-----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, TSmOcoXbP9/GLY5vbS5WtMMBhRUKb50k0LYNGtFUHSbdBp9uNsi5GzgqM5xJ6QGW k0f4esfa7HQKahVz/D++Ew== 0000071297-96-000060.txt : 19960823 0000071297-96-000060.hdr.sgml : 19960823 ACCESSION NUMBER: 0000071297-96-000060 CONFORMED SUBMISSION TYPE: U-1 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19960822 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 SEC ACT: 1935 Act SEC FILE NUMBER: 070-08901 FILM NUMBER: 96619369 BUSINESS ADDRESS: STREET 1: 25 RESEARCH DR CITY: WESTBOROUGH STATE: MA ZIP: 01581 BUSINESS PHONE: 5083669011 U-1 1 File No. 70- SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM U-1 APPLICATION/DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 NEW ENGLAND ELECTRIC SYSTEM 25 Research Drive Westborough, Massachusetts 01582 (Name of company filing this statement and address of principal executive office) NEW ENGLAND ELECTRIC SYSTEM (Name of top registered holding company parent of applicant) 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. Description of Proposed Transaction - -------------------------------------------- New England Electric System (NEES) is a voluntary association created in Massachusetts by an Agreement and Declaration of Trust dated January 2, 1926, as amended, and is a registered holding company under the Public Utility Holding Company Act of 1935 (the Act). Pursuant to Commission's order in File No. 70-8453, NEES is authorized to issue and sell short-term promissory notes to banks up to a maximum aggregate principal amount outstanding at any time not exceeding $100 million. This borrowing authority expires October 31, 1996. By this Application/Declaration, NEES proposes that it be granted authority to issue and sell short-term promissory notes to banks from time to time between November 1, 1996, and October 31, 2001. The maximum aggregate principal amount of such notes to be outstanding will not at any one time exceed $100 million. NEES currently does not expect to incur short-term borrowings during the applicable period. Nevertheless, NEES believes the requested $100 million short-term borrowing authority is necessary in order for it to act quickly in response to an emergency affecting it, or one or more of its subsidiaries. For example, if NEES subsidiaries were restricted from paying quarterly dividends, then NEES would need to borrow to pay its common dividend. A short-term debt authority of $100 million would allow NEES to continue its current dividend level for two quarters absent cash dividends from its subsidiaries. This should give the subsidiaries adequate time to resolve the dividend payment restriction. Further, given the current uncertainty in the electric utility industry, there is always the possibility that a subsidiary of NEES would be unable to access capital markets. If any subsidiary of NEES was denied access to the capital markets, their only emergency source of cash is NEES. NEES access to $100 million of short-term funds would give the subsidiaries time to satisfactorily function while the emergency situation is resolved. NEES does not currently have an ownership interest in an exempt wholesale generator (EWG) as defined in Section 32 of the Act or a foreign utility company (FUCO) as defined in Section 33 of the Act. Additionally, NEES is not a party to, nor does it have any rights under, a service, sales, or construction agreement with an EWG or FUCO. By its Order dated April 15, 1996 (HCAR 35-26504), the Commission has authorized EWG and FUCO acquisitions and financings by NEES and/or New England Electric Resources Inc., as set forth in their Application/Declaration in File No. 70-8783. In the event that the total amount of authority requested in the above-referenced Application/Declaration (File No. 70-8783) is invested in connection with EWGs and FUCOs, NEES' 'aggregate investment' (determined in accordance with Rule 53(a)(1)(i)) in EWGs and FUCOs would not exceed 50% of NEES' 'consolidated retained earnings' (as defined in Rule 53(a)(1)(ii)) in compliance with the provisions set forth in Rule 53 under the Act. NEES shall comply with the requirements of Rules 53 and 54 of the Act in connection with EWG and FUCO acquisitions and financings. Borrowings from Banks --------------------- The proposed borrowings from banks by NEES will be evidenced by notes payable maturing in less than one year from the date of issuance. NEES will negotiate with banks the interest costs of such borrowings. NEES pays fees to the banks in lieu of compensating balance arrangements. The effective interest cost of borrowings from a bank will not exceed the greater of the bank's base or prime lending rate, or the rate published in the Wall Street Journal as the high federal funds rate, plus, in either case, one percent. Certain of such borrowings may be without prepayment privileges. Based on the current base lending rate of 8.25% and an equivalent or lower high federal funds rate, the effective interest costs of such borrowing would not exceed 9.25% per annum. Payment of any short-term promissory notes prior to maturity will be made on the basis most favorable to NEES, taking into account fixed maturities, interest rates, and any other relevant financial consideration. Filing of Certificates of Notification -------------------------------------- Within 45 days after the end of each calendar quarter, NEES will file a certificate of notification covering the transactions effective pursuant to the authority requested hereby during such quarter. Such certificates will show the dates and amounts of all new money borrowings, the names of the lenders, the maximum amount of notes outstanding at any one time during the quarter, and the total amount of notes outstanding at the end of such quarter. The final certificate of notification will be accompanied by the required past tense opinion of counsel. Item 2. Fees, Commissions and Expenses - --------------------------------------- No underwriters' fees or commissions are to be paid with respect to the proposed transactions. Certain services are to be performed at the actual cost by New England Power Service Company, (NEPSCO) an affiliated service company, operating pursuant to the provisions of Section 13 of the Act and the Commission's rules thereunder. The services of NEPSCO will consist principally of services performed by the Executive and Administrative Department, the Corporate Department (including attorneys), the Treasury Department (including accountants and financial analysts), and the Office Service Department, and are estimated not to exceed $1,000. The only other expense to be borne by NEES will be the fee for filing under the Act of $2,000. Total estimated expenses in connection with the proposed transactions are $3,000. Item 3. Applicable Statutory Provisions - ---------------------------------------- Sections 6(a) and 7 of the Act are applicable to the issue and sale of notes by NEES to banks. The payment of indebtedness from the proceeds of the proposed borrowings is exempted from Sections 9(a) and 12 of the Act by Rule 42. Item 4. Regulatory Approval - ---------------------------- No state commission and no Federal commission (other than the Securities and Exchange Commission) has jurisdiction over the issue and sale of the notes by NEES. Item 5. Procedure - ------------------ It is requested that the Commission take action with respect to this Application/Declaration without a hearing being held and that an order be issued allowing this Application/Declaration to become effective on or before October 15, 1996 or as soon as practicable. NEES (i) does not request a recommended decision by a hearing officer, (ii) does not request a recommended decision by any other responsible officer of the Commission, (iii) hereby specifies that the Division of Corporate Regulation may assist in the preparation of the Commission's decision, and (iv) hereby requests that there be no 30-day waiting period between the date of issuance of the Commission's order and the date on which it is to become effective. Item 6. Exhibits and Financial Statements - ------------------------------------------ (a) Exhibits *F Opinion of Counsel G Proposed Form of Notice *To be supplied by amendment. (b) Financial Statements 1 Balance Sheets of NEES and of NEES and Subsidiaries Consolidated, as of June 30, 1996, on an actual basis. (1) 2 Statements of Income and Retained Earnings of NEES and of NEES and Subsidiaries Consolidated for the twelve months ended June 30, 1996. 3 Pro Forma to the Capital Structure of NEES (1) The proposed transactions will have no material effect on the Balance Sheets of NEES or of NEES and Subsidiaries Consolidated; therefore, pro forma statements, except as provided in 3, are omitted. Since the date of the balance sheets, there have been no material changes which were not in the ordinary course of business. A Financial Data Schedule is also provided. Item 7. Information as to Environmental Effects - ------------------------------------------------ The proposed transaction does not involve a major Federal action significantly affecting the quality of the human environment. SIGNATURE --------- Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this statement to be signed on its behalf by the undersigned officer thereunto duly authorized. NEW ENGLAND ELECTRIC SYSTEM s/Michael E. Jesanis ___________________________ Michael E. Jesanis Treasurer Date: August 22, 1996 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 of Massachusetts. 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 assumes or shall be held to any liability therefor. EX-99 2 Exhibit Index ------------- Exhibit Description Page - ------- ----------- ---- F Opinion of Counsel To be filed by amendment G Proposed Form of Notice Filed herewith Financial Statement No. Description Page - ------------- ----------- ---- 1A Balance Sheet of NEES as Filed herewith of June 30, 1996, on an actual basis 1B Balance Sheet of NEES and Filed herewith Subsidiaries Consolidated, as of June 30, 1996, on an actual basis 2A Statement of Income and Filed herewith Retained Earnings of NEES for the twelve months ended June 30, 1996 2B Statement of Income and Filed herewith Retained Earnings of NEES and Subsidiaries Consolidated for the twelve months ended June 30, 1996 3 Pro Forma of NEES Capital Filed herewith Structure 27 Financial Data Schedules for Filed herewith NEES and for NEES and Subsidiaries EX-99 3 EXHIBIT G EXHIBIT G Proposed Form of Notice ----------------------- New England Electric System ("NEES"), 25 Research Drive, Westborough, Massachusetts 01582, a registered holding company, has filed an application/declaration with this Commission pursuant to Sections 6(a) and 7 of the Public Utility Holding Company Act of 1935 ("Act"). NEES proposes to issue and sell up to a maximum aggregate outstanding principal amount of $100,000,000 of short-term notes to banks from time to time through October 31, 2001. The notes will mature in less than one year from the date of issuance. NEES will negotiate with banks the interest costs of such borrowings. The effective interest cost of borrowings will not exceed the effective interest cost of borrowings at the greater of the bank's base or prime lending rate, or the rate published by the Wall Street Journal as the high federal funds rate plus, in either case, 1%. NEES pays fees to the banks in lieu of compensating balance arrangements. Certain of such borrowings may be without prepayment privileges. Based upon the current base lending rate of 8.25% and an equivalent or lower federal funds rate, the effective interest cost would not exceed 9.25% per annum. EX-99 4 FINANCIAL STATEMENT 1A Financial Statement 1A NEW ENGLAND ELECTRIC SYSTEM (Parent Company Only) Balance Sheet At June 30, 1996 (Unaudited) ASSETS ------ (In Thousands) Investments: Common stocks of subsidiaries, at equity $1,619,806 Notes of subsidiaries 25,784 Other investments 3,652 ---------- Total investments 1,649,242 ---------- Current assets: Cash 113 Temporary cash investments - subsidiary companies 1,225 Accounts receivable 2 Interest and dividends receivable of subsidiaries 43,047 Other current assets 44 ---------- Total current assets 44,431 ---------- Deferred federal income taxes 2,845 ---------- $1,696,518 ========== CAPITALIZATION AND LIABILITIES ------------------------------ Common share equity: Common shares, par value $1 per share: Authorized - 150,000,000 shares Issued - 64,969,652 shares Outstanding - 64,898,262 shares $ 64,970 Paid-in capital 736,566 Retained earnings (including $611,566,000 of undistributed subsidiary earnings) 851,389 ---------- Total common share equity 1,652,925 ---------- Current liabilities: Accounts payable 895 Other accrued expenses 1,439 Dividends payable 34,194 ---------- Total current liabilities 36,528 ---------- Deferred credits 7,065 ---------- $1,696,518 ========== EX-99 5 FINANCIAL STATEMENT 1B Financial Statement 1B NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES Consolidated Balance Sheet At June 30, 1996 (Unaudited)
ASSETS ------ (In Thousands) Utility plant, at original cost $5,581,144 Less accumulated provisions for depreciation and amortization 1,783,968 ---------- 3,797,176 Net investment in Seabrook 1 under rate settlement 7,605 Construction work in progress 84,323 ---------- Net utility plant 3,889,104 ---------- Oil and gas properties, at full cost 1,272,417 Less accumulated provision for amortization 1,063,471 ---------- Net oil and gas properties 208,946 ---------- Investments: Nuclear power companies, at equity 47,524 Other subsidiaries, at equity 38,322 Other investments 90,134 ---------- Total investments 175,980 ---------- Current assets: Cash 2,759 Accounts receivable, less reserves of $20,226,000 255,710 Unbilled revenues 60,139 Fuel, materials, and supplies, at average cost 83,385 Prepaid and other current assets 81,014 ---------- Total current assets 483,007 ---------- Deferred charges and other assets 389,639 ---------- $5,146,676 ========== CAPITALIZATION AND LIABILITIES ------------------------------ Capitalization: Common share equity: Common shares, par value $1 per share: Authorized - 150,000,000 shares Issued - 64,969,652 shares Outstanding - 64,898,262 shares $ 64,970 Paid-in capital 736,814 Retained earnings 850,939 Treasury stock - 71,390 shares (2,501) ---------- Total common share equity 1,650,222 Minority interests in consolidated subsidiaries 47,697 Cumulative preferred stock of subsidiaries 132,016 Long-term debt 1,609,179 ---------- Total capitalization 3,439,114 ---------- Current liabilities: Long-term debt due within one year 52,585 Short-term debt 195,902 Accounts payable 132,163 Accrued taxes 31,289 Accrued interest 26,857 Dividends payable 37,626 Other current liabilities 113,743 ---------- Total current liabilities 590,165 ---------- Deferred federal and state income taxes 755,666 Unamortized investment tax credits 92,575 Other reserves and deferred credits 269,156 ---------- $5,146,676 ==========
EX-99 6 FINANCIAL STATEMENT 2A Financial Statement 2A NEW ENGLAND ELECTRIC SYSTEM (Parent Company Only) Statement of Income Twelve Months Ended June 30, 1996 (Unaudited) (In Thousands) Equity in earnings of subsidiaries $ 223,691 Interest income - subsidiaries 470 --------- Total income from subsidiaries 224,161 Other income 110 --------- Total income 224,271 Corporate and fiscal expenses (includes $1,798,000 for cost of services billed by an affiliated company) 4,303 Federal income taxes (533) --------- Income before interest 220,501 Interest 333 --------- Net income $ 220,168 ========= Statement of Retained Earnings Retained earnings at beginning of period $ 784,549 Net income 220,168 Dividends declared on common shares (153,328) --------- Retained earnings at end of period $ 851,389 ========= EX-99 7 FINANCIAL STATEMENT 2B Financial Statement 2B NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES Statement of Consolidated Income Twelve Months Ended June 30, 1996 (Unaudited) (In Thousands) Operating revenue $2,317,179 ---------- Operating expenses: Fuel for generation 276,803 Purchased electric energy 513,168 Other operation 511,184 Maintenance 127,853 Depreciation and amortization 254,747 Taxes, other than income taxes 139,693 Income taxes 139,481 ---------- Total operating expenses 1,962,929 ---------- Operating income 354,250 Other income: Allowance for equity funds used during construction 2,471 Equity in income of generating companies 10,710 Other income (expense), net (7,290) ---------- Operating and other income 360,141 ---------- Interest: Interest on long-term debt 110,343 Other interest 22,048 Allowance for borrowed funds used during construction (8,378) ---------- Total interest 124,013 ---------- Income after interest 236,128 Preferred dividends of subsidiaries 8,510 Minority interests 7,557 ---------- Net income $ 220,061 ========== Average common shares 64,906,229 Net income per average common share $ 3.39 Dividends declared per share $2.360 Statement of Consolidated Retained Earnings Retained earnings at beginning of period $ 784,549 Net income 220,061 Dividends declared on common shares (153,221) Premium on redemption of preferred stock (450) ---------- Retained earnings at end of period $ 850,939 ========== EX-99 8 FINANCIAL STATEMENT 3 Financial Statement 3 NEW ENGLAND ELECTRIC SYSTEM (Parent Company Only) Capital Structure Proformed to Include $100 Million of Short-Term Debt At June 30, 1996 (Unaudited) (In Thousands) Common share equity: Common shares, par value $1 per share: Authorized - 150,000,000 shares Issued - 64,969,652 shares Outstanding - 64,898,262 shares $ 64,970 Paid-in capital 736,566 Retained earnings (including $611,566,000 of undistributed subsidiary earnings) 851,389 ---------- Total common share equity 1,652,925 ---------- Short-term debt 100,000 EX-27 9 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AND RELATED STATEMENTS OF INCOME, AND RETAINED EARNINGS OF NEW ENGLAND ELECTRIC SYSTEM (PARENT COMPANY), AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 JUN-30-1996 JUN-30-1996 12-MOS PER-BOOK 0 1,649,242 44,431 2,845 0 1,696,518 64,970 736,566 851,389 1,652,925 0 0 0 0 0 0 0 0 0 0 43,593 1,696,518 0 (533) 4,303 3,770 (3,770) 224,271 220,501 333 220,168 0 220,168 153,328 0 0 0 0 EX-27 10 FINANCIAL DATA SCHEDULE
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND RELATED CONSOLIDATED STATEMENTS OF INCOME, RETAINED EARNINGS AND CASH FLOWS OF NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 JUN-30-1996 JUN-30-1996 12-MOS PER-BOOK 3,889,104 384,926 483,007 389,639 0 5,146,676 64,970 736,814 850,939 1,650,222 0 132,016 1,609,179 0 0 195,902 52,585 0 0 0 1,506,772 5,146,676 2,317,179 139,481 1,823,448 1,962,929 354,250 5,891 360,141 124,013 220,061 8,510 220,061 153,221 110,343 538,698 $3.39 $3.39 Total deferred charges includes other assets. Preferred stock reflects preferred stock of subsidiaries. Preferred stock dividends reflect preferred stock dividends of subsidiaries. Total common stockholders equity is reflected net of treasury stock at cost. -----END PRIVACY-ENHANCED MESSAGE-----