Constellation Energy Reports Strong Third Quarter Earnings --
Affirms 14 - 18 Percent 2004 Earnings Growth BALTIMORE, Oct. 29
/PRNewswire-FirstCall/ -- Constellation Energy (NYSE:CEG) today
reported earnings of $1.19 per share for the three months ending
Sept. 30, 2004, compared to the $1.15 per share earned during the
same period last year. Excluding special items of $(0.03) per
share, Constellation Energy earned $1.22 per share, compared to the
company's earnings guidance range provided in July of $1.03 - $1.18
per share. Earnings excluding special items for the first nine
months of 2004 were $2.45 per share, up $0.36 per share or 17
percent compared to earnings excluding special items of $2.09 per
share in 2003. Reported earnings for the first nine months of 2004
were $2.36 per share compared to earnings of $0.95 per share for
the first nine months of 2003. The company affirmed calendar year
2004 earnings per share guidance of $3.15 - $3.25. "I am pleased to
report another strong quarter," said Mayo A. Shattuck III,
chairman, president and chief executive officer of Constellation
Energy. "Our focus on customer service, energy logistics and risk
management continues to yield superior results. Our leading
wholesale and retail competitive supply business platform is
strategically positioned to realize the opportunities presented by
competitive energy procurement. We view the expansion of the PJM
interconnection and the coming adoption of competitive market rules
by the Midwest ISO, as well as ongoing discussions of competitive
procurement in Ohio and California, to be extremely positive. These
are early signs that the consumer benefits of deregulation and
enhanced grid reliability offered by well-functioning wholesale
markets are stimulating renewed interest in competitive
procurement. We have the right business model for open competitive
markets and are well positioned to realize their potential," said
Shattuck. The following table summarizes both earnings per share
excluding special items and earnings per share reported in
accordance with generally accepted accounting principles (GAAP) for
the three and nine months ended Sept. 30, 2004 and 2003: Three
Months Ended September 30, 2004 2003 Reported EPS Reported EPS GAAP
Excluding GAAP Excluding EARNINGS PER COMMON SHARE EPS Special
Items EPS Special Items Baltimore Gas and Electric $0.16 $0.16
$0.12 $0.12 Merchant energy 1.07 1.07 1.03 1.03 Other nonregulated
(0.04) (0.01)(1) - - Diluted EPS $1.19 $1.22 $1.15 $1.15 GAAP EPS
was adjusted by the following amounts to calculate EPS excluding
special items: (1) Loss on sale of investments and other assets -
$0.03 per share. Nine Months Ended September 30, 2004 2003 Reported
EPS Reported EPS GAAP Excluding GAAP Excluding EARNINGS PER COMMON
SHARE EPS Special Items EPS Special Items Baltimore Gas and
Electric $0.72 $0.72 $0.73 $0.73 Merchant energy 1.96 1.75 (1) 1.37
1.37 Other nonregulated (0.04) (0.02)(2) 0.05 (0.01)(3) Diluted EPS
from Continuing Operations and Before Cumulative Effects of Changes
in Accounting Principles $2.64 $2.45 $2.15 $2.09 Loss from
discontinued operations - Assuming Dilution (0.28) - Cumulative
effects of changes in accounting principles - Assuming Dilution -
(1.20) Diluted EPS $2.36 $0.95 GAAP EPS was adjusted by the
following amounts to calculate EPS excluding special items: (1)
Synfuel tax credits associated with 2003 production at S.C.
facility - ($0.21) per share. (2) Net loss on sales of investments
and other assets - $0.01 per share and impairment losses and other
costs - $0.01 per share. (3) Gain on sales of investments and other
assets - ($0.06) per share. Baltimore Gas and Electric (BGE) BGE
reported earnings of $0.16 per share for the third quarter of 2004,
consistent with the $0.13 - $0.17 earnings per share guidance range
provided in July and $0.04 higher than the $0.12 per share earned
for the third quarter of 2003. Compared to last year, the benefit
from the absence of the 2003 costs of Hurricane Isabel and several
other severe summer storms was partially offset by, the absence of
2003 favorable Market Based Rate gas and property tax recoveries,
Sarbanes-Oxley 404 attestation, enterprise information systems, and
other costs. Merchant Energy For the third quarter of 2004, our
merchant energy business earned $1.07 per share. These results were
above the $0.89 - $1.03 per share earnings guidance range and the
$1.03 per share earned during the third quarter of 2003. Earnings
contributions from our Constellation Energy Commodities Group and
Constellation NewEnergy competitive supply businesses, our synfuel
investments, and our newly acquired Ginna nuclear facility added to
earnings compared to last year. The favorable items were partially
offset by Sarbanes- Oxley 404 attestation, enterprise systems and
other costs, and a decrease in the Mid-Atlantic generation fleet's
gross margin. As expected, the Mid- Atlantic fleet's gross margin
decreased in the third quarter of 2004 compared to last year and
will increase in the fourth quarter. The September 2004 Financial
Statements and selected supplemental information are attached.
Earnings Excluding Special Items Constellation Energy presents
earnings excluding special items in addition to its reported
earnings per share in accordance with generally accepted accounting
principles (reported GAAP EPS). Earnings excluding special items is
a non-GAAP financial measure that differs from reported GAAP EPS
because it excludes the cumulative effects of changes in accounting
principles, losses from discontinued operations, gains or losses on
the sale of non-core assets, and other special items (which we
define as significant items that are not related to our ongoing,
underlying business or which distort comparability of results)
included in operations. We present earnings excluding special items
because we believe that it is appropriate for investors to consider
results excluding these items in addition to our results in
accordance with GAAP. We believe such a measure provides a picture
of our results that is comparable among periods since it excludes
the impact of items such as gains or losses on sales of non-core
investments and workforce reduction costs, which may recur
occasionally, but tend to be irregular as to timing, thereby
distorting comparisons between periods. However, investors should
note that these non- GAAP measures involve judgments by management
(in particular, judgments as to what is or is not classified as a
special item). These non-GAAP measures are also used to evaluate
management's performance and for compensation purposes.
Constellation Energy also provides its earnings guidance in terms
of earnings excluding special items. Constellation Energy is unable
to reconcile its 2004 earnings guidance excluding special items to
GAAP earnings per share because we do not predict the future impact
of special items due to the difficulty of doing so. The impact of
special items could be material to our operating results computed
in accordance with GAAP. SEC Filings The Company plans to file its
Form 10-Q for the three months ended Sept. 30, 2004 on or about
Nov. 8, 2004. Forward-Looking Statements We make statements in this
news release that are considered forward- looking statements within
the meaning of the Securities Exchange Act of 1934. These
statements are not guarantees of our future performance and are
subject to risks, uncertainties, and other important factors that
could cause our actual performance or achievements to be materially
different from those we project. For a full discussion of these
risks, uncertainties, and factors, we encourage you to read our
documents on file with the Securities and Exchange Commission,
including those set forth in our Form 10-K under the forward-
looking statements section. Conference Call Oct. 29, 2004
Constellation Energy will host a conference call at 8:30 a.m. EDT
on Oct. 29, 2004, to review its results. To participate, investors,
analysts, and members of the media in the United States may dial
1-800-862-9098 shortly before 8:30 a.m. The international dial-in
number is 1-785-424-1051. The conference call host is Constellation
Energy, and the password is "Energy." A replay of the call will be
available for one week. The replay number is 1-800-938-2376; the
number for international callers is 1-402-220-1129. A live audio
webcast of the conference call, as well as presentation slides and
the third quarter 2004 earnings press release will be available on
the Investor Relations page of the company Web site,
http://www.constellation.com/. The reference to our Web site is an
active textual reference and the contents of our Web site are not
part of this press release. About Constellation Energy
Constellation Energy (http://www.constellation.com/), a Fortune 500
company based in Baltimore, is the nation's leading competitive
supplier of electricity to large commercial and industrial
customers and one of the nation's largest wholesale power sellers.
Constellation Energy also manages fuels and energy services on
behalf of energy intensive industries and utilities. It owns and
operates a 12,500 MW diversified generation fleet in 11 states. The
company delivers electricity and natural gas through the Baltimore
Gas and Electric Company (BGE), its regulated utility in Central
Maryland. In 2003, the combined revenues of the integrated energy
company totaled $9.7 billion. Addendum - Special Items Recognized
in Third Quarter 2004 Net Loss on Sale of Investments and Other
Assets - before-tax loss of $7.5 million, or $(0.03) per share In
the third quarter of 2004, we recognized a $(7.5) million pretax or
$(4.6) million after-tax loss relating to the liquidation of a
non-core financial investment. We have classified this as a special
item for consistency with prior treatment of non-core asset
dispositions. Constellation Energy Group and Subsidiaries
Consolidated Statements of Income (Unaudited) Three Months Ended
Nine Months Ended September 30, September 30, 2004 2003 2004 2003
(In Millions, Except Per Share Amounts) Revenues Nonregulated
revenues $2,777.9 $1,940.0 $7,216.5 $5,173.8 Regulated electric
revenues 582.0 582.3 1,543.6 1,505.5 Regulated gas revenues 74.6
78.3 504.0 514.0 Total revenues 3,434.5 2,600.6 9,264.1 7,193.3
Expenses Operating expenses 2,808.8 2,012.6 7,806.0 5,834.1
Impairment losses and other costs 1.1 - 3.7 - Workforce reduction
costs - 0.7 - 2.1 Depreciation and amortization 138.4 127.7 391.6
355.6 Accretion of asset retirement obligations 14.5 10.7 38.1 32.0
Taxes other than income taxes 67.7 61.8 195.0 191.7 Total expenses
3,030.5 2,213.5 8,434.4 6,415.5 Net (Loss) Gain on Sales of
Investments and Other Assets (7.5) 2.1 (1.6) 16.3 Income from
Operations 396.5 389.2 828.1 794.1 Other (Expense) Income (2.7) 4.5
7.6 19.3 Fixed Charges Interest expense 80.7 85.3 249.0 251.2
Interest capitalized and allowance for borrowed funds used during
construction (2.3) (2.3) (8.1) (9.5) BGE preference stock dividends
3.3 3.3 9.9 9.9 Total fixed charges 81.7 86.3 250.8 251.6 Income
from Continuing Operations Before Income Taxes 312.1 307.4 584.9
561.8 Income Taxes 101.5 114.5 130.9 205.1 Income from Continuing
Operations and Before Cumulative Effects of Changes in Accounting
Principles 210.6 192.9 454.0 356.7 Loss from discontinued
operations, net of income taxes of $0.1 and $26.5, respectively
(0.2) - (49.2) - Cumulative effects of changes in accounting
principles, net of income taxes of $119.5 - - - (198.4) Net Income
$210.4 $192.9 $404.8 $158.3 Earnings Applicable to Common Stock
$210.4 $192.9 $404.8 $158.3 Average Shares of Common Stock
Outstanding - Basic 175.5 167.0 170.7 165.9 Average Shares of
Common Stock Outstanding - Diluted 176.4 167.7 171.8 166.2 Earnings
Per Common Share from Continuing Operations and Before Cumulative
Effects of Changes in Accounting Principles - Basic $1.20 $1.16
$2.66 $2.15 Loss from discontinued operations - Basic - - (0.29) -
Cumulative effects of changes in accounting principles - Basic - -
- (1.20) Earnings Per Common Share - Basic $1.20 $1.16 $2.37 $0.95
Earnings Per Common Share from Continuing Operations and Before
Cumulative Effects of Changes in Accounting Principles - Diluted
$1.19 $1.15 $2.64 $2.15 Loss from discontinued operations - Diluted
- - (0.28) - Cumulative effects of changes in accounting principles
- Diluted - - - (1.20) Earnings Per Common Share - Diluted $1.19
$1.15 $2.36 $0.95 Certain prior-period amounts have been
reclassified to conform with the current period's presentation.
Constellation Energy Group and Subsidiaries Consolidated Balance
Sheets (Unaudited) September 30, December 31, 2004 2003 ASSETS (In
Millions) Current Assets Cash and cash equivalents $528.9 $721.3
Accounts receivable (net of allowance for uncollectibles of $41.6
and $51.7, respectively) 1,392.8 1,563.0 Mark-to-market energy
assets 568.8 488.3 Risk management assets 594.9 249.5 Materials and
supplies 201.4 203.2 Fuel stocks 327.5 196.8 Other 236.7 221.4
Total current assets 3,851.0 3,643.5 Investments And Other Assets
Nuclear decommissioning trust funds 986.8 736.1 Investments in
qualifying facilities and power projects 326.8 332.6 Mark-to-market
energy assets 412.1 261.9 Risk management assets 341.2 158.4
Goodwill 142.5 144.0 Other 289.6 343.8 Total investments and other
assets 2,499.0 1,976.8 Property, Plant And Equipment Nonregulated
property, plant and equipment 8,600.4 8,110.0 Regulated property,
plant and equipment 5,381.5 5,266.7 Nuclear fuel (net of
amortization) 232.6 202.9 Accumulated depreciation (4,191.7)
(3,978.1) Net property, plant and equipment 10,022.8 9,601.5
Deferred Charges Regulatory assets (net) 206.6 229.5 Other 157.0
149.6 Total deferred charges 363.6 379.1 Total Assets $16,736.4
$15,600.9 LIABILITIES AND EQUITY Current Liabilities Short-term
borrowings $1.5 $9.6 Current portion of long-term debt 528.7 343.2
Accounts payable 849.0 1,149.2 Customer deposits and collateral
187.4 194.5 Mark-to-market energy liabilities 578.1 474.6 Risk
management liabilities 174.8 134.6 Other 572.0 552.2 Total current
liabilities 2,891.5 2,857.9 Deferred Credits And Other Liabilities
Deferred income taxes 1,490.3 1,384.4 Asset retirement obligations
809.5 595.9 Mark-to-market energy liabilities 355.2 258.0 Risk
management liabilities 505.9 170.1 Postretirement and
postemployment benefits 375.5 361.8 Net pension liability 196.5
225.7 Deferred investment tax credits 73.0 78.4 Other 172.5 185.6
Total deferred credits and other liabilities 3,978.4 3,259.9
Long-Term Debt Long-term debt of nonregulated businesses 3,747.1
3,739.2 Long-term debt of BGE 1,265.9 1,395.7 6.20% deferrable
interest subordinated debentures due October 15, 2043 to BGE wholly
owned BGE Capital Trust II relating to trust preferred securities
257.7 257.7 Unamortized discount and premium (11.2) (10.2) Current
portion of long-term debt (528.7) (343.2) Total long-term debt
4,730.8 5,039.2 Minority Interests 125.4 113.4 BGE Preference Stock
Not Subject To Mandatory Redemption 190.0 190.0 Common
Shareholders' Equity Common stock 2,478.6 2,179.8 Retained earnings
2,341.2 2,081.9 Accumulated other comprehensive income (loss) 0.5
(121.2) Total common shareholders' equity 4,820.3 4,140.5 Total
Liabilities And Equity $16,736.4 $15,600.9 Certain prior-period
amounts have been reclassified to conform with the current period's
presentation. Constellation Energy Group and Subsidiaries Merchant
Energy Operating Statistics (Unaudited) Nine Months Ended September
30, Hydro & Nuclear Coal Oil Gas Other Total Generation by Fuel
Type (%) 2004 49.9 33.3 2.0 12.7 2.1 100.0 2003 48.7 36.2 1.8 10.9
2.4 100.0 Utility Operating Statistics (Unaudited) Three Months
Ended Nine Months Ended September 30, September 30, 2004 2003 2004
2003 ELECTRIC Revenues (In Millions) Residential --with
househeating $97.3 $89.1 $310.7 $300.0 --other 203.0 190.7 490.6
448.1 --total 300.3 279.8 801.3 748.1 Commercial --excluding
delivery service 221.8 225.9 556.9 553.2 --delivery service 19.8
20.1 52.8 46.9 Industrial --excluding delivery service 19.3 39.2
80.1 107.9 --delivery service 6.7 4.9 15.2 13.3 System Sales 567.9
569.9 1,506.3 1,469.4 Other 14.1 12.4 37.3 36.2 Total $582.0 $582.3
$1,543.6 $1,505.6 Sales (In Thousands) - MWH Residential --with
househeating 1,183 1,109 4,255 4,200 --other 2,385 2,255 6,096
5,598 --total 3,568 3,364 10,351 9,798 Commercial --excluding
delivery service 2,479 2,814 7,429 7,691 --delivery service 1,713
1,454 4,037 3,666 Industrial --excluding delivery service 222 651
1,269 1,905 --delivery service 854 492 1,904 1,332 Total System
Sales 8,836 8,775 24,990 24,392 GAS Revenues (In Millions)
Residential --excluding delivery service $48.6 $46.4 $332.9 $320.0
--delivery service 0.8 0.8 10.0 9.9 --total 49.4 47.2 342.9 329.9
Commercial --excluding delivery service 14.3 14.3 98.2 95.7
--delivery service 3.7 3.4 19.7 17.0 Industrial --excluding
delivery service 1.1 1.2 7.0 8.3 --delivery service 1.6 2.2 5.6 8.0
System Sales 70.1 68.3 473.4 458.9 Off-System Sales 4.0 11.4 28.6
60.1 Other 1.2 1.3 5.4 5.5 Total $75.3 $81.0 $507.4 $524.5 Sales
(In Thousands) - DTH Residential --excluding delivery service 2,633
2,909 27,741 29,144 --delivery service 362 422 4,398 4,812 --total
2,995 3,331 32,139 33,956 Commercial --excluding delivery service
1,056 1,170 9,644 10,074 --delivery service 5,759 5,019 24,375
20,932 Industrial --excluding delivery service 77 75 635 765
--delivery service 3,090 3,662 10,903 13,610 System Sales 12,977
13,257 77,696 79,337 Off-System Sales 594 1,965 4,005 8,701 Total
13,571 15,222 81,701 88,038 Utility operating statistics do not
reflect the elimination of intercompany transactions.
Heating/Cooling Degree Days (Calendar-Month Basis) Heating Degree
Days - Actual 49 57 3,111 3,482 - Normal 87 87 3,078 3,034 Cooling
Degree Days - Actual 538 580 831 733 - Normal 581 577 818 816
Constellation Energy Group and Subsidiaries Supplemental Financial
Statistics (Unaudited) Nine Months Ended September 30, 2004 2003
Ratio of Earnings to Fixed Charges 3.13 3.03 Effective Tax Rate
(includes $102.5 million of synthetic fuel tax credits for the nine
months ended September 30, 2004) 22.0% 35.9% Equity Investment In
Nonregulated Businesses -- End of Period $3,377.8 $2,448.3 Equity
Investment In Utility Business -- End of Period $1,442.5 $1,473.4
Common Stock Data Three Months Ended Nine Months Ended September
30, September 30, 2004 2003 2004 2003 Common Stock Dividends - Per
Share --Declared $0.285 $0.260 $0.855 $0.780 --Paid $0.285 $0.260
$0.830 $0.760 Market Value Per Share --High $41.18 $37.65 $41.47
$37.65 --Low $36.76 $31.75 $35.89 $25.17 --Close $39.84 $35.78
$39.84 $35.78 Shares Outstanding--End of Period (In Millions) 175.7
167.1 175.7 167.1 Book Value per Share-- End of Period $27.43
$23.47 $27.43 $23.47 DATASOURCE: Constellation Energy CONTACT:
Robert L. Gould (Media), +1-410-234-7433, or Jack Thayer
(Investors), +1-410-783-3647, both of Constellation Energy Web
site: http://www.constellation.com/ Company News On-Call:
http://www.prnewswire.com/comp/084087.html
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