UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
October 30, 2002
(Date of earliest
event reported)
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
1-1839 COMMONWEALTH EDISON COMPANY 36-0938600
(an Illinois corporation)
10 South Dearborn Street - 37th Floor
P.O. Box 805379
Chicago, Illinois 60680-5379
(312) 394-4321
1-1401 PECO ENERGY COMPANY 23-0970240
(a Pennsylvania corporation)
P.O. Box 8699 2301 Market Street
Philadelphia, Pennsylvania 19101-8699
(215) 841-4000
333-85496 EXELON GENERATION COMPANY, LLC 23-3064219
(a Pennsylvania limited liability company)
300 Exelon Way
Kennett Square, Pennsylvania 19348
(610) 765-8200
Item 5. Other Events.
On October 30, 2002, Exelon Corporation issued a press release disclosing its
first quarter 2002 earnings results. The press release is attached as Exhibit
99.1.
On November 1, 2002, Exelon Generation Company, LLC issued a press release
regarding the closing of its acquisition of Sithe New England Holdings, LLC. The
press release is attached as Exhibit 99.2.
Item 9. Regulation FD Disclosure
A. Third Quarter Earnings Release Conference Call
As previously announced, on October 30, 2002 Exelon Corporation conducted its
Third Quarter Earnings Conference Call. The call was open to all on a
listen-only basis and was audio web-cast. Telephone replays will be available
through November 15, 2002. The U.S. call-in number is 877.519.4471 and the
international call-in number is 973.341.3080. The confirmation code is 3524786.
In addition, the call will be archived on Exelon's web site, www.exeloncorp.com;
please choose the Investor Relations page.
During the call management reviewed issues outlined in the press release.
Management elaborated on the initial 2003 earnings guidance range of $4.70 to
$5.00 per share, assuming normal weather. Detail on several of the large factors
impacting 2003 estimated earnings include:
Positive impacts
- ----------------
o capacity charge redutions compared to 2002 due to the exercise of
termination options under the Midwest Generation power purchase
agreements, $130 million or $0.26 per share, and
o three fewer planned nuclear refueling outages in 2003 (8), as compared to
2002 (11), $70 million or $0.14 per share
Negative impacts
- ----------------
o Exelon's interest in Sithe, other than Sithe New England purchase, about
$0.20 to $0.25 per share
o increased pension expense and other post-retirement benefit costs, $70
million, or $0.14 per share, and
o up to $0.10 per share from the adoption of SFAS No. 143
Other factors
- -------------
o weather normalized electric delivery growth rates of 1.9% and 0.6% for
ComEd and PECO, respectively.
Management provided additional information including projected around-the-clock
pricing in NEPOOL of about $37 per MWh for the fourth quarter of 2002 and for
2003 of
about $34 per MWh and a gas price of $3.75 per MMBTU at the Henry Hub.
Management observed that the three major cash outflows in 2003 are anticipated
to be approximately $2 billion in capital expenditures, approximately $570
million in dividends and a pension contribution of approximately $300 million to
$350 million. Additionally, a $650 million issuance of external debt is
anticipated in order to complete the Sithe transaction.
Management also discussed pension expense and indicated that the 2003 earnings
guidance included $70 million in increased pension and other post-retirement
benefits expense. Management noted that Exelon will not be required to make a
pension contribution in 2002, but that it is considering making discretionary
contributions of $100 million to $200 million in 2002 and of $300 million to
$350 million in 2003. It further noted that Exelon could be required to
recognize an additional minimum liability for pension as prescribed by FAS 87
and FAS 132 of between $500 million and $1 billion at year-end 2002. The
liability would be recorded as a reduction to common equity, but does not affect
earnings, and the equity would be restored to the balance sheet in future
periods when the fair value of plan assets exceeds the accumulated benefit
obligation. Management has assumed a return on assets of 4% and a discount rate
of 7% for the year 2003 in its estimate of pension expense and other
post-retirement benefit costs. Management indicated that it would review and
finalize the assumptions for 2003 and subsequent years at the beginning of 2003
during the normal annual review process. Management noted that the previously
announced equity gain of at least $1.5 billion related to the adoption of FAS
143 would offset the reduction to equity recorded to recognize the additional
pension costs.
Management stated that regulatory asset amortization in the third quarter of
2002 was $17 million higher, after income taxes, or $0.05 per share, than was
included in previous earnings guidance. Additional fourth quarter amortization
is expected to be $28 million higher than included in previous earnings
guidance, after income taxes, which would lower earnings by about $0.09 per
share relative to our prior earnings outlook for the quarter.
Enterprises expects to have positive earnings in the second half of 2002
although it will report an operating loss for the full year 2002. Break even
performance is expected from Enterprises in 2003.
B. Financial Impact of Sithe New England Holdings Acquisition
On November 4, 2002, Exelon issued a note to its investment community regarding
the financial impact of the Sithe New England Holdings, LLC acquisition. A copy
of this note is attached as Exhibit 99.3.
# # #
This combined Form 8-K is being filed separately by Exelon Corporation,
Commonwealth Edison Company, PECO Energy Company 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.
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 7 of
Notes to Condensed 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.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EXELON CORPORATION
COMMONWEALTH EDISON COMPANY
PECO ENERGY COMPANY
EXELON GENERATION COMPANY, LLC
/S/ Ruth Ann M. Gillis
------------------------------------
Ruth Ann M. Gillis
Senior Vice President
Exelon Corporation
November 4, 2002