UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 2003
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
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INDEX TO FORM 11-K
------------------
Page No.
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Report Of Independent Registered Public Accounting Firm 1
Financial Statements:
Statements of Net Assets Available for Benefits
as of December 31, 2003 and 2002 2
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2003 3
Notes to Financial Statements 4
Supplemental Schedules:
Schedule of Assets (Held at End of Year) as of
December 31, 2003, Schedule H, Part IV, Item 4i of Form 5500 14
Note: All other schedules of additional information required by the
Department of Labor's Rules and Regulations for Reporting and
Disclosure under ERISA have been omitted because they are not
applicable.
Exhibit Index 16
Signatures 17
Exhibits 18
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------
To the Exelon Corporation
Employee Savings Plan Committee
We have audited the accompanying statements of net assets available for benefits
of the Exelon Corporation Employee Savings Plan as of December 31, 2003 and
2002, and the related statement of changes in net assets available for benefits
for the year ended December 31, 2003. 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 of the Public
Company Accounting Oversight Board (United States). 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, 2003 and 2002, and the
changes in net assets available for benefits for the year ended December 31,
2003, 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, 2003, 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 11, 2004
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2003 AND 2002
2003 2002
----------------------- --------------------------
ASSETS
INVESTMENTS
Investments at Current Value:
Exelon Corporation Common Stock $ 143,161,613 $ 119,920,775
Registered Investment Companies 1,521,547,024 1,110,218,146
Collective Investment Trust Funds 699,958,457 551,281,035
Participant Loans 60,979,282 60,712,146
----------------------- --------------------------
2,425,646,376 1,842,132,102
Investment Contracts at Contract Value 23,071,802 97,216,780
----------------------- --------------------------
Total Investments 2,448,718,178 1,939,348,882
----------------------- --------------------------
CASH 1,423,621 3,057,853
RECEIVABLES:
Accrued Dividends and Interest 695 2,192
Accrued Contributions 3,107,551 -
Other Receivables 1,299,881 210,731
----------------------- --------------------------
Total Receivables 4,408,127 212,923
----------------------- --------------------------
TOTAL ASSETS 2,454,549,926 1,942,619,658
----------------------- --------------------------
LIABILITIES
Due to Broker for Securities Purchased - 790,862
Accrued Administrative Expenses and Other
Liabilities 1,166,059 594,014
----------------------- --------------------------
TOTAL LIABILITIES 1,166,059 1,384,876
----------------------- --------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 2,453,383,867 $ 1,941,234,782
======================= ==========================
The accompanying Notes are an integral part of the Financial Statements.
2
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2003
2003
-------------------
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
INVESTMENT INCOME:
Dividends on Exelon Corporation Common Stock $ 4,482,709
Income from Registered Investment Companies and
Collective Investment Trust Funds 35,791,902
Income from Participant Loans 4,244,591
Net Appreciation of Investments 436,145,345
-------------------
Total Investment Income 480,664,547
-------------------
CONTRIBUTIONS:
Participants 104,313,639
Employers 56,510,411
Rollovers 4,941,961
-------------------
Total Contributions 165,766,011
-------------------
TOTAL ADDITIONS 646,430,558
-------------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTABLE TO:
WITHDRAWALS BY PARTICIPANTS 128,735,825
DIVIDEND DISTRIBUTIONS 4,482,686
ADMINISTRATIVE EXPENSES 1,057,091
-------------------
TOTAL DEDUCTIONS 134,275,602
-------------------
NET INCREASE BEFORE TRANSFERS 512,154,956
NET ASSETS TRANSFERRED FROM OTHER PLANS 13,045
NET ASSETS TRANSFERRED TO OTHER PLANS (18,916)
-------------------
NET INCREASE AFTER TRANSFERS 512,149,085
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 1,941,234,782
-------------------
END OF YEAR $ 2,453,383,867
===================
The accompanying Notes are an integral part of the Financial Statements.
3
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(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 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 that any regular employee of Exelon Corporation
(the "Corporation") and any other affiliated company that adopts the Plan (the
"Companies") with the consent of the Corporation is eligible to elect to
participate in the Plan. There were 25,805 and 23,872 participants in the Plan
at December 31, 2003 and 2002, respectively.
The Corporation is the sponsor and 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 Exelon Corporation Employee Savings Plan trust (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 Companies match 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 subsidiaries of the Corporation that have adopted the
Plan on behalf of their union employees, the Companies match 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 a
participant attains age 50 or older, he or she 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, the participant must anticipate that
his or her pre-tax contributions to the Plan will reach the applicable annual
Internal Revenue Service ("IRS") limit on that type of contribution or be
contributing at the maximum base pay level.
4
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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 the Plan. The MIP II is managed by the Trustee. 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. A small portion of MIP II is invested in a money market fund to
provide daily liquidity. 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 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
5
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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 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
who retired around 2000. It initially invests approximately 23% in Fidelity
stock mutual funds, approximately 40% in Fidelity bond mutual funds and
approximately 37% 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 45% in
Fidelity stock mutual funds, approximately 45% in Fidelity bond mutual funds and
approximately 10% 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 70% in
Fidelity stock mutual funds and approximately 30% 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 82% in
Fidelity stock mutual funds and approximately 18% 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 88% in
Fidelity stock mutual funds and approximately 12% in Fidelity bond mutual funds.
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 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 tries 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
6
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 Class Fund 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 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 five to twelve 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 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 BGI Money Market I 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 Federal National Mortgage Association 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
7
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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, Australasia, 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.
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. This index is a broad unmanaged index that measures the aggregate
performance of the U.S. market for investment-grade bonds.
d. Discontinued Funds. The Franklin Small-Mid Cap Growth Fund
Class A Fund was discontinued as of April 30, 2003. The assets were transferred
to the 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 there under. Financial hardship
withdrawals from a before-tax contributions account suspend the participant's
right to make contributions to the Plan for six months.
8
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 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 Individual Retirement Account ("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, and professional fees, 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 Companies'
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. Employee Stock Ownership Plan. 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 the
Plan recordkeeper. Dividends distributed to the participant in cash from the
Plan are subject to income tax as a dividend, and affected participants will
receive a IRS Form 1099DIV for the dividends in the year following receipt (Form
1099R if the participant takes a full distribution of his or her Plan account).
(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 accounting principles generally accepted in the United States of
America requires the plan
9
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 statement of changes in net assets available for benefits the net
appreciation 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 New York Stock Exchange.
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.
Purchase 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.
(3) Net Appreciation of Investments. During 2003, the Plan's investments
(including gains and losses on investments bought and sold, as well as held
during the year appreciated in value as follows:
2003
------------
Exelon Corporation Common Stock $ 35,264,788
Registered Investment Companies 329,039,795
Collective Investment Trust Funds 71,840,762
------------
$436,145,345
============
10
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(4) Investments. The current values of the Plan's investments at December 31,
2003 and 2002, which represent 5% or more of the Plan's net assets, are
summarized as follows:
2003 2002
------------ ------------
Fidelity Managed Income Portfolio II $300,752,415 $224,024,411
UBS Diversified Fund - Class A 194,981,484 155,999,960
Exelon Corporation Common Stock 143,161,613 119,920,775
Fidelity Magellan Fund 183,297,372 143,155,225
Fidelity Growth Company Fund 276,686,964 166,097,506
BGI Equity Index T Fund 142,983,724 112,827,032
Fidelity Dividend Growth Fund 141,585,850 112,395,883
Legg Mason Value Trust Institutional Class 289,137,889 188,387,040
Fidelity Contrafund 167,393,817 128,875,927
PIMCO Total Return Fund - Inst. Class * 105,309,204 98,193,027
* - The PIMCO Total Return Fund - Inst. Class asset balance as of December 31,
2003 was less than 5% of the Plan assets, however it is included in this table
because the December 31, 2002 balance was greater than 5% of Plan assets as of
December 31, 2002.
(5) Investment Contracts. In 2003 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. The weighted average yield for all such contracts were
approximately 5.0 percent and 5.9 percent for 2003 and 2002, respectively. The
crediting interest rate generally cannot be less than the contract rate. The
fair market value of the investment contracts as of December 31, 2003 was
$23,603,928 and $97,774,437 as of December 31, 2002.
(6) Investments in Derivative Financial Instruments. The UBS 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.
11
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
A forward foreign 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. 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 risk, 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 IRS has issued a determination letter that the Plan,
as amended and restated December 31, 2003 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 December 31, 2003, is tax exempt under Section
501(a) of the Code.
(9) 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.
(10) 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.
12
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
(11) Subsequent Events. Effective February 25, 2004, the net assets
($95,941,218) of the AmerGen Employee Savings Plan for TMI and Oyster Creek
Non-Bargaining Employees and the AmerGen Employee Savings Plan for Clinton
Non-Bargaining Employees were merged into the Plan.
A decision has been made by the Plan administrator to discontinue the Fidelity
Magellan Fund as a plan option effective December 31, 2004. This decision has
been communicated to participants of the Plan.
The IRS issued a determination letter dated June 1, 2004, that the Plan as
amended and restated as of December 31, 2003 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 December 31, 2003 is tax exempt under Section
501(a) of the Code.
13
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
----------------------------------------
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
----------------------------------------
AS OF DECEMBER 31, 2003
----------------------------------------
Schedule H, Part IV, Item 4i of Form 5500
-----------------------------------------
Employer Identification Number 23-2990190, Plan Number 003
----------------------------------------------------------
No of Shares or Current
No. of Units Description Cost ** Value
------------------------ --------------------------------------------------------- ----------------- -----------------
COMMON STOCKS
-------------
* 5,710,764 shares Exelon Corporation Common Stock $ 143,161,613
-----------------
COLLECTIVE INVESTMENT TRUST FUNDS
---------------------------------
138,498 units UBS Diversified Fund - Class A 194,981,484
4,379,287 units BGI Equity Index Fund Class T 142,983,724
105,247 units BGI EAFE Equity Index Fund Class K 1,500,825
46,485,615 shares BGI Money Market Fund Class I 46,485,615
196,780 shares BGI Extended Equity Market Fund Class K 5,289,438
410,776 shares BGI U.S. Debt Index Fund Class K 7,964,956
* 300,752,415 units Fidelity Managed Income Portfolio II 300,752,415
-----------------
699,958,457
-----------------
REGISTERED INVESTMENT COMPANIES
-------------------------------
* 1,875,357 shares Fidelity Magellan Fund 183,297,372
* 3,391,972 shares Fidelity Contrafund 167,393,817
* 5,526,003 shares Fidelity Growth Company Fund 276,686,964
* 3,087,523 shares Fidelity Low-Priced Stock Fund 108,001,548
* 5,186,295 shares Fidelity Dividend Growth Fund 141,585,850
* 373,977 shares Fidelity Freedom Income Fund 4,147,404
* 485,115 shares Fidelity Freedom 2000 Fund 5,714,655
* 1,964,300 shares Fidelity Freedom 2010 Fund 25,575,193
* 2,701,490 shares Fidelity Freedom 2020 Fund 35,173,400
* 1,413,894 shares Fidelity Freedom 2030 Fund 18,309,929
* 342,519 shares Fidelity Freedom 2040 Fund 2,589,444
9,832,792 shares PIMCO Total Return Fund (Institutional Class) 105,309,204
5,047,658 shares T. Rowe Price Capital Appreciation Fund 88,334,007
2,087,115 shares T. Rowe Price High Yield Fund 14,735,030
2,914,760 shares Morgan Stanley International Fund, Inc.-International Equity Portfolio Class A 55,555,318
4,598,249 shares Legg Mason Value Trust Institutional Class Fund 289,137,889
-----------------
1,521,547,024
-----------------
INVESTMENT CONTRACTS
--------------------
Chase Manhattan
Synthetic Investment Contracts (Asset Backed)
2,307,121 units FannieMae GLBL, 4.69%, Matures 03-15-2004 2,307,121
Monumental Life Insurance Company
Synthetic Investment Contracts (Asset Backed)
102,641 units FHR 1522 HB 5.91%, Matures 3-15-2004 102,641
3,004,931 units FUSAM 1998-9 A 5.34%, Matures 1-20-2004 3,004,931
Morgan Guaranty
Synthetic Investment Contracts (Asset Backed)
2,020,882 units CIT Marine 99-A A3, 5.82, Matures 07-15-2005 2,020,882
284,068 units FH 1388 H 7.02%, Matures 08-16-2004 284,068
1,391,642 units FHR 1587 L 6.68%, Matures 07-15-2004 1,391,642
1,243,221 units FH 1601 PH 5.48%, Matures 01-18-2005 1,243,221
14
EXELON CORPORATION EMPLOYEE SAVINGS PLAN
----------------------------------------
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
----------------------------------------
AS OF DECEMBER 31, 2003
-----------------------
Schedule H, Part IV, Item 4i of Form 5500
-----------------------------------------
Employer Identification Number 23-2990190, Plan Number 003
----------------------------------------------------------
No of Shares or Current
No. of Units Description Cost ** Value
------------------------- -------------------------------------------------------- ---------------- -----------------
Rabo Bank
Synthetic Investment Contracts (Asset Backed)
2,299,562 units FH 1798 A 5.67%, Matures 06-15-2007 2,299,562
UBS AG
Synthetic Investment Contracts (Asset Backed)
4,030,693 units MBNAM 97-1 (A), 5.82%, Matures 08-16-2004 4,030,693
Westdeutsche Landesbank
Synthetic Investment Contract (Asset Backed)
4,009,615 units American Express 99-1 A, 5.72%, Matures 04-15-2004 4,009,615
2,377,426 units MSC 1999-CAM1 A2 7.06%, Matures 11-17-2008 2,377,426
-----------------
23,071,802
-----------------
LOANS
Participant Loans (5.25% - 10.50%) 60,979,282
-----------------
Total Investments $ 2,448,718,178
=================
* A party-in-interest to the Plan.
** Cost has been omitted as investments are participant directed
15
EXHIBIT INDEX
-------------
Exhibit filed with Form 11-K for the year ended December 31, 2003:
Exhibit Number Description of Exhibit
-------------- --------------------------------------------------------
23 Consent of Independent Registered Public Accounting Firm
16
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 28, 2004 Savings Plan
/s/ S. Gary Snodgrass
------------------------------
S. Gary Snodgrass
Chairman, Plan Committee
17