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Previous: CONSOLIDATED EDISON INC, U-1/A, 2001-01-16 |
Next: CONSOLIDATED EDISON INC, U-1/A, EX-99.2, 2001-01-16 |
Exhibit 99.1
NEW CON EDISON
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS AT SEPTEMBER 30, 2000
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Con Edison Northeast Merger
Historical Pro Forma (A) Adjustments
------------ ------------ ------------
<S> <C> <C> <C>
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
============ ============ ============
<CAPTION>
Northeast Incremental Pro Forma
Securitization Financing* Combined
-------------- ------------ ------------
<S> <C> <C> <C>
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
============ ============ ============
</TABLE>
*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)`
<TABLE>
<CAPTION>
Con Edison Northeast Merger
Historical Pro Forma (A) Adjustments
----------- ---------- -----------
<S> <C> <C> <C>
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
=========== ==========
<CAPTION>
Northeast Incremental Pro Forma
Securitization Financing* Combined
-------------- ------------ ----------
<S> <C> <C> <C>
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)
===========
</TABLE>
*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
<TABLE>
<S> <C> <C>
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.
</TABLE>
<TABLE>
<S> <C> <C>
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)
============
</TABLE>
NORTHEAST UTILITIES AND SUBSIDIARIES
PRO FORMA ADJUSTMENTS TO FINANCIAL STATEMENTS
<TABLE>
<S> <C> <C> <C>
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.
</TABLE>
Notes related to Con Edison and Northeast Utilities incremental debt issuance
<TABLE>
<S> <C> <C>
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.
</TABLE>
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