Exelon 2014 Annual Report Download - page 175

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
The following table summarizes the acquisition-date fair value of the consideration transferred and the assets and liabilities assumed
for the Integrys acquisition by Generation:
Total consideration transferred .............................................................................. $332
Identifiable assets acquired and liabilities assumed
Working capital assets ..................................................................................... $389
Mark-to-market derivative assets ............................................................................ 185
Unamortized energy contract assets ......................................................................... 115
Customer relationships .................................................................................... 48
Working capital liabilities ................................................................................... (195)
Mark-to-market derivative liabilities ........................................................................... (57)
Unamortized energy contract liabilities ........................................................................ (109)
Deferred tax liability ....................................................................................... (16)
Total net identifiable assets, at fair value .................................................................. $360
Bargain purchase gain (after-tax) ........................................................................ $ 28
The purchase accounting is preliminary, and although not expected, may be further adjusted from what is shown above.
The after-tax bargain purchase gain of $28 million is primarily the result of IES executing additional contract volumes between the
date the acquisition agreement was signed and the closing of the transaction resulting in an increase in the fair value of the net
assets acquired as of the acquisition date. The after-tax gain is included within Gain on consolidation and acquisition of businesses
in Exelon’s and Generation’s Consolidated Statements of Operations and Comprehensive Income.
IES’s operating revenue and net loss included in Exelon’s and Generation’s Consolidated Statements of Operations and
Comprehensive Income for the period from November 1, 2014 to December 31, 2014 were approximately $386 million and $(42)
million, respectively. The net loss includes pre-tax unrealized losses on derivative contracts of $108 million and the bargain purchase
gain of $28 million. Exelon and Generation incurred approximately $7 million of merger and integration related costs which are
included within Operating and maintenance expense in Exelon’s and Generation’s Consolidated Statements of Operations and
Comprehensive Income.
Merger with Constellation
Description of Constellation Merger Transaction
On March 12, 2012, Exelon completed the merger contemplated by the Merger Agreement among Exelon, Bolt Acquisition
Corporation, a wholly owned subsidiary of Exelon (Merger Sub), and Constellation. As a result of that merger, Merger Sub was
merged into Constellation (the Initial Merger) and Constellation became a wholly owned subsidiary of Exelon. Following the
completion of the Initial Merger, Exelon and Constellation completed a series of internal corporate organizational restructuring
transactions. Constellation merged with and into Exelon, with Exelon continuing as the surviving corporation (the Upstream Merger).
Simultaneously with the Upstream Merger, Constellation’s interest in RF HoldCo LLC, which holds Constellation’s interest in BGE,
was transferred to Exelon Energy Delivery Company, LLC, a wholly owned subsidiary of Exelon that also owns Exelon’s interests in
ComEd and PECO. Following the Upstream Merger and the transfer of RF HoldCo LLC, Exelon contributed to Generation certain
subsidiaries, including those with generation and customer supply operations that were acquired from Constellation as a result of the
Initial Merger and the Upstream Merger.
Regulatory Matters from the Constellation Merger
In February 2012, the MDPSC issued an order approving the Exelon and Constellation merger. As part of the MDPSC Order, Exelon
agreed to provide a package of benefits to BGE customers, the City of Baltimore and the State of Maryland, resulting in an estimated
direct investment in the State of Maryland of approximately $1 billion.
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