Exelon Announces Fourth Quarter 2015 Results, Provides 2016 Earnings Expectation, Announces Plans to Raise Dividend
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CHICAGO--(BUSINESS WIRE)-- Exelon Corporation (NYSE: EXC) announced fourth quarter 2015 consolidated earnings as follows:
Full Year |
Fourth Quarter |
|||||||
2015 |
2014 |
2015 |
2014 |
|||||
Adjusted (non-GAAP) Operating Results: |
||||||||
Net Income ($ millions) |
$2,227 |
$2,068 |
$347 |
$421 |
||||
Diluted Earnings per Share |
$2.49 |
$2.39 |
$0.38 |
$0.48 |
||||
GAAP Results: |
||||||||
Net Income ($ millions) |
$2,269 |
$1,623 |
$309 |
$18 |
||||
Diluted Earnings per Share |
$2.54 |
$1.88 |
$0.33 |
$0.02 |
||||
“Despite a challenging year for the sector, strong operating performance at both our utilities and our generation business enabled us to deliver strong earnings,” said Exelon President and CEO Christopher M. Crane. “We will provide stable growth, sustainable earnings and an attractive dividend through a combination of regulated and contracted investments and return of capital. Consistent with this strategy, we plan to grow our dividend 2.5 percent each year over the next three years.”
Fourth Quarter Operating Results
As shown in the table above, Exelon’s adjusted (non-GAAP) operating earnings decreased to $0.38 per share in the fourth quarter of 2015 from $0.48 per share in the fourth quarter of 2014. Earnings in the fourth quarter of 2015 primarily reflected the following negative factors:
- Unfavorable impacts of increased nuclear outages at Generation;
- Unfavorable weather conditions at ComEd and PECO;
- Higher depreciation and amortization expense at Generation; and
- Increased interest expense and share differential impacts related to 2015 debt and equity issuances to fund the pending PHI acquisition.
These factors were partially offset by:
- Higher electric distribution and transmission formula rate earnings at ComEd;
- Higher distribution and transmission revenue at BGE;
- Lower uncollectible accounts expense at PECO and BGE; and
- Favorable settlement of a state income tax position at Generation.
Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2015 do not include the following items (after-tax) that were included in reported GAAP earnings:
(in millions) | (per diluted share) | |||
Exelon Adjusted (non-GAAP) Operating Earnings |
$347 |
$0.38 |
||
Unrealized Gains Related to Nuclear Decommissioning Trust (NDT) Fund Investments | 51 | 0.05 | ||
Long-Lived Asset Impairments | (6) | (0.01) | ||
Merger and Integration Costs | (9) | (0.01) | ||
PHI Merger Related Redeemable Debt Exchange | (13) | (0.01) | ||
Amortization of Commodity Contract Intangibles | (10) | (0.01) | ||
Reassessment of State Deferred Income Taxes | (41) | (0.05) | ||
Reduction of State Income Tax Reserve | 10 | 0.01 | ||
CENG Non-Controlling Interest | (20) | (0.02) | ||
Exelon GAAP Net Income |
$309 |
$0.33 |
||
Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2014 do not include the following items (after-tax) that were included in reported GAAP earnings:
(in millions) | (per diluted share) | |||
Exelon Adjusted (non-GAAP) Operating Earnings |
$421 |
$0.48 |
||
Mark-to-Market Impact of Economic Hedging Activities | (70) | (0.08) | ||
Unrealized Gains Related to NDT Fund Investments | 24 | 0.03 | ||
Plant Retirements and Divestitures | 48 | 0.06 | ||
Long-Lived Asset Impairments | (337) | (0.39) | ||
Merger and Integration Costs | (25) | (0.03) | ||
Mark-to-Market Impact of PHI Merger Related Interest Rate Swaps | (55) | (0.06) | ||
Amortization of Commodity Contract Intangibles | (22) | (0.03) | ||
Reassessment of State Deferred Income Taxes | 27 | 0.03 | ||
Tax Settlements | 5 | 0.01 | ||
Bargain-Purchase Gain | 28 | 0.03 | ||
CENG Non-Controlling Interest | (26) | (0.03) | ||
Exelon GAAP Net Income |
$18 |
$0.02 |
||
2016 Earnings Outlook
Exelon introduced a guidance range for 2016 adjusted (non-GAAP) operating earnings of $2.40 to $2.70 per share. 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.
The outlook for 2016 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;
- Certain costs incurred related to the PHI acquisition;
- Certain costs incurred to achieve cost management program savings;
- Other unusual items; and
- One-time impacts of adopting new accounting standards.
Dividend
Exelon's Board of Directors declared a first quarter 2016 dividend of $0.31 per share and approved a revised dividend policy. The approved policy would raise our dividend 2.5 percent each year for the next three years, beginning with the June 2016 dividend. The Board will take formal action to declare the next dividend in the second quarter.
Fourth Quarter and Recent Highlights
- Pepco Holdings, Inc. Merger: The Hart Scott Rodino Act waiting period expired on December 2, 2015 and as such no longer precludes the completion of the merger. On December 23, 2015, the record in the settlement proceedings before the District of Columbia Public Service Commission (PSC) closed. The companies are currently awaiting a decision from the PSC. On January 8, 2016, a Circuit Court judge affirmed the Maryland Public Service Commission’s order approving the merger and denied the petitions for judicial review filed by the Office of People's Counsel (OPC), the Sierra Club, the Chesapeake Climate Action Network (CCAN) and Public Citizen, Inc. On January 19, 2016, the OPC filed a notice of appeal to the Maryland Court of Special Appeals, and on January 21, 2016, the Sierra Club and CCAN filed a notice of appeal.
- Nuclear Operations: Generation’s nuclear fleet, including its owned output from the Salem Generating Station and 100 percent of the CENG units, produced 43,832 gigawatt-hours (GWh) in the fourth quarter of 2015, compared with 44,533 GWh in the fourth quarter of 2014. Excluding Salem, the Exelon-operated nuclear plants at ownership achieved a 93.3 percent capacity factor for the fourth quarter of 2015, compared with 94.8 percent for the fourth quarter of 2014. The number of planned refueling outage days totaled 103 in the fourth quarter of 2015, compared with 97 in the fourth quarter of 2014. There were 21 non-refueling outage days in the fourth quarter of 2015, compared with eight days in the fourth quarter of 2014.
- Fossil and Renewable Operations: The Dispatch Match rate for Generation’s gas and hydro fleet was 97.3 percent in the fourth quarter of 2015, compared with 99.1 percent in the fourth quarter of 2014. The lower performance in the quarter was primarily attributed to a forced outage at Wolf Hollow. Energy Capture for the wind and solar fleet was 95.3 percent in the fourth quarter of 2015, compared with 96.4 percent in the fourth quarter of 2014. Performance was negatively impacted due to an extended outage at one of the wind projects in Missouri.
- ComEd Distribution Formula Rate Case: On December 9, 2015, the Illinois Commerce Commission issued its final order approving ComEd’s 2015 annual distribution formula rate update. The final order resulted in a reduction to the revenue requirement of $67 million. The decrease was set using an allowed return on capital of 7.02 percent (inclusive of an allowed ROE of 9.14 percent for 2015 less a reliability performance metric penalty of 5 basis points for the 2014 reconciliation). The rates took effect in January 2016.
- PECO Electric Distribution Rate Case: On December 17, 2015, the Pennsylvania Public Utility Commission approved the settlement of PECO’s electric distribution rate case. The approved electric delivery rates became effective on January 1, 2016 and will result in an increase of $127 million in annual distribution service revenue.
- BGE Electric and Gas Distribution Rate Case: On November 6, 2015, BGE filed an application with the Maryland Public Service Commission (MDPSC), ultimately requesting an increase in electric and gas distribution base rates of $121 million and $79.5 million, respectively. BGE requested an ROE for the electric and gas distribution rate cases of 10.6 percent and 10.5 percent, respectively. The MDPSC is expected to issue a final order in June 2016. If approved, the rates would become effective at that time. BGE is also proposing to recover an annual increase of approximately $30 million for Baltimore City conduit lease fees through a surcharge. BGE cannot predict how much of the requested increase the MDPSC will approve or if it will approve BGE's request for a conduit fee surcharge.
- BGE FERC Transmission Complaint: On November 6, 2015, BGE filed a settlement with the FERC relating to two complaints on the authorized ROE for their transmission business. The settlement provides for a 10 percent base ROE, which will be augmented by the PJM incentive adder of 50 basis points, and refunds to BGE customers of $13.7 million. On December 16, 2015, the presiding Administrative Law Judge submitted a certification of the uncontested settlement to the FERC commissioners. The settlement, subject to FERC approval, also provides a moratorium on any change in the ROE until June 1, 2018.
-
Financing Activities:
- On November 19, 2015, ComEd issued $450 million aggregate principal amount of its First Mortgage 4.350 percent Bonds, Series 119, due November 15, 2045. The proceeds of the sale of the bonds will be used by ComEd to repay a portion of ComEd's outstanding commercial paper obligations and for general corporate purposes.
- On December 2, 2015, Exelon completed a private offering to exchange $1.25 billion of 3.950% notes due 2025, $500 million of 4.950% notes due 2035, and $1 billion of 5.100% notes due 2045 (Exchange Offer). The original notes were issued in June 2015 to finance a portion of the pending acquisition of PHI. The new notes resulting from the Exchange Offer substantially have the same terms as the outstanding notes, except the notes are subject to mandatory redemption on June 30, 2016, rather than December 31, 2015, and under certain circumstances, can be further extended to August 31, 2016.
- On November 27, 2015, Exelon issued a notice of redemption for any outstanding notes not exchanged for new notes in the Exchange Offer, at a redemption price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest. On December 2, 2015, Exelon completed the redemption of $868 million of outstanding notes not exchanged for new notes.
- 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 is the volume of energy that best represents our commodity position in energy markets from owned or contracted for capacity based upon a simulated dispatch model that makes assumptions regarding future market conditions, which are calibrated to market quotes for power, fuel, load following products, and options. The proportion of expected generation hedged as of December 31, 2015, was 90 percent to 93 percent for 2016, 60 percent to 63 percent for 2017, and 28 percent to 31 percent for 2018. 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.
Operating Company Results
Generation consists of the generation, physical delivery and marketing of power across multiple geographical regions through its customer-facing business, Constellation, which sells electricity and natural gas to both wholesale and retail customers. Generation also sells renewable energy and other energy-related products and services.
Generation's fourth quarter 2015 GAAP net income was $154 million, compared with net loss of $91 million in the fourth quarter of 2014. Adjusted (non-GAAP) operating earnings for the fourth quarter of 2015 and 2014 do not include various items (after- tax) that were included in reported GAAP earnings. A reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Net Income is presented in the table below:
($ millions) |
4Q15 |
4Q14 | ||
Generation Adjusted (non-GAAP) Operating Earnings |
$142 |
$231 |
||
Mark-to-Market Impact of Economic Hedging Activities | — | (71) | ||
Unrealized Gains Related to NDT Fund Investments | 51 | 24 | ||
Merger and Integration Costs | (2) | (9) | ||
Amortization of Commodity Contract Intangibles | (10) | (22) | ||
Long-Lived Asset Impairments | (6) | (338) | ||
Plant Retirements and Divestitures | — | 48 | ||
Reassessment of State Deferred Income Taxes | (11) | 39 | ||
Reduction of State Income Tax Reserve | 10 | — | ||
Tax Settlements | — | 5 | ||
Bargain-Purchase Gain | — | 28 | ||
CENG Non-Controlling Interest | (20) | (26) | ||
Generation GAAP Net (Loss) Income |
$154 |
$(91) |
||
Generation’s Adjusted (non-GAAP) Operating Earnings in the fourth quarter of 2015 decreased $89 million compared with the same quarter in 2014. This decrease primarily reflected timing of nuclear projects, impacts of increased nuclear refueling outages and increased depreciation expense, partially offset by the favorable settlement of certain state income tax positions.
ComEd consists of electricity transmission and distribution operations in northern Illinois.
ComEd's fourth quarter 2015 GAAP net income was $87 million, compared with net income of $73 million in the fourth quarter of 2014. Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2014 do not include merger and integration costs that were included in reported GAAP earnings. A reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Net Income is presented in the table below:
($ millions) | 4Q15 | 4Q14 | ||
ComEd Adjusted (non-GAAP) Operating Earnings |
$87 |
$75 |
||
Merger and Integration Costs | — | (2) | ||
ComEd GAAP Net Income |
$87 |
$73 |
||
ComEd’s Adjusted (non-GAAP) Operating Earnings in the fourth quarter of 2015 increased $12 million compared with the same quarter in 2014, primarily due to higher electric distribution and transmission formula rate earnings at ComEd reflecting the impacts of increased capital investment and favorable distribution ROE, partially offset by unfavorable weather and volume.
For the fourth quarter of 2015, heating degree-days in the ComEd service territory were down 26.8 percent relative to the same period in 2014 and 25.1 percent below normal. Cooling degree days were down 66.7 percent from prior year and 90.9 percent below normal. Total retail electric deliveries decreased 4.9 percent in the fourth quarter of 2015 compared with the same period in 2014.
Weather-normalized retail electric deliveries were down 2.2 percent in the fourth quarter of 2015 relative to 2014.
PECO consists of electricity transmission and distribution operations and retail natural gas distribution operations in southeastern Pennsylvania.
PECO’s fourth quarter 2015 GAAP net income was $79 million, compared with $98 million in the fourth quarter of 2014. Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2014 do not include merger and integration costs that were included in reported GAAP earnings. A reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Net Income is presented in the table below:
($ millions) | 4Q15 | 4Q14 | ||
PECO Adjusted (non-GAAP) Operating Earnings |
$79 |
$99 |
||
Merger and Integration Costs | — | (1) | ||
PECO GAAP Net Income |
$79 |
$98 |
||
PECO’s Adjusted (non-GAAP) Operating Earnings in the fourth quarter of 2015 decreased $20 million from the same quarter in 2014, primarily due to unfavorable weather, partially offset by a reduction in uncollectible accounts expense.
For the fourth quarter of 2015, heating degree-days in the PECO service territory were down 34.5 percent relative to the same period in 2014 and were 39.9 percent below normal. Cooling degree-days were down 16.0 percent from prior year and 8.7 percent below normal. Total retail electric deliveries were down 5.9 percent compared with the fourth quarter of 2014. Natural gas deliveries (including both retail and transportation components) in the fourth quarter of 2015 were down 22.8 percent compared with the same period in 2014.
Weather-normalized retail electric deliveries and gas deliveries increased 0.2 percent and 1.6 percent in the fourth quarter of 2015 relative to 2014, respectively.
BGE consists of electricity transmission and distribution operations and retail natural gas distribution operations in Central Maryland.
BGE’s fourth quarter 2015 GAAP net income was $74 million, compared with $52 million in the fourth quarter of 2014. Adjusted (non-GAAP) Operating Earnings for the fourth quarter of 2014 do not include merger and integration costs that were included in reported GAAP earnings. A reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Net Income is presented in the table below:
($ millions) | 4Q15 | 4Q14 | ||
BGE Adjusted (non-GAAP) Operating Earnings |
$74 |
$53 |
||
Merger and Integration Costs | — | (1) | ||
BGE GAAP Net Income |
$74 |
$52 |
||
BGE’s Adjusted (non-GAAP) Operating Earnings in the fourth quarter of 2015 increased $21 million from the same quarter in 2014, primarily due to increased distribution revenue pursuant to increased rates effective in December 2014 and increased transmission revenue. Due to revenue decoupling, BGE is not affected by actual weather with the exception of major storms.
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 February 3, 2016.
Cautionary Statements Regarding Forward-Looking Information
This presentation 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 include those factors discussed herein, as well as the items discussed in (1) Exelon’s 2014 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 23; (2) Exelon’s Third Quarter 2015 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 19; and (3) other factors discussed in filings with the SEC by Exelon. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this presentation. Exelon does not undertake any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this presentation.
Exelon Corporation (NYSE: EXC) is the nation’s leading competitive energy provider, with 2015 revenues of approximately $29.4 billion. Headquartered in Chicago, Exelon does business in 48 states, the District of Columbia and Canada. Exelon is one of the largest competitive U.S. power generators, with more than 32,000 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 more than 2.5 million residential, public sector and business customers, including more than two-thirds of the Fortune 100. Exelon’s utilities deliver electricity and natural gas to more than 7.8 million customers in central Maryland (BGE), northern Illinois (ComEd) and southeastern Pennsylvania (PECO). Follow Exelon on Twitter @Exelon.
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 December 31, 2015 | Three Months Ended December 31, 2014 | |||||||||||||||||||||||||||
Adjusted | Adjusted | |||||||||||||||||||||||||||
GAAP (a) | Adjustments | Non-GAAP | GAAP (a) | Adjustments | Non-GAAP | |||||||||||||||||||||||
Operating revenues | $ | 6,702 | $ | (20 | ) | (b),(c) | $ | 6,682 | $ | 7,255 | $ | (311 | ) | (b),(c) | $ | 6,944 | ||||||||||||
Operating expenses | ||||||||||||||||||||||||||||
Purchased power and fuel | 2,874 | (33 | ) | (b),(c) | 2,841 | 3,603 | (471 | ) | (b),(c) | 3,132 | ||||||||||||||||||
Operating and maintenance | 2,204 | (24 | ) | (d),(e) | 2,180 | 2,563 | (557 | ) | (d),(e),(k) | 2,006 | ||||||||||||||||||
Depreciation and amortization | 633 | — | 633 | 582 | — | 582 | ||||||||||||||||||||||
Taxes other than income | 292 | — | 292 | 267 | — | 267 | ||||||||||||||||||||||
Total operating expenses | 6,003 | (57 | ) | 5,946 | 7,015 | (1,028 | ) | 5,987 | ||||||||||||||||||||
Gain (loss) on sales of assets | 8 | — | 8 | 80 | (83 | ) | (k) | (3 | ) | |||||||||||||||||||
Gain on acquisition of businesses | — | — | — | 28 | (28 | ) | (l) | — | ||||||||||||||||||||
Operating income | 707 | 37 | 744 | 348 | 606 | 954 | ||||||||||||||||||||||
Other income and (deductions) | ||||||||||||||||||||||||||||
Interest expense | (316 | ) | — | (316 | ) | (343 | ) | 102 | (d),(m) | (241 | ) | |||||||||||||||||
Other, net | 172 | (73 | ) | (f),(g) | 99 | 110 | (41 | ) | (f),(n) | 69 | ||||||||||||||||||
Total other income and (deductions) | (144 | ) | (73 | ) | (217 | ) | (233 | ) | 61 | (172 | ) | |||||||||||||||||
Income before income taxes | 563 | (36 | ) | 527 | 115 | 667 | 782 | |||||||||||||||||||||
Income taxes | 268 | (54 | ) | (b),(c),(d),(e),(f),(g),(h),(i) | 214 | 20 | 291 | (b),(c),(d),(e),(f),(h),(k).(m),(n) | 311 | |||||||||||||||||||
Equity in losses of unconsolidated affiliates | (4 | ) | — | (4 | ) | — | — | — | ||||||||||||||||||||
Net income | 291 | 18 | 309 | 95 | 376 | 471 | ||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests and preference stock dividends | (18 | ) | (20 | ) | (j) | (38 | ) | 77 | (27 | ) | (j) | 50 | ||||||||||||||||
Net income attributable to common shareholders | $ | 309 | $ | 38 | $ | 347 | $ | 18 | $ | 403 | $ | 421 | ||||||||||||||||
Effective tax rate | 47.6 | % | 40.6 | % | 17.4 | % | 39.8 | % | ||||||||||||||||||||
Earnings per average common share | ||||||||||||||||||||||||||||
Basic | $ | 0.34 | $ | 0.04 | $ | 0.38 | $ | 0.02 | $ | 0.47 | $ | 0.49 | ||||||||||||||||
Diluted | $ | 0.33 | $ | 0.05 | $ | 0.38 | $ | 0.02 | $ | 0.46 | $ | 0.48 | ||||||||||||||||
Average common shares outstanding | ||||||||||||||||||||||||||||
Basic | 921 | 921 | 861 | 861 | ||||||||||||||||||||||||
Diluted | 924 | 924 | 868 | 868 | ||||||||||||||||||||||||
Effect of adjustments on earnings per average diluted common share recorded in accordance with GAAP: | ||||||||||||||||||||||||||||
Mark-to-market impact of economic hedging activities (b) | $ | — | $ | 0.08 | ||||||||||||||||||||||||
Amortization of commodity contract intangibles (c) | 0.01 | 0.03 | ||||||||||||||||||||||||||
Merger and integration costs (d) | 0.01 | 0.03 | ||||||||||||||||||||||||||
Long-lived asset impairment (e) | 0.01 | 0.39 | ||||||||||||||||||||||||||
Unrealized gains related to NDT fund investments (f) | (0.05 | ) | (0.03 | ) | ||||||||||||||||||||||||
PHI merger related redeemable debt exchange (g) | 0.01 | — | ||||||||||||||||||||||||||
Reassessment of state deferred income taxes (h) | 0.05 | (0.03 | ) | |||||||||||||||||||||||||
Reduction in state income tax reserve (i) | (0.01 | ) | — | |||||||||||||||||||||||||
Non-controlling interest (j) | 0.02 | 0.03 | ||||||||||||||||||||||||||
Plant retirements and divestitures (k) | — | (0.06 | ) | |||||||||||||||||||||||||
Bargain-purchase gain (l) | — | (0.03 | ) | |||||||||||||||||||||||||
Mark-to-market impact of PHI merger related interest rate swaps (m) | — | 0.06 | ||||||||||||||||||||||||||
Tax settlements (n) | — | (0.01 | ) | |||||||||||||||||||||||||
Total adjustments | $ | 0.05 | $ | 0.46 |
(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 economic hedging activities, net of intercompany eliminations. | |
(c) | Adjustment to exclude the non-cash amortization of intangible assets, net, related to commodity contracts recorded at fair value, if and when applicable, related to the Constellation merger, the CENG integration and the Integrys acquisition. | |
(d) | Adjustment to exclude certain costs associated with mergers and acquisitions, including, if and when applicable, professional fees, employee-related expenses, integration activities, upfront credit facilities fees, merger commitments, and certain pre-acquisition contingencies related to the Constellation merger, CENG integration and the Integrys and pending PHI acquisitions. | |
(e) | Adjustment to exclude charges to earnings primarily related to the impairments of certain generating assets which were held for sale in 2014 and certain upstream assets in 2014 and 2015. | |
(f) | Adjustment to exclude the unrealized gains on NDT fund investments to the extent not offset by contractual accounting as described in the notes to the consolidated financial statements. | |
(g) | Adjustment to exclude the costs associated with the exchange and redemption in December 2015 of certain mandatorily redeemable debt issued to finance the PHI merger. | |
(h) | Adjustment to exclude the non-cash impact of the remeasurement of state deferred income taxes, primarily as a result of changes in forecasted apportionment. | |
(i) | Adjustment to exclude the reduction of a previously recorded state income tax reserve associated with the 2014 sales of Keystone and Conemaugh. | |
(j) | Adjustment to exclude Generation’s non-controlling interest related to CENG exclusion items, primarily related to the impact of unrealized gains and losses on NDT fund investments in 2015, and in 2014 the impact of unrealized gains and losses on NDT fund investments, costs incurred associated with the integration, mark-to-market activity, and non-cash amortization of intangible assets, net, related to commodity contracts. | |
(k) | Adjustment to exclude the impacts associated with the sales of Generation's ownership interests in Fore River and West Valley generating stations in 2014. | |
(l) | Adjustment to exclude the excess of the fair value of assets and liabilities acquired over the purchase price of Integrys. | |
(m) | Adjustment to exclude the impact of mark-to-market activity on forward-starting interest rate swaps held at Exelon Corporate related to financing for the pending PHI acquisition, which were terminated on June 8, 2015. | |
(n) | Adjustment to reflect a benefit related to favorable settlements in 2014 of certain income tax positions on Constellation’s pre-acquisition tax returns. | |
EXELON CORPORATION | ||||||||||||||||||||||||||||
Reconciliation of Adjusted (non-GAAP) Operating Earnings to GAAP Consolidated Statements of Operations | ||||||||||||||||||||||||||||
(unaudited) |
||||||||||||||||||||||||||||
(in millions, except per share data) |
||||||||||||||||||||||||||||
Twelve Months Ended December 31, 2015 | Twelve Months Ended December 31, 2014 | |||||||||||||||||||||||||||
Adjusted | Adjusted | |||||||||||||||||||||||||||
GAAP (a) | Adjustments | Non-GAAP | GAAP (a) | Adjustments | Non-GAAP | |||||||||||||||||||||||
Operating revenues | $ | 29,447 | $ | (210 | ) | (b),(c) | $ | 29,237 | $ | 27,429 | $ | 460 | (b),(c),(d) | $ | 27,889 | |||||||||||||
Operating expenses | ||||||||||||||||||||||||||||
Purchased power and fuel | 13,084 | 55 | (b),(c) | 13,139 | 13,003 | (251 | ) | (b),(c) | 12,752 | |||||||||||||||||||
Operating and maintenance | 8,322 | (90 | ) | (d),(e),(f),(g) | 8,232 | 8,568 | (809 | ) | (d),(e),(f),(o) | 7,759 | ||||||||||||||||||
Depreciation and amortization | 2,450 | — | 2,450 | 2,314 | — | 2,314 | ||||||||||||||||||||||
Taxes other than income | 1,200 | — | 1,200 | 1,154 | — | 1,154 | ||||||||||||||||||||||
Total operating expenses | 25,056 | (35 | ) | 25,021 | 25,039 | (1,060 | ) | 23,979 | ||||||||||||||||||||
Equity in earnings (loss) of unconsolidated affiliates | — | — | — | (20 | ) | 12 | (b),(c) | (8 | ) | |||||||||||||||||||
Gain on sales of assets | 18 | — | 18 | 437 | (411 | ) | (o) | 26 | ||||||||||||||||||||
Gain on consolidation and acquisition of
businesses |
— | — | — | 289 | (289 | ) | (p),(q) | — | ||||||||||||||||||||
Operating income | 4,409 | (175 | ) | 4,234 | 3,096 | 832 | 3,928 | |||||||||||||||||||||
Other income and (deductions) | ||||||||||||||||||||||||||||
Interest expense | (1,071 | ) | (27 | ) | (d),(h),(i) | (1,098 | ) | (1,065 | ) | 134 | (b),(d),(h) | (931 | ) | |||||||||||||||
Other, net | (8 | ) | 284 | (j),(k) | 276 | 455 | (193 | ) | (i),(j) | 262 | ||||||||||||||||||
Total other income and (deductions) | (1,079 | ) | 257 | (822 | ) | (610 | ) | (59 | ) | (669 | ) | |||||||||||||||||
Income before income taxes | 3,330 | 82 | 3,412 | 2,486 | 773 | 3,259 | ||||||||||||||||||||||
Income taxes | 1,073 | 92 | (b),(c),(d),(e),(f),(g),(h),(i),(j),(k),(l),(m) | 1,165 | 666 | 391 | (b),(c),(d),(e),(f),(h),(i),(j),(l),(o),(p) | 1,057 | ||||||||||||||||||||
Equity in loss of unconsolidated affiliates | (7 | ) | — | (7 | ) | — | — | — | ||||||||||||||||||||
Net income | 2,250 | (10 | ) | 2,240 | 1,820 | 382 | 2,202 | |||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests and preference stock dividends | (19 | ) | 32 | (n) | 13 | 197 | (63 | ) | (n) | 134 | ||||||||||||||||||
Net income attributable to common shareholders | $ | 2,269 | $ | (42 | ) | $ | 2,227 | $ | 1,623 | $ | 445 | $ | 2,068 | |||||||||||||||
Effective tax rate | 32.2 | % | 34.1 | % | 26.8 | % | 32.4 | % | ||||||||||||||||||||
Earnings per average common share | ||||||||||||||||||||||||||||
Basic | $ | 2.55 | $ | (0.05 | ) | $ | 2.50 | $ | 1.89 | $ | 0.51 | $ | 2.40 | |||||||||||||||
Diluted | $ | 2.54 | $ | (0.05 | ) | $ | 2.49 | $ | 1.88 | $ | 0.51 | $ | 2.39 | |||||||||||||||
Average common shares outstanding | ||||||||||||||||||||||||||||
Basic | 890 | 890 | 860 | 860 | ||||||||||||||||||||||||
Diluted | 893 | 893 | 864 | 864 | ||||||||||||||||||||||||
Effect of adjustments on earnings per average diluted common share recorded in accordance with GAAP: | ||||||||||||||||||||||||||||
Mark-to-market impact of economic hedging activities (b) | $ | (0.18 | ) | $ | 0.42 | |||||||||||||||||||||||
Amortization of commodity contract intangibles (c) | — | 0.07 | ||||||||||||||||||||||||||
Merger and integration costs (d) | 0.07 | 0.14 | ||||||||||||||||||||||||||
Long-lived asset impairment (e) | 0.02 | 0.50 | ||||||||||||||||||||||||||
Asset retirement obligation (f) | (0.01 | ) | (0.02 | ) | ||||||||||||||||||||||||
Midwest Generation bankruptcy recoveries (g) | (0.01 | ) | — | |||||||||||||||||||||||||
Mark-to-market impact of PHI merger related swaps (h) | (0.02 | ) | 0.07 | |||||||||||||||||||||||||
Tax settlement (i) | (0.06 | ) | (0.12 | ) | ||||||||||||||||||||||||
Unrealized (gains) losses related to NDT fund investments (j) | 0.13 | (0.10 | ) | |||||||||||||||||||||||||
PHI merger related redeemable debt exchange (k) | 0.01 | — | ||||||||||||||||||||||||||
Reassessment of state deferred income taxes (l) | 0.05 | (0.03 | ) | |||||||||||||||||||||||||
Reduction in state income tax reserve (m) | (0.01 | ) | — | |||||||||||||||||||||||||
Non-controlling interest (n) | (0.04 | ) | 0.07 | |||||||||||||||||||||||||
Plant retirements and divestitures (o) | — | (0.28 | ) | |||||||||||||||||||||||||
Gain on CENG integration (p) | — | (0.18 | ) | |||||||||||||||||||||||||
Bargain-purchase gain (q) | — | (0.03 | ) | |||||||||||||||||||||||||
Total adjustments | $ | (0.05 | ) | $ | 0.51 | |||||||||||||||||||||||
Note: For the year ended December 31, 2014, includes the results of operations of CENG beginning April 1, 2014, the date the nuclear operating services agreement was executed.
(a) | Results reported in accordance with GAAP. | |
(b) | Adjustment to exclude the mark-to-market impact of economic hedging activities, net of intercompany eliminations. | |
(c) | Adjustment to exclude the non-cash amortization of intangible assets, net, related to commodity contracts recorded at fair value, if and when applicable, related to the Constellation merger, the CENG integration and the Integrys acquisition. | |
(d) | Adjustment to exclude certain costs associated with mergers and acquisitions, including, if and when applicable, professional fees, employee-related expenses, integration activities, upfront credit facilities fees, merger commitments, and certain pre-acquisition contingencies related to the Constellation merger, CENG integration and the Integrys and pending PHI acquisitions. | |
(e) | Adjustment to exclude charges to earnings related to the impairments of certain generating assets which were held for sale and wind generating assets in 2014 and charges in 2014 and 2015 related to the impairment of investments in long-term leases and certain upstream assets. | |
(f) | Adjustment to exclude the non-cash benefit pursuant to the annual update of the Generation nuclear decommissioning obligation related to the non-regulatory units. | |
(g) | Adjustment to exclude a benefit for the favorable settlement of a long-term railcar lease agreement pursuant to the Midwest Generation bankruptcy. | |
(h) | Adjustment to exclude the impact of mark-to-market activity on forward-starting interest rate swaps held at Exelon Corporate related to financing for the pending PHI acquisition, which were terminated on June 8, 2015. | |
(i) | Adjustment to reflect a benefit related to favorable settlements in 2014 and 2015 of certain income tax positions on Constellation’s pre-acquisition tax returns. | |
(j) | Adjustment to exclude the unrealized gains and losses on NDT fund investments to the extent not offset by contractual accounting as described in the notes to the consolidated financial statements. | |
(k) | Adjustment to exclude the costs associated with the exchange and redemption in December 2015 of certain mandatorily redeemable debt issued to finance the PHI merger | |
(l) | Adjustment to exclude the non-cash impact of the remeasurement of state deferred income taxes, primarily as a result of changes in forecasted apportionment. | |
(m) | Adjustment to exclude the reduction of a previously recorded state income tax reserve associated with the 2014 sales of Keystone and Conemaugh. | |
(n) | Adjustment to exclude Generation’s non-controlling interest related to CENG exclusion items, primarily related to the impact of unrealized gains and losses on NDT fund investments and mark-to-market activity in 2015, and in 2014 the impact of unrealized gains and losses on NDT fund investments, costs incurred associated with the integration, non-cash amortization of intangible assets, net, related to commodity contracts, mark-to-market activity, and changes in asset retirement obligations. | |
(o) | Adjustment to exclude the impacts associated with the sales of Generation's ownership interests in Safe Harbor and the Fore River and West Valley generating stations in 2014. | |
(p) | Adjustment to exclude the gain recorded upon consolidation of CENG resulting from the difference in the fair value of CENG’s net assets as of April 1, 2014 and the equity method investment previously recorded on Generation’s and Exelon’s books and the settlement of pre-existing transactions between Generation and CENG. | |
(q) | Adjustment to exclude the excess of the fair value of assets and liabilities acquired over the purchase price of Integrys. |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160203005799/en/
Exelon Corporation
Francis Idehen
Investor Relations
312-394-3967
or
Paul
Adams
Corporate Communications
410-470-4167
Source: Exelon Corporation
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