Exelon Corporation (NYSE: EXC) announced third quarter 2014
consolidated earnings as follows:
Third Quarter
2014
2013
Adjusted (non-GAAP) Operating Results: Net Income ($
millions) $676 $667 Diluted Earnings per Share $0.78
$0.78 GAAP Results: Net Income ($ millions) $993 $738 Diluted
Earnings per Share $1.15 $0.86
“Exelon achieved earnings above our guidance range this quarter,
with strong performance from both our utility and generation
businesses,” said Christopher M. Crane, Exelon’s president and CEO.
“We continue to execute our strategy to diversify and grow the
business, and based on our results through September and our
outlook for the fourth quarter, we are narrowing our full-year
operating earnings guidance to $2.30 to $2.50 per share.”
Third Quarter Operating Results
Exelon’s adjusted (non-GAAP) operating earnings were $0.78 per
share in the third quarters of both 2014 and 2013. Earnings in the
third quarter of 2014 primarily reflected the following favorable
factors:
- Higher revenue net fuel at Generation
as a result of higher realized energy prices, favorable portfolio
management optimization activities and the cancellation of
Department of Energy spent nuclear fuel disposal fees;
- Favorable distribution and transmission
revenue at ComEd due to increased capital investment; and
- Higher distribution revenue pursuant to
increased rates effective in December 2013 at BGE.
These factors were offset by:
- Higher operating and maintenance
(O&M) expenses reflecting increased non-refueling nuclear
generating outage days and inflation across all operating
companies, offset in part by reduced other postretirement benefit
costs;
- Incremental storm costs at PECO and
BGE; and
- Unfavorable weather at ComEd and
PECO.
Adjusted (non-GAAP) operating earnings for the third quarter of
2014 do not include the following items (after tax) that were
included in reported GAAP earnings:
(in millions)
(per diluted share)
Exelon Adjusted (non-GAAP) Operating
Earnings
$676
$0.78
Mark-to-Market Impact of Economic Hedging
Activities
158 0.18 Unrealized Losses Related to NDT Fund Investments (22)
(0.03) Asset Retirement Obligation 13 0.02
Plant Retirements and Divestitures
(primarily gain on sale of Safe Harbor)
197 0.23 Long-Lived Asset Impairment (30) (0.03) Merger and
Integration Costs (64) (0.07) Amortization of Commodity Contract
Intangibles 12 0.01 Tax Settlements 66 0.08 Non-Controlling
Interest (13) (0.02)
Exelon GAAP Net Income
$993
$1.15
Adjusted (non-GAAP) operating earnings for the third quarter of
2013 do not include the following items (after tax) that were
included in reported GAAP earnings:
(in millions)
(per diluted share)
Exelon Adjusted (non-GAAP) Operating
Earnings
$667
$0.78
Mark-to-Market Impact of Economic Hedging
Activities
148 0.17 Unrealized Gains Related to NDT Fund Investments 24 0.03
Asset Retirement Obligation (6) (0.01) Long-Lived Asset Impairments
(28) (0.03) Merger and Integration Costs (26) (0.03) Amortization
of Commodity Contract Intangibles (41) (0.05)
Exelon GAAP Net Income
$738
$0.86
Third Quarter and Recent Highlights
- Pepco Holdings, Inc. Merger: On
September 23, 2014, Pepco Holdings, Inc. (PHI) stockholders
overwhelmingly approved the merger of PHI and Exelon. The merger
continues to be conditioned upon approval by the Federal Energy
Regulatory Commission, the District of Columbia Public Service
Commission, and the state public service commissions of Delaware,
Maryland, and New Jersey. On October 7, 2014, the Virginia State
Corporation Commission issued its order granting approval to
transfer control of PHI subsidiaries Delmarva Power & Light
Company and Potomac Electric Power Company to Exelon. In addition,
the transfer of certain PHI communications licenses requires
approval by the Federal Communication Commission. Exelon and PHI
will continue to work cooperatively with the Department of Justice
as it conducts its review of the proposed merger under the
Hart-Scott Rodino Antitrust Improvements Act of 1976. Exelon and
PHI continue to expect the merger to be complete in the second or
third quarter of 2015.
- Exelon Generation
- On September 29th, Exelon Generation
announced that it is planning to build two combined-cycle gas
turbine (CCGT) units in Texas utilizing a new General Electric
technology that will make them among the cleanest, most efficient
CCGTs in the nation. The new units are being built on existing
Exelon sites: one at Colorado Bend Generating Station, currently a
498 megawatt (MW) natural gas plant in Wharton County, Texas; and
one at the 704 MW Wolf Hollow natural gas plant in Granbury, Texas.
Each new unit will add approximately 1,000 MW of capacity to their
respective sites.
- During the third quarter Exelon
announced the sale of three natural gas generation assets. Sale
agreements were signed for Fore River (CCGT) in Massachusetts,
Quail Run (CCGT) in Texas, and West Valley (CT) in Utah. The sale
of the three natural gas generation assets and Exelon's interest in
the Safe Harbor hydroelectric facility in Pennsylvania, which
closed in August 2014 and resulted in after-tax proceeds of
approximately $975 million, are expected to generate aggregate
pre-tax proceeds of $1.3 billion, which will be used primarily to
finance a portion of the acquisition of PHI.
- On October 24, 2014, Exelon entered
into a sale agreement to divest its proportional ownership
interests in the Keystone and Conemaugh generating facilities in
Pennsylvania for total sales proceeds of approximately $475
million, including approximately $60 million of working capital.
Exelon and Generation anticipate recording a pre-tax impairment
loss ranging from approximately $350 million to $400 million during
the fourth quarter of 2014, which will not be included in Adjusted
(non-GAAP) Operating Earnings. The estimated net after-tax cash
proceeds of $418 million, excluding estimated working capital, are
expected to be used to finance a portion of the acquisition of PHI
and for general corporate purposes.
- Constellation: On July 30th ,
Exelon announced it had entered into a definitive agreement for
Exelon to purchase Integrys Energy Services Inc., a competitive
retail electricity and natural gas subsidiary serving approximately
1.2 million commercial, industrial, public sector and residential
customers across 22 Midwest, mid-Atlantic and Northeastern states
and the District of Columbia for $60 million plus adjusted net
working capital at the time of closing. Integrys Energy Services
will become part of Exelon’s Constellation business unit,
strengthening its retail power and gas business serving residential
and business customers across the continental United States. The
transaction is expected to close in the fourth quarter of
2014.
- Nuclear Operations: Generation’s
nuclear fleet, including its owned output from the Salem Generating
Station and beginning April 1, 2014, 100 percent of the CENG
units, produced 45,263 gigawatt-hours (GWh), of which 8,617 GWh
were produced by CENG, in the third quarter of 2014, compared with
36,165 GWh in the third quarter of 2013. Excluding Salem, the
Exelon-operated nuclear plants at ownership achieved a 96.5 percent
capacity factor for the third quarter of 2014, compared with 94.8
percent for the third quarter of 2013. The number of planned
refueling outage days in the third quarter of 2014 totaled 18,
including no CENG planned outage days, compared with 43 in the
third quarter of 2013. There were 20 non-refueling outage days,
including two at CENG, in the third quarter of 2014, compared with
five days in the third quarter of 2013.
- Fossil and Renewables
Operations: The dispatch match rate for Generation’s gas/hydro
fleet was 98.8 percent in the third quarter of 2014, compared with
99.1 percent in the third quarter of 2013. Energy capture for the
wind/solar fleet was 94.9 percent in the third quarter of 2014,
compared with 92.9 percent in the third quarter of 2013. The
increase in energy capture for the third quarter of 2014 was due to
the implementation of reliability programs that resulted in
increased turbine availability.
- Financing Activities:
- On September 8, 2014, PECO issued $300
million of first and refunding mortgage bonds with an interest
rate of 4.15 percent due Oct. 1, 2044. The net proceeds from the
sale of the bonds were used to pay $250 million in aggregate
principal of PECO’s 5 percent first and refunding mortgage bonds
which would have come due on Oct. 1, 2014 and for other general
corporate purposes. The offering closed on Sept. 15, 2014.
- On September 18, 2014, ExGen Texas
Power, LLC (an indirect subsidiary of Exelon and Exelon Generation)
entered into a $695 million senior secured term loan and revolving
credit facility. The company distributed the net proceeds from the
term loans to Exelon Generation for its general corporate
purposes.
- Hedging Update: Exelon’s hedging
program involves the hedging of commodity risk for Exelon’s
expected generation, typically on a ratable basis over a three-year
period. This strategy has not changed as a result of recent and
pending asset divestitures. The proportion of expected generation
hedged as of September 30, 2014, is 98.0 percent to 101.0
percent for 2014, 86.0 percent to 89.0 percent for 2015, and 55.0
percent to 58.0 percent for 2016. Expected generation is the volume
of energy that best represents our financial exposure through owned
or contracted capacity. The primary objective of Exelon’s hedging
program is to manage market risks and protect the value of its
generation and its investment-grade balance sheet, while preserving
its ability to participate in improving long-term market
fundamentals.
Operating Company Results
Generation consists of owned and contracted electric
generating facilities and wholesale and retail customer supply of
electric and natural gas products and services, including renewable
energy products, risk management services and natural gas
exploration and production activities.
The third quarter 2014 GAAP net income was $771 million,
compared with $490 million in the third quarter of 2013. Adjusted
(non-GAAP) operating earnings for the third quarter of 2014 and
2013 do not include various items (after tax) that were included in
reported GAAP earnings. A reconciliation of Adjusted (non-GAAP)
Operating Earnings to GAAP Net Income is in the table below:
($ millions)
3Q14
3Q13
Generation Adjusted (non-GAAP)
Operating Earnings
$433
$411
Mark-to-Market Impact of Economic Hedging Activities 161 151
Unrealized Gains/(Losses) Related to NDT Fund
Investments
(22) 23 Asset Retirement Obligation 13 (7) Plant Retirements and
Divestitures (primarily gain on sale
of Safe Harbor)
198 — Long-Lived Asset Impairments (30) (28) Merger and Integration
Costs (47) (20) Amortization of Commodity Contract Intangibles 12
(40) Tax Settlements 66 — Non-Controlling Interest (13)
—
Generation GAAP Net Income
$771
$490
Generation’s Adjusted (non-GAAP) Operating Earnings in the third
quarter of 2014 increased $22 million compared with the same
quarter in 2013. This increase primarily reflected higher revenue
net fuel at Generation as a result of higher realized energy
prices, favorable portfolio management optimization activities, and
the cancellation of DOE spent nuclear fuel disposal fees. The
increase was partially offset by higher O&M expenses reflecting
increased non-refueling nuclear generating outage days and
inflation, offset in part by reduced other postretirement benefit
costs.
ComEd consists of electricity transmission and
distribution operations in Northern Illinois. ComEd recorded GAAP
net income of $126 million in the third quarter of both 2014 and
2013. Adjusted (non-GAAP) Operating Earnings for the third quarter
of 2013 do not include merger and integration costs that were
included in reported GAAP earnings. A reconciliation of Adjusted
(non-GAAP) Operating Earnings to GAAP Net Income is in the table
below:
($ millions)
3Q14
3Q13
ComEd Adjusted (non-GAAP) Operating
Earnings
$
126
$
127
Merger and Integration Costs — (1 )
ComEd GAAP Net Income
$
126
$
126
ComEd’s Adjusted (non-GAAP) Operating Earnings in the third
quarter of 2014 were down $1 million from the same quarter in 2013,
primarily reflecting unfavorable weather, partially offset by
higher distribution and transmission revenue due to increased
capital investment.
For the third quarter of 2014, heating degree-days in the ComEd
service territory were up 40.5 percent relative to the same period
in 2013 and were 6.7 percent below normal. Meanwhile, cooling
degree-days were down 19.6 percent relative to the same period in
2013 and were 12.4 percent below normal. Total retail electric
deliveries decreased 5.4 percent in the third quarter of 2014
compared with the same period in 2013.
Weather-normalized retail electric deliveries remained flat in
the third quarter of 2014 relative to 2013.
PECO consists of electricity transmission and
distribution operations and retail natural gas distribution
operations in Southeastern Pennsylvania.
PECO’s GAAP net income in the third quarter of 2014 was $81
million, compared with $92 million in the third quarter of 2013.
Adjusted (non-GAAP) Operating Earnings for the third quarter of
2013 do not include merger and integration costs that were included
in reported GAAP earnings. A reconciliation of Adjusted (non-GAAP)
Operating Earnings to GAAP Net Income is in the table below:
($ millions)
3Q14
3Q13
PECO Adjusted (non-GAAP) Operating
Earnings
$81
$93
Merger and Integration Costs — (1)
PECO GAAP Net Income
$81
$92
PECO’s Adjusted (non-GAAP) Operating Earnings in the third
quarter of 2014 decreased $12 million from the same quarter in
2013, primarily due to increased storm costs and unfavorable
weather conditions.
For the third quarter of 2014, heating degree-days in the PECO
service territory were down 61.1 percent relative to the same
period in 2013 and were 60.0 percent below normal. Cooling
degree-days were down 1.8 percent from the prior year and were 2.5
percent below normal. Total retail electric deliveries were down
3.6 percent compared with the third quarter of 2013. Natural gas
deliveries (including both retail and transportation segments) in
the third quarter of 2014 were up 0.7 percent compared with the
same period in 2013.
Weather-normalized retail electric deliveries remained
relatively consistent while gas deliveries increased 7.8 percent in
the third quarter of 2014 compared with the same period in 2013.
The increased gas volumes were driven primarily by increased usage
per customer and customer growth, however gas retail volumes in the
summer account for a small percentage of annual deliveries and tend
to be more volatile.
BGE consists of electricity transmission and distribution
operations and retail natural gas distribution operations in
Central Maryland.
BGE’s GAAP net income in the third quarter of 2014 was $46
million, compared with $50 million in the third quarter of 2013.
Adjusted (non-GAAP) Operating Earnings for the third quarter of
2013 do not include merger and integration costs that were included
in reported GAAP earnings. A reconciliation of Adjusted (non-GAAP)
Operating Earnings to GAAP Net Income is in the table below:
($ millions) 3Q14
3Q13
BGE Adjusted (non-GAAP) Operating
Earnings
$46
$51
Merger and Integration Costs — (1)
BGE GAAP Net Income
$46
$50
BGE’s Adjusted (non-GAAP) Operating Earnings in the third
quarter of 2014 decreased $5 million from the same quarter in 2013,
primarily due to increased contracting as a result of an increase
in maintenance related activities and incremental storm costs,
which were partially offset by increased distribution revenues
pursuant to increased rates effective in December 2013.
Adjusted (non-GAAP) Operating Earnings
Adjusted (non-GAAP) operating earnings, which generally exclude
significant one-time charges or credits that are not normally
associated with ongoing operations, mark-to-market adjustments from
economic hedging activities and unrealized gains and losses from
NDT fund investments, are provided as a supplement to results
reported in accordance with GAAP. Management uses such adjusted
(non-GAAP) operating earnings measures internally to evaluate the
company’s performance and manage its operations. Reconciliation of
GAAP to adjusted (non-GAAP) operating earnings for historical
periods is attached. Additional earnings release attachments, which
include the reconciliation on pages 8 and 9 are posted on Exelon’s
Web site: www.exeloncorp.com and have
been furnished to the Securities and Exchange Commission on Form
8-K on October 29, 2014.
Cautionary Statements Regarding Forward-Looking
Information
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, that are subject to risks and uncertainties. The factors
that could cause actual results to differ materially from the
forward-looking statements made by Exelon Corporation, Commonwealth
Edison Company, PECO Energy Company, Baltimore Gas and Electric
Company and Exelon Generation Company, LLC (Registrants) include
those factors discussed herein, as well as the items discussed in
(1) Exelon’s 2013 Annual Report on Form 10-K in
(a) ITEM 1A. Risk Factors, (b) ITEM 7.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations and (c) ITEM 8. Financial
Statements and Supplementary Data: Note 22; (2) Exelon’s
Third Quarter 2014 Quarterly Report on Form 10-Q (to be filed on
October 29, 2014) in (a) Part II, Other Information,
ITEM 1A. Risk Factors; (b) Part 1, Financial Information,
ITEM 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations and (c) Part I, Financial
Information, ITEM 1. Financial Statements: Note 18; and
(3) other factors discussed in filings with the SEC by the
Registrants. Readers are cautioned not to place undue reliance on
these forward-looking statements, which apply only as of the date
of this press release. None of the Registrants undertakes any
obligation to publicly release any revision to its forward-looking
statements to reflect events or circumstances after the date of
this press release.
Exelon Corporation (NYSE: EXC) is the nation’s
leading competitive energy provider, with 2013 revenues of
approximately $24.9 billion. Headquartered in Chicago, Exelon does
business in 48 states, the District of Columbia and Canada. Exelon
is one of the largest competitive U.S. power generators, with more
than 35,000 megawatts of owned capacity comprising one of the
nation’s cleanest and lowest-cost power generation fleets. The
company’s Constellation business unit provides energy products and
services to approximately 100,000 business and public sector
customers and approximately 1 million residential customers.
Exelon’s utilities deliver electricity and natural gas to more than
7.8 million customers in central Maryland (BGE), northern Illinois
(ComEd) and southeastern Pennsylvania (PECO). Follow Exelon on
Twitter @Exelon.
EXELON CORPORATION
Reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP
Consolidated Statements of Operations
(unaudited)
(in millions, except per share data)
Three Months Ended September 30, 2014 Three Months
Ended September 30, 2013 Adjusted
Adjusted GAAP (a)
Adjustments Non-GAAP GAAP (a)
Adjustments Non-GAAP Operating revenues $
6,912 $ (248 ) (b),(c) $ 6,664 $ 6,502 $ (90 ) (b),(c) $ 6,412
Operating expenses Purchased power and fuel 2,648 33 (b),(c)
2,681 2,743 112 (b),(c) 2,855 Operating and maintenance 1,982 (99 )
(d),(e),(f),(g) 1,883 1,735 (96 ) (d),(e),(f) 1,639 Depreciation
and amortization 577 — 577 530 (1 ) (d) 529 Taxes other than income
306 — 306 277 — 277
Total operating expenses 5,513 (66 ) 5,447 5,285 15 5,300
Equity in earnings of unconsolidated affiliates 1 —
1 37 23 (c),(d) 60
Operating
income 1,400 (182 ) 1,218 1,254 (82 )
1,172
Other income and (deductions) Interest expense
(258 ) 24 (b),(d) (234 ) (234 ) — (234 ) Other, net 354 (275
) (g),(h),(i) 79 155 (63 ) (h) 92
Total
other income and (deductions) 96 (251 ) (155 ) (79 ) (63
) (142 )
Income before income taxes 1,496 (433 ) 1,063 1,175
(145 ) 1,030
Income taxes 422 (103 )
(b),(c),(d),(e),(f),(g),(h),(i) 319 439 (74 )
(b),(c),(d),(e),(f),(h) 365
Net income 1,074 (330 )
744 736 (71 ) 665
Net income (loss) attributable to
noncontrolling interests and preference stock dividends 81
(13 ) (j) 68 (2 ) — (2 )
Net income
attributable to common shareholders $ 993 $ (317 ) $ 676
$ 738 $ (71 ) $ 667
Effective tax rate
28.2 % 30.0 % 37.4 % 35.4 %
Earnings per average common
share Basic $ 1.15 $ (0.37 ) $ 0.78 $ 0.86 $ (0.08 ) $ 0.78
Diluted $ 1.15 $ (0.37 ) $ 0.78 $ 0.86 $ (0.08
) $ 0.78
Average common shares outstanding Basic 861
861 857 857 Diluted 863 863 860 860
Effect of adjustments on
earnings per average diluted common share recorded in accordance
with GAAP: Mark-to-market impact of economic hedging activities
(b) $ (0.18 ) $ (0.17 ) Amortization of commodity contract
intangibles (c) (0.01 ) 0.05 Merger and integration costs (d) 0.07
0.03 Long-lived asset impairment (e) 0.03 0.03 Asset retirement
obligation (f) (0.02 ) 0.01 Plant retirements and divestitures (g)
(0.23 ) — Unrealized (gains) losses related to NDT fund investments
(h) 0.03 (0.03 ) Tax settlements (i) (0.08 ) — Non-controlling
interest (j) 0.02 — Total adjustments $ (0.37 ) $
(0.08 )
For the three months ended September 30, 2014, includes the
results of operations of Constellation Energy Nuclear Group, LLC
beginning on April 1, 2014, the date the nuclear operating
services agreement was executed.
(a) Results reported in accordance with accounting
principles generally accepted in the United States (GAAP). (b)
Adjustment to exclude the mark-to-market impact of Exelon’s
economic hedging activities, net of intercompany eliminations. (c)
Adjustment to exclude the non-cash amortization of intangible
assets, net, related to commodity contracts recorded at fair value
at the Constellation merger date and at the CENG integration date.
(d) Adjustment to exclude certain costs associated with the
Constellation merger, PHI acquisition, and at Generation, the CENG
integration, including professional fees, employee-related
expenses, integration activities, upfront credit facilities fees,
merger commitments, and certain pre-acquisition contingencies. (e)
Adjustment to exclude a 2014 charge to earnings primarily related
to the impairment of certain assets held for sale and a 2013 charge
to earnings primarily related to the impairment of certain wind
generating assets. (f) Adjustment to exclude the 2014 decrease in
Generation's nuclear decommissioning obligation and 2013 increase
in Generation's asset retirement obligation for retired fossil
power plants. (g) Adjustment to exclude the impacts associated with
the sale of Generation's ownership interest in generating stations,
primarily the gain from the sale of Generation's equity interest in
Safe Harbor Water Power Corporation. (h) Adjustment to exclude the
unrealized gains and losses on NDT fund investments to the extent
not offset by contractual accounting as described in the notes to
the consolidated financial statements. (i) Adjustment to reflect a
benefit related to favorable settlements in 2014 of certain income
tax positions on Constellation’s 2009-2012 tax returns. (j)
Adjustments to account for the CENG interest not owned by
Generation, where applicable.
EXELON
CORPORATION Reconciliation of Adjusted (non-GAAP) Operating
Earnings to GAAP Consolidated Statements of Operations
(unaudited)
(in millions, except per share data)
Nine Months Ended September 30, 2014 Nine Months
Ended September 30, 2013 Adjusted
Adjusted GAAP (a)
Adjustments Non-GAAP GAAP (a)
Adjustments Non-GAAP Operating revenues $
20,173 $ 772 (b),(c),(d) $ 20,945 $ 18,725 $ 462 (b),(c) $ 19,187
Operating expenses Purchased power and fuel 9,399 220
(b),(c) 9,619 8,143 355 (b),(c) 8,498 Operating and maintenance
6,005 (250 ) (d),(e),(f),(g) 5,755 5,391 (265 ) (d),(e),(f),(g)
5,126 Depreciation and amortization 1,732 — 1,732 1,606 (3 ) (b)
1,603 Taxes other than income 887 — 887 825
— 825
Total operating expenses 18,023
(30 ) 17,993 15,965 87 16,052
Equity in earnings (loss) of
unconsolidated affiliates (20 ) 12 (c),(d) (8 ) 7 62 (c),(d) 69
Gain on consolidation of CENG 261 (261 ) (i) —
— — —
Operating income 2,391 553
2,944 2,767 437 3,204
Other
income and (deductions) Interest expense (722 ) 32 (b),(d) (690
) (1,110 ) 370 (d),(e),(l),(m) (740 ) Other, net 702 (480 )
(g),(h),(j) 222 311 (117 ) (d),(g),(h),(l) 194
Total other income and (deductions) (20 ) (448 ) (468 ) (799
) 253 (546 )
Income before income taxes 2,371 105
2,476 1,968 690 2,658
Income taxes 646 99
(b),(c),(d),(e),(f),(g),(h),(i),(j) 745 733 192
(b),(c),(d),(e),(f),(g),(h),(l),(m) 925
Net
income 1,725 6 1,731 1,235 498 1,733
Net income attributable
to noncontrolling interests, preferred security dividends and
redemption and preference stock dividends 121 (36 ) (k)
85 11 — 11
Net income attributable
to common shareholders $ 1,604 $ 42 $ 1,646
$ 1,224 $ 498 $ 1,722
Effective tax
rate 27.2 % 30.1 % 37.2 % 34.8 %
Earnings per average common
share Basic $ 1.87 $ 0.05 $ 1.92 $ 1.43 $ 0.58 $ 2.01 Diluted $
1.86 $ 0.05 $ 1.91 $ 1.42 $ 0.58
$ 2.00
Average common shares outstanding Basic 860
860 856 856 Diluted 863 863 860 860
Effect of adjustments on
earnings per average diluted common share recorded in accordance
with GAAP: Mark-to-market impact of economic hedging activities
(b) 0.34 (0.21 ) Amortization of commodity contract intangibles (c)
0.06 0.32 Merger and integration costs (d) 0.12 0.08 Long-lived
asset impairment (e) 0.11 0.13 Asset retirement obligation (f)
(0.02 ) 0.01 Plant retirements and divestitures (g) (0.23 ) (0.01 )
Unrealized gains related to NDT fund investments (h) (0.07 ) (0.04
) Gain on CENG integration (i) (0.18 ) — Tax settlement (j) (0.12 )
— Non-controlling interest (k) 0.04 — Amortization of the fair
value of certain debt (l) — (0.01 ) Remeasurement of like-kind
exchange tax position (m) — 0.31 Total adjustments $
0.05 $ 0.58
For the nine months ended September 30, 2014, includes the
results of operations of Constellation Nuclear Energy Group, LLC
beginning on April 1, 2014, the date the nuclear operating
services agreement was executed.
(a) Results reported in accordance with GAAP. (b) Adjustment
to exclude the mark-to-market impact of Exelon’s economic hedging
activities, net of intercompany eliminations. (c) Adjustment to
exclude the non-cash amortization of intangible assets, net,
related to commodity contracts recorded at fair value at the
Constellation merger date and at the CENG integration date. (d)
Adjustment to exclude certain costs associated with the
Constellation merger, PHI acquisition, and at Generation, the CENG
integration, including professional fees, employee-related
expenses, integration activities, upfront credit facilities fees,
merger commitments, and certain pre-acquisition contingencies. (e)
Adjustment to exclude a 2014 charge to earnings primarily related
to the impairment of certain wind generating assets and certain
assets held for sale, and a 2013 charge to earnings primarily
related to the cancellation of previously capitalized nuclear
uprate projects and impairment of certain wind generating assets.
(f) Adjustment to exclude the 2014 decrease in Generation's nuclear
decommissioning obligation and the 2013 increase in asset
retirement obligation for fossil power plants. (g) Adjustment to
exclude the impacts associated with the sale of Generation's
ownership interest in generating stations, primarily the gain from
sale of Generation's equity interest in Safe Harbor Water Power
Corporation in 2014. (h) Adjustment to exclude the unrealized gains
on NDT fund investments to the extent not offset by contractual
accounting as described in the notes to the consolidated financial
statements. (i) Adjustment to exclude the gain recorded upon
consolidation of CENG resulting from the difference in the fair
value of CENG’s net assets and the equity method investment
previously recorded on Generation’s and Exelon’s books and the
settlement of pre-existing commitments between Generation and CENG.
(j) Adjustment to reflect a benefit related to favorable
settlements in 2014 of certain income tax positions on
Constellation’s 2009-2012 tax returns. (k) Adjustment to account
for the CENG interest not owned by Generation, where applicable.
(l) Adjustment to exclude the non-cash amortization of certain debt
recorded at fair value at the Constellation merger date, which was
retired in the second quarter of 2013. (m) Adjustment to exclude a
non-cash charge to earnings resulting from the first quarter 2013
remeasurement of a like-kind exchange tax position taken on ComEd's
1999 sale of fossil generating assets.
Exelon CorporationFrancis IdehenInvestor
Relations312-394-3967orPaul AdamsCorporate
Communications410-470-4167
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