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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
September 27, 2001
(Date of earliest
event reported)
EXELON [LOGO]
--------------------------------------------------------------------------------
News Release
From: Exelon FOR IMMEDIATE RELEASE
Corporate Communications ---------------------
P.O. Box 805379 September 27, 2001
Chicago, IL 60680-5379
Contact: Don Kirchoffner for Media
312.394.3001
Linda Byus for Analysts/Investors
312.394.7696
Eunice Collins for Analysts/Investors
312.394.8354
Exelon Corporation Announces Lower Earnings Outlook
Chicago (September 27, 2001) -- As a result of economic and market weaknesses
and volatile energy markets, Exelon is reducing its 2001 earnings guidance.
Exelon previously issued guidance that its third quarter 2001 earnings per share
(EPS) would represent 30%-40% of its $4.50 EPS target for 2001. Exelon currently
expects its third quarter earnings to be in a range of $1.10 to $1.20 per share.
Pro forma third quarter 2000 EPS (assuming the merger occurred on January 1,
2000) was $1.27. Given reduced expectations for the third quarter and the recent
economic uncertainty, Exelon's full year earnings guidance is being reduced to a
range of $4.30 to $4.45 EPS. Exelon's core operations continue to perform well.
The nuclear fleet has operated above target with a 96% capacity factor through
August 31. Energy Delivery operations have provided improved reliability with
below-budget expenditures, and merger-related synergies continue to be on target
for $148 million in savings this year.
Factors influencing the company's results are as follows:
After very strong first and second quarters, weather-driven reductions in
energy-market prices and volatility adversely affected Exelon Power Team
performance in the third quarter. In addition, Generation recorded an increase
in its reserves for litigation of $14 million in the quarter.
The company has identified approximately 450 positions for elimination above the
2,900 positions previously announced in conjunction with the merger. Additional
severance charges will be incurred in the third and fourth quarters related to
the 450 positions. In the third quarter the severance charge is approximately
$30 million and the fourth quarter charge is estimated to be $18 million. As a
result of these additional position eliminations, operating costs will be lower
going forward.
Page 2
--Continued--
Exelon Enterprises has experienced weakness throughout the year in a number of
its businesses related to the downturn in the telecommunications market. In the
third quarter, it anticipates a $36 million write-down of its investment in
Corvis, a telecommunications equipment manufacturer. The Corvis shares were
received through venture capital fund investments. Margins in Exelon
Infrastructure Services are greatly reduced, due to the fall-off in
telecommunications infrastructure build-out across the country. Growth in this
business group is severely restricted. The downturn has also limited new
investment opportunities.
"Our performance in the first half of the year was very strong and exceeded the
market's expectations. We are disappointed in the market conditions that
affected power marketing and Enterprises. While we instituted cost-containment
efforts to address the economic weaknesses in the third quarter, the revenue
impact of recent events cannot yet be quantified," said Corbin A. McNeill,
Co-CEO.
John Rowe, Exelon Co-CEO, said, "The world has changed significantly over the
course of this year, but the fundamentals of our core businesses remain strong.
We met our commitments to our customers by keeping the lights on and improving
reliability. The original EPS target, while a significant challenge today, has
the full focus and attention of Exelon's management."
Exelon expects to release third quarter results before the financial markets
open on October 23, 2001.
###
This press release 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
Discussions 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 press release. 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 press release.
###
Exelon Corporation is one of the nation's largest electric utilities with
approximately five million customers and more than $15 billion in annual
revenues. The company has one of the industry's largest portfolios of
electricity generation capacity, with a nationwide reach and strong positions in
the Midwest and Mid-Atlantic. Exelon distributes electricity to approximately
five million customers in Illinois and Pennsylvania and gas to 425,000 customers
in the Philadelphia area. The company also has holdings in such competitive
businesses as energy, infrastructure services and energy services. Exelon is
headquartered in Chicago and trades on the NYSE under the ticker EXC.