Back to GetFilings.com




QuickLinks -- Click here to rapidly navigate through this document

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 MARCH 31, 2003
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
(845) 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 / /

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes /x/    No / /

As of the close of business on April 30, 2003, Consolidated Edison, Inc. (Con Edison) had outstanding 214,577,014 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).

1


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). Con Edison of New York and O&R are subsidiaries of Con Edison, and together with Con Edison are referred to in this report as "the Companies." 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.


TABLE OF CONTENTS

 
    
    
  
  
   PAGE
Glossary of Terms   3

Part I.—Financial Information
 
 
Item 1.   Financial Statements    
        Con Edison    
            Consolidated Balance Sheet   4
            Consolidated Income Statement   6
            Consolidated Statement of Comprehensive Income   7
            Consolidated Statement of Retained Earnings   7
            Consolidated Statement of Cash Flows   8
        Con Edison of New York    
            Consolidated Balance Sheet   9
            Consolidated Income Statement   11
            Consolidated Statement of Comprehensive Income   12
            Consolidated Statement of Retained Earnings   12
            Consolidated Statement of Cash Flows   13
        O&R    
            Consolidated Balance Sheet   14
            Consolidated Income Statement   16
            Consolidated Statement of Comprehensive Income   17
            Consolidated Statement of Retained Earnings   17
            Consolidated Statement of Cash Flows   18
        Notes to Financial Statements   19
Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations   35
Item 3.   Quantitative and Qualitative Disclosures About Market Risk   53
Item 4.   Controls and Procedures   53
    Forward-Looking Statements   53

Part II.—Other Information
 
 
Item 1.   Legal Proceedings   54
Item 6.   Exhibits and Reports on Form 8-K   54
Signatures   56
Certifications   57

2


GLOSSARY OF TERMS

The following is a glossary of frequently used abbreviations or acronyms that are found throughout this report:

Con Edison Companies    
Con Edison   Consolidated Edison, Inc
Con Edison Communications   Con Edison Communications, LLC
Con Edison Development   Consolidated Edison Development, Inc
Con Edison Energy   Consolidated Edison Energy, Inc
Con Edison of New York   Consolidated Edison Company of New York, Inc
Con Edison Solutions   Consolidated Edison Solutions, Inc
O&R   Orange and Rockland Utilities, Inc
Regulatory and State Agencies    
NYPA   New York Power Authority
PSC   New York State Public Service Commission
SEC   Securities and Exchange Commission
Other    
AFDC   Allowance for Funds used During Construction
DTH   Dekatherm
FASB   Financial Accounting Standards Board
EITF   Emerging Issues Task Force
ENDRO   Equivalent number of days of revenue outstanding
kwh   Kilowatt-hour
MW   Thousand kilowatts or Megawatts
NYISO   New York Independent System Operator
OCI   Other Comprehensive Income
PCBs   Polychlorinated biphenyls
SFAS   Statement of Financial Accounting Standards
Superfund   Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980

3


Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

 
 As at
 
 March 31, 2003
   December 31, 2002
 
 
 (Millions of Dollars)
ASSETS          
UTILITY, PLANT, AT ORIGINAL COST          
  Electric $ 11,622   $ 11,537
  Gas   2,552     2,525
  Steam   770     768
  General   1,489     1,471
  TOTAL   16,433     16,301
  Less: Accumulated depreciation   4,707     4,660
  NET   11,726     11,641
  Construction work in progress   1,063     989
NET UTILITY PLANT   12,789     12,630
NON-UTILITY PLANT          
  Unregulated generating assets, less accumulated depreciation of $32 and $30 in 2003 and 2002, respectively   253     222
  Non-utility property, less accumulated depreciation of $22 and $19 in 2003 and 2002, respectively   135     140
  Construction work in progress   343     347
NET PLANT   13,520     13,339
CURRENT ASSETS          
  Cash and temporary cash investments   62     118
  Restricted cash   16     14
  Funds held for the redemption of long-term debt   —     275
  Accounts receivable - customers, less allowance for uncollectible accounts of $36 and $35 in 2003 and 2002, respectively   872     683
  Accrued unbilled revenue   46     54
  Other receivables   203     169
  Fuel, at average cost   43     23
  Gas in storage, at average cost   42     81
  Materials and supplies, at average cost   93     92
  Prepayments   237     73
  Other current assets   137     125
TOTAL CURRENT ASSETS   1,751     1,707
INVESTMENTS   235     235
DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS          
  Goodwill   406     406
  Intangible asset, less accumulated amortization of $11 and $10 in 2003 and 2002, respectively   83     82
  Prepaid pension costs   1,065     1,024
  Regulatory assets   1,985     1,866
  Other deferred charges and noncurrent assets   222     196
TOTAL DEFERRED CHARGES, REGULATORY ASSETS AND NON CURRENT ASSETS   3,761     3,574
TOTAL ASSETS $ 19,267   $ 18,855

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

4


Consolidated Edison, Inc.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)

 
   As At

  
 
   March 31, 2003
   December 31, 2002
  
 
  
 
 
   (Millions of Dollars)

  
CAPITALIZATION AND LIABILITIES              
CAPITALIZATION              
  Common stock, authorized 500,000,000 shares; outstanding 214,443,381 shares and 213,932,934 shares in 2003 and 2002, respectively   $ 1,571   $ 1,551  
  Retained earnings     5,453     5,420  
  Treasury stock, at cost; 23,210,700 shares in 2003 and 2002     (1,001 )   (1,001 )
  Capital stock expense     (36 )   (36 )
  Accumulated other comprehensive income (loss)     (10 )   (13 )
 
      TOTAL COMMON SHAREHOLDERS' EQUITY     5,977     5,921  
 
  Preferred stock     213     213  
  Long-term debt     6,017     6,168  
 
TOTAL CAPITALIZATION     12,207     12,302  
 
MINORITY INTERESTS     8     9  
NONCURRENT LIABILITIES              
  Obligations under capital leases     38     38  
  Provision for injuries and damages     195     197  
  Pension and benefits     216     206  
  Superfund and other environmental costs     140     143  
  Independent power producer buyout     32     33  
  Other noncurrent liabilities     47     48  
 
TOTAL NONCURRENT LIABILITIES     668     665  
 
CURRENT LIABILITIES              
  Long-term debt due within one year     313     473  
  Notes payable     632     162  
  Accounts payable     1,020     919  
  Customer deposits     219     221  
  Accrued taxes     4     100  
  Accrued interest     107     94  
  System benefit charge     27     27  
  Accrued wages     81     82  
  Other current liabilities     235     196  
 
TOTAL CURRENT LIABILITIES     2,638     2,274  
 
DEFERRED CREDITS AND REGULATORY LIABILITIES              
  Deferred income taxes     2,734     2,598  
  Deferred investment tax credits     110     112  
  Regulatory liabilities     898     891  
  Other deferred credits     4     4  
 
TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES     3,746     3,605  
 
TOTAL CAPITALIZATION AND LIABILITIES   $ 19,267   $ 18,855  
 

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

5


Consolidated Edison, Inc.

CONSOLIDATED INCOME STATEMENT
(UNAUDITED)

 
   For the Three Months
Ended March 31,
  
 
   2003

   2002

  
 
  


 
 
   (Millions of Dollars)

  
OPERATING REVENUES              
  Electric   $ 1,493   $ 1,301  
  Gas     620     474  
  Steam     238     141  
  Non-utility     219     140  
 
TOTAL OPERATING REVENUES     2,570     2,056  
 
OPERATING EXPENSES              
  Purchased power     865     670  
  Fuel     185     65  
  Gas purchased for resale     363     230  
  Other operations     296     237  
  Maintenance     92     100  
  Depreciation and amortization     129     120  
  Taxes, other than income taxes     284     267  
  Income taxes     99     110  
 
TOTAL OPERATING EXPENSES     2,313     1,799  
 
OPERATING INCOME     257     257  
 
OTHER INCOME (DEDUCTIONS)              
  Investment income     —     1  
  Allowance for equity funds used during construction     2     4  
  Other income     5     7  
  Other deductions     (3 )   (8 )
  Income taxes     2     13  
 
TOTAL OTHER INCOME (DEDUCTIONS)     6     17  
 
INCOME BEFORE INTEREST CHARGES     263     274  
 
  Interest on long-term debt     100     94  
  Other interest     8     11  
  Allowance for borrowed funds used during construction     (2 )   —  
 
NET INTEREST CHARGES     106     105  
 
INCOME BEFORE PREFERRED STOCK DIVIDENDS     157     169  
 
PREFERRED STOCK DIVIDEND REQUIREMENTS     3     3  
 
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE     154     166  
 
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (NET OF INCOME TAXES OF $14)     —     20  
 
NET INCOME FOR COMMON STOCK   $ 154   $ 146  
 
EARNINGS PER COMMON SHARE - BASIC              
  Before cumulative effect of change in accounting principle   $ 0.72   $ 0.78  
 
  Cumulative effect of change in accounting principle   $ —   $ 0.10  
 
  After cumulative effect of change in accounting principle   $ 0.72   $ 0.68  
 
EARNINGS PER COMMON SHARE - DILUTED              
  Before cumulative effect of change in accounting principle   $ 0.72   $ 0.78  
 
  Cumulative effect of change in accounting principle   $ —   $ 0.10  
 
  After cumulative effect of change in accounting principle   $ 0.72   $ 0.68  
 
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK   $ 0.560   $ 0.555  
 
AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC (IN MILLIONS)     214.2     212.3  
 
AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED (IN MILLIONS)     215.1     213.3  
 

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

6


Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

 
   For the Three Months
Ended March 31,
  
 
   2003

   2002

  
 
  

 
 
   (Millions of Dollars)

  
NET INCOME FOR COMMON STOCK   $ 154   $ 166  
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES              
  Minimum pension liability adjustments, net of ($2) taxes in 2002     —     (3 )
  Unrealized gains on derivatives qualified as hedges, net of $9 and $8 taxes in 2003 and 2002, respectively     13     11  
  Less: Reclassification adjustment for gains (losses) included in net income, net of $8 and ($6) taxes in 2003 and 2002, respectively     11     (8 )
 
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAXES     2     16  
 
COMPREHENSIVE INCOME   $ 156   $ 182  
 


Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(UNAUDITED)

 
   For the Three Months
Ended March 31,
 
   2003

   2002
 
  

 
   (Millions of Dollars)
BALANCE, JANUARY 1   $ 5,420   $ 5,251
  Less: Stock options exercised     1     1
  Income before preferred stock dividends     157     169
  Less: Cumulative effect of change in accounting principle     —     20
NET INCOME AFTER CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE     157     149
TOTAL     5,576     5,399
DIVIDENDS DECLARED ON CAPITAL STOCK            
  Cumulative preferred, at required annual rates     3     3
  Common, $.56 and $.555 per share, respectively     120     118
TOTAL DIVIDENDS DECLARED     123     121
BALANCE, MARCH 31   $ 5,453   $ 5,278

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

7


Consolidated Edison, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

 
   For the Three Months Ended March 31,
  
 
   2003
   2002
  
 
  
 
 
   (Millions of Dollars)

  
OPERATING ACTIVITIES              
  Income before preferred stock dividends   $ 157   $ 169  
  PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME              
      Depreciation and amortization     129     120  
      Deferred income taxes     114     8  
      Common equity component of allowance for funds used during construction     (2 )   (4 )
      Prepaid pension costs (net of capitalized amounts)     (32 )   (70 )
      Cumulative effect of change in accounting principle     —     (20 )
      Other non-cash charges     3     96  
  CHANGES IN ASSETS AND LIABILITIES              
      Accounts receivable - customers, less allowance for uncollectibles     (190 )   (38 )
      Materials and supplies, including fuel and gas in storage     17     67  
      Prepayments, other receivables and other current assets     (201 )   (142 )
      Recoverable energy costs     (85 )   22  
      Accounts payable     101     (43 )
      Pension and benefits     10     24  
      Accrued taxes     (96 )   (64 )
      Accrued interest     13     8  
      Deferred charges and regulatory assets     (13 )   (6 )
      Deferred credits and regulatory liabilities     6     31  
      Transmission congestion contracts     —     48  
      Other assets     (11 )   (22 )
      Other liabilities     26     (38 )
 
NET CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES     (54 )   146  
 
INVESTING ACTIVITIES              
      Utility construction expenditures     (261 )   (238 )
      Cost of removal less salvage     (28 )   (28 )
      Non-utility construction expenditures     (28 )   (74 )
      Common equity component of allowance for funds used during construction     2     4  
      Investments by unregulated subsidiaries     (15 )   3  
      Demolition and remediation costs for First Avenue properties     (3 )   —  
 
NET CASH FLOWS USED IN INVESTING ACTIVITIES     (333 )   (333 )
 
FINANCING ACTIVITIES              
      Net proceeds from short-term debt     470     181  
      Retirement of long-term debt     (310 )   (150 )
      Issuance of common stock     10     —  
      Issuance of long-term debt     275     —  
      Debt issuance costs     1     —  
      Common stock dividends     (110 )   (106 )
      Preferred stock dividends     (3 )   (3 )
 
NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES     333     (78 )
 
CASH AND TEMPORARY CASH INVESTMENTS:              
NET CHANGE FOR THE PERIOD     (54 )   (265 )
BALANCE AT BEGINNING OF PERIOD     132     359  
 
BALANCE AT END OF PERIOD     78     94  
LESS: RESTRICTED CASH     16