Results Benefit From Strong Operating Performance Company Provides 2010 Earnings Guidance of $3.00-$3.25 NEWARK, N.J., Feb. 18 /PRNewswire-FirstCall/ -- Public Service Enterprise Group (PSEG) reported Income from Continuing Operations and Net Income for 2009 of $1,592 million or $3.14 per share as compared to $983 million or $1.93 per share for 2008. Including Income from Discontinued Operations ($0.41 per share), PSEG reported Net Income for 2008 of $1,188 million or $2.34 per share. Operating Earnings for 2009 were $1,579 million or $3.12 per share compared to 2008 Operating Earnings of $1,542 million or $3.03 per share. PSEG also reported Income from Continuing Operations for the fourth quarter of 2009 of $349 million, or $0.69 per share. This compares to fourth quarter 2008 results of $237 million, or $0.46 per share. Operating Earnings for the fourth quarter of 2009 were $315 million, or $0.62 per share compared to fourth quarter 2008 Operating Earnings of $313 million, or $0.62 per share. PSEG believes that the non-GAAP financial measure of "Operating Earnings" provides a consistent and comparable measure of performance of its businesses to help shareholders understand performance trends. Operating Earnings exclude the impact of returns/(losses) associated with Nuclear Decommissioning Trust (NDT) investments and Mark-To-Market accounting as well as the impact of the sale and/or impairment of certain non-core assets and other one-time items not related to ongoing operations. The table below provides a reconciliation of PSEG's Net Income to Operating Earnings (a non-GAAP measure) for the full year and fourth quarter. See Attachment 12 for a complete list of items excluded from Income from Continuing Operations in the determination of Operating Earnings. PSEG CONSOLIDATED EARNINGS (unaudited) Full-Year Comparative Results 2009 and 2008 Income Diluted Earnings ($millions) Per Share 2009 2008 2009 2008 ---- ---- ---- ---- Net Income $1,592 $1,188 $3.14 $2.34 Less: Income from Discontinued Ops -- (205) -- (0.41) Income From Continuing Ops $1,592 $983 $3.14 $1.93 Reconciling Items: Lease Reserves (29) 490 (0.05) 0.96 Other Items 16 69 0.03 0.14 Operating Earnings (Non-GAAP) $1,579 $1,542 $3.12 $3.03 Avg. Shares 507M 508M PSEG CONSOLIDATED EARNINGS (unaudited) Fourth Quarter Comparative Results 2009 and 2008 Income Diluted Earnings ($millions) Per Share 2009 2008 2009 2008 ---- ---- ---- ---- Net Income $349 $234 $0.69 $0.46 Less: Loss from Discontinued Ops -- 3 -- -- Income From Continuing Ops $349 $237 $0.69 $0.46 Reconciling Items: Lease Reserves (29) (0.05) Other Items (5) 76 (0.02) 0.16 Operating Earnings (Non-GAAP) $315 $313 $0.62 $0.62 Avg. Shares 507M 507M "I am pleased by PSEG's operating results," said Ralph Izzo, chairman, president and chief executive officer of PSEG. "PSEG reported strong earnings in the face of very challenging market conditions. Clearly, our 2009 results demonstrate the importance of a balanced portfolio of assets. The dispatch flexibility of our PJM portfolio of generating assets was ably demonstrated over the past year. The credit, however, belongs to our employees. Their commitment to our shared goal of operational excellence, and their responsiveness to a call to control costs was a major contributor to our earnings." Operating Earnings by subsidiary for 2009 is as follows: 2009 and 2008 Operating Earnings ($ millions) 2009A 2008A ----- ----- PSEG Power $1,205 $1,170 PSE&G 321 360 PSEG Energy Holdings 43 36 PSEG Parent 10 (24) Operating Earnings $1,579 $1,542 Earnings Per Share $3.12 $3.03 2010 Earnings Guidance Izzo indicated that PSEG was providing operating earnings guidance for 2010 of $3.00-$3.25 per share. "Although economic conditions remain challenging, cost reduction programs implemented throughout the organization--including support from our union membership--should help us achieve our earnings objectives." Izzo added "2009 represented a year of significant achievement for PSEG. We hope to build on this record by meeting our customer needs for safe, reliable, clean and economic energy as we also meet the needs of our shareholders for reasonable returns. This will be accomplished largely by increasing our capital investment in our energy infrastructure." 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 $242 million ($0.47 per share) for the fourth quarter of 2009 bringing full year operating earnings to $1,205 million ($2.38 per share), a record year for Power. On a comparative basis, PSEG Power reported operating earnings of $246 million ($0.49 per share) and $1,170 million ($2.30 per share) for the fourth quarter and full year 2008 respectively. Power's operating results include the contribution from the 2,000 MW of gas-fired assets in Texas transferred from Holdings to Power. PSEG Power's results in the fourth quarter of 2009 were affected by weak power prices which more than offset an 8% increase in generation and lower fuel costs. A decline in margin was experienced in the Texas ($0.02 per share) and New York/New England ($0.02 per share) markets. Earnings from the PJM assets increased $0.02 per share benefiting from higher hedge related prices and a 2% increase in nuclear generation which together more than offset a decline in BGS related volumes. Earnings comparisons were also hurt by an increase in O&M, and other miscellaneous items ($0.03 per share). An anticipated reversal of $0.01 per share of trading related losses recognized earlier in the year coupled with gains on contracts entered into during the fourth quarter increased earnings ($0.03 per share). Power's Nuclear and Combined Cycle fleets experienced record levels of output. Output from the combined cycle fleet (including Texas) increased 29.8% in the quarter. The nuclear fleet operated at a 92% capacity factor in the quarter (versus 91.3%) bringing the capacity factor for the full year to 93.4%. Generation from Power's NJ coal units increased during the fourth quarter as an increase in the cost of gas relative to coal improved the economic dispatch of these units. PSE&G PSE&G reported operating earnings of $68 million ($0.13 per share) for the fourth quarter compared with operating earnings of $76 million ($0.15 per share) for the fourth quarter of 2008. The results for the fourth quarter brought PSE&G's operating earnings for 2009 to $321 million ($0.63 per share) as compared with 2008 results of $360 million ($0.71 per share). Gas margins declined in the fourth quarter by $0.01 per share. The results were affected by warmer than normal weather in this year's fourth quarter compared with colder than normal weather experienced in the prior year. The reduction in gas margin was offset by an increase in transmission rates and higher appliance service margin which together added $0.01 per share to earnings. Earnings comparisons were hurt by an increase in pension expense which more than offset a reduction in other operation and maintenance costs and a lower tax rate. These items combined to reduce PSE&G's fourth quarter earnings by $0.02 per share. Electric and gas demand in 2009 have been heavily influenced by the weather and weak economic conditions. A 3.2% decline in weather-normalized electric demand in the fourth quarter resulted in a 2.5% decline in electric demand for the full year. Demand from residential customers declined 0.8% for the quarter resulting in a 0.9% decline in weather normalized demand for the year. Gas demand (weather normalized) increased 1.1% in the fourth quarter resulting in a decline of 0.7% for the full year. The New Jersey Board of Public Utilities (BPU) approved construction of the $750 million Susquehanna to Roseland transmission line on February 11, 2010. The BPU's decision represents a critical milestone in the regulatory approval process. PSE&G updated its filing with the BPU for an increase in electric ($148 million) and gas ($74 million) revenues. This updated request reflects actual results for the 12 months ended December 31, 2009 as part of the 2009 test year. The update represents an increase in electric ($14 million) revenues and a reduction in gas ($23 million) revenues over the May 2009 rate filing. PSE&G's request is based on an 11.25% return on equity. PSE&G's 2009 operating earnings represented an earned return on equity of 8.3%. PSEG Energy Holdings PSEG Energy Holdings reported operating earnings for the fourth quarter of 2009 of $12 million ($0.03 per share) compared to operating earnings of $1 million for the fourth quarter of 2008. The results for the fourth quarter brought Energy Holdings' full year 2009 operating earnings to $43 million ($0.09 per share) as compared with 2008's operating earnings of $36 million ($0.07 per share). The results for the quarter and the full year reflect the transfer of the Texas generating assets to PSEG Power on October 1, 2009. Earnings comparisons were aided by the recognition of gains on the successful termination of two cross-border leveraged leases in the quarter ($0.02 per share). Results also benefited from a reduction in operation and maintenance expenses and lower interest expense ($0.02 per share) which more than offset a reduction in the value of the Company's remaining International asset ($0.01 per share) which reduced the investment to a modest level. The termination of two leases in the fourth quarter of 2009 brought the number of leases terminated in 2009 to 12; our activity reduced our cash tax potential liability by $670 million to around $660 million. The activity over the past year leaves us with an investment in five cross-border leveraged leases at year-end. During the fourth quarter, we reduced our reserve for our cross-border leveraged leases by $29 million based on a reassessment of risk following the outcome of a court case with similar facts to ours. The gain is reflected in earnings from continuing operations. Summary PSEG realized operating earnings of $3.12 per share in 2009, a 3% improvement over 2008 operating earnings of $3.03 per share. We have initiated operating earnings guidance for 2010 at $3.00 - $3.25 per share. 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 - Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings FORWARD-LOOKING STATEMENT Readers are cautioned that statements contained in this presentation 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, law, policies and regulation, including market structures and rules, and reliability standards. -- Any inability of our transmission and distribution businesses to obtain adequate and timely rate relief and regulatory approvals from federal and state regulators. -- Changes in federal and 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 located on a multi-unit site 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. -- Availability of capital and credit at commercially reasonable terms and our ability to meet cash needs. -- Any inability to realize anticipated tax benefits or retain tax credits. -- Changes in the cost of or interruption in the supply of fuel and other commodities necessary to the operation of our generating units. -- Delays or unforeseen cost escalations in our construction and development activities. -- Adverse performance of our decommissioning and defined benefit plan trust fund investments, and changes in discount rates and funding requirements. -- Changes in technology and 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 presentation. 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 internal estimates change, unless otherwise required by applicable securities laws. Want to know what's new at PSEG? Go to http://www.pseg.com/getnews and sign up to have our press releases and weekly environmental commentaries sent right to your inbox. DATASOURCE: Public Service Enterprise Group (PSEG) CONTACT: Jenn Kramer, +1-973-430-6027 Web Site: http://www.pseg.com/

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