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Feb. 24, 2021, 3:21 p.m. EST

10-K: EXELON CORP

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(EDGAR Online via COMTEX) -- Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Exelon







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Generation and the Utility Registrants have also incurred direct costs related to COVID-19 consisting primarily of costs to acquire personal protective equipment, costs for cleaning supplies and services, and costs to hire healthcare professionals to monitor the health of their employees. At Generation and PECO, such costs are recorded as Operating and maintenance expense and are excluded from Adjusted (non-GAAP) Operating Earnings. At ComEd, BGE, Pepco, DPL, and ACE, such costs are primarily recorded as regulatory assets. See Note 3 - Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information.

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Financial Results of Operations







                                  2020         2019        (Unfavorable) Favorable Variance
                   Exelon       $ 1,963      $ 2,936      $                            (973)
                   Generation       589        1,125                                   (536)
                   ComEd            438          688                                   (250)
                   PECO             447          528                                    (81)
                   BGE              349          360                                    (11)
                   PHI              495          477                                     18
                   Pepco            266          243                                     23
                   DPL              125          147                                    (22)
                   ACE              112           99                                     13
                   Other(a)        (355)        (242)                                  (113)
        __________
        


Payments that ComEd made under the Deferred Prosecution Agreement. See Note 19

Lower capacity revenue;

Reduction in load due to COVID-19 at Generation;

Lower realized energy prices;







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Higher storm costs related to the June 2020 and August 2020 storms at PECO, net of tax repairs, and related to the August 2020 storm at DPL;

Unfavorable weather conditions at PECO, DPL Delaware, and ACE; and

A net increase in depreciation and amortization expense due to ongoing capital expenditures at PECO, BGE, Pepco, DPL, and ACE, partially offset at Generation due to the impact of extending the operating license at Peach Bottom.

The decreases were partially offset by;







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The following table provides a reconciliation between Net income attributable to common shareholders as determined in accordance with GAAP and Adjusted (non-GAAP) operating earnings for the year ended December 31, 2020 as compared to 2019:







                                                                                        For the Years Ended December 31,
                                                                                  2020                                         2019
                                                                                          Earnings per                             Earnings per
        (All amounts in millions after tax)                                               Diluted Share                            Diluted Share
        Net Income Attributable to Common Shareholders         $    1,963               $         2.01          $ 2,936          $         3.01
        Mark-to-Market Impact of Economic Hedging Activities
        (net of taxes of $73 and $66, respectively)                  (213)                       (0.22)             197                    0.20
        Unrealized (Gains) Losses Related to NDT Fund
        Investments (net of taxes of $278 and $269,
        respectively)(a)                                             (256)                       (0.26)            (299)                  (0.31)
        Asset Impairments (net of taxes of $135 and $56,
        respectively)(b)                                              396                         0.41              123                    0.13
        Plant Retirements and Divestitures (net of taxes of
        $244 and $9, respectively)(c)                                 718                         0.74              118                    0.12
        Cost Management Program (net of taxes of $14 and $17,
        respectively)(d)                                               45                         0.05               51                    0.05
        Litigation Settlement Gain (net of taxes of $7)                 -                            -              (19)                  (0.02)
        Asset Retirement Obligation (net of taxes of $16 and
        $9, respectively)(e)                                           48                         0.05              (84)                  (0.09)
        Change in Environmental Liabilities (net of taxes of
        $6 and $8, respectively)                                       18                         0.02               20                    0.02
        COVID-19 Direct Costs (net of taxes of $19)(f)                 50                         0.05                -                       -
        Deferred Prosecution Agreement Payments (net of taxes
        of $0)(g)                                                     200                         0.20                -                       -
        Acquisition Related Costs (net of taxes of $1)(h)               4                            -                -                       -
        ERP System Implementation Costs (net of taxes of
        $1)(i)                                                          3                            -                -                       -
        Income Tax-Related Adjustments (entire amount
        represents tax expense)(j)                                     71                         0.07                5                    0.01
        Noncontrolling Interests (net of taxes of $19 and $26,
        respectively)(k)                                              103                         0.11               90                    0.09
        Adjusted (non-GAAP) Operating Earnings                 $    3,149               $         3.22          $ 3,139          $         3.22
        __________
        Note:
        Amounts may not sum due to rounding.
        


(a)Reflects the impact of net unrealized gains and losses on Generation's NDT fund investments for Non-Regulatory and Regulatory Agreement Units. The impacts of the Regulatory Agreement Units, including the associated income taxes, are contractually eliminated, resulting in no earnings impact.







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(e)Reflects an adjustment to Generation's nuclear ARO for Non-Regulatory Agreement Units resulting from the annual update.







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Early Retirement of Generation Facilities In August 2020, Generation announced that it intends to retire the Byron Generating Station in September 2021, Dresden Generating Station in November 2021, and Mystic Units 8 and 9 at the expiration of the cost of service commitment in May 2024. As a result, in the third quarter of 2020, Exelon and Generation recognized a $500 million impairment of its New England asset group and one-time non-cash charges for Byron, Dresden, and Mystic related to materials and supplies inventory reserve adjustments, employee-related costs, and construction work-in-progress impairments, among other items. In addition, there will be ongoing annual financial impacts stemming from shortening the expected economic useful lives of these facilities, primarily related to accelerated depreciation of plant assets (including any ARC) and accelerated amortization of nuclear fuel. Such ongoing charges are excluded from Adjusted (non-GAAP) Operating Earnings.







                                                    Actual                   Projected(a)
        Income statement expense (pre-tax)           2020        2021        2022       2023       2024
        Depreciation and amortization
           Accelerated depreciation(b)             $  921      $ 2,070      $ 110      $ 120      $ 50
           Accelerated nuclear fuel amortization       60          170          -          -         -
        Operating and maintenance
           One-time charges                           277           30         10          -        20
           Other charges(c)                            35           10         10         10         5
           Contractual offset(d)                     (364)        (475)         -          -         -
        Total                                      $  929      $ 1,805      $ 130      $ 130      $ 75
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Feb 24, 2021

COMTEX_381667950/2041/2021-02-24T15:20:45

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