Exelon 2003 Annual Report Download - page 115

113Notes to Consolidated Financial Statements
EXELON CORPORATION AND SUBSIDIARY COMPANIES
Exelon’s pension plans and postretirement welfare benefit
plans do not directly hold shares of Exelon common stock.
Assumed health care cost trend rates have a significant
effect on the amounts reported for the health care plans. A
one percentage point change in assumed health care cost
trend rates would have the following effects:
Effect of a one percentage point increase in assumed health
care cost trend
on total service and interest cost components $ 37
on postretirement benefit obligation $ 372
Effect of a one percentage point decrease in assumed health
care cost trend
on total service and interest cost components $ (30)
on postretirement benefit obligation $(312)
Exelon expects to contribute up to approximately $419 mil-
lion to its pension plans in 2004. These contributions ex-
clude benefit payments expected to be made directly from
corporate assets. Of the $419 million expected to be con-
tributed to the pension plans during 2004, $17 million is
estimated to be needed to satisfy IRS minimum funding
requirements.
Exelon sponsors savings plans for the majority of its
employees. The plans allow employees to contribute a por-
tion of their pre-tax income in accordance with specified
guidelines. Exelon matches a percentage of the employee
contribution up to certain limits. The cost of Exelon’s match-
ing contribution to the savings plans totaled $55 million, $63
million and $57 million in 2003, 2002 and 2001, respectively.
NOTE 15 ‰FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
Non-Derivative Financial Assets and Liabilities
As of December 31, 2003 and 2002, Exelon’s carrying
amounts of cash and cash equivalents, accounts receivable,
accounts payable and accrued liabilities are representative
of fair value because of the short-term nature of these
instruments. Fair values of the trust accounts for decom-
missioning nuclear plants, long-term debt and preferred
securities of subsidiaries are estimated based on quoted
market prices for the securities held in trust funds and for
the same or similar issues for long-term debt and preferred
securities.
The carrying amounts and fair values of Exelon’s financial liabilities as of December 31, 2003 and 2002 were as follows:
2003 2002
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Liabilities
Long-term debt (including amounts due within one year) $9,274 $9,889 $14,529 $15,950
Long-term debt to ComEd Transitional Funding Trust and PECO Energy Transition
Trust (a) 5,525 6,006 ––
Long-term debt to financing trusts (including amounts due within one year) 545 567 ––
Preferred securities of subsidiaries 87 71 595 739
(a) Effective July 1, 2003, PECO Trust IV, a financing subsidiary created in May 2003, was deconsolidated from the financial statements in conjunction with the adoption of FIN No.
46. Effective December 31, 2003, ComEd Financing II, ComEd Financing III, ComEd Transitional Funding Trust, PECO Trust III, and PETT were deconsolidated from the financial
statements in conjunction with the adoption of FIN No. 46-R. Amounts owed to these financing trusts are recorded as debt to financing trusts within the Consolidated Balance
Sheets. See Note 16—Preferred Securities for additional information regarding ComEd Financing II, ComEd Financing III, ComEd Funding LLC, PECO Trust III and PECO Trust IV.
Financial instruments that potentially subject Exelon to con-
centrations of credit risk consist principally of cash equiv-
alents and customer accounts receivable. Exelon places its
cash equivalents with high-credit quality financial in-
stitutions. Generally, such investments are in excess of the
Federal Deposit Insurance Corporation limits. Concen-
trations of credit risk with respect to customer accounts re-
ceivable are limited due to Exelon’s large number of
customers and, in the case of the Energy Delivery business,
their dispersion across many industries.