Exelon 2002 Annual Report Download - page 102

In 2002,ComEd issued $700 million of long-term debt primarily
consisting of the issuance of $600 million of 6.15% First
Mortgage Bonds,Series 98,due March 15,2012 and the issuance
of $100 million of Illinois Development Finance Authority float-
ing-rate Pollution Control Revenue Refunding Bonds, Series
2002 due April 15, 2013. In 2002, ComEd redeemed or paid at
maturity $1,540 million of long-term debt primarily consisting
of the redemption of $100 million of 7.25% Illinois Development
Finance Authority Pollution Control Revenue Refunding Bonds,
Series 1991 due June 1, 2011, the redemption of $200 million of
8.625% First Mortgage Bonds,Series 81,due February 1,2022,the
redemption of $200 million of 8.5% First Mortgage Bonds,Series
84 due July 15, 2022,the payment at maturity of $200 million of
7.375% First Mortgage Bonds,Series 85, due September 15, 2002,
the redemption of $200 million of 8.375% First Mortgage Bonds,
Series 86, due September 15, 2022, the payment at maturity of
$200 million of variable rate senior notes due September 30,
2002, the payment at maturity of $100 million of 9.17%
medium-term notes due October 15,2002,and the retirement of
$340 million in transitional trust notes.
In 2002,Generation exchanged $700 million of 6.95% Senior
Notes issued in 2001 for notes which are registered under the
Securities Act. ComEd exchanged $600 million of 6.15% First
Mortgage Bonds, Series 98, due March 15, 2012, for bonds which
are registered under the Securities Act. PECO exchanged $250
million of 5.95% private placement First and Refunding
Mortgage Bonds,due November 1,2011,for bonds which are reg-
istered under the Securities Act.The exchange bonds are identi-
cal to the outstanding bonds except for the elimination of
certain transfer restrictions and registration rights pertaining
to the outstanding bonds.ComEd,PECO and Generation did not
receive any cash proceeds from issuance of the exchange bonds.
In 2002 and 2001, ComEd entered into forward starting
interest rate swaps with an aggregate notional amount of $830
million and $250 million, respectively, to manage interest rate
exposure associated with anticipated debt issuance. In 2002,
forward starting interest rate swaps with an aggregate
notional amount of $450 million were settled with net proceeds
to counterparties of $10 million that has been deferred in regu-
latory assets and is being amortized over the life of the First
Mortgage Bonds as an increase to interest expense.
In 2002 and 2001, ComEd entered into interest rate swap
agreements with a notional amount of $250 million and $235
million, respectively, to effectively convert fixed rate debt to
floating rate debt.
In 2002,PECO issued $225 million of 4.75% First and Refunding
Mortgage Bonds,due October 1, 2012.This bond issuance repaid
commercial paper that was used to pay $222 million of First and
Refunding Mortgage Bonds at maturity with a weighted aver-
age interest rate of 7.30%. In connection with the issuance of
the First and Refunding Mortgage Bonds, PECO settled forward
starting interest rate swaps in the aggregate notional amount
of $200 million resulting in a $5 million pre-tax loss recorded in
other comprehensive income,which is being amortized over the
expected remaining life of the related debt.
In 2001, ComEd redeemed $196 million of 9.875% First
Mortgage Bonds, Series 75, due June 15, 2020 and retired $340
million in transitional trust notes.
In 2001, PECO Energy Transition Trust (PETT), a Delaware
business trust and a wholly owned subsidiary of PECO, refi-
nanced $805 million of floating rate Series 1999-A Transition
Bonds through the issuance by PETT of fixed-rate transition
bonds (Series 2001-A Transition Bonds). The 2001-A Transition
Bonds are non-callable, fixed rate securities with an interest
rate of 6.52%. The Series 2001-A Transition Bonds have an
expected final payment date of September 1, 2010 and a termi-
nation date of December 31, 2010. In connection with this refi-
nancing, PECO settled $318 million of forward starting interest
rate swaps resulting in a $6 million gain which is reflected in
other income and deductions due to the transaction no longer
being probable. Also, in connection with the refinancing, PECO
settled a portion of the interest rate swaps and the remaining
portion of the forward starting interest rate swaps resulting in
gains of $25 million, which were deferred and are being amor-
tized over the expected remaining lives of the related debt.
In 1999, PECO entered into treasury forwards associated
with the anticipated issuance of the Series 2000-A Transition
Bonds.On May 2,2000,these instruments were settled with net
proceeds to the counterparties of $13 million that has been
deferred and is being amortized over the life of the Series
2000-A Transition Bonds as an increase to interest expense.
In 1998, PECO entered into treasury forwards and forward
starting interest rate swaps to manage interest rate exposure
associated with the anticipated issuance of the Series 1999-A
Transition Bonds. On March 18, 1999, these instruments were
settled with net proceeds of $80 million to PECO that were
deferred and are being amortized over the life of the Series
1999-A Transition Bonds as a reduction of interest expense.
At December 31, 2002 and 2001, the aggregate unamortized
net gain on the settlement of the PECO swap transactions was
$36 million and $55 million, respectively, recorded in Other
Comprehensive Income.
ComEd prepayment premiums of $24 million, and net
unamortized premiums, discounts and debt issuance expenses
of $3 million, and prepayment premiums of $39 million, offset
by unamortized issuance premiums of $17 million associated
Notes To Consolidated Financial Statements
exelon corporation and subsidiary companies
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