Exelon Corporation (NYSE: EXC) announced fourth quarter 2015
consolidated earnings as follows:
Full Year
Fourth Quarter
2015
2014
2015
2014
Adjusted (non-GAAP) Operating
Results:
Net Income ($ millions)
$2,227
$2,068
$347
$421
Diluted Earnings per Share
$2.49
$2.39
$0.38
$0.48
GAAP Results:
Net Income ($ millions)
$2,269
$1,623
$309
$18
Diluted Earnings per Share
$2.54
$1.88
$0.33
$0.02
“Despite a challenging year for the sector, strong operating
performance at both our utilities and our generation business
enabled us to deliver strong earnings,” said Exelon President
and CEO Christopher M. Crane. “We will provide stable growth,
sustainable earnings and an attractive dividend through a
combination of regulated and contracted investments and return of
capital. Consistent with this strategy, we plan to grow our
dividend 2.5 percent each year over the next three years.”
Fourth Quarter Operating Results
As shown in the table above, Exelon’s adjusted (non-GAAP)
operating earnings decreased to $0.38 per share in the fourth
quarter of 2015 from $0.48 per share in the fourth quarter of 2014.
Earnings in the fourth quarter of 2015 primarily reflected the
following negative factors:
- Unfavorable impacts of increased
nuclear outages at Generation;
- Unfavorable weather conditions at ComEd
and PECO;
- Higher depreciation and amortization
expense at Generation; and
- Increased interest expense and share
differential impacts related to 2015 debt and equity issuances to
fund the pending PHI acquisition.
These factors were partially offset by:
- Higher electric distribution and
transmission formula rate earnings at ComEd;
- Higher distribution and transmission
revenue at BGE;
- Lower uncollectible accounts expense at
PECO and BGE; and
- Favorable settlement of a state income
tax position at Generation.
Adjusted (non-GAAP) Operating Earnings for the fourth quarter of
2015 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
$347
$0.38
Unrealized Gains Related to Nuclear Decommissioning Trust (NDT)
Fund Investments 51 0.05 Long-Lived Asset Impairments (6) (0.01)
Merger and Integration Costs (9) (0.01) PHI Merger Related
Redeemable Debt Exchange (13) (0.01) Amortization of Commodity
Contract Intangibles (10) (0.01) Reassessment of State Deferred
Income Taxes (41) (0.05) Reduction of State Income Tax Reserve 10
0.01 CENG Non-Controlling Interest (20) (0.02)
Exelon GAAP Net Income
$309
$0.33
Adjusted (non-GAAP) Operating Earnings for the fourth 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
$421
$0.48
Mark-to-Market Impact of Economic Hedging Activities (70) (0.08)
Unrealized Gains Related to NDT Fund Investments 24 0.03 Plant
Retirements and Divestitures 48 0.06 Long-Lived Asset Impairments
(337) (0.39) Merger and Integration Costs (25) (0.03)
Mark-to-Market Impact of PHI Merger Related Interest Rate Swaps
(55) (0.06) Amortization of Commodity Contract Intangibles (22)
(0.03) Reassessment of State Deferred Income Taxes 27 0.03 Tax
Settlements 5 0.01 Bargain-Purchase Gain 28 0.03 CENG
Non-Controlling Interest (26) (0.03)
Exelon GAAP Net Income
$18
$0.02
2016 Earnings Outlook
Exelon introduced a guidance range for 2016 adjusted (non-GAAP)
operating earnings of $2.40 to $2.70 per share. Operating earnings
guidance is based on the assumption of normal weather, which is
determined based on historical average heating and cooling degree
days for a 30-year period in the respective utilities' service
territories.
The outlook for 2016 adjusted (non-GAAP) operating earnings for
Exelon and its subsidiaries excludes the following items:
- Mark-to-market adjustments from
economic hedging activities;
- Unrealized gains and losses from NDT
fund investments to the extent not offset by contractual accounting
as described in the notes to the consolidated financial
statements;
- Certain costs incurred related to the
PHI acquisition;
- Certain costs incurred to achieve cost
management program savings;
- Other unusual items; and
- One-time impacts of adopting new
accounting standards.
Dividend
Exelon's Board of Directors declared a first quarter 2016
dividend of $0.31 per share and approved a revised dividend policy.
The approved policy would raise our dividend 2.5 percent each year
for the next three years, beginning with the June 2016 dividend.
The Board will take formal action to declare the next dividend in
the second quarter.
Fourth Quarter and Recent Highlights
- Pepco Holdings, Inc. Merger: The
Hart Scott Rodino Act waiting period expired on December 2, 2015
and as such no longer precludes the completion of the merger. On
December 23, 2015, the record in the settlement proceedings before
the District of Columbia Public Service Commission (PSC) closed.
The companies are currently awaiting a decision from the PSC. On
January 8, 2016, a Circuit Court judge affirmed the Maryland Public
Service Commission’s order approving the merger and denied the
petitions for judicial review filed by the Office of People's
Counsel (OPC), the Sierra Club, the Chesapeake Climate Action
Network (CCAN) and Public Citizen, Inc. On January 19, 2016, the
OPC filed a notice of appeal to the Maryland Court of Special
Appeals, and on January 21, 2016, the Sierra Club and CCAN filed a
notice of appeal.
- Nuclear Operations: Generation’s
nuclear fleet, including its owned output from the Salem Generating
Station and 100 percent of the CENG units, produced 43,832
gigawatt-hours (GWh) in the fourth quarter of 2015, compared with
44,533 GWh in the fourth quarter of 2014. Excluding Salem, the
Exelon-operated nuclear plants at ownership achieved a 93.3 percent
capacity factor for the fourth quarter of 2015, compared with 94.8
percent for the fourth quarter of 2014. The number of planned
refueling outage days totaled 103 in the fourth quarter of 2015,
compared with 97 in the fourth quarter of 2014. There were 21
non-refueling outage days in the fourth quarter of 2015, compared
with eight days in the fourth quarter of 2014.
- Fossil and Renewable Operations:
The Dispatch Match rate for Generation’s gas and hydro fleet was
97.3 percent in the fourth quarter of 2015, compared with 99.1
percent in the fourth quarter of 2014. The lower performance in the
quarter was primarily attributed to a forced outage at Wolf Hollow.
Energy Capture for the wind and solar fleet was 95.3 percent in the
fourth quarter of 2015, compared with 96.4 percent in the fourth
quarter of 2014. Performance was negatively impacted due to an
extended outage at one of the wind projects in Missouri.
- ComEd Distribution Formula Rate
Case: On December 9, 2015, the Illinois Commerce Commission
issued its final order approving ComEd’s 2015 annual distribution
formula rate update. The final order resulted in a reduction to the
revenue requirement of $67 million. The decrease was set using an
allowed return on capital of 7.02 percent (inclusive of an allowed
ROE of 9.14 percent for 2015 less a reliability performance metric
penalty of 5 basis points for the 2014 reconciliation). The rates
took effect in January 2016.
- PECO Electric Distribution Rate
Case: On December 17, 2015, the Pennsylvania Public Utility
Commission approved the settlement of PECO’s electric distribution
rate case. The approved electric delivery rates became effective on
January 1, 2016 and will result in an increase of $127 million in
annual distribution service revenue.
- BGE Electric and Gas Distribution
Rate Case: On November 6, 2015, BGE filed an application with
the Maryland Public Service Commission (MDPSC), ultimately
requesting an increase in electric and gas distribution base rates
of $121 million and $79.5 million, respectively. BGE requested an
ROE for the electric and gas distribution rate cases of 10.6
percent and 10.5 percent, respectively. The MDPSC is expected to
issue a final order in June 2016. If approved, the rates would
become effective at that time. BGE is also proposing to recover an
annual increase of approximately $30 million for Baltimore City
conduit lease fees through a surcharge. BGE cannot predict how much
of the requested increase the MDPSC will approve or if it will
approve BGE's request for a conduit fee surcharge.
- BGE FERC Transmission Complaint:
On November 6, 2015, BGE filed a settlement with the FERC relating
to two complaints on the authorized ROE for their transmission
business. The settlement provides for a 10 percent base ROE, which
will be augmented by the PJM incentive adder of 50 basis points,
and refunds to BGE customers of $13.7 million. On December 16,
2015, the presiding Administrative Law Judge submitted a
certification of the uncontested settlement to the FERC
commissioners. The settlement, subject to FERC approval, also
provides a moratorium on any change in the ROE until June 1,
2018.
- Financing Activities:
- On November 19, 2015, ComEd issued $450
million aggregate principal amount of its First Mortgage 4.350
percent Bonds, Series 119, due November 15, 2045. The proceeds of
the sale of the bonds will be used by ComEd to repay a portion of
ComEd's outstanding commercial paper obligations and for general
corporate purposes.
- On December 2, 2015, Exelon completed a
private offering to exchange $1.25 billion of 3.950% notes due
2025, $500 million of 4.950% notes due 2035, and $1 billion of
5.100% notes due 2045 (Exchange Offer). The original notes were
issued in June 2015 to finance a portion of the pending acquisition
of PHI. The new notes resulting from the Exchange Offer
substantially have the same terms as the outstanding notes, except
the notes are subject to mandatory redemption on June 30, 2016,
rather than December 31, 2015, and under certain circumstances, can
be further extended to August 31, 2016.
- On November 27, 2015, Exelon issued a
notice of redemption for any outstanding notes not exchanged for
new notes in the Exchange Offer, at a redemption price equal to
101% of the aggregate principal amount thereof, plus accrued and
unpaid interest. On December 2, 2015, Exelon completed the
redemption of $868 million of outstanding notes not exchanged for
new notes.
- 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. Expected generation is the volume of energy that best
represents our commodity position in energy markets from owned or
contracted for capacity based upon a simulated dispatch model that
makes assumptions regarding future market conditions, which are
calibrated to market quotes for power, fuel, load following
products, and options. The proportion of expected generation hedged
as of December 31, 2015, was 90 percent to 93 percent for 2016, 60
percent to 63 percent for 2017, and 28 percent to 31 percent for
2018. 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 the generation, physical delivery
and marketing of power across multiple geographical regions through
its customer-facing business, Constellation, which sells
electricity and natural gas to both wholesale and retail customers.
Generation also sells renewable energy and other energy-related
products and services.
Generation's fourth quarter 2015 GAAP net income was $154
million, compared with net loss of $91 million in the fourth
quarter of 2014. Adjusted (non-GAAP) operating earnings for the
fourth quarter of 2015 and 2014 do not include various items
(after- tax) that were included in reported GAAP earnings. A
reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP
Net Income is presented in the table below:
($ millions)
4Q15
4Q14
Generation Adjusted (non-GAAP)
Operating Earnings
$142
$231
Mark-to-Market Impact of Economic Hedging Activities — (71)
Unrealized Gains Related to NDT Fund Investments 51 24 Merger and
Integration Costs (2) (9) Amortization of Commodity Contract
Intangibles (10) (22) Long-Lived Asset Impairments (6) (338) Plant
Retirements and Divestitures — 48 Reassessment of State Deferred
Income Taxes (11) 39 Reduction of State Income Tax Reserve 10 — Tax
Settlements — 5 Bargain-Purchase Gain — 28 CENG Non-Controlling
Interest (20) (26)
Generation GAAP Net (Loss)
Income
$154
$(91)
Generation’s Adjusted (non-GAAP) Operating Earnings in the
fourth quarter of 2015 decreased $89 million compared with the same
quarter in 2014. This decrease primarily reflected timing of
nuclear projects, impacts of increased nuclear refueling outages
and increased depreciation expense, partially offset by the
favorable settlement of certain state income tax positions.
ComEd consists of electricity transmission and
distribution operations in northern Illinois.
ComEd's fourth quarter 2015 GAAP net income was $87 million,
compared with net income of $73 million in the fourth quarter of
2014. Adjusted (non-GAAP) Operating Earnings for the fourth quarter
of 2014 do not include merger and integration costs that were
included in reported GAAP earnings. A reconciliation of Adjusted
(non-GAAP) Operating Earnings to GAAP Net Income is presented in
the table below:
($ millions) 4Q15
4Q14
ComEd Adjusted (non-GAAP) Operating
Earnings
$87
$75
Merger and Integration Costs — (2)
ComEd GAAP Net Income
$87
$73
ComEd’s Adjusted (non-GAAP) Operating Earnings in the fourth
quarter of 2015 increased $12 million compared with the same
quarter in 2014, primarily due to higher electric distribution and
transmission formula rate earnings at ComEd reflecting the impacts
of increased capital investment and favorable distribution ROE,
partially offset by unfavorable weather and volume.
For the fourth quarter of 2015, heating degree-days in the ComEd
service territory were down 26.8 percent relative to the same
period in 2014 and 25.1 percent below normal. Cooling degree days
were down 66.7 percent from prior year and 90.9 percent below
normal. Total retail electric deliveries decreased 4.9 percent in
the fourth quarter of 2015 compared with the same period in
2014.
Weather-normalized retail electric deliveries were down 2.2
percent in the fourth quarter of 2015 relative to 2014.
PECO consists of electricity transmission and
distribution operations and retail natural gas distribution
operations in southeastern Pennsylvania.
PECO’s fourth quarter 2015 GAAP net income was $79 million,
compared with $98 million in the fourth quarter of 2014. Adjusted
(non-GAAP) Operating Earnings for the fourth quarter of 2014 do not
include merger and integration costs that were included in reported
GAAP earnings. A reconciliation of Adjusted (non-GAAP) Operating
Earnings to GAAP Net Income is presented in the table below:
($ millions) 4Q15
4Q14
PECO Adjusted (non-GAAP) Operating
Earnings
$79
$99
Merger and Integration Costs — (1)
PECO GAAP Net Income
$79
$98
PECO’s Adjusted (non-GAAP) Operating Earnings in the fourth
quarter of 2015 decreased $20 million from the same quarter in
2014, primarily due to unfavorable weather, partially offset by a
reduction in uncollectible accounts expense.
For the fourth quarter of 2015, heating degree-days in the PECO
service territory were down 34.5 percent relative to the same
period in 2014 and were 39.9 percent below normal. Cooling
degree-days were down 16.0 percent from prior year and 8.7 percent
below normal. Total retail electric deliveries were down 5.9
percent compared with the fourth quarter of 2014. Natural gas
deliveries (including both retail and transportation components) in
the fourth quarter of 2015 were down 22.8 percent compared with the
same period in 2014.
Weather-normalized retail electric deliveries and gas deliveries
increased 0.2 percent and 1.6 percent in the fourth quarter of 2015
relative to 2014, respectively.
BGE consists of electricity transmission and distribution
operations and retail natural gas distribution operations in
Central Maryland.
BGE’s fourth quarter 2015 GAAP net income was $74 million,
compared with $52 million in the fourth quarter of 2014. Adjusted
(non-GAAP) Operating Earnings for the fourth quarter of 2014 do not
include merger and integration costs that were included in reported
GAAP earnings. A reconciliation of Adjusted (non-GAAP) Operating
Earnings to GAAP Net Income is presented in the table below:
($ millions) 4Q15
4Q14
BGE Adjusted (non-GAAP) Operating
Earnings
$74
$53
Merger and Integration Costs — (1)
BGE GAAP Net Income
$74
$52
BGE’s Adjusted (non-GAAP) Operating Earnings in the fourth
quarter of 2015 increased $21 million from the same quarter in
2014, primarily due to increased distribution revenue pursuant to
increased rates effective in December 2014 and increased
transmission revenue. Due to revenue decoupling, BGE is not
affected by actual weather with the exception of major storms.
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 February 3, 2016.
Cautionary Statements Regarding Forward-Looking
Information
This presentation 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 include those factors
discussed herein, as well as the items discussed in (1) Exelon’s
2014 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 23; (2) Exelon’s Third Quarter 2015
Quarterly Report on Form 10-Q 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 19; and (3) other factors discussed
in filings with the SEC by Exelon. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
apply only as of the date of this presentation. Exelon does not
undertake any obligation to publicly release any revision to its
forward-looking statements to reflect events or circumstances after
the date of this presentation.
Exelon Corporation (NYSE: EXC) is the nation’s
leading competitive energy provider, with 2015 revenues of
approximately $29.4 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 32,000 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 more than 2.5 million residential, public sector and
business customers, including more than two-thirds of the Fortune
100. 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 December 31, 2015 Three Months
Ended December 31, 2014 Adjusted
Adjusted GAAP (a)
Adjustments Non-GAAP GAAP (a)
Adjustments Non-GAAP Operating revenues $
6,702 $ (20 ) (b),(c) $ 6,682 $ 7,255 $ (311 ) (b),(c) $ 6,944
Operating expenses Purchased power and fuel 2,874 (33 )
(b),(c) 2,841 3,603 (471 ) (b),(c) 3,132 Operating and maintenance
2,204 (24 ) (d),(e) 2,180 2,563 (557 ) (d),(e),(k) 2,006
Depreciation and amortization 633 — 633 582 — 582 Taxes other than
income 292 — 292 267 — 267
Total operating expenses 6,003 (57 ) 5,946 7,015
(1,028 ) 5,987
Gain (loss) on sales of assets 8 — 8 80 (83 )
(k) (3 )
Gain on acquisition of businesses — —
— 28 (28 ) (l) —
Operating income 707
37 744 348 606 954
Other
income and (deductions) Interest expense (316 ) — (316 ) (343 )
102 (d),(m) (241 ) Other, net 172 (73 ) (f),(g) 99
110 (41 ) (f),(n) 69
Total other income and
(deductions) (144 ) (73 ) (217 ) (233 ) 61 (172 )
Income before income taxes 563 (36 ) 527 115 667 782
Income taxes 268 (54 ) (b),(c),(d),(e),(f),(g),(h),(i) 214
20 291 (b),(c),(d),(e),(f),(h),(k).(m),(n) 311
Equity in losses
of unconsolidated affiliates (4 ) — (4 ) — —
—
Net income 291 18 309 95 376 471
Net
income (loss) attributable to noncontrolling interests and
preference stock dividends (18 ) (20 ) (j) (38 ) 77 (27
) (j) 50
Net income attributable to common
shareholders $ 309 $ 38 $ 347 $ 18
$ 403 $ 421
Effective tax rate 47.6 % 40.6 %
17.4 % 39.8 %
Earnings per average common share Basic $ 0.34
$ 0.04 $ 0.38 $ 0.02 $ 0.47 $ 0.49 Diluted $ 0.33 $
0.05 $ 0.38 $ 0.02 $ 0.46 $ 0.48
Average common shares outstanding Basic 921 921 861 861
Diluted 924 924 868 868
Effect of adjustments on earnings per
average diluted common share recorded in accordance with GAAP:
Mark-to-market impact of economic hedging activities (b) $ — $ 0.08
Amortization of commodity contract intangibles (c) 0.01 0.03 Merger
and integration costs (d) 0.01 0.03 Long-lived asset impairment (e)
0.01 0.39 Unrealized gains related to NDT fund investments (f)
(0.05 ) (0.03 ) PHI merger related redeemable debt exchange (g)
0.01 — Reassessment of state deferred income taxes (h) 0.05 (0.03 )
Reduction in state income tax reserve (i) (0.01 ) — Non-controlling
interest (j) 0.02 0.03 Plant retirements and divestitures (k) —
(0.06 ) Bargain-purchase gain (l) — (0.03 ) Mark-to-market impact
of PHI merger related interest rate swaps (m) — 0.06 Tax
settlements (n) — (0.01 ) Total adjustments $ 0.05 $
0.46 (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
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,
if and when applicable, related to the Constellation merger, the
CENG integration and the Integrys acquisition. (d) Adjustment to
exclude certain costs associated with mergers and acquisitions,
including, if and when applicable, professional fees,
employee-related expenses, integration activities, upfront credit
facilities fees, merger commitments, and certain pre-acquisition
contingencies related to the Constellation merger, CENG integration
and the Integrys and pending PHI acquisitions. (e) Adjustment to
exclude charges to earnings primarily related to the impairments of
certain generating assets which were held for sale in 2014 and
certain upstream assets in 2014 and 2015. (f) 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. (g) Adjustment to exclude the
costs associated with the exchange and redemption in December 2015
of certain mandatorily redeemable debt issued to finance the PHI
merger. (h) Adjustment to exclude the non-cash impact of the
remeasurement of state deferred income taxes, primarily as a result
of changes in forecasted apportionment. (i) Adjustment to exclude
the reduction of a previously recorded state income tax reserve
associated with the 2014 sales of Keystone and Conemaugh. (j)
Adjustment to exclude Generation’s non-controlling interest related
to CENG exclusion items, primarily related to the impact of
unrealized gains and losses on NDT fund investments in 2015, and in
2014 the impact of unrealized gains and losses on NDT fund
investments, costs incurred associated with the integration,
mark-to-market activity, and non-cash amortization of intangible
assets, net, related to commodity contracts. (k) Adjustment to
exclude the impacts associated with the sales of Generation's
ownership interests in Fore River and West Valley generating
stations in 2014. (l) Adjustment to exclude the excess of the fair
value of assets and liabilities acquired over the purchase price of
Integrys. (m) Adjustment to exclude the impact of mark-to-market
activity on forward-starting interest rate swaps held at Exelon
Corporate related to financing for the pending PHI acquisition,
which were terminated on June 8, 2015. (n) Adjustment to reflect a
benefit related to favorable settlements in 2014 of certain income
tax positions on Constellation’s pre-acquisition tax returns.
EXELON CORPORATION Reconciliation of
Adjusted (non-GAAP) Operating Earnings to GAAP Consolidated
Statements of Operations
(unaudited)
(in millions, except per share data)
Twelve Months Ended December 31, 2015 Twelve
Months Ended December 31, 2014
Adjusted Adjusted GAAP
(a) Adjustments Non-GAAP GAAP (a)
Adjustments Non-GAAP Operating revenues $
29,447 $ (210 ) (b),(c) $ 29,237 $ 27,429 $ 460 (b),(c),(d) $
27,889
Operating expenses Purchased power and fuel 13,084 55
(b),(c) 13,139 13,003 (251 ) (b),(c) 12,752 Operating and
maintenance 8,322 (90 ) (d),(e),(f),(g) 8,232 8,568 (809 )
(d),(e),(f),(o) 7,759 Depreciation and amortization 2,450 — 2,450
2,314 — 2,314 Taxes other than income 1,200 — 1,200
1,154 — 1,154
Total operating
expenses 25,056 (35 ) 25,021 25,039 (1,060 ) 23,979
Equity
in earnings (loss) of unconsolidated affiliates — — — (20 ) 12
(b),(c) (8 )
Gain on sales of assets 18 — 18 437 (411 ) (o)
26
Gain on consolidation and acquisition of
businesses
— — — 289 (289 ) (p),(q) —
Operating income 4,409 (175 ) 4,234 3,096
832 3,928
Other income and
(deductions) Interest expense (1,071 ) (27 ) (d),(h),(i) (1,098
) (1,065 ) 134 (b),(d),(h) (931 ) Other, net (8 ) 284
(j),(k) 276 455 (193 ) (i),(j) 262
Total
other income and (deductions) (1,079 ) 257 (822 ) (610 )
(59 ) (669 )
Income before income taxes 3,330 82
3,412 2,486 773 3,259
Income taxes 1,073 92
(b),(c),(d),(e),(f),(g),(h),(i),(j),(k),(l),(m) 1,165 666 391
(b),(c),(d),(e),(f),(h),(i),(j),(l),(o),(p) 1,057
Equity in loss
of unconsolidated affiliates (7 ) — (7 ) — —
—
Net income 2,250 (10 ) 2,240 1,820 382 2,202
Net income (loss) attributable to noncontrolling interests and
preference stock dividends (19 ) 32 (n) 13 197
(63 ) (n) 134
Net income attributable to common
shareholders $ 2,269 $ (42 ) $ 2,227 $ 1,623
$ 445 $ 2,068
Effective tax rate
32.2 % 34.1 % 26.8 % 32.4 %
Earnings per average common
share Basic $ 2.55 $ (0.05 ) $ 2.50 $ 1.89 $ 0.51 $ 2.40
Diluted $ 2.54 $ (0.05 ) $ 2.49 $ 1.88 $ 0.51
$ 2.39
Average common shares outstanding Basic
890 890 860 860 Diluted 893 893 864 864
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 ) $ 0.42 Amortization of commodity contract intangibles
(c) — 0.07 Merger and integration costs (d) 0.07 0.14 Long-lived
asset impairment (e) 0.02 0.50 Asset retirement obligation (f)
(0.01 ) (0.02 ) Midwest Generation bankruptcy recoveries (g) (0.01
) — Mark-to-market impact of PHI merger related swaps (h) (0.02 )
0.07 Tax settlement (i) (0.06 ) (0.12 ) Unrealized (gains) losses
related to NDT fund investments (j) 0.13 (0.10 ) PHI merger related
redeemable debt exchange (k) 0.01 — Reassessment of state deferred
income taxes (l) 0.05 (0.03 ) Reduction in state income tax reserve
(m) (0.01 ) — Non-controlling interest (n) (0.04 ) 0.07 Plant
retirements and divestitures (o) — (0.28 ) Gain on CENG integration
(p) — (0.18 ) Bargain-purchase gain (q) — (0.03 ) Total
adjustments $ (0.05 ) $ 0.51
Note: For the year ended December 31, 2014, includes the results
of operations of CENG beginning 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 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, if and when
applicable, related to the Constellation merger, the CENG
integration and the Integrys acquisition. (d) Adjustment to exclude
certain costs associated with mergers and acquisitions, including,
if and when applicable, professional fees, employee-related
expenses, integration activities, upfront credit facilities fees,
merger commitments, and certain pre-acquisition contingencies
related to the Constellation merger, CENG integration and the
Integrys and pending PHI acquisitions. (e) Adjustment to exclude
charges to earnings related to the impairments of certain
generating assets which were held for sale and wind generating
assets in 2014 and charges in 2014 and 2015 related to the
impairment of investments in long-term leases and certain upstream
assets. (f) Adjustment to exclude the non-cash benefit pursuant to
the annual update of the Generation nuclear decommissioning
obligation related to the non-regulatory units. (g) Adjustment to
exclude a benefit for the favorable settlement of a long-term
railcar lease agreement pursuant to the Midwest Generation
bankruptcy. (h) Adjustment to exclude the impact of mark-to-market
activity on forward-starting interest rate swaps held at Exelon
Corporate related to financing for the pending PHI acquisition,
which were terminated on June 8, 2015. (i) Adjustment to reflect a
benefit related to favorable settlements in 2014 and 2015 of
certain income tax positions on Constellation’s pre-acquisition tax
returns. (j) 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. (k) Adjustment to exclude the costs associated with the
exchange and redemption in December 2015 of certain mandatorily
redeemable debt issued to finance the PHI merger (l) Adjustment to
exclude the non-cash impact of the remeasurement of state deferred
income taxes, primarily as a result of changes in forecasted
apportionment. (m) Adjustment to exclude the reduction of a
previously recorded state income tax reserve associated with the
2014 sales of Keystone and Conemaugh. (n) Adjustment to exclude
Generation’s non-controlling interest related to CENG exclusion
items, primarily related to the impact of unrealized gains and
losses on NDT fund investments and mark-to-market activity in 2015,
and in 2014 the impact of unrealized gains and losses on NDT fund
investments, costs incurred associated with the integration,
non-cash amortization of intangible assets, net, related to
commodity contracts, mark-to-market activity, and changes in asset
retirement obligations. (o) Adjustment to exclude the impacts
associated with the sales of Generation's ownership interests in
Safe Harbor and the Fore River and West Valley generating stations
in 2014. (p) Adjustment to exclude the gain recorded upon
consolidation of CENG resulting from the difference in the fair
value of CENG’s net assets as of April 1, 2014 and the equity
method investment previously recorded on Generation’s and Exelon’s
books and the settlement of pre-existing transactions between
Generation and CENG. (q) Adjustment to exclude the excess of the
fair value of assets and liabilities acquired over the purchase
price of Integrys.
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version on businesswire.com: http://www.businesswire.com/news/home/20160203005799/en/
Exelon CorporationFrancis IdehenInvestor
Relations312-394-3967orPaul AdamsCorporate
Communications410-470-4167
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