2017 Q3 Form 10-Q Financial Statement

#000162828017010625 Filed on November 02, 2017

View on sec.gov

Income Statement

Concept 2017 Q3 2017 Q2 2016 Q4
Revenue $8.768B $7.665B $7.875B
YoY Change -2.6% 10.93% 17.5%
Cost Of Revenue $3.256B $2.803B $3.178B
YoY Change -13.27% 14.22% 10.58%
Gross Profit $5.512B $4.862B $4.702B
YoY Change 5.03% 9.11% 22.86%
Gross Profit Margin 62.86% 63.43% 59.71%
Selling, General & Admin
YoY Change
% of Gross Profit
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $1.408B $1.317B $1.567B
YoY Change -12.71% -1.2% 235.55%
% of Gross Profit 25.54% 27.09% 33.33%
Operating Expenses $4.012B $4.563B $3.800B
YoY Change 0.75% 18.83% 21.52%
Operating Profit $1.499B $300.0M $714.0M
YoY Change 18.31% -53.63% 0.99%
Interest Expense $377.0M $426.0M -$357.0M
YoY Change -25.49% 16.39% 28.42%
% of Operating Profit 25.15% 142.0% -50.0%
Other Income/Expense, Net -$176.0M -$259.0M -$80.00M
YoY Change -55.56% 11.64% -160.15%
Pretax Income $1.323B $41.00M $376.0M
YoY Change 51.89% -90.12% -33.21%
Income Tax $451.0M -$62.00M $128.0M
% Of Pretax Income 34.09% -151.22% 34.04%
Net Earnings $865.0M $94.00M $191.0M
YoY Change 64.45% -69.28% -38.19%
Net Earnings / Revenue 9.87% 1.23% 2.43%
Basic Earnings Per Share $0.86 $0.10 $0.22
Diluted Earnings Per Share $0.85 $0.10 $0.22
COMMON SHARES
Basic Shares Outstanding 962.0M shares 934.0M shares 925.0M shares
Diluted Shares Outstanding 965.0M shares 936.0M shares 928.0M shares

Balance Sheet

Concept 2017 Q3 2017 Q2 2016 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $2.453B $1.786B $1.885B
YoY Change 29.31% 8.44% -71.01%
Cash & Equivalents $1.203B $536.0M $635.0M
Short-Term Investments $1.250B $1.250B $1.250B
Other Short-Term Assets $1.435B $1.600B $930.0M
YoY Change 34.87% 45.32% 23.67%
Inventory $1.668B $1.601B $1.638B
Prepaid Expenses
Receivables $3.854B $3.825B $4.158B
Other Receivables $950.0M $958.0M $1.201B
Total Short-Term Assets $12.72B $12.23B $12.41B
YoY Change 4.23% 6.41% -19.06%
LONG-TERM ASSETS
Property, Plant & Equipment $73.07B $72.75B $71.56B
YoY Change 2.6% 2.91% 24.58%
Goodwill $6.677B $6.677B $6.677B
YoY Change 0.07% -0.28% 149.89%
Intangibles
YoY Change
Long-Term Investments $634.0M $638.0M $629.0M
YoY Change 7.09% 27.09% -1.56%
Other Assets $1.277B $1.265B $1.472B
YoY Change -13.36% -7.39% 1.87%
Total Long-Term Assets $105.7B $104.9B $102.5B
YoY Change 3.34% 3.54% 28.03%
TOTAL ASSETS
Total Short-Term Assets $12.72B $12.23B $12.41B
Total Long-Term Assets $105.7B $104.9B $102.5B
Total Assets $118.5B $117.1B $114.9B
YoY Change 3.44% 3.84% 20.46%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $3.132B $3.134B $3.441B
YoY Change 2.89% 10.9% 19.35%
Accrued Expenses $3.080B $2.878B $3.460B
YoY Change -4.82% 4.39% 45.62%
Deferred Revenue
YoY Change
Short-Term Debt $710.0M $1.757B $1.267B
YoY Change 25.22% 84.75% 137.71%
Long-Term Debt Due $3.164B $3.619B $2.430B
YoY Change 25.96% 34.39% 62.0%
Total Short-Term Liabilities $12.40B $13.97B $13.46B
YoY Change 1.95% 17.41% 47.59%
LONG-TERM LIABILITIES
Long-Term Debt $31.70B $30.32B $31.58B
YoY Change -1.95% -3.89% 33.54%
Other Long-Term Liabilities $1.899B $1.828B $1.827B
YoY Change -1.5% -2.56% 22.54%
Total Long-Term Liabilities $33.60B $32.14B $33.40B
YoY Change -1.92% -3.81% 32.89%
TOTAL LIABILITIES
Total Short-Term Liabilities $12.40B $13.97B $13.46B
Total Long-Term Liabilities $33.60B $32.14B $33.40B
Total Liabilities $88.16B $87.81B $87.29B
YoY Change 1.27% 2.76% 28.25%
SHAREHOLDERS EQUITY
Retained Earnings $11.95B $11.44B $12.03B
YoY Change -1.41% -4.06% -0.31%
Common Stock $18.86B $18.86B $18.79B
YoY Change 0.57% 0.74% 0.63%
Preferred Stock
YoY Change
Treasury Stock (at cost) $123.0M $2.300B $2.327B
YoY Change -94.65% 15.0% 0.0%
Treasury Stock Shares 2.000M shares 2.000M shares 35.00M shares
Shareholders Equity $28.10B $27.55B $25.84B
YoY Change
Total Liabilities & Shareholders Equity $118.5B $117.1B $114.9B
YoY Change 3.44% 3.84% 20.46%

Cashflow Statement

Concept 2017 Q3 2017 Q2 2016 Q4
OPERATING ACTIVITIES
Net Income $865.0M $94.00M $191.0M
YoY Change 64.45% -69.28% -38.19%
Depreciation, Depletion And Amortization $1.408B $1.317B $1.567B
YoY Change -12.71% -1.2% 235.55%
Cash From Operating Activities $2.778B $1.821B $1.098B
YoY Change -1.14% -40.88% -43.46%
INVESTING ACTIVITIES
Capital Expenditures -$1.711B -$1.836B -$2.185B
YoY Change -8.94% -19.72% 0.18%
Acquisitions
YoY Change
Other Investing Activities -$51.00M $138.0M -$46.00M
YoY Change -88.98% -428.57% -195.83%
Cash From Investing Activities -$1.762B -$1.698B -$2.231B
YoY Change -24.77% -27.09% 4.59%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -282.0M -201.0M -60.00M
YoY Change 29.36% 214.06% -89.51%
NET CHANGE
Cash From Operating Activities 2.778B 1.821B 1.098B
Cash From Investing Activities -1.762B -1.698B -2.231B
Cash From Financing Activities -282.0M -201.0M -60.00M
Net Change In Cash 734.0M -78.00M -1.193B
YoY Change 193.6% -111.35% 56.36%
FREE CASH FLOW
Cash From Operating Activities $2.778B $1.821B $1.098B
Capital Expenditures -$1.711B -$1.836B -$2.185B
Free Cash Flow $4.489B $3.657B $3.283B
YoY Change -4.27% -31.86% -20.37%

Facts In Submission

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296000000 USD
us-gaap Increase Decrease In Receivables
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us-gaap Increase Decrease In Restricted Cash
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75000000 USD
us-gaap Increase Decrease In Restricted Cash
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us-gaap Incremental Common Shares Attributable To Share Based Payment Arrangements
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CY2017Q3 us-gaap Incremental Common Shares Attributable To Share Based Payment Arrangements
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us-gaap Incremental Common Shares Attributable To Share Based Payment Arrangements
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us-gaap Interest Expense
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377000000 USD
us-gaap Interest Expense
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us-gaap Interest Expense Related Party
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CY2017Q3 us-gaap Interest Expense Related Party
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us-gaap Interest Expense Related Party
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CY2016Q4 us-gaap Inventory Raw Materials And Supplies
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CY2017Q3 us-gaap Inventory Raw Materials And Supplies
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1281000000 USD
us-gaap Inventory Write Down
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74000000 USD
us-gaap Inventory Write Down
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52000000 USD
CY2016Q3 us-gaap Investment Income Interest
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2000000 USD
us-gaap Investment Income Interest
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14000000 USD
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us-gaap Investment Income Interest
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CY2017Q3 us-gaap Liabilities
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2430000000 USD
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us-gaap Loss Contingency Loss In Period
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CY2016Q4 us-gaap Margin Deposit Assets
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us-gaap Net Cash Provided By Used In Investing Activities
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CY2016Q3 us-gaap Net Income Loss Available To Common Stockholders Basic
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us-gaap Net Income Loss Available To Common Stockholders Basic
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CY2017Q3 us-gaap Net Income Loss Available To Common Stockholders Basic
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us-gaap Noncash Merger Related Costs
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us-gaap Noncash Merger Related Costs
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16000000 USD
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us-gaap Number Of Reportable Segments
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us-gaap Other Comprehensive Income Foreign Currency Transaction And Translation Gain Loss Arising During Period Net Of Tax
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us-gaap Other Comprehensive Income Foreign Currency Transaction And Translation Gain Loss Arising During Period Net Of Tax
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us-gaap Other Comprehensive Income Loss Amortization Adjustment From Aoci Pension And Other Postretirement Benefit Plans For Net Prior Service Cost Credit Net Of Tax
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us-gaap Other Comprehensive Income Loss Amortization Adjustment From Aoci Pension And Other Postretirement Benefit Plans For Net Prior Service Cost Credit Net Of Tax
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0 USD
us-gaap Other Comprehensive Income Loss Available For Sale Securities Adjustment Net Of Tax
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CY2017Q3 us-gaap Other Comprehensive Income Loss Available For Sale Securities Adjustment Net Of Tax
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us-gaap Other Comprehensive Income Loss Available For Sale Securities Adjustment Net Of Tax
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us-gaap Other Comprehensive Income Unrealized Gain Loss On Derivatives Arising During Period Net Of Tax
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us-gaap Payments For Proceeds From Other Investing Activities
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us-gaap Payments To Acquire Businesses Gross
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us-gaap Payments To Acquire Other Investments
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us-gaap Payments To Acquire Other Investments
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us-gaap Payments To Acquire Other Receivables
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us-gaap Payments To Acquire Property Plant And Equipment
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us-gaap Payments To Acquire Property Plant And Equipment
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us-gaap Pension And Other Postretirement Benefit Contributions
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us-gaap Pension And Other Postretirement Benefit Contributions
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us-gaap Pension And Other Postretirement Benefit Expense
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us-gaap Pension And Other Postretirement Benefit Expense
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CY2017Q3 us-gaap Prepaid Taxes
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us-gaap Proceeds From Issuance Of Common Stock
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us-gaap Proceeds From Issuance Of Long Term Debt
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us-gaap Proceeds From Issuance Of Long Term Debt
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us-gaap Proceeds From Minority Shareholders
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us-gaap Proceeds From Repayments Of Other Long Term Debt
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us-gaap Proceeds From Repayments Of Other Long Term Debt
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us-gaap Proceeds From Repayments Of Short Term Debt Maturing In Three Months Or Less
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us-gaap Proceeds From Repurchase Of Redeemable Preferred Stock
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us-gaap Proceeds From Repurchase Of Redeemable Preferred Stock
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us-gaap Proceeds From Sale And Maturity Of Other Investments
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us-gaap Proceeds From Sale Of Property Held For Sale
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us-gaap Proceeds From Sale Of Property Held For Sale
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us-gaap Proceeds From Short Term Debt Maturing In More Than Three Months
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us-gaap Proceeds From Short Term Debt Maturing In More Than Three Months
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us-gaap Proceeds From Stock Plans
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us-gaap Proceeds From Stock Plans
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CY2016Q3 us-gaap Profit Loss
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us-gaap Profit Loss
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CY2017Q3 us-gaap Profit Loss
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us-gaap Profit Loss
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us-gaap Provision For Doubtful Accounts
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us-gaap Provision For Doubtful Accounts
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us-gaap Public Utilities Allowance For Funds Used During Construction Capitalized Cost Of Equity
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CY2017Q3 us-gaap Public Utilities Allowance For Funds Used During Construction Capitalized Cost Of Equity
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us-gaap Public Utilities Allowance For Funds Used During Construction Capitalized Cost Of Equity
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CY2016Q4 us-gaap Public Utilities Amount Of Allowance For Earnings On Equity Capitalized For Rate Making Purposes
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CY2016Q3 us-gaap Reclassification From Accumulated Other Comprehensive Income Current Period Net Of Tax
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us-gaap Reclassification From Accumulated Other Comprehensive Income Current Period Net Of Tax
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CY2017Q3 us-gaap Regulatory Assets Current
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CY2017Q3 us-gaap Regulatory Liabilities
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CY2016Q4 us-gaap Regulatory Liability Current
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CY2017Q3 us-gaap Regulatory Liability Current
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CY2016Q4 us-gaap Regulatory Liability Noncurrent
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CY2017Q3 us-gaap Regulatory Liability Noncurrent
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us-gaap Repayments Of Long Term Debt
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us-gaap Repayments Of Long Term Debt
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us-gaap Repayments Of Related Party Debt
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250000000 USD
us-gaap Repayments Of Short Term Debt Maturing In More Than Three Months
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us-gaap Repayments Of Short Term Debt Maturing In More Than Three Months
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610000000 USD
CY2016Q4 us-gaap Restricted Cash And Cash Equivalents At Carrying Value
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CY2017Q3 us-gaap Restricted Cash And Cash Equivalents At Carrying Value
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320000000 USD
us-gaap Restructuring Costs
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130000000 USD
us-gaap Restructuring Costs
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CY2016Q4 us-gaap Retained Earnings Accumulated Deficit
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CY2017Q3 us-gaap Retained Earnings Accumulated Deficit
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CY2016Q3 us-gaap Revenue From Purchased Oil And Gas
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326000000 USD
us-gaap Revenue From Purchased Oil And Gas
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CY2017Q3 us-gaap Revenue From Purchased Oil And Gas
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460000000 USD
us-gaap Revenue From Purchased Oil And Gas
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1807000000 USD
CY2016Q3 us-gaap Revenue From Related Parties
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us-gaap Revenue From Related Parties
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CY2017Q3 us-gaap Revenue From Related Parties
RevenueFromRelatedParties
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us-gaap Revenue From Related Parties
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CY2016Q3 us-gaap Revenues
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us-gaap Revenues
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CY2017Q3 us-gaap Revenues
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us-gaap Revenues
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CY2016Q3 us-gaap Sales Revenue Services Gross
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us-gaap Sales Revenue Services Gross
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CY2017Q3 us-gaap Sales Revenue Services Gross
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us-gaap Sales Revenue Services Gross
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CY2016Q3 us-gaap Severance Costs1
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us-gaap Severance Costs1
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CY2017Q3 us-gaap Severance Costs1
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us-gaap Severance Costs1
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us-gaap Share Based Compensation
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us-gaap Share Based Compensation
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us-gaap Description Of New Accounting Pronouncements Not Yet Adopted
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:12px;padding-top:12px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-weight:bold;">New Accounting Standards (All Registrants)</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:32px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;font-weight:bold;">New Accounting Standards Issued and Not Yet Adopted: </font><font style="font-family:Arial;font-size:10pt;">The following new authoritative accounting guidance issued by the FASB has not yet been adopted and reflected by the Registrants in their consolidated financial statements. Unless otherwise indicated, the Registrants are currently assessing the impacts such guidance may have (which could be material) on their Consolidated Balance Sheets, Consolidated Statements of Operations and Comprehensive Income, Consolidated Statements of Cash Flows and disclosures, as well as the potential to early adopt where applicable. The Registrants have assessed other FASB issuances of new standards which are not listed below given the current expectation such standards will not significantly impact the Registrants' financial reporting.</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:32px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;">Revenue from Contracts with Customers (Issued May 2014 and subsequently amended to address implementation questions):</font><font style="font-family:Arial;font-size:10pt;"> Changes the criteria for recognizing revenue from a contract with a customer. The new revenue recognition guidance, including subsequent amendments, is effective for annual reporting periods beginning on or after December 15, 2017, with the option to early adopt the standard for annual periods beginning on or after December 15, 2016. Exelon has not early adopted this standard.</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:32px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">The new standard replaces existing guidance on revenue recognition, including most industry specific guidance, with a five step model for recognizing and measuring revenue from contracts with customers. The objective of the new standard is to provide a single, comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries, and across capital markets. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance also requires a number of disclosures regarding the nature, amount, timing, and uncertainty of revenue and the related cash flows. The guidance can be applied retrospectively to each prior reporting period presented (full retrospective method) or retrospectively with a cumulative effect adjustment to retained earnings for initial application of the guidance at the date of initial adoption (modified retrospective method).</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:30px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">The Registrants have assessed the revenue recognition standard and are executing a detailed implementation plan in preparation for adoption on January 1, 2018. The Registrants have also actively participated in the AICPA Power and Utilities Industry Task Force (Industry Task Force) process to identify implementation issues and support the development of related implementation guidance. In coordination with the Industry Task Force, the Registrants have reached conclusions on the following key accounting issues:</font></div><table cellpadding="0" cellspacing="0" style="padding-top:12px;padding-bottom:12px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:Arial;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">The Utility Registrants&#8217; tariff sale contracts, including those with lower credit quality customers, are generally deemed to be probable of collection under the guidance and, thus, the timing of revenue recognition will continue to be concurrent with the delivery of electricity or natural gas, consistent with current practice;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:12px;padding-bottom:12px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:Arial;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Consistent with current industry practice, revenues recognized from sales of bundled energy commodities (i.e., contracts involving the delivery of multiple energy commodities such as electricity, capacity, ancillary services, etc.) are generally expected to be recognized upon delivery to the customer in an amount based on the invoice price given that it corresponds directly with the value of the commodities transferred to the customer; and</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:12px;padding-bottom:12px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:Arial;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Contributions in aid of construction are outside of the scope of the standard and, therefore, will continue to be accounted for as a reduction to Property, Plant, and Equipment.</font></div></td></tr></table><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:30px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">The Registrants have also completed the following key activities in their implementation plan:</font></div><table cellpadding="0" cellspacing="0" style="padding-top:12px;padding-bottom:12px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:Arial;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Evaluated existing contracts and revenue streams for potential changes in revenue recognition under the new guidance.&#160; Based on these assessments, the Registrants have identified the following items that will be accounted for differently under the new revenue guidance as compared to current guidance:</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:12px;padding-bottom:12px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:96px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:72px;"><font style="font-family:Arial;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Costs to acquire certain contracts (e.g., sales commissions associated with retail power contracts) will be deferred and amortized ratably over the term of the contract rather than being expensed as incurred; and</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:12px;padding-bottom:12px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:96px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:72px;"><font style="font-family:Arial;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Variable consideration within certain contracts (e.g., performance bonuses) will be estimated and recognized as revenue over the term of the contract rather than being recognized when realized</font></div></td></tr></table><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Notwithstanding these identified changes, Exelon does not expect the new guidance will have a material impact on the amount and timing of revenue recognition;</font></div><table cellpadding="0" cellspacing="0" style="padding-top:12px;padding-bottom:12px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:174%;font-size:10pt;padding-left:24px;"><font style="font-family:Arial;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:174%;text-align:justify;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Currently expect to apply the new guidance using the full retrospective method; and</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-top:12px;padding-bottom:12px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:48px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:24px;"><font style="font-family:Arial;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Generation expects to disclose disaggregated revenue by operating segment and further differentiation by major products (i.e., electric power and gas) and the Utility Registrants expect to disclose disaggregated revenue by major customer class (i.e., residential and commercial &amp; industrial) separately for electric and gas in the Combined Notes to Consolidated Financial Statements.</font></div></td></tr></table><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:30px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;">Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Issued March 2017): </font><font style="font-family:Arial;font-size:10pt;">The new standard will require significant changes to the accounting and presentation of pension and OPEB costs at the plan sponsor (i.e., Exelon) level. This guidance requires plan sponsors to report the service cost and other non-service cost components of net periodic pension cost and net periodic OPEB cost (together, net benefit cost) separately. Under current GAAP, net benefit cost is recorded as part of income from operations and the components are disclosed in the Retirement Benefits footnote. Service cost will be presented as part of income from operations and the other non-service cost components will be classified outside of income from operations on the Consolidated Statements of Operations and Comprehensive Income. Additionally, service cost is the only component eligible for capitalization (whereas under current GAAP, all components of net benefit cost are eligible for capitalization).</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:30px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Generation, ComEd, PECO, BGE, BSC, PHI, Pepco, DPL, ACE and PHISCO participate in Exelon&#8217;s single employer pension and OPEB plans and apply multi-employer accounting. Multi-employer accounting is not impacted by this standard, so Exelon's subsidiary financial statements will not change. On Exelon&#8217;s consolidated financial statements, non-service cost components of pension and OPEB cost capitalizable under a regulatory framework will be reported as regulatory assets (currently, they are capitalizable under pension and OPEB accounting guidance and reported as PP&amp;E). These regulatory assets will be amortized outside of operating income.</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:30px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">The standard is effective January 1, 2018 and requires retrospective application for the presentation of the service cost component and the other non-service cost components of net benefit cost and prospective application for the capitalization of only the service cost component of net benefit cost. Exelon will not early adopt this standard.</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:30px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;">Leases (Issued February 2016):</font><font style="font-family:Arial;font-size:10pt;"> Increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The guidance requires lessees to recognize both the right-of-use assets and lease liabilities in the balance sheet for most leases, whereas today only financing type lease liabilities (capital leases) are recognized in the balance sheet. This is expected to require significant changes to systems, processes and procedures in order to recognize and measure leases recorded on the balance sheet that are currently classified as operating leases. In addition, the definition of a lease has been revised in regards to when an arrangement conveys the right to control the use of the identified asset under the arrangement which may result in changes to the classification of an arrangement as a lease. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from current GAAP. The accounting applied by a lessor is largely unchanged from that applied under current GAAP. The standard is effective January 1, 2019. Early adoption is permitted, however the Registrants do not expect to early adopt the standard. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Refer to Note </font><font style="font-family:Arial;font-size:10pt;">24</font><font style="font-family:Arial;font-size:10pt;"> &#8212; </font><font style="font-family:Arial;font-size:10pt;">Commitments and Contingencies</font><font style="font-family:Arial;font-size:10pt;"> of the Combined Notes to the Consolidated Financial Statements in the Exelon </font><font style="font-family:Arial;font-size:10pt;">2016</font><font style="font-family:Arial;font-size:10pt;"> Form 10-K for additional information regarding operating leases.</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:32px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;">Impairment of Financial Instruments (Issued June 2016):</font><font style="font-family:Arial;font-size:10pt;font-style:italic;font-weight:bold;"> </font><font style="font-family:Arial;font-size:10pt;">Provides for a new Current Expected Credit Loss (CECL) impairment model for specified financial instruments including loans, trade receivables, debt securities classified as held-to-maturity investments and net investments in leases recognized by a lessor. Under the new guidance, on initial recognition and at each reporting period, an entity is required to recognize an allowance that reflects the entity&#8217;s current estimate of credit losses expected to be incurred over the life of the financial instrument. The standard does not make changes to the existing impairment models for non-financial assets such as fixed assets, intangibles and goodwill. The standard will be effective January 1, 2020 (with early adoption as of January 1, 2019 permitted) and, for most debt instruments, requires a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption.</font></div><div style="line-height:120%;text-align:justify;text-indent:30px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;">Derivatives and Hedging (Issued September 2017): </font><font style="font-family:Arial;font-size:10pt;">Allows more financial and nonfinancial hedging strategies to be eligible for hedge accounting.&#160; The amendments are intended to more closely align hedge accounting with companies&#8217; risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs.&#160; There are also amendments related to effectiveness testing and disclosure requirements.&#160; The guidance is effective January 1, 2019 and early adoption is permitted with a modified retrospective transition approach. The Registrants are currently assessing this standard but do not currently expect a significant impact given the limited activity for which the Registrants elect hedge accounting and because the Registrants do not anticipate increasing their use of hedge accounting as a result of this standard.</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:32px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;">Goodwill Impairment (Issued January 2017):</font><font style="font-family:Arial;font-size:10pt;"> Simplifies the accounting for goodwill impairment by removing Step 2 of the current test, which requires calculation of a hypothetical purchase price allocation. Under the revised guidance, goodwill impairment will be measured as the amount by which a reporting unit&#8217;s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill (currently Step 1 of the two step impairment test). Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. Exelon, Generation, ComEd, PHI, and DPL have goodwill as of </font><font style="font-family:Arial;font-size:10pt;">September&#160;30, 2017</font><font style="font-family:Arial;font-size:10pt;">. This updated guidance is not currently expected to impact the Registrants&#8217; financial reporting. The standard is effective January 1, 2020, with early adoption permitted, and must be applied on a prospective basis. </font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:32px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;">Clarifying the Definition of a Business (Issued January 2017): </font><font style="font-family:Arial;font-size:10pt;">Clarifies the definition of a business with the objective of addressing whether acquisitions (or dispositions) should be accounted for as acquisitions/dispositions of assets or as acquisitions/dispositions of businesses.&#160;If substantially all the fair value of the assets acquired/disposed of is concentrated in a single identifiable asset or a group of similar identifiable assets, the set of transferred assets and activities is not a business.&#160;If the fair value of the assets acquired/disposed of is not concentrated in a single identifiable asset or a group of similar identifiable assets, then an entity must evaluate whether an input and a substantive process exist, which together significantly contribute to the ability to produce outputs.&#160;The standard also revises the definition of outputs to focus on goods and services to customers.&#160;The standard will likely result in more acquisitions being accounted for as asset acquisitions.&#160;The standard is effective January 1, 2018, with early adoption permitted, and must be applied on a prospective basis.&#160; </font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:32px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;">Intra-Entity Transfers of Assets Other Than Inventory (Issued October 2016): </font><font style="font-family:Arial;font-size:10pt;">Requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs (current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party). The standard is effective January 1, 2018 with early adoption permitted. The guidance requires a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption.</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:32px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;">Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (Issued August 2016) and Restricted Cash (Issued November 2016): </font><font style="font-family:Arial;font-size:10pt;">In 2016, the FASB issued two standards impacting the Statement of Cash Flows. The first adds or clarifies guidance on the classification of certain cash receipts and payments on the statement of cash flows as follows: debt prepayment or extinguishment costs, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies and bank-owned life insurance policies, distributions received from equity method investees, beneficial interest in securitization transactions, and the application of the predominance principle to separately identifiable cash flows. The second states that amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows (instead of being presented as cash flow activities). The Registrants will adopt both standards on January 1, 2018 on a retrospective basis. Adoption of the second standard will result in a change in presentation of restricted cash on the face of the Statement of Cash Flows; otherwise the Registrants do not expect that this guidance will have a significant impact on the Registrants&#8217; Consolidated Statements of Cash Flows and disclosures.</font></div><div style="line-height:120%;padding-bottom:12px;padding-top:12px;text-align:justify;text-indent:32px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;">Recognition and Measurement of Financial Assets and Financial Liabilities (Issued January 2016):</font><font style="font-family:Arial;font-size:10pt;"> (i) Requires all investments in equity securities, including other ownership interests such as partnerships, unincorporated joint ventures and limited liability companies, to be carried at fair value through net income, (ii) requires an incremental recognition and disclosure requirement related to the presentation of fair value changes of financial liabilities for which the fair value option has been elected, (iii) amends several disclosure requirements, including the methods and significant assumptions used to estimate fair value or a description of the changes in the methods and assumptions used to estimate fair value, and (iv) requires disclosure of the fair value of financial assets and liabilities measured at amortized cost at the amount that would be received to sell the asset or paid to transfer the liability. The standard is effective January 1, 2018 with early adoption permitted. The guidance requires a modified retrospective transition approach with a cumulative effect adjustment to retained earnings for initial application of the guidance at the date of adoption. The Registrants will not early adopt this standard. The Registrants do not expect that this guidance will have a significant impact on the Registrants' Consolidated Balance Sheets, Consolidated Statements of Operations and Comprehensive Income, and Consolidated Statements of Cash Flows.</font></div></div>

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