COMMONWEALTH EDISON CO, 10-Q, 1995-05-12

COMMONWEALTH EDISON CO
10-Q, 1995-05-12
ELECTRIC SERVICES

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<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 1995

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
--- ---

<TABLE>
<CAPTION>
COMMISSION
FILE REGISTRANT; STATE OF INCORPORATION; IRS EMPLOYER
NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO.
---------- ----------------------------------- ------------------
<C> <S> <C>
1-11375 UNICOM CORPORATION 36-3961038
(an Illinois corporation)
37th Floor, 10 South Dearborn Street
Post Office Box A-3005
Chicago, Illinois 60690-3005
312/394-7399
1-1839 COMMONWEALTH EDISON COMPANY 36-0938600
(an Illinois corporation)
37th Floor, 10 South Dearborn Street
Post Office Box 767
Chicago, Illinois 60690-0767
312/394-4321
</TABLE>

Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) have been subject to such filing
requirements for the past 90 days. Yes X No
--- ---

Common Stock outstanding at April 30, 1995:
Unicom Corporation 214,594,749 shares
Commonwealth Edison Company 214,192,288 shares

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

UNICOM CORPORATION
AND
COMMONWEALTH EDISON COMPANY

QUARTERLY REPORTS ON FORM 10-Q
TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995

This document contains the Quarterly Reports on Form 10-Q for the quarterly
period ended March 31, 1995 for each of Unicom Corporation and Commonwealth
Edison Company. Information contained herein relating to an individual
registrant is filed by such registrant on its own behalf. Accordingly, except
for its subsidiaries, Commonwealth Edison Company makes no representation as to
information relating to any other companies affiliated with Unicom Corporation.

INDEX
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Definitions.............................................................. 3
PART I. FINANCIAL INFORMATION
Unicom Corporation and Subsidiary Companies:
Financial Statements--
Report of Independent Public Accountants............................. 4
Statements of Consolidated Income for the three months and twelve
months ended March 31, 1994 and 1995................................ 5
Consolidated Balance Sheets--December 31, 1994 and March 31, 1995.... 6-7
Statements of Consolidated Capitalization--December 31, 1994 and
March 31, 1995...................................................... 8
Statements of Consolidated Retained Earnings for the three months and
twelve months ended March 31, 1994 and 1995......................... 9
Statements of Consolidated Cash Flows for the three months and twelve
months ended March 31, 1994 and 1995................................ 10
Notes to Financial Statements........................................ 11-31
Management's Discussion and Analysis of Financial Condition and Results
of Operations......................................................... 32-42
Commonwealth Edison Company and Subsidiary Companies:
Financial Statements--
Report of Independent Public Accountants............................. 44
Statements of Consolidated Income for the three months and twelve
months ended March 31, 1994 and 1995................................ 45
Consolidated Balance Sheets--December 31, 1994 and March 31, 1995.... 46-47
Statements of Consolidated Capitalization--December 31, 1994 and
March 31, 1995...................................................... 48
Statements of Consolidated Retained Earnings for the three months and
twelve months ended March 31, 1994 and 1995......................... 49
Statements of Consolidated Premium on Common Stock and Other Paid-In
Capital for the three months and twelve months ended March 31, 1994
and 1995............................................................ 49
Statements of Consolidated Cash Flows for the three months and twelve
months ended March 31, 1994 and 1995................................ 50
Notes to Financial Statements........................................ 51-55
Management's Discussion and Analysis of Financial Condition and Results
of Operations......................................................... 56
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.............................................. 57-62
Item 6. Exhibits and Reports on Form 8-K............................... 63
SIGNATURES............................................................... 64
</TABLE>

2
<PAGE>

DEFINITIONS

The following terms are used in the text of this document with the following
meanings:

<TABLE>
<CAPTION>
TERM MEANING
----------------------- ------------------------------------------------------
<C> <S>
AFUDC Allowance for funds used during construction
AMT Alternative minimum tax
CERCLA Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended
CFC Chlorofluorocarbon
Circuit Court Circuit Court of Cook County, Illinois
Clean Air Amendments Clean Air Act Amendments of 1990
ComEd Commonwealth Edison Company
Cotter Cotter Corporation, which is a wholly-owned subsidiary
of ComEd
DOE U.S. Department of Energy
EMFs Electric and magnetic fields
FASB Financial Accounting Standards Board
FERC Federal Energy Regulatory Commission
Fuel Matters Settlement A settlement relating to the ICC fuel reconciliation
proceedings involving ComEd for the period from 1985
through 1988 and to future challenges by the settling
parties to the prudency of ComEd's western coal costs
for the period from 1989 through 1992.
ICC Illinois Commerce Commission
Illinois EPA Illinois Environmental Protection Agency
Indiana Company Commonwealth Edison Company of Indiana, Inc., which is
a wholly-owned subsidiary of ComEd.
IPCB Illinois Pollution Control Board
MAIN Mid-America Interconnected Network
MGP Manufactured gas plant
NEIL Nuclear Electric Insurance Limited
NML Nuclear Mutual Limited
NPDES National Pollutant Discharge Elimination System
NPL National Priorities List
NRC Nuclear Regulatory Commission
PCBs Polychlorinated biphenyls
PRPs Potentially responsible parties under CERCLA
Rate Matters Settlement A settlement concerning the proceedings relating to
ComEd's 1985 and 1991 ICC rate orders (which orders
relate to, among other things, the recovery of costs
associated with ComEd's four most recently completed
nuclear generating units), the proceedings relating
to the reduction in the difference between ComEd'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 ComEd during
1990 relating to a 1988 ICC rate order, and matters
related to a rider to ComEd's rates that it was
required to file as a result of the change in the
federal corporate tax rate made by the Tax Reform Act
of 1986.
Rate Order ICC rate order issued on January 9, 1995, as
subsequently modified
Remand Order ICC rate order issued on January 6, 1993, as
subsequently modified
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting Standards
Unicom Unicom Corporation
Unicom Enterprises Unicom Enterprises Inc., which is a wholly-owned
subsidiary of Unicom.
Unicom Thermal Unicom Thermal Technologies Inc., which is a wholly-
owned subsidiary of Unicom Enterprises.
Units ComEd's nuclear generating units known as Byron Unit 2
and Braidwood Units 1 and 2
U.S. EPA U.S. Environmental Protection Agency
Westinghouse Westinghouse Electric Corporation
</TABLE>

3
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Unicom Corporation:

We have audited the accompanying consolidated balance sheets and statements
of consolidated capitalization of Unicom Corporation (an Illinois corporation)
and subsidiary companies as of December 31, 1994 and March 31, 1995, and the
related statements of consolidated income, retained earnings and cash flows for
the three-month and twelve-month periods ended March 31, 1994 and 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 financial position of Unicom Corporation and
subsidiary companies as of December 31, 1994 and March 31, 1995, and the
results of their operations and their cash flows for the three-month and
twelve-month periods ended March 31, 1994 and 1995, in conformity with
generally accepted accounting principles.

Arthur Andersen LLP
Chicago, Illinois
May 9, 1995

4
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED INCOME

The following Statements of Consolidated Income for the three months and
twelve months ended March 31, 1994 and 1995 reflect the results of past
operations and are not intended as any representation as to results of
operations for any future period. Future operations will necessarily be
affected by various and diverse factors and developments, including changes in
electric rates, population, business activity, taxes, environmental control,
energy use, fuel supply, cost of labor, fuel and purchased power and other
matters, the nature and effect of which cannot now be determined.

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
---------------------- -----------------------
1994 1995 1994 1995
---------- ---------- ----------- ----------
(THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Operating Revenues:
Operating revenues........... $1,530,975 $1,578,118 $ 6,534,375 $6,340,574
Provisions for revenue
refunds..................... (6,225) 18 (1,232,569) (9,667)
---------- ---------- ----------- ----------
$1,524,750 $1,578,136 $ 5,301,806 $6,330,907
---------- ---------- ----------- ----------
Operating Expenses and Taxes:
Fuel......................... $ 264,215 $ 272,857 $ 1,148,922 $1,058,494
Purchased power.............. 17,149 3,543 24,333 45,517
Deferred (under)/
overrecovered energy costs--
net......................... 11,753 (3,363) 19,434 (13,176)
Operation.................... 398,809 385,788 1,500,792 1,520,308
Maintenance.................. 165,277 145,326 587,189 541,370
Depreciation................. 221,932 225,106 869,981 890,646
Recovery of regulatory
assets...................... 3,999 3,818 8,435 15,272
Taxes (except income)........ 200,073 209,933 712,117 797,712
Income taxes--
Current--Federal........... 34,648 53,241 (28,263) 175,022
--State.................... 712 11,740 (15,376) 12,941
Deferred--Federal--net..... (6,747) 12,311 89,320 122,442
--State--net............... 7,140 4,489 38,267 62,366
Investment tax credits
deferred--net .............. (7,224) (7,179) (29,333) (28,712)
---------- ---------- ----------- ----------
$1,311,736 $1,317,610 $ 4,925,818 $5,200,202
---------- ---------- ----------- ----------
Operating Income.............. $ 213,014 $ 260,526 $ 375,988 $1,130,705
---------- ---------- ----------- ----------
Other Income and (Deductions):
Interest on long-term debt... $ (157,152) $ (152,270) $ (641,830) $ (616,343)
Interest on notes payable.... (87) (151) (340) (622)
Allowance for funds used
during construction--
Borrowed funds............. 6,178 1,685 20,904 14,419
Equity funds............... 7,356 2,093 25,248 17,364
Income taxes applicable to
nonoperating activities..... (2,733) 268 21,572 30,075
Income tax reduction for
disallowed plant costs...... -- -- 792 --
Deferred carrying charges.... -- -- 438,183 --
Interest and other costs for
1993 Settlements............ (10,475) (61) (109,149) (11,049)
Provision for dividends on
preferred and preference
stocks of Commonwealth
Edison Company.............. (15,545) (16,908) (64,961) (66,291)
Miscellaneous--net........... (4,536) (6,581) (44,574) (90,744)
---------- ---------- ----------- ----------
$ (176,994) $ (171,925) $ (354,155) $ (723,191)
---------- ---------- ----------- ----------
Net Income.................... $ 36,020 $ 88,601 $ 21,833 $ 407,514
========== ========== =========== ==========
Average Number of Common
Shares Outstanding........... 213,780 214,429 213,619 214,193
Earnings per Common Share..... $0.17 $0.41 $0.10 $1.90
Cash Dividends Declared per
Common Share................. $0.40 $0.40 $1.60 $1.60
</TABLE>

The accompanying Notes to Financial Statements are an integral part of the
above statements.

5
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
ASSETS 1994 1995
------ ------------ -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Utility Plant:
Plant and equipment, at original cost (includes
construction work in progress of $1,043 million
and $1,059 million, respectively)................. $26,257,665 $26,449,492
Less--Accumulated provision for depreciation....... 9,623,756 9,884,012
----------- -----------
$16,633,909 $16,565,480
Nuclear fuel, at amortized cost.................... 689,424 667,541
----------- -----------
$17,323,333 $17,233,021
----------- -----------
Investments and Other Property:
Nuclear decommissioning funds...................... $ 880,944 $ 1,036,296
Subsidiary companies............................... 118,051 118,609
Other, at cost..................................... 41,292 50,230
----------- -----------
$ 1,040,287 $ 1,205,135
----------- -----------
Current Assets:
Cash............................................... $ 1,927 $ 4,534
Temporary cash investments......................... 75,008 226,456
Other cash investments............................. 19,588 27,587
Special deposits................................... 29,603 16,015
Receivables--
Customers........................................ 463,241 518,316
Taxes............................................ 36,228 5,999
Other............................................ 67,389 41,587
Provisions for uncollectible accounts............ (10,720) (10,982)
Coal and fuel oil, at average cost................. 108,872 120,496
Materials and supplies, at average cost............ 384,612 371,005
Deferred unrecovered energy costs.................. 48,697 48,337
Deferred income taxes related to current assets and
liabilities--
Loss carryforward................................ 10,090 --
Other............................................ 110,267 119,521
Prepayments and other.............................. 57,050 46,332
----------- -----------
$ 1,401,852 $ 1,535,203
----------- -----------
Deferred Charges and Other Noncurrent Assets:
Regulatory assets.................................. $ 2,604,270 $ 2,575,200
Unrecovered energy costs........................... 643,438 635,213
Other.............................................. 108,308 99,662
----------- -----------
$ 3,356,016 $ 3,310,075
----------- -----------
$23,121,488 $23,283,434
=========== ===========
</TABLE>

The accompanying Notes to Financial Statements are an integral part of the
above statements.

6
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
CAPITALIZATION AND LIABILITIES 1994 1995
------------------------------ ------------ -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Capitalization (see accompanying statements):
Common stock equity................................. $ 5,448,127 $ 5,455,090
Preferred and preference stocks of Commonwealth
Edison Company--
Without mandatory redemption requirements......... 508,147 508,114
Subject to mandatory redemption requirements...... 292,163 292,163
Long-term debt of subsidiary companies.............. 7,453,206 7,374,370
----------- -----------
$13,701,643 $13,629,737
----------- -----------
Current Liabilities:
Notes payable--bank loans........................... $ 7,150 $ 7,150
Current portion of long-term debt, redeemable pref-
erence stock and capitalized lease obligations of
subsidiary companies............................... 560,545 680,986
Accounts payable.................................... 350,958 302,314
Accrued interest.................................... 182,745 159,378
Accrued taxes....................................... 206,973 314,023
Dividends payable................................... 102,647 102,720
Customer deposits................................... 44,514 43,881
Other............................................... 85,845 88,948
----------- -----------
$ 1,541,377 $ 1,699,400
----------- -----------
Deferred Credits and Other Noncurrent Liabilities:
Deferred income taxes............................... $ 4,383,347 $ 4,384,336
Accumulated deferred investment tax credits......... 717,752 710,572
Accrued spent nuclear fuel disposal fee and related
interest........................................... 589,757 598,179
Obligations under capital leases of subsidiary com-
panies............................................. 433,184 440,288
Regulatory liabilities.............................. 699,426 702,581
Other............................................... 1,055,002 1,118,341
----------- -----------
$ 7,878,468 $ 7,954,297
----------- -----------
Commitments and Contingent Liabilities (Note 19)
$23,121,488 $23,283,434
=========== ===========
</TABLE>

The accompanying Notes to Financial Statements are an integral part of the
above statements.

7
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED CAPITALIZATION

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1994 1995
------------ -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Common Stock Equity:
Common stock, without par value--
Outstanding--214,340,067 shares and 214,522,949
shares, respectively............................. $ 4,890,931 $ 4,895,105
Preference stock expense of Commonwealth Edison
Company........................................... (3,775) (3,776)
Retained earnings.................................. 560,971 563,761
----------- -----------
$ 5,448,127 $ 5,455,090
----------- -----------
Preferred and Preference Stocks of Commonwealth
Edison Company--
Without Mandatory Redemption Requirements:
Preference stock, cumulative, without par value--
Outstanding--13,499,549 shares.................. $ 504,957 $ 504,957
$1.425 convertible preferred stock, cumulative,
without par
value--
Outstanding--100,323 shares and 99,270 shares,
respectively................................... 3,190 3,157
Prior preferred stock, cumulative, $100 par value
per share--
No shares outstanding........................... -- --
----------- -----------
$ 508,147 $ 508,114
----------- -----------
Subject to Mandatory Redemption Requirements:
Preference stock, cumulative, without par value--
Outstanding--3,113,205 shares................... $ 309,964 $ 309,964
Current redemption requirements for preference
stock included in current liabilities........... (17,801) (17,801)
----------- -----------
$ 292,163 $ 292,163
----------- -----------
Long-Term Debt of Subsidiary Companies:
First mortgage bonds:
Maturing 1995 through 1999--5 1/4% to 7%......... $ 818,000 $ 818,000
Maturing 2000 through 2009--5.30% to 9 3/8%...... 2,220,500 2,220,500
Maturing 2010 through 2019--5.85% to 9 5/8%...... 1,106,000 1,106,000
Maturing 2020 through 2023--7 3/4% to 9 7/8%..... 1,870,000 1,870,000
----------- -----------
$ 6,014,500 $ 6,014,500
Sinking fund debentures, due 1999 through 2011--
2 3/4% to 7 5/8%.................................. 112,593 112,465
Pollution control obligations, due 2004 through
2014--3.952% to 9 1/8%............................ 337,200 337,200
Other long-term debt............................... 1,451,449 1,441,909
Deposit for retirement of long-term debt........... -- (1,780)
Current maturities of long-term debt included in
current liabilities............................... (395,554) (464,325)
Unamortized net debt discount and premium.......... (66,982) (65,599)
----------- -----------
$ 7,453,206 $ 7,374,370
----------- -----------
$13,701,643 $13,629,737
=========== ===========
</TABLE>

The accompanying Notes to Financial Statements are an integral part of the
above statements.

8
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED RETAINED EARNINGS

<TABLE>
<CAPTION>
THREE MONTHS TWELVE MONTHS
ENDED MARCH 31 ENDED MARCH 31
-------------------- -----------------
1994 1995 1994 1995
--------- --------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Balance at Beginning of Period.......... $ 549,152 $ 560,971 $822,419 $499,655
Add--Net income......................... 36,020 88,601 21,833 407,514
--------- --------- -------- --------
$ 585,172 $ 649,572 $844,252 $907,169
--------- --------- -------- --------
Deduct--
Cash dividends declared on common
stock............................... $ 85,518 $ 85,811 $341,857 $342,853
Other capital stock transactions--
net................................. (1) -- 2,740 555
--------- --------- -------- --------
$ 85,517 $ 85,811 $344,597 $343,408
--------- --------- -------- --------
Balance at End of Period................ $ 499,655 $ 563,761 $499,655 $563,761
========= ========= ======== ========
</TABLE>

The accompanying Notes to Financial Statements are an integral part of the
above statements.

9
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
-------------------- ----------------------
1994 1995 1994 1995
--------- --------- ----------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Cash Flow from Operating Activi-
ties:
Net income...................... $ 36,020 $ 88,601 $ 21,833 $ 407,514
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization. 232,733 238,629 919,318 935,261
Deferred income taxes and in-
vestment tax credits--net.... (4,535) 9,945 95,859 140,761
Equity component of allowance
for funds used during
construction................. (7,356) (2,093) (25,248) (17,364)
Provisions for revenue refunds
and related interest......... 16,770 -- 1,310,210 20,779
Revenue refunds and related
interest..................... (346,552) 15,115 (533,651) (859,984)
Recovery/(deferral) of regula-
tory assets/deferred carrying
charges--net................. 3,999 3,818 (429,748) 15,272
Provisions/(payments) for
liability for early
retirement and separation
costs--net................... 15,607 380 15,513 18,353
Net effect on cash flows of
changes in:
Receivables................. 213,644 1,218 109,819 (98,211)
Coal and fuel oil........... 2,772 (11,624) 149,505 (11,516)
Materials and supplies...... (2,993) 13,607 (970) 34,702
Accounts payable adjusted
for nuclear fuel lease
principal payments and
early retirement and
separation costs--net...... (52,450) 14,141 198,105 183,156
Accrued interest and taxes.. 50,724 83,683 (41,123) 103,490
Other changes in certain
current assets and
liabilities................ 19,220 5,485 33,785 (68,388)
Other--net.................... 39,232 80,740 97,111 174,833
--------- --------- ----------- ---------
$ 216,835 $ 541,645 $ 1,920,318 $ 978,658
--------- --------- ----------- ---------
Cash Flow from Investing Activi-
ties:
Construction expenditures....... $(187,724) $(206,263) $ (830,479) $(758,218)
Nuclear fuel expenditures....... (48,749) (38,857) (209,131) (247,372)
Equity component of allowance
for funds used during
construction................... 7,356 2,093 25,248 17,364
Contributions to nuclear
decommissioning funds.......... (96,229) (96,229) (132,550) (132,550)
Investment in subsidiary compa-
nies........................... -- -- -- (49)
Other cash investments and spe-
cial deposits.................. 71,649 (7,999) (548,326) 542,339
--------- --------- ----------- ---------
$(253,697) $(347,255) $(1,695,238) $(578,486)
--------- --------- ----------- ---------
Cash Flow from Financing Activi-
ties:
Issuance of securities--
Long-term debt................. $ 65,538 $ 20,000 $ 1,618,079 $ 500,751
Capital stock.................. 1,035 4,159 80,278 84,162
Retirement and redemption of
securities--
Long-term debt................. (55,307) (29,637) (1,830,749) (678,260)
Capital stock.................. -- -- (92,969) (17,709)
Deposits and securities held
for retirement and redemption
of securities.................. (12,888) (1,674) 462,976 14,405
Premium paid on early redemp-
tion of long-term debt......... (500) -- (69,895) (4,064)
Cash dividends paid on common
stock.......................... (85,500) (85,738) (341,683) (342,560)
Proceeds from sale/leaseback of
nuclear fuel................... 116,964 115,340 221,667 305,025
Nuclear fuel lease principal
payments....................... (53,445) (62,785) (240,144) (219,029)
Increase in short-term
borrowings..................... 150 -- 500 1,050
--------- --------- ----------- ---------
$ (23,953) $ (40,335) $ (191,940) $(356,229)
--------- --------- ----------- ---------
Increase (Decrease) in Cash and
Temporary Cash Investments...... $ (60,815) $ 154,055 $ 33,140 $ 43,943
Cash and Temporary Cash
Investments at Beginning of
Period.......................... 247,862 76,935 153,907 187,047
--------- --------- ----------- ---------
Cash and Temporary Cash Invest-
ments at End of Period.......... $ 187,047 $ 230,990 $ 187,047 $ 230,990
========= ========= =========== =========
</TABLE>

The accompanying Notes to Financial Statements are an integral part of the
above statements.

10
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

Corporate Structure and Basis of Presentation. Unicom was incorporated in
January 1994, and became the parent corporation of ComEd and Unicom
Enterprises in a corporate restructuring that became effective on September 1,
1994. Previously, Unicom Enterprises was a wholly-owned subsidiary of ComEd.
The restructuring was accounted for by the pooling-of-interests method. Under
this method, the assets, liabilities and ownership interests of each of the
companies are combined at their existing recorded amounts as of the
restructuring date, and the financial statements are presented herein as if
the restructuring took place as of the earliest period shown. In the
restructuring, each of the 214,185,572 outstanding shares of ComEd common
stock, par value $12.50 per share, was converted into one fully paid and non-
assessable share of Unicom common stock, without par value. ComEd, an electric
utility, is the principal subsidiary of Unicom. Unicom Enterprises is an
unregulated subsidiary engaged, through Unicom Thermal, in energy service
activities. Unicom Thermal will provide district cooling services to office
and other buildings from central locations in the city of Chicago. Unicom
Thermal expects to begin serving customers in the summer of 1995.

The consolidated financial statements include the accounts of Unicom, ComEd,
the Indiana Company and the consolidated accounts of Unicom Enterprises. All
significant intercompany transactions have been eliminated. ComEd's
investments in other subsidiary companies, which are not material in relation
to ComEd's financial position and results of operations, are accounted for in
accordance with the equity method of accounting. The preferred and preference
stocks, common stock purchase warrants, first mortgage bonds and other debt
obligations of ComEd and the Indiana Company were unchanged in the
restructuring and remain outstanding securities and obligations of ComEd and
the Indiana Company.

Regulation. ComEd is subject to regulation as to accounting and ratemaking
policies and practices by the ICC and FERC. ComEd's accounting policies and
the accompanying consolidated financial statements conform to generally
accepted accounting principles applicable to rate-regulated enterprises and
reflect the effects of the ratemaking process in accordance with SFAS No. 71,
Accounting for Certain Types of Regulation. Such effects concern mainly the
time at which various items enter into the determination of net income in
order to follow the principle of matching costs and revenues.

Regulatory Assets and Liabilities. Regulatory assets are incurred costs
which have been deferred and are amortized for ratemaking and accounting
purposes. Regulatory liabilities represent amounts to be settled with
customers through future rates. Regulatory assets and liabilities reflected in
base rates at December 31, 1994 and March 31, 1995 were as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1994 1995
------------ ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Regulatory assets:
Deferred income taxes (1)............................. $1,791,395 $1,774,416
Deferred carrying charges (2)......................... 422,966 419,705
Nuclear decommissioning costs--Dresden Unit 1 (3)..... 141,405 137,408
Unamortized loss on reacquired debt (4)............... 176,128 172,106
Other................................................. 72,376 71,565
---------- ----------
$2,604,270 $2,575,200
========== ==========
Regulatory liabilities:
Deferred income taxes (1)............................. $ 650,813 $ 648,288
Other................................................. 48,613 54,293
---------- ----------
$ 699,426 $ 702,581
========== ==========
</TABLE>
- --------
(1) Recorded in compliance with SFAS No. 109. See Note 14 for additional
information.
(2) Amortized over the remaining life of the Units.
(3) Amortized over the remaining life of Dresden station. See "Depreciation
and Decommissioning" below for additional information.
(4) Amortized over the lives of the long-term debt issued to finance the
reacquisition.

11
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

For additional information related to deferred carrying charges, see "Deferred
Carrying Charges" under the subcaption "Results of Operations" in "Management's
Discussion and Analysis of Financial Condition and Results of Operations." See
also "Deferred Unrecovered Energy Costs" below regarding the uniform fuel
adjustment clause, the DOE assessment and coal reserves.

If a portion of ComEd's operations was no longer subject to the provisions of
SFAS No. 71 as a result of a change in regulation or the effects of
competition, ComEd would be required to write off the related regulatory assets
and liabilities. In addition, ComEd would be required to determine any
impairment to other assets and write down the assets to their fair value.

SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of, which was issued in March 1995 and will be
effective on January 1, 1996, establishes accounting standards for the
impairment of long-lived assets. The SFAS also requires that regulatory assets
which are no longer probable of recovery through future revenue be charged to
earnings. SFAS No. 121 is not expected to have an impact on ComEd's financial
position or results of operations upon adoption.

Customer Receivables and Revenues. ComEd is engaged principally in the
production, purchase, transmission, distribution and sale of electricity to a
diverse base of residential, commercial and industrial customers. ComEd's
electric service territory has an area of approximately 11,540 square miles and
an estimated population of approximately 8.2 million as of December 31, 1994,
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 ComEd
derived approximately one-third of its ultimate consumer revenues in the twelve
months ended March 31, 1995. ComEd had approximately 3.4 million electric
customers at March 31, 1995.

Depreciation and Decommissioning. Depreciation is provided on the straight-
line basis by amortizing the cost of depreciable plant and equipment over
estimated composite service lives. Non-nuclear plant and equipment is
depreciated at annual rates developed for each class of plant based on their
composite service lives. Provisions for depreciation were at an average annual
rate of 3.13% of average depreciable utility plant and equipment for the three
months and twelve months ended March 31, 1994 and 1995. The annual rate for
nuclear plant and equipment is 2.88%, which excludes separately collected
decommissioning costs.

Nuclear plant decommissioning costs are accrued over the expected service
lives of the related nuclear generating units. The accrual is based on an
annual levelized cost of the unrecovered portion of estimated decommissioning
costs which are escalated for expected inflation to the expected time of
decommissioning and are net of expected earnings on the trust funds. See
"Decommissioning" under "Management's Discussion and Analysis of Financial
Condition and Results of Operations," subcaption "Results of Operations," for a
discussion of questions raised by the staff of the SEC and a FASB review
regarding the electric utility industry method of accounting for
decommissioning costs. Dismantling is expected to occur relatively soon after
the end of the useful life of each related generating station. The accrual for
decommissioning is based on the prompt removal method authorized by the NRC
guidelines. ComEd's twelve operating units have estimated remaining service
lives ranging from 11 to 33 years. ComEd's first nuclear unit, Dresden Unit 1,
is retired and will be dismantled upon the retirement of the remaining units at
that station, which is consistent with the regulatory treatment for the related
decommissioning costs.

Based on ComEd's most recent study, decommissioning costs, including the cost
of decontamination and dismantling but excluding a contingency allowance, are
estimated to aggregate $3.5 billion in

12
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

current-year (1995) dollars. ComEd estimates that it will expend approximately
$15 billion, excluding any contingency allowance, for decommissioning costs
primarily during the period from 2007 through 2032. Such costs are expected to
be funded by the external decommissioning trust funds which ComEd established
in compliance with Illinois law and into which ComEd has been making annual
contributions. Future decommissioning cost estimates may be significantly
affected by the adoption of or changes to NRC regulations.

On January 9, 1995, the ICC issued the Rate Order in the proceedings relating
to ComEd's February 10, 1994 rate increase request. In the Rate Order, the ICC
determined that ComEd's annual nuclear plant decommissioning cost collections
from its ratepayers should be reduced from the $127 million previously
authorized in the 1991 ICC rate order to $112.7 million. The $112.7 million
annual collection amount primarily resulted from the ICC's decision to exclude
from ComEd's costs subject to collection a contingency allowance. Contingency
allowances used in decommissioning cost estimates provide for currently
unforeseeable costs that are likely to occur after decommissioning begins and
generally range from 20% to 25% of the identifiable costs. However, the Rate
Order established a rider which will allow annual adjustments to
decommissioning cost collections outside of the context of a traditional rate
proceeding. Such rider is intended to allow adjustments in decommissioning cost
recoveries from ratepayers as changes in cost estimates become identifiable. On
February 28, 1995, ComEd submitted its initial rider filing to the ICC to
increase its annual collections to $113.5 million, primarily reflecting
additional expenditures at Dresden Unit 1, its retired nuclear unit. The ICC
approved the rider filing on April 19, 1995.

As a result of the decommissioning rider filing, beginning May 2, 1995, the
effective date of the order related to the rider filing, ComEd began collecting
and accruing $113.5 million annually for decommissioning costs. The assumptions
used to calculate the $113.5 million decommissioning cost accrual include: the
decommissioning cost estimate of $3.5 billion in current-year (1995) dollars,
after-tax earnings on the tax-qualified and nontax-qualified decommissioning
funds of 7.30% and 6.26%, respectively, as well as an escalation rate for
future decommissioning costs of 5.3%. The annual accrual of $113.5 million
provided over the lives of the nuclear plants, coupled with the expected fund
earnings and amounts previously recovered in rates, is expected to aggregate
approximately $15 billion.

For the twelve operating nuclear units, decommissioning costs are recorded as
portions of depreciation expense and accumulated provision for depreciation on
the Statements of Consolidated Income and the Consolidated Balance Sheets,
respectively. As of March 31, 1995, the total decommissioning costs included in
the accumulated provision for depreciation were approximately $1,069 million.
For ComEd's retired nuclear unit, Dresden Unit 1, the total estimated liability
at March 31, 1995 in current-year (1995) dollars of $238 million was recorded
on the Consolidated Balance Sheets as a noncurrent liability and the
unrecovered portion of the liability of approximately $137 million was recorded
as a regulatory asset.

Under Illinois law, decommissioning cost collections are required to be
deposited in external trust funds; and, consequently, such collections do not
add to the cash flows available for general corporate purposes. The ICC has
approved ComEd's funding plan which provides for annual contributions of
current accruals and ratable contributions of past accruals over the remaining
service lives of the nuclear plants. At March 31, 1995, the past accruals that
are required to be contributed to the external trusts aggregate $134 million.
The fair value of funds accumulated in the external trusts at March 31, 1995
was approximately $1,036 million which includes pre-tax unrealized appreciation
of $52 million. The earnings on the external trusts accumulate in the fund
balance and in the accumulated provision for depreciation. Such earnings on the
external trust funds, which have been recorded as a component of depreciation

13
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

expense on the Statements of Consolidated Income, were $12,527,000 and
$11,286,000 for the three months ended March 31, 1994 and 1995, respectively,
and $44,573,000 and $36,278,000 for the twelve months ended March 31, 1994 and
1995, respectively.

Amortization of Nuclear Fuel. The cost of nuclear fuel is amortized to fuel
expense based on the quantity of heat produced using the unit of production
method. As authorized by the ICC, provisions for spent nuclear fuel disposal
costs have been recorded at a level required to recover the fee payable on
current nuclear-generated and sold electricity and the current interest accrual
on the one-time fee payable to the DOE for nuclear generation prior to April 7,
1983. The one-time fee and interest thereon have been recovered and the current
fee and current interest on the one-time fee are currently being recovered
through the fuel adjustment clause. See Note 10 for further information
concerning the disposal of spent nuclear fuel, the one-time fee and the current
interest accrual on the one-time fee. Nuclear fuel expenses, including leased
fuel costs and provisions for spent nuclear fuel disposal costs, were
$89,243,000 and $98,844,000 for the three months ended March 31, 1994 and 1995,
respectively, and $386,282,000 and $367,628,000 for the twelve months ended
March 31, 1994 and 1995, respectively.

Income Taxes. Deferred income taxes are provided for income and expense items
recognized for financial accounting purposes in periods that differ from those
for income tax purposes. Income taxes deferred in prior years are charged or
credited to income as the book/tax timing differences reverse. Prior years'
deferred investment tax credits are amortized through credits to income
generally over the lives of the related property. Income tax credits resulting
from interest charges applicable to nonoperating activities, principally
construction, are classified as other income.

AFUDC. In accordance with the uniform systems of accounts prescribed by
regulatory authorities, ComEd capitalizes AFUDC, compounded semiannually, which
represents the estimated cost of funds used to finance its construction
program. The equity component of AFUDC is recorded on an after-tax basis and
the borrowed funds component of AFUDC is recorded on a pre-tax basis. The
average annual capitalization rates were 9.84% and 9.65% for the three months
ended March 31, 1994 and 1995, respectively, and 9.95% and 9.80% for the twelve
months ended March 31, 1994 and 1995, respectively. AFUDC does not contribute
to the current cash flow of Unicom or ComEd.

Interest. Total interest costs incurred on debt, leases and other obligations
were $190,166,000 and $176,983,000 for the three months ended March 31, 1994
and 1995, respectively, and $787,589,000 and $716,527,000 for the twelve months
ended March 31, 1994 and 1995, respectively.

Debt Discount, Premium and Expense. Discount, premium and expense on long-
term debt of subsidiary companies are being amortized over the lives of the
respective issues.

Loss on Reacquired Debt. Consistent with regulatory treatment, the net loss
from ComEd's reacquisition of first mortgage bonds, sinking fund debentures and
pollution control obligations prior to their scheduled maturity dates is
deferred and amortized over the lives of the long-term debt issued to finance
the reacquisition.

Deferred Unrecovered Energy Costs. The uniform fuel adjustment clause adopted
by the ICC provides for the recovery of changes in fossil and nuclear fuel
costs and the energy portion of purchased power costs as compared to the fuel
and purchased energy costs included in ComEd's base rates. As authorized by the
ICC, ComEd has recorded under or overrecoveries of allowable fuel and energy
costs which, under the clause, are recoverable or refundable in subsequent
months. Deferred unrecovered energy costs also include amounts to be recovered
through the fuel adjustment clause for assessments

14
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

by the DOE to fund a portion of the cost for the decontamination and
decommissioning of three nuclear enrichment facilities previously operated by
the DOE. As of December 31, 1994 and March 31, 1995, an asset of approximately
$191 million and $187 million, respectively, was recorded, of which the current
portion of approximately $15 million has been included in current assets on the
Consolidated Balance Sheets. As of December 31, 1994 and March 31, 1995, a
corresponding liability of approximately $165 million was recorded in other
noncurrent liabilities and approximately $15 million was recorded in other
current liabilities.

At December 31, 1994 and March 31, 1995, ComEd had unrecovered fuel costs in
the form of coal reserves of approximately $498 million and $489 million,
respectively. In prior years, ComEd's commitments for the purchase of coal
exceeded its requirements. Rather than take all the coal it was required to
take, ComEd agreed to purchase the coal in place in the form of coal reserves.
ComEd has been allowed to recover from its customers the costs of the coal
reserves through its fuel adjustment clause as the coal is used for the
generation of electricity. ComEd expects to recover the costs of the coal
reserves by the year 2007. However, ComEd is not earning a return on the
expenditures for coal reserves prior to the coal reserves being used for the
generation of electricity by including the coal reserves in rate base.
Unrecovered fuel costs expected to be recovered within one year amounting to
approximately $31 million and $26 million at December 31, 1994 and March 31,
1995, respectively, have been included on the Consolidated Balance Sheets in
current assets as deferred unrecovered energy costs. See Note 19 for additional
information concerning ComEd's coal commitments.

Certain Investments. Effective January 1, 1994, SFAS No. 115, Accounting for
Certain Investments in Debt and Equity Securities, was adopted. SFAS No. 115
addresses the accounting and reporting for investments in equity securities
that have readily determinable fair values and for all investments in debt
securities. For additional information, see Note 11.

Reclassifications. Certain prior year amounts have been reclassified to
conform with current period presentation. These reclassifications had no effect
on net income.

Statements of Consolidated Cash Flows. For purposes of the Statements of
Consolidated Cash Flows, temporary cash investments, generally investments
maturing within three months at the time of purchase, are considered to be cash
equivalents. Supplemental cash flow information for the three months and twelve
months ended March 31, 1994 and 1995 was as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
------------------- --------------------
1994 1995 1994 1995
--------- -------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Supplemental Cash Flow Information:
Cash paid during the period for:
Interest (net of amount
capitalized).................... $ 173,057 $162,739 $649,489 $635,339
Income taxes (net of refunds).... $(133,389) $(30,421) $(31,267) $ 98,045
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Capital lease obligations of
subsidiary companies incurred..... $ 117,499 $116,810 $225,072 $309,028
</TABLE>

(2) SETTLEMENTS RELATING TO CERTAIN RATE MATTERS. Under the Rate Matters
Settlement, effective as of November 4, 1993, ComEd 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 which
ended in November 1994 (followed by a reconciliation period of five months).
ComEd had previously deferred the recognition of revenues during 1993 as a
result of developments in the proceedings related to the 1991

15
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

ICC rate order, which resulted in a reduction to 1993 net income of
approximately $160 million or $0.75 per common share. The recording of the
effects of the Rate Matters Settlement in October 1993 reduced 1993 net income
by approximately $292 million or $1.37 per common share, in addition to the
approximately $160 million 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. The deferred recognition of revenues was
eliminated in October 1993 at the time the provisions for revenue refunds
related to the Rate Matters Settlement, which reflected those deferred
revenues, were recorded.

Under the Fuel Matters Settlement, effective as of December 2, 1993, ComEd
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 which ended in November 1994. The recording
of the effects of the Fuel Matters Settlement in October 1993 reduced 1993 net
income by approximately $62 million or $0.29 per common share.

(3) OTHER RATE MATTERS. On January 9, 1995, the ICC issued the Rate Order in
the proceedings relating to ComEd's February 10, 1994 rate increase request.
The Rate Order provides, among other things, for (i) an increase in ComEd's
total revenues of approximately $301.8 million (excluding add-on revenue taxes)
or 5.2%, on an annual basis, including a $303.2 million increase in base rates,
(ii) the collection of municipal franchise costs as an adder to base rates
until May 1, 1995, when such costs will be collected prospectively on an
individual municipality basis through a rider, and (iii) the use of a rider,
with annual review proceedings, to pass on to ratepayers increases or decreases
in estimated costs associated with the decommissioning of ComEd's nuclear
generating units. See "Depreciation and Decommissioning" in Note 1 for
information related to the level of decommissioning cost collections allowed in
the Rate Order. The ICC also determined that the Units were 100% "used and
useful" and that the previously determined reasonable costs of such Units, as
depreciated, should be included in full in ComEd's rate base. The rates
provided in the Rate Order became effective on January 14, 1995; however, they
are being collected subject to refund as a result of subsequent judicial
action. Electric operating revenues of approximately $61 million (excluding
revenue taxes) are subject to refund. Intervenors and ComEd have filed appeals
of the Rate Order with the Illinois Appellate Court.

(4) AUTHORIZED SHARES AND VOTING RIGHTS OF CAPITAL STOCK. At March 31, 1995,
Unicom's authorized shares consisted of 400,000,000 shares of common stock. The
authorized shares of ComEd preferred and preference stocks at March 31, 1995
were: preference stock--23,423,205 shares; $1.425 convertible preferred stock--
99,270 shares; and prior preferred stock--850,000 shares. The preference and
prior preferred stocks are issuable in series and may be issued with or without
mandatory redemption requirements. Holders of outstanding Unicom shares are
entitled to one vote for each share held on each matter submitted to a vote of
such shareholders; and holders of outstanding ComEd shares are entitled to one
vote for each share held on each matter submitted to a vote of such
shareholders. All such shares have the right to cumulate votes in elections for
the directors of the corporation which issued the shares.

(5) COMMON STOCK. At March 31, 1995, shares of Unicom common stock were
reserved for the following purposes:

<TABLE>
<S> <C>
Long-Term Incentive Plan........................................ 3,817,118
Employee Stock Purchase Plan.................................... 1,117,163
Employee Savings and Investment Plan............................ 480,403
---------
5,414,684
=========
</TABLE>

16
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

Common stock for the three months and twelve months ended March 31, 1994 and
1995 was issued as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
------------------ -------------------
1994 1995 1994 1995
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Shares of Common Stock Issued:
Long-Term Incentive Plan............ -- 182,882 -- 182,882
Employee Stock Purchase Plan........ -- -- 268,594 305,205
Employee Savings and Investment
Plan............................... 38,000 -- 138,700 47,400
Conversion of $1.425 convertible
preferred stock.................... 5,750 -- 27,072 179,291
Conversion of warrants.............. 198 -- 1,411 13,076
-------- --------- --------- ---------
43,948 182,882 435,777 727,854
======== ========= ========= =========
<CAPTION>
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Amount of Common Stock Issued......... $ 1,222 $ 4,159 $ 12,052 $ 17,718
======== ========= ========= =========
</TABLE>

At December 31, 1994 and March 31, 1995, 83,751 and 83,305 ComEd common stock
purchase warrants, respectively, were outstanding. The warrants entitle the
holders to convert such warrants into common stock of ComEd at a conversion
rate of one share of common stock for three warrants.

(6) COMED PREFERRED AND PREFERENCE STOCKS WITHOUT MANDATORY REDEMPTION
REQUIREMENTS. No shares of ComEd preferred or preference stocks without
mandatory redemption requirements were issued or redeemed during the twelve
months ended March 31, 1994. During the twelve months ended March 31, 1995,
3,000,000 shares of ComEd preference stock without mandatory redemption
requirements were issued and no shares of ComEd preferred or preference stocks
without mandatory redemption requirements were redeemed. The series of ComEd
preference stock without mandatory redemption requirements outstanding at March
31, 1995 are summarized as follows:

<TABLE>
<CAPTION>
INVOLUNTARY
SHARES AGGREGATE REDEMPTION LIQUIDATION
SERIES OUTSTANDING STATED VALUE PRICE(a) PRICE(a)
------ ----------- ------------ ---------- -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
$1.90 4,249,549 $106,239 $ 25.25 $25.00
$2.00 2,000,000 51,560 $ 26.04 $25.00
$1.96 2,000,000 52,440 $ 27.11 $25.00
$7.24 750,000 74,340 $101.00 $99.12
$8.40 750,000 74,175 $101.00 $98.90
$8.38 750,000 73,566 $100.16 $98.09
$2.425 3,000,000 72,637 $ 25.00 $25.00
---------- --------
13,499,549 $504,957
========== ========
</TABLE>
--------
(a) Per share plus accrued and unpaid dividends, if any.

The outstanding shares of ComEd's $1.425 convertible preferred stock are
convertible at the option of the holders thereof, at any time, into common
stock of ComEd at the rate of 1.02 shares of common stock for each share of
convertible preferred stock, subject to future adjustment. The convertible
preferred stock may be redeemed by ComEd at $42 per share, plus accrued and
unpaid dividends, if any. The involuntary liquidation price of the $1.425
convertible preferred stock is $31.80 per share, plus accrued and unpaid
dividends, if any.

17
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

(7) COMED PREFERENCE STOCK SUBJECT TO MANDATORY REDEMPTION REQUIREMENTS.
During the twelve months ended March 31, 1994, 700,000 shares of ComEd
preference stock subject to mandatory redemption requirements were issued.
During the twelve months ended March 31, 1995, no shares of ComEd preference
stock subject to mandatory redemption requirements were issued. The series of
ComEd preference stock subject to mandatory redemption requirements outstanding
at March 31, 1995 are summarized as follows:

<TABLE>
<CAPTION>
SHARES AGGREGATE
SERIES OUTSTANDING STATED VALUE OPTIONAL REDEMPTION PRICE(a)
- -------------- ----------- ------------ --------------------------------------------------
(THOUSANDS
OF DOLLARS)
<S> <C> <C> <C>
$8.20 285,705 $ 28,571 $103 through October 31, 1997; and $101 thereafter
$8.40 Series B 390,000 38,737 $101
$8.85 337,500 33,750 $103 through July 31, 1998; and $101 thereafter
$9.25 750,000 75,000 $103 through July 31, 1999; and $101 thereafter
$9.00 650,000 64,431 Non-callable
$6.875 700,000 69,475 Non-callable
--------- --------
3,113,205 $309,964
========= ========
</TABLE>
- --------
(a) Per share plus accrued and unpaid dividends, if any.

The annual sinking fund requirements and sinking fund and involuntary
liquidation prices per share of the outstanding series of ComEd preference
stock subject to mandatory redemption requirements are summarized as follows:

<TABLE>
<CAPTION>
SINKING
FUND INVOLUNTARY
SERIES ANNUAL SINKING FUND REQUIREMENT PRICE(a) LIQUIDATION PRICE(a)
- ------------------------ ----------------------------------- ------- -------------------
<S> <C> <C> <C>
$8.20 35,715 shares $100 $100.00
$8.40 Series B 30,000 shares(b) $100 $ 99.326
$8.85 37,500 shares $100 $100.00
$9.25 75,000 shares $100 $100.00
$9.00 130,000 shares beginning in 1996(b) $100 $ 99.125
$6.875 (c) $100 $ 99.25
</TABLE>
- --------
(a) Per share plus accrued and unpaid dividends, if any.
(b) ComEd has a non-cumulative option to increase the annual sinking fund
payment on each sinking fund redemption date to retire an additional number
of shares, not in excess of the sinking fund requirement, at the applicable
redemption price.
(c) All shares are required to be redeemed on May 1, 2000.

Annual remaining sinking fund requirements through 1999 on ComEd preference
stock outstanding at March 31, 1995 will aggregate $17,822,000 in 1995,
$30,822,000 in 1996, $30,822,000 in 1997, $30,822,000 in 1998 and $30,822,000
in 1999. During the twelve months ended March 31, 1994 and 1995, 1,834,025
shares and 177,085 shares, respectively, of ComEd preference stock subject to
mandatory redemption requirements were reacquired to meet sinking fund
requirements.

Sinking fund requirements due within one year are included in current
liabilities.

On June 28, 1993, ComEd redeemed the remaining 170,810 shares of its $2.875
Series of preference stock and all 1,050,000 shares of its $2.375 Series of
preference stock, both at the optional redemption price of $25.25 per share,
plus accrued and unpaid dividends.

18
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

On November 1, 1993, ComEd redeemed the remaining 75,000 shares of its $11.70
Series of preference stock (150,000 shares had been redeemed on August 1, 1993
at the optional redemption price of $105 per share, plus accrued and unpaid
dividends). Of the remaining 75,000 shares, 37,500 shares were redeemed to meet
the November 1, 1993 mandatory sinking fund requirement and 37,500 shares were
redeemed as a permitted optional sinking fund payment, both at the sinking fund
redemption price of $100 per share, plus accrued and unpaid dividends.

On November 1, 1993, ComEd redeemed all 210,000 shares of its $9.30 Series of
preference stock, of which 70,000 shares were redeemed at the optional
redemption price of $101.03 per share, plus accrued and unpaid dividends,
70,000 shares were redeemed to meet the November 1, 1993 mandatory sinking fund
requirement and 70,000 shares were redeemed as a permitted optional sinking
fund payment, the latter two at the sinking fund redemption price of $100 per
share, plus accrued and unpaid dividends.

(8) LONG-TERM DEBT OF SUBSIDIARY COMPANIES. Sinking fund requirements and
scheduled maturities remaining through 1999 for ComEd and the Indiana Company's
first mortgage bonds, sinking fund debentures and other long-term debt
outstanding at March 31, 1995, after deducting deposits made for retirement of
sinking fund debentures and sinking fund debentures reacquired for satisfaction
of future sinking fund requirements, are summarized as follows: 1995--
$364,234,000; 1996--$331,384,000; 1997--$689,314,000; 1998--$350,017,000; and
1999--$152,445,000. Unicom Enterprises' note payable to bank of $20,000,000
will mature in 1997.

At March 31, 1995, ComEd's outstanding first mortgage bonds maturing through
1999 were as follows:

<TABLE>
<CAPTION>
SERIES PRINCIPAL AMOUNT
--------------------------- ----------------------
(THOUSANDS OF DOLLARS)
<S> <C>
6 1/8% due May 15, 1995............................ $103,000
5 1/4% due April 1, 1996........................... 50,000
5 3/4% due November 1, 1996........................ 50,000
5 3/4% due December 1, 1996........................ 50,000
7% due February 1, 1997............................ 150,000
5 3/8% due April 1, 1997........................... 50,000
6 1/4% due October 1, 1997......................... 60,000
6 1/4% due February 1, 1998........................ 50,000
6% due March 15, 1998.............................. 130,000
6 3/4% due July 1, 1998............................ 50,000
6 3/8% due October 1, 1998......................... 75,000
--------
$818,000
========
</TABLE>

19
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

Other long-term debt outstanding at March 31, 1995 is summarized as follows:

<TABLE>
<CAPTION>
PRINCIPAL
DEBT SECURITY AMOUNT INTEREST RATE PROVISIONS
- ---------------------------------- ---------- -----------------------------------------------------
(THOUSANDS
OF
DOLLARS)
<S> <C> <C>
ComEd--
Notes:
Medium Term Notes, Series 1N due
various dates through
April 1, 1998 $ 50,500 Interest rates ranging from 9.40% to 9.65%
Medium Term Notes, Series 2N due
various dates through
July 1, 1996 17,500 Interest rates ranging from 9.80% to 9.874%
Medium Term Notes, Series 3N due
various dates through October
15, 2004 322,250 Interest rates ranging from 8.92% to 9.20%
Medium Term Notes, Series 4N due
various dates through
May 15, 1997 46,000 Interest rates ranging from 8.11% to 8.875%
Notes due July 15, 1995 100,000 Fixed interest rate of 5.50%
Notes due February 15, 1997 150,000 Fixed interest rate of 7.00%
Notes due July 15, 1997 100,000 Fixed interest rate of 6.50%
Notes due October 15, 2005 235,000 Fixed interest rate of 6.40%
----------
$1,021,250
----------
Long-Term Notes Payable to Banks:
Notes due July 31, 1995 $ 150,000 Prevailing interest rate of 6.75% at March 31, 1995
Note due January 9, 1996 100,000 Prevailing interest rate of 6.6875% at March 31, 1995
Note due June 1, 1997 150,000 Prevailing interest rate of 6.625% at March 31, 1995
----------
$ 400,000
----------
Purchase Contract Obligations:
Woodstock due January 2, 1997 $ 186 Fixed interest rate of 4.50%
Hinsdale due April 30, 2005 473 Fixed interest rate of 3.00%
----------
$ 659
----------
Total ComEd $1,421,909
Unicom Enterprises--
Note Payable to Bank:
Note due November 22, 1997 20,000 Prevailing interest rate of 7.1479% at March 31, 1995
----------
Total Unicom $1,441,909
==========
</TABLE>

Long-term debt maturing within one year has been included in current
liabilities.

ComEd's outstanding first mortgage bonds are secured by a lien on
substantially all property and franchises, other than expressly excepted
property, owned by ComEd.

(9) LINES OF CREDIT. ComEd had total bank lines of credit of approximately
$922 million and unused bank lines of credit of approximately $915 million at
March 31, 1995. Of that amount, $915 million (of which $175 million expires on
October 2, 1995, $72 million expires in equal quarterly installments commencing
on December 31, 1996 and ending on September 30, 1998 and $668 million expires
in equal quarterly installments commencing on December 31, 1997 and ending on
September 30, 1999) may be borrowed on secured or unsecured notes of ComEd at
various interest rates. The interest rate is set at the time of a borrowing and
is based on several floating rate bank indices plus a spread which is

20
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

dependent upon ComEd's credit ratings, or on a prime interest rate. Amounts
under the remaining lines of credit may be borrowed at prevailing prime
interest rates on unsecured notes of ComEd. Collateral, if required for the
borrowings, would consist of first mortgage bonds issued under and in
accordance with the provisions of ComEd's mortgage. ComEd is obligated to pay
commitment fees with respect to $915 million of such lines of credit.

Unicom Enterprises has a $200 million credit facility which will expire in
1997 of which $180 million was unused as of March 31, 1995. The credit facility
can be used by Unicom Enterprises to finance investments in unregulated energy-
related businesses and projects, including Unicom Thermal, and for general
corporate purposes. The credit facility is guaranteed by Unicom and includes
certain covenants with respect to Unicom's and Unicom Enterprises' operations.
Such covenants include, among other things, (i) a requirement that Unicom and
its consolidated subsidiaries maintain a tangible net worth at least $10
million over that of ComEd and its consolidated subsidiaries, (ii) a
requirement that Unicom's consolidated debt to consolidated capitalization not
exceed 0.65 to 1, (iii) restrictions on the indebtedness for borrowed money
that Unicom (excluding ComEd) and Unicom Enterprises may incur, and (iv) a
requirement that Unicom own 100% of the outstanding stock of Unicom Enterprises
and at least 80% of the outstanding stock of ComEd; and provide that Unicom may
not declare or pay dividends during the continuance of an event of default.
Interest rates for borrowings under the credit facility are set at the time of
a borrowing and are based on either a prime interest rate or a floating rate
bank index plus a spread which varies with the credit rating of ComEd's
outstanding first mortgage bonds.

(10) DISPOSAL OF SPENT NUCLEAR FUEL. Under the Nuclear Waste Policy Act of
1982, the DOE is responsible for the selection and development of repositories
for, and the disposal of, spent nuclear fuel and high-level radioactive waste.
ComEd, as required by that Act, has signed a contract with the DOE to provide
for the disposal of spent nuclear fuel and high-level radioactive waste from
ComEd's nuclear generating stations beginning not later than January 1998;
however, this delivery schedule is expected to be delayed significantly. The
contract with the DOE requires ComEd to pay the DOE a one-time fee applicable
to nuclear generation through April 6, 1983 of approximately $277 million, with
interest to date of payment, and a fee payable quarterly equal to one mill per
kilowatthour of nuclear-generated and sold electricity after April 6, 1983.
ComEd has elected to pay the one-time fee, with interest, just prior to the
first delivery of spent nuclear fuel to the DOE. The liability for the one-time
fee and the related interest is reflected in the Consolidated Balance Sheets.

(11) FAIR VALUE OF FINANCIAL INSTRUMENTS. The following methods and
assumptions were used to estimate the fair value of financial instruments
either held or issued and outstanding. The disclosure of such information does
not purport to be a market valuation of Unicom and subsidiary companies as a
whole. The impact of any realized or unrealized gains or losses related to such
financial instruments on the financial position or results of operations of
Unicom and subsidiary companies is primarily dependent on the treatment
authorized under future ComEd ratemaking proceedings.

21
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

Investments. Securities included in nuclear decommissioning funds have been
classified and accounted for as "available for sale" securities. The estimated
fair value of the nuclear decommissioning funds, as determined by the trustee,
is based on published market data. The net earnings of the nuclear
decommissioning funds, which are recorded as increases to the accumulated
provision for depreciation (only the realized portion prior to January 1,
1994), for the three months and twelve months ended March 31, 1994 and 1995
were as follows:

Current Assets. Cash, temporary cash investments and other cash investments,
which include U.S. Government Obligations and other short-term marketable
securities, and special deposits, which primarily includes cash deposited for
the redemption, refund or discharge of debt securities, are stated at cost,
which approximates their fair value because of the short maturity of these
instruments. The securities included in these categories have been classified
as "available for sale" securities.

Capitalization. The estimated fair values of ComEd preferred and preference
stocks and long-term debt of subsidiary companies, including the current
portions thereof, have been obtained from an independent consultant. Estimated
fair values exclude accrued interest and preferred and preference stock
dividends. Long-term notes payable to banks in the amounts of $400 million and
$420 million at December 31, 1994 and March 31, 1995, respectively, for which
interest is paid at prevailing rates, are included in the consolidated
financial statements at cost, which approximates their fair value.

Current Liabilities. The carrying value of notes payable, which consists of
bank loans maturing within one year, approximates the fair value because of the
short maturity of these instruments. See "Capitalization" above for a
discussion of the fair value of the current portions of long-term debt and
redeemable preference stock.

Other Noncurrent Liabilities. The carrying value of accrued spent nuclear
fuel disposal fee and related interest represents the settlement value as of
December 31, 1994 and March 31, 1995; therefore, the carrying value is equal to
the fair value.

22
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

Estimated Fair Values of Financial Instruments. The estimated fair values of
financial instruments other than those instruments reflected in the
consolidated financial statements at cost which approximates fair value, as of
December 31, 1994 and March 31, 1995, were as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1994 MARCH 31, 1995
--------------------------------- --------------------------------
UNREALIZED
GAINS UNREALIZED
COST BASIS (LOSSES) FAIR VALUE COST BASIS GAINS FAIR VALUE
---------- ---------- ---------- ---------- ---------- ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Nuclear Decommissioning
Funds:
Short-term
investments.......... $ 65,203 $ 106 $ 65,309 $ 71,228 $ 139 $ 71,367
U.S. Government and
Agency issues........ 94,450 (562) 93,888 116,629 3,259 119,888
Municipal bonds....... 478,074 (7,301) 470,773 458,144 13,732 471,876
Common stock.......... 220,395 9,069 229,464 320,340 31,001 351,341
Other................. 18,788 2,722 21,510 18,084 3,740 21,824
---------- --------- ---------- ---------- -------- ----------
$ 876,910 $ 4,034 $ 880,944 $ 984,425 $ 51,871 $1,036,296
========== ========= ========== ========== ======== ==========
<CAPTION>
DECEMBER 31, 1994 MARCH 31, 1995
--------------------------------- --------------------------------
CARRYING UNREALIZED CARRYING UNREALIZED
VALUE (GAINS) FAIR VALUE VALUE (GAINS) FAIR VALUE
---------- ---------- ---------- ---------- ---------- ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Capitalization
(including current
portion):
Preferred and
preference stocks
of Commonwealth
Edison Company....... $ 818,111 $ (64,443) $ 753,668 $ 818,078 $(32,109) $ 785,969
Long-term debt of
subsidiary companies. $7,448,236 $(450,429) $6,997,807 $7,419,968 $(97,662) $7,322,306
</TABLE>

At March 31, 1995, the debt securities held by the nuclear decommissioning
funds had the following maturities:

<TABLE>
<CAPTION>
COST FAIR
BASIS VALUE
-------- --------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Within 1 year........................................... $ 71,228 $ 71,367
1 through 5 years....................................... 50,538 50,923
5 through 10 years...................................... 218,398 226,608
Over 10 years........................................... 319,421 327,992
</TABLE>

(12) PENSION BENEFITS. ComEd and the Indiana Company have non-contributory
defined benefit pension plans which cover all regular employees. Benefits under
these plans reflect each employee's compensation, years of service and age at
retirement. Funding is based upon actuarially determined contributions that
take into account the amount deductible for income tax purposes and the minimum
contribution required under the Employee Retirement Income Security Act of
1974, as amended. The December 31, 1994 and March 31, 1995 pension liabilities
and related data were estimated pending completion of the January 1, 1995
actuarial valuation.

23
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

During 1994, the companies implemented an early retirement program for
employees eligible to retire or who would become eligible to retire after
December 31, 1993 and before April 1, 1995. During the first quarter of 1995, 8
employees accepted the program, resulting in the recognition of an additional
$380,000 of pension cost in the three months ended March 31, 1995. By the end
of March 1995, a total of 679 employees accepted the program, resulting in the
recognition of approximately $34 million of additional pension cost and an
additional increase to the projected benefit obligation of that $34 million and
$41 million of unrecognized net loss. The total charge to income was
approximately $20.5 million after reflecting income tax effects.

The funded status of these plans at December 31, 1994 and March 31, 1995 was
as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1994 1995
------------ -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Actuarial present value of accumulated pension plan
benefits:
Vested benefit obligation.......................... $(2,071,000) $(2,097,000)
Nonvested benefit obligation....................... (442,000) (448,000)
----------- -----------
Accumulated benefit obligation..................... $(2,513,000) $(2,545,000)
Effect of projected future compensation levels..... (423,000) (428,000)
----------- -----------
Projected benefit obligation....................... $(2,936,000) $(2,973,000)
Fair value of plan assets, invested primarily in U.S.
Government, government-sponsored corporation and
agency securities, fixed income funds, registered
investment companies, equity index funds and other
equity funds........................................ 2,547,000 2,672,000
----------- -----------
Plan assets less than projected benefit obligation... $ (389,000) $ (301,000)
Unrecognized prior service cost...................... 22,000 22,000
Unrecognized transition asset........................ (155,000) (152,000)
Unrecognized net loss................................ 226,000 119,000
----------- -----------
Accrued pension liability.......................... $ (296,000) $ (312,000)
=========== ===========
</TABLE>

The assumed discount rate was 8.0% at December 31, 1994 and March 31, 1995,
and the assumed annual rate of increase in future compensation levels was 4.0%.
These rates were used in determining the projected benefit obligations, the
accumulated benefit obligations and the vested benefit obligations.

Pension costs were determined under the rules prescribed by SFAS No. 87,
including the use of the projected unit credit actuarial cost method and the
following actuarial assumptions for periods during 1993, 1994 and 1995:

<TABLE>
<CAPTION>
1993 1994 1995
----- ----- -----
<S> <C> <C> <C>
Annual discount rate.......................................... 7.50% 7.50% 8.00%
Annual rate of increase in future compensation levels......... 4.00% 4.00% 4.00%
Annual long-term rate of return on plan assets................ 9.50% 9.50% 9.75%
</TABLE>

24
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

The components of pension costs, portions of which were recorded as
components of construction costs, for the three months and twelve months ended
March 31, 1994 and 1995 were as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
-------------------- --------------------
1994 1995 1994 1995
--------- --------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Service cost....................... $ 25,000 $ 21,000 $ 96,000 $ 93,000
Interest cost on projected benefit
obligation........................ 54,000 57,000 206,000 216,000
Actual loss (return) on plan as-
sets.............................. 80,000 (167,000) (105,000) (208,000)
Early retirement program cost...... 16,000 -- 16,000 18,000
Net amortization and deferral...... (147,000) 104,000 (148,000) (53,000)
--------- --------- --------- ---------
$ 28,000 $ 15,000 $ 65,000 $ 66,000
========= ========= ========= =========
</TABLE>

In addition, an employee savings and investment plan is available to certain
eligible employees of ComEd, Cotter, Unicom Thermal and the Indiana Company.
Each participating employee may contribute up to 20% of such employee's base
pay and the participating companies match such contribution equal to 70% of up
to the first 5% of contributed base salary. The participating companies'
contributions were $6,086,000 and $6,475,000 for the three months ended March
31, 1994 and 1995, respectively, and $23,053,000 and $23,214,000 for the twelve
months ended March 31, 1994 and 1995, respectively.

(13) POSTRETIREMENT HEALTH CARE BENEFITS. ComEd and the Indiana Company
provide certain postretirement health care benefits for retirees and their
dependents and for the surviving dependents of eligible employees and retirees.
Substantially all of the employees become eligible for postretirement health
care benefits when they reach retirement age while working for the companies.
ComEd and the Indiana Company fund the liability for postretirement health care
benefits through a trust fund based upon actuarially determined contributions
that take into account the amount deductible for income tax purposes. The
December 31, 1994 and March 31, 1995 postretirement health care liabilities and
related data were estimated pending completion of the January 1, 1995 actuarial
valuation.

The funded status of the plan at December 31, 1994 and March 31, 1995 was as
follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1994 1995
------------ -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Actuarial present value of accumulated postretirement
health care obligation:
Retirees........................................... $ (524,000) $ (534,000)
Active fully eligible participants................. (7,000) (8,000)
Other participants................................. (560,000) (571,000)
----------- -----------
Accumulated benefit obligation..................... $(1,091,000) $(1,113,000)
Fair value of plan assets, invested primarily in S&P
500 common stocks and U.S. Government and listed
corporate obligations............................... 503,000 528,000
----------- -----------
Plan assets less than accumulated postretirement
health care obligation.............................. $ (588,000) $ (585,000)
Unrecognized transition obligation................... 531,000 524,000
Unrecognized net gain................................ (61,000) (85,000)
----------- -----------
Accrued liability for postretirement health care..... $ (118,000) $ (146,000)
=========== ===========
</TABLE>

25
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

For 1994 and 1995, different health care cost trends are used for pre-
Medicare and post-Medicare expenses. Pre-Medicare trend rates are 14% for 1994
grading down in 0.5% annual increments to 5%. Post-Medicare trend rates are
11.5% for 1994 grading down in 0.5% annual increments to 5%. The effect of a 1%
increase in the assumed health care cost trend rates for each future year would
increase the accumulated postretirement health care obligation at January 1,
1995 by approximately $197 million and increase the aggregate of the service
and interest cost components of plan costs by approximately $7 million for the
three months ended March 31, 1995 and $29 million for the twelve months ended
March 31, 1995. The assumed discount rate used was 8.0% at December 31, 1994
and March 31, 1995 and for the three months ended March 31, 1995, and was 7.5%
for the years 1994 and 1993. The annual long-term rate of return on plan assets
was 9.5% for the years 1993 and 1994, or 9.1% for the year 1993 and 9.04% for
the year 1994, after including income tax effects, and was 9.75%, or 9.32%
after including income tax effects for the three months ended March 31, 1995.

The components of postretirement health care costs, portions of which were
recorded as components of construction costs, for the three months and twelve
months ended March 31, 1994 and 1995 were as follows:

<TABLE>
<CAPTION>
THREE MONTHS TWELVE MONTHS
ENDED MARCH 31 ENDED MARCH 31
------------------ ------------------
1994 1995 1994 1995
-------- -------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Service cost........................... $ 12,000 $ 11,000 $ 45,000 $ 46,000
Interest cost on accumulated benefit
obligation............................ 20,000 21,000 75,000 82,000
Actual loss (return) on plan assets.... 15,000 (35,000) (8,000) (41,000)
Amortization of transition obligation.. 7,000 7,000 28,000 29,000
Other.................................. (25,000) 24,000 (26,000) --
-------- -------- -------- --------
$ 29,000 $ 28,000 $114,000 $116,000
======== ======== ======== ========
</TABLE>

(14) INCOME TAXES. The components of the net deferred income tax liability at
December 31, 1994 and March 31, 1995 were as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1994 1995
------------ ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Deferred income tax liabilities:
Accelerated cost recovery and liberalized deprecia-
tion, net of removal costs......................... $3,266,930 $3,296,156
Overheads capitalized............................... 266,159 263,174
Repair allowance.................................... 210,655 208,161
Regulatory assets recoverable through future rates.. 1,791,395 1,774,416
Deferred income tax assets:
Postretirement health care benefits................. (177,991) (186,726)
Unbilled revenues................................... (90,396) (95,310)
Loss carryforward................................... (10,090) --
Alternative minimum tax............................. (283,331) (275,143)
Unamortized investment tax credits to be settled
through future rates............................... (471,058) (466,338)
Other regulatory liabilities to be settled through
future rates....................................... (179,755) (181,950)
Other--net.......................................... (59,528) (71,625)
---------- ----------
Net deferred income tax liability..................... $4,262,990 $4,264,815
========== ==========
</TABLE>

The $2 million increase in the net deferred income tax liability from December
31, 1994 to March 31, 1995 is comprised of $16 million of deferred income tax
expense and a $14 million decrease in regulatory assets net of regulatory
liabilities pertaining to income taxes for the period. The amount of regulatory
assets included in deferred income tax liabilities primarily relates to the
equity component of AFUDC which is recorded on an after-tax basis, the borrowed
funds component of AFUDC which was

26
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

previously recorded net of tax and other temporary differences for which the
related tax effects were not previously recorded. The amount of other
regulatory liabilities included in deferred income tax assets primarily relates
to deferred income taxes provided at rates in excess of the current statutory
rate.

The components of net income tax expense charged to continuing operations for
the three months and twelve months ended March 31, 1994 and 1995 were as
follows:

<TABLE>
<CAPTION>
THREE MONTHS TWELVE MONTHS
ENDED MARCH 31 ENDED MARCH 31
---------------- ------------------
1994 1995 1994 1995
------- ------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Operating income:
Current income taxes................... $35,360 $64,981 $(43,639) $187,963
Deferred income taxes.................. 393 16,800 127,587 184,808
Investment tax credits deferred--net... (7,224) (7,179) (29,333) (28,712)
Other (income) and deductions............ 2,627 (227) (22,937) (25,352)
------- ------- -------- --------
Net income taxes charged to continuing
operations.............................. $31,156 $74,375 $ 31,678 $318,707
======= ======= ======== ========
</TABLE>

Provisions for current and deferred federal and state income taxes and
amortization of investment tax credits resulted in the following effective
income tax rates for the three months and twelve months ended March 31, 1994
and 1995:

<TABLE>
<CAPTION>
THREE MONTHS TWELVE MONTHS
ENDED MARCH 31 ENDED MARCH 31
----------------- --------------------
1994 1995 1994 1995
------- -------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Net income........................... $36,020 $ 88,601 $ 21,833 $ 407,514
Net income taxes charged to continu-
ing operations...................... 31,156 74,375 31,678 318,707
Provision for dividends on preferred
and preference stocks of
Commonwealth Edison Company......... 15,545 16,908 64,961 66,291
------- -------- --------- ---------
Pre-tax income before provision for
dividends on preferred and prefer-
ence stocks of Commonwealth Edison
Company............................. $82,721 $179,884 $ 118,472 $ 792,512
======= ======== ========= =========
Effective income tax rate............ 37.7% 41.3% 26.7% 40.2%
======= ======== ========= =========
</TABLE>

The principal differences between net income taxes charged to continuing
operations and the amounts computed at the federal statutory rate of 35% for
the three months and twelve months ended March 31, 1994 and 1995 were as
follows:

<TABLE>
<CAPTION>
THREE MONTHS TWELVE MONTHS
ENDED MARCH 31 ENDED MARCH 31
---------------- --------------------
1994 1995 1994 1995
------- ------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Federal income taxes computed at statu-
tory rate............................. $28,952 $62,959 $ 41,465 $ 277,379
Equity component of AFUDC which was ex-
cluded from taxable income............ (2,575) (733) (8,837) (6,077)
Amortization of investment tax credits. (7,223) (7,179) (29,344) (28,766)
State income taxes, net of federal in-
come taxes............................ 5,001 10,396 11,131 45,535
Differences between book and tax ac-
counting, primarily property-related
deductions............................ 6,285 8,498 12,217 28,750
Other--net............................. 716 434 5,046 1,886
------- ------- --------- ---------
Net income taxes charged to continuing
operations............................ $31,156 $74,375 $ 31,678 $ 318,707
======= ======= ========= =========
</TABLE>
27
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

Current federal income tax liabilities were recorded that include excess
amounts of AMT over the regular federal income tax, which amounts were also
recorded as decreases to deferred federal income taxes. The excess amounts of
AMT can be carried forward indefinitely as a credit against future years'
regular federal income tax liabilities.

(15) TAXES, EXCEPT INCOME TAXES. Provisions for taxes, except income taxes,
for the three months and twelve months ended March 31, 1994 and 1995 were as
follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
------------------- -------------------
1994 1995 1994 1995
--------- --------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Illinois public utility revenue......... $ 52,543 $ 56,178 $ 197,738 $ 214,899
Illinois invested capital............... 27,412 27,297 110,254 109,258
Municipal utility gross receipts........ 35,339 38,045 111,424 147,716
Real estate............................. 44,631 46,831 165,701 182,422
Municipal compensation.................. 17,725 17,790 57,349 72,712
Other--net.............................. 22,423 23,792 69,651 70,705
--------- --------- --------- ---------
$ 200,073 $ 209,933 $ 712,117 $ 797,712
========= ========= ========= =========
</TABLE>

(16) LEASE OBLIGATIONS OF SUBSIDIARY COMPANIES. On November 23, 1993, ComEd
consolidated its nuclear fuel lease arrangements into a new arrangement. Under
the new arrangement, ComEd may sell and lease back nuclear fuel from a lessor
who may borrow an aggregate of $700 million (consisting of $300 million of
commercial paper or bank borrowings and $400 million of intermediate term
notes) to finance the transactions. The commercial paper/bank borrowing portion
currently will expire on November 23, 1996, but ComEd plans to ask for an
extension of the expiration date. At March 31, 1995, ComEd's obligation to the
lessor for leased nuclear fuel amounted to approximately $670 million. ComEd
has agreed to make lease payments which cover the amortization of the nuclear
fuel used in ComEd's reactors plus the lessor's related financing costs. ComEd
has an obligation for spent nuclear fuel disposal costs of leased nuclear fuel.

Future minimum rental payments, net of executory costs, at March 31, 1995 for
capital leases are estimated to aggregate $760 million, including $198 million
in 1995 (after deducting $73 million for the first three months of 1995), $237
million in 1996, $125 million in 1997, $86 million in 1998, $47 million in 1999
and $67 million in 2000-2043. The estimated interest component of such rental
payments aggregates $88 million. The estimated portions of obligations due
within one year under capital leases are included in current liabilities and
approximated $147 million and $199 million at December 31, 1994 and March 31,
1995, respectively.

Future minimum rental payments at March 31, 1995 for operating leases are
estimated to aggregate $149 million, including $5 million in 1995, $10 million
in 1996, $10 million in 1997, $9 million in 1998, $9 million in 1999 and $106
million in 2000-2024.

(17) INVESTMENTS IN URANIUM-RELATED PROPERTIES. In May 1994, ComEd recorded a
reduction in the carrying value of its investments in uranium-related
properties after completing a review of various alternatives and reassessing
the long-term recoverability of those investments. The effects of the reduction
reduced net income for the twelve months ended March 31, 1995 by approximately
$34 million or $0.16 per common share.

28
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

(18) JOINT PLANT OWNERSHIP. ComEd has a 75% undivided ownership interest in
the Quad-Cities nuclear generating station. Further, ComEd is responsible for
75% of all costs which are charged to appropriate investment, operation or
maintenance accounts and provides its own financing. At March 31, 1995, for its
share of ownership in the station, ComEd had an investment of $542 million in
production and transmission plant in service (before reduction of $175 million
for the related accumulated provision for depreciation) and $77 million in
construction work in progress.

(19) COMMITMENTS AND CONTINGENT LIABILITIES. Purchase commitments,
principally related to construction and nuclear fuel, approximated $1,170
million at March 31, 1995, comprised of approximately $1,157 million for ComEd
and the Indiana Company and approximately $13 million for Unicom Thermal. In
addition, ComEd has substantial commitments for the purchase of coal. ComEd's
coal costs are high compared to those of other utilities. ComEd'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. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations," subcaption "Liquidity and
Capital Resources," for additional information regarding ComEd's purchase
commitments.

ComEd is a member of NML, established to provide insurance coverage against
property damage to members' nuclear generating facilities. The members are
subject to a retrospective premium adjustment in the event losses exceed
accumulated reserve funds. Capital has been accumulated in the reserve funds of
NML to the extent that ComEd would not be liable for a retrospective premium
adjustment in the event of a single incident. However, ComEd could be subject
to a maximum assessment of approximately $57 million in any policy year, in the
event losses exceed accumulated reserve funds.

ComEd also is a member of NEIL, which provides insurance coverage against the
cost of replacement power obtained during certain prolonged accidental outages
of nuclear generating units and coverage for property losses in excess of $500
million occurring at nuclear stations. All companies insured with NEIL are
subject to retrospective premium adjustments if losses exceed accumulated
reserve funds. Capital has been accumulated in the reserve funds of NEIL to the
extent that ComEd would not be liable for a retrospective premium adjustment in
the event of a single incident under the replacement power coverage and the
property damage coverage. However, ComEd could be subject to maximum
assessments, in any policy year, of approximately $29 million and $89 million
in the event losses exceed accumulated reserve funds under the replacement
power and property damage coverages, respectively.

The NRC's indemnity for public liability coverage under the Price-Anderson
Act is supported by a mandatory industry-wide program under which owners of
nuclear generating facilities could be assessed in the event of nuclear
incidents. Based on the number of nuclear reactors with operating licenses,
ComEd would currently be subject to a maximum assessment of $991 million in the
event of an incident, limited to a maximum of $125 million in any calendar
year.

In addition, ComEd participates in the American Nuclear Insurers and Mutual
Atomic Energy Liability Underwriters Master Worker Program which provides
coverage for worker tort claims filed for bodily injury caused by the nuclear
energy hazard. The coverage applies to workers whose "nuclear related
employment" began after January 1, 1988. ComEd would currently be subject to a
maximum assessment of approximately $37 million in the event losses exceed
accumulated reserve funds.

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<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

Shareholder derivative lawsuits were filed on October 1, 1992 and on April
14, 1993 in the Circuit Court against current and former directors of ComEd
alleging that they breached their fiduciary duty and duty of care to ComEd in
connection with the management of the activities associated with the
construction of ComEd's four most recently completed nuclear generating units.
The lawsuits sought restitution to ComEd by the defendants for unquantified and
undefined losses and costs alleged to have been incurred by ComEd. Both
lawsuits were dismissed by the Circuit Court; however, appeals are pending
before the Illinois Appellate Court.

During 1989 and 1991, actions were brought in federal and state courts in
Colorado against ComEd and its subsidiary, Cotter, seeking unspecified damages
and injunctive relief based on allegations that Cotter has permitted
radioactive and other hazardous material to be released from its mill into
areas owned or occupied by the plaintiffs resulting in property damage and
potential adverse health effects. In February 1994, a federal jury returned
nominal dollar verdicts on eight bellwether plaintiffs' claims in these cases.
Plaintiffs have appealed those judgments. Although the remaining cases will
necessarily involve the resolution of numerous contested issues of fact and
law, Unicom's determination is that these actions will not have a material
impact on its financial position or results of operations.

ComEd is involved in administrative and legal proceedings concerning air
quality, water quality and other matters. The outcome of these proceedings may
require increases in future construction expenditures and operating expenses
and changes in operating procedures. ComEd and its subsidiaries are or are
likely to become parties to proceedings initiated by the U.S. EPA, state
agencies and/or other responsible parties under CERCLA with respect to a number
of sites, including MGP sites, or may voluntarily undertake to investigate and
remediate sites for which they may be liable under CERCLA.

ComEd generally did not operate MGPs as a corporate entity but did, however,
acquire MGP sites as part of the absorption of smaller utilities and as vacant
real estate on which ComEd facilities have been constructed. To date, ComEd has
identified 44 former MGP sites for which it may be liable for remediation.
ComEd presently estimates that its costs of former MGP site investigation and
remediation will aggregate from $25 million to $150 million in current-year
(1995) dollars. It is expected that the costs associated with investigation and
remediation of former MGP sites will be incurred over a period of approximately
20 to 30 years. Because ComEd is not able to determine the most probable
liability for such MGP costs, in accordance with accounting standards, a
reserve of approximately $25 million has been recorded as of December 31, 1994
and March 31, 1995, which reflects the low end of the range of ComEd's estimate
of the liability associated with former MGP sites. In addition, as of December
31, 1994 and March 31, 1995, a reserve of $8 million has been recorded,
representing ComEd's estimate of the liability associated with cleanup costs of
remediation sites other than former MGP sites. Unicom and ComEd presently
estimate that ComEd's costs of investigating and remediating the former MGP and
other remediation sites pursuant to CERCLA and state environmental laws will
not have a material impact on the financial position or results of operations
of Unicom or ComEd. These cost estimates are based on currently available
information regarding the responsible parties likely to share in the costs of
responding to site contamination, the extent of contamination at sites for
which the investigation has not yet been completed and the cleanup levels to
which sites are expected to have to be remediated.

30
<PAGE>

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONCLUDED

ability to acquire additional allowances or to reduce emissions below otherwise
allowable levels from their existing generating plants. In addition, the Clean
Air Amendments require studies to determine what controls, if any, should be
imposed on utilities to control air toxic emissions, including mercury. ComEd's
Clean Air Compliance Plan for Kincaid station was approved by the ICC on July
8, 1993. In late 1993, however, a federal court declared the Illinois law under
which the approval was received to be unconstitutional and compliance plans
prepared and approved in reliance on the law to be void. In January 1995, the
federal court's decision was affirmed by the U.S. Court of Appeals and Illinois
has decided to not pursue further appeals. ComEd is currently burning low
sulfur coal at Kincaid station to meet Clean Air Act Phase I requirements.
ComEd will determine future compliance plans for Kincaid station as necessary.

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<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

On September 1, 1994, a corporate restructuring took place in which Unicom
became the parent holding company of ComEd and Unicom Enterprises, an
unregulated subsidiary engaged, through a subsidiary, in energy service
activities. The purpose of the restructuring was, in part, to permit Unicom
Enterprises to engage in energy service activities without the prior approval
of, or being regulated by, the ICC, in part to permit timely responses to
competitive activities which could adversely affect ComEd's utility business
and in part to permit Unicom to take advantage of unregulated business
opportunities.

Notwithstanding the restructuring, ComEd will continue to represent
substantially all of the assets, revenues and net income of Unicom; and
Unicom's resources and results of operations will be largely dependent on, and
will reflect, those of ComEd. Unicom Enterprises' sole subsidiary, Unicom
Thermal, is a development stage company and is not expected to make a material
contribution to the revenues or results of operations of Unicom in the near
future. Consequently, the descriptions that follow focus on the utility
operations of ComEd, although information is provided with respect to the
unregulated operations of Unicom Enterprises.

LIQUIDITY AND CAPITAL RESOURCES

UTILITY OPERATIONS

Capital Budgets. ComEd and its electric utility subsidiary, the Indiana
Company, have a construction program for the three-year period 1995-97 which
consists principally of improvements to ComEd's and the Indiana Company's
existing nuclear and other electric production, transmission and distribution
facilities. It does not include funds (other than for planning) to add new
generating capacity to ComEd's system. The program, as approved by Unicom and
ComEd in December 1994, calls for electric plant and equipment expenditures of
approximately $2,750 million (excluding nuclear fuel expenditures of
approximately $800 million). It is estimated that such construction
expenditures, with cost escalation computed at 3.5% annually, will be as
follows:

<TABLE>
<CAPTION>
1995 1996 1997 TOTAL
---- ---- ---- ------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C>
Production............................................. $415 $395 $360 $1,170
Transmission and Distribution.......................... 410 445 455 1,310
General................................................ 95 90 85 270
---- ---- ---- ------
Total.............................................. $920 $930 $900 $2,750
==== ==== ==== ======
</TABLE>

In October 1994, ComEd made a commitment to provide for the replacement of
the steam generators at its Braidwood Unit 1 and Byron Unit 1 nuclear
generating plants, for service in the years 1998 and 1999, respectively, at a
total estimated cost of approximately $470 million. Approximately $170 million
of this estimated cost is included in the construction expenditures shown
above. See "Part II. Other Information, Item 1. Legal Proceedings," subcaption
"Nuclear Matters," herein for additional information.

ComEd's forecasts of peak load indicate a need for additional resources to
meet demand, either through generating capacity or through equivalent purchased
power or demand-side management resources, in 1997 and each year thereafter
through the year 2000. The projected resource needs reflect the current
planning reserve margin recommendations of MAIN, the reliability council of
which ComEd is a member. ComEd's forecasts indicate that the need for
additional resources during this period would exist only during the summer
months. ComEd does not expect to make expenditures for additional capacity to
the extent the need for capacity can be met through cost-effective demand-side
management

32
<PAGE>

resources, non-utility generation or other power purchases. Based on current
market information, ComEd believes that adequate resources, including cost-
effective demand-side management resources, non-utility generation resources
and other-utility power purchases, could be obtained sufficient to meet
forecasted requirements through the year 2000.

ComEd's construction program will be reviewed and modified as necessary to
adapt to changing economic conditions, rate levels and other relevant factors
including changing business and legal needs and requirements. ComEd cannot
anticipate all such possible needs and requirements. ComEd has not budgeted for
a number of projects, particularly at generating stations, which could be
required, but which ComEd does not expect to be required during the budget
period. In particular, ComEd has not budgeted for the construction of scrubbers
at its Kincaid station or for the replacement of major amounts of piping at its
boiling water reactor nuclear stations. While regulatory needs in particular
are more likely, on balance, to require increases in construction expenditures
than decreases, financial constraints may require compensating or greater
reductions in other construction expenditures. See "Regulation" below and "Part
II. Other Information, Item 1. Legal Proceedings," subcaption "Nuclear
Matters," herein for additional information.

Purchase commitments for ComEd and the Indiana Company, principally related
to construction and nuclear fuel, approximated $1,157 million at March 31,
1995. In addition, ComEd has substantial commitments for the purchase of coal
as indicated in the following table.

<TABLE>
<CAPTION>
CONTRACT PERIOD COMMITMENT(1)
-------- --------- -------------
<S> <C> <C>
Black Butte Coal Co. ............................. 1995-2007 $1,092
Decker Coal Co. .................................. 1995-2015 $ 796
Big Horn Coal Co. ................................ 1998 $ 21
Other commitments................................. 1995-1996 $ 20
</TABLE>
--------
(1) Estimated costs in millions of dollars FOB mine. No estimate of
future cost escalation has been made.

For additional information concerning these coal contracts and ComEd's fuel
supply, see "Results of Operations" below and Notes 1 and 19 of Notes to
Financial Statements.

Capital Resources. ComEd has forecast that internal sources will provide more
than three-fourths of the funds required for ComEd's construction program and
other capital requirements, including nuclear fuel expenditures, contributions
to nuclear decommissioning funds, sinking fund obligations and refinancing of
scheduled debt maturities (the annual sinking fund requirements for ComEd
preference stock and for ComEd and the Indiana Company long-term debt are
summarized in Notes 7 and 8, respectively, of Notes to Financial Statements).
The forecast assumes the rate levels reflected in the Rate Order remain in
effect.

The type and amount of external financing will depend on financial market
conditions and the needs and capital structure of ComEd at the time of such
financing. A portion of ComEd's financing is expected to be provided through
the continued sale and leaseback of nuclear fuel through ComEd's existing
nuclear fuel lease facility. ComEd has approximately $915 million of unused
bank lines of credit at March 31, 1995 which may be borrowed at various
interest rates and which may be secured or unsecured. The interest rate is set
at the time of a borrowing and is based on several floating rate bank indices
plus a spread which is dependent upon ComEd's credit ratings or on a prime
interest rate. Collateral, if required for the borrowings, would consist of
first mortgage bonds issued under and in accordance with the provisions of
ComEd's mortgage. See Note 9 of Notes to Financial Statements for information
concerning lines of credit. See the Statements of Consolidated Cash Flows for
the construction expenditures and cash flow from operating activities for the
three months and twelve months ended March 31, 1995.

During the first three months of 1995, ComEd sold and leased back
approximately $115,340,000 of nuclear fuel through its existing nuclear fuel
lease.

33
<PAGE>

As of May 9, 1995, ComEd has an effective "shelf" registration statement with
the SEC for the future sale of up to an additional $805 million of debt
securities and cumulative preference stock for general corporate purposes of
ComEd, including the discharge or refund of other outstanding securities.

Financial Condition. ComEd's financial condition will continue to depend on
its ability to generate revenues to cover its costs and to maintain adequate
debt and preferred and preference stock coverages and common stock equity
earnings. ComEd has no significant revenues other than from the sale of
electricity. ComEd's management recognizes that competitive and regulatory
circumstances in Illinois may limit its ability to raise its rates.
Consequently, ComEd's financial condition will be affected by, and ComEd's
management is addressing, actions to maintain and increase sales, to control
operating and capital expenditures and to anticipate competitive activities.
See "Regulation" below.

During the past several years, ComEd has instituted cost reduction plans
including various workforce reductions. ComEd reached agreement in August 1993
with its unions regarding certain cost reduction actions. The agreement
provided for a wage freeze until April 1, 1994, changes to reduce health care
plan costs, increased use of part-time employment and changes in holiday
provisions. The agreement also included a continuation of negotiations relative
to other issues. ComEd and union representatives reached agreement in February
1994 and announced an offer of a voluntary early retirement program. This
program was available to ComEd and the Indiana Company management, non-union
and union employees eligible to retire or who became eligible to retire after
December 31, 1993 and before April 1, 1995. The charge to income related to the
program for the three months ended March 31, 1995 was approximately $229,000
(net of income tax effects) related to employees who accepted the program
during that period. In total, approximately $20.5 million (net of income tax
effects) was charged to income as a result of the program.

ComEd has also examined, and is continuing to examine, the possibility of
disposing of one or more of its fossil generating stations to a third party or
parties and entering into a long-term power purchase arrangement. Such
examination is focusing on the alternatives for structuring such a transaction,
the willingness of third parties to undertake it and the economics of the
transaction. If a suitable structure and economics can be achieved, any such
transaction would be subject to the negotiation of definitive agreements and
regulatory approvals.

The current ratings of ComEd's securities by three principal securities
rating agencies are as follows:

<TABLE>
<CAPTION>
STANDARD DUFF &
MOODY'S & POOR'S PHELPS
------- -------- ------
<S> <C> <C> <C>
First mortgage and secured pollution control
bonds........................................... Baa2 BBB BBB
Publicly-held debentures and unsecured pollution
control obligations............................. Baa3 BBB- BBB-
Convertible preferred stock...................... baa3 BBB- BB+
Preference stock................................. baa3 BBB- BB+
Commercial paper................................. P-2 A-2 Duff 2
</TABLE>

On October 27, 1993, Standard & Poor's changed its "outlook" on ComEd's
ratings from stable to negative as part of its larger assessment of the
electric utility industry. In May 1995, Standard & Poor's affirmed its ratings
of ComEd's securities, with its ratings "outlook" remaining negative. In
December 1993, Moody's and Duff & Phelps affirmed their ratings of ComEd's
securities, and Moody's ratings outlook on ComEd remained stable. See "Part II,
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters"
in Unicom's Annual Report on Form 10-K for the year ended December 31, 1994,
for additional information regarding ComEd's securities ratings.

Business and Competition. The electric utility business has historically been
characterized by retail service monopolies in state or locally franchised
service territories. Investor-owned electric utilities have

34
<PAGE>

tended to be vertically integrated with all aspects of their business subject
to pervasive regulation. Although customers have normally been free to supply
their electric power needs through self-generation, they have not had a choice
of electric suppliers and self-generation has not generally been economical.

The market in which electric utilities like ComEd operate has become more
competitive as a result of technological and regulatory changes and many
observers believe competition will intensify. Self-generation can be economical
for certain customers, depending on how and when they use electricity and other
customer-specific considerations. A number of competitors are currently seeking
to identify and do business with those customers. In addition, suppliers of
other forms of energy are increasingly competing to supply energy needs which
historically were supplied primarily or exclusively by electricity.

The Energy Policy Act of 1992 will likely have a significant effect on
companies engaged in the generation, transmission, distribution, purchase and
sale of electricity. This Act, among other things, expands the authority of the
FERC to order electric utilities to transmit or "wheel" wholesale power for
others, and facilitates the creation of non-utility electric generating
companies. Although ComEd cannot now predict the full impact of this Act, it
will likely create and increase competition to supply the power needs of large
users of electricity.

In March 1995, the FERC issued a Notice of Proposed Rulemaking to encourage a
more competitive wholesale electric power market. The proposal addresses both
open access transmission issues and stranded investment costs. The FERC is
seeking comments and replies on its proposal.

ComEd is facing increased competition from several non-utility businesses
which seek to provide energy services to users of electricity, especially
larger customers such as industrial, commercial and wholesale customers. Such
suppliers include independent power producers and unregulated energy services
companies. In this regard, natural gas utilities operating in ComEd's service
area have established subsidiary ventures to provide heating, ventilating and
air conditioning services, attempting to attract ComEd's customers. Also,
several utilities in the United States have established unregulated energy
services subsidiaries which pursue business opportunities outside of the
utilities' regular service areas. In addition, cogeneration and energy services
companies have begun soliciting ComEd's customers to provide alternatives to
using ComEd's electricity. In October 1993, the ICC granted ComEd the authority
to negotiate special discount contract rates with new or existing industrial
customers for up to a total of 400 megawatts of added load, where the customers
would not have chosen service from ComEd for the increased load in the absence
of the discount rates. In addition, in June 1994, the ICC granted ComEd the
authority to negotiate special discount contract rates with up to 25 of its
largest existing customers, where such contracts would be necessary to retain
the customers' existing load on ComEd's system.

ComEd recently negotiated amendments to existing contracts with three of its
wholesale municipal customers, which extended the contracts for an additional
ten-year period past the 1997 expiration dates. ComEd was one of a number of
bidders for providing service to these customers. The contracts became
effective upon FERC approval.

In 1994, the ICC formed a task force for the purpose of conducting a broad-
based and open examination of the expanding presence of market components
within the electric utility industry. Participants from more than 40
organizations, including representatives from the electric utility industry
(including ComEd), met to examine three broad issues: effects of regulation,
competition and future regulatory and legislative changes. In May 1995, the
task force issued its report sharing the views of the participants on the
issues.

There also exists the possibility of legislation being introduced in the
Illinois General Assembly suggesting changes in the regulatory framework under
which Illinois electric utilities operate. ComEd is aware of discussions
regarding proposals that include structures for forms of retail wheeling of
power and alternative rate regulation. ComEd cannot predict whether, or in what
form, any such proposals might

35
<PAGE>

be introduced or what, if anything, or when something might be enacted. Retail
wheeling, if enacted, could adversely affect the ability of ComEd to recover
certain of its investment in generation, transmission and distribution
equipment. See "Regulation" and "Regulatory Assets and Liabilities" in Note 1
of Notes to Financial Statements.

Capital Structure. ComEd's ratio of long-term debt to total capitalization
has decreased to 54.2% at March 31, 1995 from 54.6% at December 31, 1994. This
decrease is related primarily to the increase in current maturities of long-
term debt reclassified to current liabilities.

UNREGULATED OPERATIONS

Unicom Enterprises intends, through subsidiaries, to engage in energy-related
businesses which will not be subject to utility regulation by state or federal
agencies. As of March 31, 1995, Unicom Enterprises had one subsidiary, Unicom
Thermal, which will provide district cooling services to office and other
buildings from central locations in the city of Chicago. District cooling
involves, in essence, the production of chilled water at a central location and
its circulation from such location to customers' buildings in a closed circuit
of piping. Such water is used to chill air in customers' air conditioning
systems without the use of CFCs. As a result of the Clean Air Amendments, the
manufacture and use of CFCs will be curtailed, commencing in 1996, thereby
creating an excellent marketing opportunity for non-CFC based systems, such as
district cooling. Unicom Thermal and the city of Chicago have entered into a
non-exclusive franchise agreement. Unicom Thermal is currently a development
stage enterprise and, as such, has generated no sales revenues. Unicom Thermal
has secured several long-term contracts and expects to begin serving customers
in the summer of 1995. Unicom Thermal is in the process of negotiating with
additional potential customers.

Capital Budgets. Unicom Thermal has forecasted capital expenditures for the
years 1995-97 of approximately $95 million, primarily representing the
construction costs of its district cooling facilities and piping system.
Construction of its first district cooling facility is expected to be completed
by May 1995 and is expected to cost approximately $30 million. As of March 31,
1995, Unicom Thermal's purchase commitments, principally related to
construction, were approximately $13 million.

Capital Resources. Unicom expects to obtain funds to invest in Unicom
Enterprises and its subsidiaries principally from dividends that it receives on
its ComEd common stock and from bank borrowings by Unicom Enterprises. While
the amount of dividends on ComEd common stock is expected to be greater than
the amount of dividends on Unicom common stock, the availability of such
dividends is dependent on ComEd's financial performance and cash position.
Other forms of financing by ComEd of Unicom or its other subsidiaries, such as
loans or additional equity investments (none of which is expected), would be
subject to the prior approval of the ICC.

36
<PAGE>

REGULATION

ComEd and the Indiana Company are subject to state and federal regulation in
the conduct of their respective businesses, including the operations of Cotter.
Such regulation includes rates, securities issuance, nuclear operations,
environmental and other matters. Particularly in the cases of nuclear
operations and environmental matters, such regulation can and does affect
operational and capital expenditures.

Rate Proceedings. ComEd's revenues, net income, cash flows and plant carrying
costs have been affected directly by various rate-related proceedings. During
the periods presented in the consolidated financial statements, ComEd was
involved in a number of proceedings concerning its rates. The uncertainties
associated with such proceedings and related issues, among other things, led to
the Rate Matters Settlement and Fuel Matters Settlement (see Note 2 of Notes to
Financial Statements). The effects of the aforementioned rate proceedings and
settlements during the periods presented are discussed below under "Results of
Operations."

On January 9, 1995, the ICC issued the Rate Order in the proceedings relating
to ComEd's February 10, 1994 rate increase request. The Rate Order provides,
among other things, for (i) an increase in ComEd's total revenues of
approximately $301.8 million (excluding add-on revenue taxes) or 5.2%, on an
annual basis, including a $303.2 million increase in base rates, (ii) the
collection of municipal franchise costs as an adder to base rates until May 1,
1995, when such costs will be collected prospectively on an individual
municipality basis through a rider, and (iii) the use of a rider, with annual
review proceedings, to pass on to ratepayers increases or decreases in
estimated costs associated with the decommissioning of ComEd's nuclear
generating units. See "Depreciation and Decommissioning" in Note 1 of Notes to
Financial Statements for information related to the level of decommissioning
cost collections allowed in the Rate Order. The ICC also determined that the
Units were 100% "used and useful" and that the previously determined reasonable
costs of such Units, as depreciated, should be included in full in ComEd's rate
base. The rates provided in the Rate Order became effective on January 14,
1995; however, they are being collected subject to refund as a result of
subsequent judicial action. Electric operating revenues of approximately $61
million (excluding revenue taxes) are subject to refund. Intervenors and ComEd
have filed appeals of the Rate Order with the Illinois Appellate Court.

Nuclear Matters. During the past several years, the NRC has placed two of
ComEd's nuclear generating stations, Zion station and Dresden station, on its
list of plants to be monitored closely. Although Zion station (which was placed
on the list in early 1991) was removed from that list in February 1993, Dresden
station (which was placed on the list in early 1992) remains on the list. The
NRC concern with Dresden station was that, although processes and programs were
in place to make improvements, the rate of improvement needed to accelerate. In
February 1995, the NRC reported that a sense of progress at Dresden station is
evident, but that more time is needed to determine if the improving trend will
continue. Because of the age of Zion, Dresden and Quad-Cities stations, ComEd
anticipates continued expenditures in order to improve reliability and to meet
NRC regulatory expectations. Beginning in late 1992, ComEd restructured its
management of its nuclear operations division and since that time has committed
additional resources to the stations' operations.

37
<PAGE>

Like Dresden and LaSalle County, the NRC noted that positive developments had
been observed at Quad-Cities but additional time was required to determine if
those developments had been effective in arresting the adverse trends and thus
Quad-Cities remains on the list of plants with adverse performance trends. As
noted above, ComEd anticipates continued expenditures in order to improve
reliability and to meet NRC regulatory expectations in connection with Zion,
Dresden and Quad-Cities stations. In addition, generating station availability
and performance during a year may be issues in fuel reconciliation proceedings
in assessing the prudence of fuel and power purchases during such year. Final
ICC orders have been issued in fuel reconciliation proceedings for years prior
to 1993; however, certain intervenors have appealed the ICC order in the 1989
fuel reconciliation proceedings on issues relating to nuclear station
performance. See "Part II. Other Information, Item 1. Legal Proceedings,"
subcaption "Nuclear Matters," for additional information.

ComEd estimates that it will expend approximately $15 billion, excluding any
contingency allowance, for decommissioning costs primarily during the period
from 2007 through 2032. Such costs, which are estimated to aggregate $3.5
billion in current-year (1995) dollars, are expected to be funded by the
external decommissioning trust funds which ComEd established in compliance with
Illinois law and into which ComEd has been making annual contributions. Future
decommissioning cost estimates may be significantly affected by the adoption of
or changes to NRC regulations. See "Depreciation and Decommissioning" in Note 1
of Notes to Financial Statements for additional information regarding
decommissioning costs.

Environmental Matters. ComEd is involved in administrative and legal
proceedings concerning air quality, water quality and other matters. The
outcome of these proceedings may require increases in future construction
expenditures and operating expenses and changes in operating procedures. See
Note 19 of Notes to Financial Statements and "Part II. Other Information, Item
1. Legal Proceedings," subcaption "Environmental Matters."

RESULTS OF OPERATIONS

Unicom's earnings per common share for the three months ended March 31, 1995
were $0.41 compared to $0.17 for the three months ended March 31, 1994, and
$1.90 for the twelve months ended March 31, 1995 compared to $0.10 for the
twelve months ended March 31, 1994. Substantially all of the results of
operations for Unicom are the results of operations of ComEd. Unicom
Enterprises' only subsidiary, Unicom Thermal, is currently a development stage
enterprise and has incurred losses for all periods from July 30, 1993 (date of
inception) through March 31, 1995, which are not material to the results of
Unicom and subsidiary companies as a whole. As such, the following section
discusses the results of operations of ComEd alone.

Net Income. The increase in ComEd's earnings in the recent three-month period
reflects higher revenues as a result of higher rate levels under the Rate Order
which became effective on January 14, 1995. The increase in the recent three-
month period also reflects lower operation and maintenance expenses as compared
to the three months ended March 31, 1994. The increase in the recent twelve-
month period reflects the favorable comparison to the prior twelve-month period
in which the effects of the Rate Matters Settlement and Fuel Matters Settlement
were recorded, as well as higher rate levels under the Rate Order and a higher
level of kilowatthour sales to ultimate consumers. The net effects of the Rate
Matters Settlement and Fuel Matters Settlement reduced net income for the
twelve months ended March 31, 1994 by approximately $378 million or $1.77 per
common share, in addition to the effect of the deferred recognition of revenues
which ComEd had recorded during the twelve months ended March 31, 1994
(approximately $126 million or $0.59 per common share), and after the partially
offsetting effect of recording approximately $265 million or $1.24 per common
share in deferred carrying charges, net of income taxes and amortization, as
authorized in the Remand Order. The increase in the recent twelve-month period
was partially offset by the recording of a reduction in the carrying value of
ComEd's investments in uranium-related properties which reduced net income by
approximately $34 million or $0.16 per common share.

38
<PAGE>

Kilowatthour Sales. Kilowatthour sales to ultimate consumers for the three
months and twelve months ended March 31, 1995 decreased 2.3% and increased
1.2%, respectively, compared to the three months and twelve months ended March
31, 1994. The decrease in the recent three-month period reflects lower
kilowatthour sales to all classes of customers (except for small commercial and
industrial customers, which increased) due primarily to milder winter weather
as compared to the same period ended March 31, 1994. The increase in the recent
twelve-month period reflects higher kilowatthour sales to all classes of
customers (except railroads, which decreased), due in part to warmer summer
weather as compared to the twelve months ended March 31, 1994. The service
territory economy also improved during the twelve months ended March 31, 1995,
which contributed to the increase in kilowatthour sales. Kilowatthour sales,
including sales for resale, increased 5.5% and decreased 2.5% during the three-
month and twelve-month periods ended March 31, 1995, respectively, compared to
the same periods ended March 31, 1994.

Operating Revenues. Operating revenues increased in the three months ended
March 31, 1995 compared to the three-month period ended March 31, 1994,
primarily as a result of higher rate levels under the Rate Order which became
effective on January 14, 1995 and the increase in sales for resale mentioned
above. The increase in the current three-month period was partially offset by
the decrease in kilowatthour sales to ultimate consumers described above and a
decrease in energy costs recovered under the fuel adjustment clause in ComEd's
rates. Operating revenues increased in the twelve months ended March 31, 1995
primarily as a result of a favorable comparison to the prior twelve-month
period, which reflects the recording of the effects of the Rate Matters
Settlement and Fuel Matters Settlement, which reduced operating revenues by
approximately $1,232 million. The increase in operating revenues for the recent
twelve-month period also reflects the effects of the higher rate levels under
the Rate Order and the previously described higher kilowatthour sales to
ultimate consumers partially offset by a decrease in energy costs recovered
under the fuel adjustment clause in ComEd's rates.

Fuel Costs. Changes in fuel expense for the three months and twelve months
ended March 31, 1995 as compared to the same periods ended March 31, 1994
primarily resulted from changes in the average cost of fuel consumed, changes
in the mix of fuel sources of electric energy generated and changes in net
generation of electric energy. Fuel mix is determined primarily by system load,
the costs of fuel consumed and the availability of nuclear generating units.
The cost of fuel consumed, net generation of electric energy and fuel sources
of kilowatthour generation were as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
-------------------- --------------------
1994 1995 1994 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Cost of fuel consumed (per million Btu):
Nuclear..................................... $0.54 $0.53 $0.52 $0.53
Coal........................................ $2.28 $2.44 $2.68 $2.35
Oil......................................... $2.78 $2.74 $2.92 $2.93
Natural gas................................. $2.77 $1.77 $2.70 $2.07
Average all fuels........................... $1.10 $1.05 $1.12 $1.07
Net generation of electric energy (millions of
kilowatthours)............................... 22,213 24,197 94,697 92,227
Fuel sources of kilowatthour generation:
Nuclear..................................... 70% 73% 74% 71%
Coal........................................ 26 25 24 25
Oil......................................... 2 -- 1 1
Natural gas................................. 2 2 1 3
--------- --------- --------- ---------
100% 100% 100% 100%
========= ========= ========= =========
</TABLE>

Under the Energy Policy Act of 1992, investor-owned electric utilities that
have purchased enrichment services from the DOE are being assessed amounts to
fund a portion of the cost for the decontamination and decommissioning of three
nuclear enrichment facilities previously operated by the DOE. ComEd's portion
of such assessments is estimated to be approximately $15 million per year (to
be adjusted annually for inflation) to 2007. The Act provides that such
assessments are to be treated as a cost of fuel. See Note 1 of Notes to
Financial Statements under "Deferred Unrecovered Energy Costs" for information
related to the accounting for such costs.

39
<PAGE>

Fuel Supply. Compared to other utilities, ComEd has relatively low average
fuel costs. This results from ComEd's reliance predominantly on lower cost
nuclear generation. ComEd's coal costs, however, are high compared to those of
other utilities. ComEd'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 ComEd has
significant purchase commitments under its contracts. In addition, as of March
31, 1995, ComEd had unrecovered fuel costs in the form of coal reserves of
approximately $489 million. In prior years, ComEd's commitments for the
purchase of coal exceeded its requirements. Rather than take all the coal it
was required to take, ComEd agreed to purchase the coal in place in the form of
coal reserves. For additional information concerning ComEd's coal purchase
commitments, fuel reconciliation proceedings and coal reserves, see "Liquidity
and Capital Resources" above and Notes 1, 2 and 19 of Notes to Financial
Statements.

Purchased Power. Amounts of purchased power are primarily affected by system
load, the availability of ComEd and the Indiana Company's generating units and
the availability and cost of power from other utilities.

The number and average cost of kilowatthours purchased were as follows:

THREE MONTHS TWELVE MONTHS
ENDED MARCH 31 ENDED MARCH 31
--------------- -------------------
1994 1995 1994 1995
------ ------ --------- --------
<S> <C> <C> <C> <C>
Kilowatthours (millions)............... 657 209 1,030 1,623
Cost per kilowatthour.................. 2.61c 1.69c 2.36c 2.80c
</TABLE>

Deferred Under or Overrecovered Energy Costs--Net. Operating expenses for the
three months and twelve months ended March 31, 1995 and 1994 reflect the net
change in under or overrecovered allowable energy costs under ComEd's fuel
adjustment clause. See "Fuel Costs" and "Fuel Supply" above and Note 1 of Notes
to Financial Statements under "Deferred Unrecovered Energy Costs."

Operation and Maintenance Expenses. ComEd's operation and maintenance
expenses decreased 6.1% and 1.6% for the three months and twelve months ended
March 31, 1995, respectively, compared to the same periods ended March 31,
1994. The decrease in the current three-month period primarily reflects lower
operation and maintenance expenses associated with nuclear and fossil
generating stations and a favorable comparison to the prior period which
included the 1994 early retirement program. The decrease in the current twelve-
month period primarily reflects lower expenses associated with fossil
generating stations, transmission and distribution facilities and customer-
related activities, partially offset by higher costs associated with nuclear
generating stations and employee incentive compensation. The effects of
inflation are reflected in the increases and decreases discussed below and have
increased operation and maintenance costs for the three months and twelve
months ended March 31, 1995.

Operation and maintenance expenses associated with the nuclear generating
stations decreased $5 million for the three months ended March 31, 1995 and
increased $8 million for the twelve months ended March 31, 1995 compared to the
same periods ended March 31, 1994. The decrease in operation and maintenance
expenses for the recent three-month period is primarily due to a lesser number
of scheduled and non-scheduled outages compared to the three-month period ended
March 31, 1994. The increase for the current twelve-month period is due to
activities undertaken during a greater number of scheduled and non-scheduled
outages, partially offset by cost-containment efforts on non-outage related
activities. Future operation and maintenance expenses associated with nuclear
generating stations may be significantly affected by regulatory, operational
and other requirements. See "Nuclear Matters" under "Regulation" above.
Operation and maintenance expenses associated with the fossil generating
stations decreased $11 million and $17 million in the three months and twelve
months ended March 31, 1995, respectively, compared to the same periods ended
March 31, 1994. The decreases in the recent three-month and twelve-month
periods reflect, in part, activities undertaken during a lesser number of
scheduled overhauls than in the corresponding prior periods.

40
<PAGE>

Operation and maintenance expenses associated with ComEd's transmission and
distribution system decreased $26 million in the twelve months ended March 31,
1995 compared to the same period ended March 31, 1994. The decrease in the
recent twelve-month period primarily reflects the effects of ComEd's cost
containment efforts. Operation and maintenance expenses associated with ComEd's
customer-related activities decreased $5 million in the twelve-month period
ended March 31, 1995 compared to the prior twelve-month period primarily due to
a decrease in the provision for uncollectible accounts, partially offset by
costs related to ComEd's increased marketing and sales efforts.

Operation and maintenance expenses in the twelve months ended March 31, 1995
reflect a $50 million cost (recorded in December 1994) for employee incentive
compensation related to the achievement of certain financial performance, cost
containment and operating performance goals in 1994. Operation and maintenance
expenses in the twelve months ended March 31, 1994 reflect $36 million of
special incentive compensation (recorded in December 1993) to employees related
to a sharing of operation and maintenance savings below 1993 budgeted levels.

The costs of pension and other employee benefits, including postretirement
health care benefits, decreased $14 million in the three months ended March 31,
1995 compared to the same period ended March 31, 1994. The decrease primarily
reflects costs of $16 million recorded in the three months ended March 31, 1994
related to employees who elected in the first quarter of 1994 to take early
retirements under the 1994 early retirement program.

Depreciation. Depreciation expense for the three months and twelve months
ended March 31, 1995 increased over the same periods a year ago as a result of
additions to plant in service. See "Depreciation and Decommissioning" in Note 1
of Notes to Financial Statements for additional information.

Interest on Debt. Changes in interest on ComEd's long-term debt and notes
payable for the three months and twelve months ended March 31, 1995 as compared
to the same periods ended March 31, 1994 were due to changes in average
interest rates and in the amounts of long-term debt and notes payable
outstanding. Changes in interest on ComEd's long-term debt also reflected new
issues of debt and the retirement and redemption of issues which were
refinanced at generally lower rates of interest. The average amounts of ComEd's
long-term debt and notes payable outstanding and average interest rates thereon
were as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
--------------------- ---------------------
1994 1995 1994 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Long-term debt outstanding:
Average amount (millions)................ $8,032 $7,842 $8,107 $7,888
Average interest rate.................... 7.83% 7.76% 7.92% 7.81%
Notes payable outstanding:
Average amount (millions)................ $ 6 $ 7 $ 6 $ 9
Average interest rate.................... 5.87% 8.59% 5.84% 7.00%
</TABLE>

Deferred Carrying Charges. In the Remand Order, the ICC provided that, for
ratemaking purposes, deferred carrying charges on the reasonable and "used and
useful" plant costs of the Units for the period April 1, 1989 until
approximately March 20, 1991, the date under the Remand Order that the Units
were reflected in rates, could be deferred and amortized. Approximately $438
million of such costs was capitalized as a regulatory asset in October 1993 and
resulted in an increase to net income for the twelve months ended March 31,
1994 of approximately $265 million or $1.24 per common share. Amortization of
deferred carrying charges for the three months ended March 31, 1994 and 1995
amounted to approximately $3 million and for the twelve months ended March 31,
1994 and 1995 amounted to approximately $5 million and $13 million,
respectively.

Decommissioning. The staff of the SEC has questioned certain of the current
accounting practices of the electric utility industry, including ComEd,
regarding the recognition, measurement and classification

41
<PAGE>

of decommissioning costs for nuclear generating stations in financial
statements of electric utilities. In response to these questions, the FASB is
reviewing the accounting for nuclear decommissioning costs. If current electric
utility industry accounting practices for such decommissioning costs are
changed: (1) annual provisions for decommissioning could increase; (2) the
estimated cost for decommissioning could be recorded as a liability rather than
as accumulated depreciation; and (3) trust fund income from the external
decommissioning trusts could be reported as investment income rather than as a
reduction to decommissioning expense. Unicom does not believe that such
changes, if required, would have an adverse effect on results of operations due
to ComEd's current and future ability to recover decommissioning costs through
rates.

Investments in Uranium-Related Properties. In May 1994, ComEd recorded a
reduction in the carrying value of its investments in uranium-related
properties after completing a review of various alternatives and reassessing
the long-term recoverability of those investments. The effects of the reduction
reduced net income for the twelve months ended March 31, 1995 by approximately
$34 million or $0.16 per common share.

Other Items. The amounts of AFUDC reflect changes in the average levels of
investment subject to AFUDC and changes in the average annual rates as
discussed in Note 1 of Notes to Financial Statements. AFUDC does not contribute
to the current cash flow of Unicom or ComEd.

ComEd's ratios of earnings to fixed charges for the twelve months ended
December 31, 1994 and March 31, 1995 were 1.99 and 2.13, respectively. ComEd's
ratios of earnings to fixed charges and preferred and preference stock dividend
requirements for the twelve months ended December 31, 1994 and March 31, 1995
were 1.73 and 1.84, respectively.

Business corporations in general have been adversely affected by inflation
because amounts retained after the payment of all costs have been inadequate to
replace, at increased costs, the productive assets consumed. Electric utilities
in particular have been especially affected as a result of their capital
intensive nature and regulation which limits capital recovery and prescribes
installation or modification of facilities to comply with increasingly
stringent safety and environmental requirements. Because the regulatory process
limits the amount of depreciation expense included in ComEd's revenue allowance
to the original cost of utility plant investment, the resulting cash flows are
inadequate to provide for replacement of that investment in future years or
preserve the purchasing power of common equity capital previously invested.

42
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

43
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Commonwealth Edison Company:

We have audited the accompanying consolidated balance sheets and statements
of consolidated capitalization of Commonwealth Edison Company (an Illinois
corporation) and subsidiary companies as of December 31, 1994 and March 31,
1995, and the related statements of consolidated income, retained earnings,
premium on common stock and other paid-in capital, and cash flows for the
three-month and twelve-month periods ended March 31, 1994 and 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Commonwealth Edison Company
and subsidiary companies as of December 31, 1994 and March 31, 1995, and the
results of their operations and their cash flows for the three-month and
twelve-month periods ended March 31, 1994 and 1995, in conformity with
generally accepted accounting principles.

Arthur Andersen LLP
Chicago, Illinois
May 9, 1995

44
<PAGE>

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED INCOME

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
---------------------- -----------------------
1994 1995 1994 1995
---------- ---------- ----------- ----------
(THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Electric Operating Revenues:
Operating revenues........... $1,530,975 $1,578,118 $ 6,534,375 $6,340,574
Provisions for revenue
refunds..................... (6,225) 18 (1,232,569) (9,667)
---------- ---------- ----------- ----------
$1,524,750 $1,578,136 $ 5,301,806 $6,330,907
---------- ---------- ----------- ----------
Electric Operating Expenses
and Taxes:
Fuel......................... $ 264,215 $ 272,857 $ 1,148,922 $1,058,494
Purchased power.............. 17,149 3,543 24,333 45,517
Deferred (under)/
overrecovered energy costs--
net......................... 11,753 (3,363) 19,434 (13,176)
Operation.................... 398,149 383,744 1,498,431 1,510,853
Maintenance.................. 165,277 145,326 587,189 541,370
Depreciation................. 221,922 225,088 869,969 890,598
Recovery of regulatory
assets...................... 3,999 3,818 8,435 15,272
Taxes (except income)........ 200,073 209,757 712,117 797,479
Income taxes--
Current--Federal........... 34,648 53,589 (28,263) 177,242
--State............. 712 11,740 (15,376) 12,941
Deferred--Federal--net..... (6,521) 12,578 90,123 123,390
--State--net....... 7,140 4,489 38,267 62,366
Investment tax credits
deferred--net............... (7,224) (7,179) (29,333) (28,712)
---------- ---------- ----------- ----------
$1,311,292 $1,315,987 $ 4,924,248 $5,193,634
---------- ---------- ----------- ----------
Electric Operating Income..... $ 213,458 $ 262,149 $ 377,558 $1,137,273
---------- ---------- ----------- ----------
Other Income and (Deductions):
Interest on long-term debt... $ (157,152) $ (152,197) $ (641,830) $ (616,270)
Interest on notes payable.... (87) (151) (340) (622)
Allowance for funds used
during construction--
Borrowed funds............. 6,178 1,685 20,904 14,419
Equity funds............... 7,356 2,093 25,248 17,364
Income taxes applicable to
nonoperating activities..... (2,733) 268 21,572 30,075
Income tax reduction for
disallowed plant costs...... -- -- 792 --
Deferred carrying charges.... -- -- 438,183 --
Interest and other costs for
1993 Settlements............ (10,475) (61) (109,149) (11,049)
Miscellaneous--net........... (4,980) (6,740) (46,144) (91,763)
---------- ---------- ----------- ----------
$ (161,893) $ (155,103) $ (290,764) $ (657,846)
---------- ---------- ----------- ----------
Net Income.................... $ 51,565 $ 107,046 $ 86,794 $ 479,427
Provision for Dividends on
Preferred and Preference
Stocks....................... 15,545 16,908 64,961 66,291
---------- ---------- ----------- ----------
Net Income on Common Stock.... $ 36,020 $ 90,138 $ 21,833 $ 413,136
========== ========== =========== ==========
Average Number of Common
Shares Outstanding........... 213,780 214,191 213,619 214,111
Earnings per Common Share..... $0.17 $0.42 $0.10 $1.93
</TABLE>

The accompanying Notes to Financial Statements are an integral part of the
above statements.

45
<PAGE>

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
ASSETS 1994 1995
------ ------------ -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Utility Plant:
Plant and equipment, at original cost (includes
construction work in progress of $1,043 million
and $1,059 million, respectively)................. $26,257,665 $26,449,492
Less--Accumulated provision for depreciation....... 9,623,756 9,884,012
----------- -----------
$16,633,909 $16,565,480
Nuclear fuel, at amortized cost.................... 689,424 667,541
----------- -----------
$17,323,333 $17,233,021
----------- -----------
Investments:
Nuclear decommissioning funds...................... $ 880,944 $ 1,036,296
Subsidiary companies............................... 118,051 118,609
Other investments, at cost......................... 18,613 18,693
----------- -----------
$ 1,017,608 $ 1,173,598
----------- -----------
Current Assets:
Cash............................................... $ 84 $ 213
Temporary cash investments......................... 53,566 197,560
Other cash investments............................. 19,588 27,587
Special deposits................................... 29,603 16,015
Receivables--
Customers........................................ 463,385 518,316
Taxes............................................ 36,083 5,878
Other............................................ 68,434 41,961
Provisions for uncollectible accounts............ (10,720) (10,982)
Coal and fuel oil, at average cost................. 108,872 120,496
Materials and supplies, at average cost............ 384,612 371,005
Deferred unrecovered energy costs.................. 48,697 48,337
Deferred income taxes related to current assets and
liabilities--
Loss carryforward................................ 10,090 --
Other............................................ 110,267 118,492
Prepayments and other.............................. 56,449 45,900
----------- -----------
$ 1,379,010 $ 1,500,778
----------- -----------
Deferred Charges and Other Noncurrent Assets:
Regulatory assets.................................. $ 2,604,270 $ 2,575,200
Unrecovered energy costs........................... 643,438 635,213
Other.............................................. 108,308 99,708
----------- -----------
$ 3,356,016 $ 3,310,121
----------- -----------
$23,075,967 $23,217,518
=========== ===========
</TABLE>

The accompanying Notes to Financial Statements are an integral part of the
above statements.

46
<PAGE>

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
CAPITALIZATION AND LIABILITIES 1994 1995
------------------------------ ------------ -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Capitalization (see accompanying statements):
Common stock equity................................. $ 5,401,423 $ 5,405,917
Preferred and preference stocks without mandatory
redemption requirements............................ 508,147 508,114
Preference stock subject to mandatory redemption re-
quirements......................................... 292,163 292,163
Long-term debt...................................... 7,453,206 7,354,370
----------- -----------
$13,654,939 $13,560,564
----------- -----------
Current Liabilities:
Notes payable--bank loans........................... $ 7,150 $ 7,150
Current portion of long-term debt, redeemable pref-
erence stock and capitalized lease obligations..... 560,335 680,822
Accounts payable.................................... 351,370 305,812
Accrued interest.................................... 182,745 159,412
Accrued taxes....................................... 209,269 315,620
Dividends payable................................... 102,585 102,585
Customer deposits................................... 44,514 43,881
Other............................................... 85,845 88,948
----------- -----------
$ 1,543,813 $ 1,704,230
----------- -----------
Deferred Credits and Other Noncurrent Liabilities:
Deferred income taxes............................... $ 4,383,876 $ 4,385,018
Accumulated deferred investment tax credits......... 717,752 710,572
Accrued spent nuclear fuel disposal fee and related
interest........................................... 589,757 598,179
Obligations under capital leases.................... 431,402 438,461
Regulatory liabilities.............................. 699,426 702,581
Other............................................... 1,055,002 1,117,913
----------- -----------
$ 7,877,215 $ 7,952,724
----------- -----------
Commitments and Contingent Liabilities (Note 19)
$23,075,967 $23,217,518
=========== ===========
</TABLE>

The accompanying Notes to Financial Statements are an integral part of the
above statements.

47
<PAGE>

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED CAPITALIZATION

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1994 1995
------------ -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Common Stock Equity:
Common stock, $12.50 par value per share--
Outstanding--214,191,021 shares and 214,192,221
shares, respectively............................. $ 2,677,387 $ 2,677,403
Premium on common stock and other paid-in capital.. 2,222,941 2,222,959
Capital stock and warrant expense.................. (16,240) (16,240)
Retained earnings.................................. 517,335 521,795
----------- -----------
$ 5,401,423 $ 5,405,917
----------- -----------
Preferred and Preference Stocks Without Mandatory
Redemption Requirements:
Preference stock, cumulative, without par value--
Outstanding--13,499,549 shares ................... $ 504,957 $ 504,957
$1.425 convertible preferred stock, cumulative,
without par value--
Outstanding--100,323 shares and 99,270 shares, re-
spectively....................................... 3,190 3,157
Prior preferred stock, cumulative, $100 par value
per share--
No shares outstanding............................. -- --
----------- -----------
$ 508,147 $ 508,114
----------- -----------
Preference Stock Subject to Mandatory Redemption
Requirements:
Preference stock, cumulative, without par value--
Outstanding--3,113,205 shares..................... $ 309,964 $ 309,964
Current redemption requirements for preference
stock included in current liabilities............. (17,801) (17,801)
----------- -----------
$ 292,163 $ 292,163
----------- -----------
Long-Term Debt:
First mortgage bonds:
Maturing 1995 through 1999--5 1/4% to 7%......... $ 818,000 $ 818,000
Maturing 2000 through 2009--5.30% to 9 3/8%...... 2,220,500 2,220,500
Maturing 2010 through 2019--5.85% to 9 5/8%...... 1,106,000 1,106,000
Maturing 2020 through 2023--7 3/4% to 9 7/8%..... 1,870,000 1,870,000
----------- -----------
$ 6,014,500 $ 6,014,500
Sinking fund debentures, due 1999 through 2011--
2 3/4% to 7 5/8%.................................. 112,593 112,465
Pollution control obligations, due 2004 through
2014--3.952% to 9 1/8%............................ 337,200 337,200
Other long-term debt............................... 1,451,449 1,421,909
Deposit for retirement of long-term debt........... -- (1,780)
Current maturities of long-term debt included in
current liabilities............................... (395,554) (464,325)
Unamortized net debt discount and premium.......... (66,982) (65,599)
----------- -----------
$ 7,453,206 $ 7,354,370
----------- -----------
$13,654,939 $13,560,564
=========== ===========
</TABLE>

The accompanying Notes to Financial Statements are an integral part of the
above statements.

48
<PAGE>

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED RETAINED EARNINGS

<TABLE>
<CAPTION>
THREE MONTHS TWELVE MONTHS
ENDED MARCH 31 ENDED MARCH 31
------------------- -----------------
1994 1995 1994 1995
--------- --------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Balance at Beginning of Period............ $ 549,152 $ 517,335 $822,419 $499,655
Add--Net income........................... 51,565 107,046 86,794 479,427
--------- --------- -------- --------
$ 600,717 $ 624,381 $909,213 $979,082
--------- --------- -------- --------
Deduct--
Dividends declared on--
Common stock.......................... $ 85,518 $ 85,678 $341,857 $390,441
Preferred and preference stocks....... 15,544 16,908 64,597 66,746
Loss on reacquired preference stock.... -- -- 3,104 100
--------- --------- -------- --------
$ 101,062 $ 102,586 $409,558 $457,287
--------- --------- -------- --------
Balance at End of Period.................. $ 499,655 $ 521,795 $499,655 $521,795
========= ========= ======== ========
</TABLE>

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED PREMIUM ON COMMON STOCK
AND OTHER PAID-IN CAPITAL

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
--------------------- ---------------------
1994 1995 1994 1995
---------- ---------- ---------- ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Balance at Beginning of Period..... $2,217,110 $2,222,941 $2,211,226 $2,217,775
Add--Premium on issuance of common
stock and gain on reacquired
preference stock.............. 665 18 6,549 5,184
---------- ---------- ---------- ----------
Balance at End of Period........... $2,217,775 $2,222,959 $2,217,775 $2,222,959
========== ========== ========== ==========
</TABLE>

The accompanying Notes to Financial Statements are an integral part of the
above statements.

49
<PAGE>

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
-------------------- -----------------------
1994 1995 1994 1995
--------- --------- ----------- ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Cash Flow from Operating Activi-
ties:
Net income..................... $ 51,565 $ 107,046 $ 86,794 $ 479,427
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortiza-
tion........................ 232,724 238,612 919,305 935,214
Deferred income taxes and in-
vestment tax credits--net... (4,310) 10,282 96,663 141,778
Equity component of allowance
for funds used during
construction................ (7,356) (2,093) (25,248) (17,364)
Provisions for revenue
refunds and related
interest.................... 16,770 -- 1,310,210 20,779
Revenue refunds and related
interest.................... (346,552) 15,115 (533,651) (859,984)
Recovery/(deferral) of regu-
latory assets/deferred car-
rying charges--net.......... 3,999 3,818 (429,748) 15,272
Provisions/(payments) for li-
ability for early retirement
and separation costs--net... 15,607 380 15,513 18,353
Net effect on cash flows of
changes in:
Receivables................ 215,347 2,009 109,758 (98,403)
Coal and fuel oil.......... 2,772 (11,624) 149,505 (11,516)
Materials and supplies..... (2,993) 13,607 (970) 34,702
Accounts payable adjusted
for nuclear fuel lease
principal payments and
early retirement and
separation costs--net..... (51,677) 17,227 197,665 187,094
Accrued interest and taxes. 50,724 83,018 (41,123) 105,121
Other changes in certain
current assets and
liabilities............... 19,220 6,559 33,785 (66,713)
Other--net................... 38,540 83,518 95,980 170,407
--------- --------- ----------- ----------
$ 234,380 $ 567,474 $ 1,984,438 $1,054,167
--------- --------- ----------- ----------
Cash Flow from Investing Activi-
ties:
Construction expenditures...... $(187,378) $(201,018) $ (829,067) $ (734,242)
Nuclear fuel expenditures...... (48,749) (38,857) (209,131) (247,372)
Equity component of allowance
for funds used during
construction.................. 7,356 2,093 25,248 17,364
Contributions to nuclear
decommissioning funds......... (96,229) (96,229) (132,550) (132,550)
Investment in subsidiary com-
panies........................ -- -- -- (49)
Other cash investments and
special deposits.............. 71,649 (7,999) (548,326) 542,339
--------- --------- ----------- ----------
$(253,351) $(342,010) $(1,693,826) $ (554,510)
--------- --------- ----------- ----------
Cash Flow from Financing Activi-
ties:
Issuance of securities--
Long-term debt................ $ 65,538 $ -- $ 1,618,079 $ 480,751
Capital stock................. 1,035 -- 80,278 76,936
Retirement and redemption of
securities--
Long-term debt................ (55,307) (29,637) (1,830,749) (678,260)
Capital stock................. -- -- (92,969) (17,709)
Deposits and securities held
for retirement and redemption
of securities................. (12,888) (1,674) 462,976 14,405
Premium paid on early redemp-
tion of long-term debt........ (500) -- (69,895) (4,064)
Cash dividends paid on capital
stock......................... (101,047) (102,585) (407,371) (447,880)
Proceeds from sale/leaseback
of nuclear fuel............... 116,964 115,340 221,667 305,025
Nuclear fuel lease principal
payments...................... (53,445) (62,785) (240,144) (219,029)
Increase in short-term
borrowings.................... 150 -- 500 1,050
--------- --------- ----------- ----------
$ (39,500) $ (81,341) $ (257,628) $ (488,775)
--------- --------- ----------- ----------
Increase (Decrease) in Cash and
Temporary Cash Investments..... $ (58,471) $ 144,123 $ 32,984 $ 10,882
Cash and Temporary Cash
Investments at Beginning of
Period......................... 245,362 53,650 153,907 186,891
--------- --------- ----------- ----------
Cash and Temporary Cash Invest-
ments at End of Period......... $ 186,891 $ 197,773 $ 186,891 $ 197,773
========= ========= =========== ==========
</TABLE>

The accompanying Notes to Financial Statements are an integral part of the
above statements.

50
<PAGE>

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

See Unicom's Note 1 of Notes to Financial Statements for a discussion of
significant accounting policies, except for the following specific policies
discussed below.

Holding Company Restructuring. Effective September 1, 1994, Unicom became the
parent corporation of ComEd and Unicom Enterprises in a corporate
restructuring. Previously, Unicom Enterprises was a wholly-owned subsidiary of
ComEd. The restructuring was accounted for by the pooling-of-interests method.
In the restructuring, each of the 214,185,572 outstanding shares of ComEd
common stock, par value $12.50 per share, was converted into one fully paid and
non-assessable share of Unicom common stock, without par value. In addition,
the outstanding shares of the common stock of CECo Merging Corporation (a
wholly-owned subsidiary of ComEd created to effect the restructuring) were
converted into the same number of shares of ComEd common stock, par value
$12.50 per share, outstanding immediately prior to the restructuring. The
preferred and preference stocks, common stock purchase warrants, first mortgage
bonds and other debt obligations of ComEd and the Indiana Company were
unchanged in the restructuring and remain outstanding securities and
obligations of ComEd and the Indiana Company.

Income Taxes. ComEd will be included in the consolidated federal and state
income tax returns filed by Unicom. Current and deferred income taxes of the
consolidated group are allocated to ComEd as if ComEd filed separate tax
returns. Deferred income taxes are provided for income and expense items
recognized for financial accounting purposes in periods that differ from those
for income tax purposes. Income taxes deferred in prior years are charged or
credited to income as the book/tax timing differences reverse. Prior years'
deferred investment tax credits are amortized through credits to income
generally over the lives of the related property. Income tax credits resulting
from interest charges applicable to nonoperating activities, principally
construction, are classified as other income.

Interest. Total interest costs incurred on debt, leases and other obligations
for the three months ended March 31, 1994 and 1995 were $190,125,000 and
$176,868,000, respectively, and for the twelve months ended March 31, 1994 and
1995 were $787,534,000 and $716,288,000, respectively.

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
------------------- --------------------
1994 1995 1994 1995
--------- -------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Supplemental Cash Flow Information:
Cash paid during the period for:
Interest (net of amount capital-
ized)........................... $ 172,947 $162,590 $ 649,365 $ 635,066
Income taxes (net of refunds).... $(133,389) $(30,421) $ (31,267) $ 98,045
Supplemental Schedule of Non-Cash
Investing and Financing Activities:
Capital lease obligations in-
curred............................ $ 117,499 $116,810 $ 223,080 $ 309,028
</TABLE>

(2) SETTLEMENTS RELATING TO CERTAIN RATE MATTERS. See Unicom's Note 2 of
Notes to Financial Statements.

(3) OTHER RATE MATTERS. See Unicom's Note 3 of Notes to Financial Statements.

51
<PAGE>

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

(4) AUTHORIZED SHARES AND VOTING RIGHTS OF CAPITAL STOCK. At March 31, 1995,
the authorized shares of capital stock were: common stock--250,000,000 shares;
preference stock--23,423,205 shares; $1.425 convertible preferred stock--99,270
shares; and prior preferred stock-- 850,000 shares. The preference and prior
preferred stocks are issuable in series and may be issued with or without
mandatory redemption requirements. 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 shareholders, with the right to
cumulate votes in all elections for directors.

(5) COMMON STOCK. At March 31, 1995, shares of common stock were reserved for
the following purposes:

<TABLE>
<S> <C>
Conversion of $1.425 convertible preferred stock.................. 101,255
Conversion of warrants............................................ 27,768
-------
129,023
=======
</TABLE>

During the three months and twelve months ended March 31, 1994 and 1995,
shares of common stock were issued as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
------------------ -------------------
1994 1995 1994 1995
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Employee Stock Purchase Plan............ -- -- 268,594 154,710
Employee Savings and Investment Plan.... 38,000 -- 138,700 43,400
Conversion of $1.425 convertible
preferred stock........................ 5,750 1,070 27,072 185,370
Conversion of warrants.................. 198 130 1,411 13,646
--------- -------- --------- ---------
43,948 1,200 435,777 397,126
========= ======== ========= =========
</TABLE>

At December 31, 1994 and March 31, 1995, 83,751 and 83,305 common stock
purchase warrants, respectively, were outstanding. The warrants entitle the
holders to convert such warrants into common stock at a conversion rate of one
share of common stock for three warrants.

(6) PREFERRED AND PREFERENCE STOCKS WITHOUT MANDATORY REDEMPTION
REQUIREMENTS. See Unicom's Note 6 of Notes to Financial Statements.

(7) PREFERENCE STOCK SUBJECT TO MANDATORY REDEMPTION REQUIREMENTS. See
Unicom's Note 7 of Notes to Financial Statements.

(8) LONG-TERM DEBT. See Unicom's Note 8 of Notes to Financial Statements for
ComEd and the Indiana Company's long-term debt.

(9) LINES OF CREDIT. See the first paragraph of Unicom's Note 9 of Notes to
Financial Statements.

(10) DISPOSAL OF SPENT NUCLEAR FUEL. See Unicom's Note 10 of Notes to
Financial Statements.

(11) FAIR VALUE OF FINANCIAL INSTRUMENTS. See Unicom's Note 11 of Notes to
Financial Statements.

52
<PAGE>

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

(12) PENSION BENEFITS. See Unicom's Note 12 of Notes to Financial Statements.

(13) POSTRETIREMENT HEALTH CARE BENEFITS. See Unicom's Note 13 of Notes to
Financial Statements.

(14) INCOME TAXES. The components of the net deferred income tax liability at
December 31, 1994 and March 31, 1995 were as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1994 1995
------------ ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Deferred income tax liabilities:
Accelerated cost recovery and liberalized
depreciation, net of removal costs.................. $3,266,930 $3,296,156
Overheads capitalized................................ 266,159 263,174
Repair allowance..................................... 210,655 208,161
Regulatory assets recoverable through future rates... 1,791,395 1,774,416
Deferred income tax assets:
Postretirement health care benefits.................. (177,991) (186,575)
Unbilled revenues.................................... (90,396) (95,310)
Loss carryforward.................................... (10,090) --
Alternative minimum tax.............................. (283,331) (275,143)
Unamortized investment tax credits to be settled
through future rates................................ (471,058) (466,338)
Other regulatory liabilities to be settled through
future rates........................................ (179,755) (181,950)
Other--net........................................... (58,999) (70,065)
---------- ----------
Net deferred income tax liability..................... $4,263,519 $4,266,526
========== ==========
</TABLE>

The $3 million increase in the net deferred income tax liability from December
31, 1994 to March 31, 1995 is comprised of $17 million of deferred income tax
expense and a $14 million decrease in regulatory assets net of regulatory
liabilities pertaining to income taxes for the period. The amount of regulatory
assets included in deferred income tax liabilities primarily relates to the
equity component of AFUDC which is recorded on an after-tax basis, the borrowed
funds component of AFUDC which was previously recorded net of tax and other
temporary differences for which the related tax effects were not previously
recorded. The amount of other regulatory liabilities included in deferred
income tax assets primarily relates to deferred income taxes provided at rates
in excess of the current statutory rate.

The components of net income tax expense charged to continuing operations for
the three months and twelve months ended March 31, 1994 and 1995 were as
follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
-------------------- --------------------
1994 1995 1994 1995
--------- --------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Electric operating income:
Current income taxes............. $ 35,360 $ 65,329 $ (43,639) $ 190,183
Deferred income taxes............ 619 17,067 128,390 185,756
Investment tax credits deferred--
net............................. (7,224) (7,179) (29,333) (28,712)
Other (income) and deductions..... 2,401 (227) (23,740) (25,691)
--------- --------- --------- ---------
Net income taxes charged to
continuing operations............ $ 31,156 $ 74,990 $ 31,678 $ 321,536
========= ========= ========= =========
</TABLE>

53
<PAGE>

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONTINUED

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
------------------- --------------------
1994 1995 1994 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Pre-tax book income (thousands)...... $ 82,721 $ 182,036 $118,472 $ 800,963
Effective income tax rate............ 37.7% 41.2% 26.7% 40.1%
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
-------------------- --------------------
1994 1995 1994 1995
--------- --------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Federal income taxes computed at
statutory rate................... $ 28,952 $ 63,713 $ 41,465 $ 280,337
Equity component of AFUDC which
was excluded from taxable income. (2,575) (733) (8,837) (6,077)
Amortization of investment tax
credits.......................... (7,223) (7,179) (29,344) (28,766)
State income taxes, net of federal
income taxes..................... 5,001 10,396 11,131 45,535
Differences between book and tax
accounting, primarily property-
related deductions............... 6,285 8,498 12,217 28,750
Other--net........................ 716 295 5,046 1,757
--------- --------- --------- ---------
Net income taxes charged to
continuing operations............ $ 31,156 $ 74,990 $ 31,678 $ 321,536
========= ========= ========= =========
</TABLE>

(15) TAXES, EXCEPT INCOME TAXES. Provisions for taxes, except income taxes,
for the three months and twelve months ended March 31, 1994 and 1995 were as
follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31 MARCH 31
------------------- -------------------
1994 1995 1994 1995
--------- --------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Illinois public utility revenue......... $ 52,543 $ 56,178 $ 197,738 $ 214,899
Illinois invested capital............... 27,412 27,297 110,254 109,258
Municipal utility gross receipts........ 35,339 38,045 111,424 147,716
Real estate............................. 44,631 46,831 165,701 182,422
Municipal compensation.................. 17,725 17,790 57,349 72,712
Other--net.............................. 22,423 23,616 69,651 70,472
--------- --------- --------- ---------
$ 200,073 $ 209,757 $ 712,117 $ 797,479
========= ========= ========= =========
</TABLE>

(16) LEASE OBLIGATIONS. On November 23, 1993, ComEd consolidated its nuclear
fuel lease arrangements into a new arrangement. Under the new arrangement,
ComEd may sell and lease back nuclear fuel from a lessor who may borrow an
aggregate of $700 million (consisting of $300 million of commercial paper or
bank borrowings and $400 million of intermediate term notes) to finance the
transactions. The commercial paper/bank borrowing portion currently will expire
on November 23, 1996,

54
<PAGE>

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--CONCLUDED

but ComEd plans to ask for an extension of the expiration date. At March 31,
1995, ComEd's obligation to the lessor for leased nuclear fuel amounted to
approximately $670 million. ComEd has agreed to make lease payments which cover
the amortization of the nuclear fuel used in ComEd's reactors plus the lessor's
related financing costs. ComEd has an obligation for spent nuclear fuel
disposal costs of leased nuclear fuel.

Future minimum rental payments, net of executory costs, at March 31, 1995 for
capital leases are estimated to aggregate $747 million, including $198 million
in 1995 (after deducting $73 million for the first three months of 1995), $237
million in 1996, $125 million in 1997, $86 million in 1998, $46 million in 1999
and $55 million in 2000-2003. The estimated interest component of such rental
payments aggregates $75 million. The estimated portions of obligations due
within one year under capital leases are included in current liabilities and
approximated $147 million and $199 million at December 31, 1994 and March 31,
1995, respectively.

Future minimum rental payments at March 31, 1995 for operating leases are
estimated to aggregate $148 million, including $5 million in 1995, $10 million
in 1996, $9 million in 1997, $9 million in 1998, $9 million in 1999 and $106
million in 2000-2024.

(17) INVESTMENTS IN URANIUM-RELATED PROPERTIES. See Unicom's Note 17 of Notes
to Financial Statements.

(18) JOINT PLANT OWNERSHIP. See Unicom's Note 18 of Notes to Financial
Statements.

(19) COMMITMENTS AND CONTINGENT LIABILITIES. See Unicom's Note 19 of Notes to
Financial Statements.

55
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES. See Unicom's "Management's Discussion and
Analysis of Financial Condition and Results of Operations," subcaptions
"Liquidity and Capital Resources--UTILITY OPERATIONS" and "Regulation," which
are incorporated herein by this reference.

RESULTS OF OPERATIONS. See Unicom's "Management's Discussion and Analysis of
Financial Condition and Results of Operations," subcaption "Results of
Operations" (other than the first paragraph thereof), which is incorporated
herein by this reference.

56
<PAGE>

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

CERTAIN REGULATORY MATTERS. Through its fuel adjustment clause, ComEd
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
amounts collected under the fuel adjustment clause are subject to review by
the ICC, which, under the Illinois Public Utilities Act, is required to hold
annual public hearings to reconcile the collected amounts with the actual cost
of fuel and power prudently purchased. In the event that the collected amounts
exceed such actual cost, then the ICC can order that the excess be refunded.
For additional information concerning ComEd's fuel reconciliation proceedings
and coal reserves, see Notes 1 and 2 of Unicom and ComEd's Notes to Financial
Statements.

LITIGATION. During 1989 and 1991, actions were brought in federal and state
courts in Colorado against ComEd and its subsidiary, Cotter, seeking
unspecified damages and injunctive relief based on allegations that Cotter has
permitted radioactive and other hazardous material to be released from its
mill into areas owned or occupied by the plaintiffs resulting in property
damage and potential adverse health effects. In February 1994, a federal jury
returned nominal dollar verdicts on eight bellwether plaintiffs' claims in
these cases. Plaintiffs have appealed those judgments. Although the remaining
cases will necessarily involve the resolution of numerous contested issues of
fact and law, Unicom and ComEd's determination is that these actions will not
have a material impact on their financial position or results of operations.

In October 1990, ComEd filed a complaint in the Circuit Court against
Westinghouse and certain of its employees. The complaint alleges that the
defendants knowingly concealed information regarding the durability of the
metal used in the steam generators (a major component of the nuclear steam
supply systems) at ComEd's Zion, Byron and Braidwood stations. The complaint
further alleges that the defects in the steam generators will prevent the
plants from maintaining their full power output through their forty-year
design life without costly remanufacture or replacement of the steam
generators. Damages, including punitive damages, in an unspecified amount are
claimed. Westinghouse has filed a counterclaim against ComEd which seeks
recovery of Westinghouse's costs of defense and damages of approximately $13
million.

Shareholder derivative lawsuits were filed on October 1, 1992 and on April
14, 1993 in the Circuit Court against current and former directors of ComEd
alleging that they breached their fiduciary duty and duty of care to ComEd in
connection with the management of the activities associated with the
construction of ComEd's four most recently completed nuclear generating units.
The lawsuits sought restitution to ComEd by the defendants for unquantified
and undefined losses and costs alleged to have been incurred by ComEd. Both
lawsuits were dismissed by the Circuit Court; however, appeals are pending
before the Illinois Appellate Court.

A number of complaints have been filed by former employees with the Equal
Employment Opportunity Commission, and several lawsuits have been filed by
former employees in the U.S. District Court, alleging that the employees'
terminations (which occurred as part of ComEd's management workforce
reductions that were implemented in 1992) involved discrimination on the basis
of age, race, sex, national origin and/or disabilities, in violation of
applicable law. The complainants in these various cases are seeking, among
other things, awards of back pay and lost benefits, reinstatement, pecuniary
damages, and costs and attorneys' fees. Discovery in these cases is
proceeding, and ComEd does not view these cases as having a material impact on
its financial position or results of operations.

NUCLEAR MATTERS. Under the Nuclear Waste Policy Act of 1982, the DOE is
responsible for the selection and development of repositories for, and the
disposal of, spent nuclear fuel and high-level radioactive waste. ComEd, as
required by that Act, has signed a contract with the DOE to provide for the

57
<PAGE>

disposal of spent nuclear fuel and high-level radioactive waste from ComEd's
nuclear generating stations beginning not later than January 1998; however,
this delivery schedule is expected to be delayed significantly. It is not
certain when the DOE will accept high-level radioactive waste from ComEd and
other operators of nuclear power plants. Extended delays or a default by the
DOE would lead to consideration of costly alternatives involving serious
siting and environmental issues. The contract with the DOE requires ComEd to
pay the DOE a one-time fee applicable to nuclear generation through April 6,
1983 of approximately $277 million, with interest to date of payment, and a
fee payable quarterly equal to one mill per kilowatthour of nuclear-generated
and sold electricity after April 6, 1983. ComEd has elected to pay the one-
time fee, with interest, just prior to the first delivery of spent nuclear
fuel to the DOE. The costs incurred by the DOE for disposal activities will be
paid out of fees charged to owners and generators of spent nuclear fuel and
high-level radioactive waste. ComEd has primary responsibility for the interim
storage of its spent nuclear fuel. ComEd's capability to store spent fuel is
more than adequate for some years to come. All stations except Dresden and
Zion stations will have spent fuel capacity at least through the year 2009.
Dresden station has capacity through 2001. Zion station has capacity through
2005. Meeting spent fuel storage requirements beyond the years described above
could require new and separate storage facilities, the costs for which have
not been determined.

The federal Low-Level Radioactive Waste Policy Act of 1980 provides that
states may enter into compacts to provide for regional disposal facilities for
low-level radioactive waste and restrict use of such facilities to waste
generated within the region. Since July 1, 1994, there have been no commercial
operating sites in the United States for the disposal of low-level radioactive
waste available to ComEd. Illinois has entered into a compact with the state
of Kentucky, which has been approved by Congress as required by the Waste
Policy Act. Neither Illinois nor Kentucky currently has an operational site,
and one is currently not expected to be operational until after the year 2000.
ComEd has temporary on-site storage capacity at its nuclear generating
stations for a limited amount of low-level radioactive waste and is planning
additional such capacity pending development of disposal facilities by the
state of Illinois. ComEd anticipates the possibility of serious difficulties
in disposing of low-level radioactive waste.

During the past several years, the NRC has placed two of ComEd's nuclear
generating stations, Zion station and Dresden station, on its list of plants
to be monitored closely. Although Zion station (which was placed on the list
in early 1991) was removed from that list in February 1993, Dresden station
(which was placed on the list in early 1992) remains on the list. The NRC
concern with Dresden station was that, although processes and programs were in
place to make improvements, the rate of improvement needed to accelerate. In
February 1995, the NRC reported that a sense of progress at Dresden station is
evident, but that more time is needed to determine if the improving trend will
continue. Because of the age of Zion, Dresden and Quad-Cities stations, ComEd
anticipates continued expenditures in order to improve reliability and to meet
NRC regulatory expectations. Beginning in late 1992, ComEd restructured its
management of its nuclear operations division and since that time has
committed additional resources to the stations' operations.

In January 1994, ComEd was notified by the NRC that ComEd's LaSalle County
and Quad-Cities stations were placed on the list of plants with adverse
performance trends. ComEd was informed that the NRC concerns about LaSalle
County station included, among other matters, deficient radiation worker
practices. The NRC concerns with Quad-Cities station included, among other
matters, deficiencies in the condition of certain station equipment and the
effectiveness of the operators of the units in identifying and responding to
certain operational problems. ComEd has provided written and verbal responses
to the NRC and is working to resolve the concerns. In February 1995, the NRC
concluded that LaSalle County had arrested the adverse trends in most areas
and "normal" designation should be returned. Like Dresden and LaSalle County,
the NRC noted that positive developments had been observed at Quad-Cities but
additional time was required to determine if those developments had been
effective in arresting the adverse trends and thus Quad-Cities remains on the
list of plants with adverse performance trends. As noted above, ComEd
anticipates continued expenditures in order to improve reliability and to meet

58
<PAGE>

NRC regulatory expectations in connection with Zion, Dresden and Quad-Cities
stations. In addition, generating station availability and performance during a
year may be issues in fuel reconciliation proceedings in assessing the prudence
of fuel and power purchases during such year. Final ICC orders have been issued
in fuel reconciliation proceedings for years prior to 1993; however, certain
intervenors have appealed the ICC order in the 1989 fuel reconciliation
proceedings on issues relating to nuclear station performance.

In accordance with a commitment to the NRC, ComEd examined its operating
boiling water nuclear generating units in 1983 to determine the existence or
extent of inter-granular stress corrosion in certain of the large diameter
piping in those units. Inter-granular stress corrosion was discovered in the
Dresden and Quad-Cities units. ComEd replaced the stainless steel piping
susceptible to stress corrosion at Dresden Unit 3 and is taking alternative
remedial actions which are intended to minimize the need to replace such piping
at Dresden Unit 2, Quad-Cities Units 1 and 2 and LaSalle County Units 1 and 2.
If ComEd is required to replace all of such piping, the estimated construction
expenditures, in current-year (1995) dollars, would be approximately $645
million.

ComEd has studied the possibility of having to replace the steam generators
at its Zion station. The initial studies were completed in June 1991 and
additional follow-up studies are continuing. Based on the most recent findings
of these studies, it will not be necessary to replace the Zion steam generators
until at least the year 2005 and ComEd believes that the potential exists that
replacement will not be necessary during the original operating license life,
which expires in 2013. ComEd has also studied the replacement of the steam
generators at Byron Unit 1 and Braidwood Unit 1. The studies indicate that,
from a technical standpoint, the steam generators should be replaced and, from
an economic standpoint, the replacements should be performed at the earliest
possible time. The steam generator replacements are currently planned to be
completed in 1998 for Braidwood Unit 1 and in 1999 for Byron Unit 1. The
estimated replacement costs, including the costs of removal of the existing
steam generators, are approximately $235 million for each unit. Approximately
$170 million of expenditures are included in the current 1995-97 construction
program. See "Litigation" herein concerning litigation by ComEd against
Westinghouse concerning steam generators.

During the year 1994, civil penalties were imposed on ComEd by the NRC on
eight occasions for violations of NRC regulations in amounts aggregating
$867,500. Since January 1, 1995, the NRC has imposed on ComEd two civil
penalties in the amount of $200,000 for violations of NRC regulations. There is
one potentially enforceable issue currently outstanding and under review by the
NRC.

ENVIRONMENTAL MATTERS. Air quality regulations, promulgated by the IPCB as
well as the Indiana and Hammond Departments of Environmental Management in
accordance with federal standards, impose restrictions on the emission of
particulates, sulfur dioxide, nitrogen oxides and other air pollutants and
require permits from the respective state and local environmental protection
agencies for the operation of emission sources. Permits authorizing operation
of ComEd's fossil-fueled generating facilities subject to this requirement have
been obtained and, where such permits are due to expire, ComEd has, in a timely
manner, filed applications for renewal or requested extensions of the existing
permits.

Under the Federal Clean Water Act, NPDES permits for discharges into
waterways are required to be obtained from the U.S. EPA or from the state
environmental agency to which the permit program has been delegated. Those
permits must be renewed periodically. ComEd and the Indiana Company either have
NPDES permits for all of their generating stations or have filed applications
for renewals of such permits under the current delegation of the program to the
Illinois EPA or the Indiana Department of Environmental Management. ComEd is
also subject to the jurisdiction of certain pollution control agencies of the
state of Iowa with respect to the discharge into the Mississippi River from the
Quad-Cities station.

59
<PAGE>

On August 10, 1990, the Sierra Club filed suit in the U.S. District Court
under Section 505 of the Federal Clean Water Act alleging violations of state
of Illinois water quality standards with respect to thermal effluents at
ComEd's Fisk, Crawford, Will County, Joliet and Dresden generating stations. In
July 1991, the Sierra Club and ComEd reached a settlement of this suit which
was approved by the Court on November 1, 1991. Under the settlement, ComEd has
agreed to perform an ecological study of the thermal effluents discharged from
the generating stations. Ultimately, this study, which is currently underway,
may determine whether the installation of closed cycle cooling facilities or
operational restrictions are necessary at one or more of these stations.

The Great Lakes Critical Programs Act of 1990 requires that, following the
issuance of guidance by the U.S. EPA, the states of Illinois and Indiana, among
others, adopt water quality standards, policies and procedures to assure
protection of the water quality of the Great Lakes. Water quality standards and
procedures that the states would be required to adopt are to be based on the
U.S. EPA's final guidance issued on March 13, 1995. ComEd is presently
evaluating the final guidance to assess the extent to which it may impact
certain ComEd facilities. Ultimately, the new rules may require that ComEd
install additional pollution control equipment or restrict operations at its
facilities that discharge, either directly or indirectly, into Lake Michigan.

The Clean Air Amendments require reductions in sulfur dioxide emissions from
ComEd's Kincaid station. The Clean Air Amendments also bar future utility
sulfur dioxide emissions except to the extent utilities hold allowances for
their emissions. Allowances which authorize their holder to emit sulfur dioxide
have been issued by the U.S. EPA based largely on historical levels of sulfur
dioxide emissions. These allowances are transferable and marketable. ComEd's
ability to increase generation in the future to meet expected increased demand
for electricity will depend in part on ComEd and the Indiana Company's ability
to acquire additional allowances or to reduce emissions below otherwise
allowable levels from their existing generating plants. In addition, the Clean
Air Amendments require studies to determine what controls, if any, should be
imposed on utilities to control air toxic emissions, including mercury. ComEd's
Clean Air Compliance Plan for Kincaid station was approved by the ICC on July
8, 1993. In late 1993, however, a federal court declared the Illinois law under
which the approval was received to be unconstitutional and compliance plans
prepared and approved in reliance on the law to be void. In January 1995, the
federal court's decision was affirmed by the U.S. Court of Appeals and Illinois
has decided to not pursue further appeals. ComEd is currently burning low
sulfur coal at Kincaid station to meet Clean Air Act Phase I requirements.
ComEd will determine future compliance plans for Kincaid station as necessary.

The Clean Air Amendments also require reductions in nitrogen oxide emissions
from ComEd and the Indiana Company's fossil fuel generating units. On March 6,
1995, the U.S. EPA issued a proposed rule exempting existing sources inside the
Chicago ozone non-attainment area from further nitrogen oxide emission
reductions. The Illinois EPA is now considering nitrogen oxide emission
reductions at ComEd generating stations outside the Chicago ozone non-
attainment area due to ozone transport. Under the Acid Rain program, the U.S.
EPA will prepare nitrogen oxide emission regulations for all of ComEd's boilers
with a compliance date of January 1, 2000.

CERCLA provides for immediate response and removal actions coordinated by the
U.S. EPA to releases of hazardous substances into the environment and
authorizes the U.S. Government either to clean up sites at which hazardous
substances have created actual or potential environmental hazards or to order
persons responsible for the situation to do so. Under CERCLA, generators and
transporters of hazardous substances, as well as past and present owners and
operators of hazardous waste sites, are made strictly, jointly and severally
liable for the cleanup costs of waste at sites, most of which are listed by the
U.S. EPA on the NPL. These responsible parties can be ordered to perform a
cleanup, can be sued for costs associated with a U.S. EPA directed cleanup, or
may voluntarily settle with the U.S. Government concerning their liability for
cleanup costs, or may voluntarily begin a site investigation and

60
<PAGE>

site remediation prior to listing on the NPL under state oversight. Various
states, including Illinois, have enacted statutes which contain provisions
substantially similar to CERCLA. ComEd and its subsidiaries are or are likely
to become parties to proceedings initiated by the U.S. EPA, state agencies
and/or other responsible parties under CERCLA with respect to a number of
sites, including MGP sites, or may voluntarily undertake to investigate and
remediate sites for which they may be liable under CERCLA.

MGPs manufactured gas in Illinois from approximately 1850 to 1950. ComEd
generally did not operate MGPs as a corporate entity but did, however, acquire
MGP sites as part of the absorption of smaller utilities. Approximately half of
these sites were transferred to Northern Illinois Gas Company as part of a
general conveyance in 1954. ComEd also acquired former MGP sites as vacant real
estate on which ComEd facilities have been constructed. To date, ComEd has
identified 44 former MGP sites for which it may be liable for remediation.
ComEd presently estimates that its costs of former MGP site investigation and
remediation will aggregate from $25 million to $150 million in current-year
(1995) dollars. It is expected that the costs associated with investigation and
remediation of former MGP sites will be incurred over a period of approximately
20 to 30 years. Because ComEd is not able to determine the most probable
liability for such MGP costs, in accordance with accounting standards, ComEd
has recorded a reserve as of December 31, 1994 and March 31, 1995 of
approximately $25 million, which reflects the low end of the range of its
estimate of the liability associated with former MGP sites. In addition, as of
December 31, 1994 and March 31, 1995, ComEd has recorded a reserve of $8
million, representing its estimate of the liability associated with cleanup
costs of remediation sites other than former MGP sites. Unicom and ComEd
presently estimate that ComEd's costs of investigating and remediating the
former MGP and other remediation sites pursuant to CERCLA and state
environmental laws will not have a material impact on the financial position or
results of operations of Unicom or ComEd. These cost estimates are based on
currently available information regarding the responsible parties likely to
share in the costs of responding to site contamination, the extent of
contamination at sites for which the investigation has not yet been completed
and the cleanup levels to which sites are expected to have to be remediated.

On July 17, 1991, the U.S. Government filed a complaint in U.S. District
Court alleging that ComEd and four other defendants are PRPs for remediation
costs associated with surface, soil and groundwater contamination alleged to
have occurred from the disposal by other persons of hazardous wastes at a site
located near ComEd's Byron station in Byron, Illinois. The U.S. Government
alleges that a portion of the site is owned by ComEd. The U.S. Government is
presently seeking reimbursement from the PRPs for past study and response costs
associated with the site of approximately $7 million. ComEd is currently
pursuing a negotiated settlement and is not actively pursuing cost recovery
from other PRPs at this time.

On October 16, 1992, the U.S. EPA notified ComEd and four other companies,
including the site operator, that they were PRPs for the costs associated with
the investigation and removal of contaminated soil at the Elgin Salvage and
Supply site in Elgin, Illinois. On April 19, 1993, the U.S. EPA issued an order
under Section 106 of CERCLA to ComEd and the other parties to investigate and
remove the contamination from the site. ComEd sent substantial amounts of scrap
cable and other scrap metal to the site. The site investigation and remediation
was completed in March 1995 at a cost of approximately $9 million, except for
final U.S. EPA project review. The site operator claims to be unable to fund
more than a small share of the removal costs. Consequently, the other parties
have agreed to an interim allocation of the removal costs. The interim
agreement allocates 55% of the removal costs to ComEd. ComEd and the other PRPs
have filed a cost recovery action against the site operator and the site owners
to require that they provide their share of the remediation costs. ComEd and
the site owner are in litigation with several insurance companies for claims.
Additional PRPs are being sought.

In the operation of its electric distribution system, ComEd utilized
equipment containing PCBs. Such equipment included transformers located in
customer-owned buildings and in sidewalk vaults. Under regulations adopted by
the U.S. EPA, these transformers containing PCBs were required to be modified

61
<PAGE>

(with non-PCB fluid) or be replaced. ComEd has completed the replacement of
over 2,000 PCB fluid transformers that were located in or near commercial
buildings and were subject to the federal regulations. The estimated cost to
ComEd of replacing or modifying these transformers and disposing of the PCB
fluid was approximately $120 million, which had been expended through the end
of 1993. Some of ComEd's electrical equipment containing PCBs was sent to scrap
and salvage facilities and, as a result, ComEd may be liable for penalties and
for the costs of cleanup of those facilities. An accident or spill involving
PCB oil-filled electrical equipment, resulting in exposure of persons or
property to PCBs or their by-products, could result in material liability
claims against ComEd.

In September 1990, the IPCB replaced existing landfill regulations with new,
more stringent design and performance standards. These regulations are expected
to increase the cost to ComEd for disposal of coal combustion by-products at
its Joliet station. At Joliet, an existing landfill utilized for disposal of
coal ash may require the installation by 1997 of engineered retrofits designed
to protect groundwater. ComEd intends to request exemptions from certain of the
new regulations from the IPCB. If its request is denied, then alternative
landfill siting, commercial disposal, or retrofitting of the existing facility
could result in significant increases in disposal expenditures.

The outcome of many of the regulatory proceedings referred to above, if not
favorable, could have a material adverse effect on Unicom and ComEd's future
business and operating results.

An unresolved issue is whether exposure to EMFs may result in adverse health
effects or damage to the environment. EMFs are produced by virtually all
devices carrying or utilizing electricity, including transmission and
distribution lines as well as home appliances. If regulations are adopted
related to EMFs, they could affect the construction and operation of electrical
equipment, including transmission and distribution lines and the cost of such
equipment. ComEd cannot predict the effect on the cost of such equipment or
operations if new regulations related to EMFs are adopted. In the absence of
such regulations, EMFs have nonetheless become an issue in siting facilities
and in other land use contexts. Litigation has been filed in a variety of
locations against a variety of defendants (including ComEd) alleging that the
presence or use of electrical equipment has had an adverse effect on the health
of persons. If plaintiffs are successful in litigation of this type and it
becomes widespread, the impact on ComEd and on the electric utility industry is
not predictable, but could be severe.

From time to time, Unicom and its subsidiaries are, or are claimed to be, in
violation of or in default under orders, statutes, rules or regulations
relating to environmental controls and other matters, compliance plans imposed
upon or agreed to by them or permits issued by various state and federal
agencies for the construction or operation of their facilities. Unicom and
ComEd do not believe, so far as they now foresee, that such violations or
defaults will have a material adverse effect on their future business and
operating results, except for events otherwise described in Unicom and ComEd's
Annual Reports on Form 10-K for the year ended December 31, 1994 or in these
Quarterly Reports on Form 10-Q for the quarterly period ended March 31, 1995,
which could have such an effect.

62
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ------------------------------------------------------------------
<C> <S>
(12) Statement computing Commonwealth Edison Company ratios of earnings
to fixed charges and ratios of earnings to fixed charges and
preferred and preference stock dividend requirements.
(23)-1 Consent of independent public accountants applicable to Unicom
Corporation.
(23)-2 Consent of independent public accountants applicable to
Commonwealth Edison Company.
(27)-1 Financial data schedule of Unicom Corporation.
(27)-2 Financial data schedule of Commonwealth Edison Company.
</TABLE>

(b) Reports on Form 8-K

A Current Report on Form 8-K dated January 9, 1995 was filed by Unicom
and ComEd describing the Rate Order relating to ComEd's rate increase.

A Current Report on Form 8-K dated January 27, 1995 was filed containing
Unicom's financial statements as of, and for the year ended, December 31,
1994.

A Current Report on Form 8-K dated January 27, 1995 was filed containing
ComEd's financial statements as of, and for the year ended, December 31,
1994.

A Current Report on Form 8-K/A-1 dated January 27, 1995 was filed to
amend the Current Report on Form 8-K by refiling ComEd's financial
statements as of, and for the year ended, December 31, 1994 in their
entirety.

63
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on the 9th day of May, 1995. The
signature for each undersigned company shall be deemed to relate only to
matters having reference to such company and its subsidiaries thereof.

Unicom Corporation
Registrant

Roger F. Kovack
By __________________________________
Roger F. Kovack
Comptroller
(Chief accounting officer and
officer duly authorized to sign on
behalf of the registrant)

Commonwealth Edison Company
Registrant

Roger F. Kovack
By __________________________________
Roger F. Kovack
Comptroller
(Chief accounting officer and
officer duly authorized to sign on
behalf of the registrant)

64
<PAGE>

EXHIBIT INDEX
-------------

Exhibits filed with or incorporated by reference in Form 10-Q for the quarterly
period ended March 31, 1995:

<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
(12) Statement computing Commonwealth Edison Company
ratios of earnings to fixed charges and ratios
of earnings to fixed charges and preferred and
preference stock dividend requirements.

(23)-1 Consent of independent public accountants applicable
to Unicom Corporation.

(23)-2 Consent of independent public accountants applicable
to Commonwealth Edison Company.

(27)-1 Financial Data Schedule of Unicom Corporation.

(27)-2 Financial Data Schedule of Commonwealth Edison Company.
</TABLE>

<PAGE>

Exhibit (12)
Commonwealth Edison Company
Form 10-Q File No. 1-1839

Commonwealth Edison Company and Subsidiary Companies Consolidated
-----------------------------------------------------------------

Computation of Ratios of Earnings to Fixed Charges
and Ratios of Earnings to Fixed Charges and
Preferred and Preference Stock Dividend Requirements
----------------------------------------------------

(Thousands of Dollars)

<TABLE>
<CAPTION>
Twelve Months Ended
------------------------
Line December 31, March 31,
No. 1994 1995
- ---- ------------ ----------
<S> <C> <C> <C>
1 Net income $ 423,946 $ 479,427
---------- ----------

2 Net provisions for income taxes and investment tax credits deferred
3 charged to-
4 Operations $ 300,764 $ 347,227
5 Other income (23,062) (25,691)
---------- ----------

6 $ 277,702 $ 321,536
---------- ----------

7 Fixed charges-
8 Interest on debt $ 621,909 $ 617,024
9 Estimated interest component of nuclear fuel and
10 other lease payments, rentals and other interest 64,885 69,430
11 Amortization of debt discount, premium and expense 22,804 22,748
---------- ----------

12 $ 709,598 $ 709,202
---------- ----------

13 Preferred and preference stock dividend requirements-
14 Provisions for preferred and preference stock dividends $ 64,927 $ 66,291
15 Taxes on income required to meet provisions for
16 preferred and preference stock dividends 42,854 43,712
---------- ----------

17 $ 107,781 $ 110,003
---------- ----------

18 Fixed charges and preferred and preference stock
19 dividend requirements $ 817,379 $ 819,205
---------- ----------

20 Earned for fixed charges and preferred and preference stock
21 dividend requirements $1,411,246 $1,510,165
---------- ----------

22 Ratios of earnings to fixed charges (line 21 divided by line 12) 1.99 2.13
==== ====

23 Ratios of earnings to fixed charges and preferred and preference
24 stock dividend requirements (line 21 divided by line 19) 1.73 1.84
==== ====
</TABLE>

<PAGE>

Exhibit (23)-1
Unicom Corporation
Form 10-Q File No. 1-11375

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------

As independent public accountants, we hereby consent to the incorporation
by reference of our report included in this Form 10-Q for the quarterly period
ended March 31, 1995, into Unicom Corporation's previously filed prospectuses
dated March 18, 1994, constituting part of Form S-4 Registration Statement File
No. 33-52109, as amended (relating to Common Stock of Unicom Corporation), as
further amended by Post-Effective Amendment No. 1 on Form S-8 (relating to
Commonwealth Edison Company's Employee Savings and Investment Plan) and Post-
Effective Amendment No. 2 on Form S-8 (relating to Unicom Corporation's Employee
Stock Purchase Plan), and Form S-8 Registration Statement File No. 33-56991
(relating to Unicom Corporation's Long-Term Incentive Plan).

ARTHUR ANDERSEN LLP

Chicago, Illinois
May 9, 1995

<PAGE>

Exhibit (23)-2
Commonwealth Edison Company
Form 10-Q File No. 1-1839

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------

As independent public accountants, we hereby consent to the incorporation
by reference of our report included in this Form 10-Q for the quarterly period
ended March 31, 1995, into Commonwealth Edison Company's previously filed
prospectuses as follows: (1) prospectus dated August 21, 1986, constituting
part of Form S-3 Registration Statement File No. 33-6879, as amended (relating
to the Company's Debt Securities and Common Stock); and (2) prospectus dated
January 7, 1994, constituting part of Form S-3 Registration Statement File No.
33-51379 (relating to the Company's Debt Securities and Cumulative Preference
Stock). We also consent to the application of our report, to the ratios of
earnings to fixed charges and the ratios of earnings to fixed charges and
preferred and preference stock dividend requirements for each of the twelve
months ended December 31, 1994 and March 31, 1995 appearing on page 42 of this
Form 10-Q.

ARTHUR ANDERSEN LLP

Chicago, Illinois
May 9, 1995

<PAGE>

<ARTICLE> UT
<LEGEND> THIS SCHEDULE CONTAINS UNICOM CORPORATION'S SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND STATEMENT
OF CONSOLIDATED CAPITALIZATION AS OF MARCH 31, 1995, AND THE RELATED
STATEMENTS OF CONSOLIDATED INCOME, RETAINED EARNINGS AND CASH FLOWS FOR
THE THREE MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000918040
<NAME> UNICOM CORPORATION
<MULTIPLIER> 1,000

<F1> This item is not disclosed as a separate line item on Unicom Corporation's
Consolidated Balance Sheet.

<F2> Includes a deduction of $3,776 thousand for preference stock expense of
subsidiary (Commonwealth Edison Company).

<F3> Preferred and preference stocks of subsidiary (Commonwealth Edison
Company).

<F4> Long-term debt of subsidiaries (Commonwealth Edison Company and Unicom
Enterprises Inc.).

<F5> $1,441,250 thousand of notes and long-term notes payable to banks is
included in LONG-TERM-DEBT-NET.

<F6> GROSS-OPERATING-REVENUE reflects negative provisions for revenue refunds of
$18 thousand.

<F7> A tax benefit of $227 thousand related to nonoperating activities is
included in INCOME-TAX-EXPENSE.

<F8> A $16,908 thousand provision for preferred and preference stock dividends
of subsidiary (Commonwealth Edison Company) is included in
OTHER-INCOME-NET.

<F9> This item is not disclosed as a separate line item on Unicom Corporation's
Statement of Consolidated Income.
</FN>

</TABLE>

<PAGE>

<ARTICLE> UT
<LEGEND> THIS SCHEDULE CONTAINS COMMONWEALTH EDISON COMPANY'S SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND STATEMENT
OF CONSOLIDATED CAPITALIZATION AS OF MARCH 31, 1995, AND THE RELATED
STATEMENTS OF CONSOLIDATED INCOME, RETAINED EARNINGS AND CASH FLOWS FOR
THE THREE MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000022606
<NAME> COMMONWEALTH EDISON COMPANY
<MULTIPLIER> 1,000

<F1> This item is not disclosed as a separate line item on Commonwealth Edison
Company's Consolidated Balance Sheet.

<F2> $1,421,250 thousand of notes and long-term notes payable to banks is
included in LONG-TERM-DEBT-NET.

<F3> GROSS-OPERATING-REVENUE reflects negative provisions for revenue refunds of
$18 thousand.

<F4> A tax benefit of $227 thousand related to nonoperating activities is
included in INCOME-TAX-EXPENSE.

<F5> This item is not disclosed as a separate line item on Commonwealth Edison
Company's Statement of Consolidated Income.

</FN>

</TABLE>