Filed Pursuant to Rule 424(b)(3) Registration No. 333-100108 | ||
PROSPECTUS | ||
Conectiv | ||
Offer to exchange our 5.30% Series B Notes due 2005, which have been registered under | ||
The exchange offer will expire at 5:00 p.m., New York City time, on November 18, 2002, unless extended. | ||
This prospectus and the accompanying letter of transmittal relate to our offer to exchange up to $250,000,000 in aggregate principal amount of our registered 5.30% Series B notes due 2005, which we refer to as the "exchange notes," for all of our outstanding unregistered 5.30% notes due 2005, which we refer to as the "initial notes." The form and terms of the exchange notes are the same as the form and terms of the initial notes except that the exchange notes will have been registered under the Securities Act of 1933, as amended, and, therefore, are not subject to restrictions on transfer applicable to the initial notes, will bear a different CUSIP number, and will not be entitled to the rights of holders of initial notes under the registration rights agreement. The exchange notes will evidence the same debt as the initial notes and will be issued pursuant to, and will be entitled to the benefits of, the Indenture dated as of May 1 7, 1999, as supplemented by Supplemental Indenture No. 1 dated as of June 1, 2002, which we refer to as the "indenture," between us and Wachovia Trust Company, National Association (formerly First Union Trust Company, National Association), as trustee, which also governs the initial notes. | ||
Material Terms of the Exchange Offer | ||
· | The exchange offer will expire at 5:00 p.m., New York City time, on November 18, 2002, unless extended. | |
· | In any event, the exchange offer will be open for at least 20 business days. | |
· | Upon the terms and subject to the conditions of this exchange offer, all initial notes that are validly tendered and not withdrawn will be exchanged. | |
· | You may withdraw tenders of initial notes at any time before the expiration of the exchange offer. | |
· | You may only tender the initial notes in denominations of $1,000 and integral multiples of $1,000. | |
· | If you fail to tender your initial notes, you will continue to hold unregistered, restricted securities and your ability to transfer them will be adversely affected. | |
· | We will not receive any proceeds from the exchange offer. | |
· | The exchange of initial notes for the exchange notes should not be a taxable exchange for United States federal income tax purposes. | |
· | The exchange offer is subject to customary conditions. | |
The exchange notes will mature on June 1, 2005. Interest on the exchange notes will be payable on each June 1 and December 1, commencing December 1, 2002. The exchange notes will rank equally with all of our other unsecured and unsubordinated indebtedness from time to time outstanding and will not be subject to any sinking fund. | ||
This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any of our exchange notes by any person in any jurisdiction in which it is unlawful for such person to make that offer or solicitation. Neither the delivery of this prospectus nor any sale made under this prospectus shall under any circumstances imply that there has been no change in our affairs or our subsidiaries or that the information set forth in this prospectus is correct as of any date after the date of this prospectus, or that any information incorporated or deemed to be incorporated by reference in this prospectus is correct as of any time subsequent to its date. You should rely only on information contained in this prospectus and the documents incorporated or by reference in this prospectus. We have not authorized anyone to provide you with information that is different deemed to be incorporated from that contained and incorpor ated or deemed to be incorporated by reference in this prospectus. | ||
Table of Contents | ||
Page | ||
Forward-Looking Statements | ii | |
Overview of the Offering | 1 | |
Risk Factors | 8 | |
Use of Proceeds | 11 | |
Capitalization | 12 | |
Selected Financial Data | 13 | |
Business | 17 | |
Recent Developments | 18 | |
The Exchange Offer | 19 | |
Description of the Exchange Notes | 32 | |
United States Federal Income Tax Consequences | 46 | |
Plan of Distribution | 49 | |
ERISA Considerations | 49 | |
Additional Information About Us | 52 | |
Legal Matters | 52 | |
Experts | 53 |
Forward-Looking Statements | |
The Private Securities Litigation Reform Act of 1995, which we refer to as the "Litigation Reform Act," provides a "safe harbor" for forward-looking statements to encourage such disclosures without the threat of litigation, provided those statements are identified as forward-looking and are accompanied by meaningful, cautionary statements identifying important factors that could cause the actual results to differ materially from those projected in the statement. Forward-looking statements have been made in this prospectus and in the documents incorporated or deemed to be incorporated by reference in this prospectus. Such statements are based on our management's beliefs as well as assumptions made based on the information currently available to our management. When used herein or in the documents incorporated or deemed to be incorporated by reference herein, the words "intend," "will," "anticipate," "estimate," "expect," "believe," and similar expressions are intended to identify forward-looking statements. In addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements, factors that could cause our actual results to differ materially from those contemplated in any forward-looking statements include, among others, the following: | |
· | prevailing federal and state governmental policies and regulatory actions affecting the energy industry, including without limitation with respect to allowed rates of return, industry and rate structures, acquisition and disposal of assets and facilities, operation and construction of plant facilities, recovery of purchased power expenses, deregulation of energy supply, unbundling of delivery services, and present or prospective wholesale and retail competition (including without limitation retail wheeling and transmission costs); |
· | an increasingly competitive and volatile energy marketplace, including without limitation volatility in market demand and prices for energy, capacity and fuel and competition for new energy development opportunities and other opportunities; |
· | potential negative impacts resulting from an economic downturn; |
· | ability to secure electric and natural gas supply to fulfill sales commitments at favorable prices; |
· | operating performance of power plants; |
· | sales retention and growth; |
· | population growth rates and demographic patterns; growth in demand, sales and capacity to fulfill demand; |
· | the effects of weather; |
· | changes in construction or project costs; |
· | unanticipated changes in operating expenses and capital expenditures; |
· | operating restrictions; increased costs and construction delays attributable to environmental and safety laws, regulations and policies; |
· | legal and administrative proceedings (whether civil or criminal) and settlements that influence the company's business and profitability; changes in tax rates or policies or in rates of inflation; |
· | restrictions on the ability to obtain financing and other restrictions imposed by the Public Utility Holding Company Act of 1935; |
· | capital market conditions, interest rate fluctuations and credit market concerns; and |
· | effects of geopolitical events, including the threat of domestic terrorism. |
We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. The foregoing list of factors pursuant to the Litigation Reform Act should not be construed as exhaustive or as any admission regarding the adequacy of disclosures made prior to the effective date of the Litigation Reform Act. |
The following summary contains basic information about us and the exchange notes. It does not contain all the information that is important to you. You should read this entire prospectus and the documents incorporated by reference in this prospectus carefully before making an investment decision. You should also carefully consider each of the risks described in "Risk Factors" before participating in the exchange offer. | |||||||||
We are a wholly-owned subsidiary of Pepco Holdings, Inc. We were formed on March 1, 1998 through a series of transactions with Delmarva Power & Light Company and Atlantic Energy, Inc., the parent of Atlantic City Electric Company. Our primary businesses, through our subsidiaries, are the supply and delivery of electricity and gas in markets subject to price regulation and the supply and trading of electricity and gas in markets not subject to price regulation. Our two largest subsidiaries are public utilities that supply and deliver electricity to their customers under the trade name Conectiv Power Delivery. These subsidiaries supply electric and gas services in parts of Delaware, Maryland, Virginia and New Jersey. Conectiv Energy Holding Company, a subsidiary created in 2000, is engaged in non-regulated electricity production and sales, energy trading and marketing. Our principal executive offices are located at 800 King S treet, Wilmington, DE 19801 and our telephone number is 1-800-266-3284. | |||||||||
The Exchange Offer | |||||||||
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Registration Rights Agreement | We sold the initial notes on June 4, 2002. The initial purchasers subsequently resold the initial notes in the United States to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, which we refer to as the "Securities Act." In connection with the issuance of the initial notes, we and the initial purchasers entered into a Registration Rights Agreement, dated as of June 4, 2002, which we refer to as the "registration rights agreement." You have the right under the registration rights agreement to exchange your initial notes for exchange notes that will be substantially identical in all material respects to the initial notes. See "The Exchange Offer - Terms of the Exchange Offer." Except in limited circumstances, after the exchange offer is complete, you will no longer be entitled to any exchange or registration rights with respect to your initial notes. See "The Exchange Offer - Purpose and Effect of the Exchange Offer." | ||||||||
Expiration Date | 5:00 p.m., New York City time, on November 18, 2002, unless extended by us in our sole discretion. In any event, the exchange offer will be open for at least 20 business days. See "The Exchange Offer - Expiration Date; Extensions; Amendments." | ||||||||
Accrued Interest on the Exchange |
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Conditions to the Exchange Offer | The exchange offer is subject to certain customary conditions, which we may waive. See "The Exchange Offer - Conditions." | ||||||||
Consequences of Failure to |
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Shelf Registration Statement | If we determine that a registered exchange offer is not available or may not be consummated as contemplated by the registration rights agreement with respect to the initial notes because it would violate applicable law or applicable interpretations of the staff of the SEC or, if an exchange offer is for any other reason not consummated with respect to the initial notes by January 14, 2003, which is 30 business days after December 1, 2002, which we refer to as the "effectiveness deadline," we will use our reasonable best efforts to: | ||||||||
· | file a shelf registration statement covering resales of the initial notes; | ||||||||
· | cause the shelf registration statement to be declared effective under the Securities Act; and | ||||||||
· | keep the shelf registration statement effective for a maximum of two years from June 4, 2002, the closing date of the offering of the initial notes. | ||||||||
We will be entitled to require any holder that wishes to include initial notes in a shelf registration statement to furnish us with information regarding that holder and its proposed distribution of the initial notes. See "The Exchange Offer - Purpose and Effect of the Exchange Offer." | |||||||||
Procedures for Tendering Initial |
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· | complete, sign and date the accompanying letter of transmittal in accordance with the instructions contained in the letter of transmittal and this prospectus; and | ||||||||
· | mail or otherwise deliver the letter of transmittal together with the initial notes and any other required documentation to the exchange agent at the address set forth in this prospectus. | ||||||||
If you hold initial notes through the Depository Trust Company and wish to accept the exchange offer, you must do so through the Depository Trust Company's Automated Tender Offer Program, pursuant to which you will agree to be bound by the letter of transmittal. See "The Exchange Offer - Procedures for Tendering Initial Notes." By executing or agreeing to be bound by the letter of transmittal, you will be making a number of important representations to us, as described under the "The Exchange Offer - Purpose and Effect of the Exchange Offer." | |||||||||
Guaranteed Delivery Procedures | Holders of initial notes who wish to tender their initial notes and whose initial notes are not immediately available or who cannot deliver their initial notes, the letter of transmittal or any other documents required by the letter of transmittal to the exchange agent or comply with the procedures for book-entry transfer prior to the expiration of the exchange offer must tender their initial notes according to the guaranteed delivery procedures set forth in "The Exchange Offer - Procedures for Tendering Initial Notes - Guaranteed Delivery." | ||||||||
Special Procedures for Beneficial |
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Withdrawal Rights | You may withdraw the tender of your initial notes at any time prior to 5:00 p.m., New York City time, on November 18, 2002. See "The Exchange Offer - Withdrawal of Tenders." | ||||||||
Acceptance of Initial Notes and |
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Resales of Exchange Notes and |
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· | you are acquiring the exchange notes in the ordinary course of your business; | ||||||||
· | you are not participating, and have no arrangement or understanding with any person to participate, in the distribution of the exchange notes; and | ||||||||
· | you are not an affiliate of ours. | ||||||||
This would not apply to any holder that is a broker-dealer that acquired initial notes as a result of market-making activities or other trading activities or directly from us for resale under an available exemption under the Securities Act.Our belief is based on interpretations by the Staff of the SEC set forth in no-action letters. The SEC has not considered this exchange offer in the context of a no-action letter, and we cannot be sure that the Staff of the SEC would make a similar determination with respect to this exchange offer. See "The Exchange Offer - Purpose and Effect of the Exchange Offer." | |||||||||
If our belief is not accurate and you transfer an exchange note without delivering a prospectus meeting the requirements of the Securities Act or without an exemption from such requirements, you may incur liability under the Securities Act. We do not and will not assume, or indemnify you against, such liability. | |||||||||
United States Federal Income Tax |
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Exchange Agent | Wachovia Trust Company, National Association. | ||||||||
The Exchange Notes | |||||||||
Securities Offered | $250,000,000 in aggregate principal amount of 5.30% Series B notes due 2005. | ||||||||
General | The form and terms of the exchange notes are identical in all material respects to the form and terms of the initial notes except that the exchange notes will have been registered under the Securities Act and therefore, are not subject to the restrictions on transfer applicable to the initial notes, will bear a different CUSIP number, and will not be entitled to the rights of holders of initial notes under the registration rights agreement. The holders of exchange notes will not be entitled to certain rights under the registration rights agreement, including the provisions providing for the payment of additional interest in the event we fail to satisfy certain obligations under the registration rights agreement, which rights will terminate when the exchange offer is consummated. See "The Exchange Offer - Purpose and Effect of Exchange Offer." The exchange notes will evidence the same debt as the initial notes and will be entitled to the benefits of the indenture. See "Description of the E xchange Notes." | ||||||||
Maturity Date | June 1, 2005. | ||||||||
Interest Rate | 5.30% per annum, accruing from the last date on which interest was paid on the initial notes surrendered in the exchange offer or, if no interest has been paid on the initial notes, from the date of issuance of the initial notes and calculated on the basis of a 360-day year of twelve 30-day months. | ||||||||
No Optional Redemption | The exchange notes will not be subject to redemption at our option prior to maturity and will not be subject to any sinking fund provision. | ||||||||
Interest Payment Dates | June 1 and December 1, commencing December 1, 2002. | ||||||||
Ranking | The exchange notes will be our unsecured and unsubordinated obligations and will rank equally with all of our other unsecured and unsubordinated indebtedness from time to time outstanding. The exchange notes are effectively subordinated to all existing and future liabilities, including indebtedness, trade payables, guaranties, lease obligations and letter of credit obligations, of our subsidiaries. See "Description of the Exchange Notes - Ranking." | ||||||||
Limitation on Secured Debt | The indenture limits our ability to incur debt secured by a lien upon any shares of stock of Delmarva Power & Light Company or Atlantic City Electric Company without providing that the exchange notes will be equally and ratably secured with such debt. See "Description of the Exchange Notes - Limitation on Secured Debt." | ||||||||
Risk Factors | You should carefully consider each of the factors described in the section "Risk Factors." | ||||||||
Use of Proceeds | We will not receive any cash proceeds from the issuance of the exchange notes. See "Use of Proceeds." | ||||||||
Ratios of Earnings to Fixed Charges | |||||||||
Our ratios of earnings to fixed charges determined under the method prescribed by the SEC are shown below. | |||||||||
Six Months | Year Ended December 31, | ||||||||
2002 | 2001 | 2000 | 1999 | 1998 | 1997 | ||||
Ratio of Earnings to Fixed | 2.11 | 3.80 | 2.33 | 2.20 | 2.55 | 2.72 | |||
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(1) | Under the method prescribed by the SEC: earnings, including Allowance for Funds Used During Construction, are income from continuing operations plus income taxes and fixed charges, less non-utility capitalized interest and undistributed earnings of equity method investees; and fixed charges include gross interest expense, the estimated interest component of rentals, and preferred stock dividend requirements of subsidiaries. Preferred stock dividend requirements for purposes of computing the ratio have been increased to an amount representing the pre-tax earnings that would be required to cover such dividend requirements. The ratios of earnings to fixed charges for the years ended December 31, 1997 through 2001 and the six months ended June 30, 2002 have been restated to reflect discontinued telecommunication operations, substantially all of which were sold in November 2001. |
Risk Factors | |
You should carefully consider the risks set forth below as well as the other information contained in this prospectus before exchanging your initial notes for the exchange notes offered pursuant to this prospectus. The risks described below are not the only risks we face. Additional risks and uncertainties not currently known to us may also materially and adversely affect our business operations. See "Forward-Looking Statements." | |
Risks Relating to Dividend Restrictions Applicable to Subsidiaries | |
· | the Public Utility Holding Company Act of 1935, which prohibits the payment of dividends by a registered holding company such as us, or any of our subsidiaries, out of capital or unearned surplus without the prior approval of the SEC; and |
· | the prior rights of holders of existing and future preferred stock, mortgage bonds and other long-term debt issued by the subsidiaries, and other restrictions in connection with other liabilities. |
Risks Relating to Our Financial Condition and Earnings | |
In addition to risks inherent in the electric and gas utility business, those associated generally with energy markets, and those generally applicable to generation owners and wholesale energy providers, certain factors specific to us and our subsidiaries may adversely affect our financial condition and earnings, including: | |
· | the net operating results of our energy merchant activities, including the effects of our risk management policies and business strategies, may adversely affect our financial condition and earnings; |
· | if we are unable to effect our mid-merit generating strategy, our financial condition and earnings may be adversely affected; |
· | delays in new electric generating units becoming operational, the inability to sell (or to sell on favorable terms) the remaining fossil fuel-fired electric generating plants of our subsidiary, Atlantic City Electric Company, which we refer to as "ACE", or to securitize ACE's stranded costs, may adversely affect our financial condition and earnings; |
· | a $30 million annualized decrease in ACE's electric rates, effective August 1, 2002, pursuant to the 1999 restructuring of ACE's electric utility business, may adversely affect our financial condition and earnings; |
· | the amount of income or loss from venture capital fund subsidiaries in which we hold a limited partner interest, may adversely affect our financial condition and earnings; and |
· | expected increases in pension and post-retirement benefit costs, associated primarily with lower forecasted income from pension investments, may adversely affect our financial condition and earnings. |
For further information on the items listed above, consult our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q incorporated by reference in this prospectus. See "Additional Information About Us - Incorporation by Reference." |
Risks Relating to the Exchange Offer | |
We have not registered nor do we intend to register the initial notes under the Securities Act. Initial notes that remain outstanding after consummation of the exchange offer will remain subject to transfer restrictions under applicable securities laws. Unexchanged initial notes will continue to bear a legend reflecting these restrictions on transfer. Furthermore, we have not conditioned the exchange offer on receipt of any minimum or maximum principal amount of initial notes. As initial notes are tendered and accepted in the exchange offer, the principal amount of remaining initial notes will decrease. This decrease will reduce the liquidity of the trading market for the initial notes. We cannot assure you of the liquidity, or even the continuation, of the trading market for the initial notes following the exchange offer. | |
Holders of exchange notes may be subject to restrictions or regulatory requirements. | |
· | you are acquiring the exchange notes in the ordinary course of your business; |
· | you are not participating, and have no arrangement or understanding with any person to participate, in the distribution of the exchange notes; and |
· | you are not an affiliate of ours. |
Our belief is based on interpretations by the Staff of the SEC set forth in no-action letters. The SEC has not considered this exchange offer in the context of a no-action letter, and we cannot be sure that the Staff of the SEC would make a similar determination with respect to this exchange offer. See "The Exchange Offer - Purpose and Effect of the Exchange Offer." If our belief is not accurate and you transfer an exchange note without delivering a prospectus meeting the requirements of the Securities Act or without an exemption from such requirements, you may incur liability under the Securities Act. | |
"Affiliates" of ours may sell exchange notes only in compliance with the provisions of Rule 144 under the Securities Act or another available exemption from the registration requirements under the Securities Act. See "The Exchange Offer" and "Plan of Distribution." | |
Use of Proceeds | |
The exchange offer is intended to satisfy our obligations under the registration rights agreement. We will not receive any cash proceeds from the issuance of the exchange notes. In consideration for issuing the exchange notes as contemplated in this prospectus, we will receive, in exchange, initial notes in like principal amount. The form and terms of the exchange notes are identical in all material respects to the form and terms of the initial notes, except as otherwise described in the section entitled "The Exchange Offer - Terms of the Exchange Offer." The initial notes surrendered in exchange for the exchange notes will be retired and cancelled and cannot be reissued. Accordingly, issuance of the exchange notes will not result in any change in our capitalization. The aggregate proceeds from the sale of the initial notes in the amount of approximately $248 million (after deducting discounts to the initial purchasers and cert ain estimated expenses payable by us) were used for general corporate purposes, including, but not limited to, the repayment of short-term debt with an approximate weighted average annual interest rate of 2.85%. |
Capitalization | ||||||
The following table sets forth our actual consolidated capitalization as of June 30,2002, which reflects the issuance of the initial notes and the retirement of short-term debt with the proceeds from the issuance of the initial notes. The information in the following table should be read in conjunction with the information appearing elsewhere in this prospectus under the caption "Selected Financial Data" and our consolidated financial statements and related notes incorporated by reference in this prospectus. | ||||||
June 30, 2002 | ||||||
Actual | ||||||
Short-term debt | $1,058 | |||||
Long-term debt due within one year | 365 | |||||
Variable rate demand bonds | 158 | |||||
Long-term debt (excluding long-term debt | 1,484 | |||||
Preferred stock | 201 | |||||
Common equity | 1,351 | |||||
Total capitalization | $4,617 |
Selected Financial Data |
The selected financial data appearing below should be read in conjunction with our consolidated financial statements and related notes included in our reports that have been incorporated by reference in this prospectus and that have been filed with the SEC. See "Additional Information About Us." The selected financial data appearing below for, and as of, each of the years in the five-year period ended December 31, 2001 have been derived from our audited consolidated financial statements and related notes. The selected financial data appearing below for, and as of, the six months ended June 30, 2001 and 2002 have been derived from our unaudited consolidated financial statements and related notes. Historical results are not necessarily indicative of the results to be expected in the future. |
Six Months Ended June 30, | Year Ended December 31, | |||||||||||
2002(1),(2) | 2001 (1),(3) | 2001 (1),(3),(4) | 2000(1),(5) | 1999 (1),(6) | 1998(1),(7) | 1997(1),(8) | ||||||
STATEMENT OF INCOME DATA: | ||||||||||||
OPERATING REVENUES | $ 1,545 | $ 1,661 | $ 3,539 | $ 2,899 | $ 2,443 | $ 2,204 | $ 1,092 | |||||
Gains on sales of electric | 16 | 297 | 297 | 17 | - | - | - | |||||
Gas | 385 | 1,003 | 1,466 | 1,530 | 816 | 535 | 204 | |||||
Other services | 206 | 274 | 488 | 542 | 437 | 325 | 119 | |||||
Total Revenues | 2,152 | 3,235 | 5,790 | 4,988 | 3,696 | 3,064 | 1,415 | |||||
OPERATING EXPENSES | 1,114 | 1,131 | 2,530 | 1,614 | 1,169 | 1,058 | 445 | |||||
Gas purchased | 331 | 983 | 1,432 | 1,446 | 755 | 486 | 153 | |||||
Operation and maintenance | 241 | 236 | 499 | 561 | 579 | 504 | 323 | |||||
Depreciation and amortization | 98 | 121 | 229 | 253 | 266 | 238 | 136 | |||||
Other | 190 | 203 | 341 | 575 | 534 | 361 | 122 | |||||
Total Operating Expenses | 1,974 | 2,674 | 5,031 | 4,449 | 3,303 | 2,647 | 1,179 | |||||
OPERATING INCOME | 178 | 561 | 759 | 539 | 393 | 417 | 236 | |||||
INTEREST EXPENSE | 69 | 93 | 171 | 213 | 177 | 149 | 80 | |||||
INCOME TAXES | 46 | 222 | 253 | 151 | 123 | 118 | 76 | |||||
INCOME FROM | 62 | 305 | 378 | 204 | 143 | 171 | 107 | |||||
INCOME FROM | 62 | 309 | 386 | 213 | 153 | 180 | 108 | |||||
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NET PROPERTY PLANT & | 4,057 | 3,522 | 3,810 | 3,808 | 3,641 | 4,480 | 2,324 | |||||
TOTAL ASSETS | 6,480 | 6,774 | 6,260 | 6,464 | 6,138 | 6,088 | 3,015 | |||||
TOTAL COMMON | 1,351 | 1,243 | 1,264 | 1,160 | 1,138 | 1,843 | 954 | |||||
PREFERRED STOCK | 36 | 96 | 36 | 96 | 96 | 96 | 90 | |||||
Subject to Mandatory | 0 | 12 | 12 | 24 | 24 | 24 | 0 | |||||
Company obligated | 165 | 165 | 165 | 165 | 165 | 165 | 70 |
Six Months Ended June 30, | Year Ended December 31, | ||||||||||||
2002(1),(2) | 2001(1),(3) | 2001(1),(3),(4) | 2000(1),(5) | 1999(1),(6) | 1998(1) ,(7) | 1997(1),(8) | |||||||
DEBT | 1,484 | 1,953 | 1,356 | 2,022 | 2,125 | 1,747 | 984 | ||||||
Long-term debt due within one Year | 365 | 216 | 398 | 101 | 49 | 81 | 33 | ||||||
Variable rate demand bonds | 158 | 158 | 158 | 158 | 158 | 125 | 72 | ||||||
Short-term debt | 1,058 | 783 | 1,040 | 710 | 580 | 376 | 23 | ||||||
TOTAL CAPITALIZATION | 4,617 | 4,627 | 4,429 | 4,436 | 4,335 | 4,457 | 2,226 | ||||||
STATEMENT OF CASH FLOW DATA: | |||||||||||||
NET CASH PROVIDED BY | 253 | (41) | 105 | 465 | 310 | 372 | 217 | ||||||
NET CASH PROVIDED BY (USED BY) INVESTING ACTIVITIES | (320) | 215 | 74 | (278) | (344) | (259) | (157) | ||||||
NET CASH PROVIDED BY (USED BY) FINANCING ACTIVITIES | 42 | 53 | (250) | (119) | 25 | (82) | (61) |
COMMON STOCK INFORMATION: | |||||||
Earnings from continuing | $ 0.76 | $ 3.63 | $ 4.43 | $ 2.36 | $ 1.46 | $ 1.69 | $ 1.75 |
Earnings from continuing | $ 0.76 | $ 3.68 | $ 4.53 | $ 2.47 | $ 1.56 | $ 1.78 | $ 1.77 |
Earnings from continuing | $ 0.76 | $ 3.63 | $ 4.41 | $ 2.36 | $ 1.46 | $ 1.69 | $ 1.75 |
Earnings from continuing | $ 0.76 | $ 3.68 | $ 4.51 | $ 2.47 | $ 1.56 | $ 1.78 | $ 1.77 |
Earnings from continuing | $ (0.21) | $ 0.70 | $ 1.94 | $ 1.06 | $ 1.14 | $ 1.82 | - |
Dividends declared per share of: | |||||||
Common stock | $ 0.44 | $ 0.44 | $ 0.88 | $ 0.88 | $ 1.045 | $ 1.54 | $ 1.54 |
Class A common stock | $ 0.75 | $ 1.05 | $ 1.55 | $ 3.20 | $ 3.20 | $ 3.20 | - |
(1) | The Selected Financial Data shown above excludes the operating results of the discontinued Telecommunication business segment. | |
(2) | Due to an insurance claim settlement and revised estimates of certain selling expenses, the estimated 2001 gain on the sale of electric generating plants was increased by $15.8 million before income taxes ($9.4 million after income taxes) and is included in operating revenues. | |
(3) | Delmarva Power & Light Company sold its ownership interest in nuclear electric generating plants on December 29, 2000 and elected to terminate its NEIL membership in the first quarter of 2001. As a result, Delmarva Power & Light Company received $16.3 million before income taxes ($9.8 million after income taxes), which is classified as a credit in our operation and maintenance expense for 2001. | |
(4) | In 2001, a gain on the sale of electric generating plants increased operating revenues and operating income by $297.1 million and income from continuing operations by $175.0 million. In 2001, primarily due to recognition of a previously deferred gain on the termination of a purchased power contract, earnings from continuing operations increased by $41.4 million. In 2001, costs related to the merger involving us and Potomac Electric Power Company decreased operating income by $17.0 million and income from continuing operations by $11.0 million. | |
(5) | In 2000, special charges related to the sale of businesses decreased operating income by $25.2 million and income from continuing operations by $23.4 million. In 2000, a gain on the sale of the ownership interests of Delmarva Power & Light Company in nuclear electric generating plants increased operating income by $16.6 million and income from continuing operations by $12.8 million. | |
(6) | In 1999, special charges primarily related to asset impairments decreased operating income by $105.6 million and income from continuing operations by $71.6 million. | |
(7) | Delmarva Power & Light Company and Atlantic City Electric Company became wholly owned subsidiaries of Conectiv, referred to as the "1998 merger" on March 1, 1998. The 1998 merger was accounted for under the purchase method of accounting, with Delmarva Power & Light Company as the acquirer. In 1998 special charges associated with the 1998 merger decreased operating income by $27.7 million, income from continuing operations by $16.8 million, and earnings from continuing operations per share of common stock by $0.18. | |
(8) | In 1997, the gain on the sale of a landfill and waste-hauling company increased income from continuing operations by $13.7 million and earnings from continuing operations per share of common stock by $0.22. | |
(9) | Effective January 1, 2002, Conectiv implemented Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142). Under SFAS No. 142, goodwill that has not been included in the rates of a regulated utility subject to SFAS No. 71, "Accounting for the Effects of Certain Types of Regulation," is no longer amortized and is reviewed annually for impairment. Conectiv ceased amortizing goodwill that is not included in regulated utility rates, effective January 1, 2002. For more information regarding the reconciliation of income and earnings to amounts adjusted to exclude the amortization of goodwill, see Conectiv's Current Report on Form 8-K dated June 7, 2002. | |
Note: | Conectiv is in the process of assessing the recent pronouncement issued by the Emerging Issues Task Force (EITF), entitled EITF 02-3 "Accounting for Contracts Involved in Energy Trading and Risk Management Activities." EITF 02-3 addresses the presentation of revenues and expenses associated with "energy trading book" contracts on a gross versus net basis. Previously, the EITF concluded that presentation on a gross basis was acceptable and Conectiv presented the revenues and expenses of its energy trading business on that basis in its public financial disclosures. With the issuance of EITF 02-3 and the subsequent guidance provided by the EITF in June 2002, presentation on a net basis is required, effective for the third quarter 2002 reporting cycle. |
Business |
General |
Conectiv/Pepco Merger |
The Exchange Offer | |||
Purpose and Effect of the Exchange Offer | |||
· | you are acquiring the exchange notes in the ordinary course of your business; | ||
· | you are not participating, and have no arrangement or understanding with any person to participate, in the distribution of the exchange notes; and | ||
· | you are not an affiliate of ours. | ||
This would not apply, however, to any holder that is a broker-dealer that acquired initial notes as a result of market-making activities or other trading activities or directly from us for resale under an available exemption under the Securities Act. These no-action letters are specific to the facts and circumstances set forth in the letters of the third parties, and the SEC notes that any different facts or circumstances may require a different conclusion. See "-Resales of Exchange Notes and Trading Market." | |||
· | that any exchange notes received by the holder will be acquired in the ordinary course of business; | ||
· | that the holder has no arrangement or understanding with any person to participate in the distribution of the initial notes or the exchange notes within the meaning of the Securities Act; | ||
· | that the holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of ours, or, if it is an affiliate, that the holder will comply with the registration and prospectus delivery requirements of the Securities Act, to the extent applicable; | ||
· | if the holder is not a broker-dealer, that the holder is not engaged in, and does not intend to engage in, the distribution of the exchange notes within the meaning of the Securities Act; | ||
· | that if the holder is a broker-dealer, it will receive exchange notes in exchange for initial notes that were acquired for its own account as a result of market-making activities or other trading activities, and it will be required to acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of those exchange notes; and | ||
· | that if the holder is a broker-dealer, it did not purchase the initial notes being tendered in the exchange offer directly from us for resale pursuant to Rule 144A or any other available exemption from registration under the Securities Act. | ||
Any holder that is not able to make these representations or certain similar representations will not be entitled to participate in the exchange offer and, therefore, will not be permitted to exchange their initial notes for exchange notes. In circumstances where the indenture provides for holders of debt securities of any series to vote or take any other action as a single class, holders of initial notes who do not exchange their initial notes for exchange notes and holders of exchange notes will vote or take that action as a single class. | |||
Under the registration rights agreement, we agreed to use our reasonable best efforts to: | |||
· | file an exchange offer registration statement covering the exchange notes with the SEC no later than October 2, 2002, 120 days after the closing date of the offering of the initial notes; | ||
· | cause that exchange offer registration statement to be declared effective by the SEC no later than December 1, 2002, the effectiveness deadline, which is 180 days after the closing date of the offering of the initial notes; | ||
· | keep that exchange offer registration statement effective until the closing of the exchange offer with respect to the exchange notes covered by that exchange offer registration statement; and | ||
· | cause an exchange offer for the notes covered by that exchange offer registration statement to be consummated not later than January 14, 2003, the date that is 30 business days after the effectiveness deadline. | ||
A "business day" is defined in the registration rights agreement as any day other than a Saturday or Sunday or a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed. | |||
(1) | if an exchange offer registration statement with respect to the issuance of the exchange notes or a shelf registration statement with respect to the initial notes is not filed within 120 days after the closing date of the offering of the initial notes, or on or before October 2, 2002, then beginning on the 121st day after June 4, 2002, in addition to the interest otherwise payable on the initial notes, additional interest will accrue and be payable on the initial notes at the rate of 0.25% per annum; or | ||
(2) | if an exchange offer registration statement with respect to the issuance of the exchange notes or a shelf registration statement with respect to the initial notes is not declared effective within 180 days after the closing date of the offering of the initial notes, or on or before December 1, 2002, then beginning on the 181st day after June 4, 2002, in addition to the interest otherwise payable on the initial notes, additional interest will accrue and be payable on the initial notes at the rate of 0.25% per annum; or | ||
(3) | if either: | ||
(a) | we have not issued the exchange notes in exchange for all initial notes validly tendered and not withdrawn in accordance with the terms and conditions of the exchange offer for the initial notes on or prior to January 14, 2003, the date that is 30 business days after the effectiveness deadline; or | ||
(b) | if applicable, a shelf registration statement with respect to the initial notes is declared effective but that shelf registration statement ceases to be effective at any time prior to the expiration of the holding period referred to in Rule 144(k) under the Securities Act (that is, two years after the closing of the offering of the initial notes) or, if earlier, such time as all initial notes covered by that shelf registration statement have been disposed of pursuant to that shelf registration statement or sold to the public pursuant to Rule 144(k) under the Securities Act or cease to be outstanding; | ||
then, in addition to the interest otherwise payable on the initial notes, additional interest will accrue and be payable on the initial notes at the rate of 0.25% per annum from and including (x) the day (whether or not a business day) immediately following the 30th business day after the effectiveness deadline, in the case of subclause (a) above, or (y) the day such shelf registration statement ceases to be effective, in the case of subclause (b) above. | |||
· | upon the filing of an exchange offer registration statement with respect to the issuance of the exchange notes or a shelf registration statement with respect to the initial notes (in the case of clause (1) above); | ||
· | upon the effectiveness of an exchange offer registration statement with respect to the issuance of the exchange notes or a shelf registration statement with respect to the initial notes (in the case of clause (2) above); or | ||
· | upon the issuance of exchange notes in exchange for all initial notes validly tendered and not withdrawn in accordance with the terms and conditions of the exchange offer for the initial notes or upon the effectiveness of a shelf registration statement with respect to the initial notes that had ceased to remain effective prior to the expiration of the holding period referred to in Rule 144(k) or, if earlier, such time as all initial notes covered by that shelf registration statement have been disposed of pursuant to that shelf registration statement or sold to the public pursuant to Rule 144(k) under the Securities Act or cease to be outstanding (in the case of clause (3) above), as the case may be. | ||
Any amounts of additional interest due on the notes pursuant to clauses (1), (2) or (3) above will be payable in cash and will be payable on the same dates on which interest is otherwise payable on the initial notes and to the same person who is entitled to receive those payments of interest on those initial notes. The amount of additional interest payable for any period on the initial notes will be determined by multiplying the additional interest rate, which will be 0.25% per annum, by the principal amount of the initial notes and then multiplying that product by a fraction, the numerator of which is the number of days that the additional interest rate was applicable to the initial notes during that period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360. | |||
· | the exchange notes will have been registered under the Securities Act and therefore are not subject to the restrictions on transfer applicable to the initial notes; | ||
· | will bear a different CUSIP number; and | ||
· | holders of the exchange notes will not be entitled to the rights of holders of the initial notes under the registration rights agreement, including the right to require us to pay additional interest. | ||
The exchange notes evidence the same indebtedness as the initial notes, which they replace, and will be issued pursuant to, and entitled to the benefits of, the indenture. | |||
We make no recommendation to the holders of the initial notes as to whether to tender or refrain from tendering all or any portion of their initial notes in the exchange offer. In addition, no one has been authorized to make any such recommendation. Holders of the initial notes must make their own decision whether to tender initial notes pursuant to the terms of the exchange offer, and, if so, the aggregate amount of initial notes to tender after reading this prospectus and the letter of transmittal and consulting with their advisers, if any, based on their financial position and requirements. | |||
· | delay or terminate the exchange offer (whether or not any initial notes have theretofore been accepted for exchange) if we determine, in our sole and absolute discretion, that any of the events or conditions referred to under " -Conditions" has occurred or exists or has not been satisfied with respect to the exchange offer; | ||
· | extend the expiration date of the exchange offer and retain all initial notes tendered pursuant to the exchange offer, subject, however, to the right of holders of initial notes to withdraw their tendered initial notes as described under "-Withdrawal of Tenders"; and | ||
· | waive any condition or otherwise amend the terms of the exchange offer in any respect. | ||
If the exchange offer is amended in a manner determined by us to constitute a material change, or if we waive a material condition of the exchange offer, we will promptly disclose such amendment by means of a prospectus supplement that will be distributed to the registered holders of the initial notes, and we will extend the exchange offer to the extent required by Rule 14e-1 under the Exchange Act and the registration rights agreement. | |||
In all cases, delivery of exchange notes in exchange for initial notes tendered and accepted for exchange pursuant to the exchange offer will be made only after timely receipt by the exchange agent of: | |||
· | initial notes or a book-entry confirmation of a book-entry transfer of initial notes into the exchange agent's account at DTC; | ||
· | a properly completed and duly executed letter of transmittal, or an electronic message agreeing to be bound by the letter of transmittal properly transmitted through DTC's Automated Tender Offer Program for a book-entry transfer, which we refer to as ATOP, with any required signature guarantees; and | ||
· | any other documents required by the letter of transmittal. | ||
Accordingly, the delivery of exchange notes might not be made to all tendering holders at the same time, and will depend upon when initial notes, book-entry confirmations with respect to initial notes and other required documents are received by the exchange agent. | |||
If less than all of the initial notes are tendered, a tendering holder should fill in the amount of initial notes being tendered in the appropriate box on the letter of transmittal. The entire amount of initial notes delivered to the exchange agent will be deemed to have been tendered unless otherwise indicated. | |||
· | such tenders are made by or through an Eligible Institution; | ||
· | prior to the expiration date, the exchange agent receives from such Eligible Institution a properly completed and duly executed notice of guaranteed delivery, substantially in the form accompanying the letter of transmittal, or an electronic message through ATOP with respect to guaranteed delivery for book-entry transfers, setting forth the name and address of the holder of initial notes and the amount of initial notes tendered, stating that the tender is being made thereby and guaranteeing that within three New York Stock Exchange, Inc. trading days after the date of execution of the notice of guaranteed delivery, or transmission of such electronic message through ATOP for book-entry transfers, the certificates for all physically tendered initial notes, in proper form for transfer, or a book-entry confirmation, as the case may be, and any other documents required by the letter of transmittal will be deposited by the Eligible Institution with the exchange agent; and | ||
· | the certificates (or book-entry confirmation) representing all tendered initial notes, in proper form for transfer, together with a properly completed and duly executed letter of transmittal with any required signature guarantees (or a facsimile thereof), or a properly transmitted electronic message through ATOP in the case of book-entry transfers, and any other documents required by the letter of transmittal, are received by the exchange agent within three New York Stock Exchange, Inc. trading days after the date of execution of the notice of guaranteed delivery or transmission of such electronic message through ATOP with respect to guaranteed delivery for book-entry transfers. | ||
Determination of Validity under any duty to give any notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. | |||
· | to us; | ||
· | pursuant to Rule 144A under the Securities Act; | ||
· | outside the United States to a foreign person pursuant to the requirements of Rule 904 under the Securities Act; or | ||
· | pursuant to Rule 144 under the Securities Act or pursuant to some other exemption from registration under the Securities Act. | ||
Accordingly, the liquidity of the market for the initial notes not exchanged could be adversely affected. | |||
· | a change in the current interpretation by the staff of the SEC which permits resale of exchange notes as described under "-Resales of Exchange Notes;" | ||
· | the institution or threat of an action or proceeding in any court or by or before any governmental agency or body with respect to the exchange offer which, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer; | ||
· | the adoption or enactment of any law, statute, rule or regulation which, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer; and | ||
· | the issuance of a stop order by the SEC or any state securities authority suspending the effectiveness of the registration statement, or proceedings for that purpose. | ||
If we determine in our sole and absolute discretion that any of the foregoing events or conditions has occurred or exists or has not been satisfied at any time prior to the expiration date, we may, subject to applicable law, terminate the exchange offer (whether or not any initial notes have theretofore been accepted for exchange) or may waive any such condition or otherwise amend the terms of the exchange offer in any respect. If such waiver or amendment constitutes a material change to the exchange offer, we will promptly disclose such waiver or amendment by means of a prospectus supplement that will be distributed to the registered holders of the initial notes. In this case, we will extend the exchange offer to the extent required by Rule 14e-1 under the Exchange Act and the registration rights agreement. | |||
By registered or certified mail, overnight courier or hand delivery: | |||
Delivery to other than the above addresses or facsimile number will not constitute a valid delivery or withdrawal of tender. | |||
Holders who tender initial notes in connection with the exchange offer are required to pay brokerage discounts, commissions and fees, and transfer taxes, with respect to the exchange of the initial notes pursuant to the exchange offer. We will pay all other charges and expenses. |
The exchange notes will be issued under an indenture, dated as of May 17, 1999, as supplemented by Supplemental Indenture No. 1, dated as of June 1, 2002, between us and Wachovia Trust Company, National Association (formerly First Union Trust Company, National Association), as trustee, which we refer to as the "indenture." The following summary of selected provisions of the indenture and the exchange notes is not complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the indenture and the exchange notes and the registration rights agreement. A copy of the indenture, the forms of certificates evidencing the exchange notes and the registration rights agreement are filed as exhibits to the registration statement of which this prospectus is a part. our discretion, we may change the place of payment on the exchange notes, and may remove any paying agent and may appoint one or more additional paying agents, including ourselves or any of our affiliates. |
· | We make effective a provision whereby all benefited securities then outstanding will be secured equally and ratably with such Secured Debt; or |
· | We deliver to the trustee bonds, notes or other evidences of indebtedness secured by the Lien (as defined below) which secures such Secured Debt in aggregate principal amount equal to the aggregate principal amount of the benefited securities then outstanding and meeting certain other requirements set forth in the indenture. |
"Debt," with respect to any person, means the following: | |
· | indebtedness of such person for borrowed money evidenced by a bond, debenture, note or other written instrument or agreement by which such person is obligated to repay such borrowed money, and |
· | any guaranty by such person of any such indebtedness of another person. |
"Debt" does not include, among other things, the following: | |
· | indebtedness of such person under any installment sale or conditional sale agreement or any other agreement relating to indebtedness for the deferred purchase price of property or services; |
· | obligations of such person under any lease agreement (including any lease intended as security), whether or not such obligations are required to be capitalized on the balance sheet of such person under generally accepted accounting principles; or |
· | liabilities secured by any Lien on any property owned by such person if and to the extent that such person has not assumed or otherwise become liable for the payment thereof. |
"Lien"means any lien, deed of trust, pledge or security interest. | |
· | the resulting entity expressly assumes all of our obligations under the debt securities and the indenture; |
· | immediately after giving effect to the transaction, no Event of Default will have occurred and be continuing; |
· | we deliver to the trustee an officer's certificate and legal opinion stating that the transaction complies with the indenture; and |
· | certain other conditions, as set forth in the indenture, are met. |
If we merge or consolidate with or sell all or substantially all of our assets to a United States based company, and satisfy the conditions enumerated above, then we will be relieved of all obligations under the indenture and the debt securities, including the exchange notes. | |
· | we do not pay interest on debt securities within 30 days after the same becomes due; |
· | we do not pay principal of or premium, if any, on debt securities when due; |
· | we fail to comply with any of our agreements in the debt securities or the indenture that applies to debt securities and the failure continues for 60 days after receipt of written notice of such failure; or |
· | certain events in bankruptcy, insolvency or reorganization occur with respect to us. |
Remedies |
· | such direction does not conflict with any rule of law or with the indenture, and could not involve the trustee in personal liability in circumstances where indemnity would not, in the trustee's sole discretion, be adequate; |
· | the trustee determines that such direction does not unduly prejudice the rights of the other holders of outstanding debt securities; and |
· | the trustee may take any other action deemed proper by the trustee which is not inconsistent with such direction. |
Limitation on Right to Institute Proceedings(Section 5.06) | |
· | the holder provides the trustee with written notice of a continuing Event of Default; |
· | the holders of at least 33% in principal amount of the outstanding debt securities make a written request to the trustee to pursue the remedy and offer the trustee reasonable security or indemnity against any loss, liability or expense incurred in compliance with such request; |
· | the trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and |
· | the holders of a majority of principal amount of the outstanding debt securities do not give the trustee a direction inconsistent with the request during the 60-day period. |
No Impairment of Right to Receive Payment(Section 5.07) | |
· | to cure any ambiguity, omission, defect or inconsistency; |
· | to evidence the succession of another entity to us and the assumption by any such successor of our covenants in the indenture and the debt securities; |
· | to provide for the procedures required to permit us to utilize, at our option, a non-certificated system of registration for all or any series of the debt securities; |
· | to provide collateral security for the debt securities; |
· | to add to our covenants for the benefit of all holders of the debt securities of one or more specific series or to surrender any right or power conferred upon us by the indenture; or |
· | to make any change that does not adversely affect the rights of any holder of a debt security in any material respect. |
Without limiting the generality of the foregoing, if the Trust Indenture Act is amended after the date of the indenture so as to require changes to the indenture or the incorporation therein of additional provisions or so as to permit changes to, or the elimination of, provisions which, at the date of the indenture or at any time thereafter, were required by the Trust Indenture Act to be contained in the indenture, the indenture will be deemed to have been amended so as to conform to such amendment or to effect such changes or elimination, and we and the trustee may, without the consent of any holders of any debt securities, enter into supplemental indentures to evidence or effect such amendment, change or elimination. | |
· | reduce the amount of outstanding debt securities whose holders must consent to an amendment; |
· | reduce the rate of or extend the time for payment of interest on any debt security; |
· | reduce the principal of or extend the fixed maturity of any debt security; |
· | reduce the premium payable upon the redemption of any debt security or change the time at which any debt security may or shall be redeemed; |
· | make any debt security payable in money other than that stated in the debt security; or |
· | change the number of holders of debt securities that are required for any waiver of default under the indenture. |
Generally, we may enter into supplemental indentures for other specified purposes, including the creation of a new series of debt securities, without the consent of any holder of debt securities. | |
· | all previously issued debt securities have been delivered to the trustee for cancellation and have been deemed paid; and |
· | all sums payable by us under the indenture have been paid. |
Resignation and Removal of the Trustee(Section 6.08) Securities Act, and in offshore transactions to persons other than U.S. persons (as defined in Regulation S under the Securities Act) in reliance on Regulation S. | |
· | a limited-purpose trust company organized under the laws of the State of New York; |
· | a "banking organization" within the meaning of the New York Banking Law; |
· | a member of the Federal Reserve System; |
· | a "clearing corporation" within the meaning of the New York Uniform Commercial Code, as amended; and |
· | a "clearing agency" registered pursuant to Section 17A of the Securities Exchange Act of 1934. |
DTC was created to hold securities for its participants (collectively, the "participants") and to facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes to the accounts of its participants, thereby eliminating the need for physical transfer and delivery of certificates. DTC's direct participants include securities brokers and dealers, banks and trust companies, clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of direct participants of DTC and members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MGBS Clearing Corporation, and Emerging Markets Clearing Corporation, also subsidiaries of DTCC, as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the Nat ional Association of Securities Dealers, Inc. Indirect access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies, which we collectively refer to as the "indirect participants," that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Investors who are not participants may beneficially own securities held by or on behalf of DTC only through participants or indirect participants. The DTC rules applicable to its participants are on file with the SEC. More information about DTC can be found at www.dtcc.com. However, information on this website does not constitute part of this prospectus. | |
· | upon deposit of each global security, DTC will credit, on its book-entry registration and transfer system, the accounts of participants with an interest in that global security, and |
· | ownership of beneficial interests in the global securities will be shown on, and the transfer of ownership interests in the global securities will be effected only through, records maintained by DTC (with respect to the interests of participants) and by participants and indirect participants (with respect to the interests of persons other than participants). |
The laws of some jurisdictions may require that some purchasers of securities take physical delivery of those securities in definitive form. Accordingly, the ability to transfer beneficial interests in notes represented by a global security to those persons may be limited. In addition, because DTC can act only on behalf of its participants, who in turn act on behalf of persons who hold interests through participants, the ability of a person holding a beneficial interest in a global security to pledge or transfer that interest to persons or entities that do not participate in DTC's system, or to otherwise take actions in respect of that interest, may be affected by the lack of a physical security in respect of that interest. |
The following is a summary of the material United States federal income tax consequences of the exchange, ownership and disposition of the exchange notes. It does not purport to be a complete analysis of all the potential tax considerations related thereto. This summary is based on (1) the Internal Revenue Code of 1986, as amended (the "Code"), (2) income tax regulations issued under the Code and (3) associated administrative and judicial interpretations, all as they currently exist as of the date of this prospectus. These income tax laws and regulations, however, may change at any time, and any change could be retroactive to the issuance date of the exchange notes. | |
· | the United States federal income tax consequences to shareholders in, or partners, members or beneficiaries of, a holder of the exchange notes; |
· | the United States federal alternative minimum tax consequences material to the exchange, ownership or disposition of the exchange notes; or |
· | any state, local or foreign tax consequences material to the exchange, ownership or disposition of the exchange notes. |
THIS SUMMARY OF CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TREATY. |
Consequences To United States Holders | ||
· | a citizen or resident of the United States; | |
· | a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof; | |
· | an estate, the income of which is includible in its gross income for federal income tax purposes without regard to its source, or trust if: | |
· | a court within the United States is able to exercise primary supervision over the administration of the trust; and | |
· | one or more United States trustees have the authority to control all substantial decisions of the trust; or | |
· | a person whose worldwide income or gain is subject to United States federal income taxation on a net income basis. | |
Payments of Interest | ||
· | fail to furnish your taxpayer identification number, which, for an individual, is ordinarily his or her social security number; | |
· | furnish an incorrect taxpayer identification number; | |
· | are notified by the IRS that you have failed to properly report payments of interest or dividends; or | |
· | fail to certify, under penalties of perjury, that you have furnished a correct taxpayer identification number and that the IRS has not notified you that you are subject to backup withholding. | |
You should consult your personal tax advisors regarding your qualification for an exemption from backup withholding and the procedures for obtaining such an exemption, if applicable. The backup withholding tax is not an additional tax and taxpayers may use amounts withheld as a credit against their United States federal income tax liability or may claim a refund as long as they timely provide certain information to the IRS. |
Plan of Distribution | ||
A broker-dealer that is the holder of initial notes that were acquired for the account of such broker-dealer as a result of market-making or other trading activities (other than initial notes acquired directly from us or any affiliate of ours) may exchange such initial notes for exchange notes pursuant to the exchange offer; provided that each broker-dealer that receives exchange notes for its own account in exchange for initial notes, where such initial notes were acquired by such broker-dealer as a result of market-making or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for initial notes where such initial notes were so acquired as a result of market-making activities or other trading a ctivities. We have agreed that for a period of not to exceed 180 days after the effective date of the registration statement (or such shorter period during which broker-dealers are required by law to deliver this prospectus), we will use commercially reasonable efforts to make this prospectus, as it may be amended or supplemented from time to time, available to any broker-dealer for use in connection with any such resale. | ||
ERISA Considerations | ||
Before making a determination to exchange initial notes for exchange notes, a benefit plan investor subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and/or the prohibited transaction provisions of the Internal Revenue Code of 1986, as amended (the "Code"), collectively, an "ERISA Plan", should review the following summary of issues. | ||
· | the investment is consistent with the prudence and diversification requirements of ERISA; | |
· | the fiduciary has authority to make the investment under the governing instrument of the plan and Title I of ERISA; | |
· | the investment is made solely in the interest of the participants in and beneficiaries of the plan; | |
· | the acquisition and holding of the exchange notes will result in a non-exempt "prohibited transaction" under Section 406 of ERISA or Section 4975 of the Code; and | |
· | the investment violates ERISA's prohibition on improper delegation of control over or responsibility for "plan assets." | |
Fiduciaries of ERISA Plans should also carefully consider the definition of the term "plan assets" in United States Department of Labor ("DOL") Regulations Section 2510.3-101 (the "Plan Asset Regulations"). Under the Plan Asset Regulations, if an ERISA Plan invests in an "equity interest" in a corporation, partnership, trust or another specified entity, the underlying assets and properties of the entity may be deemed for purposes of ERISA and Section 4975 of the Code to be assets of the investing plan. According to the Plan Asset Regulations, an interest is not an "equity interest" if it is treated as an indebtedness under applicable local law and has no substantial equity features. Although there is little statutory or regulatory guidance on this subject, and there can be no assurances in this regard, it appears that the exchange notes should not be treated as equity interests for purposes of the Plan Asset Regulations. | ||
· | PTCE 84-14 respecting transactions determined by independent qualified professional asset managers; | |
· | PTCE 90-1 respecting insurance company pooled separate accounts; | |
· | PTCE 91-38 respecting bank collective investment trust partnerships; | |
· | PTCE 95-60 respecting life insurance company general accounts; | |
· | PTCE 96-23 respecting transactions determined by in-house asset managers; and | |
· | PTCE 75-1 respecting principal transactions by a broker dealer. | |
Each of these PTCEs contains conditions and limitations on its application. Fiduciaries of ERISA Plans which consider purchasing the exchange notes in reliance on these or any other PTCEs should carefully review such PTCE to assure it is applicable. |
Additional Information About Us | ||
Available Information | ||
· | Annual Report of Conectiv on Form 10-K for the year ended December 31, 2001; | |
· | Quarterly Reports of Conectiv on Form 10-Q for the respective periods ended March 31, and June 30, 2002; and | |
· | Current Reports of Conectiv on Form 8-K dated January 31, April 2, June 7, July 18, July 25, July 26, and August 2, 2002. | |
Copies of any of the documents incorporated by reference in this prospectus, or a copy of the indenture, the form of certificate evidencing the notes or the registration rights agreement are available, at no cost, by writing or telephoning us at the following: | ||
Conectiv | ||
Legal Matters | ||
The validity of the exchange notes will be passed upon for Conectiv by Christie Day Cannon, Assistant General Counsel for Conectiv. | ||
The financial statements as of December 31, 2001 and 2000 and for each of the three years in the period ended December 31, 2001 incorporated by reference into this prospectus have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. |