ComEd 2006 Annual Report Download - page 198

Exelon Corporation and Subsidiary Companies
Exelon Generation Company, LLC and Subsidiary Companies
Commonwealth Edison Company and Subsidiary Companies
PECO Energy Company and Subsidiary Companies
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
FAS 106-2, which provided transition guidance for accounting for the effects of the Prescription Drug
Act and superseded FSP FAS 106-1, which had been issued in January 2004. FSP FAS 106-1
permitted a plan sponsor of a postretirement health care plan that provides a prescription drug benefit
to make a one-time election to defer the accounting for the effects of the Prescription Drug Act. The
Registrants made the one-time election allowed by FSP FAS 106-1 during the first quarter of 2004.
During the second quarter of 2004, Exelon early adopted the provisions of FSP FAS 106-2,
resulting in a remeasurement of its postretirement benefit plans’ assets and accumulated
postretirement benefit obligations (APBO) as of December 31, 2003. Upon adoption, the effect of the
subsidy on benefits attributable to past service was accounted for as an actuarial experience gain,
resulting in a decrease of the APBO of approximately $186 million. Exelon’s annualized reduction in
the net periodic postretirement benefit cost was approximately $40 million, $40 million and $33 million
in 2006, 2005 and 2004, respectively, compared to the annual cost calculated without considering the
effects of the Prescription Drug Act. The effect of the subsidy on the components of net periodic
postretirement benefit cost for 2006, 2005 and 2004 included in the consolidated financial statements
and Note 14—Retirement Benefits was as follows:
2006 2005 2004
Amortization of the actuarial experience loss ................................. $16 $18 $15
Reduction in current period service cost ..................................... 9 8 6
Reduction in interest cost on the APBO ..................................... 15 14 12
Treasury Stock (Exelon)
Treasury shares are recorded at cost. Any shares of common stock repurchased are held as
treasury shares unless cancelled or reissued.
Foreign Currency Translation (Exelon, Generation and ComEd)
The financial statements of Exelon’s, Generation’s and ComEd’s foreign subsidiaries were
prepared in their respective local currencies and translated into U.S. dollars based on the current
exchange rates at the end of the periods for the Consolidated Balance Sheets and on weighted-
average rates for the periods for the Consolidated Statements of Operations. Starting in 2006, ComEd
does not report any foreign currency translation adjustments since ComEd no longer owns any foreign
subsidiaries. Foreign currency translation adjustments, net of deferred income tax benefits, are
reflected as a component of other comprehensive income on the Consolidated Statements of
Comprehensive Income and, accordingly, have no effect on net income.
New Accounting Pronouncements (Exelon, Generation, ComEd and PECO)
Exelon has identified the following new accounting pronouncements that either have been recently
adopted or issued that may affect the Registrants upon adoption.
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