<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Amendment to Application or Report Filed
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported)
July 19, 1999
Edison Mission Energy
(Exact name of registrant as specified in its charter)
California
(State or other jurisdiction of incorporation or organization)
1-13434 95-4031807
(Commission File Number) (I.R.S. Employer Identification No.)
18101 Von Karman Avenue 92612
Irvine, California (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (949) 752-5588
Not Applicable
(Former name or former address, if changed since last report.)
The undersigned Registrant hereby amends the following items,
financial statement, exhibits or other portions of its Current Report on
Form 8-K dated August 2, 1999, as set forth in the pages attached hereto:
Item 7. Financial Statements and Exhibits
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of business acquired.
The power stations special-purpose combined balance sheets expressed in pounds
sterling as of 3 January 1999 and 29 March 1998, and the related statements of
income ("profit and loss accounts") and cash flows for the nine month period
ended 3 January 1999, and the year ended 29 March 1998, together with the notes
thereto and the Report of Independent Accountants.
The foreign exchange conversion rates to be used to translate UK sterling into
US dollars are as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Profit and loss accounts -- average rate 1.66 1.64
Balance sheets -- closing rate 1.66 1.68
</TABLE>
(b) Pro forma financial information.
- Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 1999.
- Unaudited Pro Forma Consolidated Statement of Income for the six months
ended June 30, 1999 and the year ended December 31, 1998.
- Notes to the Unaudited Pro Forma Consolidated Financial Statements.
(c) Exhibits. None.
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations
Special purpose accounts for the year ended 29 March 1998 and
the nine month period ended 3 January 1999
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
TABLE OF CONTENTS
Special-purpose combined accounts for the two periods to 3 January 1999
<TABLE>
<CAPTION>
Page
<S> <C>
Introduction 1
Auditors' report 3
Special-purpose combined accounts 4
</TABLE>
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Power Station Special-Purpose Combined Accounts
Introduction
These power station special-purpose combined accounts for the year ended 29
March 1998 and the nine month period ended 3 January 1999 (the "special-purpose
combined accounts") are non-statutory and present the combined figures for those
operations of PowerGen UK plc ("PowerGen") which form part of the Ferrybridge C
and Fiddlers Ferry power stations (together the "Power Stations").
The special-purpose combined accounts have been specifically prepared in
connection with the disposal of the Power Stations by PowerGen to Edison First
Power Limited ("EFP") for the purposes of presenting, as far as practicable, the
assets, liabilities, revenues and costs applicable to the Power Stations on a
stand-alone basis but recognizing that the Power Stations were operated and
managed as part of a portfolio of generating units within the generation
division of PowerGen for the whole period presented. The disposal of the Power
Stations by PowerGen to Edison First Power Limited was completed on 19 July 1999
("the date of disposal").
Activities such as the bidding of individual generation units, including those
of the Power Stations, into the Pool (and therefore the determination of which
generation units within the PowerGen portfolio will operate), purchasing of all
fuel requirements and negotiation of electricity sales contracts were carried
out centrally by PowerGen and outside of the control of the Power Stations.
Whilst certain responsibilities and activities, in areas such as procurement,
personnel and finance, were devolved to individual Power Stations, a number of
services were provided by central function within PowerGen and recharged to the
Power Stations.
The special-purpose combined accounts are not therefore necessarily
representative or indicative of the financial positions, results of operations
or cash flows that would have been obtained had the Power Stations operated
independently or under separate ownership.
The special-purpose combined accounts represent an aggregation of financial
information from the individual operations (which were not legal entities) which
make up the Power Stations. The basis of preparation, combination and
presentation of the financial information of the Power stations is more fully
described under "Principal Accounting Policies" on pages 7 to 11.
The Power Stations were not required to prepare audited accounts. No such
accounts have been prepared prior to these special-purpose combined accounts.
The financial information set out in the special-purpose combined accounts is
based on management accounts of the operations which comprise the Power Stations
for the relevant periods (which were used for the purpose of preparing the
consolidated financial statements of PowerGen) after making such adjustments as
were considered necessary.
1
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
In preparing the special-purpose combined accounts for the purpose stated above,
which have been drawn up on the basis explained above as more fully described in
the Principal Accounting Policies of pages 7 to 11 and which are intended to
present fairly, on that basis, the financial position, results of operations and
cash flows of the Power Stations, the Directors of PowerGen consider that they
have selected appropriate accounting policies, consistently applied and
supported by reasonable and prudent judgements and estimates, and that all
accounting standards which they consider applicable have been followed, subject
to any material departures disclosed and explained in the special-purpose
combined accounts.
The Directors of PowerGen acknowledge that they are responsible for keeping
proper accounting records which disclose with reasonable accuracy at any time
the financial position of PowerGen and its group companies, including (until the
date of disposal) the Power Stations. They are also responsible for
safeguarding the assets of PowerGen and its group companies, including (until
the date of disposal) the Power Stations, and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
The Directors of PowerGen, after making enquiries, consider that the Power
Stations have adequate resources to continue in operation for the foreseeable
future and that it is appropriate to adopt the going concern basis in preparing
the special-purpose combined accounts.
2
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Auditors' report to the Directors of PowerGen UK plc
We have audited the special-purpose power station combined accounts (the
"special-purpose combined accounts") on page 1 and pages 4 to 20 which have been
prepared under the historical cost convention and in accordance with the basis
of preparation as set out under Principal Accounting Policies on pages 7 to 11.
These special-purpose combined accounts have not been prepared for the purposes
of Section 226 of the Companies Act 1985 and were prepared solely for the
purposes described on page 1.
The special-purpose combined accounts represent an aggregation of financial
information for the individual power stations operations which make up the
Ferrybridge C and Fiddlers Ferry power stations (the "Power Stations").
Respective responsibilities of directors and auditors
The Directors of PowerGen are responsible, as described on page 2, for preparing
the special-purpose combined accounts. Our responsibilities, as independent
auditors, are established by the Auditing Practices Board and our profession's
ethical guidance.
We report to you our opinion as to whether the special-purpose combined accounts
present fairly, on the basis of preparation set out under the Principal
Accounting Policies on page 7 to 11, the financial position, results of
operations and cash flows of the Power Stations.
Basis of audit opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board which are substantially the same as auditing standards
generally accepted in the United States. An audit includes examination, on a
test basis, of evidence relevant to the amounts and disclosures in the special-
purpose combined accounts. It also includes an assessment of the significant
estimates and judgements made by the Directors of PowerGen in the preparation of
the special-purpose combined accounts, and of whether the accounting policies
are appropriate to the Power Stations' circumstances, consistently applied and
adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the special-purpose
combined accounts are free from material misstatement, whether caused by fraud
or other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the special-purpose
combined accounts.
Opinion
In our opinion the special-purpose combined accounts, drawn up on the basis
explained in the Principal Accounting Policies on pages 7 to 11, present fairly,
on that basis, the financial position of the Power Stations at 29 March 1998 and
3 January 1999 and of the results of their operations and their cash flows for
the year ended 29 March 1998 and the nine month period ended 3 January 1999 in
accordance with applicable United Kingdom accounting standards.
The accounting principles adopted in the special-purpose combined accounts
differ in certain respects from accounting principles generally accepted in the
United States. The effect of the differences in the determination of net
income, PowerGen's investment and cash flows is shown on pages 21 to 22 to the
special-purposes combined accounts.
PricewaterhouseCoopers
Chartered Accountants
London
30 September 1999
3
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Combined Profit and Loss Accounts
<TABLE>
<CAPTION>
Nine months ended 3 Year ended 29 March
January 1999 1998
Note (Pounds)m (Pounds)m
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Turnover 1 231.8 394.6
Cost of Sales 2,4 (136.9) (244.7)
- -----------------------------------------------------------------------------------------------------------------
Gross Profit 94.9 149.9
Operating Costs 3,4,5 (40.8) (80.7)
Other Operating Income 1.2 2.8
- -----------------------------------------------------------------------------------------------------------------
Operating Profit 55.3 72.0
Net Interest payable 6 (0.8) (1.0)
- -----------------------------------------------------------------------------------------------------------------
Profit on ordinary activities
before taxation 54.5 71.0
Tax on profit on ordinary
activities 7 (17.3) (18.7)
- -----------------------------------------------------------------------------------------------------------------
Retained profit on ordinary
activities after taxation 37.2 52.3
------------------------------------------------------------------------------
</TABLE>
Turnover, cost of sales, operating costs and other operating income relate
wholly to continuing operations.
There are no recognised gains and losses other than the profit above and
therefore no separate statement of total recognised gains and losses has been
presented.
The basis on which revenues and costs have been derived is outlined under
Principal Accounting Policies on pages 7 to 11. The income and charges shown
above are not necessarily representative of those which might be incurred by the
Power Stations under separate ownership.
The notes on pages 12 to 20 form part of these special-purpose combined
accounts.
4
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Combined Balance Sheets
<TABLE>
<CAPTION>
3 January 29 March
1999 1998
Note (Pounds)m (Pounds)m
- ------------------------------------------------------------------------------------------------------------------
Fixed assets
<S> <C> <C> <C>
Tangible assets 8 164.7 174.1
- ------------------------------------------------------------------------------------------------------------------
164.7 174.1
- ------------------------------------------------------------------------------------------------------------------
Current Assets
Stocks 9 50.7 49.3
Debtors: amounts falling due within one
year 10 36.6 33.0
- ------------------------------------------------------------------------------------------------------------------
87.3 82.3
Creditors: amounts falling due
within one year
Trade and other creditors 11 (32.5) (54.3)
- ------------------------------------------------------------------------------------------------------------------
Net current assets 54.8 28.0
- ------------------------------------------------------------------------------------------------------------------
Total assets less current liabilities 219.5 202.1
Provisions for liabilities and charges 13 (24.5) (32.1)
Deferred tax 14 (25.6) (23.4)
- ------------------------------------------------------------------------------------------------------------------
Net assets 169.4 146.6
=================== ====================
PowerGen's investment in the Power Stations 15 169.4 146.6
=================== ====================
</TABLE>
The basis on which the net investment of PowerGen in the Power Stations
("PowerGen's investment in the Power Stations") has been derived is outlined
under Principal Accounting Policies on pages 7 to 11. The capital structure
shown above is not representative of the capital structure of the Power Stations
under separate ownership.
The notes on pages 12 to 20 form part of these special-purpose combined
accounts.
The special-purpose combined accounts were approved by the Board of PowerGen on
30 September 1999.
By /s/ P.C.F. HICKSON
---------------------
P.C.F. HICKSON
Director
5
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Combined Cash Flow Statements
<TABLE>
<CAPTION>
Nine months Year ended
ended 3 29 March
Note January 1999 1998
(Pounds)m (Pounds)m
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flow from operating activities 16 52.4 106.7
- -----------------------------------------------------------------------------------------------------------------
Taxation (31.0) (36.2)
- -----------------------------------------------------------------------------------------------------------------
Capital expenditure and financial investment
Purchase of tangible fixed assets (7.0) (17.2)
- -----------------------------------------------------------------------------------------------------------------
(7.0) (17.2)
- -----------------------------------------------------------------------------------------------------------------
Net cash inflow before use of liquid resources and financing 14.4 53.3
Net cash generated in the period and retained by PowerGen 15 14.4 53.3
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The basis on which the cash flows have been derived is outlined under Principal
Accounting Policies on pages 7 to 11. The cashflows shown above are not
necessarily representative of those which might be incurred by the Power
Stations under separate ownership.
The notes on pages 12 and 20 form part of these special-purpose combined
accounts.
6
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Principal Accounting Policies
Basis of preparation and combination
The special-purpose combined accounts have been prepared from the accounting
records of PowerGen UK plc or its predecessor PowerGen plc (both referred to as
"Power Gen") for the purposes of presenting, as far as practicable, the
financial position, results of operations and cash flows of the Fiddler's Ferry
and Ferrybridge C power stations (together the "Power Stations") on a stand-
alone basis but recognising that the Power Stations were operated and managed as
part of a portfolio of generating units within the generation division of
PowerGen for the whole period covered by these special-purpose combined
accounts. Consequently, the financial performance of the Power Stations has
been affected by PowerGen's operating decisions in relation to its other power
stations.
Activities such as the bidding of individual generation units, including those
of the Power Stations, into the Pool (and therefore the determination of which
generation units within the PowerGen portfolio will operate), purchasing of all
fuel requirements and negotiation of electricity sales contracts were carried
out centrally by PowerGen and outside of the control of the Power Stations.
Whilst certain responsibilities and activities, in areas such as procurement,
personnel and finance, were devolved to individual Power Stations a number of
services were provided by central functions within PowerGen and recharged to the
Power Stations. Against this background, reasonable allocations and estimates
have been made that, in the opinion of the Directors of PowerGen, include all
material costs of doing business.
The special-purpose combined accounts present the financial information of the
two power stations in aggregation and have been prepared as if the Power
Stations in their present form had existed for the entire period presented.
The special-purpose combined accounts are not therefore necessarily
representative or indicative of the financial position, results of operations or
cash flows that would have been attained had the Power Stations operated
independently or under separate ownership. Further details of the way income or
charges, assets or liabilities and cashflows have been determined is set out in
the following paragraphs.
No allowance has been taken of the effect the disposal of the Power Stations by
PowerGen might have on the financial position, results of operations or cash
flows shown by the special-purpose combined accounts.
The special-purpose combined accounts are prepared under the historical cost
convention and in accordance with applicable UK accounting standards. There is
no difference between the profit on ordinary activities before taxation and the
retained profit for the period stated on the face of the profit and loss account
and their historical cost equivalents. Values of assets and liabilities vested
in PowerGen (and hence the Power Stations) on 31 March 1990 under the Transfer
Scheme made pursuant to the Electricity Act 1989 (the Transfer Scheme) are based
on their historical cost to the Central Electricity Generating Board (CEGB).
7
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Principal Accounting Policies (continued)
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results can differ from those estimates.
Turnover
Turnover comprises sales of electricity and other services to the Electricity
Pool in England and Wales ("the Pool"), and represents actual output generated
during each half-hour period valued at prevailing Pool prices for that same
half-hour period and is recognised when earned.
PowerGen enters into a portfolio of contracts for differences ("CFDs") to act as
a hedge against both the output of its portfolio of power stations taken as
whole and volatility in pool prices. Since the CFDs are not linked to the
output of specific power stations, either when the CFDs are entered into or when
the fees receivable and difference payments are calculated, the Directors of
PowerGen do not consider it appropriate or feasible to apportion the net
revenues received under the CFDs to an individual power station.
Similarly, PowerGen enters into contracts to make sales direct to large
customers of electricity purchased through the Pool. These contracts are not
linked to the output of any individual power station and the Directors of
PowerGen do not consider it appropriate or feasible to apportion any revenue
under such contracts to an individual power station.
Accordingly, turnover (and hence operating profit) in the profit and loss
account does not include any fees receivable or difference payments made under
CFDs with purchasers from the Pool or revenues under direct sales contracts, and
are therefore not necessarily representative of the income of the Power Stations
operating independently or under separate ownership.
Cost of Sales - fuel burn
Fuel burn costs in the profit and loss account have been determined by reference
to actual coal usage and the actual cost of coal purchases.
In the five year period up to and including the year ended 29 March 1998,
PowerGen received a supplement in certain CFDs with customers to reflect the
higher (above world market prices) cost of coal purchased from British Coal
Corporation and its successor entities (the "BC Supplement"). As explained
above, turnover in the profit and loss account excludes revenues earned by
PowerGen under CFDs, whilst fuel burn costs reflect the higher actual costs
incurred. Accordingly, fuel costs may be higher, and gross profits may be
lower, than would have been attained had the Power Stations operated
independently or under separate ownership.
8
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Principal Accounting Policies (continued)
Restructuring costs
Amounts are set aside for restructuring programs which involve the
reorganisation or future closure of power station units and specific reductions
in staff numbers, where there is a demonstrable commitment to such actions.
Operating costs
Operating costs include staff costs, operational rates, repairs and maintenance
costs, and allocated common costs. Operating costs have, where appropriate,
been directly attributed to the Power Stations, or to the extent that direct
attribution has not been possible, have been allocated on the basis of an
appropriate incremental or proportionate allocation methodology and the
Directors of PowerGen believe that they include all substantive costs that
should be allocated for the purpose of the special-purpose combined accounts.
No attribution or allocation has been made for costs that are driven by
corporate level activities such as the Chief Executive's Office and Company
Secretarial Department.
Tangible fixed assets
Tangible fixed assets, including plant spares, are stated at original cost less
accumulated depreciation and provisions for impairment and permanent diminution
in value.
Depreciation
Provision for depreciation of generating and other assets is made so as to write
off, on a straight-line basis, the book value of tangible fixed assets. Assets
are depreciated over their estimated useful lives. No depreciation is provided
on freehold land. The estimated total discounted cost of decommissioning the
Power Stations is capitalised as part of generating assets and depreciated on a
straight-line basis over their remaining useful economic life.
The estimated useful lives for the other principal categories of fixed assets
are:
<TABLE>
<CAPTION>
Asset Life in years
- ----------------------------------------------------------------------------------------------------------
<S> <C>
Generating assets 25-40
Other buildings 40
Other operating and short term assets 3-15
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Overhaul of generation plant
Overhaul costs are capitalised as part of generating assets and depreciated on a
straight-line basis over their estimated useful life, typically the period until
the next major overhaul. That period is usually four years.
9
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Principal Accounting Policies (continued)
Fuel stocks and stores
Fuel stocks and stores are stated at the lower of cost and net realizable value.
In general, stocks are recognised in the profit and loss account on a weighted
average cost basis.
Capital structure and financing
Because the Power Stations have not in the past formed a separate legal entity
or group, the proportion of share capital and retained profits of the PowerGen
Group attributable to the Power Stations have been shown in the balance sheet as
part of "PowerGen's investment in the Power Stations". The Power stations have
not been charged with any financing costs in respect of the amounts included
within "PowerGen's investment in the Power Stations" during the period covered
by the special-purpose combined accounts. The Power Stations have generated
sufficient cash during each of the period covered by the special-purpose
combined accounts to cover all working capital and capital expenditure
requirements.
Although separate bank accounts are maintained by each of the Power Stations,
these are used for sundry de minimus local expenses with all significant cash
flows for items of income and expenditure received or settled directly by
PowerGen centrally. For this reason, the cash flows shown, which reflect
amounts paid or received by PowerGen on behalf of the Power Stations, are not
necessarily representative of the cash flows had the Power Stations operated
independently or under separate ownership. The net cash movement in each period
has been included in "PowerGen's Investment in Power Stations".
All other financing requirements during the periods covered were met centrally
by PowerGen and have not been specifically attributed to an individual power
station. The interest charges shown are therefore not necessarily
representative of the interest charges of the Power Stations under separate
ownership.
Taxation
The Power Stations are not separate legal entities and were not subject to full
taxation of their results. The taxation charge in the special-purpose combined
accounts has been calculated on a `separate return' basis to reflect the tax
that would have been incurred on the profits as shown in these special-purpose
combined accounts. The taxation charges shown are therefore not necessarily
representative of the tax payable by the Power Stations under separate
ownership. The tax cash flows for each period represent the assumed payment of
the Corporation Tax liability from the previous period.
10
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Principal Accounting Policies (continued)
Deferred taxation arises in respect of items where there is a timing difference
between their treatment for accounting purposes and their treatment for taxation
purposes. Provision for deferred taxation, using the liability method, is made
to the extent that it is probable that a liability or asset will crystallise in
the foreseeable future.
Pensions
Pension costs are charged to the profit and loss account on the basis of
contributions payable to PowerGen's pension schemes in respect of the employees
employed by the Power Stations. Differences between the amounts funded and the
amounts charged to the profit and loss account are treated as either creditors
or debtors in the balance sheet. The pension charges shown are therefore not
necessarily representative of the pension charges for employees of the Power
Stations under separate ownership.
11
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Notes to the Accounts
1 Turnover
Turnover, which arises from generation activities wholly in the UK, is analysed
as follows:
<TABLE>
<CAPTION>
Nine months Year ended 29
ended 3 March 1998
January 1999
(Pounds)m (Pounds)m
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sales through the Pool 228.7 389.5
Other sales 3.1 5.1
- ----------------------------------------------------------------------------------------------------------------
231.8 394.6
--------------------- ---------------------
</TABLE>
Wholesale electricity trades in England and Wales are conducted according to a
multilateral agreement between the electricity generators, such as PowerGen, and
the wholesale electricity purchasers. This multilateral agreement specifies the
charges on each purchaser and the payments to each generator and ensures that
the total charges equal the total payments. All such payments and charges are
settled through a daily clearing account (the Pool) without passing through the
ownership of a third party. Therefore although the customers of a specific
generator are identified collectively as the purchasers who have signed the
multilateral agreement, it is not possible to quantify the actual sales from one
specific generator, or station, to one specific purchaser.
2 Cost of sales
Cost of sales were as follows:
<TABLE>
<CAPTION>
Nine months ended Year ended 29
3 January 1999 March 1998
(Pounds)m (Pounds)m
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Fuel burn 102.9 181.2
Depreciation and amortisation 16.8 26.0
Grid system charges and pool purchases 17.2 24.1
Exceptional cost of sales (note 4) -- 13.4
- --------------------------------------------------------------------------------------------------------------
136.9 244.7
--------------------- --------------------
</TABLE>
3 Operating costs
Operating costs were as follows:
<TABLE>
<CAPTION>
Nine months ended Year ended 29
3 January 1999 March 1998
(Pounds)m (Pounds)m
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Staff costs (note 5) 12.4 16.9
Operational rates 14.3 20.2
Repairs and maintenance costs 10.8 15.1
Allocated common costs 1.4 3.1
Other operating charges -- before exceptional items 7.5 14.6
Exceptional operating charges (note 4) (5.6) 10.8
- ---------------------------------------------------------------------------------------------------------------
40.8 80.7
--------------------- ---------------------
</TABLE>
12
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Notes to the Accounts
Operating costs include:
<TABLE>
<CAPTION>
Nine months Year ended 29
ended 3 March 1998
January 1999
(Pounds)m (Pounds)m
------------- -------------
<S> <C> <C>
Research and development costs 0.1 0.2
</TABLE>
4 Exceptional items
Exceptional items comprise:
<TABLE>
<CAPTION>
Nine months Year ended
ended 3 29 March
January 1999 1998
(Pounds)m (Pounds)m
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Plant rationalisation and restructuring
Write down of fixed assets - 13.4
Severance (5.6) 10.8
- -----------------------------------------------------------------------------------------------------------
(5.6) 24.2
------------ -------------
</TABLE>
Following a review of PowerGen's plant portfolio in the light of increased
competition and market changes, unit 4 at Ferrybridge C was closed at the end of
March 1998 with an associated write off of the remaining net book value of
(Pounds)13.4 million, and business restructuring costs of (Pounds)10.8 million.
Following PowerGen's undertaking, in November 1998, to dispose of 4GW of its
portfolio of coal-fired stations the restructuring plans were scaled back,
leading to a reversal of (Pounds)5.6 million of restructuring costs in the nine
months ended 3 January 1999.
5 Employee information
The average number of persons employed during the period at the Power Station
was:
<TABLE>
<CAPTION>
Nine months Year ended
ended 3 29 March
January 1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Number of employees 444 485
- ---------------------------------------------------------------------------------------------------------
444 485
------------ ------------
</TABLE>
The salaries and related costs of employees were:
<TABLE>
<CAPTION>
Nine months Year ended
ended 3 29 March
January 1999 1998
(Pounds)m (Pounds)m
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Wages and salaries 10.6 14.2
Social security costs 0.8 1.2
Other pension costs (note 12) 1.0 1.5
- ----------------------------------------------------------------------------------------------------------
12.4 16.9
------------ ------------
</TABLE>
13
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Notes to the Accounts
6 Net interest payable
<TABLE>
<CAPTION>
Nine months Year ended
ended 3 29 March
January 1999 1998
(Pounds)m (Pounds)m
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Unwinding of discount in provisions 0.8 1.0
- -----------------------------------------------------------------------------------------------------------
0.8 1.0
------------- -------------
</TABLE>
The basis on which the interest charge has been derived is set out in 'Capital
structure and financing' under Principal Accounting Policies on page 10.
7 Tax on profit on ordinary activities
<TABLE>
<CAPTION>
Nine months Year ended 29
ended 3 March 1998
January 1999
(Pounds)m (Pounds)m
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
United Kingdom corporation tax at 31% (year to March 1998 31%)
Current 15.1 31.0
Deferred (note 14) 2.2 (12.3)
- -----------------------------------------------------------------------------------------------------------
17.3 18.7
------------ -------------
</TABLE>
The actual rate of tax reconciles with the applicable United Kingdom corporation
tax rate as follows:
<TABLE>
<CAPTION>
Nine months Year ended 29
ended 3 March 1998
January 1999
% %
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
United Kingdom corporate tax rate 31 31
Impact of change in tax rates on deferred tax 1 (5)
- -----------------------------------------------------------------------------------------------------------
32 26
---------- -------------
</TABLE>
The basis on which the tax charge has been calculated is set out in 'Taxation'
under Principal Accounting Policies on page 10.
14
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Notes to the Accounts
8 Tangible Fixed Assets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Generating Overhaul Other Total
assets assets
(excluding
overhaul)
(Pounds)m (Pounds)m (Pounds)m (Pounds)m
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
At 29 March 1998 295.4 40.0 82.8 418.2
Additions 2.1 4.6 0.3 7.0
Transfers from stores 2.2 - - 2.2
- ---------------------------------------------------------------------------------------------------------------------
At 3 January 1999 299.7 44.6 83.1 427.4
--------------------------------------------------------------------------------
Depreciation
At 29 March 1998 (172.3) (15.4) (56.4) (244.1)
Charge for period (8.0) (7.5) (1.3) (16.8)
Transfers from stores (1.8) - - (1.8)
- ---------------------------------------------------------------------------------------------------------------------
At 3 January 1999 (182.1) (22.9) (57.7) (262.7)
------------------- ------------ ------------ ------------
Net book value at 3 January 1999 117.6 21.7 25.4 164.7
------------------- ------------ ------------ ------------
Net book value at 29 March 1998 123.1 24.6 26.4 174.1
------------------- ------------ ------------ ------------
</TABLE>
Generating assets (excluding overhaul) include freehold land and buildings with
a net book value of (Pounds)29.6 million (at 29 March 1998 (Pounds)25.6
million).
15
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Notes to the Accounts
9 Stocks
<TABLE>
<CAPTION>
At At
3 January 1999 29 March 1998
(Pounds)m (Pounds)m
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Fuel stocks 42.9 41.8
Stores 7.8 7.5
- ----------------------------------------------------------------------------------------------------------
50.7 49.3
------------ ------------
</TABLE>
Stores are shown net of a slow-moving and obsolescence provision of (Pounds)5.9
million (at 29 March 1998 (Pounds)5.4 million).
10 Debtors: amounts falling due within one year
<TABLE>
<CAPTION>
At At
3 January 1999 29 March 1998
(Pounds)m (Pounds)m
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Pool debtors 32.6 32.4
Other debtors 1.5 0.6
Prepayments and accrued income 2.5 -
- -----------------------------------------------------------------------------------------------------------
36.6 33.0
------------ -------------
</TABLE>
11 Trade and other creditors falling due within one year
<TABLE>
<CAPTION>
At At
3 January 1999 29 March 1998
(Pounds)m (Pounds)m
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Trade creditors 12.1 15.9
Corporation tax 15.1 31.0
Other taxation and social security 0.4 0.4
Accruals and other creditors 4.9 7.0
- -----------------------------------------------------------------------------------------------------------
32.5 54.3
------------ ---------
</TABLE>
Debtors and trade and other creditors are received or settled by PowerGen as
they fall due.
12 Pension scheme arrangements
PowerGen participates in the industry-wide scheme, the Electricity Supply
Pension Scheme (ESPS), for the majority of its employees, including those
employed at the Power Stations. This is a funded defined benefit scheme, with
assets invested in separate trustee administered funds.
An actuarial valuation of the ESPS is normally carried out every three years by
the Scheme's independent professionally qualified actuary, who recommends the
rates of contribution payable by each group participating in the scheme. In
intervening years the actuary reviews the continuing appropriateness of the
rates.
16
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Notes to the Accounts
Detailed accounting for these pensions arrangements takes place in PowerGen and
not at individual power stations. The charge for the period will therefore
normally represent contributions payable to the ESPS determined on an actuarial
basis so that the annual charge is a substantially level percentage of current
pensionable payroll.
In recent years, the ESPS has shown significant surpluses. Accounting for the
amortisation of these surpluses, other than the impact on regular costs and
contributions payable, is dealt with in the accounts of PowerGen, not in these
special-purpose combined accounts.
13 Provisions for Liabilities and Charges
Movements on provisions comprise:
<TABLE>
<CAPTION>
29 March Charged to Exceptional Amortisation Provision 3 January
1998 profit and credit of discount utilised 1999
loss account
(Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m (Pounds)m
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Rationalisation
and restructuring 10.9 - (5.6) - (2.8) 2.5
Decommissioning 21.2 - - 0.8 - 22.0
- --------------------------------------------------------------------------------------------------------------------------
32.1 - (5.6) 0.8 (2.8) 24.5
-----------------------------------------------------------------------------------------------------
</TABLE>
Rationalisation and restructuring provisions will be utilised within the next
year, and decommissioning provisions over the remaining lives of the power
stations.
17
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Notes to the Accounts
14 Deferred tax
An analysis of the full potential liability (which represents the US GAAP
deferred tax liability) and the net deferred tax liability recognised at 3
January 1999 and 29 March 1998 under UK GAAP is as follows:
<TABLE>
<CAPTION>
3 January 1999 29 March 1998
--------------------------- ----------------------------
Full potential liability Full potential liability
and Liability recognised and Liability recognised
(Pounds)m (Pounds)m
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accelerated capital allowances 34.6 35.1
Other timing differences (9.0) (11.7)
--------------------------- ----------------------------
25.6 23.4
=========================== ============================
</TABLE>
Assets and liabilities have been recognised for those timing differences which
are expected to crystallise in the foreseeable future. The liability in respect
of accelerated capital allowances is calculated at 30% (year ended 29 March 1998
30%). The liability in respect of other timing differences is calculated at 30%
(year ended 29 March 1998 31%).
15 PowerGen's Investment in the Power Stations
Movements in PowerGen's investment in the Power Stations comprise:
<TABLE>
<CAPTION>
3 January 29 March
1999 1998
(Pounds)m (Pounds)m
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Profit for the financial period 37.2 52.3
Net cash generated in the period and retained by PowerGen (14.4) (53.3)
- ---------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in PowerGen's investment in the Power Stations for
the period 22.8 (1.0)
PowerGen's opening investment in the Power Stations 146.6 147.6
- ---------------------------------------------------------------------------------------------------------------
PowerGen's closing investment in the Power Stations 169.4 146.6
----------- -----------
</TABLE>
18
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Notes to the Accounts
16 Cash Flow
Reconciliation of operating results to cash flow operating activities:
<TABLE>
<CAPTION>
Nine months Year ended 29
ended 3 March 1998
January
1999
(Pounds)m (Pounds)m
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating profit 55.3 72.0
Depreciation (including exceptional charges) 16.8 39.4
Increase in stocks (1.8) (5.7)
(Increase)/decrease in debtors (3.6) (6.5)
(Decrease)/increase in creditors (5.9) (1.9)
(Decrease)/increase in provisions (8.4) 9.4
- ------------------------------------------------------------------------------------------------------------------
52.4 106.7
---------- -----------
</TABLE>
The movement in provisions for the nine months ended 3 January 1999 includes
cash outflows of (Pounds)2.8 million (year ended 29 March 1998 (Pounds)nil
million) relating to exceptional charges arising in previous years.
17 Commitments
At 3 January 1999, the combined power stations had commitments of (Pounds)28.0
million (29 March 1998 (Pounds)nil) for capital expenditure, none of which
related to expenditure to be incurred after one year.
18 Post balance sheet event
On 30 April 1999 PowerGen announced the disposal, under 199-year leases, of
Fiddler's Ferry and Ferrybridge C power stations to Edison Mission Energy
("Mission"). PowerGen will supply coal to the stations for a four-year period
on terms consistent with PowerGen's overall coal commitments. PowerGen have
provided Mission with a six month Contract for Differences in respect of part of
the capacity of the plant, a Technical Support Agreement, a Transitional
Services Agreement and an agreement to provide access to PowerGen's coal import
terminal at Gladstone Dock, Liverpool. Mission have taken on all the employees
at the two stations. The disposal was completed on 19 July 1999.
19
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
Notes to the Accounts
19 Transactions and balances with PowerGen
Throughout the period covered by these special-purpose combined accounts the
Power Stations have entered into a number of transactions with other PowerGen
business units. Substantially all of these transactions are exempt from the
disclosure provisions of FRS 8 "Related Party Disclosures" as they have been
undertaken between business units of PowerGen UK plc and are eliminated in the
consolidated accounts of PowerGen UK plc. However, brief details of the nature
of these transactions are set out below.
As described in the basis of preparation of the special-purpose combined
accounts as set out under Principal Accounting Policies on pages 7 to 11, the
Power Stations were operated and managed as part of a portfolio of generating
units within the generation division of PowerGen for the whole period covered by
these special-purpose combined accounts. With the exception of a number of
sundry de minimus local expenses, all income and expenditure, in terms of cash
flows, was received or settled directly by PowerGen centrally.
In addition, the Power Stations may have indirectly benefited from the corporate
level activities (as opposed to central functions) of PowerGen. No charges have
been recognised in these special-purpose combined accounts in respect of these
activities.
20
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-Purpose Combined
Accounts
20 SUMMARY OF DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
The special-purpose combined accounts have been prepared in accordance with UK
GAAP, and on the basis described under Principal Accounting Policies on pages 7
to 11, which differs in certain significant respects from US GAAP. These
differences relate principally to the following items, and the effect of the
adjustments to net income and PowerGen's investment in the Power Stations which
would be required under US GAAP are set out in the tables below.
a) Deferred taxation UK GAAP requires provision for deferred taxation only
when it is expected that a liability will become payable or an asset will
crystallise in the foreseeable future and then at the known future rates of
tax. US GAAP requires full provision for deferred taxes to be made using
enacted future tax rates.
b) Severance costs Under UK GAAP, voluntary severance costs for employees
leaving as part of an on-going restructuring programme are accrued and
recognised in the profit and loss account once an irrevocable commitment
has been made to such a programme and implementation has commenced.
Voluntary severance costs include severance payments, payments in lieu of
notice and the costs of providing incremental pension benefits in respect
of staff reductions. Under US GAAP, voluntary termination benefits are
generally charged in the period in which the employees accept the terms
under which they will leave the station's employment. In addition, where
the number of employees leaving results in a significant reduction in the
accrual of pension benefits for employees' future service (a "curtailment"
under US GAAP), the effects are reflected as part of the cost of such
termination benefits.
c) Cash flow statement Under US GAAP, various items would be reclassified
within the cash flow statement. In particular, interest and taxation would
form part of net cash flows from operating activities.
21
<PAGE>
Fiddlers Ferry and Ferrybridge C Power Stations -- Special-purpose Combined
Accounts
Effect on net income of differences between UK GAAP and US GAAP:
<TABLE>
<CAPTION>
Nine months Year ended
ended 3 29 March 1998
January 1999
(Pounds)m (Pounds)m
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income under UK GAAP 37.2 52.3
US GAAP adjustments:
Severance costs (8.0) 6.5
Taxation effects on the foregoing adjustment 2.5 (2.0)
Deferred taxation 1.1 (1.1)
- -------------------------------------------------------------------------------------------------------------------
Net income under US GAAP 32.8 55.7
------------ -------------
</TABLE>
There are no recognised gains and losses other than as set out above and
therefore no separate comprehensive statement of net income is shown.
Effect on PowerGen's investment in the Power Stations of differences between UK
GAAP and US GAAP:
<TABLE>
<CAPTION>
3 January 29 March
1999 1998
(Pounds)m (Pounds)m
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PowerGen's investment in the Power Stations under UK GAAP 169.4 146.6
US GAAP adjustment:
Severance costs - 8.0
Taxation effects on the foregoing adjustment - (2.5)
Deferred taxation - (1.1)
- ------------------------------------------------------------------------------------------------------------------
PowerGen's investment in the Power Stations under US GAAP 169.4 151.0
-------------- ------------
</TABLE>
Statement of cash flows
The table below summarises the combined cash flow statements as if presented in
accordance with US GAAP, and includes the adjustment to reconcile cash and cash
equivalents under US GAAP to cash under UK GAAP.
<TABLE>
<CAPTION>
Nine months Year ended
ended 29 March
3 January 1998
1999
(Pounds)m (Pounds)m
-----------------------------------------------
<S> <C> <C>
Net cash provided by operating activities 21.4 70.5
Net cash used in investing activities (7.0) (17.2)
Net cash used in financing activities (14.4) (53.3)
-----------------------------------------------
Net movement in cash and cash equivalents 0.0 0.0
Cash and cash equivalents under US GAAP at the beginning and end
of the period 0.0 0.0
------------------------- -------------------
</TABLE>
There are no significant non-cash investing or financing activities during the
period.
22
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated financial statements reflect the
acquisition by Edison First Power Limited, a wholly owned subsidiary of Edison
Mission Energy ("EME"), of Fiddler's Ferry and Ferrybridge C Power Stations on
July 19, 1999. The unaudited pro forma consolidated financial statements should
be read in conjunction with the historical financial statements of EME included
in its Annual Report on Form 10-K for the year ended December 31, 1998, EME's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, and the
historical special-purpose combined accounts of Fiddler's Ferry and Ferrybridge
C Power Stations included elsewhere in this Form 8-K/A. The pro forma
adjustments are based on current information about Fiddler's Ferry and
Ferrybridge C Power Stations net assets and results of operations.
EME's total acquisition cost of (Pounds) 1.384 billion (approximately $2.2
billion) was funded by a $500 million capital contribution by Edison
International and the issuance of long-term debt and the use of existing working
capital.
Fiddler's Ferry and Ferrybridge C Power Stations present their financial
statements based on UK GAAP denominated in British pounds sterling. The
financial statements have been converted to US GAAP and US dollars for the
purposes of the following pro forma presentation. Fiddler's Ferry and
Ferrybridge C Power Stations' balance sheet denominated in British pounds
sterling was translated to US dollars at a rate of 1.5770, which was the
exchange rate at July 4, 1999. British pounds sterling amounts in the income
statement were translated at the rate of 1.6182 for the six months ended July 4,
1999 and 1.6568 for the year ended January 3, 1999, which were the average
exchange rates for the respective periods combined.
The following unaudited pro forma consolidated financial statements have been
prepared as if the acquisition of Fiddler's Ferry and Ferrybridge C Power
Stations had taken place on June 30, 1999, in the case of the pro forma
consolidated balance sheet, and as of January 1, 1998 for the consolidated pro
forma income statements for the six months ended June 30, 1999 and the year
ended December 31, 1998. EME will account for the acquisition as a purchase for
financial reporting purposes. Accordingly, the purchase price has been
allocated to the assets and liabilities based upon the estimated fair value as
of the acquisition date. The allocation of purchase price is preliminary.
Management does not anticipate that the final allocation will materially affect
the EME's financial position or results of operations.
These unaudited pro forma financial statements should be read in conjunction
with the notes thereto and with the historical financial statements and related
notes of EME and Fiddler's Ferry and Ferrybridge C Power Stations. The
unaudited pro forma financial statements have been prepared based upon
assumptions deemed appropriate by management and are for informational purposes
only and are not necessarily indicative of the actual or future results of
operations or financial conditions that would have been achieved had the
acquisition occurred at the dates assumed.
<PAGE>
EDISON MISSION ENERGY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
(In thousands)
<TABLE>
<CAPTION>
Fiddlers
Ferry and
Ferrybridge
Edison C Power
Mission Stations Pro Forma Pro Forma
Energy (USD) Adjustments Consolidated
---------------- --------------- ------------- ------------------
Assets
<S> <C> <C> <C> <C> <C>
Current Assets $1,039,294 $119,770 $ (771,066) (D) $ 387,998
---------------- --------------- ------------- ------------------
Investments
Energy projects 1,887,859 - - 1,887,859
Oil and gas 68,987 - - 68,987
---------------- --------------- ------------- ------------------
Total Investments 1,956,846 - - 1,956,846
Net Property, Plant and
Equipment 4,716,070 252,164 2,757,355 (B) 7,725,589
--------------- -------------- ------------ -----------------
Other Assets 445,981 - 31,540 (C) 477,521
---------------- --------------- ------------- ------------------
Total Assets $8,158,191 $371,934 $2,017,829 $10,547,954
================ =============== ============= ==================
Liabilities and
Shareholder's Equity
Current Liabilities $1,151,781 $ 57,913 $ 97,485 (E) $ 1,307,179
---------------- --------------- ------------- ------------------
Long-Term Obligations,
Net of Current
Maturities 4,161,114 - 1,308,910 (A) 5,470,024
---------------- --------------- ------------- ------------------
Long-Term Deferred
Liabilities 1,227,765 75,901 849,554 (F) 2,153,220
---------------- --------------- ------------- ------------------
Total Liabilities 6,540,660 133,814 2,255,949 8,930,423
Preferred Securities of
Subsidiaries 352,135 - - 352,135
---------------- --------------- ------------- ------------------
Shareholder's Equity 1,265,396 238,120 (238,120) (G) 1,265,396
---------------- --------------- ------------- ------------------
Total Liabilities and
Shareholder's Equity $8,158,191 $371,934 $2,017,829 $10,547,954
================ =============== ============= ==================
</TABLE>
<PAGE>
EDISON MISSION ENERGY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(In thousands)
<TABLE>
<CAPTION>
Fiddlers Ferry
and
Edison Ferrybridge C
Mission Power Stations Pro Forma Pro Forma
Energy (USD) Adjustments Consolidated
--------------- ------------------ ------------------ ------------
<S> <C> <C> <C> <C>
Operating Revenues
Electric Revenues $ 415,525 $223,953 $ - $ 639,478
Equity in income from energy
projects 95,999 - - 95,999
Equity in income from oil and gas 9,760 - - 9,760
Operation and maintenance services 17,844 - - 17,844
--------------- ------------------ --------------- ------------
Total operating revenues 539,128 223,953 - 763,081
--------------- ------------------ --------------- ------------
Operating Expenses
Fuel 127,647 97,302 (6,910) (H) 218,039
Plant Operations 81,389 67,398 - 148,787
Operation and maintenance services 14,013 - - 14,013
Depreciation and amortization 59,743 15,887 35,158 (I) 110,788
Administrative and general 69,064 - - 69,064
Restructuring Costs - (9,062) - (9,062)
--------------- ------------------ --------------- ------------
Total Operating expenses 351,856 171,525 28,248 551,629
--------------- ------------------ --------------- ------------
Income from operations 187,272 52,428 (28,248) 211,452
--------------- ------------------ --------------- ------------
Other Income (Expense)
Interest and other income 20,584 1,133 - 21,717
Interest expense (123,392) (971) (52,492) (J) (176,855)
Dividends on preferred securities (7,378) - - (7,378)
--------------- ------------------ --------------- ------------
Total other income (expense) (110,186) 162 (52,492) (162,516)
--------------- ------------------ --------------- ------------
Income before taxes 77,086 52,590 (80,740) 48,936
Provision (benefit) for income taxes 13,675 13,269 (21,714) (K) 5,230
--------------- ------------------ --------------- ------------
Income before change in accounting
principle $ 63,411 $ 39,321 $(59,026) $ 43,706
Cumulative effect on prior years of
change in accounting for start-up costs (13,840) - - (13,840)
--------------- ------------------ --------------- ------------
Net Income $ 49,571 $ 39,321 $(59,026) $ 29,866
=============== ================== =============== ============
</TABLE>
<PAGE>
EDISON MISSION ENERGY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(In thousands)
<TABLE>
<CAPTION>
Fiddlers Ferry
and
Edison Ferrybridge C
Mission Power Stations Pro Forma Pro Forma
Energy (USD) Adjustments Consolidated
--------------- ------------------ ------------------ ------------
<S> <C> <C> <C> <C> <C>
Operating Revenues
Electric Revenues $ 664,055 $554,100 $ - $1,218,155
Equity in income from energy
projects 171,819 - - 171,819
Equity in income from oil and gas 17,613 - - 17,613
Operation and maintenance services 40,293 - - 40,293
--------------- ------------------ ------------------ ------------
Total operating revenues 893,780 554,100 - 1,447,880
--------------- ------------------ ------------------ ------------
Operating Expenses
Fuel 176,954 241,475 (13,966) (H) 404,463
Plant Operations 127,711 138,917 - 266,628
Operation and maintenance services 28,386 - - 28,386
Depreciation and amortization 87,339 38,020 66,499 (I) 191,858
Administrative and general 122,925 - - 122,925
Restructuring Costs - 22,200 - 22,200
--------------- ------------------ ------------------ ------------
Total Operating expenses 543,315 440,612 52,533 1,036,460
--------------- ------------------ ------------------ ------------
Income from operations 350,465 113,488 (52,533) 411,420
--------------- ------------------ ------------------ ------------
Other Income (Expense)
Interest and other income 49,785 - - 49,785
Interest expense (182,901) (1,740) (111,220) (J) (295,861)
Dividends on preferred securities (14,770) - - (14,770)
--------------- ------------------ ------------------ ------------
Total other income
(expense) (147,886) (1,740) (111,220) (260,846)
--------------- ------------------ ------------------ ------------
Income before taxes 202,579 111,748 (163,753) 150,574
Provision (benefit) for income taxes 70,445 35,145 (50,747) (K) 54,843
--------------- ------------------ ------------------ ------------
Net Income $ 132,134 $ 76,603 $(113,006) $ 95,731
=============== ================== ================== ============
</TABLE>
<PAGE>
EDISON MISSION ENERGY
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The above unaudited pro forma consolidated financial statements reflect Edison
Mission Energy's results of operations for the year ended December 31, 1998 as
included in its Annual Report on Form 10-K, as well as its results of operations
for the six month's ended June 30, 1999 and its financial position as of June
30, 1999 as included in its Quarterly Report on Form 10-Q. The results of
Fiddler's Ferry and Ferrybridge C power stations included in the above unaudited
pro forma consolidated financial statements for the year ended December 31, 1998
combine the audited results of its operations for the nine months ended January
3, 1999, contained elsewhere in this Form 8-K/A, and the unaudited results of
its operations for the three months ended March 29, 1998. The unaudited pro
forma consolidated income statement for the six months ended June 30, 1999
include the stations' unaudited results of operations for the six months ended
July 4, 1999. The unaudited pro forma consolidated balance sheet as of June 30,
1999 contains Fiddler's Ferry and Ferrybridge C power stations' unaudited
financial position as of July 4, 1999.
(A) To reflect the long-term debt issued by an EME subsidiary to fund the
acquisition of Fiddler's Ferry and Ferrybridge C power stations.
(B) To reflect adjustment to fair value resulting from the preliminary purchase
price allocation of the Fiddler's Ferry and Ferrybridge C power stations.
(C) To reflect the deferred financing costs related to the issuance of the
long-term debt.
(D) To reflect the net cash consideration paid in connection with the
acquisition of Fiddler's Ferry and Ferrybridge C power stations and related
transaction costs including financial advisor, legal and accounting, offset
by the net cash received in connection with the issuance of the long-term
debt.
(E) To reflect accrual of transaction costs due after the consummation of the
acquisition offset by the elimination of certain current liabilities not
assumed.
(F) Reflects an accrual of approximately $90 million related to the assumption
by EME of above market commodity contracts as required in the acquisition
of Fiddler's Ferry and Ferrybridge C power stations and the establishment
of a deferred tax liability of approximately $835 million associated with
the difference between the book and tax basis of the assets acquired offset
by liabilities not assumed.
(G) To reflect the elimination of PowerGen's investment in Fiddler's Ferry and
Ferrybridge C power stations.
(H) Represents the reduction of Fiddler's Ferry and Ferrybridge C power
stations' above market fuel costs to market levels.
(I) Reflects pro forma increase in depreciation and amortization resulting from
amortization of the fair value of Fiddler's Ferry and Ferrybridge C power
stations over periods from 5 to 32 years.
(J) Reflects the pro forma interest expense associated with the issuance of
long-term debt and use of existing credit lines to finance the acquisition
of Fiddler's Ferry and Ferrybridge C power stations. The long-term debt
bears interest at the London Interbank Offer Rate plus 1.5% (approximately
6.7% at 6/30/99). EME's average credit line bore interest at approximately
6.25% on June 30, 1999.
(K) Reflects the adjustment necessary to provide income taxes at the effective
rate.
<PAGE>
SIGNATURES
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.
Edison Mission Energy
---------------------
(Registrant)
By /s/ KEVIN M. SMITH
--------------------------
KEVIN M. SMITH,
Senior Vice President and
Chief Financial Officer
Date: September 30, 1999
-------------------
