SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 6, 1998
Commission Registrant; State of Incorporation; IRS Employer
File Number Address; and Telephone Number Identification No.
1-11375 UNICOM CORPORATION 36-3961038
(an Illinois corporation)
37th Floor, 10 South Dearborn Street
Post Office Box A-3005
Chicago, Illinois 60690-3005
312/394-7399
1-1839 COMMONWEALTH EDISON COMPANY 36-0938600
(an Illinois corporation)
37th Floor, 10 South Dearborn Street
Post Office Box 767
Chicago, Illinois 60690-0767
312/394-4321
Item 5. Other Events.
Strategic Objectives
Unicom Corporation (the "Company") announced several objectives
(the "Objectives") that it is adopting for the operations of its
electric utility subsidiary, Commonwealth Edison Company
("ComEd"), and its other subsidiaries. Among other things, the
Objectives contemplate that ComEd will undertake steps to offer
for sale its coal-fired generation plants, representing an
approximate aggregate capacity of 5,600 megawatts. Such plants
have an aggregate book value of approximately $1.1 billion.
ComEd would retain its existing nuclear, oil and gas-fired
generating units, which represent an aggregate capacity of
approximately 13,500 megawatts, and its transmission and
distribution assets. A copy of the Objectives is filed as an
exhibit to this Current Report on Form 8-K.
Forward-Looking Statements. Except for historical data, the
information contained in the Objectives constitutes
forward-looking statements. Forward-looking statements are
inherently uncertain and subject to risks; consequently, such
statements should be viewed with caution. Actual results or
experience could differ materially from the forward-looking
statements as a result of many factors. The statements regarding
expected or targeted reductions, as well as overall savings, in
expenditures relating to operations and maintenance, capital, and
fuel and purchased power are subject to the ability of the
Company to achieve targeted workforce reductions and the ability
of internal savings initiatives to achieve expected savings,
changes in the scope of work for needed maintenance and for
capital expenditures, fluctuations in the market prices for fuel
and purchased power, and the ability of the Company to achieve
the nuclear capacity factors that are targeted. The statement
regarding targeted earnings per share is subject to unforeseen
developments in the market for electricity in Illinois resulting
from regulatory changes, the influence of developments in the
regulatory environments in other Midwestern states, adverse
weather conditions, and changes in the overall economy, any or
all of which may affect ComEd's sales of electricity; the ability
of the Company's strategic plans to produce targeted
efficiencies, the ability to complete the disposition of ComEd's
coal-fired generation units at anticipated prices and terms, and
the ability to reduce the Company's cost of capital through the
issuance of asset-backed securities by ComEd. The statement
regarding targeted gross margins for natural gas sales is subject
to the ability of the Company to achieve its goals in the
competitive market for natural gas. The statements regarding the
profitability of the performance contracting business are subject
to the Company's ability to achieve the efficiencies it seeks in
a competitive market. The statement regarding projected sales,
profits and market share in the restructured energy markets are
subject to unforeseen changes in the market as a result of
changing regulations and the emergence of competition. The
statement regarding the estimated return to service of ComEd's
LaSalle nuclear generating units is subject to the concurrence of
the Nuclear Regulatory Commission with proceeding to power
operations for those units and changes in the scope of work. The
earnings per share goals assume 185 million average outstanding
shares in 2000. The Company makes no commitment to disclose any
revisions to the forward-looking statements, or any facts,
events, or circumstances after the date hereof that may bear upon
the forward-looking statements.
Accounting for Impairment of Long-Lived Assets
The Staff of the Securities and Exchange Commission (SEC) has
recently issued interpretive guidance regarding the application
of Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets to Be Disposed
Of (SFAS 121), when a regulated enterprise such as an electric
utility discontinues regulatory accounting practices for
separable portions of its operations and assets. Under SFAS
121, an asset is considered impaired, and should be written down
to fair value, if its future cash flows are insufficient to
recover the carrying value of the asset. The interpretive
guidance concludes that for purposes of applying SFAS 121,
supplemental regulated cash flows such as a Competitive
Transition Charge (CTC) should be excluded from the cash flows of
assets in a portion of the business not subject to regulatory
accounting practices. If such assets are impaired, a regulatory
asset should be established if such costs are recoverable through
regulated cash flows. The guidance also addresses the extent to
which assets should be grouped to determine impairment.
ComEd discontinued the application of regulatory accounting
principles in December 1997 for the generation portion of its
business and performed an SFAS 121 impairment analysis that
concluded that future revenues, including the collection of the
CTC, expected to be recovered from electric supply services will
be sufficient to cover the costs of its generating assets.
However, reflecting the SEC's recent interpretive guidance,
ComEd's revised impairment evaluation is expected to result in a
plant impairment of approximately $3 billion. Under the
SEC's interpretive guidance the impairment would be reflected as
a reduction in plant assets. Because future CTC revenues
collected through regulated cash flows are expected to provide
recovery of the impaired plant assets, a regulatory asset would
be recorded for the same amount. Accordingly, this balance sheet
reclassification would not effect results of operation. ComEd
expects to record this balance sheet adjustment in the second
quarter of 1998. This regulatory asset will be amortized over a
transition period which is expected to end by 2006, but may be
extended to 2008 if certain conditions are met.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrants have duly caused this report to be
signed on their behalf by the undersigned thereunto duly
authorized.
UNICOM CORPORATION
(Registrant)
Date: July 6, 1998 By: John C. Bukovski
------------------------
John C. Bukovski
Senior Vice President
COMMONWEALTH EDISON COMPANY
(Registrant)
Date: July 6, 1998 By: John C. Bukovski
------------------------
John C. Bukovski
Senior Vice President
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
99. Unicom Directions
Recommitment, Restructuring and Renewal