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, 1998
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
_________________________
<TABLE>
<CAPTION>
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 ID. Number
<S> <C> <C> <C>
1-14514 CONSOLIDATED EDISON, INC. New York 13-3965100
4 Irving Place, New York, New York 10003
(212) 460-3900
1-1217 CONSOLIDATED EDISON COMPANY
OF NEW YORK, INC. New York 13-5009340
4 Irving Place, New York, New York 10003
(212) 460-4600
</TABLE>
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, 1998, (i) Consolidated Edison, Inc.
("CEI") had outstanding 235,488,313 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.
<PAGE>
- 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 Statements of Cash Flows 13
Notes to Financial Statements 15-16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 17-24
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES 24
ABOUT MARKET RISK
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 25
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 25
_________________________
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 became the
holding company for Con Edison on January 1, 1998. See "Corporate Structure" in
Item 1 of the combined CEI and Con Edison Annual Reports on Form 10-K for the
year ended December 31, 1997 (File Nos. 1-4514 and 1-1217, the "1997 Form 10-
K"). 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.
<PAGE>
-3-
CONSOLIDATED EDISON, INC.
CONSOLIDATED BALANCE SHEET
AS AT MARCH 31, 1998, DECEMBER 31, 1997 AND MARCH 31, 1997
<TABLE>
<CAPTION>
As At
----------------------------------------------------
March 31, 1998 Dec. 31, 1997 March 31, 1997
--------------- ------------- --------------
(Thousands of Dollars)
ASSETS
UTILITY PLANT, AT ORIGINAL COST
<S> <C> <C> <C>
Electric $11,805,558 $11,743,745 $11,678,164
Gas 1,759,293 1,741,562 1,665,996
Steam 582,332 576,206 538,924
General 1,210,805 1,203,427 1,160,419
----------- ----------- -----------
Total 15,357,988 15,264,940 15,043,503
Less: Accumulated depreciation 4,481,414 4,392,377 4,371,046
----------- ----------- -----------
Net 10,876,574 10,872,563 10,672,457
Construction work in progress 284,725 292,218 309,315
Nuclear fuel assemblies and components,
less accumulated amortization 103,690 102,321 100,720
----------- ----------- -----------
NET UTILITY PLANT 11,264,989 11,267,102 11,082,492
----------- ----------- -----------
CURRENT ASSETS
<S> <C> <C> <C>
Cash and temporary cash investments 198,257 183,458 94,903
Funds held for refunding of debt - 328,874 -
Accounts receivable customer, less
allowance for uncollectible accounts
of $22,705, $21,600 and $21,535 561,655 581,163 570,595
Other receivables 44,983 60,759 36,497
Regulatory accounts receivable 3,888 (1,682) 60,954
Fuel, at average cost 38,985 53,697 45,946
Gas in storage, at average cost 31,137 37,209 22,660
Materials and supplies, at average cost 192,698 191,759 203,675
Prepayments 189,146 75,516 170,852
Other current assets 16,700 16,457 15,453
--------- --------- ---------
TOTAL CURRENT ASSETS 1,277,449 1,527,210 1,221,535
--------- --------- ---------
Investments and nonutility property 331,970 292,397 193,894
--------- --------- ---------
DEFERRED CHARGES
<S> <C> <C> <C>
Enlightened Energy program costs 102,349 117,807 128,204
Unamortized debt expense 138,262 126,085 128,234
Recoverable fuel costs 25,613 98,301 52,389
Power contract termination costs 69,594 80,978 46,848
Other deferred charges 254,270 239,559 289,795
----------- ----------- -----------
TOTAL DEFERRED CHARGES 590,088 662,730 645,470
----------- ----------- -----------
REGULATORY ASSET-FUTURE FEDERAL
INCOME TAXES 938,053 973,079 967,977
----------- ----------- -----------
TOTAL $14,402,549 $14,722,518 $14,111,368
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
-4-
CONSOLIDATED EDISON, INC.
CONSOLIDATED BALANCE SHEET
AS AT MARCH 31, 1998, DECEMBER 31, 1997 AND MARCH 31, 1997
<TABLE>
<CAPTION>
As At
----------------------------------------------------
March 31, 1998 Dec. 31, 1997 March 31, 1997
--------------- ------------- --------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
<S> <C> <C> <C>
Common stock, authorized 500,000,000
shares; outstanding 235,489,650 shares,
235,489,650 shares and 235,008,078 shares $ 1,482,351 $ 1,482,351 $ 1,478,647
Retained earnings 4,531,810 4,484,703 4,322,562
Capital stock expense (36,966) (36,975) (34,831)
----------- ----------- -----------
TOTAL COMMON SHAREHOLDERS' EQUITY 5,977,195 5,930,079 5,766,378
----------- ----------- -----------
Preferred stock
Subject to mandatory redemption
7.20% Series I 47,500 47,500 47,500
6-1/8% Series J 37,050 37,050 37,050
----------- ----------- -----------
TOTAL SUBJECT TO MANDATORY REDEMPTION 84,550 84,550 84,550
----------- ----------- -----------
Other preferred stock
$ 5 Cumulative Preferred 175,000 175,000 175,000
5-3/4% Series A 7,061 7,061 7,061
5-1/4% Series B 13,844 13,844 13,844
4.65% Series C 15,330 15,330 15,330
4.65% Series D 22,233 22,233 22,233
6% Convertible Series B - - 4,519
----------- ----------- -----------
TOTAL OTHER PREFERRED STOCK 233,468 233,468 237,987
----------- ----------- -----------
TOTAL PREFERRED STOCK 318,018 318,018 322,537
----------- ----------- -----------
Long-term debt 4,198,152 4,188,906 4,239,066
----------- ----------- -----------
TOTAL CAPITALIZATION 10,493,365 10,437,003 10,327,981
----------- ----------- -----------
NONCURRENT LIABILITIES
<S> <C> <C> <C>
Obligations under capital leases 39,180 39,879 41,958
Other noncurrent liabilities 111,433 106,137 81,800
----------- ----------- -----------
TOTAL NONCURRENT LIABILITIES 150,613 146,016 123,758
----------- ----------- -----------
CURRENT LIABILITIES
<S> <C> <C> <C>
Long-term debt due within one year 200,000 529,385 103,762
Accounts payable 377,799 440,114 352,461
Customer deposits 163,983 161,731 159,176
Accrued taxes 107,989 65,736 109,052
Accrued interest 66,557 85,613 67,706
Accrued wages 80,509 82,556 78,300
Other current liabilities 184,551 183,122 145,787
----------- ----------- -----------
TOTAL CURRENT LIABILITIES 1,181,388 1,548,257 1,016,244
----------- ----------- -----------
PROVISIONS RELATED TO FUTURE FEDERAL INCOME TAXES
AND OTHER DEFERRED CREDITS
Accumulated deferred federal income tax 2,308,092 2,307,835 2,299,747
Accumulated deferred investment tax credits 161,490 163,680 170,290
Other deferred credits 107,601 119,727 173,348
----------- ----------- -----------
TOTAL DEFERRED CREDITS 2,577,183 2,591,242 2,643,385
----------- ----------- -----------
TOTAL $14,402,549 $14,722,518 $14,111,368
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
-5-
CONSOLIDATED EDISON, INC.
CONSOLIDATED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
(THOUSANDS OF DOLLARS)
--------------------------
Operating revenues
<S> <C> <C>
Electric $1,291,323 $1,268,950
Gas 399,170 455,020
Steam 135,390 162,178
Non-utility 27,164 29,407
---------- ----------
TOTAL OPERATING REVENUES 1,853,047 1,915,555
---------- ----------
OPERATING EXPENSES
Purchased power 358,250 352,708
Fuel 134,554 151,354
Gas purchased for resale 189,439 251,711
Other operations 275,830 278,075
Maintenance 117,975 114,163
Depreciation and amortization 128,258 123,794
Taxes, other than federal income tax 302,219 304,983
Federal income tax 91,961 91,887
---------- ----------
TOTAL OPERATING EXPENSES 1,598,486 1,668,675
---------- ----------
OPERATING INCOME 254,561 246,880
OTHER INCOME (DEDUCTIONS)
Investment income 2,904 1,036
Allowance for equity funds used during construction 512 1,800
Other income less miscellaneous deductions (503) (521)
Federal income tax (979) (303)
---------- ----------
TOTAL OTHER INCOME 1,934 2,012
---------- ----------
INCOME BEFORE INTEREST CHARGES 256,495 248,892
Interest on long-term debt 79,058 78,752
Other interest 1,247 4,414
Allowance for borrowed funds used during construction (263) (882)
---------- ----------
NET INTEREST CHARGES 80,042 82,284
---------- ----------
NET INCOME 176,453 166,608
PREFERRED STOCK DIVIDEND REQUIREMENTS (4,536) (4,604)
---------- ----------
NET INCOME FOR COMMON STOCK $ 171,917 $ 162,004
========== ==========
COMMON SHARES OUTSTANDING AVERAGE (000) 235,490 235,001
BASIC AND DILUTED EARNINGS PER SHARE $0.73 $0.69
========== ==========
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $0.53 $0.525
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
-6-
CONSOLIDATED EDISON, INC.
CONSOLIDATED INCOME STATEMENT
FOR THE TWELVE MONTHS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
(THOUSANDS OF DOLLARS)
--------------------------
Operating revenues
<S> <C> <C>
Electric $ 5,657,948 $ 5,523,800
Gas 1,038,031 1,063,225
Steam 365,011 391,494
Non-utility 72,654 159,480
------------ ------------
TOTAL OPERATING REVENUES 7,133,644 7,137,999
------------ ------------
OPERATING EXPENSES
Purchased power 1,355,129 1,321,564
Fuel 580,024 540,741
Gas purchased for resale 490,325 618,553
Other operations 1,122,458 1,165,863
Maintenance 478,600 447,944
Depreciation and amortization 507,921 487,713
Taxes, other than federal income tax 1,178,391 1,165,187
Federal income tax 377,796 383,731
------------ ------------
TOTAL OPERATING EXPENSES 6,090,644 6,131,296
------------ ------------
OPERATING INCOME 1,043,000 1,006,703
OTHER INCOME (DEDUCTIONS)
Investment income 14,082 8,527
Allowance for equity funds used during construction 3,161 4,755
Other income less miscellaneous deductions (4,082) (7,812)
Federal income tax (2,674) 811
------------ ------------
TOTAL OTHER INCOME 10,487 6,281
------------ ------------
INCOME BEFORE INTEREST CHARGES 1,053,487 1,012,984
Interest on long-term debt 318,464 312,203
Other interest 13,916 16,893
Allowance for borrowed funds used during construction (1,561) (2,270)
------------ ------------
NET INTEREST CHARGES 330,819 326,826
------------ ------------
NET INCOME 722,668 686,158
PREFERRED STOCK DIVIDEND REQUIREMENTS (18,276) (18,429)
------------ ------------
NET INCOME FOR COMMON STOCK $ 704,392 $ 667,729
============ ============
COMMON SHARES OUTSTANDING AVERAGE (000) 235,195 234,987
BASIC AND DILUTED EARNINGS PER SHARE $2.99 $2.84
============ ============
DIVIDENDS DECLARED PER SHARE OF COMMON STOCK $2.105 $2.085
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
-7-
CONSOLIDATED EDISON, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
(THOUSANDS OF DOLLARS)
--------------------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income $176,453 $ 166,608
PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME
Depreciation and amortization 128,258 123,794
Deferred recoverable fuel costs 72,688 49,073
Federal income tax deferred 32,290 24,310
Common equity component of allowance
for funds used during construction (498) (1,749)
Other non-cash credits (5,475) (56)
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable customer, less
allowance for uncollectibles 19,508 (26,591)
Regulatory accounts receivable (5,570) (15,557)
Materials and supplies, including fuel
and gas in storage 19,845 42,208
Prepayments, other receivables and
other current assets (98,097) (101,087)
Enlightened Energy program costs 15,458 5,514
Power contract termination costs 6,912 11,620
Cost of removal less salvage (17,968) (13,241)
Accounts payable (62,315) (78,654)
Accrued income taxes 58,541 68,364
Other net (71,279) 5,228
-------- ---------
NET CASH FLOWS FROM OPERATING ACTIVITIES 268,751 259,784
-------- ---------
INVESTING ACTIVITIES INCLUDING CONSTRUCTION
<S> <C> <C>
Construction expenditures (120,602) (127,723)
Nuclear fuel expenditures (1,370) (3,149)
Contributions to nuclear decommissioning trust (5,325) (12,127)
Common equity component of allowance
for funds used during construction 498 1,749
-------- --------
NET CASH FLOWS FROM INVESTING ACTIVITIES
including construction (126,799) (141,250)
-------- --------
FINANCING ACTIVITIES INCLUDING DIVIDENDS
<S> <C> <C>
Issuance of long-term debt 285,000 -
Retirement of long-term debt - (2,494)
Advance refunding of long-term debt (605,240) -
Issuance and refunding costs (6,441) (36)
Funds held for refunding of debt 328,874 -
Common stock dividends (124,810) (123,377)
Preferred stock dividends (4,536) (4,606)
--------- ---------
NET CASH FLOWS FROM FINANCING ACTIVITIES
INCLUDING DIVIDENDS (127,153) (130,513)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS 14,799 (11,979)
CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1 183,458 106,882
--------- ---------
CASH AND TEMPORARY CASH INVESTMENTS AT MARCH 31 $ 198,257 $ 94,903
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 89,672 $ 91,181
Income taxes - -
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
-8-
CONSOLIDATED EDISON, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
(THOUSANDS OF DOLLARS)
--------------------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 722,668 $ 686,158
PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME
Depreciation and amortization 507,243 487,641
Deferred recoverable fuel costs 26,776 10,911
Federal income tax deferred 30,600 20,020
Common equity component of allowance
for funds used during construction (3,070) (4,538)
Other non-cash charges 11,849 23,873
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable customer, less
allowance for uncollectibles 8,940 15,983
Regulatory accounts receivable 57,066 (61,837)
Materials and supplies, including fuel
and gas in storage 9,461 (2,874)
Prepayments, other receivables and
other current assets (28,027) 8,414
Enlightened Energy program costs 25,855 6,057
Power contract termination costs 6,843 45,048
Cost of removal less salvage (78,446) (69,568)
Accounts payable 25,338 (32,100)
Accrued income taxes 14,002 17,129
Other net (89,591) 27,768
---------- ----------
NET CASH FLOWS FROM OPERATING ACTIVITIES 1,247,507 1,178,085
---------- ----------
INVESTING ACTIVITIES INCLUDING CONSTRUCTION
<S> <C> <C>
Construction expenditures (647,100) (672,068)
Nuclear fuel expenditures (12,800) (51,199)
Contributions to nuclear decommissioning trust (14,499) (21,301)
Common equity component of allowance
for funds used during construction 3,070 4,538
-------- --------
NET CASH FLOWS FROM INVESTING ACTIVITIES
INCLUDING CONSTRUCTION (671,329) (740,030)
-------- --------
FINANCING ACTIVITIES INCLUDING DIVIDENDS
<S> <C> <C>
Issuance of long-term debt 765,000 250,000
Retirement of long-term debt (103,762) (82,812)
Advance refunding of long-term debt (605,240) (95,329)
Issuance and refunding costs (15,335) (9,864)
Common stock dividends (495,144) (489,951)
Preferred stock dividends (18,343) (18,428)
--------- ---------
NET CASH FLOWS FROM FINANCING ACTIVITIES
INCLUDING DIVIDENDS (472,824) (446,384)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS 103,354 (8,329)
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF PERIOD 94,903 103,232
--------- ---------
CASH AND TEMPORARY CASH INVESTMENTS AT MARCH 31 $ 198,257 $ 94,903
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 308,801 $ 306,606
Income taxes 335,631 346,755
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
-9-
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
BALANCE SHEET
AS AT MARCH 31, 1998, DECEMBER 31, 1997 AND MARCH 31, 1997
<TABLE>
<CAPTION>
As At
----------------------------------------------------
March 31, 1998 Dec. 31, 1997 March 31, 1997
--------------- ------------- --------------
(Thousands of Dollars)
ASSETS
UTILITY PLANT, AT ORIGINAL COST
<S> <C> <C> <C>
Electric $11,805,558 $11,743,745 $11,678,164
Gas 1,759,293 1,741,562 1,665,996
Steam 582,332 576,206 538,924
General 1,210,805 1,203,427 1,160,419
----------- ----------- -----------
Total 15,357,988 15,264,940 15,043,503
Less: Accumulated depreciation 4,481,414 4,392,377 4,371,046
----------- ----------- -----------
Net 10,876,574 10,872,563 10,672,457
Construction work in progress 284,725 292,218 309,315
Nuclear fuel assemblies and components,
less accumulated amortization 103,690 102,321 100,720
----------- ----------- -----------
NET UTILITY PLANT 11,264,989 11,267,102 11,082,492
----------- ----------- -----------
CURRENT ASSETS
<S> <C> <C> <C>
Cash and temporary cash investments 98,216 183,458 94,903
Funds held for refunding of debt - 328,874 -
Accounts receivable customer, less
allowance for uncollectible accounts
of $22,372, $21,600 and $21,535 541,322 581,163 570,595
Other receivables 43,780 60,759 36,497
Regulatory accounts receivable 3,888 (1,682) 60,954
Fuel, at average cost 38,985 53,697 45,946
Gas in storage, at average cost 29,577 37,209 22,660
Materials and supplies, at average cost 192,698 191,759 203,675
Prepayments 188,321 75,516 170,852
Other current assets 16,688 16,457 15,453
--------- --------- ---------
TOTAL CURRENT ASSETS 1,153,475 1,527,210 1,221,535
--------- --------- ---------
INVESTMENTS AND NONUTILITY PROPERTY 244,370 292,397 193,894
--------- --------- ---------
DEFERRED CHARGES
<S> <C> <C> <C>
Enlightened Energy program costs 102,349 117,807 128,204
Unamortized debt expense 138,262 126,085 128,234
Recoverable fuel costs 25,613 98,301 52,389
Power contract termination costs 69,594 80,978 46,848
Other deferred charges 254,270 239,559 289,795
----------- ----------- -----------
TOTAL DEFERRED CHARGES 590,088 662,730 645,470
----------- ----------- -----------
REGULATORY ASSET-FUTURE FEDERAL
INCOME TAXES 938,053 973,079 967,977
----------- ----------- -----------
TOTAL $14,190,975 $14,722,518 $14,111,368
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
-10-
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
BALANCE SHEET
AS AT MARCH 31, 1998, DECEMBER 31, 1997 AND MARCH 31, 1997
<TABLE>
<CAPTION>
As At
----------------------------------------------------
March 31, 1998 Dec. 31, 1997 March 31, 1997
--------------- ------------- --------------
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
<S> <C> <C> <C>
Common stock $ 1,482,351 $ 1,482,351 $ 1,478,647
Retained earnings 4,335,539 4,484,703 4,322,562
Capital stock expense (36,966) (36,975) (34,831)
----------- ----------- -----------
TOTAL COMMON SHAREHOLDERS' EQUITY 5,780,924 5,930,079 5,766,378
----------- ----------- -----------
Preferred stock
Subject to mandatory redemption
7.20% Series I 47,500 47,500 47,500
6-1/8% Series J 37,050 37,050 37,050
----------- ----------- -----------
TOTAL SUBJECT TO MANDATORY REDEMPTION 84,550 84,550 84,550
----------- ----------- -----------
Other preferred stock
$ 5 Cumulative Preferred 175,000 175,000 175,000
5-3/4% Series A 7,061 7,061 7,061
5-1/4% Series B 13,844 13,844 13,844
4.65% Series C 15,330 15,330 15,330
4.65% Series D 22,233 22,233 22,233
6% Convertible Series B - - 4,519
----------- ----------- -----------
TOTAL OTHER PREFERRED STOCK 233,468 233,468 237,987
----------- ----------- -----------
TOTAL PREFERRED STOCK 318,018 318,018 322,537
----------- ----------- -----------
Long-term debt 4,198,152 4,188,906 4,239,066
----------- ----------- -----------
TOTAL CAPITALIZATION 10,297,094 10,437,003 10,327,981
----------- ----------- -----------
NONCURRENT LIABILITIES
<S> <C> <C> <C>
Obligations under capital leases 39,180 39,879 41,958
Other noncurrent liabilities 111,433 106,137 81,800
----------- ----------- -----------
TOTAL NONCURRENT LIABILITIES 150,613 146,016 123,758
----------- ----------- -----------
CURRENT LIABILITIES
<S> <C> <C> <C>
Long-term debt due within one year 200,000 529,385 103,762
Accounts payable 356,606 440,114 352,461
Customer deposits 163,983 161,731 159,176
Accrued taxes 116,795 65,736 109,052
Accrued interest 66,557 85,613 67,706
Accrued wages 80,509 82,556 78,300
Other current liabilities 181,635 183,122 145,787
----------- ----------- -----------
TOTAL CURRENT LIABILITIES 1,166,085 1,548,257 1,016,244
----------- ----------- -----------
PROVISIONS RELATED TO FUTURE FEDERAL INCOME TAXES
AND OTHER DEFERRED CREDITS
Accumulated deferred federal income tax 2,308,092 2,307,835 2,299,747
Accumulated deferred investment tax credits 161,490 163,680 170,290
Other deferred credits 107,601 119,727 173,348
----------- ----------- -----------
TOTAL DEFERRED CREDITS 2,577,183 2,591,242 2,643,385
----------- ----------- -----------
TOTAL $14,190,975 $14,722,518 $14,111,368
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
-11-
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
(THOUSANDS OF DOLLARS)
--------------------------
OPERATING REVENUES
<S> <C> <C>
Electric $1,293,759 $1,268,950
Gas 399,715 455,020
Steam 135,794 162,178
---------- ----------
TOTAL OPERATING REVENUES 1,829,268 1,886,148
---------- ----------
OPERATING EXPENSES
Purchased power 347,563 352,708
Fuel 134,554 151,354
Gas purchased for resale 164,710 222,712
Other operations 282,218 276,839
Maintenance 117,975 114,163
Depreciation and amortization 128,052 123,752
Taxes, other than federal income tax 302,118 304,962
Federal income tax 94,140 92,140
---------- ----------
TOTAL OPERATING EXPENSES 1,571,330 1,638,630
---------- ----------
OPERATING INCOME 257,938 247,518
OTHER INCOME (DEDUCTIONS)
Investment income 1,043 844
Allowance for equity funds used during construction 512 1,800
Other income less miscellaneous deductions (503) (1,220)
Federal income tax (404) (50)
---------- ----------
TOTAL OTHER INCOME 648 1,374
---------- ----------
INCOME BEFORE INTEREST CHARGES 258,586 248,892
Interest on long-term debt 79,058 78,752
Other interest 1,247 4,414
Allowance for borrowed funds used during construction (263) (882)
---------- ----------
NET INTEREST CHARGES 80,042 82,284
---------- ----------
NET INCOME 178,544 166,608
PREFERRED STOCK DIVIDEND REQUIREMENTS (4,536) (4,604)
---------- ----------
NET INCOME FOR COMMON STOCK $ 174,008 $ 162,004
========== ==========
CON EDISON SALES
<S> <C> <C>
Electric (Thousands of kilowatthours)
Con Edison customers 9,030,401 8,931,868
DELIVERY SERVICE TO NYPA AND OTHERS 2,254,597 2,221,333
Service for municipal agencies 199,624 214,061
---------- ----------
Total sales in service territory 11,484,622 11,367,262
Off-system sales 348,781 311,778(A)
Gas (dekatherms)
Firm (B) 36,439,826 39,273,950
Off-peak firm/interruptible 7,540,851 8,204,203
---------- ----------
Total sales to Con Edison customers 43,980,677 47,478,153
Transportation of customer-owned gas
NYPA 1,083,614 2,700,208
Others 3,587,326 1,717,334
Off-system sales 5,332,301 3,505,393
---------- ----------
Total sales and transportation 53,983,918 55,401,088
Steam (Thousands of pounds) 8,985,674 10,140,688
</TABLE>
(A) Includes 63,800 thousands of kWh, subsequently purchased by Con Edison for
sale to its customers.
(B) Includes firm transportation for customer aggregation.
The accompanying notes are an integral part of these financial statements.
<PAGE>
-12-
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
INCOME STATEMENT
FOR THE TWELVE MONTHS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
(THOUSANDS OF DOLLARS)
--------------------------
OPERATING REVENUES
<S> <C> <C>
Electric $ 5,660,384 $ 5,523,800
Gas 1,038,575 1,063,225
Steam 365,415 391,494
------------ ------------
TOTAL OPERATING REVENUES 7,064,374 6,978,519
------------ ------------
OPERATING EXPENSES
Purchased power 1,344,276 1,321,564
Fuel 580,024 540,741
Gas purchased for resale 421,216 460,143
Other operations 1,114,224 1,162,695
Maintenance 478,600 447,944
Depreciation and amortization 507,079 487,599
Taxes, other than federal income tax 1,178,237 1,165,125
Federal income tax 384,910 384,260
------------ ------------
TOTAL OPERATING EXPENSES 6,008,566 5,970,071
------------ ------------
OPERATING INCOME 1,055,808 1,008,448
OTHER INCOME (DEDUCTIONS)
Investment income 11,753 7,734
Allowance for equity funds used during construction 3,160 4,755
Other income less miscellaneous deductions (17,979) (9,293)
Federal income tax 2,836 1,340
------------ ------------
TOTAL OTHER INCOME (230) 4,536
------------ ------------
INCOME BEFORE INTEREST CHARGES 1,055,578 1,012,984
Interest on long-term debt 318,464 312,203
Other interest 13,916 16,893
Allowance for borrowed funds used during construction (1,561) (2,270)
------------ ------------
NET INTEREST CHARGES 330,819 326,826
------------ ------------
NET INCOME 724,759 686,158
PREFERRED STOCK DIVIDEND REQUIREMENTS (18,276) (18,429)
------------ ------------
NET INCOME FOR COMMON STOCK $ 706,483 $ 667,729
============ ============
CON EDISON SALES
Electric (Thousands of kilowatthours)
Con Edison customers 37,626,512 36,962,401
Delivery service to NYPA and others 8,826,642 8,718,372
Service for municipal agencies 831,459 723,899
------------ ------------
Total sales in service territory 47,284,613 46,404,672
Off-system sales (A) 2,536,590 4,068,429
Gas (dekatherms)
Firm (B) 90,659,667 93,211,622
Off-peak firm/interruptible 23,248,182 21,656,329
------------ ------------
Total sales to Con Edison customers 113,907,849 114,867,951
Transportation of customer-owned gas
NYPA 15,425,100 7,487,843
Others 9,526,866 6,268,814
Off-system sales 15,785,892 10,949,867
------------ ------------
Total sales and transportation 154,645,707 139,574,475
Steam (Thousands of pounds) 26,267,547 28,271,763
</TABLE>
(A) Includes 865,683 and 1,617,564 thousands of kWh, respectively, subsequently
purchased by Con Edison for sale to its customers.
(B) Includes firm transportation for customer aggregation.
The accompanying notes are an integral part of these financial statements.
<PAGE>
-13-
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
(THOUSANDS OF DOLLARS)
--------------------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 178,544 $ 166,608
PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME
Depreciation and amortization 128,052 123,752
Deferred recoverable fuel costs 72,688 49,073
Federal income tax deferred 32,290 24,310
Common equity component of allowance
for funds used during construction (498) (1,749)
Other non-cash credits (5,475) (56)
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable customer, less
allowance for uncollectibles 16,917 (26,591)
Regulatory accounts receivable (5,570) (15,557)
Materials and supplies, including fuel
and gas in storage 21,405 42,208
Prepayments, other receivables and
other current assets (102,368) (101,087)
Enlightened Energy program costs 15,458 5,514
Power contract termination costs 6,912 11,620
Cost of removal less salvage (17,968) (13,241)
Accounts payable (58,858) (78,654)
Accrued income taxes 62,254 68,364
Other net (53,669) 5,270
--------- ---------
NET CASH FLOWS FROM OPERATING ACTIVITIES 290,114 259,784
--------- ---------
INVESTING ACTIVITIES INCLUDING CONSTRUCTION
<S> <C> <C>
Construction expenditures (120,602) (127,723)
Nuclear fuel expenditures (1,370) (3,149)
Contributions to nuclear decommissioning trust (5,325) (12,127)
Common equity component of allowance
for funds used during construction 498 1,749
-------- --------
NET CASH FLOWS FROM INVESTING ACTIVITIES
INCLUDING CONSTRUCTION (126,799) (141,250)
-------- --------
FINANCING ACTIVITIES INCLUDING DIVIDENDS
<S> <C> <C>
Issuance of long-term debt 285,000 -
Retirement of long-term debt - (2,494)
Advance refunding of long-term debt (605,240) -
Issuance and refunding costs (6,441) (36)
Funds held for refunding of debt 328,874 -
Common stock dividends (124,810) (123,377)
Preferred stock dividends (4,536) (4,606)
Corporate reorganization (121,404) -
--------- --------
NET CASH FLOWS FROM FINANCING ACTIVITIES
INCLUDING DIVIDENDS (248,557) (130,513)
--------- --------
NET DECREASE IN CASH AND TEMPORARY
CASH INVESTMENTS
CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1 (85,242) (11,979)
183,458 106,882
CASH AND TEMPORARY CASH INVESTMENTS AT MARCH 31 --------- --------
$ 98,216 94,903
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 89,672 $ 91,181
Income taxes - -
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
-14-
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
--------------------------------------------
STATEMENT OF CASH FLOWS
-----------------------
FOR THE TWELVE MONTHS ENDED MARCH 31, 1998 AND 1997
---------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
---- ----
(Thousands of Dollars)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 724,759 $686,158
PRINCIPAL NON-CASH CHARGES (CREDITS) TO INCOME
Depreciation and amortization 507,079 487,599
Deferred recoverable fuel costs 26,776 10,911
Federal income tax deferred 30,600 20,020
Common equity component of allowance
for funds used during construction (3,070) (4,538)
Other non-cash charges 11,849 23,873
CHANGES IN ASSETS AND LIABILITIES
Accounts receivable customer, less
allowance for uncollectibles 6,349 15,983
Regulatory accounts receivable 57,066 (61,837)
Materials and supplies, including fuel
and gas in storage 11,021 (2,874)
Prepayments, other receivables and
other current assets (32,299) 8,414
Enlightened Energy program costs 25,855 6,057
Power contract termination costs 6,843 45,048
Cost of removal less salvage (78,446) (69,568)
Accounts payable 28,796 (32,100)
Accrued income taxes 17,715 17,129
Other net (72,023) 27,810
---------- ---------
NET CASH FLOWS FROM OPERATING ACTIVITIES 1,268,870 1,178,085
---------- ----------
INVESTING ACTIVITIES INCLUDING CONSTRUCTION
Construction expenditures (647,100) (672,068)
Nuclear fuel expenditures (12,800) (51,199)
Contributions to nuclear decommissioning trust (14,499) (21,301)
Common equity component of allowance
for funds used during construction 3,070 4,538
--------- ---------
NET CASH FLOWS FROM INVESTING ACTIVITIES
INCLUDING CONSTRUCTION (671,329) (740,030)
---------- ----------
FINANCING ACTIVITIES INCLUDING DIVIDENDS
Issuance of long-term debt 765,000 50,000
Retirement of long-term debt (103,762) 82,812)
Advance refunding of long-term debt (605,240) 95,329)
Issuance and refunding costs (15,335) (9,864)
Common stock dividends (495,144) 89,951)
Preferred stock dividends (18,343) 18,428)
Corporate reorganization (121,404) -
---------- -------
NET CASH FLOWS FROM FINANCING ACTIVITIES
INCLUDING DIVIDENDS (594,228) (446,384)
---------- -------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS 3,313 (8,329)
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF PERIOD 94,903 103,232
---------- ----------
CASH AND TEMPORARY CASH INVESTMENTS AT MARCH 31 $ 98,216 $ 94,903
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 308,801 $306,606
Income taxes 335,631 346,755
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
-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 managements 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, 1997 (the "1997 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 2001. Con Edison has
replacement steam generators, which are stored at the site. Replacement of the
steam generators would require estimated additional expenditures of
approximately $108 million (1997 dollars, exclusive of replacement power costs)
and an outage of approximately four 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.
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,
1998, the highest amount that could be assessed for losses during the current
policy year under all of the policies was $24 million. While assessments may
also be made for losses in certain prior years, Con Edison is not 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 $79.3 million per incident, of which
not more than $10 million may be assessed in any one year. The per-incident
limit is to be adjusted for inflation not later than 1998 and not less than once
every five years thereafter.
ENVIRONMENTAL MATTERS The normal course of Con Edison's operations necessarily
involves activities and substances that expose it to potential liabilities under
federal, state and local laws protecting the environment. Such liabilities 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 such potential liabilities include (but are not
limited to) the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (Superfund), a 1994 settlement with the New York State
Department of Environmental Conservation (DEC), asbestos, and electric and
magnetic fields (EMF).
<PAGE>
-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 the
investigative, removal, remedial and environmental damage costs (if any) that
Con Edison will be obligated to pay with respect to each of these sites range
from extremely preliminary to highly refined. Based on these estimates Con
Edison had accrued at March 31, 1998 a liability of approximately $24.7
million. There will be additional costs with respect to these and possibly other
sites, the materiality of which is not presently determinable.
DEC SETTLEMENT In 1994 Con Edison agreed to a consent order settling a civil
administrative proceeding instituted by the DEC alleging environmental
violations by Con Edison. Pursuant to the consent order, Con Edison has
conducted an environmental management systems evaluation and an environmental
compliance audit. Con Edison also must implement "best management practices"
plans for certain facilities and undertake a remediation program at certain
sites. At March 31, 1998, Con Edison had an accrued liability of $16.7 million
for these sites. Expenditures for environmental-related capital projects in the
five years 1998-2002, including expenditures to comply with the consent order,
are estimated at $148 million. These estimated expenditures do not reflect
divestiture by Con Edison of generating plants pursuant to the Settlement
Agreement (see Note A to the financial statements included in the 1997 Form 10-
K) or otherwise.
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 Con Edison believes that these
amounts are greatly exaggerated, as were the claims already disposed of. Based
on the information and relevant circumstances known to Con Edison at this time,
it is the opinion of Con Edison that these suits will not have a material
adverse effect on Con Edison's 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 Con
Edison.
<PAGE>
-17-
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, the discussion and
analysis in this report 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, 1997 (File Nos. 1-4514 and 1-1217, the 1997
Form 10-K). Reference is also made to the notes to the financial statements in
Item 1 of this report, which notes are incorporated herein by reference.
LIQUIDITY AND CAPITAL RESOURCES
Con Edison cash balances reflect the January 1, 1998 corporate
reorganization. See "Corporate Structure" in Item 1 of the 1997 10-K. Net cash
flows in the first quarter of 1998 were higher than in the first quarter of 1997
due principally to higher cash flows from operating activities and reduced
construction expenditures. The cash balances also reflect, among other things,
the issuance of $150 million of five-year floating rate debentures in June 1997.
Con Edison initiated a $500 million commercial paper program in January
1998. The highest amount outstanding at any one time was $195 million. There was
no commercial paper outstanding at March 31, 1998.
Con Edison's interest coverage for the 12 months ended March 31, 1998
was 4.15 times compared with 4.09 times for the year 1997 and 4.08 times for the
12 months ended March 31, 1997.
For information about securities refunded by Con Edison during the first
quarter of 1998, see "Liquidity and Capital Resources-Refundings" in Item 7 of
the 1997 Form 10-K.
Con Edison's equivalent number of days of revenue outstanding as
customer accounts receivable was 28.9 days at March 31, 1998 compared with 28.2
days at December 31, 1997 and 28.6 days at March 31, 1997.
Regulatory accounts receivable represent amounts to be recovered from
(or refunded to) customers pursuant to the partial pass-through fuel adjustment
clause (PPFAC) described in Note A (Summary of Significant Accounting Policies)
to the financial statements included in the 1997 Form 10-K. Regulatory accounts
receivable at March 31, 1997 also included amounts to be recovered from
customers under the modified Electric Revenue Adjustment Mechanism (ERAM) and
incentive provisions of the 1995 electric rate agreement, which were eliminated,
effective April 1, 1998, pursuant to the September 1997 settlement agreement
among Con Edison, the staff of the Public Service Commission and certain other
parties (the Settlement Agreement). For additional information about the
Settlement Agreement, see "Transition to Competition," below.
In January 1998 Con Edison made a $238.7 million semi-annual prepayment
to New York City for property taxes. The prepayment balance at March 31, 1998
includes the unamortized portion ($119.3 million) of this payment. A similar
prepayment was made in January 1997.
<PAGE>
-18-
Recoverable fuel costs amounted to $25.6 million at March 31, 1998
compared with $98.3 million at December 31, 1997 and $52.4 million at March 31,
1997, reflecting the ongoing recovery of previously deferred amounts and the
changes in purchased power, fuel and gas purchased for resale discussed below in
"Results of Operations."
Transition to Competition
The Settlement Agreement in the Competitive Opportunities proceeding
provides for a transition to a competitive electric market through the
development of a "retail access" plan, a rate plan for the period ending March
31, 2002, a reasonable opportunity for recovery of "strandable costs" and the
divestiture by Con Edison to unaffiliated third parties of at least 50 percent
of its New York City fossil-fueled electric generating capacity. For additional
information about the transition to competition and the Settlement Agreement,
see "Liquidity and Capital Resources Competition and Industry Restructuring and
PSC Settlement Agreement" in Item 7 of the 1997 Form 10-K.
In April 1998 more than 75,000 Con Edison customers representing 1,555
megawatts of aggregate customer load applied for participation in the June 1998
first phase of Retail Choice, Con Edison's retail access plan under the
Settlement Agreement. Because demand to participate in Retail Choice was so
strong, Con Edison expanded the first phase from 500 megawatts to 1,000
megawatts of load. A lottery was conducted for certain classes of customers to
determine which customers may participate in the first phase. These customers
will no longer receive their energy supply from Con Edison but the delivery of
the energy will still take place through Con Edison's transmission and
distribution system.
In April 1998 Con Edison proposed a long-range plan for its steam
system. Under the plan, Con Edison proposes to sell at auction a number of its
steam-electric generating plants. The plan is subject to review by the PSC. For
information about Con Edison's plans to divest electric generating capacity, see
"Electric Facilities - Generating Facilities" in Item 2 of the 1997 Form 10-K.
Acquisition
In May 1998 CEI agreed to acquire Orange and Rockland Utilities, Inc.
("O&R") for cash at a price of $58.50 per share of O&R common stock
(approximately $790 million in aggregate) pursuant to an Agreement and Plan of
Merger among the parties. The acquisition is to be accomplished through the
merger of O&R into C Acquisition Corp., a CEI subsidiary. The transaction
is subject to certain conditions, including the approval of the holders of O&R's
common stock and the approval of the New York, New Jersey and Pennsylvania
utility regulators, the Federal Energy Regulatory Commission and the Securities
and Exchange Commission. The transaction is not subject to the approval of CEI's
shareholders.
Financial Market Risks
Reference is made to "Liquidity and Capital Resources Financial Market
Risks" in Item 7 of the 1997 Form 10-K. Consolidated Edison Solutions, Inc, a
subisidary of CEI, ("Con Edison Solutions") assumes commodity price risk by
offering its customers fixed prices for electricity and natural gas. See
"Transition to Competition," above. Con Edison Solutions hedges this risk
through forward purchases of physical supply, capacity and transportation and
the use of derivatives. At March 31, 1998 neither the fair value of the
derivatives outstanding nor potential, near-term 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.
<PAGE>
-19-
Nuclear Generation
Con Edison's Indian Point 2 nuclear generating unit has been out of service
since October 15, 1997 for unscheduled maintenace. In April 1998 Con Edison was
advised by the Nuclear Regulatory Commission (NRC) that it would monitor Con
Edison's restart activities and performance improvement initiatives for Indian
Point 2. Prior to restart, Con Edison must resolve process weaknesses and
equipment deficiencies that were addressed in a March 1998 NRC Confirmatory
Action Letter. Additional issues may also arise that will have to be resolved
prior to restart. In May 1998 an independent safety assessment of Indian Point 2
concluded that it is being operated safely, but that there are significant plant
management and organizational issues that should be addressed. For additional
information about Indian Point 2, see "Electric Facilities - Generating
Facilities" in Item 2 and "Nuclear Generation" in Item 7 of the 1997 Form 10-K.
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.
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 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, 1998 was higher than in the corresponding 1997 periods by $9.9
million ($.04 per share) and $36.7 million ($.15 per share), respectively, as
continued cost reduction programs and ongoing voluntary attrition in the labor
force offset the effects of mild winter weather and expenses incurred during the
current outage of Indian Point 2. Twelve-month earnings were higher for the same
reasons and because of increased gas sales to non-firm customers.
CEI's results of operations include the net after-tax losses of its non-
utility subsidiaries: $3.2 million ($.01 a share) in the first quarter of 1998;
$0.4 million ($.00 a share) in the first quarter of 1997; $12.3 million ($.05 a
share) for the 12 months ended March 1998; and $1.0 million ($.00 a share) for
the 12 months ended March 1997. CEI's investment in its non-utility subsidiaries
was $107.8 million at March 31, 1998. For additional information about CEI's
non-utility subsidiaries, see "Competitive Businesses and Competition" in
Item 1 of the 1997 Form 10-K.
The impact of weather on the Company's earnings depends on Con Edison's
various rate agreements. The modified ERAM, which was eliminated effective April
1, 1997, removed from earnings the impact of variations in forecasted electric
sales due to weather. See "1995 Electric Rate Agreement" in Item 7 of the 1997
Form 10-K. Most weather-related variations in gas sales do not affect earnings,
while weather-related variations in steam sales do affect earnings.
<PAGE>
-20-
Increases (Decreases)
- ---------------------
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
March 31, 1998 March 31, 1998
Compared With Compared With
Three Months Ended Twelve Months Ended
March 31, 1997 March 31, 1997
---------------------- -------------------------
Amount Percent Amount Percent
------ ------- ------ -------
(Amounts are for CEI and are in millions)
---------------------------------------
<S> <C> <C> <C> <C>
Operating revenues $(62.5) (3.3)% $ (4.3) (0.1)%
Purchased power electric and steam 5.6 1.6 33.6 2.5
Fuel electric and steam (16.8) (11.1) 39.3 7.3
Gas purchased for resale (62.3) (24.7) (128.2) (20.7)
------ -------
Operating revenues less purchased
power, fuel and gas purchased for
resale (Net revenues) 11.0 1.0 51.0 1.1
Other operations and maintenance 1.5 0.4 (12.8) (0.8)
Depreciation and amortization 4.5 3.6 20.2 4.1
Taxes, other than federal
income tax (2.8) (0.9) 13.2 1.1
Federal income tax 0.1 0.1 (5.9) (1.5)
------ -------
Operating income 7.7 3.1 36.3 3.6
Other income less deductions and
related federal income tax (0.1) (3.9) 4.2 67.0
Net interest charges (2.2) (2.7) 4.0 1.2
------ -------
Net income 9.8 5.9 36.5 5.3
Preferred stock dividend
requirements 0.1 1.5 0.2 0.8
Gain on refunding of preferred stock - - - -
------
Net income for common stock $ 9.9 6.1% $ 36.7 5.5%
======= ========
</TABLE>
<PAGE>
-21-
First Quarter 1998 Compared with
First Quarter 1997
- ---------------------------------
CEI's net revenues (operating revenues less purchased power, fuel and
gas purchased for resale) increased $11.0 million in the first quarter of 1998
compared with the 1997 period. Electric, gas and non-utility net revenues
increased $7.8 million, $2.2 million and $2.0 million, respectively. Steam net
revenues decreased $1.0 million.
Electric net revenues in the 1998 period were higher than in the 1997
period primarily as a result of higher sales, offset in part by the rate
reduction that went into effect in January 1998. See "PSC Settlement Agreement -
Rate Plan " in Item 7 of the 1997 Form 10-K. Earnings under the PPFAC incentive
mechanism were $3.6 million higher in the 1998 period than the 1997 period. The
continued outage of Indian Point 2 did not result in a penalty under the PPFAC
in the 1998 period because the maximum $10 million penalty for the rate year
ended March 31, 1998 was reached during 1997.
Con Edison's electric sales, excluding off-system sales, in the 1998 period
compared with the 1997 period were:
Millions of Kwhrs.
------------------------------------------------
1st Quarter 1st Quarter Percent
Description 1998 1997 Variation Variation
----------- ----------- ----------- --------- ---------
Residential/Religious 2,653 2,642 11 0.4 %
Commercial/Industrial 6,217 6,142 75 1.2 %
Other 161 148 13 8.8 %
------ ------ ------
Total Con Edison Customers 9,031 8,932 99 1.1 %
NYPA, Municipal Agency
and Other Sales 2,454 2,435 19 0.8 %
------ ------ ------
Total Service Area 11,485 11,367 118 1.0 %
For the 1998 period, Con Edison's firm gas sales volume (including firm
transportation) decreased 7.2 percent and off-peak firm/interruptible sales
decreased 8.1 percent compared with the 1997 period. Transportation of customer-
owned gas (other than gas transported for the New York Power Authority), which
comprised approximately seven percent of the gas Con Edison sold or transported
to customers in the 1998 period, increased 109 percent. Steam sales volume
decreased 11.4 percent compared with the 1997 period as a result of the warmer
winter weather in 1998.
After adjusting for variations, primarily in weather and billing days in
each period, electric sales volume in Con Edison's service territory increased
1.4 percent in the 1998 period, firm gas sales volume (including firm
transportation) decreased 0.3 percent and steam sales volume decreased 2.3
percent.
<PAGE>
-22-
Electric fuel costs increased $7.9 million in the 1998 period due to an
increase in the unit cost of fuel partially offset by lower electric generation.
Electric purchased power costs in the 1998 period reflect higher purchased
volumes. The variations in fuel and purchased power costs also reflect that
Indian Point 2 was out of service for a scheduled refueling for part of the 1997
period and the entire 1998 period. Steam fuel costs decreased $24.7 million in
the 1998 period due to decreased generation of steam and lower unit cost. Steam
purchased power costs decreased $1.1 million due to lower purchased volumes and
unit fuel cost. Gas purchased for resale decreased reflecting lower sendout,
lower unit cost of purchased gas and, for CEI, lower sales by Con
Edison Solutions.
Other operations and maintenance expenses increased for the 1998 period
compared with the 1997 period, due primarily to expenses associated with the
current Indian Point 2 outage, partially offset by lower pension and retiree
benefits expenses and continued voluntary attrition in the labor force.
Depreciation and amortization increased in the 1998 period due
principally to higher plant balances.
In March 1998 Con Edison settled certain outstanding issues relating to a
tax audit for less than the related expenses accrued in prior periods for taxes
and interest. The reversal of this accrual was the principal reason that taxes,
other than federal income tax, and other interest charges decreased in the 1998
period.
Twelve Months Ended March 31, 1998 Compared with
Twelve Months Ended March 31, 1997
- ------------------------------------------------
CEI's net revenues increased $51.0 million in the 12 months ended March
31, 1998 compared with the 1997 period. Electric, gas, steam and non-utility net
revenues increased $34.5 million, $13.7 million, $0.5 million and $2.3 million,
respectively.
Electric net revenues in the 1998 period were higher than in the
corresponding 1997 period due primarily to regulatory accounting provisions
related to Indian Point 2 refueling and maintenance outages (discussed in the
next paragraph) and a period of warmer than normal weather in July 1997,
partially offset by the implementation of the Settlement Agreement (including
the elimination of the modified ERAM, Enlightened Energy and customer service
incentives) for financial statement purposes effective April 1, 1997. Electric
net revenues in the 1997 period were increased by $66.8 million under the
modified ERAM. Electric net revenues in the 1998 period include $2.3 million for
incentive earnings compared with $45.8 million for the 1997 period.
The accounting provisions of the Settlement Agreement and the 1995 electric
rate agreement for recovery of the costs of the scheduled Indian Point 2
refueling and maintenance outage completed in July 1997 increased electric net
revenues in the 1998 period by $44.9 million compared with the 1997 period.
Under these provisions, amounts collected from customers for the estimated
expenses of scheduled refueling outages are deferred and are recognized during
the period when the actual expenses for the outage are incurred. As a result of
this matching of revenues and expenses, the $44.9 million increase in electric
net revenues did not affect net income.
Gas net revenues in the 1998 period reflect the retention of net
revenues from interruptible sales in accordance with the 1997 gas rate
agreement. Steam net revenues in the 1998 period reflect rate increases, offset
in part by weather-related sales decreases.
<PAGE>
-23-
Con Edison's electric sales, excluding off-system sales, for the 1998 period
compared with the 1997 period were:
Millions of Kwhrs.
----------------------------------------------------
Twelve Months Twelve Months
Ended Ended Percent
Description March 31, 1998 March 31, 1997 Variation Variation
----------- --------------- -------------- --------- ---------
Residential/Religious 1,014 10,800 214 2.0%
Commercial/Industrial 25,986 25,557 429 1.7%
Other 627 606 21 3.5%
------ ------ ------
Total Con Edison Customers 37,627 36,963 664 1.8%
NYPA Municipal Agency
and Other Sales 9,658 9,442 216 2.3%
------ ------ ------
Total Service Area 47,285 46,405 880 1.9%
====== ======
For the 1998 period, Con Edison's firm gas sales volume (including firm
transportation) decreased 2.7 percent and off-peak/interruptible sales increased
7.4 percent. Transportation of customer-owned gas (other than gas transported
for the New York Power Authority), which comprised approximately six percent of
the gas Con Edison sold or transported to customers in the 1998 period,
increased 52 percent. Steam sales volume decreased 7.1 percent compared with the
1997 period. The decreases in firm gas and steam sales volumes for the 1998
period were due primarily to milder than normal 1998 winter weather.
After adjustment for variations, primarily weather and billing days, in
each period, electric sales volume in Con Edison's service territory in the 1998
period increased 1.6 percent. Similarly adjusted, firm gas sales volume
(including firm transportation) decreased 0.5 percent and steam sales volume
decreased 2.1 percent.
Electric fuel costs increased $79.5 million in the 1998 period due to a
higher unit cost of fuel, partially offset by decreased generation of
electricity. Electric purchased power costs increased by $20.4 million in the
1998 period, reflecting increased purchased volumes and unit costs. The
variations in electric fuel and purchased power costs also reflect the greater
availability of Indian Point 2 in the 1997 period than in the 1998 period. Steam
fuel costs decreased $40.2 million in the 1998 period due to decreased
generation of steam by Con Edison and a lower unit cost of fuel. Steam purchased
power costs were $13.2 million higher reflecting greater purchased volumes. Gas
purchased for resale decreased reflecting a lower unit cost of fuel and, for
CEI, lower sales by Con Edison Solutions.
Other operations and maintenance expenses decreased in the 1998 period
due primarily to lower pension, retiree benefits and health insurance costs and
continued voluntary attrition of the labor force, partially offset by expenses
associated with Indian Point 2 outages.
Depreciation and amortization increased in the 1998 period due
principally to higher plant balances.
<PAGE>
-24-
Taxes, other than federal income tax, increased in 1998 period compared
with the 1997 period due primarily to higher property taxes.
Other income less miscellaneous deductions reflects increased investment
income in 1998 from higher temporary cash investment balances. For Con Edison,
it also reflects losses from non-utility subsidiaries prior to January 1, 1998
corporate reorganization. See "Corporate Structure" in Item 1 of the 1997 Form
10-K.
Interest on long-term debt for the 1998 period increased $6.3 million
principally as a result of new Con Edison debt issues.
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 Item 2 of this report and Item 7 of the 1997 Form
10-K.
<PAGE>
-25-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
GRAMERCY PARK
Reference is made to "Gramercy Park" in Part I, Item 3, Legal
Proceedings in the 1997 Form 10-K. In April 1998, Con Edison's term of probation
and court monitoring concluded as scheduled. The court order terminating the
probation cited Con Edison's "genuine and significant strides toward developing
and implementing an environmental compliance program." In the order, Con Edison
committed to maintain its environmental compliance program and to replace the
court-appointed monitor with an internal corporate ombudsman for a period of two
years.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 3.2 By-Laws of Con Edison, effective May 18, 1998.
Exhibit 12 Statement of computation of Con Edison's ratio of earnings to
fixed charges for the twelve-month periods ended March 31, 1998
and 1997.
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
CEI and Con Edison each filed a Current Report on Form 8-K, dated December 12,
1997, reporting (under Item 5) the approval and implementation of the Holding
Company Proposal discussed in Item 4 of the 1997 Form 10-K and the stock
repurchase discussed In "Liquidity and Capital Resources - Stock
Repurchase" in Item 7 of the 1997 Form 10-K. Con Edison filed a Current Report
on Form 8-K, dated January 29, 1998, reporting (under Item 5) the sale of
debentures and refunding of certain series of outstanding debt securities. No
other CEI or Con Edison Current Reports on Form 8-K were filed during the
quarter ended March 31, 1998. CEI and Con Edison each filed a Current Report on
Form 8-K, dated May 10, 1998, reporting the acquisition discussed in
"Liquidity and Capital Resources - Acquisition" Item 2 of Part I of this
report.
<PAGE>
-26-
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 14, 1998 By: JOAN S. FREILICH
Joan S. Freilich
Executive Vice President,
Chief Financial Officer and
Duly Authorized Officer
DATE: May 14, 1998 By: HYMAN SCHOENBLUM
Hyman Schoenblum
Vice President, Controller and
Chief Accounting Officer
BY-LAWS
OF
CONSOLIDATED EDISON COMPANY
OF NEW YORK, INC.
Effective as of May 18, 1998
SECTION 1. The annual meeting of stockholders of the Company for the election
of Trustees and such other business as may properly come before such meeting
shall be held on the third Monday in May in each year at such hour and at such
place in the City of New York or the County of Westchester as may be designated
by the Board of Trustees.
SECTION 2. Special meetings of the stockholders of the Company may be held upon
call of the Chairman of the Board, the Vice Chairman of the Board, the
President, the Board of Trustees, or stockholders holding one-fourth of the
outstanding shares of stock entitled to vote at such meeting.
SECTION 3. Notice of the time and place of every meeting of stockholders, the
purpose of such meeting and, in case of a special meeting, the person or persons
by or at whose direction the meeting is being called, shall be mailed by the
Secretary, or other officer performing his duties, at least ten days, but not
more than fifty days, before the meeting to each stockholder of record, at his
last known Post Office address; provided, however, that if a stockholder be
present at a meeting, in person or by proxy, without protesting prior to the
conclusion of the meeting the lack of notice of such meeting, or in writing
waives notice thereof before or after the meeting, the mailing to such
stockholder of notice of such meeting is unnecessary.
SECTION 4. The holders of a majority of the outstanding shares of stock of the
Company, entitled to vote at a meeting, present in person or by proxy shall
constitute a quorum, but less than a quorum shall have power to adjourn.
SECTION 5. The Chairman of the Board, or in his absence the Vice Chairman of
the Board, or in his absence the President shall preside over all meetings of
stockholders. In their absence one of the Vice Presidents shall preside over
such meetings. The Secretary of the Board of Trustees shall act as Secretary of
such meeting, if present. In his absence, the Chairman of the meeting may
appoint any person to act as Secretary of the meeting.
SECTION 6. At each meeting of stockholders at which votes are to be taken by
ballot there shall be at least two and not more than five inspectors of election
and of stockholders' votes, who shall be either designated prior to such meeting
by the Board of Trustees or, in the absence of such designation, appointed by
the Chairman of the meeting.
SECTION 7. Transfer of shares of stock of the Company will be registered on the
books of the Company maintained for that purpose upon presentation of share
certificates appropriately endorsed. The Board of Trustees may, in their
discretion, appoint one or more registrars of the stock.
SECTION 8. The affairs of the Company shall be managed under the direction of a
Board consisting of eleven Trustees, who shall be elected annually by the
stockholders by ballot and shall hold office until their successors are elected
and qualified. Vacancies in the Board of Trustees may be filled by the Board at
any meeting, but if the number of Trustees is increased or decreased by the
Board by an amendment of this section of the By-laws, such amendment shall
require the vote of a majority of the whole Board. Members of the Board of
Trustees shall be entitled to receive such reasonable fees or other forms of
compensation, on a per diem, annual or other basis, as may be fixed by
resolution of the Board of Trustees or the stockholders in respect of their
services as such, including attendance at meetings of the Board and its
committees; provided, however, that nothing herein contained shall be construed
as precluding any Trustee from serving the Company in any capacity other than as
a member of the Board or a committee thereof and receiving compensation for such
other services.
SECTION 9. Meetings of the Board of Trustees shall be held at the time and
place fixed by resolution of the Board or upon call of the Chairman of the
Board, the Vice Chairman of the Board, the President, or a Vice President or any
two Trustees. The Secretary of the Board or officer performing his duties shall
give 24 hours' notice of all meetings of Trustees; provided that a meeting may
be held without notice immediately after the annual election of Trustees, and
notice need not be given of regular meetings held at times fixed by resolution
of the Board. Meetings may be held at any time without notice if all the
Trustees are present and none protests the lack of notice either prior to the
meeting or at its commencement, or if those not present waive notice either
before or after the meeting. Notice by mailing or telegraphing, or delivering by
hand, to the usual business address or residence of the Trustee not less than
the time above specified before the meeting shall be sufficient. A Majority of
the Trustees in office shall constitute a quorum, but less than such quorum
shall have power to adjourn. The Chairman of the Board or, in his absence the
Vice Chairman of the Board or, in his absence a Chairman pro term elected by the
meeting from among the Trustees present shall preside at all meetings of the
Board. Any one or more members of the Board may participate in a special meeting
of the Board by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation
<PAGE>
by such means shall constitute presence in person at such special meeting. Any
action required or permitted to be taken by the Board may be taken without a
meeting if all members of the Board consent in writing to the adoption of a
resolution authorizing the action; provided, however, that no action taken by
the Board by unanimous written consent shall be taken in lieu of a regular
monthly meeting of the Board. Each resolution so adopted and the written
consents thereto by the members of the Board shall be filed with the minutes of
the proceedings of the Board.
SECTION 10. The Board of Trustees, as soon as may be after the election of
Trustees in each year, shall elect from their number a Chairman of the Board,
who shall be the chief executive officer of the Company, and shall elect a Vice
Chairman of the Board and a President. The Board shall also elect one or more
Vice Presidents, a Secretary and a Treasurer, and may from time to time elect
such other officers as they may deem proper. Any two or more offices may be held
by the same person, except the offices of President and Secretary.
SECTION 11. The term of office of all officers shall be until the next election
of Trustees and until their respective successors are chosen and qualify, but
any officer may be removed from office at any time by the Board of Trustees.
Vacancies among the officers may be filled by the Board of Trustees at any
meeting.
SECTION 12. The Chairman of the Board and the President shall have such duties
as usually pertain to their respective offices, except as otherwise directed by
the Board of Trustees or the Executive Committee, and shall also have such
powers and duties as may from time to time be conferred upon them by the Board
of Trustees or the Executive Committee. The Vice Chairman of the Board shall
have such powers and duties as may from time to time be conferred upon him by
the Board of Trustees, the Executive Committee or the Chairman of the Board. In
the absence or disability of the Chairman of the Board, the Vice Chairman of the
Board shall perform the duties and exercise the powers of the Chairman of the
Board. The Vice Presidents and the other officers of the Company shall have such
duties as usually pertain to their respective offices, except as otherwise
directed by the Board of Trustees, the Executive Committee, the Chairman of the
Board, the Vice Chairman of the Board or the President, and shall also have such
powers and duties as may from time to time be conferred upon them by the Board
of Trustees, the Executive Committee, the Chairman of the Board, the Vice
Chairman of the Board or the President.
SECTION 13. The Board of Trustees, as soon as may be after the election of
Trustees in each year, may by a resolution passed by a majority of the whole
Board, appoint an Executive Committee, to consist of the Chairman of the Board
(and in his absence the Vice Chairman of the Board) and three or more additional
Trustees as the Board may from time to time determine, which shall have and may
exercise during the intervals between the meetings of the Board all the powers
vested in the Board except that neither the Executive Committee nor any other
committee appointed pursuant to this section of the By-laws shall have authority
as to any of the following
<PAGE>
matters: the submission to stockholders of any action as to which stockholders'
authorization is required by law; the filling of vacancies on the Board or on
any committee thereof; the fixing of compensation of any Trustee for serving on
the Board or on any committee thereof; the amendment or repeal of these By-laws,
or the adoption of new By-laws; and the amendment or repeal of any resolution of
the Board which by its terms shall not be so amendable or repealable. The Board
shall have the power at any time to change the membership of such Executive
Committee and to fill vacancies in it. The Executive Committee may make rules
for the conduct of its business and may appoint such committees and assistants
as it may deem necessary. Four members of said Executive Committee shall
constitute a quorum. The Chairman of the Board or, in his absence a Chairman pro
tem elected by the meeting from among the members of the Executive Committee
present shall preside at all meetings of the Executive Committee. The Board may
designate one or more Trustees as alternate members of any committee appointed
pursuant to this section of the By-laws who may replace any absent member or
members at any meeting of such committee. The Board of Trustees may also from
time to time appoint other committees consisting of three or more Trustees with
such powers as may be granted to them by the Board of Trustees, subject to the
restrictions contained in this section of the By-laws. Any one or more members
of any committee appointed pursuant to this section may participate in any
meeting of such committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at such meeting. Any action required or permitted to be taken
by any committee appointed pursuant to this section may be taken without a
meeting if all members of such committee consent in writing to the adoption of a
resolution authorizing the action. Each resolution so adopted and the written
consents thereto by the members of such committee shall be filed with the
minutes of the proceedings of such committee.
SECTION 14. The Board of Trustees are authorized to select such depositories as
they shall deem proper for the funds of the Company. All checks and drafts
against such deposited funds shall be signed by such person or persons and in
such manner as may be specified by the Board of Trustees.
SECTION 15. The Company shall fully indemnify in all circumstances to the
extent not prohibited by law any person made, or threatened to be made, a party
to an action or proceeding, whether civil or criminal, including an
investigative, administrative or legislative proceeding, and including an action
by or in the right of the Company or any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust, employee benefit
plan or other enterprise, by reason of the fact that he, his testator or
intestate, is or was a Trustee or officer of the Company, or is or was serving
at the request of the Company any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust, employee benefit
plan or other enterprise, as a director, officer or in any other capacity
against any and all judgments, fines, amounts paid in settlement, and expenses,
<PAGE>
including attorneys' fees, actually and reasonably incurred as a result of or in
connection with any such action or proceeding or related appeal; provided,
however, that no indemnification shall be made to or on behalf of any Trustee,
director or officer if a judgment or other final adjudication adverse to the
Trustee, director or officer establishes that his acts were committed in bad
faith or were the result of active and deliberate dishonesty and were material
to the cause of action so adjudicated, or that he personally gained in fact a
financial profit or other advantage to which he was not legally entitled; and,
except in the case of an action or proceeding specifically approved by the Board
of Trustees, the Company shall pay expenses incurred by or on behalf of such a
person in defending such a civil or criminal action or proceeding (including
appeals) in advance of the final disposition of such action or proceeding
promptly upon receipt by the Company, from time to time, of a written demand of
such person for such advancement, together with an undertaking by or on behalf
of such person to repay any expenses so advanced to the extent that the person
receiving the advancement is ultimately found not to be entitled to
indemnification for such expenses; and the right to indemnification and
advancement of defense expenses granted by or pursuant to this by-law (i) shall
not limit or exclude, but shall be in addition to, any other rights which may be
granted by or pursuant to any statute, certificate of incorporation, by-law,
resolution or agreement, (ii) shall be deemed to constitute contractual
obligations of the Company to any Trustee, director or officer who serves in
such capacity at any time while this by-law is in effect, (iii) are intended to
be retroactive and shall be available with respect to events occurring prior to
the adoption of this by-law and (iv) shall continue to exist after the repeal or
modification hereof with respect to events occurring prior thereto. It is the
intent of this by-law to require the Company to indemnify the persons referred
to herein for the aforementioned judgments, fines, amounts paid in settlement
and expenses, including attorneys' fees, in each and every circumstance in which
such indemnification could lawfully be permitted by an express provision of a
by-law, and the indemnification required by this by-law shall not be limited by
the absence of an express recital of such circumstances. The Company may, with
the approval of the Board of Trustees, enter into an agreement with any person
who is, or is about to become, a Trustee or officer of the Company, or who is
serving, or is about to serve, at the request of the Company, any other
corporation of any type or kind, domestic or foreign, or any partnership, joint
venture, trust, employee benefit plan or other enterprise, as a director,
officer or in any other capacity, which agreement may provide for
indemnification of such person and advancement of defense expenses to such
person upon such terms, and to the extent, as may be permitted by law.
SECTION 16. Wherever the expression "Trustees" or "Board of Trustees" is used
in these By-laws the same shall be deemed to apply to the Directors or Board of
Directors, as the case may be, if the designation of those persons constituting
the governing board of this Company is changed from "Trustees" to "Directors".
SECTION 17. Either the Board of Trustees or the stockholders may alter or
amend these By-laws at any meeting duly held as above provided, the notice of
which includes notice of the proposed amendment.
<PAGE>
EMERGENCY BY-LAWS
OF
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
As Amended
February 23, 1966
Effective May 16, 1966
SECTION 1. These Emergency By-laws may be declared effective by the Defense
Council of New York as constituted under the New York State Defense Emergency
Act in the event of attack and shall cease to be effective when the Council
declares the end of the period of attack.
SECTION 2. In the event of attack and until the Defense Council declares the
end of the period of attack the affairs of the Company shall be managed by such
Trustees theretofore elected as are available to act, and a majority of such
Trustees shall constitute a quorum. In the event that there are less than three
Trustees available to act, then and in that event the Board of Trustees shall
consist of such Trustees theretofore elected and available to act plus such
number of senior officers of the Company not theretofore elected as Trustees as
will make a Board of not less than three nor more than five members. The Board
as so constituted shall continue until such time as the Defense Council declares
the end of the period of attack and their successors are duly elected.
SECTION 3. The By-laws of the Company shall remain in effect during the period
of emergency to the extent that said By-laws are not inconsistent with these
Emergency By-laws.
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
Ratio of Earnings to Fixed Charges
Twelve Months Ended
(Thousands of Dollars)
MARCH MARCH
1998 1997
---------- ---------
Earnings
Net Income $724,759 $686,158
Federal Income Tax 351,474 362,900
Federal Income Tax Deferred 39,400 28,870
Investment Tax Credits Deferred (8,800) (8,850)
---------- ----------
Total Earnings Before Federal Income Tax 1,106,833 1,069,078
Fixed Charges* 350,899 347,154
---------- ----------
Total Earnings Before Federal Income Tax
and Fixed Charges $1,457,732 $1,416,232
========== ==========
* Fixed Charges
Interest on Long-Term Debt $306,016 $300,782
Amort. of Debt Discount, Premium & Expense 12,448 11,421
Interest on Component of Rentals 18,519 18,058
Other Interest 13,916 16,893
---------- ----------
Total Fixed Charges $350,899 $347,154
========== ==========
Ratio of Earnings to Fixed Charges 4.15 4.08
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND> The schedule contains summary financial
information extracted from Consolidated
Balance Sheet, Income Statement and Statement
of Cash Flows for Consolidated
Edison, Inc. and is qualified in its entirety
by reference to such financial statements
and the notes thereto.
</LEGEND>
<CIK> 0001047862
<NAME> Consolidated Edison, Inc.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Mar-31-1998
<PERIOD-TYPE> 3-Mos
<BOOK-VALUE> Per-Book
<TOTAL-NET-UTILITY-PLANT> 11,264,989
<OTHER-PROPERTY-AND-INVEST> 286,460
<TOTAL-CURRENT-ASSETS> 1,318,834
<TOTAL-DEFERRED-CHARGES> 594,213
<OTHER-ASSETS> 938,053
<TOTAL-ASSETS> 14,402,549
<COMMON> 588,724
<CAPITAL-SURPLUS-PAID-IN> 856,661
<RETAINED-EARNINGS> 4,531,810
<TOTAL-COMMON-STOCKHOLDERS-EQ> 5,977,195
84,550
233,468
<LONG-TERM-DEBT-NET> 4,198,152
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 200,000
0
<CAPITAL-LEASE-OBLIGATIONS> 39,180
<LEASES-CURRENT> 2,778
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3,667,226
<TOT-CAPITALIZATION-AND-LIAB> 14,402,549
<GROSS-OPERATING-REVENUE> 1,853,047
<INCOME-TAX-EXPENSE> 91,961
<OTHER-OPERATING-EXPENSES> 1,506,525
<TOTAL-OPERATING-EXPENSES> 1,598,486
<OPERATING-INCOME-LOSS> 254,561
<OTHER-INCOME-NET> 1,934
<INCOME-BEFORE-INTEREST-EXPEN> 256,495
<TOTAL-INTEREST-EXPENSE> 80,042
<NET-INCOME> 176,453
4,536
<EARNINGS-AVAILABLE-FOR-COMM> 171,917
<COMMON-STOCK-DIVIDENDS> 124,810
<TOTAL-INTEREST-ON-BONDS> 79,058
<CASH-FLOW-OPERATIONS> 268,751
<EPS-PRIMARY> .73
<EPS-DILUTED> .73
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND> The schedule contains summary financial
information extracted from Consolidated
Balance Sheet, Income Statement and Statement
of Cash Flows for Consolidated
Edison Company of New York, Inc. and is
qualified in its entirety by reference to such
financial statements and the notes thereto.
</LEGEND>
<CIK> 0000023632
<NAME> Consolidated Edison Company of New York, Inc.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Mar-31-1998
<PERIOD-TYPE> 3-Mos
<BOOK-VALUE> Per-Book
<TOTAL-NET-UTILITY-PLANT> 11,264,989
<OTHER-PROPERTY-AND-INVEST> 244,370
<TOTAL-CURRENT-ASSETS> 1,153,475
<TOTAL-DEFERRED-CHARGES> 590,088
<OTHER-ASSETS> 938,053
<TOTAL-ASSETS> 14,190,975
<COMMON> 588,724
<CAPITAL-SURPLUS-PAID-IN> 856,661
<RETAINED-EARNINGS> 4,335,539
<TOTAL-COMMON-STOCKHOLDERS-EQ> 5,780,924
84,550
233,468
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0
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4,536
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</TABLE>
