ComEd 2004 Annual Report Download - page 6

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This financial performance has made Exelon the most highly valued utility
in the nation, with a year-end capitalization of $29.3 billion, and has rewarded
you, our shareholders, with one of the best overall returns in the industry.
Adjusted for the 2-for-1 stock split completed in May, our overall stock price
rose by 33 percent over the course of the year, from $33.18 on December 31, 2003
to $44.07 on December 31, 2004. Exelon’s total return for 2004, measured
by stock appreciation and assuming dividends are reinvested, exceeded
37 percent. In contrast, the 2004 total return of the companies that comprise
the Philadelphia Utility Index was 26 percent, the total return of the S&P
Electrics was 24 percent and the total return of the S&P 500 was 11 percent.
More significantly, from the completion of the Unicom/PECO merger in
October 2000 to the end of 2004, Exelon’s total return has exceeded 70 percent.
In contrast, the total average return for a comparable investment in companies
included in the Philadelphia Utility Index would have been 21 percent, and
for the S&P 500 would have been a loss of 7 percent.
The Exelon Board of Directors raised the dividend rate on three separate
occasions last year. In January, we raised the annual dividend rate from $1.00
to $1.10, a 10 percent increase. In July, the Board again voted to increase the
dividend, this time by 12 cents annually to $1.22 per share. The Board also
approved a policy targeting dividend payout at 50 to 60 percent of ongoing
earnings. In October, with increasing confidence in earnings and cash flow
improvements, the Board 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 high-
cost, urban utilities with histories of expensive nuclear plants and troubled
nuclear operations. Today, as Exelon affiliates, they are part of one of the
most successful utilities in the country, with a solidly performing nuclear
fleet that is the largest in the country, a dramatically strengthened balance
sheet, and rates that have moderated. Improved nuclear operations are now
holding wholesale rates lower than they otherwise would be in both ComEd
and PECO’s territories.
Our performance likewise sets our expectation for the promise that can be
realized from our recently announced merger with Public Service Enterprise
Group. PSEG is a natural partner for Exelon. The two companies enjoy compli-
mentary assets, geography and strategies, and already have a history of
partnership. When finally approved by a long list of federal and state agencies,
the merger will create the nation’s largest utility holding company, with
more than $70 billion in total assets, and serving more than 7 million electric
customers and 2 million gas customers in three major metropolitan areas.
More importantly, it will result in a stronger company, one built on Exelon’s
nuclear prowess and strong balance sheet, and PSEG’s expertise in distribution
operations and experience with retail auctions.
We are not there yet.
But we make progress
every day. And I will not
rest until it is so.