UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 1-16169
Exelon Corporation Employee Savings Plan
(Full title of the plan)
EXELON CORPORATION
(a Pennsylvania Corporation)
10 South Dearborn Street - 37th Floor
P.O. Box 805379
Chicago, Illinois 60680-5379
(312) 394-7398
(Name of the issuer of the securities held pursuant to the plan
and the address of its principal executive offices)
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
INDEX TO FORM 11-K
Page No.
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Independent Auditor's Report 2
Financial Statements:
Statements of Net Assets Available for Benefits,
as of December 31, 2002 and 2001 3
Statements of Changes in Net Assets Available for
Benefits for the Years Ended December 31, 2002 and 2001 4
Notes to Financial Statements 5
Supplemental Schedules:
Schedule of Assets (Held at End of Year) as of
December 31, 2002, Schedule H, Part IV, Item 4i, Form 5500 15
Note: All other schedules of additional information required by the
Department of Labor Rules and Regulations for Reporting and
Disclosure under ERISA have been omitted because they are not
applicable.
Exhibit Index 17
Signatures 18
Exhibits 19
INDEPENDENT AUDITOR'S REPORT
To the Exelon Corporation
Employee Savings Plan Committee:
We have audited the accompanying statements of net assets available for benefits
of the EXELON CORPORATON EMPLOYEE SAVINGS PLAN (the "Plan") as of December 31,
2002 and 2001, and the related statements of changes in net assets available for
benefits 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 audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 audits provide 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 EXELON
CORPORATION EMPLOYEE SAVINGS PLAN as of December 31, 2002 and 2001, and the
changes in net assets available for benefits for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
at end of year as of December 31, 2002 is presented for purposes of additional
analysis and is not a required part of the basic financial statements but is
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, as amended. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.
WASHINGTON, PITTMAN & McKEEVER, LLC
Chicago, Illinois
June 19, 2003
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EXELON CORPORATION EMPLOYEE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2002 AND 2001
2002 2001
------------------------ ------------------------
ASSETS
INVESTMENTS
Investments at Current Value:
Exelon Corporation Common Stock $ 119,920,775 $ 111,985,000
Registered Investment Companies 1,110,218,146 1,367,959,036
Collective Institutional Investment Trust Funds 551,281,035 462,474,796
Participant Loans 60,712,146 64,150,587
------------------------ ------------------------
1,842,132,102 2,006,569,419
Investment Contracts at Contract Value 97,216,780 148,311,143
------------------------ ------------------------
Total Investments 1,939,348,882 2,154,880,562
------------------------ ------------------------
CASH 3,057,853 1,135,323
------------------------ ------------------------
RECEIVABLES
Accrued Dividends and Interest 2,192 1,873
Due from Broker for Securities Sold - 288,890
Other Receivables 210,731 130,440
------------------------ ------------------------
Total Receivables 212,923 421,203
------------------------ ------------------------
TOTAL ASSETS 1,942,619,658 2,156,437,088
------------------------ ------------------------
LIABILITIES
Due to Broker for Securities Purchased 790,862 -
Accrued Administrative Expenses and Other
Liabilities 594,014 540,924
------------------------ ------------------------
TOTAL LIABILITIES 1,384,876 540,924
------------------------ ------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 1,941,234,782 $ 2,155,896,164
======================== ========================
The accompanying Notes to Financial Statements are an integral part of the above statements.
3
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
2002 2001
---------------------- ----------------------
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
INVESTMENT INCOME:
Dividends on Exelon Corporation
Common Stock $ 4,124,166 $ 3,936,916
Income from Investments in Group, Mutual and
Collective Investment Trust Funds 33,164,826 46,040,616
Income from Participant Loans 5,071,752 5,078,979
Net Depreciation of Investments (278,869,761) (221,031,634)
---------------------- ----------------------
Total Investment Income (236,509,017) (165,975,123)
---------------------- ----------------------
CONTRIBUTIONS:
Participants 102,458,404 96,543,087
Employers 55,105,256 50,582,679
Rollovers 8,471,512 6,522,082
---------------------- ----------------------
Total Contributions 166,035,172 153,647,848
---------------------- ----------------------
TOTAL ADDITIONS (70,473,845) (12,327,275)
---------------------- ----------------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
WITHDRAWALS BY PARTICIPANTS 140,035,358 105,341,526
DIVIDEND DISTRIBUTIONS 4,123,702 3,936,916
ADMINISTRATIVE EXPENSES 1,029,700 1,032,875
---------------------- ----------------------
TOTAL DEDUCTIONS 145,188,760 110,311,317
---------------------- ----------------------
NET DECREASE BEFORE TRANSFERS (215,662,605) (122,638,592)
NET ASSETS TRANSFERRED FROM OTHER PLANS 1,080,732 724,493,005
NET ASSETS TRANSFERRED TO OTHER PLANS (79,509) -
---------------------- ----------------------
NET (DECREASE) INCREASE AFTER TRANSFERS (214,661,382) 601,854,413
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 2,155,896,164 1,554,041,751
---------------------- ----------------------
END OF YEAR $ 1,941,234,782 $ 2,155,896,164
====================== ======================
The accompanying Notes to Financial Statements are an integral part of the above statements.
4
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
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NOTES TO FINANCIAL STATEMENTS
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(1) Description of Plan. The following description of the Exelon Corporation
Employee Savings Plan (the "Plan") is provided for general information purposes
only. The official text of the Plan, as amended, should be read for more
complete information.
a. General. The Plan was established by Commonwealth Edison
Company, effective March 1, 1983, to provide a systematic savings program for
eligible employees and to supplement such savings with employer contributions.
On March 30, 2001 the Commonwealth Edison Employee Savings and Investment Plan
was combined with the PECO Energy Company Employee Savings Plan to become the
Exelon Corporation Employee Savings Plan. The Plan is subject to the applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Internal Revenue Code of 1986, as amended (the "Code").
The Plan provides generally that any regular employee of Exelon
Corporation (the "Corporation") and any other affiliated company that adopts the
Plan with the consent of the Corporation is eligible to elect to participate in
the Plan. There were 23,872 and 24,532 participants in the Plan at December 31,
2002 and 2001, respectively.
The Corporation is the administrator of the Plan ("Plan
Administrator") and has the sole authority to appoint and remove members of the
Plan committee, the trustee, and any investment manager which may be provided
for under the trust. The Plan committee has the responsibility for day-to-day
administration of the Plan. Fidelity Management Trust Company is the Plan
trustee ("Trustee") and Fidelity Investments Institutional Operations Company,
Inc. is the Plan recordkeeper.
b. Contributions. The Plan permits salaried and non-union hourly
employees to contribute between 1% and 20% of their normal base pay each pay
period on a pre-tax basis, an after-tax basis or a combination of the two. For
Exelon subsidiaries that have adopted the Plan on behalf of their salaried and
non-union hourly employees, the company matches contributions at a rate of 100%
of the first 5% of contributions (whether pre-tax or after-tax).
The Plan permits union-represented employees to contribute between
1% and 15% of the sum of their normal base pay plus certain overtime on a
pre-tax basis and between 1% and 10% on an after-tax basis. Although the Plan
permits contributions of up to 15% of base pay on a pre-tax basis and up to 10%
of base pay on an after-tax basis, the combined maximum employee contributions
may not exceed 20%. For Exelon subsidiaries that have adopted the Plan on behalf
of their union employees, the company matches contributions at a rate of 100% of
the first 2% contributed, 84% of the following 1% contributed, 83% of the
following 2% contributed, and 25% of the following 1% contributed.
Effective August 1, 2002, during any calendar year in which
participants attain age 50 or older, they may elect to make additional pre-tax
contributions, called "catch-up" contributions to the Plan. In order to be
eligible to make catch-up contributions, participants must anticipate that their
Plan pre-tax contributions will reach the applicable annual IRS limit on that
type of contribution or be contributing at the maximum base pay level.
c. Investment Options. The Plan investments are fully participant
directed. The investment options provided under the Plan are described as
follows:
The Exelon Corporation Stock Fund seeks to increase the value of
each account over the long term by investing in Exelon Corporation common stock
and short-term investments. The amount of the short-term investments is based
upon a target established by the Plan sponsor, but the actual amount
5
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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of short term investments on any given business day will vary with the amount of
cash awaiting investment and participant activity of the fund (contributions,
redemptions, exchanges, and withdrawals).
The UBS Diversified Fund - Class A is a global balanced asset
allocation collective fund. The fund is a broadly diversified portfolio of
stocks, bonds, real estate and private market investments in the United States
and a broad range of other countries, including a small allocation in emerging
markets. The fund is invested in the Multi-Asset Portfolio offered through UBS
Global Asset Management Trust Company and UBS Global Asset Management. The fund
is actively managed within an asset allocation framework that encompasses the
full range of market, currency, and security exposures within the world capital
markets.
The Managed Income Fund is a fund that is a combination of
Fidelity's Managed Income Portfolio II (MIP II) and investment contracts
previously purchased by this plan. The MIP II invests in investment contracts
offered by major insurance companies and other approved financial institutions
and in certain types of fixed income securities. Other investment contracts
("wrap contracts") are purchased in conjunction with an investment in MIP II in
fixed income securities, which may include United States treasury bonds,
corporate bonds, mortgage-backed securities and bond funds.
The Fidelity U.S. Equity Index Commingled Pool is invested
primarily to perform as closely as possible to the Standard and Poor's 500 Stock
Price Index. This pooled investment is managed by Fidelity Management Trust
Company.
The Fidelity Magellan Fund is a mutual fund invested primarily in
a diversified portfolio of common and preferred stocks of all types of domestic
and foreign companies.
The Fidelity Growth Company Fund is a mutual fund invested
primarily in common stock of companies with earnings or gross sales that
indicate the possibility for above-average growth. These may be companies of any
size and may include newly established companies and less well-known companies
in emerging areas of the economy.
The Fidelity Low-Priced Stock Fund is a growth mutual fund. It
seeks capital appreciation and invests mainly in U.S. and foreign low-priced
stocks that may be undervalued, overlooked or out of favor. Generally,
"low-priced" is considered $35 or less at time of purchase. These often are
stocks of smaller, less well-known companies. This fund has a redemption fee of
1.5% on shares held less than 90 days.
The Fidelity Dividend Growth Fund is a growth mutual fund which
seeks capital growth. This fund looks for growth opportunities in companies that
have the potential for increasing their dividends or for commencing dividend
payouts, if none are currently paid. This fund invests mainly in common and
preferred stocks and securities convertible into common stocks.
The Fidelity Freedom Funds are asset allocation funds that invest
in a collection of other Fidelity mutual funds. Each Freedom Fund invests in a
combination of underlying Fidelity stock, bond, and money market mutual funds.
The allocation strategy among the underlying stock, bond, and money market
mutual funds contained in each Freedom Fund with a target retirement date is
based on the number of years until a participant's anticipated retirement. For
the funds with a target retirement date, the mix of underlying funds will
gradually become more conservative over time.
The Fidelity Freedom Income Fund seeks high current income and, as
a secondary objective, some capital appreciation for those already in
retirement. It invests approximately 20% in Fidelity stock
6
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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mutual funds, approximately 40% in Fidelity bond mutual funds, and approximately
40% in Fidelity money market mutual funds.
The Fidelity Freedom 2000 Fund seeks high total returns for those
planning to retire in approximately one to five years. It initially invests
approximately 26% in Fidelity stock mutual funds, approximately 42% in Fidelity
bond mutual funds, and approximately 32% in Fidelity money market mutual funds.
The Fidelity Freedom 2010 Fund seeks high total returns for those
planning to retire around 2010. It initially invests approximately 47% in
Fidelity stock mutual funds, approximately 44% in Fidelity bond mutual funds,
and approximately 9% in Fidelity money market mutual funds.
The Fidelity Freedom 2020 Fund seeks high total returns for those
planning to retire around 2020. It initially invests approximately 71% in
Fidelity stock mutual funds and approximately 29% in Fidelity bond mutual funds.
The Fidelity Freedom 2030 Fund seeks high total returns for those
planning to retire around 2030. It initially invests approximately 83% in
Fidelity stock mutual funds and approximately 17% in Fidelity bond mutual funds.
The Fidelity Freedom 2040 Fund seeks high total returns for those
planning to retire around 2040. It initially invests approximately 90% in
Fidelity stock mutual funds and approximately 10% in Fidelity bond mutual funds.
The Morgan Stanley Institutional Fund, Inc. - International Equity
Portfolio - Class A is a growth-oriented mutual fund that invests in stocks of
companies domiciled outside the U.S. It seeks to increase the value of
investments over the long term through growth of capital by investing primarily
in equity securities of companies domiciled in developed markets outside of the
United States.
The Franklin Small-Mid Cap Growth Fund - Class A is a growth
mutual fund that invests at least 80% of its total assets in the equity
securities of U.S. small capitalization companies and in the equity securities
of U.S. mid-capitalization companies. For this fund, mid-cap companies are those
companies with market capitalization values not exceeding $8.5 billion and small
cap companies are those with market cap values not exceeding: 1) $1.5 billion;
or 2) the highest market cap value in the Russell 2000 Index, whichever is
greater, at the time of purchase.
The Legg Mason Value Trust Institutional Shares is a large-cap
equity mutual fund which uses the value approach to investing. This fund invests
in stocks that the advisor believes are undervalued, and therefore offer
above-average potential for capital appreciation.
The Fidelity Retirement Money Market Portfolio Fund is a money
market mutual fund that seeks to provide a high level of current income that is
consistent with the preservation of capital and liquidity. This fund invests in
U.S. dollar denominated money market securities and repurchase agreements for
those securities, and may enter into reverse repurchase agreements.
The White Oak Growth Stock Portfolio is a growth mutual fund with
the goal to increase the value of investments over the long term through capital
growth. This fund invests primarily in large companies with market
capitalizations greater than $5 billion. The fund may also invest in securities
of smaller companies if it believes that such securities of smaller companies
offer comparable investment opportunities.
7
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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The PIMCO Total Return Fund (Institutional Class) is an income
mutual fund with the goal to provide a high total return that exceeds general
bond market indices. The fund invests in all types of bonds, including U.S.
government, corporate, mortgage and foreign. While the fund maintains an average
portfolio duration of three to six years (approximately equal to an average
maturity of 5 to 12 years), investments may also include short- and
long-maturity bonds.
The T.Rowe Price Capital Appreciation Fund is a growth mutual fund
that seeks to maximize long-term capital appreciation by investing primarily in
equities. The fund invests primarily in common stocks and the fund may hold
fixed income and other securities to help preserve principal value in uncertain
declining markets. The fund invests primarily in the common stocks of
established U.S. companies believed to have above-average potential for capital
growth.
The T.Rowe Price High Yield Fund is an income mutual fund with the
goal to provide high current income and, secondarily, capital appreciation. The
fund normally invests in at least 80% of its total assets in a diversified
portfolio of high-yield corporate, or "junk" bonds, income producing convertible
securities, and preferred stocks. The dollar-weighted average maturity generally
is expected to be in the 8 to 12 year range.
The Fidelity Contrafund is a growth mutual fund that seeks to
provide capital appreciation. The fund invests primarily in common stocks of
domestic and foreign issuers. The fund invests in securities of companies whose
value the manager believes is not fully recognized by the public.
The BGI Money Market Fund is a collective investment fund managed
by Barclays' Global Investors, N.A. that invests in short-term debt securities
with high credit ratings known as money market instruments. These securities are
issued by U.S. and foreign corporations, governments, banks and U.S. agencies
such as Fannie Mae and the Student Loan Marketing Association. These investments
are considered low risk due to the financial strength of the issuers and the
short-term maturity of the investments.
The BGI Extended Equity Market Fund Class K is a fund managed by
Barclays' Global Investors, N.A. that invests in small and mid-sized U.S.
stocks. The fund invests in stocks that comprise the BGI Extended Market Index
("Index"). The fund will invest in these types of investments in approximately
the same proportion as the Index. The Index is an unmanaged, market
capitalization weighted index of approximately 6,500 U.S. equity securities. It
includes most of the stocks in the Wilshire 5000 except for those included in
the S&P 500.
The BGI Equity Index Fund Class T is a growth and income
commingled fund managed by Barclays' Global Investors, N.A. The fund invests
primarily in the broadly diversified common stocks of the 500 companies that
make up the S&P 500. The fund holds each stock in the same proportion in which
it is represented in the index, which means it is weighted by stock price times
shares outstanding. Stocks are selected based on the composition of the index
rather than according to subjective opinions about individual companies or
industries.
The BGI EAFE Equity Index Fund Class K is a fund managed by
Barclays' Global Investors, N.A. that invests in stocks that comprise the Morgan
Stanley Capital International in the EAFE (Europe, Australia, Far East) Index.
The fund will invest in these types of investments in approximately the same
proportion as the EAFE Index. The EAFE Index is an unmanaged index representing
over 1,000 companies within 20 developed countries.
8
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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BGI U.S. Debt Index Fund Class K is a fund managed by Barclays'
Global Investors, N.A. that invests in bonds within the U.S. The fund invests in
investment-grade securities with maturities of at least one year, including U.S.
Treasury and U.S. agency securities, corporate bonds, asset-backed and mortgage
backed securities. The fund will invest in these types of investments in
approximately the same proportion as the Lehman Brothers Aggregate Bond Index.
The Index is a broad unmanaged index that measures the aggregate performance of
the U.S. market for investment-grade bonds.
d. Discontinued Funds. The following funds were discontinued as of
April 30, 2002: U.S. Equity Index Commingled Pooled, White Oak Growth Fund, and
the Fidelity Retirement Money Market Fund. The assets were transferred to the
other various funds described above.
e. Participant Loans. A participant may, upon application, borrow
from the Plan. Only one loan is permitted to a participant in any calendar year
(with a maximum of five loans outstanding at any time) and the loan shall not be
less than $1,000. The aggregate amount of all outstanding loans may not exceed
the lesser of (i) 50% of a participant's vested balance in the Plan or, (ii)
$50,000 minus the excess of the highest outstanding balance of all loans from
the Plan to the participant during the previous 12-month period over the
outstanding balance of all loans from the Plan to the participant on the day the
loan is made. For a general purpose loan, the maximum period is five years. For
a home loan the maximum term is fifteen years, and the minimum is five years.
The interest rate on all loans is the prime rate for commercial loans plus 1%.
No lump-sum or installment distribution from the Plan will be made to a
participant who has received a loan, or to a beneficiary of any such
participant, until the loan, including interest, has been repaid out of the
funds otherwise distributable.
f. Vesting of Participants' Accounts. A participant's after-tax
contributions account, before-tax contributions account, employer matching
contributions account, and rollover account are fully vested at all times.
g. Withdrawals by Participants While Employed. A participant may
withdraw up to the entire balance of the participant's after-tax contributions
account once each calendar year. After making such a withdrawal, the participant
must wait six months before making a new election to resume contributions to the
Plan. A participant may also withdraw up to an amount equal to the balance in
his or her rollover account.
A participant may make withdrawals from the participant's
before-tax contributions, but only if the participant has attained age 59-1/2
or, prior to that age, only in an amount required to alleviate financial
hardship as defined in the Code and regulations thereunder. Financial hardship
withdrawals from a before-tax contributions account suspend the participant's
right to make contributions to the Plan for six months.
While any loan to the participant remains outstanding, the amount
available for withdrawal shall be the balance in such account less the balance
of all outstanding loans.
h. Distributions upon Termination of Employment. Upon termination
of employment, retirement, total disability or death of a participant,
distribution of the balances of the participant's after-tax contributions
account, before-tax contributions account, rollover account and employer
matching contributions account is made to the participant or, in the event of
the participant's death, to the participant's designated beneficiary or
beneficiaries. Such distribution will be made, as elected by the participant, in
the form of either a lump-sum payment or in substantially equal annual
installments over a period not exceeding the lesser of 15 years or the life
expectancy of the participant or beneficiary, as the case may be. A participant
may elect to defer distributions until age 70-1/2. If the value of a
participant's
9
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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account is greater than $5,000 the participant can leave his or her account in
the plan. Distributions will be taxed as ordinary income in the year withdrawn
and may also be subject to an early withdrawal penalty if taken before age 59
1/2, unless eligible rollover distributions are rolled over to another qualified
plan or an IRA. A 20% mandatory federal income tax withholding applies to
withdrawals that are eligible for rollover, but which are not directly rolled
over to another qualified plan or an IRA.
i. Administrative Expenses. Administrative expenses for
recordkeeping services as well as trustee services, which include custodial,
administrative and fiduciary services, are paid out of the Plan assets.
j. Participant Accounts. Each participant's account is credited
with the participant's contribution and allocations of (a) the Company's
contribution and (b) Plan earnings, and charged with an allocation of
administrative expenses. Allocations are based on participant elections or
account balances, as defined. The benefit to which a participant is entitled is
the benefit that can be provided from the participant's vested account.
k. Reclassifications. Certain 2001 amounts have been reclassified
to conform to 2002 presentation. These reclassifications have no effect on the
net assets available for benefits as of December 31, 2001.
(2) Summary of Significant Accounting Policies. The significant accounting
policies followed by the Plan are as follows:
a. General. The Plan follows the accrual method of accounting for
recording contributions from participants and employers, income from
investments, purchases and sales of investments, and administrative expenses.
Benefits are recorded when paid.
b. Use of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires the plan
administrator to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results may differ from those
estimates.
c. Investment Valuation and Income Recognition. The Plan presents
in the statements of changes in net assets available for benefits the net
appreciation (depreciation) in the fair value of its investments which consists
of the realized gain (loss) on the sale of securities and the unrealized
appreciation (depreciation) in the fair value of investments.
Guaranteed investment contracts are fully benefit responsive and
are reported at contract value, which is cost plus accrued interest; for
synthetic investment contracts, contract value is equal to the fair value of the
collateral plus the benefit responsive wrap value.
Investments in Exelon Corporation Common Stock are valued at the
closing sales price as reported on the New York Stock Exchange.
10
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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Short-term investments held by various institutional funds of the
UBS Global Asset Management Trust Company are stated at cost which approximates
current value. Investments in certain of the various funds that make up the UBS
Multi-Asset Portfolio are valued at the latest reported sale price on the
valuation date used for securities traded on United States and foreign stock
exchanges. Investments valued in foreign currencies are converted into U.S.
dollars based on quoted foreign exchange rates on that date and are valued at
the latest quoted bid price or at estimated current value as determined by the
fund trustee.
Investments of registered securities are valued at the last sale
price, or if no sale price, at the closing bid price. Short-term securities
maturing within sixty days of their purchase date are valued at amortized cost
or original cost plus accrued interest, both of which approximate current value.
Participant loans are valued at cost, which approximates fair
value.
Purchases and sales of securities are recorded on a trade-date
basis. Interest income is recorded on the accrual basis. Dividends are recorded
on the ex-dividend date.
d. Recent Accounting Pronouncements. In June 1998, the Financial
Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," to establish accounting and
reporting standards for derivatives. SFAS No. 133 was subsequently amended by
SFAS No. 137 and SFAS No. 138. These new standards require that all derivatives
be recognized at their fair value as either assets or liabilities on the balance
sheet and specify the accounting for changes in fair value depending upon the
intended use of the derivative. The Plan was required to adopt SFAS No. 133, as
amended, in the fiscal year ended December 31, 2001.
(3) Net Appreciation/Depreciation of Investments. During 2002 and 2001, the
Plan's investments (including gains and losses on investments bought and sold,
as well as held during the year) appreciated/(depreciated) in value as follows:
2002 2001
---- ----
Exelon Corporation Common Stock $ 15,044,105 $(49,279,285)
Registered Investment Companies (289,937,862) (150,433,690)
Collective Institutional Investment Trust Funds (3,976,004) (21,318,659)
------------- --------------
$(278,869,761) $(221,031,634)
============= ==============
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EXELON CORPORATION EMPLOYEE SAVINGS PLAN
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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(4) Investments. The current values of the Plan's investments at December 31,
2002 and 2001, which represent 5% or more of the Plan's net assets, are
summarized as follows:
2002 2001
---- -----
Fidelity Managed Income Portfolio II $224,024,411 $277,550,439
UBS Collective Investment
Trust, Multi Asset Portfolio Fund 155,999,960 167,140,136
Exelon Corporation Common Stock 119,920,775 112,994,136
Fidelity Magellan Fund 143,155,225 193,440,584
Fidelity Growth Company Fund 166,097,506 243,554,370
Fidelity U.S. Equity Index Commingled Pool - 165,086,228
BGI Equity Index T Fund 112,827,032 -
Fidelity Dividend Growth Fund 112,395,883 141,508,736
Legg Mason Value Trust Institutional Shares 188,387,040 249,075,664
Fidelity Contrafund 128,875,927 148,202,380
PIMCO Total Return Fund - Inst. Class 98,193,027 -
(5) Investment Contracts. In 2002 and prior years, the Plan entered into several
benefit-responsive investment contracts with various insurance companies and
other financial institutions. The contract providers maintain the contributions
in a general account. Some investment contracts are purchased in conjunction
with the investment by the Plan in fixed-income securities. Investment contracts
provide for the payment of a specified rate of interest. The account is credited
with earnings at the specified rate and charged for participant withdrawals and
administrative expenses. The contracts are included in the financial statements
at contract value, as reported to the Plan by the contract providers. Contract
value represents contributions made under the contract, plus earnings, less
participant withdrawals and administrative expenses. Plan participants may
ordinarily direct the withdrawal or transfer of all or a portion of their
investment at contract value.
There are no reserves against contract value for credit risk of
the contract issuer or otherwise. The weighted average yield for all such
contracts was approximately 5.9 percent for 2002 and 5.7 percent for 2001. The
crediting interest rate was 6.0 percent at December 31, 2002 and 2001. The
crediting interest rate generally cannot be less than the contract rate.
(6) Investments in Derivative Financial Instruments. The UBS Collective
Investment Trust, Multi-Asset Portfolio Fund and some of the funds in which it
invests participate in various equity index futures contracts and foreign
currency contracts. The assets of this fund are invested as follows: 51%
equities, 22% bonds, 10% real estate, 11% derivatives, and 6% venture capital. A
futures contract is an agreement involving the delivery of a particular asset on
a specified future date at an agreed upon price. Risks of entering into futures
contracts include the possibility that there may be an illiquid market and that
changes in the value of the contracts may not correlate with changes in the
value of the underlying securities. Open futures contracts are valued at the
settlement price established each day on the exchange on which they are traded.
These contracts are marked to market daily with the resulting gain or loss
included in the net realized gain or loss from futures contracts.
A forward exchange contract is a commitment to purchase or sell a
foreign currency at a future date at a negotiated forward rate. Risks associated
with such contracts include movement in the value of the foreign currency
relative to the U.S. dollar and the ability of the counterparty to perform.
12
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
----------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------------
The contracts are valued at foreign exchange rates, and the changes in value of
open contracts are recognized as unrealized appreciation/depreciation. The
realized gain or loss on forward currency contracts represents the difference
between the value of the original contracts and the closing value of such
contracts.
Similarly, some or all of the Fidelity funds, the Morgan Stanley
International Equity Portfolio, and the BGI EAFE Equity Index Fund-Class K may
use (1) foreign currency contracts to facilitate transactions in foreign
securities and to manage the fund's currency exposure and (2) futures and
options contracts to manage its exposure to the stock and bond markets and to
fluctuations in the interest rates and currency values. Such funds also may
invest in indexed securities whose values are linked either directly or
inversely to changes in foreign currencies, interest rates, commodities,
indices, or other underlying instruments.
(7) Risks and Uncertainties. The Plan provides for various investment options in
several investment securities and instruments, including common stock of Exelon
Corporation. Investment securities are exposed to various risks, such as
interest rate, market and credit risks. Due to the level of risks associated
with certain investment securities and the level of uncertainty related to
changes in the value of investment securities, it is at least reasonably
possible that changes in risks and values in the near term would materially
affect participants' account balances and the amounts reported in the statement
of net assets available for benefits and the statement of changes in net assets
available for benefits. No collateral or other security is required by the
Trustee to collateralize these financial statements.
(8) Income Tax Status. The Internal Revenue Service ("IRS") has issued a
determination letter that the Plan, as amended and restated January 1, 1995, is
a qualified plan under Section 401(a) and 401(k) of the Code, and the Trust
established under the Plan, as in effect as of the amendments of January 1,
1995, is tax exempt under Section 501(a) of the Code. Although the Plan has been
amended since receiving the determination letter, the Plan Administrator and the
Plan's tax counsel believe that the Plan is currently designed and being
operated in compliance with the applicable requirements of the Code. Therefore,
they believe that the Plan was qualified and the related trust was tax-exempt as
of the financial statement date.
(9) Plan Amendments. If a participant invests any portion of his or her account
in the Exelon Corporation Stock Fund and is eligible to receive dividend
distributions from the Plan, then effective January 1, 2002, the participant is
deemed to have elected to have the dividends reinvested in the Exelon
Corporation Stock fund. If the participant prefers to receive any such dividends
in cash, he or she can so elect by contacting Fidelity. Dividends distributed to
the participant in cash from the Plan are subject to income tax as a dividend,
and affected participants will receive an IRS Form 1099DIV for the dividends in
the year following receipt (Form 1099R if participants take a full distribution
of their Plan accounts).
(10) Plan Termination. The Plan may be amended, modified or terminated by the
Corporation at any time, subject to certain rights of participants under the
Plan. The Plan may also be terminated if the Plan is disqualified by the IRS.
Termination of the Plan with respect to a participating employer may occur if
there is no successor employer in the event of dissolution, merger,
consolidation or reorganization of such employer company. In the event of full
or partial termination of the Plan, assets of affected participants of the
terminating employer or employers shall remain 100% vested and distributable at
fair market value in the form of cash, securities or annuity contracts, in
accordance with the provisions of the Plan. The Corporation has no current
intentions of terminating the Plan.
13
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
-----------------------------------------
(11) Plan Mergers. Effective November 1, 2002, the net assets ($1,080,732) of
the Systems Corp. 401(k) Retirement Plan, were merged with and into the Plan.
Effective March 30, 2001, the net assets of the following plans were merged with
and into the Plan:
PECO Energy Company Employee Savings Plan $720,059,169
Bumler Heating and Specialties, Inc. 401(k) Profit Sharing
and Savings Plan 1,426,975
Midwest Mechanical 401(k) Profit Sharing and Savings Plan 2,784,099
V.A. Smith Company 401(k) Profit Sharing and Savings Plan 222,762
------------
$724,493,005
============
(12) Related Party Transactions. Investment options in the Plan include mutual
funds managed by Fidelity Management Trust Company, the Trustee as defined by
the Plan. Also, the Plan holds shares of Exelon Corporation common stock. These
transactions qualify as exempt party-in-interest transactions. There have been
no known prohibited transactions with a party-in-interest.
14
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
----------------------------------------
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
----------------------------------------
AS OF DECEMBER 31, 2002
-----------------------
Schedule H, Part IV, Item 4i, Form 5500
---------------------------------------
Employer Identification Number 23-2990190, Plan Number 003
-----------------------------------------------------------
No of Shares or Current
No. of Units Description Cost** Value
------------------------- ------------------------------------------------------------ ---------------- ------------------
COMMON STOCKS
-------------
* 6,011,725 shares Exelon Corporation Common Stock $ 119,920,775
------------------
COLLECTIVE FUNDS
----------------
* 142,126 units UBS Collective Investment Trusts, Multi-Asset Portfolio Fund 155,999,960
* 4,443,759 units BGI Equity Index T 112,827,032
* 16,018 units BGI EAFE Equity Index K 166,105
* 49,135,114 shares BGI Money Market I 49,135,114
* 29,692 shares BGI Extended Market K 557,312
* 460,317 shares BGI US Debt K 8,571,101
* 224,024,411 units Fidelity Managed Income Portfolio II 224,024,411
------------------
551,281,035
------------------
REGISTERED INVESTMENT COMPANIES
-------------------------------
* 1,813,009 shares Fidelity Magellan Fund 143,155,225
* 3,338,755 shares Fidelity Contrafund 128,875,927
* 4,689,371 shares Fidelity Growth Company Fund 166,097,506
* 2,695,324 shares Fidelity Low-Priced Stock Fund 67,841,300
* 5,035,658 shares Fidelity Dividend Growth Fund 112,395,883
* 361,842 shares Fidelity Freedom Income Fund 3,835,524
* 617,292 shares Fidelity Freedom 2000 Fund 6,796,385
* 1,922,531 shares Fidelity Freedom 2010 Fund 21,993,756
* 2,378,581 shares Fidelity Freedom 2020 Fund 25,308,106
* 1,303,933 shares Fidelity Freedom 2030 Fund 13,352,277
* 119,612 shares Fidelity Freedom 2040 Fund 700,926
* 9,202,720 shares PIMCO Total Return Fund (Institutional Class) 98,193,027
* 4,703,928 shares T. Rowe Price Capital Appreciation Fund 66,842,819
* 738,501 shares T. Rowe Price High Yield Fund 4,630,400
* 2,706,338 shares Morgan Stanley International Equity Portfolio A 39,539,602
* 1,014,690 shares Franklin Small MidCap Growth A 22,272,443
* 4,343,718 shares Legg Mason Value Trust, Institutional Class 188,387,040
------------------
1,110,218,146
------------------
INVESTMENT CONTRACTS
--------------------
CDC Capital
Guaranteed Investment Contract
2,507,877 units 5.62%, Matures 12-10-2003 2,507,877
AIG Financial Products
Synthetic Investment Contracts (Asset Backed)
990,582 units USTN 4.64%, Matures 03-31-2003 990,582
Chase Manhattan
Synthetic Investment Contracts (Asset Backed)
1,083,699 units Americredit 1999-A A4 5.45%, Matures 04-05-2004 1,083,699
3,010,074 units Dayton Hudson Master Trust 1998-1 A, 5.58%, Matures 07-25-2003 3,010,074
2,307,837 units FannieMae GLBL, 4.69%, Matures 03-15-2004 2,307,837
3,610,580 units National Westminster BC 7.01%, Matures 11-17-2003 3,610,580
15
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
----------------------------------------
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
----------------------------------------
AS OF DECEMBER 31, 2002
-----------------------
Schedule H, part IV, Item 4i, Form 5500
---------------------------------------
Employer Identification Number 23-2990190, Plan Number 003
----------------------------------------------------------
No of Shares or Current
No. of Units Description Cost** Value
------------------------- ------------------------------------------------------- ------------- ---------------
Monumental Life Insurance Company
Synthetic Investment Contracts (Asset Backed)
531,899 units FHR 1522 HB 5.92%, Matures 03-15-2004 531,899
3,004,656 units FUSAM 1998-9 A 5.34%, Matures 01-20-2003 3,004,656
263,443 units PHMS 1993-48 A3 6.32%, Matures 09-25-2003 263,443
Morgan Guaranty
Synthetic Investment Contracts (Asset Backed)
3,518,405 units CIT Marine 99-A A3, 5.69%, Matures 08-15-2005 3,518,405
1,096,521 units FH 1388 H 7.96%, Matures 07-15-2004 1,096,521
3,508,518 units FHR 1587 L 6.68%, Matures 07-15-2004 3,508,518
2,334,003 units FH 1601 PH 5.57%, Matures 02-15-2005 2,334,003
3,505,176 units JC Penney Master Trust E A, 5.65%, Matures 11-17-2003 3,505,176
Rabo Bank
Synthetic Investment Contracts (Asset Backed)
3,028,155 units FH 1798 A 5.67%, Matures 02-15-2007 3,028,155
State Street Bank
Synthetic Investment Contracts (Asset Backed)
1,002,694 units American Express Master Trust 1998-1 A, 5.97%, Matures 05-15-2003 1,002,694
199,465 units FHR 1661 PG 5.71%, Matures 04-15-2003 199,465
UBS AG
Synthetic Investment Contracts (Asset Backed)
3,040,165 units FHLMC, 4.99%, Matures 03-17-2003 3,040,165
3,044,429 units FHLMC, 4.27%, Matures 03-17-2003 3,044,429
3,547,533 units FHLMC, 4.89%, Matures 03-17-2003 3,547,533
4,060,816 units MBNA 97-1 (A), 5.82%, Matures 08-16-2004 4,060,816
Westdeutsche Landesbank
Synthetic Investment Contract (Asset Backed)
4,007,609 units American Express 99-1 A, 5.72%, Matures 04-15-2004 4,007,609
3,040,359 units MSC 1999-CAM1 A2 6.92%, Matures 11-17-2008 3,040,359
CDC Capital
10,242,756 units Synthetic Investment Contracts (Global Wrap) 13.84% 10,242,756
Chase Manhattan
10,245,218 units Synthetic Investment Contracts (Global Wrap) 14.21% 10,245,218
Monumental Life Insurance
10,242,154 units Synthetic Investment Contracts (Global Wrap) 13.86% 10,242,154
Westdeutsche Landesbank
10,242,157 units Synthetic Investment Contract (Global Wrap) 13.86% 10,242,157
----------------
97,216,780
----------------
LOANS
Participant Loans ( 5.25% - 10.50%) 60,712,146
----------------
Total Investments $ 1,939,348,882
================
* A party-in-interest to the Plan.
** Cost has been omitted as investments are participant directed.
16
EXHIBIT INDEX
-------------
Exhibits filed with Form 11-K for the year ended December 31, 2002:
Exhibit Number Description of Exhibit
- ------------------- --------------------------------------------------------
23 Consent of Independent Public Accountants
99 Certification Pursuant to Section 1350 of Chapter 63 of
Title 18 United States Code as to the Annual Report on
Form 11-K for the year ended December 31, 2002 filed by
George R. Shicora for the Exelon Corporation Employee
Savings Plan.
17
SIGNATURES
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.
Exelon Corporation Employee
Date: June 25, 2003 Savings Plan
/s/ S. Gary Snodgrass
-------------------------
S. Gary Snodgrass
Chairman, Plan Committee
18
Exhibit 23
Exelon Corporation
Form 11-K File No. 1-16169
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (No.'s 333-37082; 333-49780) of Exelon
Corporation of our report dated June 19, 2003, pertaining to the financial
statements of the Exelon Corporation Employee Savings Plan, which appears in
this Form 11-K.
Washington, Pittman & McKeever, LLC
Chicago, Illinois
June 24, 2003
19
Exhibit 99
Exelon Corporation
Form 11-K File No. 1-16169
Certificate Pursuant to Section 1350 of
Chapter 63 of Title 18 United States Code
The undersigned officer hereby certifies, as to the Annual Report on
Form 11-K of the Exelon Corporation Employee Savings Plan for the year ended
December 31, 2002, that (i) the report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the
information contained in the report fairly presents, in all material respects,
the net assets available for benefits and the changes in net assets available
for benefits of the Exelon Corporation Employee Savings Plan.
Date: June 25, 2003 /s/ George R. Shicora
---------------------
George R. Shicora
Assistant Corporate Treasurer
Exelon Corporation
20