(5) SEGMENT INFORMATION

Pepco Holdings' management has identified its operating segments at June 30, 2011 as Power Delivery, Pepco Energy Services and Other Non-Regulated. In the tables below, the Corporate and Other column is included to reconcile the segment data with consolidated data and includes unallocated Pepco Holdings' (parent company) capital costs, such as acquisition financing costs. Segment financial information for continuing operations for the three and six months ended June 30, 2011 and 2010 is as follows:


Three Months Ended June 30, 2011
	*(millions of dollars)*
	Power Delivery		Pepco Energy Services		Other Non- Regulated			Corporate and Other (a)			PHI Consolidated
Operating Revenue	$	1,093	$	308	$	14		$	(6	)	$	1,409
Operating Expenses (b)		957		295		(38	)(c)		(7	)		1,207
Operating Income		136		13		52			1			202
Interest Income		—		—		1			(1	)		—
Interest Expense		52		1		4			6			63
Other Income		8		1		—			1			10
Income Tax Expense (Benefit) (d)		20		5		30			(1	)		54
Net Income (Loss) from Continuing Operations		72		8		19	(c)		(4	)		95
Total Assets (excluding Assets Held For sale)		10,803		615		1,461			1,354			14,233
Construction Expenditures	$	204	$	6	$	—		$	6		$	216

(a)

Total Assets in this column includes Pepco Holdings' goodwill balance of $1.4 billion, all of which is allocated to the Power Delivery segment for purposes of assessing impairment. Total assets also include capital expenditures related to certain hardware and software expenditures which primarily benefit the Power Delivery business. These expenditures are recorded as incurred in the Corporate and Other segment and are allocated to Power Delivery once the assets are placed in service. Additionally, Corporate and Other includes intercompany amounts of $(6) million for Operating Revenue, $(4) million for Operating Expense, $(5) million for Interest Income and $(5) million for Interest Expense.

(b)	Includes depreciation and amortization of $105 million, consisting of $97 million for Power Delivery, $5 million for Pepco Energy Services, $1 million for Other Non-Regulated, and $2 million for Corporate and Other.

(c)	Includes $39 million pre-tax ($3 million after-tax) gain from the early termination of finance leases held in trust.

(d)	Includes tax benefits of $14 million for Power Delivery primarily associated with an interest benefit related to federal tax liabilities and a $22 million reversal of previously recognized tax benefits for Other Non-Regulated associated with the early termination of finance leases held in trust.


	Three Months Ended June 30, 2010
	*(millions of dollars)*
	Power Delivery		Pepco Energy Services		Other Non- Regulated		Corporate and Other (a)			PHI Consolidated
Operating Revenue	$	1,149	$	476	$	13	$	(2	)	$	1,636
Operating Expenses (b)		996		453		2		(8	)		1,443
Operating Income		153		23		11		6			193
Interest Income		1		—		1		(2	)		—
Interest Expense		53		5		3		28			89
Other Income		5		—		—		—			5
Income Tax Expense (Benefit)		41		8		3		(19	)(c)		33
Net Income (Loss) from Continuing Operations		65		10		6		(5	)		76
Total Assets (excluding Assets Held For Sale)		10,429		653		1,462		1,442			13,986
Construction Expenditures	$	194	$	—	$	—	$	12		$	206

(a)

Total Assets in this column includes Pepco Holdings' goodwill balance of $1.4 billion, all of which is allocated to the Power Delivery segment for purposes of assessing impairment. Total assets also include capital expenditures related to certain hardware and software expenditures which primarily benefit the Power Delivery business. These expenditures are recorded as incurred in the Corporate and Other segment and are allocated to Power Delivery once the assets are place in service. Additionally, Corporate and Other includes intercompany amounts of $(2) million for Operating Revenue, $(1) million for Operating Expense, $(13) million for Interest Income and $(13) million for Interest Expense.

(b)	Includes depreciation and amortization of $93 million, consisting of $85 million for Power Delivery, $5 million for Pepco Energy Services, $1 million for Other Non-Regulated and $2 million for Corporate and Other.

(c)	Includes $8 million state tax benefit from changed apportionment arising from the restructuring of certain PHI subsidiaries.


	Six Months Ended June 30, 2011
	*(millions of dollars)*
	Power Delivery		Pepco Energy Services		Other Non- Regulated			Corporate and Other (a)			PHI Consolidated
Operating Revenue	$	2,342	$	681	$	28		$	(8	)	$	3,043
Operating Expenses (b)		2,088		652		(36	)(c)		(12	)		2,692
Operating Income		254		29		64			4			351
Interest Income		—		—		2			(2	)		—
Interest Expense		102		2		7			14			125
Other Income (Expenses)		16		2		(1	)		2			19
Preferred Stock Dividends		—		—		1			(1	)		—
Income Tax Expense (Benefit) (d)		49		11		32			(4	)		88
Net Income (Loss) from Continuing Operations		119		18		25	(c)		(5	)		157
Total Assets (excluding Assets Held For Sale)		10,803		615		1,461			1,354			14,233
Construction Expenditures	$	364	$	7	$	—		$	16		$	387

(a)

Total Assets in this column includes Pepco Holdings' goodwill balance of $1.4 billion, all of which is allocated to the Power Delivery segment for purposes of assessing impairment. Total assets also include capital expenditures related to certain hardware and software expenditures which primarily benefit the Power Delivery business. These expenditures are recorded as incurred in the Corporate and Other segment and are allocated to Power Delivery once the assets are placed in service. Additionally, Corporate and Other includes intercompany amounts of $(8) million for Operating Revenue, $(6) million for Operating Expense, $(10) million for Interest Income, $(9) million for Interest Expense, and $(1) million for Preferred Stock Dividends.

(b)	Includes depreciation and amortization of $210 million, consisting of $194 million for Power Delivery, $9 million for Pepco Energy Services, $1 million for Other Non-Regulated, and $6 million for Corporate and Other.

(c)	Includes $39 million pre-tax ($3 million after-tax) gain from the early termination of finance leases held in trust.

(d)	Includes tax benefits of $14 million for Power Delivery primarily associated with an interest benefit related to federal tax liabilities and a $22 million reversal of previously recognized tax benefits for Other Non-Regulated associated with the early termination of finance leases held in trust.


	Six Months Ended June 30, 2010
	*(millions of dollars)*
	Power Delivery			Pepco Energy Services		Other Non- Regulated			Corporate and Other (a)			PHI Consolidated
Operating Revenue	$	2,411		$	1,023	$	26		$	(5	)	$	3,455
Operating Expenses (b)		2,165			975		3			(12	)		3,131
Operating Income		246			48		23			7			324
Interest Income		1			—		2			(3	)		—
Interest Expense		104			10		7			51			172
Other Income (Expenses)		9			1		(1	)		1			10
Preferred Stock Dividends		—			—		1			(1	)		—
Income Tax Expense (Benefit)		67	(c)		16		6			(31	)(d)		58
Net Income (Loss) from Continuing Operations		85			23		10			(14	)		104
Total Assets (excluding Assets Held For Sale)		10,429			653		1,462			1,442			13,986
Construction Expenditures	$	345		$	1	$	—		$	18		$	364

(a)

Total Assets in this column includes Pepco Holdings' goodwill balance of $1.4 billion, all of which is allocated to the Power Delivery segment for purposes of assessing impairment. Total assets also include capital expenditures related to certain hardware and software expenditures which primarily benefit the Power Delivery business. These expenditures are recorded as incurred in the Corporate and Other segment and are allocated to Power Delivery once the assets are placed in service. Additionally, Corporate and Other includes intercompany amounts of $(5) million for Operating Revenue, $(5) million for Operating Expense, $(25) million for Interest Income, $(25) million for Interest Expense, and $(1) million for Preferred Stock Dividends.

(b)	Includes depreciation and amortization of $182 million, consisting of $167 million for Power Delivery, $9 million for Pepco Energy Services, $1 million for Other Non-Regulated and $5 million for Corporate and Other.

(c)	Includes $8 million reversal of accrued interest income on uncertain and effectively settled state income tax positions.

(d)

Includes $8 million state tax benefit from changed apportionment arising from the restructuring of certain PHI subsidiaries and the release of $8 million of valuation allowances on deferred tax assets related to state net operating losses, partially offset by a charge of $4 million to write off a deferred tax asset related to the Medicare Part D subsidy.

Segment Information

(5) SEGMENT INFORMATION

The company operates its business as one regulated utility segment, which includes all of its services as described above.

Segment Information

(5) SEGMENT INFORMATION

The company operates its business as one regulated utility segment, which includes all of its services as described above.

Segment Information

(5) SEGMENT INFORMATION

The company operates its business as one regulated utility segment, which includes all of its services as described above.