Summary
Exelon Corporation (EXC) filed an 8-K on January 30, 2003, primarily disclosing its fourth-quarter and full-year 2002 earnings and providing guidance for 2003. A key development for the fourth quarter of 2002 was ComEd's adjustment to its regulatory asset amortization, which resulted in a 7 cents per share positive impact on earnings compared to prior guidance. Additionally, Exelon made significant pension fund contributions and recorded a large charge to Other Comprehensive Income related to its pension obligation, neither of which impacted 2002 earnings. The company provided a 2003 earnings guidance range of $4.80 to $5.00 per share, assuming normal weather. This guidance is supported by several positive factors, including expected savings from the Midwest Generation contract, fewer nuclear plant refueling outages, anticipated breakeven performance from Exelon Enterprises, and benefits from debt refinancing. However, these positives are partially offset by negative impacts from the adoption of SFAS No. 143, increased dilution from the Sithe investment, and revised pension and postretirement benefit expense assumptions, which collectively are estimated to reduce earnings per share.
Key Highlights
- 1Exelon reported fourth-quarter and full-year 2002 earnings, with a positive earnings per share impact of 7 cents in Q4 2002 due to ComEd's adjusted regulatory asset amortization.
- 2Significant pension-related accounting adjustments were made in Q4 2002, including a $150 million contribution and a $1 billion after-tax charge to Other Comprehensive Income, neither affecting 2002 reported earnings.
- 3Exelon issued 2003 earnings guidance of $4.80 to $5.00 per share, contingent on normal weather conditions.
- 4Key positive drivers for 2003 earnings include $130 million pre-tax savings from the Midwest Generation contract, reduced nuclear refueling outages providing $60 million pre-tax savings, and 13 cents per share from debt refinancing.
- 5Negative impacts on 2003 earnings include an estimated 7 cents per share negative effect from SFAS No. 143 adoption and a 20 cents per share increased dilution from the Sithe investment.
- 6Revised pension and postretirement benefit assumptions are expected to increase expenses by $125 million pre-tax, resulting in an approximately 24 cents per share negative impact on earnings.
- 7Exelon is addressing the eventual cessation of ComEd's Competitive Transition Charge (CTC) revenue by refinancing bonds, diversifying income streams, establishing Exelon Generation as a separate entity, and engaging in regulatory and market development initiatives.