Summary
Exelon Corporation's (EXC) second quarter 2011 filing highlights its comprehensive risk management framework, overseen by a Risk Management Committee (RMC). The company is exposed to market risks including commodity prices, counterparty credit, interest rates, and equity prices. Exelon actively mitigates commodity price risk through various derivative instruments and hedging activities, particularly within its Generation segment. As of June 30, 2011, Generation had hedged a significant portion of its expected generation for 2011 and 2012, with percentages decreasing for 2013. The filing also details the company's ongoing merger with Constellation Energy Group, Inc., announced on April 28, 2011. Significant risks associated with this merger are outlined, including potential fluctuations in merger consideration, limitations on pursuing alternative transactions, integration challenges, and the possibility of not achieving anticipated results or benefits. Regulatory approvals are also a key condition for the merger's completion.
Financial Highlights
50 data points| Revenue | $4.50B |
| Operating Expenses | $3.46B |
| Operating Income | $1.03B |
| Interest Expense | $176.00M |
| Net Income | $620.00M |
| EPS (Basic) | $0.93 |
| EPS (Diluted) | $0.93 |
| Shares Outstanding (Basic) | 663.00M |
| Shares Outstanding (Diluted) | 664.00M |
Key Highlights
- 1Exelon's Risk Management Committee (RMC) oversees policies for risk assessment, control, and valuation across commodity prices, counterparty credit, interest rates, and equity prices.
- 2The Generation segment actively uses financial derivatives (forwards, futures, swaps, options) to hedge anticipated commodity price exposures, with high percentages hedged for 2011 and 2012.
- 3As of June 30, 2011, Exelon Generation had hedged 95%-98% of expected generation for 2011, 82%-85% for 2012, and 49%-52% for 2013.
- 4Proprietary trading activities are conducted by Generation but represent a small portion of overall revenue, with strict risk management limits in place.
- 5ComEd and PECO have specific arrangements for energy procurement and hedging, with costs generally recoverable from retail customers through regulatory mechanisms, limiting direct impact on their financial positions.
- 6The company is undergoing a significant merger with Constellation Energy Group, Inc., announced in April 2011, which introduces several merger-related risks including potential stock price volatility, integration challenges, and regulatory hurdles.
- 7Exelon reported a net mark-to-market energy contract net asset position of $632 million as of June 30, 2011, a decrease from $823 million at December 31, 2010, with Generation holding a net asset of $1.424 billion.