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--'t 7 P.l/f5() I De> THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE INFORMATION | ~/~/q7 - - | ||
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-NOTICE - | THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE INFORMATION & | ||
success Letter to Shareholders 2 Investing for Growth 14 Directors and Officers 23 Ata Glance 4 Operational Highlights 18 Stockholder Information 24 Getting the Rules Right 6 Consolidated Financial Statistics 19 www.pseg.com 25 Operational Excellence 10 Condensed Consolidated Financials 20 92 93 94 95 96 (dollars in milli.ons) | RECORDS MANAGEMENT BRANCH. | ||
Enterprise Net Income Financial Highlights Dollars in thousands where applicable 1996 Total Operating Revenues $ 6,041,249 Total Operating Expenses $ 4,984,290 Net Income $ 611,596 Common Stock Shares Outstanding-Year-end (Thousands) 233,470 Shares Outstanding-Average (Thousands) 242,401 Earnings per Average Share $ 2.52 Dividends Paid per Share $ 2.16 Book Value per Share -Year-end $22.33 Market Price per Share -Year-end $27.25 Ratio of Earnings to Fixed Charges -ENTERPRISE( A) 2.68 Ratio of Earnings to Fixed Charges -PSE&a(A) 2.62 Gross Additions to Utility Plant $ 602,783 Gross Utility Plant $17,327,635 (A) Includes Preferred Securities Dividend Requirements. | THEY HAVE BEEN CHARGED TO YOU FOR A LIMITED TIME PERIOD AND MUST BE RETURNED TO THE RECORDS & ARCHIVES SERVICES SECTION, TS C3. PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAIL. REMOVAL OF ANY PAGE(S) FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL. | ||
- NOTICE - | |||
success Letter to Shareholders 2 Investing for Growth 14 Directors and Officers 23 Ata Glance 4 Operational Highlights 18 Stockholder Information 24 Getting the Rules Right 6 Consolidated Financial Statistics 19 www.pseg.com 25 Operational Excellence 10 Condensed Consolidated Financials 20 | |||
1 | |||
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~::£ >.D ::£ ::£ ::£ NN N N N N 92 93 94 95 96 92 93 94 95 96 (dollars in milli.ons) (dollars) | |||
Enterprise Net Income Enterprise Annual Earnings and DivUlend Payout per Share Earnings Annual per Share Dividend Payout Financial Highlights Dollars in thousands where applicable 1996 1995 % Change Total Operating Revenues $ 6,041,249 $ 5,893,662 3 Total Operating Expenses $ 4,984,290 $ 4,798,472 4 Net Income $ 611,596 $ 662,323 (8) | |||
Common Stock Shares Outstanding- Year-end (Thousands) 233,470 244,698 (5) | |||
Shares Outstanding-Average (Thousands) 242,401 244,698 (1) | |||
Earnings per Average Share $ 2.52 $ 2.71 (7) | |||
Dividends Paid per Share $ 2.16 $ 2.16 Book Value per Share - Year-end $22.33 $22.22 Market Price per Share - Year-end $27.25 $30.63 (11) | |||
Ratio of Earnings to Fixed Charges - ENTERPRISE(A) 2.68 2.78 Ratio of Earnings to Fixed Charges - PSE&a(A) 2.62 2.77 Gross Additions to Utility Plant $ 602,783 $ 686,150 (12) | |||
Gross Utility Plant $17,327,635 $16,925,280 2 (A) Includes Preferred Securities Dividend Requirements. | |||
The detailed consolidated financial statements and related discussi.on appear in Appendix A of the Proxy Statement. | |||
1 | |||
==Dear Shareholder,== | ==Dear Shareholder,== | ||
n 1996, we produced The 1996 results also reflect Freedom of Choice I solid financial results, a one-time charge of$59 million, For the past five years, I've In our efforts to get the rules right, we continue to provide despite the ongoing or 25 cents per share, stemming talked to you in our annual and leadership at the state and fed-expenses associated with the from customer refunds required quarterly reports about the dra- eral levels where we are working refurbishment of the Salem by Public Service Electric and matic changes facing our indus- aggressively to establish rules nuclear units. Gas Company's (PSE&G) resolu- try and about the ways we have for competition that will be fair 1996 earnings reflect the tion of outstanding Salem regula- been preparing for that new era. to our customers, our employees benefits of our ongoing cost tory issues. This year the new era begins. and our shareholders. | |||
management efforts, the In January 1997, the New We are working to ensure Financial Outlook strong New Jersey economy Jersey Board of Public Utilities that the new rules on industry Looking ahead, we have estab-and a good contribution from (BPU) issued its proposed find- restructuring provide customer lished a target of five percent our off-system gas sales that ings and recommendations for choice and lower cost without compound annual growth in earn-helped offset relatively flat restructuring the electric power endangering service reliability ings per share. We intend to electric sales caused by cool industry in New Jersey. This or compromising air quality and grow income in both our utility summer weather. We also proposed Energy Master Plan environmental progress. | |||
We | and non-utility businesses experienced a sharp increase requires our principal subsidiary, Working to achieve opera-through effective cost manage-in earnings at our non- PSE&G, and the state's other tional excellence means concen-ment and development of new utility investment company, electric utilities, to develop pro- trating on what we do best and revenue streams. We are further Public Service Resources posals that allow customers to striving to do even better. We strengthening our capital struc-Corporation (PSRC). choose electric suppliers. It sets are creating partnerships with ture by applying our strong Public Service Enterprise an aggressive timetable requir- suppliers to increase efficiency cash flow to the retirement of Group (Enterprise) consoli- ing that customer choice be and reduce costs; recognizing maturing long-term debt and dated earnings for the year provided to a minimum of five employees, individually and in also are using internally gener-were $611.6 million, or $2.52 percent of customers beginning teams, whose best practices, ated funds to provide financial per common share. That in October 1998 and progressing in the form of their ideas and support to our more rapidly compares with earnings of to full competition for 100 per- actions, are serving as role mod-growing companies, Energis | ||
$662.3 million, or $2.71 per cent of customers no later than els for the entire corporation; Resources Incorporated (Energis share in 1995. April 2001. and implementing new informa-Resources) and Community Results for 1996 reflect Freedom of choice is coming tion technology to help manage Energy Alternatives two one-time gains recorded and we are ready for it. We wel- work more efficiently across the Incorporated (CEA). | |||
during the year - $18 mil- come it and believe we are in corporation. | |||
Through continued commit-lion, or seven cents per share, position to succeed in this new We remain committed to the ment to our core utility busi-from the repurchase of pre- marketplace. reliability and quality of our ness, and establishing new ferred stock, and $13.5 mil- We have been preparing for service. This commitment con-non-regulated businesses, such lion, or six cents per share, this change by doing what suc- tinues to grow in significance as as Energis Resources, we aim to resulting from the sale of our cessful competitors must do: customers gain freedom in enhance the value of your com-Houston-based oil and gas sub- redesign and refocus operations; choosing suppliers. PSE&G con-pany and continue our record of sidiary, Energy Development concentrate on cost containment; tinues to offer pioneering money-paying dividends annually for Corporation (EDC). emphasize a strong customer back service guarantees. If we nine decades. | |||
focus; forge strong, productive fail to keep our service promises partnerships with employees to customers, they can request and suppliers; participate and receive direct bill credits. It actively and decisively in the is no longer enough to satisfy shaping of public policies related customers; the standard for cus-to governing our industry; and tomer service has been raised seek new sources of revenue. and will be raised ever higher in the years ahead. | |||
Three Goals Our commitment to opera-We intend to prosper in this new tional excellence, and success in marketplace by advancing the the new deregulated environment three goals we set in 1996: | |||
resulted in our decision in 1995 getting the rules right; achiev-to take the nearly twenty-year-old ing operational excellence; and investing for growth. | |||
2 | |||
A key Enterprise objective is to keep its co=on stock dividend secure, as it has been over the last five decades. | |||
2.50 2.00 I.SO 1.00 0.50 0.00 111111I11111111I11111111111111111 1946 1956 1966 1976 1986 1996 (dolln.rs) | |||
Dividend History, Adjusted for Stock Splits Salem nuclear units out of service and outside our traditional serv- our work force skills must be and make fundamental changes ice territory. We plan for it to well-matched with the new necessary to improve perfor- be an engine of growth in the requirements demanded by a mance of the station to the end of future and to be a billion dollar competitive market. | |||
its 40-year license. Salem Unit 2 business in five years . Our associates are also an is expected to return to service in On the utility side, we have invaluable resource that can Allocati,on of the second quarter of this year expanded our portfolio of tradi- help us recognize the needs of Assets at and Salem Unit 1 is expected to tional products and services by the marketplace. Harnessing December 31, 1996 Enterprise 'lbtal Assets - | |||
return in the fall. In any case, expanding our appliance busi- their life experiences and per- | |||
$16.9 billion the units will be restarted only ness to include several new spectives to help shape business when we are certain they are competitive service offerings, as decisions will ultimately help us PSE&G ready for reliable operation over well as off-system electric and satisfy the energy service needs O Electric 74% | |||
the long term. gas sales. of an expanding range of cus- 0 Gas 14% | |||
The Hope Creek nuclear tomers. We are committed to EDHI Workin g Smarter plant, meanwhile, has achieved creating a work environment of 0 PSRC 9% | |||
In addition, six-year contracts CEA 2% | |||
outstanding performance since mutual respect, where associ-ratified by our unions utilized 0 EGDC 1% | |||
its return from a refueling ates are empowered to unleash mutual gains bargaining and and maintenance outage in their many, cliverse talents and enhanced our ability to compete early 1996. insights to the fullest. | |||
in the future by removing some Safety has been, and will con- In this annual report, you of the constraints that previ-tinue to be, the first priority in will find some excellent exam-ously hindered our operational operations of all our nuclear units. ples of how we are working flexibility. The contracts allow Investing for growth is our towards getting the rules right, our gas and electric employees to third goal. A key component of achieving operational excellence do crossover work, which trans- Sources of this strategy is our interna- and meeting our vision for Consolidated lates to a faster response to cus- Earnings p er Share tional independent power com- investing for growth. | |||
tomers, increases the efficiency Enterprise Earnings pany, CEA. The demand for new I am grateful to you for your of our work force and helps us find per Average Share - | |||
electric generation in the inter- continued support. As freedom $2.52 better ways to satisfy customers. | |||
national market will exceed of choice continues to evolve, Continued investment in the Earnings per Share 800 gigawatts over the next I assure you that all of us at professional growth of our 11,000 10 years. That's the equivalent Enterprise are dedicated to deliv- PSE&G employees also contributes to our of 800 very large generating ering to you the results of our 0 Electric $1.79 long-term health. We are commit-stations. CEA will continue to hard work in the years ahead. Gas $ .40 ted to establishing an organiza-pursue financially attractive tion that fosters an environment opportunities here in the of continuous learning; we have $ .23 United States, but because of EDC* $ .10 made a major investment in the tremendous demand over- CEA $ .04 employee development and tech-seas, it will emphasize interna- EGDC $ (.01) nical training, as well as tuition Energis tional markets. E. James Ferland reimbursement for college and Chairman of the Board, President Resources$ (.03) | |||
We have also launched a new and Chief Executive Officer, post-graduate studies. We realize total energy services subsidiary, Public Service Enterprise Group working smarter demands contin- Incorporated (* Discontinued operations-Energis Resources, which posi- February 14, 1997 Gain on Sale-$.06; Income uous learning by all of us, and from Operations-$.04) tions Enterprise to compete for that for Enterprise to be success-market opportunities spawned ful in a changing environment, by deregulation - both within 3 | |||
Public Service Enterprise E. James Ferland Enterprise Group Chairman of the Board, Incorporated President and Chief Executive Officer PO. Box570 80 Park Plaza, T4B Newark, NJ 07101 (201 ) 430-7000 www.pseg.com Public Service Electric PSE&G Lawrence R. Codey PSE&G serves the intensely developed corridor between and Gas Company President and Chief Operating Officer New York City and Philadelphia. PSE&G O PS~G PO. Box 570 80 Park Plaza, T4B Newark, NJ 07101 (201 ) 430-7000 www.pseg.com Enterprise EDHI Robert J. Dougherty, Jr. | |||
President and Chief Operating Officer I | |||
Diversified Holdings I Incorporated EDHI The Legal Center One Riverfront Plaza 9th Floor Newark, NJ 07102 (201 ) 596-6760 Energis Resources Frank Cassidy President and Chief Executive Officer Community Energy Energis Resources Incorporated Alternatives has power E~RGIS 499 Thornall Street plant interests in the Americas, 5th Floor Asia, the Pacific Rim Edison , NJ 08837 and Europe. (8881-3-ENERGIS www.energisresources .com Community Energy Michael J . Thomson Alternatives President and Chief Executive Officer Community Energy Alternatives Incorporate0 1200 East Ridgewood Avenue Ridgewood, NJ 07450 (201 ) 612-2772 Public Service Eileen A. Moran Resources Corporation President Public Service Resources Corporation | |||
-"----- | |||
The Legal Center One Riverfront Plaza | |||
-u-r*na.. 9th Floor Newark, NJ 07102 (201 ) 596-6710 4 | |||
- ... | |||
'II I I Publicly-traded diver s ified energy Collectively, PSE&G and | |||
* Electricity and Gas Success in meeting our strategic and energy services company Community Energy Alternatives, a | |||
* Industrial and Commercial Gas objectives will be measured in located in New Jersey with annual subsidiary of EDHI, have more than | |||
* Industrial, Commercial and terms of earnings per share revenues of more t han $6 bimon, 90 years of power plant operating Residential Electric growth. The objective for the consisting of two main subsidiaries: experience with active investments | |||
* Energy Consulting and Planning Enterprise portfolio is a compound Public Service Electric and in 40 power plants fueled by coal, *Integrated Energy Management growth rate of five percent Gas Company and Enterpr ise natural gas, oil, petroleum coke and Services annually over the next five years. | |||
Diversified Holdings Incorporated. nuclear. | |||
* Operations and Maintenance Support | |||
* Residential Gas Products and Services I | |||
I Ser ves more than 5.5 million New Jer sey residents in more than PSE&G provides the lowest cost, most reliable electric and gas service of any | |||
* Electricity and Gas | |||
* Industrial and Commercial While new business ventures will play a vital role in the long-term 300 urban, suburban and r ural New Jersey utility. It maintains a Electric growth and strength of I communities with electricity, gas staff of over 600 highly trained service | |||
* Energy Consulting and Planning Enterprise, PSE&G remains I and energy alter natives in a technicians on cal I 24 hours a day, | |||
* Industrial and Commercial Gas Enterprise's core business and 2,600 square-mile diagonal 365 days a year to repair a broad | |||
* Residential Gas Products and currently comprises approxi-cor ridor across the state. range of gas and electric appliances Services mately 97 percent of total and HVAC equipment and backs up its | |||
* Sunburst Customer Solutions Enterprise revenues. | |||
performance with nine guarantees * 'fradelillk export assistance of service. Through its Sunburst program Customer Solutions product offuring, | |||
* Business Enhancement Program PSE&G provides meter reading, | |||
* Residential Electric bi Iling and collection services. | |||
Operates Enterprise's non-utiljty EDHI bui lds on the nearly 100-year | |||
* Electricity and Gas EDHI will enter new markets in businesses seeking to maintain a nd tradition of Enterprise by seeking | |||
* Industrial and Commercial Gas the energy arena where its experi-expand its energy services in the out and developing additional | |||
* Energy Consulting and Planrung ence and knowledge can be brought world. Consists of three primary energy-related services as deregu- | |||
* Integrated Energy Management to bear and when market needs and subsidiaries: Energis Resources, lation of the industry progresses. Services opportunities can be pursued on a Community Energy Alternatives, | |||
* Operations and Maintenance sound and profitable basis. | |||
and Public Service Resources Support Corporation. | |||
Provides a full menu of energy In addition to offering several new | |||
* Electricity and Gas Energis Resources will serve management solutions for busi- services, Energis Resources brings | |||
* Energy Consulting and Planning industrial and commercial cus-nesses in the Northeast. the expertise offunctions previ- | |||
* Integrated Energy Management tomers in the New England and ously performed by a number of Services Mid-Atlantic region through three Enterprise subsidiaries to Northeast | |||
* Operations and Maintenance product platforms: energy supply, markets which it knows well. Support consulting, engineering and oper- | |||
* Financing Solutions ations services, and financing solutions. | |||
Develops, acquires, owns and oper- More than 200 experts in project | |||
* Electric Generation Solutions As the opportunities for growth in ates cogeneration and independent development and financing, engi- the domestic generation business power facilities in the U.S., Asia, neering, and plant operations shrink due to overcapacity and t he Pacific Rim, Europe, and and maintenance create effective potentially low profit margins, South Amer ica. teams that understand the CEA will pursue investments dynamics of t he areas they serve. in international generation in strategic markets. | |||
Enhances EDHI's financial strength PSRC's well-balanced portfolio | |||
* Investments in assets which pro- PSRC plans to build on its expertise with a strong, diverse portfolio of provides diversification, earrungs vide funds for future growth and in risk management and mitigation, more than 60 separate investments stability and continued incremental incremental earnings transaction analysis and closing and across a wide spectrum of industry earn.i ngs growth to shareholders. investment management to exploit sectors and asset types, including new opportunities that arise from leveraged and direct financing leases, industry deregulation. | |||
project financing, venture capital funds, leveraged buy-outs, real estate limited partner ships and securities. | |||
5 | |||
Getting the Rules Right Many of the rules governing our industry were written at a time when the utility franchise was the best way to ensure universal, safe and reliable service. However, now that the infrastructure has been built and as economic conditions change, we need to make sure all energy providers operate on a level playing field. | |||
We are working to foster rules Master Plan would require rate reductions of five to ten the high level of service relia-that are fair to our customers, utilities to develop plans to percent for customers. We are bility that exists today. | |||
shareholders, the State of offer retail competition to five committed to working toward A significant issue in the New Jersey and its economy. percent of all customers by that target rate reduction in a restructuring process is the Enterprise has dramati- October 1998. This would manner that protects the envi- recovery of transition costs. | |||
cally increased its efforts to increase incrementally until ronment and our investors, 'fransition costs result from affect the deregulation debate full competition for all con- without creating a category of the utilities' historical legal in both New Jersey and sumers is reached by April second-class consumers who obligation to serve all cus-Washington, D.C. Getting the 2001. The state's electric utili- do not share in the benefits of tomers. Utilities have been rules right is of crucial impor- ties have until July 15 to file competition. required to plan, build and tance if Enterprise is to com- their own restructuring plans. While dedicated to imple- maintain generation and a pete effectively in the evolving PSE&G shares the BPU's menting the Energy Master delivery infrastructure to reli-energy market. broad objectives in the restruc- Plan, we are also urging the ably meet customer needs. In turing process and will work BPU to provide utilities with exchange for this obligation, Energy Master Plan vigorously toward the goal of flexibility to propose benefi- utilities have been allowed a In January 1997, the BPU opening the New Jersey mar- cial changes, as different | |||
" unveiled its blueprint for ketplace to competition, with utilities face different circum-introducing customer choice stances and challenges in into New Jersey's electricity restructuring. We are also market. The proposed Energy stressing the need to maintain 7 | |||
PSE&G Net Utility Plant In-Service Fossil 18.6% | |||
Nuclear 40.0% | |||
reasonable opportunity to A significant amount of the recover investments through pollution transported into the regulated rates. As rates Northeast is produced by coal-become competitive, they may burning power plants in the no longer be sufficient to per- Midwest and Ohio Valley, mit recovery of all such costs, plants that are allowed to which then become "stranded." operate with minimal environ-Considerations of fairness, mental controls. An electric efficiency and law warrant industry restructuring plan recovery of these costs. that encourages increased pro-Transmission | |||
& Distribution 38.8% duction of this cheap, dirty Restructuring and the Midwest electric power will, environment as a result, send hundreds Lower cost electric power of thousands of tons of addi-must not come at the expense tional pollution drifting into of environmental quality or our region. | |||
sound public health policy. Our concern over this issue 2.6% | |||
New Jersey and the Northeast is shared by officials at the | |||
} o t h er are burdened by the impact highest levels of state govern-of air pollution created to the ment, as well as statehouse The net e/,ectric and gas plant in-seruice arrwunted to $ 10. 7 billwn at December 31, 1996. West and South, which is and congressional members of transported by prevailing both parties throughout the wind currents. Northeast. We have worked hard to increase their recogni-tion of the strong link between 8 | |||
I | |||
energy and the environment working to translate it into The proposal calls for the and there are encouraging appropriate action. 13 percent GRFT to be indications that the message replaced by existing sales and is being heard. Vice President Energy taxes corporate taxes and a tempo-Al Gore has clearly stated After a year of study, a BPU/ rary new tax that would be that environmental degrada- New Jersey 'freasury phased out over seven years, tion should not be the price Department joint task force causing a 45 percent reduction the nation pays for lower has recommended a major in taxes paid by consumers. | |||
energy costs. The Federal overhaul of the Gross Receipts Energy tax reform is long over-Energy Regulatory and Franchise Tux (GRFT) due and essential if New Commission, the paid by all customers of Jersey is to compete with Environmental Protection New Jersey utilities. Because other states for business and Agency and the White House customers of non-utility jobs. It's also good news for Council on Environmental energy providers do not pay New Jersey consumers, who Quality have also acknowl- this tax, utilities are at a currently pay among the high-edged the potential negative competitive disadvantage. A est energy taxes in the nation. | |||
environmental impact of new tax plan that treats all restructuring. We are encour- energy providers equally - | |||
aged by this support and are giving utilities and new market entrants the same opportuni-ties to compete for business - | |||
has been recommended. | |||
9 | |||
*' | |||
Operational Excellence Achieving operational excellence doesn't happen overnight. It means questioning tradition, finding smarter ways to serve customers, streamlining work processes, and keeping an unblinking eye on the bottom line. | |||
In 1996, Enterprise employees Aviation Agency bid out to Taking time a t Hope Creek Redu ction, r ecovery, continued their commitment replace 30,000 feet of cable Our Hope Creek nuclear sta- recycling to excellence. As we transform snaking under a runway at tion in Salem, New Jersey, got A major corporate initiative, ourselves into a global energy Newark International Airport - back to the business of making driven by the need to improve services company, their ideas one of the nation's busiest - electricity following an outage our bottom line as well as our and actions remain critical to PSE&G's Metropolitan electric early in 1996. The refueling commitment to the environ-our success. distribution division did the outage was expected to last ment, was the establishment of Here are some examples of work. The work might be 30 days; but station manage- a materials management how individuals, teams and considered traditional , but ment expanded the original process. The process empha-organizations are helping to PSE&G's approach wasn't. work scope to include more sizes not only the recovery of set a standard of excellence for Project leaders and repre- than 13,500 individual work usable waste, but also the the entire corporation. sented employees planned out activities, all aimed at ensur- reduction of waste by design-a schedule that would not ing safe and reliable long-term ing out as much as possible Shared vis ions, interfere with high air traffic operations at the plant. from the start. The results shared rewards periods. Much of the work was Hope Creek has enjoyed an have been gratifying: waste Replacing underground distri- done on weekends. Despite the extremely reliable period disposal costs have fallen more bution cable and splicing is the scheduling complications, the of operation since its return than $5 million, more than type of work on which PSE&G job was completed on time. to service. 90 percent of our non-haz-has built its reputation for The project marked a new ardous solid waste is being excellence. When the Federal approach to generating rev- recycled and PSE&G was for-enue and helped increase our mally honored by the federal employees' awareness of the Environmental Protection importance of meeting cus- Agency (EPA) as one of 280 tomer needs as we face the Fortune 1000 companies new reality of competition. named charter members of the EPA's WasteWi$e program. | |||
11 | |||
87 88 89 90 91 92 93 94 95 96 92 93 94 95 96 PSE&G supplies electricity at the lowest cost Th e ratio of customers to PSE&G permanent per kwh of all the utilities in employees, a measure of efficiency, N ew Jersey, and intends to continue the trend. has g rown 23% over the past fiv e years. | |||
(Average revenue per kwh adj usted for inflation. | |||
Base year 1995- 1996. Cents per kwh.) | |||
New perspectives, Meeting monthly, the council system will allow for quicker new energy has formulated recommenda- accessing of information and PSE&G gained recognition for tions to increase minority sup- improved capabilities for plan-its promotion and support of plier participation in high-dollar ning and management of work minority and women-owned volume and strategic products in providing energy services. | |||
business development when it and services. PSE&G's supplier But Business Integration was named 1996 Corporation of diversity process is a customer- must be more than just jar-the Year by the minority busi- driven business strategy. Just gon. PSE&G will be joining ness members of the New York/ as success requires a workforce some 6,000 companies world-New Jersey Minority Purchasing that is reflective of the society wide who are using an infor-Council. PSE&G's efforts in we serve, we also need suppliers mation system known as SAP this area include establishing who can provide insights and - Systems, Applications and a Supplier Diversity Council new ideas to help us better Products in Data Processing - | |||
comprised of employees and meet our customers' needs. to achieve major gains in representatives from minority performance. The rollout of businesses to advise the com- Making the power of Business Integration starts pany on its supplier diversity information work for us with Fossil Generation in 1998. | |||
policies and results, and to fos- Business Integration is a cor-ter communications between poratewide effort to improve PSE&G and its suppliers. our operating efficiencies through the use of integrated business software. An inte-grated internal information 12 | |||
Customer service: A residential customer in for good jobs with fair wages , | |||
a hallmark of success South Jersey, for example, was benefits and working condi-Customers today are becoming dissatisfied with the service tions. The new agreements more sophisticated - and she received from a competi- address the requirements of a demanding - consumers. tor of our appliance service fast-changing industry head-on, With the coming of customer business. This competitor including provisions that allow choice, building a relationship tried to use unethical tactics gas and electric employees to with our customers has never to sell a major repair job that work in each other's areas. | |||
been more critical. At PSE&G wasn't needed. When the cus- Other provisions address cut-we hear from our customers tomer called PSE&G for a ting non-productive time and daily through regular surveys, second opinion, our service reducing costs. Mutual-gains feedback and personal interac- technician quickly discovered bargaining, a process of tions . We listen, then improve the problem to be simply a side-by-side problem-solving, our products and services clogged pilot light. Daily inter- allowed the unions and based on what we hear. As actions such as these help company to help each other part of this constant feedback, build customer loyalty and recognize shared interests. | |||
we've learned that the exper- awareness. A united front of employer and tise and integrity of our work- employees is essential for pre-force have been major factors A pact for the 21st century serving customers and jobs. | |||
in maintaining customer loyalty. PSE&G's five unions signed contracts in 1996 that extend to the year 2002. These agree-ments balance the needs of the company in an emerging com-petitive marketplace with the needs of employees and unions 13 | |||
Investing For Growth In 1996, Enterprise reorganized to take maximum benefit of the opportunities arising out of the deregulation of the electric and gas industries. This reorganization also results in a clearer division between Enterprise's regulated and unregulated businesses. | |||
Bob Dougherty now serves Going global standards, and is delivering CEA also enjoys a well-as president and chief operat- Business plans for CEA target electricity to the country's established reputation in the ing officer of an expanded new investments of approxi- power grid. The second unit is U.S. The JFK Energy Center, Enterprise Diversified Holdings mately $700 million over a scheduled to go on-line in late which is owned and operated Incorporated (EDHI). In addi- five -year horizon. Plans for 1997; both units will supply a by CEA and Gas Energy, Inc. , | |||
tion to PSRC, which will con- 1997 call for closure on several substantial amount of electric- a wholly-owned subsidiary of tinue to search for passive, projects, among them a 220- ity to this rapidly-developing Brooklyn Union Gas Company, energy-related investments to megawatt simple-cycle plant in rural area. completed its first full year of add to its portfolio, Dougherty Colombia, South America. Last year CEA and its commercial operation. The will manage and develop CEA, This plant will burn natural partner AES, a developer and center is a 105-megawatt plant Enterprise's independent gas and sell its electrical out- operator of power plants, suc- that supplies electricity and power company, and a new put on the Colombian spot cessfully closed project hot and chilled water for business, Energis Resources, market. The project is part of financing for Central Termica New York's Kennedy which provides a full range of a joint venture formed with San Nicolas, a 650-megawatt International Airport. Addi-energy-management solutions. Amoco Power Resources. The plant located in Argentina. tional electrical capacity is I | |||
I .* | |||
Through these unregulated project is intended to enter The ability to refinance with a sold to the local utility, companies, and by expanding a construction during the first $60 million non-recourse loan Consolidated Edison. | |||
number of traditional products quarter of 1997 and be in com- in the Argentine market CEA has investments in and services found in our reg- mercial operation by late 1997. demonstrates a high degree of 22 cogeneration and power ulated utility, Enterprise seeks The year 1996 was one of bank confidence in Argentina's plants around the world to increase shareholder value. progress. CEA holds a minority power sector reforms and in totalling 2,400 megawatts of interest in two 300-megawatt San Nicolas' viability as a key electric generation capacity. | |||
coal-fired units located in the energy producer. Operating from offices in interior province of Gansu, Hong Kong, Argentina, China. The first unit success- Thailand, India and the U.S., | |||
fully passed its first perfor- CEA professionals are pursu-mance test in 1996, meeting ing nearly 70 potential projects all national environmental in more than twelve countries. | |||
15 | |||
EDHI's net income reached a record high in 1996. | |||
Net income from continuing operations increased 28.5% | |||
as compared to 1995 primarily due to a strong performance by Puhlic Service Resources Corporation. | |||
*Without EGDC impairment of $(50.4) million. | |||
92 93 94 95 96 (dollars in millions) | |||
Income from Income from Continuing Di scontinu ed Operations Operations Smarter energy*M Enterprise Strategic Energy Market restaurants through-Drawing on Enterprise's depth Solutions, which provided con- out the Northeast, as well as of experience and financial sulting, engineering and more than 40 branch offices of strength, Energis Resources, repair services. In addition, a major Manhattan-based bank. | |||
our newest subsidiary, pro- the financing of energy-savings, Similarly, deregulation of vides a single source for reli- or demand-side management electricity is proceeding able, top-quality service projects, formerly offered throughout the U.S. and at a focused on customer needs . by the utility subsidiary, particularly fast clip in the The company is concentrating Public Service Conservation Northeast - Energis on industrial and commercial Resources Corporation, Resources' home territory. | |||
customers throughout the will now be supplied by New Jersey customers will Northeast and Mid-Atlantic Energis Resources. begin gaining the ability to states. Energis Resources offers an choose their electricity sup-Energis Resources offers impressive array of products plier in October 1998. Retail customers a wide range of and services, beginning with customers in Rhode Island and services to improve business the sale of natural gas. In Pennsylvania will be able to operations and performance 1996, U.S. Energy Partners choose in 1997. Since the fed-through more cost-efficient sold more than $67 million of eral Energy Policy Act of 1992 energy utilization, energy gas to some 3,600 customers deregulated the wholesale elec-process redesign, optimized in New Jersey, New York and tricity market, Enterprise has energy investment strategies states as far south as the been one of the most active and unique financing options Carolinas. New Jersey has and aggressive participants in for energy-related projects. been a pioneer in the deregu- that market. Energis Resources The company has absorbed lation of natural gas sales, will draw on this expertise to two Enterprise companies allowing the customer to buy serve retail markets afforded with proven track records: the gas itself from suppliers freedom of choice. | |||
U.S. Energy Partners, which like Energis Resources, with sold natural gas, and delivery arranged through the local utility. | |||
The company is already marketing natural gas to a number of customers, includ-ing more than 50 Boston 16 | |||
Along with energy supply, billing, payment processing within its service territory Energis Resources provides and collection services to and a well-trained staff of consulting, engineering and municipalities and other service technicians, the appli-operations services and financ- investor-owned utilities. ance service business has ing solutions. The ultimate Municipalities and other utili- expanded its traditional port-objective is to successfully ties can reduce costs and folio of service offerings. These provide total energy manage- increase efficiencies by utiliz- new services create added ment to customers in the ing PSE&G's sophisticated opportunities for bringing in Northeast, allowing them to customer service operations additional revenues. The busi-completely outsource their and extensive meter reading ness has also gained efficien-energy functions. experience. As of January cies and sharpened its Energis Resources is 1997, seven municipalities and competitive advantage with already working on energy two regional water utilities the introduction ofhome-projects with a number of have signed on. based reporting, which allows major customers. It is PSE&G's appliance service service technicians to report installing and maintaining business is the only region- directly to their first job in the power supply equipment for a wide provider of premium morning instead of stopping major telecommunications service and service contracts first at the office. | |||
company's fiber optic network. for all major appliance brands In addition, PSE&G, with For a national food processor, with 24-hour service. 365-days- its long-established rights-of-the company is financing a-year availability. Banking on way, extensive network of third-party installation of a strong name awareness wires, and long-term customer high-efficiency lighting at 200 relationships, is also exploring of its locations. the possibility of adding wire and wireless telecommunica-Expanding a traditional tions services to its broad por t-portfolio folio of products and services. | |||
PSE&G, through its Sunburst Customer Solutions program, offers its meter reading, 17 | |||
Public Service Enterprise Group continues to pursue a strategy of enhancing stockholder value through retention and reinvestment of earnings and payment of an annual dividend . | |||
. | |||
g .. | |||
~ * | |||
* I | |||
\ | |||
i I | |||
! | |||
91 92 93 94 95 96 92 93 94 95 96 (dollars) (percent) | |||
This shows the value on December 31 Return on Average Common Equity of each year of $100 invested in for 1996 was 11.3%, which reflects Enterprise on December 31, 1991 various one-time adjustments, as (assumes reinvested dividends). discussed in the Chairman's letter of tlus annual report. | |||
g 8 g g g | |||
...- | |||
0 I | |||
' ' | |||
l r I | |||
I I I | |||
I I I CD | |||
...- | |||
I | |||
'I | |||
! I 95 96 97" 98' 99' 95 96 97* 98* 99* | |||
9 PSE&G n EDHI Common Equity Preferred Securioes 11 Long-Term lJ Debt | |||
*Projected | |||
* Projected (dollars in milliorm) (percent) | |||
Declining utility capital expenditures One of our key objectives, as reflected are expected to be funned through in Enterprise'.~ capitalization internally generated cash, while growing ratio, is to strengthen the bal.ance sheet EDHI needs are expected to be met by by delet*eraging PSE&G. | |||
additional debt and internally generated cash. | |||
Consolidated Financial StatisticsrAJ Dollars in thousands where applicable 1996 1995 1994 1993 1992 Selected Income Information Operating Revenues: | |||
Electric $ 3,944,362 $ 4,020,842 $ 3,739,713 $ 3,696,114 $ 3,407,830 Gas 1,880,994 1,686,403 1,778,528 1,594,341 1,586,181 Nonutility Activities 215,893 186,417 177,082 137,069 112,268 Thtal Operating Revenues $ 6,041,249 $ 5,893,662 $ 5,695,323 $ 5,427,524 $ 5,106,279 Income from Continuing Operations $ 587,358 $ 627,287 $ 666,521 $ 549,178 $ 475,150 Cumulative effect of change in accounting for income taxes - - - 5,414 - | |||
Income from Discontinued Operations 24,238 35,036 12,512 46,341 28,967 Net Income $ 611,596 $ 662,323 $ 679,033 $ 600,933 $ 504,117 Earnings per Average Share: | |||
From Continuing Operations $ 2.42 $ 2.57 $ 2.73 $ 2.29 $ 2.05 From Cumulative effect of change in accounting for income taxes - - - .02 - | |||
From Discontinued Operations .10 .14 .05 .19 .12 Thtal Earnings per Average Share $ 2.52 $ 2.71 $ 2.78 $ 2.50 $ 2.17 Dividends Paid per Share $ 2.16 $ 2.16 $ 2.16 $ 2.16 $ 2.16 Payout Ratio 86% 80% 78% 86% 100% | |||
Rate of Return on Average Common Equity(BJ 11.28% 12.32% 12.94% 11.91% 10.69% | |||
Ratio of Earnings to Fixed Charges 2.68 2.78 2.84 2.57 2.33 Book Value per Common Share(CJ $22.33 $22.22 $21.68 $21.07 $20.32 Gross Utility Plant $17,327,635 $16,925,280 $16,566,058 $15,861,484 $15,081,907 Accumulated Depreciation and Amortization of Utility Plant $ 6,148,482 $ 5,737,849 $ 5,467,813 $ 5,057,104 $ 4,610,595 Thtal Assets $16,915,331 $16,816,491 $16,312,734 $15,995,433 $14,543,696 Consolidated Capitalization Common Stock $ 3,626,792 $ 3,801,157 $ 3,801,157 $ 3,772,662 $ 3,499,183 Retained Earnings 1,586,256 1,636,971 1,505,010 1,361,018 1,282,931 Common Equity 5,213,048 5,438,128 5,306,167 5,133,680 4,782,114 Preferred Stock Without Mandatory Redemption 113,392 324,994 384,994 429,994 429,994 Preferred Stock With Mandatory Redemption 150,000 150,000 150,000 150,000 75,000 Monthly Guaranteed Preferred Beneficial Interest in PSE&G's Subordinated Debentures 210,000 210,000 150,000 - - | |||
Quarterly Guaranteed Preferred Beneficial Interest in PSE&G's Subordinated Debentures 208,000 - - - - | |||
' Long-Turm Debt 4,580,231 5,189,791 5,110,022 5,100,228 4,962,884 Thtal Capitalization $10,474,671 $11,312,913 $11,101,183 $10,813,902 $10,249,992 (A) The dewikd consolidated financial swtements and related discussion appear in Appendix A of the Proxy Statement. | |||
(BJ Net Income for a twelve-rrwnth period divided by the thirteen-mnnth a verage of Commnn Equity. | |||
(CJ 1hta1 Comrrwn Equity divided by end-of-period Comrrwn Shares outswnding. | |||
19 | |||
Condensed Consolidated Statements of Income | |||
~ | |||
l In thousands (except per share data) for the years ended December 31, 1996 1995 1994 Operating Revenues Electric $3,944,362 $4,020,842 $3,739,713 Gas 1,880,994 1,686,403 1,778,528 I | |||
~ | |||
Nonutility Activities 215,893 186,417 177,082 Total Operating Revenues 6,041,249 5,893,662 5,695,323 Operating Expenses Fuel for Electric Generation and Interchanged Power 918,514 891,782 695,763 Gas Purchase d Operation and Maintenance 1,117,716 1,371,800 961,539 1,320,345 1,023,956 1,323,886 l | |||
1: | |||
Depreciation and Amortization 607,293 596,966 555,461 Taxes 968,967 1,027,840 974,418 I Total Operating Expenses 4,984,290 4,798,472 4,573,484 l Operating Income Allowance for Funds Used During Construction and Capitalized Interest 1,056,959 18,155 1,095,190 38,163 1,121,839 42,588 l | |||
Other Income - Net Interest Charges (1,920) 453,111 8,041 464,207 6,430 462,189 II' Preferred Securities Dividend Requirements and Premium 32,725 49,900 42,147 I Income from Continuing Operations 587,358 627 ,287 666,521 II Income from Discontinued Operations 24,238 35,036 12,512 - | |||
! | |||
Net Income $ 611,596 $ 662,323 $ 679,033 Shares of Common Stock Ou tstanding End of Period Average for Period 233,470,291 242,400, 755 244,697,930 244,697,930 244,697,930 244,4 70, 794 lI Earnings per Average Share: | |||
From Continuing Operations From Discontinued Operations | |||
$2.42 | |||
.10 | |||
$2.57 | |||
.14 | |||
$2.73 | |||
.05 | |||
- | |||
l Total Earnings per Average Share $2.52 $2 .71 $2.78 Dividends Paid per Share of Common Stock $2.16 $2.16 $2.16 The detail.ed consolidated financial statemenls and related discussion appear in Appendix A of the Proxy Statement. | |||
Condensed Consolidated Statements of Cash Flows i | |||
In thousands for the years ended December 31, 1996 1995 1994 | |||
-' | |||
Net Income $ 611 ,596 $ 662,323 $ 679,033 Adjustments to net income, primarily depreciation I and amortization 822,864 872,550 564,745 Net cash provided by operating activities 1,434,460 1,534,873 1,243,778 Net cash used in investing activities, primarily additions to utility plant (offset by the net proceeds from the sale 1' of Discontinued Operations in 1996) (9,225) (935,305) (1,010,420) - | |||
Net cash used in financing activities (1,208,296) (603,093) (237,200) i Net increase (decrease) in Cash and Cash Equivalents 216,939 (3,525) (3,842) | |||
Cash and Cash Equivalents at Beginning of Period 61,964 65,489 69,331 Cash and Cash Equivalents at End of Period $ 278,903 $ 61,964 $ 65,489 The detail.ed consolidated financial statements and related discussion appear in Appendix A of the Proxy Statement. | |||
1 20 | |||
I Condensed Consolidated Balance Sheets In thousands at December 31, 1996 1995 I | |||
Assets I | |||
Utility Plant: | |||
r Utility Plant (including Nuclear Fuel) $16,858,348 $16,532,232 Less: Accumulated Depreciation and Amortization 6,148,482 5,737,849 | |||
. | |||
I I | |||
Net Utility Plant in Service Construction Work in Progress (including Nuclear Fuel) 10,709,866 445,321 10,794,383 369,082 Plant Held for Future Use 23,966 23,966 I | |||
Net Utility Plant 11,179,153 11,187,431 Investments and Other NoncurrentAssets 2,351 ,984 2,242,744 Current Assets 1,744,427 1,828,477 I | |||
I Deferred Debits 1,639,767 1,557,839 I | |||
Total $16,915,331 $16,816,491 | |||
' | |||
Capitalization and Liabilities Capitalization: | |||
Common Equity $ 5,213,048 $ 5,438,128 Subsidiaries' Preferred Securities: | |||
Preferred Stock Without Mandatory Redemption 113,392 324,994 Preferred Stock With Mandatory Redemption 150,000 150,000 Monthly Guaranteed Preferred Beneficial Interest in PSE&G's Subordinated Debentures 210,000 210,000 Quarterly Guaranteed Preferred Beneficial Interest in PSE&G's Subordinated Debentures 208,000 - | |||
Long-Turm Debt 4,580,231 5,189,791 Total Capitalization 10,474,671 11,312,913 Other Long-Turm Liabilities 184,769 199,832 Current Liabilities 2,271,754 1,548,026 Deferred Credits 3,984,137 3,755,720 Total $16,915,331 $16,816,491 The detailed consolidated financial statements and related discussion appear in Appendix A of the Proxy Statement. | |||
Condensed Consolidated Statements of Retained Earnings In thousands for the years ended December 31, 1996 1995 1994 Balance January 1 $1,636,971 $1 ,505,010 $1 ,361,018 Add Net Income 611,596 662,323 679,033 | |||
-. | |||
Total 2,248,567 2,167,333 2,040,051 Deduct Dividends on Common Stock 522,565 528,548 528,071 Retirement of Common Stock 133,047 - - | |||
Preferred Securities Issuance Expenses 6,699 1,814 6,970 Total Deductions 662,311 530,362 535,041 Balance December 31 $1,586,256 $1,636,971 $1,505,010 The detailed consolidated financial statements and related discussion appear in Appendix A of the Proxy Statement. | |||
Notes to Consolidated Financial Statements For full text of Organization and Summary of Significant Accounting Fblicies refer to Note 1 to Consolidated Financial Statements in Appendix A of the Proxy Statement. | |||
For full text of Commitments and Contingent Liabilities refer to Note 13 to Consolidated Financial Statements in Appendix A of the Proxy Statement. | |||
21 | |||
Financial Statement of Responsibility To the Stockholders of Public Service Enterprise Group Incorporated: | |||
The condensed financial statements in this Summary Annual Report were derived from the consolidated financial statements included in the Public Service Enterprise Group Incorporated (the "Company") Proxy Statement for the 1997 Annual Meeting of Stockholders, which has been enclosed in the same mailing as this Summary Annual Report. The integrity and objectivity of the financial information presented in the Proxy Statement and this Summary Annual Report are the responsibility of the Company's management. The financial statements report on management's accountability for corporate operations and assets. Tu this end, management maintains a highly developed system of internal con-trols and procedures designed to provide reasonable assurance that the Company's assets are protected and that all transactions are accounted for in conformity with generally accepted accounting principles. The system includes documented policies, guidelines and self-assessments, aug-mented by a comprehensive program of internal and independent audits conducted to monitor overall accuracy of financial information and com-pliance with established procedures. The consolidated financial statements included in the Proxy Statement were audited by Deloitte & Thuche LLP, independent auditors, whose report on the condensed consolidated financial statements appears herein. | |||
E. James Ferland We~~ | |||
Robert C. Murray Patricia A. Rado Chairman of the Board, Vice President and Vice President and Controller, President and Chief Executive Officer Chief Financial Officer Principal Accounting Officer February 14, 1997 Independent Auditors' Report To the Stockholders and the Board of Directors of Public Service Enterprise Group Incorporated: Deloitte& | |||
ToucheLLP We have audited the consolidated balance sheets of Public Service Enterprise Group Incorporated and its subsidiaries 0 | |||
(the "Company") as of December 31, 1996 and 1995, and the related consolidated statements of income, retained earnings and cash flows for each of the three years in the period ended December 31, 1996. Such consolidated financial statements and our report thereon dated February 14, 1997, expressing an unqualified opinion (which are not presented herein) are included in Appendix A of the Proxy Statement for the 1997 Annual Meeting of Stockholders. The accompanying condensed consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on such condensed consolidated financial statements in relation to the complete consolidated financial statements. | |||
In our opinion, the information set forth in the accompanying condensed consolidated balance sheets as of December 31, 1996 and | |||
,. | |||
1995 and the related condensed consolidated statements of income, retained earnings and cash flows for each of the three years in the period ended December 31, 1996 is fairly stated in all material respects in relation to the basic consolidated financial statements from which it has been derived. | |||
j)~ ~ I~ LL/' | |||
February 14, 1997 Parsippany, New Jersey 22 | |||
Lawrence R . Codey E. James F erland the Organization and Compensation Richard J . Swift l | |||
has been a clirector since 1991. Has has been a clirector since 1986. Committee and member of the Auclit has been a clirector since 1994. | |||
been President and Chief Operating Has been Chairman of the Board, Committee, Finance Committee and Has been Chairman of the Officer of PSE&G since September President and Chief Executive Nuclear Committee. Director of Board, President and Chief 1991. Member of Executive Officer of Enterprise since July 1986, PSE&G, Humana, Inc., Sequana Executive Officer of Foster I Therapeutics, Inc. and Medarex Inc. Wheeler Corporation, of Clinton, Committee and Finance Committee. Chairman of the Board and Chief Director of PSE&G, Sealed Air Executive Officer of PSE&G since New Jersey, a firm provicling design, Corporation, The 'frust Company of September 1991, and Chairman of the Mar ilyn M. Pfa ltz engineering, construction, manu-New Jersey, United Water Resources Board and Chief Executive Officer of has been a clirector since 1980. Has facturing, management, plant oper-Inc. and Blue Cross & Blue Shield of EDHI since June 1989. Chairman of been a partner of P and R Associates ations and environmental services, New Jersey. Executive Committee. Director of of Summit, New Jersey, a communica- since May 1994. Member of PSE&G, EDHI, and EDHI's principal t ions firm, since 1968. Chair of Finance Committee, Nominating Ern est H . Drew subsicliaries, and of Foster Wheeler Auclit Committee and member of Committee and Nuclear has been a clirector since 1993. Has Corporation and The Hartford Steam Nominating Committee and Committee. Director ofEDHI, been a member, Board of Management Boiler Inspection and Insurance Organization and Compensation Foster Wheeler Corporation and ofHoechstAG, Frankfurt, Germany, Company. Committee. Director of EDHI and Ingersoll-Rand Company. | |||
a manufacturer of pharmaceuticals, AAA National Association. | |||
chemicals, fibers, film, specialities R aymon d V. Gilmartin Jos h S. Weston and advanced materials, since has been a clirector since 1993. Has James C. Pitney has been a clirector since 1984. | |||
January 1995. Was Chairman of the been Chairman of the Board, has been a clirector since 1979. Has Has been Chairman of the Board Board and Chief Executive Officer of President and Chief Executive Officer been a partner in the law firm of of Automatic Data Processing, Inc., | |||
Hoechst Celanese Corporation of of Merck & Co., Inc. of Whitehouse, Pitney, Harclin, Kipp & Szuch of of Roseland, New Jersey, since Somerville, New Jersey from May New Jersey, a global pharmaceutical Morristown, New Jersey, since 1958. April 1986 and was Chief 1994 until January 1995 and was firm that discovers, develops, produces Member of Executive Committee, Executive Officer of Automatic President and Chief Executive Officer and markets human and animal health Auclit Committee, Finance Data Processing, Inc. from from January 1988 to May 1994. products, since November 1994. Was Committee and Nominating January 1983 to August 1996. | |||
Member of Executive Committee, President and Chief Executive Officer Committee. Director of PSE&G, Member of Executive Committee, Auclit Committee and Finance of Merck & Co., Inc. from June 1994 '!Ti-Continental Corporation, sixteen Nuclear Committee and Committee. Director ofEDHI and to November 1994. Was Chairman of funds of the Seligman fami ly of funds Organization and Compensation Thomas & Betts Corporation. the Board, President and Chief and Seligman Quality, Inc. Committee. Director ofEDHI, Executive Officer of Becton Dickinson Automatic Data Processing Inc., | |||
T. J. Der mot Dunphy and Company from November 1992 to F or r est J . R emick Olsten Corporation, Vanstar has been a clirector since 1980. Has June 1994. Chairman of Nominating has been a clirector since 1995. Has Corporation and Shared Meclical been Chairman of the Board and Committee and member of Finance been an engineering consultant since Systems Corporation. | |||
Chief Executive Officer of Sealed Air Committee and Organization and July 1994. Retired Commissioner of Corporation, a Saddle Brook, Compensation Committee. Director the United States Nuclear Regulatory New Jersey manufacturer of protec- of PSE&G, Merck & Co., Inc. and Commission. Was Associate Vice tive packaging products and systems, Proviclian Corporation. President - Research and Professor of since November 1996. Was President Nuclear Engineering at Pennsylvania and Chief Executive Officer of Sealed Irwin Lerner State University, from 1985 to 1989. | |||
Air Corporation from 1971 to has been a clirector since 1981. Chairman of Nuclear Committee and November 1996. Chairman of Finance Retired Chairman, President member of Auclit Committee and Committee and member of the Auclit and Chief Executive Officer of Nominating Committee. Director Committee and Organization and Hoffmann-La Roche Inc., of Nutley, ofPSE&G. | |||
-to | Compensation Committee. Director New Jersey, a manufacturer of pre-of EDHI , Sealed Air Corporation, scription pharmaceuticals, vitamins Summit Bancorp and Summit Bank. and fine chemicals, and cliagnostic products and services. Chairman of Executive Officers of Enterprise E . J ames Ferla nd Leon R . Eliason Robert C. Murray Fra nk Cassidy Chai rman of the Board, President Chief Nuclear Officer and President- Vice President and Chief Financial President and Chief Executive and Chief Executive Officer; Nuclear Business Unit of PSE&G. Officer; Senior Vice President and Officer of Energis Resources. | ||
Chairman of the Board and Chief Financial Officer of PSE&G. | |||
Chief Executive Officer ofPSE&G; Robert J. Dou gh erty, Jr. Patricia A. Rad o Chairman of the Board and President and Chief Operating Officer R . Edwin Selover Vice President and Controller; Chief Executive Officer ofEDHI. ofEDHI. Vice President and General Counsel; Vice President and Controller Senior Vice President and General ofPSE&G. | |||
Lawren ce R . Codey Alfred C. Ko eppe Counsel of PSE&G. | |||
- | President and Chief Operating Officer Senior Vice President-Corporate Michael J . Thoms on ofPSE&G. Services and External Affairs President and Chief Executive ofPSE&G. Officer of CEA. | ||
23 | |||
Stockholder Information Stock Exchange Listings Transfer Agents Security Analysts and New York (Enterprise common The transfer agents for the com- Institutional Investors and PSE&G preferred) mon and preferred stocks are: For information contact: | |||
Philadelphia (Enterprise common) Stockholder Services Director - Investor Relations Trading Symbol: PEG Department 201-430-6564 Public Service Electric Annual Meeting and Gas Company Available Publications Please note that the annual P.O. Box 1171 Form 10-K: A copy of Enterprise's meeting of stockholders of Newark, NJ 07101-1171 1996 Annual Report to the Public Service Enterprise Securities and Exchange First Chicago Trust Group Incorporated will be Commission, filed on Form 10-K, Company of New York held at Newark Symphony Hall, may be obtained by calling P.O. Box 2506 1020 Broad Street, Newark, 201-430-6503 or writing to: | |||
Jersey City, NJ 07303-2506 New Jersey, on Tuesday, Director - Investor Relations April 15, 1997 at 2 p.m. Public Service Electric and Enterprise Direct - | |||
Gas Company T6B Stock Purchase and Stockholder Services P.O. Box 570 Dividend Reinvestment Plan Stockholder inquiries about stock Newark, NJ 07101 Enterprise offers Enterprise transfer, dividends, dividend rein-Direct, a Stock Purchase and vestment, clirect deposit, missing The copy so provided will be with-Dividend Reinvestment Plan. For or lost certificates, change of out exhibits. Exhibits may be pur-adclitional information, inclucling a address notification and other chased for a specified fee. | |||
prospectus and enrollment form, account information should be contact us through Internet e-mail directed to: Stockholder Services Financial and Statistical Review: | |||
at stkserv@pseg.com or Department, Public Service A comprehensive statistical report call 800-242-0813. | |||
Electric & Gas Company, P.O. containing historical financial Box 1171, Newark, NJ 07101-1171. and operating data may also be Dividends Please include your account num- obtained from the Director - | |||
Dividends on the common stock ber or social security number. Investor Relations. | |||
of Enterprise, as declared by the Board of Directors, are generally Stockholders can also phone our payable on the last business day toll -free number 800-242-0813, of March , June, September and Monday through Friday, with December of each year. Regular questions about stock transfer and quarterly dividends on PSE&G's registration, shares held in preferred stock are payable on the Enterprise Direct and our other last business day of March, June, stockholder services. Hours are: | |||
September and December of 10 a.m. to 3:30 p.m. Eastern time. | |||
each year. | |||
The telephone number for the hearing impaired with special Direct Deposit of Dividends equipment is TDD 800-732-3241. | |||
No more dividend checks delayed Please have your account number in the mail. No waiting in bank or Social Security number ready Common Stock- Market Price and Dividends per Share lines. Your quarterly common and when you call. | |||
preferred stock dividend payments 1996 1995 can be deposited electronically to Stockholders can reach us by High Low Div. High Low Div. | |||
your personal checking or savings Internet e-mail at: | |||
account. To use this free service, stkserv@pseg.com First Quarter $32\il $25Y. $.54 $29Ys $26 $.54 call us at 800-242-0813. | |||
Stockholders can also reach us Second Quarter 27% | |||
Third Quarter 27% | |||
25\il 25% | |||
.54 | |||
.54 30Y. | |||
29% | |||
26% | |||
26% | |||
.54 | |||
.54 | |||
.j by FAX at: 201-824-7056 Fourth Quarter 29 26% .54 30% 28% .54 The number of holders ofrecord of Public Service Enterprise Group Incorporated common stock as of December 31, 1996 was 167,205. | |||
@Printed on recycled paper, using soy ink. | |||
24 | |||
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Revision as of 08:26, 21 October 2019
ML18102A961 | |
Person / Time | |
---|---|
Site: | Salem, Hope Creek |
Issue date: | 12/31/1996 |
From: | Ferland E PUBLIC SERVICE ENTERPRISE GROUP |
To: | |
Shared Package | |
ML18102A960 | List: |
References | |
NUDOCS 9704150102 | |
Download: ML18102A961 (28) | |
Text
~.;ZTZ NOTICE
~/~/q7 - -
't 7 P.l/f5() I De>
THE ATTACHED FILES ARE OFFICIAL RECORDS OF THE INFORMATION &
RECORDS MANAGEMENT BRANCH.
THEY HAVE BEEN CHARGED TO YOU FOR A LIMITED TIME PERIOD AND MUST BE RETURNED TO THE RECORDS & ARCHIVES SERVICES SECTION, TS C3. PLEASE DO NOT SEND DOCUMENTS CHARGED OUT THROUGH THE MAIL. REMOVAL OF ANY PAGE(S) FROM DOCUMENT FOR REPRODUCTION MUST BE REFERRED TO FILE PERSONNEL.
- NOTICE -
success Letter to Shareholders 2 Investing for Growth 14 Directors and Officers 23 Ata Glance 4 Operational Highlights 18 Stockholder Information 24 Getting the Rules Right 6 Consolidated Financial Statistics 19 www.pseg.com 25 Operational Excellence 10 Condensed Consolidated Financials 20
-
~::£ >.D ::£ ::£ ::£ NN N N N N 92 93 94 95 96 92 93 94 95 96 (dollars in milli.ons) (dollars)
Enterprise Net Income Enterprise Annual Earnings and DivUlend Payout per Share Earnings Annual per Share Dividend Payout Financial Highlights Dollars in thousands where applicable 1996 1995 % Change Total Operating Revenues $ 6,041,249 $ 5,893,662 3 Total Operating Expenses $ 4,984,290 $ 4,798,472 4 Net Income $ 611,596 $ 662,323 (8)
Common Stock Shares Outstanding- Year-end (Thousands) 233,470 244,698 (5)
Shares Outstanding-Average (Thousands) 242,401 244,698 (1)
Earnings per Average Share $ 2.52 $ 2.71 (7)
Dividends Paid per Share $ 2.16 $ 2.16 Book Value per Share - Year-end $22.33 $22.22 Market Price per Share - Year-end $27.25 $30.63 (11)
Ratio of Earnings to Fixed Charges - ENTERPRISE(A) 2.68 2.78 Ratio of Earnings to Fixed Charges - PSE&a(A) 2.62 2.77 Gross Additions to Utility Plant $ 602,783 $ 686,150 (12)
Gross Utility Plant $17,327,635 $16,925,280 2 (A) Includes Preferred Securities Dividend Requirements.
The detailed consolidated financial statements and related discussi.on appear in Appendix A of the Proxy Statement.
1
n 1996, we produced The 1996 results also reflect Freedom of Choice I solid financial results, a one-time charge of$59 million, For the past five years, I've In our efforts to get the rules right, we continue to provide despite the ongoing or 25 cents per share, stemming talked to you in our annual and leadership at the state and fed-expenses associated with the from customer refunds required quarterly reports about the dra- eral levels where we are working refurbishment of the Salem by Public Service Electric and matic changes facing our indus- aggressively to establish rules nuclear units. Gas Company's (PSE&G) resolu- try and about the ways we have for competition that will be fair 1996 earnings reflect the tion of outstanding Salem regula- been preparing for that new era. to our customers, our employees benefits of our ongoing cost tory issues. This year the new era begins. and our shareholders.
management efforts, the In January 1997, the New We are working to ensure Financial Outlook strong New Jersey economy Jersey Board of Public Utilities that the new rules on industry Looking ahead, we have estab-and a good contribution from (BPU) issued its proposed find- restructuring provide customer lished a target of five percent our off-system gas sales that ings and recommendations for choice and lower cost without compound annual growth in earn-helped offset relatively flat restructuring the electric power endangering service reliability ings per share. We intend to electric sales caused by cool industry in New Jersey. This or compromising air quality and grow income in both our utility summer weather. We also proposed Energy Master Plan environmental progress.
and non-utility businesses experienced a sharp increase requires our principal subsidiary, Working to achieve opera-through effective cost manage-in earnings at our non- PSE&G, and the state's other tional excellence means concen-ment and development of new utility investment company, electric utilities, to develop pro- trating on what we do best and revenue streams. We are further Public Service Resources posals that allow customers to striving to do even better. We strengthening our capital struc-Corporation (PSRC). choose electric suppliers. It sets are creating partnerships with ture by applying our strong Public Service Enterprise an aggressive timetable requir- suppliers to increase efficiency cash flow to the retirement of Group (Enterprise) consoli- ing that customer choice be and reduce costs; recognizing maturing long-term debt and dated earnings for the year provided to a minimum of five employees, individually and in also are using internally gener-were $611.6 million, or $2.52 percent of customers beginning teams, whose best practices, ated funds to provide financial per common share. That in October 1998 and progressing in the form of their ideas and support to our more rapidly compares with earnings of to full competition for 100 per- actions, are serving as role mod-growing companies, Energis
$662.3 million, or $2.71 per cent of customers no later than els for the entire corporation; Resources Incorporated (Energis share in 1995. April 2001. and implementing new informa-Resources) and Community Results for 1996 reflect Freedom of choice is coming tion technology to help manage Energy Alternatives two one-time gains recorded and we are ready for it. We wel- work more efficiently across the Incorporated (CEA).
during the year - $18 mil- come it and believe we are in corporation.
Through continued commit-lion, or seven cents per share, position to succeed in this new We remain committed to the ment to our core utility busi-from the repurchase of pre- marketplace. reliability and quality of our ness, and establishing new ferred stock, and $13.5 mil- We have been preparing for service. This commitment con-non-regulated businesses, such lion, or six cents per share, this change by doing what suc- tinues to grow in significance as as Energis Resources, we aim to resulting from the sale of our cessful competitors must do: customers gain freedom in enhance the value of your com-Houston-based oil and gas sub- redesign and refocus operations; choosing suppliers. PSE&G con-pany and continue our record of sidiary, Energy Development concentrate on cost containment; tinues to offer pioneering money-paying dividends annually for Corporation (EDC). emphasize a strong customer back service guarantees. If we nine decades.
focus; forge strong, productive fail to keep our service promises partnerships with employees to customers, they can request and suppliers; participate and receive direct bill credits. It actively and decisively in the is no longer enough to satisfy shaping of public policies related customers; the standard for cus-to governing our industry; and tomer service has been raised seek new sources of revenue. and will be raised ever higher in the years ahead.
Three Goals Our commitment to opera-We intend to prosper in this new tional excellence, and success in marketplace by advancing the the new deregulated environment three goals we set in 1996:
resulted in our decision in 1995 getting the rules right; achiev-to take the nearly twenty-year-old ing operational excellence; and investing for growth.
2
A key Enterprise objective is to keep its co=on stock dividend secure, as it has been over the last five decades.
2.50 2.00 I.SO 1.00 0.50 0.00 111111I11111111I11111111111111111 1946 1956 1966 1976 1986 1996 (dolln.rs)
Dividend History, Adjusted for Stock Splits Salem nuclear units out of service and outside our traditional serv- our work force skills must be and make fundamental changes ice territory. We plan for it to well-matched with the new necessary to improve perfor- be an engine of growth in the requirements demanded by a mance of the station to the end of future and to be a billion dollar competitive market.
its 40-year license. Salem Unit 2 business in five years . Our associates are also an is expected to return to service in On the utility side, we have invaluable resource that can Allocati,on of the second quarter of this year expanded our portfolio of tradi- help us recognize the needs of Assets at and Salem Unit 1 is expected to tional products and services by the marketplace. Harnessing December 31, 1996 Enterprise 'lbtal Assets -
return in the fall. In any case, expanding our appliance busi- their life experiences and per-
$16.9 billion the units will be restarted only ness to include several new spectives to help shape business when we are certain they are competitive service offerings, as decisions will ultimately help us PSE&G ready for reliable operation over well as off-system electric and satisfy the energy service needs O Electric 74%
the long term. gas sales. of an expanding range of cus- 0 Gas 14%
The Hope Creek nuclear tomers. We are committed to EDHI Workin g Smarter plant, meanwhile, has achieved creating a work environment of 0 PSRC 9%
In addition, six-year contracts CEA 2%
outstanding performance since mutual respect, where associ-ratified by our unions utilized 0 EGDC 1%
its return from a refueling ates are empowered to unleash mutual gains bargaining and and maintenance outage in their many, cliverse talents and enhanced our ability to compete early 1996. insights to the fullest.
in the future by removing some Safety has been, and will con- In this annual report, you of the constraints that previ-tinue to be, the first priority in will find some excellent exam-ously hindered our operational operations of all our nuclear units. ples of how we are working flexibility. The contracts allow Investing for growth is our towards getting the rules right, our gas and electric employees to third goal. A key component of achieving operational excellence do crossover work, which trans- Sources of this strategy is our interna- and meeting our vision for Consolidated lates to a faster response to cus- Earnings p er Share tional independent power com- investing for growth.
tomers, increases the efficiency Enterprise Earnings pany, CEA. The demand for new I am grateful to you for your of our work force and helps us find per Average Share -
electric generation in the inter- continued support. As freedom $2.52 better ways to satisfy customers.
national market will exceed of choice continues to evolve, Continued investment in the Earnings per Share 800 gigawatts over the next I assure you that all of us at professional growth of our 11,000 10 years. That's the equivalent Enterprise are dedicated to deliv- PSE&G employees also contributes to our of 800 very large generating ering to you the results of our 0 Electric $1.79 long-term health. We are commit-stations. CEA will continue to hard work in the years ahead. Gas $ .40 ted to establishing an organiza-pursue financially attractive tion that fosters an environment opportunities here in the of continuous learning; we have $ .23 United States, but because of EDC* $ .10 made a major investment in the tremendous demand over- CEA $ .04 employee development and tech-seas, it will emphasize interna- EGDC $ (.01) nical training, as well as tuition Energis tional markets. E. James Ferland reimbursement for college and Chairman of the Board, President Resources$ (.03)
We have also launched a new and Chief Executive Officer, post-graduate studies. We realize total energy services subsidiary, Public Service Enterprise Group working smarter demands contin- Incorporated (* Discontinued operations-Energis Resources, which posi- February 14, 1997 Gain on Sale-$.06; Income uous learning by all of us, and from Operations-$.04) tions Enterprise to compete for that for Enterprise to be success-market opportunities spawned ful in a changing environment, by deregulation - both within 3
Public Service Enterprise E. James Ferland Enterprise Group Chairman of the Board, Incorporated President and Chief Executive Officer PO. Box570 80 Park Plaza, T4B Newark, NJ 07101 (201 ) 430-7000 www.pseg.com Public Service Electric PSE&G Lawrence R. Codey PSE&G serves the intensely developed corridor between and Gas Company President and Chief Operating Officer New York City and Philadelphia. PSE&G O PS~G PO. Box 570 80 Park Plaza, T4B Newark, NJ 07101 (201 ) 430-7000 www.pseg.com Enterprise EDHI Robert J. Dougherty, Jr.
President and Chief Operating Officer I
Diversified Holdings I Incorporated EDHI The Legal Center One Riverfront Plaza 9th Floor Newark, NJ 07102 (201 ) 596-6760 Energis Resources Frank Cassidy President and Chief Executive Officer Community Energy Energis Resources Incorporated Alternatives has power E~RGIS 499 Thornall Street plant interests in the Americas, 5th Floor Asia, the Pacific Rim Edison , NJ 08837 and Europe. (8881-3-ENERGIS www.energisresources .com Community Energy Michael J . Thomson Alternatives President and Chief Executive Officer Community Energy Alternatives Incorporate0 1200 East Ridgewood Avenue Ridgewood, NJ 07450 (201 ) 612-2772 Public Service Eileen A. Moran Resources Corporation President Public Service Resources Corporation
-"-----
The Legal Center One Riverfront Plaza
-u-r*na.. 9th Floor Newark, NJ 07102 (201 ) 596-6710 4
- ...
'II I I Publicly-traded diver s ified energy Collectively, PSE&G and
- Electricity and Gas Success in meeting our strategic and energy services company Community Energy Alternatives, a
- Industrial and Commercial Gas objectives will be measured in located in New Jersey with annual subsidiary of EDHI, have more than
- Industrial, Commercial and terms of earnings per share revenues of more t han $6 bimon, 90 years of power plant operating Residential Electric growth. The objective for the consisting of two main subsidiaries: experience with active investments
- Energy Consulting and Planning Enterprise portfolio is a compound Public Service Electric and in 40 power plants fueled by coal, *Integrated Energy Management growth rate of five percent Gas Company and Enterpr ise natural gas, oil, petroleum coke and Services annually over the next five years.
Diversified Holdings Incorporated. nuclear.
- Operations and Maintenance Support
- Residential Gas Products and Services I
I Ser ves more than 5.5 million New Jer sey residents in more than PSE&G provides the lowest cost, most reliable electric and gas service of any
- Electricity and Gas
- Industrial and Commercial While new business ventures will play a vital role in the long-term 300 urban, suburban and r ural New Jersey utility. It maintains a Electric growth and strength of I communities with electricity, gas staff of over 600 highly trained service
- Energy Consulting and Planning Enterprise, PSE&G remains I and energy alter natives in a technicians on cal I 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> a day,
- Industrial and Commercial Gas Enterprise's core business and 2,600 square-mile diagonal 365 days a year to repair a broad
- Residential Gas Products and currently comprises approxi-cor ridor across the state. range of gas and electric appliances Services mately 97 percent of total and HVAC equipment and backs up its
- Sunburst Customer Solutions Enterprise revenues.
performance with nine guarantees * 'fradelillk export assistance of service. Through its Sunburst program Customer Solutions product offuring,
- Business Enhancement Program PSE&G provides meter reading,
- Residential Electric bi Iling and collection services.
Operates Enterprise's non-utiljty EDHI bui lds on the nearly 100-year
- Electricity and Gas EDHI will enter new markets in businesses seeking to maintain a nd tradition of Enterprise by seeking
- Industrial and Commercial Gas the energy arena where its experi-expand its energy services in the out and developing additional
- Energy Consulting and Planrung ence and knowledge can be brought world. Consists of three primary energy-related services as deregu-
- Integrated Energy Management to bear and when market needs and subsidiaries: Energis Resources, lation of the industry progresses. Services opportunities can be pursued on a Community Energy Alternatives,
- Operations and Maintenance sound and profitable basis.
and Public Service Resources Support Corporation.
Provides a full menu of energy In addition to offering several new
- Electricity and Gas Energis Resources will serve management solutions for busi- services, Energis Resources brings
- Energy Consulting and Planning industrial and commercial cus-nesses in the Northeast. the expertise offunctions previ-
- Integrated Energy Management tomers in the New England and ously performed by a number of Services Mid-Atlantic region through three Enterprise subsidiaries to Northeast
- Operations and Maintenance product platforms: energy supply, markets which it knows well. Support consulting, engineering and oper-
- Financing Solutions ations services, and financing solutions.
Develops, acquires, owns and oper- More than 200 experts in project
- Electric Generation Solutions As the opportunities for growth in ates cogeneration and independent development and financing, engi- the domestic generation business power facilities in the U.S., Asia, neering, and plant operations shrink due to overcapacity and t he Pacific Rim, Europe, and and maintenance create effective potentially low profit margins, South Amer ica. teams that understand the CEA will pursue investments dynamics of t he areas they serve. in international generation in strategic markets.
Enhances EDHI's financial strength PSRC's well-balanced portfolio
- Investments in assets which pro- PSRC plans to build on its expertise with a strong, diverse portfolio of provides diversification, earrungs vide funds for future growth and in risk management and mitigation, more than 60 separate investments stability and continued incremental incremental earnings transaction analysis and closing and across a wide spectrum of industry earn.i ngs growth to shareholders. investment management to exploit sectors and asset types, including new opportunities that arise from leveraged and direct financing leases, industry deregulation.
project financing, venture capital funds, leveraged buy-outs, real estate limited partner ships and securities.
5
Getting the Rules Right Many of the rules governing our industry were written at a time when the utility franchise was the best way to ensure universal, safe and reliable service. However, now that the infrastructure has been built and as economic conditions change, we need to make sure all energy providers operate on a level playing field.
We are working to foster rules Master Plan would require rate reductions of five to ten the high level of service relia-that are fair to our customers, utilities to develop plans to percent for customers. We are bility that exists today.
shareholders, the State of offer retail competition to five committed to working toward A significant issue in the New Jersey and its economy. percent of all customers by that target rate reduction in a restructuring process is the Enterprise has dramati- October 1998. This would manner that protects the envi- recovery of transition costs.
cally increased its efforts to increase incrementally until ronment and our investors, 'fransition costs result from affect the deregulation debate full competition for all con- without creating a category of the utilities' historical legal in both New Jersey and sumers is reached by April second-class consumers who obligation to serve all cus-Washington, D.C. Getting the 2001. The state's electric utili- do not share in the benefits of tomers. Utilities have been rules right is of crucial impor- ties have until July 15 to file competition. required to plan, build and tance if Enterprise is to com- their own restructuring plans. While dedicated to imple- maintain generation and a pete effectively in the evolving PSE&G shares the BPU's menting the Energy Master delivery infrastructure to reli-energy market. broad objectives in the restruc- Plan, we are also urging the ably meet customer needs. In turing process and will work BPU to provide utilities with exchange for this obligation, Energy Master Plan vigorously toward the goal of flexibility to propose benefi- utilities have been allowed a In January 1997, the BPU opening the New Jersey mar- cial changes, as different
" unveiled its blueprint for ketplace to competition, with utilities face different circum-introducing customer choice stances and challenges in into New Jersey's electricity restructuring. We are also market. The proposed Energy stressing the need to maintain 7
PSE&G Net Utility Plant In-Service Fossil 18.6%
Nuclear 40.0%
reasonable opportunity to A significant amount of the recover investments through pollution transported into the regulated rates. As rates Northeast is produced by coal-become competitive, they may burning power plants in the no longer be sufficient to per- Midwest and Ohio Valley, mit recovery of all such costs, plants that are allowed to which then become "stranded." operate with minimal environ-Considerations of fairness, mental controls. An electric efficiency and law warrant industry restructuring plan recovery of these costs. that encourages increased pro-Transmission
& Distribution 38.8% duction of this cheap, dirty Restructuring and the Midwest electric power will, environment as a result, send hundreds Lower cost electric power of thousands of tons of addi-must not come at the expense tional pollution drifting into of environmental quality or our region.
sound public health policy. Our concern over this issue 2.6%
New Jersey and the Northeast is shared by officials at the
} o t h er are burdened by the impact highest levels of state govern-of air pollution created to the ment, as well as statehouse The net e/,ectric and gas plant in-seruice arrwunted to $ 10. 7 billwn at December 31, 1996. West and South, which is and congressional members of transported by prevailing both parties throughout the wind currents. Northeast. We have worked hard to increase their recogni-tion of the strong link between 8
I
energy and the environment working to translate it into The proposal calls for the and there are encouraging appropriate action. 13 percent GRFT to be indications that the message replaced by existing sales and is being heard. Vice President Energy taxes corporate taxes and a tempo-Al Gore has clearly stated After a year of study, a BPU/ rary new tax that would be that environmental degrada- New Jersey 'freasury phased out over seven years, tion should not be the price Department joint task force causing a 45 percent reduction the nation pays for lower has recommended a major in taxes paid by consumers.
energy costs. The Federal overhaul of the Gross Receipts Energy tax reform is long over-Energy Regulatory and Franchise Tux (GRFT) due and essential if New Commission, the paid by all customers of Jersey is to compete with Environmental Protection New Jersey utilities. Because other states for business and Agency and the White House customers of non-utility jobs. It's also good news for Council on Environmental energy providers do not pay New Jersey consumers, who Quality have also acknowl- this tax, utilities are at a currently pay among the high-edged the potential negative competitive disadvantage. A est energy taxes in the nation.
environmental impact of new tax plan that treats all restructuring. We are encour- energy providers equally -
aged by this support and are giving utilities and new market entrants the same opportuni-ties to compete for business -
has been recommended.
9
- '
Operational Excellence Achieving operational excellence doesn't happen overnight. It means questioning tradition, finding smarter ways to serve customers, streamlining work processes, and keeping an unblinking eye on the bottom line.
In 1996, Enterprise employees Aviation Agency bid out to Taking time a t Hope Creek Redu ction, r ecovery, continued their commitment replace 30,000 feet of cable Our Hope Creek nuclear sta- recycling to excellence. As we transform snaking under a runway at tion in Salem, New Jersey, got A major corporate initiative, ourselves into a global energy Newark International Airport - back to the business of making driven by the need to improve services company, their ideas one of the nation's busiest - electricity following an outage our bottom line as well as our and actions remain critical to PSE&G's Metropolitan electric early in 1996. The refueling commitment to the environ-our success. distribution division did the outage was expected to last ment, was the establishment of Here are some examples of work. The work might be 30 days; but station manage- a materials management how individuals, teams and considered traditional , but ment expanded the original process. The process empha-organizations are helping to PSE&G's approach wasn't. work scope to include more sizes not only the recovery of set a standard of excellence for Project leaders and repre- than 13,500 individual work usable waste, but also the the entire corporation. sented employees planned out activities, all aimed at ensur- reduction of waste by design-a schedule that would not ing safe and reliable long-term ing out as much as possible Shared vis ions, interfere with high air traffic operations at the plant. from the start. The results shared rewards periods. Much of the work was Hope Creek has enjoyed an have been gratifying: waste Replacing underground distri- done on weekends. Despite the extremely reliable period disposal costs have fallen more bution cable and splicing is the scheduling complications, the of operation since its return than $5 million, more than type of work on which PSE&G job was completed on time. to service. 90 percent of our non-haz-has built its reputation for The project marked a new ardous solid waste is being excellence. When the Federal approach to generating rev- recycled and PSE&G was for-enue and helped increase our mally honored by the federal employees' awareness of the Environmental Protection importance of meeting cus- Agency (EPA) as one of 280 tomer needs as we face the Fortune 1000 companies new reality of competition. named charter members of the EPA's WasteWi$e program.
11
87 88 89 90 91 92 93 94 95 96 92 93 94 95 96 PSE&G supplies electricity at the lowest cost Th e ratio of customers to PSE&G permanent per kwh of all the utilities in employees, a measure of efficiency, N ew Jersey, and intends to continue the trend. has g rown 23% over the past fiv e years.
(Average revenue per kwh adj usted for inflation.
Base year 1995- 1996. Cents per kwh.)
New perspectives, Meeting monthly, the council system will allow for quicker new energy has formulated recommenda- accessing of information and PSE&G gained recognition for tions to increase minority sup- improved capabilities for plan-its promotion and support of plier participation in high-dollar ning and management of work minority and women-owned volume and strategic products in providing energy services.
business development when it and services. PSE&G's supplier But Business Integration was named 1996 Corporation of diversity process is a customer- must be more than just jar-the Year by the minority busi- driven business strategy. Just gon. PSE&G will be joining ness members of the New York/ as success requires a workforce some 6,000 companies world-New Jersey Minority Purchasing that is reflective of the society wide who are using an infor-Council. PSE&G's efforts in we serve, we also need suppliers mation system known as SAP this area include establishing who can provide insights and - Systems, Applications and a Supplier Diversity Council new ideas to help us better Products in Data Processing -
comprised of employees and meet our customers' needs. to achieve major gains in representatives from minority performance. The rollout of businesses to advise the com- Making the power of Business Integration starts pany on its supplier diversity information work for us with Fossil Generation in 1998.
policies and results, and to fos- Business Integration is a cor-ter communications between poratewide effort to improve PSE&G and its suppliers. our operating efficiencies through the use of integrated business software. An inte-grated internal information 12
Customer service: A residential customer in for good jobs with fair wages ,
a hallmark of success South Jersey, for example, was benefits and working condi-Customers today are becoming dissatisfied with the service tions. The new agreements more sophisticated - and she received from a competi- address the requirements of a demanding - consumers. tor of our appliance service fast-changing industry head-on, With the coming of customer business. This competitor including provisions that allow choice, building a relationship tried to use unethical tactics gas and electric employees to with our customers has never to sell a major repair job that work in each other's areas.
been more critical. At PSE&G wasn't needed. When the cus- Other provisions address cut-we hear from our customers tomer called PSE&G for a ting non-productive time and daily through regular surveys, second opinion, our service reducing costs. Mutual-gains feedback and personal interac- technician quickly discovered bargaining, a process of tions . We listen, then improve the problem to be simply a side-by-side problem-solving, our products and services clogged pilot light. Daily inter- allowed the unions and based on what we hear. As actions such as these help company to help each other part of this constant feedback, build customer loyalty and recognize shared interests.
we've learned that the exper- awareness. A united front of employer and tise and integrity of our work- employees is essential for pre-force have been major factors A pact for the 21st century serving customers and jobs.
in maintaining customer loyalty. PSE&G's five unions signed contracts in 1996 that extend to the year 2002. These agree-ments balance the needs of the company in an emerging com-petitive marketplace with the needs of employees and unions 13
Investing For Growth In 1996, Enterprise reorganized to take maximum benefit of the opportunities arising out of the deregulation of the electric and gas industries. This reorganization also results in a clearer division between Enterprise's regulated and unregulated businesses.
Bob Dougherty now serves Going global standards, and is delivering CEA also enjoys a well-as president and chief operat- Business plans for CEA target electricity to the country's established reputation in the ing officer of an expanded new investments of approxi- power grid. The second unit is U.S. The JFK Energy Center, Enterprise Diversified Holdings mately $700 million over a scheduled to go on-line in late which is owned and operated Incorporated (EDHI). In addi- five -year horizon. Plans for 1997; both units will supply a by CEA and Gas Energy, Inc. ,
tion to PSRC, which will con- 1997 call for closure on several substantial amount of electric- a wholly-owned subsidiary of tinue to search for passive, projects, among them a 220- ity to this rapidly-developing Brooklyn Union Gas Company, energy-related investments to megawatt simple-cycle plant in rural area. completed its first full year of add to its portfolio, Dougherty Colombia, South America. Last year CEA and its commercial operation. The will manage and develop CEA, This plant will burn natural partner AES, a developer and center is a 105-megawatt plant Enterprise's independent gas and sell its electrical out- operator of power plants, suc- that supplies electricity and power company, and a new put on the Colombian spot cessfully closed project hot and chilled water for business, Energis Resources, market. The project is part of financing for Central Termica New York's Kennedy which provides a full range of a joint venture formed with San Nicolas, a 650-megawatt International Airport. Addi-energy-management solutions. Amoco Power Resources. The plant located in Argentina. tional electrical capacity is I
I .*
Through these unregulated project is intended to enter The ability to refinance with a sold to the local utility, companies, and by expanding a construction during the first $60 million non-recourse loan Consolidated Edison.
number of traditional products quarter of 1997 and be in com- in the Argentine market CEA has investments in and services found in our reg- mercial operation by late 1997. demonstrates a high degree of 22 cogeneration and power ulated utility, Enterprise seeks The year 1996 was one of bank confidence in Argentina's plants around the world to increase shareholder value. progress. CEA holds a minority power sector reforms and in totalling 2,400 megawatts of interest in two 300-megawatt San Nicolas' viability as a key electric generation capacity.
coal-fired units located in the energy producer. Operating from offices in interior province of Gansu, Hong Kong, Argentina, China. The first unit success- Thailand, India and the U.S.,
fully passed its first perfor- CEA professionals are pursu-mance test in 1996, meeting ing nearly 70 potential projects all national environmental in more than twelve countries.
15
EDHI's net income reached a record high in 1996.
Net income from continuing operations increased 28.5%
as compared to 1995 primarily due to a strong performance by Puhlic Service Resources Corporation.
- Without EGDC impairment of $(50.4) million.
92 93 94 95 96 (dollars in millions)
Income from Income from Continuing Di scontinu ed Operations Operations Smarter energy*M Enterprise Strategic Energy Market restaurants through-Drawing on Enterprise's depth Solutions, which provided con- out the Northeast, as well as of experience and financial sulting, engineering and more than 40 branch offices of strength, Energis Resources, repair services. In addition, a major Manhattan-based bank.
our newest subsidiary, pro- the financing of energy-savings, Similarly, deregulation of vides a single source for reli- or demand-side management electricity is proceeding able, top-quality service projects, formerly offered throughout the U.S. and at a focused on customer needs . by the utility subsidiary, particularly fast clip in the The company is concentrating Public Service Conservation Northeast - Energis on industrial and commercial Resources Corporation, Resources' home territory.
customers throughout the will now be supplied by New Jersey customers will Northeast and Mid-Atlantic Energis Resources. begin gaining the ability to states. Energis Resources offers an choose their electricity sup-Energis Resources offers impressive array of products plier in October 1998. Retail customers a wide range of and services, beginning with customers in Rhode Island and services to improve business the sale of natural gas. In Pennsylvania will be able to operations and performance 1996, U.S. Energy Partners choose in 1997. Since the fed-through more cost-efficient sold more than $67 million of eral Energy Policy Act of 1992 energy utilization, energy gas to some 3,600 customers deregulated the wholesale elec-process redesign, optimized in New Jersey, New York and tricity market, Enterprise has energy investment strategies states as far south as the been one of the most active and unique financing options Carolinas. New Jersey has and aggressive participants in for energy-related projects. been a pioneer in the deregu- that market. Energis Resources The company has absorbed lation of natural gas sales, will draw on this expertise to two Enterprise companies allowing the customer to buy serve retail markets afforded with proven track records: the gas itself from suppliers freedom of choice.
U.S. Energy Partners, which like Energis Resources, with sold natural gas, and delivery arranged through the local utility.
The company is already marketing natural gas to a number of customers, includ-ing more than 50 Boston 16
Along with energy supply, billing, payment processing within its service territory Energis Resources provides and collection services to and a well-trained staff of consulting, engineering and municipalities and other service technicians, the appli-operations services and financ- investor-owned utilities. ance service business has ing solutions. The ultimate Municipalities and other utili- expanded its traditional port-objective is to successfully ties can reduce costs and folio of service offerings. These provide total energy manage- increase efficiencies by utiliz- new services create added ment to customers in the ing PSE&G's sophisticated opportunities for bringing in Northeast, allowing them to customer service operations additional revenues. The busi-completely outsource their and extensive meter reading ness has also gained efficien-energy functions. experience. As of January cies and sharpened its Energis Resources is 1997, seven municipalities and competitive advantage with already working on energy two regional water utilities the introduction ofhome-projects with a number of have signed on. based reporting, which allows major customers. It is PSE&G's appliance service service technicians to report installing and maintaining business is the only region- directly to their first job in the power supply equipment for a wide provider of premium morning instead of stopping major telecommunications service and service contracts first at the office.
company's fiber optic network. for all major appliance brands In addition, PSE&G, with For a national food processor, with 24-hour service. 365-days- its long-established rights-of-the company is financing a-year availability. Banking on way, extensive network of third-party installation of a strong name awareness wires, and long-term customer high-efficiency lighting at 200 relationships, is also exploring of its locations. the possibility of adding wire and wireless telecommunica-Expanding a traditional tions services to its broad por t-portfolio folio of products and services.
PSE&G, through its Sunburst Customer Solutions program, offers its meter reading, 17
Public Service Enterprise Group continues to pursue a strategy of enhancing stockholder value through retention and reinvestment of earnings and payment of an annual dividend .
.
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~ *
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!
91 92 93 94 95 96 92 93 94 95 96 (dollars) (percent)
This shows the value on December 31 Return on Average Common Equity of each year of $100 invested in for 1996 was 11.3%, which reflects Enterprise on December 31, 1991 various one-time adjustments, as (assumes reinvested dividends). discussed in the Chairman's letter of tlus annual report.
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! I 95 96 97" 98' 99' 95 96 97* 98* 99*
9 PSE&G n EDHI Common Equity Preferred Securioes 11 Long-Term lJ Debt
- Projected
- Projected (dollars in milliorm) (percent)
Declining utility capital expenditures One of our key objectives, as reflected are expected to be funned through in Enterprise'.~ capitalization internally generated cash, while growing ratio, is to strengthen the bal.ance sheet EDHI needs are expected to be met by by delet*eraging PSE&G.
additional debt and internally generated cash.
Consolidated Financial StatisticsrAJ Dollars in thousands where applicable 1996 1995 1994 1993 1992 Selected Income Information Operating Revenues:
Electric $ 3,944,362 $ 4,020,842 $ 3,739,713 $ 3,696,114 $ 3,407,830 Gas 1,880,994 1,686,403 1,778,528 1,594,341 1,586,181 Nonutility Activities 215,893 186,417 177,082 137,069 112,268 Thtal Operating Revenues $ 6,041,249 $ 5,893,662 $ 5,695,323 $ 5,427,524 $ 5,106,279 Income from Continuing Operations $ 587,358 $ 627,287 $ 666,521 $ 549,178 $ 475,150 Cumulative effect of change in accounting for income taxes - - - 5,414 -
Income from Discontinued Operations 24,238 35,036 12,512 46,341 28,967 Net Income $ 611,596 $ 662,323 $ 679,033 $ 600,933 $ 504,117 Earnings per Average Share:
From Continuing Operations $ 2.42 $ 2.57 $ 2.73 $ 2.29 $ 2.05 From Cumulative effect of change in accounting for income taxes - - - .02 -
From Discontinued Operations .10 .14 .05 .19 .12 Thtal Earnings per Average Share $ 2.52 $ 2.71 $ 2.78 $ 2.50 $ 2.17 Dividends Paid per Share $ 2.16 $ 2.16 $ 2.16 $ 2.16 $ 2.16 Payout Ratio 86% 80% 78% 86% 100%
Rate of Return on Average Common Equity(BJ 11.28% 12.32% 12.94% 11.91% 10.69%
Ratio of Earnings to Fixed Charges 2.68 2.78 2.84 2.57 2.33 Book Value per Common Share(CJ $22.33 $22.22 $21.68 $21.07 $20.32 Gross Utility Plant $17,327,635 $16,925,280 $16,566,058 $15,861,484 $15,081,907 Accumulated Depreciation and Amortization of Utility Plant $ 6,148,482 $ 5,737,849 $ 5,467,813 $ 5,057,104 $ 4,610,595 Thtal Assets $16,915,331 $16,816,491 $16,312,734 $15,995,433 $14,543,696 Consolidated Capitalization Common Stock $ 3,626,792 $ 3,801,157 $ 3,801,157 $ 3,772,662 $ 3,499,183 Retained Earnings 1,586,256 1,636,971 1,505,010 1,361,018 1,282,931 Common Equity 5,213,048 5,438,128 5,306,167 5,133,680 4,782,114 Preferred Stock Without Mandatory Redemption 113,392 324,994 384,994 429,994 429,994 Preferred Stock With Mandatory Redemption 150,000 150,000 150,000 150,000 75,000 Monthly Guaranteed Preferred Beneficial Interest in PSE&G's Subordinated Debentures 210,000 210,000 150,000 - -
Quarterly Guaranteed Preferred Beneficial Interest in PSE&G's Subordinated Debentures 208,000 - - - -
' Long-Turm Debt 4,580,231 5,189,791 5,110,022 5,100,228 4,962,884 Thtal Capitalization $10,474,671 $11,312,913 $11,101,183 $10,813,902 $10,249,992 (A) The dewikd consolidated financial swtements and related discussion appear in Appendix A of the Proxy Statement.
(BJ Net Income for a twelve-rrwnth period divided by the thirteen-mnnth a verage of Commnn Equity.
(CJ 1hta1 Comrrwn Equity divided by end-of-period Comrrwn Shares outswnding.
19
Condensed Consolidated Statements of Income
~
l In thousands (except per share data) for the years ended December 31, 1996 1995 1994 Operating Revenues Electric $3,944,362 $4,020,842 $3,739,713 Gas 1,880,994 1,686,403 1,778,528 I
~
Nonutility Activities 215,893 186,417 177,082 Total Operating Revenues 6,041,249 5,893,662 5,695,323 Operating Expenses Fuel for Electric Generation and Interchanged Power 918,514 891,782 695,763 Gas Purchase d Operation and Maintenance 1,117,716 1,371,800 961,539 1,320,345 1,023,956 1,323,886 l
1:
Depreciation and Amortization 607,293 596,966 555,461 Taxes 968,967 1,027,840 974,418 I Total Operating Expenses 4,984,290 4,798,472 4,573,484 l Operating Income Allowance for Funds Used During Construction and Capitalized Interest 1,056,959 18,155 1,095,190 38,163 1,121,839 42,588 l
Other Income - Net Interest Charges (1,920) 453,111 8,041 464,207 6,430 462,189 II' Preferred Securities Dividend Requirements and Premium 32,725 49,900 42,147 I Income from Continuing Operations 587,358 627 ,287 666,521 II Income from Discontinued Operations 24,238 35,036 12,512 -
!
Net Income $ 611,596 $ 662,323 $ 679,033 Shares of Common Stock Ou tstanding End of Period Average for Period 233,470,291 242,400, 755 244,697,930 244,697,930 244,697,930 244,4 70, 794 lI Earnings per Average Share:
From Continuing Operations From Discontinued Operations
$2.42
.10
$2.57
.14
$2.73
.05
-
l Total Earnings per Average Share $2.52 $2 .71 $2.78 Dividends Paid per Share of Common Stock $2.16 $2.16 $2.16 The detail.ed consolidated financial statemenls and related discussion appear in Appendix A of the Proxy Statement.
Condensed Consolidated Statements of Cash Flows i
In thousands for the years ended December 31, 1996 1995 1994
-'
Net Income $ 611 ,596 $ 662,323 $ 679,033 Adjustments to net income, primarily depreciation I and amortization 822,864 872,550 564,745 Net cash provided by operating activities 1,434,460 1,534,873 1,243,778 Net cash used in investing activities, primarily additions to utility plant (offset by the net proceeds from the sale 1' of Discontinued Operations in 1996) (9,225) (935,305) (1,010,420) -
Net cash used in financing activities (1,208,296) (603,093) (237,200) i Net increase (decrease) in Cash and Cash Equivalents 216,939 (3,525) (3,842)
Cash and Cash Equivalents at Beginning of Period 61,964 65,489 69,331 Cash and Cash Equivalents at End of Period $ 278,903 $ 61,964 $ 65,489 The detail.ed consolidated financial statements and related discussion appear in Appendix A of the Proxy Statement.
1 20
I Condensed Consolidated Balance Sheets In thousands at December 31, 1996 1995 I
Assets I
Utility Plant:
r Utility Plant (including Nuclear Fuel) $16,858,348 $16,532,232 Less: Accumulated Depreciation and Amortization 6,148,482 5,737,849
.
I I
Net Utility Plant in Service Construction Work in Progress (including Nuclear Fuel) 10,709,866 445,321 10,794,383 369,082 Plant Held for Future Use 23,966 23,966 I
Net Utility Plant 11,179,153 11,187,431 Investments and Other NoncurrentAssets 2,351 ,984 2,242,744 Current Assets 1,744,427 1,828,477 I
I Deferred Debits 1,639,767 1,557,839 I
Total $16,915,331 $16,816,491
'
Capitalization and Liabilities Capitalization:
Common Equity $ 5,213,048 $ 5,438,128 Subsidiaries' Preferred Securities:
Preferred Stock Without Mandatory Redemption 113,392 324,994 Preferred Stock With Mandatory Redemption 150,000 150,000 Monthly Guaranteed Preferred Beneficial Interest in PSE&G's Subordinated Debentures 210,000 210,000 Quarterly Guaranteed Preferred Beneficial Interest in PSE&G's Subordinated Debentures 208,000 -
Long-Turm Debt 4,580,231 5,189,791 Total Capitalization 10,474,671 11,312,913 Other Long-Turm Liabilities 184,769 199,832 Current Liabilities 2,271,754 1,548,026 Deferred Credits 3,984,137 3,755,720 Total $16,915,331 $16,816,491 The detailed consolidated financial statements and related discussion appear in Appendix A of the Proxy Statement.
Condensed Consolidated Statements of Retained Earnings In thousands for the years ended December 31, 1996 1995 1994 Balance January 1 $1,636,971 $1 ,505,010 $1 ,361,018 Add Net Income 611,596 662,323 679,033
-.
Total 2,248,567 2,167,333 2,040,051 Deduct Dividends on Common Stock 522,565 528,548 528,071 Retirement of Common Stock 133,047 - -
Preferred Securities Issuance Expenses 6,699 1,814 6,970 Total Deductions 662,311 530,362 535,041 Balance December 31 $1,586,256 $1,636,971 $1,505,010 The detailed consolidated financial statements and related discussion appear in Appendix A of the Proxy Statement.
Notes to Consolidated Financial Statements For full text of Organization and Summary of Significant Accounting Fblicies refer to Note 1 to Consolidated Financial Statements in Appendix A of the Proxy Statement.
For full text of Commitments and Contingent Liabilities refer to Note 13 to Consolidated Financial Statements in Appendix A of the Proxy Statement.
21
Financial Statement of Responsibility To the Stockholders of Public Service Enterprise Group Incorporated:
The condensed financial statements in this Summary Annual Report were derived from the consolidated financial statements included in the Public Service Enterprise Group Incorporated (the "Company") Proxy Statement for the 1997 Annual Meeting of Stockholders, which has been enclosed in the same mailing as this Summary Annual Report. The integrity and objectivity of the financial information presented in the Proxy Statement and this Summary Annual Report are the responsibility of the Company's management. The financial statements report on management's accountability for corporate operations and assets. Tu this end, management maintains a highly developed system of internal con-trols and procedures designed to provide reasonable assurance that the Company's assets are protected and that all transactions are accounted for in conformity with generally accepted accounting principles. The system includes documented policies, guidelines and self-assessments, aug-mented by a comprehensive program of internal and independent audits conducted to monitor overall accuracy of financial information and com-pliance with established procedures. The consolidated financial statements included in the Proxy Statement were audited by Deloitte & Thuche LLP, independent auditors, whose report on the condensed consolidated financial statements appears herein.
E. James Ferland We~~
Robert C. Murray Patricia A. Rado Chairman of the Board, Vice President and Vice President and Controller, President and Chief Executive Officer Chief Financial Officer Principal Accounting Officer February 14, 1997 Independent Auditors' Report To the Stockholders and the Board of Directors of Public Service Enterprise Group Incorporated: Deloitte&
ToucheLLP We have audited the consolidated balance sheets of Public Service Enterprise Group Incorporated and its subsidiaries 0
(the "Company") as of December 31, 1996 and 1995, and the related consolidated statements of income, retained earnings and cash flows for each of the three years in the period ended December 31, 1996. Such consolidated financial statements and our report thereon dated February 14, 1997, expressing an unqualified opinion (which are not presented herein) are included in Appendix A of the Proxy Statement for the 1997 Annual Meeting of Stockholders. The accompanying condensed consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on such condensed consolidated financial statements in relation to the complete consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed consolidated balance sheets as of December 31, 1996 and
,.
1995 and the related condensed consolidated statements of income, retained earnings and cash flows for each of the three years in the period ended December 31, 1996 is fairly stated in all material respects in relation to the basic consolidated financial statements from which it has been derived.
j)~ ~ I~ LL/'
February 14, 1997 Parsippany, New Jersey 22
Lawrence R . Codey E. James F erland the Organization and Compensation Richard J . Swift l
has been a clirector since 1991. Has has been a clirector since 1986. Committee and member of the Auclit has been a clirector since 1994.
been President and Chief Operating Has been Chairman of the Board, Committee, Finance Committee and Has been Chairman of the Officer of PSE&G since September President and Chief Executive Nuclear Committee. Director of Board, President and Chief 1991. Member of Executive Officer of Enterprise since July 1986, PSE&G, Humana, Inc., Sequana Executive Officer of Foster I Therapeutics, Inc. and Medarex Inc. Wheeler Corporation, of Clinton, Committee and Finance Committee. Chairman of the Board and Chief Director of PSE&G, Sealed Air Executive Officer of PSE&G since New Jersey, a firm provicling design, Corporation, The 'frust Company of September 1991, and Chairman of the Mar ilyn M. Pfa ltz engineering, construction, manu-New Jersey, United Water Resources Board and Chief Executive Officer of has been a clirector since 1980. Has facturing, management, plant oper-Inc. and Blue Cross & Blue Shield of EDHI since June 1989. Chairman of been a partner of P and R Associates ations and environmental services, New Jersey. Executive Committee. Director of of Summit, New Jersey, a communica- since May 1994. Member of PSE&G, EDHI, and EDHI's principal t ions firm, since 1968. Chair of Finance Committee, Nominating Ern est H . Drew subsicliaries, and of Foster Wheeler Auclit Committee and member of Committee and Nuclear has been a clirector since 1993. Has Corporation and The Hartford Steam Nominating Committee and Committee. Director ofEDHI, been a member, Board of Management Boiler Inspection and Insurance Organization and Compensation Foster Wheeler Corporation and ofHoechstAG, Frankfurt, Germany, Company. Committee. Director of EDHI and Ingersoll-Rand Company.
a manufacturer of pharmaceuticals, AAA National Association.
chemicals, fibers, film, specialities R aymon d V. Gilmartin Jos h S. Weston and advanced materials, since has been a clirector since 1993. Has James C. Pitney has been a clirector since 1984.
January 1995. Was Chairman of the been Chairman of the Board, has been a clirector since 1979. Has Has been Chairman of the Board Board and Chief Executive Officer of President and Chief Executive Officer been a partner in the law firm of of Automatic Data Processing, Inc.,
Hoechst Celanese Corporation of of Merck & Co., Inc. of Whitehouse, Pitney, Harclin, Kipp & Szuch of of Roseland, New Jersey, since Somerville, New Jersey from May New Jersey, a global pharmaceutical Morristown, New Jersey, since 1958. April 1986 and was Chief 1994 until January 1995 and was firm that discovers, develops, produces Member of Executive Committee, Executive Officer of Automatic President and Chief Executive Officer and markets human and animal health Auclit Committee, Finance Data Processing, Inc. from from January 1988 to May 1994. products, since November 1994. Was Committee and Nominating January 1983 to August 1996.
Member of Executive Committee, President and Chief Executive Officer Committee. Director of PSE&G, Member of Executive Committee, Auclit Committee and Finance of Merck & Co., Inc. from June 1994 '!Ti-Continental Corporation, sixteen Nuclear Committee and Committee. Director ofEDHI and to November 1994. Was Chairman of funds of the Seligman fami ly of funds Organization and Compensation Thomas & Betts Corporation. the Board, President and Chief and Seligman Quality, Inc. Committee. Director ofEDHI, Executive Officer of Becton Dickinson Automatic Data Processing Inc.,
T. J. Der mot Dunphy and Company from November 1992 to F or r est J . R emick Olsten Corporation, Vanstar has been a clirector since 1980. Has June 1994. Chairman of Nominating has been a clirector since 1995. Has Corporation and Shared Meclical been Chairman of the Board and Committee and member of Finance been an engineering consultant since Systems Corporation.
Chief Executive Officer of Sealed Air Committee and Organization and July 1994. Retired Commissioner of Corporation, a Saddle Brook, Compensation Committee. Director the United States Nuclear Regulatory New Jersey manufacturer of protec- of PSE&G, Merck & Co., Inc. and Commission. Was Associate Vice tive packaging products and systems, Proviclian Corporation. President - Research and Professor of since November 1996. Was President Nuclear Engineering at Pennsylvania and Chief Executive Officer of Sealed Irwin Lerner State University, from 1985 to 1989.
Air Corporation from 1971 to has been a clirector since 1981. Chairman of Nuclear Committee and November 1996. Chairman of Finance Retired Chairman, President member of Auclit Committee and Committee and member of the Auclit and Chief Executive Officer of Nominating Committee. Director Committee and Organization and Hoffmann-La Roche Inc., of Nutley, ofPSE&G.
Compensation Committee. Director New Jersey, a manufacturer of pre-of EDHI , Sealed Air Corporation, scription pharmaceuticals, vitamins Summit Bancorp and Summit Bank. and fine chemicals, and cliagnostic products and services. Chairman of Executive Officers of Enterprise E . J ames Ferla nd Leon R . Eliason Robert C. Murray Fra nk Cassidy Chai rman of the Board, President Chief Nuclear Officer and President- Vice President and Chief Financial President and Chief Executive and Chief Executive Officer; Nuclear Business Unit of PSE&G. Officer; Senior Vice President and Officer of Energis Resources.
Chairman of the Board and Chief Financial Officer of PSE&G.
Chief Executive Officer ofPSE&G; Robert J. Dou gh erty, Jr. Patricia A. Rad o Chairman of the Board and President and Chief Operating Officer R . Edwin Selover Vice President and Controller; Chief Executive Officer ofEDHI. ofEDHI. Vice President and General Counsel; Vice President and Controller Senior Vice President and General ofPSE&G.
Lawren ce R . Codey Alfred C. Ko eppe Counsel of PSE&G.
President and Chief Operating Officer Senior Vice President-Corporate Michael J . Thoms on ofPSE&G. Services and External Affairs President and Chief Executive ofPSE&G. Officer of CEA.
23
Stockholder Information Stock Exchange Listings Transfer Agents Security Analysts and New York (Enterprise common The transfer agents for the com- Institutional Investors and PSE&G preferred) mon and preferred stocks are: For information contact:
Philadelphia (Enterprise common) Stockholder Services Director - Investor Relations Trading Symbol: PEG Department 201-430-6564 Public Service Electric Annual Meeting and Gas Company Available Publications Please note that the annual P.O. Box 1171 Form 10-K: A copy of Enterprise's meeting of stockholders of Newark, NJ 07101-1171 1996 Annual Report to the Public Service Enterprise Securities and Exchange First Chicago Trust Group Incorporated will be Commission, filed on Form 10-K, Company of New York held at Newark Symphony Hall, may be obtained by calling P.O. Box 2506 1020 Broad Street, Newark, 201-430-6503 or writing to:
Jersey City, NJ 07303-2506 New Jersey, on Tuesday, Director - Investor Relations April 15, 1997 at 2 p.m. Public Service Electric and Enterprise Direct -
Gas Company T6B Stock Purchase and Stockholder Services P.O. Box 570 Dividend Reinvestment Plan Stockholder inquiries about stock Newark, NJ 07101 Enterprise offers Enterprise transfer, dividends, dividend rein-Direct, a Stock Purchase and vestment, clirect deposit, missing The copy so provided will be with-Dividend Reinvestment Plan. For or lost certificates, change of out exhibits. Exhibits may be pur-adclitional information, inclucling a address notification and other chased for a specified fee.
prospectus and enrollment form, account information should be contact us through Internet e-mail directed to: Stockholder Services Financial and Statistical Review:
at stkserv@pseg.com or Department, Public Service A comprehensive statistical report call 800-242-0813.
Electric & Gas Company, P.O. containing historical financial Box 1171, Newark, NJ 07101-1171. and operating data may also be Dividends Please include your account num- obtained from the Director -
Dividends on the common stock ber or social security number. Investor Relations.
of Enterprise, as declared by the Board of Directors, are generally Stockholders can also phone our payable on the last business day toll -free number 800-242-0813, of March , June, September and Monday through Friday, with December of each year. Regular questions about stock transfer and quarterly dividends on PSE&G's registration, shares held in preferred stock are payable on the Enterprise Direct and our other last business day of March, June, stockholder services. Hours are:
September and December of 10 a.m. to 3:30 p.m. Eastern time.
each year.
The telephone number for the hearing impaired with special Direct Deposit of Dividends equipment is TDD 800-732-3241.
No more dividend checks delayed Please have your account number in the mail. No waiting in bank or Social Security number ready Common Stock- Market Price and Dividends per Share lines. Your quarterly common and when you call.
preferred stock dividend payments 1996 1995 can be deposited electronically to Stockholders can reach us by High Low Div. High Low Div.
your personal checking or savings Internet e-mail at:
account. To use this free service, stkserv@pseg.com First Quarter $32\il $25Y. $.54 $29Ys $26 $.54 call us at 800-242-0813.
Stockholders can also reach us Second Quarter 27%
Third Quarter 27%
25\il 25%
.54
.54 30Y.
29%
26%
26%
.54
.54
.j by FAX at: 201-824-7056 Fourth Quarter 29 26% .54 30% 28% .54 The number of holders ofrecord of Public Service Enterprise Group Incorporated common stock as of December 31, 1996 was 167,205.
@Printed on recycled paper, using soy ink.
24
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