EXHIBIT 99
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma financial information combines the
historical consolidated balance sheets and statements of income of Puget
Sound Power and Light Company ("Puget") and Washington Energy Company
("WECo") after giving effect to the merger. The unaudited pro forma
condensed balance sheets give effect to the merger as if it had occurred at
each balance sheet date. The unaudited pro forma condensed statements of
income for each of the three years in the period ended December 31, 1995, and
the three months and twelve months ended March 31, 1996, give effect to the
merger as if it had occurred on January 1, 1993. These statements are
prepared on the basis of accounting for the merger 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 Puget, WECo and Washington Natural Gas Company
("WNG"), a wholly-owned subsidiary of WECo. The following information is not
necessarily indicative of the operating results or financial position that
would have occurred had the merger been consummated on the date, or at the
beginning of the periods, for which the merger is being given effect, nor is
it necessarily indicative of future operating results or financial position.
EXHIBIT 99
PAGE 2
PUGET SOUND ENERGY
PRO FORMA CONDENSED BALANCE SHEET
AT MARCH 31, 1996
(Thousands of dollars)
(unaudited)
Pro Forma
Puget(1) WECo(1) Combined
---------- ---------- ----------
ASSETS
Property, Plant and Equipment:
Utility plant $3,421,470 $1,092,224 $4,513,694
Coal and other 15,661 15,661
Accumulated provisions for depreciation
and amortization 1,139,659 289,388 1,429,047
--------- --------- ---------
Net property, plant and equipment 2,281,811 818,497 3,100,308
--------- --------- ---------
Other Property and Investments:
Investment in Bonneville Exchange Power Contract 92,412 92,412
Investment in and advances to subsidiaries 95,943 95,943
Investment in unconsolidated affiliate 69,393 69,393
Other 12,945 12,945
--------- --------- ---------
Total other property and investments 201,300 69,393 270,693
--------- --------- ---------
Current Assets:
Cash 3,902 8,277 12,179
Accounts receivable 142,203 18,627 160,830
Estimated unbilled revenue 60,263 15,607 75,870
PRAM accrued revenues 45,647 45,647
Materials and supplies, at average cost 45,062 17,965 63,027
Prepayments and other 4,021 11,163 15,184
--------- --------- ---------
Total current assets 301,098 71,639 372,737
--------- --------- ---------
Long-Term Assets:
Regulatory asset for deferred income taxes 246,015 17,605 263,620
PRAM accrued revenues (net of current portion) 44,211 44,211
Unamortized energy conservation charges 39,010 39,010
Other 125,786 34,732 160,518
--------- --------- ---------
Total long-term assets 455,022 52,337 507,359
--------- --------- ---------
TOTAL ASSETS $3,239,231 $1,011,866 $4,251,097
========= ========= =========
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements
EXHIBIT 99
PAGE 3
PUGET SOUND ENERGY
PROFORMA CONDENSED BALANCE SHEET
AT MARCH 31, 1996
(Thousands of dollars)
(unaudited)
Pro Forma
Puget(1) WECo(1) Combined
---------- ---------- ----------
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock and additional paid-in capital (4) $ 965,372 $ 324,873 $1,290,245
Earnings reinvested (Accumulated deficit) 223,892 (110,169) 113,723
Preferred stock not subject to mandatory redemption 125,000 90,000 215,000
Preferred stock subject to mandatory redemption 87,839 87,839
Long-term debt 920,476 344,920 1,265,396
--------- --------- ---------
Total capitalization 2,322,579 649,624 2,972,203
--------- --------- ---------
Current Liabilities:
Accounts payable 41,886 22,045 63,931
Short-term debt 133,740 125,918 259,658
Current maturities of long-term debt 8,000 140 8,140
Accrued taxes 76,450 17,344 93,794
Other 74,580 79,048 153,628
--------- --------- ---------
Total current liabilities 334,656 244,495 579,151
--------- --------- ---------
Deferred Taxes:
Deferred income taxes 523,973 71,655 595,628
Deferred investment credits 207 8,962 9,169
--------- --------- ---------
Total deferred taxes 524,180 80,617 604,797
--------- --------- ---------
Other Deferred Credits:
Customer advances for construction 19,559 15,401 34,960
Other 38,257 21,729 59,986
--------- --------- ---------
Total other deferred credits 57,816 37,130 94,946
--------- --------- ---------
TOTAL CAPITALIZATION AND LIABILITIES $3,239,231 $1,011,866 $4,251,097
========= ========= =========
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements
EXHIBIT 99
PAGE 4
PUGET SOUND ENERGY
PROFORMA CONDENSED BALANCE SHEET
AT DECEMBER 31, 1995
(Thousands of dollars)
(unaudited)
Pro Forma
Puget(1) WECo(1) Combined
---------- ---------- ----------
ASSETS
Property, Plant and Equipment:
Utility plant $3,400,723 $1,055,322 $4,456,045
Coal and other 15,621 15,621
Accumulated provisions for depreciation
and amortization 1,118,678 273,735 1,392,413
--------- --------- ---------
Net property, plant and equipment 2,282,045 797,208 3,079,253
--------- --------- ---------
Other Property and Investments:
Investment in Bonneville Exchange Power Contract 94,241 94,241
Investment in and advances to subsidiaries 95,459 95,459
Investment in unconsolidated affiliate 70,313 70,313
Other 12,111 12,111
--------- --------- ---------
Total other property and investments 201,811 70,313 272,124
--------- --------- ---------
Current Assets:
Cash 12,498 9,315 21,813
Accounts receivable 124,086 10,830 134,916
Estimated unbilled revenue 80,363 9,607 89,970
PRAM accrued revenues 59,123 59,123
Materials and supplies, at average cost 46,407 31,968 78,375
Prepayments and other 4,352 14,649 19,001
--------- --------- ---------
Total current assets 326,829 76,369 403,198
--------- --------- ---------
Long-Term Assets:
Regulatory asset for deferred income taxes 249,731 17,605 267,336
PRAM accrued revenues (net of current portion) 55,673 55,673
Unamortized energy conservation charges 37,889 37,889
Other 115,017 27,995 143,012
--------- --------- ---------
Total long-term assets 458,310 45,600 503,910
--------- --------- ---------
TOTAL ASSETS $3,268,995 $ 989,490 $4,258,485
========= ========= =========
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements
EXHIBIT 99
PAGE 5
PUGET SOUND ENERGY
PROFORMA CONDENSED BALANCE SHEET
AT DECEMBER 31, 1995
(Thousands of dollars)
(unaudited)
Pro Forma
Puget(1) WECo(1) Combined
---------- ---------- ----------
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock and additional paid-in capital (4) $ 965,372 $ 322,964 $1,288,336
Earnings reinvested (Accumulated deficit) 210,532 (126,278) 84,254
Preferred stock not subject to mandatory redemption 125,000 90,000 215,000
Preferred stock subject to mandatory redemption 89,039 89,039
Long-term debt 920,439 310,060 1,230,499
--------- --------- ---------
Total capitalization 2,310,382 596,746 2,907,128
--------- --------- ---------
Current Liabilities:
Accounts payable 50,269 32,755 83,024
Short-term debt 167,049 161,994 329,043
Current maturities of long-term debt 43,000 30,140 73,140
Accrued taxes 36,321 12,556 48,877
Other 72,288 49,071 121,359
--------- --------- ---------
Total current liabilities 368,927 286,516 655,443
--------- --------- ---------
Deferred Taxes:
Deferred income taxes 528,400 70,467 598,867
Deferred investment credits 311 9,352 9,663
--------- --------- ---------
Total deferred taxes 528,711 79,819 608,530
--------- --------- ---------
Other Deferred Credits:
Customer advances for construction 19,972 14,252 34,224
Other 41,003 12,157 53,160
--------- --------- ---------
Total other deferred credits 60,975 26,409 87,384
--------- --------- ---------
TOTAL CAPITALIZATION AND LIABILITIES $3,268,995 $ 989,490 $4,258,485
========= ========= =========
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements
EXHIBIT 99
PAGE 6
PUGET SOUND ENERGY
PRO FORMA CONDENSED STATEMENT OF INCOME
FOR THREE MONTHS ENDED MARCH 31, 1996
(Thousands, except per share amounts)
(unaudited)
Pro Forma
Puget(1) WECo(1) Combined(5)
---------- ---------- -----------
OPERATING REVENUES $331,009 $155,289 $486,298
OPERATING EXPENSES:
Purchased and interchanged power and gas purchases 115,626 69,465 185,091
Other operating expenses and maintenance 60,357 23,267 83,624
Depreciation, depletion and amortization 27,478 9,064 36,542
Taxes other than federal income taxes 31,827 13,680 45,507
Federal income taxes 31,033 10,331 41,364
------- ------- -------
Total operating expenses 266,321 125,807 392,128
------- ------- -------
OPERATING INCOME 64,688 29,482 94,170
------- ------- -------
OTHER INCOME (EXPENSE):
Preferred dividend requirement - WNG (6) -- (1,755) --
Other - net of taxes 1,119 512 1,631
------- ------- -------
Total other income (expense) 1,119 (1,243) 1,631
------- ------- -------
INCOME BEFORE INTEREST CHARGES 65,807 28,239 95,801
INTEREST CHARGES 19,388 10,216 29,604
------- ------- -------
INCOME FROM CONTINUING OPERATIONS BEFORE
PREFERRED DIVIDENDS 46,419 18,023 66,197
LESS PREFERRED STOCK DIVIDEND ACCRUALS 3,743 -- 5,498
------- ------- -------
INCOME FOR COMMON STOCK (2) $ 42,676 $ 18,023 $ 60,699
======= ======= =======
COMMON SHARES OUTSTANDING WEIGHTED AVERAGE (3) 63,641 24,139 84,401
EARNINGS PER SHARE (2) $ 0.67 $ 0.75 $ 0.72
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements
EXHIBIT 99
PAGE 7
PUGET SOUND ENERGY
PRO FORMA CONDENSED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED MARCH 31, 1996
(Thousands, except per share amounts)
(unaudited)
Pro Forma
Puget(1) WECo(1) Combined(5)
---------- ---------- -----------
OPERATING REVENUES $1,171,994 $ 412,631 $1,584,625
OPERATING EXPENSES:
Purchased and interchanged power and gas purchases 413,320 180,562 593,882
Other operating expenses and maintenance 247,987 93,775 341,762
Depreciation, depletion and amortization 108,037 34,123 142,160
Taxes other than federal income taxes 110,669 39,996 150,665
Federal income taxes 83,064 7,867 90,931
--------- --------- ---------
Total operating expenses 963,077 356,323 1,319,400
--------- --------- ---------
OPERATING INCOME 208,917 56,308 265,225
--------- --------- ---------
OTHER INCOME (EXPENSE):
Preferred dividend requirement - WNG (6) -- (7,020) --
Other - net of taxes 7,114 (44,650) (37,536)
--------- --------- ---------
Total other income (expense) 7,114 (51,670) (37,536)
--------- --------- ---------
INCOME BEFORE INTEREST CHARGES 216,031 4,638 227,689
INTEREST CHARGES 82,638 42,025 124,663
--------- --------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
PREFERRED DIVIDENDS 133,393 (37,387) 103,026
LESS PREFERRED STOCK DIVIDEND ACCRUALS 15,308 -- 22,328
--------- --------- ---------
INCOME (LOSS) FOR COMMON STOCK (2) $ 118,085 $ (37,387) $ 80,698
========= ========= =========
COMMON SHARES OUTSTANDING WEIGHTED AVERAGE (3) 63,641 24,049 84,323
EARNINGS (LOSS) PER SHARE (2) $ 1.86 $ (1.55) $ 0.96
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements
EXHIBIT 99
PAGE 8
PUGET SOUND ENERGY
PRO FORMA CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(Thousands, except per share amounts)
(unaudited)
Pro Forma
Puget(1) WECo(1) Combined(5)
---------- ---------- -----------
OPERATING REVENUES $1,179,330 $ 443,611 $1,622,941
OPERATING EXPENSES:
Purchased and interchanged power and gas purchases 409,541 219,022 628,563
Other operating expenses and maintenance 253,541 93,184 346,725
Depreciation, depletion and amortization 107,582 33,128 140,710
Taxes other than federal income taxes 109,533 40,974 150,507
Federal income taxes 84,545 5,507 90,052
--------- --------- ---------
Total operating expenses 964,742 391,815 1,356,557
--------- --------- ---------
OPERATING INCOME 214,588 51,796 266,384
--------- --------- ---------
OTHER INCOME (EXPENSE):
Preferred dividend requirement - WNG (6) -- (7,126) --
Other - net of taxes 7,676 (45,204) (37,528)
--------- --------- ---------
Total other income (expense) 7,676 (52,330) (37,528)
--------- --------- ---------
INCOME (LOSS) BEFORE INTEREST CHARGES 222,264 (534) 228,856
INTEREST CHARGES 86,544 40,528 127,072
--------- --------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
PREFERRED DIVIDENDS 135,720 (41,062) 101,784
LESS PREFERRED STOCK DIVIDEND ACCRUALS 15,528 -- 22,654
--------- --------- ---------
INCOME (LOSS) FOR COMMON STOCK (2) $ 120,192 $ (41,062) $ 79,130
======== ========= =========
COMMON SHARES OUTSTANDING WEIGHTED AVERAGE (3) 63,641 23,893 84,189
EARNINGS (LOSS) PER SHARE (2) $ 1.89 $ (1.72) $ 0.94
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements
EXHIBIT 99
PAGE 9
PUGET SOUND ENERGY
PRO FORMA CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(Thousands, except per share amounts)
(unaudited)
Pro Forma
Puget(1) WECo(1) Combined(5)
---------- ---------- -----------
OPERATING REVENUES $1,194,058 $ 432,025 $1,626,083
OPERATING EXPENSES:
Purchased and interchanged power and gas purchases 394,758 223,502 618,260
Other operating expenses and maintenance 301,984 118,065 420,049
Depreciation, depletion and amortization 115,738 30,901 146,639
Taxes other than federal income taxes 107,821 38,086 145,907
Federal income taxes(7) 80,259 (6,697) 74,108
--------- --------- ---------
Total operating expenses 1,000,560 403,857 1,404,963
--------- --------- ---------
OPERATING INCOME 193,498 28,168 221,120
--------- --------- ---------
OTHER INCOME (EXPENSE):
Pre-tax loss on merger of subsidiary(7) -- (6,304) --
Federal income taxes on merger of subsidiary(7) -- (23,711) --
Preferred dividend requirement - WNG (6) -- (3,970) --
Other - net of taxes(7) 12,820 (2,732) 12,362
--------- --------- ---------
Total other income (expense) 12,820 (36,717) 12,362
--------- --------- ---------
INCOME (LOSS) BEFORE INTEREST CHARGES 206,318 (8,549) 233,482
INTEREST CHARGES(7) 86,259 36,298 120,997
--------- --------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
PREFERRED DIVIDENDS 120,059 (44,847) 112,485
LESS PREFERRED STOCK DIVIDEND ACCRUALS 15,731 9 19,710
LESS EXCESS PREMIUM PREFERRED REDEMPTION -- 673 673
--------- --------- ---------
INCOME (LOSS) FOR COMMON STOCK (2) $ 104,328 $ (45,529) $ 92,102
========= ========= =========
COMMON SHARES OUTSTANDING WEIGHTED AVERAGE (3) 63,632 23,486 83,830
EARNINGS (LOSS) PER SHARE (2) $ 1.64 $ (1.94) $ 1.10
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements
EXHIBIT 99
PAGE 10
PUGET SOUND ENERGY
PRO FORMA CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
(Thousands, except per share amounts)
(unaudited)
Pro Forma
Puget(1) WECo(1) Combined(5)
---------- ---------- -----------
OPERATING REVENUES $1,112,878 $ 470,392 $1,583,270
OPERATING EXPENSES:
Purchased and interchanged power and gas purchases 317,642 180,893 498,535
Other operating expenses and maintenance 283,998 147,116 431,114
Depreciation, depletion and amortization 115,690 38,274 153,964
Taxes other than federal income taxes 100,598 38,895 139,493
Federal income taxes 83,970 9,645 93,615
--------- --------- ---------
Total operating expenses 901,898 414,823 1,316,721
--------- --------- ---------
OPERATING INCOME 210,980 55,569 266,549
--------- --------- ---------
OTHER INCOME (EXPENSE):
Preferred dividend requirement - WNG (6) -- (2,612) --
Other - net of taxes 13,578 717 14,295
--------- --------- ---------
Total other income (expense) 13,578 (1,895) 14,295
--------- --------- ---------
INCOME BEFORE INTEREST CHARGES 224,558 53,674 280,844
INTEREST CHARGES 86,231 31,639 117,870
--------- --------- ---------
INCOME FROM CONTINUING OPERATIONS BEFORE
PREFERRED DIVIDENDS 138,327 22,035 162,974
LESS PREFERRED STOCK DIVIDEND ACCRUALS 16,442 101 19,155
--------- --------- ---------
INCOME FOR COMMON STOCK (2) $ 121,885 $ 21,934 $ 143,819
========= ========= =========
COMMON SHARES OUTSTANDING WEIGHTED AVERAGE (3) 60,931 22,996 80,708
EARNINGS PER SHARE (2) $ 2.00 $ 0.95 $ 1.78
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements
EXHIBIT 99
PAGE 11
NOTES TO UNAUDITED PROFORMA CONDENSED FINANCIAL STATEMENTS
(1) Puget's fiscal year ends on December 31. WECo's fiscal year ends on
September 30. The pro forma financial data for the years ended December
31, 1993-95 reflect fiscal years ended December 31 for Puget and
September 30 for WECo. The financial data for the three months and
twelve months ended March 31, 1996 are the results of three months and
twelve months ended March 31, 1996 for Puget and WECo.
(2) Income (Loss) for Common Stock and Earnings per Share are based on
income from continuing operations after preferred dividend requirements.
Results of discontinued operations for WECo and WNG have been excluded
for 1993 and 1994.
(3) The Pro Forma Condensed Financial Statements reflect the conversion of
each share of WECo common stock outstanding into .860 share of Puget
Sound Energy common stock and the issuance of Puget Sound Energy
preferred stock for WNG preferred stock. The Pro Forma Condensed
Financial Statements are presented as if the merger had been consummated
prior to the periods presented.
(4) The number of shares of common stock outstanding, by company, were as
follows:
Puget WECo Pro Forma
---------- ---------- ----------
at December 31, 1995 63,641,000 24,128,000 84,391,000
at March 31, 1996 63,641,000 24,174,000 84,431,000
(5) The pro forma financial statements do not reflect the $370 million net
cost savings estimated to be achieved in the 10-year period following
consummation of the merger. The terms and conditions under which the
Washington Utilities and Transportation Commission may approve the
merger are unknown.
(6) Assumes WNG preferred stock has been exchanged for Puget Sound Energy
preferred stock. In the Pro Forma Condensed Statements of Income, these
dividend requirements are included in "Preferred Stock Dividend
Accruals."
(7) The results of operations for 1994 reflect pro forma adjustments to
eliminate the loss on the merger of WECo's oil and gas subsidiary and to
reflect the earnings from the investment in the independent oil and gas
company for the entire year.