SAN DIEGO, Aug. 5, 2004 (PRIMEZONE) -- Sempra Energy today reported unaudited second-quarter 2004 earnings of $121 million, or $0.52 per diluted share, compared with $116 million, or $0.55 per diluted share, for the same period of 2003.
For the first six months of 2004, Sempra Energy's earnings increased 56 percent to $318 million, or $1.37 per diluted share, from $204 million, or $0.98 per diluted share, during the first six months of 2003. Net income for Sempra Energy Resources and Sempra Energy Trading more than doubled during the first half of 2004 to a combined $158 million from $60 million during the same period last year.
"With our electric-generation and energy-trading businesses performing significantly better than last year, plus the continued solid results of our California utilities, Sempra Energy is on track to meet our 2004 earnings guidance of $2.90 to $3.10 per share," said Stephen L. Baum, chairman and chief executive officer of Sempra Energy. "We also are moving forward with our liquefied natural gas (LNG) business. Site preparation will begin this month on Sempra Energy LNG's Mexican LNG receipt terminal, Energia Costa Azul, and we are finalizing the supply agreement."
In June, Sempra Energy raised its 2004 earnings guidance to $2.90 to $3.10 per share from $2.70 to $2.90 per share to reflect the company's improved business outlook.
Sempra Energy's second-quarter 2004 net income rose on higher profits at Sempra Energy Resources, Sempra Energy Trading and Southern California Gas Co. (SoCalGas), but earnings per share were affected by a greater number of common shares outstanding.
Second-quarter 2004 earnings included an $8 million loss related to the discontinuance of Atlantic Electric & Gas, a U.K.-based energy marketer, which was sold in April 2004. The first six months of 2004 included a loss of $32 million related to the discontinued operations of Atlantic Electric & Gas.
Revenues for Sempra Energy were $2 billion in the second quarter 2004, compared with $1.8 billion in the year-ago quarter, due primarily to increased power sales by Sempra Energy Resources. For the first half of the year, Sempra Energy's revenues increased to $4.4 billion in 2004 from $3.8 billion in 2003.
OPERATING HIGHLIGHTS
Sempra Energy Utilities
Net income for SoCalGas rose to $50 million during the second quarter 2004 from $37 million in the year-earlier period, due to higher operating revenues.
Net income for San Diego Gas & Electric (SDG&E) in the second quarter 2004 was $30 million, compared with $41 million in last year's second quarter.
The decrease primarily stemmed from the elimination of SDG&E's revenue incentive mechanism for the San Onofre Nuclear Generating Station, in which the utility holds a 20-percent ownership stake.
During the quarter, SDG&E received approval from the California Public Utilities Commission for its regional energy reliability plan. Under the approved plan, SDG&E will acquire a new 550-megawatt (MW), natural gas-fired power plant -- called Palomar Energy -- being developed in Escondido, Calif., by sister company Sempra Energy Resources. Construction on Palomar Energy, which began last month, is expected to be completed in 2006. The utility also will contract for renewable energy resources and plans to enter into a 10-year power-purchase agreement for up to 570 MW of electricity.
Sempra Energy Trading
On the strength of increased profitability of its petroleum and metals trading operations, Sempra Energy Trading's net income increased to $40 million during the second quarter 2004 from $35 million in the same period last year. Through the first half of 2004, Sempra Energy Trading's net income totaled $99 million, compared with $45 million in net income during the first six months of 2003.
During the quarter, Sempra Energy Trading completed a $1 billion, two-year committed credit facility to help finance its global operations.
Sempra Energy Resources
Sempra Energy Resources reported sharply higher net income of $22 million in the second quarter 2004, up from $5 million in the second quarter last year. The rise in net income was due to increased power sales from several new power plants that were put into full operation during the past year.
In the second quarter 2004, Sempra Energy Resources delivered nearly 3.9 million megawatt-hours of power under contracted agreements. The company expects to deliver substantially more power during the second half of 2004.
Last month, a subsidiary of Sempra Energy Resources assumed management of Coleto Creek Power Station, a 632-MW coal-fired Texas power plant, and eight other Texas power plants jointly acquired on a 50-50 basis from American Electric Power by Sempra Energy Partners and Carlyle/Riverstone. The $430 million acquisition, which was completed July 1, 2004, was substantially project-financed. Sempra Energy's share of equity in the transaction was $53 million.
Sempra Energy International and Sempra Energy LNG
Net income for Sempra Energy International and Sempra Energy LNG, on a combined basis, was $15 million in this year's second quarter, versus $18 million in the second quarter 2003. Tax reserves and increased development costs were offset partially by improved results in the company's Mexican operations and by the sale of a portion of the common stock in its jointly owned Luz del Sur unit in Peru.
Internet Broadcast
Sempra Energy will broadcast a live discussion of its earnings results over the Internet today at 1 p.m. EDT with key company executives. Access is available by logging onto the Web site at www.sempra.com. For those unable to log onto the live Webcast, the teleconference will be available on replay a few hours after its conclusion by dialing (706) 645-9291 and entering the passcode, 8752753.
Sempra Energy (NYSE:SRE), based in San Diego, is a Fortune 500 energy services holding company with 2003 revenues of $7.9 billion. The Sempra Energy companies' nearly 13,000 employees serve more than 10 million customers in the United States, Europe, Canada, Mexico, South America and Asia.
This press release contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When the company uses words like "believes," "expects," "anticipates," "intends," "plans," "estimates," "may," "would," "should" or similar expressions, or when the company discusses its strategy or plans, the company is making forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future results may differ materially from those expressed in the forward-looking statements. Forward-looking statements are necessarily based upon various assumptions involving judgments with respect to the future and other risks, including, among others: national, international, regional and local economic, competitive, political, legislative and regulatory conditions and developments; actions by the California Public Utilities Commission, the California State Legislature, the California Department of Water Resources and the Federal Energy Regulatory Commission; capital market conditions, inflation rates and interest rates; energy and trading markets, including the timing and extent of changes in commodity prices; weather conditions; business, regulatory and legal decisions; the pace of deregulation of retail natural gas and electricity delivery; the timing and success of business development efforts; and other uncertainties, all of which are difficult to predict and many of which are beyond the company's control. These risks and uncertainties are further discussed in the company's reports filed with the Securities and Exchange Commission that are available through the EDGAR system without charge at its Web site, www.sec.gov and on the company's Web site, www.sempra.com.
Sempra Energy Trading, Sempra Energy Resources, Sempra Energy International, Sempra Energy Solutions and Sempra Energy Partners are not the same as the utilities, San Diego Gas & Electric and Southern California Gas Co.
SEMPRA ENERGY
Table A
STATEMENTS OF CONSOLIDATED INCOME (Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
2004 2003 2004 2003
-------- -------- -------- --------
(Dollars in millions,
except per share amounts)
--------------------------------------------------------------------
Operating revenues
California utilities:
Natural gas $ 947 $ 929 $ 2,280 $ 2,091
Electric 420 397 801 792
Other 629 514 1,275 880
-------- -------- -------- --------
Total operating
revenues 1,996 1,840 4,356 3,763
-------- -------- -------- --------
Operating expenses
California utilities:
Cost of natural gas 482 480 1,306 1,157
Cost of electric fuel
and purchased power 155 137 282 300
Other cost of sales 375 296 702 515
Other operating expenses 546 518 1,067 963
Depreciation and
amortization 165 149 330 297
Franchise fees and other
taxes 53 57 117 113
-------- -------- -------- --------
Total operating
expenses 1,776 1,637 3,804 3,345
-------- -------- -------- --------
Operating income 220 203 552 418
Other income - net 13 9 18 4
Interest income 10 10 33 22
Interest expense (80) (71) (160) (145)
Preferred dividends /
distributions by
subsidiaries (3) (8) (5) (15)
-------- -------- -------- --------
Income from continuing
operations before income
taxes 160 143 438 284
Income tax expense 31 27 88 51
-------- -------- -------- --------
Income from continuing
operations 129 116 350 233
Loss from discontinued
operations, net of tax (6) -- (30) --
Loss on disposal of
discontinued operations,
net of tax (2) -- (2) --
-------- -------- -------- --------
Income before cumulative
effect of change in
accounting principle 121 116 318 233
Cumulative effect of
change in accounting
principle, net of tax -- -- -- (29)
-------- -------- -------- --------
Net Income $ 121 $ 116 $ 318 $ 204
======== ======== ======== ========
Weighted-average number
of shares outstanding
(thousands):
Basic 230,432 207,626 229,245 207,013
======== ======== ======== ========
Diluted 234,312 210,164 232,738 208,882
======== ======== ======== ========
Income from continuing
operations per share of
common stock
Basic $ 0.56 $ 0.56 $ 1.53 $ 1.13
======== ======== ======== ========
Diluted $ 0.55 $ 0.55 $ 1.51 $ 1.12
======== ======== ======== ========
Income before cumulative
effect of change in
accounting principle per
share of common stock
Basic $ 0.52 $ 0.56 $ 1.39 $ 1.13
======== ======== ======== ========
Diluted $ 0.52 $ 0.55 $ 1.37 $ 1.12
======== ======== ======== ========
Net income per share of
common stock
Basic $ 0.52 $ 0.56 $ 1.39 $ 0.99
======== ======== ======== ========
Diluted $ 0.52 $ 0.55 $ 1.37 $ 0.98
======== ======== ======== ========
Dividends declared per
share of common stock $ 0.25 $ 0.25 $ 0.50 $ 0.50
======== ======== ======== ========
SEMPRA ENERGY
Table B
CONSOLIDATED BALANCE SHEETS (Unaudited)
Balance at
June 30, December 31,
(Dollars in millions) 2004 2003
------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 1,150 $ 432
Short-term investments -- 363
Accounts receivable 816 1,002
Due from affiliate 4 --
Deferred income taxes 84 66
Interest receivable 63 62
Trading assets 5,088 5,250
Regulatory assets arising from
fixed-price contracts and other
derivatives 152 144
Other regulatory assets 100 89
Inventories 107 147
Other 184 157
------- -------
Current assets of continuing
operations 7,748 7,712
Current assets of discontinued
operations 119 220
------- -------
Total current assets 7,867 7,932
------- -------
Investments and other assets:
Due from affiliates 47 55
Regulatory assets arising from
fixed-price contracts and other
derivatives 569 650
Other regulatory assets 509 554
Nuclear decommissioning trusts 566 570
Investments 1,055 1,114
Sundry 752 706
------- -------
Total investments and other assets 3,498 3,649
------- -------
Property, plant and equipment - net 10,693 10,474
------- -------
Total assets $22,058 $22,055
======= =======
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt $ 68 $ 28
Accounts payable 841 841
Income taxes payable 267 261
Trading liabilities 4,157 4,457
Dividends and interest payable 134 136
Regulatory balancing accounts - net 520 424
Fixed-price contracts and other
derivatives 160 148
Current portion of long-term debt 863 1,433
Other 623 704
------- -------
Current liabilities of continuing
operations 7,633 8,432
Current liabilities of discontinued
operations 32 52
------- -------
Total current liabilities 7,665 8,484
------- -------
Long-term debt 4,419 3,841
------- -------
Deferred credits and other liabilities:
Due to affiliates 362 362
Customer advances for construction 84 89
Postretirement benefits other
than pensions 122 131
Deferred income taxes 239 202
Deferred investment tax credits 81 84
Regulatory liabilities arising from
cost of removal obligations 2,297 2,238
Regulatory liabilities arising from
asset retirement obligations 284 281
Other regulatory liabilities 104 108
Fixed-price contracts and other
derivatives 571 680
Asset retirement obligations 318 313
Deferred credits and other 1,167 1,173
------- -------
Total deferred credits and
other liabilities 5,629 5,661
------- -------
Preferred stock of subsidiaries 179 179
------- -------
Shareholders' equity 4,166 3,890
------- -------
Total liabilities and shareholders' equity $22,058 $22,055
======= =======
SEMPRA ENERGY
Table C
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (Unaudited)
Six months ended
June 30,
---------------------
(Dollars in millions) 2004 2003
-------------------------------------------------------------------
Cash Flows from Operating Activities:
Net income $ 318 $ 204
Adjustments to reconcile net income to
net cash provided by operating activities:
Loss from discontinued operations,
net of tax 30 --
Loss on disposal of discontinued
operations, net of tax 2 --
Cumulative effect of change in
accounting principle -- 29
Depreciation and amortization 330 297
Deferred income taxes and investment
tax credits (12) (110)
Other - net 33 39
Net changes in other working capital
components 30 335
Changes in other assets (57) (48)
Changes in other liabilities 8 12
------- -------
Net cash provided by continuing
operations 682 758
Net cash used in discontinued
operations (30) --
------- -------
Net cash provided by operating
activities 652 758
------- -------
Cash Flows from Investing Activities:
Expenditures for property, plant
and equipment (498) (441)
Net proceeds from sale of assets 363(1) --
Proceeds from disposal of
discontinued operations 112 --
Investments and acquisitions of
subsidiaries, net of cash acquired (13) (134)
Dividends received from affiliates 47 --
Affiliate loan -- (64)
Other - net 1 (2)
------- -------
Net cash provided by (used in)
investing activities 12 (641)
------- -------
Cash Flows from Financing Activities:
Common dividends paid (115) (104)
Issuances of common stock 92 50
Repurchases of common stock (2) (6)
Issuances of long-term debt 896 400
Payments on long-term debt (877) (339)
Increase (decrease) in short-term
debt - net 63 (240)
Other - net (3) (8)
------- -------
Net cash provided by (used in)
financing activities 54 (247)
------- -------
Increase (decrease) in cash and
cash equivalents 718 (130)
Cash and cash equivalents, January 1 432 455
------- -------
Cash and cash equivalents, June 30 $ 1,150 $ 325
======= =======
(1) Proceeds from the sale of U.S. Treasury obligations which
previously securitized the Mesquite synthetic lease.
SEMPRA ENERGY
Table D
BUSINESS UNIT EARNINGS AND CAPITAL EXPENDITURES
& INVESTMENTS (Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------ ----------------
(Dollars in millions) 2004 2003 2004 2003
----------------------------------------------------------------
Net Income
California Utilities:
San Diego Gas & Electric $ 30 $ 41 $ 80 $ 86
Southern California Gas 50 37 106 95
----- ----- ----- -----
Total California Utilities 80 78 186 181
Global Enterprises:
Trading 40 35 99 45
Resources 22 5 59 15
International/LNG 15 18 32 25
Solutions 3 8 (1) 8
----- ----- ----- -----
Total Global Enterprises 80 66 189 93
Financial 6 8 16 19
Parent & Other (37) (36) (41) (60)
----- ----- ----- -----
Continuing Operations 129 116 350 233
Discontinued Operations(1) (8) -- (32) --
Cumulative Effect of Change
in Accounting Principle -- -- -- (29)(2)
----- ----- ----- -----
Consolidated Net Income $ 121 $ 116 $ 318 $ 204
===== ===== ===== =====
(1) Reflects Atlantic Electric & Gas and includes ($2) related to the
disposal.
(2) The effects to Trading and Solutions were ($28) and ($1),
respectively.
Three months ended Six months ended
June 30, June 30,
------------------ ----------------
(Dollars in millions) 2004 2003 2004 2003
----------------------------------------------------------------
Capital Expenditures and
Investments
California Utilities:
San Diego Gas & Electric $ 112 $ 94 $ 181 $ 183
Southern California Gas 82 77 144 135
----- ----- ----- -----
Total California Utilities 194 171 325 318
----- ----- ----- -----
Global Enterprises:
Resources 34 87 49 171
Trading 36 5 82 12
International/LNG 11 29 38 55
----- ----- ----- -----
Total Global Enterprises 81 121 169 238
----- ----- ----- -----
Parent & Other 10 10 17 19
----- ----- ----- -----
Consolidated Capital
Expenditures and Investments $ 285 $ 302 $ 511 $ 575
===== ===== ===== =====
SEMPRA ENERGY
Table E
OTHER OPERATING STATISTICS (Unaudited)
Three months ended Six months ended
June 30, June 30,
CALIFORNIA UTILITIES
--------------------------------------------------- ---------------
2004 2003 2004 2003
------ ------ ------ ------
Revenues (Dollars in millions)
SDG&E (excludes intercompany
sales) $ 529 $ 514 $1,104 $1,073
SoCalGas (excludes intercompany
sales) $ 838 $ 812 $1,977 $1,810
Gas Sales (Bcf) 81 89 221 214
Transportation and Exchange (Bcf) 128 113 249 247
------ ------ ------ ------
Total Deliveries (Bcf) 209 202 470 461
------ ------ ------ ------
Total Gas Customers (Thousands) 6,251 6,166
Electric Sales (Millions of kWhs) 3,747 3,454 7,559 7,063
Direct Access (Millions of kWhs) 929 759 1,658 1,565
------ ------ ------ ------
Total Deliveries (Millions of kWhs) 4,676 4,213 9,217 8,628
------ ------ ------ ------
Total Electric Customers (Thousands) 1,306 1,289
RESOURCES
--------------------------------------------------- ---------------
Power Sold (Millions of kWhs) 3,884 2,050 8,361 3,453
SOLUTIONS
--------------------------------------------------- ---------------
Revenues (Dollars in millions) $ 43 $ 55 $ 73 $ 97
INTERNATIONAL
(Represents 100% of these
subsidiaries, although only the
Mexican subsidiaries are 100%
owned by Sempra Energy).
---------------------------------------------------------------------
Natural Gas Sales (Bcf)
Argentina 62 57 113 96
Mexico 10 10 20 19
Chile -- -- 1 1
Natural Gas Customers (Thousands)
Argentina 1,429 1,379
Mexico 103 84
Chile 37 36
Electric Sales (Millions of kWhs)
Peru 1,016 1,003 2,023 2,013
Chile 502 464 1,010 934
Electric Customers (Thousands)
Peru 740 724
Chile 502 489
TRADING
--------------------------------------------------------------------
Three months Six months
ended ended
June 30, June 30,
------------- -------------
Trading Margin
(Dollars in millions) 2004 2003 2004 2003
--------------------------------------------------- -------------
Geographical:
North America $ 128 $ 89 $ 241 $ 151
Europe/Asia 36 51 120 73
----- ----- ----- -----
Total $ 164 $ 140 $ 361 $ 224
----- ----- ----- -----
Product Line:
Gas $ 50 $ 62 $ 91 $ 92
Power (9) 14 29 12
Oil - Crude & Products 48 18 89 50
Metals 50 19 108 26
Other 25 27 44 44
----- ----- ----- -----
Total $ 164 $ 140 $ 361 $ 224
----- ----- ----- -----
Physical Statistics
-------------------------------------------------------------------
Natural Gas (BCF/Day) 12.7 13.2 13.2 13.4
Electric (Billions of kWhs) 75.2 65.3 168.1 131.4
Oil & Liquid Products
(Millions Bbls/Day) 1.7 1.9 1.9 1.7
Fair
Market
Value Scheduled Maturity (in months)
Net Unrealized Revenue June 30, ------------------------------
(Dollars in millions) 2004 0 - 12 13 - 24 25 - 36 > 36
--------------------------------------------------------------------
Sources of Over-the-Counter
(OTC) Fair Value:
Prices actively quoted $ 409 $ 361 $ 15 $ (1) $ 34
Prices provided by other
external sources 6 (8) -- -- 14
Prices based on models
and other valuation
methods -- (14) 4 -- 10
---------------------------------------
Total OTC Fair Value(1) 415 339 19 (1) 58
Maturity of OTC Fair Value
Percentage 100.0% 81.6% 4.6% -0.2% 14.0%
Cumulative Percentages 81.6% 86.2% 86.0% 100.0%
Exchange Contracts(2) 186 $ 201 $ (14) $ 10 $ (11)
---------------------------------------
Total Net Unrealized Revenue $ 601
-----
(1) The present value of unrealized revenue to be received or (paid)
from outstanding OTC contracts
(2) Cash received associated with open Exchange Contracts
Credit Quality of
Unrealized Trading June 30, March 31, Dec. 31, Sept. 30, June 30,
Assets (net of margin) 2004 2004 2003 2003 2003
--------------------------------------------------------------------
Commodity Exchanges 8% 6% 8% 8% 6%
Investment Grade 71% 63% 70% 66% 71%
Below Investment Grade 21% 31% 22% 26% 23%
Three months ended Six months ended
June 30, June 30,
Risk Adjusted --------------- --------------
Performance Indicators 2004 2003 2004 2003
--------------------------------------------- --------------
VaR at 95%
(Dollars in millions)(1) $ 6.4 $ 5.6 $ 6.1 $ 7.8
VaR at 99%
(Dollars in millions)(2) $ 9.0 $ 7.9 $ 8.5 $ 11.0
Risk Adjusted Return on
Capital (RAROC)(3) 33% 38% 37% 22%
(1) Average Daily Value-at-Risk for the period using a
95% confidence level
(2) Average Daily Value-at-Risk for the period using a
99% confidence level
(3) Average Daily Trading Margin/Average Daily VaR at
95% confidence level