-----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, RFAEwh1/HPawCggxRmor+0UQlQx/ntYIRQG0TkFdiF2RjmyqrJzDmWXE0ov9uEY/ W5XVI5fKUihTry36DFDwxA== 0000072741-02-000030.txt : 20020414 0000072741-02-000030.hdr.sgml : 20020414 ACCESSION NUMBER: 0000072741-02-000030 CONFORMED SUBMISSION TYPE: U-1 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20020208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHEAST UTILITIES SYSTEM CENTRAL INDEX KEY: 0000072741 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 042147929 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1 SEC ACT: 1935 Act SEC FILE NUMBER: 070-10051 FILM NUMBER: 02532311 BUSINESS ADDRESS: STREET 1: 174 BRUSH HILL AVE CITY: WEST SPRINGFIELD STATE: MA ZIP: 01090-0010 BUSINESS PHONE: 4137855871 MAIL ADDRESS: STREET 1: 107 SELDON ST CITY: BERLIN STATE: CT ZIP: 06037-1616 U-1 1 nuu1020702.txt NU PARENT U1020802 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 NORTHEAST UTILITIES 107 Selden Street Berlin, CT 01037 (Name of companies filing this statement and address of principal executive offices) NORTHEAST UTILITIES (Name of top registered holding company) Gregory Butler, Esq. Vice President, Secretary and General Counsel Northeast Utilities Service Company P.O. Box 270 Hartford, Connecticut 06141-0270 (Name of address of agent for service) The Commission is requested to mail signed copies of all orders, notices and communications to: David R. McHale Jeffrey C. Miller Vice President and Treasurer Assistant General Counsel Northeast Utilities Service Northeast Utilities Service Company Company 107 Selden Street 107 Selden Street Berlin, CT 06037 Berlin, CT 06037 ITEM 1. Description of Proposed Transaction 1. Northeast Utilities ("NU") is a public utility holding company registered under the Public Utility Holding Company Act of 1935, as amended (the "Act"). NU files this Application/Declaration under the Act to seek authorization concerning long-term debt issuances at the NU level. Specifically, NU is requesting authorization through the period ending June 30, 2005 (the "Authorization Period"): (i) to issue from time to time secured or unsecured long-term debt securities ("Long-term Debt") in an aggregate amount at any time outstanding not to exceed $600 million; and (ii) to enter into hedging transactions with respect to existing indebtedness of NU ("Interest Rate Hedges")in order to manage and minimize interest rate costs, and to enter into hedging transactions with respect to future expected debt issuances ("Anticipatory Hedges") in order to lock-in then current interest rates and/or manage interest rate risk exposure. 2. Use of Proceeds. NU will use the proceeds from these financings for general corporate purposes, including (i) investments in its regulated utility companies, (ii) investments in exempt wholesale generators ("EWGs"), Foreign Utility Companies ("FUCOs"), nonutility companies formed pursuant to Rule 58 ("Rule 58 Subsidiaries") and exempt telecommunications companies ("ETCs") and other competitive companies, (iii) the repayment, redemption, refunding or purchase by NU of its own securities , (iv) financing working capital requirements of NU and its subsidiaries, and (v) other corporate purposes. 3. NU represents that no financing proceeds will be used to acquire the securities of, or other interests in, any company unless such acquisition has been approved by the Commission or is in accordance with an exemption under the Act or rules thereunder, including Sections 32, 33 and 34 and Rules 52, 53 and 58. The aggregate amount of proceeds used to fund investments in EWGs and FUCOs will not, when added to NU's "aggregate investment" (as defined in Rule 53) in all such entities at any point in time, exceed 50% of NU's "consolidated retained earnings" (also as defined in Rule 53) or such other amount as may be authorized by the Commission. Further, proceeds invested in Rule 58 Subsidiaries will adhere to the limitations of that rule. LONG TERM DEBT 4. NU requests authorization to issue secured or unsecured long-term debt the proceeds of which will enable NU to reduce or refinance short-term debt with more permanent capital and provide an important source of future financing for the operations of and investments in non- utility businesses that are exempt under the Act. 5. Long-term Debt of NU may be in the form of secured or unsecured notes ("Debentures") issued in one or more series. The Debentures of any series (i) will have a maturity ranging from one to 50 years, (ii) will bear interest at a rate not to exceed 500 basis points over the yield to maturity of a U.S. Treasury security having a remaining term approximately equal to the term of such series of Debentures, (iii) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at various premiums above or discounts below the principal amount thereof, (iv) may be entitled to mandatory or optional sinking fund provisions and (v) may provide for reset of the coupon pursuant to a remarketing arrangement. Long-term Debt of NU also may be in the form of bank lines of credit ("Bank Lines"). Bank Lines will have maturities of not more than five years from the date of each borrowing and the effective cost of such loans will not exceed at the time of issuance 500 basis points over LIBOR. Any Long-term Debt issued by NU which will be secured debt will not be secured by shares of stock or other securities or property of any of the utility subsidiaries of NU. NU's Declaration of Trust requires shareholder approval before placing liens on substantially all of its assets. To the extent needed, NU will obtain shareholder approval of any secured borrowings. 6. NU contemplates that the Debentures would be issued and sold directly to one or more purchasers in privately- negotiated transactions or to one or more investment banking or underwriting firms or other entities that would resell the Debentures without registration under the 1933 Act, in reliance upon one or more applicable exemptions from registration thereunder, or to the public either (i) through underwriters selected by negotiation or competitive bidding or (ii) through selling agents acting either as agent or as principal for resale to the public either directly or through dealers. 7. The maturity dates, interest rates, call, redemption and sinking fund provisions and conversion features, if any, with respect to the Debentures of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, if any, will be established by negotiation or competitive bidding and reflected in the applicable supplemental indenture or officer's certificate and purchase agreement or underwriting agreement setting forth such terms. HEDGES 9. Interest Rate Hedges. NU request authorization to enter into Interest Rate Hedges, subject to certain limitations and restrictions set forth herein, in order to manage interest rate cost. Interest Rate Hedges would only be entered into with counterparties ("Approved Counterparties") whose senior unsecured debt ratings, or the senior unsecured debt ratings of the parent companies of the counterparties, as published by Standard and Poor's Ratings Group, are equal to or greater than BBB, or an equivalent rating from Moody's Investors Service or Fitch IBCA. 10. Interest Rate Hedges will involve the use of financial instruments commonly used in the capital markets, such as interest rate swaps, locks, caps, collars, floors, and other similar appropriate instruments. The transactions would be for fixed periods and stated notional amounts. Transaction fees, commissions and other amounts payable to the counterparty or exchange (excluding, however, the swap or option payments) in connection with an Interest Rate Hedge will not exceed those generally obtainable in competitive markets for parties of comparable credit quality. 11. Anticipatory Hedges. In addition, NU requests authorization to enter into Anticipatory Hedges, subject to certain limitations and restrictions set forth herein. Such Anticipatory Hedges would only be entered into with Approved Counterparties, and would be utilized to fix and/or manage the interest rate risk associated with any new Long-term Debt issuance through (i) a forward sale of exchange-traded U.S. Treasury futures contracts, U.S. Treasury Securities and/or a forward swap (each a "Forward Sale"), (ii) the purchase of put options on U.S. Treasury Securities (a "Put Options Purchase"), (iii) a Put Options Purchase in combination with the sale of call options on U.S. Treasury Securities (a "Zero Cost Collar"), (iv) transactions involving the purchase or sale, including short sales, of U.S. Treasury Securities, or (v) some combination of a Forward Sale, Put Options Purchase, Zero Cost Collar and/or other derivative or cash transactions, including, but not limited to locks, caps and collars, appropriate for the Anticipatory Hedges. 12. Anticipatory Hedges may be executed on-exchange ("On-Exchange Trades") with brokers through the opening of futures and/or options positions publicly traded, the opening of over-the-counter positions with one or more counterparties ("Off-Exchange Trades"), or a combination of On-Exchange Trades and Off-Exchange Trades. NU will determine the optimal structure of each Anticipatory Hedge transaction at the time of execution. 13. The Applicant represents that each Interest Rate Hedge and Anticipatory Hedge will be accounted for using generally acceptable accounting practices ("GAAP"). The Applicant will also comply with the then existing financial disclosure requirements of the Financial Accounting Standards Board associated with hedging transactions. ITEM 2. Fees, Commissions, and Expenses 1. The fees, commissions and expenses of the Applicant expected to be paid or incurred, directly or indirectly, in connection with the transactions described above, other than those fees specified in Item 1 above, are estimated as follows: Northeast Utilities Service Company (Legal, Financial, Accounting and Other Services) Not in excess of $25,000 ITEM 3. Applicable Statutory Provisions 1. Sections 6(a) and 7 of the Act are applicable to the issuance of Long-term Debt, Interest Rate Hedges and Anticipatory Hedges. ITEM 4. Regulatory Approvals 1. No state commission, and no federal commission, other than the Commission, has jurisdiction over the proposed transactions. ITEM 5. Procedure 1. The Applicant hereby requests that the Commission publish a notice under Rule 23 with respect to the filing of this Application as soon as practicable and that the Commission's order be issued as soon as possible. A form of notice suitable for publication in the Federal Register is attached hereto as Exhibit H. The Applicant respectfully requests the Commission's approval, pursuant to this Application, of all transactions described herein, whether under the sections of the Act and Rules thereunder enumerated in Item 3 or otherwise. It is further requested that the Commission issue an order authorizing the transactions proposed herein at the earliest practicable date but in any event not later than April 15, 2002. Additionally, the Applicant (i) requests that there not be any recommended decision by a hearing officer or by any responsible officer of the Commission, (ii) consents to the Office of Public Utility Regulation within the Division of Investment Management assisting in the preparation of the Commission's decision, and (iii) waives the 30-day waiting period between the issuance of the Commission's order and the date on which it is to become effective, since it is desired that the Commission's order, when issued, become effective immediately. Other Matters 1. Except in accordance with the Act, neither NU nor any subsidiary thereof (a) has acquired an ownership interest in an EWG or a FUCO, as defined in Sections 32 and 33 of the Act, or (b) now is or as a consequence of the transactions proposed herein will become a party to, or has or will as a consequence of the transactions proposed herein have a right under, a service, sales, or construction contract with an EWG or a FUCO. None of the proceeds from the transactions proposed herein will be used by NU and its subsidiaries to acquire any securities of, or any interest in, an EWG or a FUCO. 2. NU currently meets all of the conditions of Rule 53(a), except for clause (1). At September 30, 2001, NU's "aggregate investment," as defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $469.5 million, or approximately 80% of NU's average "consolidated retained earnings," also as defined in Rule 53(a)(1), for the four quarters ended September 30, 2001 ($586 million). With respect to Rule 53(a)(1), however, the Commission has determined that NU's financing of its investment in Northeast Generation Company ("NGC"), NU's only current EWG or FUCO, in an amount not to exceed $481 million or 83% of its "average consolidated retained earnings" would not have either of the adverse effects set forth in Rule 53(c). See Northeast Utilities, Holding Company Act Release No. 27148, dated March 7, 2000 (the "Rule 53(c) Order"). NU continues to assert that its EWG investment in NGC will not adversely affect the System. 3. In addition, NU and its subsidiaries are in compliance and will continue to comply with the other provisions of Rule 53(a) and (b), as demonstrated by the following determinations: (i) NGC maintains books and records, and prepares financial statements, in accordance with Rule 53(a)(2). Furthermore, NU has undertaken to provide the Commission access to such books and records and financial statements, as it may request; (ii) No employees of NU's public utility subsidiaries have rendered services to NGC; (iii) NU has submitted (a) a copy of each Form U-1 and Rule 24 certificate that has been filed with the Commission under Rule 53 and (b) a copy of Item 9 of the Form U5S and Exhibits G and H thereof to each state regulator having jurisdiction over the retail rates of NU's public utility subsidiaries; (iv) Neither NU nor any subsidiary has been the subject of a bankruptcy or similar proceeding unless a plan of reorganization has been confirmed in such proceeding; (v) NU's average CREs for the four most recent quarterly periods have not decreased by 10% or more from the average for the previous four quarterly periods; and (vi) In the previous fiscal year, NU did not report operating losses attributable to its investment in EWGs/FUCOs exceeding 3 percent of NU's consolidated retained earnings. 4. The proposed transactions, considered in conjunction with the effect of the capitalization and earnings of NU's EWGs and FUCOs, would not have a material adverse effect on the financial integrity of the NU system, or an adverse impact on NU's public-utility subsidiaries, their customers, or the ability of State commissions to protect such public- utility customers. The Rule 53(c) Order was predicated, in part, upon an assessment of NU's overall financial condition which took into account, among other factors, NU's consolidated capitalization ratio and its retained earnings, both of which have improved since the date of the order. NU's EWG investment (it has no FUCO investment), has been profitable for all quarterly periods ending June 30, 2000 through September 30, 2001 (NGC was acquired in March 2000). As of December 31, 1999, the most recent period for which financial statement information was evaluated in the Rule 53(c) Order, NU's consolidated capitalization consisted of 35.3% common equity and 64.7% debt (including long and short- term debt, preferred stock, capital leases and guarantees). As of June 30, 2000, the end of the first quarter after the issuance of the Rule 53(c) Order, the consolidated capitalization ratios of NU, with consolidated debt including all short-term debt and non-recourse debt of the EWG, were as follows: As of June 30, 2000 (thousands of dollars) % Common shareholders' equity 2,365,854 36.9 Preferred stock 277,700 4.3 Long-term and short-term debt 3,768,353 58.8 6,411,907 100.0 5. The consolidated capitalization ratios of NU as of September 30, 2001, with consolidated debt including all short-term debt and non-recourse debt of the EWG, were as follows: As of September 30, 2001 (thousands of dollars) % Common shareholders' equity 2,133,851 31.6 Preferred stock 116,200 1.7 Long-term and short-term debt 2,391,557 35.4 Rate Reduction Bonds 2,118,400 31.3 6,760,008 100.0 6. NU's consolidated retained earnings decreased from $581.8 million as of December 31, 1999 to $495.9 million as of December 31, 2000, mainly as a result of an after-tax write-off of $225 million by Public Service Company of New Hampshire as part of a restructuring settlement and also recognition of a loss due to a decision by the FERC lowering the price for acquiring installed generating capacity in New England but increased by $149 million through the three quarters ended September 30, 2001. NGC has made a positive contribution to earnings by contributing $207 million in revenues from inception (March 2000) through September 30, 2001 and net income of $57.5 million for the same period. Accordingly, since the date of the Rule 53(c) Order, the capitalization and earnings attributable to NU's investments in EWGs and FUCOs has not had an adverse impact on NU's financial integrity. ITEM 6. Exhibits and Financial Statements 1. The following exhibits and financial statements are filed herewith: (a) Exhibits F. Opinion of Counsel (To be filed by amendment) H. Form of Notice (b) Financial Statements 1.1 Northeast Utilities Consolidated Balance Sheets, actual and pro forma, as of December 31, 2001, and Consolidated Statements of Income, actual and pro forma, of Retained Earnings, for the 12 months ended December 31, 2001 and Statement of Capitalization as of December 31, 2001. 1.2 Northeast Utilities Parent Balance Sheets, actual and pro forma, as of December 31, 2001, and Statements of Income, actual and pro forma, and Statement of Retained Earnings, for the 12 months ended December 31, 2001 and Statement of Capitalization as of December 31, 2001. SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this amendment to be signed on its behalf by the undersigned officer or attorney thereunto duly authorized. Date: February 7, 2002 NORTHEAST UTILITIES By: /s/ Randy A. Shoop Randy A. Shoop Assistant Treasurer - ------------------------------------------------------------ In Holding Company Act Rel. No. 35-27127 (January 31, 2000) the Commission authorized NU to issue short or long- term debt in order to fund the acquisition of Yankee Energy System, Inc., up to an aggregate amount of $275 million. The authorization expires June 30, 2002. The order sought in this file will replace the order received in File No. 35- 27127. In addition, pursuant to Holding Company Act Rel. 35-27328 (Dec. 28, 2000), the Commission authorized NU to incur up to $400 million in short-term debt. The Long-term Debt authorization sought here is in addition to such short- term debt. In March 2000, NU received an order from the Commission authorizing the investment in Northeast Generation Company, an EWG, in an amount equal to 83% of NU's average consolidated retained earnings (Holding Co. Act Rel. 35-27148 (March 7, 2000)). Recently, the Commission approved a similar financing application filed by The Southern Company in which Southern requested approval to issue preferred securities and long-term debt directly or indirectly through special- purpose financing entities. See The Southern Company, Holding Co. Act Release No. 27134 (Feb. 9, 2000). In that case, the Commission took account of the changing needs of registered holding companies for sources of capital other than common equity and short-term debt brought about primarily by the elimination of restrictions under the Act on investments in various types of non-core businesses (e.g., EWGs, FUCOs, ETCs and Rule 58 Companies). The Commission noted that, without the ability to raise capital in external markets that is appropriate for such investments, registered holding companies would be at a competitive disadvantage to other energy companies that are not subject to regulation under the Act. See also American Electric Power Co., Inc., Holding Co. Act Release No. 27382 (Apr. 20, 2001). The Commission has previously authorized similar hedging transaction proposals. See New Century Energies, Inc., et al., Holding Co. Act Release No. 27000 (April 7, 1999); and Ameren Corp., et al., Holding Co. Act Release No. 27053 (July 23, 1999). - ---------------------------------------------------------- EX-99 3 exhibhu1020702.txt EXHIBIT H EXHIBIT H FORM OF NOTICE Notice is hereby given that the following filing(s)has/have been made with the Commission pursuant to provisions of the Act and rules promulgated under the Act. All interested persons are referred to the applications(s)and/or declaration(s) for complete statements of the proposed transactions(s) summarized below. The application(s) and/or declarations(s) and any amendments is/are available for public inspection through the Commission's Branch of Public Reference. Interested persons wishing to comment or request a hearing on the applications(s) and/or declaration(s) should submit their views in writing by ___________, 2002 to the Secretary, Securities and Exchange Commission, Washington, D.C. 20549-0609, and serve a copy on the relevant applicant(s) and/or declarant(s) at the address(es) specified below. Proof of service (by affidavit or, in case of an attorney at law, by certificate) should be filed with the request. Any request for hearing should identify specifically the issues of facts or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in the matter. After __________, 2002, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective. Northeast Utilities (70- ) Northeast Utilities ("NU"), a registered public utility holding company, located at 107 Selden Street, Berlin, Connecticut 06037 has filed an application-declaration under Sections 6(a) and 7 of the Act with respect to the issuance of long-term debt by NU and related financial transactions. NU requests authorization through the period ending June 30, 2005 (the "Authorization Period") (i) to issue from time to time secured or unsecured long-term debt securities ("Long-term Debt") in an aggregate amount at any time outstanding not to exceed $600 million; and (ii) to enter into hedging transactions with respect to existing indebtedness of NU ("Interest Rate Hedges") in order to manage and minimize interest rate costs, and to enter into hedging transactions with respect to future expected debt issuances ("Anticipatory Hedges") in order to lock-in then current interest rates and/or manage interest rate risk exposure. NU states that it will use the proceeds from these financings for general corporate purposes, including (i) investments in its regulated utility companies, (ii) investments in exempt wholesale generators, Foreign Utility Companies, nonutility companies formed pursuant to Rule 58 ("Rule 58 Subsidiaries") and exempt telecommunications companies and other competitive companies, (iii) the repayment, redemption, refunding or purchase by NU of its own securities , (iv) financing working capital requirements of NU and its subsidiaries, and (v) other corporate purposes. NU states that the Long-term Debt may be in the form of secured or unsecured notes ("Debentures") issued in one or more series. The Debentures of any series (i) will have a maturity ranging from one to 50 years, (ii) will bear interest at a rate not to exceed 500 basis points over the yield to maturity of a U.S. Treasury security having a remaining term approximately equal to the term of such series of Debentures, (iii) may be subject to optional and/or mandatory redemption, in whole or in part, at par or at various premiums above or discounts below the principal amount thereof, (iv) may be entitled to mandatory or optional sinking fund provisions and (v) may provide for reset of the coupon pursuant to a remarketing arrangement. Long-term Debt of NU also may be in the form of bank lines of credit ("Bank Lines"). Bank Lines will have maturities of not more than five years from the date of each borrowing and the effective cost of such loans will not exceed at the time of issuance 500 basis points over LIBOR. NU states that any Long-term Debt issued by NU which will be secured debt will not be secured by shares of stock or other securities or property of any of the utility subsidiaries of NU. NU states that Interest Rate Hedges would only be entered into with counterparties ("Approved Counterparties") whose senior unsecured debt ratings, or the senior unsecured debt ratings of the parent companies of the counterparties, as published by Standard and Poor's Ratings Group, are equal to or greater than BBB, or an equivalent rating from Moody's Investors Service or Fitch IBCA. The Interest Rate Hedges may involve the use of financial instruments commonly used in the capital markets, such as interest rate swaps, locks, caps, collars, floors, and other similar appropriate instruments. The transactions would be for fixed periods and stated notional amounts. Transaction fees, commissions and other amounts payable to the counterparty or exchange (excluding, however, the swap or option payments) in connection with an Interest Rate Hedge will not exceed those generally obtainable in competitive markets for parties of comparable credit quality. NU states that Anticipatory Hedges would only be entered into with Approved Counterparties, and would be utilized to fix and/or manage the interest rate risk associated with any new Long-term Debt issuance through (i) a forward sale of exchange-traded U.S. Treasury futures contracts, U.S. Treasury Securities and/or a forward swap (each a "Forward Sale"), (ii) the purchase of put options on U.S. Treasury Securities (a "Put Options Purchase"), (iii) a Put Options Purchase in combination with the sale of call options on U.S. Treasury Securities (a "Zero Cost Collar"), (iv) transactions involving the purchase or sale, including short sales, of U.S. Treasury Securities, or (v) some combination of a Forward Sale, Put Options Purchase, Zero Cost Collar and/or other derivative or cash transactions, including, but not limited to locks, caps and collars, appropriate for the Anticipatory Hedges. NU represents that each Interest Rate Hedge and Anticipatory Hedge will be accounted for using generally acceptable accounting practices and that NU will also comply with the then existing financial disclosure requirements of the Financial Accounting Standards Board associated with hedging transactions. For the Commission by the Division of Investment Management, under delegated authority. - ---------------------------------------------------------------- In Holding Company Act Rel. No. 35-27127 (January 31, 2000) the Commission authorized NU to issue short or long- term debt in order to fund the acquisition of Yankee Energy System, Inc., up to an aggregate amount of $275 million. Such authorization expires June 30, 2002. The order being requested in this file will replace the order received in File No. 35-27127. In addition, pursuant to Holding Company Act Rel. 35-27328 (Dec. 28, 2000), the Commission authorized NU to incur up to $400 million in short-term debt. The Long-term Debt authorization sought here is in addition to such short-term debt. - ---------------------------------------------------------------- EX-99 4 exhibithb11.txt EXHIBIT H B 1.1 Exhibit H (b) 1.1 NORTHEAST UTILITIES PRO FORMA BALANCE SHEET AS OF DECEMBER 31, 2001 Unaudited (Thousands of Dollars)
Pro Forma Pro Forma Giving Effect Per Book Adjustments to Adjustments ----------- ----------- -------------- ASSETS - ------ Current Assets: Cash and cash equivalents................................ $ 96,658 $327,975 a,b,e $ 424,633 Investments in securitizable assets...................... 36,367 36,367 Receivables, net......................................... 831,221 831,221 Unbilled revenues........................................ 126,398 126,398 Fuel, materials and supplies, at average cost............ 108,516 108,516 Special deposits......................................... 60,261 60,261 Prepaymens and other..................................... 126,233 126,233 ----------- -------- ----------- 1,385,654 327,975 1,713,629 ----------- -------- ----------- Property, Plant and Equipment: Electric utility......................................... 5,743,575 5,743,575 Gas utility.............................................. 634,884 634,884 Competitive energy....................................... 344,063 344,063 Other.................................................... 195,741 195,741 ----------- -------- ----------- 6,918,263 - 6,918,263 Less: Accumulated provision for depreciation............ 3,418,577 3,418,577 ----------- -------- ----------- 3,499,686 - 3,499,686 Construction work in progress............................ 289,889 289,889 Nuclear fuel, net........................................ 32,564 32,564 ----------- -------- ----------- 3,822,139 - 3,822,139 ----------- -------- ----------- Deferred Debits and Other Assets: Regulatory assets 3,950,445 3,950,445 Goodwill and other purchased intangible assets, net...... 322,600 322,600 Prepaid pension.......................................... 232,398 232,398 Nuclear decommissioning trusts, at market................ 61,713 61,713 Other.................................................... 466,460 7,461 c,e 473,921 ----------- -------- ----------- 5,033,616 7,461 5,041,077 ----------- -------- ----------- Total Assets $10,241,409 $335,436 $10,576,845 =========== ======== =========== LIABILITIES AND CAPITALIZATION Current Liabilities: Notes payable to banks................................... $ 290,500 $ 290,500 Long-term debt and preferred stock - current portion..... 50,462 50,462 Accounts payable......................................... 669,545 669,545 Accrued taxes............................................ 26,203 (19,054) f 7,149 Accrued interest......................................... 35,659 47,396 d 83,055 Other.................................................... 178,071 178,071 ----------- -------- ----------- 1,250,440 28,342 1,278,782 ----------- -------- ----------- Rate Reduction Bonds....................................... 2,018,351 2,018,351 ----------- -------- ----------- Minority Interest in Consolidated Subsidiary............... - - - ----------- -------- ----------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes........................ 1,491,394 1,491,394 Accumulated deferred investment tax credits.............. 120,071 120,071 Decommissioning obligation - Millstone 1................. - - Deferred contractual obligations......................... 216,566 216,566 Other.................................................... 618,191 618,191 ----------- -------- ----------- 2,446,222 - 2,446,222 ----------- -------- ----------- Capitalization: Long-Term Debt........................................... 2,292,556 337,000 a,b 2,629,556 ----------- -------- ----------- Preferred Stock.......................................... 116,200 116,200 ----------- -------- ----------- Common Shareholders' Equity: Common shares, $5 par value - authorized 225,000,0000 shares, 148,890,640 shares issued and 130,132,136 shares outstanding in 2001 and 148,781,861 shares issued and 143,820,405 shares outstanding in 2000................................................ 744,453 744,453 Capital surplus, paid in................................. 829,006 829,006 Deferred contribution plan - employee stock ownership plan......................................... (101,809) (101,809) Retained earnings........................................ 678,460 (29,906) 648,554 Accumulated other comprehensive (loss)/income............ (32,470) (32,470) ----------- -------- ----------- Common Shareholders' Equity.............................. 2,117,640 (29,906) 2,087,734 ----------- -------- ----------- Total Capitalization....................................... 4,526,396 307,094 4,833,490 ----------- -------- ----------- Total Liabilities and Capitalization....................... $10,241,409 $335,436 $10,576,845 =========== ======== ===========
NORTHEAST UTILITIES PRO FORMA INCOME STATEMENT FOR THE 12 MONTHS ENDED DECEMBER 31, 2001 Unaudited (Thousands of Dollars)
Pro Forma Pro Forma Giving Effect Per Book Adjustments To Adjustments -------- ----------- -------------- Operating Revenues......................................... $6,873,826 $6,873,826 ---------- ----------- ---------- Operating Expenses: Operation - Fuel, purchased and net interchange power.............. 4,541,342 4,541,342 Other.................................................. 773,058 773,058 Maintenance.............................................. 258,961 258,961 Depreciation............................................. 201,013 201,013 Amortization of regulatory assets, net................... 983,037 983,037 Taxes other than income taxes............................ 219,197 219,197 Gain on sale of utility plant............................ (641,956) (641,956) ---------- ----------- ---------- Total operating expenses............................... 6,334,652 - 6,334,652 ---------- ----------- ---------- Operating Income......................................... 539,174 - 539,174 Other Income, Net........................................ 187,627 - 187,627 ---------- ----------- ---------- Income Before Interest and Income Tax Expense............ 726,801 - 726,801 ---------- ----------- ---------- Interest Expense: Interest on long-term debt............................... 147,049 48,960 c,d,e 196,009 Interest on rate reduction bonds......................... 87,616 87,616 Other interest........................................... 44,993 44,993 ---------- ----------- ---------- Interest expense, net.................................. 279,658 48,960 328,618 ---------- ----------- ---------- Income Before Income Tax Expense......................... 447,143 (48,960) 398,183 Income Tax Expense....................................... 173,952 (19,054) f 154,898 ---------- ----------- ---------- Income Before Preferred Dividends of Subsidiaries........ 273,191 (29,906) 243,285 Preferred Dividends of Subsidiaries...................... 7,249 7,249 ---------- ----------- ---------- Income Before Extraordinary Loss and Cumulative Effect of Accounting Change, Net of Tax Benefits.............. 265,942 (29,906) 236,036 Extraordinary loss, net of tax benefit of $169,562....... - - Cumulative effect of accounting change, net of tax benefit of $14,908.......................... (22,432) (22,432) ---------- ----------- ---------- Net Income............................................... $ 243,510 $ (29,906) $ 213,604 ========== =========== ==========
NORTHEAST UTILITIES PRO FORMA STATEMENT OF RETAINED EARNINGS AS OF DECEMBER 31, 2001 Unaudited (Thousands of Dollars)
Pro Forma Pro Forma Giving Effect Per Book Adjustments To Adjustments -------- ----------- -------------- Balance at beginning of the period......................... $495,873 $ $495,873 Net income................................................. 243,510 (29,906) 213,604 Cash dividends on common stock............................. (60,923) (60,923) -------- -------- -------- Balance at end of period................................... $678,460 $(29,906) $648,554 ======== ======== ========
NORTHEAST UTILITIES PRO FORMA CAPITAL STRUCTURE AS OF DECEMBER 31, 2001 Unaudited (Thousands of Dollars)
Pro Forma Pro Forma Giving Effect Per Book Adjustments To Adjustments -------- ----------- -------------- Long-term debt*............................................ $2,292,556 $337,000 $2,629,556 Preferred stock............................................ 116,200 - 116,200 Common stockholders' equity................................ 2,117,640 (29,906) 2,087,734 ---------- -------- ---------- Total capitalization....................................... $4,526,396 $307,094 $4,833,490 ========== ======== ========== *Does not include current portion.
NORTHEAST UTILITIES PRO FORMA ADJUSTMENTS TO THE FINANCIAL STATEMENTS (Thousands of Dollars)
Debit Credit ----- ------ a) Cash and cash equivalents $600,000 Long-term debt $600,000 To record issuance of long-term debt b) Long-term debt $263,000 Cash $263,000 To record repayment of long-term debt c) Interest on long-term debt $ 662 Other deferred debits $ 662 To expense remaining issuance costs on long-term debt retired d) Interest on long-term debt $ 47,396 Accrued interest $ 47,396 To record net increase in interest expense as a result of the long-term debt retired/issued e) Other deferred debits $ 8,123 Unamortized debt expense $ 902 Cash and cash equivalents $ 9,025 To record and amortize debt issuance costs associated with the long-term debt issued f) Accrued taxes $ 19,054 Income tax expense $ 19,054 To record tax effect of entries c, d, and e above
NORTHEAST UTILITIES PARENT PRO FORMA BALANCE SHEET AS OF DECEMBER 31, 2001 Unaudited (Thousands of Dollars)
Pro Forma Pro Forma Giving Effect Per Book Adjustments to Adjustments ----------- ----------- -------------- ASSETS - ------ Current Assets: Cash and cash equivalents................................ $ 13,183 $327,975 a,b,e $ 341,158 Notes receivable from affiliated companies............... 124,800 124,800 Notes and accounts receivable............................ 555 555 Accounts receivable from affiliated companies............ 21,713 21,713 Taxes receivable......................................... 25,967 25,967 Prepayments and other.................................... 1,093 1,093 ----------- -------- ----------- 187,311 327,975 515,286 ----------- -------- ----------- Other property and investments: Investments in subsidiary companies, at equity........... 2,392,884 2,392,884 Investments in transmission companies, at equity......... 13,596 13,596 Other, at cost........................................... 14 14 ----------- -------- ----------- 2,406,494 - 2,406,494 ----------- -------- ----------- Deferred Debits and Other Assets: Unamortized debt expense................................. 662 7,461 c,e 8,123 Other.................................................... 3,584 3,584 ----------- -------- ----------- 4,246 7,461 11,707 ----------- -------- ----------- Total Assets............................................... $ 2,598,051 $335,436 $ 2,933,487 =========== ======== =========== LIABILITIES AND CAPITALIZATION Current Liabilities: Notes payable to banks................................... $ 40,000 $ 40,000 Long-term debt and preferred stock - current portion..... 23,000 23,000 Accounts payable......................................... 146 146 Accounts payable to affiliated companies................. 26,626 26,626 Accrued taxes............................................ 26,216 (19,054) f 7,162 Accrued interest......................................... 2,492 47,396 d 49,888 Other.................................................... 19 19 ----------- -------- ----------- 118,499 28,342 146,841 ----------- -------- ----------- Deferred Credits and Other Liabilities: Accumulated deferred income taxes........................ 4,742 4,742 Other.................................................... 170 170 ----------- -------- ----------- 4,912 - 4,912 ----------- -------- ----------- Capitalization: Long-Term Debt........................................... 357,000 337,000 a,b 694,000 ----------- -------- ----------- Common Shareholders' Equity: Common shares, $5 par value - authorized 225,000,000 shares, 148,890,640 shares issued and 130,132,136 shares outstanding in 2001 and 148,781,861 shares issued and 143,820,405 shares outstanding in 2000...... 744,453 744,453 Capital surplus, paid in................................. 829,006 829,006 Deferred contribution plan - employee stock ownership plan......................................... (101,809) (101,809) Retained earnings........................................ 678,460 (29,906) 648,554 Accumulated other comprehensive (loss)/income............ (32,470) (32,470) ----------- -------- ----------- Common Shareholders' Equity 2,117,640 (29,906) 2,097,734 ----------- -------- ----------- Total Capitalization....................................... 2,474,640 307,094 2,781,734 ----------- -------- ----------- Total Liabilities and Capitalization....................... $ 2,598,051 $335,436 $ 2,933,487 =========== ======== ===========
EX-99 5 exhibithb12.txt EXHIBIT H B 1.2 Exhibit H (b) 1.2 NORTHEAST UTILITIES PARENT PRO FORMA INCOME STATEMENT FOR THE 12 MONTHS ENDED DECEMBER 31, 2001 Unaudited (Thousands of Dollars)
Pro Forma Pro Forma Giving Effect Per Book Adjustments To Adjustments -------- ----------- -------------- Operating Revenues......................................... $ - $ - -------- -------- --------- Operating Expenses: Operation expense........................................ 11,868 11,868 Taxes other than income taxes............................ 49 49 -------- -------- -------- Total operating expenses............................... 11,917 - 11,917 -------- -------- -------- Operating Loss........................................... (11,917) - (11,917) Other Income, Net........................................ 277,126 277,126 -------- -------- -------- Income Before Interest and Income Tax Expense............ 265,209 - 265,209 -------- -------- -------- Interest Expense: Interest on long-term debt............................. 24,191 48,960 c,d,e 73,151 Other interest......................................... 8,505 8,505 -------- -------- -------- Interest expense, net................................ 32,696 48,960 81,656 -------- -------- -------- Income Before Income Tax Expense....................... 232,513 (48,960) 183,553 Income Tax Benefit..................................... 10,997 19,054 f 30,051 -------- -------- -------- Net Income............................................. $243,510 $(29,906) $213,604 ======== ======== ========
NORTHEAST UTILITIES PARENT PRO FORMA STATEMENT OF RETAINED EARNINGS AS OF DECEMBER 31, 2001 Unaudited (Thousands of Dollars)
Pro Forma Pro Forma Giving Effect Per Book Adjustments To Adjustments -------- ----------- -------------- Balance at beginning of the period......................... $495,873 $ $495,873 Net income................................................. 243,510 (29,906) 213,604 Cash dividends on common stock............................. (60,923) (60,923) -------- -------- -------- Balance at end of period................................... $678,460 $(29,906) $648,554 ======== ======== ========
NORTHEAST UTILITIES PARENT PRO FORMA CAPITAL STRUCTURE AS OF DECEMBER 31, 2001 Unaudited (Thousands of Dollars)
Pro Forma Pro Forma Giving Effect Per Book Adjustments To Adjustments -------- ----------- -------------- Long-term debt*............................................ $ 357,000 $337,000 $ 694,000 Common stockholders' equity................................ 2,117,640 (29,906) 2,087,734 ---------- -------- ---------- Total capitalization....................................... $2,474,646 $307,094 $2,781,734 ========== ======== ========== *Does not include current portion.
NORTHEAST UTILITIES PARENT PRO FORMA ADJUSTMENTS TO THE FINANCIAL STATEMENTS (Thousands of Dollars)
Debit Credit ----- ------ a) Cash and cash equivalents $600,000 Long-term debt $600,000 To record issuance of long-term debt b) Long-term debt $263,000 Cash $263,000 To record repayment of long-term debt c) Interest on long-term debt $ 662 Other deferred debits $ 662 To expense remaining issuance costs on long-term debt retired d) Interest on long-term debt $ 47,396 Accrued interest $ 47,396 To record net increase in interest expense as a result of the long-term debt retired/issued e) Other deferred debits - unamortized debt expense $ 8,123 Unamortized debt expense $ 902 Cash and cash equivalents $ 9,025 To record and amortize debt issuance costs associated with the long-term debt issued f) Accrued taxes $ 19,054 Income tax expense $ 19,054 To record tax effect of entries c, d, and e above
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