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 24, 2000
(Date of earliest
event reported)
PECO ENERGY COMPANY
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 1-1401 23-0970240
(State or other (SEC (IRS Employer
jurisdiction of file number) Identification
incorporation) Number)
230l Market Street, Philadelphia, Pennsylvania 19101
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(215) 841-4000
<PAGE>
Item 5. Other Events.
On October 24, 2000, PECO Energy Company issued the following press release:
PECO ENERGY REPORTS EARNINGS OF $1.41 PER SHARE
FOR THIRD QUARTER 2000; A 13% INCREASE OVER 1999
PHILADELPHIA, October 24, 2000 PECO Energy Company today reported earnings for
its third quarter ended September 30, 2000 of $239 million, or $1.41 per share
of common stock as compared to $235 million, or $1.25 per share, for the same
period of 1999. These results are exclusive of extraordinary charges for
premiums of $1 million, net of taxes, paid to reacquire debt as well as
incremental merger integration costs of $4 million, net of taxes, in 2000.
Earnings per share for the third quarter of 1999 are exclusive of non-recurring
storm damage charges related to Hurricane Floyd of $7 million, net of taxes.
Earnings after these extraordinary and special items were $234 million, or $1.38
per share for 2000 as compared to $228 million, or $1.22 per share in 1999.
Corbin A. McNeill, PECO Energy's Chairman and Chief Executive Officer stated
that the company's strong third quarter earnings report will provide positive
momentum for the newly created Exelon Corporation, the company created by the
merger of PECO and Unicom Corporation which began trading on the New York Stock
Exchange with the ticker symbol EXC yesterday. "Throughout 2000, a tremendous
amount of energy has been devoted to closing our merger and integrating our two
companies. But we have not let that work get in the way of delivering solid
financial results," McNeill noted. "The key drivers of the strong performance we
experienced in PECO's final quarter will carry over to be significant
contributors to Exelon's future success. As Exelon, we will continue our proud
record of excellent nuclear operations, we will remain committed to cost control
and we will continuously seek out new business opportunities that will grow
earnings and add shareholder value."
<PAGE>
Third Quarter 2000 Results Summary
The increase in third quarter 2000 earnings was primarily attributable to higher
margins associated with non-regulated retail and wholesale operations, lower
Operating and Maintenance Expenses (excluding Exelon Infrastructure Services)
and a strong earnings contribution from AmerGen Energy, the Company's
partnership with British Energy, which owns and operates the Clinton and Three
Mile Island - Unit 1 and Oyster Creek nuclear power stations.
Earnings per share also continue to benefit from the effects of lower average
shares outstanding. Over the 18 month period ending September 30, 2000, the
Company has repurchased 56 million shares of common stock using the proceeds of
its April 1999 and May 2000 issuances of $4 billion and $1 billion of transition
bonds, respectively.
Regulated retail electricity sales were adversely affected by milder weather and
lower customer retention, mitigated by the effects of rate changes in accordance
with the terms of the Final Restructuring Order. Through Customer Choice,
approximately 17% of the Company's customers are purchasing their energy from
alternate energy providers, representing approximately 34% of the Company's
total energy sales in its traditional franchise territory. In addition, the
favorable earnings impacts were partially offset by amortization of the
Competitive Transition Charge (CTC), which commenced in January 2000.
Nine Months Ended September 30, 2000 Results Summary
The increase in earnings on a year-to-date basis is also primarily attributable
to higher margins associated with wholesale and non-regulated retail operations,
lower Operating and Maintenance Expenses, favorable equity in earnings of
unconsolidated affiliates and the combined benefits of transition bond issuances
and related share repurchases. These benefits are partially offset by the
commencement of amortization of CTC.
<PAGE>
<TABLE>
<CAPTION>
PECO ENERGY COMPANY
Selected Financial Data
(in millions, except per share data)
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
2000 1999 2000 1999 2000 1999
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $1,629 $1,729 $4,366 $4,209 $5,594 $5,281
Earnings available for common:
Before extraordinary and special items 239 235 536 491 668 556
After extraordinary and special items 234 228 515 448 637 419
Basic EPS before extraordinary and special items $ 1.41 $ 1.25 $ 3.06 $ 2.44 $3.77 $2.69
Diluted EPS before extraordinary and special items $ 1.39 $ 1.24 $ 3.04 $ 2.42 $3.73 $2.68
Basic EPS after extraordinary and special items $ 1.38 $ 1.22 $ 2.94 $ 2.23 $3.60 $2.02
Diluted EPS after extraordinary and special items $ 1.36 $ 1.21 $ 2.92 $ 2.21 $3.56 $2.01
Average Shares of Common Stock Outstanding:
Basic 170 187 175 201 177 207
Diluted 172 188 176 202 179 208
</TABLE>
<PAGE>
PECO Energy
EARNINGS PER SHARE RECONCILIATION
2000 vs. 1999
Three Months Ended
September 30
Three Months
1999 Reported Earnings Per Share $1.22
Hurricane Floyd Restoration 0.03
-----
1999 Earnings Per Share From Operations $1.25
Regulated Retail Sales (0.33)
Wholesale & Non-regulated Retail Sales 0.28
Exelon Infrastructure Services 0.02
Operation and Maintenance 0.02
Depreciation and Amortization (0.06)
Taxes Other Than Income 0.03
Interest Expense -
Other 0.08
Telecom Ventures (0.04)
AmerGen 0.04
Effects of Lower Shares Outstanding 0.12
-----
2000 Earnings Before Special & Extraordinary Item $1.41
Merger Related Expenses (0.03)
Premium Paid on Retirement of Debt -*
-----
2000 Earnings Per Share $1.38
=====
* Less than $0.01 EPS charge
-----------------------------------------------------------------------
Notes on Quarterly Earnings Variances:
======================================
Regulated Retail Sales:
-----------------------
Negative variance reflects unfavorable weather relative to the same period in
1999 and lower customer retention, partially offset by effects of the January 1,
2000 rate increase on retail sales. The total volume of kWh delivered by PECO
Energy Distribution during the third quarters of 2000 and 1999 were 9.33 billion
kWh and 9.93 billion kWh respectively. Cooling degree hours recorded in the
third quarter 2000 were 47% less than those recorded in the same period in 1999.
Wholesale & Non-regulated Retail Sales:
---------------------------------------
This positive variance reflects a reduction in the average cost of kWh sold
(combined production and purchases) and higher wholesale market prices,
partially offset by lower wholesale and non-regulated retail sales volume.
Exelon Infrastructure Services:
-------------------------------
Positive variance reflects results of EIS' portfolio of 10 infrastructure
service companies acquired over the last twelve months.
<PAGE>
Operation and Maintenance:
--------------------------
The positive variance is the combined effects of the elimination of Y2k
activities and lower utility operation expenses.
Depreciation & Amortization:
----------------------------
Negative variance is primarily the result of the January 1, 2000 initiation of
CTC/ITC amortization to recognize stranded cost recovery.
Taxes Other Than Income:
------------------------
This variance reflects the combined effects of lower gross receipts, capital
stock, and real estate taxes.
Other:
------
Reflects a $0.03 gain on the sale of our investment in Extant in the third
quarter of 2000 and results of other non-utility operations.
Telecom Ventures:
-----------------
This line reflects the combined effects of equity investments including a modest
gain associated with PECO-Adelphia and losses associated with AT&T Wireless,
Vitts and Omni Choice. Increased losses at AT&T Wireless were caused by a
significant increase in the number of new subscribers (55,856 customers added in
3Q '00 vs. 34,649 in 3Q '99).
AmerGen:
--------
Favorable variance reflects contributions of TMI Unit 1, Clinton Nuclear Power
Station and Oyster Creek.
Shares Outstanding:
-------------------
Reflects the decline in the shares outstanding as a result of $1.7 billion of
share repurchases executed in 1999 and an additional $500 million executed in
2000 with transition bond proceeds. Average shares outstanding for the third
quarter 2000 were 170 million compared to 187 million for the same quarter of
last year. Shares outstanding at the end of the third quarter 2000 were 170.5
million.
Special Item: - Merger Related Expenses:
----------------------------------------
This special item in third quarter earnings reflects $4.5 million (after-tax)
incremental expenses related to the merger with Unicom Corp.
Extraordinary Item:
-------------------
The extraordinary item reflects $1 million (after-tax) in premiums paid to
retire debt.
<PAGE>
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.
PECO ENERGY COMPANY
/S/ Jean H. Gibson
---------------------------
Vice President & Controller
October 27, 2000
