Pepco Holdings, Inc. (NYSE: POM) today reported second quarter
and six months ended June 30, 2014 earnings from continuing
operations as follows:
Three Months Ended Six Months Ended
June 30, June 30,
2014
2013
2014
2013
Net Income (Loss) from Continuing Operations (GAAP) Net
Income (Loss) ($ in millions) $ 53 $ 53 $ 128 $ (58 ) Earnings
(Loss) Per Share $ 0.21 $ 0.21 $ 0.51 $ (0.24 )
Adjusted
Net Income from Continuing Operations (Non-GAAP) Adjusted Net
Income ($ in millions) $ 71 $ 53 $ 146 $ 109 Adjusted Earnings Per
Share $ 0.28 $ 0.21 $ 0.58 $ 0.45
“We remain committed to system reliability and ongoing
improvement of the customer experience as we move forward with our
pending merger with Exelon,” said Joseph M. Rigby, Chairman,
President and Chief Executive Officer. “The significant investments
we continue to make in the electric system have resulted in a more
resilient electric grid, and the increase in adjusted earnings for
the second quarter reflects the impact of these investments.” Rigby
added, “We are working diligently with Exelon on filing and
obtaining approval from our regulators and stakeholders to create a
stronger combined company better positioned to deliver value to our
customers.”
Pepco Holdings’ GAAP net income from continuing operations for
the three months ended June 30, 2014 and 2013, was $53 million, or
21 cents per share. Excluding items that we believe are not
representative of ongoing business operations, adjusted earnings
for the second quarter of 2014 would have been $71 million or 28
cents per share. There were no adjustments to GAAP earnings in the
second quarter of 2013.
The increase in adjusted net income from continuing operations
(Non-GAAP) in the second quarter of 2014, as compared to the 2013
quarter, was driven by higher electric distribution and network
transmission revenue (primarily due to higher rates from increased
infrastructure investment) and lower operation and maintenance
expense. Partially offsetting these positive factors was higher
depreciation expense.
For the six months ended June 30, 2014, Pepco Holdings’ GAAP
earnings were $128 million or 51 cents per share, as compared to a
net loss of $58 million or 24 cents per share for the six months
ended June 30, 2013. Excluding items that we believe are not
representative of ongoing business operations, adjusted earnings
for the six months ended June 30, 2014 would have been $146 million
or 58 cents per share as compared to $109 million or 45 cents per
share for the same period in the prior year.
The primary drivers of the increase in adjusted net income from
continuing operations (Non-GAAP) for the six months ended June 30,
2014, as compared to the 2013 period, were higher electric
distribution and network transmission revenue (primarily due to
higher rates from increased infrastructure investment, as well as,
higher sales driven by customer growth) and lower operation and
maintenance expense. Higher depreciation expense and lower income
tax benefits (due to a favorable income tax adjustment in 2013)
partially offset the increase for the period.
Non-GAAP Financial
Information
Management believes the adjusted net income from continuing
operations and related per share data (both as historical financial
information and earnings guidance) are representative of Pepco
Holdings’ ongoing business operations. Management uses this
information internally to evaluate Pepco Holdings’
period-over-period financial performance and, therefore, believes
that this information is useful to investors. The presentation of
adjusted net income from continuing operations and related per
share data is intended to complement, and should not be considered
as an alternative to, reported earnings and related per share data
presented in accordance with generally accepted accounting
principles in the United States (GAAP).
Reconciliation of
GAAP Financial Information to Adjusted Financial
Information
Three Months Six Months
Net Income (Loss)
from Continuing Operations
Ended Ended
(Millions of
dollars)
June 30, June 30, 2014 2013 2014 2013 Reported (GAAP)
Net Income (Loss) from Continuing Operations $ 53 $ 53 $ 128
$ (58 ) Adjustments (after-tax):
-- Incremental merger-related transaction
costs
14 – 14 –
-- Incremental merger-related integration
costs
4 – 4 –
-- Potomac Capital Investment Corporation
(PCI) valuation allowances related to certain deferred tax
assets
– – – 101 -- Interest associated with change in assessment of
corporate tax benefits related to the cross-border energy lease
investments – – – 66
Adjusted Net Income from Continuing Operations (Non-GAAP) $
71 $ 53 $ 146 $ 109 Three Months Six
Months Ended Ended
Earnings (Loss) per
Share from Continuing Operations
June 30, June 30, 2014 2013 2014 2013 Reported (GAAP)
Earnings (Loss) per Share from Continuing Operations $ 0.21 $ 0.21
$ 0.51 $ (0.24 ) Adjustments (after-tax): -- Incremental
merger-related transaction costs 0.06 – 0.06 – -- Incremental
merger-related integration costs 0.01 – 0.01 – -- PCI valuation
allowances related to certain deferred tax assets – – – 0.42 --
Interest associated with change in assessment of corporate tax
benefits related to the cross-border energy lease investments
– – – 0.27
Adjusted Earnings per Share from Continuing Operations (Non-GAAP) $
0.28 $ 0.21 $ 0.58 $ 0.45
The income tax effects with respect to the foregoing
adjustments, where applicable, were calculated using a composite
income tax rate of 35 percent. Most merger-related costs are not
tax deductible.
Discontinued Operations
Due to the early termination of Pepco Holdings’ cross-border
energy lease investments during 2013, these investments are being
accounted for as discontinued operations and are no longer reported
as a separate segment for financial reporting purposes.
In 2013, Pepco Energy Services (PES) completed a previously
announced wind-down of its retail energy supply component. As a
result, the operations of PES’ retail electric and natural gas
supply businesses are being reported as discontinued operations and
are no longer a part of the PES segment for financial reporting
purposes.
For the six months ended June 30, 2014 there was no activity in
discontinued operations, compared to a net loss of $1.36 per share
for the same period in 2013.
Earnings Guidance
Pepco Holdings reaffirms its earnings guidance range for 2014 of
between $1.12 and $1.27 per share. The guidance range assumes
normal weather conditions and excludes:
- the results of discontinued operations
and the impact of any special, unusual or extraordinary items,
- the effect of adopting new accounting
standards,
- the effect of changes in tax law,
- the impairment of assets, and
- incremental transaction and integration
costs associated with the planned merger with Exelon.
Recent Events
Pepco Holdings – Exelon
Merger
During the second quarter, approval applications were submitted
to the Federal Energy Regulatory Commission, the Virginia State
Corporation Commission, the Delaware Public Service Commission, the
New Jersey Board of Public Utilities and the District of Columbia
Public Service Commission (DCPSC) related to the planned merger
with Exelon Corporation announced earlier this year. The Maryland
Public Service Commission (MPSC) approval application and the
Hart-Scott-Rodino notification are expected to be filed in the
third quarter of 2014. Following receipt of required approvals, the
parties anticipate closing the transaction in the second or third
quarter of 2015.
Operations
- Power Delivery electric sales were
11,175 gigawatt hours (GWh) in the second quarter of 2014, compared
to 11,172 GWh for the same period in 2013. In the electric service
territory, cooling degree days decreased by 5 percent for the three
months ended June 30, 2014, compared to the same period in 2013.
Weather-adjusted electric sales were 11,136 GWh in the second
quarter of 2014, compared to 11,041 GWh for the same period in the
prior year.
- Power Delivery electric sales were
23,439 GWh for the six months ended June 30, 2014 compared to
23,077 GWh for the six months ended June 30, 2013. In the electric
service territory, heating degree days increased by 10 percent and
cooling degree days decreased by 5 percent for the six months ended
June 30, 2014 compared to the same period in 2013. Weather-adjusted
electric sales were 22,945 GWh for the six months ended June 30,
2014 compared to 23,025 GWh for the same period in 2013.
- As of June 30, 2014, Pepco’s
installation and activation of smart meters in its District of
Columbia and Maryland service territories is complete. Delmarva
Power’s installation and activation of smart meters is complete in
its Delaware electric service territory, and is underway in its
Maryland service territory. Recovery of smart meter costs in
electric distribution base rates has begun in the District of
Columbia and Delaware. Regulatory assets associated with smart
meter installation and activation in Maryland have been
created.
- In the six months ended June 30, 2014,
PES signed $18 million in energy efficiency contracts and $41
million in underground transmission construction contracts. PES
signed $25 million in energy efficiency contracts and $36 million
in underground transmission construction contracts for the same
period in 2013.
Regulatory Matters
- On July 2, 2014, the MPSC approved an
$8.75 million annual increase in Pepco’s electric distribution base
rates based on a 9.62 percent return on equity. The annual pre-tax
earnings impact of the order is approximately $8.2 million. The new
rates were effective July 4, 2014.
- On June 17, 2014, Pepco and the
District of Columbia Department of Transportation jointly filed an
application with the DCPSC for approval of the triennial plan for
the District of Columbia power line undergrounding project. The
legislation for the public-private partnership to underground up to
60 high-voltage lines became law on May 3, 2014. The application
for the financing and surcharge order will be filed in August 2014.
The DCPSC is expected to approve the triennial plan and financing
and surcharge applications associated with the legislation in the
fourth quarter of 2014.
Financing
- On June 9, 2014, Delmarva Power issued
$200 million of 10-year first mortgage bonds. The bonds bear
interest at a fixed rate of 3.50 percent and are due on November
15, 2023. The net proceeds were used to repay outstanding
commercial paper and for general corporate purposes.
Further details regarding changes in consolidated earnings
between 2014 and 2013 are provided in the schedules that follow.
Additional information regarding financial results and recent
regulatory events can be found in the Pepco Holdings, Inc. Form
10-Q for the quarter ended June 30, 2014, as filed with the
Securities and Exchange Commission, and which is also available at
www.pepcoholdings.com/investors. Pepco Holdings, Inc. routinely
makes available this and other important information on its
website, which is a key channel of distribution for Pepco Holdings,
Inc. to reach its public investors and to disclose material,
non-public information. Information on the website is not part of
this news release.
About PHI: Pepco Holdings, Inc. (NYSE: POM) is one of the
largest energy delivery companies in the Mid-Atlantic region,
serving about 2 million customers in Delaware, the District of
Columbia, Maryland and New Jersey. PHI subsidiaries Pepco, Delmarva
Power and Atlantic City Electric provide regulated electricity
service; Delmarva Power also provides natural gas service. Through
Pepco Energy Services, PHI also provides energy savings performance
contracting services, underground transmission and distribution
construction and maintenance services, and steam and chilled water
under long-term contracts.
Forward-Looking Statements: Some of the statements
contained in this news release with respect to Pepco Holdings,
Pepco, Delmarva Power and Atlantic City Electric, including each of
their respective subsidiaries (each, a “Reporting Company”), are
forward-looking statements within the meaning of the U.S. federal
securities laws, and are subject to the safe harbor created thereby
under the Private Securities Litigation Reform Act of 1995. You can
identify forward-looking statements by terminology such as “may,”
“might,” “will,” “should,” “could,” “expects,” “intends,”
“assumes,” “seeks to,” “plans,” “anticipates,” “believes,”
“projects,” “estimates,” “predicts,” “potential,” “future,” “goal,”
“objective,” or “continue” or the negative of such terms or other
variations thereof or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. Forward-looking
statements involve estimates, assumptions, known and unknown risks,
uncertainties and other factors that may cause one or more
Reporting Company’s or their subsidiaries’ actual results, levels
of activity, performance or achievements to be materially different
from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking
statements. Therefore, forward-looking statements are not
guarantees or assurances of future performance, and actual results
could differ materially from those indicated by the forward-looking
statements. These factors should be read together with the risk
factors included in the “Risk Factors” section and other statements
contained in each Reporting Company’s Annual Report on Form 10-K
for the year ended December 31, 2013, filed with the Securities and
Exchange Commission on February 28, 2014, and in each Reporting
Company’s Quarterly Reports on Form 10-Q for the quarter ended June
30, 2014, and investors should refer to these risk factor sections
and other statements. All of such factors and forward-looking
statements are difficult to predict, contain uncertainties, are
beyond each Reporting Company’s control and may cause actual
results to differ materially from those contained in any
forward-looking statements. Any forward-looking statements speak
only as to the date this news release was issued, and none of the
Reporting Companies undertakes any obligation to update any
forward-looking statements to reflect events or circumstances after
the date on which such statements are made or to reflect the
occurrence of unanticipated events. New factors emerge from time to
time, and it is not possible for a Reporting Company to predict all
such factors. Furthermore, it may not be possible to assess the
impact of any such factor on such Reporting Company’s or its
subsidiaries’ business (viewed independently or together with the
business or businesses of some or all of the other Reporting
Companies or their subsidiaries) or the extent to which any factor,
or combination of factors, may cause results to differ materially
from those contained in any forward-looking statement. Any specific
factors that may be provided should not be construed as
exhaustive.
Additional Information and Where to Find It: This
communication does not constitute a solicitation of any vote or
approval. PHI intends to file with the SEC and mail to its
stockholders a proxy statement in connection with the proposed
merger transaction. PHI URGES INVESTORS AND SECURITY HOLDERS TO
READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS WHEN THEY
BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
about Exelon, PHI and the proposed merger. Investors and security
holders will be able to obtain these materials (when they are
available) and other documents filed with the SEC free of charge at
the SEC’s website, www.sec.gov. In addition, a copy of PHI’s proxy
statement (when it becomes available) may be obtained free of
charge from Pepco Holdings, Inc., Corporate Secretary, 701 Ninth
Street, N.W., Room 1300, Washington, D.C. 20068. Investors and
security holders may also read and copy any reports, statements and
other information filed by PHI with the SEC, at the SEC public
reference room at 100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 or visit the SEC’s website
for further information on its public reference room.
Participants in the Merger Solicitation: Exelon, PHI, and
their respective directors, executive officers and certain other
members of management and employees may be deemed to be
participants in the solicitation of proxies in respect of the
proposed transaction. Information regarding Exelon’s directors and
executive officers is available in its proxy statement filed with
the SEC on April 2, 2014 in connection with its 2014 annual meeting
of stockholders, and information regarding PHI’s directors and
executive officers is available in its proxy statement filed with
the SEC on March 25, 2014 in connection with its 2014 annual
meeting of stockholders. Other information regarding the
participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise,
will be contained in the proxy statement and other relevant
materials to be filed with the SEC when they become available.
Pepco Holdings, Inc. Earnings Per Share
Variance 2014 / 2013
Three Months Ended June 30, Power Pepco
Energy Corporate Total Delivery
Services and Other PHI
2013 Earnings (loss) per share from
Continuing Operations (GAAP) (1)
$
0.23
$ 0.01 $ (0.03 ) $
0.21
Change from 2013
earnings (loss) per share from Continuing Operations
Regulated Operations
-- Distribution Revenue
- Weather (estimate) (3)
(0.01 ) - - (0.01 )
- Rate Increases
0.07 - - 0.07
- Other Distribution Revenue
0.01 - - 0.01
-- Network Transmission Revenue
0.02 - - 0.02
-- ACE Basic Generation Service (primarily
unbilled revenue)
(0.01 ) - - (0.01 )
-- Operation & Maintenance
0.02 - - 0.02
-- Depreciation
(0.03 ) - - (0.03 ) Pepco Energy Services - - - - Corporate and
Other - - -
- 2014 Adjusted earnings (loss) per share from
Continuing Operations (Non-GAAP) 0.30 0.01 (0.03 ) 0.28
2014 Adjustments
(2)
-- Incremental merger-related transaction
costs
- - (0.06 ) (0.06 )
-- Incremental merger-related integration
costs
(0.01 ) - -
(0.01 )
2014 Earnings (loss) per share from Continuing
Operations (GAAP) (4) $ 0.29
$ 0.01 $ (0.09 )
$ 0.21 (1) The 2013 weighted average
number of diluted shares outstanding was 249 million. (2)
Management believes the adjusted items are not representative of
the Company's ongoing business operations. The presentation of this
Non-GAAP financial information is intended to complement, and
should not be considered an alternative to, the GAAP information.
(3) The effect of weather compared to the 20-year average
weather is estimated to have decreased earnings by $0.01 per share.
(4) The 2014 weighted average number of diluted shares
outstanding was 252 million.
Pepco Holdings, Inc.
Earnings Per Share Variance 2014 / 2013
Six Months Ended June 30,
Pepco
Power
Energy
Corporate Total Delivery
Services and Other PHI 2013
Earnings (loss) per share from Continuing Operations (GAAP) (1)
$ 0.47 $ 0.02 $ (0.73
) $ (0.24 )
2013 Adjustments
(2)
-- Interest associated with change in
assessment of corporate tax benefits related to the cross-border
energy lease investments
- - 0.27 0.27
-- PCI valuation allowances related to
certain deferred tax assets
- - 0.42
0.42 2013 Adjusted earnings (loss) per
share from Continuing Operations (Non-GAAP) 0.47 0.02 (0.04 ) 0.45
Change from 2013
Adjusted earnings (loss) per share from Continuing
Operations
Regulated Operations -- Distribution Revenue - Weather (estimate)
(3) 0.02 - - 0.02 - Rate Increases 0.12 - - 0.12 - Other
Distribution Revenue 0.03 - - 0.03 -- Network Transmission Revenue
0.03 - - 0.03 -- ACE Basic Generation Service (primarily unbilled
revenue) (0.02 ) - - (0.02 ) -- Operation & Maintenance 0.06 -
- 0.06 -- Depreciation (0.05 ) - - (0.05 ) -- Other, net 0.01 - -
0.01 Pepco Energy Services - (0.01 ) - (0.01 ) Corporate and Other
- - (0.01 ) (0.01 ) Net Interest Expense - - 0.01 0.01 Income Tax
Adjustments (0.04 ) - - (0.04 ) Dilution (0.02 )
- - (0.02 )
2014 Adjusted earnings (loss) per share from Continuing Operations
(Non-GAAP) 0.61 0.01 (0.04 ) 0.58
2014 Adjustments
(2)
-- Incremental merger-related transaction costs - - (0.06 ) (0.06 )
-- Incremental merger-related integration costs (0.01 )
- - (0.01 )
2014 Earnings (loss) per share from Continuing Operations
(GAAP) (4) $ 0.60 $
0.01 $ (0.10 )
$ 0.51 (1) The 2013 weighted average
number of diluted shares outstanding was 243 million. (2)
Management believes the adjusted items are not representative of
the Company's ongoing business operations. The presentation of this
Non-GAAP financial information is intended to complement, and
should not be considered an alternative to, the GAAP information.
(3) The effect of weather compared to the 20-year average
weather is estimated to have increased earnings by $0.02 per share.
(4) The 2014 weighted average number of diluted shares
outstanding was 251 million.
SEGMENT INFORMATION
Three Months Ended June 30, 2014 (millions of
dollars) Pepco Corporate
Power Energy and PHI Delivery
Services Other (a) Consolidated Operating
Revenue $ 1,040 $ 79 $ (2 ) $ 1,117 Operating Expenses (b) 881 77 8
966 Operating Income (Loss) 159 2 (10 ) 151
Interest and Dividend Income
-
-
1 1 Interest Expense 56 - 11 67 Other Income (Expense) 13 1 (1 ) 13
Income Tax Expense (Benefit) 45 1 (1 ) 45 Net Income (Loss) from
Continuing Operations 71 2 (20 ) 53 Total Assets 13,471 297 1,302
15,070 Construction Expenditures $ 253 $ 1 $ 17 $ 271 (a)
Total Assets in this column includes Pepco Holdings’ goodwill
balance of $1.4 billion, all of which is allocated to Power
Delivery for purposes of assessing impairment. Total assets also
include capital expenditures related to certain hardware and
software expenditures which primarily benefit Power Delivery. These
expenditures are recorded as incurred in Corporate and Other and
are allocated to Power Delivery once the assets are placed in
service. Corporate and Other includes intercompany amounts of $(2)
million for Operating Revenue, $(3) million for Operating Expenses,
$1 million for Interest Expense and $(1) million for Interest and
Dividend Income. (b) Includes depreciation and amortization expense
of $132 million, consisting of $122 million for Power Delivery, $2
million for Pepco Energy Services and $8 million for Corporate and
Other.
Three Months Ended June 30, 2013
(millions of dollars) Pepco
Corporate Power Energy and
PHI Delivery Services Other (a)
Consolidated Operating Revenue $ 1,006 $ 49 $ (4 ) $ 1,051
Operating Expenses (b) 866 47 (7 ) 906 Operating Income 140 2 3 145
Interest Expense 58
-
12 70 Other Income 7 - 1 8 Income Tax Expense (Benefit) 33 1 (4 )
30 Net Income (Loss) from Continuing Operations 56 1 (4 ) 53 Total
Assets (excluding Assets Held for Disposition) 12,535 350 1,923
14,808 Construction Expenditures $ 281 $ - $ 39 $ 320 (a)
Total Assets in this column includes Pepco Holdings’ goodwill
balance of $1.4 billion, all of which is allocated to Power
Delivery for purposes of assessing impairment. Total assets also
include capital expenditures related to certain hardware and
software expenditures which primarily benefit Power Delivery. These
expenditures are recorded as incurred in Corporate and Other and
are allocated to Power Delivery once the assets are placed in
service. Corporate and Other includes intercompany amounts of $(5)
million for Operating Revenue and $(5) million for Operating
Expenses. (b) Includes depreciation and amortization expense of
$116 million, consisting of $107 million for Power Delivery, $2
million for Pepco Energy Services and $7 million for Corporate and
Other.
Six Months Ended June 30, 2014
(millions of dollars) Pepco
Corporate Power Energy and
PHI Delivery Services Other (a)
Consolidated Operating Revenue $ 2,312 $ 139 $ (4 ) $ 2,447
Operating Expenses (b)
1,984
137 2 2,123 Operating Income (Loss) 328 2 (6 ) 324 Interest and
Dividend Income - - 1 1 Interest Expense 111 - 21 132 Other Income
25 1 - 26 Income Tax Expense (Benefit) 92 1 (2 ) 91 Net Income
(Loss) from Continuing Operations 150 2 (24 ) 128 Total Assets
13,471 297 1,302 15,070 Construction Expenditures $ 517 $ 1 $ 35 $
553 (a) Total Assets in this column includes Pepco Holdings’
goodwill balance of $1.4 billion, all of which is allocated to
Power Delivery for purposes of assessing impairment. Total assets
also include capital expenditures related to certain hardware and
software expenditures which primarily benefit Power Delivery. These
expenditures are recorded as incurred in Corporate and Other and
are allocated to Power Delivery once the assets are placed in
service. Corporate and Other includes intercompany amounts of $(4)
million for Operating Revenue, $(4) million for Operating Expenses
and $(1) million for Interest and Dividend Income. (b) Includes
depreciation and amortization expense of $265 million, consisting
of $246 million for Power Delivery, $4 million for Pepco Energy
Services and $15 million for Corporate and Other.
Six Months Ended June 30, 2013 (millions of dollars)
Pepco Corporate Power
Energy and PHI Delivery Services
Other (a) Consolidated Operating Revenue $ 2,130 $
106 $ (5 ) $ 2,231 Operating Expenses (b) 1,867 101 (15 ) 1,953
Operating Income 263 5 10 278 Interest Expense 114
-
23 137 Other Income 13 1 2 16 Income Tax Expense (c) 48 2
165
(d)
215 Net Income (Loss) from Continuing Operations 114 4 (176 ) (58 )
Total Assets (excluding Assets Held for Disposition) 12,535 350
1,923 14,808 Construction Expenditures $ 563 $ 1 $ 52 $ 616
(a) Total Assets in this column includes Pepco Holdings’ goodwill
balance of $1.4 billion, all of which is allocated to Power
Delivery for purposes of assessing impairment. Total assets also
include capital expenditures related to certain hardware and
software expenditures which primarily benefit Power Delivery. These
expenditures are recorded as incurred in Corporate and Other and
are allocated to Power Delivery once the assets are placed in
service. Corporate and Other includes intercompany amounts of $(5)
million for Operating Revenue, $(6) million for Operating Expenses
and $(4) million for Interest Expense. (b) Includes depreciation
and amortization expense of $228 million, consisting of $211
million for Power Delivery, $4 million for Pepco Energy Services
and $13 million for Corporate and Other. (c) Includes after-tax
interest associated with uncertain and effectively settled tax
positions allocated to each member of the consolidated group,
including a $12 million interest benefit for Power Delivery and
interest expense of $66 million for Corporate and Other. (d)
Includes non-cash charges of $101 million representing the
establishment of valuation allowances against certain deferred tax
assets of PCI included in Corporate and Other.
PEPCO HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF INCOME (LOSS) (Unaudited) Three Months
Ended Six Months Ended June 30, June 30,
2014 2013 2014 2013
(millions of dollars, except per share data)
Operating Revenue
$
1,117
$
1,051
$ 2,447 $ 2,231
Operating Expenses Fuel and purchased
energy 463 446 1,077 1,008 Other services cost of sales 61 35 107
75 Other operation and maintenance 221 212 437 439 Depreciation and
amortization 132 116 265 228 Other taxes 102 101
206 206 Deferred electric service costs (13 ) (4 )
31 (3 ) Total Operating Expenses
966 906 2,123 1,953
Operating Income 151 145
324 278
Other Income
(Expenses) Interest and dividend income 1
-
1 - Interest expense (67 ) (70 ) (132 ) (137 ) Other income
13 8 26 16
Total Other Expenses (53 ) (62 ) (105 )
(121 )
Income from Continuing Operations Before Income
Tax Expense 98 83 219 157
Income Tax Expense Related
to Continuing Operations 45 30
91 215
Net Income (Loss) from
Continuing Operations 53 53 128 (58 )
Loss from
Discontinued Operations, net of Income Taxes -
(11 ) - (330 )
Net Income
(Loss) $ 53 $ 42
128 $ (388 )
Basic and Diluted Share
Information Weighted average shares outstanding – Basic
(millions) 251 249 251
243 Weighted average shares outstanding –
Diluted (millions) 252 249 251
243 Earnings (loss) per share of common
stock from Continuing Operations – Basic and Diluted $ 0.21 $ 0.21
0.51 $ (0.24 ) Earnings (loss) per share of common stock
from Discontinued Operations – Basic and Diluted -
(0.04 ) - (1.36 ) Basic and
Diluted earnings (loss) per share $ 0.21 $ 0.17
0.51 $ (1.60 )
PEPCO
HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Unaudited) June 30, December 31,
2014 2013 (millions of dollars) ASSETS
CURRENT ASSETS Cash and cash equivalents $ 184 $ 23
Restricted cash equivalents 21 13 Accounts receivable, less
allowance for uncollectible accounts of $44 million and $38
million, respectively 822 835 Inventories 149 148 Deferred income
tax assets, net 50 51 Income taxes and related accrued interest
receivable 8 274 Prepaid expenses and other 82
54 Total Current Assets 1,316 1,398
OTHER ASSETS Goodwill 1,407 1,407 Regulatory
assets 2,002 2,087 Income taxes and related accrued interest
receivable 58 75 Restricted cash equivalents 14 14 Other 168
163 Total Other Assets 3,649
3,746
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 15,043 14,567 Accumulated
depreciation (4,938 ) (4,863 ) Net Property, Plant
and Equipment 10,105 9,704
TOTAL ASSETS $ 15,070 $ 14,848
PEPCO HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS (Unaudited) June 30, December
31, 2014 2013 (millions of dollars, except
shares) LIABILITIES AND EQUITY CURRENT
LIABILITIES Short-term debt $ 479 $ 565 Current portion of
long-term debt and project funding 371 446 Accounts payable 170 215
Accrued liabilities 327 301 Capital lease obligations due within
one year 10 9 Taxes accrued 51 56 Interest accrued 49 47
Liabilities and accrued interest related to uncertain tax positions
6 397 Other 304 277 Total Current
Liabilities 1,767 2,313
DEFERRED CREDITS Regulatory liabilities 394 399 Deferred
income tax liabilities, net 3,160 2,928 Investment tax credits 17
17 Pension benefit obligation 124 116 Other postretirement benefit
obligations 173 206 Liabilities and accrued interest related to
uncertain tax positions 6 28 Other 187 189
Total Deferred Credits 4,061 3,883
OTHER LONG-TERM LIABILITIES Long-term debt
4,557 4,053 Transition bonds issued by ACE Funding 193 214
Long-term project funding 9 10 Capital lease obligations 55
60 Total Other Long-Term Liabilities
4,814 4,337
COMMITMENTS AND
CONTINGENCIES PREFERRED STOCK Series A preferred
stock, $.01 par value, 18,000 shares authorized, 9,000 and zero
shares outstanding, respectively 93 -
EQUITY Common stock, $.01 par value, 400,000,000
shares authorized, 251,498,408 and 250,324,898 shares outstanding,
respectively 3 3 Premium on stock and other capital contributions
3,780 3,751 Accumulated other comprehensive loss (35 ) (34 )
Retained earnings 587 595 Total Equity
4,335 4,315
TOTAL LIABILITIES AND
EQUITY $ 15,070 $ 14,848
POWER
DELIVERY SALES AND REVENUE Three Months
Ended Six Months Ended June 30,
June 30, Power Delivery Sales (Gigawatt Hours)
2014 2013 2014 2013
Regulated T&D Electric Sales Residential
3,616 3,567 8,672 8,282 Commercial and industrial 7,504 7,553
14,643 14,673 Transmission and other 55 52 124
122
Total Regulated T&D Electric Sales
11,175 11,172 23,439 23,077
Default
Electricity Supply Sales Residential 2,913 2,847 6,967 6,665
Commercial and industrial 1,254 1,224 2,562 2,479 Other 10
11 21 31
Total Default Electricity Supply
Sales 4,177 4,082 9,550 9,175
Power Delivery Electric Revenue (Millions
of dollars) Regulated T&D Electric Revenue
Residential $ 185 $ 170 $ 389 $ 354 Commercial and industrial 256
241 482 457 Transmission and other 106 97 215
188
Total Regulated T&D Electric Revenue $ 547 $
508 $ 1,086 $ 999
Default Electricity Supply Revenue
Residential $ 276 $ 286 $ 659 $ 661 Commercial and industrial 132
129 273 253 Other 43 38 138 70
Total
Default Electricity Supply Revenue $ 451 $ 453 $ 1,070 $ 984
Other Electric Revenue $ 14 $ 16 $ 31 $ 33
Total Electric Operating Revenue $ 1,012 $ 977 $ 2,187 $
2,016
Power Delivery Gas Sales and
Revenue Regulated Gas Sales (Mcf) Residential 937 887
5,710 4,959 Commercial and industrial 907 608 3,540 2,669
Transportation and other 1,282 1,454 3,662
3,886
Total Regulated Gas Sales 3,126
2,949 12,912 11,514
Regulated Gas Revenue
(Millions of dollars) Residential $ 14 $ 14 $ 68 $ 62
Commercial and industrial 9 7 38 29 Transportation and other
2 3 6 6
Total Regulated Gas Revenue $
25 $ 24 $ 112 $ 97
Other Gas Revenue $ 3 $ 5 $ 13 $
17
Total Gas Operating Revenue $ 28 $ 29 $ 125 $ 114
Total Power Delivery Operating Revenue $ 1,040 $
1,006 $ 2,312 $ 2,130
POWER DELIVERY – CUSTOMERS
June 30, 2014 June 30, 2013
Regulated T&D Electric Customers (in thousands)
Residential 1,654 1,641 Commercial and industrial 199 199
Transmission and other 2 2
Total Regulated T&D Electric
Customers 1,855 1,842
Regulated Gas Customers
(in thousands) Residential 117 115 Commercial and industrial 9
10 Transportation and other – –
Total Regulated Gas
Customers 126 125
WEATHER DATA - CONSOLIDATED ELECTRIC SERVICE
TERRITORY
Three Months Ended Six Months
Ended June 30, June 30, 2014
2013 2014 2013
Heating Degree Days 381 408 3,009 2,727 20 Year Average 423 424
2,714 2,723 Percentage Difference from Average (10%) (4%) 11% −
Percentage Difference from Prior Year (7%) 10% Cooling
Degree Days 417 440 417 440 20 Year Average 390 385 392 387
Percentage Difference from Average 7% 14% 6% 14% Percentage
Difference from Prior Year (5%) (5%)
PEPCO ENERGY
SERVICES Financial Information - Continuing Operations
Three Months Ended
(Millions of Dollars)
June 30, 2014 2013 Operating
Revenues $ 79 $ 49 Cost of Goods Sold 62 35
Gross Margin 17 14 Other Operation and Maintenance Expenses
13 10 Depreciation and Amortization 2 2
Operating
Income 2 2
Other Income 1 −
Income
Before Income Taxes 3 2
Income Tax Expense 1
1
Net Income from Continuing Operations (GAAP) $ 2 $
1
Six Months Ended
(Millions of Dollars)
June 30, 2014 2013 Operating
Revenues $ 139 $ 106 Cost of Goods Sold 109 75
Gross Margin 30 31 Other Operation and Maintenance Expenses
24 22 Depreciation and Amortization 4 4
Operating
Income 2 5
Other Income 1 1
Income
Before Income Taxes 3 6
Income Tax Expense 1
2
Net Income from Continuing Operations (GAAP) $ 2 $
4
(Millions of Dollars)
June 30,
December 31,
2014 2013 Total Assets $ 297 $ 335
Current Assets 156 188 Property, Plant and Equipment 110 113 Other
Assets 31 34
Total Liabilities $ 103 $ 85 Current
Liabilities 76 55 Long-Term Liabilities 27 30
Equity
$ 194 $ 250
Pepco Holdings, Inc.Media Contact:Robert Hainey,
202-872-268024/7 Media Hotline
202-872-2680rshainey@pepcoholdings.comorInvestor Contact:Donna
Kinzel, 302-429-3004donna.kinzel@pepcoholdings.com
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