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Exelon Announces Fourth Quarter And Full Year 2012 Results; Introduces 2013 Guidance; Declares First Quarter Dividend And Sets Revised Dividend Policy

Exelon Corporation is the nation’s leading competitive energy provider, with 2012 revenues of approximately $23.5 billion. Headquartered in Chicago, Exelon has operations and business activities in 47 states, the District of Columbia and Canada. Exelon is one of the largest competitive U.S. power generators, 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 more than 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).

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, 2012 (a) Three Months Ended December 31, 2011
Adjusted Adjusted
GAAP (b) Adjustments Non-GAAP GAAP (b) Adjustments Non-GAAP
 
Operating revenues $ 6,284 $ 160

(c),(d),(e)

$ 6,444 $ 4,358 $ (24 ) (c) $ 4,334
 
Operating expenses
Purchased power and fuel 2,759 66 (c),(d),(e) 2,825 1,431 73 (c),(d) 1,504
Operating and maintenance 2,012 (130 ) (c),(f),(g),(h) 1,882 1,322 (43 ) (c),(f) 1,279
Depreciation, amortization, accretion and depletion 505 (3 ) (c) 502 360 (22 ) (c) 338
Taxes other than income   282     (3 ) (c)   279     183     -     183  
 
Total operating expenses 5,558 (70 ) 5,488 3,296 8 3,304
 
Equity in earnings of unconsolidated affiliates   (22 )   40   (e)   18     (1 )   -     (1 )
 
Operating income   704     270     974     1,061     (32 )   1,029  
 
Other income and deductions
Interest expense (231 ) (5 ) (i) (236 ) (181 ) - (181 )
Other, net   93     (20 ) (c),(f),(j)   73     150     (114 ) (j)   36  
 
Total other income and deductions   (138 )   (25 )   (163 )   (31 )   (114 )   (145 )
 
Income before income taxes 566 245 811 1,030 (146 ) 884
 
Income taxes   182     76  

(c),(d),(e),(f),(g),(h),(i),(j),(k)

  258     423     (84 )

(c),(d),(f),(j),(k)

  339  
 
Net income 384 169 553 607 (62 ) 545
 
Net loss attributable to noncontrolling interests, preferred security dividends and preference stock dividends   6     -     6     1     -     1  
 
Net income on common stock $ 378   $ 169   $ 547   $ 606   $ (62 ) $ 544  
 
Effective tax rate 32.2 % 31.8 % 41.1 % 38.3 %
 
Earnings per average common share
Basic $ 0.44 $ 0.20 $ 0.64 $ 0.91 $ (0.09 ) $ 0.82
Diluted $ 0.44   $ 0.20   $ 0.64   $ 0.91   $ (0.09 ) $ 0.82  
 
Average common shares outstanding
Basic 854 854 664 664
Diluted 857 857 666 666
 
Effect of adjustments on earnings per average diluted common share recorded in accordance with GAAP:
 
Plant retirements and divestitures (c) $ 0.05 $ 0.01
Mark-to-market impact of economic hedging activities (d) (0.14 ) (0.07 )
Amortization of commodity contract intangibles (e) 0.24 -
Constellation merger and integration costs (f) 0.05 0.03
Asset retirement obligation (g) (0.01 ) -
Midwest Generation bankruptcy charges (h) 0.01 -
Amortization of the fair value of certain debt (i) - -
Unrealized (gains) losses related to NDT fund investments (j) - (0.07 )
Non-cash remeasurement of deferred income taxes (k) - 0.01
       
Total adjustments $ 0.20   $ (0.09 )
 
(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 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 decrease in Generation’s asset retirement obligation for certain retired fossil-fueled generating stations.
(h) Adjustment to exclude estimated liabilities pursuant to the Midwest Generation bankruptcy.
(i) Adjustment to exclude the non-cash amortization of certain debt recorded at fair value at the merger date expected to be retired in 2013.
(j) Adjustment to exclude the unrealized gains associated with Generation's NDT fund investments and the associated contractual accounting relating to income taxes.
(k) Adjustment to exclude the non-cash impacts of the remeasurement of state deferred income taxes, primarily as a result of the merger in 2012 and as a result of revised estimates of state apportionments in 2011.
 
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, 2012 (a) Twelve Months Ended December 31, 2011
Adjusted Adjusted
GAAP (b) Adjustments Non-GAAP GAAP (b) Adjustments Non-GAAP
 
Operating revenues $ 23,489 $ 1,185 (c),(d),(e),(f) $ 24,674 $ 19,063 $ (66 ) (c),(o) $ 18,997
 
Operating expenses
Purchased power and fuel 10,157 607 (c),(d),(e),(g) 10,764 7,267 (292 )

(c),(d)

6,975
Operating and maintenance 7,961 (1,182 )

(c),(e),(f),(g),(h),(i),(j),(k)

6,779 5,184 (124 )

(c),(g),(j),(k),(o),(p)

5,060
Depreciation, amortization, accretion and depletion 1,881 (47 ) (c),(g) 1,834 1,347 (87 ) (c) 1,260
Taxes other than income   1,019     (9 ) (c),(f),(g)   1,010     785     (1 ) (c)   784  
 
Total operating expenses 21,018 (631 ) 20,387 14,583 (504 ) 14,079
 
Equity in earnings (losses) of unconsolidated affiliates   (91 )   150   (e),(g)   59     (1 )   -     (1 )
 
Operating income   2,380     1,966     4,346     4,479     438     4,917  
 
Other income and deductions
Interest expense (928 ) (13 ) (g),(l) (941 ) (726 ) - (726 )
Other, net   346     (94 ) (c),(g),(m)   252     203     (21 ) (m),(o)   182  
 
Total other income and deductions   (582 )   (107 )   (689 )   (523 )   (21 )   (544 )
 
Income before income taxes 1,798 1,859 3,657 3,956 417 4,373
Income taxes   627     689  

(c),(d),(e),(f),(g),(h),(i),(j),(k),(l),(m),(n)

  1,316     1,457     149  

(c),(d),(g),(j),(k),(m),(n),(o),(p)

  1,606  
 
Net income on common stock 1,171 1,170 2,341 2,499 268 2,767
 
Net loss attributable to noncontrolling interests, preferred security dividends and preference stock dividends   11     -     11     4     -     4  
 
Net income $ 1,160   $ 1,170   $ 2,330   $ 2,495   $ 268   $ 2,763  
Effective tax rate 34.9 % 36.0 % 36.8 % 36.7 %
Earnings per average common share
Basic $ 1.42 $ 1.43 $ 2.85 $ 3.76 $ 0.41 $ 4.17
Diluted $ 1.42   $ 1.43   $ 2.85   $ 3.75   $ 0.41   $ 4.16  
Average common shares outstanding
Basic 816 816 663 663
Diluted 819 819 665 665
Effect of adjustments on earnings per average diluted common share recorded in accordance with GAAP:
Plant retirements and divestitures (c) $ 0.29 $ 0.05
Mark-to-market impact of economic hedging activities (d) (0.38 ) 0.27
Amortization of commodity contract intangibles (e) 0.93 -
Maryland commitments (f) 0.28 -
Constellation merger and integration costs (g) 0.31 0.07
Midwest Generation bankruptcy charges (h) 0.01 -
FERC settlement (i) 0.21 -
Other acquisition costs (j) - 0.01
Asset retirement obligation (k) - 0.02
Amortization of the fair value of certain debt (l) (0.01 ) -
Unrealized (gains) losses related to NDT fund investments (m) (0.07 ) -
Non-cash remeasurement of deferred income taxes (n) (0.14 ) 0.05
Wolf Hollow acquisition (o) - (0.03 )
Recovery of costs pursuant to the 2011 distribution rate case order (p)   -     (0.03 )
Total adjustments $ 1.43   $ 0.41  
(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 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, 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 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 estimated liabilities pursuant to the Midwest Generation bankruptcy.
(i) Adjustment to exclude costs associated with the March 2012 settlement with the FERC.
(j) Adjustment to exclude certain costs associated with various acquisitions.
(k) Adjustment to exclude the increase in Generation's decommissioning obligation for spent nuclear fuel at retired nuclear units in 2011 and 2012, a decrease in Generation’s asset retirement obligation for certain retired fossil-fueled generating stations in 2012 and a decrease in PECO's asset retirement obligation in 2011.
(l) Adjustment to exclude the non-cash amortization of certain debt recorded at fair value at the merger date expected to be retired in 2013.
(m) 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.
(n) Adjustment to exclude the non-cash impacts of the remeasurement of state deferred income taxes, primarily as a result of the merger in 2012 and as a result of revised estimates of state apportionments in 2011.
(o) Adjustment to exclude the non-cash bargain purchase gain (negative goodwill) associated with the acquisition of Wolf Hollow, net of acquisition costs.
(p) 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.




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