-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P3GUyBPYbs3eKpS4kWmPSG5tX/aizNaveyr+KpGB6ZjTwQbUfNI33P4cnl6RmXWP TYv2CcDok6mhRfUe7XIe6Q== 0000893220-00-000079.txt : 20000203 0000893220-00-000079.hdr.sgml : 20000203 ACCESSION NUMBER: 0000893220-00-000079 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000118 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONECTIV CENTRAL INDEX KEY: 0001029590 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 510377417 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13895 FILM NUMBER: 516944 BUSINESS ADDRESS: STREET 1: 800 KING STREET P O BOX 231 CITY: WILMINGTON STATE: DE ZIP: 19899 BUSINESS PHONE: 3024293114 MAIL ADDRESS: STREET 1: 800 KING ST STREET 2: P O BOX 231 CITY: WILMINGTON STATE: DE ZIP: 19899 8-K 1 CONECTIV, INC. FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): January 18, 2000 Commission Registrant, State of Incorporation I.R.S. Employer File Number Address and Telephone Number Identification Number 1-13895 Conectiv 51-0377417 (a Delaware Corporation) 800 King Street P.O. Box 231 Wilmington, Delaware 19899 Telephone: (302) 429-3114 2 ITEM 5. OTHER EVENTS. Sale of Fossil Fuel-Fired Electric Generating Plants - ---------------------------------------------------- As previously reported, Conectiv (the "Company") subsidiaries, Atlantic City Electric Company ("ACE") and Delmarva Power & Light Company ("DPL"), conducted an auction for the sale of the interests of ACE and DPL in non-strategic baseload fossil fuel-fired electric generating plants. On January 19, 2000, Conectiv announced that ACE and DPL had reached agreement to sell their respective interests in four wholly-owned and two-jointly owned fossil fuel-fired electric generating plants to NRG Energy, Inc., together with related assets and properties, for aggregate cash consideration of $800 million, subject to adjustment based on variances in the value of fuel and material inventories at the closing and certain capital expenditures. As a result of the agreement, subject to satisfaction of certain conditions, interests in the following fossil-fuel fired generating plants will be sold: o Indian River Station, a wholly-owned 784 MW coal- and oil-fired generating plant located in Sussex County, Delaware; o Vienna Station, a wholly-owned DPL 170 MW oil-fired generating plant located in Vienna, Maryland; o B.L. England Station, a wholly-owned ACE 447 MW coal- and oil-fired generating plant located in Cape May County, New Jersey; o Deepwater Station, a wholly-owned ACE 239 MW coal-, oil- and natural gas-fired generating plant located in Salem County, New Jersey; o 6.17 percent interest of ACE and DPL in Keystone Station, a jointly-owned coal-fired generating plant located in Shelocta, Pennsylvania; and o 7.55 percent interest of ACE and DPL in Conemaugh Station, a jointly owned coal-fired generating plant located in New Florence, Pennsylvania. Consummation of the sale is subject to the satisfaction of certain conditions, including expiration of the applicable waiting period under the Hart-Scott-Rodino 3 Antitrust Improvements Act of 1976, as amended, and receipt of other required regulatory approvals. The sale is expected to be completed during the third quarter of 2000. On January 19, 2000, Conectiv issued a press release related to the sale of the generating plants, a copy of which has been filed as an exhibit to this report and is incorporated by reference herein. * * * * * ACE's agreement for the sale of non-strategic baseload fossil fuel-fired electric generating plants to NRG Energy, Inc. resulted in an adjustment to the extraordinary item initially estimated and recorded in the third quarter of 1999 for discontinuing application of Statement of Financial Accounting Standards No. 71, "Accounting for the Effects of Certain Types of Regulation," to ACE's electric supply business. As a result, ACE recorded an extraordinary loss of $40.6 million, net of income taxes, in the fourth quarter of 1999. * * * * * On January 26, 2000, Conectiv issued a press release related to its earnings report for the fiscal year ended December 31, 1999, a copy of which has been filed as an exhibit to this report and is incorporated by reference herein. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. o Exhibits. 99.1 Press release issued by Conectiv dated January 19, 2000, related to the sale of fossil fuel-fired electric generating plants. 99.2 Press release issued by Conectiv dated January 26, 2000, related to earnings report for the fiscal year ended December 31, 1999. 4 SIGNATURE 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 hereunto duly authorized. CONECTIV By: /s/ Philip S. Reese -------------------------------- Philip S. Reese Vice President and Treasurer January 31, 2000 5 EXHIBIT INDEX EXHIBIT DESCRIPTION PAGE NUMBER 99.1 Press Release issued by Conectiv dated January 19, 2000, related to the sale of fossil fuel-fired electric generating plants. 99.2 Press release issued by Conectiv dated January 26, 2000, related to earnings report for the fiscal year ended December 31, 1999. EX-99.1 2 PRESS RELEASE DATED JANUARY 19, 2000 1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE January 19, 2000 For information, contact: Tim Brown, Conectiv, (302) 452-6496 Investor Contact: Bob Marshall, Conectiv (302) 429-3114 CONECTIV TO SELL POWER PLANTS TO NRG ENERGY, REPURCHASE SHARES Conectiv Expands `Mid-Merit' Investment WILMINGTON, DE -- Conectiv (NYSE: CIV), an energy and vital services provider serving the Mid-Atlantic region, today announced that it has signed an agreement to sell 1,875 megawatts of fossil-fired generation and related assets to NRG Energy of Minneapolis, a subsidiary of Northern States Power Company, for $800 million. "Conectiv will continue to provide safe and reliable electric service to our customers," said Howard E. Cosgrove, Conectiv CEO. "We will do so by generating electricity from power plants we continue to own and by purchasing power as we have always done. We have taken steps to ensure that electricity will continue to be available to our customers." Cosgrove also noted that, at closing, a power purchase agreement between Delmarva Power & Light Company (DPL), a Conectiv subsidiary, and NRG will commence. The agreement will help DPL satisfy its obligation to provide electricity under Delaware and Maryland restructuring laws. Conectiv will use proceeds from the sale for debt repayment, repurchases of common stock and new investments that are in line with the company's corporate growth objectives, including further expanding its mid-merit generation business. Separately, Conectiv announced the Board of Directors' approval on January 17 of an additional 5 million share, open market common stock repurchase program. "As we execute growth opportunities in the merchant generation business, we will also have the opportunity to repurchase shares from time to time," said Cosgrove. "The sale takes Conectiv closer to achieving its goal of exiting baseload and nuclear generation and focusing on more growth-oriented areas of the energy markets," said Cosgrove. Conectiv continues to own about 2,000 megawatts of mid-merit and peaking capacity with an additional 650 megawatts of mid-merit generation expected to be phased into service over the next few years. Conectiv is also evaluating other opportunities to add capacity to its already strong position in the regional merchant generation market, Cosgrove said. (more) 2 Page 2 of 3 Cosgrove said, "The new $300 million gas-fired Hay Road plant that Conectiv plans to build in New Castle County, Delaware is a tangible sign of the fact that Conectiv intends to stay in the generation business. We are simply going to participate in the segment of the electric generation market in which we believe we can be most successful as greater competition takes hold in the industry," he said. Specifically, the sale reflects Conectiv's previously announced business strategy to concentrate on the "mid merit" segment of the generation industry. The mid-merit market is composed of power plants that can come on line quickly and produce electricity when demand is high, then turn off quickly when demand drops. In addition, the majority of the Conectiv units can use multiple fuels, which can be selected for use based on price and availability. Typically, mid-merit plants have fixed non-fuel operating and maintenance costs that are less than baseload units. Concentrating on such flexible power plants is expected to give Conectiv a competitive advantage in this niche segment of the burgeoning wholesale power market. Last year, the company also announced that it has entered into agreements for the sale of its interests in nuclear generating facilities, thereby substantially eliminating all of its nuclear liability. Conectiv will retain ownership of generation plants it considers to be strategic. The generating facilities included in today's sale announcement are: o B.L. England, a 447 MW coal- and oil-fired facility located in Cape May County, N.J.; o Deepwater, a 239 MW coal-, oil-, and natural gas-fired station located in Salem County, N.J.; o Indian River, a 784 MW coal-and oil-fired station located in Sussex County, Del.; o Vienna Station, a 170 MW oil-fired facility located in Vienna, Md.; o 6.17 percent interest (106 MW) in the coal-fired Keystone Station located in Shelocta, Pa.; and o 7.55 percent interest (129 MW) in the coal-fired Conemaugh Station located in New Florence, Pa. Subject to the receipt of required regulatory approvals, including expiration of the applicable waiting period under the Hart-Scott-Rodino Act, the sale is expected to close during the third quarter of 2000. "We will be working with state and federal regulators to obtain their approvals so that we can complete the sale in a timely manner," Cosgrove said. "NRG is a proven performer in the operation, both domestically and abroad, of electric generation assets," Cosgrove said. "We will be working closely with them in the coming months to maximize opportunities for our employees, and also to ensure a smooth transition for the communities in which our power plants are located. Industry-wide, incumbent employees have fared well when electric power plants are sold. A skilled workforce was a key selling point in this transaction," he said. (more) 3 Page 3 of 3 Conectiv, headquartered in Wilmington, Del., provides regulated electric and natural gas utility services and is also engaged in telecommunications and other non-regulated activities. Conectiv serves more than one million customers in New Jersey, Delaware, Maryland, Virginia and Pennsylvania. NAVIGANT CONSULTING, INC. AND CREDIT SUISSE FIRST BOSTON ADVISED CONECTIV ON THE SALE. Navigant Consulting, Inc. (NYSE: NCI) is a global management consulting firm that provides strategic, financial, management, and expert services to energy-based, network, and other regulated industries. Credit Suisse First Boston, a leading global investment banking firm that provides comprehensive financial advisory, capital raising, and financial products for users and suppliers of capital around the world, also advised Conectiv in the sales process. The firm is wholly owned by the Zurich, Switzerland-based Credit Suisse Group. 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, provided 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 statement. Forward-looking statements have been made in this Press Release. Such statements are based on beliefs of Conectiv's (the "Company'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 and telecommunications; the unbundling of delivery services; and increasingly competitive energy and telecommunications marketplace; results of any asset dispositions; sales retention and growth; federal and state regulatory actions; future litigation results; cost of construction; operating restrictions; increased costs and construction delays attributable to environmental regulations; nuclear decommissioning and the availability of reprocessing and storage facilities for spent nuclear fuel; and credit market concerns. The Company 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. ###www.conectiv.com### EX-99.2 3 PRESS RELEASE DATED JANUARY 26, 2000 1 news release Exhibit 99.2 [LOGO] For Immediate Release January 26, 2000 Contact: Bob Marshall, Investor Relations, 302-429-3114 Ted Caddell, Public Affairs, (302) 429-3264 CONECTIV REPORTS 13% INCREASE IN 1999 EARNINGS PER SHARE BEFORE NONRECURRING CHARGES WILMINGTON, Del. - Conectiv (NYSE: CIV) reported unaudited earnings for the twelve months ended December 31, 1999 of $1.89 per Common Share, before extraordinary and special charges. Earnings were $1.68 per Common Share for the twelve months ended December 31, 1998, before employee separation and other merger related charges . Consolidated revenues for the twelve months ended December 31, 1999, were $3,744.9 million, compared with $3,071.6 million for the twelve months of 1998. The improvement in 1999 earnings before extraordinary charges was due to higher energy-related earnings as a result of higher sales and the success of Conectiv's deregulated mid-merit merchant energy business. Higher investment income also contributed to the increased earnings. Offsetting these were the effects of New Jersey electric rate reductions, higher expenses associated with Conectiv's telecommunications subsidiary, Conectiv Communications (CCI), and higher interest expense. "Overall, 1999 was a year of great accomplishment for Conectiv," said Howard E. Cosgrove, Chairman, President and CEO.. "In addition to the improved earnings this year, we are on track with the financial and strategic initiatives we announced last May. The repositioning of Conectiv's generation portfolio, through our recently announced sale of nonstrategic baseload fossil assets to NRG Energy, as well as our financial recapitalization and our focus on the mid merit generation business, puts us in a good position to grow in the new millenium," said Cosgrove. After extraordinary and special charges, Conectiv recognized a loss in 1999 of $188.5 million, or $2.02 per Common Share.. The loss is due to one time nonrecurring charges of $364.9 million or $3.91 per Common Share for electric industry restructuring and special charges attributable to writedowns of goodwill and leveraged leases. (more) 2 news release Fourth Quarter - -------------- Earnings for the fourth quarter of 1999, before extraordinary charges, were $0.19 per Common Share, compared with earnings of $0.24 per Common Share for the fourth quarter of 1998. Consolidated Revenues for the fourth quarter of 1999 were $915.4 million, compared to $871.5 million for the fourth quarter of 1998. After extraordinary charges of $29.5 million or $0.34 per Common Share associated with the writedown of a certain generating asset, Conectiv reported a loss for the fourth quarter of 1999 of $0.15 per Common Share. The decrease in 1999 fourth quarter earnings, before extraordinary charges, is due to lower utility earnings as a result of electric restructuring in New Jersey and Delaware, higher CCI expenses, higher customer service costs relating to billing conversions and Year 2000 compliance, offset by investment income. The fourth quarter of 1998 also included a nonrecurring gain from unregulated generation investments. "Our progress in our unregulated businesses is encouraging and moving ahead generally as we expected," said Mr. Cosgrove. "Our mid merit energy business, which currently includes 2,000 megawatts of primarily gas-fired generation, is operationally flexible and less capital intensive, and will create good returns for us in the regional competitive energy markets," said Mr. Cosgrove. "Despite a disappointing loss in 1999, CCI revenues have grown over 200% to $36 million in 1999, and our continued expansion of the CCI network and facilities throughout the region will provide opportunities for greater shareholder value in the rapidly growing telecommunications market ," Mr. Cosgrove said. Conectiv recently announced plans to sell its 1,874 megawatts of base load fossil generation assets and associated transmission assets to NRG Energy for $800 million. The sale is subject to the receipt of regulatory approvals and is expected to be completed by the end of the third quarter of 2000. Proceeds from the sale will be used for debt retirement, additional Common Stock repurchases and further investment in mid merit merchant energy plants. Conectiv had previously announced in September 1999 the sale of its 708 megawatts of nuclear generation to Public Service Electric and Gas Company and PECO Energy. Conectiv provides vital products and services such as energy, energy consulting, heating and cooling and telecommunications to homes and businesses in the mid-Atlantic region. 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 statement. Forward-looking statements have been made in this Press Release. Such statements are based on beliefs of Conectiv's (the "Company'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 (more) 3 news release following: deregulation of energy supply and telecommunications; the unbundling of delivery services; and increasingly competitive energy and telecommunications marketplace; results of any asset dispositions; sales retention and growth; federal and state regulatory actions; future litigation results; cost of construction; operating restrictions; increased costs and construction delays attributable to environmental regulations; nuclear decommissioning and the availability of reprocessing and storage facilities for spent nuclear fuel; and credit market concerns. The Company 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. www.conectiv.com ---------------- (more) 4 news release CONECTIV (NYSE: CIV and CIVA) (Dollars in Thousands, except per share amounts) (Unaudited)
Three Months Ended Twelve Months Ended December 31, December, -------------------------- ------------------------------ 1999 1998 1999 1998 --------- --------- ----------- ----------- Operating Revenues $ 915,420 $ 871,497 $ 3,744,897 $ 3,071,606 --------- --------- ----------- ----------- Operating Income before non-recurring charges $ 49,860 $ 55,198 $ 451,237 $ 414,619 --------- --------- ----------- ----------- Income before non-recurring charges $ 13,285 $ 24,539 $ 185,140 $ 169,965 --------- --------- ----------- ----------- Non-recurring charges, net of income taxes $ (40,612) $ (372) $ (383,280) $ (16,764) --------- --------- ----------- ----------- Net Income (loss) $ (27,327) $ 24,167 $ (198,140) $ 153,201 --------- --------- ----------- ----------- Earnings (loss) applicable to common stock Common stock Income before non-recurring charges $ 16,211 $ 24,269 $ 176,366 $ 158,056 Non-recurring charges (29,525) (372) (364,888) (16,764) --------- --------- ----------- ----------- Total $ (13,314) $ 23,897 $ (188,522) $ 141,292 ========= ========= =========== =========== Class A common stock Income before non-recurring charges $ (2,926) $ 270 $ 8,774 $ 11,909 Non-recurring charges (11,087) -- (18,392) -- --------- --------- ----------- ----------- Total $ (14,013) $ 270 $ (9,618) $ 11,909 Average shares outstanding (000) Common stock 86,916 100,592 93,320 94,338 Class A common stock 5,742 6,561 6,110 6,561 Earnings (loss) per average share--basic and diluted Common stock Before non-recurring charges $ 0.19 $ 0.24 $ 1.89 $ 1.68 Non-recurring charges (0.34) -- (3.91) (0.18) --------- --------- ----------- ----------- Total $ (0.15) $ 0.24 $ (2.02) $ 1.50 ========= ========= =========== =========== Class A common stock Before non-recurring charges $ (0.51) $ 0.04 $ 1.44 $ 1.82 Non-recurring charges (1.93) -- (3.01) -- --------- --------- ----------- ----------- Total $ (2.44) $ 0.04 $ (1.57) $ 1.82 ========= ========= =========== =========== Dividends declared per share Common stock $ 0.220 $ 0.385 $ 1.045 $ 1.540 Class A common stock $ 0.800 $ 0.800 $ 3.200 $ 3.200
5 Notes: - ------ Non-recurring charges for the fourth quarter of 1999 include an extraordinary item of $(40,612) related to deregulation of Conectiv's energy supply business. Non-recurring charges for 1999 include an extraordinary item of $ (311,718) related to deregulation of Conectiv's energy supply business and special charges of $71,562 primarily related to the write-down of certain non-regulated investments. Non-recurring charges for 1998 are for employee separation and other merger-related costs. Conectiv's consolidated operating results for the twelve months ended December 31, 1998 include ten months of operating results for Atlantic City Electric Company and the non-utility businesses formerly owned by Atlantic Energy, Inc. in accordance with the purchase method of accounting, and the merger date of March 1, 1998. (more) CONECTIV BUSINESS SEGMENTS
Three Months Ended Three Months Ended December 31, 1999 December, 31, 1998 --------------------------- --------------------------- Earnings Earnings Before Before Interest and Interest and Revenues(1) Taxes(2) Revenues (1) Taxes(2) ----------- ----------- ------------ -------- Energy $746,661 $ 41,777 $682,257 $ 54,522 Power Delivery $178,453 $ 35,438 $148,128 $ 39,669 Telecommunications $ 11,331 $ (17,931) $ 4,307 $(10,133) HVAC $ 32,235 $ (5,888) $ 27,077 $ (5,822) All Other $ 1,044 $ 22,014 $ 5,904 $ (2,645) -------- --------- -------- -------- $969,724 $ 75,410 $867,673 $ 75,591
Twelve Months Ended Twelve Months Ended December 31, 1999 December, 31, 1998 ------------------------------ ----------------------------- Earnings Earnings Before Before Interest and Interest and Revenues(1) Taxes(2) Revenues(1) Taxes(2) ---------- ----------- ---------- --------- Energy $3,002,736 $ 271,181 $2,450,274 $ 267,463 Power Delivery $ 765,551 $ 260,834 $ 666,894 $ 256,886 Telecommunications $ 36,253 $ (43,344) $ 10,620 $ (29,591) HVAC $ 134,942 $ (13,656) $ 94,907 $ (21,676) All Other $ 6,470 $ 32,475 $ 14,096 $ (11,402) ---------- ----------- ---------- --------- $3,945,952 $ 507,490 $3,236,791 $ 461,680
Revenues and Earnings Before Interest and Taxes for the Twelve Months ended December 31, 1998 include two months of Atlantic Energy prior to the merger date of March 1, 1998. (1) Business Segment Revenues include inter-company revenues and certain other differences from consolidated operating revenues. (2) Earnings Before Interest and Taxes for business segment reporting purposes excludes non-recurring charges and is after allocation of certain interest costs. -----END PRIVACY-ENHANCED MESSAGE-----