UNITED STATES | |||||||||||
FORM 10-Q | |||||||||||
Quarterly Report Under Section 13 or 15(d) | |||||||||||
For Quarter Ended | September 30, 2002 | ||||||||||
Commission File Number | 1-3559 | ||||||||||
Atlantic City Electric Company | |||||||||||
New Jersey | 21-0398280 | ||||||||||
800 King Street, P.O. Box 231, Wilmington, Delaware | 19899 | ||||||||||
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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 18,320,937 issued and outstanding shares of Atlantic City Electric Company common stock, $3 per share par value, are owned by Conectiv. |
Atlantic City Electric Company | ||
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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 |
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Consolidated Balance Sheets as of September 30, 2002, and December 31, 2001 | 2-3 | |
Consolidated Statements of Cash Flows for the nine months ended September 30, 2002, and September 30, 2001 |
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Notes to Consolidated Financial Statements | 5-9 | |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 17 |
Item 4. | Controls and Procedures | 18 |
Part II. Other Information | ||
Item 1. | Legal Proceedings | 18 |
Item 6. | Exhibits and Reports on Form 8-K | 18 |
Signatures and Certifications | 19-24 |
Part 1. FINANCIAL INFORMATION | |||||||
Three Months Ended | Nine Months Ended | ||||||
2002 | 2001 | 2002 | 2001 | ||||
OPERATING REVENUES | $365,621 | $337,827 | $828,238 | $810,921 | |||
OPERATING EXPENSES | |||||||
Electric fuel and purchased energy and capacity | 233,374 | 246,905 | 513,075 | 507,052 | |||
Operation and maintenance | 56,022 | 63,056 | 176,864 | 186,278 | |||
Merger-related costs | 38,150 | - | 38,150 | - | |||
Depreciation and amortization | 17,107 | 21,869 | 51,046 | 65,417 | |||
Taxes other than income taxes | 7,668 | 10,747 | 18,967 | 28,635 | |||
Deferred electric service costs | (8,974) | (67,049) | (49,406) | (125,370) | |||
343,347 | 275,528 | 748,696 | 662,012 | ||||
OPERATING INCOME | 22,274 | 62,299 | 79,542 | 148,909 | |||
OTHER INCOME | 6,018 | 2,361 | 13,084 | 8,103 | |||
INTEREST EXPENSE | |||||||
Interest charges | 13,654 | 15,423 | 41,858 | 47,693 | |||
Allowance for borrowed funds used during | (379) | (216) | (949) | (477) | |||
13,275 | 15,207 | 40,909 | 47,216 | ||||
PREFERRED DIVIDEND REQUIREMENTS ON | 1,905 | 1,905 | 5,714 | 5,714 | |||
INCOME BEFORE INCOME TAXES | 13,112 | 47,548 | 46,003 | 104,082 | |||
INCOME TAXES | 3,948 | 19,841 | 17,815 | 43,746 | |||
NET INCOME | 9,164 | 27,707 | 28,188 | 60,336 | |||
DIVIDENDS ON PREFERRED STOCK | 66 | 308 | 683 | 1,374 | |||
EARNINGS APPLICABLE TO COMMON STOCK | $ 9,098 | $ 27,399 | $ 27,505 | $ 58,962 | |||
See accompanying Notes to Consolidated Financial Statements. |
ATLANTIC CITY ELECTRIC COMPANY | |||
September 30, | December 31, | ||
ASSETS | |||
Current Assets | |||
Cash and cash equivalents | $ 32,467 | $ 14,261 | |
Accounts receivable, net of allowances | 178,237 | 159,679 | |
Inventories, at average cost | |||
Fuel (coal and oil) | 12,709 | 20,331 | |
Materials and supplies | 10,834 | 10,738 | |
Prepaid income taxes | 13,570 | 41,044 | |
Other prepayments | 15,939 | 1,756 | |
Deferred income taxes | 175 | 181 | |
263,931 | 247,990 | ||
Investments | 3,459 | 3,666 | |
Property, Plant and Equipment | |||
Electric generation | 140,210 | 136,152 | |
Electric transmission and distribution | 1,315,862 | 1,264,311 | |
Other electric facilities | 82,147 | 89,396 | |
Other property, plant, and equipment | 1,359 | 5,772 | |
1,539,578 | 1,495,631 | ||
Less: Accumulated depreciation | 570,939 | 544,564 | |
Net plant in service | 968,639 | 951,067 | |
Construction work-in-progress | 83,671 | 74,780 | |
Intangibles | 13,990 | 14,941 | |
1,066,300 | 1,040,788 | ||
Deferred Charges and Other Assets | |||
Regulatory assets | |||
Recoverable stranded costs | 875,720 | 930,036 | |
Deferred electric service costs | 129,675 | 106,259 | |
Other non-current regulatory assets | 81,940 | 82,944 | |
Unamortized debt expense | 13,556 | 12,966 | |
Other | 8,005 | 7,681 | |
1,108,896 | 1,139,886 | ||
Total Assets | $2,442,586 | $2,432,330 | |
See accompanying Notes to Consolidated Financial Statements. |
ATLANTIC CITY ELECTRIC COMPANY | |||
September 30, 2002 | December 31, 2001 | ||
CAPITALIZATION AND LIABILITIES | |||
Current Liabilities | |||
Short-term debt | $ 117,243 | $ 44,951 | |
Long-term debt due within one year | 241,450 | 221,450 | |
Variable rate demand bonds | 22,600 | 22,600 | |
Accounts payable | 79,502 | 58,001 | |
Interest accrued | 9,835 | 17,224 | |
Dividends payable | 1,043 | 6,302 | |
Other | 60,215 | 40,461 | |
531,888 | 410,989 | ||
Deferred Credits and Other Liabilities | |||
Deferred income taxes, net | 422,298 | 470,420 | |
Deferred investment tax credits | 26,961 | 28,482 | |
Regulatory liability for New Jersey income tax benefit | 49,262 | 49,262 | |
Above-market purchased energy contracts | 16,417 | 16,615 | |
Pension benefit obligation | 43,683 | 35,529 | |
Other postretirement benefit obligation | 36,834 | 36,429 | |
Other | 21,194 | 13,311 | |
616,649 | 650,048 | ||
Capitalization | |||
Common stock, $3 par value; 18,320,937 shares outstanding; | |||
54,963 | 54,963 | ||
Additional paid-in capital | 410,371 | 410,194 | |
Retained earnings | 161,106 | 156,152 | |
Total common stockholder's equity | 626,440 | 621,309 | |
Preferred stock not subject to mandatory redemption | 6,231 | 6,231 | |
Preferred stock subject to mandatory redemption | - | 12,450 | |
Company obligated mandatorily redeemable preferred securities | 95,000 | 95,000 | |
Long-term debt | 566,378 | 636,303 | |
1,294,049 | 1,371,293 | ||
Commitments and Contingencies (Note 8) | |||
Total Capitalization and Liabilities | $ 2,442,586 | $ 2,432,330 | |
See accompanying Notes to Consolidated Financial Statements. |
ATLANTIC CITY ELECTRIC COMPANY | |||
Nine Months Ended | |||
2002 | 2001 | ||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | $ 28,188 | $ 60,336 | |
Adjustments to reconcile net income to | |||
Depreciation and amortization | 50,854 | 74,251 | |
Investment tax credit adjustments, net | (1,521) | (1,885) | |
Deferred income taxes, net | (4,187) | 53,956 | |
Deferred electric service costs | (23,416) | (127,855) | |
Net change in: | |||
Accounts receivable | (15,931) | (44,541) | |
Inventories | 7,526 | (4,778) | |
Prepaid New Jersey sales & excise taxes | (20,209) | (3,215) | |
Accounts payable | 32,982 | 7,302 | |
Taxes accrued | 27,474 | (18,674) | |
Other current assets and liabilities (1) | 6,925 | (15,031) | |
Other, net | 11,893 | 10,973 | |
Net cash provided (used) by operating activities | 100,578 | (9,161) | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Capital expenditures | (68,374) | (50,383) | |
Sale of assets | 7,400 | - | |
Deposits to nuclear decommissioning trust funds | - | (825) | |
Other, net | (1,769) | (2,421) | |
Net cash used by investing activities | (62,743) | (53,629) | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Common dividends paid | (27,633) | (38,913) | |
Preferred dividends paid | (683) | (1,374) | |
Long-term debt redeemed | (50,000) | (40,000) | |
Preferred stock redeemed | (12,450) | (11,500) | |
Principal portion of capital lease payments | - | (8,835) | |
Net increase in short-term debt | 72,292 | 24,445 | |
Other, net | (1,155) | (428) | |
Net cash used by financing activities | (19,629) | (76,605) | |
Net change in cash and cash equivalents | 18,206 | (139,395) | |
Cash and cash equivalents at beginning of period | 14,261 | 156,071 | |
Cash and cash equivalents at end of period | $ 32,467 | $ 16,676 | |
(1) Other than debt and deferred income taxes classified as current. |
ATLANTIC CITY ELECTRIC COMPANY | ||||||||||||||
Note 1.Financial Statement Presentation | ||||||||||||||
Note 2.Supplemental Cash Flow Information | ||||||||||||||
Nine Months Ended | ||||||||||||||
2002 2001 | ||||||||||||||
(Dollars in Thousands) | ||||||||||||||
Cash paid (received) for: | ||||||||||||||
Interest, net of amounts capitalized | $46,133 | $53,684 | ||||||||||||
Income taxes, net of refunds | $(4,186) | $10,425 | ||||||||||||
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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 |
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State income taxes, net of federal benefit |
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Plant basis differences | 500 | 4 | 704 | 1 | 1,500 | 3 | 2,112 | 1 | ||||||
Investment tax credit |
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Resolution of income |
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Other, net | 83 | 1 | (52) | - | (37) | - | (5) | - | ||||||
$3,948 | 30% | $19,841 | 42% | $17,815 | 39% | $43,746 | 42% | |||||||
Note 4.Regulatory Matters ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS |
Exhibit 12-A | |||||||||||||
Atlantic City Electric Company | |||||||||||||
9 Months | Year Ended December 31, | ||||||||||||
2002 | 2001 | 2000 | 1999 | 1998 | 1997 | ||||||||
Income before extraordinary item | $28,188 | $75,476 | $54,434 | $63,930 | $30,276 | $85,747 | |||||||
Income taxes | 17,815 | 46,698 | 36,746 | 49,326 | 18,178 | 50,442 | |||||||
Fixed charges: | |||||||||||||
Interest on long-term debt | 41,858 | 62,166 | 76,178 | 60,562 | 63,940 | 64,501 | |||||||
Other interest | 1,767 | 3,314 | 4,518 | 3,837 | 3,435 | 3,574 | |||||||
Preferred dividend require- | 5,714 | 7,619 | 7,619 | 7,634 | 6,052 | 5,775 | |||||||
Total fixed charges | 49,339 | 73,099 | 88,315 | 72,033 | 73,427 | 73,850 | |||||||
Earnings before extraordinary | $95,342 | $195,273 | $179,495 | $185,289 | $121,881 | $210,039 | |||||||
Ratio of earnings to fixed charges | 1.93 | 2.67 | 2.03 | 2.57 | 1.66 | 2.84 |
Exhibit 12-B | ||||||||||||||||||||||
Atlantic City Electric Company | ||||||||||||||||||||||
9 Months | Year Ended December 31, | |||||||||||||||||||||
2002 | 2001 | 2000 | 1999 | 1998 | 1997 | |||||||||||||||||
Income before extraordinary item | $28,188 | $75,476 | $54,434 | $63,930 | $30,276 | $85,747 | ||||||||||||||||
Income taxes | 17,815 | 46,698 | 36,746 | 49,326 | 18,178 | 50,442 | ||||||||||||||||
Fixed charges: | ||||||||||||||||||||||
Interest on long-term debt | 41,858 | 62,166 | 76,178 | 60,562 | 63,940 | 64,501 | ||||||||||||||||
Other interest | 1,767 | 3,314 | 4,518 | 3,837 | 3,435 | 3,574 | ||||||||||||||||
Preferred dividend require- | 5,714 | 7,619 | 7,619 | 7,634 | 6,052 | 5,775 | ||||||||||||||||
Total fixed charges | 49,339 | 73,099 | 88,315 | 72,033 | 73,427 | 73,850 | ||||||||||||||||
Earnings before extraordinary | $95,342 | $195,273 | $179,495 | $185,289 | $121,881 | $210,039 | ||||||||||||||||
Fixed charges | $49,339 | $73,099 | $88,315 | $72,033 | $73,427 | $73,850 | ||||||||||||||||
Preferred dividend requirements | 1,115 | 2,724 | 3,571 | 3,777 | 5,289 | 7,506 | ||||||||||||||||
$50,454 | $75,823 | $91,886 | $75,810 | $78,716 | $81,356 | |||||||||||||||||
Ratio of earnings to fixed charges | 1.89 | 2.58 | 1.95 | 2.44 | 1.55 | 2.58 | ||||||||||||||||
Exhibit 99 | |
Certificate of Chief Executive Officer and Chief Financial Officer of Atlantic City Electric Company (Pursuant to 18 U.S.C. Section 1350) | |
I, Joseph M. Rigby, Chief Executive Officer, and I, Andrew W. Williams, Chief Financial Officer, of Atlantic City Electric Company, certify that, to the best of my knowledge, the Quarterly Report on Form 10-Q of Atlantic City Electric Company 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 Atlantic City Electric Company. | |
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