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 September 30, 1998 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-7471 (LOGO) THE NARRAGANSETT ELECTRIC COMPANY (Exact name of registrant as specified in charter) Rhode Island 05-0187805 (State or other (I.R.S. Employer jurisdiction of Identification No.) incorporation or organization) 280 Melrose Street, Providence, R.I. 02901 (Address of principal executive offices) Registrant's telephone number, including area code (401-784-7000) 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 ( ) Common stock, par value $50 per share, authorized and outstanding: 1,132,487 shares at September 30, 1998. PART I FINANCIAL INFORMATION Item 1. Financial Statements - ---------------------------- THE NARRAGANSETT ELECTRIC COMPANY Statements of Income Periods Ended September 30 (Unaudited) Quarter Nine Months ------- ----------- 1998 1997 1998 1997 ---- ---- ---- ---- (In Thousands) Operating revenue $128,787 $141,980 $366,058 $393,340 -------- -------- -------- -------- Operating expenses: Fuel for generation and purchased electric energy, (principally from New England Power Company, an affiliate) 66,674 85,460 188,921 234,904 Other operation 22,722 17,648 68,849 52,951 Maintenance 2,755 3,375 8,706 9,122 Depreciation 5,762 5,891 17,685 17,594 Taxes, other than federal income taxes 10,799 10,409 31,201 29,882 Federal income taxes 5,974 4,959 13,025 11,427 -------- -------- -------- -------- Total operating expenses 114,686 127,742 328,387 355,880 -------- -------- -------- -------- Operating income 14,101 14,238 37,671 37,460 Other income: Other income (expense), net 2,028 110 1,294 (1,073) -------- -------- -------- -------- Operating and other income 16,129 14,348 38,965 36,387 -------- -------- -------- -------- Interest: Interest on long-term debt 3,707 3,806 11,318 12,301 Other interest 924 686 2,475 1,510 Allowance for borrowed funds used during construction - credit (12) (6) (72) (64) -------- -------- -------- -------- Total interest 4,619 4,486 13,721 13,747 -------- -------- -------- -------- Net income $ 11,510 $ 9,862 $ 25,244 $ 22,640 ======== ======== ======== ======== Statements of Retained Earnings Retained earnings at beginning of period $105,550 $122,624 $129,567 $119,978 Net income 11,510 9,862 25,244 22,640 Dividends declared on cumulative preferred stock (99) (535) (478) (1,607) Dividends declared on common stock (32,276) (2,265) (69,648) (11,325) Premium on redemption of preferred stock (1,160) - (1,160) - -------- -------- -------- -------- Retained earnings at end of period $ 83,525 $129,686 $ 83,525 $129,686 ======== ======== ======== ======== The accompanying notes are an integral part of these financial statements. Per share data is not relevant because the Company's common stock is wholly owned by New England Electric System. THE NARRAGANSETT ELECTRIC COMPANY Statements of Income Twelve Months Ended September 30 (Unaudited) 1998 1997 ---- ---- (In Thousands) Operating revenue $492,756 $512,689 -------- -------- Operating expenses: Fuel for generation and purchased electric energy, (principally from New England Power Company, an affiliate) 263,447 305,803 Other operation 90,273 70,740 Maintenance 12,031 12,115 Depreciation 23,048 23,786 Taxes, other than federal income taxes 40,685 37,964 Federal income taxes 15,845 15,260 -------- -------- Total operating expenses 445,329 465,668 -------- -------- Operating income 47,427 47,021 Other income: Other income (expense), net 1,617 (428) -------- -------- Operating and other income 49,044 46,593 -------- -------- Interest: Interest on long-term debt 15,196 16,607 Other interest 3,440 2,094 Allowance for borrowed funds used during construction - credit (128) (126) -------- -------- Total interest 18,508 18,575 -------- -------- Net income $ 30,536 $ 28,018 ======== ======== Statements of Retained Earnings Retained earnings at beginning of period $129,686 $117,400 Net income 30,536 28,018 Dividends declared on cumulative preferred stock (826) (2,142) Dividends declared on common stock (73,045) (13,590) Premium on redemption of preferred stock (2,826) - -------- -------- Retained earnings at end of period $ 83,525 $129,686 ======== ======== The accompanying notes are an integral part of these financial statements. Per share data is not relevant because the Company's common stock is wholly owned by New England Electric System. THE NARRAGANSETT ELECTRIC COMPANY Balance Sheets (Unaudited) September 30, December 31, ASSETS 1998 1997 ------ ---- ---- (In Thousands) Utility plant, at original cost $726,338 $760,923 Less accumulated provisions for depreciation 203,908 198,551 -------- -------- 522,430 562,372 Construction work in progress 3,037 5,739 -------- -------- Net utility plant 525,467 568,111 -------- -------- Current assets: Cash 3,208 3,122 Accounts receivable: From sales of electric energy 50,681 54,109 Other (including $20,582,000 and $1,112,000 from affiliates) 23,483 2,571 Less reserves for doubtful accounts 5,002 4,707 -------- -------- 69,162 51,973 Unbilled revenues 19,536 15,997 Fuel, materials and supplies, at average cost 3,564 4,165 Prepaid and other current assets 10,011 14,202 -------- -------- Total current assets 105,481 89,459 -------- -------- Deferred charges and other assets 55,390 55,285 -------- -------- $686,338 $712,855 ======== ======== CAPITALIZATION AND LIABILITIES ------------------------------ Capitalization: Common stock, par value $50 per share, authorized and outstanding 1,132,487 shares $ 56,624 $ 56,624 Premiums on preferred stocks 80 36 Other paid-in capital 105,714 105,500 Retained earnings 83,525 129,567 Unrealized gain on securities, net 143 112 -------- -------- Total common equity 246,086 291,839 Cumulative preferred stock 7,601 12,800 Long-term debt 170,658 183,545 -------- -------- Total capitalization 424,345 488,184 -------- -------- Current liabilities: Long-term debt due in one year 8,000 5,000 Short-term debt (including $40,750,000 and $4,425,000 to affiliates) 40,750 16,350 Accounts payable (including $34,356,000 and $50,751,000 to affiliates) 52,334 56,048 Accrued liabilities: Taxes 3,357 4,314 Interest 3,121 4,810 Other accrued expenses 37,944 21,519 Customer deposits 6,166 5,982 Dividends payable 99 3,587 -------- -------- Total current liabilities 151,771 117,610 -------- -------- Deferred federal income taxes 85,298 82,871 Unamortized investment tax credits 6,656 7,023 Other reserves and deferred credits 18,268 17,167 -------- -------- $686,338 $712,855 ======== ======== The accompanying notes are an integral part of these financial statements. THE NARRAGANSETT ELECTRIC COMPANY Statements of Cash Flows Nine Months Ended September 30 (Unaudited) 1998 1997 ---- ---- (In Thousands) Operating Activities: Net income $ 25,244 $ 22,640 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 17,685 17,594 Deferred federal income taxes and investment tax credit, net 1,690 209 Allowance for funds used during construction (72) (64) Decrease (increase) in accounts receivable, net and unbilled revenues (20,153) 3,940 Decrease (increase) in fuel, materials, and supplies 601 183 Decrease (increase) in prepaid and other current assets 4,191 (6,305) Increase (decrease) in accounts payable (3,714) 13,835 Increase (decrease) in other current liabilities 13,963 2,686 Other, net 1,119 137 -------- -------- Net cash provided by operating activities $ 40,554 $ 54,855 -------- -------- Investing Activities: Plant expenditures, excluding allowance for funds used during construction $(14,860) $(24,248) Other investing activities (19) (271) Proceeds from sale of generating assets 39,723 - -------- -------- Net cash provided by (used in) investing activities$ 24,844 $(24,519) -------- -------- Financing Activities: Capital contributions from parent $ 214 $ - Dividends paid on common stock (73,045) (11,325) Dividends paid on preferred stock (568) (1,607) Long-term debt - issues - 3,000 Long-term debt - retirements (10,000) (32,500) Changes in short-term debt 24,400 12,375 Preferred stock - retirements (5,153) - Premium on reacquisition of preferred stock (1,160) - -------- -------- Net cash used in financing activities $(65,312) $(30,057) -------- -------- Net increase (decrease) in cash and cash equivalents $ 86 $ 279 Cash and cash equivalents at beginning of period 3,122 1,727 -------- -------- Cash and cash equivalents at end of period $ 3,208 $ 2,006 ======== ======== The accompanying notes are an integral part of these financial statements. Note A - Hazardous Waste - ------------------------ The Federal Comprehensive Environmental Response, Compensation and Liability Act, more commonly known as the "Superfund" law, imposes strict, joint and several liability, regardless of fault, for remediation of property contaminated with hazardous substances. The electric utility industry typically utilizes and/or generates in its operations a range of potentially hazardous products and by-products. The Narragansett Electric Company (the Company) currently has in place an internal environmental audit program and an external waste disposal vendor audit and qualification program intended to enhance compliance with existing federal, state, and local requirements regarding the handling of potentially hazardous products and by-products. The Company has been named as a potentially responsible party (PRP) by either the United States Environmental Protection Agency or the Massachusetts Department of Environmental Protection for three sites (two of which are located in Massachusetts) at which hazardous waste is alleged to have been disposed. The Company is currently aware of other possible hazardous waste sites, and may in the future become aware of additional sites, that it may be held responsible for remediating. Gas was manufactured from coal in Rhode Island in the past. The Company is aware of five sites on which gas was manufactured or manufactured gas was stored that were owned either by the Company or by its predecessor companies. It is not known to what extent the Company would be held liable for hazardous wastes, if any, left at these manufactured gas locations. Predicting the potential costs to investigate and remediate hazardous waste sites continues to be difficult. There are also significant uncertainties as to the portion, if any, of the investigation and remediation costs of any particular hazardous waste site that may ultimately be borne by the Company. A preliminary review by a consultant hired by the New England Electric System (NEES) companies of the potential cost of investigating and, if necessary, remediating Rhode Island manufactured gas sites resulted in costs per site ranging from less than $1 million to $11 million. An informal survey of other utilities conducted on behalf of NEES and its subsidiaries indicated costs in a similar range. The NEES companies have recovered amounts from certain insurers and other third parties, and, where appropriate, the Company intends to seek recovery from other insurers and from other PRPs, but it is uncertain whether, and to what extent, such efforts will be successful. The Company believes that hazardous waste liabilities for all sites of which it is aware are not material to its financial position. Note B - Divestiture of Generating Business - ------------------------------------------- On September 1, 1998, the Company and New England Power Company completed the sale of substantially all of their nonnuclear generating business to USGen New England, Inc. (USGen), an indirect wholly owned subsidiary of PG&E Corporation. The Company received approximately $40 million for its share of assets included in the sale. Effective September 1, 1998, USGen and TransCanada Power Marketing, Ltd. became the Company's principal suppliers for meeting obligations for transition service customers. For more information on the terms and events leading to the sale, the accounting implications of the sale, and the assets sold, see the Company's Annual Report on Form 10-K for the year ended December 31, 1997. Note C - Comprehensive Income - ----------------------------- In the first quarter of 1998, the Company adopted Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income (FAS 130). FAS 130 establishes standards for reporting comprehensive income and its components. Comprehensive income for the period is equal to net income plus "other comprehensive income," which, for the Company, consists of the change in unrealized holding gains on available-for-sale securities during the period. Other comprehensive income was immaterial for the Company for the third quarter and nine month periods ended September 30, 1998 and 1997, respectively. Note D - New Accounting Standards - --------------------------------- In 1997, the Financial Accounting Standards Board (FASB) released Statement of Financial Accounting Standards No. 131, Disclosure about Segments of an Enterprise and Related Information (FAS 131), which goes into effect in 1998. FAS 131 requires the reporting in financial statements of certain new additional information about operating segments of a business. Application of FAS 131 is not required for interim reporting in the initial year of application. The Company is currently evaluating the impact that FAS 131 will have on its future reporting requirements. In February 1998, the FASB issued Statement of Financial Accounting Standards No. 132, Employers' Disclosures about Pensions and Other Postretirement Benefits (FAS 132), which revises disclosure requirements for pension and other postretirement benefits. The Company will adopt FAS 132 in its financial statements for the year ending December 31, 1998. The adoption of FAS 131 and FAS 132 will have no impact on the Company's operating results, financial position, or cash flows. In June 1998, the FASB issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (FAS 133), which establishes accounting and reporting standards for such instruments. FAS 133 is effective for fiscal years beginning after June 15, 1999. Currently, the Company has no such derivative holdings. Note E - ------ In the opinion of the Company, these statements reflect all adjustments (which include normal recurring adjustments) necessary for a fair statement of the results of its operations for the periods presented and should be considered in conjunction with the notes to the financial statements in the Company's 1997 Annual Report. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - ----------------------------------------------------------------- This section contains management's assessment of The Narragansett Electric Company's (the Company) financial condition and the principal factors having an impact on the results of operations. This discussion should be read in conjunction with the Company's financial statements and footnotes and the 1997 Annual Report on Form 10-K. Earnings - -------- Net income for the third quarter and first nine months of 1998 increased $1.6 million and $2.6 million, respectively, as compared to the corresponding periods in 1997. The increase is due primarily to a retail rate increase, which went into effect in January 1998, and increased kilowatthour (kWh) deliveries. This report contains statements that may be considered forward looking under the securities laws. Actual results may differ materially for reasons described in this report. Industry Restructuring - ---------------------- For a full discussion of industry restructuring activities in Rhode Island, stranded cost recovery, accounting implications of industry restructuring and divestiture, workforce reductions, and impact of industry restructuring on the distribution business, see the "Industry Restructuring" section in the Company's Form 10-K for 1997 and the Company's 1997 Annual Report. Divestiture of Generating Business On September 1, 1998, the Company and New England Power Company (NEP) completed the sale of substantially all of their nonnuclear generating business to USGen New England, Inc. (USGen), an indirect wholly owned subsidiary of PG&E Corporation. The Company received approximately $40 million for its share of assets included in the sale. Effective September 1, 1998, USGen and TransCanada Power Marketing, Ltd. (TCPM) became the Company's principal suppliers for meeting its obligations for transition service customers. For more information on the terms and events leading to the sale, the accounting implications of the sale, and the assets sold, see the Company's Annual Report on Form 10-K for the year ended December 31, 1997. Year 2000 Computer Issues - ------------------------- Over the next year, most companies will face a potentially serious information systems (computer) problem because many software applications and operational programs written in the past may not properly recognize calendar dates associated with the year 2000 (Y2K). This could cause computers to either shut down or lead to incorrect calculations. During 1996, the NEES companies began the process of identifying the changes required to their computer software and hardware to mitigate Y2K issues. The NEES companies established a Y2K Project team to manage these issues. This team reports project progress to a recently formed Y2K Executive Oversight Committee each month. The team also makes regular reports to NEES' Board of Directors and its Audit Committee. The NEES companies have separated their Y2K Project into four parts as shown below, along with the estimated completion dates for each part. Substantial Contingency Testing, Completion Documentation, of Critical and Clean Category Specific Example Systems Management - ------- ------------- --------- ---------------- Mainframe/Midrange Accounting/Customer Fourth quarter Throughout 1999 Systems service integrated 1998 systems Desktop Systems Personal computers/ Mid-1999 Throughout 1999 Department software/ Networks Operational/ Dispatching systems/ Mid-1999 Throughout 1999 Embedded Transmission and Systems Distribution systems/ Telephone systems External Issues Electronic Data Mid-1999 Throughout 1999 Interchange/Vendor communications The NEES companies are using a three-phase approach in coordinating their Y2K Project for system-related issues: (I) Assessment and Inventory, (II) Pilot Testing, and (III) Renovation, Conversion, or Replacement of Application and Operating Software Packages and Testing. Phase I, which was an initial assessment of all systems and devices for potential Y2K defects, was completed in mid-1997. Phase II, which consisted of renovation pilots for a cross-section of systems in order to facilitate the establishment of templates for Phase III work, was completed in late 1997. Phase III, which is currently ongoing, requires the renovation, conversion, or replacement of the remaining applications and operating software packages. The NEES companies have also implemented a formalized communication process with third parties to receive information related to their progress in remediating their own Y2K issues, and to communicate the NEES companies' progress in addressing the Y2K issue. These third parties include major customers, suppliers, and significant businesses with which the NEES companies have data links (such as banks). The NEES companies cannot predict the outcome of other companies' remediation efforts. The NEES companies believe total costs associated with making the necessary modifications to all centralized and noncentralized systems will be approximately $25 million. In addition, the NEES companies are spending $4 million related to the implementation of a new human resources and payroll system, the replacement of which is in part due to the Y2K issue. To date, total Y2K-related costs of $19 million have been incurred, of which $1 million has been capitalized. The NEES companies are in the process of developing Y2K contingency plans to allow for critical information and operating systems to function from January 1, 2000 forward. If required, these plans are intended to address both internal risks as well as potential external risks related to both suppliers and customers. Part of the contingency planning for accounting and desktop systems will include taking extensive data back-ups prior to year-end closing. For operational systems, the NEES companies have in place an overall disaster recovery program, which already includes periodic disaster simulation training (for outages due to severe weather, for instance). As part of Y2K contingency planning, the NEES companies will review their disaster recovery plans, modifying them for Y2K-specific issues. The NEES companies expect that these contingency plans will be in place by mid-1999. Interregional and regional contingency plans are being formulated that address emergency scenarios due to the interconnection of utility systems throughout the United States. At a regional level, the NEES companies are participating and cooperating with the New England Power Pool (NEPOOL) and the Independent System Operator of the NEPOOL area (ISO New England). Overall regional activities, including those of NEPOOL and ISO New England, will be coordinated by the Northeast Power Coordinating Council, whose activities will be incorporated into the interregional coordinating effort by the North American Electric Reliability Council. The target for completion of this planning process is mid-1999. The NEES companies have noted that the Y2K coordination efforts by ISO New England began only during May 1998, resulting in a demanding and difficult schedule to attain regional and interregional target dates. The NEES companies believe the worst case scenario with a reasonable chance of occurring is temporary disruptions of electric service. This scenario could result from a failure to adequately remediate Y2K problems at NEES company facilities or could be caused by the inability of entities, such as ISO New England, to maintain the short-term reliability of various generators and/or transmission lines on a regional or superregional basis. The NEES companies believe that the contingency plans being developed both internally and on a regional level, as described above, should substantially mitigate the risks of this potential scenario. In the event that a short-term disruption in service occurs, the Company does not expect that it would have a material impact on its financial position and results of operations. While the NEES companies believe that their overall Y2K program will satisfactorily address all critical operational and system-related issues, significant risks remain. These risks include, but are not limited to, the Y2K readiness of third parties, including other utilities and power suppliers, cost and timeline estimates of remaining Y2K mitigation efforts, and the overall accuracy of assumptions made related to future events in the development of the Y2K mitigation effort. Operating Revenue - ----------------- The following table summarizes the changes in operating revenue: Increase (Decrease) in Operating Revenue Third Quarter Nine Months ------------- ------------ 1998 vs 1997 1998 vs 1997 ------------- ------------ (In Millions) Industry restructuring-related rate changes: Purchased power and transmission- related $(15) $(33) Distribution-related 2 5 PBOP rate decrease (1) (3) KWh deliveries to ultimate customers 2 3 Other (1) 1 ---- ---- $(13) $(27) ==== ==== Historically, the Company purchased all of its electrical requirements from NEP, under the provisions of an all-requirements contract at NEP's standard resale rate. Effective January 1, 1998, the contract was amended, terminating the all-requirements provision of the contract. The Company's customers also gained the right to choose their power supplier. NEP continued to supply power to the Company, at lower rates, for customers that continued to take power from the Company, until September 1, 1998, when USGen and TCPM became the Company's principal wholesale power suppliers. All customers pay rates that include contract termination charges due NEP for its generation-related stranded costs. The revenues that the Company bills customers related to power supply costs, both prior to and subsequent to NEP's sale of its nonnuclear generating business, are subject to true-up mechanisms. However, transmission-related costs billed by both NEP and NEPOOL are not subject to a true-up mechanism until 1999, and the Company incurred an underrecovery of such costs in the third quarter of 1998. Prior to January 1998, the Company had a purchased power cost adjustment mechanism and a fuel clause mechanism, which allowed NEP's billings to be passed on to customers. In accordance with the Rhode Island Restructuring Act of 1996, a $7 million increase in distribution rates was implemented for the Company, effective January 1, 1998. The Company also implemented a rate decrease related to a lower level of postretirement benefits other than pensions (PBOPs) expenses being incurred and also made refunds in January 1998 of past overrecoveries of PBOP costs, for which reserves had previously been established. KWh deliveries to ultimate customers increased 6.4 percent and 3.5 percent for the third quarter and first nine months of 1998, respectively, as compared to the corresponding periods in 1997, and is driven primarily by warmer weather in the third quarter of 1998 as compared to the same period in 1997, as well as a strong economy. Operating Expenses - ------------------ The following table summarizes the changes in operating expenses: Increase (Decrease) in Operating Expenses Third Quarter Nine Months ------------- ------------ 1998 vs 1997 1998 vs 1997 -------------- ------------ (In Millions) Fuel, purchased power and operation and maintenance: Fuel, purchased power, generation and transmission-related $(13) $(30) PBOP expense (1) (3) Other - 3 Taxes 1 3 ---- ---- $(13) $(27) ==== ==== As noted above, effective January 1, 1998, NEP's billings to the Company were significantly changed in connection with the restructuring of the electric utility industry in Rhode Island. Not only were NEP's generation rates reduced, prior to the sale of its generating business on September 1, 1998, but the transmission portion of NEP's costs are now billed separately and recorded in operation and maintenance expense instead of as a component of purchased power expense. The decrease in other operation and maintenance expense in the third quarter and for the year-to-date period is primarily due to a reduction in the cost of PBOPs, for which refunds and a rate decrease were put into effect in the first quarter. On a year-to- date basis, this decrease was partially offset by increased distribution expenses, which reflect accounting write-offs of approximately $2 million of certain previously capitalized plant items. Other Income - ------------ The increase in other income during the third quarter is primarily due to NEP's reimbursement to the Company for premiums incurred on the reacquisition of preferred stock in connection with the divestiture of the nonnuclear generating business. The Company charged these premiums to retained earnings. Utility Plant Expenditures and Financings - ----------------------------------------- Plant expenditures for the first nine months of 1998 amounted to $15 million. The funds necessary for utility plant expenditures were provided by increased short-term debt and proceeds from the sale of the nonnuclear generating business. In the first nine months of 1998, the Company retired $10 million of mortgage bonds and increased its short-term debt outstanding by $24 million. The Company currently has lines of credit with banks totaling $41 million. There were no outstanding borrowings under these lines of credit at September 30, 1998. In September 1998, the Company repurchased preferred stock with a par value of $5.2 million. In October 1998, the Company repurchased additional preferred stock with a par value of $363,000. For the twelve-month period ending September 30, 1998, the ratio of earnings to fixed charges was 3.46. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security-Holders - ------------------------------------------------------------- On July 22, 1998, a Special Meeting of Stockholders was held. By unanimous vote of the 1,132,487 shares having general voting rights represented at the meeting a supplemental indenture to the Company's First Mortgage and Deed of Trust was approved. Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- The Company is filing the following revised exhibit for incorporation by reference into its registration statement on Form S-3, Commission file No. 33-61131. 12 Statement re computation of ratios The Company is filing Financial Data Schedules. The Company did not file any reports on Form 8-K during the third quarter of 1998. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-Q for the quarter ended September 30, 1998 to be signed on its behalf by the undersigned thereunto duly authorized. THE NARRAGANSETT ELECTRIC COMPANY s/John G. Cochrane John G. Cochrane Treasurer, Authorized Officer, and Principal Financial Officer Date: November 12, 1998