<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration no. 333-10485
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY 9, 1998
6,100,000 SHARES
GPU, INC.
COMMON STOCK
(PAR VALUE $2.50 PER SHARE)
------------------------
The last reported sale price of the Common Stock, which is quoted under the
symbol "GPU", on the New York Stock Exchange on February 12, 1998 was $39 9/16
per share.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE DISCOUNT(1) COMPANY(2)
---------------- ---------------- ----------------
<S> <C> <C> <C>
Per Share............................. $39.5625 $1.07 $38.4925
Total(3).............................. $241,331,250 $6,527,000 $234,804,250
</TABLE>
- ---------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting estimated expenses of $205,000 payable by the Company.
(3) The Company has granted the Underwriters an option for 30 days to purchase
up to an additional 900,000 shares of Common Stock at the initial public
offering price per share, less the underwriting discount, solely to cover
over-allotments. If such option is exercised in full, the total initial
public offering price, underwriting discount and proceeds to Company will be
$276,937,500, $7,490,000 and $269,447,500, respectively. See "Underwriting."
------------------------
The shares offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in
part. It is expected that the certificates for the shares will be ready for
delivery in New York, New York on or about February 19, 1998, against payment
therefor in immediately available funds.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
------------------------
The date of this Prospectus Supplement is February 12, 1998.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
COMMON STOCK, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
S-2
<PAGE> 3
RECENT DEVELOPMENTS
ELECTRIC UTILITY INDUSTRY RESTRUCTURING
New Jersey. In April 1997, the New Jersey Board of Public Utilities
("NJBPU"), issued its final Findings and Recommendations for Restructuring the
Electric Power Industry in New Jersey ("Energy Master Plan") and submitted the
plan to the Governor and the Legislature for their consideration. The NJBPU's
recommendations, implementation of which requires enabling legislation, envision
the deregulation of the generation of electricity, with retail customers being
permitted to choose their electric suppliers, commencing at 10% of load in
October 1998 and expanding to full retail choice by July 2000. Regulated
utilities would continue to have an obligation to serve, at market-based rates,
customers who do not or cannot choose an alternative supplier. The transmission
and distribution of electricity would continue as a regulated monopoly. The
NJBPU has also recommended that, in connection with such restructuring,
utilities implement near-term rate reductions of from 5% to 10%. Under the
NJBPU's proposal, utilities would be afforded an opportunity to recover, through
non-bypassable charges to customers, non-mitigable generation-related stranded
costs, as well as stranded costs from power purchase agreements with non-utility
generators ("NUGs"), subject to attainment of the 5% to 10% rate reduction goal.
In response to the NJBPU's directive, in July 1997, Jersey Central Power &
Light Company ("JCP&L") filed its restructuring proposals which included
petitions relating to stranded cost recovery, unbundling of rates and
restructuring. The stranded cost petition seeks to recover approximately $1.65
billion, of which approximately $1.5 billion is for above-market NUG contracts.
The $1.65 billion excludes above-market generation costs related to the Oyster
Creek nuclear generating station, which are proposed to be recovered primarily
through a levelized annual payment as part of the delivery charge through 2009.
Numerous parties have intervened in these proceedings and are actively
contesting various aspects of JCP&L's filings, including the quantification of
stranded costs and the applicable rate recovery mechanisms, as well as the
extent to which costs should be allocated to the distribution function in the
rate unbundling process. Principal stranded cost issues include recovery of
plant capital additions since JCP&L's last base rate case in 1992, projections
of future electricity prices on which the calculations are based, and the
appropriateness of earning a return on stranded investment. Consultants retained
by the NJBPU's Staff, the Advocate and other parties have proposed that JCP&L's
stranded cost recoveries should be substantially lower than the levels JCP&L is
seeking.
On February 4, 1998, the NJBPU in an oral decision upheld an interim ruling
by the Administrative Law Judge ("ALJ") in the proceeding denying JCP&L's
request to recover an estimated $150 million of distribution revenue
requirements based on post-1992 capital additions and increased expenses as
inconsistent with the Energy Master Plan. The NJBPU stated, however, that JCP&L
could seek to recover these costs, which are being collected in its current
bundled rates, in a base rate case.
On February 11, 1998, the NJBPU issued a written order (dated February 9,
1998) memorializing and clarifying its February 4th action. In its written
order, the NJBPU substantially affirmed the ALJ's ruling, but clarified that (1)
JCP&L could update its 1992 cost of service study to reflect adjustments
consistent with the NJBPU approved "Global Settlement" which, among other
things, recognized certain increased expense levels and reductions to base rates
and (2) all of the updated post-1992 cost information JCP&L had submitted in the
proceeding should remain in the record which the NJBPU will utilize in
establishing a reasonable level of rates going forward.
The NJBPU emphasized in its order that, although the Energy Master Plan
directs that unbundled rates be "revenue neutral", the final rates implemented
upon retail competition "will be lower than the current bundled rates". This
directive has been recognized in JCP&L's initial restructuring filing which
proposed revenue reductions totalling approximately $185 million annually. The
NJBPU went on to state that "after receipt of . . . the Initial Decisions from
the ALJ's, the [NJBPU] will render final and comprehensive decisions on the
precise level of aggregate rate
S-3
<PAGE> 4
reductions required . . . in order to establish a reasonable level of rates and
to establish a reasonable level for each component thereof, going forward, which
accomplish the primary goals of electric restructuring to introduce competition
and lower electricity costs for consumers." Moreover, the NJBPU stated that
after the ALJ had issued an Initial Decision, it will allow the parties to make
additional arguments regarding the need to reflect updated cost information, and
would "reserve judgment at this time on the need for additional testimony,
hearing and briefs with respect to this data."
If the NJBPU were to accept the positions of various parties or their
consultants as described above or were ultimately to deny JCP&L's request to
recover post-1992 capital additions and expenses, it would have a material
adverse impact on JCP&L's stranded cost recovery, restructuring proceeding and
future earnings.
Discovery, evidentiary hearings and related proceedings are continuing. ALJ
recommended decisions concerning stranded costs and rate unbundling are
scheduled to be issued in May 1998 and a final NJBPU decision is expected in
time for retail access to commence as scheduled in October 1998. There can be no
assurance as to the outcome of these proceedings.
Pennsylvania. In 1996, Pennsylvania adopted comprehensive legislation which
provides for the restructuring of the electric utility industry. Under the
legislation, the generation of electricity would be deregulated with one-third
of retail customers permitted to choose their electric suppliers commencing
January 1, 1999, two-thirds permitted to choose by January 1, 2000 and all
retail customers permitted to choose by January 1, 2001. Regulated utilities
would continue to have an obligation to serve customers who do not or cannot
choose an alternative supplier. The transmission and distribution of electricity
would continue as a regulated monopoly. The legislation gives utilities the
opportunity to recover, through non-bypassable charges to customers, prudently
incurred stranded costs, subject to certain conditions, including the
demonstration of appropriate mitigation efforts. It also provides that rates for
transmission and distribution of electricity are generally capped for 4 1/2
years and generation rates for customers who do not choose an alternative
supplier are generally capped for up to nine years.
Metropolitan Edison Company ("Met-Ed") and Pennsylvania Electric Company
("Penelec") filed their proposed restructuring plans in June 1997, which, among
other things, requested recovery of $1.4 billion and $1.3 billion, respectively,
of stranded costs and provided for unbundling of rates. Numerous parties have
intervened in these proceedings and are actively contesting various aspects of
the filings, including the quantification of stranded costs and the fixing of
the level of the so-called "generation credit" for customers who choose
alternative suppliers. Discovery, evidentiary hearings and related proceedings
are continuing. Decisions from the Pennsylvania Public Utility Commission
("PaPUC") are expected by June 30, 1998. There can be no assurance as to the
outcome of these proceedings.
Pennsylvania utilities were also required to implement retail access pilot
programs, with Met-Ed's and Penelec's pilots having commenced on November 1,
1997, covering 5% of each company's load.
In December 1997, the PaPUC rejected PECO Energy Company's ("PECO")
restructuring settlement and approved an alternate plan for PECO based on its
findings in that case. Among other things, the alternate plan accelerates the
pace of retail competition and reduces the amount of PECO's recoverable stranded
costs. PECO has appealed the PaPUC's decision. On January 26, 1998, PECO
announced a fourth quarter pre-tax charge to income of $3.1 billion "reflecting
the effects of the PaPUC order."
Met-Ed and Penelec believe that the PaPUC's decision in the PECO case was
based on the specific facts and circumstances of that proceeding. Met-Ed and
Penelec further believe that they have demonstrated in their restructuring
proceedings ample evidence to distinguish sufficiently their cases from PECO's
and that the PaPUC should not, therefore, apply its findings in the PECO case to
their pending restructuring plans. If, however, the PaPUC were to apply these
findings, it would have
S-4
<PAGE> 5
a material adverse impact on Met-Ed's and Penelec's stranded cost recovery,
restructuring proceedings and future earnings.
GENERATION DIVESTITURE
In October 1997, the Company announced that it would begin the process of
divesting its fossil and hydroelectric generating facilities. These generating
facilities represent approximately 5,300 MW of installed capacity with a net
book value of approximately $1.1 billion at September 30, 1997. The Company
intends to auction these facilities in a multi-stage process and presently
anticipates entering into definitive agreements by the end of 1998. Subject to
receipt of the various required regulatory approvals, the Company believes that
the sale could be completed by mid-1999.
SALE OF SOLARIS POWER
In January 1998, the GPU International Group completed the previously
announced sale of its 50% interest in Solaris Power to The Australian Gas Light
Company for a purchase price of US$135.2 million and a 10.36% interest in Allgas
Energy Limited, an Australian gas distribution company, valued at approximately
US$9.5 million. The sale resulted in a gain (after taxes) of approximately
US$18,3 million. The Company has applied the net cash proceeds from the sale to
retire outstanding long-term debt incurred in connection with the Solaris Power
and PowerNet acquisitions.
PRICE RANGE OF COMMON STOCK
The high and low sales prices of the Common Stock based on New York Stock
Exchange Composite Transactions as reported in The Wall Street Journal for the
fourth quarter of 1997 and the first quarter of 1998 (through February 11, 1998)
were $42 3/4 and $35 3/8 and $42 1/8 and $38 11/16, respectively.
1997 RESULTS OF OPERATIONS
On January 20, 1998, the Company reported earnings for the year ended
December 31, 1997 of $335.1 million, or $2.77 per share, as compared to 1996
earnings of $298.4 million, or $2.47 per share. Operating revenues for 1997 were
$4,143.4 million as compared to 1996 operating revenues of $3,970.7 million.
Earnings for 1997 included a previously reported non-recurring charge of
$109.3 million, or $0.90 per share, for a windfall profits tax imposed by the
Government of the United Kingdom on privatized utilities, including Midlands
Electricity plc, in which the Company owns a 50% share. In 1996, the Company
took a non-recurring charge of $74.5 million, or $0.62 per share, for the costs
related to voluntary enhanced retirement programs.
The 1997 earnings increase was mainly due to increased earnings, excluding
these non-recurring charges, from the GPU International Group (including the
result of the Company's policy of accruing U.S. income tax on its worldwide
operations, which reduced its federal income tax liability by $0.31 per share);
reduced operation and maintenance expenses; increased kilowatt-hour sales to
domestic utility customers; and the recording of step increases in operating
revenues by Met-Ed and Penelec as a result of including their energy cost rates
in base rates and the cessation of deferred energy accounting, both effective
January 1, 1997. These increases were partially offset by higher depreciation
and financing expenses, increased amortizations due to a rate cap on JCP&L's
earnings and the absence, in 1997, of gains associated with the 1996
reacquisition of preferred stock.
The Company also reported earnings for the quarter ended December 31, 1997
of $92.9 million, or $0.77 per share, as compared to $80.7 million, or $0.67 per
share, for the same period in 1996.
------------------------
For further information, reference is made to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997 and Current Reports
on Form 8-K, dated January 20, February 6 and February 11, 1998, which are
incorporated herein by reference.
S-5
<PAGE> 6
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the Underwriters named below, and each of
such Underwriters, for whom Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated and Morgan Stanley & Co. Incorporated are acting as
representatives, has severally agreed to purchase from the Company, the
respective number of shares of Common Stock set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON
UNDERWRITER STOCK
----------------------------------------------------------------- ---------
<S> <C>
Goldman, Sachs & Co.............................................. 1,370,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................ 1,370,000
Morgan Stanley & Co. Incorporated................................ 1,370,000
ABN AMRO Chicago Corporation..................................... 95,000
Chase Securities Inc. ........................................... 95,000
CIBC Oppenheimer Corp. .......................................... 95,000
Credit Lyonnaise Securities (USA) Inc. .......................... 95,000
Credit Suisse First Boston Corporation........................... 95,000
Donaldson, Lufkin & Jenrette Securities Corporation.............. 95,000
A.G. Edwards & Sons, Inc. ....................................... 95,000
EVEREN Securities, Inc. ......................................... 95,000
J.P. Morgan Securities Inc. ..................................... 95,000
PaineWebber Incorporated......................................... 95,000
SBC Warburg Dillon Read Inc. .................................... 95,000
Smith Barney Inc. ............................................... 95,000
Societe Generale Securities Corporation.......................... 95,000
UBS Securities LLC............................................... 95,000
Advest, Inc. .................................................... 60,000
Janney Montgomery Scott, Inc. ................................... 60,000
Edward D. Jones & Co., L.P. ..................................... 60,000
Legg Mason Wood Walker, Incorporated............................. 60,000
McDonald & Company Securities, Inc. ............................. 60,000
Piper Jaffray Inc. .............................................. 60,000
Tucker Anthony Incorporated...................................... 60,000
Wheat, First Securities, Inc. ................................... 60,000
BNY Capital Markets, Inc. ....................................... 30,000
HSBC Securities, Inc. ........................................... 30,000
Paribas Corporation.............................................. 30,000
Pryor, McClendon, Counts & Co., Inc. ............................ 30,000
Muriel Siebert & Co., Inc. ...................................... 30,000
The Williams Capital Group, L.P. ................................ 30,000
---------
Total.................................................. 6,100,000
=========
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the shares of Common Stock
offered hereby, if any are taken.
The Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement and in part to certain securities
dealers at such price less a concession of $0.62 per share. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $0.10 per
share to certain
S-6
<PAGE> 7
brokers and dealers. After the shares of Common Stock are released for sale to
the public, the offering price and other selling terms may from time to time be
varied by the representatives.
The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus Supplement to purchase up to an aggregate of
900,000 additional shares of Common Stock solely to cover overallotments, if
any. If the Underwriters exercise their over-allotment option, the Underwriters
have severally agreed, subject to certain conditions, to purchase approximately
the same percentage thereof that the number of shares to be purchased by each of
them, as shown in the foregoing table, bears to the 6,100,000 shares of Common
Stock offered.
In connection with this offering, the Underwriters may purchase and sell
the Common Stock in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with this offering. Stabilizing
transactions consist of certain bids or purchases for the purpose of preventing
or retarding a decline in the market price of the Common Stock; and syndicate
short positions involve the sale by the Underwriters of a greater number of
shares of Common Stock than they are required to purchase from the Company in
this offering. The Underwriters also may impose a penalty bid, whereby selling
concessions allowed to syndicate members or other broker-dealers in respect of
the shares of Common Stock sold in this offering for their account, may be
reclaimed by the syndicate if such shares of Common Stock are repurchased by the
syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Common Stock,
which may be higher than the price that might otherwise prevail in the open
market; and these activities, if commenced, may be discontinued at any time.
These transactions may be effected on the New York Stock Exchange or otherwise.
From time to time certain of the Underwriters have been retained to
provide, and continue to provide, investment banking services to the Company and
its affiliates.
Affiliates of certain of the Underwriters are lenders to affiliates of the
Company under credit facilities entered into in connection with the Company's
acquisition of its interests in Midlands Electricity plc and PowerNet and will
receive a portion of the amounts repaid under such credit facilities from the
proceeds of the offering. See "Use of Proceeds." Because more than 10% of the
net proceeds of the offering will be paid to affiliates of members of the
National Association of Securities Dealers, Inc. (the "NASD") who are
participating in the offering, the offering is being made pursuant to Rule
2710(c)(8) of the Conduct Rules of the NASD.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
S-7
<PAGE> 8
[This page has been intentionally left blank.]
<PAGE> 9
PROSPECTUS
7,000,000 SHARES
GPU, INC.
COMMON STOCK
(PAR VALUE $2.50 PER SHARE)
------------------------
GPU, Inc. (the "Company") may offer, from time to time, up to 7,000,000
shares (the "Additional Common Stock") of its Common Stock, par value $2.50 per
share. The Additional Common Stock may be offered in amounts, at prices and on
terms to be determined at the time of the offering, which will be set forth in a
Prospectus Supplement relating thereto (a "Prospectus Supplement"). The Common
Stock of the Company is, and the Additional Common Stock is expected to be upon
notice of issuance, listed on the New York Stock Exchange (Symbol: GPU). On
December 10, 1997, the last reported sale price of the Company's Common Stock on
the New York Stock Exchange was $39 per share.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The Additional Common Stock may be sold to or through underwriters, dealers
or agents, as designated from time to time, or directly to one or more
purchasers. See "Plan of Distribution". The names of any such underwriters,
dealers or agents involved in the sale of the Additional Common Stock in respect
of which this Prospectus is being delivered, the number of shares of Additional
Common Stock to be purchased by or through any such underwriters, dealers or
agents and any applicable commissions or discounts, or other terms of the
offering, will be set forth in a Prospectus Supplement. The net proceeds to the
Company will also be set forth in the Prospectus Supplement.
The date of this Prospectus is January 9, 1998.
<PAGE> 10
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE ADDITIONAL COMMON
STOCK, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN
SUCH ADDITIONAL COMMON STOCK, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION
WITH THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF
DISTRIBUTION".
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "1934 Act") and in accordance therewith files reports
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports and other information can be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at its regional offices at 500 West
Madison Street, Chicago, Illinois 60661 and Seven World Trade Center, New York,
New York 10048. Copies of such material can also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. Such material can also be inspected at the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, where the
Company's Common Stock is listed. The Commission maintains a Web site
(http://www.sec.gov) that contains reports and other information filed
electronically by the Company with the Commission.
---------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFER CONTAINED HEREIN. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION IN WHICH SUCH OFFER MAY NOT LAWFULLY BE MADE.
---------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the 1934 Act are incorporated herein by reference:
The Company's Annual Report on Form 10-K for the year ended December 31,
1996;
The Company's Quarterly Reports on Form 10-Q for the quarters ended March
31, June 30 and September 30, 1997; and
The Company's Current Reports on Form 8-K dated April 2, April 11, May 7,
October 15 and December 12, 1997.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act prior to the termination of the offering of
the Additional Common Stock shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
---------------------
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED,
UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE
DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED BY REFERENCE
IN THIS PROSPECTUS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS NOT SPECIFICALLY
INCORPORATED BY REFERENCE THEREIN. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED
TO: INVESTOR RELATIONS, GPU, INC., 310 MADISON AVENUE, MORRISTOWN, NEW JERSEY
07962-1957, (973) 455-8204.
2
<PAGE> 11
CERTAIN CONSOLIDATED FINANCIAL INFORMATION (1)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, TWELVE
------------------------------------ MONTHS ENDED
1994 1995 1996 SEPTEMBER 30, 1997
---------- ---------- ---------- ------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Income Summary:
Operating Revenues.................... $3,649,516 $3,804,656 $3,918,089 $3,987,604
Net Income............................ 163,688 440,135 298,352 322,844
Earnings Per Share.................... $ 1.42 $ 3.79 $ 2.47 $ 2.67
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-----------------------------------------
DECEMBER 31, 1996 ACTUAL AS ADJUSTED(2)
------------------ ------------------ ------------------
AMOUNT % AMOUNT % AMOUNT %
---------- ----- ---------- ----- ---------- -----
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Capital Structure:
Long-Term Debt (including
unamortized net discount)
(3)......................... $3,345,599 48.4% $3,262,825 47.0% $4,848,055 55.3%
Preferred Stock (including
premium).................... 190,478 2.7 170,478 2.5 170,478 1.9
Subsidiary-Obligated
Mandatorily Redeemable
Preferred Securities........ 330,000 4.8 330,000 4.8 330,000 3.8
Common Equity(4).............. 3,047,587 44.1 3,173,919 45.7 3,420,078 39.0
---------- ---- ---------- ---- ---------- ----
Total.................... $6,913,664 100.0% $6,937,222 100.0% $8,768,611 100.0%
========== ==== ========== ==== ========== ====
</TABLE>
- ---------------
(1) This information should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 and Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997.
(2) Reflects the issuance of long-term debt associated with the acquisition of
PowerNet Victoria ("PowerNet") in November 1997, the sale of the Additional
Common Stock offered hereby and the application of the net proceeds thereof
to repay a portion of the indebtedness incurred to acquire PowerNet and the
Company's 50% ownership interest in Midlands Electricity plc ("Midlands").
Also reflects the sale of 1,491 shares and 34,933 shares of Common Stock in
October and November 1997, respectively, pursuant to the Company's Dividend
Reinvestment and Stock Purchase Plan. Does not reflect the impact of the
Company's sale of Solaris Power.
(3) Includes obligations due within one year.
(4) The Company has 350,000,000 shares of Common Stock authorized, of which
120,789,828 shares were outstanding at September 30, 1997.
3
<PAGE> 12
THE COMPANY
The Company, a Pennsylvania corporation, is a holding company registered
under the Public Utility Holding Company Act of 1935 (the "1935 Act"). The
Company does not directly operate any utility properties, but owns all of the
outstanding common stock of three domestic electric utilities serving customers
in New Jersey -- Jersey Central Power & Light Company ("JCP&L") -- and
Pennsylvania -- Metropolitan Edison Company ("Met-Ed") and Pennsylvania Electric
Company ("Penelec"). The business of these subsidiaries (which are known
collectively as "GPU Energy") consists predominantly of the generation,
transmission, distribution and sale of electricity. The Company also owns all of
the common stock of GPU International, Inc., GPU Power, Inc. and GPU Electric,
Inc. (collectively, the "GPU International Group"), which develop, own and
operate generation, transmission and distribution facilities in the United
States and in foreign countries. GPU Service, Inc., a service company; GPU
Nuclear, Inc., which operates and maintains the nuclear units of GPU Energy; GPU
Generation, Inc., which operates and maintains the GPU Energy fossil-fueled and
hydroelectric units; and GPU Advanced Resources, Inc., which engages in energy
services, retail energy sales and telecommunication services, are also
wholly-owned subsidiaries of the Company. The income of the Company consists
predominantly of earnings on the common stock of the GPU Energy companies.
As a registered holding company, the Company is subject to regulation by
the Commission under the 1935 Act. Each GPU Energy company's retail rates,
conditions of service and issuance of securities, as well as other matters
relating to each GPU Energy company, are subject to regulation in the state in
which such GPU Energy company operates -- in New Jersey by the New Jersey Board
of Public Utilities and in Pennsylvania by the Pennsylvania Public Utility
Commission. The Nuclear Regulatory Commission regulates the construction,
ownership and operation of nuclear generating stations. The GPU Energy companies
are also subject to wholesale and transmission rate and other regulation by the
Federal Energy Regulatory Commission under the Federal Power Act. The GPU
International Group is generally exempt from most regulation under the 1935 Act
and from federal and state rate regulation; certain of its foreign operations
are subject to rate and other regulation.
The electric generating and transmission facilities of GPU Energy are
physically interconnected and are operated as a single integrated and
coordinated system serving a population of approximately five million in New
Jersey and Pennsylvania. For the year 1996, GPU Energy's revenues were about
equally divided between Pennsylvania customers and New Jersey customers. During
1996, residential sales accounted for about 42% of operating revenues from
customers and 36% of kilowatt-hour (KWH) sales to customers; commercial sales
accounted for about 35% of operating revenues from customers and 33% of KWH
sales to customers; industrial sales accounted for about 21% of operating
revenues from customers and 28% of KWH sales to customers; and sales to rural
electric cooperatives, municipalities, street and highway lighting, and others
accounted for about 2% of operating revenues from customers and 3% of KWH sales
to customers. GPU Energy also makes interchange and spot market sales of
electricity to other utilities.
Through September 30, 1997, the Company had invested an aggregate of $218
million in the GPU International Group and had also guaranteed up to an
additional $842 million of the Group's obligations. In November 1997, the
Company invested an additional $50 million and guaranteed an additional $450
million of GPU International Group obligations in connection with the
acquisition of PowerNet, which owns and maintains the high voltage transmission
system in the State of Victoria, Australia. The PowerNet transmission system
serves all of Victoria which has an area of 87,900 square miles and has a
population of approximately 4.5 million.
The GPU International Group has ownership interests in eight operating
cogeneration plants in the United States totaling 847 megawatts (MW) (of which
the GPU International Group's equity interest represents 308 MW) of capacity and
twelve operating generating facilities located in foreign countries totaling
3,662 MW (of which the GPU International Group's equity interest represents 704
4
<PAGE> 13
MW) of capacity. It also has a 50% ownership interest in Midlands, a regional
electricity company, which serves approximately 2.2 million customers in
England. Following its acquisition of PowerNet in November 1997 and in order to
comply with Victoria's cross-ownership restrictions, in December 1997, the
Company tentatively agreed to sell its entire 50% interest in Solaris Power, an
Australian distribution system serving customers in and around Melbourne which
the Company acquired in 1995. GPU will receive approximately US $141 million and
an approximately 10.36% interest in Allgas Energy Limited, an Australian gas
distribution company, valued at approximately US $9.9 million. The Company
intends to complete the sale in January 1998. The GPU International Group is
continuing to pursue investment opportunities and has a number of projects at
various stages of development.
The Company's principal executive office is located at 300 Madison Avenue,
Morristown, New Jersey 07962-1911 and its telephone number is (973) 455-8200.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock of the Company is listed on the New York Stock Exchange.
The following table shows the range of the high and low sales prices of the
Common Stock based on New York Stock Exchange Composite Transactions as reported
in The Wall Street Journal and the dividends paid for the period indicated.
<TABLE>
<CAPTION>
DIVIDENDS
YEAR HIGH LOW PER SHARE
- ----- ---- ---- ---------
<S> <C> <C> <C> <C>
1995 First Quarter..................................... $ 30 5/8 $ 26 1/4 $.45
Second Quarter.................................... 31 28 1/4 .47
Third Quarter..................................... 31 1/4 28 1/8 .47
Fourth Quarter.................................... 34 30 5/8 .47
1996 First Quarter..................................... $ 35 1/8 $ 31 1/8 $.47
Second Quarter.................................... 35 1/4 30 1/8 .485
Third Quarter..................................... 35 30 1/2 .485
Fourth Quarter.................................... 34 3/8 30 3/4 .485
1997 First Quarter..................................... $ 36 1/8 $ 32 $.485
Second Quarter.................................... 36 7/16 30 3/4 .50
Third Quarter..................................... 36 9/16 32 3/4 .50
Fourth Quarter (through December 10, 1997)........ 40 1/8 35 3/8 .50
</TABLE>
On December 10, 1997, the closing price of the Common Stock was $39 per
share.
Dividend declaration dates are the first Thursday of April, June, October
and December. Dividend payment dates are the last Wednesday of February, May,
August and November.
5
<PAGE> 14
USE OF PROCEEDS
Net proceeds of the sale of the Additional Common Stock will be used by the
Company to repay a portion of the bank borrowings incurred by the GPU
International Group to acquire its interests in Midlands and PowerNet. The bank
borrowings mature in May, 2001 for Midlands and in November, 2002 for PowerNet
and bear interest at variable rates, currently 8.0875% and 6.20%, respectively.
Net proceeds may also be used by the Company (a) to make cash capital
contributions to its subsidiaries, which in turn will apply such funds (i) to
repay outstanding indebtedness, (ii) to redeem outstanding senior securities or
reacquire such securities in open market transactions, (iii) for construction
purposes, (iv) for other corporate purposes or (v) to reimburse their treasuries
for funds previously expended therefrom for such purposes, (b) to reimburse the
Company's treasury for funds previously expended therefrom for such purposes,
(c) to repay outstanding indebtedness of the Company, and (d) for other Company
corporate purposes.
DESCRIPTION OF THE COMMON STOCK
The holders of Common Stock, the only class of authorized capital stock of
the Company, are entitled to pro rata dividends when and if declared by the
Board of Directors. Each share is entitled to cumulative voting at all elections
of directors and to one vote for all other purposes and to share pro rata in the
Company's net assets in the event of liquidation.
The outstanding shares of the Company's Common Stock are, and, upon the
issuance thereof and payment therefor, the shares of Additional Common Stock so
issued will be, fully paid and non-assessable. The outstanding shares of the
Company's Common Stock are listed on the New York Stock Exchange, and it is
expected that the Additional Common Stock will be listed on the New York Stock
Exchange upon notice of issuance.
The Company has 350,000,000 authorized shares of Common Stock, par value
$2.50 per share. At September 30, 1997, 120,789,828 shares were issued and
outstanding. Stockholders have no preemptive rights to subscribe for shares of
Common Stock.
The Transfer Agent and Registrar for the Common Stock is ChaseMellon
Shareholder Services, L.L.C., New York, New York.
PLAN OF DISTRIBUTION
The Company may offer or sell Additional Common Stock to one or more
underwriters for public offering and sale by them or directly to one or more
purchasers. In addition, the Company may sell the Additional Common Stock to one
or more agents for its or their own accounts or for resale. The Company may sell
Additional Common Stock as soon as practicable after effectiveness of the
Registration Statement provided that favorable market conditions exist. Any such
underwriter or agent involved in the offer and sale of the Additional Common
Stock will be named in an applicable Prospectus Supplement.
Underwriters may offer and sell the Additional Common Stock at a fixed
price or prices, which may be changed, or from time to time at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. In connection with the sale of Additional Common
Stock, underwriters may be deemed to have received compensation from the Company
in the form of underwriting discounts or commissions. Underwriters may sell
Additional Common Stock in block transactions to certain institutions or to or
through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters. Any agent or agents
may sell the Additional Common Stock to one or more investors at varying prices
related to prevailing market prices at the time of resale, as determined by such
agent or agents.
6
<PAGE> 15
Any underwriting compensation paid by the Company to underwriters in
connection with the offering of Additional Common Stock, any discounts,
concessions or commissions allowed by underwriters to participating dealers, any
discounts or commissions allowed or paid to any agents and any other terms of
the offering will be set forth in an applicable Prospectus Supplement.
Underwriters, agents and dealers participating in the distribution of the
Additional Common Stock may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
Additional Common Stock may be deemed to be underwriting discounts and
commissions, under the Securities Act of 1933. Underwriters, agents and dealers
may be entitled, under agreement with the Company, to indemnification against
and contribution toward certain civil liabilities, including liabilities under
the Securities Act of 1933, and to reimbursement by the Company for certain
expenses.
In connection with the offering, the underwriters may purchase and sell the
Additional Common Stock in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover short
positions created by the underwriters in connection with the offering.
Stabilizing transactions consist of certain bids or purchases for the purpose of
preventing or retarding a decline in the market price of the Additional Common
Stock; and short positions created by the underwriters involve the sale by the
underwriters of a greater number of shares of Additional Common Stock than they
are required to purchase from the Company in the offering. The underwriters also
may impose a penalty bid, whereby selling concessions allowed to broker-dealers
in respect of the shares of Additional Common Stock sold in the offering may be
reclaimed by the underwriters if such Additional Common Stock is repurchased by
the underwriters in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the shares of
Additional Common Stock, which may be higher than the price that might otherwise
prevail in the open market; and these activities, if commenced, may be
discontinued at any time. These transactions may be effected in the
over-the-counter market or otherwise.
Underwriters, agents and dealers may engage in transactions with, or
perform services for, the Company and/or any of its affiliates in the ordinary
course of business.
EXPERTS
The consolidated financial statements and financial statement schedule
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996 are incorporated herein by reference in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
said firm as experts in auditing and accounting.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Berlack,
Israels & Liberman LLP, New York, New York and for any underwriters or agents by
Winthrop, Stimson, Putnam & Roberts, New York, New York. Berlack, Israels &
Liberman LLP and Winthrop, Stimson, Putnam & Roberts may rely on Ballard Spahr
Andrews & Ingersoll, Philadelphia, Pennsylvania with respect to matters of
Pennsylvania law. Members and attorneys of Berlack, Israels & Liberman LLP own
an aggregate of 13,433 shares of the Company's Common Stock.
7
<PAGE> 16
=========================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES, OR AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES, IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Recent Developments..................... S-3
Underwriting............................ S-6
PROSPECTUS
Available Information................... 2
Incorporation of Certain Documents By
Reference............................. 2
Certain Consolidated Financial
Information........................... 3
The Company............................. 4
Price Range of Common Stock and
Dividends............................. 5
Use of Proceeds......................... 6
Description of the Common Stock......... 6
Plan of Distribution.................... 6
Experts................................. 7
Legal Matters........................... 7
</TABLE>
=========================================================
=========================================================
6,100,000 SHARES
GPU, INC.
COMMON STOCK
(PAR VALUE $2.50 PER SHARE)
------------------
PROSPECTUS SUPPLEMENT
------------------
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
REPRESENTATIVES OF THE UNDERWRITERS
=========================================================
