(18) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The quarterly data presented below reflect all adjustments necessary in the opinion of management for a fair presentation of the interim results. Quarterly data normally vary seasonally because of temperature variations and differences between summer and winter rates. The totals of the four quarterly basic and diluted earnings per common share amounts may not equal the basic and diluted earnings per common share for the year due to changes in the number of shares of common stock outstanding during the year.


	2012
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
	*(millions, except per share amounts)*
Total Operating Revenue	$	1,292		$	1,179		$	1,476		$	1,134		$	5,081
Total Operating Expenses (a)		1,153			1,027			1,212	(b)		1,019			4,411
Operating Income		139			152			264			115			670
Other Expenses		(57	)		(55	)		(59	)		(58	)		(229	)
Income From Continuing Operations Before Income Tax Expense		82			97			205			57			441
Income Tax Expense Related to Continuing Operations		14			35			93	(c)		14			156
Net Income	$	68		$	62		$	112	(b)	$	43		$	285

Basic and Diluted Earnings Per Share of Common Stock
Basic Earnings Per Share of Common Stock		0.30			0.27			0.49			0.18			1.25
Diluted Earnings Per Share of Common Stock		0.30			0.27			0.49			0.18			1.24
Cash Dividends Per Share of Common Stock		0.27			0.27			0.27			0.27			1.08

(a)	Includes impairment losses of $12 million pre-tax ($7 million after-tax) at Pepco Energy Services associated primarily with investments in landfill gas-fired electric generation facilities, and the combustion turbines at Buzzard Point.

(b)	Includes $39 million pre-tax ($9 million after-tax) gain from the early termination of cross-border energy leases.

(c)	Includes a $16 million charge related to the recognition of the tax consequences associated with the early termination of cross-border energy leases.


	2011
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
	*(millions, except per share amounts)*
Total Operating Revenue	$	1,638		$	1,412		$	1,648		$	1,253		$	5,951
Total Operating Expenses		1,489			1,210	(a)		1,453			1,162			5,314
Operating Income		149			202			195			91			637
Other Expenses		(53	)		(53	)		(60	)		(62	)		(228	)
Income From Continuing Operations Before Income Tax Expense		96			149			135			29			409
Income Tax Expense Related to Continuing Operations		34			54	(b)		55			6			149
Net Income From Continuing Operations		62			95	(a)		80			23			260
Income (Loss) From Discontinued Operations, net of taxes		2			(1	)		—			(4	)		(3	)
Net Income	$	64		$	94		$	80		$	19		$	257

Basic and Diluted Earnings Per Share of Common Stock
Earnings Per Share of Common Stock from Continuing Operations		0.27			0.42			0.35			0.10			1.15
Earnings (Loss) Per Share of Common Stock from Discontinued Operations		0.01			—			—			(0.02	)		(0.01	)
Basic and Diluted Earnings Per Share of Common Stock		0.28			0.42			0.35			0.08			1.14
Cash Dividends Per Share of Common Stock		0.27			0.27			0.27			0.27			1.08

(a)	Includes $39 million pre-tax ($3 million after-tax) gain from the early termination of cross-border energy leases.

(b)	Includes tax benefits of $14 million in the second quarter primarily associated with an interest benefit related to federal tax liabilities and a $22 million charge related to the recognition of the tax consequences associated with the early termination of cross-border energy leases.

Quarterly Financial Information

(15) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The quarterly data presented below reflect all adjustments necessary, in the opinion of management, for a fair presentation of the interim results. Quarterly data normally vary seasonally because of temperature variations and differences between summer and winter rates. Therefore, comparisons by quarter within a year are not meaningful.


	2012
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
	*(millions of dollars)*
Total Operating Revenue	$	465		$	456		$	582		$	445		$	1,948
Total Operating Expenses		425			401			475			390			1,691
Operating Income		40			55			107			55			257
Other Expenses		(21	)		(20	)		(22	)		(20	)		(83	)
Income Before Income Tax Expense		19			35			85			35			174
Income Tax (Benefit) Expense		(5	)(a)		8			35			10			48
Net Income	$	24		$	27		$	50		$	25		$	126

(a)

Includes tax benefits of $10 million (after-tax), primarily related to the settlement of an uncertain tax position with the IRS related to the methodology used historically to calculate deductible mixed service costs and the expiration of the statute of limitations associated with an uncertain tax position.


	2011
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
	*(millions of dollars)*
Total Operating Revenue	$	534		$	506		$	603		$	435		$	2,078
Total Operating Expenses		491			454			521			400			1,866
Operating Income		43			52			82			35			212
Other Expenses		(18	)		(18	)		(21	)		(20	)		(77	)
Income Before Income Tax Expense		25			34			61			15			135
Income Tax Expense (a)		7			2			23			4			36
Net Income	$	18		$	32		$	38		$	11		$	99

(a)	Includes tax benefits of $5 million (after-tax) associated with an interest benefit related to federal tax liabilities and an additional tax benefit of $4 million (after-tax) related to the filing of amended state tax returns, each recorded in the second quarter.

Quarterly Financial Information

(17) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The quarterly data presented below reflect all adjustments necessary, in the opinion of management, for a fair presentation of the interim results. Quarterly data normally vary seasonally because of temperature variations and differences between summer and winter rates. Therefore, comparisons by quarter within a year are not meaningful.


	2012
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
	*(millions of dollars)*
Total Operating Revenue	$	333		$	259		$	340		$	301		$	1,233
Total Operating Expenses		290			229			297			263			1,079
Operating Income		43			30			43			38			154
Other Expenses		(8	)		(8	)		(10	)		(11	)		(37	)
Income Before Income Tax Expense		35			22			33			27			117
Income Tax Expense		14			9			11			10			44
Net Income	$	21		$	13		$	22		$	17		$	73


	2011
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
	*(millions of dollars)*
Total Operating Revenue	$	400		$	284		$	326		$	294		$	1,304
Total Operating Expenses		351			248			297			259			1,155
Operating Income		49			36			29			35			149
Other Expenses		(9	)		(9	)		(8	)		(10	)		(36	)
Income Before Income Tax Expense		40			27			21			25			113
Income Tax Expense (a)		17			5			10			10			42
Net Income	$	23		$	22		$	11		$	15		$	71

(a)

Includes tax benefits of $4 million (after-tax) associated with an interest benefit related to federal tax liabilities in the second quarter and an additional tax expense of $1 million (after-tax) resulting from a recalculation of interest on uncertain tax positions for open tax years in the third quarter.

Quarterly Financial Information

(16) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The quarterly data presented below reflect all adjustments necessary, in the opinion of management, for a fair presentation of the interim results. Quarterly data normally vary seasonally because of temperature variations and differences between summer and winter rates. Therefore, comparisons by quarter within a year are not meaningful.


	2012
	First Quarter			Second Quarter			Third Quarter				Fourth Quarter			Total
	*(millions of dollars)*
Total Operating Revenue	$	256		$	270		$	413		$		259		$	1,198
Total Operating Expenses		239			230			364				246			1,079
Operating Income		17			40			49				13			119
Other Expenses		(16	)		(17	)		(16	)			(17	)		(66	)
Income (Loss) Before Income Tax Expense (Benefit)		1			23			33				(4	)		53
Income Tax (Benefit) Expense		(1	)		9			13				(3	)		18
Net Income	$	2		$	14		$	20		$		(1	)	$	35


	2011
	First Quarter			Second Quarter			Third Quarter				Fourth Quarter			Total
	*(millions of dollars)*
Total Operating Revenue	$	315		$	304		$	399		$		250		$	1,268
Total Operating Expenses		289			256			347				237			1,129
Operating Income		26			48			52				13			139
Other Expenses		(15	)		(16	)		(18	)			(18	)		(67	)
Income (Loss) Before Income Tax Expense (Benefit)		11			32			34				(5	)		72
Income Tax Expense (Benefit) (a)		5			14			17				(3	)		33
Net Income (Loss)	$	6		$	18		$	17		$		(2	)	$	39

(a)	Includes tax expense of $1 million (after-tax) associated with interest related to federal tax liabilities in the second quarter and an additional tax expense of $3 million (after-tax) resulting from a recalculation of interest on uncertain tax positions for open tax years in the third quarter.