Management’s Discussion  and Analysis of Financial Condition and Results  of Operations Regulated Utility Subsidiaries Corporate Overview The Utilities are primarily “wires and pipes” energy delivery companies that are subject to extensive federal and state regu- lation. Pursuant to restructuring agreements, the Utilities have sold most of their electric generating capacity and provide their customers the opportunity to buy electricity and gas directly from other suppliers through the Utilities’ retail access pro- grams. The Utilities supply more than half of the energy deliv- ered by them in their service areas and provide delivery service to their customers that buy energy from other suppliers. The Utilities purchase substantially all of the energy they supply to customers pursuant to firm contracts or through wholesale energy markets. In general, the Utilities recover on a current basis the fuel and purchased power costs they incur in supply- ing energy to their full-service customers, pursuant to appr oved rate plans. Con Edison anticipates that the Utilities will provide substantial- ly all of its earnings over the next few years. The Utilities’ earn- (a) Represents inter-company and parent company accounting. (b) Reflects impairment charges discussed below. Con Edison Annual Report 2003 21 At December  Twelve months ended December 31, 2003 31, 2003 (Millions of Dollars) Operating Revenues Net Income Assets Con Edison  of New York $8,166 83% $591 112% $17,764 85% O&R 727 7% 45 9% 1,269 6% Total Utilities 8,893 90% 636 121% 19,033 91% Con Edison  Communications 19 -% (108)(b) (20)% 35(b) -% Con Edison Development 303 3% (9)(b) (2)% 1,275(b) 6% Con Edison Energy 54 1% 1 - %  117 -% Con Edison Solutions 578 6% 19 3% 127 1% Other(a) (20) -% (11) (2)% 379 2% Total Con Edison $9,827 100% $528 100% $20,966 100% Con Edison of New York provides electric service to over 3.1 million customers and gas service to 1.1 million customers in New York City and Westchester County. The company also provides steam service in parts of Manhattan. O&R, along with its regulated utility subsidiaries, provides electric service to over 285,000 customers in southeastern New York and adjacent sections of New Jersey and northeastern Pennsylvania and gas service to over 120,000 customers in southeastern New York and northeastern Pennsylvania.  Con Edison’s principal business operations are those of  the Utilities. Con Edison also has unregulated subsidiaries that compete in energy-related and telecommunications industries.  Certain financial data of Con Edison’s subsidiaries is  presented below: Neither Con Edison of New York nor O&R makes any  representation as to information in this report relating to  Con Edison or the subsidiaries of Con Edison other than itself. Information in the notes to the consolidated financial state- ments referred to in this discussion and analysis is hereby incorporated by reference herein. The use of terms such as “see” or “refer to” shall be deemed to incorporate by reference into this discussion and analysis the information to which  reference is made.  The Companies are each subject to certain material contingen- cies, including certain Utility environmental matters and Con Edison’s legal proceedings relating to its October 1999 agree- ment to acquire Northeast Utilities. See “Application of Critical Accounting Policies - Accounting for Contingencies,” below. For additional segment financial information, see Note O to the financial statements and “Results of Operations,” below. This discussion and analysis relates to the consolidated finan- cial statements of Consolidated Edison, Inc. (Con Edison) and should be read in conjunction with the financial statements and the notes thereto. Consolidated Edison Company of New York, Inc. (Con Edison of New York) and Orange and Rockland Utilities, Inc. (O&R), which are regulated utilities, are sub- sidiaries of Con Edison and are referred to in this manage- ment’s discussion and analysis of financial condition and results of operations (MD&A) as the “Utilities.” The Utilities, together with Con Edison, are referred to in this MD&A as  the “Companies.” Con Edison’s net income for common stock in 2003 was $528 million or $2.39 a share. Net income for common stock in 2002 and 2001 was $646 million or $3.03 a share and $682 million or $3.22 a share, respectively. Included in 2003 net income for common stock were impairment charges for certain unregulated telecommunications and generating assets ($94 million after-tax or $0.43 per share) and the impact of a regula- tory settlement ($5 million after-tax charge or $0.03 per share), partially offset by the cumulative effect of changes in account- ing principles ($3 million after-tax gain or $0.02 per share). Included in the 2002 results was the cumulative effect of changes in accounting principles ($22 million after-tax charges or $0.11 per share). 