Exhibit 99
News release July 25, 2002
FOR IMMEDIATE RELEASE
Investor Contact: Bob Marshall, Conectiv (302) 429-3164
Media Contact: Tim Brown, Conectiv (302) 283-5803
CONECTIV REPORTS SECOND QUARTER 2002
EARNINGS OF $0.45 PER COMMON SHARE
Operating Earnings Increase 21%, Driven by
Asset-Backed Wholesale Energy Business
WILMINGTON, Del. - Conectiv (NYSE:CIV) today reported consolidated earnings per
Common Share for the three months ended June 30, 2002 from continuing operations
of $0.45. The current period financial results reflect a charge for the
impairment of subsidiary leverage lease portfolios and merger related expenses,
which reduced earnings per Common Share by $0.12 and $0.01, respectively.
Earnings per Common Share for the second quarter of 2001 were $3.09, which
included one-time gains for sales of base load power plants and the redemption
of a partnership interest in a cogeneration facility amounting to $2.62 and
merger related costs of $0.01 per Common Share.
Excluding these items, earnings were $0.58 per Common Share for the second
quarter of 2002, compared with earnings of $0.48 per Common Share for the second
quarter of 2001.
"Our second quarter 2002 results were very encouraging and clearly reinforce the
core energy strategy we have undertaken," said Howard E. Cosgrove, Chairman and
CEO of Conectiv. "Our asset-backed merchant energy capabilities and our stable
regulated energy delivery business continue to complement each other, and helped
to provide higher operating earnings this year despite relatively soft wholesale
energy prices," said Cosgrove.
For the six months ended June 30, 2002, consolidated earnings per Common Share
from continuing operations were $0.76, and include the impairment charges
discussed above, merger-related expenses of $0.02 and gains on power plant sales
of $0.11 per Common Share. Earnings per Common Share for the six months ended
June 30, 2001 from continuing operations were $3.63, which included the one-time
gains amounting to $2.62 discussed above and merger related expenses of $0.01.
Excluding these items, earnings were $0.79 per Common Share for the six months
ended June 30, 2002, compared with earnings of $1.02 per Common Share for the
same period in 2001.
CLASS A COMMON STOCK
Earnings per share of Class A Common Stock (NYSE:CIVA) for the three months
ended June 30, 2002 were $0.11, compared with earnings of $0.54 per Class A
Common Share for the same period
last year. For the six months ended June 30, 2002, earnings per Class A Common
Share were $(0.21), compared with $0.70 per Class A share for the same period in
2001.
Conectiv, a Fortune 500 company headquartered in Wilmington, DE, is focused on
two core energy businesses. Conectiv Power Delivery provides safe, reliable, and
affordable regulated energy delivery service to more than one million customers
in New Jersey, Delaware, Maryland, and Virginia. Conectiv Energy uses a
sophisticated power-trading unit in competitive energy markets to optimize the
value of a growing portfolio of "mid-merit" power plants that can start and stop
quickly in response to changes in the demand for power within the PJM
[Pennsylvania-New Jersey-Maryland] power pool.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 (the "Litigation Reform
Act") provides a "safe harbor" for forward-looking statements to encourage such
disclosures without the threat of litigation, provide 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 statements. Forward-looking
statements have been made in this Press Release. Such statements are based on
beliefs of Conectiv's management ("Management") as well as assumptions made by
and information currently available to Management. When used herein, the words
"will," "anticipate," "estimate," "expect," "objective," 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 actual results to differ
materially from those contemplated in any forward-looking statements include,
among others, the following: deregulation of energy supply; the unbundling of
delivery services; and increasingly competitive and volatile energy marketplace;
results of any asset dispositions; sales retention and growth; the effects of
weather; federal and state regulatory actions; future litigation results; cost
of construction; operating restrictions; increased costs and construction delays
attributable to environmental regulations; and credit market concerns. Conectiv
undertakes no obligation to publicly update or revise any forward-looking
statements, 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 admission regarding the adequacy of disclosures
made prior to the effective date of the Litigation Reform Act.
More
CONECTIV
(Dollars in Thousands, except per share amounts)
(Unaudited)
THREE MONTHS ENDED
JUNE 30,
--------------------------
2002 2001
----------- -----------
Operating Revenues $ 1,100,220 $ 1,698,577
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Operating Income $ 99,290 $ 428,701
----------- -----------
Income from Continuing Operations $ 37,487 $ 258,808
Loss From Discontinued Telecommunications Operation $ -- $ (121,473)
----------- -----------
Net Income $ 37,487 $ 137,335
=========== ===========
Earnings (loss) applicable to:
Common stock
Continuing operations $ 36,884 $ 255,682
Discontinued telecommunication operations -- (121,473)
Class A common stock 603 3,126
----------- -----------
$ 37,487 $ 137,335
=========== ===========
Average shares outstanding (000)
Common stock 82,704 82,704
Class A common stock 5,742 5,742
Earnings (loss) per average share--basic and diluted
Common stock
Continuing operations $ 0.45 $ 3.09
Discontinued telecommunication operations $ -- $ (1.47)
Class A common stock $ 0.11 $ 0.54
Dividends declared per share
Common stock $ 0.22 $ 0.22
Class A common stock $ 0.25 $ 0.25
NOTES:
Effective January 1, 2002, Conectiv implemented Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS No.
142). As a result of implement SFAS No. 142, goodwill is no longer amortized
beginning in 2002. For the second quarter of 2001, income from continuing
operations, net income, and earnings from continuing operations per share of
common stock include charges of approximately $2.0 million, $2.0 million, and
$0.03, respectively, for amortization of goodwill. For the six months ended June
30, 2001, income from continuing operations, net income, and earnings from
continuing operations per share of common stock include charges of approximately
$4.1 million, $4.1 million, and $0.05, respectively for amortization of
goodwill.
Due to an impairment charge related to Conectiv's investment in leveraged
leases, operating income, after-tax income, and earnings per share of common
stock for the three and six months ended June 30, 2002, were reduced by $17.6
million, $10.1 million, and $0.12, respectively.
For the six months ended June 30, 2002, operating revenues and operating income
increased $15.8 million, after-tax income increased $9.4 million, and earnings
from continuing operations increased $0.11 per share of common stock due to an
increase in the gain on the June 2001 sales of fossil fuel-fired electric
generating plants, primarily attributed to an agreement reached in March 2002
for insurance proceeds related to environmental clean-up costs for a plant
included in the sales.
For the three and six months ended June 30, 2001, operating revenues and
operating income increased $297.1 million, after-tax income increased $175.0
million, and earnings from continuing operations increased $2.12 per share of
common stock due to a gain from the sale of electric generating plants.
For the three and six months ended June 30, 2001, operating income increased
$73.0 million, after-tax income increased $41.4 million, and earnings from
continuing operations increased $0.50 per share of common stock due to
recognition of a previously deferred gain related to termination of a purchased
power contract.
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.
Conectiv has not completed its evaluation of the financial statement
reclassification required by EITF 02-3. However, Conectiv believes that the
implementation of EITF 02-3, because of financial statement line item changes,
likely will: (i) materially decrease Conectiv's gross revenues and revenue
growth; (ii) result in higher gross margins as a percentage of gross revenues;
and (iii) have no impact on its overall financial position or earnings. For the
year ended December 31, 2001, Conectiv's commodity trading gross revenues were
approximately $1.9 billion; Conectiv expects that a substantial portion of these
revenues would be eliminated in the reclassification.