EX-99.2 4 a04-11028_1ex99d2.htm EX-99.2

Exhibit 99.2

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The following unaudited pro forma condensed consolidated financial statements of Edison Mission Energy are included herein:

 

1.               Pro forma Condensed Consolidated Balance Sheet as of June 30, 2004

2.               Pro forma Condensed Consolidated Statement of Income for the six months ended June 30, 2004

3.               Pro forma Condensed Consolidated Statement of Income for the year ended December 31, 2003

4.               Pro forma Condensed Consolidated Statement of Income for the year ended December 31, 2002

5.               Pro forma Condensed Consolidated Statement of Income for the year ended December 31, 2001

6.               Notes to the Pro Forma Condensed Consolidated Financial Statements

 

The above-referenced unaudited pro forma condensed consolidated financial statements reflect the sale of Universal Holdings. As previously described in Item 2.01, on September 30, 2004, Edison Mission Energy completed the sale of all its shares of Universal Holdings to Origin Energy New Zealand Limited. Net proceeds from the sale will be used to repay a portion of the $800 million secured loan at Mission Energy Holdings International, Inc., which was funded on December 11, 2003.

 

The unaudited pro forma condensed consolidated financial statements have been prepared by applying pro forma adjustments to the consolidated financial statements included in Edison Mission Energy’s Annual Report on Form 10-K for the year ended December 31, 2003 and Quarterly Report on Form 10-Q for the six-month period ended June 30, 2004. The unaudited pro forma condensed consolidated balance sheet reflects the sale of Universal Holdings, assuming the transaction had been consummated as of June 30, 2004. The estimated gain on sale for purposes of these unaudited pro forma condensed consolidated financial statements will ultimately differ from the actual gain to be recorded in the quarter ended September 30, 2004. The unaudited pro forma condensed consolidated statements of income reflect the sale of Universal Holdings, assuming the transaction had been consummated as of the beginning of the fiscal periods presented. Edison Mission Energy will account for the disposition as discontinued operations in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Universal Holdings operating results were included in Income from Continuing Operations for the six-month period ended June 30, 2004 and for the years ended December 31, 2003, 2002 and 2001 because SFAS 144 criteria requiring discontinued operations presentation had not been met during these periods.

 

The pro forma adjustments, as described in the notes to the unaudited pro forma condensed consolidated financial statements, are estimates based on currently available information and certain adjustments that management believes are reasonable. The unaudited pro forma condensed consolidated financial statements are presented for informational purposes only and are not necessarily indicative of the financial position or operating results that would have occurred had the sale of Universal Holdings been consummated on, or as of, the dates indicated, nor is it necessarily indicative of future operating results or financial position. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical financial statements of Edison Mission Energy included in its Annual Report on Form 10-K for the year ended December 31, 2003 and Edison Mission Energy’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004.

 

1


 

EDISON MISSION ENERGY AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

JUNE 30, 2004

(In thousands)

 

 

 

Edison Mission
Energy

 

Sale of Universal
Holdings (A)

 

Pro Forma
Adjustments

 

Pro Forma
Consolidated

 

Assets

 

 

 

 

 

 

 

 

 

Current Assets

 

$

1,652,614

 

$

245,373

 

$

(469,927

)(B)(C)

$

1,428,060

 

Investments in Unconsolidated Affiliates

 

1,632,677

 

75

 

 

 

1,632,752

 

Property, Plant and Equipment

 

8,313,379

 

(1,769,773

)

 

 

6,543,606

 

Less accumulated depreciation and amortization

 

1,319,588

 

(167,881

)

 

 

1,151,707

 

Net property, plant and equipment

 

6,993,791

 

(1,601,892

)

 

 

5,391,899

 

Other Assets

 

 

 

 

 

 

 

 

 

Goodwill

 

853,176

 

(542,780

)

 

 

310,396

 

Deferred financing costs

 

81,665

 

(2,985

)

(8,841

)(C)

69,839

 

Long-term assets under price risk management and energy trading

 

97,670

 

 

 

 

 

97,670

 

Restricted cash

 

285,785

 

 

 

 

 

285,785

 

Other long-term assets

 

391,398

 

(66,949

)

 

 

324,449

 

Total other assets

 

1,709,694

 

(612,714

)

(8,841

)

1,088,139

 

Assets of Discontinued Operations

 

1,422

 

 

 

 

 

1,422

 

Total Assets

 

$

11,990,198

 

$

(1,969,158

)

$

(478,768

)

$

9,542,272

 

Liabilities and Shareholder’s Equity

 

 

 

 

 

 

 

 

 

Current Liabilities

 

$

887,191

 

$

(281,635

)

$

(3,111

)(C)

$

602,445

 

Long-Term Obligations Net of Current Maturities

 

6,794,534

 

(710,691

)

(453,240

)(C)

5,630,603

 

Long-Term Deferred Liabilities

 

 

 

 

 

 

 

 

 

Deferred taxes and tax credits

 

1,272,196

 

(332,447

)

 

 

939,749

 

Deferred revenue

 

415,725

 

 

 

 

 

415,725

 

Long-term incentive compensation

 

29,339

 

 

 

 

 

29,339

 

Long-term liabilities under price risk management and energy trading

 

112,416

 

 

 

 

 

112,416

 

Junior subordinated debentures

 

154,639

 

 

 

 

 

154,639

 

Preferred securities subject to mandatory redemption

 

158,250

 

(158,250

)

 

 

—

 

Other

 

326,587

 

(1,998

)

 

 

324,589

 

Total long-term deferred liabilities

 

2,469,152

 

(492,695

)

 

 

1,976,457

 

Liabilities of Discontinued Operations

 

84

 

 

 

 

 

84

 

Total Liabilities

 

10,150,961

 

(1,485,021

)

(456,351

)

8,209,589

 

Minority Interest

 

504,681

 

(507,497

)

 

 

(2,816

)

Shareholder’s Equity

 

 

 

 

 

 

 

 

 

Common stock

 

64,130

 

 

 

 

 

64,130

 

Additional paid-in capital

 

2,634,864

 

 

 

 

 

2,634,864

 

Retained deficit

 

(1,327,900

)

125,000

 

(22,417

)(B)(C)

(1,225,317

)

Accumulated other comprehensive income (loss)

 

(36,538

)

(101,640

)

 

 

(138,178

)

Total Shareholder’s Equity

 

1,334,556

 

23,360

 

(22,417

)

1,335,499

 

Total Liabilities and Shareholder’s Equity

 

$

11,990,198

 

$

(1,969,158

)

$

(478,768

)

$

9,542,272

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

2


 

EDISON MISSION ENERGY AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2004

(In thousands)

 

 

 

Edison Mission
Energy

 

Sale of Universal
Holdings (D)

 

Pro Forma
Adjustments

 

Pro Forma
Consolidated

 

Operating Revenues

 

 

 

 

 

 

 

 

 

Electric revenues

 

$

1,469,586

 

$

(400,340

)

$

 

$

1,069,246

 

Net gains from price risk management and energy trading

 

7,307

 

(6,563

)

 

 

744

 

Operation and maintenance services

 

19,388

 

 

 

 

 

19,388

 

Total operating revenues

 

1,496,281

 

(406,903

)

 

 

1,089,378

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

Fuel

 

510,154

 

(68,774

)

 

 

441,380

 

Plant operations and transmission costs

 

462,602

 

(179,134

)

 

 

283,468

 

Plant operating leases

 

97,474

 

 

 

 

 

97,474

 

Operation and maintenance services

 

16,547

 

 

 

 

 

16,547

 

Depreciation and amortization

 

148,764

 

(37,302

)

 

 

111,462

 

Loss on lease termination, asset impairment and other charges

 

954,256

 

 

 

 

 

954,256

 

Administrative and general

 

91,106

 

(463

)

 

 

90,643

 

Total operating expenses

 

2,280,903

 

(285,673

)

 

 

1,995,230

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

(784,622

)

(121,230

)

 

 

(905,852

)

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

Equity in income from unconsolidated affiliates

 

160,847

 

(236

)

 

 

160,611

 

Interest and other income

 

9,992

 

7,210

 

 

 

17,202

 

Gain on sale of assets

 

43,489

 

 

 

 

 

43,489

 

Interest expense

 

(278,984

)

40,419

 

18,771

(E)

(219,794

)

Total other income (expense)

 

(64,656

)

47,393

 

18,771

 

1,508

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations before income taxes and minority interest

 

(849,278

)

(73,837

)

18,771

 

(904,344

)

Provision (benefit) for income taxes

 

(327,971

)

(40,620

)

7,238

(F)

(361,353

)

Minority interest

 

(32,403

)

28,193

 

 

 

(4,210

)

 

 

 

 

 

 

 

 

 

 

Loss from Continuing Operations

 

$

(553,710

)

$

(5,024

)

$

11,533

 

$

(547,201

)

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

3


 

EDISON MISSION ENERGY AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2003

(In thousands)

 

 

 

Edison Mission
Energy

 

Sale of Universal
Holdings (D)

 

Pro Forma
Adjustments

 

Pro Forma
Consolidated

 

Operating Revenues

 

 

 

 

 

 

 

 

 

Electric revenues

 

$

3,077,355

 

$

(751,139

)

$

 

$

2,326,216

 

Net gains from price risk management and energy trading

 

44,322

 

(4,385

)

 

 

39,937

 

Operation and maintenance services

 

58,899

 

 

 

 

 

58,899

 

Total operating revenues

 

3,180,576

 

(755,524

)

 

 

2,425,052

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

Fuel

 

1,102,869

 

(177,354

)

 

 

925,515

 

Plant operations and transmission costs

 

912,440

 

(352,874

)

 

 

559,566

 

Plant operating leases

 

205,561

 

 

 

 

 

205,561

 

Operation and maintenance services

 

28,752

 

 

 

 

 

28,752

 

Depreciation and amortization

 

290,072

 

(63,272

)

 

 

226,800

 

Asset impairment and other charges

 

304,042

 

 

 

 

 

304,042

 

Administrative and general

 

173,342

 

(462

)

 

 

172,880

 

Total operating expenses

 

3,017,078

 

(593,962

)

 

 

2,423,116

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

163,498

 

(161,562

)

 

 

1,936

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

Equity in income from unconsolidated affiliates

 

367,676

 

(145

)

 

 

367,531

 

Interest and other income

 

7,341

 

1,277

 

 

 

8,618

 

Gain on sale of assets

 

13,000

 

 

 

 

 

13,000

 

Interest expense

 

(509,005

)

70,632

 

2,165

(E)

(436,208

)

Total other income (expense)

 

(120,988

)

71,764

 

2,165

 

(47,059

)

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes and minority interest

 

42,510

 

(89,798

)

2,165

 

(45,123

)

Provision (benefit) for income taxes

 

(24,165

)

(41,311

)

835

(F)

(64,641

)

Minority interest

 

(39,476

)

32,856

 

 

 

(6,620

)

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

$

27,199

 

$

(15,631

)

$

1,330

 

$

12,898

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

4


 

EDISON MISSION ENERGY AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2002

(In thousands)

 

 

 

Edison Mission
Energy

 

Sale of Universal
Holdings (D)

 

Pro Forma
Adjustments

 

Pro Forma
Consolidated

 

Operating Revenues

 

 

 

 

 

 

 

 

 

Electric revenues

 

$

2,679,344

 

$

(494,372

)

$

 

$

2,184,972

 

Net gains from price risk management and energy trading

 

27,498

 

378

 

 

 

27,876

 

Operation and maintenance services

 

42,881

 

 

 

 

 

42,881

 

Total operating revenues

 

2,749,723

 

(493,994

)

 

 

2,255,729

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

Fuel

 

943,639

 

(128,691

)

 

 

814,948

 

Plant operations and transmission costs

 

765,138

 

(225,179

)

 

 

539,959

 

Plant operating leases

 

205,904

 

 

 

 

 

205,904

 

Operation and maintenance services

 

28,958

 

 

 

 

 

28,958

 

Depreciation and amortization

 

247,486

 

(39,641

)

 

 

207,845

 

Settlement of postretirement employee benefit liability

 

(70,654

)

 

 

 

 

(70,654

)

Asset impairment and other charges

 

130,863

 

 

 

 

 

130,863

 

Administrative and general

 

168,507

 

(2,330

)

 

 

166,177

 

Total operating expenses

 

2,419,841

 

(395,841

)

 

 

2,024,000

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

329,882

 

(98,153

)

 

 

231,729

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

Equity in income from unconsolidated affiliates

 

282,932

 

165

 

 

 

283,097

 

Interest and other income

 

22,756

 

(2,971

)

 

 

19,785

 

Interest expense

 

(473,198

)

44,855

 

 

 

(428,343

)

Total other income (expense)

 

(167,510

)

42,049

 

 

 

(125,461

)

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes and minority interest

 

162,372

 

(56,104

)

 

 

106,268

 

Provision (benefit) for income taxes

 

38,414

 

(29,838

)

 

 

8,576

 

Minority interest

 

(27,159

)

20,323

 

 

 

(6,836

)

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

$

96,799

 

$

(5,943

)

$

 

$

90,856

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

5


 

EDISON MISSION ENERGY AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2001

(In thousands)

 

 

 

Edison Mission
Energy

 

Sale of Universal
Holdings (D)

 

Pro Forma
Adjustments

 

Pro Forma
Consolidated

 

Operating Revenues

 

 

 

 

 

 

 

 

 

Electric revenues

 

$

2,411,544

 

$

(297,310

)

$

 

$

2,114,234

 

Net gains from price risk management and energy trading

 

36,241

 

2,671

 

 

 

38,912

 

Operation and maintenance services

 

40,652

 

(23

)

 

 

40,629

 

Total operating revenues

 

2,488,437

 

(294,662

)

 

 

2,193,775

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

Fuel

 

814,531

 

(88,035

)

 

 

726,496

 

Plant operations and transmission costs

 

706,697

 

(112,823

)

 

 

593,874

 

Plant operating leases

 

133,317

 

 

 

 

 

133,317

 

Operation and maintenance services

 

26,465

 

 

 

 

 

26,465

 

Depreciation and amortization

 

263,611

 

(25,830

)

 

 

237,781

 

Asset impairment and other charges

 

59,055

 

 

 

 

 

59,055

 

Administrative and general

 

180,084

 

(3,969

)

 

 

176,115

 

Total operating expenses

 

2,183,760

 

(230,657

)

 

 

1,953,103

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

304,677

 

(64,005

)

 

 

240,672

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

Equity in income from unconsolidated affiliates

 

374,096

 

(6,819

)

 

 

367,277

 

Interest and other income

 

44,507

 

(2,153

)

 

 

42,354

 

Gain on sale of assets

 

41,313

 

 

 

 

 

41,313

 

Interest expense

 

(564,409

)

29,142

 

 

 

(535,267

)

Total other income (expense)

 

(104,493

)

20,170

 

 

 

(84,323

)

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes and minority interest

 

200,184

 

(43,835

)

 

 

156,349

 

Provision (benefit) for income taxes

 

94,784

 

(22,152

)

 

 

72,632

 

Minority interest

 

(22,157

)

18,853

 

 

 

(3,304

)

 

 

 

 

 

 

 

 

 

 

Income from Continuing Operations

 

$

83,243

 

$

(2,830

)

$

 

$

80,413

 

 

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

6


 

EDISON MISSION ENERGY AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(A)                              Reflects the elimination of historical assets and liabilities of Universal Holdings, including the resulting estimated gain on the sale as follows (in thousands):

 

Net proceeds from sale of Universal Holdings

 

$

729,336

 

Net assets of Universal Holdings

 

(521,664

)

Cumulative translation adjustment

 

101,653

 

Pre-tax gain

 

309,325

 

Income tax expense

 

184,325

 

 

 

 

 

After-tax gain

 

$

125,000

 

 

(B)                                Reflects the cost of a purchase option entered into by Edison Mission Energy in connection with the sale to protect against the depreciation in the value of the New Zealand dollar (in which the sales price is denominated) versus the U.S. dollar.

 

(C)                                To primarily reflect the partial repayment of the $800 million secured loan at Mission Energy Holdings International, Inc. with the net after-tax cash proceeds from the sale of Universal Holdings.  In addition, reflects the write-off of unamortized debt issue costs and elimination of accrued interest related to the early repayment of the secured loan.

 

(D)                               Reflects the elimination of the historical results of Universal Holdings for the period.

 

(E)                                 Reflects pro forma decrease in interest expense resulting from the repayment of debt utilizing net cash proceeds from the sale of Universal Holdings.

 

(F)                                 Reflects the income tax effects of the pro forma adjustments at a 38.56% tax rate.

 

7