Exelon 2001 Annual Report Download - page 64

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The effect of this cumulative adjustment will be to increase the decommissioning liability to reflect a full decommissioning
obligation in current year dollars. Additionally, the standard will require the accrual of an asset related to the full amount of
the decommissioning obligation, which will be amortized over the remaining lives of the plants. The net difference between
the asset recognized and the liability recorded upon adoption of the standard will be charged to earnings and recognized as a
cumulative effect, net of expected regulatory recovery. The decommissioning liability to be recorded represents an obligation
for the future decommissioning of the plants, and as a result interest expense will be accrued on this liability until such time
as the obligation is satisfied.
Exelon is in the process of evaluating the impact of SFAS No.143 on its financial statements, and cannot determine the ultimate
impact of adoption at this time, however the cumulative effect could be material to Exelon’s earnings. Additionally, although over
the life of the plant the charges to earnings for the depreciation of the asset and the interest on the liability will be equal to the
amounts currently recognized as decommissioning expense, the timing of those charges will change and in the near-term period
subsequent to adoption, the depreciation of the asset and the interest on the liability could result in an increase in expense.
SFAS No. 144 establishes accounting and reporting standards for both the impairment and disposal of long-lived assets.This
statement is effective for fiscal years beginning after December 15, 2001 and provisions of this statement are generally applied
prospectively. Exelon is in the process of evaluating the impact of SFAS No. 144 on its financial statements, and does not expect
the impact to be material.
Reclassifications
Certain prior year amounts have been reclassified for comparative purposes. The reclassifications did not affect net income.
(02) Merger
On October 20, 2000, Exelon became the parent corporation of PECO and ComEd as a result of the completion of the
transactions contemplated by an Agreement and Plan of Exchange and Merger, as amended (Merger Agreement), among
PECO, Unicom Corporation (Unicom) and Exelon. Pursuant to the Merger Agreement, Unicom merged with and into Exelon
(Merger). In the Merger, each share of the outstanding common stock of Unicom was converted into 0.875 shares of
common stock of Exelon plus $3.00 in cash. As a result of the Share Exchange, Exelon became the owner of all of the
common stock of PECO. As a result of the Merger, Unicom ceased to exist and its subsidiaries, including ComEd, became
subsidiaries of Exelon.
The Merger was accounted for using the purchase method of accounting. The total purchase price was $5,975 million.
In connection with the Merger, Exelon issued 148 million shares of common stock in the amount of $5,310 million and paid
$507 million in cash to Unicom shareholders pursuant to the terms of the Merger Agreement. The source of the cash
consideration was borrowings under an Exelon term loan. In addition, the Merger consideration included $113 million of fair
value of stock options and awards for certain Unicom employees and $45 million of direct acquisition costs. The cost in
excess of net assets acquired was $5,136 million as adjusted to reflect final purchase price allocations. Exelon’s results of
operations include Unicom’s results of operations since October 20, 2000. The fair value of the assets acquired, including
the cost in excess of net assets acquired, and liabilities assumed in the Merger are as follows:
Current Assets (including cash of $974) $2,744
Property, Plant and Equipment 7,641
Deferred Debits and Other Assets 5,535
Cost in excess of net assets acquired 5,136
Current Liabilities (2,413)
Long-Term Debt (7,419)
Deferred Credits and Other Liabilities (4,921)
Preferred Securities of Subsidiaries (328)
Total Purchase Price $5,975