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Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

/x/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended SEPTEMBER 30, 2002
or  

/ /
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission
File Number

   Exact name of registrant as specified in its charter and
principal office address and telephone number

   State of
Incorporation

   I.R.S. Employer
ID. Number
1-14514   Consolidated Edison, Inc.
4 Irving Place, New York, New York 10003
(212) 460-4600		   New York   13-3965100

1-1217
 
Consolidated Edison Company of New York, Inc.
4 Irving Place, New York, New York 10003
(212) 460-4600
 
New York
 
13-5009340

1-4315
 
Orange and Rockland Utilities, Inc.
One Blue Hill Plaza, Pearl River, New York 10965
(914) 352-6000
 
New York
 
13-1727729

Indicate by check mark whether each Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes /x/    No / /

As of the close of business on October 31, 2002, Consolidated Edison, Inc. ("Con Edison") had outstanding 213,622,478 Common Shares ($.10 par value). Con Edison owns all of the outstanding common equity of Consolidated Edison Company of New York, Inc. ("Con Edison of New York") and Orange and Rockland Utilities, Inc. ("O&R").

O&R meets the conditions specified in general instruction H (1) (a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.

1


TABLE OF CONTENTS

 
    
    
  
  
   PAGE
Filing Format   3

Part I.—Financial Information
 
 
Item 1.   Financial Statements    
        Con Edison    
            Consolidated Balance Sheet   4
            Consolidated Income Statements   6
            Consolidated Statement of Retained Earnings   8
            Consolidated Statements of Comprehensive Income   8
            Consolidated Statement of Cash Flows   10
            Notes to Financial Statements   11
        Con Edison of New York    
            Consolidated Balance Sheet   24
            Consolidated Income Statements   26
            Consolidated Statement of Retained Earnings   28
            Consolidated Statements of Comprehensive Income   28
            Consolidated Statement of Cash Flows   30
            Notes to Financial Statements   31
        O&R    
            Consolidated Balance Sheet   38
            Consolidated Income Statements   40
            Consolidated Statement of Retained Earnings   42
            Consolidated Statements of Comprehensive Income   42
            Consolidated Statement of Cash Flows   44
            Notes to Financial Statements   45
Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations    
        Con Edison   51
        Con Edison of New York   68
        O&R     *
    O&R Management's Narrative Analysis of the Results of Operations   83
Item 3.   Quantitative and Qualitative Disclosures About Market Risk    
        Con Edison   89
        Con Edison of New York   89
        O&R     *
Item 4.   Controls and Procedures   89
    Forward-Looking Statements   91

Part II.—Other Information
 
 
Item 1.   Legal Proceedings   93
Item 5.   Other Information   94
Item 6.   Exhibits and Reports on Form 8-K   94
Signatures   96
Certifications   97
*
O&R is omitting this information pursuant to General Instruction H of Form 10-Q.

2


Filing Format

This Quarterly Report on Form 10-Q  is a combined report being filed separately by three different registrants: Consolidated Edison, Inc. ("Con Edison"), Consolidated Edison Company of New York, Inc. ("Con Edison of New York") and Orange and Rockland Utilities, Inc. ("O&R"). Neither Con Edison of New York nor O&R makes any representation as to the information contained in this report relating to Con Edison or the subsidiaries of Con Edison other than itself.

O&R, a wholly-owned subsidiary of Con Edison, meets the conditions specified in General Instruction H of Form 10-Q  and is permitted to use the reduced disclosure format for wholly-owned subsidiaries of companies, such as Con Edison, that are reporting companies under the Securities Exchange Act of 1934. Accordingly, O&R has omitted from this report the information called for by Part 1, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations and has included in this report its Management's Narrative Analysis of the Results of Operations. In accordance with general instruction H, O&R has also omitted from this report the information, if any, called for by Part 1, Item 3, Quantitative and Qualitative Disclosure About Market Risk; Part II, Item 2, Changes in Securities and Use of Proceeds; Part II, Item 3, Defaults Upon Senior Securities; and Part II, Item 4, Submission of Matters to a Vote of Security Holders.

3


Consolidated Edison, Inc.


CONSOLIDATED BALANCE SHEET
(UNAUDITED)

 
   As at
 
   September 30, 2002

   December 31, 2001
 
  
 
   (Thousands of Dollars)
ASSETS            
UTILITY PLANT, AT ORIGINAL COST            
  Electric   $ 11,444,028   $ 11,145,400
  Gas     2,488,260     2,405,730
  Steam     764,376     758,600
  General     1,407,143     1,354,099
  TOTAL     16,103,807     15,663,829
  Less: Accumulated depreciation     4,629,181     4,472,994
  NET     11,474,626     11,190,835
  Construction work in progress     815,200     654,107
NET UTILITY PLANT     12,289,826     11,844,942
NON-UTILITY PLANT            
  Unregulated generating assets, less accumulated depreciation of $26,937 and $21,289 in 2002 and 2001, respectively     165,449     131,654
  Non-utility property, less accumulated depreciation of $15,970 and $11,235 in 2002 and 2001 respectively     80,948     53,915
  Construction work in progress     383,533     217,864
NET PLANT     12,919,756     12,248,375
CURRENT ASSETS            
  Unrestricted cash and temporary cash investments     83,401     271,356
  Restricted cash     18,761     69,823
  Accounts receivable - customer, less allowance for uncollectible accounts of $33,183 and $34,775 in 2002 and 2001, respectively     733,199     613,733
  Accrued unbilled revenue     46,456     47,654
  Other receivables     241,889     97,344
  Fuel, at average cost     16,791     18,216
  Gas in storage, at average cost     98,030     111,507
  Materials and supplies, at average cost     90,815     90,976
  Prepayments     208,105     79,687
  Other current assets     114,909     50,454
TOTAL CURRENT ASSETS     1,652,356     1,450,750
INVESTMENTS - OTHER     232,717     216,979
DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS            
  Goodwill     405,802     439,944
  Intangible assets     82,963     85,783
  Accrued pension credits     946,504     697,807
  Regulatory assets            
      Future federal income tax     605,290     659,891
      Recoverable energy costs     293,975     210,264
      Sale of nuclear generating plant     129,894     174,804
      Real estate sale costs - First Avenue properties     135,189     105,407
      Deferred retirement program costs     84,089     81,796
      Deferred unbilled gas revenue     43,594     43,594
      Deferred environmental remediation costs     72,011     62,559
      Workers' compensation     56,757     62,109
      Divestiture - capacity replacement reconciliation     53,850     58,850
      Deferred revenue taxes     79,830     41,256
      World Trade Center restoration costs     45,516     32,933
      Other     133,725     83,697
  TOTAL REGULATORY ASSETS     1,733,720     1,617,160
  Other deferred charges and noncurrent assets     229,850     239,313
TOTAL DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS     3,398,839     3,080,007
TOTAL   $ 18,203,668   $ 16,996,111

The accompanying notes are an integral part of these financial statements.

4


Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

 
   As at

  
 
   September 30, 2002
   December 31, 2001
  
 
   (Thousands of Dollars)

  
CAPITALIZATION AND LIABILITIES              
CAPITALIZATION              
  Common stock, authorized 500,000,000 shares; outstanding 213,485,279 shares and 212,206,394 shares   $ 1,532,172   $ 1,482,341  
  Retained earnings     5,420,676     5,251,017  
  Treasury stock, at cost; 23,210,700 shares and 23,281,700 shares     (1,001,241 )   (1,002,107 )
  Capital stock expense     (35,374 )   (35,547 )
  Accumulated other comprehensive income     (18,232 )   (29,436 )
 
      TOTAL COMMON SHAREHOLDERS' EQUITY     5,898,001     5,666,268  
 
  Preferred stock     212,563     212,563  
  Long-term debt     5,945,622     5,501,217  
 
TOTAL CAPITALIZATION     12,056,186     11,380,048  
 
MINORITY INTERESTS     8,562     9,522  
NONCURRENT LIABILITIES              
  Obligations under capital leases     39,149     41,088  
  Accumulated provision for injuries and damages     176,374     175,665  
  Pension and benefits reserve     222,331     187,739  
  Superfund and other environmental costs     142,713     132,254  
  Other noncurrent liabilities     41,420     30,159  
 
TOTAL NONCURRENT LIABILITIES     621,987     566,905  
 
CURRENT LIABILITIES              
  Long-term debt due within one year     196,630     310,950  
  Preferred stock to be redeemed in one year     —     37,050  
  Notes payable     402,846     343,722  
  Accounts payable     781,737     665,342  
  Customer deposits     217,440     214,121  
  Accrued taxes     138,281     146,657  
  Accrued interest     98,150     80,238  
  System Benefit Charge     26,987     30,024  
  Independent Power Producer buyout     32,700     33,750  
  Accrued wages     74,101     77,131  
  Other current liabilities     183,286     176,376  
 
TOTAL CURRENT LIABILITIES     2,152,158     2,115,361  
 
DEFERRED CREDITS AND REGULATORY LIABILITIES              
  Accumulated deferred income tax     2,479,211     2,235,295  
  Accumulated deferred investment tax credits     113,406     118,350  
  Regulatory liabilities              
      NYISO reconciliation     99,635     92,504  
      World Trade Center casualty loss     78,787     81,483  
      Gain on divestiture     42,670     59,030  
      Deposit from sale of First Avenue properties     50,000     50,000  
      Refundable energy costs     47,618     45,008  
      Accrued electric rate reduction     38,018     38,018  
      Transmission Congestion Contracts     79,119     4,896  
      Gas Rate Plan — World Trade Center Recovery     36,388     —  
      Electric excess earnings     20,000     —  
      Other     258,797     185,188  
 
  TOTAL REGULATORY LIABILITIES     751,032     556,127  
 
  Other deferred credits     21,126     14,503  
 
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES     3,364,775     2,924,275  
 
TOTAL   $ 18,203,668   $ 16,996,111  
 

The accompanying notes are an integral part of these financial statements.

5


Consolidated Edison, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

 
   For the Three Months
Ended September 30,
  
 
   2002

   2001

  
 
  


 
 
   (Thousands of Dollars)

  
OPERATING REVENUES              
  Electric   $ 2,127,038   $ 2,247,336  
  Gas     156,029     166,601  
  Steam     76,662     78,703  
  Non-utility     179,761     134,916  
 
TOTAL OPERATING REVENUES     2,539,490     2,627,556  
 
OPERATING EXPENSES              
  Purchased power     1,063,917     1,072,042  
  Fuel     83,462     99,845  
  Gas purchased for resale     74,537     86,868  
  Other operations     224,195     258,599  
  Maintenance     98,757     101,128  
  Depreciation and amortization     126,162     133,011  
  Taxes, other than income taxes     301,163     313,583  
  Income taxes     181,202     176,069  
 
TOTAL OPERATING EXPENSES     2,153,395     2,241,145  
 
OPERATING INCOME     386,095     386,411  
 
OTHER INCOME (DEDUCTIONS)              
  Investment income     426     2,309  
  Allowance for equity funds used during construction     1,983     286  
  Other income     1,780     1,548  
  Other income deductions     (4,363 )   (7,421 )
  Income taxes     9,703     5,490  
 
TOTAL OTHER INCOME (DEDUCTIONS)     9,529     2,212  
 
INCOME BEFORE INTEREST CHARGES     395,624     388,623  
  Interest on long-term debt     102,619     100,587  
  Other interest     8,160     9,230  
  Allowance for borrowed funds used during construction     (1,697 )   (1,934 )
 
NET INTEREST CHARGES     109,082     107,883  
 
NET INCOME     286,542     280,740  
 
PREFERRED STOCK DIVIDEND REQUIREMENTS     2,831     3,398  
 
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE     283,711     277,342  
 
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE     —     —  
 
NET INCOME FOR COMMON STOCK   $ 283,711   $ 277,342  
 
EARNINGS PER COMMON SHARE - BASIC              
  Before cumulative effect of change in accounting principle   $ 1.34   $ 1.31  
 
  Cumulative effect of change in accounting principle   $ —   $ —  
 
  After cumulative effect of change in accounting principle   $ 1.34   $ 1.31  
 
EARNINGS PER COMMON SHARE - DILUTED              
  Before cumulative effect of change in accounting principle   $ 1.33   $ 1.30  
 
  Cumulative effect of change in accounting principle   $ —   $ —  
 
  After cumulative effect of change in accounting principle   $ 1.33   $ 1.30  
 
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK   $ 0.555   $ 0.550  
 
AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC     213,219,441     212,206,033  
 
AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED     214,220,069     213,170,793  
 

The accompanying notes are an integral part of these financial statements.

6


Consolidated Edison, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

</
 
   For the Nine Months
Ended September 30,
  
 
   2002

   2001

  
 
  


 
 
   (Thousands of Dollars)

  
OPERATING REVENUES              
  Electric   $ 4,826,870   $ 5,486,659  
  Gas     872,248     1,173,813  
  Steam     288,616     426,621  
  Non-utility     437,099     414,584  
 
TOTAL OPERATING REVENUES     6,424,833     7,501,677  
 
OPERATING EXPENSES              
  Purchased power     2,413,054     2,739,562  
  Fuel     194,754     341,133  
  Gas purchased for resale     425,836     723,990  
  Other operations     691,865     799,583  
  Maintenance     297,327     345,914  
  Depreciation and amortization     368,731     404,877  
  Taxes, other than income taxes     837,648     878,052  
  Income taxes     351,673     379,841  
 
TOTAL OPERATING EXPENSES     5,580,888     6,612,952  
 
OPERATING INCOME     843,945     888,725  
 
OTHER INCOME (DEDUCTIONS)              
  Investment income     1,548     4,533  
  Allowance for equity funds used during construction     8,103     787  
  Other income     17,067     1,399  
  Other income deductions     (19,252 )   (18,500 )
  Income taxes     25,771     12,629  
 
TOTAL OTHER INCOME (DEDUCTIONS)     33,237     848  
 
INCOME BEFORE INTEREST CHARGES     877,182     889,573  
  Interest on long-term debt     295,810     298,149  
  Other interest     27,252     29,254  
  Allowance for borrowed funds used during construction     (3,404 )   (5,156 )
 
NET INTEREST CHARGES     319,658     322,247  
 
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE     557,524     567,326  
 
PREFERRED STOCK DIVIDEND REQUIREMENTS     9,627     10,194  
 
NET INCOME     547,897     557,132  
 
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (NET OF INCOME TAXES OF $13.961 MILLION)     20,182     —  
 
NET INCOME FOR COMMON STOCK   $ 527,715   $ 557,132  
 
EARNINGS PER COMMON SHARE - BASIC              
  Before cumulative effect of change in accounting principle   $ 2.58   $ 2.63  
 
  Cumulative effect of change in accounting principle   $ 0.10   $ —  
 
  After cumulative effect of change in accounting principle   $ 2.48   $ 2.63  
 
EARNINGS PER COMMON SHARE - DILUTED              
  Before cumulative effect of change in accounting principle   $ 2.57   $ 2.62