1994, Actual and Pro-forma 2-B Statement of Income and Retained Earnings for NEERI for twelve months ended September 30, 1994 SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned companies have duly caused this Amendment No. 1 to Application/Declaration on Form U-1 (Commission's File No. 70-8475) to be signed on their behalf, as indicated by the undersigned officers thereunto duly authorized by such companies. NEW ENGLAND ELECTRIC SYSTEM s/ Michael E. Jesanis __________________________________________ Michael E. Jesanis, Treasurer NEW ENGLAND ELECTRIC RESOURCES, INC. s/ John G. Cochrane __________________________________________ John G. Cochrane, Treasurer Dated: February 16, 1995 The name "New England Electric System" means the trustee or trustees for the time being (as trustee or trustees but not personally) under an agreement and declaration of trust dated January 2, 1926, as amended, which is hereby referred to, and a copy of which as amended has been filed with the Secretary of the Commonwealth. Any agreement, obligation or liability made, entered into or incurred by or on behalf of New England Electric System binds only its trust estate, and no shareholder, director, trustee, officer or agent thereof assumed or shall be held to any liability therefore. EX-99 2 EXHIBIT AND FINANCIAL STATEMENT INDEX EXHIBIT NO. Description Page - ------------ ----------- ---- I Form of Subordinated Filed herewith Promissory Note J STI Process Technical Data Filed under cover of Form SE K Potential Project Locations Filed under cover of Form SE L Agreement between STIP and Owner Filed under cover of Form SE M Agreement between STIP and NEERI Filed under cover of Form SE N Discussion of Risks and Benefits Filed under cover of Form SE O Form of Subscription Agreement Filed under cover of Form SE FINANCIAL STATEMENT NO. Description Page - ------------------- ----------- ---- 1-A Balance Sheet of NEES at Filed herewith September 30, 1994, actual and pro-forma 1-B Statement of Income and Retained Filed herewith Earnings for NEES for twelve months ended September 30, 1994 2-A Balance Sheet of NEERI at Filed herewith September 30, 1994, actual and pro-forma 2-B Statement of Income and Retained Filed herewith Earnings for NEERI for twelve months ended September 30, 1994 EX-99 3 EXHIBIT I EXHIBIT I OPEN ACCOUNT ADVANCE SUBORDINATED PROMISSORY NOTE $_____________ DATED:__________________ FOR VALUE RECEIVED, the undersigned NEW ENGLAND ELECTRIC RESOURCES, INC. (NEERI), a Massachusetts corporation hereby promises to pay to NEW ENGLAND ELECTRIC SYSTEM (NEES) ON DEMAND, but in any event, no later than ______________, the principal sum of _________________________ DOLLARS ($__________) or, if less, the aggregate unpaid principal amount of all advances made by NEES to NEERI pursuant to authority granted by orders of the Securities and Exchange Commission under the Public Utility Holding Company Act of 1935 (the 1935 Act) without interest. All such advances and all payments made on account of the principal hereof shall be recorded by NEES and endorsed on the grid attached hereto which is part of this Subordinated Promissory Note. TERMS OF SUBORDINATION (a) The principal on this Subordinated Promissory Note is and shall be subordinated in right of payment in all respects to all other indebtedness of NEERI to any lender which is not an "affiliate" of NEERI, as that term is defined in the 1935 Act (hereinafter, "Senior Debt"). (b) Without limiting the foregoing subparagraph (a), (i) no payment on this Subordinated Promissory Note shall be made or received, directly or indirectly, in cash or other property or by set-off or in any other manner (including, without limitation, from or by way of collateral), so long as any Senior Debt remains outstanding, except that prepayments of principal on this Subordinated Promissory Note may be made and received so long as, but only so long as, at the time of such payments and immediately after giving effect thereto, no Event of Default, or event which, with the giving of notice or the lapse of time, or both, would become an Event of Default exists under the provisions of any Senior Note or any other instrument evidencing Senior Debt or any agreement under which Senior Debt is then outstanding, and (ii) in the event of any insolvency or bankruptcy proceedings directly or indirectly involving NEERI, then all principal of and interest (including, without limitation, any and all interest which shall accrue after the filing of any petition in bankruptcy) on, the Senior Debt shall first be paid in full before any payment on account of principal, premium (if any) or interest is made upon this Subordinated Promissory Note, and in any such proceedings any payment or distribution of any kind or character, whether in cash, securities or other property, to which the holder of this Subordinated Promissory Note would be entitled if this Subordinated Promissory Note were not subordinated to the Senior Debt shall be made by the liquidating trustee or agent or other person making such payment or distribution, or by the holder of this Subordinated Promissory Note if received by him, directly to the holders of the Senior Debt to the extent necessary to make payment in full of the Senior Debt remaining unpaid, after giving effect to any concurrent payment or distribution to or for the holders of the Senior Debt. (c) The foregoing provisions regarding subordination are intended solely for the purpose of defining the relative rights of the holders of the Senior Debt on the one hand and the holder of this Subordinated Promissory Note on the other hand. Nothing contained herein, is intended to or shall impair, as between NEERI and the holder of this Subordinated Promissory Note, the obligation of NEERI to pay to the holder of this Subordinated Promissory Note the principal of such Subordinated Promissory Note, subject, in each case, to the rights under the foregoing subparagraphs of the holders of the Senior Debt. NEW ENGLAND ELECTRIC RESOURCES, INC. DRAFT By: _______________________________ Title: ADVANCES AND REPAYMENTS OF PRINCIPAL Advances and payments of principal of this Subordinated Promissory Note were made on the dates and in the amounts specified below: Date Amount Amount of Balance of Notation made by: of Loan Principal Principal Prepaid or Unpaid Repaid ------ ------- ---------- ---------- ----------------- EX-99 4 FINANCIAL STATEMENT 1-A Financial Statement 1-A Page 1 of 2 NEW ENGLAND ELECTRIC SYSTEM (Parent Company Only) Balance Sheet At September 30, 1994 (Actual and Pro Forma) (Unaudited) ASSETS ------
Actual Adjustments Pro Forma ------ ----------- --------- (In Thousands) Investments: Common stocks of subsidiaries, at equity $1,520,875 $1,520,875 Notes of subsidiaries 52,092 $ 12,700 64,792 Other investments 2,277 2,277 ---------- -------- ---------- Total investments 1,575,244 12,700 1,587,944 ---------- -------- ---------- Current assets: Cash 42 42 Temporary cash investments - subsidiary company 1,400 (1,400) Interest and dividends receivable of subsidiaries 45,106 (11,300) 33,806 Other current assets 95 95 ---------- -------- ---------- Total current assets 46,643 $(12,700) 33,943 ---------- -------- ---------- Deferred federal income taxes 2,218 2,218 ---------- -------- ---------- $1,624,105 $1,624,105 ========== ======== ========== CAPITALIZATION AND LIABILITIES ------------------------------ Common share equity: Common shares, par value $1 per share: Authorized - 150,000,000 shares Outstanding - 64,969,652 shares $ 64,970 $ 64,970 Paid-in capital 736,567 736,567 Retained earnings (including $578,122,000 of undistributed subsidiary earnings) 778,685 778,685 ---------- -------- ---------- Total common share equity 1,580,222 1,580,222 ---------- -------- ---------- Current liabilities: Accounts payable (including $220,000 to subsidiaries) 3,146 3,146 Other accrued expenses 787 787 Dividends payable 33,858 33,858 ---------- -------- ---------- Total current liabilities 37,791 37,791 ---------- -------- ---------- Deferred credits 6,092 6,092 ---------- -------- ---------- $1,624,105 $1,624,105 ========== ======== ==========
Financial Statement 1-A Page 2 of 2 New England Electric System (Parent Company Only) The pro forma adjustments to show the estimated effect of the proposed transactions on the foregoing Balance Sheet at September 30, 1994 are as follows: Debit - Notes of subsidiaries $12,700,000 Credit - Temporary cash investments - subsidiary company $ 1,400,000 Interest and dividends receivable of subsidiaries $11,300,000 To reflect (1) a subordinated interest-free note from New England Electric System in the amount of $12.7 million to New England Electric Resources, Inc. and (2) the funding of this contribution through the utilization of (i) temporary cash investments and (ii) interest and dividends receivable. EX-99 5 FINANCIAL STATEMENT 1-B Financial Statement 1-B NEW ENGLAND ELECTRIC SYSTEM (Parent Company Only) Statement of Income Twelve Months Ended September 30, 1994 (Unaudited) (In Thousands) Equity in earnings of subsidiaries $ 212,776 Interest income - subsidiaries 297 --------- Total income from subsidiaries 213,073 Other income 110 --------- Total income 213,183 Corporate and fiscal expenses (includes $1,848,000 for cost of services billed by an affiliated company) (17,596) Federal income taxes 7,076 --------- Income before interest 223,703 Interest 35 --------- Net income $ 223,668 ========= Statement of Retained Earnings Retained earnings at beginning of period $ 703,314 Net income 223,668 Dividends declared on common shares (147,481) Premium on redemption of preferred stock of subsidiaries (816) --------- Retained earnings at end of period $ 778,685 ========= EX-99 6 FINANCIAL STATEMENT 2-A Financial Statement 2-A Page 1 of 2 NEW ENGLAND ELECTRIC RESOURCES, INC. Balance Sheet At September 30, 1994 (Actual and Pro Forma) (Unaudited)
ASSETS ------ Actual Adjustments Pro Forma ------ ----------- --------- Current assets: Cash $ 32,807 $12,700,000 $12,732,807 Accounts receivable 341,446 341,446 Accounts receivable from associated companies 5,793 5,793 Tax benefit receivable 23,035 23,035 ---------- ----------- ----------- Total current assets 403,081 12,700,000 13,103,081 ---------- ----------- ----------- Investments 250,000 250,000 Deferred charges and other assets 526,470 526,470 ---------- ----------- ----------- $1,179,551 $12,700,000 $13,879,551 ========== =========== =========== LIABILITIES AND PARENT COMPANY'S INVESTMENT -------------------------------------------- Current liabilities: Accounts payable to associated companies $ 151,134 $ 151,134 Accounts payable 20,703 20,703 Accrued taxes 3,157 3,157 ---------- ----------- ----------- Total current liabilities 174,994 174,994 ---------- ----------- ----------- Parent company's investment: Common stock, par value $1 per share 1,000 1,000 Subordinated notes payable to parent 1,249,000 $12,700,000 13,949,000 Retained deficit (245,443) (245,443) ---------- ----------- ----------- Total parent company's investment 1,004,557 12,700,000 13,704,557 ---------- ----------- ----------- Total current liabilities and parent company's investment $1,179,551 $12,700,000 $13,879,551 ========== =========== ===========
Financial Statement 2-A Page 2 of 2 NEW ENGLAND ELECTRIC RESOURCES, INC. The pro forma adjustments to show the estimated effect of the proposed transactions on the foregoing Balance Sheet at September 30, 1994 are as follows: Debit - Cash $12,700,000 Credit - Subordinated notes payable to parent $12,700,000 To reflect subordinated interest-free notes from New England Electric System in the amount of $12.70 million to New England Electric Resources, Inc. EX-99 7 FINANCIAL STATEMENT 2-B Financial Statement 2-B NEW ENGLAND ELECTRIC RESOURCES, INC. Statement of Income (Loss) and Retained Deficit For the Twelve Months Ended September 30, 1994 (Unaudited) Services rendered to nonassociated companies $1,111,256 ---------- Total income 1,111,256 ---------- Outside services employed 1,244,523 Income taxes (51,710) ---------- Total expense 1,192,813 ---------- Net loss $ (81,557) ========== Retained earnings/(deficit) at beginning of period $ (163,886) ---------- Retained earnings/(deficit) at end of period $ (245,443) ========== -----END PRIVACY-ENHANCED MESSAGE-----