Filed by Consolidated Edison, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Consolidated Edison, Inc. (DE)
Commission File No. 333-31390
The following slides were included in an employee forum at Northeast
Utilities on March 6, 2000:
SLIDE 1
BUSINESS SENSE 3
Con Ed - NU
Transition Team
Kevin Burke, Con Ed/O&R
Jack Keane, NU/Yankee Gas
SLIDE 2
Con Edison's Strategy
Grow our core distribution business
Grow our non-regulated businesses
Continue to operate our core businesses
at an unparalleled level
Continue to create shareholder value and
maintain our credibility with the
investment community
SLIDE 3 (Map of Northeastern States)
Regulated Businesses:
We Will Be The Northeast Powerhouse
Market Cap. $8.5 Billion
Total Assets $26 Billion
Electric Customers $5.0 Million
Gas Customers $1.4 Million
Northeast Utilities System and Yankee Gas in Conn.
Con Edison of New York
Orange and Rockland Utilities
SLIDE 4
Unregulated Businesses:
We have the same focus
Con Edison Northeast Utilities
Solutions Retail Marketing & Energy Services SELECT
Energy Wholesale Marketing HEC
Development Generation: Development, Ownership, Services NGC
NGS
Communications Telecommunications Mode 1/NEON
SLIDE 5
The Transition Team's Goals
Review operations and identify "best
practices"
Develop plans for combining the companies
Support the regulatory approval process and
timetable
Achieve at least $1.3 billion of synergies
SLIDE 6
Our schedule requires us to support
a mid-year merger closing
Kick-off and familiarization November
Understand the merger December
Review the current state January
Evaluate the opportunities February
Development options & associated costs March
Refine options, develop recommendations April
Develop an implementation plan May/June
SLIDE 7
Organizing Principles
Achieve efficiencies of operation
Maintain or improve existing service levels
Minimize disruption to employees
Maintain a balance of employment levels
Use technology solutions
SLIDE 8
Service Company Team
Joe Oates, Con Ed/O&R
Al Schindler, NU/Yankee Gas
SLIDE 9
Service Company
CEI becomes a registered holding company under
PUHCA
Service Company regulated by the SEC
Function located here if service provided to
multiple affiliates
Charges affiliates cost of providing service
Direct charge if possible
Allocation for indirect costs
SLIDE 10
Corporate Structure
Con Edison Inc.
Con Edison Co. Orange Northeast Service Unregulated
of and Utilities Company Companies
New York Rockland
CL&P
PSN&H
WMECO
Yankee Energy
SLIDE 11
Service Company Potential Approach
Con Edison Inc.
Con Edison Co. Orange Northeast Corporate Unregulated
of NY and Utilities Service Holding
Rockland Company Company
Provides certain
services to all
subsidiaries
Company A Company B Company C Competitive
Business
Service Co.
Service 1 Service 3 Service 5 Provides or
manages
Service 2 Service 4 Service 6 certain
services
for the
competitive
businesses
Competitive
Business in-source
certain services to
their company
SLIDE 12
Categorization of Functions
All
Functions
Screening Criteria
Enterprise Shared Business
Functions Services Group
Functions Functions
Service Company
SLIDE 13
Location of Functions
Functions located throughout the
geographic areas
Certain functions will be placed near
external parties
Other functions may be located anywhere
Functions placed where it is more
economical
SLIDE 14
Next Steps
SEC filing
Service Company structure
Continuing management review
Function categorization
working with other transition sub-teams
SLIDE 15
Human Resource Team
John de la Bastide, Con Ed/O&R
Jim Gavell, NU/ Yankee Gas
SLIDE 16
Human Resource Goals
Develop HR policies that:
will attract and retain a highly motivated and
knowledgeable workforce
Create processes that are strongly aligned with
the business groups
Are flexible enough to support the corporate
business strategy
Achieve savings
SLIDE 17
Human Resource Principles
Select the right person with the right
skills for the right job
Provide opportunities for continuous
improvement and learning
Minimize disruption to employees
Develop a common framework for
employee benefit administration
SLIDE 18
Human Resource Work in Progress
Analyze HR functions to identify best
practices
Review benefit plans/administrators
Develop pre-merger job posting
program
Provide support to merger Transition
Teams
SLIDE 19
Next Steps
Employee communication
Evaluate sub-team recommendations
Review recommendations through
challenge sessions
Develop HR integration plan
SLIDE 20
Making Sense of the Merger
Jeffrey R. Kotkin
Director - NU Investor Relations
SLIDE 21
Read the Proxy
This presentation is not meant to take the place of the proxy
statement which will be mailed to you this week. For a full
description of the terms of the merger, please refer to a copy
of the definitive Proxy Statement which currently is available
on the SEC Edgar Database at www.SEC.org.
SLIDE 22
Is This Merger Good for NU Shareholders?
You Decide.
What are the terms of the deal, including
the "collar?"
Where might NU be today without
this deal?
Why is Con Edison the best fit for our
shareholders?
SLIDE 23
Terms of the Merger Agreement
Con Edison has agreed to pay a base price of
$25 for each share of NU
NU shareholders may elect to receive either all
cash or all Con Edison stock in exchange for
their NU shares - however, the overall merger
consideration is fixed at 50% cash and 50%
stock
A "Supermajority" of NU shares must pass the
deal - that means 66 2/3% of NU's shares must
be voted in favor
Eight states and several federal agencies must
review the deal
SLIDE 24
What Affects the $25 Price?
Three Factors.
1.) The divestiture condition
2.) The timing of the closing
3.) The average price of Con Edison's stock
during half of the 40 days just prior to
closing, and potentially, the mix of cash
and stock you receive in payment
SLIDE 25
Factor #1
The Divestiture Condition
NU shareholders get an extra $1 per
share if the staff at the Connecticut DPUC
involved in the Millstone Station auction
endorses the winning bid.
NU must have this approval by
December 31, 2000 or the closing date of
the merger, whichever comes later
SLIDE 26
Factor #2
The Timing of the Closing
For each day past August 5 that the
merger does not close, the deal goes up
by 1/3 cent per day -- or about 10 cents
per month
This is a typical condition in mergers --
NU and Yankee Energy had such a
condition but the merger closed more
than a month before it went into effect
SLIDE 27
Factor #3
The Con Edison Share Price
The Pricing Period is 20 randomly selected trading days
during the 40 trading days prior to the closing
The "Collar" that has been established is for a Con Edison
share price between $36 and $46.
Between $36 and $46, NU shareholders receive the stated
value of the deal regardless of whether they receive
payment in cash or stock
The higher Con Edison trades within the collar, the fewer
the number of shares issued
Outside of the collar, cash remains fully valued but the
stock portion of the deal changes in value
SLIDE 28
How Does the Collar Work?
First, remember that the cash portion of
the deal is not impacted by the collar
Second, let's assume a $26 merger price
Third, let's assume consideration that is
50% stock and 50% cash
SLIDE 29
Let's Review the Case of an NU
Shareholder Who Has 100 Shares
Multiply 100 shares times the merger price:
100 shares x $26 = $2,600
Divide $2,600 in half:
$2,600/2 = $1,300
You will receive $1,300 in cash, which probably
will be subject to taxes
Now let's look at the stock portion of the deal
and the collar
SLIDE 30
Calculating the Stock Payment
Assume Con Edison is WITHIN the collar for
now, with an average price of $36
Divide the remaining $1,300 by the actual
average price of Con Edison to see how many
shares of Con Edison you will receive
$1,300/$36 = 36.1 shares
So you'll receive 36.1 shares with a market value
at closing of $1,300 and cash payment of $1,300
-- you receive your full $2,600.
$1,300 + $1,300 = $2,600
SLIDE 31
Now Assume Con Ed is
Below the Collar
Go back to our $1,300 number to calculate how
many shares you'll receive
The collar works by setting $36 as the lowest
value you can assign to Con Edison and by
setting $46 as the highest value you can assign
to determine your stock portion.
If Con Edison's average price comes out to be
$28, you still have to divide by $36
SLIDE 32
Here's the Math Below the Collar
Divide your $1,300 by $36 instead of the actual
value if Con Edison is below $36
$1,300/$36 = 36.1 shares
However, if you sold them that day these shares
only are worth $28 apiece.
36.1 shares x $28 = $1,011.11
So you'll receive $1,300 in cash and 36.1 shares
of Con Edison valued at $1,011.11 -- so the full
value of the deal looks like this
$1,300 + $1,011.11 = $2,311.11
SLIDE 33
So How Much Did That NU Shareholder
Get Per Share?
Divide your total consideration of $2,311.11 by
those original 100 NU shares:
$2,311.11/100 = $23.11 per share
Due to the impact of the collar the value of the
deal declined by about $2.89 per share
This works out to be about 36 cents for every
dollar Con Edison averages below
the collar
SLIDE 34
How Does Con Edison See This?
ConEd Cash in ConEd Value of Total in
Price Millions Shares in Shares Millions
Millions
$50 $1,716 37.3 $1,865 $3,581
$46 $1,716 37.3 $1,716 $3,432
$36 $1,716 47.7 $1,716 $3,432
$30 $1,716 47.7 $1,431 $3,146
$26 $1,716 47.7 $1,240 $2,956
SLIDE 35
Where Would We Be Today Without
This Merger Deal
Absent this deal, NU's share price probably would have
slumped along with the rest of the utility group, which is
off about 17% since the deal was announced.
Utilities trade at a multiple of their earnings per share,
currently about 9 x earnings per share
Analysts estimate we'll earn about $1.45 a share in
2000 before the restructuring settlement write off in
NH
Even if you add another $2-$3 per share for our NEON
investment, you won't get above $17 a share in
today's utility market
SLIDE 36
Here's What One Analyst Who
Recommends Our Stock Says:
"Absent the merger with Con Edison, we estimate NU's stock would trade
at about $15 per share....Utility stocks with estimated growth rates of 3-
6% are currently trading at an average 2001 P/E of 7-9x. We would expect
NU to trade in the middle of this range or an 8xP/E."
"As a stand alone stock, NU's positive attributes would be: strong
management, largely completed restructuring in all three states, stable
utility growth and additional growth from Select Energy and the YES
integration. [NEON] investment is also a positive for overall valuation."
"NU would likely not trade at a premium to the group because of the
estimated below average earnings growth of 4%, relatively small size and
inconsistent performance from Select in 1999."
Brian Nelson, Equity Analyst
Salomon Smith Barney
Current Recommendation on NU: ACCUMULATE
SLIDE 37
Here's What A Second Analyst
Has to Say:
"Since 5 days prior to its deal with Con Edison, NU's share price is up
5%. Over that same period, the average utility was down 17%. If NU
were trading at an average multiple compared to the group today, it
would be at $16 13/16. In fact, I would argue that NU would be trading
between 10 and 15% below that level due to the arbitrage associated with
the acquisition of YES, which just ended, and the upcoming rulings due
out of New Hampshire."
Dan Ford, Equity Analyst
ABN AMRO
Current Recommendation on NU: BUY
SLIDE 38
Why Is Con Edison the Best Fit for NU
Shareholders?
Extremely stable financially
Overriding focus on regulated electricity and gas delivery
business
Similar unregulated strategy:
Stay Regional
Focus on energy, energy related products and services
Telecom investment strategy
Own generation to support marketing
Access to millions of customers
Contiguous service territories
SLIDE 39 (Pie Chart)
Who Votes?
Shareholder Population as of 9/30/99
Institutional - 50%
Index Funds and
Smaller Institutions - 10%
Employees* - 7%
Retail & Other - 33%
* Another 4% is held in the Employee Stock Ownership Plan for future
distribution.
SLIDE 40
How Do Employees Vote?
On shares owned through the 401(k) and
PAYSOP/TRAESOP, Fidelity will send you a
proxy
On shares owned through the ESPP, Salomon
Smith Barney will send a proxy
On shares registered with NU, the company will
send a proxy
On shares owned through your broker, your
broker will send a proxy
VOTE EACH PROXY YOU RECEIVE!
SLIDE 41
Business Sense 3
Questions