Exelon Announces Strong Operating Results; Records $1.2 Billion Charge against Goodwill; Illinois Commerce Commission Approves Electricity Procurement Plan

Business Wire, Jan 25, 2006

CHICAGO -- Exelon Corporation's (Exelon)(NYSE:EXC) fourth quarter 2005 consolidated loss prepared in accordance with GAAP was $844 million, or $1.26 per share, compared with earnings of $363 million, or $0.54 per diluted share, in the fourth quarter of 2004. Full year 2005 consolidated earnings prepared in accordance with GAAP were $916 million, or $1.35 per diluted share, compared with $1,864 million, or $2.78 per diluted share in 2004.

The fourth quarter loss in reported earnings was driven by an impairment of the goodwill at Commonwealth Edison Company (ComEd), resulting in a non-cash charge of $1,207 million, or $1.81 per share. The current fair value of ComEd does not support the carrying value of its goodwill, in part, driven by the impending termination of a nine-year transition period to competition in Illinois and associated transition revenues at ComEd. This fourth quarter charge was greater than ComEd's net income for 2004 and 2005 combined, exclusive of the goodwill impairment. For full year 2005, ComEd reported a net loss of $685 million, compared with net income of $676 million in 2004, primarily reflecting the impairment charge.

Full Year Operating Results

Full year 2005 adjusted (non-GAAP) operating earnings were $3.09 per diluted share, up 11 percent over 2004 adjusted (non-GAAP) operating earnings of $2.78 per diluted share. The full year adjusted (non-GAAP) operating earnings improvement was due to higher margins at Exelon Generation Company, LLC (Generation) and increased retail kWh deliveries at ComEd and PECO Energy Company (PECO), mostly attributable to favorable weather conditions that accounted for an estimated positive $0.12 per share.

"Our strong operating results in 2005 reflect the ongoing benefits of owning a large fleet of well-run, low-cost, low-emissions nuclear plants in today's market environment," said John W. Rowe, Exelon's chairman, president and CEO. "With $3.09 of operating earnings per share in 2005, Exelon has achieved nearly 10 percent average annual operating EPS growth since its formation in late 2000. Improving power market fundamentals, along with stable growth in our delivery businesses, will further drive earnings growth in 2006 and beyond."

Fourth Quarter Operating Results

Exelon's adjusted (non-GAAP) operating earnings for the fourth quarter of 2005 were $488 million, or $0.72 per diluted share, compared with $416 million, or $0.62 per diluted share, for the same period in 2004. The 16 percent year-over-year increase in adjusted (non-GAAP) operating earnings per share was the result of higher margins on wholesale market sales at Generation and increased retail deliveries at ComEd and PECO.

A non-GAAP financial measure, adjusted (non-GAAP) operating earnings for the fourth quarter of 2005 do not include the following items that are included in reported GAAP earnings (all after tax):

--  Charge of $1,207 million, or $1.81 per share, related to the
    impairment of ComEd's goodwill.

--  Unrealized mark-to-market losses of $88 million, or $0.13 per
    diluted share, from non-trading activities at Exelon (primarily
    Generation).

--  Losses of $42 million, or $0.06 per diluted share, for the
    cumulative effect of adopting FIN No. 47, "Accounting for
    Conditional Asset Retirement Obligations" (FIN 47).

--  Earnings of $10 million, or $0.02 per diluted share, resulting
    from investments in synthetic fuel-producing facilities.

--  Costs of $8 million, or $0.01 per diluted share, related to
    certain integration costs associated with the proposed merger with
    Public Service Enterprise Group Incorporated (PSEG).

Adjusted (non-GAAP) operating earnings for the fourth quarter of 2004 did not include the following items that were included in reported GAAP earnings (all after tax):

--  Unrealized mark-to-market losses of $25 million, or $0.04 per
    diluted share, from non-trading activities at Generation.

--  Earnings of $23 million, or $0.04 per diluted share, resulting
    from investments in synthetic fuel-producing facilities.

--  Severance and severance-related costs of $19 million, or $0.03 per
    diluted share.

--  Charges totaling $14 million, or $0.02 per diluted share, for
    premiums paid on and other costs associated with ComEd debt
    repurchases.

--  Charges of $11 million, or $0.02 per diluted share, associated
    with Generation's investment in Sithe Energies, Inc. (Sithe).

--  Costs of $4 million, or $0.01 per diluted share, related to
    certain integration costs associated with the proposed merger with
    PSEG.

Illinois Commerce Commission (ICC) Approves Electricity Procurement Plan

The ICC yesterday approved ComEd's procurement case, authorizing ComEd to procure power after 2006 through a "reverse-auction" competitive bidding process and to recover the costs from retail customers with no markup. The auction will be administered by an independent auction manager, with oversight by the ICC staff. The first auction is scheduled to take place during the fall, at which time ComEd's entire load will be up for bid. To mitigate the effects of changes in future prices, the load will be staggered in three-year contracts. To further mitigate the impact on its residential customers of transitioning to this process, ComEd has pledged to develop a "cap and deferral" proposal to keep residential rates at or below 1995 levels through the end of 2009. The company plans to work with interested stakeholders to ease the transition from frozen rates.