Exhibit 13.3
2001 Annual Report
Western Massachusetts Electric Company and Subsidiary
Index
Contents Page
- -------- ----
Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 1
Report of Independent Public Accountants.................. 11
Consolidated Statements of Income......................... 13
Consolidated Statements of Comprehensive Income........... 13
Consolidated Balance Sheets............................... 14-15
Consolidated Statements of Common Stockholder's Equity.... 16
Consolidated Statements of Cash Flows..................... 17
Notes to Consolidated Financial Statements................ 18
Selected Consolidated Financial Data...................... 38
Consolidated Quarterly Financial Data (Unaudited)......... 38
Consolidated Statistics (Unaudited)....................... 39
Preferred Stockholder and Bondholder Information.......... Back Cover
Western Massachusetts Electric Company and Subsidiary
- -------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- -------------------------------------------------------------------------------
FINANCIAL CONDITION
- -------------------
Overview
- --------
Western Massachusetts Electric Company's (WMECO or the company) earnings
before preferred dividends totaled $15 million in 2001, compared with $35.3
million in 2000 and $2.9 million in 1999. WMECO is an operating company in
the Northeast Utilities system (NU system) and is wholly owned by Northeast
Utilities (NU). Earnings at WMECO decreased primarily because the sale of
Millstone three months into 2001 removed a significant source of earnings as
compared with 2000.
Future Outlook
- --------------
In 2001, as a result of completing industry restructuring, WMECO has evolved
into an energy delivery company, delivering electricity to customers that is
produced by other companies and sometimes bought by customers through
intermediaries. Customers in Massachusetts currently have the option of
choosing alternative power suppliers or relying on WMECO to acquire the power
for them through standard offer service. WMECO renegotiated its standard
offer supply contracts on an annual basis. As a result, in January 2001,
WMECO instituted approximately a 17 percent overall rate increase for its
customers taking standard offer service reflecting a sharp increase in prices
paid to third-party suppliers during 2001. In December 2001, however, these
rates were reduced by 14 percent, primarily reflecting a reduction in WMECO's
standard offer service supply costs in 2002. The significant reduction in
supply costs in 2002 will result in a material reduction in WMECO's operating
revenues and purchased power costs in 2002, but should not have a significant
impact on financial performance since electric supply costs are passed
through to customers. As a result, WMECO expects that its financial
performance will be relatively stable and predictable in 2002, absent
significant adverse events, such as a catastrophic storm.
Liquidity
- ---------
The year 2001 was marked by tremendous inflows of cash into the NU system and
WMECO as a result of the securitization of stranded costs and the sale of the
Millstone units. WMECO's liquidity benefited from the issuance of $155
million in rate reduction certificates and the receipt of approximately $175
million from the sale of the Millstone units. The largest share of the
proceeds from the Millstone sale was used for the repayment of debt and
preferred securities. As a result, WMECO's combined short-term and long-term
debt other than rate reduction bonds decreased to $160.4 million at the end
of 2001 from $310 million at the end of 2000. WMECO repaid all of its
preferred stock in 2001.
Of the $155 million of rate reduction certificates issued by WMECO, $99.7
million was related to the buyout of high-cost, long-term purchased-power
contracts.
The remaining proceeds from the Millstone sale were used primarily to pay
state and federal income taxes on the Millstone sale and return equity
capital to NU parent. Including both return of capital and common dividends,
WMECO paid $37 million to NU parent in 2001.
Primarily as a result of the Millstone sale and the issuance of rate
reduction certificates, WMECO's consolidated capitalization ratio was
significantly stronger at the end of 2001 than it was a year earlier.
Including capital lease obligations, but excluding rate reduction bonds, as
these bonds are nonrecourse to WMECO, WMECO's capitalization ratio was 51.6
percent debt and 48.4 percent common equity at the end of 2001, compared with
61.8 percent debt, 6.7 percent preferred securities and 31.5 percent common
equity at the end of 2000. The improved capitalization ratio and lowered
overall risk profile resulted in a series of upgrades of the NU system
securities through 2001. At the end of 2001, senior debt ratings on WMECO's
securities were A3 and BBB+. Overall, these ratings were the highest for
WMECO securities in decades and are expected to continue to enhance WMECO's
access to low-cost capital.
WMECO's net cash flows provided by operating activities decreased to $64.9
million in 2001, compared with $71.5 million in 2000 and $21.8 million in
1999. In 2001, cash flows provided by operating activities, decreased
primarily due to industry restructuring and the Millstone sale in March 2001.
The level of common dividends totaled $22 million in 2001, as compared to $12
million in 2000 and no common dividends in 1999. The level of preferred
dividends decreased to $0.4 million in 2001, compared with $2.8 million in
2000 and $3.3 million in 1999, reflecting WMECO's reduced preferred stock
outstanding. WMECO currently forecasts construction expenditures of up to $25
million for the year 2002.
Over the coming years, management expects WMECO to pay out substantially all
of its earnings as dividends to the parent company. In 2002, WMECO may make
additional dividend payments to NU to help achieve its target leverage ratio
of approximately 55 percent, excluding rate reduction bonds. As of
December 31, 2001, WMECO's capitalization included total debt of
approximately 52 percent, excluding rate reduction bonds.
Current debt levels at WMECO are expected to remain stable in future years.
Capital investments in electric utility plant at WMECO totaled $30.9 million
in 2001, as compared to $27.3 million in 2000. The company anticipates no
material increase in capital expenditures in the next several years.
Restructuring and Rate Matters
- ------------------------------
Massachusetts has experienced a continued expansion in the number of
customers securing their electric supply through competitive suppliers. In
January 2001, WMECO instituted approximately a 17 percent overall rate
increase for its customers taking standard offer service. The increase
reflected a sharp increase, from approximately $0.045 per kilowatt-hour (kWh)
to approximately $0.073 per kWh, in prices paid to third-party suppliers
during 2001. In December 2001, however, the Massachusetts Department of
Telecommunications and Energy approved approximately a 14 percent reduction
in WMECO's overall rates for standard offer service customers, primarily
reflecting a reduction in WMECO's standard offer service supply costs in 2002
to approximately $0.048 per kWh. The significant reduction in supply costs
in 2002 will result in a material reduction in WMECO's operating revenues and
purchased power costs in 2002, but should not have a significant impact on
financial performance since electric supply costs are passed through to
customers.
For further information regarding commitments and contingencies related to
restructuring, see Note 10A, "Commitments and Contingencies - Restructuring,"
to the consolidated financial statements.
Regional Transmission Organization
- ----------------------------------
The Federal Energy Regulatory Commission (FERC) has required all transmission
owning utilities, including WMECO, to voluntarily start forming regional
transmission organizations (RTO) or to state why this process has not begun.
In July 2001, the FERC stated that the three existing Northeastern
Independent System Operators (ISO) (PJM, New York and New England) should
work together to form one RTO. The FERC initiated a mediation effort between
all interested parties to begin the process of forming such an entity.
NU has been discussing with the other transmission owners in the three pool
area the potential to form an Independent Transmission Company (ITC). The
ITC would be a for-profit entity and would perform certain transmission
functions required by the FERC including tariff control, system planning and
system operations. The remaining functions required by the FERC would be
performed by the ISO and deal with the energy market and short-term
reliability. Together, the ITC and ISO form the FERC desired RTO.
In January 2002, the New York and New England ISOs announced their intention
to form an RTO. NU is working with the other transmission owners in these
two power pools to create an ITC. The agreements needed to create the ITC
and to define the working relationships among the ISO, the ITC and the
transmission owners should be created in 2002 and will allow the ITC to begin
operation shortly thereafter. The ITC and/or ISO will have the
responsibility to collect the revenue requirements of each transmission
owning entity from the market place through FERC approved tariffs. The
creation of the ITC and/or RTO will require a FERC rate case and the impact
on NU's return on equity as a result of this rate case cannot be estimated at
this time.
Nuclear Plant Performance and Other Matters
- -------------------------------------------
Vermont Yankee: In August 2001, the owners of Vermont Yankee announced they
would sell the unit to an unaffiliated company for $180 million, including
$145 million for the plant and materials and supplies and $35 million for the
nuclear fuel. WMECO owns 2.5 percent of the unit, and under the terms of the
sale, will continue to buy 2.5 percent of the plant's output through March
2012 at a range of fixed prices. The sale requires several regulatory
approvals and is scheduled to close during the first half of 2002.
Millstone: On March 31, 2001, WMECO and The Connecticut Light and Power
Company (CL&P) consummated the sale of Millstone 1 and 2 to a subsidiary of
Dominion Resources, Inc., Dominion Nuclear Connecticut, Inc. (DNCI).
Additionally, WMECO, CL&P and Public Service Company of New Hampshire sold
their ownership interests in Millstone 3 to DNCI. On October 5, 2001, NU
issued a report, following an extensive search, concerning two missing fuel
pins at the retired Millstone 1 nuclear unit, which was sold to DNCI on
March 31, 2001. As of December 31, 2001, costs related to this search for
WMECO totaled $1.3 million. The report concluded that the pins are currently
located in one of four facilities licensed to store low or high-level nuclear
waste and that they are not a threat to public health and safety. A follow-
up review by the Nuclear Regulatory Commission (NRC) commenced shortly after
the report was filed and resulted in a NRC sponsored public meeting on
January 15, 2002. In February 2002, the NRC issued a written inspection
report which concluded that NU's investigation was thorough and complete, and
that its conclusions were reasonable and supportable.
Nuclear Decommissioning
- -----------------------
In connection with the aforementioned sale of the Millstone units, DNCI has
agreed to assume responsibility for decommissioning those units.
For further information regarding nuclear decommissioning, see Note 11,
"Nuclear Decommissioning and Plant Closure Costs," to the consolidated
financial statements.
Spent Nuclear Fuel Disposal Costs
- ---------------------------------
The United States Department of Energy (DOE) originally was scheduled to
begin accepting delivery of spent nuclear fuel on January 31, 1998. However,
delays in confirming the suitability of a permanent storage site continually
have postponed plans for the DOE's long-term storage and disposal site.
Extended delays or a default by the DOE could lead to consideration of costly
alternatives. WMECO has the primary responsibility for the interim storage
of its spent nuclear fuel prior to divestiture of its remaining operating
nuclear unit, Vermont Yankee, as well as the three nuclear units currently
undergoing decommissioning, Connecticut Yankee, Maine Yankee and Yankee Rowe.
For further information regarding spent nuclear fuel disposal costs, see Note
10C, "Commitments and Contingencies - Spent Nuclear Fuel Disposal Costs," to
the consolidated financial statements.
Other Matters
- -------------
Critical Accounting Policies: The preparation of financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates, assumptions and at times difficult,
subjective or complex judgments. Accounting policies related to the
recoverability of certain regulatory assets and the assumptions used in
developing the pension and postretirement benefit obligations are the
accounting principles that management believes are critical and could have a
significant impact on WMECO's consolidated financial statements.
Regulatory Assets: The accounting policies of the NU system's regulated
operating companies historically reflect the effects of the rate-making
process in accordance with Statement of Accounting Standards (SFAS) No.
71, "Accounting for the Effects of Certain Types of Regulation." Through
its cost-of-service rate regulated transmission and distribution
business, WMECO is currently recovering its investments in long-lived
assets, including regulatory assets, and management believes that the
application of SFAS No. 71 to that portion of their business continues
to be appropriate. Management must reaffirm this conclusion at each
balance sheet date. If, as a result of a change in circumstances, it is
determined that any portion of these investments is no longer
recoverable under SFAS No. 71, that portion would be written off. Such a
write-off could have a material impact on WMECO's consolidated financial
statements. Management currently believes that all long-lived assets,
including regulatory assets, are recoverable.
Pension and Postretirement Benefit Obligations: WMECO participates in a
uniform noncontributory defined benefit retirement plan covering
substantially all regular NU system employees and also provides certain
health care benefits, primarily medical and dental, and life insurance
benefits through a benefit plan to retired employees. For each of these
plans, the development of the benefit obligation, fair value of plan
assets, funded status, and net periodic benefit credit or cost is based
on several significant assumptions. These assumptions primarily relate
to the application of a discount rate, expected long-term rate of return
and other trend rates. If these assumptions were changed, the resultant
change in benefit obligations, fair values of plan assets, funded
status, and net periodic benefit credits or costs could have a material
impact on WMECO's consolidated financial statements.
For further information regarding these types of activities, see Note 1G,
"Regulatory Accounting and Assets," and Note 8, "Pension Benefits and
Postretirement Benefits Other Than Pensions," to the consolidated financial
statements.
Environmental Matters: The NU system, including WMECO, is subject to
environmental laws and regulations structured to mitigate or remove the
effect of past operations and to improve or maintain the quality of the
environment. For further information regarding environmental matters, see
Note 10B, "Commitments and Contingencies - Environmental Matters," to the
consolidated financial statements.
Other Commitments and Contingencies: For further information regarding other
commitments and contingencies, see Note 10, "Commitments and Contingencies,"
to the consolidated financial statements.
Contractual Obligations and Commercial Commitments: Aggregated information
regarding WMECO's contractual obligations and commercial commitments as of
December 31, 2001, is summarized as follows:
- -------------------------------------------------------------------------------
(Millions of Dollars) 2002 2003 2004 2005 2006 Totals
- -------------------------------------------------------------------------------
Notes payable to banks $50.0 $ - $ - $ - $ - $ 50.0
Operating leases 3.5 3.2 3.0 2.9 2.6 15.2
Long-term
contractual
obligations 10.7 10.4 10.9 10.9 10.1 53.0
- -------------------------------------------------------------------------------
Totals $64.2 $13.6 $13.9 $13.8 $12.7 $118.2
- -------------------------------------------------------------------------------
For further information regarding WMECO's contractual obligations and
commercial commitments, see Note 2, "Short-Term Debt," Note 3, "Leases," and
Note 10E, "Long-Term Contractual Arrangements," to the consolidated financial
statements.
Forward Looking Statements: This discussion and analysis includes forward
looking statements, which are statements of future expectations and not facts
including, but not limited to, statements regarding future earnings,
refinancings, the use of proceeds from restructuring, and the recovery of
operating costs. Words such as estimates, expects, anticipates, intends,
plans, and similar expressions identify forward looking statements. Actual
results or outcomes could differ materially as a result of further actions by
state and federal regulatory bodies, competition and industry restructuring,
changes in economic conditions, changes in historical weather patterns,
changes in laws, developments in legal or public policy doctrines,
technological developments, and other presently unknown or unforeseen
factors.
RESULTS OF OPERATIONS
- ---------------------
The components of significant income statement variances for the past two
years are provided in the table below.
Income Statement Variances
(Millions of Dollars)
2001 over/(under) 2000 2000 over/(under) 1999
---------------------- ----------------------
Amount Percent Amount Percent
------ ------- ------ -------
Operating Revenues $(35) (7)% $99 24%
---- --- --- ---
Operating Expenses:
Fuel, purchased and
net interchange power 70 28 95 62
Other operation (9) (12) (26) (25)
Maintenance (13) (41) (14) (30)
Depreciation (4) (22) (10) (36)
Amortization of
regulatory assets, net 84 (a) 21 80
Taxes other than
income taxes (6) (26) (3) (14)
Gain on sale of
utility plant (120) (a) 22 100
---- --- --- ---
Total operating expenses 2 1 85 24
---- --- --- ---
Operating income (37) (50) 14 24
Other income/(loss), net (2) (a) 22 (a)
Interest expense, net (10) (40) (2) (7)
---- --- --- ---
Income before income
tax expense (29) (57) 38 (a)
Income tax expense (9) (57) 6 69
---- --- --- ---
Net Income/(loss) $(20) (58)% $32 (a)
==== === === ===
(a) Percent greater than 100.
Operating Revenues
Operating revenues decreased by $35 million or 7 percent in 2001, primarily
due to lower wholesale revenues ($85 million), partially offset by higher
regulated retail revenues ($52 million). Wholesale revenues were lower
primarily as a result of the sale of the Millstone units at the end of the
first quarter of 2001 and lower sales of energy and capacity. Retail
revenues increased primarily due to an increase in the standard offer service
rate partially offset by lower retail sales. Retail sales decreased by 0.9
percent compared to 2000.
Operating revenues increased by $99 million or 24 percent in 2000, primarily
due to higher wholesale and retail revenues. Wholesale revenues increased
($82 million) as a result of the sale of output from Millstone 2 and 3.
Retail revenues increased by $11 million due to retail rate increases in late
1999 and early 2000. Retail sales compared to 1999 were flat.
Fuel, Purchased and Net Interchange Power
Fuel, purchased and net interchange power expense increased in 2001,
primarily due to higher purchased energy costs associated with the standard
offer supply.
Fuel, purchased and net interchange power expense increased in 2000,
primarily due to the transition, under industry restructuring, of purchasing
full requirements for customers from standard offer suppliers, in addition to
the remaining fuel costs of the nuclear units and cogenerators.
Other Operation and Maintenance
Other operation and maintenance (O&M) expenses decreased in 2001, primarily
due to lower nuclear expenses ($29 million) as a result of the sale of the
Millstone units at the end of the first quarter in 2001 and lower
transmission and distribution expenses ($2 million), partially offset by
higher administrative and general expenses ($10 million).
Other O&M expenses decreased in 2000, primarily due to lower spending at the
nuclear units ($17 million), the decommissioning status of Millstone 1 ($7
million), lower administrative and general expenses ($14 million), lower
fossil and hydroelectric expenses due to the sale of certain fossil
generation assets, and the transfer of certain hydroelectric generation
assets ($6 million), partially offset by higher transmission expenses ($4
million).
Depreciation
Depreciation expense decreased in 2001, primarily due to the elimination of
decommissioning expenses as a result of the sale of the Millstone units at
the end of the first quarter of 2001.
Depreciation decreased in 2000, primarily due to the effect of discontinuing
SFAS No. 71 for the generation portion of the business and the resulting
reclassification of depreciable nuclear plant balances to regulatory assets
($14 million), the sale of certain fossil generation assets and the transfer
of certain hydroelectric generation assets.
Amortization of Regulatory Assets, Net
Amortization of regulatory assets, net increased in 2001, primarily due to
the amortization in 2001 related to the gain from the sale of Millstone ($120
million), partially offset by lower amortization of nuclear-related
transition costs ($22 million) and the current deferral of transition costs
($23 million).
Amortization of regulatory assets, net increased in 2000, primarily due to
changes in amortization levels as a result of industry restructuring ($24
million) and higher amortization associated with the reclassified nuclear
plant balances ($14 million), partially offset by the amortization in 1999
of the gain on the sale of the fossil plants ($12 million).
Taxes Other Than Income Taxes
Taxes other than income taxes decreased in 2001 and 2000, primarily due to
decreases in local property taxes.
Gain on Sale of Utility Plant
WMECO recorded a gain in 2001 on the sale of its ownership interest in
Millstone. A corresponding amount of amortization expense was recorded.
Other Income/(Loss), Net
Other income/(loss), net decreased in 2001, primarily due to higher
environmental reserves in 2001, partially offset by the settlement, in 2000,
of Millstone-related litigation, net of insurance proceeds ($2 million).
Other income/(loss), net increased in 2000, primarily due to the nuclear-
related costs. Nuclear-related costs in 2000 are comprised of a settlement
of Millstone 3 joint owner litigation, net of insurance proceeds ($2 million),
and a regulatory settlement ($1 million). In comparison, costs in 1999 are
comprised of one-time charges related to the return disallowed on Millstone 1
unrecovered plant from March 1998 forward ($11 million), the settlement of
Millstone 3 owner litigation, net of insurance proceeds ($5 million), and the
disallowed Millstone 1 plant per the Massachusetts restructuring order ($2
million).
Additionally, other income/(loss), net increased in 2000, primarily due to an
environmental reserve recorded in 1999 ($3 million) and higher equity in
earnings of regional nuclear generating and transmission companies from the
Connecticut Yankee Atomic Power Company as a result of a rate settlement ($2
million).
Interest Expense, Net
Interest expense, net decreased in 2001, primarily due to retirement of long-
term debt.
Interest expense, net decreased in 2000, primarily due to reacquisitions and
retirements of long-term debt, partially offset by an increase in interest
charges related to short-term borrowings.
Income Tax Expense
Income tax expense decreased in 2001, primarily due to lower revenues
resulting from the sale of Millstone.
Income tax expense increased in 2000, primarily due to higher book taxable
income.
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- -------------------------------------------------------------------------------
To the Board of Directors
of Western Massachusetts Electric Company:
We have audited the accompanying consolidated balance sheets of Western
Massachusetts Electric Company (a Massachusetts corporation and a wholly
owned subsidiary of Northeast Utilities) and subsidiary as of December 31,
2001 and 2000, and the related consolidated statements of income,
comprehensive income, common stockholder's equity and cash flows for each
of the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Western Massachusetts
Electric Company and subsidiary as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 22, 2002
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
<Table>
<Caption>
- -----------------------------------------------------------------------------------------
For the Years Ended December 31, 2001 2000 1999
- -----------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues....................................$ 478,869 $ 513,678 $ 414,231
-----------------------------------
Operating Expenses:
Operation -
Fuel, purchased and net interchange power......... 315,903 246,130 151,714
Other............................................. 66,458 75,940 101,842
Maintenance.......................................... 19,635 33,111 47,586
Depreciation......................................... 13,818 17,693 27,771
Amortization of regulatory assets, net............... 131,876 47,775 26,488
Taxes other than income taxes........................ 13,065 17,759 20,677
Gain on sale of utility plant........................ (119,775) - (22,437)
-----------------------------------
Total operating expenses....................... 440,980 438,408 353,641
-----------------------------------
Operating Income....................................... 37,889 75,270 60,590
Other (Loss)/Income, Net............................... (1,050) 685 (21,246)
-----------------------------------
Income Before Interest and Income Tax Expense.......... 36,839 75,955 39,344
-----------------------------------
Interest Expense:
Interest on long-term debt........................... 5,325 14,051 24,255
Interest on rate reduction bonds..................... 6,251 - -
Other interest....................................... 3,735 11,491 3,259
-----------------------------------
Interest expense, net............................. 15,311 25,542 27,514
-----------------------------------
Income Before Income Tax Expense....................... 21,528 50,413 11,830
Income Tax Expense..................................... 6,560 15,145 8,943
-----------------------------------
Net Income............................................$ 14,968 $ 35,268 $ 2,887
===================================
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net Income........................................... $ 14,968 $ 35,268 $ 2,887
----------- ---------- ----------
Other comprehensive (loss)/income, net of tax:
Unrealized (losses)/gains on securities............ (123) 22 10
----------- ---------- ----------
Comprehensive Income................................. $ 14,845 $ 35,290 $ 2,897
===================================
</Table>
The accompanying notes are an integral part of these financial statements.
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<Table>
<Caption>
- -------------------------------------------------------------------------------------
At December 31, 2001 2000
- -------------------------------------------------------------------------------------
(Thousands of Dollars)
ASSETS
- ------
Current Assets:
Cash .................................................. $ 599 $ 985
Receivables, less accumulated provision for
uncollectible accounts of $2,028 in 2001 and
$1,886 in 2000......................................... 43,761 36,364
Accounts receivable from affiliated companies........... 2,208 16,146
Unbilled revenues....................................... 12,746 21,222
Fuel, materials and supplies, at average cost........... 1,457 1,606
Prepayments and other................................... 1,544 4,817
-------- ----------
62,315 81,140
-------- ----------
Property, Plant and Equipment:
Electric utility........................................ 564,857 1,112,405
Less: Accumulated provision for depreciation........ 186,784 792,923
-------- ----------
378,073 319,482
Construction work in progress........................... 18,326 22,813
Nuclear fuel, net....................................... - 18,296
-------- ----------
396,399 360,591
-------- ----------
Deferred Debits and Other Assets:
Regulatory assets....................................... 320,222 392,247
Prepaid pension......................................... 54,226 45,473
Nuclear decommissioning trusts, at market............... - 144,921
Other .................................................. 19,500 23,446
-------- ----------
393,948 606,087
-------- ----------
Total Assets............................................. $852,662 $1,047,818
======== ==========
</Table>
The accompanying notes are an integral part of these financial statements.
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<Table>
<Caption>
- ---------------------------------------------------------------------------------------
At December 31, 2001 2000
- ---------------------------------------------------------------------------------------
(Thousands of Dollars)
LIABILITIES AND CAPITALIZATION
- ------------------------------
Current Liabilities:
Notes payable to banks................................ $ 50,000 $ 110,000
Notes payable to affiliated company................... 9,200 600
Long-term debt and preferred stock - current portion.. - 61,500
Accounts payable...................................... 34,970 25,298
Accounts payable to affiliated companies.............. 2,982 8,611
Accrued taxes......................................... 3,691 8,471
Accrued interest...................................... 2,201 4,703
Other................................................. 10,214 34,592
-------- ----------
113,258 253,775
-------- ----------
Rate Reduction Bonds.................................... 152,317 -
-------- ----------
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes..................... 229,893 224,711
Accumulated deferred investment tax credits........... 3,998 17,580
Decommissioning obligation - Millstone 1.............. - 136,130
Deferred contractual obligations...................... 37,357 42,519
Other................................................. 64,222 26,782
-------- ----------
335,470 447,722
-------- ----------
Capitalization:
Long-Term Debt........................................ 101,170 139,425
-------- ----------
Preferred Stock....................................... - 35,000
-------- ----------
Common Stockholder's Equity:
Common stock, $25 par value - authorized
1,072,471 shares; 509,696 shares outstanding
in 2001 and 590,093 shares outstanding in 2000..... 12,742 14,752
Capital surplus, paid in............................ 82,224 94,010
Retained earnings................................... 55,422 62,952
Accumulated other comprehensive income.............. 59 182
-------- ----------
Common Stockholder's Equity........................... 150,447 171,896
-------- ----------
Total Capitalization.................................... 251,617 346,321
-------- ----------
Commitments and Contingencies (Note 10)
Total Liabilities and Capitalization.................... $852,662 $1,047,818
======== ==========
</Table>
The accompanying notes are an integral part of these financial statements.
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------
Accumulated
Capital Other
Common Surplus, Retained Comprehensive Total
Stock Paid In Earnings Income/(Loss) (a)
- -----------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Balance at January 1, 1999............. $26,812 $151,431 $46,003 $ 150 $224,396
Net income for 1999.................. 2,887 2,887
Cash dividends on preferred stock.... (3,298) (3,298)
Capital stock expenses, net.......... 260 260
Allocation of benefits - ESOP (b).... (6,880) (6,880)
Capital contribution from
Northeast Utilities................ 20,000 20,000
Other comprehensive income........... 10 10
------- -------- -------- ----- --------
Balance at December 31, 1999........... 26,812 171,691 38,712 160 237,375
Net income for 2000.................. 35,268 35,268
Cash dividends on preferred stock.... (2,798) (2,798)
Cash dividends on common stock....... (12,002) (12,002)
Repurchase of common stock........... (12,060) (77,940) (90,000)
Capital stock expenses, net.......... 259 259
Allocation of benefits - ESOP (b).... 3,772 3,772
Other comprehensive income........... 22 22
------- -------- -------- ----- --------
Balance at December 31, 2000........... 14,752 94,010 62,952 182 171,896
Net income for 2001.................. 14,968 14,968
Cash dividends on preferred stock.... (404) (404)
Cash dividends on common stock....... (22,000) (22,000)
Repurchase of common stock........... (2,010) (12,990) (15,000)
Capital stock expenses, net.......... 1,204 1,204
Allocation of benefits - ESOP (b).... (94) (94)
Other comprehensive loss............. (123) (123)
------- -------- -------- ----- --------
Balance at December 31, 2001........... $12,742 $ 82,224 $ 55,422 $ 59 $150,447
======= ======== ======== ===== ========
</Table>
(a) The company has no dividend restrictions. However, the company has two
tests it must meet before it can pay out any dividends. The most
restrictive of which limits the company to paying out no greater than
$55.4 million of equity at December 31, 2001.
(b) In June 1999, WMECO paid NU parent $6.9 million for NU shares issued
from 1992 through 1998 on behalf of its employees in accordance with NU's
401(k) plan. This transaction resulted in a reduction of the NU parent
loss and a tax benefit to WMECO. The amount in 2000 represents the
remaining previously unallocated 1993 through 1999 NU parent losses.
The accompanying notes are an integral part of these financial statements.
WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------------
For the Years Ended December 31, 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Activities:
Net income........................................................ $ 14,968 $ 35,268 $ 2,887
Adjustments to reconcile to net cash flows
provided by operating activities:
Depreciation.................................................... 13,818 17,693 27,771
Deferred income taxes and investment tax credits, net........... 5,281 (11,549) (6,544)
Net amortization of recoverable energy costs.................... 3,179 9,386 -
Amortization of regulatory assets, net.......................... 131,876 47,775 26,488
Gain on sale of utility plant................................... (119,775) - (22,437)
Net other (uses)/sources of cash................................ (2,052) (22,254) 6,759
Changes in working capital:
Receivables and unbilled revenues, net.......................... 15,017 (24,637) (22,180)
Fuel, materials and supplies.................................... 149 1,491 1,956
Accounts payable................................................ 4,043 17,727 (14,636)
Accrued taxes................................................... (4,780) 7,882 (675)
Other working capital (excludes cash)........................... 3,204 (7,321) 22,368
--------- --------- ---------
Net cash flows provided by operating activities..................... 64,928 71,461 21,757
--------- --------- ---------
Investing Activities:
Investments in regulated plant:
Electric utility plant.......................................... (30,921) (27,267) (30,192)
Nuclear fuel.................................................... (140) (7,848) (5,817)
--------- --------- ---------
Net cash flows used for investments in regulated plant............ (31,061) (35,115) (36,009)
Investments in nuclear decommissioning trusts..................... (23,037) (3,437) (11,387)
Other investment activities, net.................................. 817 3,589 1,807
Net proceeds from the sale of utility plant....................... 175,154 185,787 48,524
Capital contributions from Northeast Utilities.................... - - 20,000
Buyout of IPP contracts........................................... (80,000) - (19,700)
--------- --------- ---------
Net cash flows provided by investing activities..................... 41,873 150,824 3,235
--------- --------- ---------
Financing Activities:
Repurchase of common stock........................................ (15,000) (90,000) -
Issuance of rate reduction bonds.................................. 155,000 - -
Retirement of rate reduction bonds................................ (2,683) - -
Net (decrease)/increase in short-term debt........................ (51,400) (21,800) 81,500
Reacquisitions and retirements of long-term debt.................. (100,000) (94,150) (100,850)
Reacquisitions and retirements of preferred stock................. (36,500) (1,500) (1,500)
Retirement of capital lease obligation............................ (34,200) - -
Cash dividends on preferred stock................................. (404) (2,798) (3,298)
Cash dividends on common stock.................................... (22,000) (12,002) -
--------- --------- ---------
Net cash flows used in financing activities......................... (107,187) (222,250) (24,148)
--------- --------- ---------
Net (decrease)/increase in cash..................................... (386) 35 844
Cash - beginning of year............................................ 985 950 106
--------- --------- ---------
Cash - end of year.................................................. $ 599 $ 985 $ 950
========= ========= =========
Supplemental Cash Flow Information:
Cash paid/(refunded) during the year for:
Interest, net of amounts capitalized......................... $ 17,939 $ 26,055 $ 30,958
========= ========= =========
Income taxes................................................. $ 6,314 $ 18,554 $ (6,296)
========= ========= =========
Increase in obligations:
Niantic Bay Fuel Trust........................................ $ 411 $ 1,532 $ 1,112
========= ========= =========
</Table>
The accompanying notes are an integral part of these financial statements.
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. About Western Massachusetts Electric Company
Western Massachusetts Electric Company (WMECO or the company) along
with The Connecticut Light and Power Company (CL&P), Public Service
Company of New Hampshire (PSNH), North Atlantic Energy Corporation
(NAEC), Holyoke Water Power Company (HWP), and Yankee Energy System,
Inc. (Yankee) are the operating companies comprising the Northeast
Utilities system (NU system) and are wholly owned by Northeast
Utilities (NU). The NU system furnishes franchised retail electric
service in western Massachusetts, Connecticut and New Hampshire
through WMECO, CL&P and PSNH. NAEC sells all of its entitlement to
the capacity and output of the Seabrook Station nuclear unit
(Seabrook) to PSNH under the terms of two life-of-unit, full cost
recovery contracts (Seabrook Power Contracts). HWP also is engaged
in the production of electric power. Yankee, the parent company of
Yankee Gas Services Company (Yankee Gas), is Connecticut's largest
natural gas distribution system.
NU is registered with the Securities and Exchange Commission (SEC) as
a holding company under the Public Utility Holding Company Act of
1935 (1935 Act) and the NU system, including WMECO, is subject to the
provisions of the 1935 Act. Arrangements among the NU system
companies, outside agencies and other utilities covering
interconnections, interchange of electric power and sales of utility
property are subject to regulation by the Federal Energy Regulatory
Commission (FERC) and/or the SEC. WMECO is subject to further
regulation for rates, accounting and other matters by the FERC and
the Massachusetts Department of Telecommunications and Energy (DTE).
Several wholly owned subsidiaries of NU provide support services for
the NU system companies, including WMECO, and, in some cases, for
other New England utilities. Northeast Utilities Service Company
(NUSCO) provides centralized accounting, administrative, engineering,
financial, information resources, legal, operational, planning,
purchasing, and other services to the NU system companies, including
WMECO. North Atlantic Energy Service Corporation has operational
responsibility for Seabrook. In addition, WMECO has established a
special purpose subsidiary whose operations are solely related to the
issuance of rate reduction certificates.
B. Presentation
The consolidated financial statements of WMECO include the accounts
of its subsidiary. Intercompany transactions have been eliminated in
consolidation.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Certain reclassifications of prior years' data have been made to
conform with the current year's presentation.
All transactions among affiliated companies are on a recovery of cost
basis which may include amounts representing a return on equity and
are subject to approval by various federal and state regulatory
agencies and the DTE.
C. New Accounting Standards
Asset Retirement Obligations: In June 2001, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 143, "Accounting for Asset Retirement
Obligations." This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs and
applies to (a) all entities and (b) legal obligations associated with
the retirement of long-lived assets that result from the acquisition,
construction, development, and/or the normal operation of a long-
lived asset, except for certain obligations of lessees. SFAS No. 143
is effective for WMECO's 2003 calendar year. Upon adoption of SFAS
No. 143, there may be an impact on WMECO's consolidated financial
statements which management has not estimated at this time.
Long-Lived Assets: In August 2001, the FASB issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets."
This statement modifies financial accounting and reporting for the
impairment or disposal of long-lived assets. SFAS No. 144 is
effective for WMECO's 2002 calendar year. Currently, management does
not expect the adoption of SFAS No. 144 to have a material impact on
WMECO's consolidated financial statements.
D. Investments and Jointly Owned Electric Utility Plant
Regional Nuclear Generating Companies: WMECO owns common stock in
four regional nuclear companies (Yankee Companies). WMECO's ownership
interests in the Yankee Companies at December 31, 2001 and 2000,
which are accounted for on the equity method due to WMECO's ability
to exercise significant influence over their operating and financial
policies are 9.5 percent of the Connecticut Yankee Atomic Power
Company (CYAPC), 7 percent of the Yankee Atomic Electric Company
(YAEC), 3 percent of the Maine Yankee Atomic Power Company (MYAPC),
and 2.5 percent of the Vermont Yankee Nuclear Power Corporation
(VYNPC). WMECO's total equity investment in the Yankee Companies at
December 31, 2001 and 2000, is $9.3 million and $11.1 million,
respectively. Each Yankee Company owns a single nuclear generating
unit. However, VYNPC is the only unit still in operation at
December 31, 2001.
Plant-in-service and the accumulated provision for depreciation for
WMECO's share of Millstone 2 and 3 are as follows:
-----------------------------------------------------------------------
At December 31, 2001 2000
-----------------------------------------------------------------------
(Millions of Dollars)
Plant-in-service:
Millstone 2.................................. $ - $ 182.3
Millstone 3.................................. - 382.7
Accumulated provision for depreciation:
Millstone 2.................................. $ - $ 174.5
Millstone 3.................................. - 357.3
-----------------------------------------------------------------------
E. Depreciation
The provision for depreciation is calculated using the straight-line
method based on estimated remaining useful lives of depreciable
utility plant-in-service, adjusted for salvage value and removal
costs, as approved by the appropriate regulatory agency where
applicable. Depreciation rates are applied to the average plant-in-
service from the time they are placed in service. When plant is
retired from service, the original cost of the plant, including costs
of removal less salvage, is charged to the accumulated provision for
depreciation. The depreciation rates for the several classes of
electric plant-in-service are equivalent to a composite rate of 2.3
percent in 2001, 2.2 percent in 2000 and 2.3 percent in 1999.
As a result of discontinuing the application of SFAS No. 71,
"Accounting for the Effects of Certain Types of Regulation," for
WMECO's generation business in 1999, the company recorded a charge to
accumulated depreciation for the nuclear plant in excess of the
estimated fair market value at the time in the amount of $330 million
and a corresponding regulatory asset was created.
F. Revenues
Revenues are based on authorized rates applied to each customer's use
of energy. In general, rates can be changed only through a formal
proceeding before the DTE. Regulatory commissions also have authority
over the terms and conditions of nontraditional rate-making
arrangements.
At the end of each accounting period, WMECO accrues a revenue estimate
for the amount of energy delivered but unbilled.
G. Regulatory Accounting and Assets
The accounting policies of WMECO conform to accounting principles
generally accepted in the United States applicable to rate-regulated
enterprises and historically reflect the effects of the rate-making
process in accordance with SFAS No. 71.
WMECO's transmission and distribution business continues to be cost-
of-service rate regulated, and management believes the application of
SFAS No. 71 continues to be appropriate. Management also believes it
is probable that WMECO will recover its investments in long-lived
assets, including regulatory assets. Stranded costs for WMECO will be
recovered through a transition charge over a 12-year period.
In addition, the regulatory assets in the following table are earning
a return. The components of WMECO's regulatory assets are as follows:
-----------------------------------------------------------------------
At December 31, 2001 2000
-----------------------------------------------------------------------
(Millions of Dollars)
Recoverable nuclear costs.................... $ 38.5 $257.7
Securitized regulatory assets................ 149.6 -
Income taxes, net............................ 57.3 50.3
Unrecovered contractual obligations.......... 37.4 42.5
Recoverable energy costs, net................ 3.8 6.9
Other........................................ 33.6 34.8
-----------------------------------------------------------------------
Totals....................................... $320.2 $392.2
-----------------------------------------------------------------------
As a result of discontinuing the application of SFAS No. 71 for
WMECO's generation business, the company had an unamortized balance
($250.5 million and $286.9 million), included in recoverable nuclear
costs at December 31, 2001 and 2000, respectively. These amounts
were the result of reclassified nuclear plant in excess of its
estimated fair market value from plant to regulatory assets, which
took place in 1999. This balance is offset by the unamortized
balance of the deferred credit on the transfer of assets, in March
2000, to Northeast Generation Company (NGC) of approximately $127.5
million. Since the transfer occurred between WMECO and NGC, two
affiliates, the deferred credit is eliminated in consolidation. In
March 2001, WMECO sold its ownership interest in the Millstone
units. The gain on this sale in the amount of approximately $119.8
million was used to offset recoverable nuclear costs, resulting in
an unamortized balance of $3.3 million, after the current year's
amortization expense. Also included in that regulatory asset
component for 2001 and 2000 are $35.2 million and $104.9 million,
respectively, which includes Millstone 1 recoverable nuclear costs
relating to the recoverable portion of the undepreciated plant and
related assets ($35.2 million and $39.6 million, respectively) and
the decommissioning and closure obligation ($65.3 million in 2000).
WMECO issued rate reduction certificates in the amount of $155
million in May of 2001 and $99.7 million of those proceeds were
related to the buyout of contracts with independent power producers.
The payments to buyout or buydown these contracts were recorded as
securitized regulatory assets.
WMECO, under the terms of contracts with the Yankee Companies, is
responsible for its proportionate share of the remaining costs of
the units, including decommissioning. These amounts are recorded as
unrecovered contractual obligations. A portion of these obligations
was securitized in 2001 and is included in securitized regulatory
assets.
WMECO, under the Energy Policy Act of 1992 (Energy Act), is assessed
for its proportionate share of the costs of decontaminating and
decommissioning uranium enrichment plants owned by the United States
Department of Energy (DOE) (D&D Assessment). The Energy Act
requires that regulators treat D&D Assessments as a reasonable and
necessary current cost of fuel, to be fully recovered in rates like
any other fuel cost. WMECO is currently recovering these costs
through rates. As of December 31, 2001 and 2000, WMECO's total D&D
Assessment deferrals were $5.5 million and $8.6 million,
respectively, and have been recorded as recoverable energy costs,
net.
H. Income Taxes
The tax effect of temporary differences (differences between the
periods in which transactions affect income in the financial
statements and the periods in which they affect the determination of
taxable income) is accounted for in accordance with the rate-making
treatment of the applicable regulatory commissions.
The tax effect of temporary differences, including timing differences
accrued under previously approved accounting standards, that give
rise to the accumulated deferred tax obligation including the impact
of the sale of the Millstone units, is as follows:
-----------------------------------------------------------------------
At December 31, 2001 2000
-----------------------------------------------------------------------
(Millions of Dollars)
Accelerated depreciation and
other plant-related differences.............. $107.5 $113.5
Regulatory assets:
Nuclear stranded investment.................. 52.3 80.2
Securitized contract termination
costs and other............................ 38.4 -
Income tax gross-up.......................... 19.0 19.5
Other.......................................... 12.7 11.5
-----------------------------------------------------------------------
Totals......................................... $229.9 $224.7
-----------------------------------------------------------------------
I. Other (Loss)/Income, Net
The components of WMECO's other (loss)/income, net items are as
follows:
-----------------------------------------------------------------------
For the Years Ended December 31,
-----------------------------------------------------------------------
2001 2000 1999
-----------------------------------------------------------------------
(Millions of Dollars)
Other nuclear-related costs......... $ - $(2.8) $(18.0)
Other, net.......................... (1.0) 3.5 (3.2)
-----------------------------------------------------------------------
Totals.............................. $(1.0) $ 0.7 $(21.2)
-----------------------------------------------------------------------
2. SHORT-TERM DEBT
Limits: The amount of short-term borrowings that may be incurred by WMECO
is subject to periodic approval by either the SEC under the 1935 Act or
by the respective state regulators. Currently, SEC authorization allows
WMECO to incur total short-term borrowings up to a maximum of $250
million.
Credit Agreement: On November 16, 2001, WMECO, CL&P, PSNH, and Yankee
Gas entered into a 364-day unsecured revolving credit facility for $350
million. This facility replaced a $250 million facility for CL&P and
WMECO which expired on November 16, 2001. WMECO may draw up to $100
million, subject to the maximum facility limit of $350 million. Unless
extended, the credit facility will expire on November 15, 2002. At
December 31, 2001 and 2000, there were $50 million and $110 million,
respectively, in borrowings under these facilities.
Under the aforementioned credit agreement, WMECO may borrow at fixed or
variable rates plus an applicable margin based upon certain debt ratings,
as rated by the lower of Standard and Poor's or Moody's Investors
Service. The weighted average interest rates on WMECO's notes payable to
banks outstanding on December 31, 2001 and 2000, was 2.98 percent and
8.05 percent, respectively.
This credit agreement provides that WMECO must comply with certain
financial and nonfinancial covenants as are customarily included in such
agreements, including, but not limited to, consolidated debt ratios and
interest coverage ratios. WMECO currently is and expects to remain in
compliance with these covenants.
Money Pool: Certain subsidiaries of NU, including WMECO, are members of
the Northeast Utilities System Money Pool (Pool). The Pool provides a
more efficient use of the cash resources of the NU system and reduces
outside short-term borrowings. NUSCO administers the Pool as agent for
the member companies. Short-term borrowing needs of the member companies
are first met with available funds of other member companies, including
funds borrowed by NU parent. NU parent may lend to the Pool but may not
borrow. Funds may be withdrawn from or repaid to the Pool at any time
without prior notice. Investing and borrowing subsidiaries receive or
pay interest based on the average daily federal funds rate. Borrowings
based on loans from NU parent, however, bear interest at NU parent's cost
and must be repaid based upon the terms of NU parent's original
borrowing. At December 31, 2001 and 2000, WMECO had $9.2 million and
$0.6 million, respectively, of borrowings outstanding from the Pool. The
interest rate on borrowings from the Pool at December 31, 2001 and 2000,
was 1.5 percent and 5.4 percent, respectively.
3. LEASES
WMECO has entered into lease agreements for the use of data processing
and office equipment, vehicles, nuclear control room simulators, and
office space. The provisions of these lease agreements generally provide
for renewal options.
Capital lease rental payments charged to operating expense were $1.9
million in 2001, $9.6 million in 2000, and $2.6 million in 1999.
Interest included in capital lease rental payments was $0.7 million in
2001, $2.8 million in 2000, and $3.1 million in 1999. Operating lease
rental payments charged to expense were $2.5 million in 2001, $3.2
million in 2000, and $4.8 million in 1999.
Future minimum rental payments, excluding executory costs such as
property taxes, state use taxes, insurance, and maintenance, under long-
term operating noncancelable leases, as of December 31, 2001, are as
follows:
---------------------------------------------------------------------------
Year Operating Leases
---------------------------------------------------------------------------
(Millions of Dollars)
2002...................................... $ 3.5
2003...................................... 3.2
2004...................................... 3.0
2005...................................... 2.9
2006...................................... 2.6
After 2006................................ 11.4
---------------------------------------------------------------------------
Future minimum lease payments............. $26.6
---------------------------------------------------------------------------
4. PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION
Details of preferred stock not subject to mandatory redemption are as
follows:
---------------------------------------------------------------------------
December 31, Shares
2001 Outstanding December 31,
Redemption December 31, --------------------
Description Price 2001 2001 2000
---------------------------------------------------------------------------
(Millions of Dollars)
7.72% Series B
of 1971 $ - - - $20.0
---------------------------------------------------------------------------
5. PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION
Details of preferred stock subject to mandatory redemption are as
follows:
---------------------------------------------------------------------------
December 31, Shares
2001 Outstanding December 31,
Redemption December 31, --------------------
Description Price 2001 2001 2000
---------------------------------------------------------------------------
(Millions of Dollars)
7.60% Series of 1987 $ - - $ - $16.5
Less preferred stock
to be redeemed
within one year - - - 1.5
---------------------------------------------------------------------------
Totals.............................................. $ - $15.0
---------------------------------------------------------------------------
6. LONG-TERM DEBT
Details of long-term debt outstanding are as follows:
---------------------------------------------------------------------------
At December 31, 2001 2000
---------------------------------------------------------------------------
(Millions of Dollars)
First Mortgage Bonds:
7 3/8% Series B, due 2001........................... $ - $ 60.0
7 3/4% Series V, due 2002........................... - 40.0
------ ------
- 100.0
Pollution Control Notes:
Tax Exempt 1993 Series A, 5.85% due 2028.......... 53.8 53.8
Fees and interest due for spent nuclear
fuel disposal costs............................... 47.4 45.6
Less amounts due within one year................... - 60.0
---------------------------------------------------------------------------
Long-term debt, net................................ $101.2 $139.4
---------------------------------------------------------------------------
Essentially all utility plant of WMECO is subject to the liens of the
company's first mortgage bond indenture.
WMECO has secured $53.8 million of pollution control notes with second
mortgage liens on transmission assets, junior to the liens of its first
mortgage bond indentures.
7. INCOME TAX EXPENSE
The components of the federal and state income tax provisions were
charged/(credited) to operations as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 2001 2000 1999
---------------------------------------------------------------------------
(Millions of Dollars)
Current income taxes:
Federal............................. $ 0.3 $15.8 $13.5
State............................... 1.0 10.9 2.0
----- ----- -----
Total current..................... 1.3 26.7 15.5
----- ----- -----
Deferred income taxes, net:
Federal............................. 5.3 (0.8) (3.5)
State............................... 0.6 (8.6) (0.9)
----- ----- -----
Total deferred.................... 5.9 (9.4) (4.4)
----- ----- -----
Investment tax credits, net........... (0.6) (2.1) (2.2)
---------------------------------------------------------------------------
Total income tax expense.............. $ 6.6 $15.2 $ 8.9
---------------------------------------------------------------------------
Deferred income taxes are comprised of the tax effects of temporary
differences as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 2001 2000 1999
---------------------------------------------------------------------------
(Millions of Dollars)
Depreciation, leased nuclear
fuel, settlement credits, and
disposal costs..................... $(0.6) $ 0.9 $(2.3)
Regulatory deferral.................. (3.7) (16.4) (1.4)
Regulatory disallowance.............. - - (4.2)
Pension accruals..................... 1.0 5.9 4.2
Sale of generation assets............ (30.5) - -
Securitized contract
termination costs and other........ 38.4 - -
Other................................ 1.3 0.2 (0.7)
---------------------------------------------------------------------------
Deferred income taxes, net........... $ 5.9 $(9.4) $(4.4)
---------------------------------------------------------------------------
A reconciliation between income tax expense and the expected tax expense
at the statutory rate is as follows:
---------------------------------------------------------------------------
For the Years Ended December 31, 2001 2000 1999
---------------------------------------------------------------------------
(Millions of Dollars)
Expected federal income tax.......... $ 7.5 $17.6 $ 4.1
Tax effect of differences:
Depreciation....................... - (1.2) 0.2
Amortization of regulatory assets.. 1.2 1.3 6.2
Investment tax credit amortization. (0.6) (2.1) (2.2)
State income taxes, net of
federal benefit.................. 1.1 1.5 0.7
Dividends received deduction....... (0.6) (1.7) (0.4)
Other, net......................... (2.0) (0.2) 0.3
---------------------------------------------------------------------------
Total income tax expense............. $ 6.6 $15.2 $ 8.9
---------------------------------------------------------------------------
8. PENSION BENEFITS AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The NU system companies, including WMECO, participate in a uniform
noncontributory defined benefit retirement plan covering substantially
all regular NU system employees. Benefits are based on years of service
and the employees' highest eligible compensation during 60 consecutive
months of employment. WMECO's portion of the NU system's total pension
credit, part of which was credited to utility plant, was $13.9 million in
2001, $19 million in 2000 and $10.8 million in 1999.
Currently, WMECO's policy is to annually fund an amount at least equal to
that which will satisfy the requirements of the Employee Retirement
Income Security Act and Internal Revenue Code.
The NU system companies, including WMECO, also provide certain health
care benefits, primarily medical and dental, and life insurance benefits
through a benefit plan to retired employees. These benefits are available
for employees retiring from WMECO who have met specified service
requirements. For current employees and certain retirees, the total
benefit is limited to two times the 1993 per retiree health care cost.
These costs are charged to expense over the estimated work life of the
employee. WMECO annually funds postretirement costs through external
trusts with amounts that have been rate-recovered and which also are tax
deductible.
Pension and trust assets are invested primarily in domestic and
international equity securities and bonds.
The following table represents information on the plans' benefit
obligation, fair value of plan assets, and the respective plans' funded
status:
<Table>
<Caption>
-------------------------------------------------------------------------------
At December 31,
-------------------------------------------------------------------------------
Postretirement
Pension Benefits Benefits
-------------------------------------------------------------------------------
(Millions of Dollars) 2001 2000 2001 2000
-------------------------------------------------------------------------------
Change in benefit obligation
Benefit obligation
at beginning of year........... $(121.1) $ (118.1) $(29.3) $(29.5)
Service cost..................... (1.9) (2.2) (0.4) (0.4)
Interest cost.................... (8.5) (8.9) (2.4) (2.2)
Transfers........................ 4.9 0.5 - -
Actuarial loss................... (3.0) (3.0) (7.0) (0.5)
Benefits paid.................... 8.7 8.2 3.6 2.6
Settlements and other............ (0.4) 2.4 - 0.7
-------------------------------------------------------------------------------
Benefit obligation
at end of year................. $(121.3) $(121.1) $(35.5) $(29.3)
-------------------------------------------------------------------------------
Change in plan assets
Fair value of plan assets
at beginning of year........... $ 214.3 $ 223.9 $ 17.3 $ 16.6
Actual return on plan assets..... (9.5) (0.9) (1.6) 0.8
Employer contribution............ - - 2.6 2.5
Benefits paid.................... (8.7) (8.2) (3.6) (2.6)
Transfers........................ (4.9) (0.5) - -
-------------------------------------------------------------------------------
Fair value of plan assets
at end of year................. $ 191.2 $ 214.3 $ 14.7 $ 17.3
-------------------------------------------------------------------------------
Funded status
at December 31................. $ 69.9 $ 93.2 $(20.8) $(12.0)
Unrecognized transition
(asset)/obligation............. (0.7) (0.9) 17.4 19.1
Unrecognized prior service cost.. 6.0 6.6 - -
Unrecognized net (gain)/loss..... (21.0) (53.4) 3.8 (6.6)
-------------------------------------------------------------------------------
Prepaid benefit cost............. $ 54.2 $ 45.5 $ 0.4 $ 0.5
-------------------------------------------------------------------------------
</Table>
The following actuarial assumptions were used in calculating the plans'
year end funded status:
--------------------------------------------------------------------------
At December 31,
--------------------------------------------------------------------------
Postretirement
Pension Benefits Benefits
--------------------------------------------------------------------------
2001 2000 2001 2000
--------------------------------------------------------------------------
Discount rate.................. 7.25% 7.50% 7.25% 7.50%
Compensation/progression rate.. 4.25 4.50 4.25 4.50
Health care cost
trend rate (a)............... N/A N/A 11.00 5.26
--------------------------------------------------------------------------
(a) The annual per capita cost of covered health care benefits was
assumed to decrease to 5.00 percent by 2007.
The components of net periodic benefit (credit)/cost are:
<Table>
<Caption>
----------------------------------------------------------------------------------------
For the Years Ended December 31,
----------------------------------------------------------------------------------------
Pension Benefits Postretirement Benefits
----------------------------------------------------------------------------------------
(Millions of Dollars) 2001 2000 1999 2001 2000 1999
----------------------------------------------------------------------------------------
Service cost................ $ 1.9 $ 2.2 $ 2.4 $ 0.4 $ 0.4 $ 0.5
Interest cost............... 8.5 8.9 8.5 2.4 2.2 2.1
Expected return on
plan assets............... (20.0) (19.0) (16.9) (1.4) (1.3) (1.0)
Amortization of
unrecognized
net transition
(asset)/obligation......... (0.2) (0.2) (0.2) 1.6 1.6 1.6
Amortization of prior
service cost............... 0.6 0.6 0.6 - - -
Amortization of
actuarial gain............. (4.4) (4.9) (3.4) - - -
Other amortization, net...... - - - (0.4) (0.4) (0.3)
Settlements and other........ (0.3) (6.6) (1.8) - - -
----------------------------------------------------------------------------------------
Net periodic benefit
(credit)/cost............... $(13.9) $(19.0) $(10.8) $ 2.6 $ 2.5 $ 2.9
----------------------------------------------------------------------------------------
</Table>
For calculating pension and postretirement benefit costs, the following
assumptions were used:
---------------------------------------------------------------------------
For the Years Ended December 31,
---------------------------------------------------------------------------
Postretirement
Pension Benefits Benefits
---------------------------------------------------------------------------
2001 2000 1999 2001 2000 1999
---------------------------------------------------------------------------
Discount rate............. 7.50% 7.75% 7.00% 7.50% 7.75% 7.00%
Expected long-term
rate of return.......... 9.50 9.50 9.50 N/A N/A N/A
Compensation/
progression rate........ 4.50 4.75 4.25 4.50 4.75 4.25
Long-term rate
of return -
Health assets,
net of tax.......... N/A N/A N/A 7.50 7.50 7.50
Life assets........... N/A N/A N/A 9.50 9.50 9.50
---------------------------------------------------------------------------
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. The effect of changing the
assumed health care cost trend rate by one percentage point in each year
would have the following effects:
---------------------------------------------------------------------------
One Percentage One Percentage
(Millions of Dollars) Point Increase Point Decrease
---------------------------------------------------------------------------
Effect on total service and
interest cost components...... $0.1 $(0.1)
Effect on postretirement
benefit obligation............ $1.5 $(1.3)
---------------------------------------------------------------------------
The trust holding the health plan assets is subject to federal income
taxes.
9. NUCLEAR GENERATION ASSETS DIVESTITURE
On March 31, 2001, WMECO and CL&P consummated the sale of Millstone 1 and
2 to a subsidiary of Dominion Resources, Inc., Dominion Nuclear
Connecticut, Inc. (DNCI). WMECO, CL&P and PSNH sold their ownership
interests in Millstone 3 to DNCI. This sale included all of the
respective joint ownership interests of CL&P, PSNH and WMECO in Millstone
3. WMECO received approximately $175 million of cash proceeds from the
sale and applied the proceeds to taxes and reductions of debt and equity.
As part of the sale, DNCI assumed responsibility for decommissioning the
three Millstone units.
In connection with the sale, WMECO recorded a gain in the amount of
approximately $119.8 million which was used to offset stranded costs.
10. COMMITMENTS AND CONTINGENCIES
A. Restructuring
During the first quarter of 2000, WMECO filed its first annual
stranded cost reconciliation filing covering the period March 1, 1998
through December 31, 1999. The hearing and briefing processes
related to this filing were completed during the second quarter of
2001. A DTE decision is expected in the first half of 2002. On
March 30, 2001, WMECO also filed its second annual stranded cost
reconciliation with the DTE for calendar year 2000 with the related
review and hearing processes anticipated to be scheduled for the
first half of 2002. The cumulative deferral of unrecovered stranded
costs, as filed through calendar year 2000, is approximately $4
million. Management believes these costs are fully recoverable.
WMECO is in the process of finalizing its 2001 annual transition cost
reconciliation which is expected to be filed with the DTE on March 29,
2002. This filing reconciles the recovery of stranded generation
costs for calendar year 2001. Also included in this filing are the
sales proceeds from WMECO's portion of Millstone, the impact of
securitization and an approximate $13 million benefit to ratepayers
from WMECO's nuclear performance-based ratemaking process. The
inclusion of these items as part of the reconciliation filing allows
WMECO to accelerate the recovery of total stranded generation assets.
Management anticipates a formal hearing in 2002 regarding this filing
after a period of data discovery by the DTE and other intervenors.
B. Environmental Matters
The NU system, including WMECO, is subject to environmental laws and
regulations intended to mitigate or remove the effect of past
operations and improve or maintain the quality of the environment.
As such, the NU system, including WMECO, has active environmental
auditing and training programs and believes it is substantially in
compliance with the current laws and regulations.
However, the normal course of operations may involve activities and
substances that expose WMECO to potential liabilities of which
management cannot determine the outcome. Additionally, management
cannot determine the outcome for liabilities that may be imposed for
past acts, even though such past acts may have been lawful at the
time they occurred. Management does not believe, however, that this
will have a material impact on WMECO's consolidated financial
statements.
Based upon currently available information for the estimated
remediation costs as of December 31, 2001 and 2000, the liability
recorded by WMECO for its estimated environmental remediation costs
amounted to $5.3 million and $4.6 million, respectively.
C. Spent Nuclear Fuel Disposal Costs
Under the Nuclear Waste Policy Act of 1982, WMECO must pay the DOE
for the disposal of spent nuclear fuel and high-level radioactive
waste. The DOE is responsible for the selection and development of
repositories for, and the disposal of, spent nuclear fuel and high-
level radioactive waste. For nuclear fuel used to generate
electricity prior to April 7, 1983 (Prior Period Fuel), an accrual
has been recorded for the full liability and payment must be made
prior to the first delivery of spent fuel to the DOE. Until such
payment is made, the outstanding balance will continue to accrue
interest at the 3-month treasury bill yield rate. As of December 31,
2001 and 2000, fees due to the DOE for the disposal of Prior Period
Fuel were $47.4 million and $45.6 million, respectively, including
interest costs of $31.8 million and $30 million, respectively.
Fees for nuclear fuel burned on or after April 7, 1983, are billed
currently to customers and paid to the DOE on a quarterly basis.
WMECO remains responsible for fees to be paid for fuel burned until
the divestiture of the Millstone nuclear units.
D. Nuclear Insurance Contingencies
Insurance policies covering WMECO's ownership share of the NU
system's nuclear facilities have been purchased for the primary cost
of repair, replacement or decontamination of utility property,
certain extra costs incurred in obtaining replacement power during
prolonged accidental outages and the excess cost of repair,
replacement or decontamination or premature decommissioning of
utility property.
WMECO is subject to retroactive assessments if losses under those
policies exceed the accumulated funds available to the insurer. The
maximum potential assessments with respect to losses arising during
the current policy year for the primary property insurance program
and the excess property damage policies are $0.2 million and $0.3
million, respectively. In addition, insurance has been purchased by
the NU system in the aggregate amount of $200 million on an industry
basis for coverage of worker claims.
Under certain circumstances, in the event of a nuclear incident at
one of the nuclear facilities covered by the federal government's
third-party liability indemnification program, the NU system,
including WMECO, could be assessed liabilities in proportion to its
ownership interest in each of its nuclear units up to $83.9 million.
The NU system's payment of this assessment would be limited to, in
proportion to its ownership interest in each of its nuclear units,
$10 million in any one year per nuclear unit. In addition, if the
sum of all claims and costs from any one nuclear incident exceeds the
maximum amount of financial protection, the NU system, including
WMECO, would be subject to an additional 5 percent, or $4.2 million,
liability, in proportion to its ownership interests in each of its
nuclear units. Through purchased-power contracts with VYNPC, WMECO
would be responsible for an assessment of $2.2 million per incident,
of which payments would be limited to $0.3 million per year.
WMECO expects to terminate its nuclear insurance upon the divestiture
of its remaining nuclear units.
E. Long-Term Contractual Arrangements
Yankee Companies: Under the terms of its agreement, WMECO paid its
ownership (or entitlement) shares of costs, which included
depreciation, operation and maintenance (O&M) expenses, taxes, the
estimated cost of decommissioning, and a return on invested capital.
These costs were recorded as purchased-power expenses. WMECO's cost
of purchases under its contract with VYNPC amounted to $4.1 million
in 2001, $4 million in 2000 and $4.7 million in 1999. VYNPC is in
the process of selling its nuclear unit. Upon completion of the
sale, it is expected that these long-term contracts will be replaced
with different contracts with the new buyer.
Energy Procurement Contracts: WMECO has entered into various
arrangements for the purchase of capacity and energy. WMECO's total
cost of purchases under these arrangements amounted to $14.5 million
in 2001, $28.5 million in 2000 and $28.2 million in 1999.
Hydro-Quebec: Along with other New England utilities, WMECO has
entered into an agreement to support transmission and terminal
facilities to import electricity from the Hydro-Quebec system in
Canada. WMECO is obligated to pay, over a 30-year period ending in
2020, its proportionate share of the annual O&M expenses and capital
costs of those facilities.
Estimated Annual Costs: The estimated annual costs of WMECO's
significant long-term contractual arrangements, absent the effects of
any contract terminations, buydowns or buyouts, or sales of
generation assets are as follows:
---------------------------------------------------------------------
2002 2003 2004 2005 2006 Totals
---------------------------------------------------------------------
(Millions of Dollars)
VYNPC........... $ 4.8 $ 4.6 $ 5.2 $ 5.3 $ 4.8 $24.7
Energy
Procurement
Contracts..... 2.8 2.8 2.8 2.8 2.8 14.0
Hydro-Quebec.... 3.1 3.0 2.9 2.8 2.5 14.3
---------------------------------------------------------------------
Totals.......... $10.7 $10.4 $10.9 $10.9 $10.1 $53.0
---------------------------------------------------------------------
11. NUCLEAR DECOMMISSIONING AND PLANT CLOSURE COSTS
Yankee Companies: VYNPC owns and operates a nuclear generating unit with
a service life that is expected to end in 2012. WMECO's ownership share
of estimated costs, in year end 2001 dollars, of decommissioning this
unit was $11.8 million. In August 2001, VYNPC agreed to sell its nuclear
generating unit for $180 million, including $35 million for nuclear
fuel, to an unaffiliated company. Among other commitments, the
acquiring company agreed to assume the obligation to decommission the
unit after it is taken out of service and agreed to provide the current
level of output from the unit through 2012. The sale is subject to the
approval of the Vermont Public Service Board, the Nuclear Regulatory
Commission, the FERC and other regulatory authorities. The closing on
the sale is expected to be in the first half of 2002.
As of December 31, 2001 and 2000, WMECO's remaining estimated
obligations, including decommissioning for the units owned by CYAPC,
YAEC and MYAPC, which have been shut down was $37.4 million and $42.5
million, respectively.
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair
value of each of the following financial instruments:
Nuclear Decommissioning Trusts: WMECO's portion of the investments held
in the NU system companies' nuclear decommissioning trusts were
transferred to DNCI in conjunction with the sale of the Millstone units
to DNCI in March 2001. These investments were marked-to-market by a
positive $32.3 million as of December 31, 2000, with corresponding
offsets to the accumulated provision for depreciation.
Preferred Stock and Long-Term Debt: The fair value of WMECO's fixed-rate
securities is based upon the quoted market price for those issues or
similar issues. Adjustable rate securities are assumed to have a fair
value equal to their carrying value. The carrying amounts of WMECO's
financial instruments and the estimated fair values are as follows:
--------------------------------------------------------------------------
At December 31, 2001
--------------------------------------------------------------------------
Carrying Fair
(Millions of Dollars) Amount Value
--------------------------------------------------------------------------
Long-term debt -
Other long-term debt..................... $101.2 $101.0
Rate reduction bonds....................... 152.3 154.1
--------------------------------------------------------------------------
--------------------------------------------------------------------------
At December 31, 2000
--------------------------------------------------------------------------
Carrying Fair
(Millions of Dollars) Amount Value
--------------------------------------------------------------------------
Preferred stock not subject
to mandatory redemption.................. $ 20.0 $ 20.2
Preferred stock subject to
mandatory redemption..................... 16.5 16.5
Long-term debt -
First mortgage bonds..................... 100.0 100.3
Other long-term debt..................... 99.4 93.7
-------------------------------------------------------------------------
13. OTHER COMPREHENSIVE INCOME
The accumulated balance for each other comprehensive income item is as
follows:
--------------------------------------------------------------------------
Current
December 31, Period December 31,
(Millions of Dollars) 2000 Change 2001
--------------------------------------------------------------------------
Unrealized gains
on securities................ $0.2 $(0.1) $0.1
--------------------------------------------------------------------------
Accumulated other
comprehensive income/(loss).. $0.2 $(0.1) $0.1
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Current
December 31, Period December 31,
(Millions of Dollars) 1999 Change 2000
--------------------------------------------------------------------------
Unrealized gains
on securities................ $0.2 $ - $0.2
--------------------------------------------------------------------------
Accumulated other
comprehensive income......... $0.2 $ - $0.2
--------------------------------------------------------------------------
The changes in the components of other comprehensive income are reported
net of the following income tax effects:
--------------------------------------------------------------------------
(Millions of Dollars) 2001 2000 1999
--------------------------------------------------------------------------
Unrealized gains
on securities............... $0.1 $ - $ -
--------------------------------------------------------------------------
Other comprehensive income.... $0.1 $ - $ -
--------------------------------------------------------------------------
14. SEGMENT INFORMATION
The NU system is organized between regulated utilities (electric and gas
since March 1, 2000) and competitive energy subsidiaries. WMECO is
included in the regulated utilities segment of the NU system and has no
other reportable segments.
- ------------------------------------------------------------------------------------------------------
SELECTED CONSOLIDATED FINANCIAL DATA 2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues.................. $478,869 $513,678 $414,231 $393,322 $426,447
Net Income/(Loss)................... 14,968 35,268 2,887 (9,579) (27,460)
Cash Dividends on Common Stock...... 22,000 12,002 - - 15,004
Total Assets........................ 852,662 1,047,818 1,253,604 1,287,682 1,179,128
Rate Reduction Bonds................ 152,317 - - - -
Long-Term Debt (a).................. 101,170 199,425 290,279 389,314 396,649
Preferred Stock Not Subject to
Mandatory Redemption.............. - 20,000 20,000 20,000 20,000
Preferred Stock Subject to
Mandatory Redemption (a).......... - 16,500 18,000 19,500 21,000
Obligations Under
Capital Leases (a)................ 110 26,921 29,972 34,093 32,887
</Table>
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------
CONSOLIDATED QUARTERLY FINANCIAL DATA (Unaudited)
- ------------------------------------------------------------------------------------------------
Quarter Ended
- ------------------------------------------------------------------------------------------------
2001 March 31 June 30 September 30 December 31
- ------------------------------------------------------------------------------------------------
(Thousands of Dollars)
Operating Revenues......... $143,300 $106,866 $120,679 $108,024
======== ======== ======== ========
Operating Income........... $ 11,876 $ 6,406 $ 14,821 $ 4,786
======== ======== ======== ========
Net Income................. $ 3,319 $ 1,518 $ 3,880 $ 6,251
======== ======== ======== ========
- ------------------------------------------------------------------------------------------------
2000
- ------------------------------------------------------------------------------------------------
Operating Revenues......... $129,410 $120,090 $130,400 $133,778
======== ======== ======== ========
Operating Income........... $ 20,244 $ 12,707 $ 20,668 $ 21,651
======== ======== ======== ========
Net Income................. $ 11,053 $ 2,956 $ 9,638 $ 11,621
======== ======== ======== ========
</Table>
(a) Includes portion due within one year.
Western Massachusetts Electric Company and Subsidiary
- -------------------------------------------------------------------------------
CONSOLIDATED STATISTICS (Unaudited)
- -------------------------------------------------------------------------------
Average
Gross Electric Annual
Utility Plant Use Per
December 31, kWh Residential Electric
(Thousands of Sales Customer Customers Employees
Dollars) (Millions) (kWh) (Average) December 31,
- -------------------------------------------------------------------------------
2001 $ 583,183 4,712 7,476 200,166 405
2000 1,153,514 7,278 7,371 198,372 406
1999 1,216,015 4,654 7,423 198,012 482
1998 1,256,046 4,091 6,979 196,339 533
1997 1,334,233 4,300 7,121 195,324 507