- Exelon reported GAAP Net Income of
$1.94 per share and $3.97 per share for the fourth quarter and full
year 2017, respectively, and Adjusted (non-GAAP) Operating Earnings
of $0.55 per share and $2.60 per share for the fourth quarter and
full year 2017, respectively.
- Exelon introduces a 2018 Adjusted
(non-GAAP) Operating Earnings guidance range of $2.90 - $3.20 per
share, reflecting growth in Utilities, full year recognition of
both Illinois and New York ZEC revenue and the impact of tax
reform.
- Exelon's Board of Directors increased
the annual dividend growth rate to 5 percent from 2.5 percent,
effective in the first quarter of 2018.
- Exelon Utilities project capital
expenditures of $21 billion over the next 4 years to improve
service and benefit customers, supporting over 7 percent annual
rate base growth.
- Exelon Generation projects free cash
flow before growth capex of $7.6 billion over the next 4 years,
supporting Exelon's priorities of Utility reinvestment and debt
reduction.
- Quad Cities Units 1 & 2 and Clinton
Unit 1 were winning bidders in Illinois ZEC procurement.
Exelon Corporation (NYSE: EXC) today reported its financial
results for the fourth quarter and full year 2017.
This press release features multimedia. View
the full release here:
http://www.businesswire.com/news/home/20180207005615/en/
Exelon Corporation 2017 in Review
"Exelon had a strong 2017, with our utilities turning in
first-quartile and in several cases best-ever performance in
reliability and customer service, and our nuclear generation fleet
producing the most power on record, all thanks to the great work of
our people, who also set company records for volunteerism and
charitable giving,” said Christopher M. Crane, Exelon’s president
and CEO. “We will build on this momentum in 2018 with our new
dividend growth rate of 5 percent annually over the next three
years, tax reform that will benefit utility customers and reduce
tax expenses at Generation, and movement on needed power price
formation changes in PJM and broader resiliency reviews at
FERC.”
“In 2017, Exelon delivered solid financial performance with
$2.60 of Adjusted (non-GAAP) Operating Earnings, which is within
our range,” said Jonathan W. Thayer, Exelon’s Senior Executive Vice
President and CFO. “We are introducing 2018 operating earnings
guidance of $2.90 - $3.20 per share which incorporates the benefits
of U.S. tax reform, strong utility growth, a full-year of ZEC
programs in New York and Illinois, and recognition of Illinois ZEC
revenue from 2017.”
Fourth Quarter 2017
Exelon's GAAP Net Income for the fourth quarter 2017 increased
to $1.94 per share from $0.22 per share in the fourth quarter of
2016; Adjusted (non-GAAP) Operating Earnings increased to $0.55 per
share in the fourth quarter of 2017 from $0.44 per share in the
fourth quarter of 2016. For the reconciliations of GAAP Net Income
to Adjusted (non-GAAP) Operating Earnings, refer to the tables
beginning on page 9.
Adjusted (non-GAAP) Operating Earnings in the fourth quarter of
2017 reflect higher utility earnings due to regulatory rate
increases and weather, partially offset by a 2017 impairment of
certain transmission-related income tax regulatory assets; and, at
Generation, New York ZEC revenue and higher capacity prices,
partially offset by lower realized energy prices.
Full Year 2017
For the full year 2017, Exelon's GAAP Net Income increased to
$3.97 per share from $1.22 per share in 2016. Exelon's Adjusted
(non-GAAP) Operating Earnings for 2017 decreased to $2.60 per share
from $2.68 per share in 2016.
Adjusted (non-GAAP) Operating Earnings for the full year 2017
reflect higher utility earnings due to regulatory rate increases,
partially offset by weather and a 2017 impairment of certain
transmission-related income tax regulatory assets; and, at
Generation, lower realized energy prices, the impacts of lower load
volumes delivered due to mild weather in the third quarter 2017,
the conclusion of the Ginna RSSA and the impact of declining
natural gas prices on Generation's natural gas portfolio, partially
offset by New York ZEC revenue and higher capacity prices.
Operating Company Results1
ComEd2
ComEd's fourth quarter 2017 GAAP Net Income was $120 million
compared with $80 million in the fourth quarter of 2016. ComEd’s
Adjusted (non-GAAP) Operating Earnings for the fourth quarter 2017
were $123 million compared with $81 million in the fourth quarter
of 2016, primarily reflecting higher electric distribution and
transmission formula rate revenues.
PECO
PECO’s fourth quarter 2017 GAAP Net Income was $107 million
compared with $92 million in the fourth quarter of 2016. PECO’s
fourth quarter 2017 Adjusted (non-GAAP) Operating Earnings of $95
million remained relatively consistent with fourth quarter 2016
Adjusted (non-GAAP) Operating Earnings of $94 million.
____________________ 1 Exelon’s five business units include ComEd,
which consists of electricity transmission and distribution
operations in northern Illinois; PECO, which consists of
electricity transmission and distribution operations and retail
natural gas distribution operations in southeastern Pennsylvania;
BGE, which consists of electricity transmission and distribution
operations and retail natural gas distribution operations in
central Maryland; PHI, which 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; and Generation,
which 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 and risk management services. 2 For BGE, Pepco and DPL
Maryland and beginning in 2017 for ComEd, customer rates are
adjusted to eliminate the impacts of weather and customer usage on
distribution volumes.
Heating degree days were up 6.1 percent relative to the same
period in 2016 and were 7.2 percent below normal. Total retail
electric deliveries were up 3.4 percent compared with the fourth
quarter of 2016. Natural gas deliveries (including both retail and
transportation segments) in the fourth quarter of 2017 were up 9.0
percent compared with the same period in 2016.
BGE2
BGE’s fourth quarter 2017 GAAP Net Income was $76 million
compared with $103 million in the fourth quarter of 2016. BGE’s
Adjusted (non-GAAP) Operating Earnings for the fourth quarter 2017
were $82 million compared with $105 million in the fourth quarter
of 2016, primarily due to a favorable 2016 settlement of a
Baltimore City conduit fee dispute and a 2017 impairment of certain
transmission-related income tax regulatory assets.
PHI2
PHI’s fourth quarter 2017 GAAP Net Income was $4 million
compared with $30 million in the fourth quarter of 2016. PHI’s
Adjusted (non-GAAP) Operating Earnings for the fourth quarter 2017
were $48 million compared with $42 million in the fourth quarter of
2016, primarily due to regulatory rate increases, partially offset
by a 2017 impairment of certain transmission-related income tax
regulatory assets.
Generation
Generation's fourth quarter 2017 GAAP Net Income was $2,215
million compared with a GAAP Net Loss of $41 million in the fourth
quarter of 2016. Generation’s Adjusted (non-GAAP) Operating
Earnings for the fourth quarter 2017 were $252 million compared
with $162 million in the fourth quarter of 2016, primarily
reflecting New York ZEC revenue and higher capacity prices,
partially offset by lower realized energy prices.
The proportion of expected generation hedged as of Dec. 31,
2017, was 85.0 percent to 88.0 percent for 2018, 55.0 percent to
58.0 percent for 2019 and 26.0 percent to 29.0 percent for
2020.
___________________ 2 For BGE, Pepco and DPL Maryland and beginning
in 2017 for ComEd, customer rates are adjusted to eliminate the
impacts of weather and customer usage on distribution volumes.
Initiates Annual Guidance for 2018
Exelon introduced a guidance range for 2018 Adjusted (non-GAAP)
Operating Earnings of $2.90 to $3.20 per share. Adjusted (non-GAAP)
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, except at PHI, where a 20-year
period is used. The outlook for 2018 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;
- Non-cash amortization of intangible
assets, net related to commodity contracts recorded at the date of
the acquisition of ConEdison Solutions in 2016 and FitzPatrick in
2017;
- Certain costs incurred related to the
PHI and FitzPatrick acquisitions;
- Certain costs incurred related to plant
retirements;
- Certain costs incurred to achieve cost
management program savings;
- Other unusual items;
- Generation's noncontrolling interest
related to CENG exclusion items; and
- One-time impacts of adopting new
accounting standards.
Recent Developments
- Dividend Policy Update: On Jan.
30, 2018, the Board of Directors of Exelon announced an updated
dividend policy targeting 5 percent annual dividend growth for the
period covering 2018 through 2020. Since the last dividend policy
of 2.5 percent annual growth was implemented in 2016, Exelon’s
business position has continued to strengthen. The company has
generated more earnings from regulated utilities following the PHI
acquisition, recognized greater stability for its generation fleet
with the Illinois and New York ZEC programs, and continued to focus
on cost management and prudent balance sheet oversight. As a result
of the strengthened outlook on earnings, Exelon is sharing the
financial success with its shareholders through this updated
dividend policy.
- Utility Capex and Rate Base
Update: Exelon Utilities plan to invest nearly $21 billion of
capital to ensure reliable, more resilient and more efficient
transmission and distribution of electricity and gas for our
customers. The increased capital investments and impacts of tax
reform are expected to drive annual rate base growth of 7.4 percent
through 2021, exceeding the 6.5 percent growth expectations for
2017-2020 projected a year ago.
- Generation and Free Cash Flow
Outlook: Cumulatively from 2018 through 2021, Generation
projects $7.6 billion of free cash flow before growth capex, which
is $0.8 billion higher than the prior 4-year outlook from 2017
through 2020. This financial outlook accounts for the latest power
price forwards, updated gross margins at Constellation, continued
efforts to reduce O&M cost and capital expenditures, the
planned closure of Three Mile Island and Oyster Creek, and the
impact of tax reform.
- Exelon Nuclear Plants Selected in
Illinois ZEC Procurement Event: On Jan. 25, 2018, the ICC
announced that Clinton Unit 1 and Quad Cities Units 1 & 2 were
winning bidders through the Illinois Power Agency's ZEC procurement
event, which entitles them to compensation for the sale of ZECs.
Generation executed the ZEC procurement contracts with Illinois
utilities, including ComEd, effective January 26, 2018, and will
begin recognizing revenue. In addition to recognizing ZEC revenue
generated in the first quarter of 2018, Generation will also
recognize ZEC revenue retroactive to June 1, 2017, which will
contribute approximately $0.11 to Adjusted (non-GAAP) Operating
Earnings. The $0.11 contribution to Adjusted (non-GAAP) Operating
Earnings is higher than the $0.09 originally expected in 2017 due
to the lower tax rate in 2018 at Generation as a result of the Tax
Cuts and Jobs Act (TCJA).
- Early Retirement of Oyster Creek
Nuclear Facility: On Feb. 2, 2018, Generation announced that it
will permanently cease generation operations at Oyster Creek
Generating Station (Oyster Creek) at the end of its current
operating cycle in October 2018. In 2010, Generation announced that
Oyster Creek would retire by the end of 2019 as part of an
agreement with the State of New Jersey to avoid significant costs
associated with the construction of cooling towers to meet the
State’s then new environmental regulations. Since then, like other
nuclear sites, Oyster Creek has continued to face rising operating
costs amid a historically low wholesale power price environment.
The decision to retire Oyster Creek in 2018 at the end of its
current operating cycle involved consideration of several factors,
including economics and operating efficiencies, and avoids a
refueling outage scheduled for the fall of 2018 that would have
required advanced purchasing of fuel fabrication and materials
beginning in late February 2018. Because of the decision to retire
Oyster Creek in 2018, Generation will recognize certain one-time
charges in the first quarter of 2018 ranging from an estimated $25
million to $35 million (pre-tax) related to a materials and
supplies inventory reserve adjustment, employee-related costs, and
construction work-in-progress impairment, among other items. The
aforementioned one-time charges will be excluded from GAAP Net
Income to arrive at Adjusted (non-GAAP) Operating Earnings in the
first quarter 2018.
- DOE Notice of Proposed
Rulemaking: On Aug. 23, 2017, the United States Department of
Energy (DOE) released its report on the reliability of the electric
grid. One aspect of the wide-ranging report is the DOE’s
recognition that the electricity markets do not currently value the
resiliency provided by baseload generation, such as nuclear plants.
On Sept. 28, 2017, the DOE issued a Notice of Proposed Rulemaking
(NOPR) that would entitle certain eligible resilient generating
units (i.e., those located in organized markets, with a 90-day
supply of fuel on site, not already subject to state cost of
service regulation and satisfying certain other requirements) to
recover fully allocated costs and earn a fair return on equity on
their investment. On Jan. 8, 2018, the FERC issued an order
terminating the rulemaking docket that was initiated to address the
proposed rule in the DOE NOPR, concluding the proposed rule did not
sufficiently demonstrate there is a resiliency issue and that it
proposed a remedy that did not appear to be just, reasonable and
nondiscriminatory as required under the Federal Power Act. At the
same time, the FERC initiated a new proceeding to consider
resiliency challenges to the bulk power system and evaluate whether
additional FERC action to address resiliency would be appropriate.
Exelon has been and will continue to be an active participant in
these proceedings, but cannot predict the final outcome or its
potential impact, if any, on Exelon or Generation.
Fourth Quarter Highlights
- Corporate Tax Reform: On Dec.
22, 2017, President Trump signed into law the TCJA. The Registrants
remeasured their existing deferred income tax balances as of Dec.
31, 2017, to reflect the decrease in the corporate income tax rate
from 35 percent to 21 percent, which resulted in a material
decrease to their net deferred income tax liability balances. At
Generation, this reduction in net deferred income tax liabilities
resulted in a one-time credit to income tax expense of
approximately $1.9 billion. The Utility Registrants offset
virtually all similar reductions, totaling $7.3 billion, with net
regulatory liabilities (rather than through earnings), given that
changes in income taxes are generally passed through customer
rates. The amount and timing of potential refunds of the
established net regulatory liabilities will be determined by the
Utility Registrants’ respective rate regulators, subject to certain
IRS "normalization" rules.Pursuant to TCJA, beginning in 2018,
Generation is expected to have higher operating cash flows over the
next five years reflecting the reduction in the corporate federal
income tax rate and full expensing of capital investments. The TCJA
is generally expected to result in lower operating cash flows for
the Utility Registrants as a result of the elimination of bonus
depreciation and lower customer rates. Increased operating cash
flows for the Utility Registrants from lower corporate federal
income tax rates is expected to be more than offset over time by
lower customer rates resulting from lower income tax expense and
the settlement of deferred income tax net regulatory liabilities
established pursuant to TCJA, partially offset by the impacts of
higher rate base. The Utility Registrants expect to fund any
required incremental operating cash outflows using third party debt
financings and equity funding from Exelon in combinations generally
consistent with existing capitalization ratio structures. To fund
any additional equity contributions to the Utility Registrants,
Exelon would have available to it its typical sources, including,
but not limited to, the increased operating cash flows at
Generation referenced above, which over time are expected to exceed
the incremental equity needs at the Utility Registrants.The Utility
Registrants continue to work with their state regulatory
commissions to determine the amount and timing of the passing back
of TCJA income tax savings benefits to customers; with filings
either made, or expected to be made, at Pepco, DPL and ACE, and
approved filings at ComEd and BGE. The amounts being passed back or
proposed to be passed back to customers reflect the benefit of
lower income tax expense beginning January 1, 2018 (Feb. 1, 2018
for DPL Delaware), and the settlement of a portion of deferred
income tax regulatory liabilities established upon enactment of the
TCJA. To date, neither the PAPUC nor FERC has yet issued guidance
on how and when to reflect the impacts of the TCJA in customer
rates.
- EGTP Bankruptcy: On Nov. 7,
2017, EGTP and all of its wholly-owned subsidiaries filed voluntary
petitions for relief under Chapter 11 of Title 11 of the United
States Code in the United States Bankruptcy Court for the District
of Delaware. As a result, Exelon and Generation deconsolidated
EGTP’s net liabilities, which included the previously impaired
assets and related debt, from their consolidated financial
statements, resulting in a $213 million pre-tax gain. Concurrently
with the Chapter 11 filings, Generation entered into an asset
purchase agreement to acquire one of EGTP’s generating plants, the
Handley Generating Station, for approximately $60 million, subject
to a potential adjustment for fuel oil and assumption of certain
liabilities. The acquisition was approved by the Bankruptcy Court
in January 2018 and the transaction is expected to be completed in
the first half of 2018.
- Proposed Remedy for West Lake
Landfill: On Feb. 1, 2018, the Environmental Protection Agency
(EPA) announced a proposed remediation plan for the West Lake
Landfill Superfund Site in Bridgeton, Missouri, for which
Generation is one of the potentially responsible parties (PRPs).
The proposed remediation plan includes a partial excavation of the
site and an enhanced landfill cover and will be open for public
comment through March 22, 2018, with the expectation that a Record
of Decision will be issued during the third quarter of 2018.
Thereafter, the EPA will seek to enter into a Consent Decree with
the PRPs to effectuate the remedy, which Generation currently
expects will occur in late 2018 or early 2019. The estimated
total cost to fully execute the EPA’s proposed remedy is
approximately $340 million, including cost escalation on an
undiscounted basis, which will be allocated among the final group
of PRPs. Generation increased its previous liability to
reflect management’s best estimate of Generation’s allocable share
of the cost of the proposed remedy among the PRPs, which could
materially change in the future. The aforementioned 2017 charge has
been excluded from GAAP Net Income to arrive at Adjusted (non-GAAP)
Operating Earnings.
- ComEd Electric Distribution Rate
Case: On Dec. 6, 2017, the ICC issued its final order approving
ComEd’s 2017 annual distribution formula rate update. The final
order resulted in an increase to the revenue requirement of
$96 million, reflecting an increase of $78 million for the
initial revenue requirement for 2017 and an increase of $18 million
related to the annual reconciliation for 2016. The increase was set
using an allowed return on rate base of 6.47 percent for the
initial revenue requirement and 6.45 percent for the annual
reconciliation (inclusive of an allowed ROE of 8.40 percent
for 2017 less a reliability performance metric penalty of 6 basis
points for the 2016 reconciliation). The rates took effect in
January 2018.
- Pepco District of Columbia Electric
Distribution Rate Case: On Dec. 19, 2017, Pepco filed an
application with the DCPSC to increase its annual electric
distribution base rates by $66 million, reflecting a requested ROE
of 10.1 percent. By mid-February, Pepco will update its current
distribution rate case to reflect the TCJA impacts. Pepco
expects a decision in the matter in the fourth quarter of 2018, but
cannot predict how much of the requested increase the DCPSC will
approve.
- Pepco Maryland Electric Distribution
Rate Case: On Jan. 2, 2018, Pepco filed an application with the
MDPSC to increase its annual electric distribution base rates by
$41 million, reflecting a requested ROE of 10.1 percent. On
Feb. 5, 2018, Pepco filed with the MDPSC an update to its current
distribution rate case to reflect approximately $31 million in TCJA
tax savings, thereby reducing the requested annual base rate
increase to $11 million. Pepco expects a decision in the
matter in the third quarter of 2018, but cannot predict how much of
the requested increase the MDPSC will approve.
- DPL Maryland Electric Distribution
Rate Case: On July 14, 2017, DPL filed an application with the
MDPSC to increase its annual electric distribution base rates by
$27 million, which was updated to $19 million on Nov. 16, 2017,
reflecting a requested ROE of 10.1 percent. On Dec. 18, 2017, DPL,
the MDPSC Staff and Maryland’s Office of People’s Counsel filed a
settlement agreement with the MDPSC that would provide DPL a rate
increase of $13 million, and a ROE of 9.5 percent solely for
purposes of calculating AFUDC and regulatory asset carrying costs.
By mid-February, DPL is planning to file with the MDPSC seeking
approval to pass back to customers beginning in 2018 approximately
$13 million in annual tax savings resulting from the enactment of
the TCJA through a reduction in electric distribution rates. DPL
expects a decision in the matter in the first quarter of 2018, but
cannot predict whether the MDPSC will approve the settlement
agreement as filed or how much of the requested increase will be
approved.
- FERC Transmission-Related Regulatory
Asset Order: On Nov. 16, 2017, FERC issued an order rejecting
BGE’s proposed revisions to its transmission formula rate to
recover certain transmission-related income tax regulatory assets.
ComEd, Pepco, DPL and ACE have similar transmission-related income
tax regulatory assets also requiring FERC approval separate from
their transmission formula rate mechanisms. Pursuant to the FERC
order, management of each company concluded that the portion of the
total transmission-related income tax regulatory assets that would
have been previously amortized and recovered through rates had the
transmission formula rate provided for such recovery was no longer
probable of recovery; and recorded impairment charges to Income tax
expense of $35 million, $3 million, $5 million, $27 million, $14
million, $6 million and $7 million at Exelon, ComEd, BGE, PHI,
Pepco, DPL and ACE, respectively. Nevertheless, each company
believes there is sufficient basis to support full recovery of all
existing transmission-related income tax regulatory assets, and
intends to further pursue such full recovery with FERC.
- Nuclear Operations: Generation’s
nuclear fleet, including its owned output from the Salem Generating
Station and 100 percent of the CENG units, produced 47,528
gigawatt-hours (GWhs) in the fourth quarter of 2017, compared with
44,834 GWhs in the fourth quarter of 2016. Excluding Salem, the
Exelon-operated nuclear plants at ownership achieved a 95.3 percent
capacity factor for the fourth quarter of 2017, compared with 94.2
percent for the fourth quarter of 2016. Excluding Salem, the number
of planned refueling outage days in the fourth quarter of 2017
totaled 60, compared with 71 in the fourth quarter of 2016. There
were 18 non-refueling outage days in the fourth quarter of 2017,
compared with 32 days in the fourth quarter of 2016.
- Fossil and Renewables
Operations: The dispatch match rate for Generation’s gas and
hydro fleet was 98.4 percent in the fourth quarter of 2017,
compared with 99.7 percent in the fourth quarter of 2016. The lower
performance in the quarter was primarily due to outages at gas
units in Texas and Alabama. The reported performance includes the
EGTP sites, which Exelon maintained and operated through the
quarter, but does not include Wolf Hollow II or Colorado Bend II,
the two new CCGT units that went into full commercial operation in
the second quarter. Energy capture for the wind and solar fleet was
96.2 percent in the fourth quarter of 2017, compared with 95.7
percent in the fourth quarter of 2016.
- Financing Activities:
- On Nov. 28, 2017, ExGen Renewables IV,
an indirect subsidiary of Exelon and Generation, entered into an
$850 million non-recourse senior secured term loan credit facility
agreement scheduled to mature on Nov. 28, 2024. The net proceeds of
$785 million, after the initial funding of $50 million for debt
service and liquidity reserves as well as deductions for original
discount and issuance costs, were distributed to Generation for
general corporate purposes. The term loan bears interest at a
variable rate equal to LIBOR plus 3.00 percent, subject to a 1.00
percent LIBOR floor. As of Dec. 31, 2017, $850 million was
outstanding. In addition to the financing, ExGen Renewables IV
entered into interest rate swaps with an initial notional amount of
$636 million at an interest rate of 2.32 percent to manage a
portion of the interest rate exposure in connection with the
financing.
GAAP/Adjusted (non-GAAP) Operating
Earnings Reconciliations
Adjusted (non-GAAP) Operating Earnings for
the fourth quarter of 2017 do not include the following items
(after tax) that were included in reported GAAP Net Income:
(in millions) ExelonEarnings per
Diluted Share Exelon ComEd
PECO BGE PHI
Generation 2017 GAAP Net Income $ 1.94
$ 1,871 $ 120 $ 107
$ 76 $ 4 $ 2,215
Mark-to-Market Impact of Economic Hedging Activities (net of taxes
of $7 and $6, respectively) 0.01 8 — — — — 9 Unrealized Gains
Related to Nuclear Decommissioning Trust (NDT) Fund Investments
(net of taxes of $67) (0.12 ) (108 ) — — — — (108 ) Amortization of
Commodity Contract Intangibles (net of taxes of $5) 0.01 8 — — — —
8 Merger and Integration Costs (net of taxes of $1, $1 and $0,
respectively) — 1 — — 1 — 1 Long-Lived Asset Impairments (net of
taxes of $16, $9 and $8, respectively) 0.03 29 — — — 16 12 Plant
Retirements and Divestitures (net of taxes of $45, respectively)
0.07 70 — — — — 70 Cost Management Program (net of taxes of $6, $1,
$1 and $5, respectively) 0.01 10 — 1 1 — 8 Reassessment of Deferred
Income Taxes (entire amount represents tax expense) (1.30 ) (1,257
) 3 (12 ) 5 33 (1,874 ) Gain on Deconsolidation of Businesses (net
of taxes of $83) (0.14 ) (130 ) — — — — (130 ) Vacation Policy
Change (net of taxes of $21, $1, $1, $3, and $16, respectively)
(0.03 ) (33 ) — (1 ) (1 ) (5 ) (26 ) Change in Environmental
Remediation Liabilities (net of taxes of $17) 0.03 27 — — — — 27
Noncontrolling Interests (net of taxes of $8) 0.04 40
— — — —
40
2017 Adjusted (non-GAAP) Operating Earnings
$ 0.55 $ 536
$ 123 $ 95
$ 82 $ 48
$ 252
Adjusted (non-GAAP) Operating Earnings for
the fourth quarter of 2016 do not include the following items
(after tax) that were included in reported GAAP Net Income:
(in millions) ExelonEarnings per
Diluted Share Exelon ComEd
PECO BGE PHI
Generation 2016 GAAP Net Income $ 0.22
$ 204 $ 80 $ 92 $
103 $ 30 $ (41 )
Mark-to-Market Impact of Economic Hedging Activities (net of taxes
of $28) (0.05 ) (44 ) — — — — (44 ) Unrealized Losses Related to
NDT Fund Investments (net of taxes of $13) 0.01 9 — — — — 9
Amortization of Commodity Contract Intangibles (net of taxes of
$16) 0.03 26 — — — — 26 Merger and Integration Costs (net of taxes
of $14, $0, $1, $1, $3 and $9, respectively) 0.02 23 1 1 1 4 15
Merger Commitments (net of taxes of $12, $2 and $9, respectively)
0.04 38 — — — 8 40 Long-Lived Asset Impairments (net of taxes of
$1) — (1 ) — — — — — Plant Retirements and Divestitures (net of
taxes of $59) 0.10 94 — — — — 94 Cost Management Program (net of
taxes of $5, $1, $1 and $3, respectively) 0.01 8 — 1 1 — 6
Reassessment of State Deferred Income Taxes (entire amount
represents tax expense) 0.01 10 — — — — 14 Asset Retirement
Obligation (net of taxes of $14) (0.08 ) (75 ) — — — — (75 )
Curtailment of Generation Growth Development Activities (net of
taxes of $35) 0.06 57 — — — — 57 Noncontrolling Interests (net of
taxes of $1) 0.07 61 — —
— — 61
2016 Adjusted
(non-GAAP) Operating Earnings $ 0.44
$ 410 $ 81
$ 94 $ 105
$ 42 $ 162
Adjusted (non-GAAP) Operating Earnings for
the full year 2017 do not include the following items (after tax)
that were included in reported GAAP Net Income:
(in millions) ExelonEarnings per
Diluted Share Exelon ComEd
PECO BGE PHI
Generation 2017 GAAP Net Income $ 3.97
$ 3,770 $ 567 $ 434
$ 307 $ 362 $ 2,694
Mark-to-Market Impact of Economic Hedging Activities (net of taxes
of $68 and $66, respectively) 0.11 107 — — — — 109 Unrealized Gains
Related to NDT Fund Investments (net of taxes of $204) (0.34 ) (318
) — — — — (318 ) Amortization of Commodity Contract Intangibles
(net of taxes of $22) 0.04 34 — — — — 34 Merger and Integration
Costs (net of taxes of $25, $0, $2, $2, $7 and $27, respectively)
0.04 40 1 2 2 (10 ) 44 Merger Commitments (net of taxes of $137,
$52 and $18, respectively) (0.14 ) (137 ) — — — (59 ) (18 )
Long-Lived Asset Impairments (net of taxes of $204, $9 and $194,
respectively) 0.34 321 — — — 16 306 Plant Retirements and
Divestitures (net of taxes of $134 and $133, respectively) 0.22 207
— — — — 208 Reassessment of Deferred Income Taxes (entire amount
represents tax expense) (1.37 ) (1,299 ) 1 (12 ) 5 34 (1,856 ) Cost
Management Program (net of taxes of $21, $3, $3 and $15
respectively) 0.04 34 — 4 5 — 25 Like-Kind Exchange Tax Position
(net of taxes of $66 and $9, respectively) (0.03 ) (26 ) 23 — — — —
Asset Retirement Obligation (net of taxes of $1) — (2 ) — — — — (2
) Tax Settlements (net of taxes of $1) (0.01 ) (5 ) — — — — (5 )
Bargain Purchase Gain (net of taxes of $0) (0.25 ) (233 ) — — — —
(233 ) Gain on Deconsolidation of Businesses (net of taxes of $83)
(0.14 ) (130 ) — — — — (130 ) Vacation Policy Change (net of taxes
of $21, $1, $1, $3, and $16, respectively) (0.03 ) (33 ) — (1 ) (1
) (5 ) (26 ) Change in Environmental Remediation Liabilities (net
of taxes of $17) 0.03 27 — — — — 27 Noncontrolling Interests (net
of taxes of $24) 0.12 114 — —
— — 114
2017
Adjusted (non-GAAP) Operating Earnings $ 2.60
$ 2,471 $ 592
$ 427 $ 318
$ 338 $ 973
Adjusted (non-GAAP) Operating Earnings for
the full year 2016 do not include the following items (after tax)
that were included in reported GAAP Net Income:
(in millions) ExelonEarnings per
Diluted Share Exelon ComEd
PECO BGE PHI
Generation 2016 GAAP Net Income $ 1.22
$ 1,134 $ 378 $ 438
$ 286 $ (61 ) $
496 Mark-to-Market Impact of Economic Hedging Activities
(net of taxes of $18) 0.03 24 — — — — 24 Unrealized Gains Related
to NDT Fund Investments (net of taxes of $77) (0.13 ) (118 ) — — —
— (118 ) Amortization of Commodity Contract Intangibles (net of
taxes of $22) 0.04 35 — — — — 35 Merger and Integration Costs (net
of taxes of $50, $2, $2, $28 and $22, respectively) 0.12 114 (3 ) 3
— 42 35 Merger Commitments (net of taxes of $126, 77 and $10,
respectively) 0.47 437 — — — 247 42 Long-Lived Asset Impairments
(net of taxes of $68) 0.11 103 — — — — 103 Plant Retirements and
Divestitures (net of taxes of $273, respectively) 0.47 432 — — — —
432 Reassessment of Deferred Income Taxes (entire amount represents
tax expense) 0.01 10 — — — — 20 Cost Management Program (net of
taxes of $21, $2, $2 and $17 respectively) 0.04 34 — 3 3 — 28
Like-Kind Exchange Tax Position (net of taxes of $61 and $42,
respectively) 0.21 199 149 — — — — Asset Retirement Obligation (net
of taxes of $13) (0.08 ) (75 ) — — — — (75 ) Curtailment of
Generation Growth and Development Activities (net of taxes of $35)
0.06 57 — — — — 57 Noncontrolling Interests (net of taxes of $9)
0.11 102 — — —
— 102
2016 Adjusted
(non-GAAP) Operating Earnings $ 2.68
$ 2,488 $ 524
$ 444 $ 289
$ 228 $ 1,181
Note:
Unless otherwise noted, the income tax impact of each
reconciling item between GAAP Net Income and Adjusted (non-GAAP)
Operating Earnings is based on the marginal statutory federal and
state income tax rates for each Registrant, taking into account
whether the income or expense item is taxable or deductible,
respectively, in whole or in part. For all items except the
unrealized gains and losses related to NDT fund investments, the
marginal statutory income tax rates ranged from 39.0 percent to
41.0 percent. Under IRS regulations, NDT fund investment returns
are taxed at differing rates for investments in qualified vs.
non-qualified funds. The tax rates applied to unrealized gains and
losses related to NDT fund investments were 49.5 percent and 76.2
percent for the three months ended December 31, 2017 and 2016,
respectively; and were 47.4 percent and 48.7 percent for the twelve
months ended December 31, 2017 and 2016, respectively.
Webcast Information
Exelon will discuss fourth quarter 2017 earnings in a one-hour
conference call scheduled for today at 9 a.m. Central Time (10 a.m.
Eastern Time). The webcast and associated materials can be accessed
at www.exeloncorp.com/investor-relations.
About Exelon
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 2017 revenue of $33.5 billion. Exelon’s six utilities deliver
electricity and natural gas to approximately 9 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 35,168
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 million
residential, public sector and business customers, including more
than two-thirds of the Fortune 100. Follow Exelon on Twitter
@Exelon.
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 Net Income 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 February 7,
2018.
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,
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) the
Registrants' 2016 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 24, Commitments
and Contingencies; (2) the Registrants' Third Quarter 2017
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 18, Commitments and Contingencies;
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
GAAP Consolidated Statements of
Operations and
Adjusted (non-GAAP) Operating Earnings
Reconciling Adjustments
(unaudited)
(in millions, except per share data)
Three Months Ended December 31, 2017
Three Months Ended December 31, 2016 GAAP
(a) Non-GAAP Adjustments GAAP (a)
Non-GAAP Adjustments Operating revenues $ 8,381 $ 93
(b),(d) $ 7,875 $ 177 (b),(d)
Operating expenses Purchased
power and fuel 3,508 61 (b),(d),(g) 3,178 184 (b),(d),(g) Operating
and maintenance 2,395 (53 ) (e),(f),(g),(h),(i),(k),(o) 2,371 107
(e),(g),(h),(l),(m),(n) Depreciation and amortization 1,015 (109 )
(g) 1,115 (251 ) (g) Taxes other than income 418 2 (k) 408
—
Total operating expenses 7,336 7,072
Loss on
sales of assets — — (89 ) 89 (g),(n)
Gain on deconsolidation
of business 213 (213 ) (j) —
Operating
income 1,258 714
Other income and
(deductions) Interest expense, net (365 ) — (356 ) — Other, net
331 (244 ) (c),(i) 33 37 (c),(g),(n)
Total other
income and (deductions) (34 ) (323 )
Income before income
taxes 1,224 391
Income taxes (719 ) 1,110
(b),(c),(d),(e),(f),(g),(h),(i),(j),(k),(o) 136 118
(b),(c),(d),(e),(g),(h),(i),(l),(m),(n)
Equity in losses of
unconsolidated affiliates (6 ) — (8 ) —
Net income 1,937
247
Net income attributable to noncontrolling interests and
preference stock dividends 66 (40 ) (p) 43 (61 )
(p)
Net income attributable to common shareholders $ 1,871
$ 204
Effective tax rate(q)(r) (58.7 )%
34.8 %
Earnings per average common share Basic $ 1.94 $ 0.22
Diluted $ 1.94 $ 0.22
Average common shares
outstanding Basic 964 925 Diluted 967 928
Effect of
adjustments on earnings per average diluted common share recorded
in accordance with GAAP: Mark-to-market impact of economic
hedging activities (b) $ 0.01 $ (0.05 ) Unrealized (gains) losses
related to NDT fund investments (c) (0.12 ) 0.01 Amortization of
commodity contract intangibles (d) 0.01 0.03 Merger and integration
costs (e) — 0.02 Long-lived asset impairments (f) 0.03 — Plant
retirements and divestitures (g) 0.07 0.10 Cost management program
(h) 0.01 0.01 Reassessment of deferred income taxes (i) (1.30 )
0.01 Gain on deconsolidation of business (j) (0.14 ) — Vacation
policy change (k) (0.03 ) — Merger commitments (l) — 0.04 Asset
retirement obligation (m) — (0.08 ) Curtailment of Generation
growth and development activities (n) — 0.06 Change in
environmental remediation liabilities (o) 0.03 — Noncontrolling
interests (p) 0.04 0.07 Total adjustments $ (1.39 ) $
0.22 (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 impact of 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, primarily related
to commodity contracts recorded at fair value related to, in 2016,
the Integrys and ConEdison Solutions acquisitions, and in 2017, the
ConEdison Solutions and FitzPatrick acquisitions. (e) Adjustment to
exclude certain costs associated with mergers and acquisitions,
including, if and when applicable, professional fees,
employee-related expenses and integration activities related to the
PHI and FitzPatrick acquisitions. (f) Adjustment to exclude charges
to earnings related to the PHI 2017 impairment of the District of
Columbia sponsorship intangible asset. (g) Adjustment to exclude in
2016, incremental accelerated depreciation and amortization
expenses from June 2, 2016 through December 6, 2016 pursuant to the
second quarter decision to early retire the Clinton and Quad Cities
nuclear generation facilities, which decision was reversed in
December 2016, partially offset by the reversal of certain one-time
charges for materials & supplies inventory reserves and
severance reserves upon Generation’s decision to continue operating
the plants with the passage of the Illinois Zero Emission Standard,
and in 2017, an adjustment to exclude accelerated depreciation and
amortization expenses associated with Generation’s decision to
early retire the Three Mile Island nuclear facility. (h) Adjustment
to exclude severance and reorganization costs related to a cost
management program. (i) Adjustment to exclude in 2016 the non-cash
impact of the remeasurement of deferred income taxes as a result of
changes in forecasted apportionment related to the PHI acquisition,
and in 2017, the one-time non-cash impacts associated with the Tax
Cuts and Jobs Act (including impacts on pension obligations). (j)
Adjustment to exclude the gain recorded upon deconsolidation of
EGTP's net liabilities, which included the previously impaired
assets and related debt, as a result of the November 2017
bankruptcy filing. (k) Adjustment to exclude the reversal of
previously accrued vacation expenses as a result of a change in
Exelon's vacation vesting policy. (l) Adjustment to exclude costs
incurred as part of the settlement orders approving the PHI
acquisition and a charge related to a 2012 CEG merger commitment.
(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 the one-time
recognition for a loss on sale of assets and asset impairment
charges pursuant to Generation’s strategic decision in the fourth
quarter of 2016 to narrow the scope and scale of its growth and
development activities. (o) Represents charges to adjust the
environmental reserve associated with future remediation of the
West Lake Landfill Superfund Site. (p) Adjustment to exclude the
elimination from Generation’s results of the noncontrolling
interests related to certain exclusion items, primarily related to
the impact of unrealized gains and losses on NDT fund investments
at CENG. (q) The effective tax rate related to GAAP Net Income for
the three months ended December 31, 2017 includes the impact of the
Tax Cuts and Jobs Act. (r) The effective tax rate related to
Adjusted (non-GAAP) Operating Earnings is 40.8% and 38.8% for the
three months ended December 31, 2017 and 2016, respectively.
EXELON CORPORATION
GAAP Consolidated Statements of
Operations and
Adjusted (non-GAAP) Operating Earnings
Reconciling Adjustments
(unaudited)
(in millions, except per share data)
Twelve Months Ended December 31, 2017
Twelve Months Ended December 31, 2016 GAAP (a)
Non-GAAP Adjustments GAAP (a)
Non-GAAP Adjustments Operating revenues $ 33,531 $
170 (b),(d) $ 31,360 $ 545 (b),(d),(e)
Operating expenses
Purchased power and fuel 14,035 (72 ) (b),(d),(h) 12,640 395
(b),(d),(h) Operating and maintenance 10,126 (686 )
(e),(g),(h),(i),(j),(l),(p),(r) 10,048 (849 )
(e),(f),(g),(h),(j),(l),(q) Depreciation and amortization 3,828
(252 ) (d),(h) 3,936 (704 ) (e),(h) Taxes other than income 1,731
2 (p) 1,576 (1 ) (j)
Total operating expenses
29,720 28,200
Gain (Loss) on sales of assets 3 1 (h) (48 )
57 (h),(q)
Bargain purchase gain 233 (233 ) (n) — —
Gain
on deconsolidation of business 213 (213 ) (o) — —
Operating income 4,260 3,112
Other income
and (deductions) Interest expense, net (1,560 ) 58 (g),(k),(m)
(1,536 ) 153 (k) Other, net 1,056 (638 ) (c),(i),(k) 413
(124 ) (c),(h),(k),(q)
Total other income and
(deductions) (504 ) (1,123 )
Income before income taxes
3,756 1,989
Income taxes (125 ) 1,566
(b),(c),(d),(e),(f),(g),(h),(i),(j),(k),(l),(m),(o),(p),(r) 761 538
(b),(c),(d),(e),(f),(g),(h),(i),(j),(k),(l),(q)
Equity in losses
of unconsolidated affiliates (32 ) — (24 ) —
Net income
3,849 1,204
Net income attributable to noncontrolling interests
and preference stock dividends 79 (114 ) (s) 70
(102 ) (s)
Net income attributable to common shareholders $
3,770 $ 1,134
Effective tax rate(t)(u)
(3.3 )% 38.3 %
Earnings per average common share Basic $
3.98 $ 1.23 Diluted $ 3.97 $ 1.22
Average common
shares outstanding Basic 947 924 Diluted 949 927
Effect of
adjustments on earnings per average diluted common share recorded
in accordance with GAAP: Mark-to-market impact of economic
hedging activities (b) $ 0.11 $ 0.03 Unrealized gains related to
NDT fund investments (c) (0.34 ) (0.13 ) Amortization of commodity
contract intangibles (d) 0.04 0.04 Merger and integration costs (e)
0.04 0.12 Merger commitments (f) (0.14 ) 0.47 Long-lived asset
impairments (g) 0.34 0.11 Plant retirements and divestitures (h)
0.22 0.47 Reassessment of deferred income taxes (i) (1.37 ) 0.01
Cost management program (j) 0.04 0.04 Like-kind exchange tax
position (k) (0.03 ) 0.21 Asset retirement obligation (l) — (0.08 )
Tax settlements (m) (0.01 ) — Bargain purchase gain (n) (0.25 ) —
Gain on Deconsolidation of Business (o) (0.14 ) — Vacation policy
change (p) (0.03 ) —
Curtailment of generation growth and development activities
(q)
— 0.06 Change in environmental remediation liabilities (r) 0.03 —
Noncontrolling interests (s) 0.12 0.11 Total
adjustments $ (1.37 ) $ 1.46 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 December
31, 2017. Therefore, the results of operations from 2017 and 2016
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 impact of unrealized
gains 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, primarily related
to commodity contracts recorded at fair value related to, in 2016,
the Integrys and ConEdison Solutions acquisitions, and in 2017, the
ConEdison Solutions and FitzPatrick acquisitions. (e) Adjustment to
exclude certain costs associated with mergers and acquisitions,
including, if and when applicable, professional fees,
employee-related expenses and integration activities related to the
PHI and FitzPatrick acquisitions. (f) Adjustment to exclude costs
incurred as part of the settlement orders approving the PHI
acquisition, and in 2016, a charge related to a 2012 CEG merger
commitment, and in 2017, a decrease in reserves for uncertain tax
positions related to the deductibility of certain merger
commitments associated with the 2012 CEG and 2016 PHI acquisitions.
(g) Adjustment to exclude charges to earnings related to the
impairment of upstream assets and certain wind projects at
Generation in 2016, and in 2017, impairments of the ExGen Texas
Power, LLC (EGTP) assets and PHI District of Columbia sponsorship
intangible asset. (h) Adjustment to exclude in 2016, accelerated
depreciation and amortization expenses through December 2016 and
construction work in progress impairments associated with
Generation’s previous decision to early retire the Clinton and Quad
Cities nuclear facilities, partially offset by a gain associated
with Generation’s sale of the New Boston generating site, and in
2017, primarily reflects accelerated depreciation and amortization
expenses, increases to materials and supplies inventory reserves,
construction work in progress impairments and charges for severance
reserves associated with Generation’s decision to early retire the
Three Mile Island nuclear facility. (i) Adjustment to exclude in
2016 the non-cash impact of the remeasurement of deferred income
taxes as a result of changes in forecasted apportionment related to
the PHI acquisition, and in 2017, one-time non-cash impacts
associated with remeasurements of deferred income taxes as a result
of the Tax Cuts and Jobs Act (including impacts on pension
obligations), changes in the Illinois and District of Columbia
statutory tax rates and changes in forecasted apportionment. (j)
Adjustment to exclude severance and reorganization costs related to
a cost management program. (k) Adjustment to exclude in 2016 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, and in 2017, adjustments to income tax, penalties and
interest expenses as a result of the finalization of the IRS tax
computation related to Exelon’s like-kind exchange tax position.
(l) Adjustment to exclude a non-cash benefit pursuant to the annual
update of the Generation nuclear decommissioning obligation related
to the non-regulatory units. (m) Adjustment to exclude benefits
related to the favorable settlement in 2017 of certain income tax
positions related to PHI's unregulated business interests that were
transferred to Generation. (n) Adjustment to exclude the excess of
the fair value of assets and liabilities acquired over the purchase
price for the FitzPatrick acquisition. (o) Adjustment to exclude
the gain recorded upon deconsolidation of EGTP's net liabilities,
which included the previously impaired assets and related debt, as
a result of the November 2017 bankruptcy filing. (p) Adjustment to
exclude the reversal of previously accrued vacation expenses as a
result of a change in Exelon's vacation vesting policy. (q)
Adjustment to exclude the one-time recognition for a loss on sale
of assets and asset impairment charges pursuant to Generation’s
strategic decision in the fourth quarter of 2016 to narrow the
scope and scale of its growth and development activities. (r)
Represents charges to adjust the environmental reserve associated
with future remediation of the West Lake Landfill Superfund Site.
(s) Adjustment to exclude the elimination from Generation’s results
of the noncontrolling interests related to certain exclusion items,
primarily related to the impact of unrealized gains and losses on
NDT fund investments at CENG. (t) The effective tax rate related to
GAAP Net Income for the twelve months ended December 31, 2017
includes the impact of the Tax Cuts and Jobs Act. (u) The effective
tax rate related to Adjusted (non-GAAP) Operating Earnings is 36.9%
and 34.4% for the twelve months ended December 31, 2017 and 2016,
respectively.
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version on businesswire.com: http://www.businesswire.com/news/home/20180207005615/en/
Exelon CorporationDan EggersInvestor Relations312-394-2345orPaul
AdamsCorporate Communications410-470-4167
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