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FORM 10-Q | ||||||||||||||
Quarterly Report Under Section 13 or 15(d) | ||||||||||||||
For Quarter Ended | September 30, 2001 | |||||||||||||
Commission File Number | 000-33049 | |||||||||||||
New RC, Inc. | ||||||||||||||
Delaware | 52-2297449 | |||||||||||||
701 Ninth Street, N.W., Washington, D.C. | 20068 | |||||||||||||
202-872-2000 | ||||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past | ||||||||||||||
Yes | [ ] | No | [ X ] | |||||||||||
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. | ||||||||||||||
Class | Outstanding at September 30, 2001 | |||||||||||||
Common Stock, $0.01 par value | 100 | |||||||||||||
TABLE OF CONTENTS
Page | |
PART I - Financial Information | |
Item 1. - Consolidated Financial Statements | |
Consolidated Statements of Earnings and Retained Income | 3 |
Consolidated Balance Sheet | 3 |
Consolidated Statement of Cash Flows | 4 |
Notes to Consolidated Financial Statements | 4 |
(1) Formation and Organization | 4 |
Item 2. - Management's Discussion and Analysis of Consolidated | 5 |
Signatures | 6 |
Part I | - | FINANCIAL INFORMATION |
Item 1. | - | CONSOLIDATED FINANCIAL STATEMENTS |
NEW RC, INC. | ||
Three Months Ended | February 9, 2001 (Inception) throughSeptember 30, 2001 | |
REVENUE | $ - | $ - |
EXPENSES | $ - | $ - |
NET INCOME | $ - | $ - |
Retained Income at Beginning of Period | $ - | $ - |
Retained Income at End of Period | $ - | $ - |
The accompanying notes are an integral part of these statements. | ||
NEW RC, INC. | |
ASSETS | |
Cash | $200 |
LIABILITIES AND SHAREHOLDER'S EQUITY | |
LIABILITIES | $ - |
SHAREHOLDER'S EQUITY | |
Common Stock, $.01 par value (Note 1): |
|
Additional Paid-in-Capital | 199 |
Total Liabilities and Shareholder's Equity | $200 |
The accompanying notes are an integral part of this statement. | |
NEW RC, INC. | |
| |
Proceeds from the issuance of New RC common stock | $200 |
Net Increase in Cash and Cash Equivalents | $200 |
Cash and Cash Equivalents at Beginning of Period | $ - |
Cash and Cash Equivalents at End of Period | $200 |
The accompanying notes are an integral part of this statement. | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Formation and Organization
Organization
New RC, Inc. (New RC) was incorporated under the laws of Delaware on February 9,
2001, as a wholly owned subsidiary of Potomac Electric Power Company (Pepco). New
RC has issued 100 shares of common stock (with a par value of $.01), all of which are
owned by Pepco. New RC has not commenced operations and therefore as of
September 30, 2001 has no operating results. New RC will be a holding company
registered under the Public Utility Holding Company Act of 1935, as amended.
Pepco, New RC, and Conectiv (a Delaware corporation), entered into an Agreement
and Plan of Merger (Agreement) on February 9, 2001, providing for a reorganization in
which two wholly owned and newly formed subsidiaries of New RC will merge with and
into Pepco and Conectiv, respectively. As a result of these mergers, Pepco and Conectiv
will be wholly owned subsidiaries of New RC and existing Pepco and Conectiv
shareholders will own all outstanding shares of New RC. The Agreement is expected to
close shortly after all of the conditions to the consummation of the Agreement, including
obtaining applicable regulatory approvals, are met or waived. The regulatory approval
process is expected to take approximately 12 to 18 months from the date of the
Agreement. The transaction will be accounted for as a purchase of Conectiv by Pepco
under the purchase accounting method, and the total consideration of approximately $2.2
billion will consist of 50% in cash and 50% in stock. Pepco's historical financial
statements will become the historical financial statements of New RC upon the
consummation of the transaction. The transaction has received approval from both
Pepco's and Conectiv's shareholders, the Pennsylvania commission, and the Federal
Energy Regulatory Commission. Additionally, antitrust clearance has been received
under the Hart-Scott-Rodino Antitrust Improvements Act (HSR) effective August 7,
2001. HSR provides the Federal Trade Commission and the Justice Department the
opportunity to review the proposed transaction prior to its completion to ensure it will not
violate antitrust laws. Pending the receipt of various other regulatory approvals, the
transaction is expected to close in early 2002.
(2) Summary of Significant Accounting Policies
New Accounting Standards
In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 141 entitled "Business Combinations,"
which applies to all business combinations initiated after June 30, 2001. This statement
requires that the purchase method of accounting be used for all business combinations.
Additionally, intangible assets that can be identified and named must be recognized as
assets apart from goodwill if certain criteria are met. Due to the pending transaction with
Conectiv, the Company is in the process of assessing the provisions of SFAS 141 in order
to determine the impact it will have on its financial position and results of operations.
In June 2001, the FASB issued SFAS 142 "Goodwill and Other Intangible Assets,"
which is required to be applied starting with fiscal years beginning after December 15,
2001. This statement establishes the accounting and reporting standards for goodwill and
other intangible assets and requires that goodwill no longer be amortized but rather tested
for impairment based on the criteria prescribed in the statement. Due to the pending
transaction with Conectiv, the Company is in the process of assessing the provisions of
SFAS 142 in order to determine the impact it will have on its financial position and
results of operations.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
This Quarterly Report on Form 10-Q will automatically be incorporated by reference
in the Prospectus constituting part of New RC, Inc.'s Registration Statement on Form S-4
(Number 333-57042), filed under the Securities Act of 1933.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Refer to Note 1. Formation and Organization, and Note 2. Summary of Significant
Accounting Policies, herein.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
| New RC, Inc. |
November 6, 2001
Date
