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Share Name | Share Symbol | Market | Type |
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Exelon Corp | NYSE:EXC | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 48.80 | 0 | 01:00:00 |
Exelon Corporation (NYSE: EXC) today reported its financial results for the fourth quarter and full year 2017.
This press release features multimedia. View the full release here: http://www.businesswire.com/news/home/20180207005615/en/
Exelon Corporation 2017 in Review
"Exelon had a strong 2017, with our utilities turning in first-quartile and in several cases best-ever performance in reliability and customer service, and our nuclear generation fleet producing the most power on record, all thanks to the great work of our people, who also set company records for volunteerism and charitable giving,” said Christopher M. Crane, Exelon’s president and CEO. “We will build on this momentum in 2018 with our new dividend growth rate of 5 percent annually over the next three years, tax reform that will benefit utility customers and reduce tax expenses at Generation, and movement on needed power price formation changes in PJM and broader resiliency reviews at FERC.”
“In 2017, Exelon delivered solid financial performance with $2.60 of Adjusted (non-GAAP) Operating Earnings, which is within our range,” said Jonathan W. Thayer, Exelon’s Senior Executive Vice President and CFO. “We are introducing 2018 operating earnings guidance of $2.90 - $3.20 per share which incorporates the benefits of U.S. tax reform, strong utility growth, a full-year of ZEC programs in New York and Illinois, and recognition of Illinois ZEC revenue from 2017.”
Fourth Quarter 2017
Exelon's GAAP Net Income for the fourth quarter 2017 increased to $1.94 per share from $0.22 per share in the fourth quarter of 2016; Adjusted (non-GAAP) Operating Earnings increased to $0.55 per share in the fourth quarter of 2017 from $0.44 per share in the fourth quarter of 2016. For the reconciliations of GAAP Net Income to Adjusted (non-GAAP) Operating Earnings, refer to the tables beginning on page 9.
Adjusted (non-GAAP) Operating Earnings in the fourth quarter of 2017 reflect higher utility earnings due to regulatory rate increases and weather, partially offset by a 2017 impairment of certain transmission-related income tax regulatory assets; and, at Generation, New York ZEC revenue and higher capacity prices, partially offset by lower realized energy prices.
Full Year 2017
For the full year 2017, Exelon's GAAP Net Income increased to $3.97 per share from $1.22 per share in 2016. Exelon's Adjusted (non-GAAP) Operating Earnings for 2017 decreased to $2.60 per share from $2.68 per share in 2016.
Adjusted (non-GAAP) Operating Earnings for the full year 2017 reflect higher utility earnings due to regulatory rate increases, partially offset by weather and a 2017 impairment of certain transmission-related income tax regulatory assets; and, at Generation, lower realized energy prices, the impacts of lower load volumes delivered due to mild weather in the third quarter 2017, the conclusion of the Ginna RSSA and the impact of declining natural gas prices on Generation's natural gas portfolio, partially offset by New York ZEC revenue and higher capacity prices.
Operating Company Results1
ComEd2
ComEd's fourth quarter 2017 GAAP Net Income was $120 million compared with $80 million in the fourth quarter of 2016. ComEd’s Adjusted (non-GAAP) Operating Earnings for the fourth quarter 2017 were $123 million compared with $81 million in the fourth quarter of 2016, primarily reflecting higher electric distribution and transmission formula rate revenues.
PECO
PECO’s fourth quarter 2017 GAAP Net Income was $107 million compared with $92 million in the fourth quarter of 2016. PECO’s fourth quarter 2017 Adjusted (non-GAAP) Operating Earnings of $95 million remained relatively consistent with fourth quarter 2016 Adjusted (non-GAAP) Operating Earnings of $94 million.
____________________ 1 Exelon’s five business units include ComEd, which consists of electricity transmission and distribution operations in northern Illinois; PECO, which consists of electricity transmission and distribution operations and retail natural gas distribution operations in southeastern Pennsylvania; BGE, which consists of electricity transmission and distribution operations and retail natural gas distribution operations in central Maryland; PHI, which consists of electricity transmission and distribution operations in the District of Columbia and portions of Maryland, Delaware, and New Jersey and retail natural gas distribution operations in northern Delaware; and Generation, which consists of owned and contracted electric generating facilities and wholesale and retail customer supply of electric and natural gas products and services, including renewable energy products and risk management services. 2 For BGE, Pepco and DPL Maryland and beginning in 2017 for ComEd, customer rates are adjusted to eliminate the impacts of weather and customer usage on distribution volumes.Heating degree days were up 6.1 percent relative to the same period in 2016 and were 7.2 percent below normal. Total retail electric deliveries were up 3.4 percent compared with the fourth quarter of 2016. Natural gas deliveries (including both retail and transportation segments) in the fourth quarter of 2017 were up 9.0 percent compared with the same period in 2016.
BGE2
BGE’s fourth quarter 2017 GAAP Net Income was $76 million compared with $103 million in the fourth quarter of 2016. BGE’s Adjusted (non-GAAP) Operating Earnings for the fourth quarter 2017 were $82 million compared with $105 million in the fourth quarter of 2016, primarily due to a favorable 2016 settlement of a Baltimore City conduit fee dispute and a 2017 impairment of certain transmission-related income tax regulatory assets.
PHI2
PHI’s fourth quarter 2017 GAAP Net Income was $4 million compared with $30 million in the fourth quarter of 2016. PHI’s Adjusted (non-GAAP) Operating Earnings for the fourth quarter 2017 were $48 million compared with $42 million in the fourth quarter of 2016, primarily due to regulatory rate increases, partially offset by a 2017 impairment of certain transmission-related income tax regulatory assets.
Generation
Generation's fourth quarter 2017 GAAP Net Income was $2,215 million compared with a GAAP Net Loss of $41 million in the fourth quarter of 2016. Generation’s Adjusted (non-GAAP) Operating Earnings for the fourth quarter 2017 were $252 million compared with $162 million in the fourth quarter of 2016, primarily reflecting New York ZEC revenue and higher capacity prices, partially offset by lower realized energy prices.
The proportion of expected generation hedged as of Dec. 31, 2017, was 85.0 percent to 88.0 percent for 2018, 55.0 percent to 58.0 percent for 2019 and 26.0 percent to 29.0 percent for 2020.
___________________ 2 For BGE, Pepco and DPL Maryland and beginning in 2017 for ComEd, customer rates are adjusted to eliminate the impacts of weather and customer usage on distribution volumes.Initiates Annual Guidance for 2018
Exelon introduced a guidance range for 2018 Adjusted (non-GAAP) Operating Earnings of $2.90 to $3.20 per share. Adjusted (non-GAAP) Operating Earnings guidance is based on the assumption of normal weather, which is determined based on historical average heating and cooling degree days for a 30-year period in the respective utilities' service territories, except at PHI, where a 20-year period is used. The outlook for 2018 Adjusted (non-GAAP) Operating Earnings for Exelon and its subsidiaries excludes the following items:
Recent Developments
Fourth Quarter Highlights
GAAP/Adjusted (non-GAAP) Operating Earnings Reconciliations
Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2017 do not include the following items (after tax) that were included in reported GAAP Net Income:
(in millions) ExelonEarnings per Diluted Share Exelon ComEd PECO BGE PHI Generation 2017 GAAP Net Income $ 1.94 $ 1,871 $ 120 $ 107 $ 76 $ 4 $ 2,215 Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $7 and $6, respectively) 0.01 8 — — — — 9 Unrealized Gains Related to Nuclear Decommissioning Trust (NDT) Fund Investments (net of taxes of $67) (0.12 ) (108 ) — — — — (108 ) Amortization of Commodity Contract Intangibles (net of taxes of $5) 0.01 8 — — — — 8 Merger and Integration Costs (net of taxes of $1, $1 and $0, respectively) — 1 — — 1 — 1 Long-Lived Asset Impairments (net of taxes of $16, $9 and $8, respectively) 0.03 29 — — — 16 12 Plant Retirements and Divestitures (net of taxes of $45, respectively) 0.07 70 — — — — 70 Cost Management Program (net of taxes of $6, $1, $1 and $5, respectively) 0.01 10 — 1 1 — 8 Reassessment of Deferred Income Taxes (entire amount represents tax expense) (1.30 ) (1,257 ) 3 (12 ) 5 33 (1,874 ) Gain on Deconsolidation of Businesses (net of taxes of $83) (0.14 ) (130 ) — — — — (130 ) Vacation Policy Change (net of taxes of $21, $1, $1, $3, and $16, respectively) (0.03 ) (33 ) — (1 ) (1 ) (5 ) (26 ) Change in Environmental Remediation Liabilities (net of taxes of $17) 0.03 27 — — — — 27 Noncontrolling Interests (net of taxes of $8) 0.04 40 — — — — 40 2017 Adjusted (non-GAAP) Operating Earnings $ 0.55 $ 536 $ 123 $ 95 $ 82 $ 48 $ 252Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2016 do not include the following items (after tax) that were included in reported GAAP Net Income:
(in millions) ExelonEarnings per Diluted Share Exelon ComEd PECO BGE PHI Generation 2016 GAAP Net Income $ 0.22 $ 204 $ 80 $ 92 $ 103 $ 30 $ (41 ) Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $28) (0.05 ) (44 ) — — — — (44 ) Unrealized Losses Related to NDT Fund Investments (net of taxes of $13) 0.01 9 — — — — 9 Amortization of Commodity Contract Intangibles (net of taxes of $16) 0.03 26 — — — — 26 Merger and Integration Costs (net of taxes of $14, $0, $1, $1, $3 and $9, respectively) 0.02 23 1 1 1 4 15 Merger Commitments (net of taxes of $12, $2 and $9, respectively) 0.04 38 — — — 8 40 Long-Lived Asset Impairments (net of taxes of $1) — (1 ) — — — — — Plant Retirements and Divestitures (net of taxes of $59) 0.10 94 — — — — 94 Cost Management Program (net of taxes of $5, $1, $1 and $3, respectively) 0.01 8 — 1 1 — 6 Reassessment of State Deferred Income Taxes (entire amount represents tax expense) 0.01 10 — — — — 14 Asset Retirement Obligation (net of taxes of $14) (0.08 ) (75 ) — — — — (75 ) Curtailment of Generation Growth Development Activities (net of taxes of $35) 0.06 57 — — — — 57 Noncontrolling Interests (net of taxes of $1) 0.07 61 — — — — 61 2016 Adjusted (non-GAAP) Operating Earnings $ 0.44 $ 410 $ 81 $ 94 $ 105 $ 42 $ 162Adjusted (non-GAAP) Operating Earnings for the full year 2017 do not include the following items (after tax) that were included in reported GAAP Net Income:
(in millions) ExelonEarnings per Diluted Share Exelon ComEd PECO BGE PHI Generation 2017 GAAP Net Income $ 3.97 $ 3,770 $ 567 $ 434 $ 307 $ 362 $ 2,694 Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $68 and $66, respectively) 0.11 107 — — — — 109 Unrealized Gains Related to NDT Fund Investments (net of taxes of $204) (0.34 ) (318 ) — — — — (318 ) Amortization of Commodity Contract Intangibles (net of taxes of $22) 0.04 34 — — — — 34 Merger and Integration Costs (net of taxes of $25, $0, $2, $2, $7 and $27, respectively) 0.04 40 1 2 2 (10 ) 44 Merger Commitments (net of taxes of $137, $52 and $18, respectively) (0.14 ) (137 ) — — — (59 ) (18 ) Long-Lived Asset Impairments (net of taxes of $204, $9 and $194, respectively) 0.34 321 — — — 16 306 Plant Retirements and Divestitures (net of taxes of $134 and $133, respectively) 0.22 207 — — — — 208 Reassessment of Deferred Income Taxes (entire amount represents tax expense) (1.37 ) (1,299 ) 1 (12 ) 5 34 (1,856 ) Cost Management Program (net of taxes of $21, $3, $3 and $15 respectively) 0.04 34 — 4 5 — 25 Like-Kind Exchange Tax Position (net of taxes of $66 and $9, respectively) (0.03 ) (26 ) 23 — — — — Asset Retirement Obligation (net of taxes of $1) — (2 ) — — — — (2 ) Tax Settlements (net of taxes of $1) (0.01 ) (5 ) — — — — (5 ) Bargain Purchase Gain (net of taxes of $0) (0.25 ) (233 ) — — — — (233 ) Gain on Deconsolidation of Businesses (net of taxes of $83) (0.14 ) (130 ) — — — — (130 ) Vacation Policy Change (net of taxes of $21, $1, $1, $3, and $16, respectively) (0.03 ) (33 ) — (1 ) (1 ) (5 ) (26 ) Change in Environmental Remediation Liabilities (net of taxes of $17) 0.03 27 — — — — 27 Noncontrolling Interests (net of taxes of $24) 0.12 114 — — — — 114 2017 Adjusted (non-GAAP) Operating Earnings $ 2.60 $ 2,471 $ 592 $ 427 $ 318 $ 338 $ 973Adjusted (non-GAAP) Operating Earnings for the full year 2016 do not include the following items (after tax) that were included in reported GAAP Net Income:
(in millions) ExelonEarnings per Diluted Share Exelon ComEd PECO BGE PHI Generation 2016 GAAP Net Income $ 1.22 $ 1,134 $ 378 $ 438 $ 286 $ (61 ) $ 496 Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $18) 0.03 24 — — — — 24 Unrealized Gains Related to NDT Fund Investments (net of taxes of $77) (0.13 ) (118 ) — — — — (118 ) Amortization of Commodity Contract Intangibles (net of taxes of $22) 0.04 35 — — — — 35 Merger and Integration Costs (net of taxes of $50, $2, $2, $28 and $22, respectively) 0.12 114 (3 ) 3 — 42 35 Merger Commitments (net of taxes of $126, 77 and $10, respectively) 0.47 437 — — — 247 42 Long-Lived Asset Impairments (net of taxes of $68) 0.11 103 — — — — 103 Plant Retirements and Divestitures (net of taxes of $273, respectively) 0.47 432 — — — — 432 Reassessment of Deferred Income Taxes (entire amount represents tax expense) 0.01 10 — — — — 20 Cost Management Program (net of taxes of $21, $2, $2 and $17 respectively) 0.04 34 — 3 3 — 28 Like-Kind Exchange Tax Position (net of taxes of $61 and $42, respectively) 0.21 199 149 — — — — Asset Retirement Obligation (net of taxes of $13) (0.08 ) (75 ) — — — — (75 ) Curtailment of Generation Growth and Development Activities (net of taxes of $35) 0.06 57 — — — — 57 Noncontrolling Interests (net of taxes of $9) 0.11 102 — — — — 102 2016 Adjusted (non-GAAP) Operating Earnings $ 2.68 $ 2,488 $ 524 $ 444 $ 289 $ 228 $ 1,181Note:
Unless otherwise noted, the income tax impact of each reconciling item between GAAP Net Income and Adjusted (non-GAAP) Operating Earnings is based on the marginal statutory federal and state income tax rates for each Registrant, taking into account whether the income or expense item is taxable or deductible, respectively, in whole or in part. For all items except the unrealized gains and losses related to NDT fund investments, the marginal statutory income tax rates ranged from 39.0 percent to 41.0 percent. Under IRS regulations, NDT fund investment returns are taxed at differing rates for investments in qualified vs. non-qualified funds. The tax rates applied to unrealized gains and losses related to NDT fund investments were 49.5 percent and 76.2 percent for the three months ended December 31, 2017 and 2016, respectively; and were 47.4 percent and 48.7 percent for the twelve months ended December 31, 2017 and 2016, respectively.
Webcast Information
Exelon will discuss fourth quarter 2017 earnings in a one-hour conference call scheduled for today at 9 a.m. Central Time (10 a.m. Eastern Time). The webcast and associated materials can be accessed at www.exeloncorp.com/investor-relations.
About Exelon
Exelon Corporation (NYSE: EXC) is a Fortune 100 energy company with the largest number of utility customers in the U.S. Exelon does business in 48 states, the District of Columbia and Canada and had 2017 revenue of $33.5 billion. Exelon’s six utilities deliver electricity and natural gas to approximately 9 million customers in Delaware, the District of Columbia, Illinois, Maryland, New Jersey and Pennsylvania through its Atlantic City Electric, BGE, ComEd, Delmarva Power, PECO and Pepco subsidiaries. Exelon is one of the largest competitive U.S. power generators, with more than 35,168 megawatts of nuclear, gas, wind, solar and hydroelectric generating capacity comprising one of the nation’s cleanest and lowest-cost power generation fleets. The company’s Constellation business unit provides energy products and services to approximately 2 million residential, public sector and business customers, including more than two-thirds of the Fortune 100. Follow Exelon on Twitter @Exelon.
Non-GAAP Financial Measures
In addition to net income as determined under generally accepted accounting principles in the United States (GAAP), Exelon evaluates its operating performance using the measure of Adjusted (non-GAAP) Operating Earnings because management believes it represents earnings directly related to the ongoing operations of the business. Adjusted (non-GAAP) Operating Earnings exclude certain costs, expenses, gains and losses and other specified items. This measure is intended to enhance an investor’s overall understanding of period over period operating results and provide an indication of Exelon’s baseline operating performance excluding items that are considered by management to be not directly related to the ongoing operations of the business. In addition, this measure is among the primary indicators management uses as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and forecasting of future periods. Adjusted (non-GAAP) Operating Earnings is not a presentation defined under GAAP and may not be comparable to other companies’ presentation. The Company has provided the non-GAAP financial measure as supplemental information and in addition to the financial measures that are calculated and presented in accordance with GAAP. Adjusted (non-GAAP) Operating Earnings should not be deemed more useful than, a substitute for, or an alternative to the most comparable GAAP Net Income measures provided in this earnings release and attachments. This press release and earnings release attachments provide reconciliations of adjusted (non-GAAP) Operating Earnings to the most directly comparable financial measures calculated and presented in accordance with GAAP, are posted on Exelon’s website: www.exeloncorp.com, and have been furnished to the Securities and Exchange Commission on Form 8-K on February 7, 2018.
Cautionary Statements Regarding Forward-Looking Information
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factors that could cause actual results to differ materially from the forward-looking statements made by Exelon Corporation, Exelon Generation Company, LLC, Commonwealth Edison Company, PECO Energy Company, Baltimore Gas and Electric Company, Pepco Holdings LLC, Potomac Electric Power Company, Delmarva Power & Light Company, and Atlantic City Electric Company (Registrants) include those factors discussed herein, as well as the items discussed in (1) the Registrants' 2016 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 24, Commitments and Contingencies; (2) the Registrants' Third Quarter 2017 Quarterly Report on Form 10-Q in (a) Part II, Other Information, ITEM 1A. Risk Factors; (b) Part 1, Financial Information, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements: Note 18, Commitments and Contingencies; and (3) other factors discussed in filings with the SEC by the Registrants. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this press release. None of the Registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this press release.
EXELON CORPORATION
GAAP Consolidated Statements of Operations and
Adjusted (non-GAAP) Operating Earnings Reconciling Adjustments
(unaudited)
(in millions, except per share data)
Three Months Ended December 31, 2017 Three Months Ended December 31, 2016 GAAP (a) Non-GAAP Adjustments GAAP (a) Non-GAAP Adjustments Operating revenues $ 8,381 $ 93 (b),(d) $ 7,875 $ 177 (b),(d) Operating expenses Purchased power and fuel 3,508 61 (b),(d),(g) 3,178 184 (b),(d),(g) Operating and maintenance 2,395 (53 ) (e),(f),(g),(h),(i),(k),(o) 2,371 107 (e),(g),(h),(l),(m),(n) Depreciation and amortization 1,015 (109 ) (g) 1,115 (251 ) (g) Taxes other than income 418 2 (k) 408 — Total operating expenses 7,336 7,072 Loss on sales of assets — — (89 ) 89 (g),(n) Gain on deconsolidation of business 213 (213 ) (j) — Operating income 1,258 714 Other income and (deductions) Interest expense, net (365 ) — (356 ) — Other, net 331 (244 ) (c),(i) 33 37 (c),(g),(n) Total other income and (deductions) (34 ) (323 ) Income before income taxes 1,224 391 Income taxes (719 ) 1,110 (b),(c),(d),(e),(f),(g),(h),(i),(j),(k),(o) 136 118 (b),(c),(d),(e),(g),(h),(i),(l),(m),(n) Equity in losses of unconsolidated affiliates (6 ) — (8 ) — Net income 1,937 247 Net income attributable to noncontrolling interests and preference stock dividends 66 (40 ) (p) 43 (61 ) (p) Net income attributable to common shareholders $ 1,871 $ 204 Effective tax rate(q)(r) (58.7 )% 34.8 % Earnings per average common share Basic $ 1.94 $ 0.22 Diluted $ 1.94 $ 0.22 Average common shares outstanding Basic 964 925 Diluted 967 928 Effect of adjustments on earnings per average diluted common share recorded in accordance with GAAP: Mark-to-market impact of economic hedging activities (b) $ 0.01 $ (0.05 ) Unrealized (gains) losses related to NDT fund investments (c) (0.12 ) 0.01 Amortization of commodity contract intangibles (d) 0.01 0.03 Merger and integration costs (e) — 0.02 Long-lived asset impairments (f) 0.03 — Plant retirements and divestitures (g) 0.07 0.10 Cost management program (h) 0.01 0.01 Reassessment of deferred income taxes (i) (1.30 ) 0.01 Gain on deconsolidation of business (j) (0.14 ) — Vacation policy change (k) (0.03 ) — Merger commitments (l) — 0.04 Asset retirement obligation (m) — (0.08 ) Curtailment of Generation growth and development activities (n) — 0.06 Change in environmental remediation liabilities (o) 0.03 — Noncontrolling interests (p) 0.04 0.07 Total adjustments $ (1.39 ) $ 0.22 (a) Results reported in accordance with accounting principles generally accepted in the United States (GAAP). (b) Adjustment to exclude the mark-to-market impact of Exelon’s economic hedging activities, net of intercompany eliminations. (c) Adjustment to exclude the impact of unrealized gains and losses on NDT fund investments to the extent not offset by contractual accounting as described in the notes to the consolidated financial statements. (d) Adjustment to exclude the non-cash amortization of intangible assets, net, primarily related to commodity contracts recorded at fair value related to, in 2016, the Integrys and ConEdison Solutions acquisitions, and in 2017, the ConEdison Solutions and FitzPatrick acquisitions. (e) Adjustment to exclude certain costs associated with mergers and acquisitions, including, if and when applicable, professional fees, employee-related expenses and integration activities related to the PHI and FitzPatrick acquisitions. (f) Adjustment to exclude charges to earnings related to the PHI 2017 impairment of the District of Columbia sponsorship intangible asset. (g) Adjustment to exclude in 2016, incremental accelerated depreciation and amortization expenses from June 2, 2016 through December 6, 2016 pursuant to the second quarter decision to early retire the Clinton and Quad Cities nuclear generation facilities, which decision was reversed in December 2016, partially offset by the reversal of certain one-time charges for materials & supplies inventory reserves and severance reserves upon Generation’s decision to continue operating the plants with the passage of the Illinois Zero Emission Standard, and in 2017, an adjustment to exclude accelerated depreciation and amortization expenses associated with Generation’s decision to early retire the Three Mile Island nuclear facility. (h) Adjustment to exclude severance and reorganization costs related to a cost management program. (i) Adjustment to exclude in 2016 the non-cash impact of the remeasurement of deferred income taxes as a result of changes in forecasted apportionment related to the PHI acquisition, and in 2017, the one-time non-cash impacts associated with the Tax Cuts and Jobs Act (including impacts on pension obligations). (j) Adjustment to exclude the gain recorded upon deconsolidation of EGTP's net liabilities, which included the previously impaired assets and related debt, as a result of the November 2017 bankruptcy filing. (k) Adjustment to exclude the reversal of previously accrued vacation expenses as a result of a change in Exelon's vacation vesting policy. (l) Adjustment to exclude costs incurred as part of the settlement orders approving the PHI acquisition and a charge related to a 2012 CEG merger commitment. (m) Adjustment to exclude a non-cash benefit pursuant to the annual update of the Generation nuclear decommissioning obligation related to the non-regulatory units. (n) Adjustment to exclude the one-time recognition for a loss on sale of assets and asset impairment charges pursuant to Generation’s strategic decision in the fourth quarter of 2016 to narrow the scope and scale of its growth and development activities. (o) Represents charges to adjust the environmental reserve associated with future remediation of the West Lake Landfill Superfund Site. (p) Adjustment to exclude the elimination from Generation’s results of the noncontrolling interests related to certain exclusion items, primarily related to the impact of unrealized gains and losses on NDT fund investments at CENG. (q) The effective tax rate related to GAAP Net Income for the three months ended December 31, 2017 includes the impact of the Tax Cuts and Jobs Act. (r) The effective tax rate related to Adjusted (non-GAAP) Operating Earnings is 40.8% and 38.8% for the three months ended December 31, 2017 and 2016, respectively.EXELON CORPORATION
GAAP Consolidated Statements of Operations and
Adjusted (non-GAAP) Operating Earnings Reconciling Adjustments
(unaudited)
(in millions, except per share data)
Twelve Months Ended December 31, 2017 Twelve Months Ended December 31, 2016 GAAP (a) Non-GAAP Adjustments GAAP (a) Non-GAAP Adjustments Operating revenues $ 33,531 $ 170 (b),(d) $ 31,360 $ 545 (b),(d),(e) Operating expenses Purchased power and fuel 14,035 (72 ) (b),(d),(h) 12,640 395 (b),(d),(h) Operating and maintenance 10,126 (686 ) (e),(g),(h),(i),(j),(l),(p),(r) 10,048 (849 ) (e),(f),(g),(h),(j),(l),(q) Depreciation and amortization 3,828 (252 ) (d),(h) 3,936 (704 ) (e),(h) Taxes other than income 1,731 2 (p) 1,576 (1 ) (j) Total operating expenses 29,720 28,200 Gain (Loss) on sales of assets 3 1 (h) (48 ) 57 (h),(q) Bargain purchase gain 233 (233 ) (n) — — Gain on deconsolidation of business 213 (213 ) (o) — — Operating income 4,260 3,112 Other income and (deductions) Interest expense, net (1,560 ) 58 (g),(k),(m) (1,536 ) 153 (k) Other, net 1,056 (638 ) (c),(i),(k) 413 (124 ) (c),(h),(k),(q) Total other income and (deductions) (504 ) (1,123 ) Income before income taxes 3,756 1,989 Income taxes (125 ) 1,566 (b),(c),(d),(e),(f),(g),(h),(i),(j),(k),(l),(m),(o),(p),(r) 761 538 (b),(c),(d),(e),(f),(g),(h),(i),(j),(k),(l),(q) Equity in losses of unconsolidated affiliates (32 ) — (24 ) — Net income 3,849 1,204 Net income attributable to noncontrolling interests and preference stock dividends 79 (114 ) (s) 70 (102 ) (s) Net income attributable to common shareholders $ 3,770 $ 1,134 Effective tax rate(t)(u) (3.3 )% 38.3 % Earnings per average common share Basic $ 3.98 $ 1.23 Diluted $ 3.97 $ 1.22 Average common shares outstanding Basic 947 924 Diluted 949 927 Effect of adjustments on earnings per average diluted common share recorded in accordance with GAAP: Mark-to-market impact of economic hedging activities (b) $ 0.11 $ 0.03 Unrealized gains related to NDT fund investments (c) (0.34 ) (0.13 ) Amortization of commodity contract intangibles (d) 0.04 0.04 Merger and integration costs (e) 0.04 0.12 Merger commitments (f) (0.14 ) 0.47 Long-lived asset impairments (g) 0.34 0.11 Plant retirements and divestitures (h) 0.22 0.47 Reassessment of deferred income taxes (i) (1.37 ) 0.01 Cost management program (j) 0.04 0.04 Like-kind exchange tax position (k) (0.03 ) 0.21 Asset retirement obligation (l) — (0.08 ) Tax settlements (m) (0.01 ) — Bargain purchase gain (n) (0.25 ) — Gain on Deconsolidation of Business (o) (0.14 ) — Vacation policy change (p) (0.03 ) —Curtailment of generation growth and development activities (q)
— 0.06 Change in environmental remediation liabilities (r) 0.03 — Noncontrolling interests (s) 0.12 0.11 Total adjustments $ (1.37 ) $ 1.46 As a result of the PHI acquisition completion on March 23, 2016, the table includes financial results for PHI beginning on March 24, 2016 to December 31, 2017. Therefore, the results of operations from 2017 and 2016 are not comparable for Exelon. The explanations below identify any other significant or unusual items affecting the results of operations. (a) Results reported in accordance with accounting principles generally accepted in the United States (GAAP). (b) Adjustment to exclude the mark-to-market impact of Exelon’s economic hedging activities, net of intercompany eliminations. (c) Adjustment to exclude the impact of unrealized gains on NDT fund investments to the extent not offset by contractual accounting as described in the notes to the consolidated financial statements. (d) Adjustment to exclude the non-cash amortization of intangible assets, net, primarily related to commodity contracts recorded at fair value related to, in 2016, the Integrys and ConEdison Solutions acquisitions, and in 2017, the ConEdison Solutions and FitzPatrick acquisitions. (e) Adjustment to exclude certain costs associated with mergers and acquisitions, including, if and when applicable, professional fees, employee-related expenses and integration activities related to the PHI and FitzPatrick acquisitions. (f) Adjustment to exclude costs incurred as part of the settlement orders approving the PHI acquisition, and in 2016, a charge related to a 2012 CEG merger commitment, and in 2017, a decrease in reserves for uncertain tax positions related to the deductibility of certain merger commitments associated with the 2012 CEG and 2016 PHI acquisitions. (g) Adjustment to exclude charges to earnings related to the impairment of upstream assets and certain wind projects at Generation in 2016, and in 2017, impairments of the ExGen Texas Power, LLC (EGTP) assets and PHI District of Columbia sponsorship intangible asset. (h) Adjustment to exclude in 2016, accelerated depreciation and amortization expenses through December 2016 and construction work in progress impairments associated with Generation’s previous decision to early retire the Clinton and Quad Cities nuclear facilities, partially offset by a gain associated with Generation’s sale of the New Boston generating site, and in 2017, primarily reflects accelerated depreciation and amortization expenses, increases to materials and supplies inventory reserves, construction work in progress impairments and charges for severance reserves associated with Generation’s decision to early retire the Three Mile Island nuclear facility. (i) Adjustment to exclude in 2016 the non-cash impact of the remeasurement of deferred income taxes as a result of changes in forecasted apportionment related to the PHI acquisition, and in 2017, one-time non-cash impacts associated with remeasurements of deferred income taxes as a result of the Tax Cuts and Jobs Act (including impacts on pension obligations), changes in the Illinois and District of Columbia statutory tax rates and changes in forecasted apportionment. (j) Adjustment to exclude severance and reorganization costs related to a cost management program. (k) Adjustment to exclude in 2016 the recognition of a penalty and associated interest expense as a result of a tax court decision on Exelon’s like-kind exchange tax position, and in 2017, adjustments to income tax, penalties and interest expenses as a result of the finalization of the IRS tax computation related to Exelon’s like-kind exchange tax position. (l) Adjustment to exclude a non-cash benefit pursuant to the annual update of the Generation nuclear decommissioning obligation related to the non-regulatory units. (m) Adjustment to exclude benefits related to the favorable settlement in 2017 of certain income tax positions related to PHI's unregulated business interests that were transferred to Generation. (n) Adjustment to exclude the excess of the fair value of assets and liabilities acquired over the purchase price for the FitzPatrick acquisition. (o) Adjustment to exclude the gain recorded upon deconsolidation of EGTP's net liabilities, which included the previously impaired assets and related debt, as a result of the November 2017 bankruptcy filing. (p) Adjustment to exclude the reversal of previously accrued vacation expenses as a result of a change in Exelon's vacation vesting policy. (q) Adjustment to exclude the one-time recognition for a loss on sale of assets and asset impairment charges pursuant to Generation’s strategic decision in the fourth quarter of 2016 to narrow the scope and scale of its growth and development activities. (r) Represents charges to adjust the environmental reserve associated with future remediation of the West Lake Landfill Superfund Site. (s) Adjustment to exclude the elimination from Generation’s results of the noncontrolling interests related to certain exclusion items, primarily related to the impact of unrealized gains and losses on NDT fund investments at CENG. (t) The effective tax rate related to GAAP Net Income for the twelve months ended December 31, 2017 includes the impact of the Tax Cuts and Jobs Act. (u) The effective tax rate related to Adjusted (non-GAAP) Operating Earnings is 36.9% and 34.4% for the twelve months ended December 31, 2017 and 2016, respectively.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180207005615/en/
Exelon CorporationDan EggersInvestor Relations312-394-2345orPaul AdamsCorporate Communications410-470-4167
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