UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 30, 2001
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission file number 1-3559
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Conectiv Savings and Investment Plan
800 King Street
P.O. Box 231
Wilmington, DE 19899
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Baron Asset Fund International Stock Fund
Baron Capital Group T. Rowe Price Associates, Inc.
767 Fifth Avenue 100 East Pratt Street
New York, NY 10153 Baltimore, MD 21202
Vanguard 500 Index Fund Conectiv Class A Common Stock Fund
The Vanguard Group Conectiv
P.O. Box 2600 800 King Street
Valley Forge, PA 19482 Wilmington, DE 19899-0231
Vanguard Growth and Income Fund Conectiv Common Stock Fund
The Vanguard Group Conectiv
P.O. Box 2600 800 King Street
Valley Forge, PA 19482 Wilmington, DE 19899-0231
Vanguard LifeStrategy Growth Fund Vanguard LifeStrategy Moderate Growth Fund
The Vanguard Group The Vanguard Group
P.O. Box 2600 P.O. Box 2600
Valley Forge, PA 19482 Valley Forge, PA 19482
Vanguard PRIMECAP Fund Vanguard Total Bond Market Index Fund
The Vanguard Group The Vanguard Group
P.O. Box 2600 P.O. Box 2600
Valley Forge, PA 19482 Valley Forge, PA 19482
Vanguard Windsor II Fund Vanguard Retirement Savings Trust
The Vanguard Group The Vanguard Group
P.O. Box 2600 P.O. Box 2600
Valley Forge, PA 19482 Valley Forge, PA 19482
Conectiv Stable Value Fund
Conectiv
800 King Street
Wilmington, DE 19899-0231
CONECTIV SAVINGS
AND INVESTMENT PLAN
Financial Statements as of and for the
years ended December 30, 2001 and 2000
Additional information required for Form 5500
for the year ended December 30, 2001
CONECTIV SAVINGS AND INVESTMENT PLAN
Table of Contents
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Page Number
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Report of Independent Accountants 1
Basic Financial Statements
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4 - 8
Additional Information *
Schedule I - Schedule of Assets (Held at End of Year) 9
Signature 10
* Other supplemental schedules required by Section 2520.103-10 of the Department
of Labor Rules and Regulations for Reporting and Disclosure under ERISA have
been omitted because they are not applicable.
Report of Independent Accountants
To the Participants and Administrator of
Conectiv Savings and Investment Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of Conectiv Savings and Investment Plan (the "Plan") at December 30, 2001 and
2000, and the changes in net assets available for benefits for the years then
ended in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental schedule is the responsibility of the Plan's management. The
supplemental schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
June 13, 2002
1
CONECTIV SAVINGS AND INVESTMENT PLAN
Statements of Net Assets Available for Benefits
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As of December 30,
2001 2000
-----------------------------------------
Investments, at fair value
Registered investment companies:
Baron Asset Fund $ 4,827,177 $ 6,727,806
T. Rowe Price International Funds, Inc. 2,703,196 3,566,456
Vanguard 500 Index Fund * 30,225,380 * 36,436,337
Vanguard Growth and Income Fund * 87,335,893 * 107,921,466
Vanguard LifeStrategy Growth Fund 1,262,268 1,383,216
Vanguard LifeStrategy Moderate Growth Fund 5,127,455 5,561,446
Vanguard Mid-Cap Index Fund 1,092,454 -
Vanguard PRIMECAP Fund * 18,049,564 * 21,033,631
Vanguard Small-Cap Index Fund 571,894 -
Vanguard Total Bond Market Index Fund * 29,739,549 * 27,217,464
Vanguard Value Index Fund Investor Shares 654,794 -
Vanguard Windsor II Fund 2,223,342 1,968,712
-----------------------------------------
183,812,966 211,816,534
Conectiv Inc. Stable Value Fund * 19,331,945 * 20,179,895
Vanguard Retirement Savings Trust 11,428,415 7,835,695
Conectiv Class A Common Stock Fund 19,488 21,486
Conectiv Common Stock Fund * 58,107,714 * 48,209,080
Conectiv Class A ESOP Stock Fund 659,712 435,866
Conectiv PAYSOP Stock Fund * 21,775,162 * 19,295,328
Participant Loans 5,435,952 6,174,087
-----------------------------------------
Total investments 300,571,354 313,967,971
-----------------------------------------
Receivables
Employer's contributions 122,037 290,556
Participants' contributions 375,661 931,843
Dividend receivables 291,933 286,473
-----------------------------------------
Total receivables 789,631 1,508,872
-----------------------------------------
Net assets available for benefits $ 301,360,985 $ 315,476,843
=========================================
* Represents 5% or more of net assets available for benefits.
The accompanying notes are an integral part of the financial statements.
2
CONECTIV SAVINGS AND INVESTMENT PLAN
Statements of Changes in Net Assets Available for Benefits
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Year Ended December 30,
2001 2000
------------------------------
Additions
Investment income:
Interest and dividend income, investments $ 8,932,730 $ 15,752,937
Interest income, participant loans 515,700 573,551
Net depreciation in fair value of investments (6,528,543) (11,708,067)
------------------------------
2,919,887 4,618,421
------------------------------
Contributions:
Employer 3,366,755 3,843,458
Participants 10,999,808 12,813,249
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14,366,563 16,656,707
------------------------------
Total additions 17,286,450 21,275,128
------------------------------
Deductions
Payment of benefits 29,805,900 29,409,315
Asset transfers out 1,596,408 -
------------------------------
Total deductions 31,402,308 29,409,315
------------------------------
Net decrease (14,115,858) (8,134,187)
Net assets available for plan benefits:
Beginning of year 315,476,843 323,611,030
------------------------------
End of year $ 301,360,985 $ 315,476,843
==============================
The accompanying notes are an integral part of the financial statements.
3
CONECTIV SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
NOTE 1 - DESCRIPTION OF PLAN
The following description of the Conectiv Savings and Investment Plan, a defined
contribution plan, (the "Plan") provides only general information. Participants
should refer to the Plan document for a more comprehensive description of the
Plan's provisions. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
General
On March 1, 1998, Atlantic Energy, Inc., the former parent company of Atlantic
City Electric Company, and Delmarva Power & Light Company consummated a merger
transaction to form Conectiv (the "Merger"). As a consequence of the Merger, the
Plan was renamed from Delmarva Power & Light Company Savings and Thrift Plan and
the Atlantic Electric 401(k) Savings and Investment Plan - A (Management) to
Conectiv Savings and Investment Plan effective July 1, 1998. In addition, the
Employee Stock Ownership Plan ("ESOP") Accounts in the Plan result from the
merger, as of November 1, 1998, of Delmarva Power & Light Company Payroll Based
Employee Stock Ownership Plan and the Atlantic City Electric Company Employee
Stock Ownership Plan with the Plan.
Contributions
Eligible employees, as defined by the Plan document, of Conectiv and
subsidiaries (the "Company") may participate in the Plan. Participants may
contribute from 1% to 20% of their base pay, with the Company contributing a
matching amount equal to 50% of each participant's contributions up to 6% of the
participant's base pay of any participant who is a Non-Bargaining Unit Employee
or up to 5% of the base pay of any participant who is a Local 1238a Employee or
a Local 1307a Employee. The Company may make its matching contribution, either
by contribution of cash to purchase the Company's common stock or newly issued
or purchased shares of the Company's common stock. The Plan includes a 401(k)
option, which allows participants to defer income taxes on their before-tax
contributions until such contributions and earnings are withdrawn from the Plan.
Participants may elect to contribute on an after-tax or before-tax basis and to
invest their contributions among the investment funds at their discretion, in
increments of 5%. Dividends earned on the Company common stock invested for the
benefit of participants is reinvested in Company common stock, which may, at the
Company's option, be purchased by the Plan trustee on the open market or from
the Company. A participant who is at least 55 years old with at least 10 years
of service and who has been a participant of the Plan and/or prior Plans for 5
years may direct a percentage of his common stock balance, with certain
limitations, to be transferred to any investment fund or funds available.
Participant Accounts
Each participant's account is credited with the participant's contribution, the
Company's contribution, and an allocation of Plan earnings. Allocations are
based on participant account balances, as defined in the Plan.
Vesting
Upon enrollment in the Plan, participants are fully vested at all times in all
amounts held in their accounts.
Participant Loans
The Plan allows participants to obtain loans from their individual accounts.
Participants may borrow up to 50% of their account balance subject to a minimum
loan of $1,000 and a maximum of $50,000. Loans have terms from one to five years
and bear interest at the average rate charged by at least three financial
institutions selected by the Plan Committee for comparable loans, originating on
the first business day of the month in which the Plan loan is made, ranging
between 7.4% and 10.3% at December 30, 2001. Principal
4
CONECTIV SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
and interest is paid ratably through payroll deductions or by prepayment in a
lump sum. A participant may not have more than two loans outstanding at any
time. A participant may pre-pay a loan at any time without penalty. A
participant's loan is repayable within a maximum of five years or immediately
upon termination of employment. Loans are secured by a lien on the participant's
interest in the Plan.
Payment of Benefits
If a participant retires, dies, becomes permanently disabled, or otherwise
separates from the Company, the participant or participant's beneficiary is
entitled to the full amount of his account as valued on the applicable valuation
date. In the event of a participant's death, distribution of his account will be
made as soon as administratively practicable upon the receipt of appropriate
documentation from his designated beneficiary. Distributions for reasons of
retirement, permanent disability or termination will be made upon written
request. Distributions of a participant's account may be made in (1) a lump sum
cash payment (2) in regular installments for a period not exceeding the joint
and survivor life expectancy of the participant and his or her spouse or other
beneficiary (3) partial lump sums upon the request of the Participant, with
certain limitations stated in the Plan. Distributions from the Conectiv Class A
ESOP Stock Fund and the Conectiv PAYSOP Stock Fund may be made in Company stock
or cash. Deferrals of distributions cannot be made past the age of 70 1/2.
While employed, a participant may make certain withdrawals upon written notice
of basic and supplemental contributions for the reason of financial hardship, as
defined in the Plan. Hardship withdrawals must be approved by the Committee. At
the age of 59 1/2, the participant may withdraw any portion of his basic and
supplemental contribution amounts.
Before-tax contributions, Company matching and supplemental contributions, and
all investment earnings are fully taxable upon distribution to the participant.
Special lump-sum distribution rules apply for full plan withdrawals made after
age 59 1/2. A 10% surtax, as well as a 20% mandatory withholding, is applicable
to taxable withdrawals and distributions prior to age 59 1/2, subject to certain
exceptions.
A participant with less than 60 months of Plan participation will incur a
six-month suspension period upon making any withdrawal of the participant's
after-tax contributions. During the suspension period, no matching contributions
will be credited to the participant's account. Participants with 60 or more
months of Plan participation will incur a six-month suspension of Company
contributions when any part of the Company contributions are withdrawn. After
making a hardship withdrawal of before-tax contributions, a participant is
prohibited from making contributions or receiving Company matching contributions
for a period of one year.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time subject to the
provisions of ERISA.
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
The following accounting policies, which conform with accounting principles
generally accepted in the United States of America, have been used consistently
in the preparation of the Plan's financial statements:
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of
accounting.
5
CONECTIV SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of additions and deductions
during the reporting period. Actual results could differ from those estimates.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value, except for investment
contracts, which are valued at contract value. Common stock is valued at quoted
market prices. Shares of registered investment companies are valued at quoted
market prices, which represent the net asset value of shares held by the Plan at
year-end. Shares of collective trust funds are valued at net asset value.
Participant loans are valued at cost, which approximates fair value.
Purchases and sales of investments are recorded on a trade-date basis. Interest
income is accrued when earned. Dividend income is recorded on the ex-dividend
date. Capital gain distributions are included in dividend income.
Payment of Benefits
Benefits are recorded when paid.
Reclassification
Certain prior year amounts have been reclassified to conform to the current year
presentation.
NOTE 3 - INVESTMENT CONTRACTS
The Plan invests in investment contracts through the Conectiv Inc. Stable Value
Fund (the "Fund") and the Vanguard Retirement Savings Trust (the "Trust"). The
Fund consists of guaranteed investment contracts with a value of $3,852,705,
with two insurance companies ("Issuers"). Additionally, the Fund currently holds
units of the Trust, a common / collective trust sponsored by Vanguard Fiduciary
Trust Company ("VFTC") with a value of $15,572,856. The Fund is credited with
earnings on the underlying investments and charged for Plan withdrawals and
administrative expenses charged by the Issuers. The investment contracts
included in the Fund are carried at contract value, which approximates fair
value, because the contracts are fully benefit responsive. The Fund also
included income payable in the amount of $93,616. The crediting interest rates
of the investment contracts ranged from 5.84% - 6.15% at December 30, 2001.
There are no reserves required against contract value for credit risk of the
contract issuer or otherwise. The Fund was created by Vanguard for the Plan to
account for its investments in investment contracts and intends to maintain a
constant net asset value of $1.00 per unit. As the existing contracts mature,
the proceeds are invested in the Trust.
The Trust is a tax-exempt collective trust registered in the State of
Pennsylvania, which invests primarily in investment contracts issued by
insurance companies and commercial banks, and similar types of fixed-principal
investments. The Fund intends to maintain a constant net asset value of $1.00
per unit.
6
CONECTIV SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
NOTE 4 - NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the components of and the significant changes in net assets
relating to the Plan's nonparticipant-directed investments are as follows:
December 30,
2001 2000
Conectiv Class A Common Stock Fund $ 19,488 $ 21,486
Conectiv Common Stock Fund 58,107,714 48,209,080
Conectiv Class A ESOP Stock Fund 659,712 435,866
Conectiv PAYSOP Stock Fund 21,775,162 19,295,328
Conectiv, Inc. Stable Value Fund 19,331,945 20,179,895
----------- -----------
$99,894,021 $88,141,655
=========== ===========
Year ended
December 30,
2001 2000
Changes in net assets:
Contributions 3,909,172 $ 3,707,850
Interest and dividend income 4,162,267 4,265,243
Net appreciation in fair value of investments 14,652,685 10,490,325
Benefits paid to participants (10,180,227) (6,804,263)
Transfers to participant-directed investments (459,473) (1,923,607)
NOTE 5 - INVESTMENTS
During 2001 and 2000, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
(depreciated) in value as follows:
For the Year Ended
2001 2000
Registered Investment Companies $(21,181,228) $(22,198,392)
Common Stock 14,652,685 10,490,325
------------ ------------
$ (6,528,543) $(11,708,067)
============ ============
NOTE 6 - RELATED PARTY TRANSACTIONS
The Plan invests in shares of mutual funds managed by an affiliate of VFTC. VFTC
acts as trustee for Plan assets. Transactions in such investments qualify as
party-in-interest transactions, which are exempt from the prohibited transaction
rules.
7
CONECTIV SAVINGS AND INVESTMENT PLAN
Notes to Financial Statements
NOTE 7 - PLAN EXPENSES
All expenses incurred in the administration of the Plan are paid by the Company.
NOTE 8 - TAX STATUS
The Internal Revenue Service had determined and informed the Company by letter
dated October 27, 1995 that the Plan was qualified under Internal Revenue Code
("IRC") Section 401(a). The Plan had subsequently been amended and restated
since receiving the determination letter. The Plan has filed an application for
a new determination letter, which is currently pending. However, the Company
believes the Plan is designed and is currently being operated in compliance with
the applicable requirements of the IRC.
NOTE 9 - SUBSEQUENT EVENT
On February 9, 2001, the Boards of Directors of Conectiv and Potomac Electric
Power Company (Pepco) approved an Agreement and Plan of Merger (the "Merger")
under which Pepco will acquire Conectiv for a combination of cash and stock and
Conectiv and Pepco will become wholly-owned subsidiaries of Pepco Holdings, Inc.
Under the Merger, holders of Conectiv common stock and Conectiv Class A common
stock may elect to exchange their shares for cash, Pepco Holdings, Inc. common
stock, or a combination of cash and Pepco Holdings, Inc. common stock.
Management currently expects the Merger to close in the third quarter of 2002,
subject to timely receipt of various statutory and regulatory approvals.
8
Additional Information
Required for Form 5500
CONECTIV SAVINGS AND INVESTMENT PLAN Schedule I
Schedule of Assets (Held at End of Year)
As of December 30, 2001
Conectiv Savings and Investment Plan, EIN 51-0377417, Plan #002
Attachment to Form 5500, Schedule H, Line 4i
Identity of Issue Investment Type Cost Current Value
- ------------------------------------------------------------------------------------------------------------------------------------
Baron Asset Fund Registered Investment Company $ 5,679,363 $ 4,827,177
T. Rowe Price International Funds, Inc. Registered Investment Company 3,821,202 2,703,196
* Vanguard 500 Index Fund Registered Investment Company 28,661,749 30,225,380
* Vanguard Growth and Income Fund Registered Investment Company 76,848,271 87,335,893
* Vanguard LifeStrategy Growth Fund Registered Investment Company 1,402,916 1,262,268
* Vanguard LifeStrategy Moderate Growth Fund Registered Investment Company 5,343,477 5,127,455
* Vanguard Mid-Cap Index Fund Registered Investment Company 1,034,715 1,092,454
* Vanguard PRIMECAP Fund Registered Investment Company 20,358,999 18,049,564
* Vanguard Small-Cap Index Fund Registered Investment Company 547,995 571,894
* Vanguard Total Bond Market Index Fund Registered Investment Company 28,830,447 29,739,549
* Vanguard Value Index Fund Investor Shares Registered Investment Company 695,746 654,794
* Vanguard Windsor II Fund Registered Investment Company 2,401,789 2,223,342
* Vanguard Retirement Savings Trust Common/Collective Trust 27,001,271 27,001,271
* Conectiv Common Stock 57,109,783 79,882,876
* Conectiv Common Stock, Class A 714,165 679,200
Conectiv Savings and Investment Plan Participant loans (7.42% - 10.29%) 5,435,952 5,435,952
Canada Life 6.15%, 2/15/2002 Unallocated Insurance Contract 1,975,075 1,975,075
Life of Virginia 5.84%, 5/15/2001 Unallocated Insurance Contract 1,877,630 1,877,630
-----------------------------------
Total $ 269,740,545 $ 300,664,970
===================================
* Party in Interest
9
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
Conectiv Savings and Investment Plan
Date: June 25, 2002 /s/ John C. van Roden
----------------------------------------
John C. van Roden, Senior Vice President
and Chief Financial Officer
10