Exelon Announces Second Quarter Results; Reaffirms Full Year 2007 Operating Earnings Guidance and Revises GAAP Guidance; Commonwealth Edison Announces Illinois Electric Rate Settlement.CHICAGO -- Exelon Corporation's (Exelon) second quarter 2007 consolidated earnings prepared in accordance with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). were $702 million, or $1.03 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with earnings of $644 million, or $0.95 per diluted share, in the second quarter of 2006. Exelon's adjusted (non-GAAP) operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before for the second quarter of 2007 were $700 million, or $1.03 per diluted share, compared with $577 million, or $0.85 per diluted share, for the same period in 2006. The increase in adjusted (non-GAAP) operating earnings per share was primarily due to higher margins on energy sales at Exelon Generation Company, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control (Generation) and the effects of favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. weather conditions as compared with last year in the Commonwealth Edison This article is about ComEd in Illinois. For ConEd in New York, see Consolidated Edison. Commonwealth Edison (or "ComEd"), owned by Exelon Corporation, is the largest electric utility in Illinois, serving the Chicago and Northern Illinois area. Company (ComEd) and PECO PECO Países da Europa Central e Oriental (Portugal) PECO Philadelphia Electric Company PECO Public Education Capital Outlay PECO Pelagic Cormorant (phalacrocorax pelagicus) Energy Company (PECO) service territories. These positive factors were partially offset by lower nuclear output reflecting more refueling outage out·age n. 1. A quantity or portion of something lacking after delivery or storage. 2. A temporary suspension of operation, especially of electric power. days, significantly lower net income at ComEd primarily due to the end of its nearly ten-year regulatory transition period and associated transition revenues, and higher operating and maintenance expense and increased depreciation and amortization across Exelon's operating companies operating company A business that engages in transactions with outsiders. , including the scheduled higher competitive transition charge (CTC CTC - Cornell Theory Center ) amortization at PECO. Adjusted (non-GAAP) operating earnings for the second quarter of 2007 do not include the following items that are included in reported GAAP earnings (all after tax): * Mark-to-market losses of $13 million, or $0.02 per diluted share, primarily from Generation's economic hedging activities. * Earnings of $27 million, or $0.04 per diluted share, associated with investments in synthetic fuel-producing facilities, including the impact of mark-to-market losses associated with the related derivatives. * A charge of $14 million, or $0.02 per diluted share, for the costs associated with ComEd's initial Rate Relief and Assistance Initiative. Adjusted (non-GAAP) operating earnings for the second quarter of 2006 do not include the following items that are included in reported GAAP earnings (all after tax): * Income of $89 million, or $0.13 per diluted share, resulting from decreases in decommissioning Decommissioning is a general term for a formal process to remove something from operational status. Some specific instances include:
* A net charge of $55 million, or $0.08 per diluted share, for an impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. related to the write-off of the intangible asset Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. associated with investments in synthetic fuel-producing facilities, net of earnings from the investments, including the impact of mark-to-market gains associated with the related derivatives. * Mark-to-market gains of $38 million, or $0.06 per diluted share, primarily from Generation's economic hedging activities. * A net charge of $5 million, or $0.01 per diluted share, related to certain integration costs associated with the now terminated merger with Public Service Enterprise Group Incorporated (PSEG PSEG Public Service Enterprise Group ) and Generation's prior investment in Sithe Energies, Inc. (Sithe), which is reflected as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . ComEd and Generation Announce Comprehensive Settlement of Electric Rates and Policy in Illinois In a news release yesterday, ComEd announced that it agreed to participate in a statewide, comprehensive settlement regarding electric rates and related policy matters. Other participants in the settlement include Generation, Ameren, Dynegy, Midwest Generation and MidAmerican. Reached after months of negotiations with Illinois Senate The Illinois Senate is the upper chamber of the Illinois General Assembly, the legislative branch of the government of the state of Illinois in the United States. The body was created by the first state constitution adopted in 1818. President Emil Jones Emil Jones, Jr. is the President of the Illinois Senate. A Democrat, he was previously a member of the Illinois House of Representatives from 1973 until 1983. Education Senator Jones studied at Chicago's Tilden Technical High School, where he graduated in 1953. , House Speaker Mike Madigan and the Attorney General Lisa Madigan Lisa Madigan (born July 30, 1966 in Chicago) is the current and 41st Attorney General of the U.S. state of Illinois. She is a Democrat. Madigan is the first woman to hold the post, narrowly defeating Joe Birkett in 2002, achieving 50.4% of the vote. , the settlement preserves the competitive electric market in Illinois while providing a multi-year, $1 billion rate relief package for Illinois residential electric consumers, a range of related electric industry policy changes including a new state power agency and an alternative method of purchasing power Purchasing Power 1. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you'd be able to purchase. 2. for consumers. It also eliminates the need for any further consideration of rate freeze or generation tax legislation. In order to avoid a generation tax, which would have been harmful to the state and to the company, and to preserve the competitive market, Generation will provide a significant portion of the $1 billion funding to offer relief to Illinois customers. It is a one-time contribution to help customers transition to market rates. The settlement will be effective only after enactment of proposed legislation that includes certain electric industry policy provisions. For additional details of the settlement, please refer to the Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filed by Exelon Corporation, Commonwealth Edison Company, and Exelon Generation Company, LLC with the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Securities and Exchange Commission on July 24, 2007. 2007 Earnings Outlook Exelon affirmed its adjusted (non-GAAP) operating earnings guidance range for 2007 of $4.00 to $4.30 per share. The following table indicates guidance ranges by operating company contribution to 2007 adjusted (non-GAAP) operating earnings per Exelon share, excluding Exelon holding company. Generation: < $3.40 to $3.60 ComEd: < $0.10 to $0.20 PECO: < $0.60 to $0.65 The outlook for 2007 adjusted (non-GAAP) operating earnings for Exelon and its subsidiaries excludes the following items: * costs associated with the Illinois electric rate settlement, including ComEd's previously announced customer Rate Relief and Assistance Initiative * mark-to-market adjustments from economic hedging activities * investments in synthetic fuel-producing facilities * significant impairments of intangible assets, including goodwill * significant changes in decommissioning obligation estimates * other unusual items * any future changes to GAAP Giving consideration to these factors, Exelon estimates GAAP earnings in 2007 will fall in the range of $3.70 to $4.00 per share. This range is lower than the previous estimate of $4.10 to $4.40 per share primarily reflecting the costs of the recently announced Illinois electric rate settlement. Both Exelon's operating earnings and GAAP earnings guidance are based on the assumption of normal weather. Second Quarter and Recent Highlights [TABLE OMITTED] OPERATING COMPANY RESULTS Exelon Generation consists of Exelon's electric generation operations, power marketing and trading functions, and competitive retail sales. Second quarter 2007 net income was $578 million compared with $500 million in the second quarter of 2006. Second quarter 2007 net income included (all after tax) mark-to-market losses of $13 million and a gain of $2 million related to the sale of Generation's 49.5 percent ownership interests in Termoelectrica del Golfo (TEG teg also tegg n. A sheep in its second year or before its first shearing. [Origin unknown.] Noun 1. teg - two-year-old sheep lamb - young sheep ) and Termoelectrica Penoles (TEP TEP Tucson Electric Power TEP Tomographie par Emission de Positons (French: Nuclear medicine imaging) TEP Technical Evaluation Panel TEP The English Patient (movie) TEP Transportation Enhancement Program ), two generating facilities in Mexico. Second quarter 2006 net income included (all after tax) income of $89 million resulting from decreases in decommissioning obligations primarily related to the AmerGen nuclear plants, mark-to-market gains of $36 million, expenses of $2 million related to certain integration costs associated with the now terminated merger with PSEG and income of $2 million related to Generation's prior investment in Sithe, which is reflected as discontinued operations. Excluding the impact of these items, Generation's net income of $589 million in the second quarter of 2007 increased $214 million compared with the same quarter last year, primarily due to higher revenue, net of purchased power and fuel expense, more than offsetting increased nuclear refueling outage expense and inflationary cost pressures. Generation's revenue, net of purchased power and fuel expense, increased by $376 million in the second quarter of 2007 compared with the second quarter of 2006 excluding the mark-to-market impact in both years. The increase in revenue, net of purchased power and fuel expense, was driven by higher average margins primarily due to the end of the below-market price PPA PPA 1. Palpation, Percussion & Ausculation 2. Pittsburgh pneumonia agent 3. Postpartum amenorrhea 4. Price per accession 5. Pure pulmonary atresia with ComEd at year-end 2006 and the contractual increase in the prices associated with Generation's PPA with PECO, partially offset by lower nuclear output reflecting more refueling outage days. Generation's average realized margin on all electric sales, including sales to affiliates and excluding trading activity, was $35.97 per MWh in the second quarter of 2007 compared with $26.43 per MWh in the second quarter of 2006. ComEd consists of the retail and wholesale electricity transmission and distribution operations in northern Illinois For the university, see Northern Illinois University Northern Illinois is a region generally covering the northern third of the U.S. state of Illinois. Economics . ComEd recorded net income in the second quarter of 2007 of $29 million, a substantial reduction from net income of $127 million in the second quarter of 2006. Second quarter 2007 net income included an after-tax charge of $14 million for costs associated with ComEd's Rate Relief and Assistance Initiative. Second quarter 2006 net income included (all after tax) mark-to-market gains of $2 million from economic hedging activities at ComEd and expenses of $1 million related to certain integration costs associated with the now terminated merger with PSEG. Excluding the impact of these items, ComEd's net income in the second quarter of 2007 decreased $83 million compared with the same quarter last year, primarily due to the end of its regulatory transition period and associated transition revenues, the end of its below-market price PPA with Generation in 2006 and higher operating and maintenance expense partially due to increased communications and other costs related to the end of ComEd's rate freeze. These items were partially offset by the effects of favorable weather, the FERC-approved transmission rate increase which is subject to refund, and an ICC-authorized increase in delivery service rates. In the ComEd service territory in the second quarter of 2007, cooling degree-days were up 43 percent relative to the same period in 2006 and were 40 percent above normal. ComEd's total retail kWh deliveries increased 4 percent in 2007 as compared with 2006, with a 4 percent increase in deliveries to the residential customer class, largely due to favorable weather. ComEd's second quarter 2007 revenues were $1,420 million, down 2 percent from $1,453 million in 2006 primarily due to customers switching to alternative electric generation suppliers and the impact of ComEd's Rate Relief and Assistance Initiative. For ComEd, weather had a favorable after-tax impact of $14 million on second quarter 2007 earnings relative to 2006 and had a favorable after-tax impact of $10 million relative to normal weather, which was incorporated in earnings guidance. The number of customers being served in the ComEd region has increased 1.5 percent since the second quarter of 2006, and weather-normalized kWh retail deliveries increased 1.0 percent compared with the second quarter of 2006. PECO consists of the retail electricity transmission and distribution operations and the retail natural gas distribution business in southeastern Pennsylvania. PECO's net income in the second quarter of 2007 was $96 million, an increase from net income of $93 million in the second quarter of 2006. Second quarter 2006 net income included after-tax expenses of $3 million related to certain integration costs associated with the now terminated merger with PSEG. Excluding the impact of these items, PECO's net income in the second quarter of 2007 was unchanged compared with the same quarter last year. In the PECO service territory in the second quarter of 2007, cooling degree-days were up 22 percent from 2006 and were 26 percent above normal. PECO's total electric retail kWh deliveries increased 6 percent, with residential deliveries up 9 percent. Total gas retail deliveries were up 15 percent from the 2006 period. PECO's second quarter 2007 revenues were $1,269 million, up from $1,148 million in 2006, primarily due to the effects of favorable weather and an authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: electric generation rate increase under the 1998 restructuring settlement, partially offset by a decrease in average gas rates effective through PAPUC-approved changes to the purchased gas adjustment clause. For PECO, weather had a favorable after-tax impact of $14 million on second quarter 2007 earnings relative to 2006 and a favorable after-tax impact of $9 million relative to normal weather, which was incorporated in earnings guidance. Higher CTC amortization expense, which was in accordance with PECO's 1998 restructuring settlement with the PAPUC, partially offset higher operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. for the second quarter. The number of electric customers being served in the PECO region has increased 0.1 percent since the second quarter of 2006, with weather-normalized kWh growth of 2.8 percent compared with the second quarter of 2006. 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 and mark-to-market adjustments from economic hedging activities, 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. Reconciliations of GAAP to adjusted (non-GAAP) operating earnings for historical periods are attached. Additional earnings release attachments, which include the reconciliations on pages 7 and 8, are posted on Exelon's Web site: www.exeloncorp.com and have been filed with the Securities and Exchange Commission on Form 8-K on July 25, 2007. Conference call information: Exelon has scheduled a conference call for 11 AM ET (10 AM CT) on July 25, 2007. The call-in number in the U.S. is 800-690-3108, and the international call-in number is 973-935-8753. No password is required. Media representatives are invited to participate on a listen-only basis. The call will be web-cast and archived on Exelon's Web site: www.exeloncorp.com. (Please select the Investor Relations Investor relations The process by which the corporation communicates with its investors. page.) Telephone replays will be available until August 8. The U.S. call-in number for replays is 877-519-4471, and the international call-in number is 973-341-3080. The confirmation code is 8962952. This news release includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, that are subject to risks and uncertainties. The factors that could cause actual results to differ materially from these forward-looking statements include those discussed herein as well as those discussed in (1) Exelon's 2006 Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 18; (2) Exelon's Second Quarter 2007 Quarterly Report on Form 10-Q Form 10-Q See 10-Q. (to be filed on July 25, 2007) in (a) Part II, Other Information, ITEM 1A. Risk Factors and (b) Part I, Financial Information, ITEM 1. Financial Statements: Note 13; and (3) other factors discussed in filings with the Securities and Exchange Commission (SEC) by Exelon Corporation, Commonwealth Edison Company, PECO Energy Company and Exelon Generation Company, LLC (Companies). Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this news release. None of the Companies 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 one of the nation's largest electric utilities with approximately 5.4 million customers and more than $15 billion in annual revenues. The company has one of the industry's largest portfolios of electricity generation capacity, with a nationwide reach and strong positions in the Midwest and Mid-Atlantic. Exelon distributes electricity to approximately 5.4 million customers in Illinois and Pennsylvania and natural gas to more than 480,000 customers in southeastern Pennsylvania. Exelon is headquartered in Chicago and trades on the NYSE NYSE See: New York Stock Exchange under the ticker ticker An automated quotation system on which security transactions are reported after they occur on an exchange floor. Even though the newer systems are electronic and no longer actually tick, the name of the old mechanical device has stuck. EXC EXC Exception EXC Excellent Condition EXC Excellency EXC Enduro Cross Country (motorcycle racing/riding style) EXC Electronic Cross Connect (Nortel) EXC Exchange Component EXC Exclusion Dictionary . [TABLE OMITTED] [TABLE OMITTED] |
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