Constellation reports fourth quarter loss on $532.6 million in charges

By the OGJ Online Staff

HOUSTON, Jan. 30, 2002 — Constellation Energy Group Inc. Wednesday reported a loss of $260.1 million or $1.59/share for the 2001 fourth quarter, including $532.6 million in charges for workforce reductions, discontinued operations, and termination of power plant projects.

That compares to a profit of $86.1 million or 57-/share in the comparable quarter a year ago. Constellation’s share were up 3.07% to $27.20 in light trading Wednesday morning on the New York Stock Exchange.

The Baltimore company also forecast 2002 first quarter earnings of 43-48-/share and full year 2002 earnings of $2.65-$2.75 a share, excluding items.

Constellation reported the $532.6 million in charges recognized in the fourth quarter included termination of the Goldman Sachs power business services agreement, and the sale of Constellation Energy Group’s Guatemalan operations, together totaling $268.1 million. The remaining $264.5 million related primarily to a 10% cut in its workforce, plans to sell noncore assets, and the termination of several power plant development projects.

CEO Mayo Shattuck said the charge reflects the company’s intention regarding certain investments, including the real estate portfolio, senior living facilities, and international investments. “We are undertaking a number of initiatives to move costs towards competitive levels and to ensure that our management and capital resources are focused on our core energy businesses in projects that will yield strong returns for our shareholders,” he said.

Merchant Energy earned 31-/share, excluding a 32-/share charge in the fourth quarter of 2000. Constellation said the negative impact of declining California power prices was largely offset by termination of the Goldman Sachs power business services agreement.

Baltimore Gas & Electric’s regulated electric and gas businesses declined by 1-/share to13-/share in the fourth quarter of 2001, excluding special items. The company said the unfavorable impact of milder weather was largely offset by a reduction in interest expense.

Including the special charges and a 5-/share cumulative effect of an accounting change recognized in the first quarter, 2001 after-tax net income was $90.9 million or 57-/share. For the year ending Dec. 31, 2001, net income was $2.60/share, excluding the special charges recognized in the fourth quarter.

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