UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 11-K

 

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended: December 31, 2004

 

Commission File Number: 1-12869

 

A.            Full title of the plan and the address of the plan, if different from that of the issuer named below:

 

Non-Represented Employee Savings Plan for Nine Mile Point

Constellation Energy Group, Inc.

750 E. Pratt St.

Baltimore, Maryland 21202

 

B.                                     Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

 

Constellation Energy Group, Inc.

750 E. Pratt St.

Baltimore, Maryland 21202

 

 



 

TABLE OF CONTENTS

 

Signature

 

 

 

Report of Independent Registered Public Accounting Firm

 

 

 

Consent of Independent Registered Public Accounting Firm

 

 

 

Financial Statements:

 

 

 

Statements of Net Assets Available for Benefits

 

 

 

Statements of Changes in Net Assets Available for Benefits

 

 

 

Notes to Financial Statements

 

 

 

Supplemental Schedule

 

 

 

Schedule of Assets Held at End of Year

 

 

2



 

SIGNATURE

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

NON-REPRESENTED EMPLOYEE SAVINGS PLAN FOR
NINE MILE POINT

 

 

 

 

 

 

Date:

  June 24, 2005

 

/s/ Richard D. Honaker

 

 

Richard D. Honaker, Plan Administrator

 

3



 

Report of Independent Registered Public Accounting Firm

 

To the Plan Administrator of the

Non-Represented Employee Savings Plan for Nine Mile Point

 

We have audited the accompanying statements of net assets available for benefits of the Non-Represented Employee Savings Plan for Nine Mile Point (the Plan), as of December 31, 2004 and 2003, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2004 and 2003, and the changes in its net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of financial information for the year ended December 31, 2004 is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental information is the responsibility of the Plan’s management. The supplemental information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

 

 

 

/s/ Mitchell & Titus LLP

 

 

 

Washington, DC

June 24, 2005

 

4



 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We consent to the incorporation by reference in the Registration Statements of Constellation Energy Group, Inc. on Form S-3 and Form S-8 (File Nos. 333-102723, 333-59601, 33-57658, 333-56572, 333-24705, and 33-49801 and 33-59545, 333-45051, 333-46980, 33-56084, 333-81292, and 333-89046, respectively) of our report dated June 24, 2005 on the financial statements and supplemental schedule of the Non-Represented Employee Savings Plan for Nine Mile Point, as of and for the years ended December 31, 2004 and 2003, which report is included in this Annual Report on Form 11-K.

 

 

 

/s/ Mitchell & Titus LLP

 

 

 

Washington, DC

June 24, 2005

 

5



 

NINE MILE POINT NUCLEAR STATION, LLC

NON-REPRESENTED EMPLOYEE SAVINGS PLAN FOR NINE MILE POINT

Statements of Net Assets Available for Benefits

 

At December 31,

 

2004

 

2003

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Securities held in trust

 

$

86,624,412

 

$

74,432,265

 

Participant loans

 

1,815,716

 

1,547,907

 

 

 

 

 

 

 

Receivables:

 

 

 

 

 

Employer contribution

 

16,771

 

 

Participant Contributions

 

67,268

 

 

Loan receivable

 

 

49,499

 

Total Assets

 

$

88,524,167

 

$

76,029,671

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Accounts Payable

 

$

 

$

 

Total Liabilities

 

$

 

$

 

 

 

 

 

 

 

Net assets available for benefits end of year

 

$

88,524,167

 

$

76,029,671

 

 

The accompanying notes are an integral part of these financial statements

 

6



 

NINE MILE POINT NUCLEAR STATION, LLC

NON-REPRESENTED EMPLOYEE SAVINGS PLAN FOR NINE MILE POINT

Statements of Changes in Net Assets Available for Benefits

 

Year Ended December 31,

 

2004

 

2003

 

 

 

 

 

 

 

ADDITIONS

 

 

 

 

 

Contributions

 

 

 

 

 

Participant contributions

 

$

5,045,519

 

$

5,152,539

 

Employer matching contributions

 

1,224,183

 

1,199,171

 

Plan transfer

 

676,463

 

527,885

 

Total Contributions

 

6,946,165

 

6,879,595

 

 

 

 

 

 

 

Income

 

 

 

 

 

Dividends

 

1,865,574

 

1,209,952

 

Interest on participant loans

 

91,032

 

100,744

 

Total Income

 

1,956,606

 

1,310,696

 

 

 

 

 

 

 

Net appreciation (See note 4)

 

6,731,380

 

10,913,641

 

 

 

 

 

 

 

Total Additions

 

15,634,151

 

19,103,932

 

 

 

 

 

 

 

DEDUCTIONS

 

 

 

 

 

Withdrawals and distributions

 

(3,131,109

)

(3,340,395

)

Fees

 

(8,546

)

(7,176

)

Total Deductions

 

(3,139,655

)

(3,347,571

)

 

 

 

 

 

 

CHANGE IN NET ASSETS

 

12,494,496

 

15,756,361

 

 

 

 

 

 

 

Net assets available for benefits beginning of year

 

76,029,671

 

60,273,310

 

 

 

 

 

 

 

Net assets available for benefits end of year

 

$

88,524,167

 

$

76,029,671

 

 

The accompanying notes are an integral part of these financial statements.

 

7



 

Notes to Financial Statements

 

Note 1.  General Description on the Plan

 

On November 7, 2001, Nine Mile Point Nuclear Station, LLC (Company), a subsidiary of Constellation Energy Group, Inc., purchased the Nine Mile Point Nuclear Power Station from the Niagara Mohawk Power Corporation and other owners.

 

Consequently, a number of the participants’ balances in the Niagara Mohawk Non-Represented Employee Savings Fund Plan were spun off to a cloned plan which was named the Non-Represented Employee Savings Plan for Nine Mile Point (Plan).

 

The Plan is a defined contribution plan, subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

 

Eligibility - An employee must be employed by Nine Mile Point Nuclear Station, LLC, not covered by a collective bargaining agreement, and be 21 years of age with one month of service to be eligible to participate in the Plan.

 

Administration - The Plan Administrator is the Director - Benefits, Human Resources Division of Constellation Energy Group, Inc.  The assets are held and managed by the Trustee, Fidelity Management Trust Company (Trustee).  Fidelity Management Trust Company provides the record keeping for the Plan.

 

Although it has not expressed any intent to do so, the Company has the right to amend or terminate the Plan at any time, subject to provisions set forth in ERISA.

 

Contributions - Eligible participants may contribute from 2% to 50% of their eligible pay on a before-tax basis, from 2% to 15% of their eligible pay through an after-tax basis, or a combination thereof through payroll deductions.  The maximum combined contribution rate for both the before-tax and the after-tax contributions is 50%.  The maximum amount a participant can contribute to the Plan on a before-tax basis is limited per year by the Internal Revenue Service.  The limitation for 2004 was $13,000.

 

Participants age 50 and older (by year end) and meeting one of the Plan’s or IRS pre-tax contribution limits are eligible to make catch up contributions.  The catch-up contributions limit for 2004 was $3,000.

 

The Plan accepts rollovers of employees’ eligible rollover distributions from other qualified plans.

 

Participants have the right, on a daily basis, to change the amount of their payroll deductions, effective as of the next pay period.  Participants also have the right to change, on a daily basis, the percentage of their future contributions being invested in each of the available investment funds as provided in the Plan.

 

Company Matching Contributions – Upon completion of one year of service, the Company contributes an amount equal to 50% of the participant’s first 2% to 6% of contributions.

 

All Company matching contributions are fully and immediately vested upon being credited to the participant’s account. Company contributions are initially invested in the CEG Company Stock Fund. Once credited, the participant has the option to transfer the funds to other available investment options.

 

Investment Options - Except as otherwise indicated, participants can elect to have their contributions invested in the following:

 

                  CEG Company Stock Fund

                  National Grid Stock Fund*

                  Fidelity Diversified International Fund

                  Fidelity Dividend Growth Fund

                  Fidelity Freedom 2005 Fund**

                  Fidelity Freedom 2010 Fund

                  Fidelity Freedom 2015 Fund**

                  Fidelity Freedom 2020 Fund

                  Fidelity Freedom 2025 Fund**

                  Fidelity Freedom 2030 Fund

                  Fidelity Freedom 2035 Fund**

                  Fidelity Freedom 2040 Fund

                  Fidelity Freedom Income Fund

                  Fidelity Growth Company Fund

                  Fidelity Low Priced Stock Fund

                  Fidelity Managed Income Portfolio

                  Fidelity Small Cap Stock Fund**

                  Fidelity U.S. Equity Index Commingled Pool

                  PIMCO Total Return Fund – Administrative Class

                  T. Rowe Price Equity Income Fund**

                  T. Rowe Price Mid Cap Growth Fund**

                  T. Rowe Price Mid Cap Value Fund**

 

* This Fund is closed to new investments such as contributions, loan repayments and transfers (exchanges).

 

** New funds added to the plan July 16, 2004.

 

8



 

Effective July 16, 2004, the following funds were removed as investment options of the plan.

 

                  Fidelity Aggressive Growth Fund

                  Fidelity Asset Manager

                  Fidelity Asset Manager: Growth

                  Fidelity Asset Manager: Income

                  Fidelity Growth & Income Portfolio

                  Fidelity Overseas Fund

                  Fidelity Retirement Government Money Market Portfolio

                  Fidelity U.S. Bond Index Fund

                  Janus Flexible Income Fund

                  Janus Worldwide Fund

                  Spartan Extended Market Index Fund

 

Common Stock Funds - Investments in the CEG Company Stock Fund and the National Grid Stock Fund are stated in units, not shares.  The value of a unit reflects the combined fair value of a share of common stock and the cash or liquid investments held by the Stock Fund.  Each Stock Fund keeps some of its assets in cash or liquid investments so those participants may trade out of the Stock Funds on any business day.  This requires it to be unitized.  Unitization does not change the fair value of a participant’s investment, only the manner in which that value is expressed.

 

The equivalent number of shares of common stock a participant owns on any given day can be determined by multiplying the total number of units owned by the unit value on that day and then dividing that amount by the common stock market price for that day.

 

Managed Income Fund - Amounts held in the Managed Income Portfolio are invested in a pooled account.  Investment units are supported by investments contracts in insurance companies and other financial institutions, and fixed income securities. A portion of the portfolio is invested in a money market fund to provide daily liquidity. The account is credited with earnings on the underlying investments and charged for Plan withdrawals and administrative expenses.  The account is included in the financial statements at fair value, as reported to the Plan by Fidelity Institutional Retirement Services Company.

 

Common Trust Fund -  The Fidelity U.S. Equity Index Commingled Pool portfolio is a commingled pool of the Fidelity Group Trust for Employee Benefit Plans and is managed by Geode Capital Management. It is not a mutual fund. The portfolio seeks to provide investment results that correspond to the total return performance of common stocks publicly traded in the United States.

 

The pool may use futures, index options, and exchange traded funds to enable the pool to remain fully invested, while being able to respond to participant cash flows.

 

Investment Income – Effective July 16, 2004, dividend earnings on shares of National Grid Company Stock Fund are automatically invested in the Fidelity Managed Income Portfolio.  Prior to July 16, 2004, dividend earnings on shares of National Grid Company Stock Fund were automatically invested in the Fidelity Retirement Government Money Market Portfolio.

 

Dividends and earnings received on all other funds are automatically reinvested in the fund to which those earnings apply.

 

Transfers - Participants whose job status changes from or to represented and non-represented may transfer assets to or from the Represented Employee Savings Plan for Nine Mile Point and the Non-Represented Employee Savings Plan for Nine Mile Point. Those transfers are recorded at fair value.

 

In addition, participants are allowed to initiate, on a daily basis, a transfer of the value of their contributions, including earnings, among the available investment funds.

 

Participant Loan Provisions – Participants may obtain a loan in any amount between a minimum of $1,000 and a maximum of $50,000, but not more than 50% of the participant’s account balance. Participants may elect up to five years to repay the loan, unless the loan is used for the purchase of a principal residence, in which case they may elect up to 30 years for repayment.  Participants are allowed to have up to two loans outstanding at any time.  Principal and interest are repaid through regular payroll deductions or by direct payment. The interest rate for loans is equal to the prime rate plus one percent on the last day of the month preceding the month the loan is initiated.  The interest rate on amounts borrowed is set at the time the loan is executed and remains in effect for the duration of the loan.

 

Withdrawals and Distributions - A participant may, on a daily basis, elect to withdraw all or part of the stock and cash attributable to their after-tax contributions.  Contributions made on a before-tax basis may not be withdrawn until a participant attains age 59 1/2, except for death, disability, retirement, separation from service, or under certain circumstances of hardship, in which case the participant may be subject to tax penalties.

 

9



 

Distributions to participants who retire or terminate active employment are automatically deferred until they either reach age 65 or cease active employment, whichever is later, unless they request an earlier or later distribution.  Generally, participants who reach age 70 1/2 must begin receiving their Plan distribution by April 1 of the following year.  Furthermore, active employees who attain age 59 1/2 may request to receive a distribution of their before-tax account balances. The distribution options include lump sum or installments paid monthly, quarterly, or annually for up to 10 years.

 

Withdrawals and distributions to participants are recorded when paid.

 

Vesting - All contributions that are held in participants’ accounts are immediately 100% vested.

 

Administrative costs - Administrative costs are paid directly by the Plan.  Investment management expenses of each fund are deducted from the assets of that fund. Participants are charged a nominal loan initiation fee.

 

Related Party Transactions - Certain Plan investments are shares of mutual funds managed by Fidelity Investments, a division of which is also the Plan Trustee, and therefore, these transactions qualify as party-in-interest transactions.

 

In 2004, the Company began a feasibility study and trustee/recordkeeper search with the intent of consolidating the Represented Employee Savings Plan for Nine Mile Point, the Non-Represented Employee Savings Plan for Nine Mile Point, and the Constellation Energy Group, Inc. Employee Savings Plans with a single trustee/recordkeeper, and adopting consistent plan provisions where appropriate.   Decisions on that project are pending as of the date of this report.

 

Note 2.  Significant Accounting Policies

 

The financial statements of the Plan are prepared under the accrual method of accounting.  The accounting principles and practices that affect the more significant elements of the financial statements are:

 

Valuation of Investments - Shares of common stock are valued at the closing market price as of year-end.  Investment units in the Fidelity Retirement Government Money Market Portfolio are valued at a constant $1 per unit and are supported by the U.S. Government Obligations.  Temporary investments in short-term cash funds are also valued at a constant $1 per unit.  The remaining investment units are valued at the year-end fair value of the underlying securities in the Funds. Participant loans are valued at cost, which approximates fair value.

 

The Plan presents in the Statement of Changes in Net Assets Available for Benefits the net appreciation (depreciation) in the fair value of its investments, which consists of realized gains or losses and unrealized appreciation (depreciation) on those investments.

 

The Fidelity U.S. Equity Index Commingled Pool calculates its net asset value as of the close of business of the New York Stock Exchange. Equity securities are valued at the last sale price or official closing price. Debt securities are valued at their most recent bid prices.

 

Loans to participants are valued at their outstanding principal amount.

 

Contributions Receivable - Contributions receivable represent amounts remitted in January 2005 which were attributable to compensation earned in December 2004.

 

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.

 

Note 3.  Tax Status

 

The Company has received the latest favorable determination letter from the Internal Revenue Service (IRS), dated July 21, 2004, with respect to the Plan as restated effective September 13, 2002, qualifying the Plan as a stock bonus plan under Section 401(a) of the Internal Revenue Code (Code) exempting the Plan from federal income tax under Section 501 of the Code.

 

Note 4.  Investments

 

Investments which exceed 5% of the Plan’s net assets as of December 31, 2004 and December 31, 2003, include:

 

At December 31, 2004

 

Identity of Issue

 

Units

 

Current
Value

 

CEG Company Stock Fund

 

428,368

 

$

6,656,829

 

National Grid Stock Fund

 

325,978

 

4,804,908

 

Fidelity Dividend Growth Fund

 

374,317

 

10,664,286

 

Fidelity Growth Company Fund

 

228,426

 

12,807,830

 

Fidelity Low Priced Stock Fund

 

150,227

 

6,046,618

 

Fidelity Managed Income Portfolio

 

20,114,387

 

20,114,387

 

Fidelity U.S. Equity Index Commingled Pool

 

310,497

 

11,618,782

 

 

10



 

At December 31, 2003

 

Identity of Issue

 

Units

 

Current
Value

 

National Grid Stock Fund

 

404,264

 

$

4,547,975

 

CEG Company Stock Fund

 

358,957

 

5,014,626

 

Fidelity Growth & Income Portfolio

 

266,083

 

9,480,524

 

Fidelity Growth Company Fund

 

216,072

 

10,818,735

 

Fidelity Low Price Stock Fund

 

114,302

 

3,998,273

 

Fidelity Managed Income Portfolio

 

11,567,682

 

11,567,682

 

Fidelity Retirement Government Money Market Portfolio

 

5,071,049

 

5,071,049

 

Fidelity U.S. Equity Index Commingled Pool

 

355,959

 

12,020,740

 

 

The Plan’s investments (including investments bought, sold, and held during the year) appreciated (depreciated) as follows:

 

Identity of Issue

 

2004

 

2003

 

National Grid Stock Fund

 

$

1,222,637

 

$

(146,019

)

CEG Company Stock Fund

 

694,851

 

1,230,815

 

Mutual Funds

 

4,813,892

 

9,828,845

 

Total

 

$

6,731,380

 

$

10,913,641

 

 

Note 5.  Reconciliation of Financial Statements to FORM 5500

 

The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:

 

The following is a reconciliation of contributions per the financial statements to the Form 5500:

 

 

 

December 31, 2004

 

Contributions per the financial statements

 

$

6,946,165

 

Less: contributions receivable at December 31, 2004

 

(84,039

)

Contributions per the Form 5500

 

$

6,862,126

 

 

11



 

NINE MILE POINT NUCLEAR STATION, LLC (EIN 52-2303044)
NON-REPRESENTED EMPLOYEE SAVINGS PLAN FOR NINE MILE POINT

Schedule of Assets Held at End of Year

 

Identity of Issue

 

Cost

 

December 31, 2004
Current Value

 

 

 

 

 

 

 

 

*

CEG Company Stock Fund

 

$

5,070,841

 

$

6,656,829

 

 

National Grid Stock Fund

 

2,296,149

 

4,804,908

 

*

Fidelity Diversified International Fund

 

3,781,504

 

4,396,228

 

*

Fidelity Dividend Growth Fund

 

9,924,974

 

10,664,286

 

*

Fidelity Freedom 2005 Fund

 

15,211

 

16,025

 

*

Fidelity Freedom 2010 Fund

 

893,242

 

944,924

 

*

Fidelity Freedom 2015 Fund

 

363,211

 

388,188

 

*

Fidelity Freedom 2020 Fund

 

1,118,350

 

1,222,239

 

*

Fidelity Freedom 2025 Fund

 

485,392

 

527,824

 

*

Fidelity Freedom 2030 Fund

 

286,103

 

323,131

 

*

Fidelity Freedom 2035 Fund

 

87,345

 

92,022

 

*

Fidelity Freedom 2040 Fund

 

78,770

 

86,668

 

*

Fidelity Freedom Income Fund

 

131,183

 

134,051

 

*

Fidelity Growth Company Fund

 

11,522,545

 

12,807,830

 

*

Fidelity Low Priced Stock Fund

 

4,720,870

 

6,046,618

 

*

Fidelity Managed Income Portfolio

 

20,114,387

 

20,114,387

 

*

Fidelity Small Cap Stock Fund

 

401,947

 

431,182

 

*

Fidelity U.S. Equity Index Commingled Pool

 

10,260,586

 

11,618,782

 

 

PIMCO Total Return Fund – Administrative Class

 

2,507,610

 

2,485,082

 

 

T. Rowe Price Equity Income Fund

 

923,591

 

980,723

 

 

T. Rowe Price Mid Cap Growth Fund

 

841,616

 

927,196

 

 

T. Rowe Price Mid Cap Value Fund

 

930,341

 

955,289

 

 

Subtotal Securities Held In Trust

 

76,755,768

 

86,624,412

 

 

 

 

 

 

 

 

*

Loan Fund

 

 

1,815,716

 

 

Subtotal Participant Loans

 

 

1,815,716

 

 

 

 

 

 

 

 

 

Grand Total

 

$

76,755,768

 

$

88,440,128

 

 


* Represents party-in-interest

 

12