Exelon 2001 Annual Report Download - page 29

27
The October 20, 2000 acquisition of Unicom, and the January 1, 2001 corporate restructuring, significantly impacted Exelon’s
results of operations. To provide a more meaningful analysis of results of operations, the EBIT analyses by business segment
below identify the portion of the EBIT variance that is attributable to Unicom’s results of operations and the portion of the
variance that results from normal operations attributable to changes in components of the underlying operations of Exelon.The
merger variance represents Unicom results for 2000 prior to the October 20, 2000 acquisition date as well as the effect of
excluding Merger-related costs from Exelon’s 2000 operations. The segment results also reflect the results as if the corporate
restructuring occurred on January 1, 2000. The 2000 pro forma effects of the Merger and restructuring were developed using
estimates of various items, including allocation of corporate overheads to business segments and intercompany transactions.
EBIT Contribution by Business Segment
Components of Variance
Merger Normal
(in millions) 2001 2000 Variance Variance Operations
Energy Delivery $ 2,623 $ 1,503 $ 1,120 $ 1,219 $ (99)
Generation 962 440 522 22 500
Enterprises (107) (140) 33 (32) 65
Corporate (22) (328) 306 286 20
EBIT $ 3,456 $ 1,475 $ 1,981 $ 1,495 $ 486
Energy Delivery
Components of Variance
Merger Normal
(in millions) 2001 2000 Variance Variance Operations
Operating Revenue $ 10,171 $ 4,511 $ 5,660 $ 5,168 $ 492
Operating Expense and Other 6,467 2,711 3,756 3,242 514
Depreciation & Amortization 1,081 297 784 707 77
EBIT $ 2,623 $1,503 $ 1,120 $ 1,219 $ (99)
Energy Delivery’s EBIT increased $1,120 million in 2001, as compared to 2000.The Merger accounted for $1,219 million of the
variance offset by a decrease in EBIT from normal operations of $99 million. The decrease in EBIT from normal operations
reflects increased operating and maintenance expenses and regulatory asset amortization, partially offset by improved
margins on sales due to favorable rate changes.
Energy Delivery’s operating and maintenance expenses increased due to higher administrative and general costs as a
result of increased allocation of costs previously recorded at Corporate, and $18 million for employee severance costs
associated with the Merger, partially offset by a decrease in customer costs. Higher purchased power costs for 2001 include
charges for energy losses incurred during distribution from Generation (line loss charges), however line loss charges were
not included in the 2000 pro forma purchased power costs.
Other expenses increased $73 million due primarily to a $113 million gain on a ComEd forward share repurchase
arrangement recognized during the first quarter of 2000, partially offset by a $38 million non-recurring loss on the sale of
Cotter Corporation, a ComEd subsidiary, recognized during the first quarter of 2000.
Depreciation and amortization increased $77 million reflecting increased regulatory asset amortization of $34 million
consistent with regulatory provisions, and increased depreciation expense of $43 million primarily associated with capital
additions.
Depreciation and amortization includes goodwill amortization of $126 million in 2001, which will be discontinued in
2002 upon the adoption of Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards
(SFAS) No. 142 “Goodwill and Other Intangible Assets” (SFAS No. 142).