1 File No. 30- 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM U5S ANNUAL REPORT For the Year Ended December 31, 1997 Filed Pursuant to the Public Utility Holding Company Act of 1935 by UNITIL CORPORATION 6 Liberty Lane West, Hampton, New Hampshire 03842-1720 TABLE OF CONTENTS ITEMS PAGE Item 1 1 Item 2 2 Item 3 3 Item 4 4 Item 5 5 Item 6 Part I 6 Part II 8 Part III(a) 9 (b) 13 (c) 14 (d) 14 (e) 14 (f) 15 Item 7 Part I 17 Part II 17 Item 8 Part I 17 Part II 17 Part III 17 Item 9 Part I 17 Part II 17 Part III 17 Item 10 Financial Statements 18 Exhibits 29 ITEM 1 SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF DECEMBER 31, 1997 Name of Company Number of Common % of Shares Voting Issuer Owner's Owned Power Book Value Book Value Unitil Corporation Concord Electric 131,745 100% 10,180,258 10,180,258 Company (CECO) Exeter & Hampton 195,000 100% 11,478,339 11,478,339 Electric Company (E&H) Fitchburg Gas and Electric 1,244,629 100% 37,572,688 37,572,688 Light Company (FG&E) Unitil Power Corp. (UPC) 100 100% 407,697 407,697 Unitil Realty Corp. (URC) 100 100% 1,302,470 1,302,470 Unitil Resources, Inc. (URI) 100 100% 24,629 24,629 Unitil Service Corp. (USC) 100 100% 2,688 2,688 ITEM 2 ACQUISITIONS OR SALES OF UTILITY ASSETS Information concerning acquisitions or sales of utility assets by System companies not reported in a certificate filed pursuant to Rule 24 - None ITEM 3. ISSUE, SALE, PLEDGE, GUARANTEE, OR ASSUMPTION OF SYSTEM SECURITIES Name of Name Of Company Brief Description Consideration Authori Issuer Issuing, Selling, of Transaction zation or and Title Pledging, Guaranteeing Exemption of Issue or Assuming (1) (2) (3) (4) (5) Unitil (In Whole Corporation Dollars) (UTL) UTL Issuance of Shares Pursuant to Stock Option Plan on 5/9/97 - 1,139 shares and on HCAR No. 12/31/97 -27,083 shares. $241,710 35-25677 UTL Issued on Various Dates, 51,529 Shares in Connection with the Company's Dividend Reinvestment and Stock Purchase Plan and Tax Deferred Savings and HCAR No. Investment Plan $1,042,974 35-25677 Short-term UTL, CECo, E&H, Bank Borrowings Made Bank FG&E, Service, on Various Dates and Borrowings Realty, Power, Such Funds Lent to Resources Affiliates Under the HCAR No. Unitil Cash Pool (A) 35-26328 Unitil Realty UTL,URC Issuance and Sale of $7,500,000 HCAR No. Corp. $7.5 million Senior 35-26739 (URC) Secured Notes by URC guaranteed by UTL (A) Maximum borrowing authority is $25,000,000. Borrowings outstanding at December 31, 1997 were $18,000,000. ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES Name of Name Of Issuer Company Acquiring, Extinguished (EXT) and Redeeming, or Distributed (D) Title of Retiring Consider or Held (H) For Authorization Issue Securities ation Further Disposition or Exemption (1) (2) (3) (4) (5) (In Whole Dollars) Unitil Corporation (UTL) Common Stock, Unitil D & H (B) HCAR No. No Par Value Service Corp. 35-25951 (B) Common Stock Purchased on the Open-Market to Satisfy Requirements of the Management Performance Compensation Program. ITEM 5. INVESTMENTS IN SECURITIES OF NONSYSTEM COMPANIES AS OF DECEMBER 31, 1997 1. Aggregate amount of Investments in persons operating in the retail service area. Name of Name of Nature of Description Number Percent Owner's Company Issuer Issuer's of of of Voting Book Business Securities Shares Power Value (In Dollars) (1) (2) (3) (4) (5) (6) (7) CECo Concord Economic Common Stock 120 * $3,000 Regional Development Development Corp. E&H Collin Retail 12% S. F. * $500 & Alkman Debenture Group Wickes Retail Capital Stock 3 * $6 Companies, Inc. FG&E Ames Retail Cum.Preferred 32 * $170 Department Stk. Store Massachusetts Business Economic Common Stock 350 * $3,500 Development Development Corp. Boundary Gas Gas, Inc. Distribution Common Stock 0.57 * $57 2. Securities owned not included in 1 above. None ITEM 6 OFFICERS AND DIRECTORS OF UNITIL CORPORATION AND SUBSIDIARIES Part I. As of December 31, 1997: LEGEND OF ABBREVIATIONS CB Chairman of the Board D Director CEO Chief Executive Officer P President COO Chief Operating Officer CFO Chief Financial Officer SEVP Senior Executive Vice President EVP Executive Vice President SVP Senior Vice President VP Vice President T Treasurer S Secretary/Clerk C Controller Name and Business Address Unitil CECo E&H FG&E USC URC UPC URI Michael J. Dalton 6 Liberty Lane West Hampton, NH 03842 D, P, D, P D, P D,P D, D D D, VP COO SEVP Thomas M. Hardiman 5 Walker Street Concord, NH 03301 D G. Arnold Haynes 34 Washington Street Wellesley, MA 02181 D D Douglas K. Macdonald 8 Wilson Avenue Concord, NH 03301 D D J. Parker Rice, Jr. 112 River Street Fitchburg, MA 01420 D D John J. Quinn 13 Williams Circle Stratham. NH 03885 D Robert G. Schoenberger 6 Liberty Lane West D, CB, Hampton, NH 03842 CEO ITEM 6. (continued) Name and Business Address Unitil CECo E&H FG&E USC URC UPC URI Charles H. Tenney II 300 Friberg Parkway Westborough, MA 01581 D Charles H. Tenney III 300 Friberg Parkway Westborough, MA 01581 D William W. Treat P.O. Box 800 Stratham, NH 03885 D D W. William VanderWolk, Jr. Route 109, Box 20 Melvin Village, NH 03850 D D Robert L. Ware P.O. Box 2202 Fitchburg, MA 01420 D Franklin Wyman, Jr. 211 Congress Street Boston, MA 02110 D D Joan D. Wheeler P.O. Box 895 Hollis, NH 03049 D Michael B. Green 250 Pleasant Street Concord, NH 03301 D H. Alfred Casassa 459 Lafayette Road Hampton, NH 03841 D Gail A. Siart 6 Liberty Lane West CFO, T, Hampton, NH 03842 S SVP,D D,P VP,T David K. Foote 6 Liberty Lane West Hampton, NH 03842 SVP VP D,SVP Raymond J. Morrissey 6 Liberty Lane West Hampton, NH 03842 VP Name and Business Address Unitil CECo E&H FG&E USC URC UPC URI Mark H. Collin 6 Liberty Lane West Hampton, NH 03842 T T T VP,T T T Richard Heath One McGuire Street Concord, NH 03302 VP Anthony Smoker 6 Liberty Lane West Hampton, NH 03842 VP Glenn D. Appleton 6 Liberty Lane West Hampton, NH 03842 VP James G. Daly 6 Liberty Lane West Hampton, NH 03842 SVP, D D D P George R. Gantz 6 Liberty Lane West Hampton, NH 03842 SVP, D D P D Sandra L. Whitney 6 Liberty Lane West Hampton, NH 03842 S S S S S S Laurence M. Brock 6 Liberty Lane West Hampton, NH 03842 C C C C C C C M. Mitchell Bodnarchuk 285 John Fitch Highway Fitchburg, MA 01420 VP, S Part II. Each officer and director with a financial connection within the provisions of Section 17(c) of the Act are as follows: Name of Officer Name and Location of Position Held in Applicable or Director Financial Institution Financial Exemption Rule Institution (1) (2) (3) (4) Franklin Wyman, Brookline Savings Bank, Trustee, 70(c) Jr. Brookline MA Vice President Part III. The disclosures made in the System companies' most recent proxy statement and annual report on Form 10-K with respect to items (a) through (f) follow: (a) COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS Directors' Compensation Members of the Board of Directors who are not officers of Unitil or any of its subsidiaries receive an annual retainer fee of $7,000 and $500 for each Board meeting attended. Members of the Executive Committee, who are not officers of Unitil or any of its subsidiaries, receive an annual retainer fee of $2,000 and $400 for each meeting attended. Members of the Audit Committee and Compensation Committee receive an annual retainer fee of $1,000 and $400 for each meeting attended. Those Directors of Unitil who also serve as Directors of CECo, E&H or FG&E and who are not officers of Unitil or any of its subsidiaries receive a meeting fee of $100 per subsidiary meeting attended and no annual retainer fee from CECo, E&H or FG&E. All Directors are entitled to reimbursement of expenses incurred in connection with attendance at meetings of the Board of Directors and any Committee on which they serve. In March, 1998 The Board of Directors approved an increase of $5,500 in the annual compensation received by Directors, to be paid in Unitil Common Stock, effective January 1, 1998. The annual retainer fee of $7,000 and $500 for each Board Meeting attended remain unchanged. Executive Compensation The tabulation below shows the compensation Unitil Corporation, or any of its subsidiaries, has paid to its Chief Executive Officer and its most highly compensated officers whose total annual salary and bonus were in excess of $100,000 during the year 1997. Long-Term Compensation Annual Compensation Awards Payouts Name and Other Restricted All Other Principal Salary Bonus Annual Stock Options LTIP Compensa Position (1) Year ($) ($) Comp.($)Awards (#) Payouts tion($) (a) (b) (c) (d) (e) (f) (g) (h) (i) Robert G. Schoenberger(2) 1997 65,833(3) - - - 25,000(4) $13,207 (5) Chairman of the - - - - - - - Board & CEO - - - - - - - - - - - Peter J. 1997 218,499 104,800(7) - - - - $3,791 (8) Stulgis (6) Chairman of the 1996 241,025 100,036 - - - - Board & CEO 1995 215,300 110,411 - - - - - - - - Michael J. 1997 174,000 63,834(7) - - - $10,912 (9) Dalton 1996 169,200 61,959 - - - - President & COO 1995 164,400 63,347 - - - - Gail A. 1997 135,000 33,568(7) - - - - $ 5,432 (11) Siart (10) 1996 97,500 32,580 - - - - CFO, Treasurer 1995 90,000 47,228 - - 3,000(12) & Secretary James G. Daly 1997 125,625 33,658(7) - - - - $ 5,466 (13) Senior VP, 1996 95,625 32,580 - - - Unitil Service 1995 88,675 47,228 - - 3,000(12) - George R. Gantz 1997 104,475 33,568(7) - - - $ 4,369 (14) Senior VP, 1996 95,625 32,580 - - - Unitil Service 1995 89,000 42,428 - - 3,000(12) - - NOTES: (1) Officers of the Company also hold various positions with subsidiary companies. Compensation for those positions is included in the above table. (2) Robert G. Schoenberger was elected Chairman of the Board and Chief Executive Officer in October 1997. Mr. Schoenberger was not employed by the Company or any of its subsidiary companies prior to October 1997. (3) Base salary paid to Mr. Schoenberger for 1997 includes salary for the months of November and December, and a $25,000 payment received on his first day of employment with the Company. Mr. Schoenberger's annual base salary is $245,000. (4) Options were granted to Mr. Schoenberger on November 3, 1997 under the Key Employee Stock Option Plan (see "Other Compensation Arrangements" and subsequent notes.) (5) All Other Compensation for Mr. Schoenberger for the year 1997 includes the Supplemental Life Insurance payment, Group Term Life Insurance payment, and taxable relocation payment valued at $64, $255 and $12,888, respectively. (6) Peter J. Stulgis served as Chairman of the Board and Chief Executive Officer of the Company until his death in May 1997. (7) Bonus amounts are comprised of Management Performance Compensation Program (MPCP) cash and stock awards and distributions from the System's non-utility subsidiary, Unitil Resources. Unitil maintains a management performance compensation program ("MPCP") for certain management employees, including Executive Officers. The MPCP provides for awards to be calculated annually and paid in a combination of cash and Unitil Common Stock. Awards are based on several factors designed to reflect the Company's performance and the attainment of individual performance goals. There was no distribution from Unitil Resources in 1996 or 1997. (8) All Other Compensation for Mr. Stulgis for the year 1997 includes the company's contribution to the Tax Qualified Savings and Investment Plan ("401(K)") and Group Term Life Insurance payment, valued at $3,283 and $508, respectively. (9) All Other Compensation for Mr. Dalton for the year 1997 includes, 401(K) company contribution, Supplemental Life Insurance payment and Group Term Life Insurance payment, valued at $4,800, $3,452 and $2,660, respectively. (10) Gail A. Siart resigned from the Company effective January 23, 1998. (11) All Other Compensation for Ms. Siart for the year 1997 includes 401(K) company contribution, Supplemental Life Insurance payment and Group Term Life Insurance payment, valued at $4,742, $424 and $266, respectively. (12) Options were granted in 1995 under the Key Employee Stock Option Plan (see "Other Compensation Arrangements" and subsequent notes). (13) All Other Compensation for Mr. Daly for the year 1997 includes 401(K) company contribution, Supplemental Life Insurance payment and Group Term Life Insurance payment, valued at $4,452, $603 and $411, respectively. (14) All Other Compensation for Mr. Gantz for the year 1997 includes 401(K) company contribution, Supplemental Life Insurance payment and Group Term Life Insurance payment, valued at $3,134, $682 and $553, respectively. OTHER COMPENSATION ARRANGEMENTS The table below provides information with respect to options to purchase shares of the Company's Common Stock exercised in fiscal 1997 and the value of unexercised options granted in prior years under the Key Employee Stock Option Plan ("Option Plan") to the named executive officers in the Summary Compensation Table and held by them as of December 31, 1997. The Company has no compensation plan under which Stock Appreciation Rights (SARs) are granted. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR (FY) AND FY-END OPTION VALUES Shares Number of Unexercised Value of Unexercised Acquired Options at In-the-Money Options at Name and on Value FY-End (#) (2) FY-End ($) Principal Exercise Realized Exercisable/ Exercisable/ Position (1) (#) ($) Unexercisable Unexercisable (a) (b) (c) (d) (e) Robert G. - - exercisable 0 exercisable 0 Schoenberger Chairman of the - unexercisable 25,000(3) unexercisable 153,563 Board & CEO - - Peter J. 5,280 73,709 exercisable 18,720 exercisable 313,981 Stulgis(4) Chairman of the - unexercisable 0 unexercisable 0 Board & CEO - - Michael J. Dalton - exercisable 24,000 exercisable 398,700 President & Chief - unexercisable 0 unexercisable 0 Operating Officer - - - - Gail A. 5,078 68,350 exercisable 0 exercisable 0 Siart(5) CFO, Treasurer & - unexercisable 0 unexercisable 0 Secretary - - - - James G. Daly - - exercisable 5,078 exercisable 67,492 Senior VP, - - unexercisable 0 unexercisable 0 Unitil Service - - - - George R. Gantz - - exercisable 5,078 exercisable 72,425 Senior VP, - - unexercisable 0 unexercisable 0 Unitil Service NOTES: (1) The Option Plan authorizes the KESOP Committee to provide in the award agreements that the participant's right to exercise the options provided for therein will be accelerated upon the occurrence of a "Change in Control" of Unitil. The term "Change in Control" is defined in substantially the same manner as in the Severance Agreements as defined below. All of the award agreements entered into with participants in the Option Plan to date contain such a "Change in Control" provision. Each award agreement also provides that, upon the exercise of an option on or after a Change in Control, Unitil shall pay to the optionee, within five business days, a lump sum cash amount equal to the economic benefit of the optionee's outstanding options and associated dividend equivalents that the optionee would have received had the option remained unexercised until the day preceding the expiration of the grant. (2) Amounts listed in column (d) in the table above do not include non-preferential dividend equivalents associated with options outstanding. (3) In accordance with the terms of Mr. Schoenberger's employment agreement, on November 3, 1997, he received 25,000 options to purchase shares of Company stock under the Key Employee Stock Option Plan. The options granted to Mr. Schoenberger are not exercisable until November 3, 1998. (4) Peter J. Stulgis served as Chairman of the Board and Chief Executive Officer of the Company until his death in May 1997. (5) Gail A. Siart resigned from the Company effective January 23, 1998. Unitil maintains a tax-qualified defined benefit pension plan and related trust agreement (the "Retirement Plan"), which provides retirement annuities for eligible employees of Unitil and its subsidiaries. Since the Retirement Plan is a defined benefit plan, no amounts were contributed or accrued specifically for the benefit of any officer of Unitil under the Retirement Plan. Directors of Unitil who are not and have not been officers of Unitil or any of its subsidiaries are not eligible to participate in the Retirement Plan. The table below sets forth the estimated annual benefits (exclusive of Social Security payments) payable to participants in the specified compensation and years of service classifications, assuming continued active service until retirement. The average annual earnings used to compute the annual benefits are subject to a $160,000 limit. PENSION PLAN TABLE Average Annual Earnings Used for Computing Pension ANNUAL PENSION 10 Years 20 Years 30 Years 40 Years of Service of Service of Service of Service 100,000 20,000 40,000 50,000 55,000 125,000 25,000 50,000 62,500 68,750 150,000 30,000 60,000 75,000 82,500 160,000 32,000 64,000 80,000 88,000 The present formula for determining annual benefits under the Retirement Plan's life annuity option is (i) 2% of average annual salary (average annual salary during the five consecutive years out of the last twenty years of employment that give the highest average salary) for each of the first twenty years of benefit service, plus (ii) 1% of average annual salary for each of the next ten years of benefit service and (iii) 1/2% of average annual salary for each year of benefit service in excess of thirty, minus (iv) 50% of age 65 annual Social Security benefit (as defined in the Retirement Plan), and (v) any benefit under another Unitil retirement plan of a former employer for which credit for service is given under the Retirement Plan. A participant is eligible for early retirement at an actuarially reduced pension upon the attainment of age 55 with at least 15 years of service with Unitil or one of its subsidiaries. A participant is 100% vested in his benefit under the Retirement Plan after 5 years of service with Unitil or one of its subsidiaries. As of January 1, 1998, Executive Officers Shoenberger, Dalton, Siart, Daly and Gantz had .17, 30, 15, 9 and 14 credited years of service, respectively, under the Retirement Plan. Unitil Service also maintains a Supplemental Executive Retirement Plan ("SERP"), a non-qualified defined benefit plan. SERP provides for supplemental retirement benefits to executives selected by the Board of Directors. At the present time, Messrs. Schoenberger and Dalton are eligible for SERP benefits upon attaining normal or early retirement eligibility. Annual benefits are based on a participant's final average earnings less the participant's benefits payable under the Retirement Plan, less other retirement income payable to such participant by Unitil or any previous employer and less income that a participant receives as a primary Social Security benefit. Early retirement benefits are available to a participant, with the Unitil Board's approval, if the participant has attained age 55 and completed 15 years of service. Should a participant elect to begin receiving early retirement benefits under SERP prior to attaining age 60, the benefits are reduced by 5% for each year that commencement of benefits precedes attainment of age 60. If a participant terminates employment for any reason prior to retirement, the participant will not be entitled to any benefits. Under the SERP, Messrs. Schoenberger and Dalton would be entitled to receive an annual benefit of $14,238 and $21,859, respectively, assuming their normal retirement at age 65 and that their projected final average earnings are equal to the average of their respective three consecutive years of highest compensation prior to the date thereof. (b) OWNERSHIP OF SECURITIES NAME DIRECTOR OF SHARES OF UNITIL COMMON STOCK BENEFICIALLY OWNED (1) Michael J. Dalton UNITIL, CECO, E&H, 63,162 (2)(3)(4)(5) Service, Power, URI, FG&E, Realty Joan D. Wheeler UNITIL 1,000 Bruce W. Keough UNITIL 0 Douglas K. MacDonald UNITIL, CECO 924 J. Parker Rice, Jr. UNITIL, FG&E 1,254 Robert G. Schoenberger UNITIL 25,335 (3) Charles H. Tenney II (7) UNITIL 275,420 (2)(3)(4)(6) Charles H. Tenney III (7) UNITIL 2,530 William W. Treat UNITIL, E&H 18,486 (8) W. William VanderWolk, Jr.UNITIL, CECO 16,786 (9) Franklin Wyman, Jr. UNITIL, FG&E 5,000 NOTES: (1) Based on information furnished to Unitil by the nominees and continuing Directors. (2) Included are 3,977 and 3,689 shares which are held in trust for Messrs. Dalton and Tenney, respectively, under the terms of the Unitil Tax Deferred Savings and Investment Plan ("401(k)"); they have voting power only with respect to the shares credited to their accounts. For further information regarding 401(k), see "Other Compensation Arrangements - Tax-Qualified Savings and Investment Plan" below. (3) Included are 25,335, 45,754 and 43,733 shares which Messrs. Schoenberger, Dalton and Tenney, respectively, have the right to purchase pursuant to the exercise of options under the Key Employee Stock Option Plan. (See "Other Compensation Arrangements"). (4) With the exception of Messrs. Dalton and Tenney, who own shares totaling 1.40% and 6.08%, respectively, of the total outstanding shares, no Director or officer owns more than one percent of the total outstanding shares. (5) Included are 13,431 shares held by Mr. Dalton jointly with his wife with whom he shares voting and investment power. (6) Included are 124,522 shares (2.75%) owned by two trusts of which Mr. Tenney is Co-Trustee with shared voting and investment power; he has a 1/6 beneficial interest in both trusts and disclaims any beneficial ownership of such shares other than such 1/6 beneficial interest. (7) Charles H. Tenney II is the father of Charles H. Tenney III. (8) Included are 5,387 shares owned by three trusts of which Mr. Treat is Trustee with voting and investment power; he has no beneficial interest in such shares. Also included are 7,500 shares owned by one organization in which Mr. Treat has shared voting and investment power and a 1/3 beneficial interest, and also 500 shares owned by a member of Mr. Treat's family; he has no voting or investment power with respect to, and no beneficial interest in, such shares. (9) Included are 3,508 shares owned by a member of Mr. VanderWolk's family; he has no voting or investment power with respect to, and no beneficial interest in, such shares. (c) TRANSACTIONS WITH SYSTEM COMPANIES In 1992, the Company entered into a Senior Advisory Agreement with Charles H. Tenney II. This agreement provides that Mr. Tenney will be compensated $105,000 per annum for his role as Chairman of the Executive Committee of the Board of the Company, as well as for other advisory services which he will provide. In consideration of this Agreement, Mr. Tenney waives all Board-related fees and retainers that he is otherwise entitled to receive as a Director of the Company. As of October 1997, Mr. Tenney no longer serves as chairman of the Executive Committee, and therefore the Agreement has been discontinued. As a result of the discontinuation of the Agreement, Mr. Tenney will receive the annual retainer fee and all other Board-related fees he is entitled to as a Director of the Company. (d) INDEBTEDNESS TO SYSTEM COMPANIES - None (e) OTHER BENEFITS Unitil and certain subsidiaries maintain severance agreements (the "Severance Agreements") with certain management employees, including Executive Officers. The Severance Agreements are intended to help assure continuity in the management and operation of Unitil and its subsidiaries in the event of a proposed "Change in Control". Each Severance Agreement only becomes effective upon the occurrence of a Change in Control of Unitil as defined in the Severance Agreements. If an employee's stipulated compensation and benefits, position, responsibilities and other conditions of employment are reduced during the thirty-six month period following a Change in Control, the employee is entitled to a severance benefit. The severance benefit is a lump sum cash amount equal to (i) the present value of three years' base salary and bonus; (ii) the present value of the additional amount the employee would have received under the Retirement Plan if the employee had continued to be employed for such thirty-six month period; (iii) the present value of contributions that would have been made by Unitil or its subsidiaries under the 401(k) if the employee had been employed for such thirty-six month period; and (iv) the economic benefit on any outstanding Unitil stock options and associated dividend equivalents, assuming such options remained unexercised until the day preceding the expiration of the grant, including the spread on any stock options that would have been granted under the Option Plan if the employee had been employed for such thirty-six month period. Each Severance Agreement also provides for the continuation of all employee benefits for a period of thirty-six months, commencing with the month in which the termination occurred. In addition, pursuant to each Severance Agreement, Unitil is required to make an additional payment to the employee sufficient on an after-tax basis to satisfy any additional individual tax liability incurred under Section 280G of the Internal Revenue Code of 1986, as amended, in respect to such payments. The Company entered into an employment agreement with Mr. Schoenberger on November 1, 1997. The term of the agreement is for three years and the expiration date is October 31, 2000. Under the terms of the employment agreement, Mr. Schoenberger shall receive an annual base salary of $245,000 and is subject to annual review by the Board for discretionary periodic increases in accordance with the Company's compensation policies. Mr. Schoenberger is entitled to participate in the Company's SERP, Executive Supplemental Life Insurance Program, Management Performance Compensation Program and all other employee benefit plans made available by the Company. On November 3, 1997, Mr. Schoenberger also received 25,000 options to purchase shares of Company stock under the Company's Key Employee Stock Option Plan. Mr. Schoenberger shall be reimbursed for all direct moving, reasonable interim living and reasonable travel expenses. In addition, Mr. Schoenberger shall receive $50,000 at the time he relocates to the area. The agreement also provides that the Company and Mr. Schoenberger will enter into a Severance Agreement, more fully described above. The Company, by action of the Board, may terminate Mr. Schoenberger's employment for any reason. If Mr. Schoenberger's employment is terminated by the Company during the term of the agreement for any reason other than Cause, death or disability, the Company shall pay Mr. Schoenberger's base pay at the rate in effect on the date of employment termination and benefits until the end of the term of the agreement, or if employment termination is after November 1, 1999, for one year. (f) RIGHTS TO INDEMNITY Unitil Corporation (the Corporation) shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the person's having served as, or by reason of the person's alleged acts or omissions while serving as a director, officer, employee or agent of the Corporation, or while serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorney's fees, judgments, fines and amounts paid in settlement or otherwise actually and reasonably incurred by him in connection with the action, suit or proceeding, if the person acted in good faith and in a manner he reasonable believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, said indemnification to be to the full extent permitted by law under the circumstances, including, without limitation, by all applicable provisions of the New Hampshire Business Corporation Act ("the Act"). Any indemnification under this Article shall be made by the Corporation with respect to Directors or other persons after a determination that the person to be indemnified has met the standards of conduct set forth in the Act, such determination to be made by the Board of Directors, by majority vote of a quorum, or by other persons authorized to make such a determination under the Act. The right of indemnification arising under this Article is adopted for the purpose of inducing persons to serve and to continue to serve the Corporation without concern that their service may expose them to personal financial harm. It shall be broadly construed, applied and implemented in light of this purpose. It shall not be exclusive of any other right to which any such person is entitled under any agreement, vote of the stockholders or the Board of Directors, statute, or as a matter of law, or otherwise, nor shall it be construed to limit or confine in any respect the power of the Board of Directors to grant indemnity pursuant to any applicable statutes or laws of The State of New Hampshire. The provisions of this Article are separable, and, if any provision or portion hereof shall for any reason be held inapplicable, illegal or ineffective, this shall not affect any other right of indemnification existing under this Article or otherwise. As used herein, the term "person: includes heirs, executors, administrators or other legal representatives. As used herein, the terms "Director" and "officer" include persons elected or appointed as officers by the Board of Directors, persons elected as Directors by the stockholders or by the Board of Directors, and persons who serve by vote or at the request of the Corporation as directors, officers or trustees of another organization in which the Corporation has any direct or indirect interest as a shareholder, creditor or otherwise. The Corporation may purchase and maintain insurance on behalf of any person who was or is a Director, officer or employee of the Corporation or any of its subsidiaries, or who was or is serving at the request of the Corporation as a fiduciary of any employee benefit plan of the Corporation or any subsidiary, against any liability asserted against, and incurred by, such person in any such capacity, or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of the Act. The obligation to indemnify and reimburse such person under this Article, if applicable, shall be reduced by the amount of any such insurance proceeds paid to such person, or the representatives or successors of such person. ITEM 7 CONTRIBUTIONS AND PUBLIC RELATIONS Part I. Payments to any political party, candidate for public office or holder of such office, or any committee or agent thereof. - None Part II. Payments to any citizens group or public relations counsel. - None ITEM 8 SERVICE, SALES AND CONSTRUCTION CONTRACTS Part I. Contracts for services, including engineering or construction services, or goods supplied or sold between system companies. There are a number of areas in which Concord Electric Company (CECo), Exeter & Hampton Electric Company (E&H) and Fitchburg Gas and Electric Light Company (FG&E) work closely together and cooperate on a regular basis. The areas of cooperation include the following: CECo and E&H have jointly shared a Mobile Substation at cost for many years. Under an Agreement originally made in 1964, CECo and E&H have obtained the benefits of an emergency mobile substation at a cost far below that which each company would have incurred without the sharing agreement. During emergencies and other occasional situations, FG&E, CECo and E&H share line crews at cost. FG&E, CECo and E&H occasionally exchange materials and supplies, a practice which assists substantially in the companies' maintenance of cost-effective inventory and stock levels. FG&E, CECo and E&H, with the support and coordination provided by Unitil Service Corp., participate in joint purchasing and sharing of computer software, hardware and supplies, a practice which benefits all of the companies. Part II. Contracts to purchase services or goods between any System company and (1) any affiliate company (other than a System company) or (2) any other company in which any officer or director of the System company, receiving service under the contract, is a partner or owns 5 percent or more of any class of equity securities. - None Part III. The Company does not employ any other person or persons for the performance of management, supervisory or financial advisory services. ITEM 9 WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES Part I. None Part II. None Part III. None ITEM 10 FINANCIAL STATEMENTS AND EXHIBITS FINANCIAL STATEMENTS Page No. Consolidating Income Statement 19-20 Consolidating Balance Sheet Assets 21-22 Capitalization and Liabilities 23-24 Consolidating Statement of Cash Flows 25-26 Consolidating Statement of Retained Earnings 27-28 EXHIBITS Exhibit A 29 Exhibit B 29 Exhibit C 31 Exhibit D 33 Exhibit E 40 Exhibit F 40 Exhibit G 42 Exhibit H 47 Exhibit I 47 UNITIL CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING INCOME STATEMENT - YEAR TO DATE Consolidated Eliminations Concord Exeter & FG&E Electric Hampton. Consolidated Company Electric Co Operating Revenues: Electric 149,972,422 (82,539,918) 49,801,485 53,818,166 49,435,710 Gas 19,729,377 0 0 0 19,729,377 Other 36,200 (14,295,052) 0 0 0 Total Operating Revenue 169,737,999 (96,834,970) 49,801,485 53,818,166 69,165,087 Operating Expenses: Fuel and 99,973,506 (74,733,237) 39,115,558 42,680,782 23,350,391 Purchased Power Gas Purchased 12,032,051 0 0 0 12,032,051 For Resale Operating and 23,549,929 (22,101,733) 4,800,190 4,828,651 14,267,966 Maintenance Depreciation 7,631,665 0 1,421,910 1,815,303 3,354,541 Amortization of Cost of Abandoned Property 1,547,230 0 0 0 1,547,230 Provisions for Taxes: Local Property 5,276,277 0 1,745,921 1,325,901 1,700,642 and Other Federal and 4,165,566 (29,200) 300,860 411,733 3,297,901 State Income Total Operating 154,176,224 (96,864,170) 47,384,439 51,062,370 59,550,722 Expenses Operating Income 15,561,775 29,200 2,417,046 2,755,796 9,614,365 Non-operating Expenses 160,207 6,399,573 4,095 19,760 62,114 Income Before Interest Expense 15,401,568 (6,370,373) 2,412,951 2,736,036 9,552,251 Interest Expense, Net 7,166,506 (460,828) 1,498,106 1,623,716 3,530,702 Net Income 8,235,062 (5,909,545) 914,845 1,112,320 6,021,549 Less Dividends on Preferred Stock 276,040 0 32,205 78,251 165,583 Net Income Applicable to Common Stock 7,959,022 (5,909,545) 882,640 1,034,069 5,855,966 Average Common Shares Outstand 4,412,869 Basic Earnings per Share $1.80 Diluted Earnings per Share $1.76 Note: Individual columns may not add to Consolidated due to rounding. UNITIL CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING INCOME STATEMENT - YEAR TO DATE Unitil Unitil Unitil Unitil Unitil Service Power Realty Resources Corporation Corp. Corp. Corp. Inc. Operating Revenues: Electric 0 78,973,254 0 483,726 0 Gas 0 0 0 0 0 Other 12,965,280 0 1,359,772 6,200 0 Total Operating Revenue 12,965,280 78,973,254 1,359,772 489,926 0 Operating Expenses: Fuel and 0 68,931,656 0 628,356 0 Purchased Power Gas Purchased 0 0 0 0 0 For Resale Operating and 11,510,526 9,850,720 188,636 20,270 184,703 Maintenance Depreciation 785,609 0 254,301 0 0 Amortization of Cost of Abandoned Property 0 0 0 0 0 Provisions for Taxes: Local Property 402,731 0 101,083 0 0 and Other Federal and (116) 30,596 111,358 (35,661) 78,095 State Income Total Operating Expenses 12,698,750 78,812,972 655,378 612,965 262,798 Operating Income 266,530 160,282 704,394 (123,039) (262,798) Non-operating Expenses (6,306) (17,784) 0 (2,027) (6,299,218) Income Before 272,836 178,066 704,394 (121,012) 6,036,420 Interest Expense Interest Expense, 272,836 133,000 559,497 9,478 0 Net Net Income 0 45,066 144,897 (130,490) 6,036,420 Less Dividends on Preferred Stock 0 0 0 0 0 Net Income Applicable to Common Stock 0 45,066 144,897 (130,490) 6,036,420 Note: Individual columns may not add to Consolidated due to rounding. UNITIL CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING BALANCE SHEET ASSETS: Consolidated Eliminations Concord Exeter & FG&E Electric Hampton. Consolidated Company Electric Co Utility Plant, at cost: Electric 166,636,311 0 42,143,648 52,172,604 72,320,060 Gas 30,472,495 0 0 0 30,472,495 Common 19,689,260 0 0 0 5,364,189 Construction 2,676,684 0 533,220 799,168 841,513 Work in Process Utility Plant 219,474,750 0 42,676,868 52,971,772 108,998,257 Less: Accumulated Provision for Depreciation 68,359,889 0 12,557,848 18,632,802 35,018,132 Net Utility Plant 151,114,861 0 30,119,020 34,338,970 73,980,125 Other Property & Investments 42,448 (44,335,505) 23,827 507 18,114 Current Assets: Cash 2,336,627 (8,250,146) 330,373 245,645 322,275 Accounts Receivable, net of Provision for Doubtful Accounts 16,889,396 0 4,146,909 4,436,453 8,108,609 Accounts Receivable - Associated Companies 0 (12,405,757) 50,785 136,571 54,324 Materials and Supplies 2,663,285 0 354,229 382,761 1,926,296 Prepayments 433,909 (8,120,000) 2,005,332 2,926,319 3,751,435 Accrued Revenue 6,796,187 0 209,964 968,023 4,181,980 Total Current Assets 29,119,404 (28,775,903) 7,097,592 9,095,772 18,344,919 Deferred Assets: Debt Issuance Costs 918,347 0 246,856 194,939 330,374 Cost of Abandoned Properties 23,885,028 0 0 0 23,885,028 Prepaid Pension Costs 8,120,000 8,120,000 Other Deferred Assets 24,777,056 (2,584,269) 4,756,254 5,032,478 16,449,642 Total Deferred Assets 57,700,431 5,535,731 5,003,110 5,227,417 40,665,044 TOTAL 237,977,144 (67,575,677) 42,243,549 48,662,666 133,008,202 Note: Individual columns may not add to Consolidated due to rounding. UNITIL CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING BALANCE SHEET ASSETS: Unitil Unitil Unitil Unitil Unitil Service Power Realty Resources Corporation Corp. Corp. Corp. Inc. Utility Plant, at cost: Electric 0 0 0 0 0 Gas 0 0 0 0 0 Common 4,766,665 0 9,558,405 0 0 Construction Work in Process 0 0 502,783 0 0 Utility Plant 4,766,665 0 10,061,188 0 0 Less: Accumulated Provision for Depreciation 1,769,333 0 381,775 0 0 Net Utility Plant 2,997,332 0 9,679,413 0 0 Other Property & Investments 0 0 0 0 44,335,505 Current Assets: Cash 493,562 1,526,142 0 51,232 7,617,544 Accounts Receivable, net of Provision for Doubtful Accounts 113,241 0 0 84,185 0 Accounts Receivable - Associated Companies 2,032,757 7,155,626 0 254 2,975,441 Materials and Supplies 0 0 0 0 0 Prepayments (137,842) 7,232 1,328 105 0 Accrued Revenue 0 1,350,682 0 85,537 0 Total Current Assets 2,501,718 10,039,682 1,328 221,313 10,592,985 Deferred Assets: Debt Issuance Costs 0 0 146,178 0 0 Cost of Abandoned Properties 0 0 0 0 0 Prepaid Pension Costs 0 0 0 0 0 Other Deferred Assets 1,288,227 0 (165,276) 0 0 Total Deferred Assets 1,288,227 0 (19,098) 0 0 TOTAL 6,787,277 10,039,682 9,661,643 221,313 54,928,490 Note: Individual columns may not add to Consolidated due to rounding. UNITIL CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING BALANCE SHEET Consolidated Eliminations Concord Exeter & FG&E Electric Hampton. Consolidated Company Electric Co CAPITALIZATION: Common Stock Equity 71,644,368 (44,411,621) 10,180,258 11,478,339 37,572,688 Preferred Stock: Non-Redeemable Non-Cumulative 225,000 0 225,000 0 0 Redeemable, Cumulative 3,665,900 0 215,000 1,009,300 2,441,600 Long-Term Debt, Less Current Portion 63,895,589 0 10,550,000 13,060,000 33,000,000 Total Capitalization 139,430,857 (44,411,621) 21,170,258 25,547,639 73,014,288 Capitalized Leases, Less Current Portion 4,732,702 0 0 0 2,499,103 Current Liabilities: Long-Term Debt, Current Portion 4,469,795 0 2,170,000 1,137,000 1,000,000 Short-Term Debt 18,000,000 (8,246,282) 5,982,985 7,437,717 10,020,914 Accounts Payable 14,733,908 0 103,801 214,527 5,728,304 A/P - Associated Companies 0 (10,929,308) 3,738,012 4,144,683 1,084,877 Dividends Declared and Payable 212,097 (1,480,314) 166,156 234,037 1,149,116 Refundable Customer Deposits 2,187,032 0 238,788 738,680 1,176,764 Taxes Accrued (553,854) 0 (316,234) (162,182) 275,780 Interest Accrued 1,086,651 0 337,553 318,881 427,500 Capitalized Leases, Current Portion 883,528 0 0 0 130,642 Accrued and Other Current Liabilities 2,634,829 76,118 344,939 119,887 274,259 Total Current Liabilities 43,653,986 (20,579,786) 12,766,000 14,183,230 21,268,156 Deferred Liabilities: Investment Tax Credits 1,437,639 0 315,673 299,283 822,684 Other Deferred Liabilities 7,863,691 0 1,463,008 922,020 5,478,663 Total Deferred Liabilities 9,301,330 0 1,778,681 1,221,303 6,301,347 Deferred Income Taxes 40,858,269 (2,584,270) 6,528,610 7,710,494 29,925,308 Total Liabilities and Capitalization 237,977,144 (67,575,677) 42,243,549 48,662,666 133,008,202 Note: Individual columns may not add to Consolidated due to rounding. UNITIL CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING BALANCE SHEET CAPITALIZATION: Unitil Unitil Unitil Unitil Unitil Service Power Realty Resources Corporation Corp. Corp. Corp. Inc. Common Stock Equity 2,688 407,697 1,302,470 24,629 55,087,220 Preferred Stock: Non-Redeemable, Non-Cumulative 0 0 0 0 0 Redeemable, Cumulative 0 0 0 0 0 Long-Term Debt, Less Current Portion 0 0 7,285,589 0 0 Total Capitalization 2,688 407,697 8,588,059 24,629 55,087,220 Capitalized Leases, Less Current Portion 2,233,598 0 0 0 0 Current Liabilities: Long-Term Debt., Current Portion 0 0 162,795 0 0 Short-Term Debt 1,816,986 0 836,870 150,810 0 Accounts Payable 666,092 7,958,151 59,830 3,202 0 A/P - Associated Companies 1,452,443 364,610 33,738 110,945 0 Dividends Declared and Payable 0 0 0 0 143,102 Refundable Customer Deposits 0 32,800 0 0 0 Taxes Accrued 35,932 1,928 (19,649) (67,597) (301,832) Interest Accrued 0 2,717 0 0 0 Capitalized Leases, Current Portion 752,887 0 0 0 0 Accrued and Other Current Liabilities 547,570 1,271,779 0 280 0 Total Current Liabilities 5,271,910 9,631,985 1,073,584 197,640 (158,730) Deferred Liabilities: Investment Tax Credits 0 0 0 0 0 Other Deferred Liabilities 0 0 0 0 0 Total Deferred Liabilities 0 0 0 0 0 Deferred Income Taxes (720,919) 0 0 (956) 0 Total Liabilities and Capitalization 6,787,277 10,039,682 9,661,643 221,313 54,928,490 Note: Individual columns may not add to Consolidated due to rounding. UNITIL CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENT OF CASH FLOWS Consolidated Eliminations Concord Exeter & FG&E Electric Hampton. Consolidated Company Electric Co Cash Flows From Operating Activities: Net Income 8,235,062 (5,909,545) 914,845 1,112,320 6,021,549 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 9,178,742 0 1,421,911 1,815,303 4,901,618 Deferred Taxes 660,061 449,457 290,946 (31,271) Amortization of Investment Tax Credit (172,478) 0 (39,377) (37,748) (95,352) Amortization of Debt Issuance Costs 59,594 0 26,643 10,599 19,277 Provision for Doubtful Accounts 853,249 0 156,066 99,753 597,431 Changes in Assets and Liabilities: (Increase) Decrease in: Accounts Receivable (1,359,323) 1,229,122 349,908 (418,247) (1,149,892) Materials and Supplies (184,353) 0 32,974 (9,867) (207,461) Prepayments and Prepaid Pension (725,447) (202,000) (286,546) (386,395) (60,701) Accrued Revenue 2,063,001 0 (73,026) (889,803) (365,575) Increase (Decrease) in: Accounts Payable (370,017) (1,189,339) 382,937 429,837 856,300 Refundable Customer Deposits 601,916 0 (59,487) (80,069) 746,772 Taxes and Interest Accrued (803,431) (27,483) (391,299) (332,335) (328,517) Other, Net (1,864,046) 903,000 (16,863) (224,720) (2,072,290) Net Cash provided by Operating Activities 16,172,530 (5,196,245) 2,868,143 1,379,574 8,831,888 Cash Flows From Investing Activities: Acquisition of Property, Plant, Equipment (13,887,448) 357,000 (2,822,038) (3,830,402) (6,004,568) Other Property and Investments 0 0 0 0 0 Net Cash Used in Investing Activities (13,887,448) 357,000 (2,822,038) (3,830,402) (6,004,568) Cash Flows From Financing Activities: Proceeds From (Repayment of ) Short-Term Debt (3,400,000) (3,594,712) 1,598,697 4,015,048 1,512,217 Proceeds from Long-Term Debt 7,500,000 Repayment of Long-Term Debt (1,345,616) 0 (682,000) (612,000) 0 Dividends Paid (6,158,876) 5,865,897 (887,230) (969,401) (4,285,305) Issuance of Common Stock 1,668,732 0 0 0 0 Capital Lease Obligations (1,115,537) (1,058,000) 0 (295,390) Net Cash Used in Financing Activities (2,851,297) 1,213,185 29,467 2,433,647 (3,068,478) Net Increase (Decrease) in Cash (566,215) (3,626,060) 75,572 (17,181) (241,158) Cash at Beginning of Year 2,902,842 (4,624,086) 254,801 262,826 563,433 Cash at End of Year 2,336,627 (8,250,146) 330,373 245,645 322,275 Note : Individual columns may not add to Consolidated due to rounding. UNITIL CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENT OF CASH FLOWS Unitil Unitil Unitil Unitil Unitil Service Power Realty Resources Corporation Corp. Corp. Corp. Inc. Cash Flows From Operating Activities: Net Income 0 45,066 144,897 (130,490) 6,036,420 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 785,609 0 254,301 0 0 Deferred Taxes (53,727) 0 4,650 6 0 Amortization of Investment Tax Credit 0 0 0 0 0 Amortization of Debt Issuance Costs 0 0 3,074 0 0 Provision for Doubtful Accounts 0 0 0 0 0 Changes in Assets and Liabilities: (Increase) Decrease in: Accounts Receivable (664,392) (663,471) 113,936 (12,834) (143,453) Materials and Supplies 0 0 0 0 0 Prepayments and Prepaid Pension 158,668 3,130 (198) (104) 48,700 Accrued Revenue 0 3,437,319 0 (45,914) 0 Increase (Decrease) in: Accounts Payable 174,372 (948,695) (30,352) 11,342 (56,421) Refundable Customer Deposits 0 (5,300) 0 0 0 Taxes and Interest Accrued 29,768 6,302 228,959 112,207 (101,033) Other, Net (752,234) 658,069 (168,766) (136,282) (53,960) Net Cash provided by Operating Activities (321,936) 2,532,420 550,501 (202,069) 5,730,253 Cash Flows From Investing Activities: Acquisition of Property, Plant, Equipment (1,031,521) 0 (555,918) 0 0 Other Property and Investments 0 0 0 100,000 (100,000) Net Cash Used in Investing Activities (1,031,521) 0 (555,918) 100,000 (100,000) Cash Flows From Financing Activities: Proceeds From (Repayment of ) Short-Term Debt 1,367,185 (1,006,278)(7,442,967) 150,810 0 Proceeds from Long-Term Debt 0 0 7,500,000 Repayment of Long-Term Debt 0 0 (51,616) 0 0 Dividends Paid 0 0 0 0 (5,882,836) Issuance of Common Stock 0 0 0 0 1,668,732 Retirement of Preferred Stock 0 0 0 0 0 Capital Lease Obligations 237,853 0 0 0 0 Net Cash Used in Financing Activities 1,605,038 (1,006,278) 5,417 150,810 (4,214,104) Net Increase (Decrease) in Cash 251,581 1,526,142 0 48,741 1,416,149 Cash at Beginning of Year 241,981 0 0 2,491 6,201,395 Cash at End of Year 493,562 1,526,142 0 51,232 7,617,544 Note : Individual columns may not add to Consolidated due to rounding. UNITIL CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENT OF RETAINED EARNINGS Consolidated Eliminations Concord Exeter & FG&E Electric Hampton. Consolidated Company Electric Co Retained Earnings, Beginning of Year 32,484,185 (17,712,695) 8,676,381 9,414,751 14,803,394 Additions: Net Income, Excluding Dividends Received 8,235,062 0 914,845 1,112,320 6,021,549 Dividends Received From Subsidiaries 0 (5,909,545) 0 0 0 Total Additions 8,235,062 (5,909,545) 914,845 1,112,320 6,021,549 Deductions: Dividends Declared: Preferred Stock of Subsidiaries 276,040 0 32,205 78,251 165,583 Common Stock of Subsidiaries 0 (5,909,545) 811,549 891,150 4,206,846 Common Stock of Registrant 5,903,688 0 0 0 0 Adjustments to Retained Earnings 0 0 0 0 0 Total Deductions 6,179,728 (5,909,545) 843,754 969,401 4,372,429 Retained Earnings, End of Year 34,539,519 (17,712,695) 8,747,472 9,557,670 16,452,514 Note : Individual columns may not add to Consolidated due to rounding. UNITIL CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENT OF RETAINED EARNINGS Unitil Unitil Unitil Unitil Unitil Service Power Realty Resources Corporation Corp. Corp. Corp. Inc. Retained Earnings, Beginning of Year 1,688 261,631 831,573 45,119 16,162,343 Additions: Net Income, Excluding Dividends Received 0 45,066 144,897 (130,490) 126,875 Dividends Received From Subsidiaries 0 0 0 0 5,909,545 Total Additions 0 45,066 144,897 (130,490) 6,036,420 Deductions: Dividends Declared: Preferred Stock of Subsidiaries 0 0 0 0 0 Common Stock of Subsidiaries 0 0 0 0 0 Common Stock of Registrant 0 0 0 0 5,903,688 Adjustments to Retained Earnings 0 0 0 0 0 Total Deductions 0 0 0 0 5,903,688 Retained Earnings, End of Year 1,688 306,697 976,470 (85,371) 16,295,075 Note : Individual columns may not add to Consolidated due to rounding. EXHIBITS Exhibit A. A copy of Unitil Corporation's Annual Report and Form 10-K for the year ended December 31, 1997 (Incorporated herein by reference to File No. 1-8858 and File No. 1-7536, respectively) Exhibit B. Exhibit No. Description of Exhibit Reference B-1 Unitil Corporation B -1(a) Certificate of Incorporation Exhibit B-1(a) Form U5B File No. 30 - 1 B-1(b) Amendment to Certificate of Incorporation Exhibit B-1(b) Form U5B File No. 30 - 1 B-1(c) Articles of Incorporation Exhibit B-1(c) Form U5B File No. 30 - 1 B-1(d) Articles of Amendment to Articles of Exhibit B-1(d) Incorporation Form U5B File No. 30 - 1 B-1(e) By - Laws Exhibit B-1(e) Form U5B File No. 30 - 1 B-2 Concord Electric Company B-2(a) Charter (Articles of Association) and Exhibit B-2(a) Amendments thereto Form U5B File No. 30 - 1 B-2(b) By - Laws Exhibit B-2(b) Form U5B File No. 30 - 1 B-3 Exeter & Hampton Electric Company B-3(a) Charter (Articles of Association) and Exhibit B-3(a) Amendments thereto Form U5B File No. 30 - 1 B-3(b) By - Laws Exhibit B-3(b) Form U5B File No. 30 - 1 B-4 Fitchburg Gas and Electric Light Company B-4(a) Articles of Incorporation and Amendments Exhibit B-4(a) thereto Form U5B File No. 30 - 1 B-4(b) By - Laws Exhibit B-4(b) Form U5B File No. 30 - 1 B-5 Fitchburg Energy Development Company B-5(a) Certificate of Incorporation Exhibit B-5(a) Form U5B File No. 30 - 1 B-5(b) By - Laws Exhibit B-5(b) Form U5B File No. 30 - 1 B-6 Unitil Power Corp. B-6(a) Certificate of Incorporation Exhibit B-6(a) Form U5B File No. 30 - 1 B-6(b) Articles of Incorporation Exhibit B-6(b) Form U5B File No. 30 - 1 B-6(c) Statement of Change of Registered Office Exhibit B-6(c) Form U5B File No. 30 - 1 B-6(d) By - Laws Exhibit B-6(d) Form U5B File No. 30 - 1 B-7 Unitil Realty Corp. B-7(a) Certificate of Incorporation Exhibit B-7(a) Form U5B File No. 30 - 1 B-7(b) Articles of Incorporation Exhibit B-7(b) Form U5B File No. 30 - 1 B-7(c) By - Laws Exhibit B-7(c) Form U5B File No. 30 - 1 B-8 Unitil Service Corp. B-8(a) Certificate of Incorporation Exhibit B-8(a) Form U5B File No. 30 - 1 B-8(b) Articles of Incorporation Exhibit B-8(b) Form U5B File No. 30 - 1 B-8(c) By - Laws Exhibit B-8(c) Form U5B File No. 30 - 1 B-9 Unitil Resources, Inc. B-9(a) Certificate of Incorporation Exhibit B-9(a) 1993 Form U5S File No. 30 - 1 B-9(b) Articles of Incorporation and Exhibit B-9(b) Addendum to Articles of Incorporation 1993 Form U5S File No. 30 - 1 B-9(c) By - Laws Exhibit B-9(c) 1993 Form U5S File No. 30 - 1 Exhibit C (a) INDENTURES Exhibit No. Description of Exhibit Reference C-1 Indenture of Mortgage and Deed of Trust dated Exhibit C-1 July 15, 1958 of Concord Electric Company (CECO) Form U5B relating to First Mortgage Bonds, and relating to File No. 30 - 1 all series unless supplemented. C-2 First Supplemental Indenture dated January 15, 1968 Exhibit C-2 relating to CECO's First Mortgage Bonds, Series C, Form U5B 6 3/4% due January 15 1998 and all additional series File No. 30 - 1 unless supplemented. C-3 Second Supplemental Indenture dated November 15, 1971 Exhibit C-3 relating to CECO's First Mortgage Bonds, Series D, Form U5B 8.70% due November 15, 2001 and all prior and File No. 30 - 1 additional series unless supplemented. C-4 Fourth Supplemental Indenture dated March 28, 1984 Exhibit C-4 relating to CECO's First Mortgage Bonds, amending Form U5B certain provisions of the Original Indenture as File No. 30 - 1 supplemented and all additional series unless supplemented. C-5 Sixth Supplemental Indenture dated October 29, 1987 Exhibit C-5 relating to CECO's First Mortgage Bonds, Series G, Form U5B 9.85% due October 15, 1997 and all additional series File No. 30 - 1 unless supplemented. C-6 Seventh Supplemental Indenture dated August 29, 1991 Exhibit C-6 relating to CECO's First Mortgage Bonds, Series H, Form U5B 9.43% due September 1, 2003 and all series unless File No. 30 - 1 supplemented. C-7 Eighth Supplemental Indenture dated October 14, 1994 Exhibit 4.8 relating to CECO's First Mortgage Bonds, Series I, 1994 Form 10-K 8.49% due October 14, 2024 and all additional series File No. 1-8858 unless supplemented. C-8 Indenture of Mortgage and Deed of Trust dated Exhibit C-7 December 1, 1952 of Exeter & Hampton Electric Company Form U5B (E&H) relating to all series unless supplemented. File No. 30 - 1 C-9 Third Supplemental Indenture dated June 1, 1964 Exhibit C-8 relating to E&H's First Mortgage Bonds, Series D, Form U5B 4 3/4% due June 1, 1994 and all additional series File No. 30 - 1 unless supplemented. C-10 Fourth Supplemental Indenture dated January 15, 1968 Exhibit C-9 relating to E&H's First Mortgage Bonds, Series E, Form U5B 6 3/4% due January 15, 1998 and all additional series File No. 30 - 1 unless supplemented. C-11 Fifth Supplemental Indenture dated November 15, 1971 Exhibit C-10 relating to E&H's First Mortgage Bonds, Series F, Form U5B 8.70% due November 15, 2001 and all additional series File No. 30 - 1 unless supplemented. C-12 Sixth Supplemental Indenture dated April 1, 1974 Exhibit C-11 relating to E&H's First Mortgage Bonds, Series G, Form U5B 8 7/8% due April 1, 2004 and all additional series File No. 30 - 1 unless supplemented. C-13 Seventh Supplemental Indenture dated December 15, 1977 Exhibit C-12 relating to E&H's First Mortgage Bonds, Series H, Form U5B 8.50% due December 15, 2002 and all additional series File No. 30 - 1 unless supplemented. C-14 Eighth Supplemental Indenture dated October 28, 1987 Exhibit C-13 relating to E&H's First Mortgage Bonds, Series I, Form U5B 9.85% due October 15, 1997 and all additional series File No. 30 - 1 unless supplemented. C-15 Ninth Supplemental Indenture dated August 29, 1991 Exhibit C-14 relating to E&H's First Mortgage Bonds, Series J, Form U5B 9.43% due September 1, 2003 and all additional series File No. 30 - 1 unless supplemented. C-16 Tenth Supplemental Indenture dated October 14, 1994 Exhibit 4.17 relating to E&H's First Mortgage Bonds, Series K, 1994 Form 10-K 8.49% due October 14, 2024 and all additional series File No. 1-8858 unless supplemented. C-17 Purchase Agreement dated March 20, 1992 for the 8.55% Exhibit C-20 Senior Note due March 31, 2004. Form U5B File No. 30 - 1 C-18 Loan Agreement dated October 24, 1988 with ComPlan, Exhibit C-21 Inc. in connection with UNITIL Realty Corp. (Realty) Form U5B borrowing to acquire and renovate facilities in File No. 30 - 1 Exeter, New Hampshire; and related Assignment and Consent Agreement between Realty, ComPlan, Inc. and the tenants, UNITIL Service Corp. and E&H. C-19 Purchase Agreement dated November 30, 1993 for the Exhibit 4.18 6.75% Notes due November 30, 2023. 1993 Form 10-K File No. 1-8858 C-20 Note Purchase Agreement dated July 1, 1997 for the Exhibit 4.22 8.0% Senior Secured Notes due August 1, 2017 to Form 10-K for 1997 Exhibit D Tax Allocation Agreement AGREEMENT made as of September 10, 1985, among Concord Electric Company, a New Hampshire corporation, Exeter & Hampton Electric Company, a New Hampshire corporation, UNITIL Service Corp., a New Hampshire corporation, and UNITIL Power Corp., a New Hampshire corporation, and UNITIL Corporation ('UNITIL"), a New Hampshire corporation, ("AFFILIATE" companies or collectively, the "AFFILIATES"). Whenever it is intended to include UNITIL in the context of the affiliated group, the term "CONSOLIDATED AFFILIATE" or "CONSOLIDATED AFFILIATES" may be used, and when reference is to the affiliated group as a collective tax paying unit the term "Group" may be used. WHEREAS, UNITIL owns at least 80 percent of the issued and outstanding shares of each class of voting common stock of each of the AFFILIATES: each of the CONSOLIDATED AFFILIATES is a member of the affiliated group within the meaning of section 1504 of the Internal Revenue Code of 1954, as amended (the "Code"), of which UNITIL is the common parent corporation; and UNITIL proposes to include each of the AFFILIATES in filing a consolidated income tax return for the calendar year 1985; NOW, THEREFORE, UNITIL and the AFFILIATES agree as follows: 1. Consolidated Return Election. If at any time and from time to time UNITIL so elects, each of the AFFILIATES will join in the filing of a consolidated Federal income tax return for the calendar year 1985 and for any subsequent period for which the Group is required of permitted to file such a return. UNITIL and its affiliates agree to file such consents, elections and other documents and to take such other action as may be necessary or appropriate to carry out the purposes of this Section 1. Any period for which any of the AFFILIATES is included in a consolidated Federal income tax return filed by UNITIL is referred to in the Agreement as a "Consolidated Return Year". 2. AFFILIATES' Liability to UNITIL for Consolidated Return Year. Prior to the filing of each consolidated return by UNITIL each of the AFFILIATES included therein shall pay to UNITIL the amount, if any, on the Federal income tax for which the AFFILIATES would have been liable for that year, computed in accordance with Treasury Regulations, section 1.1552-1(a)(2)(ii) as though that AFFILIATE had filed a separate return for such year, giving the effect to any net operating loss carryovers, capital loss carryovers, investment tax credit carryovers, foreign tax carryovers or other similar items, incurred by that AFFILIATE for any period ending on or before the date of this Agreement. The foregoing allocation of Federal income tax liability is being made in accordance with Treasury Regulations, sections 1.1552-1(a)(2) and 1.1502-33(d)(2)(ii), and no amount shall be allocated to any CONSOLIDATED AFFILIATE in excess of the amount permitted under Treasure Regulations, section 1.1502-33(d)(2)(ii). Accordingly, after taking into account the allocable portion of the Group's Federal income tax liability, no amount shall be allocated to any CONSOLIDATED AFFILIATE in excess of the amount permitted in accordance with Treasury Regulations, section 1.1502-33(d)(2)(ii). 3. UNITIL Liability to Each Affiliate for Consolidated Return Year. If for any Consolidated Return Year, any AFFILIATE included in the consolidated return filed by UNITIL for such year has available a net operating loss, capital loss, foreign tax credit, investment tax credit or similar items (computed by taking into account carryovers of such items from periods ending on or before the date of this Agreement) that reduces the consolidated tax liability of the Group below the amount that would have been payable if that AFFILIATE did not have such item available, UNITIL shall pay the amount of the reduction attributable to such AFFILIATE prior to the filing of the consolidated return for such year. The amount of the reduction shall be equal to a portion of the excess of (i) the total of the separate return tax liabilities of each of the CONSOLIDATED AFFILIATES computed in accordance with Section 2 of this Agreement, over (ii) the Federal income tax liability of the Group for the year. The portion of such reduction attributable to an AFFILIATE shall be computed by multiplying the total reduction by a fraction, the numerator of which is the value of the tax benefits contributed by the AFFILIATE to the Group and the denominator of which is the value of the total value of such benefits contributed by all CONSOLIDATED AFFILIATES during the year. For purposes of the foregoing paragraph a deduction of credit generated by a CONSOLIDATED AFFILIATE which is in excess of the amount required to eliminate its separate tax return liability but which is utilized in the computation of the Federal income tax liability of the Group shall be deemed to be a tax benefit contributed by the CONSOLIDATED AFFILIATE to the Group. The value of a deduction which constitutes such a benefit shall be determined by applying the current corporate income tax rate, presently 46 percent, to the amount for the deduction. The value of a credit that constitutes such a benefit shall be the tax savings, currently 100 percent thereof. The value of capital losses used to offset capital gains shall be computed at the then current rate applicable to capital gains for corporations. 4. Payment of Estimated Taxes. Prior to the paying and filing of estimated consolidated tax declaration by UNITIL, each of the AFFILIATES included in such estimated tax declaration shall pay to UNITIL the amount, if any, of the estimated Federal income tax for which the AFFILIATE would have been liable for that year, computed as though that AFFILIATE had filed a separate estimated tax declaration for such year. 5. Tax Adjustments. In the event of any adjustments to the consolidated tax return as filed (by reason of an amended return, a claim for refund of an audit by the Internal Revenue Service), the liability, if any, of each of the AFFILIATES under Sections 2, 3, and 4 shall be redetermined to give effect to any such adjustment as if it had been made as part of the original computation of tax liability, and payments between UNITIL and the appropriate AFFILIATES shall be made within 120 days after any such payments are made or refunds are received, or, in the case of contested proceedings, within 120 days after a final determination of the contest. Interest and penalties, if any, attributable to such an adjustment shall be paid by each AFFILIATE to UNITIL in proportion to the increase in such AFFILIATE'S separate return tax liability that is required to be paid to UNITIL, as computed under Section 2. 6. Subsidiaries of Affiliates. If at any time, any of the AFFILIATES acquire or creates one or more subsidiary corporations that are includable corporations of the Group, they shall be subject to this Agreement and all references to the AFFILIATES herein shall be interpreted to include such subsidiaries as a group. 7. Successors. This Agreement shall be binding on and inure to the benefit of any successor, by merger, acquisition of assets or otherwise, to any of the parties hereto (including but not limited to any successor of UNITIL or any of the AFFILIATES succeeding to the tax attributes of such corporation under Section 381 of the Code) to the same extent as if such successor had been an original party to this Agreement. 8. Affiliates' Liability for Separate Return Years. If any of the AFFILIATES leaves the Group and files separate Federal income tax returns, within 120 days of the end of each of the first fifteen taxable years for which it files such returns, it shall pay to UNITIL the excess, if any, of (A) Federal income tax that such AFFILIATE would have paid for such year (on a separate return basis giving the effect to its net operating loss carryovers) if it never had been a member of the Group, over (B) the amount of Federal income tax such AFFILIATE has actually paid or will actually pay for such years. 9. Examples of Calculations. Attached hereto and made part hereof , as "Appendix A to Tax Sharing Agreement By and Between UNITIL Corporation and Its Affiliated Companies", are illustrated examples of the matters contained herein. IN WITNESS WHEREOF, the duly authorized representatives of the parties hereto have set their hands this tenth day of September, 1985. UNITIL CORPORATION By /s/ Michael J. Dalton its President EXETER & HAMPTON ELECTRIC COMPANY By /s/ Michael J. Dalton its President CONCORD ELECTRIC COMPANY By /s/ Douglas K. Macdonald its President UNITIL POWER CORP. By /s/ Michael J. Dalton its President UNITIL SERVICE CORP. By /s/ Peter J. Stulgis its President APPENDIX A TO TAX SHARING AGREEMENT BY AND BETWEEN UNITIL CORPORATION AND ITS AFFILIATED COMPANIES The allocation agreement follows the Internal Revenue Service Regulations for "basic" and "supplemental" allocation of consolidated return liability and benefits. The "basic" method used to allocate UNITIL'S liability shown on the consolidated return is provided by Internal Revenue Code Section 1552(a) and provides for allocation based on the amount of tax liability calculated on a separate return basis. The "supplemental" method provides that the tax savings of credits and deductions in excess of the amount of the individual company can use, but which can be used in consolidations, is allocated among the members supplying the savings and the benefiting members reimburse them. For example, assume that a three member group has consolidated tax liability of $200,000 and $100,000 respectively. The individual members, A, B, and C have separate return taxable income (loss) of $150,000, $100,000, and $(50,000) and the individual members have separate return liabilities of $75,000, $50,000, and none, respectively. (Loss members are deemed to have a zero tax liability.) Under the proposed method, the Individual tax liability and benefit is allocated as follows: Member A B C Taxable Income (Loss) $150,000 $100,000 $(50,000) Separate Tax Liability 75,000 50,000 none Percent of Total ($125,000) 60% 40% 0% Consolidated Tax Allocation 60,000 40,000 none Separate Tax Liability 75,000 50,000 0 Less Consolidated Tax 60,000 40,000 0 15,000 10,000 0 100% 100% Supplemental Allocation 15,000 10,000 0 Benefits paid to C $(15,000) $(10,000) $(25,000) Regulation 1.1502-33(d) provides the "supplemental" method of allocating tax liability in order to permit members to receive reimbursement for contributing tax deductions or credits to the group. The method adopted by the Company and outlined at Regulation 1.1502-33(2)(ii) provides for immediate reimbursement for the tax year involved. The steps are as follows: (1) Tax liability is allocated to the members by the basic method outlined above. (2) Each member with a separate company tax will be allocated 100% of the excess of its separate return liability over its share of the consolidated liability under step (1). (3) The amounts allocated to benefiting members under Step 2 are credited to the members supplying the capital losses, deductions, credits or other items to which the savings are attributable. For this purpose an amount generated by a member which is in its own separate return tax liability and which is utilized in the computation of the Federal income tax liability of the group shall be deemed to be a tax benefit contributed by the member to the group. In some years the Step 2 savings to be credited may be less than the total tax savings items available for use. In such a case, the savings shall be attributed to tax savings items in the order that they are used on the consolidated return and in an amount equal to the savings actually realized. Under this method, capital losses would normally be used first to the extent there are capital gains, since these items are netted in order to reach income, and are used before any deductions or credits are taken into account. The value of the capital loss would be the current rate of tax for capital gain income of the loss. The next item to be used would be deductions resulting in a current year operating loss, and these would be valued at the marginal rate of tax on the income they offset. This is normally 46 percent under current law, but would be less for income under $100,000, which falls in to the graduated tax brackets under Reg.1.1502-33(d)(2), the amount of each graduated rate bracket is apportioned equally by dividing that amount by the number of corporations that where members of the group. Additionally, an alternative is to allocate the amount of each graduated rate bracket based on an election made be each of the companies' and including with that year's tax return. Operating loss carryovers would be used next, and finally credits would be used. Credits will be valued at 100 percent, since they result in dollar for dollar savings. Where the total amount of an item is not used, the savings will be allocated to each member in proportion to his share of the total of that benefit available from all members of the consolidated group. (4) Benefiting members will reimburse the other members prior to the filing of the consolidated tax return. A more complicated Situation is presented when there are several loss companies. Assume that the facts are the same as above except that there are three loss companies: C, D, and E with the following tax savings items: C D E Capital Loss 0 5,000 0 Current Operating Loss 5,000 0 3,000 Operating Loss Carryover 0 10,000 0 Credits 4,000 8,000 4,000 Allocation of the $25,000 benefit from Step 2 would proceed as follows: C D E Remaining Benefit Capital Gains @ 28% 0 1,400 0 23,600 Current Operating Loss Offsetting 46% Income 2,300 0 1,380 19,920 Operating Loss Carryover Offsetting 46% Income 4,600 15,320 Credits @ 100% (proportionate) 3,830 7,600 3,830 0 Total Allocated 6,130 13,660 5,210 0 Thus companies A and B would reimburse C, D and E for the above amounts. There will be credit carryovers for C, D, and E of $170, $340, and $170, respectively. Separate Return Liability The Allocations and reimbursements outline above use the concept of a "separate return tax liability" as a starting point for allocations. This liability is the amount which a member of the affiliated group would pay of it filed a separate return. It is calculated in three basic steps. (1) The rules for consolidated return deferred accounting, inventory adjustments, basis determination, basis adjustments, excess losses, earnings and profits, and obligations of members must be applied. (2) Intercompany dividends are eliminated and no dividend received or paid deduction is allowed on intercompany dividends. (3) Adjustments are made for specific items used in the consolidated return which must be divided by some equitable method among the members. The third step is the subject of this part of the Appendix. Two different approaches may be taken for the apportionment of the limits, deductions, and exemptions used to reach tax liability. It is recognized that each company is a part of an affiliated group, and that all credits, deductions and limitations must be apportioned in some equitable manner. Specific Apportionments (1) Carryovers. On a consolidated basis, items such as operating losses, capital losses, and contributions will be used first from the current year and then carried forward from the oldest year forward until exhausted. It is the intention of the Tax Sharing Agreement, for allocation and reimbursement purposes, that a member shall use its own carryovers first before it is required to reimburse another member for use of its carryover in consolidation, without regard for the fact that the tax regulations for consolidated returns may require a different order. (2) Contribution Deduction. The amount of the contribution deduction is limited to 10% of consolidated taxable income. Thus the amount allowable may exceed the actual contributions. In order to avoid having a consolidated contribution carryover which is not owned by a member, each member agrees that its deduction be limited to its proportionate share on a separate return basis of the consolidated contribution deduction in a given year, rather than 10% of its separate return income, and that any contribution in excess of such amount be treated as its own carryover. If the consolidated deduction is greater than the separate deductions of the profitable members (thus permitting a deduction for contributions of a loss member) the excess allowable deduction will be allocated to the loss members in proportion to the excess allowable over their available contributions. Contribution Illustration Example A A B C Consolidated Income before contributions 12,000 100 (5,600) 6,500 Contributions - current 400 25 100 - carryover 300 25 - available 700 50 100 10% Limit 650 Allowable on SR basis 1,200 10 Allowable by agreement 644 6 Carryover by agreement - current 0 19 100 - prior 56 25 Taxable income 11,356 94 (5,600) 5,850 Example B A B C Consolidated Income before contributions 12,000 (100) (5,400) 6,500 Contributions - current only 200 50 200 10% Limit 650 Available on SR basis 200 200 Excess deduction allowable 250 Allocation by agreement 50 200 Carryover by agreement 50 200 Taxable income 11,800 (150) (5,600) 6,050 (3) Tax Brackets. The members agree that the brackets will first be applied equally to the members with ordinary income. If the allocated amount exceeds income, the excess can be reapplied equally to the other members with remaining income. (4) I.T.C. Limitation. The limitation on 100% utilization of investment tax credit provided by Internal Revenue Code S46(a)(3), currently $25,000, will be allocated equally among the members with tax liability and available credits, with any excess to be allocated equally to those with remaining liability and credits. (5) I.T.C. Limit for Used Property. The limitations on used property cost deemed eligible for investment credit, currently $215,000, will be allocated equally among the companies that have used property acquisitions with a ten year recovery life in any year. If a member is unable to utilize all of its allocated amount the excess will be allocated proportionately to the members with used property acquisitions in excess of their allocated share. If there are insufficient ten year recovery life assets, the remainder will be allocated to five year recovery life assets in a similar manner. Likewise, if there are not enough ten and five year recovery life assets, the remainder of the $100,000 limitation will be allocated equally to members having three year recovery life used property additions. (6) Future Developments. Any credits, deductions, or other items established by future legislation will be allocated in a manner consistent with the above methods. The foregoing examples are for illustrative purposes and are not intended to cover all possible situations that may arise. Exhibit E Other Documents - None Exhibit F Supporting Schedules Report of Independent Public Accounts To Unitil Corporation We have audited the consolidated balance sheet and consolidated statement of capitalization of Unitil Corporation and subsidiaries as of December 31, 1997, and the related consolidated statements of earnings, cash flows and changes in common stock equity for the year then ended, included in the 1997 annual report to the shareholders and incorporated by reference in this Form U5S. 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 audit. We conducted our audit in accordance with generally accepted auditing standards. 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 our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Unitil Corporation and subsidiaries as of December 31, 1997, and the consolidated results of their operations and their consolidated cash flows for the year then ended, in conformity with generally accepted accounting principles. Grant Thornton LLP Boston, Massachusetts February 10, 1998 Exhibit G Financial Data Schedules - See Exhibits 27.1 through 27.5 Exhibit G 27.1 [ARTICLE] OPUR1 [FISCAL-YEAR-END] DEC-31-1997 [PERIOD-START] JAN-01-1997 [PERIOD-END] DEC-31-1997 [PERIOD-TYPE] YEAR [BOOK-VALUE] PER-BOOK [TOTAL-NET-UTILITY-PLANT] 151,114,861 [OTHER-PROPERTY-AND-INVEST] 42,448 [TOTAL-CURRENT-ASSETS] 29,119,404 [TOTAL-DEFERRED-CHARGES] 57,700,431 [OTHER-ASSETS] 0 [TOTAL-ASSETS] 237,977,144 [COMMON] 35,653,142 [CAPITAL-SURPLUS-PAID-IN] 1,451,707 [RETAINED-EARNINGS] 34,539,519 [TOTAL-COMMON-STOCKHOLDERS-EQ] 71,644,368 [PREFERRED-MANDATORY] 3,665,900 [PREFERRED] 225,000 [LONG-TERM-DEBT-NET] 63,895,589 [SHORT-TERM-NOTES] 18,000,000 [LONG-TERM-NOTES-PAYABLE] 0 [COMMERCIAL-PAPER-OBLIGATIONS] 0 [LONG-TERM-DEBT-CURRENT-PORT] 4,469,795 [PREFERRED-STOCK-CURRENT] 0 [CAPITAL-LEASE-OBLIGATIONS] 4,732,702 [LEASES-CURRENT] 883,528 [OTHER-ITEMS-CAPITAL-AND-LIAB] 70,460,262 [TOT-CAPITALIZATION-AND-LIAB] 237,977,144 [GROSS-OPERATING-REVENUE] 169,737,999 [INCOME-TAX-EXPENSE] 4,165,566 [OTHER-OPERATING-EXPENSES] 150,010,658 [TOTAL-OPERATING-EXPENSES] 154,176,224 [OPERATING-INCOME-LOSS] 15,561,775 [OTHER-INCOME-NET] -160,207 [INCOME-BEFORE-INTEREST-EXPEN] 15,401,568 [TOTAL-INTEREST-EXPENSE] 7,166,506 [NET-INCOME] 8,235,062 [PREFERRED-STOCK-DIVIDENDS] 276,040 [EARNINGS-AVAILABLE-FOR-COMM] 7,959,022 [COMMON-STOCK-DIVIDENDS] 5,803,688 [TOTAL-INTEREST-ON-BONDS] 4,981,741 CASH-FLOW-OPERATIONS> 16,172,530 [EPS-PRIMARY] 1.80 [EPS-DILUTED] 1.76 Exhibit G 27.2 [ARTICLE] OPUR1 [SUBSIDIARY] EXETER & HAMPTON ELECTRIC COMPANY [NUMBER] 02 [FISCAL-YEAR-END] DEC-31-1997 [PERIOD-START] JAN-01-1997 [PERIOD-END] DEC-31-1997 [PERIOD-TYPE] YEAR [BOOK-VALUE] PER-BOOK [TOTAL-NET-UTILITY-PLANT] 34,338,970 [OTHER-PROPERTY-AND-INVEST] 507 [TOTAL-CURRENT-ASSETS] 9,095,772 [TOTAL-DEFERRED-CHARGES] 5,227,417 [OTHER-ASSETS] 0 [TOTAL-ASSETS] 48,662,666 [COMMON] 1,920,669 [CAPITAL-SURPLUS-PAID-IN] 0 [RETAINED-EARNINGS] 9,557,670 [TOTAL-COMMON-STOCKHOLDERS-EQ] 11,478,339 [PREFERRED-MANDATORY] 1,009,300 [PREFERRED] 0 [LONG-TERM-DEBT-NET] 13,060,000 [SHORT-TERM-NOTES] 7,437,717 [LONG-TERM-NOTES-PAYABLE] 0 [COMMERCIAL-PAPER-OBLIGATIONS] 0 [LONG-TERM-DEBT-CURRENT-PORT] 1,137,000 [PREFERRED-STOCK-CURRENT] 0 [CAPITAL-LEASE-OBLIGATIONS] 0 [LEASES-CURRENT] 0 [OTHER-ITEMS-CAPITAL-AND-LIAB] 14,540,310 [TOT-CAPITALIZATION-AND-LIAB] 48,662,666 [GROSS-OPERATING-REVENUE] 53,818,166 [INCOME-TAX-EXPENSE] 411,733 [OTHER-OPERATING-EXPENSES] 50,650,637 [TOTAL-OPERATING-EXPENSES] 51,062,370 [OPERATING-INCOME-LOSS] 2,755,796 [OTHER-INCOME-NET] -19,760 [INCOME-BEFORE-INTEREST-EXPEN] 2,736,036 [TOTAL-INTEREST-EXPENSE] 1,623,716 [NET-INCOME] 1,112,320 [PREFERRED-STOCK-DIVIDENDS] 78,251 [EARNINGS-AVAILABLE-FOR-COMM] 1,034,069 [COMMON-STOCK-DIVIDENDS] 0 [TOTAL-INTEREST-ON-BONDS] 1,273,899 [CASH-FLOW-OPERATIONS] 1,379,574 [EPS-PRIMARY] 5.30 [EPS-DILUTED] 5.30 Exhibit G 27.3 [ARTICLE] OPUR1 [SUBSIDIARY] CONCORD ELECTRIC COMPANY [NUMBER] 01 [FISCAL-YEAR-END] DEC-31-1997 [PERIOD-START] JAN-01-1997 [PERIOD-END] DEC-31-1997 [PERIOD-TYPE] YEAR [BOOK-VALUE] PER-BOOK [TOTAL-NET-UTILITY-PLANT] 30,119,020 [OTHER-PROPERTY-AND-INVEST] 23,827 [TOTAL-CURRENT-ASSETS] 7,097,592 [TOTAL-DEFERRED-CHARGES] 5,003,110 [OTHER-ASSETS] 0 [TOTAL-ASSETS] 42,243,549 [COMMON] 1,432,786 [CAPITAL-SURPLUS-PAID-IN] 0 [RETAINED-EARNINGS] 8,747,472 [TOTAL-COMMON-STOCKHOLDERS-EQ] 10,180,258 [PREFERRED-MANDATORY] 215,000 [PREFERRED] 225,000 [LONG-TERM-DEBT-NET] 10,550,000 [SHORT-TERM-NOTES] 5,982,985 [LONG-TERM-NOTES-PAYABLE] 0 [COMMERCIAL-PAPER-OBLIGATIONS] 0 [LONG-TERM-DEBT-CURRENT-PORT] 2,170,000 [PREFERRED-STOCK-CURRENT] 0 [CAPITAL-LEASE-OBLIGATIONS] 0 [LEASES-CURRENT] 0 [OTHER-ITEMS-CAPITAL-AND-LIAB] 12,920,306 [TOT-CAPITALIZATION-AND-LIAB] 42,243,549 [GROSS-OPERATING-REVENUE] 49,801,485 [INCOME-TAX-EXPENSE] 300,860 [OTHER-OPERATING-EXPENSES] 47,083,579 [TOTAL-OPERATING-EXPENSES] 47,384,439 [OPERATING-INCOME-LOSS] 2,417,046 [OTHER-INCOME-NET] -4,095 [INCOME-BEFORE-INTEREST-EXPEN] 2,412,951 [TOTAL-INTEREST-EXPENSE] 1,498,106 [NET-INCOME] 914,845 [PREFERRED-STOCK-DIVIDENDS] 32,205 [EARNINGS-AVAILABLE-FOR-COMM] 882,640 [COMMON-STOCK-DIVIDENDS] 0 [TOTAL-INTEREST-ON-BONDS] 1,142,842 [CASH-FLOW-OPERATIONS] 2,868,143 [EPS-PRIMARY] 6.70 [EPS-DILUTED] 6.70 Exhibit G 27.4 [ARTICLE] OPUR1 [SUBSIDIARY] FITCHBURG GAS AND ELECTRIC LIGHT COMPANY [NUMBER] 03 [FISCAL-YEAR-END] DEC-31-1997 [PERIOD-START] JAN-01-1997 [PERIOD-END] DEC-31-1997 [PERIOD-TYPE] YEAR [BOOK-VALUE] PER-BOOK [TOTAL-NET-UTILITY-PLANT] 73,980,125 [OTHER-PROPERTY-AND-INVEST] 18,114 [TOTAL-CURRENT-ASSETS] 18,344,919 [TOTAL-DEFERRED-CHARGES] 40,665,044 [OTHER-ASSETS] 0 [TOTAL-ASSETS] 133,008,202 [COMMON] 21,112,064 [CAPITAL-SURPLUS-PAID-IN] -1,890 [RETAINED-EARNINGS] 16,452,514 [TOTAL-COMMON-STOCKHOLDERS-EQ] 37,572,688 [PREFERRED-MANDATORY] 2,441,600 [PREFERRED] 0 [LONG-TERM-DEBT-NET] 33,000,000 [SHORT-TERM-NOTES] 10,020,914 [LONG-TERM-NOTES-PAYABLE] 0 [COMMERCIAL-PAPER-OBLIGATIONS] 0 [LONG-TERM-DEBT-CURRENT-PORT] 1,000,000 [PREFERRED-STOCK-CURRENT] 0 [CAPITAL-LEASE-OBLIGATIONS] 2,499,103 [LEASES-CURRENT] 130,642 [OTHER-ITEMS-CAPITAL-AND-LIAB] 46,343,255 [TOT-CAPITALIZATION-AND-LIAB] 133,008,202 [GROSS-OPERATING-REVENUE] 69,165,087 [INCOME-TAX-EXPENSE] 3,297,901 [OTHER-OPERATING-EXPENSES] 56,252,821 [TOTAL-OPERATING-EXPENSES] 59,550,722 [OPERATING-INCOME-LOSS] 9,614,365 [OTHER-INCOME-NET] -62,114 [INCOME-BEFORE-INTEREST-EXPEN] 9,552,251 [TOTAL-INTEREST-EXPENSE] 3,530,702 [NET-INCOME] 6,021,549 [PREFERRED-STOCK-DIVIDENDS] 165,583 [EARNINGS-AVAILABLE-FOR-COMM] 5,855,966 [COMMON-STOCK-DIVIDENDS] 0 [TOTAL-INTEREST-ON-BONDS] 2,565,000 [CASH-FLOW-OPERATIONS] 8,831,888 [EPS-PRIMARY] 4.70 [EPS-DILUTED] 4.70 Exhibit G 27.5 [ARTICLE] OPUR1 [SUBSIDIARY] UNITIL POWER CORP. [NUMBER] 04 [FISCAL-YEAR-END] DEC-31-1997 [PERIOD-START] JAN-01-1997 [PERIOD-END] DEC-31-1997 [PERIOD-TYPE] YEAR [BOOK-VALUE] PER-BOOK [TOTAL-NET-UTILITY-PLANT] 0 [OTHER-PROPERTY-AND-INVEST] 0 [TOTAL-CURRENT-ASSETS] 10,039,682 [TOTAL-DEFERRED-CHARGES] 0 [OTHER-ASSETS] 0 [TOTAL-ASSETS] 10,039,682 [COMMON] 101,000 [CAPITAL-SURPLUS-PAID-IN] 0 [RETAINED-EARNINGS] 306,697 [TOTAL-COMMON-STOCKHOLDERS-EQ] 407,6970 [PREFERRED] 0 [LONG-TERM-DEBT-NET] 0 [SHORT-TERM-NOTES] 0 [LONG-TERM-NOTES-PAYABLE] 0 [COMMERCIAL-PAPER-OBLIGATIONS] 0 [LONG-TERM-DEBT-CURRENT-PORT] 0 [PREFERRED-STOCK-CURRENT] 0 [CAPITAL-LEASE-OBLIGATIONS] 0 [LEASES-CURRENT] 0 [OTHER-ITEMS-CAPITAL-AND-LIAB] 9,631,985 [TOT-CAPITALIZATION-AND-LIAB] 10,039,682 [GROSS-OPERATING-REVENUE] 78,973,254 [INCOME-TAX-EXPENSE] 30,596 [OTHER-OPERATING-EXPENSES] 78,782,376 [TOTAL-OPERATING-EXPENSES] 78,812,972 [OPERATING-INCOME-LOSS] 160,282 [OTHER-INCOME-NET] 17,784 [INCOME-BEFORE-INTEREST-EXPEN] 178,066 [TOTAL-INTEREST-EXPENSE] 133,000 [NET-INCOME] 45,066 [PREFERRED-STOCK-DIVIDENDS] 0 [EARNINGS-AVAILABLE-FOR-COMM] 45,066 [COMMON-STOCK-DIVIDENDS] 0 [TOTAL-INTEREST-ON-BONDS] 0 [CASH-FLOW-OPERATIONS] 2,532,420 [EPS-PRIMARY] 450.66 [EPS-DILUTED] 450.66 Exhibit H Organizational Chart - Not Applicable Exhibit I Majority Owned Associate Company - Not Applicable SIGNATURE Each undersigned system company has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized pursuant to the requirements of the Public Utility Holding Company Act of 1935. UNITIL CORPORATION By ___________________________ Robert G. Schoenberger Chairman of the Board & Chief Executive Officer UNITIL SERVICE CORP. By ___________________________ Robert G. Schoenberger President UNITIL RESOURCES, INC. By ___________________________ James G. Daly President CONCORD ELECTRIC COMPANY, EXETER & HAMPTON ELECTRIC COMPANY, FITCHBURG GAS AND ELECTRIC LIGHT COMPANY. UNITIL REALTY CORP. By ___________________________ Michael J. Dalton President UNITIL POWER CORP. By ___________________________ George R. Gantz President Date ___________________________