<PAGE>
                                                                    EXHIBIT 99.3

ARTHUR KILL POWER LLC
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

<PAGE>

ARTHUR KILL POWER LLC
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                           PAGE(S)
<S>                                                                                                        <C>
Report of Independent Accountants                                                                             1

Financial Statements:

   Balance Sheet at December 31, 2001 and 2000                                                                2

   Statement of Operations for the years ended December 31, 2001 and 2000 and for the
   period from June 25, 1999 (inception) to December 31, 1999                                                 3

   Statement of Cash Flows for the years ended December 31, 2001 and 2000 and for the
   period from June 25, 1999 (inception) to December 31, 1999                                                 4

   Statement of Member's Equity for the years ended December 31, 2001 and 2000 and for
   the period from June 25, 1999 (inception) to December 31, 1999                                             5

Notes to Financial Statements                                                                               6-12
</TABLE>

<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Management Committee of
Arthur Kill Power LLC:

In our opinion, the accompanying balance sheet and the related statement of
operations, of member's equity and of cash flows present fairly, in all material
respects, the financial position of Arthur Kill Power LLC at December 31, 2001
and 2000, and the results of its operations and its cash flows for the year
ended December 31, 2001 and 2000 and for the period from June 25, 1999
(inception) through December 31, 1999 in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

/s/ PRICEWATERHOUSECOOPERS LLP

Minneapolis, Minnesota
February 21, 2002

<PAGE>

ARTHUR KILL POWER LLC
BALANCE SHEET
AT DECEMBER 31, 2001 AND 2000
(Thousands of dollars)

<TABLE>
<CAPTION>
                      ASSETS                                             2001        2000
<S>                                                                    <C>         <C>
Current assets:
    Cash and cash equivalents                                          $     --    $      2
    Accounts receivable, net of allowance for doubtful accounts
        of $0 and $722                                                   16,437      18,687
    Accounts receivable, affiliate                                           --      44,830
    Inventory                                                             8,364       7,753
    Prepaid expenses                                                        607       7,811
                                                                       --------    --------
      Total current assets                                               25,408      79,083
Property, plant and equipment, net of accumulated depreication of
      $32,513 and $19,478                                               385,110     392,253
Deferred financing costs, net of accumulated amortization of
      $228 and $103                                                       2,844       2,909
                                                                       --------    --------
      Total assets                                                     $413,362    $474,245
                                                                       ========    ========
                         LIABILITIES AND MEMBER'S EQUITY
Liabilities:
    Current liabilities:
      Accounts payable                                                 $  1,934    $    524
      Current portion of long-term debt (intercompany note payable)      32,393      27,251
      Checks in excess of cash                                            1,868         851
      Accrued interest                                                      633         765
      Accrued fuel and purchased power expense                           11,042       5,311
      Other current liabilities                                          15,824      11,943
                                                                       --------    --------
      Total current liabilities                                          63,694      46,645
    Long-term debt (intercompany note payable)                          152,157     184,525
    Other long term liabilities                                           1,465          --
                                                                       --------    --------
      Total liabilities                                                 217,316     231,170
Member's equity                                                         196,046     243,075
                                                                       --------    --------
      Total liabilities and member's equity                            $413,362    $474,245
                                                                       ========    ========
</TABLE>

    The accompanying notes are an integral part of the financial statements.


                                        2
<PAGE>

ARTHUR KILL POWER LLC
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000 AND FOR THE PERIOD FROM JUNE 25,
1999 (INCEPTION) TO DECEMBER 31, 1999
(Thousands of dollars)

<TABLE>
<CAPTION>
                                         2001         2000         1999
<S>                                    <C>         <C>           <C>
Revenues                               $320,792    $ 219,509     $59,155
Operating costs                         181,866      129,858      21,220
                                       --------    ---------     -------
      Operating margin                  138,926       89,651      37,935
Depreciation                             13,035       12,858       6,620
General and administrative expenses       1,526        1,328       2,292
                                       --------    ---------     -------
      Income from operations            124,365       75,465      29,023
Other income, net                           133           35          --
Interest expense                         17,713       20,930      10,720
                                       --------    ---------     -------
Net income                             $106,785    $  54,570     $18,303
                                       ========    =========     =======
</TABLE>

    The accompanying notes are an integral part of the financial statements.


                                       3
<PAGE>

ARTHUR KILL POWER LLC
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000 AND FOR THE PERIOD FROM JUNE 25,
1999 (INCEPTION) TO DECEMBER 31, 1999
(Thousands of dollars)

<TABLE>
<CAPTION>
                                                                      2001          2000           1999
Cash flows from operating activities:
<S>                                                                <C>           <C>           <C>
    Net income                                                     $ 106,785     $  54,570     $  18,303
    Adjustments to reconcile net income to net cash provided by
        operating activities:
      Depreciation                                                    13,035        12,858         6,620
      Amortization of deferred financing costs                           125         1,314         1,401
      Changes in assets and liabilities:
        Accounts receivable                                            2,250         5,050       (23,737)
        Inventories                                                     (611)          831            69
        Accounts receivable, affiliate                                44,830       (44,830)           --
        Prepaid expenses                                               7,204        (1,586)       (5,837)
        Accounts payable                                               1,410           330           193
        Accounts payable - affiliates                                     --        (9,296)       (6,044)
        Accrued fuel and purchased power expense                       5,731        (4,757)       10,068
        Accrued interest                                                (132)          765            --
        Other current liabilities                                      3,881         9,658           730
        Other assets and liabilities                                   1,465           (91)           --
                                                                   ---------     ---------     ---------
      Net cash provided by operating activities                      185,973        24,816         1,766
                                                                   ---------     ---------     ---------
Cash flows from investing activities:
    Business acquisition, net of liabilities assumed                      --            --      (395,510)
    Proceeds from disposition of fixed assets                             --           728            --
    Capital expenditures                                              (5,892)       (4,014)       (5,080)
                                                                   ---------     ---------     ---------
      Net cash used in investing activities                           (5,892)       (3,286)     (400,590)
                                                                   ---------     ---------     ---------
Cash flows from financing activities:
    Principal payments of long-term debt                             (27,226)     (264,629)           --
    Proceeds from borrowings                                              --       226,900       249,505
    Deferred financing costs                                             (60)       (3,012)       (2,521)
    (Distributions to)/contributions from member                    (153,814)       24,197       146,005
    Checks in excess of cash                                           1,017        (4,986)        5,837
                                                                   ---------     ---------     ---------
      Net cash (used in) provided by financing activities           (180,083)      (21,530)      398,826
                                                                   ---------     ---------     ---------
Net increase in cash and cash equivalents                                 (2)           --             2
Cash and cash equivalents at beginning of year                             2             2            --
                                                                   ---------     ---------     ---------
Cash and cash equivalents at end of year                           $      --     $       2     $       2
                                                                   =========     =========     =========
Supplemental disclosures of cash flow information:
    Interest paid (net of amount capitalized)                      $  17,720     $  17,537     $  10,201
</TABLE>

    The accompanying notes are an integral part of the financial statements.


                                       4
<PAGE>

ARTHUR KILL POWER LLC
STATEMENT OF MEMBER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000 AND FOR THE PERIOD FROM JUNE 25,
1999 (INCEPTION) TO DECEMBER 31, 1999
(Thousands of dollars)

<TABLE>
<CAPTION>

                                                       Total
                                                      Member's
                                                       Equity
<S>                                                <C>
Balance, June 25, 1999                             $           --
                                                   ==============
Net income                                                 18,303
Contributions from member                                 146,005
                                                   --------------
Balance, December 31, 1999                         $      164,308
                                                   ==============
Net income                                                 54,570
Contributions from member                                  24,197
                                                   --------------
Balance, December 31, 2000                         $      243,075
                                                   ==============

Net income                                                106,785
Member distributions, net                                (153,814)
                                                   --------------
Balance, December 31, 2001                         $      196,046
                                                   ==============
</TABLE>
    The accompanying notes are an integral part of the financial statements.


                                       5
<PAGE>

ARTHUR KILL POWER LLC
NOTES TO FINANCIAL STATEMENTS

Arthur Kill Power LLC ("the Company"), a wholly-owned subsidiary of NRG
Northeast Generating LLC ("Northeast Gen"), owns and operates the approximately
842 Megawatt ("MW"), three unit, natural gas/oil fired intermediate/peaking
electric generating facility located in Staten Island, New York.

Northeast Gen, a wholly-owned indirect subsidiary of NRG Energy, Inc. ("NRG"),
owns electric power generation plants in the northeastern region of the United
States. Northeast Gen was formed for the purpose of financing, acquiring,
owning, operating and maintaining, through its subsidiaries and affiliates the
electric generating facilities owned by Arthur Kill Power LLC, Astoria Gas
Turbine Power LLC, Connecticut Jet Power LLC, Devon Power LLC, Dunkirk Power
LLC, Huntley Power LLC, Middletown Power LLC, Montville Power LLC, Norwalk
Harbor Power LLC, Oswego Harbor Power LLC and Somerset Power LLC.

At December 31, 1999, Northeast Gen held a 99% interest in Arthur Kill Power
LLC, Astoria Gas Turbine Power LLC, Dunkirk Power LLC, Huntley Power LLC, Oswego
Harbor Power LLC and Somerset Power LLC. Northeast Generating Holding LLC and
NRG Eastern LLC each held a minority interest of 0.5% in Arthur Kill Power LLC,
Astoria Gas Turbine Power LLC, Dunkirk Power LLC, Huntley Power LLC, Oswego
Harbor Power LLC and Somerset Power LLC.

NRG Connecticut Generating LLC, a wholly owned subsidiary of NRG, owned 100% of
Connecticut Jet Power LLC, Devon Power LLC, Middletown Power LLC, Montville
Power LLC and Norwalk Harbor Power LLC.

Effective January 1, 2000, the minority ownership interests held by Northeast
Generating Holding LLC and NRG Eastern LLC as well as the ownership interests
held by NRG Connecticut Generating LLC were transferred to Northeast Gen. Since
all assets and operations were under common ownership and control since April
27, 1999 (Inception of Northeast Gen), the Northeast Gen financial statements
have been presented on a combined basis without minority interest.

Additional information regarding the Northeast Gen and the Company can be found
in NRG's Form 10-K for the twelve months ended December 31, 2001.

1.    BUSINESS DEVELOPMENTS

      In June 1999, the Arthur Kill and Astoria generating facilities were
      acquired from the Consolidated Edison Company of New York, Inc. ("ConEd")
      for approximately $505 million. The acquisition was accounted for as the
      purchase of assets. These facilities are located in Staten Island and
      Queens, New York, and have a combined capacity of 1,456 MW. The Arthur
      Kill facilities were acquired for approximately $395.5 million and have a
      capacity of 842 MW.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      USE OF ESTIMATES IN FINANCIAL STATEMENTS The preparation of financial
      statements in conformity with accounting principles generally accepted in
      the United States of America requires management to make estimates and
      assumptions that affect reported amounts of assets and liabilities at the
      date of the financial statements and reported amounts of revenue and
      expenses during the reporting period. Actual results may differ from those
      estimates.

      In recording transactions and balances resulting from business operations,
      the Company uses


                                       6
<PAGE>

ARTHUR KILL POWER LLC
NOTES TO FINANCIAL STATEMENTS

      estimates based on the best information available. Estimates are used for
      such items as plant depreciable lives, uncollectible accounts and
      actuarially determined benefit costs, among others. As better information
      becomes available (or actual amounts are determinable), the recorded
      estimates are revised. Consequently, operating results can be affected by
      revisions to prior accounting estimates.

      CASH AND CASH EQUIVALENTS

      The Company considers cash and cash equivalents to include cash and
      short-term investments with original maturities of three months or less.

      INVENTORY

      Inventory consists of spare parts and is stated at the lower of weighted
      average cost or market.

      At December 31, 2001 and 2000, inventory, which is stated at the lower of
      weighted average cost or market, consisted of:

<TABLE>
<CAPTION>
      (In thousands)     2001      2000

<S>                     <C>        <C>
      Spare parts       $ 8,364    $7,753
                        =======    ======
</TABLE>

      PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment are stated at cost. Depreciation is computed
      on a straight-line basis over the following estimated useful lives:

<TABLE>
<S>                                                     <C>
      Facilities, machinery and equipment               25 to 30 years
      Office furnishings and equipment                  3 to 10 years
</TABLE>

      At December 31, 2001 and 2000, property, plant and equipment consisted of
      the following:

<TABLE>
<CAPTION>
      (In thousands)                            2001          2000
<S>                                          <C>           <C>
      Land                                   $  24,826     $  24,826
      Facilities, machinery and equipment      386,030       385,183
      Construction in progress                   6,562         1,527
      Office furnishings and equipment             205           195
      Accumulated depreciation                 (32,513)      (19,478)
                                             ---------     ---------
      Property, plant and equipment, net     $ 385,110     $ 392,253
                                             =========     =========
</TABLE>

      DEFERRED FINANCING COSTS

      Deferred financing costs consist of legal and other costs incurred to
      obtain debt financing. These costs are being amortized over the terms of
      the related debt.

      REVENUE RECOGNITION

      Revenues from the sale of electricity are recorded based upon the output
      delivered and capacity provided at rates as specified under contract terms
      or prevailing market rates. Revenues and related costs under cost
      reimbursable contract provisions are recorded as costs are incurred.

      POWER MARKETING ACTIVITIES

      The Company has entered into a contract with a marketing affiliate for the
      sale of energy, capacity and ancillary services produced, which enables
      the affiliate to engage in forward sales and hedging transactions to
      manage the Company's electricity price exposure. Net gains or losses on
      hedges by the marketing affiliate, which are physically settled, are
      recognized in the same manner as the hedged item. The Company receives the
      net transaction price on all contracts that are physically settled by its
      marketing affiliate.


                                       7
<PAGE>

ARTHUR KILL POWER LLC
NOTES TO FINANCIAL STATEMENTS

      INCOME TAXES

      The Company has been organized as a LLC. Therefore, federal and state
      income taxes are assessed at the member level. Accordingly, no provision
      has been made for federal or state income taxes in the accompanying
      financial statements.

      At December 31, 2001 and 2000, the accompanying financial statements
      report a balance of $385.1 million and $392.3 million, respectively, for
      net property, plant and equipment. The tax basis of this property is
      estimated to be $352.5 million and $369.7 million, respectively. The
      primary difference is due to accelerated tax depreciation.

      NEW ACCOUNTING PRONOUNCEMENTS

      In June 2001, the Financial Accounting Standards Board (the FASB) issued
      Statement of Financial Accounting Standards No. 142, Goodwill and Other
      Intangible Assets (SFAS No. 142). SFAS No. 142 requires that goodwill and
      intangible assets with indefinite useful lives no longer be amortized but
      instead be tested for impairment in accordance with SFAS No. 121,
      Accounting for the Impairment of Long-lived Assets and for Long-lived
      Assets to Be Disposed Of (SFAS No. 121). Goodwill will no longer be
      amortized to comply with the provisions of SFAS No. 142. Instead, goodwill
      and intangible assets that will not be amortized should be tested for
      impairment annually and on an interim basis if an event occurs or a
      circumstance changes between annual tests that may reduce the fair value
      of a reporting unit below its carrying value. An impairment test is
      required to be performed within six months of the date of adoption, and
      the first annual impairment test must be performed in the year the
      statement is initially adopted.

      Arthur Kill Power LLC as required is adopting SFAS No. 142 on January 1,
      2002. All intangible assets and goodwill acquired in the future will be
      accounted for under the new accounting standard. Arthur Kill Power does
      not expect to recognize any asset impairments as a result of adopting SFAS
      No. 142 in the first quarter of 2002.

      In June 2001, FASB issued SFAS No. 143, Accounting for Asset Retirement
      Obligations (SFAS No. 143). This statement addresses financial accounting
      and reporting for obligations associated with the retirement of tangible
      long-lived assets and the associated asset retirement costs. SFAS No. 143
      requires an entity to recognize the fair value of a liability for an asset
      retirement obligation in the period in which it is incurred. Upon initial
      recognition of a liability for an asset retirement obligation, an entity
      shall capitalize an asset retirement cost by increasing the carrying
      amount of the related long-lived asset by the same amount as the
      liability. SFAS No. 143 is effective for financial statements issued for
      fiscal years beginning after June 15, 2002. Arthur Kill Power LLC has not
      completed its analysis of SFAS No. 143.

      In October 2001, the FASB issued SFAS No. 144, Accounting for the
      Impairment or Disposal of Long-Lived Assets (SFAS No. 144). This statement
      addresses financial accounting and reporting for the impairment or
      disposal of long-lived assets. SFAS No. 144 retains and expands upon the
      fundamental provisions of existing guidance related to the recognition and
      measurement of the impairment of long-lived assets to be held and used and
      the measurement of long-lived assets to be disposed of by sale. Generally,
      the provisions of SFAS No. 144 are effective for financial statements
      issued for fiscal years beginning after December 15, 2001. Arthur Kill
      Power LLC does not expect to recognize any asset impairments as a result
      of adopting SFAS No. 144 in the first quarter of 2002.


                                       8
<PAGE>

ARTHUR KILL POWER LLC
NOTES TO FINANCIAL STATEMENTS

3.    DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITY

      On January 1, 2001, the Company adopted Statement of Financial Accounting
      Standards No. 133, Accounting for Derivative Instruments and Hedging
      Activities (SFAS No. 133), as amended by SFAS No. 137 and SFAS No. 138.
      SFAS No. 133 requires the Company to record all derivatives on the balance
      sheet at fair value.

      SFAS No. 133 applies to Northeast Gen's energy and energy related
      commodities financial instruments, long-term power sales contracts and
      long-term gas purchase contracts used to mitigate variability in earnings
      due to fluctuations in spot market prices, hedge fuel requirements at
      generation facilities and protect investment in fuel inventories. The
      Company does not enter into long-term power sales contracts, long-term gas
      purchase contracts, or other derivative instruments. These activities are
      conducted by an affiliate of Northeast Gen and are not allocated to the
      Company.

4.    LONG-TERM DEBT

      On February 22, 2000, Northeast Gen issued $750 million of senior secured
      bonds to refinance short-term project borrowings and for certain other
      purposes. The bond offering included three tranches: $320 million with an
      interest rate of 8.065% due in 2004; $130 million with an interest rate of
      8.842% due in 2015; and $300 million with an interest rate of 9.292% due
      in 2024. Each of the subsidiaries of Northeast Gen, of which the Company
      is one, jointly and severally guarantee the bonds. The bonds are secured
      by a security interest in Northeast Gen's membership or other ownership
      interest in its subsidiaries that guarantee the bonds; Northeast Gen's
      rights under all intercompany notes between it and its subsidiaries; the
      power sales and agency agreements, the operations and maintenance
      agreements, the corporate services agreements, the transition power sales
      contracts entered into by Northeast Gen and its subsidiaries and the funds
      administration agreement; the debt service reserve account; and the
      revenues from certain power sales contracts entered into by NRG Power
      Marketing associated with existing or future facilities owned by Northeast
      Gen or its subsidiaries. At December 31, 2001 and 2000, the Company's
      outstanding balance under this debt agreement was $184.6 million and
      $211.8 million, respectively. A portion of the interest expense related to
      these bonds will be recognized as part of the Company's results of
      operations.


                                       9
<PAGE>

ARTHUR KILL POWER LLC
NOTES TO FINANCIAL STATEMENTS


5.    RELATED PARTY TRANSACTIONS

      On June 25, 1999, the Company entered into a power sales and agency
      agreement with NRG Power Marketing Inc., a wholly-owned subsidiary of NRG.
      The agreement is effective until December 31, 2030. Under the agreement,
      NRG Power Marketing Inc. will (i) have the exclusive right to manage,
      market and sell all power not otherwise sold or committed to or by such
      subsidiaries, (ii) procure and provide to such subsidiaries all fuel
      required to operate their respective facilities and (iii) market, sell and
      purchase all emission credits owned, earned or acquired by such
      subsidiaries. In addition, NRG Power Marketing Inc. will have the
      exclusive right and obligation to effect the direction of the power output
      from the facilities.

      Under the agreement, NRG Power Marketing Inc. pays to the Company gross
      receipts generated through sales, less costs incurred by NRG Power
      Marketing Inc. relative to its providing services (e.g. transmission and
      delivery costs, fuel cost, taxes, employee labor, contract services,
      etc.). The Company incurs no fees related to these power sales and agency
      agreements with NRG Power Marketing.



                                       10
<PAGE>

ARTHUR KILL POWER LLC
NOTES TO FINANCIAL STATEMENTS

      On June 25, 1999, the Company entered into an operation and maintenance
      agreement with a subsidiary of NRG Operating Services, Inc., a
      wholly-owned subsidiary of NRG ("NRG Operating Services"). The agreement
      is effective for five years, with options to extend beyond five years.
      Under the agreement, the NRG Operating Services company operator operates
      and maintains its respective facility, including (i) coordinating fuel
      delivery, unloading and inventory, (ii) managing facility spare parts,
      (iii) meeting external performance standards for transmission of
      electricity, (iv) providing operating and maintenance consulting and (v)
      cooperating with and assisting the Company in performing the Company's
      obligations under agreements related to its facilities.

      Under the agreement, the operator charges an annual fee, and in addition
      will be reimbursed for usual and customary costs related to providing the
      services including plant labor and other operating costs. A demobilization
      payment will be made if the subsidiary elects not to renew the agreement.
      There are also incentive fees and penalties based on performance under the
      approved operating budget, the heat rate and safety.

      During 2001, 2000 and 1999, the Company incurred annual operating and
      maintenance costs billed from NRG Operating Services Inc. totaling $0.4
      million. In addition, the Company incurred $16.6 million, $20.0 million
      and $5.2 million, respectively, for usual and customary costs related to
      providing the services including plant labor and other operating costs.

      On June 25, 1999, the Company entered into an agreement with NRG for
      corporate support and services. The agreement is perpetual in term, unless
      terminated in writing. Under the agreement, NRG will provide services, as
      requested, in areas such as human resources, accounting, finance,
      treasury, tax, office administration, information technology, engineering,
      construction management, environmental, legal and safety. Under the
      agreement, NRG is paid for personnel time as well as out-of-pocket costs.

      During 2001, 2000 and 1999, the Company paid NRG approximately $0.5
      million, $0.4 million, and $0.1 million, respectively, for corporate
      support and services.

6.    SALES TO SIGNIFICANT CUSTOMERS

      During 2001, sales to one customer accounted for 73.1% of the Company's
      revenues. During 2000, sales to one customer accounted for 54.1% of the
      Company's revenues. During 1999, sales to two customers accounted for
      80.9% and 18.7% of the Company's revenue. During 1999, the Company entered
      into a transition agreement with the previous owner of the Company's
      recently acquired electric generating facility for the sale of energy,
      capacity and other ancillary services. The transition agreement accounted
      for the majority of the Company's revenues during 1999.

7.    COMMITMENTS AND CONTINGENCIES

      ENVIRONMENTAL

      The total forecasted capital expenditures during the first 5 years of the
      ConEd, NiMo, Somerset and CL&P assets acquired by NRG Energy were in the
      range of $60 million dollars. Currently, the Company is estimating that
      costs approximating $7.5 million will be required to close out the
      remaining issues associated with remedial investigations/clean-ups at
      Somerset, Arthur Kill, Astoria, Middletown, Norwalk Harbor, Devon, and
      Montville.



                                       11
<PAGE>

ARTHUR KILL POWER LLC
NOTES TO FINANCIAL STATEMENTS

      In response to liabilities associated with these activities, accruals have
      been established when reasonable estimates are possible. As of December
      31, 2001 and 2000, the Company has established such accruals in the amount
      of approximately $1.5 million for both periods. Such accruals primarily
      include estimated costs associated with remediation. The Company has not
      used discounting in determining its accrued liabilities for environmental
      remediation and no claims for possible recovery from third party issuers
      or other parties related to environmental costs have been recognized in
      the Company's consolidated financial statements. The Company adjusts the
      accruals when new remediation responsibilities are discovered and probable
      costs become estimable, or when current remediation estimates are adjusted
      to reflect new information.


                                       12