-- Earnings Per Share Rise 26 Percent to $3.83
-- Commodity-Trading, Electric-Generation Units Pace Growth
-- Company Raises 2005 Earnings-Per-Share Guidance to
$3.10 to $3.30 From $3.00 to $3.20
SAN DIEGO, Feb. 23, 2005 (PRIMEZONE) -- Sempra Energy (NYSE:SRE) today reported 2004 earnings of $895 million, or $3.83 per diluted share, up 38 percent over 2003 earnings of $649 million, or $3.03 per diluted share.
For the fourth quarter 2004, Sempra Energy's earnings were $346 million, or $1.46 per diluted share, an increase of 48 percent over fourth-quarter 2003 earnings of $234 million, or $1.03 per diluted share.
"This marks the sixth consecutive year of record earnings for Sempra Energy, a period during which we have averaged earnings growth of more than 20 percent annually," said Stephen L. Baum, chairman and chief executive officer. "In 2004, we further strengthened our balance sheet and significantly advanced our liquefied natural gas (LNG) business. Our commodity-trading and electric-generation businesses experienced robust growth and our California utilities continue to excel."
Yesterday, Sempra Energy's board of directors announced a dividend increase of 16 percent, raising the quarterly dividend on common shares to 29 cents ($1.16 on an annualized basis). The increase was the first change in the company's dividend since 2000.
Revenues for Sempra Energy in 2004 were $9.4 billion, compared with $7.9 billion in 2003, due to increased power sales and commodity trading. Fourth-quarter 2004 revenues were $2.9 billion, up from $2.1 billion in the year-earlier period.
SUBSIDIARY OPERATING RESULTS
Sempra Utilities
Net income for Southern California Gas Co. (SoCalGas) increased to $232 million in 2004 from $209 million in 2003, due primarily to lower operating expenses, the favorable settlement of its rate case at the California Public Utilities Commission (CPUC) and a one-time gain from a property sale. Fourth-quarter 2004 net income for SoCalGas was $58 million, versus $61 million in the year-earlier period.
Net income for San Diego Gas & Electric (SDG&E) in 2004 was $208 million, compared with $334 million in 2003. SDG&E's net income was $68 million in the fourth quarter 2004, compared with $128 million in the same quarter of 2003. In the fourth quarter 2004, SDG&E benefited from the settlement of its rate case at the CPUC. The 2003 results for SDG&E included a $79 million gain recorded in the fourth quarter for the favorable resolution of tax issues and a $65 million gain recorded in the third quarter for a contract settlement with the CPUC.
In December 2004, the CPUC approved base rates for SDG&E and SoCalGas for a four-year period extending through 2007.
"The approval of new rate plans for SDG&E and SoCalGas ensures that our utilities will continue to earn a reasonable return as they invest in critical new infrastructure to serve their customers," Baum said.
Sempra Commodities
In 2004, net income for Sempra Commodities (formerly Sempra Energy Trading) more than doubled to $320 million from $157 million in 2003, due to improved performance in all of its key commodity segments worldwide, including natural gas, petroleum and base metals. Fourth-quarter 2004 net income for Sempra Commodities increased to $171 million from $73 million in the year-earlier period on the strength of its natural gas and power trading.
"In 2004, Sempra Commodities recorded its best year ever," said Baum. "Quarter after quarter, Sempra Commodities has remained consistently profitable, while carefully managing risk and entering into transactions that convert to cash quickly."
Sempra Generation
Net income for Sempra Generation (formerly Sempra Energy Resources) rose to $137 million in 2004 from $71 million in the previous year, due primarily to a full year of contributions from the company's new generating fleet in the Pacific Southwest, as well as power plants acquired in Texas.
Sempra Generation's fourth-quarter net income was $19 million in 2004, compared with $32 million in 2003, due primarily to litigation reserves.
Sempra Pipelines & Storage
Sempra Pipelines & Storage (formerly Sempra Energy International) recorded net income of $63 million in 2004, up from $3 million in 2003. Results for 2003 included an impairment charge of $50 million in the third quarter. In 2004, Sempra Pipelines & Storage also benefited from a $5 million gain from reducing its ownership in Luz del Sur, a Peruvian utility, to 38 percent from 44 percent. For the fourth quarter, net income for Sempra Pipelines & Storage increased to $28 million in 2004 from $10 million in 2003, due primarily to favorable resolution of foreign-tax issues.
Sempra LNG
Last month, Sempra LNG (formerly Sempra Energy LNG) awarded the engineering and construction contracts for its Energia Costa Azul and Cameron LNG receipt terminals in Baja California, Mexico, and Louisiana. Construction has commenced on the Energia Costa Azul terminal, which is expected to be operational in 2008.
Also last month, Sempra LNG was awarded a 15-year natural gas contract to supply Mexico's state-owned electric utility, Comision Federal de Electricidad.
On Jan. 27, 2005, Sempra LNG announced it had signed a Heads of Agreement (HOA) to provide Tractebel LNG North America LLC with up to one-third of the capacity of the Cameron LNG receipt terminal for a period of 20 years, beginning in 2008. The non-binding HOA contemplates finalizing a definitive agreement by June 30, 2005. Additional supply and capacity agreements involving Cameron LNG are being negotiated. The facility is expected to be operational in 2008.
2005 Earnings Outlook
Sempra Energy today updated its 2005 earnings-per-share guidance to $3.10 to $3.30 from previous guidance of $3.00 to $3.20. The company also announced a capital budget of approximately $1.6 billion for 2005.
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 the passcode, 3346152.
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' 13,000 employees serve more than 10 million customers in the United States, Europe, Canada, Mexico, South America and Asia.
This presentation 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; 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 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 utilites, 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
(Dollars in millions, except per share amounts)
Three months ended Years ended
December 31, December 31,
------------------- -------------------
2004 2003 2004 2003
-------- -------- -------- --------
(Unaudited)
Operating revenues
California utilities:
Natural gas $ 1,348 $ 1,049 $ 4,537 $ 4,010
Electric 412 419 1,658 1,787
Other 1,129 598 3,215 2,090
-------- -------- -------- --------
Total operating
revenues 2,889 2,066 9,410 7,887
-------- -------- -------- --------
Operating expenses
California utilities:
Cost of natural gas 849 542 2,593 2,071
Cost of electric fuel
and purchased power 151 113 576 541
Other cost of sales 555 318 1,741 1,204
Other operating expenses 774 656 2,371 2,287
Depreciation and
amortization 120 160 621 615
Franchise fees and
other taxes 65 63 236 230
-------- -------- -------- --------
Total operating
expenses 2,514 1,852 8,138 6,948
-------- -------- -------- --------
Operating income 375 214 1,272 939
Other income (expense)
- net 46 (12) 104 26
Interest income 11 74 69 104
Interest expense (88) (85) (322) (308)
Preferred dividends/
distributions by
subsidiaries (3) (2) (10) (19)
-------- -------- -------- --------
Income from continuing
operations before
income taxes 341 189 1,113 742
Income tax expense
(benefit) 2 (62) 193 47
-------- -------- -------- --------
Income from continuing
operations 339 251 920 695
Income (loss) from
discontinued operations,
net of tax 7 -- (23) --
Loss on disposal of
discontinued operations,
net of tax -- -- (2) --
-------- -------- -------- --------
Income before cumulative
effect of changes in
accounting principles 346 251 895 695
Cumulative effect of
changes in accounting
principles, net of tax -- (17) -- (46)
-------- -------- -------- --------
Net income $ 346 $ 234 $ 895 $ 649
======== ======== ======== ========
Basic earnings per share:
Income from continuing
operations $ 1.47 $ 1.12 $ 4.03 $ 3.29
Discontinued operations,
net of tax 0.03 -- (0.11) --
Cumulative effect of
changes in accounting
principles, net of tax -- (0.07) -- (0.22)
-------- -------- -------- --------
Net income $ 1.50 $ 1.05 $ 3.92 $ 3.07
======== ======== ======== ========
Weighted-average
number of shares
outstanding (thousands) 230,832 223,962 228,271 211,740
======== ======== ======== ========
Diluted earnings per share:
Income from continuing
operations $ 1.43 $ 1.11 $ 3.93 $ 3.24
Discontinued operations,
net of tax 0.03 -- (0.10) --
Cumulative effect of
changes in accounting
principles, net of tax -- (0.08) -- (0.21)
-------- -------- -------- --------
Net income $ 1.46 $ 1.03 $ 3.83 $ 3.03
======== ======== ======== ========
Weighted-average number
of shares outstanding
(thousands) 237,500 227,214 233,852 214,482
======== ======== ======== ========
Dividends declared per
share of common stock $ 0.25 $ 0.25 $ 1.00 $ 1.00
======== ======== ======== ========
SEMPRA ENERGY
Table B
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
December 31,
2004 2003
------- -------
Assets
Current assets:
Cash and cash equivalents $ 419 $ 409
Short-term investments 15 386
Accounts receivable 1,032 874
Due from unconsolidated affiliate 4 --
Deferred income taxes 15 --
Interest receivable 80 62
Trading-related receivables and deposits, net 2,606 2,350
Derivative trading instruments 2,339 1,607
Commodities owned 1,547 1,420
Regulatory assets arising from fixed-price
contracts and other derivatives 152 144
Other regulatory assets 103 89
Inventories 172 147
Other 222 158
------- -------
Current assets of continuing operations 8,706 7,646
Current assets of discontinued operations 70 220
------- -------
Total current assets 8,776 7,866
------- -------
Investments and other assets:
Due from unconsolidated affiliates 42 55
Regulatory assets arising from fixed-price
contracts and other derivatives 500 650
Other regulatory assets 619 552
Nuclear decommissioning trusts 612 570
Investments 1,164 1,112
Sundry 844 707
------- -------
Total investments and other assets 3,781 3,646
------- -------
Property, plant and equipment - net 11,086 10,476
------- -------
Total assets $23,643 $21,988
======= =======
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt $ 405 $ 28
Accounts payable 1,126 788
Due to unconsolidated affiliates 205 1
Income taxes payable 187 336
Deferred income taxes -- 31
Trading-related payables 3,182 2,255
Derivative trading instruments sold,
not yet purchased 1,484 1,340
Commodities sold with agreement to repurchase 513 922
Dividends and interest payable 123 136
Regulatory balancing accounts - net 509 424
Fixed-price contracts and other derivatives 157 148
Current portion of long-term debt 398 1,433
Other 776 675
------- -------
Current liabilities of continuing operations 9,065 8,517
Current liabilities of discontinued operations 17 52
------- -------
Total current liabilities 9,082 8,569
------- -------
Long-term debt 4,192 3,841
------- -------
Deferred credits and other liabilities:
Due to unconsolidated affiliates 162 362
Customer advances for construction 97 89
Postretirement benefits other than pensions 129 131
Deferred income taxes 420 368
Deferred investment tax credits 78 84
Regulatory liabilities arising from cost
of removal obligations 2,359 2,238
Regulatory liabilities arising from asset
retirement obligations 333 303
Other regulatory liabilities 67 109
Fixed-price contracts and other derivatives 500 680
Asset retirement obligations 326 313
Deferred credits and other 854 832
------- -------
Total deferred credits and other liabilities 5,325 5,509
------- -------
Preferred stock of subsidiaries 179 179
------- -------
Shareholders' equity 4,865 3,890
------- -------
Total liabilities and shareholders' equity $23,643 $21,988
======= =======
SEMPRA ENERGY
Table C
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Dollars in millions)
Years ended
December 31,
---------------------
2004 2003
------- -------
Cash Flows from Operating Activities:
Net income $ 895 $ 649
Adjustments to reconcile net income to net
cash provided by operating activities:
Discontinued operations, net of tax 25 --
Cumulative effect of changes in accounting
principles, net of tax -- 46
Depreciation and amortization 621 615
Deferred income taxes and investment
tax credits 13 (118)
Impairment losses 12 101
Other - net 61 99
Net changes in other working
capital components (427) (154)
Changes in other assets (200) (71)
Changes in other liabilities (21) (26)
------- -------
Net cash provided by continuing operations 979 1,141
Net cash used in discontinued operations (30) --
------- -------
Net cash provided by operating activities 949 1,141
------- -------
Cash Flows from Investing Activities:
Expenditures for property,
plant and equipment (1,083) (1,049)
Investments in and acquisitions of
subsidiaries, net of cash acquired (74) (202)
Proceeds from disposal of discontinued
operations 157 --
Net proceeds from sale of assets 372(a) 29
Dividends received from unconsolidated
affiliates 59 72
Affiliate loans -- (99)
Other - net 10 1
------- -------
Net cash used in investing activities (559) (1,248)
------- -------
Cash Flows from Financing Activities:
Common dividends paid (195) (182)
Issuances of common stock 110 505
Repurchases of common stock (5) (7)
Issuances of long-term debt 997 900
Payments on long-term debt (1,670) (601)
Increase (decrease) in short-term debt - net 397 (518)
Other - net (14) (8)
------- -------
Net cash (used in) provided by
financing activities (380) 89
------- -------
Increase (decrease) in cash and
cash equivalents 10 (18)(b)
Cash and cash equivalents, January 1 409 427
------- -------
Cash and cash equivalents, December 31 $ 419 $ 409
======= =======
(a) Primarily proceeds from the sale of U.S. Treasury obligations
which previously securitized the Mesquite synthetic lease.
(b) Change from $(23) 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 Years ended
December 31, December 31,
-------------- --------------
2004 2003 2004 2003
----- ----- ----- -----
Net Income
California Utilities:
San Diego Gas & Electric $ 68 $ 128 $ 208 $ 334
Southern California Gas 58 61 232 209
----- ----- ----- -----
Total California Utilities 126 189 440 543
----- ----- ----- -----
Sempra Global:
Sempra Commodities 171 73 320 157
Sempra Generation 19 32 137 71
Sempra Pipelines & Storage 28 10 63 3(c)
Sempra LNG (8) (2) (8) (2)
----- ----- ----- -----
Total Sempra Global 210 113 512 229
----- ----- ----- -----
Sempra Financial 10 9 36 41
Parent & Other (7) (60)(d) (68) (118)(d)
----- ----- ----- -----
Continuing Operations 339 251 920 695
Discontinued Operations (a) 7 -- (25) --
Cumulative Effect of Changes
in Accounting Principles -- (17)(b) -- (46)(b)
----- ----- ----- -----
Consolidated Net Income $ 346 $ 234 $ 895 $ 649
===== ===== ===== =====
(a) Reflects Atlantic Electric & Gas and for the three months
ended December 31, 2004 includes $7 related to favorable tax
adjustment.
(b) The effects were ($29) at Sempra Commodities, $9 at Sempra
Generation and ($26) at Parent & Other, respectively. The effects
at Sempra Generation and Parent & Other were recorded in the
three months ended December 31, 2003.
(c) Includes ($50) write-down of the carrying value of assets of
Frontier Energy.
(d) Includes the ($21) impairment of the carrying value of assets
of AEG at Parent & Other.
Three months ended Years ended
December 31, December 31,
--------------- ---------------
(Dollars in millions) 2004 2003 2004 2003
--------------------- ------ ------ ------ ------
Capital Expenditures
and Investments:
California Utilities:
San Diego Gas & Electric $ 131 $ 159 $ 414 $ 444
Southern California Gas 77 101 311 318
------ ------ ------ ------
Total California Utilities 208 260 725 762
------ ------ ------ ------
Sempra Global:
Sempra Generation 41 69 194 300
Sempra Commodities 28 31 131 51
Sempra Pipelines & Storage 4 13 22 50
Sempra LNG 20 23 55 51
------ ------ ------ ------
Total Sempra Global 93 136 402 452
------ ------ ------ ------
Parent & Other 4 9 30 37
------ ------ ------ ------
Consolidated Capital
Expenditures and Investments $ 305 $ 405 $1,157 $1,251
====== ====== ====== ======
SEMPRA ENERGY
Table E
OTHER OPERATING STATISTICS (Unaudited)
Three months ended Years Ended
December 31, December 31,
----------------- -----------------
CALIFORNIA UTILITIES 2004 2003 2004 2003
-------------------- ------- ------- ------- -------
Revenues
(Dollars in millions)
SDG&E (excludes
intercompany sales) $ 599 $ 557 $ 2,248 $ 2,292
SoCalGas (excludes
intercompany sales) $ 1,161 $ 911 $ 3,947 $ 3,505
Gas Sales (Bcf) 125 115 413 394
Transportation and
Exchange (Bcf) 139 130 550 540
------- ------- ------- -------
Total Deliveries (Bcf) 264 245 963 934
------- ------- ------- -------
Total Gas Customers
(Thousands) 6,297 6,210
Electric Sales
(Millions of kWhs) 3,993 3,817 15,799 15,040
Direct Access
(Millions of kWhs) 881 866 3,441 3,322
------- ------- ------- -------
Total Deliveries
(Millions of kWhs) 4,874 4,683 19,240 18,362
------- ------- ------- -------
Total Electric Customers
(Thousands) 1,319 1,296
SEMPRA GENERATION
----------------- ------- ------- ------- -------
Power Sold
(Millions of kWhs) 5,943 3,787 20,739 11,251
SEMPRA PIPELINES & STORAGE
(Represents 100% of these
subsidiaries, although only
the Mexican subsidiaries are
100% owned by Sempra Energy).
-------------------------------
Natural Gas Sales (Bcf)
Argentina 60 58 251 232
Mexico 9 10 42 40
Chile 1 1 3 3
Natural Gas Customers (Thousands)
Argentina 1,449 1,404
Mexico 97 95
Chile 37 37
Electric Sales (Millions of kWhs)
Peru 1,024 1,023 4,044 4,032
Chile 475 453 1,959 1,832
Electric Customers (Thousands)
Peru 748 732
Chile 508 496
SEMPRA ENERGY
Table E (Continued)
SEMPRA COMMODITIES
(Dollars in millions)
---------------------
Three months ended Years ended
December 31, December 31,
------------------- -------------------
Trading Margin(a) 2004 2003 2004 2003
--------------------------------------------- -------------------
Geographical:
North America $ 300 $ 120 $ 689 $ 439
Europe/Asia 165 75 338 172
------------------- -------------------
Total $ 465 $ 195 $ 1,027 $ 611
------------------- -------------------
Product Line:
Gas $ 234 $ 29 $ 314 $ 146
Power 85 36 166 137
Oil - Crude & Products 69 51 265 128
Metals 54 49 179 96
Other 23 30 103 104
------------------- -------------------
Total $ 465 $ 195 $ 1,027 $ 611
------------------- -------------------
(a) Trading 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) 11.9 13.0 13.0 13.3
Electric
(Billions of kWhs) 108.1 102.6 373.7 324.4
Oil & Liquid Products
(Millions Bbls/Day) 2.1 2.0 2.1 1.7
Fair
Market Value
Net Unrealized Revenue December 31, Scheduled Maturity (in months)
(Dollars in millions) 2004 0 - 12 13 - 24 25 - 36 > 36
------- -----------------------------
Sources of Over-the-Counter
(OTC) Fair Value:
Prices actively quoted $844 $ 788 $ 12 $ 10 $ 34
Prices provided by other
external sources 23 (14) -- -- 37
Prices based on models
and other valuation
methods (21) (20) -- -- (1)
---- ------ ------- ------- -------
Total OTC Fair
Value (a) $846 $ 754 $ 12 $ 10 $ 70
-----------------------------------------
Maturity of OTC Fair Value
Percentage 100.0% 89.1% 1.4% 1.2% 8.3%
Cumulative Percentages 89.1% 90.5% 91.7% 100.0%
-----------------------------------------
---------------------------------------------------------------------
Exchange Contracts (b) $ 347 $ 337 $ 21 $ 8 $ (19)
---- ------ ------- ------- -------
Total Net Unrealized
Revenue $1,193
------
(a) The present value of unrealized revenue to be received or
(paid) from outstanding OTC contracts
(b) Cash received associated with open Exchange Contracts
Credit Quality of Unrealized Trading Assets
(net of margin)
-------------------------------------------
December 31, December 31,
2004 2003
------------ ------------
Commodity Exchanges 10% 8%
Investment Grade 66% 68%
Below Investment Grade 24% 24%
------------ ------------
100% 100%
Risk Adjusted Performance Indicators
------------------------------------
Three months ended Years ended
December 31, December 31,
-----------------------------------
2004 2003 2004 2003
------- ------ ------- --------
VaR at 95%
(Dollars in millions)(a) $ 11.2 $ 4.4 $ 7.9 $ 6.5
VaR at 99%
(Dollars in millions)(b) $ 15.7 $ 6.3 $ 11.2 $ 9.2
Risk Adjusted Return
on Capital (RAROC)(c) 34% 38% 38% 23%
(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