ComEd 2006 Annual Report Download - page 199

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)
SFAS No. 123-R
Exelon grants stock-based awards through its Long-Term Incentive Plans (LTIPs), which primarily
include stock options and performance share awards. Prior to January 1, 2006, Exelon accounted for
these stock-based awards under the intrinsic value method of Accounting Principles Board (APB)
No. 25, “Accounting for Stock Issued to Employees” (APB No. 25). This method under APB No. 25
resulted in no expense being recorded for stock option grants in 2005. On January 1, 2006, Exelon
adopted Financial Accounting Standards Board (FASB) Statement No. 123 (revised 2004), “Share-
Based Payment” (SFAS No. 123-R), which replaces SFAS No. 123, “Accounting for Stock-Based
Compensation” (SFAS No. 123) and supersedes APB No. 25. SFAS No. 123-R requires that
compensation cost relating to stock-based payment transactions be recognized in the financial
statements. That cost is measured on the fair value of the equity or liability instruments issued.
SFAS No. 123-R applies to all of Exelon’s outstanding unvested stock-based awards as of January 1,
2006 and all prospective awards using the modified prospective transition method without restatement
of prior periods. At December 31, 2006, there were approximately 28 million shares remaining for
issuance under the LTIPs.
The following table shows the effect of adopting SFAS No. 123-R on selected reported items:
Year Ended
December 31,
2006
Income from continuing operations before income taxes and minority interest .......... $ (49)
Net income ................................................................ (31)
Basic earnings per share ..................................................... (0.05)
Diluted earnings per share .................................................... (0.05)
Cash flows provided by operating activities ...................................... (60)
Cash flows used in financing activities .......................................... 60
The following table presents the stock-based compensation expense included in Exelon’s
Consolidated Statements of Operations and Comprehensive Income during the twelve months ended
December 31, 2006, 2005 and 2004:
Year
Ended
December 31,
Components of Stock-Based Compensation Expense 2006 2005 2004
Stock options ........................................................ $ 39 $— $—
Performance shares .................................................. 84 49 51
Other stock-based awards ............................................. 5 8 14
Total stock-based compensation included in operating and maintenance
expense .......................................................... 128 57 65
Income tax benefit .................................................... (48) (23) (26)
Total after-tax stock-based compensation expense ......................... $ 80 $ 34 $ 39
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