<PAGE> 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
<PAGE> 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
<PAGE> 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.
<PAGE> 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
<PAGE> 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.
<PAGE> 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)
<PAGE> 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)
<PAGE> 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###
<PAGE> 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)
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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)
<PAGE> 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)
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news release
CONECTIV
(NYSE: CIV and CIVA)
(Dollars in Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December,
-------------------------- ------------------------------
1999 1998 1999 1998
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
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
</TABLE>
<PAGE> 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
<TABLE>
<CAPTION>
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)
----------- ----------- ------------ --------
<S> <C> <C> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
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)
---------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
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
</TABLE>
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.
