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EXHIBIT 99
Items Incorporated by Reference from the REMA 10-K
5. COMMITMENTS AND CONTINGENCIES
(a) Lease Financing -- In August 2000, REMA sold to and leased back from
each of three owner lessors in separate lease transactions REMA's respective
16.45%, 16.67% and 100% interest in the Conemaugh, Keystone and Shawville
generating stations. As a lessee, REMA leases an interest in each facility from
each owner lessor under a facility lease agreement. The lease agreements contain
some restrictive covenants that restrict REMA's ability to, among other things,
make dividend distributions unless REMA satisfies various conditions. The
covenant restricting dividends would be suspended if a direct or indirect parent
of REMA meeting specified criteria guarantees the lease obligations. As of
December 31, 2000, REMA had $50 million which was restricted pursuant to the
lease agreements. As consideration for the sale of REMA's interest in each of
the facilities, REMA received $1.0 billion in cash. These proceeds were utilized
to return capital of $183 million, with the remainder used to reduce affiliate
debt. In connection with the lease transactions, REMA entered into working
capital facilities with affiliates in the aggregate amount of $150 million (see
Note 8). REMA will make lease payments through 2029. The lease term expires in
2034.
The following table sets forth REMA's obligation under these long-term
operating leases (in millions):
2001................................................................. $ 259
2002................................................................. 137
2003................................................................. 77
2004................................................................. 84
2005................................................................. 75
2006 and beyond...................................................... 1,188
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$ 1,820
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There was no operating lease expense for the periods November 24, 1999 to
December 31, 1999 and January 1, 2000 to May 11, 2000. Operating lease expense
was $20.9 million for the period May 12, 2000 to December 31, 2000.
The equity interests in all of the subsidiaries of REMA are pledged as
collateral for REMA's lease obligations. In addition, these subsidiaries have
also guaranteed the payments under the lease obligations. The following
represents condensed consolidating financial statements of REMA and its
subsidiaries. The subsidiaries included in the condensed consolidating financial
statements presented below are all wholly owned and constitute all of REMA's
direct and indirect subsidiaries (Guarantor Subsidiaries). The guaranties of the
Guarantor Subsidiaries of the lease obligations are all full, unconditional, and
joint and several. There are no significant restrictions on REMA's ability to
obtain funds from the Guarantor Subsidiaries.
RELIANT ENERGY MID-ATLANTIC POWER HOLDINGS LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2000
(THOUSANDS OF DOLLARS)
GUARANTOR
REMA SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------
Revenues........................................... $ 542,528 $ 107,899 $ -- $ 650,427
Expenses:
Fuel, operation, maintenance and lease expenses.. 273,456 46,832 -- 320,288
General and administrative....................... 21,154 3,320 -- 24,474
Depreciation and amortization.................... 46,304 10,855 -- 57,159
------------ ------------ ------------ ------------
Total Expenses........................... 340,914 61,007 -- 401,921
Operating Income................................... 201,614 46,892 -- 248,506
Equity in Earnings of Consolidated Subsidiaries.... 22,334 -- (22,334) --
Interest Expense to Affiliate, net................. 110,799 8,776 -- 119,575
Interest Income.................................... 3,034 -- -- 3,034
------------ ------------ ------------ ------------
Net Income Before Taxes............................ 116,183 38,116 (22,334) 131,965
Income Tax Expense................................. 41,654 15,782 -- 57,436
------------ ------------ ------------ ------------
Net Income......................................... $ 74,529 $ 22,334 $ (22,334) $ 74,529
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RELIANT ENERGY MID-ATLANTIC POWER HOLDINGS LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2000
(THOUSANDS OF DOLLARS)
GUARANTOR
REMA SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------
Current Assets..................................... $ 121,096 $ 132,630 $ (94,525) $ 159,201
Property, Plant and Equipment, net................. 590,699 322,224 -- 912,923
Other Noncurrent Assets............................ 540,616 17,182 (368,638) 189,160
------------ ------------ ------------ ------------
Total Assets............................. $ 1,252,411 $ 472,036 $ (463,163) $ 1,261,284
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Current Liabilities................................ $ 194,477 $ 89,648 $ (94,525) $ 189,600
Noncurrent Liabilities............................. 27,117 13,750 -- 40,867
Subordinated Note Payable to Affiliate............. 838,356 -- -- 838,356
Member's Equity.................................... 192,461 368,638 (368,638) 192,461
------------ ------------ ------------ ------------
Total Liabilities and Member's Equity.... $ 1,252,411 $ 472,036 $ (463,163) $ 1,261,284
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(b) Other Operating Leases -- REMA leases some equipment and vehicles under
noncancelable operating leases extending through 2006. Future minimum rentals
under lease agreements are as follows (in thousands):
2001................................................................. $ 386
2002................................................................. 288
2003................................................................. 143
2004................................................................. 109
2005................................................................. 88
2006................................................................. 12
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Total...................................................... $ 1,026
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Rent expense incurred under other operating leases aggregated approximately
$35,000, $187,000 and $346,000 for the periods November 24, 1999 to December 31,
1999, January 1, 2000 to May 11, 2000, and May 12, 2000 to December 31, 2000,
respectively.
(c) Environmental -- Under the agreement to acquire REMA's generating
assets from GPU, liabilities associated with ash disposal site closures and site
contamination at the acquired facilities in Pennsylvania and New Jersey prior to
plant closing were assumed, except for the first $6 million of remediation costs
at the Seward Station. GPU retained liabilities associated with the disposal of
hazardous substances to off-site locations prior to November 24, 1999. REMA has
recorded its estimate of these environmental liabilities in the amount of $28.0
million and $35.8 million, as of December 31, 1999 and 2000, respectively. REMA
expects approximately $13 million will be paid over the next five years.
(d) Fuel Supply Agreements -- REMA is a party to several long-term fuel
supply contracts that have various quantity requirements and durations. Minimum
payment obligations under these agreements that extend through 2004 are as
follows, as of December 31, 2000 (in millions):
2001................................................................. $ 85
2002................................................................. 66
2003................................................................. 29
2004................................................................. 14
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Total...................................................... $ 194
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(e) Other -- REMA is party to various legal proceedings that arise from
time to time in the ordinary course of business. While REMA cannot predict the
outcome of these proceedings, REMA does not expect these matters to have a
material adverse effect on REMA's financial position, results of operations or
cash flows.