Exelon Corporation (NYSE: EXC) announced third quarter 2016
consolidated earnings as follows:
Third Quarter
2016
2015
GAAP Results:
Net Income ($ millions)
$490
$629
Diluted Earnings per Share
$0.53
$0.69
Adjusted (non-GAAP) Operating
Results:
Net Income ($ millions)
$841
$757
Diluted Earnings per Share
$0.91
$0.83
“During the third quarter, Exelon delivered on its commitment to
provide value to our stakeholders through our strong operating
performance at the legacy Exelon utilities, improved operational
performance at PHI, the stellar performance of our generation
assets during the summer heat, and the ability of our Constellation
business to perform in low- and high-volatility market conditions,”
said Christopher M. Crane, Exelon president and CEO. “Exelon
produced earnings of $0.91 per share, exceeding our guidance
range. For the full year, we are raising our guidance from
$2.55 to $2.75 per share.”
Third Quarter Operating Results
Exelon’s GAAP Net Income decreased to $0.53 per share in the
third quarter of 2016 from $0.69 per share in the third quarter of
2015. Exelon’s adjusted (non-GAAP) Operating Earnings increased to
$0.91 per share in the third quarter of 2016 from $0.83 per share
in the third quarter of 2015.
Third quarter 2016 results include $0.14 per share of PHI
Adjusted (non-GAAP) Operating Earnings, the impact of which was
partially offset by incremental debt and equity costs incurred in
connection with the merger. Adjusted (non-GAAP) Operating Earnings
in the third quarter of 2016 also reflect the following favorable
factors:
- Higher utility earnings due to
favorable impacts of regulatory rate increases; and
- Favorable utility weather.
These factors were partially offset by:
- Decreased capacity prices at
Generation;
- Increased income taxes given a decrease
in domestic production activities production at Generation;
and
- Higher nuclear decommissioning
amortization at Generation.
Adjusted (non-GAAP) Operating Earnings for the third quarter of
2016 do not include the following items (after tax) that were
included in reported GAAP Net Income:
(in millions) (per diluted share)
Exelon GAAP Net Income
$490
$0.53
Mark-to-Market Impact of Economic
Hedging
Activities
(54) (0.06) Unrealized Gains Related to NDT Fund Investments (70)
(0.07) Amortization of Commodity Contract Intangibles 13 0.01
Merger and Integration Costs 13 0.01 Merger Commitments 5 0.01
Long-Lived Asset Impairments 11 0.01 Plant Retirements and
Divestitures 204 0.22 Cost Management Program 7 0.01 Like-Kind
Exchange Tax Position 199 0.21 CENG Non-Controlling Interest
23 0.03
Exelon Adjusted (non-GAAP) Operating
Earnings
$841
$0.91
Adjusted (non-GAAP) Operating Earnings for the third quarter of
2015 do not include the following items (after tax) that were
included in reported GAAP Net Income:
(in millions)
(per diluted share)
Exelon GAAP Net Income
$629
$0.69
Mark-to-Market Impact of Economic Hedging
Activities
85 0.09 Unrealized Losses Related to NDT Fund Investments 133 0.15
Amortization of Commodity Contract Intangibles 2 — Merger and
Integration Costs 12 0.02 Asset Retirement Obligation (6) (0.01)
Tax Settlements (52) (0.06) CENG Non-Controlling Interest
(46) (0.05)
Exelon Adjusted (non-GAAP) Operating
Earnings
$757
$0.83
Third Quarter and Recent Highlights
- ACE New Jersey Electric Distribution
Rate Case: On August 24, 2016, the NJBPU approved ACEs filed
settlement for its pending electric distribution rate case, which
includes an increase of $45 million (before New Jersey sales and
use tax) to its electric distribution base rates, based on an
approved ROE of 9.75 percent. The new rates were effective
immediately after approval.
- Proposed Acquisition of FitzPatrick
Nuclear Station: Following the approval of the Clean Energy
Standard by the New York Public Service Commission, Generation
entered into a series of agreements with Entergy Nuclear
FitzPatrick LLC on August 8, 2016, to acquire the James A.
Fitzpatrick nuclear generating station for a cash purchase price of
$110 million. Under the terms of the agreements, Generation will
reimburse Entergy for approximately $200 million to $250 million of
incremental costs to refuel the plant and operate and maintain the
plant after the refueling outage, scheduled to end in February
2017, through the closing date. Generation will be entitled to all
revenues from FitzPatrick’s electricity and capacity sales for the
period commencing upon completion of the refueling outage through
the closing date. The transaction is expected to close in the
second quarter of 2017, and is dependent upon regulatory approval
by FERC, NRC and the NYPSC.
- ConEdison Solutions Acquisition:
On September 1, 2016, Generation acquired the competitive retail
electric and natural gas businesses of ConEdison Solutions, a
subsidiary of Consolidated Edison, Inc., for an all cash purchase
price of $257 million including net working capital of $204
million.
- Like-Kind Exchange Tax Court
Decision: Exelon took a position on its 1999 income tax return
to defer approximately $1.2 billion of tax gain on the sale of
ComEd’s fossil generating assets. On September 19, 2016, the United
States Tax Court rejected Exelon’s position regarding this sale and
asserted that the entire gain was taxable in 1999. The IRS has also
asserted a penalty of approximately $90 million for a substantial
understatement of tax. As a result, Exelon recorded a charge to
earnings for the penalty and after-tax interest due on the asserted
penalty of approximately $200 million, of which approximately $150
million was recorded at ComEd. In early 2017, Exelon expects to
appeal this decision to the U.S. Court of Appeals for the Seventh
Circuit. Exelon has agreed to hold ComEd harmless from any
unfavorable impacts of the after-tax interest or penalty amounts on
ComEd’s equity, and will not seek recovery from ComEd customers for
any interest or penalty associated with the like-kind exchange tax
position. Exelon is required to pay the tax, penalty and interest
for the tax years before the Court at the time Exelon files its
appeal. As a result, Exelon deposited $1.25 billion with the IRS in
October of 2016. The remaining amount will be paid in early 2017 at
the time Exelon files its appeal.
- Nuclear Operations: Generation’s
nuclear fleet, including its owned output from the Salem Generating
Station and 100 percent of the CENG units, produced 44,709
gigawatt-hours (GWh) in the third quarter of 2016, compared with
45,180 GWh in the third quarter of 2015. Excluding Salem, the
Exelon-operated nuclear plants at ownership achieved a 96.3 percent
capacity factor for the third quarter of 2016, compared with 95.5
percent for the third quarter of 2015. The number of planned
refueling outage days in the third quarter of 2016 totaled 17,
compared with 27 in the third quarter of 2015. There were zero
non-refueling outage days in the third quarter of 2016, compared
with 11 days in the third quarter of 2015.
- Fossil and Renewables
Operations: The Dispatch Match rate for Generation’s gas and
hydro fleet was 97.9 percent in the third quarter of 2016, compared
with 99.0 percent in the third quarter of 2015, primarily
reflecting gas unit outages in Texas and Maryland. Energy Capture
for the wind and solar fleet was 95.2 percent in the third quarter
of 2016, compared with 94.8 percent in the third quarter of
2015.
- 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. The proportion of expected generation hedged as of
September 30, 2016, is 98.0 percent to 101.0 percent for 2016,
85.0 percent to 88.0 percent for 2017, and 54.0 percent to 57.0
percent for 2018. 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.
- Financing Activities:
- On August 18, 2016, BGE issued and sold
$850 million in aggregate principal amount of Notes consisting of
$350 million of 2.400 percent Notes due in 2026 and $500 million of
3.500 percent Notes due in 2046. The proceeds of the Notes were
used to redeem outstanding preference shares issued by BGE and for
general corporate purposes.
- On September 18, 2016, BGE redeemed the
remaining 500,000 shares of its outstanding 6.970 percent
Cumulative Preference Stock, 1993 Series and the remaining 400,000
shares of its outstanding 6.70 percent Cumulative Preference Stock,
1993 Series for $90 million, plus accrued and unpaid
dividends.
- On September 21, 2016, PECO issued $300
million in aggregate principal amount of its First and Refunding
Mortgage Bonds, 1.700 percent Series due in 2021. The net proceeds
from the sale of the bonds were used to refinance maturing mortgage
bonds.
- On September 30, 2016, Generation
issued $150 million in aggregate principal amount of 3.390 percent
Notes due in 2036. The proceeds of the Notes will be used for
general corporate purposes.
Operating Company Results
ComEd consists of electricity transmission and
distribution operations in Northern Illinois.
ComEd’s third quarter 2016 GAAP Net Income was $37 million
compared with $149 million in the third quarter of 2015. Adjusted
(non-GAAP) Operating Earnings for the third quarter of 2016 and
2015 do not include certain items (after tax) that were included in
reported GAAP Net Income as reconciled in the table below:
($ millions)
3Q16
3Q15
ComEd GAAP Net Income
$37
$149
Merger and Integration Costs — 2 Like-Kind Exchange Tax Position
149 —
ComEd Adjusted (non-GAAP) Operating
Earnings
$186
$151
ComEd’s Adjusted (non-GAAP) Operating Earnings in the third
quarter of 2016 increased by $35 million from the same quarter in
2015, primarily due to favorable weather and higher electric
distribution and transmission formula rate earnings.
For the third quarter of 2016, cooling degree days were up 32.5
percent relative to the same period in 2015 and were 37.0 percent
above normal. Total retail deliveries increased by 7.0 percent in
the third quarter of 2016 compared with the same period in
2015.
Weather-normalized retail electric deliveries remained
relatively consistent in the third quarter of 2016 compared with
the same period in 2015.
PECO consists of electricity transmission and
distribution operations and retail natural gas distribution
operations in Southeastern Pennsylvania.
PECO’s third quarter 2016 GAAP Net Income was $122 million
compared with $90 million in the third quarter of 2015. Adjusted
(non-GAAP) Operating Earnings for the third quarter of 2016 and
2015 do not include merger and integration costs that were included
in reported GAAP Net Income as reconciled in the table below:
($ millions)
3Q16
3Q15
PECO GAAP Net Income
$122
$90
Merger and Integration Costs 1 1
PECO Adjusted (non-GAAP) Operating
Earnings
$123
$91
PECO’s Adjusted (non-GAAP) Operating Earnings in the third
quarter of 2016 increased by $32 million from the same quarter in
2015, primarily due to favorable weather and increased electric
distribution revenue pursuant to a rate increase effective January
1, 2016.
For the third quarter of 2016, cooling degree days were up 8.6
percent relative to the same period in 2015 and were 38.6 percent
above normal. Total retail electric deliveries were up 5.1 percent
compared with the third quarter of 2015. Natural gas deliveries
(including both retail and transportation segments) in the third
quarter of 2016 were down 2.6 percent compared with the same period
in 2015.
Weather-normalized retail electric deliveries remained
relatively consistent while gas deliveries decreased 3.0 percent in
the third quarter of 2016 compared with the same period in 2015.
The decreased gas volumes were driven primarily by lower use per
customer.
BGE consists of electricity transmission and distribution
operations and retail natural gas distribution operations in
Central Maryland.
BGE’s third quarter 2016 GAAP Net Income was $54 million
compared with $51 million in the third quarter of 2015. Adjusted
(non-GAAP) Operating Earnings for the third quarter of 2016 and
2015 do not include merger and integration costs that were included
in reported GAAP Net Income as reconciled in the table below:
($ millions) 3Q16
3Q15
BGE GAAP Net Income
$54
$51
Merger and Integration Costs 1 1
BGE Adjusted (non-GAAP) Operating
Earnings
$55
$52
BGE’s Adjusted (non-GAAP) Operating Earnings in the third
quarter of 2016 increased $3 million from the same quarter in 2015,
primarily due to increased distribution revenue pursuant to
increased rates effective in June 2016 and increased transmission
revenue due to increased capital investments and operating and
maintenance expense recoveries, partially offset by the increased
amortization due to the initiation of cost recovery of the AMI
programs and increased underground conduit rental fees assessed by
the City of Baltimore. Due to revenue decoupling, BGE is not
affected by actual weather with the exception of major storms.
PHI consists of electricity transmission and distribution
operations in the District of Columbia and portions of Maryland,
Delaware, and New Jersey and retail natural gas distribution
operations in northern Delaware.
PHI’s third quarter 2016 GAAP Net Income was $166 million.
Adjusted (non-GAAP) Operating Earnings do not include certain items
(after-tax) that were included in reported GAAP Net Income as
reconciled in the table below:
($ millions) 3Q16
PHI GAAP Net Income
$166
Merger and Integration Costs 4 Merger Commitments(1) (40)
PHI Adjusted (non-GAAP) Operating
Earnings
$130
(1) Reflects impacts of after-tax adjustments to amounts and
allocations of PHI merger commitment costs in application of the
“most favored nation” provision. For the Exelon consolidated
entity, total adjustments under this provision have increased total
estimated merger commitment costs from $508 million at June 30,
2016 to $513 million at September 30, 2016 (with no change in a net
present value basis).
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.
Generation’s third quarter 2016 GAAP Net Income was $236 million
compared with GAAP Net Income of $377 million in the third quarter
of 2015. Adjusted (non-GAAP) Operating Earnings for the third
quarter of 2016 and 2015 do not include various items (after tax)
that were included in reported GAAP Net Income as reconciled in the
table below:
($ millions)
3Q16
3Q15
Generation GAAP Net Income
$236
$377
Mark-to-Market Impact of Economic Hedging
Activities
(54) 85 Unrealized (Gains) Losses Related to NDT Fund Investments
(70) 133 Amortization of Commodity Contract Intangibles 13 2 Merger
and Integration Costs 7 6 Long-Lived Asset Impairments 10 — Plant
Retirements and Divestitures 204 — Cost Management Program 7 —
Asset Retirement Obligation — (6) Tax Settlements — (52) CENG
Non-Controlling Interest 23 (46)
Generation Adjusted (non-GAAP)
Operating Earnings
$376
$499
Generation’s Adjusted (non-GAAP) Operating Earnings in the third
quarter of 2016 decreased by $123 million compared with the same
quarter in 2015, primarily reflecting increased income taxes given
a decrease in the domestic production activities deduction,
decreased capacity prices and increased nuclear decommissioning
amortization expense.
Non-GAAP Financial Measures
In addition to net income as determined under generally accepted
accounting principles in the United States (GAAP), Exelon evaluates
its operating performance using the measure of Adjusted (non-GAAP)
Operating Earnings because management believes it represents
earnings directly related to the ongoing operations of the
business. Adjusted (non-GAAP) Operating Earnings exclude certain
costs, expenses, gains and losses and other specified items. This
measure is intended to enhance an investor’s overall understanding
of period over period operating results and provide an indication
of Exelon’s baseline operating performance excluding items that are
considered by management to be not directly related to the ongoing
operations of the business. In addition, this measure is among the
primary indicators management uses as a basis for evaluating
performance, allocating resources, setting incentive compensation
targets and planning and forecasting of future periods. Adjusted
(non-GAAP) Operating Earnings is not a presentation defined under
GAAP and may not be comparable to other companies’
presentation. The Company has provided the non-GAAP financial
measure as supplemental information and in addition to the
financial measures that are calculated and presented in accordance
with GAAP. Adjusted (non-GAAP) Operating Earnings should not be
deemed more useful than, a substitute for, or an alternative to the
most comparable GAAP measures provided in this earnings release and
attachments. This press release and earnings release attachments
provide reconciliations of adjusted (non-GAAP) Operating Earnings
to the most directly comparable financial measures calculated and
presented in accordance with GAAP, are posted on Exelon’s website:
www.exeloncorp.com, and have been
furnished to the Securities and Exchange Commission on Form 8-K on
October 26, 2016.
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, Exelon
Generation Company, LLC, Commonwealth Edison Company, PECO Energy
Company, Baltimore Gas and Electric Company, Pepco Holdings LLC
(PHI), Potomac Electric Power Company, Delmarva Power & Light
Company, and Atlantic City Electric Company (Registrants) include
those factors discussed herein, as well as the items discussed in
(1) Exelon’s 2015 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) PHI’s
2015 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 16; (3) Exelon’s Third Quarter 2016
Quarterly Report on Form 10-Q (To be filed on October 26, 2016) 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
(4) 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 a Fortune 100 energy company
with the largest number of utility customers in the U.S. Exelon
does business in 48 states, the District of Columbia and Canada and
had 2015 revenue of $34.5 billion. Exelon’s six utilities deliver
electricity and natural gas to approximately 10 million customers
in Delaware, the District of Columbia, Illinois, Maryland, New
Jersey and Pennsylvania through its Atlantic City Electric, BGE,
ComEd, Delmarva Power, PECO and Pepco subsidiaries. Exelon is one
of the largest competitive U.S. power generators, with more than
32,700 megawatts of nuclear, gas, wind, solar and hydroelectric
generating 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 2.5 million residential, public sector and business
customers, including more than two-thirds of the Fortune 100.
Follow Exelon on Twitter @Exelon.
EXELON CORPORATION
Reconciliation of GAAP Consolidated
Statements of Operations to Adjusted (non-GAAP) Operating
Earnings
(unaudited)
(in millions, except per share data)
Three Months Ended September 30,
2016
Three Months Ended September 30, 2015 GAAP (a)
Adjustments
AdjustedNon-GAAP
GAAP (a) Adjustments
AdjustedNon-GAAP
Operating revenues
$ 9,002 $ (166 ) (b),(d) $ 8,836 $ 7,401 $ 11 (b),(d) $ 7,412
Operating expenses Purchased power and fuel 3,754 (127 )
(b),(d),(h) 3,627 3,291 (132 ) (b),(d) 3,159 Operating and
maintenance 2,338 (23 ) (e),(f),(g),(h),(i) 2,315 1,996 (13 )
(e),(k) 1,983 Depreciation and amortization 1,195 (338 ) (e),(h)
857 606 — 606
Taxes other than income
449 — 449 310 — 310
Total operating expenses
7,736 (488 ) 7,248 6,203 (145 ) 6,058
Gain on sales of
assets 1 — 1 2 — 2
Operating income 1,267 322 1,589 1,200
156 1,356
Other income and (deductions)
Interest expense, net (516 ) 153 (j) (363 ) (253 ) (12 ) (l) (265 )
Other, net 120 (39 ) (c),(j) 81 (244 ) 279 (c)
35
Total other income and (deductions) (396 ) 114
(282 ) (497 ) 267 (230 )
Income before income
taxes 871 436 1,307 703 423 1,126
Income taxes 340 108
(b),(c),(d),(e),(f),(g),(h),(i),(j) 448 115 249
(b),(c),(d),(e),(k),(l) 364
Equity in losses of unconsolidated
affiliates (5 ) — (5 ) (1 ) — (1 )
Net
income 526 328 854 587 174 761
Net income (loss)
attributable to noncontrolling interests and preference stock
dividends 36 (23 ) (m) 13 (42 ) 46 (m) 4
Net income attributable to common shareholders $ 490
$ 351 $ 841 $ 629 $ 128 $ 757
Effective tax rate 39.0 % 34.3 % 16.4 % 32.3 %
Earnings per average common share Basic $ 0.53 $ 0.38 $ 0.91
$ 0.69 $ 0.14 $ 0.83 Diluted $ 0.53 $ 0.38 $ 0.91
$ 0.69 $ 0.14 $ 0.83
Average common
shares outstanding Basic 925 925 913 913 Diluted 927 927 915
915
Effect of adjustments on earnings per average diluted common
share recorded in accordance with GAAP: Mark-to-market impact
of economic hedging activities (b) $ (0.06 ) $ 0.09 Unrealized
(gains) losses related to NDT fund investments (c) (0.07 ) 0.15
Amortization of commodity contract
intangibles (d)
0.01 — Merger and integration costs (e) 0.01 0.02 Merger
commitments (f) 0.01 — Long-lived asset impairments (g) 0.01 —
Plant retirements and divestitures (h) 0.22 — Cost management
program (i) 0.01 — Like-kind exchange tax position (j) 0.21 — Asset
retirement obligation (k) — (0.01 ) Tax settlements (l) — (0.06 )
CENG non-controlling interest (m) 0.03 (0.05 ) Total
adjustments $ 0.38 $ 0.14
For the three months ended September 30, 2016, includes
financial results for PHI. Therefore, the results of operations
from 2016 and 2015 are not comparable for Exelon. The explanations
below identify any other significant or unusual items affecting the
results of operations.
(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 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.
(d) Adjustment to exclude the non-cash amortization of intangible
assets, net, related to commodity contracts recorded at fair value
related to the Integrys acquisition in 2015 and the Integrys and
ConEdison Solutions acquisitions in 2016. (e) Adjustment to exclude
certain costs associated with mergers and acquisitions, including,
if and when applicable, professional fees, employee-related
expenses, integration activities, and upfront credit facilities
fees. (f) Adjustments to costs incurred as part of the settlement
orders approving the PHI acquisition. (g) Adjustment to exclude
2016 charge to earnings primarily related to the impairment of
upstream assets at Generation. (h) Adjustment to exclude
accelerated depreciation and amortization associated with
Generation's decision to early retire the Clinton and Quad Cities
nuclear facilities. (i) Adjustment to exclude the 2016 severance
expense and reorganization costs related to a cost management
program. (j) Adjustment to exclude the recognition of a penalty and
associated interest expense, as a result of a tax court decision on
Exelon's like-kind exchange tax position. (k) Adjustment to exclude
a non-cash benefit pursuant to the annual update of the Generation
nuclear decommissioning obligation related to the non-regulatory
units. (l) Adjustment to exclude favorable settlements of certain
income tax positions on Constellation's pre-acquisition tax
returns. (m) Adjustments to exclude the elimination from
Generation’s results of the 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.
EXELON CORPORATION
Reconciliation of GAAP Consolidated
Statements of Operations to Adjusted (non-GAAP) Operating
Earnings
(unaudited)
(in millions, except per share data)
Nine Months Ended September 30, 2016
Nine Months Ended September 30, 2015
GAAP (a)
Adjustments
AdjustedNon-GAAP
GAAP (a) Adjustments
AdjustedNon-GAAP
Operating revenues $ 23,486 $ 368 (b),(d),(e) $ 23,854 $
22,746 $ (190 ) (b),(d) $ 22,556
Operating expenses
Purchased power and fuel 9,462 211 (b),(d),(i) 9,673 10,210 88
(b),(d) 10,298 Operating and maintenance 7,677 (956 )
(e),(f),(g),(i),(j) 6,721 6,119 (66 ) (e),(g),(l),(m) 6,053
Depreciation and amortization 2,821 (452 ) (e),(i) 2,369 1,818 —
1,818 Taxes other than income 1,168 (1 ) (j) 1,167
908 — 908
Total operating expenses
21,128 (1,198 ) 19,930 19,055 22 19,077
Gain on sales of
assets 41 — 41 10 — 10
Operating income 2,399 1,566 3,965
3,701 (212 ) 3,489
Other income and
(deductions) Interest expense, net (1,179 ) 153 (k) (1,026 )
(755 ) (27 ) (h),(n) (782 ) Other, net 377 (193 )
(c),(i),(k) 184 (179 ) 357 (c) 178
Total
other income and (deductions) (802 ) (40 ) (842 ) (934 ) 330
(604 )
Income before income taxes 1,597 1,526 3,123
2,767 118 2,885
Income taxes 625 419
(b),(c),(d),(e),(f),(g),(i),(j),(k) 1,044 805 145
(b),(c),(d),(e),(g),(h),(l),(m),(n) 950
Equity in losses of
unconsolidated affiliates (16 ) — (16 ) (3 ) — (3
)
Net income 956 1,107 2,063 1,959 (27 ) 1,932
Net income
attributable to noncontrolling interests and preference stock
dividends 26 (41 ) (o) (15 ) — 52 (o) 52
Net income attributable to common shareholders $ 930
$ 1,148 $ 2,078 $ 1,959 $ (79 ) $ 1,880
Effective tax rate 39.1 % 33.4 % 29.1 % 32.9 %
Earnings per average common share Basic $ 1.01 $ 1.24 $ 2.25
$ 2.23 $ (0.09 ) $ 2.14 Diluted $ 1.00 $ 1.24 $ 2.24
$ 2.22 $ (0.09 ) $ 2.13
Average common
shares outstanding Basic 924 924 879 879 Diluted 926 926 883
883
Effect of adjustments on earnings per average diluted common
share recorded in accordance with GAAP: Mark-to-market impact
of economic hedging activities (b) $ 0.07 $ (0.18 ) Unrealized
(gains) losses related to NDT fund investments (c) (0.13 ) 0.19
Amortization of commodity contract intangibles (d) 0.01 (0.01 )
Merger and integration costs (e) 0.10 0.06 Merger commitments (f)
0.43 — Long-lived asset impairments (g) 0.11 0.02 Mark-to-market
impact of PHI merger related interest swap (h) — (0.03 ) Plant
retirements and divestitures (i) 0.37 — Cost management program (j)
0.03 — Like-kind exchange tax position (k) 0.21 — Midwest
Generation bankruptcy recoveries (l) — (0.01 ) Asset retirement
obligation (m) — (0.01 ) Tax settlements (n) — (0.06 ) CENG
non-controlling interest (o) 0.04 (0.06 ) Total adjustments
$ 1.24 $ (0.09 )
As a result of the PHI acquisition completion on March 23,
2016, the table includes financial results for PHI beginning on
March 24, 2016 to September 30, 2016. Therefore, the
results of operations from 2016 and 2015 are not comparable for
Exelon. The explanations below identify any other significant or
unusual items affecting the results of operations.
(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 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.
(d) Adjustment to exclude the non-cash amortization of intangible
assets, net, related to commodity contracts recorded at fair value
related to the Integrys acquisition in 2015 and the Integrys and
ConEdison Solutions acquisitions in 2016. (e) Adjustment to exclude
certain costs associated with mergers and acquisitions, including,
if and when applicable, professional fees, employee-related
expenses, integration activities, and upfront credit facilities
fees, partially offset in 2016 at ComEd, BGE and PHI by the
anticipated recovery of previously incurred PHI acquisition costs.
(f) Adjustment to exclude costs incurred as part of the settlement
orders approving the PHI acquisition. (g) Adjustment to exclude a
2015 charge to earnings primarily related to the impairment of
investment in long-term leases at Corporate and 2016 charges to
earnings primarily related to the impairment of upstream assets and
certain wind projects at Generation. (h) Adjustment to exclude the
mark-to-market impact of Exelon's Corporate's forward-starting
interest rate swaps related to financing for the PHI acquisition,
which were terminated on June 8, 2015. (i) Adjustment to exclude
the impacts associated with Generation's decision to early retire
the Clinton and Quad Cities nuclear facilities, partially offset by
a gain associated with Generation's 2016 sale of the New Boston
generating site. (j) Adjustment to exclude the 2016 severance
expense and reorganization costs related to a cost management
program. (k) Adjustment to exclude the recognition of a penalty and
associated interest expense, as a result of a tax court decision on
Exelon's like-kind exchange tax position. (l) Adjustment to exclude
a 2015 benefit for the favorable settlement of a long-term railcar
lease agreement pursuant to the Midwest Generation bankruptcy. (m)
Adjustment to exclude a non-cash benefit pursuant to the annual
update of the Generation nuclear decommissioning obligation related
to the non-regulatory units. (n) Adjustment to exclude favorable
settlements of certain income tax positions on Constellation's
pre-acquisition tax returns. (o) Adjustments to exclude the
elimination from Generation’s results of the 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161026005846/en/
Exelon CorporationDan Eggers, 312-394-2345Investor
RelationsorPaul Adams, 410-470-4167Corporate Communications
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