Exelon 2006 Annual Report Download

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value driven
Exelon Corporation 06 Summary Annual Report

Table of contents

  • Page 1
    value driven Exelon Corporation 06 Summary Annual Report

  • Page 2
    ...Value driven to capitalize on environmental leadership and clean nuclear energy Value driven to create a challenging and rewarding workplace Value driven to enhance the value of our generation Value driven to build value through disciplined financial management Exelon at a Glance Strategy and Policy...

  • Page 3
    ... management team, focused on delivering superior operating performance. > We have a uniquely positioned generation business, one that we expect to drive strong earnings and cash flow. > We are building healthy, self-sustaining delivery companies, while managing the transition to competitive...

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

  • Page 5
    ... of it good, some not. In Illinois, Commonwealth Edison won the right to pass through its cost of purchased power to its retail customers, despite a last ditch effort to extend a ten-year rate freeze in the Illinois legislature. While the issue seems likely to arise again, ComEd's success to date is...

  • Page 6
    ... the performance of the Philadelphia Utility Index, the S&P 500 Utility Index, and the S&P 500. And we continue to earn favorable recognition in the media and from industry and civic groups. Fortune magazine named Exelon one of America's "Most Admired Companies," and ranked Exelon number one...

  • Page 7
    ... share repurchases. Future dividends and share repurchases are subject to the approval of our board of directors. And lastly, our Business Services Group again improved its overall performance and service levels, delivering quality products and services at the best cost to all Exelon companies...

  • Page 8
    ... the opportunity to phase-in rates, if they choose to do so. ComEd is also proactively taking steps to educate customers on energy efficiency and renewable energy programs and assistance for low-income customers through the ComEd CARE (Customers' Affordable Reliable Energy) program. Illinois is...

  • Page 9
    ... cap-and-trade system with a safety valve to govern economic impact. With our current nuclear fleet, we are well positioned to provide environmental leadership into a low-carbon energy future. And in the future, we intend to expand our low-carbon resource portfolio around low or no carbon generation...

  • Page 10
    ... leadership and clean nuclear energy > Create a challenging and rewarding workplace > Enhance the value of our generation > Build value through disciplined financial management our values Safety - for our employees, our customers and our communities Integrity - the highest ethical standards...

  • Page 11
    ... performance > Support competitive markets > Protect the value of our generation > Build healthy, self-sustaining delivery companies + grow long-term value > Take the organization to the next level of performance > Align our financial management policies with the changing profile of our company...

  • Page 12
    ... to our commitment to keep the lights on and the gas flowing. Our delivery companies must continue to operate safely, reliably and efficiently, and provide superior service to our customers. They must also secure power supplies for those customers at the best price available in the marketplace. 10

  • Page 13
    Grow long-term value Each of our delivery companies must stand on its own feet. For ComEd, this means opposing rate freeze legislation, seeking regulatory and political solutions that enable it to recover prudently incurred purchased power and delivery service costs, and putting itself on a path to ...

  • Page 14

  • Page 15
    ... to run our nuclear fleet at world-class levels Protect today's value In 2006, Exelon Nuclear performed at world-class levels. We achieved a record summer capacity factor of 98.1 percent, and our fleet-wide annual capacity factor was 93.9 percent, the sixth consecutive year that it has exceeded...

  • Page 16
    ...value In 2006, Exelon was named to both the Dow Jones Sustainability North American Index and the Carbon Disclosure Project's Leadership Index. We further demonstrated our commitment to environmental leadership through the design and construction of our new corporate headquarters in downtown Chicago...

  • Page 17

  • Page 18
    ...become a high-performance organization with a strong culture of continuous improvement - where each employee strives to do his or her best each day, and the organization provides support and opportunity for diversity and growth. In recognition of our effort, BusinessWeek recently named Exelon one of...

  • Page 19
    ... and retaining top-notch talent. We will do this by focusing on integrating our values of safety, integrity, diversity, respect, accountability and continuous improvement into a workplace where employees understand how the work they do links to the Vision and to Exelon's strategic direction. 17

  • Page 20
    ... to enhance the value of our generation Protect today's value A significant portion of Exelon's current stock value depends on sustaining market prices for the output of Exelon Generation's unregulated nuclear fleet. To protect the value of that fleet, Exelon Generation must continue to optimize the...

  • Page 21
    ... ensure the best value for both customers and investors. As the debate over restructuring and competition continues, we are stepping up our advocacy efforts on a range of issues, including organized markets like PJM and ERCOT and competitive procurement approaches like the Illinois auction. 19

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  • Page 23
    Value driven to build value through disciplined financial management Protect today's value Exelon is transitioning from a more traditional, stable utility to a more cyclical commodity-driven merchant generator with a sizable utility presence. As our business profile changes, its financial ...

  • Page 24
    ...in southeastern Pennsylvania. Purchases through PECO WIND in 2006 had an environmental benefit equal to taking 6,500 cars off the road or planting 7.6 million trees. By the Numbers ComEd, with about 5,500 employees, serves 3.8 million electric customers in Chicago and northern Illinois. PECO and its...

  • Page 25
    ...focused in the Midwest. Power Team's trade floor and headquarters are located in Kennett Square, Pennsylvania, with retail offices in Ohio and Illinois. exelon business services company Exelon Business Services Company (EBSC) is a direct, wholly owned subsidiary of Exelon Corporation that serves as...

  • Page 26
    ... Committee John W. Rowe Chairman, President and Chief Executive Officer Frank M. 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...

  • Page 27
    ...Chief Executive Officer, Ariel Capital Management LLC John W. Rowe Chairman, President and Chief Executive Officer, Exelon Corporation Ronald Rubin Chairman and Chief Executive Officer, Pennsylvania Real Estate Investment Trust Richard L. Thomas Retired Chairman, First Chicago NBD Corporation 25

  • Page 28
    ... Statements: > Consolidated Statements of Operations > 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 29
    ... of $776 million and $1.2 billion in 2006 and 2005, respectively. (b) Change between 2006 and 2005 was primarily due to the impact of adopting SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132...

  • Page 30
    ...S&P Utility Index for the period 2001 through 2006. This performance chart assumes: • $100 invested on December 31, 2001 in Exelon Corporation common stock, in the S&P 500 Stock Index and in the S&P Utility Index; and • All dividends are reinvested. Comparison of Five-Year Cumulative Return 350...

  • Page 31
    ... expenses including increased costs associated with storm damage in the PECO service territory, increased nuclear refueling outage costs, increased stock-based compensation expense as a result of adopting FASB Statement No. 123 (revised 2004), EXELON CORPORATION AND SUBSIDIARY COMPANIES 29

  • Page 32
    ...weather conditions in the ComEd and PECO service territories. Purchased Power and Fuel Expense. Purchased power and fuel expense decreased due to lower volumes of power purchased in the market and decreased fossil generation, partially offset by overall higher market energy prices and higher natural...

  • Page 33
    ... within Exelon's (for Sithe Energies, Inc. (Sithe) and Exelon Enterprises Company, LLC (Enterprises)) and Generation's (for Sithe) Consolidated Statements of Operations and Comprehensive Income. See Notes 2 and 3 of the Combined Notes to Consolidated Financial Statements within Exelon's 2006 Form 10...

  • Page 34
    ...Exelon Business Services Company (BSC), Enterprises, investments in synthetic fuel-producing facilities and intersegment eliminations. Net Income (Loss) Before Cumulative Effect of Changes in Accounting Principles by Business Segment 2006 2005 Favorable (Unfavorable) Variance Generation ComEd PECO...

  • Page 35
    ... cold weather on Generation depend on the nature of its market position at the time of the unusual weather. Generation's net income for 2006 and 2005 reflects income from discontinued operations of $4 million and $19 million (after tax), respectively. EXELON CORPORATION AND SUBSIDIARY COMPANIES 33

  • Page 36
    ... impairment of goodwill in 2006, lower purchased power expense and one-time benefits associated with reversing previously incurred expenses as a result of the July 2006 and December 2006 ICC rate orders, partially offset by lower operating revenues. 34 EXELON CORPORATION AND SUBSIDIARY COMPANIES

  • Page 37
    ...year. The increases in CTC amortization expense and CTC rates were in accordance with PECO's 1998 restructuring settlement with the Pennsylvania Public Utility Commission. The increase in CTC amortization expense exceeded the increase in CTC revenues. EXELON CORPORATION AND SUBSIDIARY COMPANIES 35

  • Page 38
    ... statements, including notes, please refer to pages 149 through 324 of Exelon's 2006 Form 10-K filed with the Securities and Exchange Commission (SEC). See also management's discussion and analysis of financial condition and results of operation, which includes a discussion of critical accounting...

  • Page 39
    ... of long-term debt to financing affiliates Issuance of short-term debt Retirement of short-term debt Change in short-term debt Dividends paid on common stock Proceeds from employee stock plans Purchase of treasury stock Other financing activities Net cash flows used in financing activities Increase...

  • Page 40
    ... 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 62 through 133 of Exelon's 2006 Form 10-K filed with the SEC. 38 EXELON CORPORATION AND SUBSIDIARY COMPANIES

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    ... Corporation and Subsidiary Companies Consolidated Balance Sheets (in millions) December 31, 2006 2005 Liabilities and shareholders' equity Current liabilities Commercial paper and notes payable Long-term debt due within one year Long-term debt to ComEd Transitional Funding Trust and PECO Energy...

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    ... Shares Common Stock Treasury Stock Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Shareholders' Equity Balance, December 31, 2003 Net income Long-term incentive plan activity Employee stock purchase plan issuances Common stock purchases Common stock dividends declared...

  • Page 43
    Exelon Corporation and Subsidiary Companies Consolidated Statements of Comprehensive Income (in millions) For the Years Ended December 31, 2006 2005 2004 Net income Other comprehensive income (loss) Minimum pension liability, net of income taxes of $674, $3, and $(228), respectively Net ...

  • Page 44
    ... in Internal Control - Integrated Framework issued by the COSO. The full text of PricewaterhouseCoopers LLP's report can be found on pages 150 and 151 of our 2006 Form 10-K. Certifications The CEO of Exelon has made the required annual certifications for 2006 to the New York Stock Exchange and...

  • Page 45
    ..., IL 60680-5398 Investor Relations 312.394.2345 Independent Public Accountants PricewaterhouseCoopers LLP Website www.exeloncorp.com New York Stock Exchange Listing EXC Shareholder Inquiries Computershare Trust Company, N.A., is Dividend Disbursing Agent, Dividend Reinvestment Agent and Transfer...

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    Exelon Corporation P.O. Box 805398 Chicago, IL 60680-5398 www.exeloncorp.com ©2007 Exelon