<TABLE>
<CAPTION>
EXHIBIT FS-1
Energy East Corporation
Combined Condensed Balance Sheet
Giving Effect to the CMP Group, CTG Resources
and Berkshire Energy Resources Mergers
At June 30, 2000
Actual and Pro Forma
(Unaudited)
Berkshire
Energy CMP CTG Energy Merger Pro Forma
East Group Resources Resources Pro Forma Energy
Actual Actual Actual Actual Adjustments East
---------- ---------- ---------- ------------ ------------- ----------
Assets (thousands)
<S> <C> <C> <C> <C> <C> <C>
Current Assets
Cash and cash equivalents $ 25,449 $ 226,491 $ 34,507 $ 554 ($188,013) (4,9) $ 98,988
Special deposits 427 - - - - 427
Temporary investments 459,378 - 2,467 - (450,000) 11,845
Accounts receivable, net 169,388 109,763 39,608 6,294 - (4) 325,053
Other 76,527 15,311 22,891 6,981 - 121,710
---------- ---------- ---------- ------------ ------------- ----------
Total Current Assets 731,169 351,565 99,473 13,829 (638,013) 558,023
Utility Plant, at Original Cost 4,582,976 1,356,051 541,005 133,083 - 6,613,115
Less accumulated depreciation 2,232,112 561,039 204,229 43,343 - 3,040,723
---------- ---------- ---------- ------------ ------------- ----------
Net utility plant in service 2,350,864 795,012 336,776 89,740 - 3,572,392
Construction work in progress 36,511 33,092 4,301 568 - 74,472
---------- ---------- ---------- ------------ ------------- ----------
Total Utility Plant 2,387,375 828,104 341,077 90,308 - 3,646,864
Other Property and Investments, Net 148,462 58,637 11,221 - - 218,320
Regulatory Assets 295,915 389,668 13,282 6,494 - 705,359
Other Assets 283,126 138,809 21,944 1,416 55,285 (5) 500,580
Goodwill 302,601 - - 1,952 662,945 (6,7) 967,498
---------- ---------- ---------- ------------ ------------- ----------
Total Assets $4,148,648 $1,766,783 $ 486,997 $ 113,999 $ 80,217 $6,596,644
========== ========== ========== ============ ============= ==========
</TABLE>
The notes on pages 5 to 7 of this exhibit are an integral part of the pro forma
combined condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
Energy East Corporation
Combined Condensed Balance Sheet
Giving Effect to the CMP Group, CTG Resources
and Berkshire Energy Resources Mergers
At June 30, 2000
Actual and Pro Forma
(Unaudited)
Energy CMP CTG Berkshire Energy Merger Pro Forma
East Group Resources Resources Pro Forma Energy
Actual Actual Actual Actual Adjustments East
----------- ---------- ----------- ------------------ ------------- -----------
Liabilities (thousands)
<S> <C> <C> <C> <C> <C> <C>
Current Liabilities
Current portion of long-term debt
and sinking fund requirements $ 7,355 $ 20,538 $ 3,287 - - $ 31,180
Notes payable and interim financing 167,426 750 - $ 14,595 $ 110,000 292,771
Taxes accrued 54,471 1,020 (2,903) - - 52,588
Other 272,349 123,159 39,505 5,016 18,500 (7) 458,529
----------- ---------- ----------- ------------------ ------------- -----------
Total Current Liabilities 501,601 145,467 39,889 19,611 128,500 835,068
Regulatory Liabilities
Gain on sale of generation assets - 244,312 - - - 244,312
Other 125,123 62,333 86,604 10,260 32,806 (5) 317,126
----------- ---------- ----------- ------------------ ------------- -----------
Total Regulatory Liabilities 125,123 306,645 86,604 10,260 32,806 561,438
Deferred Income Taxes and
Unamortized Investment
Tax credits 240,875 68,870 2,376 1,001 22,479 (5) 335,601
Other 381,736 438,123 - 5,624 - 825,483
Long-term debt 1,304,157 186,057 216,530 40,000 500,000 (9) 2,246,744
----------- ---------- ----------- ------------------ ------------- -----------
Total Liabilities 2,553,492 1,145,162 345,399 76,496 683,785 4,804,334
Commitments - - - - - -
Preferred stock redeemable solely
at the option of subsidiary 10,159 35,528 850 310 - 46,847
Preferred stock subject to mandatory
redemption requirements - 910 - - - 910
Common Stock Equity
Common stock Energy East
($.01 par value, 300,000 shares
authorized and 112,208 shares
outstanding as of June 30, 2000) 1,137 61 (10) 1,198
Common stock CMP Group
($5 par value, 80,000 shares
authorized and 32,443 shares
outstanding as of June 30, 2000) 162,213 (162,213) -
Common stock CTG Resources
(No par value, 20,000 shares
authorized and 8,620 shares
outstanding as of June 30, 2000)
Common stock Berkshire Energy
Resources (No par value, 10,000
shares authorized and 2,529
shares outstanding as of
June 30, 2000)
Capital in excess of par value 740,240 284,462 67,386 29,029 (221,382) (10) 899,735
Retained earnings 883,329 138,508 73,687 8,164 (220,359) 883,329
Accumulated other
comprehensive income (712) - - - - (712)
Unearned compensation - restricted
stock awards - - (325) - 325 -
Treasury stock, at cost (1,500 shares
at June 30, 2000) (38,997) - - - - (38,997)
----------- ---------- ----------- ------------------ ------------- -----------
Total Common Stock Equity 1,584,997 585,183 140,748 37,193 (603,568) 1,744,553
----------- ---------- ----------- ------------------ ------------- -----------
Total Liabilities and
Shareholders' Equity $4,148,648 $1,766,783 $ 486,997 $ 113,999 $ 80,217 $6,596,644
=========== ========== =========== ================== ============= ===========
</TABLE>
The notes on pages 5 to 7 of this exhibit are an integral part of the pro forma
combined condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
Energy East Corporation
Combined Condensed Statement of Income
Giving Effect to the CMP Group, CTG Resources
and Berkshire Energy Resources Mergers
Twelve Months Ended June 30, 2000
Actual and Pro Forma
(Unaudited)
Berkshire
Energy CMP CTG Energy Merger Pro Forma
East Group Resources Resources Pro Forma Energy
Actual Actual Actual Actual Adjustments East
---------- ---------- --------- -------- ----------- -----------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues
Sales and services $2,372,588 $ 961,936 $320,091 $55,807 - $3,710,422
Operating Expenses
Electricity purchased and fuel
used in generation 946,075 524,966 - 1,471,041
Natural gas purchased 266,093 168,037 26,144 - 460,274
Other operating expenses 322,348 242,305 56,205 15,958 - 636,816
Maintenance 87,647 34,948 8,247 684 - 131,526
Depreciation and amortization 124,763 43,310 20,998 4,474 $ 16,574 (11) 210,119
Other taxes 167,043 20,162 23,073 2,295 - 212,573
----------- ---------- --------- -------- ---------- -----------
Total Operating Expenses 1,913,969 865,691 276,560 49,555 16,574 3,122,349
----------- ---------- --------- -------- ---------- -----------
Operating Income 458,619 96,245 43,531 6,252 (16,574) 588,073
Other (Income) and Deductions (39,865) (150,607) (3,237) (2,067) - (195,776)
Merger Related Expenses - 4,710 1,806 707 - 7,223
Interest Charges, Net 125,583 49,278 14,997 4,463 40,000 (9) 234,321
Preferred Stock Dividends
of Subsidiary 1,183 2,595 60 15 - 3,853
----------- ---------- --------- -------- ---------- -----------
Income Before Federal
Income Taxes 371,718 190,269 29,905 3,134 (56,574) 538,452
Federal Income Taxes 128,134 116,509 14,065 1,291 (16,000) (8) 243,999
----------- ---------- --------- -------- ---------- -----------
Income Before
Extraordinary Item 243,584 73,760 15,840 1,843 (40,574) 294,453
Extraordinary Loss on Early
Extinguishment of Debt, Net 17,566 - - - - 17,566
----------- ---------- --------- -------- ---------- -----------
Net Income $ 226,018 $ 73,760 $ 15,840 $ 1,843 ($40,574) $ 276,887
=========== ========== ========= ======== ========== ===========
Earnings per share,
basic and diluted $ 2.00 $ 2.32
Average Common
Shares Outstanding 113,006 6,107 (12) 119,113
</TABLE>
The notes on pages 5 to 7 of this exhibit are an integral part of the pro forma
combined condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
Energy East Corporation
Combined Condensed Statement of Retained Earnings
Giving Effect to the CMP Group, CTG Resources
and Berkshire Energy Mergers
Twelve Months Ended June 30, 2000
Actual and Pro Forma
(Unaudited)
Berkshire
Energy CMP CTG Energy Merger Pro Forma
East Group Resources Resources Pro Forma Energy
Actual Actual Actual Actual Adjustments East
-------- -------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning of period $754,088 $ 94,217 $ 66,841 $ 9,300 ($170,358) $ 754,088
Add net income 226,018 73,760 15,840 1,843 (91,443) 226,018
Deduct dividends on common stock 96,777 29,198 8,994 2,979 (41,171) 96,777
Deduct reacquired preferred stock - 271 - - (271) -
-------- -------- ---------- ---------- ------------ ----------
Balance, end of period $883,329 $138,508 $ 73,687 $ 8,164 ($220,359) $ 883,329
======== ======== ========== ========== ============ ==========
</TABLE>
The notes on pages 5 to 7 of this exhibit are an integral part of the pro forma
combined condensed financial statements.
<PAGE>
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
GIVING EFFECT TO THE CMP GROUP, CTG RESOURCES
AND BERKSHIRE ENERGY RESOURCES MERGERS
Note 1. Unaudited Pro Forma Combined Condensed Financial Statements.
The unaudited pro forma combined condensed financial statements as of and
for the twelve months ended June 30, 2000, have been adjusted to give effect to
the CMP Group, CTG Resources and Berkshire Energy Resources mergers. The
unaudited pro forma combined condensed financial statements reflect preliminary
purchase accounting adjustments in accordance with generally accepted accounting
principles. Estimates relating to the fair value of some assets, liabilities
and other events have been made as more fully described below. Actual
adjustments will be made on the basis of actual assets, liabilities and other
items as of the closing date of the mergers on the basis of appraisals and
evaluations. Therefore, actual amounts may differ from those reflected below.
The unaudited pro forma combined condensed balance sheet and statement of
retained earnings assume that the mergers occurred on June 30, 2000. The
unaudited pro forma combined condensed statement of income for the twelve months
ended June 30, 2000, assumes that the mergers were completed on July 1, 1999,
and does not give effect to the pending sale of Energy East's interest in
nuclear generation assets.
The pro forma combined condensed financial statements should be read in
conjunction with the consolidated historical financial statements and the
related notes of Energy East, CMP Group, CTG Resources and Berkshire Energy
Resources, which are incorporated by reference. The pro forma statements are
for illustrative purposes only. They are not necessarily indicative of the
financial position or operating results that would have occurred had the mergers
been completed on July 1, 1999, or June 30, 2000, as assumed above; nor is the
information necessarily indicative of future financial position or operating
results.
Note 2. Accounting Method.
The CMP Group, CTG Resources and Berkshire Energy Resources mergers will be
accounted for as an acquisition of CMP Group, CTG Resources and Berkshire Energy
Resources by Energy East under the purchase method of accounting in accordance
with generally accepted accounting principles. The amount of goodwill recorded
will reflect the excess of the purchase prices over the estimated net fair value
of assets and liabilities of CMP Group's, CTG Resources' and Berkshire Energy
Resources' utility and nonutility businesses at the time of closing, plus Energy
East's estimated transaction costs related to the mergers. The assets and
liabilities of CMP Group's, CTG Resources' and Berkshire Energy Resources'
unregulated subsidiaries will be revalued to fair value, including an allocation
of goodwill to the subsidiaries, if appropriate.
5
<PAGE>
The remaining goodwill will be allocated to Central Maine Power, Connecticut
Natural Gas, and Berkshire Gas Company and will be recorded as an acquisition
adjustment.
Note 3. Earnings Per Share and Average Shares Outstanding.
The pro forma earnings per share and number of average shares outstanding
have been restated to reflect the average number of shares that would have been
outstanding if the merger occurred at the beginning of the period presented
assuming a conversion of 45% CTG Resources shares into 1.57 Energy East shares
per CTG Resources share. The following table presents the range of shares that
could be issued based on various potential conversion ratios under the merger
agreement:
Conversion ratio 1.36 1.57 1.73
Number of shares (thousands) 5,296 6,107 6,740
Note 4. Cash Consideration.
This amount reflects the cash consideration paid to CMP Group's
shareholders based on a purchase price per share of $29.50 for all of the CMP
Group shares outstanding, the cash consideration paid to CTG Resources
shareholders based on a purchase price per share of $41.00 for 55% of the CTG
Resources shares outstanding and the cash consideration paid to Berkshire Energy
shareholders based on a purchase price per share of $38.00 for all of the
Berkshire Energy shares outstanding.
Note 5. Other Asset and Related Regulatory Liability.
This amount reflects the recognition of an other asset and related
regulatory liability for the estimated difference between CMP Group's, CTG
Resources' and Berkshire Energy Resources' net pension and other postretirement
benefit obligations and the previously recognized asset or liability.
Note 6. Goodwill.
This amount reflects the recognition of an amount of goodwill equal to the
excess of the estimated purchase price of $957 million over the estimated net
fair value of the assets and liabilities of CMP Group acquired of $585.2
million, plus estimated transaction costs of $11 million related to the merger;
an amount of goodwill equal to the excess of the estimated purchase price of
$355 million over the estimated net fair value of the assets and liabilities of
CTG Resources acquired of $140.7 million, plus estimated transaction costs of
$6.5 million related to the merger and an amount of goodwill equal to the excess
of the estimated purchase price of $96 million over the estimated net fair value
of the assets and liabilities of Berkshire Energy Resources acquired of $37.2
million, plus estimated transaction costs of $1 million related to the merger.
6
<PAGE>
Note 7. Merger-Related Costs.
Energy East, CMP Group, CTG Resources and Berkshire Energy Resources will
incur direct expenses related to the merger, including financial advisor, legal
and accounting fees. The pro forma adjustments include an estimate for Energy
East's merger-related costs of $11 million for the CMP Group merger, $6.5
million for the CTG Resources merger, and $1 million for the Berkshire Energy
merger, which are included in goodwill. CMP Group, CTG Resources and Berkshire
Energy Resources expect to incur approximately $7.5 million, $5.5 million and $2
million of merger-related costs, respectively, which they will expense as
incurred. The actual amount of merger-related costs may differ from the amounts
reflected in the unaudited pro forma combined condensed financial statements.
Note 8. Income Taxes.
Income taxes on the pro forma combined condensed income statement have been
based on the statutory rate and adjusted for goodwill, which is not tax
deductible.
Note 9. Notes Payable
This amount reflects the issuance of $500 million principal amount of notes
payable with an assumed interest rate of 8%, the proceeds of which may be used
to fund the consideration paid to CMP Group shareholders.
Note 10. Common Stock.
This amount reflects the Energy East shares to be issued to CTG Resources
shareholders in exchange for 45% of their CTG Resources shares, assuming a
conversion ratio of 1.57 Energy East shares per CTG Resources share, and the
purchase of 55% of their CTG Resources shares for cash.
Note 11. Amortization of Goodwill.
This amount represents the amortization of goodwill, for financial
accounting purposes, over a 40-year period. The goodwill is not amortizable for
tax purposes.
Note 12. Energy East Shares Issued.
Reflects the number of Energy East shares to be issued in the merger with
CTG Resources assuming a conversion of 45% of the CTG Resources shares into 1.57
Energy East shares per CTG Resources share.
7
<PAGE>
