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 (Date of earliest event reported) July 20, 1999
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Exact name of registrant as specified in its charter)
State of 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: 973-430-7000
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Exact name of registrant as specified in its charter)
State of 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: 973-430-7000
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Item 5. Other Events
- --------------------
The following information updates certain matters previously reported
to the Securities and Exchange Commission under Item 1 - Business and Item 3
- -Legal Proceedings of Part I and Item 7 - Management's Discussion and Analysis
of Financial Condition and Results of Operations ("MD&A") and Item 8 - Financial
Statements and Supplementary Data of Part II of the Annual Reports on Form 10-K
for the year ended December 31, 1998, on Form 10-Q for the quarter ended March
31, 1999, on Form 8-K filed March 18, 1999, and on Form 8-K filed April 26, 1999
of Public Service Electric and Gas Company ("PSE&G") and of its parent, Public
Service Enterprise Group Incorporated ("PSEG").
PSE&G Records Extraordinary Charge
PSE&G recorded a $790 million (after tax) or $3.60 per share of PSEG
common stock extraordinary charge to earnings in the second quarter as a
result of the discontinuation of Statement of Financial Accounting Standards No.
71, "Accounting for the Effects of Regulation" for the electric generation
portion of its business. For further discussion, see the press release of PSEG
dated July 20, 1999, which is attached hereto as Exhibit 99.
Shareholder Derivative Lawsuits Dismissed
As previously disclosed, by complaints filed in 1995 and 1996,
shareholder derivative actions on behalf of PSEG shareholders were
commenced by purported shareholders against certain directors and officers. The
four complaints generally seek recovery of damages for alleged losses
purportedly arising out of PSE&G's operation of the Salem and Hope Creek
generating stations, together with certain other relief, including removal of
certain executive officers of PSE&G and PSEG and certain changes in the
composition of PSEG's Board of Directors. By letter dated July 9, 1999, the
Court advised the parties in the actions of its determination to grant the
defendants' motion for summary judgement dismissing all four derivative actions.
A written Order has not yet been issued. Public Service Enterprise Group Inc. by
G. E. Stricklin, derivatively v. E. James Ferland, et. al., Superior Court of
New Jersey, Chancery Division, Essex County, Docket No. C-160-96. Dr. Steven
Fink and Dr. David Friedman, P.C. Profit Sharing Plan, derivatively, et. al. v.
Lawrence R. Codey, et. al., Superior Court of New Jersey, Chancery Division,
Essex County, Docket No. C-65-96. A. Harold Datz Pension and Profit Sharing Plan
derivatively, et. al., v. Lawrence R. Codey, et. al., Superior Court of New
Jersey, Chancery Division, Essex County, Docket No. C-68-96. Tillie Greenberg,
derivatively v. E. James Ferland, et. al., Superior Court of New Jersey,
Chancery Division, Essex County, Docket No. C-188-96.
Item 7. Financial Statements and Exhibits
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Exhibit Designation Nature of Exhibit
99 PSEG Press Release dated July 20, 1999
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SIGNATURE
---------
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: PATRICIA A. RADO
----------------------------------------------------
Patricia A. Rado
Vice President and Controller
(Principal Accounting Officer)
Date: July 21, 1999
EXHIBIT 99
July 20, 1999
PUBLIC SERVICE ENTERPRISE GROUP REPORTS
EARNINGS LOSS OF $2.77 PER SHARE FOR SECOND QUARTER, 1999
DUE TO ONE-TIME CHARGE RELATED TO ENERGY MASTER PLAN
Public Service Enterprise Group (PSEG) reported today (July 20, 1999)
an earnings loss of $609 million or $2.77 per share of common stock for the
second quarter of 1999, based on 220 million average shares outstanding. The
loss was due to a one-time extraordinary charge of $790 million or $3.60 per
share resulting from the anticipated outcome of New Jersey's Energy Master Plan
(EMP) proceedings.
The one-time loss reflects the impairment of Public Service Electric
and Gas Company's (PSE&G) electric generation assets and related fuel,
equipment, materials and supplies as well as the recording of certain
liabilities stemming from the deregulation of PSE&G's electric generation
business.
Excluding the charge, PSEG would have earned $181 million or $0.83 per
share in the second quarter, compared to second-quarter, 1998 earnings of $122
million or $0.53 per share, based on 232 million average shares outstanding.
The impairment stems from accounting changes required as a result of
the April 21, 1999 summary order issued by the New Jersey Board of Public
Utilities (BPU) in PSE&G's EMP case. The summary order resolved a number of
regulatory issues, such as rate unbundling and recovery of stranded generation
costs. It also directed PSE&G to reduce customer rates by up to 13.9% over a
four-year period, starting with a 5% reduction on August 1, 1999, and to provide
average annual shopping credits of up to 5.1 cents per kilowatt-hour for those
customers who choose alternative electric suppliers.
In its EMP filing with the BPU in 1997, PSE&G had sought recovery of up
to $3.9 billion of its generation-related stranded costs. In its summary order,
the BPU approved the recovery of up to $2.94 billion, authorizing PSE&G to
securitize $2.4 billion and allowing the utility the opportunity to recover the
other $540 million through various means, including a market transition charge
to customers. After receiving the summary order, PSE&G indicated that it would
record a one-time charge in the second quarter to reflect the difference in the
level of stranded cost recovery that it sought and the level that was approved
by the regulatory agency.
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The amount of the one-time charge was established after an evaluation
of the summary order and its implications on the utility's accounting under
Statement of Financial Accounting Standards (SFAS) 71, "Accounting for the
Effects of Certain Types of Regulation." PSE&G concluded that it no longer meets
the requirements of SFAS 71 for the electric generation portion of its business.
It calculated the one-time charge consistent with the requirements of SFAS 101,
"Regulated Enterprises--Accounting for the Discontinuation of Application of
FASB Statement No. 71." The portion of the one-time charge related to the
impairment of assets was then calculated in accordance with SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To
Be Disposed Of."
The decision to record the charge was also based on the assumption that
the BPU's final order, which is expected in the near future, would not be
materially different than the summary order.
"This one-time extraordinary charge is but a single element in a
complex effort by PSE&G, the state of New Jersey, and its legislators and
regulators to achieve competition in the electric utility industry in a manner
that strikes a fair and reasonable balance for customers and shareholders," said
E. James Ferland, chairman and chief executive officer of PSEG.
As a result of the impairment and accounting policy changes stemming
from the discontinuation of SFAS 71, PSE&G had lower generation-related
depreciation expenses in the second quarter, partially offset by higher O&M
expenses due to certain costs, which would have been capitalized under the prior
accounting policies but now are treated as current expenses. The net effect on
PSEG's earnings in the second quarter amounted to $26 million or $0.12 per
share.
In addition to the 12-cent benefit, PSEG's second-quarter, 1999
results, on a comparative basis with results for the same quarter of 1998, were
positively affected by several factors, including:
o An increase in electric revenues stemming from higher sales by
PSE&G due principally to the hot weather in June. This amounted
to about $0.08 per share.
o Across-the-board improvements by the three businesses within PSEG
Energy Holdings (Holdings) - PSEG Global, PSEG Resources and PSEG
Energy Technologies. This amounted to about $0.06 per share.
o A decrease in the number of shares outstanding resulting from
PSEG's common stock repurchase program initiated in September,
1998. This amounted to about $0.04 per share.
Second-quarter 1999 results for PSE&G were $(635) million or $(2.89)
per share of PSEG common stock, compared to earnings of $108 million or $0.47
per share in the second quarter of 1998. Second-quarter 1999 earnings for
Holdings were $26 million or $0.12 per share of PSEG common stock, compared to
$14 million or $0.06 per share in the second quarter of 1998.
<PAGE>
PSEG's results for the first six months of 1999 were $(421) million or
$(1.90) per share, based on 221 million average shares outstanding. Excluding
the one-time charge, PSEG would have earned $369 million or $1.67 per share,
compared to earnings for the first six months of 1998 of $313 million or $1.35
per share, based on 232 million average shares outstanding.
PSE&G's results for the first half of 1999 were $(466) million or
$(2.11) per share, compared to earnings of $263 million or $1.14 per share for
the first half of 1998. Holdings' six-month earnings were $45 million or $0.21
per share, compared to $50 million or $0.21 per share for the same period of
1998.
PSEG's consolidated results for the 12 months ended June 30, 1999 were
$(90) million or $(0.40) per share, based on 226 million average shares
outstanding. Excluding the one-time charge, PSEG would have earned $700 million
or $3.10 per share, compared to earnings for the 12 months ended June 30, 1998
of $642 million or $2.77 per share, based on 232 million average shares
outstanding.
PSE&G's results for the 12 months ended June 30, 1999 were $(136)
million or $(0.60) per share of PSEG common stock, compared to $559 million or
$2.41 per share for the prior 12-month period. Holdings' 12-month earnings were
$46 million or $0.20 per share, compared to $83 million or $0.36 per share.
PSE&G's electric sales in the second quarter increased by 3.0% when
compared to sales for the same period in 1998, with residential, commercial and
industrial sales up by 6.3%, 2.4% and 0.6%, respectively, due largely to the
warmer weather in June. Electric sales through June increased 3.0% when compared
to sales for the same period in 1998. Residential and commercial sales increased
5.4% and 3.6%, respectively, while industrial sales decreased 1.2%.
Total gas sold and transported for the second quarter was up 1.4%.
Residential and firm industrial sales increased 4.0% and 16.7%, respectively,
while firm commercial sales declined 11.7%. Total gas sold and transported
increased 6.9% for the first six months of 1999 when compared to the same period
in 1998. Residential, firm commercial and firm industrial sales increased 13.4%,
6.2% and 11.1%, respectively.
######
This news release includes forward-looking
statements. Although Public Service Enterprise
` Group Incorporated and its subsidiaries
believe that their expectations are based on
reasonable assumptions, they can give no
assurance that these expectations will be
achieved. For further information, please
refer to their reports filed with the
Securities and Exchange Commission. These
documents address company business, industry
issues and other factors that could cause
actual results to differ materially from
those indicated in this release.
