Earnings Release Highlights
- GAAP Net Income of $0.85 per share and
Adjusted (non-GAAP) Operating Earnings of $0.85 per share for the
third quarter of 2017
- Narrowing guidance range for full year
2017 Adjusted (non-GAAP) Operating Earnings from $2.50 - $2.80 per
share to $2.55 - $2.75 per share including the 9 cent impact from
delays to the Illinois Zero Emission Credit (ZEC) contract signing
from December 2017 to January 2018
- Announcing another $250 million of cost
reductions with full run-rate savings to be achieved in 2020
- New Jersey Board of Public Utilities
(NJBPU) approval of ACE’s $43 million settlement for its electric
distribution rate case
- Maryland Public Service Commission
(MDPSC) order issued granting Pepco Maryland a $32 million increase
for its electric distribution rate case
- Record third-quarter production for
Exelon Nuclear and fewer refueling outage days compared with a year
ago
Exelon Corporation (NYSE: EXC) today reported its financial
results for the third quarter 2017.
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the full release here:
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Exelon Corporation Third Quarter
Review
“Exelon delivered a strong third quarter, led by our Utilities
that are performing ahead of plan for the year while providing
first quartile reliability, customer satisfaction, and safety
across most metrics,” said Christopher M. Crane, Exelon’s president
and CEO. “We are encouraged by the U.S. Department of Energy’s
recent support for proposed market reforms that would help preserve
reliable, emissions-free nuclear energy for the benefit of our
customers, environment and communities. We see an important first
step coming through potential changes in energy price formation
which could be implemented in PJM by mid-year 2018. Our company’s
commitment to advancing clean energy and sustainability remains a
strategic priority, as was recognized by our inclusion on the Dow
Jones Sustainability Index for the 12th consecutive year.”
“In the third quarter of 2017, Exelon delivered solid financial
performance with Adjusted (non-GAAP) operating earnings of $0.85
per share, which is at the mid-point of our guidance range,” said
Jonathan W. Thayer, Exelon’s Senior Executive Vice President and
CFO. “Exelon is narrowing the full-year 2017 guidance from $2.50 -
$2.80 to $2.55 - $2.75 per share as our utilities perform better
than planned, absorbing the impact of delays in recognition of
Illinois ZEC revenues until 2018. We also continue to execute
against a disciplined management plan that is focused on
strengthening and optimizing our operations. We are now targeting
another $250 million of annual cost savings by 2020, bringing total
annual run-rate savings to over $700 million from initiatives
identified since 2015.”
Third Quarter 2017
Exelon's GAAP Net Income for the third quarter 2017 increased to
$0.85 per share from $0.53 per share in the third quarter of 2016;
Adjusted (non-GAAP) Operating Earnings decreased to $0.85 per share
in the third quarter of 2017 from $0.91 per share in the third
quarter of 2016. For the reconciliations of GAAP Net Income to
Adjusted (non-GAAP) Operating Earnings, refer to the tables
beginning on page 7.
Adjusted (non-GAAP) Operating Earnings in the third quarter of
2017 reflect the impacts of lower load volumes delivered at
Generation due to mild weather, lower realized energy prices
related to Exelon's ratable hedging strategy and unfavorable
weather conditions at the utilities, partially offset by higher
utility earnings due to regulatory rate increases, ZEC revenue
related to the New York Clean Energy Standard (CES) and increased
capacity prices.
Operating Company Results1
ComEd
ComEd's third quarter 2017 GAAP Net Income was $189 million
compared with $37 million in the third quarter of 2016. ComEd’s
Adjusted (non-GAAP) Operating Earnings were $186 million for the
third quarter 2017 and the third quarter 2016, primarily reflecting
higher electric distribution and transmission formula rate
earnings, offset by favorable weather conditions in 2016. Pursuant
to the Illinois Future Energy Jobs Act, beginning in 2017, customer
rates for ComEd are adjusted to eliminate the favorable and
unfavorable impacts of weather and customer usage patterns on
distribution volumes.
PECO
PECO’s third quarter 2017 GAAP Net Income was $112 million
compared with $122 million in the third quarter of 2016. PECO’s
Adjusted (non-GAAP) Operating Earnings for the third quarter 2017
were $114 million compared with $123 million in the third quarter
of 2016, primarily due to unfavorable weather conditions, partially
offset by the impacts of higher income tax repairs deduction.
Cooling degree days were down 23.2 percent relative to the same
period in 2016 and were 7.2 percent above normal. Total retail
electric deliveries were down 8.2 percent compared with the third
quarter of 2016. Natural gas deliveries (including both retail and
transportation segments) in the third quarter of 2017 were down
10.6 percent compared with the same period in 2016.
BGE
BGE’s third quarter 2017 GAAP Net Income was $62 million
compared with $54 million in the third quarter of 2016. BGE’s
Adjusted (non-GAAP) Operating Earnings for the third quarter 2017
were $64 million compared with $55 million in the third quarter of
2016, primarily due to regulatory rate increases. Due to revenue
decoupling, BGE is not affected by actual weather or customer usage
patterns.
PHI
PHI’s third quarter 2017 GAAP Net Income was $153 million
compared with $166 million in the third quarter of 2016. PHI’s
Adjusted (non-GAAP) Operating Earnings for the third quarter 2017
were $146 million compared with $130 million in the third quarter
of 2016, primarily due to regulatory rate increases in 2016 and
2017. Due to revenue decoupling, PHI's revenues related to Pepco
and DPL Maryland are not affected by actual weather or customer
usage patterns.
________________________
1Exelon’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.
Generation
Generation's third quarter 2017 GAAP Net Income was $305 million
compared with $236 million in the third quarter of 2016.
Generation’s Adjusted (non-GAAP) Operating Earnings for the third
quarter 2017 were $347 million compared with $376 million in the
third quarter of 2016, primarily reflecting the impacts of lower
load volumes delivered due to mild weather and lower realized
energy prices related to Exelon's ratable hedging strategy,
partially offset by ZEC revenue related to the New York CES and
increased capacity prices.
The proportion of expected generation hedged as of
September 30, 2017 was 98.0 percent to 101.0 percent for 2017,
79.0 percent to 82.0 percent for 2018 and 45.0 percent to 48.0
percent for 2019.
Third Quarter and Recent Highlights
- ACE New Jersey Electric Distribution
Rate Case: On September 22, 2017, the NJBPU approved ACE’s
filed settlement for its pending electric distribution rate case,
which provides for an increase in ACE annual electric distribution
base rates of $43 million (before New Jersey sales and use tax)
reflecting a ROE of 9.6 percent. Pursuant to the settlement
agreement, ACE agreed to withdraw its request for approval of a
System Renewal Recovery Charge without prejudice to its right to
refile. The new rates were effective on October 1, 2017.
- Pepco Maryland Electric Distribution
Rate Case: On October 20, 2017, the MDPSC approved an increase
in Pepco electric distribution rates of $34 million, reflecting a
ROE of 9.5 percent. On October 27, 2017, the MDPSC issued an errata
order revising the approved increase in Pepco electric distribution
rates to $32 million. The errata order corrected a number of
computational errors in the original order but did not alter any of
the findings. The new rates became effective for services rendered
on or after October 20, 2017. In its decision, the MDPSC denied
Pepco’s request regarding the income tax adjustment without
prejudice to Pepco filing another similar proposal with additional
information. Requests for rehearing are due November 20,
2017.
- DPL Delaware Electric and Natural
Gas Distribution Rates Case: On August 17, 2017, DPL filed
applications with the Delaware Public Service Commission (DPSC) to
increase its annual electric and natural gas distribution base
rates by $24 million, which was updated to $31 million on October
18, 2017, and $13 million, respectively, reflecting a requested ROE
of 10.1 percent. DPL expects a decision in the electric
proceeding and the gas proceeding in the third quarter of 2018, but
cannot predict how much of the requested rate increases the DPSC
will approve. While the DPSC is not required to issue a decision on
the application within a specified period of time, Delaware law
allows DPL to put into effect $2.5 million of the rate increase two
months after filing the application and the entire requested rate
increase seven months after filing, subject to a cap and a refund
obligation based on the final DPSC order. On October 24, 2017,
the Staff of the DPSC and the Public Advocate filed a joint motion
to dismiss DPL’s electric distribution base rate application
without prejudice to refiling, arguing that the amount of the
requested increase to $31 million required additional time to
review and additional public notice. The DPSC is expected to decide
at its meeting on November 9, 2017. DPL cannot predict the outcome
of this matter.
- Updated Cost Management Program:
In November 2017, Exelon announced the elimination of approximately
$250 million of annual ongoing costs, primarily at Generation, by
2020. This announcement is a result of Exelon’s continuous focus on
improving its cost profile through enhanced efficiency and
productivity. These cost reductions result in a cost profile that
better aligns with current market conditions. The targeted
cost savings are incremental to the expected savings from previous
cost management initiatives.
- DOE Notice of Proposed
Rulemaking: On August 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 September, 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 October 2, 2017, the Federal Energy
Regulatory Commission (FERC) issued a notice inviting comments
regarding the DOE NOPR within 21 days and established a new docket
wherein the FERC will consider the matter. On October 23, 2017,
Exelon filed comments with the FERC, supporting the goals of the
NOPR and urging the agency to take swift action to protect
customers from power supply interruptions and ensure resiliency in
a way that appropriately balances the value and cost to
customers. Exelon cannot predict the final outcome of the
proceeding or its potential impact, if any, on Exelon or
Generation.
- Delay in Illinois ZEC Revenue
Recognition: On October 27, 2017, the Illinois Power Agency
(IPA) released the schedule for the ZEC procurement event
indicating that contracts with zero emission facilities will be
fully executed on January 30, 2018. It was anticipated that the
procurement event and the execution of contracts with winning ZEC
suppliers would occur in December 2017 and therefore Exelon would
begin to recognize expected Illinois ZEC revenue retroactive to
June 1, 2017, in the fourth quarter 2017. Exelon now expects to
recognize Illinois ZEC revenue in the first quarter of 2018,
effectively shifting $0.09 of EPS from 2017 into 2018. The delayed
timing will have no impact on the amount of ZEC revenue.
- Nuclear Operations: Generation’s
nuclear fleet, including its owned output from the Salem Generating
Station and 100 percent of the CENG units, produced 47,747
gigawatt-hours (GWhs) in the third quarter of 2017, compared with
44,709 GWhs in the third quarter of 2016. Excluding Salem, the
Exelon-operated nuclear plants at ownership achieved a 96.1 percent
capacity factor for the third quarter of 2017, compared with 96.3
percent for the third quarter of 2016. The number of planned
refueling outage days in the third quarter of 2017 totaled 13,
compared with 17 in the third quarter of 2016. There were 15
non-refueling outage days in the third quarter of 2017, compared
with 0 days in the third quarter of 2016.
- Fossil and Renewables
Operations: The dispatch match rate for Generation’s gas and
hydro fleet was 98.4 percent in the third quarter of 2017, compared
with 97.9 percent in the third quarter of 2016. The reported
performance does not include Wolf Hollow II or Colorado Bend II,
the two new combined-cycle gas turbine units that went into full
commercial operation in the second quarter of 2017. Energy capture
for the wind and solar fleet was 95.9 percent in the third quarter
of 2017, compared with 95.2 percent in the third quarter of
2016.
- State of Illinois Income Tax Rate
Change: On July 6, 2017, Illinois enacted Senate Bill 9, which
permanently increased Illinois’ total corporate income tax rate
from 7.75 percent to 9.50 percent effective July 1, 2017. In
addition, in the third quarter of 2017, Exelon updated its marginal
state income tax rates based on 2016 state apportionment rates. As
a result of these changes, Exelon, Generation and ComEd recorded a
one-time increase to Deferred income taxes of approximately $250
million, $20 million and $270 million, respectively, on their
Consolidated Balance Sheets in the third quarter of 2017. As
income taxes are recovered through rates, each of Exelon and ComEd
recorded a corresponding regulatory asset of $272 million. Further,
Exelon recorded a decrease of approximately $20 million and
Generation recorded an increase of approximately $20 million (each
net of federal taxes) to Income tax expense in the third quarter of
2017. The income tax rate increase is not expected to have a
material ongoing impact to Exelon’s, Generation’s or ComEd’s future
results of operations.
- Financing Activities:
- On August 23, 2017, ComEd issued $350
million aggregate principal amount of its First Mortgage 2.950
percent Bonds, due August 15, 2027 and $650 million aggregate
principal amount of its First Mortgage 3.750 percent Bonds, due
August 15, 2047. ComEd used the proceeds from the Bonds to
refinance maturing First Mortgage Bonds, to repay a portion of
ComEd’s outstanding commercial paper obligations and for general
corporate purposes.
- On August 24, 2017, BGE issued $300
million aggregate principal amount of its 3.750 percent Notes due
2047. BGE used the proceeds from the Notes to redeem $250 million
in principal amount of the 6.200 percent Deferrable Interest
Subordinated Debentures due October 15, 2043 issued by BGE's
affiliate BGE Capital Trust II, to repay commercial paper
obligations and for general corporate purposes.
- On September 18, 2017, PECO issued $325
million aggregate principal amount of its First and Refunding
Mortgage Bonds, 3.700 percent Series due September 15, 2047. PECO
used the proceeds from the Bonds for general corporate
purposes.
GAAP/Adjusted (non-GAAP) Operating Earnings
Reconciliation
Adjusted (non-GAAP) Operating Earnings for the third 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 $
0.85 $ 824 $ 189 $
112 $ 62 $ 153 $
305 Mark-to-Market Impact of Economic Hedging Activities
(net of taxes of $29) (0.05 ) (45 ) — — — — (46 ) Unrealized Gains
Related to Nuclear Decommissioning Trust (NDT) Fund Investments
(net of taxes of $45) (0.07 ) (67 ) — — — — (67 ) Amortization of
Commodity Contract Intangibles (net of taxes of $8) 0.01 12 — — — —
12 Merger and Integration Costs (net of taxes of $1, $6 and $5,
respectively) — (1 ) — — — (9 ) 7 Long-Lived Asset Impairments (net
of taxes of $16) 0.03 24 — — — — 25 Plant Retirements and
Divestitures (net of taxes of $47 and $46, respectively) 0.08 71 —
— — — 72 Cost Management Program (net of taxes of $8, $1, $1 and $6
respectively) 0.01 13 — 2 2 — 10 Reassessment of State Deferred
Income Taxes (entire amount represents tax expense) (0.02 ) (21 )
(3 ) — — 2 18 Bargain Purchase Gain (net of taxes of $0) (0.01 ) (7
) — — — — (7 ) Asset Retirement Obligation (net of taxes of $1) —
(2 ) — — — — (2 ) Noncontrolling Interests (net of taxes of $4)
0.02 20 — —
— — 20
2017 Adjusted
(non-GAAP) Operating Earnings $ 0.85
$ 821 $ 186
$ 114 $ 64
$ 146 $ 347
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) ExelonEarnings per
Diluted Share Exelon
ComEd PECO BGE PHI
Generation 2016 GAAP Net Income $
0.53 $ 490 $ 37 $
122 $ 54 $ 166 $
236 Mark-to-Market Impact of Economic Hedging Activities
(net of taxes of $35) (0.06 ) (54 ) — — — — (54 ) Unrealized Gains
Related to NDT Fund Investments (net of taxes of $48) (0.07 ) (70 )
— — — — (70 ) Amortization of Commodity Contract Intangibles (net
of taxes of $8) 0.01 13 — — — — 13 Merger and Integrations Costs
(net of taxes of $10, $1, $1, $3 and $5, respectively) 0.01 13 — 1
1 4 7 Merger Commitments (net of taxes of $1 and $10, respectively)
0.01 5 — — — (40 ) — Long-Lived Asset Impairments (net of taxes of
$5 and $6, respectively) 0.01 11 — — — — 10 Plant Retirements and
Divestitures (net of taxes of $129) 0.22 204 — — — — 204 Cost
Management Program (net of taxes of $5) 0.01 7 — — — — 7 Like-Kind
Exchange Tax Position (net of taxes of $61 and $42, respectively)
0.21 199 149 — — — — Noncontrolling Interests (net of taxes of $5)
0.03 23 — —
— — 23
2016 Adjusted
(non-GAAP) Operating Earnings $ 0.91
$ 841 $ 186
$ 123 $ 55
$ 130 $ 376
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 43.2 percent and 52.6
percent for the three months ended September 30, 2017 and 2016,
respectively.
Webcast Information
Exelon will discuss third 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 2016 revenue of $31.4 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
35,500 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 2.2 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 November 2,
2017.
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 (to be filed on November 2, 2017) 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 September 30, 2017 Three
Months Ended September 30, 2016 GAAP (a)
Non-GAAP Adjustments GAAP (a) Non-GAAP
Adjustments Operating revenues $ 8,769 $ (39 ) (b),(d) $
9,002 $ (166 ) (b),(d)
Operating expenses Purchased power
and fuel 3,542 9 (b),(d),(h) 3,754 (127 ) (b),(d),(h) Operating and
maintenance 2,300 (60 )
(e),(g),(h),(i),(m)
2,338 (23 ) (e),(f),(g),(h),(i) Depreciation and amortization 1,002
(106 ) (h) 1,195 (338 ) (e),(h) Taxes other than income 456
— 449 —
Total operating expenses 7,300 7,736
Gain
on sales of assets (1 ) 2 (h) 1 —
Bargain purchase gain
7 (7 ) (l) —
Operating income 1,475
1,267
Other income and (deductions) Interest expense,
net (386 ) — (516 ) 153 (j) Other, net 237 (118 ) (c) 120
(39 ) (c),(j)
Total other income and (deductions)
(149 ) (396 )
Income before income taxes 1,326 871
Income
taxes 452 18
(b),(c),(d),
(e),(g),(h),(i),(k),(m)
340 108
(b),(c),(d)(e),(f),(g),(h),(i),(j)
Equity in losses of unconsolidated affiliates (7 ) — (5 ) —
Net income 867 526
Net income attributable to
noncontrolling interests and preference stock dividends 43
(20 ) (n) 36 (23 ) (n)
Net income attributable to
common shareholders $ 824 $ 490
Effective tax
rate(o) 34.1 % 39.0 %
Earnings per average common
share Basic $ 0.86 $ 0.53 Diluted $ 0.85 $ 0.53
Average common shares outstanding Basic 962 925 Diluted 965
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) $ (0.05 ) $ (0.06 ) Unrealized
gains related to NDT fund investments (c) (0.07 ) (0.07 )
Amortization of commodity contract intangibles (d) 0.01 0.01 Merger
and integration costs (e) — 0.01 Merger commitments (f) — 0.01
Long-lived asset impairments (g) 0.03 0.01 Plant retirements and
divestitures (h) 0.08 0.22 Cost management program (i) 0.01 0.01
Like-kind exchange tax position (j) — 0.21 Reassessment of state
deferred income taxes (k) (0.02 ) — Bargain purchase gain (l) (0.01
) — Asset retirement obligation (m)Asset retirement obligation (m)
— — Noncontrolling interests (n) 0.02 0.03 Total
adjustments $ — $ 0.38 (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, primarily related
to commodity contracts recorded at fair value related to the
Integrys and ConEdison Solutions acquisitions in 2016, 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 acquisition in 2016, and in 2017, the PHI and FitzPatrick
acquisitions, offset at 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 charges to earnings
related to the impairment of upstream assets at Generation in 2016,
and in 2017, impairments of the ExGen Texas Power, LLC assets held
for sale. (h) Adjustment to exclude accelerated depreciation and
amortization expenses associated with Generation's previous
decision to early retire the Clinton and Quad Cities nuclear
facilities in 2016, and Generation's decision to early retire the
Three Mile Island nuclear facility in 2017. (i) Adjustment to
exclude severance and reorganization costs related to a cost
management program. (j) Adjustment to exclude the recognition of a
penalty and associated interest expense in the third quarter of
2016, as a result of a tax court decision on Exelon’s like-kind
exchange tax position. (k) Adjustment to exclude the non-cash
impact of the remeasurement of state deferred income taxes,
primarily as a result of a change in the Illinois statutory tax
rate and changes in forecasted apportionment. (l) Adjustment to
exclude a measurement period adjustment to the bargain purchase
gain for the FitzPatrick acquisition. (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 from Generation’s results the
noncontrolling interests related to certain exclusion items,
primarily related to the impact of unrealized gains and losses on
NDT fund investments at CENG. (o) The effective tax rate related to
Adjusted (non-GAAP) Operating Earnings is 35.6% and 34.3% for the
three months ended September 30, 2017 and September 30, 2016,
respectively.
EXELON
CORPORATION GAAP Consolidated Statements of Operations
and Adjusted (non-GAAP) Operating Earnings Reconciling
Adjustments
(unaudited)
(in millions, except per share data)
Nine Months Ended September 30, 2017 Nine
Months Ended September 30, 2016 GAAP (a)
Non-GAAP Adjustments GAAP (a) Non-GAAP
Adjustments Operating revenues $ 25,149 $ 77 (b),(d) $
23,486 $ 368 (b),(d),(e)
Operating expenses Purchased power
and fuel 10,527 (133 ) (b),(d),(h) 9,462 211 (b),(d),(h) Operating
and maintenance 7,732 (633 )
(e),(g),(h),(j),(l)
7,677 (956 ) (e),(f),(g),(h),(j) Depreciation and amortization
2,814 (143 ) (d),(h) 2,821 (452 ) (e),(h) Taxes other than income
1,313 — 1,168 (1 ) (j)
Total operating
expenses 22,386 21,128
Gain on sales of assets 4 1 (h)
41 —
Bargain purchase gain 233 (233 ) (n) — —
Operating income 3,000 2,399
Other income
and (deductions) Interest expense, net (1,194 ) 59 (g),(k),(m)
(1,179 ) 153 (k) Other, net 725 (393 ) (c),(k) 377
(193 ) (c),(h),(k)
Total other income and (deductions) (469
) (802 )
Income before income taxes 2,531 1,597
Income
taxes 595 459
(b),(c),(d),(e),(f),(g),(h),(i),(j),(k),(l),(m)
625 419
(b),(c),(d),(e),(f),(g),(h),(j),(k)
Equity in losses of unconsolidated affiliates (25 ) — (16 )
—
Net income 1,911 956
Net loss attributable to
noncontrolling interests and preference stock dividends 12
(75 ) (o) 26 (41 ) (o)
Net income attributable to
common shareholders $ 1,899 $ 930
Effective
tax rate(p) 23.5 % 39.1 %
Earnings per average common
share Basic $ 2.02 $ 1.01 Diluted $ 2.01 $ 1.00
Average common shares outstanding Basic 941 924 Diluted 943
926
Effect of adjustments on earnings per average diluted common
share recorded in accordance with GAAP: Mark-to-market impact
of economic hedging activities (b) $ 0.10 $ 0.07 Unrealized gains
related to NDT fund investments (c) (0.22 ) (0.13 ) Amortization of
commodity contract intangibles (d) 0.03 0.01 Merger and integration
costs (e) 0.04 0.10 Merger commitments (f) (0.15 ) 0.43 Long-lived
asset impairments (g) 0.31 0.11 Plant retirements and divestitures
(h) 0.15 0.37 Reassessment of state deferred income taxes (i) (0.04
) — Cost management program (j) 0.03 0.03 Like-kind exchange tax
position (k) (0.03 ) 0.21 Asset retirement obligation (l) — — Tax
settlements (m) (0.01 ) — Bargain purchase gain (n) (0.25 ) —
Noncontrolling interests (o) 0.08 0.04 Total
adjustments $ 0.04 $ 1.24
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, 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 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 the Integrys and ConEdison Solutions acquisitions in
2016, 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 acquisition in 2016, partially offset
at ComEd, BGE and PHI by the anticipated recovery of previously
incurred PHI acquisition costs, and in 2017, the PHI and
FitzPatrick acquisitions, partially offset at PHI by the
anticipated recovery of previously incurred PHI acquisition costs.
(f) Adjustment to exclude in 2016 costs incurred as part of the
settlement orders approving the PHI acquisition, 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 as a result of the ExGen Texas Power, LLC assets held
for sale. (h) Adjustment to exclude accelerated depreciation and
amortization expenses, increases to materials and supplies
inventory reserves, charges for severance reserves and construction
work in progress impairments associated with Generation's previous
decision to early retire the Clinton and Quad Cities nuclear
facilities in 2016, and Generation's decision to early retire the
Three Mile Island nuclear facility in 2017, partially offset in
2016 by a gain associated with Generation’s sale of the New Boston
generating site. (i) Adjustment to exclude the non-cash impact of
the remeasurement of state deferred income taxes, primarily as a
result of changes in forecasted apportionment related to the PHI
acquisition in 2016, and in 2017, 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 the recognition of a penalty and associated
interest expense in 2016 as a result of a tax court decision on
Exelon’s like-kind exchange tax position, and adjustments to income
tax, penalties and interest expenses in 2017 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 from
Generation’s results the noncontrolling interests related to
certain exclusion items, primarily related to the impact of
unrealized gains and losses on NDT fund investments at CENG. (p)
The effective tax rate related to Adjusted (non-GAAP) Operating
Earnings is 35.7% and 33.4% for the nine months ended September 30,
2017 and September 30, 2016, respectively.
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version on businesswire.com: http://www.businesswire.com/news/home/20171102005699/en/
Exelon CorporationDan EggersInvestor Relations312-394-2345orPaul
AdamsCorporate Communications410-470-4167
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