$3.51 Per Share From Continuing Operations NEWARK, N.J., Feb. 2
/PRNewswire-FirstCall/ -- Public Service Enterprise Group (PSEG)
announced today that 2005 Income from Continuing Operations was 11%
higher than comparable 2004 results. Operating Earnings, which
exclude the impact of costs associated with the pending merger with
Exelon, were 15% higher than 2004. PSEG believes that the non-GAAP
financial measure of "Operating Earnings" provides a consistent and
comparable measure of performance of its businesses to help
shareholders understand performance trends. The tables below
provide a reconciliation of PSEG's Income from Continuing
Operations to Operating Earnings for the full year and fourth
quarter. PSEG CONSOLIDATED EARNINGS Full Year Comparative Results
2005 and 2004 Income Earnings Per Share ($M) 2005 2004 2005 2004
Net Income $ 661 $ 726 $ 2.71 $ 3.05 Loss from Discontinued
Operations 180 44 .73 .18 Cumulative Effect of a Change in
Accounting Principle 17 - .07 - Income from Continuing Operations $
858 $ 770 $ 3.51 $ 3.23 Merger Related Costs 32 4 .14 .01 Operating
Earnings (Non-GAAP) $ 890 $ 774 $ 3.65 $ 3.24 All amounts are after
federal and state income taxes Avg. Shares 244M 238M "The growth in
Operating Earnings for the year is a direct result of the improved
operation of our nuclear and fossil fleets," said E. James Ferland,
chairman and chief executive officer of PSEG. For the year, PSEG's
five-unit nuclear fleet had a capacity factor of 90%, an 8%
improvement over the 2004 capacity factor of 82%. "Exceptional
performance in the fourth quarter by the entire team at Salem Unit
1 allowed us to complete a refueling outage and replacement of the
reactor vessel head in a world-record 25 days. This was 17 days
faster than our initial estimates of a year ago," Ferland said.
Experience gained from the strong performance during an identical
outage in the spring on Salem Unit 2 was credited as a major factor
in achieving the world-record time for replacing the reactor head.
"Improvements in the overall work management processes at the New
Jersey nuclear site during the year were a direct result of the
Operating Services Agreement that PSEG entered into with Exelon in
late 2004," Ferland said. "By applying the best practices gained
from their large fleet of nuclear plants, Exelon has demonstrated
how a focused approach to running nuclear plants can produce
significant benefits in a short period of time however; we realize
we still have a way to go to achieve the performance levels of the
Exelon fleet." PSEG CONSOLIDATED EARNINGS 4th Quarter Comparative
Results 2005 and 2004 Income Earnings Per Share ($M) 2005 2004 2005
2004 Net Income $ 205 $ 87 $ .83 $ .36 (Income)/Loss from
Discontinued Operations (2) 19 (.01) .08 Cumulative Effect of a
Change in Accounting Principle 17 - .07 - Income from Continuing
Operations $ 220 $ 106 $ .89 $ .44 Merger Related Costs 6 4 .02 .01
Operating Earnings (Non-GAAP) $ 226 $ 110 $ .91 $ .45 All amounts
are after federal and state income taxes Avg. Shares 248M 239M
"Operating Earnings for the quarter, which doubled those of last
year, resulted from improved operations at PSEG Power and an
increased contribution from PSEG Energy Holdings," Ferland said.
The capacity factor for PSEG's five-unit nuclear fleet increased
from 64% in fourth quarter 2004 to 93% in fourth quarter 2005. This
increase, in spite of planned refueling outages at our Salem 1 and
Peach Bottom 3 units, was the result of above-plan nuclear output
at the New Jersey site and the relative improvement over 2004's
disappointing performance in the fourth quarter. At PSEG Energy
Holdings an 18 cent gain on the sale of the Seminole lease,
partially offset by 4 cents of costs to redeem the 2007 bond
maturity, boosted earnings for the quarter. On January 31, 2006
PSEG Energy Holdings announced that it entered into an agreement to
sell its two coal-fired assets in Poland to CEZ a.s. The expected
sale, which would be above book value, should generate net cash
proceeds in excess of $300 million with an anticipated closing
sometime in the second quarter. As a result of the pending sale,
the $17 million of income in 2005 and the $15 million loss in 2004
from these assets have been reclassified to Discontinued
Operations. During the fourth quarter, the Financial Accounting
Standards Board (FASB) issued a new standard that clarifies the
accounting for legal obligations to remove property conditioned on
future events. PSEG recorded a charge of $17 million, or 7 cents
per share as a cumulative effect of a change in accounting
principle with the adoption of FIN 47, "Accounting for Conditional
Asset Retirement Obligations." The $17 million charge primarily
relates to the impact of adopting this standard at PSEG Power. For
Public Service Electric & Gas (PSE&G), the adoption of FIN
47 only impacted the balance sheet as these costs are recoverable
from customers. Attachments to this release provide a
reconciliation of Income from Continuing Operations to Operating
Earnings and other summary exhibits for the quarter and
year-to-date for 2005 and 2004 for PSEG's principal subsidiaries -
PSE&G, PSEG Power and PSEG Energy Holdings. 2005 SUMMARY - PSEG
Power Thomas M. O'Flynn, PSEG's chief financial officer provided
additional details on the results for the quarter and full year.
For 2005, PSEG Power reported operating earnings of $418 million or
$1.71 per share, excluding $12 million in merger-related costs,
exceeding the top end of its guidance range of $335 million to $385
million for the year and also its 2004 earnings of $342 million or
$1.43 per share. Most of the improved results came in the fourth
quarter when increased nuclear output was available for sale into a
very strong energy market. "By improving availability of all three
New Jersey units, we produced about 2.2 more gigawatt hours of
low-cost nuclear power during the fourth quarter this year,
compared to last year, when the Hope Creek unit was shut down for
most of the quarter and both Salem units were off-line for several
days due to the oil spill in the Delaware River," O'Flynn said.
Replacement power costs for the fourth quarter of 2004 were
identified as 22 cents per share. Higher than planned output from
all three units added 4 cents to earnings for the quarter, while
the early return of Salem 1 from the refueling and reactor vessel
head replacement outage contributed 5 cents. "The 9 cent
improvement for the quarter from these two events was the main
driver behind PSEG and Power exceeding their full year guidance,"
said O'Flynn. Offsetting some of this benefit was 4 cents for the
quarter and 5 cents for the full year for the impacts of
mark-to-market accounting on a small portion of the non-trading,
energy related forward contracts that Power enters into as part of
its ongoing portfolio management. Interest and depreciation from
the addition of new plants in Lawrenceburg, Indiana and Albany, New
York reduced Power's 2005 results by 3 cents for the quarter and 7
cents for the full year. Finally, O&M costs for the year and
the quarter were lower, driven by the absence of costs associated
with the extended outage at Hope Creek during 2004. 2005 SUMMARY -
PSE&G Overall, PSE&G reported operating earnings of $347
million or $1.42 per share, excluding $3 million of merger costs,
an increase of $5 million from the prior year, but an overall
reduction of 2 cents per share due to additional shares outstanding
in 2005. Year-over-year weather, mostly electric, added about 6
cents per share to PSE&G's results. PSE&G also benefited
from reduced interest costs of about 4 cents per share compared to
2004. The favorable weather and interest impacts were somewhat
mitigated by increased O&M costs of 9 cents per share
attributable to higher labor and benefit costs. For the fourth
quarter, Operating Earnings increased $4 million to $68 million, or
27 cents per share, excluding merger costs of $3 million. "Weather
was normal for the quarter, but slightly colder than last year
which contributed modestly to earnings," O'Flynn said. Also
benefiting PSE&G for the quarter were lower interest costs.
2005 SUMMARY - PSEG Energy Holdings PSEG Energy Holdings reported
operating earnings of $196 million, or 81 cents per share for the
year. This is an increase of $61 million or 25 cents per share over
the comparable 2004 results. Improved operations at Texas
Independent Energy (TIE) contributed 13 cents per share. Increased
earnings from South America contributed another 16 cents to the
growth in earnings for the year. Operating earnings for 2005
includes the 18 cent gain from the sale of the Seminole lease in
December by PSEG Resources. In addition, there was a net 8 cents
per share decline year-over-year driven primarily by various sales
in 2004 and 2005 at PSEG Global. Gains recognized in 2004 on the
sale of securities in the KKR portfolio within PSEG Resources
reduced the year-over-year contribution by 4 cents per share.
Proceeds from the Seminole sale, along with cash on hand, were used
to redeem all of the outstanding PSEG Energy Holdings 7.75% bonds
due in 2007. Premium costs of 4 cents per share associated with the
redemption were recorded in the fourth quarter. For the year, $242
million was repatriated from PSEG Global at a cost of 4 cents per
share in incremental tax expense. Energy Holdings reported fourth
quarter operating earnings of $74 million, or 30 cents per share,
an increase of $34 million or 14 cents per share compared to the
fourth quarter of 2004. In addition to the gain on the Seminole
sale partially offset by debt extinguishment costs, continued
favorable results from TIE and the South American investments
contributed 8 cents, offset by reduced earnings of 4 cents per
share from the KKR portfolio held by PSEG Resources. 2006 OUTLOOK
"We see continued strong prospects for growth in earnings and cash
flow from our operating companies, and on January 17th we announced
another increase in our quarterly dividend," said Ferland. With an
indicative annual rate of $2.28 per share, this is the third
consecutive year PSEG has provided shareholders with a dividend
increase. Ferland reaffirmed 2006 operating earnings guidance in
the range of $3.45 to $3.75 per share. The 2006 guidance is based
on earnings ranges for each operating company as follows:
PSE&G, $315 million to $335 million, PSEG Power, $475 million
to $525 million, PSEG Energy Holdings, $155 million to $175
million. Reducing these results are estimated costs of $70 million
to $80 million at the parent. As part of the August 2004 electric
base rate proceeding, a $64 million annual depreciation credit was
established with an expiration date of December 31, 2005. The
agreement called for PSE&G to receive a corresponding increase
in electric base rates upon the expiration of the depreciation
credit, subject to review by the New Jersey Board of Public
Utilities (BPU). "We expected to have a reasonable outcome at the
beginning of the year on this issue, however at this time, we do
not expect it to be resolved before the end of the first quarter,"
said Ferland. The impact on PSE&G's 2006 guidance of not
receiving this increase is more than $5 million (pre-tax) per
month. In September 2005 PSE&G filed for a gas base rate
increase for new rates effective October 1, 2006. "We expect to
file full test year actual information at the end of February and
receive a decision in September," said Ferland. The decline in
expected operating earnings at PSE&G from 2005 to the mid-point
of the 2006 guidance range assumes normal weather, reasonable
regulatory relief and some increased O&M costs. Ferland said,
"The nuclear fleet is expected to operate at a 91% capacity factor
in 2006, a 1% improvement over the very strong 2005 results largely
driven by the Nuclear Operating Services Agreement with Exelon." In
the spring, Hope Creek will undergo its first refueling outage
under the Agreement. Ferland noted that the projected 15% to 25%
increase in earnings at Power over 2005 is driven by the rolling
nature of the forward positions, as the expected output is
recontracted at prevailing prices. The benefit is partially offset
by increased depreciation and interest expense from the new Linden
plant, which is expected to go into service in mid-2006. For Energy
Holdings, continued strength in the Texas market is expected to be
a major contributor to 2006 operating earnings. Last year was the
final Eagle Point payment however, its absence in 2006 will be
offset by the elimination of expenses associated with the cash
repatriation and debt premiums that were incurred in 2005. The
guidance for Energy Holdings does not include any anticipated gain
from the sale of the Polish assets. MERGER UPDATE In New Jersey,
hearings by the Office of Administrative Law (OAL) on the proposed
merger with Exelon have extended into February to enable the PJM
Market Monitor to complete an analysis of the adequacy of the
proposed sale of 4,000 megawatts of fossil generation and the
virtual divestiture of 2,600 megawatts of nuclear. Ferland said,
"In late December we provided the PJM Market Monitor with various
alternatives for asset sales that meet the requirements approved by
FERC last summer. We expect the necessary analysis and testimony
will take a few more weeks, but we feel confident that in the end,
it will provide the New Jersey Board of Public Utilities with the
level of detail it requires to make an affirmative decision." The
OAL approved additional hearing dates through February 27, if
necessary. No firm dates have been set for decisions by the OAL and
the New Jersey BPU based on the additional hearing dates. PSEG also
continues to work with the Department of Justice to provide the
information it needs to complete its review. PSEG expects to
complete the regulatory reviews and close the merger late in the
second quarter of 2006. Closing could occur earlier if a settlement
is reached and approved by the New Jersey BPU. On January 27, 2006
the Pennsylvania Public Utility Commission approved the merger.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995 This filing contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements include, but are not limited to,
statements about the benefits of the business combination
transaction involving Public Service Enterprise Group Incorporated
and Exelon Corporation, including future financial and operating
results, the combined company's plans, objectives, expectations and
intentions and other statements that are not historical or current
facts. Such statements are based upon the current beliefs and
expectations of Public Service Enterprise Group Incorporated's and
Exelon Corporation's management, are subject to significant risks
and uncertainties and may differ materially from actual future
experience involving any one or more of such matters. Actual
results may differ from those set forth in the forward-looking
statements. The following factors, among others, could cause actual
results to differ from those set forth in the forward-looking
statements: the timing of the contemplated merger and the impact of
any conditions imposed by regulators in connection with their
approval thereof; the risk that the businesses will not be
integrated successfully; failure to quickly realize cost-savings
from the transaction as a result of technical, logistical,
competitive and other factors; 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, equity
and credit 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. While we believe that our forecasts and
assumptions are reasonable, we caution that actual results may
differ materially. We intend the forward-looking statements to
speak only as of the time first made and we do not undertake to
update or revise them as more information becomes available.
Additional factors that could cause Public Service Enterprise Group
Incorporated's and Exelon Corporation's results to differ
materially from those described in the forward-looking statements
can be found in the 2004 Annual Reports on Form 10- K, and
Quarterly Reports on Form 10-Q for the quarterly period ended
September 30, 2005, and Current Reports on Form 8-K, of Public
Service Enterprise Group Incorporated and Exelon Corporation,
respectively, as such reports may have been amended, each filed
with the Securities and Exchange Commission and available at the
Securities and Exchange Commission's website, http://www.sec.gov/.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED (Unaudited) For the
Quarter For the Years Ended Ended December 31, December 31, 2005
2004 2005 2004 Earnings Results (in Millions) PSE&G $68 $64
$347 $342 PSEG Power 105 23 418 342 PSEG Energy Holdings PSEG
Global 22 8 109 79 PSEG Resources 52 34 92 65 PSEG Energy Holdings
- (2) (5) (9) Total PSEG Energy Holdings 74 40 196 135 PSEG (21)
(17) (71) (45) Operating Earnings $226 $110 $890 $774 Merger and
Merger Related Costs (6) (4) (32) (4) Income from Continuing
Operations $220 $106 $858 $770 Discontinued Operations 2 (19) (180)
(44) Cumulative Effect of a Change in Accounting Principle (17) -
(17) - PSEG Net Income $205 $87 $661 $726 Fully Diluted Average
Shares Outstanding (in Millions) 248 239 244 238 Per Share Results
(Diluted) PSE&G $0.27 $0.26 $1.42 $1.44 PSEG Power 0.42 0.10
1.71 1.43 PSEG Energy Holdings PSEG Global 0.09 0.03 0.45 0.33 PSEG
Resources 0.21 0.14 0.37 0.27 PSEG Energy Holdings 0.00 (0.01)
(0.01) (0.04) Total PSEG Energy Holdings 0.30 0.16 0.81 0.56 PSEG
(0.08) (0.07) (0.29) (0.19) Operating Earnings $0.91 $0.45 $3.65
$3.24 Merger and Merger Related Costs (0.02) (0.01) (0.14) (0.01)
Income from Continuing Operations $0.89 $0.44 $3.51 $3.23
Discontinued Operations 0.01 (0.08) (0.73) (0.18) Cumulative Effect
of a Change in Accounting Principle (0.07) - (0.07) - PSEG Net
Income $0.83 $0.36 $2.71 $3.05 Note 1: Net Income includes
preferred stock dividends / preference units distributions relating
to PSE&G of $1 million and $1 million for the quarters ended
December 31, 2005 and 2004, and PSEG Global of $0 million and $3
million for the quarters ended December 31, 2005 and 2004,
respectively. Net Income includes preferred stock dividends /
preference units distributions relating to PSE&G of $4 million
and $4 million, PSEG Global of $3 million and $13 million and PSEG
Resources of $0 and $3 million for the years ended December 31,
2005 and 2004. Note 2: Basic Earnings per Share from Net Income was
$0.84 and $0.37 per share for the quarters ended December 31, 2005
and 2004, respectively. Basic Earnings per Share from Net Income
was $2.75 and $3.06 per share for the years ended December 31, 2005
and 2004, respectively. PUBLIC SERVICE ENTERPRISE GROUP
INCORPORATED CONSOLIDATING STATEMENT OF OPERATIONS For the Quarter
Ended December 31, 2005 (Unaudited, $ Millions) PSEG PSEG ENERGY
PSEG OTHER PSE&G POWER HOLDINGS (Note 2) OPERATING REVENUES
$3,472 $(907) $2,169 $1,825 $385 OPERATING EXPENSES Energy Costs
2,128 (906) 1,498 1,345 191 Operation and Maintenance 635 (4) 312
264 63 Depreciation and Amortization 186 5 135 35 11 Taxes Other
Than Income Taxes 36 1 35 - - Total Operating Expenses 2,985 (904)
1,980 1,644 265 Income from Equity Method Investments 35 - - - 35
OPERATING INCOME 522 (3) 189 181 155 Other Income and Deductions 38
(1) 7 41 (9) Interest Expense (210) (34) (86) (45) (45) Preferred
Securities Dividends (1) - (1) - - INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES (Note 1) 349 (38) 109 177 101 Income
Tax Expense (129) 16 (44) (74) (27) INCOME FROM CONTINUING
OPERATIONS 220 (22) 65 103 74 Income (Loss) from Discontinued
Operations, including Loss on Disposal, net of tax 2 - - (1) 3
INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE
222 (22) 65 102 77 Cumulative Effect of a Change in Accounting
Principle, net of tax (17) (1) - (16) - NET INCOME (LOSS) $205
$(23) $65 $86 $77 INCOME FROM CONTINUING OPERATIONS $220 $(22) $65
$103 $74 Merger and Merger-Related Costs 6 1 3 2 - OPERATING
EARNINGS $226 $(21) $68 $105 $74 For the Quarter Ended December 31,
2004 (Unaudited, $ Millions) PSEG PSEG ENERGY PSEG OTHER PSE&G
POWER HOLDINGS (Note 2) OPERATING REVENUES $2,674 $(683) $1,736
$1,350 $271 OPERATING EXPENSES Energy Costs 1,537 (682) 1,081 1,010
128 Operation and Maintenance 624 (1) 286 282 57 Depreciation and
Amortization 178 4 130 30 14 Taxes Other Than Income Taxes 36 - 36
- - Total Operating Expenses 2,375 (679) 1,533 1,322 199 Income
from Equity Method Investments 34 - - - 34 OPERATING INCOME 333 (4)
203 28 106 Other Income and Deductions 14 (4) 2 16 - Interest
Expense (195) (27) (89) (28) (51) Preferred Securities Dividends
(1) 3 (1) (3) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
(Note 1) 151 (32) 115 16 52 Income Tax Expense (45) 11 (51) 7 (12)
INCOME FROM CONTINUING OPERATIONS 106 (21) 64 23 40 Loss from
Discontinued Operations, including Loss on Disposal, net of tax
(19) - - (7) (12) INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE 87 (21) 64 16 28 Cumulative Effect of a Change
in Accounting Principle, net of tax - - - - - NET INCOME (LOSS) $87
$(21) $64 $16 $28 INCOME FROM CONTINUING OPERATIONS $106 $(21) $64
$23 $40 Merger and Merger-Related Costs 4 4 - - - OPERATING
EARNINGS $110 $(17) $64 $23 $40 Note 1: Income from Continuing
Operations before Income Taxes includes preferred stock dividends /
preference units distributions relating to PSE&G of $1 million
and $1 million and PSEG Global of $0 million and $3 million for the
quarters ended December 31, 2005 and 2004, respectively Note 2:
Primarily includes financing activities at the parent and
intercompany eliminations. PUBLIC SERVICE ENTERPRISE GROUP
INCORPORATED CONSOLIDATING STATEMENT OF OPERATIONS For the Twelve
Months Ended December 31, 2005 (Unaudited, $ Millions) PSEG PSEG
ENERGY PSEG OTHER PSE&G POWER HOLDINGS (Note 2) OPERATING
REVENUES $12,430 $(2,659) $7,728 $6,059 $1,302 OPERATING EXPENSES
Energy Costs 7,273 (2,658) 4,970 4,286 675 Operation and
Maintenance 2,314 (1) 1,151 949 215 Depreciation and Amortization
748 18 553 131 46 Taxes Other Than Income Taxes 141 - 141 - - Total
Operating Expenses 10,476 (2,641) 6,815 5,366 936 Income from
Equity Method Investments 131 - - - 131 OPERATING INCOME 2,085 (18)
913 693 497 Other Income and Deductions 134 (5) 12 143 (16)
Interest Expense (816) (130) (342) (131) (213) Preferred Securities
Dividends (4) 3 (4) - (3) INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES (Note 1) 1,399 (150) 579 705 265 Income Tax Expense
(541) 62 (235) (299) (69) INCOME FROM CONTINUING OPERATIONS 858
(88) 344 406 196 Income (Loss) from Discontinued Operations,
including Loss on Disposal, net of tax (180) - - (198) 18 INCOME
BEFORE CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE 678
(88) 344 208 214 Cumulative Effect of a Change in Accounting
Principle, net of tax (17) (1) - (16) - NET INCOME (LOSS) $661
$(89) $344 $192 $214 INCOME FROM CONTINUING OPERATIONS $858 $(88)
$344 $406 $196 Merger and Merger-Related Costs 32 17 3 12 -
OPERATING EARNINGS $890 $(71) $347 $418 $196 For the Twelve Months
Ended December 31, 2004 (Unaudited, $ Millions) PSEG PSEG ENERGY
PSEG OTHER PSE&G POWER HOLDINGS (Note 2) OPERATING REVENUES
$10,800 $(2,176) $6,972 $5,168 $836 OPERATING EXPENSES Energy Costs
5,987 (2,173) 4,284 3,554 322 Operation and Maintenance 2,179 (29)
1,083 954 171 Depreciation and Amortization 693 18 523 108 44 Taxes
Other Than Income Taxes 139 139 Total Operating Expenses 8,998
(2,184) 6,029 4,616 537 Income from Equity Method Investments 126 -
- - 126 OPERATING INCOME 1,928 8 943 552 425 Other Income and
Deductions 111 (7) 11 112 (5) Interest Expense (798) (100) (362)
(113) (223) Preferred Securities Dividends (4) 16 (4) - (16) INCOME
FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (Note 1) 1,237 (83)
588 551 181 Income Tax Expense (467) 34 (246) (209) (46) INCOME
FROM CONTINUING OPERATIONS 770 (49) 342 342 135 Loss from
Discontinued Operations, including Gain on Disposal, net of tax
(44) - - (34) (10) INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE 726 (49) 342 308 125 Cumulative Effect of a
Change in Accounting Principle, net of tax - - - - - NET INCOME
(LOSS) $726 $(49) $342 $308 $125 INCOME FROM CONTINUING OPERATIONS
$770 $(49) $342 $342 $135 Merger and Merger-Related Costs 4 4 - - -
OPERATING EARNINGS $774 $(45) $342 $342 $135 Note 1: Income from
Continuing Operations before Income Taxes includes preferred stock
dividends / preference units distributions relating to PSE&G of
$4 million and $4 million, PSEG Global of $3 million and $13
million and PSEG Resources of $0 and $3 million for the twelve
months ended December 31, 2005 and 2004, respectively. Note 2:
Primarily includes financing activities at the parent and
intercompany eliminations. PUBLIC SERVICE ENTERPRISE GROUP
INCORPORATED CAPITALIZATION SCHEDULE (Unaudited, $ Millions)
December 31, December 31, 2005 2004 DEBT Commercial Paper and Loans
$100 $638 Long-Term Debt, including amounts due within one year
9,025 8,588 Securitization Debt, including amounts due within one
year 2,041 2,085 Project Level, Non-Recourse Debt, including
amounts due within one year 935 1,115 Debt Supporting Trust
Preferred Securities 814 1,201 Total Debt 12,915 13,627
SUBSIDIARY'S PREFERRED SECURITIES 80 80 COMMON STOCKHOLDERS' EQUITY
Common Stock 4,618 4,569 Treasury Stock (532) (978) Retained
Earnings 2,545 2,425 Accumulated Other Comprehensive Loss (609)
(272) Total Common Stockholders' Equity 6,022 5,744 Total
Capitalization $19,017 $19,451 PSEG's credit agreements contain
covenants that require PSEG's debt to capitalization ratio not to
exceed 70.0% at the end of any quarterly period. The debt to
capitalization ratio calculated under PSEG's credit agreements as
of December 31, 2005 was and 59.9%. The ratio as calculated
pursuant to these covenants exclude non-recourse project debt ($935
million), securitization debt ($2.041 billion) and Debt Supporting
Trust Preferred Securities ($814 million), which is now included in
Long-Term debt due to the adoption of Financial Interpretation 46,
and include capital lease obligations ($46 million) and certain
other obligations such as guarantees and letters of credit ($1.139
billion). This ratio is presented for the benefit of the investors
and the related securities to which the covenants apply and is not
intended as a financial performance or liquidity measure. PUBLIC
SERVICE ENTERPRISE GROUP INCORPORATED CONDENSED STATEMENTS OF CASH
FLOWS (Unaudited, $ Millions) For the Years Ended December 31, 2005
2004 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $661 $726
Adjustments to Reconcile Net Income to Net Cash Flows From
Operating Activities 249 849 Net Cash Provided By Operating
Activities (A) 910 1,575 CASH FLOWS USED IN INVESTING ACTIVITIES
(332) (714) CASH FLOWS USED IN FINANCING ACTIVITIES (555) (1,041)
Effect of Exchange Rate Change 2 1 Net Increase (Decrease) in Cash
and Cash Equivalents 25 (179) Cash and Cash Equivalents at
Beginning of Period 263 442 Cash and Cash Equivalents at End of
Period $288 $263 (A) Decrease in Operating Cash Flows is largely
driven by additional working capital requirements at Power
primarily due to approximately $300 million of additional margin
requirements and approximately $100 million of inventory costs both
due to higher market prices. PUBLIC SERVICE ENTERPRISE GROUP
INCORPORATED Quarter-to-Quarter EPS Reconciliation December 31,
2005 vs. December 31, 2004 (Unaudited) PSEG 4th Quarter 2004 Net
Income $0.36 Loss from Discontinued Operations 0.08 PSEG 4th
Quarter 2004 Income from Continuing Operations $0.44 Merger and
Merger Related Costs 0.01 PSEG 4th Quarter 2004 Operating Earnings
$0.45 PSE&G B/(W) 4th Quarter 2004 $0.26 Weather 0.01 O&M
(0.02) Deprec., Amort, Interest and Other Income 0.03 Shares
Outstanding (0.01) 4th Quarter 2005 $0.27 $0.01 PSEG Power 4th
Quarter 2004 $0.10 2004 Replacement Power 0.22 Improved 2005
Nuclear Ops 0.09 Mark to Market on Non-Trading Energy-Related
Contracts (0.04) Other Margin 0.04 Margin 0.31 Depreciation &
Amortization - BEC (0.03) O&M 0.07 Other (0.02) Shares
outstanding (0.01) 4th Quarter 2005 $0.42 $0.32 PSEG Energy
Holdings 4th Quarter 2004 $0.16 Global Operations - primarily TIE
and South America 0.08 Loss on extinguishment of debt &
interest rate swap (0.02) Resources Seminole lease gain, loss on
extinguishment of debt & interest rate swap 0.16 KKR Portfolio
(0.04) Other (0.05) Energy Holdings (Parent) 0.01 4th Quarter 2005
$0.30 $0.14 Public Service Enterprise Group 4th Quarter 2004
$(0.07) Interest Expense (0.01) 4th Quarter 2005 $(0.08) $(0.01)
PSEG 4th Quarter 2005 Operating Earnings $0.91 Merger and Merger
Related Costs (0.02) PSEG 4th Quarter 2005 Income from Continuing
Operations $0.89 Income (Loss) from Discontinued Operations 0.01
Cumulative Effect of a Change in Accounting Principle (0.07) PSEG
4th Quarter 2005 Net Income $0.83 PUBLIC SERVICE ENTERPRISE GROUP
INCORPORATED YTD-to-YTD EPS Reconciliation December 31, 2005 vs.
December 31, 2004 (Unaudited) PSEG Net Income for the Twelve Months
Ended December 31, 2004 $3.05 Loss from Discontinued Operations,
including Gain on Disposal 0.18 PSEG Income from Continuing
Operations for the Twelve Months Ended December 31, 2004 $3.23
Merger and Merger Related Costs 0.01 PSEG Operating Earnings for
the Twelve Months Ended December 31, 2004 $3.24 PSE&G B/(W)
Year to Date December 31, 2004 $1.44 Weather 0.06 Demands and
Volume (first quarter Gas) (0.01) O&M (0.09) Interest Savings
0.04 Other 0.02 Additional Shares Outstanding (0.04) Year to Date
December 31, 2005 $1.42 $(0.02) PSEG Power Year to Date December
31, 2004 $1.43 Margin 0.38 Mark-to-Market of Non-Trading
Energy-Related Contracts (0.05) Depreciation & Amortization -
Lawrenceburg and BEC (0.07) O&M 0.09 Other (0.03) Additional
Shares Outstanding (0.04) Year to Date December 31, 2005 $1.71
$0.28 PSEG Energy Holdings Year to Date December 31, 2004 $0.56
Global Operations - TIE 0.13 Mark-to-Market of Non-Trading
Energy-Related Contracts at TIE (0.01) Operations - Primarily South
America 0.16 Loss on extinguishment of debt & interest rate
swap (0.02) Taxes on Foreign Cash Repatriation (0.04) Other (2004
Asset Sales, Interest, FX) (0.08) Additional Shares Outstanding
(0.02) 0.12 Resources Operations Sale of Seminole Lease 0.18 Loss
on extinguishment of debt & interest rate swap (0.02) KKR Fund
(0.04) Other (0.02) Additional Shares Outstanding - 0.10 Energy
Holdings (Parent) 0.03 Year to Date December 31, 2005 $0.81 $0.25
Public Service Enterprise Group Year to Date December 31, 2004
$(0.19) Interest Expense (0.10) Year to Date December 31, 2005
$(0.29) $(0.10) PSEG Operating Earnings for the Twelve Months Ended
December 31, 2005 $3.65 Merger and Merger Related Costs (0.14) PSEG
Income from Continuing Operations for the Twelve Months Ended
December 31, 2005 $3.51 Income (Loss) from Discontinued Operations,
including Loss on Disposal (0.73) Cumulative Effect of a Change in
Accounting Principle (0.07) PSEG Net Income for the Twelve Months
Ended December 31, 2005 $2.71 PSEG Global L.L.C. Investment Results
(Unaudited, $ Millions) Total Capital at For the Twelve Risk (A)
Months Ended As of December 31, 2005 December 31, December 31,
Non-Recourse 2005 2004 EBIT (B) Interest (C) Region North America
$485 $427 $151 $22 South America 1,655 1,581 159 29 Europe (D) 209
209 (6) - India and Oman 62 94 12 5 Asia Pacific 6 6 5 - Global
G&A - Unallocated - - (36) - Total $2,417 $2,317 $285 $56 For
the Twelve Months Ended December 31, 2004 Non-Recourse EBIT (B)
Interest (C) Region North America $98 $13 South America 135 33
Europe 6 - India and Oman 18 15 Asia Pacific 54 - Global G&A -
Unallocated (31) - Total $280 $61 Reconciliation of EBIT to
Operating Earnings For the Twelve Months Ended December 31, 2005
2004 Total Global EBIT $285 $280 Interest Expense (138) (139)
Income Taxes (34) (47) Minority Interest (1) (2) Income from
Continuing Operations 112 92 Preference Unit Distributions (3) (13)
Operating Earnings $109 $79 (A) Total Capital at Risk includes
Global's gross investments and equity commitment guarantees less
non-recourse debt at the project level. (B) For investments
accounted for under the equity method of accounting, includes
Global's share of net earnings, including Interest Expense and
Income Tax Expense. (C) Non-Recourse Interest is Interest Expense
on debt that is non- recourse to Global. (D) Total Capital at Risk
includes amounts relating to Elcho and Skawina as the sale has not
been completed and therefore there is still Capital at Risk in
Poland. EBIT and Non-Recourse Interest exclude amounts relating to
Elcho and Skawina as these amounts are being reported in
Discontinued Operations. PUBLIC SERVICE ELECTRIC AND GAS COMPANY
Electric and Gas Sales and Revenues December 2005 Electric Sales
and Revenues Three Change Twelve Change Sales (millions kwh) Months
vs. Months vs. Ended 2004 Ended 2004 Residential 3,030 3.2% 14,039
7.0% Commercial 5,782 3.5% 24,155 3.5% Industrial 1,542 -2.0% 6,282
-3.7% Street Lighting 105 -2.0% 362 -0.5% Interdepartmental 3
-74.2% 15 -52.6% Total 10,462 -2.4% 44,853 3.4% Revenue (in
millions) Residential $348 13.9% $1,644 10.3% Commercial 439 18.6%
2,055 8.7% Industrial 68 -8.3% 332 -7.5% Street Lighting 17 8.6% 62
4.1% Other 113 53.1% 374 27.3% Total $985 17.4% $4,467 9.1% Gas
Sold and Transported Three Change Twelve Change Sales (millions
therms) Months vs. Months vs. Ended 2004 Ended 2004 Residential
Sales 451 -0.6% 1,453 -1.4% Commercial - Firm Sales 163 -4.6% 561
-5.2% Commercial - Interr. & Cogen 92 554.8% 138 186.5%
Industrial - Firm Sales 14 -3.7% 47 -9.3% Industrial - Interr.
& Cogen 131 44.7% 416 10.2% Other Operating Revenues 0 -102.7%
1 -23.1% Total 851 15.5% 2,616 2.8% Gas Transported 245 -14.7%
1,030 -0.4% Revenue (in millions) Residential Sales $398 16.3%
$1,168 8.5% Commercial - Firm Sales 252 54.3% 593 20.9% Commercial
- Interr. & Cogen 29 280.7% 66 96.2% Industrial - Firm Sales 20
46.4% 49 14.3% Industrial - Interr. & Cogen 158 123.5% 412
49.1% Other Operating Revenues 35 7.4% 132 10.9% Total $892 41.6%
$2,420 18.7% Gas Transported $287 7.8% $835 -0.2% Three Change
Twelve Change Weather Data Months vs. Months vs. Ended 2004 Ended
2004 Degree Days - Actual 1,685 0.2% 4,932 1.1% Degree Days -
Normal 1,685 4,839 THI Hours - Actual 499 n/m 19,088 28.5% THI
Hours - Normal 264 14,878 PUBLIC SERVICE ENTERPRISE GROUP
INCORPORATED STATISTICAL MEASURES (Unaudited) Quarters Ended Twelve
Months Ended December 31, December 31, 2005 2004 2005 2004 Weighted
Average Common Shares Outstanding (000's) Basic 245,048 237,755
240,297 236,984 Diluted 248,068 239,410 244,406 238,286 Stock Price
at End of Period $64.97 $51.77 Dividends Paid per Share of Common
Stock $0.56 $0.55 $2.24 $2.20 Dividend Payout Ratio 63.8% 68.1%
Dividend Yield 3.4% 4.2% Price/Earnings Ratio 18.5 x 16.0 x Rate of
Return on Average Common Equity 15.1% 13.1% Book Value per Common
Share $23.98 $24.12 Market Price as a Percent of Book Value 271%
215% Total Shareholder Return - Period Ending 1.8% 23.1% 30.2%
24.4% Quarters Ended Twelve Months Ended December 31, December 31,
Generation by Fuel Type 2005 2004 2005 2004 Nuclear - NJ 40% 26%
37% 33% Nuclear - PA 18% 23% 18% 21% Total Nuclear 58% 49% 55% 54%
Fossil - Coal - NJ 15% 15% 13% 12% Fossil - Coal - PA 12% 14% 12%
13% Fossil - Coal - CT 4% 6% 6% 6% Total Coal 31% 35% 31% 31%
Fossil - Oil & Natural Gas - NJ 5% 15% 9% 13% Fossil - Oil
& Natural Gas - NY 2% 0% 2% 1% Fossil - Oil & Natural Gas -
CT 4% 1% 2% 1% Fossil - Oil & Natural Gas - Midwest 0% 0% 1% 0%
Total Oil & Natural Gas 11% 16% 14% 15% Fossil - Pumped Storage
0% 0% 0% 0% 100% 100% 100% 100% DATASOURCE: Public Service
Enterprise Group CONTACT: Paul Rosengren, +1-973-430-5911, or
Denise Denk, +1-973-430-6336, both for PSEG Web site:
http://www.pseg.com/
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