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, 1999
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
_________________________
Commission Exact name of registrant as specified in its charter State of I.R.S. Employer
File Number and principal office address and telephone number Incorporation I.D. Number
1-14514 Consolidated Edison, Inc. New York 13-3965100
4 Irving Place, New York, New York 10003
(212) 460-4600
1-1217 Consolidated Edison Company
of New York, Inc. New York 13-5009340
4 Irving Place, New York, New York 10003
(212) 460-4600
Each Registrant 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
has been subject to such filing requirements for the past 90 days.
Yes ___X___ No _______
As of the close of business on April 30, 1999, (i) Consolidated Edison,
Inc. ("CEI") had outstanding 227,235,294 Common Shares ($.10 par value) and (ii)
all of the outstanding Common Stock ($2.50 par value) of Consolidated Edison
Company of New York, Inc. was held by CEI.
- 2 -
TABLE OF CONTENTS
PAGE
FILING FORMAT 2
PART I. - FINANCIAL INFORMATION
ITEM 1. Financial Statements:
Consolidated Edison, Inc.
Consolidated Balance Sheet 3-4
Consolidated Income Statements 5-6
Consolidated Statements of Cash Flows 7-8
Consolidated Edison Company of New York, Inc.
Consolidated Balance Sheet 9-10
Consolidated Income Statements 11-12
Consolidated Statement of Cash Flows 13-14
Notes to Financial Statements 15-17
ITEM 2. Management's Discussion and Analysis 18-25
of Financial Condition and Results of Operations
ITEM 3. Quantitative and Qualitative Disclosures 25
About Market Risk
PART II. - OTHER INFORMATION
ITEM 1. Legal Proceedings 26
ITEM 6. Exhibits and Reports on Form 8-K 26
_________________________
FILING FORMAT
This Quarterly Report on Form 10-Q is a combined quarterly report being filed
separately by two different registrants: Consolidated Edison. Inc. ("CEI") and
Consolidated Edison Company of New York, Inc. ("Con Edison"). CEI is a holding
company that owns all of the outstanding Common Stock ($2.50 par value) of Con
Edison, has certain other subsidiaries, and has no significant business
operations other than through its subsidiaries. Any references in this report to
the "Company" are to CEI and Con Edison, collectively. Con Edison makes no
representation as to the information contained in this report relating to CEI
and the subsidiaries of CEI other than Con Edison.
-3-
CONSOLIDATED EDISON, INC.
CONSOLIDATED BALANCE SHEET
AS AT MARCH 31, 1999, DECEMBER 31, 1998 AND MARCH 31, 1998
As at
-------------------------------------------------------------------
March 31, 1999 December 31, 1998 March 31, 1998
------------------------ --------------------- --------------------
(Thousands of Dollars)
ASSETS
Utility plant, at original cost
Electric $ 12,101,804 $ 12,039,082 $ 11,805,558
Gas 1,860,508 1,838,550 1,759,293
Steam 607,226 604,761 582,332
General 1,217,585 1,204,262 1,210,805
-------------- -------------- --------------
Total 15,787,123 15,686,655 15,357,988
Less: Accumulated depreciation 4,812,171 4,726,211 4,481,414
-------------- -------------- --------------
Net 10,974,952 10,960,444 10,876,574
Construction work in progress 334,779 347,262 284,725
Nuclear fuel assemblies and components, less
accumulated amortization 91,506 98,837 103,690
-------------- -------------- --------------
Net utility plant 11,401,237 11,406,543 11,264,989
-------------- -------------- --------------
Current assets
Cash and temporary cash investments 57,503 102,295 198,257
Accounts receivable - customer, less allowance for
uncollectible accounts of $26,068, $24,957 and
$22,705 574,410 521,648 561,655
Other receivables 38,845 49,381 44,983
Fuel, at average cost 21,964 33,289 38,985
Gas in storage, at average cost 28,092 49,656 31,137
Materials and supplies, at average cost 185,300 184,916 192,698
Prepayments 256,214 131,374 189,146
Other current assets 20,726 20,984 20,588
-------------- -------------- --------------
Total current assets 1,183,054 1,093,543 1,277,449
-------------- -------------- --------------
Investments
Nuclear decommissioning trust funds 274,321 265,063 230,669
Other 116,551 113,382 101,301
-------------- -------------- --------------
Total investments 390,872 378,445 331,970
-------------- -------------- --------------
Deferred charges
Enlightened Energy program costs 57,058 68,381 102,349
Unamortized debt expense 132,844 135,897 138,262
Recoverable fuel costs (7,613) 22,013 25,613
Power contract termination costs 70,925 70,621 69,594
Other deferred charges 270,928 254,944 254,270
-------------- -------------- --------------
Total deferred charges 524,142 551,856 590,088
-------------- -------------- --------------
Regulatory asset - future federal income taxes 947,044 951,016 938,053
-------------- -------------- --------------
Total $ 14,446,349 $ 14,381,403 $ 14,402,549
============== ============== ==============
The accompanying notes are an integral part of these financial statements.
-4-
CONSOLIDATED EDISON, INC.
CONSOLIDATED BALANCE SHEET
AS AT MARCH 31, 1999, DECEMBER 31, 1998 AND MARCH 31, 1998
As at
-------------------------------------------------------------------
March 31, 1999 December 31, 1998 March 31, 1998
------------------------ --------------------- --------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock, authorized 500,000,000 shares;
outstanding 228,447,294 shares, 232,833,494 shares
and 235,489,650 shares $ 1,482,342 $ 1,482,341 $ 1,482,351
Retained earnings 4,753,375 4,700,500 4,531,810
Treasury stock, at cost; 7,040,800 shares and
2,654,600 shares (330,855) (120,790) -
Capital stock expense (36,289) (36,446) (36,966)
-------------- ------------- -------------
Total common shareholders' equity 5,868,573 6,025,605 5,977,195
Preferred stock subject to mandatory redemption 37,050 37,050 84,550
Other preferred stock 212,563 212,563 233,468
Long-term debt 3,925,548 4,050,108 4,198,152
-------------- ------------- -------------
Total capitalization 10,043,734 10,325,326 10,493,365
-------------- ------------- -------------
Noncurrent liabilities
Obligations under capital leases 36,580 37,295 39,180
Other noncurrent liabilities 228,367 203,543 111,433
-------------- ------------- -------------
Total noncurrent liabilities 264,947 240,838 150,613
-------------- ------------- -------------
Current liabilities
Long-term debt due within one year 350,000 225,000 200,000
Accounts payable 351,695 371,274 377,799
Notes payable 121,906 - -
Customer deposits 188,627 181,236 163,983
Accrued taxes 59,861 15,670 107,989
Accrued interest 63,980 76,466 66,557
Accrued wages 79,821 83,555 80,509
Other current liabilities 195,752 188,186 184,551
-------------- ------------- -------------
Total current liabilities 1,411,642 1,141,387 1,181,388
-------------- ------------- -------------
Provisions related to future federal income taxes and
other deferred credits
Accumulated deferred federal income tax 2,433,601 2,392,812 2,308,092
Accumulated deferred investment tax credits 152,801 154,970 161,490
Other deferred credits 139,624 126,070 107,601
-------------- ------------- -------------
Total deferred credits 2,726,026 2,673,852 2,577,183
-------------- ------------- -------------
Total $ 14,446,349 $ 14,381,403 $ 14,402,549
----- ============== ============= =============
The accompanying notes are an integral part of these financial statements.
-5-
CONSOLIDATED EDISON, INC.
CONSOLIDATED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998
---- ----
(Thousands of Dollars)
Operating revenues
Electric $ 1,193,500 $ 1,291,323
Gas 381,342 399,170
Steam 140,733 135,390
Non-utility 61,011 27,164
------------ ------------
Total operating revenues 1,776,586 1,853,047
------------ ------------
Operating expenses
Purchased power 287,826 358,250
Fuel 117,540 134,554
Gas purchased for resale 180,531 189,439
Other operations 291,972 275,830
Maintenance 105,426 117,975
Depreciation and amortization 132,709 128,258
Taxes, other than federal income tax 300,380 302,219
Federal income tax 101,735 91,961
------------ ------------
Total operating expenses 1,518,119 1,598,486
------------ ------------
Operating income 258,467 254,561
Other income (deductions)
Investment income 1,416 2,904
Allowance for equity funds used during construction 972 512
Other income less miscellaneous deductions (367) (503)
Federal income tax (220) (979)
------------ ------------
Total other income 1,801 1,934
------------ ------------
Income before interest charges 260,268 256,495
Interest on long-term debt 75,843 79,058
Other interest 4,834 1,247
Allowance for borrowed funds used during construction (454) (263)
------------ ------------
Net interest charges 80,223 80,042
------------ ------------
Preferred stock dividend requirements 3,398 4,536
------------ ------------
Net income for common stock $ 176,647 $ 171,917
============ ============
Common shares outstanding - average (000) 230,997 235,490
Basic and diluted earnings per share $ 0.76 $ 0.73
============ ============
Dividends declared per share of common stock $ 0.535 $ $ 0.53
============ ============
The accompanying notes are an integral part of these financial statements.
-6-
CONSOLIDATED EDISON, INC.
CONSOLIDATED INCOME STATEMENT
FOR THE TWELVE MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998
---- ----
(Thousands of Dollars)
Operating revenues
Electric $ 5,576,622 $ 5,657,948
Gas 941,780 1,038,031
Steam 327,276 365,011
Non-utility 170,908 72,654
------------- -------------
Total operating revenues 7,016,586 7,133,644
------------- -------------
Operating expenses
Purchased power 1,183,358 1,355,129
Fuel 561,992 580,024
Gas purchased for resale 428,401 490,325
Other operations 1,174,101 1,122,458
Maintenance 464,863 478,600
Depreciation and amortization 522,962 507,921
Taxes, other than federal income tax 1,206,264 1,178,391
Federal income tax 417,413 377,796
------------- -------------
Total operating expenses 5,959,354 6,090,644
------------- -------------
Operating income 1,057,232 1,043,000
Other income (deductions)
Investment income 10,314 14,082
Allowance for equity funds used during construction 2,891 3,161
Other income less miscellaneous deductions (14,079) (4,082)
Federal income tax 2,988 (2,674)
------------- -------------
Total other income 2,114 10,487
------------- -------------
Income before interest charges 1,059,346 1,053,487
Interest on long-term debt 305,455 318,464
Other interest 21,987 13,916
Allowance for borrowed funds used during construction (1,438) (1,561)
------------- -------------
Net interest charges 326,004 330,819
------------- -------------
Preferred stock dividend requirements 15,869 18,276
------------- -------------
Net income for common stock $ 717,473 $ 704,392
============= =============
Common shares outstanding - average (000) 233,130 235,195
Basic and diluted earnings per share $ 3.08 $ 2.99
============= =============
Dividends declared per share of common stock $ 2.125 $ 2.105
============= =============
The accompanying notes are an integral part of these financial statements.
-7-
CONSOLIDATED EDISON, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998
---- ----
(Thousands of Dollars)
Operating activities
Net income for common stock $ 176,647 $ 171,917
Principal non-cash charges (credits) to income
Depreciation and amortization 132,709 128,258
Deferred recoverable fuel costs 29,626 72,688
Federal income tax deferred 42,175 32,290
Common equity component of allowance for funds
used during construction (952) (498)
Other non-cash charges (credits) 8,606 (5,475)
Changes in assets and liabilities
Accounts receivable-customer, less allowance for uncollectibles (52,762) 19,508
Materials and supplies, including fuel and gas in storage 32,505 19,845
Prepayments, other receivables and other current assets (114,046) (103,667)
Enlightened Energy program costs 11,323 15,458
Power contract termination costs (1,050) 6,912
Accounts payable (19,579) (62,315)
Accrued income taxes (1,129) 58,541
Other-net 43,865 (89,247)
--------- ---------
Net cash flows from operating activities 287,938 264,215
--------- ---------
Investing activities including construction
Construction expenditures (120,896) (120,602)
Nuclear fuel expenditures (1,337) (1,370)
Contributions to nuclear decommissioning trust (5,325) (5,325)
Common equity component of allowance for funds
used during construction 952 498
--------- ---------
Net cash flows from investing activities
including construction (126,606) (126,799)
--------- ---------
Financing activities including dividends
Repurchase of common stock (204,205) --
Net proceeds from short-term debt 121,906 --
Issuance of long-term debt -- 285,000
Advance refunding of long-term debt -- (605,240)
Issuance and refunding costs (53) (6,441)
Funds held for refunding of debt -- 328,874
Common stock dividends (123,772) (124,810)
--------- ---------
Net cash flows from financing activities
including dividends (206,124) (122,617)
--------- ---------
Net increase (decrease) in cash and temporary cash investments (44,792) 14,799
Cash and temporary cash investments at January 1 102,295 183,458
--------- ---------
Cash and temporary cash investments at March 31 $ 57,503 $ 198,257
========= =========
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 85,512 $ 89,672
Income taxes -- --
The accompanying notes are an integral part of these financial statements.
-8-
CONSOLIDATED EDISON, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998
---- ----
(Thousands of Dollars)
Operating activities
Net income for common stock $ 717,473 $ 704,392
Principal non-cash charges (credits) to income
Depreciation and amortization 522,962 507,921
Deferred recoverable fuel costs 33,226 26,776
Federal income tax deferred 96,315 30,600
Common equity component of allowance for funds
used during construction (2,818) (3,070)
Other non-cash charges 25,378 11,849
Changes in assets and liabilities
Accounts receivable-customer, less allowance for uncollectibles (12,755) 8,940
Materials and supplies, including fuel and gas in storage 27,464 9,461
Prepayments, other receivables and other current assets (61,068) 29,039
Enlightened Energy program costs 45,291 25,855
Power contract termination costs (7,058) 6,843
Accounts payable (26,104) 25,338
Accrued income taxes (106,249) 14,002
Other-net 137,422 (168,781)
----------- -----------
Net cash flows from operating activities 1,389,479 1,229,165
----------- -----------
Investing activities including construction
Construction expenditures (619,138) (647,100)
Nuclear fuel expenditures (7,023) (12,800)
Contributions to nuclear decommissioning trust (21,301) (14,499)
Common equity component of allowance for funds
used during construction 2,818 3,070
----------- -----------
Net cash flows from investing activities
including construction (644,644) (671,329)
----------- -----------
Financing activities including dividends
Repurchase of common stock (319,452) --
Net proceeds from short-term debt 121,906 --
Issuance of long-term debt 175,000 765,000
Retirement of long-term debt (200,000) (103,762)
Advance refunding of preferred stock (68,405) --
Advance refunding of long-term debt (100,000) (605,240)
Issuance and refunding costs (2,475) (15,336)
Common stock dividends (492,163) (495,144)
----------- -----------
Net cash flows from financing activities
including dividends (885,589) (454,482)
----------- -----------
Net increase (decrease) in cash and temporary cash investments (140,754) 103,354
Cash and temporary cash investments at beginning of period 198,257 94,903
----------- -----------
Cash and temporary cash investments at March 31 $ 57,503 $ 198,257
=========== ===========
Supplemental disclosure of cash flow information Cash paid during the period
for:
Interest $ 281,795 $ 308,801
Income taxes 355,707 335,586
The accompanying notes are an integral part of these financial statements.
-9-
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
BALANCE SHEET
AS AT MARCH 31, 1999, DECEMBER 31, 1998 AND MARCH 31, 1998
As at
--------------------------------------------------------------------
March 31, 1999 December 31, 1998 March 31, 1998
------------------------- --------------------- --------------------
(Thousands of Dollars)
ASSETS
Utility plant, at original cost
Electric $ 12,101,804 $ 12,039,082 $ 11,805,558
Gas 1,860,508 1,838,550 1,759,293
Steam 607,226 604,761 582,332
General 1,217,585 1,204,262 1,210,805
---------------- ---------------- ----------------
Total 15,787,123 15,686,655 15,357,988
Less: Accumulated depreciation 4,812,171 4,726,211 4,481,414
---------------- ---------------- ----------------
Net 10,974,952 10,960,444 10,876,574
Construction work in progress 334,779 347,262 284,725
Nuclear fuel assemblies and components, less
accumulated amortization 91,506 98,837 103,690
---------------- ---------------- ----------------
Net utility plant 11,401,237 11,406,543 11,264,989
---------------- ---------------- ----------------
Current assets
Cash and temporary cash investments 17,649 30,026 98,216
Accounts receivable - customer, less allowance for
uncollectible accounts of $23,576, $22,600 and $22,372 537,495 491,493 541,322
Other receivables 37,761 45,935 43,780
Fuel, at average cost 21,964 33,289 38,985
Gas in storage, at average cost 25,689 46,801 29,577
Materials and supplies, at average cost 185,300 184,916 192,698
Prepayments 254,878 130,198 188,321
Other current assets 20,654 20,911 20,576
---------------- ---------------- ----------------
Total current assets 1,101,390 983,569 1,153,475
---------------- ----------------- ---------------
Investments
Nuclear decommissioning trust funds 274,321 265,063 230,669
Other 14,788 14,750 13,701
---------------- ---------------- ----------------
Total investments 289,109 279,813 244,370
---------------- ---------------- ----------------
Deferred charges
Enlightened Energy program costs 57,058 68,381 102,349
Unamortized debt expense 132,844 135,897 138,262
Recoverable fuel costs (7,613) 22,013 25,613
Power contract termination costs 70,925 70,621 69,594
Other deferred charges 270,928 254,944 254,270
---------------- ----------------- ----------------
Total deferred charges 524,142 551,856 590,088
---------------- ----------------- ----------------
Regulatory asset - future federal income taxes 947,044 951,016 938,053
---------------- ----------------- ----------------
Total $ 14,262,922 $ 14,172,797 $ 14,190,975
================ ================ ================
The accompanying notes are an integral part of these financial statements.
-10-
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
BALANCE SHEET
AS AT MARCH 31, 1999, DECEMBER 31, 1998 AND MARCH 31, 1998
As at
--------------------------------------------------------------------
March 31, 1999 December 31, 1998 March 31, 1998
------------------------- --------------------- --------------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock $ 1,482,342 $ 1,482,341 $ 1,482,351
Repurchased CEI common stock (330,855) (120,790) -
Retained earnings 4,575,774 4,517,529 4,335,539
Capital stock expense (36,289) (36,356) (36,966)
----------------- ----------------- ---------------
Total common shareholders' equity 5,690,972 5,842,724 5,780,924
----------------- ----------------- ---------------
Preferred stock
Subject to mandatory redemption
7.20% Series I - - 47,500
6-1/8% Series J 37,050 37,050 37,050
----------------- ----------------- ---------------
Total subject to mandatory redemption 37,050 37,050 84,550
----------------- ----------------- ---------------
Other preferred stock
$5 Cumulative Preferred 175,000 175,000 175,000
5-3/4% Series A - - 7,061
5-1/4% Series B - - 13,844
4.65% Series C 15,330 15,330 15,330
4.65% Series D 22,233 22,233 22,233
----------------- ----------------- ---------------
Total other preferred stock 212,563 212,563 233,468
----------------- ----------------- ---------------
Total preferred stock 249,613 249,613 318,018
----------------- ----------------- ---------------
Long-term debt 3,925,548 4,050,108 4,198,152
----------------- ----------------- ---------------
Total capitalization 9,866,133 10,142,445 10,297,094
----------------- ----------------- ---------------
Noncurrent liabilities
Obligations under capital leases 36,580 37,295 39,180
Other noncurrent liabilities 228,367 203,543 111,433
---------------- ----------------- ---------------
Total noncurrent 264,947 240,838 150,613
---------------- ----------------- ---------------
liabilities
Current liabilities
Long-term debt due within one year 350,000 225,000 200,000
Accounts payable 344,629 357,315 356,606
Notes payable 121,906 - -
Customer deposits 197,883 181,236 163,983
Accrued taxes 68,252 17,621 116,795
Accrued interest 64,021 76,507 66,557
Accrued wages 79,821 83,555 80,509
Other current liabilities 192,349 184,989 181,635
---------------- ----------------- ---------------
Total current 1,418,861 1,126,223 1,166,085
---------------- ----------------- ---------------
liabilities
Provisions related to future federal income taxes and
other deferred credits
Accumulated deferred federal income tax 2,420,558 2,382,273 2,308,092
Accumulated deferred investment tax credits 152,801 154,970 161,490
Other deferred credits 139,622 126,048 107,601
---------------- ----------------- ---------------
Total deferred credits 2,712,981 2,663,291 2,577,183
---------------- ----------------- ---------------
Total $ 14,262,922 $ 14,172,797 $ 14,190,975
------------ ================ ================= ===============
The accompanying notes are an integral part of these financial statements
-11-
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998
---- ----
(Thousands of Dollars)
Operating revenues
Electric $ 1,210,194 $ 1,291,323
Gas 381,342 399,170
Steam 140,733 135,390
------------ ------------
Total operating revenues 1,732,269 1,825,883
------------ ------------
Operating expenses
Purchased power 282,442 358,235
Fuel 117,540 134,554
Gas purchased for resale 148,061 164,710
Other operations 277,588 268,161
Maintenance 105,426 117,975
Depreciation and amortization 132,273 128,052
Taxes, other than federal income tax 298,876 302,118
Federal income tax 104,766 94,140
------------ ------------
Total operating expenses 1,466,972 1,567,945
------------ ------------
Operating income 265,297 257,938
Other income (deductions)
Investment income 62 1,043
Allowance for equity funds used during construction 972 512
Other income less miscellaneous deductions (636) (503)
Federal income tax (57) (404)
------------ ------------
Total other income 341 648
------------ ------------
Income before interest charges 265,638 258,586
Interest on long-term debt 75,843 79,058
Other interest 4,834 1,247
Allowance for borrowed funds used during construction (454) (263)
------------ ------------
Net interest charges 80,223 80,042
------------ ------------
Net income 185,415 178,544
Preferred stock dividend requirements 3,398 4,536
------------ ------------
Net income for common stock $ 182,017 $ 174,008
============ ============
Con Edison Sales
Electric (Thousands of kilowatthours)
Con Edison customers 8,406,243 9,030,401
Delivery service for Retail Choice 1,049,068 --
Delivery service to NYPA and others 2,473,339 2,454,221
------------ ------------
Total sales in service territory 11,928,650 11,484,622
Off-system and ESCO sales 1,358,161 348,781
Gas (dekatherms)
Firm sales and transportation 40,595,350 36,439,826
Off-peak firm/interruptible 5,163,556 7,540,851
------------ ------------
Total sales to Con Edison customers 45,758,906 43,980,677
Transportation of customer-owned gas
NYPA 15,953 1,083,613
Other 6,801,098 3,587,326
Off-system sales 8,457,822 5,332,301
------------ ------------
Total sales and transportation 61,033,779 53,983,917
Steam (Thousands of pounds) 10,216,257 8,985,674
The accompanying notes are an integral part of these financial statements.
-12-
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
INCOME STATEMENT
FOR THE TWELVE MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998
---- ----
(Thousands of Dollars)
Operating revenues
Electric $ 5,635,991 $ 5,657,948
Gas 941,780 1,038,031
Steam 327,276 365,011
Non-utility -- 45,490
------------- -------------
Total operating revenues 6,905,047 7,106,480
------------- -------------
Operating expenses
Purchased power 1,176,241 1,355,114
Fuel 561,992 580,024
Gas purchased for resale 353,454 465,596
Other operations 1,127,216 1,114,789
Maintenance 464,863 478,600
Depreciation and amortization 522,046 507,714
Taxes, other than federal income tax 1,199,367 1,178,291
Federal income tax 425,436 379,975
------------- -------------
Total operating expenses 5,830,615 6,060,103
------------- -------------
Operating income 1,074,432 1,046,377
Other income (deductions)
Investment income 5,181 12,221
Allowance for equity funds used during construction 2,891 3,161
Other income less miscellaneous deductions (5,410) (4,082)
Federal income tax 921 (2,099)
------------- -------------
Total other income 3,583 9,201
------------- -------------
Income before interest charges 1,078,015 1,055,578
Interest on long-term debt 305,455 318,464
Other interest 21,987 13,916
Allowance for borrowed funds used during construction (1,438)
-------------
(1,561)
Net interest charges 326,004 330,819
------------- -------------
Net income 752,011 724,759
Preferred stock dividend requirements 15,869 18,276
------------- -------------
Net income for common stock $ 736,142 $ 706,483
============= =============
Con Edison Sales
Electric (Thousands of kilowatthours)
Con Edison customers 35,749,860 37,626,512
Delivery service for Retail Choice 3,466,389 --
Delivery service to NYPA and others 9,873,366 9,658,101
------------- -------------
Total sales in service territory 49,089,615 47,284,613
Off-system and ESCO sales 4,964,476 2,536,590
Gas (dekatherms)
Firm sales and transportation 88,581,762 90,659,667
Off-peak firm/interruptible 15,085,606 23,248,182
------------- -------------
Total sales to Con Edison customers 103,667,368 113,907,849
Transportation of customer-owned gas
NYPA 3,193,247 15,425,100
Other 17,692,042 9,526,866
Off-system sales 29,107,721 15,785,892
------------- -------------
Total sales and transportation 153,660,378 154,645,707
Steam (Thousands of pounds) 26,226,277 26,267,547
The accompanying notes are an integral part of these financial statements.
-13-
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998
---- ----
(Thousands of Dollars)
Operating activities
Net income $ 185,415 $ 178,544
Principal non-cash charges (credits) to income
Depreciation and amortization 132,273 128,052
Deferred recoverable fuel costs 29,626 72,688
Federal income tax deferred 39,671 32,290
Common equity component of allowance for funds
used during construction (952) (498)
Other non-cash charges (credits) 8,606 (5,475)
Changes in assets and liabilities
Accounts receivable-customer, less allowance for uncollectibles (46,002) 16,917
Materials and supplies, including fuel and gas in storage 32,053 21,405
Prepayments, other receivables and other current assets (116,249) (107,938)
Enlightened Energy program costs 11,323 15,458
Power contract termination costs (1,050) 6,912
Accounts payable (12,686) (58,858)
Accrued income taxes 4,445 62,254
Other-net 57,278 (71,637)
--------- ---------
Net cash flows from operating activities 323,751 290,114
--------- ---------
Investing activities including construction
Construction expenditures (120,896) (120,602)
Nuclear fuel expenditures (1,337) (1,370)
Contributions to nuclear decommissioning trust (5,325) (5,325)
Common equity component of allowance for funds
used during construction 952 498
--------- ---------
Net cash flows from investing activities including
construction (126,606) (126,799)
--------- ---------
Financing activities including dividends
Repurchase of common stock (204,205) --
Net proceeds from short-term debt 121,906 --
Issuance of long-term debt -- 285,000
Advance refunding of long-term debt -- (605,240)
Issuance and refunding costs (53) (6,441)
Funds held for refunding of debt -- 328,874
Common stock dividends (123,772) (124,810)
Preferred stock dividends (3,398) (4,536)
Corporate reorganization -- (121,404)
---------
Net cash flows from financing activities including
dividends (209,522) (248,557)
--------- ---------
Net decrease in cash and temporary cash investments (12,377) (85,242)
Cash and temporary cash investments at January 1 30,026 183,458
--------- ---------
Cash and temporary cash investments at March 31 $ 17,649 $ 98,216
========= =========
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 85,512 $ 89,672
Income taxes -- --
The accompanying notes are an integral part of these financial statements.
-14-
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998
---- ----
(Thousands of Dollars)
Operating activities
Net income $ 752,011 $ 724,759
Principal non-cash charges (credits) to income
Depreciation and amortization 522,046 507,714
Deferred recoverable fuel costs 33,226 26,776
Federal income tax deferred 93,811 30,600
Common equity component of allowance for funds
used during construction (2,818) (3,070)
Other non-cash charges 25,378 11,849
Changes in assets and liabilities
Accounts receivable-customer, less allowance for uncollectibles 3,827 6,349
Materials and supplies, including fuel and gas in storage 28,307 11,021
Prepayments, other receivables and other current assets (60,616) 24,767
Enlightened Energy program costs 45,291 25,855
Power contract termination costs (7,058) 6,843
Accounts payable (11,977) 28,796
Accrued income taxes (104,634) 17,715
Other-net 153,617 (151,104)
----------- -----------
Net cash flows from operating activities 1,470,411 1,268,870
----------- -----------
Investing activities including construction
Construction expenditures (619,138) (647,100)
Nuclear fuel expenditures (7,023) (12,800)
Contributions to nuclear decommissioning trust (21,301) (14,499)
Common equity component of allowance for funds
used during construction 2,818 3,070
----------- -----------
Net cash flows from investing activities
including construction (644,644) (671,329)
----------- -----------
Financing activities including dividends
Repurchase of common stock (319,452) --
Net proceeds from short-term debt 121,906 --
Issuance of long-term debt 175,000 765,000
Retirement of long-term debt (200,000) (103,762)
Advance refunding of preferred stock (68,405) --
Advance refunding of long-term debt (100,000) (605,240)
Issuance and refunding costs (2,475) (15,336)
Common stock dividends (495,908) (495,144)
Preferred stock dividends (17,000) (18,342)
Corporate reorganization -- (121,404)
----------- -----------
Net cash flows from financing activities
including dividends (906,334) (594,228)
----------- -----------
Net increase (decrease) in cash and temporary cash investments (80,567) 3,313
Cash and temporary cash investments at beginning of period 98,216 94,903
----------- -----------
Cash and temporary cash investments at March 31 $ 17,649 $ 98,216
=========== ===========
Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest $ 281,795 $ 308,801
Income taxes 375,125 335,586
The accompanying notes are an integral part of these financial statements.
-15-
NOTE A - GENERAL
These footnotes accompany and form an integral part of (i) the interim
consolidated financial statements of Consolidated Edison, Inc. ("CEI") and its
subsidiaries, including Consolidated Edison Company of New York, Inc. ("Con
Edison"), the regulated utility, and several non-utility subsidiaries, and (ii)
the interim consolidated financial statements of Con Edison on a stand-alone
basis. These financial statements are unaudited but, in the respective opinions
of the management of CEI and Con Edison, represent all adjustments (which
include only normally recurring adjustments) necessary for a fair statement of
the results for the interim periods presented. These financial statements should
be read together with the audited financial statements (including the notes
thereto) included in the combined CEI and Con Edison Annual Reports on Form 10-K
for the year ended December 31, 1998 (the "1998 Form 10-K").
NOTE B - CONTINGENCIES
INDIAN POINT Nuclear generating units similar in design to Con Edison's Indian
Point 2 unit have experienced problems that have required steam generator
replacement. Inspections of the Indian Point 2 steam generators since 1976 have
revealed various problems, some of which appear to have been arrested, but the
remaining service life of the steam generators is uncertain. The projected
service life of the steam generators is reassessed periodically in the light of
the inspections made during scheduled outages of the unit. Based on the latest
available data and current NRC criteria, Con Edison estimates that steam
generator replacement will not be required before 2002. Con Edison has
replacement steam generators, which are stored at the site. Replacement of the
steam generators would require estimated additional expenditures of up to $100
million (exclusive of replacement power costs) and an outage of approximately
three months. However, securing necessary permits and approvals or other factors
could require a substantially longer outage if steam generator replacement is
required on short notice.
The Settlement Agreement (described in Note A to the financial statements
included in the 1998 Form 10-K) does not contemplate the divestiture or transfer
of Indian Point 2. The PSC has, however, initiated a proceeding to consider the
future of nuclear generating facilities in New York State.
NUCLEAR INSURANCE The insurance policies covering Con Edison's nuclear
facilities for property damage, excess property damage, and outage costs permit
assessments under certain conditions to cover insurers' losses. As of March 31,
1999, the highest amount that could be assessed for losses during the current
policy year under all of the policies was $18.9 million. While assessments may
also be made for losses in certain prior years, neither CEI nor Con Edison is
aware of any losses in such years that it believes are likely to result in an
assessment.
Under certain circumstances, in the event of nuclear incidents at facilities
covered by the federal government's third-party liability indemnification
program, Con Edison could be assessed up to $88.1 million per incident, of which
not more than $10 million may be assessed in any one year.
ENVIRONMENTAL MATTERS The normal course of operations of certain of CEI's
subsidiaries, including Con Edison, necessarily involves activities and
substances that expose the subsidiaries to potential liabilities under laws and
regulations protecting the environment. Liabilities under these laws and
regulations can be material and in some instances may be imposed without regard
to fault, or may be imposed for past acts, even though such past acts may have
been lawful at the time they occurred. Sources of potential environmental
liabilities include (but are not limited to) the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (Superfund) and
similar state statutes, asbestos, and electric and magnetic fields (EMF).
-16-
SUPERFUND By its terms Superfund imposes joint and several strict liability,
regardless of fault, upon generators of hazardous substances for resulting
removal and remedial costs and environmental damages. Con Edison has received
process or notice concerning possible claims under Superfund or similar state
statutes relating to a number of sites at which it is alleged that hazardous
substances generated by Con Edison (and, in most instances, a large number of
other potentially responsible parties) were deposited. Estimates of Con Edison's
liability for these sites range from extremely preliminary to highly refined. At
March 31, 1999, a liability of approximately $22.6 million had been accrued.
There will be additional costs in amounts that are not presently determinable
but may be material to the respective financial position, results of operations
or liquidity of CEI and Con Edison.
ASBESTOS CLAIMS Suits have been brought in New York State and federal courts
against Con Edison and many other defendants, wherein a large number of
plaintiffs sought large amounts of compensatory and punitive damages for deaths
and injuries allegedly caused by exposure to asbestos at various premises of Con
Edison. Many of these suits have been disposed of without any payment by Con
Edison, or for immaterial amounts. The amounts specified in all the remaining
suits total billions of dollars but CEI and Con Edison believe that these
amounts are greatly exaggerated, as were the claims already disposed of. Based
on the information and relevant circumstances known to CEI and Con Edison at
this time, neither CEI nor Con Edison believe that these suits will have a
material adverse effect on their respective financial position, results of
operations or liquidity.
EMF Electric and magnetic fields (EMF) are found wherever electricity is used.
In the event a causal relationship between EMF and adverse health effects is
established, or independently of any such causal determination, in the event of
adverse developments in related legal or public policy doctrines, there could be
a material adverse effect on the electric utility industry, including CEI and
Con Edison.
NOTE C - FINANCIAL INFORMATION BY CEI BUSINESS SEGMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
Electric Gas
-------- ---
1999 1998 1999 1998
---- ---- ---- ----
Sales revenue $ 1,193,500 $ 1,291,323 $ 381,342 $ 399,170
Intersegment revenues 19,392 2,436 615 544
Depreciation and amortization 112,113 108,903 15,712 14,874
Operating income 147,149 140,164 88,446 88,233
Steam Other
----- -----
1999 1998 1999 1998
---- ---- -- ---- ----
Sales revenue $ 140,733 $ 135,390 $ 61,011 $ 27,164
Intersegment revenues 414 405 221 -
Depreciation and amortization 4,449 4,275 435 206
Operating income 29,702 29,541 (6,830) (3,377)
Total
1999 1998
---- ----
Sales revenue $ 1,776,586 $ 1,853,047
Intersegment revenues 20,642 3,385
Depreciation and amortization 132,709 128,258
Operating income 258,467 254,561
-17-
FOR THE TWELVE MONTHS ENDED MARCH 31, 1999 AND 1998
Electric Gas
-------- ---
1999 1998 1999 1998
---- ---- ---- ----
Sales revenue $ 5,576,622 $ 5,657,948 $ 941,780 $ 1,038,031
Intersegment revenues 70,421 10,995 2,531 2,208
Depreciation and amortization 443,079 432,476 61,433 58,057
Operating income 912,961 858,529 141,894 162,343
Steam Other
----- -----
1999 1998 1999 1998
---- ---- ---- ----
Sales revenue $ 327,276 $ 365,011 $ 170,908 $ 72,654
Intersegment revenues 1,663 1,651 511 -
Depreciation and amortization 17,534 16,547 916 841
Operating income 19,578 34,936 (17,201) (12,808)
Total
1999 1998
---- ----
Sales revenue $ 7,016,586 $ 7,133,644
Intersegment revenues 75,126 14,854
Depreciation and amortization 522,962 507,921
Operating income 1,057,232 1,043,000
-18-
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis relates to (i) the interim
consolidated financial statements of Consolidated Edison, Inc. (CEI) and its
subsidiaries, including Consolidated Edison Company of New York, Inc. (Con
Edison), the regulated utility, and several non-utility subsidiaries, and (ii)
the interim consolidated financial statements of Con Edison on a stand-alone
basis. CEI is a holding company, operates only through its subsidiaries and has
no material assets other than the stock of its subsidiaries. Con Edison is the
principal subsidiary of CEI. Unless otherwise indicated, this discussion and
analysis applies to each of CEI and Con Edison. References in this report to the
"Company" are to CEI and Con Edison, collectively.
This discussion and analysis should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations in Item 7 of the combined CEI and Con Edison Annual Reports on Form
10-K for the year ended December 31, 1998 (File Nos. 1-14514 and 1-1217, the
1998 Form 10-K). Reference is also made to the notes to the financial statements
in Part I, Item 1 of this report, which notes are incorporated herein by
reference.
LIQUIDITY AND CAPITAL RESOURCES
Cash and temporary cash investments were $57.5 million for CEI
(including $17.6 million for Con Edison) at March 31, 1999, $102.3 million for
CEI (including $30.0 million for Con Edison) at December 31, 1998 and $198.3
million for CEI (including $98.2 million for Con Edison) at March 31, 1998.
These balances reflect, among other things, outstanding commercial paper of
$121.9 million at March 31, 1999 and the stock repurchases and tax prepayments
discussed below. The highest amount of commercial paper outstanding during the
first quarter of 1999 was $238 million. The Company had no commercial paper
outstanding at December 31, 1998 and March 31. 1998.
Pursuant to the CEI stock repurchase program, Con Edison purchased
approximately 4.3 million CEI shares at an aggregate cost of $210.1 million
during the first quarter of 1999. From May 1998, when the program began, through
March 31, 1999 Con Edison purchased a total of approximately 7.0 million CEI
shares at an aggregate cost of $330.9 million. See "Liquidity and Capital
Resources - Sources of Liquidity - Stock Repurchases" in Item 7 of the 1998 Form
10-K.
CEI's interest coverage for the 12 months ended March 31, 1999 was 4.32
times, compared with 4.29 times for the year 1998 and 4.14 times for the 12
months ended March 31, 1998. The increase in interest coverage reflects higher
pre-tax income and lower interest expense as a result of debt refundings.
Customer accounts receivable, less allowance for uncollectible
accounts, increased at March 31, 1999 compared with year-end 1998 primarily
because revenues were higher in March 1999 than in December 1998 (when there was
warmer than normal weather). Con Edison's equivalent number of days of revenue
outstanding (ENDRO) as customer accounts receivable was 25.3 days at March 31,
1999, compared with 28.0 days at December 31, 1998 and 25.7 days at March 31,
1998. Prior year ENDRO amounts have been restated to reflect a new method for
calculating ENDRO that eliminates variations due to the number of billing and
collection days in each month.
-19-
In January 1999 Con Edison made a $252.3 million semi-annual prepayment
to New York City for property taxes. The prepayment balance at March 31, 1999
includes the unamortized portion ($126.1 million) of this payment. A similar
prepayment was made in January 1998. The prepayment balance at March 31, 1999
also reflects cumulative credits to pension expense of $73.2 million, compared
with $62.0 million at December 31, 1998 and $14.6 million at March 31, 1998,
resulting primarily from the amortization of investment gains. See Note D to the
financial statements included in Item 8 of the 1998 Form 10-K.
Recoverable fuel costs amounted to a credit of $7.6 million at March
31, 1999, compared with $22.0 million at December 31, 1998 and $25.6 million at
March 31,1998, reflecting the ongoing recovery of previously deferred amounts
and the changes in volumes and unit cost of purchased power, fuel and gas
purchased for resale discussed below in "Results of Operations."
Non-current liabilities - other includes $123.3 million at March 31,
1999, $102.0 million at December 31, 1998 and $36.6 million at March 31, 1998
for unfunded other post-employment benefit (OPEB) obligations. The Company's
policy is to fund its estimated OPEB costs to the extent deductible under
current tax limitations. See Note E to the financial statements included in Item
8 of the 1998 Form 10-K.
Acquisition
Reference is made to "Liquidity and Capital Resources - Acquisition" in
Item 7 of the 1998 Form 10-K. During the first quarter of 1999, CEI's
acquisition of Orange and Rockland Utilities, Inc. was approved by New York, New
Jersey and Pennsylvania utility regulators. The acquisition remains subject to
approval by the Securities and Exchange Commission and review by the U.S.
Department of Justice.
PSC Settlement Agreement
Reference is made to "Liquidity and Capital Resources - PSC Settlement
Agreement" in Item 7 of the 1998 Form 10-K. In April 1999 Con Edison's electric
Retail Choice program was expanded to cover Con Edison customers representing
approximately 2,000 megawatts of aggregate customer load. Because this level
exceeds 15% of Con Edison's peak electric load, Con Edison believes that the
application of the earnings sharing provisions of the Settlement Agreement will
cease beginning in the current rate year (starting April 1, 1999).
Financial Market Risks
Reference is made to "Liquidity and Capital Resources - Financial
Market Risks" in Item 7 of the 1998 Form 10-K. At March 31, 1999 neither the
fair value of derivatives outstanding nor potential derivative losses from
reasonably possible near-term changes in market prices were material to the
financial position, results of operations or liquidity of the Company.
Environmental Claims and Other Contingencies
Reference is made to the notes to the financial statements included in
this report for information concerning potential liabilities of the Company
arising from the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (Superfund), from claims relating to alleged exposure to
asbestos, and from certain other contingencies to which the Company is subject.
-20-
Year 2000 Readiness Disclosure
Reference is made to "Liquidity and Capital Resources - Year 2000
Readiness Disclosure" in Item 7 of the 1998 Form 10-K.
Con Edison estimates that the cost of its Year 2000 program will be
approximately $27 million, of which approximately $23.8 million has been
incurred. The cost is being funded from internally-generated funds and expensed
as incurred.
Con Edison expects that its program will be adequate to address its
Year 2000 issues, but nevertheless has developed a Year 2000 contingency plan.
The plan addresses energy supply, staffing, communication and other resources
that may be needed in the event of Year 2000 problems. There can, of course, be
no assurance as to whether the contingency plan will successfully address any
contingencies that arise. In the event that Con Edison is unsuccessful in
addressing its Year 2000 issues, worst case scenarios could have a material
adverse effect on CEI's and Con Edison's financial condition, results of
operations or liquidity.
Forward-Looking Statements
This discussion and analysis includes forward-looking statements, which
are statements of future expectation and not facts. Words such as "estimates,"
"expects," "anticipates," "intends," "plans" and similar expressions identify
forward-looking statements. Actual results or developments might differ
materially from those included in the forward-looking statements because of
factors such as competition and industry restructuring, changes in economic
conditions, changes in historical weather patterns, changes in laws,
regulations, regulatory policies or public policy doctrines, technological
developments, any failure by Con Edison or others to successfully complete
necessary changes to address Year 2000 problems, and other presently unknown or
unforeseen factors.
RESULTS OF OPERATIONS
CEI's net income for common stock for the first quarter and 12 months
ended March 31, 1999 was higher than the corresponding 1998 periods by $4.7
million ($.03 per share) and $13.1 million ($.09 per share), respectively. The
increase in earnings for the first quarter reflects higher electric sales growth
resulting from the continued strength in the regional economy, continued
emphasis on cost reduction and the impact of the common stock repurchase program
(see "Liquidity and Capital Resources," above). These factors more than offset
the rate reductions implemented under the PSC Settlement Agreement. The increase
in earnings for the 12-month period reflects the same factors and also reflects
higher electric net revenues from warmer than normal 1998 summer weather. The
results of operations of CEI include the results of operations of Con Edison and
of the several non-utility subsidiaries of CEI. For information about CEI's
operating segments, see the notes to the financial statements included in this
report.
-21-
Increases (Decreases)
--------------------------------------------------------------
Three Months Ended Twelve Months Ended
March 31, 1999 March 31, 1999
Compared With Compared With
Three Months Ended Twelve Months Ended
March 31, 1998 March 31, 1998
---------------------- ------------------
Amount Percent Amount Percent
------ ------- ------ -------
(Amounts are for CEI and are in Millions)
-----------------------------------------
Operating revenues $ (76.4) (4.1)% $ (117.0) (1.6)%
Purchased power - electric and steam (70.4) (19.7) (171.8) (12.7)
Fuel - electric and steam (17.0) (12.6) (18.0) (3.1)
Gas purchased for resale (8.9) (4.7) (61.9) (12.6)
----- ------
Operating revenues less purchased
power, fuel and gas purchased for
resale (Net revenues) 19.9 1.7 134.7 2.9
Other operations and maintenance 3.6 0.9 37.9 2.4
Depreciation and amortization 4.4 3.5 15.1 3.0
Taxes, other than federal
income tax (1.8) (0.6) 27.9 2.4
Federal income tax 9.8 10.6 39.6 10.5
--- ----
Operating income 3.9 1.5 14.2 1.4
Other income less deductions and
related federal income tax (0.1) (6.9) (8.3) (79.8)
Net interest charges 0.2 0.2 (4.8) (1.5)
Preferred stock dividend
requirements (1.1) (25.1) (2.4) (13.2)
----- -----
Net income for common stock $ 4.7 2.8% $ 13.1 1.9%
------- --------
-22-
CEI's investment in its non-utility subsidiaries was $151.7 million at
March 31, 1999. CEI's results of operations include the net after-tax losses of
its non-utility subsidiaries as follows (with amounts shown in millions):
1999 1998
---- ----
Amount Per Share Amount Per Share
First Quarter $ (5.7) $ (.02) $ (3.2) $ (.01)
Twelve Months ended March 31 $ (20.9) $ (.09) $ (12.3) $ (.05)
For additional information about CEI's non-utility subsidiaries, see
"Non-Utility Subsidiaries" in Item 1 of the 1998 Form 10-K.
First Quarter 1999 Compared with
First Quarter 1998
CEI's net revenues (operating revenues less purchased power, fuel and
gas purchased for resale) increased $19.9 million in the first quarter of 1999
compared with the 1998 period. Electric, steam and non-utility net revenues
increased $14.0 million, $2.8 million and $4.3 million, respectively. Gas net
revenues decreased $1.2 million.
Electric net revenues in the 1999 period were higher than in the 1998
period primarily as a result of higher sales, reflecting continued strength in
the regional economy, offset in part by rate reductions that went into effect in
April 1998 and the deferral for customer benefit of approximately $10 million
under the earnings sharing provisions applicable to the rate year ended March
31, 1999 under the PSC Settlement Agreement. See "Liquidity and Capital
Resources - PSC Settlement Agreement - Rate Plan" in Item 7 of the 1998 Form
10-K.
Con Edison's electric sales, excluding off-system sales, in the 1999
period compared with the 1998 period were:
Millions of Kwhrs.
1st Quarter 1st Quarter Percent
Description 1999 1998 Variation Variation
Residential/Religious 2,723 2,653 70 2.6%
Commercial/Industrial 5,542 6,217 (675) (10.9)
Other 141 161 (20) (12.4)
Total Full Service Customers 8,406 9,031 (625) (6.9)
Retail Choice Customers 1,049 -- 1,049 Large
NYPA, Municipal Agency
and Other Sales 2,474 2,454 20 0.8
Total Service Area 11,929 11,485 444 3.9%
-23-
The decrease in sales to Con Edison's full service (supply and
delivery) customers in the 1999 period reflects Con Edison's electric Retail
Choice (delivery only) program. See "Electric Operations - Changes" in Item 1 of
the 1998 Form 10-K and "PSC Settlement Agreement," above.
For the 1999 period, Con Edison's firm gas sales and transportation
volumes increased 11.4 percent due to colder winter weather in 1999 as compared
to 1998, and interruptible sales decreased 31.5 percent compared with the 1998
period. Under the current gas rate agreement, most weather-related variations in
firm gas sales and transportation do not affect earnings. Transportation of
customer-owned gas under Con Edison's gas Retail Choice program increased
significantly during the 1999 period. See "Gas Operations Gas Sales" in Item 1
of the 1998 Form 10-K. Gas transported for the New York Power Authority (NYPA)
decreased in the 1999 period due to NYPA's use of alternative fuel for its
generation.
Steam sales volume increased 13.7 percent compared with the 1998 period
as a result of colder winter weather in 1999 as compared to 1998. Both winter
periods experienced weather patterns that are considered warmer than normal.
After adjusting for variations, primarily in weather and billing days
in each period, electric sales volume in Con Edison's service territory
increased 2.2 percent in the first quarter of 1999, firm gas sales and
transportation volume increased 2.3 percent and steam sales volume decreased 1.3
percent.
Electric fuel costs decreased in the 1999 period by $21.0 million due
to a decrease in the average unit cost of fuel, partially offset by increased
generation. The Indian Point 2 nuclear generating unit was out of service for
maintenance during the 1998 period and was in service during the 1999 period.
See "Liquidity and Capital Resources - Nuclear Generation" in Item 7 of the 1998
Form 10-K. Electric purchased power costs decreased in the 1999 period due to
lower unit costs and lower purchased volumes. Steam fuel costs increased in the
1999 period due to higher sendout. Steam purchased power costs decreased due to
lower unit cost. The cost of gas purchased for resale decreased, reflecting
lower unit cost partially offset by higher sendout.
CEI's other operations and maintenance (O&M) expenses increased in the
1999 period compared with the 1998 period, due primarily to increased expenses
in the non-utility subsidiaries of $6.6 million, while utility O&M expenses for
Con Edison decreased by $3.0 million. The decrease in utility O&M in the 1999
period was due primarily to lower nuclear expenses.
Depreciation and amortization increased in the 1999 period due
principally to higher plant balances.
Federal income tax increased in the 1999 period due to higher taxable
income and lower tax credits.
Twelve Months Ended March 31, 1999 Compared with
Twelve Months Ended March 31, 1998
CEI's net revenues increased $134.7 million in the 12 months ended
March 31, 1999 compared with the 1998 period. Electric and non-utility net
revenues increased $144.8 million and $26.6 million, respectively. Gas and steam
net revenues decreased $28.5 million and $8.2 million, respectively.
-24-
Electric net revenues in the 12-month period ended March 31, 1999 were
higher than in the corresponding 1998 period primarily as a result of higher
sales, reflecting continued strength in the regional economy and warmer than
normal 1998 summer weather, offset in part by the rate reductions that went into
effect in January and April 1998 and the deferral for customer benefit of
approximately $10 million under the earnings sharing provisions applicable to
the rate year ended March 31, 1999 under the PSC Settlement Agreement.
Gas net revenues include an efficiency distribution incentive of $10.8
million in the 1998 period; no incentive was recorded in the 1999 period.
Steam net revenues decreased in the 1999 period primarily due to
weather-related sales decreases.
Non-utility net revenues increased in the 1999 period primarily due to
the participation of Consolidated Edison Solutions, Inc., a CEI subsidiary, in
Con Edison's electric and gas Retail Choice programs.
Con Edison's electric sales, excluding off-system sales, for the 1999
period compared with the 1998 period were:
Millions of Kwhrs.
Twelve Months Twelve Months
Ended Ended Percent
Description March 31, 1999 March 31, 1998 Variation Variation
Residential/Religious 11,353 11,014 339 3.1 %
Commercial/Industrial 23,780 25,986 (2,206) (8.5)
Other 617 627 (10) (1.6)
Total Full Service Customers 35,750 37,627 (1,877) (5.0)
Retail Choice Customers 3,466 -- 3,466 Large
NYPA, Municipal Agency
and Other Sales 9,874 9,658 216 2.2
Total Service Area 49,090 47,285 1,805 3.8 %
The decrease in sales to Con Edison's full service (supply and
delivery) customers in the 1999 period reflects Con Edison's electric Retail
Choice (delivery only) program.
For the 1999 period, Con Edison's firm gas sales and transportation
volumes decreased 2.3 percent, and interruptible sales decreased 35.1 percent.
Transportation of customer-owned gas under Con Edison's gas Retail Choice
program increased significantly during the 1999 period. Gas transported for the
New York Power Authority (NYPA) decreased in the 1999 period due to NYPA's use
of alternative fuel for its generation.
-25-
After adjustment for variations, primarily in weather and billing days
in each period, electric sales volume in Con Edison's service territory in the
1999 period increased 2.4 percent. Similarly adjusted, firm gas sales and
transportation volume increased 0.4 percent and steam sales volume decreased 1.6
percent.
Electric fuel costs increased in the 1999 period by $11.7 million due
to increased generation of electricity, partially offset by a decrease in the
unit costs of fuel. Electric purchased power costs decreased in the 1999 period,
reflecting decreased purchased volumes and lower unit cost of purchases. Steam
fuel costs decreased in the 1999 period due to decreased generation of steam by
Con Edison and a lower unit cost of fuel. Steam purchased power costs were
relatively unchanged in the 1999 period. The cost of gas purchased for resale
decreased, reflecting a lower unit cost of fuel and lower sendout.
CEI's other operations and maintenance (O&M) expenses increased in the
1999 period due primarily to increased expenses in the non-utility subsidiaries
of $24.8 million, while utility O&M expenses for Con Edison increased by $13.3
million. The increase in utility O&M in the 1999 period was due primarily to
higher electric distribution expenses and lower nuclear expenses.
Depreciation and amortization increased in the 1999 period due
principally to higher plant balances.
Taxes other than federal income tax increased in the 1999 period
compared with the 1998 period, due primarily to increased property taxes and
application of the subsidiary capital tax.
Federal income tax increased in the 1999 period due to higher taxable
income and lower tax credits.
CEI's other income less miscellaneous deductions decreased in the 1999
period due primarily to the write-off of a $10 million investment made by one of
CEI's non-utility subsidiaries.
Net interest charges decreased in the 1999 period due to interest
savings resulting from the refunding of long-term debt issues in 1998.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For information about the Company's primary market risks associated
with activities in derivative financial instruments, other financial instruments
and derivative commodity instruments, see "Liquidity and Capital Resources -
Financial Market Risks" in Part I, Item 2 of this report and Item 7A of the 1998
Form 10-K.
-26-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
SUPERFUND - EDISON PROPERTIES SITE
In April 1999, Edison Properties, LLC (which is not affiliated with CEI
or Con Edison) notified Con Edison that it had discovered coal tar on its site
in lower Manhattan. The site, which is located near the Hudson River, was part
of a large manufactured gas plant complex that was operated by Con Edison and
its predecessor, the Manhattan Gas Light Company, prior to 1914. Con Edison is
unable at this time to estimate its to exposure to liability with respect to
this site.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 12.1 Statement of computation of CEI's ratio of earnings to
fixed charges for the twelve-month periods ended March 31,
1999 and 1998.
Exhibit 12.2 Statement of computation of Con Edison's ratio of
earnings to fixed charges for the twelve-month periods ended
March 31, 1999 and 1998.
Exhibit 27.1 Financial Data Schedule for CEI.*
Exhibit 27.2 Financial Data Schedule for Con Edison.*
- -----------
*To the extent provided in Rule 402 of Regulation S-T, this exhibit shall not be
deemed "filed", or otherwise subject to liabilities, or be deemed part of a
registration statement.
(b) REPORTS ON FORM 8-K
Neither CEI nor Con Edison filed a Current Report on Form 8-K during
the quarter ended March 31, 1999.
-27-
SIGNATURES
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 thereunto duly authorized.
CONSOLIDATED EDISON, INC.
CONSOLIDATED EDISON COMPANY
OF NEW YORK, INC.
DATE: May 13, 1999 By: Joan S. Freilich
Joan S. Freilich
Executive Vice President, Chief Financial
Officer and Duly Authorized Officer
DATE: May 13, 1999 By: Hyman Schoenblum
Hyman Schoenblum
Vice President, Controller and
Chief Accounting Officer
CONSOLIDATED EDISON, INC.
Ratio of Earnings to Fixed Charges
Twelve Months Ended
(Thousands of Dollars)
DECEMBER DECEMBER
1998 1997
---------- ---------
Earnings
Net Income Available for Common $712,742 $694,479
Preferred Dividends 17,007 18,344
Federal Income Tax 318,980 357,100
Federal Income Tax Deferred 95,140 31,450
Investment Tax Credits Deferred (8,710) (8,830)
---------- ----------
Total Earnings Before Federal Income Tax 1,135,159 1,092,543
Fixed Charges* 345,513 353,689
---------- ----------
Total Earnings Before Federal Income Tax
and Fixed Charges $1,480,672 $1,446,232
========== ==========
* Fixed Charges
Interest on Long-Term Debt $294,894 $306,109
Amort. of Debt Discount, Premium & Expense 13,777 12,049
Interest on Component of Rentals 18,442 18,448
Other Interest 18,400 17,083
---------- ----------
Total Fixed Charges $345,513 $353,689
========== ==========
Ratio of Earnings to Fixed Charges 4.29 4.09
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
Ratio of Earnings to Fixed Charges
Twelve Months Ended
(Thousands of Dollars)
DECEMBER DECEMBER
1998 1997
--------- ---------
Earnings
Net Income $745,140 $712,823
Federal Income Tax 327,805 357,100
Federal Income Tax Deferred 95,140 31,450
Investment Tax Credits Deferred (8,710) (8,830)
---------- ----------
Total Earnings Before Federal Income Tax 1,159,375 1,092,543
Fixed Charges* 345,513 353,689
---------- ----------
Total Earnings Before Federal Income Tax
and Fixed Charges $1,504,888 $1,446,232
========== ==========
* Fixed Charges
Interest on Long-Term Debt $294,894 $306,109
Amort. of Debt Discount, Premium & Expense 13,777 12,049
Interest on Component of Rentals 18,442 18,448
Other Interest 18,400 17,083
---------- ----------
Total Fixed Charges $345,513 $353,689
========== ==========
Ratio of Earnings to Fixed Charges 4.36 4.09
UT 0001047862 Consolidated Edison, Inc. 1,000 Dec-31-1999 Mar-31-1999 3-Mos Per-Book 11,401,237 390,872 1,183,054 524,142 947,044 14,446,349 588,720 857,333 4,753,375 5,868,573 37,050 212,563 3,925,548 0 0 121,906 350,000 0 36,580 2,600 3,891,529 14,446,349 1,776,586 101,735 1,416,384 1,518,119 258,467 1,801 260,268 80,223 180,045 3,398 176,647 123,772 75,843 287,938 .76 .76
UT 0000023632 Consolidated Edison Company of New York, Inc. 1,000 Dec-31-1999 Mar-31-1999 3-Mos Per-Book 11,401,237 289,109 1,101,390 524,142 947,044 14,262,922 588,720 857,333 4,575,774 5,690,972 37,050 212,563 3,925,548 0 0 121,906 350,000 0 36,580 2,600 3,885,703 14,262,922 1,732,269 104,766 1,362,206 1,466,972 265,297 341 265,638 80,223 185,415 3,398 182,017 123,772 75,843 323,751 0 0