EXHIBIT 99
GENERATION DIVESTITURE - 1998 PRO-FORMA FINANCIAL STATEMENTS
ACQUISITION OR DISPOSITION OF ASSETS
In October 1997, GPU announced its intention to begin a process to sell,
through a competitive bid process, up to all of the fossil-fuel and
hydroelectric generating facilities owned by the GPU Energy companies (Jersey
Central Power & Light Company (JCP&L), Metropolitan Edison Company (Met-Ed),
Pennsylvania Electric Company (Penelec)). These facilities, comprised of 26
operating stations, support organizations and development sites, total
approximately 5,300 MW (JCP&L 1,900 MW; Met-Ed 1,300 MW; Penelec 2,100 MW) of
capacity and have a net book value of approximately $1.1 billion (JCP&L $272
million; Met-Ed $283 million; Penelec $508 million) at December 31, 1998.
In August 1998, after the completion of an auction process, Penelec and
New York State Electric & Gas Corporation (NYSEG) entered into definitive
agreements with Edison Mission Energy (Edison) to sell the Homer City Station
for a total purchase price of approximately $1.8 billion. The Homer City Station
is a 1,884 MW three unit coal-fired generation station located in Indiana
County, Pennsylvania. In March 1999, the sale of Homer City to EME Homer City
Generation, L.P., a subsidiary of Edison, was completed. Penelec and NYSEG each
owned a 50% interest in the station and shared equally in the net sale proceeds.
In November 1998, the GPU Energy companies entered into definitive
agreements with Sithe Energies and FirstEnergy Corporation to sell all their
remaining fossil-fuel and hydroelectric generating facilities other than JCP&L's
50% interest in the Yards Creek Pumped Storage Facility (Yards Creek) for a
total purchase price of approximately $1.7 billion (JCP&L $442 million; Met-Ed
$677 million; Penelec $604 million). Penelec's 20% undivided ownership interest
in the Seneca Pumped Storage Facility (Seneca) is being sold to FirstEnergy for
$43 million, which is included in this amount. The sales are expected to be
completed by mid-1999, subject to the timely receipt of the necessary regulatory
and other approvals. Sithe has agreed to assume the collective bargaining
agreements covering union employees and to fill bargaining positions on the
basis of seniority. Sithe has also agreed to use reasonable efforts to offer
positions to GPU Generation, Inc. (Genco) non-bargaining employees. The GPU
Energy companies have agreed to assume up to $20 million (JCP&L $7 million;
Met-Ed $9 million; Penelec $4 million) of employee severance costs for employees
not hired by Sithe.
In October 1998, the GPU Energy companies entered into definitive
agreements to sell Three Mile Island Unit 1 (TMI-1) to AmerGen Energy Company,
LLC (AmerGen), which is a joint venture between PECO Energy and British Energy.
Terms of the purchase agreements are summarized as follows:
- - The total cash purchase price is approximately $100 million, which
represents $23 million to be paid at closing, and $77 million for the
nuclear fuel in the reactor to be paid in five equal annual installments
beginning one year after the closing. The purchase price and closing payment
are subject to certain adjustments for capital expenditures and other items.
1
- - AmerGen will make contingent payments of up to $80 million for the period
January 1, 2002 through December 31, 2010 depending on the actual energy
market clearing prices through 2010.
- - GPU will purchase the energy and capacity from TMI-1 from the closing
through December 31, 2001, at predetermined rates.
- - At closing, GPU will make additional deposits into the TMI-1 decommissioning
trusts to bring the trust totals up to $320 million and AmerGen will then
assume all liability and obligation for decommissioning TMI-1.
- - GPU will continue to own and hold the license for Three Mile Island Unit 2
(TMI-2). No liability for TMI-2 or its decommissioning will be assumed by
AmerGen. AmerGen will, however, maintain TMI-2 under contract with GPU.
- - AmerGen will employ all employees located at TMI-1 at closing, and will also
have the opportunity to offer positions to GPU Nuclear, Inc.'s headquarters
staff. GPU will be responsible for all severance payments associated with
these employees for a one-year period following closing. AmerGen will assume
the current collective bargaining agreement covering TMI-1 union employees.
The sale is subject to various conditions, including the receipt of
satisfactory federal and state regulatory approvals. Nuclear Regulatory
Commission approval of the TMI-1 license transfer to AmerGen, as well as certain
rulings from the Internal Revenue Service, will be necessary with respect to the
maintenance or transfer of the decommissioning trusts. There can be no assurance
as to the outcome of these matters.
The net proceeds from these generation asset sales will be used to
reduce the capitalization of the respective GPU Energy companies, repurchase
GPU, Inc. common stock, fund previously incurred liabilities in accordance with
the Pennsylvania settlement, and may also be applied to reduce short-term debt,
finance further acquisitions, and reduce acquisition debt of the GPUI Group.
Financial Statements and Pro Forma Financial Information
The following consolidated financial statements are filed with this
exhibit:
Actual (audited) and Pro Forma (unaudited) Consolidated Balance Sheets at
December 31, 1998 for:
GPU, Inc. and Subsidiaries
Jersey Central Power & Light and Subsidiary
Metropolitan Edison Company and Subsidiaries
Pennsylvania Electric Company and Subsidiaries
2
Actual (audited) and Pro Forma (unaudited) Consolidated Statements of Income For
The Year Ended December 31, 1998 for:
GPU, Inc. and Subsidiaries
Jersey Central Power & Light and Subsidiary
Metropolitan Edison Company and Subsidiaries
Pennsylvania Electric Company and Subsidiaries
The following major assumptions were used in preparing the pro forma
financial statements of GPU, Inc., JCP&L, Met-Ed and Penelec:
Assumes an asset sale date of January 1, 1998.
A 41% effective tax rate.
Estimate of selling/transaction costs considering costs already incurred
and estimated future expenditures.
Replacement power for the facilities sold is assumed to have been
purchased at $21.80/MWH (the average 1998 Pennsylvania-New
Jersey-Maryland interchange rate).
Capacity is assumed to be priced at $70/MW day.
Assumes no change in rate structure during 1998 for Pennsylvania or New
Jersey (JCP&L Levelized Energy Adjustment Clause and Pennsylvania
deferral of above market nonutility generation still in effect).
All gains and losses on the sales have been deferred except for the
Federal Energy Regulatory Commission jurisdictional portion which is
credited to retained earnings.
TMI-1 decommissioning trust funds transferred to AmerGen and any gains
not subject to taxation.
The tax effect of the asset sales as it relates to depreciation has been
analyzed and is reflected in the pro forma entries. The tax effect of
other items (mainly employee benefits), which are expected to primarily
affect the balance sheet, are not reflected in the pro forma entries.
Pro forma entries are presented up to the point of receipt of cash
proceeds. No assumptions were made regarding the utilization of
proceeds, including Penelec First Mortgage Bond redemption and intended
re-issuance of unsecured debt in the second quarter of 1999. A general
statement on the use of proceeds is included in our general description
of the transactions at the beginning of the exhibit.
3
Description of Pro-forma Adjustments
The Pro-forma financial statements reflect the following transactions:
1. The sale of the GPU Energy companies' assets as described above including
the recording of the gain on the sale, reversal of related accumulated
depreciation balances and deferral of the gain pending ratemaking
determination.
2. The reversal of tax balances from the balance sheet related to the
assets sold.
3. The recording of selling costs related to the sale (includes legal fees,
advisory fees, employee benefits, etc.).
4. The removal from the income statement of fuel, depreciation and
operations and maintenance expenses which would not have been incurred if
assets were sold at January 1, 1998.
5. The recording of the effect of purchasing power and capacity from
external sources which would have replaced the energy from the assets
sold.
6. The elimination of the income statement tax effects of the generation
assets sold assuming the sale was effective January 1, 1998.
4
GPU, Inc. and Subsidiaries
Consolidated Balance Sheets
Actual (audited) and Pro Forma (unaudited)
December 31, 1998
-------------------------------------------
(In Thousands)
ASSETS Actual Adjustments Pro Forma
----------- ----------- -----------
Utility Plant:
Utility plant in service $11,025,439 $(2,480,900) $ 8,544,539
Accumulated depreciation (4,460,341) 1,608,700 (2,851,641)
---------- ---------- -----------
Net utility plant in service 6,565,098 (872,200) 5,692,898
Construction work in progress 94,005 (26,300) 67,705
Other, net 145,792 (54,300) 91,492
---------- ---------- -----------
Net utility plant 6,804,895 (952,800) 5,852,095
---------- ---------- -----------
Other Property and Investments:
GPUI Group equity investments 682,125 - 682,125
Goodwill, net 545,262 - 545,262
Nuclear decommissioning trusts, at market 716,274 (174,600) 541,674
Other, net 356,282 - 356,282
---------- ---------- -----------
Total other property and investments 2,299,943 (174,600) 2,125,343
---------- ---------- -----------
Current Assets:
Cash and temporary cash investments 72,755 2,117,354 2,190,109
Special deposits 62,673 - 62,673
Accounts receivable:
Customers, net 286,278 - 286,278
Other 126,088 64,300 190,388
Unbilled revenues 144,076 - 144,076
Materials and supplies, at average cost or less:
Construction and maintenance 155,827 (116,600) 39,227
Fuel 42,697 (42,469) 228
Investments held for sale 48,473 - 48,473
Deferred income taxes 47,521 - 47,521
Prepayments 76,021 - 76,021
---------- ---------- -----------
Total current assets 1,062,409 2,022,585 3,084,994
---------- ---------- -----------
Deferred Debits and Other Assets:
Regulatory assets, net:
Competitive transition charge 1,023,815 - 1,023,815
Other regulatory assets, net 2,882,413 (72,900) 2,809,513
Deferred income taxes 2,004,278 573,900 2,578,178
Other 210,356 62,500 272,856
---------- ---------- -----------
Total deferred debits and other assets 6,120,862 563,500 6,684,362
---------- ---------- -----------
Total Assets $16,288,109 $ 1,458,685 $17,746,794
========== ========== ===========
5
GPU, Inc. and Subsidiaries
Consolidated Balance Sheets
Actual (audited) and Pro Forma (unaudited)
December 31, 1998
-------------------------------------------
(In Thousands)
LIABILITIES AND CAPITALIZATION Actual Adjustments Pro Forma
----------- ----------- -----------
Capitalization:
Common stock $ 331,958 $ - $ 331,958
Capital surplus 1,011,310 - 1,011,310
Retained earnings and accumulated
other comprehensive income/(loss) 2,199,121 (151,299) 2,047,822
---------- ---------- -----------
Total 3,542,389 (151,299) 3,391,090
Reacquired common stock, at cost (77,741) - (77,741)
---------- ---------- -----------
Total common stockholders' equity 3,464,648 (151,299) 3,313,349
Cumulative preferred stock:
With mandatory redemption 86,500 - 86,500
Without mandatory redemption 66,478 - 66,478
Subsidiary-obligated mandatorily redeemable
preferred securities 330,000 - 330,000
Long-term debt 3,825,584 - 3,825,584
---------- ---------- -----------
Total capitalization 7,773,210 (151,299) 7,621,911
---------- ---------- -----------
Current Liabilities:
Securities due within one year 563,683 - 563,683
Notes payable 368,607 - 368,607
Obligations under capital leases 126,480 (54,300) 72,180
Accounts payable 394,815 (25,200) 369,615
Taxes accrued 92,339 658,600 750,939
Interest accrued 81,931 - 81,931
Deferred energy credits 2,411 (107,500) (105,089)
Other 377,594 39,400 416,994
---------- ---------- -----------
Total current liabilities 2,007,860 511,000 2,518,860
---------- ---------- -----------
Deferred Credits and Other Liabilities:
Deferred income taxes 3,044,947 (131,700) 2,913,247
Unamortized investment tax credits 114,308 1,600 115,908
Three Mile Island Unit 2 future costs 483,515 - 483,515
Nonutility generation contract loss liability 1,803,820 - 1,803,820
Other 1,060,449 1,229,084 2,289,533
---------- ---------- -----------
Total deferred credits and other liabilities 6,507,039 1,098,984 7,606,023
---------- ---------- -----------
Total Liabilities and Capitalization $16,288,109 $ 1,458,685 $17,746,794
========== ========== ===========
6
GPU, Inc. and Subsidiaries
Consolidated Statements of Income
Actual (audited) and Pro Forma (unaudited)
For The Year Ended December, 31, 1998
---------------------------------------------
(In Thousands)
Actual Adjustments Pro Forma
----------- ----------- -----------
Operating Revenues $4,248,792 $(163,000) $4,085,792
----------- ----------- -----------
Operating Expenses:
Fuel 407,105 (335,270) 71,835
Power purchased and interchanged 1,122,841 678,462 1,801,303
Deferral of energy and capacity costs, net (25,542) (107,500) (133,042)
Other operation and maintenance 1,106,913 (216,346) 890,567
Depreciation and amortization 522,094 (91,300) 430,794
Taxes, other than income taxes 219,302 - 219,302
----------- ----------- -----------
Total operating expenses 3,352,713 (71,954) 3,280,759
----------- ----------- -----------
Operating Income Before Income Taxes 896,079 (91,046) 805,033
Income taxes 238,241 (36,200) 202,041
----------- ----------- -----------
Operating Income 657,838 (54,846) 602,992
----------- ----------- -----------
Other Income and Deductions:
Allowance for other funds used during construction 916 - 916
Equity in undistributed earnings/(losses)
of affiliates 72,012 - 72,012
Other income, net 48,366 - 48,366
Income taxes (1,848) - (1,848)
----------- ----------- -----------
Total other income and deductions 119,446 - 119,446
----------- ----------- -----------
Income Before Interest Charges and
Preferred Dividends 777,284 (54,846) 722,438
Interest Charges and Preferred Dividends:
Long-term debt 318,396 - 318,396
Subsidiary-obligated mandatorily
redeemable preferred securities 28,888 - 28,888
Other interest 35,053 - 35,053
Allowance for borrowed funds used
during construction (4,348) - (4,348)
Preferred stock dividends of subsidiaries 11,243 - 11,243
----------- ----------- -----------
Total interest charges and preferred dividends 389,232 - 389,232
----------- ----------- -----------
Minority interest net income 2,171 - 2,171
----------- ----------- -----------
Income Before Extraordinary Item 385,881 (54,846) 331,035
Extraordinary item (net of income tax
benefit of $16,300) (25,755) - (25,755)
----------- ----------- -----------
Net Income $ 360,126 $ (54,846) 305,280
=========== =========== ===========
Basic- Earnings Per Average Common Share
Before Extraordinary Item $ 3.03 $ (0.43) $ 2.60
Extraordinary Item (0.20) - (0.20)
----------- ----------- -----------
Earnings Per Average Common Share $ 2.83 $ (0.43) $ 2.40
=========== =========== ===========
Average Common Shares Outstanding (In Thousands) 127,093 127,093 127,093
=========== =========== ===========
Diluted-Earnings Per Average Common Share
Before Extraordinary Item $ 3.03 $ (0.43) $ 2.60
Extraordinary Item (0.20) - (0.20)
----------- ----------- -----------
Earnings Per Average Common Share $ 2.83 $ (0.43) $ 2.40
=========== =========== ===========
Average Common Shares Outstanding (In Thousands) 127,312 127,312 127,312
=========== =========== ===========
7
Jersey Central Power & Light Company and Subsidiary
Consolidated Balance Sheets
Actual (audited) and Pro Forma (unaudited)
----------------------------------------------------
December 31, 1998
(In Thousands)
ASSETS Actual Adjustments Pro Forma
----------- ----------- -----------
Utility Plant:
Utility plant in service $ 4,755,273 $ (606,800) $ 4,148,473
Accumulated depreciation (2,217,108) 403,100 (1,814,008)
----------- ----------- -----------
Net utility plant in service 2,538,165 (203,700) 2,334,465
Construction work in progress 48,126 (6,100) 42,026
Other, net 98,491 (13,500) 84,991
----------- ----------- -----------
Net utility plant 2,684,782 (223,300) 2,461,482
----------- ----------- -----------
Other Property and Investments:
Nuclear decommissioning trusts, at market 422,277 (48,300) 373,977
Other, net 126,467 - 126,467
----------- ----------- -----------
Total other property and investments 548,744 (48,300) 500,444
----------- ----------- -----------
Current Assets:
Cash and temporary cash investments 1,850 327,300 329,150
Special deposits 6,047 - 6,047
Accounts receivable:
Customers, net 152,120 - 152,120
Other 32,562 7,100 39,662
Unbilled revenues 56,391 - 56,391
Materials and supplies, at average cost or less:
Construction and maintenance 79,863 (71,100) 8,763
Fuel 13,144 (13,144) -
Deferred income taxes 20,812 - 20,812
Prepayments 27,648 - 27,648
----------- ----------- -----------
Total current assets 390,437 250,156 640,593
----------- ----------- -----------
Deferred Debits and Other Assets:
Other regulatory assets, net 753,885 (47,500) 706,385
Deferred income taxes 179,237 45,300 224,537
Other 25,037 15,600 40,637
----------- ----------- -----------
Total deferred debits and other assets 958,159 13,400 971,559
----------- ----------- -----------
Total Assets $ 4,582,122 $ (8,044) $ 4,574,078
=========== =========== ===========
8
Jersey Central Power & Light Company and Subsidiary
Consolidated Balance Sheets
Actual (audited) and Pro Forma (unaudited)
December 31, 1998
----------------------------------------------------
(In Thousands)
LIABILITIES AND CAPITALIZATION Actual Adjustments Pro Forma
----------- ----------- -----------
Capitalization:
Common stock $ 153,713 $ - $ 153,713
Capital surplus 510,769 - 510,769
Retained earnings and accumulated
other comprehensive income/(loss) 892,591 (25,400) 867,191
----------- ----------- -----------
Total common stockholder's equity 1,557,073 (25,400) 1,531,673
Cumulative preferred stock:
With mandatory redemption 86,500 - 86,500
Without mandatory redemption 37,741 - 37,741
Company-obligated mandatorily redeemable
preferred securities 125,000 - 125,000
Long-term debt 1,173,532 - 1,173,532
----------- ----------- -----------
Total capitalization 2,979,846 (25,400) 2,954,446
----------- ----------- -----------
Current Liabilities:
Securities due within one year 2,512 - 2,512
Notes payable 122,344 - 122,344
Obligations under capital leases 85,366 (13,500) 71,866
Accounts payable:
Affiliates 40,861 - 40,861
Other 80,233 (4,200) 76,033
Taxes accrued 5,559 70,800 76,359
Interest accrued 26,678 - 26,678
Deferred energy credits 2,411 (107,500) (105,089)
Other 104,408 39,400 143,808
----------- ----------- -----------
Total current liabilities 470,372 (15,000) 455,372
----------- ----------- -----------
Deferred Credits and Other Liabilities:
Deferred income taxes 670,961 (33,600) 637,361
Unamortized investment tax credits 50,225 - 50,225
Nuclear fuel disposal fee 141,270 - 141,270
Three Mile Island Unit 2 future costs 120,904 - 120,904
Other 148,544 65,956 214,500
----------- ----------- -----------
Total deferred credits and other liabilities 1,131,904 32,356 1,164,260
----------- ----------- -----------
Total Liabilities and Capitalization $ 4,582,122 $ (8,044) $ 4,574,078
========== ========== ===========
9
Jersey Central Power & Light Company and Subsidiary
Consolidated Statements of Income
Actual (audited) and Pro Forma (unaudited)
For The Year Ended December, 31, 1998
------------------------------------------------------
(In Thousands)
Actual Adjustments Pro Forma
----------- ----------- -----------
Operating Revenues $2,069,648 $ (109,700) $1,959,948
----------- ----------- -----------
Operating Expenses:
Fuel 86,431 (59,211) 27,220
Power purchased and interchanged:
Affiliates 57,643 (57,643) -
Others 658,742 154,100 812,842
Deferral of energy and capacity costs, net (25,542) (107,500) (133,042)
Other operation and maintenance 485,054 (53,446) 431,608
Depreciation and amortization 250,675 14,000 264,675
Taxes, other than income taxes 94,586 - 94,586
----------- ----------- -----------
Total operating expenses 1,607,589 (109,700) 1,497,889
----------- ----------- -----------
Operating Income Before Income Taxes 462,059 - 462,059
Income taxes 164,445 - 164,445
----------- ----------- -----------
Operating Income 297,614 - 297,614
----------- ----------- -----------
Other Income and Deductions:
Allowance for other funds used during construction 786 - 786
Other income, net 13,227 - 13,227
Income taxes 19,367 - 19,367
----------- ----------- -----------
Total other income and deductions 33,380 - 33,380
----------- ----------- -----------
Income Before Interest Charges 330,994 - 330,994
----------- ----------- -----------
Interest Charges:
Long-term debt 87,261 - 87,261
Company-obligated mandatorily
redeemable preferred securities 10,700 - 10,700
Other interest 12,229 - 12,229
Allowance for borrowed funds used
during construction (1,638) - (1,638)
----------- ----------- -----------
Total interest charges 108,552 - 108,552
----------- ----------- -----------
Net Income 222,442 - 222,442
Preferred stock dividends 10,065 - 10,065
----------- ----------- -----------
Earnings Available for Common Stock $ 212,377 $ - $ 212,377
=========== =========== ===========
10
Metropolitan Edison Company and Subsidiaries
Consolidated Balance Sheets
Actual (audited) and Pro Forma (unaudited)
December 31, 1998
---------------------------------------------
(In Thousands)
ASSETS Actual Adjustments Pro Forma
----------- ----------- -----------
Utility Plant:
Utility plant in service $ 2,247,627 $ (772,500) $ 1,475,127
Accumulated depreciation (1,008,438) 575,200 (433,238)
----------- ----------- -----------
Net utility plant in service 1,239,189 (197,300) 1,041,889
Construction work in progress 19,380 (11,700) 7,680
Other, net 27,819 (27,100) 719
----------- ----------- -----------
Net utility plant 1,286,388 (236,100) 1,050,288
----------- ----------- -----------
Other Property and Investments:
Nuclear decommissioning trusts, at market 211,194 (88,000) 123,194
Other, net 11,742 - 11,742
----------- ----------- -----------
Total other property and investments 222,936 (88,000) 134,936
----------- ----------- -----------
Current Assets:
Cash and temporary cash investments 442 481,977 482,419
Special deposits 1,062 - 1,062
Accounts receivable:
Customers, net 60,012 - 60,012
Other 41,895 8,700 50,595
Unbilled revenues 43,687 - 43,687
Materials and supplies, at average cost or less:
Construction and maintenance 24,727 (17,300) 7,427
Fuel 12,218 (12,218) -
Deferred income taxes 2,945 - 2,945
Prepayments 20,616 - 20,616
----------- ----------- -----------
Total current assets 207,604 461,159 668,763
----------- ----------- -----------
Deferred Debits and Other Assets:
Regulatory assets, net:
Competitive transition charge 680,213 - 680,213
Other regulatory assets, net 921,934 (5,000) 916,934
Deferred income taxes 714,202 143,400 857,602
Other 31,692 31,200 62,892
----------- ----------- -----------
Total deferred debits and other assets 2,348,041 169,600 2,517,641
----------- ----------- -----------
Total Assets $ 4,064,969 $ 306,659 $ 4,371,628
=========== =========== ===========
11
Metropolitan Edison Company and Subsidiaries
Consolidated Balance Sheets
Actual (audited) and Pro Forma (unaudited)
December 31, 1998
-------------------------------------------
(In Thousands)
LIABILITIES AND CAPITALIZATION Actual Adjustments Pro Forma
----------- ----------- -----------
Capitalization:
Common stock $ 66,273 $ - $ 66,273
Capital surplus 370,200 - 370,200
Retained earnings and accumulated
other comprehensive income 250,586 (62,676) 187,910
----------- ----------- -----------
Total common stockholder's equity 687,059 (62,676) 624,383
Cumulative preferred stock 12,056 - 12,056
Company-obligated mandatorily redeemable
preferred securities 100,000 - 100,000
Long-term debt 546,904 - 546,904
----------- ----------- -----------
Total capitalization 1,346,019 (62,676) 1,283,343
----------- ----------- -----------
Current Liabilities:
Securities due within one year 30,024 - 30,024
Notes payable 79,540 - 79,540
Obligations under capital leases 27,135 (27,100) 35
Accounts payable:
Affiliates 75,933 - 75,933
Other 102,390 (7,700) 94,690
Taxes accrued 19,463 140,500 159,963
Interest accrued 16,747 - 16,747
Other 42,598 - 42,598
----------- ----------- -----------
Total current liabilities 393,830 105,700 499,530
----------- ----------- -----------
Deferred Credits and Other Liabilities:
Deferred income taxes 1,010,982 (12,500) 998,482
Unamortized investment tax credits 27,157 600 27,757
Three Mile Island Unit 2 future costs 241,707 - 241,707
Nuclear fuel disposal fee 31,912 - 31,912
Nonutility generation contract loss liability 787,440 - 787,440
Other 225,922 275,535 501,457
----------- ----------- -----------
Total deferred credits and other liabilities 2,325,120 263,635 2,588,755
----------- ----------- -----------
Total Liabilities and Capitalization $ 4,064,969 $ 306,659 $ 4,371,628
=========== =========== ===========
12
Metropolitan Edison Company and Subsidiaries
Consolidated Statements of Income
Actual (audited) and Pro Forma (unaudited)
For The Year Ended December, 31, 1998
-----------------------------------------------
(In Thousands)
Actual Adjustments Pro Forma
----------- ----------- -----------
Operating Revenues $ 919,594 $ (32,400) $ 887,194
----------- ----------- -----------
Operating Expenses:
Fuel 99,511 (99,511) -
Power purchased and interchanged:
Affiliates 17,766 (17,766) -
Others 220,095 242,700 462,795
Other operation and maintenance 247,189 (83,800) 163,389
Depreciation and amortization 109,148 (47,600) 61,548
Taxes, other than income taxes 58,459 - 58,459
----------- ----------- -----------
Total operating expenses 752,168 (5,977) 746,191
----------- ----------- -----------
Operating Income Before Income Taxes 167,426 (26,423) 141,003
Income taxes 42,979 (10,400) 32,579
----------- ----------- -----------
Operating Income 124,447 (16,023) 108,424
----------- ----------- -----------
Other Income and Deductions:
Allowance for other funds used during construction 130 - 130
Other income/(expense), net (13,539) - (13,539)
Income taxes 5,556 - 5,556
----------- ----------- -----------
Total other income and deductions (7,853) - (7,853)
----------- ----------- -----------
Income Before Interest Charges 116,594 (16,023) 100,571
----------- ----------- -----------
Interest Charges:
Long-term debt 42,493 - 42,493
Company-obligated mandatorily
redeemable preferred securities 9,000 - 9,000
Other interest 8,194 - 8,194
Allowance for borrowed funds used
during construction (813) - (813)
----------- ----------- -----------
Total interest charges 58,874 - 58,874
----------- ----------- -----------
Income Before Extraordinary Item 57,720 (16,023) 41,697
Extraordinary item (net of income tax
benefit of $4,708) (6,805) - (6,805)
----------- ----------- -----------
Net Income 50,915 (16,023) 34,892
----------- ----------- -----------
Preferred stock dividends 483 - 483
Earnings Available for Common Stock $ 50,432 $ (16,023) $ 34,409
=========== =========== ===========
13
Pennsylvania Electric Company and Subsidiaries
Consolidated Balance Sheets
Actual (audited) and Pro Forma (unaudited)
December 31, 1998
------------------------------------------------
(In Thousands)
ASSETS Actual Adjustments Pro Forma
----------- ----------- -----------
Utility Plant:
Utility plant in service $ 2,802,360 $(1,101,600) $ 1,700,760
Accumulated depreciation (1,175,842) 630,400 (545,442)
----------- ----------- -----------
Net utility plant in service 1,626,518 (471,200) 1,155,318
Construction work in progress 18,862 (8,500) 10,362
Other, net 19,482 (13,700) 5,782
----------- ----------- -----------
Net utility plant 1,664,862 (493,400) 1,171,462
----------- ----------- -----------
Other Property and Investments:
Nuclear decommissioning trusts, at market 82,803 (38,300) 44,503
Other, net 7,705 - 7,705
----------- ----------- -----------
Total other property and investments 90,508 (38,300) 52,208
----------- ----------- -----------
Current Assets:
Cash and temporary cash investments 2,750 1,308,077 1,310,827
Special deposits 2,632 - 2,632
Accounts receivable:
Customers, net 69,887 - 69,887
Other 28,893 48,500 77,393
Unbilled revenues 43,998 - 43,998
Materials and supplies, at average cost or less:
Construction and maintenance 39,452 (28,200) 11,252
Fuel 17,107 (17,107) -
Deferred income taxes 7,589 - 7,589
Prepayments 31,551 - 31,551
----------- ----------- -----------
Total current assets 243,859 1,311,270 1,555,129
----------- ----------- -----------
Deferred Debits and Other Assets:
Regulatory assets, net:
Competitive transition charge 343,602 - 343,602
Other regulatory assets, net 1,206,594 (20,400) 1,186,194
Deferred income taxes 951,471 385,200 1,336,671
Other 23,911 15,700 39,611
----------- ----------- -----------
Total deferred debits and other assets 2,525,578 380,500 2,906,078
----------- ----------- -----------
Total Assets $ 4,524,807 $ 1,160,070 $ 5,684,877
=========== =========== ===========
14
Pennsylvania Electric Company and Subsidiaries
Consolidated Balance Sheets
Actual (audited) and Pro Forma (unaudited)
December 31, 1998
---------------------------------------------
(In Thousands)
LIABILITIES AND CAPITALIZATION Actual Adjustments Pro Forma
----------- ----------- -----------
Capitalization:
Common stock $ 105,812 $ - $ 105,812
Capital surplus 285,486 - 285,486
Retained earnings and accumulated
other comprehensive income 376,006 (63,223) 312,783
----------- ----------- -----------
Total common stockholder's equity 767,304 (63,223) 704,081
Cumulative preferred stock 16,681 - 16,681
Company-obligated mandatorily redeemable
preferred securities 105,000 - 105,000
Long-term debt 626,434 - 626,434
----------- ----------- -----------
Total capitalization 1,515,419 (63,223) 1,452,196
----------- ----------- -----------
Current Liabilities:
Securities due within one year 50,012 - 50,012
Notes payable 86,023 - 86,023
Obligations under capital leases 13,979 (13,700) 279
Accounts payable:
Affiliates 47,164 - 47,164
Other 47,795 (13,300) 34,495
Taxes accrued 32,755 447,300 480,055
Interest accrued 19,700 - 19,700
Other 37,272 - 37,272
----------- ----------- -----------
Total current liabilities 334,700 420,300 755,000
----------- ----------- -----------
Deferred Credits and Other Liabilities:
Deferred income taxes 1,338,235 (85,600) 1,252,635
Unamortized investment tax credits 36,926 1,000 37,926
Three Mile Island Unit 2 future costs 120,904 - 120,904
Nuclear fuel disposal fee 15,956 - 15,956
Nonutility generation contract loss liability 1,016,380 - 1,016,380
Other 146,287 887,593 1,033,880
----------- ----------- -----------
Total deferred credits and other liabilities 2,674,688 802,993 3,477,681
----------- ----------- -----------
Total Liabilities and Capitalization $ 4,524,807 $ 1,160,070 $ 5,684,877
=========== =========== ===========
15
Pennsylvania Electric Company and Subsidiaries
Consolidated Statements of Income
Actual (audited) and Pro Forma (unaudited)
For The Year Ended December, 31, 1998
---------------------------------------------------
(In Thousands)
Actual Adjustments Pro Forma
----------- ----------- -----------
Operating Revenues $1,032,226 $ (99,100) $ 933,126
----------- ----------- -----------
Operating Expenses:
Fuel 176,548 (176,548) -
Power purchased and interchanged:
Affiliates 2,729 (2,729) -
Others 233,395 281,600 514,995
Other operation and maintenance 275,107 (79,100) 196,007
Depreciation and amortization 109,800 (57,700) 52,100
Taxes, other than income taxes 63,874 - 63,874
----------- ----------- -----------
Total operating expenses 861,453 (34,477) 826,976
----------- ----------- -----------
Operating Income Before Income Taxes 170,773 (64,623) 106,150
Income taxes 45,150 (25,800) 19,350
----------- ----------- -----------
Operating Income 125,623 (38,823) 86,800
----------- ----------- -----------
Other Income and Deductions:
Other income/(expense), net (6,429) - (6,429)
Income taxes 2,613 - 2,613
----------- ----------- -----------
Total other income and deductions (3,816) - (3,816)
Income Before Interest Charges 121,807 (38,823) 82,984
----------- ----------- -----------
Interest Charges:
Long-term debt 47,729 - 47,729
Company-obligated mandatorily
redeemable preferred securities 9,188 - 9,188
Other interest 8,197 - 8,197
Allowance for borrowed funds used
during construction (1,897) - (1,897)
----------- ----------- -----------
Total interest charges 63,217 - 63,217
----------- ----------- -----------
Income Before Extraordinary Item 58,590 (38,823) 19,767
Extraordinary item (net of income tax
benefit of $11,592) (18,950) - (18,950)
----------- ----------- -----------
Net Income 39,640 (38,823) 817
Preferred stock dividends 695 - 695
----------- ----------- -----------
Earnings Available for Common Stock $ 38,945 $ (38,823) $ 122
=========== =========== ===========
16