SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of report (date of earliest event reported): February 16, 1996
Pennsylvania Enterprises, Inc.
(Exact name of registrant as specified in its charter
Pennsylvania 0-7812 23-1920170
(State or other jurisdiction) (Commission File Number) (IRS Employer Identification No.)
Wilkes-Barre Center, 39 Public Square, Wilkes-Barre, Pennsylvania 18711-0601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (717)829-8843
Not Applicable
(Former name or former address, if changed since last report)
Page 1 of 15 Pages
The Exhibit Index is on Page 15
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Item 2. Acquisition or Disposition of Assets.
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On February 16, 1996, PG Energy Inc. (formerly known as Pennsylvania Gas and
Water Company), a Pennsylvania corporation ("PGE"), and a wholly-owned subsidiary of
Pennsylvania Enterprises, Inc., a Pennsylvania corporation ("PEI"), consummated the sale
of its regulated water operations and certain related assets (the "Water Business") to
Pennsylvania-American Water Company, a Pennsylvania corporation ("PAWC"), a wholly-owned
subsidiary of American Water Works Company, Inc., a Delaware corporation ("AWWC"), for a
purchase price of $409,000,000 (including the assumption of indebtedness), subject to
certain adjustments (the "Sale of the Water Business"), as set forth in the Asset Purchase
Agreement dated as of April 26, 1995, among PGE, PEI, PAWC and AWWC (the "Asset Purchase
Agreement").
Page 2 of 15 Pages
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Item 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information
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The following PEI unaudited pro forma consolidated financial statements have been
prepared based on PEI's consolidated statement of income for the twelve months ended
December 31, 1994, and PEI's unaudited consolidated balance sheet as of September 30,
1995, and unaudited consolidated statement of income for the nine months then ended, each
as adjusted to reflect the Sale of the Water Business and, based on the Initial Cash
Payment (as such term is defined in the Asset Purchase Agreement) as of September 30,
1995, of $256.3 million, PEI's use of the proceeds from the Sale of the Water Business of
$201.2 million (after the payment of an estimated $55.1 million of federal and state
income taxes on the sale). PEI and PGE intend to use such proceeds together with $1.1
million of net tax benefits resulting from an estimated $9.3 million of transaction costs,
and a $6.5 million premium over book value on the Sale of the Water Business, to (i) repay
the $50.0 million bridge loan (the "Bridge Loan"), the proceeds of which were used to
redeem the $50.0 million principal amount of PGE's 9.57% Series First Mortgage Bonds on
October 13, 1995, (ii) repurchase approximately 225,000 shares of PGE's 9% Cumulative
Preferred Stock at an aggregate repurchase price of $24.3 million (equivalent to $108.00
per share), which includes an aggregate repurchase premium of $1.8 million (equivalent to
$8.00 per share), (iii) repurchase 80,000 shares of PGE's 4.10% Cumulative Preferred Stock
at an aggregate repurchase price of $4.0 million (equivalent to $50.00 per share), (iv)
defease the $30.0 million principal amount of PEI's 10.125% Senior Notes (the "10.125%
Senior Notes") at a total cost of $31.5 million, (v) repurchase 2,000,000 shares of PEI
Common Stock at an aggregate repurchase price of $76.0 million (equivalent to $38.00 per
share), (vi) pay an estimated $2.8 million of costs in connection with the repurchases
referred to in items (ii), (iii) and (v) above and (vii) pay an estimated $7.7 million of
transaction costs relative to the Sale of the Water Business. The repayment of the Bridge
Loan referred to in item (i) above was made on February 16, 1996. The repurchases
referred to in items (ii), (iii) and (v) are currently expected to be made during April,
1996. Since these repurchases involve voluntary sales to PEI and PGE by the holders of
the respective securities, the number and price of the securities purchased may vary
depending on market conditions at the time of the repurchases. The defeasance of the
10.125% Senior Notes referred to in item (iv) is currently planned for June 17, 1996, the
earliest date on which those securities may be defeased. The proceeds from the Sale of
the Water Business which will be used for the repurchases referred to in items (ii), (iii)
and (v) and the defeasance referred to in item (iv) have been temporarily invested by PEI
and PGE pending their use for such purposes.
The unaudited pro forma consolidated financial statements also reflect the
redemption, primarily utilizing bank borrowings, of PGE's 8% Series First Mortgage Bonds,
of which (a) $3,325,000 principal amount of the 8% Series First Mortgage Bonds were
redeemed on July 10, 1995, in connection with the Sale of the Water Business, at an
aggregate redemption price of $3,336,305, which included an aggregate redemption premium
of $11,305, and (b) $210,000 principal amount of the 8% Series First Mortgage Bonds were
redeemed on each of June 1, 1994, and June 1, 1995, pursuant to annual sinking fund
requirements of such bonds, as if such transactions had occurred at the beginning of the
period of the respective financial statements.
Additionally, the unaudited pro forma consolidated statement of income for the
twelve months ended December 31, 1994, reflects (i) the redemption of 150,000 shares of
PGE's 8.90% Cumulative Preferred Stock at an aggregate redemption price of $15,445,500
(equivalent to $102.97 per share), which includes an aggregate redemption premium of
$445,500 (equivalent to $2.97 per share), as if it had occurred at the beginning of the
period (such shares, the proceeds from the issuance of which were used to provide capital
for the Water Business, were redeemed on December 16, 1994, utilizing bank borrowings and
would have been redeemed in connection with the Sale of the Water Business had such shares
Page 3 of 15 Pages
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not been redeemed on December 16, 1994), and (ii) the redemption of 150,000 shares of
PGE's 9.50% Cumulative Preferred Stock at an aggregate redemption price of $15,534,375
(equivalent to $103.5625 per share), which includes an aggregate redemption premium of
$534,375 (equivalent to $3.5625 per share), as if it had occurred at the beginning of the
period (such shares were redeemed on May 31, 1994, utilizing proceeds from a $20 million
term loan to PEI).
The following PEI unaudited pro forma consolidated statements of income reflect
the results of PEI's continuing operations as if the transactions described herein had
occurred at the beginning of the respective periods. The PEI unaudited pro forma
consolidated balance sheet as of September 30, 1995, reflects the financial position of
PEI as if the transactions described herein had occurred on such date. Each of the PEI
unaudited pro forma consolidated statements of income and consolidated balance sheet
include estimates of transaction costs which may differ from the costs ultimately
incurred.
These PEI unaudited pro forma consolidated financial statements should be read in
conjunction with PEI's consolidated financial statements and the notes thereto included in
PEI's latest annual report on Form 10-K.
The PEI unaudited pro forma financial statements have been included herein as
required by the rules of the Securities and Exchange Commission and are provided for
comparative purposes only. The PEI unaudited pro forma financial statements do not
purport to be indicative of the results which would have been obtained if the Sale of the
Water Business had been effected on the date or dates indicated or which may be obtained
in the future. No pro forma adjustment has been made to reflect any interest income that
may be earned on the Initial Cash Payment.
Page 4 of 15 Pages
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PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Statement of Income
for the Twelve Months Ended December 31, 1994
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Adjustments Pro Forma
Before Sale to Reflect After Sale
of Water Sale of Water of Water
Business Business (1) Business
(In thousands of dollars, except per share amounts)
<S> <C> <C> <C>
OPERATING REVENUES $ 167,992 $ - $ 167,992
Cost of gas 98,653 - 98,653
OPERATING MARGIN 69,339 - 69,339
OTHER OPERATING EXPENSES
Operation 22,652 - 22,652
Maintenance 4,436 - 4,436
Depreciation 6,667 - 6,667
Income taxes 4,290 1,640 (2) 5,930
Taxes other than income taxes 10,807 - 10,807
Total other operating expenses 48,852 1,640 50,492
OPERATING INCOME 20,487 (1,640) 18,847
OTHER INCOME, NET 258 226 (3) 484
INCOME BEFORE INTEREST CHARGES 20,745 (1,414) 19,331
INTEREST CHARGES:
Interest on long-term debt 12,591 (3,839) (2) 8,752
Other interest 1,223 8 (2) 1,231
Allowance for borrowed funds used
during construction (21) - (21)
Total interest charges 13,793 (3,831) 9,962
INCOME FROM CONTINUING OPERATIONS
BEFORE SUBSIDIARY'S PREFERRED STOCK
DIVIDENDS 6,952 2,417 9,369
SUBSIDIARY'S PREFERRED STOCK DIVIDENDS 4,639 (4,224) (4) 415
INCOME FROM CONTINUING OPERATIONS
APPLICABLE TO COMMON STOCK $ 2,313 $ 6,641 $ 8,954
COMMON STOCK
Earnings per share of common stock
from continuing operations:
Before premium on redemption of
subsidiary's preferred stock $ .43 $ 2.59
Premium on redemption of
subsidiary's preferred stock (.18) - (5)
Earnings per share of common
stock from continuing operations $ .25 $ 2.59
Weighted average number of shares
outstanding 5,456,568 (2,000,000) (6) 3,456,568
Page 5 of 15 Pages
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PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Consolidated Statement of Income
for the Twelve Months Ended December 31, 1994
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(1) Adjustments reflect the Sale of the Water Business as if it had taken place at the
beginning of the period.
(2) Represents the adjustments to interest on long-term debt and amortization of debt
expense, and the related income tax effect, necessary to reflect the interest on
indebtedness, including $15.4 million of bank borrowings utilized to redeem the $15.0
million principal amount of PGE's 8.90% Cumulative Preferred Stock and $15.5 million
of bank borrowings utilized to redeem the $15.0 million principal amount of PGE's
9.50% Cumulative Preferred Stock, outstanding after (a) application of proceeds from
the Sale of the Water Business to (i) repay the Bridge Loan, the proceeds of which
were used to redeem the $50.0 million principal amount of PGE's 9.57% Series First
Mortgage Bonds on October 13, 1995, and (ii) defease the $30.0 million principal
amount of the 10.125% Senior Notes and (b) the redemption in connection with the Sale
of the Water Business and pursuant to annual sinking fund requirements of $3.7 million
principal amount of PGE's 8% Series First Mortgage Bonds outstanding as of January 1,
1994. The adjustments to interest on long-term debt may be summarized as follows:
(Thousands of dollars)
<S> <C>
Interest on long-term debt for the
twelve months ended December 31, 1994:
Allocated to continuing operations,
as per accompanying unaudited pro forma
consolidated statement of income $ 12,591
Allocated to discontinued operations 12,309
24,900
Deduct:
Interest on debt assumed by PAWC $ 9,347
Interest on debt redeemed, repaid or
to be defeased in connection with
the Sale of the Water Business
9.57% Series First Mortgage Bonds* 4,785
10.125% Senior Notes 3,038
8% Series First Mortgage Bonds 290 (17,460)
Add:
Interest on bank borrowings to reflect the
redemption of $15.0 million principal of PGE's
8.90% Cumulative Preferred Stock and the
payment of a $445,500 premium in connection
therewith as if it occurred at the beginning of
the period instead of December 16, 1994 780
Interest on bank borrowings to reflect the
redemption of $15.0 million principal of PGE's
9.50% Cumulative Preferred Stock and the
payment of a $534,375 premium in connection
therewith as if it occurred at the beginning of
the period instead of May 31, 1994 341
Interest on PGE's bank borrowings to reflect the
redemption of PGE's 8% Series First Mortgage
Bonds as if it occurred at the beginning of
the period 191 1,312
Pro forma interest on long-term debt,
as per accompanying unaudited pro forma
consolidated statement of income $ 8,752
Page 6 of 15 Pages
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* The Bridge Loan that PGE utilized for redemption of the 9.57% Series First
Mortgage Bonds on October 13, 1995, has not been reflected in this summary since
it had no effect on the net adjustment to interest on long-term debt.
Page 7 of 15 Pages
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(3) Represents elimination of the amortization of capital stock expense, net of the
related tax effect, relative to PGE's 9.50% Cumulative Preferred Stock ($90,000) and
PGE's 8.90% Cumulative Preferred Stock ($136,000).
(4) Represents elimination of preferred stock dividends of (i) $2.0 million to reflect
the repurchase of 225,000 shares of PGE's 9% Cumulative Preferred Stock, (ii)
$328,000 to reflect the repurchase of 80,000 shares of PGE's 4.10% Cumulative
Preferred Stock, (iii) $591,000 on the $15.0 million principal amount of PGE's 9.50%
Cumulative Preferred Stock from January 1, 1994 to May 31, 1994, the date of
redemption of such stock and (iv) $1.3 million on the $15.0 million principal amount
of PGE's 8.90% Cumulative Preferred Stock from January 1, 1994 to December 16, 1994,
the date of redemption of such stock.
(5) Reflects elimination of the premiums on the redemption of PGE's 8.90% Cumulative
Preferred Stock ($445,500) and 9.50% Cumulative Preferred Stock ($534,375) from the
calculation of the earnings per share of PEI Common Stock.
(6) Represents the reduction in the number of shares of PEI's Common Stock outstanding
resulting from the application of the proceeds from the Sale of the Water Business to
repurchase 2,000,000 shares of PEI's Common Stock at an average price of $38.00 per
share.
Page 8 of 15 Pages
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PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Statement of Income
for the Nine Months Ended September 30, 1995
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Adjustments Pro Forma
Before Sale to Reflect After Sale
of Water Sale of Water of Water
Business Business (1) Business
(In thousands of dollars, except per share amounts)
<S> <C> <C> <C>
OPERATING REVENUES $ 105,540 $ - $ 105,540
Cost of gas 59,147 - 59,147
OPERATING MARGIN 46,393 - 46,393
OTHER OPERATING EXPENSES
Operation 16,342 - 16,342
Maintenance 3,732 - 3,732
Depreciation 5,361 - 5,361
Income taxes 447 1,402 (2) 1,849
Taxes other than income taxes 7,934 - 7,934
Total other operating expenses 33,816 1,402 35,218
OPERATING INCOME 12,577 (1,402) 11,175
OTHER INCOME, NET 550 - 550
INCOME BEFORE INTEREST CHARGES 13,127 (1,402) 11,725
INTEREST CHARGES:
Interest on long-term debt 10,232 (3,356) (2) 6,876
Other interest 1,485 (22) (2) 1,463
Allowance for borrowed funds used
during construction (40) - (40)
Total interest charges 11,677 (3,378) 8,299
INCOME FROM CONTINUING OPERATIONS
BEFORE SUBSIDIARY'S PREFERRED STOCK
DIVIDENDS 1,450 1,976 3,426
SUBSIDIARY'S PREFERRED STOCK DIVIDENDS 2,073 (1,765) (3) 308
INCOME FROM CONTINUING OPERATIONS
APPLICABLE TO COMMON STOCK $ (623) $ 3,741 $ 3,118
COMMON STOCK:
Earnings per share of common stock from
continuing operations $ (.11) $ .84
Weighted average number of shares
outstanding 5,715,294 (2,000,000) (4) 3,715,294
Page 9 of 15 Pages
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PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Consolidated Statement of Income
for the Nine Months Ended September 30, 1995
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(1) Adjustments reflect the Sale of the Water Business as if it had taken place at the
beginning of the period.
(2) Represents the adjustments to interest on long-term debt and amortization of debt
expense, and the related income tax effect, necessary to reflect the interest on
indebtedness outstanding during the period after (a) application of proceeds from the
Sale of the Water Business to (i) repay the Bridge Loan, the proceeds of which were
used to redeem the $50.0 million principal amount of PGE's 9.57% Series First
Mortgage Bonds on October 13, 1995, and (ii) defease the $30.0 million principal
amount of the 10.125% Senior Notes and (b) the redemption in connection with the Sale
of the Water Business and pursuant to annual sinking fund requirements of $3.5
million principal amount of PGE's 8% Series First Mortgage Bonds outstanding as of
January 1, 1995. The adjustments to interest on long-term debt may be summarized as
follows:
(Thousands of dollars)
<S> <C>
Interest on long-term debt for the
nine months ended September 30, 1995:
Allocated to continuing operations,
as per accompanying unaudited pro forma
consolidated statement of income $ 10,232
Allocated to discontinued operations 9,679
19,911
Deduct:
Interest on debt assumed by PAWC $ 7,141
Interest on debt redeemed, repaid or
to be defeased in connection with
the Sale of the Water Business
9.57% Series First Mortgage Bonds* 3,589
10.125% Senior Notes 2,278
8% Series First Mortgage Bonds 147 (13,155)
Add:
Interest on PGE's bank borrowings to
reflect the redemption of PGE's
8% Series First Mortgage Bonds as if
it occurred at the beginning of the
period 120
Pro forma interest on long-term debt,
as per accompanying unaudited pro forma
consolidated statement of income $ 6,876
* The Bridge Loan that PGE utilized for redemption of the 9.57% Series First
Mortgage Bonds on October 13, 1995, has not been reflected in this summary since
it had no effect on the net adjustment to interest on long-term debt.
(3) Represents elimination of preferred stock dividends of $1,519,000 and $246,000 to
reflect the repurchase of 225,000 shares of PGE's 9% Cumulative Preferred Stock and
80,000 shares of PGE's 4.10% Cumulative Preferred Stock, respectively, with proceeds
from the Sale of the Water Business.
(4) Represents the reduction in the number of shares of PEI's Common Stock outstanding
resulting from the application of the proceeds from the Sale of the Water Business to
repurchase 2,000,000 shares of PEI's Common Stock at an average price of $38.00 per
share.
Page 10 of 15 Pages
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PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Balance Sheet
as of September 30, 1995
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Adjustments Pro Forma
Before Sale to Reflect After Sale
of Water Sale of Water of Water
Business Business (1) Business
(In thousands of dollars)
ASSETS
<S> <C> <C> <C>
UTILITY PLANT:
At original cost, less acquisition
adjustments of $386,000 $ 293,279 $ - $ 293,279
Accumulated depreciation (76,680) - (76,680)
216,599 - 216,599
OTHER PROPERTY AND INVESTMENTS 4,393 - 4,393
CURRENT ASSETS:
Cash and cash equivalents 762 256,291 (2a)
(55,050) (2c)
(201,241) (3)
1,500 (3d)
6,100 (3i) 8,362
Accounts receivable-
Customers 8,118 - 8,118
Others 513 - 513
Reserve for uncollectible accounts (1,086) - (1,086)
Accrued utility revenues 1,573 - 1,573
Materials and supplies, at average cost 2,955 - 2,955
Gas held by suppliers, at average cost 20,155 - 20,155
Natural gas transition costs collectible 4,350 - 4,350
Prepaid expenses and other 5,308 - 5,308
42,648 7,600 50,248
DEFERRED CHARGES:
Regulatory assets -
Deferred taxes collectible 30,174 - 30,174
Natural gas transition costs collectible 1,668 - 1,668
Other 3,062 - 3,062
Unamortized debt expense 2,950 (169) (5) 2,781
Other 3,218 - 3,218
41,072 (169) 40,903
NET ASSETS OF DISCONTINUED OPERATIONS 195,595 (195,595) (2e) -
TOTAL ASSETS $ 500,307 $ (188,164) $ 312,143
Page 11 of 15 Pages
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PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Balance Sheet
as of September 30, 1995
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Adjustments Pro Forma
Before Sale to Reflect After Sale
of Water Sale of Water of Water
Business Business (1) Business
(In thousands of dollars)
CAPITALIZATION AND LIABILITIES
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CAPITALIZATION:
Common shareholders' investment $ 161,632 $ (854) (2b) $
(76,000) (3a)
(1,800) (3b)
4,000 (3c)
(2,750) (3e)
(722) (4)
(99) (5)
(65) (6)
(469) (7) 82,873
Preferred stock-
Not subject to mandatory redemption, net 33,615 (22,500) (3b)
(8,000) (3c)
1,247 (4) 4,362
Subject to mandatory redemption 1,680 - 1,680
Long-term debt 154,900 (30,000) (3d)
(50,000) (3f)
100 (6) 75,000
351,827 (187,912) 163,915
CURRENT LIABILITIES:
Current portion of long-term debt and
preferred stock subject to mandatory
redemption 57,491 - 57,491
Note payable to bank 5,000 - 5,000
Accounts payable 14,049 - 14,049
Deferred cost of gas and suppliers
refunds, net 2,468 - 2,468
Accrued general business and realty taxes 703 - 703
Accrued income taxes 531 (525) (4)
(70) (5)
(35) (6) (99)
Accrued interest 2,382 - 2,382
Accrued natural gas transition costs 2,158 - 2,158
Other 2,225 6,500 (2d)
(7,682) (3g)
780 (7) 1,823
87,007 (1,032) 85,975
DEFERRED CREDITS:
Deferred income taxes 47,861 1,091 (3h)
(311) (7) 48,641
Accrued natural gas transition costs 1,631 - 1,631
Unamortized investment tax credits 4,982 - 4,982
Operating reserves 2,236 - 2,236
Other 4,763 - 4,763
61,473 780 62,253
TOTAL CAPITALIZATION AND LIABILITIES $ 500,307 $ (188,164) $ 312,143
Page 12 of 15 Pages
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PENNSYLVANIA ENTERPRISES, INC. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Consolidated Balance Sheet
as of September 30, 1995
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(1) Adjustments reflect the Sale of the Water Business as if it had taken place as of the
date of the balance sheet.
(2) Represents (a) receipt of cash proceeds of $256.3 million from the Sale of the Water
Business, (b) elimination from common shareholders' investment of the $854,000 of
estimated income from PGE's water operations during the period from October 1, 1995,
to December 31, 1995 (the estimated closing date as of September 30, 1995, for the
Sale of the Water Business), that was reflected as of September 30, 1995, as an
offset against the estimated loss on the Sale of the Water Business, (c) payment of
the estimated federal and state income tax liability of $55.1 million on the Sale of
the Water Business, (d) recording of the $6.5 million premium of the purchase price
over the book value of the assets acquired by PAWC as a credit to other current
liabilities, the account to which it was charged as of September 30, 1995, as an
offset against the liability for the estimated expenses on the Sale of the Water
Business and (e) elimination of the $195.6 million of net assets of the Water
Business.
(3) Reflects the application of the proceeds from the Sale of the Water Business of
$201.2 million, after the payment of the estimated federal and state income tax
liability of $55.1 million on the Sale of the Water Business, in the following
manner: (a) the repurchase (for an aggregate consideration of $76.0 million) of
2,000,000 shares of PEI's Common Stock at an average price of $38.00 per share, (b)
the repurchase (for an aggregate consideration of $24.3 million) of 225,000 shares of
PGE's 9% Cumulative Preferred Stock (having an aggregate book value of $22.5 million)
at a price of $108.00 per share, which includes a premium of $8.00 per share ($1.8
million in the aggregate), (c) the repurchase (for an aggregate consideration of $4.0
million) of 80,000 shares of PGE's 4.10% Cumulative Preferred Stock (having an
aggregate book value of $8.0 million) at a price of $50.00 per share, which reflects
a $4.0 million aggregate ($50.00 per share) discount from book value, (d) the
defeasance of the $30.0 million principal amount of PEI's 10.125% Senior Notes at a
total cost of $31.5 million, (e) payment of $2.8 million of costs in connection with
the repurchase of shares of PEI's common stock and PGE's preferred stock (which will
vary depending on the number of shares repurchased), (f) the repayment of the Bridge
Loan, the proceeds of which were used to redeem $50.0 million principal amount of
PGE's 9.57% Series First Mortgage Bonds on October 13, 1995, (g) payment of $7.7
million of transaction costs relative to the Sale of the Water Business, (h)
recording of the $1.1 million net tax benefit resulting from transaction costs and
the premium over book value on the Sale of the Water Business and (i) the addition of
the remaining proceeds of $6.1 million to the cash accounts of PEI ($5.8 million) and
PGE ($350,000).
(4) Reflects the write-off of $1.2 million ($722,000 after related income tax benefits of
$525,000) of issuance costs relative to the 225,000 shares of PGE's 9% Cumulative
Preferred Stock which PGE intends to repurchase with proceeds from the Sale of the
Water Business.
(5) Reflects the write-off of $169,000 ($99,000 after related income tax benefits of
$70,000) of issuance costs relating to PGE's 9.57% Series First Mortgage Bonds which
PGE redeemed on October 13, 1995, with proceeds from the Bridge Loan.
(6) Reflects the write-off of $100,000 ($65,000 after related income tax benefits of
$35,000) of the unamortized discount on the 10.125% Senior Notes, which PEI plans to
defease with proceeds from the Sale of the Water Business.
(7) Reflects the recording of $780,000 ($469,000 after related income tax benefits of
$311,000) of additional transaction costs relative to the Sale of the Water Business,
which were not reflected on the balance sheet of PEI as of September 30, 1995.
Page 13 of 15 Pages
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
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Asset Purchase Agreement, dated as of April 26, 1995, among PGE, PEI,
PAWC and AWWC was filed as Exhibit 2-1 to Pennsylvania Gas and Water
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, File No. 1-3490, and is
incorporated herein by reference.
Page 14 of 15 Pages
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: February 28, 1996 PENNSYLVANIA ENTERPRISES, INC.
By: /s/ John F. Kell, Jr.
Name: John F. Kell, Jr.
Title: Vice President, Finance
Page 15 of 15 Pages
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Index to Exhibits
Exhibit No. Description
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2-1 Asset Purchase Agreement, dated as of April 26, 1995, among Pennsylvania
Gas and Water Company, Pennsylvania Enterprises, Inc., Pennsylvania-
American Water Company and American Water Works Company, Inc., filed as
Exhibit 2-1 to Pennsylvania Gas and Water Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1995, File No. 1-3490.
Page 16 of 15 Pages
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