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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report January 21, 1994
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Exact name of registrant as specified in its charter)
New Jersey 1-9120 22-2625848
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
80 Park Plaza, P. O. Box 1171
Newark, New Jersey 07101-1171
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 201-430-7000
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Exact name of registrant as specified in its charter)
New Jersey 1-973 22-1212800
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
80 Park Plaza, P. O. Box 570
Newark, New Jersey 07101-0570
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 201-430-7000
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Item 5. Other Events.
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The following information updates certain matters previously reported to
the Securities and Exchange Commission under Item 1 - Business of Part I of
the Annual Reports on Form 10-K for 1992 and Part II of the Reports on Form
10-Q for the quarters ended March 31, 1993, June 30, 1993 and September 30,
1993 of Public Service Electric and Gas Company (PSE&G) and its parent,
Public Service Enterprise Group Incorporated (Enterprise).
Credit Ratings
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On January 17, 1994, Standard & Poor's Corporation (S&P) announced that
it had lowered its securities ratings of PSE&G's debt and preferred stock as
follows: mortgage bonds to A- from A; debentures and preferred stock to BBB+
from A-; and commercial paper to A-2 from A-1.
S&P also announced that it had lowered its securities ratings on the
medium term notes (MTNs) of Enterprise's indirect subsidiary PSEG Capital
Corporation (PSEG Capital) to BBB from BBB+ and on the commercial paper of
PSE&G's subsidiary, PSEG Fuel Corporation to A-2 from A-1. S&P said:
"The downgrades for PSE&G reflect prospects for a financial profile that
will be inadequate for former ratings in view of a business position
considered by S&P to be somewhat below average. Despite ample
generating reserves and limited external financing pressures during the
next several years, financial improvement will be constrained by
sluggish sales growth prospects due to a weak local economy and a high
common dividend payout ratio which will restrict capital structure
improvement."
S&P further stated:
"Other concerns include regionally high electric rates, in part due to a
heavy capital investment in the Hope Creek nuclear facility, and high
production costs. Recognizing increasing competition in retail power
markets, PSE&G has been aggressive in identifying customers that have
alternative power options and negotiating special tariffs, when
necessary, to retain load."
"Additionally, plans to refrain from seeking base rate relief during the
next few years should gradually improve PSE&G's relative competitive
position. Still, prospective revenue loss tied to discounted retail
power contracts could exacerbate pressures to control costs to maintain
adequate earning levels. PSE&G's financial parameters strengthened
during the past year due primarily to electric and gas base rate relief
earlier in the year, strong, largely weather-related, electric sales
growth, and continued cost control."
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"Over the intermediate term, financial measures of protection should
remain stable, with cash flow after dividends funding the bulk of
construction expenditures."
"The rating action for PSEG Capital, the initial funding conduit for the
nonutility operations, follows that of PSE&G in view of the former's
primary credit support provided by a support agreement from parent
Enterprise. The Parent's creditworthiness is, in turn, derived mainly
from its cash-generating entity, PSE&G."
"The ratings outlook for both PSE&G and PSEG Capital is stable,
reflecting PSE&G's manageable construction program, limited external
financing pressures, and absence of rate relief needs."
The respective ratings presently assigned by Moody's Investor Service
(Moody's) and Duff and Phelps (Duff) to PSE&G's securities are as follows:
Mortgage Bonds, A2 and A; Debenture Bonds, A3 and A-; Preferred Stock, A3 and
A- and commercial paper, P1 and Duff 1. The ratings presently assigned by
Moody's and Duff to PSEG Capital's MTNs are Baa2 and BBB+, respectively. The
respective ratings assigned by S&P, Moody's and Duff to the commercial paper
of Enterprise's indirect subsidiary, Enterprise Capital Funding Corporation,
which is supported by a commercial bank letter of credit, are A1+, P1 and
Duff 1+.
The current ratings of such securities reflect the respective views of
the rating agency furnishing the same and not necessarily those of management
of Enterprise or PSE&G. An explanation of the significance of such ratings
may be obtained from such agency.
1993 Unaudited Operating Results
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On January 18, 1994, Enterprise reported that its unaudited 1993
consolidated earnings were a record $600.9 million, or $2.50 per share of
common stock, based on 240.7 million average shares outstanding. Enterprise
consolidated earnings for 1992 were $504.1 million, or $2.17 per share, based
on 232.3 million average shares outstanding.
PSE&G also reported unaudited 1993 consolidated earnings of $576.7
million for the year, or $2.40 per share of Enterprise common stock, compared
with 1992 earnings of $444.0 million, or $1.91 per share.
Both Enterprise and PSE&G's improved results stemmed principally from
PSE&G's increased weather-related electric sales and its higher electric and
gas base rates that became effective January 1, 1993.
Consolidated unaudited 1993 earnings for Enterprise Diversified Holdings
Incorporated (EDHI), parent company of Enterprise's nonutility businesses,
were $24.2 million, or 10 cents per share of Enterprise common
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stock, compared with its 1992 earnings of $60.1 million, or 26 cents per
share.
EDHI's results were positively affected by comparatively higher income
from Energy Development Corporation, its wholly-owned oil and gas subsidiary,
largely due to higher natural gas prices. However, EDHI's results were also
impacted by the recording of an impairment in the value of certain properties
by its wholly-owned real estate subsidiary, Enterprise Group Development
Corporation (EGDC). As a result of a recent comprehensive management review
of each property's current value and the potential for increasing such value
through operating and other improvements, EGDC recorded an impairment related
to certain of its properties, including properties upon which EGDC's
management altered its intent from a long-term investment strategy to a
short-term hold for sale status, reflecting such properties on its books at
their net realizable value. This impairment reduced EDHI's unaudited
consolidated earnings by $50.5 million or 21 cents per share of Enterprise
common stock. Exclusive of the recorded impairment, EDHI's unaudited
consolidated net income would have been a record $74.6 million for the year.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Registrant)
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Registrant)
By ROBERT C. MURRAY
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Robert C. Murray
Vice President and Chief Financial Officer
Public Service Enterprise Group Incorporated
Senior Vice President - Finance and
Chief Financial Officer
Public Service Electric and Gas Company
Date: January 21, 1994
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