<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK
ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<CAPTION>
COMMISSION REGISTRANT; STATE OF INCORPORATION; IRS EMPLOYER
FILE 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>
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE
- --------------------------- ON WHICH REGISTERED
-------------------------
UNICOM CORPORATION
Common Stock, without par value New York, Chicago and Pacific
COMMONWEALTH EDISON COMPANY
(Listed on inside cover)
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 .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
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<PAGE>
COMMONWEALTH EDISON COMPANY Securities Registered Pursuant to Section 12(b) of
the Act:
TITLE OF NAME OF EACH EXCHANGE
EACH CLASS ON WHICH REGISTERED
- -------------------------- ------------------------
First Mortgage Bonds:
7 5/8% Series 25, due June 1, 2003 )
8% Series 26, due October 15, 2003 } New York
8 1/8% Series 35, due January 15, 2007 )
Sinking Fund Debentures:
3%, due April 1, 1999 )
2 7/8%, due April 1, 2001 } New York
7 5/8% Series 1, due February 15, 2003 )
2 3/4%, due April 1, 1999 New York and Chicago
Cumulative Preference Stock, without
par value:
$1.90; $2.00; $7.24; $8.40; $8.38; and $8.40 ) New York, Chicago and
Series B ) Pacific
$2.425 New York
8.48% ComEd-Obligated Mandatorily
Redeemable Preferred Securities of
Subsidiary Trust New York, Chicago and
Pacific
THE ESTIMATED AGGREGATE MARKET VALUE OF UNICOM CORPORATION'S 215,206,007 shares
of outstanding Common Stock, without par value, was approximately
$6,900,000,000 as of February 29, 1996. In excess of 99.91% of Unicom
Corporation's voting stock was owned by non-affiliates as of that date.
THE ESTIMATED AGGREGATE MARKET VALUE OF COMMONWEALTH EDISON COMPANY'S
outstanding $1.425 Convertible Preferred Stock, Cumulative Preference Stock and
Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary
Trust was approximately $1,000,000,000 as of February 29, 1996. Unicom
Corporation held in excess of 99.99% of the 214,195,157 shares of outstanding
Common Stock, $12.50 par value, of Commonwealth Edison Company as of that date.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of Unicom Corporation's Current Report on Form 8-K dated January 26,
1996 are incorporated by reference into Parts I, II and IV of the Unicom
Corporation Annual Report on Form 10-K and portions of its definitive Proxy
Statement to be filed prior to April 29, 1996 relating to its Annual Meeting of
shareholders to be held on May 22, 1996 are incorporated by reference into Part
III of the Unicom Corporation Annual Report on Form 10-K.
Portions of Commonwealth Edison Company's Current Report on Form 8-K dated
January 26, 1996 are incorporated by reference into Parts I, II and IV of the
Commonwealth Edison Company Annual Report on Form 10-K and portions of its
definitive Information Statement to be filed prior to April 29, 1996 relating
to its Annual Meeting of shareholders to be held on May 22, 1996 are
incorporated by reference into Part III of the Commonwealth Edison Company
Annual Report on Form 10-K.
Unicom Corporation's Current Report on Form 8-K/A-1 dated March 14, 1996, is
incorporated by reference into Parts I and II of the Unicom Corporation Annual
Report on Form 10-K.
Commonwealth Edison Company's Current Report on Form 8-K/A-1 dated March 14,
1996, is incorporated by reference into Parts I and II of the Commonwealth
Edison Company Annual Report on Form 10-K.
<PAGE>
UNICOM CORPORATION
AND
COMMONWEALTH EDISON COMPANY
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
This document contains the Annual Reports on Form 10-K for the fiscal year
ended December 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 Unicom Corporation or to any other companies affiliated
with Unicom Corporation.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Definitions............................................................... 1
ANNUAL REPORT ON FORM 10-K FOR UNICOM CORPORATION:
Part I
Item 1. Business........................................................ 2
General............................................................... 2
Net Electric Generating Capability.................................... 3
Construction Program.................................................. 4
Rate Proceedings...................................................... 6
Fuel Supply........................................................... 7
Regulation............................................................ 8
Employees............................................................. 15
Interconnections...................................................... 15
Franchises............................................................ 16
Business and Competition.............................................. 16
Executive Officers of the Registrant.................................. 19
Operating Statistics.................................................. 20
Item 2. Properties...................................................... 21
Item 3. Legal Proceedings............................................... 22
Item 4. Submission of Matters to a Vote of Security Holders............. 22
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters................................................................ 23
Item 6. Selected Financial Data......................................... 24
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of
Operations...................................................... 24
Item 8. Financial Statements and Supplementary Data..................... 24
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................ 24
Part III
Item 10. Directors and Executive Officers of the Registrant............. 25
Item 11. Executive Compensation......................................... 25
Item 12. Security Ownership of Certain Beneficial Owners and Manage-
ment................................................................... 25
Item 13. Certain Relationships and Related Transactions................. 25
</TABLE>
i
<PAGE>
UNICOM CORPORATION
AND
COMMONWEALTH EDISON COMPANY
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
TABLE OF CONTENTS (CONCLUDED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ANNUAL REPORT ON FORM 10-K FOR COMMONWEALTH EDISON COMPANY:
Part I
Item 1. Business........................................................ 26
Item 2. Properties...................................................... 27
Item 3. Legal Proceedings............................................... 27
Item 4. Submission of Matters to a Vote of Security Holders............. 27
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters................................................................ 27
Item 6. Selected Financial Data......................................... 28
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................... 28
Item 8. Financial Statements and Supplementary Data..................... 28
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................ 28
Part III
Item 10. Directors and Executive Officers of the Registrant............. 28
Item 11. Executive Compensation......................................... 28
Item 12. Security Ownership of Certain Beneficial Owners and Management. 28
Item 13. Certain Relationships and Related Transactions................. 28
ANNUAL REPORTS ON FORM 10-K FOR UNICOM CORPORATION AND COMMONWEALTH EDISON
COMPANY:
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K............................................................... 29
Report of Independent Public Accountants on Supplemental Schedule to
Unicom Corporation..................................................... 37
Report of Independent Public Accountants on Supplemental Schedule to
Commonwealth Edison Company............................................ 38
Schedule II--Valuation and Qualifying Accounts.......................... 39
Signature Page to Unicom Corporation Annual Report on Form 10-K......... 40
Signature Page to Commonwealth Edison Company Annual Report on
Form 10-K.............................................................. 41
</TABLE>
ii
<PAGE>
DEFINITIONS
The following terms are used in this document with the following meanings:
<TABLE>
<CAPTION>
TERM MEANING
----------------------- ------------------------------------------------------
<C> <S>
AFUDC Allowance for funds used during construction
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
Congress U.S. Congress
Cotter Cotter Corporation, which is a wholly-owned subsidiary
of ComEd.
DOE U.S. Department of Energy
EEOC Equal Employment Opportunity Commission
EMFs Electric and magnetic fields
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 prudence of ComEd's western coal costs
for the period from 1989 through 1992.
IBEW International Brotherhood of Electrical Workers (AFL-
CIO)
ICC Illinois Commerce Commission
IDNS Illinois Department of Nuclear Safety
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
NOPR Notice of Proposed Rulemaking issued by the FERC
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
related to, among other things, the recovery of costs
associated with ComEd's four most recently completed
nuclear generating units), the proceedings related 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
related to the appropriate interest rate and rate
design to be applied to a refund made by ComEd during
1990 related 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 income 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 in January 1993, as subsequently
modified
SEC Securities and Exchange Commission
Trust ComEd Financing I, which is a wholly-owned subsidiary
trust of ComEd.
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>
1
<PAGE>
ANNUAL REPORT ON FORM 10-K FOR UNICOM CORPORATION
PART I
ITEM 1. BUSINESS.
GENERAL
Unicom was organized in the state of Illinois on January 28, 1994. 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. Unicom's
principal executive offices are located at 10 South Dearborn Street, Post
Office Box A-3005, Chicago, Illinois 60690-3005, and its telephone number is
312/394-7399.
ComEd continues to represent substantially all of the assets, revenues and
net income of Unicom; and Unicom's resources and results of operations are
largely dependent on, and reflect, those of ComEd. Unicom's unregulated
subsidiaries are not expected to make material contributions to Unicom's
revenues or results of operations in the near future. Consequently, the
following discussion focuses on ComEd's utility operations although information
is also provided about Unicom's unregulated operations.
Utility Operations
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 was organized in the state of
Illinois on October 17, 1913 as a result of the merger of Cosmopolitan Electric
Company into the original corporation named Commonwealth Edison Company. The
latter had been incorporated on September 17, 1907. ComEd's electric service
territory has an area of approximately 11,540 square miles and an estimated
population of approximately eight million as of December 31, 1994 and 1995. It
includes the city of Chicago, an area of about 225 square miles with an
estimated population of approximately three million from which ComEd derived
approximately one-third of its ultimate consumer revenues in 1995. ComEd had
approximately 3.4 million electric customers at December 31, 1995. ComEd's
principal executive offices are located at 10 South Dearborn Street, Post
Office Box 767, Chicago, Illinois 60690-0767, and its telephone number is
312/394-4321.
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. In
December 1995, ComEd announced a cap on base electric rates at current levels.
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 "Rate Proceedings" and "Business and Competition" below.
During the past several years, ComEd has instituted cost reduction plans
including various workforce reductions. Such efforts included an offer of
voluntary early retirement which was made 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. Such
program resulted in a charge to income of approximately $20.5 million (after
reflecting income tax effects), substantially all of which was recorded during
1994. ComEd is continuing to examine methods of
2
<PAGE>
reducing the size of its workforce, including special severance offers. On
October 30, 1995, ComEd declared an impasse in the collective bargaining
agreement negotiations with its principal union and implemented virtually all
of the terms of its last offered proposal prior to the impasse. Those terms
include, among other things, a wage increase retroactive to April 1, 1995 and a
voluntary separation offer for employees who accepted and left ComEd's employ
by year-end 1995. The voluntary separation offer, combined with separation
plans offered to selected groups of non-union employees, resulted in a charge
to income of approximately $59 million (after reflecting income tax effects) or
$0.27 per common share for the year 1995. This charge to income occurred
primarily in the fourth quarter of 1995 when most of the acceptances of the
offers occurred. ComEd expects to recover the costs of these plans within two
years as a result of reduced personnel. On February 20, 1996, ComEd announced
that it had reached agreement with Local 15 of the IBEW with respect to the
terms of a new collective bargaining agreement. See "Employees" below and Notes
13, 14 and 15 of Notes to Financial Statements in Unicom's Current Report on
Form 8-K dated January 26, 1996 and ComEd's Current Report on Form 8-K dated
January 26, 1996 (the "January 26, 1996 Form 8-K Reports").
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. In connection
with such examination, ComEd has solicited and received binding proposals with
respect to such a transaction involving its State Line and Kincaid generating
stations; and it is negotiating with possible purchasers with respect to such
transactions. As presently structured, such transactions would involve a sale
of the generating station assets at a price approximating their book value and
a fifteen-year power purchase arrangement. Any such transactions would be
subject to the negotiation of definitive agreements and regulatory approvals
and are not expected to have a material impact on ComEd's consolidated
financial position or results of operations.
See "Fuel Supply," "Regulation" and "Item 3. Legal Proceedings" herein for
information concerning administrative and legal proceedings and certain other
matters involving ComEd, the Indiana Company and Cotter. The outcome of certain
of the proceedings or matters described or referred to therein, if not
favorable to ComEd and the Indiana Company, could have a material adverse
effect on the future business and operating results of Unicom, ComEd and the
Indiana Company.
Unregulated Operations
Unicom Enterprises is engaged, through its subsidiaries, in energy service
activities which are not subject to utility regulation by state or federal
agencies. Its principal subsidiary, Unicom Thermal, currently provides district
cooling services to office and other buildings from a central location in the
city of Chicago. District cooling involves, in essence, the production of
chilled water at a central location(s) and its circulation to customers'
buildings through a closed circuit of supply and return piping. Such water is
circulated through customers' premises primarily for air conditioning. This
process is used in lieu of self-generated cooling. As a result of the Clean Air
Amendments, the manufacture of CFCs has been curtailed, commencing in January
1996, thereby creating an excellent marketing opportunity for non-CFC based
systems, such as Unicom Thermal's district cooling. Unicom Thermal and the city
of Chicago have entered into a non-exclusive franchise agreement. Unicom
Thermal's first plant began service in May 1995, and sufficient contracts have
been secured to utilize the full capacity of the plant. In January 1996, Unicom
Thermal Technologies Boston, Inc., a subsidiary of Unicom Thermal, became a
minority participant with Boston Edison Technologies Group, Inc. in a venture
to provide district cooling services to office and other buildings in the city
of Boston.
NET ELECTRIC GENERATING CAPABILITY
ComEd and the Indiana Company consider their owned (non-summer) generating
capability to be 22,522,000 kilowatts. After deducting summer limitations of
557,000 kilowatts, ComEd and the
3
<PAGE>
Indiana Company consider their net summer generating capability to be
21,965,000 kilowatts. The net generating capability available for operation at
any time may be less due to regulatory restrictions, fuel restrictions,
efficiency of cooling facilities and generating units being temporarily out of
service for inspection, maintenance, refueling, repairs or modifications
required by regulatory authorities. See "Item 2. Properties."
ComEd's highest peak load experienced to date occurred on August 14, 1995 and
was 19,212,000 kilowatts; and the highest peak load experienced to date during
a winter season occurred on January 18, 1994 and was 14,179,000 kilowatts.
ComEd's kilowatthour sales and generation are generally higher (primarily
during the summer periods but also during the winter periods) when temperature
extremes create demand for either summer cooling or winter heating.
CONSTRUCTION PROGRAM
Utility Operations
ComEd and its electric utility subsidiary, the Indiana Company, have a
construction program for the three-year period 1996-98 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 currently approved by
ComEd, calls for electric plant and equipment expenditures of approximately
$2,784 million (excluding nuclear fuel expenditures of approximately $885
million). It is estimated that such construction expenditures, with cost
escalation computed at 3.5% annually, will be as follows:
<TABLE>
<CAPTION>
1996 1997 1998 TOTAL
---- ---- ---- ------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C>
Production............................................ $451 $385 $426 $1,262
Transmission and Distribution......................... 392 405 410 1,207
General............................................... 110 110 95 315
---- ---- ---- ------
Total................................................ $953 $900 $931 $2,784
---- ---- ---- ------
---- ---- ---- ------
</TABLE>
Such construction program includes the replacement of the steam generators at
ComEd's Braidwood Unit 1 and Byron Unit 1 nuclear generating units, for service
prior to year-end 1999 at a total estimated cost of approximately $470 million.
Approximately $355 million of this estimated cost is included in the
construction expenditures shown above. See "Regulation," subcaption "Nuclear"
for additional information relating to the replacement of the steam generators.
ComEd and the Indiana Company's construction expenditures during 1995 were
approximately $899 million.
ComEd's gross investment in nuclear generating capacity (excluding nuclear
fuel) is approximately $14.2 billion at December 31, 1995, and ComEd expects
that investment to be approximately $14.7 billion by the end of 1998 as a
result of improvements. Gross additions to and retirements from utility
property, excluding nuclear fuel, of ComEd and the Indiana Company for the five
years ended December 31, 1995 were $4,419 million and $458 million,
respectively.
ComEd periodically reviews its projection of probable future demand for
electricity in its service territory. It currently projects an average annual
growth of 2% in annual peak load and 1.75% in annual output through 1999;
thereafter, due in part to implementation of national energy efficiency
standards, ComEd projects long-term average annual growth of 1.75% in annual
peak load and 1.5% in annual output. 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
4
<PAGE>
management resources, in 1998 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 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. If ComEd were to build additional capacity to meet its needs, it
would need to make additional expenditures during the 1996-98 period.
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. 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
for additional information.
The 1996-98 construction program includes approximately $24 million for
environmental control facilities, of which approximately $9 million, $6 million
and $9 million is budgeted for 1996, 1997 and 1998, respectively. Expenditures
on such facilities were $28 million, $24 million and $16 million during 1993,
1994 and 1995, respectively.
Purchase commitments for ComEd and the Indiana Company, principally related
to construction and nuclear fuel, approximated $1,137 million at December 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..................................... 1996-2007 $1,011
Decker Coal Co. ........................................ 1996-2015 $ 713
Big Horn Coal Co. ...................................... 1998 $ 22
Other commitments....................................... 1996 $ 3
</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 "Fuel Supply" below and Notes 1 and 21 of Notes to Financial
Statements in the January 26, 1996 Form 8-K Reports.
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 and scheduled maturities
for ComEd preference stock and long-term debt are summarized in Notes 7 and 9,
respectively, of Notes to Financial Statements in the January 26, 1996 Form 8-K
Reports). The forecast assumes the rate levels reflected in the Rate Order
(described below) remain in effect. See "Rate Proceedings" herein for
additional information.
See Note 1 of Notes to Financial Statements and "Results of Operations,"
subcaption "Other Items" in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the January 26, 1996 Form 8-K Reports
for information concerning AFUDC.
5
<PAGE>
Unregulated Operations
Unicom has approved capital expenditures for the years 1996-98 of
approximately $100 million for Unicom Thermal, primarily representing the
construction costs of its district cooling facilities in the city of Chicago.
Construction of its first district cooling facility was completed in May 1995
and cost approximately $30 million. Unicom Thermal began construction on two
additional cooling facilities in 1995. As of December 31, 1995, Unicom
Thermal's purchase commitments, principally related to construction, were
approximately $35 million. Unicom Thermal's construction expenditures during
1995 were approximately $31 million.
Unicom expects to obtain funds to invest in its unregulated subsidiaries
principally from dividends received on its ComEd common stock and from bank
borrowings. 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 the
unregulated subsidiaries, such as loans or additional equity investments (none
of which is expected), would be subject to the prior approval of the ICC.
Unicom Enterprises has a $200 million credit facility which will expire in
1998, of which $158 million was unused as of February 29, 1996. 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. 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. See Note 10 of Notes to Financial
Statements in Unicom's January 26, 1996 Form 8-K Report for additional
information regarding certain covenants with respect to Unicom's and Unicom
Enterprises' operations.
The foregoing paragraphs in this "Construction Program" section include
forward-looking statements with respect to the future levels of capital and
operation and maintenance expenditures which are necessarily based upon
assumptions regarding estimated costs and availability of materials and
services as well as contingencies. Unforeseen events or conditions may require
changes in the scope of work with consequent changes in the timing and level of
the projected expenditures. In addition, changes in laws and regulations, or
their interpretation and enforcement, can affect the scope of certain projects,
the manner in which they are undertaken and the costs associated therewith.
While ComEd gives consideration to such factors in developing its budgets, such
consideration cannot predict the course of future events or anticipate the
interaction of multiple factors beyond management's control upon project timing
and cost. Consequently, actual results could differ materially from those
described.
RATE PROCEEDINGS
ComEd's revenues, net income, cash flows and plant carrying costs have been
affected directly by various rate-related proceedings. During 1993, 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 the Fuel Matters Settlement in late 1993 (which
are discussed below).
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 refunded
approximately $1.26 billion (including revenue
6
<PAGE>
taxes), plus interest at five percent on the unpaid balance, through
temporarily reduced rates over a 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 a 1991 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.
Under the Fuel Matters Settlement, effective as of December 2, 1993, ComEd
paid 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.
Other Rate Matters
On January 9, 1995, the ICC issued its Rate Order in the proceedings relating
to ComEd's February 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
ComEd began collecting such costs 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
in the January 26, 1996 Form 8-K Reports for information related to the level
of decommissioning cost collections allowed in the Rate Order and subsequent
rider proceedings. 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. As of December 31, 1995, electric operating revenues of approximately
$319 million (excluding revenue taxes) are subject to refund. Intervenors and
ComEd have filed appeals of the Rate Order with the Illinois Appellate Court.
See "Business and Competition" below for additional information regarding
ComEd's announcement of certain customer initiatives in December 1995.
FUEL SUPPLY
The kilowatthour generation of ComEd and the Indiana Company for 1995 was
provided from the following fuel sources: nuclear 73%, coal 24% and natural gas
3%.
Nuclear Fuel
ComEd has uranium concentrate inventory, supply contracts and subsidiary
resources sufficient to meet all of its uranium concentrate requirements
through 1997 and portions of its uranium concentrate requirements for periods
beyond 1997. ComEd's contracted conversion services are sufficient to meet all
of its uranium conversion requirements through 1998. All of ComEd's enrichment
requirements have been contracted for through September 1999. Commitments for
fuel fabrication have been obtained for ComEd's nuclear units at least through
1999. ComEd does not anticipate that it will have any difficulty in negotiating
contracts for uranium concentrates, conversion, enrichment and fuel fabrication
services for its remaining requirements.
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See "Regulation," subcaption "Nuclear" herein for information concerning the
disposal of radioactive waste.
Coal
ComEd burns low sulfur western coal at all its coal-fired stations. ComEd's
present policy is to maintain a coal inventory of at least 30 days of high
utilization. As of February 29, 1996, coal inventories approximated 37 days.
The average cost per ton of coal consumed by ComEd and the Indiana Company for
the years 1993, 1994 and 1995, including transportation charges, was $49.42,
$39.50 and $41.72, respectively.
Compared to other utilities, ComEd has relatively low average fuel costs as a
result of its 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
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 December 31, 1995, ComEd
had unrecovered fuel costs in the form of coal reserves of approximately $448
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, see
"Construction Program," subcaption "Utility Operations" above. For additional
information regarding ComEd's fuel reconciliation proceedings and coal
reserves, see "Fuel Adjustment Clause" below and Notes 1, 2 and 21 of Notes to
Financial Statements in the January 26, 1996 Form 8-K Reports.
Oil and Gas
ComEd's fast-start peaking units use middle distillate oils. Approximately
half of this capacity can also be fueled with natural gas. ComEd's 2,698,000
kilowatt Collins station is fueled with natural gas and residual oil. ComEd
purchases oil and gas in the spot market as needed. The conversion of three of
the five units at Collins station to dual fuel capability (residual oil and
natural gas) was completed during 1994 and a fourth unit is currently being
converted. ComEd has a contract for the delivery and storage of natural gas
from gas pipelines to Collins station which expires in 2003.
Fuel Adjustment Clause
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 Notes to Financial Statements in the
January 26, 1996 Form 8-K Reports.
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
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capital expenditures. ComEd is subject to regulation by the ICC as to rates and
charges, issuance of securities (other than debt securities maturing within
twelve months), service and facilities, classification of accounts,
transactions with affiliated interests as defined in the Illinois Public
Utilities Act and other matters. In addition, the ICC in certain of its rate
orders has exercised jurisdiction over ComEd's environmental control program.
ComEd is subject to the jurisdiction of the FERC with respect to the issuance
of debt securities maturing within twelve months. ComEd is also subject to the
jurisdiction of the FERC and the DOE under the Federal Power Act with respect
to certain other matters, including the sale for resale of electric energy and
the transmission of electric energy in interstate commerce, and to the
jurisdiction of the DOE with respect to the disposal of spent nuclear fuel and
other radioactive wastes.
Unicom is a public utility holding company as defined by the Public Utility
Holding Company Act of 1935 because of its majority ownership of common stock
of ComEd, and ComEd is a public utility holding company as defined in such Act
because of its ownership of the Indiana Company. However, both Unicom and ComEd
are exempt from most provisions of such Act.
The Indiana Company, an "affiliated interest" of ComEd within the meaning of
the Illinois Public Utilities Act, is subject to regulation by the Indiana
Utility Regulatory Commission and to the jurisdiction of the FERC, the DOE and
federal and state of Indiana pollution control and other agencies.
Nuclear
The IDNS has jurisdiction over certain activities in Illinois relating to
nuclear power and safety, and radioactive materials. Effective June 1, 1987,
the IDNS replaced the NRC as the regulator and licensor of certain source, by-
product and special nuclear material in quantities not sufficient to form a
critical mass, including such material contained in various measuring devices
used at fossil-fuel power plants. The IDNS has promulgated regulations which
are substantially similar to the corresponding federal regulations. The IDNS
also has authority to license a low-level radioactive waste disposal facility
and to regulate alternative methods for disposing of materials which contain
only trace amounts of radioactivity.
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. It is not certain when the DOE will
accept high-level radioactive waste from ComEd and other operators of nuclear
power plants. Significant legislation, in both the House of Representatives and
the Senate, would fundamentally change the nation's spent fuel management
program by creating a federal interim storage facility which could begin
accepting spent nuclear fuel as early as 1998. Delivery to the interim facility
could be accomplished using existing technology. Extended delays in spent
nuclear fuel acceptance by the DOE would lead to ComEd's consideration of
costly storage alternatives. 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. As provided for under the contract, 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.
Dresden station has spent fuel capacity through the
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year 2001, Zion station has capacity through 2005 and all of the other stations
have capacity through at least 2009. In addition, ComEd is developing on site
dry cask spent fuel storage for Dresden Unit 1 at a budgeted cost of $21
million. The Dresden Unit 1 facility will use existing technology procured to
meet the federal requirements for both storage and transportation of spent
nuclear fuel. Meeting other spent fuel storage requirements beyond the years
stated above could require new and separate storage facilities. The costs for
ComEd's other nuclear units 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. Between July 1, 1994 and July 1, 1995, there were
no commercial operating sites in the United States for the disposal of low-
level radioactive waste available to ComEd. However, the Barnwell, South
Carolina low-level radioactive waste site was reopened on July 1, 1995 and is
available to ComEd. ComEd has entered into an agreement with the Barnwell site
operator and began shipping waste to Barnwell on August 17, 1995. 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. ComEd anticipates the possibility of continuing difficulties
in disposing of low-level radioactive waste. Since the reopening and
availability of the Barnwell site, ComEd continues to reevaluate its options.
ComEd is subject to the jurisdiction of the NRC with respect to its nuclear
generating stations. The NRC regulations control the granting of permits and
licenses for the construction and operation of nuclear generating stations and
subject such stations to continuing review and regulation. The NRC review and
regulatory process covers, among other things, operations, maintenance, and
environmental and radiological aspects of such stations. The NRC may modify,
suspend or revoke licenses and impose civil penalties for failure to comply
with the Atomic Energy Act, the regulations under such Act or the terms of such
licenses.
During 1991 and 1992, the NRC placed ComEd's Zion and Dresden stations,
respectively, on its list of plants to be monitored closely. Although Zion
station was removed from that list in February 1993, Dresden station remains on
the list. In June 1995, the NRC reported that over the past year performance at
Dresden was cyclical, that plant material condition needed to be improved at
Dresden and that a more effective work management system was needed to deal
with the corrective maintenance backlog. In January 1996, the NRC noted
improvement but indicated that certain of the same concerns continue to exist.
The NRC also stated that the effectiveness of the recent improvement efforts
must be sustained. 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, and that 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. In February and June 1995, the NRC concluded
that LaSalle County and Quad-Cities, respectively, had arrested the adverse
trends in most areas and "normal" designation has been reestablished.
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 addition, generating
station availability and performance during a year may be issues in fuel
reconciliation proceedings in
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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
1994; however, certain intervenors have appealed the ICC order in the 1989 fuel
reconciliation proceedings on issues relating to nuclear station performance.
In 1996, an intervenor filed testimony in the fuel reconciliation proceeding
for 1994 seeking a refund of approximately $90 million 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. ComEd believes the remedial
actions taken to minimize the impact of stress corrosion cracking on BWR
stainless steel reactor coolant piping have been successfully completed on
Dresden Units 2 and 3, Quad-Cities Units 1 and 2 and LaSalle County Units 1 and
2. Future work on this piping will consist of routine inspections and repairs.
As a result of ComEd's experience with the effects of inter-granular stress
corrosion of stainless steel materials in BWRs, an inspection, repair and
mitigation program of reactor vessel internals has been implemented. This
effort is intended to prevent non-budgeted costs and refueling outage
extensions resulting from unanticipated repairs occurring during a refueling
outage. For 1996, current estimated expenditures for mitigation systems at
Dresden, LaSalle County and Quad-Cities stations are $11.8 million, $6.5
million and $7.1 million, respectively. For 1997, estimated expenditures for
installation of mitigation systems for LaSalle County and Quad-Cities stations
are $1.6 million and $0.6 million, respectively.
ComEd has studied the possibility of having to replace the steam generators
at its Zion station. The initial studies were completed in 1991 and additional
follow-up studies are continuing. Based on the most recent findings, it will
not be necessary on a technical basis to replace the Zion steam generators
until at least the year 2005; however, ComEd is continuing to monitor the
extent of steam generator degradation and is continuing to study the timing and
economics of replacement. 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 prior to year-end 1999. The estimated replacement costs, including
the costs of removal of the existing steam generators, are approximately $235
million for each unit. Approximately $355 million of expenditures is included
in the current 1996-98 construction program, including an increase of
approximately $65 million approved by ComEd's Board of Directors in March 1996
in order to accelerate the planned replacements. The Board also authorized an
increase in certain nuclear operation and maintenance expenditures. See Unicom
and ComEd's Current Report on Form 8-K/A-1 dated March 14, 1996 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 $3.7
billion in current-year (1996) dollars, are expected to be funded by external
decommissioning trusts 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 as well as changes in the assumptions used in
making such estimates. See Note 1 of Notes to Financial Statements under
"Depreciation and Decommissioning" in the January 26, 1996 Form 8-K Reports for
additional information regarding decommissioning costs.
During the year 1995, civil penalties were imposed on ComEd by the NRC on
four occasions for violations of NRC regulations in amounts aggregating
$300,000. Since January 1, 1996, civil penalties were imposed on ComEd on two
occasions for violations of NRC regulations in amounts aggregating $100,000. To
ComEd's knowledge there are no current enforcement issues outstanding and under
review by the NRC.
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The uranium mining and milling operations of Cotter are subject to regulation
by the state of Colorado and the NRC.
Environmental
ComEd and the Indiana Company are subject to regulation regarding
environmental matters by the United States and by the states of Illinois,
Indiana, Iowa and, in the case of Cotter, Colorado, and by local jurisdictions
where ComEd and the Indiana Company operate their facilities. The IPCB has
jurisdiction over environmental control in the state of Illinois, which
includes authority to regulate air, water and noise emissions and solid waste
disposal, together with the Illinois EPA, which enforces regulations of the
IPCB and issues permits in connection with environmental control. The U.S. EPA
administers certain federal statutes relating to such matters. The IPCB has
published a proposed rule under which it would have the power to regulate
radioactive air pollutants under the Illinois Environmental Protection Act and
the Federal Clean Air Act Amendments of 1977.
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 pending applications
for 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.
In 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 and Joliet generating stations. In 1991, the Sierra Club
and ComEd reached a settlement of this suit which was also approved by the
Court. 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 scheduled to be completed in April 1996, 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
following state activities to promulgate rules implementing the final guidance,
and assessing the extent to which such 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
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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 the ability of ComEd and the Indiana Company 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 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's and the Indiana Company's fossil fuel generating units. On January
26, 1996, the U.S. EPA issued a final rule exempting existing sources inside
the Chicago ozone non-attainment area from further nitrogen oxide emission
reductions; however, this exemption is limited pending further study of ozone
transport. The Illinois EPA is also considering nitrogen oxide emission
reductions at ComEd generating stations outside the Chicago ozone non-
attainment area also due to ozone transport. Under the Acid Rain program, the
U.S. EPA will prepare nitrogen oxide emission regulations that would apply to
all of ComEd's boilers with a compliance date of January 1, 2000. These
regulations were proposed on January 19, 1996 and include limits for cyclone
and tangentially fired boilers.
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, may
voluntarily settle with the U.S. Government concerning their liability for
cleanup costs, or may voluntarily begin a site investigation and 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
(1996) 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 was recorded as of December 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, 1995, a
reserve of $8 million was 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
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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.
In 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 near 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.
In 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. In 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. 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. Also, additional PRPs have responded to
informational requests concerning their potential liability at the site. Their
participation should reduce ComEd's percent allocation of such costs. 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.
In 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 has requested 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
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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 this Annual Report
on Form 10-K, which could have such an effect.
EMPLOYEES
The total number of employees of Unicom and its subsidiary companies was
approximately 17,045 (of which approximately 17,025 employees were employed by
ComEd and the Indiana Company) at December 31, 1995. Of that amount,
approximately 9,323 employees of ComEd are represented by the IBEW, Local 15,
and approximately 162 employees of the Indiana Company are represented by the
United Steelworkers of America, Local 12502. Collective bargaining agreements
with the unions expired on March 31, 1995. On October 30, 1995, ComEd declared
an impasse in the collective bargaining agreement negotiations with Local 15 of
the IBEW and implemented virtually all of the terms of its last offered
proposal prior to the impasse. On February 20, 1996, ComEd announced that it
had reached agreement with Local 15 of the IBEW with respect to the terms of a
new collective bargaining agreement. Union members are scheduled to vote on
ratification of the new agreement and ComEd will be notified of the results by
April 10, 1996. Subject to ratification by the union membership, the new
agreement provides, among other things, for a term expiring on September 30,
1997, a retroactive wage increase to April 1, 1995 (substantially all of which
had been accrued on ComEd's books as of December 31, 1995), a further wage
increase of approximately 2.7% effective on April 1, 1996 and a 1.5% wage
increase effective on April 1, 1997. In addition, the agreement provides that
union employees are eligible to receive 1995 and 1996 incentive payments
dependent upon the achievement of certain corporate and individual goals and
reflects the previously implemented voluntary separation offer that was made
for employees who accepted and left ComEd's employ by year-end 1995. For the
term of the agreement, a revision to the provision relative to contracting work
was negotiated which will give ComEd the flexibility needed to maintain
operations following the employee reduction resulting from the voluntary
separation offer, as well as to smooth out the peaks and valleys in the labor
requirements of the business. This flexibility will provide a stable work
environment for ComEd's employees. For additional information regarding the
effects of the previously implemented voluntary separation offer, see
"General," subcaption "Utility Operations" above.
The supplemental agreements covering life insurance, savings and investment
plan, healthcare coverage for medical, dental and vision are effective through
September 30, 1997. In March 1995, the supplemental agreement covering pension
benefits was ratified with an expiration date of September 30, 1999.
INTERCONNECTIONS
ComEd has interconnections for the transmission of electricity with Central
Illinois Light Company, Central Illinois Public Service Company, Illinois Power
Company, Indiana Michigan Power Company (a subsidiary of American Electric
Power Company), Interstate Power Company, MidAmerican Energy Company, Northern
Indiana Public Service Company, Wisconsin Electric Power Company and Wisconsin
Power and Light Company for the purpose of exchanging energy and for other
forms of mutual assistance.
15
<PAGE>
ComEd and 13 other Midwest power systems are regular members of MAIN (which
also includes ten associate members and three affiliate members). The members
have entered into an agreement to work together to ensure the reliability of
electric power production and transmission throughout the area they serve.
FRANCHISES
ComEd's franchises are in general deemed adequate to permit it to engage in
the business it now conducts.
In the city of Chicago, ComEd operates under a nonexclusive electric
franchise ordinance effective January 1, 1992, and continuing in force until
December 31, 2020. ComEd derives approximately one-third of its ultimate
consumer revenues from the city of Chicago.
The electric business outside of the city of Chicago is conducted in
municipalities under nonexclusive franchises and, where required, under
certificates of convenience and necessity granted by the ICC. The following
tabulation summarizes as of December 31, 1995 the expiration dates of the
electric franchises held in 395 of the 396 municipalities outside of the city
of Chicago capable of granting franchises and in which ComEd currently provides
electric service.
<TABLE>
<CAPTION>
ESTIMATED
NUMBER OF AGGREGATE
FRANCHISE EXPIRATION PERIODS MUNICIPALITIES POPULATION
- ---------------------------- -------------- ----------
<S> <C> <C>
1996-2006............................................. 4 108,000
2007-2017............................................. 11 97,000
2018-2028............................................. 3 4,000
2029-2039............................................. 1 *
2040 and subsequent years............................. 373 4,013,000
No stated time limit.................................. 3 61,000
</TABLE>
- --------
*Less than 1,000 people.
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 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 place in which electric utilities like ComEd operate has become
more competitive as a result of technological and regulatory changes, and
competition is expected to 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. Also, a
number of electric utilities (including utilities bordering ComEd's service
area) have announced plans to combine, or have combined, to achieve certain
size and operating efficiencies in response to expected changes in the market
place. Finally, both the state and federal regulatory framework under which
ComEd and other electric utilities have operated are under review. In recent
years, there has been increasing debate at the state and federal levels
regarding the structure and regulation of the electric utility industry. In
particular, these discussions have focused on whether certain aspects of the
industry, such as generation, could be more efficiently provided under a more
competitive scheme.
16
<PAGE>
A central feature of the current debate over deregulation and changed
regulation in the electric utility industry is the extent to which electric
utilities will be permitted to recover so-called "stranded" or "strandable"
costs incurred to fulfill their duty to serve all of the electricity needs
within their service territories. These costs would be stranded to the extent
that market-based rates would be insufficient to allow for full recovery of the
investments.
ComEd cannot estimate its strandable investment with any degree of accuracy
at this time because of the number of variables involved. ComEd, however, is
taking steps, such as aggressive cost-cutting measures and additional
depreciation, to minimize its potential exposure. The regulatory and
legislative initiatives that ComEd has proposed, described below, contemplate a
full recovery of ComEd's costs to meet its duty to serve.
The Energy Policy Act of 1992 has had 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. In March
1995, the FERC issued a NOPR seeking comments on proposals intended to
encourage a more competitive wholesale electric power market. The NOPR
addresses both open access transmission and stranded cost issues. ComEd is
unable to predict the structure and effect of any rule that the FERC may
ultimately adopt based upon the NOPR.
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. ComEd has pursued a number of strategies to retain
its customers. In October 1993, ComEd obtained 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 discount rates. In
June 1994, ComEd obtained authority, subsequently overturned by the courts, to
negotiate special discount contract rates with up to 25 of its largest
customers, where such contracts would be necessary to retain the customers'
existing load on ComEd's system. In the wake of the Illinois Appellate Court
decision holding that the confidential nature of such contracts violated
applicable state law, ComEd sought and obtained ICC approval for the eleven
contracts that had been negotiated. The Illinois Supreme Court recently denied
ComEd's petition for leave to appeal the Appellate Court's decision. ComEd
continues to use ICC-approved special contracts, where necessary, to prevent
uneconomic by-pass of its system.
Legislation has been passed in Illinois to review the need for changes in the
regulatory framework under which Illinois electric utilities operate. The Joint
Committee on Electric Utility Regulatory Reform was created pursuant to
House/Senate Joint Resolution 21 to develop any legislative reform proposals it
finds necessary. A final legislative proposal is to be delivered by November 8,
1996. ComEd is participating as a member of the Technical Assistance Group. A
bill allowing utilities to submit plans for experimental alternative
regulation, such as price caps or incentive regulation, has been signed by the
Governor of Illinois. On December 11, 1995, ComEd announced a series of
customer initiatives as part of its larger ongoing effort to address the need
to give all customer classes the opportunity to benefit from increased
competition in the electric utility business, while retaining the benefits
(such as reliability) of current regulation and ensuring utilities' cost
recovery for commitments made under the obligation to serve customers. The
initiatives include
17
<PAGE>
(i) a five-year cap on base electric rates at current levels, (ii) certain
energy monitoring and management programs designed to monitor and control
energy usage, particularly during certain peak periods, (iii) single statement,
or unified, billing for certain multi-site customers, (iv) certain incentives
for manufacturing customers looking to expand operations or to locate in
northern Illinois and (v) market pricing options for up to ten percent of
certain large industrial customers' existing electric energy requirements and
all of their incremental requirements. ComEd anticipates the initiatives will
be fully implemented in 1997 and will reduce its revenues by approximately $42
million annually (including the effects of previously implemented initiatives
and before income tax effects) primarily through changes in energy utilization
and increase its costs by at least $30 million annually (before income tax
effects) through the increase of depreciation charges on its nuclear generating
units. In March 1996, ComEd filed a request for ICC approval of the additional
depreciation initiative. ComEd also continues to consider the possibility of
additional depreciation options. Management expects the financial impact of
these initiatives will be substantially offset by ComEd's cost reduction
efforts and expected growth in its business.
Under ComEd's initiatives, the five-year base rate cap at current levels
became effective in December 1995 and will extend until January 1, 2001. The
rate cap does not affect ComEd's fuel cost or nuclear decommissioning cost
recovery provisions. ComEd's fuel cost variances will continue to be collected
through its fuel adjustment clause, and such collections will continue to be
subject to annual reconciliation proceedings before the ICC. Nuclear
decommissioning cost variances will continue to be collected under a rider that
was approved in the Rate Order, and such rider is intended to allow annual
adjustments in decommissioning cost recoveries from ratepayers as changes in
cost estimates occur. See "Depreciation and Decommissioning" in Note 1 of Notes
to Financial Statements in the January 26, 1996 Form 8-K Reports for additional
information regarding the decommissioning costs rider.
On December 13, 1995, ComEd announced a proposal to amend certain provisions
of the Illinois Public Utilities Act. The proposal would, among other things,
allow Illinois utilities to launch five-year experimental "direct access"
programs, whereby certain customers would have the opportunity to obtain some
of their electric energy requirements from their chosen supplier. If the
proposal is adopted as legislation, such "direct access" programs could begin
as early as 1998; and under the legislation, ComEd announced it would offer
such a program for new or expanded load of three megawatts or greater in its
northern Illinois service territory. Under ComEd's proposal, if such "direct
access" proves workable, and if the ICC finds it to be in the public interest,
the ICC could order it as an option for all electricity consumers in Illinois
starting in 2003. Other Illinois utilities have also initiated both legislative
and regulatory proposals. Both Illinois Power Company and Central Illinois
Light Company have filed proposed retail wheeling experiments with the ICC.
These experiments were approved on March 13, 1996. As structured, they are
limited in scope, size and duration. See "Regulation" and "Regulatory Assets
and Liabilities" in Note 1 of Notes to Financial Statements in the January 26,
1996 Form 8-K Reports.
18
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
EFFECTIVE DATE OF ELECTION
NAME AGE POSITION TO PRESENT POSITION
-------- --- --------------------- --------------------------
<S> <C> <C> <C>
James J. O'Connor 59 Chairman and Chief
Executive Officer January 28, 1994
Leo F. Mullin 53 Vice Chairman December 1, 1995
Samuel K. Skinner 57 President January 28, 1994
Donald A. Petkus 54 Senior Vice President July 11, 1995
John C. Bukovski 53 Vice President January 28, 1994
John T. Costello 47 Vice President January 24, 1996
Roger F. Kovack 47 Comptroller January 28, 1994
Dennis F. O'Brien 50 Treasurer January 28, 1994
David A. Scholz 54 Secretary January 28, 1994
</TABLE>
The present term of office of each of the above executive officers extends to
the first meeting of Unicom's Board of Directors after the next annual election
of Directors scheduled to be held on May 22, 1996.
Except for Mr. Mullin and Mr. Skinner, each of the above executive officers
has been employed by ComEd for more than five years and, except for Mr. Mullin,
Mr. Petkus and Mr. Costello, by Unicom since January 28, 1994, in executive or
management positions. The business experience of the officers and the prior
positions they have held with ComEd or other companies since January 1, 1991
until their election to the offices indicated above are described below. Mr.
Mullin served as President and Chief Operating Officer of First Chicago
Corporation from November 1993 to July 1995, as Chairman, President and Chief
Executive Officer of American National Bank and Trust Company of Chicago from
April 1991 to November 1993, and as Executive Vice President of First Chicago
Corporation prior to April 1991. Mr. Skinner was General Chairman of the
Republican National Committee from August 1992 to January 1993, Chief of Staff
to the President of the United States from December 1991 to August 1992, and
Secretary of the United States Department of Transportation prior to December
1991. Mr. Petkus was (and continues to be) a Senior Vice President of ComEd
since June 1992, and previously served as Vice President of ComEd. Mr. Petkus
was also elected President of Unicom Thermal effective July 17, 1995. Mr.
Costello was ComEd's Manager of Corporate Relations from July 1995 to January
24, 1996, and prior to that was its Manager of Public Affairs. The following
Unicom officers have held and continue to hold the following positions at ComEd
for at least five years: Mr. O'Connor is Chairman and Chief Executive Officer;
Mr. Bukovski is Vice President; Mr. Kovack is Comptroller; Mr. O'Brien is
Treasurer; and Mr. Scholz is Secretary.
There are no family relationships among the executive officers, directors and
nominees for director of Unicom.
19
<PAGE>
OPERATING STATISTICS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Operating Revenues (thousands of dol-
lars)(1):
Residential............................... $2,621,038 $2,273,763 $2,341,155
Small commercial and industrial........... 2,073,998 1,917,084 1,962,662
Large commercial and industrial........... 1,425,784 1,381,251 1,437,680
Public authorities........................ 487,142 452,512 474,034
Electric railroads........................ 26,894 26,179 27,593
Provisions for revenue refunds--ultimate
consumers................................ -- (15,909) (1,281,788)
Sales for resale (net of provisions for
revenue refunds)......................... 207,256 187,147 237,573
Other revenues............................ 67,933 55,494 61,531
---------- ---------- ----------
Total.................................. $6,910,045 $6,277,521 $5,260,440
---------- ---------- ----------
---------- ---------- ----------
Sales (millions of kilowatthours):
Residential............................... 23,303 21,376 20,818
Small commercial and industrial........... 25,313 24,320 23,463
Large commercial and industrial........... 23,777 23,450 22,917
Public authorities........................ 7,158 6,885 6,741
Electric railroads........................ 390 397 405
Sales for resale.......................... 11,412 8,743 13,417
---------- ---------- ----------
Total.................................. 91,353 85,171 87,761
---------- ---------- ----------
---------- ---------- ----------
Sources of Electric Energy (millions of
kilowatthours):
Generation--
Nuclear.................................. 70,261 63,795 70,403
Fossil................................... 26,231 26,361 23,839
Fast-start peaking units................. 116 87 24
---------- ---------- ----------
Net generation......................... 96,608 90,243 94,266
Purchased power........................... 2,475 2,071 644
Company use and losses.................... (7,730) (7,143) (7,149)
---------- ---------- ----------
Total.................................. 91,353 85,171 87,761
---------- ---------- ----------
---------- ---------- ----------
Cost of Fuel Consumed (per million Btu):
Nuclear................................... $0.52 $0.53 $0.52
Coal...................................... $2.43 $2.31 $2.89
Oil....................................... $3.06 $2.89 $3.03
Natural gas............................... $1.85 $2.27 $2.70
Average all fuels......................... $1.05 $1.08 $1.15
Peak Load (kilowatts)...................... 19,212,000 17,928,000 17,771,000
Number of Customers (at end of year):
Residential............................... 3,079,381 3,047,354 3,009,508
Small commercial and industrial........... 288,848 286,793 283,764
Large commercial and industrial........... 1,539 1,528 1,503
Public authorities........................ 12,039 12,059 12,023
Electric railroads and resale............. 26 20 19
---------- ---------- ----------
Total.................................. 3,381,833 3,347,754 3,306,817
---------- ---------- ----------
---------- ---------- ----------
Average Annual Revenue Per Residential Cus-
tomer (excluding light bulb service)...... $852.18 $748.10 $779.54
Average Use Per Residential Customer
(kilowatthours)........................... 7,598 7,056 6,954
Average Revenue Per Kilowatthour(2):
Residential (excluding light bulb serv-
ice)..................................... 11.22c 10.60c 11.21c
Small commercial and industrial........... 8.19c 7.88c 8.36c
Large commercial and industrial........... 6.00c 5.89c 6.27c
</TABLE>
- --------
(1) See "Rate Proceedings" above.
(2) Average revenue per kilowatthour after reflecting provisions for revenue
refunds and after reflecting revenue refunds and related interest credited
to customers in 1994 and 1993, respectively, were as follows:
<TABLE>
<CAPTION>
1994 1993
-------------------------------- --------------------------------
AFTER DEDUCTIONS FOR AFTER DEDUCTIONS FOR
-------------------------------- --------------------------------
PROVISIONS FOR REVENUE PROVISIONS FOR REVENUE
REVENUE REFUNDS REFUNDS CREDITED REVENUE REFUNDS REFUNDS CREDITED
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Residential 10.57c 8.22c 8.61c 10.78c
Small commercial and
industrial 7.86c 6.43c 6.80c 8.16c
Large commercial and
industrial 5.88c 4.76c 5.07c 6.10c
</TABLE>
20
<PAGE>
ITEM 2. PROPERTIES.
ComEd's electric properties are located in Illinois and the Indiana Company's
electric facilities are located in Indiana. In management's opinion, ComEd and
the Indiana Company's operating properties are adequately maintained and are
substantially in good operating condition. The electric generating,
transmission, distribution and general facilities of ComEd and the Indiana
Company represent approximately 68%, 9%, 20% and 3%, respectively, of their
gross investment in electric plant and equipment in service.
The electric generating stations, substations and a portion of the
transmission rights of way of ComEd and the Indiana Company are owned in fee.
A significant portion of the electric transmission and distribution facilities
is located over or under highways, streets, other public places or property
owned by others, for which permits, grants, easements or licenses (deemed
satisfactory by ComEd, but without examination of underlying land titles) have
been obtained. The principal plants and properties of ComEd are subject to the
lien of ComEd's Mortgage dated July 1, 1923, as amended and supplemented, under
which ComEd's first mortgage bonds are issued.
The net generating capability of ComEd and the Indiana Company is derived
from the following electric generating facilities:
<TABLE>
<CAPTION>
NET GENERATING
CAPABILITY
STATION LOCATION (KILOWATTS)
------- ---------------- --------------
<S> <C> <C>
Nuclear--
Zion Zion 2,080,000
Dresden Near Morris 1,588,000
Quad-Cities Near Cordova 1,183,000(1)
LaSalle County Near Seneca 2,156,000
Byron Near Byron 2,240,000
Braidwood Near Braidwood 2,240,000
Fossil--
Collins Near Morris 2,698,000
Powerton Near Pekin 1,400,000
Joliet 6 Near Joliet 302,000
Joliet 7 & 8 Near Joliet 1,025,000
Kincaid Near Taylorville 1,108,000
Will County Near Lockport 1,092,000
Waukegan Waukegan 725,000
Crawford Chicago 542,000
State Line Hammond, Indiana 490,000
Fisk Chicago 321,000
Fast-Start Peaking Units(2) Various 1,332,000
----------
Net non-summer generating capability 22,522,000
Deduct--Summer limitations 557,000
----------
Net summer generating capability 21,965,000
----------
----------
</TABLE>
- --------
(1) Excludes the 25% undivided interest of MidAmerican Energy Company (formerly
Iowa-Illinois Gas and Electric Company) in the Quad-Cities station.
(2) Generating units normally designed for use only during the maximum load
period of a designated time interval. Such units are capable of starting
and coming on-line quickly.
Major electric transmission lines owned and in service are as follows:
<TABLE>
<CAPTION>
VOLTAGE CIRCUIT
(VOLTS) MILES
------- -------
<S> <C>
765,000........................................................... 90
345,000........................................................... 2,513
138,000........................................................... 2,709
</TABLE>
ComEd's electric distribution system includes 37,790 pole line miles of
overhead lines and 31,750 cable miles of underground lines. A total of
approximately 1,318,020 poles are included in ComEd's distribution system, of
which about 589,530 poles are owned jointly with telephone companies.
21
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
During 1989 and 1991, actions were brought in federal and state courts in
Colorado against ComEd and 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, which verdicts were upheld
on appeal. The remaining claims in the 1989 actions are the subject of a
settlement agreement entered into by counsel for the plaintiffs and Cotter. If
the settlement agreement is implemented, the 1989 actions will be dismissed.
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 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 in 1992 and 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 and that dismissal was affirmed by the Illinois Appellate
Court. The Illinois Supreme Court declined to review that decision.
A number of complaints have been filed by former employees with the EEOC, 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. Most of these
claims were resolved by settlement in 1995. ComEd does not view the remaining
cases as having a material impact on its financial position or results of
operations.
In July 1995, the Chicago area experienced several consecutive days of
unusually high temperatures coupled with high humidity. Between July 12 and 14,
1995, ComEd experienced record demand for electricity. On July 14, 1995, a fire
in a substation caused a power outage to approximately 40,000 customers. Other
equipment failures in the same general area caused certain of these customers
to be without power for up to 48 hours. In the wake of these power outages,
three class action lawsuits were filed against ComEd seeking recovery of
damages for property losses allegedly suffered. One suit seeks at least $10
million in damages; the others seek unspecified damages. One individual suit
was also filed seeking damages less than $100,000 for property losses.
See "Item 1. Business," subcaptions "Rate Proceedings," "Fuel Supply--Fuel
Adjustment Clause" and "Regulation" above for information concerning other
legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
22
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
ComEd's securities and other securities guaranteed by ComEd are currently
rated by three principal securities rating agencies 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- BBB-
Preference stock.................................... baa3 BBB- BBB-
ComEd-obligated mandatorily redeemable preferred se-
curities of the Trust.............................. baa3 BBB- BBB-
Commercial paper.................................... P-2 A-2 D-2
</TABLE>
As of March 1996, Standard & Poor's rating outlook on ComEd remained stable.
As of October 1995, Moody's rating outlook on ComEd also remained stable. In
August 1995, Duff & Phelps upgraded its rating of ComEd's preferred and
preference stock from BB+ to BBB- and reaffirmed that its rating outlook on
ComEd remained stable.
The above ratings reflect only the views of such rating agencies and each
rating should be evaluated independently of any other rating. Generally,
rating agencies base their ratings on information furnished to them by the
issuing company and on investigations, studies and assumptions by the rating
agencies. There is no assurance that any particular rating will continue for
any given period of time or that it will not be changed or withdrawn entirely
if in the judgment of the rating agency circumstances so warrant. Such ratings
are not a recommendation to buy, sell or hold securities.
The following is a brief summary of the meanings of the above ratings and the
relative rank of the above ratings within each rating agency's classification
system.
Moody's top four long-term debt ratings (Aaa, Aa, A and Baa) are generally
considered "investment grade." Obligations rated Baa are considered as medium
grade obligations, neither highly protected nor poorly secured. Such
obligations lack outstanding investment characteristics and in fact have
speculative characteristics. (A numerical modifier in Moody's system shows
relative standing within the principal rating category, with 1 indicating the
high end of that category, 2 the mid-range and 3 the low end.) Standard &
Poor's top four bond ratings (AAA, AA, A and BBB) are generally considered to
describe obligations in which investment characteristics predominate.
Obligations rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Such obligations normally exhibit adequate
protection parameters, but adverse economic conditions or changing
circumstances are more likely to lead to weakened capacity to pay. (A plus or
minus sign in Standard & Poor's system shows relative standing within the major
rating categories.)
Both Moody's and Standard & Poor's preferred stock ratings represent relative
security of dividends. Moody's top four preferred stock ratings (aaa, aa, a
and baa) are generally considered "investment grade." Moody's baa rating
describes a medium grade preferred stock, neither highly protected nor poorly
secured. Standard & Poor's top four preferred stock ratings (AAA, AA, A and
BBB) are generally considered "investment grade." Standard & Poor's BBB rating
applies to medium grade preferred stock which is below A ("sound") and above BB
("lower grade").
Duff & Phelps' credit rating scale has 17 alphabetical categories, of which
ratings AAA through BBB (with AAA being the highest rating) represent
investment grade securities. Ratings of BBB+,
23
<PAGE>
BBB and BBB- represent the lowest category of "investment grade" rating. This
category describes securities with below average protection factors but which
are considered sufficient for institutional investment. Considerable
variability in risk occurs during economic cycles. Ratings of BB+, BB and BB-
describe below investment grade securities which are deemed likely to meet
obligations when due. Present or prospective financial protection factors of
these securities fluctuate according to industry conditions or company
fortunes.
Moody's P-2 rating of commercial paper is the second highest of three
possible ratings; P-2 describes a strong capacity for repayment of short-term
promissory obligations. Standard & Poor's rates commercial paper in four basic
categories with A-2 being the second highest category. Duff & Phelps rates
commercial paper in three basic categories, with D-2 indicating the middle
category.
Further explanations of the significance of ratings may be obtained from the
rating agencies.
Additional information required by Item 5 is incorporated herein by reference
to the "Price Range and Cash Dividends Paid Per Share of Common Stock" on page
3 of Unicom's January 26, 1996 Form 8-K Report.
ITEM 6. SELECTED FINANCIAL DATA.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by Items 6, 7 and 8 is incorporated herein by
reference to the "Summary of Selected Consolidated Financial Data" on page 3,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 4 through 15, and the audited consolidated financial
statements and notes thereto on pages 16 through 44 of Unicom's January 26,
1996 Form 8-K Report and to Unicom's Form 8-K/A-1 Current Report dated March
14, 1996. Reference is also made to "Item 1. Business," subcaptions
"Construction Program," "Regulation" and "Business and Competition" for
additional information.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
24
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by Item 10 relating to directors and nominees for
election as directors at Unicom's Annual Meeting of shareholders to be held on
May 22, 1996 is incorporated herein by reference to the information under the
heading "Security Ownership of Certain Beneficial Owners and Management" in
Unicom's definitive Proxy Statement (1996 Proxy Statement) to be filed with the
SEC prior to April 29, 1996 pursuant to Regulation 14A under the Securities
Exchange Act of 1934. The information required by Item 10 relating to
executive officers is set forth in Part I of Unicom's Annual Report on Form 10-
K under "Item 1. Business," subcaption "Executive Officers of the Registrant"
and under the heading "Security Ownership of Certain Beneficial Owners and
Management" of Unicom's 1996 Proxy Statement, which are incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by Item 11 is incorporated herein by reference to
the information labelled "Compensation of Directors" and the paragraphs under
the heading "Executive Compensation" (other than the paragraphs under the
heading "Corporate Governance and Compensation Committee Report on Executive
Compensation") of Unicom's 1996 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by Item 12 is incorporated herein by reference to
the stock ownership information under the heading "Security Ownership of
Certain Beneficial Owners and Management" in Unicom's 1996 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
25
<PAGE>
ANNUAL REPORT ON FORM 10-K FOR COMMONWEALTH EDISON COMPANY
PART I
ITEM 1. BUSINESS.
See Unicom's "Item 1. Business" (other than the paragraphs under the headings
"General--Unregulated Operations," "Construction Program--Unregulated
Operations" and "Executive Officers of the Registrant"), which is incorporated
herein by this reference.
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
EFFECTIVE DATE OF ELECTION
NAME AGE POSITION TO PRESENT POSITION
------------------ --- ------------------------ --------------------------
<S> <C> <C> <C>
James J. O'Connor 59 Chairman and
Chief Executive Officer March 1, 1980
Leo F. Mullin 53 Vice Chairman December 1, 1995
Samuel K. Skinner 57 President February 1, 1993
Thomas J. Maiman 57 Senior Vice President June 10, 1992
Robert J. Manning 53 Senior Vice President June 10, 1992
Donald A. Petkus 54 Senior Vice President June 10, 1992
Cordell Reed 58 Senior Vice President June 5, 1987
Michael J. Wallace 48 Senior Vice President December 9, 1993
John C. Bukovski 53 Vice President February 1, 1989
John T. Costello 47 Vice President January 24, 1996
Louis O. DelGeorge 48 Vice President April 22, 1992
William H. Downey 51 Vice President June 10, 1992
William H. Dunbar, 55 May 10, 1994
Jr. Vice President
J. Stanley Graves 59 Vice President June 5, 1987
Harold W. Keiser 52 Vice President December 18, 1995
Emerson W. Lacey 54 Vice President November 17, 1992
Paul D. McCoy 45 Vice President June 10, 1992
Robert A. Paul 52 Vice President January 24, 1994
J. Stephen Perry 57 Vice President April 28, 1994
James A. Small 52 Vice President July 6, 1993
Pamela B. Strobel 43 Vice President and
General Counsel June 1, 1993
Roger F. Kovack 47 Comptroller February 1, 1989
Dennis F. O'Brien 50 Treasurer February 1, 1989
David A. Scholz 54 Secretary February 1, 1989
</TABLE>
The present term of office of each of the above executive officers extends to
the first meeting of ComEd's Board of Directors after the next annual election
of Directors scheduled to be held on May 22, 1996.
Each of the above executive officers (except for Messrs. Mullin, Skinner,
Keiser, Paul, Perry and Small and Ms. Strobel) has been employed by ComEd for
more than five years in executive or
26
<PAGE>
management positions. Messrs. Mullin, Skinner, Keiser, Paul, Perry and Small
and Ms. Strobel have been employed by ComEd for less than five years. Their
business experience from January 1, 1991 until their election to the offices
indicated is as follows: Mr. Mullin served as President and Chief Operating
Officer of First Chicago Corporation from November 1993 to July 1995, as
Chairman, President and Chief Executive Officer of American National Bank and
Trust Company of Chicago from April 1991 to November 1993, and prior to that as
Executive Vice President of First Chicago Corporation; Mr. Skinner was General
Chairman of the Republican National Committee from August 1992 to January 1993,
Chief of Staff to the President of the United States from December 1991 to
August 1992, and Secretary of the United States Department of Transportation
prior to December 1991; Mr. Keiser was employed at Entergy Operations, Inc., as
Executive Vice President and Chief Operating Officer from 1993 to 1995 and,
prior to that, as Senior Vice President of Pennsylvania Power & Light Company;
Mr. Paul was employed by Digital Equipment Corporation in the following
capacities: from 1992 to January 1994 as Corporate Purchasing Manager and,
prior to that, as Corporate Technology and Business Acquisition Manager; Mr.
Perry was employed at Illinois Power Company in the following capacities: from
1992 to April 1994 as Senior Vice President and, prior to that, as Vice
President of Nuclear Operations; Mr. Small was General Manager of Fuel Services
at Georgia Power Company; Ms. Strobel was a partner in the law firm of Sidley &
Austin. Prior to election to the positions shown above, the following officers
held other positions at ComEd: Messrs. Maiman, Manning, Petkus and Wallace were
Vice Presidents; Mr. Costello was Manager of Public Affairs prior to July 1995
and Manager of Corporate Relations thereafter; Mr. DelGeorge was Assistant Vice
President; Mr. Downey was Manager of Marketing and Customer Services; Mr.
Dunbar was Division Vice President--Chicago North prior to December 1992 and
Manager of Quality thereafter; Mr. Lacey was Fossil Engineering and
Construction Manager; and Mr. McCoy was Operating Manager prior to September
1991 and Manager of Transmission and Distribution Operations thereafter.
There are no family relationships among the executive officers, directors and
nominees for director of ComEd.
ITEM 2. PROPERTIES.
See Unicom's "Item 2. Properties," which is incorporated herein by this
reference.
ITEM 3. LEGAL PROCEEDINGS.
See Unicom's "Item 3. Legal Proceedings," which is incorporated herein by
this reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE BY SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
See Unicom's "Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters" (other than the last paragraph thereof), which is
incorporated herein by reference.
Additional information required by Item 5 is incorporated herein by reference
to the "Price Range and Cash Dividends Paid Per Share of Common Stock" on page
3 of ComEd's January 26, 1996 Form 8-K Report.
27
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by Items 6, 7 and 8 is incorporated herein by
reference to the "Summary of Selected Consolidated Financial Data" on page 3,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 4 through 14, and the audited consolidated financial
statements and notes thereto on pages 15 through 41 of ComEd's January 26, 1996
Form 8-K Report and to ComEd's Form 8-K/A-1 Current Report dated March 14,
1996. Reference is also made to "Item 1. Business," subcaptions "Construction
Program," "Regulation" and "Business and Competition" for additional
information.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by Item 10 relating to directors and nominees for
election as directors at ComEd's Annual Meeting of shareholders to be held on
May 22, 1996 is incorporated herein by reference to information under the
heading "Security Ownership of Certain Beneficial Owners and Management" in
ComEd's definitive Information Statement (1996 Information Statement) to be
filed with the SEC prior to April 29, 1996 pursuant to Regulation 14C under the
Securities Exchange Act of 1934. The information required by Item 10 relating
to executive officers is set forth in Part I of ComEd's Annual Report on Form
10-K under "Item 1. Business," subcaption "Executive Officers of the
Registrant" and under the heading "Security Ownership of Certain Beneficial
Owners and Management" in ComEd's 1996 Information Statement, which are
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by Item 11 is incorporated herein by reference to
the paragraph labelled "Compensation of Directors" and the paragraphs under the
heading "Executive Compensation" (other than the paragraphs under the heading
"Corporate Governance and Compensation Committee Report on Executive
Compensation") of ComEd's 1996 Information Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by Item 12 is incorporated herein by reference to
the stock ownership information under the heading "Security Ownership of
Certain Beneficial Owners and Management" of ComEd's 1996 Information
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
28
<PAGE>
ANNUAL REPORTS ON FORM 10-K FOR UNICOM CORPORATION AND COMMONWEALTH EDISON
COMPANY
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(A)FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND EXHIBITS:
<TABLE>
<CAPTION>
PAGE OF
JANUARY 26,
1996 FORM 8-
K REPORT
------------
UNICOM COMED
------ -----
<S> <C> <C>
The following financial statements are incorporated into the
Unicom Annual Report on Form 10-K by reference to the indi-
cated page or pages of Unicom's January 26, 1996 Form 8-K
Report, and into the ComEd Annual Report on Form 10-K by
reference to the indicated page or pages of ComEd's January
26, 1996 Form 8-K Report:
Report of Independent Public Accountants.................... 16 15
Statements of Consolidated Income for the years 1995, 1994
and 1993................................................... 17 16
Consolidated Balance Sheets--December 31, 1995 and 1994..... 18-19 17-18
Statements of Consolidated Capitalization--December 31, 1995
and 1994................................................... 20 19
Statements of Consolidated Retained Earnings for the years
1995, 1994 and 1993........................................ 21 20
Statements of Consolidated Premium on Common Stock and Other
Paid-In Capital for the years 1995, 1994 and 1993 ......... NA 20
Statements of Consolidated Cash Flows for the years 1995,
1994 and 1993.............................................. 22 21
Notes to Financial Statements............................... 23-44 22-41
</TABLE>
<TABLE>
<CAPTION>
ANNUAL
REPORT ON
PAGE OF FORM 10-K
THIS ------------
DOCUMENT UNICOM COMED
-------- ------ -----
<S> <C> <C> <C>
The following supplemental schedules are included in
the indicated Annual Report on Form 10-K:
Report of Independent Public Accountants on
Supplemental Schedule.............................. 37 x
Report of Independent Public Accountants on
Supplemental Schedule.............................. 38 x
Schedule II--Valuation and Qualifying Accounts for
each of the three years in the period
ended
December 31, 1995........................ 39 x x
</TABLE>
The following schedules are omitted as not applicable or not required
under rules of Regulation S-X: I, III, IV and V.
29
<PAGE>
The individual financial statements and schedules of ComEd's
nonconsolidated wholly-owned subsidiaries have been omitted from Unicom's
and ComEd's Annual Report on Form 10-K because the investments are not
material in relation to ComEd's financial position or results of
operations. As of December 31, 1995, the assets of the nonconsolidated
subsidiaries in the aggregate approximated 1% of ComEd's consolidated
assets and for the year 1995 annual revenues of the nonconsolidated
subsidiaries in the aggregate were less than 1% of ComEd's consolidated
annual revenues.
The following exhibits are filed with the indicated Annual Report on Form
10-K or incorporated therein by reference. Documents indicated by an
asterisk (*) are incorporated by reference to the File No. indicated.
Documents indicated by a plus sign (+) identify management contracts or
compensatory plans or arrangements.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
<C> <S> <C> <C>
*(3)-1 Articles of Incorporation of Unicom effective
January 28,
1994. (File No. 1-11375, Form 10-K for the year
ended
December 31, 1994, Exhibit (3)-1). x
*(3)-2 Restated Articles of Incorporation of ComEd ef-
fective February 20, 1985, including Statements
of Resolution Establishing Series, relating to
the establishment of three new series of ComEd
preference stock known as the "$9.00 Cumulative
Preference Stock," the "$6.875 Cumulative Pref-
erence Stock" and the "$2.425 Cumulative Prefer-
ence Stock." (File No. 1-1839, Form 10-K for the
year ended December 31, 1994, Exhibit (3)-2). x
(3)-3 By-Laws of Unicom Corporation, effective January
28, 1994 as amended through December 13, 1995. x
(3)-4 By-Laws of Commonwealth Edison Company, effective
September 2, 1988 as amended through December
13, 1995. x
*(4)-1 Mortgage of ComEd to Illinois Merchants Trust
Company, Trustee (Continental Illinois National
Bank and Trust Company of Chicago, successor
Trustee), dated July 1, 1923, Supplemental In-
denture thereto dated August 1, 1944, and amend-
ments and supplements thereto dated, respective-
ly, August 1, 1946, April 1, 1953, April 1,
1966, November 1, 1966, December 1, 1966, March
31, 1967, April 1, 1967, February 1, 1968, July
1, 1968, October 1, 1968, February 28, 1969, May
29, 1970, January 1, 1971, June 1, 1971, May 31,
1972, June 1, 1973, June 15, 1973, October 15,
1973, May 31, 1974, July 1, 1974, June 13, 1975,
May 28, 1976, January 15, 1977, June 1, 1977 and
June 3, 1977 (File No. 2-60201, Form S-7, Ex-
hibit 2-1). x
*(4)-2 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, December 1, 1977, May
17, 1978, August 31, 1978, June 18, 1979, June
20, 1980, April 16, 1981, April 30, 1982, April
15, 1983, April 13, 1984, March 1, 1985 and
April 15, 1985 (File No. 2-99665, Form S-3, Ex-
hibit (4)-3). x
*(4)-3 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, April 15, 1986 and May
1, 1986 (File No. 33-6879, Form S-3, Exhibit
(4)-9). x
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
<C> <S> <C> <C>
*(4)-4 Supplemental Indenture to Mortgage dated July 1,
1923 dated January 12, 1987 (File No. 33-13193,
Form S-3, Exhibit (4)-6). x
*(4)-5 Supplemental Indenture to Mortgage dated July 1,
1923 dated June 30, 1989 (File No. 33-32929,
Form S-3, Exhibit (4)-11). x
*(4)-6 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, February 15, 1990 and
June 15, 1990 (File No. 33-38232, Form S-3, Ex-
hibits (4)-11 and (4)-12). x
*(4)-7 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, June 1, 1991, October
1, 1991 and October 15, 1991 (File No. 33-44018,
Form S-3, Exhibits (4)-12, (4)-13 and (4)-14). x
*(4)-8 Supplemental Indenture to Mortgage dated July 1,
1923 dated February 1, 1992 (File No. 1-1839,
Form 10-K for the year ended December 31, 1991,
Exhibit (4)-18). x
*(4)-9 Supplemental Indenture to Mortgage dated July 1,
1923 dated May 15, 1992 (File No. 33-48542, Form
S-3, Exhibit (4)-14). x
*(4)-10 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, July 15, 1992, Septem-
ber 15, 1992 and October 1, 1992 (File No. 33-
53766, Form S-3, Exhibits (4)-13, (4)-14 and
(4)-15). x
*(4)-11 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, February 1, 1993 and
March 1, 1993 (File No. 1-1839, Form 10-K for
the year ended December 31, 1992, Exhibits (4)-
14 and (4)-15). x
*(4)-12 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, April 1, 1993 and
April 15, 1993 (File No. 33-64028, Form S-3, Ex-
hibits (4)-12 and (4)-13). x
*(4)-13 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, June 15, 1993 and July
1, 1993 (File No. 1-1839, Form 8-K dated May 21,
1993, Exhibits (4)-1 and (4)-2). x
*(4)-14 Supplemental Indenture to Mortgage dated July 1,
1923 dated July 15, 1993 (File No. 1-1839, Form
10-Q for the quarter ended June 30, 1993, Ex-
hibit (4)-1). x
*(4)-15 Supplemental Indenture to Mortgage dated July 1,
1923 dated January 15, 1994 (File No. 1-1839,
Form 10-K for the year ended December 31, 1993,
Exhibit (4)-15). x
*(4)-16 Supplemental Indenture to Mortgage dated July 1,
1923 dated December 1, 1994 (File No. 1-1839,
Form 10-K for the year ended December 31, 1994,
Exhibit (4)-16). x
*(4)-17 Indentures of ComEd to The First National Bank of
Chicago, Trustee (Harris Trust and Savings Bank,
successor Trustee), dated April 1, 1949, October
1, 1949, October 1, 1950, October 1, 1954, Janu-
ary 1, 1958, January 1, 1959 and December 1,
1961 (File No. 1-1839, Form 10-K for the year
ended December 31, 1982, Exhibit (4)-20). x
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
<C> <S> <C> <C>
*(4)-18 Indenture of ComEd dated February 15, 1973 to The
First National Bank of Chicago, Trustee (LaSalle
National Bank, successor Trustee), and Supple-
mental Indenture thereto dated July 13, 1973
(File No. 2-66100, Form S-16, Exhibit (b)-2). x
*(4)-19 Indenture dated as of September 1, 1987 between
ComEd and Citibank, N.A., Trustee relating to
Notes (File No. 33-20619, Form S-3, Exhibit (4)-
13). x
*(4)-20 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated September 15, 1987 (File No.
33-20619, Form S-3, Exhibit (4)-14). x
*(4)-21 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated May 18, 1988 (File No. 33-
23036, Form S-3, Exhibit (4)-14). x
*(4)-22 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated July 14, 1989 (File No. 33-
32929, Form S-3, Exhibit (4)-16). x
*(4)-23 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated April 1, 1991 (File No. 33-
44018, Form S-3, Exhibit (4)-21). x
*(4)-24 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated April 15, 1992 (File No. 33-
48542, Form S-3, Exhibit
(4)-22). x
*(4)-25 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated July 15, 1992 (File No. 33-
53766, Form S-3, Exhibit (4)-24). x
*(4)-26 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated October 15, 1993 (File No. 1-
1839, Form 10-Q for the quarter ended September
30, 1993, Exhibit (4)-1). x
*(4)-27 Supplemental Indenture to Indenture dated Septem-
ber 1, 1987 dated April 1, 1994 (File No. 1-
1839, Form 10-Q for the quarter ended March 31,
1994, Exhibit (4)-1). x
(4)-28 Instrument of Resignation, Appointment and Ac-
ceptance dated January 31, 1996, under the pro-
visions of the Mortgage dated July 1, 1923, and
Indentures Supplemental thereto. x
(4)-29 Instrument dated as of January 31, 1996, for
trustee under the Mortgage dated July 1, 1923
and Indentures Supplemental thereto. x
*(4)-30 Credit Agreement dated as of October 1, 1991,
among Commonwealth Edison Company, as borrower,
the Banks named therein and the other Lenders
from time to time parties thereto, and Citibank,
N.A. (File No. 1-1839, Form 10-K for the year
ended December 31, 1991, Exhibit (4)-27). x
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
<C> <S> <C> <C>
*(4)-31 Credit Agreement dated as of October 1, 1991,
among Commonwealth Edison Company, as borrower,
the Banks named therein and the other Lenders
from time to time parties thereto, and Citibank,
N.A. (File No. 1-1839, Form 10-K for the year
ended December 31, 1991, Exhibit (4)-28). x
*(4)-32 Letter Agreement dated as of October 4, 1993,
among Commonwealth Edison Company and certain of
the Banks party to the Credit Agreement dated as
of October 1, 1991 (File No. 1-1839, Form 10-K
for the year ended December 31, 1993, Exhibit
(4)-28). x
*(4)-33 Term Loan Agreement dated as of January 7, 1992,
between Commonwealth Edison Company, as borrow-
er, and The First National Bank of Chicago, in-
dividually and as agent (File No. 1-1839, Form
10-K for the year ended December 31, 1992, Ex-
hibit (4)-28). x
*(4)-34 First Amendment to Term Loan Agreement dated as
of January 9, 1995, by and among Commonwealth
Edison Company, The First National Bank of Chi-
cago, individually and as agent, and the banks
party thereto (File No. 1-1839, Form 10-K for
the year ended December 31, 1994, Exhibit (4)-
32). x
*(4)-35 Term Loan Agreement dated as of January 15, 1992,
between Commonwealth Edison Company, as borrow-
er, and Westpac Banking Corporation, Chicago
Branch, individually and as agent (File No. 1-
1839, Form 10-K for the year ended December 31,
1992, Exhibit (4)-29). x
*(4)-36 Term Loan Agreement dated as of January 16, 1992,
between Commonwealth Edison Company, as borrow-
er, and The Bank of New York, individually and
as agent (File No. 1-1839, Form 10-K for the
year ended December 31, 1992, Exhibit (4)-29). x
*(4)-37 Credit Agreement dated as of November 22, 1994,
among Unicom Enterprises Inc., the Banks Named
Therein and Citibank, N.A. (File No. 1-11375,
Form 10-K for the year ended December 31, 1994,
Exhibit (4)-35). x
*(4)-38 Guaranty dated November 22, 1994, by Unicom Cor-
poration in favor of the Lenders and LC Banks
parties to the aforementioned Credit Agreement
with Unicom Enterprises Inc. (File No. 1-11375,
Form 10-K for the year ended December 31, 1994,
Exhibit (4)-36). x
*(4)-39 Guaranty dated November 22, 1994, by Unicom Cor-
poration in favor of Citibank, N.A. (File No. 1-
11375, Form 10-K for the year ended December 31,
1994, Exhibit (4)-37). x
*(10)-1 Nuclear Fuel Lease Agreement dated as of November
23, 1993, between CommEd Fuel Company, Inc., as
Lessor, and Commonwealth Edison Company, as Les-
see (File No. 1-1839, Form 10-K for the year
ended December 31, 1993, Exhibit (10)-1). x
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
<C> <S> <C> <C>
+*(10)-2 Unicom Corporation Long-Term Incentive Plan (File
No. 1-1839, ComEd Proxy Statement dated March
26, 1993, Exhibit A). x
+*(10)-3 Amendment to Unicom Corporation Long-Term Incen-
tive Plan, effective September 1, 1994 (File No.
33-56991, Form S-8, Exhibit (4)-4). x
+*(10)-4 1994 Long-Term Performance Unit Award for Execu-
tive and Group Level Employes Payable in 1996
under the 1993 Long-Term Incentive Plan (File
No. 1-1839, Form 10-K/A-1 for the year ended De-
cember 31, 1993, Exhibit (10)-4). x x
+*(10)-5 1994 Long-Term Performance Unit Award for Execu-
tive and Group Level Employes Payable in 1997
under the 1993 Long-Term Incentive Plan (File
No. 1-1839, Form 10-K/A-1 for the year ended De-
cember 31, 1993, Exhibit (10)-5). x x
+ (10)-6 1995 Long-Term Performance Unit Award for Execu-
tive and Group Level Employees Payable in 1998
under the Unicom Corporation Long-Term Incentive
Plan, as amended. x x
+*(10)-7 1995 Variable Compensation Award for Management
Employees under the Unicom Corporation Long-Term
Incentive Plan (File Nos. 1-11375 and 1-1839,
Form 10-K for the year ended December 31, 1994,
Exhibit (10)-7). x x
+*(10)-8 1995 Award to Mr. O'Connor and Mr. Skinner under
the Unicom Corporation Long-Term Incentive Plan
(File Nos. 1-11375 and 1-1839, Form 10-K for the
year ended December 31, 1994, Exhibit (10)-8). x x
+ (10)-9 1996 Long-Term Performance Unit Award for Execu-
tive and Group Level Employees Payable in 1999
under the Unicom Corporation Long-Term Incentive
Plan. x x
+ (10)-10 1996 Variable Compensation Award for Management
Employees under the Unicom Corporation Long-Term
Incentive Plan. x x
+ (10)-11 1996 Award to Mr. O'Connor, Mr. Mullin and Mr.
Skinner under the Unicom Corporation Long-Term
Incentive Plan. x x
+ (10)-12 Unicom Corporation Deferred Compensation Unit
Plan, as amended. x x
+*(10)-13 Deferred Compensation Plan (included in Article
Five of Exhibit (3)-2 above). x
+*(10)-14 Management Incentive Compensation Plan, effective
January 1, 1989 (File No. 1-1839, Form 10-K for
the year ended December 31, 1988, Exhibit (10)-
4). x
+*(10)-15 Amendments to Management Incentive Compensation
Plan, dated December 14, 1989 and March 21, 1990
(File No. 1-1839, Form 10-K for the year ended
December 31, 1989, Exhibit (10)-5). x
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
<C> <S> <C> <C>
+*(10)-16 Amendment to Management Incentive Compensation
Plan, dated March 21, 1991 (File No. 1-1839,
Form 10-K for the year ended December 31, 1991,
Exhibit (10)-6). x
+ (10)-17 Retirement Plan for Directors, effective Septem-
ber 1, 1994, as amended through May 24, 1995. x
+ (10)-18 Retirement Plan for Directors, effective January
1, 1987, as amended through May 24, 1995. x
+ (10)-19 Unicom Corporation Outside Director Stock Award
Plan as amended. x
+*(10)-20 Executive Group Life Insurance Plan (File No. 1-
1839, Form 10-K for the year ended December 31,
1980, Exhibit (10)-3). x
+*(10)-21 Amendment to the Executive Group Life Insurance
Plan (File No. 1-1839, Form 10-K for the year
ended December 31, 1981, Exhibit (10)-4). x
+*(10)-22 Amendment to the Executive Group Life Insurance
Plan dated December 12, 1986 (File No. 1-1839,
Form 10-K for the year ended December 31, 1986,
Exhibit (10)-6). x
+*(10)-23 Amendment of Executive Group Life Insurance Plan
to implement program of "split dollar life in-
surance" dated December 13, 1990 (File No. 1-
1839, Form 10-K for the year ended December 31,
1990, Exhibit (10)-10). x
+*(10)-24 Commonwealth Edison Company Supplemental Manage-
ment Retirement Plan (File No. 1-1839, Form 10-K
for the year ended December 31, 1985, Exhibit
(10)-6). x
+*(10)-25 Amendment of Executive Group Life Insurance Plan
to stabilize the death benefit applicable to
participants dated July 22, 1992 (File No. 1-
1839, Form 10-K for the year ended December 31,
1992, Exhibit (10)-13). x
+*(10)-26 Letter Agreement dated December 16, 1992 between
Commonwealth Edison Company and Samuel K. Skinner
(File No. 1-1839, Form 10-K for the year ended
December 31, 1992, Exhibit (10)-14). x
+ (10)-27 Amendment dated May 31, 1995 to Letter Agreement
dated December 16, 1992 between Commonwealth Ed-
ison Company and Samuel K. Skinner. x
+ (10)-28 Letter Agreement dated November 14, 1995 between
Commonwealth Edison Company and Leo F. Mullin. x
+*(10)-29 Commonwealth Edison Company Excess Benefit Sav-
ings Plan (File No. 1-1839, Form 10-Q for the
quarter ended June 30, 1994, Exhibit (10)-2). x
+ (10)-30 Amendment No. 1 to Commonwealth Edison Company
Excess Benefit Savings Plan dated May 24, 1995. x
+ (10)-31 Unicom Corporation Stock Bonus Deferral Plan. x x
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ------------------------------------------------- ------ -----
<C> <S> <C> <C>
(12) Statement re computation of ratios of earnings to
fixed charges and ratios of earnings to fixed
charges and preferred and preference stock divi-
dend requirements for ComEd. x
(21)-1 Subsidiaries of Unicom Corporation. x
(21)-2 Subsidiaries of Commonwealth Edison Company. x
(23)-1 Consent of experts for Unicom Corporation. x
(23)-2 Consent of experts for Commonwealth Edison Compa-
ny. x
(24)-1 Powers of attorney of Directors whose names are
signed to the Unicom Corporation Annual Report
on Form 10-K pursuant to such powers. x
(24)-2 Powers of attorney of Directors whose names are
signed to the Commonwealth Edison Company Annual
Report on Form 10-K pursuant to such powers. x
(99)-1 Unicom Corporation's Current Report on Form 8-K
dated January 26, 1996. x
(99)-2 Commonwealth Edison Company's Current Report on
Form 8-K dated January 26, 1996. x
</TABLE>
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Unicom and ComEd
hereby agree to furnish to the SEC, upon request, any instrument
defining the rights of holders of long-term debt of ComEd not filed as
an exhibit herein. No such instrument authorizes securities in excess
of 10% of the total assets of ComEd.
(B) REPORTS ON FORM 8-K:
A Current Report on Form 8-K dated December 11, 1995 was filed by Unicom
and ComEd to describe ComEd's announcement of a series of customer
initiatives.
A Current Report on Form 8-K dated December 13, 1995 was filed by Unicom
and ComEd to describe ComEd's announcement of a proposal to amend certain
provisions of the Illinois Public Utilities Act.
36
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE
To Unicom Corporation:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Unicom Corporation and subsidiary
companies incorporated by reference in this Annual Report on Form 10-K, and
have issued our report thereon dated January 26, 1996.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed on page 29, Item
14.(a), is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Chicago, Illinois
January 26, 1996
37
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE
To Commonwealth Edison Company:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Commonwealth Edison Company and
subsidiary companies incorporated by reference in this Annual Report on Form
10-K, and have issued our report thereon dated January 26, 1996.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed on page 29, Item
14.(a), is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Chicago, Illinois
January 26, 1996
38
<PAGE>
SCHEDULE II
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(THOUSANDS OF DOLLARS)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------------------------- --------- ------------------ ---------- --------
ADDITIONS
------------------
BALANCE CHARGED
AT TO COSTS CHARGED BALANCE
BEGINNING AND TO OTHER AT END
DESCRIPTION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS OF YEAR
- ---------------------------- --------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER
31, 1993
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts (a).............. $12,976 $(2,066) $ -- $ -- $10,910
======= ======= ====== ======== =======
Other Reserves:
Estimated liabilities asso-
ciated with remediation
costs and former manufac-
tured gas plant sites..... $24,522 $ 6,020 $ -- $ (1,020)(b) $29,522
======= ======= ====== ======== =======
Accumulated provision for
injuries and damages...... $64,512 $13,963 $7,795 $(29,536)(c) $56,734
======= ======= ====== ======== =======
FOR THE YEAR ENDED DECEMBER
31, 1994
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts (a).............. $10,910 $ (190) $ -- $ -- $10,720
======= ======= ====== ======== =======
Other Reserves:
Estimated liabilities asso-
ciated with remediation
costs and former manufac-
tured gas plant sites..... $29,522 $ 5,039 $ -- $ (2,039)(b) $32,522
======= ======= ====== ======== =======
Accumulated provision for
injuries and damages...... $56,734 $20,270 $7,802 $(29,494)(c) $55,312
======= ======= ====== ======== =======
FOR THE YEAR ENDED DECEMBER
31, 1995
- ----------------------------
Reserve Deducted From Assets
in Consolidated Balance
Sheet:
Provision for uncollectible
accounts (a).............. $10,720 $ 1,108 $ -- $ -- $11,828
======= ======= ====== ======== =======
Other Reserves:
Estimated liabilities asso-
ciated with remediation
costs and former manufac-
tured gas plant sites..... $32,522 $ 2,271 $ -- $ (2,271)(b) $32,522
======= ======= ====== ======== =======
Accumulated provision for
injuries and damages...... $55,312 $21,135 $4,671 $(23,142)(c) $57,976
======= ======= ====== ======== =======
</TABLE>
Notes:
(a) Bad debt losses, net of recoveries, and provisions for uncollectible
accounts were charged to operating expense and amounted to $28,867,000,
$25,287,000 and $26,278,000 in 1993, 1994 and 1995, respectively.
(b) Expenditures for site investigation and cleanup costs.
(c) Payments of claims and related costs.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
39
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS
REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF CHICAGO AND STATE OF ILLINOIS ON THE 28TH
DAY OF MARCH 1996.
UNICOM CORPORATION
By James J. O'Connor
-----------------------------
James J. O'Connor, Chairman
and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF
OF THE REGISTRANT AND IN THE CAPACITIES INDICATED ON THE 28TH DAY OF
MARCH 1996.
SIGNATURE TITLE
- ---------------------------- ---------------------
James J. O'Connor Chairman and Chief
- ---------------------------- Executive Officer and
James J. O'Connor Director (principal
executive officer)
John C. Bukovski
- ---------------------------- Vice President (principal
John C. Bukovski financial officer)
Roger F. Kovack Comptroller (principal
- ---------------------------- accounting officer)
Roger F. Kovack
Jean Allard Director
Edward A. Brennan* Director
James W. Compton* Director
Sue L. Gin* Director
Donald P. Jacobs Director
Edgar D. Jannotta* Director
George E. Johnson* Director
Edward A. Mason* Director
Leo F. Mullin* Vice Chairman and Director
Frank A. Olson Director
Samuel K. Skinner* President and Director
David A. Scholz
*By
----------------------------
David A. Scholz, Attorney-in-
fact
[Signature page to Unicom Corporation Annual Report on Form 10-K]
40
<PAGE>
UNICOM CORPORATION
COMMONWEALTH EDISON COMPANY
FILE NO.'S 1-11375
AND 1-1839
EXHIBIT INDEX
The following exhibits are filed with the indicated Annual Report on Form 10-
K or incorporated therein by reference. Documents indicated by an asterisk (*)
are incorporated by reference to the File No. indicated. Documents indicated by
a plus sign (+) identify management contracts or compensatory plans or
arrangements.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ----------------------------------------------------- ------ -----
<C> <S> <C> <C>
*(3)-1 Articles of Incorporation of Unicom effective January
28,
1994. (File No. 1-11375, Form 10-K for the year
ended
December 31, 1994, Exhibit (3)-1). x
*(3)-2 Restated Articles of Incorporation of ComEd effective
February 20, 1985, including Statements of Resolu-
tion Establishing Series, relating to the establish-
ment of three new series of ComEd preference stock
known as the "$9.00 Cumulative Preference Stock,"
the "$6.875 Cumulative Preference Stock" and the
"$2.425 Cumulative Preference Stock." (File No. 1-
1839, Form 10-K for the year ended December 31,
1994, Exhibit (3)-2). x
(3)-3 By-Laws of Unicom Corporation, effective January 28,
1994 as amended through December 13, 1995. x
(3)-4 By-Laws of Commonwealth Edison Company, effective
September 2, 1988 as amended through December 13,
1995. x
*(4)-1 Mortgage of ComEd to Illinois Merchants Trust Compa-
ny, Trustee (Continental Illinois National Bank and
Trust Company of Chicago, successor Trustee), dated
July 1, 1923, Supplemental Indenture thereto dated
August 1, 1944, and amendments and supplements
thereto dated, respectively, August 1, 1946, April
1, 1953, April 1, 1966, November 1, 1966, December
1, 1966, March 31, 1967, April 1, 1967, February 1,
1968, July 1, 1968, October 1, 1968, February 28,
1969, May 29, 1970, January 1, 1971, June 1, 1971,
May 31, 1972, June 1, 1973, June 15, 1973, October
15, 1973, May 31, 1974, July 1, 1974, June 13, 1975,
May 28, 1976, January 15, 1977, June 1, 1977 and
June 3, 1977 (File No. 2-60201, Form S-7, Exhibit 2-
1). x
*(4)-2 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, December 1, 1977, May 17,
1978, August 31, 1978, June 18, 1979, June 20, 1980,
April 16, 1981, April 30, 1982, April 15, 1983,
April 13, 1984, March 1, 1985 and April 15, 1985
(File No. 2-99665, Form S-3, Exhibit (4)-3). x
*(4)-3 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, April 15, 1986 and May 1,
1986 (File No. 33-6879, Form S-3, Exhibit (4)-9). x
*(4)-4 Supplemental Indenture to Mortgage dated July 1, 1923
dated January 12, 1987 (File No. 33-13193, Form S-3,
Exhibit (4)-6). x
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ----------------------------------------------------- ------ -----
<C> <S> <C> <C>
*(4)-5 Supplemental Indenture to Mortgage dated July 1, 1923
dated June 30, 1989 (File No. 33-32929, Form S-3,
Exhibit (4)-11). x
*(4)-6 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, February 15, 1990 and June
15, 1990 (File No. 33-38232, Form S-3, Exhibits (4)-
11 and (4)-12). x
*(4)-7 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, June 1, 1991, October 1,
1991 and October 15, 1991 (File No. 33-44018, Form
S-3, Exhibits (4)-12, (4)-13 and (4)-14). x
*(4)-8 Supplemental Indenture to Mortgage dated July 1, 1923
dated February 1, 1992 (File No. 1-1839, Form 10-K
for the year ended December 31, 1991, Exhibit (4)-
18). x
*(4)-9 Supplemental Indenture to Mortgage dated July 1, 1923
dated May 15, 1992 (File No. 33-48542, Form S-3, Ex-
hibit (4)-14). x
*(4)-10 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, July 15, 1992, September
15, 1992 and October 1, 1992 (File No. 33-53766,
Form S-3, Exhibits (4)-13, (4)-14 and (4)-15). x
*(4)-11 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, February 1, 1993 and March
1, 1993 (File No. 1-1839, Form 10-K for the year
ended December 31, 1992, Exhibits (4)-14 and (4)-
15). x
*(4)-12 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, April 1, 1993 and April
15, 1993 (File No. 33-64028, Form S-3, Exhibits (4)-
12 and (4)-13). x
*(4)-13 Supplemental Indentures to Mortgage dated July 1,
1923 dated, respectively, June 15, 1993 and July 1,
1993 (File No. 1-1839, Form 8-K dated May 21, 1993,
Exhibits (4)-1 and (4)-2). x
*(4)-14 Supplemental Indenture to Mortgage dated July 1, 1923
dated July 15, 1993 (File No. 1-1839, Form 10-Q for
the quarter ended June 30, 1993, Exhibit (4)-1). x
*(4)-15 Supplemental Indenture to Mortgage dated July 1, 1923
dated January 15, 1994 (File No. 1-1839, Form 10-K
for the year ended December 31, 1993, Exhibit (4)-
15). x
*(4)-16 Supplemental Indenture to Mortgage dated July 1, 1923
dated December 1, 1994 (File No. 1-1839, Form 10-K
for the year ended December 31, 1994, Exhibit (4)-
16). x
*(4)-17 Indentures of ComEd to The First National Bank of
Chicago, Trustee (Harris Trust and Savings Bank,
successor Trustee), dated April 1, 1949, October 1,
1949, October 1, 1950, October 1, 1954, January 1,
1958, January 1, 1959 and December 1, 1961 (File No.
1-1839, Form 10-K for the year ended December 31,
1982, Exhibit (4)-20). x
*(4)-18 Indenture of ComEd dated February 15, 1973 to The
First National Bank of Chicago, Trustee (LaSalle Na-
tional Bank, successor Trustee), and Supplemental
Indenture thereto dated July 13, 1973 (File No. 2-
66100, Form S-16, Exhibit (b)-2). x
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ----------------------------------------------------- ------ -----
<C> <S> <C> <C>
*(4)-19 Indenture dated as of September 1, 1987 between ComEd
and Citibank, N.A., Trustee relating to Notes (File
No. 33-20619, Form S-3, Exhibit (4)-13). x
*(4)-20 Supplemental Indenture to Indenture dated September
1, 1987 dated September 15, 1987 (File No. 33-20619,
Form S-3, Exhibit (4)-14). x
*(4)-21 Supplemental Indenture to Indenture dated September
1, 1987 dated May 18, 1988 (File No. 33-23036, Form
S-3, Exhibit (4)-14). x
*(4)-22 Supplemental Indenture to Indenture dated September
1, 1987 dated July 14, 1989 (File No. 33-32929, Form
S-3, Exhibit (4)-16). x
*(4)-23 Supplemental Indenture to Indenture dated September
1, 1987 dated April 1, 1991 (File No. 33-44018, Form
S-3, Exhibit (4)-21). x
*(4)-24 Supplemental Indenture to Indenture dated September
1, 1987 dated April 15, 1992 (File No. 33-48542,
Form S-3, Exhibit
(4)-22). x
*(4)-25 Supplemental Indenture to Indenture dated September
1, 1987 dated July 15, 1992 (File No. 33-53766, Form
S-3, Exhibit (4)-24). x
*(4)-26 Supplemental Indenture to Indenture dated September
1, 1987 dated October 15, 1993 (File No. 1-1839,
Form 10-Q for the quarter ended September 30, 1993,
Exhibit (4)-1). x
*(4)-27 Supplemental Indenture to Indenture dated September
1, 1987 dated April 1, 1994 (File No. 1-1839, Form
10-Q for the quarter ended March 31, 1994, Exhibit
(4)-1). x
(4)-28 Instrument of Resignation, Appointment and Acceptance
dated January 31, 1996, under the provisions of the
Mortgage dated July 1, 1923, and Indentures Supple-
mental thereto. x
(4)-29 Instrument dated as of January 31, 1996, for trustee
under the Mortgage dated July 1, 1923 and Indentures
Supplemental thereto. x
*(4)-30 Credit Agreement dated as of October 1, 1991, among
Commonwealth Edison Company, as borrower, the Banks
named therein and the other Lenders from time to
time parties thereto, and Citibank, N.A. (File No.
1-1839, Form 10-K for the year ended December 31,
1991, Exhibit (4)-27). x
*(4)-31 Credit Agreement dated as of October 1, 1991, among
Commonwealth Edison Company, as borrower, the Banks
named therein and the other Lenders from time to
time parties thereto, and Citibank, N.A. (File No.
1-1839, Form 10-K for the year ended December 31,
1991, Exhibit (4)-28). x
*(4)-32 Letter Agreement dated as of October 4, 1993, among
Commonwealth Edison Company and certain of the Banks
party to the Credit Agreement dated as of October 1,
1991 (File No. 1-1839, Form 10-K for the year ended
December 31, 1993, Exhibit (4)-28). x
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ----------------------------------------------------- ------ -----
<C> <S> <C> <C>
*(4)-33 Term Loan Agreement dated as of January 7, 1992, be-
tween Commonwealth Edison Company, as borrower, and
The First National Bank of Chicago, individually and
as agent (File No. 1-1839, Form 10-K for the year
ended December 31, 1992, Exhibit (4)-28). x
*(4)-34 First Amendment to Term Loan Agreement dated as of
January 9, 1995, by and among Commonwealth Edison
Company, The First National Bank of Chicago, indi-
vidually and as agent, and the banks party thereto
(File No. 1-1839, Form 10-K for the year ended De-
cember 31, 1994, Exhibit (4)-32). x
*(4)-35 Term Loan Agreement dated as of January 15, 1992, be-
tween Commonwealth Edison Company, as borrower, and
Westpac Banking Corporation, Chicago Branch, indi-
vidually and as agent (File No. 1-1839, Form 10-K
for the year ended December 31, 1992, Exhibit (4)-
29). x
*(4)-36 Term Loan Agreement dated as of January 16, 1992, be-
tween Commonwealth Edison Company, as borrower, and
The Bank of New York, individually and as agent
(File No. 1-1839, Form 10-K for the year ended De-
cember 31, 1992, Exhibit (4)-29). x
*(4)-37 Credit Agreement dated as of November 22, 1994, among
Unicom Enterprises Inc., the Banks Named Therein and
Citibank, N.A. (File No. 1-11375, Form 10-K for the
year ended December 31, 1994, Exhibit (4)-35). x
*(4)-38 Guaranty dated November 22, 1994, by Unicom Corpora-
tion in favor of the Lenders and LC Banks parties to
the aforementioned Credit Agreement with Unicom En-
terprises Inc. (File No. 1-11375, Form 10-K for the
year ended December 31, 1994, Exhibit (4)-36). x
*(4)-39 Guaranty dated November 22, 1994, by Unicom Corpora-
tion in favor of Citibank, N.A. (File No. 1-11375,
Form 10-K for the year ended December 31, 1994, Ex-
hibit (4)-37). x
*(10)-1 Nuclear Fuel Lease Agreement dated as of November 23,
1993, between CommEd Fuel Company, Inc., as Lessor,
and Commonwealth Edison Company, as Lessee (File No.
1-1839, Form 10-K for the year ended December 31,
1993, Exhibit (10)-1). x
+*(10)-2 Unicom Corporation Long-Term Incentive Plan (File No.
1-1839, ComEd Proxy Statement dated March 26, 1993,
Exhibit A). x
+*(10)-3 Amendment to Unicom Corporation Long-Term Incentive
Plan, effective September 1, 1994 (File No. 33-
56991, Form S-8, Exhibit (4)-4). x
+*(10)-4 1994 Long-Term Performance Unit Award for Executive
and Group Level Employes Payable in 1996 under the
1993 Long-Term Incentive Plan (File No. 1-1839, Form
10-K/A-1 for the year ended December 31, 1993, Ex-
hibit (10)-4). x x
+*(10)-5 1994 Long-Term Performance Unit Award for Executive
and Group Level Employes Payable in 1997 under the
1993 Long-Term Incentive Plan (File No. 1-1839, Form
10-K/A-1 for the year ended December 31, 1993, Ex-
hibit (10)-5). x x
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ----------------------------------------------------- ------ -----
<C> <S> <C> <C>
+ (10)-6 1995 Long-Term Performance Unit Award for Executive
and Group Level Employees Payable in 1998 under the
Unicom Corporation Long-Term Incentive Plan, as
amended. x x
+*(10)-7 1995 Variable Compensation Award for Management Em-
ployees under the Unicom Corporation Long-Term In-
centive Plan (File Nos. 1-11375 and 1-1839, Form 10-
K for the year ended December 31, 1994, Exhibit
(10)-7). x x
+*(10)-8 1995 Award to Mr. O'Connor and Mr. Skinner under the
Unicom Corporation Long-Term Incentive Plan (File
Nos. 1-11375 and 1-1839, Form 10-K for the year
ended December 31, 1994, Exhibit (10)-8). x x
+ (10)-9 1996 Long-Term Performance Unit Award for Executive
and Group Level Employees Payable in 1999 under the
Unicom Corporation Long-Term Incentive Plan. x x
+ (10)-10 1996 Variable Compensation Award for Management Em-
ployees under the Unicom Corporation Long-Term In-
centive Plan. x x
+ (10)-11 1996 Award to Mr. O'Connor, Mr. Mullin and Mr. Skin-
ner under the Unicom Corporation Long-Term Incentive
Plan. x x
+ (10)-12 Unicom Corporation Deferred Compensation Unit Plan,
as amended. x x
+*(10)-13 Deferred Compensation Plan (included in Article Five
of Exhibit (3)-2 above). x
+*(10)-14 Management Incentive Compensation Plan, effective
January 1, 1989 (File No. 1-1839, Form 10-K for the
year ended December 31, 1988, Exhibit (10)-4). x
+*(10)-15 Amendments to Management Incentive Compensation Plan,
dated December 14, 1989 and March 21, 1990 (File No.
1-1839, Form 10-K for the year ended December 31,
1989, Exhibit (10)-5). x
+*(10)-16 Amendment to Management Incentive Compensation Plan,
dated March 21, 1991 (File No. 1-1839, Form 10-K for
the year ended December 31, 1991, Exhibit (10)-6). x
+ (10)-17 Retirement Plan for Directors, effective September 1,
1994, as amended through May 24, 1995. x
+ (10)-18 Retirement Plan for Directors, effective January 1,
1987, as amended through May 24, 1995. x
+ (10)-19 Unicom Corporation Outside Director Stock Award Plan
as amended. x
+*(10)-20 Executive Group Life Insurance Plan (File No. 1-1839,
Form 10-K for the year ended December 31, 1980, Ex-
hibit (10)-3). x
+*(10)-21 Amendment to the Executive Group Life Insurance Plan
(File No. 1-1839, Form 10-K for the year ended De-
cember 31, 1981, Exhibit (10)-4). x
+*(10)-22 Amendment to the Executive Group Life Insurance Plan
dated December 12, 1986 (File No. 1-1839, Form 10-K
for the year ended December 31, 1986, Exhibit (10)-
6). x
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT UNICOM COMED
------- ----------------------------------------------------- ------ -----
<C> <S> <C> <C>
+*(10)-23 Amendment of Executive Group Life Insurance Plan to
implement program of "split dollar life insurance"
dated December 13, 1990 (File No. 1-1839, Form 10-K
for the year ended December 31, 1990, Exhibit (10)-
10). x
+*(10)-24 Commonwealth Edison Company Supplemental Management
Retirement Plan (File No. 1-1839, Form 10-K for the
year ended December 31, 1985, Exhibit (10)-6). x
+*(10)-25 Amendment of Executive Group Life Insurance Plan to
stabilize the death benefit applicable to partici-
pants dated July 22, 1992 (File No. 1-1839, Form 10-
K for the year ended December 31, 1992, Exhibit
(10)-13). x
+*(10)-26 Letter Agreement dated December 16, 1992 between Com-
monwealth Edison Company and Samuel K. Skinner (File
No. 1-1839, Form 10-K for the year ended December
31, 1992, Exhibit (10)-14). x
+ (10)-27 Amendment dated May 31, 1995 to Letter Agreement
dated December 16, 1992 between Commonwealth Edison
Company and Samuel K. Skinner. x
+ (10)-28 Letter Agreement dated November 14, 1995 between Com-
monwealth Edison Company and Leo F. Mullin. x
+*(10)-29 Commonwealth Edison Company Excess Benefit Savings
Plan (File No. 1-1839, Form 10-Q for the quarter
ended June 30, 1994, Exhibit (10)-2). x
+ (10)-30 Amendment No. 1 to Commonwealth Edison Company Excess
Benefit Savings Plan dated May 24, 1995. x
+ (10)-31 Unicom Corporation Stock Bonus Deferral Plan. x x
(12) Statement re computation of ratios of earnings to
fixed charges and ratios of earnings to fixed
charges and preferred and preference stock dividend
requirements for ComEd. x
(21)-1 Subsidiaries of Unicom Corporation. x
(21)-2 Subsidiaries of Commonwealth Edison Company. x
(23)-1 Consent of experts for Unicom Corporation. x
(23)-2 Consent of experts for Commonwealth Edison Company. x
(24)-1 Powers of attorney of Directors whose names are
signed to the Unicom Corporation Annual Report on
Form 10-K pursuant to such powers. x
(24)-2 Powers of attorney of Directors whose names are
signed to the Commonwealth Edison Company Annual Re-
port on Form 10-K pursuant to such powers. x
(99)-1 Unicom Corporation's Current Report on Form 8-K dated
January 26, 1996. x
(99)-2 Commonwealth Edison Company's Current Report on Form
8-K dated January 26, 1996. x
</TABLE>
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, Unicom and ComEd hereby
agree to furnish to the SEC, upon request, any instrument defining the rights
of holders of long-term debt of ComEd not filed as an exhibit herein. No such
instrument authorizes securities in excess of 10% of the total assets of ComEd.
6
<PAGE>
Exhibit (3)-3
Unicom Corporation
Form 10-K File No. 1-11375
UNICOM CORPORATION
BY-LAWS
EFFECTIVE JANUARY 28, 1994
AS AMENDED THROUGH
DECEMBER 13, 1995
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
Page
Number
------
<S> <C> <C>
ARTICLE I. Stock............................................. 1
ARTICLE II. Meetings of Shareholders.......................... 3
ARTICLE III. Board of Directors................................ 6
ARTICLE IV. Committees of the Board of Directors.............. 8
ARTICLE V. Officers.......................................... 12
ARTICLE VI. Indemnification................................... 16
ARTICLE VII. Miscellaneous..................................... 18
ARTICLE VIII. Alteration, Amendment or Repeal of By-Laws........ 19
</TABLE>
<PAGE>
UNICOM CORPORATION
BY-LAWS
_____
ARTICLE I.
STOCK.
SECTION 1. Each holder of fully paid stock shall be entitled to a
certificate or certificates of stock stating the number and class of shares, and
the designation of the series, if any, which such certificate represents. All
certificates of stock shall at the time of their issuance be signed either
manually or by facsimile signature by the Chairman, the President or a Vice
President and by the Secretary or an Assistant Secretary. All certificates of
stock shall be sealed with the seal of the Company or a facsimile of such seal,
shall be countersigned either manually or by facsimile signature by a Transfer
Agent and shall be authenticated by manual signature and registered by a
Registrar. The Board of Directors shall appoint one or more Transfer Agents,
none of whom shall be officers of the Company authorized to sign certificates of
stock, and one or more Registrars, each of which Registrars shall be a bank or
trust company. Certificates of stock shall not be valid until countersigned by
a Transfer Agent and authenticated and registered by a Registrar in the manner
provided by the Board of Directors.
SECTION 2. Shares of stock shall be transferable only on the books of
the Company and, except as hereinafter provided or as otherwise required by law,
shall be transferred only upon proper endorsement and surrender of the
certificates issued therefor. If an outstanding certificate of stock shall be
lost, destroyed or stolen, the holder thereof may have a new certificate upon
producing evidence satisfactory to the Board of Directors of such loss,
destruction or theft, and upon furnishing to the Company, the Transfer Agents
and the Registrars a bond of indemnity deemed sufficient by the Board of
Directors against claims under the outstanding certificate.
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SECTION 3. The certificates for each class or series of stock shall
be numbered and issued in consecutive order and a record shall be kept of the
name and address of the person to whom each certificate is issued, the number of
shares represented by the certificate and the number and date of the
certificate. All certificates exchanged or returned to the Company or the
Transfer Agent for transfer shall be canceled and filed.
SECTION 4. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than sixty days and, for a meeting of
shareholders, not less than ten days, or in the case of a merger, consolidation,
share exchange, dissolution or sale, lease or exchange of assets, not less than
twenty days, immediately preceding such meeting.
SECTION 5. If any subscription for stock in the Company or any
installment of such subscription shall be unpaid when due, as the Board of
Directors shall have determined the time for payment, and shall continue unpaid
for twenty days after demand for the amount due, made either in person or by
written notice duly mailed to the last address, as it appears on the records of
the Company, of the subscriber or other person by whom the subscription or
installment shall be payable, the stock or subscription upon which payment shall
be so due shall, upon the expiration of said twenty days, become and be
forfeited to the Company without further action, demand or notice, and such
stock or subscription may be sold at public sale, subject to payment of the
amount due and unpaid, plus all costs and expenses incurred by the Company in
that connection, at a time and place to be stated in a written notice to be
mailed to the recorded address of the delinquent subscriber or other person in
default on the subscription at least ten days prior to the time fixed for such
sale; provided, that the excess of proceeds of such sale realized over the
amount due and unpaid on said stock or subscription shall be paid to the
delinquent subscriber of other person in default on the subscription, or to his
or her legal representative; and, provided further, that no forfeiture of stock,
or of any amounts paid upon
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a subscription therefor, shall be declared as against the estate of any decedent
before distribution shall have been made of the estate.
The foregoing provisions for the forfeiture and sale of stock or
subscriptions shall not exclude any other remedy which may lawfully be
enforceable at any time, by forfeiture of stock or of amounts theretofore paid
or otherwise, against any person for nonpayment of a subscription or of any
installment thereof.
SECTION 6. Transfers of shares shall be made only on the books of the
Company by the registered holder thereof or by his or her legal representative,
who shall furnish proper evidence of authority to transfer, or by his or her
attorney or successor thereunto authorized by power of attorney or by documents
duly executed and filed with the Secretary or Transfer Agent of the Company, and
upon surrender for cancellation of the certificate for such shares. The person
in whose name shares stand on the books of the Company shall be deemed the owner
thereof for all purposes as regards the Company.
SECTION 7. The Company shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof and
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of the State of Illinois.
ARTICLE II.
MEETINGS OF SHAREHOLDERS.
SECTION 1. The regular annual meeting of the shareholders of the
Company for the election of Directors and for the transaction of such other
business as may come before the meeting shall be held on such day in April or
May of each year as the Board of Directors may by resolution determine. Each
such regular annual meeting and each special meeting of the shareholders shall
be held at such place as may be fixed by the Board of Directors and at such hour
as the Board of Directors shall order.
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SECTION 2. Special meetings of the shareholders may be called by the
Chairman, by the Board of Directors, by a majority of the Directors individually
or by the holders of not less than one-fifth of the total outstanding shares of
capital stock of the Company.
SECTION 3. Written notice stating the place, day and hour of the
meeting of the shareholders and, in the case of a special meeting, the purpose
or purposes for which the meeting is called shall be delivered not less than ten
nor more than sixty days before the date of the meeting, or in the case of a
merger, consolidation, share exchange, dissolution or sale, lease or exchange of
assets not less than twenty nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction of the Chairman,
the Secretary or the persons calling the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the shareholder
at the shareholder's address as it appears upon the records of the Company, with
postage thereon prepaid.
SECTION 4. At all meetings of the shareholders, a majority of the
outstanding shares of stock, entitled to vote on a matter, represented in person
or by proxy, shall constitute a quorum for consideration of such matter, but the
shareholders represented at any meeting, though less than a quorum, may adjourn
the meeting to some other day or sine die. If a quorum is present, the
affirmative vote of the majority of the shares of stock represented at the
meeting and entitled to vote on a matter shall be the act of the shareholders,
unless the vote of a greater number or voting by classes is required by law or
the articles of incorporation.
SECTION 5. At every meeting of the shareholders, each outstanding
share of stock shall be entitled to one vote on each matter submitted for a
vote. In all elections for Directors, every shareholder shall have the right to
vote the number of shares owned by such shareholder for as many persons as there
are Directors to be elected, or to cumulate such votes and give one candidate as
many votes as shall equal the number of Directors to be elected multiplied by
the number of such shares or to distribute such cumulative votes in any
proportion among any number of candidates. A shareholder may vote either in
person or by proxy.
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A shareholder may appoint a proxy to vote or otherwise act for him or her by
signing an appointment form and delivering it to the person so appointed.
SECTION 6. Any meeting at which a quorum of shareholders is present,
in person or by proxy, may adjourn from time to time without notice, other than
announcement at such meeting, until its business is completed. At the adjourned
meeting, the Company may transact any business which might have been transacted
at the original meeting. If the adjournment is for more than thirty days, a
notice of the adjourned meeting shall be given to each shareholder of record
entitled to vote at the meeting.
SECTION 7. The Secretary of the Company shall make or cause to be
made, within twenty days after the record date for a meeting of shareholders of
the Company or ten days before such meeting, whichever is earlier, a complete
list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of and the number of shares held by each,
which list, for at least ten days prior to such meeting, shall be kept on file
at the registered office of the Company and shall be subject to inspection by
any shareholder, and to copying at such shareholder's expense, at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting.
SECTION 8. The Chairman and the Secretary of the Company shall, when
present, act as chairman and secretary, respectively, of each meeting of the
shareholders.
SECTION 9. At any meeting of shareholders, the chairman of the
meeting may, or upon the request of any shareholder shall, appoint one or more
persons as inspectors for such meeting, unless an inspector or inspectors shall
have been previously appointed for such meeting by the Chairman. Such
inspectors shall ascertain and report the number of shares of stock represented
at the meeting, based upon their determination of the validity and effect of
proxies, count all votes and report the results and do such other acts as are
proper to conduct the election and voting with impartiality and fairness to all
the shareholders.
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SECTION 10. Voting on any question or in any election may be viva
voce unless the presiding officer shall order or any shareholder shall demand
that voting be by ballot.
ARTICLE III.
BOARD OF DIRECTORS.
SECTION 1. The business and affairs of the Company shall be managed
by or under the direction of the Board of Directors. The number of Directors of
the Company shall be not less than ten nor more than fifteen. The Directors
shall be elected at each annual meeting of the shareholders, but if for any
reason the election shall not be held at an annual meeting, it may be
subsequently held at any special meeting of the shareholders called for that
purpose after proper notice. The Directors so elected shall hold office until
the next annual meeting and until their respective successors, willing to serve,
shall have been elected and qualified. Directors need not be residents of the
State of Illinois or shareholders of the Company. No person shall be eligible
for nomination or renomination as a Director by the management of the Company
who, prior to the date of election, shall have attained age seventy-two. No
person who is an employe or a former employe of the Company or of a subsidiary
of the Company shall be eligible for nomination or renomination as a Director by
the management of the Company for a term commencing after such person ceases to
be such an employe; provided, however, that any Director of the Company who was
a Director of Commonwealth Edison Company, an Illinois corporation, in office on
June 15, 1989 who is or has been such an employe may be renominated as a
Director unless such person shall have attained age sixty-five on or before the
date of election of Directors.
SECTION 2. Any vacancy occurring in the Board of Directors, including
a vacancy created by an increase in the number of directors, may be filled by
election at an annual meeting or at a special meeting of shareholders called for
that purpose; provided, however, that any vacancy in the Board of Directors
arising between meetings of shareholders by reason of an increase in the number
of directors or otherwise may be filled by the vote of a majority of the
directors then in office, although less than
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a quorum. Any directors so elected shall serve until the next annual meeting of
shareholders.
SECTION 3. A meeting of the Board of Directors shall be held
immediately, or as soon as practicable, after the annual election of Directors
in each year, provided a quorum for such meeting can be obtained. Notice of
every meeting of the Board, stating the time and place at which such meeting
will be held, shall be given to each Director personally, by telephone or by
other means of communication at least one day, or by depositing the same in the
mails properly addressed at least two days before the day of such meeting. A
meeting of the Board of Directors may be called at any time by the Chairman or
by any two Directors and shall be held at such place as shall be specified in
the notice for such meeting.
SECTION 4. A majority of the number of Directors then in office, but
not less than six, shall constitute a quorum for the transaction of business at
any meeting of the Board, but a lesser number may adjourn the meeting from time
to time until a quorum is obtained, or may adjourn sine die. The act of the
majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
SECTION 5. Each member of the Board not receiving a salary from the
Company or a subsidiary of the Company shall be paid such fees as the Board of
Directors may from time to time, by resolution adopted by the affirmative vote
of a majority of the Directors then in office, and irrespective of any personal
interest of any of its members, determine. The Directors shall be paid their
reasonable expenses, if any, of attendance at each meeting of the Board of
Directors. Members of any committee of the Board of Directors may be allowed
like fees and expenses for service on or attendance at meetings of such
committee. No such payment shall preclude any Director from serving the Company
in any other capacity and receiving compensation therefor.
SECTION 6. A Director of the Company who is present at a meeting of
the Board of Directors at which action is taken on any corporate matter shall be
conclusively presumed to have assented to the action taken unless his or her
dissent shall be entered in the minutes of the meeting or unless he shall file
his or her written dissent to such action with the person acting as Secre-
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tary of the meeting before the adjournment thereof or shall forward such dissent
by registered mail to the Secretary of the Company immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
ARTICLE IV.
COMMITTEES OF THE BOARD OF DIRECTORS
SECTION 1. There shall be an Executive Committee of the Board
consisting of six members. The Board of Directors shall, at its first meeting
after the annual meeting of the shareholders in each year, elect a chairman and
the four other members of the Executive Committee. The remaining Directors
shall constitute alternates to serve temporarily, and as far as practicable in
rotation (in such order as shall be established by the Board), in the place of
any member who may be unable to serve. The Chairman or the Directors calling a
meeting of the Executive Committee shall call upon alternates, in rotation, to
serve as herein provided. When any alternate serves, the minutes of the meeting
shall record the name of the member in whose place such alternate serves. The
Directors elected as members of the Executive Committee shall serve as such for
one year and until their respective successors, willing to serve, shall have
been elected. The Executive Committee shall, when the Board is not in session,
have and may exercise all of the authority of the Board of Directors, subject to
the limitations set forth in Section 10 of this Article IV. Vacancies in the
membership of the Executive Committee shall be filled by the Board of Directors.
The Executive Committee shall keep minutes of the proceedings at its meetings.
SECTION 2. There shall be an Audit Committee of the Board consisting
of not less than three nor more than five members who are not employes of the
Company. The Directors elected as members of the Audit Committee shall serve as
such for three years and until their respective successors, willing to serve,
shall have been elected, provided that, to the extent practicable, the members
of the Audit Committee shall be elected for staggered terms. The Board of
Directors shall, at its first meeting after the annual meeting of shareholders
in each year,
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elect the successors of the members whose terms shall then expire. The Board of
Directors shall designate from time to time the member who is to serve as
chairman of the Audit Committee. The Audit Committee shall meet with the
Company's independent auditors at least once each year to review the Company's
financial statements and the scope and results of such auditors' examinations,
monitor the internal accounting controls and practices of the Company, review
the annual report to shareholders and made recommendations as to its approval to
the Board and recommend, subject to shareholder approval, the appointment of
independent auditors, and shall report its findings at least once each year to
the Board. The Audit Committee shall have such powers as it shall deem necessary
for the performance of its duties. Vacancies in the membership of the Audit
Committee shall be filled by the Board of Directors. The Audit Committee shall
keep minutes of the proceedings at its meetings.
SECTION 3. There shall be a Corporate Governance and Compensation
Committee of the Board consisting of those Directors who are not employees or
former employees of the Company. The Board of Directors shall, at its first
meeting after the annual meeting of shareholders in each year, elect a chairman
of the Corporate Governance and Compensation Committee. The Directors serving
as members of the Committee shall serve for one year and until their respective
successors, willing to serve, shall have been elected. The Corporate Governance
and Compensation Committee shall (i) oversee corporate governance policies,
practices and procedures of the Company and make such recommendations as it may
deem appropriate to the Board; and (ii) oversee general compensation policy of
the Company, and establish and administer compensation programs applicable to
the principal officers of the Company, including but not necessarily limited to
the establishment of base salaries and the administration of awards under the
Unicom Corporation Deferred Compensation Unit Plan and the Unicom Corporation
Long-Term Incentive Plan. The Committee shall have such power as it deems
necessary for the performance of its duties. Vacancies in the membership of the
Committee shall be filled by the Board of Directors. The Committee shall keep
minutes of the proceedings at its meetings.
SECTION 4. There shall be a Finance Committee of the Board consisting
of not less than three nor more than five members. The Board of Directors
shall, at its first meeting after the
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annual meeting of shareholders in each year, elect a chairman and the other
members of the Finance Committee. The Directors elected as members of the
Finance Committee shall serve as such for one year and until their respective
successors, willing to serve, shall have been elected. The Finance Committee
shall review the scope and results of the Company's financing program and review
the Company's financial statements, construction budgets and cash budgets as
they relate to the Company's financing program, and shall report its findings at
least once each year to the Board. The Finance Committee shall have such power
as it shall deem necessary for the performance of its duties. Vacancies in the
membership of the Finance Committee shall be filled by the Board of Directors.
The Finance Committee shall keep minutes of the proceedings at its meetings.
SECTION 5. There shall be a Nominating Committee of the Board
consisting of not less than three nor more than five members, a majority of whom
are not employes of the Company. The Board of Directors shall, at its first
meeting after the annual meeting of shareholders in each year, elect a chairman
and the other members of the Nominating Committee. The Directors elected as
members of the Nominating Committee shall serve as such for one year and until
their respective successors, willing to serve, shall have been elected. The
Nominating Committee shall review the requirements for serving as Director,
review potential candidates for Director, propose nominees for Director to the
Board and recommend to the Board the successor to the Chairman when a vacancy
occurs in that position. The Nominating Committee shall have such power as it
shall deem necessary for the performance of its duties. Vacancies in the
membership of the Nominating Committee shall be filled by the Board of
Directors. The Nominating Committee shall keep minutes of the proceedings at
its meetings.
SECTION 6. The Board of Directors may from time to time create other
committees, standing or special, appoint Directors to serve on such committees
and confer such powers upon such committees and revoke such powers and terminate
the existence of such committees, as the Board at its pleasure may determine,
subject to the limitations set forth in Section 8.40(c) of the Illinois Business
Corporation Act of 1983, as amended from time to time.
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SECTION 7. Meetings of any committee of the Board may be called at
any time by the Chairman, by any two Directors or by the chairman of the
committee the meeting of which is being called and shall be held at such place
as shall be designated in the notice of such meeting. Notice of each committee
meeting stating the time and place at which such meeting will be held shall be
given to each member of the committee personally, or by telegraph, or by
depositing the same in the mails properly addressed, at least one day before the
day of such meeting. A majority of the members of a committee shall constitute
a quorum thereof but a lesser number may adjourn the meeting from time to time
until a quorum is obtained, or may adjourn sine die. A majority vote of the
members of a committee present at a meeting at which a quorum is present shall
be necessary for committee action.
SECTION 8. The Board of Directors may from time to time designate
from among the Directors alternates to serve on one or more committees as
occasion may require. Whenever a quorum cannot be secured for any meeting of
any committee from among the regular members thereof and designated alternates,
the member or members of such committee present at such meeting and not
disqualified from voting thereat, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in place of such absent or disqualified member.
SECTION 9. Every Director of the Company, or member of any committee
designated by the Board of Directors pursuant to authority conferred by these
By-Laws, shall, in the performance of his or her duties, be fully protected in
relying in good faith upon the records of the Company and upon such information,
opinions, reports or statements presented to the Company by any of the Company's
officers or employees, or committees of the Board of Directors, or by any other
person as to matters the Director or member reasonably believes are within such
other person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Company.
SECTION 10. Unless otherwise limited by the Board of Directors and
subject to the limitations set forth in the next sentence, each committee of the
Board of Directors consisting of two or more Directors may exercise the
authority of the Board.
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Notwithstanding any other provision of the By-Laws, no committee of the Board of
Directors shall: (1) authorize distributions; (2) approve or recommend to
shareholders any act required by law to be approved by shareholders; (3) fill
vacancies on the Board of Directors or on any of its committees; (4) elect or
remove officers or fix the compensation of any member of the committee; (5)
adopt, amend or repeal the By-Laws; (6) approve a plan of merger not requiring
shareholder approval; (7) authorize or approve reacquisition of stock, except
according to a general formula or method prescribed by the Board of Directors;
(8) authorize or approve the issuance or sale, or contract for sale, of stock or
determine the designation and relative rights, preferences, and limitations of a
series of stock, except that a committee may fix the specific terms of the
issuance or sale or contract for sale or the number of shares of stock to be
allocated to particular employes under an employe benefit plan; or (9) amend,
alter, repeal, or take action inconsistent with any resolution or action of the
Board of Directors when the resolution or action of the Board of Directors
provides by its terms that it shall not be amended, altered or repealed by
action of a committee.
ARTICLE V.
OFFICERS.
SECTION 1. There shall be elected by the Board of Directors, at its
first meeting after the annual election of Directors in each year if
practicable, the following principal officers of the Company, namely: a
Chairman, a President, such number of Executive Vice Presidents, Senior Vice
Presidents and Vice Presidents as the Board at the time may decide upon, a
Secretary, a Treasurer and a Comptroller; and the Board may also provide for a
Vice Chairman and such other officers, and prescribe for each of them such
duties, as in its judgment may from time to time be desirable to conduct the
affairs of the Company. No officer shall be elected for a term extending beyond
the first day of the month following the month in which such officer attains the
age of 65 years, on which date such officer shall be retired. The Chairman
shall be a Director of the Company; any other officer above named may, but need
not, be a Director of the Company. Any
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two or more offices may be held by the same person. All officers shall hold
their respective offices until the first meeting of the Board of Directors after
the next succeeding annual election of Directors and until their successors,
willing to serve, shall have been elected, but any officer may be removed from
office by the Board of Directors whenever in its judgment the best interests of
the Company will be served thereby. Such removal, however, shall be without
prejudice to the contract rights, if any, of the person so removed. Election of
an officer shall not of itself create contract rights.
SECTION 2. The Chairman shall be the chief executive officer of the
Company and shall have general authority over all the affairs of the Company,
including the power to appoint and discharge any and all officers, agents and
employes of the Company not elected or appointed directly by the Board of
Directors. The Chairman shall, when present, preside at all meetings of the
shareholders and of the Board of Directors. The Chairman shall have authority
to call special meetings of the shareholders and meetings of the Board of
Directors, and of any committee of the Board of Directors and, when neither the
Board of Directors nor the Executive Committee is in session, to suspend the
authority of any other officer or officers of the Company, subject, however, to
the pleasure of the Board of Directors or of the Executive Committee at its next
meeting. The Chairman, or such other officer as the Chairman may direct, shall
be responsible for all internal audit functions, and the internal audit
personnel shall report directly to the Chairman or to such other officer.
SECTION 3. In the absence or disability of the Chairman, the powers
and duties of the Chairman shall be performed by the President or, in the
President's absence or disability, by such other principal officer as the Board
of Directors or the Executive Committee may designate.
SECTION 4. Except insofar as the Board of Directors, the Executive
Committee or the Chairman shall have devolved responsibilities on the other
principal officers, the President shall be responsible for the general
management and direction of the affairs of the Company, subject to the control
of the Board of Directors, the Executive Committee and the Chairman. The
President shall have such other powers and duties as usually devolve
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upon the President of a corporation and such further powers and duties as may be
prescribed by the Board of Directors, the Executive Committee or the chairman.
The President shall report to the Chairman.
SECTION 5. The Executive Vice Presidents, the Senior Vice Presidents
and the Vice Presidents shall have such powers and duties as may be prescribed
for them, respectively, by the Board of Directors, the Executive committee or
the Chairman. Each of such officers shall report to the Chairman or such other
officer as the Chairman shall direct.
SECTION 6. The Secretary shall attend all meetings of the
shareholders, of the Board of Directors and of each committee of the Board of
Directors, shall keep a true and faithful record thereof in proper books and
shall have the custody and care of the corporate seal, records, minute books and
stock books of the Company and of such other books and papers as in the
practical business operations of the Company shall naturally belong in the
office or custody of the Secretary or as shall be placed in the Secretary's
custody by order of the Board of Directors or the Executive Committee. The
Secretary shall keep or cause to be kept a suitable record of the addresses of
shareholders and shall, except as may be otherwise required by statute or the
by-laws, sign and issue all notices required for meetings of shareholders, of
the Board of Directors and of the committees of the Board of Directors.
Whenever requested by the requisite number of shareholders or Directors, the
Secretary shall give notice, in the name of the shareholder or shareholders or
Director or Directors making the request, of a meeting of the shareholders or of
the Board of Directors or of a committee of the Board of Directors, as the case
may be. The Secretary shall sign all papers to which the Secretary's signature
may be necessary or appropriate, shall affix and attest the seal of the Company
to all instruments requiring the seal, shall have the authority to certify the
by-laws, resolutions of the shareholders and Board of Directors and committees
of the Board of Directors and other documents of the Company as true and correct
copies thereof and shall have such other powers and duties as are commonly
incidental to the office of Secretary and as may be prescribed by the Board of
Directors, the Executive Committee or the Chairman. The Secretary shall report
to the Chairman or such other officer as the Chairman shall direct.
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SECTION 7. The Treasurer shall have charge of and be responsible for
the collection, receipt, custody and disbursement of the funds of the Company.
The Treasurer shall deposit the Company's funds in its name in such banks, trust
companies or safe deposit vaults as the Board of Directors may direct. Such
funds shall be subject to withdrawal only upon checks or drafts signed or
authenticated in such manner as may be designated from time to time by
resolution of the Board of Directors or of the Executive Committee. The
Treasurer shall have the custody of such books and papers as in the practical
business operations of the Company shall naturally belong in the office or
custody of the Treasurer or as shall be placed in the Treasurer's custody by
order of the Board of Directors or the Executive Committee. The Treasurer shall
have such other powers and duties as are commonly incidental to the office of
Treasurer or as may be prescribed for the Treasurer by the Board of Directors,
the Executive Committee or the Chairman. Securities owned by the Company shall
be in the custody of the Treasurer or of such other officers, agents or
depositaries as may be designated by the Board of Directors or the Executive
Committee. The Treasurer may be required to give bond to the Company for the
faithful discharge of the duties of the Treasurer in such form and in such
amount and with such surety as shall be determined by the Board of Directors.
The Treasurer shall report to the Chairman or such other officer as the Chairman
shall direct.
SECTION 8. The Comptroller shall be responsible for the executive
direction of the accounting organization and shall have functional supervision
over the records of all other departments pertaining to revenues, expenses,
money, securities, properties, materials and supplies. The Comptroller shall
prescribe the form of all vouchers, accounts and accounting procedures, and
reports required by the various departments. The Comptroller shall be
responsible for the preparation and interpretation of all accounting reports and
financial statements as required and for the proper review and approval of all
bills received for payment. No bill or voucher shall be so approved unless the
charges covered by the bill or voucher shall have been previously approved
through job order, requisition or otherwise by the head of the department in
which it originated, or unless the Comptroller shall otherwise be satisfied of
its propriety and correctness. The Comptroller shall have such other powers and
duties as are
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commonly incidental to the office of Comptroller or as may be prescribed for the
Comptroller by the Board of Directors, the Executive Committee or the Chairman.
The Comptroller may be required to give bond to the Company for the faithful
discharge of the duties of the Comptroller in such form and in such amount and
with such surety as shall be determined by the Board of Directors. The
Comptroller shall report to the Chairman or such other officer as the Chairman
shall direct.
SECTION 9. Assistant Secretaries, Assistant Treasurers and Assistant
Comptrollers, when elected or appointed, shall respectively assist the
Secretary, the Treasurer and the Comptroller in the performance of the
respective duties assigned to such principal officers, and in assisting such
principal officer, each of such assistant officers shall for such purpose have
the powers of such principal officer. In case of the absence, disability,
death, resignation or removal from office of any principal officer, such
principal officer's duties shall, except as otherwise ordered by the Board of
Directors or the Executive Committee, temporarily devolve upon such assistant
officer as shall be designated by the Chairman.
ARTICLE VI.
INDEMNIFICATION.
SECTION 1. (a) A Director of the Company shall not be personally
liable to the Company or its shareholders for monetary damages for breach of
fiduciary duty as a Director, except for liability (i) for any breach of the
Director's duty of loyalty to the Company or its shareholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law, (iii) under Section 8.65 of the Illinois Business Corporation
Act of 1983, as amended, or (iv) for any transaction from which the Director
derived an improper personal benefit. If the Illinois Business Corporation Act
of 1983 is amended to authorize corporate action further eliminating or limiting
the personal liability of Directors, then the liability of a Director of the
Company shall be eliminated or limited to the full extent permitted by the
Illinois Business Corporation Act of 1983, as so amended. Any repeal or
modification of this Section 1(a) by the shareholders of the Company shall not
ad-
-16-
<PAGE>
versely affect any right or protection of a Director of the Company existing
at the time of such repeal or modification.
(b) Each person who is or was or had agreed to become a Director or
officer of the Company, and each person who is or was serving or who had agreed
to serve at the request of the Board of Directors or an officer of the Company
as an employe or agent of the Company or as a director, officer, employe, or
agent, trustee or fiduciary of another corporation, partnership, joint venture,
trust or other enterprise (including the heirs, executors, administrators or
estate of such person), shall be indemnified by the Company to the full extent
permitted by the Illinois Business Corporation Act of 1983 or any other
applicable laws as presently or hereafter in effect. Without limiting the
generality of the foregoing, the Company may enter into one or more agreements
with any person which provide for indemnification greater or different than that
provided in this Section 1(b). Any repeal or modification of this Section 1(b)
shall not adversely affect any right or protection existing hereunder
immediately prior to such repeal or modification.
SECTION 2. The provisions of this Article shall be deemed to be a
contract between the Company and each Director or officer who serves in any such
capacity at any time while this Article is in effect, and any repeal or
modification of this Article shall not affect any rights or obligations
hereunder with respect to any state of facts then or theretofore existing or any
action, suit or proceeding theretofore or thereafter brought or threatened based
in whole or in part upon any such state of facts.
SECTION 3. The indemnification provided or permitted by this Article
shall not be deemed exclusive of any other rights to which those indemnified may
be entitled by law or otherwise, and shall continue as to a person who has
ceased to be a Director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such person.
SECTION 4. The Company may purchase and maintain insurance on behalf
of any person who is or was a Director, officer, employee or agent of the
Company, or who is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, against any liability asserted against such
-17-
<PAGE>
person and incurred by such person in any such capacity, or arising out of his
or her status as such, whether or not the Company would have the power to
indemnify such person against such liability under the laws of the State of
Illinois.
ARTICLE VII.
MISCELLANEOUS.
SECTION 1. No bills shall be paid by the Treasurer unless reviewed
and approved by the Comptroller or by some other person or committee expressly
authorized by the Board of Directors, the Executive Committee, the Chairman or
the Comptroller to review and approve bills for payment.
SECTION 2. All checks, drafts or other orders for payment of money
issued in the name of the Company shall be signed by such officers, employees or
agents of the Company as shall from time to time be designated by the Board of
Directors, the Chairman, the chief financial officer of the Company or the
Treasurer.
SECTION 3. Any and all shares of stock of any corporation owned by
the Company and any and all voting trust certificates owned by the Company
calling for or representing shares of stock of any corporation may be voted at
any meeting of the shareholders of such corporation or at any meeting of the
holders of such certificates, as the case may be, by any one of the principal
officers of the Company upon any question which may be presented at such
meeting, and any such officer may, on behalf of the Company, waive any notice
required to be given of the calling of such meeting and consent to the holding
of any such meeting without notice. Any such principal officer other than the
Secretary, acting together with the Secretary or an Assistant Secretary, shall
have authority to give to any person a written proxy, in the name of the Company
and under its corporate seal, to vote any or all shares of stock or any or all
voting trust certificates owned by the Company upon any question that may be
presented at any such meeting of shareholders or certificate holders, with full
power to waive any notice of the calling of such meeting and consent to the
holding of such meeting without notice.
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<PAGE>
SECTION 4. The fiscal year of the Company shall begin on the first
day of January and end on the last day of December in each year.
ARTICLE VIII.
ALTERATION, AMENDMENT OF REPEAL OF BY-LAWS.
These by-laws may be altered, amended or repealed by the shareholders
or the Board of Directors.
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<PAGE>
Exhibit (3)-4
Commonwealth Edison Company
Form 10-K File No. 1-1839
COMMONWEALTH EDISON COMPANY
BY-LAWS
EFFECTIVE SEPTEMBER 2, 1988
AS AMENDED THROUGH
DECEMBER 13, 1995
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
ARTICLE I. STOCK..................................................... 1
ARTICLE II. MEETINGS OF STOCKHOLDERS.................................. 3
ARTICLE III. BOARD OF DIRECTORS........................................ 5
ARTICLE IV. COMMITTEES OF THE BOARD OF DIRECTORS...................... 6
ARTICLE V. OFFICERS.................................................. 10
ARTICLE VI. MISCELLANEOUS............................................. 14
ARTICLE VII. ALTERATION, AMENDMENT OR REPEAL OF BY-LAWS................ 15
</TABLE>
<PAGE>
COMMONWEALTH EDISON COMPANY
BY-LAWS
-------
ARTICLE I.
STOCK.
SECTION 1. Each holder of fully paid stock shall be entitled to a
certificate or certificates of stock stating the number and class of shares, and
the designation of the series, if any, which such certificate represents. All
certificates of stock shall at the time of their issuance be signed either
manually or by facsimile signature by the Chairman, the President or a Vice
President and by the Secretary or an Assistant Secretary. All certificates of
stock shall be sealed with the seal of the Company or a facsimile of such seal,
shall be countersigned either manually or by facsimile signature by a Transfer
Agent and shall be authenticated by manual signature and registered by a
Registrar. The Board of Directors shall appoint one or more Transfer Agents,
none of whom shall be officers of the Company authorized to sign certificates of
stock, and one or more Registrars, each of which Registrars shall be a bank or
trust company. Certificates of stock shall not be valid until countersigned by a
Transfer Agent and authenticated and registered by a Registrar in the manner
provided by the Board of Directors.
SECTION 2. Shares of stock shall be transferable only on the books of
the Company and, except as hereinafter provided or as otherwise required by law,
shall be transferred only upon proper endorsement and surrender of the
certificates issued therefor. If an outstanding certificate of stock shall be
lost, destroyed or stolen, the holder thereof may have a new certificate upon
producing evidence satisfactory to the Board of Directors of such loss,
destruction or theft, and upon furnishing to the Company, the Transfer Agents
and the Registrars a bond of indemnity deemed sufficient by the Board of
Directors against claims under the outstanding certificate.
SECTION 3. The certificates for each class or series of stock shall be
numbered and issued in consecutive order and a record shall be kept of the name
and address of the person to whom each certificate is issued, the number of
shares represented by the certificate and the number and date of the
certificate. All certificates exchanged or returned to the Company for transfer
shall be canceled and filed.
<PAGE>
-2-
SECTION 4. For the purpose of determining stockholders entitled to
notice of or to vote at any meeting of stockholders, or stockholders entitled to
receive payment of any dividend, or in order to make a determination of
stockholders for any other proper purpose, the Board of Directors may fix in
advance a date as the record date for any such determination for stockholders,
such date in any case to be not more than sixty days and, for a meeting of
stockholders, not less than ten days, or in the case of a merger, consolidation,
share exchange, dissolution or sale, lease or exchange of assets, not less than
twenty days, immediately preceding such meeting.
SECTION 5. If any subscription for stock in the Company or any
installment of such subscription shall be unpaid when due, as the Board of
Directors shall have determined the time for payment, and shall continue unpaid
for twenty days after demand for the amount due, made either in person or by
written notice duly mailed to the last address, as it appears on the records of
the Company, of the subscriber or other person by whom the subscription or
installment shall be payable, the stock or subscription upon which payment shall
be so due shall, upon the expiration of said twenty days, become and be
forfeited to the Company without further action, demand or notice, and such
stock or subscription may be sold at public sale, subject to payment of the
amount due and unpaid, plus all costs and expenses incurred by the Company in
that connection, at a time and place to be stated in a written notice to be
mailed to the recorded address of the delinquent subscriber or other person in
default on the subscription at least ten days prior to the time fixed for such
sale; provided, that the excess of proceeds of such sale realized over the
amount due and unpaid on said stock or subscription shall be paid to the
delinquent subscriber or other person in default on the subscription, or to his
or her legal representative; and, provided further, that no forfeiture of stock,
or of any amounts paid upon a subscription therefor, shall be declared as
against the estate of any decedent before distribution shall have been made of
the estate.
The foregoing provisions for the forfeiture and sale of stock or
subscriptions shall not exclude any other remedy which may lawfully be
enforceable at any time, by forfeiture of stock or of amounts theretofore paid
or otherwise, against any person for nonpayment of a subscription or of any
installment thereof.
<PAGE>
-3-
ARTICLE II.
MEETINGS OF STOCKHOLDERS.
SECTION 1. The regular annual meeting of the stockholders of the
Company for the election of Directors and for the transaction of such other
business as may come before the meeting shall be held on such day in April or
May of each year as the Board of Directors may by resolution determine. Each
such regular annual meeting and each special meeting of the stockholders shall
be held at such place as may be fixed by the Board of Directors and at such hour
as the Board of Directors shall order.
SECTION 2. Special meetings of the stockholders may be called by the
Chairman, by the Board of Directors, by a majority of the Directors individually
or by the holders of not less than one-fifth of the total outstanding shares of
capital stock of the Company.
SECTION 3. Written notice stating the place, day and hour of the
meeting of the stockholders and, in the case of a special meeting, the purpose
or purposes for which the meeting is called shall be delivered not less than ten
nor more than sixty days before the date of the meeting, or in the case of a
merger, consolidation, share exchange, dissolution or sale, lease or exchange of
assets not less than twenty nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction of the Chairman,
the Secretary or the persons calling the meeting, to each stockholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the stockholder
at the stockholder's address as it appears upon the records of the Company, with
postage thereon prepaid.
SECTION 4. At all meetings of the stockholders, a majority of the
outstanding shares of stock, entitled to vote on a matter, represented in person
or by proxy, shall constitute a quorum for consideration of such matter, but the
stockholders represented at any meeting, though less than a quorum, may adjourn
the meeting to some other day or sine die. If a quorum is present, the
affirmative vote of the majority of the shares of stock represented at the
meeting and entitled to vote on a matter shall be the act of the stockholders,
unless the vote of a greater number or voting by classes is required by law or
the articles of incorporation.
<PAGE>
-4-
SECTION 5. At every meeting of the stockholders, each outstanding
share of stock shall be entitled to one vote on each matter submitted for a
vote. In all elections for Directors, every stockholder shall have the right to
vote the number of shares owned by such stockholder for as many persons as there
are Directors to be elected, or to cumulate such votes and give one candidate as
many votes as shall equal the number of Directors to be elected multiplied by
the number of such shares or to distribute such cumulative votes in any
proportion among any number of candidates. A stockholder may vote either in
person or by proxy. A stockholder may appoint a proxy to vote or otherwise act
for him or her by signing an appointment form and delivering it to the person so
appointed.
SECTION 6. The Secretary of the Company shall make, within twenty days
after the record date for a meeting of stockholders of the Company or ten days
before such meeting, whichever is earlier, a complete list of the stockholders
entitled to vote at such meeting, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for at least ten
days prior to such meeting, shall be kept on file at the registered office of
the Company and shall be subject to inspection by any stockholder, and to
copying at such stockholder's expense, at any time during usual business hours.
Such list shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any stockholder during the
whole time of the meeting.
SECTION 7. The Chairman and the Secretary of the Company shall, when
present, act as chairman and secretary, respectively, of each meeting of the
stockholders.
SECTION 8. At any meeting of stockholders, the chairman of the meeting
may, or upon the request of any stockholder shall, appoint one or more persons
as inspectors for such meeting, unless an inspector or inspectors shall have
been previously appointed for such meeting by the Chairman. Such inspectors
shall ascertain and report the number of shares of stock represented at the
meeting, based upon their determination of the validity and effect of proxies,
count all votes and report the results and do such other acts as are proper to
conduct the election and voting with impartiality and fairness to all the
stockholders.
<PAGE>
-5-
ARTICLE III.
BOARD OF DIRECTORS.
SECTION 1. The business and affairs of the Company shall be managed by
or under the direction of the Board of Directors. The number of Directors of the
Company shall be not less than ten nor more than fifteen. The Directors shall be
elected at each annual meeting of the stockholders, but if for any reason the
election shall not be held at an annual meeting, it may be subsequently held at
any special meeting of the stockholders called for that purpose after proper
notice. The Directors so elected shall hold office until the next annual meeting
and until their respective successors, willing to serve, shall have been elected
and qualified. Directors need not be residents of the State of Illinois or
stockholders of the Company. No person shall be eligible for nomination or
renomination as a Director by the management of the Company who, prior to the
date of election, shall have attained age seventy-two.
No person who is an employe or a former employe of the Company or of a
subsidiary of the Company shall be eligible for nomination or renomination as a
Director by the management of the Company for a term commencing after such
person ceases to be such an employe; provided, however that any Director in
office on June 15, 1989 who is or has been such an employe may be renominated as
a Director unless such person shall have attained age sixty-five on or before
the date of election of Directors.
SECTION 2. A meeting of the Board of Directors shall be held
immediately, or as soon as practicable, after the annual election of Directors
in each year, provided a quorum for such meeting can be obtained. Notice of
every meeting of the Board, stating the time and place at which such meeting
will be held, shall be given to each Director personally, by telephone or by
other means of communication at least one day, or by depositing the same in the
mails properly addressed at least two days before the day of such meeting. A
meeting of the Board of Directors may be called at any time by the Chairman or
by any two Directors and shall be held at such place as shall be specified in
the notice for such meeting.
SECTION 3. A majority of the number of Directors then in office, but
not less than six, shall constitute a quorum for the transaction of business at
any meeting of the Board, but a lesser number may adjourn the meeting from time
to time until a quorum is
<PAGE>
-6-
obtained, or may adjourn sine die. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 4. Each member of the Board not receiving a salary from the
Company or a subsidiary of the Company shall be paid such fees as the Board of
Directors may from time to time, by resolution adopted by the affirmative vote
of a majority of the Directors then in office, determine.
ARTICLE IV.
COMMITTEES OF THE BOARD OF DIRECTORS.
SECTION 1. There shall be an Executive Committee of the Board
consisting of six members. The Board of Directors shall, at its first meeting
after the annual meeting of the stockholders in each year, elect a chairman and
the four other members of the Executive Committee. The remaining Directors shall
constitute alternates to serve temporarily, and as far as practicable in
rotation (in such order as shall be established by the Board), in the place of
any member who may be unable to serve. The Chairman or the Directors calling a
meeting of the Executive Committee shall call upon alternates, in rotation, to
serve as herein provided. When any alternate serves, the minutes of the meeting
shall record the name of the member in whose place such alternate serves. The
Directors elected as members of the Executive Committee shall serve as such for
one year and until their respective successors, willing to serve, shall have
been elected. The Executive Committee shall, when the Board is not in session,
have and may exercise all of the authority of the Board of Directors, subject to
the limitations set forth in Section 10 of this Article IV. Vacancies in the
membership of the Executive Committee shall be filled by the Board of Directors.
The Executive Committee shall keep minutes of the proceedings at its meetings.
SECTION 2. There shall be an Audit Committee of the Board consisting
of not less than three nor more than five members who are not employes of the
Company. The Directors elected as members of the Audit Committee shall serve as
such for three years and until their respective successors, willing to serve,
shall have been elected, provided that, to the extent practicable, the members
of the Audit Committee shall be elected for staggered terms. The Board of
Directors shall, at its first meeting after the annual meeting of
<PAGE>
-7-
stockholders in each year, elect the successors of the members whose terms shall
then expire. The Board of Directors shall designate from time to time the member
who is to serve as chairman of the Audit Committee. The Audit Committee shall
meet with the Company's independent auditors at least once each year to review
the Company's financial statements and the scope and results of such auditors'
examinations, monitor the internal accounting controls and practices of the
Company, review the annual report to stockholders and make recommendations as to
its approval to the Board and recommend, subject to stockholder approval, the
appointment of independent auditors, and shall report its findings at least once
each year to the Board. The Audit Committee shall have such powers as it shall
deem necessary for the performance of its duties. Vacancies in the membership of
the Audit Committee shall be filled by the Board of Directors. The Audit
Committee shall keep minutes of the proceedings at its meetings.
SECTION 3. There shall be a Corporate Governance and Compensation
Committee of the Board consisting of those Directors who are not employees or
former employees of the Company. The Board of Directors shall, at its first
meeting after the annual meeting of shareholders in each year, elect a chairman
of the Corporate Governance and Compensation Committee. The Directors serving as
members of the Committee shall serve for one year and until their respective
successors, willing to serve, shall have been elected. The Corporate Governance
and Compensation Committee shall (i) oversee corporate governance policies,
practices and procedures of the Company and make such recommendations as it may
deem appropriate to the Board; and (ii) oversee general compensation policy of
the Company, and establish and administer compensation programs applicable to
the principal officers of the Company, including but not necessarily limited to
the establishment of base salaries and the administration of awards under the
Commonwealth Edison Company Deferred Compensation Plan and any other
Commonwealth Edison Company compensation plan. The Committee shall have such
power as it deems necessary for the performance of its duties. Vacancies in the
membership of the Committee shall be filled by the Board of Directors. The
Committee shall keep minutes of the proceedings at its meetings.
SECTION 4. There shall be a Finance Committee of the Board consisting
of not less than three nor more than five members. The Board of Directors shall,
at its first meeting after the annual meeting of stockholders in each year,
elect a chairman and the other members of the Finance Committee. The Directors
elected as members of the Finance Committee shall serve as such for one year and
until their
<PAGE>
-8-
respective successors, willing to serve, shall have been elected. The Finance
Committee shall review the scope and results of the Company's financing program
and review the Company's financial statements, construction budgets and cash
budgets as they relate to the Company's financing program, and shall report its
findings at least once each year to the Board. The Finance Committee shall have
such power as it shall deem necessary for the performance of its duties.
Vacancies in the membership of the Finance Committee shall be filled by the
Board of Directors. The Finance Committee shall keep minutes of the proceedings
at its meetings.
SECTION 5. There shall be a Nominating Committee of the Board
consisting of not less than three nor more than five members, a majority of whom
are not employes of the Company. The Board of Directors shall, at its first
meeting after the annual meeting of stockholders in each year, elect a chairman
and the other members of the Nominating Committee. The Directors elected as
members of the Nominating Committee shall serve as such for one year and until
their respective successors, willing to serve, shall have been elected. The
Nominating Committee shall review the requirements for serving as Director,
review potential candidates for Director, propose nominees for Director to the
Board and recommend to the Board the successor to the Chairman when a vacancy
occurs in that position. The Nominating Committee shall have such power as it
shall deem necessary for the performance of its duties. Vacancies in the
membership of the Nominating Committee shall be filled by the Board of
Directors. The Nominating Committee shall keep minutes of the proceedings at its
meetings.
SECTION 6. There shall be a Nuclear Operations Committee of the Board
consisting of at least one but not more than five members. The Board of
Directors shall, at it first meeting after the annual meeting of stockholders in
each year, elect a chairman and the other members of the Nuclear Operations
Committee. The Directors elected as members of the Nuclear Operations Committee
shall serve as such for one year and until their respective successors, willing
to serve, shall have been elected. The Nuclear Operations Committee shall review
the Company's nuclear operations and the Company's strategic plans respecting
nuclear operations, and shall report its findings at least once each year to the
Board. The Nuclear Operations Committee shall have such power as it shall deem
necessary for the performance of its duties. Vacancies in the membership of the
Nuclear Operations Committee shall be filled by the Board of Directors. The
Nuclear
<PAGE>
-9-
Operations Committee shall keep minutes of the proceedings at its meetings.
SECTION 7. There shall be a Regulatory and Environmental Affairs
Committee of the Board consisting of not less than three nor more than five
members. The Board of Directors shall, at its first meeting after the annual
meeting of stockholders in each year, elect a chairman and the other members of
the Regulatory and Environmental Affairs Committee. The Directors elected as
members of the Regulatory and Environmental Affairs Committee shall serve as
such for one year and until their respective successors, willing to serve, shall
have been elected. The Regulatory and Environmental Affairs Committee shall
review the Company's relationships with economic and environmental regulatory
agencies that exercise significant regulatory jurisdiction over the Company, and
shall review significant matters involving the Company before those agencies; it
shall review the Company's policies and strategic plans respecting regulatory
and environmental affairs; and it shall report its findings at least once each
year to the Board. The Regulatory and Environmental Affairs Committee shall have
such power as it shall deem necessary for the performance of its duties.
Vacancies in the membership of the Regulatory and Environmental Affairs
Committee shall be filled by the Board of Directors. The Regulatory and
Environmental Affairs Committee shall keep minutes of the proceedings at its
meetings.
SECTION 8. The Board of Directors may from time to time create other
committees, standing or special, appoint Directors to serve on such committees
and confer such powers upon such committees and revoke such powers and terminate
the existence of such committees, as the Board at its pleasure may determine,
subject to the limitations set forth in Section 10 of this Article IV.
SECTION 9. Meetings of any committee of the Board may be called at any
time by the Chairman, by any two Directors or by the chairman of the committee
the meeting of which is being called and shall be held at such place as shall be
designated in the notice of such meeting. Notice of each committee meeting
stating the time and place at which such meeting will be held shall be given to
each member of the committee personally, or by telegraph, or by depositing the
same in the mails properly addressed, at least one day before the day of such
meeting. A majority of the members of a committee shall constitute a quorum
thereof but a lesser number may adjourn the meeting from time to time until a
quorum is obtained, or may adjourn sine die. A majority vote of the members of a
committee present at a
<PAGE>
-10-
meeting at which a quorum is present shall be necessary for committee action.
SECTION 10. Unless otherwise limited by the Board of Directors and
subject to the limitations set forth in the next sentence, each committee of the
Board of Directors consisting of two or more Directors may exercise the
authority of the Board. Notwithstanding any other provision of the by-laws, no
committee of the Board of Directors shall: (1) authorize distributions; (2)
approve or recommend to stockholders any act required by law to be approved by
stockholders; (3) fill vacancies on the Board of Directors or on any of its
committees; (4) elect or remove officers or fix the compensation of any member
of the committee; (5) adopt, amend or repeal the by-laws; (6) approve a plan of
merger not requiring stockholder approval; (7) authorize or approve
reacquisition of stock, except according to a general formula or method
prescribed by the Board of Directors; (8) authorize or approve the issuance or
sale, or contract for sale, of stock or determine the designation and relative
rights, preferences, and limitations of a series of stock, except that a
committee may fix the specific terms of the issuance or sale or contract for
sale or the number of shares of stock to be allocated to particular employes
under an employe benefit plan; or (9) amend, alter, repeal, or take action
inconsistent with any resolution or action of the Board of Directors when the
resolution or action of the Board of Directors provides by its terms that it
shall not be amended, altered or repealed by action of a committee.
ARTICLE V.
OFFICERS.
SECTION 1. There shall be elected by the Board of Directors, at its
first meeting after the annual election of Directors in each year if
practicable, the following principal officers of the Company, namely: a
Chairman, a President, such number of Executive Vice Presidents, Senior Vice
Presidents and Vice Presidents as the Board at the time may decide upon, a
Secretary, a Treasurer and a Comptroller; and the Board may also provide for a
Vice Chairman and such other officers, and prescribe for each of them such
duties, as in its judgment may from time to time be desirable to conduct the
affairs of the Company. No officer shall be elected for a term extending beyond
the first day of the month following the month in which such officer attains the
age of 65 years, on which date such officer shall be retired. The Chairman shall
be a Director of the Company; any other
<PAGE>
-11-
officer above named may, but need not, be a Director of the Company. Any two or
more offices may be held by the same person, except that one person may not at
the same time hold the office of Chairman or President and the office of
Secretary. All officers shall hold their respective offices until the first
meeting of the Board of Directors after the next succeeding annual election of
Directors and until their successors, willing to serve, shall have been elected,
but any officer may be removed from office by the Board of Directors whenever in
its judgment the best interests of the Company will be served thereby. Such
removal, however, shall be without prejudice to the contract rights, if any, of
the person so removed. Election of an officer shall not of itself create
contract rights.
SECTION 2. The Chairman shall be the chief executive officer of the
Company and shall have general authority over all the affairs of the Company,
including the power to appoint and discharge any and all officers, agents and
employes of the Company not elected or appointed directly by the Board of
Directors. The Chairman shall, when present, preside at all meetings of the
stockholders and of the Board of Directors. The Chairman shall have authority to
call special meetings of the stockholders and meetings of the Board of
Directors, and of any committee of the Board of Directors and, when neither the
Board of Directors nor the Executive Committee is in session, to suspend the
authority of any other officer or officers of the Company, subject, however, to
the pleasure of the Board of Directors or of the Executive Committee at its next
meeting. The Chairman, or such other officer as the Chairman may direct, shall
be responsible for all internal audit functions, and internal audit personnel
shall report directly to the Chairman or to such other officer.
SECTION 3. In the absence or disability of the Chairman, the powers
and duties of the Chairman shall be performed by the President or, in the
President's absence or disability, by such other principal officer as the Board
of Directors or the Executive Committee may designate.
SECTION 4. Except insofar as the Board of Directors, the Executive
Committee or the Chairman shall have devolved responsibilities on the other
principal officers, the President shall be responsible for the general
management and direction of the affairs of the Company, subject to the control
of the Board of Directors, the Executive Committee and the Chairman. The
President shall have such other powers and duties as usually devolve upon the
President of a corporation and such further powers and duties as may be
prescribed by
<PAGE>
-12-
the Board of Directors, the Executive Committee or the Chairman. The President
shall report to the Chairman.
SECTION 5. The Executive Vice Presidents, the Senior Vice Presidents
and the Vice Presidents shall have such powers and duties as may be prescribed
for them, respectively, by the Board of Directors, the Executive Committee or
the Chairman. Each of such officers shall report to the Chairman or such other
officer as the Chairman shall direct.
SECTION 6. The Secretary shall attend all meetings of the
stockholders, of the Board of Directors and of each committee of the Board of
Directors, shall keep a true and faithful record thereof in proper books and
shall have the custody and care of the corporate seal, records, minute books and
stock books of the Company and of such other books and papers as in the
practical business operations of the Company shall naturally belong in the
office or custody of the Secretary or as shall be placed in the Secretary's
custody by order of the Board of Directors or the Executive Committee. The
Secretary shall keep a suitable record of the addresses of stockholders and
shall, except as may be otherwise required by statute or the by-laws, sign and
issue all notices required for meetings of stockholders, of the Board of
Directors and of the committees of the Board of Directors. Whenever requested by
the requisite number of stockholders or Directors, the Secretary shall give
notice, in the name of the stockholder or stockholders or Director or Directors
making the request, of a meeting of the stockholders or of the Board of
Directors or of a committee of the Board of Directors, as the case may be. The
Secretary shall sign all papers to which the Secretary's signature may be
necessary or appropriate, shall affix and attest the seal of the Company to all
instruments requiring the seal, shall have the authority to certify the by-laws,
resolutions of the stockholders and Board of Directors and committees of the
Board of Directors and other documents of the Company as true and correct copies
thereof and shall have such other powers and duties as are commonly incidental
to the office of Secretary and as may be prescribed by the Board of Directors,
the Executive Committee or the Chairman. The Secretary shall report to the
Chairman or such other officer as the Chairman shall direct.
SECTION 7. The Treasurer shall have charge of and be responsible for
the collection, receipt, custody and disbursement of the funds of the Company.
The Treasurer shall deposit the Company's funds in its name in such banks, trust
companies or safe deposit
<PAGE>
-13-
vaults as the Board of Directors may direct. Such funds shall be subject to
withdrawal only upon checks or drafts signed or authenticated in such manner as
may be designated from time to time by resolution of the Board of Directors or
of the Executive Committee. The Treasurer shall have the custody of such books
and papers as in the practical business operations of the Company shall
naturally belong in the office or custody of the Treasurer or as shall be placed
in the Treasurer's custody by order of the Board of Directors or the Executive
Committee. The Treasurer shall have such other powers and duties as are commonly
incidental to the office of Treasurer or as may be prescribed for the Treasurer
by the Board of Directors, the Executive Committee or the Chairman. Securities
owned by the Company shall be in the custody of the Treasurer or of such other
officers, agents or depositaries as may be designated by the Board of Directors
or the Executive Committee. The Treasurer may be required to give bond to the
Company for the faithful discharge of the duties of the Treasurer in such form
and in such amount and with such surety as shall be determined by the Board of
Directors. The Treasurer shall report to the Chairman or such other officer as
the Chairman shall direct.
SECTION 8. The Comptroller shall be responsible for the executive
direction of the accounting organization and shall have functional supervision
over the records of all other departments pertaining to revenues, expenses,
money, securities, properties, materials and supplies. The Comptroller shall
prescribe the form of all vouchers, accounts and accounting procedures, and
reports required by the various departments. The Comptroller shall be
responsible for the preparation and interpretation of all accounting reports and
financial statements as required and for the proper review and approval of all
bills received for payment. No bill or voucher shall be so approved unless the
charges covered by the bill or voucher shall have been previously approved
through job order, requisition or otherwise by the head of the department in
which it originated, or unless the Comptroller shall otherwise be satisfied of
its propriety and correctness. The Comptroller shall have such other powers and
duties as are commonly incidental to the office of Comptroller or as may be
prescribed for the Comptroller by the Board of Directors, the Executive
Committee or the Chairman. The Comptroller may be required to give bond to the
Company for the faithful discharge of the duties of the Comptroller in such form
and in such amount and with such surety as shall be determined by the Board of
Directors. The Comptroller shall report to the Chairman or such other officer as
the Chairman shall direct.
<PAGE>
-14-
SECTION 9. Assistant Secretaries, Assistant Treasurers and Assistant
Comptrollers, when elected or appointed, shall respectively assist the
Secretary, the Treasurer and the Comptroller in the performance of the
respective duties assigned to such principal officers, and in assisting such
principal officer, each of such assistant officers shall for such purpose have
the powers of such principal officer. In case of the absence, disability, death,
resignation or removal from office of any principal officer, such principal
officer's duties shall, except as otherwise ordered by the Board of Directors or
the Executive Committee, temporarily devolve upon such assistant officer as
shall be designated by the Chairman.
ARTICLE VI.
MISCELLANEOUS.
SECTION 1. No bills shall be paid by the Treasurer unless reviewed and
approved by the Comptroller or by some other person or committee expressly
authorized by the Board of Directors, the Executive Committee, the Chairman or
the Comptroller to review and approve bills for payment.
SECTION 2. Any and all shares of stock of any corporation owned by the
Company and any and all voting trust certificates owned by the Company calling
for or representing shares of stock of any corporation may be voted at any
meeting of the stockholders of such corporation or at any meeting of the holders
of such certificates, as the case may be, by any one of the principal officers
of the Company upon any question which may be presented at such meeting, and any
such officer may, on behalf of the Company, waive any notice required to be
given of the calling of such meeting and consent to the holding of any such
meeting without notice. Any such principal officer other than the Secretary,
acting together with the Secretary or an Assistant Secretary, shall have
authority to give to any person a written proxy, in the name of the Company and
under its corporate seal, to vote any or all shares of stock or any or all
voting trust certificates owned by the Company upon any question that may be
presented at any such meeting of stockholders or certificate holders, with full
power to waive any notice of the calling of such meeting and consent to the
holding of such meeting without notice.
SECTION 3. The fiscal year of the Company shall begin on the first day
of January and end on the last day of December in each year.
<PAGE>
-15-
SECTION 4. The Company shall indemnify the Directors, officers and
employes of the Company, and shall have the power to indemnify other agents of
the Company and any person acting or serving at the request of the Company as a
director, officer, employe or agent of another corporation, partnership, joint
venture, trust or other enterprise, in accordance with and to the extent
permitted by Section 8.75 of The Business Corporation Act of 1983 of the State
of Illinois, as from time to time amended and in effect. Such indemnification
shall be available to any past, present or future Director, officer or employe
of the Company, and may be available to any past, present or future agent of the
Company and any past, present or future director, officer, employe or agent of
such other corporation, partnership, joint venture, trust or other enterprise,
and shall apply to actions, suits, proceedings or claims arising out of or based
upon events occurring prior to, on or after the date of original adoption of
this by-law.
ARTICLE VII.
ALTERATION, AMENDMENT OR REPEAL OF BY-LAWS.
These by-laws may be altered, amended or repealed by the stockholders
or the Board of Directors.
<PAGE>
================================================================================
Exhibit (4)-28
Commonwealth Edison Company
Form 10-K File No. 1-1839
INSTRUMENT
OF
RESIGNATION, APPOINTMENT AND ACCEPTANCE
_______________________
DATED AS OF JANUARY 31, 1996
_______________________
EXECUTED BY
BANK OF AMERICA ILLINOIS
COMMONWEALTH EDISON COMPANY
AND
HARRIS TRUST AND SAVINGS BANK
UNDER THE PROVISIONS OF THE
MORTGAGE OF COMMONWEALTH EDISON COMPANY,
DATED JULY 1, 1923, AND INDENTURES
SUPPLEMENTAL THERETO
REFLECTING
THE RESIGNATION OF BANK OF AMERICA ILLINOIS AS
TRUSTEE AND THE APPOINTMENT OF HARRIS TRUST AND
SAVINGS BANK AS SUCCESSOR TRUSTEE
================================================================================
<PAGE>
THIS INSTRUMENT OF RESIGNATION, APPOINTMENT AND ACCEPTANCE (this
"Instrument"), dated as of the 31st day of January, 1996, among BANK OF AMERICA
ILLINOIS, a state banking corporation organized and existing under the laws of
the State of Illinois (the "Resigning Trustee"), COMMONWEALTH EDISON COMPANY, a
corporation organized and existing under the laws of the State of Illinois (the
"Company"), and HARRIS TRUST AND SAVINGS BANK, a state banking corporation
organized and existing under the laws of the State of Illinois (the "Successor
Trustee").
W I T N E S S E T H:
WHEREAS, the Resigning Trustee has previously indicated its intent to
resign as trustee under the Mortgage dated July 1, 1923, as amended and
supplemented by Supplemental Indenture dated August 1, 1944 and by subsequent
supplemental indentures (the "Mortgage"); and the Company has caused notice
thereof to be published as required by the provisions of Section 15.06 of the
Mortgage and to be given to the holders of bonds outstanding under the Mortgage
as required by the provisions of Section 15.10(c) of the Mortgage; and
WHEREAS, pursuant to an order of its Board of Directors, the Company
has determined to appoint the Successor Trustee to serve as successor trustee to
the Resigning Trustee under the provisions of the Mortgage; and
WHEREAS, by this Instrument, the Resigning Trustee desires to confirm
its resignation as trustee, the Company desires to confirm its appointment of
the Successor Trustee as trustee, and the Successor Trustee desires to confirm
its acceptance of its appointment as trustee under the provisions of the
Mortgage;
NOW, THEREFORE, in consideration of the foregoing, the parties hereby
agree and confirm as follows:
1. The Resigning Trustee hereby confirms its resignation as Trustee
(as such term is used in the Mortgage) under the Mortgage. Such resignation
shall be effective as provided in Section 4 of this Instrument.
2. The Company hereby confirms its appointment of the Successor
Trustee to serve as Trustee under the Mortgage as successor to the Resigning
Trustee. Such appointment shall be effective as provided in Section 4 of this
Instrument.
3. The Successor Trustee hereby confirms its acceptance of its
appointment as Trustee under the Mortgage and its acceptance of the estates,
authority,
-2-
<PAGE>
rights, trusts, powers, duties and obligations of the Resigning Trustee, as
Trustee, under the Mortgage. Such acceptance shall be effective as provided in
Section 4 of this Instrument.
4. The resignation referred to in Section 1, the appointment referred
to in Section 2 and the acceptance referred to in Section 3 shall be effective
as of the opening of business in Chicago, Illinois on the date hereof.
-3-
<PAGE>
IN WITNESS WHEREOF, each of said parties has caused this Instrument to
be executed in its name by as duly authorized representative, and its corporate
seal to be hereunto affixed and attested by a duly authorized representative, as
of the 31st day of January, 1996.
BANK OF AMERICA ILLINOIS
By: /s/ Ben Espinos
Ben Espinos
(CORPORATE SEAL) Senior Vice President
ATTEST: /s/ Howard McCarty
Howard McCarty
Vice President
COMMONWEALTH EDISON COMPANY
By: /s/ John C. Bukovski
John C. Bukovski
(CORPORATE SEAL) Vice President
ATTEST: /s/ John F. Hogan
John F. Hogan
Assistant Secretary
HARRIS TRUST AND SAVINGS BANK
By: /s/ Carolyn Potter
Carolyn Potter
(CORPORATE SEAL) Assistant Vice President
ATTEST: /s/ J. Bartolini
J. Bartolini
Assistant Secretary
<PAGE>
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
I, P. JOHNSON, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that Ben Espinos, a Senior Vice President of Bank
of America Illinois, an Illinois state banking corporation, one of the parties
described in and which executed the foregoing instrument, and Howard McCarty, a
Vice President of said bank, who are both personally known to me to be the same
persons whose names are subscribed to the foregoing instrument as such Senior
Vice President and Vice President, respectively, and who are both personally
known to me to be a Senior Vice President and a Vice President, respectively, of
said bank, appeared before me this day in person and severally acknowledged that
they signed, sealed, executed and delivered said instrument as their free and
voluntary act as such Senior Vice President and Vice President, respectively, of
said bank, and as the free and voluntary act of said bank, for the uses and
purposes therein set forth.
Given under my hand and notarial seal this 31st day of January, A.D.
1996.
/s/ P. Johnson
P. Johnson
Notary Public
(NOTARIAL SEAL)
My Commission expires June 28, 1997.
<PAGE>
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
I, MARY L. KWILOS, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY that John C. Bukovski, a Vice President of
Commonwealth Edison Company, a corporation organized and existing under the laws
of the State of Illinois, one of the parties described in and which executed the
foregoing instrument, and John F. Hogan, an Assistant Secretary of said
corporation, who are both personally known to me to be the same persons whose
names are subscribed to the foregoing instrument as such Vice President and
Assistant Secretary, respectively, and who are both personally known to me to be
a Vice President and an Assistant Secretary, respectively, of said corporation,
appeared before me this day in person and severally acknowledged that they
signed, sealed, executed and delivered said instrument as their free and
voluntary act as such Vice President and Assistant Secretary, respectively, of
said corporation, and as the free and voluntary act of said corporation, for the
uses and purposes therein set forth.
Given under my hand and notarial seal this 31st day of January, A.D.
1996.
Mary L. Kwilos
Notary Public
(NOTARIAL SEAL)
My Commission expires October 26, 1997.
<PAGE>
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
I, MARIANNE CODY, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that Carolyn Potter, an Assistant Vice President of
Harris Trust and Savings Bank, an Illinois state banking corporation, one of the
parties described in and which executed the foregoing instrument, and J.
Bartolini, an Assistant Secretary of said bank, who are both personally known to
me to be the same persons whose names are subscribed to the foregoing instrument
as such Assistant Vice President and Assistant Secretary, respectively, and who
are both personally known to me to be an Assistant Vice President and an
Assistant Secretary, respectively, of said bank, appeared before me this day in
person and severally acknowledged that they signed, sealed, executed and
delivered said instrument as their free and voluntary act as such Assistant Vice
President and Assistant Secretary, respectively, of said bank, and as the free
and voluntary act of said bank, for the uses and purposes therein set forth.
Given under my hand and notarial seal this 31st day of January, A.D.
1996.
MARIANNE CODY
Notary Public
(NOTARIAL SEAL)
My Commission expires May 29, 1997.
<PAGE>
================================================================================
Exhibit (4)-29
Commonwealth Edison Company
Form 10-K File No. 1-1839
INSTRUMENT
_______________________
DATED AS OF JANUARY 31, 1996
_______________________
EXECUTED BY
HARRIS TRUST AND SAVINGS BANK
TRUSTEE UNDER MORTGAGE OF COMMONWEALTH EDISON COMPANY,
DATED JULY 1, 1923, AND INDENTURES
SUPPLEMENTAL THERETO
APPOINTING
D. G. DONOVAN
SUCCESSOR CO-TRUSTEE
================================================================================
<PAGE>
THIS INSTRUMENT, dated as of the 31st day of January, 1996, witnesseth
that HARRIS TRUST AND SAVINGS BANK (a state banking corporation organized and
existing under the laws of the State of Illinois), successor to Bank of America
Illinois (formerly Continental Bank, National Association) and Illinois
Merchants Trust Company, as Trustee under the Mortgage of COMMONWEALTH EDISON
COMPANY (a corporation organized and existing under the laws of the State of
Illinois) dated July 1, 1923, as amended and supplemented by Supplemental
Indenture dated August 1, 1944 and by subsequent supplemental indentures (the
"Mortgage"), does hereby (i) confirm the removal of ROBERT J. DONAHUE as Co-
Trustee under the Mortgage and (ii) pursuant to Section 15.06 of the Mortgage,
confirm the appointment of D. G. DONOVAN of Chicago, Illinois, as successor Co-
Trustee under the Mortgage. Such removal and appointment shall be effective on
the date hereof.
IN WITNESS WHEREOF, said Harris Trust and Savings Bank, as Trustee as
aforesaid, has caused this instrument to be executed in its name by one of its
Assistant Vice Presidents, and its corporate seal to be hereunto affixed and
attested by one of its Trust Officers, as of the 31st day of January, 1996.
HARRIS TRUST AND SAVINGS BANK
By: /s/ Carolyn Potter
Carolyn Potter
Assistant Vice President
(CORPORATE SEAL)
ATTEST: /s/ J. Bartolini
J. Bartolini
Assistant Secretary
-2-
<PAGE>
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
I, T. MUZQUIZ, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY that Carolyn Potter, an Assistant Vice
President of Harris Trust and Savings Bank, an Illinois state banking
corporation, one of the parties described in and which executed the foregoing
instrument, and J. Bartolini, an Assistant Secretary of said bank, who are both
personally known to me to be the same persons whose names are subscribed to the
foregoing instrument as such Assistant Vice President and Assistant Secretary,
respectively, and who are both personally known to me to be an Assistant Vice
President and an Assistant Secretary, respectively, of said bank, appeared
before me this day in person and severally acknowledged that they signed,
sealed, executed and delivered said instrument as their free and voluntary act
as such Assistant Vice President and Assistant Secretary, respectively, of said
bank, and as the free and voluntary act of said bank, for the uses and purposes
therein set forth.
Given under my hand and notarial seal this 31st day of January, A.D.
1996.
T. MUZQUIZ
Notary Public
(NOTARIAL SEAL)
My Commission expires July 12, 1997.
-3-
<PAGE>
Exhibit (10)-6
Unicom Corporation
Form 10-K File No. 1-11375
Commonwealth Edison Company
Form 10-K File No. 1-1839
As Amended on March 14, 1996
UNICOM CORPORATION
1995 LONG-TERM PERFORMANCE UNIT AWARD
FOR EXECUTIVE AND GROUP LEVEL EMPLOYEES
PAYABLE IN 1998
UNDER THE
UNICOM CORPORATION LONG-TERM INCENTIVE PLAN
Unicom Corporation, an Illinois corporation (the "Company"), hereby
grants to each employee described in Section 1 hereof as of January 1, 1995 (the
"Grant Date"), in accordance with the provisions of the Unicom Corporation Long-
Term Incentive Plan (the "Plan"), a performance unit award (each, an "Award")
expressed as a number (the "Base Unit") of performance units, in the amount and
upon and subject to the restrictions, terms and conditions set forth below.
Capitalized terms not defined herein shall have the meanings specified in the
Plan.
1. Recipients of Awards. Recipients of Awards hereunder shall
consist of the following employees (each, an "Existing Employee") of
Commonwealth Edison Company ("ComEd") and of Commonwealth Edison Company of
Indiana, Inc.: (i) each Group Level employee on the Grant Date, (ii) each
Executive on the Grant Date and (iii) each Officer on the Grant Date, including,
without limitation, the Chairman of ComEd, the President of ComEd and each
Senior Vice President of ComEd; provided, however, that individuals who become
Group Level employees, Executives or Officers after the Grant Date and during
the Performance Period (as hereinafter defined) (each, a "New Employee") shall
be eligible to receive an Award hereunder. The term "Employee" shall mean
either an Existing Employee or a New Employee.
2. Base Unit. The Base Unit for each Award shall be a number
(rounded to the nearest whole number) equal to (a) the product of multiplying
(i) the Salary (as defined herein) of the Employee receiving such Award by (ii)
the applicable percentage set forth below, divided by (b) the closing price of a
share of Common Stock as reported in The Wall Street Journal as New York Stock
Exchange Composite Transactions on December 30, 1994:
Chairman: 50%
President: 50%
Senior Vice Presidents: 40%
Officers, other than as listed above: 30%
Executives, other than as listed above: 20%
Group Level employees, other than as listed above: 20%
<PAGE>
For the purposes of calculating the Base Unit, an Existing Employee's Salary
shall be such Existing Employee's monthly scheduled rate of pay as of the Grant
Date multiplied by 12 together with the income from such Existing Employee's
Deferred Compensation Units (whether such Units were granted by the Company or
by ComEd), and a New Employee's Salary shall be such New Employee's monthly
scheduled rate of pay as of the date such New Employee becomes a New Employee
(the "Start Date") multiplied by 12 together with the income from such New
Employee's Deferred Compensation Units (whether such Units were granted by the
Company or by ComEd).
3. Performance Period. The Performance Period shall commence on
January 1, 1995 and end on December 31, 1997.
4. Payment Amount/Stockholder Protection. The amount payable in
connection with an Award (a "Payment Amount") shall be a dollar amount based on
the Base Unit and on the Company's percentile rank, with the percentile rank
corresponding to the highest performance in the performance group being 100 and
the percentile rank corresponding to the lowest performance in the performance
group being 1 (the "Company Rank"), in the Ranking (as hereinafter defined) for
the Performance Period, and calculated as follows:
Below Threshold Level. If the Company Rank is lower than the 25th
percentile in the Ranking, then the Payment Amount shall be zero.
Between Threshold Level and Target Level. If the Company Rank is no
lower than the 25th percentile in the Ranking and no higher than the 49th
percentile in the Ranking, then the Payment Amount shall be the Base Value
multiplied by a fraction the numerator of which is the Company Rank
multiplied by 2 and the denominator of which is 100.
Between Target Level and Maximum Level. If the Company Rank is no
lower than the 50th percentile in the Ranking and no higher than the 90th
percentile in the Ranking, then the Payment Amount shall be the Base Value
multiplied by a fraction the numerator of which is the Company Rank
multiplied by 2.5 minus 25 and the denominator of which is 100.
Above Maximum Level. If the Company Rank is above the 90th percentile
in the Ranking, then the Payment Amount shall be the Base Value multiplied
by 2.
Notwithstanding the foregoing, if the Company fails to maintain
regular quarterly cash dividends of at least $.40 per share of Common Stock
during the Performance Period (adjusted for any stock-split, stock dividend or
other similar event), then the Payment Amount shall be zero.
For purposes of the foregoing, the term "Ranking" shall mean a ranking
determined based upon the Cumulative Total Shareholder Return (as hereinafter
defined) for such Performance Period on the Company's Common Stock as compared
to the Cumulative Total
-2-
<PAGE>
Shareholder Return for such Performance Period on the common stock of each
corporation comprising the Dow Jones Utility Index (or any successor index); the
term "Cumulative Total Shareholder Return" for a period shall mean the result
obtained by dividing (i) the sum of (a) the cumulative amount of dividends on
the common stock in question for such period, assuming reinvestment of said
dividends in said common stock, and (b) the difference between the price per
share of said common stock at the end and the beginning of such period, by (ii)
the price per share of said common stock at the beginning of such period; and
the term "Base Value" shall mean the result obtained by multiplying the Base
Unit by the value of a share of Common Stock (as determined under Section 5
hereof).
5. Settlement of Awards. The Payment Amount shall become payable
upon the completion of the Performance Period and shall be paid by the Company
within 90 days after the completion of the Performance Period. The Payment
Amount shall be paid 50% in cash and 50% in shares of Common Stock; provided,
however, that shares that may become payable hereunder shall not be issued if
the aggregate number of shares payable to an Employee does not exceed five (and,
in such cases, cash shall be paid in an amount equal to the value of the shares
that would have been issued but for this proviso). Fractional shares of Common
Stock that may become payable hereunder shall be issued if the shares paid an
Employee exceed five and are held in non-certificated, book-entry or electronic
form; otherwise, any such fractional shares shall be paid in cash. For the
purposes of determining the number of shares of Common Stock payable pursuant to
this Section, a share of Common Stock shall be valued at the average of the
closing prices of a share of Common Stock as reported in The Wall Street Journal
as New York Stock Exchange Composite Transactions during the calendar quarter
ending on the last day of the Performance Period (appropriately adjusted for any
stock-split, stock dividend or other similar event).
6. Employment as an "Employee" for Less Than Full Performance Period.
6.1. Termination of Employment. If an Employee's employment with the
Company is terminated prior to the completion of the Performance Period for any
reason other than as provided in the immediately following sentence, then no
amount shall be payable hereunder. If an Employee's employment with the Company
is terminated prior to the completion of the Performance Period due to such
Employee's (i) retirement under the pension plan of any of the Employers or (ii)
death, then such Employee shall be entitled to an amount equal to the Payment
Amount calculated in accordance with Section 4 hereof multiplied by a fraction
the numerator of which is the number of days in the Performance Period that have
elapsed between the commencement of the Performance Period (in the case of an
Existing Employee), or the Start Date (in the case of a New Employee), and the
date of such retirement or death (as the case may be) and the denominator of
which is the number of days in the Performance Period. The Payment Amount for
any New Employee whose employment is not terminated prior to the completion of
the Performance Period shall be calculated in accordance with Section 4 hereof
and be reduced by multiplying it by a fraction the numerator of which is the
number of days in the Performance Period that have elapsed between such New
Employee's Start Date and the end of the Performance Period and the denominator
of which is the number of
-3-
<PAGE>
days in the Performance Period. Any Payment Amount calculated in accordance with
either of the two immediately preceding sentences shall be paid as provided in
Section 5 hereof within 90 days after the completion of the Performance Period.
6.2. Promotions; Demotions. If an Employee is promoted or demoted
during the Performance Period to a level that is included within the definition
of Employee, then such person shall be entitled to an amount equal to a Payment
Amount calculated in accordance with Section 4 hereof, but based upon the sum of
the products of (i) the Base Unit applicable to each level held by such person
during the Performance Period, multiplied by (ii) a fraction the numerator of
which is the number of days such level was held and the denominator of which is
the number of days in the Performance Period. If an Employee is demoted during
the Performance Period to a level below that included within the definition of
Employee, then such person shall be entitled to an amount equal to the Payment
Amount calculated in accordance with Section 4 hereof multiplied by a fraction
the numerator of which is the number of days in the Performance Period that such
person was at a level included within the definition of Employee and the
denominator of which is the number of days in the Performance Period.
6.3. Employment. As used in this Section 6, employment by the
Company shall include employment by a corporation which is a "subsidiary
corporation" of the Company, as such term is defined in section 424 (and any
successor section) of the Internal Revenue Code of 1986, as amended, or any
successor internal revenue law.
7. Rights as a Stockholder. No Employee shall have any rights as a
stockholder of the Company with respect to any shares of Common Stock that may
be payable hereunder unless and until such shares have been issued to such
Employee or otherwise credited to an account for the benefit of such Employee.
8. Additional Terms and Conditions of Award.
8.1. Nontransferability of Award. In accordance with Section 13.5 of
the Plan, no Award or other related benefit may, except as otherwise
specifically provided by the Plan or by law, be transferable in any manner other
than by will or the laws of descent and distribution, and any attempt to
transfer any such Award or other benefit shall be void; provided, however, that
the foregoing shall not restrict the ability of any Employee to transfer any
cash or Common Stock received as part of the Payment Amount. In accordance with
Section 13.5 of the Plan, Awards or other benefits payable under Awards shall
not in any manner be subject to the debts, contracts, liabilities, engagements
or torts of any person who shall be entitled to such Award or benefits, nor
shall they be subject to attachment or legal process for or against such person.
8.2. Withholding Taxes. As a condition precedent to the delivery to
the Employee of cash or Common Stock hereunder and in accordance with Section
13.4 of the Plan, the Company may deduct from any amount (including any Payment
Amount) payable then or thereafter payable by the Company or any of its
subsidiaries to the Employee, or may request the Employee to pay to the Company
in cash, such amount as the Company or any of its subsidiaries
-4-
<PAGE>
may be required, under all applicable federal, state, local or other laws or
regulations, to withhold and pay over with respect to the Award.
8.3. Compliance with Applicable Law. Each Award is subject to the
condition that if the listing, registration or qualification of the shares of
Common Stock subject to the Award upon any securities exchange or under any law,
or the consent or approval of any governmental body, or the taking of any other
action is necessary or desirable as a condition of, or in connection with, the
vesting or delivery of such shares hereunder, such shares may not be delivered,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained.
8.4. Award Subject to the Plan. This Award is subject to the
provisions of the Plan, and shall be interpreted in accordance therewith.
-5-
<PAGE>
Exhibit (10)-9
Unicom Corporation
Form 10-K File No. 1-11375
Commonwealth Edison Company
Form 10-K File No. 1-1839
UNICOM CORPORATION
1996 LONG-TERM PERFORMANCE UNIT AWARD
FOR EXECUTIVE AND GROUP LEVEL EMPLOYEES
PAYABLE IN 1999
UNDER THE
UNICOM CORPORATION LONG-TERM INCENTIVE PLAN
Unicom Corporation, an Illinois corporation (the "Company"), hereby
grants to each employee described in Section 1 hereof as of January 1, 1996 (the
"Grant Date"), in accordance with the provisions of the Unicom Corporation Long-
Term Incentive Plan (the "Plan"), a performance unit award (each, an "Award")
expressed as a number (the "Base Unit") of performance units, in the amount and
upon and subject to the restrictions, terms and conditions set forth below.
Capitalized terms not defined herein shall have the meanings specified in the
Plan.
1. Recipients of Awards. Recipients of Awards hereunder shall
consist of the following employees (each, an "Existing Employee") of
Commonwealth Edison Company ("ComEd") and of Commonwealth Edison Company of
Indiana, Inc. ("ComEd/Indiana"): (i) each Group Level employee on the Grant
Date, (ii) each Executive on the Grant Date and (iii) each Officer on the Grant
Date, including, without limitation, the Chairman of ComEd, the Vice Chairman of
ComEd, the President of ComEd and each Senior Vice President of ComEd; provided,
however, that individuals who become Group Level employees, Executives or
Officers after the Grant Date and during the Performance Period (as hereinafter
defined) (each, a "New Employee") shall be eligible to receive an Award
hereunder. The term "Employee" shall mean either an Existing Employee or a New
Employee.
2. Base Unit. The Base Unit for each Award shall be a number
(rounded to the nearest whole number) equal to (a) the product of multiplying
(i) the Salary (as defined herein) of the Employee receiving such Award by (ii)
the applicable percentage set forth below, divided by (b) the closing price of a
share of Common Stock as reported in The Wall Street Journal as New York Stock
Exchange Composite Transactions for December 29, 1995:
Chairman: 50%
Vice Chairman: 50%
President: 50%
Senior Vice Presidents: 40%
Officers, other than as listed above: 30%
Executives, other than as listed above: 20%
Group Level employees, other than as listed above: 20%
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For the purposes of calculating the Base Unit, an Existing Employee's Salary
shall be such Existing Employee's monthly scheduled rate of pay as of the Grant
Date multiplied by 12 together with the income from such Existing Employee's
Deferred Compensation Units (whether such Units were granted by the Company or
by ComEd), and a New Employee's Salary shall be such New Employee's monthly
scheduled rate of pay as of the date such New Employee becomes a New Employee
(the "Start Date") multiplied by 12 together with the income from such New
Employee's Deferred Compensation Units (whether such Units were granted by the
Company or by ComEd).
3. Performance Period. The Performance Period shall commence on
January 1, 1996 and end on December 31, 1998.
4. Payment Amount/Stockholder Protection. The amount payable in
connection with an Award (a "Payment Amount") shall be a dollar amount based on
the Base Unit and on the Company's percentile rank, with the percentile rank
corresponding to the highest performance in the performance group being 100 and
the percentile rank corresponding to the lowest performance in the performance
group being 1 (the "Company Rank"), in the Ranking (as hereinafter defined) for
the Performance Period, and calculated as follows:
Below Threshold Level. If the Company Rank is lower than the 25th
percentile in the Ranking, then the Payment Amount shall be zero.
Between Threshold Level and Target Level. If the Company Rank is no
lower than the 25th percentile in the Ranking and no higher than the 49th
percentile in the Ranking, then the Payment Amount shall be the Base Value
multiplied by a fraction the numerator of which is the Company Rank
multiplied by 2 and the denominator of which is 100.
Between Target Level and Maximum Level. If the Company Rank is no
lower than the 50th percentile in the Ranking and no higher than the 90th
percentile in the Ranking, then the Payment Amount shall be the Base Value
multiplied by a fraction the numerator of which is the Company Rank
multiplied by 2.5 minus 25 and the denominator of which is 100.
Above Maximum Level. If the Company Rank is above the 90th percentile
in the Ranking, then the Payment Amount shall be the Base Value multiplied
by 2.
Notwithstanding the foregoing, if the Company fails to maintain
regular quarterly cash dividends of at least $.40 per share of Common Stock
during the Performance Period (adjusted for any stock-split, stock dividend or
other similar event), then the Payment Amount shall be zero.
For purposes of the foregoing, the term "Ranking" shall mean a ranking
determined based upon the Cumulative Total Shareholder Return (as hereinafter
defined) for such Performance Period on the Company's Common Stock as compared
to the Cumulative Total
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Shareholder Return for such Performance Period on the common stock of each
corporation comprising the Dow Jones Utility Index (or any successor index); the
term "Cumulative Total Shareholder Return" for a period shall mean the result
obtained by dividing (i) the sum of (a) the cumulative amount of dividends on
the common stock in question for such period, assuming reinvestment of said
dividends in said common stock, and (b) the difference between the price per
share of said common stock at the end and the beginning of such period, by (ii)
the price per share of said common stock at the beginning of such period; and
the term "Base Value" shall mean the result obtained by multiplying the Base
Unit by the value of a share of Common Stock (as determined under Section 5
hereof).
5. Settlement of Awards. The Payment Amount shall become payable
upon the completion of the Performance Period and shall be paid by the Company
within 90 days after the completion of the Performance Period. The Payment
Amount shall be paid 50% in cash and 50% in shares of Common Stock; provided,
however, that, if the Employee elects under the Unicom Corporation Stock Bonus
Deferral Plan to defer more than 50% of the Payment Amount, the amount so
deferred shall be paid in shares of Common Stock; and provided further, that
shares that may become payable to an Employee hereunder shall not be issued if
the aggregate number of shares payable to such Employee does not exceed five
(and, in such case, cash shall be paid in an amount equal to the value of the
shares that would have been issued but for this proviso). Fractional shares of
Common Stock that may become payable to an Employee hereunder shall be issued if
the shares issuable to such Employee exceed five and are held in non-
certificated, book-entry or electronic form; otherwise, any such fractional
shares shall be paid in cash. For the purposes of determining the number of
shares of Common Stock payable pursuant to this Section, a share of Common Stock
shall be valued at the average of the closing prices of a share of Common Stock
as reported in The Wall Street Journal as New York Stock Exchange Composite
Transactions during the calendar quarter ending on the last day of the
Performance Period (appropriately adjusted for any stock-split, stock dividend
or other similar event).
6. Employment as an "Employee" for Less Than Full Performance Period.
6.1. Termination of Employment. If an Employee's employment with the
Company is terminated prior to the completion of the Performance Period for any
reason other than as provided in the immediately following sentence, then no
amount shall be payable hereunder. If an Employee's employment with the Company
is terminated prior to the completion of the Performance Period due to such
Employee's (i) termination as a result of the sale of ComEd/Indiana's State Line
generating plant located in Hammond, Indiana, the sale of ComEd's Kincaid
generating plant located in Kincaid, Illinois, or ComEd's decision to have a
third party provide the services provided by the functional group that includes
such Employee (in any such case, a "Permitted Termination"), (ii) retirement
under the pension plan of any of the Employers or (iii) death, then such
Employee shall be entitled to an amount equal to the Payment Amount calculated
in accordance with Section 4 hereof multiplied by a fraction the numerator of
which is the number of days in the Performance Period that have elapsed between
the commencement of the Performance Period (in the case of an Existing
Employee), or the Start
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Date (in the case of a New Employee), and the date of such Permitted
Termination, retirement or death (as the case may be) and the denominator of
which is the number of days in the Performance Period. The Payment Amount for
any New Employee whose employment is not terminated prior to the completion of
the Performance Period shall be calculated in accordance with Section 4 hereof
and be reduced by multiplying it by a fraction the numerator of which is the
number of days in the Performance Period that have elapsed between such New
Employee's Start Date and the end of the Performance Period and the denominator
of which is the number of days in the Performance Period. Any Payment Amount
calculated in accordance with either of the two immediately preceding sentences
shall be paid as provided in Section 5 hereof within 90 days after the
completion of the Performance Period.
6.2. Promotions; Demotions. If an Employee is promoted or demoted
during the Performance Period to a level that is included within the definition
of Employee, then such person shall be entitled to an amount equal to a Payment
Amount calculated in accordance with Section 4 hereof, but based upon the sum of
the products of (i) the Base Unit applicable to each level held by such person
during the Performance Period, multiplied by (ii) a fraction the numerator of
which is the number of days during the Performance Period that such level was
held and the denominator of which is the number of days in the Performance
Period. If an Employee is demoted during the Performance Period to a level
below that included within the definition of Employee, then such person shall be
entitled to an amount equal to the Payment Amount calculated in accordance with
Section 4 hereof multiplied by a fraction the numerator of which is the number
of days in the Performance Period that such person was at a level included
within the definition of Employee and the denominator of which is the number of
days in the Performance Period.
6.3. Employment. As used in this Section 6, employment by the
Company shall include employment by a corporation which is a "subsidiary
corporation" of the Company, as such term is defined in section 424 (and any
successor section) of the Internal Revenue Code of 1986, as amended, or any
successor internal revenue law.
7. Rights as a Stockholder. No Employee shall have any rights as a
stockholder of the Company with respect to any shares of Common Stock that may
be payable hereunder unless and until such shares have been issued to such
Employee or otherwise credited to an account for the benefit of such Employee.
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8. Additional Terms and Conditions of Award.
8.1. Nontransferability of Award. In accordance with Section 13.5 of
the Plan, no Award or other related benefit may, except as otherwise
specifically provided by the Plan or by law, be transferable in any manner other
than by will or the laws of descent and distribution, and any attempt to
transfer any such Award or other benefit shall be void; provided, however, that
the foregoing shall not restrict the ability of any Employee to transfer any
cash or Common Stock received as part of the Payment Amount. In accordance with
Section 13.5 of the Plan, Awards or other benefits payable under Awards shall
not in any manner be subject to the debts, contracts, liabilities, engagements
or torts of any person who shall be entitled to such Award or benefits, nor
shall they be subject to attachment or legal process for or against such person.
8.2. Withholding Taxes. As a condition precedent to the delivery to
the Employee of cash or Common Stock hereunder and in accordance with Section
13.4 of the Plan, the Company may deduct from any amount (including any Payment
Amount) payable then or thereafter payable by the Company or any of its
subsidiaries to the Employee, or may request the Employee to pay to the Company
in cash, such amount as the Company or any of its subsidiaries may be required,
under all applicable federal, state, local or other laws or regulations, to
withhold and pay over with respect to the Award.
8.3. Compliance with Applicable Law. Each Award is subject to the
condition that if the listing, registration or qualification of the shares of
Common Stock subject to the Award upon any securities exchange or under any law,
or the consent or approval of any governmental body, or the taking of any other
action is necessary or desirable as a condition of, or in connection with, the
vesting or delivery of such shares hereunder, such shares may not be delivered,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained.
8.4. Award Subject to the Plan. This Award is subject to the
provisions of the Plan, and shall be interpreted in accordance therewith.
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<PAGE>
Exhibit (10)-10
Unicom Corporation
Form 10-K File No. 1-11375
Commonwealth Edison Company
Form 10-K File No. 1-1839
UNICOM CORPORATION
1996 VARIABLE COMPENSATION AWARD FOR MANAGEMENT EMPLOYEES
UNDER THE UNICOM CORPORATION LONG-TERM INCENTIVE PLAN
Unicom Corporation, an Illinois corporation (the "Company"), hereby
grants to each employee described in Section 1 hereof (each, an "Employee"), as
of January 1, 1996 (the "Grant Date"), in accordance with the provisions of the
Unicom Corporation Long-Term Incentive Plan (the "Plan"), a performance unit
award (each, an "Award"), expressed as a number of performance units, in the
amount and upon and subject to the restrictions, terms and conditions set forth
below and in Appendices A and B attached hereto. Capitalized terms not defined
herein shall have the meanings specified in the Plan.
1. Recipients of Awards. Subject in all respects to the provisions
hereof, recipients of Awards hereunder shall consist of each employee of
Commonwealth Edison Company ("ComEd") (other than (i) the Chairman, the Vice
Chairman and the President and (ii) temporary employees) and of Commonwealth
Edison Company of Indiana, Inc. ("ComEd/Indiana," and, together with ComEd, the
"Employers") who is on the management or executive payroll during calendar year
1996.
2. Base Unit. The Base Unit for each Award shall be the number which
is equal to the number of dollars determined by multiplying the Base Pay (as
defined herein) of the Employee receiving the Award by the conversion factor of
1.25% and rounding up to the nearest whole dollar. For purposes of calculating
the Base Unit, "Base Pay" shall mean the sum of (i) the product of an Employee's
monthly scheduled rate of pay, determined as of the close of the final pay
period for calendar year 1996 (or such earlier pay period during 1996 in which
the Employee's employment terminates), multiplied by 12, plus (ii) the income
from such Employee's Deferred Compensation Units (whether such Units were
granted by the Company or by ComEd) if such Employee is in the "Group" or
"Executive" categories of employment.
3. Payment Amount. The total amount payable in connection with an
Award (the "Payment Amount") may consist solely of a cash payment (the "Cash
Payment Amount") or may consist of a Cash Payment Amount and a payment of Common
Stock (the "Stock Payment Amount"), as determined below. Interpolation shall
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be used in determining the number of performance units earned for goal
achievement between the "Threshold" level and the "Distinguished" level.
a. Cash Payment Amount. The Cash Payment Amount shall be the dollar
amount computed by multiplying the Employee's Base Unit by the applicable
performance unit set forth (i) in the cases of the "Rated" and "Group"
categories of Employees, below under the column titled "Cash" that
corresponds to such Employee's category of employment and the level of
performance goals achieved as set forth in Appendix A attached hereto that
are applicable to such Employee or (ii) in the case of the "Executive"
category of Employees, in Appendix B under the column titled "Cash" that
corresponds to (1) such Employee's name, if such Employee is named on
Appendix B, or the line entry "Other Executive," if such Employee is not
named on Appendix B, and (2) level of performance goals achieved as set
forth in Appendix A attached hereto that are applicable to such Employee.
b. Stock Payment Amount. The Stock Payment Amount shall be the
dollar amount computed by multiplying the Employee's Base Unit by the
applicable performance unit set forth (i) in the cases of the "Rated" and
"Group" categories of Employees, below under the column titled "Stock" that
corresponds to such Employee's category of employment and the level of
performance goals achieved as set forth in Appendix A attached hereto that
are applicable to such Employee, or (ii) in the case of the "Executive"
category of Employees, in Appendix B under the column titled "Stock" that
corresponds to (1) such Employee's name, if such Employee is named on
Appendix B, or the line entry "Other Executive," if such Employee is not
named on Appendix B, and (2) level of performance goals achieved as set
forth in Appendix A attached hereto and that are applicable to such
Employee.
<TABLE>
<CAPTION>
PERFORMANCE UNITS
-----------------
THRESHOLD TARGET DISTINGUISHED
--------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
CATEGORY CASH STOCK CASH STOCK CASH STOCK
RATED 2.4 0 6 0 8.4 1.2
GROUP 2.4 0 8 4 8 8
</TABLE>
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4. Reduction of Payment Amount in Certain Instances. In the event
that:
(a) an Employee (i) is first placed on the management or executive
payroll after January 1, 1996, (ii) is on a leave of absence during 1996,
(iii) retires under the pension plan of any one of the Employers during
1996, or (iv) dies during 1996, or
(b) an Employee's employment with the Employers is terminated during
1996 as a result of (i) the sale of ComEd/Indiana's State Line generating
plant located in Hammond, Indiana, (ii) the sale of ComEd's Kincaid
generating plant located in Kincaid, Illinois, or (iii) ComEd's decision to
have a third party provide the services provided by the functional group
that includes such Employee,
each of the Cash Payment Amount and the Stock Payment Amount will be a reduced
amount equal to each of the amounts determined in Section 3 above multiplied by
a fraction, the numerator of which is the number of days the Employee worked for
one of the Employers during 1996 and the denominator of which is 366. In
addition, in the event that an Employee is or becomes a participant in, or is
eligible or becomes eligible to participate in, The ComEd Pension Fund
Management Incentive Pay Plan or The ComEd Bulk Power Marketing Incentive Plan
(such incentive plans are collectively referred to herein as the "Other
Incentive Plans") during 1996, then each of the Cash Payment Amount and the
Stock Payment Amount will be a reduced amount equal to each of the amounts
determined in Section 3 above (subject to any adjustment required by the first
sentence of this Section 4) multiplied by a fraction, the numerator of which is
the number of days during which the Employee worked during 1996 and was not a
participant in, or eligible to participate in, the Other Incentive Plans and the
denominator of which is the number of days the Employee worked during 1996.
Further, in the event that an Employee's hourly or salary compensation is paid
or reimbursed by the Mid-America Interconnected Network ("MAIN") during 1996,
then each of the Cash Payment Amount and the Stock Payment Amount will be a
reduced amount equal to each of the amounts determined in Section 3 above
(subject to any adjustment required by the first sentence of this Section 4)
multiplied by a fraction, the numerator of which is the number of days during
1996 in respect of which such Employee's hourly or salary compensation was not
paid or reimbursed by MAIN and the denominator of which is the number of days
the Employee worked during 1996. For purposes of the preceding sentences, the
number of days an Employee worked in 1996 shall include, solely in the cases of
an Employee who retires under the pension plan of any one of the Employers or
who dies, the full month in which the Employee retires or dies. For an Employee
who is a part-time Employee described in clause (a) or (b) of the first sentence
of this Section, the reduction provided in this Section shall be made after the
reduction set forth in Section 5 is made.
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5. Reduction of Payment Amount for Part-Time Employees. For an
Employee who is a part-time Employee, each of the Cash Payment Amount and the
Stock Payment Amount will be a reduced amount equal to the amount determined
above multiplied by a fraction, the numerator of which is the number of hours
the Employee was scheduled to work during 1996 and the denominator of which is
2080 hours.
6. Transfer of Employee from One Business Unit to Another Business
Unit. In the event that an Employee is transferred from one Business Unit (as
hereinafter defined) to another Business Unit during 1996, each of the Cash
Payment Amount and the Stock Payment Amount will be determined on a prorated
basis from each Business Unit. For purposes of this Section, "Business Unit"
means the following corporate functions of the Employers: (a) commercial, (b)
financial, (c) human resources, (d) corporate relations, (e) corporate
resources, (f) law, (g) fuel/diversity/ethics, (h) fossil energy production, (i)
nuclear energy production and (j) quality improvement programs.
7. Stockholder Protection. Notwithstanding anything herein to the
contrary, no amount shall be paid hereunder unless the following four conditions
are satisfied:
(a) The Company maintains regular quarterly cash dividends of at
least $.40 per share of Common Stock during calendar year 1996 (adjusted
for any stock-split, stock dividend or other similar event).
(b) The aggregate amount actually incurred by the Employers for
operations and maintenance expenditures for calendar year 1996 (calculated
as provided in Section 12.5(b)) is less than $2,020 million.
(c) The aggregate amount actually incurred by the Employers for
capital expenditures for calendar year 1996 is less than $920 million
(excluding (i) any capitalized charges associated with awards made or paid
under the Plan, The ComEd Pension Fund Management Incentive Pay Plan, The
ComEd Bulk Power Marketing Incentive Plan and any company-wide incentive
pay plan or arrangement generally applicable to bargaining unit employees
within ComEd and/or ComEd/Indiana, (ii) one half of any capitalized charges
associated with any signing bonus and/or adders paid to members of Local 15
of the International Brotherhood of Electrical Workers in connection with
the execution of their most recent collective bargaining agreement with
ComEd, (iii) any capital expenditures associated with ComEd's accelerated
nuclear expenditures (improvement program), and (iv) any additional capital
expenditures due to the acceleration of ComEd's steam generator replacement
program).
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(d) The earnings per share of Common Stock of the Company (calculated
as provided in Section 12.5(a)) are not less than $3.00.
8. Failure to Achieve "Meeting All Expectations" Rating. An Employee
who fails to receive at least a "meeting all expectations" rating under the
Performance Evaluation, Career Development and/or Succession Planning (or the
equivalent thereof) with respect to performance in 1996 shall not receive any
amount hereunder.
9. Settlement of Awards. The Payment Amount, if any, will be paid to
an Employee as soon as practicable after the Company's audited financial results
are available for calendar year 1996. The number of shares of Common Stock
payable to an Employee with respect to an Award shall be computed by dividing
the Stock Payment Amount by the value of one share of Common Stock; provided,
however, that shares that may become payable to an Employee hereunder shall not
be issued if the aggregate number of shares payable to such Employee does not
exceed five (and, in such case, cash shall be paid in an amount equal to the
value of the shares that would have been issued but for this proviso).
Fractional shares of Common Stock that may become payable to an Employee
hereunder shall be awarded if the shares awarded to such Employee exceed five
and are held in non-certificated, book-entry or electronic form; otherwise, any
such fractional shares shall be paid in cash. For purposes of this Section, the
value of a share of Common Stock shall be the average of the closing prices of a
share of Common Stock as reported in The Wall Street Journal as New York Stock
Exchange Composite Transactions during the last calendar quarter of 1996
(appropriately adjusted for any stock-split, stock dividend or other similar
event).
10. Termination of Employment. An Employee whose employment with the
Employers is terminated prior to December 31, 1996 for any reason other as
specified in clauses (a)(iii), (a)(iv), (b)(i), (b)(ii) or (b)(iii) of Section 4
shall not be entitled to any payment under the Plan.
11. Rights as a Stockholder. No Employee shall have any rights as a
stockholder of the Company with respect to any shares of Common Stock that may
be payable hereunder unless and until such shares shall have been issued to such
Employee or otherwise credited to an account for the benefit of such Employee.
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12. Additional Terms and Conditions of Award.
12.1. Nontransferability of Award. In accordance with Section 13.5
of the Plan, no Award or other related benefit may, except as otherwise
specifically provided by the Plan or by law, be transferable in any manner other
than by will or the laws of descent and distribution, and any attempt to
transfer any such Award or other benefit shall be void; provided, however, that
the foregoing shall not restrict the ability of any Employee to transfer any
cash or Common Stock received as part of the Payment Amount. In accordance with
Section 13.5 of the Plan, Awards or other benefits payable under Awards shall
not in any manner be subject to the debts, contracts, liabilities, engagements
or torts of any person who shall be entitled to such Award or benefits, nor
shall they be subject to attachment or legal process for or against such person.
12.2. Withholding Taxes. As a condition precedent to the delivery to
the Employee of cash or Common Stock hereunder and in accordance with Section
13.4 of the Plan, the Company may deduct from any amount (including any Payment
Amount) payable then or thereafter payable by the Company to the Employee, or
may request the Employee to pay to the Company in cash, such amount as the
Company may be required, under all applicable federal, state, local or other
laws or regulations, to withhold and pay over with respect to the Award.
12.3. Compliance with Applicable Law. Each Award is subject to the
condition that if the listing, registration or qualification of the shares of
Common Stock subject to the Award upon any securities exchange or under any law,
or the consent or approval of any governmental body, or the taking of any other
action is necessary or desirable as a condition of, or in connection with, the
vesting or delivery of such shares hereunder, such shares may not be delivered,
in whole or in part, unless such listing, registration, qualification, consent
or approval shall have been effected or obtained.
12.4. Award Subject to the Plan. This Award is subject to the
provisions of the Plan, and shall be interpreted in accordance therewith.
12.5. Certain Computations. (a) For the purposes of Section 7(d)
above and Appendix A hereto, "earnings per share" shall mean the earnings per
share of Common Stock of the Company calculated without giving effect to (i) any
charges associated with any early retirement program adopted by the Employers or
any severance payments made by the Employers, (ii) any write-off (as opposed to
depreciation charges) associated with any plant, property or equipment of the
Employers, (iii) any accelerated depreciation on any nuclear generating stations
under ComEd's "ENERGY Partnership Program," (iv) the effect of any unanticipated
accounting reclassifications or adjustments
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or inter-company cost allocation adjustments that may be required by the Federal
Energy Regulatory Commission or the Illinois Commerce Commission ("ICC"), (v)
any accounting effects resulting from any subsequent ICC or judicial proceeding
relating to any order entered by the ICC in Docket No. 94-0065, (vi) any
investment tax credit related to certain investments in nuclear fuel and other
miscellaneous electric utility property permitted under the 1986 Tax Reform Act
and not previously taken, (vii) any "finder's fee" or similar compensation paid
in connection with the realization of the investment tax credit referred to in
the preceding clause (vi), (viii) any gain, loss or other charges (including,
without limitation, increases or decreases in related operations and maintenance
expenditures) associated with the disposition of ComEd/Indiana's State Line
generating plant, (ix) any gain, loss or other charges (including, without
limitation, increases or decreases in related operations and maintenance
expenditures) associated with the disposition of ComEd's Kincaid generating
plant, (x) one half of any charges associated with any signing bonus and/or
adders paid to members of Local 15 of the International Brotherhood of
Electrical Workers in connection with the execution of their most recent
collective bargaining agreement with ComEd, (xi) any expenditures associated
with ComEd's accelerated nuclear expenditures (improvement program), and (xii)
any charges associated with necessary increases in pension provisions for the
Service Annuity Systems of the Employers which are determined after January 1,
1996; and shall be adjusted for any stock splits, stock dividends or other
similar event.
(b) For the purposes of Section 7(b) above and Appendix A hereto, the
computation of "operations and maintenance expenditures" shall exclude (i)
charges associated with any early retirement program adopted by the Employers or
any severance payments made by the Employers, (ii) any charges associated with
awards made or paid under the Plan, The ComEd Pension Fund Management Incentive
Pay Plan, The ComEd Bulk Power Marketing Incentive Plan and any company-wide
incentive pay plan or arrangement generally applicable to bargaining unit
employees within ComEd and/or ComEd/Indiana, (iii) any write-off (as opposed to
depreciation charges) included in operation and maintenance expenditures that
relates to any plant, property or equipment of the Employers, (iv) the effect
of any unanticipated accounting reclassifications or adjustments or inter-
company cost allocation adjustments that may be required by the Federal Energy
Regulatory Commission or the ICC, (v) any accounting effects resulting from any
subsequent ICC or judicial proceeding relating to any order entered by the ICC
in Docket No. 94-0065, (vi) any "finder's fee" or similar compensation paid in
connection with the realization of the investment tax credit referred to Section
12.5(a)(vi) above, (vii) any gain, loss or other charges (including, without
limitation, increases or decreases in related operations and maintenance
expenditures) associated with the disposition of ComEd/Indiana's State Line
generating plant, (viii) any gain, loss or other charges (including, without
limitation, increases or decreases in related operations and maintenance
expenditures) associated with the disposition of ComEd's Kincaid generating
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plant, (ix) one half of any charges associated with any signing bonus and/or
adders paid to members of Local 15 of the International Brotherhood of
Electrical Workers in connection with the execution of their most recent
collective bargaining agreement with ComEd, (x) any expenditures associated with
ComEd's accelerated nuclear expenditures (improvement program), and (xi) any
charges associated with necessary increases in pension provisions for the
Service Annuity Systems of the Employers which are determined after January 1,
1996.
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Exhibit (10)-11
Unicom Corporation
Form 10-K File No 1-11375
Commonwealth Edison Company
Form 10-K File No. 1-1839
1996 AWARD TO MR. O'CONNOR, MR. MULLIN AND MR. SKINNER
UNDER THE UNICOM CORPORATION LONG-TERM INCENTIVE PLAN
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Unicom Corporation, an Illinois corporation (the "Company"), hereby
grants to James J. O'Connor, Leo F. Mullin and Samuel K. Skinner in accordance
with the provisions of the Unicom Corporation Long-Term Incentive Plan (the
"Plan"), a performance unit award (each, an "Award") in the amount and upon and
subject to the restrictions, terms and conditions set forth below. Capitalized
terms not defined herein shall have the meanings specified in the Plan. The
following chart describes the requirements for each Award level and sets forth
the percentage of Base Pay (as hereinafter defined) allocated to such level:
<TABLE>
<CAPTION>
Level of Award
- --------------
Cash Stock
---- -----
<S> <C> <C>
Threshold:
If earnings per share on the Company's
Common Stock are at least $3.24 per share* 25% 0%
Target:
If earnings per share on the Company's
Common Stock are at least $3.31 per share* 30% 20%
Distinguished Level:
If earnings per share on the Company's
Common Stock are at least $3.39 per share* 30% 70%
</TABLE>
- ---------------
* For the purposes of determining the Level of Award, the "earnings per
share" amount shall be calculated without giving effect to (i) any charges
associated with any early retirement program for employees of the Company
or its subsidiaries or any severance payments made by the Company or its
subsidiaries, (ii) any charges associated with necessary increases in
pension provisions for the Service Annuity Systems of Commonwealth Edison
Company ("ComEd") and Commonwealth Edison Company of Indiana, Inc. ("ComEd-
Indiana") which are determined after January 1, 1996, (iii) any write-off
(as opposed to depreciation charges) associated with any plant, property or
equipment of the Company or its subsidiaries, (iv) the effect of any
unanticipated accounting reclassifications or adjustments or inter-company
cost allocation adjustments that may be required by the Federal Energy
Regulatory Commission or the Illinois Commerce
<PAGE>
Commission ("ICC"), (v) any accounting effects resulting from any
subsequent ICC or judicial proceeding relating to any order entered by the
ICC in Docket No. 94-0065, (vi) any accelerated depreciation on any nuclear
generating stations under ComEd's "ENERGY Partnership Program," (vii) any
investment tax credit related to certain investments in nuclear fuel and
other miscellaneous electric utility property permitted under the 1986 Tax
Reform Act and not previously taken, (viii) any "finder's fee" or similar
compensation paid in connection with the realization of the investment tax
credit referred to in the preceding clause (vii), (ix) any gain, loss or
other charges (including, without limitation, increases or decreases in
related operations and maintenance expenditures) associated with the
disposition of ComEd/Indiana's State Line generating plant, (x) any gain,
loss or other charges (including, without limitation, increases or
decreases in related operations and maintenance expenditures) associated
with the disposition of ComEd's Kincaid generating plant, (xi) one half of
any charges associated with any signing bonus and/or adders paid to members
of Local 15 of the International Brotherhood of Electrical Workers in
connection with the execution of their most recent collective bargaining
agreement with ComEd, and (xii) any expenditures associated with ComEd's
accelerated nuclear expenditures (improvement program); and shall be
adjusted for any stock splits, stock dividends or other similar event.
No award at any level shall be earned or payable if (i) the aggregate
amount actually incurred by ComEd and ComEd-Indiana for operations and
maintenance expenditures (excluding (1) any charges or effects associated with
any of the items referred to in clauses (i) through (v), inclusive, and clauses
(viii) through (xii), inclusive, of the first sentence of the asterisked
footnote to the preceding table and (2) any charges associated with awards made
or paid under the Plan, The ComEd Pension Fund Management Incentive Pay Plan,
The ComEd Bulk Power Marketing Incentive Plan and any company-wide incentive pay
plan or arrangement generally applicable to bargaining unit employees within
ComEd and/or ComEd-Indiana) for the calendar year 1996 is not less than $2,020
million, (ii) the aggregate amount actually incurred by ComEd and ComEd-Indiana
for capital expenditures for calendar year 1996 is not less than $920 million
(excluding (1) any capitalized charges associated with awards made or paid under
the Plan, The ComEd Pension Fund Management Incentive Pay Plan, The ComEd Bulk
Power Marketing Incentive Plan and any company-wide incentive pay plan or
arrangement generally applicable to bargaining unit employees within ComEd
and/or ComEd-Indiana, (2) one half of any capitalized charges associated with
any signing bonus and/or adders paid to members of Local 15 of the International
Brotherhood of Electrical Workers in connection with the execution of their most
recent collective bargaining agreement with ComEd, (3) any capital expenditures
associated with ComEd's accelerated nuclear expenditures (improvement program),
and (4) any additional capital expenditures due to the acceleration of ComEd's
steam generator replacement program), or (iii) the Company fails to maintain its
regular quarterly cash dividends on the outstanding Common Stock in an amount at
least equal to $.40 per share (adjusted for any stock-split, stock dividend or
other similar event) during the calendar year 1996.
The value (the "Payment Amount") of an award is determined by
multiplying the performance units (expressed as a percentage) at the achieved
award level by Base Pay, and will result in a "Cash Payment Amount" (determined
by reference to the "Cash" column) and a "Stock Payment Amount" (determined by
reference to the "Stock" column); provided, however, that interpolation shall be
used in determining the
-2-
<PAGE>
amount of any award based on achievement between the "Threshold" level and the
"Distinguished" level. "Base Pay" for Mr. O'Connor, Mr. Mullin and Mr. Skinner,
as the case may be, shall be his monthly scheduled rate of pay from ComEd as of
January 1, 1996, multiplied by 12 together with the 1996 income from his
Deferred Compensation Units (whether received from the Company or ComEd).
The Award is subject to the provisions of Sections 9 through 12.4
(inclusive) of the 1996 Variable Compensation Award for Management Employees
(including employment requirements and timing of payments).
-3-
<PAGE>
Exhibit (10)-12
Unicom Corporation
Form 10-K File No. 1-11375
Commonwealth Edison Company
Form 10-K File No. 1-1839
UNICOM CORPORATION
DEFERRED COMPENSATION UNIT PLAN
(as amended through October 25, 1995)
1. Purposes. The purposes of the Unicom Corporation Deferred
Compensation Unit Plan (the "Plan") are (i) to align the interests of the
Company's stockholders and recipients of awards under the Plan by linking a
portion of such recipients, compensation to the amount of cash dividends paid
with respect to the Company's Common Stock and (ii) to assure continuity of
efficient management, by providing for awards under the Plan, which may be
wholly or partly in lieu of salary increases, to such persons.
2. Definitions. In addition to the other terms defined in this Plan,
the following terms shall have the following meanings for purposes of this Plan:
"Committee" means the Compensation Committee of the Board of Directors
of the Company.
"Common Stock" means the Common Stock, without par value, of the
Company.
"Company" means Unicom Corporation, an Illinois corporation.
"Current Compensation Unit" means an award entitling the recipient to
receive, following the award and during the continued employment of the
recipient by the Company or its subsidiaries, an amount in cash equal to,
and payable on the payment dates of, the cash dividends such recipient
would have received if on the day of the award one share of Common Stock
had been issued to such recipient; provided, however, that no amounts shall
be payable under such award in respect of non-cash dividends paid on the
Common Stock.
"Retirement Compensation Unit" means an award under Section 4(c) or
4(f) of this Plan entitling the recipient to receive, following the award
and continuing for the recipient's lifetime, an amount
<PAGE>
equal to, and payable on the payment dates of, the cash dividends such
recipient would have received if on the day of the award one share of
Common Stock had been issued to such recipient; provided, however: (a) no
amount shall be payable under such award in respect of non-cash dividends
paid on the Common Stock; (b) payments in respect of such Unit in any
calendar year shall not in any event be
(i) less than the average amount of the payments per Current Compensation
Unit during the five calendar years preceding the termination of
employment which gave rise to the award of such Retirement
Compensation Unit (provided that for purposes of this provision, the
payments per Current Compensation Unit in the calendar years prior to
January 1, 1995 shall be deemed to be as follows: 1994--$1.60, 1993--
$1.60, 1992--$2.65, 1991--$3.00 and 1990-$3.00), or
(ii) more than such average amount (or the amount of the payments per
Current Compensation Unit in the calendar year preceding such
termination, if greater), increased at the compound annual rate of two
percent to the end of the calendar year of payment,
provided that the foregoing clause (i) and (ii) limits shall not apply to
any such Units issued pursuant to Section 4(f) of this Plan and, instead,
any such Units shall have the limits, if any, applicable to the
corresponding retirement compensation units for which they are exchanged or
such other limits, if any, as may be established by the Committee; and (c)
upon the death of a recipient of a Unit, leaving a spouse surviving,
payments on account of such Unit shall continue to be made to the spouse
for the spouse's lifetime, but only if (i) such Unit had originated from
the deceased's employment by the Company or its subsidiaries and (ii) the
surviving spouse was married to such recipient when his or her period of
service with the Company and all of its subsidiaries terminated.
-2-
<PAGE>
"Units" means Current Compensation Units and Retirement Compensation
Units.
3. Eligible Participants. Participants in the Plan shall consist of
such key executive and managerial employees of the Company and its subsidiaries
as the Committee in its sole discretion may select from time to time consistent
with the next sentence of this Section 3. The number of active officers and
employees to whom Current Compensation Units may be so awarded in any one
calendar year shall be limited to such number fixed by the Committee annually,
but shall be so limited that the Plan shall remain primarily for the purpose of
providing deferred compensation for a select group of management employees
within the meaning of the Employee Retirement Income Security Act of 1974, as
amended.
4. Awards. (a) Subject to Section 4(b), the Committee shall, from
time to time, award Current Compensation Units, which may be wholly or partly in
lieu of salary increases, to eligible participants. Such awards shall be
evidenced by a written notification to the recipient, which shall indicate the
number of Current Compensation Units so awarded.
(b) The total number of Current Compensation Units awarded in any
calendar year shall be limited so that the compensation payable thereon would
not exceed one-tenth of one percent of "consolidated net income on the Common
Stock of the Company" (as hereinafter defined) for the preceding calendar year.
To compute this limitation, the "compensation payable thereon" shall be deemed
to be the amount which would have been paid in the preceding calendar year
either (a) on an equivalent number of units awarded on the record date for the
first cash dividend on the Common Stock paid in that year, or (b) at a rate per
unit equal to five percent of the book value per share of the Common Stock at
the end of that year, whichever results in the lower number of available units.
No Current Compensation Units shall be awarded in any calendar year if total
payments during the preceding calendar year on outstanding Units had reduced
consolidated net income on the Common Stock of the Company for such year by as
much as two percent. As herein used, the term "consolidated net income on the
Common Stock of the Company" shall mean, for any calendar
-3-
<PAGE>
year, such net income (after all Federal income and excess profits tax
provisions) of the Company and its consolidated subsidiaries, or of the Company
alone if there are no consolidated subsidiaries, as shown in the Annual Report
to the Stockholders of the Company for such year.
(c) Upon the termination of the employment by the Company and its
subsidiaries of a recipient of Current Compensation Units, such recipient's
Current Compensation Units shall automatically be converted into an equivalent
number of Retirement Compensation Units; provided, however, if such termination
of employment is due to the resignation of such recipient, then (i) such
recipient's Current Compensation Units, and any payments in respect thereof,
shall terminate immediately, and (ii) no Retirement Compensation Units shall be
awarded pursuant to this Section 4(c). For purposes of the foregoing proviso, a
termination of employment resulting from a recipient's acceptance of a voluntary
separation offer made by the Company or its subsidiaries shall not be deemed a
resignation.
(d) If any recipient of Units should at any time engage in a
competitive business activity, such recipient's Units, and any payments in
respect thereof, shall terminate immediately.
(e) The number of outstanding Units shall be adjusted by the
Committee to reflect stock dividends, stock splits or other changes in the
Company's Common Stock.
(f) Notwithstanding the limitation contained in Section 4(b), the
Committee may, from time to time and in such manner and on such terms as it
shall consider to be appropriate, award Current Compensation Units and
Retirement Compensation Units under this Plan in exchange for outstanding
current compensation units and retirement compensation units, respectively,
under the Commonwealth Edison Company Deferred Compensation Plan. Any Units so
issued shall not reduce the number of Current Compensation Units otherwise
issuable under Section 4(b).
5. Administration. The Plan shall be administered and interpreted by
the Committee. The Committee shall have the authority to adopt, alter and
repeal such administrative rules,
-4-
<PAGE>
guidelines and practices governing the Plan and perform all acts, including the
delegation of its administrative responsibilities, as it shall, from time to
time, deem advisable; to construe and interpret the terms and provisions of the
Plan and any award issued under the Plan (and any notices relating thereto) and
to otherwise supervise the administration of the Plan. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in the Plan or in
any notice of an award in the manner and to the extent it shall deem necessary
to carry the Plan into effect. Any decision, interpretation or other action made
or taken in good faith by or at the direction of the Committee (or any of its
members) arising out of or in connection with the Plan shall be within its
absolute discretion and shall be final, binding and conclusive on the Company
and all employees and participants and their respective beneficiaries, heirs,
executors, administrators, successors and assigns.
Neither the Committee nor any member thereof shall be liable for any
act, omission, interpretation, construction or determination made in connection
with the Plan in good faith, and the members of the Committee shall be entitled
to indemnification and reimbursement by the Company in respect of any claim,
loss, damage or expense (including attorney's fees) arising therefrom to the
full extent permitted by law and under any directors, and officers' liability
insurance that may be in effect from time to time. In addition, no member of
the Board and no employee of the Company shall be liable for any act or failure
to act hereunder, by any other member or employee or by any agent to whom duties
in connection with the administration of this Plan have been delegated or,
except in circumstances involving a member's or employee's bad faith, gross
negligence or fraud, for any act or failure to act by the member or employee.
A majority of the Committee shall constitute a quorum, and the acts of
a majority of the members present at any meeting at which a quorum is present,
or acts approved in writing by a majority of the Committee without a meeting,
shall be the acts of the Committee.
6. Amendment and Termination. The Board of Directors of the Company
shall have the right to modify or discontinue the Plan at any time, and to
establish a trust fund
-5-
<PAGE>
to ensure the payment of benefits hereunder, provided that the rights of persons
entitled to payments on account of Units previously awarded shall in nowise be
thereby impaired.
7. Miscellany. (a) Unless the Board of Directors takes necessary
action pursuant to Section 6 hereof, this Plan is intended to be unfunded. With
respect to any payments as to which a participant has a fixed and vested
interest but which are not yet made to a participant by the Company, nothing
contained herein shall give any such participant any rights that are greater
than those of a general creditor of the Company.
(b) Neither this Plan nor the grant of any award hereunder shall give
any participant or other employee any right with respect to continuance of
employment by the Company or any of its subsidiaries, nor shall they be a
limitation in any way on the right of the Company or any subsidiary by which an
employee is employed to terminate his or her employment at any time.
(c) This Plan and actions taken in connection herewith shall be
governed and construed in accordance with the laws of the State of Illinois
(without regard to applicable Illinois principles of conflict of laws).
-6-
<PAGE>
Exhibit (10)-17
Unicom Corporation
Form 10-K File No. 1-11375
UNICOM CORPORATION
RETIREMENT PLAN FOR DIRECTORS
I. Purpose
The Unicom Corporation Retirement Plan for Directors is hereby
established by Unicom Corporation (the "Company") to provide benefits for
eligible members of the Company's Board of Directors as hereinafter set forth.
II. Definitions
The following words and phrases shall have the meanings set forth
below unless a different meaning is required by the context:
(a) Board: The Board of Directors of the Company.
(b) Company: Unicom Corporation, a corporation organized and
existing under the laws of the State of Illinois, or its successor or
successors.
<PAGE>
(c) ComEd Plan: The Commonwealth Edison Company Retirement Plan
for Directors, as it may be amended from time to time.
(d) ComEd Service: A Director's service as a member of the Board
of Directors of Commonwealth Edison Company.
(e) Concurrent Service: A Director's concurrent service on the Board
and as a member of the Board of Directors of Commonwealth Edison Company.
(f) Director: Any member of the Board on or after September 1, 1994
who is an outside director and who is not and never has been an officer or
employee of the Company or any of its subsidiaries.
(g) Eligible Director: A Director who meets the eligibility
requirements for retirement benefits set forth in Article III.
(h) Eligible Service: A Director's (1) Unicom Service for any period
after September 1, 1994, plus (2) ComEd Service, if any, for any period prior to
September 1, 1994, provided, however, that any period of Concurrent Service
shall be counted
-2-
<PAGE>
only once (and not double-counted as a period of Unicom Service and ComEd
Service) in determining Eligible Service.
(i) Plan: The Unicom Corporation Retirement Plan for Directors, as
it may be amended from time to time.
(j) Retainer: The annual cash retainer established for members of
the Board for their service as such prior to any reduction or offset therefrom
as a result of ComEd Service.
(k) Termination Date: The date on which an Eligible Director is no
longer a Director or a director of Commonwealth Edison Company.
(l) Unicom Service: A Director's service on the Board.
III. Eligibility for Retirement Benefits
Eligibility for retirement benefits under the Plan shall be limited to
each Director who has attained at least age 65 and who thereafter, for reasons
other than death, terminates Unicom Service while in good standing, provided
that such Director shall have completed at least five full years of
-3-
<PAGE>
Eligible Service or at least three full years of Eligible Service if such
Director's Eligible Service commenced after attaining age 65.
IV. Amount of Retirement Benefit
Each Eligible Director shall be entitled to an annual retirement
benefit, for the period provided in Article V, which shall be an amount equal to
the product of (a) the Retainer as in effect when such Eligible Director's
benefit payments commence, adjusted from time to time for any changes thereafter
in the Retainer multiplied by (b) a fraction, the numerator of which shall be
the number of years of Unicom Service and the denominator of which shall be the
number of years of Eligible Service; provided, however, that in computing
Unicom Service, there shall be excluded one-half of the years of Concurrent
Service; and provided further, that in computing the number of years of Unicom
Service, Eligible Service and Concurrent Service for the purpose of this Article
IV, fractional years will be
-4-
<PAGE>
rounded up to the next higher whole year. Such benefit shall be paid as
hereinafter provided.
V. Payment of Retirement Benefits
Retirement benefit payments shall commence to be paid to an Eligible
Director on the last day of the calendar quarter next following the Eligible
Director's Termination Date. Subsequent benefit payments shall be made on the
last day of each calendar quarter thereafter and shall be paid for a period
equal to the Eligible Director's years of Eligible Service. For the purpose of
determining the payment period, fractional years of Eligible Service will be
rounded up to the next higher whole year. Each installment of retirement
benefit payments shall be equal to one-fourth of the amount determined as
provided in Article IV hereof.
In the event of the Eligible Director's death after his or her
Termination Date but before commencement of payments hereunder or before the
Eligible Director has received all payments to which the Eligible Director is
entitled hereunder,
-5-
<PAGE>
the benefit payments to which the Eligible Director would have been entitled had
the Eligible Director lived shall be paid in the same amount to the Eligible
Director's surviving spouse, if any, using the same payment schedule and amount
as would have applied if the Eligible Director had lived. If there is no
surviving spouse at the death of the Eligible Director or if a surviving spouse
dies before receiving any or all payments to which entitled under the Plan, the
Eligible Director's benefits under the Plan shall terminate.
VI. Pre-Retirement Death Benefits
(a) If the Eligible Service of a Director who is eligible to retire
as an Eligible Director is terminated due to death, such Director's surviving
spouse, if any, shall receive the benefit to which the surviving spouse would
have been entitled had the Director retired and his Termination Date occurred on
the day prior to his or her death.
(b) If the Eligible Service of a Director is terminated due to death
prior to attaining age 65 but after
-6-
<PAGE>
attaining age 62 and completing at least five full years of Eligible Service,
such Director's surviving spouse, if any, shall receive the benefit to which the
surviving spouse would have been entitled had such Director attained age 65 and
terminated Eligible Service on the day prior to his or her death, except that
(i) the amount of each installment of such benefit shall be equal to one-fourth
of the amount determined as provided in Article IV hereof and (ii) the benefit
shall be paid for a period equal to the Director's years of Eligible Service at
the Director's date of death.
(c) Payments of any benefits under subparagraphs (a) or (b) shall
commence on the last day of the calendar quarter in which occurs the Director's
date of death. If the Director under subparagraphs (a) or (b) leaves no
surviving spouse, or if a surviving spouse dies before receiving any or all
payments to which entitled under the Plan, the Director's benefits under the
Plan shall terminate.
-7-
<PAGE>
VII. Disability Benefits
If the Eligible Service of a Director is terminated due to disability
prior to attaining age 65 but after attaining age 62, such Director shall be
entitled to payment of benefits, if any, under this Plan on the same basis as he
or she would have been if he or she had attained age 65 prior to such
termination. For purposes of this Article VII, disability shall mean a
disability that prevents the Director from performing any and every duty of a
member of the Board. The determination of the Compensation Committee of the
Board as to whether a Director is terminated due to disability shall be final
and conclusive.
VIII. Financing of Benefits
The Plan shall be a noncontributory, nonqualified and unfunded plan.
Benefit payments under the Plan shall represent an unsecured general obligation
of the Company and shall be paid by the Company from its general assets. No
special fund or trust
-8-
<PAGE>
shall be created, nor shall any notes or securities be issued with respect to
any benefits under the Plan.
IX. Forfeiture of Benefits
As long as a former Director is receiving or is entitled to receive
benefits under the Plan, such former Director will not directly or indirectly
enter into or in any manner take part in any business or other endeavor, either
as an employee, agent, independent contractor, owner or otherwise, which in any
manner competes or conflicts with the business of the Company or is detrimental
to the best interests of the Company, unless the Company gives its prior written
consent thereto. The failure of a former Director to comply with the provisions
of this Article shall result in the forfeiture of all further payments which
otherwise would become due and payable under the Plan to the former Director or
to his or her surviving spouse. Before any such forfeiture, the Company shall
mail notice to the former Director that consideration is being given to
forfeiture pursuant to this Article. On written request of the former Director
-9-
<PAGE>
within sixty days following the mailing by the Company of the notice, the
Compensation Committee of the Board shall afford the former Director an
opportunity, at any mutually convenient time within that sixty-day period, to
demonstrate to the Compensation Committee that forfeiture of payments would not
be justified.
X. Facility of Payment
Whenever a person entitled to receive any payment under the Plan is a
person under legal disability or a person not adjudicated incompetent but who,
by reason of illness or mental or physical disability, is in the opinion of the
Compensation Committee of the Board unable properly to manage his or her
affairs, then such payments shall be paid in such of the following ways as the
Compensation Committee deems best: (A) to such person directly; (b) to the
legally appointed guardian or conservator of such person; (c) to some relative
or friend of such person for his or her benefit; or (d) for the benefit of such
person in such manner as the Compensation Committee considers advisable. Any
payment made in accordance with the
-10-
<PAGE>
provisions of this Article shall be a complete discharge of any liability for
the making of such payment under the Plan, and the distributee's receipt shall
be a sufficient discharge to the Company.
XI. Administration
The Plan shall be administered by the Compensation Committee of the
Board, which shall have full and final authority to interpret the provisions of
the Plan and to make determinations regarding the administration of the Plan.
All decisions and determinations by the Compensation Committee shall be final
and binding upon all parties.
XII. Miscellaneous
The Plan shall not affect in any way the rights of a Director under
any deferred compensation agreement between the Director and the Company or any
of its subsidiaries.
-11-
<PAGE>
The Plan may not be cancelled by the Company upon any merger or
consolidation with or acquisition of the Company by any other entity, but shall
be binding upon and inure to the benefit of the successors and assigns of the
Company and the heirs, executors, administrators and assigns of each Director.
No person shall have any right to commute, encumber, pledge or dispose
of any right to receive payments hereunder, nor shall such payments be subject
to seizure, attachment or garnishment for the payments of any debts, judgments,
alimony or separate maintenance obligations or be transferable by operation of
law in the event of bankruptcy, insolvency or otherwise, all payments and rights
hereunder being expressly declared to be nonassignable and nontransferable.
The Plan may be amended from time to time or terminated by the Board
at any time, but no amendment or termination may adversely affect the rights of
any person then receiving benefits under the Plan or who is entitled to receive
benefits under the Plan on account of a Director's prior termination of Unicom
Service.
-12-
<PAGE>
This Plan shall be governed by the law of the State of Illinois.
-13-
<PAGE>
Exhibit (10)-18
Commonwealth Edison Company
Form 10-K File No. 1-1839
COMMONWEALTH EDISON COMPANY
RETIREMENT PLAN FOR DIRECTORS
I. Purpose
-----------
The Commonwealth Edison Company Retirement Plan for Directors is
hereby established by Commonwealth Edison Company ("Company") to provide
benefits for eligible members of the Company's Board of Directors as hereinafter
set forth.
II. Definitions
----------------
The following words and phrases shall have the meanings set forth
below unless a different meaning is required by the context:
(a) Board: The Board of Directors of the Company.
(b) ComEd Service: A Director's service on the Board.
(c) Company: Commonwealth Edison Company, a corporation organized and
existing under the laws of the State of Illinois, or its successor or
successors.
<PAGE>
(d) Concurrent Service: A Director's concurrent service on the Board
and as a member of the Board of Directors of Unicom Corporation.
(e) Director: Any member of the Board on or after January 1, 1987 who
is an outside director and who never has been an officer or employee of the
Company or any of its subsidiaries.
(f) Eligible Director: A Director who meets the eligibility
requirements for retirement benefits set forth in Article III.
(g) Eligible Service: A Director's (1) ComEd Service for any period,
plus (2) Unicom Service, if any, for any period after September 1, 1994,
provided, however, that any period of Concurrent Service shall be counted only
once (and not double-counted as a period of ComEd Service and Unicom Service) in
determining Eligible Service.
(h) Plan: The Commonwealth Edison Company Retirement Plan for
Directors, as it may be amended from time to time.
(i) Retainer: The annual cash retainer established for members of
the Board for their service as such prior to any reduction or offset therefrom
as a result of Unicom Service.
-2-
<PAGE>
(j) Termination Date: The date on which an Eligible Director is no
longer a Director or a director of Unicom Corporation.
(k) Unicom Plan: The Unicom Corporation Retirement Plan for
Directors, as it may be amended from time to time.
(l) Unicom Service: A Director's service as a member of the Board of
Directors of Unicom Corporation.
III. Eligibility For Retirement Benefits
-----------------------------------------
Eligibility for retirement benefits under the Plan shall be limited to
each Director who has attained at least age 65 and who thereafter, for reasons
other than death, terminates ComEd Service while in good standing, provided that
such Director shall have completed at least five full years of Eligible Service
or at least three full years of Eligible Service if such Director's Eligible
Service commenced after attaining age 65.
IV. Amount of Retirement Benefit
---------------------------------
Each Eligible Director shall be entitled to an annual retirement
benefit, for the period provided in Article V, which
-3-
<PAGE>
shall be an amount equal to the product of (a) the Retainer as in effect when
such Eligible Director's benefit payments commence, adjusted from time to time
for any changes thereafter in the Retainer, multiplied by (b) a fraction, the
numerator of which shall be the number of years of ComEd Service and the
denominator of which shall be the number of years of Eligible Service; provided,
however, that in computing ComEd Service, there shall be excluded one-half of
the years of Concurrent Service; and provided further, that in computing the
number of years of ComEd Service, Eligible Service and Concurrent Service for
the purpose of this Article IV, fractional years will be rounded up to the next
higher whole year. Such benefit shall be paid as hereinafter provided.
V. Payment of Retirement Benefits
----------------------------------
Retirement benefit payments shall commence to be paid to an Eligible
Director on the last day of the calendar quarter next following the Eligible
Director's Termination Date. Subsequent benefit payments shall be made on the
last day of each calendar quarter thereafter and shall be paid for a period
equal to the Eligible Director's years of Eligible Service. For the
-4-
<PAGE>
purpose of determining the payment period, fractional years of Eligible Service
will be rounded up to the next higher whole year. Each installment of retirement
benefit payments shall be equal to one-fourth of the amount determined as
provided in Article IV hereof.
In the event of the Eligible Director's death after his or her
Termination Date but before commencement of payments hereunder or before the
Eligible Director has received all payments to which the Eligible Director is
entitled hereunder, the benefit payments to which the Eligible Director would
have been entitled had the Eligible Director lived shall be paid in the same
amount to the Eligible Director's surviving spouse, if any, using the same
payment schedule and amount as would have applied if the Eligible Director had
lived. If there is no surviving spouse at the death of the Eligible Director or
if a surviving spouse dies before receiving any or all payments to which
entitled under the Plan, the Eligible Director's benefits under the Plan shall
terminate.
-5-
<PAGE>
VI. Pre-Retirement Death Benefits
----------------------------------
(a) If the Eligible Service of a Director who is eligible to retire as
an Eligible Director is terminated due to death, such Director's surviving
spouse, if any, shall receive the benefit to which the surviving spouse would
have been entitled had the Director retired and his Termination Date occurred on
the day prior to his or her death.
(b) If the Eligible Service of a Director is terminated due to death
prior to attaining age 65 but after attaining age 62 and completing at least
five full years of Eligible Service, such Director's surviving spouse, if any,
shall receive the benefit to which the surviving spouse would have been entitled
had such Director attained age 65 and terminated Eligible Service on the day
prior to his or her death, except that (i) the amount of each installment of
such benefit shall be equal to one-fourth of the amount determined as provided
in Article IV hereof and (ii) the benefit shall be paid for a period equal to
the Director's years of Eligible Service at the Director's date of death.
-6-
<PAGE>
(c) Payments of any benefits under subparagraphs (a) or (b) shall
commence on the last day of the calendar quarter in which occurs the Director's
date of death. If the Director under subparagraphs (a) or (b) leaves no
surviving spouse, or if a surviving spouse dies before receiving any or all
payments to which entitled under the Plan, the Director's benefits under the
Plan shall terminate.
VII. Disability Benefits
-------------------------
If the Eligible Service of a Director is terminated due to disability
prior to attaining age 65 but after attaining age 62, such Director shall be
entitled to payment of benefits, if any, under this Plan on the same basis as he
or she would have been if he or she had attained age 65 prior to such
termination. For purposes of this Article VII, disability shall mean a
disability that prevents the Director from performing any and every duty of a
member of the Board. The determination of the Compensation Committee of the
Board as to whether a Director is terminated due to disability shall be final
and conclusive.
-7-
<PAGE>
VIII. Financing of Benefits
----------------------------
The Plan shall be a noncontributory, nonqualified and unfunded plan.
Benefit payments under the Plan shall represent an unsecured general obligation
of the Company and shall be paid by the Company from its general assets. No
special fund or trust shall be created, nor shall any notes or securities be
issued with respect to any benefits under the Plan.
IX. Forfeiture of Benefits
---------------------------
As long as a former Director is receiving or is entitled to receive
benefits under the Plan, such former Director will not directly or indirectly
enter into or in any manner take part in any business or other endeavor, either
as an employe, agent, independent contractor, owner or otherwise, which in any
manner competes or conflicts with the business of the Company or is detrimental
to the best interests of the Company, unless the Company gives its prior written
consent thereto. The failure of a former Director to comply with the provisions
of this Article shall result in the forfeiture of all further payments which
otherwise would become due and payable under the Plan to the
-8-
<PAGE>
former Director or to his or her surviving spouse. Before any such forfeiture,
the Company shall mail notice to the former Director that consideration is being
given to forfeiture pursuant to this Article. On written request of the former
Director within sixty days following the mailing by the Company of the notice,
the Compensation Committee of the Board shall afford the former Director an
opportunity, at any mutually convenient time within that sixty-day period, to
demonstrate to the Compensation Committee that forfeiture of payments would not
be justified.
X. Facility of Payment
-----------------------
Whenever a person entitled to receive any payment under the Plan is a
person under legal disability or a person not adjudicated incompetent but who,
by reason of illness or mental or physical disability, is in the opinion of the
Compensation Committee of the Board unable properly to manage his or her
affairs, then such payments shall be paid in such of the following ways as the
Compensation Committee deems best: (a) to such person directly; (b) to the
legally appointed guardian or conservator of such person; (c) to some relative
or friend of such person for his or her benefit; or (d) for the benefit of
-9-
<PAGE>
such person in such manner as the Compensation Committee considers advisable.
Any payment made in accordance with the provisions of this Article shall be a
complete discharge of any liability for the making of such payment under the
Plan, and the distributee's receipt shall be a sufficient discharge of the
Company.
XI. Administration
-------------------
The Plan shall be administered by the Compensation Committee of the
Board, which shall have full and final authority to interpret the provisions of
the Plan and to make determinations regarding the administration of the Plan.
All decisions and determinations by the Compensation Committee shall be final
and binding upon all parties.
XII. Miscellaneous
-------------------
The Plan shall not affect in any way the rights of a Director under
any deferred compensation agreement between the Director and the Company.
-10-
<PAGE>
The Plan may not be cancelled by the Company upon any merger or
consolidation with or acquisition of the Company by any other entity, but shall
be binding upon and inure to the benefit of the successors and assigns of the
Company and the heirs, executors, administrators and assigns of each Director.
No person shall have any right to commute, incumber, pledge or dispose
of any right to receive payments hereunder, nor shall such payments be subject
to seizure, attachment or garnishment for the payments of any debts, judgments,
alimony or separate maintenance obligations or be transferable by operation of
law in the event of bankruptcy, insolvency or otherwise, all payments and rights
hereunder being expressly declared to be nonassignable and nontransferable.
The Plan may be amended from time to time or terminated by the Board
at any time, but no amendment or termination may adversely affect the rights of
any person then receiving benefits under the Plan or who is entitled to receive
benefits under the Plan on account of a Director's prior termination of Eligible
Service.
This Plan shall be governed by the law of the State of Illinois.
-11-
<PAGE>
Exhibit (10)-19
Unicom Corporation
Form 10-K File No. 1-11375
UNICOM CORPORATION
------------------
OUTSIDE DIRECTOR STOCK AWARD PLAN
---------------------------------
1. Purpose: Unicom Corporation (the "Company") wishes to establish
an Outside Director Stock Award Plan (the "Plan"). The purpose of the Plan is
to increase the proprietary interest of directors who are not employees of the
Company or any of its subsidiaries ("Outside Directors") through the grant of
shares of Common Stock, without par value ("Common Stock"), of the Company.
2. Administration: The Board of Directors of the Company (the
"Board") shall administer and interpret the provisions of this Plan. All
determinations of the Board with respect to the Plan shall be final and binding
upon all persons.
3. Grants: As of the beginning of the month immediately following
each Annual Meeting of Shareholders of the Company, beginning with the meeting
to be held in 1995 (each a "Grant Date"), each Outside Director then in office
shall be granted 300 shares of Common Stock.
In the case of an Outside Director who is elected or appointed as a
Director of the Company other than at the Annual Meeting of Shareholders in any
year, such Outside Director shall be granted 300 shares of Common Stock promptly
following such election or appointment.
4. Terms and Conditions:
(a) Shares of Common Stock to be granted pursuant to the Plan
will be purchased on behalf of the recipient in the open market in
accordance with applicable rules and regulations.
(b) No shares of Common Stock received under the Plan may be
sold, assigned, transferred or otherwise disposed of for at least six
months after the applicable Grant Date, except in the event of death or
disability of the Outside Director.
<PAGE>
-2-
(c) A grant of Common Stock hereunder shall be disclosed in the
Company's proxy statement for the year in which the grant was made; and the
Outside Director, as of the Grant Date of such Common Stock, shall become
the record holder of such Common Stock and shall immediately become
entitled to all the rights and privileges accorded such Common Stock. In
addition, such Common Stock shall be shown on the appropriate form for
reporting beneficial ownership of securities pursuant to Section 16 of the
Securities Exchange Act of 1934, as amended.
(d) The value of any Common Stock granted to an Outside Director
under this Plan is not intended to be taken into account, and consequently
shall be excluded, in determining the amount of any retirement benefit
otherwise payable to such Outside Director under any of the Company's
retirement plans, including the Commonwealth Edison Company Retirement Plan
for Directors and any similar plan hereafter adopted for the Directors of
the Company. The acceptance by an Outside Director of any grant of Common
Stock under this Plan shall constitute such Outside Director's agreement
to, and confirmation of, such exclusion.
(e) The Board shall appropriately adjust the number of shares for
which grants may be made under this Plan in the event of any
reorganization, recapitalization, stock split, reverse stock split, stock
dividend, exchange or combination of shares, merger, consolidation, rights
offering, or other relevant changes in capitalization.
5. Regulatory Compliance: The delivery of any shares under this
Plan may be postponed by the Company for such period as may be required to
comply with Federal or state securities laws, national securities exchange
requirements or any other law or regulation applicable to the delivery of such
shares. The Company shall not be obligated to deliver any shares under this
Plan if such delivery shall constitute a violation of any provision of any law
or any regulation of any governmental authority or any national securities
exchange. In addition, the shares, when delivered, may be subject to
conditions, including transfer restrictions, if such conditions are required to
comply with applicable securities law.
<PAGE>
-3-
6. No Right to Continue as Outside Director: Nothing contained in
this Plan shall be construed as conferring upon an Outside Director any right to
continue to be associated with the Company as an Outside Director or in any
other capacity.
7. Amendment or Discontinuance: The Board may amend, rescind or
terminate this Plan as shall in its judgment be advisable.
8. Taxes: The Company shall not be required to, and shall not,
withhold or otherwise pay on behalf of any Outside Director any Federal, state,
local or other taxes arising in connection with a grant of Common Stock under
this Plan. The payment of any such taxes shall be the sole responsibility of
each Outside Director.
9. Governing Law: This Plan and all determinations made and actions
taken pursuant hereto shall be governed by the internal laws of the State of
Illinois, except as Federal law may apply.
<PAGE>
Commonwealth Edison Company Exhibit (10)-27
One First National Plaza Commonwealth Edison Company
P.O. Box 767 Form 10-K File No. 1-1839
Chicago, IL 60690-0767
May 31, 1995 [ComEd logo]
Mr. Samuel K. Skinner
President
Commonwealth Edison Company
P. O. Box 767
Chicago, Illinois 60690-0767
Dear Sam:
The purpose of this letter is to confirm our agreement with respect to your
employment as President of Commonwealth Edison Company and Unicom Corporation.
We have agreed that the calculation of the "SERP benefit" as set forth in
paragraph number one of the letter agreement between Commonwealth Edison and you
dated December 16, 1992, will be modified to refer to the "highest annual
earnings" instead of "highest annual base pay." For this purpose, "highest
annual earnings" means the highest base pay rate and any incentive pay that
would be taken into account under the Commonwealth Edison Company Service
Annuity System for the applicable period.
All other terms of the December 16, 1992 letter agreement remain unaffected by
this change.
If the above is consistent with the agreements reached in our discussion, please
countersign in the space provided below.
Sincerely,
James J. O'Connor
James J. O'Connor
Chairman and
Chief Executive Office
Samuel K. Skinner
Samuel K. Skinner
President
<PAGE>
Commonwealth Edison Company Exhibit (10)-28
One First National Plaza Commonwealth Edison Company
P.O. Box 767 Form 10-K File No. 1-1839
Chicago, IL 60690-0767
[ComEd logo]
November 14, 1995
Mr. Leo F. Mullin
548 Maple Street
Winnetka, Illinois 60093
Dear Mr. Mullin:
Let me try to summarize the following points related to the agreement we reached
with respect to your employment as Vice Chairman of Unicom Corporation and its
subsidiary, Commonwealth Edison (collectively the "Company").
1. It is anticipated that you will be elected (i) as Vice Chairman effective
upon commencement of your employment, and (ii) as a director of the Company
at our Board meeting on December 13, 1995 or sooner by special meeting of the
Board. Reporting to me, your initial duties and responsibilities will
include strategic planning, financial and our unregulated businesses.
2. You will be placed on our payroll effective December 1, 1995, at a base
salary of $577,000 per year. You will receive an employment commencement
payment in the amount of $275,000 (less withholding and applicable employment
taxes) on your first day of full-time employment with the Company. You will
also be entitled for 1996 and subsequent years to annual bonuses to be
structured and earned on the same basis as any annual bonus payable to the
Chairman of the Board or the President of the Company, or both, as determined
by the Board of Directors. For calendar year 1996, you will receive a
guaranteed bonus under the preceding sentence of not less than 50% of the
foregoing base salary.
3. In 1996, you will receive the following performance units based on the
following percentages of your Base Pay as defined under our 1993 Long-Term
Incentive Plan (the "Incentive Plan"): a one-year unit based on 25% of your
Base Pay; a two-year unit based on 25% of your Base Pay; and a three-year
unit based on 50% of your Base Pay. Thereafter, you will be awarded three-
year performance units annually based on at least 50% of your Base Pay.
<PAGE>
Mr. Leo F. Mullin
November 14, 1995
Page 2
4. As we have discussed, it is anticipated that an additional long-term
incentive program will be implemented by our Compensation Committee early in
1996. You will be eligible to receive an award under that program. As we
also discussed, it is my intention to recommend to the Compensation Committee
that you be granted an award of dividend-paying stock options in 1996, 1997
and 1998.
5. You will receive vacation and other benefits normally provided to senior
executives of the Company.
6. Your retirement benefit will equal the annual retirement benefit that would
have been payable under the Company's Service Annuity System Plan (including
payments under the unfunded equalization benefit plan) as now in effect for
employees who retire at age 60 computed on the assumptions that (i) you have
20 years of service on your date of employment and accrue one additional year
of service for each year of employment and (ii) your compensation is the
average of your four (4) highest consecutive annual earnings years (base pay
and incentive compensation earned), determined as if you had been eligible to
receive benefits under such Plan.
7. In order to provide this total benefit, you will receive a supplemental
executive retirement payment ("SERP") determined as follows:
A. Benefit payments under Service Annuity System Plan (including payment
under the unfunded equalization benefit plan) to the extent you are
eligible therefor;
B. Social Security Supplemental paid by the Company until age 65;
C. SERP (the difference between the amount in 6 above and the sum of 7.A
and 7.B).
8. The SERP will be payable on termination of employment, provided that no SERP
or Service Annuity System benefits will be available prior to completion of
five (5) years of employment with the Company (except as otherwise provided
in 11 below) and none will be paid during any period in which you are
employed at the Company or receiving severance payments.
<PAGE>
Mr. Leo F. Mullin
November 14, 1995
Page 3
9. You will have the option to receive the SERP as a regular annuity or as a
martial annuity with surviving spouse benefit. Appropriate adjustments will
be made in computing annual SERP benefit if the marital option is elected.
In the event of your death during employment, your spouse will be immediately
entitled to the surviving spouse benefit.
10. In the event (A) the Company terminates your employment for reasons other
than death, fraud or willful misconduct, or (B) you elect to terminate your
employment because the Company (i) materially reduces your status or
responsibilities in the Company without your consent, such as by appointing
you to a lesser office, having you report to anyone other than the Chairman
of the Board or the Board and its committees or reducing your
responsibilities from those set forth in 1 above, (ii) reduces or fails to
pay the salary, bonus and other payments provided for in 2 above or (iii)
fails to award or, to the extent earned, to pay, the bonus and incentive
compensation provided for in 3 and 4 above, you will be entitled to a
severance payment equal to two years of your then current base salary and of
your most recent annual bonus to be paid out in equal bi-weekly installments
over a three-year period. All other health and life insurance benefits will
continue during the three-year period of the payments. If full-time
employment is obtained during the post-employment period, the Company will
pay you a lump sum payment equal to one-half (50%) of the remaining payments
within 30 days of receiving notice of such employment, whereupon any further
severance payments will cease. Health and life insurance benefits will
continue during any customary waiting period under such new employer's plans
(including any period for preexisting conditions), but in no event longer
than three years after the date of termination.
11. You will be entitled to receive SERP benefits before you have five (5) years
of employment with the Company if either the Company terminates your
employment for reasons other than death, fraud, or willful misconduct, or
you terminate your employment for one of the reasons described in 10 above.
No SERP or Service Annuity System Benefits, however, will be paid to you
during any time you are receiving severance payments. You will also receive
a pro rata annual bonus at target level for the year of termination of
employment for one of the reasons entitling you to a severance payment in 10
above, to be paid at the time annual bonuses are paid, and your entitlement
to the incentive compensation described in 3 and 4 above shall be determined
as provided in the applicable plan or award agreement.
<PAGE>
Mr. Leo F. Mullin
November 14, 1995
Page 4
12. All provisions of the SERP must remain unfunded to insure that no tax is due
because of constructive receipt. Future payments are unsecured in regards
to payment and you would not receive benefits if the Company us unable to
make payment.
If the above is consistent with the agreements reached in our discussion, please
countersign in the space provided below.
We very much look forward to you being a part of the Unicom and Commonwealth
Edison team.
Sincerely,
James J. O'Connor
James J. O'Connor
Chairman
ACCEPTED and AGREED this
14 day of November, 1995.
- -- --------
Leo F. Mullin
- -------------
<PAGE>
Exhibit (10)-30
Commonwealth Edison Company
Form 10-K File No. 1-1839
AMENDMENT NO. 1
TO
COMMONWEALTH EDISON
EXCESS BENEFIT SAVINGS PLAN
---------------------------
WHEREAS, Commonwealth Edison Company, an Illinois corporation (the
"Company"), has heretofore adopted and maintains a non-qualified deferred
compensation plan intended to provide benefits that would have been provided
under the Commonwealth Edison Employee Savings and Investment Plan (the "ESIP")
but for certain limits imposed by the Internal Revenue Code, designated the
Commonwealth Edison Excess Benefit Savings Plan (the "Plan");
WHEREAS, the ESIP was amended and restated, effective January 1, 1995;
and
WHEREAS, the Company desires to amend the Plan to reflect certain
changes in the ESIP definitions made by such amendment and restatement and to
provide additional deferrals equal to the amount that would have been credited
to a Participant's Before-Tax Contributions Accounts pursuant to
<PAGE>
Section 8.1(f) the ESIP on account of dividends distributed to such Participant
but for the Dollar Limit or the Before-Tax Contribution Limit.
NOW, THEREFORE, pursuant to the power of amendment contained in
Section 8 of the Plan, the Plan is hereby amended, effective as of January 1,
1995, as follows:
1. All references in the Plan to the term "Compensation Conversion
Account" shall be amended to the term "Before-Tax Contributions Account."
2. Sections 2(a), (b), (c) and (d) are amended to read as follows:
(a) The third sentence of subdivision (10) of Article 2 of the ESIP,
relating to the Compensation Limit;
(b) Section 4.2 of the ESIP, relating to the dollar limit;
(c) Section 4.4 of the ESIP, relating to the Before-Tax Contribution Limit
and the Matching Contribution Limit; and
(d) Section 7.4 relating to the Section 415 limit.
-2-
<PAGE>
3. Section 2 is further amended by substituting "Section 4.1" for
"Section 4.2" in each place where the latter term appears therein.
4. Section 2 is further amended by adding the following new sentence
after the second sentence thereof:
Each such election shall be deemed to authorize the Participant's
compensation by an amount equal to the amount that would have been
credited to the Participant's Before-Tax Contributions Account
pursuant to the deemed election contained in the fourth sentence of
Section 3.2 of the ESIP (providing for additional Before-Tax
Contributions equal to dividends distributed to the Participant
pursuant to Section 8.1(f) of the ESIP) but for the provisions
described in clauses (a), (b), (c) and (d) of the preceding sentence.
5. Section 3 is amended by substituting "Section 7.3(a)" for "Section
4.3" each time the latter term appears therein.
6. Section 7 is amended by substituting "Section 8.5" for "Section 7.6"
appearing in the last sentence thereof.
7. Section 10 is amended by substituting "Article II" for "Article IX"
appearing therein.
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<PAGE>
8. Section 14 is amended by substituting the terms "Sections 11.4 and
11.5" and "Section 14.7" for the terms "Section 10.5" and "Section 10.6,"
respectively, appearing therein.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officers on this 24th day of May, 1995.
COMMONWEALTH EDISON COMPANY
By: James J. O'Connor
-------------------------------------
Title: Chairman
----------------------------------
ATTEST:
David A. Scholz
- --------------------------------------
Title: Secretary
-------------------------------
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<PAGE>
Exhibit (10)-31
Unicom Corporation
Form 10-K File No. 1-11375
Commonwealth Edison Company
Form 10-K File No. 1-1839
UNICOM CORPORATION
STOCK BONUS DEFERRAL PLAN
1. Purpose. The purpose of this Unicom Corporation Stock Bonus Deferral
Plan (the "Plan") is to provide to certain key employees of Unicom Corporation
("Unicom") and participating affiliates the opportunity to defer the receipt of
all the stock portion of their annual awards, all or any portion of their long-
term awards, or both, if any, payable pursuant to the Unicom Corporation Long-
Term Incentive Plan (the "Incentive Plan").
2. Eligibility. Any employee of Unicom or its affiliates who on the
applicable election due date described in Section 3(b) is a participant in the
Incentive Plan and who is one of the following: (A) an officer of Unicom or any
affiliate (including, but not limited to, Commonwealth Edison Company), (B)
included on the "Executive" payroll of his or her employer or (C) classified as
management personnel in job grade 12 or above shall be eligible to participate
in this Plan. For purposes of the preceding sentence, the classification of an
employee shall be based upon classifications used by Unicom or Commonwealth
Edison Company, or if a participant's employer maintains a system of pay
classification different from that described above, a classification determined
by such employer and Unicom to be comparable to the above-described eligible
classifications.
3. Participants; Deferral Elections.
(a) Participants. Any eligible employee may become a participant in this
Plan by making an election pursuant to Section 3(b).
(b) Timing of Elections. On or before the election due date set forth
below, while this Plan is in effect, a participant may elect (i) to defer the
receipt of all or a portion of the stock portion of any incentive award and (ii)
to defer all or a portion of the cash portion of any Long-Term Performance Unit
Award for Executive and Group Level Employees
<PAGE>
(the "Long-Term Performance Unit Award"), provided, however, that if any cash
portion is so deferred, such election shall be treated as a request to convert
such portion into shares of the common stock of Unicom ("Unicom Stock")
(determined as provided in the Long-Term Performance Unit Award for the stock
portion of the payment amount) and such shares shall be deliverable in lieu of
any such cash upon the expiration of any such deferral election (as such
election may be extended as hereinafter provided). For purposes of this Plan,
the term "stock portion" means the portion of an incentive award that, pursuant
to the terms of the Incentive Plan or such award, is payable in shares of Unicom
Stock. Any such election shall become irrevocable on December 31 of the calendar
year in which made. The election due date shall be (i) for all awards payable in
1996, December 31, 1995, (ii) for Long-Term Performance Unit Awards payable in
subsequent years, March 31 of the preceding year, (iii) for annual awards
payable in subsequent years, September 30 of the preceding year and (iv) for an
individual who first becomes an eligible employee after an applicable election
due date, the 30th day after the date of eligibility.
(c) Effect of Elections. Subject to Sections 3(d) and (e), an election
made pursuant to Section 3(b) shall provide that the stock portion of the
incentive award subject to such election shall not be paid to the participant at
the time provided pursuant to the Incentive Plan or such award, as the case may
be, but shall instead be paid to the participant on the third anniversary of the
date on which such payment would have been made but for such deferral election.
(d) Subsequent payment elections. Notwithstanding the foregoing, at any
time prior to the calendar year in which the stock portion of an award is
otherwise payable pursuant to a deferral election made under Section 3(b) or a
subsequent payment election pursuant to this Section 3(d), a participant may
elect to defer further all or a portion of the payment of such award until the
third anniversary of the date on which such stock portion would have been
payable but for the participant's election under Section 3(b) or the
participant's last election under this Section 3(d), as the case may be.
-2-
<PAGE>
(e) Termination of Employment Election. Notwithstanding the provisions of
Sections 3(b), (c) and (d), a participant may at any time elect to have any or
all the stock portions subject to deferral pursuant to Sections 3(c) or (d) paid
as soon as is practicable following the participant's termination of employment
with Unicom and its affiliates, provided, however, that an election pursuant to
this Section 3(e) shall not be effective unless made prior to the calendar year
in which the participant's termination of employment occurs.
4. Deferred Stock Accounts. Unicom (or in the case of a Participant
employed by an affiliate of Unicom, such affiliate) shall establish on its books
an account (a "Deferred Stock Account") on behalf of each participant who has
made a deferral election pursuant to Section 3(b). Each Deferred Stock Account
shall be credited with the number of shares of Unicom Stock subject to each such
deferral election made by such participant. Each such account shall also be
credited with an amount ("dividend equivalents") equal to the dividends
declared, from time to time, on a number of shares of Unicom Stock equal to the
number of shares credited to such Deferred Stock Account. Unless the
participant has elected, in the time and manner set forth in Section 5 below to
receive current payment in respect of such dividend equivalents, such dividend
equivalents shall be credited to the participant's Deferred Stock Account as a
number of additional shares of Unicom Stock determined by dividing the aggregate
amount of such dividends by the closing per share price of Unicom Stock, as
reported on the New York Stock Exchange, on the date such dividend equivalents
are to be credited to the participant's Deferred Stock Account. Deferred Stock
Accounts shall be for bookkeeping purposes only, and neither Unicom nor any of
its affiliates shall be obligated to set aside or segregate any actual shares of
Unicom Stock or any other assets in respect of such accounts.
5. Election to Receive Current Payment of Dividend Equivalents. Not later
than December 31 of a calendar year, each participant may elect to receive from
Unicom (or in the case of a participant employed by an affiliate of Unicom, such
affiliate) current payment of an amount equal to the dividend equivalents
allocable to the Participant's Deferred Stock Account during all subsequent
calendar years. Any such election may be revoked at
-3-
<PAGE>
any time, but such revocation shall not be effective until the calendar year
following the year in which such revocation is made.
6. Distribution. Distribution shall be made at such time as specified in
the participant's election pursuant to Section 3 in the form of whole shares of
Unicom Stock and cash in lieu of any fractional share (determined by reference
to the closing price per share of Union Stock, as reported on the New York Stock
Exchange on the business day immediately preceding the date of distribution).
7. Beneficiaries. If a participant shall die while any shares of Unicom
Stock remains credited to the Deferred Stock Account established on his or her
behalf pursuant to Section 4, such amount shall be distributed as provided in
Section 6 to the beneficiary or beneficiaries as the participant may, from time
to time, designate in writing delivered to the Committee (as defined in Section
10 below). A participant may revoke or change his or her beneficiary
designation at any time in writing delivered to the Committee. If a participant
does not designate a beneficiary under this Plan, or if no designated
beneficiary survives the Participant, the balance of the Participant's Deferred
Stock Account shall be distributed to the person or persons entitled to his
account under Section 7.6 of the Commonwealth Edison Savings and Investment Plan
(or who would be so entitled if there were then an account on behalf of the
participant under such plan).
8. Amendment and Termination. This Plan may be amended or terminated at
any time by the Board of Directors of Unicom (or a duly authorized committee
thereof), except that no such amendment or termination shall reduce or otherwise
adversely affect the rights of participants in respect of amounts credited to
their Deferred Stock Accounts as of the date of such amendment or termination.
9. Application of ERISA. (a) Plan Not Funded. This Plan is intended to
be an unfunded plan maintained primarily for the purpose of providing deferred
compensation to a select group of management or highly compensated employees
within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of the Employee
Retirement Income Security Act of 1974, as amended, and
-4-
<PAGE>
Department of Labor Regulation (S) 2520.104-23. This Plan shall not be a funded
plan, and neither Unicom Corporation nor any of its affiliates shall be under
any obligation to set aside any funds for the purpose of making payments under
this Plan. Any payments hereunder shall be made out of the general assets of
Unicom and its affiliates.
(b) Trust. Unicom shall establish a trust subject to sections 671, et.
seq., of the Internal Revenue Code of 1986, as amended, to hold and administer
shares of Unicom Stock or other assets for the purposes of satisfying the
obligations of Unicom and its affiliates under this Plan. Neither the
establishment of, or the contribution of Unicom Stock or other assets to, any
such trust shall relieve Unicom or its affiliates hereunder, but such
liabilities shall be reduced to the extent of any assets paid by such trust to a
participant.
10. Administration. The Corporate Governance and Compensation Committee
of the Board of Directors of Unicom shall be charged with the administration of
this Plan and shall have the same powers and duties, and shall be subject to the
same limitations, as are described in the Incentive Plan.
11. Nonassignment of Benefits. It shall be a condition of the payment of
benefits under this Plan that neither such benefits nor any portion thereof
shall be assigned, alienated or transferred to any person voluntarily or by
operation of any law, including any assignment, division or awarding of property
under state domestic relations law (including community property law). If any
person shall endeavor or purport to make any such assignment, alienation or
transfer, the amount otherwise provided hereunder which is the subject of such
assignment, alienation or transfer shall cease to be payable to any person.
12. No Guaranty of Employment. Nothing contained in this Plan shall be
construed as a contract of employment between any employer and any employee or
as conferring a right on any employee to be continued in the employment of any
employer.
13. Adoption By Affiliates. Any corporation which is affiliated with Unicom
may, with the consent of Unicom, adopt
-5-
<PAGE>
this Plan in respect of its eligible employees by delivery to Unicom of a
resolution of its board of directors or duly authorized committee to such
effect, which resolution shall specify the first calendar year for which this
Plan shall be effective in respect of the eligible employees of such affiliate.
14. Miscellaneous. (a) FICA Taxes. For each calendar year in which a
participant's compensation is reduced by reason of elections made under this
Plan, such participant's employer shall withhold from the participant's
compensation the taxes imposed upon the participant pursuant to section 3121 of
the Code in respect of the amount by which the participant's compensation is so
reduced and the related amount credited to his or her Deferred Stock.
(b) Successors and Assigns. The provisions of this Plan shall bind and
inure to the benefit of each employer and its successors and assigns, as well as
each Participant and his or her beneficiaries and successors.
IN WITNESS WHEREOF, Unicom Corporation has caused this instrument to be
executed in its name and its corporate seal to be hereunder affixed on this 15th
day of December, 1995.
UNICOM CORPORATION
By: John C. Bukovski
-----------------------------
Title: Vice President
---------------------------
ATTEST:
David A. Scholz
-------------------------------
Title: Secretary
------------------------
-6-
<PAGE>
Exhibit (12)
Commonwealth Edison Company
Form 10-K 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, December 31,
No. 1994 1995
- ---- ------------ ------------
<C> <S> <C> <C>
1 Net income before extraordinary item $ 423,946 $ 737,176
---------- ----------
2 Net provisions for income taxes and investment tax credits deferred
3 charged to-
4 Operations $ 300,764 $ 503,519
5 Other income (23,062) (7,685)
---------- ----------
6 $ 277,702 $ 495,834
---------- ----------
7 Fixed charges-
8 Interest on debt $ 621,909 $ 589,217
9 Estimated interest component of nuclear fuel and
10 other lease payments, rentals and other interest 64,885 73,003
11 Amortization of debt discount, premium and expense 22,804 22,738
12 Preferred securities dividend requirements of subsidiary trust - 4,428
---------- ----------
13 $ 709,598 $ 689,386
---------- ----------
14 Preferred and preference stock dividend requirements-
15 Provisions for preferred and preference stock dividends $ 64,927 $ 69,961
16 Taxes on income required to meet provisions for
17 preferred and preference stock dividends 42,854 45,945
---------- ----------
18 $ 107,781 $ 115,906
---------- ----------
19 Fixed charges and preferred and preference stock
20 dividend requirements $ 817,379 $ 805,292
---------- ----------
21 Earned for fixed charges and preferred and preference stock
22 dividend requirements $1,411,246 $1,922,396
---------- ----------
23 Ratios of earnings to fixed charges (line 22 divided by line 13) 1.99 2.79
==== ====
24 Ratios of earnings to fixed charges and preferred and preference
25 stock dividend requirements (line 22 divided by line 20) 1.73 2.39
==== ====
</TABLE>
<PAGE>
Exhibit (21)-1
Unicom Corporation
Form 10-K File No. 1-11375
Unicom Corporation
Subsidiaries of the Company
---------------------------
State or
Jurisdiction
in Which
Name Incorporated
- -------------------------------------------------- ------------
Commonwealth Edison Company* Illinois
Commonwealth Edison Company of Indiana, Inc.* Indiana
ComEd Financing I* Delaware
Commonwealth Research Corporation Illinois
Concomber, Ltd. Bermuda
Cotter Corporation New Mexico
Edison Development Company Delaware
Edison Development Canada Inc. Canada
Unicom Enterprises Inc.* Illinois
Unicom Thermal Technologies Inc.* Illinois
Unicom Thermal Technologies Boston Inc.* Delaware
Unicom Technology Development Inc.* Illinois
Unicom Resources Inc.* Illinois
*Included in the consolidated financial statements.
<PAGE>
Exhibit (21)-2
Commonwealth Edison Company
Form 10-K File No. 1-1839
Commonwealth Edison Company
Subsidiaries of the Company
---------------------------
State or
Jurisdiction
in Which
Name Incorporated
- --------------------------------------------- ------------
Commonwealth Edison Company of Indiana, Inc.* Indiana
ComEd Financing I* Delaware
Edison Development Company Delaware
Cotter Corporation New Mexico
Commonwealth Research Corporation Illinois
Concomber, Ltd. Bermuda
Edison Development Canada Inc. Canada
* Included in the consolidated financial statements.
<PAGE>
Exhibit (23)-1
Unicom Corporation
Form 10-K File No. 1-11375
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation
by reference in this Form 10-K of our report dated January 26, 1996 on Unicom
Corporation and subsidiary companies' consolidated financial statements as of
and for the year ended December 31, 1995 (Report), included in Unicom
Corporation's Current Report on Form 8-K dated January 26, 1996, to the
inclusion in this Form 10-K of our report dated January 26, 1996, on the
supplemental schedule of Unicom Corporation as of and for the year ended
December 31, 1995, and to the incorporation of such reports 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), Form S-8
Registration Statement File No. 33-56991 (relating to Unicom Corporation's Long-
Term Incentive Plan) and Form S-4 Registration Statement File No. 333-01003
(relating to the common stock of Unicom Corporation). We also consent to the
application of our Report, incorporated by reference in this Form 10-K, to
Commonwealth Edison Company and subsidiary companies' 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 years ended December 31,
1995, 1994 and 1993 appearing in Exhibit 99 of Unicom Corporation's Current
Report on Form 8-K dated January 26, 1996.
ARTHUR ANDERSEN LLP
Chicago, Illinois
March 28, 1996
<PAGE>
Exhibit (23)-2
Commonwealth Edison Company
Form 10-K File No. 1-1839
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation
by reference in this Form 10-K of our report dated January 26, 1996, on
Commonwealth Edison Company and subsidiary companies' consolidated financial
statements as of and for the year ended December 31, 1995 (Report), included in
Commonwealth Edison Company's Current Report on Form 8-K dated January 26, 1996,
to the inclusion in this Form 10-K of our report dated January 26, 1996, on the
supplemental schedule of Commonwealth Edison Company as of and for the year
ended December 31, 1995, and to the incorporation of such reports 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); (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); and (3) prospectus
dated September 19, 1995, constituting part of Amendment No. 1 to Form S-3
Registration Statement File No. 33-61343, as amended (relating to Company-
Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trust). We
also consent to the application of our Report, incorporated by reference in this
Form 10-K, 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 years ended December 31, 1995, 1994 and 1993 appearing in Exhibit 99
of Unicom Corporation's Current Report on Form 8-K dated January 26, 1996.
ARTHUR ANDERSEN LLP
Chicago, Illinois
March 28, 1996
<PAGE>
Exhibit(24)-1
Unicom Corporation
Form 10-K File No. 1-11375
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director of Unicom Corporation, an Illinois
corporation, does hereby constitute and appoint JAMES J. O'CONNOR, SAMUEL K.
SKINNER and DAVID A. SCHOLZ, and each of them, his true and lawful attorneys and
agents, each with full power and authority (acting alone and without the others)
to execute in the name and on behalf of the undersigned as such Director, the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995, to be filed with the Securities and Exchange Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; hereby
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and hereby ratifying and confirming
all that such attorneys and agents, or any of them, may do or cause to be done
by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
Edward A. Brennan
------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that EDWARD A. BRENNAN, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
--------------------------
Notary Public
[Notary Public Seal]
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director of Unicom Corporation, an Illinois
corporation, does hereby constitute and appoint JAMES J. O'CONNOR, SAMUEL K.
SKINNER and DAVID A. SCHOLZ, and each of them, his true and lawful attorneys and
agents, each with full power and authority (acting alone and without the others)
to execute in the name and on behalf of the undersigned as such Director, the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995, to be filed with the Securities and Exchange Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; hereby
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and hereby ratifying and confirming
all that such attorneys and agents, or any of them, may do or cause to be done
by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
James W. Compton
------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that JAMES W. COMPTON, personally known to me to be
the same person whose name is subscribed to the foregoing instrument, appeared
before me this day in person, and acknowledged that he signed and delivered said
instrument as his free and voluntary act, for the uses and purposes therein set
forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
-------------------------
Notary Public
[Notary Public Seal]
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director of Unicom Corporation, an Illinois
corporation, does hereby constitute and appoint JAMES J. O'CONNOR, SAMUEL K.
SKINNER and DAVID A. SCHOLZ, and each of them, her true and lawful attorneys and
agents, each with full power and authority (acting alone and without the others)
to execute in the name and on behalf of the undersigned as such Director, the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995, to be filed with the Securities and Exchange Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; hereby
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and hereby ratifying and confirming
all that such attorneys and agents, or any of them, may do or cause to be done
by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
Sue L. Gin
------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that SUE L. GIN, personally known to me to be the
same person whose name is subscribed to the foregoing instrument, appeared
before me this day in person, and acknowledged that she signed and delivered
said instrument as her free and voluntary act, for the uses and purposes therein
set forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
-------------------------
Notary Public
[Notary Public Seal]
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director of Unicom Corporation, an Illinois
corporation, does hereby constitute and appoint JAMES J. O'CONNOR, SAMUEL K.
SKINNER and DAVID A. SCHOLZ, and each of them, his true and lawful attorneys and
agents, each with full power and authority (acting alone and without the others)
to execute in the name and on behalf of the undersigned as such Director, the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995, to be filed with the Securities and Exchange Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; hereby
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and hereby ratifying and confirming
all that such attorneys and agents, or any of them, may do or cause to be done
by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
Edgar D. Jannotta
------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that EDGAR D. JANNOTTA, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
---------------------------
Notary Public
[Notary Public Seal]
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director of Unicom Corporation, an Illinois
corporation, does hereby constitute and appoint JAMES J. O'CONNOR, SAMUEL K.
SKINNER and DAVID A. SCHOLZ, and each of them, his true and lawful attorneys and
agents, each with full power and authority (acting alone and without the others)
to execute in the name and on behalf of the undersigned as such Director, the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995, to be filed with the Securities and Exchange Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; hereby
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and hereby ratifying and confirming
all that such attorneys and agents, or any of them, may do or cause to be done
by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
George E. Johnson
------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that GEORGE E. JOHNSON, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
--------------------------
Notary Public
[Notary Public Seal]
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director of Unicom Corporation, an Illinois
corporation, does hereby constitute and appoint JAMES J. O'CONNOR, SAMUEL K.
SKINNER and DAVID A. SCHOLZ, and each of them, his true and lawful attorneys and
agents, each with full power and authority (acting alone and without the others)
to execute in the name and on behalf of the undersigned as such Director, the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995, to be filed with the Securities and Exchange Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; hereby
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and hereby ratifying and confirming
all that such attorneys and agents, or any of them, may do or cause to be done
by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
Edward A. Mason
------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that EDWARD A. MASON, personally known to me to be
the same person whose name is subscribed to the foregoing instrument, appeared
before me this day in person, and acknowledged that he signed and delivered said
instrument as his free and voluntary act, for the uses and purposes therein set
forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
--------------------------
Notary Public
[Notary Public Seal]
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director and Officer of Unicom Corporation, an
Illinois corporation, does hereby constitute and appoint JAMES J. O'CONNOR and
DAVID A. SCHOLZ and each of them, his true and lawful attorneys and agents, each
with full power and authority (acting alone and without the others) to execute
in the name and on behalf of the undersigned as such Director and Officer, the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995, to be filed with the Securities and Exchange Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; hereby
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and hereby ratifying and confirming
all that such attorneys and agents, or any of them, may do or cause to be done
by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
Leo F. Mullin
-------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that LEO F. MULLIN, personally known to me to be
the same person whose name is subscribed to the foregoing instrument, appeared
before me this day in person, and acknowledged that he signed and delivered said
instrument as his free and voluntary act, for the uses and purposes therein set
forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
---------------------------
Notary Public
[Notary Public Seal]
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director and Officer of Unicom Corporation, an
Illinois corporation, does hereby constitute and appoint JAMES J. O'CONNOR and
DAVID A. SCHOLZ and each of them, his true and lawful attorneys and agents, each
with full power and authority (acting alone and without the others) to execute
in the name and on behalf of the undersigned as such Director and Officer, the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995, to be filed with the Securities and Exchange Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; hereby
granting to such attorneys and agents, and each of them, full power of
substitution and revocation in the premises; and hereby ratifying and confirming
all that such attorneys and agents, or any of them, may do or cause to be done
by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
Samuel K. Skinner
-------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that SAMUEL K. SKINNER, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
--------------------------
Notary Public
[Notary Public Seal]
<PAGE>
Exhibit (24)-2
Commonwealth Edison Company
Form 10-K File No. 1-1839
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director of Commonwealth Edison Company, an
Illinois corporation, does hereby constitute and appoint JAMES J. O'CONNOR,
SAMUEL K. SKINNER and DAVID A. SCHOLZ, and each of them, his true and lawful
attorneys and agents, each with full power and authority (acting alone and
without the others) to execute in the name and on behalf of the undersigned as
such Director, the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, to be filed with the Securities and Exchange Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or any of them, may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
Edward A. Brennan
------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that EDWARD A. BRENNAN, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
---------------------------
Notary Public
[Notary Public Seal]
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director of Commonwealth Edison Company, an
Illinois corporation, does hereby constitute and appoint JAMES J. O'CONNOR,
SAMUEL K. SKINNER and DAVID A. SCHOLZ, and each of them, his true and lawful
attorneys and agents, each with full power and authority (acting alone and
without the others) to execute in the name and on behalf of the undersigned as
such Director, the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, to be filed with the Securities and Exchange Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or any of them, may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
James W. Compton
------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that JAMES W. COMPTON, personally known to me to be
the same person whose name is subscribed to the foregoing instrument, appeared
before me this day in person, and acknowledged that he signed and delivered said
instrument as his free and voluntary act, for the uses and purposes therein set
forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
---------------------------
Notary Public
[Notary Public Seal]
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director of Commonwealth Edison Company, an
Illinois corporation, does hereby constitute and appoint JAMES J. O'CONNOR,
SAMUEL K. SKINNER and DAVID A. SCHOLZ, and each of them, her true and lawful
attorneys and agents, each with full power and authority (acting alone and
without the others) to execute in the name and on behalf of the undersigned as
such Director, the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, to be filed with the Securities and Exchange Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or any of them, may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
Sue L. Gin
------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that SUE L. GIN, personally known to me to be the
same person whose name is subscribed to the foregoing instrument, appeared
before me this day in person, and acknowledged that she signed and delivered
said instrument as her free and voluntary act, for the uses and purposes therein
set forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
---------------------------
Notary Public
[Notary Public Seal]
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director of Commonwealth Edison Company, an
Illinois corporation, does hereby constitute and appoint JAMES J. O'CONNOR,
SAMUEL K. SKINNER and DAVID A. SCHOLZ, and each of them, his true and lawful
attorneys and agents, each with full power and authority (acting alone and
without the others) to execute in the name and on behalf of the undersigned as
such Director, the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, to be filed with the Securities and Exchange Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or any of them, may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
Edgar D. Jannotta
------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that EDGAR D. JANNOTTA, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
---------------------------
Notary Public
[Notary Public Seal]
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director of Commonwealth Edison Company, an
Illinois corporation, does hereby constitute and appoint JAMES J. O'CONNOR,
SAMUEL K. SKINNER and DAVID A. SCHOLZ, and each of them, his true and lawful
attorneys and agents, each with full power and authority (acting alone and
without the others) to execute in the name and on behalf of the undersigned as
such Director, the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, to be filed with the Securities and Exchange Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or any of them, may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
George E. Johnson
------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that GEORGE E. JOHNSON, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
----------------------------
Notary Public
[Notary Public Seal]
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director of Commonwealth Edison Company, an
Illinois corporation, does hereby constitute and appoint JAMES J. O'CONNOR,
SAMUEL K. SKINNER and DAVID A. SCHOLZ, and each of them, his true and lawful
attorneys and agents, each with full power and authority (acting alone and
without the others) to execute in the name and on behalf of the undersigned as
such Director, the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, to be filed with the Securities and Exchange Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or any of them, may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
Edward A. Mason
------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that EDWARD A. MASON, personally known to me to be
the same person whose name is subscribed to the foregoing instrument, appeared
before me this day in person, and acknowledged that he signed and delivered said
instrument as his free and voluntary act, for the uses and purposes therein set
forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
---------------------------
Notary Public
[Notary Public Seal]
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director and Officer of Commonwealth Edison
Company, an Illinois corporation, does hereby constitute and appoint JAMES J.
O'CONNOR and DAVID A. SCHOLZ and each of them, his true and lawful attorneys and
agents, each with full power and authority (acting alone and without the others)
to execute in the name and on behalf of the undersigned as such Director and
Officer, the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, to be filed with the Securities and Exchange Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or any of them, may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
Leo F. Mullin
-------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that LEO F. MULLIN, personally known to me to be
the same person whose name is subscribed to the foregoing instrument, appeared
before me this day in person, and acknowledged that he signed and delivered said
instrument as his free and voluntary act, for the uses and purposes therein set
forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
---------------------------
Notary Public
[Notary Public Seal]
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director and Officer of Commonwealth Edison
Company, an Illinois corporation, does hereby constitute and appoint JAMES J.
O'CONNOR and DAVID A. SCHOLZ and each of them, his true and lawful attorneys and
agents, each with full power and authority (acting alone and without the others)
to execute in the name and on behalf of the undersigned as such Director and
Officer, the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, to be filed with the Securities and Exchange Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended; hereby granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and hereby ratifying and
confirming all that such attorneys and agents, or any of them, may do or cause
to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of March,
1996.
Samuel K. Skinner
-------------------------------
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
I, Mary T. Snyder, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that SAMUEL K. SKINNER, personally known to me to
be the same person whose name is subscribed to the foregoing instrument,
appeared before me this day in person, and acknowledged that he signed and
delivered said instrument as his free and voluntary act, for the uses and
purposes therein set forth.
GIVEN under my hand and notarial seal this 14th day of March, 1996.
Mary T. Snyder
---------------------------
Notary Public
[Notary Public Seal]
<PAGE>
Exhibit (99)-1
Unicom Corporation
Form 10-K File No. 1-11375
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of
earliest event reported): January 26, 1996
Unicom Corporation
(Exact name of registrant as specified in its charter)
Illinois 1-11375 36-3961038
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
37th Floor, 10 South Dearborn Street,
Post Office Box A-3005, Chicago, Illinois 60690-3005
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (312) 394-7399
<PAGE>
The purpose of this Current Report is to file certain financial information
regarding the Registrant (Unicom Corporation) and its subsidiaries. Such
financial information is set forth in the exhibits to this Current Report.
Item 5. Other Events
- ------- ------------
Exhibits
--------
(23) Consent of Independent Public Accountants
(27) Financial Data Schedule of Unicom Corporation
(99) Unicom Corporation and Subsidiary Companies - Certain Financial
Information as of and for the Year Ended December 31, 1995:
--Summary of Selected Consolidated Financial Data
--Price Range and Cash Dividends Paid Per Share of Common Stock
--1995 Consolidated Revenues and Sales
--Management's Discussion and Analysis of Financial Condition and
Results of Operations
--Report of Independent Public Accountants
--Statements of Consolidated Income
--Consolidated Balance Sheets
--Statements of Consolidated Capitalization
--Statements of Consolidated Retained Earnings
--Statements of Consolidated Cash Flows
--Notes to Financial Statements
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNICOM CORPORATION
(Registrant)
By: David A. Scholz
-----------------------
David A. Scholz
Secretary
Date: February 9, 1996
-3-
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
(23) Consent of Independent Public Accountants
(27) Financial Data Schedule of Unicom Corporation*
(99) Unicom Corporation and Subsidiary Companies - Certain
Financial Information as of and for the Year Ended
December 31, 1995:
--Summary of Selected Consolidated Financial Data
--Price Range and Cash Dividends Paid Per Share of Common Stock
--1995 Consolidated Revenues and Sales
--Management's Discussion and Analysis of Financial Condition
and Results of Operations
--Report of Independent Public Accountants
--Statements of Consolidated Income
--Consolidated Balance Sheets
--Statements of Consolidated Capitalization
--Statements of Consolidated Retained Earnings
--Statements of Consolidated Cash Flows
--Notes to Financial Statements
*Previously filed and incorporated by reference to Unicom Corporation's
Form 8-K Current Report dated January 26, 1996.
<PAGE>
Exhibit (23)
Unicom Corporation
Form 8-K File No. 1-11375
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation
by reference of our report dated January 26, 1996 on Unicom Corporation and
subsidiary companies' consolidated financial statements as of and for the year
ended December 31, 1995, included as an Exhibit to this Form 8-K Current Report
of Unicom Corporation dated January 26, 1996, 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). We also consent to the application of our report to
Commonwealth Edison Company and subsidiary companies' 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, 1995, 1994 and 1993 appearing in Exhibit 99 of this Form 8-K.
ARTHUR ANDERSEN LLP
Chicago, Illinois
January 26, 1996
<PAGE>
Exhibit (99)
Unicom Corporation
Form 8-K File No. 1-11375
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
INDEX
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Definitions.............................................................. 2
Summary of Selected Consolidated Financial Data.......................... 3
Price Range and Cash Dividends Paid Per Share of Common Stock............ 3
1995 Consolidated Revenues and Sales..................................... 3
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 4-15
Report of Independent Public Accountants................................. 16
Consolidated Financial Statements--
Statements of Consolidated Income for the years 1995, 1994 and 1993.... 17
Consolidated Balance Sheets--December 31, 1995 and 1994................ 18-19
Statements of Consolidated Capitalization--December 31, 1995 and 1994.. 20
Statements of Consolidated Retained Earnings for the years 1995, 1994
and 1993.............................................................. 21
Statements of Consolidated Cash Flows for the years 1995, 1994 and
1993.................................................................. 22
Notes to Financial Statements.......................................... 23-44
</TABLE>
1
<PAGE>
DEFINITIONS
The following terms are used in this document with the following meanings:
<TABLE>
<CAPTION>
TERM MEANING
- ----------------------- ------------------------------------------------------------------
<S> <C>
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
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 prudence of
ComEd's western coal costs for the period from 1989 through 1992.
ICC Illinois Commerce Commission
Indiana Company Commonwealth Edison Company of Indiana, Inc., which is a wholly-
owned subsidiary of ComEd.
MAIN Mid-America Interconnected Network
MGP Manufactured gas plant
NEIL Nuclear Electric Insurance Limited
NML Nuclear Mutual Limited
NOPR Notice of Proposed Rulemaking issued by the FERC
NRC Nuclear Regulatory Commission
Rate Matters Settlement A settlement concerning the proceedings relating to ComEd's 1985
and 1991 ICC rate orders (which orders related to, among other
things, the recovery of costs associated with ComEd's four most
recently completed nuclear generating units), the proceedings
related 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 related to the appropriate interest
rate and rate design to be applied to a refund made by ComEd
during 1990 related 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 income 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 in January 1993, as subsequently modified
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting Standards
Trust ComEd Financing I, which is a wholly-owned subsidiary trust of
ComEd.
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
</TABLE>
2
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
(MILLIONS OF DOLLARS EXCEPT PER SHARE
DATA)
<S> <C> <C> <C> <C> <C>
Operating revenues............... $ 6,910 $ 6,278 $ 5,260 $ 6,026 $ 6,276
Net income....................... $ 640(1) $ 355 $ 46(2) $ 443 $ 17
Earnings per common share........ $ 2.98(1) $ 1.66 $ 0.22(2) $ 2.08 $ 0.08
Cash dividends declared per com-
mon share....................... $ 1.60 $ 1.60 $ 1.60 $ 2.30 $ 3.00
Total assets (at end of year).... $23,247 $23,121 $24,383 $20,993 $17,365
Long-term obligations at end of
year excluding current portion:
Long-term debt, preference stock
and preferred securities sub-
ject to mandatory redemption
requirements................... $ 7,011 $ 7,745 $ 7,861 $ 7,913 $ 7,081
Accrued spent nuclear fuel dis-
posal fee and related interest. $ 624 $ 590 $ 567 $ 549 $ 530
Capital lease obligations....... $ 376 $ 433 $ 323 $ 347 $ 396
Other long-term obligations..... $ 1,826 $ 1,754 $ 1,718 $ 666 $ 341
</TABLE>
- --------
(1) Net income in 1995 includes an extraordinary loss related to the early
redemption of long-term debt of $20 million or $0.09 per common share.
(2) Net income in 1993 includes the cumulative effect of change in accounting
for income taxes of $10 million or $0.05 per common share.
PRICE RANGE* AND CASH DIVIDENDS PAID PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
1995 (BY QUARTERS) 1994 (BY QUARTERS)
--------------------------- ---------------------------
FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Price range:
High.................. 33 7/8 30 1/2 27 3/4 26 1/8 24 3/4 24 7/8 26 28 3/4
Low................... 30 1/4 26 1/4 23 5/8 23 1/4 20 5/8 21 1/4 22 25 1/8
Cash dividends paid.... 40c 40c 40c 40c 40c 40c 40c 40c
</TABLE>
* As reported as NYSE Composite Transactions for Unicom on and after September
1, 1994 and for ComEd prior to that date.
- --------
Unicom's common stock is traded on the New York, Chicago and Pacific stock
exchanges, with the ticker symbol UCM. At December 31, 1995, there were
approximately 171,000 holders of record of Unicom's common stock.
1995 CONSOLIDATED REVENUES AND SALES
<TABLE>
<CAPTION>
OPERATING KILOWATTHOUR INCREASE/ INCREASE/
REVENUES INCREASE SALES (DECREASE) (DECREASE)
(THOUSANDS) OVER 1994 (MILLIONS) OVER 1994 CUSTOMERS OVER 1994
----------- --------- ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Residential............. $2,621,038 15.3% 23,303 9.0 % 3,079,381 1.1 %
Small commercial and
industrial............. 2,073,998 8.2% 25,313 4.1 % 288,848 0.7 %
Large commercial and
industrial............. 1,425,784 3.2% 23,777 1.4 % 1,539 0.7 %
Public authorities...... 487,142 7.7% 7,158 4.0 % 12,039 (0.2)%
Electric railroads...... 26,894 2.7% 390 (2.0)% 2 --
---------- ------ ---------
Ultimate consumers...... $6,634,856 9.7% 79,941 4.6 % 3,381,809 1.0 %
Sales for resale........ 207,256 11,412 24
Other revenues.......... 67,933 -- --
---------- ------ ---------
Total.................. $6,910,045 10.1% 91,353 7.3 % 3,381,833 1.0 %
========== ====== =========
</TABLE>
3
<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.
ComEd continues to represent substantially all of the assets, revenues and
net income of Unicom; and Unicom's resources and results of operations are
largely dependent on, and reflect, those of ComEd. Unicom's unregulated
subsidiaries are not expected to make material contributions to Unicom's
revenues or results of operations in the near future. Consequently, the
following discussion focuses on ComEd's utility operations although information
is also provided about Unicom's unregulated operations.
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 1996-98 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 1995, calls for electric plant and equipment expenditures of
approximately $2,695 million (excluding nuclear fuel expenditures of
approximately $885 million). It is estimated that such construction
expenditures, with cost escalation computed at 3.5% annually, will be as
follows:
<TABLE>
<CAPTION>
1996 1997 1998 TOTAL
---- ---- ---- ------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C>
Production............................................ $405 $390 $380 $1,175
Transmission and Distribution......................... 390 405 410 1,205
General............................................... 110 110 95 315
---- ---- ---- ------
Total.............................................. $905 $905 $885 $2,695
==== ==== ==== ======
</TABLE>
The construction program includes the replacement of the steam generators at
ComEd's Braidwood Unit 1 and Byron Unit 1 nuclear generating units, for service
in the years 1998 and 1999, respectively, at a total estimated cost of
approximately $470 million. Approximately $290 million of this estimated cost
is included in the construction expenditures shown above. ComEd is studying the
possibility of accelerating the replacement of the steam generators which could
increase the construction expenditures shown above.
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 1998 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 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.
4
<PAGE>
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. 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
for additional information.
Purchase commitments for ComEd and the Indiana Company, principally related
to construction and nuclear fuel, approximated $1,137 million at December 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................................ 1996-2007 $1,011
Decker Coal Co..................................... 1996-2015 $ 713
Big Horn Coal Co................................... 1998 $ 22
Other commitments.................................. 1996 $ 3
</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 21 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 and scheduled
maturities for ComEd preference stock and long-term debt are summarized in
Notes 7 and 9, 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. See Note 18 of Notes to Financial Statements for
more information concerning ComEd's nuclear fuel lease facility. ComEd has
approximately $915 million of unused bank lines of credit at December 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 10 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 years 1995, 1994 and 1993.
During 1995, Unicom issued 424,480 shares of common stock for approximately
$11 million under its employee stock plans. The Trust also issued $200 million
of ComEd-obligated mandatorily redeemable preferred securities, the proceeds of
which were used to purchase ComEd's subordinated deferrable interest notes due
September 30, 2035. The proceeds of such notes were used by ComEd to refund
short-term debt incurred to meet current maturities of ComEd debt. ComEd sold
and leased back approximately $193 million of nuclear fuel through its existing
nuclear fuel lease facility.
As of January 26, 1996, 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
5
<PAGE>
electricity. In December 1995, ComEd announced a cap on base electric rates at
current levels. 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 "Business and Competition" and "Regulation" below.
During the past several years, ComEd has instituted cost reduction plans
including various workforce reductions. Such efforts included an offer of
voluntary early retirement which was made 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. Such
program resulted in a charge to income of approximately $20.5 million (after
reflecting income tax effects), substantially all of which was recorded during
1994. ComEd is continuing to examine methods of reducing the size of its
workforce, including special severance offers. On October 30, 1995, ComEd
declared an impasse in the collective bargaining agreement negotiations with
its principal union and has implemented virtually all of the terms of its last
offered proposal prior to the impasse. Those terms include, among other things,
a wage increase retroactive to April 1, 1995 and a voluntary separation offer
for employees who accepted and left ComEd's employ by year-end 1995. The union
has filed an unfair labor practice charge with respect to ComEd's action with
the National Labor Relations Board. The voluntary separation offer, combined
with separation plans offered to selected groups of non-union employees,
resulted in a charge to income of approximately $59 million (after reflecting
income tax effects) or $0.27 per common share for the year 1995. This charge to
income occurred primarily in the fourth quarter of 1995 when most of the
acceptances of the offers occurred. ComEd expects to recover the costs of these
plans within two years as a result of reduced personnel.
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. In connection
with such examination, ComEd has solicited and received binding proposals with
respect to such a transaction involving its State Line and Kincaid generating
stations; and it is negotiating with possible purchasers with respect to such
transactions. As presently structured, such transactions would involve a sale
of the generating station assets at a price approximating their book value and
a fifteen-year power purchase arrangement. Any such transactions would be
subject to the negotiation of definitive agreements and regulatory approvals
and are not expected to have a material impact on ComEd's consolidated
financial position or results of operations.
ComEd's securities and other securities guaranteed by ComEd are currently
rated by three principal securities rating agencies 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- BBB-
Preference stock.................................. baa3 BBB- BBB-
ComEd-obligated mandatorily redeemable preferred
securities of the Trust.......................... baa3 BBB- BBB-
Commercial paper.................................. P-2 A-2 D-2
</TABLE>
As of January 1996, Standard & Poor's rating outlook on ComEd remained
stable. As of October 1995, Moody's rating outlook on ComEd also remained
stable. In August 1995, Duff & Phelps upgraded its rating of ComEd's preferred
and preference stock from BB+ to BBB- and reaffirmed that its rating outlook on
ComEd remained stable.
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 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.
6
<PAGE>
The market place 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. Also, a
number of electric utilities (including utilities bordering ComEd's service
area) have announced plans to combine, or have combined, to achieve certain
size and operating efficiencies in response to expected changes in the market
place. Finally, both the state and federal regulatory framework under which
ComEd and other electric utilities have operated are under review. In recent
years, there has been increasing debate at the state and federal levels
regarding the structure and regulation of the electric utility industry. In
particular, these discussions have focused on whether certain aspects of the
industry, such as generation, could be more efficiently provided under a more
competitive scheme.
A central feature of the current debate over deregulation and changed
regulation in the electric utility industry is the extent to which electric
utilities will be permitted to recover so-called "stranded" or "strandable"
costs incurred to fulfill their duty to serve all of the electricity needs
within their service territories. These costs would be stranded to the extent
that market-based rates would be insufficient to allow for full recovery of the
investments.
ComEd cannot estimate its strandable investment with any degree of accuracy
at this time because of the number of variables involved. ComEd, however, is
taking steps, such as aggressive cost-cutting measures and accelerated
depreciation, to minimize its potential exposure. The regulatory and
legislative initiatives that ComEd has proposed, described below, contemplate a
full recovery of ComEd's costs to meet its duty to serve.
The Energy Policy Act of 1992 has had 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. In March
1995, the FERC issued a NOPR seeking comments on proposals intended to
encourage a more competitive wholesale electric power market. The NOPR
addresses both open access transmission and stranded cost issues. ComEd is
unable to predict the structure and effect of any rule that the FERC may
ultimately adopt based upon the NOPR.
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. The Illinois Appellate Court
reversed the latter ICC decision, ruling that state law prohibited the
confidential aspects of the contracts. ComEd has petitioned the Illinois
Supreme Court to review the reversal. ComEd has also sought and received ICC
approval for the eleven contracts at special discount rates which it negotiated
prior to the Illinois Appellate Court's decision.
7
<PAGE>
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.
Legislation has been passed in Illinois to review the need for changes in the
regulatory framework under which Illinois electric utilities operate. The Joint
Committee on Electric Utility Regulatory Reform was created pursuant to
House/Senate Joint Resolution 21 to develop any legislative reform proposals it
finds necessary. A final legislative proposal is to be delivered by November 8,
1996. ComEd is participating as a member of the Technical Advisory Group. A
bill allowing utilities to submit plans for alternative regulation, such as
price caps or incentive regulation, has been signed by the Governor of
Illinois. On December 11, 1995, ComEd announced a series of customer
initiatives as part of its larger ongoing effort to address the need to give
all customer classes the opportunity to benefit from increased competition in
the electric utility business, while retaining the benefits (such as
reliability) of current regulation and ensuring utilities' cost recovery for
commitments made under the obligation to serve customers. The initiatives
include (i) a five-year cap on base electric rates at current levels, (ii)
certain energy monitoring and management programs designed to monitor and
control energy usage, particularly during certain peak periods, (iii) single
statement, or unified, billing for certain multi-site customers, (iv) certain
incentives for manufacturing customers looking to expand operations or to
locate in northern Illinois and (v) market pricing options for up to ten
percent of certain large industrial customers' existing electric energy
requirements and all of their incremental requirements. ComEd anticipates the
initiatives will be fully implemented in 1997 and will reduce its revenues by
approximately $42 million annually (including the effects of previously
implemented initiatives and before income tax effects) primarily through
changes in energy utilization and increase its costs by at least $30 million
annually (before income tax effects) through the acceleration of depreciation
charges on its nuclear generating units. ComEd expects to file a request for
ICC approval of the accelerated depreciation initiatives in the near future.
Management expects the financial impact of these initiatives will be
substantially offset by ComEd's cost reduction efforts and expected growth in
its business. ComEd also continues to consider the possibility of additional
accelerated depreciation options.
Under ComEd's initiatives, the five-year base rate cap at current levels
became effective in December 1995 and will extend until January 1, 2001. The
rate cap does not affect ComEd's fuel cost or nuclear decommissioning cost
recovery provisions. ComEd's fuel cost variances will continue to be collected
through its fuel adjustment clause, and such collections will continue to be
subject to annual reconciliation proceedings before the ICC. Nuclear
decommissioning cost variances will continue to be collected under a rider that
was approved in the Rate Order, and such rider is intended to allow annual
adjustments in decommissioning cost recoveries from ratepayers as changes in
cost estimates occur. See "Depreciation and Decommissioning" in Note 1 of Notes
to Financial Statements for additional information regarding the
decommissioning costs rider.
On December 13, 1995, ComEd announced a proposal to amend certain provisions
of the Illinois Public Utilities Act. The proposal would, among other things,
allow Illinois utilities to launch five-year experimental "direct access"
programs, whereby certain customers would have the opportunity to obtain some
of their electric energy requirements from their chosen supplier. If the
proposal is adopted as legislation, such "direct access" programs could begin
as early as 1998; and under the legislation, ComEd announced it would offer
such a program for new or expanded load of three megawatts or greater in its
northern Illinois service territory. Under ComEd's proposal, if such "direct
access" proves workable, and the ICC finds it to be in the public interest, the
ICC could order it as an option for all electricity consumers in Illinois
starting in 2003. Other Illinois utilities have also initiated both legislative
and regulatory proposals. Both Illinois Power Company and Central Illinois
Light Company have filed
8
<PAGE>
proposed retail wheeling experiments with the ICC. These experiments are
currently the subject of hearings. ComEd cannot predict whether, or in what
form, these proposals may be approved. See "Regulation" and "Regulatory Assets
and Liabilities" in Note 1 of Notes to Financial Statements.
Capital Structure. The ratio of ComEd's long-term debt to total
capitalization has decreased to 49.3% at December 31, 1995 from 54.6% at
December 31, 1994. This decrease is related primarily to the retirement and
early redemption of long-term debt.
UNREGULATED OPERATIONS
Unicom Enterprises is engaged, through a subsidiary, in energy service
activities which are not subject to utility regulation by state or federal
agencies. The subsidiary, Unicom Thermal, currently provides district cooling
services to office and other buildings from a central location in the city of
Chicago. District cooling involves, in essence, the production of chilled water
at a central location(s) and its circulation to and from such location(s) to
customers' buildings through a closed circuit of piping. Such water is
circulated through customers' premises for air conditioning. This process is
used in lieu of self-generated cooling utilizing CFC refrigerants. 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's
first plant began service in May 1995, and sufficient contracts have been
secured to utilize the full capacity of the plant. As of January 10, 1996,
Unicom Thermal Technologies Boston, a subsidiary of Unicom Thermal, has entered
into a limited liability corporation as a minority member with Boston Edison
Technologies Group to provide district cooling services to office and other
buildings in the city of Boston.
Capital Budgets. Unicom Thermal has forecasted capital expenditures for the
years 1996-98 of approximately $100 million, primarily representing the
construction costs of its district cooling facilities in the city of Chicago.
Construction of its first district cooling facility was completed in May 1995
and cost approximately $30 million. Unicom Thermal began construction on two
additional cooling facilities in 1995. As of December 31, 1995, Unicom
Thermal's purchase commitments, principally related to construction, were
approximately $21 million.
Capital Resources. Unicom expects to obtain funds to invest in its
unregulated subsidiaries principally from dividends received on its ComEd
common stock and from bank borrowings. 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 the unregulated subsidiaries, such as loans or additional equity
investments (none of which is expected), would be subject to the prior approval
of the ICC.
Unicom Enterprises has a $200 million credit facility which will expire in
1998 of which $158 million was unused as of December 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. 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. See Note 10 of Notes to Financial
Statements for additional information regarding certain covenants with respect
to Unicom's and Unicom Enterprises' operations.
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
9
<PAGE>
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
1993, 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 the Fuel Matters Settlement in
late 1993 (see Note 2 of Notes to Financial Statements). The effects of such
settlements during 1993 and 1994 are discussed below under "Results of
Operations."
On January 9, 1995, the ICC issued its Rate Order in the proceedings relating
to ComEd's February 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
ComEd began collecting such costs 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 and subsequent rider proceedings. 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. As of December 31, 1995,
electric operating revenues of approximately $319 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. In
June 1995, the NRC reported that over the past year performance at Dresden was
cyclical; that plant material condition needed to be improved at Dresden and
that a more effective work management system was needed to deal with the
corrective maintenance backlog. In January 1996, the NRC noted improvement but
indicated that certain of the same concerns continue to exist. The NRC also
stated that the effectiveness of the recent improvement efforts must be
sustained. 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, and that 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. In February and June 1995, the NRC concluded that
LaSalle County and Quad-Cities, respectively, had arrested the adverse trends
in most areas and "normal" designation has been reestablished.
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 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
10
<PAGE>
proceedings for years prior to 1994; however, certain intervenors have appealed
the ICC order in the 1989 fuel reconciliation proceedings on issues relating to
nuclear station performance.
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 $3.7
billion in current-year (1996) dollars, are expected to be funded by external
decommissioning trusts 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 as well as changes in the assumptions used in
making such estimates. See Note 1 of Notes to Financial Statements under
"Depreciation and Decommissioning" 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 21 of Notes to Financial Statements for information regarding certain
effects of CERCLA on ComEd.
RESULTS OF OPERATIONS
Unicom's earnings per common share were $2.98 in 1995, $1.66 in 1994 and
$0.22 in 1993. Substantially all of the results of operations for Unicom are
the results of operations for ComEd. The results of Unicom's unregulated
subsidiaries are not material to the results of Unicom and subsidiary companies
as a whole. As such, the following section discusses the results of operations
for ComEd alone.
Net Income. The 1995 results reflect higher revenues primarily as a result of
higher kilowatthour sales and the higher rate levels which became effective in
January 1995 under the Rate Order. The higher kilowatthour sales reflect the
unusually hot summer weather in 1995. The 1995 results were also affected by
higher operation and maintenance expenses, which reflect an after-tax charge of
$59 million or $0.27 per common share for a voluntary separation offer for
union employees who accepted and left ComEd's employ by year-end 1995 combined
with separation plans offered to selected groups of non-union employees. ComEd
also recorded an after-tax charge of $20 million or $0.09 per common share
related to the early redemption of $645 million of long-term debt.
The 1994 results reflect higher revenues as a result of the favorable
comparison to 1993 in which the effects of the Rate Matters Settlement and the
Fuel Matters Settlement were recorded. The 1994 results also reflect ComEd's
increased kilowatthour sales to ultimate consumers. The effects of these items
were partially offset by higher operation and maintenance expenses, which
include an after-tax charge of $20 million or $0.09 per common share for
additional pension costs related to an early retirement offer made to certain
employees during 1994. ComEd also recorded a reduction in the carrying value of
its investments in uranium-related properties in 1994, which reduced net income
by $34 million or $0.16 per common share.
The 1993 results were significantly affected by the recording of the effects
of the Rate Matters Settlement and the Fuel Matters Settlement, which reduced
1993 net income by approximately $354 million or $1.66 per common share, in
addition to the effect of the deferred recognition of revenues which ComEd had
recorded during 1993 (approximately $160 million or $0.75 per common share),
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, as authorized in the Remand Order. The 1993 earnings also reflect a one-
time favorable cumulative effect of $10 million or $0.05 per common share as a
result
11
<PAGE>
of the adoption of SFAS No. 109, Accounting for Income Taxes. The effect of the
non-recurring items was partially offset by a higher level of kilowatthour
sales and lower operation and maintenance expenses. Excluding non-recurring
items, earnings in 1993 would have been $1.83 per common share.
Kilowatthour Sales. Kilowatthour sales to ultimate consumers increased 4.6%
in 1995, 2.8% in 1994 and 4.6% in 1993 as a result of increased sales to all
classes of customers, except railroads, which decreased during each year,
reflecting progressively warmer summers (particularly in 1995) and, in 1994,
colder winter weather than in 1993. The service territory economy also improved
during 1994, which contributed to the increase in kilowatthour sales.
Kilowatthour sales including sales for resale increased 7.3% in 1995, decreased
3.0% in 1994 and increased 16.0% in 1993.
Operating Revenues. ComEd's operating revenues increased $632 million in 1995
principally reflecting the higher kilowatthour sales described above and higher
rate levels under the Rate Order. Operating revenues increased $1,017 million
in 1994 principally reflecting the favorable comparison to 1993 in which the
effects of the Rate Matters Settlement and the Fuel Matters Settlement were
recorded and the increased level of kilowatthour sales to ultimate consumers
described above. The increase was partially offset by a decrease in energy
costs recovered under the fuel adjustment clause in ComEd's rates.
Operating revenues decreased $766 million in 1993 principally reflecting the
recording of the effects of the Rate Matters Settlement and the Fuel Matters
Settlement, which reduced 1993 operating revenues by $1,282 million. This
reduction was partially offset by a higher level of kilowatthour sales and an
increase in energy costs recovered under the fuel adjustment clause in ComEd's
rates. See "Net Income" above and Note 2 of Notes to Financial Statements for
additional information.
Fuel Costs. Changes in fuel expense for 1995, 1994 and 1993 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>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Cost of fuel consumed (per million Btu):
Nuclear........................................... $0.52 $0.53 $0.52
Coal.............................................. $2.43 $2.31 $2.89
Oil............................................... $3.06 $2.89 $3.03
Natural gas....................................... $1.85 $2.27 $2.70
Average all fuels................................. $1.05 $1.08 $1.15
Net generation of electric energy (millions of kilo-
watthours)......................................... 96,608 90,243 94,266
Fuel sources of kilowatthour generation:
Nuclear........................................... 73% 71% 75%
Coal.............................................. 24 25 23
Oil............................................... -- 1 1
Natural gas....................................... 3 3 1
------ ------ ------
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
uranium enrichment facilities owned and 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.
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<PAGE>
Fuel Supply. Compared to other utilities, ComEd has relatively low average
fuel costs as a result of its 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 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
December 31, 1995, ComEd had unrecovered fuel costs in the form of coal
reserves of approximately $448 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 21 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:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- ----
<S> <C> <C> <C>
Kilowatthours (millions)................................. 2,475 2,071 644
Cost per kilowatthour.................................... 2.60c 2.86c 1.91c
</TABLE>
Deferred Under or Overrecovered Energy Costs--Net. Fuel expenses for the
years 1995, 1994 and 1993 include 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 increased 4% during 1995, increased 2% during 1994 and decreased 4%
during 1993. The increase in 1995 primarily reflects increased expenses for
costs related to voluntary employee separation plans, nuclear and fossil
generating stations, customer-related activities and incentive compensation
programs, partially offset by lower expenses associated with transmission and
distribution facilities, certain administrative and general costs and pensions
and other employee benefits, including postretirement health care benefits. The
increase in 1994 primarily reflects increased expenses associated with pensions
and other employee benefits, incentive compensation programs, nuclear and
fossil generating stations, and certain administrative and general costs,
partially offset by lower expenses associated with transmission and
distribution facilities. The decrease in 1993 primarily reflects decreased
expenses associated with nuclear and fossil generating stations, pension
benefits and customer-related activities, a decrease in the number of employees
and lower research costs, partially offset by higher costs of postretirement
health care benefits and the cost related to the 1993 special incentive plan
for employees. Wage increases, the effects of which are reflected in the
increases and decreases discussed below, have increased operation and
maintenance expenses during 1995 and 1994. Wages in 1993 were not increased
over 1992 levels. Operation and maintenance expenses in 1995 and 1994 include
approximately $16 million and $20 million, respectively, for wage increases.
The effects of inflation have increased operation and maintenance expenses
during the years and are also reflected in the increases and decreases
discussed below.
Operation and maintenance expenses for pensions and other employee benefits,
including postretirement health care benefits, decreased $40 million in 1995,
increased $30 million in 1994 and decreased $2 million in 1993. The 1995
decrease reflects a decrease of $40 million in the provision for postretirement
health care costs, partially offset by a $25 million increase for the portion
of the costs of the voluntary employee separation plans related to
postretirement health care benefits and an increase of $9 million for certain
other employee benefits. The 1994 increase includes a $34 million increase in
13
<PAGE>
pension costs related to an early retirement program offered in 1994. See
"Liquidity and Capital Resources," subcaption "Financial Condition," for
additional information regarding the employee separation plans offered in 1995
and the 1994 early retirement program. The 1993 decrease reflects a decrease in
pension benefits of $16 million which was partially offset by an increase in
postretirement health care benefits of $14 million. The increase in
postretirement health care benefits in 1993 reflects $17 million as a result of
adopting SFAS No. 106, Employers' Accounting for Postretirement Benefits Other
Than Pensions.
Operation and maintenance expenses in 1995 also reflect $72 million for the
portion of the costs of the voluntary employee separation plans not related to
the postretirement health care benefits described above. See "Liquidity and
Capital Resources," subcaption "Financial Condition," above for information
regarding the employee separation plans offered in 1995.
Operation and maintenance expenses associated with the nuclear generating
stations tend to be affected by the number of outages (both scheduled and non-
scheduled) of the units, during which a greater number of activities related to
inspection, maintenance and improvement are scheduled and carried out. Such
expenses increased $32 million in 1995, increased $9 million in 1994 and
decreased $74 million in 1993. The increase in 1995 is primarily due to
increased expenses related to the plant improvement efforts at Dresden and Zion
stations. The increase in 1994 is due to activities undertaken during increased
scheduled and non-scheduled outages. The decrease in 1993 includes the effects
of ComEd's cost reduction efforts, including re-engineering and process
improvements, eliminating unnecessary work and increasing the efficiency at
which the remaining work was performed. 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 also tend to be affected by the number of outages in the same manner
as nuclear generating stations. Such expenses increased $8 million in 1995,
increased $4 million in 1994 and decreased $13 million in 1993. The increase in
1995 reflects the cost for the increase in scope of scheduled overhauls
partially offset by the net effect of a reduction of personnel. The increase in
1994 reflects, in part, activities undertaken during a greater number of
scheduled overhauls. The decrease in 1993 includes the effects of ComEd's cost
reduction efforts. Research costs also decreased $10 million in 1993 due to the
cost reduction efforts.
Operation and maintenance expenses associated with ComEd's transmission and
distribution system decreased $3 million and $18 million in 1995 and 1994,
respectively. The decreases in 1995 and 1994 reflect the effects of ComEd's
cost containment efforts. Costs of customer-related activities, including
customer assistance and energy sales services, increased $10 million in 1995
and decreased $13 million in 1993.
Operation and maintenance expenses reflect $65 million, $50 million and $36
million for employee incentive compensation plan costs related to the
achievement of certain financial performance, cost containment and operating
performance goals in 1995, 1994 and 1993, respectively.
Certain administrative and general costs decreased $16 million in 1995 and
increased $12 million in 1994. The decrease in 1995 was due to a variety of
reasons including a decrease in expenses related to insurance, injuries and
damages and the provision for vacation pay liability. The increase in 1994 is
primarily due to increased provisions for injuries and damages and obsolete
materials.
Depreciation. Depreciation expense increased in 1995, 1994 and 1993 as a
result of additions to plant in service. See "Depreciation and Decommissioning"
in Note 1 of Notes to Financial Statements for additional information. ComEd
also intends to seek authorization from the ICC to accelerate the depreciation
charges on its nuclear generating units. See "Business and Competition" under
"Liquidity and Capital Resources."
14
<PAGE>
Interest on Debt. Changes in interest on long-term debt and notes payable for
the years 1995, 1994 and 1993 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, the
retirement and early redemption 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>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Long-term debt outstanding:
Average amount (millions).......................... $7,528 $7,934 $8,105
Average interest rate.............................. 7.78% 7.83% 8.03%
Notes payable outstanding:
Average amount (millions).......................... $ 51 $ 9 $ 6
Average interest rate.............................. 6.40% 6.48% 5.83%
</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 year 1993 of approximately $269
million or $1.26 per common share. Amortization of deferred carrying charges
was $13 million in 1995 and 1994 and was $2 million in 1993.
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 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, annual
provisions for decommissioning could increase and the estimated cost for
decommissioning could be recorded as a liability rather than as accumulated
depreciation. 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 1994 net income by $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 capitalization
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 years 1995, 1994 and 1993
were 2.79, 1.99 and 1.19, respectively. ComEd's ratios of earnings to fixed
charges and preferred and preference stock dividend requirements for the years
1995, 1994 and 1993 were 2.39, 1.73 and 1.03, 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.
15
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of 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, 1995 and 1994, and the related
statements of consolidated income, retained earnings and cash flows for each of
the three years in the period ended December 31, 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, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Chicago, Illinois
January 26, 1996
16
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED INCOME
The following Statements of Consolidated Income for the years 1995, 1994 and
1993 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, competition, 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>
1995 1994 1993
---------- ---------- -----------
(THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Operating Revenues:
Operating revenues...................... $6,910,045 $6,293,430 $ 6,547,205
Provisions for revenue refunds.......... -- (15,909) (1,286,765)
---------- ---------- -----------
$6,910,045 $6,277,521 $ 5,260,440
---------- ---------- -----------
Operating Expenses and Taxes:
Fuel.................................... $1,087,109 $1,051,793 $ 1,169,178
Purchased power......................... 64,378 59,123 12,303
Operation and maintenance............... 2,175,439 2,094,655 2,039,403
Depreciation............................ 898,035 887,466 862,766
Recovery of regulatory assets........... 15,272 15,453 5,235
Taxes (except income)................... 833,356 787,796 701,913
Income taxes............................ 526,567 326,744 95,251
Investment tax credits deferred--net.... (28,710) (28,757) (29,424)
---------- ---------- -----------
$5,571,446 $5,194,273 $ 4,856,625
---------- ---------- -----------
Operating Income.......................... $1,338,599 $1,083,248 $ 403,815
---------- ---------- -----------
Other Income and (Deductions):
Interest on long-term debt.............. $ (587,438) $ (621,225) $ (651,181)
Interest on notes payable............... (3,280) (557) (334)
Allowance for funds used during
construction--
Borrowed funds........................ 11,137 18,912 16,930
Equity funds.......................... 13,129 22,628 20,618
Income taxes applicable to nonoperating
activities............................. 5,085 27,074 30,705
Deferred carrying charges............... -- -- 438,183
Interest and other costs for 1993
Settlements............................ (61) (21,464) (98,674)
Provision for dividends on--
Preferred and preference stocks of
ComEd................................ (69,961) (64,927) (66,052)
ComEd-obligated mandatorily redeemable
preferred securities of subsidiary
trust................................ (4,428) -- --
Miscellaneous--net...................... (43,249) (88,755) (57,360)
---------- ---------- -----------
$ (679,066) $ (728,314) $ (367,165)
---------- ---------- -----------
Net Income Before Extraordinary Item and
Cumulative Effect of Change in Accounting
for Income Taxes......................... $ 659,533 $ 354,934 $ 36,650
Extraordinary Loss Related to Early
Redemption of Long-Term Debt, Less
Applicable Income Taxes.................. (20,022) -- --
Cumulative Effect of Change in Accounting
for Income Taxes......................... -- -- 9,738
---------- ---------- -----------
Net Income................................ $ 639,511 $ 354,934 $ 46,388
========== ========== ===========
Average Number of Common Shares
Outstanding.............................. 214,691 214,031 213,508
Earnings Per Common Share Before
Extraordinary Item and Cumulative Effect
of Change in Accounting for Income Taxes. $ 3.07 $ 1.66 $ 0.17
Extraordinary Loss Related to Early
Redemption of Long-Term Debt, Less
Applicable Income Taxes.................. (0.09) -- --
Cumulative Effect of Change in Accounting
for Income Taxes......................... -- -- 0.05
---------- ---------- -----------
Earnings Per Common Share................. $ 2.98 $ 1.66 $ 0.22
========== ========== ===========
Cash Dividends Declared Per Common Share.. $ 1.60 $ 1.60 $ 1.60
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
above statements.
17
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
ASSETS 1995 1994
------ ----------- -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Utility Plant:
Plant and equipment, at original cost (includes
construction work in progress of $1,105 million
and $1,043 million, respectively)................. $27,052,778 $26,257,665
Less--Accumulated provision for depreciation....... 10,565,093 9,623,756
----------- -----------
$16,487,685 $16,633,909
Nuclear fuel, at amortized cost.................... 734,667 689,424
----------- -----------
$17,222,352 $17,323,333
----------- -----------
Investments and Other Property:
Nuclear decommissioning funds...................... $ 1,237,527 $ 880,944
Subsidiary companies............................... 113,657 118,051
Other, at cost..................................... 96,937 41,292
----------- -----------
$ 1,448,121 $ 1,040,287
----------- -----------
Current Assets:
Cash............................................... $ 3,575 $ 1,927
Temporary cash investments......................... 47,801 75,008
Other cash investments............................. -- 19,588
Special deposits................................... 3,546 29,603
Receivables--
Customers........................................ 580,254 463,386
Taxes............................................ 82,319 36,083
Other............................................ 83,151 67,389
Provisions for uncollectible accounts............ (11,828) (10,720)
Coal and fuel oil, at average cost................. 129,176 108,872
Materials and supplies, at average cost............ 333,539 384,612
Deferred unrecovered energy costs.................. 46,028 48,697
Deferred income taxes related to current assets and
liabilities--
Loss carryforward................................ -- 10,090
Other............................................ 107,991 110,267
Prepayments and other.............................. 45,272 57,050
----------- -----------
$ 1,450,824 $ 1,401,852
----------- -----------
Deferred Charges and Other Noncurrent Assets:
Regulatory assets.................................. $ 2,467,386 $ 2,604,270
Unrecovered energy costs........................... 588,152 643,438
Other.............................................. 70,153 108,308
----------- -----------
$ 3,125,691 $ 3,356,016
----------- -----------
$23,246,988 $23,121,488
=========== ===========
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
above statements.
18
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
CAPITALIZATION AND LIABILITIES 1995 1994
------------------------------ ----------- -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Capitalization (see accompanying statements):
Common stock equity.................................. $ 5,769,637 $ 5,448,127
Preferred and preference stocks of ComEd--
Without mandatory redemption requirements.......... 508,034 508,147
Subject to mandatory redemption requirements....... 261,475 292,163
ComEd-obligated mandatorily redeemable preferred
securities of subsidiary trust*..................... 200,000 --
Long-term debt....................................... 6,549,335 7,453,206
----------- -----------
$13,288,481 $13,701,643
----------- -----------
Current Liabilities:
Notes payable--
Commercial paper................................... $ 261,000 $ --
Bank loans......................................... 7,150 7,150
Current portion of long-term debt, redeemable
preference stock and capitalized lease obligations
of subsidiary companies............................ 434,563 560,545
Accounts payable..................................... 606,806 351,081
Accrued interest..................................... 171,488 182,622
Accrued taxes........................................ 215,966 206,973
Dividends payable.................................... 102,497 102,647
Customer deposits.................................... 44,521 44,514
Other................................................ 93,841 85,845
----------- -----------
$ 1,937,832 $ 1,541,377
----------- -----------
Deferred Credits and Other Noncurrent Liabilities:
Deferred income taxes................................ $ 4,506,043 $ 4,383,347
Accumulated deferred investment tax credits.......... 689,041 717,752
Accrued spent nuclear fuel disposal fee and related
interest............................................ 624,191 589,757
Obligations under capital leases of subsidiary
companies........................................... 375,524 433,184
Regulatory liabilities............................... 601,002 699,426
Other................................................ 1,224,874 1,055,002
----------- -----------
$ 8,020,675 $ 7,878,468
----------- -----------
Commitments and Contingent Liabilities (Note 21)
$23,246,988 $23,121,488
=========== ===========
</TABLE>
*As described in Note 8 of Notes to Financial Statements, the sole asset of
ComEd Financing I, a subsidiary trust of ComEd, is $206.2 million principal
amount of ComEd's 8.48% subordinated deferrable interest notes due
September 30, 2035.
The accompanying Notes to Financial Statements are an integral part of the
above statements.
19
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED CAPITALIZATION
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1995 1994
----------- -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Common Stock Equity:
Common stock, without par value--
Outstanding--214,947,629 shares and 214,340,067
shares, respectively............................ $ 4,916,438 $ 4,890,931
Preference stock expense of ComEd................. (3,694) (3,775)
Retained earnings................................. 856,893 560,971
----------- -----------
$ 5,769,637 $ 5,448,127
----------- -----------
Preferred and Preference Stocks of ComEd--
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--96,753 shares and 100,323 shares,
respectively.................................. 3,077 3,190
Prior preferred stock, cumulative, $100 par
value per share--
No shares outstanding.......................... -- --
----------- -----------
$ 508,034 $ 508,147
----------- -----------
Subject to Mandatory Redemption Requirements:
Preference stock, cumulative, without par
value--
Outstanding--2,934,990 shares and 3,113,205
shares, respectively.......................... $ 292,163 $ 309,964
Current redemption requirements for preference
stock included
in current liabilities......................... (30,688) (17,801)
----------- -----------
$ 261,475 $ 292,163
----------- -----------
ComEd-Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trust:
Outstanding--8,000,000 and none, respectively..... $ 200,000 $ --
----------- -----------
Long-Term Debt:
First mortgage bonds:
Maturing 1995 through 2000--5 1/4% to 9 3/8%.... $ 1,170,000 $ 1,273,000
Maturing 2001 through 2010--5.30% to 8 3/8%..... 1,465,400 1,765,500
Maturing 2011 through 2020--5.85% to 9 7/8%..... 1,266,000 1,591,000
Maturing 2021 through 2023--7 3/4% to 9 1/8%.... 1,385,000 1,385,000
----------- -----------
$ 5,286,400 $ 6,014,500
Sinking fund debentures, due 1999 through 2011--
2 3/4% to 7 5/8%................................. 110,505 112,593
Pollution control obligations, due 2004 through
2014--4.434% to 9 1/8%........................... 317,200 337,200
Other long-term debt.............................. 1,126,318 1,451,449
Current maturities of long-term debt included in
current liabilities.............................. (235,992) (395,554)
Unamortized net debt discount and premium......... (55,096) (66,982)
----------- -----------
$ 6,549,335 $ 7,453,206
----------- -----------
$13,288,481 $13,701,643
=========== ===========
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
above statements.
20
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED RETAINED EARNINGS
<TABLE>
<CAPTION>
1995 1994 1993
---------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Balance at Beginning of Year...................... $ 560,971 $549,152 $847,186
Add--Net income................................... 639,511 354,934 46,388
---------- -------- --------
$1,200,482 $904,086 $893,574
---------- -------- --------
Deduct--
Cash dividends declared on common stock....... $ 343,619 $342,561 $341,683
Other capital stock transactions--net......... (30) 554 2,739
---------- -------- --------
$ 343,589 $343,115 $344,422
---------- -------- --------
Balance at End of Year............................ $ 856,893 $560,971 $549,152
========== ======== ========
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
above statements.
21
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Cash Flow From Operating Activities:
Net income............................. $ 639,511 $ 354,934 $ 46,388
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization........ 949,413 929,365 911,139
Deferred income taxes and investment
tax credits--net.................... 156,938 126,281 84,500
Extraordinary loss related to early
redemption of long-term debt........ 33,158 -- --
Cumulative effect of change in
accounting for income taxes......... -- -- (9,738)
Equity component of allowance for
funds used during construction...... (13,129) (22,628) (20,618)
Provisions for revenue refunds and
related interest.................... (231) 37,548 1,354,197
Revenue refunds and related interest. 15,135 (1,221,650) (190,723)
Recovery/(deferral) of regulatory
assets/deferred carrying charges--
net................................. 15,272 15,453 (432,948)
Provisions/(payments) for liability
for early retirement and separation
costs--net.......................... 60,713 33,580 (1,816)
Net effect on cash flows of changes
in:
Receivables........................ (177,758) 114,215 (157,405)
Coal and fuel oil.................. (20,304) 2,880 215,382
Materials and supplies............. 51,073 18,102 1,834
Accounts payable adjusted for
nuclear fuel lease principal
payments and early retirement and
separation costs--net............. 458,410 116,688 278,946
Accrued interest and taxes......... (2,141) 70,408 (39,234)
Other changes in certain current
assets and liabilities............ 26,545 (55,843) (6,637)
Other--net........................... 139,830 134,515 109,361
----------- ----------- -----------
$ 2,332,435 $ 653,848 $ 2,142,628
----------- ----------- -----------
Cash Flow From Investing Activities:
Construction expenditures.............. $ (927,327) $ (739,679) $ (842,591)
Nuclear fuel expenditures.............. (289,118) (257,264) (261,370)
Equity component of allowance for
funds used during construction........ 13,129 22,628 20,618
Contributions to nuclear
decommissioning funds................. (132,653) (132,550) (132,550)
Investment in subsidiary companies..... (8) (49) --
Other investments and special
deposits.............................. (1,612) 621,987 (619,349)
----------- ----------- -----------
$(1,337,589) $ (484,927) $(1,835,242)
----------- ----------- -----------
Cash Flow From Financing Activities:
Issuance of securities--
Long-term debt....................... $ 62,000 $ 546,289 $ 1,927,296
Preferred securities of subsidiary
trust............................... 200,000 -- --
Capital stock........................ 25,411 81,037 80,585
Retirement and redemption of
securities--
Long-term debt....................... (1,137,272) (703,930) (1,900,540)
Capital stock........................ (17,822) (17,709) (93,081)
Deposits and securities held for
retirement and redemption of
securities............................ 106 3,191 241,731
Premium paid on early redemption of
long-term debt........................ (25,823) (4,564) (78,395)
Cash dividends paid on common stock.... (343,375) (342,322) (341,505)
Proceeds from sale/leaseback of
nuclear fuel.......................... 193,215 306,649 204,254
Nuclear fuel lease principal payments.. (237,845) (209,689) (245,968)
Increase in short-term borrowings...... 261,000 1,200 350
----------- ----------- -----------
$(1,020,405) $ (339,848) $ (205,273)
----------- ----------- -----------
Increase (Decrease) in Cash and
Temporary Cash Investments............. $ (25,559) $ (170,927) $ 102,113
Cash and Temporary Cash Investments at
Beginning of Year...................... 76,935 247,862 145,749
----------- ----------- -----------
Cash and Temporary Cash Investments at
End of Year............................ $ 51,376 $ 76,935 $ 247,862
=========== =========== ===========
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
above statements.
22
<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. The preferred and preference stocks,
common stock purchase warrants, first mortgage bonds and other debt obligations
of ComEd were unchanged in the restructuring and remain as ComEd's outstanding
securities and obligations.
ComEd, an electric utility, is the principal subsidiary of Unicom. Unicom
Enterprises is an unregulated subsidiary of Unicom and is engaged, through a
subsidiary, Unicom Thermal, in energy service activities. Unicom also has
several other subsidiaries that have been formed to engage in unregulated
activities.
The consolidated financial statements include the accounts of Unicom, ComEd,
the Indiana Company, ComEd Financing I and Unicom's unregulated subsidiaries.
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 or results of operations, are accounted for in
accordance with the equity method of accounting.
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 the Effects of 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.
23
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
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 on
the Consolidated Balance Sheets at December 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1995 1994
---------- ----------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Regulatory assets:
Deferred income taxes (1)............................... $1,689,832 $1,791,395
Deferred carrying charges (2)........................... 409,923 422,966
Nuclear decommissioning costs--Dresden Unit 1 (3)....... 138,058 141,405
Unamortized loss on reacquired debt (4)................. 160,440 176,128
Other................................................... 69,133 72,376
---------- ----------
$2,467,386 $2,604,270
========== ==========
Regulatory liabilities:
Deferred income taxes (1)............................... $ 601,002 $ 650,813
Other................................................... -- 48,613
---------- ----------
$ 601,002 $ 699,426
========== ==========
</TABLE>
- --------
(1) Recorded in compliance with SFAS No. 109.
(2) Amortized over the remaining lives of the Units.
(3) Amortized over the remaining life of Dresden station. See "Depreciation
and Decommissioning" below for additional information.
(4) Amortized over the remaining lives of the long-term debt issued to finance
the reacquisition. See "Loss on Reacquired Debt" below for additional
information.
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
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 such 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 will be adopted 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 eight million as of December 31,
1995, 1994 and 1993. It includes the city of Chicago, an area of about 225
square miles with an estimated population of approximately three million from
which ComEd derived approximately one-third of its ultimate consumer revenues
in 1995. ComEd had approximately 3.4 million electric customers at December
31, 1995.
Depreciation and Decommissioning. ComEd's 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
24
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
their composite service lives. Provisions for depreciation were at average
annual rates of 3.14%, 3.13% and 3.12% of average depreciable utility plant and
equipment for the years 1995, 1994 and 1993, respectively. The annual rate for
nuclear plant and equipment is 2.88%, which excludes separately collected
decommissioning costs. See Note 3 for additional information concerning ComEd's
announcement of customer initiatives which include the acceleration of
depreciation charges on nuclear generating units.
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 NRC
guidelines. ComEd's twelve operating units have estimated remaining service
lives ranging from 10 to 32 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, are estimated to aggregate $3.7 billion in
current-year (1996) dollars excluding a contingency allowance. 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 trusts 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 as well as changes in the assumptions used in
making such estimates.
On January 9, 1995, the ICC issued its Rate Order in the proceedings relating
to ComEd's February 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
unspecifiable costs that are likely to occur after decommissioning begins and
generally range from 20% to 25% of the currently specifiable 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 occur. 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 $3.7 billion in current-year (1996) dollars,
after-tax earnings on the tax-qualified and nontax-qualified decommissioning
funds of 7.30% and 6.26%,
25
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
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 December 31, 1995, the total decommissioning costs included
in the accumulated provision for depreciation were $1,301 million. For ComEd's
retired nuclear unit, Dresden Unit 1, the total estimated liability at December
31, 1995 in current-year (1996) dollars of $257 million was recorded on the
Consolidated Balance Sheets as a noncurrent liability and the unrecovered
portion of the liability of approximately $138 million was recorded as a
regulatory asset.
Under Illinois law, decommissioning cost collections are required to be
deposited into external trusts; 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 December 31, 1995, the past accruals
that are required to be contributed to the external trusts aggregate $182
million. The fair value of funds accumulated in the external trusts at December
31, 1995 was approximately $1,238 million which includes pre-tax unrealized
appreciation of $165 million. The earnings on the external trusts accumulate in
the fund balance and in the accumulated provision for depreciation.
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 11 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, for the years
1995, 1994 and 1993 were $390.7 million, $358.0 million and $385.9 million,
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 for the years 1995, 1994 and 1993 were
9.52%, 9.85% and 10.05%, 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
for the years 1995, 1994 and 1993 were $695.8 million, $729.8 million and
$778.7 million, respectively.
26
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
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 in connection with refinancing 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 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 by the DOE to fund a portion
of the cost for the decontamination and decommissioning of uranium enrichment
facilities owned and previously operated by the DOE. As of December 31, 1995
and 1994, an asset related to the assessments of approximately $179 million and
$191 million, respectively, was recorded, of which the current portion of
approximately $15 million was included in current assets on the Consolidated
Balance Sheets. As of December 31, 1995 and 1994, a corresponding liability of
approximately $152 million and $165 million, respectively, was recorded in
other noncurrent liabilities and approximately $15 million was recorded in
other current liabilities.
At December 31, 1995 and 1994, ComEd had unrecovered fuel costs in the form
of coal reserves of approximately $448 million and $498 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; however, ComEd is not earning a return on the expenditures for
coal reserves. Such fuel costs expected to be recovered within one year
amounting to approximately $24 million and $31 million at December 31, 1995 and
1994, respectively, have been included on the Consolidated Balance Sheets in
current assets as deferred unrecovered energy costs. ComEd expects to fully
recover the costs of the coal reserves by the year 2007. See Note 21 for
additional information concerning ComEd's coal commitments.
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 years 1995, 1994 and
1993 was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Supplemental Cash Flow Information:
Cash paid during the year for:
Interest (net of amount capitalized)........... $604,932 $645,658 $677,682
Income taxes (net of refunds).................. $367,708 $ (4,923) $103,014
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Capital lease obligations incurred by subsidiary
companies....................................... $198,577 $309,716 $215,751
</TABLE>
27
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(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 refunded
approximately $1.26 billion (including revenue taxes), plus interest at five
percent on the unpaid balance, through temporarily reduced rates over a 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 a 1991 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.
Under the Fuel Matters Settlement, effective as of December 2, 1993, ComEd
paid 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 its Rate Order in the proceedings relating
to ComEd's February 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
ComEd began collecting such costs 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
Note 1 under "Depreciation and Decommissioning" for information related to the
level of decommissioning cost collections allowed in the Rate Order and
subsequent rider proceedings. 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. As of December 31, 1995, electric operating revenues of approximately
$319 million (excluding revenue taxes) are subject to refund. Intervenors and
ComEd have filed appeals of the Rate Order with the Illinois Appellate Court.
On December 11, 1995, ComEd announced a series of customer initiatives as
part of its larger ongoing effort to address the need to give all customer
classes the opportunity to benefit from increased competition in the electric
utility business, while retaining the benefits (such as reliability) of current
regulation and ensuring utilities' cost recovery for commitments made under the
obligation to serve customers. The initiatives include a five-year cap on base
electric rates at current levels and various customer service and incentive
pricing programs designed to allow customers more choice and control over the
services they seek and the prices they pay. These initiatives are in addition
to previously implemented special discount contract rate programs for new or
existing industrial customers. ComEd anticipates the initiatives will be fully
implemented in 1997 and will reduce its revenues by approximately $42 million
annually (including the effects of previously implemented initiatives and
before income tax
28
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
effects) primarily through changes in energy utilization and increase its costs
by at least $30 million annually (before income tax effects) through the
acceleration of depreciation charges on its nuclear generating units. ComEd
expects to file a request for ICC approval of the accelerated depreciation
initiatives in the near future. Management expects the financial impact of
these initiatives will be substantially offset by ComEd's cost reduction
efforts and expected growth in its business. ComEd also continues to consider
the possibility of additional accelerated depreciation options.
Under ComEd's initiatives, the five-year base rate cap at current levels
became effective in December 1995 and will extend until January 1, 2001. The
rate cap does not affect ComEd's fuel cost or nuclear decommissioning cost
recovery provisions. ComEd's fuel cost variances will continue to be collected
through its fuel adjustment clause, and such collections will continue to be
subject to annual reconciliation proceedings before the ICC. Likewise, nuclear
decommissioning costs will continue to be collected as described in Note 1
under "Depreciation and Decommissioning."
(4) AUTHORIZED SHARES AND VOTING RIGHTS OF CAPITAL STOCK
At December 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 December 31, 1995 were: preference stock--23,244,990 shares; $1.425
convertible preferred stock--96,753 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 December 31, 1995, shares of Unicom common stock were reserved for the
following purposes:
<TABLE>
<S> <C>
Long-Term Incentive Plan........................................ 3,816,918
Employee Stock Purchase Plan.................................... 900,083
Employee Savings and Investment Plan............................ 273,003
Exchange for ComEd common stock not held by Unicom.............. 135,646
---------
5,125,650
=========
</TABLE>
Common stock for the years 1995, 1994 and 1993 was issued as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Shares of Common Stock Issued:
Long-Term Incentive Plan............................. 183,082 -- --
Employee Stock Purchase Plan......................... 217,080 305,205 268,594
Employee Savings and Investment Plan................. 207,400 85,400 153,400
Conversion of $1.425 convertible preferred stock..... -- 185,041 22,375
Conversion of warrants............................... -- 13,274 1,374
------- ------- -------
607,562 588,920 445,743
======= ======= =======
<CAPTION>
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Amount of Common Stock Issued.......................... $15,446 $14,781 $12,211
======= ======= =======
</TABLE>
At December 31, 1995 and 1994, 82,742 and 83,751 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.
29
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(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 1995 or 1993. During
1994, 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
December 31, 1995 are summarized as follows:
<TABLE>
<CAPTION>
INVOLUNTARY
SHARES AGGREGATE REDEMPTION LIQUIDATION
SERIES OUTSTANDING STATED VALUE PRICE(1) PRICE(1)
------ ----------- ------------ ---------- -----------
(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>
--------
(1) 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.
(7) COMED PREFERENCE STOCK SUBJECT TO MANDATORY REDEMPTION REQUIREMENTS
During 1995 and 1994, no shares of ComEd preference stock subject to
mandatory redemption requirements were issued. During 1993, 700,000 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 December 31, 1995 are summarized as follows:
<TABLE>
<CAPTION>
SHARES AGGREGATE
SERIES OUTSTANDING STATED VALUE OPTIONAL REDEMPTION PRICE(1)
- -------------- ----------- ------------ --------------------------------------------------
(THOUSANDS
OF DOLLARS)
<S> <C> <C> <C>
$8.20 249,990 $ 24,999 $103 through October 31, 1997; and $101 thereafter
$8.40 Series B 360,000 35,758 $101
$8.85 300,000 30,000 $103 through July 31, 1998; and $101 thereafter
$9.25 675,000 67,500 $103 through July 31, 1999; and $101 thereafter
$9.00 650,000 64,431 Non-callable
$6.875 700,000 69,475 Non-callable
--------- --------
2,934,990 $292,163
========= ========
</TABLE>
- --------
(1) Per share plus accrued and unpaid dividends, if any.
30
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
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
ANNUAL SINKING FUND FUND INVOLUNTARY
SERIES REQUIREMENT PRICE(1) LIQUIDATION PRICE(1)
-------------- ------------------- ------- -------------------
<S> <C> <C> <C>
$8.20 35,715 shares $100 $100.00
$8.40 Series B 30,000 shares(2) $100 $ 99.326
$8.85 37,500 shares $100 $100.00
$9.25 75,000 shares $100 $100.00
$9.00 130,000 shares(2) $100 $ 99.125
$6.875 (3) $100 $ 99.25
</TABLE>
--------
(1) Per share plus accrued and unpaid dividends, if any.
(2) 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.
(3) All shares are required to be redeemed on May 1, 2000.
Annual remaining sinking fund requirements through 2000 on ComEd preference
stock outstanding at December 31, 1995 will aggregate $30,822,000 in each of
1996, 1997, 1998 and 1999, and $100,822,000 in 2000. During 1995, 1994 and
1993, 178,215 shares, 177,085 shares and 1,835,155 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.
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) COMED-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF COMED
FINANCING I
In September 1995, ComEd Financing I (Trust), a wholly-owned subsidiary trust
of ComEd, issued 8,000,000 of its 8.48% ComEd-obligated mandatorily redeemable
preferred securities. The sole asset of the Trust is $206.2 million principal
amount of ComEd's 8.48% subordinated deferrable interest notes due September
30, 2035. There is a full and unconditional guarantee by ComEd of the Trust's
obligations
31
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
under the securities issued by the Trust. However, ComEd's obligations are
subordinate and junior in right of payment to certain other indebtedness of
ComEd. ComEd has the right to defer payments of interest on the subordinated
deferrable interest notes by extending the interest payment period, at any
time, for up to 20 consecutive quarters. If interest payments on the
subordinated deferrable interest notes are so deferred, distributions on the
preferred securities will also be deferred. During any deferral, distributions
will continue to accrue with interest thereon. In addition, during any such
deferral, ComEd may not declare or pay any dividend or other distribution on,
or redeem or purchase, any of its capital stock.
The subordinated deferrable interest notes are redeemable by ComEd (in whole
or in part) from time to time, on or after September 30, 2000, or at any time
in the event of certain income tax circumstances. If the subordinated
deferrable interest notes are redeemed, the Trust must redeem preferred
securities having an aggregate liquidation amount equal to the aggregate
principal amount of the subordinated deferrable interest notes so redeemed. In
the event of the dissolution, winding up or termination of the Trust, the
holders of the preferred securities will be entitled to receive, for each
preferred security, a liquidation amount of $25 plus accrued and unpaid
distributions thereon (including interest thereon) to the date of payment,
unless in connection with the dissolution, the subordinated deferrable interest
notes are distributed to the holders of the preferred securities.
(9) LONG-TERM DEBT
Sinking fund requirements and scheduled maturities remaining through 2000 for
ComEd's first mortgage bonds, sinking fund debentures and other long-term debt
outstanding at December 31, 1995, after deducting sinking fund debentures
reacquired for satisfaction of future sinking fund requirements, are summarized
as follows: 1996--$234,893,000; 1997--$689,168,000; 1998--$350,017,000; 1999--
$152,445,000; and 2000--$464,446,000. Scheduled payments through 2000 for
Unicom's loans payable are as follows: 1996--$1,099,000; 1997--$1,972,000;
1998--$2,465,000; 1999--$2,575,000; and 2000--$2,656,000. Unicom Enterprises'
note payable to bank of $42,000,000 will mature in 1998.
32
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
At December 31, 1995, ComEd's outstanding first mortgage bonds maturing
through 2000 were as follows:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
SERIES ----------------------
(THOUSANDS OF DOLLARS)
<S> <C>
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
9 3/8% due February 15, 2000....................... 125,000
6 1/2% due April 15, 2000.......................... 230,000
6 3/8% due July 15, 2000........................... 100,000
----------
$1,170,000
==========
</TABLE>
Other long-term debt outstanding at December 31, 1995 is summarized as
follows:
<TABLE>
<CAPTION>
PRINCIPAL
DEBT SECURITY AMOUNT INTEREST RATE
-------------------------------- ---------- -------------------------------------------------------
(THOUSANDS
OF
DOLLARS)
<S> <C> <C>
Unicom--
Loans Payable:
Loan due January 1, 2003 $ 10,000 Interest rate of 8.31%
Loan due January 1, 2004 10,000 Interest rate of 8.44%
----------
$ 20,000
----------
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 Note, Series 2N
due July 1, 1996 10,000 Interest rate of 9.85%
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 February 15, 1997 150,000 Interest rate of 7.00%
Notes due July 15, 1997 100,000 Interest rate of 6.50%
Notes due October 15, 2005 235,000 Interest rate of 6.40%
----------
$ 913,750
----------
Long-Term Note Payable to
Bank:
Note due June 1, 1997 $ 150,000 Prevailing interest rate of 6.375% at December 31, 1995
----------
Purchase Contract Obligations:
Woodstock due January 2, 1997 $ 95 Interest rate of 4.50%
Hinsdale due April 30, 2005 473 Interest rate of 3.00%
----------
$ 568
----------
Total ComEd $1,064,318
----------
Unicom Enterprises--
Note Payable to Bank:
Note due November 22, 1998 $ 42,000 Prevailing interest rate of 6.831% at December 31, 1995
----------
Total Unicom $1,126,318
==========
</TABLE>
Long-term debt maturing within one year has been included in current
liabilities.
33
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
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.
ComEd recorded an extraordinary loss of $33 million in the fourth quarter of
1995 related to the early redemption of $645 million of long-term debt which
reduced net income by $20 million (after reflecting income tax effects of $13
million) or $0.09 per common share.
(10) 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 December 31, 1995. Of
that amount, $915 million (of which $175 million expires on September 30, 1996,
$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 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
1998 of which $158 million was unused as of December 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.
(11) 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. As provided for under the contract, 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.
34
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(12) 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.
Investments. Securities included in the 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 and based on published market data, as of December 31, 1995 and 1994
was as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
-------------------------------- --------------------------------
UNREALIZED
UNREALIZED GAINS
COST BASIS GAINS FAIR VALUE COST BASIS (LOSSES) FAIR VALUE
---------- ---------- ---------- ---------- ---------- ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Short-term investments.. $ 40,575 $ 283 $ 40,858 $ 65,203 $ 106 $ 65,309
U.S. Government and
Agency issues.......... 156,745 17,636 174,381 94,450 (562) 93,888
Municipal bonds......... 496,707 34,970 531,677 478,074 (7,301) 470,773
Common stock............ 348,866 107,280 456,146 220,395 9,069 229,464
Other................... 29,757 4,708 34,465 18,788 2,722 21,510
---------- -------- ---------- -------- ------- --------
$1,072,650 $164,877 $1,237,527 $876,910 $ 4,034 $880,944
========== ======== ========== ======== ======= ========
</TABLE>
At December 31, 1995, the debt securities held by the nuclear decommissioning
funds had the following maturities:
<TABLE>
<CAPTION>
COST BASIS FAIR VALUE
---------- ----------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Within 1 year....................................... $ 40,575 $ 40,858
1 through 5 years................................... 73,996 76,978
5 through 10 years.................................. 229,132 247,521
Over 10 years....................................... 366,667 398,510
</TABLE>
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 years 1995, 1994 and 1993 were as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
----------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Gross proceeds from sales of securities..... $ 2,598,889 $ 811,368 $ 388,684
Less cost based on specific identification.. (2,581,714) (811,997) (377,734)
----------- --------- ---------
Realized gains (losses) on sales of securi-
ties....................................... $ 17,175 $ (629) $ 10,950
Other realized fund earnings net of ex-
penses..................................... 46,294 38,148 29,878
----------- --------- ---------
Total realized net earnings of the funds.... $ 63,469 $ 37,519 $ 40,828
Unrealized gains (losses)................... 160,843 (57,948) 30,969
----------- --------- ---------
Total net earnings (losses) of the funds... $ 224,312 $ (20,429) $ 71,797
=========== ========= =========
</TABLE>
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.
35
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
Capitalization. The estimated fair values of ComEd preferred and preference
stocks, ComEd-obligated mandatorily redeemable preferred securities of the
Trust and long-term debt were obtained from an independent consultant. The
estimated fair values, which include the current portions of redeemable
preference stock and long-term debt but exclude accrued interest and dividends,
as of December 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
-------------------------------- ---------------------------------
CARRYING UNREALIZED CARRYING UNREALIZED
VALUE LOSSES FAIR VALUE VALUE (GAINS) FAIR VALUE
---------- ---------- ---------- ---------- ---------- ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
ComEd preferred and
preference stocks.... $ 800,197 $ 14,769 $ 814,966 $ 818,111 $ (64,443) $ 753,668
ComEd-obligated
mandatorily
redeemable preferred
securities of the
Trust................ $ 200,000 $ 6,000 $ 206,000 $ -- $ -- $ --
Long-term debt of
subsidiary companies. $6,572,853 $470,175 $7,043,028 $7,448,236 $(450,429) $6,997,807
</TABLE>
Long-term notes payable, which are not included in the above table, amounted
to $212 million and $400 million at December 31, 1995 and 1994, respectively.
Such notes, for which interest is paid at fixed and 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
commercial paper and 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 portion 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, 1995 and 1994; therefore, the carrying value is equal to the fair
value.
(13) 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. During
1995, these plans were amended to more closely base retirement benefits on
final pay. 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. Actuarial valuations were determined as of January 1, 1995
and 1994.
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. 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
charge to income was approximately $20.5 million after reflecting income tax
effects as a result of the program.
36
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
The funded status of these plans at December 31, 1995 and 1994 was as
follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1995 1994
----------- -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Actuarial present value of accumulated pension plan
benefits:
Vested benefit obligation......................... $(2,839,000) $(2,105,000)
Nonvested benefit obligation...................... (251,000) (359,000)
----------- -----------
Accumulated benefit obligation.................... $(3,090,000) $(2,464,000)
Effect of projected future compensation levels.... (304,000) (485,000)
----------- -----------
Projected benefit obligation...................... $(3,394,000) $(2,949,000)
Fair value of plan assets, invested primarily in
U.S. Government, government-sponsored corporation
and agency securities, fixed income funds, regis-
tered investment companies, equity index funds and
other equity funds ................................ 3,060,000 2,547,000
----------- -----------
Plan assets less than projected benefit obligation.. $ (334,000) $ (402,000)
Unrecognized prior service cost..................... (73,000) 22,000
Unrecognized transition asset....................... (142,000) (155,000)
Unrecognized net loss............................... 204,000 239,000
----------- -----------
Accrued pension liability......................... $ (345,000) $ (296,000)
=========== ===========
</TABLE>
The assumed discount rates were 7.5% and 8.0% at December 31, 1995 and 1994,
respectively, 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 the years 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Annual discount rate.......................................... 8.00% 7.50% 7.50%
Annual rate of increase in future compensation levels......... 4.00% 4.00% 4.00%
Annual long-term rate of return on plan assets................ 9.75% 9.50% 9.50%
</TABLE>
The components of pension costs, portions of which were recorded as
components of construction costs, for the years 1995, 1994 and 1993 were as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Service cost................................. $ 87,000 $ 97,000 $ 96,000
Interest cost on projected benefit
obligation.................................. 225,000 213,000 204,000
Actual loss (return) on plan assets.......... (681,000) 37,000 (310,000)
Early retirement program cost................ -- 34,000 --
Net amortization and deferral................ 418,000 (302,000) 61,000
--------- --------- ---------
$ 49,000 $ 79,000 $ 51,000
========= ========= =========
</TABLE>
In addition, an employee savings and investment plan is available to certain
eligible employees of ComEd, Cotter, Unicom Thermal and the Indiana Company.
During the fourth quarter of 1995, the employee savings and investment plan was
amended for employees of ComEd, Cotter, Unicom Thermal and the management
employees of the Indiana Company. Each participating employee affected by the
amendments may contribute up to 20% of such employee's base pay and the
participating companies match such contribution equal to 100% of up to the
first 2% of contributed base salary, 70% of the second 3% of contributed base
salary and 25% of the last 1% of contributed base salary. During 1995, 1994 and
1993, the participating companies contributed $24,661,000, $22,756,000 and
$21,948,000, respectively.
37
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(14) 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. The employees become eligible for
postretirement health care benefits when they reach age 55 with 10 years of
service. The liability for postretirement health care benefits is funded
through trust funds based upon actuarially determined contributions that take
into account the amount deductible for income tax purposes. The postretirement
health care plan for ComEd and the Indiana Company was amended, effective April
1, 1995. Prior to that date, the postretirement health care plan was fully
funded by the companies. With respect to employees who retire on or after April
1, 1995, the plan is contributory, funded jointly by the companies and the
participating employees. Actuarial valuations were determined as of January 1,
1995 and 1994.
Postretirement health care costs in 1995 included $25 million related to a
voluntary separation offer for union employees who accepted and left ComEd's
employ by year-end 1995 combined with separation plans offered to selected
groups of non-union employees.
The funded status of the plan at December 31, 1995 and 1994 was as follows:
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1995 1994
--------- -----------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Actuarial present value of accumulated postretirement
health care obligation:
Retirees.............................................. $(457,000) $ (467,000)
Active fully eligible participants.................... (25,000) (34,000)
Other participants.................................... (418,000) (581,000)
--------- -----------
Accumulated benefit obligation........................ $(900,000) $(1,082,000)
Fair value of plan assets, invested primarily in S&P
500 common stocks and U.S. Government,
government agency, municipal and listed corporate ob-
ligations............................................. 603,000 503,000
--------- -----------
Plan assets less than accumulated postretirement health
care obligation....................................... $(297,000) $ (579,000)
Unrecognized transition obligation..................... 374,000 531,000
Unrecognized net gain.................................. (285,000) (70,000)
--------- -----------
Accrued liability for postretirement health care....... $(208,000) $ (118,000)
========= ===========
</TABLE>
Different health care cost trends are used for pre-Medicare and post-Medicare
expenses. Pre-Medicare trend rates were 14% for 1994 and 13.5% for the first
three months of 1995, grading down in 0.5% annual increments to 5%. Post-
Medicare trend rates were 11.5% for 1994 and 11% for the first three months of
1995, grading down in 0.5% annual increments to 5%. For the last nine months of
1995, pre-Medicare trend rates were 10%, grading down in 0.5% annual increments
to 5%. Post-Medicare trend rates were 8% for the last nine months of 1995,
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 $161 million and increase the aggregate of the service and
interest cost components of plan costs by approximately $20 million for the
year 1995. The assumed discount rates were 7.5% and 8.0% at December 31, 1995
and 1994, respectively. The annual long-term rate of return on plan assets was
9.32% and 9.04% for the years 1995 and 1994, respectively, after including
income tax effects.
38
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
The components of postretirement health care costs, portions of which were
recorded as components of construction costs, for the years 1995, 1994 and 1993
were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Service cost............................... $ 31,000 $ 47,000 $ 45,000
Interest cost on accumulated benefit obli-
gation.................................... 69,000 81,000 74,000
Actual loss (return) on plan assets........ (137,000) 9,000 (41,000)
Amortization of transition obligation...... 23,000 29,000 29,000
Severance plan cost........................ 25,000 -- --
Other...................................... 83,000 (49,000) 9,000
-------- -------- --------
$ 94,000 $117,000 $116,000
======== ======== ========
</TABLE>
(15) SEPARATION PLAN COSTS
Operation and maintenance expenses included $97 million for the year 1995
related to a voluntary separation offer for union employees who accepted and
left ComEd's employ by year-end 1995 combined with separation plans offered to
selected groups of non-union employees. These employee separation plans reduced
net income by $59 million or $0.27 per common share for the year 1995.
(16) INCOME TAXES
The components of the net deferred income tax liability at December 31, 1995
and 1994 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1995 1994
---------- ----------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Deferred income tax liabilities:
Accelerated cost recovery and liberalized deprecia-
tion, net of removal costs........................... $3,379,987 $3,266,930
Overheads capitalized................................. 252,910 266,159
Repair allowance...................................... 219,585 210,655
Regulatory assets recoverable through future rates.... 1,689,832 1,791,395
Deferred income tax assets:
Postretirement benefits............................... (235,360) (177,991)
Unbilled revenues..................................... (116,274) (90,396)
Loss carryforward..................................... -- (10,090)
Alternative minimum tax............................... (145,019) (283,331)
Unamortized investment tax credits to be settled
through future rates................................. (452,210) (471,058)
Other regulatory liabilities to be settled through fu-
ture rates........................................... (148,792) (179,755)
Other--net............................................ (46,607) (59,528)
---------- ----------
Net deferred income tax liability...................... $4,398,052 $4,262,990
========== ==========
</TABLE>
The $135 million increase in the net deferred income tax liability from
December 31, 1994 to December 31, 1995 is comprised of $187 million of deferred
income tax expense and a $52 million decrease in regulatory assets net of
regulatory liabilities pertaining to income taxes for the year. 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.
39
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
The components of net income tax expense charged to continuing operations for
the years 1995, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Operating income:
Current income taxes........................... $339,920 $158,342 $(27,553)
Deferred income taxes.......................... 186,647 168,402 122,804
Investment tax credits deferred--net........... (28,710) (28,757) (29,424)
Other (income) and deductions................... (7,685) (22,498) (31,076)
-------- -------- --------
Net income taxes charged to continuing
operations..................................... $490,172 $275,489 $ 34,751
======== ======== ========
</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 years 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
---------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Net income before extraordinary item and
cumulative effect of change in accounting for
income taxes.................................. $ 659,533 $354,934 $ 36,650
Net income taxes charged to continuing
operations.................................... 490,172 275,489 34,751
Provision for dividends on ComEd preferred and
preference stocks............................. 69,961 64,927 66,052
---------- -------- --------
Pre-tax income before provision for dividends.. $1,219,666 $695,350 $137,453
========== ======== ========
Effective income tax rate...................... 40.2% 39.6% 25.3%
========== ======== ========
</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 years 1995, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Federal income taxes computed at statutory rate.. $426,883 $243,373 $ 48,109
Equity component of AFUDC which was excluded from
taxable income.................................. (4,595) (7,920) (7,216)
Amortization of investment tax credits........... (28,710) (28,810) (29,421)
State income taxes, net of federal income taxes.. 65,972 40,140 13,138
Differences between book and tax accounting,
primarily property-related deductions........... 27,534 26,505 2,063
Other--net....................................... 3,088 2,201 8,078
-------- -------- --------
Net income taxes charged to continuing
operations...................................... $490,172 $275,489 $ 34,751
======== ======== ========
</TABLE>
Current federal income tax liabilities which were recorded prior to 1995
included 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 were carried forward and a portion was applied as a
credit against the 1995 regular federal income tax liability. The excess
amounts of AMT can be carried forward indefinitely as a credit against future
years' regular federal income tax liabilities.
40
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(17) TAXES, EXCEPT INCOME TAXES
Provisions for taxes, except income taxes, for the years 1995, 1994 and 1993
were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Illinois public utility revenue............... $229,546 $211,263 $199,498
Illinois invested capital..................... 106,830 109,373 111,126
Municipal utility gross receipts.............. 167,758 145,011 107,232
Real estate................................... 176,454 180,221 162,560
Municipal compensation........................ 78,602 72,647 56,878
Other--net.................................... 74,166 69,281 64,619
-------- -------- --------
$833,356 $787,796 $701,913
======== ======== ========
</TABLE>
(18) LEASE OBLIGATIONS OF SUBSIDIARY COMPANIES
Under its nuclear fuel lease 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. With respect
to the commercial paper/bank borrowing portion, $20 million will expire on
November 23, 1996, $10 million will expire on November 23, 1997 and $270
million will expire on November 23, 1998. ComEd has asked for an extension of
the expiration dates. At December 31, 1995, ComEd's obligation to the lessor
for leased nuclear fuel amounted to approximately $577 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 December 31, 1995
for capital leases are estimated to aggregate $659 million, including $231
million in 1996, $171 million in 1997, $112 million in 1998, $68 million in
1999, $37 million in 2000 and $40 million in 2001-2043. The estimated interest
component of such rental payments aggregates $84 million. The estimated
portions of obligations due within one year under capital leases are included
in current liabilities and approximated $168 million and $147 million at
December 31, 1995 and 1994, respectively.
Future minimum rental payments at December 31, 1995 for operating leases are
estimated to aggregate $157 million, including $9 million in 1996, $10 million
in 1997, $10 million in 1998, $10 million in 1999, $9 million in 2000 and $109
million in 2001-2024.
(19) 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 1994 net income by $34 million or $0.16
per common share.
41
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(20) 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 December 31, 1995, for its share of ownership in
the station, ComEd had an investment of $558 million in production and
transmission plant in service (before reduction of $185 million for the related
accumulated provision for depreciation) and $75 million in construction work in
progress.
(21) COMMITMENTS AND CONTINGENT LIABILITIES
Purchase commitments, principally related to construction and nuclear fuel,
approximated $1,158 million at December 31, 1995, comprised of approximately
$1,137 million for ComEd and the Indiana Company and approximately $21 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 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 $27 million and $108 million
in the event losses exceed accumulated reserve funds under the replacement
power and property damage coverages, respectively.
Under certain circumstances, member companies are eligible to continue to
receive distributions from accumulated reserve funds, if declared by NML or
NEIL, after insurance coverage has terminated on a nuclear generating station.
ComEd expects that any such post-coverage distributions would begin about the
time a station is decommissioned and continue for an undetermined period.
ComEd's twelve operating nuclear units have estimated remaining service lives
ranging from 10 to 32 years. Considering the circumstances related to the
declaration of such distributions and the extended period over which such
distributions may be declared, ComEd does not expect that any such
distributions would have a material impact on its financial position or results
of operations.
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
42
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
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 $36 million in the event losses exceed
accumulated reserve funds.
Shareholder derivative lawsuits were filed in 1992 and 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 and that dismissal was affirmed by the Illinois Appellate
Court. One of the plaintiffs has filed a petition for leave to appeal in the
Illinois Supreme Court.
During 1989 and 1991, actions were brought in federal and state courts in
Colorado against ComEd and 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
(1996) 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 was recorded as of December 31, 1995 and
1994, 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,
1995 and 1994, a reserve of $8 million was recorded representing ComEd's
estimate of the liability associated with cleanup costs of remediation sites
other than former MGP sites. Unicom presently estimates 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 Unicom's financial position or results of operations. These cost estimates
are based on currently available information regarding the responsible
43
<PAGE>
UNICOM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONCLUDED
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.
(22) QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
AVERAGE EARNINGS
NUMBER OF (LOSS)
NET COMMON PER
OPERATING OPERATING INCOME SHARES COMMON
THREE MONTHS ENDED REVENUES INCOME (LOSS) OUTSTANDING SHARE
- ------------------ ---------- --------- -------- ----------- --------
(THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
March 31, 1994.............. $1,524,750 $213,014 $ 36,020 213,780 $ 0.17
June 30, 1994............... $1,432,166 $184,918 $(23,339) 213,923 $(0.11)
September 30, 1994.......... $1,855,276 $438,994 $263,661 214,138 $ 1.23
December 31, 1994........... $1,465,329 $246,322 $ 78,592 214,283 $ 0.37
March 31, 1995.............. $1,578,136 $260,526 $ 88,601 214,429 $ 0.41
June 30, 1995............... $1,559,521 $276,673 $108,866 214,677 $ 0.51
September 30, 1995.......... $2,190,862 $582,006 $407,433 214,769 $ 1.90
December 31, 1995........... $1,581,526 $219,394 $ 34,611 214,889 $ 0.16
</TABLE>
44
<PAGE>
Unicom Corporation
One First National Plaza
P.O. Box A-3005
Chicago, Illinois 60690-3005
[Unicom Logo]
February 9, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Unicom Corporation
Commission File No. 1-11375
Ladies and Gentlemen:
Submitted for filing under the Securities Exchange Act of 1934, as amended, is
one copy of a Form 8-K Current Report relating to Unicom Corporation.
As stated in the Form 8-K Current Report, its purpose is to file certain
financial information regarding Unicom Corporation and its subsidiaries as of
and for the year ended December 31, 1995.
Sincerely,
UNICOM CORPORATION
By: David A. Scholz
----------------------------------
David A. Scholz
Secretary
Enclosures
<PAGE>
Exhibit (99)-2
Commonwealth Edison Company
Form 10-K File No. 1-1839
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of
earliest event reported): January 26, 1996
Commonwealth Edison Company
(Exact name of registrant as specified in its charter)
Illinois 1-1839 36-0938600
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
37th Floor, 10 South Dearborn Street,
Post Office Box 767, Chicago, Illinois 60690-0767
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (312) 394-4321
<PAGE>
The purpose of this Current Report is to file certain financial information
regarding the Registrant (Commonwealth Edison Company) and its subsidiaries.
Such financial information is set forth in the exhibits to this Current Report.
Item 5. Other Events
- ------- ------------
Exhibits
--------
(23) Consent of Independent Public Accountants
(27) Financial Data Schedule of Commonwealth Edison Company
(99) Commonwealth Edison Company and Subsidiary Companies - Certain
Financial Information as of and for the Year Ended December 31, 1995:
--Summary of Selected Consolidated Financial Data
--Price Range and Cash Dividends Paid Per Share of Common Stock
--1995 Consolidated Revenues and Sales
--Management's Discussion and Analysis of Financial Condition and
Results of Operations
--Report of Independent Public Accountants
--Statements of Consolidated Income
--Consolidated Balance Sheets
--Statements of Consolidated Capitalization
--Statements of Consolidated Retained Earnings
--Statements of Consolidated Premium on Common Stock and Other
Paid-In Capital
--Statements of Consolidated Cash Flows
--Notes to Financial Statements
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Commonwealth Edison Company
(Registrant)
David A. Scholz
By: ______________________
David A. Scholz
Secretary
Date: February 9, 1996
-3-
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
(23) Consent of Independent Public Accountants
(27) Financial Data Schedule of Commonwealth Edison Company*
(99) Commonwealth Edison Company and Subsidiary Companies -
Certain Financial Information as of and for the Year Ended
December 31, 1995:
--Summary of Selected Consolidated Financial Data
--Price Range and Cash Dividends Paid Per Share of Common Stock
--1995 Consolidated Revenues and Sales
--Management's Discussion and Analysis of Financial Condition
and Results of Operations
--Report of Independent Public Accountants
--Statements of Consolidated Income
--Consolidated Balance Sheets
--Statements of Consolidated Capitalization
--Statements of Consolidated Retained Earnings
--Statements of Consolidated Premium on Common Stock and
Other Paid-In Capital
--Statements of Consolidated Cash Flows
--Notes to Financial Statements
*Previously filed and incorporated by reference to Commonwealth Edison
Company's Form 8-K Current Report dated January 26, 1996.
<PAGE>
Exhibit (23)
Commonwealth Edison Company
Form 8-K File No. 1-1839
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation
by reference of our report dated January 26, 1996, on Commonwealth Edison
Company and subsidiary companies' consolidated financial statements as of and
for the year ended December 31, 1995, included as an Exhibit to this Form 8-K
Current Report of Commonwealth Edison Company dated January 26, 1996, 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); (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); and (3) prospectus
dated September 19, 1995, constituting part of Amendment No. 1 to Form S-3
Registration Statement File No. 33-61343, as amended (relating to Company-
Obligated Mandatorily Redeemable Preferred Securities of ComEd Financing I). 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,
1995, 1994 and 1993 appearing in Exhibit 99 of this Form 8-K.
ARTHUR ANDERSEN LLP
Chicago, Illinois
January 26, 1996
<PAGE>
Exhibit (99)
Commonwealth Edison
Company
Form 8-K File No. 1-1839
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
INDEX
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Definitions.............................................................. 2
Summary of Selected Consolidated Financial Data.......................... 3
Price Range and Cash Dividends Paid Per Share of Common Stock............ 3
1995 Consolidated Revenues and Sales..................................... 3
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 4-14
Report of Independent Public Accountants................................. 15
Consolidated Financial Statements--
Statements of Consolidated Income for the years 1995, 1994 and 1993.... 16
Consolidated Balance Sheets--December 31, 1995 and 1994................ 17-18
Statements of Consolidated Capitalization--December 31, 1995 and 1994.. 19
Statements of Consolidated Retained Earnings for the years 1995, 1994
and 1993.............................................................. 20
Statements of Consolidated Premium on Common Stock and Other Paid-In
Capital for the years 1995, 1994 and 1993............................. 20
Statements of Consolidated Cash Flows for the years 1995, 1994 and
1993.................................................................. 21
Notes to Financial Statements.......................................... 22-41
</TABLE>
1
<PAGE>
DEFINITIONS
The following terms are used in this document with the following meanings:
<TABLE>
<CAPTION>
TERM MEANING
- ----------------------- ------------------------------------------------------------------
<S> <C>
AFUDC Allowance for funds used during construction
AMT Alternative minimum tax
CERCLA Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended
Circuit Court Circuit Court of Cook County, Illinois
ComEd Commonwealth Edison Company
Cotter Cotter Corporation, which is a wholly-owned subsidiary of ComEd.
DOE U.S. Department of Energy
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 prudence of
ComEd's western coal costs for the period from 1989 through 1992.
ICC Illinois Commerce Commission
Indiana Company Commonwealth Edison Company of Indiana, Inc., which is a wholly-
owned subsidiary of ComEd.
MAIN Mid-America Interconnected Network
MGP Manufactured gas plant
NEIL Nuclear Electric Insurance Limited
NML Nuclear Mutual Limited
NOPR Notice of Proposed Rulemaking issued by the FERC
NRC Nuclear Regulatory Commission
Rate Matters Settlement A settlement concerning the proceedings relating to ComEd's 1985
and 1991 ICC rate orders (which orders related to, among other
things, the recovery of costs associated with ComEd's four most
recently completed nuclear generating units), the proceedings
related 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 related to the appropriate interest
rate and rate design to be applied to a refund made by ComEd
during 1990 related 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 income 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 in January 1993, as subsequently modified
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting Standards
Trust ComEd Financing I, which is a wholly-owned subsidiary trust of
ComEd.
Unicom Unicom Corporation
Unicom Enterprises Unicom Enterprises Inc., which is a wholly-owned subsidiary of
Unicom.
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
</TABLE>
2
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
(MILLIONS OF DOLLARS EXCEPT PER SHARE
DATA)
<S> <C> <C> <C> <C> <C>
Electric operating revenues... $ 6,910 $ 6,278 $ 5,260 $ 6,026 $ 6,276
Net income.................... $ 717(1) $ 424 $ 112(3) $ 514 $ 95
Earnings per common share..... $ 3.02(1) $ 1.68 $ 0.22(3) $ 2.08 $ 0.08
Cash dividends declared per
common share................. $ 1.60 $ 1.60(2) $ 1.60 $ 2.30 $ 3.00
Total assets (at end of year). $23,119 $23,076 $24,380 $20,993 $17,365
Long-term obligations at end
of year excluding current
portion:
Long-term debt, preference
stock and preferred
securities subject to
mandatory redemption
requirements................ $ 6,950 $ 7,745 $ 7,861 $ 7,913 $ 7,081
Accrued spent nuclear fuel
disposal fee and related
interest.................... $ 624 $ 590 $ 567 $ 549 $ 530
Capital lease obligations.... $ 374 $ 431 $ 321 $ 347 $ 396
Other long-term obligations.. $ 1,819 $ 1,754 $ 1,718 $ 666 $ 341
</TABLE>
- --------
(1) Includes an extraordinary loss related to the early redemption of long-term
debt of $20 million or $0.09 per common share.
(2) Excludes a special dividend (consisting of $40 million cash and the common
stock of Unicom Enterprises Inc.) effected on September 1, 1994 in
connection with the holding company corporate restructuring.
(3) Includes the cumulative effect of change in accounting for income taxes of
$10 million or $0.05 per common share.
PRICE RANGE* AND CASH DIVIDENDS PAID PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
1995 (BY QUARTERS) 1994 (BY QUARTERS)
------------------------- ---------------------------
FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
------ ----- ------ ----- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Price range:
High.................... -- -- -- -- -- -- 26 28 3/4
Low..................... -- -- -- -- -- -- 22 25 1/8
Cash dividends paid...... 40c 40c 40c 40c 40c 40c** 40c 40c
</TABLE>
* As reported as NYSE Composite Transactions.
**Excludes a special dividend (consisting of $40 million cash and the common
stock of Unicom Enterprises Inc.) effected on September 1, 1994 in connection
with the holding company corporate restructuring.
- --------
Prior to the corporate restructuring on September 1, 1994, ComEd's common
stock was traded on the New York, Chicago and Pacific stock exchanges, with the
ticker symbol CWE. See Note 1 of Notes to Financial Statements for additional
information.
1995 CONSOLIDATED REVENUES AND SALES
<TABLE>
<CAPTION>
ELECTRIC
OPERATING INCREASE KILOWATTHOUR INCREASE/ INCREASE/
REVENUES OVER SALES (DECREASE) (DECREASE)
(THOUSANDS) 1994 (MILLIONS) OVER 1994 CUSTOMERS OVER 1994
----------- -------- ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Residential............. $2,621,038 15.3% 23,303 9.0 % 3,079,381 1.1 %
Small commercial and
industrial............. 2,073,998 8.2% 25,313 4.1 % 288,848 0.7 %
Large commercial and
industrial............. 1,425,784 3.2% 23,777 1.4 % 1,539 0.7 %
Public authorities...... 487,142 7.7% 7,158 4.0 % 12,039 (0.2)%
Electric railroads...... 26,894 2.7% 390 (2.0)% 2 --
---------- ------ ---------
Ultimate consumers...... $6,634,856 9.7% 79,941 4.6 % 3,381,809 1.0 %
Sales for resale........ 207,256 11,412 24
Other revenues.......... 67,674 -- --
---------- ------ ---------
Total.................. $6,909,786 10.1% 91,353 7.3 % 3,381,833 1.0 %
========== ====== =========
</TABLE>
3
<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.
LIQUIDITY AND CAPITAL RESOURCES
Capital Budgets. ComEd and its electric utility subsidiary, the Indiana
Company, have a construction program for the three-year period 1996-98 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 1995, calls for electric plant and equipment expenditures of
approximately $2,695 million (excluding nuclear fuel expenditures of
approximately $885 million). It is estimated that such construction
expenditures, with cost escalation computed at 3.5% annually, will be as
follows:
<TABLE>
<CAPTION>
1996 1997 1998 TOTAL
---- ---- ---- ------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C>
Production............................................ $405 $390 $380 $1,175
Transmission and Distribution......................... 390 405 410 1,205
General............................................... 110 110 95 315
---- ---- ---- ------
Total.............................................. $905 $905 $885 $2,695
==== ==== ==== ======
</TABLE>
The construction program includes the replacement of the steam generators at
ComEd's Braidwood Unit 1 and Byron Unit 1 nuclear generating units, for service
in the years 1998 and 1999, respectively, at a total estimated cost of
approximately $470 million. Approximately $290 million of this estimated cost
is included in the construction expenditures shown above. ComEd is studying the
possibility of accelerating the replacement of the steam generators which could
increase the construction expenditures shown above.
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 1998 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 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. 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
for additional information.
4
<PAGE>
Purchase commitments for ComEd and the Indiana Company, principally related
to construction and nuclear fuel, approximated $1,137 million at December 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................................ 1996-2007 $1,011
Decker Coal Co..................................... 1996-2015 $ 713
Big Horn Coal Co................................... 1998 $ 22
Other commitments.................................. 1996 $ 3
</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 21 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 and scheduled
maturities for preference stock and long-term debt are summarized in Notes 7
and 9, 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. See Note 18 of Notes to Financial Statements for
more information concerning ComEd's nuclear fuel lease facility. ComEd has
approximately $915 million of unused bank lines of credit at December 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 10 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 years 1995, 1994 and 1993.
During 1995, ComEd sold and leased back approximately $193 million of nuclear
fuel through its existing nuclear fuel lease facility. The Trust also issued
$200 million of company-obligated mandatorily redeemable preferred securities,
the proceeds of which were used to purchase ComEd's subordinated deferrable
interest notes due September 30, 2035. The proceeds of such notes were used by
ComEd to refund short-term debt incurred to meet current maturities of ComEd
debt.
As of January 26, 1996, 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. In December 1995, ComEd announced a cap on base electric rates at
current levels. 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 "Business and Competition" and "Regulation" below.
During the past several years, ComEd has instituted cost reduction plans
including various workforce reductions. Such efforts included an offer of
voluntary early retirement which was made to ComEd and the Indiana Company
management, non-union and union employees eligible to retire or who
5
<PAGE>
became eligible to retire after December 31, 1993 and before April 1, 1995.
Such program resulted in a charge to income of approximately $20.5 million
(after reflecting income tax effects), substantially all of which was recorded
during 1994. ComEd is continuing to examine methods of reducing the size of its
workforce, including special severance offers. On October 30, 1995, ComEd
declared an impasse in the collective bargaining agreement negotiations with
its principal union and has implemented virtually all of the terms of its last
offered proposal prior to the impasse. Those terms include, among other things,
a wage increase retroactive to April 1, 1995 and a voluntary separation offer
for employees who accepted and left ComEd's employ by year-end 1995. The union
has filed an unfair labor practice charge with respect to ComEd's action with
the National Labor Relations Board. The voluntary separation offer, combined
with separation plans offered to selected groups of non-union employees,
resulted in a charge to income of approximately $59 million (after reflecting
income tax effects) or $0.27 per common share for the year 1995. This charge to
income occurred primarily in the fourth quarter of 1995 when most of the
acceptances of the offers occurred. ComEd expects to recover the costs of these
plans within two years as a result of reduced personnel.
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. In connection
with such examination, ComEd has solicited and received binding proposals with
respect to such a transaction involving its State Line and Kincaid generating
stations; and it is negotiating with possible purchasers with respect to such
transactions. As presently structured, such transactions would involve a sale
of the generating station assets at a price approximating their book value and
a fifteen-year power purchase arrangement. Any such transactions would be
subject to the negotiation of definitive agreements and regulatory approvals
and are not expected to have a material impact on ComEd's consolidated
financial position or results of operations.
ComEd's securities and other securities guaranteed by ComEd are currently
rated by three principal securities rating agencies 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- BBB-
Preference stock................................. baa3 BBB- BBB-
Company-obligated mandatorily redeemable pre-
ferred securities of the Trust.................. baa3 BBB- BBB-
Commercial paper................................. P-2 A-2 D-2
</TABLE>
As of January 1996, Standard & Poor's rating outlook on ComEd remained
stable. As of October 1995, Moody's rating outlook on ComEd also remained
stable. In August 1995, Duff & Phelps upgraded its rating of ComEd's preferred
and preference stock from BB+ to BBB- and reaffirmed that its rating outlook on
ComEd remained stable.
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 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 place 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. Also, a
number of electric utilities (including utilities bordering ComEd's service
area) have
6
<PAGE>
announced plans to combine, or have combined, to achieve certain size and
operating efficiencies in response to expected changes in the market place.
Finally, both the state and federal regulatory framework under which ComEd and
other electric utilities have operated are under review. In recent years, there
has been increasing debate at the state and federal levels regarding the
structure and regulation of the electric utility industry. In particular, these
discussions have focused on whether certain aspects of the industry, such as
generation, could be more efficiently provided under a more competitive scheme.
A central feature of the current debate over deregulation and changed
regulation in the electric utility industry is the extent to which electric
utilities will be permitted to recover so-called "stranded" or "strandable"
costs incurred to fulfill their duty to serve all of the electricity needs
within their service territories. These costs would be stranded to the extent
that market-based rates would be insufficient to allow for full recovery of the
investments.
ComEd cannot estimate its strandable investment with any degree of accuracy
at this time because of the number of variables involved. ComEd, however, is
taking steps, such as aggressive cost-cutting measures and accelerated
depreciation, to minimize its potential exposure. The regulatory and
legislative initiatives that ComEd has proposed, described below, contemplate a
full recovery of ComEd's costs to meet its duty to serve.
The Energy Policy Act of 1992 has had 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. In March
1995, the FERC issued a NOPR seeking comments on proposals intended to
encourage a more competitive wholesale electric power market. The NOPR
addresses both open access transmission and stranded cost issues. ComEd is
unable to predict the structure and effect of any rule that the FERC may
ultimately adopt based upon the NOPR.
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. The Illinois Appellate Court
reversed the latter ICC decision, ruling that state law prohibited the
confidential aspects of the contracts. ComEd has petitioned the Illinois
Supreme Court to review the reversal. ComEd has also sought and received ICC
approval for the eleven contracts at special discount rates which it negotiated
prior to the Illinois Appellate Court's decision.
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.
7
<PAGE>
Legislation has been passed in Illinois to review the need for changes in the
regulatory framework under which Illinois electric utilities operate. The Joint
Committee on Electric Utility Regulatory Reform was created pursuant to
House/Senate Joint Resolution 21 to develop any legislative reform proposals it
finds necessary. A final legislative proposal is to be delivered by November 8,
1996. ComEd is participating as a member of the Technical Advisory Group. A
bill allowing utilities to submit plans for alternative regulation, such as
price caps or incentive regulation, has been signed by the Governor of
Illinois. On December 11, 1995, ComEd announced a series of customer
initiatives as part of its larger ongoing effort to address the need to give
all customer classes the opportunity to benefit from increased competition in
the electric utility business, while retaining the benefits (such as
reliability) of current regulation and ensuring utilities' cost recovery for
commitments made under the obligation to serve customers. The initiatives
include (i) a five-year cap on base electric rates at current levels, (ii)
certain energy monitoring and management programs designed to monitor and
control energy usage, particularly during certain peak periods, (iii) single
statement, or unified, billing for certain multi-site customers, (iv) certain
incentives for manufacturing customers looking to expand operations or to
locate in northern Illinois and (v) market pricing options for up to ten
percent of certain large industrial customers' existing electric energy
requirements and all of their incremental requirements. ComEd anticipates the
initiatives will be fully implemented in 1997 and will reduce its revenues by
approximately $42 million annually (including the effects of previously
implemented initiatives and before income tax effects) primarily through
changes in energy utilization and increase its costs by at least $30 million
annually (before income tax effects) through the acceleration of depreciation
charges on its nuclear generating units. ComEd expects to file a request for
ICC approval of the accelerated depreciation initiatives in the near future.
Management expects the financial impact of these initiatives will be
substantially offset by ComEd's cost reduction efforts and expected growth in
its business. ComEd also continues to consider the possibility of additional
accelerated depreciation options.
Under ComEd's initiatives, the five-year base rate cap at current levels
became effective in December 1995 and will extend until January 1, 2001. The
rate cap does not affect ComEd's fuel cost or nuclear decommissioning cost
recovery provisions. ComEd's fuel cost variances will continue to be collected
through its fuel adjustment clause, and such collections will continue to be
subject to annual reconciliation proceedings before the ICC. Nuclear
decommissioning cost variances will continue to be collected under a rider that
was approved in the Rate Order, and such rider is intended to allow annual
adjustments in decommissioning cost recoveries from ratepayers as changes in
cost estimates occur. See "Depreciation and Decommissioning" in Note 1 of Notes
to Financial Statements for additional information regarding the
decommissioning costs rider.
On December 13, 1995, ComEd announced a proposal to amend certain provisions
of the Illinois Public Utilities Act. The proposal would, among other things,
allow Illinois utilities to launch five-year experimental "direct access"
programs, whereby certain customers would have the opportunity to obtain some
of their electric energy requirements from their chosen supplier. If the
proposal is adopted as legislation, such "direct access" programs could begin
as early as 1998; and under the legislation, ComEd announced it would offer
such a program for new or expanded load of three megawatts or greater in its
northern Illinois service territory. Under ComEd's proposal, if such "direct
access" proves workable, and the ICC finds it to be in the public interest, the
ICC could order it as an option for all electricity consumers in Illinois
starting in 2003. Other Illinois utilities have also initiated both legislative
and regulatory proposals. Both Illinois Power Company and Central Illinois
Light Company have filed proposed retail wheeling experiments with the ICC.
These experiments are currently the subject of hearings. ComEd cannot predict
whether, or in what form, these proposals may be approved. See "Regulation" and
"Regulatory Assets and Liabilities" in Note 1 of Notes to Financial Statements.
Capital Structure. The ratio of long-term debt to total capitalization has
decreased to 49.3% at December 31, 1995 from 54.6% at December 31, 1994. This
decrease is related primarily to the retirement and early redemption of long-
term debt.
8
<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
1993, 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 the Fuel Matters Settlement in
late 1993 (see Note 2 of Notes to Financial Statements). The effects of such
settlements during 1993 and 1994 are discussed below under "Results of
Operations."
On January 9, 1995, the ICC issued its Rate Order in the proceedings relating
to ComEd's February 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
ComEd began collecting such costs 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 and subsequent rider proceedings. 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. As of December 31, 1995,
electric operating revenues of approximately $319 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. In
June 1995, the NRC reported that over the past year performance at Dresden was
cyclical; that plant material condition needed to be improved at Dresden and
that a more effective work management system was needed to deal with the
corrective maintenance backlog. In January 1996, the NRC noted improvement but
indicated that certain of the same concerns continue to exist. The NRC also
stated that the effectiveness of the recent improvement efforts must be
sustained. 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, and that 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. In February and June 1995, the NRC concluded that
LaSalle County and Quad-Cities, respectively, had arrested the adverse trends
in most areas and "normal" designation has been reestablished.
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 addition, generating
station availability and
9
<PAGE>
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
1994; however, certain intervenors have appealed the ICC order in the 1989 fuel
reconciliation proceedings on issues relating to nuclear station performance.
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 $3.7
billion in current-year (1996) dollars, are expected to be funded by external
decommissioning trusts 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 as well as changes in the assumptions used in
making such estimates. See Note 1 of Notes to Financial Statements under
"Depreciation and Decommissioning" 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 21 of Notes to Financial Statements for information regarding certain
effects of CERCLA on ComEd.
RESULTS OF OPERATIONS
Net Income on Common Stock. The 1995 results reflect higher revenues
primarily as a result of higher kilowatthour sales and the higher rate levels
which became effective in January 1995 under the Rate Order. The higher
kilowatthour sales reflect the unusually hot summer weather in 1995. The 1995
results were also affected by higher operation and maintenance expenses, which
reflect an after-tax charge of $59 million or $0.27 per common share for a
voluntary separation offer for union employees who accepted and left ComEd's
employ by year-end 1995 combined with separation plans offered to selected
groups of non-union employees. ComEd also recorded an after-tax charge of $20
million or $0.09 per common share related to the early redemption of $645
million of long-term debt.
The 1994 results reflect higher revenues as a result of the favorable
comparison to 1993 in which the effects of the Rate Matters Settlement and the
Fuel Matters Settlement were recorded. The 1994 results also reflect ComEd's
increased kilowatthour sales to ultimate consumers. The effects of these items
were partially offset by higher operation and maintenance expenses, which
include an after-tax charge of $20 million or $0.09 per common share for
additional pension costs related to an early retirement offer made to certain
employees during 1994. ComEd also recorded a reduction in the carrying value of
its investments in uranium-related properties in 1994, which reduced net income
by $34 million or $0.16 per common share.
The 1993 results were significantly affected by the recording of the effects
of the Rate Matters Settlement and the Fuel Matters Settlement, which reduced
1993 net income by approximately $354 million or $1.66 per common share, in
addition to the effect of the deferred recognition of revenues which ComEd had
recorded during 1993 (approximately $160 million or $0.75 per common share),
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, as authorized in the Remand Order. The 1993 earnings also reflect a one-
time favorable cumulative effect of $10 million or $0.05 per common share as a
result of the adoption of SFAS No. 109, Accounting for Income Taxes. The effect
of the non-recurring items was partially offset by a higher level of
kilowatthour sales and lower operation and maintenance expenses. Excluding non-
recurring items, earnings in 1993 would have been $1.83 per common share.
Kilowatthour Sales. Kilowatthour sales to ultimate consumers increased 4.6%
in 1995, 2.8% in 1994 and 4.6% in 1993 as a result of increased sales to all
classes of customers, except railroads, which decreased during each year,
reflecting progressively warmer summers (particularly in 1995) and, in
10
<PAGE>
1994, colder winter weather than in 1993. The service territory economy also
improved during 1994, which contributed to the increase in kilowatthour sales.
Kilowatthour sales including sales for resale increased 7.3% in 1995, decreased
3.0% in 1994 and increased 16.0% in 1993.
Electric Operating Revenues. Operating revenues increased $632 million in
1995 principally reflecting the higher kilowatthour sales described above and
higher rate levels under the Rate Order. Operating revenues increased $1,017
million in 1994 principally reflecting the favorable comparison to 1993 in
which the effects of the Rate Matters Settlement and the Fuel Matters
Settlement were recorded and the increased level of kilowatthour sales to
ultimate consumers described above. The increase was partially offset by a
decrease in energy costs recovered under the fuel adjustment clause in ComEd's
rates.
Operating revenues decreased $766 million in 1993 principally reflecting the
recording of the effects of the Rate Matters Settlement and the Fuel Matters
Settlement, which reduced 1993 operating revenues by $1,282 million. This
reduction was partially offset by a higher level of kilowatthour sales and an
increase in energy costs recovered under the fuel adjustment clause in ComEd's
rates. See "Net Income on Common Stock" above and Note 2 of Notes to Financial
Statements for additional information.
Fuel Costs. Changes in fuel expense for 1995, 1994 and 1993 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>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Cost of fuel consumed (per million Btu):
Nuclear........................................... $0.52 $0.53 $0.52
Coal.............................................. $2.43 $2.31 $2.89
Oil............................................... $3.06 $2.89 $3.03
Natural gas....................................... $1.85 $2.27 $2.70
Average all fuels................................. $1.05 $1.08 $1.15
Net generation of electric energy (millions of
kilowatthours).................................... 96,608 90,243 94,266
Fuel sources of kilowatthour generation:
Nuclear........................................... 73% 71% 75%
Coal.............................................. 24 25 23
Oil............................................... -- 1 1
Natural gas....................................... 3 3 1
------ ------ ------
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
uranium enrichment facilities owned and 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.
Fuel Supply. Compared to other utilities, ComEd has relatively low average
fuel costs as a result of its 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 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
December 31, 1995, ComEd had unrecovered fuel costs in the form of coal
reserves of approximately $448 million. In prior years, ComEd's commitments for
the purchase of coal exceeded its requirements.
11
<PAGE>
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 21 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:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- ----
<S> <C> <C> <C>
Kilowatthours (millions)................................. 2,475 2,071 644
Cost per kilowatthour.................................... 2.60c 2.86c 1.91c
</TABLE>
Deferred Under or Overrecovered Energy Costs--Net. Operating expenses for the
years 1995, 1994 and 1993 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. Operation and maintenance expenses
increased 4% during 1995, increased 2% during 1994 and decreased 4% during
1993. The increase in 1995 primarily reflects increased expenses for costs
related to voluntary employee separation plans, nuclear and fossil generating
stations, customer-related activities and incentive compensation programs,
partially offset by lower expenses associated with transmission and
distribution facilities, certain administrative and general costs and pensions
and other employee benefits, including postretirement health care benefits. The
increase in 1994 primarily reflects increased expenses associated with pensions
and other employee benefits, incentive compensation programs, nuclear and
fossil generating stations, and certain administrative and general costs,
partially offset by lower expenses associated with transmission and
distribution facilities. The decrease in 1993 primarily reflects decreased
expenses associated with nuclear and fossil generating stations, pension
benefits and customer-related activities, a decrease in the number of employees
and lower research costs, partially offset by higher costs of postretirement
health care benefits and the cost related to the 1993 special incentive plan
for employees. Wage increases, the effects of which are reflected in the
increases and decreases discussed below, have increased operation and
maintenance expenses during 1995 and 1994. Wages in 1993 were not increased
over 1992 levels. Operation and maintenance expenses in 1995 and 1994 include
approximately $16 million and $20 million, respectively, for wage increases.
The effects of inflation have increased operation and maintenance expenses
during the years and are also reflected in the increases and decreases
discussed below.
Operation and maintenance expenses for pensions and other employee benefits,
including postretirement health care benefits, decreased $40 million in 1995,
increased $30 million in 1994 and decreased $2 million in 1993. The 1995
decrease reflects a decrease of $40 million in the provision for postretirement
health care costs, partially offset by a $25 million increase for the portion
of the costs of the voluntary employee separation plans related to
postretirement health care benefits and an increase of $9 million for certain
other employee benefits. The 1994 increase includes a $34 million increase in
pension costs related to an early retirement program offered in 1994. See
"Liquidity and Capital Resources," subcaption "Financial Condition," for
additional information regarding the employee separation plans offered in 1995
and the 1994 early retirement program. The 1993 decrease reflects a decrease in
pension benefits of $16 million which was partially offset by an increase in
postretirement health care benefits of $14 million. The increase in
postretirement health care benefits in 1993 reflects $17 million as a result of
adopting SFAS No. 106, Employers' Accounting for Postretirement Benefits Other
Than Pensions.
12
<PAGE>
Operation and maintenance expenses in 1995 also reflect $72 million for the
portion of the costs of the voluntary employee separation plans not related to
the postretirement health care benefits described above. See "Liquidity and
Capital Resources," subcaption "Financial Condition," above for information
regarding the employee separation plans offered in 1995.
Operation and maintenance expenses associated with the nuclear generating
stations tend to be affected by the number of outages (both scheduled and non-
scheduled) of the units, during which a greater number of activities related to
inspection, maintenance and improvement are scheduled and carried out. Such
expenses increased $32 million in 1995, increased $9 million in 1994 and
decreased $74 million in 1993. The increase in 1995 is primarily due to
increased expenses related to the plant improvement efforts at Dresden and Zion
stations. The increase in 1994 is due to activities undertaken during increased
scheduled and non-scheduled outages. The decrease in 1993 includes the effects
of ComEd's cost reduction efforts, including re-engineering and process
improvements, eliminating unnecessary work and increasing the efficiency at
which the remaining work was performed. 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 also tend to be affected by the number of outages in the same manner
as nuclear generating stations. Such expenses increased $8 million in 1995,
increased $4 million in 1994 and decreased $13 million in 1993. The increase in
1995 reflects the costs for the increase in scope of scheduled overhauls
partially offset by the net effect of a reduction of personnel. The increase in
1994 reflects, in part, activities undertaken during a greater number of
scheduled overhauls. The decrease in 1993 includes the effects of ComEd's cost
reduction efforts. Research costs also decreased $10 million in 1993 due to the
cost reduction efforts.
Operation and maintenance expenses associated with ComEd's transmission and
distribution system decreased $3 million and $18 million in 1995 and 1994,
respectively. The decreases in 1995 and 1994 reflect the effects of cost
containment efforts. Costs of customer-related activities, including customer
assistance and energy sales services, increased $10 million in 1995 and
decreased $13 million in 1993.
Operation and maintenance expenses reflect $65 million, $50 million and $36
million for employee incentive compensation plan costs related to the
achievement of certain financial performance, cost containment and operating
performance goals in 1995, 1994 and 1993, respectively.
Certain administrative and general costs decreased $16 million in 1995 and
increased $12 million in 1994. The decrease in 1995 was due to a variety of
reasons including a decrease in expenses related to insurance, injuries and
damages and the provision for vacation pay liability. The increase in 1994 was
primarily due to increased provisions for injuries and damages and obsolete
materials.
Depreciation. Depreciation expense increased in 1995, 1994 and 1993 as a
result of additions to plant in service. See "Depreciation and Decommissioning"
in Note 1 of Notes to Financial Statements for additional information. ComEd
also intends to seek authorization from the ICC to accelerate the depreciation
charges on its nuclear generating units. See "Business and Competition" under
"Liquidity and Capital Resources."
Interest on Debt. Changes in interest on long-term debt and notes payable for
the years 1995, 1994 and 1993 were due to changes in average interest rates and
in the amounts of long-term debt and notes payable outstanding. Changes in
interest on long-term debt also reflected new issues of debt, the retirement
and early redemption of debt, and the retirement and redemption of issues which
were
13
<PAGE>
refinanced at generally lower rates of interest. The average amounts of long-
term debt and notes payable outstanding and average interest rates thereon were
as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Long-term debt outstanding:
Average amount (millions).......................... $7,528 $7,934 $8,105
Average interest rate.............................. 7.78% 7.83% 8.03%
Notes payable outstanding:
Average amount (millions).......................... $ 51 $ 9 $ 6
Average interest rate.............................. 6.40% 6.48% 5.83%
</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 year 1993 of approximately $269
million or $1.26 per common share. Amortization of deferred carrying charges
was $13 million in 1995 and 1994 and was $2 million in 1993.
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 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, annual
provisions for decommissioning could increase and the estimated cost for
decommissioning could be recorded as a liability rather than as accumulated
depreciation. ComEd does not believe that such changes, if required, would have
an adverse effect on results of operations due to its 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 1994 net income by $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 capitalization
rates as discussed in Note 1 of Notes to Financial Statements. AFUDC does not
contribute to the current cash flow of ComEd.
The ratios of earnings to fixed charges for the years 1995, 1994 and 1993
were 2.79, 1.99 and 1.19, respectively. The ratios of earnings to fixed charges
and preferred and preference stock dividend requirements for the years 1995,
1994 and 1993 were 2.39, 1.73 and 1.03, 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.
14
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of 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, 1995 and 1994, and the
related statements of consolidated income, retained earnings, premium on common
stock and other paid-in capital and cash flows for each of the three years in
the period ended December 31, 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 Commonwealth Edison Company
and subsidiary companies as of December 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Chicago, Illinois
January 26, 1996
15
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED INCOME
The following Statements of Consolidated Income for the years 1995, 1994 and
1993 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, competition, 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>
1995 1994 1993
---------- ---------- -----------
(THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Electric Operating Revenues:
Operating revenues....................... $6,909,786 $6,293,430 $ 6,547,205
Provisions for revenue refunds........... -- (15,909) (1,286,765)
---------- ---------- -----------
$6,909,786 $6,277,521 $ 5,260,440
---------- ---------- -----------
Electric Operating Expenses and Taxes:
Fuel..................................... $1,089,841 $1,049,853 $ 1,170,935
Purchased power.......................... 64,378 59,123 12,303
Deferred (under)/overrecovered energy
costs--net.............................. (2,732) 1,940 (1,757)
Operation................................ 1,597,964 1,525,258 1,455,986
Maintenance.............................. 566,749 561,320 581,714
Depreciation............................. 897,305 887,432 862,766
Recovery of regulatory assets............ 15,272 15,453 5,235
Taxes (except income).................... 832,026 787,796 701,913
Income taxes--
Current--Federal....................... 257,083 158,301 (19,930)
--State................................ 87,138 1,913 (7,623)
Deferred--Federal--net................. 172,403 104,290 88,631
--State--net........................... 15,605 65,017 34,752
Investment tax credits deferred--net..... (28,710) (28,757) (29,424)
---------- ---------- -----------
$5,564,322 $5,188,939 $ 4,855,501
---------- ---------- -----------
Electric Operating Income................. $1,345,464 $1,088,582 $ 404,939
---------- ---------- -----------
Other Income and (Deductions):
Interest on long-term debt............... $ (585,806) $ (621,225) $ (651,181)
Interest on notes payable................ (3,280) (557) (334)
Allowance for funds used during
construction--
Borrowed funds......................... 11,137 18,912 16,930
Equity funds........................... 13,129 22,628 20,618
Income taxes applicable to nonoperating
activities.............................. 5,085 27,074 30,705
Deferred carrying charges................ -- -- 438,183
Interest and other costs for 1993
Settlements............................. (61) (21,464) (98,674)
Provision for dividends on company-
obligated mandatorily redeemable
preferred securities of subsidiary
trust................................... (4,428) -- --
Miscellaneous--net....................... (44,064) (90,004) (58,484)
---------- ---------- -----------
$ (608,288) $ (664,636) $ (302,237)
---------- ---------- -----------
Net Income Before Extraordinary Item and
Cumulative Effect of Change in Accounting
for Income Taxes......................... $ 737,176 $ 423,946 $ 102,702
Extraordinary Loss Related to Early
Redemption of Long-Term Debt, Less
Applicable Income Taxes.................. (20,022) -- --
Cumulative Effect of Change in Accounting
for Income Taxes......................... -- -- 9,738
---------- ---------- -----------
Net Income................................ $ 717,154 $ 423,946 $ 112,440
Provision for Dividends on Preferred and
Preference Stocks........................ 69,961 64,927 66,052
---------- ---------- -----------
Net Income on Common Stock................ $ 647,193 $ 359,019 $ 46,388
========== ========== ===========
Average Number of Common Shares
Outstanding.............................. 214,193 214,008 213,508
Earnings Per Common Share Before
Extraordinary Item and Cumulative Effect
of Change in Accounting for Income Taxes. $ 3.11 $ 1.68 $ 0.17
Extraordinary Loss Related to Early
Redemption of Long-Term Debt, Less
Applicable Income Taxes.................. (0.09) -- --
Cumulative Effect of Change in Accounting
for Income Taxes......................... -- -- 0.05
---------- ---------- -----------
Earnings Per Common Share................. $ 3.02 $ 1.68 $ 0.22
========== ========== ===========
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
above statements.
16
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
ASSETS 1995 1994
------ ----------- -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Utility Plant:
Plant and equipment, at original cost (includes
construction work in progress of $1,105 million
and $1,043 million, respectively)................. $27,052,778 $26,257,665
Less--Accumulated provision for depreciation....... 10,565,093 9,623,756
----------- -----------
$16,487,685 $16,633,909
Nuclear fuel, at amortized cost.................... 734,667 689,424
----------- -----------
$17,222,352 $17,323,333
----------- -----------
Investments:
Nuclear decommissioning funds...................... $ 1,237,527 $ 880,944
Subsidiary companies............................... 113,657 118,051
Other investments, at cost......................... 20,478 18,613
----------- -----------
$ 1,371,662 $ 1,017,608
----------- -----------
Current Assets:
Cash............................................... $ 972 $ 84
Temporary cash investments......................... 14,138 53,566
Other cash investments............................. -- 19,588
Special deposits................................... 3,546 29,603
Receivables--
Customers........................................ 579,861 463,385
Taxes............................................ 75,536 36,083
Other............................................ 82,824 68,434
Provisions for uncollectible accounts............ (11,828) (10,720)
Coal and fuel oil, at average cost................. 129,176 108,872
Materials and supplies, at average cost............ 333,539 384,612
Deferred unrecovered energy costs.................. 46,028 48,697
Deferred income taxes related to current assets and
liabilities--
Loss carryforward................................ -- 10,090
Other............................................ 107,931 110,267
Prepayments and other.............................. 44,661 56,449
----------- -----------
$ 1,406,384 $ 1,379,010
----------- -----------
Deferred Charges and Other Noncurrent Assets:
Regulatory assets.................................. $ 2,467,386 $ 2,604,270
Unrecovered energy costs........................... 588,152 643,438
Other.............................................. 63,124 108,308
----------- -----------
$ 3,118,662 $ 3,356,016
----------- -----------
$23,119,060 $23,075,967
=========== ===========
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
above statements.
17
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
CAPITALIZATION AND LIABILITIES 1995 1994
------------------------------ ----------- -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Capitalization (see accompanying statements):
Common stock equity.................................. $ 5,706,130 $ 5,401,423
Preferred and preference stocks without mandatory
redemption requirements............................. 508,034 508,147
Preference stock subject to mandatory redemption
requirements........................................ 261,475 292,163
Company-obligated mandatorily redeemable preferred
securities of subsidiary trust*..................... 200,000 --
Long-term debt....................................... 6,488,434 7,453,206
----------- -----------
$13,164,073 $13,654,939
----------- -----------
Current Liabilities:
Notes payable--
Commercial paper.................................... $ 261,000 $ --
Bank loans.......................................... 7,150 7,150
Current portion of long-term debt, redeemable
preference stock and capitalized lease obligations.. 433,299 560,335
Accounts payable..................................... 614,283 351,370
Accrued interest..................................... 170,284 182,745
Accrued taxes........................................ 215,965 209,269
Dividends payable.................................... 102,192 102,585
Customer deposits.................................... 44,521 44,514
Other................................................ 93,841 85,845
----------- -----------
$ 1,942,535 $ 1,543,813
----------- -----------
Deferred Credits and Other Noncurrent Liabilities:
Deferred income taxes................................ $ 4,506,704 $ 4,383,876
Accumulated deferred investment tax credits.......... 689,041 717,752
Accrued spent nuclear fuel disposal fee and related
interest............................................ 624,191 589,757
Obligations under capital leases..................... 373,697 431,402
Regulatory liabilities............................... 601,002 699,426
Other................................................ 1,217,817 1,055,002
----------- -----------
$ 8,012,452 $ 7,877,215
----------- -----------
Commitments and Contingent Liabilities (Note 21)
$23,119,060 $23,075,967
=========== ===========
</TABLE>
*As described in Note 8 of Notes to Financial Statements, the sole asset of
ComEd Financing I, a subsidiary trust of ComEd, is $206.2 million principal
amount of ComEd's 8.48% subordinated deferrable interest notes due September
30, 2035.
The accompanying Notes to Financial Statements are an integral part of the
above statements.
18
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED CAPITALIZATION
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1995 1994
----------- -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Common Stock Equity:
Common stock, $12.50 par value per share--
Outstanding--214,194,950 shares and 214,191,021
shares, respectively............................. $ 2,677,437 $ 2,677,387
Premium on common stock and other paid-in capital.. 2,223,004 2,222,941
Capital stock and warrant expense.................. (16,159) (16,240)
Retained earnings.................................. 821,848 517,335
----------- -----------
$ 5,706,130 $ 5,401,423
----------- -----------
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--96,753 shares and 100,323 shares,
respectively..................................... 3,077 3,190
Prior preferred stock, cumulative, $100 par value
per share--
No shares outstanding............................. -- --
----------- -----------
$ 508,034 $ 508,147
----------- -----------
Preference Stock Subject to Mandatory Redemption
Requirements:
Preference stock, cumulative, without par value--
Outstanding--2,934,990 shares and 3,113,205
shares, respectively............................. $ 292,163 $ 309,964
Current redemption requirements for preference
stock included in current liabilities............. (30,688) (17,801)
----------- -----------
$ 261,475 $ 292,163
----------- -----------
Company-Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trust:
Outstanding--8,000,000 and none, respectively...... $ 200,000 $ --
----------- -----------
Long-Term Debt:
First mortgage bonds:
Maturing 1995 through 2000--5 1/4% to 9 3/8%..... $ 1,170,000 $ 1,273,000
Maturing 2001 through 2010--5.30% to 8 3/8%...... 1,465,400 1,765,500
Maturing 2011 through 2020--5.85% to 9 7/8%...... 1,266,000 1,591,000
Maturing 2021 through 2023--7 3/4% to 9 1/8%..... 1,385,000 1,385,000
----------- -----------
$ 5,286,400 $ 6,014,500
Sinking fund debentures, due 1999 through 2011--
2 3/4% to 7 5/8%.................................. 110,505 112,593
Pollution control obligations, due 2004 through
2014--4.434% to 9 1/8%............................ 317,200 337,200
Other long-term debt............................... 1,064,318 1,451,449
Current maturities of long-term debt included in
current liabilities............................... (234,893) (395,554)
Unamortized net debt discount and premium.......... (55,096) (66,982)
----------- -----------
$ 6,488,434 $ 7,453,206
----------- -----------
$13,164,073 $13,654,939
=========== ===========
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
above statements.
19
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED RETAINED EARNINGS
<TABLE>
<CAPTION>
1995 1994 1993
---------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Balance at Beginning of Year...................... $ 517,335 $549,152 $847,186
Add--Net income................................... 717,154 423,946 112,440
---------- -------- --------
$1,234,489 $973,098 $959,626
---------- -------- --------
Deduct--
Dividends declared on--
Common stock.................................. $ 342,710 $390,281 $341,683
Preferred and preference stocks............... 66,855 65,381 65,688
Other capital stock transactions--net........... 3,076 101 3,103
---------- -------- --------
$ 412,641 $455,763 $410,474
---------- -------- --------
Balance at End of Year............................ $ 821,848 $517,335 $549,152
========== ======== ========
</TABLE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED PREMIUM ON COMMON STOCK
AND OTHER PAID-IN CAPITAL
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Balance at Beginning of Year................... $2,222,941 $2,217,110 $2,210,524
Add--Premium on issuance of common stock....... 63 5,831 6,586
---------- ---------- ----------
Balance at End of Year......................... $2,223,004 $2,222,941 $2,217,110
========== ========== ==========
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
above statements.
20
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Cash Flow From Operating Activities:
Net income............................. $ 717,154 $ 423,946 $ 112,440
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization........ 948,683 929,325 911,136
Deferred income taxes and investment
tax credits--net.................... 158,296 127,186 85,079
Extraordinary loss related to early
redemption of long-term debt........ 33,158 -- --
Cumulative effect of change in
accounting for income taxes......... -- -- (9,738)
Equity component of allowance for
funds used during construction...... (13,129) (22,628) (20,618)
Provisions for revenue refunds and
related interest.................... (231) 37,548 1,354,197
Revenue refunds and related interest. 15,135 (1,221,650) (190,723)
Recovery/(deferral) of regulatory
assets/deferred carrying charges--
net................................. 15,272 15,453 (432,948)
Provisions/(payments) for liability
for early retirement and separation
costs--net.......................... 60,713 33,580 (1,816)
Net effect on cash flows of changes
in:
Receivables........................ (169,211) 114,935 (159,169)
Coal and fuel oil.................. (20,304) 2,880 215,382
Materials and supplies............. 51,073 18,102 1,834
Accounts payable adjusted for
nuclear fuel lease principal
payments and early retirement and
separation costs--net............. 465,475 118,190 277,733
Accrued interest and taxes......... (5,765) 72,827 (39,234)
Other changes in certain current
assets and liabilities............ 26,555 (52,862) (6,637)
Other--net........................... 141,411 124,241 108,924
----------- ----------- -----------
$ 2,424,285 $ 721,073 $ 2,205,842
----------- ----------- -----------
Cash Flow From Investing Activities:
Construction expenditures.............. $ (899,366) $ (720,602) $ (841,525)
Nuclear fuel expenditures.............. (289,118) (257,264) (261,370)
Equity component of allowance for
funds used during construction........ 13,129 22,628 20,618
Contributions to nuclear
decommissioning funds................. (132,653) (132,550) (132,550)
Investment in subsidiary companies..... (8) (49) --
Other investments and special
deposits.............................. 19,588 621,987 (619,349)
----------- ----------- -----------
$(1,288,428) $ (465,850) $(1,834,176)
----------- ----------- -----------
Cash Flow From Financing Activities:
Issuance of securities--
Long-term debt....................... $ -- $ 546,289 $ 1,927,296
Preferred securities of subsidiary
trust............................... 200,000 -- --
Capital stock........................ 1 77,970 80,585
Retirement and redemption of
securities--
Long-term debt....................... (1,137,272) (703,930) (1,900,540)
Capital stock........................ (17,822) (17,709) (93,081)
Deposits and securities held for
retirement and redemption of
securities............................ 106 3,191 241,731
Premium paid on early redemption of
long-term debt........................ (25,823) (4,564) (78,395)
Cash dividends paid on capital stock... (409,957) (446,342) (408,285)
Proceeds from sale/leaseback of
nuclear fuel.......................... 193,215 306,649 204,254
Nuclear fuel lease principal payments.. (237,845) (209,689) (245,968)
Increase in short-term borrowings...... 261,000 1,200 350
----------- ----------- -----------
$(1,174,397) $ (446,935) $ (272,053)
----------- ----------- -----------
Increase (Decrease) in Cash and
Temporary Cash Investments............. $ (38,540) $ (191,712) $ 99,613
Cash and Temporary Cash Investments at
Beginning of Year...................... 53,650 245,362 145,749
----------- ----------- -----------
Cash and Temporary Cash Investments at
End of Year............................ $ 15,110 $ 53,650 $ 245,362
=========== =========== ===========
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
above statements.
21
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 were
unchanged in the restructuring and remain as ComEd's outstanding securities
and obligations.
Principles of Consolidation. The consolidated financial statements include
the accounts of ComEd, the Indiana Company and ComEd Financing I. 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.
Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 the Effects of 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 on
the Consolidated Balance Sheets at December 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1995 1994
---------- ----------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Regulatory assets:
Deferred income taxes (1)............................... $1,689,832 $1,791,395
Deferred carrying charges (2)........................... 409,923 422,966
Nuclear decommissioning costs--Dresden Unit 1 (3)....... 138,058 141,405
Unamortized loss on reacquired debt (4)................. 160,440 176,128
Other................................................... 69,133 72,376
---------- ----------
$2,467,386 $2,604,270
========== ==========
Regulatory liabilities:
Deferred income taxes (1)............................... $ 601,002 $ 650,813
Other................................................... -- 48,613
---------- ----------
$ 601,002 $ 699,426
========== ==========
</TABLE>
- --------
(1) Recorded in compliance with SFAS No. 109.
(2) Amortized over the remaining lives of the Units.
(3) Amortized over the remaining life of Dresden station. See "Depreciation
and Decommissioning" below for additional information.
(4) Amortized over the remaining lives of the long-term debt issued to finance
the reacquisition. See "Loss on Reacquired Debt" below for additional
information.
22
<PAGE>
COMMONWEALTH EDISON COMPANY 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 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 such 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 will be adopted 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 eight million as of December 31, 1995,
1994 and 1993. It includes the city of Chicago, an area of about 225 square
miles with an estimated population of approximately three million from which
ComEd derived approximately one-third of its ultimate consumer revenues in
1995. ComEd had approximately 3.4 million electric customers at December 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 average annual
rates of 3.14%, 3.13% and 3.12% of average depreciable utility plant and
equipment for the years 1995, 1994 and 1993, respectively. The annual rate for
nuclear plant and equipment is 2.88%, which excludes separately collected
decommissioning costs. See Note 3 for additional information concerning ComEd's
announcement of customer initiatives which include the acceleration of
depreciation charges on nuclear generating units.
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 NRC
guidelines. ComEd's twelve operating units have estimated remaining service
lives ranging from 10 to 32 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, are estimated to aggregate $3.7 billion in
current-year (1996) dollars excluding
23
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
a contingency allowance. 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 trusts 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 as well as changes in
the assumptions used in making such estimates.
On January 9, 1995, the ICC issued its Rate Order in the proceedings relating
to ComEd's February 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
unspecifiable costs that are likely to occur after decommissioning begins and
generally range from 20% to 25% of the currently specifiable 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 occur. 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 $3.7 billion in current-year (1996) 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 December 31, 1995, the total decommissioning costs included
in the accumulated provision for depreciation were $1,301 million. For ComEd's
retired nuclear unit, Dresden Unit 1, the total estimated liability at December
31, 1995 in current-year (1996) dollars of $257 million was recorded on the
Consolidated Balance Sheets as a noncurrent liability and the unrecovered
portion of the liability of approximately $138 million was recorded as a
regulatory asset.
Under Illinois law, decommissioning cost collections are required to be
deposited into external trusts; 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 December 31, 1995, the past accruals
that are required to be contributed to the external trusts aggregate $182
million. The fair value of funds accumulated in the external trusts at December
31, 1995 was approximately $1,238 million which includes pre-tax unrealized
appreciation of $165 million. The earnings on the external trusts accumulate in
the fund balance and in the accumulated provision for depreciation.
24
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
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 11 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, for the years
1995, 1994 and 1993 were $390.7 million, $358.0 million and $385.9 million,
respectively.
Income Taxes. ComEd is 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.
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 for the years 1995, 1994 and 1993 were
9.52%, 9.85% and 10.05%, respectively. AFUDC does not contribute to the current
cash flow of ComEd.
Interest. Total interest costs incurred on debt, leases and other obligations
for the years 1995, 1994 and 1993 were $692.9 million, $729.5 million and
$778.6 million, respectively.
Debt Discount, Premium and Expense. Discount, premium and expense on long-
term debt are being amortized over the lives of the respective issues.
Loss on Reacquired Debt. Consistent with regulatory treatment, the net loss
from reacquisition in connection with refinancing 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 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 by the DOE to fund a portion
of the cost for the decontamination and decommissioning of uranium enrichment
facilities owned and previously operated by the DOE. As of December 31, 1995
and 1994, an asset related to the assessments of approximately $179 million and
$191 million, respectively, was recorded, of which the current portion of
approximately $15 million was included in current assets on the Consolidated
Balance Sheets. As of December 31, 1995 and 1994, a corresponding liability of
approximately $152 million and $165 million, respectively, was recorded in
other noncurrent liabilities and approximately $15 million was recorded in
other current liabilities.
25
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
At December 31, 1995 and 1994, ComEd had unrecovered fuel costs in the form
of coal reserves of approximately $448 million and $498 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; however, ComEd is not earning a return on the expenditures for
coal reserves. Such fuel costs expected to be recovered within one year
amounting to approximately $24 million and $31 million at December 31, 1995 and
1994, respectively, have been included on the Consolidated Balance Sheets in
current assets as deferred unrecovered energy costs. ComEd expects to fully
recover the costs of the coal reserves by the year 2007. See Note 21 for
additional information concerning ComEd's coal commitments.
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 years 1995, 1994 and
1993 was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Supplemental Cash Flow Information:
Cash paid during the year for:
Interest (net of amount capitalized)........... $604,202 $645,424 $677,669
Income taxes (net of refunds).................. $368,842 $ (4,923) $103,014
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Capital lease obligations incurred............... $198,577 $309,716 $213,758
</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 refunded
approximately $1.26 billion (including revenue taxes), plus interest at five
percent on the unpaid balance, through temporarily reduced rates over a 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 a 1991 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.
Under the Fuel Matters Settlement, effective as of December 2, 1993, ComEd
paid 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.
26
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(3) OTHER RATE MATTERS
On January 9, 1995, the ICC issued its Rate Order in the proceedings relating
to ComEd's February 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
ComEd began collecting such costs 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
Note 1 under "Depreciation and Decommissioning" for information related to the
level of decommissioning cost collections allowed in the Rate Order and
subsequent rider proceedings. 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. As of December 31, 1995, electric operating revenues of approximately
$319 million (excluding revenue taxes) are subject to refund. Intervenors and
ComEd have filed appeals of the Rate Order with the Illinois Appellate Court.
On December 11, 1995, ComEd announced a series of customer initiatives as
part of its larger ongoing effort to address the need to give all customer
classes the opportunity to benefit from increased competition in the electric
utility business, while retaining the benefits (such as reliability) of current
regulation and ensuring utilities' cost recovery for commitments made under the
obligation to serve customers. The initiatives include a five-year cap on base
electric rates at current levels and various customer service and incentive
pricing programs designed to allow customers more choice and control over the
services they seek and the prices they pay. These initiatives are in addition
to previously implemented special discount contract rate programs for new or
existing industrial customers. ComEd anticipates the initiatives will be fully
implemented in 1997 and will reduce its revenues by approximately $42 million
annually (including the effects of previously implemented initiatives and
before income tax effects) primarily through changes in energy utilization and
increase its costs by at least $30 million annually (before income tax effects)
through the acceleration of depreciation charges on its nuclear generating
units. ComEd expects to file a request for ICC approval of the accelerated
depreciation initiatives in the near future. Management expects the financial
impact of these initiatives will be substantially offset by ComEd's cost
reduction efforts and expected growth in its business. ComEd also continues to
consider the possibility of additional accelerated depreciation options.
Under ComEd's initiatives, the five-year base rate cap at current levels
became effective in December 1995 and will extend until January 1, 2001. The
rate cap does not affect ComEd's fuel cost or nuclear decommissioning cost
recovery provisions. ComEd's fuel cost variances will continue to be collected
through its fuel adjustment clause, and such collections will continue to be
subject to annual reconciliation proceedings before the ICC. Likewise, nuclear
decommissioning costs will continue to be collected as described in Note 1
under "Depreciation and Decommissioning."
(4) AUTHORIZED SHARES AND VOTING RIGHTS OF CAPITAL STOCK
At December 31, 1995, the authorized shares of ComEd capital stock were:
common stock--250,000,000 shares; preference stock--23,244,990 shares; $1.425
convertible preferred stock--96,753 shares; and prior preferred stock--850,000
shares. The preference and prior preferred stocks are
27
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
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 December 31, 1995, shares of common stock were reserved for the following
purposes:
<TABLE>
<S> <C>
Conversion of $1.425 convertible preferred stock.................. 98,688
Conversion of warrants............................................ 27,580
-------
126,268
=======
</TABLE>
Common stock for the years 1995, 1994 and 1993 was issued as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----- ------- -------
<S> <C> <C> <C>
Employee Stock Purchase Plan........................ -- 154,710 268,594
Employee Savings and Investment Plan................ -- 81,400 153,400
Conversion of $1.425 convertible preferred stock.... 3,630 190,050 22,375
Conversion of warrants.............................. 299 13,714 1,374
----- ------- -------
3,929 439,874 445,743
===== ======= =======
</TABLE>
At December 31, 1995 and 1994, 82,742 and 83,751 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
No shares of preferred or preference stocks without mandatory redemption
requirements were issued or redeemed during 1995 or 1993. During 1994,
3,000,000 shares of preference stock without mandatory redemption requirements
were issued and no shares of preferred or preference stocks without mandatory
redemption requirements were redeemed. The series of preference stock without
mandatory redemption requirements outstanding at December 31, 1995 are
summarized as follows:
<TABLE>
<CAPTION>
INVOLUNTARY
SHARES AGGREGATE REDEMPTION LIQUIDATION
SERIES OUTSTANDING STATED VALUE PRICE(1) PRICE(1)
------- ----------- ------------ ---------- -----------
(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>
--------
(1) Per share plus accrued and unpaid dividends, if any.
The outstanding shares of $1.425 convertible preferred stock are convertible
at the option of the holders thereof, at any time, into common stock 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
28
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
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.
(7) PREFERENCE STOCK SUBJECT TO MANDATORY REDEMPTION REQUIREMENTS
During 1995 and 1994, no shares of preference stock subject to mandatory
redemption requirements were issued. During 1993, 700,000 shares of preference
stock subject to mandatory redemption requirements were issued. The series of
preference stock subject to mandatory redemption requirements outstanding at
December 31, 1995 are summarized as follows:
<TABLE>
<CAPTION>
SHARES AGGREGATE
SERIES OUTSTANDING STATED VALUE OPTIONAL REDEMPTION PRICE(1)
- -------------- ----------- ------------ --------------------------------------------------
(THOUSANDS
OF DOLLARS)
<S> <C> <C> <C>
$8.20 249,990 $ 24,999 $103 through October 31, 1997; and $101 thereafter
$8.40 Series B 360,000 35,758 $101
$8.85 300,000 30,000 $103 through July 31, 1998; and $101 thereafter
$9.25 675,000 67,500 $103 through July 31, 1999; and $101 thereafter
$9.00 650,000 64,431 Non-callable
$6.875 700,000 69,475 Non-callable
--------- --------
2,934,990 $292,163
========= ========
</TABLE>
- --------
(1) 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 preference stock
subject to mandatory redemption requirements are summarized as follows:
<TABLE>
<CAPTION>
SINKING
ANNUAL SINKING FUND INVOLUNTARY
SERIES FUND REQUIREMENT PRICE(1) LIQUIDATION PRICE(1)
-------------- ----------------- -------- --------------------
<S> <C> <C> <C>
$8.20 35,715 shares $100 $100.00
$8.40 Series B 30,000 shares(2) $100 $ 99.326
$8.85 37,500 shares $100 $100.00
$9.25 75,000 shares $100 $100.00
$9.00 130,000 shares(2) $100 $ 99.125
$6.875 (3) $100 $ 99.25
</TABLE>
--------
(1) Per share plus accrued and unpaid dividends, if any.
(2) 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.
(3) All shares are required to be redeemed on May 1, 2000.
Annual remaining sinking fund requirements through 2000 on preference stock
outstanding at December 31, 1995 will aggregate $30,822,000 in each of 1996,
1997, 1998 and 1999, and $100,822,000 in 2000. During 1995, 1994 and 1993,
178,215 shares, 177,085 shares and 1,835,155 shares, respectively, of
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.
29
<PAGE>
COMMONWEALTH EDISON COMPANY 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) COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF COMED
FINANCING I
In September 1995, ComEd Financing I (Trust), a wholly-owned subsidiary trust
of ComEd, issued 8,000,000 of its 8.48% company-obligated mandatorily
redeemable preferred securities. The sole asset of the Trust is $206.2 million
principal amount of ComEd's 8.48% subordinated deferrable interest notes due
September 30, 2035. There is a full and unconditional guarantee by ComEd of the
Trust's obligations under the securities issued by the Trust. However, ComEd's
obligations are subordinate and junior in right of payment to certain other
indebtedness of ComEd. ComEd has the right to defer payments of interest on the
subordinated deferrable interest notes by extending the interest payment
period, at any time, for up to 20 consecutive quarters. If interest payments on
the subordinated deferrable interest notes are so deferred, distributions on
the preferred securities will also be deferred. During any deferral,
distributions will continue to accrue with interest thereon. In addition,
during any such deferral, ComEd may not declare or pay any dividend or other
distribution on, or redeem or purchase, any of its capital stock.
The subordinated deferrable interest notes are redeemable by ComEd (in whole
or in part) from time to time, on or after September 30, 2000, or at any time
in the event of certain income tax circumstances. If the subordinated
deferrable interest notes are redeemed, the Trust must redeem preferred
securities having an aggregate liquidation amount equal to the aggregate
principal amount of the subordinated deferrable interest notes so redeemed. In
the event of the dissolution, winding up or termination of the Trust, the
holders of the preferred securities will be entitled to receive, for each
preferred security, a liquidation amount of $25 plus accrued and unpaid
distributions thereon (including interest thereon) to the date of payment,
unless in connection with the dissolution, the subordinated deferrable interest
notes are distributed to the holders of the preferred securities.
(9) LONG-TERM DEBT
Sinking fund requirements and scheduled maturities remaining through 2000 for
first mortgage bonds, sinking fund debentures and other long-term debt
outstanding at December 31, 1995, after deducting sinking fund debentures
reacquired for satisfaction of future sinking fund requirements, are summarized
as follows: 1996--$234,893,000; 1997--$689,168,000; 1998--$350,017,000; 1999--
$152,445,000; and 2000--$464,446,000.
30
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
At December 31, 1995, outstanding first mortgage bonds maturing through 2000
were as follows:
<TABLE>
<CAPTION>
SERIES PRINCIPAL AMOUNT
------ ----------------------
(THOUSANDS OF DOLLARS)
<S> <C>
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
9 3/8% due February 15, 2000...................... 125,000
6 1/2% due April 15, 2000......................... 230,000
6 3/8% due July 15, 2000.......................... 100,000
----------
$1,170,000
==========
</TABLE>
Other long-term debt outstanding at December 31, 1995 is summarized as
follows:
<TABLE>
<CAPTION>
PRINCIPAL
DEBT SECURITY AMOUNT INTEREST RATE
- --------------------------------- ---------- -------------------------------------------------------
(THOUSANDS
OF
DOLLARS)
<S> <C> <C>
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 Note, Series 2N
due July 1, 1996 10,000 Interest rate of 9.85%
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 February 15, 1997 150,000 Interest rate of 7.00%
Notes due July 15, 1997 100,000 Interest rate of 6.50%
Notes due October 15, 2005 235,000 Interest rate of 6.40%
----------
$ 913,750
----------
Long-Term Note Payable to Bank:
Note due June 1, 1997 $ 150,000 Prevailing interest rate of 6.375% at December 31, 1995
----------
Purchase Contract Obligations:
Woodstock due January 2, 1997 $ 95 Interest rate of 4.50%
Hinsdale due April 30, 2005 473 Interest rate of 3.00%
----------
$ 568
----------
$1,064,318
==========
</TABLE>
Long-term debt maturing within one year has been included in current
liabilities.
The outstanding first mortgage bonds are secured by a lien on substantially
all property and franchises, other than expressly excepted property, owned by
ComEd.
ComEd recorded an extraordinary loss of $33 million in the fourth quarter of
1995 related to the early redemption of $645 million of long-term debt which
reduced net income by $20 million (after reflecting income tax effects of $13
million) or $0.09 per common share.
31
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(10) 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 December 31, 1995. Of
that amount, $915 million (of which $175 million expires on September 30, 1996,
$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 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.
(11) 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. As provided for under the contract, 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.
(12) 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 ComEd 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 ComEd and subsidiary companies is primarily dependent
on the treatment authorized under future ratemaking proceedings.
Investments. Securities included in the 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 and based on published market data, as of December 31, 1995 and 1994
was as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
-------------------------------- ----------------------------
UNREALIZED
UNREALIZED COST GAINS FAIR
COST BASIS GAINS FAIR VALUE BASIS (LOSSES) VALUE
---------- ---------- ---------- -------- ---------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Short-term investments.. $ 40,575 $ 283 $ 40,858 $ 65,203 $ 106 $ 65,309
U.S. Government and
Agency issues.......... 156,745 17,636 174,381 94,450 (562) 93,888
Municipal bonds......... 496,707 34,970 531,677 478,074 (7,301) 470,773
Common stock............ 348,866 107,280 456,146 220,395 9,069 229,464
Other................... 29,757 4,708 34,465 18,788 2,722 21,510
---------- -------- ---------- -------- ------- --------
$1,072,650 $164,877 $1,237,527 $876,910 $ 4,034 $880,944
========== ======== ========== ======== ======= ========
</TABLE>
32
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
At December 31, 1995, the debt securities held by the nuclear decommissioning
funds had the following maturities:
<TABLE>
<CAPTION>
FAIR
COST BASIS VALUE
---------- --------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Within 1 year......................................... $ 40,575 $ 40,858
1 through 5 years..................................... 73,996 76,978
5 through 10 years.................................... 229,132 247,521
Over 10 years......................................... 366,667 398,510
</TABLE>
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 years 1995, 1994 and 1993 were as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
----------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Gross proceeds from sales of securities.... $ 2,598,889 $ 811,368 $ 388,684
Less cost based on specific identification. (2,581,714) (811,997) (377,734)
----------- --------- ---------
Realized gains (losses) on sales of securi-
ties...................................... $ 17,175 $ (629) $ 10,950
Other realized fund earnings net of ex-
penses.................................... 46,294 38,148 29,878
----------- --------- ---------
Total realized net earnings of the funds... $ 63,469 $ 37,519 $ 40,828
Unrealized gains (losses).................. 160,843 (57,948) 30,969
----------- --------- ---------
Total net earnings (losses) of the funds.. $ 224,312 $ (20,429) $ 71,797
=========== ========= =========
</TABLE>
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 preferred and preference stocks,
company-obligated mandatorily redeemable preferred securities of the Trust and
long-term debt were obtained from an independent consultant. The estimated fair
values, which include the current portions of redeemable preference stock and
long-term debt but exclude accrued interest and dividends, as of December 31,
1995 and 1994 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
-------------------------------- ---------------------------------
CARRYING UNREALIZED CARRYING UNREALIZED
VALUE LOSSES FAIR VALUE VALUE (GAINS) FAIR VALUE
---------- ---------- ---------- ---------- ---------- ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Preferred and preference
stocks................. $ 800,197 $ 14,769 $ 814,966 $ 818,111 $ (64,443) $ 753,668
Company-obligated
mandatorily redeemable
preferred securities of
the Trust.............. $ 200,000 $ 6,000 $ 206,000 $ -- $ -- $ --
Long-term debt.......... $6,572,853 $470,175 $7,043,028 $7,448,236 $(450,429) $6,997,807
</TABLE>
Long-term notes payable to banks, which are not included in the above table,
amounted to $150 million and $400 million at December 31, 1995 and 1994,
respectively. Such notes, 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
commercial paper and 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 portion of long-term
debt and redeemable preference stock.
33
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
Other Noncurrent Liabilities. The carrying value of accrued spent nuclear
fuel disposal fee and related interest represents the settlement value as of
December 31, 1995 and 1994; therefore, the carrying value is equal to the fair
value.
(13) 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. During
1995, these plans were amended to more closely base retirement benefits on
final pay. 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. Actuarial valuations were determined as of January 1, 1995
and 1994.
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. 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
charge to income was approximately $20.5 million after reflecting income tax
effects as a result of the program.
The funded status of these plans at December 31, 1995 and 1994 was as
follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1995 1994
----------- -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Actuarial present value of accumulated pension plan
benefits:
Vested benefit obligation.......................... $(2,839,000) $(2,105,000)
Nonvested benefit obligation....................... (251,000) (359,000)
----------- -----------
Accumulated benefit obligation..................... $(3,090,000) $(2,464,000)
Effect of projected future compensation levels..... (304,000) (485,000)
----------- -----------
Projected benefit obligation....................... $(3,394,000) $(2,949,000)
Fair value of plan assets, invested primarily in
U.S. Government, government-sponsored corporation
and agency securities, fixed income funds, regis-
tered investment companies, equity index funds and
other equity funds................................. 3,060,000 2,547,000
----------- -----------
Plan assets less than projected benefit obligation.. $ (334,000) $ (402,000)
Unrecognized prior service cost..................... (73,000) 22,000
Unrecognized transition asset....................... (142,000) (155,000)
Unrecognized net loss............................... 204,000 239,000
----------- -----------
Accrued pension liability.......................... $ (345,000) $ (296,000)
=========== ===========
</TABLE>
The assumed discount rates were 7.5% and 8.0% at December 31, 1995 and 1994,
respectively, 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 the years 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Annual discount rate.......................................... 8.00% 7.50% 7.50%
Annual rate of increase in future compensation levels......... 4.00% 4.00% 4.00%
Annual long-term rate of return on plan assets................ 9.75% 9.50% 9.50%
</TABLE>
34
<PAGE>
COMMONWEALTH EDISON COMPANY 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 years 1995, 1994 and 1993 were as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Service cost................................. $ 87,000 $ 97,000 $ 96,000
Interest cost on projected benefit
obligation.................................. 225,000 213,000 204,000
Actual loss (return) on plan assets.......... (681,000) 37,000 (310,000)
Early retirement program cost................ -- 34,000 --
Net amortization and deferral................ 418,000 (302,000) 61,000
--------- --------- ---------
$ 49,000 $ 79,000 $ 51,000
========= ========= =========
</TABLE>
In addition, an employee savings and investment plan is available to certain
eligible employees of ComEd, Cotter and the Indiana Company. During the fourth
quarter of 1995, the employee savings and investment plan was amended for
employees of ComEd, Cotter and the management employees of the Indiana Company.
Each participating employee affected by the amendments may contribute up to 20%
of such employee's base pay and the participating companies match such
contribution equal to 100% of up to the first 2% of contributed base salary,
70% of the second 3% of contributed base salary and 25% of the last 1% of
contributed base salary. During 1995, 1994 and 1993, the participating
companies contributed $24,645,000, $22,750,000 and $21,948,000, respectively.
(14) 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. The employees become eligible for
postretirement health care benefits when they reach age 55 with 10 years of
service. The liability for postretirement health care benefits is funded
through trust funds based upon actuarially determined contributions that take
into account the amount deductible for income tax purposes. The postretirement
health care plan for ComEd and the Indiana Company was amended, effective April
1, 1995. Prior to that date, the postretirement health care plan was fully
funded by the companies. With respect to employees who retire on or after April
1, 1995, the plan is contributory, funded jointly by the companies and the
participating employees. Actuarial valuations were determined as of January 1,
1995 and 1994.
Postretirement health care costs in 1995 included $25 million related to a
voluntary separation offer for union employees who accepted and left ComEd's
employ by year-end 1995 combined with separation plans offered to selected
groups of non-union employees.
The funded status of the plan at December 31, 1995 and 1994 was as follows:
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1995 1994
--------- -----------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Actuarial present value of accumulated postretirement
health care obligation:
Retirees.............................................. $(457,000) $ (467,000)
Active fully eligible participants.................... (25,000) (34,000)
Other participants.................................... (418,000) (581,000)
--------- -----------
Accumulated benefit obligation........................ $(900,000) $(1,082,000)
Fair value of plan assets, invested primarily in S&P
500 common stocks and U.S. Government,
government agency, municipal and listed corporate
obligations........................................... 603,000 503,000
--------- -----------
Plan assets less than accumulated postretirement health
care obligation....................................... $(297,000) $ (579,000)
Unrecognized transition obligation..................... 374,000 531,000
Unrecognized net gain.................................. (285,000) (70,000)
--------- -----------
Accrued liability for postretirement health care....... $(208,000) $ (118,000)
========= ===========
</TABLE>
35
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
Different health care cost trends are used for pre-Medicare and post-Medicare
expenses. Pre-Medicare trend rates were 14% for 1994 and 13.5% for the first
three months of 1995, grading down in 0.5% annual increments to 5%. Post-
Medicare trend rates were 11.5% for 1994 and 11% for the first three months of
1995, grading down in 0.5% annual increments to 5%. For the last nine months of
1995, pre-Medicare trend rates were 10%, grading down in 0.5% annual increments
to 5%. Post-Medicare trend rates were 8% for the last nine months of 1995,
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 $161 million and increase the aggregate of the service and
interest cost components of plan costs by approximately $20 million for the
year 1995. The assumed discount rates were 7.5% and 8.0% at December 31, 1995
and 1994, respectively. The annual long-term rate of return on plan assets was
9.32% and 9.04% for the years 1995 and 1994, respectively, after including
income tax effects.
The components of postretirement health care costs, portions of which were
recorded as components of construction costs, for the years 1995, 1994 and 1993
were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Service cost.............................. $ 31,000 $ 47,000 $ 45,000
Interest cost on accumulated benefit obli-
gation................................... 69,000 81,000 74,000
Actual loss (return) on plan assets....... (137,000) 9,000 (41,000)
Amortization of transition obligation..... 23,000 29,000 29,000
Severance plan cost....................... 25,000 -- --
Other..................................... 83,000 (49,000) 9,000
--------- -------- --------
$ 94,000 $117,000 $116,000
========= ======== ========
</TABLE>
(15) SEPARATION PLAN COSTS
Operation and maintenance expenses included $97 million for the year 1995
related to a voluntary separation offer for union employees who accepted and
left ComEd's employ by year-end 1995 combined with separation plans offered to
selected groups of non-union employees. These employee separation plans reduced
net income by $59 million or $0.27 per common share for the year 1995.
(16) INCOME TAXES
The components of the net deferred income tax liability at December 31, 1995
and 1994 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1995 1994
---------- ----------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Deferred income tax liabilities:
Accelerated cost recovery and liberalized deprecia-
tion, net of removal costs.......................... $3,379,987 $3,266,930
Overheads capitalized................................ 252,910 266,159
Repair allowance..................................... 219,585 210,655
Regulatory assets recoverable through future rates... 1,689,832 1,791,395
Deferred income tax assets:
Postretirement benefits.............................. (235,353) (177,991)
Unbilled revenues.................................... (116,274) (90,396)
Loss carryforward.................................... -- (10,090)
Alternative minimum tax.............................. (145,019) (283,331)
Unamortized investment tax credits to be settled
through future rates................................ (452,210) (471,058)
Other regulatory liabilities to be settled through
future rates........................................ (148,792) (179,755)
Other--net........................................... (45,893) (58,999)
---------- ----------
Net deferred income tax liability..................... $4,398,773 $4,263,519
========== ==========
</TABLE>
36
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
The $135 million increase in the net deferred income tax liability from
December 31, 1994 to December 31, 1995 is comprised of $187 million of deferred
income tax expense and a $52 million decrease in regulatory assets net of
regulatory liabilities pertaining to income taxes for the year. 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 years 1995, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Electric operating income:
Current income taxes........................... $344,221 $160,214 $(27,553)
Deferred income taxes.......................... 188,008 169,307 123,383
Investment tax credits deferred--net........... (28,710) (28,757) (29,424)
Other (income) and deductions................... (7,685) (23,062) (31,655)
-------- -------- --------
Net income taxes charged to continuing opera-
tions.......................................... $495,834 $277,702 $ 34,751
======== ======== ========
</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 years 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
---------- -------- --------
<S> <C> <C> <C>
Pre-tax book income (thousands)................. $1,233,010 $701,648 $137,453
Effective income tax rate....................... 40.2% 39.6% 25.3%
</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 years 1995, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Federal income taxes computed at statutory rate.. $431,554 $245,577 $ 48,109
Equity component of AFUDC which was excluded from
taxable income.................................. (4,595) (7,920) (7,216)
Amortization of investment tax credits........... (28,710) (28,810) (29,421)
State income taxes, net of federal income taxes.. 65,972 40,140 13,138
Differences between book and tax accounting, pri-
marily property-related deductions.............. 27,534 26,505 2,063
Other--net....................................... 4,079 2,210 8,078
-------- -------- --------
Net income taxes charged to continuing opera-
tions........................................... $495,834 $277,702 $ 34,751
======== ======== ========
</TABLE>
Current federal income tax liabilities which were recorded prior to 1995
included 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 were carried forward and a portion was applied as a
credit against the 1995 regular federal income tax liability. The excess
amounts of AMT can be carried forward indefinitely as a credit against future
years' regular federal income tax liabilities.
37
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(17) TAXES, EXCEPT INCOME TAXES
Provisions for taxes, except income taxes, for the years 1995, 1994 and 1993
were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Illinois public utility revenue............... $229,546 $211,263 $199,498
Illinois invested capital..................... 106,830 109,373 111,126
Municipal utility gross receipts.............. 167,758 145,011 107,232
Real estate................................... 175,747 180,221 162,560
Municipal compensation........................ 78,602 72,647 56,878
Other--net.................................... 73,543 69,281 64,619
-------- -------- --------
$832,026 $787,796 $701,913
======== ======== ========
</TABLE>
(18) LEASE OBLIGATIONS
Under its nuclear fuel lease 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. With respect
to the commercial paper/bank borrowing portion, $20 million will expire on
November 23, 1996, $10 million will expire on November 23, 1997 and $270
million will expire on November 23, 1998. ComEd has asked for an extension of
the expiration dates. At December 31, 1995, ComEd's obligation to the lessor
for leased nuclear fuel amounted to approximately $577 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 December 31, 1995
for capital leases are estimated to aggregate $647 million, including $231
million in 1996, $171 million in 1997, $112 million in 1998, $67 million in
1999, $37 million in 2000 and $29 million in 2001-2004. The estimated interest
component of such rental payments aggregates $72 million. The estimated
portions of obligations due within one year under capital leases are included
in current liabilities and approximated $168 million and $147 million at
December 31, 1995 and 1994, respectively.
Future minimum rental payments at December 31, 1995 for operating leases are
estimated to aggregate $141 million, including $9 million in 1996, $9 million
in 1997, $9 million in 1998, $9 million in 1999, $8 million in 2000 and $97
million in 2001-2024.
(19) 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 1994 net income by $34 million or $0.16
per common share.
(20) 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 December 31, 1995, for its share of ownership in
the station, ComEd had an investment of $558 million in production and
transmission
38
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
plant in service (before reduction of $185 million for the related accumulated
provision for depreciation) and $75 million in construction work in progress.
(21) COMMITMENTS AND CONTINGENT LIABILITIES
Purchase commitments, principally related to construction and nuclear fuel,
approximated $1,137 million at December 31, 1995. 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 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 $27 million and $108 million
in the event losses exceed accumulated reserve funds under the replacement
power and property damage coverages, respectively.
Under certain circumstances, member companies are eligible to continue to
receive distributions from accumulated reserve funds, if declared by NML or
NEIL, after insurance coverage has terminated on a nuclear generating station.
ComEd expects that any such post-coverage distributions would begin about the
time a station is decommissioned and continue for an undetermined period.
ComEd's twelve operating nuclear units have estimated remaining service lives
ranging from 10 to 32 years. Considering the circumstances related to the
declaration of such distributions and the extended period over which such
distributions may be declared, ComEd does not expect that any such
distributions would have a material impact on its financial position or results
of operations.
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.
39
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONTINUED
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 $36 million in the event losses exceed
accumulated reserve funds.
Shareholder derivative lawsuits were filed in 1992 and 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 and that dismissal was affirmed by the Illinois Appellate
Court. One of the plaintiffs has filed a petition for leave to appeal in the
Illinois Supreme Court.
During 1989 and 1991, actions were brought in federal and state courts in
Colorado against ComEd and 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, ComEd'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
(1996) 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 was recorded as of December 31, 1995 and
1994, 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,
1995 and 1994, a reserve of $8 million was recorded representing ComEd's
estimate of the liability associated with cleanup costs of remediation sites
other than former MGP sites. ComEd presently estimates that its 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 its financial position or results of operations. 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.
40
<PAGE>
COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS--CONCLUDED
(22) QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NET
INCOME AVERAGE EARNINGS
(LOSS) NUMBER OF (LOSS)
ELECTRIC ELECTRIC NET ON COMMON PER
OPERATING OPERATING INCOME COMMON SHARES COMMON
THREE MONTHS ENDED REVENUES INCOME (LOSS) STOCK OUTSTANDING SHARE
- ------------------- ---------- --------- -------- -------- ----------- --------
(THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
March 31, 1994.......... $1,524,750 $213,458 $ 51,565 $ 36,020 213,780 $ 0.17
June 30, 1994........... $1,432,166 $185,297 $ (7,856) $(23,339) 213,923 $(0.11)
September 30, 1994...... $1,855,532 $442,288 $283,608 $266,642 214,138 $ 1.25
December 31, 1994....... $1,465,073 $247,539 $ 96,629 $ 79,696 214,190 $ 0.37
March 31, 1995.......... $1,578,136 $262,149 $107,046 $ 90,138 214,191 $ 0.42
June 30, 1995........... $1,559,535 $278,230 $127,377 $110,512 214,192 $ 0.52
September 30, 1995...... $2,190,879 $583,819 $426,351 $409,677 214,193 $ 1.91
December 31, 1995....... $1,581,236 $221,266 $ 56,380 $ 36,866 214,195 $ 0.17
</TABLE>
41
<PAGE>
Commonwealth Edison Company
One First National Plaza
P.O. Box 767
Chicago, IL 60690-0767
[ComEd Logo]
February 9, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Commonwealth Edison Company
Commission File No. 1-1839
Ladies and Gentlemen:
Submitted for filing under the Securities Exchange Act of 1934, as amended, is
one copy of a Form 8-K Current Report relating to Commonwealth Edison Company.
As stated in the Form 8-K Current Report, its purpose is to file certain
financial information regarding Commonwealth Edison Company and its subsidiaries
as of and for the year ended December 31, 1995.
Sincerely,
COMMONWEALTH EDISON COMPANY
By: David A. Scholz
-----------------------------------
David A. Scholz
Secretary
Enclosures
