10-QPeriod: Q1 FY2003

EXELON CORP Quarterly Report for Q1 Ended Mar 31, 2003

Filed May 2, 2003For Securities:EXC

Summary

Exelon Corporation's first quarter 2003 report shows a significant rebound in net income compared to the prior year, reaching $361 million, or $1.11 per diluted share, up from a mere $8 million in Q1 2002. This improvement is largely driven by a $112 million positive impact from the adoption of SFAS No. 143 (Asset Retirement Obligations), which offset a $230 million charge in the prior year related to SFAS No. 142 adoption. Excluding these accounting changes, income before cumulative effect increased by 5%, fueled by favorable weather conditions, higher customer rate recoveries, and reduced refueling outage costs, partially offset by an investment impairment and higher operating expenses. The Energy Delivery segment, encompassing ComEd and PECO, demonstrated strong revenue growth driven by increased deliveries, favorable weather, and rate adjustments. Generation's results were impacted by a significant $200 million impairment charge on its investment in Sithe Energies, leading to a net income decline for the segment. The Enterprises segment also reported an improved operating loss. Overall, the company generated positive operating cash flows of $383 million, with capital expenditures totaling $427 million, primarily focused on infrastructure improvements and generation facilities.

Key Highlights

  • 1Net income surged to $361 million ($1.11/diluted share) in Q1 2003, a substantial increase from $8 million ($0.02/diluted share) in Q1 2002.
  • 2Income before cumulative accounting effects rose 5% to $249 million, driven by favorable weather, higher customer rate recoveries, and reduced nuclear refueling costs.
  • 3The adoption of SFAS No. 143 (Asset Retirement Obligations) resulted in a $112 million positive cumulative accounting effect in Q1 2003.
  • 4The Energy Delivery segment saw a 13.1% increase in operating revenues, supported by favorable weather and rate adjustments.
  • 5Generation segment's net income declined due to a $200 million impairment charge on its investment in Sithe Energies.
  • 6Operating cash flow was strong at $383 million for the quarter.
  • 7Capital expenditures were $427 million, focused on infrastructure and generation projects.

Frequently Asked Questions

The substantial increase in net income was driven by two main factors: the positive cumulative effect of adopting SFAS No. 143 ($112 million) and an underlying operational improvement. Excluding accounting changes, income before cumulative effects grew by 5% due to favorable weather, higher customer rate recoveries, and reduced nuclear refueling outage costs. This was partially offset by a $200 million impairment charge on the Sithe Energies investment and higher operating expenses in the Generation segment.

The Energy Delivery segment (ComEd and PECO) performed well, with a 13.1% increase in operating revenues driven by higher customer deliveries, favorable weather, and rate adjustments. The Generation segment's net income declined due to a significant $200 million impairment charge related to its Sithe Energies investment. The Enterprises segment showed an improved operating loss. Overall, the company benefited from improved operational performance excluding the Generation segment's impairment.

Exelon generated $383 million in cash flow from operating activities during the quarter. Capital expenditures totaled $427 million, primarily directed towards improving the reliability of the transmission and distribution systems for Energy Delivery and construction of new generating facilities for Generation. The company anticipates these expenditures will be funded through a combination of internally generated cash, borrowings, and capital contributions from Exelon.