EXHIBIT 99
[LETTERHEAD OF PSEG]
October 22, 2003
PSEG ANNOUNCES THIRD-QUARTER 2003 EARNINGS:
93 CENTS PER SHARE FROM CONTINUING OPERATIONS
Results Reflect Impact of Storm-Related Weather on PSEG Power
And Higher Electric Base Rates at PSE&G
Company Reiterates Earnings Per Share Guidance
of $3.60 to $3.75 for 2003 and $3.60 to $3.80 for 2004
Public Service Enterprise Group (PSEG) announced today (October 22)
that earnings from continuing operations for the third quarter of 2003 were $213
million or 93 cents per share of common stock, based on 228 million average
shares outstanding. These results exclude a net loss of $3 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 $210 million or 92
cents per share of common stock.
For the nine months through September 30, 2003, PSEG produced earnings
from continuing operations of $684 million or $3.02 per share, based on 226
million average shares outstanding. Excluded from these results is a net benefit
of $332 million or $1.47 per share related to the positive impact of the
adoption of a new accounting standard for fossil and nuclear decommissioning in
the first quarter, partially offset by the effects of an 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 all three
quarters. Including these items, PSEG's reported earnings for the first nine
months of the year were $1.02 billion or $4.49 per share of common stock.
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 generally
strong results for the quarter were offset by unexpected, storm-related
expenditures at both PSEG Power and PSE&G and by the dilutive effect of
additional shares of common stock.
"The impact of Hurricane Isabel and storms in Pennsylvania and central
Jersey in late September had a combined impact of about 8 cents per share in the
quarter," O'Flynn said. "In particular, the hurricane caused heavy salt spray
from the Delaware Bay to coat the electrical
equipment outside our three nuclear units in south Jersey. We shut down the
plants for about a week to clean the equipment. There was no effect on the units
themselves, but we had to purchase replacement power."
On a quarterly comparative basis, PSEG Power's results were down about
11 cents per share, including the dilutive effect of 17 million additional
shares of common stock issued by PSEG in November 2002.
O'Flynn said the cost of replacement power due to the shutdown of the
units resulted in PSEG Power's reducing its 2003 earnings expectations by about
$20 million.
This replacement power cost, combined with PSEG's issuance of more than
8 million additional shares of common stock in October 2003, resulted in PSEG's
decision to lower its overall 2003 earnings expectations by 10 to 15 cents per
share to a range of $3.60 to $3.75.
"Although it was a difficult decision to issue common equity, we are
pleased with the results and the incremental balance sheet strength and
financial flexibility we have gained," O'Flynn said.
For PSE&G, August 1 marked the beginning of new electric base rates in
line with the conclusion of New Jersey's four-year industry restructuring and
the elimination of customer discounts that approached 14% in the final year.
PSE&G earned 4 cents per share more this year than in the third quarter of 2002.
"With the transition period now complete, the utility is earning
returns that support our investments designed to ensure customer reliability,"
O'Flynn said. "These investments have been made since the last base rate
increase a decade ago. However, the effect of the higher rates for two months
was largely offset by relatively higher O&M costs. This increase in O&M was not
unexpected. Last year, PSE&G engaged in an aggressive, but temporary,
cost-containment program to offset the financial impact of the mild winter in
2002. Most of the cost savings occurred in the last half of 2002. Absent the
impact from storm-related activities, O&M for the third quarter of this year was
in line with our expectations."
PSEG Energy Holdings' results for the third quarter generally
paralleled 2002 third-quarter results. O'Flynn said this was due in part to the
expansion of generation projects in California and to improved contributions by
projects in Texas, which offset lower income from leveraged lease investments at
PSEG Resources.
In looking ahead, O'Flynn said the recent common stock sale in October
resulted in PSEG's reducing 2004 earnings guidance by about 15 cents per share
to a range of $3.60 to $3.80.
"In general, PSEG remains fundamentally strong on several fronts,"
O'Flynn said. "We were on target to achieve our initial earnings expectations
for 2003 until we were unexpectedly impacted by Hurricane Isabel. Our balance
sheet was strengthened in early October through the issuance of the additional 8
million shares of common stock, the proceeds of which were used to pay down
short-term debt."
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, capacity 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.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
September 30, 2003
(Unaudited)
- -------------------------------------------------------------------------------------------------------------------------
Third Quarter YTD
2003 2002 2003 2002
- -------------------------------------------------------------------------------------------------------------------------
Earnings Results (in Millions)
Income from Ongoing Operations
PSE&G $ 68 $ 55 $ 189 $ 128
PSEG Power 110 121 396 325
PSEG Energy Holdings
PSEG Global* 28 20 76 72
PSEG Resources 15 19 50 30
PSEG Energy Holdings (1) (2) (3) (6)
------------------------------------------------------------
Total PSEG Energy Holdings* 42 37 123 96
------------------------------------------------------------
PSEG (7) (6) (24) (14)
- -------------------------------------------------------------------------------------------------------------------------
Income from Ongoing Operations* $ 213 $ 207 $ 684 $ 535
- -------------------------------------------------------------------------------------------------------------------------
Write-down of Argentine Investments, net of tax - - - (334)
Operating Losses from Argentina, net of tax - - - (40)
- -------------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations $ 213 $ 207 $ 684 $ 161
- -------------------------------------------------------------------------------------------------------------------------
Extraordinary Item - - (18) -
Loss from Discontinued Operations, including Loss on Disposal (3) (3) (20) (41)
Cumulative Effect of a Change in Accounting Principle - - 370 (120)
- -------------------------------------------------------------------------------------------------------------------------
PSEG Net Income $ 210 $ 204 $1,016 $ -
- -------------------------------------------------------------------------------------------------------------------------
Fully Diluted Average Shares Outstanding (in Millions) 228 207 226 207
- -------------------------------------------------------------------------------------------------------------------------
Per Share Results (Diluted)
Income from Ongoing Operations
PSE&G $ 0.30 $ 0.26 $ 0.84 $ 0.62
PSEG Power 0.48 0.59 1.75 1.57
PSEG Energy Holdings
PSEG Global* 0.12 0.09 0.33 0.35
PSEG Resources 0.07 0.09 0.22 0.14
PSEG Energy Holdings - (0.01) (0.01) (0.03)
------------------------------------------------------------
Total PSEG Energy Holdings* 0.19 0.17 0.54 0.46
------------------------------------------------------------
PSEG (0.04) (0.02) (0.11) (0.06)
- -------------------------------------------------------------------------------------------------------------------------
Income from Ongoing Operations* $ 0.93 $ 1.00 $ 3.02 $ 2.59
- -------------------------------------------------------------------------------------------------------------------------
Write-down of Argentine Investments, net of tax - - - (1.62)
Operating Losses from Argentina, net of tax - - - (0.19)
- -------------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations $ 0.93 $ 1.00 $ 3.02 $ 0.78
- -------------------------------------------------------------------------------------------------------------------------
Extraordinary Item - - (0.08) -
Loss from Discontinued Operations, including Loss on Disposal (0.01) (0.01) (0.09) (0.20)
Cumulative Effect of a Change in Accounting Principle - - 1.64 (0.58)
- -------------------------------------------------------------------------------------------------------------------------
PSEG Net Income $ 0.92 $ 0.99 $ 4.49 $ -
- -------------------------------------------------------------------------------------------------------------------------
* 2002 Amounts exclude write-down of and operating losses relating to
Argentine Investments totaling $374 million or $1.81 per share for the nine
month period ended September 30, 2002.
Note 1:
- -------
Income from Ongoing and Continuing Operations include preferred
stock dividends relating to PSE&G of $1 million and $3 million, Global of $4
million and $13 million and Resources of $2 million and $4 million for the
quarter and nine month periods ended September 30, 2003 and 2002, respectively.
Note 2:
- -------
Basic Earnings per Share for Income from Continuing Operations was
$0.94 and $3.03 for the quarter and nine month periods ended September 30, 2003,
respectively. Basic Earnings per Share for Net Income was $0.93 and $4.50 for
the quarter and nine month periods ended September 30, 2003, respectively.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
2003 vs. 2002
Three Months Ending
September 30, 2003
-------------------------------
- --------------------------------------------------------------------------------------------------------------------------
PSEG 2002 Net Income $ 0.99
- --------------------------------------------------------------------------------------------------------------------------
Loss from Discontinued Operations at Energy Holdings (ET and
Global's investment in Tanir Bavi) 0.01
- --------------------------------------------------------------------------------------------------------------------------
PSEG 3rd Quarter 2002 Income from Ongoing Operations: $ 1.00
- --------------------------------------------------------------------------------------------------------------------------
PSE&G B/(W)
- ----- ----
-------------------
3rd Quarter 2002 $ 0.26
-------------------
Improved Margins (new electric base rates, partially 0.12
offset by weather, (0.03))
Increased O&M costs (pension, storm impacts, other) (0.09)
Additional Shares Outstanding (2002 issuance, DRIP) (0.03)
Other (lower depreciation rates and financing costs) 0.04
-------------------
3rd Quarter 2003 $ 0.30 $ 0.04
-------------------
PSEG Power
- ----------
-------------------
3rd Quarter 2002 $ 0.59
-------------------
Margins:
Improved Margins from acquisition of Connecticut
Plants and performance of BGS,
BGSS and Trading portfolio 0.08
Storm-related replacement power costs at Nuclear (0.07)
-----------
Net Improved Margins 0.01
Increased O&M and Other costs (CT plants, pensions, other) (0.11)
Additional Shares Outstanding (2002 issuance, DRIP) (0.04)
Interest, Dividends and Realized gains from NDT Fund 0.03
-------------------
3rd Quarter 2003 $ $ 0.48 $(0.11)
-------------------
PSEG Energy Holdings
- --------------------
-------------------
3rd Quarter 2002 $ 0.17
-------------------
Global
------
Improved Earnings from Operations, primarily GWF and TIE 0.04
Additional Shares Outstanding (2002 issuance, DRIP) (0.01) 0.03
-----------
Resources - Lower Earnings from Investment Portfolio (0.02)
Energy Holdings (parent) 0.01
-------------------
3rd Quarter 2003 $ 0.19 $ 0.02
-------------------
Public Service Enterprise Group
-------------------
3rd Quarter 2002 $ (0.02)
-------------------
Increased financing costs (0.02)
-------------------
3rd Quarter 2003 $ (0.04) $(0.02)
-------------------
- --------------------------------------------------------------------------------------------------------------------------
PSEG 3rd Quarter 2003 Income from Ongoing Operations: $ 0.93
- --------------------------------------------------------------------------------------------------------------------------
Loss from Discontinued Operations at Energy Holdings (ET) (0.01)
- --------------------------------------------------------------------------------------------------------------------------
PSEG 2003 Net Income $ 0.92
- --------------------------------------------------------------------------------------------------------------------------
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
2003 vs. 2002
Nine Months Ending
September 30, 2003
--------------------------
- -------------------------------------------------------------------------------------------------------------------------
PSEG 2002 Net Income (Loss) $ 0.00
- -------------------------------------------------------------------------------------------------------------------------
Cumulative Effect of a Change in Accounting Principle at
Energy Holdings (Goodwill at ET and Global's investments) 0.58
Loss from Discontinued Operations at Energy Holdings (ET and
Global's investment in Tanir Bavi) 0.20
- -------------------------------------------------------------------------------------------------------------------------
Income from Continuing Operations $ 0.78
- -------------------------------------------------------------------------------------------------------------------------
Loss from Operations of Impaired Assets (Argentina) 1.81
- -------------------------------------------------------------------------------------------------------------------------
PSEG Year to Date 2002 Income from Ongoing Operations: $ 2.59
- -------------------------------------------------------------------------------------------------------------------------
PSE&G B/(W)
- ----- ----
-----------------
3rd Quarter YTD 2002 $ 0.62
-----------------
Improved Margins (Weather, $0.18, new electric base rates and other) 0.35
Increased O&M & Other costs (higher pension costs, bad debts,
storm related and other) (0.11)
Additional Shares Outstanding (2002 Issuance, DRIP) (0.07)
Lower Interest Costs 0.05
-----------------
3rd Quarter YTD 2003 $ 0.84 $ 0.22
-----------------
PSEG Power
- ----------
-----------------
3rd Quarter YTD 2002 $ 1.57
-----------------
Margins:
Improved Margins from acquisition of Connecticut
Plants, a full period of BGSS margins, and strong
results from the BGS and Trading portfolio 0.47
Storm-related replacement power costs at Nuclear (0.07)
-------
Net Improved Margins 0.40
Increased O&M and Other costs (Connecticut plants, higher pension
costs, timing of outages and other) (0.19)
Additional Shares Outstanding (2002 Issuance, DRIP) (0.13)
Interest, Dividends and Realized gains from NDT Fund 0.10
-----------------
3rd Quarter YTD 2003 $ 1.75 $ 0.18
-----------------
PSEG Energy Holdings
- --------------------
-----------------
3rd Quarter YTD 2002 $ 0.46
-----------------
Global
------
Improved earnings from operations, primarily GWF and TIE, partially
offset by lower results from RGE -
Additional Shares Outstanding (2002 Issuance, DRIP) (0.02) (0.02)
-------
Resources
Absence of prior year losses in the KKR Portfolio 0.11
Lower earnings from the Lease portfolio (0.02)
Additional Shares Outstanding (2002 Issuance, DRIP) (0.01) 0.08
-------
Holdings 0.02
--------
-----------------
3rd Quarter YTD 2003 $ 0.54 $ 0.08
-----------------
Public Service Enterprise Group
- -------------------------------
-----------------
3rd Quarter YTD 2002 $ (0.06)
-----------------
Increased financing costs (0.05)
-----------------
3rd Quarter YTD 2003 $ (0.11) $(0.05)
-----------------
- -------------------------------------------------------------------------------------------------------------------------
PSEG Year to Date 2003 Income from Ongoing Operations: $ 3.02
- -------------------------------------------------------------------------------------------------------------------------
Loss from Discontinued Operations at Energy Holdings (ET) (0.09)
Extraordinary Item at PSE&G (electric rate case) (0.08)
Cumulative Effect of a Change in Accounting Principle at Power (Asset Retirement Obligation) 1.64
- -------------------------------------------------------------------------------------------------------------------------
PSEG 2003 Net Income $ 4.49
- -------------------------------------------------------------------------------------------------------------------------
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CAPITALIZATION SCHEDULE
(Unaudited)
September 30, December 31,
2003 2002
------------------------------------
DEBT (Millions)
Commercial Paper and Loans $ 944 $ 625
Non-Recourse Note Payable 2 137
Long-Term Debt, including amounts due within one year 7,919 7,736
Securitization Debt, including amounts due within one year 2,258 2,351
Project Level, Non-Recourse Debt, including amounts due within one year 2,105 1,653
Debt Supporting Trust Preferred Securities (TOPRS, PEPS, MIPS and QUIPS) 1,361 1,361
------------- ------------
Total Debt 14,589 13,863
SUBSIDIARIES' PREFERRED SECURITIES 80 80
------------- ------------
COMMON STOCKHOLDERS' EQUITY
Common Stock 4,113 4,051
Treasury Stock (981) (981)
Retained Earnings 2,256 1,606
Accumulated Other Comprehensive Loss (543) (697)
------------- ------------
Total Common Stockholders' Equity 4,845 3,979
------------- ------------
Total Capitalization $ 19,514 $ 17,922
============= ============
The debt to capitalization ratio calculated under PSEG's credit agreements as of
September 30, 2003 was 59.3%. The ratio as calculated pursuant to these
covenants exclude non-recourse project debt ($2.1 billion), securitization debt
($2.3 billion) and Debt Supporting Trust Preferred Securities ($1.4 billion),
which is now included in Long-Term debt due to the adoption of Financial
Interpretation 46, and including capital lease obligations ($51 million) and
certain other obligations such as guarantees and letters of credit ($199
million). Further adjusting the debt to capitalization ratio for the effects of
the $356 million common stock issuance that closed on October 7, 2003, the
adjusted debt to capitalization ratio as of September 30, 2003 would have been
57.0%.
Public Service Electric and Gas Company
Electric and Gas Sales to Customers
September 2003
Electric Sales
Millions of Kilowatthours
-------------------------
Three Change vs Nine Change vs
Months Ended 2002 Months Ended 2002
------------ --------- ------------ ---------
Residential 4,111 -5.4% 9,947 -0.1%
Commercial 6,131 -1.1% 16,787 1.7%
Industrial 1,818 -1.7% 5,058 -2.0%
Total -2.7% 0.5%
Gas Sold and Transported
Millions of Therms
------------------
Three Change vs Nine Change vs
Months Ended 2002 Months Ended 2002
------------ ---- ------------ -----
Residential Sales 105 7.6% 1,080 26.6%
Commercial - Firm Sales 41 -0.8% 440 26.5%
Commercial - Interr. & Cogen 13 -12.9% 35 -18.4%
Industrial - Firm Sales 5 2.6% 41 16.6%
Industrial - Interr. & Cogen 135 -1.9% 390 -0.2%
Total 0.9% 19.0%
Gas Transported 298 19.2% 1,044 21.1%