-----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, VVXMnJSbsEX16JwREn1nFiwbY+SuyX562A8CFAGAcpgtCwNIBU/YGh/Wgh+ht+v+ lPC3ld+GNnvgd40tUQkZmg== 0000893220-99-001182.txt : 19991018 0000893220-99-001182.hdr.sgml : 19991018 ACCESSION NUMBER: 0000893220-99-001182 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19991015 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONECTIV INC 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: U-1/A SEC ACT: SEC FILE NUMBER: 070-09095 FILM NUMBER: 99729605 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 U-1/A 1 AMENDMENT NO. 7 TO FORM U-1 DELMARVA POWER & LIGHT 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________________________ POST-EFFECTIVE AMENDMENT NO. 7 To FORM U-1 DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 CONECTIV DELMARVA POWER & LIGHT COMPANY CONECTIV RESOURCE PARTNERS, INC. CONECTIV ENERGY SUPPLY, INC. KING STREET ASSURANCE, LTD. CONECTIV ENERGY, INC 800 King Street Wilmington, DE 19899 DELMARVA CAPITAL INVESTMENTS, INC. ATLANTIC CITY ELECTRIC COMPANY CONECTIV SERVICES, INC. 6801 Black Horse Pike CONECTIV COMMUNICATIONS, INC. Egg Harbor Township, NJ 08234 DELMARVA SERVICES COMPANY DCI I, INC. ATLANTIC GENERATION, INC. DCI II, INC. ATLANTIC SOUTHERN PROPERTIES, INC DCTC-BURNEY, INC. ATE INVESTMENT, INC CONECTIV OPERATING SERVICES CO CONECTIV THERMAL SYSTEMS, INC. CONECTIV SOLUTIONS, LLC BINGHAMTON GENERAL, INC. CONECTIV PLUMBING LLC. BINGHAMTON LIMITED, INC. 252 Chapman Road PEDRICK GEN., INC P.O. Box 6066 VINELAND LIMITED, INC. Newark, DE 19714 VINELAND GENERAL, INC ATLANTIC JERSEY THERMAL SYSTEMS, INC ATS OPERATING SERVICES, INC. 5100 Harding Highway Mays Landing, NJ 08330
(Names of companies filing this statement and address of principal executive offices) Conectiv (Name of top registered holding company parent) Philip S. Reese Treasurer Conectiv (address above) (Name and address of agent of service) The Commission is requested to send copies of all notices, orders and communications in connection with this Application to: Peter F. Clark Joyce Koria Hayes, Esquire General Counsel 7 Graham Court Conectiv Newark, DE 19711 (address above)
2 Item 1. Description of Proposed Transactions (a) Furnish a reasonably detailed and precise description of the proposed transaction, including a statement of the reason why it is desired to consummate the transaction and the anticipated effect thereof. If the transaction is part of a general program, describe the program and its relation to the proposed transaction. A. BACKGROUND Conectiv, a Delaware corporation, previously was authorized under Section 9(a)(2) of the Public Utility Holding Company Act of 1935, as amended (the "Act") to consummate certain transactions resulting in the acquisition by Conectiv of all of the outstanding common stock of Delmarva Power & Light Company, a Delaware and Virginia corporation and an operating public utility company ("Delmarva"), and of Atlantic City Electric Company, a New Jersey corporation and an operating public utility company ("ACE") (ACE and Delmarva are collectively referred to as the "Utility Subsidiaries"), and of certain direct and indirect nonutility subsidiaries ("Nonutility Subsidiaries"). Both Utility and Nonutility Subsidiaries are referred to collectively as "Subsidiaries". See HCAR No. 26832 dated February 25, 1998 (the "Merger Order") in File No. 70-9069. Delmarva provides electric service in Delaware, Maryland and Virginia and natural gas service in northern Delaware and ACE provides electric service in New Jersey. Following the merger, Conectiv and its Subsidiaries filed an Application/Declaration on Form U-1 in this File No. 70-9095 requesting authorization for financing transactions for the period beginning with the effective date of an order issued in such proceeding through December 31, 2000. Those financing transactions were approved by Order dated February 26, 1998 (HCAR No. 26833) as supplemented by Orders dated August 21, 1998 (HCAR No. 26907), September 28, 1998 (HCAR No. 26921), October 21, 1998 (HCAR No. 26930), and November 13, 1998 (HCAR No. 26941) (the "Financing Orders"). Further, in early 1999, Conectiv realized that certain write-downs that might be required due to electric industry restructuring in the states of New Jersey, Maryland, and Delaware might be sufficient to reduce retained earnings to a level which would require that dividends be paid out of capital or unearned surplus. A declaration on Form U-1 was filed in File No. 70-9499 (the "Dividend File") seeking authority for Conectiv, Delmarva and ACE to issue certain dividends out of capital or unearned surplus. In September, an order was requested and issued permitting Conectiv to issue dividends aggregating no more than $24 million out of capital or unearned surplus and jurisdiction was reserved with respect to the issuance of future dividends by Conectiv, Delmarva or ACE out of capital or unearned surplus (HCAR No. 35-27079 dated September 27, 1999). Pursuant to the Financing Orders, during the period ending December 31, 2000, Conectiv is authorized, among other authorizations, 1) to issue short-term debt aggregating no more than $800 million less any amount of short-term debt issued by Delmarva under its authorization to issue up to $275 million of short-term debt; 2) to issue up to $250 million of long-term debt with the reservation of jurisdiction over an additional $250 million of long-term debt (overall short-term and long-term debt thus aggregating $1.3 billion) and 3) to issue common stock which when aggregated with any long-term debt issued does not exceed $500 million in the aggregate.(1) Also under the terms of the Financing Orders, the short-term debt issued by Conectiv may be used to provide working capital for the general corporate purposes of Conectiv and its Subsidiaries and to fund the capital requirements of Conectiv's Subsidiaries until long-term financing can be obtained.(2) - ---------- (1) Conectiv currently does not envision the issuance of equity unless used as consideration in connection with an acquisition as permitted under the Financing Orders. The fair market value of any equity issued would reduce the amount of long-term debt that may be issued pursuant to the authorization requested herein. (2) General corporate purposes could include interim funding of repurchase of outstanding long-term securities. 3 Financings authorized in the Financing Orders are subject to certain limitations contained therein as follows: i) Conectiv's consolidated common equity will be at least 30% of its total consolidated capitalization ("Common Equity Ratio"), as adjusted to reflect subsequent events that affect capitalization; ii) the effective cost of money on long-term debt securities will not exceed 300 basis points over comparable term U.S. Treasury securities and the effective cost of money on short-term securities will not exceed 300 basis points over the comparable term London Interbank Offered Rate; iii) maturity of indebtedness will not exceed 50 years; and iv) the underwriting fees, commissions, or similar remuneration paid in connection with the issue, sale or distribution of a security will not exceed 5% of the principal amount of the financing. The purpose of this filing is to request: 1. An extension of the effective period for all authorizations contained in the Financing Orders to March 31, 2002 (the "Authorization Period") and changes in certain authorizations as described below.(3) 2. An increase in the amount of short-term debt that Conectiv is authorized to have outstanding during the Authorization Period from $800 million to $1.3 billion less any short-term debt issued by Delmarva, with Conectiv and Delmarva permitted to issue securities during the Authorization Period so long as the common Equity Ratio is at least 20%. 3. An increase in the level of long-term debt for which authorization is requested from $500 million to $1 billion resulting in an increase in the long-term debt that is subject to a request for a reservation of jurisdiction from $250 million to $750 million with the understanding that to the extent that any of the incremental $500 million is eventually authorized and issued, the proceeds will be used to pay - ---------- (3) Authorizations contained in the Financing Orders which are requested to be extended but not amended include: 1) Conectiv's authorization to issue up to 10 million shares of Common Stock pursuant to employee benefit plans and the Conectiv Dividend Reinvestment Plan. 2) Conectiv's authority to issue up to $500 million of Common Stock less any long-term debt issued (Since Conectiv has issued $250 million of long-term debt, authorization remains only to issue up to an additional $250 million aggregate value of common stock subject to further decrease for any future long-term debt issued.) 3) Conectiv's and the Utility Subsidiaries' authority to enter into, perform, purchase and sell financial instruments intended to manage the volatility of interest rates. 4) Conectiv's authority to issue other securities subject to a reservation of jurisdiction over the additional types of securities pending completion of the record. 5) Delmarva's authority to issue up to $275 million of short-term debt and the Utilities Subsidiaries' authority to issue securities which are not exempt subject to a reservation of jurisdiction over these additional types of securities pending completion of the record. 6) Nonutility Subsidiaries' authority to issue securities which are not exempt subject to a reservation of jurisdiction over the issuance of additional types and amounts of securities that are not exempt under Rule 52 (b) pending completion of the record. 7) Conectiv's authority to enter into guarantees or otherwise provide credit support with respect to the obligations of Subsidiaries in an amount not to exceed $350 million except to the extent exempt under Rule 45 under the Act and Nonutility Subsidiaries' authority to provide credit support to each other in an aggregate amount not to exceed $100 million. 8) Authority of wholly-owned Nonutility Subsidiaries to change authorized capital stock and to issue dividends out of capital without further authorization of the Commission. 9) Authority of Subsidiaries to organize new corporations, trusts, partnerships or other entities for the purpose of facilitating financings. 3 4 down short-term debt. The aggregate debt that Conectiv would be permitted to have outstanding prior to the removal of the reservation of jurisdiction is $1.3 billion of short-term plus $250 million of long-term previously issued. If the reservation of jurisdiction is removed, the aggregate debt that Conectiv could have outstanding would total $800 million of short-term and $1 billion of long-term debt for a total of $1.8 billion. 4. Authorization for investments in Exempt Wholesale Generators ("EWGs") in an amount not exceeding 50% of the average consolidated retained earnings at the end of the previous four quarters adjusted to include the amount of retained earnings that were not available to Conectiv under the purchase method of accounting for the Merger ($225 million). 5. Elimination of the $25 million maximum limit on borrowings by Nonutility Subsidiaries from the Conectiv System Money Pool and the addition of King Street Assurance, Ltd. to the Money Pool. B. EXTENSION OF AUTHORIZATION PERIOD, INCREASE IN AUTHORIZED SHORT- AND LONG-TERM DEBT AND IMPACT ON CAPITALIZATION. 1. INCREASE IN SHORT-TERM DEBT AUTHORIZATION FROM $800 MILLION TO $1.3 BILLION AT ANY ONE TIME OUTSTANDING DURING THE AUTHORIZATION PERIOD AND INCREASE IN LONG-TERM DEBT SUBJECT TO RESERVATION OF JURISDICTION. Conectiv herewith requests an extension of the Authorization Period to March 31, 2002 and an increase in the aggregate amount of short-term debt at any one time outstanding to no more than $1.3 billion. This additional $500 million of short-term debt is required to fund the increased working capital and capital expenditure needs of Conectiv and its Subsidiaries, including such expenditures as a possible significant nonutility acquisition. At the same time that Conectiv is required to fund the capital needs of the nonutility companies, ACE will be issuing interim funding of the buy-out of certain power purchase agreements with nonutility generators (the "NUG Buyouts"). At a later date anticipated to be in mid 2000, debt will be issued by a special purpose subsidiary of ACE and secured by regulatory assets created under the New Jersey Electric Discount and Energy Competition Act ("Securitized Debt"). The Securitized Debt will be issued pursuant to an order of the New Jersey Board of Public Utilities ("NJBPU") and an order of this Commission pursuant to an application to be filed later. It is not expected that the Securitized Debt will be exempt from the requirement of Commission approval. However, the interim financing of the NUG Buyouts will be issued directly by ACE pursuant to order of the NJBPU and, therefore, will be exempt from the requirements of Commission approval under Sections 9 and 10 of the Act by virtue of Rule 52. The interim funding and the Securitized Debt will, however, be included in total consolidated debt for purposes of calculating the Common Equity Ratio. Conectiv also requests authority to increase the aggregate amount of long-term debt that may be issued during the Authorization Period to an aggregate of $1 billion, but requests that the Commission continue to reserve jurisdiction over the issuance of any long-term debt in excess of the $250 million previously authorized and issued. When the issuance of additional long-term debt is authorized, proceeds of the incremental $500 million will be used to pay down outstanding short-term debt that was issued to fund capital expenditures. The financial statements included in this filing show the pro forma effects of the issuance of an additional $500 million of short-term debt over that which was previously authorized. The issuance of long-term debt over which jurisdiction is requested to be reserved will be dealt with in the filing requesting removal of the reservation of jurisdiction. 5 It is Conectiv's understanding that an application by another registered holding company for the issuance of long-term debt is pending before the Commission for decision. That decision, when issued, will be precedent for authorization for the issuance of additional long-term debt by Conectiv. 2. ANTICIPATED DECREASES IN THE COMMON EQUITY RATIO As is discussed in detail in the Dividend File, each of the states in which Delmarva and ACE operate as utilities enacted legislation restructuring the electric utility industry in that state to provide retail choice of electricity suppliers in the near future. Generally, with restructuring, the supply component of the price charged to a customer for electricity would be deregulated, and electricity suppliers would compete to supply electricity to customers. Customers would continue to pay the local utility a regulated price for the delivery of the electricity over the transmission and distribution system. Stranded costs are costs which may not be recoverable in a competitive energy supply market due to lower prices or customers choosing a different supplier. Stranded costs generally include above-market costs associated with generation facilities or long-term purchased power agreements, and regulatory assets. As was disclosed initially in Conectiv's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, the total amount that could be charged to Conectiv's earnings, on a consolidated basis, as a result of electric industry restructuring includes (a) the impairment amount for the electric generating plants of Delmarva and ACE, (b) the stranded cost amount for Delmarva's purchased power contracts, and (c) regulatory assets of Delmarva and ACE related to their electric generation businesses. The charge to earnings is reduced by the estimated cost recovery through Delmarva's and ACE's regulated electricity delivery rates. Based on this methodology (giving effect to estimated cost recoveries), management estimated that future charges to earnings, after taxes, as a result of electric utility industry restructuring could be within the following ranges: DPL $300 million to $425 million ACE $50 million to $75 million ------------------------------ Consolidated Conectiv $350 million to $500 million ============================
As of June 30, 1999, Conectiv had approximately $289 million in retained earnings. As shown on Exhibit H-1 hereto, if Conectiv had been able to use pooling rather than purchase accounting in connection with the Merger, the ACE retained earnings would not have been excluded from Conectiv's consolidated retained earnings and Conectiv's retained earnings would have been approximately $225 million higher and better able to absorb the anticipated write-downs. Although Conectiv has benefited from earnings for the third quarter so that current retained earnings will be higher, write-downs in even the lowest of the above ranges would eliminate all or substantially all of Conectiv's retained earnings, drop the Common Equity Ratio below 30% and impact Conectiv's ability to invest in EWGs as defined in Section 32 of the Act and Rule 53. A second accounting convention contributes to the problem. Management expects to sell certain of the electric generating plants of Delmarva and ACE. Purchase and sale agreements have been executed for some assets, subject to the receipt of certain regulatory approvals(4). Although sales of the impaired electric generating plants are not expected to result in significant gains or losses,(5) some of the electric generating plants that are not impaired may be sold at a gain. Under GAAP, the write-down of an impaired asset is not reduced by the expected future gain on sales of assets that are not impaired; the gain on the sale of an asset is only recognized when the sale occurs. - ---------- (4) On October 7, 1999, Conectiv, Delmarva and ACE each filed with the Commission under cover of Form 8-K, Current Report, copies of a press release dated September 30, 1999 announcing agreements for sale of the Utility Subsidiaries' interests in three nuclear plants. (5) Although no gain may be realized, a significant cash flow results which benefits the utility system. 6 Exhibit H-2, filed herewith under a request for confidential treatment, is a consolidated capitalization forecast for the Conectiv System, by quarter through December 31, 2000 and as of December 31, 2001. This Exhibit includes estimates of the impacts of a) write-downs due to implementation of state electric industry restructuring legislation equal to the lower end of the range of estimates (which is the level currently anticipated), b) the interim financing of the NUG Buyouts by ACE, c) short-term debt issued by Conectiv to fund a possible significant nonutility acquisition, d) the issuance of Securitized Debt that will refund the interim debt incurred to fund the NUG Buy-out and to recover the stranded costs associated with the ACE generating plants and e) the issue of short-term debt to fund increased investment in exempt wholesale electric generation facilities. The exhibit also shows a "worst case" scenario that includes an issuance of securitized debt to fund two additional NUG Buyouts. The Exhibit indicates that under the worst case scenario, the Common Equity Ratio for the Conectiv consolidated system is projected to never be less than 20% during the Authorization Period. Conectiv requests that it and Delmarva be permitted to issue securities pursuant to the Financing Orders as supplemented by the Supplemental Order requested herein so long as the Common Equity Ratio is at least 20%. 3. CONECTIV REMAINS A FINANCIALLY STRONG AND SECURE PARTICIPANT IN THE EVOLVING ENERGY MARKET Following the sales of the generating assets, the foundation of Conectiv's near-term growth opportunities are considered to be its energy, telecommunications and regulated electric and gas delivery businesses. These areas allow the company to focus on vital services to the customer and allow Conectiv to concentrate on deepening customer relationships within its growing region. The energy business will be centered on 2,000 megawatts of flexible, low-cost generation that back Conectiv's merchant capabilities. Conectiv also will focus resources on growing its facilities-based telecommunications business, taking advantage of the many high growth opportunities including Internet and high speed DSL (digital subscriber line) that will be available to customers in the near future. Conectiv is in very sound financial condition, and will remain so following any write-downs that occur. Following an early 1999 announcement of a dividend reduction, a common stock self-tender and the future sale of generating assets (discussed in detail in the Dividend File), both Standard and Poor's and Moody's confirmed the stable ratings outlook for Conectiv, ACE and Delmarva. Below are the ratings for unsecured long-term debt and short-term debt, respectively: Agency Conectiv Delmarva ACE ------ -------- -------- --- Moody's Baa1/P-2 A3/P-1 Baa1/P-2 S & P BBB+/A-2 A-/A-1 BBB+ /A-2
C. AUTHORIZATION TO INVEST IN EXEMPT WHOLESALE GENERATORS AN AMOUNT EQUAL TO UP TO 50% OF AVERAGE CONSOLIDATED RETAINED EARNINGS ADJUSTED TO ADD BACK RETAINED EARNINGS NOT AVAILABLE TO CONECTIV UNDER MERGER ACCOUNTING ($225 MILLION). Under the Delaware electric industry restructuring legislation, Delmarva is in the process of exiting the business of generating electricity. Some of the generating facilities will be sold to third parties and some will be sold to an affiliated generation company. Appropriate filings will be made with this Commission under the Act related to both sales. Conectiv's strategic plan calls for the retention and development of the flexible, low-cost generation that will back Conectiv's merchant capabilities. Two such projects are in development. The output of the projects will be sold at wholesale to the PJM - ---------- 7 Interconnection Pool. Since Delmarva is currently in the process of exiting the generating business and the new generation company is not as yet formed, investments in the development of two "mid-merit" generating projects must be and are appropriately made through an EWG. Conectiv Energy, Inc.("CEI"), a previously inactive subsidiary, has been making investments in the development of projects involving combustion turbine generating facilities that upon operation will be eligible facilities which will qualify CEI as an exempt wholesale generator under Section 32 of the Act. Rule 54 promulgated under the Act states that in determining whether to approve the issue or sale of a security by a registered holding company for purposes other than the acquisition of an EWG or a Foreign Utility Company ("FUCO"), or other transactions by such registered holding company or its subsidiaries other than with respect to EWGs or FUCOs, the Commission shall not consider the effect of the capitalization or earnings of any subsidiary which is an EWG or a FUCO upon the registered holding company system if Rules 53(a), (b), or (c) are satisfied. Rule 53(a) permits the Commission to authorize the issuance of securities to fund the acquisition of EWGs(7) if the aggregate investment does not exceed 50% of the average consolidated retained earnings as reported for the four most recent quarterly periods on the holding company's Form 10-K or 10-Q. However, under Rule 53(b)(2), if the average consolidated retained earnings for the four most recent quarterly periods have decreased by 10% from the average for the previous four quarterly periods and the aggregate investment in EWG's exceeds two per cent of the total capital invested in utility operations, Rule 53(a) does not apply. Currently, Conectiv has insignificant indirect interests in EWGs, DCTC-Burney, Inc., an indirect subsidiary of Conectiv, holds a 45% direct and indirect interest in Burney Forest Products, A Joint Venture, which is an EWG. There has been no additional post-merger investment in this EWG by Conectiv or a subsidiary. CEI has invested approximately $6 million as of September 30, 1999 in two generating projects that will be eligible facilities. Another result of the write-downs due to electric industry restructuring will be that, under Rule 53(b)(2), Conectiv's ability to issue securities pursuant to Rule 53 will disappear when the investment in EWGs (and FUCOs in which there currently is no investment) exceeds an amount equal to 2% of Conectiv's investment in utility operations. Current projections are that the investments in the generating facilities could reach that level by the end of January, 2000. If the amount of ACE retained earnings that were not allowed to Conectiv under the merger accounting ($225 million) were added to retained earnings at the end of each quarter for the purpose of calculating a limit to 50% of average consolidated retained earnings, Conectiv would have sufficient authorization to make investments in the two projects planned for the Authorization Period. Conectiv is therefore requesting an order authorizing the use of the proceeds from the issuance of the securities for investments in EWGs aggregating no more than the average consolidated retained earnings as reported for the four most recent quarterly periods on the holding company's Form 10-K or 10-Q plus $225 million added to each quarter's retained earnings. In all other ways, Conectiv meets the requirements of Rule 53. Conectiv and its subsidiaries will maintain books and records to identify the investments in earnings from EWGs and FUCOs in which they directly or indirectly hold an interest, thereby satisfying Rule 53(a)(2). In addition, the books and records of each such entity will be kept in conformity with United States generally accepted accounting principles ("GAAP"), the financial statements will be prepared according to GAAP, and Conectiv undertakes to provide the Commission access to such books and - ---------- (7) The 50% limitation applies to investments in foreign utility companies as well; however, Conectiv is planning no such investments. 8 records and financial statements as it may request. No more than 2% of the employees of Conectiv's domestic public-utility companies will render services, directly or indirectly, to any EWGs or FUCOs in which Conectiv, directly or indirectly, has an interest, thereby satisfying Rule 53(a)(3). Copies of this Post-effective Amendment and every certificate filed pursuant to Rule 24 will be submitted to the New Jersey Board of Public Utilities, the Delaware Public Service Commission, the Virginia State Corporation Commission, and the Maryland Public Service Commission, the only regulatory agencies having jurisdiction over the retail rates of the public utility companies in the Conectiv System. Rule 53(a)(4) will be correspondingly satisfied. D. ELIMINATION OF LIMITATION ON PERMISSIBLE MONEY POOL BORROWING BY NONUTILITIES AND ADDITION OF KING STREET ASSURANCE, LTD. TO MONEY POOL. Under the terms of the Financing Order, the Money Pool was established to permit Subsidiaries with excess funds to lend to the Money Pool and Subsidiaries in need of funds to borrow from the Money Pool, thus utilizing all available cash and limiting the System's need to use external short-term borrowing to fund working capital needs. Only those Subsidiaries (other than Conectiv Communications (an Exempt Telecommunications Company) and Conectiv Energy, Inc. (an EWG)) that are specifically listed as parties to this application/declaration may participate in the Money Pool. New subsidiaries may only be added as participants pursuant to a Supplemental Order. Under the terms of the Financing Order, borrowing by any one nonutility subsidiary is limited to $25 million. The limit on Nonutility Subsidiary borrowing has resulted in unnecessary borrowing by the System when some Subsidiaries have money invested in the Money Pool but other Nonutility Subsidiaries need to borrow more than $25 million. The excess borrowing must be made directly from Conectiv with funds borrowed from external sources while excess funds in the Money Pool are invested with third parties. Since Conectiv guarantees the repayment of sums loaned to the Money Pool, there is little increased risk to the lenders if the limit on Nonutility borrowing is removed. Conectiv proposes that this limitation be eliminated. King Street Assurance Ltd. ("KSA") is a new subsidiary that was formed as an insurance company incorporated in Bermuda to reinsure appliance warranties under the authority that KSA has as a Subsidiary of Conectiv Solutions, Inc.(8) Authorization is requested to add KSA to the Money Pool. To the extent that the laws governing insurance companies in Bermuda permit excess funds to be invested in the Money Pool, KSA would invest excess funds in the Money Pool, which would again decrease the need for outside borrowing by the Conectiv system. - ---------- (8) By Order dated August 10, 1999 (Release No. 27059) Conectiv was authorized to transfer the ownership of ATE Investment, Inc. ("ATE") to either Conectiv Services, Inc ("CSI") or Conectiv Solutions, Inc. ("Solutions") depending upon whether the merger of Solutions into CSI had occurred. On August 11, 1999 Conectiv transferred all shares of Common Stock of ATE held by Conectiv to Solutions as a capital contribution. Simultaneously, ATE formed KSA for the purpose of reinsuring appliance warranties related to the heating, air conditioning and ventilation business. Under the Merger Order, Solutions is authorized to conduct such activities directly or indirectly through subsidiaries. KSA was funded by the contribution to KSA by ATE of the limited partnership interest in Enertech Capital Partners LP, a venture capital fund investing in various energy-related and telecommunications technologies as also authorized for Solutions or its subsidiaries under the terms of the Merger Order. An application-declaration will be filed shortly seeking authorization to expand the reinsurance activities of KSA. 9 E. SUMMARY OF REQUESTED ACTION: Conectiv requests that this Commission authorize: - - Extension of the Authorization Period to March 31, 2002 for all authorities granted in the Financing Orders and amendment of certain authorities as described below. - - Increase in the amount of short-term debt that Conectiv is authorized to have outstanding during the Authorization Period from $800 million to $1.3 billion with Conectiv and Delmarva permitted to issue securities during the Authorization Period so long as the Common Equity Ratio is at least 20% of consolidated capitalization. - - An increase in the level of Conectiv's long-term debt authorization from $500 million to $1 billion increasing the level of long-term debt subject to the reservation of jurisdiction from $250 million to $750 million with the understanding that to the extent that any of the incremental $500 million is eventually authorized and issued, the proceeds will be used to pay down short-term debt. - - Authorization for investments in EWGs in an amount not exceeding 50% of the average consolidated retained earnings at the end of the previous four quarters adjusted to add back the amount of retained earnings that were not available to Conectiv under the purchase method of accounting for the merger( $225 million). - - Elimination of the $25 million maximum limitation on borrowings by nonutilities from the Conectiv System Money Pool and the addition of KSA to the Money Pool. (b) Describe briefly, and where practicable state the approximate amount of, any material interest in the proposed transaction, direct or indirect, of any associate company or affiliate of the applicant or any affiliate of any such associate company. Not applicable. (c) If the proposed transaction involves the acquisition of securities not issued by a registered holding company or a subsidiary thereof, describe briefly the business and property, present or proposed, of the issuer of such securities. Not applicable. (d) If the proposed transaction involves the acquisition or disposition of assets, describe briefly such assets, setting forth original cost, vendor's book cost (including the basis of determination) and applicable valuation and qualifying reserves. Not applicable. Item 2. Fees, Commissions and Expenses. (a) The fees, commissions and expenses to be incurred, directly or indirectly, by Conectiv or any associate company thereof in connection with the proposed transactions are estimated as follows: Fees of Conectiv Resource Partners, Inc. ...................... $* Fees of outside counsel ....................................... $*
10 Miscellaneous expenses ........................................ $* --- TOTAL ......................................................... $*
* to be filed by amendment (b) If any person to whom fees or commissions have been or are to be paid in connection with the proposed transaction is an associate company or an affiliate of the applicant or declarant, or is an affiliate of an associate company, set forth the facts with respect thereto. The financial statements and other portions of this declaration were prepared by personnel of Conectiv Resource Partners, Inc., whose time will be charged to Conectiv at cost as appropriate. Item 3. Applicable Statutory Provisions (a) State the sections of the Act and the rules thereunder believed to be applicable to the proposed transaction. If any section or rule would be applicable in the absence of a specific exemption, state the basis of exemption. Sections 6, 7 and 32 of the Act and Rules 53 and 54 of the Act are applicable to the issuance of the additional long- and short-term debt by Conectiv for which authorization is sought. Sections 6, 7, 9 and 10 and Rule 52 are applicable to the issuance of evidences of deposit by Conectiv Resources and the issuance of Money Pool Notes by borrowers from the System Money Pool and sections 9 and 10 and Rule 52 are applicable to the receipt of said notes by lenders other than Delmarva. Because Delmarva is incorporated in both Virginia and Delaware and only Virginia has approved participation in the Money Pool, Rule 52 is not applicable. (b) If an applicant is not a registered holding company or a subsidiary thereof, state the name of each public utility company of which it is an affiliate, or of which it will become an affiliate as a result of the proposed transactions, and the reasons why it is or will become such an affiliate. Not applicable. Item 4. Regulatory Approval. (a) State the nature and extent of the jurisdiction of any State commission or any Federal commission (other than the Securities and Exchange Commission) over the proposed transaction. No other regulatory agency has jurisdiction over the proposed transactions. (b) Describe the action taken or proposed to be taken before any commission named in answer to paragraph (a) of this item in connection with the proposed transaction Not applicable. Item 5. Procedure. (a) State the date when Commission action is requested. If the date is less than 40 days from the date of the original filing, set forth the reasons for acceleration. Conectiv requests that the Commission issue and publish not later than October 22, 1999, the requisite notice under Rule 23 with respect to the filing of this Declaration. Conectiv further requests 11 that such notice specify a date not later than November 29, 1999, as the date after which the Commission may issue an order granting this Application. (b) State (i) whether there should be a recommended decision by a hearing officer, (ii) whether there should be a recommended decision by any other responsible officer of the Commission, (iii) whether the Division of Corporate Regulation may assist in the preparation of the Commission's decision, and (iv) whether there should be a 30-day waiting period between the issuance of the Commission's order and the date on which it is to become effective. Conectiv waives a recommended decision by a hearing officer or other responsible officer of the Commission; consents that the Staff of the Division of Investment Management may assist in the preparation of the Commission's order; and requests that there be no waiting period between the issuance of the Commission's order and its effectiveness. Item 6. Exhibits and Financial Statements. (a) Exhibits: A Not applicable B Not applicable C Not applicable D Not applicable E Not applicable F Preliminary opinion of counsel (to be filed by amendment) G Form of Federal Register notice H-1 Comparison of Impact on Retained Earnings of Purchase versus Pooling Accounting for Merger H-2 Conectiv Capitalization Forecast (Filed under request for confidential treatment.) (b) Financial Statements: FS-1 Conectiv Consolidated Balance Sheet per books and per forma, dated June 30, 1999. FS-2 Conectiv Consolidated Income Statement per books and per forma for the period ended June 30, 1999 FS-3 Conectiv Consolidated Financial Data Schedule (included in electronic submission only)
Item 7. Information as to Environmental Effects. (a) Describe briefly the environmental effects of the proposed transaction in terms of the standards set forth in Section 102(2)(C) of the National Environmental Policy Act (42 U.S.C. 4312(2)(C)). If the response to this item is a negative statement as to the applicability of Section 102(2)(C) in connection with the proposed transaction, also briefly state the reasons for that response. The Commission's action in this matter will not constitute major federal action significantly affecting the quality of the human environment. (b) State whether any other federal agency has prepared or is preparing an environmental impact statement ("EIS") with respect to the proposed transaction. If any other Federal agency has prepared or is preparing an EIS, state which agency or agencies and indicate the status of that EIS preparation. 11 12 No other federal agency has prepared or is preparing an environmental impact statement with regard to the proposed transactions. SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned companies have duly caused this Post-Effective Amendment No. 7 to Form U-1 to be signed on their behalf by the undersigned thereunto duly authorized. DATE: October 15, 1999 CONECTIV DELMARVA POWER & LIGHT COMPANY CONECTIV RESOURCE PARTNERS, INC. CONECTIV ENERGY SUPPLY INC. KING STREET ASSURANCE, LTD. CONECTIV ENERGY, INC. DELMARVA CAPITAL INVESTMENTS, INC. CONECTIV SERVICES, INC. CONECTIV COMMUNICATIONS, INC. DELMARVA SERVICES COMPANY DCI I, INC. DCI II, INC. DCTC-BURNEY, INC. CONECTIV OPERATING SERVICES COMPANY CONECTIV SOLUTIONS, LLC CONECTIV PLUMBING, LLC ATLANTIC CITY ELECTRIC COMPANY ATLANTIC GENERATION, INC. ATLANTIC SOUTHERN PROPERTIES, INC. ATE INVESTMENT, INC. CONECTIV THERMAL SYSTEMS, INC. BINGHAMTON GENERAL, INC. BINGHAMTON LIMITED, INC. PEDRICK GEN., INC. VINELAND LIMITED, INC. VINELAND GENERAL, INC. ATLANTIC JERSEY THERMAL SYSTEMS, INC. ATS OPERATING SERVICES, INC. /s/ Philip S. Reese ------------------ Philip S. Reese Treasurer
EX-99.G 2 FORM OF FEDERAL REGISTER NOTICE 1 Exhibit G Conectiv et al., Notice of Proposal to Extend Authorization Period for the Issuance of Securities, Issue Additional Long and Short-Term Debt, Eliminate Limitation on Nonutility Borrowings from the Money Pool, Addition of New Nonutility Subsidiary to Money Pool and Authorization to Add Back Retained Earnings Disallowed on Merger Accounting for Purposes of Limitation on Investments in Exempt Wholesale Generators. Conectiv, a Delaware corporation and a registered public utility holding company has filed an amendment to the application/declaration under Sections 6, 7, 9 , 10 and 32 and Rule 53 of the Public Utility Holding Company Act of 1935, as amended (the "Act"). Conectiv and its operating utility subsidiaries, Delmarva Power and Light Company ("Delmarva") and Atlantic City Electric ("ACE") and certain direct and indirect nonutility subsidiaries were authorized to issue securities for the period beginning with the effective date of an order issued in such proceeding through December 31, 2000 by Order dated February 26, 1998 (HCAR No. 26833) as supplemented by Orders dated August 21, 1998 (HCAR No. 26907), September 28, 19998 (HCAR No. 26921), October 21, 1998 (HCAR No. 26930), and November 13, 1998 (HCAR No. 26941) (the "Financing Orders"). Further, in early 1999, Conectiv realized that certain write-downs that might be required due to electric industry restructuring in the states of New Jersey, Maryland, and Delaware might be sufficient to reduce retained earnings to a level which would require that dividends be paid out of capital. A declaration on Form U-1 was filed in File No. 70-9499 seeking authority for Conectiv, Delmarva and ACE to issue certain dividends out of capital or unearned surplus. In September, an order was requested and issued permitting Conectiv to issue dividends aggregating no more than $24 million out of capital or unearned surplus and jurisdiction was reserved with respect to the issuance of future dividends by Conectiv, Delmarva and ACE out of capital or unearned surplus (HCAR No. 35-27079 dated September 27, 1999). Conectiv has estimated that the write-downs, after taxes, as a result of electric utility industry restructuring could be within the following ranges: DPL $300 million to $425 million ACE $50 million to $75 million ----------------------------- Consolidated Conectiv $350 million to $500 million =============================
As of June 30, 1999, Conectiv has approximately $289 million in retained earnings, Although Conectiv has benefited from earnings for the third quarter so that current retained earnings will be higher, write-downs in even the lowest of the above ranges would eliminate all or substantially all retained earnings, decrease consolidated common stock equity to below 30% of total capitalization (the "Common Equity Ratio") and impact Conectiv's ability to invest in exempt wholesale generators ("EWGs") as defined in Section 32 of the Act and Rule 53. Conectiv has filed estimates and projections of capitalization through December 31, 2001 that include the estimated impacts of a) write-downs due to implementation of state electric industry restructuring legislation equal to the lower end of the range of estimates, b) the interim financing of the buy-outs by ACE of two power purchase agreements with nonutility generators, c) the issuance of debt by a special purpose subsidiary of ACE to be secured by regulatory assets created under the New Jersey Electric Discount and Energy Competition Act ("Securitized Debt") to refund the interim debt incurred to fund buy-out, recover the stranded costs associated with the ACE generating plants and, possibly, fund two additional buyouts by ACE of power purchase agreements with non-utility generators, d) short-term debt issued by Conectiv to fund a possible significant nonutility acquisition, and e) the issuance of short-term debt to fund increased investment in exempt wholesale electric generation facilities. The exhibit indicates that on a worst case basis, the Common Equity Ratio for the Conectiv consolidated system is 2 not expected to be less than 20%. Conectiv requests that an order be issued that would permit: - - Extension of the Authorization Period for all authorities granted under the previous Financing Orders to March 31, 2002* and amendment of certain authorities as described below. - - Increase in the amount of short-term debt that Conectiv is authorized to have outstanding during the Authorization Period from $800 million to $1.3 billion with Conectiv and Delmarva permitted to issue securities during the Authorization Period so long as common stock equity is at least 20% of consolidated capitalization. The short-term debt issued by Conectiv may be used to provide additional working capital for the general corporate purposes of Conectiv and its subsidiaries and to fund the capital requirements of Conectiv's subsidiaries until long-term financing can be obtained.** - - An increase in the total long-term debt for which Conectiv requests authorization from $500 million to $1 billion which increases the level of long-term debt that is subject to a reservation of jurisdiction from $250 million to $750 million with the understanding that to the extent that any of the incremental $500 million is eventually authorized and issued, the proceeds will be used to pay down short-term debt . - - An increase in the amount which may be invested in Exempt Wholesale Generators ("EWGs") to an amount equal to 50% of the total of the average consolidated retained earnings at the end of the - ---------- * Authorizations contained in the Financing Orders which are requested to be extended but not amended include: 1) Conectiv's authorization to issue up to 10 million shares of Common Stock pursuant to employee benefit plans and the Conectiv Dividend Reinvestment Plan. 2) Conectiv's authority to issue up to $500 million of Common Stock less any long-term debt issued (Since Conectiv has issued $250 million of long-term debt, authorization remains only to issue up to an additional $250 million less any future long-term debt issued.) 3) Conectiv's and the Utility Subsidiaries' authority to enter into, perform, purchase and sell financial instruments intended to manage the volatility of interest rates. 4) Conectiv's authority to issue other securities subject to a reservation of jurisdiction over the additional types of securities pending completion of the record. 5) Delmarva's authority to issue up to $275 million of short-term debt and the utilities authority to issue securities which are not exempt subject to a reservation of jurisdiction over these additional types of securities pending completion of the record. 6) Nonutility Subsidiaries' authority to issue securities which are not exempt subject to a reservation of jurisdiction over the issuance of additional types and amounts of securities that are not exempt under Rule 52 (b) pending completion of the record. 7) Conectiv's authority to enter into guarantees or otherwise provide credit support with respect to the obligations of Subsidiaries in an amount not to exceed $350 million except to the extent exempt under Rule 45 under the Act and Nonutility Subsidiaries' able to provide credit support to each other in an aggregate amount not to exceed $100 million. 8) Authority of wholly-owned Nonutilities to change authorized capital stock and to issue dividends out of capital without further authorization of the Commission. 9) Authority of Subsidiaries to organize new corporations, trusts, partnerships or other entities for the purpose of facilitating financings. ** General corporate purposes could include interim funding of repurchase of outstanding long-term securities. 3 previous four quarters plus the amount of retained earnings that were not available to Conectiv under the purchase method of accounting for the Merger. - - Elimination of a limitation to $25 million on borrowings by nonutilities from the Conectiv System Money Pool and the addition to the Money Pool of King Street Assurance, Ltd., A Bermudian insurance company subsidiary formed to reinsure appliance warranties. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Jonathan G. Katz Secretary EX-99.H.1 3 CONSOLIDATED STOCKHOLDER'S EQUITY ACCOUNTS 1 EXHIBIT H-1 CONSOLIDATED CONECTIV COMMON STOCKHOLDERS' EQUITY ACCOUNTS ADJUSTED FROM PURCHASED METHOD ACCOUNTING TO POOLING OF INTERESTS ACCOUNTING.
(Dollars in Thousands) PAR VALUE PAID IN CAPITAL ----------------------------- ------------------------------- Common Common Stock Class A Stock Class A ------------ ----------- --------------- ------------- BALANCE AS OF MARCH 31, 1999 $1,008 $66 $1,464,599 $107,095 ADJUSTMENTS TO POOLING ACCOUNTING (a) Remove goodwill which resulted from valuing Atlantic Energy Inc. (AEI) based on its stock price as of the merger announcement (132,902) (b) Recognize AEI's retained earnings on (224,663) February 28, 1998 (the day prior to the Merger) (c) Recognize in earnings the direct merger costs capitalized under purchase accounting (d) Remove the earnings effect of amortizing goodwill and purchase accounting adjustments related to pension and other postretirement benefit obligations PRO FORMA BALANCE AS OF MARCH 31, 1999, ASSUMING ----------- ------------ ---------------- ------------ POOLING ACCOUNTING $1,008 $66 $1,107,034 $107,095 ----------- ------------- ---------------- ------------
2
TOTAL (Dollars in Thousands) Retained Treasury Unearned COMMON Earnings Stock Comp. EQUITY -------- -------- -------- ------ > BALANCE AS OF MARCH 31, 1999 $281,682 $(3,819) $(2,421) $1,848,211 ADJUSTMENTS TO POOLING ACCOUNTING (a) Remove goodwill which resulted from valuing Atlantic Energy Inc. (AEI) based on its stock price as of the merger announcement (132,902) (b) Recognize AEI's retained earnings on February 28, 1998 (the day prior to the Merger) 224,663 -- (c) Recognize in earnings the direct merger costs capitalized under purchase accounting (50,728) (50,728) (d) Remove the earnings effect of amortizing goodwill and purchase accounting adjustments related to pension and other postretirement benefit obligations 3,606 3,606 PRO FORMA BALANCE AS OF MARCH 31, 1999, ASSUMING ---------- ---------- ---------- ---------- POOLING ACCOUNTING $459,224 $(3,819) $(2,421) $1,668,187 ========== ========== ========== ==========
Conectiv's merger of Delmarva Power and Atlantic City Electric was accounted for using the purchase method of accounting for business combinations. Because of the purchase method, the retained earnings of Atlantic as of the merger date are excluded from Conectiv's consolidated retained earnings. EX-99.H.2 4 CONECTIV CAPITALIZATION FORECAST 1 Exhibit 99 H.2 CONECTIV CAPITALIZATION FORECAST FILED WITH THE OFFICE OF THE SECRETARY UNDER A REQUEST FOR CONFIDENTIAL TREATMENT EX-99.FS.1 5 PRO FORMA CONSOLIDATED BALANCE SHEETS 1 EXHIBIT FS-1 CONECTIV AND SUBSIDIARIES ACTUAL AND PRO FORMA CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1999 (DOLLARS IN THOUSANDS) (UNAUDITED)
Pro Forma Actual Adjustments Pro Forma ------ ----------- --------- ASSETS CURRENT ASSETS Cash and cash equivalents $44,433 $729,992(1) $774,425 Accounts receivable 447,476 -- 447,476 Inventories, at average cost: Fuel (coal, oil, and gas) 57,844 -- 57,844 Materials and supplies 78,935 -- 78,935 Prepaid New Jersey sales and excise taxes 40,234 -- 40,234 Other prepayments 13,142 -- 13,142 Deferred income taxes, net 33,099 -- 33,099 ---------- ---------- ---------- 715,163 729,992 1,445,155 ---------- ---------- ---------- INVESTMENTS Investment in leveraged leases 117,573 -- 117,573 Funds held by trustee 171,145 -- 171,145 Other investments 132,250 -- 132,250 ---------- ---------- ---------- 420,968 -- 420,968 ---------- ---------- ---------- PROPERTY, PLANT, and EQUIPMENT Electric utility plant 5,723,283 -- 5,723,283 Gas utility plant 254,262 -- 254,262 Common utility plant 182,544 -- 182,544 ---------- ---------- ---------- 6,160,089 -- 6,160,089 Less: Accumulated depreciation 2,603,257 -- 2,603,257 ---------- ---------- ---------- Net utility plant in service 3,556,832 -- 3,556,832 Utility construction work-in-progress 226,281 -- 226,281 Leased nuclear fuel, at amortized cost 57,049 -- 57,049 Nonutility property, net 243,553 -- 243,553 Goodwill, net 409,297 -- 409,297 ---------- ---------- ---------- 4,493,012 -- 4,493,012 ---------- ---------- ---------- DEFERRED CHARGES AND OTHER ASSETS Unrecovered purchased power costs 38,891 -- 38,891 Deferred recoverable income taxes 184,245 -- 184,245 Unrecovered New Jersey state excise tax 30,814 -- 30,814 Deferred debt refinancing costs 42,014 -- 42,014 Deferred other postretirement benefit costs 33,728 -- 33,728 Prepaid employee benefits costs 24,937 -- 24,937 Unamortized debt expense 28,633 -- 28,633 License fees 24,018 -- 24,018 Other 81,334 -- 81,334 ---------- ---------- ---------- 488,614 -- 488,614 ---------- ---------- ---------- TOTAL ASSETS $6,117,757 $729,992 $6,847,749 ========== ========== ==========
2 EXHIBIT FS-1 CONECTIV AND SUBSIDIARIES ACTUAL AND PRO FORMA CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1999 (DOLLARS IN THOUSANDS) (UNAUDITED)
Pro Forma Actual Adjustments Pro Forma ------ ----------- --------- CAPITALIZATION AND LIABILITIES CURRENT LIABILITIES Short-term debt $ 600,008 $ 729,992(1) $ 1,330,000 Long-term debt due within one year 67,055 -- 67,055 Variable rate demand bonds 125,100 -- 125,100 Accounts payable 217,876 -- 217,876 Taxes accrued 34,257 -- 34,257 Interest accrued 42,915 -- 42,915 Dividends payable 27,442 -- 27,442 Deferred energy costs 49,243 -- 49,243 Current capital lease obligation 28,107 -- 28,107 Accrued employee separation and other merger-related costs 4,856 -- 4,856 Other 66,315 -- 66,315 ----------- ----------- ----------- 1,263,174 729,992 1,993,166 ----------- ----------- ----------- DEFERRED CREDITS AND OTHER LIABILITIES Other postretirement benefits obligation 102,918 -- 102,918 Deferred income taxes, net 870,004 -- 870,004 Deferred investment tax credits 76,978 -- 76,978 Long-term capital lease obligation 30,244 -- 30,244 Other 62,600 -- 62,600 ----------- ----------- ----------- 1,142,744 -- 1,142,744 ----------- ----------- ----------- CAPITALIZATION Common stock: $0.01 par value; 150,000,000 shares authorized; shares outstanding-- 87,822,737 actual and pro forma 1,021 -- 1,021 Class A common stock, $0.01 par value; 10,000,000 shares authorized; shares outstanding-- 5,742,604 actual and pro forma 57 -- 57 Additional paid-in capital--common stock 1,477,336 -- 1,477,336 Additional paid-in capital--Class A common stock 93,742 -- 93,742 Retained earnings 289,139 -- 289,139 ----------- ----------- ----------- 1,861,295 -- 1,861,295 Treasury shares, at cost: 14,261,349 shares actual and pro forma (362,741) -- (362,741) Unearned compensation (2,236) -- (2,236) ----------- ----------- ----------- Total common stockholders' equity 1,496,318 -- 1,496,318 Preferred stock of subsidiaries: Not subject to mandatory redemption 95,933 -- 95,933 Subject to mandatory redemption 188,950 -- 188,950 Long-term debt 1,930,638 -- 1,930,638 ----------- ----------- ----------- 3,711,839 -- 3,711,839 ----------- ----------- ----------- TOTAL CAPITALIZATION AND LIABILITIES $ 6,117,757 $ 729,992 $ 6,847,749 =========== =========== ===========
EX-99.FS.2 6 ACTUAL AND PRO FORMA CONSOL. STATEMENTS OF INCOME 1 EXHIBIT FS-2 CONECTIV AND SUBSIDIARIES ACTUAL AND PRO FORMA CONSOLIDATED STATEMENTS OF INCOME FOR THE TWELVE MONTHS ENDED JUNE 30, 1999 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Pro Forma Actual Adjustments Pro Forma ------ ----------- --------- OPERATING REVENUES Electric $ 2,440,041 $ -- $ 2,440,041 Gas 771,396 -- 771,396 Other services 421,604 -- 421,604 ----------- ----------- ----------- 3,633,041 -- 3,633,041 ----------- ----------- ----------- OPERATING EXPENSES Electric fuel and purchased energy 979,656 -- 979,656 Gas purchased 716,052 -- 716,052 Other services' cost of sales 338,816 -- 338,816 Purchased electric capacity 216,149 -- 216,149 Employee separation and other merger-related costs 1,358 -- 1,358 Operation and maintenance 587,652 -- 587,652 Depreciation 266,732 -- 266,732 Taxes other than income taxes 82,907 -- 82,907 ----------- ----------- ----------- 3,189,322 -- 3,189,322 ----------- ----------- ----------- OPERATING INCOME 443,719 -- 443,719.00 ----------- ----------- ----------- OTHER INCOME Allowance for equity funds used during construction 2,627 -- 2,627 Other income 60,543 -- 60,543 ----------- ----------- ----------- 63,170 -- 63,170 ----------- ----------- ----------- INTEREST EXPENSE Interest charges 169,147 43,800(2) 212,947 Allowance for borrowed funds used during construction and capitalized interest (5,648) -- (5,648) ----------- ----------- ----------- 163,499 43,800 207,299 ----------- ----------- ----------- PREFERRED STOCK DIVIDEND REQUIREMENTS OF SUBSIDIARIES 16,805 -- 16,805 ----------- ----------- ----------- INCOME BEFORE INCOME TAXES 326,585 (43,800) 282,785 INCOME TAXES 128,696 (17,520)(3) 111,176 ----------- ----------- ----------- NET INCOME $ 197,889 $ (26,280) $ 171,609 =========== =========== =========== EARNINGS APPLICABLE TO COMMON STOCK Common stock $ 185,542 $ (26,280) $ 159,262 Class A common stock 12,347 -- 12,347 ----------- ----------- ----------- $ 197,889 $ (26,280) $ 171,609 =========== =========== =========== COMMON STOCK Average shares outstanding (000) Common stock 100,064 100,064 Class A common stock 6,522 6,522 Earnings per average share--basic and diluted Common stock $ 1.85 $ 1.59 Class A common stock $ 1.89 $ 1.89 Dividends declared per share Common stock $ 1.375 $ 1.375 Class A common stock $ 3.20 $ 3.20
2 PRO FORMA NOTES ($000's) -------- (1) Represents the issuance of short-term debt in the amount necessary to bring Conectiv up to the $1.3 billion limit being requested (total Conectiv consolidated short-term debt is increased to $1.33 billion since the Atlantic City Electric Company has $30 million of short-term debt that is not included under the financing order dated February 26, 1998 (HCAR No. 26833) (2) Represents the yearly interest expense on the additional short-term debt at 6%. $729,992 6% -------- $ 43,800 ======== (3) Represents the tax effect of the additional interest expense. $ 43,800 40% -------- $ 17,520 ========
EX-27 7 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 12-MOS 12-MOS JUN-30-1999 JUN-30-1999 PER-BOOK PRO-FORMA 3,556,832 3,556,832 664,521 664,521 715,163 1,445,155 488,614 488,614 692,627 692,627 6,117,757 6,847,749 1,078 1,078 1,571,078 1,571,078 289,139 289,139 1,861,295 1,861,295 188,950 188,950 95,933 95,933 1,930,638 1,930,638 600,008 1,330,000 0 0 0 0 67,055 67,055 0 0 30,244 30,244 28,107 28,107 1,315,527 1,315,527 6,117,757 6,847,749 3,633,041 3,633,041 128,696 111,176 3,189,322 3,189,322 3,318,018 3,300,498 315,023 332,543 63,170 63,170 378,193 395,713 180,304 224,104 197,889 171,609 0 0 197,889 171,609 155,853 155,853 0 0 474,958 0 1.85 1.59 1.89 1.89
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