ML19031A127
| ML19031A127 | |
| Person / Time | |
|---|---|
| Site: | Salem  (DPR-070, DPR-075) |
| Issue date: | 07/28/1976 |
| From: | Atlantic City Electric Co |
| To: | Office of Nuclear Reactor Regulation |
| References | |
| Download: ML19031A127 (28) | |
Text
Atlantic Electric SERVING SOUTHERN NEW JERSEY ANNUAL REPORT 1.975 NOTICE -
THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE DIVISION OF DOCUMENT CONTROL. THEY HAVE BEEN CHARGED TO YOU FOR A LIMITED TIME PERIOD AND MUST BE RETURNED TO THE RECORDS FACILITY BRANCH 016.
PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAIL. REMOVAL OF ANY PAGE(S) FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL.
~ u\\atory DEADLINE RETURN DATE 1-"**x.
311 RECORDS FACILITY BRANCH
COVER Nuclear Energy is Now!
Cover photo shows fuel rods being placed in a storage chamber at a nuclear station. Uniforms are worn to protect the fuel rods from contam-inntion. During 1975, nuclear energy accounted for about 17% of the Company 's kilowatt-hours and is expected to account for 28 "io in 1977.
Accelerated use of the domestic fuels uranium and coal in generating stations will help reduce the nation's dependence on foreign oil and con-tinue to help stabilize the price of one of our great-est neccssi ties-electric energy!
ADVANCE NOTICE The 1976 Annual Meeting of Shareholders will be held Tuesday, April 1:!,
1976, at the Company's Data Processing Center.
Black Horse Pike and Fire Road. near Pleasantville, New jersey. A Notice of Meeting will be mailed in March to those share-holders entitled to vote.
CONTENTS Letter to Shareholders 1 The Company 3 Earnings & Dividends 4 Rate Increases 5 Construction Program 6 Dividend Reinvestment Program 6 Financing 7 Fuel 8 Operations 9 Environment 10 Employees 11 Financial Statements 12-19 1975-1965 Statistical Profile and Summary of Operations 20-21 Managemen l's Discussion and Ana lysis of The Summary of Operntions 22 Price Range and Dividends Paid on Stock 23 Transfer Agents 24 Directors and Officers 24 ATLANTIC CITY ELECTRIC COMP ANY
JOHN D. FEEHAN President To Our Shareholders:
1975 was not a banner year for Atlantic Electric in that earnings per share declined from $2.54 in 1974 to $2.41 in 1975, the first such decline since 1947. Nevertheless, several favorable developments have occurred which should pave the way for renewed progress and improved earnings in 1976.
The nationwide recession had its impact on business in Southern New Jersey and as a result industrial kilowatt-hour sales were down 8.8% in 1975. However, this decline was offset by an increase of 3% in residential kilowatt-hour sales and 3.6% in commercial kilowatt-hour sales. While total kilowatt-hour sales were essentially flat, future KWH sales will be enhanced by the addition of 5,350 new customers in 1975 and an increase of 2,880 in the number of electrically heated homes. Growth in industrial sales should return as the economy rebounds.
Stringent controls over expenditures continued in force through-out the year as further emphasis was placed upon productivity, economy and efficiency. These efforts were fruitful in the areas where management could exert control. However, in areas less subject to management control (taxes, depreciation, financing costs, etc.) results were not as rewarding and substantial increases in such items had a major adverse effect on earnings for 1975.
Recognition of the need for more timely rate relief by the New Jersey Board of Public Utility Commissioners must be highlighted as a significant favorable development. A 4.7 % increase in revenues was approved by Order dated January 29, 1976, less than six months after the Company filed its request... the 6% increase which became effective July 3, 1975 was the result of the request filed ten months earlier. The new rates are designed to increase operating revenues by $9.3 million annually and are intended to produce a return on common equity of 13 % and a rate of return on rate base of 8.65 %.
Reduction in the fuel clause adjustment reflected in our customers' bills in recent months also is a source of satisfaction. Most notably, the January 1976 fuel clause adjustment was 1.3616¢ per KWH compared with 1.8045¢ per KWH in January 1975. The impact of this reduction on a customer's bill is significant and has resulted in lower electric bills for many customers even after applying the 6%
general rate increase which became effective last July. Moderation in the fuel adjustment clause should continue since it is anticipated that 19% of our 1976 KWH will be produced from nuclear fuel and 44 % from coal.
1
2 The financial and fuel supply dominance by the oil producing nations is still of national concern; the threat of another oil embargo is ever present; yet, an effective national energy program which will help reduce America's dependence on foreign oil had not been adopted at year-end 1975. Hopefully our nation's leaders will resolve this most critical matter in 1976.
A glimmer of progress in the program to develop domestic energy resources became evident in December when, in preparation for natural gas and oil exploration off the Atlantic Coast, a drilling platform was placed in position about 73 miles east of Atlantic City. Test drillings are expected to be completed by May 1976.
The year 1976 finds the Company in a relatively strong financial position with a staff of competent and loyal personnel who are dedicated to seeking out the opportunities which the challenges of the future will hold. Although conservation and the slowdown in the economy during the past two years has enabled us to defer near-term capital expenditures, we continue to anticipate a resumption of growth in demand for electricity as Southern New Jersey develops in an orderly but sustained fashion.
Construction expenditures, as warranted over the next few years, will be made to assure the availability of an adequate energy supply for Southern New Jersey's future. Hopefully, the rate of inflation will be contained thereby enabling greater stability in the price of electricity. Certainly greater use of the nation's most abundant domestic fuels, coal and uranium, together with reduced oil imports, will put further pressure on oil prices and reduce the power of OPEC on the inlernational monetary scene.
There is a growing public awareness that the growth and prosperity of the American economy depend upon a strong electric utility industry. In this, our Country's Bicentennial Year, you may be assured that we at Atlantic Electric will do our share to keep the lights of freedom proudly burning so that our way of life may continue to prosper for the common good of all mankind.
For the Board of Directors,
<<~~
W.W. White Chairman of the Board
~~
President 1975 REVENUE DOLLAR SOURCES OF REVENUE RESIDENTIAL 46¢ COMMERCIAL 32¢ INDUSTRIAL OTHER REVENUE TOTAL $1.00 DISPOSITION OF REVENUE 36¢ FUEL 16¢ COST OF INVESTED FUNDS 16¢ TAXES 11 ¢ MATERIALS & SUPPLIES 9¢ COST OF REPLACIN G EQUIPMENT!
8¢ LABOR 4¢ RE INVE STED FU NDS
$1.00 TOTAL
HISTORY OF THE COMPANY Atlantic Electric is an investor-owned electric utility serving the southern one-third of the State of New Jersey. The Company was incorporated in 1886 and reorganized under the laws of New Jersey on April 28, 1924 through the merger and consolidation of several utility companies. From a small company, formed just four years after Thomas Edison built the first central generating station in the United States, the Company has grown to a modern, integrated power system serving over 336,000 customers in eight counties.
The service area of Atlantic Electric encompasses approximately 2,700 square miles and has a year-round population of 915,000. In addition to numerous summer resorts, the region has excellent agricultural capabilities and boasts a variety of industries as well. Because of its economic diversity and its proximity to large cities, such as New York and Philadelphia, the southern New Jersey area possesses a unique potential for growth.
At year-end 1975 there were 39,400 holders of the Company's Common Stock and 2,020 holders of Preferred Stock. Approximately one-third of Atlantic Electric's holders of Common Stock are also customers of the Company and own 34% of the 9,470,073 shares outstanding.
A Company line crew working on the Lewis-Motts Farm 69,000 volt line spanning the Mullica River.
3
4 L
Earnings and Dividends Earnings for Common Stock amounted to
$2.41 per share outstanding in 1975 compared to $2.54 per average share outstanding in 1974.
Earnings for Common Stock in 1975 were affected by (1) a change in depreciation rates and increased depreciation due to the completion of major plant additions, mainly Peach Bottom Units #2 and # 3 and B. L. England Unit #3; (2) a decrease in Allowance for Funds Used During Construction attributed to our reduced construc-tion program; (3) increased Gross Receipts and Franchise Taxes and (4) increased interest charges and Preferred Stock dividends. Also, the sale of 600,000 shares of Common Stock in October, 1974 increased the total number of shares outstanding to 9,470,073 shares of Common Stock compared to 8,973,400 average shares outstanding in 1974.
However, we feel the major factor affecting 1975 earnings was the fact that rate relief granted the Company during the year not only was inadequate but came too late to offset those factors which caused the decrease in earnings.
Nonetheless, the Company is confident that earnings will improve in 1976 as a result of the expeditious rate relief which was authorized Serving One-third of the State of New Jersey
January 29, 1976 (see "Rate Increases" section).
Cash dividends of $1.51 per share of Common Stock were paid in 1975 compared to $1.50 per share in 1974. On August 27, 1975 the Board of Directors increased the quarterly dividend rate from 371/2 cents per share to 381/2 cents per share. The quarterly rate of 381/z cents per share was maintained for the January 15, 1976 dividend payment and is equivalent to $1.54 per share on an annual basis.
The Company has paid dividends on Common Stock for fifty-eight consecutive years and the amount of the annual dividend per share was increased in each year since 1952, an accom-plishment of which we are extremely proud.
Rate Increases Effective July 3, 1975, Atlantic Electric was permitted to implement a 6% general rate COST OF FUELS (Cents per Gallon or Equ ivalent) 30 Coal II Oil Nuclear 20 10--~
0 1970 1971 1972 1973 1974 1975 increase as a result of a request filed on August 30, 1974. Unfortunately, the increase granted by the New Jersey Public Utility Commission (PUC) was only one-third ($10.7 million) of the $30.8 million increase requested by the Company.
On January 29, 1976 the PUC granted the Company a 4.7% general rate increase as a result of a request for a $28 million increase filed August 15, 1975. The increase is expected to raise operating revenues by $9.3 million annually. The Public Utility Commissioners did not concur with our strong belief (as well as the recommendation of their Hearing Examiners in both cases) that the Company must be given the opportunity to earn a higher return on equity than in the past. However, one positive aspect of the increase was its timeliness-it was granted less than six months after we filed the request.
The Company will determine the probable effects of these increases on its operations, and will determine what revisions may be required in its construction program and other planned programs. Timely and adequate rate relief is essential to the continued financial health of the Company, especially in an inflationary period such as we have been experiencing.
To supplement electric revenue dollars, mil-lions of dollars must be obtained from investors who, primarily because of inflation, will require 5
6 a higher return on their investments. Atlantic Electric must be permitted to earn an acceptable return if it is to attract the investment capital necessary to continue to provide adequate, safe and reliable elec tric servi ce to its custom ers as well as to provide existing shareholders with a fair return on their investment in the Company.
Construction Program Expenditures by the Company for additions to generating capacity, transmission and distribution facilities and other capital improve-ments amounted to $39.5 million in 1975 compared to $60.7 million in 1974. In addition, allowance for funds used during construction (AFDC] amounted to $7.2 million in 1975 and
$10.5 million in 1974. It is estimated that construction expenditures for 1976 (excluding AFDC] will total $54 million.
During 1975 the Company received electric energy from its 157,000 kilowatt share of two nuclear generating units located at Peach Bottom, Pennsylvania. By the summer of 1984, the Company expects to be receiving energy from an additional 378,000 kilowatts of nuclear Dividend Reinvestment Plan (Participants) 2ooo~~i...-~i...-......r.~......r.~......r.~...... ~
...... ~-'--
Apri1 July Oct Jan Apri l July Oct Jan 1974 1974 1974 1975 1975 1975 1975 1976 In November, the Company announced the availability of a new Dividend Reinvestment and Stock Purchase Plan to replace the Dividend Reinvestment Program which had been in effect since April 1974. The new plan enables holders of record of Common Stock to have cash dividends paid on their shares of Common Stock automatically reinvested in additional new shares of Common Stock of the Company.
Alternatively, shareholders may con tinue lo receive cash dividends on shares regis tered in their names and invest in Company Common Stock by making optional cash payments of up to $3,000 per quarter; or they may invest both their dividends and optional cash payments.
Because shares are purchased directly from the Company and not on the open market, there are no brokerage fees or commissions. All service charges and costs of administration are paid by the Company. Reinvestment of dividends under the new plan began with the January 15, 1976 dividend and we are pleased with shareholder response. For the January 15, 1976 dividend payment, 4,620, or about 12 % of the share-holders, participated in the Dividend Reinvest-ment and Stock Purchase Plan, resulting in the issuance of 18,984 shares of Common Stock.
power. Of that amount, 164,000 kilowatts will come as a result of the Company's 7.4%
ownership of two nuclear units, having a combined capacity of 2,205,000 kilowatts, currently under construction at the Salem Nuclear Generating Station, Lower Alloways Creek, New Jersey. These units are being constructed by Public Service Electric and Gas Company; the first unit is scheduled for service in 1976 and the second in 1979.
The Company also has an ownership interest of 213,400 kilowatts in two nuclear units which will have a combined capacity of 2,134,000 kilowatts, to be constructed by Public Service at the Hope Creek Generating Station located adjacent to the Salem Nuclear Station. The first unit is scheduled for completion during 1982 and the second in 1984.
Financing To help finance the Company's continuing construction program, it was necessary to issue Total Interest Charges and Dividends
$45 (M illions of Dolla rs) 40 35 30 25 20 15 10 various capital securities during 1975. $10 million of 9.90 % Notes due 1977 were issued in January 1975. [This was part of a negotiated sale totaling $15 million of 9.90 % Notes due 1977, the first $5 million of which were issued in December 1974.) Also in January 1975, the Company issued $6.5 million principal amount of First Mortgage Bonds, 75/s % Pollution Control Series due 2005. $15,000,000 of First Mortgage Bonds, 8% % Series, were redeemed at maturity on April 1, 1975.
The net proceeds from the sale in May 1975 of $35 million of First Mortgage Bonds, 9% %
Series due May 1, 1983, were also applied toward the cost of the Company's continuing construc-tion program and toward the repayment of
$31.7 million of outstanding Notes Payable to banks. Short-term borrowings from banks and commercial paper borrowings totaled $13.7 million at year-end.
Cash generated within the Company consisting of retained earnings, depreciation accruals and COMMON DIVIDENDS 5
PREFERRED DIVIDENDS 0
INTEREST CHARGES 1970 1971 1972 1973 1974 1975 7
8 similar items provided approximately 66% of construction requirements in 1975 compared with 19% in 1974. It is the Company's goal to continue that trend which is so important to its continued financial health.
We estimate that 51 % of the amount needed to meet 1976 construction requirements will be provided from internal sources and the remaining 49% from external sources. Also, $10 million of 81/z % Debentures will mature on September 1, 1976. The sale of common stock through the Dividend Reinvestment and Stock Purchase Plan will provide a portion of the external funds. We expect to temporarily finance the balance through short-term bank loans and the issuance of commercial paper. Ultimately of course, it will be necessary to issue long-term debt or equity securities to repay short-term borrowings. We do presently expect to sell some type of equity security before the end of 1976-the timing, amount and form will depend upon market conditions.
Fuel 1975 marked the first full year in which Atlantic Electric's customers were the recipients of electric power generated by nuclear units.
Approximately 17% of the kilowatt-hours produced by the Company in 1975 was from the Company's share of the Peach Bottom nuclear units. This nuclear energy replaced what would have been generated by oil-fired units at a price of 31.8 cents per gallon of oil versus only 3.7 cents for the equivalent nuclear fuel. During 1976, nuclear energy is expected to account for 19% of the Company's kilowatt-hours.
Coal continued as the primary fuel for Units
- 1 and #2 at B. L. England Station. The consent order from the New Jersey Department of Environmental Protection permitting this coal burning was renewed and now expires in July 1976. In the interim, the N.J.D.E.P. is conducting a regional air quality study to determine the potential for relaxing its emissions limitations.
Approximately 47% of the kilowatt-hours Net Investment in Utility Plant (Year End) and Operating Revenues 300 200 100 (Excluding Fuel Adjustment Revenu e]
(Millions of Dollars) 1970 1971 1972 1973 1974 1975 INVESTMENT REVENUES
produced by the Company in 1975 was from coal-fired units.
Oil produced 36% of the Company's total kilowatt-hours in 1975, compared with 70%
before the oil embargo. Utilization of coal and nuclear power has reduced our dependence on foreign oil and has helped to reduce the overall cost of fuel to the Company. Fuel costs in 1975 were 2% below those in 1974.
Operations Continued efficient operation of an electric utility company is accomplished through new technology and improved procedures imple-mented by a highly skilled, imaginative and hard working management and employee staff.
Atlantic Electric is indeed fortunate to have such a staff.
Each department within the Company continued to make all-out efforts in 1975 to reduce the Company's financial requirements, improve earnings and provide service to our customers at the lowest practical cost.
A number of methods were utilized during 1975 to hold the line on labor and other costs.
These include a reduction of the work force made possible by limited replacement of retirees and other persons who terminated employment, reduction of overtime and limited use of contract personnel.
Also, the Company's comprehensive cost control program included elimination, reduction or deferment of a number of programs and/ or expenditures originally planned for 1975. Many cost-cutting measures were required as a result of inadequate rate relief and many were made possible as a result of reductions in the 1975-1976 construction programs attributable to downward revisions in anticipated future load growth.
Management is ever mindful of its responsibility to provide adequate, reliable electric service to its customers.
The use of more than 917,000 tons of coal to generate electricity in 1975 has reduced our dependence on foreign oil and has helped to reduce the overall cos t of fue l to the Company.
9
10 Environment Atlantic Electric has been a continuous supporter of long-range objectives aimed at improving and protecting the quality of the environment. The Company has invested, and will continue to invest, in numerous environ-mental protection facilities and studies connected with its generating stations. These range from fish sampling and air monitoring studies to the construction and installation of cooling towers, containment dikes and waste water treatment facilities.
The Company is subject to regulation with respect to air and water quality and other environmental matters by various Federal, state and local authorities. Stringent New Jersey Department of Environmental Protection standards often exceed the requirements set forth by the Environmental Protection Agency at the national level.
It is the Company's belief that there must be a realistic balance between environmental controls and future energy requirements.
Everyone is aware of the danger and the potential costs involved in allowing the environment to Stack sampling is part of the Company's continuing program to reduce fl yash emissions from its coal-fired facilities.
deteriorate. However, protection of the environment is also costly. Overly restrictive environmental regulations only serve to increase the cost of electricity (a cost which has already risen dramatically due to increased fuel costs, inflation and various other factors) while providing only marginal benefit to environmental quality.
Employees Employees were put to the test in 1975. While implementing a most stringent cost-cutting program, employees were asked to respond to a great number of customer inquiries both on and off the job, and asked to combat the same inflation that they are faced with in their personal lives. They performed magnificently.
Salaries and wages paid to employees amounted to $28.8 million in 1975. The Company's cost of employee benefits totaled an additional $5.5 million. A general increase, effective December 1975, will add $2.5 million to 1976 payroll costs. Employees numbered 1,741 at year-end 1975, a reduction of 70 from the 1,811 employees on the payroll at year-end 1974.
The Company is not insensitive or unrespon-sive to the effect of rate increases on its customers. Employees in their day-to-day contact with customers, friends and family, must be prepared to fairly present facts about increased electric rates, nuclear station siting and other matters. A program designed to further educate employees about increasing fuel and material costs, taxes paid, and the need to pay a fair return to our shareholders, was presented to all employees again in 1975. Designed and presented by Officers of the Company, the program provided employees with data to enable them to better respond to inquiries from the public.
Meetings are held periodically to keep employees informed of the latest developments in Company operations and to provide them with data so they can better com-muni cate with the public. Pictured is Mr. R. M. Wilson, Senior Vice President, addressing employees.
11
Income and Retained Earnings Year Ended December 31 1975 1974 OPERATING REVENUES-ELECTRIC (Note 9).................
$199,079,150
$176,611,265 OPERA TING EXPENSES:
Fuel......................................................
71,644,673 73,167,066 Other Operation............................................
28,886,894 29,086,792 Maintenance...............................................
8,866,990 9,865,228 Depreciation (Note 1).......................................
16,846,038 12,946,590 Taxes Other Than Federal Income Taxes.......................
23,394,142 17,832,852 Federal Income Taxes (Notes 1 and 6)..........................
1,035,029 (1,601,412)
Federal IncCJme Taxes Deferred:
Liberalized Depreciation (Note 1)...........................
2,342,355 690,000 Accelerated Amortization.................................
(110,507)
(115,746)
Investment Tax Credit Adjustments-Net [Note 1)...............
5,422,214 (602,731)
Total Operating Expenses.............................
158,327,828 141,268,639 OPERA TING INCOME.......................................
40,751,322 35,342,626 OTHER INCOME:
Allowance for Funds Used During Construction (Note 1).........
7,229,745 10,567,696 Miscellaneous Non-Operating Income Less Income Deductions....
516,755 187,428 Net Other Income....................................
7,746,500 10,755,124 INCOME BEFORE INTEREST CHARGES.......................
48,497,822 46,097,750 INTEREST CHARGES:
Interest on Long-Term Debt.................................
18,403,404 15,288,146 Amortization of Debt Expense and Premium-Net.............
25,335 (8,237)
Interest on Short-Term Debt.................................
1,694,322 3,746,663 Other Interest Expense......................................
95,026 61,159 Total Interest Charges................................
20,218,087 19,087,731 NET INCOME...............................................
28,279,735 27,010,019 RETAINED EARNINGS AT BEGINNING OF YEAR..............
65,764,596 56,756,492 94,044,331 83,766,511 DIVIDENDS DECLARED:
Dividends on Cumulative Preferred Stock......................
5,483,936 4,471,602 Dividends on Common Stock (per share 1975- $1.52, 1974- $1.50) 14,394,717 13,530,313 Total Dividends Declared..............................
19,878,653 18,001,915 RETAINED EARNINGS AT END OF YEAR.....................
$ 74,165,678
$ 65,764,596 AVERAGE NUMBER OF COMMON SHARES OUTSTANDING....
9,470,073 8,973,400 EARNINGS PER SHARE OF COMMON STOCK (Note 4):
Based on average shares outstanding..........................
$2.41
$2.54 Based on average shares-fully diluted........................
$2.38
$2.51 The accompanying Notes to Financial Statements are an integral part of this statement.
12
Statement of Changes in Financial Position SOURCE OF FUNDS Funds from Operations:
Net Income................................................
Principal Non-Cash Charges (Credits) to Income:
Depreciation.............................................
Allowance for Funds Used During Construction...............
Federal Income Taxes-Deferred [Net)......................
Investment Tax Credit Adjustments (Net)....................
Other [Net)..............................................
Total Funds from Operations...........................
Funds from Outside Sources:
Long-Term Debt............................................
Sale of Common Stock......................................
Sale of Preferred Stock......................................
Increase in Short-Term Debt.................................
Total Funds from Outside Sources......................
Debentures Maturing in 1976...................................
Other Sources (Net)..........................................
Total Source of Funds................................
APPLICATION OF FUNDS Gross Additions to Utility Plant................................
Allowance for Funds Used During Construction...................
Net.................................................
Dividends on Pref erred Stock..................................
Dividends on Common Stock..................................
Retirement and Maturity of Long-Term Debt.....................
Debentures Maturing in 1976...................................
Decrease in Short-Term Debt..................................
Investments in Subsidiary Companies...........................
Increase (Decrease) in Working Capital (excluding short-term debt)
(see below)................................................
Total Application of Funds.............................
NET INCREASE (DECREASE) IN COMPONENTS OF WORKING CAPITAL [EXCLUDING SHORT-TERM DEBT)
Current Assets:
Cash and Cash I terns........................................
Accounts Receivable........................................
Fuel......................................................
Materials and Supplies......................................
Prepayments...............................................
Other Current Assets.......................................
Total...............................................
Current Liabilities:
Accounts Payable..........................................
Taxes Accrued.............................................
Interest Accrued...........................................
Other.....................................................
Total...............................................
Net Increase [Decrease) in Working Capital......................
Year Ended December 31 1975 1974
$ 28,279,735 16,846,038 (7,229,745) 2,231,848 5,422,214 471,723 46,021,813 51,500,000 51,500,000 10,000,000 (793,301)
$106,728,512
$ 46,744,820 (7,229,745) 39,515,075 5,483,936 14,394,717 15,125,000 10,000,000 23,650,000 894,446 (2,334,662)
$106,728,512
$ (2,812,009) 157,868 2,391,684 (70,487) 207,626 (2,106,348)
(2,231,666)
(1,633,447) 296,281 (32,377) 1,472,539 102,996
$ (2,334,662)
$ 27,010,019 12,946,590 (10,567,696) 574,254 (602,731)
(59,950) 29,300,486 5,000,000 7,595,804 29,826,200 24,800,000 67,222,004 1,206,182
$ 97,728,672
$ 71,219,796 (10,567,696) 60,652,100 4,471,602 13,530,313 255,000 478,761 18,340,896
$ 97,728,672 4,780,609 3,815,287 6,294,209 1,311,103 313,270 2,106,348 18,620,826 (2,727,265) 438,683 373,440 2,195,072 279,930
$ 18,340,896 The accompanying Notes to Financial Statements are an integral part of this statement.
13
14 Balance Sheet - December 31, 1975-1974 Assets ELECTRIC UTILITY PLANT (Note 1):
In Service:
Production..............................................
Transmission............................................
Distribution.............................................
General.................................................
Construction Work in Progress...............................
Nuclear Fuel (Note 8).......................................
Total Electric Utility Plant.................................
Less Accumulated Provision for Depreciation..............
Electric Utility Plant-Net.............................
INVESTMENTS:
Investment in Subsidiary Companies, at Equity (Note 2)
Land Purchase Contracts....................................
Other Investments..........................................
Total Investments CURRENT ASSETS:
Cash (Note 5)..............................................
Temporary Cash Investments................................
Special Deposits and Working Funds..........................
Accounts Receivable:
Utility Services..........................................
Subsidiary Companies....................................
Miscellaneous............................................
Allowance for Doubtful Accounts..........................
Fuel (at average cost).......................................
Materials and Supplies (at average cost).......................
Prepayments...............................................
Other Current Assets.......................................
Total Current Assets..................................
DEFERRED DEBITS:
Unamortized Debt Expense (Note 1)...........................
Other Work in Progress.....................................
Other Deferred Debits.......................................
Total Deferred Debits.................................
Total...........................................
December 31 1975 1974
$252,255,291 95,672,272 185,854,216 15,806,598 119,478,320 6,549,957 675,616,654 122,988,944 552,627,710 4,621,320 635,231 494,078 5,750,629 4,786,613 1,800,000 182,718 12,870,557 39,077 2,372,419 (430,000) 16,964,948 7,198,353 1,572,498 47,357,183 2,289,175 724,506 622,051 3,635,732
$609,371,254
$254, 760,072 88,003,720 177,150,588 14,900,972 97,820,024 4,614,794 637,250,170 113,745,335 523,504,835 3,780,045 551,689 412,823 4,744,557 7,996,540 1,400,000 184,800 13,032,711 34,188 1,907,286 (280,000) 14,573,264 7,268,840 1,364,872 2,106,348 49,588,849 1,646,771 831,556 312,115 2,790,442
$580,628,683 The accompanying Notes to Financial Statements are an integral part of this statement.
Liabilities December 31 1975 1974 LONG-TERM DEBT (see page 19)..............................
$288,864,954
$262,632,846 SHAREHOLDERS' EQUITY (Note 3):
Cumulative Preferred Stock..................................
80,091,045 80,091,045 Common Stock, Par Value $3:
Authorized Shares, 14,000,000 in 1975 and 11,000,000 in 1974 Outstanding Shares 9,470,073..............................
28,410,219 28,410,219 Premium on Common Stock................................
81,955,984 81,955,984 Total Common Stock.................................
110,366,203 110,366,203 Capital Stock Expense (not being amortized)...................
(1,511,187)
(1,470,954)
Retained Earnings..........................................
74,165,678 65,764,596 Total Shareholders' Equity.............................
263,111,739 254, 750,890 CURRENT LIABILITIES:
Current Portion of Long-Term Debt...........................
10,000,000 Notes Payable to Banks (Note 5)..............................
7,150,000 37,300,000 Commercial Paper (Note 5)..................................
6,500,000 Accounts Payable..........................................
1,517,747 3,167,700 Accounts Payable-Subsidiary Companies.....................
196,133 179,627 Customer Deposits.........................................
1,648,070 1,234,593 Taxes Accrued.............................................
2,061,578 1,765,297 Interest Accrued...........................................
3,819,993 3,852,370 Dividends Declared.........................................
5,016,960 4,922,259 Other Current Liabilities....................................
5,952,493 4,988,132 Total Current Liabilities...............................
43,862,974 57,409,978 DEFERRED CREDITS:
Customer Advances for Construction..........................
541,977 576,257 Accumulated Deferred Investment Tax Credits (Note 1)..........
7,638,388 2,216,174 Accumulated Deferred Income Taxes:
Liberalized Depreciation (Note 1)...........................
3,032,355 690,000 Accelerated Amortization.................................
979,413 1,089,920 Other Def erred Credits......................................
175,602 491,983 Reserve for Storm Damage...................................
558,852 315,635 Other Reserves.............................................
605,000 455,000 Total Deferred Credits................................
13,531,587 5,834,969 COMMITMENTS AND CONTINGENT LIABILITIES (Note 8)
Total...........................................
$609,371,254
$580,628,683 The accompanying Notes to Financial Statements are an integral part of this statement.
15
Notes to Financial Statements 16 NOTE 1: SIGNIFICANT ACCOUNTING POLICIES:
REGULATION-The accounting and rates of the Company are sub-ject in certain respects to the requirements of the Board of Public Utility Commissioners of the State of New Jersey (PUC) and in certain respects to the Federal Power Commission.
ELECTRIC UTILITY PLANT-Property is stated at original cost (cost to the person first devoting the plant to public service).
Generally the plant is subject to first mortgage liens. The cost of property additions, including replacements of units of property and betterments, is capitalized. Included in such additions is an Allowance for Funds Used During Construction which is defined in the applicable regulatory systems of accounts as the net cost, during the period of construction, of borrowed funds used for construction purposes and a reasonable rate on other funds when so used. The rate used for such allowance was 8% in 1975 and 1974.
DEPRECIATION AND MAINTENANCE-The Company provides for depreciation on the basis of the estimated service lives of de-preciable property on a straight-line basis. The over-all composite rate of depreciation was approximately 3.2% and 3% for the years 1975 and 1974, respectively. In 1975, changes in deprecia-tion rates had the effect of increasing depreciation expense by approximately $990,000. In addition to the provision for de-preciation, income is charged with the cost of labor, material, supervision and other expenses incurred in making repairs and minor replacements and in maintaining the properties in efficient condition. The accumulated provision for depreciation is charged with the cost of depreciable property units retired, together with removal costs less salvage.
DEBT EXPENSE AND PREMIUM-Debt issuance expense and pre-mium are being amortized over the lives of the issu2s to which they pertain.
INCOME TAXES-Tax reductions resulting from the use of ac-celerated depreciation including Class Life (ADR) System for de-preciable property added prior to 1974 are reflected in income tax expense currently in accordance with the prescribed rate-making policy of the PUC. Deferred income taxes are provided in amounts equal to the tax effect of the difference between tax depreciation computed on depreciable property added after 1973 using accelerated methods under the ADR System and the straight line method using asset guideline periods.
Investment tax credits are being deferred in a balance sheet account and are being restored to income over the life of the related property.
PENSION PLAN-The Company and Deepwater, referred to in Note 2, have in effect a noncontributory insured retirement annuity plan covering all regular employees. The cost of the plan determined under the aggregate cost actuarial method for the years 1975 and 1974 respectively, *amounted to $2,164,000 and $2,069,000 for the Company (including $510,000 and $518,000 charged to construc-tion) and $362,000 and $392,000 for Deepwater. Based on an actuarial study as of December 31, 1974, the vested benefits computed under the plan were in excess of pension fund assets by approximately $215,000. The effects, if any, of conforming the plan to the requirements of the Employee Retirement Income Security Act of 1974 are not determinable at this time.
NOTE 2: INVESTMENT IN SUBSIDIARY COMPANIES:
The Company has an investment of $1,856,000 at December 31, 1975 and $1,631,000 at December 31, 1974 in Deepwater Oper-ating Company (Deepwater), a wholly-owned subsidiary which op-erates generating and process steam units owned by the Com-pany. The assets of Deepwater consist almost wholly of working capital in which the equity of the Company is fairly represented by its investment in Deepwater. The net production costs of Deepwater (after deducting charges to E. I. duPont deNemours &
Company) are charged to the Company. These costs are included in the Company's income account, classified as to maintenance, taxes, etc. Also, the Company has an investment in Overland Realty, Inc. (Overland), a wholly-owned subsidiary which acquired, prior to 197 4, land to be used as sites for the location of future generating stations or industrial and residential developments.
The Company's investment in Overland amounted to $2, 765,220 at December 31, 1975 and $2,148,945 at December 31, 1974. At December 31, 1975, Overland had $10,865,217 invested in mort-gages and land of which $1,784,332 is invested in a future gen-erating station and industrial site which is subject to a mortgage of which the Company is liable for the payment of $900,000 princi-pal amount and interest under a suretyship agreement. At Decem-ber 31, 1975 Overland had outstanding $4,182,593 in short-term mortgage notes payable to banks and $2,740,081 of advances from the Company (included in the Company's investment referred to above) which are subordinated to the mortgage notes. The mortgage note agreement requires the Company to advance to Overland any amounts necessary to maintain the real estate cov-ered by the agreement. Carrying costs of land held for resale (principally interest and property taxes) are being capitalized by the subsidiary and net carrying costs capitalized in 1975 were approximately $812,000. The combined assets of the subsidiaries were approximately 2% of the Company's assets at December 31, 1975 and December 31, 1974 and their net income is not significant.
NOTE 3: PREFERRED AND COMMON STOCKS:
CUMULATIVE PREFERRED STOCK, Par Value $100 (authorized 1,200,000 shares in 1975 and 1,000,000 shares in 1974)
Issued and Outstanding Series:
4% Series-77,000 Shares 4.10% Series-72,000 Shares 4.35% Series-15,000 Shares 4.35% 2nd Series-36,000 Shares 4.75% Series-50,000 Shares 5% Series-50,000 Shares 5Vs% Convertible Series-99,979 Shares (B) 7.52% Series-100,000 Shares 8.40% Series-100,000 Shares (C) 9.96% Series-200,000 Shares (D)
Premium on Preferred Stock Total Cumulative Preferred Stock December 31 1975 1974
$ 7,700,000 7,200,000 1,500,000 3,600,000 5,000,000 5,000,000 9,997,900 10,000,000 10,000,000 20,000,000 79,997,900 93,145
$80,091,045
$ 7,700,000 7,200,000 1,500,000 3,600,000 5,000,000 5,000,000 9,997,900 10,000,000 10,000,000 20,000,000 79,997,900 93,145
$80,091,045 Current Redemption Price Per Share
$105.50 101.00 101.00 101.00 101.00 100.00 104.50 108.65 115.00 109.61 (A) Prior to the date specified, no shares may be redeemed through certain refunding operations.
Refunding Restricted Prior to (A)
April 1, 1977 Feb. 1, 1979 Aug. 1, 1984 (B) The 5Vs% Convertible Series is convertible (subject to adjustment of certain events) into Common Stock at the rate of 3.5 shares of Common Stock for each share of the Preferred (349,927 shares of authorized Common Stock are reserved for the conversion of the Series).
(C) On February 1, 1985, and annually thereafter, 4,000 shares must be redeemed through the operation of a sinking fund at a redemption price of $100.00 per share, plus, at the option of the Company, an additional 4,000 shares may be redeemed on any sinking fund date, without premium, up to 32,000 shares in the aggregate.
(D) On August 1, 1979, and annually thereafter, 8,000 shares of the 9.96% Series must be redeemed through the operation of a sinking fund at a redemption price of $100.00 per share, plus, at the option of the Company, an additional 8,000 shares may be redeemed on any sinking fund date, without premium, up to 40,000 shares in the aggregate.
COMMON STOCK-Issues of capital stock include the sale of 600,000 shares of Common Stock in October, 1974. Premium on Com-mon Stock was credited in 1974 with the amount of $5,892,000 representing the excess of proceeds over the par value of shares of Common Stock issued and sold. The Company has reserved 200,000 shares of Common Stock under its Dividend Reinvestment and Stock Purchase Plan which became effective in 1976. In January, 1976, 18,984 shares were issued under the Plan.
NOTE 4: EARNINGS PER SHARE:
Earnings per share of Common Stock has been computed by di-viding net income net of applicable preferred stock dividend re-quirements ($5,483,936 in 1975 and $4,233,384 in 1974) by the average common shares outstanding during the year.
Earnings per share assuming full dilution reflects the net reduc-tion in earnings per share which would have been realized if the 5Vs% Series preferred stock had been converted in full at the beginning of each year.
NOTE 5: SHORT-TERM BORROWINGS AND COMPENSATING BALANCES:
The Company had arrangements for short-term borrowings as follows:
Maximum amount of short-term borrowings outstanding at any month end during the year Average daily amount outstanding during the year Average daily interest rate on above Weighted average interest rate on short-term borrowings outstanding at year end:
Notes Payable to Banks Commercial Paper 1975 1974
$41,200,000
$55,000,000
$18,500,000
$33,000,000 8.8%
11.1%
7.9%
11.6%
5.6%
17
Notes to Financial Statements 18 The unused lines of credit available at December 31, 1975 and December 31, 1974 were $43,000,000 and $33,000,000, respec-tively. Demand deposits are maintained with lending banks cer-tain of which are deemed to constitute compensating balances which are not legally restricted. Based on lines of credit and loans outstanding at December 31, 1975 and December 31, 1974, respectively, such compensating balances approximated $3,300,000 and $5,000,000.
NOTE 6: FEDERAL INCOME TAXES:
Federal income tax returns, except for certain claims for refund, have been settled through 1971. The U. S. Department of Justice has recommended to the Joint Committee on Internal Revenue Taxation a settlement of claims for the years 1962 and 1963 in the amount of $338,902 plus interest of $262,853. Such amounts were credited to income in 1975.
Federal income tax expense applicable to current operations is less than the income tax that would have resulted by applying the statutory rate because of the following:
Year ended Year ended December 31, December 31, 1975 1974 Federal income tax expense at 48%
of pre-tax income............. $17,784,703
$12,198,115 Decrease resulting from:
Excess of tax depreciation over book depreciation...........
(6,188,621)
(7,135,455)
Exclusion of allowance for funds used during construction from taxable income.............
(3,470,278)
(5,072,494)
Capitalized overheads deducted for tax purposes...............
(744,889)
(654,060)
Investment tax credit.........
(5,874,512) 458,738 Other........................
(388,734)
(1,363,645)
Federal income tax expense (credit) included in State-ment of Income......... $ 1,117,669
$ (1,568,801)
Charged (credited) to:
Operating Expense............. $ 1,035,029
$ (1,601,412)
Other Income................
82,640 32,611 Total.................... $ 1,117,669
$ (1,568,801)
At December 31, 1975, investment tax credit of approximately
$250,000 is available for carryforward to subsequent years.
NOTE 7: LEASES:
Rentals incurred in 1975 and 1974 were approximately $2,552,000 and $1,606,000, respectively.
Minimum rental commitments under noncancelable leases (prin*
cipally noncapitalized financing leases) as of December 31, 1975 are approximately as follows:
1976-$2,550,000 1977-2,446,000 1978-2,342,000 1979-2,281,000 1980- 2,237,000 1981-1985-$10,584,000 1986-1990-8,444,000 1991-1995-7,020,000 After 1995-3,929,000 The total minimum rental commitments as of December 31, 1975 are applicable to combustion turbine generating units (65%),
fuel transportation and storage facilities (17%), real estate (12%),
and other (6%).
The present value of future noncancelable lease commitments at December 31, 1975 and December 31, 1974 is less than 5% of capitalization in each case. If all noncapitalized financing leases were capitalized, the impact on net income for 1975 and 1974 would be less than 3% of the average net income for the most recent three years.
NOTE 8: COMMITMENTS AND CONTINGENT LIABILITIES:
Construction expenditures, excluding production plant, are esti-mated at $30,000,000 for 1976. Commitments for the construction of production plant amount to approximately $270,000,000 of which it is estimated that $32,000,000 will be expended in 1976.
In connection with a long-term agreement for the purchase of fuel oil the Company has a commitment for use of terminal facili-ties for a fifteen-year period from May 27, 1971 at a minimum annual amount of approximately $1,300,000, with the right to cancel the commitment five years thereafter upon payment of an estimated $4,200,000. The amounts paid under the above agreement are a part of the cost of fuel and are recoverable under the fuel clause surcharge in the Company's tariff schedules.
Nuclear fuel requirements for Peach Bottom Units No. 2 and 3 are being provided by the operating company for Peach Bottom through a fuel purchase contract. The Company is responsible for payment of its proportionate interest (7.51 %) of the cost of the fuel burned and of certain operating costs and interest expense during the term of the contract.
NOTE 9: RATE INCREASES:
Effective July 18, 1974 the PUC granted the Company an increase in rates which would have the effect of increasing the annual revenues of the Company. by about $12.2 million, or 9.5%, when applied to the billing determinants for 1973, the test year.
Effective July 3, 1975 the PUC granted the Company an increase in rates which would have the effect of increasing the annual revenues of the Company by about $10.7 million, or 6%, when applied to the billing determinants for 1974, the test year.
On January 29, 1976 the PUC granted the Company an increase in rates which would have the effect of increasing the annual revenues of the Company by about $9.3 million, or 4.7%, when applied to the billing determinants for 1975, the test year.
Long-Term Debt December 31 First Mortgage Bonds:
1975 1974 8% % Series due (April 1) 1975....................................
$ 15,000,000 2% % Series due (June 1) 1979....................................
3,000,000 3,000,000 2% % Series due (July 1) 1980.....................................
4,600,000 4,600,000 2% % Series A due (Nov. 1) 1980..................................
18,400,000 18,400,000 3% % Series due (March 1) 1982...................................
4,620,000 4,620,000 3% % Series due (Jan. 1) 1983.....................................
4,050,000 4,050,000 9% % Series due (May 1) 1983....................................
35,000,000 3% Series due (March 1) 1984....................................
5,000,000 5,000,000 3% % Series due (March 1) 1985..................................
10,000,000 10,000,000 41/z % Series due (Jan. 1) 1987.....................................
10,000,000 10,000,000 3% % Series due (April 1) 1988....................................
10,000,000 10,000,000 41/z % Series due (April 1) 1989....................................
5,000,000 5,000,000 41/z % Series due (March 1) 1991..................................
10,000,000 10,000,000 41/z % Series due (July 1) 1992.....................................
15,000,000 15,000,000 43/s % Series due (March 1) 1993...................................
15,000,000 15,000,000 51/a % Series due (Feb. 1) 1996....................................
10,000,000 10,000,000 8% % Series due (Sept. 1) 2000....................................
20,000,000 20,000,000 8% Series due (May 1) 2001......................................
27,000,000 27,000,000 71/z % Series due (April 1) 2002....................................
20,000,000 20,000,000 7% % Series due (June 1) 2003....................................
30,000,000 30,000,000 75/a % Pollution Control Series due (Jan. 1) 2005......................
6,500,000 Debentures:
263,170,000 236,670,000 81/z % Debentures due (Sept. 1) 1976...............................
10,000,000 5% % Sinking Fund Debentures due (Feb. 1) 1996....................
4,299,000 4,399,000 7% % Sinking Fund Debentures due (May 1) 1998....................
4,555,000 4,580,000 Notes:
9.90% Notes due (Dec. 15) 1977...................................
15,000,000 5,000,000 287,024,000 260,649,000 Add: Unamortized Premium (Note 1)................................
1,840,954 1,983,846
$288,864,954
$262,632,846 Deposits in sinking funds for retirement of debentures are required on February 1 of each year, from 1976 through 1995 for the 51/. % debentures, and on May 1 of each year from 1976 to 1997 for the 71/. % debentures, in amounts in each case sufficient to redeem $100,000 principal amount plus, at the election of the Company, up to an additional $100,000 principal amount in each year. Prior to December 31, 1975 the Company had reacquired and cancelled $201,000 prin-cipal amount of the 51/. % debentures and $145,000 principal amount of the 71/. % debentures toward its requirements for 1976 and subsequent periods.
Accountants' Opinion Haskins & Sells Certified Public Accountants Atlantic City Electric Company:
Sinking fund requirements of $1,246,700 required in connection with certain first mortgage bonds outstanding, are being satisfied by certification of property additions as provided for in the related mortgage indentures.
Principal amount of 81/z % debentures due September 1, 1976 is included in current liabilities at December 31, 1975.
Two Broadway New York, New York 10004 We have examined the balance sheet of Atlantic City Electric Company as of December 31, 1975 and 1974 and the related statements of income and retained earnings and changes in financial position for the years then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the accompanying financial statements present fairly the financial position of the Company at December 31, 1975 and 1974 and the results of its operations and the changes in its financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.
January 30, 1976
- 1 19
20 1975-1965 Statistical Profile and Summary of Operations Facilities for Service Total Utility Plant [Thousands)..................
Gross Additions to Utility Plant [Thousands)......
Pole Miles of Transmission and Distribution Lines Generating Capacity [Kilowatts)(a)...............
Maximum Utility System Demand-Kw............
Source of Energy [Thousands of Kwh)
Net Generation................................
Purchased and Interchanged-Net...............
Total...................................
Electric Sales [Thousands of Kwh)
Residential....................................
Commercial...................................
Industrial.....................................
All Others....................................
Total...................................
Gross Revenue [Thousands of Dollars)
Energy Sales Residential..................................
Commercial.................................
Industrial...................................
All Others..................................
Total...................................
Other Electric Revenue.........................
Total...................................
Residential Electric Service [Average per Customer)
Amount of Electricity used during the year (Kwh)..
Amount paid for a year's service................
Price paid per Kilowatt-hour [cents)..............
Customer Service Locations -Electric [Year-End) [bJ..
Population Served.............................
- Summary of Operations [Thousands of Dollars)
Operating Revenues-Electric...................
Operating Expenses Fuel........................................
Other Operation and Maintenance Expenses....
Depreciation................................
Taxes......................................
Total Operating Expenses.................
Operating Income......................
Other Income and Deductions-Net..............
Income before interest charges..........
Interest Charges...............................
Net Income...........................
Dividends Paid or Accrued on Preferred Stock....
Earnings for Common Stock............
Average Shares of Common Stock Outstanding......
Earnings Per Share of Common Stock (cl............
Dividends Declared Per Share of Common Stock.....
Dividends Paid on Common Stock (Cash)...........
(a) Excludes capacity allocated to a large industrial cus tomer.
[b) Restated.
1975
$ 675,617 46,745 6,645 1,334,700 1,069,400 4,715,357 190,852 4,906,209 1,938,724 1,346,216 1,036,755 56,465 4,378,160 90,956 63,544 34,974 4,881 194,355 4,724
$ 199,079 7,018 329.25 4.69¢ 336,105 915,000
$ 199,079 71,645 37,754 16,846 32,083 158,328 40,751 7,747 48,498 20,218 28,280 5,484 22,796 9,470,073
$2.41
$1.52
$1.51
[c) See Income and Retained Earnings statement for earnings per share of common stock assuming conversion of convertible preferred.
- See page 22 for Management's Discussion.
1974
$ 637,250 71,220 6,580 1,278,700 1,004,400 4,651,334 229,197 4,880,531 1,882,560 1,298,858 1,136,935 57,477 4,375,830 78,512 55,713 33,565 4,207 171,997 4,614
$ 176,611 6,982 291.21 4.17¢ 330,758 894,000
$ 176,611 73,167 38,952 12,946 16,203 141,268 35,343 10,755 46,098 19,088 27,010 4,233 22,777 8,973,400
$2.54
$1.50
$1.50 1973
$ 572,5E 67,8E 6,5(
1,013,5(
1,051,4(
4,236,0f 665,5E 4,901,64 1,899,12 1,351,91 1,119,4 '.i 58,1:;
4,428,7(
59,8E 42,8C 22,0C 3,8E 128,5::
4,3 f
$ 132,m 7,3 ~
230.1 3.1 320,8~
865,0C
$ 132,8J 37,1L 38,0E 11,7L 16,61 1 0 3,5~
29,3(
8,7~
38, 0 ~
15, 1~
22,91 2,6~
20,2~
8,453,4E
$2.40 '
$1.476
$1.461
1972 1971 1970 1969 1968 1967 1966 1965 511,274
$ 455,956
$ 404,364
$ 357,863
$ 324,561
$ 300,435
$ 284,957
$ 270,838 58,434 54,151 48,200 35,306 25,406 17,063 15,841 10,901 6,408 6,333 6,252 6,187 6,109 6,038 5,945 5,932 965,900 897,600 821,400 757,800 700,800 678,500 636,500 636,500 920,400 829,300 755,500 721,800 671,600 563,900 542,000 489,500 1,071,225 4,262,062 4,294,352 4,227,315 3,929,222 3,598,431 3,323,888 3,016,998 458,050
-74,395
-358,203
- 566,932
-615,766
-574,707
-475,760
- 450,345 1,529,275 4,187,667 3,936,149 3,660,383 3,313,456 3,023,724 2,848,128 2,566,653 l,741,895 1,624,793 1,520,939 1,375,546 1,253,772 1,140,797 1,038,428 948,299 i,183,668 1,059,498 977,210 879,916 821,538 742,486 689,245 625,895 l,061,932 990,363 954,111 911,138 801,664 755,624 746,996 661,875 64,531 88,963 101,703 116,021 91,467 81,966 73,616 68,984 1,052,026 3,763,617 3,553,963 3,282,621 2,968,441 2,720,873 2,548,285 2,305,053 51,544 42,623 36,979 32,672 29,850 27,673 25,709 23,963 35,868 28,648 23,933 20,584 18,912 17,345 16,335 15,100 19,350 16,529 13,036 11,303 9,738 9,225 9,011 8,133 3,763 3,919 3,795 3,753 3,302 3,054 2,848 2,666 110,525 91,719 77,743 68,312 61,802 57,297 53,903 49,862 4,128 3,687 3,648 3,731 3,688 3,737 3,694 3,680 114,653 95,406 81,391 72,043 65,490 61,034 57,597 53,542 7,008 6,793 6,542 6,072 5,685 5,313 4,959 4,662 207.37 178.19 159.06 144.22 135.34 128.88 122.78 117.80 I
2.96¢ 2.62¢ 2.43¢ 2.38¢ 2.38¢ 2.43¢ 2.48¢ 2.53¢
~ 309,393 297,437 288,538 282,274 279,976 274,360 268,739 261,665 828,000 796,000 773,000 753,000 733,000 714,000 697,000 679,000 114,653 95,406 81,391 72,043 65,490 61,034 57,597 53,542 29,944 28,705 22,457 15,691 13,057 11,928 10,297 8,895 31,427 23,333 17,862 16,103 13,964 12,735 12,727 12,721 11,190 10,355 9,632 9,043 7,892 7,479 7,129 6,475 15,359 10,603 11,129 12,292 12,748 11,935 11,300 10,231 87,920 72,996 61,080 53,129 47,661 44,077 41,453 38,322 26,733 22,410 20,311 18,914 17,829 16,957 16,144 15,220 6,647 5,164 3,520 1,773 1,097 450 306 101 33,380 27,5 74 23,831 20,687 18,926 17,407 16,450 15,321 13,297 11,641 9,276 6,302 6,226 5,700 5,129 4,744 20,083 15,933 14,555 14,385 12,700 11,707 11,321 10,577 2,456 1,900 1,900 1,900 1,672 1,313 1,313 1,313 17,627 14,033 12,655 12,485 11,028 10,394 10,008 9,264
,810,073 7,436,740 6,920,073 6,817,083 6,270,000 6,270,000 6,270,000 6,270,000
$2.26
$1.89
$1.83
$1.83
$1.76
$1.66
$1.60
$1.48
$1.4316
$1.37
$1.345
$1.31
$1.27
$1.23
$1.16
$1.095
$1.4144
$1.36
$1.34
$1.30
$1.26
$1.22
$1.14
$1.08 This Annual Report has been prepared for the purpose of providing general and statistical information concerning the Company and not in connection with any sale, offer for sale or solicitation of an offer to buy any securities.
21 Printed in U.S.A.
Managements Discussion and Analysis of The Summary of Operations 22 The Summary of Operations reflects the results of past operations and is not intended as any representa-tion as to results of operations for any future period.
Future operations will necessarily be affected by various and diverse factors and developments includ-ing possible changes in electric rates, business activity, taxes, labor contracts, fuel costs, environmental expenditures, the effects of various electricity conser-vation programs, and other matters, the nature and effect of which cannot now be determined.
The following discussion relates to the Summary of Operations for the years 1973, 1974 and 1975.
Operating Revenues: Operating revenues increased by the following percentages over the preceding year:
1974, 33%, 1975, 13%. These changes reflect increases resulting from fuel cost adjustments and rate increases in 1974 and 1975, increased kilowatt-hour sales in 1973, and a leveling in customer usage in 1974 and 1975 due to national concern over fuel supplies, conservation efforts and milder weather conditions.
During the period 1970-1973 the Company experienced annual increases in the number of kilowatt-hours delivered to ultimate customers averaging 7.8%.
During 1974 the Company experienced a decrease in the kilowatt-hours delivered to ultimate customers of approximately 1.2%, as compared with 1973, and during 1975 the Company experienced no significant change as compared to 1974.
Fuel: Fuel costs increased by 97% in 1974 vs. 1973, and decreased by 2% in 1975 vs. 1974. The increase in 1974 was primarily due to higher fuel prices and an increase of approximately 10% in energy generated by the Company. The decrease in fuel costs in 1975 vs. 1974 was made possible by greater use of nuclear fuel and a moderation of increases in the cost of coal and oil. [See charts on pages 4 and 5).
Other Operation and Maintenance Expenses: These expenses increased by only 2.3% in 1974 vs. 1973, and decreased by 3.1 % in 1975 vs. 1974. The increase in 1974 was a result of inflationary pressures (including higher costs of materials and supplies and of wages),
an increase in the net cost of purchased and inter-changed energy, and an increase in customers served, offset in part by decreases in expenses as a result of leveling of customer usage and management's com-prehensive cost control program. In 1975 the leveling of customer usage, the availability of energy from the interchange at a lower net cost, and management's comprehensive cost control program offset increases caused by inflationary pressures and the increase in customers served.
Depreciation: Depreciation increased by 10% in 1974 vs. 1973, and increased by 30% in 1975 vs. 1974.
These increases are primarily due to increase in plant.
The increase for 1975 is primarily the result of the addition of three major generating units during the second half of 1974 and an increase in the depreciation rates effective as of January 1, 1975.
Taxes: Taxes other than Federal Income Taxes increased by 16% in 1974 vs. 1973 and increased by 31 % in 1975 vs. 1974. These expenses [principally New Jersey tax on gross receipts) have increased as a direct result of increases in Operating Revenues.
1974 Federal Income Taxes declined as a result of increased operating and interest expenses and the use of accelera Led deprecia Lion. The increase in Federal Income Taxes for 1975 is primarily due to the fact that since mid 1974 the Company has been normalizing the benefits of accelerated depreciation by vintage years of plant add itions and as a result of rate increases granted in July, 1974 and July, 1975. [See Notes 1 and 6 of Notes to Financial Statements).
Other Income and Deductions -
Net: Other Income and Deductions (principally Allowance for Funds Used During Construction) increased by 23% in 1974 vs. 1973 primarily as a result of increases in construc-tion expenditures, and decreased by 28% in 1975 vs.
1974 primarily as a result of a decrease in construction expenditures.
Total Interest Charges; Preferred Stock Dividend Requirements: These charges and requirements increased 33% in 1974 vs. 1973 and increased 9% in 1975 vs. 1974. Interest charges on long-term debt and short-term debt and dividends on Preferred Stock have increased because of higher costs of money during certain periods and the sale of additional series of debt and preferred stock to help finance the Company's construction program.
Price Range of Stock and Dividends Paid on Stock Common Stock The Common Stock of the Company is traded on the New York Stock Exchange (principal market] and the 1
PBW Stock Exchange. The reported high and low sale prices of the Common Stock on the New York Stock Exchange for each quarterly period during 1974 and 1975 are listed below.
First Quarter..................
Second Quarter................
Third Quarter..................
Fourth Quarter.................
Cumulative Preferred Stock 1974
$20.375 18.75 17.25 14.50 High 1975
$17.75 19.50 19.00 18.50 1974
$16.75 14.00 12.50 12.00 Low 1975
$12.625 15.00 15.75 16.25 The 5% % Cumulative Convertible Preferred Stock [par value $100) of the Company is traded on the New York Stock Exchange. The reported high and low sale prices of such Preferred Stock for each quarterly period during 1974 and 1975 are listed below. No other series of Cumulative Preferred Stock is listed on a Stock Exchange.
First Quarter..................
Second Quarter................
Third Quarter..................
Fourth Quarter.................
1974
$78.00 75.00 61.00 59.00 High 1975
$62.00 70.00 69.50 69.00 1974
$72.00 61.50 50.00 50.00 Low 1975
$58.25 64.50 62.00 60.50 r
Common Stock The Company has paid cash dividends on its Common Stock in each year since 1919. The quarterly cash dividend paid per share was' 371/2 ¢ in 1974, 371/2 ¢ for the first three quarters of 1975 and 381/2 ¢ for the fourth quarter of 1975.
Cumulative Preferred Stock During 1974 and 1975 the Company paid quarterly cash dividends on each series of Cumulative Preferred Stock as listed below:
Series 4%
4.10%
4.35 %
4.75%
5%
57/s %
7.52%
8.40%
9.96%
1Series issued in February 1974.
~series issued in August 1974.
1974 Quarterly Rate
$1.00 1.025 1.0875 1.1875 1.25 1.46875 1.88 2.10 1 2.49~
1975 Quarterly Rate
$1.00 1.025 1.0875 1.1875 1.25 1.46875 1.88 2.10 2.49 23
Officers 24 John D. Feehan President and Director William S. Cowart, Jr.
Senior Vice President Richard M. Wilson Senior Vice President Charles F. Morgan Vice President, Secretary and Treasurer David V. Boney Vice President-Customer and Community Services Frank J. Ficadenti Vice President-Engineering, Research and Development TRANSFER AGENTS For Common Stock Irving Trust Company 1 Wall Street New York, N.Y. 10015 First National Bank of South Jersey Atlantic City, N.J. 08404 For Cumulative Preferred Stock Chemical Bank 20 Pine Street New York, N.Y. 10015 Edwin L. Gerber Vice President-Personnel and Public Relations Frederick Lange Vice President-Control John F. Born Assistant Vice President-Electric Operations Ernest D. Huggard Assistant Vice President-Production Martin R. Meyer Assistant Secretary and Assistant Treasurer Jerrold L. Jacobs Assistant Treasurer REGISTRARS For Common Stock Morgan Guaranty Trust Company of New York New York, N.Y. 10015 Guarantee Bank Atlantic City, N.J. 08404 For Cumulative Preferred Stock Irving Trust Company New York, N.Y. 10015 For Cumulative Convertible Preferred Stock Morgan Guaranty Trust Company of New York For Cumulative Convertible Preferred Stock Irving Trust Company New York, N.Y. 10015 I
New York, N.Y. 10015 SHARE LISTINGS Common Stock of the Company is listed on the New York Stock Exchange and the PEW Stock Exchange, Inc. The 5 'l's% Cumulative Convertible Preferred Stock of the Company is listed on the New York Stock Exchange.
I
(
Directors Karl R. Bopp Retired. Former President of Federal Reserve Bank of Philadelphia.
Eleanor S. Daniel Self employed. Former Assistant Vice President of the Mutual Life Insurance Company of New York (Senior Economic Adviser).
Richard M. Dicke Counselor at Law. Senior Partner of the law firm of Simpson Thacher
& Bartlett.
John D. Feehan President and Chief Executive Officer of the Company.
James P. Hayward Retired. Former President of the Company.
Mack C. Jones President of Radette Company.
Engaged in research, and development of electronic products.
Alfred C. Linkletter Senior Vice President of The Prudential Insurance Company of America.
John M. Miner Senior Executive Vice President of The Fidelity Bank.
Frank H. Wheaton, Jr.
President of Wheaton Industries.
Manufacturer of glass and plastic containers.
William W. White Chairman of the Board of Directors of the Company.
Chairman of the Board of Allied Power and Light Company.
Karl R. Bopp, who has served on the Board since 1970, will retire April 13, 1976.
Top-Left to Right Frank H. Wheaton, Jr.,
William W. White, Mack C. Jones.
Middle-Left to Right John M. Miner, Eleanor S. Daniel, John D. Feehan.
Bottom-Left to Right Richard M. Dicke, James P. Hayward, Alfred C. Linkletter.
0 ~~!!!g~R~!~wg!t~
1600 PACIFIC AVE.,
ATLANTIC CITY, N.J. 08404 BULK RATE U.S. POSTAGE PAID BRIDGETON, N.J.
PERMIT NO. 246