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Consolidated Edison, Inc. Reports 2004 Earnings
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NEW YORK, Jan 27, 2005 /PRNewswire-FirstCall via COMTEX/ -- Consolidated Edison, Inc. (Con Edison) (NYSE: ED) today reported 2004 earnings from ongoing operations of $629 million or $2.67 a share, compared with earnings from ongoing operations of $649 million or $2.95 a share in 2003. Earnings from ongoing operations exclude the effect of non-cash, non-recurring charges totaling $80 million (after-tax) in 2004 related to the company's new electric, gas and steam rate plans and $12 million (after-tax) in 2003 related to impairment charges for certain unregulated generating assets, the impact of a regulatory settlement and the cumulative effect of changes in accounting principles. Also excluded from these results are losses from the discontinued operations of Con Edison Communications, reflecting a December 2004 agreement to sell the telecommunications company. Including these items, net income for common stock for 2004 was $537 million or $2.28 a share compared with $528 million or $2.39 a share in 2003.
For the fourth quarter of 2004, the company's earnings from ongoing operations were $117 million or $0.49 a share compared with $152 million or $0.67 a share for the fourth quarter of 2003. Including the items noted above, net income for common stock was $51 million or $0.21 a share compared with $50 million or $0.21 a share in the 2003 period.
"In 2004, we were at or near the end of our multi-year rate plans. With new rate plans in place or close to approval, we are confident that we will have the financial strength and flexibility we need to continue to meet our customers' growing energy needs with the highest levels of reliability," said Eugene R. McGrath, chairman and chief executive officer.
Con Edison expects its earnings for 2005 to be in the range of $2.75 to $2.90 a share. The forecast reflects the multi-year rate plans for gas and steam that took effect in October 2004 and a three-year electric rate plan that, subject to PSC approval, is expected to take effect in April 2005.
The company also declared a quarterly dividend of 57 cents a share on its common stock, payable March 15, 2005 to shareholders of record as of February 16, 2005, an annualized increase of 2 cents over the previous annual dividend of $2.26 a share. This represents the company's 31st consecutive annual increase in its dividend to shareholders. "We recognize the importance of dividends to all of our investors," said Joan S. Freilich, executive vice president and chief financial officer. "We focus on steady dividend growth, consistent with maintaining our strong financial position."
The following table is a reconciliation of Con Edison's reported net income for common stock and reported earnings per share to earnings and earnings per share from ongoing operations.
For the year For the quarter ended December 31, ended December 31, Earnings Earnings Earnings Earnings per share per share (Million of Dollars, except earnings per share) 2004 2003 2004* 2003 2004 2003 2004* 2003 Reported net income for common stock and earnings per share - GAAP Basis $537 $528 $2.28 $2.39 $51 $50 $0.21 $0.21 One-time rate plan charges 80 - 0.34 - 65 - 0.27 - Discontinued operations of Con Edison Communications** 12 109 0.05 0.50 1 90 0.01 0.40 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) - (0.02) - (3) - (0.02) Ongoing operations $629 $649 $2.67 $2.95 $117 $152 $0.49 $0.67 * The earnings per share variations shown above include the dilutive effect of higher weighted average number of common shares outstanding in the three months and the year ended December 31, 2004. ** The 2003 amounts include an after-tax impairment charge of $84 million, or $0.38 per share.
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 of 2004 compared with the 2003 periods:
4th Year quarter 2004 vs. 2004 vs. 2003 2003 Con Edison of New York: Impact of weather in 2004 on net revenues versus 2003 (estimated) $(0.02) $(0.01) Sales growth and other revenue factors (estimated) 0.15 0.08 Increased pension & other post-retirement benefit costs (0.08) (0.03) Regulatory accounting (0.05) (0.08) Higher depreciation and property tax expense (0.13) (0.04) Higher operations and maintenance expense (0.11) (0.10) Lower interest expense, primarily on long-term debt 0.06 0.03 Allowance for funds used during construction and other income 0.09 0.01 Other (0.07) (0.03) Total Con Edison of New York (0.16) (0.17) Orange and Rockland Utilities (0.02) - Con Edison Development (0.01) - Con Edison Energy - - Con Edison Solutions (0.08) (0.02) Other (parent and inter-company accounting) (0.01) 0.01 Total earnings per share variation from ongoing operations $(0.28) $(0.18)
The earnings per share from ongoing operations variations shown above include the dilutive effect of higher weighted average number of common shares outstanding in the three months and the year ended December 31, 2004. The weighted average numbers of common shares were 242 million shares and 236 million shares for the three months and year ended December 31, 2004, compared with 226 million shares and 221 million shares in the 2003 periods, respectively. The dilutive effect on earnings per share from ongoing operations for the three months and year ended December 2004 is $0.03 and $0.18, respectively. These amounts per share do not reflect the offsetting benefits of avoided interest expense.
The company's earnings for the fourth quarter of 2004 reflect the new gas and steam rate increases, partially offset by warm fall weather. The lower fourth quarter and year-end results also include a reduction in net credits for pensions and other post-retirement benefits and higher operations and maintenance expense, principally related to work we are doing to improve the safety of steam manholes. In addition, higher depreciation and property taxes in 2004 reflect large continuing investments in energy delivery infrastructure.
The results for the unregulated energy businesses in 2004 reflect lower gross margins on wholesale and retail electric sales and higher costs related to generating plants placed in service in mid-2003, offset in part by higher mark-to-market gains on forward transactions.
Amounts of electricity and firm gas delivered by Con Edison of New York, after adjusting for variations in weather and billing days in the period, increased 1.4 percent and 0.6 percent, respectively, in 2004, while steam deliveries decreased 0.4 percent, as compared with the 2003 period. The 2003 amounts were also adjusted for the August 2003 regional power outage.
Construction expenditures are estimated at $1.6 billion per year for 2005 and 2006 and $1.7 billion for 2007, compared with $1.3 billion in 2004. Virtually all of the estimated construction expenditures are for the company's regulated utilities. The company does not expect to issue new equity in 2005, other than an estimated $95 million to be issued through its dividend reinvestment and employee stock plans.
This press release contains certain forward-looking statements of future expectations and financial measures not determined in accordance with Generally Accepted Accounting Principles (non-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" excludes the impact of unusual items. Earnings from ongoing operations should not be considered as an alternative to net income, which is an indicator of operating performance determined in accordance with GAAP. Management uses earnings and earnings per share from ongoing operations to facilitate the analysis of the company's ongoing performance as compared to its internal budgets and previously reported financial results. Management believes that earnings from ongoing operations, although a non-GAAP measure, are also useful and meaningful to investors. Other companies may use different measures to present financial performance.
Refer to the attachments to this press release for the condensed consolidated balance sheets at December 31, 2004 and 2003 and the consolidated income statements for 2004 and 2003. For additional information related to utility sales and revenues go to the Con Edison Web site at http://www.conedison.com, select "Investor Information" and then select "Financial Reports."
Consolidated Edison, Inc. is one of the nation's largest investor-owned energy companies, with $10 billion in annual revenues and approximately $23 billion in assets. The company provides a wide range of energy-related products and services to its customers through the following 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 supply and services company; Con Edison Energy, a wholesale energy supply company; and Con Edison Development, a company that owns and operates generating plants and participates in other infrastructure projects.
Attachment A CONSOLIDATED EDISON, INC. CONSOLIDATED BALANCE SHEET (Condensed) (UNAUDITED) December 31, 2004 December 31, 2003 ASSETS (Millions of Dollars) PLANT, AT ORIGINAL COST Utility plant - net $15,168 $14,284 Non-utility plant - net 873 941 Non-utility plant assets held for sale 65 - NET PLANT 16,106 15,225 CURRENT ASSETS Cash and temporary cash investments 26 49 Accounts receivable - customers, less allowance for uncollectible accounts 760 798 Other receivables, less allowance for uncollectible accounts 179 176 Inventories 311 283 Prepayments 93 98 Current assets held for sale 5 - Other current assets 339 188 TOTAL CURRENT ASSETS 1,713 1,592 INVESTMENTS 257 248 DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS Goodwill 406 406 Intangible assets - net 100 111 Prepaid pension costs 1,442 1,257 Regulatory assets 2,262 1,861 Other deferred charges and noncurrent assets 271 266 TOTAL DEFERRED CHARGES, REGULATORY ASSETS AND NONCURRENT ASSETS 4,481 3,901 TOTAL ASSETS $22,557 $20,966 CAPITALIZATION AND LIABILITIES CAPITALIZATION Common shareholders' equity $7,054 $6,423 Preferred stock of subsidiary 213 213 Long-term debt 6,561 6,733 TOTAL CAPITALIZATION 13,828 13,369 NONCURRENT LIABILITIES Provision for injuries and damages 180 194 Pensions and retiree benefits 207 205 Superfund and other environmental costs 198 193 Noncurrent liabilities held for sale 5 - Other noncurrent liabilities including minority interests 134 157 TOTAL NONCURRENT LIABILITIES 724 749 CURRENT LIABILITIES Long-term debt due within one year 469 166 Notes payable 156 159 Accounts payable 923 905 Customer deposits 234 228 Current liabilities held for sale 11 - Other current liabilities 434 453 TOTAL CURRENT LIABILITIES 2,227 1,911 DEFERRED CREDITS AND REGULATORY LIABILITIES Deferred income taxes and investment tax credits 3,726 3,172 Regulatory liabilities and other deferred credits 2,052 1,765 TOTAL DEFERRED CREDITS AND REGULATORY LIABILITIES 5,778 4,937 TOTAL CAPITALIZATION AND LIABILITIES $22,557 $20,966 Attachment B Consolidated Edison, Inc. CONSOLIDATED INCOME STATEMENT (Unaudited) For the Three Months Ended For the Years December 31, Ended December 31, 2004 2003 2004 2003 (Millions of Dollars/Except Share Data) OPERATING REVENUES Electric $1,414 $1,559 $6,652 $6,863 Gas 396 362 1,507 1,492 Steam 134 107 550 537 Non-utility 237 245 1,049 916 TOTAL OPERATING REVENUES 2,181 2,273 9,758 9,808 OPERATING EXPENSES Purchased power 926 895 3,961 3,884 Fuel 130 87 597 504 Gas purchased for resale 209 231 852 889 Other operations and maintenance 373 327 1,494 1,438 Impairment charges - unregulated assets - 18 - 18 Depreciation and amortization 139 133 551 516 Taxes, other than income taxes 265 267 1,080 1,116 Income taxes (15) 71 292 399 TOTAL OPERATING EXPENSES 2,027 2,029 8,827 8,764 OPERATING INCOME 154 244 931 1,044 OTHER INCOME (DEDUCTIONS) Investment and other income 3 10 42 27 Allowance for equity funds used during construction 7 5 25 15 Preferred stock dividend requirements of subsidiary (3) (3) (11) (11) Other deductions (4) (3) (14) (16) Income taxes 7 1 20 9 TOTAL OTHER INCOME (DEDUCTIONS) 10 10 62 24 INTEREST EXPENSE Interest on long-term debt 106 101 426 401 Other interest 11 20 36 45 Allowance for borrowed funds used during construction (5) (4) (18) (12) NET INTEREST EXPENSE 112 117 444 434 INCOME FROM CONTINUING OPERATIONS 52 137 549 634 LOSS FROM DISCONTINUED OPERATIONS (NET OF INCOME TAXES OF $1 AND $8 IN 2004 AND $61 AND $74 IN 2003 (1) (90) (12) (109) INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 51 47 537 525 CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES (NET OF INCOME TAX OF $2 MILLION IN 2003 ) - 3 - 3 NET INCOME $51 $50 $537 $528 EARNINGS PER COMMON SHARE - BASIC Continuing operations $0.22 $0.59 $2.33 $2.87 Discontinued operations $(0.01) $(0.40) (0.05) (0.50) Before cumulative effect of changes in accounting principles $0.21 $0.19 $2.28 $2.37 Cumulative effect of changes in accounting principles $ - $0.02 $ - $0.02 After cumulative effect of changes in accounting principles $0.21 $0.21 $2.28 $2.39 EARNINGS PER COMMON SHARE - DILUTED Continuing operations $0.22 $0.59 $2.32 $2.86 Discontinued operations $(0.01) $(0.40) $(0.05) $(0.50) Before cumulative effect of changes in accounting principles $0.21 $0.19 $2.27 $2.36 Cumulative effect of changes in accounting principles $ - $0.02 $ - $0.02 After cumulative effect of changes in accounting principles $0.21 $0.21 $2.27 $2.38 AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC (IN MILLIONS) 242.2 225.5 235.8 220.9 AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED (IN MILLIONS) 242.9 226.5 236.4 221.8
SOURCE Consolidated Edison, Inc.
Michael Clendenin, Consolidated Edison, Inc., +1-212-460-4111
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