SAN DIEGO, May 4, 2005 (PRIMEZONE) -- Sempra Energy (NYSE:SRE) today reported first-quarter 2005 earnings of $223 million, or $0.92 per diluted share, compared with $197 million, or $0.85 per diluted share, in the first quarter 2004.
"Operating results in the first quarter were solid for all of our businesses and put us on track to accomplish our financial goals for the year," said Stephen L. Baum, chairman and chief executive officer of Sempra Energy. "We are reaffirming our earnings-per-share guidance for 2005 of $3.10 to $3.30."
Net income in the first quarter 2005 included $59 million related to the favorable resolution of federal and state income-tax issues from prior years for both the parent company and the California utilities. First-quarter 2004 results included a $24 million loss related to discontinued operations and $16 million in net income related to the favorable resolution of prior years' income-tax issues.
Revenues in the first quarter 2005 were $2.7 billion, compared with $2.4 billion in the same quarter last year, due to increased power and commodity sales.
SUBSIDIARY OPERATING RESULTS
Sempra Utilities
Net income for San Diego Gas & Electric was $59 million in the first quarter 2005, up from $50 million in the year-ago quarter. The increase was due primarily to the favorable resolution of income-tax issues.
Net income for Southern California Gas Co. in the first quarter 2005 rose to $69 million from $56 million in the first quarter 2004, primarily due to a favorable adjustment related to the utility's recent rate-making decision.
Sempra Commodities
Sempra Commodities' first-quarter 2005 net income was $29 million, versus $57 million in the same quarter last year. The decrease in quarterly net income was primarily due to lower income in natural gas and metals trading.
"Accounting rules impact the timing of earnings recognition for our commodity operations, as was the case in our natural gas trading operations during the first quarter," Baum said. "Even though we will continue to see quarter-to-quarter variation in reported earnings for this business, we expect Sempra Commodities to meet its 2005 financial plan."
Sempra Generation
First-quarter net income for Sempra Generation rose to $46 million in 2005 from $35 million last year, primarily as a result of increased power sales from the company's generating facilities in Texas. Sempra Generation acquired its half of the Coleto Creek facility and eight other Texas power plants in July 2004.
Sempra Pipelines & Storage
Sempra Pipelines & Storage had net income of $13 million during the first quarter 2005, up from $11 million in the year-ago quarter, due primarily to improved results from the company's Latin American utility operations.
Sempra LNG
Sempra LNG recorded a net loss of $5 million during the first quarter 2005, versus net income of $6 million in the first quarter 2004. Last year's quarterly results included an $8 million contribution from the favorable buy-out of a future obligation related to the Cameron LNG project.
"We are pleased that our liquefied natural gas business is making good progress," Baum said. "Capacity for our Energia Costa Azul receipt terminal in Baja California, Mexico, is fully subscribed and construction on the terminal is underway. We are working toward finalizing several non-binding, preliminary agreements this summer for capacity at our Cameron LNG terminal in Louisiana and expect to begin construction later this year. Finally, last week we announced a preliminary agreement with Gazprom - the world's largest natural gas producer - which wants to enter the North American market with sufficient quantities of gas to launch our Port Arthur LNG terminal in Texas. We expect to receive federal regulatory approvals for this terminal by year-end."
INTERNET BROADCAST
Sempra Energy will broadcast a live discussion of its earnings results over the Internet today at 1 p.m. Eastern Time with senior management of the company. 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 passcode number 5582676.
Sempra Energy, based in San Diego, is a Fortune 500 energy-services holding company with 2004 revenues of $9.4 billion. The Sempra Energy companies' more than 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: local, regional, national and international 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, the Federal Energy Regulatory Commission and other regulatory bodies in the United States and other countries; capital markets conditions, inflation rates, interest rates and exchange rates; energy and trading markets, including the timing and extent of changes in commodity prices; the availability of natural gas; weather conditions and conservation efforts; war and terrorist attacks; business, regulatory, environmental, and legal decisions and requirements; the status of deregulation of retail natural gas and electricity delivery; the timing and success of business development efforts; the outcome of litigation; and other uncertainties, all of which are difficult to predict and many of which are beyond the control of the company. 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 LNG and Sempra Pipelines & Storage are not the same companies as the utilities, SDG&E or SoCalGas, and are not regulated by the California Public Utilities Commission. Sempra Energy Trading, doing business as Sempra Commodities, and Sempra Generation are not the same companies as the utilities, SDG&E or SoCalGas, and the California Public Utilities Commission does not regulate the terms of their products and services.
SEMPRA ENERGY
Table A
STATEMENTS OF CONSOLIDATED INCOME (Unaudited)
(Dollars in millions, except per share amounts)
Three months ended
March 31,
-------------------------
2005 2004
--------------------------------------------------------------------
Operating revenues
California utilities:
Natural gas $ 1,433 $ 1,333
Electric 394 381
Other 865 646
--------- ---------
Total operating revenues 2,692 2,360
--------- ---------
Operating expenses
California utilities:
Cost of natural gas 913 824
Cost of electric fuel and
purchased power 145 127
Other cost of sales 584 327
Other operating expenses 542 521
Depreciation and amortization 161 165
Franchise fees and other taxes 68 64
--------- ---------
Total operating expenses 2,413 2,028
--------- ---------
Operating income 279 332
Other income, net 17 5
Interest income 11 23
Interest expense (74) (80)
Preferred dividends of subsidiaries (2) (2)
--------- ---------
Income from continuing operations
before income taxes 231 278
Income tax expense 8 57
--------- ---------
Income from continuing operations 223 221
Loss from discontinued operations,
net of tax -- (24)
--------- ---------
Net income $ 223 $ 197
========= =========
Basic earnings per share:
Income from continuing operations $ 0.96 $ 0.97
Discontinued operations, net of tax -- (0.11)
--------- ---------
Net income $ 0.96 $ 0.86
========= =========
Weighted-average number of
shares outstanding (thousands) 232,939 228,055
========= =========
Diluted earnings per share:
Income from continuing operations $ 0.92 $ 0.96
Discontinued operations, net of tax -- (0.11)
--------- ---------
Net income $ 0.92 $ 0.85
========= =========
Weighted-average number of
shares outstanding (thousands) 241,105 231,136
========= =========
Dividends declared per share
of common stock $ 0.29 $ 0.25
========= =========
SEMPRA ENERGY
Table B
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in millions)
March 31, December 31,
2005 2004
--------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 609 $ 419
Short-term investments 12 15
Accounts receivable 874 1,032
Due from unconsolidated affiliate 5 4
Deferred income taxes 47 15
Interest receivable 47 80
Trading-related receivables and
deposits, net 2,442 2,606
Derivative trading instruments 3,023 2,339
Commodities owned 1,201 1,547
Regulatory assets arising from
fixed-price contracts and other
derivatives 143 152
Other regulatory assets 107 103
Inventories 70 172
Other 196 222
------- -------
Current assets of continuing operations 8,776 8,706
Current assets of discontinued operations 60 70
------- -------
Total current assets 8,836 8,776
------- -------
Investments and other assets:
Due from unconsolidated affiliates 27 42
Regulatory assets arising from fixed-price
contracts and other derivatives 470 500
Other regulatory assets 601 619
Nuclear decommissioning trusts 613 612
Investments 1,147 1,164
Sundry 821 844
------- -------
Total investments and other assets 3,679 3,781
------- -------
Property, plant and equipment, net 11,245 11,086
------- -------
Total assets $23,760 $23,643
======= =======
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt $ 340 $ 405
Accounts payable 692 1,126
Due to unconsolidated affiliates -- 205
Income taxes payable 255 187
Trading-related payables 2,795 3,182
Derivative trading instruments sold,
not yet purchased 2,414 1,484
Commodities sold with agreement
to repurchase 291 513
Dividends and interest payable 132 123
Regulatory balancing accounts, net 599 509
Fixed-price contracts and other derivatives 146 157
Current portion of long-term debt 394 398
Temporary LIFO liquidation 200 --
Other 780 776
------- -------
Current liabilities of continuing
operations 9,038 9,065
Current liabilities of discontinued
operations 7 17
------- -------
Total current liabilities 9,045 9,082
------- -------
Long-term debt 4,132 4,192
------- -------
Deferred credits and other liabilities:
Due to unconsolidated affiliates 162 162
Customer advances for construction 94 97
Postretirement benefits other than pensions 127 129
Deferred income taxes 386 420
Deferred investment tax credits 77 78
Regulatory liabilities arising from cost of
removal obligations 2,386 2,359
Regulatory liabilities arising from asset
retirement obligations 330 333
Other regulatory liabilities 72 67
Fixed-price contracts and other derivatives 472 500
Asset retirement obligations 330 326
Deferred credits and other 837 854
------- -------
Total deferred credits and
other liabilities 5,273 5,325
------- -------
Preferred stock of subsidiaries 179 179
------- -------
Shareholders' equity 5,131 4,865
------- -------
Total liabilities and shareholders' equity $23,760 $23,643
======= =======
SEMPRA ENERGY
Table C
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (Unaudited)
(Dollars in millions)
Three months ended
March 31,
------------------
2005 2004
------------------------------------------------------------------
Cash Flows from Operating Activities:
Net income $ 223 $ 197
Adjustments to reconcile net income to
net cash provided by operating activities:
Loss from discontinued operations,
net of tax -- 24
Depreciation and amortization 161 165
Deferred income taxes and investment
tax credits (68) (22)
Other, net 9 27
Net changes in other working capital components 393 408
Changes in other assets 4 7
Changes in other liabilities (3) (13)
----- -----
Net cash provided by continuing operations 719 793
Net cash used in discontinued operations -- (2)
----- -----
Net cash provided by operating activities 719 791
----- -----
Cash Flows from Investing Activities:
Expenditures for property, plant and equipment (269) (219)
Proceeds from sale of assets 6 363(a)
Investments in and acquisitions of
subsidiaries, net of cash acquired (1) (7)
Dividends received from affiliates 2 10
Other, net 16 10
----- -----
Net cash provided by (used in) investing
activities (246) 157
----- -----
Cash Flows from Financing Activities:
Common dividends paid (50) (48)
Issuances of common stock 90 35
Repurchases of common stock (6) (2)
Issuances of long-term debt -- 21
Redemption of mandatorily redeemable
preferred securities (200) --
Payments on long-term debt (50) (857)
Increase (decrease) in short-term debt, net (64) 134
Other, net (3) (2)
----- -----
Net cash used in financing activities (283) (719)
----- -----
Increase in cash and cash equivalents 190 229(b)
Cash and cash equivalents, January 1 419 409
----- -----
Cash and cash equivalents, March 31 $ 609 $ 638
===== =====
(a) Proceeds from the sale of U.S. Treasury obligations which
previously securitized the Mesquite synthetic lease.
(b) Change from $221 as reported in prior year reflects
reclassification of restricted cash.
SEMPRA ENERGY
Table D
BUSINESS UNIT EARNINGS AND CAPITAL EXPENDITURES
& INVESTMENTS (Unaudited)
(Dollars in millions)
Three months ended
March 31,
------------------
2005 2004
----------------------------------------------------------------
Net Income
California Utilities:
San Diego Gas & Electric $ 59 $ 50
Southern California Gas 69 56
----- -----
Total California Utilities 128 106
----- -----
Sempra Global:
Sempra Commodities 29 57
Sempra Generation 46 35
Sempra Pipelines & Storage 13 11
Sempra LNG (5) 6
----- -----
Total Sempra Global 83 109
----- -----
Sempra Financial 4 10
Parent & Other 8 (4)
----- -----
Continuing Operations 223 221
Discontinued Operations(a) -- (24)
----- -----
Consolidated Net Income $ 223 $ 197
===== =====
Capital Expenditures and Investments
California Utilities:
San Diego Gas & Electric $ 94 $ 69
Southern California Gas 63 62
----- -----
Total California Utilities 157 131
----- -----
Sempra Global:
Sempra Generation 49 14
Sempra Commodities 13 46
Sempra Pipelines & Storage 4 5
Sempra LNG 45 22
----- -----
Total Sempra Global 111 87
----- -----
Parent & Other 2 8
----- -----
Consolidated Capital Expenditures
and Investments $ 270 $ 226
===== =====
(a) Reflects Atlantic Electric & Gas.
SEMPRA ENERGY
Table E
OTHER OPERATING STATISTICS (Unaudited)
Three months ended
March 31,
------------------
CALIFORNIA UTILITIES 2005 2004
--------------------------------------------------------------------
Revenues (Dollars in millions)
SDG&E (excludes intercompany sales) $ 616 $ 575
SoCalGas (excludes intercompany sales) $ 1,211 $ 1,139
Gas Sales (Bcf) 137 140
Transportation and Exchange (Bcf) 122 121
------- -------
Total Deliveries (Bcf) 259 261
------- -------
Total Gas Customers (Thousands) 6,316 6,231
Electric Sales (Millions of kWhs) 3,906 3,812
Direct Access (Millions of kWhs) 820 729
------- -------
Total Deliveries (Millions of kWhs) 4,726 4,541
------- -------
Total Electric Customers (Thousands) 1,323 1,301
SEMPRA GENERATION
--------------------------------------------------------------------
Power Sold (Millions of kWhs) 5,639 4,477
SEMPRA PIPELINES & STORAGE
(Represents 100% of these subsidiaries,
although only the Mexican subsidiaries
are 100% owned by Sempra Energy).
--------------------------------------------------------------------
Natural Gas Sales (Bcf)
Argentina 51 51
Mexico 10 10
Chile 1 1
Natural Gas Customers (Thousands)
Argentina 1,459 1,414
Mexico 97 101
Chile 38 37
Electric Sales (Millions of kWhs)
Peru 1,052 1,007
Chile 733 508
Electric Customers (Thousands)
Peru 753 736
Chile 512 499
SEMPRA ENERGY
Table E (Continued)
SEMPRA COMMODITIES
--------------------------------------------------------------------
Three months ended
March 31,
-------------------
Margin(a) (Dollars in millions) 2005 2004
--------------------------------------------------------------------
Geographical:
North America $ 125 $ 120
Europe/Asia 29 84
--------------------
Total $ 154 $ 204
--------------------
Product Line:
Gas $ (15) $ 42
Power 42 45
Oil - Crude & Products 80 42
Metals 14 58
Other 33 17
--------------------
Total $ 154 $ 204
--------------------
(a) Margin consists of net trading revenues less related costs
(primarily brokerage, transportation and storage) plus or minus
net interest income/expense.
Physical Statistics
--------------------------------------------------------------------
Natural Gas (BCF/Day) 12.2 13.8
Electric (Billions of kWhs) 107.8 96.6
Oil & Liquid Products (Millions Bbls/Day) 1.9 2.0
Net Unrealized Revenue (Dollars in millions)
Fair
Market Value Scheduled Maturity (in months)
March 31, -------------------------------
2005 0 - 12 13 - 24 25 - 36 > 36
--------------------------------------------------------------------
Sources of Over-the-Counter
(OTC) Fair Value:
Prices actively quoted $ 568 $ 475 $ 9 $ 19 $ 65
Prices provided by other
external sources 34 -- -- -- 34
Prices based on models and
other valuation methods (6) 5 -- -- (11)
---------------------------------------
Total OTC Fair Value(a) $ 596 $ 480 $ 9 $ 19 $ 88
Maturity of OTC Fair Value
----------------------------------------
Percentage 100.0% 80.5% 1.5% 3.2% 14.8%
Cumulative Percentages 80.5% 82.0% 85.2% 100.0%
----------------------------------------
--------------------------------------------------------------------
Exchange Contracts(b) $ (7) $(127) $ 173 $ (63) $ 10
----------------------------------------
Total Net Unrealized
Revenue $ 589
-----
(a) The present value of unrealized revenue to be received or
(paid) from outstanding OTC contracts
(b) Cash received or (paid) associated with open Exchange
Contracts
Credit Quality of
Unrealized Trading March 31, December 31,
Assets (net of margin) 2005 2004
---------------------------------------------------------------------
Commodity Exchanges 10% 10%
Investment Grade 70% 66%
Below Investment Grade 20% 24%
Three months ended
March 31,
--------------------
Risk Adjusted
Performance Indicators 2005 2004
---------------------------------------------------------------------
VaR at 95% (Dollars in
millions) (a) $ 8.5 $ 5.7
VaR at 99% (Dollars in
millions) (b) $11.9 $ 8.1
Risk Adjusted Return
on Capital (RAROC) (c) 33% 41%
(a) Average Daily Value-at-Risk for the period using a 95% confidence
level
(b) Average Daily Value-at-Risk for the period using a 99% confidence
level
(c) Average Daily Trading Margin/Average Daily VaR at 95% confidence
level