PSEG Announces 2008 Results; $1.93 Per Share From Continuing Operations; $2.92 Per Share of Operating Earnings
04 February 2009 - 12:45AM
PR Newswire (US)
Strong Operating Performance Underpins Results in face of Difficult
Markets NEWARK, N.J., Feb. 3 /PRNewswire-FirstCall/ -- Public
Service Enterprise Group (PSEG) reported Income from Continuing
Operations for 2008 of $983 million or $1.93 per share as compared
to $1,325 million or $2.60 per share for 2007. Operating Earnings
for 2008 were $1,487 million or $2.92 per share compared to 2007
Operating Earnings of $1,385 million or $2.72 per share. Including
Lease Transaction reserves and other asset impairment charges
($0.99 per share) and income from discontinued operations ($0.41
per share), PSEG reported Net Income for 2008 of $1,188 million or
$2.34 per share compared to Net Income for 2007 of $1,335 million
or $2.62 per share. PSEG also reported Income from Continuing
Operations for the fourth quarter of 2008 of $237 million, or $0.46
per share. This compares to fourth quarter 2007 results of $219
million, or $0.42 per share. Operating Earnings for the fourth
quarter of 2008 were $250 million, or $0.49 per share compared to
fourth quarter 2007 Operating Earnings of $272 million, or $0.53
per share. Net Income in the fourth quarter of 2008 amounted to
$234 million, or $0.46 per share, compared to Net Income for the
fourth quarter of 2007 of $225 million, or $0.43 per share. PSEG
believes that the non-GAAP financial measure of "Operating
Earnings" provides a consistent and comparable measure of
performance of its businesses to help shareholders understand
performance trends. Operating Earnings exclude the impact of
lease-related charges and the impact of the sale and/or impairment
of certain non-core domestic and international assets. The table
below provides a reconciliation of PSEG's Net Income to Operating
Earnings (a non-GAAP measure) for the full year and fourth quarter.
See Attachment 14 for a complete list of items excluded from Income
from Continuing Operations in the determination of Operating
Earnings. PSEG CONSOLIDATED EARNINGS (unaudited) Full-Year
Comparative Results 2008 and 2007 Income Diluted Earnings
($millions) Per Share 2008 2007 2008 2007 Net Income $1,188 $1,335
$2.34 $2.62 Less: Income from Discontinued Ops (205) (10) (0.41)
(0.02) Income From Continuing Ops $983 $1,325 $1.93 $2.60 Add:
Lease Reserves 490 -- 0.96 -- Asset Sales/Impairments 14 60 0.03
0.12 Operating Earnings (Non-GAAP) $1,487 $1,385 $2.92 $2.72 Avg.
Shares 508M 509M PSEG CONSOLIDATED EARNINGS (unaudited) Fourth
Quarter Comparative Results 2008 and 2007 Income Diluted Earnings
($millions) Per Share 2008 2007 2008 2007 Net Income $234 $225
$0.46 $0.43 Less: Income (Loss) from Discontinued Ops 3 (6) --
(0.01) Income From Continuing Ops $237 $219 $0.46 $0.42 Add: Asset
Sales/Impairments 13 53 0.03 0.11 Operating Earnings (Non-GAAP)
$250 $272 $0.49 $0.53 Avg. Shares 507M 510M "PSEG performed well in
a difficult environment" said Ralph Izzo, chairman, president and
chief executive officer of PSEG. "Clearly, the sale of
international assets improved our liquidity and strengthened our
balance sheet during a period of unprecedented financial market
turbulence. Just as importantly, the commitment of our employees to
operational excellence supported PSEG Power's record output from
its generation fleet, and helped PSE&G advance the state's
energy policy goals." Izzo indicated that PSEG was refining its
operating earnings guidance for 2009 to $3.00-$3.25 per share in
accordance with statements made in the Fall. "We indicated to the
financial community in our third quarter earnings release that we
were expecting earnings for 2009 to come in at the lower half of
our previously stated range of $3.05-$3.35 per share. This remains
our expectation. The outlook for the economy remains weak; but,
with the commitment of management and the support of PSEG's
employees to control costs, we expect to be able to manage through
these difficult times and meet the earnings objectives we
established." Izzo said "PSEG is committed to meeting the
expectations of its customers and its shareholders. In the
near-term, this commitment will be met through cost vigilance to
mitigate the effects of a slowing economy. In the long run, growth
will be aided by collaborative efforts with government, labor and
other key partners supporting the investment of capital to advance
a common goal of a sustainable strong economy." He mentioned that
"the capital spending program recently proposed by PSE&G is
designed to jump start the economy through the creation of jobs. It
is this type of effort that assures our stakeholders of PSEG's
dedication to providing safe, reliable, economic and green energy."
Operating Earnings by subsidiary for 2008, and our guidance for
2009 is as follows: 2009 Operating Earnings Guidance ($millions)
2008A 2009E PSEG Power $1,050 $1,210 - $1,285 PSE&G 360 320 -
345 PSEG Energy Holdings 101 0 - 20 PSEG Parent (24) (10) - 0
Operating Earnings $1,487 $1,520 - $1,650 Earnings Per Share $2.92
$3.00 - $3.25 Operating Earnings Review and Outlook by Operating
Subsidiary See Attachments 6 and 7 for detail regarding the
quarter-over-quarter and year-over-year earnings reconciliations
for each of PSEG's businesses. PSEG Power PSEG Power reported
operating earnings of $207 million ($0.40 per share) for the fourth
quarter of 2008 bringing full year operating earnings to $1,050
million ($2.06 per share), a record year for Power. On a
comparative basis, PSEG Power reported operating earnings of $205
million ($0.40 per share) and $949 million ($1.86 per share) for
the fourth quarter and full year 2007 respectively. PSEG Power's
margins in the fourth quarter of 2008 continued to benefit from
higher contracted pricing. Higher prices improved earnings
comparisons by $0.07 per share during the quarter. The results for
the quarter were also aided by the performance of the nuclear
fleet. The nuclear fleet (including PSEG Power's interest in the
Peach Bottom station) operated at a capacity factor of 91.3% in the
fourth quarter compared to a capacity factor of 83.6% in the 2007
fourth quarter. Performance in the quarter was aided by the timing
of year-over-year refueling outages. Power's fully-owned Hope Creek
nuclear facility operated at a full capacity factor of 100% during
the 2008 fourth quarter (and full year) compared to a 57.3%
capacity factor during the year ago quarter when Hope Creek
experienced a 33-day refueling outage. Power's earnings comparisons
in the fourth quarter of 2008 were aided by a decline in operating
and maintenance expense ($0.03 per share). The benefits of higher
prices and lower costs offset a decline in the value of Power's
nuclear decommissioning trust fund in the quarter ($0.10 per share)
due to the turbulent financial markets. William Levis, president
and chief operating officer of PSEG Power, said "2008 was a record
year for PSEG Power in terms of generation output and
profitability. An alignment of interest in safety, reliability and
performance yielded our record results, and should support
continued improvement in a very challenging environment." PSEG
Power's operating earnings forecast for 2009 reflects the expected
full year benefit of the extended power uprates at Hope Creek and
Salem (173 Mw) as well as higher contracted load pricing. The
competitive energy market has allowed Power to hedge most of its
base-load coal and nuclear output going into 2009. Capacity has
been hedged through PJM's RPM auction process. A forecasted
improvement in year-over-year hedged power pricing is expected to
offset the impact of higher fuel costs including a renegotiated
coal contract. The renegotiated agreement provides us with pricing
more reflective of market levels in return for greater supply
flexibility. PSE&G PSE&G reported operating earnings of $76
million ($0.15 per share) for the fourth quarter compared with
operating earnings of $77 million ($0.15 per share) for the fourth
quarter of 2007. The results for the fourth quarter brought
PSE&G's operating earnings for 2008 to $360 million ($0.71 per
share) as compared with 2007 results of $376 million ($0.74 per
share). Colder than normal weather conditions supported gas sales
in the fourth quarter ($0.01 per share) and more than offset the
impact of the economy on demand. This improvement also offset the
impact of a decline in electric sales. During the quarter, electric
sales for our two primary market segments (residential and
commercial) declined 3.8% resulting in a 1.3% decline in sales to
these segments for the year. Sales to industrial electric customers
declined 18.3% in the fourth quarter resulting in an 8.6% decline
for the year. This segment represents 12% of sales and contributes
a smaller percentage to electric margin. Earnings comparisons
benefited from PSE&G's ability to tailor its workload to match
changes in operating conditions resulting in a decline in operating
expenses ($0.04 per share). The decline offset an increase in taxes
and depreciation expense. Ralph LaRossa, president and chief
operating officer of PSE&G, said "our employees can point to
2008 as a year of significant accomplishment. Their achievements in
advancing regulatory and operational initiatives will support
customer reliability and advance the goals of the state's energy
master plan." PSE&G expects to experience a decline in
operating earnings in 2009. The forecast assumes a slight increase
in electric sales for the year. However, an increase in pension
expense as well as expenses associated with the start-up of the
company's new customer information system (iPower) are expected to
put pressure on PSE&G's full year return. PSE&G is planning
to file a combined electric and gas rate case by mid-year that will
take into consideration higher levels of operating costs, pension
expense and capital investment. PSEG Energy Holdings PSEG Energy
Holdings reported an operating loss for the fourth quarter of 2008
of $23 million ($0.04 per share) compared to operating earnings of
$10 million ($0.02 per share) for the fourth quarter of 2007. The
results for the fourth quarter brought Energy Holdings' full year
2008 operating earnings to $101 million ($0.20 per share) as
compared with 2007's operating earnings of $123 million ($0.24 per
share). Earnings for the fourth quarter of 2008 as compared to the
same period in the prior year were affected by mark-to-market
losses ($0.05 per share) and higher operating and maintenance
expenses associated with the Texas generating assets ($0.02 per
share). Earnings comparisons were also affected by the absence of
earnings from international assets sold late in 2007 ($0.03 per
share) as well as a decline in the return on the leveraged lease
portfolio ($0.02 per share). These items more than offset lower
financing costs. PSEG Energy Holdings expects to operate at close
to break-even in 2009. Results will be influenced by a full year
decline in income on the leveraged lease portfolio. The
subsidiary's 2000 Mw of gas-fired Texas generating assets are also
expected to be negatively affected by a forecast decline in natural
gas prices (versus very high prices in the first half of 2008) as
well as a decline in availability and an increase in operating and
maintenance expense. Pension Expense PSEG estimates pension expense
in 2009 will increase $0.15 per share over 2008's expense (this
estimated increase reflects the amount capitalized at PSE&G)
due to a decline in market value of our pension assets. This
year-over-year increase in pension expense also widened from our
third quarter update due to a decline in financing costs used to
establish the plan's discount rate. Common Dividend Date The dates
for the Board of Directors to declare the common dividend in 2009
have been adjusted to reflect a change in the meeting schedule. The
next regularly scheduled meeting for the Board of Directors is
February 17, 2009. The dividend declared on that date will be
payable on or before March 31, 2009 to shareholders of record as of
the March 10, 2009 record date. The following attachments can be
found on http://www.pseg.com/ Attachment 1 - Operating Earnings and
Per Share Results by Subsidiary Attachment 2 - Consolidating
Statements of Operations Attachment 3 - Consolidating Statements of
Operations Attachment 4 - Capitalization Schedule Attachment 5 -
Condensed Consolidated Statements of Cash Flows Attachment 6 -
Quarter-to-Quarter EPS Reconciliation Attachment 7 - Year to Date
EPS Reconciliation Attachment 8 - Generation Measures Attachment 9
- Retail Sales and Revenues Attachment 10 - Retail Sales and
Revenues Attachment 11 - Statistical Measures Attachment 12 -
Non-Trading Mark-to-Market Attachment 13 - NDT Impacts Attachment
14 - Reconciling Items Excluded from Continuing Operations to
Compute Operating 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, but are not limited to: -- Adverse
Changes in energy industry, policies and regulation, including
market rules that may adversely affect our operating results. --
Any inability of our energy transmission and distribution
businesses to obtain adequate and timely rate relief and/or
regulatory approvals from federal and/or state regulators. --
Changes in federal and/or state environmental regulations that
could increase our costs or limit operations of our generating
units. -- Changes in nuclear regulation and/or developments in the
nuclear power industry generally, that could limit operations of
our nuclear generating units. -- Actions or activities at one of
our nuclear units that might adversely affect our ability to
continue to operate that unit or other units at the same site. --
Any inability to balance our energy obligations, available supply
and trading risks. -- Any deterioration in our credit quality. --
Any inability to realize anticipated tax benefits or retain tax
credits. -- Increases in the cost of or interruption in the supply
of fuel and other commodities necessary to the operation of our
generating units. -- Delays or cost escalations in our construction
and development activities. -- Adverse capital market performance
of our decommissioning and defined benefit plan trust funds. --
Changes in technology and/or increased customer conservation. For
further information, please refer to our Annual Report on Form
10-K, including item 1A. Risk Factors, 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. DATASOURCE: Public Service Enterprise Group (PSEG)
CONTACT: Paul Lief Rosengren, +1-973-430-5911; or Jenn Kramer,
+1-973-430-6027, both of PSEG Web Site: http://www.pseg.com/
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