Exelon 2003 Annual Report Download - page 46

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44 Management’s Discussion and Analysis of Financial Condition and Results of Operations
EXELON CORPORATION AND SUBSIDIARY COMPANIES
Energy Delivery’s gas sales statistics and revenue detail were as follows:
Deliveries to customers in million cubic feet (mmcf) 2003 2002 Variance % Change
Retail sales 61,858 54,782 7,076 12.9%
Transportation 26,404 30,763 (4,359) (14.2%)
Total 88,262 85,545 2,717 3.2%
Revenue 2003 2002 Variance % Change
Retail sales $ 609 $ 490 $ 119 24.3%
Transportation 18 19 (1) (5.3%)
Resales and other 18 40 (22) (55.0%)
Total $ 645 $ 549 $ 96 17.5%
Results of Operations–Generation
Generation 2003 2002 Variance % Change
Operating revenues $ 8,135 $6,858 $ 1,277 18.6%
Purchased power and fuel expense 5,120 4,253 867 20.4%
Operating and maintenance expense(a) 2,890 1,656 1,234 74.5%
Depreciation and amortization expense 199 276 (77) (27.9%)
Operating income (loss) (194) 509 (703) (138.1%)
Income (loss) before income taxes and cumulative effect of changes in
accounting principles (420) 604 (1,024) (169.5%)
Income (loss) before cumulative effect of changes in accounting principles (241) 387 (628) (162.3%)
Net income (loss) (133) 400 (533) (133.3%)
(a) Includes an impairment charge of $945 million before income taxes related to the long-lived assets of Boston Generating.
Net Income (Loss). The decrease in Generation’s net income in
2003 as compared to 2002 was primarily due to an impair-
ment charge of $945 million before income taxes recorded in
2003 related to the long-lived assets of Boston Generating,
impairment and other transaction-related charges of $280
million before income taxes recorded in 2003 related to
Generation’s investment in Sithe, and increased operating
and maintenance expenses, partially offset by an increase in
operating revenues net of purchased power and fuel ex-
pense. Generation also experienced an increase in its effec-
tive tax rate.
Cumulative effect of changes in accounting principles
recorded in 2003 and 2002 included income of $108 million,
net of income taxes, recorded in 2003 related to the of adop-
tion of SFAS No. 143 and income of $13 million, net of income
taxes, recorded in 2002 related to the adoption of SFAS No.
142. See Note 1 of the Notes to Consolidated Financial State-
ments for further discussion of these effects.
Operating Revenues. The changes in Generation’s operating
revenues for 2003 compared to 2002 consisted of the
following:
Generation Variance
Market sales $1,270
Trading margins 30
Energy Delivery and Exelon Energy Company (177)
Other 154
Increase in operating revenues $ 1,277
Market Sales. Sales volume in the wholesale spot and bi-
lateral markets increased primarily due to the acquisition of
Exelon New England in November 2002 and the
commencement of commercial operations in 2003 of the
Boston Generating facilities, Mystic 8 and 9 and Fore River. In
addition, average market prices were $5/MWh higher than
2002.
Trading Margins. Trading activity increased revenue by $1
million in 2003 compared to a reduction in revenue of $29
million in 2002 due to an increase in gas prices in April 2002,
which negatively affected Generation’s trading positions.