News Column

Pepco Holdings Reports Fourth Quarter 2013 Financial Results; Announces 2014 Earnings Guidance Range

February 28, 2014

WASHINGTON--(BUSINESS WIRE)-- Pepco Holdings, Inc. (NYSE: POM) today reported fourth quarter and full year 2013 earnings from continuing operations as follows:

   

Three Months Ended

December 31,

Year Ended

December 31,

2013

 

2012

2013

 

2012

Net Income from Continuing Operations (GAAP)
Net Income ($ in millions) $ 58 $ 34 $ 110 $ 218
Earnings Per Share $ 0.23 $ 0.15 $ 0.45 $ 0.95
 

Adjusted Net Income from Continuing Operations (Non-GAAP)

Adjusted Net Income ($ in millions) $ 61 $ 38 $ 280 $ 225
Adjusted Earnings Per Share $ 0.24 $ 0.17 $ 1.14 $ 0.98
 


“We continue to be pleased with the progress we have made in improving reliability and customer satisfaction,” said Joseph M. Rigby, Chairman, President and Chief Executive Officer. “Over the past three years, decreases in the duration and number of power outages have been dramatic, reflecting the significant investments we have made in the electric system. The increase in adjusted earnings in 2013 reflects the impact of these investments.” Rigby added, “While we recognize there is still progress to be made in the execution of our regulatory strategy, the passage of the District of Columbia undergrounding legislation earlier this month is a major step in the right direction, representing a collaborative effort by District of Columbia government officials, the Public Service Commission, the Office of People’s Counsel, community members and Pepco.”

Rigby went on to emphasize the importance of timely cost recovery and having an opportunity to earn reasonable rates of return on Pepco Holdings’ extensive infrastructure investments. “We continue to work to identify cost recovery mechanisms that will better align the timing of when assets are placed in service with when customers begin to pay for using the assets. We will also continue to seek approaches that will mitigate the need to file frequent rate cases.”

In 2013, Pepco Holdings GAAP earnings were $110 million, or 45 cents per share, compared to $218 million, or 95 cents per share, in the prior year. Excluding items that we believe are not representative of ongoing business operations, 2013 adjusted earnings would have been $280 million or $1.14 per share in comparison to $225 million, or 98 cents per share in the prior year.

The increase in adjusted net income from continuing operations (Non-GAAP) for the full year 2013, as compared to 2012, was driven by higher electric distribution revenue (primarily due to higher rates driven by increased infrastructure investment) and lower operation and maintenance expense. Partially offsetting these positive factors were higher depreciation and interest expense, and lower default electricity supply margins due to a favorable adjustment in the prior year.

Pepco Holdings GAAP earnings for the three months ended December 31, 2013 were $58 million or 23 cents per share, as compared to $34 million or 15 cents per share for the same period in 2012. Excluding items that we believe are not representative of ongoing business operations, adjusted earnings for the fourth quarter of 2013 would have been $61 million or 24 cents per share compared to $38 million or 17 cents per share for the 2012 period.

The primary drivers of the increase in adjusted net income from continuing operations (Non-GAAP) for the fourth quarter 2013, as compared to the 2012 period, were higher electric distribution revenue (primarily due to higher rates driven by increased infrastructure investment) and lower operation and maintenance expense. Higher depreciation expense partially offset the net income increase for the three months ended December 31, 2013.

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

 

Net Income from Continuing Operations – Millions of dollars

 

Three Months

Ended

December 31,

 

Year

Ended

December 31,

2013   2012 2013   2012
Reported (GAAP) Net Income from Continuing Operations $ 58   $ 34 $ 110   $ 218
Adjustments (after-tax):

-- Interest associated with change in assessment of corporate tax benefits related to the cross-border energy lease investments

66

-- Potomac Capital Investment Corporation (PCI) valuation allowances related to certain deferred tax assets

101

-- Impairment charges related to Pepco Energy Services long-lived assets

  3     4   3     7
Adjusted Net Income from Continuing Operations (Non-GAAP) $ 61   $ 38 $ 280   $ 225
 
   

Earnings per Share from Continuing Operations

Three Months

Ended

December 31,
Year

Ended

December 31,
2013   2012 2013   2012
Reported (GAAP) Earnings per Share from Continuing Operations $ 0.23   $ 0.15 $ 0.45   $ 0.95
Adjustments (after-tax):

-- Interest associated with change in assessment of corporate tax benefits related to the cross-border energy lease investments



0.27

-- PCI valuation allowances related to certain deferred tax assets

0.41

-- Impairment charges related to Pepco Energy Services long-lived assets

  0.01     0.02   0.01     0.03
Adjusted Earnings per Share from Continuing Operations (Non-GAAP) $ 0.24   $ 0.17 $ 1.14   $ 0.98
 


The income tax effects with respect to the foregoing adjustments, where applicable, were calculated using a composite income tax rate of 35 percent.

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 year ended December 31, 2013, the net loss from discontinued operations was $1.31 per share, compared to net income of $0.30 per share ($0.29 per share on a diluted basis), for the prior year.

Earnings Guidance

Pepco Holdings today announced 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, and
  • the impairment of assets.

    Recent Events

    Operations

  • Power Delivery electric sales were 47,497 gigawatt hours (GWh) for the full year 2013 compared to 48,142 GWh for the full year 2012. In the electric service territories, heating degree days increased by 22 percent and cooling degree days decreased by 12 percent in 2013 compared to 2012. Weather-adjusted electric sales were 47,477 GWh for the full year 2013 compared to 48,182 GWh for the full year 2012.
  • Power Delivery electric sales were 11,085 GWh in the fourth quarter of 2013, compared to 10,992 GWh for the same period in 2012. In the electric service territories, heating degree days increased by 6 percent for the fourth quarter 2013, compared to the same period in 2012. Weather-adjusted electric sales were 11,013 GWh in the fourth quarter of 2013, compared to 11,095 GWh for the fourth quarter of 2012.
  • As of December 31, 2013, Delmarva Power’s installation and activation of electric smart meters is underway in its Maryland service territory, and is complete in its Delaware service territory. Pepco’s installation and activation of electric smart meters is complete in both its District of Columbia and Maryland service territories. Currently, 70 percent of Delmarva Power Delaware’s costs related to smart meters are included in electric distribution base rates, with the remainder expected to be reflected in base rates by June 2014. Regulatory assets associated with smart meter installation and activation in the District of Columbia and Maryland have been created.
  • During 2013, PES signed $66 million in energy efficiency contracts as compared to $9 million for the same period in 2012. W.A. Chester signed $111 million in underground transmission construction contracts in 2013 as compared to $47 million in 2012.

    Regulatory Matters

  • On February 4, 2014, the Council of the District of Columbia approved the $1 billion undergrounding legislation initially recommended by the District of Columbia’s Power Line Undergrounding Task Force. The legislation is expected to become law early in the second quarter of 2014 following a 30-day Congressional review period. The program will underground up to 60 high voltage distribution feeder lines over a seven to ten year period in areas most impacted by storms and overhead related outages. Funding for the undergrounding program will be divided evenly between Pepco and the District of Columbia. Pepco’s cost recovery will be through a customer surcharge. District of Columbia Public Service Commission approval of the financing and surcharge applications associated with the legislation is expected in the fourth quarter of 2014.
  • On December 18, 2013, a settlement agreement was filed with the Federal Energy Regulatory Commission (FERC) regarding the recovery of Mid-Atlantic Power Pathway (MAPP) abandoned costs. The settlement provides for recovery of $80.5 million of costs over a three-year period and allows Delmarva Power and Pepco to retain title to all real property acquired for the MAPP project.
  • On December 4, 2013, Pepco filed an electric distribution base rate case in Maryland. The filing seeks approval of an annual rate increase of $43 million, based on a requested return on equity of 10.25 percent. A decision is expected in the case in early July 2014.

    Further details regarding changes in consolidated earnings between 2013 and 2012 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-K for the year ended December 31, 2013, 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.

    Conference Call for Investors

    Pepco Holdings, Inc. will host a conference call to discuss fourth quarter results on Friday, February 28 at 10 a.m. E.T. Investors, members of the media and other interested persons may access the conference call on the Internet at http://www.pepcoholdings.com/investors or by calling 1.877.474.9502 before 9:55 a.m. The pass code for the call is 76221242. International callers may access the call by dialing 1.857.244.7555, using the same pass code, 76221242. An on-demand replay will be available for seven days following the call. To hear the replay, dial 1.888.286.8010 and enter pass code 59090463. International callers may access the replay by dialing 1.617.801.6888 and entering the same pass code 59090463. An audio archive will be available at PHI's website, http://www.pepcoholdings.com/investors.

    Note: If any non-GAAP financial information (as defined by the Securities and Exchange Commission in Regulation G) is used during the quarterly earnings conference call, a presentation of the most directly comparable GAAP measure and a reconciliation of the differences will be available at http://www.pepcoholdings.com/investors promptly after the conclusion of the conference call.

    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. PHI also provides energy efficiency and renewable energy services through Pepco Energy Services.

    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 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.

     

    Pepco Holdings, Inc.

    Earnings Per Share Variance
    2013 / 2012
             
    Year Ended December 31,
     

    Pepco

    Power

    Energy

    Corporate   Total
    Delivery   Services   and Other   PHI
    2012 Earnings (loss) per share from Continuing Operations (GAAP) (1)$1.02$(0.03)$(0.04)$0.95
     

    2012 Adjustment (2)



    -- Pepco Energy Services impairment charges

    -     0.03     -     0.03  
     
    2012 Adjusted earnings (loss) per share from Continuing Operations (Non-GAAP) 1.02 - (0.04 ) 0.98
     

    Change from 2012 Adjusted earnings (loss) per share from Continuing Operations

    Regulated Operations
    -- Distribution Revenue
    -Weather (estimate) (3) 0.02 - - 0.02
    -Rate Increases 0.28 - - 0.28
    -Other Distribution Revenue 0.01 - - 0.01
    -- Transmission Revenue 0.02 - - 0.02
    -- Standard Offer Service Margin (0.03 ) - - (0.03 )
    -- Operation & Maintenance 0.07 - - 0.07
    -- Depreciation & Amortization (0.05 ) - - (0.05 )
    -- Other, net (0.03 ) - - (0.03 )
    Pepco Energy Services - 0.02 - 0.02
    Corporate and Other - - (0.01 ) (0.01 )
    Net Interest Expense (0.03 ) - (0.02 ) (0.05 )
    Income Tax Adjustments (0.02 ) - 0.01 (0.01 )
    Dilution (0.08 )   -     -     (0.08 )
     
    2013 Adjusted earnings (loss) per share from Continuing Operations (Non-GAAP) 1.18 0.02 (0.06 ) 1.14
     

    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 - - (0.41 ) (0.41 )
    -- Pepco Energy Services impairment charges -     (0.01 )   -     (0.01 )
     
    2013 Earnings (loss) per share from Continuing Operations (GAAP) (4)$1.18     $0.01     $(0.74)   $0.45  
     
     
    (1) The 2012 weighted average number of diluted shares outstanding was 230 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 had no impact on earnings.
     
    (4) The 2013 weighted average number of diluted shares outstanding was 246 million.
     
     

    Pepco Holdings, Inc.

    Earnings Per Share Variance
    2013 / 2012
     
      Three Months Ended December 31,
     
     

    Pepco

       
    Power

    Energy

    CorporateTotal
    Delivery   Services   and Other   PHI
    2012 Earnings (loss) per share from Continuing Operations (GAAP) (1)$0.18$(0.02)$(0.01)$0.15
     

    2012 Adjustment (2)



    -- Pepco Energy Services impairment charges

      -       0.02       -       0.02  
     
    2012 Adjusted earnings (loss) per share from Continuing Operations (Non-GAAP) 0.18 - (0.01 ) 0.17
     

    Change from 2012 Adjusted earnings (loss) per share from Continuing Operations

    Regulated Operations
    -- Distribution Revenue
    -Weather (estimate) (3) 0.01 - - 0.01
    -Rate Increases 0.06 - - 0.06
    -Other Distribution Revenue 0.02 - - 0.02
    -- Transmission Revenue 0.02 - - 0.02
    -- Operation & Maintenance 0.04 - - 0.04
    -- Depreciation & Amortization (0.03 ) - - (0.03 )
    -- Other, net (0.01 ) - - (0.01 )
    Pepco Energy Services - 0.01 - 0.01
    Corporate and Other - - (0.01 ) (0.01 )
    Income Tax Adjustments (0.02 ) - - (0.02 )
    Dilution (0.02 )   -     -     (0.02 )
     
    2013 Adjusted earnings (loss) per share from Continuing Operations (Non-GAAP) 0.25 0.01 (0.02 ) 0.24
     

    2013 Adjustment (2)

    -- Pepco Energy Services impairment charges -     (0.01 )   -     (0.01 )
     
    2013 Earnings (loss) per share from Continuing Operations (GAAP) (4)$0.25     $-     $(0.02)   $0.23  
     
     
    (1) The 2012 weighted average number of diluted shares outstanding was 232 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 had no impact on earnings.
     
    (4) The 2013 weighted average number of diluted shares outstanding was 250 million.
     
     

    SEGMENT INFORMATION

     
    Year Ended December 31, 2013
    (millions of dollars)
    Power

    Delivery
      Pepco

    Energy

    Services
      Corporate

    and

    Other (a)

      PHI

    Consolidated
    Operating Revenue $ 4,472 $ 203 $ (9 ) $ 4,666
    Operating Expenses (b) 3,828

    201

    (e)

    (31 ) 3,998
    Operating Income 644 2 22 668
    Interest Expense 228 1 44 273
    Other Income 28 3 3 34
    Income Tax Expense (c) 155 1

    163

    (d)

    319
    Net Income (Loss) from Continuing Operations 289 3 (182 ) 110
    Total Assets (excluding Assets Held for Disposition) 13,027 335 1,485 14,847
    Construction Expenditures $ 1,194 $ 4 $ 112 $ 1,310
     
     
    (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 $(10) million for Operating Revenue, $(9) million for Operating Expenses and $(5) million for Interest Expense.
     
    (b) Includes depreciation and amortization expense of $473 million, consisting of $439 million for Power Delivery, $6 million for Pepco Energy Services and $28 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.
     
    (e) Includes pre-tax impairment losses of $4 million ($3 million after-tax) at Pepco Energy Services associated with a landfill gas-fired electric generation facility.
     
     

    Year Ended December 31, 2012

    (millions of dollars)

    Power

    Delivery
      Pepco

    Energy

    Services
      Corporate

    and

    Other (a)

      PHI

    Consolidated
    Operating Revenue $ 4,378 $

    256

    (b)

    $ (9 ) $ 4,625
    Operating Expenses (c) 3,847

    271

    (b)(d)

    (34 ) 4,084
    Operating Income (Loss) 531 (15 ) 25 541
    Interest Income 1 1 (1 ) 1
    Interest Expense 219 2 35 256

    Impairment Losses

    -

    -

    (1 ) (1 )
    Other Income 32 1 3 36
    Income Tax Expense (Benefit) 110 (7 ) - 103
    Net Income (Loss) from Continuing Operations 235 (8 ) (9 ) 218
    Total Assets (excluding Assets Held for Disposition) 12,149 342 2,028 14,519
    Construction Expenditures $ 1,168 $ 11 $ 37 $ 1,216
     
     
    (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 $(11) million for Operating Revenue, $(10) million for Operating Expenses, $(21) million for Interest Income and $(18) million for Interest Expense.
     
    (b) Includes $9 million of intra-company revenue (and associated costs) previously eliminated in consolidation which will continue to be recognized from third parties subsequent to the completion of the wind-down of the Pepco Energy Services’ retail electric and natural gas supply businesses.
     
    (c) Includes depreciation and amortization expense of $454 million, consisting of $416 million for Power Delivery, $14 million for Pepco Energy Services and $24 million for Corporate and Other.
     
    (d) Includes impairment losses of $12 million pre-tax ($7 million after-tax) at Pepco Energy Services associated primarily with investments in landfill gas-fired electric generation facilities and the combustion turbines at Buzzard Point.
     
       

    PEPCO HOLDINGS, INC. AND SUBSIDIARIES

    CONSOLIDATED STATEMENTS OF INCOME (LOSS)  

               
     

     

    Three Months Ended

    December 31,

     

    Year Ended

    December 31,
    2013   20122013   2012
    UNAUDITED
    (millions of dollars, except per share data)
    Operating Revenue $ 1,091 $ 1,056 $ 4,666 $ 4,625
     
    Operating Expenses
    Fuel and purchased energy 483 465 2,070 2,123
    Other services cost of sales 34 38 146 170
    Other operation and maintenance 204 230 851 898
    Depreciation and amortization 121 111 473 454
    Other taxes 103 102

     

    428 432
    Deferred electric service costs (13) 1 26 (5)
    Impairment losses 4 7 4 12
     
    Total Operating Expenses 936 954 3,998 4,084
     
    Operating Income 155 102 668 541
     
    Other Income (Expenses)
    Interest and dividend income 1 1
    Interest expense (68) (66) (273) (256)
    Gain from equity investments 2 1
    Impairment losses (1) (1)
    Other income 10 9 32 35
     
    Total Other Expenses (58) (57) (239) (220)
     
    Income from Continuing Operations Before Income Tax Expense 97 45 429 321
     
    Income Tax Expense Related to Continuing Operations 39 11 319 103
     
    Net Income from Continuing Operations 58 34 110 218
     
    Income (Loss) from Discontinued Operations, Net of Income Taxes 9 (322) 67
     
    Net Income (Loss) $ 58 $ 43 $ (212) $ 285
     
    Basic Share Information
    Weighted average shares outstanding – Basic (millions) 250     229     246     229
    Earnings per share of common stock from Continuing Operations – Basic $ 0.23 $ 0.15 $ 0.45 $ 0.95
    Earnings (loss) per share of common stock from Discontinued Operations – Basic     0.03     (1.31)     0.30
    Earnings (loss) per share – Basic $ 0.23   $ 0.18   $ (0.86)   $ 1.25
     
    Diluted Share Information
    Weighted average shares outstanding – Diluted (millions) 250     232     246     230
    Earnings per share of common stock from Continuing Operations – Diluted $ 0.23 $ 0.15 $ 0.45 $ 0.95
    Earnings (loss) per share of common stock from Discontinued Operations – Diluted     0.03     (1.31)     0.29
    Earnings (loss) per share – Diluted $ 0.23   $ 0.18   $ (0.86)   $ 1.24
     
       

    PEPCO HOLDINGS, INC. AND SUBSIDIARIES

    CONSOLIDATED BALANCE SHEETS

           
     

    December 31,

    2013

    December 31,

    2012
    (millions of dollars)
    ASSETS
     
    CURRENT ASSETS
    Cash and cash equivalents $ 23 $ 25
    Restricted cash equivalents 13 10
    Accounts receivable, less allowance for uncollectible accounts of $38 million and $34 million, respectively 835 804
    Inventories 148 153
    Prepayments of income taxes 40 59
    Deferred income tax assets, net 51 28
    Income taxes receivable 234 69
    Prepaid expenses and other 53 81
    Assets held for disposition   1     38  
     
    Total Current Assets   1,398     1,267  
     
     
    OTHER ASSETS
    Goodwill 1,407 1,407
    Regulatory assets 2,087 2,614
    Income taxes receivable 67 217
    Restricted cash equivalents 14 17
    Assets and accrued interest related to uncertain tax positions 8 18
    Derivative assets 8
    Other 163 163
    Assets held for disposition       1,237  
     
    Total Other Assets   3,746     5,681  
     
     
    PROPERTY, PLANT AND EQUIPMENT
    Property, plant and equipment 14,567 13,625
    Accumulated depreciation   (4,863 )   (4,779 )
     
    Net Property, Plant and Equipment   9,704     8,846  
     
     
    TOTAL ASSETS $ 14,848   $ 15,794  
     
       

    PEPCO HOLDINGS, INC. AND SUBSIDIARIES

    CONSOLIDATED BALANCE SHEETS

           
     

    December 31,

    2013

    December 31,

    2012

    (millions of dollars, except shares)
    LIABILITIES AND EQUITY
     
    CURRENT LIABILITIES
    Short-term debt $ 565 $ 965
    Current portion of long-term debt and project funding 446 569
    Accounts payable 215 196
    Accrued liabilities 301 357
    Capital lease obligations due within one year 9 8
    Taxes accrued 56 75
    Interest accrued 47 47
    Liabilities and accrued interest related to uncertain tax positions 397 9
    Derivative liabilities 4
    Other 276 272
    Liabilities associated with assets held for disposition   1     41  
     
    Total Current Liabilities   2,313     2,543  
     
    DEFERRED CREDITS
    Regulatory liabilities 399 501
    Deferred income tax liabilities, net 2,928 3,208
    Investment tax credits 17 20
    Pension benefit obligation 116 449
    Other postretirement benefit obligations 206 454
    Liabilities and accrued interest related to uncertain tax positions 28 15
    Derivative liabilities 11
    Other 189 191
    Liabilities associated with assets held for disposition       2  
     
    Total Deferred Credits   3,883     4,851  
     
    OTHER LONG-TERM LIABILITIES
    Long-term debt 4,053 3,648
    Transition bonds issued by ACE Funding 214 256
    Long-term project funding 10 12
    Capital lease obligations   60     70  
     
    Total Other Long-Term Liabilities   4,337     3,986  
     
    COMMITMENTS AND CONTINGENCIES
     
    EQUITY
    Common stock, $.01 par value, 400,000,000 shares authorized, 250,324,898 and 230,015,427 shares outstanding, respectively 3 2
    Premium on stock and other capital contributions 3,751 3,383
    Accumulated other comprehensive loss (34 ) (48 )
    Retained earnings   595     1,077  
     
    Total Equity   4,315     4,414  
     
    TOTAL LIABILITIES AND EQUITY $ 14,848   $ 15,794  
     
     

    POWER DELIVERY SALES AND REVENUE

       
        Three Months Ended

    December 31,
      Year Ended

    December 31,
    Power Delivery Sales (Gigawatt Hours)2013     2012   2013     2012
    Regulated T&D Electric Sales    
    Residential 3,826 3,676 17,168 17,150
    Commercial and industrial 7,183 7,241 30,070 30,734
    Transmission and other 76 75 259 258
    Total Regulated T&D Electric Sales 11,085 10,992 47,497 48,142
     
    Default Electricity Supply Sales
    Residential 3,047 2,989 13,743 14,245
    Commercial and industrial 1,170 1,166 5,079 5,508
    Other 13 14 55 55
    Total Default Electricity Supply Sales 4,230 4,169 18,877 19,808
     
     
     
    Power Delivery Electric Revenue (Millions of dollars)
    Regulated T&D Electric Revenue
    Residential $ 180 $ 167 $ 781 $ 722
    Commercial and industrial 237 224 970 923
    Transmission and other 104 92 395 361
    Total Regulated T&D Electric Revenue $ 521 $ 483 $ 2,146 $ 2,006
     
    Default Electricity Supply Revenue
    Residential $ 289 $ 296 $ 1,376 $ 1,467
    Commercial and industrial 124 117 542 542
    Other 42 30 157 115
    Total Default Electricity Supply Revenue $ 455 $ 443 $ 2,075 $ 2,124
     
    Other Electric Revenue $ 14 $ 19 $ 60 $ 65
     
    Total Electric Operating Revenue $ 990 $ 945 $ 4,281 $ 4,195
     
     
     

    Power Delivery Gas Sales and Revenue

    Regulated Gas Sales (Mcf)

    Residential

    2,496

    2,376

    7,861

    6,428

    Commercial and industrial

    1,713

    1,326

    4,945

    3,636

    Transportation and other

    1,849

    1,874

    6,990

    6,751

    Total Regulated Gas Sales

    6,058

    5,576

    19,796

    16,815

     

    Regulated Gas Revenue (Millions of dollars)

    Residential

    $

    32

    $

    31

    $

    103

    $

    94

    Commercial and industrial

    17

    15

    52

    47

    Transportation and other

    2

    3

    10

    10

    Total Regulated Gas Revenue

    $

    51

    $

    49

    $

    165

    $

    151

     

    Other Gas Revenue

    $

    3

    $

    10

    $

    26

    $

    32

     

    Total Gas Operating Revenue

    $

    54

    $

    59

    $

    191

    $

    183

     

    Total Power Delivery Operating Revenue

    $

    1,044

    $

    1,004

    $

    4,472

    $

    4,378

     

       
    POWER DELIVERY – CUSTOMERS

    December 31,

    2013

       

    December 31,

    2012

     
    Regulated T&D Electric Customers (in thousands)
    Residential 1,650 1,641
    Commercial and industrial 200 198
    Transmission and other 2 2
    Total Regulated T&D Electric Customers 1,852 1,841
     
     
    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

    December 31,

          Year Ended

    December 31,
    2013   2012       2013   2012
             
    Heating Degree Days 1,511 1,429 4,281 3,523
    20 Year Average 1,526 1,533 4,276 4,327
    Percentage Difference from Average (1%) (7%) (19%)
    Percentage Difference from Prior Year 6% 22%
     
    Cooling Degree Days 67 39 1,453 1,649
    20 Year Average 29 28 1,393 1,365
    Percentage Difference from Average 131% 39% 4% 21%
    Percentage Difference from Prior Year 72% (12%)
     
       

    PEPCO ENERGY SERVICES

    Net Income (Loss) - Continuing Operations

     
    (Millions of Dollars)

    Three Months Ended

    December 31,

    Year Ended

    December 31,

    2013   20122013   2012
     
    Operating Revenues $ 49 $ 51 $ 203 $ 256
    Cost of Goods Sold   34     39     148     186  
    Gross Margin 15 12 55 70
    Other Operation and Maintenance Expenses 10 14 43 59
    Depreciation and Amortization 2 2 6 14
    Impairment Losses   4     7     4     12  
    Operating (Loss) Income (1 ) (11 ) 2 (15 )
    Other Income   1     -     2     -  
    (Loss) Income Before Income Taxes - (11 ) 4 (15 )
    Income Tax (Benefit) Expense   -     (5 )   1     (7 )
    Net (Loss) Income from Continuing Operations (GAAP) - (6 ) 3 (8 )
     
    Adjustments:
    Impairment Losses Related to Long-Lived Assets 4 7 4 12
    Income Tax Benefits   (1 )   (3 )   (1 )   (5 )
    Impairment Losses Related to Long-Lived Assets (after-tax)   3     4     3     7  
     
    Adjusted Net Income (Loss) from Continuing Operations (Non-GAAP)$3   $(2)$6   $(1)
     


    Non-GAAP Financial Information

    Management believes the adjusted financial information above is representative of Pepco Energy Services’ ongoing business operations. Management uses this information internally to evaluate Pepco Energy Services’ period-over-period financial performance and therefore, believes that this information is useful to investors. The presentation of this adjusted financial information is intended to complement, and should not be considered as an alternative to, Pepco Energy Services’ financial information presented in accordance with GAAP.




    Pepco Holdings, Inc.

    Media Contact:

    Robert Hainey

    Office: 202-872-2680

    24/7 Media Hotline: 202-872-2680

    rshainey@pepcoholdings.com

    or

    Investor Contact:

    Donna Kinzel

    Office: 302-429-3004

    donna.kinzel@pepcoholdings.com

    Source: Pepco Holdings, Inc.


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