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Pursuant to employment agreements, effective September 2000, certain senior officers of Con Edison and its subsidiaries were granted an aggregate of 350,000 restricted stock units, subject to the officers meeting the terms and conditions of the agreements. In June 2002, an additional 150,000 restricted stock units were granted to certain senior officers of Con Edison and its subsidiaries under similar terms. The units, each of which represents the right to receive one share of Con Edison common stock and related dividends, vest ratably through August 2005 or immediately upon the occurrence of certain events. Pursuant to APB No. 25, Con Edison is recog- nizing compensation expense and accruing a liability for the units over the vesting period. 

The following table summarizes the expense recognized in relation to the restricted stock units: 

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In June 2002, Con Edison terminated its Directors’ Retirement Plan applicable to non-officer directors (the termination is not applicable to directors who had previously retired from the board) and adopted a deferred stock compensation plan for these directors. Under this plan, directors were granted stock units for accrued service. Pursuant to APB No. 25, Con Edison is recognizing compensation expense and accruing a liability for these units. 

The following table summarizes the expense recognized in relation to the non-officer director deferred stock compensation plan: 

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Con Edison’s shareholders, at their annual meeting in May 2003, approved the Con Edison Long-Term Incentive Plan under which up to 10 million shares of its common stock may be issued. No shares have been issued under the plan. 

## Note O – Financial Information By Business Segment 

The business segments of each of the Companies were deter- mined based on similarities in economic characteristics, the regulatory environment, and management’s reporting require- ments. 

Con Edison’s principal business segments are Con Edison of New York’s regulated electric, gas and steam utility activities, 

O&R’s regulated electric and gas utility activities and other operations, Con Edison’s unregulated subsidiaries and other (parent holding company interest and other expenses and con- solidation adjustments). 

All revenues of these business segments, excluding revenues earned by Con Edison Development on certain energy infra- structure projects, which are deemed to be immaterial, are from customers located in the United States of America. Also, all assets of the business segments, excluding certain invest- ments in energy infrastructure projects by Con Edison Development ($216 million at December 31, 2003), are located in the United States of America. The accounting policies of the segments are the same as those described in Note A to the financial statements of this report. 

Common services shared by the business segments are assigned directly or allocated based on various cost factors, depending on the nature of the service provided. 

