Exelon 2015 Annual Report Download - page 77

Table of Contents
PECO
As of January 31, 2016, there were 170,478,507 outstanding shares of common stock, without par value, of PECO, all of which were
indirectly held by Exelon.
BGE
As of January 31, 2016, there were 1,000 outstanding shares of common stock, without par value, of BGE, all of which were indirectly held
by Exelon.
Exelon, Generation, ComEd, PECO and BGE
Dividends
Under applicable Federal law, Generation, ComEd, PECO and BGE can pay dividends only from retained, undistributed or current earnings.
A significant loss recorded at Generation, ComEd, PECO or BGE may limit the dividends that these companies can distribute to Exelon.
The Federal Power Act declares it to be unlawful for any officer or director of any public utility “to participate in the making or paying of any
dividends of such public utility from any funds properly included in capital account.” What constitutes “funds properly included in capital account” is
undefined in the Federal Power Act or the related regulations; however, FERC has consistently interpreted the provision to allow dividends to be
paid as long as (1) the source of the dividends is clearly disclosed, (2) the dividend is not excessive and (3) there is no self-dealing on the part of
corporate officials. While these restrictions may limit the absolute amount of dividends that a particular subsidiary may pay, Exelon does not
believe these limitations are materially limiting because, under these limitations, the subsidiaries are allowed to pay dividends sufficient to meet
Exelon’s actual cash needs.
Under Illinois law, ComEd may not pay any dividend on its stock unless, among other things, “[its] earnings and earned surplus are sufficient
to declare and pay same after provision is made for reasonable and proper reserves,” or unless it has specific authorization from the ICC. ComEd
has also agreed in connection with a financing arranged through ComEd Financing III that ComEd will not declare dividends on any shares of its
capital stock in the event that: (1) it exercises its right to extend the interest payment periods on the subordinated debt securities issued to
ComEd Financing III; (2) it defaults on its guarantee of the payment of distributions on the preferred trust securities of ComEd Financing III; or
(3) an event of default occurs under the Indenture under which the subordinated debt securities are issued. No such event has occurred.
PECO has agreed in connection with financings arranged through PEC L.P. and PECO Trust IV that PECO will not declare dividends on any
shares of its capital stock in the event that: (1) it exercises its right to extend the interest payment periods on the subordinated debentures which
were issued to PEC L.P. or PECO Trust IV; (2) it defaults on its guarantee of the payment of distributions on the Series D Preferred Securities of
PEC L.P. or the preferred trust securities of PECO Trust IV; or (3) an event of default occurs under the Indenture under which the subordinated
debentures are issued. No such event has occurred.
BGE is subject to certain dividend restrictions established by the MDPSC. First, in connection with the Constellation merger, BGE was
prohibited from paying a dividend on its common shares through the end of 2014. Second, BGE is prohibited from paying a dividend on its
common shares if (a) after the dividend payment, BGE’s equity ratio would be below 48% as calculated pursuant to the MDPSC’s ratemaking
precedents or (b) BGE’s senior unsecured credit rating is rated by two of the three major credit rating agencies below investment grade. Finally,
BGE must notify the MDPSC that it intends to declare a dividend on its common shares at least 30 days before such a dividend is paid and notify
the
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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