UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 24, 1997
BALTIMORE GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Maryland 1-1910 52-0280210
-------------------------------------------------------
(State of incorporation) (Commission (IRS Employer
File Number) Identification No.)
39 W. Lexington Street Baltimore, Maryland 21201
----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
410-783-5920
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
1
<PAGE>
ITEM 5. Other Events
- ---------------------
Earnings
- --------
Our consolidated earnings were:
o $ .05 per share for the quarter ended June 30, 1997,
o $ .48 per share for the six months ended June 30, 1997, and
o $1.36 per share for the 12 months ended June 30, 1997.
See the press release attached to this 8-K as Exhibit 99 which includes details
about second quarter financial performance. These earnings reflect the $31.9
million after-tax write-down discussed below.
$31.9 Million Real Estate Project Write-Down
- --------------------------------------------
Our Constellation Companies' real estate portfolio includes a mixed-use,
planned-unit development named Piney Orchard. The development, located in the
Baltimore-Washington corridor, has been economically hurt by a prolonged period
of low economic growth in the corridor. While the project is successful
operationally, delays in the rebound of the real estate market caused delays in
completion of phases of the development and sales which drove up project costs,
specifically carrying costs which include interest expenses.
As previously disclosed, under applicable accounting rules we are required
to write down the value of a real estate investment if expected cash flow from
the project is less than the investment in the project. The expected cash flow
from the Piney Orchard project is less than the Constellation Companies'
investment in the project due primarily to carrying costs which include interest
expenses. As a result, our second quarter financial statements will reflect an
after-tax write-down of $31.9 million. The Constellation Companies remaining
book investment in the project is $97.8 million.
2
<PAGE>
ITEM 7. Financial Statements and Exhibits
- ------------------------------------------
(c) Exhibit No. 99 News Release of Baltimore Gas and
Electric Company dated July 24, 1997.
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 thereunto duly authorized.
BALTIMORE GAS AND ELECTRIC COMPANY
----------------------------------
(Registrant)
Date July 24, 1997 /s/ D. A. Brune
------------- ----------------
D. A. Brune, Vice President
on behalf of the Registrant and
as Principal Financial Officer
3
<PAGE>
EXHIBIT INDEX
Exhibit
Number
------
99 News Release of Baltimore Gas and
Electric Company dated July 24, 1997.
4
<PAGE>
Exhibit 99
----------
Arthur J. Slusark Baltimore Gas and Electric Company
Director of Public Information 39 W. Lexington Street
Room 1100
Baltimore, Maryland 21202
410 234-7433 24 hours a day
N e w s
R e l e a s e
July 24, 1997
FOR IMMEDIATE RELEASE
REAL ESTATE WRITE-DOWN AND MILD WEATHER
- ---------------------------------------
RESULT IN BGE SECOND QUARTER EARNINGS DECLINE
- ---------------------------------------------
Baltimore Gas and Electric Company today reported common stock earnings of
$7,096,000 for the three months ended June 30, 1997, equivalent to $.05 per
common share. This compares with earnings of $52,449,000, or $.36 per share, for
the second quarter of 1996. The primary reason for the decline in 1997
second-quarter earnings was a write-down of $32 million after-tax, or $.22 per
share, on Piney Orchard, a planned community being developed by BGE subsidiary
Constellation Real Estate Group.
For the six months ended June 30, 1997, earnings on common stock were
$71,323,000, equivalent to $.48 per share. This compares with earnings of
$143,566,000, or $.97 per share for the six months ended June 30, 1996. The 1997
six-month figures include the $.22 Piney Orchard write- down as well as an $.08
per share write-down on Church Street Station, an entertainment complex in
Florida also operated by Constellation Real Estate Group.
(more)
1
<PAGE>
Earnings per share for the Company's utility operations and for its
diversified businesses were as follows:
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
Utility Operations $.23 $.26b $.62 $.83b
Diversified Businesses (.18)a .10 (.14)c .14
---- --- ---- ---
Total $.05 $.36 $.48 $.97
==== ==== ==== ====
Note
- ----
a Includes the impact of the $.22 per share write-down of the Piney Orchard
Planned Community, a real estate project.
b Reflects the $.03 per share disallowance of replacement energy costs
incurred during an outage at Calvert Cliffs in 1987.
c Reflects the $.22 per share write-down of the Piney Orchard Planned
Community and the $.08 per share write-down for the possible sale of Church
Street Station.
Mild weather conditions during the first half of 1997 that contrasted
sharply with the weather experienced during the first six months of 1996
impacted utility earnings. According to George C. Creel, Executive Vice
President and Acting Chief Operating Officer, "So far this year, we have had a
very mild winter and spring. Unfortunately, the nice weather is not so nice for
earnings, especially when compared to our earnings during the first half of 1996
when we experienced intemperate weather conditions." In 1997, there were 35%
fewer cooling degree days and 9% fewer heating degree days than in the first
half of 1996.
Total electric sales to customers decreased nearly 5% during the first two
quarters of 1997 compared to the same period in 1996. Residential sales
decreased more than 10% despite a 1% growth in customers, while commercial and
industrial sales each decreased 1%, primarily as a result of the weather.
2
<PAGE>
Total gas sales to customers for the first six months of 1997 were 3% below
sales during the first half of 1996. Sales to residential gas customers were
down 12% and commercial sales decreased 1% as a result of the weather. These
decreases were partially offset by 2% customer growth and an 8% increase in
industrial sales.
Earnings from diversified businesses during the first half of 1997 were
lower than earnings during the first six months of 1996 as a result of two real
estate write-downs. An $.08 per share write-down was taken on Church Street
Station during the first quarter and a $.22 per share write-down was taken
during the second quarter on Piney Orchard, a 1,525-acre, planned community in
Anne Arundel County. Excluding the write-downs, which total $44 million
after-tax, Constellation Holdings, Inc. increased earnings $3.9 million. Bruce
M. Ambler, President - Constellation Holdings, said "although the Piney Orchard
project is successful operationally, delays in the rebound of the real estate
market caused delays in development and sales that drove up our project costs."
In addition, BGE Home Products & Services contributed $2.3 million to the
diversified business earnings.
(more)
3
<PAGE>
BALTIMORE GAS AND ELECTRIC COMPANY AND SUBSIDIARIES
Consolidated Financial Information
June 30, 1997
(In Thousands, Except Per Share Amounts)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
Revenues:
Electric $498,066 $517,780 $1,015,362 $1,072,224
Gas 92,338 93,515 306,046 312,779
Diversified Businesses 156,032 120,412 312,714 208,034
------- ------- ------- -------
Total $746,436 $731,707 $1,634,122 $1,593,037
======== ======== ========== ==========
Net Income $14,970 $64,553 $87,081 $165,334
Earnings Applicable to
Common Stock $7,096 $52,449 $71,323 $143,566
Average Common Shares
Outstanding 147,667 147,527 147,667 147,527
Earnings Per Share
of Common Stock
Utility Operations $.23 $.26b $.62 $.83b
Diversified Businesses (.18)a .10 (.14)c .14
---- --- ---- ---
Total $.05 $.36 $.48 $.97
==== ==== ==== ====
Note
- ----
a Includes the impact of the $.22 per share write-down of the Piney Orchard
Planned Community, a real estate project.
b Reflects the $.03 per share disallowance of replacement energy costs
incurred during an outage at Calvert Cliffs in 1987.
c Reflects the $.22 per share write-down of the Piney Orchard Planned
Community and the $.08 per share write-down for the possible sale of Church
Street Station.
- ### -
4
<PAGE>
