-----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, QfAtW7RBJBdSzbA8PP143w+iluptl2cQ5E1IiKFrx5ir670qk29U607nSepYIEH9 PfJQk3exYWIy2DQO5Odd+w== 0000071297-98-000059.txt : 19981105 0000071297-98-000059.hdr.sgml : 19981105 ACCESSION NUMBER: 0000071297-98-000059 CONFORMED SUBMISSION TYPE: U-1 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19981104 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: SEC FILE NUMBER: 070-09417 FILM NUMBER: 98737475 BUSINESS ADDRESS: STREET 1: 25 RESEARCH DR CITY: WESTBOROUGH STATE: MA ZIP: 01582 BUSINESS PHONE: 5083669011 MAIL ADDRESS: STREET 1: 25 RESEARCH DR CITY: WESTBOROUGH STATE: MA ZIP: 01582 U-1 1 File No. 70- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM U-1 APPLICATION/DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 NEW ENGLAND ELECTRIC SYSTEM (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 of applicant) John G. Cochrane Kirk L. Ramsauer Treasurer Associate General 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 Transactions - --------------------------------------------- Introduction - ------------ New England Electric System (NEES) is a holding company created under the laws of The Commonwealth of Massachusetts by an Agreement and Declaration of Trust dated January 1, 1926, as amended, and is registered under the Public Utility Holding Company Act of 1935. Two of NEES' subsidiaries currently occupy office complexes under long- term leases with John Hancock Life Insurance Company (John Hancock). John Hancock has indicated its willingness to sell its interest in the properties to NEES or a subsidiary thereof. As those NEES subsidiaries engaged in businesses other than the distribution and transmission of electric energy expand their operations, they may require new or additional office space. It may be desirable to own and occupy such space, as opposed to renting. Therefore, NEES believes it may be most efficient to concentrate such property ownership interests in a new subsidiary (Property Company). Property Company will be organized as a Massachusetts business trust with transferable shares, a Massachusetts corporation, or a limited liability company, with an initial capitalization of not exceeding $50 million. NEES proposes to make an initial equity investment in Property Company of at least $1 million and not more than $50 million. The ultimate debt-equity ratio of Property Company, and whether NEES' further equity interest will be represented by stock purchases, capital contributions, or open account advances, will depend on the nature of capital markets at the time of closing. The initial properties being considered for acquisition are: 1. North Andover Service Building, Salem Turnpike (Route 114), North Andover, Massachusetts. The service building consists of approximately 105,500 square feet of gross building area, including a three-story office building and one-story warehouse building, and approximately 31 acres of land. The service building complex and related facilities are currently leased to Massachusetts Electric Company for a term of thirty-five years, commencing on January 1, 1967 and terminating on December 31, 2001. The lease contains the option for three additional five year renewal terms. 2. NEES Companies Headquarters Complex, 25 Research Drive, Westborough, Massachusetts. The headquarters complex consists of a three- building complex operating as a single unit containing a gross building area of approximately 317,877 square feet, including a six-story office building, a two-story office building, and connecting common areas. The complex and related facilities are located upon approximately 25 acres of land. The headquarters complex and related facilities are currently leased to New England Power Service Company (the Service Company) under a long-term lease which expires on August 31, 1999. The lease contains the option for three additional five year renewal terms. New England Power Service Company has exercised the right to extend the lease for the first five-year renewal term. It is currently contemplated that after the acquisitions, the current leasing arrangements will remain in place, with Property Company merely replacing John Hancock as landlord under the terms and conditions remaining as previously negotiated in arms-length bargaining between the unaffiliated parties. Item 2. Fees, Commissions and Expenses - --------------------------------------- The title examination, title insurance, surveys, and recording fees in connection with the transfers of the service building and the headquarters complex are estimated to be approximately $40,000. Incidental services in connection herewith will be performed by the Service Company at the actual cost thereof. The Service Company is an affiliated service company operating pursuant to Section 13 of the Act and the Commission's rules thereunder. The cost of such services is estimated not to exceed $2,000. Item 3. Applicable Statutory Provisions - ---------------------------------------- The proposed investment by NEES in the equity securities of the Property Company by NEES are subject to Sections 9(a) and 10 of the Act. Any capital contributions or open account advances by NEES are subject to Section 12(b) of the Act but exempted by Rule 45(b)4. To the extent the acquisition of the commercial real estate is an acquisition of an interest in another business, Sections 9(a) and 10 of the Act apply. The proposed issue and sale of the securities of Property Company is subject to Sections 6(a) and 7 of the Act. The continuation of lease of the service building and the headquarters complex to affiliates of the Property Company is subject to Section 12(f). EWG OR FUCO OWNERSHIP --------------------- Neither NEES nor any of its subsidiaries has an ownership interest in an exempt wholesale generator (EWG) or a foreign utility company (FUCO) as defined in Sections 32 and 33 of the 1935 Act. Additionally, neither NEES nor any subsidiary thereof is a party to, or has any rights under, a service, sales, or construction agreement with an EWG or FUCO. NEES and the subsidiaries thereof shall comply with the requirements of Rule 53 of the Act in connection with EWG and FUCO acquisitions and financings. Further, any capital contribution to Property Company will not be used for the acquisition of an interest in an EWG or a FUCO. Item 4. Regulatory Approval - ---------------------------- No action by any state commission or Federal commission (other than the Securities and Exchange Commission) is necessary to carry out the proposed transactions. Item 5. Procedure - ------------------ It is requested that the Commission take action with respect to this Application/Declaration without a hearing being held and that this statement become effective and be granted on or before December 28, 1998, or as soon thereafter as possible. The Companies (1) do not request a recommended decision by a hearing officer, (2) do not request a recommended decision by any other responsible officer of the Commission, (3) hereby specify that the Division of Corporate Regulation may assist in the preparation of the Commission's decision, and (4) hereby request 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 * A Constituent instruments of Property Company * F Opinion of Counsel H Proposed Form of Notice * to be filed by amendment (b) Financial Statements 1-A Balance Sheet of NEES (Parent Company only) at June 30, 1998, Actual ** 1-B Statement of Income and Retained Earnings for NEES (Parent Company only) for twelve months ended June 30, 1998, Actual 2-A Consolidated Balance Sheet of NEES at June 30, 1998, Actual ** 2-B Statement of Consolidated Income for NEES for twelve months ended June 30, 1998, Actual 27 Financial Data Schedule for NEES ** The proposed transactions will have no material, instant effect on the statements of income and retained earnings. Pro forma statements, therefore, are omitted. ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS - ------------------------------------------------- The proposed transactions do 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 Application/Declaration on Form U-1 to be signed on its behalf, as indicated by the undersigned officer thereunto duly authorized. NEW ENGLAND ELECTRIC SYSTEM s/John G. Cochrane By John G. Cochrane Treasurer Date: November 4, 1998 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 INDEX Exhibit No. Description Page - ----------- ----------- ---- A Constituent instruments of To be filed by Property Company amendment F Opinion of Counsel To be filed by amendment H Proposed Form of Notice Filed herewith Financial Statements 1-A Balance Sheet of NEES (Parent Filed herewith Company only) at June 30, 1998, Actual 1-B Statement of Income and Retained Filed herewith Earnings for NEES (Parent Company only) for twelve months ended June 30, 1998, Actual 2-A Consolidated Balance Sheet of Filed herewith NEES at June 30, 1998, Actual 2-B Statement of Consolidated Income Filed herewith for NEES for twelve months ended June 30, 1998, Actual 27 Financial Data Schedule for NEES Filed herewith EX-99 3 EXHIBIT H EXHIBIT H - Proposed Form of Notice Notice of Proposal to organize Property Subsidiary New England Electric System (NEES), a registered holding company, has filed an Application/Declaration under Sections 6(a), 7, 9(a), 10, and 12 of the 1935 Act and Rules thereunder. NEES proposes to organize a Property Company to purchase office space to be used by certain NEES subsidiaries, including the existing service buildings leased by Massachusetts Electric Company and the headquarters complex leased by New England Power Service Company. NEES proposes to make an initial equity investment in the Property Company of at least $1 million and not more than $50 million. EX-99 4 FINANCIAL STATEMENT 1-A NEW ENGLAND ELECTRIC SYSTEM (Parent Company Only) Balance Sheet At June 30, 1998 (Unaudited)
ASSETS ------ (In Thousands) Investments: Common stocks of subsidiaries, at equity $1,803,017 Preferred stock of subsidiary 29,282 Notes of subsidiaries 88,877 Other investments 4,817 ---------- Total investments 1,925,993 ---------- Current assets: Cash 508 Temporary cash investments - subsidiary companies 178,150 Interest and dividends receivable of subsidiaries 20,912 Other current assets 4,034 ---------- Total current assets 203,604 ---------- Deferred federal income taxes 3,595 ---------- $2,133,192 ========== CAPITALIZATION AND LIABILITIES ------------------------------ Common share equity: Common shares, par value $1 per share: Authorized - 150,000,000 shares Issued - 64,969,652 shares $ 64,970 Other paid-in capital 736,661 Retained earnings (including $711,160,000 of undistributed subsidiary earnings) 970,833 Treasury stock - 1,950,005 shares (82,587) Unrealized gain on securities, net 574 ---------- Total common share equity 1,690,451 ---------- Current liabilities: Accounts payable 552 Dividends payable 33,337 Short-term debt 398,375 ---------- Total current liabilities 432,264 ---------- Other reserves and deferred credits 10,477 ---------- $2,133,192 ==========
EX-99 5 FINANCIAL STATEMENT 1-B NEW ENGLAND ELECTRIC SYSTEM (Parent Company Only) Statement of Income Twelve Months Ended June 30, 1998 (Unaudited)
(In Thousands) Equity in earnings of subsidiaries $225,942 Interest income - subsidiaries 1,687 -------- Total income from subsidiaries 227,629 Other income 169 --------- Total income 227,798 Corporate and fiscal expenses (includes $1,550,000 for cost of services billed by an affiliated company) 5,925 Federal income taxes (1,844) --------- Income before interest 223,717 Interest 6,083 --------- Net income $ 217,634 ========= Statement of Retained Earnings Retained earnings at beginning of period $ 904,827 Net income 217,634 Dividends declared on common shares (151,628) --------- Retained earnings at end of period $ 970,833 =========
EX-99 6 FINANCIAL STATEMENT 2-A NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES Consolidated Balance Sheet at June 30, 1998 (Unaudited)
ASSETS ------ (In Thousands) Utility plant, at original cost $5,926,625 Less accumulated provisions for depreciation and amortization 2,068,995 ---------- 3,857,630 Construction work in progress 50,194 ---------- Net utility plant 3,907,824 ---------- Oil and gas properties, at full cost - Less accumulated provision for amortization - ---------- Net oil and gas properties - ---------- Investments: Nuclear power companies, at equity 47,443 Other subsidiaries, at equity 36,725 Other investments 132,769 ---------- Total investments 216,937 ---------- Current assets: Cash 23,040 Accounts receivable, less reserves of $19,877,000 255,522 Unbilled revenues 76,138 Fuel, materials, and supplies, at average cost 81,810 Prepaid and other current assets 104,224 ---------- Total current assets 540,734 ---------- Accrued Yankee nuclear plant costs 272,939 Deferred charges and other assets 560,932 ---------- $5,499,366 ========== 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 - 62,847,197 shares $ 64,970 Paid-in capital 736,699 Retained earnings 970,833 Treasury stock - 2,122,455 shares (89,045) Unrealized gain on securities, net 7,688 ---------- Total common share equity 1,691,145 Minority interests in consolidated subsidiaries 42,637 Cumulative preferred stock of subsidiaries 39,087 Long-term debt 1,365,848 ---------- Total capitalization 3,138,717 ---------- Current liabilities: Long-term debt due within one year 27,920 Short-term debt 656,950 Accounts payable 161,567 Accrued taxes 19,065 Accrued interest 21,980 Dividends payable 35,457 Other current liabilities 121,869 ---------- Total current liabilities 1,044,808 ---------- Deferred federal and state income taxes 713,527 Unamortized investment tax credits 88,994 Accrued Yankee nuclear plant costs 272,939 Other reserves and deferred credits 240,381 ---------- $5,499,366 ==========
EX-99 7 FINANCIAL STATEMENT 2-B NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES Statement of Consolidated Income Twelve Months Ended June 30, 1998 (Unaudited)
(In Thousands) Operating revenue $2,478,391 ---------- Operating expenses: Fuel for generation 350,612 Purchased electric energy 501,584 Other operation 594,731 Maintenance 149,855 Depreciation and amortization 223,205 Taxes, other than income taxes 147,900 Income taxes 150,892 ---------- Total operating expenses 2,118,779 ---------- Operating income 359,612 Other income: Equity in income of generating companies 10,153 Other income (expense), net (11,003) ---------- Operating and other income 358,762 ---------- Interest: Interest on long-term debt 102,493 Other interest 24,502 Allowance for borrowed funds used during construction (1,783) ---------- Total interest 125,212 ---------- Income after interest 233,550 Preferred dividends and net gain on reacquisition of preferred stock 9,794 Minority interests 6,483 ---------- Net income $ 217,273 ========== Average common shares - Basic 64,431,253 Average common shares - Diluted 64,499,067 Per share data: Net income - Basic and Diluted $3.37 Dividends declared $2.36 Statements of Consolidated Retained Earnings Retained earnings at beginning of period $ 904,825 Net income 217,273 Dividends declared on common shares (151,265) Premium on redemption of preferred stock - --------- Retained earnings at end of period $ 970,833 =========
EX-27 8 FINANCIAL DATA SCHEDULE
OPUR1 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 IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 DEC-31-1998 JUN-30-1998 12-MOS PER-BOOK 3,907,824 216,937 540,734 833,871 0 5,499,366 64,970 736,699 970,833 1,691,145 0 39,087 1,365,848 0 0 656,950 27,920 0 0 0 1,718,416 5,499,366 2,478,391 150,892 1,967,887 2,118,779 359,612 (850) 358,762 125,212 217,273 4,327 217,273 151,265 102,493 239,340 $3.37 $2.37 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 includes treasury stock at cost and unrealized gain on securities. -----END PRIVACY-ENHANCED MESSAGE-----