Exhibit 99.1
DUQUESNE LIGHT COMPANY UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma financial information presented on the following pages
is derived from the historical financial statements of Duquesne Light Company.
The unaudited pro forma condensed consolidated balance sheet information as of
December 31, 1999 gives pro forma effect to the generation asset divestiture
described in Item 2 as if such transaction had been consummated on December 31,
1999. The unaudited pro forma condensed consolidated statement of income gives
pro forma effect to the generation asset divestiture described in Item 2 as if
the transaction had been consummated on January 1, 1999.
The pro forma adjustments do not reflect any operating efficiencies or cost
savings that may be achievable with respect to the divested assets. The pro
forma adjustments do not include any adjustments to historical revenues and
expenses for any future price changes or any adjustments to operating expenses
for any future operation changes except for those items that are directly
related to the operation of the generation facilities.
The unaudited pro forma financial information is not necessarily indicative of
the financial position or operating results that would have occurred had the
generation assets divestiture been consummated on the dates for which such
transaction is being given effect. The pro forma adjustments reflecting the
generation asset divestiture are based upon the assumptions set forth in the
notes to the unaudited pro forma condensed consolidated financial statements.
The unaudited pro forma condensed consolidated financial information presented
on the following pages should be read in conjunction with the audited historical
financial statements (including the notes thereto) of Duquesne Light Company,
which are contained in its Annual Report on Form 10-K.
Duquesne Light Company
Pro Forma Condensed Consolidated Balance Sheet
December 31, 1999
Amounts in Thousands
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Pro Forma
UNAUDITED As Reported Adjustments As Adjusted
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ASSETS
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Property, plant and equipment - net $ 1,458,517 $ (189,000)e $ 1,269,517
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Long-term investments 80,891 - 80,891
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Current assets:
Cash and temporary investments 16,068 (0) 16,068
Receivables - net 131,647 - 131,647
Other current assets 111,134 (33,057) 78,077
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Current assets 258,849 (33,057) 225,792
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Other Non-Current Assets:
Transition costs 2,008,171 (1,300,559)e 707,612
Regulatory assets 224,002 - 224,002
Divestiture costs 218,653 (218,653)e -
Other 32,329 - 32,329
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Non-current assets 2,483,155 (1,519,212) 963,943
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TOTAL ASSETS $ 4,281,412 $ (1,741,269) $ 2,540,143
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CAPITALIZATION and LIABILITIES
Capitalization:
Common stock $ - $ - $ -
Capital surplus 746,051 (665,797)d 80,254
Retained earnings 39,931 (43,586) (3,655)
Accumulated other comprehensive income 12,692 - 12,692
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Total common stockholders' equity 798,674 (709,383) 89,291
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Preferred and preference stock 229,512 - 229,512
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Long-term debt 1,410,754 (350,162)c 1,060,592
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Total capitalization 2,438,940 (1,059,545) 1,379,395
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Current liabilities:
Notes payable and current maturities 536,353 (435,668)c 100,685
Other current liabilities 225,333 - 225,333
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Current liabilities 761,686 (435,668) 326,018
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Non-current liabilities:
Deferred income taxes 760,677 (246,056) 514,621
Deferred income 93,246 - 93,246
Other non-current liabilities 226,863 - 226,863
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Non-current liabilities 1,080,786 (246,056) 834,730
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TOTAL LIABILITIES and CAPITALIZATION $ 4,281,412 $ (1,741,269) $ 2,540,143
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See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
Exhibit 99.1
Duquesne Light Company
Pro Forma Condensed Consolidated Statement of Income
Year ended December 31, 1999
Amounts in thousands, except per share amounts
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Pro Forma
UNAUDITED As Reported Adjustments As Adjusted
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Operating Revenues:
Customer revenues $ 1,022,425 $ - a $ 1,022,425
Utilities 76,303 $ - 76,303
Other 60,072 - 60,072
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Total Operating Revenues 1,158,800 - 1,158,800
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Operating Expenses:
Fuel and purchased power 225,182 196,956 a 422,138
Other operating 253,252 (68,117)a 185,135
Maintenance 75,400 (48,133)a 27,267
Depreciation and amortization 172,424 84,559 b 256,983
Taxes other than income taxes 84,532 (45,670)a 38,862
Income taxes 88,246 (30,920)f 57,326
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Total Operating Expenses 899,036 88,675 987,711
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Operating Income 259,764 (88,675) 171,089
Other Income and (Deductions) 22,490 0 22,490
Income Before Interest and Other Charges 282,254 (88,675) 193,579
Interest Charges (118,672) 45,089 c (73,583)
Monthly Income Preferred Securities Dividend Requirements (12,562) - (12,562)
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Net Income 151,020 (43,586) 107,434
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Dividends on Preferred and Preference Stock 3,998 - 3,998
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Earnings Available for Common Stock $ 147,022 $ (43,586) $ 103,436
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See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
Exhibit 99.1
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(a) In conjunction with the generation station auction, Orion will supply
energy to Duquesne Light to cover the Provider of Last Resort (POLR)
obligation for customers who do not switch to another energy supplier. No
change would result to operating revenues as the amount of POLR revenues
are unaffected. Operating expenses related to coal and nuclear generation
(fuel, operating and maintenance costs, and property taxes) have been
eliminated. In addition, purchased power and gross receipt taxes have been
adjusted to reflect the impact of the provider of last resort agreement
with Orion. Under this agreement, the cost of the purchased power will be
equal to the operating revenue received from customers who do not switch to
another energy supplier.
(b) Since Duquesne Light would have recovered approximately $1.1 billion of
transition costs (net of deferred taxes) at the beginning of 1999 through
the generation auction, the permitted return on the unrecovered balance of
transition costs would have been substantially reduced. This reduced return
is reflected as additional amortization expense. The increase in
amortization expense is offset by a reduction in depreciation expense
related to the generation facilities of $21,793.
(c) Adjustment represents the impact of the elimination of the interest
component on the Beaver Valley Unit 2 lease of $35,245 and the incremental
debt and interest expense of $9,844 incurred from the issuance of
commercial paper and other debt in anticipation of receiving generation
auction proceeds.
(d) Adjustment represents special dividend to DQE.
(e) Adjustment represents the write-off of the net book value of the generation
plant assets, materials and supplies inventory, the recovery on December
31, 1999 of the transition assets (including the related deferred income
taxes) and the recovery of the previously deferred divestiture expenses.
(f) Adjustment represents the net income tax impact of all of the pro forma
adjustments utilizing Duquesne Light's effective tax rate.