EX-99.1 2 0002.txt FINANCIALS - CON EDISON Exhibit 99.1 NEW CON EDISON UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET AS AT SEPTEMBER 30, 2000 (DOLLARS IN THOUSANDS)
Con Edison Northeast Merger Historical Pro Forma (A) Adjustments ------------ ------------ ------------ ASSETS Utility plant, net $ 11,914,540 $ 4,296,561 Other property and investments 550,315 985,664 Cash and temporary cash investments 72,810 237,972 Accounts receivable, net 800,019 479,957 Other current assets 944,687 642,636 Unamortized debt expense 152,854 33,524 Regulatory assets and deferred charges 1,653,397 3,552,845 Goodwill 419,328 332,664 $ 1,584,678 (B) ------------ ------------ ------------ Total Assets $ 16,507,950 $ 10,561,823 $ 1,584,678 ============ ============ ============ CAPITALIZATION AND LIABILITIES Capitalization Common shareholders' equity* $ 5,542,724 $ 2,405,322 $ (435,322)(C) Preferred Stock subject to mandatory redemption 37,050 15,000 Preferred stock not subject to mandatory redemption 212,563 136,200 Long-term debt 5,222,309 2,042,929 1,970,000 (D) ------------ ------------ ------------ Total Capitalization 11,014,646 4,599,451 1,534,678 ------------ ------------ ------------ Minority interest in consolidated subsidiaries -- 100,000 Obligations under capital leases 32,283 50,619 Rate reduction bond obligation -- -- Other noncurrent liabilities 369,782 -- Long-term debt and preferred stock - current 158,910 539,900 Notes payable 243,004 1,127,338** Other current liabilities 1,617,575 911,719 50,000 (B) Accumulated deferred federal income tax 2,410,001 1,674,587 Regulatory liabilities and deferred credits 661,749 1,558,209 ------------ ------------ ------------ Total Capitalization and Liabilities $ 16,507,950 $ 10,561,823 $ 1,584,678 ============ ============ ============ Northeast Incremental Pro Forma Securitization Financing* Combined -------------- ------------ ------------ ASSETS Utility plant, net $ 16,211,101 Other property and investments 1,535,979 Cash and temporary cash investments $ 353,329(H)&(J) $ 2,014,274(N) 2,678,385 Accounts receivable, net 115,012(H) 1,394,988 Other current assets 1,587,323 Unamortized debt expense 186,378 Regulatory assets and deferred charges 1,249,731(H) 6,455,973 Goodwill 2,336,670 ------------ ------------ ------------ Total Assets $ 1,718,072 $ 2,014,274 $ 32,386,797 ============ ============ ============ CAPITALIZATION AND LIABILITIES Capitalization Common shareholders' equity* $ --(H)&(I) $ (145,384)(P) $ 7,367,340 Preferred stock subject to mandatory redemption (15,000)(H) 37,050 Preferred stock not subject to mandatory redemption (20,000)(H) 750,000(Q) 1,078,763 Long-term debt (138,784)(H) 9,096,454 ------------ ------------ ------------ Total Capitalization (173,784) 604,616 17,579,607 ------------ ------------ ------------ Minority interest in consolidated subsidiaries (100,000)(H) -- Obligations under capital leases --(H)&(I) 82,902 Rate reduction bond obligation 2,188,000(H) 2,188,000 Other noncurrent liabilities 369,782 Long-term debt and preferred stock - current (171,983)(H) 526,827 Notes payable (139,173)(H) 1,409,658(O) 2,640,827 Other current liabilities 102,319(H) 2,681,613 Accumulated deferred federal income tax 12,693(H) 4,097,281 Regulatory liabilities and deferred credits 2,219,958 ------------ ------------ ------------ Total Capitalization and Liabilities $ 1,718,072 $ 2,014,274 $ 32,386,797 ============ ============ ============
*The issuance of 50 million shares of New CEI Common Stock pursuant to stock plans or in exchange for securities or assets of other companies, approval of which is being requested, has not been reflected in the Pro Forma. Currently, all stock plans are using market purchased shares and no exchange of New CEI Common Stock for securities or assets of another company is pending (other than the CEI/NU merger, which has been reflected in the Pro Forma). **Includes $430 million of short-term debt for Northeast Generation Company which is not jurisdictional to the SEC because it has EWG status. This statement does not reflect the operating results and financial position of Con Edison and Northeast Utilities relating to the pending sales for utility assets. The accompanying notes to the pro forma are an integral part of this statement. NEW CON EDISON UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2000 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)`
Con Edison Northeast Merger Historical Pro Forma (A) Adjustments ----------- ---------- ----------- Operating revenues Electric $ 6,802,697 $5,137,373 $ Gas 1,168,993 484,881 Steam 407,303 -- Non-utility 691,380 96,138 ----------- ---------- ---------- Total operating revenues 9,070,373 5,718,392 ----------- ---------- ---------- Operating expenses Fuel and purchased power 4,359,755 3,046,583 Other operations 1,172,060 934,438 Maintenance 449,732 251,570 Depreciation and amortization 564,445 815,587 39,617(B) Taxes, other than federal income tax 1,173,082 251,112 Federal income tax 324,332 254,032 ----------- ---------- ---------- Total operating expenses 8,043,406 5,553,322 39,617 ----------- ---------- ---------- Operating income 1,026,967 165,070 (39,617) Other income (deductions) Investment income 13,852 6,887 Allowance for equity funds used during construction 1,493 -- Other income less miscellaneous deductions (10,887) 197,097 Federal income tax 29,784 91,531 58,608(E) ----------- ---------- ---------- Total other income 34,242 295,515 58,608 ----------- ---------- ---------- Income before interest charges 1,061,209 460,585 18,991 Interest charges 393,782 304,523 167,450(F) Allowance for borrowed funds used during construction (4,481) -- ----------- ---------- ---------- Net interest charges 389,301 304,523 167,450 ----------- ---------- ---------- Preferred stock dividend requirements 13,592 16,634 ----------- ---------- ---------- Net income for common stock $ 658,316 $ 139,428 $ (148,459) ----------- ---------- ---------- Common shares outstanding - average (000)* 213,372 139,166 (91,200)(G) Basic earnings per share $ 3.09 $ 1.00 =========== ========== Northeast Incremental Pro Forma Securitization Financing* Combined -------------- ------------ ---------- Operating revenues Electric $ 115,012(H) $ $12,055,082 Gas 1,653,874 Steam 407,303 Non-utility 787,518 ---------- ------------ ---------- Total operating revenues 115,012 14,903,777 ---------- ------------ ---------- Operating expenses Fuel and purchased power 7,406,338 Other operations 2,106,498 Maintenance 701,302 Depreciation and amortization 1,419,649 Taxes, other than federal income tax 1,424,194 Federal income tax 578,364 ---------- ------------ ---------- Total operating expenses 13,636,345 ---------- ------------ ---------- Operating income 115,012 1,267,432 Other income (deductions) Investment income 20,739 Allowance for equity funds used during construction 1,493 Other income less miscellaneous deductions 186,210 Federal income tax 41,937(L) 221,860 ---------- ------------ ---------- Total other income 41,937 430,302 ---------- ------------ ---------- Income before interest charges 115,012 41,937 1,697,734 Interest charges 119,821(M) 985,576 Allowance for borrowed funds used during construction (4,481) ---------- ------------ ---------- Net interest charges -- 119,821 981,095 ---------- ------------ ---------- Preferred stock dividend requirements 67,500(R) 97,726 ---------- ------------ ---------- Net income for common stock $ 115,012 $ (145,384) $ 618,913 ---------- ------------ ---------- Common shares outstanding - average (000)* 261,338 Basic earnings per share $ 2.37(D) ===========
*The issuance of 50 million shares of New CEI Common Stock pursuant to stock plans or in exchange for securities or assets of other companies, approval of which is being requested, has not been reflected in the Pro Forma. Currently, all stock plans are using market purchased shares and no exchange of New CEI Common Stock for securities or assets of another company is pending (other than the CEI/NU merger, which has been reflected in the Pro Forma). This statement does not reflect the operating results and financial position of Con Edison and Northeast Utilities relating to the announced sales for their utility assets. The accompanying notes to the pro forma are an integral part of this statement. NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) Notes related to Con Edison and Northeast merger Note A. Unaudited Pro Forma Combined Condensed Income Statement Reflects the combination of the historical information of Northeast and Yankee to give effect to the acquisition of Yankee by Northeast as if it occurred by January 1, 2000 instead of March 1, 2000. Note B. Goodwill Reflects adjustment to record the goodwill resulting from the merger: Purchase of 148.7 million Northeast common shares $3,940,000 Estimated direct costs incurred in consummating the merger 50,000 Elimination of Northeast Shareholders' equity on September 30, 2000 (2,405,322) Addition of Northeast goodwill to purchase price 332,664 ----------- Total goodwill created as a result of the merger $1,917,342 =========== Amortization of goodwill over 1-year period (assuming straight line method over 40 years) $47,934 Elimination of Northeast purchased goodwill (332,664) Reversal of amortization of Northeast purchased goodwill over 1-year period (8,317) Note C. Common Shareholders' Equity Reflects payment of stock consideration in the merger as discussed in Note D net of the elimination of Northeast shareholders' equity. Elimination of Northeast shareholders' equity ($2,405,322) Issuance of stock to purchase Northeast common shares 1,970,000 ----------- ($435,322) =========== Note D. Merger Consideration The unaudited pro forma combined condensed financial statements assume that 50% of the outstanding Northeast common shares were exchanged for cash consideration of $26.50 and 50% of the outstanding Northeast common shares were exchanged for .646 shares of New Con Edison common stock. We have assumed that the cash payment to Northeast shareholders will be financed through the issuance of long-term debt. The merger consideration was determined assuming that the merger would be consummated on December 31, 2000, the average trading price of Con Edison common shares over the specified period would be $41.00 and the value of the fraction of a share of New Con Edison common stock delivered to Northeast shareholders would remain at $26.50 at the time of delivery. A Con Edison share price of $41.00 has been assumed because it represents the midpoint of the price collar established for Con Edison's share price. Cash payment to Northeast shareholders $1,970,000 Stock payment to Northeast shareholders 1,970,000 ----------- Purchase of 148.7 million Northeast common shares $3,940,000 =========== Note E. Income Taxes Reflects tax benefit, based on an assumed tax rate of 35%, from the payments of 1 year. ($58,608) ========= Note F. Interest Charges Reflects $1.970 billion of long-term debt bearing interest over one year at an effective interest rate of 8.5% inclusive of costs of issuance, the proceeds of which may be used to fund the cash consideration to be paid to Northeast shareholders $167,450 ======== A 1/8 of 1% variation in the interest rate would result in a $2.5 million change in interest expense.
Note G. Outstanding Shares (12 Months) Reflects the issuance of 47,966,000 New Con Edison shares at an assumed issuance cost of $41.00 as described in Note D net of the elimination of outstanding Northeast common shares. Elimination of outstanding Northeast common shares $ (139,166) Purchase of 50% of 148,700,000 Northeast common shares at an exchange rate of .646 shares of New Con Edison common stock per Northeast common share 47,966 ------------ $ (91,200) ============
NORTHEAST UTILITIES AND SUBSIDIARIES PRO FORMA ADJUSTMENTS TO FINANCIAL STATEMENTS Note H. Receivables, net 115,012 Regulatory assets -- other 1,244,074 Unamortized debt expense 5,657 Common stock 1 Capital surplus, paid in 269,999 Preferred stock not subject to mandatory redemption 20,000 Preferred stock subject to mandatory redemption 15,000 Long-term debt 138,784 Minority interest in consolidated subsidiary 100,000 Obligations under capital leases 254,894 Notes payable to banks 139,173 Long-term debt and preferred stock - current portion 171,983 Obligations under capital leases -- current portion 94,645 Accrued taxes 12,693 Interest on long-term debt 115,012 Cash and cash equivalents (3,790) Rate reduction bond obligation 2,188,000 Accrued interest 115,012 Accumulated deferred income taxes 12,693 Operating revenues 115,012 Fuel, purchased and net interchange power - Operating expenses -- operation -- other - Federal and state income taxes - Income taxes - Investment in subsidiary companies 270,000 To record summary entry for NU consolidated - securitization. Note I. Investment in subsidiary companies 270,000 Common stock 1 Capital surplus, paid in 269,999 To eliminate impact of pro forma adjustments on investment in subsidiary companies from securitization. Note J. Cash 349,539 Obligations under capital leases 254,894 Obligations under capital leases - current portion 94,645 To eliminate impact of intercopmany lease pay down from securitization.
Notes related to Con Edison and Northeast Utilities incremental debt issuance Note K. Unaudited Pro Forma Combined Condensed Income Statement The following Pro Forma consolidated financial information is based upon historical consolidated financial statements of Consolidated Edison and Northeast Utilities. These Pro Forma financial statements reflect the $1,410 million incremental debt issuance at 8.5%. Note L. Income Taxes Reflects tax benefit, based on an assumed tax rate of 35%, from the payments of one year of interest charges described in Note K. $ 41,937 ========== Note M. Interest Charges Reflects interest over one year at an effective interest rate of 8.5% on incremental debt. (See Note M) $ 119,821 ========== A 1/8 of 1% variation in the interest rate would result in a $1.8 million change in interest expense. Note N. Cash Reflects net increase to cash after payment of interest expense for a full year and tax benefit. $2,081,774 (See Notes J, K, M and O) Reflects cash payment for preferred stock dividend (See Note P). ($67,500) ---------- $2,014,274 ========== Note O. Incremental debt financing (new issuance) Equals New CEI Debt Limit ($4.75 billion) less acquisition financing ($1.97 billion) and short-term debt outstanding ($1.37 billion) as of 9/30/2000. $1,409,658 ========== Note P. Stockholders' equity Reflects net change to stockholders' equity for interest expenses, tax benefit and preferred stock dividends for a full year. ($145,384) ========== Note Q. Preferred stock Reflects $750 million of Preferred Stock $ 750,000 ========== Note R. Preferred stock dividends Preferred stock dividend declared bearing dividend yield of 9% over one year. $ 67,500 ========== A 1/8 of 1% variation in the dividend yield would result in a $84 thousand change in preferred stock dividends.