8-KOther Events

EXELON CORP 8-K Report, Corporate Update (Jul 16, 2009)

Filed July 16, 2009For Securities:EXC

Summary

This 8-K filing from Exelon Corporation (EXC) reports a significant development regarding a legal ruling on Illinois investment tax credits. Initially, on February 20, 2009, the Illinois Supreme Court ruled in favor of Exelon, allowing the company to record approximately $42 million (after-tax) in income related to refund claims for investment tax credits and associated interest from 1995-2008. This income was recognized in the first quarter of 2009. However, on July 15, 2009, the Illinois Supreme Court changed its opinion, clarifying that the previous ruling was to be applied only prospectively from 2009. This means Exelon is no longer entitled to the previously recognized refunds. The company is now expected to record a charge in the third quarter to reverse the $42 million income. Despite this reversal, Exelon stated that this development does not affect its 2009 earnings guidance.

Key Highlights

  • 1Illinois Supreme Court reversed its prior ruling on investment tax credits, impacting Exelon's recognized income.
  • 2Exelon initially recorded $42 million (after-tax) in income in Q1 2009 based on the favorable ruling.
  • 3The court's revised opinion dictates that the ruling applies prospectively from 2009 only.
  • 4Exelon is no longer entitled to the previously claimed tax credit refunds for prior years.
  • 5A charge will be recorded in Q3 2009 to reverse the previously recognized income.
  • 6The company is evaluating its options regarding the court's decision.
  • 7Exelon's 2009 earnings guidance remains unaffected by this development.

Frequently Asked Questions

On February 20, 2009, the Illinois Supreme Court ruled in favor of Exelon, allowing the company to recognize approximately $42 million (after-tax) in income related to refund claims for Illinois investment tax credits and associated interest for the years 1995-2008. This income was recorded in the first quarter of 2009.

The Illinois Supreme Court changed its opinion on July 15, 2009, stating that its previous ruling should only be applied prospectively, beginning in 2009. As a result, Exelon is no longer entitled to the $42 million in refunds previously recognized, and will need to record a charge in the third quarter to reverse this income.

No, Exelon explicitly stated in the filing that this development does not affect its 2009 earnings guidance.

Exelon is currently evaluating its options following the Illinois Supreme Court's revised opinion. If the court does not change its position again, the company will record a charge in the third quarter to reverse the income previously recognized from the tax credits.