2014 Financial Section - Exelon · (a) Includes the operations of CENG from the date Generation...

Exelon 2014 Summary Annual Report

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2014Financial Section


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Table of Contents

40 Summary of Earnings and Financial Condition

41 Stock Performance Graph

42 Discussion of Financial Results — Exelon

45 Discussion of Financial Results — by Business Segment

46 Discussion of Financial Results — Generation

47 Discussion of Financial Results — ComEd

48 Discussion of Financial Results — PECO

49 Discussion of Financial Results — BGE

50 Condensed Consolidated Financial Statements:

> Consolidated Statements of Operations and Comprehensive Income

> Consolidated Statements of Cash Flows

> Consolidated Balance Sheets

> Consolidated Statements of Changes in Shareholders’ Equity

59 Management’s Report on Internal Control Over Financial Reporting

60 Stock Information

Table of Contents


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For the years ended Dec. 31,

(Dollars in millions, except for per share data) 2014(b) 2013 (a) 2012 2011 2010

Statement of operations data

Operating revenues $ 27,429 $ 24,888 $ 23,489 $ 19,063 $ 18,644

Operating income 3,096 3,669 2,373 4,479 4,726

Net income on common stock $ 1,623 $ 1,719 $ 1,160 $ 2,495 $ 2,563

Earnings per average common share (diluted)

Net income on common stock $ 1.88 $ 2.00 $ 1.42 $ 3.75 $ 3.87

Dividends per common share $ 1.24 $ 1.46 $ 2.10 $ 2.10 $ 2.10

Average shares of common stock outstanding – diluted 864 860 819 665 663

Dec. 31,

(Dollars in millions) 2014 (e) 2013 2012 (c)(d) 2011 2010

Balance sheet data

Current assets $ 12,097 $ 10,137 10,140 $ 5,713 $ 6,398

Property, plant and equipment, net 52,087 47,330 45,186 32,570 29,941

Noncurrent regulatory assets 6,076 5,910 6,497 4,518 4,140

Goodwill 2,672 2,625 2,625 2,625 2,625

Other deferred debits and other assets 13,882 13,922 14,113 9,569 9,136

Total assets $ 86,814 $ 79,924 78,561 $ 54,995 $ 52,240

Current liabilities $ 8,726 $ 7,728 7,791 $ 5,134 $ 4,240

Long-term debt, including long-term debt to financing trusts

and long-term debt of variable interest entities 20,010 18,271 18,346 12,189 12,004

Noncurrent regulatory liabilities 4,550 4,388 3,981 3,627 3,555

Other deferred credits and other liabilities 29,359 26,597 26,626 19,570 18,791

Preferred securities of subsidiary — — 87 87 87

BGE preference stock not subject to mandatory redemption 193 193 193 — —

Noncontrolling interest 1,332 15 106 3 3

Shareholders’ equity 22,608 22,732 21,431 14,385 13,560

Total liabilities and shareholders’ equity $ 86,814 $ 79,924 78,561 $ 54,995 $ 52,240

(a) Includes the operations of Constellation and BGE from the date of the merger, March 12, 2012, through Dec. 31, 2012.(b) Includes the operations of CENG from the date Generation assumed operation control of CENG’s nuclear fleet, April 1, 2014, through December 31, 2014.(c) Includes retrospective reclassifications to conform to 2013 presentation.(d) Includes the financial information of Constellation and BGE.(e) Includes the financial information of CENG.

Financial Section

Summary Annual Report Summary of Earnings and Financial Condition


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Comparison of Five-Year Cumulative Return

0

100

150

200

250

2009

DO

LLA

RS

Exelon Corporation S&P 500 S&P Utilities

50

2010

2011

2012

2013

2014

Stock Performance Graph

The performance graph below illustrates a 5-year comparison of cumulative total returns based on an initial investment of $100 in Exelon common stock, as compared with the Standard and Poor’s (S&P) 500 Stock Index and the S&P Utilities Index for the period 2009 through 2014.

This performance chart assumes:

• $100 invested on Dec. 31, 2009, in Exelon common stock, in the S&P 500 Stock Index and in the S&P Utilities Index; and

• All dividends are reinvested.

Source: Bloomberg

Value of investment at Dec. 31,

2009 2010 2011 2012 2013 2014

Exelon Corporation $ 100.00 $ 74.88 $ 77.99 $ 53.48 $ 49.25 $ 66.68

S&P 500 $ 100.00 $ 139.23 $ 139.23 $ 157.89 $ 204.63 $ 227.94

S&P Utilities $ 100.00 $ 107.71 $ 123.69 $ 120.09 $ 130.60 $ 162.33

Financial Section


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Results of Operations — Exelon

Discussion of Financial Results — Exelon

(Dollars in millions) 2014 (a) 2013

Favorable(Unfavorable)

Variance

Operating revenues $ 27,429 $ 24,888 $ 2,541

Purchased power and fuel expense 13,003 10,724 (2,279)

Revenue net of purchased power and fuel expense 14,426 14,164 262

Other operating expenses

Operating and maintenance 8,568 7,270 (1,298)

Depreciation and amortization 2,314 2,153 (161)

Taxes other than income 1,154 1,095 (59)

Total other operating expenses 12,036 10,518 (1,518)

Equity in (losses) earnings of unconsolidated affiliates (20) 10 (30)

Gain (loss) on sales of assets 437 13 424

Gain on consolidation and acquisition of businesses 289 — 289

Operating income 3,096 3,669 (573)

Other income and deductions

Interest expense, net (1,065) (1,356) 291

Other, net 455 460 (5)

Total other income and deductions (610) (896) 286

Income before income taxes 2,486 2,773 (287)

Income taxes 666 1,044 378

Net income 1,820 1,729 91

Net income attributable to noncontrolling interests, preferred security dividends and

preference stock dividends 197 10 (187)

Net income on common stock $ 1,623 $ 1,719 $ (96)

Diluted earnings per share $ 1.88 $ 2.00 $ (0.12)

(a) Includes the operations of CENG from the date Generation assumed operational control of CENG’s nuclear fleet, April 1, 2014 through December 31, 2014.

Exelon’s net income on common stock was $1,623 million for the year ended Dec. 31, 2014, as compared to $1,719 million for the year ended Dec. 31, 2013, and diluted earnings per average common share were $1.88 for the year ended Dec. 31, 2014, as compared to $2.00 for the year ended Dec. 31, 2013. All amounts presented below are before the impact of income taxes, except as noted.

Exelon and its subsidiaries evaluate their operating performance using the measure of revenue net of purchased power and fuel expense. Exelon and its subsidiaries believe that revenue net of purchased power and fuel expense is a useful measure because it provides information that can be used to evaluate its operational performance. Revenue net of purchased power and fuel expense is not a presentation defined under GAAP and may not be comparable to other companies’ presentations or deemed more useful than the GAAP information provided elsewhere in this report.

Financial Section


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Discussion of Financial Results — Exelon

Operating revenue net of purchased power and fuel expense, which is a non-GAAP measure discussed below, increased by $262 million as compared to 2013. The year-over-year increase reflects the inclusion of CENG’s results beginning April 1, 2014 and was primarily due to the following favorable factors:

• Increase of $815 million at Generation primarily due to the inclusion of CENG’s results beginning April 1, 2014 through December 31, 2014, a decrease in fuel costs related to the cancellation of DOE spent nuclear fuel disposal fees, increased capacity prices related to the Reliability Pricing Model (RPM) for the PJM Interconnection, LLC (PJM) market, and favorable portfolio management activities in the New England and South regions; partially offset by higher procurement costs for replacement power related to the extreme cold weather in the first quarter of 2014 and lower realized energy prices related to executing Generation’s ratable hedging strategy;

• Increase of $365 million at Generation related to the reduction in amortization of in-the-money energy contracts recorded at fair value at the Constellation merger date and an increase related to the amortization of out-of-the money energy contracts recorded at fair value upon the consolidation of CENG;

• Increase of $30 million at ComEd primarily reflecting higher transmission revenue due to increased capital investment and an increase of $93 million as a result of increased cost recovery associated with energy efficiency programs and uncollectible accounts expense (both offset below in operating and maintenance expense);

• Increase of $33 million at PECO primarily due to increased recovery from regulatory programs (offset below primarily in operating and maintenance expense); and

• Increase of $104 million at BGE primarily due to increased distribution revenue as a result of the 2013 and 2014 electric and natural gas distribution rate case orders issued by the Maryland PSC, increased cost recovery for energy efficiency and demand response programs (offset below in depreciation and amortization expense), and increased transmission revenue pursuant to increased rates effective June 2014.

The year-over-year increase in operating revenue net of purchased power and fuel expense was partially offset by the following unfavorable factors:

• Decrease of $1,095 million at Generation due to mark-to-market losses of $591 million in 2014 from economic hedging activities compared to $504 million in mark-to-market gains in 2013.

• Decrease of $16 million at ComEd due to unfavorable weather in the ComEd service territory.

Operating and maintenance expense increased by $1,298 million as compared to 2013 primarily due to the following unfavorable factors:

• Increase in Generation’s labor, contracting and materials costs of $361 million primarily due to the inclusion of CENG’s results from April 1, 2014 through December 31, 2014, an increase of $44 million resulting from expenses recorded for a Constellation merger commitment, an increase of $54 million as a result of an increase in the number of planned nuclear refueling outage days at Generation, primarily related to the inclusion of CENG’s plants beginning April 1, 2014, and an increase of $16 million in the reserve for future asbestos-related bodily injury claims;

• Increase in labor, contracting and materials costs of $56 million at ComEd associated with EIMA smart meter projects and $22 million at BGE due to increased maintenance activities;

• Increase in Generation’s accretion expense of $78 million primarily due to the inclusion of CENG’s results from April 1, 2014 through December 31, 2014;

• Long-lived asset impairments at Generation of $663 million in 2014 compared to $157 million in 2013.

• Increased storm costs at PECO and BGE of $100 million and $21 million, respectively;

• Increased spending on energy and efficiency programs and increased uncollectible accounts expense at ComEd of $93 million; and

• Increased uncollectible accounts expense at BGE of $17 million.

Financial Section


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Discussion of Financial Results — Exelon (continued)

The year-over-year increase in operating and maintenance expense was partially offset by the following favorable factor:

• A reduction in pension and non-pension postretirement benefits expense of $178 million primarily at Exelon, Generation, and ComEd, resulting from plan design changes for certain OPEB plans and the favorable impact of higher actuarially assumed pension and OPEB discount rates for 2014, partially offset by the inclusion of CENG’s pension and non-pension postretirement benefits expense from April 1, 2014 through December 31, 2014.

Depreciation and amortization expense increased by $161 million primarily as a result of the inclusion of CENG’s results from April 1, 2014 through December 31, 2014, increased depreciation expense across the operating companies for ongoing capital expenditures, and higher regulatory asset amortization related to energy efficiency and demand response expenditures.

Exelon recorded $437 million at Generation as a result of gains recorded on the sales of ownership interest in certain generating stations in 2014.

Exelon recorded a $261 million gain upon consolidation of CENG resulting from the difference in 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. Additionally, Exelon recorded a $28 million bargain-purchase gain related to the Integrys acquisition.

Interest expense decreased by $291 million primarily as a result of a decrease in 2014 given ComEd’s 2013 remeasurement of Exelon’s like-kind exchange tax positions, offset at Exelon by an increase in 2014 related to financing activities associated with the pending PHI merger.

Other, net increased by $5 million primarily at Generation as a result of favorable settlements in 2014 of certain income tax positions on Constellation’s pre-acquisition 2009-2012 tax returns and the change in realized and unrealized gains and losses on NDT funds.

Exelon’s effective income tax rates for the years ended December 31, 2014 and 2013 were 26.8% and 37.6%, respectively.

Financial Section


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Discussion of Financial Results — by Business Segment

Results of Operations

The comparisons of 2014 and 2013 operating results and other statistical information set forth below include intercompany

transactions, which are eliminated in Exelon’s consolidated financial statements.

Net Income (Loss) on Common Stock by Business Segment



Variance

Exelon $ 1,623 $ 1,719 $ (96)

Generation 835 1,070 (235)

ComEd 408 249 159

PECO 352 388 (36)

BGE 198 197 1

(a) For Exelon and Generation, includes the operations of CENG from the date Generation assumed operation control of CENG’s nuclear fleet, April 1, 2014, through December 31, 2014.

Financial Section


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Results of Operations — Generation

Discussion of Financial Results — Generation



Variance


Purchased power and fuel expense 9,925 8,197 (1,728)



Operating and maintenance 5,566 4,534 (1,032)

Depreciation and amortization 967 856 (111)

Taxes other than income 465 389 (76)

Total other operating expenses 6,998 5,779 (1,219)

Equity in earnings (losses) of unconsolidated affiliates (20) 10 (30)

Gain (loss) on sales of assets 437 13 424

Gain on consolidation and acquisition of businesses 289 — 289

Operating income 1,176 1,677 (501)


Interest expense (356) (357) 1

Other, net 406 355 51

Total other income and (deductions) 50 (2) 52

Income before income taxes 1,226 1,675 (449)

Income taxes 207 615 408

Net income 1,019 1,060 (41)

Net loss attributable to noncontrolling interest 184 (10) 194

Net income attributable to membership interest $ 835 $ 1,070 $ (235)

(a) Includes the operations of CENG from the date Generation assumed operation control of CENG’s nuclear fleet, April 1, 2014, through December 31, 2014.

Generation’s net income attributable to membership interest decreased compared to the same period in 2013 primarily due to higher operating and maintenance expense and higher depreciation expense; partially offset by higher revenue, net of purchase power and fuel expense, higher other income, the gains recorded on the sale of Generation’s ownership interest in generating stations, the bargain-purchase gain recorded related to the Integrys acquisition, and the gain recorded upon consolidation of CENG. The increase in operating and maintenance expense was largely due to increased labor contracting and materials expense due to the inclusion of CENG’s results beginning April 1, 2014 and impairment charges related to 1) generating assets held-for-sale, 2) certain Upstream assets, and 3) wind generating assets. The increase in revenue, net of purchased power and fuel expense was primarily due to the inclusion of CENG’s results beginning April 1, 2014, a decrease in fuel costs related to the cancellation of DOE spent nuclear fuel disposal fees, an increase in capacity prices, and favorable portfolio management activities in the New England an South regions, partially offset by lower realized energy prices related to executing Exelon’s ratable hedging strategy, higher procurement costs for replacement power due to extreme cold weather in the first quarter of 2014, and unrealized mark-to-market losses in 2014. The increase in other income is primarily the result of increased realized and unrealized gain on NDT funds.

Financial Section


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Results of Operations — ComEd

Discussion of Financial Results — ComEd

(Dollars in millions) 2014 2013


Variance

Operating revenues $ 4,564 $ 4,464 $ 100

Purchased power expense 1,177 1,174 (3)

Revenue net of purchased power expense 3,387 3,290 97


Operating and maintenance 1,429 1,368 (61)


Taxes other than income 293 299 6

Total other operating expenses 2,409 2,336 (73)

Gain on sales of assets 2 — 2

Operating income 980 954 26


Interest expense, net (321) (579) 258

Other, net 17 26 (9)


Income before income taxes 676 401 275

Income taxes 268 152 (116)

Net income $ 408 $ 249 $ 159

ComEd’s net income for the year ended Dec. 31, 2014, was higher than the same period in 2013, primarily due to the 2013 remeasurement of Exelon’s like-kind exchange tax position, and increased electric distribution and transmission earnings resulting from increased capital investment, partially offset by unfavorable weather.

Financial Section


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Results of Operations — PECO

Discussion of Financial Results — PECO



Variance

Operating revenues $ 3,094 $ 3,100 $ (6)

Purchased power and fuel expense 1,261 1,300 39



Operating and maintenance 866 748 (118)




Operating income 572 666 (94)



Other, net 7 6 1


Income before income taxes 466 557 (91)

Income taxes 114 162 48

Net income 352 395 (43)

Preferred security dividends — 7 7

Net income on common stock $ 352 $ 388 $ (36)

PECO’s net income attributable to common shareholder decreased primarily due to an increase in operating and maintenance expense partially offset by an increase in operating revenue net of purchase power and fuel expense and a decrease in income tax expense.

Financial Section


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Results of Operations — BGE

Discussion of Financial Results — BGE



Variance

Operating revenues $ 3,165 $ 3,065 $ 100

Purchased power and fuel expense 1,417 1,421 4



Operating and maintenance 717 634 (83)




Operating income 439 449 (10)



Other, net 18 17 1


Income before income taxes 351 344 7

Income taxes 140 134 (6)

Net income 211 210 1

Preference stock dividends 13 13 —

Net income (loss) attributable to common shareholder $ 198 $ 197 $ 1

BGE’s net income attributable to common shareholder remained relatively consistent primarily due to an increase in revenue net of purchased power and fuel expense as a result of the December 2013 and 2014 electric and gas distribution rate order issued by the MDPSC offset by increases in operating and maintenance expense and depreciation expense.

Financial Section


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Consolidated Statements of Operations and Comprehensive IncomeExelon Corporation and Subsidiary Companies


(Dollars In millions, except per share data) 2014 (b) 2013 2012 (a)


Operating expenses

Purchased power and fuel 13,003 10,724 10,157

Operating and maintenance 8,568 7,270 7,961

Depreciation and amortization 2,314 2,153 1,881

Taxes other than income 1,154 1,095 1,019

Total operating expenses 25,039 21,242 21,018

Equity in earnings (losses) of unconsolidated affiliates (20) 10 (91)

Gain (loss) on sales of assets 437 13 (7)

Gain on consolidation and acquisition of businesses 289 — —

Operating income 3,096 3,669 2,373


Interest expense, net (1,065) (1,356) (928)

Other, net 455 460 353

Total other income and deductions (610) (896) (575)

Income before income taxes 2,486 2,773 1,798

Income taxes 666 1,044 627

Net income 1,820 1,729 1,171

Net income attributable to noncontrolling interests, preferred security dividends and preference

stock dividends 197 10 11

Net income attributable to common shareholders $ 1,623 $ 1,719 $ 1,160

Financial Section


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Consolidated Statements of Operations and Comprehensive Income (continued) Exelon Corporation and Subsidiary Companies


(Dollars In millions, except per share data) 2014 (b) 2013 2012 (a)

Comprehensive income (loss), net of income taxes

Net income $ 1,820 $ 1,729 $ 1,171

Other comprehensive income (loss)

Pension and non-pension postretirement benefit plans:

Prior service cost (benefit) reclassified to periodic costs, net of taxes of $(19), $0 and $1, respectively $ (30) $ — $ 1

Actuarial loss reclassified to periodic cost, net of taxes of $93, $133 and $110, respectively 147 208 168

Transition obligation reclassified to periodic cost, net of taxes of $0, $0 and $2, respectively — — 2

Pension and non-pension postretirement benefit plan valuation adjustment, net of taxes of $(317),

$430 and $(237), respectively (497) 669 (371)

Unrealized gain (loss) on cash flow hedges, net of taxes of $(96), $(166) and $(68), respectively (148) (248) (120)

Unrealized gain (loss) on marketable securities, net of taxes of $0, $0 and $(1), respectively 1 2 2

Unrealized gain (loss) on equity investments, net of taxes of $(93), $71 and $1, respectively 8 106 1

Unrealized gain (loss) on foreign currency translation, net of taxes of $0, $0 and $0, respectively (9) (10) —

Reversal of CENG equity method AOCI, net of taxes of $(77), $0 and $0, respectively (116) — —

Other comprehensive income (loss) (644) 727 (317)

Comprehensive income $ 1,176 $ 2,456 $ 854

Average shares of common stock outstanding

Basic 860 856 816

Diluted 864 860 819

Earnings per average common share

Basic $ 1.89 $ 2.01 $ 1.42

Diluted $ 1.88 $ 2.00 $ 1.42

Dividends per common share $ 1.24 $ 1.46 $ 2.10

(a) Includes the operations of Constellation and BGE from the date of the merger, March 12, 2012, through Dec. 31, 2012.(b) Includes the operations of CENG from the date Generation assumed operations of CENG’s nuclear fleet, April 1, 2014, through December 31, 2014 .

The information in the Consolidated Statements of Operations and Comprehensive Income shown above is a replication of the information in the Consolidated Statements of Operations and Comprehensive Income in Exelon’s 2014 Form 10-K. For complete consolidated financial statements, including notes, please refer to pages 200 through 467 of Exelon’s 2014 Form 10-K filed with the SEC. Also see Management’s Discussion and Analysis of Financial Condition and Results of Operations, which includes a discussion of critical accounting policies and estimates, on pages 85 through 199 of Exelon’s 2014 Form 10-K filed with the SEC

Financial Section


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Consolidated Statements of Cash FlowsExelon Corporation and Subsidiary Companies


(Dollars in millions) 2014 (b) 2013 2012 (a)

Cash flows from operating activities

Net income $ 1,820 $ 1,729 $ 1,171

Adjustments to reconcile net income to net cash flows provided by operating activities:

Depreciation, amortization, depletion and accretion, including nuclear fuel and

energy contract amortization 3,868 3,779 4,079

Impairment of long-lived assets 687 171 284

Gain on consolidation and acquisition of businesses (296) — —

(Gain) loss on sales of assets (437) (13) 7

Deferred income taxes and amortization of investment tax credits 502 119 615

Net fair value changes related to derivatives 716 (445) (604)

Net realized and unrealized (gains) losses on nuclear decommissioning trust fund investments (210) (170) (157)

Other non-cash operating activities 1,054 718 1,364

Changes in assets and liabilities:

Accounts receivable (318) (97) 243

Inventories (380) (100) 26

Accounts payable, accrued expenses and other current liabilities 209 (90) (632)

Option premiums received (paid), net 38 (36) (114)

Counterparty collateral (posted) received, net (1,478) 215 135

Income taxes (143) 883 544

Pension and non-pension postretirement benefit contributions (617) (422) (462)

Other assets and liabilities (558) 102 (368)

Net cash flows provided by operating activities 4,457 6,343 6,131

Cash flows from investing activities

Capital expenditures (6,077) (5,395) (5,789)

Proceeds from termination of direct financing lease investment 335 — —

Proceeds from nuclear decommissioning trust fund sales 7,396 4,217 7,265

Investment in nuclear decommissioning trust funds (7,551) (4,450) (7,483)

Cash and restricted cash acquired from consolidations and acquisitions 140 — 964

Acquisitions of long lived assets (386) — (21)

Proceeds from sales of long-lived assets 1,719 32 371

Proceeds from sales of investments 7 22 28

Purchases of investments (3) (4) (13)

Change in restricted cash (104) (43) (34)

Distribution from CENG 13 115 —

Other investing activities (88) 112 136

Net cash flows used in investing activities (4,599) (5,394) (4,576)

Financial Section


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Consolidated Statements of Cash Flows (continued)Exelon Corporation and Subsidiary Companies


(Dollars in millions) 2014 (b) 2013 2012 (a)

Cash flows from financing activities

Payments of accounts receivable agreement — (210) (15)

Changes in short-term borrowings 122 332 (197)

Issuance of long-term debt 3,463 2,055 2,027

Retirement of long-term debt (1,545) (1,589) (1,145)

Redemption of preferred securities — (93) —

Distributions to noncontrolling interest of consolidated VIE (421) — —

Dividends paid on common stock (1,065) (1,249) (1,716)

Proceeds from employee stock plans 35 47 72

Other financing activities (178) (119) (111)

Net cash flows used in financing activities 411 (826) (1,085)

Increase (decrease) in cash and cash equivalents 269 123 470

Cash and cash equivalents at beginning of period 1,609 1,486 1,016

Cash and cash equivalents at end of period $ 1,878 $ 1,609 $ 1,486

(a) Includes the operations of Constellation and BGE from the date of the merger, March 12, 2012, through Dec. 31, 2012.

(b) Includes the operations of CENG from the date generation assumed operational control of CENG’s nuclear fleet, April 1, 2014, through Dec. 31, 2014.

The information in the Consolidated Statements of Cash Flows shown above is a replication of the information in the Consolidated Statements of Cash Flows in Exelon’s 2014 Form 10-K. For complete consolidated financial statements, including notes, please refer to pages 200 through 467 of Exelon’s 2014 Form 10-K filed with the SEC. Also see Management’s Discussion and Analysis of Financial Condition and Results of Operations, which includes a discussion of critical accounting policies and estimates, on pages 85 through 199 of Exelon’s 2014 Form 10-K filed with the SEC.

Financial Section


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Consolidated Balance SheetsExelon Corporation and Subsidiary Companies

Dec. 31,


Assets

Current assets

Cash and cash equivalents $ 1,878 $ 1,609

Restricted cash and investments 271 167

Accounts receivable, net

Customer 3,482 2,981

Other 1,227 1,175

Mark-to-market derivative assets 1,279 727

Unamortized energy contract assets 254 374

Inventories, net

Fossil fuel 579 276

Materials and supplies 1,024 829

Deferred income taxes 244 573

Regulatory assets 847 760

Assets held for sale 147 14

Other 865 652

Total current assets 12,097 10,137

Property, plant and equipment, net 52,087 47,330

Deferred debits and other assets

Regulatory assets 6,076 5,910

Nuclear decommissioning trust funds 10,537 8,071

Investments 544 1,187

Investment in CENG — 1,925

Goodwill 2,672 2,625

Mark-to-market derivative assets 773 607

Unamortized energy contract assets 549 710

Pledged assets for Zion Station decommissioning 319 458

Other 1,160 964

Total deferred debits and other assets 22,630 22,457

Total assets $ 86,814 $ 79,924

Financial Section


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Consolidated Balance Sheets (continued)Exelon Corporation and Subsidiary Companies

Dec. 31,


Liabilities and shareholders’ equity

Current liabilities

Short-term borrowings $ 460 $ 341

Long-term debt due within one year 1,802 1,509

Accounts payable 3,048 2,484

Accrued expenses 1,539 1,633

Payables to affiliates 8 116

Deferred income taxes — 40

Regulatory liabilities 310 327

Mark-to-market derivative liabilities 234 159

Unamortized energy contract liabilities 238 261

Other 1,123 858

Total current liabilities 8,762 7,728

Long-term debt 19,362 17,623

Long-term debt to other financing trusts 648 648

Deferred credits and other liabilities

Deferred income taxes and unamortized investment tax credits 13,019 12,905

Asset retirement obligations 7,295 5,194

Pension obligations 3,366 1,876

Non-pension postretirement benefit obligations 1,742 2,190

Spent nuclear fuel obligation 1,021 1,021

Regulatory liabilities 4,550 4,388

Mark-to-market derivative liabilities 403 300

Unamortized energy contract liabilities 211 266

Payable for Zion Station decommissioning 155 305

Other 2,147 2,540

Total deferred credits and other liabilities 33,909 30,985

Total liabilities $ 62,681 $ 56,984

Financial Section


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Consolidated Balance Sheets (continued)Exelon Corporation and Subsidiary Companies

Dec. 31


Commitments and contingencies

Shareholders' equity

Common stock (No par value, 2,000 shares authorized, 860 and 857 shares outstanding

at Dec. 31, 2014, and 2013, respectively) 16,709 16,741

Treasury stock, at cost (35 shares held at Dec. 31, 2014, and 2013, respectively) (2,327) (2,327)

Retained earnings 10,910 10,358

Accumulated other comprehensive loss, net (2,684) (2,040)

Total shareholders' equity 22,608 22,732

BGE preference stock not subject to mandatory redemption 193 193

Noncontrolling interest 1,332 15

Total equity 24,133 22,940

Total liabilities and shareholders' equity $ 86,814 $ 79,924

(a) Includes the financial information of CENG.

The information in the Consolidated Balance Sheets shown above is a replication of the information in the Consolidated Balance Sheets in Exelon’s 2014 Form 10-K. For complete consolidated financial statements, including notes, please refer to pages 200 through 467 of Exelon’s 2014 Form 10-K filed with the SEC. Also see Management’s Discussion and Analysis of Financial Condition and Results of Operations, which includes a discussion of critical accounting policies and estimates, on pages 83 through 199 of Exelon’s 2014 Form 10-K filed with the SEC.

Financial Section


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Consolidated Statements of Changes in Shareholders’ EquityExelon Corporation and Subsidiary Companies

(Dollars in millions, shares in thousands)Issued Shares

Common Stock

Treasury Stock

Retained Earnings

AccumulatedOther

Comprehensive Loss

Noncontrolling Interest

Preferred andPreference

Stock

Total Shareholders’

Equity

Balance, Dec. 31, 2011 698,112 $ 9,107 $ (2,327) $ 10,055 $ (2,450) $ 3 $ — $ 14,388

Net income (b) — — — 1,160 — (3) 14 1,171

Long-term incentive plan activity (b) 2,432 126 — — — — — 126

Employee stock purchase plan issuances (b) 857 26 — — — — — 26

Common stock dividends (b) — — — (1,322) — — — (1,322)

Common stock issuance

Constellation merger (b) 188,124 7,365 — — — — — 7,365

Noncontrolling interest acquired (b) — 8 — — — 106 — 114

BGE preference stock acquired (b) — — — — — — 193 193

Preferred and preference stock dividends (b) — — — — — — (14) (14)

Other comprehensive loss,

net of income taxes of $(192) (b) — — — — (317) — — (317)

Balance, Dec. 31, 2012 889,525 $ 16,632 $ (2,327) $ 9,893 $ (2,767) $ 106 $ 193 $ 21,730

Net income — — — 1,719 — (10) 20 1,729

Long-term incentive plan activity 1,445 81 — — — — — 81

Employee stock purchase plan issuances 1,064 28 — — — — — 28

Common stock dividends — — — (1,254) — — — (1,254)

Consolidated VIE dividend to

non-controlling interest — — — — — (63) — (63)

Deconsolidation of VIE — — — — — (18) (18)

Redemption of preferred securities — — — — — — (6) (6)

Preferred and preference stock dividends — — — — — — (14) (14)

Other comprehensive income,

net of income taxes of $(468) — — — — 727 — — 727

Balance, Dec. 31, 2013 892,034 $ 16,741 $ (2,327) $ 10,358 $ (2,040) $ 15 $ 193 $ 22,940

Net income (loss) (c) — — — 1,623 — 184 13 1,820

Long-term incentive plan activity 1,574 72 — — — — — 72

Employee stock purchase plan issuances 960 35 — — — — — 35

Tax benefit on stock compensation — (8) — — — — — (8)

Acquisition of noncontrolling interest — (2) — — — 6 — 4

Common stock dividends — — — (1,071) — — — (1,071)

Preferred and preference stock dividends — — — — — — (13) (13)

Fair value of financing contract payments — (131) — — — — — (131)

Noncontrolling interest established upon

consolidation of CENG — — — — — 1,548 — 1,548

Transfer of CENG pension and non-pension

postretirement benefit obligations — 2 — — — — — 2

Financial Section


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Consolidated Statements of Changes in Shareholders’ Equity (continued)Exelon Corporation and Subsidiary Companies

(Dollars in millions, shares in thousands)Issued Shares

Common Stock

Treasury Stock

Retained Earnings

AccumulatedOther

Comprehensive Loss

Noncontrolling Interest

Preferred andPreference

Stock

Total Shareholders’

Equity

Consolidated VIE dividend to

noncontrolling interest — — — — — (421) — (421)

Reversal of CENG equity method AOCI,

net of income taxes — — — — (116) — — (116)

Other comprehensive loss,

net of income taxes — — — — (528) — — (528)

Balance, Dec. 31, 2014 894,568 $ 16,709 $ (2,327) $ 10,910 $ (2,684) $ 1,332 $ 193 $ 24,133

(a) Includes retrospective reclassifications to conform to the current year presentation.(b) Includes the operations of Constellation and BGE from the date of the merger, March 12, 2012, through Dec. 31, 2012.(c) Includes the operations of CENG from the date Generation assumed operational control of CENG’s nuclear fleet, April 1, 014, through Dec. 31, 2014.

The information in the Consolidated Statements of Changes in Shareholders’ Equity shown above is a replication of the information in the Consolidated Statements in Shareholders’ Equity in Exelon’s 2014 Form 10-K. For complete consolidated financial statements, including notes, please refer to pages 200 through 467 of Exelon’s 2014 Form 10-K filed with the SEC. Also see Management’s Discussion and Analysis of Financial Condition and Results of Operations, which includes a discussion of critical accounting policies and estimates, on pages 83 through 199 of Exelon’s 2014 Form 10-K filed with the SEC.

Financial Section


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Management’s Report on Internal Control Over Financial Reporting

The management of Exelon Corporation (Exelon) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a- 15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Exelon’s management conducted an assessment of the effectiveness of Exelon’s internal control over financial reporting as of Dec. 31, 2014. In making this assessment, management used the criteria in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, Exelon’s management concluded that, as of Dec. 31, 2014, Exelon’s internal control over financial reporting was effective.

We excluded Integrys, which we acquired on November 1, 2014, from management’s assessment of the effectiveness of Exelon’s internal control over financial reporting as of December 31, 2014. This exclusion is in accordance with the SEC’s general guidance that an assessement of recently acquired business may be omitted from our scope in the year of acquisition.

The effectiveness of the Exelon’s internal control over financial reporting as of Dec. 31, 2014, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

Feb. 13, 2015

Information Derived from 2014 Form 10-K

We have presented a condensed discussion of financial results, excerpts from our consolidated financial statements and a copy of our Management’s Report on Internal Control Over Financial Reporting in this summary annual report. A complete discussion of our financial results and our complete consolidated financial statements, including notes, appears on pages 83 through 467 of our Form 10-K annual report for the year ended Dec. 31, 2014. That annual report was filed with the Securities and Exchange Commission on Feb. 13, 2015, and can be viewed and retrieved through the Commission’s website at www.sec.gov or our website at www.exeloncorp.com.

Our independent registered public accounting firm, PricewaterhouseCoopers LLP (PwC), issued a report dated Feb. 13, 2015, on its integrated audit of our consolidated financial statements and our internal control over financial reporting. In its report PwC expressed an unqualified opinion that those consolidated financial statements present fairly, in all material respects, the financial position of Exelon Corporation and its subsidiaries at Dec. 31, 2014, and 2013, and the results of their operations and their cash flows for each of the three years in the period ended Dec. 31, 2014, in conformity with accounting principles generally accepted in the United States of America. Furthermore, PwC expressed an unqualified opinion that Exelon maintained, in all material respects, effective internal control over financial reporting as of Dec. 31, 2014, based on criteria established in Internal Control — Integrated Framework (2013) issued by the COSO. The full text of PwC’s report can be found on page 205 of our 2014 Form 10-K.

Financial Section


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Exelon Corporation is the nation’s leading competitive energy provider, with 2014 revenues of approximately $27.4 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 32,750 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. Exelon’s utilities deliver electricity to more than 6.7 million customers in central Maryland (BGE), northern Illinois (ComEd) and southeastern Pennsylvania (PECO), and natural gas to 1.2 million customers through BGE and PECO. Exelon is headquartered in Chicago and trades on the NYSE under the ticker EXC.

Corporate HeadquartersExelon CorporationP.O. Box 805379Chicago, IL 60680-5379

Transfer AgentWells Fargo Shareowner Services800.626.8729

Employee Stock Purchase Plan877.582.5113

Employee Stock Options888.609.3534

Investor Relations Voice Mailbox312.394.2345

Shareholder Services Voice Mailbox312.394.8811

Independent Public AccountantsPricewaterhouseCoopers LLP

Websitewww.exeloncorp.com

Twitter@Exelon

Stock TickerEXC

Shareholder Inquiries

Exelon Corporation has appointed Wells Fargo Shareowner Services as its transfer agent, stock registrar, dividend disbursing agent and dividend reinvestment agent. Should you have questions concerning your registered shareholder account or the payment or reinvestment of your dividends, or if you wish to make a stock transaction or stock transfer, you may call shareowner services at Wells Fargo at the toll-free number shown to the left or access its website at www.shareowneronline.com.

Morgan Stanley administers the Employee Stock Purchase Plan (ESPP), employee stock options and other employee equity awards. Should you have any questions concerning your employee plan shares or wish to make a transaction, you may call the toll-free numbers shown to the left or access its website at www.benefitaccess.com.

The company had approximately 124,000 holders of record of its common stock as of Dec. 31, 2014.

The 2014 Form 10-K Annual Report to the Securities and Exchange Commission was filed on Feb. 13, 2015. To obtain a copy without charge, write to Bruce G. Wilson, Senior Vice President, Deputy General Counsel and Corporate Secretary, Exelon Corporation, Post Office Box 805379, Chicago, Illinois 60680-5379.

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