Pepco Holdings Reports Third-Quarter Results: Declares Dividend on Common Stock
Thursday, October 23, 2003
Conference Call Scheduled
For Immediate Release
Pepco Holdings, Inc. (NYSE: POM) today announced third-quarter 2003 consolidated earnings of $157.3 million, or 92 cents per share, on operating revenue of $2.1 billion. The 92 cents includes the favorable impact of a $44.7 million gain, or 26 cents per share, related to the sale of the Edison Place office building and the unfavorable impact of $8.7 million, or 5 cents per share, related to the reserve of a portion of a pre-bankruptcy petition receivable from Mirant Corp., for which Pepco will file a creditor's claim in the bankruptcy proceedings. In the third quarter of 2002, PHI reported consolidated earnings of $115.2 million, or 80 cents per share, on operating revenues of $1.6 billion. PHI was formed to effect Pepco''s Aug. 1, 2002 acquisition of Conectiv, a Wilmington, Del. based holding company.
For the nine months ended Sept. 30, 2003, PHI's consolidated earnings were $175.5 million, or $1.03 per share, on operating revenues of $5.7 billion. These results include the previously reported net unfavorable impacts of $31.1 million, or 18 cents per share, due to Conectiv Energy’s cancellation of a contract for the delivery of four combustion turbines and $27 million, or 16 cents per share, in net energy trading losses prior to the cessation of proprietary energy trading. The result also includes the favorable impact of $44.7 million, or 26 cents per share, related to a gain on the Edison Place office building sale, as well as the unfavorable impacts of $8.7 million, or 5 cents per share, related to the Mirant receivable reserve, and the previously reported net charge of $10.4 million, or 6 cents per share, related to Atlantic City Electric's New Jersey deferral disallowance. For the same period in 2002, PHI reported consolidated earnings of $184.1 million, or $1.54 per share, on operating revenue of $2.7 billion.
The 2003 quarterly and year-to-date financial results include PHI's and its subsidiaries' operating results for the full periods. Pursuant to purchase accounting rules, the 2002 periods include the results of Pepco and its pre-merger subsidiaries for the entire periods consolidated with Conectiv's and its subsidiaries' results starting on Aug. 1, 2002, the date the merger was completed. Accordingly, comparisons to the 2002 results for these periods are not meaningful.
Common Stock Dividend Declared
PHI's Board of Directors today declared a dividend on common stock of 25 cents per share payable Dec. 31, 2003, to shareholders of record on Dec. 10, 2003.
Conference Call For Investors
PHI will host a conference call to discuss third-quarter results on Friday, October 24 at 9:00 a.m. EDT. Individual investors, members of the news media and other interested parties may access the conference call "live" on the Internet at http://www.pepcoholdings.com/investors or by telephone at (212) 676-5282. 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 21163960. An audio archive also will be available on the PHI Web site.
Current News
Relationship With Mirant Corporation: On July 14, 2003, Mirant Corporation and most of its subsidiaries filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. As more fully described in PHI’s Form 10-Q for the quarter ended June 30, 2003 (Second Quarter 10-Q), Potomac Electric Power Company (Pepco), a wholly owned subsidiary of PHI, has several significant commercial relationships with Mirant and its subsidiaries that could be adversely affected by the bankruptcy filing. These consist primarily of (1) Transition Power Agreements (TPAs) under which an affiliate of Mirant is obligated to supply Pepco with all of the capacity and energy needed to fulfill its standard offer service obligations in Maryland until July 2004 and in the District of Columbia until February 2005 and (2) agreements of Mirant to purchase from Pepco the capacity and energy that Pepco is obligated to purchase from third parties under several power purchase agreements (PPA-Related Obligations). Each of these arrangements, based on the current market prices for capacity and energy, are on terms that are favorable to Pepco.
In the bankruptcy and related proceedings, Pepco is contesting a motion by Mirant to reject the PPA-Related Obligations. Mirant has not sought to reject the TPAs, but there is no assurance that it will not seek to do so in the course of the bankruptcy proceedings.
The Second Quarter Form 10-Q contains an estimate prepared by Pepco management of Pepco’s potential financial exposure if Mirant were successfully to reject the TPAs and the PPA-Related Obligations. Pepco continues to monitor closely its Mirant bankruptcy exposure and believes that the presentation in the Second Quarter Form 10-Q continues to be, subject to the assumptions, limitations and qualifications set forth therein, a reasonable assessment of its potential bankruptcy exposure. PHI expects to provide a more detailed update regarding the Mirant bankruptcy proceedings in its Form 10-Q for the quarter ended Sept. 30, 2003, to be filed on or about Nov. 13, 2003.
Note: The financial information set forth in this press release for the periods ending Sept. 30, 2003, reflects the resolution as of Oct. 23, 2003, of contingencies relating to the Mirant bankruptcy that existed on Sept. 30, 2003. To the extent that events occur or circumstances change after Oct. 23 that further resolve any such contingencies so as to affect the accounting treatment of items for prior periods, the Company may update accordingly the financial information set forth herein.
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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.
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 cause actual 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.
