For Immediate Release
For immediate ReleaseOctober 26, 2000
Potomac Electric Power Company (NYSE: POM) today reported a drop in third-quarter earnings due to unseasonably cool weather that sharply reduced air conditioning use in the Washington metropolitan area.
Consolidated earnings totaled $119.5 million, or $1.07 per share, for the third quarter ended
Sept. 30, 2000, compared with $151.9 million, or $1.28 per share during the same period last year. Operating revenues for third-quarter 2000 were $835.7 million, compared with $861.7 million in 1999's third quarter.
The $1.07 earnings per share consisted of $1.08 per share from recurring utility operations offset by a 1-cent loss per share from the operations of its non-regulated subsidiary, Pepco Holdings, Inc. (PHI). Subsidiary operations did not contribute to consolidated earnings per share in the 1999 period.
The decrease in recurring utility earnings in the 2000 third quarter resulted primarily from a decrease in revenues due to cooler weather, accounting for about 18 cents of the 20-cent per share decrease from $1.28 in the 1999 period. Rate reductions that became effective July 1, 2000, and higher fuel and purchased energy costs, partially offset by lower operating and maintenance expenses and the impact of fewer shares outstanding over the third quarter period due to the Company's stock reacquisition program announced in April, accounted for the remainder. Temperatures this past summer were 48 percent milder as measured in cooling degree hours than in 1999, and were 37 percent milder than the corresponding 20-year average. There was a negligible impact on earnings from customers choosing other suppliers in Maryland where deregulation began July 1, 2000.
Nine Months Ended Results
The $1.59 consolidated earnings per share for the year-to-date 2000 period consisted of $1.58 per share from recurring utility operations and 1-cent per share from PHI's operations. In the corresponding period of 1999, earnings per share were $2.10 and included a 12-cent, non-recurring utility item, which represents a contract termination fee from Southern Maryland Electric Cooperative, Inc.(SMECO); a contribution of $1.78 from recurring utility operations; and 20 cents per share from subsidiary operations.
The 20-cent difference between recurring utility earnings per share in the nine-month period of 2000 and 1999 ($1.58 versus $1.78) resulted primarily from higher costs for fuel and purchased energy as well as reductions in customers' rates. Effective July 1, 2000, base rates were reduced 1.5 percent for District of Columbia customers; Maryland residential customers received a 3 percent rate decrease and non-residential customers received a $3 million reduction. Earlier rate reductions in the District of Columbia had little impact on earnings because of the elimination of the surcharge for the costs of energy conservation programs. However, the decrease was partially offset by lower operating and maintenance expenses and a reduction of shares outstanding due to Pepco's stock reacquisition program.
In the area of PHI subsidiary operations, a 16-cent decrease in PCI earnings, from 24 cents to 8 cents per share, resulted from the impact in 1999 of non-recurring tax benefits associated with the completion of a restructuring transaction. The 3-cent increase of losses per share at Pepco Energy Services, from a 4-cent loss to a 7-cent loss, resulted from an increase in costs to prepare for deregulation.
For the year-to-date period in 2000, Pepco had consolidated earnings of $184.4 million on revenues of $2.018 billion, compared with earnings of $249.3 million on revenues of $1.974 billion during the nine-month period in 1999.
Average Common Shares Outstanding
During the period June 7, 2000 through September 30, 2000, Pepco reacquired 7,180,000 shares of its common stock for a total of approximately $185.5 million. These shares were acquired as part of Pepco's Board-approved plan to reacquire up to $200 million in treasury shares. These shares are no longer "outstanding" and therefore are not included in Pepco`s calculation of average common shares outstanding for purposes of computing earnings per share for the period the shares are held in treasury. Accordingly, the average common shares outstanding for the three and nine month periods ended September 30, 2000, decreased in comparison to the corresponding periods in 1999.
Potomac Electric Power Company's (Pepco) Board of Directors today declared a quarterly dividend on common stock of 41.5 cents per share payable Dec. 29, 2000, to shareholders of record on Dec.11, 2000. Dividends on preferred stock were declared payable Dec. 1, 2000, to shareholders of record on Nov. 6, 2000.
Conference Call for Investors
Pepco will host its regularly scheduled quarterly earnings conference call beginning at 9:00 a.m. EDT, Friday, Oct. 27. The conference call will be available to the general public and broadcast live on the company's Web site at www.pepco.com. The conference call will be archived on the site for replay purposes.
Pepco is engaged in regulated utility operations and in diversified, competitive energy and telecommunications businesses through its wholly owned nonregulated subsidiary, PHI. PHI was created in 1999 as the parent company of its two wholly owned subsidiaries, PCI and Pepco Energy Services. PCI manages a diversified portfolio of financial investments and provides telecommunication services and utility industry-related services. Pepco Energy Services provides nonregulated energy and energy related services in the mid-Atlantic region from Pennsylvania to Georgia, and its products include electricity, natural gas, equipment retrofits, equipment operation and maintenance, and fuel management.
Forward-Looking Statements: Certain matters discussed in this press release include forward-looking statements within the meaning of the Private Litigation Reform Act of 1995. All forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual transactions, results, performance or achievements to be materially different from any future transactions, results, performance or achievements expressed or implied by such forward-looking statements. Future transactions, results, performance and achievements will be affected by general economic, business and financing conditions, weather conditions, competition and governmental actions. Although the company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be attained or that any deviations will not be material. The company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances. A discussion of risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, can be found in the company's Annual Report on Form 10-K for the most recent fiscal year and reports filed from time to time with the Securities and Exchange Commission.
For additional information, refer to the Company's Form 10-Q for the quarter ended
September 30, 2000, which is expected to be filed today with the Securities and Exchange Commission.
Pepco Operating Results
Three Months Ended September 30,
Nine Months Ended
Basic Earnings Per Share
Recurring Utility Operations
Non-Recurring Utility Item -
Contract Termination Fee
Net Utility Operations
Pepco Energy ServicesOperations
Total PHI Operations
Pepco Consolidated Earnings
Basic Average Common Shares Outstanding
Diluted Earnings Per Share
Diluted Average Common Shares Outstanding
Pepco Selected Consolidated Financial Information
Three Months Ended September 30, 2000
(Millions of Dollars)
(Loss) Income from Equity Investments, principallyTelecommunication Entities
Pre-Tax Income (Loss)
Distributions on Preferred Securities of
Income Tax Expense (Benefit)
Net Income (Loss)
Dividends on Preferred Stock
Earnings (Loss) Available for Common Stock
Three Months Ended September 30, 1999
Loss from Equity Investments, principallyTelecommunication Entities
Net Income (Loss)
Dividends on Preferred Stock
Nine Months Ended September 30, 2000
Nine Months Ended September 30, 1999
Point of Contact:Robert Dobkin