SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
(Mark One)
( X ) ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission File Number 1-1401
PECO ENERGY COMPANY
EMPLOYEE SAVINGS PLAN
(Full title of the plan)
PECO ENERGY COMPANY
P.O. Box 8699
2301 MARKET STREET
PHILADELPHIA, PA 19101
(Name of issuer of the securities
held pursuant to the plan and the address
of its principal executive offices)
REQUIRED INFORMATION
FINANCIAL STATEMENTS
Statement of Net Assets Available for Benefits as of December 31,
1997 and 1996
Statement of Changes in Net Assets Available for Benefits for the Years
Ended December 31, 1997 and 1996
EXHIBITS
Consent of Independent Accountants
CONTENTS PAGE
Report of Independent Accountants .................. 3
Statement of Net Assets Available for Benefits
as of December 31, 1997 and 1996 ................... 4
Statement of Changes in Net Assets Available for
Benefits for the Years Ended December 31, 1997
and 1996 ........................................... 10
Notes to Financial Statements ...................... 15
Supplemental Schedule - Schedule of Assets Held
for Investment Purposes as of December 31, 1997 .... 21
List of Exhibits ................................... 22
Signature ......................................... 23
Report of Independent Accountants
PECO Energy Company
Philadelphia, Pennsylvania
We have audited the accompanying statements of net assets available for benefits
of the PECO Energy Company Employee Savings Plan (Plan) as of December 31, 1997
and 1996, and the related statements of changes in net assets available for
benefits for each of the two years in the period ended December 31, 1997. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1997 and 1996, and the changes in net assets available for benefits
for each of the two years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
accompanying index on page 2 is presented for the purpose of additional analysis
and is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule is the responsibility of the
Plan's management. The Fund Information in the statement of net assets available
for benefits and the statement of changes in net assets available for benefits
is presented for purposes of additional analysis rather than to present the net
assets available for benefits and changes in net assets available for benefits
of each fund. The supplemental schedule and Fund Information have been subjected
to the auditing procedures applied in the audits of the basic financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
The schedule of assets held for investment purposes that accompanies the Plan's
financial statements does not disclose the historical cost of certain Plan
assets held by the Plan trustee. Disclosure of this information is required by
the Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
June 29, 1998
PECO ENERGY COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
AS OF DECEMBER 31, 1997
Growth & Equity
Growth Income Small Cap Income
Mutual Mutual Growth Mutual
Total Fund Fund Fund Fund
------- ------------ ------------ ------------ ------------
Investments at fair value:
Mutual funds $434,661,681 $312,671,228 $75,725,122 $1,803,648 $778,643
Insurance contracts 51,973,786
Common stock 20,483,755
Participants' loans
receivables 13,279,818
------------ ------------ ------------ ------------ ------------
Total Investments 520,399,040 312,671,228 75,725,122 1,803,648 778,643
------------ ------------ ------------ ------------ ------------
Net assets available for
benefits $520,399,040 $312,671,228 $75,725,122 $1,803,648 $778,643
============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
PECO ENERGY COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
AS OF DECEMBER 31, 1997
(continued)
Money Fixed
Market Income Balanced
Fund Fund Fund
------------ ------------ ------------
Investments at fair value:
Mutual funds $20,793,790 $4,493,902 $17,576,085
Insurance contracts 51,973,786
Common stock
Participants' loans
receivables
------------ ------------ ------------
Total Investments 20,793,790 56,467,688 17,576,085
------------ ------------ ------------
Net assets available for benefits
$20,793,790 $56,467,688 $17,576,085
============ ============ ============
The accompanying notes are an integral part of the financial statements.
PECO ENERGY COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
AS OF DECEMBER 31, 1997
(continued)
PECO
Foreign Energy Co.
Stock Common Stock
Fund Fund Loan Fund
Investments at fair value: --------- ------------- ----------
Mutual funds $819,263
Insurance contracts
Common stock $20,483,755
Participants' loans
receivables $13,279,818
------------ ------------ ------------
Total Investments 819,263 20,483,755 13,279,818
------------ ------------ ------------
Net assets available for plan
benefits $819,263 $20,483,755 $13,279,818
============ ============ ============
The accompanying notes are an integral part of the financial statements.
PECO ENERGY COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
AS OF DECEMBER 31, 1996
Growth &
Growth Income
Mutual Mutual Money
Total Fund Fund Market
------------ ------------ ------------ ------------
Investments at fair value:
Mutual funds $321,537,526 $245,801,984 $57,002,648 $7,523,213
Interest-bearing 13,819,782
deposits
Insurance contracts 58,510,585
Common stock 22,595,789
Participants' loans
receivables 10,444,705
------------ ------------ ------------ ------------
Total Investments 426,908,387 245,801,984 57,002,648 7,523,213
Accrued transfers authorized by
participants - 840,508 (241,087) 79,162
------------ ------------ ------------ ------------
Net assets available for benefits
$426,908,387 $246,642,492 $56,761,561 $7,602,375
============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
PECO ENERGY COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
AS OF DECEMBER 31, 1996
(continued)
Fixed Credit
Income Union Balanced
Fund Fund Fund
------------ ------------ ------------
Investments at fair value:
Mutual funds $11,209,681
Interest-bearing $13,819,782
deposits
Insurance contracts $58,510,585
Common stock
Participants' loans
receivables
------------ ------------ ------------
Total Investments 58,510,585 13,819,782 11,209,681
Accrued transfers authorized by
participants 207,903 (428,583) 355,518
------------ ------------ ------------
Net assets available for benefits
$58,718,488 $13,391,199 $11,565,199
============ ============ ============
The accompanying notes are an integral part of the financial statements.
PECO ENERGY COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
AS OF DECEMBER 31, 1996
(continued)
PECO
Energy
Common Stock Loan
Fund* Fund
------------ ------------
Investments at fair value:
Mutual funds
Interest-bearing
deposits
Insurance contracts
Common stock $22,595,789
Participants' loans
receivables $10,444,705
------------ ------------
Total Investments 22,595,789 10,444,705
Accrued transfers authorized by
participants (813,421)
------------ ------------
Net assets available for benefits
$21,782,368 $10,444,705
============ ============
<FN>
* Non-Participant Directed in 1996.
</FN>
The accompanying notes are an integral part of the financial statements.
PECO ENERGY COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
Growth & Equity
Growth Income Small Cap Income
Mutual Mutual Growth Mutual
Total Fund Fund Fund Fund
------------ ------------ ------------ ------------ -----------
Employer contributions $6,464,570 $ 4,464,702 $ 852,709 $ 12,986 $ 3,520
Employee contributions 28,642,419 19,932,714 3,854,938 95,353 19,437
----------- ------------ ------------ ------------ -----------
Total contributions 35,106,989 24,397,416 4,707,647 108,339 22,957
Investment income:
Interest 3,705,016
Dividends 54,419,493 41,030,348 9,397,683 59,897 21,156
Net apprec./(deprec.)
in fair value of
investments 21,366,395 16,441,490 4,777,822 (90,060) (4,264)
Interest on loans 958,810
Transfers of interest on loans
- 628,584 118,269 2,394 309
----------- ------------ ------------ ------------ -----------
Total additions 115,556,703 82,497,838 19,001,421 80,570 40,158
Deductions and transfers:
Distributions to
participants (22,066,050) (10,813,206) (3,107,157)
Transfers among funds - (5,655,896) 3,069,297 1,723,078 738,485
----------- ------------ ------------ ------------ -----------
Total deductions and
transfers (22,066,050) (16,469,102) (37,860) 1,723,078 738,485
----------- ------------ ------------ ------------ -----------
Net additions
(deductions) 93,490,653 66,028,736 18,963,561 1,803,648 778,643
Net assets available for benefits:
Beginning of year 426,908,387 246,642,492 56,761,561 - -
------------ ------------ ------------ ------------ ------------
End of year $520,399,040 $312,671,228 $75,725,122 $1,803,648 $778,643
============ ============ ============ ============ ===========
The accompanying notes are an integral part of the financial statements.
PECO ENERGY COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
(continued)
Money Fixed Credit
Market Income Union Balanced
Fund Fund Fund** Fund
------------ ------------ ----------- ------------
Employer contributions $163,672 $576,581 $118,204 $265,924
Employee contributions 611,029 2,431,923 406,124 1,255,770
------------ ------------ ------------ ------------
Total contributions 774,701 3,008,504 524,328 1,521,694
Investment income:
Interest 3,705,016
Dividends 594,642 537,631 1,222,148
Net apprec./(deprec.)
in fair value of
investments 1,428,299
Interest on loans
Transfers of interest on loans
32,212 117,481 32,141 26,448
------------ ------------ ------------ ------------
Total additions 1,401,555 6,831,001 1,094,100 4,198,589
Deductions and transfers:
Distributions to
participants (817,187) (4,836,712) (808,230) (401,717)
Transfers among funds 12,607,047 (4,245,089) (13,677,069) 2,214,014
------------ ------------ ------------ ------------
Total deductions and
transfers 11,789,860 (9,081,801) (14,485,299) 1,812,297
------------ ------------ ------------ ------------
Net additions
(deductions) 13,191,415 (2,250,800) (13,391,199) 6,010,886
Net assets available for benefits:
Beginning of year 7,602,375 58,718,488 13,391,199 11,565,199
------------ ------------ ------------ ------------
End of year $20,793,790 $56,467,688 $ - $17,576,085
============ ============ ============ ============
<FN>
** Closed 9/30/97
</FN>
The accompanying notes are an integral part of the financial statements.
PECO ENERGY COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
(continued)
PECO
Energy Co.
Foreign Common Stock Loan
Fund Fund Fund
------------ ----------- -----------
Employer contributions $5,754 $ 518
Employee contributions 30,704 4,427
------------ ------------ -----------
Total contributions 36,458 4,945
Investment income:
Interest
Dividends 14,073 1,541,915
Net apprec./(deprec.)
in fair value of
investments (14,634) (1,172,258)
Interest on loans $958,810
Transfers of interest on loans
934 38 (958,810)
------------ ------------ -----------
Total additions 36,831 374,640
Deductions and transfers:
Distributions to
participants (1,197,373) (84,468)
Transfers among funds 782,432 (475,880) 2,919,581
------------ ------------ -----------
Total deductions and
transfers 782,432 (1,673,253) 2,835,113
------------ ------------ -----------
Net additions
(deductions) 819,263 (1,298,613) 2,835,113
Net assets available for benefits:
Beginning of year - 21,782,368 10,444,705
------------ ------------ -----------
End of year $819,263 $20,483,755 $13,279,818
============ ============ ===========
The accompanying notes are an integral part of the financial statements.
PECO ENERGY COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
Growth Conservative Money Fixed
Mutual Mutual Market Income
Total Fund Fund Fund Fund
------------ ------------ ------------ ------------ -----------
Employer contributions $2,990,149 $2,019,096 $401,775 $68,820 $310,842
Employee contributions 25,179,201 17,489,497 3,270,619 509,518 2,431,946
------------ ------------ ------------ ------------ -----------
Total contributions 28,169,350 19,508,593 3,672,394 578,338 2,742,788
Investment income:
Interest 3,617,614 3,617,614
Dividends 11,220,502 5,230,146 2,884,699 391,772
Net apprec./(deprec)
in fair value of
investments 35,961,324 36,015,641 3,523,995
Interest on loans 846,347
Transfers of interest on loans
- 523,164 111,650 24,193 132,802
------------ ------------ ------------ ------------ -----------
Total additions 79,815,137 61,277,544 10,192,738 994,303 6,493,204
Deductions and transfers:
Distributions to
participants (30,383,415) (13,961,256) (3,531,391) (961,251) (6,778,405)
Transfers among funds - 2,110,364 (1,541,903) 30,888 (736,961)
------------ ------------ ------------ ------------ -----------
Total deductions and
transfers (30,383,415) (11,850,892) (5,073,294) (930,363) (7,515,366)
------------ ------------ ------------ ------------ -----------
Net additions
(deductions) 49,431,722 49,426,652 5,119,444 63,940 (1,022,162)
Net assets available for benefits:
Beginning of year 377,476,665 197,215,840 51,642,117 7,538,435 59,740,650
------------ ------------ ------------ ------------ -----------
End of year $426,908,387 $246,642,492 $56,761,561 $7,602,375 $58,718,488
============ ============ ============ ============ ===========
The accompanying notes are an integral part of the financial statements.
PECO ENERGY COMPANY EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
(continued)
PECO
Credit Energy
Union Balanced Common Stock
Fund Fund Fund* Loan Fund
------------ ------------ ------------ ------------
Employer contributions $ 88,364 $ 101,252
Employee contributions 609,512 868,109
------------ ------------ ------------ ------------
Total contributions 697,876 969,361
Investment income:
Interest
Dividends 765,482 337,791 $ 1,610,612
Net apprec//(deprec.)
in fair value of
investments 978,774 (4,557,086)
Interest on loans $ 846,347
Transfers of interest on loans
40,977 13,561 (846,347)
------------ ------------ ------------ ------------
Total additions 1,504,335 2,299,487 (2,946,474) -
Deductions and transfers:
Distributions to
participants (1,383,725) (249,161) (3,166,430) (351,796)
Transfers among funds (1,307,526) 1,041,562 (1,564,368) 1,967,944
------------ ------------ ------------ ------------
Total deductions and
transfers (2,691,251) 792,401 (4,730,798) 1,616,148
------------ ------------ ------------ ------------
Net additions
(deductions) (1,186,916) 3,091,888 (7,677,272) 1,616,148
Net assets available for benefits:
Beginning of year 14,578,115 8,473,311 29,459,640 8,828,557
------------ ------------ ------------ ------------
End of year $13,391,199 $11,565,199 $21,782,368 $10,444,705
============ ============ ============ ============
<FN>
* Non-Participant Directed in 1996.
</FN>
The accompanying notes are an integral part of the financial statements.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 General Description of the PECO Energy Company Employee Savings
Plan:
General:
The PECO Energy Company Employee Savings Plan (Plan) is a trusteed
defined contribution plan. The Plan was formed as of January 1,
1984 for the purpose of allowing eligible employees of PECO Energy
Company and subsidiaries, formerly Philadelphia Electric Company,
(Company) to reduce their taxable incomes pursuant to Section
401(k) of the Internal Revenue Code.
Effective October 1, 1997, Fidelity Institutional Retirement
Services Company assumed the role and responsibility of record
keeper and trustee for the Plan. The Company retains the
responsibilities of plan sponsor and plan administrator.
All employees classified as "regular," "part-time" or
"probationary" become eligible to participate in the Plan
immediately upon completion of six months of service.
Contributions:
Participants elect to have the Company make contributions to the
Plan on their behalf. Such contributions are made by authorizing
the Company to withhold from the participant's salary an amount
equal to the contribution to be made. Participants may elect to
authorize the Company to contribute from 1% to 17% of their base
salary depending upon their salary level.
On January 1, 1994, the Plan was amended to reflect the addition of
employer matching contributions. The Company makes a matching
contribution of 50 cents on each dollar of employee contributions
up to 4% of an employee's base salary deposited into the Plan.
Employees are always fully vested in employer contributions.
Participants may elect that their contributions be invested in one
or more of the following generic fund categories - Growth, Growth
and Income, Balanced, Equity Income, Small Capitalization Growth,
Foreign, Money Market, Fixed Income, or Company Stock.
By giving notice to the Plan record keeper and subject to rules
established by the Plan administrator, participants may suspend or
change the amount of their contributions and exchange their
investments among the investment funds.
Distributions and exchanges can be made on a daily basis provided
the market is open and the request is confirmed by the record
keeper prior to 4:00 p.m. Eastern Time.
Participant Accounts:
Each participant's account is credited with the participant's
contribution, the Company's contribution and Plan earnings.
Payment of Benefits:
On termination of service a participant receives a lump-sum amount
equal to the value in his or her account.
Participant Loans:
The Plan allows participants to obtain loans. Participants may
borrow up to 50% of their account balances subject to a minimum
loan amount of $500 and a maximum loan amount of $50,000. Loans
have terms of up to 30 years for the purchase of a primary
residence or one to four years for other purposes and bear interest
at rates determined by the Plan administrator equivalent to rates
charged by local and regional commercial lenders. Loans are
repayable in equal installments by means of payroll deductions. A
participant may not have more than one loan outstanding at any time
or take more than one loan in a Plan year.
Plan Termination:
While it is the Company's intention to continue the Plan in
operation indefinitely, the Company may terminate the Plan in whole
or in part at any time. Any such termination, partial termination
or discontinuance of contributions shall be effected only upon
condition that such action is taken as shall render it impossible
for any part of the assets of the Plan to be used for, or diverted
to, purposes other than the exclusive benefit of the Plan
participants and their beneficiaries.
NOTE 2. Summary of Significant Accounting Policies:
Valuation of Investments:
Investments in mutual funds are valued at the reported net asset
value on the last day of the year.
Growth Fund:
The growth mutual fund invests primarily in U.S. and foreign common
stocks of companies that are considered undervalued or out of favor
and whose products show potential for improvement. Investments can
include any type of security that may produce capital growth. The
growth mutual fund's goal is to provide capital growth over the
long-term.
Growth and Income Fund:
The growth and income mutual fund invests primarily in common
stocks, focusing on larger, more established companies. Investments
are spread out across many different kinds of companies and
industries. The growth and income mutual fund's goal is to provide
capital growth and income over the long-term.
Small Capitalization Growth Fund:
The small capitalization growth fund invests primarily in stocks of
companies which have market capitalization of less than $1 billion
at the time of investment. The fund tries to keep at least
one-third of its assets in stocks of companies with market
capitalizations of $550 million or less. This fund may also invest
up to 25% of its assets in foreign securities. This fund's goal is
to provide capital growth over the long-term.
Equity Income Fund:
The equity income mutual fund invests primarily in attractively
priced, dividend paying, income-producing equity securities;
including common and preferred stocks, and convertible securities.
It may also invest in debt securities (bonds). This mutual fund's
goal is to invest for capital growth and current income.
Money Market Fund:
The money market fund invests primarily in high quality, investment
grade, short-term, U.S. dollar denominated money market securities
of domestic and foreign issuers.
Investments include short-term corporate obligations, U.S.
government obligations, and certificates of deposit. The money
market fund's goal is to preserve participants' investments,
maintain a stable price, and provide current income.
The money market fund is valued at the cost of contributions made
plus accrued interest.
Fixed Income Fund:
The fixed income fund is made up of insurance contracts that are
benefit-responsive guaranteed investment contracts (GICs) and are
valued at contract value, which approximates fair market value.
Contract value represents the cost of contributions made under the
contract plus accrued interest at the contract rate less
withdrawals. The contract rate is established at the commencement
of the contract and remains fixed (except for certain conditions)
at that rate until maturity. The contract rate reflects market and
other conditions at the commencement of the contract. Upon
expiration of the fixed income contracts, the assets are rolled
into the Fidelity Managed Income Portfolio II unless the
participant directs otherwise.
The Fidelity Managed Income Portfolio II invests in investment
contracts offered by major insurance companies and other approved
financial institutions and certain other types of fixed-income
securities. A small portion of the fund is invested in a money
market fund to provide for daily liquidity.
Balanced Fund:
The balanced fund invests primarily in a diversified mix of common
and preferred stocks, and investment grade bonds. The fund is
diversified across many sectors and industries. This fund's goal is
to provide regular income, conservation of principal and an
opportunity for long-term growth of principal and income.
Foreign Fund:
The foreign fund invests primarily in common stocks of companies in
any foreign country, developed or developing. This growth mutual
fund's goal is to provide capital growth over the long-term by
investing internationally.
PECO Energy Common Stock Fund:
The Company common stock fund invests primarily in Company common
stock and a small amount of short-term investments which enables
participants to buy or sell without the usual trade settlement
period of individual stock transactions.
This fund is a unitized investment alternative. Participants will
own units of the investment alternative rather than shares of
common stock. Unitization allows the units of the investment
alternative to be purchased, transferred (exchanged) and redeemed
the same day provided the participant's request is confirmed before
4:00 p.m. Eastern time the same business day.
Fund valuation is determined by multiplying the number of units
times the net asset value calculated at the close of the market.
Purchases and sales of investments are reflected on a trade-date
basis. Dividend income is recorded when declared payable.
Net Appreciation/(Depreciation) in Investments:
The Plan presents in the statement of changes in net assets
available for benefits the net appreciation/(depreciation) in the
fair value of its investments which consists of the realized gains
or losses and the unrealized appreciation/(depreciation) on those
investments.
Concentration of Credit Risk:
The Plan invests in benefit-responsive guaranteed investment
contracts with four insurance companies and is subject to credit
risk with respect to these insurance companies.
The Plan invests in government notes and securities which include
direct obligations of the U.S., or obligations of agencies or
instrumentalities thereof, which are backed by the full faith and
credit of the U.S. government.
Use of Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Risk and Uncertainties:
The Plan provides for various investment options in any combination
of stocks, bonds, fixed income securities, mutual funds and other
investment securities. Investment securities are exposed to various
risks, such as interest rate, market and credit. Due to the level
of risk associated with certain investment securities and the level
of uncertainty related to changes in the value of investment
securities, it is at least reasonably possible that changes in
risks in the near term would materially affect participants'
account balances and the amounts reported in the statement of net
assets available for benefits and the statement of changes in net
assets available for benefits.
NOTE 3. Investments:
As of December 31, 1997 and 1996, the Plan held the following
investments, each of which accounted for more than 5% of the total
net assets available for benefits:
Investments 1997 1996
----------- ------- -------
Growth Mutual Fund - Janus Fund $ 166,850,056 $ 134,195,997
Growth Mutual Fund - Fidelity Contrafund 145,821,172 111,605,987
Conservative Mutual Fund - Merrill Lynch
Capital Value Class A Fund - 57,002,648
PECO Energy Company
Common Stock Fund - 22,595,789
Growth & Income Mutual Fund - Putnam
Growth & Income Fund A 72,993,091 -
NOTE 4. Loans:
The activity for the Loan Fund is summarized as follows:
1997 1996
---- ----
Loan Balance, beginning of year $10,444,705 $ 8,828,557
Loan Distributions 8,304,549 6,781,562
Principal Repayments (5,469,436) (5,165,414)
------------ ------------
Loan Balance, end of year $13,279,818 $10,444,705
============ ============
Interest Paid $958,810 $ 846,347
============ ============
The interest rate on all loans ranged from 7.38% to 8.50% and from
6.63% to 8.50% in 1997 and 1996, respectively.
For the 1997 Plan year, there were no outstanding loan requests
that were to be distributed in 1998.
As of December 31, 1996, the Plan had received requests by
participants for loans totaling $1,538,849. These loans, not
reflected in the accompanying financial statements, were
distributed in 1997 and are summarized below:
1996
------
Growth Mutual Funds $1,005,798
Conservative Mutual Fund 211,575
Money Market Fund 86,015
Fixed Income Fund 149,391
Credit Union Fund 55,060
Balanced Fund 31,010
------------
$1,538,849
============
NOTE 5. Tax Status:
The Internal Revenue Service has determined and informed the
Company that the Plan is qualified under Sections 401(a) and 401(k)
of the Internal Revenue Code and that the trust and Plan are exempt
from federal income tax under Section 501(a). The Plan has been
amended since receiving the original determination letter. However,
the Company believes that the Plan is designed and operated in
compliance with the applicable requirements of the Internal Revenue
Code.
NOTE 6. General and Administrative Expenses:
General and administrative expenses of the Plan paid by the Company
totaled approximately $32,200 and $38,700 in 1997 and 1996,
respectively. In addition, the Company carried out certain
administrative activities on behalf of the Plan.
SCHEDULE OF ASSETS HELD FOR INVESTMENT
PURPOSES AS OF DECEMBER 31, 1997
b. Identity of Issuer, Lessor Similar Party c. Description of Investment d. Cost e. Current Value
- ------------------------------------------- ---------------------------- ------- ---------------
Janus Fund Mutual Fund ** $166,850,056
Fidelity Contrafund* Mutual Fund ** 145,821,172
Putnam Growth & Income Fund A Mutual Fund ** 72,993,091
Spartan U.S. Index Fund Mutual Fund ** 2,732,031
Franklin Small Cap. Fund Mutual Fund ** 1,803,648
Putnam Equity Income Fund Mutual Fund ** 778,643
Fidelity Money Market* Mutual Fund ** 20,793,790
Dodge & Cox Balanced Fund Mutual Fund ** 17,576,085
Managed Income Portfolio III Mutual Fund ** 4,493,901
Templeton Foreign Fund Mutual Fund ** 819,263
Continental Assurance Company (1997) Insurance Contract maturing 12/31/01, 7.13% ** 10,878,742
Continental Assurance Company (1996) Insurance Contract maturing 12/29/00, 6.30% ** 16,921,518
Principal Mutual Life Insurance Company Insurance Contract maturing 12/30/99, 7.70% ** 14,784,270
(1995)
Principal Mutual Life Insurance Company Insurance Contract maturing 12/30/98, 5.00% ** 9,389,257
(1994)
PECO Energy Company* Common stock ** 20,483,755
Participant Loans Rates ranged from 7.38% to 8.50% 0 13,279,818
---------------
$520,399,040
===============
<FN>
* - Denotes party-in-interest.
** - The trustee did not report
historical cost nformation.
</FN>
EXHIBITS
List of Exhibits:
Exhibit 23.1 - Consent of Independent Accountants
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the plan) have duly caused this annual
report to be signed by the undersigned hereunto duly authorized.
June 29, 1998 By: /S/ J. Barry Mitchell
------------------------
J. Barry Mitchell
Vice President-Finance and Treasurer
Plan Administrator