UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Name of Registrant; State of Incorporation; Address of IRS Employer
Number Principal Executive Offices; and Telephone Number Identification Number
- --------------------- ---------------------------------------------------------- ------------------------
1-16169 EXELON CORPORATION 23-2990190
(a Pennsylvania corporation)
10 South Dearborn Street - 37th Floor
P.O. Box 805379
Chicago, Illinois 60680-5379
(312) 394-7398
333-85496 EXELON GENERATION COMPANY, LLC 23-3064219
(a Pennsylvania limited liability company)
300 Exelon Way
Kennett Square, Pennsylvania 19348
(610) 765-8200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_], except for Exelon
Generation Company, LLC which became an effective registrant on April 24, 2002.
The number of shares outstanding of each registrant's common stock as of
May 3, 2002 was as follows:
Exelon Corporation Common Stock, without par value 322,006,807
Exelon Generation Company, LLC not applicable
TABLE OF CONTENTS
Page No.
--------
Explanatory Note 3
Filing Format 3
Forward-Looking Statements 3
PART I. FINANCIAL INFORMATION 4
ITEM 1. FINANCIAL STATEMENTS 4
Exelon Corporation
Condensed Consolidated Statements of Income and Comprehensive Income 5
Condensed Consolidated Balance Sheets 6
Condensed Consolidated Statements of Cash Flows 8
Exelon Generation Company, LLC
Condensed Consolidated Statements of Income and Comprehensive Income 9
Condensed Consolidated Balance Sheets 10
Condensed Consolidated Statements of Cash Flows 12
Notes to Condensed Consolidated Financial Statements 13
PART II. OTHER INFORMATION 31
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 31
SIGNATURES 33
CERTIFICATIONS 34
2
Explanatory Note
This amendment to Exelon Corporation's (Exelon) and Exelon Generation
Company, LLC's (Generation) quarterly report on Form 10-Q for the quarter ended
March 31, 2002 reflects a restatement as a result of a $101 million double
posting of deferred income taxes recorded associated with unrealized losses on
Generation's nuclear decommissioning trust fund securities. Additionally, Exelon
and Generation determined that Other Comprehensive Income should be restated for
the amount of $27 million to reflect Generation's ownership interest in the
Other Comprehensive Income of its equity investments in AmerGen Energy Company,
LLC and Sithe Energies Inc. Earnings per share, net income and cash flow for the
periods are not affected by the restatements. However, Other Comprehensive
Income, which is a component of Shareholders' Equity, will be reduced by a total
of $128 million as of December 31, 2001, and by $122 million in the first
quarter of 2002 as a result of the revision. See Note 2. No attempt has been
made in this Form 10-Q/A to modify or update other disclosures as presented in
the original Form 10-Q except as required to reflect the effects of the
restatements.
Filing Format
This combined Form 10-Q is being filed separately by Exelon Corporation,
and Exelon Generation Company, LLC (Registrants). Information contained herein
relating to any individual registrant has been filed by such registrant on its
own behalf. No registrant makes any representation as to information relating to
any other registrant.
Forward-Looking Statements
Except for the historical information contained herein, certain of the
matters discussed in this Report are forward-looking statements that are subject
to risks and uncertainties. The factors that could cause actual results to
differ materially include those discussed herein as well as those listed in Note
8 of Notes to Consolidated Financial Statements, those discussed in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Outlook" in Exelon Corporation's 2001 Annual Report, those discussed
in "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in Exelon Generation Company, LLC's
Registration Statement on Form S-4, Reg. No. 333-85496 and other factors
discussed in filings with the Securities and Exchange Commission by the
Registrants. Readers are cautioned not to place undue reliance on these
forward-looking statements, which apply only as of the date of this Report. The
Registrants undertake no obligation to publicly release any revision to
forward-looking statements to reflect events or circumstances after the date of
this Report.
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
4
EXELON CORPORATION
- ------------------
EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended March 31,
---------------------------------
(in millions, except per share data) 2002 2001
(Restated)
(See Note 2.)
- -----------------------------------------------------------------------------------------------------------------------
OPERATING REVENUES $ 3,870 $ 3,823
OPERATING EXPENSES
Fuel and Purchased Power 1,621 1,320
Purchases Power from Affiliate 56 10
Operating and Maintenance 1,067 1,058
Depreciation and Amortization 335 378
Taxes Other Than Income 186 168
- -----------------------------------------------------------------------------------------------------------------------
Total Operating Expense 3,265 2,934
- -----------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 605 889
- -----------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND DEDUCTIONS
Interest Expense (249) (292)
Distributions on Preferred Securities of Subsidiaries (11) (11)
Equity in Earnings of Unconsolidated Affiliates, net 13 18
Other, net 28 55
- -----------------------------------------------------------------------------------------------------------------------
Total Other Income and Deductions (219) (230)
- -----------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT
OF CHANGES IN ACCOUNTING PRINCIPLES 386 659
INCOME TAXES 148 272
- -----------------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 238 387
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING
PRINCIPLES (net of income taxes of $90 and $8 for the three
months ended March 31, 2002 and 2001, respectively) (230) 12
- -----------------------------------------------------------------------------------------------------------------------
NET INCOME 8 399
OTHER COMPREHENSIVE INCOME (LOSS) (net of income taxes)
SFAS 133 Transition Adjustment -- 44
Cash Flow Hedge Fair Value Adjustment (58) (21)
Unrealized Gain (Loss) on Marketable Securities, net (15) (124)
Equity in Other Comprehensive Income of Unconsolidated Affiliates 6 --
- -----------------------------------------------------------------------------------------------------------------------
Total Other Comprehensive Income (Loss) (67) (101)
- -----------------------------------------------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME (LOSS) $ (59) $ 298
=======================================================================================================================
AVERAGE SHARES OF COMMON STOCK OUTSTANDING - Basic 321 320
=======================================================================================================================
AVERAGE SHARES OF COMMON STOCK OUTSTANDING - Diluted 323 324
=======================================================================================================================
EARNINGS PER AVERAGE COMMON SHARE:
BASIC:
Income Before Cumulative Effect of Changes in Accounting Principles $ 0.74 $ 1.21
Cumulative Effect of Changes in Accounting Principles (0.72) 0.04
- -----------------------------------------------------------------------------------------------------------------------
Net Income $ 0.02 $ 1.25
=======================================================================================================================
DILUTED:
Income Before Cumulative Effect of Changes in Accounting Principles $ 0.73 $ 1.19
Cumulative Effect of Changes in Accounting Principles (0.71) 0.04
- -----------------------------------------------------------------------------------------------------------------------
Net Income $ 0.02 $ 1.23
=======================================================================================================================
DIVIDENDS PER COMMON SHARE $ 0.44 $ 0.55
=======================================================================================================================
See Notes to Condensed Consolidated Financial Statements
5
EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
(in millions) 2002 2001
(Restated) (Restated)
(See Note 2.) (See Note 2.)
- -----------------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 696 $ 485
Restricted Cash 237 372
Accounts Receivable, net 1,962 2,115
Receivable from Unconsolidated Affiliate 73 44
Inventories, at average cost 457 471
Other 482 295
- -----------------------------------------------------------------------------------------------------------------------
Total Current Assets 3,907 3,782
- -----------------------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, NET 14,059 13,781
DEFERRED DEBITS AND OTHER ASSETS
Regulatory Assets 6,338 6,423
Nuclear Decommissioning Trust Funds 3,161 3,165
Investments 1,748 1,623
Goodwill, net 4,971 5,335
Other 685 708
- -----------------------------------------------------------------------------------------------------------------------
Total Deferred Debits and Other Assets 16,903 17,254
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 34,869 $ 34,817
=======================================================================================================================
See Notes to Condensed Consolidated Financial Statements
6
EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
(in millions) 2002 2001
(Restated) (Restated)
(See Note 2.) (See Note 2.)
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes Payable $ 438 $ 360
Long-Term Debt Due within One Year 1,613 1,406
Accounts Payable 1,078 964
Accrued Expenses 1,133 1,182
Other 499 505
- ------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 4,761 4,417
- ------------------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT 12,609 12,876
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred Income Taxes 4,423 4,388
Unamortized Investment Tax Credits 312 316
Nuclear Decommissioning Liability for Retired Plants 1,367 1,353
Pension Obligation 318 334
Non-Pension Postretirement Benefits Obligation 860 847
Spent Nuclear Fuel Obligation 847 843
Other 830 728
- ------------------------------------------------------------------------------------------------------------------------
Total Deferred Credits and Other Liabilities 8,957 8,809
- ------------------------------------------------------------------------------------------------------------------------
PREFERRED SECURITIES OF SUBSIDIARIES 613 613
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock 6,950 6,930
Deferred Compensation (1) (2)
Retained Earnings 1,073 1,200
Accumulated Other Comprehensive Income (93) (26)
- ------------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 7,929 8,102
- ------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 34,869 $ 34,817
========================================================================================================================
See Notes to Condensed Consolidated Financial Statements
7
EXELON CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
-----------------------------------
(in millions) 2002 2001
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 8 $ 399
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Depreciation and Amortization 427 490
Cumulative Effect of a Change in Accounting Principle (net of income taxes) 230 (12)
Provision for Uncollectible Accounts 29 30
Deferred Income Taxes 67 65
Deferred Energy Costs 34 (29)
Equity in (Earnings) Losses of Unconsolidated Affiliates, net (13) (18)
Net Realized Losses on Nuclear Decommissioning Trust Funds 10 15
Other Operating Activities 111 (33)
Changes in Working Capital:
Accounts Receivable 58 57
Inventories 13 60
Accounts Payable, Accrued Expenses and Other Current Liabilities (7) (164)
Other Current Assets (134) (63)
- ------------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by Operating Activities 833 797
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Plant (560) (447)
Acquisitions - Enterprises, net of cash acquired -- (38)
Proceeds from Nuclear Decommissioning Trust Funds 580 333
Investment in Nuclear Decommissioning Trust Funds (605) (354)
Note Receivable from Unconsolidated Affiliate (46) --
Other Investing Activities (6) (11)
- ------------------------------------------------------------------------------------------------------------------------
Net Cash Flows used in Investing Activities (637) (517)
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Long-Term Debt 408 827
Retirement of Long-Term Debt (471) (1,029)
Change in Short-Term Debt 78 257
Dividends on Common Stock (141) (176)
Change in Restricted Cash 135 104
Proceeds from Stock Option Exercises 18 36
Other Financing Activities (12) --
- ------------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by Financing Activities 15 19
- ------------------------------------------------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 211 299
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 485 526
- ------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 696 $ 825
========================================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION
Noncash Investing and Financing Activities:
Regulatory Asset Fair Value Adjustment -- $ 347
See Notes to Condensed Consolidated Financial Statements
8
EXELON GENERATION COMPANY, LLC
- ------------------------------
EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended March 31,
------------------------------
(in millions) 2002 2001
(Restated)
(See Note 2.)
- -----------------------------------------------------------------------------------------------------------------------
OPERATING REVENUES
Operating Revenues $1,083 $ 914
Operating Revenues from Affiliates 892 714
- -----------------------------------------------------------------------------------------------------------------------
Total Operating Revenues 1,975 1,628
- -----------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Fuel and Purchased Power 1,270 800
Purchased Power from Affliates 72 18
Operating and Maintenance 428 397
Operating and Maintenance Expense from Affiliates 4 7
Depreciation and Amortization 63 92
Taxes Other Than Income 49 46
- -----------------------------------------------------------------------------------------------------------------------
Total Operating Expense 1,886 1,360
- -----------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 89 268
- -----------------------------------------------------------------------------------------------------------------------
OTHER INCOME AND DEDUCTIONS
Interest Expense (17) (18)
Interest Expense from Affiliates -- (15)
Equity in Earnings of Unconsolidated Affiliates 23 26
Other, net 16 4
- -----------------------------------------------------------------------------------------------------------------------
Total Other Income and Deductions 22 (3)
- -----------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES 111 265
INCOME TAXES 45 107
- -----------------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 66 158
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 13 12
- -----------------------------------------------------------------------------------------------------------------------
NET INCOME $ 79 $ 170
- -----------------------------------------------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME (LOSS) (net of income taxes)
Other Comprehensive Income (Loss):
SFAS 133 Transition Adjustment -- 4
Unrealized Loss on Marketable Securities (9) (120)
Cash Flow Hedge Fair Value Adjustment (74) (1)
Equity in Other Comprehensive Income of Unconsolidated Affiliates 6 --
- -----------------------------------------------------------------------------------------------------------------------
Total Other Comprehensive Income (Loss) (77) (117)
- -----------------------------------------------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME (LOSS) $ 2 $ 53
=======================================================================================================================
See Notes to Condensed Consolidated Financial Statements
9
EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
(in millions) 2002 2001
(Restated) (Restated)
(See Note 2.) (See Note 2.)
- -----------------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 355 $ 224
Accounts Receivable, net 422 466
Receivables from Affiliates 241 339
Inventories, at average cost 343 307
Other 89 65
- -----------------------------------------------------------------------------------------------------------------------
Total Current Assets 1,450 1,401
- -----------------------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, NET 2,173 2,003
DEFERRED DEBITS AND OTHER ASSETS
Nuclear Decommissioning Trust Funds 3,161 3,165
Investments 870 816
Notes Receivable from Affiliates 277 291
Deferred Income Taxes 264 212
Other 188 223
- -----------------------------------------------------------------------------------------------------------------------
Total Deferred Debits and Other Assets 4,760 4,707
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 8,383 $ 8,111
=======================================================================================================================
See Notes to Condensed Consolidated Financial Statements
10
EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
(in millions) 2002 2001
(Restated) (Restated)
(See Note 2.) (See Note 2.)
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES
Long-Term Debt Due within One Year $ 5 $ 4
Accounts Payable 675 585
Accrued Expenses 399 303
Deferred Income Taxes 7 7
Other 183 171
- ------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 1,269 1,070
- ------------------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT 1,020 1,021
DEFERRED CREDITS AND OTHER LIABILITIES
Unamortized Investment Tax Credits 232 234
Nuclear Decommissioning Liability 1,367 1,353
Pension Obligation 104 118
Non-Pension Postretirement Benefits Obligation 385 384
Spent Nuclear Fuel Obligation 847 843
Other 349 280
- ------------------------------------------------------------------------------------------------------------------------
Total Deferred Credits and Other Liabilities 3,284 3,212
- ------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
MEMBER'S EQUITY
Membership Interest 2,368 2,368
Undistributed Earnings 550 471
Accumulated Other Comprehensive Income (108) (31)
- ------------------------------------------------------------------------------------------------------------------------
Total Member's Equity 2,810 2,808
- ------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND MEMBER'S EQUITY $ 8,383 $ 8,111
========================================================================================================================
See Notes to Condensed Consolidated Financial Statements
11
EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
-----------------------------------
(in millions) 2002 2001
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 79 $ 170
Adjustments to Reconcile Net Income to Net Cash Flows
Provided by Operating Activities:
Depreciation and Amortization 155 192
Cumulative Effect of a Change in Accounting Principle (net of income taxes) (13) (12)
Provision for Uncollectible Accounts 2 3
Deferred Income Taxes (2) (13)
Deferred Energy Costs -- --
Equity in (Earnings) Losses of Unconsolidated Affiliates (23) (26)
Net Realized Losses on Nuclear Decommissioning Trust Funds 10 15
Other Operating Activities 40 (38)
Changes in Working Capital:
Accounts Receivable 53 37
Changes in Receivables and Payables to Affiliates, net 144 12
Inventories (37) 4
Accounts Payable, Accrued Expenses and Other Current Liabilities 127 35
Other Current Assets (26) (17)
- ------------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by (used in) Operating Activities 509 362
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Plant (288) (118)
Proceeds from Nuclear Decommissioning Trust Funds 580 333
Investment in Nuclear Decommissioning Trust Funds (605) (354)
Note Receivable from Affiliate (46) --
Other Investing Activities (20) --
- ------------------------------------------------------------------------------------------------------------------------
Net Cash Flows used in Investing Activities (379) (139)
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Retirement of Long-Term Debt 1 --
Distribution to Member -- (36)
- ------------------------------------------------------------------------------------------------------------------------
Net Cash Flows provided by (used in) Financing Activities 1 (36)
- ------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 131 187
- ------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 224 --
- ------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 355 $ 187
========================================================================================================================
See Notes to Condensed Consolidated Financial Statements
12
EXELON CORPORATION AND SUBSIDIARY COMPANIES
EXELON GENERATION COMPANY, LLC AND SUBSIDIARY COMPANIES
COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share data, unless otherwise noted)
1. BASIS OF PRESENTATION (Exelon and Generation)
The accompanying condensed consolidated financial statements as of March
31, 2002 and for the three months then ended are unaudited, but include all
adjustments that Exelon Corporation (Exelon) and Exelon Generation Company, LLC
(Generation) consider necessary for a fair presentation of their respective
financial statements. All adjustments are of a normal, recurring nature, except
as otherwise disclosed. The year-end condensed consolidated balance sheet data
were derived from audited financial statements but do not include all
disclosures required by generally accepted accounting principles. Certain
prior-year amounts have been reclassified for comparative purposes. These
reclassifications had no effect on net income or shareholders' or member's
equity. These notes should be read in conjunction with the Notes to Consolidated
Financial Statements of Exelon included in or incorporated by reference in Item
8 of its Annual Report on Form 10-K/A for the year ended December 31, 2001 and
the Notes to Consolidated Financial Statements in Generation's Form S-4
registration statement declared effective on April 24, 2002 by the Securities
and Exchange Commission (SEC), (Generation's Form S-4). See ITEM 8. Exhibits and
Reports on Form 8-K.
2. RESTATEMENT (Exelon and Generation)
In October 2002, Exelon and Generation determined that its March 31, 2002
financial statements required a restatement as a result of a double posting of
deferred income taxes recorded associated with unrealized losses on Generation's
nuclear decommissioning trust fund securities. Additionally, Exelon and
Generation determined that Other Comprehensive Income should be revised to
reflect Generation's ownership interest in the Other Comprehensive Income of its
equity investments in AmerGen Energy Company, LLC and Sithe Energies Inc. Such
adjustments had no effect on either Exelon's or Generation's net income,
earnings per share or cash flows.
The following tables show the items that have been restated on Exelon's and
Generation's Condensed Consolidated Statements of Income and Comprehensive
Income, for the three months ended March 31, 2002 and the Condensed Consolidated
Balance Sheets as of March 31, 2002 and December 31, 2001 and Note 6, Segment
Information:
Exelon
Condensed Consolidated Statements of Income and Comprehensive Income Three
Months Ended March 31, 2002
As Previously As
Reported Restatement Restated
-------------------------------------------------
Equity in Other Comprehensive Income of
Unconsolidated Affiliates $ - $ 6 $ 6
Total Other Comprehensive Income $ (73) $ 6 $ (67)
Total Comprehensive Income $ (65) $ 6 $ (59)
13
Condensed Consolidated Balance Sheets at March 31, 2002
As Previously As
Reported Restatement Restated
-------------------------------------------------
Investments $ 1,782 $ (34) $ 1,748
Total Deferred Debits and Other Assets $ 16,937 $ (34) $ 16,903
Total Assets $ 34,903 $ (34) $ 34,869
Deferred Income Taxes $ 4,335 $ 88 $ 4,423
Total Deferred Credits and Other Liabilities $ 8,869 $ 88 $ 8,957
Accumulated Other Comprehensive Income $ 29 $ (122) $ (93)
Total Shareholders' Equity $ 8,051 $ (122) $ 7,929
Total Liabilities and Shareholders' Equity $ 34,903 $ (34) $ 34,869
Condensed Consolidated Balance Sheets at December 31, 2001
As Previously As
Reported Restatement Restated
-------------------------------------------------
Investments $ 1,666 $ (43) $ 1,623
Total Deferred Debits and Other Assets $ 17,297 $ (43) $ 17,254
Total Assets $ 34,860 $ (43) $ 34,817
Deferred Income Taxes $ 4,303 $ 85 $ 4,388
Total Deferred Credits and Other Liabilities $ 8,724 $ 85 $ 8,809
Accumulated Other Comprehensive Income $ 102 $ (128) $ (26)
Total Shareholders' Equity $ 8,230 $ (128) $ 8,102
Total Liabilities and Shareholders' Equity $ 34,860 $ (43) $ 34,817
Note 6 Segment Information
at March 31, 2002
As Previously As
Reported Restatement Restated
-------------------------------------------------
Total Assets - Generation $ 8,505 $ (122) $ 8,383
Total Assets - Corporate and Intersegment $ (1,442) $ 88 $ (1,354)
Eliminations
Total Assets - Consolidated $ 34,903 $ (34) $ 34,869
at December 31, 2001
As Previously As
Reported Restatement Restated
-------------------------------------------------
Total Assets - Generation $ 8,239 $ (128) $ 8,111
Total Assets - Corporate and Intersegment $ (1,526) $ 85 $ (1,441)
Eliminations
Total Assets - Consolidated $ 34,860 $ (43) $ 34,817
14
Generation
Condensed Consolidated Statements of Income and Comprehensive Income
Three Months Ended March 31, 2002
As Previously As
Reported Restatement Restated
-------------------------------------------------
Equity in Other Comprehensive Income of
Unconsolidated Affiliates $ - $ 6 $ 6
Total Other Comprehensive Income $ (83) $ 6 $ (77)
Total Comprehensive Income $ (4) $ 6 $ 2
Condensed Consolidated Balance Sheets at March 31, 2002
As Previously As
Reported Restatement Restated
-------------------------------------------------
Investments $ 904 $ (34) $ 870
Deferred Income Taxes $ 352 $ (88) $ 264
Total Deferred Debits and Other Assets $ 4,882 $ (122) $ 4,760
Total Assets $ 8,505 $ (122) $ 8,383
Accumulated Other Comprehensive Income $ 14 $ (122) $ (108)
Total Member's Equity $ 2,932 $ (122) $ 2,810
Total Liabilities and Member's Equity $ 8,505 $ (122) $ 8,383
Condensed Consolidated Balance Sheets at December 31, 2001
As Previously As
Reported Restatement Restated
-------------------------------------------------
Investments $ 859 $ (43) $ 816
Deferred Income Taxes $ 297 $ (85) $ 212
Total Deferred Debits and Other Assets $ 4,835 $ (128) $ 4,707
Total Assets $ 8,239 $ (128) $ 8,111
Accumulated Other Comprehensive Income $ 97 $ (128) $ (31)
Total Member's Equity $ 2,936 $ (128) $ 2,808
Total Liabilities and Member's Equity $ 8,239 $ (128) $ 8,111
3. CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES (Exelon and Generation)
In 2001, the Financial Accounting Standard Board (FASB) issued Statement of
Accounting Standard (SFAS) No. 141, "Business Combinations" (SFAS No. 141),
which requires that all business combinations be accounted for under the
purchase method of accounting and establishes criteria for the separate
recognition of intangible assets acquired in business combinations. SFAS No. 141
is effective for business combinations initiated after June 30, 2001. In
addition, SFAS No. 141 requires that unamortized negative goodwill related to
pre-July 1, 2001 purchases be recognized as a change in accounting principle
concurrent with the adoption of SFAS No. 142, "Goodwill and Other Intangible
Assets" (SFAS No. 142). At
15
December 31, 2001, AmerGen Energy Company, LLC (AmerGen), an equity-method
investee of Generation, had $43 million of negative goodwill, net of accumulated
amortization, recorded on its balance sheet. Upon AmerGen's adoption of SFAS No.
141 in January 2002, Generation recognized its proportionate share of income of
$22 million ($13 million, net of income taxes) as a cumulative effect of a
change in accounting principle.
Exelon, Commonwealth Edison Company (ComEd), PECO Energy Company (PECO) and
Generation adopted SFAS No. 142 as of January 1, 2002. SFAS No. 142 establishes
new accounting and reporting standards for goodwill and intangible assets.
Exelon does not have significant other intangible assets recorded on its balance
sheet. Under SFAS No. 142, goodwill is no longer subject to amortization;
however, goodwill is subject to an assessment for impairment using a two-step
fair value based test, the first step of which must be performed at least
annually, or more frequently if events or circumstances indicate that goodwill
might be impaired. The first step compares the fair value of a reporting unit to
its carrying amount, including goodwill. If the carrying amount of the reporting
unit exceeds its fair value, the second step is performed. The second step
compares the carrying amount of the goodwill to the fair value of the goodwill.
If the fair value of goodwill is less than the carrying amount, an impairment
loss is reported as a reduction to goodwill and a charge to operating expense,
except at the transition date, when the loss is reflected as a cumulative effect
of a change in accounting principle.
As of December 31, 2001, Exelon's Condensed Consolidated Balance Sheets
reflected approximately $5.3 billion in goodwill net of accumulated
amortization, including $4.9 billion of net goodwill related to the merger of
Unicom and PECO recorded on ComEd's Consolidated Balance Sheets, with the
remainder related acquisitions by Exelon Enterprises Company, LLC (Enterprises).
The first step of the transitional impairment analysis indicated that ComEd's
goodwill was not impaired but that an impairment did exist with respect to
goodwill recorded in Enterprises' reporting units. Exelon's infrastructure
services business (InfraSource), the energy services business (Exelon Services)
and the competitive retail energy sales business (Exelon Energy) were determined
to be those reporting units of Enterprises which had goodwill allocated to them.
The second step of the analysis, which compared the fair value of each of
Enterprises' reporting units' goodwill to the carrying value at December 31,
2001, indicated a total goodwill impairment of $357 million ($243 million, net
of income taxes and minority interest). The fair value of the Enterprises'
reporting units was determined using discounted cash flow models reflecting the
expected range of future cash flow outcomes related to each of the Enterprises
reporting units over the life of the model. These cash flows were discounted to
2002 using a risk-adjusted discount rate. The impairment was recorded as a
cumulative effect of a change in accounting principle in the first quarter of
2002.
The changes in the carrying amount of goodwill by reportable segment for
the three months ended March 31, 2002 are as follows:
Energy
Delivery Enterprises Total
- ----------------------------------------------------------------------------------------------------------------------
Balance as of January 1, 2002 $ 4,902 $ 433 $ 5,335
Impairment losses -- (357) (357)
Settlement of pre-merger income tax contingency (7) -- (7)
- ----------------------------------------------------------------------------------------------------------------------
Balance as of March 31, 2002 $ 4,895 $ 76 $ 4,971
======================================================================================================================
16
The March 31, 2002 Energy Delivery goodwill relates to ComEd and the
remaining Enterprises goodwill relates to the InfraSource and Exelon Energy
reporting units. Consistent with SFAS No. 142, the remaining goodwill will be
reviewed for impairment on an annual basis or more frequently if significant
events occur that could indicate an impairment exists.
The components of the net transitional impairment loss recognized in the
first quarter of 2002 as a cumulative effect of a change in accounting principle
are as follows:
Exelon
- ----------------------------------------------------------------------------------------------------------------------
Enterprises goodwill impairment (net of income taxes of $103 million) $ (254)
Minority interest (net of income taxes of $4 million) 11
Elimination of AmerGen negative goodwill (net of income taxes of $9 million) 13
- ----------------------------------------------------------------------------------------------------------------------
Total cumulative effect of a change in accounting principle $ (230)
======================================================================================================================
Generation
- ----------------------------------------------------------------------------------------------------------------------
Elimination of AmerGen negative goodwill (net of income taxes of $9 million)
recorded as cumulative effect of a change in accounting principle $ 13
- ----------------------------------------------------------------------------------------------------------------------
The following tables sets forth Exelon's and ComEd's net income and
earnings per common share for the three months ended March 31, 2002 and 2001,
respectively, adjusted to exclude 2001 amortization expense related to goodwill
that is no longer being amortized.
17
Exelon
Three Months Ended March 31,
---------------------------------
2002 2001
- ----------------------------------------------------------------------------------------------------------------------
Reported income before cumulative effect
of changes in accounting principles $ 238 $ 387
Cumulative effect of changes in accounting principles (230) 12
- ----------------------------------------------------------------------------------------------------------------------
Reported net income 8 399
Goodwill amortization -- 39
- ----------------------------------------------------------------------------------------------------------------------
Adjusted net income $ 8 $ 438
======================================================================================================================
Basic earnings per common share:
Reported income before cumulative effect
of changes in accounting principles $ 0.74 $ 1.21
Cumulative effect of changes in accounting principles (0.72) 0.04
- ----------------------------------------------------------------------------------------------------------------------
Reported net income 0.02 1.25
Goodwill amortization -- 0.12
- ----------------------------------------------------------------------------------------------------------------------
Adjusted net income $ 0.02 $ 1.37
======================================================================================================================
Diluted earnings per common share:
Reported income before cumulative effect of
changes in accounting principles $ 0.73 $ 1.19
Cumulative effect of changes in accounting principles (0.71) 0.04
- ----------------------------------------------------------------------------------------------------------------------
Reported net income 0.02 1.23
Goodwill amortization -- 0.12
- ----------------------------------------------------------------------------------------------------------------------
Adjusted net income $ 0.02 $ 1.35
======================================================================================================================
ComEd
Three Months Ended March 31,
---------------------------------
2002 2001
- ----------------------------------------------------------------------------------------------------------------------
Reported income before cumulative effect
of a change in accounting principle $ 129 $ 146
Cumulative effect of change in a accounting principle -- --
- ----------------------------------------------------------------------------------------------------------------------
Reported net income 129 146
Goodwill amortization -- 32
- ----------------------------------------------------------------------------------------------------------------------
Adjusted net income $ 129 $ 178
======================================================================================================================
Generation
The cessation of the amortization of negative goodwill of AmerGen on
January 1, 2002 did not have a material impact on Generation's reported net
income for the three months ended March 31, 2002.
Exelon, PECO and Generation
On January 1, 2001, Generation recognized a non-cash gain of $12 million,
net of income taxes, in earnings and deferred a non-cash gain of $4 million, net
of income taxes, in accumulated other comprehensive income and PECO deferred a
non-cash gain of $40 million, net of income taxes, in accumulated other
comprehensive income. SFAS No. 133, "Accounting
18
for Derivative Instruments and Hedging Activities" (SFAS No. 133) applies to all
derivative instruments and requires that such instruments be recorded on the
balance sheet either as an asset or a liability measured at their fair value
through earnings, with special accounting permitted for certain qualifying
hedges.
4. REGULATORY ISSUES (Exelon)
On April 1, 2002, the Illinois Commerce Commission issued an interim order
in ComEd's Delivery Services Rate Case. The order sets new delivery rates for
residential customers choosing a new retail electric supplier or the Purchase
Power Option (PPO) which allows the purchase of electric energy from ComEd at
market-based rates. The new rates are effective May 1, 2002 when retail choice
for residential customers begins. Traditional bundled rates - rates paid by
residential customers that retain ComEd as their electricity supplier - are not
affected by this Order and will remain frozen through 2004. The rates for
business customers taking delivery services are not impacted by the order. The
potential revenue impact of the interim order is not expected to be material in
2002.
As permitted by the Pennsylvania Electric Competition Act, the Pennsylvania
Department of Revenue has calculated a 2002 Revenue Neutral Reconciliation (RNR)
adjustment to the gross receipts tax rate in order to neutralize the impact of
electric restructuring on its tax revenues. The 2002 RNR adjustment increases
the gross receipts tax rate which will increase PECO's annual revenues and tax
obligations by approximately $50 million per year. In January 2002, the
Pennsylvania Public Utility Commission (PUC) approved the RNR adjustment to the
gross receipts tax rate collected from customers. Effective January 1, 2002,
PECO implemented the change in the gross receipts tax rate.
5. EARNINGS PER SHARE (Exelon)
Diluted earnings per share are calculated by dividing net income by the
weighted average shares of common stock outstanding, including shares issuable
upon exercise of stock options outstanding under Exelon's stock option plans
considered to be common stock equivalents. The following table shows the effect
of these stock options on the weighted average number of shares outstanding used
in calculating diluted earnings per share (in millions):
Three Months Ended March 31,
-----------------------------
2002 2001
- ---------------------------------------------------------------------------------------------------------------------
Average common shares outstanding 321 320
Assumed exercise of stock options 2 4
- ---------------------------------------------------------------------------------------------------------------------
Average diluted common shares outstanding 323 324
=====================================================================================================================
19
6. SEGMENT INFORMATION (Exelon)
Exelon operates in three business segments: energy delivery, generation and
enterprises. Energy delivery consists of the operations of ComEd and PECO.
Beginning in 2002, Exelon evaluates the performance of its business segments on
the basis of net income. Exelon's segment information for the three months ended
March 31, 2002 as compared to the same period in 2001 and as of March 31, 2002
and December 31, 2001 is as follows:
Corporate and
Energy Intersegment
Delivery Generation Enterprises Eliminations Consolidated
- --------------------------------------------------------------------------------------------------------------------
Revenues:
2002 $ 2,335 $ 1,975 $ 490 $ (930) $ 3,870
2001 2,497 1,628 667 (969) 3,823
Net Income:
2002 $ 215 $ 79 $ (271) $ (15) $ 8
2001 266 170 (25) (12) 399
Total Assets (Restated, See
Note 2.):
March 31, 2002 $26,467 $ 8,383 $ 1,373 $ (1,354) $ 34,869
December 31, 2001 26,448 8,111 1,699 (1,441) 34,817
- --------------------------------------------------------------------------------------------------------------------
7. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (Exelon and Generation)
During the three months ended March 31, 2002 and 2001, Exelon recognized
net losses in other comprehensive income relating to mark-to-market (MTM)
adjustments of contracts designated as cash flow hedges as follows:
ComEd PECO Generation Enterprises Exelon
- ----------------------------------------------------------------------------------------------------------------------
2002 $ 7 $ 6 $ (122) $ 17 $ (92)
2001 -- -- (1) -- (1)
- ----------------------------------------------------------------------------------------------------------------------
During the three months ended March 31, 2002 and 2001, Generation
recognized net gains of $2 million and $16 million, respectively, on power
purchase and sale contracts not designated as cash flow hedges, in Operating
Revenues and Fuel and Purchased Power Expense in the Condensed Consolidated
Statements of Income and Comprehensive Income. During the three months ended
March 31, 2002 and 2001, no amounts were reclassified from accumulated other
comprehensive income into earnings as a result of forecasted energy commodity
transactions or forecasted financing transactions no longer being probable.
During the three months ended March 31, 2002 and 2001, PECO reclassified no
amount and a net gain of $6 million, respectively, to other income in the
Condensed Consolidated Statements of Income and Comprehensive Income, as a
result of the discontinuance of cash flow hedges related to certain forecasted
transactions that were no longer probable of occurring.
As of March 31, 2002, deferred net gains and (losses) on derivative
instruments accumulated in other comprehensive income are expected to be
reclassified to earnings during the next twelve months are as follows:
20
ComEd PECO Generation Enterprises Exelon
- ----------------------------------------------------------------------------------------------------------------------
2002 $ 1 $ 15 $ (7) $ 3 $ 12
- ----------------------------------------------------------------------------------------------------------------------
Amounts in accumulated other comprehensive income related to interest rate
cash flows are reclassified into earnings when the forecasted interest payment
occurs. Amounts in accumulated other comprehensive income related to energy
commodity cash flows are reclassified into earnings when the forecasted purchase
or sale of the energy commodity occurs.
Generation classifies investments in the trust accounts for decommissioning
nuclear plants as available-for-sale. The following tables show the fair values,
gross unrealized gains and losses and amortized costs bases for the securities
held in these trust accounts.
March 31, 2002
------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
- ----------------------------------------------------------------------------------------------------------------------
Equity securities $ 1,651 $ 150 $ (257) $ 1,544
Debt securities
Government obligations 975 20 (5) 990
Other debt securities 641 10 (24) 627
- ----------------------------------------------------------------------------------------------------------------------
Total debt securities 1,616 30 (29) 1,617
- ----------------------------------------------------------------------------------------------------------------------
Total available-for-sale securities $ 3,267 $ 180 $ (286) $ 3,161
======================================================================================================================
Unrealized gains and losses are recognized in Accumulated Depreciation,
Regulatory Assets and Accumulated Other Comprehensive Income in Generation's
Condensed Consolidated Balance Sheet.
For the three months ended March 31, 2002, proceeds from the sale of
decommissioning trust investments and gross realized gains and losses on those
sales were $580 million, $18 million and $32 million, respectively.
Net realized losses of $4 million were recognized in Accumulated
Depreciation in Generation's Consolidated Balance Sheets at March 31, 2002 and
$10 million of net realized losses were recognized in Other Income and
Deductions in Generation's Condensed Consolidated Statements of Income and
Comprehensive Income for the three month period ended March 31, 2002. The
available-for-sale securities held at March 31, 2002 have an average maturity of
eight to ten years. The cost of these securities was determined on the basis of
specific identification.
8. COMMITMENTS AND CONTINGENCIES (Exelon and Generation)
For information regarding capital commitments and nuclear decommissioning
and spent fuel storage, see the Commitments and Contingencies Note in the
Consolidated Financial Statements of Exelon, ComEd and PECO for the year ended
December 31, 2001 and Generation's S-4.
21
Environmental Liabilities
Exelon has identified 72 sites where former manufactured gas plant (MGP)
activities have or may have resulted in actual site contamination. As of March
31, 2002, Exelon had accrued $144 million for environmental investigation and
remediation costs that currently can be reasonably estimated, including $121
million for MGP investigation and remediation. Exelon, ComEd, PECO and
Generation cannot predict whether they will incur other significant liabilities
for additional investigation and remediation costs at these or additional sites
identified by environmental agencies or others, or whether such costs may be
recoverable from third parties.
ComEd had accrued $99 million (discounted) as of March 31, 2002, for
environmental investigation and remediation costs which currently can be
reasonably estimated. This reserve included $94 million for MGP investigation
and remediation.
PECO had accrued $35 million (undiscounted) as of March 31, 2002, for
environmental investigation and remediation costs which currently can be
reasonably estimated, including $27 million for MGP investigation and
remediation.
Generation had accrued $10 million (undiscounted) as of March 31, 2002, for
environmental investigation and remediation cost, none of which relates to MGP
investigation and remediation.
Energy Commitments
As of March 31, 2002, Exelon and Generation had long-term commitments
relating to the net purchase and sale of energy, capacity and transmission
rights from unaffiliated utilities and others, including Midwest Generation, LLC
and AmerGen, an unconsolidated affiliate of Generation, as expressed in the
following table:
Power Only Purchases from
Capacity Power Only ------------------------- Transmission
Purchases Sales AmerGen Non-Affiliates Rights Purchases
- ----------------------------------------------------------------------------------------------------------------------
2002 $ 840 $ 2,210 $ 201 $ 1,330 $ 91
2003 1,214 1,391 261 506 31
2004 1,222 809 315 144 15
2005 406 231 241 78 15
2006 406 122 241 63 5
Thereafter 3,657 22 2,171 252 --
- ----------------------------------------------------------------------------------------------------------------------
Total $ 7,745 $ 4,785 $ 3,430 $ 2,373 $ 157
- ----------------------------------------------------------------------------------------------------------------------
In connection with the 2001 corporate restructuring, ComEd entered into a
purchase power agreement (PPA) with Generation. Under the terms of the PPA,
Generation has agreed to supply all of ComEd's load requirements through 2004.
Prices for this energy vary depending upon the time of day and month of
delivery. During 2005 and 2006, ComEd's PPA is a partial requirements agreement
under which ComEd will purchase all of its required energy and capacity from
Generation, up to the available capacity of the nuclear generating plants
formerly owned by ComEd and transferred to Generation. Under the terms of the
PPA, Generation is responsible for obtaining any required transmission service.
The PPA also specifies that prior to 2005, ComEd and Generation will jointly
determine and agree on a market-based price for energy delivered under the PPA
for 2005 and 2006. In the event that the parties cannot agree to market-based
prices for 2005 and 2006 prior to July 1, 2004, ComEd has the option of
22
terminating the PPA effective December 31, 2004. ComEd will obtain any
additional supply required from market sources in 2005 and 2006, and subsequent
to 2006, will obtain all of its supply from market sources, which could include
Generation.
In connection with the 2001 corporate restructuring, PECO entered into a
PPA with Generation. Under the terms of the PPA, PECO obtains the majority of
its electric supply from Generation through 2010. Also, under the restructuring,
PECO assigned its rights and obligations under various PPAs and fuel supply
agreements to Generation. Generation supplies power to PECO from the transferred
generation assets, assigned PPAs and other market sources.
Under terms of the 2001 corporate restructuring, ComEd will remit to
Generation any amounts collected from customers for decommissioning. Under an
agreement effective September 2001, PECO will remit to Generation any amounts
collected from customers for decommissioning.
Litigation
ComEd
Chicago Franchise. In March 1999, ComEd reached a settlement agreement with
the City of Chicago (Chicago) to end the arbitration proceeding between ComEd
and Chicago regarding the January 1, 1992 franchise agreement. As part of the
settlement agreement, ComEd and Chicago agreed to a revised combination of
ongoing work under the franchise agreement and new initiatives that will result
in defined transmission and distribution expenditures by ComEd to improve
electric services in Chicago. The settlement agreement provides that ComEd would
be subject to liquidated damages if the projects are not completed by various
dates, unless it was prevented from doing so by events beyond its reasonable
control. In addition, ComEd and Chicago established an Energy Reliability and
Capacity Account, into which ComEd deposited $25 million during each of the
years 1999 through 2001 and has conditionally agreed to deposit $25 million at
the end of 2002, to help ensure an adequate and reliable electric supply for
Chicago.
FERC Municipal Request for Refund. Three of ComEd's wholesale municipal
customers filed a complaint and request for refund with the Federal Energy
Regulatory Commission (FERC) alleging that ComEd failed to properly adjust its
rates, as provided for under the terms of the electric service contracts with
the municipal customers and to track certain refunds made to ComEd's retail
customers in the years 1992 through 1994. In the third quarter of 1998, FERC
granted the complaint and directed that refunds be made, with interest. ComEd
filed a request for rehearing. On April 30, 2001, FERC issued an order granting
rehearing in which it determined that its 1998 order had been erroneous and that
no refunds were due from ComEd to the municipal customers. On June 29, 2001,
FERC denied the customers' requests for rehearing of the order granting
rehearing. In August 2001, each of the three wholesale municipal customers
appealed the April 30, 2001 FERC order to the Federal circuit court, which
consolidated the appeals for the purposes of briefing and decision. In November
2001, the court suspended briefing pending court-initiated settlement
discussions.
Retail Rate Law. In 1996, several developers of non-utility generating
facilities filed litigation against various Illinois officials claiming that the
enforcement against those facilities of an amendment to Illinois law removing
the entitlement of those facilities to state-subsidized
23
payments for electricity sold to ComEd after March 15, 1996 violated their
rights under the Federal and state constitutions. The developers also filed suit
against ComEd for a declaratory judgment that their rights under their contracts
with ComEd were not affected by the amendment. On August 4, 1999, the Illinois
Appellate Court held that the developers' claims against the state were
premature, and the Illinois Supreme Court denied leave to appeal that ruling.
Developers of both facilities have since filed amended complaints repeating
their allegations that ComEd breached the contracts in question and requesting
damages for such breach, in the amount of the difference between the
state-subsidized rate and the amount ComEd was willing to pay for the
electricity. ComEd is contesting this matter.
Service Interruptions. In August 1999, three class action lawsuits were
filed against ComEd, and subsequently consolidated, in the Circuit Court of Cook
County, Illinois seeking damages for personal injuries, property damage and
economic losses related to a series of service interruptions that occurred in
the summer of 1999. The combined effect of these interruptions resulted in over
168,000 customers losing service for more than four hours. Conditional class
certification was approved by the court for the sole purpose of exploring
settlement talks. ComEd filed a motion to dismiss the complaints. On April 24,
2001, the court dismissed four of the five counts of the consolidated complaint
without prejudice and the sole remaining count was dismissed in part. On June 1,
2001, the plaintiffs filed a second amended consolidated complaint and ComEd has
filed an answer. A portion of any settlement or verdict may be covered by
insurance; discussions with the carrier are ongoing. Exelon's management
believes adequate reserves have been established in connection with these cases.
Enron. As a result of Enron Corp.'s bankruptcy proceeding, ComEd has
potential monetary exposure for its 366 customer accounts that were served by
Enron Energy Services (EES) as a billing agent. EES has rejected its contracts
with these accounts, with the exception of approximately 100 accounts for which
EES retains its billing agency. ComEd is working to ensure that customers know
what amounts are owed to ComEd on accounts for which EES has been removed as
billing agent, and has obtained updated billing addresses for these accounts.
With regard to the accounts for which EES retains its billing agency, ComEd's
total amount outstanding is not material. Because that amount is owed to ComEd
by individual customers, it is not part of the bankrupt Enron's estate. The ICC
has rescinded EES's authority to act as an alternative retail energy supplier in
Illinois. However, EES never served as a supplier, as opposed to a billing
agent, to any of ComEd's retail accounts.
ComEd and Generation
Godley Park District Litigation. On April 18, 2001, the Godley Park
District filed suit in Will County Circuit Court against ComEd and Exelon
alleging that oil spills at Braidwood Station have contaminated the Park
District's water supply. The complaint sought actual damages, punitive damages
of $100 million and statutory penalties. The court dismissed all counts seeking
punitive damages and statutory penalties, and the plaintiff has filed an amended
complaint before the court. Exelon is contesting the liability and damages
sought by the plaintiff.
Generation
Cotter Corporation Litigation. During 1989 and 1991, actions were brought
in Federal and state courts in Colorado against ComEd and its subsidiary, Cotter
Corporation (Cotter), seeking unspecified damages and injunctive relief based on
allegations that Cotter permitted
24
radioactive and other hazardous material to be released from its mill into areas
owned or occupied by the plaintiffs, resulting in property damage and potential
adverse health effects. In 1994, a Federal jury returned nominal dollar verdicts
against Cotter on eight plaintiffs' claims in the 1989 cases, which verdicts
were upheld on appeal. The remaining claims in the 1989 actions were settled or
dismissed. In 1998, a jury verdict was rendered against Cotter in favor of 14 of
the plaintiffs in the 1991 cases, totaling approximately $6 million in
compensatory and punitive damages, interest and medical monitoring. On appeal,
the Tenth Circuit Court of Appeals reversed the jury verdict, and remanded the
case for new trial. These plaintiffs' cases were consolidated with the remaining
26 plaintiffs' cases, which had not been tried. The consolidated trial was
completed on June 28, 2001. The jury returned a verdict against Cotter and
awarded $16.3 million in various damages. On November 20, 2001, the District
Court entered an amended final judgment which included an award of both
pre-judgment and post-judgment interests, costs, and medical monitoring expenses
which total $43.3 million. This matter is being appealed by Cotter in the Tenth
Circuit Court of Appeals. Cotter will vigorously contest the award.
In November 2000, another trial involving a separate sub-group of 13
plaintiffs, seeking $19 million in damages plus interest was completed in
federal district court in Denver. The jury awarded nominal damages of $42,500 to
11 of 13 plaintiffs, but awarded no damages for any personal injury or health
claims, other than requiring Cotter to perform periodic medical monitoring at
minimal cost. The plaintiffs appealed the verdict to the Tenth Circuit Court of
Appeals.
On February 18, 2000, ComEd sold Cotter to an unaffiliated third party. As
part of the sale, ComEd agreed to indemnify Cotter for any liability incurred by
Cotter as a result of these actions, as well as any liability arising in
connection with the West Lake Landfill discussed in the next paragraph. In
connection with Exelon's 2001 corporate restructuring, the responsibility to
indemnify Cotter for any liability related to these matters was transferred by
ComEd to Generation. Exelon's management believes adequate reserves have been
established in connection with these proceedings.
The United States Environmental Protection Agency (EPA) has advised Cotter
that it is potentially liable in connection with radiological contamination at a
site known as the West Lake Landfill in Missouri. Cotter is alleged to have
disposed of approximately 39,000 tons of soils mixed with 8,700 tons of leached
barium sulfate at the site. Cotter, along with three other companies identified
by the EPA as potentially responsible parties (PRPs), is reviewing a draft
feasibility study that recommends capping the site. The PRPs are also engaged in
discussions with the State of Missouri and the EPA. The estimated costs of
remediation for the site are $10 to $15 million. Once a final feasibility study
is complete and a remedy selected, it is expected that the PRPs will agree on an
allocation of responsibility for the costs. Until an agreement is reached,
Exelon cannot predict its share of the costs.
Pennsylvania Real Estate Tax Appeals. Exelon is involved in tax appeals
regarding two of its nuclear facilities, Limerick Generating Station (Montgomery
County) and Peach Bottom Atomic Power Station (York County), and one of its
fossil facilities, Eddystone (Delaware County). Exelon is also involved in the
tax appeal for Three Mile Island (Dauphin County)
25
through AmerGen. Exelon does not believe the outcome of these matters will have
a material adverse effect on Exelon's results of operations or financial
condition.
General
Exelon, ComEd, PECO and Generation are involved in various other litigation
matters. The ultimate outcome of such matters, as well as the matters discussed
above, while uncertain, are not expected to have a material adverse effect on
its respective financial condition or results of operations.
9. MERGER-RELATED COSTS (Exelon and Generation)
In association with the October 20, 2000 merger of Unicom Corporation (the
former parent company of ComEd) and PECO (Merger), Exelon recorded certain
reserves for restructuring costs. The reserves associated with PECO were charged
to expense, while the reserves associated with Unicom were recorded as part of
the application of purchase accounting and did not affect results of operations.
Merger-related costs charged to expense in 2000 were $276 million,
consisting of $124 million for PECO employee costs and $152 million of direct
incremental costs. Direct incremental costs represent expenses directly
associated with completing the Merger, including professional fees, regulatory
approval and settlement costs, and settlement of compensation arrangements.
Employee costs represent estimated severance costs and pension and
postretirement benefits provided under Exelon's merger separation plans for
eligible employees who are expected to be involuntarily terminated before
December 2002 due to integration activities of the merged companies.
The purchase price allocation as of December 31, 2000 included a liability
of $307 million for Unicom employee costs and liabilities of approximately $39
million for estimated costs of exiting various business activities of former
Unicom activities that were not compatible with the strategic business direction
of Exelon.
During 2001, Exelon finalized its plans for consolidation of functions,
including negotiation of an agreement with the union regarding severance
benefits to union employees and recorded adjustments to the purchase price
allocation as follows:
Original 2001 Adjusted
Estimate Adjustments Liabilities
- --------------------------------------------------------------------------------------------------------------------------
Employee severance payments $ 128 $ 33 $ 161 (a)
Actuarially determined pension and postretirement costs 158 (11) 147 (b)
Relocation and other severance 21 9 30 (a)
- --------------------------------------------------------------------------------------------------------------------------
Total Unicom - Employee Cost $ 307 $ 31 $ 338
- --------------------------------------------------------------------------------------------------------------------------
<FN>
(a) The increase is a result of the identification in 2001 of additional
positions to be eliminated.
(b) The reduction results from lower estimated pension and post retirement
welfare benefits reflecting revised actuarial estimates.
</FN>
Additional employee severance costs of $48 million primarily related to
PECO employees were charged to expense in 2001. Exelon anticipates that a total
of $281 million of employee costs will be funded from pension and postretirement
benefit plans.
26
The following table provides a reconciliation of the reserve for employee
severance and relocation costs associated with the merger:
- ---------------------------------------------------------------------------------------------------
Employee severance and relocation reserve as of October 20, 2000 $ 149
Additional reserve 42
- ---------------------------------------------------------------------------------------------------
Adjusted employee severance and relocation reserve 191
Payments to employees (October 2000-December 2001) (77)
Payments to employees (January 2002-March 2002) (15)
- ---------------------------------------------------------------------------------------------------
Employee severance and relocation reserve as of March 31, 2002 $ 99
===================================================================================================
As part of the January 2001 corporate restructuring, portions of the
employee severance and restructuring reserve were transferred from ComEd to
Generation, Enterprises and BSC. Approximately $62 million and $30 million of
the employee severance and relocation reserve as of March 31, 2002 relates to
ComEd and Generation, respectively, and is reflected on the Consolidated Balance
Sheets of those entities.
Approximately 3,300 Unicom and PECO positions have been identified to be
eliminated as a result of the merger. Exelon has terminated 1,745 employees as
of March 31, 2002 of which 284 were terminated in the first quarter of 2002. The
remaining positions are expected to be eliminated by the end of 2002.
10. LONG-TERM DEBT (Exelon)
On March 13, 2002, ComEd issued $400 million of 6.15% First Mortgage Bonds,
due March 15, 2012. On March 21, 2002, ComEd redeemed $200 million of 8.625%
First Mortgage Bonds at the redemption price of 103.84% of the principal amount
plus accrued interest. These bonds had a maturity date of February 1, 2022. The
$400 million bond issuance was a replacement of the $200 million bonds called on
March 21, 2002 and the $196 million 9.875% First Mortgage Bonds which were
called in November 2001.
In connection with the issuance of $400 million of First Mortgage Bonds,
ComEd settled forward starting interest rate swaps in the aggregate amount of
$375 million resulting in a $9 million loss recorded in other comprehensive
income, which is being amortized over the expected remaining life of the related
debt.
11. SALE OF ACCOUNTS RECEIVABLE (Exelon)
PECO is party to an agreement, which expires in November 2005, with a
financial institution under which it can sell or finance with limited recourse
an undivided interest, adjusted daily, in up to $225 million of designated
accounts receivable. As of March 31, 2002, PECO had sold a $225 million interest
in accounts receivable, consisting of a $163 million interest in accounts
receivable that PECO accounted for as a sale under SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
a Replacement of FASB Statement No. 125" and a $62 million interest in
special-agreement accounts receivable which were accounted for as a long-term
note payable. PECO retains the servicing responsibility for these receivables.
The agreement requires PECO to maintain the $225 million interest,
27
which, if not met, requires PECO to deposit cash in order to satisfy such
requirements. At March 31, 2002, PECO met this requirement and was not required
to make any cash deposits.
12. RELATED-PARTY TRANSACTIONS (Exelon and Generation)
Exelon and Generation
In February 2002, Generation entered into an agreement to loan AmerGen up
to $75 million at an interest rate equal to the 1-month London Interbank
Offering Rate plus 2.25%. As of March 31, 2002, $46 million had been loaned to
AmerGen. The loan is due November 30, 2002.
Generation has entered into PPAs dated December 18, 2001 and November 22,
1999 with AmerGen. Under the 2001 PPA, Generation has agreed to purchase from
AmerGen all the energy from Unit No. 1 at Three Mile Island Nuclear Station from
January 1, 2002 through December 31, 2014. Under the 1999 PPA, Generation has
agreed to purchase from AmerGen all of the residual energy from Clinton Nuclear
Power Station (Clinton), through December 31, 2002. Currently, the residual
output approximates 25% of the total output of Clinton. For the three months
ended March 31, 2002 and 2001, the amount of purchased power recorded in Fuel
and Purchased Power in the Condensed Consolidated Statements of Income and
Comprehensive Income is $56 million and $10 million, respectively. As of March
31, 2002 and December 31, 2001, Generation had a payable of $19 million and $3
million, respectively, resulting from these PPAs.
Under a service agreement dated March 1, 1999, Generation provides AmerGen
with certain operation and support services to the nuclear facilities owned by
AmerGen. This service agreement has an indefinite term and may be terminated by
Generation or AmerGen on 90 days notice. Generation is compensated for these
services in an amount agreed to in the work order, but not less than the higher
of fully allocated costs for performing the services or the market price. For
the three months ended March 31, 2002 and 2001, the amount charged to AmerGen
for these services was $14 million and $16 million, respectively. As of March
31, 2002 and December 31, 2001, Generation had a receivable of $46 million and
$47 million, respectively, resulting from these services.
Generation
Generation had a short-term receivable of $59 million at March 31, 2002 and
December 31, 2001, and a long-term receivable of $275 million and $291 million
at March 31, 2002 and December 31, 2001, respectively, from ComEd primarily
representing ComEd's legal requirements to remit collections of nuclear
decommissioning costs from customers to Generation resulting from the
restructuring. These receivables from ComEd were included in Current Assets and
Deferred Debits and Other Liabilities, respectively, on Generation's Condensed
Consolidated Balance Sheets.
Effective January 1, 2001, Generation entered into PPAs with ComEd and
PECO. Intercompany power sales pursuant to the PPAs for the three months ended
March 31, 2002 and March 31, 2001 were $835 million, including decommissioning
reveue of $3 million, and $852 million, including decommissioning revenue of $3
million, respectively. At March 31, 2002 and December 31, 2001, there was a $271
million and $273 million receivable, respectively, for the
28
PPAs as well as other services provided which is included in Current Assets on
Generation's Condensed Consolidated Balance Sheets.
Generation sells power to Exelon Energy. Power sales for the three months
ended March 31, 2002 and 2001 were $57 million and $61 million, respectively. At
March 31, 2002 and December 31, 2001, there was a $19 million and $15 million
receivable, respectively.
Generation purchases power from AmerGen under PPAs as discussed in the
Exelon and Generation section of this note. Additionally, Generation purchases
power from PECO for Generation's own use, buys back excess power from Exelon
Energy and purchases transmission and ancillary services from ComEd. These
purchases, including AmerGen, for the three months ended March 31, 2002 and 2001
were $72 million and $18 million, respectively. At March 31, 2002 and December
31, 2001, Generation had payables for such services of $4 million and $26
million, respectively.
Generation receives a variety of corporate support services from BSC,
including legal, human resources, financial and information technology services.
Such services, provided at cost including applicable overhead, were $14 million
and $13 million for the three months ended March 31, 2002 and March 31, 2001,
respectively, and were included in Operating and Maintenance (O&M) expense on
Generation's Condensed Consolidated Statements of Income and Comprehensive
Income. At March 31, 2002 and December 31, 2001, there was an $8 million and an
$18 million payable, respectively, to BSC for services provided which is
included in Current Liabilities on Generation's Condensed Consolidated Balance
Sheets.
In order to facilitate payment processing, ComEd processes certain invoice
payments on behalf of Generation. Payables at March 31, 2002 and December 31,
2001 to ComEd for such services totaled $119 million and $21 million,
respectively, and were included in Current Liabilities on Generation's Condensed
Consolidated Balance Sheets.
In relation to the December 18, 2001 acquisition of 49.9% of Sithe
Energies, Inc. (Sithe) common stock, Generation had a $700 million payable to
Exelon, which was repaid in the second quarter of 2001. Interest expense related
to this payable for the three months ended March 31, 2001 was $15 million.
13. NEW ACCOUNTING PRONOUNCEMENTS (Exelon and Generation)
In June 2001, the FASB issued SFAS No. 143, "Asset Retirement Obligations"
(SFAS No. 143). In August 2001, the FASB issued SFAS No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets" (SFAS No. 144). In April 2002,
the FASB issued SFAS No. 145, " Rescission of FASB Statements No. 4, 44 and 64,
Amendment of FASB Statement No. 13, and Technical Corrections" (SFAS No. 145).
SFAS No. 143 provides accounting requirements for retirement obligations
associated with tangible long-lived assets. Exelon expects to adopt SFAS No. 143
on January 1, 2003. Retirement obligations associated with long-lived assets
included within the scope of SFAS No. 143 are those for which there is a legal
obligation to settle under existing or enacted law, statute, written or oral
contract or by legal construction under the doctrine of promissory estoppel.
29
Adoption of SFAS No. 143 will change the accounting for the decommissioning of
Exelon's nuclear generating plants. Currently, Generation records the obligation
for decommissioning ratably over the lives of the plants. The January 1, 2003
adoption of SFAS No. 143 will require a cumulative effect adjustment effective
the date of adoption to adjust plant assets and decommissioning liabilities to
the values they would have been had this standard been employed from the
in-service dates of the plants.
The effect of this cumulative adjustment will be to increase the
decommissioning liability to reflect a full decommissioning obligation in
current year dollars. Additionally, the standard will require the accrual of an
asset related to the full amount of the decommissioning obligation, which will
be amortized over the remaining lives of the plants. The net difference between
the asset recognized and the liability recorded upon adoption of SFAS No. 143
will be charged to earnings and recognized as a cumulative effect, net of
expected regulatory recovery. The decommissioning liability to be recorded
represents an obligation for the future decommissioning of the plants, and as a
result interest expense will be accrued on this liability until such time as the
obligation is satisfied.
Exelon is in the process of evaluating the impact of SFAS No. 143 on its
financial statements, and cannot determine the ultimate impact of adoption at
this time, however the cumulative effect could be material to Exelon's earnings.
Additionally, although over the life of the plant the charges to earnings for
the depreciation of the asset and the interest on the liability will be equal to
the amounts currently recognized as decommissioning expense, the timing of those
charges will change and in the near-term period subsequent to adoption, the
depreciation of the asset and the interest on the liability could result in an
increase in expense.
Exelon, ComEd, PECO and Generation adopted SFAS No. 144 on January 1, 2002.
SFAS No. 144 establishes accounting and reporting standards for both the
impairment and disposal of long-lived assets. SFAS No. 144 is effective for
fiscal years beginning after December 15, 2001 and its provisions are generally
applied prospectively. The adoption of this statement had no effect on Exelon's
reported financial positions, results of operations or cash flows.
SFAS No. 145 eliminates SFAS No. 4 "Reporting Gains and Losses from
Extinguishment of Debt" (SFAS No. 4) and thus allows for only those gains or
losses on the extinguishment of debt that meet the criteria of extraordinary
items to be treated as such in the financial statements. SFAS No. 145 also
amends Statement of Financial Accounting Standards No. 13, "Accounting for
Leases", (SFAS No. 13) to require sale-leaseback accounting for certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. This provisions of this statement relating to the rescission of
SFAS No. 4 are effective for fiscal years beginning after May 15, 2002, the
provisions of this statement relating to the amendment of SFAS No. 13 are
effective for transactions occurring after May 15, 2002, and all other
provisions of this Statement are effective for financial statements issued on or
after May 15, 2002. Exelon is in the process of evaluating the impact of SFAS
No. 145 on its financial statements, and does not expect the impact to be
material.
30
14. CHANGE IN ACCOUNTING ESTIMATE (Exelon and Generation)
Effective April 1, 2001, Generation changed its accounting estimates
related to the depreciation and decommissioning of certain generating stations.
The estimated service lives were extended by 20 years for three nuclear
stations, by periods of up to 20 years for certain fossil stations and by 50
years for a pumped storage station. Effective July 1, 2001, the estimated
service lives were extended by 20 years for the remainder of Exelon's operating
nuclear stations. These changes were based on engineering and economic
feasibility studies performed by Generation considering, among other things,
future capital and maintenance expenditures at these plants. As a result of the
change, net income for the three months ended March 31, 2002 increased $35
million ($20 million, net of income taxes).
15. SUBSEQUENT EVENTS (Exelon and Generation)
On April 25, 2002, Generation completedthe purchase of two TXU Energy power
plants located in the Dallas and Fort Worth areas for $443 million. The
agreement was first announced in December 2001. The purchase includes the 893 MW
Mountain Creek Steam Electric Station in Dallas and the 1,441 MW Handley Steam
Electric Station in Fort Worth. The purchase was funded with available cash and
Exelon commercial paper.
On April 1, 2002, Exelon Enterprises completed the sale of its 49% interest
in AT&T Wireless PCS of Philadelphia, LLC to a subsidiary of AT&T Wireless
Services for $285 million in cash. The after-tax gain is estimated at
approximately $120 million with a resulting $0.37 earnings per share (diluted)
gain, which will be reported as part of second quarter earnings. Proceeds from
the transaction will be used for Exelon's general corporate purposes.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
99.1 - Management's Discussion and Analysis of Financial Condition
and Results of Operations and Index to Financial Statements of
Exelon Generation Company, LLC, filed by Exelon Generation
Company, LLC with the Securities Exchange Commission on April
24, 2002 on Registration Statement Form S-4 (File No.
333-85496).
Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 United
States Code (Sarbanes - Oxley Act of 2002) as to the Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2002 filed by the
following officers for the following companies:
-------------------------------------------------------------------------
99.2 - Filed by John W. Rowe for Exelon Corporation
99.3 - Filed by Ruth Ann M. Gillis for Exelon Corporation
99.4 - Filed by Oliver D. Kingsley for Exelon Generation Company, LLC
99.5 - Filed by Ruth Ann M. Gillis for Exelon Generation Company, LLC
31
(b) Reports on Form 8-K:
Exelon filed Current Reports on Form 8-K during the three months ended
March 31, 2002 regarding the following items:
Date of Earliest
Event Reported Description of Item Reported
- --------------------------------------------------------------------------------
January 25, 2002 "ITEM 5. OTHER EVENTS" regarding Exelon's restatement of
third quarter earnings and reaffirming 2001 earnings
guidance.
January 29, 2002 "ITEM 5. OTHER EVENTS" regarding the announcement of
Exelon's consolidated earnings for the year ended December
31, 2001 and "ITEM 9. REGULATION FD DISCLOSURE" regarding
highlights of the Exelon Fourth Quarter Earnings
Conference Call.
February 12, 2002 "ITEM 9. REGULATION FD DISCLOSURE" regarding a
presentation by Corbin A. McNeill, Jr., Chairman and
Co-CEO of Exelon at the UBS Warburg Energy and Utilities
Conference. The exhibits include the slides used and
copies of the materials made available to investors
attending the conference.
February 18, 2002 "ITEM 9. REGULATION FD DISCLOSURE" regarding a
presentation by Corbin A. McNeill, Jr., Chairman and
Co-CEO of Exelon at the EEI International Financial
Conference, London. The exhibit includes the slides used
during the presentation.
February 28, 2002 "ITEM 5. OTHER EVENTS" regarding certain financial
information of Exelon Corporation and Subsidiary
Companies. The exhibits under "ITEM 7. FINANCIAL STATEMENT
AND EXHIBITS" include the Consent of the Independent
Public Accountants, Selected Financial Data, Market for
Registrant's Common Equity and Related Stockholder
Matters, Management's Discussion and Analysis of Financial
Condition and Results of Operations, and Financial
Statements and Supplementary Data.
March 1, 2002 "ITEM 5. OTHER EVENTS" regarding issuance of a press
release announcing the sale of Exelon's interest in a
joint venture with AT&T Wireless.
March 5, 2002 "ITEM 9. REGULATION FD DISCLOSURE" regarding a
presentation by John W. Rowe, President and Co-CEO of
Exelon at the Morgan Stanley Global Electricity & Energy
Conference in New York City. The exhibits include the
slides used during the presentation and materials made
available to investors attending the conference.
- --------------------------------------------------------------------------------
32
Generation did not file any Current Reports on Form 8-K during the three
months ended March 31, 2002.
33
SIGNATURES
----------
Pursuant to requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EXELON CORPORATION
/s/ John W. Rowe /s/ Ruth Ann M. Gillis
- --------------------------- -----------------------------
JOHN W. ROWE RUTH ANN M. GILLIS
Chairman of the Board and Senior Vice President and
Chief Executive Officer Chief Financial Officer
Date: October 30, 2002
- --------------------------------------------------------------------------------
Pursuant to requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EXELON GENERATION COMPANY, LLC
/s/ Oliver D. Kingsley Jr. /s/ Ruth Ann M. Gillis
- --------------------------- -----------------------------
OLIVER D. KINGSLEY JR. RUTH ANN M. GILLIS
Chief Executive Officer and Senior Vice President and
President Chief Financial Officer
Exelon Corporation
(Principal Financial Officer)
Date: October 30, 2002
34
CERTIFICATIONS
- --------------------------------------------------------------------------------
CERTIFICATION PURSUANT TO RULE 13A-14 AND 15D-14 OF THE SECURITIES AND
EXCHANGE ACT OF 1934
I, John W. Rowe certify that:
1. I have reviewed this amended quarterly report on Form 10-Q/A of Exelon
Corporation;
2. Based on my knowledge, this amended quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
amended quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this amended quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this amended
quarterly report;
Date: October 30, 2002
/s/ John w. Rowe
------------------------
John W. Rowe
Chairman of the Board and Chief Executive Officer
35
CERTIFICATION PURSUANT TO RULE 13A-14 AND 15D-14 OF THE SECURITIES AND
EXCHANGE ACT OF 1934
- --------------------------------------------------------------------------------
I, Ruth Ann M. Gillis certify that:
1. I have reviewed this amended quarterly report on Form 10-Q/A of Exelon
Corporation;
2. Based on my knowledge, this amended quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
amended quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this amended quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this amended
quarterly report;
Date: October 30, 2002
/s/ Ruth Ann M. Gillis
------------------------
Ruth Ann M. Gillis
Senior Vice President and Chief Financial Officer
36
CERTIFICATION PURSUANT TO RULE 13A-14 AND 15D-14 OF THE SECURITIES AND
EXCHANGE ACT OF 1934
- --------------------------------------------------------------------------------
I, Oliver D. Kingsley Jr. certify that:
1. I have reviewed this amended quarterly report on Form 10-Q/A of Exelon
Generation Company, LLC;
2. Based on my knowledge, this amended quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
amended quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this amended quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this amended
quarterly report;
Date: October 30, 2002
/s/ Oliver D. Kingsley Jr
----------------------------
Oliver D. Kingsley Jr.
Chief Executive Officer and President
37
CERTIFICATION PURSUANT TO RULE 13A-14 AND 15D-14 OF THE SECURITIES AND
EXCHANGE ACT OF 1934
- --------------------------------------------------------------------------------
I, Ruth Ann M. Gillis certify that:
1. I have reviewed this amended quarterly report on Form 10-Q/A of Exelon
Generation Company, LLC;
2. Based on my knowledge, this amended quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
amended quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this amended quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this amended
quarterly report;
Date: October 30, 2002
/s/ Ruth Ann M. Gillis
------------------------
Ruth Ann M. Gillis
Senior Vice President and Chief Financial Officer
Exelon Corporation
38