<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       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 March 31, 2000

                                       OR

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

                   For the transition period from     to

<TABLE>
<CAPTION>
 Commission
    File          Registrant; State of Incorporation;            IRS Employer
   Number            Address; and Telephone Number            Identification No.
 ----------       -----------------------------------         ------------------
 <C>        <S>                                               <C>
 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
</TABLE>

  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   3      No

Common Stock outstanding at April 30, 2000:
    Unicom Corporation                           177,783,904 shares
    Commonwealth Edison Company                  183,745,079 shares

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                              Unicom Corporation
                                      and
                          Commonwealth Edison Company

                        Quarterly Reports on Form 10-Q
                   to the Securities and Exchange Commission
                 for the Quarterly Period Ended March 31, 2000

  This document contains the Quarterly Reports on Form 10-Q for the quarterly
period ended March 31, 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
<TABLE>
<CAPTION>
                                                                          Page
                                                                          -----
<S>                                                                       <C>
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 and twelve
     months ended March 31, 2000 and 1999................................     5
    Consolidated Balance Sheets--March 31, 2000 and December 31, 1999....   6-7
    Statements of Consolidated Capitalization--March 31, 2000 and
     December 31, 1999 ..................................................     8
    Statements of Consolidated Retained Earnings for the three months and
     twelve months ended March 31, 2000 and 1999.........................     9
    Statements of Consolidated Comprehensive Income for the three months
     and twelve months ended March 31, 2000 and 1999.....................     9
    Statements of Consolidated Cash Flows for the three months and twelve
     months ended March 31, 2000 and 1999................................    10
    Notes to Financial Statements........................................ 11-40
  Management's Discussion and Analysis of Financial Condition and Results
   of Operations......................................................... 41-59
Commonwealth Edison Company and Subsidiary Companies:
  Financial Statements--
    Report of Independent Public Accountants.............................    60
    Statements of Consolidated Operations for the three months and twelve
     months ended March 31, 2000 and 1999................................    61
    Consolidated Balance Sheets--March 31, 2000 and December 31, 1999.... 62-63
    Statements of Consolidated Capitalization--March 31, 2000 and
     December 31, 1999...................................................    64
    Statements of Consolidated Retained Earnings for the three months and
     twelve months ended March 31, 2000 and 1999.........................    65
    Statements of Consolidated Comprehensive Income for the three months
     and twelve months ended March 31, 2000 and 1999.....................    65
    Statements of Consolidated Cash Flows for the three months and twelve
     months ended March 31, 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 6. Exhibits and Reports on Form 8-K...............................    74
SIGNATURES...............................................................    75
</TABLE>

                                       2
<PAGE>

                                  DEFINITIONS

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

<TABLE>
<CAPTION>
          Term                                  Meaning
 ---------------------- -------------------------------------------------------
 <C>                    <S>
 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
 ARES                   Alternative Retail Electric Suppliers
 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, 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 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 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 Enterprises
                         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
</TABLE>

                                       3
<PAGE>

                   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 March 31, 2000 and December 31, 1999, and the
related statements of consolidated operations, retained earnings,
comprehensive income and cash flows for the three-month and twelve-month
periods ended March 31, 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 and schedule 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 March 31, 2000 and December 31,
1999, and the results of their operations and their cash flows for the three-
month and twelve-month periods ended March 31, 2000 and 1999, in conformity
with accounting principles generally accepted in the United States.




                                            Arthur Andersen LLP

Chicago, Illinois
May 12, 2000

                                       4
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                     STATEMENTS OF CONSOLIDATED OPERATIONS

  The following Statements of Consolidated Operations for the three months and
twelve months ended March 31, 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.

<TABLE>
<CAPTION>
                                  Three Months Ended      Twelve Months Ended
                                       March 31                March 31
                                 ----------------------  ----------------------
                                    2000        1999        2000        1999
                                 ----------  ----------  ----------  ----------
<S>                              <C>         <C>         <C>         <C>
<CAPTION>
                                      (Thousands Except Per Share Data)
<S>                              <C>         <C>         <C>         <C>
Operating Revenues.............  $1,657,786  $1,537,804  $6,967,929  $6,977,431
                                 ----------  ----------  ----------  ----------
Operating Expenses and Taxes:
  Fuel.........................  $   99,208  $  234,834  $  861,636  $1,070,069
  Purchased power..............     226,733      71,682     706,627     646,306
  Operation and maintenance....     548,737     555,402   2,420,933   2,272,742
  Depreciation and
   amortization................     374,697     231,332     986,613     925,571
  Taxes (except income)........     138,388     132,360     514,480     624,709
  Income taxes.................      33,409      63,264     329,343     377,280
  Investment tax credits
   deferred--net ..............      (5,499)     (7,021)    (24,306)    (27,591)
                                 ----------  ----------  ----------  ----------
                                 $1,415,673  $1,281,853  $5,795,326  $5,889,086
                                 ----------  ----------  ----------  ----------
Operating Income...............  $  242,113  $  255,951  $1,172,603  $1,088,345
                                 ----------  ----------  ----------  ----------
Other Income and (Deductions):
  Interest on long-term debt,
   net of interest capitalized.  $ (134,365) $ (142,558) $ (536,984) $ (471,526)
  Interest on notes payable....        (969)     (3,952)    (15,619)    (20,392)
  Allowance for funds used
   during construction.........       5,619       4,211      23,219      17,515
  Income taxes applicable to
   nonoperating activities.....      (6,389)     (1,416)     22,110       3,747
  Provisions for dividends and
   redemption premiums--
   Preferred and preference
    stocks of ComEd............      (1,222)    (15,297)     (9,681)    (57,634)
   ComEd-obligated mandatorily
    redeemable preferred
    securities of subsidiary
    trusts holding solely
    ComEd's subordinated debt
    securities.................      (7,428)     (7,428)    (29,710)    (29,710)
  Miscellaneous--net...........      97,722       7,638      69,239      23,273
                                 ----------  ----------  ----------  ----------
                                 $  (47,032) $ (158,802) $ (477,426) $ (534,727)
                                 ----------  ----------  ----------  ----------
Net Income before Extraordinary
 Items ........................  $  195,081  $   97,149  $  695,177  $  553,618
Extraordinary Losses, less
 Applicable Income Taxes.......      (2,744)    (27,506)     (2,817)    (27,506)
                                 ----------  ----------  ----------  ----------
Net Income.....................  $  192,337  $   69,643  $  692,360  $  526,112
                                 ==========  ==========  ==========  ==========
Earnings per common share
 before extraordinary items
  Basic........................  $     1.02  $     0.45  $     3.29  $     2.55
  Diluted......................  $     1.01  $     0.45  $     3.28  $     2.55
Extraordinary losses, less
 applicable income taxes (basic
 and diluted)..................  $    (0.01) $    (0.13) $    (0.01) $    (0.13)
Earnings per common share--
  Basic........................  $     1.01  $     0.32  $     3.28  $     2.42
  Diluted......................  $     1.00  $     0.32  $     3.27  $     2.42
Cash Dividends Declared per
 Common Share..................  $     0.40  $     0.40  $     1.60  $     1.60
</TABLE>

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

                                       5
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                       March 31,   December 31,
                       ASSETS                            2000          1999
                       ------                         -----------  ------------
                                                       (Thousands of Dollars)
<S>                                                   <C>          <C>
Utility Plant:
  Plant and equipment, at original cost (includes
   construction work in progress of $768 million and
   $672 million, respectively)....................... $25,290,040  $25,007,637
  Less--Accumulated provision for depreciation.......  13,988,275   13,729,223
                                                      -----------  -----------
                                                      $11,301,765  $11,278,414
  Nuclear fuel, at amortized cost....................     797,087      843,724
                                                      -----------  -----------
                                                      $12,098,852  $12,122,138
                                                      -----------  -----------
Investments and Other Property:
  Nuclear decommissioning funds...................... $ 2,671,305  $ 2,546,540
  Subsidiary companies...............................      17,290       50,417
  Other, at cost.....................................     600,139      470,848
                                                      -----------  -----------
                                                      $ 3,288,734  $ 3,067,805
                                                      -----------  -----------
Current Assets:
  Cash and temporary cash investments................ $   652,666  $ 1,696,336
  Cash held for redemption of securities.............      64,577      285,056
  Other cash investments.............................          24           62
  Special deposits...................................   1,802,506    1,845,730
  Receivables--
    Customers........................................   1,084,066    1,224,678
    Forward share repurchase contract................         --       813,046
    Other............................................     190,191      181,532
    Provisions for uncollectible accounts............     (51,437)     (50,814)
  Coal and fuel oil, at average cost.................      17,575       15,613
  Materials and supplies, at average cost............     231,652      221,157
  Deferred income taxes related to current assets and
   liabilities.......................................      66,714       60,056
  Prepayments and other..............................      36,643       36,268
                                                      -----------  -----------
                                                      $ 4,095,177  $ 6,328,720
                                                      -----------  -----------
Deferred Charges and Other Noncurrent Assets:
  Regulatory assets.................................. $ 1,585,225  $ 1,792,907
  Other..............................................      87,902       94,463
                                                      -----------  -----------
                                                      $ 1,673,127  $ 1,887,370
                                                      -----------  -----------
                                                      $21,155,890  $23,406,033
                                                      ===========  ===========
</TABLE>

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

                                       6
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                        March 31,  December 31,
            CAPITALIZATION AND LIABILITIES                2000         1999
            ------------------------------             ----------- ------------
                                                        (Thousands of Dollars)
<S>                                                    <C>         <C>
Capitalization (see accompanying statements):
  Common stock equity................................. $ 3,932,138 $ 5,332,611
  Preferred and preference stocks of ComEd--
    Without mandatory redemption requirements.........       1,678       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......................................   6,965,357   7,129,906
                                                       ----------- -----------
                                                       $11,249,173 $12,814,307
                                                       ----------- -----------
Current Liabilities:
  Notes payable....................................... $   445,000 $     4,750
  Current portion of long-term debt, redeemable pref-
   erence stock and capitalized lease obligations of
   subsidiary companies...............................     894,498     915,439
  Accounts payable....................................     477,677     582,920
  Accrued interest....................................     124,495     146,718
  Accrued taxes.......................................     420,499   1,386,930
  Dividends payable...................................      74,940      94,090
  Customer deposits...................................      72,102      68,128
  Other...............................................     267,925     316,542
                                                       ----------- -----------
                                                       $ 2,777,136 $ 3,515,517
                                                       ----------- -----------
Deferred Credits and Other Noncurrent Liabilities:
  Deferred income taxes............................... $ 2,464,423 $ 2,484,883
  Nuclear decommissioning liability for retired
   plants.............................................   1,274,900   1,259,700
  Accumulated deferred investment tax credits.........     477,065     484,717
  Accrued spent nuclear fuel disposal fee and related
   interest...........................................     773,996     763,427
  Obligations under capital leases of subsidiary com-
   panies.............................................     132,105     161,611
  Regulatory liabilities..............................     581,963     596,157
  Other...............................................   1,425,129   1,325,714
                                                       ----------- -----------
                                                       $ 7,129,581 $ 7,076,209
                                                       ----------- -----------
Commitments and Contingent Liabilities (Note 21)
                                                       $21,155,890 $23,406,033
                                                       =========== ===========
</TABLE>

  *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.

                                       7
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   STATEMENTS OF CONSOLIDATED CAPITALIZATION

<TABLE>
<CAPTION>
                                                        March 31,   December 31,
                                                          2000          1999
                                                       -----------  ------------
                                                        (Thousands of Dollars)
<S>                                                    <C>          <C>
Common Stock Equity:
  Common stock, without par value--
   Outstanding--218,265,888 shares and 217,835,570
    shares, respectively.............................. $ 4,975,791  $ 4,971,618
  Preference stock expense of ComEd...................         (72)         (72)
  Retained earnings...................................     484,896      363,621
  Accumulated other comprehensive income..............       8,569        7,539
  Treasury stock--40,619,106 shares and 264,406
   shares, respectively...............................  (1,537,046)     (10,095)
                                                       -----------  -----------
                                                       $ 3,932,138  $ 5,332,611
                                                       -----------  -----------
Preferred and Preference Stocks of ComEd--
  Without Mandatory Redemption Requirements:
    $1.425 convertible preferred stock, cumulative,
     without par value--Outstanding--52,753 shares and
     56,291 shares, respectively...................... $     1,678  $     1,790
    Prior preferred stock, cumulative, $100 par value
     per share--
     No shares outstanding............................         --           --
                                                       -----------  -----------
                                                       $     1,678  $     1,790
                                                       -----------  -----------
  Subject to Mandatory Redemption Requirements:
    Preference stock, cumulative, without par value--
     Outstanding--700,000 shares and 700,000 shares,
      respectively.................................... $    69,475  $    69,475
    Current redemption requirements for preference
     stock included
     in current liabilities...........................     (69,475)     (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%....... $   656,000  $   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%.......   1,511,000    1,589,443
                                                       -----------  -----------
                                                       $ 3,466,400  $ 3,587,088
  Transitional trust notes, due 2001 through 2008--
   5.29% to 5.74%.....................................   2,975,033    3,070,000
  Sinking fund debentures, due 2001 through 2011--2
   7/8% to 4.75%......................................      30,857       30,866
  Pollution control obligations, due 2007 through
   2014--3.85% to 5 7/8%..............................     139,200      139,200
  Other long-term debt................................   1,088,065    1,089,347
  Deposit for retirement of long-term debt............      (4,183)         --
  Current maturities of long-term debt included in
   current liabilities................................    (684,162)    (737,615)
  Unamortized net debt discount and premium...........     (45,853)     (48,980)
                                                       -----------  -----------
                                                       $ 6,965,357  $ 7,129,906
                                                       -----------  -----------
                                                       $11,249,173  $12,814,307
                                                       -----------  -----------
</TABLE>


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

                                       8
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                  STATEMENTS OF CONSOLIDATED RETAINED EARNINGS

<TABLE>
<CAPTION>
                                           Three Months    Twelve Months Ended
                                          Ended March 31        March 31
                                         ----------------- -------------------
                                           2000     1999     2000      1999
                                         -------- -------- --------- ---------
                                                (Thousands of Dollars)
<S>                                      <C>      <C>      <C>       <C>
Balance at Beginning of Period.......... $363,621 $142,813  $124,991  $(54,207)
Add--Net income.........................  192,337   69,643   692,360   526,112
                                         -------- -------- --------- ---------
                                         $555,958 $212,456  $817,351 $ 471,905
                                         -------- -------- --------- ---------
Deduct--
   Cash dividends declared on
     common stock....................... $ 71,062 $ 86,865  $331,980  $347,287
   Other capital stock transactions--
     net................................      --       600       475      (373)
                                         -------- -------- --------- ---------
                                         $ 71,062 $ 87,465 $332 ,455 $346,914
                                         -------- -------- --------- ---------
Balance at End of Period (Includes $837
  million and $477 million of
  appropriated retained earnings at
  March 31, 2000 and 1999,
  respectively)......................... $484,896 $124,991 $484 ,896  $124,991
                                         ======== ======== ========= =========
</TABLE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                       Three Months Ended  Twelve Months Ended
                                            March 31            March 31
                                       ----------------------------------------
                                         2000       1999     2000       1999
                                       ---------  ------------------  ---------
                                               (Thousands of Dollars)
<S>                                    <C>        <C>      <C>        <C>
Net Income............................ $ 192,337  $ 69,643  $692,360   $526,112
Other Comprehensive Income
  Unrealized gains on securities...... $   1,704  $    --  $  14,175  $     --
  Income taxes on other comprehensive
   income.............................      (674)      --     (5,606)       --
                                       ---------  -------- ---------  ---------
  Other comprehensive income, net of
   tax................................ $   1,030  $    --  $   8,569  $     --
                                       ---------  -------- ---------  ---------
Comprehensive Income.................. $ 193,367  $ 69,643 $ 700,929   $526,112
                                       =========  ======== =========  =========
</TABLE>



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

                                       9
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                     STATEMENTS OF CONSOLIDATED CASH FLOWS

<TABLE>
<CAPTION>
                               Three Months  Ended      Twelve Months  Ended
                                    March 31                  March 31
                             ------------------------  ------------------------
                                2000         1999         2000         1999
                             -----------  -----------  -----------  -----------
                                         (Thousands of Dollars)
<S>                          <C>          <C>          <C>          <C>
Cash Flow from Operating
 Activities:
 Net income................  $   192,337  $    69,643  $   692,360  $   526,112
 Adjustments to reconcile
  net income to net cash
  provided by operating
  activities:
   Depreciation and
    amortization...........      407,613      246,312    1,076,425      979,162
   Deferred income taxes
    and investment tax
    credits--net...........      (37,101)     (53,656)  (1,431,809)      (8,639)
   Contribution to
    environmental trust....          --           --      (250,000)         --
   Recovery of coal reserve
    regulatory assets......          --        19,936      178,038      (10,515)
   Change in MGP
    remediation liability..          --           --        68,078          --
   Gain on forward share
    arrangements...........     (113,071)     (13,728)     (55,370)     (13,728)
   Provisions/(payments)
    for revenue refunds--
    net....................          --       (22,493)        (110)     (10,856)
   Equity component of
    allowance for funds
    used during
    construction...........       (2,751)      (1,753)      (8,787)      (7,128)
   Provisions/(payments)
    for liability for
    separation costs--net..       (8,889)      (8,780)     (62,505)      (6,448)
   Net effect on cash flows
    of changes in:
     Receivables...........      128,521      194,299       37,699     (336,548)
     Coal and fuel oil.....          555      (18,143)      19,316        3,292
     Materials and
      supplies.............      (10,456)      (4,139)     (11,519)      20,887
     Accounts payable
      excluding nuclear
      fuel lease principal
      payments and
      separation costs--
      net..................      (98,012)    (130,879)      12,983        2,373
     Accrued interest and
      taxes................     (986,873)     148,474      111,218      117,073
     Other changes in
      certain current
      assets and
      liabilities..........       49,310       27,850      145,614      154,592
   Other--net..............      110,952       87,382      (58,628)     107,914
                             -----------  -----------  -----------  -----------
                             $  (367,865) $   540,325  $   463,003  $ 1,517,543
                             -----------  -----------  -----------  -----------
Cash Flow from Investing
 Activities:
 Construction
  expenditures.............  $  (329,878) $  (231,075) $(1,301,309) $  (981,905)
 Nuclear fuel
  expenditures.............      (29,622)     (50,085)    (233,019)    (155,705)
 Sales of generating
  plants...................          --           --     4,885,720          --
 Equity component of
  allowance for funds used
  during construction......        2,751        1,753        8,787        7,128
 Contributions to nuclear
  decommissioning funds....      (39,400)     (39,426)     (89,919)     (96,120)
 Other investments and
  special deposits.........      (37,357)      (4,815)  (1,878,511)       1,073
 Plant removal costs--net..       (2,253)     (26,679)     (59,188)     (73,178)
                             -----------  -----------  -----------  -----------
                             $  (435,759) $  (350,327) $ 1,332,561  $(1,298,707)
                             -----------  -----------  -----------  -----------
Cash Flow from Financing
 Activities:
 Issuance of securities--
  Transitional trust
   notes...................  $       --   $       --   $       --   $ 3,382,629
  Other long-term debt.....          --        35,000      166,764      392,270
  Capital stock............        4,173          824       24,290       13,245
 Retirement, redemption
  and repurchase of
  securities--
  Transitional trust
   notes...................      (94,967)         --      (424,967)         --
  Other long-term debt.....     (122,012)  (1,055,655)    (497,915)  (1,304,998)
  Common stock.............     (533,702)      (3,570)    (533,702)     (10,370)
  Preferred stock..........         (113)    (544,187)     (75,166)    (578,120)
 Common stock forward
  repurchase arrangements..      (67,133)    (678,569)    (262,039)    (678,569)
 Cash dividends paid on
  common stock.............      (87,021)     (86,806)    (347,780)    (347,150)
 Proceeds from
  sale/leaseback of
  nuclear fuel.............          --           --           --        84,473
 Nuclear fuel lease
  principal payments.......          --       (53,745)    (201,657)    (277,163)
 Increase/(decrease) in
  short-term borrowings....      440,250      (72,149)     224,216     (158,836)
                             -----------  -----------  -----------  -----------
                             $  (460,525) $(2,458,857) $(1,927,956) $   517,411
                             -----------  -----------  -----------  -----------
Change in Net Cash Balance.  $(1,264,149) $(2,268,859) $  (132,392) $   736,247
Cash, Temporary Cash
 Investments and Cash Held
 for Redemption of
 Securities:
   Balance at Beginning of
    Period.................    1,981,392    3,118,494      849,635      113,388
                             -----------  -----------  -----------  -----------
   Balance at End of
    Period.................  $   717,243  $   849,635  $   717,243  $   849,635
                             ===========  ===========  ===========  ===========
</TABLE>


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

                                       10
<PAGE>

                  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 and
ComEd Funding Trust, which are SPEs, are included in the consolidated
financial statements, as required by GAAP, ComEd Funding and ComEd Funding
Trust 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
held by the SPEs are not assets of Unicom or ComEd.

  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
March 31, 2000 and December 31, 1999, respectively.

                                      11
<PAGE>

                  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 March 31, 2000 and December 31, 1999 were
as follows:

<TABLE>
<CAPTION>
                                                         March 31,  December 31,
                                                            2000        1999
                                                         ---------- ------------
                                                         (Thousands of Dollars)
<S>                                                      <C>        <C>
Regulatory assets:
 Impaired production plant(1)..........................  $  178,537  $  366,221
 Deferred income taxes (2).............................     685,327     688,946
 Nuclear decommissioning costs--Dresden Unit 1.........     193,269     202,308
 Nuclear decommissioning costs--Zion Units 1 and 2.....     490,418     496,638
 Unamortized loss on reacquired debt (3)...............      37,674      38,794
                                                         ----------  ----------
                                                         $1,585,225  $1,792,907
                                                         ==========  ==========
Regulatory liabilities:
 Deferred income taxes (2).............................  $  581,963  $  596,157
                                                         ==========  ==========
</TABLE>
--------
(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 and twelve months ended
March 31, 2000 and 1999 were as follows:

<TABLE>
<CAPTION>
                                        Three Months Ended  Twelve Months Ended
                                             March 31            March 31
                                        ------------------- -------------------
                                          2000      1999      2000      1999
                                        --------- --------- --------- ---------
                                                (Thousands of Dollars)
<S>                                     <C>       <C>       <C>       <C>
Depreciation expense................... $ 166,058 $ 177,438 $ 701,960 $ 743,601
Amortization of regulatory assets and
 liabilities--net......................   187,684    32,939   200,833    98,150
                                        --------- --------- --------- ---------
                                         $353,742  $210,377  $902,793  $841,751
Decommissioning expense................    20,955    20,955    83,820    83,820
                                        --------- --------- --------- ---------
                                         $374,697  $231,332  $986,613  $925,571
                                        ========= ========= ========= =========
</TABLE>

  The increased regulatory asset amortization recorded in the recent three-
month and twelve-month periods represents amounts calculated in accordance
with the earnings cap provisions of the 1997 Act. The increased regulatory
asset amortization was primarily recorded as a result of higher net income in
the first quarter of 2000, compared to the first quarter of 1999, before
reflecting such increased amortization.


                                      12
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued

  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 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
and twelve months ended March 31, 2000 and 1999 as follows:

<TABLE>
<CAPTION>
                                         Three Months Ended  Twelve Months Ended
                                              March 31            March 31
                                         ------------------  -------------------
                                           2000      1999      2000      1999
                                         --------- --------- --------- ---------
<S>                                      <C>       <C>       <C>       <C>
Average annual depreciation rates.......     2.69%     2.65%     2.67%     2.83%
</TABLE>

  Depreciation is provided on a straight-line basis by amortizing the cost of
depreciable plant and equipment over estimated service lives for each class of
plant. The decrease in the average depreciation rates for the twelve-month
period ended March 31, 2000, compared to the same period ended March 31, 1999,
relates primarily to a reduction in nuclear depreciation rates due to the
partial impairment of production plant, which was recorded as a component of
accumulated depreciation.

  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

                                      13
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued
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.

  Following the merger with PECO, it is anticipated that ComEd will transfer
its nuclear generating assets, including the decommissioning trust funds, to a
generation and power marketing subsidiary of Exelon ("Genco"). 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
March 31, 2000, the total decommissioning costs included in the accumulated
provision for depreciation were $2,176 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 March 31, 2000 was as follows:

<TABLE>
<CAPTION>
                                                               Zion
                                                    Dresden   Units
                                                     Unit 1  1 and 2    Total
                                                    -------- -------- ----------
                                                       (Thousands of Dollars)
<S>                                                 <C>      <C>      <C>
Amounts recovered through rates and investment
 fund earnings....................................  $117,531 $473,682 $  591,213
Unrecovered portion of the liability..............   193,269  490,418    683,687
                                                    -------- -------- ----------
 Nuclear decommissioning liability for retired
  plants..........................................  $310,800 $964,100 $1,274,900
                                                    ======== ======== ==========
</TABLE>

  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 March 31, 2000 was $2,671 million,
which includes pre-tax unrealized appreciation of $749 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
March 31, 2000 was as follows:

<TABLE>
<CAPTION>
                                                          (Thousands of Dollars)
<S>                                                       <C>
Amounts recovered through rates and investment fund
 earnings for operating plants (included in the
 accumulated provision for depreciation)................        $2,175,656
Amounts recovered through rates and investment fund
 earnings for retired plants............................           591,213
Less past accruals not yet contributed to the trusts....            95,564
                                                                ----------
 Fair value of external trust funds.....................        $2,671,305
                                                                ==========
</TABLE>

                                      14
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued

  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 utilities 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
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
before the end of 2000.

  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 March
31, 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 March 31, 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 have temporarily increased
accounts receivable from customers. Receivables from customers include $70
million and $103 million as of March 31, 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. ComEd has 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 March 31, 2000, compared to normally
expected levels. Receivables from customers as of March 31, 2000 and December
31, 1999 also include $257 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 Notes 3 and 18 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 $99 million and $89 million for the three months
ended March 31, 2000 and 1999, respectively and $391 million and $321 million
for the twelve months ended March 31, 2000 and 1999, respectively.

                                      15
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued

  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 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 8.02% for the
three months ended March 31, 2000 and 1999, respectively, and 7.87% and 8.11%
for the twelve months ended March 31, 2000 and 1999, respectively. In
accordance with SFAS No. 34, Capitalization of Interest Cost, ComEd
capitalized $16 million and $32 million for the twelve months ended March 31,
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 $151 million and $167 million for the three months ended
March 31, 2000 and 1999, respectively, and $654 million and $577 million for
the twelve months ended March 31, 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.

                                      16
<PAGE>

                  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 and twelve
months ended March 31, 2000 and 1999 were as follows:

<TABLE>
<CAPTION>
                                        Three Months Ended  Twelve Months Ended
                                             March 31            March 31
                                        ------------------- -------------------
                                          2000      1999      2000      1999
                                        --------- --------- --------- ---------
                                                 (Thousands of Shares)
<S>                                     <C>       <C>       <C>       <C>
Average Number of Common Shares
 Outstanding:
 Average Number of Common Shares--
  Basic................................   191,034   217,081   210,792   217,036
 Potentially Dilutive Common Shares--
  Treasury Method:
   Stock Options.......................       721       614       706       653
   Other Convertible Securities........        87        85        87        85
                                        --------- --------- --------- ---------
Average Number of Common Shares--
 Diluted...............................   191,842   217,780   211,585   217,774
                                        ========= ========= ========= =========
</TABLE>

  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. SFAS No. 133 requires that changes in the derivative's fair value
be recognized currently in earnings, unless specific hedge accounting criteria
are met. Special 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 Unicom and ComEd to formally document,
designate, and assess the effectiveness of transactions that receive hedge
accounting.

  The effective date of SFAS No. 133 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 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 and would need
to be reflected as derivatives under the standard and accounted for at fair
value. Among the contracts that are being 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. However, adoption of
SFAS No. 133 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.

                                      17
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued


  Cash Held for Redemption of Securities. As of March 31, 2000, the cash held
for redemption of securities reported on the Consolidated Balance Sheets
includes $65 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.

  Special Deposits. As of March 31, 2000, special deposits included $1.8
billion for cash deposited by Unicom Investments in connection with a
contemplated like-kind exchange transaction involving certain of the sold
fossil plants.

  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 and twelve months ended March 31,
2000 and 1999 was as follows:

<TABLE>
<CAPTION>
                                      Three Months Ended   Twelve Months Ended
                                           March 31             March 31
                                      -------------------  -------------------
                                        2000      1999        2000      1999
                                      --------- ---------  ---------- --------
                                              (Thousands of Dollars)
<S>                                   <C>       <C>        <C>        <C>
Supplemental Cash Flow Information:
 Cash paid during the period for:
   Interest (net of amount
    capitalized).....................  $152,148  $161,651  $  588,481 $475,122
   Income taxes (net of refunds)..... $ 950,001 $ (25,921) $1,431,102 $246,555
Supplemental Schedule of Non-Cash
 Investing and Financing Activities:
 Capital lease obligations incurred
  by subsidiary companies............ $      33 $   1,162  $      615 $ 89,537
</TABLE>

  (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 is conditioned, among other things, upon the approvals of
the shareholders of both companies and by various regulatory bodies. The
merger was approved unanimously on April 12, 2000, without conditions, by the
FERC. Aspects of the merger still must be approved by other federal and state
regulatory agencies, including the SEC, the NRC, the Federal Communications
Commission and the Pennsylvania Public Utility Commission and also by
shareholders of both companies. In Pennsylvania, a settlement has been reached
with virtually all intervenors, and the regulatory process in Illinois has
been completed. The merger is currently expected to be completed in the latter
half 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.

  Prior to the consummation of the merger, Unicom expects to repurchase
approximately $1.0 billion of its outstanding common shares. 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. The $1.0 billion additional share repurchases will be funded from
available funds, including funds resulting from the fossil plant sale. See
Note 6 for additional information.

  Following the consummation of the Merger, it is anticipated that both ComEd
and PECO will transfer their generating assets and wholesale power marketing
operations to subsidiaries. Following

                                      18
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued
those transfers, these subsidiaries will be transferred to Exelon and
ultimately will be combined into a single power generation and marketing
company ("Genco"), which will be a direct subsidiary of Exelon. In ComEd's
case, the transfer will include its Braidwood, Byron, Dresden, LaSalle and
Quad Cities generating stations (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. The proposed transfer is subject to various regulatory approvals.

  (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.

  On October 1, 1999, more than 41,000 non-residential customers became
eligible to choose a new electric supplier or elect the purchase power option.
The remainder of non-residential customers will become eligible to choose an
electric supplier or the purchase power option between June 1 and December 31,
2000. As of March 31, 2000, over 5,900 non-residential customers, representing
approximately 13 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.

                                      19
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued

  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.

  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
and beyond.

  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. The total amount of such securities that may be issued is
approximately $6.8 billion. 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

                                      20
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued
issuance costs totaling $23 million and a $17 million collateral requirement
related to the transitional trust notes. See Note 6 for additional information
regarding Unicom's share repurchases.

  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,
liability standard applicable to ComEd in the event of a major outage.

  (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.

  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, except for 17 affected employees who remain
in an extended transition program. 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. See Note 1, under "Regulatory Assets and
Liabilities," for additional information.

  (5) Authorized Shares, Voting Rights and Stock Rights of Capital Stock. At
March 31, 2000, Unicom's authorized shares consisted of 400,000,000 shares of
common stock. The authorized

                                      21
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued
shares of ComEd preferred and preference stocks at March 31, 2000 were:
preference stock--7,510,451 shares; $1.425 convertible preferred stock--52,753
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.

  (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.

  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 quarter of 2000, Unicom expended
$534 million to repurchase 14 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.

                                      22
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued

  At March 31, 2000, shares of Unicom common stock were reserved for the
following purposes:

<TABLE>
      <S>                                                              <C>
      Long-Term Incentive Plan........................................ 1,787,144
      Employee Stock Purchase Plan....................................   323,797
      Shareholder Rights Plan.........................................   400,000
      Exchange for ComEd common stock not held by Unicom..............    86,748
      1996 Directors' Fee Plan........................................   159,702
                                                                       ---------
                                                                       2,757,391
                                                                       =========
</TABLE>

  Common stock issued/(reacquired) for the three months and twelve months
ended March 31, 2000 and 1999 was as follows:
<TABLE>
<CAPTION>
                                    Three Months Ended    Twelve Months Ended
                                         March 31               March 31
                                   ---------------------  ---------------------
                                      2000        1999       2000        1999
                                   -----------  --------  -----------  --------
<S>                                <C>          <C>       <C>          <C>
Shares of Common Stock
 Issued/(Reacquired):
 Long-Term Incentive Plan........      444,619   148,813      747,307   468,828
 Employee Stock Purchase Plan....          --        --        89,500    94,270
 Exchange for ComEd common stock
  not held by Unicom.............          902    (3,749)       2,197     5,531
 1996 Directors' Fee Plan........        2,757     2,244        6,034    10,903
 Treasury Stock..................  (40,354,700)  (85,424) (40,354,700) (264,406)
                                   -----------  --------  -----------  --------
                                   (39,906,422)   61,884  (39,509,662)  315,126
                                   ===========  ========  ===========  ========
<CAPTION>
                                            (Thousands of Dollars)
<S>                                <C>          <C>       <C>          <C>
Changes in Common Stock Accounts:
 Total shares issued.............  $     4,095  $    681  $    24,704  $ 13,330
 Net cash settlement of forward
  share repurchase contract......          --    (16,454)         --    (16,454)
 Share repurchases...............   (1,526,952)   (3,295)  (1,526,952)  (10,095)
 Shares held by trustee for
  Unicom Stock Bonus Deferral
  Plan...........................          --        --           --      8,772
 Other...........................           79       145           86       (83)
                                   -----------  --------  -----------  --------
                                   $(1,522,778) $(18,923) $(1,502,162) $ (4,530)
                                   ===========  ========  ===========  ========
</TABLE>

  As of March 31, 2000 and December 31, 1999, 40,619,106 and 264,406 shares,
respectively, of Unicom common stock were reacquired and held as treasury
stock at a cost of $1,537 million and $10 million, respectively.

  At March 31, 2000 and December 31, 1999, 75,458 and 75,692, respectively, of
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.

  As of March 31, 2000 and December 31, 1999, $837 million and $716 million,
respectively, of retained earnings had been appropriated for future dividend
payments.

  (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,

                                      23
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued
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 March 31, 2000 are summarized as follows:

<TABLE>
<CAPTION>
                                                     Number of  Weighted Average
                                                      Options    Exercise Price
                                                     ---------  ----------------
<S>                                                  <C>        <C>
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............................. 1,848,050       35.750
Exercised during the year...........................  (313,231)      24.102
Expired/cancelled during year.......................  (179,076)      33.551
                                                     ---------
Outstanding as of December 31, 1999................. 4,498,636       31.719
Granted during the first quarter.................... 2,131,600       37.063
Exercised during the first quarter..................  (126,656)      26.587
Expired/cancelled during the first quarter..........   (66,794)      35.435
                                                     ---------
Outstanding as of March 31, 2000.................... 6,436,786       33.551
                                                     =========
</TABLE>

  Of the stock options outstanding at March 31, 2000, 2,191,926 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:

<TABLE>
<CAPTION>
                                                         Stock Option Grant Date
                                                         -----------------------
                                                          2000    1999    1998
                                                         ------- ------- -------
<S>                                                      <C>     <C>     <C>
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%
</TABLE>

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

  The ESPP allows 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 are eligible to participate in the ESPP. Unicom
issued 89,500 and 94,270 shares of common stock for the twelve months ended
March 31, 2000 and 1999, respectively, under the ESPP at a weighted average
annual purchase price of $33.58 and $33.11, respectively.

  Unicom has adopted the disclosure-only provisions of SFAS No. 123. For
financial reporting purposes, Unicom has adopted 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 March 31, 2000 and 1999,
respectively.

                                      24
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued

  (8) ComEd Preferred and Preference Stocks Without Mandatory Redemption
Requirements. During the twelve months ended March 31, 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 series other than Series $1.425 have been redeemed.

  The outstanding shares of ComEd's $1.425 convertible preferred stock are
convertible at the option of the holders thereof, at any time, into common
stock of ComEd at the rate of 1.02 shares of common stock for each share of
convertible preferred stock, subject to future adjustment. The convertible
preferred stock may be redeemed by ComEd at $42 per share, plus accrued and
unpaid dividends, if any. The involuntary liquidation price of the $1.425
convertible preferred stock is $31.80 per share, plus accrued and unpaid
dividends, if any.

  (9) ComEd Preference Stock Subject to Mandatory Redemption
Requirements. During the twelve months ended March 31, 2000 and 1999, no
shares of ComEd preference stock subject to mandatory redemption requirements
were issued. During the twelve months ended March 31, 2000 and 1999, no shares
and 1,358,560 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. The sinking fund price was $100 and the involuntary
liquidation price was $99.25 per share, plus accrued and unpaid dividends, if
any. The $69 million is included in current liabilities.

  (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.

  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

                                      25
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued
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:

<TABLE>
<CAPTION>
              Series                                         Principal Amount
      ------------------------                            ----------------------
                                                          (Thousands of Dollars)
      <S>                                                 <C>
      5.29% due June 25, 2001............................       $  425,033
      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
                                                                ----------
                                                                $2,975,033
                                                                ==========
</TABLE>

  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 March 31, 2000, after
deducting deposits made for the retirement of sinking fund debentures, are
summarized as follows: 2000--$589 million; 2001--$346 million; 2002--$645
million; 2003--$445 million; and 2004--$577 million.

                                      26
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                    NOTES TO FINANCIAL STATEMENTS--Continued

  At March 31, 2000, ComEd's outstanding first mortgage bonds maturing through
2004 were as follows:

<TABLE>
<CAPTION>
                   Series                                    Principal Amount
      --------------------------------                    ----------------------
                                                          (Thousands of Dollars)
      <S>                                                 <C>
      6 1/2% due April 15, 2000..........................        $230,000
      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
                                                                 --------
                                                                 $656,000
                                                                 ========
</TABLE>

  On April 15, 2000, ComEd redeemed $230 million of first mortgage bonds.

  Other long-term debt outstanding at March 31, 2000 is summarized as follows:

<TABLE>
<CAPTION>
                                          Principal
              Debt Security                 Amount                 Interest Rate
----------------------------------------  ---------- ------------------------------------------
                                          (Thousands
                                              of
                                           Dollars)
<S>                                       <C>        <C>
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                        $  120,000 Interest rate of 7.38%
 Northwind Midway Guaranteed Senior Note
  due June 30, 2023                           11,523 Interest rate of 7.68%
 Unicom Mechanical Services Notes
  due various dates through October 31,
  2002                                            44 Interest rate ranging from 2.90% to 9.40%
                                          ----------
Total Unicom Enterprises                  $  131,567
                                          ----------
Total Unicom                              $1,088,065
                                          ==========
</TABLE>


                                       27
<PAGE>

                  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.

  In July 1998, Unicom Thermal issued a $120 million 7.38% unsecured
guaranteed senior Note due May 2012, the proceeds of which were used to
refinance existing debt. The Note is guaranteed by Unicom and includes certain
covenants with respect to Unicom and Unicom Thermal's operations. Such
covenants include, among other things, (i) a requirement that Unicom and its
consolidated subsidiaries maintain a tangible net worth at least $10 million
greater than that of ComEd and its consolidated subsidiaries, (ii) a
requirement that Unicom's consolidated debt to consolidated capitalization not
exceed 0.65 to 1, (iii) restrictions on the indebtedness for borrowed money
that Unicom Thermal may incur, and (iv) a requirement that Unicom own,
directly or indirectly, 51% of the outstanding stock of Unicom Thermal and at
least 80% of the outstanding stock of ComEd.

  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. 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 March 31, 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 has a $400 million credit facility which will expire
December 15, 2000 of which $77 million was unused as of March 31, 2000. The
credit facility can be 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 is
guaranteed by Unicom and includes certain covenants with respect to Unicom and
Unicom Enterprises' operations. Such covenants include, among other things,
(i) a requirement that Unicom and its consolidated subsidiaries maintain a
tangible net worth at least $3.5 million over that of ComEd and its
consolidated subsidiaries, (ii) a requirement that Unicom's consolidated debt
to consolidated capitalization not exceed 0.65 to 1, (iii) restrictions on the
indebtedness for borrowed money that Unicom (excluding ComEd) and Unicom
Enterprises may incur, and (iv) a requirement that Unicom own 100% of the
outstanding stock of Unicom Enterprises and at least 80% of the outstanding
stock of ComEd; and provide that Unicom may not declare or pay dividends
during the continuance of an event of default. Interest rates for borrowings
under the credit facility are set at the time of a borrowing and are based on
either a prime interest rate or a floating rate bank index plus a spread which
varies with the credit rating of ComEd's outstanding first mortgage bonds.
Unicom Enterprises is obligated to pay commitment fees with respect to the
unused portion of such lines of credit.

  (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

                                      28
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued
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 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 March 31, 2000 and
December 31, 1999 was as follows:

<TABLE>
<CAPTION>
                                  March 31, 2000                 December 31, 1999
                         -------------------------------- --------------------------------
                                    Unrealized                       Unrealized
                                      Gains/                           Gains/
                         Cost Basis  (Losses)  Fair Value Cost Basis  (Losses)  Fair Value
                         ---------- ---------- ---------- ---------- ---------- ----------
                                              (Thousands of Dollars)
<S>                      <C>        <C>        <C>        <C>        <C>        <C>
Short-term investments.. $   57,558  $     81  $   57,639 $   41,362  $     95  $   41,457
U.S. Government and
 Agency issues..........    231,589     6,375     237,964    245,399    (1,993)    243,406
Municipal bonds.........    388,112     6,132     394,244    383,816      (940)    382,876
Corporate bonds.........    217,617    (5,760)    211,857    196,942    (5,699)    191,243
Common stock............    897,855   744,338   1,642,193    832,802   732,893   1,565,695
Other...................    129,174    (1,766)    127,408    125,072    (3,209)    121,863
                         ----------  --------  ---------- ----------  --------  ----------
                         $1,921,905  $749,400  $2,671,305 $1,825,393  $721,147  $2,546,540
                         ==========  ========  ========== ==========  ========  ==========
</TABLE>

  At March 31, 2000, the debt securities held by the nuclear decommissioning
funds had the following maturities:
<TABLE>
<CAPTION>
                                                           Cost Basis Fair Value
                                                           ---------- ----------
                                                               (Thousands of
                                                                 Dollars)
      <S>                                                  <C>        <C>
      Within 1 year.......................................  $ 37,917   $ 38,228
      1 through 5 years...................................   264,273    263,651
      5 through 10 years..................................   265,245    264,445
      Over 10 years.......................................   410,870    412,100
</TABLE>

                                      29
<PAGE>

                  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 and twelve
months ended March 31, 2000 and 1999 were as follows:
<TABLE>
<CAPTION>
                                       Three Months Ended   Twelve Months Ended
                                            March 31             March 31
                                       ------------------- ---------------------
                                         2000      1999       2000       1999
                                       --------- --------- ---------- ----------
                                                (Thousands of Dollars)
<S>                                    <C>       <C>       <C>        <C>
Gross proceeds from sales of securi-
 ties................................   $531,996 $ 385,688 $1,911,309 $1,753,169
Less cost based on specific identifi-
 cation..............................    493,238   382,027  1,829,363  1,715,785
                                       --------- --------- ---------- ----------
Realized gains on sales of securi-
 ties................................  $  38,758 $   3,661 $   81,946 $   37,384
Other realized fund earnings, net of
 expenses............................     18,353    10,574     70,705     47,337
                                       --------- --------- ---------- ----------
Total realized net earnings of the
 funds...............................  $  57,111 $  14,235 $  152,651 $   84,721
Unrealized gains.....................     28,253    50,278     79,485    126,743
                                       --------- --------- ---------- ----------
 Total net earnings of the funds.....  $  85,364 $  64,513 $  232,136 $  211,464
                                       ========= ========= ========== ==========
</TABLE>

  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 March 31, 2000 was as follows:

<TABLE>
<CAPTION>
                                                      Cost   Unrealized  Fair
                                                      Basis     Gain     Value
                                                     ------- ---------- -------
                                                       (Thousands of Dollars)
<S>                                                  <C>     <C>        <C>
Short-term investments.............................. $   198  $   --    $   198
Registered investment companies.....................  21,735   14,175    35,910
                                                     -------  -------   -------
                                                     $21,933  $14,175   $36,108
                                                     =======  =======   =======
</TABLE>

  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 March 31, 2000 and December 31, 1999 were as follows:

<TABLE>
<CAPTION>
                                  March 31, 2000                  December 31, 1999
                         --------------------------------- ---------------------------------
                                    Unrealized                        Unrealized
                          Carrying    Gains/                Carrying    Gains/       Fair
                           Value     (Losses)   Fair Value   Value     (Losses)     Value
                         ---------- ----------  ---------- ---------- ----------  ----------
                                              (Thousands of Dollars)
<S>                      <C>        <C>         <C>        <C>        <C>         <C>
ComEd preferred and
 preference stocks...... $   71,153 $      75   $   71,228 $   71,265 $      58   $   71,323
ComEd-obligated
 mandatorily redeemable
 preferred securities of
 subsidiary trusts
 holding solely ComEd's
 subordinated debt
 securities............. $  350,000 $ (15,798)  $  334,202 $  350,000 $ (10,595)  $  339,405
Transitional trust
 notes.................. $2,963,030 $(149,007)  $2,814,023 $3,057,112 $(163,600)  $2,893,512
Long-term debt.......... $4,690,418 $  13,357   $4,703,775 $4,810,108 $ (23,136)  $4,786,972
</TABLE>

                                      30
<PAGE>

                  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
March 31, 2000 and December 31, 1999; therefore, the carrying value is equal
to the fair value.

  (15) Pension and Postretirement Benefits. As of March 31, 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 March 31, 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 March 31,
2000 and December 31, 1999 postretirement benefit liabilities and related data
were determined using the January 1, 1999 actuarial valuations.

                                      31
<PAGE>

                  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 three months ended
March 31, 2000 and twelve months ended December 31, 1999 were as follows:

<TABLE>
<CAPTION>
                          Three Months Ended March      Twelve Months Ended
                                  31, 2000              December  31, 1999
                          -------------------------- --------------------------
                                          Other                      Other
                           Pension    Postretirement  Pension    Postretirement
                           Benefits      Benefits     Benefits      Benefits
                          ----------  -------------- ----------  --------------
                                        (Thousands of Dollars)
Change in benefit
obligation
-----------------
<S>                       <C>         <C>            <C>         <C>
Benefit obligation at
 beginning of period....  $4,094,000    $1,151,000   $4,326,000    $1,236,000
Service cost............      21,000         8,000      120,000        41,000
Interest cost...........      77,000        22,000      285,000        82,000
Plan participants' con-
 tributions.............         --          1,000          --          4,000
Actuarial loss/(gain)...       3,000        (1,000)    (458,000)     (188,000)
Benefits paid...........     (65,000)      (13,000)    (241,000)      (51,000)
Special termination ben-
 efits..................         --            --        62,000        27,000
                          ----------    ----------   ----------    ----------
 Benefit obligation at
  end of period.........  $4,130,000    $1,168,000   $4,094,000    $1,151,000
                          ----------    ----------   ----------    ----------
<CAPTION>
Change in plan assets
---------------------
<S>                       <C>         <C>            <C>         <C>
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.................     131,000        24,000      491,000       106,000
Employer contribution...         --            --         3,000        24,000
Plan participants' con-
 tributions.............         --          1,000          --          4,000
Benefits paid...........     (65,000)      (13,000)    (241,000)      (51,000)
                          ----------    ----------   ----------    ----------
 Fair value of plan as-
  sets at end of period.  $4,334,000    $  960,000   $4,268,000    $  948,000
                          ----------    ----------   ----------    ----------
Plan assets
 greater/(less) than
 benefit obligation.....  $  204,000    $ (208,000)  $  174,000    $ (203,000)
Unrecognized net actuar-
 ial gain...............    (549,000)     (554,000)    (522,000)     (556,000)
Unrecognized prior serv-
 ice cost/(asset).......     (50,000)       40,000      (51,000)       41,000
Unrecognized transition
 obligation/(asset).....     (76,000)      271,000      (79,000)      276,000
                          ----------    ----------   ----------    ----------
 Accrued liability for
  benefits..............  $ (471,000)   $ (451,000)  $ (478,000)   $ (442,000)
                          ==========    ==========   ==========    ==========
</TABLE>

  The assumed discount rate used to determine the benefit obligation as of
March 31, 2000 and December 31, 1999 was 7.75%. The fair value of plan assets
excludes $27 million and $25 million held in grantor trust as of March 31,
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 March 31,
2000 and December 31, 1999 for the payment of postretirement medical benefits.

                                      32
<PAGE>

                  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 and twelve months ended March 31, 2000 were as follows:

<TABLE>
<CAPTION>
                                   Three Months Ended    Twelve Months Ended
                                        March 31               March 31
                                   --------------------  ---------------------
                                     2000       1999       2000        1999
                                   ---------  ---------  ---------  ----------
                                            (Thousands of Dollars)
<S>                                <C>        <C>        <C>        <C>
Pension Benefit Costs
---------------------
Service cost.....................  $  21,000  $  31,000  $ 110,000  $  115,000
Interest cost on projected bene-
 fit obligation..................     77,000     71,000    291,000     274,000
Expected return on plan assets...    (98,000)   (90,000)  (370,000)   (346,000)
Amortization of transition asset.     (3,000)    (3,000)   (13,000)    (12,000)
Amortization of prior service as-
 set.............................     (1,000)    (1,000)    (4,000)     (4,000)
Recognized loss/(gain)...........     (1,000)     1,000      1,000       3,000
Curtailment loss.................        --         --      16,000         --
                                   ---------  ---------  ---------  ----------
 Net periodic benefit cost.......  $  (5,000) $   9,000  $  31,000  $   30,000
                                   =========  =========  =========  ==========
Other Postretirement Benefit
 Costs
----------------------------
Service cost.....................  $   8,000  $  10,000   $ 39,000  $   39,000
Interest cost on accumulated ben-
 efit obligation.................     22,000     21,000     83,000      80,000
Expected return on plan assets...    (21,000)   (19,000)   (78,000)    (71,000)
Amortization of transition obli-
 gation..........................      5,000      6,000     21,000      23,000
Amortization of prior service
 cost............................      1,000      1,000      4,000       4,000
Recognized gain..................     (6,000)    (3,000)   (17,000)    (12,000)
Severance plan cost..............        --         --       1,000       5,000
Curtailment loss.................        --         --      35,000         --
                                   ---------  ---------  ---------  ----------
 Net periodic benefit cost.......  $   9,000  $  16,000  $  88,000  $   68,000
                                   =========  =========  =========  ==========
</TABLE>

  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:

<TABLE>
<CAPTION>
                                                                     Other
                                                                Postretirement
                                             Pension Benefits       Benefits
                                             ----------------- -----------------
                                             2000  1999  1998  2000  1999  1998
                                             ----- ----- ----- ----- ----- -----
<S>                                          <C>   <C>   <C>   <C>   <C>   <C>
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%   --    --    --
</TABLE>

  The pension and other postretirement benefit curtailment losses for the
twelve months ended March 31, 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

                                      33
<PAGE>

                  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:

<TABLE>
<CAPTION>
                                                    1 Percentage   1 Percentage
                                                   Point Increase Point Decrease
                                                   -------------- --------------
                                                      (Thousands of Dollars)
<S>                                                <C>            <C>
Effect on total annual service and interest cost
 components......................................     $ 23,000      $ (18,000)
Effect on postretirement benefit obligation as of
 March 31, 2000..................................      195,000       (155,000)
</TABLE>

  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 $7 million for
the three months ended March 31, 2000 and 1999, and $32 million and
$31 million for the twelve months ended March 31, 2000 and 1999, respectively.

  (16) Separation Plan Costs. O&M expenses included $3 million and $0.3
million for the three months ended March 31, 2000 and 1999, respectively, and
$12 million and $33 million for the twelve months ended March 31, 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 $2 million (after-tax), or $0.01 per common share (diluted) and
$0.2 million (after-tax), or less than $0.01 per common share (dilutive) for
the three months ended March 31, 2000 and 1999, respectively, and $7 million
(after-tax), or $0.04 per common share (diluted), and $20 million (after-tax),
or $0.09 per common share (diluted), for the twelve months ended March 31,
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 March 31, 2000 and December 31, 1999 were as follows:

<TABLE>
<CAPTION>
                                                        March 31,   December 31,
                                                           2000         1999
                                                        ----------  ------------
                                                        (Thousands of Dollars)
<S>                                                     <C>         <C>
Deferred income tax liabilities:
 Accelerated cost recovery and liberalized deprecia-
  tion, net of removal costs..........................  $2,723,915   $2,815,972
 Overheads capitalized................................     157,101      159,836
 Repair allowance.....................................     218,674      221,502
 Regulatory assets recoverable through future rates...     685,327      688,946
Deferred income tax assets:
 Postretirement benefits..............................    (377,790)    (376,538)
 Unamortized investment tax credits...................    (159,420)    (161,756)
 Regulatory liabilities to be settled through future
  rates...............................................    (581,963)    (596,157)
 Nuclear plant closure................................      (5,454)      (5,456)
 Other--net...........................................    (262,681)    (321,522)
                                                        ----------   ----------
Net deferred income tax liability.....................  $2,397,709   $2,424,827
                                                        ==========   ==========
</TABLE>

  The $27 million decrease in the net deferred income tax liability from
December 31, 1999 to March 31, 2000 is comprised of a $40 million credit to
net deferred income tax expense, a $11 million increase in regulatory assets
net of regulatory liabilities pertaining to income taxes for the period, and
$2 million related to other items. The amount of accelerated cost recovery and
liberalized depreciation included in deferred income tax liabilities for both
periods includes amounts related to the regulatory

                                      34
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued
asset for impaired production plant. The amount of regulatory assets included
in deferred income tax liabilities primarily relates to the equity component
of AFUDC which is recorded on an after-tax basis, the borrowed funds component
of AFUDC which was previously recorded net of tax and other temporary
differences for which the related tax effects were not previously recorded.
The amount of other regulatory liabilities included in deferred income tax
assets primarily relates to deferred income taxes provided at rates in excess
of the current statutory rate.

  The components of net income tax expense charged to continuing operations
for the three months and twelve months ended March 31, 2000 and 1999 were as
follows:

<TABLE>
<CAPTION>
                                   Three Months Ended    Twelve Months Ended
                                        March 31               March 31
                                   --------------------  ---------------------
                                     2000       1999        2000        1999
                                   ---------  ---------  -----------  --------
                                            (Thousands of Dollars)
<S>                                <C>        <C>        <C>          <C>
Operating income:
 Current income taxes............  $  74,779  $ 108,879  $ 1,728,182  $367,363
 Deferred income taxes...........    (41,370)   (45,615)  (1,398,839)    9,917
 Investment tax credits de-
  ferred--net....................     (5,499)    (7,021)     (24,306)  (27,591)
Other (income) and deductions:
 Current income taxes............     (4,952)     2,668       (6,998)  (10,496)
 Deferred income taxes...........     13,632        837       36,838   13,546
 Investment tax credits..........     (2,153)    (1,828)     (52,064)   (6,463)
                                   ---------  ---------  -----------  --------
Net income taxes charged to con-
 tinuing operations..............  $  34,437  $  57,920  $   282,813  $346,276
                                   =========  =========  ===========  ========
</TABLE>

  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 and twelve months ended March 31, 2000
and 1999:

<TABLE>
<CAPTION>
                                     Three Months Ended    Twelve Months Ended
                                          March 31              March 31
                                     --------------------  --------------------
                                       2000       1999       2000       1999
                                     ---------  ---------  ---------  ---------
                                             (Thousands of Dollars)
<S>                                  <C>        <C>        <C>        <C>
Net income before extraordinary
 items.............................  $ 195,081  $  97,149  $ 695,177   $553,618
Net income taxes charged to contin-
 uing operations...................     34,437     57,920    282,813    346,276
Provision for dividends on ComEd
 preferred and preference stocks...      1,222     15,297      9,681     57,634
                                     ---------  ---------  ---------  ---------
Pre-tax income before extraordinary
 items and provision for dividends.   $230,740  $ 170,366  $ 987,671   $957,528
                                     =========  =========  =========  =========
Effective income tax rate..........       14.9%      34.0%      28.6%      36.2%
                                     =========  =========  =========  =========
</TABLE>

  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 and twelve months ended March 31, 2000 and 1999 were as
follows:

<TABLE>
<CAPTION>
                                      Three Months Ended   Twelve Months Ended
                                           March 31             March 31
                                      -------------------- --------------------
                                        2000       1999      2000       1999
                                      ---------  --------- ---------  ---------
                                              (Thousands of Dollars)
<S>                                   <C>        <C>       <C>        <C>
Federal income taxes computed at
 statutory rate.....................  $  80,759  $ 59,628  $ 345,685  $ 335,135
Amortization of investment tax
 credits, net of deferred income
 taxes..............................     (5,235)   (5,711)   (47,740)   (22,006)
State income taxes, net of federal
 income taxes.......................      4,090     7,910     42,075     42,932
Net gain on forward share repurchase
 contract...........................    (39,575)   (4,805)   (19,380)    (4,805)
Earnings on non-tax qualified
 decommissioning fund...............        406       --      (8,509)       --
Differences between book and tax
 accounting, primarily property-
 related deductions.................     (6,008)      898    (29,318)    (4,980)
                                      ---------  --------  ---------  ---------
Net income taxes charged to
 continuing operations..............  $  34,437  $ 57,920  $ 282,813  $ 346,276
                                      =========  ========  =========  =========
</TABLE>


                                      35
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued
  (18) Taxes, Except Income Taxes. Provisions for taxes, except income taxes,
for the three months and twelve months ended March 31, 2000 and 1999 were as
follows:

<TABLE>
<CAPTION>
                                          Three Months     Twelve Months Ended
                                         Ended March 31         March 31
                                        ------------------ --------------------
                                          2000      1999     2000       1999
                                        --------  -------- ---------  ---------
                                               (Thousands of Dollars)
<S>                                     <C>       <C>      <C>        <C>
Illinois public utility revenue........ $ (3,685) $  1,495 $  (4,199) $  70,295
Illinois electricity distribution tax..   25,603    28,337   111,507    111,644
Municipal utility gross receipts.......   27,450    24,758   102,392    138,453
Real estate............................   36,066    33,394   117,880    123,424
Municipal compensation.................   22,273    18,471    77,150     79,653
Energy assistance and renewable energy
 charge................................    8,799     8,669    34,553     33,841
Other--net.............................   21,882    17,236    75,197     67,399
                                        --------  -------- ---------  ---------
                                        $138,388  $132,360 $ 514,480  $ 624,709
                                        ========  ======== =========  =========
</TABLE>

  The 1997 Act changed the nature of several state and municipal taxes that
are collected through customer billings. Before August 1998, the utility taxes
were assessed against the utility. Effective August 1998, the utility taxes
are assessed on the electric consumer rather than the utility. Accordingly,
ComEd records the collections as liabilities and no longer records the taxes
collected through billings as revenues and tax expense. The reduction in
operating revenues and taxes, except income taxes, due to the change in
presentation for such taxes was approximately $82 million for the twelve
months ended March 31, 2000 compared to the same period ended March 31, 1999.
This change in presentation for such taxes did not have an effect on
operations.

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

  (19) Lease Obligations of Subsidiary Companies. Under its nuclear fuel lease
arrangement, ComEd may sell and lease back nuclear fuel from a lessor who may
borrow an aggregate of $267 million, consisting of intermediate term notes, to
finance the transactions. With respect to the intermediate term notes, $75
million expires on November 23, 2000, $40 million expires on November 23,
2001, $77 million expires on November 23, 2002 and $75 million expires on
November 23, 2003. At March 31, 2000, ComEd's obligation to the lessor for
leased nuclear fuel amounted to approximately $270 million. ComEd has agreed
to make lease payments which cover the amortization of the nuclear fuel used
in ComEd's reactors plus the lessor's related financing costs. ComEd has an
obligation for spent nuclear fuel disposal costs of leased nuclear fuel.

  As of March 31, 2000, future minimum rental payments, net of executory
costs, for capital leases are estimated to aggregate to $298 million,
including $124 million in 2000, $94 million in 2001, $48 million in 2002 and
$32 million in 2003. The estimated interest component of such rental payments
aggregates $27 million. The estimated portions of obligations due within one
year under capital leases of $141 million and $108 million at March 31, 2000
and December 31, 1999, respectively, were included in current liabilities on
the Consolidated Balance Sheets.

  Future minimum rental payments at December 31, 1999 for operating leases are
estimated to aggregate to $279 million, including $21 million in 2000, $25
million in 2001, $25 million in 2002, $23 million in 2003, $22 million in 2004
and $163 million in 2005-2043.

                                      36
<PAGE>

                  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 $28 million at March 31, 2000.

  (21) Commitments and Contingent Liabilities. Purchase commitments,
principally related to construction, nuclear fuel, and coal in support of
certain power purchase agreements approximated $651 million at March 31, 2000,
comprised of $594 million for ComEd, $10 million for UT Holdings, $16 million
for Unicom Energy Services and $31 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 $33 million for primary property damage, $29
million for excess property damage and $10 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 $934 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

                                      37
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued
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.

  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 has filed a
motion challenging the legal sufficiency of the consolidated complaints. The
plaintiff's response is overdue and the motion to dismiss is currently
scheduled to be argued on May 23, 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 of five reports on Phase II and Phase III, focusing
on the transmission and distribution system, is anticipated in late spring.
The investigation is expected to conclude by early 2001.

  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

                                      38
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued
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 current best estimate of its cost of former MGP site
investigation and remediation is $93 million in current-year (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 $182 million. 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. ComEd's current estimate of
its costs of former MGP site investigation and remediation of $93 million is
included in other noncurrent liabilities on the Consolidated Balance Sheets as
of March 31, 2000. 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
March 31, 2000 and December 31, 1999, a reserve of $8 million 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 environment remediation costs.

  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

                                      39
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued
penalties, totaled approximately $53 million as of March 31, 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.

  The 1997 Act also committed ComEd to spend at least $2 billion from 1999
through 2004 on transmission and distribution facilities outside of the City.

  (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. Prior to 1999, unregulated business operations were
predominately in a developmental stage and did not meet the revenue, asset or
net income criteria for a reportable segment under SFAS 131. However, 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 $1.82 billion at March 31, 2000 representing
special deposits and unused cash proceeds resulting from the fossil plant
sale.

                                      40
<PAGE>

                  UNICOM CORPORATION AND SUBSIDIARY COMPANIES

                    NOTES TO FINANCIAL STATEMENTS--Continued

  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:

<TABLE>
<CAPTION>
                              Three Months Ended        Twelve Months Ended
                                   March 31                  March 31
                            ------------------------  ------------------------
                               2000         1999         2000         1999
                            -----------  -----------  -----------  -----------
                                        (Thousands of Dollars)
<S>                         <C>          <C>          <C>          <C>
Operating Revenue:
 Electric Utility.........  $ 1,549,868  $ 1,528,484  $ 6,778,841  $ 6,949,332
 Unregulated Businesses...      107,918        9,320      189,088       28,099
 Intersegment Revenue.....       10,976          316       37,335        5,734
 Elimination..............      (10,976)        (316)     (37,335)      (5,734)
                            -----------  -----------  -----------  -----------
Consolidated Unicom.......  $ 1,657,786  $ 1,537,804  $ 6,967,929  $ 6,977,431
                            ===========  ===========  ===========  ===========
Depreciation, Amortization
 and Decommissioning:
 Electric Utility.........  $   372,016  $   229,769  $   978,392  $   919,614
 Unregulated Businesses...        2,681        1,563        8,221        5,957
                            -----------  -----------  -----------  -----------
Consolidated Unicom.......  $   374,697  $   231,332  $   986,613  $   925,571
                            ===========  ===========  ===========  ===========
Interest and Dividend
 Income:
 Electric Utility.........  $    67,360  $    17,647  $   108,864  $    33,054
 Unregulated Businesses...       41,378          854       50,010        4,213
 Elimination..............      (54,326)        (291)     (64,840)      (1,088)
                            -----------  -----------  -----------  -----------
Consolidated Unicom.......  $    54,412  $    18,210  $    94,034  $    36,179
                            ===========  ===========  ===========  ===========
Interest Expense--Net:
 Electric Utility.........  $   130,060  $   142,511  $   532,901  $   477,110
 Unregulated Businesses...       59,600        4,290       84,542       15,896
 Elimination..............      (54,326)        (291)     (64,840)      (1,088)
                            -----------  -----------  -----------  -----------
Consolidated Unicom.......  $   135,334  $   146,510  $   552,603  $   491,918
                            ===========  ===========  ===========  ===========
Income Tax
 Expense/(Benefit):
 Electric Utility.........  $    50,999  $    70,579  $   332,640  $   404,845
 Unregulated Businesses...      (11,201)      (5,899)     (25,407)     (31,312)
                            -----------  -----------  -----------  -----------
Consolidated Unicom.......  $    39,798  $    64,680  $   307,233  $   373,533
                            ===========  ===========  ===========  ===========
Net Income:
 Electric Utility.........  $   206,326  $    94,401  $   734,654  $   616,774
 Unregulated Businesses...      (13,989)     (24,758)     (42,294)     (90,662)
                            -----------  -----------  -----------  -----------
Consolidated Unicom.......  $   192,337  $    69,643  $   692,360  $   526,112
                            ===========  ===========  ===========  ===========
Total Assets:
 Electric Utility.........  $20,943,770  $23,693,693  $20,943,770  $23,693,693
 Unregulated Businesses...    3,472,796    1,085,269    3,472,796    1,085,269
 Elimination..............   (3,260,676)    (789,433)  (3,260,676)    (789,433)
                            -----------  -----------  -----------  -----------
Consolidated Unicom.......  $21,155,890  $23,989,529  $21,155,890  $23,989,529
                            ===========  ===========  ===========  ===========
Capital Expenditures:
 Electric Utility.........  $   260,619  $   228,416  $ 1,115,601  $   960,059
 Unregulated Businesses...       69,259        2,659      185,708       21,846
                            -----------  -----------  -----------  -----------
Consolidated Unicom.......  $   329,878  $   231,075  $ 1,301,309  $   981,905
                            ===========  ===========  ===========  ===========
</TABLE>

                                       41
<PAGE>

                    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

                                      42
<PAGE>

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.

  On October 1, 1999, more than 41,000 non-residential customers became
eligible to choose a new electric supplier or elect the purchase power option.
The remainder of the non-residential customers will become eligible to choose
an electric supplier or the purchase power option between June 1 and
December 31, 2000. As of March 31, 2000, over 5,900 non-residential customers,
representing approximately 13 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 1997 Act committed ComEd to spend at least $2 billion during the period
1999 through 2004 on transmission and distribution facilities outside of the
City and to contribute $250 million to an environmental trust, as a result of
closing of the fossil plant sale.

  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.

  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 for ComEd 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

                                      43
<PAGE>

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 and
beyond.

  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. The total amount of such securities that may be issued is
approximately $6.8 billion. 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

                                      44
<PAGE>

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 is conditioned, among other things, upon the approvals of
the shareholders of both companies and by various regulatory bodies. The
merger was approved unanimously on April 12, 2000, without conditions, by the
FERC. Aspects of the merger still must be approved by other federal and state
regulatory agencies, including the SEC, the NRC, the Federal Communications
Commission and the Pennsylvania Public Utility Commission and also by
shareholders of both companies. In Pennsylvania, a settlement has been reached
with virtually all intervenors, and the regulatory process in Illinois has
been completed. The merger is currently expected to be completed in the latter
half 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.

  Prior to the consummation of the merger, Unicom expects to repurchase
approximately $1.0 billion of its outstanding common shares. These share
repurchases are in addition to 26.3 million shares

                                      45
<PAGE>

of Unicom common stock that Unicom repurchased in January 2000 upon settlement
of certain forward purchase contracts. The $1.0 billion additional share
repurchases will be funded from available funds, including funds resulting
from the fossil plant sale. See Note 6 of Notes to Financial Statements for
additional information.

  Following the consummation of the merger, it is anticipated that both ComEd
and PECO will transfer their generating assets and wholesale power marketing
operations to subsidiaries. Following those transfers, these subsidiaries will
be transferred to Exelon and ultimately will be combined into a single power
generation and marketing company ("Genco"), which will be a direct subsidiary
of Exelon. In ComEd's case, the transfer will include its Braidwood, Byron,
Dresden, LaSalle and Quad Cities generating stations (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 and Zion Station, 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. The
proposed transfer is subject to various regulatory approvals.

  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.

  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

                                      46
<PAGE>

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, except for 17 affected
employees who remain in an extended transition program. 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 has a construction program for the year 2000,
which consists principally of improvements to its existing nuclear production,
transmission and distribution facilities. The program, as currently approved
by ComEd, includes the following estimated expenditures (excluding nuclear
fuel expenditures of approximately $260 million).
<TABLE>
<CAPTION>
                                                             2000
                                                            ------
                                                                (Millions
                                                               of Dollars)
   <S>                                                      <C>    <C> <C> <C>
   Nuclear................................................. $  215
   Transmission and Distribution...........................    650
   General.................................................    167
                                                            ------
                                                            $1,032
                                                            ======
</TABLE>

  The construction program above reflects an evaluation of the expenditures
required to support ComEd's intensive efforts to improve the reliability of
its transmission and distribution systems following record peak demand levels
and system outages experienced during the summer of 1999. ComEd is currently
evaluating its construction programs for the years 2001 and 2002. The results
of this planning process cannot be determined at this time but expenditures
for the transmission and distribution program are expected to trend downward
from 2000 expenditure levels.

  ComEd's forecasts of peak load for its traditional service territory
indicate a need for additional resources to meet demand, through generating
capacity, equivalent purchased power and/or the development of additional
demand-side management resources, in 2000 and each year thereafter for the
foreseeable future. ComEd believes that adequate resources, including cost-
effective demand-side management resources, nonutility generation resources,
power purchases and generation resources from ARES, can be obtained in
sufficient quantities to meet such forecasted needs. See "Unregulated
Operations," subcaption "Construction Program" below, for additional
information.

  Purchase commitments for ComEd, principally related to construction, nuclear
fuel and coal in support of certain power purchase agreements approximated
$594 million at March 31, 2000. In addition, ComEd's estimated commitments for
expected capacity payments and fixed charges related to power purchase
agreements were as follows:

                                      47
<PAGE>

<TABLE>
<CAPTION>
                                               Commitments(1)
           Period                               ($Millions)
           ------                              --------------
           <S>                                 <C>
           2000...............................     $  748
           2001...............................        616
           2002...............................        474
           2003-2004..........................        703
           2005-2012..........................      1,039
                                                   ------
                                                   $3,580
                                                   ======
</TABLE>
     --------
     (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 ComEd's
outstanding short-term debt by $500 million. In 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 preference stock. Unicom has also expended
$1,104 million to repurchase 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
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.

  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 quarter of 2000, Unicom expended
$534 million to repurchase 14 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.

  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.

                                      48
<PAGE>

  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
March 31, 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 and twelve months ended March 31,
2000 and 1999.

  As of May 15, 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:

<TABLE>
<CAPTION>
                                                                Standard Duff &
                                                        Moody's & Poor's Phelps
                                                        ------- -------- ------
<S>                                                     <C>     <C>      <C>
First mortgage and secured pollution control bonds.....  Baa1     BBB+    A-
Publicly-held debentures and unsecured pollution con-
 trol 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     D-1
</TABLE>

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

<TABLE>
<CAPTION>
                                                                 Standard Duff &
                                                         Moody's & Poor's Phelps
                                                         ------- -------- ------
      <S>                                                <C>     <C>      <C>
      Transitional trust notes..........................   Aaa     AAA     AAA
</TABLE>

  All three agencies raised their ratings for ComEd in 1999: 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 59.4% at March 31, 2000 from 55.2% at December 31, 1999,
primarily due to the repurchase of common stock in the first quarter of 2000.
As of March 31, 2000 and December 31, 1999, $837 million and $716 million,
respectively, of retained earnings had been appropriated for Unicom'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 March 31,
2000 were adversely affected by increased labor and overtime costs incurred to
address the billing issues, and by increased charges for uncollectible

                                      49
<PAGE>

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 twelve months ended March 31,
1999 and positively affected in twelve months ended March 31, 2000 as a result
of the billing delays experienced due to implementation. Receivables from
customers as of March 31, 2000 and December 31, 1999 include $70 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.

  Year 2000 Conversion. Unicom successfully completed the transition to the
Year 2000 as systems performed without interruption during the rollover from
December 31, 1999 to January 1, 2000 and the rollover from February 28, 2000
to February 29, 2000.

  In addition to 12/31/99, other key Year 2000 dates that Unicom has completed
without Year 2000 problems are 1/1/99, 4/9/99 (99th day of 1999), 8/21/99
(Global Positioning System rollover), and 9/9/99.

  Unicom depends upon third parties, including customers, suppliers,
government agencies and financial institutions, to reliably deliver its
products and services. Unicom completed an analysis of the Year 2000 readiness
programs of its critical vendors and obtained Year 2000 warranties in certain
new contracts and licenses. Unicom also has introduced protocols for assuring
that software and embedded systems remain Year 2000 ready on a continuing
basis. Even though mission critical products and services of the Unicom supply
chain are Year 2000 ready, contingency plans were developed to prevent or
mitigate interruptions caused by Unicom suppliers.

  Unicom has expended approximately $37 million as of April 30, 2000 for
external labor, hardware and software costs, and for the costs of Unicom
employees who are dedicated full-time to the Year 2000 project. All of such
costs were expensed as incurred. The foregoing amounts do not include the cost
of new software applications installed as a result of strategic replacement
projects. Such replacement projects were not accelerated because of Year 2000
issues. Unicom expects to incur minimal expenditures for final project wrap-up
activities.

  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

                                      50
<PAGE>

estimated March 31, 2000 fair value of the forward contracts, including
options, for the purchase and sale of energy for the years 2000 through 2007,
was approximately $(75) 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 March 31, 2000 fair value of
the forward energy contracts for the years 2000-2007 by approximately $130
million, of which approximately $75 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 March 31, 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 Power Holdings, another subsidiary of Unicom Enterprises, is
developing certain generation and cogeneration projects.

  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 an unregulated retail energy supplier.

  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 in the City
and the surrounding area through various subsidiaries.

  Construction Program and Purchase Commitments. Unicom Enterprises has
approved construction expenditures of $200 million for its unregulated
operations 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.

                                      51
<PAGE>

  Unicom Enterprises' construction expenditures also include the purchase of
approximately 440 MW of combustion turbine generators and auxiliary equipment
by Unicom Power Holdings. Such generators will either be sold or placed into
cogeneration or other peaking applications. Unicom Power Holdings is
evaluating the costs and economics of such alternatives. Unicom Power Holdings
anticipates that the equipment purchases will cost approximately $165 million,
of which approximately $134 million has been incurred as of March 31, 2000.
Unicom Power Holdings may incur significant additional costs to site and
install such power generation equipment.

  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, for additional
information.

  Unicom Enterprises has an unused $400 million credit facility which will
expire December 15, 2000 of which $77 million was unused as of March 31, 2000.
The credit facility can be 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 is
guaranteed by Unicom and includes certain covenants with respect to Unicom and
Unicom Enterprises' operations. Interest rates for borrowings under the credit
facility are set at the time of a borrowing and are based on either a prime
interest rate or a floating rate bank index plus a spread which varies with
the credit rating of ComEd's outstanding first mortgage bonds. See Note 12 of
Notes to Financial Statements for additional information regarding certain
covenants with respect to Unicom and Unicom Enterprises' operations.

  In July 1998, Unicom Thermal issued a $120 million 7.38% unsecured
guaranteed senior Note due May 2012, the proceeds of which were used to
refinance existing debt. The Note is guaranteed by Unicom and includes 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, 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.

                                      52
<PAGE>

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. See "Changes in the Electric Utility Industry,"
subcaption "Response to Regulatory Changes" above, for information regarding
ComEd's permanent cessation of nuclear generation operations at its Zion
Station.

  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.

  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. See Note 1 of Notes to
Financial Statements, under "Depreciation, Amortization of Regulatory Assets
and Liabilities, and Decommissioning," for additional information regarding
decommissioning costs.

                                      53
<PAGE>

  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 March 31, 2000 and 1999 were as follows:

<TABLE>
<CAPTION>
                                       Three  Months Ended Twelve  Months Ended
                                            March 31             March 31
                                       ------------------- ---------------------
                                         2000      1999       2000       1999
                                       --------- --------- ---------- ----------
<S>                                    <C>       <C>       <C>        <C>
Basic Earnings per Common Share....... $    1.01 $    0.32 $     3.28 $     2.42
                                       ========= ========= ========== ==========
Diluted Earnings per Common Share..... $    1.00 $    0.32 $     3.27 $     2.42
                                       ========= ========= ========== ==========
</TABLE>

  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.
All EPS computations shown below reflect the impact on Unicom's diluted EPS.

  Net Income for the Three Months Ended March 31, 2000. The increase in
Unicom's net income in the recent three-month period reflects, among other
factors, ComEd's increased energy sales, lower operating costs under the
structure of the PPAs entered into upon the sale of ComEd's fleet of fossil
stations, improved nuclear operating performance, and lower financing costs.
Earnings for the quarter were positively impacted by approximately $0.30 per
common share due to reduced operation and maintenance, fuel, depreciation and
property tax expenses, as a result of the December 1999 sale of the fossil
stations, partially offset by costs of related PPAs entered into with Midwest
Generation. On an annualized basis, the costs of the PPAs in 2000 are expected
to approximate the costs associated with owning and operating the fossil
stations in 1999; however, the PPAs shift a significant portion of the costs
to the summer months. Two non-operating items, a gain on the settlement of the
forward share repurchase arrangements ($113 million, after-tax) and a loss on
the sale of uranium-related properties ($22 million, after-tax), were offset
by increased regulatory asset amortization.

  Net Income for the Twelve Months Ended March 31, 2000. The increase in
earnings for the twelve-month period was primarily due to increased
kilowatthour sales, lower energy costs, the sale of ComEd's fleet of fossil
stations, lower taxes other than income taxes, partially offset by the 15%
residential base rate reduction which became effective August 1, 1998,
increased regulatory asset amortization 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.
Revenues have also been reduced by a change in presentation for certain
utility taxes. The 1997 Act changed the nature of several state and municipal
taxes that are collected through customer billings. Before August 1998, the
utility taxes were assessed against the utility. Effective August 1998, the
utility taxes are assessed on the electric consumer rather than the utility.
Accordingly, ComEd records the collections as liabilities and no

                                      54
<PAGE>

longer records the taxes collected through billing as revenues and tax
expense. The change in presentation for utility taxes did not have an effect
on results of operations. 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 $31 million for the three months ended
March 31, 2000, compared to the three months ended March 31, 1999, primarily
due to an $87 million increase in off-system sales offset by a $56 million
reduction in sales to retail customers and other revenues. ComEd's operating
revenues decreased $157 million for the twelve months ended March 31, 2000,
compared to the twelve months ended March 31, 1999. The decrease is due to
various factors, including lower revenues from customers electing to purchase
energy from a RES or electing the purchase power option, the approximately
$142 million impact of the 15% residential base rate reduction that took
effect August 1, 1998 and a reduction in revenue taxes of approximately $112
million principally due to the change in presentation for certain state and
municipal taxes, partially offset by an $197 million increase in off-system
sales.

  Unicom's unregulated businesses' operating revenues increased $89 million
and $148 million in the three months and twelve months ended March 31, 2000,
respectively, compared to the three months and twelve months ended March 31,
1999. The increase is primarily due to increased revenues related to
performance contracting and district cooling services and the acquisition of
new businesses in 1999.

  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 and the availability and cost of power from other
utilities. 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:

<TABLE>
<CAPTION>
                                Three Months Ended                  Twelve Months Ended
                          ----------------------------------  ----------------------------------
                          March 31, 2000    March 31, 1999    March 31, 2000    March 31, 1999
                          ----------------  ----------------  ----------------  ----------------
                                     Cost              Cost               Cost              Cost
                           Energy     per    Energy     per     Energy    per     Energy    per
                            Costs     Kwh     Costs     Kwh     Costs     Kwh     Costs     Kwh
                          ---------  -----  ---------  -----  ----------  ----  ----------  ----
                           (000's)           (000's)           (000's)           (000's)
<S>                       <C>        <C>    <C>        <C>    <C>         <C>   <C>         <C>
Cost of energy:
Fuel
 Nuclear................  $  99,208   0.50c $  88,535   0.51c $  391,162  0.51c $  320,612  0.52c
 Coal...................        --     --     132,185   2.41     393,711  2.21     631,043  2.60
 Oil....................        --     --         920   3.93       6,934  5.68       8,835  6.65
 Natural gas............        --     --      13,194   3.36      69,829  3.20     109,579  3.07
Purchased power.........    226,733   2.76     71,682   3.67     706,627  3.97     646,306  4.63
                          ---------         ---------         ----------        ----------
 Total..................  $ 325,941   1.16c $ 306,516   1.22c $1,568,263  1.37c $1,716,375  1.66c
                          =========         =========         ==========        ==========
Electricity available
 for sale:
 (millions of
  kilowatthours)
 Generation--net........     19,810            23,160             96,334            89,135
 Purchased power........      8,203             1,953             17,811            13,972
                          ---------         ---------         ----------        ----------
 Total available for
  sale..................     28,013            25,113            114,145           103,107
                          =========         =========         ==========        ==========
Sources of kilowatthour
 available for sale:
Fuel
 Nuclear................         71%               69%                67%               59%
 Coal...................        --                 22                 15                24
 Oil....................        --                --                 --                --
 Natural gas............        --                  1                  2                 3
Purchased power.........         29                 8                 16                14
                          ---------         ---------         ----------        ----------
                                100%              100%               100%              100%
                          =========         =========         ==========        ==========
</TABLE>

                                      55
<PAGE>

  Higher energy costs for the three months ended March 31, 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 will be
offset by lower depreciation and O&M expenses. Lower energy costs for the
twelve months ended March 31, 2000 are primarily due to the continued
improvement in ComEd's nuclear operations. The overall nuclear capacity factor
was 92% for the twelve months ended March 31, 2000, compared to 74% for the
same period ended March 31, 1999. Net generation includes 20,090,296
megawatthours, 5,909,270 megawatthours and 27,995,426 megawatthours for the
twelve months ended March 31, 2000, and the three and twelve months ended
March 31, 1999, respectively, for ComEd's fossil stations sold in December
1999. 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. Two major components of such
expenses, however, are the costs associated with operating and maintaining
ComEd's 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 and twelve months ended March 31, 2000, the
aggregate level of O&M expenses decreased 1% and increased 7%, respectively,
compared to the same periods ended March 31, 1999.

  O&M expenses associated with nuclear generating stations decreased $36
million and $105 million during the three months and twelve months ended March
31, 2000, respectively, compared to the same periods ended March 31, 1999. The
decreases in the recent three-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 ended March 31, 1999 and
$154 million and $256 million for the twelve months ended March 31, 2000 and
March 31, 1999, respectively.

  O&M expenses associated with ComEd's transmission and distribution system
increased $29 million and $95 million for the three months and twelve months
ended March 31, 2000, respectively, compared to the same periods ended March
31, 1999. The increases for the recent three-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 increased $6 million and $41 million for the three
months and twelve months ended March 31, 2000, respectively, compared to the
same periods ended March 31, 1999. The increase in the recent three-month
period was primarily due to increased 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
beginning in July 1998.

                                      56
<PAGE>

  O&M expenses for the twelve months ended March 31, 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 March 31, 1999. O&M expenses for the twelve months ended March 31, 2000
also reflect increased charges of $35 million 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 $3 million
for the three months ended March 31, 2000 and $12 million and $33 million for
the twelve months ended March 31, 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 $4 million
and $9 million for the three months and twelve months ended March 31, 2000,
respectively, compared to the same periods ended March 31, 1999. The decreases
for the recent three-month and twelve-month periods was primarily due to a
reduction in medical costs for active and retired employees.

  O&M expenses included a $25 million charge for the three months and twelve
months ended March 31, 1999 as a result of a franchise related settlement
agreement between ComEd and the City.

  O&M expenses associated with certain administrative and general costs
increased $4 million and $9 million for the three months and twelve months
ended March 31, 2000, respectively, compared to the same periods ended
March 31, 1999. The increases in the recent three-month and twelve-month
periods were due to a variety of reasons, including additional expenses
incurred in connection with the merger.

  O&M expenses associated with Unicom's unregulated businesses increased $84
million and $149 million for the three months and twelve months ended March
31, 2000, respectively, compared to the same periods ended March 31, 1999. The
increase is primarily related to their increased level of operation and the
acquisition of new businesses.

  Depreciation, Amortization and Decommissioning. Depreciation, amortization
and decommissioning expense increased $143 million and $61 million for the
three months and twelve months ended March 31, 2000, respectively, compared to
the same periods ended March 31, 1999. The increased regulatory asset
amortization recorded in the recent three-month and twelve-month periods
represents amounts calculated in accordance with the earnings cap provisions
of the 1997 Act. The increased regulatory asset amortization was primarily
recorded as a result of higher net income in the first quarter of 2000,
compared to the first quarter of 1999, before reflecting such increased
amortization. Amounts for the twelve months ended March 31, 2000 include a
reduction of $88 million related to the December 1999 fossil plant sale.
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 March 31, 2000. See Note 1
of Notes to Financial Statements, under "Depreciation, Amortization of
Regulatory Assets and Liabilities, and Decommissioning," for additional
information.

                                      57
<PAGE>

  Interest on Debt. Changes in interest on long-term debt and notes payable
for the years 1999, 1998 and 1997 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:

<TABLE>
<CAPTION>
                                     Three Months Ended    Twelve Months Ended
                                          March 31              March 31
                                     --------------------  --------------------
                                       2000       1999       2000       1999
                                     ---------  ---------  ---------  ---------
<S>                                  <C>        <C>        <C>        <C>
Long-term debt outstanding:
 Average amount (millions).........  $   7,612  $   8,489  $   7,885  $   6,609
 Average interest rate.............       6.77%      6.81%      6.76%      7.39%
Notes payable outstanding:
 Average amount (millions).........  $      62  $     221  $     280  $     346
 Average interest rate.............       6.29%      7.25%      5.58%      5.89%
</TABLE>

  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 $16 million and $32 million for the twelve
months ended March 31, 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
March 31, 2000 and December 31, 1999 were 2.65 and 2.45, respectively. ComEd's
ratios of earnings to fixed charges and preferred and preference stock
dividend requirements for the twelve months ended March 31, 2000 and December
31, 1999 were 2.59 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

                                      58
<PAGE>

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
risks and uncertainties relating to Year 2000 issues set forth in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," subcaption "Liquidity and Capital Resources--UTILITY OPERATIONS--
Year 2000 Conversion," including Unicom's dependence upon the Year 2000
readiness of third parties with whom it has significant business relationships
and the estimated costs for final project wrap-up activities, (7) 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, (8) statements regarding estimates of
claims resulting from the summer of 1999 outages set forth in Note 21 of Notes
to Financial Statements and (9) 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, cleanup costs
and Year 2000 wrap-up 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 expectations for Year 2000 readiness are also subject to the risk
that Year 2000 remediation efforts of other parties with whom Unicom has
significant business relationships are not successful. 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.

                                      59
<PAGE>

                   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 March 31, 2000 and December 31,
1999, and the related statements of consolidated operations, retained
earnings, comprehensive income and cash flows for the three-month and twelve-
month periods ended March 31, 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
Commonwealth Edison Company and subsidiary companies as of March 31, 2000 and
December 31, 1999, and the results of their operations and their cash flows
for the three-month and twelve-month periods ended March 31, 2000 and 1999, in
conformity with accounting principles generally accepted in the United States.


                                            Arthur Andersen LLP
Chicago, Illinois
May 12, 2000

                                      60
<PAGE>

             COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

                     STATEMENTS OF CONSOLIDATED OPERATIONS

  The following Statements of Consolidated Operations for the three months and
twelve months ended March 31, 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.

<TABLE>
<CAPTION>
                           Three Months Ended      Twelve Months Ended
                                March 31                March 31
                          ----------------------  ----------------------
                             2000        1999        2000        1999
                          ----------  ----------  ----------  ----------
                                        (Thousands of Dollars)
<S>                       <C>         <C>         <C>         <C>         <C> <C>
Electric Operating Reve-
 nues...................  $1,559,815  $1,528,800  $6,797,907  $6,955,066
                          ----------  ----------  ----------  ----------
Electric Operating Ex-
 penses and Taxes:
 Fuel...................  $   99,208  $  234,834  $  861,636  $1,070,069
 Purchased power........     226,733      71,682     706,627     646,306
 Operation..............     293,450     321,386   1,513,499   1,434,741
 Maintenance............     159,552     222,587     711,275     791,090
 Depreciation and amor-
  tization..............     372,016     229,769     978,392     919,614
 Taxes (except income)..     136,823     131,618     511,531     621,802
 Income taxes--
   Current--Federal.....      72,117      95,710   1,443,400     340,747
   --State..............      15,553      20,674     310,592      64,188
   Deferred--Federal--
    net.................     (35,991)    (39,019) (1,152,381)     (1,242)
   --State--net.........      (7,069)     (8,202)   (246,861)      4,899
   Investment tax cred-
    its deferred--net...      (5,499)     (7,021)    (24,306)    (27,591)
                          ----------  ----------  ----------  ----------
                          $1,326,893  $1,274,018  $5,613,404  $5,864,623
                          ----------  ----------  ----------  ----------
Electric Operating In-
 come...................  $  232,922  $  254,782  $1,184,503  $1,090,443
                          ----------  ----------  ----------  ----------
Other Income and (Deduc-
 tions):
 Interest on long-term
  debt, net of interest
  capitalized...........  $ (129,091) $ (138,559) $ (517,282) $ (456,718)
 Interest on notes pay-
  able..................        (969)     (3,952)    (15,619)    (20,392)
 Allowance for funds
  used during construc-
  tion..................       5,619       4,211      23,219      17,515
 Income taxes applicable
  to nonoperating
  activities............      (6,389)     (1,416)     22,110       3,747
 Provision for dividends
  on company-obligated
  mandatorily redeemable
  preferred securities
  of subsidiary trusts
  holding solely the
  Company's subordinated
  debt securities.......      (7,428)    (7,428)     (29,710)    (29,710)
 Miscellaneous--net.....     114,406      14,269      70,250      39,395
                          ----------  ----------  ----------  ----------
                          $  (23,852) $ (132,875) $ (447,032) $ (446,163)
                          ----------  ----------  ----------  ----------
Net Income before
 Extraordinary Item.....  $  209,070  $  121,907  $  737,471  $  644,280
Extraordinary Loss, less
 Applicable Income
 Taxes..................      (2,744)    (27,506)     (2,817)    (27,506)
                          ----------  ----------  ----------  ----------
Net Income..............  $  206,326  $   94,401  $  734,654  $  616,774
Provision for Dividends
 on Preferred and
 Preference Stocks......       1,222      15,297       9,681      57,634
                          ----------  ----------  ----------  ----------
Net Income on Common
 Stock..................  $  205,104  $   79,104  $  724,973  $  559,140
                          ==========  ==========  ==========  ==========
</TABLE>

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

                                      61
<PAGE>

              COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                       March 31,   December 31,
                                                         2000          1999
                                                      -----------  ------------
                                                       (Thousands of Dollars)
                       ASSETS
                       ------
<S>                                                   <C>          <C>
Utility Plant:
  Plant and equipment, at original cost (includes
   construction work in progress of $740 million and
   $653 million, respectively)....................... $25,290,040  $25,007,637
  Less--Accumulated provision for depreciation.......  13,988,275   13,729,223
                                                      -----------  -----------
                                                      $11,301,765  $11,278,414
  Nuclear fuel, at amortized cost....................     797,087      843,724
                                                      -----------  -----------
                                                      $12,098,852  $12,122,138
                                                      -----------  -----------
Investments:
  Nuclear decommissioning funds...................... $ 2,671,305  $ 2,546,540
  Subsidiary companies...............................      49,500       77,061
  Other investments, at cost.........................      65,398       63,702
                                                      -----------  -----------
                                                      $ 2,786,203  $ 2,687,303
                                                      -----------  -----------
Current Assets:
  Cash and temporary cash investments................ $   428,732  $ 1,254,868
  Cash held for redemption of securities.............      64,577      285,056
  Special deposits...................................       2,506       45,730
  Receivables--
    Customers........................................     998,116    1,183,505
    Forward share repurchase contract................         --       813,046
    Other............................................     429,794      422,837
    Provisions for uncollectible accounts............     (49,875)     (49,344)
  Coal and fuel oil, at average cost.................      15,843       14,222
  Materials and supplies, at average cost............     231,045      220,398
  Deferred income taxes related to current assets and
   liabilities.......................................      61,400       54,796
  Prepayments and other..............................      22,598       30,539
                                                      -----------  -----------
                                                      $ 2,204,736  $ 4,275,653
                                                      -----------  -----------
Deferred Charges and Other Noncurrent Assets:
  Note receivable from affiliate..................... $ 2,208,324  $ 2,208,956
  Regulatory assets..................................   1,585,225    1,792,907
  Other..............................................      60,430       73,308
                                                      -----------  -----------
                                                      $ 3,853,979  $ 4,075,171
                                                      -----------  -----------
                                                      $20,943,770  $23,160,265
                                                      ===========  ===========
</TABLE>

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

                                       62
<PAGE>

             COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                     March 31,   December 31,
          CAPITALIZATION AND LIABILITIES               2000        1999
          ------------------------------            ----------- -----------
                                                    (Thousands of Dollars)
<S>                                                 <C>         <C>         <C>
Capitalization (see accompanying statements):
  Common stock equity.............................  $ 4,289,248 $ 5,302,915
  Preferred and preference stocks without
   mandatory redemption requirements..............        8,655       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..................................    6,800,066   6,962,448
                                                    ----------- -----------
                                                    $11,447,969 $12,624,131
                                                    ----------- -----------
Current Liabilities:
  Notes payable...................................  $   122,000 $     4,750
  Current portion of long-term debt, redeemable
   preference stock and capitalized lease
   obligations....................................      888,028     909,900
  Accounts payable................................      388,136     545,329
  Accrued interest................................      126,473     147,044
  Accrued taxes...................................      456,449   1,409,626
  Dividends payable...............................       77,376      92,656
  Customer deposits...............................       72,102      68,128
  Other...........................................      257,821     307,040
                                                    ----------- -----------
                                                    $ 2,388,385 $ 3,484,473
                                                    ----------- -----------
Deferred Credits and Other Noncurrent Liabilities:
  Deferred income taxes...........................  $ 2,433,984 $ 2,456,447
  Nuclear decommissioning liability for retired
   plants.........................................    1,274,900   1,259,700
  Accumulated deferred investment tax credits.....      477,065     484,717
  Accrued spent nuclear fuel disposal fee and re-
   lated interest.................................      773,995     763,427
  Obligations under capital leases................      132,099     161,602
  Regulatory liabilities..........................      581,963     596,157
  Other...........................................    1,433,410   1,329,611
                                                    ----------- -----------
                                                    $ 7,107,416 $ 7,051,661
                                                    ----------- -----------
Commitments and Contingent Liabilities (Note 21)
                                                    $20,943,770 $23,160,265
                                                    =========== ===========
</TABLE>

  *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.

                                      63
<PAGE>

              COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

                   STATEMENTS OF CONSOLIDATED CAPITALIZATION

<TABLE>
<CAPTION>
                                                  March 31,    December 31,
                                                    2000           1999
                                                 -----------  ----------------
                                                 (Thousands of Dollars)
<S>                                              <C>          <C>          <C>
Common Stock Equity:
  Common stock, $12.50 par value per share--
   Outstanding--214,241,890 shares and
    213,973,810 shares, respectively...........  $ 2,678,041  $ 2,677,995
  Premium on common stock and other paid-in
   capital.....................................    2,207,353    2,207,287
  Capital stock and warrant expense............      (12,537)     (12,537)
  Retained earnings............................      564,608      433,001
  Other comprehensive income...................        8,569        7,539
  Treasury stock--30,497,107 shares and 264,406
   shares, respectively........................   (1,156,786)     (10,370)
                                                 -----------  -----------
                                                 $ 4,289,248  $ 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................................  $     6,977  $     6,978
  $1.425 convertible preferred stock, cumula-
   tive, without par value--
   Outstanding--52,753 shares and 56,291
    shares, respectively.......................        1,678        1,790
                                                 -----------  -----------
                                                 $     8,655  $     8,768
                                                 -----------  -----------
Preference Stock Subject to Mandatory
 Redemption Requirements:
  Preference stock, cumulative, without par
   value--
   Outstanding--700,000 shares and 700,000
    shares, respectively.......................  $    69,475  $    69,475
  Current redemption requirements for
   preference stock included in current
   liabilities.................................      (69,475)     (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%......................................  $   656,000  $   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%......................................    1,511,000    1,589,443
                                                 -----------  -----------
                                                 $ 3,466,400  $ 3,587,088
  Transitional trust notes, due 2001 through
   2008--5.29% to 5.74%........................    2,975,033    3,070,000
  Sinking fund debentures, due 2001 through
   2011--2 7/8% to 4.75%.......................       30,857       30,866
  Pollution control obligations, due 2007
   through 2014--3.85% to 5 7/8%...............      139,200      139,200
  Other long-term debt.........................      916,303      916,351
  Deposit for retirement of long-term debt.....       (4,183)         --
  Current maturities of long-term debt included
   in current liabilities......................     (677,691)    (732,077)
  Unamortized net debt discount and premium....      (45,853)     (48,980)
                                                 -----------  -----------
                                                 $ 6,800,066  $ 6,962,448
                                                 -----------  -----------
                                                 $11,447,969  $12,624,131
                                                 ===========  ===========
</TABLE>


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

                                       64
<PAGE>

              COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

                  STATEMENTS OF CONSOLIDATED RETAINED EARNINGS

<TABLE>
<CAPTION>
                                     Three Months Ended   Twelve Months Ended
                                          March 31             March 31
                                     -------------------- --------------------
                                       2000       1999      2000       1999
                                     ---------  --------- ---------  ---------
                                             (Thousands of Dollars)
<S>                                  <C>        <C>       <C>        <C>
Balance at Beginning of Period...... $ 433,001  $ 176,643 $ 169,578  $ (47,579)
Add--Net income.....................   206,326     94,401   734,654    616,774
                                     ---------  --------- ---------  ---------
                                     $ 639,327  $ 271,044 $ 904,232  $ 569,195
                                     ---------  --------- ---------  ---------
Deduct--
   Dividends declared on--
    Common stock.................... $  73,497  $  85,589 $ 330,194  $ 342,672
    Preferred and preference stocks.     1,222      3,042     6,711     43,815
   Preferred stock redemption
    premiums........................       --       9,984       --       9,984
   Other capital stock
    transactions--net...............       --       2,851     2,719      3,146
                                     ---------  --------- ---------  ---------
                                     $  74,719  $ 101,466 $ 339,624  $ 399,617
                                     ---------  --------- ---------  ---------
Balance at End of Period (Includes
 $985 million and $586 million of
 appropriated retained earnings at
 March 31, 2000 and 1999,
 respectively)...................... $ 564,608  $ 169,578 $ 564,608  $ 169,578
                                     =========  ========= =========  =========

              COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

                STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

<CAPTION>
                                     Three Months Ended   Twelve Months Ended
                                          March 31             March 31
                                     -------------------- --------------------
                                       2000       1999      2000       1999
                                     ---------  --------- ---------  ---------
                                             (Thousands of Dollars)
<S>                                  <C>        <C>       <C>        <C>
Net Income.......................... $ 206,326  $  94,401 $ 734,654  $ 616,774
Other Comprehensive Income
  Unrealized gains on securities.... $   1,704  $     --  $  14,175  $     --
  Income taxes on other
   comprehensive income.............      (674)       --     (5,606)       --
                                     ---------  --------- ---------  ---------
  Other comprehensive income, net of
   tax.............................. $   1,030  $     --  $   8,569  $     --
                                     ---------  --------- ---------  ---------
Comprehensive Income................ $ 207,356  $  94,401 $ 743,223  $ 616,774
                                     =========  ========= =========  =========
</TABLE>


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

                                       65
<PAGE>

              COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

                     STATEMENTS OF CONSOLIDATED CASH FLOWS

<TABLE>
<CAPTION>
                               Three Months Ended        Twelve Months Ended
                                    March 31                  March 31
                             ------------------------  ------------------------
                                2000         1999         2000         1999
                             -----------  -----------  -----------  -----------
                                         (Thousands of Dollars)
<S>                          <C>          <C>          <C>          <C>
Cash Flow from Operating
 Activities:
 Net income................  $   206,326  $    94,401  $   734,654  $   616,774
 Adjustments to reconcile
  net income (loss) to net
  cash provided by
  operating activities:
   Depreciation and amorti-
    zation.................      405,439      244,748    1,069,185      973,175
   Deferred income taxes
    and investment tax
    credits--net...........      (38,790)     (55,261)  (1,435,440)     (16,965)
   Contribution to environ-
    mental trust...........          --           --      (250,000)         --
   Recovery of coal reserve
    regulatory assets......                    19,936      178,038      (10,515)
   Change in MGP
    remediation liability..          --           --        68,078          --
   Gain on forward share
    arrangements...........     (113,071)     (13,728)     (55,370)     (13,728)
   Provisions/(payments)
    for revenue refunds--
    net....................          --       (22,493)        (110)     (10,856)
   Equity component of al-
    lowance for funds used
    during construction....       (2,751)      (1,753)      (8,787)      (7,128)
   Provisions/(payments)
    for liability for sepa-
    ration costs--net......       (8,889)      (8,780)     (62,505)      (6,448)
   Net effect on cash flows
    of changes in:
     Receivables...........      178,963      203,057      117,084     (330,163)
     Coal and fuel oil.....       (1,621)     (18,270)      18,208        3,615
     Materials and sup-
      plies................      (10,647)      (4,140)     (13,664)      22,118
     Accounts payable ex-
      cluding nuclear fuel
      lease principal pay-
      ments and separation
      costs--net...........     (148,304)    (137,549)     (68,373)      (3,610)
     Accrued interest and
      taxes................     (971,953)     155,064      113,958      124,138
     Other changes in cer-
      tain current assets
      and liabilities......       47,649       27,764      144,310      152,247
   Other--net..............      106,404       87,712       21,842      154,543
                             -----------  -----------  -----------  -----------
                             $  (351,245) $   570,708  $   571,108  $ 1,647,197
                             -----------  -----------  -----------  -----------
Cash Flow from Investing
Activities:
 Construction expendi-
  tures....................  $  (260,619) $  (228,416) $(1,115,601) $  (960,059)
 Nuclear fuel expendi-
  tures....................      (29,622)     (50,085)    (233,019)    (155,705)
 Proceeds from fossil
  plant sale...............          632          --     2,435,720          --
 Equity component of al-
  lowance for funds used
  during construction......        2,751        1,753        8,787        7,128
 Contributions to nuclear
  decommissioning funds....      (39,400)     (39,426)     (89,919)     (96,120)
 Other investments and
  special deposits.........       49,329         (288)      12,410         (602)
 Plant removal costs--net..       (2,253)     (26,679)     (59,188)     (73,178)
                             -----------  -----------  -----------  -----------
                             $  (279,182) $  (343,141) $   959,190  $(1,278,536)
                             -----------  -----------  -----------  -----------
Cash Flow from Financing
Activities:
 Issuance of securities--
   Transitional trust
    notes..................  $       --   $       --   $       --   $ 3,382,629
   Other long-term debt....          --           --           --       222,068
   Capital stock...........          112            6          183          117
 Retirement, redemption
  and repurchase of secu-
  rities--
   Transitional trust
    notes..................      (94,967)         --      (424,967)         --
   Other long-term debt....     (120,743)  (1,053,080)    (267,646)  (1,187,221)
   Common stock............     (153,164)      (3,570)    (153,164)     (10,370)
   Preferred stock.........         (113)    (544,187)     (68,189)    (578,120)
 Common stock forward re-
  purchase arrangements....      (67,135)    (678,569)    (262,116)    (678,569)
 Cash dividends paid on
  capital stock............      (97,428)    (108,793)    (380,526)    (427,806)
 Proceeds from
  sale/leaseback of nu-
  clear fuel...............          --           --           --        84,473
 Nuclear fuel lease prin-
  cipal payments...........          --       (53,745)    (201,657)    (277,163)
 Increase/(decrease) in
  short-term borrowings....      117,250      (72,149)     (82,207)    (175,443)
                             -----------  -----------  -----------  -----------
                             $  (416,188) $(2,514,087) $(1,840,289) $   354,595
                             -----------  -----------  -----------  -----------
Change in Net Cash Balance.  $(1,046,615) $(2,286,520) $  (309,991) $   723,256
Cash, Temporary Cash In-
 vestments and Cash Held
 for Redemption
 of Securities:
 Balance at Beginning of
  Period...................    1,539,924    3,089,820      803,300       80,044
                             -----------  -----------  -----------  -----------
 Balance at End of Period..  $   493,309  $   803,300  $   493,309  $   803,300
                             ===========  ===========  ===========  ===========
</TABLE>

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

                                       66
<PAGE>

             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 $145 million and $163 million for the three months ended
March 31, 2000 and 1999, respectively, and $633 million and $561 million for
the twelve months ended March 31, 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 and
twelve months ended March 31, 2000 and 1999 was as follows:

<TABLE>
<CAPTION>
                                      Three Months Ended   Twelve Months Ended
                                           March 31             March 31
                                      -------------------  -------------------
                                        2000      1999        2000      1999
                                      --------- ---------  ---------- --------
                                              (Thousands of Dollars)
<S>                                   <C>       <C>        <C>        <C>
Supplemental Cash Flow Information:
 Cash paid during the period for:
   Interest (net of amount capital-
    ized)............................ $ 148,933 $ 158,744  $  578,591 $462,174
   Income taxes (net of refunds)..... $ 950,001 $ (25,921) $1,461,120 $276,368
Supplemental Schedule of Non-Cash
 Investing and Financing Activities:
 Capital lease obligations incurred.. $      33 $   1,162  $      615 $ 89,537
</TABLE>

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

  (5) Authorized Shares and Voting Rights of Capital Stock. At March 31, 2000,
the authorized shares of capital stock were: common stock--250,000,000 shares;
preference stock--7,510,451 shares; $1.425 convertible preferred stock--52,753
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.


                                      67
<PAGE>

             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 March 31, 2000, shares of common stock were reserved for the following
purposes:

<TABLE>
      <S>                                                                 <C>
      Conversion of $1.425 convertible preferred stock................... 53,808
      Conversion of warrants............................................. 25,152
                                                                          ------
                                                                          78,960
                                                                          ======
</TABLE>

  Shares of common stock issued/(reacquired) for the three months and twelve
months ended March 31, 2000 and 1999 were as follows:

<TABLE>
<CAPTION>
                                   Three Months Ended    Twelve Months Ended
                                        March 31               March 31
                                   --------------------  ---------------------
                                      2000       1999       2000        1999
                                   -----------  -------  -----------  --------
<S>                                <C>          <C>      <C>          <C>
Conversion of $1.425 convertible
 preferred stock..................       3,602      212        5,344     3,791
Conversion of warrants............          72       29          152       173
Treasury stock.................... (30,232,701) (85,424) (30,232,701) (264,406)
                                   -----------  -------  -----------  --------
                                   (30,229,027) (85,183) (30,227,205) (260,442)
                                   ===========  =======  ===========  ========
</TABLE>

  As of March 31, 2000 and December 31, 1999, 30,497,107 shares and 264,406
shares, respectively, of ComEd common stock were reacquired and held as
treasury stock at a cost of $1,157 million and $10 million, respectively.

  At March 31, 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.

  As of March 31, 2000 and December 31, 1999, $985 million and $852 million,
respectively, of retained earnings had been appropriated for future dividend
payments.

  (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.


                                      68
<PAGE>

             COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued

  (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 two paragraphs regarding Unicom Thermal and Northwind Mid
Way's guaranteed senior Notes.

  (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 March 31, 2000 and December 31, 1999 were as follows:

<TABLE>
<CAPTION>
                                   March 31, 2000                  December 31, 1999
                          --------------------------------- ---------------------------------
                                     Unrealized                        Unrealized
                           Carrying    Gains/                Carrying    Gains/
                            Value     (Losses)   Fair Value   Value     (Losses)   Fair Value
                          ---------- ----------  ---------- ---------- ----------  ----------
                                               (Thousands of Dollars)
<S>                       <C>        <C>         <C>        <C>        <C>         <C>
Preferred and preference
 stocks.................  $   71,153 $      75   $   71,228 $   71,265 $      58   $   71,323
Company-obligated
 mandatorily redeemable
 preferred securities of
 subsidiary trusts
 holding solely the
 Company's subordinated
 debt securities........  $  350,000 $ (15,798)  $  334,202 $  350,000 $ (10,595)  $  339,405
Transitional trust
 notes..................  $2,963,030 $(149,007)  $2,814,023 $3,057,112 $(163,600)  $2,893,512
Long-term debt..........  $4,518,607 $  13,584   $4,532,191 $4,637,062 $ (22,237)  $4,614,825
</TABLE>

  (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.

                                      69
<PAGE>

             COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Continued


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

<TABLE>
<CAPTION>
                                                        March 31,   December 31,
                                                           2000         1999
                                                        ----------  ------------
                                                        (Thousands of Dollars)
<S>                                                     <C>         <C>
Deferred income tax liabilities:
 Accelerated cost recovery and liberalized
  depreciation, net of removal costs..................  $2,693,513   $2,781,601
 Overheads capitalized................................     157,101      159,836
 Repair allowance.....................................     218,674      221,502
 Regulatory assets recoverable through future rates...     685,327      688,946
Deferred income tax assets:
 Postretirement benefits..............................    (377,401)    (376,207)
 Unamortized investment tax credits...................    (159,420)    (161,756)
 Regulatory liabilities to be settled through future
  rates...............................................    (581,963)    (596,157)
 Nuclear plant closure................................      (5,454)      (5,456)
 Other--net...........................................    (257,793)    (310,658)
                                                        ----------   ----------
Net deferred income tax liability.....................  $2,372,584   $2,401,651
                                                        ==========   ==========
</TABLE>

  The $29 million decrease in the net deferred income tax liability from
December 31, 1999 to March 31, 2000 is comprised of a $42 million credit to
net deferred income tax expense, a $11 million decrease in regulatory assets
net of regulatory liabilities pertaining to income taxes for the period and $2
million related to other items. The amount of accelerated cost recovery and
liberalized depreciation included in deferred income tax liabilities for both
periods includes amounts related to the regulatory asset for impaired
production plant. The amount of regulatory assets included in deferred income
tax liabilities primarily relates to the equity component of AFUDC which is
recorded on an after-tax basis, the borrowed funds component of AFUDC which
was previously recorded net of tax and other temporary differences for which
the related tax effects were not previously recorded. The amount of other
regulatory liabilities included in deferred income tax assets primarily
relates to deferred income taxes provided at rates in excess of the current
statutory rate.

  The components of net income tax expense charged to continuing operations
for the three months and twelve months ended March 31, 2000 and 1999 were as
follows:

<TABLE>
<CAPTION>
                                    Three Months Ended   Twelve Months Ended
                                         March 31              March 31
                                    -------------------  ---------------------
                                      2000      1999        2000        1999
                                    --------  ---------  -----------  --------
                                            (Thousands of Dollars)
<S>                                 <C>       <C>        <C>          <C>
Electric operating income:
 Current income taxes.............  $ 87,670  $ 116,384  $ 1,753,992  $404,935
 Deferred income taxes............   (43,060)   (47,221)  (1,399,242)    3,657
 Investment tax credits deferred--
  net.............................    (5,499)    (7,021)     (24,306)  (27,591)
Other (income) and deductions:
 Current income taxes.............    (4,952)     2,668       (6,998)  (10,496)
 Deferred income taxes............    13,632        837       36,839    13,546
 Investment tax credits...........    (2,153)    (1,828)     (52,064)   (6,463)
                                    --------  ---------  -----------  --------
Net income taxes charged to
 continuing operations............  $ 45,638  $  63,819  $   308,221  $377,588
                                    ========  =========  ===========  ========
</TABLE>

  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 and twelve months ended March 31, 2000
and 1999:
<TABLE>
<CAPTION>
                                   Three Months Ended     Twelve Months Ended
                                        March 31               March 31
                                   --------------------  ----------------------
                                     2000       1999        2000        1999
                                   ---------  ---------  ----------  ----------
<S>                                <C>        <C>        <C>         <C>
Pre-tax book income (thousands)... $ 254,708  $ 185.726  $1,045,692  $1,021,868
Effective income tax rate.........      17.9%      34.4%       29.5%       37.0%
</TABLE>

                                      70
<PAGE>

             COMMONWEALTH EDISON COMPANY AND SUBSIDIARY COMPANIES

                   NOTES TO FINANCIAL STATEMENTS--Concluded

  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 and twelve months ended March 31, 2000 and 1999 were as
follows:
<TABLE>
<CAPTION>
                                      Three Months Ended   Twelve Months Ended
                                           March 31             March 31
                                      -------------------- --------------------
                                        2000       1999      2000       1999
                                      ---------  --------- ---------  ---------
                                              (Thousands of Dollars)
<S>                                   <C>        <C>       <C>        <C>
Federal income taxes computed at
 statutory rate.....................  $  89,148  $ 65,004  $ 365,992  $ 357,654
Amortization of investment tax
 credits, net of deferred income
 taxes..............................     (5,235)   (5,711)   (47,740)   (22,006)
State income taxes, net of federal
 income taxes.......................      5,220     8,465     44,831     45,991
Net gain on forward share repurchase
 contract...........................    (39,575)   (4,805)   (19,380)    (4,805)
Earnings on non-tax qualified
 decommissioning fund...............        406       --      (8,509)       --
Differences between book and tax
 accounting, primarily property-
 related deductions.................     (4,326)      866    (26,973)       754
                                      ---------  --------  ---------  ---------
Net income taxes charged to
 continuing operations..............  $  45,638  $ 63,819  $ 308,221  $ 377,588
                                      =========  ========  =========  =========
</TABLE>

  (18) Taxes, Except Income Taxes. Provisions for taxes, except income taxes,
for the three months and twelve months ended March 31, 2000 and 1999 were as
follows:

<TABLE>
<CAPTION>
                                      Three Months Ended   Twelve Months Ended
                                           March 31             March 31
                                      -------------------- --------------------
                                        2000       1999      2000       1999
                                      ---------  --------- ---------  ---------
                                              (Thousands of Dollars)
<S>                                   <C>        <C>       <C>        <C>
Illinois public utility revenue...... $  (3,685) $   1,495 $  (4,199) $  70,295
Illinois electricity distribution
 tax.................................    25,603     28,337   111,507    111,644
Municipal utility gross receipts.....    27,450     24,758   102,392    138,453
Real estate..........................    35,782     33,027   117,149    122,027
Municipal compensation...............    22,273     18,471    77,150     79,653
Energy assistance and renewable
 energy charge.......................     8,799      8,669    34,553     33,841
Other--net...........................    20,601     16,861    72,979     65,889
                                      ---------  --------- ---------  ---------
                                      $ 136,823  $ 131,618 $ 511,531  $ 621,802
                                      =========  ========= =========  =========
</TABLE>

  The 1997 Act changed the nature of several state and municipal taxes that
are collected through customer billings. Before August 1998, the utility taxes
were assessed against the utility. Effective August 1998, the utility taxes
are assessed on the electric consumer rather than the utility. Accordingly,
ComEd records the collections as liabilities and no longer records the taxes
collected through billings as revenues and tax expense. The reduction in
operating revenues and taxes, except income taxes, due to the change in
presentation for such taxes was approximately $82 million  for the twelve
months ended March 31, 2000, compared to the same period in 1999. This change
in the presentation for such taxes did not have an effect on results of
operations.

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

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

  Future minimum rental payments at March 31, 2000 for operating leases are
estimated to aggregate to $245 million, including $20 million in 2000, $23
million in 2001, $23 million in 2002, $21 million in 2003, $20 million in 2004
and $138 million in 2004-2024.

  (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.

                                      71
<PAGE>

             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.

                                      72
<PAGE>

                          PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

  During the first quarter 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 has filed a
motion challenging the legal sufficiency of the consolidated complaints. The
plantiff's response is overdue and the motion to dismiss is currently
scheduled to be argued on May 23, 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 of five reports on Phase II and Phase III, focusing
on the transmission and distribution system, is anticipated in late spring.
The investigation is expected to conclude by early 2001.

  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

                                      73
<PAGE>

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.

  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 March 31, 2000,
which could have such an effect.

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

  (a) Exhibits

<TABLE>
<CAPTION>
     Exhibit
     Number                        Description of Exhibit
     ------- ------------------------------------------------------------------
     <C>     <S>
     (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.
</TABLE>


                                      74
<PAGE>

  (b) Reports on Form 8-K

    A Current Report on Form 8-K dated January 7, 2000 was filed by Unicom
  and ComEd announcing Unicom and PECO's agreement to accelerate the
  repurchase of stock and to adjust shareholder consideration under their
  Agreement and Plan of Exchange and Merger, dated as of September 22, 1999.

    A Current Report on Form 8-K dated January 13, 2000 was filed by Unicom
  and ComEd providing additional information about the transactions
  contemplated by the Amended Merger Agreement before Unicom commences
  repurchases of shares of its common stock.

    A Current Report on Form 8-K dated March 30, 2000 was filed containing
  ComEd's consolidated financial statements as of, and for the year ended,
  December 31, 1999.


                                      75
<PAGE>

                                  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 15th day of May 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

                                          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)


                                      76