PSEG Announces Second Quarter Earnings: 50 Cents Per Share Of
Common Stock From Continuing Operations Results Reflect Unplanned
Replacement Power, Congestion and Maintenance Costs At PSEG Power's
Nuclear and Fossil Generating Units NEWARK, N.J., July 30
/PRNewswire-FirstCall/ -- Public Service Enterprise Group (PSEG)
announced today (July 30) that earnings from continuing operations
for the second quarter of 2004 were $119 million or 50 cents per
share of common stock, based on 238 million average shares
outstanding. These results exclude a gain of $5 million or 2 cents
per share from discontinued operations at PSEG Global. Including
this item, PSEG's reported earnings for the quarter were $124
million or 52 cents per share. Comparatively, PSEG's earnings from
continuing operations for the second quarter of 2003 were $156
million or 69 cents per share of common stock, based on 227 million
average shares outstanding. These results exclude two
below-the-line items. The first is an extraordinary charge of $18
million or 8 cents per share related to the conclusion of Public
Service Electric and Gas Company's (PSE&G) last electric base
rate case. The second item is a loss of 5 million or 2 cents per
share related to discontinued operations at PSEG Energy
Technologies and PSEG Global. Including these items, PSEG's
reported earnings for the quarter were $133 million or 59 cents per
share. For the six months through June 30, 2004, PSEG produced
earnings from continuing operations of $390 million or $1.64 per
share, based on 238 million average shares outstanding. These
results exclude a gain of $5 million or 2 cents per share from
discontinued operations at PSEG Global. Including this item, PSEG's
reported earnings for the first half of the year were $395 million
or $1.66 per share. For the comparable six-month period in 2003,
earnings from continuing operations were $480 million or $2.12 per
share, based on 226 million average shares outstanding. These
results exclude a net benefit of $334 million or $1.48 per share
related to the adoption of a new accounting standard for fossil and
nuclear decommissioning, the effect of an extraordinary charge due
to the finalization of PSE&G's electric base rate case and
discontinued operations at PSEG Energy Technologies. Including this
net benefit, PSEG's reported earnings for the first half of 2003
were $814 million or $3.60 per share. Attachments to this release
provide a summary of quarterly and year-to- date results for 2004
and 2003 and consolidating financial statements for the same time
periods for PSEG and its principal subsidiaries - PSE&G, PSEG
Power and PSEG Energy Holdings. E. James Ferland, chairman of the
board, said the quarterly results reflected a sharply lower
contribution by PSEG Power, the wholesale energy business. Power's
quarterly results were down $57 million or 26 cents per share of
common stock, as compared to earnings in the second quarter of
2003. He said a major impact on quarterly results was replacement
power costs totaling about $39 million or 16 cents per share, about
a third of which was attributable to higher congestion in New
Jersey. Congestion is generally caused by restrictions in the
movement of electricity. This occurred as a result of a 30%
de-rating of PSE&G's electric transformer in Branchburg, NJ,
which caused higher energy prices in the vicinity. The de-rated
transformer is scheduled to be replaced and returned to full
service by mid-2005. The primary reasons for the replacement power
requirements were longer- than-planned or unexpected refurbishment
outages at the Salem 1 and Hope Creek nuclear stations and a delay
in the return to service of the 600-megawatt Mercer coal-fired
station from the installation of technology to reduce nitrogen
oxide emissions. Ferland said PSEG Power's quarterly results were
also affected by several other factors: the absence of $34 million
or 14 cents per share from market transition charges (MTC) revenues
collected over a four-year period ended July 31, 2003;
comparatively higher O&M and other costs of about $10 million
or 4 cents per share, and comparatively lower operating margins,
including trading, of about $10 million or 4 cents per share.
Partially offsetting these decreases at Power was comparatively
higher income of about $19 million or 8 cents per share from its
nuclear decommissioning trust fund. This increased income
represents realized gains that resulted from the change in
investment styles within the fund. Ferland said Public Service
Electric and Gas Company's (PSE&G) quarterly performance was
comparatively better by $41 million or 17 cents per share,
primarily as a result of a $159.5 million electric distribution
rate case that became effective in August 2003. This improvement at
PSE&G also helped offset the decline at Power as well as a
decrease of $18 million or 8 cents per share in quarterly earnings
at PSEG Energy Holdings due primarily to lower project income at
PSEG Global and lower lease income at PSEG Resources. "Although all
of our nuclear units were returned to service in early June, the
outages reduced PSEG's aggregate capacity factor over the first six
months of 2004 to about 85% compared to our plan of 93%. We now
expect our combined annual capacity factor to be at about 86% for
2004." "These refurbishment outages occurred largely in April and
May when we had some particularly hot weather days that drove up
electric demand volumes as well as energy prices to levels some 20%
higher than initially forecasted," Ferland said. "Higher energy
prices generally benefit PSEG Power when its generating facilities
are operating steadily, but we experienced the opposite result this
spring because of the overlapping nature of the nuclear and coal
outages that created the need to buy replacement power at these
higher prices." On the positive side, Ferland noted that the steam
turbine replacement accomplished during the Salem 1 outage would
enable the unit to boost its output by 63 megawatts. He also said
that the installation of state-of-the- art equipment to control
nitrogen oxide emissions at the Mercer station has enabled its two
units to remain in compliance with environmental regulations.
Ferland said Power's higher unanticipated expenses totaled $48
million or 19 cents per share in the second quarter. He said Power,
during the balance of the year, is likely to sustain additional
impacts of approximately $50 to $60 million or 20 to 25 cents per
share on its projected 2004 earnings for several reasons: A recent
decision to extend the Hope Creek refueling outage in the fall by
two weeks to perform preventive maintenance, the ongoing impact of
congestion around the Branchburg transformer, and
lower-than-planned trading revenues. "As a result of all these
factors, PSEG is revising its 2004 earnings guidance from a range
of $3.60 to $3.80 per share to a range of $3.15 to $3.35 per
share," he said. "The Hope Creek work in the spring and the work
planned for later this year strongly support our key objective of
strengthening the reliability of our nuclear operations," he said.
"This objective is critical to our long- term success and is well
worth a short-term earnings impact." In revising the 2004 guidance,
Ferland said PSEG Power now expects to earn in the range of $300 to
$350 million, down from an original estimate of $400 to $450
million. He said expectations for PSE&G have improved by $20
million, reflective of an improvement in the economy and higher
weather-related energy sales, to a range of $340 to $360 million.
PSEG Energy Holdings' target remains unchanged at $130 to $150
million. "All of our businesses remain fundamentally solid,"
Ferland said. "In particular, PSE&G, our delivery company, is
performing very well, with its contribution for 2004 expected to
represent almost 45% of PSEG's total earnings." In looking ahead,
Ferland said PSEG has initiated its annual business planning
process. "While we will not provide specific 2005 guidance until
this process is completed, early indications are that several 2004
factors will carry over to next year," he said. "They include
higher nuclear and fossil O&M expenses, more modest revenues
from our trading operations and the ongoing impacts of the
Branchburg de-rating. These factors, combined with an oversupply of
generation capacity and volatility in the energy markets, will
continue to affect earnings." 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. Attachment 1 PUBLIC SERVICE
ENTERPRISE GROUP (Unaudited) For the Quarter For the Six Months
Ended Ended June 30, June 30, As As Restated Restated (Note 3)
(Note 3) 2004 2003 2004 2003 Earnings Results (in Millions) Income
from Continuing Operations PSE&G $62 $21 $186 $121 PSEG Power
52 109 161 286 PSEG Energy Holdings PSEG Global 5 12 50 57 PSEG
Resources 13 22 13 34 PSEG Energy Holdings (2) -- (4) (2) Total
PSEG Energy Holdings 16 34 59 89 PSEG (11) (8) (16) (16) Income
from Continuing Operations $119 $156 $390 $480 Income (Loss) from
Discontinued Operations, including Gain (Loss) on Disposal 5 (5) 5
(18) Extraordinary Item -- (18) -- (18) Cumulative Effect of a
Change in Accounting Principle -- -- -- 370 PSEG Net Income $124
$133 $395 $814 Fully Diluted Average Shares Outstanding (in
Millions) 238 227 238 226 Per Share Results (Diluted) Income from
Continuing Operations PSE&G $0.26 $0.09 $0.78 $0.53 PSEG Power
0.22 0.48 0.68 1.27 PSEG Energy Holdings PSEG Global 0.02 0.05 0.21
0.26 PSEG Resources 0.06 0.10 0.05 0.15 PSEG Energy Holdings (0.01)
-- (0.01) (0.01) Total PSEG Energy Holdings 0.07 0.15 0.25 0.40
PSEG (0.05) (0.03) (0.07) (0.08) Income from Continuing Operations
$0.50 $0.69 $1.64 $2.12 Income (Loss) from Discontinued Operations,
including Gain (Loss) on Disposal 0.02 (0.02) 0.02 (0.08)
Extraordinary Item -- (0.08) -- (0.08) Cumulative Effect of a
Change in Accounting Principle -- -- -- 1.64 PSEG Net Income $0.52
$0.59 $1.66 $3.60 Note 1: Income from Continuing Operations include
preferred stock dividends / preference units distributions relating
to PSE&G of $1 million and $1 million, Global of $4 million and
$4 million and Resources of $1 million and $2 million for the
quarters ended June 30, 2004 and 2003, respectively. Income from
Continuing Operations include preferred stock dividends /
preference units distributions relating to PSE&G of $2 million
and $2 million, Global of $8 million and $9 million and Resources
of $2 million and $3 million for the six months ended June 30, 2004
and 2003, respectively. Note 2: Basic Earnings per Share from Net
Income was $0.52 and $0.59 per share for the quarters ended June
30, 2004 and 2003, respectively. Basic Earnings per Share from Net
Income was $1.67 and $3.61 per share for the six months ended June
30, 2004 and 2003, respectively. Note 3: 2003 results reflect the
restatement to correct foreign currency translation impacts of
Energy Holdings' equity method investment in RGE, a distribution
company in Brazil, and other minor items. The total impact of the
restatement for the quarter and six months ended June 30, 2003
resulted in an increase in PSEG's and Energy Holdings' net income
of approximately $0.02 and $0.03 per share, respectively.
Attachment 2 PUBLIC SERVICE ENTERPRISE GROUP CONSOLIDATING
STATEMENT OF OPERATIONS For the Quarter Ended June 30, 2004
(Unaudited, $ Millions) PSEG PSEG ENERGY PSEG OTHER PSE&G POWER
HOLDINGS (Note 3) OPERATING REVENUES $2,290 $(298) $1,418 $993 $177
OPERATING EXPENSES Energy Costs 1,254 (299) 824 681 48 Operation
and Maintenance 537 (8) 258 237 50 Depreciation and Amortization
170 4 126 28 12 Taxes Other Than Income Taxes 28 -- 28 -- -- Total
Operating Expenses 1,989 (303) 1,236 946 110 Income from Equity
Method Investments 33 -- -- -- 33 OPERATING INCOME 334 5 182 47 100
Other Income 83 1 3 77 2 Other Deductions (31) -- -- (22) (9)
Interest Expense (214) (28) (91) (28) (67) Preferred Securities
Dividends (1) 5 (1) -- (5) INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES (Note 1) 171 (17) 93 74 21 Income Taxes (52) 6 (31)
(22) (5) INCOME FROM CONTINUING OPERATIONS 119 (11) 62 52 16 Gain
on Disposal of Discontinued Operations, net of tax 5 -- -- -- 5 NET
INCOME $124 $(11) $62 $52 $21 For the Quarter Ended June 30, 2003
(Unaudited, $ Millions) PSEG PSEG ENERGY PSEG OTHER PSE&G POWER
HOLDINGS (Note 2) (Note 3) (Note 2) OPERATING REVENUES $2,401
$(347) $1,342 $1,235 $171 OPERATING EXPENSES Energy Costs 1,400
(347) 919 787 41 Operation and Maintenance 488 (5) 224 228 41
Depreciation and Amortization 98 1 63 24 10 Taxes Other Than Income
Taxes 28 -- 28 -- -- Total Operating Expenses 2,014 (351) 1,234
1,039 92 Income from Equity Method Investments 31 -- -- -- 31
OPERATING INCOME 418 4 108 196 110 Other Income 30 (1) 3 25 3 Other
Deductions (9) 4 -- (10) (3) Interest Expense (210) (32) (97) (28)
(53) Preferred Securities Dividends (1) 6 (1) -- (6) INCOME FROM
CONTINUING OPERATIONS BEFORE INCOME TAXES (Note 1) 228 (19) 13 183
51 Income Taxes (72) 11 8 (74) (17) INCOME FROM CONTINUING
OPERATIONS 156 (8) 21 109 34 Loss from Discontinued Operations, net
of tax (5) -- -- -- (5) INCOME BEFORE EXTRAORDINARY ITEM 151 (8) 21
109 29 Extraordinary Item, net of tax (18) -- (18) -- -- NET INCOME
$133 $(8) $3 $109 $29 Note 1: Income from Continuing Operations
before Income Taxes include preferred stock dividends / preference
units distributions relating to PSE&G of $1 million and $1
million, Global of $4 million and $4 million and Resources of $1
million and $2 million for the quarters ended June 30, 2004 and
2003, respectively. Note 2: 2003 results reflect the restatement to
correct foreign currency impacts of Energy Holdings' equity method
investment in RGE, a distribution company in Brazil, and other
minor items. Note 3: Primarily includes financing activities at the
parent and intercompany eliminations. Attachment 3 PUBLIC SERVICE
ENTERPRISE GROUP CONSOLIDATING STATEMENT OF OPERATIONS For the Six
Months Ended June 30, 2004 (Unaudited, $ Millions) PSEG PSEG ENERGY
PSEG OTHER PSE&G POWER HOLDINGS (Note 3) OPERATING REVENUES
$5,511 $(1,164) $3,600 $2,685 $390 OPERATING EXPENSES Energy Costs
3,077 (1,165) 2,243 1,905 94 Operation and Maintenance 1,083 (19)
536 467 99 Depreciation and Amortization 342 9 253 55 25 Taxes
Other Than Income Taxes 73 -- 73 -- -- Total Operating Expenses
4,575 (1,175) 3,105 2,427 218 Income from Equity Method Investments
61 -- -- -- 61 OPERATING INCOME 997 11 495 258 233 Other Income 118
(3) 6 112 3 Other Deductions (54) -- (1) (42) (11) Interest Expense
(437) (51) (187) (69) (130) Preferred Securities Dividends (2) 10
(2) -- (10) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(Note 1) 622 (33) 311 259 85 Income Taxes (232) 17 (125) (98) (26)
INCOME FROM CONTINUING OPERATIONS 390 (16) 186 161 59 Income from
Discontinued Operations, including Gain on Disposal, net of tax 5
-- -- -- 5 NET INCOME $395 $(16) $186 $161 $64 For the Six Months
Ended June 30, 2003 (Unaudited, $ Millions) PSEG PSEG ENERGY PSEG
OTHER PSE&G POWER HOLDINGS (Note 2) (Note 3) (Note 2) OPERATING
REVENUES $5,689 $(1,227) $3,490 $3,065 $361 OPERATING EXPENSES
Energy Costs 3,353 (1,227) 2,426 2,078 76 Operation and Maintenance
1,007 (9) 510 430 76 Depreciation and Amortization 197 3 129 47 18
Taxes Other Than Income Taxes 72 -- 72 -- -- Total Operating
Expenses 4,629 (1,233) 3,137 2,555 170 Income from Equity Method
Investments 51 -- -- -- 51 OPERATING INCOME 1,111 6 353 510 242
Other Income 89 -- 13 69 7 Other Deductions (52) -- (1) (40) (11)
Interest Expense (408) (57) (194) (56) (101) Preferred Securities
Dividends (2) 12 (2) -- (12) INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (Note 1) 738 (39) 169 483 125 Income Taxes
(258) 23 (48) (197) (36) INCOME FROM CONTINUING OPERATIONS 480 (16)
121 286 89 Loss from Discontinued Operations, including Loss on
Disposal, net of tax (18) -- -- -- (18) INCOME BEFORE EXTRAORDINARY
ITEM AND CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE 462
(16) 121 286 71 Extraordinary Item, net of tax (18) -- (18) -- --
Cumulative Effect of a Change in Accounting Principle, net of tax
370 -- -- 370 -- NET INCOME $814 $(16) $103 $656 $71 Note 1: Income
from Continuing Operations before Income Taxes include preferred
stock dividends / preference units distributions relating to
PSE&G of $2 million and $2 million, Global of $8 million and $9
million and Resources of $2 million and $3 million for the six
months ended June 30, 2004 and 2003, respectively. Note 2: 2003
results reflect the restatement to correct foreign currency impacts
of Energy Holdings' equity method investment in RGE, a distribution
company in Brazil, and other minor items. Note 3: Primarily
includes financing activities at the parent and intercompany
eliminations. Attachment 4 PUBLIC SERVICE ENTERPRISE GROUP
CONSOLIDATING BALANCE SHEETS As of June 30, 2004 (Unaudited, $
Millions) PSEG PSEG ENERGY PSEG OTHER PSE&G POWER HOLDINGS
(Note 3) CURRENT ASSETS Cash and Cash Equivalents $253 $3 $21 $17
$212 Accounts Receivable (Note 1) 1,490 (184) 768 795 111 Other
Current Assets 1,510 (110) 488 891 241 Total Current Assets 3,253
(291) 1,277 1,703 564 NET PROPERTY, PLANT AND EQUIPMENT 12,696 129
6,592 4,795 1,180 NONCURRENT ASSETS Regulatory Assets 4,625 --
4,625 -- -- Long-Term Investments 4,534 47 135 37 4,315 Nuclear
Decommissioning Trust Funds 983 -- -- 983 -- Other Noncurrent
Assets 1,316 (2) 350 369 599 Total Noncurrent Assets 11,458 45
5,110 1,389 4,914 TOTAL ASSETS $27,407 $(117) $12,979 $7,887 $6,658
CURRENT LIABILITIES Short -Term Debt $954 $361 $364 $191 $38
Accounts Payable (Note 1) 1,055 (287) 571 687 84 Other Current
Liabilities 1,079 141 321 476 141 Total Current Liabilities 3,088
215 1,256 1,354 263 NONCURRENT LIABILITIES Deferred Income Taxes
and ITC 4,108 (24) 2,636 -- 1,496 Regulatory Liabilities 523 -- 523
-- -- OPEB Costs 558 5 532 18 3 Other Noncurrent Liabilities (Note
2) 1,097 93 227 618 159 Total Noncurrent Liabilities 6,286 74 3,918
636 1,658 LONG-TERM DEBT - excluding amounts due within one year
12,523 1,454 5,080 3,316 2,673 SUBSIDIARIES' PREFERRED SECURITIES
80 (359) 80 -- 359 COMMON STOCKHOLDERS' EQUITY 5,430 (1,501) 2,645
2,581 1,705 TOTAL LIABILITIES AND CAPITALIZATION $27,407 $(117)
$12,979 $7,887 $6,658 Note 1: Includes amounts related to
transactions with affiliates. Note 2: Other noncurrent liabilities
for PSEG Energy Holdings include minority interests. Note 3:
Primarily includes PSEG (parent company), PSEG Services Corp. and
intercompany eliminations. Attachment 5 PUBLIC SERVICE ENTERPRISE
GROUP CONSOLIDATING BALANCE SHEETS As of December 31, 2003
(Unaudited, $ Millions) PSEG PSEG ENERGY PSEG OTHER PSE&G POWER
HOLDINGS (Note 3) CURRENT ASSETS Cash and Cash Equivalents $452
$181 $140 $27 $104 Accounts Receivable (Note 1) 1,549 (393) 804 843
295 Other Current Assets 1,662 (276) 377 909 652 Total Current
Assets 3,663 (488) 1,321 1,779 1,051 NET PROPERTY, PLANT AND
EQUIPMENT 12,422 128 6,535 4,581 1,178 NONCURRENT ASSETS Regulatory
Assets 4,801 -- 4,801 -- -- Long-Term Investments 4,808 51 131 43
4,583 Nuclear Decommissioning Trust Funds 985 -- -- 985 -- Other
Noncurrent Assets 1,382 17 374 343 648 Total Noncurrent Assets
11,976 68 5,306 1,371 5,231 TOTAL ASSETS $28,061 $(292) $13,162
$7,731 $7,460 CURRENT LIABILITIES Short -Term Debt $1,027 $299 $423
$-- $305 Accounts Payable (Note 1) 1,216 (358) 717 800 57 Other
Current Liabilities 1,100 55 377 265 403 Total Current Liabilities
3,343 (4) 1,517 1,065 765 NONCURRENT LIABILITIES Deferred Income
Taxes and ITC 4,196 (6) 2,715 -- 1,487 Regulatory Liabilities 536
-- 536 -- -- OPEB Costs 532 4 509 16 3 Other Noncurrent Liabilities
(Note 2) 900 92 216 429 163 Total Noncurrent Liabilities 6,164 90
3,976 445 1,653 LONG-TERM DEBT - excluding amounts due within one
year 12,945 1,462 5,129 3,616 2,738 SUBSIDIARIES' PREFERRED
SECURITIES 80 (509) 80 -- 509 COMMON STOCKHOLDERS' EQUITY 5,529
(1,331) 2,460 2,605 1,795 TOTAL LIABILITIES AND CAPITALIZATION
$28,061 $(292) $13,162 $7,731 $7,460 Note 1: Includes amounts
related to transactions with affiliates. Note 2: Other noncurrent
liabilities for PSEG Energy Holdings include minority interests.
Note 3: Primarily includes PSEG (parent company), PSEG Services
Corp. and intercompany eliminations. Attachment 6 PUBLIC SERVICE
ENTERPRISE GROUP CONSOLIDATING STATEMENTS OF CASH FLOWS For the Six
Months Ended June 30, 2004 (Unaudited, $ Millions) PSEG PSEG ENERGY
PSEG OTHER PSE&G POWER HOLDINGS (Note 1) CASH FLOWS FROM
OPERATING ACTIVITIES Net Income (Note 2) $395 $(16) $186 $161 $64
Adjustments to Reconcile Net Income to Net Cash Flows From
Operating Activities: Depreciation and Amortization 342 9 253 55 25
Amortization of Nuclear Fuel 41 -- -- 41 -- Non-Cash Items (14) 6
45 45 (110) Net Change in Certain Current Assets and Liabilities 61
(9) (254) 105 219 Other 3 -- (53) (34) 90 Net Cash Provided by
(Used In) Operating Activities 828 (10) 177 373 288 CASH FLOWS FROM
INVESTING ACTIVITIES Additions to Property, Plant, and Equipment
(578) (7) (187) (335) (49) Proceeds from the Sale of Investments
292 -- -- -- 292 Other 3 (211) 1 73 140 Net Cash (Used In) Provided
By Investing Activities (283) (218) (186) (262) 383 CASH FLOWS FROM
FINANCING ACTIVITIES Net Change in Short-Term Debt 474 61 222 191
-- Issuance of Project- Level/Securitization Long-Term Debt 671 --
175 488 8 Redemption of LTD and Project- Level/Securitization LTD
(1,643) -- (507) (800) (336) Return of Capital -- 150 -- -- (150)
Issuance of Common Stock/Contributed Capital 42 42 -- -- -- Cash
Dividends Paid on Common Stock (260) (185) -- -- (75) Other (27)
(18) -- -- (9) Net Cash (Used In) Provided by Financing Activities
(743) 50 (110) (121) (562) Effect of Exchange Rate Changes on Cash
(1) -- -- -- (1) Net Decrease in Cash and Cash Equivalents (199)
(178) (119) (10) 108 Cash and Cash Equivalents at Beginning of
Period 452 181 140 27 104 Cash and Cash Equivalents at End of
Period $253 $3 $21 $17 $212 For the Six Months Ended June 30, 2003
(Unaudited, $ Millions) PSEG PSEG ENERGY PSEG OTHER PSE&G POWER
HOLDINGS (Note 1) CASH FLOWS FROM OPERATING ACTIVITIES Net Income
(Note 2) $814 $(16) $103 $656 $71 Adjustments to Reconcile Net
Income to Net Cash Flows From Operating Activities: Depreciation
and Amortization 197 3 129 47 18 Amortization of Nuclear Fuel 46 --
-- 46 -- Non-Cash Items (126) 18 134 (287) 9 Net Change in Certain
Current Assets and Liabilities (226) (10) (261) 133 (88) Other
(123) (18) (149) (15) 59 Net Cash Provided by (Used In) Operating
Activities 582 (23) (44) 580 69 CASH FLOWS FROM INVESTING
ACTIVITIES Additions to Property, Plant, and Equipment (661) (4)
(215) (330) (112) Proceeds from the Sale of Investments 2 -- -- --
2 Other (48) 69 9 (16) (110) Net Cash (Used In) Provided By
Investing Activities (707) 65 (206) (346) (220) CASH FLOWS FROM
FINANCING ACTIVITIES Net Change in Short-Term Debt 421 333 278
(235) 45 Issuance of Project- Level/Securitization Long-Term Debt
840 -- 150 -- 690 Redemption of LTD and Project-
Level/Securitization LTD (934) -- (358) -- (576) Return of Capital
-- (170) 170 -- -- Issuance of Common Stock/Contributed Capital 42
42 -- -- -- Cash Dividends Paid on Common Stock (244) (244) -- --
-- Other (35) (3) (3) -- (29) Net Cash Provided by (Used In)
Financing Activities 90 (42) 237 (235) 130 Effect of Exchange Rate
Changes on Cash -- -- -- -- -- Net Decrease in Cash and Cash
Equivalents (35) -- (13) (1) (21) Cash and Cash Equivalents at
Beginning of Period 150 1 35 26 88 Cash and Cash Equivalents at End
of Period $115 $1 $22 $25 $67 Note 1: Primarily includes activities
at the parent and intercompany eliminations. Note 2: Net Income
includes preferred stock dividends / preference units distributions
relating to PSE&G of $2 million and $2 million, Global of $8
million and $9 million and Resources of $2 million and $3 million
for the six months ended June 30, 2004 and 2003, respectively.
Attachment 7 PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
Quarter-to-Quarter EPS Reconciliation June 30, 2004 vs. June 30,
2003 (Unaudited) PSEG 2nd Quarter 2003 Net Income (as restated)*
$0.59 Loss from Discontinued Operations (ET and Global's
investments in CPC) 0.02 Extraordinary Loss (relating to rate case)
0.08 PSEG 2nd Quarter 2003 Income from Continuing Operations (as
restated)*: $0.69 PSE&G B/(W) 2nd Quarter 2003 $0.09 Electric
Rate Case 0.16 Weather (0.03) Electric Demand and Volume margin
increase 0.02 Other 0.03 Additional Shares Outstanding (2003
Issuance, DRIP) (0.01) 2nd Quarter 2004 $0.26 $0.17 PSEG Power 2nd
Quarter 2003 $0.48 Energy Replacement Costs (includes congestion)
(0.16) Lower Operating Margins including Trading (0.04) MTC (ended
August 2003) (0.14) O&M and Depreciation (0.04) NDT Income 0.08
Other 0.05 Additional Shares Outstanding (2003 Issuance, DRIP)
(0.01) 2nd Quarter 2004 $0.22 $(0.26) PSEG Energy Holdings 2nd
Quarter 2003 (as restated)* $0.15 Global Operations (foreign
currency losses and lower results from TIE and Electroandes,
partially offset by stronger results from LDS and RGE) (0.03)
Resources Loss of Earnings due to Termination of EME-Collins Lease
(0.02) Operations (losses on KKR portfolio and higher interest
costs) (0.02) (0.04) Energy Holdings (Parent) (0.01) 2nd Quarter
2004 $0.07 $(0.08) Public Service Enterprise Group 2nd Quarter 2003
$(0.03) Other - Taxes (0.02) 2nd Quarter 2004 $(0.05) $(0.02) PSEG
2nd Quarter 2004 Income from Continuing Operations $0.50 Income
from Discontinued Operations (Global's gain on sale of CPC) 0.02
PSEG 2nd Quarter 2004 Net Income $0.52 * See Attachment 1, Note 3
for further details regarding the 2003 restatement. Attachment 8
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED YTD-to-YTD EPS
Reconciliation June 30, 2004 vs. June 30, 2003 (Unaudited) PSEG
Year to Date June 30, 2003 Net Income (as restated)* $3.60 Loss
from Discontinued Operations (ET and Global's investments in CPC)
0.08 Extraordinary Loss (relating to rate case) 0.08 Cumulative
Effect of a Change in Accounting Principle (adoption of Asset
Retirement Obligation at Power) (1.64) PSEG Year to Date June 30,
2003 Income from Continuing Operations (as restated)*: $2.12
PSE&G B/(W) Year to Date June 30, 2003 $0.53 Electric Rate Case
0.26 Weather (0.04) Electric Demand and Volume margin increase 0.04
Other 0.03 Additional Shares Outstanding (2003 Issuance, DRIP)
(0.04) Year to Date June 30, 2004 $0.78 $0.25 PSEG Power Year to
Date June 30, 2003 $1.27 MTC (ended August 2003) (0.26) Energy
Replacement Costs (includes congestion) (0.16) Lower Operating
Margins including Trading (0.10) O&M and Depreciation (0.12)
Interest Expense (0.04) NDT Income 0.08 Other 0.04 Additional
Shares Outstanding (2003 Issuance, DRIP) (0.03) Year to Date June
30, 2004 $0.68 $(0.59) PSEG Energy Holdings Year to Date June 30,
2003 $0.40 Global Operations (foreign currency losses and lower
results from TIE, GWF and Electroandes, partially offset by
stronger results from LDS, SAESA and RGE) (0.05) Resources
Termination of EME-Collins Lease (0.07) Operations (lower lease
income) (0.03) (0.10) Energy Holdings (Parent) -- Year to Date June
30, 2004 $0.25 $(0.15) Public Service Enterprise Group Year to Date
June 30, 2003 $(0.08) Interest Income 0.02 Other (0.01) Year to
Date June 30, 2004 $(0.07) $0.01 PSEG Year to Date June 30, 2004
Income from Continuing Operations $1.64 Income from Discontinued
Operations (Global's gain on sale of CPC) 0.02 PSEG Year to Date
June 30, 2004 Net Income $1.66 * See Attachment 1, Note 3 for
further details regarding the 2003 restatement. Attachment 9 PSEG
Global L.L.C. Investment Results For the Quarter and Six Months
Ended June 30, 2004 (Unaudited, $ Millions) For the Quarter For the
Six Months As of Ended June 30, Ended June 30, June 30, 2004 2004
2004 Non- Non- Recourse Recourse Capital Interest Interest Region
At Risk (A) EBIT (B) (C) EBIT (B) (C) North America $402 $9 $-- $64
$-- Latin America 1,573 35 4 70 10 Asia Pacific 191 3 -- 8 --
Europe 237 7 8 20 16 India and Oman 94 3 4 10 8 Global G&A -
Unallocated -- (8) -- (16) -- Total $2,497 $49 $16 $156 $34 For the
Quarter and Six Months Ended June 30, 2003 (Unaudited, $ Millions)
For the Quarter For the Six Months As of Ended June 30, Ended June
30, December 31, 2003 2003 2003 Non- Non- Recourse Recourse Capital
Interest Interest Region At Risk (A) EBIT (B) (C) EBIT (B) (C)
North America $424 $21 $-- $76 $-- Latin America 1,575 34 5 66 8
Asia Pacific 180 2 -- 5 -- Europe 309 -- -- 10 -- India and Oman 91
2 -- 2 -- Global G&A - Unallocated -- (7) -- (15) -- Total
$2,579 $52 $5 $144 $8 Reconciliation of EBIT to Income from
Continuing Operations For the Quarters Ended For the Six Months
Ended June 30, June 30, June 30, June 30, 2004 2003 2004 2003 Total
Global EBIT $49 $52 $156 $144 Interest Expense (38) (28) (77) (54)
Income Taxes (2) (6) (19) (17) Minority Interest -- (2) (2) (7)
Preference Units Distributions (4) (4) (8) (9) Income from
Continuing Operations $5 $12 $50 $57 (A) Total Capital at Risk
includes Global's gross investments, net of equity adjustments,
non-recourse debt at the project level and equity commitment
guarantees. (B) Includes Global's share of net earnings, including
interest expense and income taxes, for investments accounted for
under the equity method of accounting. (C) Non-recourse Interest is
interest expense paid on debt that is non- recourse to Global.
Attachment 10 PUBLIC SERVICE ELECTRIC & GAS Sales and Revenues
to Customers June 2004 (Unaudited, $ Millions) Electric Sales Three
Change Six Change Twelve Change Sales (millions kwh) Months vs.
Months vs. Months vs. Ended 2003 Ended 2003 Ended 2003 Residential
3,049 11.0% 6,194 6.1% 13,158 0.5% Commercial 5,719 8.3% 11,381
6.8% 23,005 4.1% Industrial 1,650 -1.7% 3,205 -1.1% 6,586 -1.9%
Street Lighting 73 -6.2% 176 -2.0% 362 -1.6% Interdepartmental 5
55.5% 19 170.4% 24 80.5% Total 10,496 7.3% 20,975 5.3% 43,135 2.0%
Revenue (in millions) Residential $348 32.3% $704 27.7% $1,493
17.2% Commercial 479 12.4% 886 4.9% 1,873 4.5% Industrial 89 -22.5%
160 -27.3% 352 -24.2% Street Lighting 14 13.6% 30 15.3% 60 14.2%
Other 74 55.1% 142 48.5% 250 49.1% Total $1,004 16.3% $1,922 10.6%
$4,028 7.4% Gas Sold and Transported Three Change Six Change Twelve
Change Sales (millions therms) Months vs. Months vs. Months vs.
Ended 2003 Ended 2003 Ended 2003 Residential Sales 185 -20.9% 916
-6.0% 1,481 -5.7% Commercial - Firm Sales 78 -19.2% 376 -5.9% 588
-7.0% Commercial - Interr. & Cogen 11 -9.3% 23 7.8% 48 -5.2%
Industrial - Firm Sales 8 -11.4% 35 -4.9% 55 -8.4% Industrial -
Interr. & Cogen 97 -28.2% 181 -29.0% 436 -18.7% Other 3 170.8%
5 126.0% 6 77.8% Total 382 -21.8% 1,536 -9.1% 2,614 -8.4% Gas
Transported 235 -21.1% 505 -32.3% 1,101 -17.1% Revenue (in
millions) Residential Sales $133 -15.8% $660 5.9% $1,085 13.3%
Commercial - Firm Sales 61 -12.9% 297 -7.5% 447 -1.7% Commercial -
Interr. & Cogen 6 -18.2% 16 -0.2% 32 5.7% Industrial - Firm
Sales 6 -3.5% 28 -7.1% 42 -2.6% Industrial - Interr. & Cogen 72
-16.9% 130 -26.9% 279 -9.2% Other Operating Revenues 30 4.8% 57
3.2% 116 3.6% Total $308 -13.7% $1,188 -2.9% $2,001 5.0% Gas
Transported $106 -12.7% $490 -7.3% $822 -5.0% Three Change Six
Change Twelve Change Weather Data Months vs. Months vs. Months vs.
Ended 2003 Ended 2003 Ended 2003 Degree Days - Actual 408 -40.1%
3,184 -9.1% 4,839 -9.5% Degree Days - Normal 509 3,143 4,867 THI
Hours - Actual 4,390 70.8% 4,393 70.0% 16,624 0.8% THI Hours -
Normal 3,542 3,570 14,878 Attachment 11 PUBLIC SERVICE ENTERPRISE
GROUP STATISTICAL MEASURES Quarters Ending Year to Date June 30
June 30 June 30 June 30 2004 2003 2004 2003 Weighted Average Common
Shares Outstanding (000's) Basic 236,705 225,909 236,449 225,627
Diluted 238,001 226,582 238,321 226,108 Stock Price at End of
Period $40.03 $42.25 Dividends Paid per Share of Common Stock $0.55
$0.54 $1.10 $1.08 Dividend Payout Ratio* 67.9% 50.7% Dividend Yield
5.5% 5.1% Price/Earnings Ratio* 12.4 9.9 Rate of Return on Average
Common Equity* 15.2% 21.3% Ratio of Earnings to Fixed Charges 1.55
1.82 2.10 2.40 Book Value per Common Share $22.89 $20.79 Market
Price as a Percent of Book Value 175% 203% Total Shareholder Return
- QTR Ending -13.7% 16.6% Total Shareholder Return - YTD -6.3%
35.4% Total Shareholder Return - 12 Months Ending 0.0% 3.9% Six
Months Ending Generation by Fuel Type Quarters Ending June 30, June
30, 2004 2003 2004 2003 Nuclear - NJ 31% 40% 34% 39% Nuclear - PA
23% 22% 21% 21% Total Nuclear 54% 62% 55% 60% Fossil - Coal - NJ
10% 7% 10% 11% Fossil - Coal - PA 13% 13% 13% 12% Fossil - Coal -
CT 6% 7% 6% 6% Total Coal 29% 27% 29% 29% Fossil - Oil &
Natural Gas - NJ 15% 9% 12% 8% Fossil - Oil & Natural Gas - NY
0% 1% 1% 0% Fossil - Oil & Natural Gas - CT 1% 0% 2% 2% Total
Oil & Natural Gas 16% 10% 15% 10% Fossil - Pumped Storage 1% 1%
1% 1% 100% 100% 100% 100% *Calculation based on earnings from
continuing operations for 12-month period ending DATASOURCE: Public
Service Enterprise Group Incorporated CONTACT: Leslie A. Cifelli of
PSEG, +1-973-430-3809, or Web site: http://www.pseg.com/
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