01—Abstract
Summary
Summary of the 10-K filed February 13, 2015. Cited figures are marked; the original filing is the authoritative source.
Exelon Corporation's 2014 10-K filing highlights a year of significant operational integration, including the full consolidation of CENG's nuclear fleet and the acquisition of Integrys Energy Services.
The company is progressing with its proposed merger with Pepco Holdings, Inc. (PHI), having received several key regulatory approvals and anticipating closure in the second or third quarter of 2015. Exelon's utility businesses (ComEd, PECO, BGE) are focused on infrastructure modernization and smart grid deployments, supported by performance-based regulatory frameworks that allow for capital recovery and provide stable returns. Generation's diverse portfolio, with a strong emphasis on nuclear power, navigates competitive energy markets while managing commodity price risks through a robust hedging strategy.
The company's financial performance in 2014 saw a slight decrease in net income attributable to common shareholders compared to 2013, primarily due to higher operating and maintenance expenses, including long-lived asset impairments, partially offset by gains on asset sales and the consolidation of CENG. Exelon remains committed to maintaining investment-grade credit metrics and returning value to shareholders through a sustainable dividend and earnings growth.
02—Key points
Key Highlights
- Exelon is pursuing a merger with Pepco Holdings, Inc. (PHI), expecting closure in Q2 or Q3 2015, with several key regulatory approvals already obtained.
- The company fully consolidated CENG's nuclear fleet operations starting April 1, 2014, impacting financial results and operational oversight.
- Exelon acquired Integrys Energy Services, Inc. on November 1, 2014, expanding its competitive retail footprint.
- Utility businesses (ComEd, PECO, BGE) are executing modernization plans, including significant investments in smart meter and smart grid technologies.
- Generation's operational performance is strong, with its nuclear fleet achieving high capacity factors, while navigating competitive energy markets and commodity price risks.
- The company is actively managing its hedging strategy to mitigate commodity price risk, with significant portions of expected generation hedged for 2015 and 2016.
- Despite a slight decrease in net income attributable to common shareholders, Exelon's financial strategy emphasizes maintaining investment-grade credit metrics and returning value to shareholders.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 13, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $27.43B$24.89B | +10.2% |
| Operating Expenses | $25.04B$21.24B | +17.9% |
| Operating Income | $3.10B$3.67B | −15.6% |
| Interest Expense | $1.02B$1.31B | −22.1% |
| Net Income | $1.62B$1.73B | −6.1% |
| EPS (Diluted) | $1.88$2.00 | −6.0% |
| Shares Outstanding (Basic) | 860.00M856.00M | +0.5% |
| Shares Outstanding (Diluted) | 864.00M860.00M | +0.5% |
05—Questions
Frequently Asked Questions
What is the status of the proposed merger with Pepco Holdings, Inc. (PHI)?
Exelon signed an agreement to combine with PHI in an all-cash transaction valued at $27.25 per share. As of the filing date (February 13, 2015), key regulatory approvals from PHI stockholders, Virginia, New Jersey, FERC, and the FCC had been obtained. Exelon anticipated regulatory decisions from Delaware, Maryland, and the District of Columbia in the first half of 2015, with an expected closure in the second or third quarter of 2015. Transaction and integration costs incurred up to December 31, 2014, were approximately $179 million.
How did the consolidation of CENG impact Exelon's financial results?
On April 1, 2014, Exelon Generation Company, LLC (Generation) assumed operational control of CENG's nuclear fleet. This resulted in the full consolidation of CENG's financial position and results of operations into Exelon's and Generation's financial statements from that date. This consolidation contributed significantly to operating revenues and operating income, but also increased operating and maintenance expenses and depreciation and amortization expenses.
What are Exelon's key capital expenditure plans for its regulated utilities?
Exelon's utilities (ComEd, PECO, and BGE) plan to invest approximately $16 billion over the next five years in projects such as smart meter deployment, transmission upgrades, gas infrastructure improvements, and electric system enhancements to improve reliability and customer service.
How does Exelon manage commodity price risk?
Generation manages commodity price risk through a strategy of entering into physical and financial derivative contracts, including forwards, futures, swaps, and options, to hedge anticipated exposures. The company hedges commodity risk on a ratable basis over three-year periods. As of December 31, 2014, a significant portion of expected generation was hedged for 2015 and 2016, with a lower percentage hedged for 2017, indicating ongoing risk management.
06—Continue