<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997 Commission File Number
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Atlantic Electric 401(K) Savings and Investment Plan - B
6801 Black Horse Pike
Egg Harbor Twp., N.J. 08234-4130
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Custom Stable Value Fund Equity Index Fund
T. Rowe Price, Inc. T. Rowe Price, Inc.
100 East Pratt Street 100 East Pratt Street
Baltimore, Maryland 21202 Baltimore, Maryland 21202
Equity Income Fund Spectrum Growth Fund
T. Rowe Price, Inc. T. Rowe Price, Inc.
100 East Pratt Street 100 East Pratt Street
Baltimore, Maryland 21202 Baltimore, Maryland 21202
International Stock Fund Atlantic Energy, Inc. Common Stock
T. Rowe Price, Inc. Atlantic Energy, Inc.
100 East Pratt Street 6801 Black Horse Pike
Baltimore, Maryland 21202 Egg Harbor Twp., NJ 08234-4130
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TABLE OF CONTENTS
Page
----
Independent Auditors' Report 2
Atlantic Electric
401(K) Savings and Investment Plan - B
Financial Statements as of December 31, 1997 and 1996
and For The Year Ended December 31, 1997:
Statements of Net Assets Available for Benefits 3
Statement of Changes in Net Assets Available for Benefits 4
Notes to Financial Statements 5
Supplemental Schedules:
I: Schedule of Reportable Transactions-Form 5500, Item 27d 13
II: Schedule of Assets Held for Investment Purposes,
December 31, 1997 - Form 5500, Item 27a 14
*****
1
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INDEPENDENT AUDITORS' REPORT
- ----------------------------
Atlantic Electric
401(K) Savings and Investment Plan - B
We have audited the accompanying statements of net assets available for benefits
of Atlantic Electric 401 (K) Savings and Investment Plan-B as of December 31,
1997 and 1996 and the related statement of changes in net assets available for
benefits for the year ended December 31, 1997. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements, present fairly, in all material
respects, the net assets available for benefits of Atlantic Electric 401(K)
Savings and Investment Plan-B as of December 31, 1997 and 1996, and the changes
in net assets available for benefits for the year ended December 31, 1997 in
conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
Table of Contents are presented for the purpose of additional analysis and are
not a required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These schedules are the responsibility of the Plan's management. Such
schedules have been subjected to the auditing procedures applied in the audit of
the basic 1997 financial statements and, in our opinion, are fairly stated in
all material respects when considered in relation to the basic financial
statements taken as a whole.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Parsippany, New Jersey
June 17, 1998
2
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ATLANTIC ELECTRIC
- -----------------
401 (K) SAVINGS AND INVESTMENT PLAN - B
---------------------------------------
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997 AND 1996
- ----------------------------------------------------------------------------
ASSETS 1997 1996
-------------- -------------
Investments at fair value:
Common Collective Trust $10,920,800 $12,784,415
Mutual fund accounts 22,936,625 14,009,030
Participant Loans 1,197,529 1,072,374
Atlantic Energy, Inc. Common Stock 116,219 79,922
Contributions receivable:
Atlantic City Electric Company 15,619 14,726
Participants 46,269 41,068
-------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $35,233,061 $28,001,535
============== =============
See notes to financial statements.
3
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ATLANTIC ELECTRIC
- -----------------
401 (K) SAVINGS AND INVESTMENT PLAN - B
---------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
1997
-----------------
Additions to assets:
Investment income:
Interest - GIC $ 721,077
Interest - Participant Loans 99,147
Dividends 1,516,782
Net appreciation of investments 2,990,403
-----------------
5,327,409
Contributions:
Participants' 2,243,390
Employers' 772,618
-----------------
3,016,008
Total additions 8,343,417
-----------------
Deductions from Assets:
Benefits paid to participants 1,108,941
Administrative Fees 2,950
-----------------
Total deductions 1,111,891
-----------------
Increase in net assets available for benefits 7,231,526
Net assets available for benefits, at beginning of year 28,001,535
-----------------
Net assets available for benefits, at end of year $35,233,061
=================
See notes to financial statements.
4
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ATLANTIC ELECTRIC
401(K) SAVINGS AND INVESTMENT PLAN - B
--------------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
1. SIGNIFICANT ACCOUNTING POLICIES
Plan Description
----------------
The Atlantic Electric 401(K) Savings and Investment Plan - B (the Plan) is
a defined contribution savings plan designed to comply with the
requirements of the Employee Retirement Income Security Act of 1974 and
with the requirements for qualifications under Section 401(k) of the
Internal Revenue Code. The Plan is administered by the Benefits/Trusts
Investment Committee appointed by the Board of Directors of Atlantic
Energy, Inc., parent holding Company of Atlantic City Electric Company (See
Note 3 "Subsequent Event"). Employee contributions to the Plan are remitted
to T. Rowe Price Trust Company and invested as directed by Plan
participants. Employer contributions are invested in the Custom Stable
Value Fund Common Collective Trust.
All full-time bargaining unit employees of the Atlantic City Electric
Company and its wholly-owned subsidiary, Deepwater Operating Company
(together referred to as the "Company"), are eligible to participate in the
Plan. Additionally, any employee who is not a regular full time employee
shall be eligible to participate upon completion of 1000 hours of service.
Employees may contribute up to 10% of base pay. Upon enrollment in the
Plan, a participant may direct employee contributions in any of six
investment options. Options available to the employee are the Custom Stable
Value Fund, Atlantic Energy, Inc. Common Stock, Equity Index Fund, Equity
Income Fund, International Stock Fund, and Spectrum Growth Fund. The tax
savings portion of participant contributions (up to 6% of an employee's
base pay) is matched by the Company at a rate of 50% not to exceed 3% of
the employee's compensation. Federal Income taxes on these contributions
and the related income are deferred until withdrawn. Benefits from the tax
savings portion of the Plan can be withdrawn upon the attainment of age 59
1/2, retirement, separation from service, death or in special financial
hardship situations. In addition, employees may contribute up to an
additional 10% of base pay on an after-tax basis to the supplemental
savings portion of the Plan, which also earns income that is not subject to
Federal income tax until withdrawn. These contributions may be withdrawn
once a quarter subject to the provisions of the Internal Revenue Code.
5
<PAGE>
Tax Status
----------
The Plan obtained its latest determination letter on March 23, 1995, in
which the Internal Revenue Service stated that the Plan was in compliance
with the applicable requirements of the Internal Revenue Code. The Plan
administrator and the Plan's tax counsel believe that the Plan is currently
designed and being operated in compliance with the applicable requirements
of the Internal Revenue Code. Therefore, no provision for income taxes has
been included in the Plan's financial statements.
Participant Accounts
--------------------
Participants' contributions are recorded in the period of the related
payroll deductions. The Company's matching contributions are recorded in
the period of the related participants' contributions. Income is recorded
as earned. Distributions to participants are recorded in the period in
which distributions are made. Participants are fully vested in employee and
employer contributions in their respective accounts at all times.
Plan Termination
----------------
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time subject
to the provisions of ERISA. In the event of Plan termination, participants
remain 100 percent vested in their accounts.
Administration Costs
--------------------
Certain professional fees and administrative expenses incurred in
connection with the Plan are paid by the Company. The facilities of the
Company are used by the Plan at no charge. Loan processing fees are paid by
the participants and deducted from Plan assets.
Participant Loans Receivable
----------------------------
The Plan began to make participant loans effective April 1, 1995.
Participants may borrow from their fund accounts a minimum of $1,000 up to
a maximum equal to the lesser of $50,000 or 50 percent of their account
balance. Loan transactions are treated as a transfer from the investment
fund to the participant Loan fund. Loan terms range from 1-5 years or up to
15 years for the purchase of a primary residence. The loans are secured by
the balance in the participant's account and bear interest at a rate
commensurate with local prevailing rates as determined quarterly by the
plan administrator. The interest rate for 1997 and 1996 was 9%. Principal
and interest is paid ratably through weekly payroll deductions.
6
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Investments
-----------
The investment options available to plan participants have the following
objectives:
(i) T. Rowe Price Custom Stable Value Fund - to provide principal stability
and a high level of monthly income;
(ii) T. Rowe Price Equity Income Fund - to provide substantial dividend
income and secondarily, long-term capital appreciations;
(iii) T. Rowe Price Equity lndex Fund - to match the performance of the
Standard & Poor's Stock Index;
(iv) T. Rowe Price International Stock Fund - to provide the
diversifications of an international fund as well as the opportunity for
long-term capital growth;
(v) T. Rowe Price Spectrum Growth Fund - to provide long-term growth of
capital;
(vi) Atlantic Energy, Inc. Stock - to provide maximum capital appreciation
and dividend income from Atlantic Energy, Inc. Common Shares (See Note 3
"Subsequent Event")
The investments in Mutual Funds are stated at fair value as determined by
quoted market prices. The investments in the Common Collective Trust are
stated at contract value (which approximates fair value) which is the
aggregate of contributions and income earned on such contributions, less
participants' withdrawals.
The following table represents the fair value of investments by issuer
comprising 5 percent or more of the Plan's assets:
<TABLE>
<CAPTION>
December 31,
<S> <C> <C>
Investments at Fair Value: 1997 1996
-------------------------- ----------- -----------
Custom Stable Value Fund $10,920,800 $12,784,415
Equity Index Fund 9,000,217 4,878,462
Equity Income Fund 11,664,945 7,501,536
----------- -----------
$31,585,962 $25,164,413
=========== ===========
</TABLE>
The net appreciation in fair value of each significant type of investment
for the year ended is as follows:
December 31,
1997
------------
Custom Stable Value Fund $ -0-
Equity Index Fund 1,641,509
Equity Income Fund 1,281,779
------------
$ 2,923,288
============
7
<PAGE>
The Custom Stable Value Fund invests funds in various term guaranteed
insurance contracts and maintains a cash reserve balance with all excess
funds. The average yield and the weighted average crediting interest rate
are based on the underlying contracts.
For the years ended December 31, 1997 and 1996, the guaranteed insurance
contracts of the Custom Stable Value Fund, in aggregate, had an average
yield of 6.38% and 6.36%, respectively.
At December 31, 1997 and 1996, the fund had a weighted average crediting
interest rate of 6.65% and 6.93%, respectively.
Distributions
-------------
At December 31, 1997 and 1996, there were no benefits payable to plan
participants.
8
<PAGE>
2. PARTICIPANT-DIRECTED INVESTMENT FUNDS AS OF December 31, 1997 AND 1996
Net assets available for plan benefits are presented below for each
participant-directed investment fund for the year ended December 31, 1997:
(In Dollars)
<TABLE>
<CAPTION>
Custom Stable Equity Equity Spectrum International
Value Index Income Growth Stock
----------------- --------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Investments at fair value:
Common Collective Trust $10,920,800
Mutual fund accounts $9,000,217 $11,664,945 $1,753,528 $517,935
Participant loans
Atlantic Energy, Inc. Common Stock
Contributions receivable:
Atlantic City Electric Company 15,619
Participants 11,368 13,436 17,232 3,003 1,177
================= =============== ================ ============== ===============
Net Assets Available for Benefits $10,947,787 $9,013,653 $11,682,177 $1,756,531 $519,112
================= =============== ================ ============== ===============
<CAPTION>
Atlantic
Loans Energy Total
-------------- ------------ ---------------
<S> <C> <C> <C>
Investments at fair value:
Common Collective Trust $10,920,800
Mutual fund accounts 22,936,625
Participant loans $1,197,529 1,197,529
Atlantic Energy, Inc. Common Stock $116,219 116,219
Contributions receivable:
Atlantic City Electric Company 15,619
Participants 53 46,269
============== ============ ===============
Net Assets Available for Benefits $1,197,529 $116,272 $35,233,061
============== ============ ===============
</TABLE>
9
<PAGE>
Changes in Net Assets available for Benefits for the year ended December 31,
1997
<TABLE>
<CAPTION>
Custom Stable Equity Equity Spectrum International
Value Index Income Growth Stock
------------------- --------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Additions to assets:
Investment income:
Interest - GIC $ 721,077
Interest - loans 33,497 $ 26,626 $ 27,626 $ 9,086 $ 2,035
Dividends 177,845 1,125,856 177,311 27,337
Net appreciation
of investment 1,641,509 1,281,779 51,766 (8,529)
Interfund (3,205,908) 1,794,013 1,065,214 209,533 (16,110)
Contributions:
Employee 653,519 592,018 785,959 149,679 59,798
Employer 772,618
------------------- --------------- ----------------- --------------- ---------------
Total Additions (1,025,197) 4,232,011 4,286,434 597,375 64,531
Deductions from assets:
Distributions (838,940) (105,934) (118,353) (15,609) (3,319)
Administrative fees (1,137) (826) (777) (167) (32)
------------------- --------------- ----------------- --------------- ---------------
Total Deductions (840,077) (106,760) (119,130) (15,776) (3,351)
Increase/(Decrease) in
net assets (1,865,274) 4,125,251 4,167,304 581,599 61,180
Net assets, beginning
of year 12,813,061 4,888,402 7,514,873 1,174,932 457,932
------------------- --------------- ----------------- --------------- ---------------
Net assets, end of year $ 10,947,787 $ 9,013,653 $ 11,682,177 $ 1,756,531 $ 519,112
=================== =============== ================= =============== ===============
<CAPTION>
Atlantic
Loans Energy Total
--------------- ----------------- -----------------
<S> <C> <C> <C>
Additions to assets:
Investment income:
Interest - GIC $ 721,077
Interest - loans $ 277 99,147
Dividends 8,433 1,516,782
Net appreciation
of investment 23,878 2,990,403
Interfund $ 151,941 1,317 0
Contributions:
Employee 2,417 2,243,390
Employer 772,618
--------------- ----------------- -----------------
Total Additions 151,941 36,322 8,343,417
Deductions from assets:
Distributions (26,786) (1,108,941)
Administrative fees (11) (2,950)
--------------- ----------------- -----------------
Total Deductions (26,786) (11) (1,111,891)
Increase/(Decrease) in
net assets 125,155 36,311 7,231,526
Net assets, beginning
of year 1,072,374 79,961 28,001,535
--------------- ----------------- -----------------
Net assets, end of year $ 1,197,529 $ 116,272 $ 35,233,061
=============== ================= =================
</TABLE>
10
<PAGE>
Net assets available for plan benefits are presented below for each
participant-directed investment fund for the year ended December 31, 1996: (In
Dollars)
<TABLE>
<CAPTION>
Custom Stable Equity Equity Spectrum International
Value Index Income Growth Stock
----------------- --------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Investments at fair value:
Common Collective Trust $12,784,415
Mutual fund accounts $4,878,462 $7,501,536 $1,172,193 $456,839
Participant loans
Atlantic Energy, Inc. Common Stock
Contributions receivable:
Atlantic City Electric Company 14,726
Participants 13,920 9,940 13,337 2,739 1,093
----------------- --------------- ---------------- -------------- ---------------
Net Assets Available for Benefits $12,813,061 $4,888,402 $7,514,873 $1,174,932 $457,932
================= =============== ================ ============== ===============
<CAPTION>
Atlantic
Loans Energy Total
-------------- ------------ ---------------
<S> <C> <C> <C>
Investments at fair value:
Common Collective Trust $12,784,415
Mutual fund accounts 14,009,030
Participant loans $1,072,374 1,072,374
Atlantic Energy, Inc. Common Stock $79,922 79,922
Contributions receivable:
Atlantic City Electric Company 14,726
Participants 39 41,068
-------------- ------------ ---------------
Net Assets Available for Benefits $1,072,374 $79,961 $28,001,535
============== ============ ===============
</TABLE>
11
<PAGE>
3. SUBSEQUENT EVENT
On August 12, 1996, the Board of Directors of Atlantic Energy, Inc. and
Delmarva Power & Light Company (Delmarva) jointly announced an agreement to
merge the companies into a new company named Conectiv. The merger became
effective on March 1, 1998. As a result of this merger, each share of
Atlantic Energy, Inc. Common Stock was converted into .75 shares of
Conectiv Common Stock and .125 shares of Conectiv Class A Stock.
12
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SCHEDULE 1
ATLANTIC ELECTRIC
- -----------------
401 (K) SAVINGS AND INVESTMENT PLAN - B
---------------------------------------
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
Transactions or series of transactions in excess of 5% of the market value of
plan assets:
Units or Description of Market Net Gain
Shares Investment Cost Value or (Loss)
- -------------------------------------------------------------------------------
Purchases:
- -------------
T. Rowe Price
Custom Stable
Value Fund $ 3,837,038
T. Rowe Price
Equity Index Fund 3,886,585
T. Rowe Price
Equity Income Fund 3,912,364
T. Rowe Price
International
Stock Fund 1,158,419
Sales:
- -------------
T. Rowe Price
Custom Stable
Value Fund $ 5,700,653 $ 5,700,653 $ -
T. Rowe Price
Equity Index Fund 1,251,967 1,406,340 154,373
T. Rowe Price
Equity Income Fund 914,458 1,030,736 116,278
T. Rowe Price
International
Stock Fund 1,064,738 1,088,794 24,056
13
<PAGE>
SCHEDULE II
ATLANTIC ELECTRIC
- -----------------
401 (K) SAVINGS AND INVESTMENT - B
----------------------------------
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description of
Investment Cost Current Value
------------------------------ ---------------------- ----------------------
<S> <C> <C> <C>
T. Rowe Price
Custom Stable Value
Fund GIC $10,920,800 $10,920,800
Equity Index Fund Mutual Fund 6,523,754 9,000,217
Equity Income Fund Mutual Fund 9,327,066 11,664,945
Spectrum Growth Fund Mutual Fund 1,648,948 1,753,528
International Stock
Fund Mutual Fund 515,578 517,935
Atlantic Energy, Inc.
Stock * Common Stock 97,377 116,219
Participant Loans Various loans at 9%,
maturing January 1998
through November 2012 1,197,529 1,197,529
---------------------- ----------------------
TOTAL ASSETS HELD FOR INVESTMENT $30,231,052 $35,171,173
====================== ======================
</TABLE>
*Represents a qualified investment in an Employee related security.
14
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: June 30, 1998 /s/ L.M. Walters
---------------------------
L. M. Walters
Treasurer
15
