EXHIBIT 99
[LETTERHEAD OF PSEG]
July 22, 2003
PSEG ANNOUNCES SECOND-QUARTER 2003 EARNINGS:
66 CENTS PER SHARE FROM CONTINUING OPERATIONS
Solid Energy Portfolio Management at PSEG Power Is Key Driver
In Producing Earnings Consistent with 2003 Guidance of $3.70 to $3.90 Per Share
PSEG Issues Initial 2004 Guidance of $3.75 to $3.95 per share
Public Service Enterprise Group (PSEG) announced today (July 22) that
earnings from continuing operations for the second quarter of 2003 were $150
million or 66 cents per share of common stock, based on 227 million average
shares outstanding. These results exclude two after-tax, below-the-line items.
The first is an extraordinary charge of $18 million or 8 cents per share related
to the recent conclusion of Public Service Electric and Gas Company's (PSE&G)
electric base rate case. The second item is $2 million or 1 cent per share
related to discontinued operations at PSEG Energy Technologies. Including these
items, PSEG's reported earnings for the quarter were $130 million or 57 cents
per share.
For the six months through June 30, 2003, PSEG produced earnings from
continuing operations of $471 million or $2.09 per share, based on 226 million
average shares outstanding. Excluded from these results are a net benefit of
$335 million or $1.48 per share related to the adoption of a new accounting
standard for fossil and nuclear decommissioning in the first quarter, the effect
of the extraordinary charge due to the finalization of the electric base rate
case in the second quarter and the reporting of discontinued operations for
Energy Technologies for both quarters. Including these items, PSEG's reported
earnings for the first half of the year were $806 million or $3.57 per share.
Attachments to this release provide a summary of 2003 and 2002 results
and details of the quarterly and year-to-date results for PSEG's principal
subsidiaries -- Public Service Electric and Gas Company (PSE&G), PSEG Power and
PSEG Energy Holdings.
Thomas M. O'Flynn, PSEG's chief financial officer, said that the solid
second quarter results -- representing a 10-cents per share improvement over
comparable results for the second quarter of 2002, which excluded losses
relating to PSEG Energy Holdings' Argentine investments -- were primarily driven
by the strength of PSEG Power's energy portfolio management, favorable weather
impacts on PSE&G's sales and higher investment income at PSEG Resources.
EXHIBIT 99
O'Flynn said PSEG Power continues to benefit from its ability to
optimize its generation assets around the basic generation supply (BGS)
contracts offered in New Jersey. "Our ability to combine electric generation,
fuel supply, trading and purchased power costs effectively to meet the needs of
BGS suppliers is reflected in PSEG's year over year earnings improvement," he
said. "Looking ahead, these skills will be especially important during the peak
electric demand months of the third quarter."
Outside New Jersey, PSEG Power continued to benefit from the 2002
acquisition of two generating facilities in Connecticut, O'Flynn added.
PSE&G had a benefit in the second quarter due to weather. The unusually
cold spring resulted in higher gas heating demand in April, partially offset by
lower electric cooling demands in June.
Also in the second quarter, the decision by the New Jersey Board of
Public Utilities (BPU) in PSE&G's electric base rate case marked a major final
step in the transition process to a deregulated electric market that began in
1999. The extraordinary charge recorded in the second quarter resulted from the
disallowance of some previously recognized revenues related to nuclear
decommissioning.
In deciding the rate case, the BPU approved an increase in annual
revenues of $159.5 million, effective August 1. "Even with the increase,
customer rates will still be slightly below levels before the start of the
four-year transition to deregulation," O'Flynn said. "During that four-year
period, customers enjoyed rate discounts of up to 14%."
O'Flynn said there were several positive developments at PSEG Energy
Holdings. "Two of PSEG Global's generation projects have been completed -- one
in Oman that began operation in May and the other in California that was placed
in service this month," he said. "There were also improvements at both
generating units in Texas in which Global has investments. And, in Brazil,
Global's distribution business received a significant rate increase.
"In addition, there were improvements in the credit quality and
liquidity of several lessees of merchant energy facilities in which PSEG
Resources has invested."
O'Flynn said Holdings' results for the second-quarter were, however,
impacted by the timing of an annual payment for PSEG Global's share of the Eagle
Point facility. The payment was received in the first quarter this year,
compared to the second quarter of last year. The absence of the payment in the
second quarter was partially offset by improved performance of the securities in
the KKR portfolio in 2003 compared to 2002.
"PSEG's overall second-quarter results were consistent with our
objectives for the first half of the year and keeps us on track to achieve 2003
earnings from continuing operations in the range of $3.70 to $3.90 per share."
O'Flynn said. "We anticipate a solid second half of the year, barring unforeseen
circumstances."
EXHIBIT 99
O'Flynn said PSEG, anticipating its solid performance will continue
into next year, has set initial 2004 earnings guidance at $3.75 to $3.95 per
share. While the company is still early in its business planning stages for the
next five years, he said its results next year would benefit from, among other
factors:
The effect of PSEG Power's contracts with BGS suppliers to New
Jersey's utility customers at higher prices established in an auction
conducted by the Board of Public Utilities (BPU). The higher prices
will be effective August 1 through next May 31. This will help offset
the elimination of the market transition charge (MTC) at the
conclusion of the transition period this year.
A full year's effect of $159.5 million of additional electric
distribution revenues from customers of PSE&G, which were approved by
the BPU effective August 1.
===============================================================================
FORWARD-LOOKING STATEMENT
Readers are cautioned that statements contained in this press release about our
and our subsidiaries' future performance, including future revenues, earnings,
strategies, prospects and all other statements that are not purely historical,
are forward-looking statements for purposes of the safe harbor provisions under
The Private Securities Litigation Reform Act of 1995. Although we believe that
our expectations are based on reasonable assumptions, we can give no assurance
they will be achieved. The results or events predicted in these statements may
differ materially from actual results or events. Factors which could cause
results or events to differ from current expectations include, among other
things: the effects of weather; the performance of generating units and
transmission systems; the availability and prices for oil, gas, coal, nuclear
fuel and electricity; changes in the markets for electricity and other
energy-related commodities; changes in the number of participants and the risk
profile of such participants in the energy marketing and trading business; the
effectiveness of our risk management and internal controls systems; the effects
of regulatory decisions and changes in law; changes in competition in the
markets we serve; the ability to recover regulatory assets and other potential
stranded costs; the outcomes of litigation and regulatory proceedings or
inquiries; the timing and success of efforts to develop domestic and
international power projects; conditions of the capital markets and equity
markets; advances in technology; changes in accounting standards; changes in
interest rates and in financial and foreign currency markets generally; the
economic and political climate and growth in the areas in which we conduct our
activities; and changes in corporate strategies. For further information, please
refer to our Annual Report on Form 10-K and subsequent reports on Form 10-Q and
Form 8-K filed with the Securities and Exchange Commission. These documents
address in further detail our business, industry issues and other factors that
could cause actual results to differ materially from those indicated in this
release. In addition, any forward-looking statements included herein represent
our estimates only as of today and should not be relied upon as representing our
estimates as of any subsequent date. While we may elect to update
forward-looking statements from time to time, we specifically disclaim any
obligation to do so, even if our estimates change, unless otherwise required by
applicable securities laws.
===============================================================================
Attachment 1
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------
Quarter Ended Six Months
June 30, Ended June 30,
2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------
Earnings Results (in Millions)
Income from Ongoing Operations
PSE&G $ 21 $ 7 $ 121 $ 74
PSEG Power 109 83 286 203
PSEG Energy Holdings
PSEG Global* 7 34 49 52
PSEG Resources 22 (4) 34 11
PSEG Energy Holdings (1) (2) (2) (4)
-------------------------------------------------------
Total PSEG Energy Holdings* 28 28 81 59
-------------------------------------------------------
PSEG (8) (2) (17) (8)
- ---------------------------------------------------------------------------------------------------------------------------
Income from Ongoing Operations* $ 150 $ 116 $ 471 $ 328
- ---------------------------------------------------------------------------------------------------------------------------
Write-down of Argentine Investments, net of tax - (334) - (334)
Operating Losses from Argentina, net of tax - (9) - (40)
- ---------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Continuing Operations $ 150 $ (227) $ 471 $ (46)
- ---------------------------------------------------------------------------------------------------------------------------
Loss from Discontinued Operations, including Loss on Disposal (2) (37) (17) (38)
Extraordinary Item (18) - (18) -
Cumulative Effect of a Change in Accounting Principle - - 370 (120)
- ---------------------------------------------------------------------------------------------------------------------------
PSEG Net Income (Loss) $ 130 $ (264) $ 806 $ (204)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Average Shares Outstanding (in Millions) 227 207 226 207
- ---------------------------------------------------------------------------------------------------------------------------
Per Share Results (Diluted)
Income from Ongoing Operations
PSE&G $ 0.09 $ 0.03 $ 0.53 $ 0.36
PSEG Power 0.48 0.40 1.27 0.98
PSEG Energy Holdings
PSEG Global* 0.03 0.17 0.22 0.26
PSEG Resources 0.10 (0.02) 0.15 0.05
PSEG Energy Holdings (0.01) (0.01) (0.01) (0.02)
-------------------------------------------------------
Total PSEG Energy Holdings* 0.12 0.14 0.36 0.29
-------------------------------------------------------
PSEG (0.03) (0.01) (0.07) (0.04)
- ---------------------------------------------------------------------------------------------------------------------------
Income from Ongoing Operations* $ 0.66 $ 0.56 $ 2.09 $ 1.59
- ---------------------------------------------------------------------------------------------------------------------------
Write-down of Argentine Investments, net of tax - (1.62) - (1.62)
Operating Losses from Argentina, net of tax - (0.04) - (0.19)
- ---------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Continuing Operations $ 0.66 $(1.10) $ 2.09 $(0.22)
- ---------------------------------------------------------------------------------------------------------------------------
Loss from Discontinued Operations, including Loss on Disposal (0.01) (0.18) (0.08) (0.19)
Extraordinary Item (0.08) - (0.08) -
Cumulative Effect of a Change in Accounting Principle - - 1.64 (0.58)
- ---------------------------------------------------------------------------------------------------------------------------
PSEG Net Income (Loss) $ 0.57 $(1.28) $ 3.57 $(0.99)
- ---------------------------------------------------------------------------------------------------------------------------
* 2002 Amounts exclude write-down of and operating losses relating to Argentine
Investments totalling $343 million or $1.66 per share and $374 million or $1.81
per share for the quarter and six month periods ended June 30, 2002,
respectively.
Note: Income from Ongoing and Continuing Operations include preferred stock
dividends relating to PSE&G of $1 million and $2 million, Global of $4 million
and $8 million and Resources of $1 million and $3 million for the quarters and
six months ended June 30, 2003 and June 30, 2002, respectively.
Attachment 2
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
Reconciliation of Income from Ongoing Operations
Quarter Ended June 30, 2003 vs. Quarter Ended June 30, 2002
PSEG Income from Ongoing Operations for the Quarter Ended June 30, 2002: $ 0.56
PSE&G Better/(Worse)
--------------
2nd Quarter 2002 $ 0.03
Margins: Weather, $0.01, and Other 0.04
O&M (primarily pension costs) (0.01)
Lower Interest Costs 0.02
Other 0.02
Additional Shares Outstanding (0.01)
2nd Quarter 2003 $ 0.09 $ 0.06
PSEG Power
2nd Quarter 2002 $ 0.40
Increased Margins (BGS and Trading, MTC and 0.15
Connecticut Plants)
Higher O&M (Connecticut Plants and Outages) (0.06)
Income on Nuclear Decommissioning Trust Funds 0.04
Additional Shares Outstanding (0.05)
2nd Quarter 2003 $ 0.48 $ 0.08
PSEG Energy Holdings
2nd Quarter 2002 $ 0.14
Global
Eagle Point gain recorded in 1st Quarter in 2003,
prior year recorded in 2nd Quarter (0.15)
Other 0.01 (0.14)
------
Resources
Improved Performance in KKR Portfolio:
2Q 2003 = 0.02; 2Q 2002 = (0.10) 0.12
Other 0.02
Additional Shares Outstanding (0.02) 0.12
2nd Quarter 2003 ------ $ 0.12 $ (0.02)
Public Service Enterprise Group
2nd Quarter 2002 $ (0.01)
Increase in financing costs (0.02)
2nd Quarter 2003 $ (0.03) $ (0.02)
PSEG Income from Ongoing Operations for the Quarter Ended June 30, 2003: $ 0.66
Attachment 3
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
Reconciliation of Income from Ongoing Operations
Six Months Ended June 30, 2003 vs. Six Months Ended June 30, 2002
PSEG Income from Ongoing Operations for the Six Months Ended June 30, 2002: $ 1.59
PSE&G Better/(Worse)
--------------
YTD 2002 $ 0.36
Improved Margins: Primarily Weather, $0.20 0.21
O&M and Other (primarily pension costs) (0.03)
Lower Interest Costs 0.02
Gain on property sales 0.02
Additional Shares Outstanding (0.05)
YTD 2003 $ 0.53 $ 0.17
PSEG Power
YTD 2002 $ 0.98
Increased Margins (BGSS, BGS and Trading, MTC and 0.41
Connecticut Plants)
Higher O&M (Connecticut Plants and Outages) (0.07)
Income on Nuclear Decommissioning Trust Funds 0.07
Additional Shares Outstanding (0.12)
YTD 2003 $ 1.27 $ 0.29
PSEG Energy Holdings
YTD 2002 $ 0.29
Global
Lower gains from withdrawal from Eagle Point (0.01)
Other (0.01)
Additional Shares Outstanding (0.02) (0.04)
-----
Resources
Improved Performance in KKR Portfolio 0.10
Other 0.01
Additional Shares Outstanding (0.01) 0.10
-----
Holdings parent (miscellaneous) 0.01
YTD 2003 $ 0.36 $ 0.07
Public Service Enterprise Group (parent)
YTD 2002 $(0.04)
Increase in financing costs (0.03)
YTD 2003 $(0.07) $(0.03)
PSEG Income from Ongoing Operations for the Six Months Ended June 30, 2003: $ 2.09
Attachment 4
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CAPITALIZATION SCHEDULE
(Unaudited)
June 30, December 31,
2003 2002
-----------------------------
(Millions)
DEBT
Commercial Paper and Loans $ 1,003 $ 625
Non-Recourse Note Payable 67 137
Long-Term Debt, including amounts due within one year 7,623 7,668
Securitization Debt, including amounts due within one year 2,293 2,351
Project Level, Non-Recourse Debt, including amounts due within one year 1,845 1,721
-----------------------------
Total Debt 12,831 12,502
SUBSIDIARIES' PREFERRED SECURITIES 1,400 1,400
-----------------------------
COMMON STOCKHOLDERS' EQUITY
Common Stock 4,100 4,056
Treasury Stock (981) (981)
Retained Earnings 2,160 1,601
Accumulated Other Comprehensive Loss (574) (689)
-----------------------------
Total Common Stockholders' Equity 4,705 3,987
-----------------------------
Total Capitalization $ 18,936 $ 17,889
=============================
The traditional and adjusted debt to capitalization ratio as of June 30, 2003
was 0.68 and 0.59, respectively. PSEG's financial covenants require an
adjustment to the traditional debt to capitalization ratio by excluding
non-recourse project debt ($1.8 billion) and securitization debt ($2.3 billion)
and including capital lease obligations ($51 million) and certain other
obligations such as guarantees and letters of credit ($216 million).
Attachment 5
Public Service Electric and Gas Company
Electric and Gas Sales to Customers
June 2003
Electric Sales
Millions of Kilowatthours
Three Change vs Six Change vs
Months Ended 2002 Months Ended 2002
------------ ---- ------------ ----
Residential 2,746 -4.1% 5,836 4.0%
Commercial 5,281 -0.6% 10,656 3.3%
Industrial 1,678 -2.4% 3,240 -2.1%
Total -1.9% 2.6%
Gas Sold and Transported
Millions of Therms
Three Change vs Six Change vs
Months Ended 2002 Months Ended 2002
------------ ---- ------------ ----
Residential Sales 234 26.0% 975 29.0%
Commercial - Firm Sales 96 30.3% 400 30.1%
Industrial - Firm Sales 8 18.9% 37 18.7%
Gas Transported 298 9.9% 746 21.8%
Total * 17.3% 22.5%
* Includes interruptible and cogeneration sales