UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT
TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001 Commission File Number 001-09120
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
EMPLOYEE SAVINGS PLAN
80 PARK PLAZA
NEWARK, NEW JERSEY 07102
MAILING ADDRESS: P.O. Box 1171
NEWARK, NEW JERSEY 07101-1171
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
See Page 2.
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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
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Stable Value Fund UBS AG
PRIMCO CAPITAL MANAGEMENT 677 WASHINGTON BOULEVARD, 6TH FLOOR
400 WEST MARKET STREET, SUITE 3300 STAMFORD, CT 06901
LOUISVILLE, KENTUCKY 40202
STATE STREET BANK AND TRUST COMPANY
THE CHASE MANHATTAN BANK 225 FRANKLIN STREET, M9
270 PARK AVENUE, 6TH FLOOR BOSTON, MASSACHUSSETTS 02110-2804
NEW YORK, NEW YORK 10017
PRUDENTIAL SECURITIES, INC.
J.P. MORGAN GUARANTEED PRODUCTS
60 WALL STREET 71 HANOVER ROAD
NEW YORK, NEW YORK 10260-0060 FLORHAM PARK, NJ 07932-1597
METROPOLITAN LIFE INSURANCE Enterprise Common Stock Fund and ESOP Fund
COMPANY PUBLIC SERVICE ENTERPRISE GROUP
ONE MADISON AVENUE INCORPORATED
NEW YORK, NEW YORK 10010-3690 80 PARK PLAZA
NEWARK, NEW JERSEY 07101-1171
ALLSTATE LIFE INSURANCE COMPANY
ALLSTATE PLAZA WEST Large Company Stock Index Fund
3100 SANDERS ROAD, SUITE M2 THE VANGUARD GROUP
NORTHBROOK, ILLINOIS 60062-7154 INSTITUTIONAL DIVISION
P.O. BOX 2900
CONTINENTAL ASSURANCE COMPANY VALLEY FORGE, PENNSYLVANIA 19482
CAN PLAZA, 35 SOUTH
CHICAGO, IL 60685 Diversified Bond Fund
BLACKROCK FINANCIAL MANAGEMENT, INC.
BANK OF AMERICA 345 PARK AVENUE
P.O. BOX 37003 NEW YORK, NEW YORK 10154
MAIL CODE: CA5-701-05-31
SAN FRANCISCO, CA 94137 International Stock Fund
T. ROWE PRICE INC.
CAISSE des DEPOTS 100 EAST PRATT STREET
9 WEST 57th STREET, 36TH FLOOR BALTIMORE, MARYLAND 02120
NEW YORK, NEW YORK 10019
Mid Size Company Stock Fund
DFP, INC. PUTNAM INVESTMENTS
400 WEST MARKET STREET P.O. BOX 41203
P.O. BOX 32830 PROVIDENCE, RHODE ISLAND 02940
LOUISVILLE, KY 40232
Small Company Stock Fund
JOHN HANCOCK MUTUAL LIFE MORGAN STANLEY DEAN WITTER
INSURANCE COMPANY ONE TOWER BRIDGE
JOHN HANCOCK PLACE, 27th FLOOR WEST CONSHOHOCKEN, PENNSLYVANIA 19428
P.O. BOX 111
BOSTON, MASSACHUSSETTS 02117 Schwab Personal Choice Retirement Account Fund
CHARLES SCHWAB & CO., INC.
4722 NORTH 24TH STREET, SUITE 300
PHOENIX, ARIZONA 85016
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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
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INDEX
PAGE
----
INDEPENDENT AUDITORS' REPORT 4
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2001 AND 2000 5
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001 6
NOTES TO FINANCIAL STATEMENTS 7
SIGNATURES 21
EXHIBIT INDEX 22
INDEPENDENT AUDITORS' REPORT
Employee Benefits Committee of
Public Service Enterprise Group Incorporated:
We have audited the accompanying statements of net assets available for
benefits of the Public Service Enterprise Group Incorporated Employee Savings
Plan (the "Plan") as of December 31, 2001 and 2000, and the related statement of
changes in net assets available for benefits for the year ended December 31,
2001. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 2001
and 2000, and the changes in net assets available for benefits for the year
ended December 31, 2001 in conformity with accounting principles generally
accepted in the United States of America.
/s/DELOITTE & TOUCHE LLP
Parsippany, New Jersey
June 28, 2002
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
EMPLOYEE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
As of December 31,
---------------------------
2001 2000
------------ ------------
ASSETS
Investments, at Fair Value-
Plan Interest in Master Employee Benefit Plan Trust $421,192,783 $433,023,908
Contributions Receivable from Participants 1,261,490 --
Contributions Receivable from Employer 358,228 --
Receivables from Investments Sold 110,159 --
Interest and Dividends Receivable 2,068 7,228
------------ ------------
Total Assets 422,924,728 433,031,136
------------ ------------
LIABILITIES
Payable for Investments Purchased 22,390 --
Accounts Payable 187,832 246,827
------------ ------------
Total Liabilities 210,222 246,827
------------ ------------
Net Assets Available for Benefits $422,714,506 $432,784,309
============ ============
See Notes to Financial Statements.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
EMPLOYEE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001
ADDITIONS:
Contributions
Participant Deposits $ 35,196,082
Employer Contributions 11,691,148
-------------
Total Deposits and Contributions 46,887,230
Investment Income/(Loss)
Plan Interest in Master Employee Benefit Trust Investment Income 12,520,155
Plan Interest in Master Employee Benefit Trust
Net Depreciation in Market Value of Investments (47,665,835)
-------------
Net Investment Loss (35,145,680)
Transfers into the Plan 460,276
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Total Additions 12,201,826
-------------
DEDUCTIONS:
Benefit Payments to Participants 18,146,920
Administrative Expenses 376,361
Transfers to Thrift and Tax-Deferred Savings Plan-net 3,748,348
-------------
Total Deductions 22,271,629
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DECREASE IN NET ASSETS AVAILABLE FOR BENEFITS (10,069,803)
NET ASSETS AVAILABLE FOR BENEFITS BEGINNING OF YEAR 432,784,309
-------------
NET ASSETS AVAILABLE FOR BENEFITS
END OF YEAR $ 422,714,506
=============
See Notes to Financial Statements.
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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
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EMPLOYEE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
General
The following description of the Public Service Enterprise Group
Incorporated (Company) Employee Savings Plan (Plan) is provided for general
information purposes only. Participants should refer to the Plan Document for
more complete information.
The Plan was adopted as a tax qualified profit sharing plan under section
401(a) of the Internal Revenue Code of 1986, as amended, (IRC) and a qualified
cash or deferred arrangement under IRC section 401(k) to encourage thrift and
savings by eligible bargaining unit employees (Eligible Employees). Deutsche
Bank is the Trustee of the Master Trust established pursuant to the Plan. Hewitt
Associates is the Record Keeper for the Plan.
The Plan is generally subject to the provisions of Titles I and II of the
Employee Retirement Income Security Act of 1974 (ERISA), including, but not
limited to, the provisions with respect to reporting, disclosure, participation,
vesting and fiduciary responsibility. However, it is not subject to the funding
requirements of Title I and benefits under the Plan are not guaranteed by the
Pension Benefit Guarantee Corporation under Title IV of ERISA.
The Plan was last amended effective January 1, 2002. Effective with that
date, catch-up contributions of an additional $1,000 in pre-income tax deposits
for employees age 50 or older in 2002 were implemented, maximum permitted
employee contribution increased from 25% to 50%, acceptance of after-tax
rollovers and rollovers from financial institutions were implemented, Internal
Revenue Service (IRS) minimum distribution requirements were implemented for
post age 70 1/2 distributions, the suspension period for making deposits to the
Plan after a hardship withdrawal was decreased from one year to six months and
the Company stock fund converted to an employee stock ownership plan and
dividends on Company Stock can be made in cash. Certain other provisions of this
amendment are discussed below.
The Plan permits, among other things, participation in the Plan by
Affiliates of the Company and their bargaining unit employees (each such
participating Affiliate with the Company is an "Employer"). Participation in the
Plan is entirely voluntary.
An employee may participate in the Plan from the date of hire. The Company
begins matching contributions when an employee has completed one Year of Service
as defined by the Plan. The Company also maintains a Thrift and Tax Deferred
Savings Plan (Thrift Plan) to provide for its non-represented employees. At the
time any employee who is a Participant in the Thrift Plan becomes an Eligible
Employee for the Plan, that employee will automatically be enrolled in the Plan,
all balances in the Thrift Plan will be transferred to the Plan and all
contributions and investment elections in effect for the Thrift Plan will remain
in effect in the Plan. Certain Eligible Employees may also elect to have a
distribution from another qualified corporate plan contributed as a rollover
contribution with the approval of the Company's Employee Benefits Committee
(Committee), the Plan Administrator.
During 2000, the Company acquired Fluidics, Inc. and Arden Engineering
Constructors, Inc. As a result of these transactions, the savings plans of the
acquired companies were merged with and into the Plan and the Thrift Plan.
Combined participant account balances of $460,276 were transferred into the Plan
during 2001.
Deposits and Contributions
Under the Plan, each Participant, except as otherwise noted, may elect to
make basic deposits to Investment Funds of such Participant's choosing within
the Savings Account Fund of 1% - 7% of his/her Compensation (Basic Deposits),
and his/her Employer will contribute an amount equal to 50% thereof, subject to
certain exceptions and limitations (Employer Contributions). Prior to March 1,
2002, Employer Contributions for Participants with respect to Basic Deposits in
excess of 5% and up to 7% of Compensation were made in shares of the Company's
Common Stock and were not available for transfer to any other Investment Fund or
withdrawal from the Plan prior to the Participant's termination of employment.
Effective March 1, 2002, Employer Contributions for Participants with respect to
Basic Deposits in excess of 5% and up to 7% of Compensation are made in cash and
invested according to the participant's investment election and any shares of
Company Stock held in a Participant's account are eligible for transfer to any
other Investment Fund. In addition, a Participant may elect to make supplemental
deposits to his/her Savings Account Fund in increments of 1% of Compensation up
to an additional 18% (43% effective January 1, 2002) of Compensation
(Supplemental Deposits), subject to certain limitations, without any
corresponding matching Employer Contribution. Participants may designate such
Basic and/or Supplemental Deposits as post-income tax contributions (Nondeferred
deposits) or pre-income tax contributions (Deferred Deposits).
Each Participant may also, within any Plan Year, make one or more
Additional Lump Sum Deposits on a Nondeferred basis in minimum amounts of $250
and in such total amounts which, when aggregated with such Participant's Basic
Deposits and Supplemental Deposits, do not exceed 25% of his or her Compensation
for that Plan Year and subject to the limitations of the IRC. As previously
stated, as of January 1, 2002, maximum permitted employee contribution increased
from 25% to 50%.
The maximum amount of Deferred Deposits to a Participant's Savings Account
may have to be limited to meet requirements of the IRC. The extent of any such
limitation will be determined from time to time by the Committee based on the
actual pattern of Deferred Deposits by all Participants. All Deferred Deposits
in excess of such percentage will automatically be treated as Nondeferred
Deposits and will result in taxable income to the affected Participants. The
Committee will attempt to assure that any such limitation will apply only to
future contributions, but it is possible that, in order to meet requirements of
the IRC, the limitation will, in some circumstances, have to be applied
retroactively. Deferred Deposits may not generally be withdrawn until age
59-1/2. Nondeferred Deposits, on the other hand, may be withdrawn at any time
subject to certain penalties and restrictions.
Savings Account Deposits are made through payroll deductions by the
Employer, rollover contributions from other qualified plans and Additional Lump
Sum Deposits. Deposits by Participants and Employer Contributions are
transferred to a Trustee and separately held in the Plan's Savings Account Fund
of the Master Trust Fund for Investment and other transactions, as directed by
Participants. Each Participant is entitled to choose the Investment Funds in
which his/her Deposits and Employer Contributions will be invested from among
the Investment Funds offered under the Plan, except for Employer Contributions
with respect to Basic Deposits in excess of 5% for all others, which were
invested in the Enterprise Common Stock Fund prior to March 1, 2002, as
discussed above.
Dividends, interest and other income attributable to each Investment Fund
of the Plan are reinvested in that Investment Fund to the extent they are not
used to pay direct expenses of that Investment Fund.
All Deposits and Employer Contributions in the Stable Value Fund are
invested in either traditional Guaranteed Investment Contracts (GICs) issued by
insurance companies or other financial intermediaries (Traditional GICs) or
Benefit Responsive Agreements (Synthetic GICs) which are similar to Traditional
GICs in terms of their ability to preserve principal and provide a stable rate
of return. Synthetic GICs are different in that they are backed or secured by a
separate portfolio of high-quality fixed income securities that are directly
owned by the Plan. The portfolio is wrapped by a "book value wrapper", usually a
financial institution other than the investment manager of the Synthetic GIC,
which provides a crediting rate and which guarantees that benefit repayments
will be made at book value. Deposits and Employer Contributions earn interest at
the composite rate of all GICs in which the assets of the Stable Value Fund are
then invested. Such rate varies as such Traditional and Synthetic GICs mature or
are entered into, and as Deposits and Employer Contributions are made to and
withdrawn from such contracts. Under the contracts in effect during 2001, the
composite rate of interest earned by such assets so invested was not less than
5.81%.
Employee Stock Ownership Plan Fund (ESOP Fund) Participants receive
quarterly payments directly from the Trustee equal to the dividends paid to the
Trustee on the shares of the Company's Common Stock held for their ESOP Fund.
Participant Loans
The Trustee may, subject to the approval of the Director of Performance and
Rewards of PSEG Services Corporation, lend a Participant an amount up to: the
lesser of 50% of the value of the vested portion of such Participant's Savings
Account and ESOP Fund but no more than the aggregate value of such Participant's
Savings Account or $50,000, whichever is less. However, no amounts may be loaned
directly from any ESOP Account, from any portion of a Participant's Savings
Account attributable to transfers from the Cash Balance from assets held in the
Schwab Personal Choice Retirement Account Fund, or prior to April 1, 2002, from
any portion of the Enterprise Common Stock Fund attributable to Employer
Contributions made in shares of stock. Any Participant loan must be for a
principal amount of $1,000 or more and no Participant may have more than two
loans outstanding at any time. All loans, including interest thereon, must be
repaid by payroll deductions in equal monthly installments of 12 to 60 months as
selected by the Participant. However, a Participant may prepay any such loan in
full or in part in a lump sum in accordance with such rules as are prescribed by
the Committee. A Participant may not apply for more than one loan in any
calendar year. A loan to a Participant is considered an investment of such
Participant's Savings Account and repayments of principal of any loan, together
with interest thereon, are invested in the Savings Account Investment Funds of
the Plan in accordance with the Participant's then-current investment direction
for Deposits and Employer Contributions.
Each loan bears interest at a rate fixed from time to time by the Committee
taking into consideration the then-current interest rates being charged by other
lenders. The rate of interest applicable to any loan at its inception remains in
effect for the duration of such loan. During 2001 and 2000, the rate of interest
on loans granted to Participants ranged between 6.0% to 9.5% and 8.5% to 9.5%,
respectively.
Loan amounts are taken from sub-accounts of a Participant's Savings Account
in the following order:
(a) Deferred Deposits
(b) Unmatured vested Employer Contributions
(c) Matured vested Employer Contributions
(d) Rollover Contributions
(e) Unmatured post-1986 Nondeferred Deposits
(f) Matured post-1986 Nondeferred Deposits
(g) Pre-1987 Nondeferred Deposits
Each loan is secured by an assignment of the Participant's entire right,
title and interest in and to the Master Trust Fund to the extent of the loan and
accrued interest thereon.
Forfeitures
Any nonvested portion of the Participant's Account, determined as of the
date of severance from employment, shall be forfeited and shall be applied
thereafter to reduce a subsequent contribution or contributions of the Employer
as provided in the Plan Document. If such former Participant is rehired by an
Employer on or before the end of and is employed by an Employer at the end of
the fifth Plan Year after the Plan Year in which such severance occurred, then
such nonvested portion of the Participant's Account shall be reinstated by the
Employer and the Participant's right thereto shall be determined as if the
Participant had not terminated employment, provided that the Participant repays
to the Plan the amount of any distribution paid to him or her on account of the
severance from employment. Unallocated forfeitures to be used for reducing
future contributions as of December 31, 2001 and 2000 amounted to $95,968 and
$94,433, respectively.
Participant Accounts
Individual accounts are maintained for each Participant which consist of
the following subaccounts: Basic Deposit Subaccount, Supplemental Deposit
Subaccount and Employer Contribution Subaccount, the assets of which are
invested pursuant to the direction of the Participant. The assets of each such
subaccount of the Savings Account are identified as Nondeferred or Deferred.
Vesting
Except for amounts transferred from the Cash Balance Plan into the Plan,
since May 1, 2002, Employer Contributions to a Participant's Savings Account are
fully vested. Prior to that time, Employer Contributions vested according to a
5-year cliff vesting schedule. Amounts transferred from the Cash Balance Plan
follow the Cash Balance Plan vesting regulations and vest upon a Participant's
completion of five years of service with an Employer, or when a Participant
reaches the age of 65, is disabled, laid off or dies. All amounts credited to a
Participant's ESOP Fund are fully vested.
Holding Account
The Holding Account is a vehicle to record the transactions either from one
Investment Fund to another Investment Fund or from an Investment Fund to an
outside source. Daily balances which remain in the Holding Account are
temporarily invested in short-term, liquid investments by the Trustee until
disbursement. Activity within the Holding Account includes inflows and outflows
of cash related to Investment Fund transfers, Deposits, Employer Contributions,
withdrawals, receipts of dividends and interest, expenses incurred in connection
with the administration of the Plan, benefit payments and loan transactions.
Penalties Upon Withdrawal
If a Participant withdraws vested Employer Contributions and/or Deposits
before they have been in the Plan for twenty-four months, such Participant will
lose the matching Employer Contributions on Deposits made during the subsequent
three months. Distributions to Participants electing to withdraw Nondeferred
Deposits and Employer Contributions are made as soon as practicable after such
elections are received by the Plan's Record Keeper. Nondeferred Deposits may be
withdrawn at any time, but certain penalties may apply. Deferred Deposits may
not be withdrawn during employment prior to age 59-1/2 except for reasons of
extraordinary financial hardship and to the extent permitted by the IRC
(hardship withdrawals). Distributions to Participants of approved hardship
withdrawals are made as soon as practicable after such approval.
Payment of Benefits
Benefit payments to Participants are recorded upon distribution. Amounts
allocated to accounts of persons who have elected to withdraw from the plan but
have not yet been paid were $249,211 and $216,158 as of December 31, 2001 and
2000, respectively.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan have been prepared on an accrual basis
in accordance with accounting principles generally accepted in the United States
of America.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
net assets available for benefits and changes therein. Actual results could
differ from those estimates.
Risks and Uncertainties
The Plan provides for various investment options. The mutual funds invest
in various securities including U.S. Government securities, corporate debt
instruments and corporate stocks. Investment securities, in general, are exposed
to various risks, such as interest rate, credit and overall market volatility.
Due to the level of risk associated with certain investment securities, it is
reasonably possible that changes in the values of investment securities will
occur in the near term and that such changes could materially affect
participants' account balances and the amount reported in the statement of net
assets available for Plan benefits.
Investment Valuation and Income Recognition
The investments in the Master Trust are stated at fair value except for its
benefit-responsive investment contract with the Stable Value Fund, which is
recorded at contract value, which approximates fair value. The Plan's
investments in the guaranteed annuity contracts of the Stable Value Fund are
with various insurance companies and are recorded at contract value, which
approximates fair value, and is calculated as cost plus accumulated interest
less withdrawals (see Note 3). Quoted market prices are used to value all other
investments. Shares of mutual funds are valued at adjusted cost of the net asset
value of shares held by the Plan at year-end. The adjusted cost is the fair
value of the security at the beginning of the Plan Year, or cost if acquired
since that date. Purchases and sales of securities are recorded on a trade-date
basis. Temporary investments are stated at cost, which approximates fair market
value. Dividend income is recorded on the ex-dividend date. The loans to
participants are valued at outstanding principle balance plus accrued interest,
which approximates fair value.
Investment gains and losses from securities transactions are computed using
an adjusted cost basis as prescribed by the Department of Labor's (DOL) Rules
and Regulations for Reporting and Disclosure.
Administrative Expenses of Plan
All expenses incurred for the administration of the Plan, including taxes
and brokerage costs, are deducted from the Master Trust Fund.
The assets of the Enterprise Common Stock Fund and the ESOP Fund are
invested in shares of the Company's Common Stock. Shares of the Company's Common
Stock required for the Enterprise Common Stock Fund are purchased by the Trustee
either directly from the Company at its sole discretion, on the open market
through a broker or from the ESOP Fund. In situations where the ESOP Fund is in
a "sell" position and the Enterprise Common Stock Fund is in a "buy" position,
the Enterprise Common Stock Fund will buy from the ESOP Fund at the closing
price on the New York Stock Exchange for that day. In such case, no brokerage
commissions will be charged on the transaction. Otherwise, all shares sold for
the Enterprise Common Stock Fund and the ESOP Fund are sold by the Trustee on
the open market through a broker. The proceeds, net of brokerage commissions and
transfer taxes, are distributed to the Participant.
Transfers of the ESOP Fund to Savings Account
Participants are permitted to transfer all, but not less than all, of the
shares of the Company's Common Stock from their ESOP Funds to their Savings
Accounts. To effect such transfers, the Trustee will sell the shares of
Enterprise Common Stock held in the ESOP Fund and invest the proceeds in the
Savings Account Investment Funds designated by the Participant. The cash value
of each share of the Company's Common Stock transferred will be equal to the
price per share of the Company's Common Stock actually received by the Trustee.
Any such transfer is treated as a rollover contribution.
Recently Adopted Accounting Principle
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133), which was later amended by SFAS
No. 138. Effective January 1, 2001, the Plan adopted this statement, as amended.
Adoption of SFAS 133 had no impact on the Plan's financial position or results
of operations.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current
year presentation.
3. INVESTMENT OF THE PLAN AND THRIFT PLAN IN THE MASTER TRUST
The Plan's investments are included in the Master Trust, which was
established for the investment of assets of all of the Company's qualified
retirement plans including the Plan and the Thrift Plan. The following tables
present the fair values of and the investment income recognized by the
investments of the Plan and Thrift Plan in the Master Trust as of December 31,
2001 and 2000 and for the year ended December 31, 2001. As of December 31, 2001
and 2000, the Plan's interests in such assets of the Master Trust were
approximately 39% and 38%, respectively.
December 31,
-------------------------------
2001 2000
-------------- --------------
Investments at fair value:
Participant Loans $ 31,729,786 $ 31,058,248
Cash and Cash Equivalents 21,516,751 12,387,447
Common Stock of
Public Service Enterprise Group Incorporated 151,220,984 158,237,865
Mutual Funds 470,642,487 557,693,509
Guaranteed Investment Contracts 392,214,802 354,239,114
Schwab PCRA Fund (a) 24,676,728 27,297,856
-------------- --------------
$1,092,001,538 $1,140,914,039
============== ==============
December 31, 2001
-----------------
Investment income/(loss) recognized:
Net depreciation in fair value of Mutual Funds (89,449,833)
Net depreciation in fair value of Common Stock
of Public Service Enterprise Group Incorporated (21,816,714)
Net depreciation in fair value of Schwab PCRA Fund (a) (8,894,657)
Interest from Mutual Funds 2,595,596
Interest from Enterprise Common Stock Funds 139,284
Interest from Guaranteed Investment Contracts 21,610,050
Dividends from Common Stock of Public
Service Enterprise Group Incorporated 7,579,345
-------------
$(88,236,929)
=============
(a) Amounts primarily relate to equity investments in stocks and through mutual
funds. The net depreciation in fair value is primarily comprised of
realized/unrealized gains or losses and dividends earned on these equity
investments.
4. INVESTMENTS
The Master Trust includes the following:
A. Savings Account Investment Funds
(1) The assets of the Stable Value Fund are primarily invested in Traditional
GICs or Synthetic GICs with additional investments in the Trustee's
short-term investment fund. All GIC contract values approximate fair
values. As of December 31, 2001, the Plan's interest in the Stable Value
Fund was approximately 39%. At December 31, 2001, the Stable Value Fund was
comprised of the following:
Issuer Type Expiration Effective Rate Contract Value
--------------------------------------------- ------------- ---------------------- ----------------- ----------------
Prudential Life Insurance Company Traditional November 30, 2005 6.99% $5,374,313
J.P. Morgan (a) Synthetic Open-Ended 7.62% 20,580,768
Bank of America (a) Synthetic Open-Ended 6.54% 19,223,504
Bank of America (b) Synthetic Open-Ended 4.40% 3,024,163
Bank of America (b) Synthetic Open-Ended 5.47% 30,816,109
Continental Assurance Company (b) Synthetic Open-Ended 5.07% 6,155,414
The Chase Manhattan Bank (c) Synthetic Open-Ended 6.65% 43,036,209
Allstate Life Insurance Company (d) Synthetic Open-Ended 5.87% 52,546,157
State Street Bank and Trust Company (d) Synthetic Open-Ended 5.48% 55,880,774
N/A (pooled separate account)(e) Synthetic May 1, 2007 6.13% 9,673,568
DFP, Inc. (d) Synthetic Open-Ended 6.28% 65,708,653
Caisse des Depots Synthetic November 26, 2002 4.48% 4,017,327
Caisse des Depots Synthetic November 26, 2002 4.48% 2,008,663
Caisse des Depots Synthetic December 12, 2002 4.65% 4,009,974
Caisse des Depots Synthetic December 12, 2002 4.65% 2,004,987
Caisse des Depots Synthetic February 3, 2003 3.74% 3,017,858
UBS AG (d) Synthetic Open-Ended 6.61% 65,136,361
----------------
Total GICs $392,214,802
Investment in Bankers Trust Short Term Investment Fund (2.28%) 16,464,717
----------------
Total Stable Value Fund $408,679,519
================
(a) Managed by Pacific Investment Management Company
(b) Managed by INVESCO Institutional, Inc.
(c) Managed by Seix Investment Advisors
(d) PRIMCO Capital Management
(e) Managed by John Hancock Mutual Life Insurance Company
(2) The assets of the Enterprise Common Stock Fund are invested in the
Company's Common Stock.
(3) The assets of the Large Company Stock Index Fund are invested in the
capital stock of Vanguard Institutional Index Fund, a no-load mutual
fund managed by The Vanguard Group, Inc. The prospectus for the
Vanguard Institutional Index Fund indicates that such fund seeks to
replicate the investment performance of the Standard and Poor's 500
Composite Stock Price Index.
(4) The assets of the Diversified Bond Fund are invested in a separate
account managed by BlackRock Financial Management, Inc. The
Diversified Bond Fund invests in a broadly diversified portfolio of
bonds that include U.S. Treasury and agency securities, commercial and
residential mortgage-backed securities, asset-backed securities, and
corporate bonds.
(5) The assets of the International Stock Fund are invested in the capital
stock of the T. Rowe Price International Stock Fund, a no-load mutual
fund managed by Rowe Price-Fleming International, Inc. The prospectus
for the T. Rowe Price International Stock Fund indicates that such
fund invests primarily in common stocks of established, non-U.S.
companies.
(6) The assets of the Mid Size Company Stock Fund are invested in the
capital stock of the Putnam Vista Fund, a no-load mutual fund managed
by Putnam Investment Management, Inc. The prospectus for the Putnam
Vista Fund indicates that such fund invests in a diversified portfolio
of common stocks, which may include widely-traded common stocks of
larger companies as well as common stocks of smaller, less well-known
companies.
(7) The assets of the Small Company Stock Fund are invested in a separate
account managed by Morgan Stanley. The Small Company Stock Fund
invests in a broadly diversified portfolio of U.S. small
capitalization companies that are considered to be undervalued on a
relative basis by the Fund Manager at the time of purchase. Small
capitalization companies are those with equity capitalizations
generally below $1.5 billion.
(8) The assets of the Conservative Pre-Mix Portfolio are invested in
specific percentages within a mix of five existing Plan investment
Funds: 40% Stable Value Fund, 20% Diversified Bond Fund, 20% Large
Company Stock Index Fund, 10% International Stock Fund, and 10% Small
Company Stock Fund. Every quarter the Trustee re-aligns this portfolio
to match its conservative (risk and return) investment strategy of 60%
in bonds and 40% in stocks.
(9) The assets of the Moderate Pre-Mix Portfolio are invested in specific
percentages within a mix of five existing Plan investment Funds: 25%
Large Company Stock Index Fund, 20% Stable Value Fund, 20%
International Stock Fund, 20% Diversified Bond Fund, and 15% Small
Company Stock Fund. Every quarter the trustee re-aligns this portfolio
to match its moderate (risk and return) investment strategy of 60% in
stocks and 40% in bonds.
(10) The assets of the Aggressive Pre-Mix Portfolio are invested in
specific percentages within a mix of four existing Plan investment
Funds: 30% Large Company Stock Index Fund, 25% International Stock
Fund, 25% Small Company Stock Fund, and 20% Diversified Bond Fund.
Every quarter the Trustee re-aligns this portfolio to match its
aggressive (risk and return) investment strategy of 80% in stocks and
20% in bonds.
B. ESOP Fund
During 2001 and 2000, no contributions to or transfers into the ESOP Fund
were permitted.
C. Schwab PCRA Fund
The Schwab PCRA Fund is a self-directed brokerage account in which
Participants can select and manage a wide selection of investments including
mutual funds, stocks and bonds. Deposits into the Schwab PCRA Fund must come
from balances transferred from the other options in the Plan. Participants may
transfer up to 100% of their account balance to the Schwab PCRA Fund.
5. NON-PARTICIPANT DIRECTED INVESTMENTS
As stated previously, prior to March 1, 2002, Employer Contributions for
Participants with respect to Basic Deposits in excess of 5% and up to 7% of
Compensation were made in shares of the Company's Common Stock into the
Enterprise Common Stock Fund and were not available for transfer to any other
Investment Fund or withdrawal from the Plan prior to the Participant's
termination of employment. Information about the net assets and the significant
components of the changes in net assets relating to the Plan's interest in the
Enterprise Common Stock Fund is as follows:
As of December 31,
-----------------------------
2001 2000
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Net Assets:
Enterprise Common Stock Fund $ 62,276,657 $ 64,184,801
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Changes in Net Assets:
Deposits and Contributions $ 6,693,446
Dividends and Interest 3,015,782
Net Depreciation (8,678,547)
Benefits paid to Participants (2,641,749)
Forfeitures (31,145)
Administrative Expenses (57,743)
Transfers from participant-directed investments (208,188)
-------------
Total Changes in Net Assets $ (1,908,144)
=============
6. FEDERAL INCOME TAXES
The Plan is intended to be qualified under Section 401(a) of the Internal
Revenue Code of 1986 (the "Code") and is intended to be exempt under Section
501(a) of the Code. The Plan received a favorable Internal Revenue Service
determination letter dated April 8, 1998. The Plan has since been amended.
However, the Plan Administrator believes that the Plan is currently being
operated in compliance with the applicable requirements of the Code. Therefore,
no provision for income taxes has been included in the Plan's financial
statements.
7. PLAN TERMINATION
The Company expects and intends to continue the Plan indefinitely, but has
reserved the right to amend, suspend or terminate the Plan at any time. In the
event of termination of the Plan, the net assets of the Plan would be
distributed to the Participants based on the balances in their individual
accounts at the date of termination.
8. RELATED PARTY TRANSACTIONS
Certain Plan investments are in the Company's common stock. As the Company
is the Plan Sponsor; these transactions qualify as party-in-interest
transactions. Certain administrative functions are performed by the officers and
employees of the Company (who may also be participants of the Plan) at no cost
to the Plan. These transactions are not deemed prohibited party-in-interest
transactions, because they are covered by statutory or administrative exemptions
from ERISA's rules on prohibited transactions.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
Public Service Enterprise Group Incorporated
Employee Savings Plan
(Name of Plan)
By: MARGARET M. PEGO
---------------------------------------------
Margaret M. Pego
Chairperson of Employee
Benefits Committee
Date: July 1, 2002
EXHIBIT INDEX
Exhibit Number
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1 Amended and Restated Public Service Enterprise Group Incorporated
Employee Savings Plan Effective January 1, 2002
2 Independent Auditors' Consent