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Con Edison, Inc. Reports 2003 Earnings
NEW YORK, Jan 22, 2004 /PRNewswire-FirstCall via COMTEX/ -- Consolidated Edison, Inc. (Con Edison) (NYSE: ED) today reported 2003 earnings from ongoing operations of $624 million or $2.83 a share, compared with earnings from ongoing operations of $668 million or $3.14 a share in 2002. Excluded from these results in 2003 are impairment charges for certain unregulated telecommunications and generating assets and the impact of a regulatory settlement, partially offset by the cumulative effect of changes in accounting principles, and in 2002, the cumulative effect of changes in accounting principles. Including these items, net income for common stock was $528 million or $2.39 a share in 2003 compared with $646 million or $3.03 a share in 2002.
For the fourth quarter of 2003, the company's earnings from ongoing operations were $146 million or $0.65 a share compared with $120 million or $0.56 a share for the fourth quarter of 2002. Including the items noted above, net income for common stock was $50 million or $0.21 a share in the fourth quarter 2003 compared with $118 million or $0.55 a share in the 2002 period.
"Con Edison's utility operations performed very well in 2003. For the second year in a row, Con Edison of New York was named 'Most Reliable Electric Utility in North America.' This award reflects our employees' dedication and our continued focus on the basics of our business," said Eugene R. McGrath, Chairman and Chief Executive Officer. "We're pleased to see that the economy in New York has clearly turned the corner. We are well positioned to participate in the continuing recovery."
The company also declared a quarterly dividend of 56-1/2 cents a share on its common stock, payable March 15, 2004 to shareholders of record as of February 11, 2004, an annualized increase of 2 cents over the previous annual dividend of $2.24 a share. This represents the company's 30th consecutive annual increase in its dividend to shareholders. "The dividend increase reflects our continued confidence in our business and the underlying economic strength of our service area," said Joan S. Freilich, Executive Vice President and Chief Financial Officer. "While our earnings have been negatively impacted by the recent economic slowdown and by increased costs at Con Edison of New York that are not yet reflected in rates, we remain strong financially, with a solid balance sheet, good liquidity and above average debt ratings."
In view of conditions affecting certain of its competitive activities, the company recognized impairment charges of $159 million ($94 million after-tax) for its unregulated telecommunications and generation businesses in the fourth quarter of 2003. The company is evaluating strategic alternatives for the telecommunications business. In addition, the company recognized an $8 million ($5 million after-tax) charge for the settlement of a proceeding regarding outages at the nuclear generating unit the company sold in 2001.
The changes in accounting principles in 2003 were the adoption of new accounting standards requiring fair value accounting for certain power contracts and the consolidation of variable interest entities. The changes in 2002 were the adoption of new accounting standards for goodwill and for certain contracts involved in energy trading and risk management activities.
The following table is a reconciliation of Con Edison's earnings and earnings per share from ongoing operations to reported net income for common stock and earnings per share.
For the year ended For the quarter ended December 31, December 31, Earnings per Earnings per Earnings share Earnings share (Million of Dollars, except earnings per share) 2003 2002 2003 2002 2003 2002 2003 2002 Ongoing operations $624 $668 $2.83 $3.14 $146 $120 $0.65 $0.56 Telecommunications asset impairment (84) - (0.38) - (84) - (0.38) - Unregulated generating asset impairments (10) - (0.05) - (10) - (0.05) - Settlement regarding nuclear generating unit sold in 2001 (5) - (0.03) - (5) - (0.03) - Cumulative effect of changes in accounting principles 3 (22) 0.02 (0.11) 3 (2) 0.02 (0.01) Reported net income for common stock and earnings per share - GAAP Basis $528 $646 $2.39* $3.03 $50 $118 $0.21 $0.55 * The weighted average number of shares outstanding used to calculate earnings per share was 221 million in 2003. Excluding the impact of new equity issuances in 2003 and 2002, the weighted average number of shares outstanding would have been 212 million in 2003.
The following table represents an analysis of the major factors affecting Con Edison's earnings per share from ongoing operations for the year and fourth quarter 2003 compared with the 2002 periods:
Year 4th quarter 2003 vs. 2003 vs. 2002 2002 Con Edison of New York: Impact of weather in 2003 on net revenues versus 2002 (estimated) $(0.03) $(0.05) Sales, adjusted for weather (estimated) 0.15 0.03 Lower operations expense 0.11 0.07 Regulatory accounting/amortizations 0.06 0.14 Increased pension & other post-retirement benefit costs (0.24) (0.05) Higher depreciation and property tax expense (0.12) (0.03) Regional power outage (estimated) (0.03) -- Other (0.04) 0.05 Total Con Edison of New York (0.14) 0.16 Orange and Rockland Utilities -- 0.02 Unregulated subsidiaries and parent company (0.17) (0.09) Total earnings per share variation from ongoing operations ($0.31) $0.09
The performance of the unregulated businesses in 2003 reflects lower merchant generation margins and additional costs related to generating units placed in service and lower than anticipated revenues in the telecommunications business.
For the year 2003, amounts of electricity, firm gas and steam delivered by Con Edison of New York, after adjusting for variations in weather and billing days in the period and the August power outage, increased 0.6 percent, 3.6 percent and 0.9 percent, respectively, as compared with the 2002 period.
Con Edison expects its earnings for 2004 to be in the range of $2.60 to $2.80 a share. The forecast reflects increased pension and other post- retirement benefit costs, insurance premiums and depreciation expense, partially offset by sales growth. Con Edison of New York has filed gas and steam rate proposals that would take effect in October 2004 and expects to file an electric rate proposal this spring, to take effect in April 2005, at the end of the respective current rate plans.
Regulated utility construction expenditures for 2004 are estimated at $1.1 billion, compared with $1.2 billion in 2003. Unregulated subsidiary construction expenditures are estimated at $30 million in 2004 compared with approximately $100 million in 2003.
Refer to attachments to this press release for the condensed consolidated balance sheets at December 31, 2003 and 2002 and the consolidated income statements for 2003 and 2002.
This press release contains certain forward-looking statements of future expectations and non-Generally Accepted Accounting Principles (GAAP) financial measures. Actual results might differ materially from those projected in the forward looking statements because of factors such as those identified in reports the company has filed with the Securities and Exchange Commission. Earnings from ongoing operations should not be considered as an alternative to net income, determined in accordance with GAAP. Management uses earnings and earnings per share from ongoing operations as measures to evaluate operations of the company and believes that these non-GAAP financial measures also provide useful information to investors. Use of these measures facilitates the analysis of the company's ongoing performance as compared to its internal budgets and previously reported financial results. Other companies may use different measures to present financial performance.
Consolidated Edison, Inc. (NYSE: ED) is one of the nation's largest investor-owned energy companies, with $10 billion in annual revenues and approximately $21 billion in assets. The company provides a wide range of energy-related products and services to its customers through the following six subsidiaries: Consolidated Edison Company of New York, Inc., a regulated utility providing electric, gas, and steam service in New York City and Westchester County, New York; Orange and Rockland Utilities, Inc., a regulated utility serving customers in a 1,350 square mile area in southeastern New York state and adjacent sections of northern New Jersey and northeastern Pennsylvania; Con Edison Solutions, a retail energy services company; Con Edison Energy, a wholesale energy supply company; Con Edison Development, an infrastructure development company; and Con Edison Communications, a telecommunications infrastructure company and service provider.
Consolidated Edison, Inc. CONSOLIDATED BALANCE SHEET (Condensed) (UNAUDITED) As at December 31, 2003 December 31, 2002 (Millions of Dollars) ASSETS PLANT, AT ORIGINAL COST Utility plant - net $14,284 $13,442 Non-utility plant - net 941 710 NET PLANT 15,225 14,152 CURRENT ASSETS Cash and temporary cash investments 67 132 Funds held for the redemption of long-term debt -- 275 Accounts receivable - customers, less allowance for uncollectible accounts 790 683 Other receivables, less allowance for uncollectible accounts 184 169 Inventories 283 196 Prepayments 98 73 Other current assets 170 178 TOTAL CURRENT ASSETS 1,592 1,706 INVESTMENTS 248 235 DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS Goodwill 406 406 Intangible assets - net 111 82 Prepaid pension costs 1,257 1,024 Regulatory assets 1,861 1,866 Other deferred charges and noncurrent assets 266 196 TOTAL DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS 3,901 3,574 TOTAL ASSETS $20,966 $19,667 Consolidated Edison, Inc. CONSOLIDATED BALANCE SHEET (Condensed) (UNAUDITED) As at December 31, 2003 December 31, 2002 (Millions of Dollars) CAPITALIZATION AND LIABILITIES CAPITALIZATION Common shareholders' equity $6,423 $5,921 Preferred stock 213 213 Long-term debt 6,733 6,166 TOTAL CAPITALIZATION 13,369 12,300 NONCURRENT LIABILITIES Provision for injuries and damages 194 197 Pension and benefits 205 206 Superfund and other environmental costs 193 143 Other noncurrent liabilities 157 122 TOTAL NONCURRENT LIABILITIES 749 668 CURRENT LIABILITIES Long-term debt due within one year 166 473 Notes payable 159 162 Accounts payable 905 925 Customer deposits 228 221 Other current liabilities 453 494 TOTAL CURRENT LIABILITIES 1,911 2,275 DEFERRED CREDITS AND REGULATORY LIABILITIES Deferred income taxes and investment tax credits 3,172 2,788 Regulatory liabilities and other deferred credits 1,765 1,636 TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES 4,937 4,424 TOTAL CAPITALIZATION AND LIABILITIES $20,966 $19,667 CONSOLIDATED EDISON, INC. CONSOLIDATED INCOME STATEMENT FOR THE THREE MONTHS ENDED DECEMBER 31, 2003 AND 2002 (Unaudited) 2003 2002 (Millions of Dollars) Operating revenues Electric $1,559 $1,424 Gas 362 332 Steam 107 115 Non-utility 251 186 Total operating revenues 2,279 2,057 Operating expenses Purchased power 936 767 Fuel 87 94 Gas purchased for resale 190 171 Other operations 266 270 Maintenance 75 90 Impairment charges - telecommunications and other unregulated assets 159 - Depreciation and amortization 136 126 Taxes, other than income tax 267 277 Income tax 10 46 Total operating expenses 2,126 1,841 Operating income 153 216 Other income (deductions) Investment income 1 1 Allowance for equity funds used during construction 5 2 Other income 9 31 Other deductions (3) (1) Income tax 2 (4) Total other income (deductions) 14 29 Income before interest charges 167 245 Interest on long-term debt 101 90 Other interest 20 33 Allowance for borrowed funds used during construction (4) (1) Net interest charges 117 122 Income before preferred stock dividends 50 123 Preferred stock dividend requirements 3 3 Income before cumulative effect of changes in accounting principles $47 $120 Cumulative effect of changes in accounting principles (net of income tax of $2 million in 2003 and $1 million in 2002) $3 $(2) Net income for common stock $50 $118 Earnings per common share - Basic Before cumulative effect of changes in accounting principles $0.19 $0.56 Cumulative effect of changes in accounting principles $0.02 (0.01) After cumulative effect of changes in accounting principles $0.21 $0.55 Earnings per common share - Diluted Before cumulative effect of changes in accounting principles $0.19 $0.56 Cumulative effect of changes in accounting principles $0.02 (0.01) After cumulative effect of changes in accounting principles $0.21 $0.55 Average number of shares outstanding - Basic (in Millions) 225.5 213.7 Average number of shares outstanding - Diluted (in Millions) 226.5 214.8 Consolidated Edison, Inc. utility sales Electric (thousands of kilowatthours) Total energy delivered in service areas 14,218,825 14,405,405 Gas (dekatherms) Firm sales and transportation 31,148,615 32,072,850 Steam (thousands of pounds) 5,592,791 6,301,118 CONSOLIDATED EDISON, INC. CONSOLIDATED INCOME STATEMENT FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2003 AND 2002 (Unaudited) 2003 2002 (Millions of Dollars) Operating revenues Electric $6,863 $6,251 Gas 1,492 1,204 Steam 537 404 Non-utility 935 643 Total operating revenues 9,827 8,502 Operating expenses Purchased power 3,926 3,201 Fuel 504 289 Gas purchased for resale 847 596 Other operations 1,134 962 Maintenance 353 387 Impairment charges - telecommunications and other unregulated assets 159 - Depreciation and amortization 529 495 Taxes, other than income tax 1,116 1,114 Income tax 325 398 Total operating expenses 8,893 7,442 Operating income 934 1,060 Other income (deductions) Investment income 4 2 Allowance for equity funds used during construction 15 10 Other income 23 48 Other deductions (16) (20) Income tax 10 22 Total other income (deductions) 36 62 Income before interest charges 970 1,122 Interest on long-term debt 401 386 Other interest 45 61 Allowance for borrowed funds used during construction (12) (5) Net interest charges 434 442 Income before preferred stock dividends 536 680 Preferred stock dividend requirements 11 12 Income before cumulative effect of changes in accounting principles 525 668 Cumulative effect of changes in accounting principles (net of income tax of $2 million in 2003 and $15 million in 2002) 3 (22) Net income for common stock $528 $646 Earnings per common share - Basic Before cumulative effect of changes in accounting principles $2.37 $3.14 Cumulative effect of changes in accounting principles $0.02 $(0.11) After cumulative effect of changes in accounting principles $2.39 $3.03 Earnings per common share - Diluted Before cumulative effect of changes in accounting principles $2.36 $3.13 Cumulative effect of changes in accounting principles $0.02 $(0.11) After cumulative effect of changes in accounting principles $2.38 $3.02 Average number of shares outstanding - Basic (in Millions) 220.9 213.0 Average number of shares outstanding - Diluted (in Millions) 221.8 214.0 Consolidated Edison, Inc. utility sales Electric (thousands of kilowatthours) Total energy delivered in service areas 59,347,469 59,520,658 Gas (dekatherms) Firm sales and transportation 127,527,813 116,331,065 Steam (thousands of pounds) 26,248,361 24,519,476
SOURCE Consolidated Edison, Inc.
Michael Clendenin of Consolidated Edison, Inc., +1-212-460-4111, or Media Relations, +1-212-460-4111 (24 hours)
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