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 23, 2001
(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) 394-4321
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
Item 9. Regulation FD Disclosure
As previously announced, on October 23, 2001, Exelon Corporation conducted its
Third Quarter Earnings Conference Call. Members of management participating in
the call included Corbin A. McNeill, Jr., Chairman and Co-CEO, John W. Rowe,
President and Co-CEO, and Ruth Ann M. Gillis, Senior Vice President and Chief
Financial Officer. The call was open to all on a listen-only basis and was audio
web-cast. Telephone replays will be available through October 31, 2001; the U.S.
call in number is 877-519-4471, the international call-in number is
973-341-3080, and the confirmation code is 2894650. The call will also be
archived on Exelon's web site, www.exeloncorp.com; please choose the Investor
Relations page.
Highlights and clarifications of the call are as follows:
1. Corporate
Management provided additional information with respect to the earnings
outlook for the year 2002, which was revised to a range of $4.45 to $4.85 per
diluted share, a reduction from previous guidance of $4.95 per diluted share.
The revised earnings outlook reflects the benefit of the discontinuance of
goodwill amortization effective January 1, 2002. (In 2001, goodwill amortization
is expected to total $151 million, or $0.47 per share). Approximately one-half
of the decline in the 2002 earnings outlook, after considering the
discontinuance of goodwill amortization, is attributable to Exelon Generation,
one-fourth reflects lower earnings in Exelon Enterprises, and the remainder of
the decline reflects lower earnings expectations in Exelon Energy Delivery and
other miscellaneous factors.
In response to questions about the use of excess cash, management
indicated that its first preference is to use excess cash for generation-related
acquisitions. Management stated it believes that there may be opportunities in
the next year to acquire generation facilities currently under development.
Management's second preference is to make an acquisition of a smaller integrated
utility, provided that such an acquisition would be accretive to earnings.
Management's third preference is to repurchase stock or increase the dividend.
Management stated that although the stock repurchase and dividend increase
alternatives are being explored and will be reviewed with the board of directors
in the next few months, the company is taking a considered approach to these
alternatives.
2. Generation
Management noted that lower market prices for electricity and lower
than planned acquisition growth in its generation asset portfolio have adversely
affected the earnings outlook for Exelon Generation. Although accretive
acquisitions did not materialize to the extent expected in the first nine months
of 2001, management stated that Exelon is currently evaluating the acquisition
of generation facilities, which if successful, could be announced in the fourth
quarter of 2001. In developing the revised earnings guidance, Exelon assumed
around-the-clock market prices for electricity of $26 to $29 per megawatthour in
2002, depending upon the region. Approximately 40% of Exelon Generation sales
are market sales, including off-peak sales. Management indicated that Exelon is
reviewing whether the "rule-of-thumb" for sensitivity to changes in wholesale
electricity market prices issued in November 2000 (a $1 per megawatthour change
in the market price for electricity has a $0.07 earnings per share effect) is
applicable under the company's new assumptions for the year 2002.
3. Enterprises
Management stated that it expects Exelon Enterprises earnings before
interest and taxes (EBIT) for 2001 to be a loss of approximately $100 million,
as compared to an expected positive EBIT of $60 million. Management further
stated that it is responding to the changes in the Exelon Enterprises businesses
by reducing the workforce by over 1,500 employees, halting acquisitions, and
reviewing each of the businesses for possible sale. Management views the current
market as unfavorable for selling these businesses, and stated it would not
engage in any "fire sales". Instead, management anticipates significant efforts
to achieve the merger synergies of recent Exelon Enterprises acquisitions and to
improve the operating results of these businesses. Management anticipates that
it may take one to two years for such improvements to be achieved and for market
conditions to improve enough for considered decisions to be made to sell or
retain certain of the businesses, although others may be saleable sooner.
Management also anticipates Exelon Enterprises results for 2002 to be a loss of
$0.07 per diluted share, with an upside potential of $0.03-$0.04 per diluted
share and a downside potential of $0.06-$0.07 per diluted share, and
anticipates Exelon Enterprises has a chance to break even in 2003. The
anticipated financial results for Exelon Enterprises for 2002 and 2003 are
subject to change should one or more businesses be sold.
4. Energy Delivery
With respect to Exelon Energy Delivery, management stated that the EBIT
estimate for 2001 is approximately $100 million above budget for the year, but
stated that sales growth-rate assumptions for 2002 have been reduced to 0.9% and
0.6% for the ComEd and PECO Energy service territories, respectively, primarily
as a reflection of the slowing economy.
* * * * *
This report contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements are based
on management's current expectations and are subject to uncertainty and changes
in circumstances. Actual results may vary materially from the expectations
contained herein. The forward-looking statements herein include statements about
future financial and operating results of Exelon. Economic, business,
competitive and/or regulatory factors affecting Exelon's businesses generally
could cause actual results to differ materially from those described herein. For
a discussion of the factors that could cause actual results to differ
materially, please see Exelon's filings with the Securities and Exchange
Commission, particularly those discussed in "Management's Discussion and
Analysis of Financial Condition and Results of Operations-- Outlook" in Exelon's
2000 Annual Report. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this report.
Exelon does not undertake any obligation to publicly release any revisions to
these 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
/S/ Ruth Ann Gillis
-----------------------------------
Ruth Ann Gillis
Senior Vice President and Chief Financial Officer
Exelon Corporation
October 24, 2001