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3
realizing the promise
Exelon Corporation 04 Summary Annual Report

Table of contents

  • Page 1
    realizing the promise Exelon Corporation 04 Summary Annual Report 3

  • Page 2
    ... to Shareholders Realizing our Commitment to Customers Realizing our Commitment to Competition Realizing our Obligation to the Environment Realizing our Commitment to Employees Realizing our Commitment to Shareholders Exelon at a Glance Strategy and Policy Committee Board of Directors Financial...

  • Page 3
    ... exercise disciplined financial management, Exelon can become the best and most consistently profitable electricity and gas company in the United States. We do not claim to have achieved our goal. But we like our chances. And we will not rest until we do. Exelon - pursuing the vision, realizing the...

  • Page 4
    John W. Rowe Chairman, President and CEO 2

  • Page 5
    ... of adjusted (non GAAP) operating earnings to GAAP (accounting principles generally accepted in the United States) earnings, see Exelon's fourth quarter earnings release, issued January 25, 2005, posted on the Investor Relations page at www.exeloncorp.com and included in the 8-K filed with the SEC...

  • Page 6
    ...raised the annual rate yet again to $1.60 per share, an increase of 31 percent. Exelon now has a fully competitive dividend. Our performance demonstrates that we are realizing the promise of the PECO/Unicom merger. In the early 1990s, both PECO and ComEd were highcost, urban utilities with histories...

  • Page 7
    ... program, after-tax cash savings during 2004. Jack Skolds, Frank Clark, Denis O'Brien and Ruth Ann Gillis have been engaged in an all-out effort to bring The Exelon Way to our energy delivery business by adapting and applying the nuclear management model to the wires business by the end of this year...

  • Page 8
    ... with any other utility. And finally, we are determined to more effectively engage our employees in this ongoing effort to make Exelon the best electricity and gas company in the country. We recognize that our efforts to improve productivity and financial performance have placed great demands upon...

  • Page 9
    ...." leading the way As we look to the future, we know many things. We know that fundamental utility obligations remain imperative - this is still a business about providing real service, with real assets, to real customers. We know that maintaining our position as a low-cost provider will remain...

  • Page 10
    ... may be obtained free of charge from Exelon Shareholder Services, 10 South Dearborn Street, P.O. Box 805398, Chicago, Illinois 60680-5398, or from PSEG, Investor Relations, 80 Park Plaza, P.O. Box 1171, Newark, New Jersey 07101-1171. The respective directors and executive officers of Exelon and PSEG...

  • Page 11
    Exelon strives to build exceptional value - by becoming the best and most consistently profitable electricity and gas company in the United States. To succeed, we must... > Live up to our commitments > Perform at world-class levels > Build value through disciplined financial management 9

  • Page 12
    we promise to keep the lights on >

  • Page 13
    ... every day to apply the lessons learned in nuclear and finance to our distribution business. We still have much to do, but every day we get better. Exelon will be recognized as a public service leader, the nation's foremost electric and gas utility. While competition has changed the way we price our...

  • Page 14
    ...in the industry. Competition works. Exelon will be the first truly national utility. As the benefits of competition become more apparent, wholesale competition will grow in other regions, and Exelon will be well positioned to grow with it. Our low-cost nuclear fleet, our financial discipline and our...

  • Page 15
    < we promise to compete for your business

  • Page 16
    we promise to be good stewards >

  • Page 17
    ... our obligation to the environment...In a world increasingly concerned about global climate change, nuclear power will play a pivotal role. today Exelon is a good safety and environmental steward. Our accident rate in nuclear and our OSHA recordables in Exelon Energy Delivery are among the best in...

  • Page 18
    ... as well. In a competitive world, a successful company provides a challenging and diverse work environment that develops and encourages employees to be their best. It is also a place where employees are committed to improving productivity, service and customer relations. tomorrow 17,300 Engaging...

  • Page 19
    < we promise to build a high-performance culture

  • Page 20
    we promise to keep working until we are the finest electric and gas company in the country > John Rowe and Jim Ferland at PSEG headquarters.

  • Page 21
    ... may change, but the Vision remains. Exelon is one Company, with one Vision - to be the finest electric and gas company in the country. today Exelon is one of the most successful utilities in country, with the largest nuclear fleet, a strong balance sheet, and the largest market cap in the industry...

  • Page 22
    ... in several vital areas of the company, including Customer & Marketing Services and the Work Management Department, to ensure that its focus is on the customer first. exelon generation In 2004, Exelon Generation worked to further integrate its business units, tailoring them to be most profitable...

  • Page 23
    ...and traditional shared services including information technology, supply management, legal services, payroll, accounts payable and employee benefits administration. As a shared services organization, BSC delivers value to Exelon's business units and optimizes solutions for the company as a whole. By...

  • Page 24
    ... Officer, Exelon, and President, Exelon Business Services Company John L. Skolds Executive Vice President, Exelon and President, Exelon Energy Delivery * Oliver D. Kingsley, Jr. retired on November 1, 2004. During his 7 years with Exelon, Oliver transformed the performance of the company's nuclear...

  • Page 25
    ... Retired Chairman, First Chicago NBD Corporation M. Walter D'Alessio Vice Chairman, NorthMarq Capital, Inc. Ronald Rubin Chairman and Chief Executive Officer, Pennsylvania Real Estate Investment Trust Sue L. Gin Chairman and Chief Executive Officer, Flying Food Group, LLC Nelson A. Diaz Partner...

  • Page 26
    ... Business Segment Condensed Consolidated Financial Statements: > Consolidated Statements of Income > Consolidated Statements of Cash Flows > Consolidated Balance Sheets > Consolidated Statements of Changes in Shareholders' Equity > Consolidated Statements of Comprehensive Income Management's Report...

  • Page 27
    ...merger of Exelon, Unicom and PECO on October 20, 2000. That merger was accounted for using the purchase method of accounting with PECO as the acquiring company. Accordingly, financial results for 2000 consist of PECO...in millions 2004 2003 2002 2001 December 31, 2000 Balance Sheet data: Current...

  • Page 28
    .... 143, "Accounting for Asset Retirement Obligations" (SFAS No. 143). See Note 1 of Exelon's Notes to Consolidated Financial Statements within its 2004 Form 10-K for further information regarding the adoptions of FIN 46-R, EITF 03-16 and SFAS No. 143. Operating Revenues. Operating revenues decreased...

  • Page 29
    ...of Sithe and the recording and subsequent impairment of an asset retirement cost (ARC) at Generation in 2004. See Note 14 of Exelon's Notes to Consolidated Financial Statements within its 2004 Form 10-K for additional information. The increase also resulted from increased amortization expense due to...

  • Page 30
    ...eliminated in Exelon's consolidated financial statements. Transfer of Exelon Energy Company from Enterprises to Generation. Effective January 1, 2004, Enterprises' competitive retail sales business, Exelon Energy Company, was transferred to Generation. The 2003 information related to the Enterprises...

  • Page 31
    ...Financial Results - Energy Delivery Results of Operations - Energy Delivery in millions 2004 2003 Favorable (Unfavorable) Variance Operating revenues Operating expenses Purchased power... revenues and expenses, was relatively unchanged between periods. EXELON CORPORATION AND SUBSIDIARY COMPANIES 29

  • Page 32
    ...of changes in accounting principles recorded in 2004 included a benefit of $32 million, net of income taxes, related to the adoption of FIN 46-R and in 2003 included income of $108 million, net of income taxes, related to the adoption of SFAS No. 143. 30 EXELON CORPORATION AND SUBSIDIARY COMPANIES

  • Page 33
    Discussion of Financial Results - Enterprises Results of Operations - Enterprises As previously described, effective January 1, 2004, Enterprises contributed its interest in Exelon Energy Company to Generation. Exelon Energy Company was previously reported as a part of the Enterprises segment. For ...

  • Page 34
    ... (SEC). See also management's discussion and analysis of financial condition and results of operation, which includes a discussion of critical accounting policies and estimates, on pages 46 through 130 of Exelon's 2004 Form 10-K filed with the SEC. 32 EXELON CORPORATION AND SUBSIDIARY COMPANIES

  • Page 35
    ... the SEC. See also management's discussion and analysis of financial condition and results of operation, which includes a discussion of critical accounting policies and estimates, on pages 46 through 130 of Exelon's 2004 Form 10-K filed with the SEC. EXELON CORPORATION AND SUBSIDIARY COMPANIES 33

  • Page 36
    ... the SEC. See also management's discussion and analysis of financial condition and results of operation, which includes a discussion of critical accounting policies and estimates, on pages 46 through 130 of Exelon's 2004 Form 10-K filed with the SEC. 34 EXELON CORPORATION AND SUBSIDIARY COMPANIES

  • Page 37
    ... the SEC. See also management's discussion and analysis of financial condition and results of operation, which includes a discussion of critical accounting policies and estimates, on pages 46 through 130 of Exelon's 2004 Form 10-K filed with the SEC. EXELON CORPORATION AND SUBSIDIARY COMPANIES 35

  • Page 38
    ... the SEC. See also management's discussion and analysis of financial condition and results of operation, which includes a discussion of critical accounting policies and estimates, on pages 46 through 130 of Exelon's 2004 Form 10-K filed with the SEC. 36 EXELON CORPORATION AND SUBSIDIARY COMPANIES

  • Page 39
    ...on marketable securities...management's discussion and analysis of financial condition and results of operation, which includes a discussion of critical accounting policies and estimates, on pages 46 through 130 of Exelon's 2004 Form 10-K filed with the SEC. EXELON CORPORATION AND SUBSIDIARY COMPANIES...

  • Page 40
    ...December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. They also expressed an unqualified opinion that Exelon's assessment, included in Management's Report on Internal Controls Over Financial Reporting, that Exelon maintained effective internal...

  • Page 41
    ... information Corporate Headquarters Exelon Corporation P.O. Box 805398 Chicago, IL 60680-5398 Independent Public Accountants PricewaterhouseCoopers LLP Website www.exeloncorp.com New York Stock Exchange Listing EXC Shareholder Inquiries EquiServe Trust Company, N.A., is Dividend Disbursing Agent...

  • Page 42
    Exelon Corporation P.O. Box 805398 Chicago, IL 60680-5398 www.exeloncorp.com ©2005 Exelon