Exhibit 99.1
Puget Energy, Inc.
Unaudited Pro Forma Consolidated Financial Statements
The following unaudited pro forma consolidated financial statements of Puget Energy, Inc are included herein:
| 1. | Unaudited pro forma consolidated statement of income for the year ended December 31, 2004 |
| 2. | Unaudited pro forma consolidated statement of income for the year ended December 31, 2003 |
| 3. | Unaudited pro forma consolidated statement of income for the year ended December 31, 2002 |
| 4. | Unaudited pro forma consolidated balance sheet as of December 31, 2004 |
| 5. | Notes to the unaudited pro forma consolidated financial statements |
On February 8, 2005, following a strategic review of Puget Energy, Inc.’s unregulated subsidiary, InfrastruX Group, Inc., conducted by Puget Energy, Inc. management, Puget Energy, Inc.’s Board of Directors decided to exit the utility construction services sector. During 2005, Puget Energy intends to monetize its interest in InfrastruX Group, Inc. through a sale and to invest the proceeds in its regulated utility subsidiary, Puget Sound Energy, Inc.
The unaudited pro forma consolidated financial statements of Puget Energy, Inc. reflect the elimination of InfrastruX Group, Inc. The unaudited pro forma consolidated financial statements have been prepared by applying pro forma adjustments to the consolidated financial statements included in the combined Puget Energy, Inc. and Puget Sound Energy, Inc. Annual Report on Form 10-K for the year ended December 31, 2004. The unaudited pro forma consolidated financial statements are presented for informational purposes only. The unaudited pro forma consolidated financial statements should be read in conjunction with the historical financial statements of Puget Energy, Inc. included in the combined Puget Energy and Puget Sound Energy, Inc. Annual Report on Form 10-K for the year ended December 31, 2004.
PUGET ENERGY, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 2004
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) | | Puget Energy As Reported | | | Elimination of Discontinued Operations | | | Pro Forma | |
| Operating revenues: | | | | | | | | | |
| Electric | $ | 1,423,034 | | $ | -- | | $ | 1,423,034 | |
| Gas | | 769,306 | | | -- | | | 769,306 | |
| Non-utility construction services | | 369,936 | | | (369,936 | ) | | -- | |
| Other | | 6,537 | | | -- | | | 6,537 | |
| Total operating revenues | | 2,568,813 | | | (369,936 | ) | | 2,198,877 | |
| Operating expenses: | | | | | | | | | |
| Energy costs: | | | | | | | | | |
| Purchased electricity | | 723,567 | | | -- | | | 723,567 | |
| Electric generation fuel | | 80,772 | | | -- | | | 80,772 | |
| Residential exchange | | (174,473 | ) | | -- | | | (174,473 | ) |
| Purchased gas | | 451,302 | | | -- | | | 451,302 | |
| Unrealized gain on derivative instruments | | (526 | ) | | -- | | | (526 | ) |
| Utility operations and maintenance | | 291,232 | | | -- | | | 291,232 | |
| Other operations and maintenance | | 322,517 | | | (320,193 | ) | | 2,324 | |
| Depreciation and amortization | | 246,842 | | | (18,276 | ) | | 228,566 | |
| Conservation amortization | | 22,688 | | | -- | | | 22,688 | |
| Goodwill impairment | | 91,196 | | | (91,196 | ) | | -- | |
| Taxes other than income taxes | | 221,981 | | | (12,991 | ) | | 208,990 | |
| Income taxes | | 74,964 | | | 1,793 | | | 76,757 | |
| Total operating expenses | | 2,352,062 | | | (440,863 | ) | | 1,911,199 | |
| Operating income | | 216,751 | | | 70,927 | | | 287,678 | |
| Other income (deductions): | | | | | | | | | |
| Other income | | 4,292 | | | 70 | | | 4,362 | |
| Interest charges: | | | | | | | | | |
| AFUDC | | 5,420 | | | -- | | | 5,420 | |
| Interest expense | | (178,419 | ) | | 6,460 | | | (171,959 | ) |
| Mandatorily redeemable securities interest expense | | (91 | ) | | -- | | | (91 | ) |
| Minority interest in earnings of consolidated subsidiary | | 7,069 | | | (7,069 | ) | | -- | |
| Income from continuing operations | $ | 55,022 | | $ | 70,388 | | $ | 125,410 | |
| | | | | | | | | | |
| Common shares outstanding weighted average (in thousands) | | 99,470 | | | 99,470 | | | 99,470 | |
| Diluted shares outstanding weighted average (in thousands) | | 99,911 | | | 99,911 | | | 99,911 | |
| | | | | | | | | | |
| Basic and diluted earnings per common share from continuing operations | $ | 0.55 | | $ | 0.71 | | $ | 1.26 | |
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
PUGET ENERGY, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 2003
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) | | Puget Energy As Reported | | | Elimination of Discontinued Operations | | | Pro Forma | |
| Operating revenues: | | | | | | | | | |
| Electric | $ | 1,400,743 | | $ | -- | | $ | 1,400,743 | |
| Gas | | 634,230 | | | -- | | | 634,230 | |
| Non-utility construction services | | 341,787 | | | (341,787 | ) | | -- | |
| Other | | 6,043 | | | -- | | | 6,043 | |
| Total operating revenues | | 2,382,803 | | | (341,787 | ) | | 2,041,016 | |
| Operating expenses: | | | | | | | | | |
| Energy costs: | | | | | | | | | |
| Purchased electricity | | 714,469 | | | -- | | | 714,469 | |
| Electric generation fuel | | 64,999 | | | -- | | | 64,999 | |
| Residential exchange | | (173,840 | ) | | -- | | | (173,840 | ) |
| Purchased gas | | 327,132 | | | -- | | | 327,132 | |
| Unrealized gain on derivative instruments | | 106 | | | -- | | | 106 | |
| Utility operations and maintenance | | 289,702 | | | -- | | | 289,702 | |
| Other operations and maintenance | | 303,972 | | | (302,425 | ) | | 1,547 | |
| Depreciation and amortization | | 236,866 | | | (16,779 | ) | | 220,087 | |
| Conservation amortization | | 33,458 | | | -- | | | 33,458 | |
| Taxes other than income taxes | | 208,395 | | | (13,538 | ) | | 194,857 | |
| Income taxes | | 72,369 | | | (1,594 | ) | | 70,775 | |
| Total operating expenses | | 2,077,628 | | | (334,336 | ) | | 1,743,292 | |
| Operating income | | 305,175 | | | (7,451 | ) | | 297,724 | |
| Other income (deductions): | | | | | | | | | |
| Other income | | 1,564 | | | 23 | | | 1,587 | |
| Interest charges: | | | | | | | | | |
| AFUDC | | 3,343 | | | -- | | | 3,343 | |
| Interest expense | | (187,316 | ) | | 5,485 | | | (181,831 | ) |
| Mandatorily redeemable securities interest expense | | (1,072 | ) | | -- | | | (1,072 | ) |
| Preferred stock dividends of subsidiary | | (5,151 | ) | | -- | | | (5,151 | ) |
| Minority interest in earnings of consolidated subsidiary | | (177 | ) | | 177 | | | -- | |
| Income from continuing operations | $ | 116,366 | | $ | (1,766 | ) | $ | 114,600 | |
| | | | | | | | | | |
| Common shares outstanding weighted average (in thousands) | | 94,750 | | | 94,750 | | | 94,750 | |
| Diluted shares outstanding weighted average (in thousands) | | 95,309 | | | 95,309 | | | 95,309 | |
| | | | | | | | | | |
| Basic earnings per common share from continuing operations | $ | 1.23 | | $ | (0.02 | ) | $ | 1.21 | |
| Diluted earnings per common share from continuing operations | $ | 1.22 | | $ | (0.02 | ) | $ | 1.20 | |
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
PUGET ENERGY, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 2002
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) | | Puget Energy As Reported | | | Elimination of Discontinued Operations | | | Pro Forma | |
| Operating revenues: | | | | | | | | | |
| Electric | $ | 1,288,744 | | $ | -- | | $ | 1,288,744 | |
| Gas | | 697,155 | | | -- | | | 697,155 | |
| Non-utility construction services | | 319,529 | | | (319,529 | ) | | -- | |
| Other | | 9,753 | | | -- | | | 9,753 | |
| Total operating revenues | | 2,315,181 | | | (319,529 | ) | | 1,995,652 | |
| Operating expenses: | | | | | | | | | |
| Energy costs: | | | | | | | | | |
| Purchased electricity | | 568,230 | | | -- | | | 568,230 | |
| Electric generation fuel | | 113,538 | | | -- | | | 113,538 | |
| Residential exchange | | (149,970 | ) | | -- | | | (149,970 | ) |
| Purchased gas | | 405,016 | | | -- | | | 405,016 | |
| Unrealized gain on derivative instruments | | (11,612 | ) | | -- | | | (11,612 | ) |
| Utility operations and maintenance | | 286,220 | | | -- | | | 286,220 | |
| Other operations and maintenance | | 273,157 | | | (270,758 | ) | | 2,399 | |
| Depreciation and amortization | | 228,743 | | | (13,426 | ) | | 215,317 | |
| Conservation amortization | | 17,501 | | | -- | | | 17,501 | |
| Taxes other than income taxes | | 215,429 | | | (13,047 | ) | | 202,382 | |
| Income taxes | | 59,260 | | | (6,703 | ) | | 52,557 | |
| Total operating expenses | | 2,005,512 | | | (303,934 | ) | | 1,701,578 | |
| Operating income | | 309,669 | | | (15,595 | ) | | 294,074 | |
| Other income (deductions): | | | | | | | | | |
| Other income | | 5,458 | | | (243 | ) | | 5,215 | |
| Interest charges: | | | | | | | | | |
| AFUDC | | 1,969 | | | -- | | | 1,969 | |
| Interest expense | | (198,346 | ) | | 5,516 | | | (192,830 | ) |
| Preferred stock dividends of subsidiary | | (7,831 | ) | | -- | | | (7,831 | ) |
| Minority interest in earnings of consolidated subsidiary | | (867 | ) | | 867 | | | -- | |
| Income from continuing operations | $ | 110,052 | | $ | (9,455 | ) | $ | 100,597 | |
| | | | | | | | | | |
| Common shares outstanding weighted average (in thousands) | | 88,372 | | | 88,372 | | | 88,372 | |
| Diluted shares outstanding weighted average (in thousands) | | 88,777 | | | 88,777 | | | 88,777 | |
| | | | | | | | | | |
| Basic and diluted earnings per common share from continuing operations | $ | 1.24 | | $ | (0.11 | ) | $ | 1.13 | |
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
PUGET ENERGY, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
ASSETS
(DOLLARS IN THOUSANDS) | | Puget Energy As Reported December 31, 2004 | | | Elimination of Discontinued Operations | | | Pro Forma December 31, 2004 | |
| Utility plant: | | | | | | | | | |
| Electric plant | $ | 4,389,882 | | $ | -- | | $ | 4,389,882 | |
| Gas plant | | 1,881,768 | | | -- | | | 1,881,768 | |
| Common plant | | 409,677 | | | -- | | | 409,677 | |
| Less: Accumulated depreciation and amortization | | (2,452,969 | ) | | -- | | | (2,452,969 | ) |
| Net utility plant | | 4,228,358 | | | -- | | | 4,228,358 | |
| Other property and investments: | | | | | | | | | |
| Goodwill, net | | 43,503 | | | (43,503 | ) | | -- | |
| Intangibles, net | | 16,680 | | | (16,680 | ) | | -- | |
| Other | | 257,785 | | | (43,197 | ) | | 214,588 | |
| Total other property and investments | | 317,968 | | | (103,380 | ) | | 214,588 | |
| Current assets: | | | | | | | | | |
| Cash | | 19,771 | | | (6,817 | ) | | 12,954 | |
| Restricted cash | | 1,633 | | | -- | | | 1,633 | |
| Accounts receivable, net of allowance for doubtful accounts | | 216,304 | | | (78,643 | ) | | 137,661 | |
| Unbilled revenues | | 140,391 | | | -- | | | 140,391 | |
| Purchased gas adjustment receivable | | 19,088 | | | -- | | | 19,088 | |
| Materials and supplies, at average cost | | 107,356 | | | (9,779 | ) | | 97,577 | |
| Current portion of unrealized gain on derivative instruments | | 8,087 | | | -- | | | 8,087 | |
| Prepayments and other | | 20,360 | | | (13,499 | ) | | 6,861 | |
| Total current assets | | 532,990 | | | (108,738 | ) | | 424,252 | |
| Other long-term assets: | | | | | | | | | |
| Regulatory asset for deferred income taxes | | 127,252 | | | -- | | | 127,252 | |
| Regulatory asset for PURPA buyout costs | | 211,241 | | | -- | | | 211,241 | |
| Unrealized gain on derivative instruments | | 13,765 | | | -- | | | 13,765 | |
| Other | | 401,795 | | | -- | | | 401,795 | |
| Total other long-term assets | | 754,053 | | | -- | | | 754,053 | |
| Total assets | $ | 5,833,369 | | $ | (212,118 | ) | $ | 5,621,251 | |
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
PUGET ENERGY, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
CAPITALIZATION AND LIABILITIES
(DOLLARS IN THOUSANDS) | | Puget Energy As Reported December 31, 2004 | | | Elimination of Discontinued Operations | | | Pro-Forma December 31, 2004 | |
| Capitalization: | | | | | | | | | |
| Common equity | $ | 1,622,276 | | $ | 22,635 | | $ | 1,644,911 | |
| Total shareholders’ equity | | 1,622,276 | | | 22,635 | | | 1,644,911 | |
| Redeemable securities and long-term debt: | | | | | | | | | |
| Preferred stock subject to mandatory redemption | | 1,889 | | | -- | | | 1,889 | |
Junior subordinated debentures of the corporation payable to a subsidiary trust holding mandatorily redeemable preferred securities | | 280,250 | | | -- | | | 280,250 | |
| Long-term debt | | 2,212,532 | | | (143,172 | ) | | 2,069,360 | |
| Total redeemable securities and long-term debt | | 2,494,671 | | | (143,172 | ) | | 2,351,499 | |
| Total capitalization | | 4,116,947 | | | (120,537 | ) | | 3,996,410 | |
| Minority interest in consolidated subsidiary | | 4,648 | | | (4,648 | ) | | -- | |
| Current liabilities: | | | | | | | | | |
| Accounts payable | | 239,520 | | | (9,773 | ) | | 229,747 | |
| Short-term debt | | 8,297 | | | (8,297 | ) | | -- | |
| Current maturities of long-term debt | | 38,933 | | | (7,933 | ) | | 31,000 | |
| Accrued expenses: | | | | | | | | | |
| Taxes | | 77,698 | | | 3,617 | | | 81,315 | |
| Salaries and wages | | 13,829 | | | -- | | | 13,829 | |
| Interest | | 29,005 | | | -- | | | 29,005 | |
| Current portion of unrealized loss on derivative instruments | | 19,261 | | | -- | | | 19,261 | |
| Tenaska disallowance reserve | | 3,156 | | | -- | | | 3,156 | |
| Other | | 61,155 | | | (26,237 | ) | | 34,918 | |
| Total current liabilities | | 490,854 | | | (48,623 | ) | | 442,231 | |
| Long-term liabilities: | | | | | | | | | |
| Deferred income taxes | | 810,726 | | | (23,648 | ) | | 787,078 | |
| Long-term portion of unrealized loss on derivative instruments | | 249 | | | -- | | | 249 | |
| Other deferred credits | | 409,945 | | | (14,662 | ) | | 395,283 | |
| Total long-term liabilities | | 1,220,920 | | | (38,310 | ) | | 1,182,610 | |
| Commitments and contingencies | | | | | | | | | |
| Total capitalization and liabilities | $ | 5,833,369 | | $ | (212,118 | ) | $ | 5,621,251 | |
See Notes to Unaudited Pro Forma Consolidated Financial Statements.
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Note 1
The unaudited pro forma consolidated income statements reflect the elimination of historical operating revenues and expenses of InfrastruX Group, Inc., a majority owned subsidiary.
Note 2
The unaudited pro forma consolidated balance sheet reflects the elimination of historical assets and liabilities of InfrastruX Group, Inc., a majority owned subsidiary of Puget Energy, Inc.
