EX-99.3 5 d585321dex993.htm EX-99.3 EX-99.3

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED

FINANCIAL INFORMATION

The unaudited pro forma condensed combined financial information of Chesapeake Utilities Corporation (“Chesapeake Utilities”, or the “Company”) consists of a condensed combined balance sheet at September 30, 2023, and condensed combined statements of income for the nine months ended September 30, 2023 and the year ended December 31, 2022, all of which reflect the Company’s anticipated acquisition of Pivotal Utility Holdings, Inc. doing business as Florida City Gas (“FCG”). The unaudited pro forma condensed combined financial statements included herein have been derived from the following historical financial statements:

 

   

the audited financial statements of Chesapeake Utilities as of and for the year ended December 31, 2022;

 

   

the unaudited interim financial statements of Chesapeake Utilities as of and for the nine months ended September 30, 2023;

 

   

the audited financial statements of FCG as of and for the year ended December 31, 2022; and

 

   

the unaudited interim financial statements of FCG as of and for the nine months ended September 30, 2023.

The pro forma adjustments have been prepared as if the acquisition of FCG occurred on September 30, 2023 in the case of the unaudited pro forma condensed combined balance sheet and on January 1, 2022 in the case of the unaudited pro forma condensed combined statements of income for the nine months ended September 30, 2023 and for the year ended December 31, 2022. The unaudited pro forma condensed combined financial statements should be read in conjunction with the related notes, which are included herein, the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed February 22, 2023, and Quarterly Report on Form 10-Q for the nine months ended September 30, 2023, as filed November 2, 2023 and the financial statements and notes of FCG attached as Exhibits 99.1 and 99.2 in the Company’s Current Report on Form 8-K filed by the Company on November 9, 2023.

The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not necessarily reflect what the combined financial condition and results of operations would have reflected had the Acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of the operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

The unaudited pro forma information and adjustments, including the preliminary allocation of purchase price, are based upon preliminary estimates of fair values of assets acquired and liabilities assumed, current available information and certain assumptions that we believe are reasonable in the circumstances, as described in the notes to the unaudited pro forma condensed combined financial statements. The actual adjustments to the Company’s consolidated financial statements as of the closing date of the Acquisition will depend on a number of factors, including, among others, additional information available and the net assets of FCG on the closing date of the Acquisition. As a result, the actual adjustments will differ from the pro forma adjustments, and the differences may be material.

CHESAPEAKE UTILITIES CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED

BALANCE SHEET AT SEPTEMBER 30, 2023

 

Assets

   CPK     FCG            Transaction
Adjustments
        Pro Forma
Combined
 

(in thousands)

             

Property, Plant and Equipment

             

Regulated energy

   $ 1,916,585     $ 663,047        $ (11,882   4[a]   $ 2,567,750  

Unregulated energy

     404,924       —                404,924  

Other businesses and eliminations

     28,802       —                28,802  
  

 

 

   

 

 

      

 

 

     

 

 

 

Total property, plant and equipment

     2,350,311       663,047          (11,882       3,001,476  

Less: Accumulated depreciation and amortization

     (503,897     (179,367        2,411     4[a]     (680,853

Plus: Construction work in progress

     61,843       18,183              80,026  
  

 

 

   

 

 

      

 

 

     

 

 

 

Net property, plant and equipment

     1,908,257       501,863          (9,472       2,400,648  
  

 

 

   

 

 

      

 

 

     

 

 

 

Current Assets

             

Cash and cash equivalents

     1,793       24,306          (22,306   4[b]     3,793  

Trade and other receivables

     47,397       14,355          (187   4[c]     61,565  

Less: Allowance for credit losses

     (2,405     (451            (2,856
  

 

 

   

 

 

      

 

 

     

 

 

 

Trade receivables, net

     44,992       13,904          (187       58,709  

Accrued revenue

     15,229       —                15,229  

Propane inventory, at average cost

     7,001       —                7,001  

Other inventory, at average cost

     17,593       1,324              18,917  

Natural gas for sale

     —         1,373              1,373  

Regulatory assets

     19,111       2,833              21,944  

Storage gas prepayments

     5,063       —                5,063  

Income taxes receivable

     5,340       —                5,340  

Prepaid expenses

     17,179       1,006              18,185  

Derivative assets, at fair value

     2,328       —                2,328  

Other current assets

     1,837       436              2,273  
  

 

 

   

 

 

      

 

 

     

 

 

 

Total current assets

     137,466       45,182          (22,493       160,155  
  

 

 

   

 

 

      

 

 

     

 

 

 

Deferred Charges and Other Assets

             

Goodwill

    
46,213

 
    —           

467,689

(868

 

  4[d]

4[e]

   
513,034

 

Other intangible assets, net

     16,518       —                16,518  

Investments, at fair value

     11,084       —                11,084  

Derivative assets, at fair value

     425       —                425  

Operating lease right-of-use assets

     12,842       43,828          (43,828   4[f]     12,842  

Regulatory assets

     91,678       3,636              95,314  

Receivables and other deferred charges

             

Prepaid pension asset

       4,869          (4,869   4[g]     —    

Prepaid software service costs

       9,551              9,551  

Deferred software implementation costs

       4,812              4,812  

Miscellaneous deferred debits

       4,427          (154   4[h]     4,273  

Deferred rate case expenses

       1,136              1,136  

Other receivables and other deferred charges

     16,263       15              16,278  
  

 

 

   

 

 

      

 

 

     

 

 

 

Total deferred charges and other assets

     195,023       72,274          417,970         685,267  
  

 

 

   

 

 

      

 

 

     

 

 

 

Total Assets

   $ 2,240,746     $ 619,319        $ 386,005       $ 3,246,070  
  

 

 

   

 

 

      

 

 

     

 

 

 

Capitalization and Liabilities

             

Stockholders’ equity

             

Preferred stock, par value $0.01 per share (authorized 2,000,000 shares)

   $ —       $ —          $ —         $ —    

Common stock, par value $0.4867 per share (authorized 50,000,000 shares)

     8,662       —            1,824     4[i]     10,486  

Additional paid-in capital

     382,551       256,081          (10,725   4[j]     700,002  
           

328,176

(256,081)

 

 

  4[i]

4[k]

 

Retained earnings

     476,601       38,187         

(38,187)

(18,750)

4,818

 

 

 

  4[k]

4[l]

4[l]

    462,669  

Accumulated other comprehensive loss

     (1,137     —                (1,137

Deferred compensation obligation

     8,987       —                8,987  

Treasury stock

     (8,987     —                (8,987
  

 

 

   

 

 

      

 

 

     

 

 

 

Total stockholders’ equity

     866,677       294,268          11,075         1,172,020  

Long-term debt, net of current maturities

     643,801       136,763         

(4,125

(136,763

550,000


 

  4[m]

4[n]

4[i]

    1,189,677  
  

 

 

   

 

 

      

 

 

     

 

 

 

Total capitalization

     1,510,478       431,031          420,188         2,361,697  
  

 

 

   

 

 

      

 

 

     

 

 

 

Current Liabilities

             

Current portion of long-term debt

     20,000       19,538          (19,538   4[n]     20,001  

Short-term borrowing

     118,570       —           

77,000

(868

 

  4[i]

4[e]

    194,702  

Due to affiliates

     —         3,317          (3,317   4[o]     —    

Accounts payable

     53,729       5,937              59,666  

Customer deposits and refunds

     40,228       5,149              45,377  

Accrued interest

     4,985       —                4,985  

Dividends payable

     10,500       —                10,500  

Income taxes payable

     —         5,285              5,285  

Other accrued taxes

     —         4,243              4,243  

Accrued compensation

     9,831       1,959              11,790  

Regulatory liabilities

     9,092       3,083              12,175  

Derivative liabilities, at fair value

     828       —                828  

Construction accruals

     —         2,274              2,274  

Other accrued liabilities

     20,647       3,684          (1,281   4[f]     23,050  
  

 

 

   

 

 

      

 

 

     

 

 

 

Total current liabilities

     288,410       54,469          51,997         394,876  
  

 

 

   

 

 

      

 

 

     

 

 

 

Deferred Credits and Other Liabilities

             

Deferred income taxes

     264,541       38,814         

(38,814

(4,818


  4[p]

4[l]

    259,723  

Accrued removal costs

     —         33,605              33,605  

Regulatory liabilities

     145,092       18,512              163,604  

Environmental liabilities

     2,562       —                2,562  

Other pension and benefit costs

     17,133       —                17,133  

Derivative liabilities, at fair value

     101       —                101  

Lease liabilities

     11,040       42,547          (42,547   4[f]     11,040  

Other liabilities

     1,389       341              1,730  
  

 

 

   

 

 

      

 

 

     

 

 

 

Total deferred credits and other liabilities

     441,858       133,819          (86,179       489,498  
  

 

 

   

 

 

      

 

 

     

 

 

 

Other commitments and contingencies

             
  

 

 

   

 

 

      

 

 

     

 

 

 

Total Capitalization and Liabilities

   $ 2,240,746     $ 619,319        $ 386,005       $ 3,246,070  
  

 

 

   

 

 

      

 

 

     

 

 

 


CHESAPEAKE UTILITIES CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

 

     CPK      FCG      Transaction
Adjustments
           Pro Forma
Combined
 

(in thousands, except shares and per share data)

             

Operating Revenues

             

Regulated Energy

   $ 345,822      $ 98,078      $ (862     4[q]      $ 442,063  
     (975     4[r]  

Unregulated Energy and Other

     139,447        —               139,447  
  

 

 

    

 

 

    

 

 

      

 

 

 

Total operating revenues

     485,269        98,078        (1,837        581,510  
  

 

 

    

 

 

    

 

 

      

 

 

 

Operating Expenses

             

Natural gas and electricity costs

     105,692        23,856             129,548  

Propane and natural gas costs

     55,786        —               55,786  

Operations

     128,147        28,604        (369     4[s]        156,382  

Transaction-related expenses

     3,899        —               3,899  

Maintenance

     15,487        —               15,487  

Depreciation and amortization

     52,096        6,020        (732     4[t]        56,409  
     (975     4[r]  

Other taxes

     20,674        9,089             29,763  
  

 

 

    

 

 

    

 

 

      

 

 

 

Total operating expenses

     381,781        67,569        (2,076        447,274  
  

 

 

    

 

 

    

 

 

      

 

 

 

Operating Income

     103,488        30,509        239          134,236  

Other income, net

     1,036        376             1,412  

Interest charges, net

     21,272        6,533        (862     4[q]        51,979  
     (5,505     4[u]  
     26,978       4[v]  
     3,563       4[w]     
  

 

 

    

 

 

    

 

 

      

 

 

 

Income Before Income Taxes

     83,252        24,352        (23,935        83,669  

Income Taxes

     21,368        5,791        (6,143     4[x]        21,016  
  

 

 

    

 

 

    

 

 

      

 

 

 

Net Income

   $ 61,884      $ 18,561      $ (17,792      $ 62,653  
  

 

 

    

 

 

    

 

 

      

 

 

 

Weighted Average Common Shares Outstanding:

             

Basic

     17,783,787           3,746,828       4[y]        21,530,615  

Diluted

     17,847,288           3,746,828       4[y]        21,594,116  

Earnings Per Share of Common Stock:

             
  

 

 

            

 

 

 

Basic Earnings Per Share of Common Stock

   $ 3.48              $ 2.91  
  

 

 

            

 

 

 

Diluted Earnings Per Share of Common Stock

   $ 3.47              $ 2.90  


CHESAPEAKE UTILITIES CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2022

 

     CPK     FCG      Transaction
Adjustments
           Pro Forma
Combined
 

(in thousands, except shares and per share data)

            

Operating Revenues

            

Regulated Energy

   $ 429,424     $ 118,491      $
(297

    4[z]      $ 547,075  
     (543     4[aa]  

Unregulated Energy

     280,750       —               280,750  

Other businesses and eliminations

     (29,470     —               (29,470
  

 

 

   

 

 

    

 

 

      

 

 

 

Total operating revenues

     680,704       118,491        (840        798,355  
  

 

 

   

 

 

    

 

 

      

 

 

 

Operating Expenses

            

Natural gas and electricity costs

     127,172       33,414             160,586  

Propane and natural gas costs

     133,334       —               133,334  

Operations

     164,505       33,868        (1,015     4[ab]        197,358  

Maintenance

     18,176       —               18,176  

Depreciation and amortization

     68,973       17,959        (840     4[ac]        85,549  
     (543     4[aa]  

Other taxes

     25,611       10,328             35,939  
  

 

 

   

 

 

    

 

 

      

 

 

 

Total operating expenses

     537,771       95,569        (2,398        630,942  
  

 

 

   

 

 

    

 

 

      

 

 

 

Operating Income

     142,933       22,922        1,558          167,413  

Other income, net

     5,051       35             5,086  

Interest charges, net

     24,356       6,584        (297     4[z]        65,681  
     (6,176     4[ad]  
     35,970       4[ae]  
          5,245       4[af]     
  

 

 

   

 

 

    

 

 

      

 

 

 

Income Before Income Taxes

     123,628       16,373        (33,183        106,818  

Income Taxes

     33,832       3,636        (9,081     4[ag]        28,387  
  

 

 

   

 

 

    

 

 

      

 

 

 

Net Income

   $ 89,796     $ 12,737      $ (24,102      $ 78,431  
  

 

 

   

 

 

    

 

 

      

 

 

 

Weighted Average Common Shares Outstanding:

            

Basic

     17,722,227          3,746,828       4[ah]        21,469,055  

Diluted

     17,804,294          3,746,828       4[ah]        21,551,122  

Earnings Per Share of Common Stock:

            

Basic Earnings Per Share of Common Stock

   $ 5.07             $ 3.65  

Diluted Earnings Per Share of Common Stock

   $ 5.04             $ 3.64  

NOTE 1. BASIS OF PRESENTATION

The unaudited pro forma condensed combined financial statements included herein have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and Article 11 of Regulation S-X, and have been derived from the following historical financial statements:

 

   

the audited financial statements of Chesapeake Utilities as of and for the year ended December 31, 2022;

 

   

the unaudited interim financial statements of Chesapeake Utilities as of and for the nine months ended September 30, 2023;

 

   

the audited financial statements of FCG as of and for the year ended December 31, 2022; and

 

   

the unaudited interim financial statements of FCG as of and for the nine months ended September 30, 2023.

On September 26, 2023, the Company entered into a stock purchase agreement (the “Purchase Agreement”) with Florida Power & Light Company (“FPL”), to acquire all of the outstanding common shares of FCG, a wholly-owned subsidiary of FPL, for approximately $923.4 million in cash, subject to customary purchase price adjustments (the “Acquisition”). The Purchase Agreement is subject to the satisfaction of customary closing conditions and certain regulatory approvals in various jurisdictions, which have been received as of the date hereof. Subject to the satisfaction or waiver of the remaining conditions and the other terms and conditions of the Purchase Agreement, the Acquisition is expected to close in the fourth quarter of 2023.

The Acquisition has been accounted for in the unaudited pro forma condensed combined financial statements as an acquisition of all of the outstanding common shares of FCG using the acquisition method of accounting for business combinations. The assets acquired and liabilities assumed have been measured at estimated fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The Company expects to make a 338(h)(10) tax election under the Internal Revenue Code, which recharacterizes the stock purchase as an asset purchase for federal tax purposes. The Company expects to receive a tax basis in the acquired assets equal to the purchase price, and depreciate such basis over a 15-year period.

The accompanying unaudited pro forma condensed combined financial statements are not necessarily indicative of the results that would have been achieved if the transactions reflected herein had been completed on the dates indicated or the results which may be obtained in the future. While the underlying pro forma adjustments are intended to provide a reasonable basis for presenting the significant financial effects directly attributable to the Acquisition, they are preliminary and are based on currently available financial information and certain estimates and assumptions which we believe to be reasonable. The actual adjustments to our consolidated financial statements will be determined as of and subsequent to the closing date. Therefore, it is expected that the actual adjustments will differ from the pro forma adjustments, and the differences may be material.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies followed in preparing the unaudited pro forma condensed combined financial statements are those used by Chesapeake Utilities as set forth in the audited historical financial statements and notes of the Company included in its Annual Report on Form 10-K for the year ended December 31, 2022, as filed February 22, 2023, and in the unaudited historical interim financial statements and notes of the Company included in its Quarterly Report on Form 10-Q for the nine months ended September 30, 2023. The unaudited pro forma condensed combined financial statements reflect any adjustments known at this time to conform FCG’s historical financial information to the Company’s significant accounting policies based on the Company’s review of FCG’s summary of significant accounting policies, as disclosed in the FCG historical financial statements attached as Exhibits 99.1 and 99.2 to the Company’s Current Report on Form 8-K filed on November 9, 2023 and preliminary discussions with FCG’s management. Upon completion of a more comprehensive comparison and assessment, additional differences may be identified.


NOTE 3. PURCHASE PRICE AND PRELIMINARY PURCHASE PRICE ALLOCATION

The expected purchase price for the Acquisition is as follows:

 

(in thousands, except offer price)       

Total shares of Chesapeake Utilities common stock issued

     3,746.8  

Offer price of Chesapeake Utilities common stock on November 3, 2023

   $ 92.71  
  

Equity portion of purchase price

   $ 330,000  

Issuance of long-term debt

     550,000  

Short-term borrowings under the existing Revolver

     43,400  
  

 

 

 

Total purchase price

   $ 923,400  
  

 

 

 

Preliminary Purchase Price Allocation

Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed of FCG are recorded at fair value on the acquisition date and added to those of the Company. The pro forma adjustments included herein are preliminary and based on estimates of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effects of the acquisition between the Company and FCG. Significant portions of FCG’s operations are subject to the rate regulation by the Florida Public Service Commission. The carrying values of the assets and liabilities subject to regulatory accounting under U.S. GAAP, including property, plant and equipment, are considered to approximate the fair values.

The final determination of the preliminary purchase price allocation will be based on the net assets acquired as of the acquisition date and will depend on a number of factors, which cannot be predicted with any certainty at this time. The preliminary purchase price allocation may change based on the receipt of more detailed information. Accordingly, this allocation is preliminary and subject to further adjustment as additional information becomes available and as additional analyses and final valuations are completed. There can be no assurance that these additional analyses and final valuations will not result in significant changes to the estimates of fair value set forth below.

The following table provides a summary of the preliminary allocation of the purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed of FCG, based on FCG’s balance sheet at September 30, 2023, with all excess value over consideration paid recorded as goodwill.

 

(in thousands)       

Total current assets

   $ 22,689  

Property, plant and equipment

    
492,391
 

Goodwill

     467,689  

Regulatory assets

     3,636  

Other deferred charges and other assets, including intangible assets

     19,787  
  

 

 

 

Total assets

     1,006,192  
  

 

 

 

Total current liabilities

     30,334  

Regulatory liabilities

     52,117  

Deferred credits and other liabilities

     341  
  

 

 

 

Total liabilities

     82,792  
  

 

 

 

Total purchase price

   $ 923,400  
  

 

 

 


NOTE 4. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS

The following pro forma adjustments were based on the historical financial information and preliminary estimates and assumptions, both as described above and which are subject to change as additional information is obtained:

 

a

Reflects property, plant and equipment with a net book value of $9.5 million related to software that is excluded from the Acquisition and being retained by FPL.

 

b

Reflects a reduction in FCG’s cash balance to the minimum cash amount of $2.0 million as defined in the Purchase Agreement.

 

c

Reflects $0.2 million of affiliated accounts receivable at September 30, 2023 which is an asset excluded from the Acquisition and being retained by FPL.

 

d

Represents the excess of the Company’s purchase price of approximately $923.4 million over the estimated fair values of assets acquired and liabilities assumed.

 

e

Reflects approximately $0.9 million of estimated working capital adjustments that in accordance with the Purchase Agreement are treated as an adjustment to the Acquisition purchase price.

 

f

Reflects $43.8 million in right of use assets and lease liabilities associated with long-term transportation service agreements between FCG and PPC, a wholly owned subsidiary of the Company. Upon closing of the Acquisition, these agreements will be classified as affiliate transactions and the associated assets and liabilities will be eliminated in the Company’s consolidated balance sheet.

 

g

Reflects $4.9 million of prepaid pension expenses that are excluded from the Acquisition.

 

h

Reflects FCG’s $0.2 million unamortized loss on reacquired debt which is excluded from the Acquisition.

 

i

Reflects the financing needs of the Acquisition and the associated transaction-related costs including: $550.0 million of new long-term debt, the issuance of 3.7 million shares of Chesapeake Utilities Corporation common stock, and $77.0 million of new short-term borrowings under the Company’s Revolver.

 

j

Represents approximately $10.7 million of fees associated with the issuance of 3.7 million shares of the Company’s common stock to finance the Acquisition. The number of common shares assumed to be issued is estimated based on the Company’s closing price of $92.71 on November 3, 2023, net of a 5.0% underwriting discount.

 

k

Reflects the elimination of FCG’s stockholder’s equity.

 

l

Represents $18.8 million of non-recurring direct incremental transaction-related expenses expected to be incurred and would reduce deferred income tax liabilities by $4.8 million, including but not limited to, legal, consulting, audit and financing fees. These expenses are reflected as an adjustment to retained earnings of $18.8 million, less income tax effects of $4.8 million on the unaudited pro forma condensed combined balance sheet at September 30, 2023.

 

m

Represents approximately $4.1M of debt issuance costs that have been reflected as a reduction to the Company’s issuance of long-term debt to finance the Acquisition. The Company expects to issue $550.0 million in new long-term notes at an interest rate of 6.54 percent.

 

n

Reflects $156.3 million of affiliated debt of FCG that will be settled prior to the closing of the Acquisition.

 

o

Reflects $3.3 million of affiliated accounts payable that will be settled prior to the closing of the Acquisition.

 

p

As defined in the Purchase Agreement, the Company and FCG have elected to apply the provision of Section 338(h)(10) of the IRS Code, which recharacterizes the stock purchase as an asset purchase for federal tax purposes. The Company will receive a tax basis in the acquired assets equal to the purchase price and can depreciate the assets at their purchased value and record goodwill that will be amortized for tax purposes over the next 15 years. As a result, FCG’s deferred tax balances will not transfer to the Company.

 

q

Represents $0.9 million of interest expense associated with long-term transportation service agreements between FCG and PPC, a wholly owned subsidiary of the Company. Upon closing of the Acquisition, these agreements will be classified as affiliate transactions and the associated revenues and expenses will be eliminated in the Company’s consolidated results.

 

r

Represents $1.0 million of depreciation expense associated with long-term transportation service agreements between FCG and PPC, a wholly owned subsidiary of the Company. Upon closing of the Acquisition, these agreements will be classified as affiliate transactions and the associated revenues and expenses will be eliminated in the Company’s consolidated results.

 

s

Reflects $0.4 million of pension expenses related to benefit plan obligations that are excluded from the Acquisition.

 

t

Reflects $0.7 million of depreciation expense related to software that is excluded from the Acquisition and being retained by FPL.

 

u

Reflects $5.5 million of interest expense related to outstanding debt of FCG that will be settled prior to the closing of the Acquisition.

 

v

Reflects a $27.0 million net increase to interest expense resulting from the Company’s issuance of long-term debt to finance the Acquisition. The Company expects to issue $550.0 million in new long-term notes at an interest rate of 6.54 percent.

 

w

Reflects a $3.6 million increase in interest expense resulting from incremental borrowings under the Company’s Revolver at an interest rate of 6.17 percent. Such incremental borrowings will be used to finance the Acquisition and pay certain transaction-related expenses in connection with the closing of the Acquisition and related financing activities.

 

x

Reflects the income tax effects of pro forma adjustments based on the Company’s blended federal and state effective tax rate for the nine months ended September 30, 2023.

 

y

Reflects the issuance of 3.7 million shares of the Company’s common stock to finance the Acquisition. The number of common shares assumed to be issued is estimated based on the $92.71 closing price of the Company’s common stock on November 3, 2023, net of a 5.0 percent underwriting discount.

 

z

Represents $0.3 million of interest expense associated with long-term transportation service agreements between FCG and PPC, a wholly owned subsidiary of the Company. Upon closing of the Acquisition, these agreements will be classified as affiliate transactions and the associated revenues and expenses will be eliminated in the Company’s consolidated results.

 

aa

Represents $0.5 million of depreciation expense associated with long-term transportation service agreements between FCG and PPC, a wholly owned subsidiary of the Company. Upon closing of the Acquisition, these agreements will be classified as affiliate transactions and the associated revenues and expenses will be eliminated in the Company’s consolidated results.

 

ab

Reflects $1.0 million of pension expenses related to benefit plan obligations that are excluded from the Acquisition.

 

ac

Reflects $0.8 million of depreciation expense related to software that is excluded from the Acquisition and being retained by FPL.

 

ad

Reflects $6.2 million of interest expense related to outstanding debt of FCG that will be settled prior to the closing of the Acquisition.

 

ae

Reflects a $36.0 million net increase to interest expense resulting from the Company’s issuance of long-term debt to finance the Acquisition. The Company expects to issue $550.0 million in new long-term notes at an interest rate of 6.54 percent.

 

af

Reflects a $5.2 million increase in interest expense resulting from incremental borrowings under the Company’s Revolver at an interest rate of 6.17 percent. Such incremental borrowings will be used to finance the Acquisition and pay certain transaction-related expenses in connection with the closing of the Acquisition and related financing activities.

 

ag

Reflects the income tax effects of pro forma adjustments based on the Company’s blended federal and state effective tax rate for the year ended December 31, 2022.

 

ah

Reflects the issuance of 3.7 million shares of the Company’s common stock to finance the Acquisition. The number of common shares assumed to be issued is estimated based on the closing price of the Company’s common stock of $92.71 on November 3, 2023, net of a 5.0 percent underwriting discount.