EX-99.1 2 d300951dex991.htm EX-99.1

EX-99.1

Exhibit 99.1

EMERA INCORPORATED

Supplemental Financial Information

December 31, 2015 and 2014

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Emera Incorporated

We have audited the consolidated financial statements of Emera Incorporated (the “Company”) as of December 31, 2015 and 2014, and for each of the years then ended, and have issued our report thereon dated February 12, 2016. Our audits in accordance with Canadian generally accepted auditing standards also subsequently included the accompanying Supplemental Financial Information. Management is responsible for the preparation and fair presentation of the accompanying Supplemental Financial Information in accordance with United States generally accepted accounting principles. Our responsibility is to express an opinion on the Supplemental Financial Information based on our audits.

In our opinion, the Supplemental Financial Information referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein in accordance with United States generally accepted accounting principles.

/s/ Ernst & Young LLP

Halifax, Canada

December 1, 2016

1. BASIS OF PRESENTATION

The accompanying supplemental financial information has been derived from the audited consolidated financial statements of Emera Incorporated (“Emera” or the “Company”) as at and for the years ended December 31, 2015 and 2014 and should be read in conjunction with such financial statements. The condensed consolidated financial statements utilize accounting policies that are consistent with those disclosed in the Company’s audited consolidated financial statements for the same period and were prepared in accordance with accounting principles generally accepted in the United States.

2. SUPPLEMENTAL FINANCIAL INFORMATION

On June 16, 2016, Emera US Finance LP, (in such capacity, the “Subsidiary Issuer”), issued $3.25 billion USD senior unsecured notes (“U.S. Notes”). The U.S Notes are fully and unconditionally guaranteed, on a joint and several basis, by Emera (in such capacity, the “Parent Company”) and Emera US Holdings Inc. (“EUSHI”) (in such capacity, the “Guarantor Subsidiaries”). Emera owns, directly or indirectly, all of the limited and general partnership interests in Emera US Finance LP. Emera US Finance LP had no material operations prior to June 16, 2016. On July 1, 2016, Emera, through EUSHI, acquired all of the outstanding common shares of TECO Energy Inc. for a net cash purchase price of $8.4 billion. Accordingly, the financial position and operating results of Emera, the Subsidiary Issuer and the Guarantor Subsidiaries after July 1, 2016 are not comparable to the respective amounts prior to July 1, 2016. The accompanying supplemental financial information should also be read in conjunction with unaudited condensed consolidated interim financial statements of Emera as at September 30, 2016 and for the three and nine-month periods then ended.

The following supplemental financial information presents condensed consolidating balance sheet information of the Parent, Subsidiary Issuer, Guarantor Subsidiaries and the Non-guarantor Subsidiaries as of December 31, 2015 and December 31, 2014, and condensed consolidating statements of income and cash flows for the years ended December 31, 2015 and 2014. The guarantors were not determined using geographic, service line or other similar criteria, and as a result, the “Parent”, “Subsidiary Issuer”, “Guarantor Subsidiaries” and “Non-guarantor Subsidiaries” columns each include portions of domestic and international operations. Accordingly, this basis of presentation is not intended to present Emera’s financial condition, results of operations or cash flows for any purpose other than to comply with the specific requirements for guarantor reporting.

Emera Incorporated

Condensed Consolidated Statements of Income

For the year ended December 31, 2015

millions of Canadian dollars		Parent				Subsidiary Issuer				Guarantor Subsidiaries				Non-guarantor Subsidiaries				Eliminations				Consolidated
Operating revenues
Regulated electric		$	—			$	—			$	283			$	1,860			$	(2	)		$	2,141
Regulated gas			—				—				—				52				—				52
Non-regulated			—				—				419				219				(42	)			596
Total operating revenues			—				—				702				2,131				(44	)			2,789
Operating expenses
Regulated fuel for generation and purchased power			—				—				70				744				—				814
Regulated fuel adjustment mechanism and fixed cost deferrals			—				—				—				41				—				41
Non-regulated fuel for generation and purchased power			—				—				277				64				(5	)			336
Non-regulated direct costs			—				—				—				49				(30	)			19
Operating, maintenance and general			54				—				148				473				(8	)			667
Provincial, state and municipal taxes			—				—				21				43				—				64
Depreciation and amortization			1				—				79				260				—				340
Total operating expenses			55				—				595				1,674				(43	)			2,281
Income (loss) from operations			(55	)			—				107				457				(1	)			508
Income (loss) from equity investments in subsidiaries			270				—				—				—				(270	)			—
Income from equity investments			37				—				5				67				—				109
Intercompany income (expenses), net			156				—				—				8				(164	)			—
Other income (expenses), net			91				—				21				29				—				141
Interest expense, net			46				—				28				273				(134	)			213
Income (loss) before provision for income taxes			453				—				105				288				(301	)			545
Income tax expense (recovery)			25				—				35				33				—				93
Net income (loss)			428				—				70				255				(301	)			452
Non-controlling interest in subsidiaries			—				—				—				13				12				25
Net income (loss) of Emera Incorporated			428				—				70				242				(313	)			427
Preferred stock dividends			30				—				15				26				(41	)			30
Net income (loss) attributable to common shareholders		$	398			$	—			$	55			$	216			$	(272	)		$	397
Comprehensive income (loss) of Emera Incorporated		$	912			$	—			$	303			$	452			$	(755	)		$	912

Emera Incorporated

Condensed Consolidated Statements of Income

For the year ended December 31, 2014

millions of Canadian dollars		Parent				Subsidiary Issuer				Guarantor Subsidiaries				Non-guarantor Subsidiaries				Eliminations				Consolidated
Operating revenues
Regulated electric		$	—			$	—			$	242			$	1,825			$	(3	)		$	2,064
Regulated gas			—				—				—				49				—				49
Non-regulated			—				—				455				404				(33	)			826
Total operating revenues			—				—				697				2,278				(36	)			2,939
Operating expenses
Regulated fuel for generation and purchased power			—				—				59				785				—				844
Regulated fuel adjustment mechanism and fixed cost deferrals			—				—				—				47				—				47
Non-regulated fuel for generation and purchased power			—				—				312				93				(4	)			401
Non-regulated direct costs			—				—				—				55				(24	)			31
Operating, maintenance and general			38				—				87				444				(8	)			561
Provincial, state and municipal taxes			—				—				17				41				—				58
Depreciation and amortization			1				—				78				251				—				330
Total operating expenses			39				—				553				1,716				(36	)			2,272
Income (loss) from operations			(39	)			—				144				562				—				667
Income (loss) from equity investments in subsidiaries			394				—				—				—				(394	)			—
Income from equity investments			31				—				(17	)			53				—				67
Intercompany income (expenses), net			73				—				(15	)			(29	)			(29	)			—
Other income (expenses), net			—				—				4				8				—				12
Interest expense, net			31				—				19				130				—				180
Income (loss) before provision for income taxes			428				—				97				464				(423	)			566
Income tax expense (recovery)			(5	)			—				30				88				—				113
Net income (loss)			433				—				67				376				(423	)			453
Non-controlling interest in subsidiaries			—				—				—				9				11				20
Net income (loss) of Emera Incorporated			433				—				67				367				(434	)			433
Preferred stock dividends			26				—				16				24				(40	)			26
Net income (loss) attributable to common shareholders		$	407			$	—			$	51			$	343			$	(394	)		$	407
Comprehensive income (loss) of Emera Incorporated		$	511			$	—			$	136			$	365			$	(501	)		$	511

Emera Incorporated

Condensed Consolidated Balance Sheets

As at December 31, 2015

millions of Canadian dollars		Parent				Subsidiary Issuer				Guarantor Subsidiaries				Non-guarantor Subsidiaries				Eliminations				Consolidated
Assets
Current assets
Cash and cash equivalents		$	—			$	—			$	19			$	1,068			$	(14	)		$	1,073
Restricted cash			—				—				1				18				—				19
Receivables, net			2				—				70				506				—				578
Intercompany receivable			102				—				51				95				(248	)			—
Income taxes receivable			—				—				9				3				—				12
Inventory			—				—				48				266				—				314
Derivative instruments			109				—				46				112				(17	)			250
Regulatory assets			—				—				17				77				—				94
Prepaid expenses			—				—				4				14				—				18
Due from related parties			2				—				—				—				—				2
Other current assets			7				—				—				229				—				236
Total current assets			222				—				265				2,388				(279	)			2,596
Property, plant and equipment, net of accumulated depreciation			15				—				2,035				4,419				—				6,469
Other assets
Income taxes receivable			—				—				—				49				—				49
Deferred income taxes			—				—				47				19				(34	)			32
Derivative instruments			35				—				—				167				(34	)			168
Pension and post-retirement assets			—				—				—				9				—				9
Regulatory assets			—				—				100				505				—				605
Net investment in direct financing lease			—				—				—				480				—				480
Investments in subsidiaries accounted for using the equity method			6,042				—				—				—				(6,042	)			—
Investments subject to significant influence			509				—				12				624				—				1,145
Investment securities			—				—				—				116				—				116
Goodwill			—				—				158				106				—				264
Due from related parties			—				—				—				3				—				3
Intercompany notes receivable			3,051				—				—				2,754				(5,805	)			—
Other investments - intercompany			—				—				—				98				(98	)			—
Other long-term assets			16				—				13				74				—				103
Total other assets			9,653				—				330				5,004				(12,013	)			2,974
Total assets		$	9,890			$	—			$	2,630			$	11,811			$	(12,292	)		$	12,039

Emera Incorporated

Condensed Consolidated Balance Sheets – Continued

As at December 31, 2015

millions of Canadian dollars		Parent				Subsidiary Issuer				Guarantor Subsidiaries				Non-guarantor Subsidiaries				Eliminations				Consolidated
Liabilities and Equity
Current liabilities
Short-term debt		$	14			$	—			$	—			$	16			$	(14	)		$	16
Current portion of long-term debt			250				—				6				18				—				274
Accounts payable			17				—				76				301				—				394
Income taxes payable			—				—				—				8				—				8
Intercompany payable			52				—				92				77				(221	)			—
Derivative instruments			17				—				36				313				(17	)			349
Regulatory liabilities			—				—				10				102				—				112
Pension and post-retirement liabilities			—				—				—				7				—				7
Due to related party			—				—				—				2				—				2
Other current liabilities			51				—				24				130				—				205
Total current liabilities			401				—				244				974				(252	)			1,367
Long-term liabilities
Long-term debt			464				—				389				2,882				—				3,735
Intercompany long-term debt			2,631				—				120				3,072				(5,823	)			—
Deferred income taxes			3				—				343				450				(34	)			762
Convertible debentures			2,139				—				—				(1,458	)			—				681
Derivative instruments			34				—				—				96				(34	)			96
Regulatory liabilities			—				—				12				341				—				353
Asset retirement obligations			—				—				—				109				—				109
Pension and post-retirement liabilities			13				—				93				197				—				303
Other long-term liabilities			5				—				61				233				—				299
Total long-term liabilities			5,289				—				1,018				5,922				(5,891	)			6,338
Equity
Common stock			2,157				—				312				3,829				(4,141	)			2,157
Cumulative preferred stock			709				—				425				271				(696	)			709
Contributed surplus			29				—				45				133				(178	)			29
Accumulated other comprehensive income (loss)			137				—				245				(169	)			(76	)			137
Retained earnings			1,168				—				341				751				(1,092	)			1,168
Total Emera Incorporated equity			4,200				—				1,368				4,815				(6,183	)			4,200
Non-controlling interest in subsidiaries			—				—				—				100				34				134
Total equity			4,200				—				1,368				4,915				(6,149	)			4,334
Total liabilities and equity		$	9,890			$	—			$	2,630			$	11,811			$	(12,292	)		$	12,039

Emera Incorporated

Condensed Consolidated Balance Sheets

As at December 31, 2014

millions of Canadian dollars		Parent				Subsidiary Issuer				Guarantor Subsidiaries				Non-guarantor Subsidiaries				Eliminations				Consolidated
Assets
Current assets
Cash and cash equivalents		$	—			$	—			$	38			$	193			$	(10	)		$	221
Restricted cash			—				—				1				15				—				16
Receivables, net			1				—				65				448				—				514
Intercompany receivable			85				—				—				177				(262	)			—
Income taxes receivable			2				—				1				2				—				5
Inventory			—				—				39				256				—				295
Derivative instruments			5				—				70				67				(5	)			137
Regulatory assets			—				—				15				99				—				114
Prepaid expenses			—				—				12				13				—				25
Due from related parties			2				—				—				1				—				3
Other current assets			5				—				—				76				—				81
Total current assets			100				—				241				1,347				(277	)			1,411
Property, plant and equipment, net of accumulated depreciation			10				—				1,620				4,115				—				5,745
Other assets
Income taxes receivable			—				—				—				29				—				29
Deferred income taxes			31				—				9				2				16				58
Derivative instruments			10				—				8				84				(10	)			92
Pension and post-retirement assets			—				—				—				6				—				6
Regulatory assets			—				—				92				396				—				488
Net investment in direct financing lease			—				—				—				484				—				484
Investments in subsidiaries accounted for using the equity method			2,964				—				—				—				(2,964	)			—
Investments subject to significant influence			340				—				245				443				—				1,028
Investment securities			—				—				—				84				—				84
Goodwill			—				—				133				89				—				222
Due from related parties			—				—				—				3				—				3
Intercompany notes receivable			2,302				—				25				2,093				(4,420	)			—
Other investments - intercompany			—				—				—				69				(69	)			—
Other long-term assets			126				—				9				70				—				205
Total other assets			5,773				—				521				3,852				(7,447	)			2,699
Total assets		$	5,883			$	—			$	2,382			$	9,314			$	(7,724	)		$	9,855

Emera Incorporated

Condensed Consolidated Balance Sheets – Continued

As at December 31, 2014

millions of Canadian dollars		Parent				Subsidiary Issuer				Guarantor Subsidiaries				Non-guarantor Subsidiaries				Eliminations				Consolidated
Liabilities and Equity
Current liabilities
Short-term debt		$	10			$	—			$	—			$	258			$	(10	)		$	258
Current portion of long-term debt			—				—				5				89				—				94
Accounts payable			5				—				40				326				—				371
Intercompany payable			24				—				31				206				(261	)			—
Income taxes payable			—				—				—				34				—				34
Derivative instruments			5				—				31				96				(5	)			127
Regulatory liabilities			—				—				7				36				—				43
Pension and post-retirement liabilities			—				—				—				8				—				8
Due to related party			—				—				—				2				—				2
Other current liabilities			32				—				36				119				—				187
Total current liabilities			76				—				150				1,174				(276	)			1,124
Long-term liabilities
Long-term debt			753				—				335				2,572				—				3,660
Intercompany long-term debt			1,631				—				459				2,327				(4,417	)			—
Deferred income taxes			—				—				223				374				16				613
Derivative instruments			10				—				4				74				(11	)			77
Regulatory liabilities			—				—				19				140				—				159
Asset retirement obligations			—				—				—				106				—				106
Pension and post-retirement liabilities			11				—				97				253				—				361
Other long-term liabilities			4				—				16				29				—				49
Total long-term liabilities			2,409				—				1,153				5,875				(4,412	)			5,025
Equity
Common stock			2,016				—				312				1,385				(1,697	)			2,016
Cumulative preferred stock			709				—				425				397				(822	)			709
Contributed surplus			9				—				45				23				(68	)			9
Accumulated other comprehensive income (loss)			(348	)			—				12				(380	)			369				(347	)
Retained earnings			1,012				—				285				699				(984	)			1,012
Total Emera Incorporated equity			3,398				—				1,079				2,124				(3,202	)			3,399
Non-controlling interest in subsidiaries			—				—				—				141				166				307
Total equity			3,398				—				1,079				2,265				(3,036	)			3,706
Total liabilities and equity		$	5,883			$	—			$	2,382			$	9,314			$	(7,724	)		$	9,855

Emera Incorporated

Condensed Consolidated Statements of Cash Flows

For the year ended December 31, 2015

millions of Canadian dollars		Parent				Subsidiary Issuer				Guarantor Subsidiaries				Non-guarantor Subsidiaries				Eliminations				Consolidated
Net cash provided by (used in) operating activities		$	291			$	—			$	190			$	364			$	(170	)		$	675
Investing activities
Additions to property, plant and equipment			(1	)			—				(66	)			(302	)			—				(369	)
Net purchase of investments subject to significant influence, inclusive of acquisition costs			(1	)			—				(3	)			(132	)			—				(136	)
Proceeds on sale of investment subject to significant influence			—				—				282				—				—				282
Other intercompany investing activities			(2,453	)			—				—				(29	)			2,482				—
Other investing activities			(756	)			—				(10	)			(465	)			1,330				99
Net cash provided by (used in) investing activities			(3,211	)			—				203				(928	)			3,812				(124	)
Financing activities
Change in short-term debt, net			4				—				—				(262	)			(4	)			(262	)
Proceeds from long-term debt, net of issuance costs			—				—				29				1,465				(1,047	)			447
Proceeds from convertible debentures represented by instalment receipts, net of issuance costs			2,138				—				—				(1,457	)			—				681
Retirement of long-term debt			—				—				(420	)			(372	)			702				(90	)
Net borrowings (repayments) under committed credit facilities			(39	)			—				(9	)			(153	)			—				(201	)
Issuance of common stock, net of issuance costs			9				—				—				2,390				(2,390	)			9
Issuance of preferred stock, net of issuance costs			—				—				—				6				(6	)			—
Dividends on common stock			(163	)			—				—				(162	)			162				(163	)
Dividends on preferred stock			(30	)			—				(15	)			(25	)			40				(30	)
Dividends paid by subsidiaries to non-controlling interest			—				—								(3	)			(11	)			(14	)
Other financing activities			1,001				—				(11	)			(54	)			(1,092	)			(156	)
Net cash provided by (used in) financing activities			2,920				—				(426	)			1,373				(3,646	)			221
Effect of exchange rate changes on cash and cash equivalents			—				—				14				66				—				80
Net increase (decrease) in cash and cash equivalents			—				—				(19	)			875				(4	)			852
Cash and cash equivalents, beginning of period			—				—				38				193				(10	)			221
Cash and cash equivalents, end of period		$	—			$	—			$	19			$	1,068			$	(14	)		$	1,073

Emera Incorporated

Condensed Consolidated Statements of Cash Flows

For the year ended December 31, 2014

millions of Canadian dollars		Parent				Subsidiary Issuer				Guarantor Subsidiaries				Non-guarantor Subsidiaries				Eliminations				Consolidated
Net cash provided by (used in) operating activities		$	223			$	—			$	143			$	613			$	(216	)		$	763
Investing activities
Additions to property, plant and equipment			—				—				(136	)			(298	)			—				(434	)
Net purchase of investments subject to significant influence, inclusive of acquisition costs			(4	)			—				(4	)			(147	)			—				(155	)
Proceeds on sale of investment subject to significant influence			(111	)			—				—				—				—				(111	)
Other intercompany investing activities			(1,484	)			—				(23	)			(1,529	)			3,036				—
Other investing activities			(144	)			—				(4	)			(1	)			138				(11	)
Net cash provided by (used in) investing activities			(1,743	)			—				(167	)			(1,975	)			3,174				(711	)
Financing activities
Change in short-term debt, net			44				—				(65	)			(183	)			(10	)			(214	)
Proceeds from long-term debt, net of issuance costs			—				—				180				410				(288	)			302
Retirement of long-term debt			(250	)			—				(38	)			(35	)			14				(309	)
Net borrowings (repayments) under committed credit facilities			(39	)			—				—				66				—				27
Issuance of common stock, net of issuance costs			252				—				—				80				(80	)			252
Issuance of preferred stock, net of issuance costs			194				—				—				57				(57	)			194
Dividends on common stock			(153	)			—				—				(188	)			188				(153	)
Dividends on preferred stock			(26	)			—				(16	)			(24	)			40				(26	)
Dividends paid by subsidiaries to non-controlling interest			—				—				—				(2	)			(11	)			(13	)
Other financing activities			1,498				—				(1	)			1,262				(2,761	)			(2	)
Net cash provided by (used in) financing activities			1,520				—				60				1,443				(2,965	)			58
Effect of exchange rate changes on cash and cash equivalents			—				—				—				10				—				10
Net increase (decrease) in cash and cash equivalents			—				—				36				91				(7	)			120
Cash and cash equivalents, beginning of period			—				—				1				100				—				101
Cash and cash equivalents, end of period		$	—			$	—			$	37			$	191			$	(7	)		$	221