EXHIBIT 99
Constellation Energy Reports Strong
First Quarter Earnings
Significant Growth in Competitive Supply and Productivity Savings
BALTIMORE, April 27, 2005 - Constellation Energy (NYSE: CEG) today reported earnings of $0.68 per share for the three months ending March 31, 2005, compared to the $0.39 per share earned during the same period last year. Excluding special items, Constellation Energy earned $0.67 per share, compared to $0.65 per share in the first quarter of 2004. The company’s earnings guidance range provided in January was $0.47 - $0.62 per share.
“Our performance during the first quarter builds on our record of solid market execution and operational excellence,” said Mayo A. Shattuck, III, chairman, president and chief executive officer of Constellation Energy. “A clear indicator of this success is the exceptional performance throughout our nuclear fleet, where we recently completed two refueling outages in record time. With the successful completion of these key outages, we’re well positioned to deliver on our 2005 productivity target of $80 million.
“Competitive supply continues to show strong momentum as well. NewEnergy is growing market share and now counts 68 of the FORTUNE 100 as customers. Eighty-six percent of all customers with expiring contracts opted to renew with NewEnergy. The wholesale competitive supply business had a successful auction season. On both our wholesale and retail platforms, we are growing and leveraging scale. With our success in the first quarter, we remain confident in our guidance range of $3.35 to $3.60 earnings per share for 2005.”
The following table summarizes both earnings per share excluding special items and earnings per share reported in accordance with generally accepted accounting principles (GAAP) for the three months ended March 31, 2005 and 2004:
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| | Three Months Ended March 31, | |
| | 2005 | | 2004 | |
| | Reported | | EPS | | Reported | | EPS | |
| | GAAP | | Excluding | | GAAP | | Excluding | |
EARNINGS PER COMMON SHARE | | EPS* | | Special Items | | EPS* | | Special Items | |
Baltimore Gas and Electric | | $ | 0.40 | | $ | 0.40 | | $ | 0.43 | | $ | 0.43 | |
Merchant Energy | | 0.27 | | 0.27 | | 0.22 | | 0.22 | |
Other Nonregulated | | — | | — | | — | | — | |
Diluted Earnings Per Share from Continuing Operations | | 0.67 | | 0.67 | | 0.65 | | 0.65 | |
| | | | | | | | | |
Income from Discontinued Operations Assuming Dilution- Oleander | | 0.01 | | — | | 0.01 | | — | |
Loss from Discontinued Operations Assuming Dilution - Puna | | — | | — | | (0.27 | ) | — | |
Diluted Earnings Per Share | | $ | 0.68 | | $ | 0.67 | | $ | 0.39 | | $ | 0.65 | |
* Unaudited.
Baltimore Gas and Electric (BGE)
BGE reported earnings of $0.40 per share for the first quarter of 2005, consistent with the $0.36 - $0.41 earnings per share guidance range provided in January and $0.03 lower than the $0.43 per share earned for the first quarter of 2004. Benefits from customer growth in gas and electric distribution were essentially offset by higher operating costs and spending to enhance system reliability. Earnings per share were down primarily due to the effect of dilution associated with incremental shares outstanding.
Merchant Energy
For the first quarter of 2005, our merchant energy business earned $0.27 per share. These results were above the $0.10 - $0.25 per share earnings guidance range and above the $0.22 per share earned during the first quarter of 2004. Constellation Energy Commodities Group’s new business was strong, and our generation fleet showed core operational improvement. These favorable items were partially offset by lower scheduled first quarter wholesale backlog realization, a hedge recognition mismatch, and the timing of nuclear plant refueling outages, where more outage time was scheduled in the first quarter of 2005 than the same period last year.
The March 2005 Financial Statements and selected supplemental information are attached.
Earnings Excluding Special Items
Constellation Energy presents earnings excluding special items in addition to its reported earnings per share in accordance with generally accepted accounting principles (reported GAAP EPS). Earnings excluding special items is a non-GAAP financial measure that differs from reported GAAP EPS because it excludes the cumulative effects of changes in accounting
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principles, losses from discontinued operations, and other special items (which we define as significant items that are not related to our ongoing, underlying business or which distort comparability of results) included in operations. We present earnings excluding special items because we believe that it is appropriate for investors to consider results excluding these items in addition to our results in accordance with GAAP. We believe such a measure provides a picture of our results that is comparable among periods since it excludes the impact of items such as workforce reduction costs, which may recur occasionally, but tend to be irregular as to timing, thereby distorting comparisons between periods. However, investors should note that these non-GAAP measures involve judgments by management (in particular, judgments as to what is or is not classified as a special item). These non-GAAP measures are also used to evaluate management’s performance and for compensation purposes.
Constellation Energy also provides its earnings guidance in terms of earnings excluding special items. Constellation Energy is unable to reconcile its 2005 earnings guidance excluding special items to GAAP earnings per share because we do not predict the future impact of special items due to the difficulty of doing so. The impact of special items could be material to our operating results computed in accordance with GAAP.
SEC Filings
The Company plans to file its Form 10-Q for the three months ended March 31, 2005 on or about May 9, 2005.
Forward-Looking Statements
We make statements in this news release that are considered forward-looking statements within the meaning of the Securities Exchange Act of 1934. These statements are not guarantees of our future performance and are subject to risks, uncertainties, and other important factors that could cause our actual performance or achievements to be materially different from those we project. For a full discussion of these risks, uncertainties, and factors, we encourage you to read our documents on file with the Securities and Exchange Commission, including those set forth in our Form 10-K under the forward-looking statements section.
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Conference Call April 27, 2005
Constellation Energy will host a conference call at 8:30 a.m. EDT on April 27, 2005, to review its results. To participate, investors, analysts, and members of the media in the United States may dial 1-800-862-9098 shortly before 8:30 a.m. The international dial-in number is 1-785-424-1051. The conference call host is Constellation Energy, and the password is “Energy.” A replay of the call will be available for one week. The replay number is 1-888-562-3376; the number for international callers is 1-402-220-1185. A live audio webcast of the conference call, as well as presentation slides and the first quarter 2005 earnings press release will be available on the Investor Relations page of the company Web site, www.constellation.com. The reference to our Web site is an active textual reference and the contents of our Web site are not part of this press release.
About Constellation Energy
Constellation Energy (http://www.constellation.com ), a FORTUNE 200 company based in Baltimore, is the nation’s largest competitive supplier of electricity to large commercial and industrial customers and the nation’s largest wholesale power seller. Constellation Energy also manages fuels and energy services on behalf of energy intensive industries and utilities. It owns a diversified fleet of more than 100 generating units located throughout the United States, totaling approximately 12,500 megawatts of generating capacity. The company delivers electricity and natural gas through the Baltimore Gas and Electric Company (BGE), its regulated utility in Central Maryland. In 2004, the combined revenues of the integrated energy company totaled $12.5 billion.
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Constellation Energy Group and Subsidiaries
Consolidated Statements of Income (Unaudited)
| | Three Months Ended | |
| | March 31, | |
| | 2005 | | 2004 | |
| | (In Millions, Except Per Share Amounts) | |
Revenues | | | | | |
Nonregulated revenues | | $ | 2,773.7 | | $ | 2,227.3 | |
Regulated electric revenues | | 491.5 | | 484.4 | |
Regulated gas revenues | | 364.6 | | 317.9 | |
Total revenues | | 3,629.8 | | 3,029.6 | |
| | | | | |
Expenses | | | | | |
Purchased fuel and energy expenses | | 2,716.4 | | 2,201.5 | |
Operating expenses | | 465.3 | | 399.0 | |
Depreciation and amortization | | 133.7 | | 121.6 | |
Accretion of asset retirement obligations | | 15.1 | | 11.2 | |
Taxes other than income taxes | | 68.5 | | 64.0 | |
Total expenses | | 3,399.0 | | 2,797.3 | |
Income from Operations | | 230.8 | | 232.3 | |
Other Income | | 10.3 | | 4.6 | |
Fixed Charges | | | | | |
Interest expense | | 81.3 | | 84.8 | |
Interest capitalized and allowance for borrowed funds used during construction | | (3.0 | ) | (2.6 | ) |
BGE preference stock dividends | | 3.3 | | 3.3 | |
Total fixed charges | | 81.6 | | 85.5 | |
Income from Continuing Operations Before Income Taxes | | 159.5 | | 151.4 | |
Income Taxes | | 39.2 | | 41.1 | |
Income from Continuing Operations | | 120.3 | | 110.3 | |
Income from discontinued operations associated with our Oleander plant, net of income taxes of $0.3 and $1.4, respectively | | 0.4 | | 2.2 | |
Loss from discontinued operations associated with our Hawaiian Geothermal Power Plant, net of income taxes of $23.8 | | — | | (46.3 | ) |
Net Income | | $ | 120.7 | | $ | 66.2 | |
| | | | | |
Earnings Applicable to Common Stock | | $ | 120.7 | | $ | 66.2 | |
| | | | | |
Average Shares of Common Stock Outstanding - Basic | | 176.8 | | 168.1 | |
Average Shares of Common Stock Outstanding - Diluted | | 178.6 | | 169.2 | |
| | | | | |
Earnings Per Common Share from Continuing Operations -Basic | | $ | 0.68 | | $ | 0.65 | |
Income from discontinued operations associated with our Oleander plant - Basic | | — | | 0.01 | |
Loss from discontinued operations associated with our Hawaiian Geothermal Power Plant - Basic | | — | | (0.27 | ) |
Earnings Per Common Share - Basic | | $ | 0.68 | | $ | 0.39 | |
| | | | | |
Earnings Per Common Share from Continuing Operations - Diluted | | $ | 0.67 | | $ | 0.65 | |
Income from discontinued operations associated with our Oleander plant - Diluted | | 0.01 | | 0.01 | |
Loss from discontinued operations associated with our Hawaiian Geothermal Power Plant - Diluted | | — | | (0.27 | ) |
Earnings Per Common Share - Diluted | | $ | 0.68 | | $ | 0.39 | |
Certain prior-period amounts have been reclassified to conform with the current period’s presentation.
Constellation Energy Group and Subsidiaries
Consolidated Balance Sheets (Unaudited)
| | March 31, | | December 31, | |
| | 2005 | | 2004 | |
| | (In Millions) | |
ASSETS | | | |
Current Assets | | | | | |
Cash and cash equivalents | | $ | 1,002.9 | | $ | 706.3 | |
Accounts receivable (net of allowance for uncollectibles of $43.0 and $43.1, respectively) | | 2,078.5 | | 1,979.3 | |
Mark-to-market energy assets | | 765.8 | | 567.3 | |
Risk management assets | | 745.1 | | 471.5 | |
Fuel stocks | | 234.0 | | 298.3 | |
Materials and supplies | | 202.7 | | 203.8 | |
Assets held for sale-discontinued operations | | 217.5 | | — | |
Other | | 288.8 | | 262.9 | |
Total current assets | | 5,535.3 | | 4,489.4 | |
Investments And Other Assets | | | | | |
Nuclear decommissioning trust funds | | 1,061.1 | | 1,033.7 | |
Investments in qualifying facilities and power projects | | 317.1 | | 318.4 | |
Mark-to-market energy assets | | 547.6 | | 359.8 | |
Risk management assets | | 511.7 | | 306.2 | |
Regulatory assets (net) | | 167.3 | | 195.4 | |
Goodwill | | 146.2 | | 144.8 | |
Other | | 463.9 | | 412.8 | |
Total investments and other assets | | 3,214.9 | | 2,771.1 | |
Property, Plant And Equipment | | | | | |
Nonregulated property, plant and equipment | | 8,446.9 | | 8,638.4 | |
Regulated property, plant and equipment | | 5,398.0 | | 5,412.7 | |
Nuclear fuel (net of amortization) | | 263.4 | | 264.3 | |
Accumulated depreciation | | (4,220.5 | ) | (4,228.8 | ) |
Net property, plant and equipment | | 9,887.8 | | 10,086.6 | |
Total Assets | | $ | 18,638.0 | | $ | 17,347.1 | |
| | | | | |
LIABILITIES AND EQUITY | | | | | |
Current Liabilities | | | | | |
Short-term borrowings | | $ | 3.0 | | $ | — | |
Current portion of long-term debt | | 462.4 | | 480.4 | |
Accounts payable and accrued liabilities | | 1,447.1 | | 1,424.9 | |
Customer deposits and collateral | | 319.9 | | 223.8 | |
Mark-to-market energy liabilities | | 756.1 | | 559.7 | |
Risk management liabilities | | 278.1 | | 304.3 | |
Deferred income taxes | | 207.7 | | 95.0 | |
Accrued expenses and other | | 477.1 | | 574.3 | |
Total current liabilities | | 3,951.4 | | 3,662.4 | |
Deferred Credits And Other Liabilities | | | | | |
Deferred income taxes | | 1,329.8 | | 1,303.3 | |
Asset retirement obligations | | 840.1 | | 825.0 | |
Mark-to-market energy liabilities | | 482.4 | | 315.0 | |
Risk management liabilities | | 1,064.0 | | 472.2 | |
Postretirement and postemployment benefits | | 376.7 | | 375.3 | |
Net pension liability | | 234.1 | | 269.7 | |
Deferred investment tax credits | | 69.4 | | 71.2 | |
Other | | 175.5 | | 232.0 | |
Total deferred credits and other liabilities | | 4,572.0 | | 3,863.7 | |
Long-Term Debt | | | | | |
Long-term debt of nonregulated businesses | | 3,792.4 | | 3,800.5 | |
Long-term debt of BGE | | 1,225.9 | | 1,245.9 | |
6.20% deferrable interest subordinated debentures due October 15, 2043 to BGE wholly owned BGE Capital Trust II relating to trust preferred securities | | 257.7 | | 257.7 | |
Unamortized discount and premium | | (9.7 | ) | (10.5 | ) |
Current portion of long-term debt | | (462.4 | ) | (480.4 | ) |
Total long-term debt | | 4,803.9 | | 4,813.2 | |
Minority Interests | | 92.5 | | 90.9 | |
BGE Preference Stock Not Subject To Mandatory Redemption | | 190.0 | | 190.0 | |
Common Shareholders’ Equity | | | | | |
Common stock | | 2,550.5 | | 2,502.6 | |
Retained earnings | | 2,487.6 | | 2,425.8 | |
Accumulated other comprehensive loss | | (9.9 | ) | (201.5 | ) |
Total common shareholders’ equity | | 5,028.2 | | 4,726.9 | |
Total Liabilities And Equity | | $ | 18,638.0 | | $ | 17,347.1 | |
Certain prior-period amounts have been reclassified to conform with the current period’s presentation.
Constellation Energy Group and Subsidiaries
Merchant Energy Operating Statistics (Unaudited)
| | Three Months Ended March 31, | |
| | | | | | | | Hydro & | | | | | |
| | Nuclear | | Coal | | Oil | | Gas | | Other | | Total | |
Generation by Fuel Type (%) | | | | | | | | | | | | | |
2005 | | 52.5 | | 33.1 | | 0.6 | | 11.9 | | 1.9 | | 100.0 | |
2004 | | 49.6 | | 36.9 | | 2.1 | | 9.6 | | 1.8 | | 100.0 | |
Utility Operating Statistics (Unaudited)
| | Three Months Ended | |
| | March 31, | |
| | 2005 | | 2004 | |
ELECTRIC | | | | | |
Revenues (In Millions) | | | | | |
Residential | —with househeating | | $ | 122.8 | | $ | 127.9 | |
| —other | | 140.1 | | 134.3 | |
| —total | | 262.9 | | 262.2 | |
Commercial | —excluding delivery service | | 176.1 | | 153.7 | |
| —delivery service | | 23.2 | | 16.6 | |
Industrial | —excluding delivery service | | 12.6 | | 37.1 | |
| —delivery service | | 5.9 | | 3.7 | |
System Sales | | 480.7 | | 473.3 | |
Other | | 10.8 | | 11.1 | |
Total | | $ | 491.5 | | $ | 484.4 | |
Sales (In Thousands) – MWH | | | | | |
Residential | —with househeating | | 1,833 | | 1,941 | |
| —other | | 1,893 | | 1,847 | |
| —total | | 3,726 | | 3,788 | |
Commercial | —excluding delivery service | | 2,142 | | 2,434 | |
| —delivery service | | 1,646 | | 1,129 | |
Industrial | —excluding delivery service | | 157 | | 679 | |
| —delivery service | | 736 | | 358 | |
Total System Sales | | 8,407 | | 8,388 | |
GAS | | | | | |
Revenues (In Millions) | | | | | |
Residential | —excluding delivery service | | $ | 214.3 | | $ | 212.7 | |
| —delivery service | | 9.5 | | 8.1 | |
| —total | | 223.8 | | 220.8 | |
Commercial | —excluding delivery service | | 66.9 | | 61.4 | |
| —delivery service | | 11.6 | | 11.1 | |
Industrial | —excluding delivery service | | 4.0 | | 4.1 | |
| —delivery service | | 2.8 | | 2.3 | |
System Sales | | 309.1 | | 299.7 | |
Off-System Sales | | 54.4 | | 17.5 | |
Other | | 2.3 | | 2.3 | |
Total | | $ | 365.8 | | $ | 319.5 | |
Sales (In Thousands) – DTH | | | | | |
Residential | —excluding delivery service | | 19,130 | | 20,174 | |
| —delivery service | | 2,749 | | 3,310 | |
| —total | | 21,879 | | 23,484 | |
Commercial | —excluding delivery service | | 6,762 | | 6,520 | |
| —delivery service | | 11,290 | | 11,458 | |
Industrial | —excluding delivery service | | 420 | | 413 | |
| —delivery service | | 4,270 | | 4,404 | |
System Sales | | 44,621 | | 46,279 | |
Off-System Sales | | 7,357 | | 2,436 | |
Total | | 51,978 | | 48,715 | |
Utility operating statistics do not reflect the elimination of intercompany transactions.
Heating Degree Days (Calendar-Month Basis)
Heating Degree Days | — Actual | | 2,532 | | 2,604 | |
| — Normal | | 2,442 | | 2,462 | |
Constellation Energy Group and Subsidiaries
Supplemental Financial Statistics (Unaudited)
| | Three Months Ended | |
| | March 31, | |
| | 2005 | | 2004 | |
Ratio of Earnings to Fixed Charges | | 2.70 | | 2.66 | |
| | | | | |
Effective Tax Rate | | 24.1 | % | 26.6 | % |
| | | | | |
Equity Investment In Nonregulated Businesses — End of Period | | $ | 3,419.0 | | $ | 2,789.0 | |
| | | | | |
Equity Investment In Regulated Business — End of Period | | $ | 1,609.2 | | $ | 1,488.7 | |
Common Stock Data
| | Three Months Ended | |
| | March 31, | |
| | 2005 | | 2004 | |
Common Stock Dividends - Per Share | | | | | |
—Declared | | $ | 0.335 | | $ | 0.285 | |
—Paid | | $ | 0.285 | | $ | 0.260 | |
| | | | | |
Market Value Per Share | | | | | |
—High | | $ | 53.55 | | $ | 41.47 | |
—Low | | $ | 43.01 | | $ | 38.52 | |
—Close | | $ | 51.70 | | $ | 39.95 | |
| | | | | |
Shares Outstanding—End of Period (In Millions) | | 177.4 | | 168.3 | |
| | | | | |
Book Value per Share—End of Period | | $ | 28.34 | | $ | 25.42 | |
