8-KOther Events

CONSOLIDATED EDISON INC 8-K Report (Jan 16, 2003)

Filed January 16, 2003For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) filed an 8-K on January 16, 2003, to report its unaudited financial results for the year and quarter ended December 31, 2002. For the full year 2002, net income for common stock was $646.0 million, a decrease from $682.2 million in 2001. Similarly, for the fourth quarter of 2002, net income for common stock was $118.3 million, down from $125.1 million in the same period of 2001. The report also details the impact of adopting new accounting standards, specifically SFAS No. 142 concerning Goodwill and Other Intangible Assets, and the cessation of applying EITF Issue No. 98-10 related to energy trading contracts. These changes resulted in a different reported net income when excluding their cumulative effect. Additionally, Con Edison anticipates a significant decrease in net credits for pensions and other postretirement benefits in 2003 due to lower market values of pension plan assets and reduced expected annual returns, although the pension plan assets still exceed the benefit obligation.

Key Highlights

  • 1Consolidated Edison, Inc. reported a decrease in unaudited net income for common stock for both the full year 2002 ($646.0 million vs. $682.2 million in 2001) and the fourth quarter of 2002 ($118.3 million vs. $125.1 million in 2001).
  • 2The company adopted Statement of Financial Accounting Standards No. 142 (Goodwill and Other Intangible Assets).
  • 3Con Edison ceased applying Emerging Issues Task Force Issue No. 98-10 (Accounting for Contracts Involved in Energy Trading and Risk Management Activities).
  • 4Excluding the cumulative effect of accounting changes, Con Edison's net income for common stock was $668.1 million for the year and $120.2 million for the quarter ended December 31, 2002.
  • 5The company expects a $54 million after-tax decrease in net credits to net income for pensions and other postretirement benefits in 2003.
  • 6This decrease in pension-related credits is attributed to an 8.6% decline in pension plan assets in 2002 and a reduction in the expected annual return assumption from 9.2% to 8.8%.
  • 7At December 31, 2002, Con Edison's pension plan assets exceeded its accumulated benefit obligation, and no cash contribution was required in 2002 or is expected for 2003.

Frequently Asked Questions

For the year ended December 31, 2002, Consolidated Edison reported unaudited net income for common stock of $646.0 million, down from $682.2 million in 2001. For the fourth quarter of 2002, net income for common stock was $118.3 million, compared to $125.1 million in the fourth quarter of 2001.

Con Edison adopted two significant accounting changes: Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," and ceased applying Emerging Issues Task Force Issue No. 98-10, which related to accounting for contracts in energy trading and risk management activities.

When excluding the cumulative effect of these accounting principle changes, Con Edison's unaudited net income for common stock for the year ended December 31, 2002, was $668.1 million, and for the quarter ended December 31, 2002, it was $120.2 million. These figures differ slightly from the reported net income before considering these cumulative effects.

Con Edison anticipates a decrease of $54 million in after-tax net credits to net income for pensions and other postretirement benefits in 2003 compared to 2002. This is due to a decline in the market value of pension plan assets during 2002 and a lower expected annual return on those assets.