EX-99.1 2 d431480dex991.htm PRESS RELEASE AND EARNINGS RELEASE ATTACHMENTS Press release and earnings release attachments

Exhibit 99.1

 

LOGO

 

Contact:   

JaCee Burnes

Investor Relations

312-394-2948

 

Paul Adams

Corporate Communications

410-470-4167

      FOR IMMEDIATE RELEASE

EXELON ANNOUNCES THIRD QUARTER 2012 RESULTS;

RAISES FULL-YEAR OPERATING EARNINGS GUIDANCE RANGE

CHICAGO (Nov. 1, 2012) — Exelon Corporation (NYSE: EXC) announced third quarter 2012 consolidated earnings as follows:

 

     Third Quarter  
     2012      2011  

Adjusted (non-GAAP) Operating Results:

     

Net Income ($ millions)

   $ 658       $ 743   

Diluted Earnings per Share

   $ 0.77       $ 1.12   
  

 

 

    

 

 

 

GAAP Results:

     

Net Income ($ millions)

   $ 296       $ 601   

Diluted Earnings per Share

   $ 0.35       $ 0.90   
  

 

 

    

 

 

 

“We delivered strong financial performance during the third quarter and exceeded our quarterly guidance range thanks in large part to the management of our portfolio by Constellation, Exelon’s retail and wholesale marketing organization,” said Christopher M. Crane, Exelon’s president and CEO. “Based on our results through September and the ICC’s reversal of its ComEd pension asset decision in October, we are revising our full-year operating earnings guidance range upwards to $2.75 to $2.95 per share.”

Third Quarter Operating Results

Third quarter 2012 earnings include financial results for Constellation Energy and Baltimore Gas and Electric Company (BGE). Therefore, the composition of results of operations from 2012 and 2011 are not comparable for Exelon Generation Company, LLC (Generation), BGE and Exelon.

 

1


As shown in the table above, Exelon’s adjusted (non-GAAP) operating earnings declined to $0.77 per share in the third quarter of 2012 from $1.12 per share in the third quarter of 2011. Earnings in third quarter 2012 primarily reflected the following negative factors:

 

   

Lower energy margins at Generation, resulting from decreased capacity pricing related to the Reliability Pricing Model (RPM) for the PJM Interconnection, LLC (PJM) market, higher nuclear fuel costs and lower realized market prices for the sale of energy across all regions;

 

   

Lower nuclear volume due to increased planned and unplanned outage days;

 

   

Lower allowed ROE (return on equity) at ComEd;

 

   

Higher operating and maintenance expenses, including increased labor, contracting and materials;

 

   

Impact of increased average diluted common shares outstanding as a result of the merger; and

 

   

Increased depreciation and amortization expense due to ongoing capital expenditures.

These factors were partially offset by:

 

   

The addition of Constellation Energy’s contribution to Generation’s energy margins; and

 

   

Decreased storm costs in the ComEd and PECO territories.

Adjusted (non-GAAP) operating earnings for the third quarter of 2012 do not include the following items (after tax) that were included in reported GAAP earnings:

 

     (in millions)     (per diluted share)  

Mark-to-Market Impact of Economic Hedging Activities

   $ 19      $ 0.02   

Unrealized Gains Related to NDT (Nuclear Decommissioning Trust) Fund Investments

   $ 38      $ 0.04   

Plant Retirements and Divestitures

   $ (193   $ (0.22

Asset Retirement Obligation

   $ (6   $ (0.01

Constellation Merger and Integration Costs

   $ (36   $ (0.04

Amortization of Commodity Contract Intangibles

   $ (187   $ (0.21

Amortization of the Fair Value of Certain Debt

   $ 3        —     

 

2


Adjusted (non-GAAP) operating earnings for the third quarter of 2011 do not include the following items (after tax) that were included in reported GAAP earnings:

 

     (in millions)     (per diluted share)  

Mark-to-Market Impact of Economic Hedging Activities

   $ (55   $ (0.08

Unrealized Losses Related to NDT Fund Investments

   $ (76   $ (0.12

Plant Retirements and Divestitures

   $ (2     —     

Asset Retirement Obligation

   $ (16   $ (0.02

Constellation Merger and Integration Costs

   $ (11   $ (0.02

Other Acquisition Costs

   $ (5   $ (0.01

Wolf Hollow Acquisition

   $ 23      $ 0.03   

2012 Earnings Outlook

Exelon revised upward its guidance range for 2012 adjusted (non-GAAP) operating earnings to $2.75 to $2.95 per share. Operating earnings guidance is based on the assumption of normal weather for the balance of the year and preliminary cost estimates for the impact of Hurricane Sandy.

The outlook for 2012 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

 

   

Financial impacts associated with the planned retirement of fossil generating units and the expected sale in the fourth quarter of 2012 of three generating stations as required by the merger

 

   

Changes in decommissioning and other asset retirement obligation estimates

 

   

Certain costs related to the merger and integration initiatives

 

   

Costs incurred as part of the Maryland order approving the merger transaction

 

   

Non-cash amortization of intangible assets, net, related to commodity contracts recorded at fair value at the merger date

 

   

Costs incurred as part of a March 2012 settlement with the FERC

 

   

Changes in state deferred tax rates resulting from a reassessment of apportionment of Exelon’s deferred taxes as a result of the merger

 

   

Non-cash amortization of certain debt recorded at fair value at the merger date

 

   

Other acquisition costs

 

   

Significant impairments of assets, including goodwill

 

   

Other unusual items

 

   

Significant changes to GAAP

 

3


Third Quarter and Recent Highlights

 

   

Nuclear Operations: Generation’s nuclear fleet, including its owned output from the Salem Generating Station, produced 34,581 gigawatt-hours (GWh) in the third quarter of 2012, compared with 36,045 GWh in the third quarter of 2011. The output data excludes the units owned by Constellation Energy Nuclear Group LLC (CENG). Excluding Salem and the units owned by CENG, the Exelon-operated nuclear plants achieved a 90.7 percent capacity factor for the third quarter of 2012, compared with 95.8 percent for the third quarter of 2011. The number of planned refueling outage days totaled 43 in the third quarter of 2012 versus 33 days in the third quarter of 2011. The number of non-refueling outage days at the Exelon-operated plants totaled 40 days in the third quarter of 2012, compared with three days in the third quarter of 2011.

 

   

Fossil and Renewables Operations: The equivalent demand forced outage rate for Generation’s fossil fleet is 3.7 percent for the first three quarters of 2012, compared with 6.0 percent in the first three quarters of 2011. The 2012 results include former Constellation plants, exclusive of the Maryland Clean Coal plants to be sold, whereas 2011 data includes only legacy Exelon plants. The equivalent availability factor for the hydroelectric facilities was 91.9 percent in the third quarter of 2012, compared with 93.9 percent in the third quarter of 2011. The change was largely due to planned outages in July and August of 2012. The energy capture for the wind fleet was 94.4 percent in the third quarter of 2012, compared with 91.6 percent in the third quarter of 2011.

 

   

ComEd Distribution Formula Rate Cases: The Illinois Commerce Commission (ICC) ruled on ComEd’s formula rate proceeding under the Electric Infrastructure Modernization Act (EIMA) on May 30, 2012 (May Order). EIMA is designed to provide for timely and regular recovery of actual costs to support a 10-year grid modernization program. As enacted by the General Assembly, EIMA expressly provides for recovery of certain categories of costs such as a return on equity tied to U.S. Treasury bonds and pension funding costs, and it also requires an annual revenue requirement reconciliation, or “true up,” to ensure customers pay no more or no less than ComEd’s true costs. In the proceeding covered by the May Order, ComEd had taken positions supporting a $59 million reduction in the annual revenue requirement being recovered in current rates (based on 2010 costs and 2011 plant additions), primarily reflecting a lower return on equity consistent with the provision of EIMA. The ICC’s May Order reduced the annual revenue requirements by $168 million, or approximately $110 million more than proposed by ComEd.

On October 3, 2012, the ICC issued its final Order on Remand (Rehearing Order) in ComEd’s expedited rehearing of specific items pursuant to EIMA. The Rehearing Order addressed three key conclusions reached in the ICC’s May Order: (1) ComEd’s pension asset recovery; (2) the rate of interest to affix to over or under recovered costs; and (3) the use of a year-end or an “average year” rate base in determining ComEd’s reconciliation revenue requirement.

 

4


In the Rehearing Order, the ICC adopted ComEd’s position on the return on its pension asset, resulting in an increase in ComEd’s annual revenue requirement of $35 million based on ComEd’s 2010 Pension Asset. The impact on the 2011 reconciliation and subsequent periods will incorporate the additional investment in the pension asset ComEd made in 2011. However, the ICC ruled against ComEd in affirming its decision to use (1) an average rate base in ComEd’s reconciliation revenue requirement; and (2) the ICC amended its prior order to provide a short-term debt rate as the appropriate interest rate to apply to under/over recoveries of incurred costs. ComEd filed a notice of appeal with the Illinois Appellate Court on Oct. 4, 2012 on the May Order and the Rehearing Order because the impact of the issues in the two orders would be nearly $100 million per year that ComEd would not be able to recover and subsequently reinvest in the distribution system in 2014 and beyond.

Pursuant to the distribution formula rate mechanism and the May Order, ComEd had recorded as of June 30, 2012 a net regulatory asset of $26 million, reflecting its best estimate of the probable increase in distribution rates under the annual reconciliation mechanism reflecting costs incurred in 2011 and the first six months of 2012. ComEd expects to record in the fourth quarter an increase in revenue of approximately $135 million pre-tax in 2012 consistent with the terms of the Rehearing Order.

 

   

Maryland Clean Coal Asset Divestitures: On Aug. 8, 2012, Exelon reached an agreement to sell its three Maryland coal-fired power plants to Raven Power Holdings LLC (Raven Power), fulfilling its commitment to Maryland to divest the plants as part of its merger with Constellation Energy. The sale was required by the Federal Energy Regulatory Commission (FERC), U.S. Department of Justice (DOJ) and the Maryland Public Service Commission as part of Exelon’s merger approval. The three plants, known collectively as Maryland Clean Coal, include:

 

   

Brandon Shores (coal) in Pasadena, Md.: 1,273 MW of installed capacity, two units

 

   

C.P. Crane (coal and oil) in Middle River, Md.: 399 MW installed capacity, three units

 

   

H.A. Wagner (coal, natural gas and oil) in Pasadena, Md.: 976 MW installed capacity, five units

Generation expects to receive proceeds of approximately $388 million in the fourth quarter less cash payments of approximately $32 million to Raven Power Holdings LLC over a twelve-month period beginning in June 2014. Generation expects to incur transaction costs of approximately $20 million through the closing of the transaction in the fourth quarter of 2012. The sale will generate approximately $225 million of cash tax benefits, of which $135 million will be realized in periods through 2013 with the balance to be received in later years. Therefore, Generation expects net after-tax cash sale proceeds of approximately $500 million through 2013 and approximately $65 million in 2014 and subsequent years. Exelon recorded a pre-tax loss of $278 million in the third quarter to reflect the difference between the estimated sale price and the carrying value of the plants. The impact of the loss has been excluded from Adjusted (Non-GAAP) Operating Earnings. All regulatory preconditions to closing this transaction have been met and required FERC authorizations have been received. The transaction is expected to close in the fourth quarter of this year.

 

5


   

Qualified Facility Sales: On Aug. 21, 2012, Exelon closed on the sale of its ownership share of five California power plants – a total of 70 megawatts (MW) of generating capacity – to Tokyo-based IHI Corporation. The power plants joined Exelon’s generating portfolio following the company’s merger with Constellation Energy in March 2012. The five California power plants include:

 

   

Chinese Station (biomass) in Jamestown, CA, in which Exelon owned a 9.9 MW share;

 

   

Rio Bravo Fresno (biomass) in Fresno, CA, in which Exelon owned a 12 MW share;

 

   

Rio Bravo Jasmin (coal) in Bakersfield, CA, in which Exelon owned a 17.5 MW share;

 

   

Rio Bravo Poso (coal) in Bakersfield, CA, in which Exelon owned a 17.5 MW share;

 

   

Rio Bravo Rocklin (biomass) in Lincoln, CA, in which Exelon owned a 12 MW share.

 

   

Riverside 6 & Schuylkill 1 Retirements: On Oct. 31, 2012, Exelon Generation notified PJM Interconnection of its intention to permanently retire Schuylkill Generating Station Unit 1 by Feb. 1, 2013, and Riverside Generating Station Unit 6 by Jun. 1, 2014. Schuylkill Unit 1 is a 166 MW peaking oil unit located in Philadelphia, PA, which was placed in service in 1958. Riverside 6 is a 115 MW peaking gas/kerosene unit located in Baltimore, MD, which was placed in service in 1970. The units are being retired because they are no longer economic to operate due to their age, relatively high capital and operating costs and current market conditions. PJM has 30 days to review whether the proposed retirements of the units create transmission system reliability issues. Once PJM’s review is complete, Exelon will determine final retirement dates for the units.

 

   

Texas ESP Application: On Aug. 28, 2012, Exelon halted efforts to gain initial federal regulatory approvals for new nuclear construction in Victoria County, TX. The company notified the Nuclear Regulatory Commission that it has withdrawn its Early Site Permit application for an 11,500-acre tract southeast of Victoria. The action is in response to low natural gas prices and economic and market conditions that have made construction of new merchant nuclear power plants in competitive markets uneconomical now and for the foreseeable future. Exelon originally submitted an application for a combined construction and operating license for the Victoria County site in 2008, but never made a decision to build a nuclear plant there. In 2010, the company applied for an Early Site Permit, a change in licensing strategy that allowed Exelon to continue with some aspects of site evaluation and regulatory approvals while deferring a construction decision for up to 20 years. The withdrawal of the license brings an end to all project activity.

 

6


   

Constellation Solar Projects: In August 2012, Constellation announced two solar projects:

 

   

On Aug. 14, 2012, Constellation announced that it will develop a 4.35-MW solar generation system for the Casa Grande Union High School District in Casa Grande, AZ. Constellation will own and operate the solar power system and the school district will purchase the electricity it generates under a 20-year power purchase agreement.

 

   

On Aug. 29, 2012, Constellation announced the completion of a 16.1-MW (DC) grid-connected photovoltaic (PV) solar installation in Emmitsburg, MD., for the state of Maryland’s Generating Clean Horizons initiative. Constellation will own and operate the approximately $50 million solar facility on behalf of its customer, the State of Maryland. Electricity generated by the system is purchased by the state’s Department of General Services and the University System of Maryland under 20-year solar power purchase agreements with Constellation.

 

   

Hedging Update: Exelon’s hedging program involves the hedging of commodity risk for Exelon’s expected generation, typically on a ratable basis over a three-year period. Expected generation represents the amount of energy estimated to be generated or purchased through owned or contracted-for capacity. The proportion of expected generation hedged as of Sept. 30, 2012, is 99 to 102 percent for 2012, 88 to 91 percent for 2013, 56 to 59 percent for 2014 and 21 to 24 percent for 2015. 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:

 

   

BGE: On Aug. 17, 2012, BGE issued $250 million in principal amount of its 2.80 percent Notes due 2022. BGE will use the net proceeds to repay outstanding commercial paper obligations and for general corporate purposes.

 

   

PECO: On Sept. 17, 2012, PECO issued $350 million of First Mortgage Bonds, maturing on Sept. 15, 2022, with a coupon of 2.375 percent. PECO used a portion of the net proceeds from the sale of the bonds to pay at maturity $225 million aggregate principal amount of its 4.75 percent first mortgage bonds due Oct. 1, 2012, and the remaining proceeds were used for other general corporate purposes.

 

   

ComEd: On Oct. 1, 2012, ComEd issued $350 million aggregate principal amount of its First Mortgage 3.800 percent Bonds, Series 113 due Oct. 1, 2042. ComEd will use the net proceeds from the sale of the bonds to repay outstanding commercial paper obligations and for general corporate purposes.

 

7


Operating Company Results

Generation consists of owned and contracted electric generating facilities and wholesale and retail customer supply of electric and natural gas products and services, including renewable energy products, risk management services and natural gas exploration and production activities.

Third quarter 2012 GAAP net income was $91 million, compared with $386 million in the third quarter of 2011. Adjusted (non-GAAP) operating earnings for the third quarter of 2011 and 2012 do not include various items (after tax) that were included in reported GAAP earnings. A reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Net Income is in the table below:

 

($ millions)

   3Q12     3Q11  

Generation Adjusted (non-GAAP) Operating Earnings

   $ 458      $ 522   

Mark-to-Market Impact of Economic Hedging Activities

   $ 9      $ (55

Unrealized Gains/Losses Related to NDT Fund Investments

   $ 38      $ (76

Plant Retirements and Divestitures

   $ (193   $ (2

Asset Retirement Obligation

   $ (6   $ (18

Constellation Merger and Integration Costs

   $ (31   $ (3

Amortization of Commodity Contract Intangibles

   $ (187     —     

Amortization of Fair Value of Certain Debt

   $ 3        —     

Other Acquisition Costs

     —        $ (5

Wolf Hollow Acquisition

     —        $ 23   
  

 

 

   

 

 

 

Generation GAAP Net Income

   $ 91      $ 386   
  

 

 

   

 

 

 

Generation’s Adjusted (non-GAAP) Operating Earnings in the third quarter of 2012 decreased $64 million compared with the same quarter in 2011. This decrease primarily reflected:

 

   

Lower energy margins at Generation, resulting from decreased capacity pricing related to RPM for the PJM market, higher nuclear fuel costs and lower realized market prices for the sale of energy across all regions;

 

   

Lower nuclear volume due to increased planned and unplanned outage days;

 

   

Higher operating and maintenance expenses; and

 

   

Increased depreciation and amortization expense due to ongoing capital expenditures.

 

8


These items were partially offset by contribution to Generation’s energy margins from the addition of Constellation Energy to Generation’s operations.

Generation’s average realized margin on all electric sales, including sales to affiliates and excluding trading activity, was $25.96 per megawatt-hour (MWh) in the third quarter of 2012, compared with $39.19 per MWh in the third quarter of 2011.

ComEd consists of electricity transmission and distribution operations in northern Illinois.

ComEd recorded GAAP net income of $90 million in the third quarter of 2012, compared with net income of $112 million in the third quarter of 2011. Adjusted (non-GAAP) operating earnings for the third quarter of 2011 and 2012 do not include various items (after tax) that were included in reported GAAP earnings. A reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Net Income is in the table below:

 

($ millions)

   3Q12      3Q11  

ComEd Adjusted (non-GAAP) Operating Earnings

   $ 90       $ 113   

Constellation Merger and Integration Costs

     —         $ (1
  

 

 

    

 

 

 

ComEd GAAP Net Income

   $ 90       $ 112   
  

 

 

    

 

 

 

ComEd’s Adjusted (non-GAAP) Operating Earnings in the third quarter of 2012 were down $23 million from the same quarter in 2011, primarily due to decreased distribution revenues based on a lower allowed ROE as a result of a final order issued by the ICC on the 2011 performance based formula rate proceeding under the EIMA; this unfavorable item was partially offset by decreased storm costs in ComEd’s territory.

For the third quarter of 2012, cooling degree-days in the ComEd service territory were up 9.4 percent relative to the same period in 2011 and were 40.1 percent above normal. In the third quarter of 2012, heating degree-days in the ComEd service territory were down 27.2 percent relative to the same period in 2011 and were 10.1 percent below normal. Total retail electric deliveries increased 2.1 percent quarter over quarter.

Weather-normalized retail electric deliveries increased 0.2 percent in the third quarter of 2012 relative to 2011, reflecting increases in deliveries to residential and public authorities & railroads, partially offset by decreases in deliveries to both small and large commercial and industrial (C&I) customers. For ComEd, weather had no impact on third quarter 2012 earnings relative to 2011 and a favorable after-tax effect of $14 million relative to normal weather.

PECO consists of electricity transmission and distribution operations and retail natural gas distribution operations in southeastern Pennsylvania.

PECO’s GAAP net income in the third quarter of 2012 was $122 million, compared with $104 million in the third quarter of 2011. Adjusted (non-GAAP) Operating Earnings for the third quarter of 2011 and 2012 do not include various items (after tax) that were included in reported GAAP earnings. A reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Net Income is in the table below:

 

($ millions)

   3Q12     3Q11  

PECO Adjusted (non-GAAP) Operating Earnings

   $ 124      $ 103   

Asset Retirement Obligation

     —        $ 2   

Constellation Merger and Integration Costs

   $ (2   $ (1
  

 

 

   

 

 

 

PECO GAAP Net Income

   $ 122      $ 104   
  

 

 

   

 

 

 

 

9


PECO’s Adjusted (non-GAAP) Operating Earnings in the third quarter of 2012 increased $21 million from the same quarter in 2011, primarily reflecting the effect of lower storm costs from 2011’s Hurricane Irene; this favorable item was partially offset by lower load.

For the third quarter of 2012, cooling degree-days in the PECO service territory were up 2.6 percent relative to the same period in 2011 and were 21.8 percent above normal. In the third quarter of 2012, heating degree-days in the PECO service territory were down 22.2 percent from 2011 and were 60.0 percent below normal. Total retail electric deliveries were down 2.3 percent quarter over quarter. On the retail gas side, deliveries in the third quarter of 2012 were down 4.4 percent from the third quarter of 2011.

Weather-normalized retail electric deliveries were down 3.6 percent in the third quarter of 2012 relative to 2011, reflecting declines in deliveries to all customer classes except public authorities and electric railroads. Weather-normalized gas deliveries were down 4.4 percent in the third quarter of 2012. For PECO, weather had a favorable after-tax effect of $3 million on third quarter 2012 earnings relative to 2011 and a favorable after-tax effect of $12 million relative to normal weather.

BGE consists of electricity transmission and distribution operations and retail natural gas distribution operations in central Maryland.

BGE’s GAAP net income in the third quarter of 2012 was $(4) million. The net income included after-tax costs of $1 million associated with the merger and integration initiatives. Excluding the effects of these items, BGE’s adjusted (non-GAAP) Operating Earnings in the third quarter of 2012 was $(3) million. The primary driver of BGE’s loss for the quarter was significant storm costs associated with the derecho storm.

Adjusted (non-GAAP) Operating Earnings

Adjusted (non-GAAP) operating earnings, which generally exclude significant one-time charges or credits that are not normally associated with ongoing operations, mark-to-market adjustments from economic hedging activities and unrealized gains and losses from NDT fund investments, are provided as a supplement to results reported in accordance with GAAP. Management uses such adjusted (non-GAAP) operating earnings measures internally to evaluate the company’s performance and manage its operations. Reconciliation of GAAP to adjusted (non-GAAP) operating earnings for historical periods is attached. Additional earnings release attachments, which include the reconciliation on pages 8 and 9 are posted on Exelon’s Web site: www.exeloncorp.com and have been furnished to the Securities and Exchange Commission on Form 8-K on November 1, 2012.

 

10


Cautionary Statements Regarding Forward-Looking Information

This news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factors that could cause actual results to differ materially from the forward-looking statements made by Exelon Corporation, Commonwealth Edison Company, PECO Energy Company, Baltimore Gas and Electric Company and Exelon Generation Company, LLC (Registrants) include those factors discussed herein, as well as the items discussed in (1) Exelon’s 2011 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 18; (2) Constellation Energy Group’s 2011 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 12; (3) the Registrant’s Second Quarter 2012 Quarterly Report on Form 10-Q in (a) Part II, Other Information, ITEM 1A. Risk Factors and (b) Part I, Financial Information, ITEM 1. Financial Statements: Note 15; 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 presentation. 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 news release.

# # #

Exelon Corporation is the nation’s leading competitive energy provider, with approximately $33 billion in annual revenues. Headquartered in Chicago, Exelon has operations and business activities in 47 states, the District of Columbia and Canada. Exelon is the largest competitive U.S. power generator, with approximately 35,000 megawatts of owned capacity comprising one of the nation’s cleanest and lowest-cost power generation fleets. The company’s Constellation business unit provides energy products and services to approximately 100,000 business and public sector customers and approximately 1 million residential customers. Exelon’s utilities deliver electricity and natural gas to more than 6.6 million customers in central Maryland (BGE), northern Illinois (ComEd) and southeastern Pennsylvania (PECO).

 

11


Earnings Release Attachments

Table of Contents

 

Consolidating Statements of Operations - Three Months Ended September 30, 2012 and 2011

     1  

Consolidating Statements of Operations - Nine Months Ended September 30, 2012 and 2011

     2  

Business Segment Comparative Statements of Operations - Generation and ComEd - Three and Nine Months Ended September 30, 2012 and 2011

     3  

Business Segment Comparative Statements of Operations - PECO and BGE - Three and Nine Months Ended September 30, 2012 and 2011

     4  

Business Segment Comparative Statements of Operations - Other - Three and Nine Months Ended September 30, 2012 and 2011

     5  

Consolidated Balance Sheets - September 30, 2012 and December 31, 2011

     6  

Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2012 and 2011

     7  

Reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Consolidated Statements of Operations - Exelon - Three Months Ended September 30, 2012 and 2011

     8  

Reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Consolidated Statements of Operations - Exelon - Nine Months Ended September 30, 2012 and 2011

     9  

Reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Earnings By Business Segment - Three Months Ended September 30, 2012 and 2011

     10  

Reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Earnings By Business Segment - Nine Months Ended September 30, 2012 and 2011

     11  

Reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Consolidated Statements of Operations - Generation - Three and Nine Months Ended September 30, 2012 and 2011

     12  

Reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Consolidated Statements of Operations - ComEd - Three and Nine Months Ended September 30, 2012 and 2011

     13  

Reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Consolidated Statements of Operations - PECO - Three and Nine Months Ended September 30, 2012 and 2011

     14  

Reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Consolidated Statements of Operations - BGE - Three Months Ended September 30, 2012 and March 12, 2012 Through September 30, 2012

     15  

Reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Consolidated Statements of Operations - Other - Three and Nine Months Ended September 30, 2012 and 2011

     16  

Exelon Generation Statistics - Three Months Ended September 30, 2012, June 30, 2012, March 31, 2012, December 31, 2011 and September 30, 2011

     17  

Exelon Generation Statistics - Nine Months Ended September 30, 2012 and 2011

     18  

ComEd Statistics - Three and Nine Months Ended September 30, 2012 and 2011

     19  

PECO Statistics - Three and Nine Months Ended September 30, 2012 and 2011

     20  

BGE Statistics - Three Months Ended September 30, 2012 and March 12, 2012 Through September 30, 2012

     21  


EXELON CORPORATION

Consolidating Statements of Operations

(unaudited)

(in millions)

 

     Three Months Ended September 30, 2012  
     Generation     ComEd     PECO     BGE     Other (a)     Exelon
Consolidated
 

Operating revenues

   $ 4,017     $ 1,484     $ 806     $ 720     $ (462   $ 6,565  

Operating expenses

            

Purchased power and fuel

     2,122       678       326       373       (473     3,026  

Operating and maintenance

     1,415       350       199       201       (9     2,156  

Depreciation, amortization, accretion and depletion

     207       157       55       68       13       500  

Taxes other than income

     109       81       48       48       4       290  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     3,853       1,266       628       690       (465     5,972  

Equity in earnings of unconsolidated affiliates

     10       —          —          —          —          10  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     174       218       178       30       3       603  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income and deductions

            

Interest expense

     (85     (74     (32     (35     (20     (246

Other, net

     83       5       2       5       6       101  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and deductions

     (2     (69     (30     (30     (14     (145
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     172       149       148       —          (11     458  

Income taxes

     85       59       25       —          (8     161  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     87       90       123       —          (3     297  

Net loss attributable to noncontrolling interests, preferred security dividends and preference stock dividends

     (4     —          1       4       —          1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) on common stock

   $ 91     $ 90     $ 122     $ (4   $ (3   $ 296  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Three Months Ended September 30, 2011  
     Generation     ComEd     PECO     BGE     Other (a)     Exelon
Consolidated
 

Operating revenues

   $ 2,821     $ 1,784     $ 946     $ —        $ (297   $ 5,254  

Operating expenses

            

Purchased power and fuel

     1,071       932       464       —          (346     2,121  

Operating and maintenance

     790       396       219       —          8       1,413  

Depreciation, amortization, accretion and depletion

     139       135       51       —          7       332  

Taxes other than income

     67       78       59       —          3       207  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     2,067       1,541       793       —          (328     4,073  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     754       243       153       —          31       1,181  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income and deductions

            

Interest expense

     (37     (86     (34     —          (25     (182

Other, net

     (164     16       3       —          3       (142
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and deductions

     (201     (70     (31     —          (22     (324
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     553       173       122         9       857  

Income taxes

     167       61       17       —          10       255  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     386       112       105       —          (1     602  

Preferred security dividends

     —          —          1       —          —          1  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) on common stock

   $ 386     $ 112     $ 104     $ —        $ (1   $ 601  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Other primarily includes eliminating and consolidating adjustments, Exelon’s corporate operations, shared service entities and other financing and investment activities.

 

1


EXELON CORPORATION

Consolidating Statements of Operations

(unaudited)

(in millions)

 

     Nine Months Ended September 30, 2012 (a)  
     Generation     ComEd     PECO     BGE     Other (b)     Exelon
Consolidated
 

Operating revenues

   $ 10,509     $ 4,154     $ 2,396     $ 1,388     $ (1,242   $ 17,205  

Operating expenses

            

Purchased power and fuel

     5,018       1,886       1,033       727       (1,266     7,398  

Operating and maintenance

     3,756       1,000       574       423       196       5,949  

Depreciation, amortization, accretion and depletion

     564       458       161       157       36       1,376  

Taxes other than income

     272       224       122       104       15       737  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     9,610       3,568       1,890       1,411       (1,019     15,460  

Equity in losses of unconsolidated affiliates

     (69     —          —          —          —          (69
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     830       586       506       (23     (223     1,676  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income and deductions

            

Interest expense

     (223     (230     (94     (77     (73     (697

Other, net

     185       12       6       14       36       253  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and deductions

     (38     (218     (88     (63     (37     (444
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     792       368       418       (86     (260     1,232  

Income taxes

     373       149       118       (37     (158     445  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     419       219       300       (49     (102     787  

Net loss attributable to noncontrolling interests, preferred security dividends and preference stock dividends

     (6     —          3       8       —          5  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) on common stock

   $ 425     $ 219     $ 297     $ (57   $ (102   $ 782  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Nine Months Ended September 30, 2011  
     Generation     ComEd     PECO     BGE     Other (b)     Exelon
Consolidated
 

Operating revenues

   $ 7,919     $ 4,694     $ 2,942     $ —        $ (850   $ 14,705  

Operating expenses

            

Purchased power and fuel

     2,795       2,436       1,506       —          (901     5,836  

Operating and maintenance

     2,306       930       597       —          30       3,863  

Depreciation, amortization, accretion and depletion

     416       405       150       —          16       987  

Taxes other than income

     199       226       165       —          12       602  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     5,716       3,997       2,418       —          (843     11,288  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     2,203       697       524       —          (7     3,417  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income and deductions

            

Interest expense

     (128     (257     (102     —          (58     (545

Other, net

     (12     24       11       —          31       54  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and deductions

     (140     (233     (91     —          (27     (491
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     2,063       464       433       —          (34     2,926  

Income taxes

     738       169       119       —          8       1,034  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     1,325       295       314       —          (42     1,892  

Preferred security dividends

     —          —          3       —          —          3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) on common stock

   $ 1,325     $ 295     $ 311     $ —        $ (42   $ 1,889  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Includes financial results for Constellation and BGE beginning on March 12, 2012, the date the merger was completed.
(b) Other primarily includes eliminating and consolidating adjustments, Exelon’s corporate operations, shared service entities and other financing and investment activities.

 

2


EXELON CORPORATION

Business Segment Comparative Statements of Operations

(unaudited)

(in millions)

 

     Generation  
     Three Months Ended September 30,     Nine Months Ended September 30,  
     2012     2011     Variance     2012 (a)     2011     Variance  

Operating revenues

   $ 4,017     $ 2,821     $ 1,196     $ 10,509     $ 7,919     $ 2,590  

Operating expenses

            

Purchased power and fuel

     2,122       1,071       1,051       5,018       2,795       2,223  

Operating and maintenance

     1,415       790       625       3,756       2,306       1,450  

Depreciation, amortization, accretion and depletion

     207       139       68       564       416       148  

Taxes other than income

     109       67       42       272       199       73  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     3,853       2,067       1,786       9,610       5,716       3,894  

Equity in earnings (losses) of unconsolidated affiliates

     10       —          10       (69     —          (69
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     174       754       (580     830       2,203       (1,373
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income and deductions

            

Interest expense

     (85     (37     (48     (223     (128     (95

Other, net

     83       (164     247       185       (12     197  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and deductions

     (2     (201     199       (38     (140     102  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     172       553       (381     792       2,063       (1,271

Income taxes

     85       167       (82     373       738       (365
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     87       386       (299     419       1,325       (906

Net loss attributable to noncontrolling interests

     (4     —          (4     (6     —          (6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income on common stock

   $ 91     $ 386     $ (295   $ 425     $ 1,325     $ (900
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Includes financial results for Constellation beginning on March 12, 2012, the date the merger was completed.

 

     ComEd  
     Three Months Ended September 30,     Nine Months Ended September 30,  
     2012     2011     Variance     2012     2011     Variance  

Operating revenues

   $ 1,484     $ 1,784     $ (300   $ 4,154     $ 4,694     $ (540

Operating expenses

            

Purchased power

     678       932       (254     1,886       2,436       (550

Operating and maintenance

     350       396       (46     1,000       930       70  

Depreciation and amortization

     157       135       22       458       405       53  

Taxes other than income

     81       78       3       224       226       (2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     1,266       1,541       (275     3,568       3,997       (429
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     218       243       (25     586       697       (111
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income and deductions

            

Interest expense

     (74     (86     12       (230     (257     27  

Other, net

     5       16       (11     12       24       (12
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and deductions

     (69     (70     1       (218     (233     15  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     149       173       (24     368       464       (96

Income taxes

     59       61       (2     149       169       (20
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 90     $ 112     $ (22   $ 219     $ 295     $ (76
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

3


EXELON CORPORATION

Business Segment Comparative Statements of Operations

(unaudited)

(in millions)

 

     PECO  
     Three Months Ended September 30,     Nine Months Ended September 30,  
     2012     2011     Variance     2012     2011     Variance  

Operating revenues

   $ 806     $ 946     $ (140   $ 2,396     $ 2,942     $ (546

Operating expenses

            

Purchased power and fuel

     326       464       (138     1,033       1,506       (473

Operating and maintenance

     199       219       (20     574       597       (23

Depreciation and amortization

     55       51       4       161       150       11  

Taxes other than income

     48       59       (11     122       165       (43
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     628       793       (165     1,890       2,418       (528
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     178       153       25       506       524       (18
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income and deductions

            

Interest expense

     (32     (34     2       (94     (102     8  

Other, net

     2       3       (1     6       11       (5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and deductions

     (30     (31     1       (88     (91     3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     148       122       26       418       433       (15

Income taxes

     25       17       8       118       119       (1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     123       105       18       300       314       (14

Preferred security dividends

     1       1       —          3       3       —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income on common stock

   $ 122     $ 104     $ 18     $ 297     $ 311     $ (14
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     BGE  
     Three Months Ended September 30,     March 12, 2012 through September 30,  
     2012     2011     Variance     2012     2011     Variance  

Operating revenues

   $ 720     $ —        $ 720     $ 1,388     $ —        $ 1,388  

Operating expenses

            

Purchased power and fuel

     373       —          373       727       —          727  

Operating and maintenance

     201       —          201       423       —          423  

Depreciation and amortization

     68       —          68       157       —          157  

Taxes other than income

     48       —          48       104       —          104  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     690       —          690       1,411       —          1,411  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     30       —          30       (23     —          (23
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income and deductions

            

Interest expense

     (35     —          (35     (77     —          (77

Other, net

     5       —          5       14       —          14  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and deductions

     (30     —          (30     (63     —          (63
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     —          —          —          (86     —          (86

Income taxes

     —          —          —          (37     —          (37
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     —          —          —          (49     —          (49

Preference stock dividends

     4       —          4       8       —          8  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss on common stock

   $ (4   $ —        $ (4   $ (57   $ —        $ (57
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

4


EXELON CORPORATION

Business Segment Comparative Statements of Operations

(unaudited)

(in millions)

 

     Other (a)  
     Three Months Ended September 30,     Nine Months Ended September 30,  
     2012     2011     Variance     2012 (b)     2011     Variance  

Operating revenues

   $ (462   $ (297   $ (165   $ (1,242   $ (850   $ (392

Operating expenses

            

Purchased power and fuel

     (473     (346     (127     (1,266     (901     (365

Operating and maintenance

     (9     8       (17     196       30       166  

Depreciation and amortization

     13       7       6       36       16       20  

Taxes other than income

     4       3       1       15       12       3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     (465     (328     (137     (1,019     (843     (176
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     3       31       (28     (223     (7     (216
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income and deductions

            

Interest expense

     (20     (25     5       (73     (58     (15

Other, net

     6       3       3       36       31       5  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and deductions

     (14     (22     8       (37     (27     (10
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     (11     9       (20     (260     (34     (226

Income taxes

     (8     10       (18     (158     8       (166
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (3   $ (1   $ (2   $ (102   $ (42   $ (60
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Other primarily includes eliminating and consolidating adjustments, Exelon's corporate operations, shared service entities and other financing and investment activities.
(b) Includes financial results for Constellation and BGE beginning on March 12, 2012, the date the merger was completed.

 

5


EXELON CORPORATION

Consolidated Balance Sheets

(unaudited)

(in millions)

 

     September 30, 2012 (a)     December 31, 2011  

ASSETS

    

Current assets

    

Cash and cash equivalents

   $ 1,602     $ 1,016  

Cash and cash equivalents of variable interest entities

     98       —     

Restricted cash and investments

     73       40  

Restricted cash and investments of variable interest entities

     67       —     

Accounts receivable, net

    

Customer

     2,835       1,613  

Other

     1,216       1,000  

Accounts receivable, net, variable interest entities

     225       —     

Mark-to-market derivative assets

     928       432  

Unamortized energy contract assets

     1,141       13  

Inventories, net

    

Fossil fuel

     264       208  

Materials and supplies

     767       656  

Deferred income taxes

     254       —     

Regulatory assets

     786       390  

Other

     1,072       345  
  

 

 

   

 

 

 

Total current assets

     11,328       5,713  
  

 

 

   

 

 

 

Property, plant and equipment, net

     43,914       32,570  

Deferred debits and other assets

    

Regulatory assets

     6,192       4,518  

Nuclear decommissioning trust (NDT) funds

     7,140       6,507  

Investments

     838       751  

Investments in affiliates

     371       15  

Investment in CENG

     1,908       —     

Goodwill

     2,625       2,625  

Mark-to-market derivative assets

     1,039       650  

Unamortized energy contracts assets

     1,191       388  

Pledged assets for Zion Station decommissioning

     631       734  

Other

     1,176       524  
  

 

 

   

 

 

 

Total deferred debits and other assets

     23,111       16,712  
  

 

 

   

 

 

 

Total assets

   $ 78,353     $ 54,995  
  

 

 

   

 

 

 
    

Liabilities and shareholders’ equity

    

Current liabilities

    

Short-term borrowings

   $ 60     $ 163  

Short-term notes payable - accounts receivable agreement

     225       225  

Long-term debt due within one year

     1,049       828  

Long-term debt of variable interest entities due within one year

     70       —     

Accounts payable

     2,359       1,444  

Accounts payable of variable interest entities

     132       —     

Accrued expenses

     1,502       1,255  

Deferred income taxes

     52       1  

Regulatory liabilities

     299       197  

Dividends payable

     4       349  

Mark-to-market derivative liabilities

     521       112  

Unamortized energy contract liabilities

     523       —     

Other

     974       560  
  

 

 

   

 

 

 

Total current liabilities

     7,770       5,134  
  

 

 

   

 

 

 
    

Long-term debt

     17,050       11,799  

Long-term debt to financing trusts

     649       390  

Long-term debt of variable interest entity

     546       —     

Deferred credits and other liabilities

    

Deferred income taxes and unamortized investment tax credits

     11,600       8,253  

Asset retirement obligations

     4,866       3,884  

Pension obligations

     2,575       2,194  

Non-pension postretirement benefit obligations

     2,946       2,263  

Spent nuclear fuel obligation

     1,020       1,019  

Regulatory liabilities

     4,000       3,627  

Mark-to-market derivative liabilities

     407       126  

Unamortized energy contract liabilities

     621       —     

Payable for Zion Station decommissioning

     422       563  

Other

     1,691       1,268  
  

 

 

   

 

 

 

Total deferred credits and other liabilities

     30,148       23,197  
  

 

 

   

 

 

 

Total liabilities

     56,163       40,520  
  

 

 

   

 

 

 
    
    

Commitments and contingencies

    

Preferred securities of subsidiary

     87       87  

Shareholders’ equity

    

Common stock

     16,594       9,107  

Treasury stock, at cost

     (2,327     (2,327

Retained earnings

     9,959       10,055  

Accumulated other comprehensive loss, net

     (2,405     (2,450
  

 

 

   

 

 

 

Total shareholders’ equity

     21,821       14,385  
    

BGE preference stock not subject to mandatory redemption

     193       —     

Noncontrolling interest

     89       3  
  

 

 

   

 

 

 

Total equity

     22,103       14,388  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 78,353     $ 54,995  
  

 

 

   

 

 

 

 

(a) Includes the financial information of Constellation and BGE.

 

6


EXELON CORPORATION

Consolidated Statements of Cash Flows

(unaudited)

(in millions)

 

     Nine Months Ended
September 30,
 
     2012 (a)     2011  

Cash flows from operating activities

    

Net income

   $ 787     $ 1,892  

Adjustments to reconcile net income to net cash flows provided by operating activities:

    

Depreciation, amortization, accretion and depletion including nuclear fuel and energy contract amortization

     2,909       1,702  

Impairment of long-lived assets

     278       —     

Deferred income taxes and amortization of investment tax credits

     263       1,008  

Net fair value changes related to derivatives

     (377     360  

Net realized and unrealized gains on NDT fund investments

     (142     90  

Other non-cash operating activities

     1,235       703  

Changes in assets and liabilities:

    

Accounts receivable

     240       3  

Inventories

     12       (44

Accounts payable, accrued expenses and other current liabilities

     (837     (400

Option premiums (paid) received, net

     (122     59  

Counterparty collateral received (posted), net

     408       (807

Income taxes

     465       532  

Pension and non-pension postretirement benefit contributions

     (131     (2,089

Other assets and liabilities

     (431     (92
  

 

 

   

 

 

 

Net cash flows provided by operating activities

     4,557       2,917  
  

 

 

   

 

 

 

Cash flows from investing activities

    

Capital expenditures

     (4,145     (2,972

Proceeds from nuclear decommissioning trust fund sales

     6,262       3,120  

Investment in nuclear decommissioning trust funds

     (6,422     (3,293

Acquisitions

     —          (380

Cash acquired from Constellation

     964       —     

Proceeds from sales of investments

     26       —     

Purchases of investments

     (13     —     

Change in restricted cash

     (38     (532

Other investing activities

     41       26  
  

 

 

   

 

 

 

Net cash flows used in financing activities

     (3,325     (4,031
  

 

 

   

 

 

 

Cash flows from financing activities

    

Changes in short-term debt

     (139     462  

Issuance of long-term debt

     1,558       1,199  

Retirement of long-term debt

     (731     (3

Dividends paid on common stock

     (1,226     (1,044

Dividends paid to former Constellation shareholders

     (51     —     

Proceeds from employee stock plans

     61       26  

Other financing activities

     (20     (67
  

 

 

   

 

 

 

Net cash flows (used in) provided by financing activities

     (548     573  
  

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     684       (541

Cash and cash equivalents at beginning of period

     1,016       1,612  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 1,700     $ 1,071  
  

 

 

   

 

 

 

 

(a) Includes financial results for Constellation and BGE beginning on March 12, 2012, the date the merger was completed.

 

7


EXELON CORPORATION

Reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Consolidated Statements of Operations

(unaudited)

(in millions, except per share data)

 

    Three Months Ended September 30, 2012 (a)     Three Months Ended September 30, 2011  
                Adjusted                 Adjusted  
    GAAP (b)     Adjustments     Non-GAAP     GAAP (b)     Adjustments     Non-GAAP  

Operating revenues

  $ 6,565     $ 464  (c),(d),(e)    $ 7,029     $ 5,254     $ (33 )(c),(j)    $ 5,221  

Operating expenses

           

Purchased power and fuel

    3,026       278  (c),(d),(e)      3,304       2,121       (93 )(c),(d)      2,028  

Operating and maintenance

    2,156      

 

 

(378

 (c),(e),(f), 

)(g) 

    1,778       1,413      

 

 

(65

 (c),(f),(g), 

)(j),(k) 

    1,348  

Depreciation, amortization, accretion and depletion

    500       (13 )(c),(f)      487       332       (19 )(c)      313  

Taxes other than income

    290       (4 )(c)      286       207       —          207  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    5,972       (117     5,855       4,073       (177     3,896  

Equity in earnings of unconsolidated affiliates

    10       50  (e)      60       —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    603       631        1,234       1,181       144        1,325  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income and deductions

           

Interest expense

    (246     (2 )(f),(h)      (248     (182     —          (182

Other, net

    101       (60 )(c),(f),(i)      41       (142     181  (i)      39  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and deductions

    (145     (62     (207     (324     181        (143
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

    458       569        1,027       857       325        1,182  

Income taxes

    161      

 

 

207

 (c),(d),(e), 

 (f),(g),(h),(i) 

    368       255      

 

 

183

 (c),(d),(f), 

 (g),(i),(j),(k) 

    438  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
           

Net income

    297       362        659       602       142        744  
           

Net loss attributable to noncontrolling interests, preferred security dividends and preference stock dividends

    1       —          1       1       —          1  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
           

Net income on common stock

  $ 296     $ 362      $ 658     $ 601     $ 142      $ 743  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Effective tax rate

    35.2       35.8     29.8       37.1

Earnings per average common share

           

Basic

  $ 0.35     $ 0.42      $ 0.77     $ 0.91     $ 0.21      $ 1.12  

Diluted

  $ 0.35     $ 0.42      $ 0.77     $ 0.90     $ 0.22      $ 1.12  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average common shares outstanding

           

Basic

    854         854       663         663  

Diluted

    857         857       665         665  

 

Effect of adjustments on earnings per average diluted common share recorded in accordance with GAAP:

  

 

Plant retirements and divestitures (c)

      $ 0.22            $ —       

Mark-to-market impact of economic hedging activities (d)

        (0.02           0.08     

Amortization of commodity contract intangibles (e)

        0.21              —       

Constellation merger and integration costs (f)

        0.04              0.02     

Asset retirement obligation (g)

        0.01              0.02     

Amortization of the fair value of certain debt (h)

        —                —       

Unrealized (gains) losses related to NDT fund investments (i)

        (0.04           0.12     

Wolf Hollow acquisition (j)

        —                (0.03  

Other acquisition costs (k)

        —                0.01     
               
     

 

 

         

 

 

   

Total adjustments

      $ 0.42            $ 0.22     
     

 

 

         

 

 

   

 

(a) Includes financial results for Constellation and BGE beginning on March 12, 2012, the date the merger was completed.
(b) Results reported in accordance with accounting principles generally accepted in the United States (GAAP).
(c) Adjustment to exclude costs associated with the retirement of fossil generating units, the impacts of the FERC approved reliability-must-run rate schedule and the impact associated with the expected sale in the fourth quarter of 2012 of three generating stations associated with certain of the regulatory approvals required for the merger.
(d) Adjustment to exclude the mark-to-market impact of Exelon’s economic hedging activities, net of intercompany eliminations.
(e) Adjustment to exclude the non-cash amortization of intangible assets, net, related to commodity contracts recorded at fair value at the merger date.
(f) Adjustment to exclude certain costs incurred associated with the merger, including transaction costs, employee-related expenses (e.g. severance, retirement, relocation and retention bonuses) and integration initiatives.
(g) Adjustment to exclude the increase in Generation’s decommissioning obligation for spent nuclear fuel at retired nuclear units.
(h) Adjustment to exclude the non-cash amortization of certain debt recorded at fair value at the merger date expected to be retired in 2013.
(i) Adjustment to exclude the unrealized losses in 2011 and gains in 2012 associated with Generation’s NDT fund investments and the associated contractual accounting relating to income taxes.
(j) Adjustment to exclude the non-cash bargain purchase gain (negative goodwill) associated with the acquisition of Wolf Hollow, net of acquisition costs.
(k) Adjustment to exclude certain costs associated with Exelon’s acquisition of Antelope Valley Solar Ranch One (AVSR) in 2011.

 

8


EXELON CORPORATION

Reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Consolidated Statements of Operations

(unaudited)

(in millions, except per share data)

 

    Nine Months Ended September 30, 2012 (a)     Nine Months Ended September 30, 2011  
                Adjusted                 Adjusted  
    GAAP (b)     Adjustments     Non-GAAP     GAAP (b)     Adjustments     Non-GAAP  

Operating revenues

  $ 17,205     $ 1,024  (c),(d),(e),(f)    $ 18,229     $ 14,705     $ (42 )(c),(n)    $ 14,663  

Operating expenses

           

Purchased power and fuel

    7,398       540  (c),(d),(e),(g)      7,938       5,836       (366 )(d)      5,470  

Operating and maintenance

    5,949      

 

 

(1,051

 (c),(e),(f), 

)(g),(h),(i),(j) 

    4,898       3,863      

 

 

(82

 (c),(g),(i), 

)(j),(n),(o) 

    3,781  

Depreciation, amortization, accretion and depletion

    1,376       (43 )(c),(g)      1,333       987       (65 )(c)      922  

Taxes other than income

    737       (6 )(c),(f)      731       602       —          602  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    15,460       (560     14,900       11,288       (513     10,775  

Equity in earnings (losses) of unconsolidated affiliates

    (69     110  (e),(g)      41       —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    1,676       1,694        3,370       3,417       471        3,888  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income and deductions

           

Interest expense

    (697     (8 )(g),(k)      (705     (545     —          (545

Other, net

    253       (73 )(c),(g),(l)      180       54       94  (l),(n)      148  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income and deductions

    (444     (81     (525     (491     94        (397
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

    1,232       1,613        2,845       2,926       565        3,491  

Income taxes

    445      

 

 

 

  

612

(c),(d),(e),(f), 

(g),(h),(i),(j), 

(k),(l),(m) 

    1,057       1,034      

 

 

 

 

235

 (c),(d),(g),(i), 

 (j),(l),(n), 

 (o),(p) 

    1,269  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income on common stock

    787       1,001        1,788       1,892       330        2,222  

Net loss attributable to noncontrolling interests, preferred security dividends and preference stock dividends

    5       —          5       3       —          3  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
           

Net income

  $ 782     $ 1,001      $ 1,783     $ 1,889     $ 330      $ 2,219  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Effective tax rate

    36.1       37.2     35.3       36.4

Earnings per average common share

           

Basic

  $ 0.97     $ 1.25      $ 2.22     $ 2.85     $ 0.50      $ 3.35  

Diluted

  $ 0.97     $ 1.24      $ 2.21     $ 2.84     $ 0.50      $ 3.34  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average common shares outstanding

           

Basic

    804         804       663         663  

Diluted

    806         806       664         664  

Effect of adjustments on earnings per average diluted common share recorded in accordance with GAAP:

           

Plant retirements and divestitures (c)

    $ 0.25          $ 0.04     

Mark-to-market impact of economic hedging activities (d)

      (0.23         0.34     

Amortization of commodity contract intangibles (e)

      0.68            —       

Maryland commitments (f)

      0.28            —       

Constellation merger and integration costs (g)

      0.26            0.04     

FERC settlement (h)

      0.22            —       

Other acquisition costs (i)

      —              0.01     

Asset retirement obligation (j)

      0.01            0.02     

Amortization of the fair value of certain debt (k)

      (0.01         —       

Unrealized (gains) losses related to NDT fund investments (l)

      (0.07         0.07     

Reassessment of state deferred income taxes (m)

      (0.15         —       

Wolf Hollow acquisition (n)

      —              (0.03  

Recovery of costs pursuant to the 2011 distribution rate case order (o)

      —              (0.03  

Charge resulting from Illinois tax rate change legislation (p)

      —              0.04     
   

 

 

       

 

 

   

Total adjustments

    $ 1.24          $ 0.50     
   

 

 

       

 

 

   

 

(a) Includes financial results for Constellation Energy including BGE, beginning on March 12, 2012, the date the acquisition was completed.
(b) Results reported in accordance with GAAP.
(c) Adjustment to exclude costs associated with the retirement of fossil generating units, the impacts of the FERC approved reliability-must-run rate schedule, and the impact associated with the expected sale in the fourth quarter of 2012 of three generation stations associated with certain of the regulatory approvals required for the merger.
(d) Adjustment to exclude the mark-to-market impact of Exelon’s economic hedging activities.
(e) Adjustment to exclude the non-cash amortization of intangible assets, net, related to commodity contracts recorded at fair value at the merger date.
(f) Adjustment to exclude costs incurred as part of the Maryland order approving the merger transaction.
(g) Adjustment to exclude certain activities associated with the merger, including transaction costs, employee-related expenses (e.g. severance, retirement, relocation and retention bonuses) and integration initiatives.
(h) Adjustment to exclude costs associated with the March 2012 settlement with the FERC.
(i) Adjustment to exclude certain costs associated with various acquisitions.
(j) Adjustment to exclude the increase in Generation’s decommissioning obligation for spent nuclear fuel and the decrease in PECO’s asset retirement obligation.
(k) Adjustment to exclude the non-cash amortization of certain debt recorded at fair value at the merger date expected to be retired in 2013.
(l) Adjustment to exclude the unrealized gains in 2011 and losses in 2012 associated with Generation’s NDT fund investments and the associated contractual accounting relating to income taxes.
(m) Adjustment to exclude a one-time, non-cash benefit associated with a change in state deferred tax rates resulting from a reassessment of anticipated apportionment of Exelon’s deferred taxes as a result of the merger.
(n) Adjustment to exclude the non-cash bargain purchase gain (negative goodwill) associated with the acquisition of Wolf Hollow, net of acquisition costs.
(o) Adjustment to exclude one-time benefits for the recovery of previously incurred costs related to the 2009 restructuring plan and for the passage of Federal health care legislation in 2010.
(p) Adjustment to exclude a one-time, non-cash charge to remeasure deferred taxes at higher corporate tax rates pursuant to the Illinois tax rate change legislation.

 

9


EXELON CORPORATION (a)

Reconciliation of Adjusted (non-GAAP) Operating

Earnings to GAAP Earnings (in millions)

Three Months Ended September 30, 2012 and 2011

 

     Exelon                                      
     Earnings per                                      
     Diluted Share     Generation     ComEd     PECO     BGE     Other (b)     Exelon  

2011 GAAP Earnings (Loss)

   $ 0.90     $ 386     $ 112     $ 104     $ —        $ (1   $ 601  

2011 Adjusted (non-GAAP) Operating Earnings (Loss) Adjustments:

              

Mark-to-Market Impact of Economic Hedging Activities

     0.08       55       —          —          —          —          55  

Unrealized Losses Related to NDT Fund Investments (1)

     0.12       76       —          —          —          —          76  

Plant Retirements and Divestitures (2)

     —          2       —          —          —          —          2  

Asset Retirement Obligation (3)

     0.02       18       —          (2     —          —          16  

Constellation Merger and Integration Costs (4)

     0.02       3       1       1       —          6       11  

Other Acquisition Costs

     0.01       5       —          —          —          —          5  

Wolf Hollow Acquisition (5)

     (0.03     (23     —          —          —          —          (23
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2011 Adjusted (non-GAAP) Operating Earnings

     1.12       522       113       103       —          5       743  

Year Over Year Effects on Earnings:

              

Generation Energy Margins, Excluding Mark-to-Market:

              

Nuclear Volume (6)

     (0.03     (24     —          —          —          —          (24

Nuclear Fuel Costs (7)

     (0.01     (13     —          —          —          —          (13

Capacity Pricing (8)

     —          2       —          —          —          —          2  

Market and Portfolio Conditions (9)

     0.22       185       —          —          —          —          185  

Transmission Upgrades (10)

     —          30       —          —          —          (30     —     

ComEd, PECO and BGE Margins:

              

Weather

     —          —          —          3       —   (c)      —          3  

Load

     (0.01     —          1       (7     —   (c)      —          (6

Other Energy Delivery (11)

     0.21       —          (29     3       208       —          182  

Operating and Maintenance Expense:

              

Labor, Contracting and Materials (12)

     (0.25     (143     (14     7       (60     —          (210

Planned Nuclear Refueling Outages

     —          (3     —          —          —          —          (3

Pension and Non-Pension Postretirement Benefits (13)

     (0.03     (8     (9     (2     (7     (3     (29

Other Operating and Maintenance (14)

     (0.03     (41     50       13       (53     7       (24

Depreciation and Amortization Expense (15)

     (0.12     (46     (14     (3     (40     (4     (107

Equity in Earnings of Unconsolidated Affiliates (16)

     0.04       38       —          —          —          —          38  

Income Taxes (17)

     0.01       8       (7     (2     —          10       9  

Interest Expense, Net (18)

     (0.05     (34     1       1       (21     7       (46

Other

     (0.05     (15     (2     8       (30     (3     (42

Share Differential (19)

     (0.25     —          —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2012 Adjusted (non-GAAP) Operating Earnings (Loss)

     0.77       458       90       124       (3     (11     658  

2012 Adjusted (non-GAAP) Operating Earnings (Loss) Adjustments:

              

Mark-to-Market Impact of Economic Hedging Activities

     0.02       9       —          —          —          10       19  

Unrealized Gains Related to NDT Fund Investments (1)

     0.04       38       —          —          —          —          38  

Plant Retirements and Divestitures (2)

     (0.22     (193     —          —          —          —          (193

Asset Retirement Obligation (3)

     (0.01     (6     —          —          —          —          (6

Constellation Merger and Integration Costs (4)

     (0.04     (31     —          (2     (1     (2     (36

Amortization of Commodity Contract Intangibles (20)

     (0.21     (187     —          —          —          —          (187

Amortization of the Fair Value of Certain Debt (21)

     —          3       —          —          —          —          3  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2012 GAAP Earnings (Loss)

   $ 0.35     $ 91     $ 90     $ 122     $ (4   $ (3   $ 296  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) For the three months ended September 30, 2012, includes financial results for Constellation and BGE. Therefore, the results of operations from 2012 and 2011 are not comparable for Generation, BGE, Other and Exelon. The explanations below identify any significant or unusual items affecting the results of operations.
(b) Other primarily includes eliminating and consolidating adjustments, Exelon's corporate operations, shared service entities and other financing and investment activities.
(c) As approved by the Maryland PSC, BGE records a monthly adjustment to residential and the majority of its commercial and industrial customers to eliminate the effect of abnormal weather and usage patterns per customer on distribution volumes.

 

(1) Reflects the impact of unrealized losses in 2011 and unrealized gains in 2012 on NDT fund investments to the extent not offset by contractual accounting as described in the notes to the consolidated financial statements.

 

(2) For 2012, primarily reflects the impact associated with the expected sale in the fourth quarter of 2012 of three generating stations associated with certain of the regulatory approvals required for the merger. For 2011, primarily reflects incremental accelerated depreciation associated with the retirement of four fossil generating units and compensation for operating two of the units past their planned retirement date under a FERC-approved reliability-must-run rate schedule.

 

(3) Primarily reflects an increase in Generation’s decommissioning obligation for spent nuclear fuel at retired nuclear units.

 

(4) Reflects certain costs incurred associated with the merger, including transaction costs, employee-related expenses (e.g. severance, retirement, relocation and retention bonuses) and integration initiatives.

 

(5) Primarily reflects a non-cash bargain purchase gain (negative goodwill) in 2011 in connection with the acquisition of Wolf Hollow, net of acquisition costs.

 

(6) Primarily reflects the impact of increased planned and unplanned nuclear outage days in 2012, excluding Constellation Energy Nuclear Group, LLC (CENG).
(7) Primarily reflects the impact of higher nuclear fuel prices, excluding CENG.

 

(8) Primarily reflects the addition of Constellation’s financial results in 2012, offset by the impact of decreased capacity prices related to the Reliability Pricing Model (RPM) for the PJM Interconnection, LLC (PJM) market.

 

(9) Primarily reflects the addition of Constellation’s financial results in 2012, partially offset by the impact of decreased realized market prices for the sale of energy across all regions.

 

(10) Reflects intercompany expense in 2011 at Generation for upgrades in transmission assets owned by ComEd, which are reflected as assets at Exelon Corporate.

 

(11) For ComEd, primarily reflects decreased distribution revenue pursuant to the performance based formula rate and decreased cost recovery for regulatory required programs (completely offset in operating and maintenance expense).

 

(12) Primarily reflects the addition of Constellation and BGE's financial results in 2012 and the impacts of increased wages and other benefits and increased contracting expenses (exclusive of planned nuclear refueling outages and incremental storm costs). At ComEd, primarily reflects increased contracting expenses resulting from new projects related to EIMA. At PECO, primarily reflects a decrease in contracting expenses.

 

(13) The increase in pension and OPEB costs primarily reflect the impact of lower actuarially assumed discount rates and expected return on assets for 2012 as compared to 2011.

 

(14) Primarily reflects the addition of Constellation and BGE's financial results in 2012 and the impact of storm costs in the BGE service territory, partially offset by decreased storm costs in the ComEd and PECO service territories and decreased costs at ComEd associated with regulatory required programs (completely offset by decreased other energy delivery revenues at ComEd).

 

(15) Includes increased depreciation expense across the operating companies due to ongoing capital expenditures and the non-cash amortization of intangible assets at Generation primarily related to the trade name and retail relationships recorded at fair value at the merger date.

 

(16) Primarily reflects the equity in earnings in CENG, partially offset by the non-cash amortization of the fair value basis difference recorded at the merger date.

 

(17) At Generation, primarily reflects an increase in investment tax credits attributable to AVSR, partially offset by a 2012 reduction in manufacturing deduction benefits. At PECO, primarily reflects a 2011 benefit for the electric transmission and distribution property repairs deduction, offset by a 2012 gas property repairs deduction.

 

(18) Primarily reflects the addition of Constellation and BGE's financial results in 2012 and the impact of higher interest expense at Generation and BGE due to higher outstanding debt.

 

(19) Reflects the impact on earnings per share due to the increase in Exelon's average diluted common shares outstanding as a result of the merger.

 

(20) Represents the non-cash amortization of intangible assets, net, related to commodity contracts recorded at fair value at the merger date.

 

(21) Represents the non-cash amortization of certain debt recorded at fair value at the merger date expected to be retired in 2013.

 

10


EXELON CORPORATION (a)

Reconciliation of Adjusted (non-GAAP) Operating

Earnings to GAAP Earnings (in millions)

Nine Months Ended September 30, 2012 and 2011

 

     Exelon
Earnings  per
Diluted Share
    Generation     ComEd     PECO     BGE     Other (b)     Exelon  
              
              

2011 GAAP Earnings (Loss)

   $ 2.84     $ 1,325     $ 295     $ 311     $ —        $ (42   $ 1,889  

2011 Adjusted (non-GAAP) Operating Earnings (Loss) Adjustments:

              

Mark-to-Market Impact of Economic Hedging Activities

     0.34       219       —          —          —          —          219  

Unrealized Losses Related to NDT Fund Investments (1)

     0.07       46       —          —          —          —          46  

Plant Retirements and Divestitures (2)

     0.04       29       —          —          —          —          29  

Asset Retirement Obligation (3)

     0.02       18       —          (2     —          —          16  

Non-Cash Charge Resulting From Illinois Tax Rate Change Legislation (4)

     0.04       21       4       —          —          4       29  

Recovery of Costs Pursuant to the 2011 Distribution Rate Case Order (5)

     (0.03     —          (17     —          —          —          (17

Constellation Merger and Integration Costs (6)

     0.04       3       1       1       —          21       26  

Other Acquisition Costs

     0.01       5       —          —          —          —          5  

Wolf Hollow Acquisition (7)

     (0.03     (23     —          —          —          —          (23
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2011 Adjusted (non-GAAP) Operating Earnings (Loss)

     3.34       1,643       283       310       —          (17     2,219  

Year Over Year Effects on Earnings:

              

Generation Energy Margins, Excluding Mark-to-Market:

              

Nuclear Volume

     —          —          —          —          —          —          —