SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1998
Commission file number: 1-12869
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Constellation Energy Group, Inc.
Employee Savings Plan
Address same as issuer
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
Constellation Energy Group, Inc.
Gas and Electric Building, Charles Center
Baltimore, Maryland 21201
1
SIGNATURES
The Plan: Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSTELLATION ENERGY GROUP, INC.
EMPLOYEE SAVINGS PLAN
/s/ Richard D. Honaker
Date: June 17, 1999 By:___________________________________
Richard D. Honaker
Plan Administrator
2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Plan Administrator of the
Constellation Energy Group, Inc.
Employee Savings Plan
We have audited the accompanying statements of net assets available
for benefits with fund information of the Constellation Energy Group, Inc.
Employee Savings Plan (the Plan), formerly the Baltimore Gas and Electric
Company Employee Savings Plan, as of December 31, 1998 and December 31,
1997 and the related statements of changes in net assets available for
benefits with fund information for the years then ended. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits of
the Plan as of December 31, 1998 and 1997, and the changes in net assets
available for benefits for the years then ended in conformity with
generally accepted accounting principles.
Our audit was performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
assets held for investment purposes and reportable transactions for the
year ended December 31, 1998 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but
are supplementary information required by the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. The supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules and
Fund information have been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ Mitchell & Titus L.L.P.
______________________________
Washington, DC
June 16, 1999
3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectuses of
Constellation Energy Group, Inc. on Form S-8 (File No. 333-45051-99) and
Forms S-3 (File Nos. 333-75217, 333- 59601-99, and 333-24705) and of
Baltimore Gas and Electric Company on Form S-3 (File No. 333-66015) of
our report dated June 16, 1999 on the financial statements and
supplemental schedules of the Constellation Energy Group, Inc. Employee
Savings Plan for the year ended December 31, 1998, which report is
included in this Annual Report on Form 11-K.
/s/ Mitchell & Titus L.L.P.
______________________________
Baltimore, Maryland
June 16, 1999
4
Page 1 of 2
Constellation Energy Group, Inc.
Employee Savings Plan
Statement of Net Assets Available for Benefits
December 31, 1998
Investment Funds
Constellation
Energy Interest Income Mutual
Total Common Stock Fund Fund Funds Loan Fund
-------------- -------------- -------------- -------------- --------------
Assets
Value of securities
held in trust $539,823,941 $324,473,557 $0 $215,350,384 $0
Value of guaranteed
investment contracts 115,465,530 0 115,465,530 0 0
Loans outstanding to
plan participants 28,891,912 0 0 0 28,891,912
Short-term investments 8,247,190 260,200 7,959,084 27,906
Accrued dividends
receivable 4,398,665 4,398,081 0 584 0
Accrued interest
receivable 807 0 0 0 807
Accounts receivable 1,567,083 521,794 469,776 575,513 0
-------------- -------------- -------------- -------------- --------------
Total 698,395,128 329,653,632 123,894,390 215,954,387 28,892,719
-------------- -------------- -------------- -------------- --------------
Liabilities
Accounts payable 99,300 67,793 31,507 0 0
-------------- -------------- -------------- -------------- --------------
Total 99,300 67,793 31,507 0 0
-------------- -------------- -------------- -------------- --------------
Net assets available
for benefits $698,295,828 $329,585,839 $123,862,883 $215,954,387 $28,892,719
============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
(continued next page)
5
Page 2 of 2
Constellation Energy Group, Inc.
Employee Savings Plan
Statement of Net Assets Available for Benefits
December 31, 1998
(Continued)
T. Rowe Price Mutual Funds
Equity New
Balanced Equity Index 500 Growth International Mid-Cap Horizons New Income Small Cap
Fund Income Fund Fund Stock Fund Stock Fund Growth Fund Fund Fund Value Fund
-------------------------------------------------------------------------------------------------------------------
Assets
Value of securities
held in trust $9,791,132 $86,216,947 $12,293,072 $60,411,423 $11,832,199 $7,583,783 $2,590,838 $2,193,307 $22,437,683
Value of guaranteed
investment
contracts 0 0 0 0 0 0 0 0 0
Loans outstanding
to plan
participants 0 0 0 0 0 0 0 0 0
Short-term
investments 192 10,986 46 15,609 890 87 38 0 58
Accrued dividends
receivable 0 264 0 203 30 0 0 0 87
Accrued interest
receivable 0 0 0 0 0 0 0 0 0
Accounts
receivable 27,230 175,548 44,194 151,897 38,245 33,900 15,055 6,842 82,602
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- ------------
Total 9,818,554 86,403,745 12,337,312 60,579,132 11,871,364 7,617,770 2,605,931 2,200,149 22,520,430
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- ------------
Liabilities
Accounts
payable 0 0 0 0 0 0 0 0 0
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- ------------
Total 0 0 0 0 0 0 0 0 0
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- ------------
Net assets available
for benefits $9,818,554 $86,403,745 $12,337,312 $60,579,132 $11,871,364 $7,617,770 $2,605,931 $2,200,149 $22,520,430
========== ========== ========== ========== ========== ========== ========== ========== ===========
The accompanying notes are an integral part of the financial statements.
6
Page 1 of 2
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Net Assets Available for Benefits
December 31, 1997
Investment Funds
BGE Common Interest Income Mutual
Total Stock Fund Fund Funds Loan Fund
-------------- -------------- -------------- -------------- --------------
Assets
Value of securities
held in trust $534,496,187 $362,505,984 $0 $171,990,203 $0
Value of guaranteed
investment contracts 101,752,619 0 101,752,619 0 0
Loans outstanding to
plan participants 28,589,210 0 0 0 28,589,210
Short-term investments 20,505,491 170,150 20,319,172 16,169 0
Accrued dividends
receivable 4,338,636 4,338,636 0 0 0
Accrued interest
receivable 566 0 0 0 566
Accounts receivable 446,338 446,338 0 0 0
-------------- -------------- -------------- -------------- --------------
Total 690,129,047 367,461,108 122,071,791 172,006,372 28,589,776
-------------- -------------- -------------- -------------- --------------
Liabilities
Accounts payable 195,526 618 194,908 0 0
-------------- -------------- -------------- -------------- --------------
Total 195,526 618 194,908 0 0
-------------- -------------- -------------- -------------- --------------
Net assets available
for benefits $689,933,521 $367,460,490 $121,876,883 $172,006,372 $28,589,776
============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
(continued next page)
7
Page 2 of 2
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Net Assets Available for Benefits
December 31, 1997
(Continued)
Mutual Funds
Total T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price
Mutual Balanced Equity Growth Small Cap International
Funds Fund Income Fund Stock Fund Value Fund Stock Fund
-------------- -------------- -------------- -------------- -------------- --------------
Assets
Value of securities
held in trust $171,990,203 $7,241,838 $82,168,550 $45,262,623 $27,026,476 $10,290,716
Value of guaranteed
investment contracts 0 0 0 0 0 0
Loans outstanding to
plan participants 0 0 0 0 0 0
Short-term investments 16,169 0 5,411 4,685 3,991 2,082
Accrued dividends
receivable 0 0 0 0 0 0
Accrued interest
receivable 0 0 0 0 0 0
Accounts receivable 0 0 0 0 0 0
-------------- -------------- -------------- -------------- -------------- --------------
Total 172,006,372 7,241,838 82,173,961 45,267,308 27,030,467 10,292,798
-------------- -------------- -------------- -------------- -------------- --------------
Liabilities
Accounts payable 0 0 0 0 0 0
-------------- -------------- -------------- -------------- -------------- --------------
Total 0 0 0 0 0 0
-------------- -------------- -------------- -------------- -------------- --------------
Net assets available
for benefits $172,006,372 $7,241,838 $82,173,961 $45,267,308 $27,030,467 $10,292,798
============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
8
Page 1 of 4
Constellation Energy Group, Inc.
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1998
Investment Funds
Constellation
Energy Interest Income Mutual
Total Common Stock Fund Fund Funds Loan Fund
-------------- -------------- -------------- -------------- --------------
Additions and Net
Investment Activity
- -------------------
Contributions:
Participant eligible
pay contributions $31,966,159 $6,518,510 $5,981,560 $19,466,089 $0
Net Participant rollover
contributions 261,044 10,543 13,380 237,121 0
Employer matching
contributions
Company stock fund 9,830,195 9,830,195 0 0 0
-------------- -------------- -------------- -------------- --------------
42,057,398 16,359,248 5,994,940 19,703,210 0
-------------- -------------- -------------- -------------- --------------
Income:
Dividends
Stock 31,994,119 15,150,492 0 16,843,627 0
Employee stock account 2,361,838 2,361,838 0 0 0
Interest 7,188,349 44,425 7,143,924 0 0
Interest on participant loans 2,604,109 0 0 0 2,604,109
-------------- -------------- -------------- -------------- --------------
44,148,415 17,556,755 7,143,924 16,843,627 2,604,109
-------------- -------------- -------------- -------------- --------------
Participant loan repayments 0 5,602,480 2,747,305 6,338,412 (14,688,197)
-------------- -------------- -------------- -------------- --------------
0 5,602,480 2,747,305 6,338,412 (14,688,197)
-------------- -------------- -------------- -------------- --------------
Participant interfund
transfers (net) 0 (12,432,135) 604,024 11,828,111 0
-------------- -------------- -------------- -------------- --------------
0 (12,432,135) 604,024 11,828,111 0
-------------- -------------- -------------- -------------- --------------
The accompanying notes are an integral part of the financial statements.
(continued on next page)
9
Page 2 of 4
Constellation Energy Group, Inc.
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1998
(Continued)
Investment Funds
Constellation
Energy Interest Income Mutual
Total Common Stock Fund Fund Funds Loan Fund
-------------- -------------- -------------- -------------- --------------
Additions and Net
Investment Activity (Continued)
- -------------------------------
Net appreciation (depreciation) of investments:
Net depreciation
of common stock ($34,526,697) ($34,526,697) $0 $0 $0
Net appreciation
of mutual funds 5,552,393 0 0 5,552,393 0
-------------- -------------- -------------- -------------- --------------
(28,974,304) (34,526,697) 0 5,552,393 0
-------------- -------------- -------------- -------------- --------------
Total additions and net
investment activity 57,231,509 (7,440,349) 16,490,193 60,265,753 (12,084,088)
-------------- -------------- -------------- -------------- --------------
Distributions:
Withdrawal and distribution
payments to participants (48,869,202) (25,425,563) (12,171,635) (10,627,935) (644,069)
Loans to participants 0 (5,008,739) (2,332,558) (5,689,803) 13,031,100
-------------- -------------- -------------- -------------- --------------
Total Distributions (48,869,202) (30,434,302) (14,504,193) (16,317,738) 12,387,031
-------------- -------------- -------------- -------------- --------------
Change in net assets 8,362,307 (37,874,651) 1,986,000 43,948,015 302,943
Net assets available
for benefits,
beginning of year 689,933,521 367,460,490 121,876,883 172,006,372 28,589,776
-------------- -------------- -------------- -------------- --------------
Net assets available
for benefits,
end of year $698,295,828 $329,585,839 $123,862,883 $215,954,387 $28,892,719
============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
10
Page 3 of 4
Constellation Energy Group, Inc.
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1998
(Continued)
T. Rowe Price Mutual Funds
Equity New
Balanced Equity Index 500 Growth International Mid-Cap Horizons New Income Small Cap
Fund Income Fund Fund Stock Fund Stock Fund Growth Fund Fund Fund Value Fund
--------- ------------ ---------- ----------- ----------- ------------ ---------- ----------- -------------
Additions and Net
Investment Activity
- -------------------
Contributions:
Participant
eligible pay
contributions $998,958 $6,057,623 $1,084,667 $5,038,280 $1,526,888 $874,886 $426,369 $162,988 $3,295,430
Net Participant rollover
contributions 2,011 26,919 55,916 48,148 18,709 31,230 18,117 3,972 32,099
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- ------------
1,000,969 6,084,542 1,140,583 5,086,428 1,545,597 906,116 444,486 166,960 3,327,529
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- ------------
Income:
Dividends 289,259 6,580,632 119,531 7,391,324 435,119 159,369 135,496 134,751 1,598,146
Interest 0 0 0 0 0 0 0 0 0
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- ------------
289,259 6,580,632 119,531 7,391,324 435,119 159,369 135,496 134,751 1,598,146
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- ------------
Participant loan
repayments 296,617 2,096,275 332,190 1,718,472 449,247 255,822 130,678 73,669 985,442
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- -----------
296,617 2,096,275 332,190 1,718,472 449,247 255,822 130,678 73,669 985,442
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- -----------
Participant interfund
transfers (net) 652,756 (5,094,767) 9,927,210 849,103 (1,005,635) 6,064,124 2,056,013 1,952,308 (3,573,001)
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- -----------
652,756 (5,094,767) 9,927,210 849,103 (1,005,635) 6,064,124 2,056,013 1,952,308 (3,573,001)
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- ------------
The accompanying notes are an integral part of the financial statements.
(continued on next page)
11
Page 4 of 4
Constellation Energy Group, Inc.
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1998
(Continued)
T. Rowe Price Mutual Funds
Equity New
Balanced Equity Index 500 Growth International Mid-Cap Horizons New Income Small Cap
Fund Income Fund Fund Stock Fund Stock Fund Growth Fund Fund Fund Value Fund
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- -----------
Additions and Net
Investment Activity (Continued)
- -------------------------------
Appreciation (depreciation)
of mutual funds
Net Appreciation
(depreciation) of
mutual funds 982,146 843,807 1,509,126 5,183,878 1,170,118 641,097 (39,564) (67,649) (4,670,566)
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- -----------
982,146 843,807 1,509,126 5,183,878 1,170,118 641,097 (39,564) (67,649) (4,670,566)
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- -----------
Total additions and
net investment
activity 3,221,747 10,510,489 13,028,640 20,229,205 2,594,446 8,026,528 2,727,109 2,260,039 (2,332,450)
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- -----------
Distributions:
Withdrawal and distribution
payments to
participants (395,264) (4,385,808) (435,692) (3,045,823) (638,117) (261,334) (50,157) (43,374) (1,372,366)
Loans to
participants (249,767) (1,894,897) (255,636) (1,871,558) (377,763) (147,424) (71,021) (16,516) (805,221)
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- -----------
Distributions (645,031) (6,280,705) (691,328) (4,917,381) (1,015,880) (408,758) (121,178) (59,890) (2,177,587)
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- -----------
Change in
net assets 2,576,716 4,229,784 12,337,312 15,311,824 1,578,566 7,617,770 2,605,931 2,200,149 (4,510,037)
Net assets available
for benefits,
beginning
of year 7,241,838 82,173,961 0 45,267,308 10,292,798 0 0 0 27,030,467
------------ ----------- ----------- ---------- ----------- ----------- ----------- ----------- -----------
Net assets available
for benefits,
end of year $9,818,554 $86,403,745 $12,337,312 $60,579,132 $11,871,364 $7,617,770 $2,605,931 $2,200,149 $22,520,430
========== ========== ========== ========== ========== ========== ========== ========== ==========
The accompanying notes are an integral part of the financial statements.
12
Page 1 of 4
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1997
Investment Funds
BGE Common Interest Income Mutual
Total Stock Fund Fund Funds Loan Fund
-------------- -------------- -------------- -------------- --------------
Additions and Net
Investment Activity
- -------------------
Contributions:
Participant eligible
pay contributions $30,793,196 $7,760,915 $6,924,097 $16,108,184 $0
Net Participant rollover
contributions 461,112 59,435 5,840 395,837 0
Employer matching
contributions
Company stock fund 9,641,095 9,641,095 0 0 0
-------------- -------------- -------------- -------------- --------------
40,895,403 17,461,445 6,929,937 16,504,021 0
-------------- -------------- -------------- -------------- --------------
Income:
Dividends
Stock 31,201,128 15,239,780 0 15,961,348 0
Employee stock account 2,521,116 2,521,116 0 0 0
Interest 7,395,150 51,690 7,343,460 0 0
Interest on participant loans 2,540,609 0 0 0 2,540,609
-------------- -------------- -------------- -------------- --------------
43,658,003 17,812,586 7,343,460 15,961,348 2,540,609
-------------- -------------- -------------- -------------- --------------
Participant loan repayments 0 6,161,652 3,230,575 5,154,864 (14,547,091)
-------------- -------------- -------------- -------------- --------------
0 6,161,652 3,230,575 5,154,864 (14,547,091)
-------------- -------------- -------------- -------------- --------------
Participant interfund
transfers (net) 0 (24,105,775) (5,407,252) 29,513,027 0
-------------- -------------- -------------- -------------- --------------
0 (24,105,775) (5,407,252) 29,513,027 0
-------------- -------------- -------------- -------------- --------------
The accompanying notes are an integral part of the financial statements.
(continued on next page)
13
Page 2 of 4
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1997
(Continued)
Investment Funds
BGE Common Interest Income Mutual
Total Stock Fund Fund Funds Loan Fund
-------------- -------------- -------------- -------------- --------------
Additions and Net
Investment Activity (Continued)
- -------------------------------
Net appreciation
of investments:
Net appreciation
of common stock $78,944,467 $78,944,467 $0 $0 $0
Net appreciation
of mutual funds 14,446,526 0 0 14,446,526 0
-------------- -------------- -------------- -------------- --------------
93,390,993 78,944,467 0 14,446,526 0
-------------- -------------- -------------- -------------- --------------
Total additions and net
investment activity 177,944,399 96,274,375 12,096,720 81,579,786 (12,006,482)
-------------- -------------- -------------- -------------- --------------
Distributions:
Withdrawal and distribution
payments to participants (37,122,722) (20,981,891) (10,108,584) (5,586,587) (445,660)
Loans to participants 0 (5,646,795) (2,836,201) (4,036,904) 12,519,900
-------------- -------------- -------------- -------------- --------------
Total Distributions (37,122,722) (26,628,686) (12,944,785) (9,623,491) 12,074,240
-------------- -------------- -------------- -------------- --------------
Change in net assets 140,821,677 69,645,689 (848,065) 71,956,295 67,758
Net assets available
for benefits,
beginning of year 549,111,844 297,814,801 122,724,948 100,050,077 28,522,018
-------------- -------------- -------------- -------------- --------------
Net assets available
for benefits,
end of year $689,933,521 $367,460,490 $121,876,883 $172,006,372 $28,589,776
============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
14
Page 3 of 4
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1997
(Continued)
Mutual Funds
Total T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price
Mutual Balanced Equity Growth Small Cap International
Funds Fund Income Fund Stock Fund Value Fund Stock Fund
-------------- -------------- -------------- -------------- -------------- --------------
Additions and Net
Investment Activity
- -------------------
Contributions:
Participant eligible
pay contributions $16,108,184 $923,212 $5,973,535 $4,553,007 $2,898,233 $1,760,197
Net Participant rollover
contributions 395,837 24,970 108,734 203,400 29,249 29,484
-------------- -------------- -------------- -------------- -------------- --------------
16,504,021 948,182 6,082,269 4,756,407 2,927,482 1,789,681
-------------- -------------- -------------- -------------- -------------- --------------
Income:
Dividends 15,961,348 237,726 7,909,644 5,548,590 1,720,334 545,054
Interest 0 0 0 0 0 0
-------------- -------------- -------------- -------------- -------------- --------------
15,961,348 237,726 7,909,644 5,548,590 1,720,334 545,054
-------------- -------------- -------------- -------------- -------------- --------------
Participant loan repayments 5,154,864 294,799 2,007,716 1,457,240 836,170 558,939
-------------- -------------- -------------- -------------- -------------- --------------
5,154,864 294,799 2,007,716 1,457,240 836,170 558,939
-------------- -------------- -------------- -------------- -------------- --------------
Participant interfund
transfers (net) 29,513,027 2,305,383 8,587,423 7,818,259 8,744,960 2,057,002
-------------- -------------- -------------- -------------- -------------- --------------
29,513,027 2,305,383 8,587,423 7,818,259 8,744,960 2,057,002
-------------- -------------- -------------- -------------- -------------- --------------
The accompanying notes are an integral part of the financial statements.
(continued on next page)
15
Page 4 of 4
Baltimore Gas and Electric Company
Employee Savings Plan
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1997
(Continued)
Mutual Funds
Total T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price T. Rowe Price
Mutual Balanced Equity Growth Small Cap International
Funds Fund Income Fund Stock Fund Value Fund Stock Fund
-------------- -------------- -------------- -------------- -------------- --------------
Additions and Net
Investment Activity (Continued)
- -------------------------------
Appreciation (depreciation)
of mutual funds
Net Appreciation (depreciation)
of mutual funds 14,446,526 629,485 9,070,273 2,526,215 2,685,419 (464,866)
-------------- -------------- -------------- -------------- -------------- --------------
14,446,526 629,485 9,070,273 2,526,215 2,685,419 (464,866)
-------------- -------------- -------------- -------------- -------------- --------------
Total additions and net
investment activity 81,579,786 4,415,575 33,657,325 22,106,711 16,914,365 4,485,810
-------------- -------------- -------------- -------------- -------------- --------------
Distributions:
Withdrawal and distribution
payments to participants (5,586,587) (241,661) (2,822,808) (1,354,296) (863,021) (304,801)
Loans to participants (4,036,904) (183,503) (1,747,719) (1,186,463) (585,591) (333,628)
-------------- -------------- -------------- -------------- -------------- --------------
Total Distributions (9,623,491) (425,164) (4,570,527) (2,540,759) (1,448,612) (638,429)
-------------- -------------- -------------- -------------- -------------- --------------
Change in net assets 71,956,295 3,990,411 29,086,798 19,565,952 15,465,753 3,847,381
Net assets available
for benefits,
beginning of year 100,050,077 3,251,427 53,087,163 25,701,356 11,564,714 6,445,417
-------------- -------------- -------------- -------------- -------------- --------------
Net assets available
for benefits,
end of year $172,006,372 $7,241,838 $82,173,961 $45,267,308 $27,030,467 $10,292,798
============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements.
16
CONSTELLATION ENERGY GROUP, INC.
EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. GENERAL DESCRIPTION OF THE PLAN
Baltimore Gas and Electric Company (BGE) established the Baltimore
Gas and Electric Company Employee Savings Plan and Trust Agreement on
July 1, 1978. Effective April 30, 1999, BGE shareholders approved the
formation of a holding company Constellation Energy Group, Inc. (the
Company) and the Baltimore Gas and Electric Company Employee Savings
Plan was amended, restated and renamed as the Constellation Energy
Group, Inc. Employee Savings Plan (Plan). There were no other
significant Plan changes made at that time. T. Rowe Price Trust Company
(T. Rowe Price) is the trustee (Trustee). In addition, TRP Retirement
Plan Services, Inc., is the provider of administrative services for the
Plan.
The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA). Employees become eligible to make
contributions one month after date of hire. After meeting this
eligibility requirement, participants are allowed to contribute up to
15% of their eligible pay through regular payroll deductions, under a
deferred compensation option and/or a thrift option. Participant
contributions under the deferred compensation option are excluded from
current year's taxable income, whereas participant contributions under
the thrift option are included in current year's taxable income. The
Company contributes one-half of the first 6% of eligible pay contributed
by participants.
The Plan accepts rollovers of employees' eligible rollover
distributions from other qualified plans.
There are eleven investment fund choices offered for participant
contributions: the Constellation Energy Common Stock Fund (formerly
the BGE Common Stock Fund), the Interest Income Fund and nine mutual
funds. The Interest Income Fund is managed by T. Rowe Price Stable
Asset Management, Inc. The mutual funds consist of the T. Rowe Price
Balanced Fund, the T. Rowe Price Equity Income Fund, the T. Rowe Price
Growth Stock Fund, the T. Rowe Price International Stock Fund, and the
T. Rowe Price Small Cap Value Fund and effective January 1, 1998, the
following four funds were added, the T. Rowe Price New Income Fund,
the T. Rowe Price Equity Index 500 Fund, the T. Rowe Price Mid-Cap
Growth Fund and the T. Rowe Price New Horizons Fund (mutual funds).
All Company contributions are initially invested by the Trustee in the
Constellation Energy Common Stock Fund.
17
1. GENERAL DESCRIPTION OF THE PLAN (Continued)
Participant and Company matching contributions are sent, each pay
period, to the Trustee, who invests participant contributions as
designated, either in (1) the Constellation Energy Common Stock Fund for
the purchase (on the open market) or other acquisition (as described in
Note 2) of shares of the Company's common stock; (2) the nine T. Rowe
Price mutual funds; or (3) the Interest Income Fund, as more fully
described below.
Dividends and earnings received on any shares held in participants'
accounts, except for the shares of Company common stock held in their
employee stock accounts, whether in the Constellation Energy Common
Stock Fund, or the mutual funds are automatically used to purchase or
otherwise acquire additional shares for reinvestment in the
corresponding fund, and all earnings on each participant's investment in
the Interest Income Fund are automatically reinvested in that fund.
Dividends received on shares of Company common stock held in a
participant's employee stock account are invested by the Trustee in
income-producing investments. Annually, a check is sent to the
participant representing the total dividends credited to the
participant's employee stock account. Any income earned on the dividends
is not paid out annually, but is used to purchase or otherwise acquire
additional shares of Company common stock for reinvestment in the
participant's employee stock account.
The total number of common stock or mutual fund shares purchased
for any participant depends upon: (1) the participant's eligible pay;
(2) the amount of the participant's eligible pay that is contributed;
(3) the amount of that contribution which is designated for investment
in the Constellation Energy Common Stock Fund or the mutual funds; (4)
the amount of Company matching contributions invested in the
Constellation Energy Common Stock Fund; (5) the reinvested dividends and
earnings on each investment fund; and (6) the price of common stock or
mutual fund shares, at the time of purchase, for each investment fund.
18
1. GENERAL DESCRIPTION OF THE PLAN (Continued)
Amounts held in the Interest Income Fund are invested in contracts
issued by insurance companies or other financial institutions and in
short term investments. Each contract specifies a fixed or variable rate
of interest for a certain period of time. The interest rate earned by
the Interest Income Fund is a blend of the rates under the various
investments. The annual effective rates for 1998 and 1997 were 6.16% and
6.26%, respectively. The crediting interest rates for the investment
contracts as of December 31, 1998 and 1997 were 5.94% and 6.65%,
respectively. At December 31, 1998 and 1997, there were no investments
in the aggregate contracts of any issuer in the Interest Income Fund
which exceeded 5% of net assets available for benefits. Contracts
included in the Interest Income Fund have been reported at their
contract value, which approximates fair market value. All the
investments in this fund are held for purposes other than trading.
Participants have the right, once a month, to change the amount of
their payroll deductions. Participants also have the right to change, on
a daily basis, the percentage of their future contributions being
invested in each of the eleven investment funds as provided in the Plan.
In addition, participants are allowed to initiate, on a daily
basis, a transfer of the value of their contributions, including
earnings, among the eleven investment funds. Furthermore, as of the
beginning of the calendar year in which participants reach age 56, they
may initiate, on a daily basis, a transfer of the value of their Company
contributions and employee stock account among the eleven investment
funds.
Under a loan program, participants may borrow up to one-half of
their total account balance, with a minimum of $1,000 and a maximum of
$50,000. Participants may elect up to five years to repay the loan,
unless the loan is used for the purchase of a principal residence, in
which case they may elect up to thirty years for repayment. Participants
are allowed to have up to two loans outstanding at any time. Principal
and interest are repaid through regular payroll deductions or by direct
payment. The interest rate on amounts borrowed is set at the time the
loan is executed and remains in effect for the duration of the loan. The
interest rate for loans is equal to the prime rate plus 1% on the last
day of the month preceding the month the loan is initiated.
The Plan allows participants to postpone, until withdrawal or
distribution, any income tax liability on (1) all Company contributions;
(2) participant contributions under the deferred compensation option;
and (3) earnings on their contributions and Company contributions.
Participant contributions under the thrift option are included in
current year's taxable income.
19
1. GENERAL DESCRIPTION OF THE PLAN (Continued)
Withdrawals of thrift contributions and Company contributions,
including earnings, are allowed to be initiated on a daily basis. All
contributions held in participants' accounts are immediately 100%
vested. However, participants who withdraw unmatured basic contributions
(contributions of up to the first 6% of the participant's eligible pay
that had not remained in the Plan for two full calendar years) are
suspended from making payroll contributions to the Plan for twelve
months.
Distributions to participants who retire or terminate active
employment are automatically deferred until they either reach age 65 or
cease active employment, whichever is later, unless they request an
earlier or later distribution. Generally, participants who reach age 70
1/2 must begin receiving their Plan distribution by April 1 of the
following year. Furthermore, active employees who attain age 59 1/2 may
request to receive a distribution of their deferred compensation account
balances.
The Plan is administered by the Director - Benefits, Human
Resources Division of the Baltimore Gas and Electric Company, as Plan
Administrator. Administrative fees charged by institutions, which issue
contracts for the Interest Income Fund, are reflected in the effective
rate earned by the fund. All other fees and expenses of the Plan,
including those of the Trustee, are currently paid by the Company.
Brokerage fees, commissions and transfer taxes associated with the
purchase, sale, or transfer of shares of common stock for the
Constellation Energy Common Stock Fund and mutual fund shares for the
nine mutual funds are borne by those funds.
Although it has not expressed any intent to do so, the Company has
the right under the Plan to discontinue its contributions at any time
and to terminate the Plan subject to the provisions of ERISA.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Plan are prepared under the accrual
method of accounting.
Shares of common stock for participant contributions and Company
matching contributions currently are purchased for the Constellation
Energy Common Stock Fund on the open market, through new issuances or by
other acquisition. Mutual fund shares for the T. Rowe Price Mutual Funds
are purchased on the open market, except the Trustee may purchase from
time to time
20
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
a small number of shares at current market value from participants
making withdrawals or interfund transfers or obtaining loans from the
Plan. The cost of shares sold from the Constellation Energy Common Stock
Fund and the T. Rowe Price Mutual Funds, as a result of participant
distributions, withdrawals, interfund transfers or loans, is determined
under the average cost method.
Withdrawals and distributions to participants are recorded when
paid.
Leveraging provisions are included in the Plan, but these
provisions have not yet been utilized.
Shares of common stock in the Constellation Energy Common Stock
Fund held by T. Rowe Price Trust Company are valued as of December 31,
1998 and 1997, using the quoted closing market price as reported by the
"NYSE--Composite Transactions" published in the eastern edition of The
Wall Street Journal. Mutual fund shares held in the T. Rowe Price Mutual
Funds, are valued as of December 31, 1998 and 1997 respectively, using
the net asset value price of such shares as quoted by the "Mutual Fund
Quotations" for such date in the eastern edition of The Wall Street
Journal. Participant loans are valued at cost, which approximates fair
value.
The Plan's investments are stated at fair value except for the
various contracts issued by insurance companies or other financial
institutions, under the Interest Income Fund, which are fully
benefit-responsive and are stated at contract value. Contract value is
equal to the aggregate of the net contributions and earnings thereon.
The Plan presents in the Statement of Changes in Net Assets
Available for Benefits the net appreciation (depreciation) in the fair
value of its investments which consists of realized gains or losses and
unrealized appreciation (depreciation) on those investments.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from
those estimates.
21
3. SECURITIES HELD IN TRUST
Shown below are the shares, with respective market value and cost,
which were held in trust in the Constellation Energy Common Stock Fund
and the mutual funds on December 31, 1998 and 1997.
SHARES HELD MARKET
IN TRUST VALUE COST
CONSTELLATION ENERGY COMMON STOCK FUND
December 31, 1998 10,506,574 $324,473,557 $234,742,256
December 31, 1997 10,624,752 $362,505,984 $226,205,259
T. ROWE PRICE BALANCED FUND
December 31, 1998 526,711 $9,791,132 $8,269,771
December 31, 1997 437,838 $7,241,838 $6,474,294
T. ROWE PRICE EQUITY INCOME FUND
December 31, 1998 3,275,854 $86,216,947 $72,666,085
December 31, 1997 3,151,843 $82,168,550 $66,812,537
T. ROWE PRICE EQUITY INDEX 500 FUND
December 31, 1998 368,300 $12,293,072 $10,877,044
December 31, 1997 - - -
T. ROWE PRICE GROWTH STOCK FUND
December 31, 1998 1,883,790 $60,411,423 $52,038,870
December 31, 1997 1,561,318 $45,262,623 $40,949,796
T. ROWE PRICE INTERNATIONAL STOCK FUND
December 31, 1998 789,399 $11,832,199 $11,031,889
December 31, 1997 766,819 $10,290,716 $10,514,050
T. ROWE PRICE MID-CAP GROWTH FUND
December 31, 1998 222,531 $7,583,783 $6,935,540
December 31, 1997 - - -
T. ROWE PRICE NEW HORIZONS FUND
December 31, 1998 111,011 $2,590,838 $2,617,668
December 31, 1997 - - -
T. ROWE PRICE NEW INCOME FUND
December 31, 1998 248,983 $2,193,307 $2,254,408
December 31, 1997 - - -
T. ROWE PRICE SMALL CAP VALUE FUND
December 31, 1998 1,182,870 $22,437,683 $24,488,710
December 31, 1997 1,154,978 $27,026,476 $23,821,921
22
4. TAX STATUS
The Company has received the latest favorable determination letter
from the Internal Revenue Service, dated May 2, 1997, with respect to
the Plan as restated effective June 30, 1995, qualifying the Plan as a
stock bonus plan under Section 401 of the Internal Revenue Code (Code)
and an employee stock ownership plan under Section 4975(e)(7) of the
Code and exempting the Plan from federal income tax under Section 501 of
the Code.
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for
benefits per the financial statements to the Form 5500:
December 31,
1998 1997
Net assets available
for benefits per the
financial statements $698,295,828 $689,933,521
Amounts requested by
participant's for
withdrawals and
distributions at
December 31, but paid
in subsequent years (104,756) (214,050)
------------- -------------
Net assets available
for benefits
per the Form 5500 $698,191,072 $689,719,471
============= =============
23
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 (Continued)
The following is a reconciliation of withdrawals and distributions
paid to participants per the financial statements to the Form 5500:
Year ended
December 31, 1998
Withdrawals and distributions paid
to participants per the
financial statements $48,869,202
Add:
Amounts requested by participants for
withdrawals and distributions at
December 31, 1998 but paid in 1999 104,756
Less:
Amounts requested by participants for
withdrawals and distributions at
December 31, 1997 but paid in 1998 (214,050)
-------------
Withdrawals and distributions to
participants per the Form 5500 $48,759,908
=============
Withdrawals and distributions to participants recorded on the Form
5500 for benefit claims include amounts that have been processed and
approved for payment prior to December 31 but not yet paid as of that
date.
24
Page 1 of 3
Constellation Energy Group (EIN 52-0280210)
T. Rowe Price, Trustee - Constellation Energy Group, Inc., Employee Savings Plan
Item 27(a) - Schedule of Assets Held for Investment Purposes
Decemberr 31, 1998
Current Maturity
Identity of Issue Description of Asset Cost Value Date
*
Group Annuity Contract with Insurance Company Guaranteed
Bayerische Landesbnk Interest Contract -
Company (98-005-A) Guaranteed Interest - 5.95% 3,052,816 3,052,816 9/13/2002
Group Annuity Contract with Insurance Company Guaranteed
Bayerische Landesbnk Interest Contract -
Company (98-005-B) Guaranteed Interest - 5.92% 3,091,963 3,091,963 6/25/2003
Group Annuity Contract with Insurance Company Guaranteed
Canada Life Assurance Interest Contract -
Company (P-45870) Guaranteed Interest - 7.20% 3,115,901 3,115,901 6/15/2000
Group Annuity Contract with Insurance Company Guaranteed
Canada Life Assurance Interest Contract -
Company (P-45904) Guaranteed Interest - 6.31% 6,016,115 6,016,115 12/15/2000
Group Annuity Contract with Insurance Company Guaranteed
Canada Life Assurance Interest Contract -
Company (P-45908) Guaranteed Interest - 6.23% 1,518,995 1,518,995 10/16/2000
Group Annuity Contract with Insurance Company Guaranteed
Continental Assurance Interest Contract -
Company (GP-24100) Guaranteed Interest - 6.32% 7,268,875 7,268,875 9/15/2000
Group Annuity Contract with Insurance Company Guaranteed
John Hancock Life Interest Contract -
(GAC-8444) Guaranteed Interest - 5.81% 5,832,065 5,832,065 3/15/2001
Group Annuity Contract with Insurance Company Guaranteed
Life Insurance Company of Interest Contract - 50% 3/1/2002
Virginia (GS-2987) Guaranteed Interest - 7.25% 6,771,753 6,771,753 Balance 4/1/2002
Group Annuity Contract with Insurance Company Guaranteed
Life Insurance Company of Interest Contract -
Virginia (GS-3169) Guaranteed Interest - 5.79% 2,035,470 2,035,470 12/15/2002
Group Annuity Contract with Insurance Company Guaranteed
Monumental Life Interest Contract - 50% 2/15/2003
(MDA00008FR) Guaranteed Interest - 5.71% 3,511,734 3,511,734 Balance 4/15/2003
Group Annuity Contract with Insurance Company Guaranteed
Monumental Life Interest Contract - 50% 4/15/2002
(BDA00729FR) Guaranteed Interest - 6.82% 3,864,436 3,864,436 Balance 6/14/2002
Group Annuity Contract with Insurance Company Guaranteed
New York Life Interest Contract -
(GA-06750-002) Guaranteed Interest - 6.35% 3,530,569 3,530,569 3/31/1999
Group Annuity Contract with Insurance Company Guaranteed
Pacific Mutual Life Interest Contract -
(G-26263.01) Guaranteed Interest - 7.31% 7,092,691 7,092,691 6/14/2001
(Continued on next page)
* Current Value of the guaranteed interest contracts equal contract value.
25
Page 2 of 3
Constellation Energy Group (EIN 52-0280210)
T. Rowe Price, Trustee - Constellation Energy Group, Inc., Employee Savings Plan
Item 27(a) - Schedule of Assets Held for Investment Purposes
December 31, 1998
Current Maturity
Identity of Issue Description of Asset Cost Value Date
*
Group Annuity Contract with Insurance Company Guaranteed
Protective Life Interest Contract -
(GA-1174) Guaranteed Interest - 7.18% $3,879,256 $3,879,256 3/15/2000
Group Annuity Contract with Insurance Company Guaranteed
Protective Life Interest Contract -
(GA-1348) Guaranteed Interest - 6.77% 2,627,614 2,627,614 1/15/2002
Group Annuity Contract with Insurance Company Guaranteed
Protective Life Interest Contract -
(GA-1391) Guaranteed Interest - 7.31% 3,376,728 3,376,728 4/15/2002
Group Annuity Contract with Insurance Company Guaranteed
Prudential Interest Contract - 50% 01/31/99
(GA-7088-213) Guaranteed Interest - 6.48% 4,072,434 4,072,434 Balance 05/31/99
Group Annuity Contract with Insurance Company Guaranteed
SAFECO Life Interest Contract - 2.1 Mil 11/19/2001
(LP1055917-01) Guaranteed Interest - 7.00% 4,210,471 4,210,471 Balance 12/19/2001
Group Annuity Contract with Insurance Company Guaranteed
SAFECO Life Interest Contract - $2.1 Mil 11/19/2001
(LP1055917-02) Guaranteed Interest - 7.00% 4,210,471 4,210,471 Balance 12/19/2001
Group Annuity Contract with Insurance Company Guaranteed
SAFECO Life Interest Contract -
(LP1055917-03) Guaranteed Interest - 6.85% 3,814,378 3,814,378 9/18/2001
Group Annuity Contract with Insurance Company Guaranteed
Security Life Denver Interest Contract -
(FA-0494) Guaranteed Interest - 6.82% 2,842,375 2,842,375 2/14/2002
Group Annuity Contract with Insurance Company Guaranteed
Transamerica Occ. Interest Contract - 50% 09/15/1999
(51266-00) Guaranteed Interest - 7.16% 9,582,943 9,582,943 Balance 12/15/1999
Investment Contract with Synthetic Investment Agreement
State Street Bank and Trust Interest Contract
Company (98255) Variable Interest-5.984% initially 20,145,477 20,145,477 None
------------ ------------
115,465,530 115,465,530
(Continued on next page)
* Current Value of the guaranteed interest contracts equal contract value.
26
Page 3 of 3
Constellation Energy Group (EIN 52-0280210)
T. Rowe Price, Trustee - Constellation Energy Group, Inc., Employee Savings Plan
Item 27(a) - Schedule of Assets Held for Investment Purposes
December 31, 1998
Current Maturity
Identity of Issue Description of Asset Cost Value Date
*
** Constellation Energy Group, Inc. Common Stock - no par 234,742,256 324,473,557 -
T. Rowe Price Balanced Fund Mutual Fund 8,269,771 9,791,132 -
T. Rowe Price Equity Income Fund Mutual Fund 72,666,085 86,216,947 -
T. Rowe Price Equity Index 500 Fund Mutual Fund 10,877,044 12,293,072 -
T. Rowe Price Growth Stock Fund Mutual Fund 52,038,870 60,411,423 -
T. Rowe Price International Fund Mutual Fund 11,031,889 11,832,199 -
T. Rowe Price Mid-Cap Growth Fund Mutual Fund 6,935,540 7,583,783 -
T. Rowe Price New Horizons Fund Mutual Fund 2,617,668 2,590,838 -
T. Rowe Price New Income Fund Mutual Fund 2,254,408 2,193,307 -
T. Rowe Price Small Cap Value Fund Mutual Fund 24,488,710 22,437,683 -
** Loan Fund (Interest) Participant Loan Fund - 28,891,912 -
Interest Range 8.25 - 9.75%
T. Rowe Price Prime Reserve Fund Money Market Mutual Fund 7,943,304 7,943,304 -
T. Rowe Price Short Term Money Market Bank Account 199,044 199,044 -
Settlement Account
T. Rowe Price Short Term Money Market Bank Account 104,842 104,842 -
Distribution Account
------------ ------------
Total $549,634,961 $692,428,573
=========== ===========
* Current Value of the guaranteed interest contracts equal contract value.
** Parties-in-Interest
27