UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
May 2, 2005
Consolidated Edison, Inc.
(Exact name of registrant as specified in its charter)
| New York | 1-14514 | 13-3965100 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 4 Irving Place, New York, New York | 10003 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code
(212) 460-4600
Consolidated Edison Company of New York, Inc.
(Exact name of registrant as specified in its charter)
| New York | 1-1217 | 13-5009340 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 4 Irving Place, New York, New York | 10003 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code
(212) 460-4600
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
INFORMATION TO BE INCLUDED IN THE REPORT
Item 7.01. Regulation FD Disclosure
The material attached hereto as Exhibit 99, which is incorporated in this Item 7.01 by reference thereto, is furnished pursuant to Regulation FD.
| Item 9.01 | Financial Statements and Exhibits | |
| (c) Exhibits | ||
| Exhibit 99 | Financial presentation – May 2, 2005. | |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CONSOLIDATED EDISON, INC. | ||
| CONSOLIDATED EDISON COMPANY OF NEW YORK, INC. | ||
| By | /s/ Edward J. Rasmussen | |
| Edward J. Rasmussen | ||
| Vice President and Controller | ||
DATE: May 2, 2005
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Exhibit 99
Con Edison, Inc.
Stable, Disciplined, Reliable
American Gas Association Financial Forum – New Orleans, LA
May 1 - 3, 2005
Stable, Disciplined, Reliable
American Gas Association Financial Forum – New Orleans, LA
May 1 – 3, 2005
Joan S. Freilich Executive Vice President & Chief Financial Officer
Robert Hoglund Senior Vice President, Finance
Jan C. Childress Director, Investor Relations; Tel: 212-460-6611
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This presentation 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.
3
Investment Highlights
Focused Strategy
Maintain leadership in service reliability
Continue to focus on energy infrastructure investment
Maintain constructive regulatory relationships
Financial Performance and Strength
Dependable and predictable earnings stream
Strong balance sheet, solid credit ratings and ample liquidity
Attractive dividend yield and total return performance
Conservative Business Philosophy
Strong corporate governance
Primarily regulated business
Limited unregulated investments
Disciplined, low-risk approach to unregulated business opportunities
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We Never Left The Basics
2004 Net Income*: $629 million – 100%
Con Edison, Inc.
Parent Net Loss: $14 million – (2)%
CECONY
Net Income: $598 million – 95%
O&R
Net Income: $46 million – 7%
Unregulated Energy Subsidiaries
Con Edison Solutions
Net Income: $3 million – 1%
Con Edison Energy
Net Income: $0 – 0%
Con Edison Development
Net Loss: $4 million – (1)%
* 2004 Net Income shown above represents Income from ongoing Operations and excludes the after-tax effect of non-recurring charges totaling $80 million related to the company’s new electric, gas, and steam rate plans. 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. Reported Net income for Common Stock – GAAP basis – was $537 million.
Reconciliation of 2004 Reported Net Income and Earnings from Ongoing Operations
Earnings EPS
($ millions)
Reported net income for common stock and earnings per share – GAAP Basis $537 $2.28
One-time rate plan charges 80 0.34
Discontinued operations of Con Edison Communications 12 0.05
Ongoing Operations $629 $2.67
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Business Profile
Serves world’s foremost financial, cultural and communication centers
Economy appears to be recovering
Achieved favorable restructuring outcome
Stranded cost recovery
Continued recovery of energy costs
Generation divestiture
Strong cost controls
Nation’s highest electric reliability
Electric
Customers
CECONY: 3.1 million
O&R: 0.3 million
Gas
Customers
CECONY: 1.1 million
O&R: 0.1 million
New York
Pennsylvania
Connecticut
New Jersey
Electric Only
Electric and Gas
Gas Only
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Consolidated Edison, Inc.
Serving The World’s Most Demanding Marketplace
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Reliable Energy Supply is Crucial to Economic Growth
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40 million tourists visited New York City in 2004 – a new record
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Hutchinson Metro Center
Bronx
Bank of America Tower
Manhattan
Avalon Chrystie Place
Manhattan
Atlantic Terminal
Brooklyn
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Memorial Sloan-Kettering Cancer Center’s Research Building
This new 1.2 million square foot facility is a steam customer
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New York City Housing Permits
Number of New Dwelling Units
Represents New 30-Year Record 25,208
30,000
25,000
20,000
15,000
10,000
5,135
5,000
0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
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Electric Peak Load Forecast
Megawatts
1,560
1,530
13,425
1,500
1,465
13,250
Orange & Rockland
1,435
13,025
1,410
12,775
12,600
12,400
Con Edison of New York
2007
2006
2002
2003
2005
2004
Figures for 2002–2004 are actual weather adjusted peak loads.
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East River Repowering
Placed in service in April 2005 Estimated rate base addition of $685 million
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Dunwoodie Station Transmission Upgrade
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Building Substations to Meet Growing Demand
7 World Trade Center – Manhattan
30th Street – Manhattan
Grasslands – Westchester
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Supplying New York City’s Electric Needs
Major new substations required to support increased economic growth (2002 - 2010)
2009
2007
2005
2003
2008
2006
2004
2002
2010
Replacement
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Con Edison of New York Infrastructure Investment
($ in Millions)
Lower Manhattan Rebuild
East River Repowering
Common Plant
Steam
Gas
Electric
1,700
1,600
1,500
1,400
1,300
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0
2003
Actual
$1,167
2004
Actual
$1,235
2005
Budget
$1,492
2006
Forecast
$1,541
2007
Forecast
$1,580
2002
Actual
$1,098
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Capital Expenditures
($ in Millions)
$1,541
$1,580
$1,492
$1,235
$1,167
Con Edison of New York
O&R
Unregulated Subsidiaries
$105
$84
$82
$79
$86
$71
$38
$8
$6
$8
2006*
Total $1,635
2005*
Total $1,580
2004
Total $1,352
2003
Total $1,343
2007*
Total $1,672
* Estimated
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Growing Earnings Through Infrastructure Investment — An Illustration
Let’s say we spend $1 billion+ each year in cap ex
One-half, or $500 million, is funded through depreciation
The balance of $500 million is funded 50/50 with debt/equity
Earnings on the equity investment at 11% would be approximately $27 million
Represents 3% to 4% growth in net income
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Consolidated Edison, Inc.
Regulatory Update Financial Strength
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Rate Agreements Provide Regulatory Stability with Incentives
Long history of constructive rate agreements
Current recovery of energy costs
Financial incentives for improved performance
Average earned ROE from ongoing operations for past 10 years is approximately 11.8%
Rate agreements ending:
Con Ed of NY: Electric – 3/08; Gas – 9/07; Steam – 9/06
O&R: Electric – 10/06; Gas – 10/06
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Con Edison of New York Summary of Electric Rate Plan
Three-year rate plan: April 1, 2005 – March 31, 2008
Rate increases
First year increase - $104.6 million (1.3%)
Second year rate freeze
Third year increase - $220.4 million (2.3%)
Accounting credits totaling $550 million over three years
Retain first $60 million of revenues from transmission congestion contracts in each year
Full recovery of fuel and purchased power costs
Earnings Sharing
Earnings threshold 11.4%
11.4% to 13.0% - 50/50 sharing
Above 13.0% - 25/75 sharing (shareholder/customer)
Equity ratio – actual ratio up to 50%
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Con Edison of New York Summary of Electric Rate Plan
Rate Base
$9.3 billion in rate year 1
$9.6 billion in rate year 2
$10.3 billion in rate year 3
Reconciliations
Full reconciliation of T&D rate base
Pension and retiree health expenses, and environmental remediation costs
Property taxes and interference costs above or below 2.5% band
One-time pretax charge of $100 million taken in 2004 to resolve certain issues
Incentives for migration of electric customers to retail access and demand-side management activities. Potential penalties tied to reliability standards.
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Con Edison of New York Summary of Gas and Steam Rate Plans
Rate Periods
Gas – 3 years: October 2004 through September 2007
Steam – 2 years: October 2004 through September 2006
Rate Increases (effective October 1st of each year)
Gas
2004 - $46.8 million
In addition, first $35 million of non-firm revenues will be retained by the Company
Steam
2004 - $49.6 million
2005 - $27.4 million
Earnings Sharing Levels – 50/50 sharing over 11.75% ROE for both gas and steam
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Con Edison of New York Summary of Gas and Steam Rate Plans
Increases reflect a one-time pretax charge of $17.5 million for gas and $6.2 million for steam, to resolve certain issues
Steam carrying costs for East River Repowering Project to be recovered through fuel rider
Reconciliations
Pension and OPEB costs, property taxes, environmental remediation and interference. Also have the ability to petition for recovery of major new infrastructure projects
Continued gas weather normalization clause and full recovery of fuel costs
Incentive for migration of gas customers to retail access
Incentive for non-firm gas transactions
20% of annual revenues between $35 million and $50 million
25% of annual revenues between $50 million and $70 million
10% of annual revenues above $70 million
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Orange and Rockland Summary of Rate Plans
Rate Periods
Electric – July 2003 through October 2006
Gas – November 2003 through October 2006
Rate Increases
Gas
Effective November 2003 - $9.3 million
Effective November 2004 - $9.3 million
Effective November 2005 - $5.0 million
Earnings Sharing Levels
Electric – 12.75%
Gas – 11.0% with incentives
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Rate Base (as of December 31, 2004)
($ millions)
Con Edison of New York
Electric $ 9,225
Gas $ 1,935
Steam $ 575
Orange and Rockland Utilities
Pike Gas $ 1
Pike Electric $ 8
Rockland Electric $ 136
O&R Gas $ 180
O&R Electric $ 360
Total Rate Base $ 12,420 *
* Does not include the East River Repowering Steam/Electric Plant (estimated rate base of $685 million) that went into service in April 2005
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2005 First Quarter Earnings Per Share of $0.75
Major Factors Affecting Earnings Per Share
2005 Compared with 2004 EPS Variation ($)
Con Edison of New York:
Sales growth (estimated) $0.04
Impact of weather in 2005 vs. 2004 (est.) (0.01)
Gas rate changes (estimated) 0.04
Retention of non-firm gas revenues 0.04
Steam rate changes (estimated) 0.09
Increased pensions and other post-retirement benefits costs (0.06)
Higher operation and maintenance expense (0.04)
Higher depreciation and property tax expense (0.04)
Other (0.03)
Total Con Edison of NY 0.03
Orange & Rockland Utilities -
Unregulated energy subsidiaries 0.02
Total earnings per share variation from continuing operations $0.05
Discontinued operations – Con Edison Communications 0.01
Total earnings per share variation $0.06
The earnings per share variations shown above include the dilutive effect of a higher weighted average number of common shares outstanding in the 2005 period (243 million shares) than in the 2004 period (226 million shares). The company confirmed its previous forecast of 2005 earnings in the range of $2.75 to $2.90 per share in an April 21, 2005 press release.
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Balance Sheet Strength and Flexibility (as of March 31, 2005)
1.5%
Long-Term Debt
Preferred Stock
49.9%
48.6%
Common Equity
Issued $245.5 million in Con Edison of NY tax-exempt bonds in January 2004
Issued $400 million in Con Edison of NY debentures in February 2004
Issued $512 million in common stock in May 2004
Issued $350 million in Con Edison of NY debentures in March 2005
Issued $40 million in Orange and Rockland debentures in March 2005
Raising equity through DRIP and employee stock plans (approximately $112 million in 2004)
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Superior Credit Quality
Standard and Poor’s Business Position “2” for holding company and both regulated utilities
A2 / A- / A- Senior unsecured ratings – holding company
A1 / A / A+ Senior unsecured ratings – regulated businesses
P-1 / A-1 / F1 Commercial paper ratings
No ratings triggers
Transparent financials
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A Compelling Dividend Record: 31 Consecutive Years of Dividend Increases
Annualized Dividend 1975 - 2005
Only utility in S&P 500 with 25 or more consecutive years of dividend increases
$2.50
$2.28
$2.00
$1.50
$1.00
$0.50
$0.30
1993
1995
1997
1999
2001
2003
2005
1975
1977
1981
1983
1984
1989
1991
1979
1986
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Total Average Annual Return to Shareholders
Period Ending March 31, 2005 (%)
24.1
Con Edison
12.9
13.9
10.8
10.6
S&P Electrics
10.8
6.7
S&P 500 Index
0.9
-3.2
5 Year
1 Year
10 Year
Source: Standard and Poor’s, Bloomberg
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Investment Highlights
Maintain leadership in service reliability
Continue to focus on energy infrastructure investment
Maintain constructive regulatory relationships
Focused Strategy
Financial Performance and Strength
Dependable and predictable earnings stream
Strong balance sheet, solid credit ratings and ample liquidity
Attractive dividend yield and total return performance
Conservative Business Philosophy
Strong corporate governance
Primarily regulated business
Limited unregulated investments
Disciplined, low-risk approach to unregulated business opportunities
34
conEdison, inc.
35