Summary
This filing provides an update on Exelon Corporation's (EXC) market risk exposures, particularly focusing on commodity price risk, credit risk, and interest rate risk as of September 30, 2011. Exelon's Risk Management Committee (RMC) oversees these exposures, with robust policies in place for assessment, control, and monitoring. The company actively employs hedging strategies, utilizing derivative instruments like forwards, futures, and swaps, to mitigate risks associated with fluctuating commodity prices. Notably, Exelon Generation is significantly hedged for expected generation in the near term (97%-100% for 2011), though hedging decreases in subsequent years. Significant information for investors also pertains to the pending merger with Constellation Energy. The filing details risks associated with the merger, including the exchange ratio fluctuation, limitations on pursuing alternative transactions, potential disruptions during the integration period, and the uncertainty of achieving anticipated benefits. Exelon anticipates the merger to be accretive to earnings in 2013, but acknowledges potential goodwill impairment and the possibility of regulatory hurdles affecting the transaction. The company also notes that current shareholders will have a reduced ownership percentage post-merger.
Financial Highlights
51 data points| Revenue | $5.25B |
| Operating Expenses | $4.07B |
| Operating Income | $1.18B |
| Interest Expense | $176.00M |
| Net Income | $601.00M |
| EPS (Basic) | $0.91 |
| EPS (Diluted) | $0.90 |
| Shares Outstanding (Basic) | 663.00M |
| Shares Outstanding (Diluted) | 665.00M |
Key Highlights
- 1Exelon Generation is highly hedged for its 2011 expected generation (97%-100%), with decreasing hedge percentages for 2012 (85%-88%) and 2013 (56%-59%).
- 2The company manages commodity price risk through a combination of physical and financial derivative contracts, including forwards, futures, and swaps.
- 3Exelon Generation engages in proprietary trading activities, which represented a small portion of its overall revenue, with a pre-tax gain of $23 million for the nine months ended September 30, 2011.
- 4The report details credit risk exposures to counterparties, with a total net exposure of $838 million for Generation, primarily to investment-grade entities.
- 5The pending merger with Constellation Energy introduces significant risks, including potential fluctuations in merger consideration due to stock price volatility and the possibility of not achieving expected synergies.
- 6Exelon anticipates the merger to be accretive to earnings per share in 2013, but acknowledges this is based on preliminary estimates.
- 7Regulatory approvals from entities such as FERC and state Public Utility Commissions are required for the Constellation merger to proceed, and these could impose conditions or delays.