Exhibit 99.03
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information reflects the
adjustment of the historical consolidated balance sheets and statements of
income of NSP and WEC after giving effect to their proposed business
combination transaction (the Transaction) to form Primergy and a new
subsidiary structure. The unaudited pro forma combined condensed balance
sheets at Dec. 31, 1996 give effect to the Transaction as if it had occurred
on that date. The unaudited pro forma combined condensed statements of income
for each of the three years in the period ended Dec. 31, 1996 give effect to
the Transaction as if it had occurred at Jan. 1, 1994. These statements are
prepared on the basis of accounting for the Transaction as a pooling of
interests and are based on the assumptions set forth in the notes thereto.
The following pro forma financial information has been prepared from,
and should be read in conjunction with, the historical consolidated financial
statements and related notes thereto of NSP and WEC. The following
information is not necessarily indicative of the financial position or
operating results that would have occurred had the Transaction been
consummated on the date, or at the beginning of the periods, for which the
Transaction is being given effect nor is it necessarily indicative of future
Primergy operating results or financial position. Completion of the
Transaction is subject to numerous conditions, many of which are beyond NSP's
control.
Primergy Pro Forma Combined Condensed Information
The pro forma financial information combines the historical financial
statements of NSP and WEC after giving effect to the Transaction to form
Primergy on the basis of accounting for the Transaction as a pooling of
interests.
PRIMERGY CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1996
(In thousands, except per share amounts)
NSP WEC Pro Forma Pro Forma
(As Reported) (As Reported) Adjustments Combined
Utility Operating Revenues
Electric $2,127,413 $1,393,270 $0 $3,520,683
Gas 526,793 364,875 0 891,668
Steam 0 15,675 0 15,675
Total Operating Revenues 2,654,206 1,773,820 0 4,428,026
Utility Operating Expenses
Electric Production-Fuel
and Purchased Power 541,267 331,867 0 873,134
Cost of Gas Sold & Transported 335,453 234,254 0 569,707
Other Operation 554,946 391,520 0 946,466
Maintenance 155,830 103,046 0 258,876
Depreciation and Amortization 306,432 202,796 0 509,228
Taxes Other Than Income Taxes 232,824 77,866 0 310,690
Income Taxes 161,410 126,627 0 288,037
Total Operating Expenses 2,288,162 1,467,976 0 3,756,138
Utility Operating Income 366,044 305,844 0 671,888
Other Income (Expense)
Equity Earnings of Unconsolidated
Investees 31,025 0 0 31,025
Other Income and Deductions - Net 8,169 20,042 0 28,211
Total Other Income (Expense) 39,194 20,042 0 59,236
Income before Interest Charges
and Preferred Dividends 405,238 325,886 0 731,124
Interest Charges 130,699 106,548 0 237,247
Preferred Dividends of Subsidiaries 12,245 1,203 0 13,448
Net Income $262,294 $218,135 $0 $480,429
Average Common Shares Outstanding (Note 1) 68,679 110,983 42,993 222,655
Earnings Per Common Share $3.82 $1.97 $2.16
NSP Equivalent Shares (Note 1) 68,679 110,983 (42,728) 136,934
Earnings Per Common Share using NSP Equivalent Shares $3.51
See accompanying notes to unaudited pro forma combined condensed financial statements.
PRIMERGY CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1995
(In thousands, except per share amounts)
NSP WEC Pro Forma Pro Forma
(As Reported) (As Reported) Adjustments Combined
Utility Operating Revenues
Electric $2,142,770 $1,437,480 $0 $3,580,250
Gas 425,814 318,262 0 744,076
Steam 0 14,742 0 14,742
Total Operating Revenues 2,568,584 1,770,484 0 4,339,068
Utility Operating Expenses
Electric Production-Fuel and
Purchased Power 570,245 345,387 0 915,632
Cost of Gas Sold & Transported 256,758 188,764 0 445,522
Other Operation 560,734 395,242 0 955,976
Maintenance 158,203 112,400 0 270,603
Depreciation and Amortization 290,184 183,876 0 474,060
Taxes Other Than Income Taxes 239,433 74,765 0 314,198
Income Taxes 147,148 141,029 0 288,177
Total Operating Expenses 2,222,705 1,441,463 0 3,664,168
Utility Operating Income 345,879 329,021 0 674,900
Other Income (Expense)
Equity Earnings of Unconsolidated
Investees 59,067 0 0 59,067
Other Income and Deductions - Net (6,261) 16,821 0 10,560
Total Other Income (Expense) 52,806 16,821 0 69,627
Income before Interest Charges
and Preferred Dividends 398,685 345,842 0 744,527
Interest Charges 122,890 110,605 0 233,495
Preferred Dividends of Subsidiaries 12,449 1,203 0 13,652
Net Income $263,346 $234,034 $0 $497,380
Average Common Shares Outstanding (Note 1) 67,416 109,850 42,202 219,468
Earnings Per Common Share $3.91 $2.13 $2.27
NSP Equivalent Shares (Note 1) 67,416 109,850 (42,292) 134,974
Earnings Per Common Share using NSP Equivalent Shares $3.69
See accompanying notes to unaudited pro forma combined condensed financial statements.
PRIMERGY CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1994
(In thousands, except per share amounts)
NSP WEC Pro Forma Pro Forma
(As Reported) (As Reported) Adjustments Combined
Utility Operating Revenues
Electric $2,066,644 $1,403,562 $0 $3,470,206
Gas 419,903 324,349 0 744,252
Steam 0 14,281 0 14,281
Total Operating Revenues 2,486,547 1,742,192 0 4,228,739
Utility Operating Expenses
Electric Production-Fuel and
Purchased Power 570,880 328,485 0 899,365
Cost of Gas Sold & Transported 263,905 199,511 0 463,416
Other Operation 535,706 399,011 0 934,717
Maintenance 170,145 124,602 0 294,747
Depreciation and Amortization 273,801 177,614 0 451,415
Taxes Other Than Income Taxes 234,564 76,035 0 310,599
Revitalization Charges 0 73,900 0 73,900
Income Taxes 129,228 99,761 0 228,989
Total Operating Expenses 2,178,229 1,478,919 0 3,657,148
Utility Operating Income 308,318 263,273 0 571,591
Other Income (Expense)
Equity Earnings of Unconsolidated
Investees 41,709 0 0 41,709
Other Income and Deductions - Net 663 26,965 0 27,628
Total Other Income (Expense) 42,372 26,965 0 69,337
Income before Interest Charges
and Preferred Dividends 350,690 290,238 0 640,928
Interest Charges 107,215 108,019 0 215,234
Preferred Dividends of Subsidiaries 12,364 1,351 0 13,715
Net Income $231,111 $180,868 $0 $411,979
Average Common Shares Outstanding (Note 1) 66,845 108,025 41,845 216,715
Earnings Per Common Share $3.46 $1.67 $1.90
NSP Equivalent Shares (Note 1) 66,845 108,025 (41,589) 133,281
Earnings Per Common Share using NSP Equivalent Shares $3.09
See accompanying notes to unaudited pro forma combined condensed financial statements.
PRIMERGY CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEETS
DECEMBER 31, 1996
(In thousands)
NSP WEC Pro Forma Pro Forma
Pro Forma Balance Sheet (As Reported) (As Reported) Adjustments Combined
ASSETS
UTILITY PLANT
Electric $6,766,896 $4,857,528 $0 $11,624,424
Gas 750,449 505,100 0 1,255,549
Other 331,441 61,765 0 393,206
Total 7,848,786 5,424,393 0 13,273,179
Accumulated provision for depreciation (3,611,244) (2,441,950) 0 (6,053,194)
Nuclear fuel - net 100,338 75,476 0 175,814
Net utility plant 4,337,880 3,057,919 0 7,395,799
CURRENT ASSETS
Cash and cash equivalents 51,118 10,748 0 61,866
Accounts receivable - net 371,654 151,473 0 523,127
Accrued utility revenues 147,366 155,838 0 303,204
Fossil fuel inventories 45,013 113,516 0 158,529
Material & supplies inventories 109,425 70,900 0 180,325
Prepayments and other 72,647 63,383 0 136,030
Total current assets 797,223 565,858 0 1,363,081
OTHER ASSETS
Regulatory Assets 354,128 286,461 0 640,589
External decommissioning fund 260,756 322,085 0 582,841
Investments in non-regulated projects and other in 451,223 104,919 0 556,142
Non-regulated property - net 192,790 173,525 0 366,315
Intangible assets and other (Note 4) 242,900 300,071 (153,806) 389,165
Total other assets 1,501,797 1,187,061 (153,806) 2,535,052
TOTAL ASSETS $6,636,900 $4,810,838 ($153,806) $11,293,932
LIABILITIES AND EQUITY
CAPITALIZATION
Common stock equity:
Common stock (Note 1) $172,659 $1,117 ($171,536) $2,240
Other stockholders' equity (Note 1) 1,963,221 1,944,227 171,536 4,078,984
Total common stock equity 2,135,880 1,945,344 0 4,081,224
Cumulative preferred stock and premium 240,469 30,450 0 270,919
Long-term debt 1,592,568 1,416,067 0 3,008,635
Total capitalization 3,968,917 3,391,861 0 7,360,778
CURRENT LIABILITIES
Current portion of long-term debt 261,218 190,204 0 451,422
Short-term debt 368,367 69,265 0 437,632
Accounts payable 236,341 148,429 0 384,770
Taxes accrued 204,348 37,362 0 241,710
Other accrued liabilities 166,126 81,758 0 247,884
Total current liabilities 1,236,400 527,018 0 1,763,418
OTHER LIABILITIES
Deferred income taxes (Note 4) 804,342 511,399 (153,806) 1,161,935
Deferred investment tax credits 149,606 87,798 0 237,404
Regulatory liabilities 302,647 175,943 0 478,590
Other liabilities and deferred credits 174,988 116,819 0 291,807
Total other liabilities 1,431,583 891,959 (153,806) 2,169,736
TOTAL CAPITALIZATION AND LIABILITIES $6,636,900 $4,810,838 ($153,806) $11,293,932
See accompanying notes to unaudited pro forma combined condensed financial statements.
PRIMERGY CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
1. The pro forma combined condensed financial statements reflect the
conversion of each share of NSP common stock outstanding ($2.50 par
value) into 1.626 shares of Primergy Common Stock ($.01 par value) and
the continuation of each share of WEC Common Stock outstanding as one
share of Primergy common stock ($.01 par value), as provided in the
Merger Agreement. The pro forma combined condensed financial statements
are presented as if the companies were combined during all periods
included therein.
NSP equivalent shares shown on the pro forma combined condensed income
statements represent the pro forma equivalent of one share of NSP Common
Stock calculated by multiplying the pro forma information by the
conversion ratio of 1.626 shares of Primergy Common Stock for each share
of NSP Common Stock.
2. The allocation between NSP and WEC and their customers of the estimated
cost savings, resulting from the Transaction, net of the costs incurred
to achieve such savings, will be subject to regulatory review and
approval. At the time the Merger Agreement was signed, cost savings
resulting from the Transaction were estimated to be approximately $2
billion over a 10-year period, net of transaction costs (including fees
for financial advisors, attorneys, accountants, consultants, filings and
printing) and net of costs to achieve the savings of approximately $30
million and $122 million, respectively. None of the estimated cost
savings, the costs to achieve such savings, or the transaction costs
have been reflected in the pro forma combined condensed financial
statements.
3. Intercompany transactions (including purchased and exchanged power
transactions) between NSP and WEC during the periods presented were not
material and, accordingly, no pro forma adjustments were made to
eliminate such transactions.
4. A pro forma adjustment has been made to conform the presentation of
noncurrent deferred income taxes in the pro forma combined condensed
balance sheet into one net amount. All other report presentation and
accounting policy differences are immaterial and have not been adjusted
in the pro forma combined condensed financial statements.