1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1998
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
Commission file number 1-2301
BOSTON EDISON COMPANY
(Exact name of registrant as specified in its charter)
Massachusetts 04-1278810
- ------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
800 Boylston Street, Boston, Massachusetts 02199
- ------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 617-424-2000
------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 11, 1998
- ----- ---------------------------
Common Stock, $1 par value 48,514,973 shares
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Part I - Financial Information
Item 1. Financial Statements
- -----------------------------
Boston Edison Company
Consolidated Statements of Income
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended March 31,
1998 1997
-------- --------
Operating revenues $394,555 $422,725
-------- --------
Operating expenses:
Fuel and purchased power 149,661 181,168
Operations and maintenance 94,839 99,795
Depreciation and amortization 46,039 45,523
Demand side management programs 8,067 6,990
Taxes - property and other 29,526 29,171
Income taxes 15,814 12,489
-------- --------
Total operating expenses 343,946 375,136
-------- --------
Operating income 50,609 47,589
Other expense, net (2,788) (140)
-------- --------
Operating and other income 47,821 47,449
-------- --------
Interest charges:
Long-term debt 22,907 23,399
Other 2,331 3,404
Allowance for borrowed funds
used during construction (276) (289)
-------- --------
Total interest charges 24,962 26,514
-------- --------
Net income 22,859 20,935
Preferred stock dividends 2,919 3,817
-------- --------
Earnings available for common
shareholders $ 19,940 $ 17,118
======== ========
Weighted average common shares
outstanding 48,515 48,515
====== ======
Earnings per share of common stock - basic
and diluted $0.41 $0.35
===== =====
Dividends declared per share of
common stock $0.47 $0.47
===== =====
The accompanying notes are an integral part of the consolidated financial
statements.
3
Boston Edison Company
Consolidated Balance Sheets
(Unaudited)
(in thousands)
March 31, December 31,
1998 1997
---------- ------------
Assets
- ------
Utility plant in service, at original cost $4,483,096 $4,458,638
Less: accumulated depreciation 1,755,578 1,713,079
---------- ----------
2,727,518 2,745,559
Nuclear fuel, net 62,442 67,935
Construction work in progress 31,889 40,633
---------- ----------
Net utility plant 2,821,849 2,854,127
Nuclear decommissioning trust 157,661 151,634
Equity investments 43,497 35,455
Other investments 7,442 7,107
Current assets:
Cash and cash equivalents 15,441 4,140
Accounts receivable 167,752 192,220
Accrued unbilled revenues 16,648 30,048
Fuel, materials and supplies,
at average cost 49,810 60,834
Prepaid expenses and other 27,347 31,283
---------- ----------
Total current assets 276,998 318,525
---------- ----------
Regulatory assets:
Power contracts 68,284 71,445
Income taxes, net 45,340 51,096
Deferred customer charges 28,108 0
Redemption premiums 26,033 27,019
Postretirement benefits costs 22,228 22,441
Fossil divestiture 21,248 21,248
Other 18,418 16,994
---------- ----------
Total regulatory assets 229,659 210,243
Other deferred debits 39,807 45,256
---------- ----------
Total assets $3,576,913 $3,622,347
========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
4
Boston Edison Company
Consolidated Balance Sheets
(Unaudited)
(in thousands)
March 31, December 31,
1998 1997
---------- ------------
Capitalization and Liabilities
- ------------------------------
Common stock equity:
Common stock $ 744,878 $ 744,652
Retained earnings 325,783 328,802
---------- ----------
Total common stock equity 1,070,661 1,073,454
---------- ----------
Cumulative preferred stock:
Nonmandatory redeemable series 83,000 83,000
Mandatory redeemable series 78,250 78,093
---------- ----------
Total preferred stock 161,250 161,093
---------- ----------
Long-term debt 957,039 1,057,076
---------- ----------
Total capitalization 2,188,950 2,291,623
---------- ----------
Current liabilities:
Long-term debt/preferred stock
due within one year 102,267 102,667
Notes payable 199,000 137,013
Accounts payable 84,489 87,015
Accrued interest 12,239 24,289
Dividends payable 24,748 24,748
Other 146,331 128,061
---------- ----------
Total current liabilities 569,074 503,793
---------- ----------
Deferred credits:
Accumulated deferred income taxes 481,231 485,738
Accumulated deferred investment tax credits 59,530 60,736
Nuclear decommissioning liability 161,086 155,182
Power contracts 68,284 71,445
Other 48,758 53,830
---------- ----------
Total deferred credits 818,889 826,931
Commitments and contingencies __________ __________
Total capitalization and liabilities $3,576,913 $3,622,347
========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
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Boston Edison Company
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Three Months Ended March 31,
1998 1997
--------- ---------
Operating activities:
Net income $ 22,859 $ 20,935
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 56,263 53,067
Deferred income taxes and investment
tax credits 367 (3,650)
Allowance for borrowed funds used during
construction (276) (289)
Net changes in:
Accounts receivable and accrued
unbilled revenues 37,868 2,712
Fuel, materials and supplies 10,616 9,560
Accounts payable (2,526) (32,306)
Other current assets and liabilities 10,156 1,576
Other, net (30,425) (8,644)
--------- ---------
Net cash provided by operating activities 104,902 42,961
--------- ---------
Investing activities:
Plant expenditures (excluding AFUDC) (14,839) (31,485)
Nuclear fuel expenditures (959) 23
Investments (14,069) (5,810)
--------- ---------
Net cash used in investing activities (29,867) (37,272)
--------- ---------
Financing activities:
Issuances:
Common stock 0 144
Long-term debt 0 100,000
Long-term debt redemptions (100,000) (100,000)
Net change in notes payable 61,987 19,336
Dividends paid (25,721) (26,619)
--------- ---------
Net cash used in financing activities (63,734) (7,139)
--------- ---------
Net increase (decrease) in cash and cash
equivalents 11,301 (1,450)
Cash and cash equivalents at beginning of year 4,140 5,651
--------- ---------
Cash and cash equivalents at end of period $ 15,441 $ 4,201
========= =========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest, net of amounts capitalized $ 36,084 $ 35,888
========= =========
Income taxes $ 10,233 $ 6,700
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
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Notes to Unaudited Consolidated Financial Statements
- ----------------------------------------------------
A) Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements should be read in
conjunction with the Boston Edison Company (the Company) 1997 Annual Report on
Form 10-K. The financial information presented as of March 31 has been
prepared from the Company's books and records without audit by independent
accountants. Financial information as of December 31 has been derived from
the audited financial statements of the Company, but does not include all
disclosures required by generally accepted accounting principles (GAAP). In
the opinion of the Company's management, all adjustments (which are of a
normal recurring nature) necessary for a fair presentation of the financial
information for the periods indicated have been included. Certain
reclassifications have been made to the prior year data to conform with the
current presentation.
As a rate-regulated company Boston Edison has been subject to Statement of
Financial Accounting Standards No. 71, Accounting for the Effects of Certain
Types of Regulation (SFAS 71), under GAAP. The application of SFAS 71 results
in differences in the timing of recognition of certain expenses from that of
other businesses and industries. As a result of the Massachusetts electric
industry restructuring legislation enacted in November 1997 and the
Massachusetts Department of Telecommunications and Energy (DTE) order
regarding the Company's related settlement agreement, as of December 31, 1997,
the Company is no longer applying the provisions of SFAS 71 to its generation
business. Under the Company's restructuring settlement agreement,
approximately 75% of the net assets of Pilgrim Nuclear Power Station are
recoverable through the non-bypassable transition charge of the Company's
distribution business which continues to be subject to rate-regulation. The
remaining 25% is collected under Pilgrim's wholesale life of the unit
contracts. Accounting authoritative bodies, including the Securities and
Exchange Commission, are deliberating as to whether such assets which are
recoverable through a transition charge should continue to be classified as
plant in service or should be reclassified to a regulatory asset. In either
case, no write-off of Pilgrim net assets is expected due to the recovery
mechanism in the settlement agreement. Refer to Note C of Item 8 in the
Company's 1997 Annual Report on Form 10-K for more information on the
accounting implications of the electric utility industry restructuring and the
Company's related settlement agreement.
Under the terms of the settlement agreement, the Company recovers its
generation and purchased power costs from customers. The settlement agreement
allows the Company to defer the difference between these costs and the amounts
billed to customers with a return for future recovery. The net underrecovery
of these recovery mechanisms was $28.1 million and is reflected as deferred
customer charges on the consolidated balance sheet at March 31, 1998. At
March 31, 1998, the Company was approximately $36 million over recovered from
its fuel and purchased power clause. The Company has proposed to the DTE to
offset this against the standard offer portion of the deferral.
The preparation of financial statements in conformity with GAAP requires the
Company to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at
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the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
The results of operations for the three-month periods ended March 31, 1998 and
1997 are not indicative of the results which may be expected for an entire
year. The Company's kilowatt-hour sales and revenues are typically higher in
the winter and summer than in the spring and fall as sales tend to vary with
weather conditions. Accordingly, the Company's third quarter earnings are
typically higher than the other periods of the year.
B) Nature of Operations
--------------------
Within the newly restructured electric utility industry, the Company is
focusing its operations in the transmission and distribution of energy. In
April 1998, the Company began soliciting expressions of interest for the sale
of Pilgrim Nuclear Power Station. The Company's intention to sell its nuclear
generating assets is part of its previously announced strategy to exit the
generation business. Finalization of the sale of the Company's fossil
generating assets is expected in May 1998. The Company provides "Standard
Offer" service to all customers of record as of the retail access date,
March 1, 1998. Default service is provided to customers not receiving power
from either the standard offer or a competitive supplier. The Company
delivers electricity at retail to an area of 590 square miles, including the
City of Boston and 39 surrounding cities and towns. It also supplies
electricity at wholesale for resale to other utilities and municipal electric
departments. The Company will continue to develop and implement electric
demand side management programs as well as provide funding for renewable
energy projects pursuant to the Massachusetts electric industry restructuring
legislation enacted in November 1997. In addition, the Company conducts
unregulated activities through its wholly owned subsidiary, Boston Energy
Technology Group (BETG). Refer to Note A of Item 8 in the Company's 1997
Annual Report on Form 10-K for information regarding the Company's
telecommunications and energy marketing joint ventures.
The Company received approval of its reorganization plan to form a holding
company structure from the DTE on April 17, 1998. The Holding Company, BEC
Energy, is expected to be established in May 1998 following the anticipated
final approval from the Securities and Exchange Commission. Upon completion
of the reorganization, Boston Edison will be a wholly owned subsidiary of BEC
Energy. BETG, currently a wholly owned unregulated subsidiary, will cease
being a subsidiary of Boston Edison and become a wholly owned subsidiary of
BEC Energy. The common shareholders of Boston Edison will become shareholders
of BEC Energy. The existing debt and preferred stock of Boston Edison will
remain obligations of the regulated utility business.
C) Contingencies
-------------
1. Hazardous Waste
The Company is an owner or operator of approximately 30 properties where oil
or hazardous materials were spilled or released. As such, the Company is
required to clean up these remaining properties in accordance with a timetable
developed by the Massachusetts Department of Environmental Protection. There
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are uncertainties associated with these costs due to the complexities of
cleanup technology, regulatory requirements and the particular characteristics
of the different sites. The Company continues to evaluate the cleanup costs
of these sites. The Company also faces possible liability as a potentially
responsible party in the cleanup of six multi-party hazardous waste sites in
Massachusetts and other states where it is alleged to have generated,
transported or disposed of hazardous waste at the sites. The Company is one
of many potentially responsible parties and currently expects to have only a
small percentage of the total potential liability for these sites. Through
March 31, 1998, the Company had approximately $7 million accrued related to
its cleanup liabilities. The Company is unable to fully determine a range of
reasonably possible cleanup costs in excess of the accrued amount, however
based on its assessments of the specific site circumstances, it does not
believe that it is probable that it will incur additional costs that will have
a material impact on its financial condition. However, it is reasonably
possible that additional provisions for cleanup costs that may result from a
change in estimates could have a material impact on the results of a reporting
period in the near term.
2. Connecticut Yankee Atomic Power Company
In December 1996, the Board of Directors of Connecticut Yankee Atomic Power
Company (CYAPC), which owns and operates the Connecticut Yankee nuclear
electric generating unit, unanimously voted to retire the unit. The decision
was based on an economic analysis of the costs of operating the unit compared
to the costs of closing the unit and incurring replacement power costs through
the period of its operating license. In early 1997, CYAPC filed for rate
relief at the Federal Energy Regulatory Commission (FERC) seeking to recover
certain post-operating costs, including decommissioning. Raising concerns
regarding the plant operator's prudency prior to the shut down decision, the
Connecticut Department of Public Utility Control (DPUC) has contested CYAPC's
estimate of these costs. The DPUC argues that the FERC should deny recovery
of substantial post-operating costs, including a significant amount related to
decommissioning and the return on CYAPC's undepreciated investment. Hearings
before an Administrative Law Judge have been completed. The Company, a 9.5%
equity investor in CYAPC and power purchaser, is currently unable to determine
the ultimate outcome of this proceeding or the impact on the Company.
3. Generating Unit Performance Program
The Company's generating unit performance program ceased March 1, 1998. Under
this program the recovery of incremental purchased power costs resulting from
generating unit outages prior to March 1, 1998 are subject to regulatory
review. Proceedings relative to generating unit performance remain pending
before the DTE. The Company is unable to fully determine a range of
reasonably possible disallowance costs in excess of amounts accrued, although,
based on its assessments of the information currently available, it does not
believe that it is probable that any such additional costs will have a
material impact on its financial condition. However, it is reasonably
possible that additional disallowance costs that may result from a change in
estimates could have a material impact on the results of a reporting period in
the near term.
9
4. Industry Restructuring Legal Proceedings/Referendum Campaign
The DTE order approving the Company's settlement agreement has been appealed
by certain parties to the Massachusetts Supreme Judicial Court. In addition,
along with other Massachusetts investor-owned utilities, the Company has been
named as a defendant in a class action suit seeking to declare certain
provisions of the Massachusetts electric industry restructuring legislation
unconstitutional. The Company is currently unable to determine the outcome of
these proceedings or the impact on the Company.
In addition, opponents of the Massachusetts electric industry restructuring
legislation that was enacted in November 1997 have obtained sufficient
signatures to place a referendum before Massachusetts voters on the November
1998 state wide general election ballot that calls for the repeal of the
legislation. The Company, along with a broad-based group of consumer,
business and environmental interests, is opposing this effort. A court
challenge has been filed opposing the placement of the referendum on the
ballot and a decision is expected by August 1998. The Company is currently
unable to predict the eventual outcome of this referendum or the impact on the
Company.
5. Litigation
In October 1997, the DTE opened a proceeding to investigate the Company's
compliance with the 1993 order which permitted the formation of BETG and
authorized the Company to invest up to $45 million in unregulated activities.
The Company is currently unable to determine the outcome of this proceeding or
the impact on the Company.
In the normal course of its business the Company is also involved in certain
other legal matters. The Company is unable to fully determine a range of
reasonably possible legal costs in excess of amounts accrued, although, based
on the information currently available, it does not believe that it is
probable that any such additional costs will have a material impact on its
financial condition. However, it is reasonably possible that additional legal
costs that may result from a change in estimates could have a material impact
on the results of a reporting period in the near term.
D) Income Taxes
------------
The following table reconciles the statutory federal income tax rate to the
annual estimated effective income tax rate for 1998 and the actual effective
income tax rate for 1997.
1998 1997
---- ----
Statutory tax rate 35.0% 35.0%
State income tax, net of federal income
tax benefit 4.8 4.5
Investment tax credit amortization (2.2) (3.3)
Other (0.1) 0.1
---- ----
Effective tax rate 37.5% 36.3%
==== ====
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E) Financing Activity
------------------
In March 1998, $100 million of 5.95% debentures matured.
Item 2. Management's Discussion and Analysis
- ---------------------------------------------
Results of Operations - Three Months Ended March 31, 1998 vs. Three Months
- --------------------------------------------------------------------------
Ended March 31, 1997
- --------------------
Earnings per share of common stock for the three months ended March 31, 1998
were $0.41 as compared to $0.35 for the three months ended March 31, 1997.
The increase reflects higher kilowatt-hour sales to the commercial sector
resulting from the strong economic conditions in the Boston area. Operations
and maintenance expense decreased due to lower overall spending as a result of
the Company's continuing cost control efforts. The increase in 1998 earnings
also reflects lower financing costs primarily due to a lower average short-
term debt balance and a decrease in preferred dividends due to the preferred
stock redemptions in the second quarter of 1997. These positive impacts on
earnings were partially offset by an increase in unregulated subsidiary
expenses.
Operating revenues
Operating revenues decreased 6.7% during the first quarter of 1998 as follows:
(in thousands)
- ------------------------------------------------------
Retail electric revenues $(28,410)
Wholesale revenues (324)
Short-term sales and other revenues 564
- ------------------------------------------------------
Decrease in operating revenues $(28,170)
======================================================
The decrease in retail electric revenues is primarily due to the timing effect
of fuel and purchased power cost recovery. Prior to its cessation as of
March 1, 1998, the fuel clause charge was lower than the prior year as the
1997 charge reflected the recovery of substantial prior period
undercollections. Fuel clause revenues were offset by fuel and purchased
power expenses and, therefore, had no net effect on earnings. The decrease in
retail electric revenues also reflects the 10% retail rate reduction which
became effective for electricity usage as of the retail access date, March 1,
1998. Retail kilowatt-hour sales increased by 0.7% as the positive impact of
the strong economic conditions affecting the commercial sector was partially
offset by milder weather in the first quarter.
Operating expenses
Fuel and purchased power expenses decreased $31.5 million. The decrease
reflects lower purchased power costs due to a 24% reduction in power contract
purchases. The decrease also reflects lower Company fuel costs resulting from
lower oil prices, and the timing effect of the Company's fuel and purchased
power and standard offer cost collection mechanisms.
Operations and maintenance expense decreased approximately $5 million. The
decrease is primarily due to lower overall spending as a result of the
Company's continuing cost control efforts.
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Other expense
The increase in other expense, net is due to an increase in BETG equity losses
in 1998. The final closing for the Company's telecommunications joint venture
with RCN occurred in June 1997.
Interest charges
Interest charges on short-term debt decreased due to a lower average
outstanding short-term debt balance in 1998, offset slightly by a higher
effective interest rate in 1998.
Allowance for borrowed funds used during construction, which represents the
financing costs of construction, decreased due to a lower average construction
work in progress balance in 1998.
Preferred stock dividends
Preferred stock dividends decreased as a result of the redemption of 40,000
shares of 7.27% series cumulative preferred stock in May 1997 and 400,000
shares of 8.25% series in June 1997.
Electric Revenues
- -----------------
Effective March 1, 1998, the retail access date, the Company's electric
delivery business provides its "Standard Offer" customers service at rates
designed to give 10% savings from rates previously in effect. These customers
will realize an additional 5% average savings, after an adjustment for
inflation, by September 1, 1999. The cost of providing standard offer
service, which includes fuel and purchased power costs, is recovered from
customers on a fully reconciling basis. New retail customers in the Company's
service territory and previously existing customers that are no longer
eligible for the standard offer due to choosing a competitive supplier are on
default service. The price of default service is based on the average
competitive market price for power. Refer also to the Electric Revenues
section of Item 7 of the Company's 1997 Annual Report on Form 10-K.
As part of the Company's restructuring settlement agreement, the annual
performance adjustment charge ceased and the cost recovery mechanism for
Pilgrim Station changed effective March 1, 1998. Approximately 25% of the
operations and capital costs, including a return on investment, continues to
be collected under wholesale life of the unit contracts. Refer to the
Electric Revenues section of Item 7 of the Company's 1997 Annual Report on
Form 10-K for a description of Pilgrim's new cost recovery mechanism.
The rates of the Company's distribution business will remain unchanged,
subject to a minimum and maximum return on average common equity (ROE) from
March 1, 1998 through December 31, 2000. Refer to the Electric Revenues
section of Item 7 of the Company's 1997 Annual Report on Form 10-K for detail
regarding the minimum and maximum ROE. Under the Company's settlement
agreement, the cost of providing transmission service to distribution
customers is recovered on a fully reconciling basis.
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Liquidity
- ---------
The Company supplements internally generated funds as needed, primarily
through the issuance of short-term commercial paper and bank borrowings. The
Company has authority from the FERC to issue up to $350 million of short-term
debt. Boston Edison Company also has a $200 million revolving credit
agreement and arrangements with several banks to provide additional short-term
credit on an uncommitted and as available basis. The Company has $220 million
remaining under its approved long-term financing plan with the DTE which is
available through 1998. Proceeds from issuances under this plan are to be
used to refinance short and long-term securities and to fund capital
expenditures.
At March 31, 1998, BETG had $30 million outstanding under its revolving credit
agreement. The purpose of this line is to fund BETG's capital requirements
above Boston Edison Company's $45 million limited investment. This debt will
be refinanced upon the formation of BEC Energy.
On April 23, 1998, the Company's Board of Directors authorized the repurchase
of up to four million shares of common stock. The common stock may be
repurchased from time to time on the open market, through block or privately-
negotiated transactions, or a combination. Timing of the repurchase will
depend heavily on market conditions. The Company contemplates repurchasing
the shares after completion of the sale of its fossil generating assets to
Sithe Energies, and final regulatory approval of the Holding Company. Both
events are expected to occur in May 1998.
The Company anticipates using the after-tax proceeds from the sale of the
fossil generating assets to retire debt and preferred stock, as well as to
repurchase common stock.
Year 2000 Computer Issue
- ------------------------
The Company has developed a plan to address the year 2000 issue that includes
modification of certain applications and replacement of systems that are not
year 2000 compliant. The cost associated with modification of existing
applications will be expensed as incurred. In addition, the Company has made
a decision to use this opportunity to upgrade some of its less efficient
centralized business systems. Replacement costs associated with these systems
will be capitalized and amortized over future periods. The Company
anticipates completion of the year 2000 project in the third quarter of 1999.
The Accounting Standards Executive Committee of the American Institute of
Certified Public Accountants issued Statement of Position 98-1, Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use (SOP
98-1) in March 1998. SOP 98-1, effective in 1999, provides specific guidance
on whether to capitalize or expense costs within its scope. The Company does
not expect this SOP to have a material impact on its financial position or
results of operations.
13
Other Matters
- -------------
Safe Harbor Cautionary Statement
The Company occasionally makes forward-looking statements such as forecasts
and projections of expected future performance or statements of its plans and
objectives. These forward-looking statements may be contained in filings with
the Securities and Exchange Commission, press releases and oral statements.
Actual results could potentially differ materially from these statements.
Therefore, no assurances can be given that the outcomes stated in such
forward-looking statements and estimates will be achieved. Refer also to the
safe harbor cautionary statements included in the Company's 1997 Annual Report
on Form 10-K.
The preceding sections include certain forward-looking statements about
environmental and legal issues and year 2000.
The impacts of various environmental and legal issues could differ from
current expectations. New regulations or changes to existing regulations
could impose additional operating requirements or liabilities other than
expected. The effects of changes in specific hazardous waste site conditions
and cleanup technology could affect estimated cleanup liabilities. The
impacts of changes in available information and circumstances regarding legal
issues could affect the estimated litigation costs.
The timing and total costs related to the Company's year 2000 plan could
differ from its expectations. Factors that may cause such differences include
the ability to locate and correct all relevant computer codes and the
availability of personnel trained in this area. In addition, the Company
cannot predict the nature or impact on operations of third party
noncompliance.
14
Part II - Other Information
Item 5. Other Information
- --------------------------
The following additional information is furnished in connection with the
Registration Statement on Form S-3 of the Registrant (File No. 33-57840),
filed with the Securities and Exchange Commission on February 3, 1993.
Price and dividend information per share of common stock:
Price
------------------------- Dividend
High Low Paid
--------- -------- --------
First quarter 1998 $41 15/16 $35 1/16 $0.470
The market value per share of the Company's common stock as of the close of
business on May 11, 1998 was $41 9/16 per share as reported in the Wall Street
Journal.
Ratio of earnings to fixed charges and ratio of earnings to fixed charges and
preferred stock dividend requirements:
Twelve months ended March 31, 1998:
----------------------------------
Ratio of earnings to fixed charges 3.01
Ratio of earnings to fixed charges and preferred
stock dividend requirements 2.58
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
a) Exhibits filed herewith:
Exhibit 4 - Instruments Defining the Rights of Security Holders,
Including Indentures
The Company agrees to furnish to the Securities and
Exchange Commission, upon request, a copy of any
agreements or instruments defining the rights of
holders of any long-term debt whose authorization
does not exceed 10% of the Company's total assets.
Exhibit 10 - Material Contracts
10.1 - Boston Edison Company and Sithe Energies, Inc.
Purchase and Sale and Transition Agreements dated
December 10, 1997
Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges
12.1 - Computation of ratio of earnings to fixed charges
for the twelve months ended March 31, 1998
15
12.2 - Computation of ratio of earnings to fixed charges
and preferred stock dividend requirements for the
twelve months ended March 31, 1998
Exhibit 15 - Letter Re Unaudited Interim Financial Information
15.1 - Report of Independent Accountants
Exhibit 27 - Financial Data Schedule
27.1 - Schedule UT
Exhibit 99 - Additional Exhibits
99.1 - Letter of Independent Accountants
Re Form S-3 Registration Statements filed by the
Company on February 3, 1993 (File No. 33-57840)
and May 31, 1995 (File No. 33-59693); Form S-8
Registration Statements filed by the Company on
October 10, 1985 (File No. 33-00810), July 28, 1986
(File No. 33-7558), December 31, 1990 (File No. 33-
38434), June 5, 1992 (33-48424 and 33-48425),
March 17, 1993 (33-59662 and 33-59682) and April 6,
1995 (33-58457) and in the Form S-4 Registration
Statement filed by Boston Edison Holdings, currently
known as BEC Energy, on March 17, 1997 (File No.
333-23439)
b) A Form 8-K dated February 10, 1998 announced the DTE's approval of
the Company's restructuring settlement agreement. This Form 8-K also
stated the Company's determination that the provisions of SFAS 71 no
longer apply to the generation portion of its business.
16
Signature
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BOSTON EDISON COMPANY
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(Registrant)
Date: May 14, 1998 /s/ Robert J. Weafer, Jr.
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Robert J. Weafer, Jr.
Vice President-Finance,
Controller and Chief
Accounting Officer