Pepco Holdings Reports Second-Quarter Results Declares Dividend on Common Stock
Thursday, July 24, 2003
Conference Call Scheduled
For Immediate Release
Pepco Holdings, Inc. (NYSE: POM) today announced second-quarter 2003 consolidated earnings of $53.4 million, or 31 cents per share, on operating revenue of $1.7 billion. In the second quarter of 2002, Potomac Electric Power Company (Pepco) reported consolidated earnings of $45.7 million, or 43 cents per share, on operating revenues of $581.2 million.
For the six months ended June 30, 2003, PHI''s consolidated earnings were $28.5 million, or 17 cents per share, on operating revenues of $3.6 billion. These results include the previously reported net unfavorable impact of $31.1 million, or 18 cents per share, due to Conectiv Energy’s cancellation of a contract with General Electric for the delivery of four combustion turbines (CTs) and $27 million, or 16 cents per share, in net trading losses prior to the cessation o fproprietary trading. For the same period last year, Pepco reported consolidated earnings of $69 million, or 64 cents per share, on operating revenue of $1.1 billion.
PHI was formed to effect Pepco's acquisition of Conectiv on Aug. 1, 2002.The 2003 quarterly and year-to-date financial results include PHI and its subsidiaries'' operating results for the full periods. The 2002 periods include only the results of Pepco and its pre-merge rsubsidiaries, as previously reported by Pepco. Accordingly, comparisons to the 2002 results for these periods are not meaningful because pursuant to purchase accounting rules Conectiv's results of operations are not included.
COMMON STOCK DIVIDEND DECLARED
PHI''s Board of Directors today declared a dividend on common stock of 25 cents per share payable Sept. 30, 2003, to shareholders of record on Sept. 10, 2003.
CONFERENCE CALL FOR INVESTORS
PHI will host a conference call to discuss second-quarter results on Friday,J uly 25 at 10:00 a.m. EDT. Individual investors, members of the news media and other interested parties may access the conference call "live" on the Internet at www.pepcoholdings.com/investorsor by telephone at (212) 896-6011. A taped on-demand replay of the conference call will also be available for seven days following the call. To hear the replay, call (800) 633-8284 or (402)977-9140 and enter access code 21155015. An audio archive also will be available on the PHI Website.
CURRENT NEWS
As previously disclosed, under settlements entered into with regulatory authorities, Pepco is required to provide default electricity supply (referred to as "Standard Offer Service") at specified rates to customers in Maryland until July 2004 and to customers in Washington, D.C. until February 2005. Under full requirements contracts entered into in 2000 in connection with the purchase by Mirant Corp. and certain of its affiliates ("Mirant") of substantially all of Pepco''s electricity generation assets, Mirant is obligated to supply Pepco with all ofthe capacity and energy needed to fulfill these Standard Offer Service obligations at fixed prices that incorporate certain above market power purchase contracts with other parties.
On July 14, 2003, Mirant filed a voluntary petition for relief under Chapter 11 ofthe Federal Bankruptcy Code. Mirant is continuing to supply power to Pepco under the terms ofits contracts and retail prices to Pepco’s Standard Offer Service customers are unaffected.These retail prices can be changed only by order of the Public Service Commissions in Maryland and the District of Columbia. If at a later time Mirant moves to reject the contracts, Pepco has other options to ensure power supply is continued. Pepco will, of course, exercise its legal remedies and vigorously oppose any attempt to adversely affect Pepco's rights under the contracts, and will work with its regulators to achieve appropriate results for Pepco and its customers. Pepco intends to be actively involved in this bankruptcy case to protect the interests of its customers and shareholders.
Successful rejection of Mirant's obligations under the contracts could have a material adverse effect on results of operations; however, management does not believe that it would have a material adverse impact on PHI''s financial position. Although Pepco believes it has substantial legal basis to oppose such rejection, the outcome of any bankruptcy proceeding cannot be predicted.In the event of such rejection, Pepco believes it will have significant claims against the bankruptcy estates for the full amount of any additional cost incurred, and Pepco also believes it has substantial legal grounds to recover losses, if any, that are not recovered from Mirant through appropriate regulatory relief.
On July 21, 2003, Atlantic City Electric Company ("ACE"), a wholly owned subsidiary of PHI and Conectiv, received approval from the New Jersey Board of Public Utilities ("Board") to begin collecting a portion of the deferred costs that were incurred asa result of the Electric Discount and Energy Competition Act ("EDECA") and to resetrates to recover on-going costs incurred as a result of EDECA.
The Board announced it has approved the recovery of $125 million over a ten-year amortization period beginning August 1, 2003 and has agreed to consider approximately $25.4 million of the difference between the filed and approved deferred balance as part of ACE''s currently pending base rate case. The Board's estimated overall deferral balance as of July 31, 2003 was $195 millionof which the Board has disallowed $44.6 million pre-tax. Since the amounts included in this decision are based on estimates through July 31, 2003, the actual ending deferred cost balance will be subject to review and finalization by the Board and ACE. The approved rates will become effective on August 1, 2003. ACE believes the record does not justify the level of disallowance imposedby the Board. ACE is awaiting the written order from the Board and is evaluating its options related to this decision.
Please click here for the SelectedFinancial Information. (.pdf document).
About PHI: Pepco Holdings, Inc. is a diversified energy company with headquarters in Washington, D.C. Its principal operations consist of Pepco and Conectiv Power Delivery, which deliver 50,000 gigawatt-hours of power to more than 1.8 million customers in Washington, Delaware, Maryland, New Jersey and Virginia. PHI engages in regulated utility operations by delivering electricity and natural gas, and provides competitive energy and energy products and services to residential and commercial customers.
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Forward-Looking Statements: Except for historical statements and discussions, the statements in this news release constitute "forward-looking statements" within the meaning of federal securities law. These statements contain management's beliefs based on information currently available to management and on various assumptions concerning future events. Forward-looking statements are not a guarantee of future performance or events. They are subject to a number of uncertainties and other factors, many of which are outside the company's control. Factors that could cause actual results to differ materially from those in the forward-looking statements herein include general economic, business and financing conditions; availability and cost of capital; changes in laws, regulations or regulatory policies ;weather conditions; competition; governmental actions; and other presently unknown or unforeseen factors. These uncertainties and factors could caus eactual results to differ materially from such statements. PHI disclaims any intention or obligation to update or revise any forward-looking statements,whether as a result of new information, future events or otherwise. This information is presented solely to provide additional information to further understand the results and prospects of PHI.
