Exelon 2005 Annual Report Download

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meeting the challenge
Exelon Corporation 05 Summary Annual Report

Table of contents

  • Page 1
    meeting the challenge Exelon Corporation 05 Summary Annual Report

  • Page 2
    ... 02 10 12 14 16 18 20 22 23 24 Introduction Letter to Shareholders Meeting the operational challenge Meeting the financial challenge Meeting the workplace challenge Meeting the environmental challenge Achieving our Vision Exelon at a Glance Strategy and Policy Committee Board of Directors Financial...

  • Page 3
    ..., in both Illinois and New Jersey. We are determined to meet these challenges, just as we have met past challenges, and turn them into opportunities for our customers, our employees, and for you, our shareholders. We are Exelon, always striving to be the best electric and gas company in the country...

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

  • Page 5
    ... Public Service Enterprise Group. However, we are still pursuing approvals before the United States Department of Justice and the New Jersey Board of Public Utilities. Our efforts continue as I write and we remain optimistic about a successful outcome. Fortunately, we have ample success to report...

  • Page 6
    ... the gas flowing for millions of people at home and work. We must constantly strive to be a good neighbor, a good environmental steward and a strong partner in the communities in which we all work and live. We must provide a diverse and highly competent group of employees with respect, opportunity...

  • Page 7
    ..., implemented an online employee self-service payroll and benefits administration program, and automated our invoice processing. BSC also exceeded its supply chain savings target for the second consecutive year, achieving $71.7 million in savings, and directed some $252 million of Exelon's spend for...

  • Page 8
    ... maintained our nuclear edge, improved the performance of our fossil and hydro units, and improved the performance of both of our delivery companies. I would like to thank the management team pictured in the back of this report, and all of our other managers and employees, for their hard work and...

  • Page 9
    ...and External Affairs, along with John Hooker, Senior Vice President, Legislative and Governmental Affairs, and Darryl Bradford, Vice President and General Counsel. The PSEG Merger We also are making progress in obtaining approval of our announced merger with Public Service Enterprise Group, although...

  • Page 10
    ... the security of our energy supply, and an increasingly urgent need to address global climate and other environmental issues, we need utility companies with the financial strength to develop and deploy new and innovative forms of generation and transmission. The new company, Exelon Electric & Gas...

  • Page 11
    ... improve our operating performance even as we confront the challenges of Illinois and New Jersey. We have a sound Vision - we know what it takes to be the very best, and we work at getting there each and every day. John W. Rowe Chairman, President and CEO Exelon Corporation May 3, 2006 9

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  • Page 13
    ... to safety. Safety is our number one priority, for our employees, our customers, and the communities we serve. Our pending merger with PSEG will afford us greater opportunities to improve our operational performance. The new company will combine Exelon's expertise in nuclear operations with PSEG...

  • Page 14
    Meeting the financial challenge We are providing exceptional value to our investors. Our financial performance has made Exelon one of the most highly valued utilities in the industry. Over the past five years, our operating earnings per diluted share have increased by almost 10 percent a year. And, ...

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    ...We have made a promise to listen, to communicate and to show respect to our employees. The merger with PSEG is about building a new culture, one that will better enable the new company to set the standard for the industry. Even as we work to meet our commitments to our customers and provide superior...

  • Page 18
    ...opportunities to address both climate change and the consequences of our national over-reliance on fossil fuels. Even now we are working on a resource plan... gas, energy efficiency, renewable energy, emerging clean coal technologies and new nuclear energy. We are determined to meet the future energy ...

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    ... achieve our Vision through enhanced earnings, regulatory and market diversity, increased operating flexibility, strong stable cash flow and an experienced management team. The pending merger will create substantial benefits to all of our customers, employees, investors and the communities we serve...

  • Page 22
    ... Social Security Administration Building in Chicago. PECO focused its efforts during 2005 on key regulatory issues, improving customer communications and satisfaction, maintaining the system during peak load periods, and positive employee engagement. PECO secured approval of the Exelon-PSEG merger...

  • Page 23
    ... the Exelon enterprise. These services include information technology, supply management, and legal services, as well as payroll, accounts payable and employee benefits administration. BSC also is responsible for Exelon corporate governance. The company employs some 2,000 people in Northern Illinois...

  • Page 24
    ... Clark Chairman and CEO, ComEd Ian P. McLean Executive Vice President, Exelon and President, Power Team Randall E. Mehrberg Executive Vice President, Chief Administrative Officer, and Chief Legal Officer Elizabeth A. Moler Executive Vice President, Government and Environmental Affairs and Public...

  • Page 25
    ... (Retired), United States Navy Nelson A. Diaz Partner, Blank Rome LLP Sue L. Gin Chairman and Chief Executive Officer, Flying Food Group, LLC Rosemarie B. Greco Director, Office of Health Care Reform, Commonwealth of Pennsylvania Edgar D. Jannotta Chairman, William Blair & Company, LLC John...

  • Page 26
    ... 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 on Internal Control Over Financial Reporting...

  • Page 27
    ... due to the goodwill impairment charge of $1.2 billion in 2005. (b) Due to the adoptions of FIN 46 and FIN 46-R in 2003, the mandatorily redeemable preferred securities of ComEd and PECO were reclassified as long-term debt to financing trusts in 2003. EXELON CORPORATION AND SUBSIDIARY COMPANIES 25

  • Page 28
    ... Emerging Issues Task Force Issue No. 03-16, "Accounting for Investments in Limited Liability Companies" (EITF 03-16). See Note 1 of Exelon's Notes to Consolidated Financial Statements within its 2005 Form 10-K for further information regarding the adoption of FIN 46-R. Operating Revenues. Operating...

  • Page 29
    ... Boston Generating in 2004 and decreased severance and benefit expense. Impairment of Goodwill. ComEd recorded a $1,207 million charge during 2005 to impair its goodwill. See Note 8 of Exelon's Notes to Consolidated Financial Statements within its 2005 Form 10-K for further information. Depreciation...

  • Page 30
    ...Other includes corporate operations, shared service entities, including BSC, Enterprises, investments in synthetic fuel-producing facilities and intersegment eliminations. Income (Loss) Before Cumulative Effect of Changes in Accounting Principles by Business Segment 2005 2004 Favorable (unfavorable...

  • Page 31
    ... of goodwill and higher purchased power expense, partially offset by higher operating revenues due to favorable weather and due to the impacts of a 2004 charge associated with the accelerated retirement of long-term debt and lower interest expense. EXELON CORPORATION AND SUBSIDIARY COMPANIES 29

  • Page 32
    ... revenues, net of related purchased power expense, due to favorable weather and lower interest expense due to the scheduled retirement of debt owed to the PECO Energy Transition Trust, partially offset by higher CTC regulatory asset amortization. 30 EXELON CORPORATION AND SUBSIDIARY COMPANIES

  • Page 33
    ... in prices associated with Generation's power sales agreement with ComEd and higher average margins on wholesale market sales as higher spot market prices more than compensated for higher fuel prices and the impact of higher nuclear generation. EXELON CORPORATION AND SUBSIDIARY COMPANIES 31

  • Page 34
    Exelon Corporation and Subsidiary Companies Consolidated Statements of Income (in millions, except per share data) For the Years Ended December 31, 2005 2004 2003 Operating revenues Operating expenses Purchased power Purchased power from AmerGen Energy Company, LLC Fuel Operating and maintenance ...

  • Page 35
    ...of mandatorily redeemable preferred securities Payment on acquisition note payable to Sithe Energies, Inc. Retirement of preferred stock Dividends paid on common stock Proceeds from employee stock plans Purchase of treasury stock Other financing activities Net cash flows used in financing activities...

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    Exelon Corporation and Subsidiary Companies Consolidated Balance Sheets (in millions) 2005 December 31, 2004 Assets Current assets Cash and cash equivalents Restricted cash and investments Accounts receivable, net Customer Other Mark-to-market derivative assets Inventories, at average cost ...

  • 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 78 through 148 of Exelon's 2005 Form 10-K filed with the SEC. EXELON CORPORATION AND SUBSIDIARY COMPANIES 35

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    Exelon Corporation and Subsidiary Companies Consolidated Statements of Changes in Shareholders' Equity (Dollars in millions, shares in thousands) Issued Shares Common Stock Treasury Stock Deferred Compensation Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shareholders...

  • Page 39
    ... 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 78 through 148 of Exelon's 2005 Form 10-K filed with the SEC. EXELON CORPORATION AND SUBSIDIARY COMPANIES 37

  • Page 40
    ... 31, 2005, Exelon's internal control over financial reporting was effective. February 15, 2006 Information Derived from 2005 Form 10-K We have presented a condensed discussion of financial results, excerpts from our consolidated financial statements and a copy of our Management's Report on Internal...

  • Page 41
    ... symbol EXC. investor and general 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 Computershare Trust Company...

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    Exelon Corporation P.O. Box 805398 Chicago, IL 60680-5398 www.exeloncorp.com ©2006 Exelon