Annual Reports

 
Quarterly Reports

  • 10-Q (Nov 7, 2011)
  • 10-Q (Aug 8, 2011)
  • 10-Q (May 9, 2011)
  • 10-Q (Nov 5, 2010)
  • 10-Q (Aug 6, 2010)
  • 10-Q (May 7, 2010)

 
8-K

 
Other

Constellation Energy Group 10-Q 2006

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended September 30, 2006

Commission
File Number

 

Exact name of registrant as specified in its charter

 

IRS Employer
Identification No.

1-12869

 

CONSTELLATION ENERGY GROUP, INC.

 

52-1964611

1-1910

 

BALTIMORE GAS AND ELECTRIC COMPANY

 

52-0280210

 

 

MARYLAND

 

 

(State of Incorporation of both registrants)

 

750 E. PRATT STREET,                      BALTIMORE, MARYLAND

 

21202 

(Address of principal executive offices)             

 

(Zip Code)

 

 

410-783-2800

 

 

(Registrants’ telephone number, including area code)

 

 

NOT APPLICABLE

 

 

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) have been subject to such filing requirements for the past 90 days. Yes x    No o

Indicate by check mark whether Constellation Energy Group, Inc. is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.

(Check one):

Large accelerated filer x    Accelerated filer o    Non-accelerated filer o

Indicate by check mark whether Baltimore Gas and Electric Company is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.

(Check one):

Large accelerated filer o    Accelerated filer o    Non-accelerated filer x

Indicate by check mark whether Constellation Energy Group, Inc. is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o    No x

Indicate by check mark whether Baltimore Gas and Electric Company is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o    No x

Common Stock, without par value 180,007,617 shares outstanding of

Constellation Energy Group, Inc. on October 31, 2006.

Baltimore Gas and Electric Company meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form in the reduced disclosure format.

 




TABLE OF CONTENTS

 

Page

Part I—Financial Information

 

 

Item 1—Financial Statements

 

 

Constellation Energy Group, Inc. and Subsidiaries

 

 

Consolidated Statements of Income

 

3

Consolidated Statements of Comprehensive Income

 

3

Consolidated Balance Sheets

 

4

Consolidated Statements of Cash Flows

 

6

Baltimore Gas and Electric Company and Subsidiaries

 

 

Consolidated Statements of Income

 

7

Consolidated Balance Sheets

 

8

Consolidated Statements of Cash Flows

 

10

Notes to Consolidated Financial Statements

 

11

Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

 

Introduction and Overview

 

25

Business Environment

 

25

Events of 2006

 

28

Results of Operations

 

30

Financial Condition

 

45

Capital Resources

 

48

Item 3—Quantitative and Qualitative Disclosures About Market Risk

 

52

Item 4—Controls and Procedures

 

52

Part II—Other Information

 

53

Item 1—Legal Proceedings

 

53

Item 1A—Risk Factors

 

53

Item 2—Unregistered Sales of Equity Securities and Use of Proceeds

 

53

Item 5—Other Information

 

54

Item 6—Exhibits

 

55

Signature

 

56

 

2




PART I—FINANCIAL INFORMATION

Item 1—Financial Statements

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Constellation Energy Group, Inc. and Subsidiaries

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2006

 

2005

 

2006

 

2005

 

 

 

(In millions, except per share amounts)

 

Revenues

 

 

 

 

 

 

 

 

 

Nonregulated revenues

 

$

4,672.1

 

$

4,183.4

 

$

12,428.7

 

$

9,771.0

 

Regulated electric revenues

 

649.9

 

626.8

 

1,652.6

 

1,583.4

 

Regulated gas revenues

 

111.7

 

112.2

 

671.8

 

618.5

 

Total revenues

 

5,433.7

 

4,922.4

 

14,753.1

 

11,972.9

 

Expenses

 

 

 

 

 

 

 

 

 

Fuel and purchased energy expenses

 

4,096.5

 

3,953.2

 

11,416.4

 

9,218.0

 

Operating expenses

 

519.5

 

415.4

 

1,622.5

 

1,339.3

 

Workforce reduction costs

 

21.7

 

3.9

 

23.9

 

3.9

 

Merger-related costs

 

3.4

 

 

12.4

 

 

Depreciation, depletion, and amortization

 

140.7

 

143.3

 

413.8

 

407.4

 

Accretion of asset retirement obligations

 

17.1

 

15.8

 

50.3

 

46.2

 

Taxes other than income taxes

 

74.9

 

73.8

 

222.7

 

209.4

 

Total expenses

 

4,873.8

 

4,605.4

 

13,762.0

 

11,224.2

 

Income from Operations

 

559.9

 

317.0

 

991.1

 

748.7

 

Other Income

 

8.7

 

16.1

 

36.5

 

43.0

 

Fixed Charges

 

 

 

 

 

 

 

 

 

Interest expense

 

83.1

 

75.7

 

239.3

 

230.2

 

Interest capitalized and allowance for borrowed funds used during construction

 

(3.5

)

(2.1

)

(10.1

)

(7.6

)

BGE preference stock dividends

 

3.3

 

3.3

 

9.9

 

9.9

 

Total fixed charges

 

82.9

 

76.9

 

239.1

 

232.5

 

Income from Continuing Operations Before Income Taxes

 

485.7

 

256.2

 

788.5

 

559.2

 

Income Tax Expense

 

161.3

 

72.1

 

257.9

 

138.7

 

Income from Continuing Operations

 

324.4

 

184.1

 

530.6

 

420.5

 

Income from discontinued operations, net of income taxes of
$4.1, $0.5 and $12.0, respectively

 

 

1.4

 

0.9

 

7.4

 

Net Income

 

$

324.4

 

$

185.5

 

$

531.5

 

$

427.9

 

Earnings Applicable to Common Stock

 

$

324.4

 

$

185.5

 

$

531.5

 

$

427.9

 

Average Shares of Common Stock Outstanding—Basic

 

179.7

 

178.1

 

179.1

 

177.5

 

Average Shares of Common Stock Outstanding—Diluted

 

181.6

 

180.5

 

180.9

 

179.6

 

Earnings Per Common Share from Continuing Operations—Basic

 

$

1.81

 

$

1.03

 

$

2.96

 

$

2.37

 

Income from discontinued operations

 

 

0.01

 

0.01

 

0.04

 

Earnings Per Common Share—Basic

 

$

1.81

 

$

1.04

 

$

2.97

 

$

2.41

 

Earnings Per Common Share from Continuing Operations—Diluted

 

$

1.79

 

$

1.02

 

$

2.93

 

$

2.34

 

Income from discontinued operations

 

 

0.01

 

0.01

 

0.04

 

Earnings Per Common Share—Diluted

 

$

1.79

 

$

1.03

 

$

2.94

 

$

2.38

 

Dividends Declared Per Common Share

 

$

0.3775

 

$

0.335

 

$

1.1325

 

$

1.005

 

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

Constellation Energy Group, Inc. and Subsidiaries

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2006

 

2005

 

2006

 

2005

 

 

 

(In millions)

 

Net Income

 

$

324.4

 

$

185.5

 

$

531.5

 

$

427.9

 

Other comprehensive income (OCI)

 

 

 

 

 

 

 

 

 

Reclassification of net loss (gain) on sales of securities from OCI to
net income, net of taxes

 

 

1.6

 

(0.3

)

1.5

 

Reclassification of net loss (gain) on hedging instruments from OCI to
net income, net of taxes

 

193.0

 

(318.7

)

407.1

 

(416.9

)

Net unrealized (loss) gain on hedging instruments, net of taxes

 

(369.7

)

820.8

 

(1,418.7

)

906.9

 

Net unrealized gain on securities, net of taxes

 

16.7

 

6.7

 

20.0

 

15.3

 

Net unrealized (loss) gain on foreign currency, net of taxes

 

(0.3

)

0.7

 

0.8

 

1.1

 

Comprehensive Income (Loss)

 

$

164.1

 

$

696.6

 

$

(459.6

)

$

935.8

 

 

See Notes to Consolidated Financial Statements.

3




CONSOLIDATED BALANCE SHEETS

Constellation Energy Group, Inc. and Subsidiaries

 

 

September 30,

 

December 31,

 

 

 

2006*

 

2005

 

 

 

(In millions)

 

Assets

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

320.7

 

 

 

$

813.0

 

 

Accounts receivable (net of allowance for uncollectibles of
$53.2 and $47.4, respectively)

 

 

2,959.5

 

 

 

2,727.9

 

 

Fuel stocks

 

 

605.7

 

 

 

489.5

 

 

Materials and supplies

 

 

204.2

 

 

 

197.0

 

 

Mark-to-market energy assets

 

 

889.3

 

 

 

1,339.2

 

 

Risk management assets

 

 

231.2

 

 

 

1,244.3

 

 

Unamortized energy contract assets

 

 

40.9

 

 

 

55.6

 

 

Deferred income taxes

 

 

472.0

 

 

 

 

 

Other

 

 

531.3

 

 

 

555.3

 

 

Total current assets

 

 

6,254.8

 

 

 

7,421.8

 

 

Investments and Other Assets

 

 

 

 

 

 

 

 

 

Nuclear decommissioning trust funds

 

 

1,170.4

 

 

 

1,110.7

 

 

Investments in qualifying facilities and power projects

 

 

312.5

 

 

 

306.2

 

 

Regulatory assets (net)

 

 

283.4

 

 

 

154.3

 

 

Goodwill

 

 

157.1

 

 

 

147.1

 

 

Mark-to-market energy assets

 

 

814.1

 

 

 

1,089.3

 

 

Risk management assets

 

 

360.3

 

 

 

626.0

 

 

Unamortized energy contract assets

 

 

120.5

 

 

 

141.2

 

 

Other

 

 

340.7

 

 

 

410.6

 

 

Total investments and other assets

 

 

3,559.0

 

 

 

3,985.4

 

 

Property, Plant and Equipment

 

 

 

 

 

 

 

 

 

Nonregulated property, plant and equipment

 

 

8,928.3

 

 

 

8,580.8

 

 

Regulated property, plant and equipment

 

 

5,673.5

 

 

 

5,520.5

 

 

Nuclear fuel (net of amortization)

 

 

362.8

 

 

 

302.0

 

 

Accumulated depreciation

 

 

(4,579.1

)

 

 

(4,336.6

)

 

Net property, plant and equipment

 

 

10,385.5

 

 

 

10,066.7

 

 

Total Assets

 

 

$

20,199.3

 

 

 

$

21,473.9

 

 

 

* Unaudited

See Notes to Consolidated Financial Statements.

4




CONSOLIDATED BALANCE SHEETS

Constellation Energy Group, Inc. and Subsidiaries

 

 

September 30,

 

December 31,

 

 

 

2006*

 

2005

 

 

 

(In millions)

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

Short-term borrowings

 

 

$

185.0

 

 

 

$

0.7

 

 

Current portion of long-term debt

 

 

1,186.1

 

 

 

491.3

 

 

Accounts payable and accrued liabilities

 

 

1,719.9

 

 

 

1,667.9

 

 

Customer deposits and collateral

 

 

419.8

 

 

 

458.9

 

 

Mark-to-market energy liabilities

 

 

822.9

 

 

 

1,348.7

 

 

Risk management liabilities

 

 

1,120.7

 

 

 

483.5

 

 

Unamortized energy contract liabilities

 

 

412.7

 

 

 

489.5

 

 

Deferred income taxes

 

 

 

 

 

151.4

 

 

Accrued expenses and other

 

 

738.4

 

 

 

780.4

 

 

Total current liabilities

 

 

6,605.5

 

 

 

5,872.3

 

 

Deferred Credits and Other Liabilities

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

1,268.7

 

 

 

1,180.8

 

 

Asset retirement obligations

 

 

956.2

 

 

 

908.0

 

 

Mark-to-market energy liabilities

 

 

467.8

 

 

 

912.3

 

 

Risk management liabilities

 

 

840.6

 

 

 

1,035.5

 

 

Unamortized energy contract liabilities

 

 

1,022.3

 

 

 

1,118.7

 

 

Net pension liability

 

 

421.8

 

 

 

401.4

 

 

Postretirement and postemployment benefits

 

 

395.3

 

 

 

382.6

 

 

Deferred investment tax credits

 

 

58.9

 

 

 

64.1

 

 

Other

 

 

104.8

 

 

 

101.0

 

 

Total deferred credits and other liabilities

 

 

5,536.4

 

 

 

6,104.4

 

 

Long-term Debt

 

 

 

 

 

 

 

 

 

Long-term debt of Constellation Energy

 

 

3,051.5

 

 

 

3,049.1

 

 

Long-term debt of nonregulated businesses

 

 

329.0

 

 

 

357.5

 

 

First refunding mortgage bonds of BGE

 

 

244.5

 

 

 

342.8

 

 

Other long-term debt of BGE

 

 

824.5

 

 

 

861.5

 

 

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

 

 

(5.2

)

 

 

(8.0

)

 

Current portion of long-term debt

 

 

(1,186.1

)

 

 

(491.3

)

 

Total long-term debt

 

 

3,515.9

 

 

 

4,369.3

 

 

Minority Interests

 

 

21.9

 

 

 

22.4

 

 

BGE Preference Stock Not Subject to Mandatory Redemption

 

 

190.0

 

 

 

190.0

 

 

Common Shareholders’ Equity

 

 

 

 

 

 

 

 

 

Common stock

 

 

2,698.8

 

 

 

2,620.8

 

 

Retained earnings

 

 

3,137.4

 

 

 

2,810.2

 

 

Accumulated other comprehensive loss

 

 

(1,506.6

)

 

 

(515.5

)

 

Total common shareholders’ equity

 

 

4,329.6

 

 

 

4,915.5

 

 

Commitments, Guarantees, and Contingencies (see Notes)

 

 

 

 

 

 

 

 

 

Total Liabilities and Equity

 

 

$

20,199.3

 

 

 

$

21,473.9

 

 

 

* Unaudited

See Notes to Consolidated Financial Statements.

5




CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Constellation Energy Group, Inc. and Subsidiaries

Nine Months Ended September 30,

 

2006

 

2005

 

 

 

(In millions)

 

Cash Flows From Operating Activities

 

 

 

 

 

Net income

 

$

531.5

 

$

427.9

 

Adjustments to reconcile to net cash provided by operating activities

 

 

 

 

 

(Gain) loss on sales of discontinued operations

 

(0.9

)

2.4

 

Depreciation, depletion, and amortization

 

417.1

 

494.9

 

Accretion of asset retirement obligations

 

50.3

 

46.2

 

Deferred income taxes

 

73.8

 

7.5

 

Investment tax credit adjustments

 

(5.2

)

(5.4

)

Deferred fuel costs

 

(164.7

)

12.1

 

Pension and postemployment benefits

 

35.5

 

4.0

 

Workforce reduction costs

 

23.9

 

3.9

 

Merger-related costs

 

12.4

 

 

Equity in earnings of affiliates less than dividends received

 

12.9

 

28.3

 

Proceeds from derivative power sales contracts classified as financing activities under SFAS No. 149

 

(38.9

)

(47.4

)

Changes in

 

 

 

 

 

Accounts receivable

 

(367.7

)

(719.8

)

Mark-to-market energy assets and liabilities

 

(241.5

)

(98.6

)

Risk management assets and liabilities

 

(2.0

)

(51.5

)

Materials, supplies, and fuel stocks

 

(267.9

)

(126.0

)

Other current assets

 

53.9

 

(186.1

)

Accounts payable and accrued liabilities

 

30.9

 

646.2

 

Other current liabilities

 

32.9

 

665.9

 

Other

 

(23.2

)

(5.2

)

Net cash provided by operating activities

 

163.1

 

1,099.3

 

Cash Flows From Investing Activities

 

 

 

 

 

Investments in property, plant and equipment

 

(668.0

)

(476.9

)

Acquisitions, net of cash acquired

 

(133.5

)

(238.1

)

Investments in nuclear decommissioning trust fund securities

 

(275.0

)

(258.7

)

Proceeds from nuclear decommissioning trust fund securities

 

266.2

 

245.5

 

Sales of investments and other assets

 

43.5

 

1.9

 

Contract and portfolio acquisitions

 

(2.3

)

(23.7

)

Proceeds from sale of discontinued operations

 

 

217.6

 

Issuances of loans receivable

 

(65.4

)

(82.8

)

Other investments

 

33.8

 

(28.5

)

Net cash used in investing activities

 

(800.7

)

(643.7

)

Cash Flows From Financing Activities

 

 

 

 

 

Net issuance of short-term borrowings

 

184.3

 

10.0

 

Proceeds from issuance of

 

 

 

 

 

Common stock

 

56.2

 

66.5

 

Long-term debt

 

122.0

 

 

Repayment of long-term debt

 

(285.8

)

(338.4

)

Common stock dividends paid

 

(195.7

)

(169.1

)

Proceeds from contract and portfolio acquisitions contracts

 

221.3

 

403.3

 

Proceeds from derivative power sales contracts classified as financing activities under
SFAS No. 149

 

38.9

 

47.4

 

Other

 

4.1

 

(41.8

)

Net cash provided by (used in) financing activities

 

145.3

 

(22.1

)

Net (Decrease) Increase in Cash and Cash Equivalents

 

(492.3

)

433.5

 

Cash and Cash Equivalents at Beginning of Period

 

813.0

 

706.3

 

Cash and Cash Equivalents at End of Period

 

$

320.7

 

$

1,139.8

*

 

*Includes $4.8 million related to “Assets held for sale” at September 30, 2005

See Notes to Consolidated Financial Statements.

Certain prior-period amounts have been reclassified to conform with the current period’s presentation.

6




CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Baltimore Gas and Electric Company and Subsidiaries

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2006

 

2005

 

2006

 

2005

 

 

 

(In millions)

 

Revenues

 

 

 

 

 

 

 

 

 

Electric revenues

 

$

649.9

 

$

626.8

 

$

1,652.6

 

$

1,583.4

 

Gas revenues

 

114.6

 

115.9

 

678.4

 

626.9

 

Total revenues

 

764.5

 

742.7

 

2,331.0

 

2,210.3

 

Expenses

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

Electricity purchased for resale

 

391.1

 

362.5

 

933.8

 

849.0

 

Gas purchased for resale

 

66.4

 

72.1

 

448.6

 

422.5

 

Operations and maintenance

 

123.9

 

112.7

 

364.2

 

332.5

 

Merger-related costs

 

0.8

 

 

3.3

 

 

Depreciation and amortization

 

57.2

 

58.6

 

172.1

 

176.6

 

Taxes other than income taxes

 

42.1

 

41.9

 

126.4

 

126.7

 

Total expenses

 

681.5

 

647.8

 

2,048.4

 

1,907.3

 

Income from Operations

 

83.0

 

94.9

 

282.6

 

303.0

 

Other Income

 

3.9

 

1.2

 

4.9

 

4.7

 

Fixed Charges

 

 

 

 

 

 

 

 

 

Interest expense

 

24.8

 

23.9

 

73.3

 

71.4

 

Allowance for borrowed funds used during construction

 

(0.5

)

(0.6

)

(1.4

)

(1.6

)

Total fixed charges

 

24.3

 

23.3

 

71.9

 

69.8

 

Income Before Income Taxes

 

62.6

 

72.8

 

215.6

 

237.9

 

Income Taxes

 

23.7

 

27.1

 

83.3

 

91.0

 

Net Income

 

38.9

 

45.7

 

132.3

 

146.9

 

Preference Stock Dividends

 

3.3

 

3.3

 

9.9

 

9.9

 

Earnings Applicable to Common Stock

 

$

35.6

 

$

42.4

 

$

122.4

 

$

137.0

 

 

See Notes to Consolidated Financial Statements.

7




CONSOLIDATED BALANCE SHEETS

Baltimore Gas and Electric Company and Subsidiaries

 

 

September 30,

 

December 31,

 

 

 

2006*

 

2005

 

 

 

(In millions)

 

Assets

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

14.9

 

 

 

$

15.1

 

 

Accounts receivable (net of allowance for uncollectibles of
$15.4 and $13.0, respectively)

 

 

310.7

 

 

 

480.5

 

 

Accounts receivable, affiliated companies

 

 

30.9

 

 

 

1.8

 

 

Fuel stocks

 

 

115.0

 

 

 

102.7

 

 

Materials and supplies

 

 

42.2

 

 

 

40.1

 

 

Prepaid taxes other than income taxes

 

 

28.0

 

 

 

45.7

 

 

Other

 

 

36.1

 

 

 

6.5

 

 

Total current assets

 

 

577.8

 

 

 

692.4

 

 

Investments and Other Assets

 

 

 

 

 

 

 

 

 

Regulatory assets (net)

 

 

283.4

 

 

 

154.3

 

 

Receivable, affiliated company

 

 

160.0

 

 

 

154.7

 

 

Other

 

 

121.5

 

 

 

144.0

 

 

Total investments and other assets

 

 

564.9

 

 

 

453.0

 

 

Utility Plant

 

 

 

 

 

 

 

 

 

Plant in service

 

 

 

 

 

 

 

 

 

Electric

 

 

4,000.8

 

 

 

3,891.1

 

 

Gas

 

 

1,136.0

 

 

 

1,116.7

 

 

Common

 

 

434.0

 

 

 

416.0

 

 

Total plant in service

 

 

5,570.8

 

 

 

5,423.8

 

 

Accumulated depreciation

 

 

(1,972.5

)

 

 

(1,923.8

)

 

Net plant in service

 

 

3,598.3

 

 

 

3,500.0

 

 

Construction work in progress

 

 

99.8

 

 

 

93.9

 

 

Plant held for future use

 

 

2.9

 

 

 

2.8

 

 

Net utility plant

 

 

3,701.0

 

 

 

3,596.7

 

 

Total Assets

 

 

$

4,843.7

 

 

 

$

4,742.1

 

 

 

* Unaudited

See Notes to Consolidated Financial Statements.

8




CONSOLIDATED BALANCE SHEETS

Baltimore Gas and Electric Company and Subsidiaries

 

 

September 30,

 

December 31,

 

 

 

2006*

 

2005

 

 

 

(In millions)

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

 

$

565.9

 

 

 

$

469.6

 

 

Accounts payable and accrued liabilities

 

 

164.8

 

 

 

169.7

 

 

Accounts payable and accrued liabilities, affiliated companies

 

 

134.1

 

 

 

152.8

 

 

Borrowing from cash pool, affiliated company

 

 

147.3

 

 

 

3.2

 

 

Customer deposits

 

 

70.4

 

 

 

65.1

 

 

Accrued taxes

 

 

19.2

 

 

 

35.5

 

 

Accrued expenses and other

 

 

86.0

 

 

 

79.6

 

 

Total current liabilities

 

 

1,187.7

 

 

 

975.5

 

 

Deferred Credits and Other Liabilities

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

669.0

 

 

 

608.9

 

 

Postretirement and postemployment benefits

 

 

278.1

 

 

 

277.7

 

 

Deferred investment tax credits

 

 

13.9

 

 

 

15.1

 

 

Other

 

 

17.7

 

 

 

19.0

 

 

Total deferred credits and other liabilities

 

 

978.7

 

 

 

920.7

 

 

Long-term Debt

 

 

 

 

 

 

 

 

 

First refunding mortgage bonds of BGE

 

 

244.5

 

 

 

342.8

 

 

Other long-term debt of BGE

 

 

824.5

 

 

 

861.5

 

 

6.20% deferrable interest subordinated debentures due October 15, 2043 to wholly owned BGE Capital Trust II relating to trust preferred securities

 

 

257.7

 

 

 

257.7

 

 

Long-term debt of nonregulated business

 

 

25.0

 

 

 

25.0

 

 

Unamortized discount and premium

 

 

(1.8

)

 

 

(2.3

)

 

Current portion of long-term debt

 

 

(565.9

)

 

 

(469.6

)

 

Total long-term debt

 

 

784.0

 

 

 

1,015.1

 

 

Minority Interest

 

 

18.2

 

 

 

18.3

 

 

Preference Stock Not Subject to Mandatory Redemption

 

 

190.0

 

 

 

190.0

 

 

Common Shareholder’s Equity

 

 

 

 

 

 

 

 

 

Common stock

 

 

912.2

 

 

 

912.2

 

 

Retained earnings

 

 

772.2

 

 

 

709.6

 

 

Accumulated other comprehensive income

 

 

0.7

 

 

 

0.7

 

 

Total common shareholder’s equity

 

 

1,685.1

 

 

 

1,622.5

 

 

Commitments, Guarantees, and Contingencies (see Notes)

 

 

 

 

 

 

 

 

 

Total Liabilities and Equity

 

 

$

4,843.7

 

 

 

$

4,742.1

 

 

 

* Unaudited

See Notes to Consolidated Financial Statements.

9




CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Baltimore Gas and Electric Company and Subsidiaries

Nine Months Ended September 30,

 

2006

 

2005

 

 

 

(In millions)

 

Cash Flows From Operating Activities

 

 

 

 

 

Net income

 

$

132.3

 

$

146.9

 

Adjustments to reconcile to net cash provided by operating activities

 

 

 

 

 

Depreciation and amortization

 

180.1

 

187.5

 

Deferred income taxes

 

59.0

 

(6.4

)

Investment tax credit adjustments

 

(1.2

)

(1.3

)

Deferred fuel costs

 

(164.7

)

12.1

 

Pension and postemployment benefits

 

(2.5

)

(5.2

)

Merger-related costs

 

3.3

 

 

Allowance for equity funds used during construction

 

(2.6

)

(2.8

)

Changes in

 

 

 

 

 

Accounts receivable

 

169.8

 

22.1

 

Receivables, affiliated companies

 

(29.1

)

(33.0

)

Materials, supplies, and fuel stocks

 

(14.4

)

(22.9

)

Other current assets

 

(11.7

)

(20.9

)

Accounts payable and accrued liabilities

 

(8.3

)

(3.0

)

Accounts payable and accrued liabilities, affiliated companies

 

(18.7

)

(20.1

)

Other current liabilities

 

(3.7

)

9.5

 

Other

 

(12.0

)

(23.1

)

Net cash provided by operating activities

 

275.6

 

239.4

 

Cash Flows From Investing Activities

 

 

 

 

 

Utility construction expenditures (excluding equity portion of allowance for
funds used during construction)

 

(225.2

)

(199.2

)

Change in cash pool at parent

 

144.1

 

10.8

 

Other

 

10.3

 

(14.5

)

Net cash used in investing activities

 

(70.8

)

(202.9

)

Cash Flows From Financing Activities

 

 

 

 

 

Distribution to parent

 

(59.8

)

 

Repayment of long-term debt

 

(135.3

)

(23.5

)

Preference stock dividends paid

 

(9.9

)

(9.9

)

Net cash used in financing activities

 

(205.0

)

(33.4

)

Net (Decrease) Increase in Cash and Cash Equivalents

 

(0.2

)

3.1

 

Cash and Cash Equivalents at Beginning of Period

 

15.1

 

8.2

 

Cash and Cash Equivalents at End of Period

 

$

14.9

 

$

11.3

 

 

See Notes to Consolidated Financial Statements.

10




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Various factors can have a significant impact on our results for interim periods. This means that the results for this quarter are not necessarily indicative of future quarters or full year results given the seasonality of our business.

Our interim financial statements on the previous pages reflect all adjustments that management believes are necessary for the fair statement of the results of operations for the interim periods presented. These adjustments are of a normal recurring nature.

Basis of Presentation

This Quarterly Report on Form 10-Q is a combined report of Constellation Energy Group, Inc. (Constellation Energy) and Baltimore Gas and Electric Company (BGE). References in this report to “we” and “our” are to Constellation Energy and its subsidiaries, collectively. References in this report to the “regulated business(es)” are to BGE.

Subsequent Events

Termination of Merger Agreement with
FPL
Group, Inc.

On October 24, 2006, Constellation Energy and FPL Group, Inc. (FPL Group) agreed to terminate the Agreement and Plan of Merger the parties had entered into on December 18, 2005.

Gas-Fired Plants

In October 2006, we announced an agreement to sell the following natural gas-fired plants owned by our merchant energy business for $1.635 billion:

Facility

 

Capacity
(MW)

 

Unit Type

 

Location

High Desert

 

830

 

Combined Cycle

 

California

Rio Nogales

 

800

 

Combined Cycle

 

Texas

Holland

 

665

 

Combined Cycle

 

Illinois

University Park

 

300

 

Peaking

 

Illinois

Big Sandy

 

300

 

Peaking

 

West Virginia

Wolf Hills

 

250

 

Peaking

 

Virginia

 

We expect the transaction to close by the end of 2006 or the first quarter of 2007. We estimate that we will recognize a pre-tax gain of approximately $250 million and we expect to receive approximately $1.5 billion in cash after tax payments on the gain. We expect to apply the proceeds from the sale to reduce debt and invest in our business or repurchase equity.

In October 2006, we designated these plants as held for sale and we reclassified the assets associated with these gas-fired plants to “Assets held for sale” and the liabilities to “Liabilities associated with assets held for sale” in our Consolidated Balance Sheets, we ceased recording depreciation expense, and discontinued hedge accounting for these facilities. The assets and liabilities associated with these gas-fired plants will be removed from our Consolidated Balance Sheets at closing.

Variable Interest Entities

We have a significant interest in the following variable interest entities (VIE) for which we are not the primary beneficiary:

VIE

 

Nature of
Involvement