Sempra Energy 8-K 5/4/2005

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

CURRENT REPORT

 

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934

Date of Report

 

(Date of earliest event reported):

May 4, 2005
- -----------------------

SEMPRA ENERGY
- ---------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

CALIFORNIA
- --------------------------------

1-14201
- --------------------------------

33-0732627
- --------------------------------

(State of incorporation
or organization)

(Commission
File Number)

(I.R.S. Employer
Identification No.

101 ASH STREET, SAN DIEGO, CALIFORNIA
- ------------------------------------------------------------------

92101
- ----------------------

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code

(619) 696-2034
- -------------------

---------------------------------------------------------------------
(Former name or former address, if changed since last report.)






FORM 8-K

Item 2.02 Results of Operations and Financial Condition

On May 4, 2005, Sempra Energy announced consolidated net income of $223 million, or $0.92 per diluted share of common stock, for the first quarter of 2005. A copy of the press release is attached as Exhibit 99.1. The information furnished in this Item 2.02 and in Exhibit 99.1 shall not be deemed to be "filed" for purposes of the Securities Exchange Act of 1934, nor shall it be deemed to be incorporated by reference in any filing of Sempra Energy, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

 

 

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

99.1 May 4, 2005 Sempra Energy News Release (including tables)






SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SEMPRA ENERGY
(Registrant)

Date: May 4, 2005

By: /s/ F. H. Ault
- -----------------------------------------

 

F. H. Ault
Sr. Vice President and Controller

 

SEMPRA ENERGY

 

Exhibit 99.1

   

NEWS RELEASE

     

Media Contacts:

Doug Kline
Sempra Energy
(877) 866-2066
www.sempra.com

 
   
   
   
     

Financial Contacts:

Dennis Arriola/Karen Sedgwick
Sempra Energy
(877) 736-7727

 
   
   

 

SEMPRA ENERGY REPORTS
HIGHER FIRST-QUARTER 2005 EARNINGS

 

          SAN DIEGO, May 4, 2005 - Sempra Energy 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 Energía 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)

Three months ended

March 31,

(Dollars in millions, except per share amounts)

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)

March 31,

December 31,

(Dollars in millions)

 

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)

Three months ended

March 31,

(Dollars in millions)

 

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

(1)

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

(2)

Cash and cash equivalents, January 1

419

409

Cash and cash equivalents, March 31

$ 609

$ 638

(1)

Proceeds from the sale of U.S. Treasury obligations which previously securitized the Mesquite synthetic lease.

(2)

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)

Three months ended

March 31,

(Dollars in millions)

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 (1)

-

(24

)

Consolidated Net Income

$ 223

$ 197

(1)

Reflects Atlantic Electric & Gas.

Three months ended

March 31,

(Dollars in millions)

2005

 

2004

 

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






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 * (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

* 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

Fair

Market Value

March 31,

Scheduled Maturity (in months)

Net Unrealized Revenue (Dollars in millions)

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 (1)

$ 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 (2)

$ (7

)

$ (127

)

$ 173

 

$ (63

$ 10

Total Net Unrealized Revenue

$ 589

(1) The present value of unrealized revenue to be received or (paid) from outstanding OTC contracts

(2) Cash received or (paid) associated with open Exchange Contracts

March 31,

December 31,

Credit Quality of Unrealized Trading 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) (1)

$ 8.5

$ 5.7

VaR at 99% (Dollars in millions) (2)

$ 11.9

$ 8.1

Risk Adjusted Return on Capital (RAROC) (3)

33%

41%

(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