-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, kCVqcAP4RCEiVxMb8H9DwCTQV+2vNx6olB95lVQEaGx4He5OI4eDNo5XD7UqtzRN b2w9FpbcpbnY4e1fKHLWfg== 0000950131-94-000487.txt : 19940407 0000950131-94-000487.hdr.sgml : 19940407 ACCESSION NUMBER: 0000950131-94-000487 CONFORMED SUBMISSION TYPE: 424B5 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19940406 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMONWEALTH EDISON CO CENTRAL INDEX KEY: 0000022606 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 360938600 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B5 SEC ACT: 33 SEC FILE NUMBER: 033-51379 FILM NUMBER: 94520568 BUSINESS ADDRESS: STREET 1: ONE FIRST NATIONAL PLZ 37TH FL STREET 2: P O BOX 767 CITY: CHICAGO STATE: IL ZIP: 60690 BUSINESS PHONE: 3122944321 424B5 1 PROSPECTUS/PROSPECTUS SUPPLEMENT Filed pursuant to Rule 424(b)(5) Registration No. 33-51379 PROSPECTUS SUPPLEMENT BOOK-ENTRY ONLY (To Prospectus Dated April 5, 1994) $150,000,000 COMMONWEALTH EDISON COMPANY 7% NOTES DUE FEBRUARY 15, 1997 Interest on the Notes offered hereby (the "Offered Notes") is payable semi- annually on February 15 and August 15 of each year, beginning August 15, 1994. The Offered Notes will not be redeemable prior to maturity. The Offered Notes will be registered in the name of Cede & Co., as registered owner and as nominee for The Depository Trust Company ("DTC"), New York, New York. Beneficial interests in the Offered Notes will be shown on, and transfers will be effected only through, records maintained by DTC (with respect to its participants' interests) and its participants. Except as described herein, Offered Notes will not be issued in certificated form. Settlement for the Offered Notes will be made in immediately available funds. The Offered Notes will trade in DTC's Same-Day Funds Settlement System until maturity, and secondary market trading activity for the Offered Notes will therefore settle in immediately available funds. All payments of principal and interest will be made by the Company in immediately available funds. See "Description of the Offered Notes." THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - -------------------------------------------------------------------------------- PRICE TO UNDERWRITING PROCEEDS TO PUBLIC(1) DISCOUNT COMPANY(1)(2) Per Offered Note........................ 100.000% .375% 99.625% Total................................... $150,000,000 $562,500 $149,437,500 - --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from April 12, 1994. (2) Before deducting expenses payable by the Company estimated to be $210,000. The Offered Notes are offered subject to receipt and acceptance by the Underwriters, to prior sale and to the Underwriters' right to reject any order in whole or in part and to withdraw, cancel or modify the offer without notice. It is expected that delivery of the Offered Notes will be made through the facilities of DTC on or about April 12, 1994. SALOMON BROTHERS INC MERRILL LYNCH & CO. PAINEWEBBER INCORPORATED The date of this Prospectus Supplement is April 5, 1994. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SECURITIES OFFERED HEREBY AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. DESCRIPTION OF THE OFFERED NOTES The following description of the particular terms of the Offered Notes supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of Notes set forth in the Prospectus, to which description reference is hereby made. Capitalized terms not defined herein have the meanings assigned to such terms in the Prospectus. GENERAL. The Offered Notes will be issued in a single series of Notes under the Company's Indenture dated as of September 1, 1987, as amended and supplemented, and as further supplemented by a Supplemental Indenture to be dated April 1, 1994, creating the Offered Notes. The Offered Notes will bear interest at the rate per annum, and will be due and payable on the date, specified in their title on the cover page of this Prospectus Supplement. The Offered Notes will be issued only in fully registered form and, when issued, will be registered in the name of Cede & Co., as registered owner and as nominee for DTC. DTC will act as securities depository for the Offered Notes. Purchases of beneficial interests in the Offered Notes will be made in book-entry form only, in denominations of $1,000 or any integral multiple thereof. Purchasers of such beneficial interests will not receive certificates representing their beneficial interests in the Offered Notes. See "Book-Entry Notes" below. No service charge will be made for any transfer or exchange of Offered Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charges that may be imposed in connection therewith. Principal and interest payments on the Offered Notes will be made by the Company to Cede & Co. (as nominee of DTC) so long as Cede & Co. is the registered owner. Disbursement of such payments to the DTC Participants is the responsibility of DTC, and disbursement of such payments to the beneficial owners of the Offered Notes is the responsibility of DTC Participants and Indirect Participants, all as described below under "Book-Entry Notes." The Offered Notes will not be redeemable prior to maturity. The Offered Notes will not be subject to any sinking fund. BOOK-ENTRY NOTES. DTC will act as securities depository for the Offered Notes. The Offered Notes will be issued as fully-registered securities registered in the name of Cede & Co., DTC's partnership nominee, and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC holds securities that its participants ("DTC Participants") deposit with DTC. DTC also facilitates the settlement among DTC Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in DTC Participants' accounts, thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations S-2 and certain other organizations. DTC is owned by a number of the DTC Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and the DTC Participants are on file with the Securities and Exchange Commission. Purchases of beneficial ownership interests in the Offered Notes under the DTC system must be made by or through DTC Participants, which will receive a credit for the Offered Notes on DTC's records. The ownership interest of each beneficial owner of an Offered Note (a "Beneficial Owner") is in turn to be recorded on the DTC Participants' and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the DTC Participant or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of beneficial ownership interests in the Offered Notes are to be accomplished by entries made on the books of DTC Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their beneficial ownership interests in the Offered Notes, except in the event that use of the book-entry only system for the Offered Notes is discontinued as described below. To facilitate subsequent transfers, all Offered Notes deposited by DTC Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Offered Notes with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Offered Notes. DTC's records reflect only the identity of the DTC Participants to whose accounts such Offered Notes are credited, which may or may not be the Beneficial Owners. The DTC Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to DTC Participants, by DTC Participants to Indirect Participants, and by DTC Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Neither DTC nor Cede & Co. will consent or vote with respect to the Offered Notes. Under its usual procedures, DTC mails an "Omnibus Proxy" to the Company as soon as possible after the record date. The "Omnibus Proxy" assigns Cede & Co.'s consenting or voting rights to those DTC Participants to whose accounts the Offered Notes are credited on the record date identified in a listing attached to the "Omnibus Proxy." Principal and interest payments on the Offered Notes will be made to DTC. DTC's practice is to credit DTC Participants' accounts on a payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on a payment date. Payments by DTC Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such DTC Participant and not of DTC, the Indenture Trustee or the Company, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments of principal and interest to DTC is the responsibility of the Indenture Trustee. Disbursement of such payments to DTC Participants shall be the responsibility of DTC and disbursement of such payments to the Beneficial Owners shall be the responsibility of the DTC Participants and Indirect Participants. If DTC is at any time unwilling or unable to continue as securities depository and a successor depository is not appointed by the Company within 90 days after notice of such condition, the Company will issue Offered Notes in certificated form in exchange for each Offered Note issued in book-entry S-3 form. In addition, the Company may at any time determine that Offered Notes will not be represented by book-entry notes, and, in such event, will issue Offered Notes in certificated form in exchange for all Offered Notes then issued in book-entry form. In any such instance, an owner of book-entry notes will be entitled to physical delivery in certificated form of Offered Notes equal in principal amount to such book-entry notes and to have such Offered Notes registered in such owner's name. Offered Notes so issued in certificated form will be issued in denominations of $1,000 and integral multiples of $1,000 in excess thereof and will be issued in registered form only, without coupons. The information provided immediately above under this caption has been provided by DTC. No representation is made by the Company or the Underwriters as to the accuracy or adequacy of such information or as to the absence of material adverse changes in such information subsequent to the date hereof. For so long as the Offered Notes are registered in the name of DTC or its nominee, Cede & Co., the Company and the Indenture Trustee will recognize only DTC or its nominee, Cede & Co., as the registered owner of the Offered Notes for all purposes, including payments, notices and voting. The Company shall not have any responsibility or obligation with respect to the accuracy of the records of DTC, its nominee or any DTC Participant or Indirect Participant relating to any beneficial ownership interest in any Offered Note or with respect to the payment to any DTC Participant or Indirect Participant or any other person, other than a registered owner of an Offered Note, of any amount with respect to the principal of, or interest on, any Offered Note. SAME-DAY SETTLEMENT AND PAYMENT. Settlement for the Offered Notes will be made by the Underwriters in immediately available funds. All payments of principal and interest on the Offered Notes will be made by the Company in immediately available funds. Secondary trading in long-term bonds and notes of corporate issuers is generally settled in clearing-house or next-day funds. In contrast, the Offered Notes will trade in DTC's Same-Day Funds Settlement System until maturity, and secondary market trading activity in the Offered Notes will therefore be required by DTC to settle in immediately available funds. No assurance can be given as to the effect, if any, of settlement in immediately available funds on trading activity in the Offered Notes. UNDERWRITING Subject to the terms and conditions set forth in an underwriting agreement (the "Underwriting Agreement") between the Company and Salomon Brothers Inc, as representative of the several underwriters named therein (the "Underwriters"), the Company has agreed to sell to each of the Underwriters, and each of the Underwriters has severally agreed to purchase, the principal amounts of the Offered Notes set forth after their names below. The Underwriting Agreement provides that the obligations of the Underwriters are subject to certain conditions precedent and that the Underwriters will be obligated to purchase all of the Offered Notes if any are purchased.
PRINCIPAL AMOUNT OF OFFERED UNDERWRITER NOTES - ----------- ------------ Salomon Brothers Inc.............................................. $ 50,000,000 Merrill Lynch, Pierce, Fenner & Smith Incorporated............................................. 50,000,000 PaineWebber Incorporated.......................................... 50,000,000 ------------ $150,000,000 ============
S-4 The Underwriters have advised the Company that they propose initially to offer the Offered Notes to the public at the public offering price set forth on the cover page of this Prospectus Supplement, and to certain dealers at such price less a concession not in excess of .25 of 1% of the principal amount of the Offered Notes. The Underwriters may allow and such dealers may reallow a discount not in excess of .25 of 1% of the principal amount of the Offered Notes to certain other dealers. After the initial public offering, the public offering price, concession and discount may be changed. The Company has agreed to indemnify the several Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute with respect to payments which such Underwriters may be required to make in respect thereof. The Company does not intend to apply for listing of the Offered Notes on a national securities exchange. Each Underwriter may make a market in the Offered Notes, but such Underwriter is not obligated to do so and may discontinue market-making at any time without notice. No assurances can be given as to the liquidity of, or that there will be a secondary market for, the Offered Notes. Certain of the Underwriters engage or may in the future engage in transactions with and perform services for the Company and certain of its affiliates in the ordinary course of business. S-5 COMMONWEALTH EDISON COMPANY DEBT SECURITIES CUMULATIVE PREFERENCE STOCK Commonwealth Edison Company (the "Company") may offer, from time to time, not to exceed $1,030,000,000 aggregate initial offering price of its (i) Debt Securities (the "Debt Securities"), consisting of First Mortgage Bonds (the "Bonds"), in one or more series, and Notes (the "Notes"), in one or more series, and (ii) Cumulative Preference Stock, without par value (the "New Cumulative Preference Stock"), in one or more series. The Debt Securities and New Cumulative Preference Stock (together, the "Securities") may be offered separately or together, in separate series, in amounts, at prices and on terms to be determined at the time or times of sale. The Bonds will be issued under, and secured by, a mortgage which constitutes a lien on substantially all of the properties and franchises of the Company. The Notes will be unsecured, and the indenture under which they are to be issued contains no limitations on the issuance by the Company of other indebtedness (whether secured or unsecured). For each offering of Bonds (the "Offered Bonds") or Notes (the "Offered Notes") for which this Prospectus is being delivered, there is an accompanying Prospectus Supplement (the "Prospectus Supplement") that sets forth the specific designation, aggregate principal amount, maturity or maturities, rate or rates and times of payment of interest, sinking fund provisions, redemption terms and any other special terms of the Offered Bonds or the Offered Notes, as the case may be, and any planned listing thereof on a securities exchange (although no assurance can be given as to the liquidity of, or the trading market for, any of the Debt Securities). For each offering of New Cumulative Preference Stock for which this Prospectus is being delivered (the "Offered Preference"), there is an accompanying Prospectus Supplement that sets forth the number of shares, public offering price, dividend rate (or method of calculation thereof), redemption and sinking fund terms and any other special terms of the Offered Preference, as well as any planned listing thereof on a securities exchange (although no assurance can be given as to the liquidity of, or the trading market for, any shares of the New Cumulative Preference Stock). See "Recent Rate Proceedings" herein for certain other considerations relating to an investment in the Securities. The Company may sell the Securities to or through underwriters or dealers, directly to other purchasers or through agents. The names of any underwriters, dealers or agents involved in the distribution of the Offered Bonds, the Offered Notes or the Offered Preference, as the case may be (the "Offered Securities"), any applicable discounts, commissions or allowances, any initial public offering price and the proceeds to the Company from the sale of the Offered Securities are set forth in the Prospectus Supplement. See "Plan of Distribution" herein. ---------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECU- RITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------------- The date of this Prospectus is April 5, 1994. THE COMPANY Commonwealth Edison Company (the "Company") is engaged principally in the production, purchase, transmission, distribution and sale of electricity to a diverse base of residential, commercial and industrial customers. The Company's electric service territory has an area of approximately 11,540 square miles and an estimated population of approximately 8.1 million as of December 31, 1993 and approximately 8.2 million as of December 31, 1992. It includes the city of Chicago, an area of about 225 square miles with an estimated population of three million from which the Company derived approximately one-third of its ultimate consumer revenues in the twelve months ended February 28, 1994. The Company had approximately 3.3 million electric customers as of February 28, 1994. The Company's principal executive offices are located at 10 South Dearborn Street, Post Office Box 767, Chicago, IL 60690-0767, and its telephone number is 312/394-4321. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith files reports and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements and other information filed by the Company can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at its Regional Offices located at Citicorp Center, 500 West Madison Street, Chicago, IL 60661 and Seven World Trade Center, New York, NY 10048. Copies of such material can be obtained from the Public Reference Section of the Commission, Washington, D.C. 20549 at prescribed rates. In addition, reports, proxy statements and other information concerning the Company may be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, NY, the Chicago Stock Exchange, 440 South LaSalle Street, Chicago, IL and the Pacific Stock Exchange, 301 Pine Street, San Francisco, CA, the exchanges on which certain of the Company's securities are listed. The Company has filed with the Commission a Registration Statement on Form S-3 under the Securities Act of 1933, as amended, with respect to the Securities. This Prospectus does not contain all of the information set forth in such Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. For further information, reference is made to such Registration Statement. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents filed by the Company with the Commission (File No. 1- 1839) are incorporated in this Prospectus by reference and made a part hereof: (a) The Company's Annual Report on Form 10-K for the year ended December 31, 1993 (the "1993 Form 10-K"); and (b) The Company's Current Report on Form 8-K/A-1 dated January 28, 1994 (the "January 28, 1994 Form 8-K/A-1 Report"). All documents subsequently filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the date of this Prospectus and prior to the termination of the offering or offerings made by this Prospectus, shall be deemed to be incorporated in this Prospectus by reference and to be a part hereof from the respective dates of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference in this Prospectus shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained in this Prospectus or in any other subsequently filed document which also is or is deemed to be incorporated by reference in this Prospectus modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. 2 The Company will provide without charge to each person, including any beneficial owner, to whom this Prospectus is delivered, upon written or oral request of such person, a copy of any or all of the documents that have been or may be incorporated in this Prospectus by reference, other than certain exhibits to such documents. Such requests should be directed to David A. Scholz, Secretary, Commonwealth Edison Company, 37th Floor, One First National Plaza, Post Office Box 767, Chicago, IL 60690-0767 (telephone number 312/394- 3126). RECENT RATE PROCEEDINGS The Company's revenues, net income, cash flows, plant carrying costs, ratios of earnings to fixed charges and ratios of earnings to fixed charges and preferred and preference stock dividend requirements have been affected directly by various rate-related proceedings. These proceedings have related principally to the rate base treatment of the Company's four most recently completed nuclear generating units, but have also related to proceedings concerning the reduction in the difference between the Company's summer and non-summer residential rates that was effected in the summer of 1988, as well as fuel reconciliation proceedings conducted by the Illinois Commerce Commission ("ICC") principally concerning the recoverability of the costs of the Company's western coal. The uncertainties associated with such proceedings and issues, among other things, led to the Rate Matters Settlement and the Fuel Matters Settlement (which are discussed below). On November 4, 1993, a proposed settlement (the "Rate Matters Settlement") became final concerning the proceedings relating to the Company's 1985 and 1991 ICC rate orders (which orders related principally to the recovery of costs associated with the Company's four most recently completed nuclear generating plants, Byron Units 1 and 2 and Braidwood Units 1 and 2), the proceedings concerning the reduction in the difference between the Company's summer and non-summer residential rates that was effected in the summer of 1988, outstanding issues related to the appropriate interest rate and rate design to be applied to a refund that was made in 1990 following the reversal of a December 1988 ICC rate order, and a rider to the Company's rates that the Company was required to file as a result of the change in the federal corporate income tax rate made by the Tax Reform Act of 1986. Effective as of November 4, 1993, the Company reduced its rates by approximately $339 million annually and commenced refunding approximately $1.26 billion (including revenue taxes), plus interest at five percent on the unpaid balance, through temporarily reduced rates over an initial refund period scheduled to be twelve months (to be followed by a reconciliation period of no more than five months). On November 15, 1993, a proposed settlement (the "Fuel Matters Settlement") became final which relates to the ICC fuel reconciliation proceedings involving the Company for the period from 1985 through 1988 and to future challenges by the settling parties to the prudency of the Company's western coal costs for the period from 1989 through 1992. Under the Fuel Matters Settlement, effective as of December 2, 1993, the Company commenced paying approximately $108 million (including revenue taxes) to its customers through temporarily reduced collections under its fuel adjustment clause over a twelve-month period. On February 10, 1994, the Company filed a request with the ICC to increase electric operating revenues by approximately $460 million, or 7.9%, on an annual basis above the level of revenues approved in the Rate Matters Settlement. This request principally reflects the inclusion of Byron Unit 2 and Braidwood Units 1 and 2 (collectively, the "Units") in the Company's rate base as fully "used and useful," increased operation and maintenance expenses over the level reflected in the ICC rate order issued on January 6, 1993 (as subsequently amended, the "Remand Order"), increased contributions to the external trust funds which the Company is required to fund to cover the eventual decommissioning of its nuclear power plants and lower debt and equity costs. The ICC has suspended the rates, appointed hearing examiners and ordered an investigation. Under the Illinois Public Utilities Act, the ICC must decide the case by early January 1995. For additional information, including the accounting effects of the foregoing settlements, see "Summary Information" and Notes A, B and C of Notes to Summary Information. 3 SUMMARY INFORMATION The following summary information is qualified in its entirety by the information appearing elsewhere in this Prospectus and by the information and financial statements appearing in the documents incorporated in this Prospectus by reference. THE OFFERING Issue................... Not to exceed $1,030,000,000 aggregate initial offer- ing price of Securities, consisting of Bonds, Notes and New Cumulative Preference Stock Terms of Debt Securities............. To be determined at time or times of sale Terms of New Cumulative Preference Stock....... To be determined at time or times of sale Use of Proceeds......... For general corporate purposes of the Company, including to discharge or refund outstanding long-term debt and preference stock of the Company
COMMONWEALTH EDISON COMPANY Estimated Population of Service Area............................... 8,100,000 Customers (as of February 28, 1994)................................ 3,318,812 Sales (thousands of kilowatthours-12 months ended February 28, 1994)............................................................. 88,784,948 Net Electric Generating Capability, net of summer limitations (kilowatts)....................................................... 21,965,000 Fuel Sources of Kilowatthour Generation (12 months ended February 28, 1994): Nuclear........................................................... 74% Coal.............................................................. 24 Oil............................................................... 1 Natural gas....................................................... 1 ---------- 100% ==========
FINANCIAL INFORMATION
TWELVE MONTHS YEAR ENDED DECEMBER 31 ENDED ------------------------------------------------------------------ FEBRUARY 28, 1994 1989(B) 1990(B) 1991(B) 1992(B) 1993(A)(B) (A)(B)(C) ---------- ---------- ---------- ---------- ---------- ----------------- Electric Operating Revenues (thousands of dollars)(1)............ $5,819,499(2) $5,310,819(2) $6,275,533(2) $6,026,321(2) $5,260,440(3) $5,304,215(3) Net Income (thousands of dollars)............... $ 693,683 $ 128,291 $ 94,887 $ 513,981 $ 112,440(4) $ 92,361 Net Income on Common Stock (thousands of dollars)............... $ 598,503 $ 45,796 $ 16,599 $ 443,442 $ 46,388(4) $ 27,036 Earnings per Common Share.................. $ 2.83 $ 0.22 $ 0.08 $ 2.08 $ 0.22(4) $ 0.13 Ratios of Earnings to-- Fixed Charges (D)...... 2.49 1.42 1.59 2.06 1.19 1.19 Fixed Charges and Preferred and Preference Stock Dividend Requirements (D)................... 2.06 1.21 1.36 1.78 1.03 1.03
- -------- See Notes (A) through (D) on pages 5 through 7. (1) For the years 1989 and 1990, electric operating revenues have been increased to reflect the reclassification of interchange sales which were previously recorded net with purchased power. (2) Reflects provisions for revenue refunds of $18.4 million for the year ended December 31, 1992, $0.9 million for the year ended December 31, 1991 and $536.4 million for the year ended December 31, 1990, relating in each case to the Illinois Supreme Court's ("Supreme Court") reversal of the ICC's December 1988 rate order and the Supreme Court's decision regarding Byron Unit 1. During 1989, the Company recorded provisions for revenue refunds of $31.8 million with respect to the Byron Unit 1 remand proceedings and the summer/non-summer rate differential matter. (3) Reflects provisions for revenue refunds of $1,281 million for the year ended December 31, 1993 and $1,282 million for the twelve months ended February 28, 1994, recording the effects of the Rate Matters Settlement and the Fuel Matters Settlement, as discussed below in Note A on page 5 of this Prospectus. (4) In January 1993, the Company adopted an accounting standard which requires an asset and liability approach for financial accounting and reporting for income taxes as opposed to the deferred method that the Company had previously used. The Company adopted the standard as a cumulative effect of a change in an accounting principle, which increased net income and net income on common stock for the year ended December 31, 1993 by $9.7 million, or $0.05 per common share. 4 NOTES TO SUMMARY INFORMATION: (A) On September 24, 1993, the Company's Board of Directors approved two proposed settlements which the Company's management had reached with parties involved in several of the proceedings and matters relating to the level of the Company's rates for electric service. The Rate Matters Settlement concerned the proceedings relating to the Company's 1985 and 1991 ICC rate orders (which orders relate to, among other things, the recovery of costs associated with the Company's four most recently completed nuclear generating plants, Byron Units 1 and 2 and Braidwood Units 1 and 2), the proceedings relating to the reduction in the difference between the Company's summer and non-summer residential rates that was effected in the summer of 1988, outstanding issues relating to the appropriate interest rate and rate design to be applied to a refund made by the Company during 1990 relating to a December 1988 ICC rate order, and matters related to a rider to the Company's rates that the Company was required to file as a result of the change in the federal corporate income tax rate made by the Tax Reform Act of 1986. The Fuel Matters Settlement related to the ICC fuel reconciliation proceedings involving the Company for the period from 1985 through 1988 and to future challenges by the settling parties to the prudency of the Company's western coal costs for the period from 1989 through 1992. Each of these settlements was subject to appropriate action by the ICC or the courts having jurisdiction over the proceedings. As a result of subsequent ICC and judicial actions, the Rate Matters Settlement became final on November 4, 1993. Under the Rate Matters Settlement, effective as of November 4, 1993, the Company reduced its rates by approximately $339 million annually and commenced refunding approximately $1.26 billion (including revenue taxes), plus interest at five percent on the unpaid balance, through temporarily reduced rates over an initial refund period scheduled to be twelve months (to be followed by a reconciliation period of no more than five months). The Company had previously deferred the recognition of revenues during 1993 as a result of developments in the proceedings related to the March 1991 ICC rate order, which resulted in a reduction to 1993 net income of approximately $160 million. The recording of the effects of the Rate Matters Settlement in October 1993 reduced the Company's 1993 net income and retained earnings by approximately $292 million or $1.37 per common share, in addition to the effect of the deferred recognition of revenues and after the partially offsetting effect of recording approximately $269 million (or $1.26 per common share) in deferred carrying charges, net of income taxes, authorized in the Remand Order. In January 1994, a purported class action was filed in the Circuit Court of Cook County, Illinois challenging the method in which the refunds are being made to residential customers in the Rate Matters Settlement. The Company does not believe that the complaint has any merit. As a result of subsequent ICC actions, the Fuel Matters Settlement became final on November 15, 1993. Under the Fuel Matters Settlement, effective as of December 2, 1993, the Company commenced paying approximately $108 million (including revenue taxes) to its customers through temporarily reduced collections under its fuel adjustment clause over a twelve-month period. The Company recorded the effects of the Fuel Matters Settlement in October 1993, which effects reduced the Company's net income and retained earnings by approximately $62 million or $0.29 per common share. For additional information regarding the proceedings and matters settled, see Note B below and Notes 3, 17 and 19 of Notes to Financial Statements in the January 28, 1994 Form 8-K/A-1 Report. (B) The Company's revenues, net income, cash flows, plant carrying costs, ratios of earnings to fixed charges and ratios of earnings to fixed charges and preferred and preference stock dividend requirements have been affected directly by various rate-related proceedings. During the periods presented under the subcaption "Financial Information" in "Summary Information," the Company was involved in proceedings concerning its October 1985 ICC rate order (which related principally to the recovery of costs associated with its Byron Unit 1 nuclear generating unit), proceedings concerning its March 1991 ICC rate order (which related principally to the recovery of costs 5 associated with the Units), proceedings concerning the reduction in the difference between the Company's summer and non-summer residential rates that was effected in the summer of 1988, and ICC fuel reconciliation proceedings principally concerning the recoverability of the costs of the Company's western coal. In addition, there were outstanding issues related to the appropriate interest rate and rate design to be applied to a refund that was made in 1990 following the reversal of a December 1988 ICC rate order and a rider to the Company's rates that the Company was required to file as a result of the change in the federal corporate income tax rate made by the Tax Reform Act of 1986. The uncertainties associated with such proceedings and issues, among other things, led to the Rate Matters Settlement and the Fuel Matters Settlement. See Note A for additional information. The proceedings following the Company's 1985 ICC rate order resulted in additional plant cost disallowances related to Byron Unit 1 (approximately $200 million) and associated refunds and interest (approximately $163 million), the income effects of which were largely recorded in October 1989 ($62 million or $0.29 per common share) and the second quarter of 1990 ($208 million or $0.98 per common share). An April 1992 Supreme Court order, which resolved certain jurisdictional and interest rate issues, resulted in additional provisions for refunds with interest and revenue taxes and additional interest aggregating approximately $73 million (which reduced net income by approximately $50 million or $0.24 per common share) during 1992. Prior to the Rate Matters Settlement, an open issue in these proceedings was the amount of refunds, if any, that the Company owed for the period from January 1, 1989 through March 19, 1991, as a result of the previously recorded plant cost disallowances. Although the Company had received a favorable ICC order, which was issued on June 2, 1993, there was no assurance that the order would be upheld on appeal. The proceedings following the Company's 1991 ICC rate order resulted in plant cost disallowances related to the Units and a suspension of the second and third steps of the scheduled three-step rate increase (the first step rate increase of $483 million was allowed to go into effect). The disallowances, aggregating approximately $734 million, were recorded in March and November 1991 and reduced net income by an aggregate of approximately $551 million or $2.59 per common share. Following a Supreme Court remand of the 1991 order to the ICC, the ICC issued the Remand Order determining that the then effective $483 million rate increase under the 1991 order should be reduced by approximately $339 million to $144 million and ordering the Company to make refunds to its customers over a six-month period commencing February 15, 1993. On January 21, 1993, the Supreme Court granted the Company's request for a stay of the effectiveness of the Remand Order pending administrative and judicial review. Applications for rehearing were denied by the ICC, and appeals were filed with the Illinois Appellate Court ("Appellate Court"), which were pending until the Rate Matters Settlement was finalized. The proceedings related to the reduction in the differential between the Company's summer and non-summer residential rates stem from two orders entered by the ICC in April and June 1988. Both orders were intended to reduce the differential without affecting the Company's overall revenues provided under the then effective rates set forth in the Company's October 1985 ICC rate order. The Company billed under the rates allowed under the June order. Those billings resulted in revenues through year-end 1988 approximately $150 million greater than would have been billed under the specific charges set forth in the April order and approximately $5.7 million over what would have been billed under the October 1985 rate order. As a result of the proceedings that followed, the Company refunded $5.7 million (in its May 1990 billing cycle); however, various intervenors continued to seek additional refunds. The matter was pending before the Appellate Court prior to the finalization of the Rate Matters Settlement. The Illinois Public Utilities Act requires the ICC to hold annual public hearings to determine whether each utility's fuel adjustment clause reflects actual costs of fuel and power prudently purchased 6 and to reconcile amounts collected with actual costs. Through its fuel adjustment clause, the Company recovers from its customers the cost of the fuel used to generate electricity and of purchased power as compared to fuel costs included in base rates. The Company is currently involved in proceedings relating to the amounts collected under its fuel adjustment clause with respect to 1989 through 1992. Under the Fuel Matters Settlement, parties to the settlement have agreed not to challenge the prudency of the Company's western coal costs for the period from 1989 through 1992. The Company's western coal contracts and its rail contracts for delivery of the western coal were renegotiated during 1992 effective as of January 1, 1993, to provide, among other things, for significant reductions in the delivered price of the coal over the duration of the contracts. However, the renegotiated contracts provide for the purchase of certain coal at prices substantially above currently prevailing market prices and the Company has significant purchase commitments under its contracts. For additional information relating to the Company's commitments for the purchase of coal under long-term contracts, see "Management's Discussion and Analysis of Financial Condition and Results of Operations," subcaption "Liquidity and Capital Resources," and Notes 17 and 19 of Notes to Financial Statements in the January 28, 1994 Form 8-K/A-1 Report. For additional information regarding the foregoing proceedings, see Notes 2 and 3 of Notes to Financial Statements in the June 30, 1993 Form 10-Q. (C) On February 10, 1994, the Company filed a request with the ICC to increase electric operating revenues by approximately $460 million, or 7.9%, on an annual basis above the level of revenues approved in the Rate Matters Settlement. This request principally reflects the inclusion of the Units in the Company's rate base as fully "used and useful," increased operation and maintenance expenses over the level reflected in the Remand Order, increased contributions to the external trust funds which the Company is required to fund to cover the eventual decommissioning of its nuclear power plants and lower debt and equity costs. The ICC has suspended the rates, appointed hearing examiners and ordered an investigation. Under the Illinois Public Utilities Act, the ICC must decide the case by early January 1995. In the Remand Order, the rate determination was based upon, among other things, findings by the ICC with respect to the extent to which the Units were "used and useful" during the 1991 test year period of the rate order. With respect to the "used and useful" issue, the ICC applied a needs and economic benefits methodology, using a twenty percent reserve margin and forecasted peak demand, and found Byron Unit 2 and Braidwood Units 1 and 2 to be 93%, 21% and 0%, respectively, "used and useful." The Company has not recorded any disallowances related to the "used and useful" issue. The Company considers the "used and useful" disallowance in the Remand Order to be temporary. The ICC concluded in the Remand Order that the forecasts in the record in that proceeding indicate that Braidwood Units 1 and 2 will be fully "used and useful" within the reasonably foreseeable future. (D) For purposes of computing the ratios of earnings to fixed charges and the ratios of earnings to fixed charges and preferred and preference stock dividend requirements: (i) earnings consist of net income before deducting net provisions for income taxes (including deferred taxes and current income taxes applicable to nonoperating activities), investment tax credits deferred and fixed charges; (ii) fixed charges consist of interest on debt, amortization of debt discount, premium and expense, and the estimated interest component of nuclear fuel and other lease payments and rentals; and (iii) preferred and preference stock dividend requirements represent an amount equal to income, before income taxes, which would be required to meet the dividends on preferred and preference stocks. For additional information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the January 28, 1994 Form 8-K/A-1 Report. 7 USE OF PROCEEDS The proceeds from the sale of Securities offered hereby will be used for general corporate purposes, including to discharge or refund (by redemption or by purchase on the open market, in private transactions, by tender offer or otherwise) outstanding long-term debt and preference stock of the Company, to finance the Company's ongoing capital improvement program, nuclear fuel expenditures and contributions to nuclear decommissioning trusts, and to supplement working capital. Long-term debt and preference stock to be discharged or refunded is expected to consist of maturing debt and/or sinking fund installments on outstanding preference stock and, should market conditions and the terms of the related debt instrument or preference stock permit, debt and/or preference stock to be refinanced with debt and/or preference stock bearing lower interest or dividend rates. For information concerning the Company's outstanding long-term debt and preference stock, see Statements of Consolidated Capitalization in the January 28, 1994 Form 8-K/A-1 Report. DESCRIPTION OF BONDS GENERAL. The Bonds will be issued under the Company's Mortgage dated July 1, 1923, as amended and supplemented, and as to be further supplemented by one or more Supplemental Indentures creating the respective series in which the Bonds are to be issued. Continental Bank, National Association (the "Trustee") and M. J. Kruger are the Trustees under such Mortgage, as amended and supplemented, and Supplemental Indentures thereto (collectively hereinafter called the "Mortgage"), copies of which are filed as exhibits to the Registration Statement. The Mortgage provides generally for the issuance of first mortgage bonds in series. The following statements are brief summaries of certain of the provisions of the Mortgage and reference is made to the aforementioned exhibits for a more complete statement of such provisions. The terms "lien of the Mortgage," "mortgage date of acquisition," "permitted lien," "prior lien," "prior lien bonds," "property additions" and "utilized under the Mortgage" are hereinafter used with the meanings ascribed to such terms, respectively, by the Mortgage. (Sections 1.27, 1.28, 1.39, 1.40, 1.41, 1.42 and 1.58) The Mortgage contains provisions under which substantially all of the properties of the Company's electric utility subsidiary, Commonwealth Edison Company of Indiana, Inc. (the "Indiana Company"), might be subjected to the lien of the Mortgage if the Company should so determine, as additional security for the Company's bonds, whereupon such subsidiary would become a "mortgaged subsidiary," as defined in the Mortgage. (Section 1.31) Since the Company has not as yet made any determination as to causing the Indiana Company to become a mortgaged subsidiary, those provisions of the Mortgage, hereinafter summarized, which relate to a mortgaged subsidiary as well as to the Company, are stated as though they relate to the Company only. The Bonds will be issued only in fully registered certificated or book-entry form, without coupons, in the denomination of $1,000 or any authorized multiple of $1,000. It is expected that the Bonds will be delivered initially in definitive form. The Company reserves the right, however, to make initial delivery of the Bonds in temporary form. No service charge will be made for any transfer or exchange of any Bonds, except, in the case of transfer, a charge sufficient to reimburse the Company for any stamp or other tax or governmental charge required to be paid will be made. Principal of the Bonds and interest thereon will be payable in Chicago or in New York City, except as may otherwise be set forth in the applicable Prospectus Supplement. Interest on each registered Bond issued in certificated form (with limited exceptions as provided in the Mortgage) will be paid to the person in whose name such Bond is registered at the close of business on the applicable record date specified in the Bond. Payment of interest on Bonds issued in book-entry form will be made to The Depository Trust Company, New York, New York, or its nominee. 8 Any terms of the Bonds which are not summarized herein will be described in the applicable Prospectus Supplement. REDEMPTION PROVISIONS. Any applicable redemption provisions of the Bonds will be fixed for each series of Bonds at the time of sale of any such series. SECURITY. The Bonds will rank equally and ratably with all bonds, irrespective of series, now outstanding or hereafter issued under the Mortgage. The Mortgage constitutes a direct first mortgage lien on substantially all property and franchises (other than expressly excepted property) now owned by the Company, subject only to permitted liens. All property and franchises (other than expressly excepted property and property which may be acquired by the Company subsequent to the filing of a bankruptcy proceeding with respect to the Company under the Bankruptcy Reform Act of 1978) hereafter acquired by the Company will become subject to the lien of the Mortgage, subject only to permitted liens and liens, if any, existing or placed on such after-acquired property at the time of acquisition thereof. There are expressly excepted from the lien of the Mortgage, whether now owned or hereafter acquired, certain real estate not used in the public utility business, real estate held by the Company in the name of a nominee, cash and securities not specifically pledged under the Mortgage, receivables, contracts (other than leases), materials and supplies not included in utility plant accounts, merchandise, automobiles, trucks and other transportation equipment and office furniture and equipment. (Divisions A and B of the Supplemental Indenture dated August 1, 1944) ISSUANCE OF ADDITIONAL BONDS. The Mortgage provides that no bonds may be issued which, as to security, will rank ahead of the Bonds, but, as hereinafter indicated, the Company may, subject to certain limitations, acquire property subject to prior liens. The aggregate principal amount of other bonds which may be issued under the Mortgage and which as to security will rank equally with the Bonds is not limited except as indicated below. Additional bonds of any series may be issued, subject to the provisions of the Mortgage, in a principal amount equal to (a) 66 2/3% of net property additions not previously utilized under the Mortgage, (b) the amount of cash deposited with the Trustee as the basis for the issuance of such bonds and (c) the amount of bondable bond retirements not previously utilized under the Mortgage; provided, however, that no such bonds in any event may be issued under (a) or (b), or under (c) if the bonds to be issued bear a higher rate of interest than that borne by the bonds retired or being retired (except in case such bonds retired or being retired mature within two years), unless the net earnings of the Company for a twelve-month period within the immediately preceding fifteen-month period shall have been equal to at least two and one-half times the annual interest on all bonds then outstanding under the Mortgage, including the bonds then applied for but not including any bonds then being retired, and on all prior lien bonds then outstanding but not including any prior lien bonds then being retired. For purposes of such net earnings test, revenues include amounts billed subject to refund including such amounts collected pursuant to the rate proceedings discussed in Note B. The net earnings calculation under the Mortgage is not affected by certain accounting write-offs related to plant costs. (For additional information, see Note B on pages 5 through 7 of this Prospectus.) (Sections 4.02, 4.03, 4.04, 1.32 and 1.33) The Mortgage provides that cash deposited with the Trustee as a basis for the issuance of bonds shall be (a) paid over to the Company in an amount, certified to the Trustee, equal to 66 2/3% of the amount of net property additions not previously utilized under the Mortgage, or in an amount equal to 9 the amount of bondable bond retirements not previously utilized under the Mortgage, or both, or (b) applied to the purchase or redemption of bonds. (Section 9.02) At February 28, 1994, the amount of net property additions, including nuclear fuel, not previously utilized under the Mortgage was approximately $1,092 million (of which approximately $911 million was available to be utilized for the issuance of additional bonds subject to compliance with other provisions), and the amount of bondable bond retirements not previously utilized under the Mortgage was approximately $3,272 million. Bonds covered by this Prospectus will be issued on the basis of net property additions unless otherwise stated in the applicable Prospectus Supplement. "Bondable bond retirements" means an amount equal to the principal amount of bonds retired by application of funds deposited with the Trustee or by surrender of bonds to the Trustee for cancellation, whether or not such deposit of funds or surrender of bonds is pursuant to a sinking fund or purchase fund. (Section 1.10) "Net earnings" means the earnings of the Company as defined in the Mortgage after deducting all charges except: (a) charges for the amortization, write- down or write-off of acquisition adjustments or intangibles; (b) property losses charged to operations; (c) provisions for income and excess or other profits taxes imposed on income after the deduction of interest charges, or charges made in lieu of such taxes; (d) interest charges; and (e) amortization of debt and stock discount and expense or premium. Any net profit or net loss from merchandising and jobbing is to be deducted from operating expenses or added to operating expenses, as the case may be. Net non-operating income from property and securities not subject to the lien of the Mortgage may be included in revenues but only to the extent of not more than 10% of the total of such net earnings. No profits or losses on the disposition of property or securities or on the reacquisition of securities shall be included in net earnings. The net earnings calculation under the Mortgage is not affected by certain accounting write-offs related to plant costs. (Section 1.32) "Net property additions" means the amount of $50 million, plus the cost or fair value as of the mortgage date of acquisition thereof, whichever is less, of property additions, less all "current provisions for depreciation" made by the Company after December 31, 1944, after deducting from such current provisions for depreciation the amount of the "renewal fund requirement," if any, for the year 1945 and each subsequent year. (Section 1.44) "Current provisions for depreciation" for any period means the greater of: (a) the total of the amounts appropriated by the Company for depreciation during such period on all property of the character of property additions not subject to a prior lien, increased or decreased, as the case may be, by net salvage for such period, such amounts not to include, however, provisions for depreciation charged to surplus, charges to income or surplus for the amortization, write-down or write-off of acquisition adjustments or intangibles, property losses charged to operations or surplus, or charges to income in lieu of income and excess or other profits taxes; and (b) an amount equal to one-twelfth of 2% for each calendar month of such period (or such lesser percentage as may, at stated intervals, be certified by an independent engineer as adequate) of the original cost, as of the beginning of such month, of all depreciable property of the character of property additions not subject to a prior lien. (Section 1.18) Except as set forth above, the Mortgage does not limit the amount of additional bonds which can be issued; and it does not contain any restrictions on the issuance of unsecured indebtedness, such as the Notes. In addition, the Mortgage does not prohibit a merger or sale of substantially all of the Company's assets or a comparable transaction, unless the lien of the Mortgage is impaired, and does not address the effect on bondholders of a highly leveraged transaction. 10 RENEWAL FUND REQUIREMENT. The Company covenants that it will, for each year, pay or cause to be paid to the Trustee an amount of cash, as and for a renewal fund, equal to the excess, if any, of current provisions for depreciation for such year over the cost or fair value as of the mortgage date of acquisition thereof, whichever is less, of property additions for such year, such amount, which will be the renewal fund requirement for such year, to be subject to reduction by an amount equal to the amount, certified to the Trustee, of net property additions or bondable bond retirements, or both, not previously utilized under the Mortgage. (Sections 6.01 and 6.02) There was no renewal fund requirement for any of the years 1945 through 1988, 1991 or 1992, although there was a $140.7 million requirement for 1989 and a $1 million requirement for 1990. In both 1989 and 1990, the renewal fund requirement was satisfied by certifying an equivalent amount of net property additions. ACQUISITION OF PROPERTY SUBJECT TO PRIOR LIENS. The Company covenants that it will not acquire any property subject to a prior lien if the principal amount of prior lien bonds outstanding thereunder and under other prior liens upon such prior lien property exceeds 66 2/3% of the fair value of such part of such property as shall consist of property of the character of property additions, nor unless the net earnings of such property for a twelve-month period within the immediately preceding fifteen- month period shall have been at least two and one-half times the annual interest on all prior lien bonds secured by prior liens on such property. The Company also covenants that it will not transfer all or substantially all its property to any other corporation, the property of which is subject to a prior lien, unless the property of such other corporation could be acquired by the Company under the provisions of such covenant with respect to the acquisition of property subject to a prior lien. (Section 7.15) The Company covenants that it will not issue additional prior lien bonds under any prior lien, and that as soon as all prior lien bonds shall cease to be outstanding under any prior lien, the Company will promptly procure or cause to be procured the cancellation and discharge of such prior lien. The Company further covenants that upon the discharge of a prior lien it will cause any cash on deposit with the prior lien trustee (other than cash deposited for the payment or redemption of outstanding prior lien bonds) to be deposited with the Trustee, except to the extent required to be deposited with the trustee under another prior lien. (Section 7.16) MODIFICATION OF MORTGAGE. In general, modifications or alterations of the Mortgage and of the rights and obligations of the Company and of the bondholders, and waivers of compliance with the Mortgage, may, with the approval of the Company, be made at a meeting of bondholders upon the affirmative vote of 80% of the bonds entitled to vote at the meeting with respect to the matter involved, but no such modifications or alterations or waivers of compliance shall be made which will permit the extension of the time or times of payment of the principal of or the interest or the premium, if any, on any bonds, or the reduction in the principal amount thereof or in the rate of interest or the amount of any premium thereon, or any other modification in the terms of payment of such principal, interest or premium, which terms of payment are unconditional, or, otherwise than as permitted by the Mortgage, the creation of any lien ranking prior to or on a parity with the lien of the Mortgage with respect to any of the mortgaged property, all as more fully provided in the Mortgage. (Section 17.07) CONCERNING THE TRUSTEES. The Trustee, Continental Bank, National Association, provides general banking services, including those as a depository, for the Company and certain of its subsidiaries. The Trustee also has a commitment of $60 million in the Company's lines of credit. M. J. Kruger, Co-Trustee under the Mortgage, is an officer of the Trustee. 11 RIGHTS UPON DEFAULT. The Mortgage provides that in case any one or more of certain specified events (defined as "completed defaults") shall occur and be continuing, the Trustee or the holders of not less than 25% in principal amount of the bonds may declare the principal of all bonds, if not already due, together with all accrued and unpaid interest thereon, to be immediately due and payable. The Trustee, upon request of the holders of a majority in principal amount of the outstanding bonds, shall waive such default and rescind any such declaration if such default is cured. (Sections 11.02 and 11.21) The Mortgage further provides that upon the occurrence of one or more completed defaults, the Trustees may proceed by such suits at law or in equity to foreclose the lien of the Mortgage or to enforce any other appropriate remedy as the Trustees, being advised by counsel, shall determine. (Section 11.05) Bondholders have no right to enforce any remedy under the Mortgage unless the Trustees have first had a reasonable opportunity to do so following notice of default to the Trustee and request by the holders of not less than 25% in principal amount of the bonds for action by the Trustees with offer of indemnity satisfactory to the Trustees against costs, expenses and liabilities that may be incurred thereby, but such provision does not impair the absolute right of any bondholder to enforce payment of the principal of and interest on such bondholder's bonds when due. (Section 11.20) DEFAULT AND NOTICE THEREOF TO BONDHOLDERS. The Mortgage provides that the following shall constitute completed defaults: (a) default shall be made in the payment of any installment of interest on any of the bonds when due and such default shall continue for 60 days; (b) default shall be made in the payment of the principal of any of the bonds when due, whether at maturity or by declaration or otherwise; (c) default shall be made in the payment of any installment of interest on any prior lien bonds when due, and such default shall continue for 30 days after written notice given to the Company (following the expiration of the period of grace, if any, specified in the prior lien securing such prior lien bonds) by the Trustee or to the Company and the Trustee by the holders of not less than 5% in principal amount of the bonds; (d) default shall be made in the payment of the principal of any prior lien bonds when due, whether at maturity or by declaration or otherwise, and such default shall continue for 30 days after written notice to the Company by the Trustee or to the Company and the Trustee by the holders of not less than 5% in principal amount of the bonds; (e) bankruptcy, receivership or similar proceedings shall be initiated by the Company; or any judgment entered in such proceedings initiated against the Company shall not have been vacated, set aside or stayed within 45 days after the entry thereof; and (f) default shall be made in the observance or performance of any other of the covenants, conditions or agreements on the part of the Company contained in the Mortgage or in the bonds or in any prior lien or prior lien bonds, and such default shall continue for 90 days after written notice to the Company by the Trustee or to the Company and the Trustee by the holders of not less than 25% in principal amount of the bonds. Within 90 days after the occurrence of any default which is known to the Trustees, the Trustees shall give to the bondholders notice of such default unless it shall have been cured; except that, in case of defaults in the payment of principal of or interest on the bonds, or in the payment of any sinking fund or purchase fund installment, the Trustees may withhold such notice if and so long as the board 12 of directors, the executive committee, or a trust committee of directors or responsible officers of the Trustee, or any one or more of them, shall in good faith determine that the withholding of such notice is in the interests of the bondholders and the Co-Trustee shall in good faith determine that the withholding of such notice is in the interests of the bondholders. (Sections 11.02 and 15.03) CERTIFICATES AND OPINIONS. Officers' certificates evidencing compliance with the covenants in the Mortgage relating to the payment of taxes and the maintenance of insurance on properties of the Company subject to the lien of the Mortgage must be filed as exhibits to the certificate of the Company filed annually with the Trustee. (Sections 2.01, 7.09 and 7.10(c)) In connection with the taking of various actions by the Trustees or the Trustee upon application of the Company, including the authentication and delivery of additional bonds (Article IV), the release of property (Section 8.03), the reduction or withdrawal of cash (Section 8.04) and other matters, the Mortgage requires that the Company furnish to the Trustee orders, requests, resolutions, certificates of officers, engineers, accountants and appraisers, and opinions of counsel and other documents, the particular documents to be furnished in each case being dependent upon the nature of the application. DESCRIPTION OF NOTES GENERAL. The Notes will be issued under the Company's Indenture dated as of September 1, 1987, as amended and supplemented, and as to be further supplemented by one or more Supplemental Indentures creating the respective series in which the Notes are to be issued. Citibank, N.A., is the Trustee (the "Indenture Trustee") under the Indenture and the Supplemental Indentures thereto (collectively hereinafter called the "Indenture"), copies of which are filed as exhibits to the Registration Statement. The Indenture provides generally for the issuance of notes in series. The following statements are brief summaries of the provisions of the Indenture and reference is made to such exhibits for a more complete statement of such provisions. The Notes will be issued only in fully registered certificated or book-entry form (unless otherwise indicated in the Prospectus Supplement with respect to any particular series of Notes) in the denomination of $1,000 or any authorized multiple of $1,000. It is expected that the Notes will be delivered initially in definitive form. The Company reserves the right, however, to make initial delivery of the Notes in temporary form. No service charge will be made for any transfer or exchange of any Notes, except the Company may require payment of a sum sufficient to cover any tax or other governmental charge in connection therewith. Principal of the Notes and interest thereon will be payable in New York City, except as may otherwise be set forth in the applicable Prospectus Supplement. Interest on each registered Note issued in certificated form (with limited exceptions as provided in the Indenture) will be paid to the person in whose name such Note is registered at the close of business on the applicable record date specified in the Note. Payment of interest on Notes issued in book-entry form will be made to The Depository Trust Company, New York, New York, or its nominee. The Notes will be unsecured and will rank equally with the Company's outstanding unsecured indebtedness. Substantially all of the properties and franchises of the Company are subject to the lien of the Mortgage under which the Company's first mortgage bonds are outstanding. (See "Description of Bonds," subcaption "Security," herein.) Any terms of the Notes which are not summarized herein will be described in the applicable Prospectus Supplement. 13 SINKING FUND AND REDEMPTION PROVISIONS. Any applicable sinking fund and redemption provisions of the Notes will be fixed for each series of Notes at the time of sale of any such series. ISSUANCE OF ADDITIONAL SECURITIES. The Indenture does not limit the aggregate principal amount of notes which may be issued thereunder. There are notes presently outstanding under the Indenture. Neither the Indenture nor any of the other indentures under which the Company's several series of debentures are outstanding contains any limitation on the issuance by the Company of other securities either secured or unsecured. In addition, the Indenture does not address the effect on noteholders of a highly leveraged transaction. In addition to the bonds now outstanding under the Company's Mortgage, bonds of any series may hereafter be issued under the Mortgage, subject to certain net earnings and other requirements. (See "Description of Bonds," subcaption "Issuance of Additional Bonds," herein.) MODIFICATION OF INDENTURE. The Indenture provides that with the consent of the holders of a majority in principal amount of the notes at the time outstanding under the Indenture, of all series which are affected (or without such consent in the case of amendments or modifications that do not affect the rights of any noteholder), the Company and the Indenture Trustee may enter into supplemental indentures for the purpose of amending or modifying, in any manner, the provisions of the Indenture or of any supplemental indenture, provided that no such supplemental indenture shall, without the consent of the holder of each outstanding note affected thereby, among other things, (i) change the stated maturity of the principal of, or any installment of interest on, any note, or reduce the principal amount thereof or the interest thereon or any premium payable upon the redemption thereof, or (ii) reduce the percentage in principal amount of the outstanding notes, the consent of whose holders is required for any such supplemental indenture. (Sections 11.01 and 11.02) CONCERNING THE INDENTURE TRUSTEE. The Indenture Trustee, Citibank, N.A., provides general banking services, including those as a depository, for the Company. The Indenture Trustee also has a commitment of $95 million in the Company's lines of credit and has issued a letter of credit in the amount of $20 million on behalf of the Company. EVENTS OF DEFAULT AND RIGHTS UPON DEFAULT. The Indenture provides that the following constitute "Events of Default" with respect to the notes of any series: (a) default in the payment of any interest upon any note of that series when it becomes due and payable, and continuance of such default for a period of 60 days; (b) default in the payment of the principal of (or premium, if any, on) any note of that series at its maturity; (c) default in the deposit of any installment of any sinking fund or similar payment with respect to notes of that series when and as payable, and continuance of such default for a period of 60 days; (d) the entry of a decree or order in bankruptcy, receivership or similar proceedings initiated against the Company, and the continuance of any such decree or order for a period of 45 consecutive days; 14 (e) the institution by the Company of, or the consent by the Company to the institution of, bankruptcy, insolvency or similar proceedings against the Company; and (f) default in the performance, or breach, of any other covenant or warranty of the Company in the Indenture, and continuance of such default or breach for a period of 90 days after notice to the Company by the Indenture Trustee or to the Company and the Indenture Trustee by the holders of at least 25% in principal amount of the outstanding notes of that series. (Section 7.01) The Indenture provides that within 90 days after the occurrence of any default which is known to the Indenture Trustee, the Indenture Trustee shall give to the noteholders notice of such default, unless such default shall have been cured or waived; provided that, except in the case of a default in the payment of the principal of (or premium, if any) or interest on any note of such series or in the payment of any sinking or purchase fund installment, the Indenture Trustee may withhold such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or responsible officers of the Indenture Trustee, or any one or more of them, shall in good faith determine that the withholding of such notice is in the interests of the holders of notes of such series; and provided, further, that in the case of any default in the performance, or breach, of any covenant or warranty referred to in clause (f) of the immediately preceding paragraph, no such notice to holders shall be given until at least 60 days after the occurrence thereof. (Section 8.02) If an Event of Default occurs with respect to notes of any series and is continuing, the Indenture Trustee or the holders of 25% in principal amount of the outstanding notes of that series may declare the principal of all the notes of that series due and payable. A majority in principal amount of the outstanding notes of that series may rescind and annul such declaration if the default has been cured. (Section 7.02) The holders of a majority in principal amount of the outstanding notes of all series affected by an Event of Default may waive any past default under the Indenture and its consequences, except a default in the payment of the principal of (or premium, if any) or interest on any note or in respect of a covenant or provision of the Indenture which cannot be modified or amended without the consent of the holder of each outstanding note affected. (Section 7.13) If an Event of Default occurs and is continuing, the Indenture Trustee may in its discretion proceed to protect and enforce its rights and the rights of the holders of notes by such appropriate judicial proceedings as the Indenture Trustee shall deem most effectual. (Section 7.03) The Indenture provides that the holders of a majority in principal amount of the outstanding notes issued under the Indenture have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee or exercising any trust or power conferred on the Indenture Trustee. (Section 7.12) The Indenture Trustee is not obligated to comply with any request or direction of noteholders pursuant to the Indenture unless it has been offered indemnity against costs and liabilities which it might incur in complying with such request or direction. (Section 8.03(e)) The Company is required to file with the Indenture Trustee annually an officers' certificate specifying any defaults known to exist under the Indenture. (Section 3.04) SATISFACTION AND DISCHARGE OF THE NOTES AND THE INDENTURE. Unless otherwise provided in the supplemental indenture creating a series of notes, the Company shall be deemed to have paid and discharged the entire indebtedness on all the outstanding notes of any such series when (a) either (i)(1) the Company has deposited with the Indenture Trustee for such purpose an amount sufficient to pay and discharge the entire indebtedness on all outstanding notes of 15 such series for principal (and premium, if any) and interest to the stated maturity or any redemption date thereof, or (2) the Company has deposited with the Indenture Trustee for such purpose such amount of direct obligations of, or obligations the principal of and interest on which are fully guaranteed by, the United States of America and which are not callable at the option of the issuer thereof as will, together with the income to accrue thereon without consideration of any reinvestment thereof, be sufficient to pay and discharge the entire indebtedness on all outstanding notes of such series for principal (and premium, if any) and interest to the stated maturity or any redemption date thereof, or (ii) the Company has properly fulfilled such other means of satisfaction and discharge as is specified in the supplemental indenture applicable to the notes of such series; (b) the Company has paid or caused to be paid all other sums payable with respect to the outstanding notes of such series; and (c) the Company has delivered certain certificates and an opinion of counsel. (Section 6.03) The Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of notes) when (a) either (i) all notes theretofore authenticated and delivered and all coupons appertaining thereto have been delivered to the Indenture Trustee for cancellation, or (ii) all such notes not theretofore delivered to the Indenture Trustee for cancellation have become due and payable, or will become due and payable at their stated maturity within one year, or are to be called for redemption within one year under arrangements satisfactory to the Indenture Trustee and the Company has deposited with the Indenture Trustee for such purpose an amount sufficient to pay and discharge the entire indebtedness on such notes for principal (and premium, if any) and interest to the date of such deposit (in the case of notes which have become due and payable), or to their stated maturity or redemption date, as the case may be; (b) the Company has paid or caused to be paid all other sums payable under the Indenture by the Company; and (c) the Company has delivered certain certificates and an opinion of counsel. (Section 6.01) For federal income tax purposes, any such deposit may be treated as a taxable exchange of the related notes for an issue of obligations of the trust or a direct interest in the cash and securities held in the trust. In that case, holders of such notes would recognize gain or loss as if the trust obligations or the cash or securities deposited, as the case may be, had actually been received by them in exchange for their notes. Such holders thereafter would be required to include in income a share of the income, gain or loss of the trust. The amount so required to be included in income could be a different amount than would be includable in the absence of such deposit. Prospective investors are urged to consult their own tax advisors as to the specific consequences to them of such deposit. DESCRIPTION OF STOCK The authorized stock of the Company now consists of four classes: prior preferred stock, par value $100 per share (the "Prior Preferred Stock") (no shares outstanding); $1.425 convertible preferred stock, without par value-- stated value $31.80 per share (the "$1.425 Convertible Preferred Stock"); preference stock, without par value (the New Cumulative Preference Stock to constitute one or more new series of such class); and common stock, par value $12.50 per share. The number of outstanding shares of each class as of December 31, 1993 is set forth in the Statements of Consolidated Capitalization, and the number of authorized shares of each class is set forth in Note 4 of Notes to Financial Statements, in the January 28, 1994 Form 8-K/A-1 Report. ISSUANCE IN SERIES. The Board of Directors is authorized to provide for the issuance of shares of the Prior Preferred Stock and the preference stock from time to time in series and, as to each series, to fix the designation, dividend rate, redemption price or prices, voluntary and involuntary liquidation prices, sinking fund provisions, if any, and conversion provisions, if any, applicable to the shares of such series. 16 DIVIDENDS. Dividends are payable on the Prior Preferred Stock (if and when shares thereof are issued) in preference to dividends on the $1.425 Convertible Preferred Stock, the preference stock and the common stock; dividends are payable on the $1.425 Convertible Preferred Stock in preference to dividends on the preference stock and the common stock; and dividends are payable on the preference stock in preference to dividends on the common stock. Dividends are payable on the Prior Preferred Stock (if and when shares thereof are issued), the $1.425 Convertible Preferred Stock and each series of preference stock quarterly on the first day of February, May, August and November in each year. Dividends are cumulative with respect to the shares of the Prior Preferred Stock (if and when shares thereof are issued), the $1.425 Convertible Preferred Stock and each series of preference stock. Accumulations of dividends do not bear interest. The dividend rates per share per annum are indicated by the title of the $1.425 Convertible Preferred Stock and the respective titles of the following outstanding series of preference stock: $1.90 series, $2.00 series, $1.96 series, $7.24 series, $8.40 series, $8.38 series, $8.20 series, $8.40 Series B, $8.85 series, $9.25 series, $9.00 series and $6.875 series. REDEMPTION AND REPURCHASE PROVISIONS. Subject to the limitations hereinafter stated and except as otherwise provided by the Board of Directors in respect of the shares of a particular series of the Prior Preferred Stock or the preference stock, shares of any one or more of such series, and shares of the $1.425 Convertible Preferred Stock, may be redeemed, on not more than 60 nor less than 30 days' notice by mail, in whole at any time or in part from time to time at the option of the Company, or in part from time to time pursuant to any sinking fund or funds created for one or more series of the Prior Preferred Stock or the preference stock, in each case by payment of the then applicable redemption price of the shares to be redeemed. Provision is made whereby, subject to certain conditions, all rights of the holders of shares called for redemption (except the right to exercise any then effective privilege of conversion and the right to receive the redemption moneys) will terminate before the redemption date, upon the deposit with a bank or trust company of the funds necessary for redemption. If and so long as the Company shall be in default in the payment of any quarterly dividend on shares of any series of the preference stock, or in the making or setting aside of any payment under any sinking fund for any such series, the Company may not (other than by the use of unapplied sinking fund moneys) (1) redeem any shares of the preference stock unless all shares are redeemed or (2) purchase or otherwise acquire for a consideration any such shares, except pursuant to offers of sale made by holders of the preference stock in response to an invitation for tenders given simultaneously by the Company by mail to the holders of record of all shares of the preference stock then outstanding. The Restated Articles of Incorporation of the Company contain corresponding provisions applicable to the Prior Preferred Stock and, as to dividend defaults, the $1.425 Convertible Preferred Stock. See Notes 6 and 7 of Notes to Financial Statements in the January 28, 1994 Form 8-K/A-1 Report for information relating to the redemption provisions applicable to the presently outstanding shares of $1.425 Convertible Preferred Stock and of each presently outstanding series of preference stock. SINKING FUNDS. The $1.425 Convertible Preferred Stock and the $1.90 series, $2.00 series, $1.96 series, $7.24 series, $8.40 series and $8.38 series of preference stock do not have sinking funds. The $8.20 series, $8.40 Series B, $8.85 series, $9.25 series, $9.00 series and $6.875 series of preference stock have mandatory sinking funds and the $8.40 Series B and $9.00 series of preference stock also have optional sinking funds. Each series of Prior Preferred Stock (if and when shares thereof are issued) may have a 17 sinking fund, at the discretion of the Board of Directors, along with such other provisions as shall be fixed and determined by such Board. See Note 7 of Notes to Financial Statements in the January 28, 1994 Form 8-K/A-1 Report for information relating to the preference stock sinking fund provisions. CONVERSION OF $1.425 CONVERTIBLE PREFERRED STOCK. The shares of $1.425 Convertible Preferred Stock are convertible, at the option of the respective holders, into shares of common stock of the Company currently at the rate of 1.02 shares of common stock for each share of $1.425 Convertible Preferred Stock. Provision is made for adjustment of the conversion price, under certain conditions, in order to protect the conversion rights against dilution. Shares of the $1.425 Convertible Preferred Stock may be converted at any time except that in case of call for redemption the conversion rights will terminate on the tenth day prior to the redemption date. No payment or adjustment with respect to dividends on shares of the $1.425 Convertible Preferred Stock or on the common stock will be made in connection with any conversion. LIQUIDATION PREFERENCES. In the event of dissolution, liquidation or winding up of the Company, voluntary or involuntary, holders of the Prior Preferred Stock (if any shares thereof are then issued) will be entitled to payment of the applicable liquidation price or prices, out of the assets of the Company, in preference to the holders of the $1.425 Convertible Preferred Stock, the preference stock and the common stock; holders of the $1.425 Convertible Preferred Stock will be entitled to such payment in preference to the holders of the preference stock and the common stock; and holders of the preference stock will be entitled to such payment in preference to the holders of the common stock. In the event of voluntary or involuntary dissolution, liquidation or winding up of the Company, holders of the common stock will be entitled to receive, ratably, assets of the Company available for payment to stockholders remaining after payment in full of the preferential amounts on the Prior Preferred Stock (if any), the $1.425 Convertible Preferred Stock and preference stock on such dissolution, liquidation or winding up. The current per share voluntary liquidation prices of the outstanding shares of the preference stock are: $8.20 series, $103 through October 31, 1997, and $101 thereafter; $8.40 Series B, $101; $8.85 series, $103 through July 31, 1998, and $101 thereafter; $9.25 series, $105 through July 31, 1994, $103 through July 31, 1999, and $101 thereafter; $9.00 series, $106 through July 31, 1994, $105 through July 31, 1995, $104 through July 31, 1996, $103 through July 31, 1997, $102 through July 31, 1998, $101 through July 31, 1999, and $100 thereafter; $6.875 series, $106.875 through April 30, 1994, $105.75 through April 30, 1995, $104.625 through April 30, 1996, $103.50 through April 30, 1997, $102.375 through April 30, 1998, $101.25 through April 30, 1999, and $100 thereafter; plus, in each case, accrued and unpaid dividends, if any, to the date fixed for payment; and after such respective dates at the applicable optional redemption prices (if any) for the respective series. The per share voluntary liquidation prices of the outstanding shares of the $1.90 series, $2.00 series, $1.96 series, $7.24 series, $8.40 series and $8.38 series of the preference stock and the $1.425 Convertible Preferred Stock are the respective optional redemption prices in effect on the date of liquidation. See Notes 6 and 7 of Notes to Financial Statements in the January 28, 1994 Form 8-K/A-1 Report for information concerning the involuntary liquidation prices applicable to the presently outstanding shares of such stock. VOTING RIGHTS. Holders of shares at any time outstanding, regardless of class, are entitled to one vote for each share held on each matter submitted to a vote at a meeting of stockholders, with the right to cumulate votes in all elections for directors. 18 Without the vote or consent of the holders of at least two-thirds of the outstanding shares, if any, of the Prior Preferred Stock, no stock of any prior or parity class may be created, nor may the Restated Articles of Incorporation of the Company be amended so as to affect any of the preferences or rights of the Prior Preferred Stock as a class. Without the vote or consent of the holders of at least two-thirds of the outstanding shares of the preference stock, no stock of any class, other than the Prior Preferred Stock, ranking prior to or on a parity with the preference stock may be created, nor may the Restated Articles of Incorporation of the Company be amended so as to affect any of the preferences or rights of the preference stock as a class. The Restated Articles of Incorporation contain corresponding provisions applicable to the $1.425 Convertible Preferred Stock as a class. No amendment so affecting a single series of either the Prior Preferred Stock or the preference stock (when more than one series of such class is outstanding) nor any amendment of the resolution of the Board of Directors establishing such series may be made that affects any of the preferences or rights of the holders of the shares of such series without the vote or consent of the holders of at least two-thirds of the outstanding shares of such series, but in such case the class vote or consent of the holders of shares of no other series will be required. Without the vote or consent of the holders of a majority of the outstanding shares, if any, of the Prior Preferred Stock, no shares of the class (in addition to the 850,000 shares now authorized) or of any class ranking prior to or on a parity with the Prior Preferred Stock may be issued (other than for the retirement of a like amount of stock of such class or classes) if, after such issue, the aggregate stated capital (including paid-in surplus) represented by the outstanding shares of such class or classes (after giving effect to any retirement of shares of such class or classes made in connection with such issue) would exceed 75% of the aggregate stated capital (including paid-in surplus) represented by the then outstanding shares of all subordinate classes, plus consolidated retained earnings of the Company and consolidated subsidiaries as of the end of the preceding fiscal year. Without the vote or consent of the holders of a majority of the outstanding shares, if any, of the Prior Preferred Stock, the $1.425 Convertible Preferred Stock and the preference stock, each voting as a class, the Company may not (except where the parties are in a parent-subsidiary relationship, or when ordered by governmental commission or agency) consolidate with or merge into any other corporation or sell all or substantially all of its property and business. PREEMPTIVE RIGHTS. Holders of the Prior Preferred Stock, the $1.425 Convertible Preferred Stock, the preference stock and the common stock have no preemptive rights to purchase any securities of the Company. MISCELLANEOUS. The outstanding shares of the $1.425 Convertible Preferred Stock, the preference stock and the common stock are, and the shares of the New Cumulative Preference Stock offered hereby will be, when issued, fully paid and nonassessable. The Transfer Agent and Registrar for the New Cumulative Preference Stock will be: THE FIRST CHICAGO TRUST COMPANY OF NEW YORK 30 West Broadway New York, New York 10007-2192 and 1 North State Street Chicago, Illinois 60670-0123 19 PLAN OF DISTRIBUTION The Securities may be sold (i) by selecting and negotiating with a managing underwriter or underwriters for the sale, (ii) by a sale directly to a limited number of purchasers or to a single purchaser or (iii) through agents. Securities may be sold outside the United States. The Prospectus Supplement sets forth the manner and terms of the offering of the Offered Securities, including the name or names of any underwriters, dealers or agents, the purchase price or prices of the Offered Securities, the proceeds to the Company from the sale of the Offered Securities, any initial public offering price, any underwriting discount or commission and any discounts, concessions or commissions allowed or reallowed or paid by any underwriter to other dealers. Any initial public offering price and any discounts, concessions or commissions allowed or reallowed or paid to dealers may be changed from time to time. Unless otherwise indicated in the Prospectus Supplement, any agent will be acting on a best efforts basis for the period of its appointment. Underwriters, dealers and agents who participate in the distribution of the Securities, and their officers, directors and controlling persons, may be entitled under agreements to be entered into with the Company to indemnification by the Company against certain liabilities, including liabilities under the Securities Act of 1933, or to contribution with respect to payments which such underwriters, dealers or agents may be required to make in respect of such liabilities. Unless otherwise set forth in the Prospectus Supplement, the obligations of any underwriter or underwriters to purchase the Offered Securities will be subject to certain conditions precedent and such underwriter or underwriters with respect to the sale of such Offered Securities will be obligated to purchase all of such Offered Securities if any are purchased. The Prospectus Supplement sets forth any planned listing of the Offered Securities on a national securities exchange and indicates whether any underwriters, dealers or agents intend to make a market in the Offered Securities as permitted by applicable laws and regulations. No assurance can be given as to the liquidity of or the trading market for the Securities. LEGAL OPINIONS The legality of the Securities will be passed upon by Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, counsel for the Company, and by Winston & Strawn, 35 West Wacker Drive, Chicago, Illinois 60601, counsel for the underwriters, dealers, purchasers or agents. Winston & Strawn acts from time to time as counsel for the Company in certain matters. The statements as to matters of law and legal conclusions made under "Description of Bonds," subcaption "Security," and "Description of Stock" herein are made on the authority of Sidley & Austin. EXPERTS The financial statements and schedules included or incorporated by reference in the 1993 Form 10-K and the January 28, 1994 Form 8-K/A-1 Report have been audited by Arthur Andersen & Co., independent public accountants, as indicated in their reports with respect thereto, and are incorporated herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. 20 No dealer, salesman or other person has been authorized to give any informa- tion or to make any representations other than those contained in this Pro- spectus Supplement and the accompanying Prospectus in connection with the of- fer contained in this Prospectus Supplement and the accompanying Prospectus, and, if given or made, such information or representations must not be relied upon as having been authorized by the Company or by any of the Underwriters. Neither the delivery of this Prospectus Supplement and the accompanying Pro- spectus nor any sale made hereunder shall under any circumstances create an implication that there has been no change in the affairs of the Company since the date hereof. This Prospectus Supplement and the accompanying Prospectus shall not constitute an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or in which the person mak- ing such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or solicitation. -------------------- TABLE OF CONTENTS
PAGE ---- PROSPECTUS SUPPLEMENT Description of the Offered Notes........................................... S-2 Underwriting............................................................... S-4 PROSPECTUS The Company................................................................ 2 Available Information...................................................... 2 Incorporation of Certain Information by Reference................................................................. 2 Recent Rate Proceedings.................................................... 3 Summary Information........................................................ 4 Use of Proceeds............................................................ 8 Description of Bonds....................................................... 8 Description of Notes....................................................... 13 Description of Stock....................................................... 16 Plan of Distribution....................................................... 20 Legal Opinions............................................................. 20 Experts.................................................................... 20
$150,000,000 COMMONWEALTH EDISON COMPANY 7% NOTES DUE FEBRUARY 15, 1997 COMMONWEALTH EDISON LOGO SALOMON BROTHERS INC MERRILL LYNCH & CO. PAINEWEBBER INCORPORATED PROSPECTUS SUPPLEMENT DATED APRIL 5, 1994 -----END PRIVACY-ENHANCED MESSAGE-----