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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2000

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission
File Registrant; State of Incorporation; IRS Employer
Number Address; and Telephone Number Identification No.
---------- ----------------------------------- ------------------

1-11375 UNICOM CORPORATION 36-3961038
(an Illinois corporation)
37th Floor, 10 South Dearborn Street
Post Office Box A-3005
Chicago, Illinois 60690-3005
312/394-7399
1-1839 COMMONWEALTH EDISON COMPANY (an Illinois corpo- 36-0938600
ration)
37th Floor, 10 South Dearborn Street
Post Office Box 767
Chicago, Illinois 60690-0767
312/394-4321

Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) have been subject to such filing
requirements for the past 90 days. Yes X No

Common Stock outstanding at July 31, 2000:
Unicom Corporation 175,824,812 shares
Commonwealth Edison Company 183,745,848 shares

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Unicom Corporation
and
Commonwealth Edison Company

Quarterly Reports on Form 10-Q
to the Securities and Exchange Commission
for the Quarterly Period Ended June 30, 2000

This document contains the Quarterly Reports on Form 10-Q for the quarterly
period ended June 30, 2000 for each of Unicom Corporation and Commonwealth
Edison Company. Information contained herein relating to an individual
registrant is filed by such registrant on its own behalf. Accordingly, except
for its subsidiaries, Commonwealth Edison Company makes no representation as to
information relating to Unicom Corporation or to any other companies affiliated
with Unicom Corporation. In addition, several portions of these Quarterly
Reports contain forward-looking statements; and reference is made to pages 58-
59 for the location and character of such statements.

INDEX

Page
-----

Definitions.............................................................. 3
PART I. FINANCIAL INFORMATION
Unicom Corporation and Subsidiary Companies:
Financial Statements--
Report of Independent Public Accountants............................. 4
Statements of Consolidated Operations for the three months, six
months and twelve months ended June 30, 2000 and 1999............... 5
Consolidated Balance Sheets--June 30, 2000 and December 31, 1999..... 6-7
Statements of Consolidated Capitalization--June 30, 2000 and
December 31, 1999 .................................................. 8
Statements of Consolidated Retained Earnings for the three months,
six months and twelve months ended June 30, 2000 and 1999........... 9
Statements of Consolidated Comprehensive Income for the three months,
six months and twelve months ended June 30, 2000 and 1999........... 9
Statements of Consolidated Cash Flows for the three months, six
months and twelve months ended June 30, 2000 and 1999............... 10
Notes to Financial Statements........................................ 11-41
Management's Discussion and Analysis of Financial Condition and Results
of Operations......................................................... 42-59
Commonwealth Edison Company and Subsidiary Companies:
Financial Statements--
Report of Independent Public Accountants............................. 60
Statements of Consolidated Operations for the three months, six
months and twelve months ended June 30, 2000 and 1999............... 61
Consolidated Balance Sheets--June 30, 2000 and December 31, 1999..... 62-63
Statements of Consolidated Capitalization--June 30, 2000 and
December 31, 1999................................................... 64
Statements of Consolidated Retained Earnings for the three months,
six months and twelve months ended June 30, 2000 and 1999........... 65
Statements of Consolidated Comprehensive Income for the three months,
six months and twelve months ended June 30, 2000 and 1999........... 65
Statements of Consolidated Cash Flows for the three months, six
months and twelve months ended June 30, 2000 and 1999............... 66
Notes to Financial Statements........................................ 67-71
Management's Discussion and Analysis of Financial Condition and Results
of Operations......................................................... 72
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.............................................. 73-74
Item 4. Submission of Matters to Vote of Security Holders.............. 74-75
Item 6. Exhibits and Reports on Form 8-K............................... 75
SIGNATURES............................................................... 76

DEFINITIONS

The following terms are used in this document with the following meanings:

Term Meaning
---------------------- -------------------------------------------------------

1997 Act Illinois Electric Service Customer Choice and Rate
Relief Law of 1997, as amended
AFUDC Allowance for funds used during construction
APB Accounting Principles Board
APX Automated Power Exchange Inc., a California company
CERCLA Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended
City City of Chicago
ComEd Commonwealth Edison Company, a Unicom subsidiary
ComEd Funding ComEd Funding, LLC, a ComEd subsidiary
ComEd Funding Trust ComEd Transitional Funding Trust, a ComEd Funding
subsidiary
Cotter Cotter Corporation, formerly a ComEd subsidiary
CTC Non-bypassable "competitive transition charge"
DOE U.S. Department of Energy
Edison Development Edison Development Canada Inc., a ComEd subsidiary
EME Edison Mission Energy, an Edison International
subsidiary
EPS Earnings/(Loss) per Common Share
ESPP Employee Stock Purchase Plan
FASB Financial Accounting Standards Board
FERC Federal Energy Regulatory Commission
Fossil Plant ComEd's former six coal-fired generating plants, an oil
and gas-fired plant, and nine peaking unit sites
GAAP Generally Accepted Accounting Principles
ICC Illinois Commerce Commission
IDR Illinois Department of Revenue
Indiana Company Commonwealth Edison Company of Indiana, Inc., a ComEd
subsidiary
INPO Institute of Nuclear Power Operations
ISO Independent System Operator
MGP Manufactured gas plant
NEIL Nuclear Electric Insurance Limited
Northwind Chicago Northwind Chicago, LLC, a UT Holdings subsidiary
Northwind Midway Northwind Midway, LLC, a UT Holdings subsidiary
NRC Nuclear Regulatory Commission
O&M Operation and maintenance
PECO PECO Energy Company, a Pennsylvania company
PPAs Purchase Power Agreements
RES Retail Electric Supplier
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting Standards
SPEs Special purpose entities
S&P Standard & Poor's
Trusts ComEd Financing I and ComEd Financing II, ComEd
subsidiaries
Trust Securities ComEd-obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely ComEd's
subordinated debt securities
Unicom Unicom Corporation
Unicom Energy Services Unicom Energy Services Inc., a Unicom Enterprises
subsidiary
Unicom Enterprises Unicom Enterprises Inc., a Unicom subsidiary
Unicom Investment Unicom Investment, Inc., a Unicom subsidiary
Unicom Power Holdings Unicom Power Holdings Inc., a Unicom Enterprises
subsidiary
Unicom Thermal Unicom Thermal Technologies Inc., a UT Holdings
subsidiary
U.S. EPA U.S. Environmental Protection Agency
UT Holdings UT Holdings Inc., a Unicom Enterprises subsidiary

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of Unicom Corporation:

We have audited the accompanying consolidated balance sheets and statements
of consolidated capitalization of UNICOM CORPORATION (an Illinois corporation)
and subsidiary companies as of June 30, 2000 and December 31, 1999, and the
related statements of consolidated operations, retained earnings,
comprehensive income and cash flows for the three-month, six-month and twelve-
month periods ended June 30, 2000 and 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Unicom
Corporation and subsidiary companies as of June 30, 2000 and December 31,
1999, and the results of their operations and their cash flows for the three-
month, six-month and twelve-month periods ended June 30, 2000 and 1999, in
conformity with accounting principles generally accepted in the United States.

Arthur Andersen LLP

Chicago, Illinois
August 11, 2000

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED OPERATIONS

The following Statements of Consolidated Operations for the three months,
six months and twelve months ended June 30, 2000 and 1999 reflect the results
of past operations and are not intended as any representation as to results of
operations for any future period. Future operations will necessarily be
affected by various and diverse factors and developments, including changes in
electric prices, regulation, population, business activity, asset
dispositions, competition, taxes, environmental control, energy use, fuel,
cost of labor, purchased power and other matters, the nature and effect of
which cannot now be determined.

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
---------------------- ---------------------- ----------------------
2000 1999 2000 1999 2000 1999
---------- ---------- ---------- ---------- ---------- ----------
(Thousands Except Per Share Data)

Operating Revenues...... $1,807,596 $1,685,714 $3,465,382 $3,223,518 $7,089,811 $6,882,885
---------- ---------- ---------- ---------- ---------- ----------
Operating Expenses and
Taxes:
Fuel.................. $ 97,631 $ 259,639 $ 196,839 $ 494,473 $ 699,628 $1,087,835
Purchased power....... 402,937 98,301 674,987 169,983 1,058,303 465,249
Operation and
maintenance.......... 591,070 650,096 1,094,490 1,205,498 2,314,866 2,355,938
Depreciation and
amortization......... 226,948 266,947 601,645 498,279 946,615 960,083
Taxes (except income). 129,359 130,135 267,747 262,495 513,704 569,841
Income taxes.......... 58,893 60,347 92,302 123,611 327,891 360,265
Investment tax credits
deferred--net ....... (5,500) (7,021) (10,999) (14,042) (22,785) (27,723)
---------- ---------- ---------- ---------- ---------- ----------
$1,501,338 $1,458,444 $2,917,011 $2,740,297 $5,838,222 $5,771,488
---------- ---------- ---------- ---------- ---------- ----------
Operating Income........ $ 306,258 $ 227,270 $ 548,371 $ 483,221 $1,251,589 $1,111,397
---------- ---------- ---------- ---------- ---------- ----------
Other Income and
(Deductions):
Interest on long-term
debt, net of interest
capitalized.......... $ (129,856) $ (135,952) $ (264,221) $ (278,510) $ (530,779) $ (499,439)
Interest on notes
payable.............. (5,202) (3,769) (6,171) (7,721) (17,052) (18,264)
Allowance for funds
used during
construction......... 5,392 5,190 11,011 9,401 23,422 18,006
Income taxes
applicable to
nonoperating
activities........... (15,029) (1,833) (21,418) (3,249) 8,913 (17,827)
Provisions for
dividends and
redemption premiums--
Preferred and
preference stocks of
ComEd............... (1,017) (3,043) (2,239) (18,340) (7,655) (46,215)
ComEd-obligated
mandatorily
redeemable preferred
securities of
subsidiary trusts
holding solely
ComEd's subordinated
debt securities..... (7,427) (7,427) (14,855) (14,855) (29,710) (29,710)
Miscellaneous--net.... (5,555) 38,956 92,167 46,664 24,552 74,674
---------- ---------- ---------- ---------- ---------- ----------
$ (158,694) $ (107,878) $ (205,726) $ (266,610) $ (528,309) $ (518,775)
---------- ---------- ---------- ---------- ---------- ----------
Net Income before
Extraordinary Items ... $ 147,564 $ 119,392 $ 342,645 $ 216,611 $ 723,280 $ 592,622
Extraordinary Losses,
less Applicable Income
Taxes.................. (1,423) -- (4,167) (27,576) (4,171) (27,576)
---------- ---------- ---------- ---------- ---------- ----------
Net Income.............. $ 146,141 $ 119,392 $ 338,478 $ 189,035 $ 719,109 $ 565,046
========== ========== ========== ========== ========== ==========
Earnings per common
share before
extraordinary items
Basic................. $ 0.84 $ 0.55 $ 1.86 $ 1.00 $ 3.60 $ 2.73
Diluted............... $ 0.83 $ 0.55 $ 1.85 $ 1.00 $ 3.59 $ 2.72
Extraordinary losses,
less applicable income
taxes (basic and
diluted)............... $ (0.01) -- $ (0.02) (0.13) $ (0.02) (0.13)
Earnings per common
share--
Basic................. $ 0.83 $ 0.55 $ 1.84 $ 0.87 $ 3.58 $ 2.60
Diluted............... $ 0.82 $ 0.55 $ 1.83 $ 0.87 $ 3.57 $ 2.59
Cash Dividends Declared
per Common Share....... $ 0.40 $ 0.40 $ 0.80 $ 0.80 $ 1.60 $ 1.60

The accompanying Notes to Financial Statements are an integral part of the
above statements.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

June 30, December 31,
ASSETS 2000 1999
------ ----------- ------------
(Thousands of Dollars)

Utility Plant:
Plant and equipment, at original cost (includes
construction work in progress of $753 million and
$672 million, respectively)....................... $25,612,137 $25,007,637
Less--Accumulated provision for depreciation....... 14,116,986 13,729,223
----------- -----------
$11,495,151 $11,278,414
Nuclear fuel, at amortized cost.................... 794,535 843,724
----------- -----------
$12,289,686 $12,122,138
----------- -----------
Investments and Other Property:
Nuclear decommissioning funds...................... $ 2,616,886 $ 2,546,540
Investment in leases............................... 1,613,783 --
Nonutility property--less accumulated provision for
depreciation of $21,419 and $17,345, respectively. 240,578 304,976
Goodwill........................................... 62,873 34,955
Subsidiary companies............................... 17,360 50,417
Other, at cost..................................... 319,666 130,917
----------- -----------
$ 4,871,146 $ 3,067,805
----------- -----------
Current Assets:
Cash and temporary cash investments................ $ 639,075 $ 1,696,336
Cash held for redemption of securities............. 64,467 285,056
Other cash investments............................. 668 62
Special deposits................................... 492 1,845,730
Receivables--
Customers........................................ 1,143,984 1,224,678
Forward share repurchase contract................ -- 813,046
Other............................................ 207,509 181,532
Provisions for uncollectible accounts............ (49,719) (50,814)
Coal and fuel oil, at average cost................. 19,310 15,613
Materials and supplies, at average cost............ 236,739 221,157
Deferred income taxes related to current assets and
liabilities....................................... 67,494 60,056
Prepayments and other.............................. 32,290 36,268
----------- -----------
$ 2,362,309 $ 6,328,720
----------- -----------
Deferred Charges and Other Noncurrent Assets:
Regulatory assets.................................. $ 1,563,896 $ 1,792,907
Other.............................................. 107,768 94,463
----------- -----------
$ 1,671,664 $ 1,887,370
----------- -----------
$21,194,805 $23,406,033
=========== ===========

The accompanying Notes to Financial Statements are an integral part of the
above statements.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

June 30, December 31,
CAPITALIZATION AND LIABILITIES 2000 1999
------------------------------ ----------- ------------
(Thousands of Dollars)

Capitalization (see accompanying statements):
Common stock equity................................. $ 3,964,006 $ 5,332,611
Preferred and preference stocks of ComEd--
Without mandatory redemption requirements......... 1,646 1,790
ComEd-obligated mandatorily redeemable preferred se-
curities of subsidiary trusts holding solely
ComEd's subordinated debt securities*.............. 350,000 350,000
Long-term debt...................................... 6,781,928 7,129,906
----------- -----------
$11,097,580 $12,814,307
----------- -----------
Current Liabilities:
Notes payable....................................... $ 680,366 $ 4,750
Current portion of long-term debt, redeemable pref-
erence stock and capitalized lease obligations of
subsidiary companies............................... 805,873 915,439
Accounts payable.................................... 644,183 582,920
Accrued interest.................................... 134,586 146,718
Accrued taxes....................................... -- 1,386,930
Dividends payable................................... 76,523 94,090
Customer deposits................................... 70,038 68,128
Other............................................... 235,610 316,542
----------- -----------
$ 2,647,179 $ 3,515,517
----------- -----------
Deferred Credits and Other Noncurrent Liabilities:
Deferred income taxes............................... $ 2,907,844 $ 2,484,883
Nuclear decommissioning liability for retired
plants............................................. 1,275,400 1,259,700
Accumulated deferred investment tax credits......... 469,414 484,717
Accrued spent nuclear fuel disposal fee and related
interest........................................... 785,360 763,427
Obligations under capital leases of subsidiary com-
panies............................................. -- 161,611
Regulatory liabilities.............................. 584,414 596,157
Other............................................... 1,427,614 1,325,714
----------- -----------
$ 7,450,046 $ 7,076,209
----------- -----------
Commitments and Contingent Liabilities (Note 21)
$21,194,805 $23,406,033
=========== ===========

*As described in Note 10 of Notes to Financial Statements, the sole asset of
ComEd Financing I, a subsidiary trust of ComEd, is $206.2 million principal
amount of ComEd's 8.48% subordinated deferrable interest notes due September
30, 2035. The sole asset of ComEd Financing II, also a subsidiary trust of
ComEd, is $154.6 million principal amount of ComEd's 8.50% subordinated
deferrable interest debentures due January 15, 2027.

The accompanying Notes to Financial Statements are an integral part of the
above statements.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED CAPITALIZATION

June 30, December 31,
2000 1999
----------- ------------
(Thousands of Dollars)

Common Stock Equity:
Common stock, without par value--
Outstanding--218,552,976 shares and 217,835,570
shares, respectively.............................. $ 4,984,166 $ 4,971,618
Preference stock expense of ComEd................... -- (72)
Retained earnings................................... 561,502 364,345
Accumulated other comprehensive income.............. 7,007 6,815
Treasury stock--41,910,306 shares and 264,406
shares, respectively............................... (1,588,669) (10,095)
----------- -----------
$ 3,964,006 $ 5,332,611
----------- -----------
Preferred and Preference Stocks of ComEd--
Without Mandatory Redemption Requirements:
$1.425 convertible preferred stock, cumulative,
without par value--Outstanding--51,773 shares and
56,291 shares, respectively...................... $ 1,646 $ 1,790
Prior preferred stock, cumulative, $100 par value
per share--
No shares outstanding............................ -- --
----------- -----------
$ 1,646 $ 1,790
----------- -----------
Subject to Mandatory Redemption Requirements:
Preference stock, cumulative, without par value--
Outstanding--No shares and 700,000 shares,
respectively.................................... $ -- $ 69,475
Current redemption requirements for preference
stock included
in current liabilities........................... -- (69,475)
----------- -----------
$ -- $ --
----------- -----------
ComEd-Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts Holding Solely
ComEd's Subordinated Debt Securities................. $ 350,000 $ 350,000
----------- -----------
Long-Term Debt:
First mortgage bonds:
Maturing 2000 through 2004--5.30% to 9 3/8%....... $ 426,000 $ 698,245
Maturing 2005 through 2014--4.40% to 8 3/8%....... 1,299,400 1,299,400
Maturing 2015 through 2023--6.75% to 9 7/8%....... 1,501,000 1,589,443
----------- -----------
$ 3,226,400 $ 3,587,088
Transitional trust notes, due 2001 through 2008--
5.29% to 5.74%..................................... 2,890,000 3,070,000
Sinking fund debentures, due 2001 through 2011--2
7/8% to 4.75%...................................... 28,060 30,866
Pollution control obligations, due 2007 through
2014--4.65% to 5 7/8%.............................. 137,700 139,200
Other long-term debt................................ 1,112,954 1,089,347
Deposit for retirement of long-term debt............ (1,386) --
Current maturities of long-term debt included in
current liabilities................................ (567,508) (737,615)
Unamortized net debt discount and premium........... (44,292) (48,980)
----------- -----------
$ 6,781,928 $ 7,129,906
----------- -----------
$11,097,580 $12,814,307
----------- -----------

The accompanying Notes to Financial Statements are an integral part of the
above statements.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED RETAINED EARNINGS

Three Months Six Months Ended Twelve Months Ended
Ended June 30 June 30 June 30
------------------ ------------------ --------------------
2000 1999 2000 1999 2000 1999
-------- -------- -------- -------- --------- ---------
(Thousands of Dollars)

Balance at Beginning of
Period................. $485,620 $125,715 $364,345 $143,537 $157,467 $ (60,108)
Add--Net income......... 146,141 119,392 338,478 189,035 719,109 565,046
-------- -------- -------- -------- --------- ---------
$631,761 $245,107 $702,823 $332,572 $ 876,576 $ 504,938
-------- -------- -------- -------- --------- ---------
Deduct--
Cash dividends
declared on
common stock....... $ 70,661 $ 86,916 $141,723 $173,781 $ 315,724 $ 347,429
Other capital stock
transactions--net.. (402) 724 (402) 1,324 (650) 42
-------- -------- -------- -------- --------- ---------
$ 70,259 $ 87,640 $141,321 $175,105 $ 315,074 $ 347,471
-------- -------- -------- -------- --------- ---------
Balance at End of Period
(Includes $913 million
and $509 million of
appropriated retained
earnings for future
dividend payments at
June 30, 2000 and
1999, respectively)... $561,502 $157,467 $561,502 $157,467 $ 561,502 $ 157,467
======== ======== ======== ======== ========= =========

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
-------------------- ------------------ --------------------
2000 1999 2000 1999 2000 1999
--------- --------- -------- -------- --------- ---------
(Thousands of Dollars)

Net Income.............. $ 146,141 $ 119,392 $338,478 $189,035 $719,109 $565,046
Other Comprehensive
Income
Unrealized
gains/(losses) on
securities and
foreign currency
translations......... $ (1,179) $ (724) $ 525 (724) $ 12,272 $ (724)
Income taxes on other
comprehensive income. 341 -- (333) -- (5,265) --
--------- --------- -------- -------- --------- ---------
Other comprehensive
income, net of tax... $ (838) $ (724) $ 192 $ (724) $ 7,007 $ (724)
--------- --------- -------- -------- --------- ---------
Comprehensive Income.... $145,303 $ 118,668 $338,670 $188,311 $ 726,116 $564,322
========= ========= ======== ======== ========= =========

The accompanying Notes to Financial Statements are an integral part of the
above statements.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED CASH FLOWS

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
---------------------- ------------------------ ------------------------
2000 1999 2000 1999 2000 1999
----------- --------- ----------- ----------- ----------- -----------
(Thousands of Dollars)

Cash Flow from Operating
Activities:
Net income............. $ 146,141 $ 119,392 $ 338,478 $ 189,035 $ 719,109 $ 565,046
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization........ 259,709 285,472 667,322 531,784 1,055,899 1,017,175
Deferred income taxes
and investment tax
credits--net........ (47,304) (44,664) (84,405) (98,320) (1,435,090) (34,806)
Contribution to
environmental trust. -- -- -- -- (250,000) --
Recovery of coal
reserve regulatory
assets.............. -- -- -- 19,936 178,038 65,397
Change in MGP
remediation
liability........... (1,200) -- (1,200) -- 66,878 --
Gain on forward share
arrangements........ -- (19,689) (113,071) (33,417) (55,370) (33,417)
Provisions/(payments)
for revenue
refunds--net........ -- 2,635 -- (19,858) (2,745) 2,745
Equity component of
allowance for funds
used during
construction........ (2,551) (2,003) (5,302) (3,756) (9,335) (7,170)
Payments for
liability for
separation costs--
net................. (166) (1,018) (9,055) (9,798) (73,663) (7,076)
Net effect on cash
flows of changes in:
Receivables........ (48,410) (128,005) 80,111 66,294 151,402 (259,886)
Coal and fuel oil.. (1,696) 7,533 (1,141) (10,610) 10,087 59,147
Materials and
supplies.......... (1,365) (3,128) (11,821) (7,267) (5,953) 24,431
Accounts payable
excluding nuclear
fuel lease
principal payments
and separation
costs--net........ 149,531 27,956 51,519 (102,923) 147,658 (108,081)
Accrued interest
and taxes......... 69,974 (43,887) (916,899) 104,587 224,497 (8,107)
Other changes in
certain current
assets and
liabilities....... (226) 24,148 49,084 51,998 121,063 143,880
Other--net........... (13,729) 47,001 97,223 134,383 (85,668) 114,597
----------- --------- ----------- ----------- ----------- -----------
$ 508,708 $ 271,743 $ 140,843 $ 812,068 $ 756,807 $ 1,533,875
----------- --------- ----------- ----------- ----------- -----------
Cash Flow from Investing
Activities:
Construction
expenditures.......... $ (264,849) $(249,618) $ (594,727) $ (480,693) $(1,230,199) $ (974,552)
Nuclear fuel
expenditures.......... (71,857) (63,862) (101,479) (113,947) (241,023) (185,147)
Sales of generating
plants................ -- -- -- -- 4,885,720 --
Investment in leases... (1,613,783) -- (1,613,783) -- (1,613,783) --
Equity component of
allowance for funds
used during
construction.......... 2,551 2,003 5,302 3,756 9,335 7,170
Contributions to
nuclear
decommissioning
funds................. -- -- (39,400) (39,426) (89,919) (96,120)
Other investments and
special deposits...... 1,735,529 (7,886) 1,698,172 (12,701) (299,564) (28,281)
Plant removal costs--
net................... (16,707) (5,333) (18,960) (32,012) (49,321) (97,952)
----------- --------- ----------- ----------- ----------- -----------
$ (229,116) $(324,696) $ (664,875) $ (675,023) $ 1,371,246 $(1,374,882)
----------- --------- ----------- ----------- ----------- -----------
Cash Flow from Financing
Activities:
Issuance of
securities--
Transitional trust
notes................ $ -- $ -- $ -- $ -- $ -- $ 3,382,629
Other long-term debt.. 28,091 28,130 28,091 63,130 166,712 410,400
Capital stock......... 8,375 3,588 12,548 4,412 29,077 14,290
Retirement, redemption
and repurchase of
securities--
Transitional trust
notes................ (85,033) (140,000) (180,000) (140,000) (370,000) (140,000)
Other long-term debt.. (252,759) (5,355) (374,771) (1,061,010) (745,327) (1,302,220)
Common stock.......... (51,623) (26,486) (585,325) (30,056) (585,325) (36,970)
Preferred stock....... (70,031) 9,979 (70,144) (534,208) (145,191) (561,935)
Common stock forward
repurchase
arrangements.......... -- 16,456 (67,133) (662,113) (262,038) (662,113)
Cash dividends paid on
common stock.......... (71,059) (86,864) (158,080) (173,670) (331,974) (347,276)
Proceeds from
sale/leaseback of
nuclear fuel.......... -- -- -- -- -- 39,612
Nuclear fuel lease
principal payments.... (34,620) (48,191) (34,620) (101,936) (188,086) (196,531)
Increase/(decrease) in
short-term
borrowings............ 235,366 191,036 675,616 118,887 268,516 (77,996)
----------- --------- ----------- ----------- ----------- -----------
$ (293,293) $ (57,707) $ (753,818) $(2,516,564) $(2,163,636) $ 521,890
----------- --------- ----------- ----------- ----------- -----------
Change in Net Cash
Balance................ $ (13,701) $(110,660) $(1,277,850) $(2,379,519) $ (35,583) $ 680,883
Cash, Temporary Cash
Investments and Cash
Held for Redemption of
Securities:
Balance at Beginning
of Period........... 717,243 849,785 1,981,392 3,118,644 739,125 58,242
----------- --------- ----------- ----------- ----------- -----------
Balance at End of
Period.............. $ 703,542 $ 739,125 $ 703,542 $ 739,125 $ 703,542 $ 739,125
=========== ========= =========== =========== =========== ===========

The accompanying Notes to Financial Statements are an integral part of the
above statements.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS

(1) Summary of Significant Accounting Policies.

Corporate Structure and Basis of Presentation. Unicom is the parent holding
company of ComEd and Unicom Enterprises. ComEd, a regulated electric utility,
is the principal subsidiary of Unicom. Unicom Enterprises is an unregulated
subsidiary of Unicom and is engaged, through its subsidiaries, in energy
service activities.

The consolidated financial statements include the accounts of Unicom, ComEd,
Indiana Company, Edison Development, the Trusts, ComEd Funding, ComEd Funding
Trust and Unicom's unregulated subsidiaries. All significant intercompany
transactions have been eliminated. Although the accounts of ComEd Funding,
ComEd Funding Trust and the subsidiaries of Unicom Investment, which are SPEs,
are included in the consolidated financial statements, as required by GAAP,
ComEd Funding, ComEd Funding Trust and the subsidiaries of Unicom Investment
are legally separated from Unicom and ComEd. The assets of the SPEs are not
available to creditors of Unicom or ComEd and the transitional property and
investments held by the SPEs are not assets of Unicom or ComEd.

See Note 2 for information on Unicom's pending merger with PECO.

Use of Estimates. The preparation of financial statements in conformity with
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Due to the transition to a new
customer information and billing system, a larger portion of customer revenues
and net receivables were based on estimates for the period July 1998 through
November 1999 than in previous and subsequent periods.

Regulation. ComEd is subject to regulation as to accounting and ratemaking
policies and practices by the ICC and FERC. ComEd's accounting policies and
the accompanying consolidated financial statements conform to GAAP applicable
to rate-regulated enterprises for the non-generation portion of its business,
including the effects of the ratemaking process in accordance with SFAS
No. 71, Accounting for the Effects of Certain Types of Regulation. Such
effects on the non-generation portion of its business concern mainly the time
at which various items enter into the determination of operating results in
order to follow the principle of matching costs with the applicable revenues
collected from or returned to customers through future rates.

ComEd's investment in generation-related net utility plant, not subject to
cost-based rate regulation, including construction work in progress and
nuclear fuel, and excluding the decommissioning costs included in the
accumulated provision for depreciation was $7.7 billion and $7.8 billion as of
June 30, 2000 and December 31, 1999, respectively.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

Regulatory Assets and Liabilities. Regulatory assets are incurred costs
which have been deferred and are amortized for ratemaking and accounting
purposes. Regulatory liabilities represent amounts to be settled with
customers through future rates. Regulatory assets and liabilities reflected on
the Consolidated Balance Sheets at June 30, 2000 and December 31, 1999 were as
follows:

June 30, December 31,
2000 1999
---------- ------------
(Thousands of Dollars)

Regulatory assets:
Impaired production plant(1).......................... $ 141,098 $ 366,221
Deferred income taxes (2)............................. 696,949 688,946
Nuclear decommissioning costs--Dresden Unit 1......... 192,164 202,308
Nuclear decommissioning costs--Zion Units 1 and 2..... 496,928 496,638
Unamortized loss on reacquired debt (3)............... 36,757 38,794
---------- ----------
$1,563,896 $1,792,907
========== ==========
Regulatory liabilities:
Deferred income taxes (2)............................. $ 584,414 $ 596,157
========== ==========

- --------
(1) Expected to be substantially recovered through regulated cash flow by the
end of 2000.
(2) Recorded in compliance with SFAS No. 109, Accounting for Income Taxes, for
non-generation related temporary differences.
(3) Amortized over the remaining lives of the non-generation related long-term
debt issued to finance the reacquisition. See "Loss on Reacquired Debt"
below for additional information.

The regulatory assets for Dresden Unit 1 and Zion Units 1 and 2 represent
unrecovered nuclear decommissioning costs, which are expected to be recovered
over the periods 2000-2011 and 2000-2013, respectively, through future rate
recoveries and related trust fund earnings. See "Depreciation, Amortization of
Regulatory Assets and Liabilities and Decommissioning" below for additional
information.

Depreciation, Amortization of Regulatory Assets and Liabilities, and
Decommissioning. Depreciation, amortization of regulatory assets and
liabilities, and decommissioning for the three months, six months and twelve
months ended June 30, 2000 and 1999 were as follows:

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
------------------- ----------------- -------------------
2000 1999 2000 1999 2000 1999
--------- --------- -------- -------- --------- ---------
(Thousands of Dollars)

Depreciation expense.... $ 168,554 $ 180,587 $334,612 $358,025 $ 689,928 $ 712,708
Amortization of
regulatory assets and
liabilities--net....... 37,439 65,405 225,123 98,344 172,867 163,555
--------- --------- -------- -------- --------- ---------
$ 205,993 $245,992 $559,735 $456,369 $ 862,795 $876,263
Decommissioning expense. 20,955 20,955 41,910 41,910 83,820 83,820
--------- --------- -------- -------- --------- ---------
$ 226,948 $266,947 $601,645 $498,279 $ 946,615 $960,083
========= ========= ======== ======== ========= =========

The regulatory asset amortization recorded in the recent three, six and
twelve month periods represent amounts calculated in accordance with the
earnings cap provisions of the 1997 Act.

Consistent with the provisions of the 1997 Act, the (pre-tax) gain on the
December 1999 sale of Fossil Plant assets of $2.587 billion resulted in a
regulatory liability, which was used to recover

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

regulatory assets. Therefore, the gain on the sale, excluding $43 million of
amortization of investment tax credits, was recorded as a regulatory liability
in the amount of $2.544 billion and amortized in the fourth quarter of 1999.
The amortization of the regulatory liability and additional regulatory asset
amortization of $2.456 billion are reflected in depreciation and amortization
expense on Unicom's Statements of Consolidated Operations and resulted in a
net reduction to depreciation and amortization expense of $88 million in the
fourth quarter of 1999.

See Note 3 for additional information regarding amortization of regulatory
assets with respect to limits on ComEd's earnings due to statutory sharing
provisions. See Note 4 for additional information regarding the fossil plant
sale.

Provisions for depreciation, including nuclear plant, were at average annual
rates of average depreciable utility plant and equipment for the three months,
six months and twelve months ended June 30, 2000 and 1999 as follows:

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
------------------ ---------------- -------------------
2000 1999 2000 1999 2000 1999
--------- --------- -------- -------- --------- ---------

Average annual
depreciation rates..... 2.70% 2.66% 2.69% 2.65% 2.67% 2.69%

Nuclear plant decommissioning costs generally are accrued over the current
NRC license lives of the related nuclear generating units. The accrual is
based on an annual levelized cost of the unrecovered portion of estimated
decommissioning costs, which are escalated for expected inflation to the
expected time of decommissioning and are net of expected earnings on the trust
funds. Dismantling is expected to occur relatively soon after the end of the
current NRC license life of each generating station currently operating. The
accrual for decommissioning is based on the prompt removal method authorized
by NRC guidelines. ComEd's ten operating units have remaining current NRC
license lives ranging from 7 to 28 years. ComEd's Zion Station and Dresden
Unit 1 are retired and are expected to be dismantled beginning in the years
2014 and 2011, respectively, which is consistent with the regulatory treatment
for recovery of the related decommissioning costs.

Based on ComEd's most recent study, decommissioning costs are estimated to
be $5.6 billion in current-year (2000) dollars, including a contingency
allowance. These expenditures are expected to occur primarily during the
period from 2007 through 2034. All such costs are expected to be funded by the
external decommissioning trusts, which ComEd established in compliance with
Illinois law and into which ComEd has been making annual contributions. Future
decommissioning cost estimates may be significantly affected by the adoption
of, or changes to NRC regulations, as well as changes in the assumptions used
in making such estimates, including changes in technology, available
alternatives for the disposal of nuclear waste and inflation.

Since 1995, ComEd has collected decommissioning costs from its ratepayers in
conjunction with a rider to its tariffs. The rider allows annual adjustments
to decommissioning cost collections outside the context of a traditional rate
proceeding and will continue under the 1997 Act. The ICC has approved ComEd's
current funding plan, which provides for annual contributions of current
accruals and ratable contributions of past accruals over the remaining current
NRC license lives of the nuclear plants.

ComEd is undertaking steps to transfer its nuclear generating assets,
including the decommissioning trust funds, to a generation and power marketing
subsidiary of Exelon ("Genco"), following the merger with PECO. On August 3,
2000 the NRC approved the request of ComEd and PECO to transfer licenses for
both companies' nuclear plants from ComEd and PECO to Gencc. Other aspects of
the transfer of

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
nuclear assets, including the decommissioning trust funds, are subject to
satisfactory resolution of significant regulatory and tax issues. Genco will
assume responsibility for the decommissioning of the nuclear generating
stations, including Zion Station and Dresden Unit 1, subject to an obligation
of ComEd to continue collecting decommissioning-related charges from its
retail customers and contribute such amounts to Genco's trust funds. In
conjunction with the ICC regulatory approval proceeding related to Genco,
ComEd is currently considering an alternative decommissioning funding
structure that would provide for i) collection of amounts sufficient to
satisfy the decommissioning obligation from customers over a period that is
generally shorter than the remaining NRC license lives of the units, and ii) a
waiver of ComEd's rights to further collections after that shorter period.
Although ComEd cannot currently determine whether an alternative funding
structure will ultimately be approved and implemented, such a structure could
increase the decommissioning cost recovery risk. See Note 2 for additional
information on the planned merger of Unicom and PECO.

For the ten operating nuclear units, decommissioning cost accruals are
recorded as portions of depreciation expense and accumulated provision for
depreciation on the Statements of Consolidated Operations and the Consolidated
Balance Sheets, respectively, as such costs are recovered through rates. As of
June 30, 2000, the total decommissioning costs included in the accumulated
provision for depreciation were $2,147 million.

For ComEd's retired nuclear units, the total estimated liability for nuclear
decommissioning in current-year (2000) dollars is recorded as a noncurrent
liability. The unrecovered portion of the liability is recorded as a
regulatory asset. The nuclear decommissioning liability for retired plants as
of June 30, 2000 was as follows:

Zion
Dresden Units
Unit 1 1 and 2 Total
-------- -------- ----------
(Thousands of Dollars)

Amounts recovered through rates and investment
fund earnings.................................... $118,636 $467,672 $ 586,308
Unrecovered portion of the liability.............. 192,164 496,928 689,092
-------- -------- ----------
Nuclear decommissioning liability for retired
plants.......................................... $310,800 $964,600 $1,275,400
======== ======== ==========

Under Illinois law, decommissioning cost collections are required to be
deposited into external trusts. Consequently, such collections do not add to
the cash flows available for general corporate purposes. The fair value of
funds accumulated in the external trusts at June 30, 2000 was $2,617 million,
which includes pre-tax unrealized appreciation of $696 million. The earnings
on the external trusts for operating plants accumulate in the fund balance and
accumulated provision for depreciation. Nuclear decommissioning funding as of
June 30, 2000 was as follows:

(Thousands of Dollars)

Amounts recovered through rates and investment fund
earnings for operating plants (included in the
accumulated provision for depreciation)................ $2,147,095
Amounts recovered through rates and investment fund
earnings for retired plants............................ 586,308
Less past accruals not yet contributed to the trusts.... (116,517)
----------
Fair value of external trust funds..................... $2,616,886
==========

In February 2000, the FASB issued an exposure draft addressing the
accounting for asset removal costs, including those relating to nuclear
decommissioning. The exposure draft would require companies to recognize the
entire decommissioning liability on the balance sheet when the liability is
incurred very early in the operating life of the generating station, rather
than ratably over the operating life of the station as is the current industry
accounting practice. The cost basis of the related nuclear power plant would
be increased by a corresponding amount at the time the liability is recorded

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
and depreciated over the operating life. Although over the life of the
stations total decommissioning provisions would approximate the total amount
recognized over the life of the stations under current electric utility
accounting practices, amounts for interim years could increase or decrease
from currently expected decommissioning provisions. However, ComEd does not
believe such changes will adversely impact results of operations due to the
ability to recover decommissioning costs through rates. The exposure draft is
proposed to be effective for financial statements issued for fiscal years
beginning after June 15, 2001. A final statement is expected to be issued
during the first quarter of 2001.

Customer Receivables and Revenues. ComEd is engaged principally in the
production, purchase, transmission, distribution and sale of electricity to a
diverse base of residential, commercial, industrial and wholesale customers.
ComEd's electric service territory has an area of approximately 11,300 square
miles and an estimated population of approximately eight million as of June
30, 2000. It includes the City, an area of about 225 square miles with an
estimated population of approximately three million from which ComEd derived
approximately 30 percent of its ultimate consumer revenues in 1999. ComEd had
approximately 3.5 million electric customers at June 30, 2000. Revenues are
recognized as electric and delivery services are provided to customers.

As a result of the implementation of a new customer billing and information
system in July 1998, billing and collection delays temporarily increased
accounts receivable from customers. In December 1998 and June 1999, ComEd
recorded increased provisions for uncollectible accounts to recognize the
estimated portion of the receivables that are not expected to be recoverable.
Such provisions increased O&M expenses by $35 million in the twelve months
ended June 30, 1999, compared to normally expected levels. Receivables from
customers include $67 million and $103 million as of June 30, 2000 and
December 31, 1999, respectively, in estimated unbilled revenue for service
that has been provided to customers, but for which bill issuance was delayed
beyond the normal date of issuance. Receivables from customers as of June 30,
2000 and December 31, 1999 also include $325 million and $295 million,
respectively, for estimated unbilled revenues for electric service that has
been provided to customers subsequent to the normal billing date and prior to
the end of the reporting period. See "Use of Estimates" above for additional
information regarding ComEd's revenues and net receivables.

See Note 3 for additional information.

Nuclear Fuel. The cost of nuclear fuel is amortized to fuel expense based on
the quantity of heat produced using the unit of production method. As
authorized by the ICC, provisions for spent nuclear fuel disposal costs have
been recorded at a level required to recover the fee payable on the current
nuclear-generated and sold electricity and the current interest accrual on the
one-time fee payable to the DOE for nuclear generation prior to April 7, 1983.
The one-time fee and interest thereon have been recovered and the current fee
and interest on the one-time fee are presently being recovered through base
rates. See Note 13 for additional information concerning the disposal of spent
nuclear fuel, one-time fee and interest accrual on the one-time fee. Nuclear
fuel expenses, including leased fuel costs and provisions for spent nuclear
fuel disposal costs, were $98 million and $92 million for the three months
ended June 30, 2000 and 1999, respectively, $197 million and $180 million for
the six months ended June 30, 2000 and 1999, respectively, and $397 million
and $347 million for the twelve months ended June 30, 2000 and 1999,
respectively.

Income Taxes. Deferred income taxes are provided for income and expense
items recognized for financial accounting purposes in periods that differ from
those for income tax purposes. Income

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
taxes deferred in prior years are charged or credited to income as the
book/tax temporary differences reverse. Prior years' deferred investment tax
credits are amortized through credits to income generally over the lives of
the related property. Income tax credits resulting from interest charges
applicable to nonoperating activities, principally construction, are
classified as other income.

AFUDC and Interest Capitalized. In accordance with the uniform systems of
accounts prescribed by regulatory authorities, ComEd capitalizes AFUDC,
compounded semiannually, which represents the estimated cost of funds used to
finance its construction program for the non-generation portion of its
business. The equity component of AFUDC is recorded on an after-tax basis and
the borrowed funds component of AFUDC is recorded on a pre-tax basis. The
average annual capitalization rates for AFUDC were 8.29% and 7.65% for the
three months ended June 30, 2000 and 1999, respectively, 8.29% and 7.83% for
the six months ended June 30, 2000 and 1999, respectively, and 8.03% and 8.00%
for the twelve months ended June 30, 2000 and 1999, respectively. In
accordance with SFAS No. 34, Capitalization of Interest Cost, ComEd
capitalized less than $1 million and $6 million for the three months ended
June 30, 2000 and 1999, respectively, $2 million and $12 million for the six
months ended June 30, 2000 and 1999, respectively, and $12 million and $32
million for the twelve months ended June 30, 2000 and 1999, respectively, in
interest costs on its generation-related construction work in progress and
nuclear fuel in process. AFUDC and interest capitalized do not contribute to
the current cash flow of Unicom or ComEd.

Interest. Total interest costs incurred on debt, leases and other
obligations were $158 million and $157 million for the three months ended June
30, 2000 and 1999, respectively, $313 million and $324 million to the six
months ended June 30, 2000 and 1999, respectively, and $631 million and $579
million for the twelve months ended June 30, 2000 and 1999, respectively.

Debt Discount, Premium and Expense. Discount, premium and expense on long-
term debt of ComEd are being amortized over the lives of the respective
issues.

Loss on Reacquired Debt. Consistent with regulatory treatment, the net loss
from ComEd's reacquisition, in connection with the refinancing of first
mortgage bonds, sinking fund debentures and pollution control obligations
prior to their scheduled maturity dates, is deferred and amortized over the
lives of the long-term debt issued to finance the reacquisition for non-
generation related financings. See "Regulatory Assets and Liabilities" above
and Note 3 for additional information.

Stock Option Awards/Employee Stock Purchase Plan. Unicom has elected to
adopt SFAS No. 123, Accounting for Stock-Based Compensation, for disclosure
purposes only. Unicom accounts for its stock option awards and ESPP under APB
Opinion No. 25, Accounting for Stock Issued to Employees. See Note 7 for
additional information.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

Average Common Shares Outstanding. The number of average outstanding common
shares used to compute basic and diluted EPS for the three months, six months
and twelve months ended June 30, 2000 and 1999 were as follows:

Six
Three Months Ended Months Ended Twelve Months Ended
June 30 June 30 June 30
------------------- --------------- -------------------
2000 1999 2000 1999 2000 1999
--------- --------- ------- ------- --------- ---------
(Thousands of Shares)

Average Number of Common
Shares Outstanding:
Average Number of
Common Shares--Basic.. 177,181 217,235 184,107 217,158 200,778 217,120
Potentially Dilutive
Common Shares--
Treasury Method:
Stock Options........ 972 1,006 823 813 710 780
Other Convertible
Securities.......... 87 89 87 89 87 89
--------- --------- ------- ------- --------- ---------
Average Number of Common
Shares--Diluted........ 178,240 218,330 185,017 218,060 201,575 217,989
========= ========= ======= ======= ========= =========

Energy Risk Management Contracts. In the normal course of business, ComEd
utilizes contracts for the forward sale and purchase of energy to manage
effectively the utilization of its available generating capability. ComEd also
utilizes put and call option contracts and energy swap arrangements to limit
the market price risk associated with the forward commodity contracts. As
ComEd does not currently utilize financial or commodity instruments for
trading or speculative purposes, any gains or losses on forward commodity
contracts are recognized when the underlying transactions affect earnings.
Revenues and expenses associated with market price risk management contracts
are amortized over the terms of such contracts.

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, which establishes accounting and reporting
standards requiring that every derivative instrument, including certain
derivative instruments embedded in other contracts, be recorded on the
Consolidated Balance Sheets as either an asset or liability measured at its
fair value. In June 2000, FASB issued SFAS No. 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities, as an amendment of SFAS
No. 133. SFAS No. 133, as amended, requires that changes in the derivative's
fair value be recognized currently in earnings, unless specific hedge
accounting criteria are met. The accounting for qualifying hedges allows a
derivative's gains and losses to offset related results on the hedged item on
the Statements of Consolidated Operations, and requires companies to formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting.

The effective date of SFAS No. 133, as amended, has been delayed for one
year, to fiscal years beginning after June 15, 2000. SFAS No. 133 may be
implemented prior to June 15, 2000, but such implementation cannot be applied
retroactively. SFAS No. 133, as amended, must be applied to (i) derivative
instruments and (ii) certain derivative instruments embedded in hybrid
contracts that were issued, acquired, or substantively modified after January
1, 1998 or January 1, 1999 at the Company's election.

Unicom and ComEd are in the process of reviewing their various contracts to
determine which contracts meet the requirements of SFAS No. 133, as amended,
and would need to be reflected as derivatives under the standard and accounted
for at fair value. Among the contracts that are being

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

reviewed are purchase power agreements, contracts related to electricity
purchases and sales, contracts related to gas purchases and sales, normal
purchase orders, securities issued and insurance contracts. Unicom and ComEd
have not yet quantified the effects on their financial statements of adopting
SFAS No. 133, as amended. However, adoption of SFAS No. 133, as amended, could
increase volatility in earnings and other comprehensive income.

Reclassifications. Certain prior year amounts have been reclassified to
conform with current period presentation. These reclassifications had no
effect on operating results.

Cash Held for Redemption of Securities. As of June 30, 2000, the cash held
for redemption of securities reported on the Consolidated Balance Sheets
includes $64 million of escrowed cash and pending instrument funding charges
collected from ComEd customers to be applied to the principal and interest
payment on the transitional trust notes. See Note 3 for additional
information.

Investment in Leases. In June 2000, Unicom Investment entered into a like-
kind exchange transaction utilizing proceeds from the December 1999 sale of
fossil generating stations. Under the transaction, Unicom Investment invested
approximately $1.6 billion, previously classified as special deposits, in
passive generating station leases with two separate entities. The generating
stations were leased back to such entities as part of the transaction. For
financial accounting purposes, the investments are accounted for as direct
financing lease investments. Under the terms of the lease agreements, Unicom
Investment will receive prepayments of its scheduled lease payments of about
$1.26 billion in the fourth quarter of 2000 which will reduce the outstanding
lease investment at that time.

The components of the net investment in the direct financing leases as of
June 30, 2000 are as follows:

(Thousands
of
Dollars)
----------

Total minimum lease payments.................................. $2,727,233
Deferred initial direct costs................................. 14,287
----------
$2,741,520
Less: Unearned income......................................... 1,127,737
----------
$1,613,783
==========

Goodwill. Goodwill represents the excess of the purchase consideration over
the fair value of the net assets of the companies or natural gas service
contracts acquired by subsidiaries of Unicom Enterprises. Goodwill arising
from such acquisitions is generally being amortized on a straight-line basis
over 40 years for goodwill arising from the acquisition of established
mechanical services companies and over 10 to 15 years for the goodwill arising
from the acquisition of performance contracting companies and natural gas
service contracts.

Statements of Consolidated Cash Flows. For purposes of the Statements of
Consolidated Cash Flows, temporary cash investments, generally investments
maturing within three months at the time of purchase, and cash held for
redemption of securities are considered to be cash equivalents. Supplemental
cash flow information for the three months, six months and twelve months ended
June 30, 2000 and 1999 was as follows:

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
------------------- ------------------- -------------------
2000 1999 2000 1999 2000 1999
--------- --------- ---------- -------- ---------- --------
(Thousands of Dollars)

Supplemental Cash Flow
Information:
Cash paid during the
period for:
Interest (net of
amount capitalized). $116,012 $165,867 $ 268,160 $327,518 $ 547,457 $548,390
Income taxes (net of
refunds)............ $ 136,221 $110,028 $1,086,222 $ 84,107 $1,457,293 $356,077
Supplemental Schedule of
Non-Cash Investing and
Financing Activities:
Capital lease
obligations incurred
by subsidiary
companies............. $ -- $ 274 $ 34 $ 1,436 $ 343 $ 43,828

(2) Merger Agreement. In September 1999, the Boards of Directors of Unicom
and PECO approved a merger of equals that will create a new holding company,
Exelon. The merger was approved on June 27 and 28, 2000 by PECO and Unicom's
shareholders, respectively. The merger was approved unanimously on April 12,
2000, without conditions, by the FERC. In Pennsylvania, the Public Utility
Commission has approved a settlement reached with virtually all intervenors,
and the regulatory process in Illinois has been completed. Aspects of the
merger still must be approved by the SEC and the NRC. The merger is currently
expected to be completed in the fall of 2000.

Under the merger agreement, as amended and restated in January 2000, PECO
and ComEd will become the principal utility subsidiaries of Exelon. This
result will be achieved by a mandatory exchange of the outstanding common
stock of PECO for common stock of Exelon, and a merger of Unicom with and into
Exelon wherein holders of Unicom common stock will receive 0.875 shares of
Exelon common stock plus $3.00 in cash for each of their shares of Unicom
common stock. The merger transaction will be accounted for as a purchase of
Unicom by PECO.

Consistent with Unicom's $1 billion share repurchase commitment in the
pending merger agreement with PECO, Unicom has entered into repurchase
agreements with financial institutions to repurchase shares of its common
stock from the open market. During the first six months of 2000, Unicom
expended $584 million to repurchase 15 million of its common shares pursuant
to these agreements of which approximately $153 million was funded with
proceeds from the 1998 issuance of transitional trust notes. The remaining
share repurchases will be funded from available funds, including funds
ultimately resulting from the fossil plant sale. These share repurchases are
in addition to 26.3 million shares of Unicom common stock that Unicom
repurchased in January 2000 upon settlement of certain forward purchase
contracts. See Notes 6 and 23 for additional information.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
Dresden Unit 1, subject to an obligation of ComEd to continue collecting
decommissioning-related charges from its customers. Genco will enter into a
power purchase agreement with ComEd in which Genco will undertake to supply
ComEd's full requirements for electric energy through 2004 and all of ComEd's
requirements up to the available capacity of the nuclear generating stations
in 2005 and 2006. On August 3, the NRC approved the request of ComEd and PECO
to transfer licenses for both companies' nuclear plants from ComEd and PECO to
Genco. Other aspects of the transfer of nuclear assets, including the
decommissioning trust funds, are subject to satisfactory resolution of
significant regulatory and tax issues.

(3) Accounting Effects Related to the 1997 Act. In December 1997, the
Governor of Illinois signed into law the 1997 Act, which established a phased
process to introduce competition into the electric industry in Illinois under
a less regulated structure. The 1997 Act was amended in June 1999.

As a result of the 1997 Act and FERC rules, prices for the supply of
electric energy are expected to transition from cost-based, regulated rates to
rates determined by competitive market forces. Accordingly, the 1997 Act
provides for, among other things, gradual customer access to other electric
suppliers or a power purchase option which allows the purchase of electric
energy from ComEd at market based prices, and the collection of a CTC from
customers who choose to purchase electric energy from a RES or elect the power
purchase option during a transition period that extends through 2006.
Effective October 1, 1999, the CTC was established in accordance with a
formula defined in the 1997 Act. The CTC, which is applied on a cents per
kilowatthour basis, considers the revenue which would have been collected from
a customer under tariffed rates, reduced by the revenue the utility will
receive for providing delivery services to the customer, the market price for
electricity and a defined mitigation factor, which represents the utility's
opportunity to develop new revenue sources and achieve cost savings. The CTC
allows ComEd to recover some of its costs which might otherwise be
unrecoverable under market-based rates. Nonetheless, ComEd will need to take
steps to address the portion of such costs which are not recoverable through
the CTC. Such steps may include cost control efforts, developing new sources
of revenue and asset dispositions. See Note 4 for additional information.

As of June 1, 2000, more than 62,000 non-residential customers are eligible
to choose a new electric supplier or elect the purchase power option. As of
June 30, 2000, over 7,000 non-residential customers, representing
approximately 16 percent of ComEd's retail kilowatthour sales for the twelve
months prior to the introduction of open access, elected to receive their
electric energy from a RES or chose the purchase power option. The impact of
customer choice on results of operations will depend on various factors,
including the extent to which customers elect to receive energy from a RES or
the purchased power option, the development of a competitive market, the
market price for energy, the extent to which ComEd develops new sources of
revenue and the results of cost control efforts. Because of the inherent
uncertainty in these factors ComEd is unable to predict the long term impact
of customer choice on results of operations. However, ComEd does not expect
customer choice to have a material effect in the near term as a result of the
collection of CTCs as provided by the 1997 Act.

Utilities are required to continue to offer delivery services, including the
transmission and distribution of electric energy, such that customers who
select a RES can receive electric energy from that supplier using existing
transmission and distribution facilities. Such services will continue to be
offered under cost-based, regulated rates. The ICC issued orders in August and
September 1999 approving, with modifications, ComEd's delivery service
tariffs.

The 1997 Act also provides for a 15% residential base rate reduction which
became effective August 1, 1998 and an additional 5% residential base rate
reduction in October 2001. ComEd's operating revenues were reduced by
approximately $170 million in 1998 due to the 15% residential base rate
reduction. The 15% rate reduction further reduced ComEd's operating revenues
by approximately $226 million in 1999, compared to 1998 rate levels.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

Notwithstanding the rate reductions and subject to certain earnings tests, a
rate freeze will generally be in effect until at least January 1, 2005. During
this period, utilities may reorganize, sell or assign assets, retire or remove
plants from service, and accelerate depreciation or amortization of assets
with limited ICC regulatory review. A utility may request a rate increase
during the rate freeze period only when necessary to ensure the utility's
financial viability. Under the earnings provision of the 1997 Act, if the
earned return on common equity of a utility during this period exceeds an
established threshold, one-half of the excess earnings must be refunded to
customers. The threshold rate of return on common equity is based on the 30-
Year Treasury Bond rate, plus 5.5% in the years 1998 and 1999, and plus 8.5%
in the years 2000 through 2004. The utility's earned return on common equity
and the threshold return on common equity for ComEd are each calculated on a
two-year average basis. The earnings sharing provision is applicable only to
ComEd's earnings. Consistent with the provisions of the 1997 Act, increased
amortization of regulatory assets may be recorded, thereby reducing the earned
return on common equity, if earnings otherwise would have exceeded the maximum
allowable rate of return. The potential for earnings sharing or increased
amortization of regulatory assets could limit earnings in future periods.
ComEd's returns on average common equity for the years 1999 and 1998 were
11.56% and 10.86%, respectively. The average return of 11.21% for the two year
period ended December 31, 1999 equaled the threshold return for that period
under the earnings provisions of the 1997 Act. ComEd does not currently expect
to trigger the earnings sharing provisions of the 1997 Act in the years 2000
through 2004.

The 1997 Act also allows a portion of ComEd's future revenues to be
segregated and used to support the issuance of securities by ComEd or a SPE.
The proceeds, net of transaction costs, from such security issuances must be
used to refinance outstanding debt or equity or for certain other limited
purposes. In December 1998, ComEd initiated the issuance of $3.4 billion of
transitional trust notes through its SPEs, ComEd Funding and ComEd Funding
Trust. The proceeds from the transitional trust notes, net of transaction
costs, were used to redeem long-term debt and preference stock and reduce
ComEd's outstanding short-term debt, as required. Unicom has also repurchased
its common stock using proceeds it received from ComEd's repurchase of its
common stock held by Unicom. The balance of the proceeds were used for the
payment of fees and other debt issuance costs and a collateral requirement
related to the transitional trust notes.

(4) Fossil Plant Sale. In December 1999, ComEd completed the sale of its
fossil generating assets to EME for a cash purchase price of $4.8 billion. The
fossil generating assets represent an aggregate generating capacity of
approximately 9,772 megawatts.

Just prior to the consummation of the fossil plant sale, ComEd transferred
these assets to an affiliate, Unicom Investment. In consideration for the
transferred assets, Unicom Investment paid ComEd consideration totalling
approximately $4.8 billion in the form of a demand note in the amount of
approximately $2.4 billion and an interest-bearing note with a maturity of
twelve years. Unicom Investment immediately sold the fossil plant assets to
EME, in consideration of which Unicom Investment received approximately $4.8
billion in cash from EME. Immediately after its receipt of the cash payment
from EME, Unicom Investment paid the $2.4 billion aggregate principal due to
ComEd under the demand note. Unicom Investment will use the remainder of the
cash received from EME to fund other business opportunities, including the
share repurchases. Of the cash received by ComEd, $1.5 billion has been used
to pay the costs and taxes associated with the fossil plant sale, including
ComEd's contribution of $250 million of the proceeds to an environmental trust
as required by the 1997 Act. The remainder of the demand note proceeds will be
available to ComEd to fund, among other things, transmission and distribution
projects, nuclear generation station projects, and environmental and other
initiatives. See Note 1, under "Investment in Leases," for additional
information.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

The sale produced an after-tax gain of approximately $1.6 billion, after
recognizing commitments associated with certain coal contracts ($350 million),
recognizing employee-related costs ($112 million) and contributing to the
environmental trust. The coal contract costs include the amortization of the
remaining balance of ComEd's regulatory asset for unrecovered coal reserves of
$178 million and the recognition of $172 million of settlement payments
related to the above-market portion of coal purchase commitments ComEd
assigned to EME at market value upon completion of the fossil plant sale. The
severance costs included pension and post-retirement welfare benefit
curtailment and special termination benefit costs of $51 million and
transition, separation and retention payments of $61 million. A total of 1,730
fossil station employee positions were eliminated upon completion of the
fossil plant sale on December 15, 1999. The employees whose positions were
eliminated have been terminated. Consistent with the provisions of the 1997
Act, the (pre-tax) gain on the sale of $2.587 billion resulted in a regulatory
liability, which was used to recover regulatory assets. Therefore, the gain on
the sale, excluding $43 million of amortization of investment tax credits, was
recorded as a regulatory liability in the amount of $2.544 billion and
amortized in the fourth quarter of 1999. The amortization of the regulatory
liability and additional regulatory asset amortization of $2.456 billion are
reflected in depreciation and amortization expense on Unicom's Statement of
Consolidated Operations. See Note 1, under "Regulatory Assets and
Liabilities," for additional information.

(5) Authorized Shares, Voting Rights and Stock Rights of Capital Stock. At
June 30, 2000, Unicom's authorized shares consisted of 400,000,000 shares of
common stock. The authorized shares of ComEd preferred and preference stocks
at June 30, 2000 were: preference stock--6,810,451 shares; $1.425 convertible
preferred stock--51,773 shares; and prior preferred stock--850,000 shares. The
preference and prior preferred stocks are issuable in series and may be issued
with or without mandatory redemption requirements. Holders of outstanding
Unicom shares are entitled to one vote for each share held on each matter
submitted to a vote of such shareholders; and holders of outstanding ComEd
shares are entitled to one vote for each share held on each matter submitted
to a vote of such shareholders. All such shares have the right to cumulate
votes in elections for the directors of the corporation which issued the
shares.

Pursuant to a plan adopted by the Unicom Board of Directors on February 2,
1998, each share of Unicom's common stock carries the right (referred to
herein as a "Right") to purchase one-thousandth of one share of Unicom's
common stock at a purchase price of $100 per whole share of common stock,
subject to adjustment. The plan was amended on September 22, 1999 to render
the Rights inapplicable to the transactions contemplated by the Merger
Agreement. The Rights are tradable only with Unicom's common stock until they
become exercisable. The Rights become exercisable upon the earlier of ten days
following a public announcement that a person (an "Acquiring Person") has
acquired 15% or more of Unicom's outstanding common stock or ten business days
(or such later date as may be determined by action of the Board of Directors)
following the commencement of a tender or exchange offer which, if
consummated, would result in a person or group becoming an Acquiring Person.
The Rights are subject to redemption by Unicom at a price of $0.01 per Right,
subject to certain limitations, and will expire on February 2, 2008. If a
person or group becomes an Acquiring Person, each holder of a Right will
thereafter have the right to receive, upon exercise, Unicom common stock at a
50% discount from the then current market price. If Unicom is acquired in a
merger or other business combination transaction in which Unicom is not the
survivor, or 50% or more of Unicom's assets or earning power is sold or
transferred, each holder of a Right shall then have the right to receive, upon
exercise, common stock of the acquiring company at a 50% discount from the
then current market price of such common stock. Rights held by an Acquiring
Person become void upon the occurrence of such events.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

(6) Common Equity. In January 2000, Unicom physically settled the forward
share repurchase arrangements it had with financial institutions for the
repurchase of 26.3 million Unicom common shares. Prior to settlement, the
repurchase arrangements were recorded as a receivable on Unicom's Consolidated
Balance Sheets based on the aggregate market value of the shares under the
arrangements. In 1999, net unrealized losses of $44 million (after-tax), or
$0.20 per common share were recorded related to the arrangements. The
settlement of the arrangements in January 2000 resulted in a gain of $113
million (after-tax), which was recorded in the first quarter of 2000. The
settlement of the arrangements resulted in a reduction in Unicom's outstanding
common shares and common stock equity effective January 2000.

At June 30, 2000, shares of Unicom common stock were reserved for the
following purposes:

Long-Term Incentive Plan........................................ 1,561,857
Employee Stock Purchase Plan.................................... 284,940
Shareholder Rights Plan......................................... 400,000
Exchange for ComEd common stock not held by Unicom.............. 86,630
1996 Directors' Fee Plan........................................ 136,876
---------
2,470,303
=========

Common stock issued/(reacquired) for the three months, six months and twelve
months ended June 30, 2000 and 1999 was as follows:

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
------------------- --------------------- ---------------------
2000 1999 2000 1999 2000 1999
---------- ------- ----------- -------- ----------- --------

Shares of Common Stock
Issued/(Reacquired):
Long-Term Incentive
Plan.................. 225,287 84,402 669,906 233,215 888,192 523,726
Employee Stock Purchase
Plan.................. 38,857 45,126 38,857 45,126 83,231 86,884
Exchange for ComEd com-
mon stock not held by
Unicom................ 118 419 1,020 (3,330) 1,896 2,887
1996 Directors' Fee
Plan.................. 22,826 1,104 25,583 3,348 27,756 9,404
Treasury Stock......... (1,291,200) -- (41,645,900) (85,424) (41,645,900) (264,406)
---------- ------- ----------- -------- ----------- --------
(1,004,112) 131,051 (40,910,534) 192,935 (40,644,825) 358,495
========== ======= =========== ======== =========== ========

(Thousands of Dollars)

Changes in Common Stock
Accounts:
Total shares issued.... $ 8,348 $ 4,096 $ 12,443 $ 4,777 $ 28,956 $ 14,869
Net cash settlement of
forward share repur-
chase contract........ -- -- -- (16,454) -- (16,454)
Share repurchases...... (51,623) -- (1,578,575) (3,295) (1,578,575) (10,095)
Shares held by trustee
for Unicom Stock Bonus
Deferral Plan......... -- -- -- -- -- 8,722
Other.................. 27 (8) 106 137 121 (79)
---------- ------- ----------- -------- ----------- --------
$ (43,428) $ 4,088 $(1,566,026) $(14,835) $(1,549,498) $ (3,037)
========== ======= =========== ======== =========== ========

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

At June 30, 2000 and December 31, 1999, 75,458 and 75,692, respectively,
ComEd common stock purchase warrants were outstanding. The warrants entitle
the holders to convert such warrants into common stock of ComEd at a
conversion rate of one share of common stock for three warrants.

(7) Stock Option Awards/Employee Stock Purchase Plan. Unicom has a
nonqualified stock option awards program under its Long-Term Incentive Plan.
The stock option awards program was adopted by Unicom in July 1996 to reward
valued employees responsible for, or contributing to, the management, growth
and profitability of Unicom and its subsidiaries. The stock options granted
expire ten years from their grant date. One-third of the shares subject to the
options vest on each of the first three anniversaries of the option grant
date. In addition, the stock options will become fully vested immediately if
the holder dies, retires, is terminated by the Company, other than for cause,
or qualifies for long-term disability. Options granted before July 22, 1998
also vest in full upon a change in control, while options granted on or after
July 22, 1998 vest in full if the option holder is terminated within 24 months
after a change of control.

Stock option transactions through June 30, 2000 are summarized as follows:

Number of Weighted Average
Options Exercise Price
--------- ----------------

Outstanding as of December 31, 1997................ 2,291,378 $23.810
Granted during the year............................ 1,379,525 35.234
Exercised during the year.......................... (404,082) 24.244
Expired/cancelled during the year.................. (123,928) 25.715
---------
Outstanding as of December 31, 1998................ 3,142,893 28.694
Granted during the year............................ 1,853,050 35.750
Exercised during the year.......................... (313,231) 24.102
Expired/cancelled during year...................... (179,076) 33.551
---------
Outstanding as of December 31, 1999................ 4,503,636 31.723
Granted during the six months ended June 30, 2000.. 2,166,600 37.063
Exercised during the six months ended June 30,
2000.............................................. (351,944) 27.072
Expired/cancelled during the six months ended June
30, 2000.......................................... (114,251) 35.543
---------
Outstanding as of June 30, 2000.................... 6,204,041 33.781
=========

Of the stock options outstanding at June 30, 2000, 2,028,761 had vested with
a weighted average exercise price of $30.

The fair value of each stock option is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions:

Stock Option Grant Date
-----------------------
2000 1999 1998
------- ------- -------

Expected option life.................................... 7 years 7 years 7 years
Dividend yield.......................................... 4.30% 4.50% 4.54%
Expected volatility..................................... 21.97% 23.02% 21.95%
Risk-free interest rate................................. 6.76% 4.83% 5.58%

The estimated weighted average fair value for each stock option granted in
the first half of 2000 and in 1999 and 1998 was $8.19, $6.48 and $6.62,
respectively.

The ESPP was terminated on June 28, 2000 by Unicom's Board of Directors in
anticipation of the Merger. The ESPP allowed employees to purchase Unicom
common stock at a ten percent discount from market value. Substantially all of
the employees of Unicom, ComEd and their subsidiaries were

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
eligible to participate in the ESPP. Unicom issued 83,231 and 86,884 shares of
common stock for the twelve months ended June 30, 2000 and 1999, respectively,
under the ESPP at a weighted average annual purchase price of $35.02 and
$34.34, respectively.

Unicom has adopted the disclosure-only provisions of SFAS No. 123. For
financial reporting purposes, Unicom has adopted APB No. 25 and has taken into
consideration FASB Interpretation No. 44 of APB No. 25, and thus no
compensation cost has been recognized for the stock option awards program or
ESPP. If Unicom had recorded compensation expense for the stock options
granted and the shares of common stock issued under the ESPP in accordance
with SFAS No. 123 using the fair value based method of accounting, the
additional charge to operations would have been $4 million (after-tax), or
$0.02 per common share (diluted), and $3 million (after-tax), or $0.01 per
common share (diluted), for the twelve months ended June 30, 2000 and 1999,
respectively.

(8) ComEd Preferred and Preference Stocks Without Mandatory Redemption
Requirements. During the twelve months ended June 30, 2000 and 1999, 3,000,000
shares and 10,499,549 shares of preferred or preference stock without
mandatory redemption requirements were redeemed, respectively, and no shares
were issued. All of the outstanding shares of Series $1.425 preferred stock
were redeemed on August 1, 2000. The redemption price was $42 per share, plus
accrued and unpaid dividends.

(9) ComEd Preference Stock Subject to Mandatory Redemption
Requirements. During the twelve months ended June 30, 2000 and 1999, no shares
of ComEd preference stock subject to mandatory redemption requirements were
issued. During the twelve months ended June 30, 2000 and 1999, 700,000 shares
and 1,298,560 shares, respectively, of ComEd preference stock subject to
mandatory redemption requirements were reacquired to meet sinking fund
requirements or were part of the early redemption in 1999. There were 700,000
shares of Series $6.875 preference stock outstanding at December 31, 1999, at
an aggregate stated value of $69 million. This series was non-callable and was
redeemed on May 1, 2000.

(10) ComEd-Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trusts Holding Solely ComEd's Subordinated Debt Securities. In
September 1995, ComEd Financing I, a wholly-owned subsidiary trust of ComEd,
issued 8,000,000 of its 8.48% ComEd-obligated mandatorily redeemable preferred
securities. The sole asset of ComEd Financing I is $206.2 million principal
amount of ComEd's 8.48% subordinated deferrable interest notes due September
30, 2035. In January 1997, ComEd Financing II, a wholly-owned subsidiary trust
of ComEd, issued 150,000 of its 8.50% ComEd-obligated mandatorily redeemable
capital securities. The sole asset of ComEd Financing II is $154.6 million
principal amount of ComEd's 8.50% subordinated deferrable interest debentures
due January 15, 2027. There is a full and unconditional guarantee by ComEd of
the Trusts' obligations under the securities issued by the Trusts. However,
ComEd's obligations are subordinate and junior in right of payment to certain
other indebtedness of ComEd. ComEd has the right to defer payments of interest
on the subordinated deferrable interest notes by extending the interest
payment period, at any time, for up to 20 consecutive quarters. Similarly,
ComEd has the right to defer payments of interest on the subordinated
deferrable interest debentures by extending the interest payment period, at
any time, for up to ten consecutive semi-annual periods. If interest payments
on the subordinated deferrable interest notes or debentures are so deferred,
distributions on the preferred securities will also be deferred. During any
deferral, distributions will continue to accrue with interest thereon. In
addition, during any such deferral, ComEd may not declare or pay any dividend
or other distribution on, or redeem or purchase, any of its capital stock.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

The subordinated deferrable interest notes are redeemable by ComEd, in whole
or in part, from time to time, on or after September 30, 2000, and with
respect to the subordinated deferrable interest debentures, on or after
January 15, 2007, or at any time in the event of certain income tax
circumstances. If the subordinated deferrable interest notes or debentures are
redeemed, the Trusts must redeem preferred securities having an aggregate
liquidation amount equal to the aggregate principal amount of the subordinated
deferrable interest notes or debentures so redeemed. In the event of the
dissolution, winding up or termination of the Trusts, the holders of the
preferred securities will be entitled to receive, for each preferred security,
a liquidation amount of $25 for the securities of ComEd Financing I and $1,000
for the securities of ComEd Financing II, plus accrued and unpaid
distributions thereon, including interest thereon, to the date of payment,
unless in connection with the dissolution, the subordinated deferrable
interest notes or debentures are distributed to the holders of the preferred
securities.

(11) Long-Term Debt. ComEd initiated the issuance of $3.4 billion of
transitional trust notes through its SPEs, ComEd Funding and ComEd Funding
Trust, in the fourth quarter of 1998. The current amount outstanding is as
follows:

Series Principal Amount
------------------------ ----------------------
(Thousands of Dollars)

5.29% due June 25, 2001............................ $ 340,000
5.34% due March 25, 2002........................... 258,861
5.39% due June 25, 2003............................ 421,139
5.44% due March 25, 2005........................... 598,511
5.63% due June 25, 2007............................ 761,489
5.74% due December 25, 2008........................ 510,000
----------
$2,890,000
==========

For accounting purposes, the liabilities of ComEd Funding Trust for the
transitional trust notes are reflected as long-term debt on the Consolidated
Balance Sheets of Unicom and ComEd.

The proceeds, net of transaction costs, from the transitional trust notes
were used, as required, to redeem debt and equity. During 1999, ComEd redeemed
or reacquired $1,101 million of long-term debt.

Sinking fund requirements and scheduled maturities remaining through 2004
for ComEd's first mortgage bonds, transitional trust notes, sinking fund
debentures and other long-term debt outstanding at June 30, 2000, after
deducting deposits made for the retirement of sinking fund debentures, are
summarized as follows: 2000--$271 million; 2001--$346 million; 2002--$645
million; 2003--$445 million; and 2004--$577 million.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

At June 30, 2000, ComEd's outstanding first mortgage bonds maturing through
2004 were as follows:

Series Principal Amount
-------------------------------- ----------------------
(Thousands of Dollars)

6 3/8% due July 15, 2000........................... $100,000
7 3/8% due September 15, 2002...................... 200,000
6 5/8% due July 15, 2003........................... 100,000
5 3/10% due January 15, 2004....................... 26,000
--------
$426,000
========

Other long-term debt outstanding at June 30, 2000 is summarized as follows:

Principal
Debt Security Amount Interest Rate
- ---------------------------------------- ---------- ------------------------------------------
(Thousands
of
Dollars)

Unicom--
Loans Payable:
Loan due January 1, 2003 $ 4,212 Interest rate of 8.31%
Loan due January 1, 2004 5,021 Interest rate of 8.44%
Loan due January 15, 2009 5,228 Interest rate of 8.30%
Loan due January 15, 2009 6,568 Interest rate of 8.55%
Loan due January 15, 2010 3,632 Interest rate of 8.65%
Loan due January 15, 2010 6,880 Interest rate of 8.88%
Loan due July 15, 2010 8,703 Interest rate of 7.98%
----------
$ 40,244
----------
ComEd--
Notes:
Medium Term Notes, Series 3N due vari-
ous dates through October 15, 2004 $ 156,000 Interest rates ranging from 9.17% to 9.20%
Notes due January 15, 2004 150,000 Interest rate of 7.375%
Notes due October 15, 2005 235,000 Interest rate of 6.40%
Notes due January 15, 2007 150,000 Interest rate of 7.625%
Notes due July 15, 2018 225,000 Interest rate of 6.95%
----------
$ 916,000
----------
Purchase Contract Obligation
due April 30, 2005 $ 254 Interest rate of 3.00%
----------
Total ComEd $ 916,254
----------
Unicom Enterprises--
Notes:
Unicom Thermal Guaranteed Senior Note
due May 30, 2012 $ 115,800 Interest rate of 7.38%
Unicom Thermal Guaranteed Senior Note
due January 31, 2020 28,000 Interest rate of 9.09%
Northwind Midway Guaranteed Senior Note
due June 30, 2023 11,423 Interest rate of 7.68%
Unicom Thermal Obligation due April 1,
2015 1,124 Interest rate of 8.00%
Unicom Mechanical Services Notes
due various dates through May 15, 2003 109 Interest rate ranging from 8.50% to 9.40%
----------
Total Unicom Enterprises $ 156,456
----------
Total Unicom $1,112,954
==========

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
Long-term debt maturing within one year has been included in current
liabilities.

ComEd's outstanding first mortgage bonds are secured by a lien on
substantially all property and franchises, other than expressly excepted
property, owned by ComEd.

Unicom Thermal redeemed the $115.8 million outstanding balance of the 7.38%
unsecured guaranteed senior Note on July 12, 2000. Unicom Thermal recorded an
extraordinary loss related to early redemption premiums paid and the write-off
of unamortized debt expenses, which will reduce Unicom's net income on common
stock by approximately $3.5 million (after-tax) in the third quarter of 2000.
The Note was guaranteed by Unicom and included certain covenants with respect
to Unicom and Unicom Thermal's operations.

In May 2000, Northwind Chicago issued $28 million of 9.09% guaranteed senior
Notes due January 31, 2020, the proceeds of which will be used primarily to
finance certain project construction costs. The Notes are guaranteed by Unicom
and include certain covenants with respect to Unicom and Northwind Chicago's
operations.

In June 1999, Northwind Midway issued $11.4 million of 7.68% guaranteed
senior Notes due June 2023, the proceeds of which will be used primarily to
finance certain project construction costs. The Notes are guaranteed by Unicom
and include certain covenants with respect to Unicom and Northwind Midway's
operations. Such covenants include, among other things, a requirement that
Unicom and its consolidated subsidiaries own no less than 65% of the voting
membership interest of Northwind Midway.

(12) Lines of Credit. ComEd had total unused bank lines of credit of $800
million at June 30, 2000. Of that amount, $500 million expires on December 15,
2000 and $300 million expires on December 17, 2002. The interest rate is set
at the time of a borrowing and is based on several floating rate bank indices
plus a spread which is dependent upon the credit rating of ComEd's outstanding
first mortgage bonds or on a prime interest rate. ComEd is obligated to pay
commitment and facility fees with respect to the line of credit.

Unicom Enterprises had a $400 million credit facility of which $74 million
was unused as of June 30, 2000. The credit facility was terminated on August
7, 2000 by Unicom Enterprises. The credit facility was used by Unicom
Enterprises to finance investments in unregulated businesses and projects,
including UT Holdings and Unicom Energy Services, and for general corporate
purposes. The credit facility was guaranteed by Unicom and included certain
covenants with respect to Unicom and Unicom Enterprises' operations. See Note
23 for additional information.

(13) Disposal of Spent Nuclear Fuel. Under the Nuclear Waste Policy Act of
1982, the DOE is responsible for the selection and development of repositories
for, and the disposal of, spent nuclear fuel and high-level radioactive waste.
ComEd, as required by that Act, has entered into a contract with the DOE to
provide for the disposal of spent nuclear fuel and high-level radioactive
waste from ComEd's nuclear generating stations. The contract with the DOE
requires ComEd to pay the DOE a one-time fee applicable to nuclear generation
through April 6, 1983 of $277 million, with interest to date of payment, and a
fee payable quarterly equal to one mill per kilowatthour of nuclear-generated
and sold electricity after April 6, 1983. Pursuant to the contract, ComEd has
elected to pay the one-time fee, with interest, just prior to the first
delivery of spent nuclear fuel to the DOE. The liability

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
for the one-time fee and the related interest is reflected on the Consolidated
Balance Sheets. The contract also provided for acceptance by the DOE of such
materials to begin in January 1998; however, that date was not met by the DOE
and is expected to be delayed significantly. The DOE's current estimate for
opening a facility to accept such waste is 2010. This extended delay in spent
nuclear fuel acceptance by the DOE has led to ComEd's consideration of
additional dry storage alternatives. On July 30, 1998, ComEd filed a complaint
against the United States in the United States Court of Federal Claims seeking
to recover damages caused by the DOE's failure to honor its contractual
obligation to begin disposing of spent nuclear fuel in January 1998. On
November 5, 1999, ComEd's case was stayed pending the decision of the United
States Court of Appeals for the Federal Circuit in several similar cases
brought by other utilities.

(14) Fair Value of Financial Instruments. The following methods and
assumptions were used to estimate the fair value of financial instruments
either held, or issued and outstanding. The disclosure of such information
does not purport to be a market valuation of Unicom and subsidiary companies
as a whole. The impact of any realized or unrealized gains or losses related
to such financial instruments on the financial position or results of
operations of Unicom and subsidiary companies is primarily dependent on the
treatment authorized under future ComEd ratemaking proceedings.

Investments. Securities included in the nuclear decommissioning funds have
been classified and accounted for as "available for sale" securities. The
estimated fair value of the nuclear decommissioning funds, as determined by
the trustee and based on published market data, as of June 30, 2000 and
December 31, 1999 was as follows:

June 30, 2000 December 31, 1999
-------------------------------- --------------------------------
Unrealized Unrealized
Gains/ Gains/
Cost Basis (Losses) Fair Value Cost Basis (Losses) Fair Value
---------- ---------- ---------- ---------- ---------- ----------
(Thousands of Dollars)

Short-term investments.. $ 39,092 $ 51 $ 39,143 $ 41,362 $ 95 $ 41,457
U.S. Government and
Agency issues.......... 242,467 6,330 248,797 245,399 (1,993) 243,406
Municipal bonds......... 401,688 2,797 404,485 383,816 (940) 382,876
Corporate bonds......... 203,167 (5,248) 197,919 196,942 (5,699) 191,243
Common stock............ 885,291 695,013 1,580,304 832,802 732,893 1,565,695
Other................... 149,578 (3,340) 146,238 125,072 (3,209) 121,863
---------- -------- ---------- ---------- -------- ----------
$1,921,283 $695,603 $2,616,886 $1,825,393 $721,147 $2,546,540
========== ======== ========== ========== ======== ==========

At June 30, 2000, the debt securities held by the nuclear decommissioning
funds had the following maturities:

Cost Basis Fair Value
---------- ----------
(Thousands of
Dollars)

Within 1 year....................................... $ 29,619 $ 29,857
1 through 5 years................................... 304,911 304,379
5 through 10 years.................................. 243,306 243,152
Over 10 years....................................... 409,449 411,937

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

The net earnings of the nuclear decommissioning funds, which are recorded in
the accumulated provision for depreciation, for the three months, six months
and twelve months ended June 30, 2000 and 1999 were as follows:

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
-------------------- ------------------ ----------------------
2000 1999 2000 1999 2000 1999
--------- --------- -------- -------- ---------- ----------
(Thousands of Dollars)

Gross proceeds from
sales of
securities............. $372,244 $ 457,175 $904,241 $842,863 $1,826,378 $1,689,884
Less cost based on spe-
cific
identification......... 372,500 436,159 865,738 818,185 1,765,704 1,652,894
--------- --------- -------- -------- ---------- ----------
Realized gains/(losses)
on sales of
securities............. $ (256) $ 21,016 $ 38,503 $ 24,678 $ 60,674 $ 36,990
Other realized fund
earnings, net of
expenses............... (366) 20,242 17,987 30,816 50,097 58,342
--------- --------- -------- -------- ---------- ----------
Total realized net earn-
ings of the funds...... $ (622) $ 41,258 $ 56,490 $ 55,494 $ 110,771 $ 95,332
Unrealized
gains/(losses)......... (53,797) 38,460 (25,544) 88,738 (12,772) 164,679
--------- --------- -------- -------- ---------- ----------
Total net earnings of
the funds............. $ (54,419) $ 79,718 $ 30,946 $144,232 $ 97,999 $ 260,011
========= ========= ======== ======== ========== ==========

Securities held by certain trusts, which were established to provide for
supplemental retirement benefits and executive medical claims, have been
classified and accounted for as "available for sale." The estimated fair value
of these securities, as determined by the trustee and based on published
market data, as of June 30, 2000 was as follows:

Cost Unrealized Fair
Basis Gain Value
------- ---------- -------
(Thousands of Dollars)

Short-term investments.............................. $ 236 $ -- $ 236
Registered investment companies..................... 21,841 13,308 35,149
------- ------- -------
$22,077 $13,308 $35,385
======= ======= =======

Current Assets. Cash, temporary cash investments, cash held for redemption
of securities and other cash investments, which include U.S. Government
obligations and other short-term marketable securities, and special deposits,
are stated at cost, which approximates their fair value because of the short
maturity of these instruments. The securities included in these categories
have been classified as "available for sale" securities.

Capitalization. The estimated fair values of ComEd preferred and preference
stocks, ComEd-obligated mandatorily redeemable preferred securities of
subsidiary trusts holding solely ComEd's subordinated debt securities,
transitional trust notes and long-term debt were obtained from an independent
consultant. The estimated fair values, which include the current portions of
redeemable preference stock and long-term debt but exclude accrued interest
and dividends, as of June 30, 2000 and December 31, 1999 were as follows:

June 30, 2000 December 31, 1999
--------------------------------- ---------------------------------
Unrealized Unrealized
Carrying Gains/ Carrying Gains/ Fair
Value (Losses) Fair Value Value (Losses) Value
---------- ---------- ---------- ---------- ---------- ----------
(Thousands of Dollars)

ComEd preferred and $ 1,249
preference stocks...... $ 1,646 $ (397) $ 71,265 $ 58 $ 71,323
ComEd-obligated
mandatorily redeemable
preferred securities of
subsidiary trusts
holding solely ComEd's
subordinated debt
securities............. $ 350,000 $ (21,824) $ 328,176 $ 350,000 $ (10,595) $ 339,405
Transitional trust
notes.................. $2,878,808 $(134,549) $2,744,259 $3,057,112 $(163,600) $2,893,512
Long-term debt.......... $4,471,760 $ (58,447) $4,413,313 $4,810,108 $ (23,136) $4,786,972

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

Current Liabilities. The carrying value of notes payable, which consists of
commercial paper and bank loans maturing within one year, approximates the
fair value because of the short maturity of these instruments. See
"Capitalization" above for a discussion of the fair value of the current
portion of long-term debt and redeemable preference stock.

Other Noncurrent Liabilities. The carrying value of accrued spent nuclear
fuel disposal fee and related interest represents the settlement value as of
June 30, 2000 and December 31, 1999; therefore, the carrying value is equal to
the fair value.

(15) Pension and Postretirement Benefits. As of June 30, 2000, ComEd had a
qualified non-contributory defined benefit pension plan which covers all
regular employees of ComEd and certain of Unicom's subsidiaries. Benefits
under this plan reflect each employee's compensation, years of service and age
at retirement. Funding is based upon actuarially determined contributions that
take into account the amount deductible for income tax purposes and the
minimum contribution required under the Employee Retirement Income Security
Act of 1974, as amended. The June 30, 2000 and December 31, 1999 pension
liabilities and related data were determined using the January 1, 1999
actuarial valuation. Additionally, ComEd maintains a nonqualified supplemental
retirement plan which covers any excess pension benefits that would be payable
to management employees under the qualified plan but which are limited by the
Internal Revenue Code. In 1998, Indiana Company's qualified defined benefit
pension plan was merged into ComEd's pension plan as a result of the sale of
Indiana Company's State Line Station and the transfer of its remaining
employees to ComEd.

ComEd and certain of Unicom's subsidiaries provide certain postretirement
medical, dental and vision care, and life insurance for retirees and their
dependents and for the surviving dependents of eligible employees and
retirees. Generally, the employees become eligible for postretirement benefits
if they retire no earlier than age 55 with ten years of service. The liability
for postretirement benefits is funded through trust funds based upon
actuarially determined contributions that take into account the amount
deductible for income tax purposes. The health care plans are contributory,
funded jointly by the companies and the participating retirees. The June 30,
2000 and December 31, 1999 postretirement benefit liabilities and related data
were determined using the January 1, 1999 actuarial valuations.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

Reconciliations of the beginning and ending balances of the projected
pension benefit obligation and the accumulated postretirement benefit
obligation, and the funded status of these plans for the six months ended June
30, 2000 and twelve months ended December 31, 1999 were as follows:

Six Months Ended Twelve Months Ended
June 30, 2000 December 31, 1999
-------------------------- --------------------------
Other Other
Pension Postretirement Pension Postretirement
Benefits Benefits Benefits Benefits
---------- -------------- ---------- --------------
(Thousands of Dollars)
Change in benefit
obligation
- -----------------

Benefit obligation at
beginning of period.... $4,094,000 $1,151,000 $4,326,000 $1,236,000
Service cost............ 41,000 16,000 120,000 41,000
Interest cost........... 154,000 44,000 285,000 82,000
Plan participants' con-
tributions............. -- 2,000 -- 4,000
Actuarial loss/(gain)... 7,000 1,000 (458,000) (188,000)
Benefits paid........... (130,000) (29,000) (241,000) (51,000)
Special termination ben-
efits.................. -- -- 62,000 27,000
---------- ---------- ---------- ----------
Benefit obligation at
end of period......... $4,166,000 $1,185,000 $4,094,000 $1,151,000
---------- ---------- ---------- ----------

Change in plan assets
- ---------------------

Fair value of plan as-
sets at beginning of
period................. $4,268,000 $ 948,000 $4,015,000 $ 865,000
Actual return on plan
assets................. 80,000 11,000 491,000 106,000
Employer contribution... 2,000 -- 3,000 24,000
Plan participants' con-
tributions............. -- 2,000 -- 4,000
Benefits paid........... (130,000) (29,000) (241,000) (51,000)
---------- ---------- ---------- ----------
Fair value of plan as-
sets at end of period. $4,220,000 $ 932,000 $4,268,000 $ 948,000
---------- ---------- ---------- ----------
Plan assets
greater/(less) than
benefit obligation..... $ 54,000 $ (253,000) $ 174,000 $ (203,000)
Unrecognized net actuar-
ial gain............... (395,000) (512,000) (522,000) (556,000)
Unrecognized prior serv-
ice cost/(asset)....... (49,000) 39,000 (51,000) 41,000
Unrecognized transition
obligation/(asset)..... (74,000) 266,000 (79,000) 276,000
---------- ---------- ---------- ----------
Accrued liability for
benefits.............. $ (464,000) $ (460,000) $ (478,000) $ (442,000)
========== ========== ========== ==========

The assumed discount rate used to determine the benefit obligation as of
June 30, 2000 and December 31, 1999 was 7.75%. The fair value of plan assets
excludes $26 million and $25 million held in grantor trust as of June 30, 2000
and December 31, 1999, respectively, for the payment of benefits under the
supplemental plan and $9 million held in a grantor trust as of June 30, 2000
and December 31, 1999 for the payment of postretirement medical benefits.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

The components of pension and other postretirement benefit costs, portions
of which were recorded as components of construction costs, for the three
months, six months and twelve months ended June 30, 2000 were as follows:

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
-------------------- -------------------- --------------------
2000 1999 2000 1999 2000 1999
--------- --------- --------- --------- --------- ---------
(Thousands of Dollars)

Pension Benefit Costs
- ---------------------
Service cost............ $ 20,000 $ 32,000 $ 41,000 $ 63,000 $ 98,000 $ 116,000
Interest cost on pro-
jected benefit obliga-
tion................... 77,000 71,000 154,000 142,000 297,000 276,000
Expected return on plan
assets................. (99,000) (91,000) (197,000) (181,000) (378,000) (352,000)
Amortization of transi-
tion asset............. (2,000) (3,000) (5,000) (6,000) (12,000) (12,000)
Amortization of prior
service asset.......... (1,000) (1,000) (2,000) (2,000) (4,000) (4,000)
Recognized loss/(gain).. (1,000) 1,000 (2,000) 2,000 (1,000) 4,000
Curtailment loss........ -- -- -- -- 16,000 --
--------- --------- --------- --------- --------- ---------
Net periodic benefit
cost.................. $ (6,000) $ 9,000 $ (11,000) $ 18,000 $ 16,000 $ 28,000
========= ========= ========= ========= ========= =========
Other Postretirement
Benefit Costs
- --------------------
Service cost............ $ 8,000 $ 11,000 $ 16,000 $ 21,000 $ 36,000 $ 41,000
Interest cost on accumu-
lated benefit
obligation............. 22,000 20,000 44,000 41,000 85,000 82,000
Expected return on plan
assets................. (22,000) (18,000) (43,000) (37,000) (82,000) (72,000)
Amortization of transi-
tion obligation........ 5,000 5,000 10,000 11,000 21,000 22,000
Amortization of prior
service cost........... 1,000 1,000 2,000 2,000 4,000 4,000
Recognized gain......... (5,000) (3,000) (11,000) (6,000) (19,000) (11,000)
Severance plan cost..... -- 1,000 -- 1,000 -- 5,000
Curtailment loss........ -- -- -- -- 35,000 --
--------- --------- --------- --------- --------- ---------
Net periodic benefit
cost.................. $ 9,000 $ 17,000 $ 18,000 $ 33,000 $ 80,000 $ 71,000
========= ========= ========= ========= ========= =========

In accounting for the pension costs and other postretirement benefit costs
under the plans, the following weighted average actuarial assumptions were
used for the periods during 2000, 1999 and 1998:

Other
Postretirement
Pension Benefits Benefits
----------------- -----------------
2000 1999 1998 2000 1999 1998
----- ----- ----- ----- ----- -----

Annual discount rate....................... 7.75% 6.75% 7.00% 7.75% 6.75% 7.00%
Annual long-term rate of return on plan as-
sets...................................... 9.50% 9.25% 9.50% 9.23% 8.97% 9.20%
Annual rate of increase in future compensa-
tion levels............................... 4.00% 4.00% 4.00% -- -- --

The pension and other postretirement benefit curtailment losses for the
twelve months ended June 30, 2000 represent the recognition of prior service
costs and transition obligations, and an increase in the benefit obligations
resulting from special termination benefits, related to the reduction in the
number of employees due to ComEd's December 1999 sale of the fossil stations.

The health care cost trend rates used to measure the expected cost of the
postretirement medical benefits are assumed to be 7.5% for pre-Medicare
recipients and 5.5% for Medicare recipients for 2000. Those rates are assumed
to decrease in 0.5% annual increments to 5% for the years 2005 and 2001,
respectively, and to remain level thereafter. The health care cost trend
rates, used to measure the expected cost of postretirement dental and vision
benefits, are a level 3.5% and 2.0% per year, respectively. Assumed health
care cost trend rates have a significant effect on the amounts reported

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued
for the health care plans. A one percentage point change in the assumed health
care cost trend rates would have the following effects:

1 Percentage 1 Percentage
Point Increase Point Decrease
-------------- --------------
(Thousands of Dollars)

Effect on total annual service and interest cost
components...................................... $ 23,000 $ (18,000)
Effect on postretirement benefit obligation as of
June 30, 2000................................... 195,000 (155,000)

In addition, an employee savings and investment plan is available to
eligible employees of ComEd and certain of its and Unicom's subsidiaries.
Under the plan, each participating employee may contribute up to 20% of such
employee's base pay and the participating companies match the first 6% of such
contribution equal to 100% of the first 2% of contributed base salary, 70% of
the next 3% of contributed base salary and 25% of the next 1% of contributed
base salary. The participating companies' contributions were $9 million and $8
million for the three months ended June 30, 2000 and 1999, respectively, $16
million and $15 million for six months ended June 30, 2000 and 1999,
respectively, and $33 million and $32 million for the twelve months ended
June 30, 2000 and 1999, respectively.

(16) Separation Plan Costs. O&M expenses included $11 million and $5 million
for the three months ended June 30, 2000 and 1999, respectively, $14 million
and $5 million for the six months ended June 30, 2000 and 1999, respectively,
and $18 million and $30 million for the twelve months ended June 30, 2000 and
1999, respectively, for costs related to voluntary separation offers to
certain employees of ComEd, other than costs related to the fossil plant sale,
as well as certain other employee-related costs. Such costs resulted in
charges of $7 million (after-tax), or $0.04 per common share (diluted) and
$3 million (after-tax), or less than $0.01 per common share (dilutive) for the
three months ended June 30, 2000 and 1999, respectively, $8 million (after-
tax), or $0.04 per common share (diluted), and $3 million (after-tax), or
$0.01 per common share (diluted), for the six months ended June 30, 2000 and
1999, respectively, and $11 million (after-tax), or $0.06 per common share
(diluted), and $18 million (after-tax), or $0.08 per common share (diluted),
for the twelve months ended June 30, 2000 and 1999, respectively. See Note 4
regarding employee separation costs related to the fossil plant sale.

(17) Income Taxes. The components of the net deferred income tax liability
at June 30, 2000 and December 31, 1999 were as follows:

June 30, December 31,
2000 1999
---------- ------------
(Thousands of Dollars)

Deferred income tax liabilities:
Accelerated cost recovery and liberalized deprecia-
tion, net of removal costs........................... $2,693,006 $2,815,972
Overheads capitalized................................. 154,198 159,836
Deferred gain on sale of fossil stations.............. 462,000 --
Repair allowance...................................... 215,847 221,502
Regulatory assets recoverable through future rates.... 696,949 688,946
Deferred income tax assets:
Postretirement benefits............................... (378,430) (376,538)
Unamortized investment tax credits.................... (157,005) (161,756)
Regulatory liabilities to be settled through future
rates................................................ (584,413) (596,157)
Nuclear plant closure................................. (5,459) (5,456)
Other--net............................................ (256,343) (321,522)
---------- ----------
Net deferred income tax liability...................... $2,840,350 $2,424,827
========== ==========

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

The components of net income tax expense charged to continuing operations
for the three months, six months and twelve months ended June 30, 2000 and
1999 were as follows:

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
-------------------- ------------------ ---------------------
2000 1999 2000 1999 2000 1999
--------- --------- -------- -------- ----------- --------
(Thousands of Dollars)

Operating income:
Current income taxes... $ 105,392 $ 103,501 $180,171 $212,379 $ 1,730,075 $379,078
Deferred income taxes.. (46,499) (43,154) (87,869) (88,768) (1,402,184) (18,813)
Investment tax credits
deferred--net......... (5,500) (7,021) (10,999) (14,042) (22,785) (27,723)
Other (income) and
deductions:
Current income taxes... 16,376 (899) 11,422 1,769 10,274 9,147
Deferred income taxes.. 852 5,243 14,484 6,080 32,324 17,993
Investment tax credits. (2,153) (2,153) (4,305) (3,981) (52,064) (8,616)
--------- --------- -------- -------- ----------- --------
Net income taxes charged
to continuing opera-
tions.................. $ 68,468 $ 55,517 $102,904 $113,437 $ 295,640 $351,066
========= ========= ======== ======== =========== ========

Provisions for current and deferred federal and state income taxes and
amortization of investment tax credits resulted in the following effective
income tax rates for the three months, six months and twelve months ended June
30, 2000 and 1999:

Net income before
extraordinary items.... $ 147,564 $ 119,462 $342,645 $216,611 $ 723,280 $592,622
Net income taxes charged
to continuing
operations............. 68,468 55,517 102,904 113,437 295,640 351,066
Provision for dividends
on ComEd preferred and
preference stocks...... 1,017 3,043 2,239 18,340 7,655 46,215
--------- --------- -------- -------- ---------- --------
Pre-tax income before
extraordinary items and
provision for
dividends.............. $ 217,049 $ 178,022 $447,788 $348,388 $1,026,575 $989,903
========= ========= ======== ======== ========== ========
Effective income tax
rate................... 31.5% 31.2% 23.0% 32.6% 28.8% 35.5%
========= ========= ======== ======== ========== ========

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

The principal differences between net income taxes charged to continuing
operations and the amounts computed at the federal statutory rate of 35% for
the three months, six months and twelve months ended June 30, 2000 and 1999
were as follows:

Federal income taxes
computed at statutory
rate................... $ 75,967 $ 62,308 $156,726 $121,936 $ 359,301 $ 346,466
Amortization of
investment tax credits,
net of deferred income
taxes.................. (5,234) (5,907) (10,468) (11,618) (47,063) (23,395)
State income taxes, net
of federal income
taxes.................. 9,570 7,527 13,660 15,436 44,105 43,641
Net gain on forward
share repurchase
contract............... -- (6,891) (39,575) (11,696) (12,489) (11,696)
Earnings on non-tax
qualified
decommissioning fund... (1,538) (2,768) (1,133) (2,768) (7,280) (2,768)
Differences between book
and tax accounting,
primarily property-
related deductions..... (10,297) 1,248 (16,306) 2,147 (40,934) (1,182)
--------- -------- -------- -------- --------- ---------
Net income taxes charged
to continuing
operations............. $ 68,468 $ 55,517 $102,904 $113,437 $ 295,640 $ 351,066
========= ======== ======== ======== ========= =========

(18) Taxes, Except Income Taxes. Provisions for taxes, except income taxes,
for the three months, six months and twelve months ended June 30, 2000 and
1999 were as follows:

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
------------------- ------------------ --------------------
2000 1999 2000 1999 2000 1999
--------- --------- -------- -------- --------- ---------
(Thousands of Dollars)

Illinois public utility
revenue................ $ -- $ 402 $ (3,685) $ 1,897 $ (4,601) $ 26,449
Illinois electricity
distribution tax....... 21,115 26,336 46,719 54,672 106,287 113,069
Municipal utility gross
receipts............... 21,801 25,829 49,250 50,587 98,364 121,981
Real estate............. 40,463 29,839 76,529 63,233 128,505 124,172
Municipal compensation.. 18,648 18,329 40,921 36,801 77,469 70,426
Energy assistance and
renewable energy
charge................. 8,651 8,776 17,451 17,445 34,428 33,909
Other--net.............. 18,681 20,624 40,562 37,860 73,252 79,835
--------- --------- -------- -------- --------- ---------
$ 129,359 $ 130,135 $267,747 $262,495 $ 513,704 $ 569,841
========= ========= ======== ======== ========= =========

See Note 21 for additional information regarding Illinois invested capital
taxes.

(19) Lease Obligations of Subsidiary Companies. On July 31, 2000, ComEd
terminated its nuclear fuel lease arrangement. ComEd's termination payment to
the lessor amounted to approximately $240 million and covered the value of the
unused leased nuclear fuel in ComEd's reactors plus the lessor's related
financing costs. ComEd's estimate of $235 million for its termination
obligation under the nuclear fuel lease arrangement at June 30, 2000 was
included in current liabilities on the Consolidated Balance Sheets.

Future minimum rental payments at June 30, 2000 for operating leases of
equipment and real property are estimated to aggregate to $284 million,
including $14 million in 2000, $28 million in 2001, $26 million in 2002, $25
million in 2003, $24 million in 2004 and $167 million in 2005-2043.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

(20) Joint Plant Ownership. ComEd has a 75% undivided ownership interest in
the Quad Cities nuclear generating station. Further, ComEd is responsible for
75% of all costs which are charged to appropriate investment and O&M accounts,
and provides its own financing. ComEd's net plant investment, including
construction work in progress, in Quad Cities Station on the Consolidated
Balance Sheets was $33 million at June 30, 2000.

(21) Commitments and Contingent Liabilities. Purchase commitments,
principally related to construction, nuclear fuel, and coal in support of
certain power purchase agreements approximated $808 million at June 30, 2000,
comprised of $787 million for ComEd, $7 million for UT Holdings, $3 million
for Unicom Energy Services and $11 million for Unicom Power Holdings. In
addition, ComEd has substantial commitments for expected capacity payments and
fixed charges related to power purchase agreements. Upon completion of the
fossil plant sale with EME, ComEd entered into arrangements to assign or
settle a substantial portion of its coal purchase commitments and entered into
purchase power agreements with EME. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations," subcaption "Liquidity and
Capital Resources--UTILITY OPERATIONS--Construction Program," for additional
information regarding ComEd's purchase commitments.

ComEd is a member of NEIL which provides insurance coverage against property
damage and associated replacement power costs occurring at members' nuclear
generating facilities. All companies insured with NEIL are subject to
retrospective premium adjustments if losses exceed accumulated reserve funds.
Capital has been accumulated in the reserve funds such that ComEd would not be
liable for any single incident. However, ComEd could be subject to assessments
in any policy year for each of three types of coverage provided. The maximum
assessments are approximately $32 million for primary property damage, $20
million for excess property damage and $7 million for replacement power.

The NRC's indemnity for public liability coverage under the Price-Anderson
Act is supported by a mandatory industry-wide program under which owners of
nuclear generating facilities could be assessed in the event of nuclear
incidents. Based on the number of nuclear reactors with operating licenses,
ComEd would currently be subject to a maximum assessment of $969 million in
the event of an incident, limited to a maximum of $110 million in any calendar
year.

In addition, ComEd participates in the American Nuclear Insurers Master
Worker Program, which provides coverage for worker tort claims filed for
bodily injury caused by the nuclear energy hazard. This program was modified,
effective January 1, 1998, to provide coverage to all workers whose "nuclear-
related employment" began on or after the commencement date of reactor
operations. ComEd will not be liable for a retrospective assessment under this
new policy. However, ComEd is still subject to a maximum retroactive
assessment of up to $36 million in the event losses incurred under the small
number of policies in the old program exceed accumulated reserves.

Three of ComEd's wholesale municipal customers filed a complaint and request
for refund with the FERC alleging that ComEd failed to properly adjust their
rates, as provided for under the terms of their electric service contracts, to
track certain refunds made to ComEd's retail customers in the years 1992
through 1994. In the third quarter of 1998, the FERC granted the complaint and
directed that refunds be made, with interest. ComEd filed and was granted a
request for rehearing for purposes of reconsideration with the FERC. If the
order is upheld, ComEd must make refunds within 15 days of the resolution for
rehearing. ComEd's management believes an adequate reserve has been
established in connection with this case.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

During 1989 and 1991, actions were brought in federal and state courts in
Colorado against ComEd and Cotter seeking unspecified damages and injunctive
relief based on allegations that Cotter has permitted radioactive and other
hazardous material to be released from its mill into areas owned or occupied
by the plaintiffs resulting in property damage and potential adverse health
effects. With respect to Cotter, in 1994 a federal jury returned nominal
dollar verdicts against Cotter on eight plaintiffs' claims in the 1989 cases,
which verdicts were upheld on appeal. The remaining claims in the 1989 actions
have been settled and dismissed. On July 15, 1998, a jury verdict was rendered
in Dodge v. Cotter (United States District Court for the District of Colorado,
Civil Action No. 91-Z-1861), a case relating to 14 of the plaintiffs in the
1991 cases. The verdict against Cotter and in favor of the plaintiff, after an
amended judgement was issued March 11, 1999, totaled approximately $6 million,
including compensatory and punitive damages, interest, and medical monitoring.
On February 11, 2000, the Tenth Circuit Court of Appeals agreed with Cotter,
found that the trial judge had erred in critical rulings and reversed the jury
verdict, remanding the case for new trial. A case involving the next group of
plaintiffs is set for trial in federal district court in Denver on October 2,
2000. Although ComEd sold its investment in Cotter in February 2000, ComEd
will continue to be liable for any court verdicts in favor of the plaintiffs.
The other 1991 cases will necessarily involve the resolution of numerous
contested issues of law and fact. It is Unicom and ComEd's assessment that
these actions will not have a material impact on their financial position or
results of operations.

In August 1999, three class action lawsuits were filed against ComEd related
to a series of service interruptions during the summer of 1999. The combined
effect of these events resulted in over 100,000 customers losing service. On
August 12, 1999, service was interrupted to ComEd customers on the near north
and near west side of the City's central business district. While major
commercial customers were affected, all service was restored on the same date.
The class action complaints have been consolidated and seek to recover damages
for personal injuries and property damage, as well as economic loss for these
events. Further, ComEd initiated expedited claim settlements for those with
primarily food spoilage claims. Conditional class certification has been
approved by the Court for the sole purpose of exploring settlement talks. The
lawsuits are pending in the Circuit Court of Cook County. ComEd filed a motion
challenging the legal sufficiency of the consolidated complaints. On July 31,
2000, the judge dismissed two of the counts with prejudice and dismissed four
of the counts with leave to replead. The plaintiffs have 28 days to replead,
and then ComEd will have 28 days to respond. A status hearing is scheduled for
October 10, 2000. ComEd's management believes adequate reserves have been
established in connection with these cases.

Following the summer 1999 service interruptions, the ICC opened a three-
phase investigation of the design and reliability of ComEd's transmission and
distribution system. At the conclusion of each phase of the investigation, the
ICC will issue reports that will include specific recommendations for ComEd
and a timetable for executing the recommendations. Although the
recommendations are not legally binding on ComEd, the ICC may enforce the
recommendations through litigation. The report on Phase I of the investigation
was released the week of January 3, 2000, which focused on the outages of July
and August 1999. The first and second of five reports on Phase II and Phase
III, focusing on the transmission and distribution system, were released
during the weeks of June 5 and June 17, respectively. The third report is
anticipated later this summer. The investigation is expected to conclude by
early 2001. Since summer 1999, the Company has devoted significant resources
to improving the reliability of its transmission and distribution system. As a
result of the application of these resources and discussions with the ICC, the
Company believes that the likelihood of a successful material claim by the ICC
resulting from this investigation is remote. The investigation is expected to
conclude by early 2001.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

In 1996, several developers of non-utility generating facilities filed
litigation against various Illinois officials claiming that the enforcement
against those facilities of an amendment to Illinois law removing the
entitlement of those facilities to state-subsidized payments for electricity
sold to ComEd after March 15, 1996 violated their rights under the federal and
state constitutions, and against ComEd for a declaratory order that their
rights under their contracts with ComEd were not affected by the amendment. On
August 4, 1999, the Illinois Appellate Court held that the developers' claims
against the State were premature, and the Illinois Supreme Court denied leave
to appeal that ruling by Order dated December 1, 1999. On April 14, 2000, the
developer of one such facility requested leave to amend its complaint to
allege claims for damages against ComEd based on breach by ComEd of an alleged
contractual obligation to pay for electricity purchased from that developer at
the state-subsidized rate. ComEd has objected to the developer's request for
leave to amend, and intends vigorously to contest any assertion by such
developer that it is entitled to any payment in excess of ComEd's avoided
costs.

ComEd is involved in administrative and legal proceedings concerning air
quality, water quality and other matters. The outcome of these proceedings may
require increases in future construction expenditures and operating expenses
and changes in operating procedures. ComEd and its subsidiaries are or are
likely to become parties to proceedings initiated by the U.S. EPA, state
agencies and/or other responsible parties under CERCLA with respect to a
number of sites, including MGP sites, or may voluntarily undertake to
investigate and remediate sites for which they may be liable under CERCLA.

ComEd generally did not operate MGPs as a corporate entity but did, however,
acquire MGP sites as part of the absorption of smaller utilities.
Approximately half of these sites were transferred to then Northern Illinois
Gas Company (Nicor Gas) as part of a general conveyance in 1954. ComEd also
acquired former MGP sites as vacant real estate on which ComEd facilities have
been constructed. To date, ComEd has identified 44 former MGP sites for which
it may be liable for remediation. In the fourth quarter of 1999, ComEd re-
evaluated its environmental remediation strategies. As a result of this re-
evaluation, ComEd's estimate of its cost of former MGP site investigation and
remediation was increased by $68 million in the fourth quarter of 1999.
ComEd's current best estimate of its costs of former MGP site investigation
and remediation is $91 million (2000) dollars (reflecting an estimated
inflation rate of 3.0% and a discount rate of 6.5%). Such estimate, reflecting
an estimated inflation rate of 3% and before the effects of discounting, is
$179 million and is included in other liabilities on the Consolidated Balance
Sheets as of June 30, 2000. It is expected that the costs associated with
investigation and remediation of former MGP sites will be substantially
incurred through 2012, however monitoring and certain other costs are expected
to be incurred through 2042. The increase in ComEd's estimated costs of former
MGP sites of $68 million in the fourth quarter of 1999 was included in O & M
expenses on Unicom and ComEd's Statements of Consolidated Operations. In
addition, as of June 30, 2000 and December 31, 1999, a reserve of $7 million
and $8 million, respectively, has been included in other noncurrent
liabilities on the Consolidated Balance Sheets, representing ComEd's estimate
of the liability associated with cleanup costs of sites other than former MGP
sites. These cost estimates are based on currently available information
regarding the responsible parties likely to share in the costs of responding
to site contamination, the extent of contamination at sites for which the
investigation has not yet been completed and the cleanup levels to which sites
are expected to have to be remediated. While ComEd may have rights of
reimbursement under insurance policies, amounts that may be recoverable from
other entities are not considered in establishing the estimated liability for
the environmental remediation costs.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

The IDR has issued Notices of Tax Liability to ComEd alleging deficiencies
in Illinois invested capital tax payments for the years 1988 through 1997. The
alleged deficiencies, including interest and penalties, totaled approximately
$53 million as of June 30, 2000. ComEd has protested the notices, and the
matter is currently pending before the IDR's Office of Administrative
Hearings. Interest will continue to accumulate on the alleged tax
deficiencies.

(22) Segment Reporting. Unicom's reportable operating segments as determined
under SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information include its regulated electric utility and its unregulated
business operations. Unicom's reportable segments are managed separately
because of their different regulatory and operating environments. Unicom
evaluates their performance based on net income.

ComEd is an electric utility which is engaged in the generation, purchase,
transmission, distribution and sale of electric energy in Northern Illinois.
ComEd's rates and services are subject to federal and state regulations.

Unicom's unregulated business operations, including energy services and
development of new business ventures, are not subject to utility regulation by
federal or state agencies. As a result of the December 1999 fossil plant sale,
as described in Note 4, the assets of unregulated businesses exceeded 10% of
Unicom's total assets and, as such, constitute a reportable segment. The
assets of the unregulated businesses include approximately $1.6 billion of
investments in leases at June 30, 2000 as discussed in Note 1.

UNICOM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Concluded

The accounting policies of the segments are the same as those described in
Note 1. Unicom's financial data for business segments are as follows:

Three Months Ended June Six Months Ended Twelve Months Ended
30 June 30 June 30
------------------------ ------------------------ ------------------------
2000 1999 2000 1999 2000 1999
----------- ----------- ----------- ----------- ----------- -----------
(Thousands of Dollars)

Operating Revenue:
Electric Utility....... $ 1,684,271 $ 1,677,946 $ 3,234,139 $ 3,206,430 $ 6,785,166 $ 6,851,262
Unregulated Businesses. 123,325 7,768 231,243 17,088 304,645 31,623
Intersegment Revenue... 24,163 10,509 35,139 10,825 50,989 15,287
Elimination............ (24,163) (10,509) (35,139) (10,825) (50,989) (15,287)
----------- ----------- ----------- ----------- ----------- -----------
Consolidated Unicom..... $ 1,807,596 $ 1,685,714 $ 3,465,382 $ 3,223,518 $ 7,089,811 $ 6,882,885
=========== =========== =========== =========== =========== ===========
Depreciation,
Amortization and
Decommissioning:
Electric Utility....... $ 223,695 $ 265,334 $ 595,711 $ 495,103 $ 936,753 $ 953,940
Unregulated Businesses. 3,253 1,613 5,934 3,176 9,862 6,143
----------- ----------- ----------- ----------- ----------- -----------
Consolidated Unicom..... $ 226,948 $ 266,947 $ 601,645 $ 498,279 $ 946,615 $ 960,083
=========== =========== =========== =========== =========== ===========
Interest and Dividend
Income:
Electric Utility....... $ 54,689 $ 13,222 $ 122,226 $ 30,869 $ 151,488 $ 43,982
Unregulated Businesses. 36,350 529 79,262 1,819 86,787 4,733
Elimination............ (60,428) (302) (114,754) (593) (124,701) (1,153)
----------- ----------- ----------- ----------- ----------- -----------
Consolidated Unicom..... $ 30,611 $ 13,449 $ 86,734 $ 32,095 $ 113,574 $ 47,562
=========== =========== =========== =========== =========== ===========
Interest Expense--Net:
Electric Utility....... $ 126,435 $ 135,368 $ 256,495 $ 277,879 $ 523,968 $ 501,688
Unregulated Businesses. 69,051 4,655 128,651 8,945 148,564 17,168
Elimination............ (60,428) (302) (114,754) (593) (124,701) (1,153)
----------- ----------- ----------- ----------- ----------- -----------
Consolidated Unicom..... $ 135,058 $ 139,721 $ 270,392 $ 286,231 $ 547,831 $ 517,703
=========== =========== =========== =========== =========== ===========
Income Tax
Expense/(Benefit):
Electric Utility....... $ 94,933 $ 67,297 $ 145,932 $ 137,876 $ 360,278 $ 407,530
Unregulated Businesses. (21,011) (5,117) (32,212) (11,016) (41,300) (29,438)
----------- ----------- ----------- ----------- ----------- -----------
Consolidated Unicom..... $ 73,922 $ 62,180 $ 113,720 $ 126,860 $ 318,978 $ 378,092
=========== =========== =========== =========== =========== ===========
Net Income/(Loss):
Electric Utility....... $ 176,903 $ 129,985 $ 383,229 $ 224,386 $ 781,512 $ 642,306
Unregulated Businesses. (30,762) (10,593) (44,751) (35,351) (62,403) (77,260)
----------- ----------- ----------- ----------- ----------- -----------
Consolidated Unicom..... $ 146,141 $ 119,392 $ 338,478 $ 189,035 $ 719,109 $ 565,046
=========== =========== =========== =========== =========== ===========
Capital Expenditures:
Electric Utility....... $ 313,707 $ 245,292 $ 574,326 $ 473,708 $ 1,184,016 $ 956,817
Unregulated Businesses. (48,858) 4,326 20,401 6,985 46,183 17,735
----------- ----------- ----------- ----------- ----------- -----------
Consolidated Unicom..... $ 264,849 $ 249,618 $ 594,727 $ 480,693 $ 1,230,199 $ 974,552
=========== =========== =========== =========== =========== ===========
Total Assets:
Electric Utility....... $20,943,131 $23,729,265 $20,943,131 $23,729,265 $20,943,131 $23,729,265
Unregulated Businesses. 3,432,807 1,068,598 3,432,807 1,068,598 3,432,807 1,068,598
Elimination............ (3,240,388) (801,164) (3,240,388) (801,164) (3,240,388) (801,164)
----------- ----------- ----------- ----------- ----------- -----------
Consolidated Unicom..... $21,135,550 $23,996,699 $21,135,550 $23,996,699 $21,135,550 $23,996,699
=========== =========== =========== =========== =========== ===========

(23) Subsequent Event. On August 7, 2000, Unicom borrowed $1.05 billion
under a credit agreement with several banks. Unicom expects to use $1.05
billion of lease prepayments, scheduled to be received in the fourth quarter
of 2000, to repay the amounts borrowed pursuant to the credit agreement. See
Note 1, under "Investment in Leases", for additional information.

Proceeds from the credit agreement were used to fund the August 7, 2000
termination payment for Unicom Enterprises' $400 million credit facility of
which $341 million was used as of August 7, 2000. The remaining proceeds from
the credit agreement will be used to fund share repurchases and other business
opportunities.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Changes in the Electric Utility Industry

Unicom and its predominant business, electric energy generation,
transmission and distribution, are in a period of fundamental change. These
changes are attributable to changes in technology and regulation. Federal law
and regulations have been amended to provide for open transmission system
access, and various states, including Illinois, are considering, or have
adopted, new regulatory structures to allow access by some or all customers to
energy suppliers, in addition to the local utility.

Electric Utility Industry. The electric utility industry historically has
consisted of vertically integrated companies which combine generation,
transmission and distribution assets; serve customers within relatively
defined service territories; and operate under extensive regulation with
respect to rates, operations and other matters. Utilities have operated under
a regulatory compact with the state, with a statutory obligation to serve all
of the electricity needs within their service territory in a nondiscriminatory
manner. Historically, investment and operating decisions have been made based
upon the utilities' respective assessment of the current and projected needs
of their customers. In view of this obligation, regulation has focused on
investment and operating costs, and rates have been based on recovery of some
or all of such prudently incurred costs plus a return on invested capital.
Such rate regulation, and the ability of utilities to recover investment and
other costs through rates, have provided the basis for recording certain costs
as regulatory assets. These assets represent costs which are allocated over
future periods reflecting related regulatory treatment, rather than expensed
in the current period.

Federal Regulation. The Federal Energy Policy Act of 1992, among other
things, empowered the FERC to introduce a greater level of competition into
the wholesale marketplace for electric energy. Under FERC Order No. 888,
utilities are required to file open access tariffs with regard to their
transmission systems. These tariffs set forth the terms, including prices,
under which other parties and the utility's wholesale marketing function may
use the utility's transmission system. ComEd has an approved open access
tariff with the FERC. A companion FERC rule, Order No. 889, requires the
separation of the transmission operations and wholesale marketing functions so
as to ensure that unaffiliated third parties have access to the same
information as to system availability and other requirements. The FERC Order
further requires utilities to operate an electronic bulletin board to make
transmission price and access data available to all potential users. A key
feature of FERC Order No. 888 is that it contemplates full recovery of a
utility's costs "stranded" by competition. These costs are "stranded" or
"strandable" to the extent market-based rates would be insufficient to allow
for their full recovery. To recover stranded costs, the utility must show that
it had a reasonable expectation that it would continue to serve the customer
in question under its regulatory compact. In addition, some governmental
entities, such as cities, may elect to "municipalize" a utility's distribution
facilities through condemnation proceedings. Such municipalities would then be
able to purchase electric power on a wholesale basis and resell it to
customers over the newly acquired facilities. The FERC Order provides for the
recovery of a utility's investment stranded by municipalization.

The 1997 Act. In December 1997, the Governor of Illinois signed into law the
1997 Act, which established a phased process to introduce competition into the
electric industry in Illinois under a less regulated structure. The 1997 Act
was amended in June 1999.

As a result of the 1997 Act and FERC rules, prices for the supply of
electric energy are expected to change from cost-based, regulated rates to
rates determined by competitive market forces. Accordingly, the 1997 Act
provides for, among other things, gradual customer access to other electric
suppliers or a power purchase option which allows the purchase of electric
energy from ComEd at

market based prices, and the collection of a CTC from customers who choose to
purchase electric energy from a RES or elect the power purchase option during
a transition period that extends through 2006. Effective October 1, 1999, the
CTC was established in accordance with a formula defined in the 1997 Act. The
CTC, which is applied on a cents per kilowatthour basis, considers the revenue
which would have been collected from a customer under tariffed rates, reduced
by the revenue the utility will receive for providing delivery services to the
customer, the market price for electricity and a defined mitigation factor,
which represents the utility's opportunity to develop new revenue sources and
achieve cost savings. The CTC allows ComEd to recover some of its costs which
might otherwise be unrecoverable under market-based rates. Nonetheless, ComEd
will need to take steps to address the portion of such costs which are not
recoverable through the CTC. Such steps may include cost control efforts,
developing new sources of revenue and asset dispositions. See "Response to
Regulatory Changes" and "Fossil Plant Sale" below for additional information.

As of June 1, 2000, more than 62,000 non-residential customers are eligible
to choose a new electric supplier or elect the purchase power option. As of
June 30, 2000, over 7,000 non-residential customers, representing
approximately 16 percent of ComEd's retail kilowatthour sales for the twelve
months prior to the introduction of open access, elected to receive their
electric energy from a RES or chose the purchase power option. The impact of
customer choice on results of operations will depend on various factors,
including the extent to which customers elect to receive energy from a RES or
the purchased power option, the development of a competitive market, the
market price for energy, the extent to which ComEd develops new sources of
revenue and the results of cost control efforts. Because of the inherent
uncertainty in these factors, ComEd is unable to predict the long term impact
of customer choice on results of operations. However, ComEd does not expect
customer choice to have a material effect in the near term as a result of the
collection of CTCs as provided by the 1997 Act.

Notwithstanding the rate reductions and subject to certain earnings tests, a
rate freeze will generally be in effect until at least January 1, 2005. During
this period, utilities may reorganize, sell or assign assets, retire or remove
plants from service, and accelerate depreciation or amortization of assets
with limited ICC regulatory review. A utility may request a rate increase
during the rate freeze period only when necessary to ensure the utility's
financial viability. Under the earnings provision of the 1997 Act, if the
earned return on common equity of a utility during this period exceeds an
established threshold, one-half of the excess earnings must be refunded to
customers. The threshold rate of return on common equity is based on the 30-
Year Treasury Bond rate, plus 5.5% in the years 1998 and 1999, and plus 8.5%
in the years 2000 through 2004. The utility's earned return on common equity
and the threshold return on common equity are each calculated on a two-year
average basis. The earnings sharing provision is applicable only to ComEd's
earnings. In accordance with the provisions of the 1997 Act, increased
amortization of regulatory assets may be recorded, thereby reducing the earned
return on common equity, if earnings otherwise would have exceeded the maximum
allowable rate of return. The potential for earnings sharing or increased
amortization of regulatory assets could limit earnings in future periods.
ComEd's returns on average common equity

for the years 1999 and 1998 were 11.56% and 10.86%, respectively. The average
return of 11.21% for the two year period ended December 31, 1999 equaled the
threshold return for that period under the earnings provisions of the 1997
Act. ComEd does not currently expect to trigger the earnings sharing
provisions of the 1997 Act in the years 2000 through 2004.

The 1997 Act also allows a portion of ComEd's future revenues to be
segregated and used to support the issuance of securities by ComEd or a SPE.
The proceeds, net of transaction costs, from such security issuances must be
used to refinance outstanding debt or equity or for certain other limited
purposes. In December 1998, ComEd initiated the issuance of $3.4 billion of
transitional trust notes through its SPEs, ComEd Funding and ComEd Funding
Trust. See "Liquidity and Capital Resources," subcaption "UTILITY OPERATIONS--
Capital Resources" below, and Notes 3 and 6 of Notes to Financial Statements,
for additional information regarding the redemptions and repurchases of debt
and equity.

The 1997 Act also requires utilities to establish or join an ISO that will
independently manage and control utility transmission systems. Additionally,
the 1997 Act includes the leveling of certain regulatory requirements to
permit operational flexibility, the leveling of certain regulatory and tax
provisions as applied to various electric suppliers and a new, more stringent,
reliability requirement applicable to ComEd in the event of a major outage.
See "Response to Regulatory Changes" below for additional information.

See Notes 1, under "Regulatory Assets and Liabilities," and 3 of Notes to
Financial Statements for the accounting effects related to the 1997 Act.

Response to Regulatory Changes. Unicom has announced several business and
operational objectives designed to focus efforts in responding to the energy
market changes that are expected to develop from the 1997 Act. Among other
things, these strategic objectives call for a focus on operations to: (1)
provide a reliable supply of electricity as the competitive marketplace
evolves, (2) become a top quartile operator of competitive nuclear plants, (3)
deliver competitive earnings while restructuring the balance sheet to reflect
the realities of the marketplace, (4) expand the offering of energy-related
products and services, and (5) transform the corporate culture of Unicom.

Under the 1997 Act, the role of electric utilities in the supply and
delivery of energy is expected to change. Utilities, such as ComEd,
traditionally have been responsible for providing both adequate supply and
reliable delivery of electricity to customers within their service areas. In
the future, ComEd will continue to be obligated to provide a reliable delivery
system. However, ComEd will be obligated to supply electricity only to those
customers that it continues to serve under tariffs for electricity, but not
for those customers who choose to rely on the marketplace. Nonetheless, during
the transition period to a competitive supply marketplace, ComEd must provide
both an adequate supply and reliable delivery of electricity. Given the tight
capacity situation in ComEd's market, ComEd will be working to maintain its
available capacity, as well as working to assist in the development of a
competitive supply marketplace in Illinois.

ComEd has a significant commitment to, and investment in, nuclear generating
capacity. ComEd has installed a management team responsible for improving
nuclear operations. Such improvements are aimed at increasing levels of energy
generation, or capacity factors, at ComEd's nuclear generating units while
simultaneously improving ComEd's record of meeting NRC requirements and INPO
performance standards. Increased capacity factors generally result in lower
unit production costs and an improved opportunity to generate and sell
electricity in a competitive marketplace. Efforts are also being made to
control capital and operating costs through increased efficiencies, such as
the reduction of downtime and expenses associated with generating unit
maintenance and refueling outages.

ComEd joined with other Midwestern utilities to design the Midwest ISO in
1998. These utilities have agreed to place their transmission systems under
the control of the Midwest ISO as soon as it achieves operational status in
2001. The Midwest ISO, a key element in accommodating the FERC-directed
restructuring of the electric industry, is expected to promote enhanced
reliability of the transmission system, equal access to the transmission
system, and foster increased competition. The Midwest ISO will control the
transmission system and will have authority to require modification in the
operation of generators connected to that system during system emergencies.
ComEd, like other utilities, will retain ownership of its transmission lines.
The formation of the Midwest ISO was approved by the FERC in September 1998,
subject to certain conditions. In December 1999, ComEd and other Midwestern
utilities filed a request with the FERC for a Declaratory Order approving a
different organizational template for the regional transmission grid. The
request sought approval for the creation of for-profit transmission companies,
operating under the general oversight of the Midwest ISO, but fully separated
from their previous vertically integrated utilities. The request was approved,
in part, on February 24, 2000, subject to further development of its elements.

In the absence of an ISO-related power exchange, ComEd has also agreed to
cooperate with APX in the creation of the first electronic energy exchange in
Illinois. Initial products may include hourly, daily and weekly electricity
delivered to and from interconnection points on ComEd's transmission system,
and a standard system of credit and trading interfaces. Unicom has made a $3
million venture capital investment in APX in order to help finance its
expansion in Midwest. Neither ComEd nor Unicom will receive any voting rights.
The power exchange will be independently owned and managed by APX and will
allow wholesale and retail market participants to trade electricity
anonymously through an internet-based computerized system. ComEd will be
treated like any other market participant and will be an active participant in
the power exchange which opened in Illinois in the fourth quarter of 1999.

Merger Agreement. In September 1999, the Boards of Directors of Unicom and
PECO approved a merger of equals that will create a new holding company,
Exelon. The merger was approved on June 27 and 28, 2000 by PECO and Unicom's
shareholders, respectively. The merger was approved unanimously on April 12,
2000, without conditions, by the FERC. In Pennsylvania, the Public Utility
Commission has approved a settlement reached with virtually all intervenors,
and the regulatory process in Illinois has been completed. Aspects of the
merger still must be approved by the SEC and the NRC. The merger is currently
expected to be completed in the fall of 2000.

ComEd and PECO are undertaking steps to transfer their generating assets and
wholesale power marketing operations to subsidiaries following the
consummation of the merger. Subsequent to those transfers, these subsidiaries
will be transferred to Exelon and ultimately will be combined into a single
power generation and marketing company, which will be a direct subsidiary of
Exelon. In ComEd's case, the transfer will include its Braidwood, Byron,
Dresden, LaSalle and Quad Cities nuclear generating stations representing an
aggregate generating capability of 9,566 megawatts, its Zion station, its
rights and obligations under various power purchase agreements, the assets
constituting its nuclear decommissioning trusts and its wholesale power
marketing business. Genco will assume responsibility for the decommissioning
of the nuclear generating stations, including Zion Station and Dresden Unit 1,
subject to an obligation of ComEd to continue collecting decommissioning-
related charges from its customers. Genco will enter into a power purchase
agreement with ComEd in which Genco will undertake to supply ComEd's full
requirements for electric energy through 2004 and all of ComEd's requirements
up to the available capacity of the nuclear generating stations in 2005 and
2006. On August 3, the NRC approved the request of ComEd and PECO to transfer
licenses for both companies' nuclear plants from ComEd and PECO to Exelon
Generating Company to be formed in connection with the proposed merger. Other
aspects of the transfer of the nuclear assets, including the decommissioning
trust funds, are subject to satisfactory resolution of significant regulatory
and tax issues.

The Amended and Restated Agreement and Plan of Exchange and Merger, dated as
of January 7, 2000, was filed on January 13, 2000 by Unicom with the SEC as an
exhibit to a Form 8-K, and reference to that filing is made for more detailed
information.

Fossil Plant Sale. In December 1999, ComEd completed the sale of its fossil
generating assets to EME for a cash purchase price of $4.8 billion. The fossil
plant assets represent an aggregate generating capacity of approximately 9,772
megawatts.

Just prior to the consummation of the fossil plant sale, ComEd transferred
these assets to an affiliate, Unicom Investment. In consideration for the
transferred assets, Unicom Investment paid ComEd consideration totalling
approximately $4.8 billion in the form of a demand note in the amount of
approximately $2.4 billion and an interest-bearing Note with a maturity of
twelve years. Unicom Investment immediately sold the fossil plant assets to
EME, in consideration of which Unicom Investment received approximately $4.8
billion in cash from EME. Immediately after its receipt of the cash payment
from EME, Unicom Investment paid the $2.4 billion aggregate principal due to
ComEd under the demand note. Unicom Investment will use the remainder of the
cash received from EME to fund other business opportunities, including share
repurchases. Of the cash received by ComEd, $1.5 billion has been used to pay
the costs and taxes associated with the fossil plant sale including ComEd's
contribution of $250 million to an environmental trust as required by the 1997
Act. The remainder of the demand note proceeds will be available to ComEd to
fund, among other things, transmission and distribution projects, nuclear
generation station projects, and environmental and other initiatives. See Note
1 of Notes to Financial Statements, under "Investment in Leases," for
additional information.

terminated. Consistent with the provisions of the 1997 Act, the (pre-tax) gain
on the sale of $2.587 billion resulted in a regulatory liability, which was
used to recover regulatory assets. Therefore, the gain on the sale, excluding
$43 million of amortization of investment tax credits, was recorded as a
regulatory liability in the amount of $2.544 billion and amortized in the
fourth quarter of 1999. The amortization of the regulatory liability and
additional regulatory asset amortization of $2.456 billion are reflected in
depreciation and amortization expense on Unicom's Statement of Consolidated
Operations and resulted in a net reduction to depreciation and amortization
expense of $88 million.

As part of the sale transaction, ComEd entered into transitional, limited
term power purchase agreements with the buyer. Such purchase power agreements
will increase ComEd's purchased power costs.

Liquidity and Capital Resources

UTILITY OPERATIONS

Construction Program. ComEd's construction program for the year 2000
principally covers improvements to its nuclear production, transmission and
distribution facilities. The amount shown below for transmission and
distribution expenditures reflects a current reevaluation of the level of
expenditures required this year to support ComEd's ongoing intensive efforts
to improve the reliability of its transmission and distribution systems for
this summer and beyond. A significant portion of the transmission and
distribution expenditures reflects management decisions to adopt new design
criteria that will improve reliability and reduce the number and duration of
power outages, and to accelerate the pace of certain projects that had been
scheduled for completion after 2000. Current estimates of construction
expenditures (excluding nuclear fuel expenditures of approximately $260
million) are as follows:

2000
------
(Millions
of Dollars)

Nuclear................................................. $ 210
Transmission and Distribution........................... 735
General................................................. 162
------
$1,107
======

The construction expenditures in the above table reflect an increase of
approximately $75 million from previously reported levels. The increased
transmission and distribution expenditures will be used to fund infrastructure
improvement projects, including the expansion of substation and line capacity
in Chicago and suburban locations, upgrading transmission lines and the
installation of monitoring equipment that is designed to identify distribution
problems faster and restore power to customers more quickly. ComEd has
experienced improved reliability of its distribution system during the past
twelve months as measured by a reduction in the number and duration of power
outages.

ComEd is currently evaluating its construction expenditures for the years
2001 and 2002 and expects expenditures for transmission and distribution
construction to trend gradually downward from the revised 2000 levels, but to
remain above the lower historic expenditure levels in order to attain further
improvements in overall system reliability.

Purchase commitments for ComEd, principally related to construction, nuclear
fuel and coal in support of certain power purchase agreements approximated
$787 million at June 30, 2000. In addition, ComEd's estimated commitments for
expected capacity payments and fixed charges related to power purchase
agreements were as follows:

Commitments(1)
Period ($Millions)
------ --------------

2000............................... $ 662
2001............................... 700
2002............................... 585
2003-2004.......................... 927
2005-2012.......................... 898
------
$3,772
======

--------
(1) Capacity payments may be adjusted based on certain conditions. No
estimate of future cost escalation has been made.

See "Changes in the Electric Utility Industry," subcaptions "The 1997 Act"
and "Fossil Plant Sale" above, for additional information.

Capital Resources. In December 1998, ComEd initiated the issuance of $3.4
billion of transitional trust notes through its SPEs, ComEd Funding and ComEd
Funding Trust. The proceeds from the transitional trust notes, net of
transaction costs, were, as required, used to redeem $1,101 million of long-
term debt and $607 million of preference stock in 1999 and reduce by $500
million ComEd's outstanding short-term debt. During the year 1999, ComEd
recorded an extraordinary loss related to the early redemptions of such long-
term debt, which reduced net income on common stock by approximately $28
million (after-tax), or $0.13 per common share (diluted). ComEd also recorded
$12 million (after-tax), or $0.05 per common share (diluted), for premiums
paid in connection with the redemption of such preference stock. The
preference stock premiums were included in the provision for dividends for
preference stocks of ComEd on the Statements of Consolidated Operations.
Unicom has also repurchased shares of its common stock using $1,104 million of
proceeds it received from ComEd's repurchase of its common stock held by
Unicom. The balance of proceeds were used for the payment of fees and other
debt issuance costs totaling $23 million and a $17 million collateral
requirement related to the transitional trust notes.

In January 2000, Unicom physically settled the forward share repurchase
arrangements it had with financial institutions for the repurchase of 26.3
million Unicom common shares. Prior to settlement, the repurchase arrangements
were recorded as a receivable on Unicom's Consolidated Balance Sheets based on
the aggregate market value of the shares under the arrangements. In 1999, net
unrealized losses of $44 million (after-tax), or $0.20 per common share were
recorded related to the arrangements. The settlement of the arrangements in
January 2000 resulted in a gain of $113 million (after-tax), which was
recorded in the first quarter of 2000. The settlement of the arrangements
resulted in a reduction in Unicom's outstanding common shares and common stock
equity, effective January 2000.

ComEd forecasts that internal sources will provide approximately three-
fourths of the funds required for ComEd's 2000 construction program and other
capital requirements, including nuclear fuel expenditures, contributions to
nuclear decommissioning funds, sinking fund obligations and scheduled debt
maturities. See Notes 9 and 11 of Notes to Financial Statements for the
summaries of the annual sinking fund requirements and scheduled maturities for
ComEd preference stock and long-term debt, respectively.

See "Changes in the Electric Utility Industry," subcaption "Fossil Plant
Sale" above, for a description of ComEd's planned uses of the fossil plant
sale proceeds.

The type and amount of external financing will depend on financial market
conditions and the needs and capital structure of ComEd at the time of such
financing. ComEd had total unused bank lines of credit of $800 million at June
30, 2000, which may be borrowed at various interest rates. Of that amount,
$500 million expires on December 15, 2000 and $300 million expires on December
17, 2002. The interest rate is set at the time of a borrowing and is based on
several floating rate bank indices plus a spread, which is dependent upon the
credit ratings of ComEd's outstanding first mortgage bonds or on a prime
interest rate. See Note 12 of Notes to Financial Statements for additional

information concerning lines of credit. See the Statements of Consolidated
Cash Flows for the construction expenditures and cash flow from operating
activities for the three months, six months and twelve months ended June 30,
2000 and 1999.

As of August 11, 2000, ComEd has an effective "shelf" registration statement
with the SEC for the future sale of up to an additional $280 million of debt
securities and cumulative preference stock for general corporate purposes of
ComEd, including the discharge or refund of other outstanding securities.

ComEd's securities and other securities guaranteed by ComEd are currently
rated by three principal securities rating agencies as follows:

Standard
Moody's & Poor's Fitch
------- -------- -----

First mortgage and secured pollution control bonds...... Baa1 BBB+ A-
Publicly-held debentures and unsecured pollution control
obligations............................................ Baa2 BBB BBB+
Convertible preferred stock............................. baa3 BBB- BBB
Preference stock........................................ Baa2 BBB- BBB
Trust Securities........................................ baa3 BBB- BBB
Commercial paper........................................ P-2 A-2 F-2

ComEd Funding Trust's securities are currently rated by three principal
securities rating agencies as follows:

Standard
Moody's & Poor's Fitch
------- -------- -----

Transitional trust notes........................... Aaa AAA AAA

All three agencies raised their ratings for ComEd in 1999: Fitch (formerly
Duff & Phelps) in December, Moody's in September; and S&P in June.

Capital Structure. ComEd's ratio of long-term debt to total capitalization
has increased to 58.5% at June 30, 2000 from 55.2% at December 31, 1999,
primarily due to the repurchase of common stock in the first six months of
2000. As of June 30, 2000 and December 31, 1999, $1,087 million and $852
million, respectively, of retained earnings had been appropriated for ComEd's
future dividend payments.

New Customer Information and Billing system. In July 1998, ComEd began a
transition to a new customer information and billing system. The new system
was implemented to achieve a number of strategic objectives as the electric
industry enters into a more competitive environment. Following the July 1998
initial implementation, ComEd experienced delays in issuing bills on a timely
basis to a portion of its commercial and industrial customers. ComEd also
temporarily suspended credit activities from late in the third quarter of 1998
until the end of the first quarter of 1999 as a result of system
implementation issues. The system stabilized gradually throughout 1999 such
that by the fourth quarter of 1999 substantially all customers were being
billed on a current basis. Operating results for twelve months ended June 30,
1999 were adversely affected by increased labor and overtime costs incurred to
address the billing issues, and by increased charges for uncollectible
accounts of approximately $35 million resulting from the billing and
collection delays and the temporary suspension of credit activities. Cash
flows from operations were adversely affected in the twelve months ended June
30, 1999 and positively affected in the twelve months ended June 30, 2000 as a
result of the billing delays experienced due to implementation. Receivables
from customers as of June 30, 2000 and December 31, 1999 include $67 million
and $103 million, respectively, for estimated unbilled revenues for service
that has been provided to customers but for which bill issuance was delayed
beyond the normal date of issuance. See "Results of Operations," subcaption
"Operation and Maintenance Expenses" below, and Note 1 of Notes to Financial
Statements, under "Customer Receivables and Revenues" and "Use of Estimates,"
for additional information.

Market Risks. ComEd is exposed to market risk due to changes in interest
rates and the market price for electricity. Exposure for interest rate changes
relates to its long-term debt and preferred equity obligations. Exposure to
electricity market price risk relates to forward activities taken to manage
effectively the supply of, and demand for, the electric generation capability
of ComEd's generating plants. ComEd has implemented an integrated risk
management framework to manage such risks. A corporate Risk Management
Committee defines the Company's risk tolerance and establishes appropriate
position limits, and corporate policies and procedures have been implemented
to minimize the exposure to market risk. ComEd does not currently utilize
derivative commodity or financial instruments for trading or speculative
purposes.

See "Energy Risk Management Contracts" in Note 1 of Notes to Financial
Statements regarding the accounting for energy risk management contracts.

Market Price Exposure. ComEd's energy purchases from other suppliers have
increased as a result of reductions in owned generating capability and system
load growth. The market price of energy is subject to price volatility
associated with changes in supply and demand in the electric supply markets.
In the normal course of business, ComEd utilizes contracts for the forward
sale and purchase of energy to assure system reliability and manage
effectively the utilization of its available generating capability. ComEd also
utilizes put and call option contracts and energy swap arrangements to limit
the market price risk associated with the forward commodity contracts. The
estimated June 30, 2000 fair value of the forward contracts, including
options, for the purchase and sale of energy for the years 2000 through 2007,
was approximately $(90) million. The estimated fair value is based on the
estimated net settlement value of the contracts derived from forward price
curves and market quotes, discounted at a 10% rate. A 10% increase in the
forward price of electricity would decrease the June 30, 2000 fair value of
the forward energy contracts for the years 2000-2007 by approximately $110
million, of which approximately $60 million is for contracts for the period
2000-2002. Likewise, a 10% decrease would increase the fair value of the
energy contracts by $130 million. Notwithstanding these price risk management
activities, an unexpected loss of generating capability or reduction in demand
could increase ComEd's exposure to market price risks and could have a
material adverse effect on operating results.

Unicom Energy Inc., has entered into gas sales contracts which are hedged
with gas supply contracts at lower prices. Unicom Energy Inc.'s margin per
therm of gas delivered is not significantly affected by the market price of
gas. Unicom Energy Inc. has also entered into electricity contracts for which
the mark-to-market at June 30, 2000 is not material.

UNREGULATED OPERATIONS

Unicom Enterprises is engaged, through subsidiaries, in energy service
activities which are not subject to utility regulation by federal or state
agencies. One of these subsidiaries, UT Holdings, provides district cooling
and related services to offices and other buildings in the central business
district of the City and in other cities in North America, generally working
with local utilities. District cooling involves, in essence, the production of
chilled water at one or more central locations and its circulation to
customers' buildings through a closed circuit of supply and return piping.
Such water is circulated through customers' premises primarily for air
conditioning. This process is used by customers in lieu of self-generated
cooling.

Unicom Energy Services, another subsidiary of Unicom Enterprises, is engaged
in providing energy services, including gas services, performance contracting,
distributed energy and energy management systems. Through an alliance with
AlliedSignal Power Systems, Inc., a subsidiary of Honeywell, Unicom Energy
Services is an exclusive distributor for the Parallon 75(TM) TurboGenerator
system, which was developed by AlliedSignal to provide customers with on-site
electricity production.

Unicom Energy Services' exclusive territory for distributing the Parallon
75(TM) system encompasses 12 Midwest states, Ontario, Canada and Puerto Rico.

Unicom Energy Inc., a subsidiary of Unicom Energy Services, is currently
engaged in providing retail gas services to commercial and industrial
customers in the Midwest region. Unicom Energy Inc. also provides retail
electric services as a RES.

Unicom Mechanical Services Inc., a subsidiary of Unicom Enterprises, engages
in the design, installation and servicing of heating, ventilation and air
conditioning facilities for commercial and industrial customers through
various subsidiaries.

Construction Program and Purchase Commitments. Unicom Enterprises estimate
of construction expenditures for its unregulated operations is $180 million
for the year 2000, excluding expenditures for acquisitions contemplated by
subsidiaries of Unicom Enterprises.

Unicom Enterprises' construction expenditures include $85 million for the
expansion of UT Holdings' Chicago district cooling facilities and the related
distribution piping and plants in other cities.

Unicom Power Holdings purchased approximately 440 MW of combustion turbine
generators and auxiliary equipment. Unicom Power Holdings currently expects to
sell the purchased equipment. Unicom Power Holdings anticipates that the total
expenditures for the equipment will be $165 million. The book value of the
equipment approximates fair value.

Unicom Enterprises purchase commitments, principally related to equipment
purchases and the expansion of UT Holdings' district cooling facilities and
the related distribution piping in Chicago and other cities, approximated $21
million at June 30, 2000.

Capital Resources. Unicom expects to obtain funds to invest in its
unregulated subsidiaries principally from the fossil plant sale proceeds,
dividends received on its ComEd common stock and from borrowings. The
availability of ComEd's dividends to Unicom is dependent on ComEd's financial
performance and cash position, as well as legal restrictions on the payment of
dividends by public utilities. Neither the Illinois Public Utilities Act, nor
the Illinois Business Corporation Act impose an absolute bar on the payment of
dividends. However, when a corporation's retained earnings are negative, the
ICC under the Illinois Public Utilities Act has authority to prohibit such
payments. The "Uniform System of Accounts Prescribed for Public Utilities and
Licensees Subject to the Provisions of the Federal Power Act" provides a
mechanism whereby utilities with negative retained earnings balances may pay
dividends out of current earnings as long as current earnings have been
appropriated. Other forms of financing by ComEd to Unicom or the unregulated
subsidiaries of Unicom, such as additional loans or additional equity
investments, which are not expected, would be subject to prior approval by the
ICC.

The fossil plant sale proceeds received by Unicom Investment, after the
payment of the demand note to ComEd, will be used to fund share repurchases
and to invest in new business opportunities. See "Changes in the Electric
Utility Industry" subcaption "Fossil Plant Sale" above, and Notes 1 and 23 of
Notes to Financial Statements for additional information.

respect to the unused portion of such lines of credit. See Note 23 of Notes to
Financial Statements for additional information.

Unicom Thermal redeemed the $115.8 million outstanding balance of the 7.38%
unsecured guaranteed senior Note on July 12, 2000. Unicom Thermal recorded an
extraordinary loss related to the early redemption premiums paid and the
write-off of unamortized debt expenses, which will reduce Unicom's net income
on common stock by approximately $3.5 million (after-tax) in the third quarter
of 2000. The Note was guaranteed by Unicom and included certain covenants with
respect to Unicom and Unicom Thermal's operations.

In June 1999, Northwind Midway issued $12 million of 7.68% guaranteed senior
Notes due June 2023, the proceeds of which will be used primarily to finance
certain project construction costs. The Notes are guaranteed by Unicom and
include certain covenants with respect to Unicom and Northwind Midway's
operations.

On December 17, 1999, Fitch (formerly Duff & Phelps) raised its rating on
Unicom's senior debt obligation to BBB. S&P's current corporate credit rating
for Unicom is BBB. On September 23, 1999, in response to the announced Unicom
and PECO merger agreement, S&P placed Unicom on credit watch with positive
implications, and Moody's confirmed the first-time issuer rating of Baa3 it
had assigned to Unicom on September 15, 1999.

Capital Structure. Unicom's ratio of long-term debt to total capitalization
has increased to 61.1% at June 30, 2000 from 55.6% at December 31, 1999,
primarily due to the repurchase of common stock in the first six months of
2000. As of June 30, 2000 and December 31, 1999, $913 million and $716
million, respectively, of retained earnings had been appropriated for Unicom's
future dividend payments.

Regulation

ComEd and Indiana Company are subject to federal and state regulation in the
conduct of their respective businesses. Such regulation includes rates,
securities issuance, nuclear operations, environmental and other matters.
Particularly in the cases of nuclear operations and environmental matters,
such regulation can and does affect operational and capital expenditures.

Rate Matters. See "Changes in the Electric Utility Industry," subcaption
"The 1997 Act" above, for information regarding the effect of the 1997 Act on
rate matters.

Nuclear Matters. Nuclear operations have been, and remain, an important
focus of ComEd. ComEd operates five nuclear plants--Braidwood, Byron, Dresden,
LaSalle and Quad Cities Stations, and is committed to safe, reliable and
efficient operation.

On May 6, 1999, ComEd's LaSalle Station was officially removed from the
NRC's listing of plants that require increased regulatory scrutiny. LaSalle
Station had been on this list since January 1997. Concurrent with the LaSalle
Station action, the NRC announced the formal removal of the Quad Cities
Station from its list of plants with declining performance trends. Quad Cities
Station had been on the declining trend list since January 1998. With these
actions, all of ComEd's nuclear plants are now placed in the NRC's "routine
oversight" category.

The NRC and representatives of ComEd's management have met, and will
continue to meet periodically as part of the NRC's normal oversight process,
to discuss the overall performance of the ComEd nuclear program.

Since 1995, ComEd has collected decommissioning costs from its ratepayers in
conjunction with a rider to its tariffs. The rider allows annual adjustments
to decommissioning cost collections outside the context of a traditional rate
proceeding and will continue under the 1997 Act. See Note 1 of Notes to
Financial Statements, under "Depreciation, Amortization of Regulatory Assets
and Liabilities, and Decommissioning," for additional information regarding
decommissioning costs.

Environmental Matters. ComEd is involved in administrative and legal
proceedings concerning air quality, water quality and other matters. The
outcome of these proceedings may require increases in future construction
expenditures and operating expenses and changes in operating procedures. See
Note 21 of Notes to Financial Statements for additional information.

Results of Operations

Unicom's basic and diluted earnings per common share for three months and
twelve months ended June 30, 2000 and 1999 were as follows:

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
------------------- ----------------- ---------------------
2000 1999 2000 1999 2000 1999
--------- --------- -------- -------- ---------- ----------

Basic Earnings per Com-
mon Share.............. $ 0.83 $ 0.55 $ 1.84 $ 0.87 $ 3.58 $ 2.60
========= ========= ======== ======== ========== ==========
Diluted Earnings per
Common Share........... $ 0.82 $ 0.55 $ 1.83 $ 0.87 $ 3.57 $ 2.59
========= ========= ======== ======== ========== ==========

Substantially all of the results of operations for Unicom are the results of
operations for ComEd. As such, the following section generally discusses, in
more detail, the effect of ComEd's operations on Unicom's financial results.
EPS computations for the recent three, six and twelve month periods were
positively affected by reductions in Unicom's outstanding shares as a result
of share repurchases. All EPS computations shown below reflect the impact on
Unicom's diluted EPS.

Net Income for the Three Months Ended June 30, 2000. The increase in
Unicom's net income in the recent three-month period reflects, among other
factors, ComEd's increased wholesale energy sales, improved nuclear operating
performance, lower O&M expenses.

Net Income for the Six Months Ended June 30, 2000. The increase in ComEd's
net income in the recent six-month period reflects, among other factors, the
continued improvement of ComEd's

nuclear fleet, increased kilowatthour sales, lower O&M expenses, lower
financing costs and a reduction in Unicom's outstanding shares.

Net Income for the Twelve Months Ended June 30, 2000. The increase in
earnings for the twelve-month period was primarily due to increased off-system
kilowatthour sales, lower regulatory asset amortization, the sale of ComEd's
fleet of fossil stations, lower financing costs, a reduction in Unicom's
outstanding common shares, partially offset by the 15% residential base rate
reduction which became effective August 1, 1998, increased energy costs and
higher O&M expenses.

Operating Revenues. ComEd's electric operating revenues reflect revenues
from sales to ultimate consumers (including residential, commercial and
industrial customers within its service territory) and revenues from sales for
resale (i.e., sales to wholesale customers, principally other electric
utilities). Operating revenues are affected by kilowatthour sales and rate
levels. Kilowatthour sales, in turn, are affected by weather, the level of
economic activity within ComEd's service area, and off-system or wholesale
sales to other utilities. Off-system sales are affected by a number of
factors, including nuclear generating station availability and performance.
See Note 1 of Notes to Financial Statements, under "Use of Estimates" and
"Customer Receivables and Revenues", for additional information.

ComEd's operating revenues increased $23 million for the three months ended
June 30, 2000, compared to the three months ended June 30, 1999, primarily due
to a $140 million increase in off-system sales and other revenues offset by a
$117 million reduction in sales to retail customers. ComEd's operating
revenues increased $54 million for the six months ended June 30, 2000,
compared to the six months ended June 30, 1999, primarily due to a $236
million increase in off-system sales and other revenues offset by a $182
million reduction in sales to retail customers. ComEd's operating revenues
decreased $36 million for the twelve months ended June 30, 2000, compared to
the twelve months ended June 30, 1999 due to a $368 million reduction in sales
to retail customers offset by a $332 million increase in off-system sales and
other revenues.

Unicom's unregulated businesses' operating revenues increased $98 million,
$188 million and $231 million in the three months, six months and twelve
months ended June 30, 2000, respectively, compared to the three months, six
months and twelve months ended June 30, 1999. The increase is primarily due to
the acquisition of new businesses in 1999 and the first half of 2000 and
increased revenues related to performance contracting and district cooling
services.

Energy Costs. Energy costs are currently affected primarily by system load,
the cost of nuclear fuel consumed, the availability and net generation of
ComEd's nuclear generating units, the PPAs ComEd entered into upon the sale of
its fossil stations, the availability and cost of power from other utilities
and the costs of gas supply contracts entered into by Unicom's unregulated gas
services subsidiaries. Prior to the sale of ComEd's fossil stations, energy
costs were also affected by changes in

the cost of fossil fuels consumed and changes in the mix of fuel sources of
electric energy generated. Energy costs, electricity available for sale and
fuel sources of kilowatthour generation were as follows:

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
------------------------------ ------------------------------ ----------------------------------
2000 1999 2000 1999 2000 1999
-------------- -------------- -------------- -------------- ---------------- ----------------
Cost Cost Cost Cost Cost Cost
Energy per Energy per Energy per Energy per Energy per Energy per
Costs Kwh Costs Kwh Costs Kwh Costs Kwh Costs Kwh Costs Kwh
-------- ---- -------- ---- -------- ---- -------- ---- ---------- ---- ---------- ----
(000's) (000's) (000's) (000's) (000's) (000's)

Cost of energy:
Electricity (ComEd)
Fuel
Nuclear............... $ 97,631 0.48c $ 91,788 0.52c $196,839 0.49c $180,322 0.52c $ 397,007 0.50c $ 347,111 0.52c
Coal.................. -- -- 138,642 2.34 -- -- 270,827 2.37 255,069 2.15 641,428 2.54
Oil................... -- -- 1,263 4.31 -- -- 2,184 4.14 5,670 6.18 6,567 6.62
Natural gas........... -- -- 27,946 3.01 -- -- 41,140 3.12 41,882 3.33 92,729 3.10
Purchased power........ 370,656 3.85 98,301 4.82 597,389 3.35 169,983 4.26 978,980 3.85 465,249 4.54
-------- -------- -------- -------- ---------- ----------
Total cost of
electricity.......... $468,287 1.57c $357,940 1.35c $794,228 1.37c $664,456 1.29c $1,678,608 1.43c $1,553,084 1.47c
Gas (Unregulated
operations)
Supply contracts....... $ 32,281 $ -- $ 77,598 $ -- $ 79,323 $ --
-------- -------- -------- -------- ---------- ----------
Total cost of energy... $500,568 $357,940 $871,826 $664,456 $1,757,931 $1,553,084
======== ======== ======== ======== ========== ==========
Electricity available
for sale (millions of
kilowatthours)
Generation--net....... 20,260 24,531 40,070 47,692 92,062 95,503
Purchased power....... 9,630 2,040 17,833 3,993 25,401 10,248
-------- -------- -------- -------- ---------- ----------
Total available for
sale................. 29,890 26,571 57,903 51,685 117,463 105,751
======== ======== ======== ======== ========== ==========
Sources of
kilowatthour
generation available
for sale:
Fuel
Nuclear............... 68% 66% 69% 67% 67% 63%
Coal.................. -- 22 -- 22 10 24
Oil................... -- -- -- -- -- --
Natural gas........... -- 4 -- 3 1 3
Purchased power....... 32 8 31 8 22 10
-------- -------- -------- -------- ---------- ----------
100% 100% 100% 100% 100% 100%
======== ======== ======== ======== ========== ==========

Higher energy costs for the three months, six months and twelve months ended
June 30, 2000 resulted primarily from the effects of the PPAs ComEd entered
into upon the sale of its fleet of fossil stations which increase purchased
power costs but are offset by lower depreciation and O&M expenses. Costs
associated with Unicom Energy's gas supply contracts also contributed to
higher energy costs for the recent three, six and twelve months ended June 30,
2000. See "Regulation," subcaption "Nuclear Matters" above, for information
regarding ComEd's nuclear generating stations. For additional information
concerning ComEd's purchase power commitments see "Liquidity and Capital
Resources," subcaption "UTILITY OPERATIONS--Construction Program," above and
Note 21 of Notes to Financial Statements.

The market price for electricity is subject to price volatility associated
with changes in supply and demand in the electric supply markets. ComEd
utilizes energy put and call option contracts and energy

swap arrangements to limit market price risk associated with forward commodity
contracts. See "Liquidity and Capital Resources," subcaption "UTILITY
OPERATIONS--Market Risks" above, for additional information.

Operation and Maintenance Expenses. O&M expenses include the expenses
associated with operating and maintaining ComEd's generation, transmission and
distribution assets, as well as administrative overhead and support, and the
expenses associated with Unicom's unregulated businesses. Given the variety of
expense categories covered, there are a number of factors which affect the
level of such expenses within any given period. A major component of such
expenses, however, is the cost associated with operating and maintaining
ComEd's nuclear generating facilities. Generating station expenses are
affected by the cost of materials, regulatory requirements and expectations,
the age of facilities and cost control efforts.

During the three months, six months and twelve months ended June 30, 2000,
the aggregate level of O&M expenses decreased 9%, 9% and 2%, respectively,
compared to the same periods ended June 30, 1999.

O&M expenses associated with nuclear generating stations decreased $46
million, $82 million and $138 million during the three months, six months and
twelve months ended June 30, 2000, respectively, compared to the same periods
ended June 30, 1999. The decreases in the recent three-month, six-month and
twelve-month periods were due to shorter refueling outages and fewer forced
outages.

O&M expenses associated with ComEd's fossil generating stations sold in
December 1999 were $66 million for the three months and $132 million for the
six months ended June 30, 1999 and $88 million and $245 million for the twelve
months ended June 30, 2000 and June 30, 1999, respectively.

O&M expenses associated with ComEd's transmission and distribution system
increased $43 million, $71 million and $113 million for the three months, six
months and twelve months ended June 30, 2000, respectively, compared to the
same periods ended June 30, 1999. The increases for the recent three-month,
six-month and twelve-month periods were primarily due to ComEd's intensive
efforts to improve the reliability of its transmission and distribution
systems. O&M expenses associated with customer related activities decreased $5
million and increased $1 million and $23 million for the three months, six
months and twelve months ended June 30, 2000, respectively, compared to the
same periods ended June 30, 1999. The decrease in the recent three-month
period was primarily due to decreased credit and collection activity. The
increase in the recent twelve-month period was primarily due to increased
overtime and labor costs incurred to address billing problems encountered
following the implementation of a new customer information and billing system
in July 1998.

O&M expenses for the twelve months ended June 30, 2000 reflect an increase
of $68 million in ComEd's estimated environmental liability for the
remediation of former manufactured gas plant sites compared to the same period
ended June 30, 1999. O&M expenses for the six and twelve months ended June 30,
1999 also reflect increased charges of $25 million and $35 million,
respectively, for uncollectible accounts resulting from billing and collection
delays experienced following the ongoing implementation of a new customer
information system and the temporary suspension of credit activities in the
last half of 1998 and early 1999.

O&M expenses also include employee benefits expenses. Since 1995, ComEd has
reduced the size of its workforce by offering incentives for employees to
leave the company voluntarily. Such incentives included both current payments
and earlier eligibility for postretirement health care benefits, in addition
to certain other employee-related costs, resulting in charges of $11 million
and $5 million for the three months ended June 30, 2000 and 1999,
respectively, $14 million and $5 million for the six

months ended June 30, 2000 and 1999, respectively, and $19 million and $30
million for the twelve months ended June 30, 2000 and 1999, respectively,
other than costs related to the fossil plant sale.

Other ComEd employee benefits expenses, excluding the effects of employee
separation plans and certain other employee-related costs decreased
$34 million, $38 million and $56 million for the three months, six months and
twelve months ended June 30, 2000, respectively, compared to the same periods
ended June 30, 1999. The decreases for the recent three-month, six-month and
twelve-month periods was primarily due to a reduction in pension costs and
medical costs for active and retired employees.

O&M expenses also include increases of $13 million, $17 million and $17
million for the recent three, six and twelve months ended June 30, 2000,
respectively, for expenses incurred in connection with the merger with PECO.

O&M expenses included a $25 million charge for the six months and twelve
months ended June 30, 1999 as a result of a franchise related settlement
agreement between ComEd and the City.

O&M expenses also include increases of $17 million, $20 million and $20
million for the recent three, six and twelve months ended June 30, 2000,
respectively, for the rental of gas and diesel peaking units.

O&M expenses decreased $21 million, $24 million and $25 million for the
three, six and twelve months ended June 30, 2000, compared to the same periods
ended June 30, 1999, due to lower administrative and general costs.

O&M expenses associated with Unicom's unregulated businesses increased $66
million, $105 million and $154 million for the three months, six months and
twelve months ended June 30, 2000, respectively, compared to the same periods
ended June 30, 1999. The increase is primarily related to their increased
level of operation and the acquisition of new businesses in 1999 and the first
half of 2000.

Depreciation, Amortization and Decommissioning. Depreciation, amortization
and decommissioning expense decreased $40 million, increased $104 million and
decreased $13 million for the three months, six months and twelve months ended
June 30, 2000, respectively, compared to the same periods ended June 30, 1999.
The regulatory asset amortization recorded for the three months, six months
and twelve months ended June 30, 2000 represent amounts calculated in
accordance with the earnings cap provisions of the 1997 Act. Consistent with
the provisions of the 1997 Act, the (pre-tax) gain on the fossil plant sale of
$2.587 billion resulted in a regulatory liability, which was used to recover
regulatory assets. Therefore, the gain on the sale, excluding $43 million of
amortization of investment tax credits, was recorded as a regulatory liability
in the amount of $2.544 billion and amortized in the fourth quarter of 1999.
The amortization of the regulatory liability and additional regulatory asset
amortization of $2.456 billion are reflected in depreciation and amortization
expense on Unicom's Statements of Consolidated Operations and resulted in a
net reduction to depreciation and amortization expense of $88 million for the
twelve months ended June 30, 2000. See Note 1 of Notes to Financial
Statements, under "Depreciation, Amortization of Regulatory Assets and
Liabilities, and Decommissioning," for additional information.

Interest on Debt. Changes in interest on long-term debt and notes payable
for the three months, six months and twelve months ended June 30, 2000,
compared to the same periods ended June 30, 1999, were due to changes in
average interest rates and in the amounts of long-term debt and notes payable
outstanding. Changes in interest on ComEd's long-term debt also reflected new
issues of debt, the retirement and early redemption of debt, and the
retirement and redemption of issues which were refinanced at generally lower
rates of interest. See Notes 3 and 6 of Notes to Financial Statements for
information regarding the redemptions and repurchases of debt and equity. The

average amounts of ComEd's long-term debt and notes payable outstanding and
average interest rates thereon were as follows:

Six Months
Three Months Ended Ended Twelve Months Ended
June 30 June 30 June 30
-------------------- -------------- --------------------
2000 1999 2000 1999 2000 1999
--------- --------- ------ ------ --------- ---------

Long-term debt outstand-
ing:
Average amount
(millions)............ $ 7,284 $ 8,128 $7,443 $8,329 $ 7,667 $ 7,167
Average interest rate.. 7.02% 6.76% 6.90% 6.77% 6.83% 7.19%
Notes payable outstand-
ing:
Average amount
(millions)............ $ 313 $ 290 $ 188 $ 256 $ 286 $ 318
Average interest rate.. 6.68% 5.22% 6.62% 6.09% 5.97% 5.73%

Other Items. The amounts of AFUDC reflect changes in the average levels of
investment subject to AFUDC and changes in the average annual capitalization
rates as discussed in Note 1 of Notes to Financial Statements, under "AFUDC
and Interest Capitalized." In accordance with SFAS No. 34, Capitalization of
Interest Cost, ComEd capitalized less than $1 million and $6 million for the
three months ended June 30, 2000 and 1999, respectively, $2 million and $12
million for the six months ended June 30, 2000 and 1999, respectively, and $12
million and $32 million for the twelve months ended June 30, 2000 and 1999,
respectively, of interest costs on its generation-related construction work in
progress and nuclear fuel in process. AFUDC and interest capitalized do not
contribute to the current cash flow of Unicom or ComEd.

ComEd's ratios of earnings to fixed charges for the twelve months ended June
30, 2000 and December 31, 1999 were 2.76 and 2.45, respectively. ComEd's
ratios of earnings to fixed charges and preferred and preference stock
dividend requirements for the twelve months ended June 30, 2000 and December
31, 1999 were 2.71 and 2.32, respectively.

Business corporations, in general, have been adversely affected by inflation
because amounts retained after the payment of all costs have been inadequate
to replace, at increased costs, the productive assets consumed. Electric
utilities, in particular, have been especially affected as a result of their
capital intensive nature and regulation which limits capital recovery and
prescribes installation or modification of facilities to comply with
increasingly stringent safety and environmental requirements. Because the
regulatory process limits the amount of depreciation expense included in
ComEd's revenue allowance to the original cost of utility plant investment,
the resulting cash flows are inadequate to provide for replacement of that
investment in future years or preserve the purchasing power of common equity
capital previously invested.

Foward-Looking Information. Except for historical data, the information
contained herein constitutes forward-looking statements. Forward-looking
statements are inherently uncertain and subject to risks. Such statements
should be viewed with caution. Actual results or experience could differ
materially from the forward-looking statements as a result of many factors.
Forward-looking statements in this report include, but are not limited to: (1)
statements regarding expectations of revenue reductions and collections of
future CTC revenues as a result of the 1997 Act in "Management's Discussion
and Analysis of Financial Condition and Results of Operations," subcaption
"Changes in the Electric Utility Industry--The 1997 Act," and in Notes 1 and 3
of Notes to Financial Statements, (2) statements regarding estimated capital
expenditures in "Management's Discussion and Analysis of Financial Condition
and Results of Operations," subcaptions "Liquidity and Capital Resources--
UTILITY OPERATIONS--Construction Program" and "Liquidity and Capital
Resources--UNREGULATED OPERATIONS--Construction Program," and "Changes in the
Electric Utility Industry--Response to Regulatory Changes," (3) statements
regarding the costs of decommissioning nuclear generating stations in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," subcaption "Regulation--Nuclear Matters," and in Note 1 of Notes
to Financial Statements, under "Depreciation, Amortization of Regulatory
Assets and

Liabilities and Decommissioning," (4) statements regarding cleanup costs
associated with MGPs and other remediation sites in Note 21 of Notes to
Financial Statements, (5) statements regarding the estimated fair value of
forward energy contracts in "Management's Discussion and Analysis of Financial
Condition and Results of Operations," subcaption "Liquidity and Capital
Resources-- UTILITY OPERATIONS--Market Risks," (6) statements regarding the
use of fossil plant sale proceeds in "Management's Discussion and Analysis of
Financial Condition and Results of Operations," subcaptions "Changes in the
Electric Utility Industry--Fossil Plant Sale," "Liquidity and Capital
Resources--UTILITY OPERATIONS--Construction Program," and "Liquidity and
Capital Resources--UNREGULATED OPERATIONS--Capital Resources," and in Note 4
of Notes to Financial Statements, (7) statements regarding estimates of claims
resulting from the summer of 1999 outages set forth in Note 21 of Notes to
Financial Statements and (8) statements regarding the Merger Agreement in Note
2 of Notes to Financial Statements and in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" subcaption "Changes
in the Electric Utility Industry--Merger Agreement." Management cannot predict
the course of future events or anticipate the interaction of multiple factors
beyond management's control and their effect on revenues, project timing and
costs. The statements regarding revenue reductions and collections of future
CTC revenues are subject to unforeseen developments in the market for
electricity in Illinois resulting from regulatory changes. The statements
regarding estimated capital expenditures, decommissioning costs and cleanup
costs are subject to changes in the scope of work and manner in which the work
is performed and consequent changes in the timing and level of the projected
expenditure, and are also subject to changes in laws and regulations or their
interpretation or enforcement. The statements regarding the fair value of
forward energy contracts are subject to changes in generating capability and
reduction in the demand for electricity. The statement regarding the use of
proceeds from the fossil plant sale is subject to the possibility that
regulatory action might affect the amount and use of such proceeds and the
possibility that, due to changing market conditions, Unicom and ComEd may
determine that other uses of the proceeds may be in their best interest. The
statements regarding estimates of claims resulting from the summer of 1999
outages are subject to the risk that the actual amount of losses suffered by
customers and restoration costs may exceed the estimated amounts. The
statements regarding the Merger Agreement and the associated repurchase of
shares are subject to the risk of a significant delay in the expected
completion of, and unexpected consequences resulting from, the transactions
contemplated by the Merger Agreement, including the inability to close the
transaction, and to changes in the number of shares of outstanding common
stock of Unicom and PECO for unforeseen reasons. Unicom and ComEd make no
commitment to disclose any revisions to the forward-looking statements, or any
facts, events or circumstances after the date hereof that may bear upon
forward-looking statements.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of Commonwealth Edison Company:

We have audited the accompanying consolidated balance sheets and statements
of consolidated capitalization of COMMONWEALTH EDISON COMPANY (an Illinois
corporation) and subsidiary companies as of June 30, 2000 and December 31,
1999, and the related statements of consolidated operations, retained
earnings, comprehensive income and cash flows for the three-month, six-month
and twelve-month periods ended June 30, 2000 and 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Commonwealth Edison Company and subsidiary companies as of June 30, 2000 and
December 31, 1999, and the results of their operations and their cash flows
for the three-month, six-month and twelve-month periods ended June 30, 2000
and 1999, in conformity with accounting principles generally accepted in the
United States.

Arthur Andersen LLP
Chicago, Illinois
August 11, 2000

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED OPERATIONS

Electric Operating Revenues.. $1,702,248 $1,678,983 $3,262,063 $3,207,783 $6,821,172 $6,857,078
---------- ---------- ---------- ---------- ---------- ----------
Electric Operating Expenses
and Taxes:
Fuel........................ $ 97,631 $ 259,639 $ 196,839 $ 494,473 $ 699,628 $1,087,835
Purchased power............. 372,212 98,301 598,945 169,983 980,536 465,249
Operation................... 362,559 428,536 656,009 749,922 1,447,523 1,518,014
Maintenance................. 146,473 198,992 306,025 421,579 658,756 776,711
Depreciation and amortiza-
tion....................... 223,695 265,334 595,711 495,103 936,753 953,940
Taxes (except income)....... 125,023 129,924 261,846 261,542 506,630 567,128
Income taxes--
Current--Federal............ 117,984 90,010 190,101 185,720 1,471,375 349,571
--State..................... 25,436 19,427 40,989 40,101 316,600 66,421
Deferred--Federal--net...... (53,547) (36,356) (89,538) (75,375) (1,169,572) (25,598)
--State--net............... (9,969) (7,617) (17,038) (15,819) (249,212) (691)
Investment tax credits de-
ferred--net................ (5,500) (7,021) (10,999) (14,042) (22,785) (27,723)
---------- ---------- ---------- ---------- ---------- ----------
$1,401,997 $1,439,169 $2,728,890 $2,713,187 $5,576,232 $5,730,857
---------- ---------- ---------- ---------- ---------- ----------
Electric Operating Income.... $ 300,251 $ 239,814 $ 533,173 $ 494,596 $1,244,940 $1,126,221
---------- ---------- ---------- ---------- ---------- ----------
Other Income and (Deduc-
tions):
Interest on long-term debt,
net of interest capital-
ized....................... $ (121,233) $ (131,599) $ (250,324) $ (270,158) $ (506,916) $ (483,424)
Interest on notes payable... (5,202) (3,769) (6,171) (7,721) (17,052) (18,264)
Allowance for funds used
during construction........ 5,392 5,190 11,011 9,401 23,422 18,006
Income taxes applicable to
nonoperating activities.... (15,029) (1,833) (21,418) (3,249) 8,913 (17,827)
Provision for dividends on
company-obligated
mandatorily redeemable
preferred securities of
subsidiary trusts holding
solely the Company's sub-
ordinated debt securities.. (7,427) (7,427) (14,855) (14,855) (29,710) (29,710)
Miscellaneous--net.......... 21,574 29,609 135,980 43,948 62,146 74,880
---------- ---------- ---------- ---------- ---------- ----------
$ (121,925) $ (109,829) $ (145,777) $ (242,634) $ (459,197) $ (456,339)
---------- ---------- ---------- ---------- ---------- ----------
Net Income before Extraordi-
nary Item................... $ 178,326 $ 129,985 $ 387,396 $ 251,962 $ 785,743 $ 669,882
Extraordinary Loss, less Ap-
plicable Income Taxes....... (1,423) -- (4,167) (27,576) (4,171) (27,576)
---------- ---------- ---------- ---------- ---------- ----------
Net Income................... $ 176,903 $ 129,985 $ 383,229 $ 224,386 $ 781,572 $ 642,306
Provision for Dividends on
Preferred and Preference Stocks. 1,017 3,043 2,239 18,340 7,655 46,215
---------- ---------- ---------- ---------- ---------- ----------
Net Income on Common Stock... $ 175,886 $ 126,942 $ 380,990 $ 206,046 $ 773,917 $ 596,091
========== ========== ========== ========== ========== ==========

The accompanying Notes to Financial Statements are an integral part of the
above statements.

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

June 30, December 31,
2000 1999
----------- ------------
(Thousands of Dollars)
ASSETS
------

Utility Plant:
Plant and equipment, at original cost (includes
construction work in progress of $719 million and
$654 million, respectively)....................... $25,612,137 $25,007,637
Less--Accumulated provision for depreciation....... 14,116,986 13,729,223
----------- -----------
$11,495,151 $11,278,414
Nuclear fuel, at amortized cost.................... 794,535 843,724
----------- -----------
$12,289,686 $12,122,138
----------- -----------
Investments:
Nuclear decommissioning funds...................... $ 2,616,886 $ 2,546,540
Subsidiary companies............................... 50,041 77,061
Other investments, at cost......................... 59,269 63,702
----------- -----------
$ 2,726,196 $ 2,687,303
----------- -----------
Current Assets:
Cash and temporary cash investments................ $ 268,609 $ 1,254,868
Cash held for redemption of securities............. 64,467 285,056
Special deposits................................... 492 45,730
Receivables--
Customers........................................ 1,027,045 1,183,505
Forward share repurchase contract................ -- 813,046
Other............................................ 234,328 181,793
Provisions for uncollectible accounts............ (47,899) (49,344)
Coal and fuel oil, at average cost................. 17,674 14,222
Materials and supplies, at average cost............ 235,731 220,398
Deferred income taxes related to current assets and
liabilities....................................... 58,541 54,796
Prepayments and other.............................. 30,270 30,539
----------- -----------
$ 1,889,258 $ 4,034,609
----------- -----------
Deferred Charges and Other Noncurrent Assets:
Note receivable from affiliate..................... $ 2,450,000 $ 2,450,000
Regulatory assets.................................. 1,563,896 1,792,907
Other.............................................. 63,119 73,308
----------- -----------
$ 4,077,015 $ 4,316,215
----------- -----------
$20,982,155 $23,160,265
=========== ===========

The accompanying Notes to Financial Statements are an integral part of the
above statements.

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

June 30, December 31,
CAPITALIZATION AND LIABILITIES 2000 1999
------------------------------ ----------- -----------
(Thousands of Dollars)

Capitalization (see accompanying statements):
Common stock equity............................. $ 4,392,229 $ 5,302,915
Preferred and preference stocks without
mandatory redemption requirements.............. 8,624 8,768
Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts
holding solely the Company's subordinated debt
securities*.................................... 350,000 350,000
Long-term debt.................................. 6,707,565 6,962,448
----------- -----------
$11,458,418 $12,624,131
----------- -----------
Current Liabilities:
Notes payable................................... $ 354,000 $ 4,750
Current portion of long-term debt, redeemable
preference stock and capitalized lease
obligations.................................... 683,587 909,900
Accounts payable................................ 569,525 545,329
Accrued interest................................ 141,269 147,044
Accrued taxes................................... -- 1,409,626
Dividends payable............................... 79,360 92,656
Customer deposits............................... 70,038 68,128
Other........................................... 217,053 307,040
----------- -----------
$ 2,114,832 $ 3,484,473
----------- -----------
Deferred Credits and Other Noncurrent Liabilities:
Deferred income taxes........................... $ 2,858,076 $ 2,456,447
Nuclear decommissioning liability for retired
plants......................................... 1,275,400 1,259,700
Accumulated deferred investment tax credits..... 469,414 484,717
Accrued spent nuclear fuel disposal fee and re-
lated interest................................. 785,360 763,427
Obligations under capital leases................ -- 161,602
Regulatory liabilities.......................... 584,414 596,157
Other........................................... 1,436,241 1,329,611
----------- -----------
$ 7,408,905 $ 7,051,661
----------- -----------
Commitments and Contingent Liabilities (Note 21)
$20,982,155 $23,160,265
=========== ===========

The accompanying Notes to Financial Statements are an integral part of the
above statements.

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED CAPITALIZATION

June 30, December 31,
2000 1999
----------- ----------------
(Thousands of Dollars)

Common Stock Equity:
Common stock, $12.50 par value per share--
Outstanding--214,242,887 shares and
213,973,810 shares, respectively............ $ 2,678,053 $ 2,677,995
Premium on common stock and other paid-in cap-
ital......................................... 2,207,372 2,207,287
Capital stock and warrant expense............. (12,464) (12,537)
Retained earnings............................. 667,396 433,001
Other comprehensive income.................... 8,659 7,539
Treasury stock--30,497,107 shares and 264,406
shares, respectively......................... (1,156,787) (10,370)
----------- -----------
$ 4,392,229 $ 5,302,915
----------- -----------
Preferred and Preference Stocks Without Manda-
tory
Redemption Requirements:
Preference stock, non-cumulative, without par
value--
Outstanding--1,120 shares and 1,120 shares,
respectively................................. $ 6,978 $ 6,978
$1.425 convertible preferred stock, cumula-
tive, without par value--
Outstanding--51,773 shares and 56,291 shares,
respectively................................ 1,646 1,790
----------- -----------
$ 8,624 $ 8,768
----------- -----------
Preference Stock Subject to Mandatory Redemption
Requirements:
Preference stock, cumulative, without par val-
ue--
Outstanding--no shares and 700,000 shares,
respectively................................ $ -- $ 69,475
Current redemption requirements for preference
stock included in current liabilities........ -- (69,475)
----------- -----------
$ -- $ --
----------- -----------
Company-Obligated Mandatorily Redeemable Pre-
ferred Securities of Subsidiary Trusts Holding
Solely the Company's Subordinated Debt Securi-
ties........................................... $ 350,000 $ 350,000
----------- -----------
Long-Term Debt:
First mortgage bonds:
Maturing 2000 through 2004--5.30% to 9 3/8%. $ 426,000 $ 698,245
Maturing 2005 through 2014--4.40% to 8 3/8%. 1,299,400 1,299,400
Maturing 2015 through 2023--6.75% to 9 7/8%. 1,501,000 1,589,443
----------- -----------
$ 3,226,400 $ 3,587,088
Transitional trust notes, due 2001 through
2008--5.29% to 5.74%......................... 2,890,000 3,070,000
Sinking fund debentures, due 2001 through
2011--2 7/8% to 4.75%........................ 28,060 30,866
Pollution control obligations, due 2007
through 2014--4.65% to 5 7/8%................ 137,700 139,200
Other long-term debt.......................... 916,304 916,351
Deposit for retirement of long-term debt...... (1,386) --
Current maturities of long-term debt included
in current liabilities....................... (445,222) (732,077)
Unamortized net debt discount and premium..... (44,291) (48,980)
----------- -----------
$ 6,707,565 $ 6,962,448
----------- -----------
$11,458,418 $12,624,131
----------- -----------

The accompanying Notes to Financial Statements are an integral part of the
above statements.

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED RETAINED EARNINGS

Balance at Beginning of
Period................. $ 564,608 $ 169,578 $433,001 $176,643 $ 211,003 $ (43,295)
Add--Net income......... 176,903 129,985 383,229 224,386 781,572 642,306
--------- --------- -------- -------- --------- ---------
$ 741,511 $ 299,563 816,230 401,029 $ 992,575 $ 599,011
--------- --------- -------- -------- --------- ---------
Deduct--
Dividends declared
on--
Common stock........ $ 73,499 $ 85,517 $146,996 $171,106 $ 318,175 $ 342,495
Preferred and
preference stocks.. 19 3,043 1,241 6,085 3,687 32,437
Other capital stock
transactions--net... 597 -- 597 12,835 3,317 13,076
--------- --------- -------- -------- --------- ---------
$ 74,115 $ 88,560 $148,834 $190,026 $ 325,179 $ 388,008
--------- --------- -------- -------- --------- ---------
Balance at End of Period
(Includes $1,087
million and $627
million of appropriated
retained earnings for
future dividend
payments at June 30,
2000 and 1999,
respectively).......... $ 667,396 $ 211,003 $667,396 $211,003 $ 667,396 $ 211,003
========= ========= ======== ======== ========= =========

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

Net Income.............. $ 176,903 $ 129,985 $383,229 $224,386 $ 781,572 $ 642,306
Other Comprehensive
Income
Unrealized
gains/(losses) on
securities and
foreign currency
translations......... $ (251) $ -- $ 1,453 $ -- $ 13,924 $ --
Income taxes on other
comprehensive income. 341 -- (333) -- (5,265) --
--------- --------- -------- -------- --------- ---------
Other comprehensive
income, net of tax... $ 90 $ -- $ 1,120 $ -- $ 8,659 $ --
--------- --------- -------- -------- --------- ---------
Comprehensive Income.... $ 176,993 $ 129,985 $384,349 $224,386 $ 790,231 $ 642,306
========= ========= ======== ======== ========= =========

The accompanying Notes to Financial Statements are an integral part of the
above statements.

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED CASH FLOWS

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
-------------------- ------------------------ ------------------------
2000 1999 2000 1999 2000 1999
--------- --------- ----------- ----------- ----------- -----------
(Thousands of Dollars)

Cash Flow from Operating
Activities:
Net income............. $ 176,903 $ 129,985 $ 383,229 $ 224,386 $ 781,572 $ 642,306
Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities:
Depreciation and am-
ortization.......... 255,746 284,156 661,185 528,904 1,045,612 1,011,988
Deferred income taxes
and investment tax
credits--net........ (62,994) (47,937) (101,784) (103,198) (1,450,496) (44,743)
Contribution to envi-
ronmental trust..... -- -- -- -- (250,000) --
Recovery of coal re-
serve regulatory as-
sets................ -- -- -- 19,936 178,038 65,397
Change in MGP
remediation liabili-
ty.................. (1,200) -- (1,200) -- 66,878 --
Gain on forward share
arrangements........ -- (19,689) (113,071) (33,417) (35,682) (33,417)
Provisions/(payments)
for revenue re-
funds--net.......... -- 2,635 -- (19,858) (2,745) 2,745
Equity component of
allowance for funds
used during
construction........ (2,551) (2,003) (5,302) (3,756) (9,335) (7,170)
Payments for liabil-
ity for separation
costs--net.......... (166) (1,018) (9,055) (9,798) (73,663) (7,076)
Net effect on cash
flows of changes in:
Receivables........ (77,115) (129,953) 101,848 73,104 186,820 (263,327)
Coal and fuel oil.. (1,831) 7,495 (3,452) (10,775) 8,882 59,432
Materials and sup-
plies............. (4,686) (5,841) (15,333) (9,981) (12,509) 19,176
Accounts payable
excluding nuclear
fuel lease
principal payments
and separation
costs--net........ 181,555 29,482 33,251 (108,067) 95,710 (112,850)
Accrued interest
and taxes......... 38,729 (35,359) (933,224) 119,705 188,046 (913)
Other changes in
certain current
assets and liabil-
ities............. (10,231) 26,468 37,418 54,232 107,610 143,732
Other--net........... 31,831 50,815 138,235 138,527 (22,000) 146,943
--------- --------- ----------- ----------- ----------- -----------
$ 523,990 $ 289,236 $ 172,745 $ 859,944 $ 802,738 $ 1,622,223
--------- --------- ----------- ----------- ----------- -----------
Cash Flow from Investing
Activities:
Construction expendi-
tures................. $(313,707) $(245,292) $ (574,326) $ (473,708) $(1,184,016) $ (956,817)
Nuclear fuel expendi-
tures................. (71,857) (63,862) (101,479) (113,947) (241,023) (185,147)
Sale of generating
plants................ (632) -- -- -- 4,885,720 --
Note receivable from
affiliates............ 632 -- 632 -- (2,450,000) --
Equity component of
allowance for funds
used during
construction.......... 2,551 2,003 5,302 3,756 9,335 7,170
Contributions to nu-
clear decommissioning
funds................. -- -- (39,400) (39,426) (89,919) (96,120)
Other investments and
special deposits...... 543 (2,180) 49,872 (2,468) 13,820 (2,695)
Plant removal costs--
net................... (16,707) (5,333) (18,960) (32,012) (49,321) (97,952)
--------- --------- ----------- ----------- ----------- -----------
$(399,177) $(314,664) $ (678,359) $ (657,805) $ 894,596 $(1,331,561)
--------- --------- ----------- ----------- ----------- -----------
Cash Flow from Financing
Activities:
Issuance of securi-
ties--
Transitional trust
notes............... $ -- $ -- $ -- $ -- $ -- $ 3,382,629
Other long-term debt. -- -- -- -- 50 222,068
Capital stock........ 31 9 143 15 206 17,043
Retirement, redemption
and repurchase of se-
curities--
Transitional trust
notes............... (85,033) (140,000) (180,000) (140,000) (370,000) (140,000)
Other long-term debt. (248,433) (5,355) (369,176) (1,058,435) (510,728) (1,184,443)
Common stock......... -- (26,486) (153,164) (30,056) (153,196) (36,970)
Preferred stock...... (70,031) 9,979 (70,144) (534,208) (155,204) (561,935)
Common stock forward
repurchase arrange-
ments................. -- 16,456 (67,135) (662,113) (262,040) (662,113)
Cash dividends paid on
capital stock......... (78,960) (92,800) (176,388) (201,593) (366,687) (416,126)
Proceeds from
sale/leaseback of nu-
clear fuel............ -- -- -- -- -- 39,612
Nuclear fuel lease
principal payments.... (34,620) (48,191) (34,620) (101,936) (188,086) (196,531)
Increase/(decrease) in
short-term
borrowings............ 232,000 207,643 349,250 135,494 (57,850) (77,996)
--------- --------- ----------- ----------- ----------- -----------
$(285,046) $ (78,745) $ (701,234) $(2,592,832) $(2,063,535) $ 385,238
--------- --------- ----------- ----------- ----------- -----------
Change in Net Cash Bal-
ance................... $(160,233) $(104,173) $(1,206,848) $(2,390,693) $ (366,201) $ 675,900
Cash, Temporary Cash
Investments and Cash
Held for Redemption of
Securities:
Balance at Beginning
of Period............. 493,309 803,450 1,539,924 3,089,970 699,277 23,377
--------- --------- ----------- ----------- ----------- -----------
Balance at End of Pe-
riod.................. $ 333,076 $ 699,277 $ 333,076 $ 699,277 $ 333,076 $ 699,277
========= ========= =========== =========== =========== ===========

The accompanying Notes to Financial Statements are an integral part of the
above statements.

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS

(1) Summary of Significant Accounting Policies.

See Unicom's Note 1 of Notes to Financial Statements for a discussion of
significant accounting policies, except for the following specific policies
discussed below and the subcaption "Average Common Shares Outstanding" in
Unicom's Note 1.

Income Taxes. ComEd is included in the consolidated federal and state income
tax returns filed by Unicom. Current and deferred income taxes of the
consolidated group are allocated to ComEd as if ComEd filed separate tax
returns. Deferred income taxes are provided for income and expense items
recognized for financial accounting purposes in periods that differ from those
for income tax purposes. Income taxes deferred in prior years are charged or
credited to income as the book/tax temporary differences reverse. Prior years'
deferred investment tax credits are amortized through credits to income
generally over the lives of the related property. Income tax credits resulting
from interest charges applicable to nonoperating activities, principally
construction, are classified as other income.

Interest. Total interest costs incurred on debt, leases and other
obligations were $148 million and $152 million for the three months ended June
30, 2000 and 1999, respectively, $298 million and $315 million for the six
months ended June 30, 2000 and 1999, respectively, and $605 million and $562
million for the twelve months ended June 30, 2000 and 1999, respectively.

Statements of Consolidated Cash Flows. For purposes of the Statements of
Consolidated Cash Flows, temporary cash investments, generally investments
maturing within three months at the time of purchase, are considered to be
cash equivalents. Supplemental cash flow information for the three months, six
months and twelve months ended June 30, 2000 and 1999 was as follows:

Supplemental Cash Flow
Information:
Cash paid during the
period for:
Interest (net of
amount capitalized). $ 109,955 $ 164,112 $ 258,888 $322,856 $ 524,433 $536,558
Income taxes (net of
refunds)............ $ 193,360 $ 110,028 $1,143,361 $ 84,107 $1,544,451 $385,890
Supplemental Schedule of
Non-Cash Investing and
Financing Activities:
Capital lease obliga-
tions incurred........ $ -- $ 274 $ 34 $ 1,436 $ 343 $ 43,828

(2) Merger Agreement. See Unicom's Note 2 of Notes to Financial Statements.

(3) Accounting Effects Related to the 1997 Act. See Unicom's Note 3 of Notes
to Financial Statements, except for EPS information.

(4) Fossil Plant Sale. See Unicom's Note 4 of Notes to Financial Statements,
except for EPS information.

(5) Authorized Shares and Voting Rights of Capital Stock. At June 30, 2000,
the authorized shares of capital stock were: common stock--250,000,000 shares;
preference stock--6,810,451 shares; $1.425 convertible preferred stock--51,773
shares; and prior preferred stock--850,000 shares. The preference and prior
preferred stocks are issuable in series and may be issued with or without
mandatory redemption requirements. Holders of shares at any time outstanding,
regardless of class, are entitled to one vote for each share held on each
matter submitted to a vote at a meeting of shareholders, with the right to
cumulate votes in all elections for directors.

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

(6) Common Equity. In January 2000, ComEd physically settled the forward
share repurchase arrangements it had with Unicom for the repurchase of 26.3
million ComEd common shares. Prior to settlement, the repurchase arrangements
were recorded as a receivable on ComEd's Consolidated Balance Sheets based on
the aggregate market value of the shares under the arrangements. In 1999, net
unrealized losses of $44 million (after-tax), or $0.20 per common share were
recorded related to the arrangements. The settlement of the arrangements in
January 2000 resulted in a gain of $113 million (after-tax), which was
recorded in the first quarter of 2000. The settlement of the arrangements
resulted in a reduction in ComEd's outstanding common shares and common stock
equity, effective January 2000.

During the first quarter of 2000, ComEd used $153 million to repurchase an
additional 4 million of its common shares from Unicom with proceeds from the
1998 issurance of transitional trust notes.

At June 30, 2000, shares of common stock were reserved for the following
purposes:

Conversion of $1.425 convertible preferred stock................... 52,808
Conversion of warrants............................................. 25,152
------
77,960
======

Shares of common stock issued/(reacquired) for the three months, six months
and twelve months ended June 30, 2000 and 1999 were as follows:

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
-------------------- -------------------- ---------------------
2000 1999 2000 1999 2000 1999
--------- --------- ----------- ------- ----------- --------

Conversion of $1.425
convertible preferred
stock.................. 997 283 4,599 495 6,058 1,147
Conversion of warrants.. -- 36 72 65 116 169
Treasury stock.......... -- -- (30,232,701) (85,424) (30,232,701) (264,406)
--------- --------- ----------- ------- ----------- --------
997 319 (30,228,030) (84,864) (30,226,527) (263,090)
========= ========= =========== ======= =========== ========

At June 30, 2000 and December 31, 1999, 75,458 and 75,692, respectively, of
common stock purchase warrants were outstanding. The warrants entitle the
holders to convert such warrants into common stock at a conversion rate of one
share of common stock for three warrants.

(7) Stock Option Awards/Employee Stock Purchase Plan. See Unicom's Note 7 of
Notes to Financial Statements, except for EPS information.

(8) Preferred and Preference Stocks Without Mandatory Redemption
Requirements. See Unicom's Note 8 of Notes to Financial Statements.

(9) Preference Stock Subject to Mandatory Redemption Requirements. See
Unicom's Note 9 of Notes to Financial Statements.

(10) Company-Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trusts Holding Solely the Company's Subordinated Debt
Securities. See Unicom's Note 10 of Notes to Financial Statements.

(11) Long-Term Debt. See Unicom's Note 11 of Notes to Financial Statements,
except for the last three paragraphs regarding Unicom Thermal, Northwind
Chicago and Northwind Midway's guaranteed senior Notes.

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

(12) Lines of Credit. See the first paragraph of Unicom's Note 12 of Notes
to Financial Statements.

(13) Disposal of Spent Nuclear Fuel. See Unicom's Note 13 of Notes to
Financial Statements.

(14) Fair Value of Financial Instruments. See Unicom's Note 14 of Notes to
Financial Statements, except for the following section.

Capitalization. The estimated fair values of preferred and preference
stocks, company-obligated mandatorily redeemable preferred securities of
subsidiary trusts holding solely the Company's subordinated debt securities,
transitional trust notes, and long-term debt were obtained from an independent
consultant. The estimated fair values, which include the current portions of
redeemable preference stock and long-term debt but exclude accrued interest
and dividends, as of June 30, 2000 and December 31, 1999 were as follows:

June 30, 2000 December 31, 1999
--------------------------------- ---------------------------------
Unrealized Unrealized
Carrying Gains/ Carrying Gains/
Value (Losses) Fair Value Value (Losses) Fair Value
---------- ---------- ---------- ---------- ---------- ----------
(Thousands of Dollars)

Preferred and preference
stocks................. $ 1,646 $ (397) $ 1,249 $ 71,265 $ 58 $ 71,323
Company-obligated
mandatorily redeemable
preferred securities of
subsidiary trusts
holding solely the
Company's subordinated
debt securities........ $ 350,000 $ (21,824) $ 328,176 $ 350,000 $ (10,595) $ 339,405
Transitional trust
notes.................. $2,878,808 $(134,549) $2,744,259 $3,057,112 $(163,600) $2,893,512
Long-term debt.......... $4,275,060 $ (58,146) $4,216,914 $4,637,062 $ (22,237) $4,614,825

(15) Pension and Postretirement Benefits. See Unicom's Note 15 of Notes to
Financial Statements.

(16) Separation Plan Costs. See Unicom's Note 16 of Notes to Financial
Statements, except for EPS information.

(17) Income Taxes. The components of the net deferred income tax liability
at June 30, 2000 and December 31, 1999 were as follows:

June 30, December 31,
2000 1999
---------- ------------
(Thousands of Dollars)

Deferred income tax liabilities:
Accelerated cost recovery and liberalized
depreciation, net of removal costs.................. $2,664,364 $2,781,601
Overheads capitalized................................ 154,198 159,836
Deferred gain on sale of fossil stations............. 462,000 --
Repair allowance..................................... 215,847 221,502
Regulatory assets recoverable through future rates... 696,949 688,946
Deferred income tax assets:
Postretirement benefits.............................. (377,962) (376,207)
Unamortized investment tax credits................... (157,005) (161,756)
Regulatory liabilities to be settled through future
rates............................................... (584,413) (596,157)
Nuclear plant closure................................ (5,459) (5,456)
Other--net........................................... (268,984) (310,658)
---------- ----------
Net deferred income tax liability..................... $2,799,535 $2,401,651
========== ==========

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Continued

The components of net income tax expense charged to continuing operations
for the three months, six months and twelve months ended June 30, 2000 and
1999 were as follows:

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
-------------------- ------------------- ---------------------
2000 1999 2000 1999 2000 1999
--------- --------- --------- -------- ----------- --------
(Thousands of Dollars)

Electric operating in-
come:
Current income taxes... $ 143,420 $ 109,437 $ 231,090 $225,821 $ 1,787,975 $415,992
Deferred income taxes.. (63,516) (43,973) (106,576) (91,194) (1,418,784) (26,289)
Investment tax credits
deferred--net......... (5,500) (7,021) (10,999) (14,042) (22,785) (27,723)
Other (income) and
deductions:
Current income taxes... 16,374 (899) 11,421 1,769 10,274 9,147
Deferred income taxes.. 851 5,242 14,483 6,080 32,324 17,993
Investment tax credits. (2,153) (2,153) (4,305) (3,981) (52,064) (8,616)
--------- --------- --------- -------- ----------- --------
Net income taxes charged
to continuing
operations............. $ 89,476 $ 60,633 $ 135,114 $124,453 $ 336,940 $380,504
========= ========= ========= ======== =========== ========

Pre-tax book income
(thousands)............ $ 267,802 $ 190,688 $522,510 $376,415 $1,122,683 $1,050,386
Effective income tax
rate................... 33.4% 31.8% 25.9% 33.1% 30.0% 36.2%

Federal income taxes
computed at statutory
rate................... $ 93,731 $ 66,741 $182,879 $131,745 $ 392,939 $ 367,635
Amortization of
investment tax credits,
net of deferred income
taxes.................. (5,234) (5,907) (10,468) (11,618) (47,063) (23,395)
State income taxes, net
of federal income
taxes.................. 12,036 8,125 17,256 16,589 48,728 46,586
Net gain on forward
share repurchase
contract............... -- (6,891) (39,575) (11,696) (12,489) (11,696)
Earnings on non-tax
qualified
decommissioning fund... (1,538) (2,768) (1,133) (2,768) (7,280) (2,768)
Differences between book
and tax accounting,
primarily property-
related deductions..... (9,519) 1,333 (13,845) 2,201 (37,895) 4,142
--------- --------- -------- -------- --------- ---------
Net income taxes charged
to continuing
operations............. $ 89,476 $ 60,633 $135,114 $124,453 $ 336,940 $ 380,504
========= ========= ======== ======== ========= =========

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

NOTES TO FINANCIAL STATEMENTS--Concluded

(18) Taxes, Except Income Taxes. Provisions for taxes, except income taxes,
for the three months, six months and twelve months ended June 30, 2000 and
1999 were as follows:

Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
------------------- ------------------ --------------------
2000 1999 2000 1999 2000 1999
--------- --------- -------- -------- --------- ---------
(Thousands of Dollars)

Illinois public utility
revenue................ $ -- $ 402 $ (3,685) $ 1,897 $ (4,601) $ 26,449
Illinois electricity
distribution tax....... 21,115 26,336 46,719 54,672 106,287 113,069
Municipal utility gross
receipts............... 21,801 25,829 49,250 50,587 98,364 121,981
Real estate............. 40,133 29,479 75,915 62,506 127,803 122,776
Municipal compensation.. 18,648 18,329 40,921 36,801 77,469 70,426
Energy assistance and
renewable energy
charge................. 8,651 8,776 17,451 17,445 34,428 33,909
Other--net.............. 14,675 20,773 35,275 37,634 66,880 78,518
--------- --------- -------- -------- --------- ---------
$ 125,023 $ 129,924 $261,846 $261,542 $ 506,630 $ 567,128
========= ========= ======== ======== ========= =========

See Unicom's Note 21 for additional information regarding Illinois invested
capital taxes.

(19) Lease Obligations. See the first paragraph of Unicom's Note 19 of Notes
to Financial Statements.

Future minimum rental payments at June 30, 2000 for operating leases of
equipment and real property are estimated to aggregate to $251 million,
including $13 million in 2000, $26 million in 2001, $23 million in 2002,
$23 million in 2003, $22 million in 2004 and $144 million in 2005-2024.

(20) Joint Plant Ownership. See Unicom's Note 20 of Notes to Financial
Statements.

(21) Commitments and Contingent Liabilities. See Unicom's Note 21 of Notes
to Financial Statements.

COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Changes in the Electric Utility Industry. See Unicom's "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
subcaption "Changes in the Electric Utility Industry," which is incorporated
herein by this reference, except for EPS information.

Liquidity and Capital Resources. See Unicom's "Management's Discussion and
Analysis of Financial Condition and Results of Operations," subcaption
"Liquidity and Capital Resources--UTILITY OPERATIONS," which is incorporated
herein by this reference.

Regulation. See Unicom's "Management's Discussion and Analysis of Financial
Condition and Results of Operations," subcaption "Regulation," which is
incorporated herein by this reference.

Results of Operations. See Unicom's "Management's Discussion and Analysis of
Financial Condition and Results of Operations," subcaption "Results of
Operations" (other than the first paragraph thereof), which is incorporated
herein by this reference, except for EPS information.

Forward-Looking Information. See Unicom's "Management's Discussion and
Analysis of Financial Condition and Results of Operations," subcaption
"Forward-Looking Information," which is incorporated herein by this reference.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

During the first half of 2000, no civil penalties were imposed on ComEd for
violations of NRC regulations. To ComEd's knowledge, there are no current
enforcement issues outstanding or under review by the NRC.

During 1989 and 1991, actions were brought in federal and state courts in
Colorado against ComEd and Cotter seeking unspecified damages and injunctive
relief based on allegations that Cotter has permitted radioactive and other
hazardous material to be released from its mill into areas owned or occupied
by the plaintiffs resulting in property damage and potential adverse health
effects. With respect to Cotter, in 1994 a federal jury returned nominal
dollar verdicts on eight plaintiffs' claims in the 1989 cases, which verdicts
were upheld on appeal. The remaining claims in the 1989 actions have been
settled and dismissed. On July 15, 1998, a jury verdict was rendered in Dodge
v. Cotter (United States District Court for the District of Colorado, Civil
Action No. 91-Z-1861), a case relating to 14 of the plaintiffs in the 1991
cases. The verdict against Cotter and in favor of the plaintiff, after amended
judgement was issued March 1999, totaled approximately $6 million, including
compensatory and punitive damages, interest, and medical monitoring. On
February 11, 2000, the Tenth Circuit Court of Appeals agreed with Cotter,
found that the trial judge had erred in critical rulings and reversed the jury
verdict, remanding the case for new trial. A case involving the next group of
plaintiffs is set for trial in federal district court in Denver on October 2,
2000. Although ComEd sold its investment in Cotter in February 2000, ComEd
will continue to be liable for any court verdicts in favor of the plaintiffs.
The other 1991 cases will necessarily involve the resolution of numerous
contested issues of law and fact. It is Unicom and ComEd's assessment that
these actions will not have a material impact on their financial position or
results of operations.

In August 1999, three class action lawsuits were filed against ComEd related
to a series of service interruptions during the summer of 1999. The combined
effect of these events resulted in over 100,000 customers losing service. On
August 12, 1999, service was interrupted to ComEd customers on the near north
and near west side of Chicago's central business district. While major
commercial customers were affected, all service was restored on the same date.
The class action complaints have been consolidated and seek to recover damages
for personal injuries and property damage, as well as economic loss for these
events. Further, ComEd initiated expedited claim settlements for those with
primarily food spoilage claims. Conditional class certification has been
approved by the Court for the sole purpose of exploring settlement talks. The
lawsuits are pending in the Circuit Court of Cook County. ComEd filed a motion
challenging the legal sufficiency of the consolidated complaints. On July 31,
2000, the judge dismissed two of the counts with prejudice and dismissed four
of the counts with leave to replead. The plaintiffs have 28 days to replead,
and then ComEd will have 28 days to respond. A status hearing is scheduled for
October 10, 2000. ComEd's management believes adequate reserves have been
established in connection with these cases.

CERCLA provides for immediate response and removal actions coordinated by
the U.S. EPA to releases of hazardous substances into the environment and
authorizes the U.S. Government either to clean up sites at which hazardous
substances have created actual or potential environmental hazards or to order
persons responsible for the situation to do so. Under CERCLA, generators and
transporters of hazardous substances, as well as past and present owners and
operators of hazardous waste sites, are made strictly, jointly and severally
liable for the cleanup costs of waste at sites, most of which are listed by
the U.S. EPA on the NPL. These responsible parties can be ordered to perform a
cleanup, can be sued for costs associated with a U.S. EPA directed cleanup,
may voluntarily settle with the U.S. Government concerning their liability for
cleanup costs, or may voluntarily begin a site investigation and site
remediation prior to listing on the NPL under state oversight. Various states,
including Illinois, have enacted statutes which contain provisions
substantially similar to CERCLA. ComEd and its subsidiaries are or are likely
to become parties to proceedings initiated by the U.S. EPA, state agencies
and/or other responsible parties under CERCLA with respect to a number of
sites, including MGP sites, or may voluntarily undertake to investigate and
remediate sites for which they may be liable under CERCLA. See Note 21 of
Notes to Financial Statements for information regarding costs associated with
investigating and remediating former MGP sites.

From time to time, Unicom and its subsidiaries are, or are claimed to be, in
violation of or in default under orders, statutes, rules or regulations
relating to environmental controls and other matters, compliance plans imposed
upon or agreed to by them or permits issued by various state and federal
agencies for the construction or operation of their facilities. Unicom and
ComEd do not believe, so far as they now foresee, that such violations or
defaults will have a material adverse effect on their future business and
operating results, except for events otherwise described in Unicom and ComEd's
Annual Reports on Form 10-K for the year ended December 31, 1999 or in these
Quarterly Reports on Form 10-Q for the quarterly period ended June 30, 2000,
which could have such an effect.

Item 4. Submission of Matters to a Vote of Security Holders.

Unicom's annual meeting of shareholders was held on June 28, 2000. At that
meeting, each of the persons named in the table below was elected as a
director. Vote totals for each director are shown below:

Shares Shares
Nominee Voted For Withheld From
------- ----------- -------------

Edward A. Brennan..................................... 149,895,675 4,290,575
Carlos H. Cantu....................................... 149,213,506 4,972,744
James W. Compton...................................... 149,967,186 4,219,064
Bruce DeMars.......................................... 150,023,246 4,163,004
Sue L. Gin............................................ 149,950,215 4,236,035
Edgar D. Jannotta..................................... 149,967,058 4,219,192
John W. Rogers........................................ 149,981,921 4,204,329
John W. Rowe.......................................... 150,007,733 4,178,517
Richard L. Thomas..................................... 149,949,632 4,236,618

Also at the meeting, the merger agreement between Unicom and PECO was
approved. A total of 136,820,415 voted to approve the merger, 5,269,529 voted
against the merger, 1,319,724 shares abstained and 10,776,582 shares were non-
vote.

Also at the meeting, the appointment by Unicom's Board of Directors of
Arthur Andersen LLP as auditors for the year 2000 was approved. A total of
151,734,454 shares voted to approve the appointment, 993,900 shares voted
against the appointment and 1,457,896 shares abstained.

ComEd's annual meeting of shareholders was held on June 28, 2000. At that
meeting, each of the persons named in the table below was elected as a
director. Vote totals for each director are shown below:

Shares
Nominee Voted For
------- -----------

Edward A. Brennan................................................... 183,737,262
Carlos H. Cantu..................................................... 183,737,262
James W. Compton.................................................... 183,737,262
Bruce DeMars........................................................ 183,737,262
Sue L. Gin.......................................................... 183,737,262
Edgar D. Jannotta................................................... 183,737,262
John W. Rogers...................................................... 183,737,262
John W. Rowe........................................................ 183,737,262
Richard L. Thomas................................................... 183,737,262

Also at the meeting, the appointment by ComEd's Board of Directors of Arthur
Andersen LLP as auditors for the year 2000 was approved. A total of
183,737,262 shares voted to approve the appointment.

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits

Exhibit
Number Description of Exhibit
------- ------------------------------------------------------------------

(12) Statement computing Commonwealth Edison Company ratios of earnings
to fixed charges and ratios of earnings to fixed charges and
preferred and preference stock dividend requirements.
(23)-1 Consent of independent public accountants applicable to Unicom
Corporation.
(23)-2 Consent of independent public accountants applicable to
Commonwealth Edison Company.
(27)-1 Financial data schedule of Unicom Corporation.
(27)-2 Financial data schedule of Commonwealth Edison Company.

(b) Reports on Form 8-K

A Current Report on Form 8-K dated May 9, 2000 was filed by Unicom and
ComEd announcing Unicom's first quarter 2000 earnings and revised
transmission and distribution expenditures for the year 2000.

A Current Report on Form 8-K dated June 29, 2000 was filed by Unicom and
ComEd announcing Unicom's shareholders' approval of the merger between
Unicom and PECO.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on the 11th day of August 2000. The
signature for each undersigned company shall be deemed to relate only to
matters having reference to such company and its subsidiaries thereof.

Unicom Corporation
Registrant

By Robert E. Berdelle
_____________________________________
Robert E. Berdelle
Vice President and Comptroller
(Chief accounting officer and
officer duly authorized to sign on
behalf of the registrant)

Commonwealth Edison Company
Registrant