UNITED STATES |
|||||||||||
FORM 10-Q |
|||||||||||
Quarterly Report Under Section 13 or 15(d) |
|||||||||||
For Quarter Ended |
September 30, 2002 |
||||||||||
Commission File Number |
1-13895 |
||||||||||
CONECTIV |
|||||||||||
Delaware |
51-0377417 |
||||||||||
800 King Street, P.O. Box 231, Wilmington, Delaware |
19899 |
||||||||||
|
|||||||||||
|
|||||||||||
Yes |
[ X ] |
No |
[ ] |
||||||||
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. |
|||||||||||
All 100 issued and outstanding shares of Conectiv common stock, $0.01 per share par value, are owned by Pepco Holdings, Inc. |
Conectiv |
||
Page |
||
Part I. Financial Information: |
||
Item 1. |
Financial Statements |
|
Consolidated Statements of Income for the three and nine months ended September 30, 2002, and September 30, 2001 |
|
|
Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2002, and September 30, 2001 |
|
|
Consolidated Balance Sheets as of September 30, 2002, and December 31, 2001 |
3-4 |
|
Consolidated Statements of Cash Flows for the nine months ended September 30, 2002, and September 30, 2001 |
|
|
Notes to Consolidated Financial Statements |
6-19 |
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
36-37 |
Item 4. |
Controls and Procedures |
37 |
Part II. Other Information |
||
Item 1. |
Legal Proceedings |
37 |
Item 6. |
Exhibits and Reports on Form 8-K |
38 |
Signatures and Certifications |
39-43 |
|
PART I. FINANCIAL INFORMATION |
||||||||
CONECTIV |
||||||||
Three Months Ended |
Nine Months Ended |
|||||||
2002 |
2001 |
2002 |
2001 |
|||||
OPERATING REVENUES |
||||||||
Electric |
$ |
1,051,318 |
$ |
860,640 |
$ |
2,227,811 |
$ |
2,178,132 |
Gain on sales of electric generating plants |
- |
- |
15,817 |
297,140 |
||||
Gas |
72,582 |
61,927 |
294,998 |
341,174 |
||||
Other services |
118,427 |
118,228 |
307,174 |
391,810 |
||||
1,242,327 |
1,040,795 |
2,845,800 |
3,208,256 |
|||||
OPERATING EXPENSES |
||||||||
Electric fuel and purchased energy and capacity |
744,120 |
597,525 |
1,489,585 |
1,385,346 |
||||
Gas purchased |
56,035 |
57,913 |
224,351 |
316,775 |
||||
Other services' cost of sales |
108,723 |
104,257 |
272,581 |
328,441 |
||||
Merger-related costs |
72,963 |
13,488 |
75,394 |
14,573 |
||||
Operation and maintenance |
127,420 |
125,143 |
366,062 |
359,573 |
||||
Loss on sale of leveraged leases |
2,089 |
- |
19,674 |
- |
||||
Impairment of office building held for sale |
3,977 |
- |
3,977 |
- |
||||
Depreciation and amortization |
48,077 |
55,024 |
146,448 |
175,559 |
||||
Taxes other than income taxes |
18,098 |
20,891 |
48,896 |
59,246 |
||||
Deferred electric service costs |
(8,974) |
(67,049) |
(49,406) |
(125,370) |
||||
1,172,528 |
907,192 |
2,597,562 |
2,514,143 |
|||||
OPERATING INCOME |
69,799 |
133,603 |
248,238 |
694,113 |
||||
OTHER INCOME |
7,018 |
5,096 |
13,548 |
74,291 |
||||
INTEREST EXPENSE |
||||||||
Interest charges |
39,722 |
43,689 |
117,462 |
146,730 |
||||
Capitalized interest and allowance for borrowed |
(3,706) |
(3,206) |
(12,049) |
(12,958) |
||||
36,016 |
40,483 |
105,413 |
133,772 |
|||||
PREFERRED STOCK DIVIDEND |
3,803 |
4,487 |
11,891 |
14,689 |
||||
INCOME FROM CONTINUING OPERATIONS |
36,998 |
93,729 |
144,482 |
619,943 |
||||
INCOME TAXES |
18,254 |
31,810 |
64,205 |
253,401 |
||||
INCOME FROM CONTINUING OPERATIONS |
18,744 |
61,919 |
|
80,277 |
366,542 |
|||
DISCONTINUED TELECOMMUNICATION OPERATIONS |
||||||||
LOSS FROM OPERATIONS, NET OF INCOME TAXES |
- |
- |
- |
(7,696) |
||||
LOSS FROM DISPOSAL, NET OF INCOME TAXES |
- |
- |
- |
(118,788) |
||||
INCOME BEFORE EXTRAORDINARY ITEM |
18,744 |
61,919 |
80,277 |
240,058 |
||||
EXTRAORDINARY ITEM--LOSS ON EXTINGUISHMENT |
- |
(2,790) |
- |
(2,790) |
||||
NET INCOME |
$ |
18,744 |
$ |
59,129 |
$ |
80,277 |
$ |
237,268 |
See accompanying Notes to Consolidated Financial Statements. |
CONECTIV |
|||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||
2002 |
2001 |
2002 |
2001 |
||||||||
Net income |
$ |
18,744 |
$ |
59,129 |
$ |
80,277 |
$ |
237,268 |
|||
Other comprehensive income / (loss), net of taxes |
|||||||||||
Energy commodity derivative instruments designated as cash flow hedges |
|||||||||||
Unrealized gain / (loss) from cash flow hedges net of reclassification |
(5,289) |
(12,208) |
61,881 |
(67,746) |
|||||||
Cumulative effect of a change in accounting resulting from |
- |
- |
- |
3,445 |
|||||||
Unrealized loss on marketable securities net of reclassification |
(561) |
(8,835) |
(2,714) |
(10,360) |
|||||||
Interest rate swap agreement designated as cash flow hedge |
|||||||||||
Unrealized gain / (loss) from cash flow hedge net of reclassification |
(6,823) |
- |
(6,823) |
- |
|||||||
Other comprehensive income / (loss), net of taxes |
(12,673) |
(21,043) |
52,344 |
(74,661) |
|||||||
Comprehensive income |
$ |
6,071 |
$ |
38,086 |
$ |
132,621 |
$ |
162,607 |
|||
|
|||||||||||
See accompanying Notes to Consolidated Financial Statements. |
CONECTIV |
|||
ASSETS |
September 30, |
December 31, |
|
Current Assets |
|||
Cash and cash equivalents |
$ 80,434 |
$ 52,871 |
|
Accounts receivable, net of allowances of |
662,705 |
636,404 |
|
Inventories, at average cost |
|||
Fuel (coal, oil and gas) |
58,250 |
81,448 |
|
Materials and supplies |
45,529 |
44,604 |
|
Deferred energy supply costs |
- |
25,525 |
|
Deferred income taxes, net : |
|||
Assets held and used |
4,698 |
- |
|
Office building held for sale as of September 30, 2002 |
793 |
- |
|
Prepayments and other |
47,237 |
76,107 |
|
899,646 |
916,959 |
||
Investments |
|||
Investment in leveraged leases |
- |
45,314 |
|
Funds held by trustee |
6,602 |
12,136 |
|
Other investments |
58,130 |
60,845 |
|
64,732 |
118,295 |
||
Property, Plant and Equipment |
|||
Electric generation |
1,221,642 |
1,067,464 |
|
Electric transmission and distribution |
2,864,170 |
2,761,570 |
|
Gas transmission and distribution |
294,943 |
284,982 |
|
Other electric and gas facilities |
222,646 |
298,033 |
|
Other property, plant, and equipment |
|
|
|
Assets held and used |
171,948 |
173,501 |
|
Office building held for sale as of September 30, 2002 |
8,406 |
8,337 |
|
4,783,755 |
4,593,887 |
||
Less: Accumulated depreciation |
|
||
Assets held and used |
1,791,848 |
1,730,551 |
|
Office building held for sale as of September 30, 2002 |
5,422 |
1,335 |
|
Net plant in service |
2,986,485 |
2,862,001 |
|
Construction work-in-progress |
785,915 |
584,440 |
|
Intangibles |
56,235 |
73,311 |
|
Goodwill, net of accumulated amortization |
313,124 |
312,789 |
|
4,141,759 |
3,832,541 |
||
Deferred Charges and Other Assets |
|||
Regulatory assets: |
|||
Recoverable stranded costs, net |
879,129 |
944,529 |
|
Other non-current regulatory assets |
311,295 |
294,114 |
|
Prepaid pension costs |
94,609 |
91,891 |
|
Unamortized debt expense |
38,099 |
25,513 |
|
Other |
39,556 |
32,440 |
|
1,362,688 |
1,388,487 |
||
Total Assets |
$6,468,825 |
$6,256,282 |
|
See accompanying Notes to Consolidated Financial Statements. |
CONECTIV |
|||
CAPITALIZATION AND LIABILITIES |
September 30, |
December 31, |
|
Current Liabilities |
|||
Short-term debt |
$ 396,843 |
$1,039,820 |
|
Long-term debt due within one year |
424,757 |
397,963 |
|
Variable rate demand bonds |
158,430 |
158,430 |
|
PHI money pool lendings |
121,394 |
- |
|
Notes payable to associated companies |
577,744 |
- |
|
Accounts payable |
349,315 |
351,382 |
|
Accounts payable to associated companies |
31,230 |
- |
|
Derivative instruments |
61,757 |
87,876 |
|
Other current liabilities |
321,336 |
197,109 |
|
2,442,806 |
2,232,580 |
||
Deferred Credits and Other Liabilities |
|||
Other postretirement benefits obligation |
88,699 |
89,836 |
|
Deferred income taxes, net |
766,744 |
843,039 |
|
Deferred investment tax credits |
47,100 |
49,542 |
|
Regulatory liability for New Jersey income tax benefit |
49,262 |
49,262 |
|
Above-market purchased energy contracts |
|||
74,483 |
85,326 |
||
Derivative instruments |
17,332 |
28,852 |
|
Other |
39,526 |
43,736 |
|
1,083,146 |
1,189,593 |
||
Capitalization |
|||
Common stock: $0.01 per share par value; 1,000 shares |
|||
|
|
||
- |
830 |
||
Class A common stock, $0.01 per share par value; |
- |
57 |
|
Additional paid-in capital - - common stock |
1,121,448 |
1,027,790 |
|
Additional paid-in capital - - Class A common stock |
- |
93,738 |
|
Retained earnings |
234,546 |
209,336 |
|
Unearned compensation |
- |
(1,719) |
|
Accumulated other comprehensive income |
(13,587) |
(65,931) |
|
Total common stockholders' equity |
1,342,407 |
1,264,101 |
|
Preferred stock and securities of subsidiaries: |
|||
Not subject to mandatory redemption |
35,813 |
35,813 |
|
Subject to mandatory redemption |
- |
12,450 |
|
Company obligated mandatorily redeemable preferred |
165,000 |
165,000 |
|
Long-term debt |
1,399,023 |
1,356,003 |
|
Long-term capital lease obligation |
630 |
742 |
|
2,942,873 |
2,834,109 |
||
Commitments and Contingencies (Note 14) |
|||
Total Capitalization and Liabilities |
$6,468,825 |
$6,256,282 |
|
See accompanying Notes to Consolidated Financial Statements. |
CONECTIV |
||||||||||
Nine Months Ended |
||||||||||
2002 |
2001 |
|||||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||||
Net income |
$ 80,277 |
$237,268 |
||||||||
Adjustments to reconcile net income to |
||||||||||
Depreciation and amortization |
147,629 |
187,985 |
||||||||
Deferred income taxes, net |
(65,447) |
16,319 |
||||||||
Gains on sales of electric generating plants |
(15,817) |
(297,140) |
||||||||
Loss on sale of leveraged leases |
19,674 |
- |
||||||||
Deferred electric service costs and gas supply costs |
12,002 |
(106,190) |
||||||||
Recognition of deferred gain on contract termination |
- |
(73,015) |
||||||||
Provision for loss on disposal of discontinued operations |
- |
177,245 |
||||||||
Non-cash loss / (earnings) of equity method investee |
5,264 |
5,223 |
||||||||
Net change in: |
||||||||||
Accounts receivable |
(324,334) |
8,139 |
||||||||
Inventories |
22,273 |
(24,961) |
||||||||
Accounts payable |
375,618 |
(120,914) |
||||||||
Accrued / prepaid taxes |
132,123 |
104,864 |
||||||||
Other current assets & liabilities (1) |
22,854 |
(67,988) |
||||||||
Other, net |
17,873 |
(4,330) |
||||||||
Net cash provided (used) by operating activities |
429,989 |
42,505 |
||||||||
|
||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||||
Capital expenditures |
(500,830) |
(416,439) |
||||||||
Investments in partnerships |
(2,945) |
(22,974) |
||||||||
Proceeds from sales of electric generating plants |
10,000 |
641,734 |
||||||||
Proceeds from other assets sold |
33,150 |
24,566 |
||||||||
Net cash of subsidiaries transferred to PHI |
(1,530) |
- |
||||||||
Increase in funds held by trustee |
- |
141 |
||||||||
Leveraged leases, net |
- |
606 |
||||||||
Other, net |
(774) |
(930) |
||||||||
Net cash provided (used) by investing activities |
(462,929) |
226,704 |
||||||||
|
||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||||
Common stock dividends paid |
(75,987) |
(65,391) |
||||||||
Preferred stock redeemed |
(12,450) |
(71,370) |
||||||||
Long-term debt issued |
296,000 |
59,000 |
||||||||
Long-term debt redeemed |
(226,349) |
(355,306) |
||||||||
Principal portion of capital lease payments |
(112) |
(8,835) |
||||||||
Notes payable to associated companies |
577,744 |
- |
||||||||
PHI money pool lendings |
164,877 |
- |
||||||||
Net increase (decrease) in short-term debt |
(642,977) |
119,501 |
||||||||
Cost of issuances and refinancings |
(20,243) |
(20,624) |
||||||||
Net cash provided (used) by financing activities |
60,503 |
(343,025) |
||||||||
Net change in cash and cash equivalents |
27,563 |
(73,816) |
||||||||
Cash and cash equivalents at beginning of period |
52,871 |
123,562 |
||||||||
Cash and cash equivalents at end of period |
$ 80,434 |
$ 49,746 |
||||||||
(1) Other than debt and deferred income taxes classified as current. |
||||||||||
See accompanying Notes to Consolidated
Financial Statements. |
||||||||||
CONECTIV |
||||||||||
Note 1. Financial Statement Presentation |
||||||||||
Three Months |
Nine Months |
|||||||||
(Dollars in Thousands) |
||||||||||
Operating revenues, |
|
|
||||||||
Reclassification |
(561,132) |
(1,628,401) |
||||||||
Operating revenues, |
|
|
||||||||
Operating expenses, |
|
|
||||||||
Reclassification |
(561,132) |
(1,628,401) |
||||||||
Operating expenses, |
|
|
||||||||
|
||||||||||
Three Months Ended |
Nine Months Ended
|
|||||||||
2002 2001 |
2002 2001 |
|||||||||
(Dollars in Thousands) |
||||||||||
Reported net income |
$18,744 |
$59,129 |
$80,277 |
$237,268 |
||||||
Add back: Goodwill amortization |
- |
2,018 |
- |
6,109 |
||||||
Adjusted net income |
$18,744 |
$61,147 |
$80,277 |
$243,377 |
Note 2. Supplemental Cash Flow Information |
||||||||||||||||||||
Nine Months Ended |
||||||||||||||||||||
2002 2001 |
||||||||||||||||||||
(Dollars in Thousands) |
||||||||||||||||||||
Cash paid (received) for: |
||||||||||||||||||||
Interest, net of amounts capitalized |
$100,198 |
$138,201 |
||||||||||||||||||
Income taxes, net of refunds |
$(13,488) |
$74,303 |
||||||||||||||||||
|
||||||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||
2002 |
2001 |
2002 |
2001 |
|||||||||||||||||
Amount |
Rate |
Amount |
Rate |
Amount |
Rate |
Amount |
Rate |
|||||||||||||
(Dollars in Thousands) |
||||||||||||||||||||
Statutory federal income tax expense |
|
|
|
|
|
|
|
|
||||||||||||
State income taxes, net of federal benefit |
|
|
|
|
|
|
|
|
||||||||||||
Regulatory asset basis |
|
|
|
|
|
|
|
|
||||||||||||
Depreciation |
1,000 |
3 |
1,474 |
2 |
3,000 |
2 |
4,421 |
1 |
||||||||||||
Non-deductible goodwill |
|
|
|
|
|
|
|
|
||||||||||||
Investment tax credit |
|
|
|
|
|
|
|
|
||||||||||||
Resolution of income |
|
|
|
|
|
|
|
|
||||||||||||
Other, net |
113 |
- |
330 |
- |
(1,131) |
(1) |
2,952 |
- |
||||||||||||
Income taxes |
$18,254 |
49% |
$31,810 |
34% |
$64,205 |
44% |
$253,401 |
41% |
||||||||||||
|
||||||||||||||||||||
Note 9. Office Building Held For Sale |
||||||||||||||||||||
Accumulated other comprehensive income as of December 31, 2001 |
|
|||||||||||||||||||
Net unrealized hedging gains |
26,188 |
|||||||||||||||||||
Reclassification to earnings because the forecasted energy commodity |
|
|||||||||||||||||||
Reclassification to earnings because the forecasted energy commodity |
|
|||||||||||||||||||
Accumulated other comprehensive income as of September 30, 2002 |
|
|||||||||||||||||||
Air Quality Regulations |
||||||||||||||||||||
Three Months Ended |
Three Months Ended |
|||||||||||||||||||
|
|
Earnings |
|
Earnings |
||||||||||||||||
(Dollars in Thousands) |
||||||||||||||||||||
Energy |
$786,235 |
$55,077 |
$545,197 |
$67,737 |
||||||||||||||||
Power Delivery |
707,427 |
99,853 |
673,112 |
88,076 |
||||||||||||||||
All Other |
1,434 |
(4,440) |
1,200 |
(6,546) |
||||||||||||||||
Total |
$1,495,096 (1) |
$150,490 (2) |
$1,219,509 (3) |
$149,267 (4) |
||||||||||||||||
(1) |
Intercompany revenues that are eliminated in consolidation are included in business segment revenues as follows: Energy business segment--$251,409; Power Delivery business segment--$711; All Other business segments--$649. |
|||||||||||||||||||
(2) |
"Earnings before interest and taxes" less $72,963 of costs associated with the Conectiv/Pepco Merger, $35,765 of interest expense and preferred stock dividends, the $2,089 loss on sale of leverage leases, and the $3,977 impairment of office building held for sale, plus $1,302 of certain other adjustments equals consolidated income from continuing operations before income taxes. |
|||||||||||||||||||
(3) |
Intercompany revenues that are eliminated in consolidation are included in business segment revenues as follows: Energy business segment--$177,446; Power Delivery business segment $1,268. |
|||||||||||||||||||
(4) |
"Earnings before interest and taxes" less $13,488 of costs associated with the Conectiv/Pepco Merger, $40,458 of interest expense and preferred stock dividends and $1,592 of consolidation and other adjustments equals consolidated income from continuing operations before income taxes. |
Nine Months Ended |
Nine Months Ended |
||||||||||
|
|
Earnings |
|
Earnings |
|||||||
(Dollars in Thousands) |
|||||||||||
Energy |
$1,714,549 |
$116,320 |
$1,548,804 |
$125,707 |
|||||||
Power Delivery |
1,762,799 |
234,342 |
1,922,488 |
311,570 |
|||||||
All Other |
5,581 |
(9,758) |
6,748 |
(29,511) |
|||||||
Total |
$3,482,929 (1) |
$340,904 (2) |
$3,478,040 (3) |
$407,766 (4) |
|||||||
(1) |
Intercompany revenues that are eliminated in consolidation are included in business segment revenues as follows: Energy business segment-$647,976; Power Delivery business segment-$1,916; All Other business segments-$3,054. Excludes $15,817 of revenues reported as "Gain on sales of electric generating plants" in the Consolidated Statements of Income. |
||||||||||
(2) |
"Earnings before interest and taxes" less $75,394 of costs associated with the Conectiv/Pepco Merger, the $19,674 loss on sale of leveraged leases, the $3,977 impairment of office building held for sale, and $105,614 of interest expense and preferred stock dividends, plus $4,329 of the pre-tax gain on sale of electric generating plants and $3,908 of certain other adjustments equals consolidated income from continuing operations before income taxes. |
||||||||||
(3) |
The $297,140 pre-tax gain from the sale of electric generating plants is excluded from business segment revenues. Intercompany revenues that are eliminated in consolidation are included in business segment revenues as follows: Energy business segment-$565,305; Power Delivery business segment $1,431; All Other business segments-$188. |
||||||||||
(4) |
"Earnings before interest and taxes" plus the $297,140 pre-tax gain from the sale of electric generating plants and the $73,015 pre-tax gain primarily from recognition of a previously deferred gain related to termination of a contract with the Pedricktown partnership, less $14,573 of costs associated with the Conectiv/Pepco Merger, $140,312 of interest expense and preferred stock dividends, and $3,093 of consolidation and other adjustments equals consolidated income from continuing operations before income taxes. |
||||||||||
|
|||||||||||
Acquisition of Conectiv by Pepco Holdings, Inc. |
|||||||||||
Regulatory Matters |
|||||||||||
|
|||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||
2002 |
2001 |
2002 |
2001 |
||||||||
(Dollars in millions) |
|||||||||||
(1) Energy, Power Delivery, and Other Businesses |
$66.1 |
$62.2 |
$134.1 |
$156.1 |
|||||||
(2) Investment income (loss) |
0.6 |
8.5 |
(3.6) |
3.5 |
|||||||
(3) Loss on sale of investment in leveraged leases |
(1.1) |
- |
(11.2) |
- |
|||||||
(4) Impairment of office building held for sale |
(2.4) |
- |
(2.4) |
- |
|||||||
(5) Merger-related costs |
(44.5) |
(8.8) |
(46.0) |
(9.5) |
|||||||
(6) Gains on sales of electric generating plants |
- |
- |
9.4 |
175.0 |
|||||||
(7) Gain on contract termination |
- |
- |
- |
41.4 |
|||||||
$18.7 |
$61.9 |
$80.3 |
$366.5 |
||||||||
(1) Energy, Power Delivery, and Other Businesses |
|||||||||||
Three Months |
Nine Months |
||||||||||
(Dollars in Thousands) |
|||||||||||
Operating revenues, |
|
|
|||||||||
Reclassification |
(561,132) |
(1,628,401) |
|||||||||
Operating revenues, |
|
|
|||||||||
Operating expenses, |
|
|
|||||||||
Reclassification |
(561,132) |
(1,628,401) |
|||||||||
Operating expenses, |
|
|
|||||||||
On October 25, 2002, the EITF rescinded Issue No. 98-10, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities." Conectiv's interpretation of EITF 98-10 is consistent with the current rules that are being applied under Statement of Financial Accounting Standards (SFAS) No. 133 and therefore, management does not believe that rescinding EITF 98-10 will impact its financial position or results of operations. |
Electric Revenues |
|||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||
2002 2001 |
2002 2001 |
||||||||||
(Dollars in millions) |
|||||||||||
Regulated electric revenues |
$680.8 |
$649.6 |
$1,623.9 |
$1,625.4 |
|||||||
Non-regulated electric revenues |
370.5 |
211.1 |
603.9 |
552.7 |
|||||||
Total electric revenues |
$1,051.3 |
$860.7 |
$2,227.8 |
2,178.1 |
|||||||
The table above shows the amounts of electric revenues earned that are subject to price regulation (regulated) and that are not subject to price regulation (non-regulated). "Regulated electric revenues" include revenues for delivery (transmission and distribution) service and electricity supply service within the service areas of ACE and DPL. |
|||||||||||
Gas Revenues |
|||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||
2002 2001 |
2002 2001 |
||||||||||
(Dollars in millions) |
|||||||||||
Regulated electric revenues |
$15.5 |
$16.3 |
$106.9 |
$119.6 |
|||||||
Non-regulated electric revenues |
57.1 |
45.6 |
188.1 |
221.6 |
|||||||
Total electric revenues |
$72.6 |
$61.9 |
$295.0 |
$341.2 |
|||||||
Liquidity and Capital Resources |
|||||||||||
September 30, |
December 31, |
||||||||||
Common stockholders' equity |
34.2% |
28.5% |
|||||||||
Preferred stock |
0.9% |
1.1% |
|||||||||
Preferred trust securities |
4.2% |
3.7% |
|||||||||
Long-term debt and variable rate demand bonds |
39.7% |
34.2% |
|||||||||
Short-term debt and current maturities of long-term debt |
21.0% |
32.5% |
|||||||||
|
|||||||||||
Nine Months |
|
||||||||||
2002 |
2001 |
2000 |
1999 |
1998 |
1997 |
||||||
Ratio of Earnings to |
|
|
|
|
|
|
As a result of recent declines in the values of securities in the financial markets, the pension assets of Conectiv have failed to achieve the level of returns assumed in the determination of their pension expense accruals thus far during 2002. As a result, should the financial markets remain at the lower levels of September 30, 2002, or decline further, Conectiv will need to contribute additional funds to its pension plans in order to achieve a funding level of 100% with respect to its pension liabilities. In addition, due to the current lower asset values in its pension plans and the potential need to modify the assumptions used to value its pension liabilities, Conectiv could experience a substantially higher level of pension expense in the near term and until the financial markets' performance improves. Both the funding amount and the pension expense accrual will be determined by the actual return on plan assets for the year, which depends on the performance of the financial markets du
ring the balance of the year, and the level of interest rates at year end 2002, which cannot be definitively predicted. |
|||||
Energy Trading Contracts |
|||||
|
Total |
Maturity |
Maturity |
||
(Dollars in Millions) |
|||||
Prices actively quoted |
$40.2 |
$43.6 |
$(3.4) |
||
Prices provided by other |
|
|
|
||
Total |
$50.2 |
$46.6 |
$3.6 |
||
|
Fair Value |
|
Fair value of contracts outstanding as of December 31, 2001 |
$29.0 |
Less: Contracts realized or otherwise settled |
36.6 |
Plus: Fair value of new contracts when initially entered |
- |
Changes in fair value attributable to change in |
|
Other changes in fair value |
57.8 |
Fair value of contracts outstanding as of September 30, 2002 |
$50.2 |
Exhibit 12 |
||||||||||||
Conectiv |
||||||||||||
9 Months Ended |
Year Ended December 31, |
|||||||||||
September 30, 2002 |
2001 |
2000 |
1999 |
1998 |
1997 |
|||||||
Income from continuing operations |
$ 80,277 |
$377,522 |
$203,815 |
$143,493 |
$170,933 |
$106,890 |
||||||
Income taxes |
64,205 |
253,486 |
151,275 |
123,079 |
117,857 |
76,040 |
||||||
Fixed charges: |
57,831 |
142,423 |
166,256 |
149,732 |
133,796 |
78,350 |
||||||
Interest on long-term debt |
||||||||||||
Other interest |
26,257 |
54,175 |
60,818 |
37,743 |
26,199 |
12,835 |
||||||
Preferred dividend require- |
11,891 |
18,734 |
20,383 |
19,894 |
17,871 |
10,178 |
||||||
Total fixed charges |
95,979 |
215,332 |
247,457 |
207,369 |
177,866 |
101,363 |
||||||
Nonutility capitalized interest |
(10,576) |
(15,119) |
(9,278) |
(3,264) |
(1,444) |
(208) |
||||||
Undistributed earnings of equity |
- |
- |
(4,496) |
- |
- |
- |
||||||
Earnings before extraordinary |
$229,885 |
$831,221 |
$588,773 |
$470,677 |
$465,212 |
$284,085 |
||||||
Total fixed charges shown above |
$ 95,979 |
$215,332 |
$247,457 |
$207,369 |
$177,866 |
$101,363 |
||||||
Increase preferred stock dividend |
1,528 |
3,644 |
5,253 |
6,123 |
4,901 |
3,065 |
||||||
Fixed charges for ratio |
$ 97,507 |
$218,976 |
$252,710 |
$213,492 |
$182,767 |
$104,428 |
||||||
Ratio of earnings to fixed charges |
2.36 |
3.80 |
2.33 |
2.20 |
2.55 |
2.72 |
||||||
|
|
Certificate of Chief Executive Officer and Chief Financial Officer of Conectiv (Pursuant to 18 U.S.C. Section 1350) |
|
I, John M. Derrick, Jr., Chairman and Chief Executive Officer, and I, Andrew W. Williams, Senior Vice President and Chief Financial Officer, of Conectiv, certify that, to the best of my knowledge, the Quarterly Report on Form 10-Q of Conectiv for the quarter ended September 30, 2002, filed with the Securities and Exchange Commission on the date hereof (i) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and (ii) the information contained therein fairly presents, in all material respects, the financial condition and results of operations of Conectiv. |
|
|
|
|
|