UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) December 9, 2013

 

 

 

Commission File Number		Exact Name of Registrant as Specified in Its Charter; State of Incorporation; Address of Principal Executive Offices; and Telephone Number		IRS Employer Identification Number
1-16169		EXELON CORPORATION (a Pennsylvania corporation) 10 South Dearborn Street P.O. Box 805379 Chicago, Illinois 60680-5379 (312) 394-7398		23-2990190
333-85496		EXELON GENERATION COMPANY, LLC (a Pennsylvania limited liability company) 300 Exelon Way Kennett Square, Pennsylvania 19348-2473 (610) 765-5959		23-3064219

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Section 7 – Regulation FD

Item 7.01. Regulation FD Disclosure.

Exelon Corporation (Exelon) and Exelon Generation Company, LLC (Exelon Generation) are revising the non-GAAP presentation definitions previously used in earnings release and investor conference presentations for Exelon Generation Gross Margin, Operating and Maintenance (O&M) and Depreciation & Amortization (D&A). Direct costs incurred to generate revenues (Cost of Sales) of certain Constellation businesses including Energy Efficiency, BGE Home and Exploration and Production were previously included in O&M or D&A. To better reflect the scale of these businesses and reduce the volatility in the Gross Margin disclosures resulting from only capturing changes in revenue, Exelon will include Cost of Sales for those businesses in Gross Margin and remove those costs from O&M or D&A. While these changes are material to the individual categories being disclosed, there is no impact to the overall results for Exelon or Exelon Generation. Attached as Exhibit 99.1 to this Current Report on Form 8-K are the presentation slides for the disclosure format change including the amounts being adjusted and a comparison of presentation methodologies for the September 30, 2013 amounts.

Section 9 – Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.		Description
99.1		Presentation supporting disclosure changes

* * * * *

This combined Form 8-K is being furnished separately by Exelon Corporation and Exelon Generation Company, LLC (the “Registrants”). Information contained herein relating to any individual Registrant has been furnished by such Registrant on its own behalf. No Registrant makes any representation as to information relating to any other Registrant.

This Current Report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act 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) Registrants’ 2012 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements and Supplementary Data: Note 19; (2) Registrants’ Third Quarter 2013 Quarterly Report on Form 10-Q in (a) Part II, Other Information, ITEM 1A. Risk Factors; (b) Part 1, Financial Information, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements: Note 18; and (3) other factors discussed in filings with the Securities and Exchange Commission by the Registrants. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Current Report. None of the Registrants undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this Current Report.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

December 9, 2013

 

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EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Presentation supporting disclosure changes

 

4

Exhibit 99.1

 

Change to Format of Exelon Generation Disclosures

All numbers as of September 30, 2013

Exelon®

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Change to Format of Exelon Generation Disclosures – Gross Margin, O&M and Depreciation & Amortization Definitions

Direct costs incurred to generate revenues (“Cost of Sales”) for certain Constellation businesses (Energy Efficiency, BGE Home and Upstream) have been included in O&M or Depreciation & Amortization (“D&A”) in previous Exelon Generation disclosures

Cost of Sales previously included in O&M and D&A is approximately $250M -$300M/year

Including the Cost of Sales in Gross Margin better reflects the scale of these Constellation businesses while reducing volatility in disclosures resulting from only capturing changes in revenue

Beginning with Q4 2013 Exelon Generation disclosure, Exelon is revising Gross Margin to include “Cost of Sales” for certain Constellation businesses; while simultaneously reducing O&M and D&A by an equal amount

Effect of revised format:

Gross Margin lowered by $250M—$300M

O&M/D&A lowered by $250M—$300M

Net Change to EBIT $0

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Impacted Components of Gross Margin Categories

Gross margin linked to power production and sales

Open Gross Margin

Generation Gross Margin at current market prices, including capacity and ancillary revenues, nuclear fuel amortization and fossils fuels expense

Exploration and Production(4)

Power Purchase Agreement (PPA) Costs and Revenues

Provided at a consolidated level for all regions (includes hedged gross margin for South, West and Canada(1)) MtM of Hedges(2)

Mark to Market (MtM) of power, capacity and ancillary hedges, including cross commodity, retail and wholesale load transactions

Provided directly at a consolidated level for five major regions. Provided indirectly for each of the five major regions via Effective Realized Energy Price (EREP), reference price, hedge %, expected generation

“Power” New Business

Retail, Wholesale planned electric sales

Portfolio Management new business

Mid marketing new business

Gross margin from other business activities

“Non Power” Executed

Retail, Wholesale executed gas sales

Load Response

Energy Efficiency(4) BGE Home(4)

Distributed Solar

“Non Power” New Business

Retail, Wholesale planned gas sales

Load Response

Energy Efficiency(4)

BGE Home(4)

Distributed Solar

Portfolio Management / origination fuels new business

Proprietary trading(3)

These sections going forward will be inclusive of Cost of Sales; see additional Footnote (4)

Margins move from new business to MtM of hedges over the course of the year as sales are executed

Margins move from “Non power new business” to “Non power executed” over the course of the year

(1) Hedged gross margins for South, West and Canada region will be included with Open Gross Margin, and no expected generation, hedge %, EREP or reference prices provided for this region. (2) MtM of hedges provided directly for the five larger regions. MtM of hedges is not provided directly at the regional level but can be easily estimated using EREP, reference price and hedged MWh. (3) Proprietary trading gross margins will remain within “Non Power” New Business category and not move to “Non Power” Executed category.

(4) Gross margin for these businesses are net of direct “Cost of Sales”.

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ExGen Disclosures – Previous and Revised Presentations

Gross Margin Category ($M) (1,2) 2013 2014 2015 2016

(as presented in EEI presentation slide 37)

Open Gross Margin (including South, West & Canada hedged GM) (3) $5,600 $5,650 $5,800 $5,800

Mark to Market of Hedges (3,4) $1,700 $900 $450 $250

Power New Business / To Go $50 $500 $750 $750

Non-Power Margins Executed(5) $400 $200 $100 $100

Non-Power New Business / To Go(5) $200 $400 $500 $500

Total Gross Margin $7,950 $7,650 $7,600 $7,400

Sept 30, 2013 – Revised

presentation

Gross Margin Category ($M) 2013 2014 2015 2016

Open Gross Margin

(including South, West, Canada hedged gross $5,550 $5,600 $5,750 $5,700

margin)

Mark-to-Market of Hedges $1,700 $900 $450 $250

Power New Business / To Go $50 $500 $750 $750

Non-Power Margins Executed $300 $100 $50 $50

Non-Power New Business / To Go $100 $300 $350 $350

Total Gross Margin $7,700 $7,400 $7,350 $7,100

Change from previous

presentation

2013 2014 2015 2016

($50) ($50) ($50) ($100)

0 0 0 0

0 0 0 0

($100) ($100) ($50) ($50)

($100) ($100) ($150) ($150)

($250) ($250) ($250) ($300)

(1) Gross margin (net of direct “cost of sales”) rounded to nearest $50M.

(2) Gross margin does not include revenue related to decommissioning, gross receipts tax, Exelon Nuclear Partners and entities consolidated solely as a result of the application of FIN 46R.

(3) Includes CENG Joint

(4) Mark to Market of Hedges assumes mid-point of hedge percentages.

(5) Any changes to new business estimates for our non-power business are presented as revenue less costs of sales.

(6) Based on September 30, 2013 market conditions.

These reductions shown in gross margin, are offset by commensurate reductions in O&M and D&A; There is no impact on net income

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Additional 2013 ExGen and CENG Modeling – Previous and Revised Presentations

P&L Item 2013 Estimate

ExGen Model Inputs(1) EEI Slide 13 presentation Revised presentation

O&M(2) $4,275M $4,075M

Taxes Other Than Income (TOTI)(3) $300M No change

Depreciation & Amortization(4) $825M $775M

Interest Expense $350M No change

CENG Model Inputs (at ownership) (5)

Gross Margin in ExGen Disclosures No change

O&M/TOTI 400M—$450M No change

Depreciation & A

Asset Retirement 100M—$150M No change

Capital Expenditures $75M—$125M No change

Nuclear Fuel Capital Expenditure $100M—$150M No change

Reduced O&M ~$200M and

D&A ~$50M. Footnotes (2)

and (4) have been updated to

reflect new definition

(1) ExGen amounts for O&M, TOTI and Depreciation & Amortization exclude the impacts of CENG. CENG impact is reflected in “Equity earnings of unconsolidated affiliates” in the Income Statement.

(2) ExGen O&M excludes costs of sales for certain Constellation businesses, P&L neutral decommissioning costs and the impact from O&M related to entities consolidated solely as a result of the application of FIN 46R.

(3) TOTI excludes gross receipts tax for retail.

(4) ExGen Depreciation & Amortization excludes costs of sales for certain Constellation businesses and the impact of P&L neutral decommissioning. (5) The CENG model inputs are intended to support Exelon’s guidance range and do not represent CENG’s final estimates.

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