SOURCE: Sempra Energy
Sempra Energy Earnings per Share Rise 6.5 Percent in 2008
Company Reaffirms 2009 Earnings-per-Share Outlook of $4.35 per Share to $4.60 per Share
Sempra Energy
SAN DIEGO, CA--(Marketwire - February 24, 2009) - Sempra Energy (
Fourth-quarter 2008 net income rose to $319 million, or $1.30 per diluted share, from $289 million, or $1.10 per diluted share in 2007.
"Despite the challenging economic environment, our businesses have excelled and we've achieved major milestones in our long-term strategy," said Donald E. Felsinger, chairman and chief executive officer of Sempra Energy. "We launched operations at our Mexican liquefied natural gas terminal, completed our commodities joint venture and added new Gulf Coast natural gas assets with the acquisition of EnergySouth. We also received state regulatory approval on San Diego Gas & Electric's Sunrise Powerlink transmission line and both of our utilities' rate cases. Additionally, we completed a $1 billion share-repurchase program, increased our dividend and maintained a strong balance sheet."
SUBSIDIARY OPERATING RESULTS
San Diego Gas & Electric
San Diego Gas & Electric (SDG&E) recorded net income of $339 million in 2008, up from $283 million in 2007. SDG&E's fourth-quarter 2008 net income was $81 million, compared with $47 million in the year-ago quarter, due primarily to higher operating margin and a lower tax rate.
In December 2008, the California Public Utilities Commission approved SDG&E's application to build the $1.9 billion, 500-kilovolt Sunrise Powerlink transmission-line project. Pre-construction activities on the project have begun, with completion of the power line expected in 2012.
"After three years of thorough regulatory review, we are pleased that the Sunrise Powerlink project is moving forward," said Felsinger. "California policymakers have set aggressive environmental goals for the state's utilities, mandating a significant increase in renewable energy and reduction in greenhouse-gas emissions over the next decade. The Sunrise Powerlink will help SDG&E meet these environmental mandates, while increasing system reliability."
Southern California Gas Co.
In 2008, Southern California Gas Co. (SoCalGas) net income increased to $244 million from $230 million. Fourth-quarter net income for SoCalGas was $54 million in 2008, compared with $58 million in 2007.
RBS Sempra Commodities
Sempra Energy generated net income of $345 million from its commodity operations in the full-year 2008, including nine months of net income from its equity share of the RBS Sempra Commodities joint venture, and $164 million in the fourth quarter 2008. In 2007, Sempra Commodities earned $499 million in net income and $186 million in fourth-quarter net income. Results for 2007 represented 100 percent of the earnings from the commodities-marketing business prior to the formation of RBS Sempra Commodities. In the fourth quarter 2008, RBS Sempra Commodities performed well in all of its major product segments, led by crude oil and petroleum products.
Sempra Generation
Sempra Generation's net income rose to $222 million in 2008 from $162 million in 2007. In the fourth quarter 2008, Sempra Generation's net income increased to $60 million from $40 million in the same quarter of 2007, due primarily to lower income-tax expense.
In December 2008, Sempra Generation completed its first solar-power project. The 10-megawatt facility, located outside of Las Vegas, is the largest thin-film solar generating plant in North America.
Sempra Pipelines & Storage
Sempra Pipelines & Storage earned $106 million in 2008 net income, up from $64 million in 2007. In the fourth quarter 2008, Sempra Pipelines & Storage had net income of $22 million, compared with $14 million in the prior year's quarter, due primarily to the operation of the western portion of the Rockies Express Pipeline and the company's Mexico pipelines.
Sempra LNG
In 2008, Sempra LNG recorded a net loss of $46 million, unchanged from 2007. For the fourth quarter 2008, Sempra LNG had a net loss of $13 million, compared with a net loss of $19 million in the same period of 2007, due primarily to a tax benefit related to currency and inflation adjustments.
2009 Outlook
Sempra Energy today reaffirmed its previous earnings-per-share outlook for 2009 of a range of $4.35 per share to $4.60 per share.
Internet Broadcast
Sempra Energy will broadcast a live discussion of its earnings results over the Internet today at 1 p.m. EST 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 (888) 203-1112 and entering passcode 2137643.
Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2008 revenues of nearly $11 billion. The Sempra Energy companies' 13,600 employees serve about 24 million consumers worldwide.
Complete financial tables, including income-statement information by business unit, are available on Sempra Energy's Web site at http://www.sempra.com/downloads/4Q2008.pdf.
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. These statements can be identified by words like "believes," "expects," "anticipates," "intends," "plans," "estimates," "may," "would," "could," "should," or similar expressions, or discussions of strategies, plans or intentions. 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, California State Legislature, California Department of Water Resources, Federal Energy Regulatory Commission, Federal Reserve Board, and other regulatory and governmental bodies in the United States, the United Kingdom and other countries; capital market conditions and inflation, interest and exchange rates; energy and trading markets, including the timing and extent of changes and volatility in commodity prices; the availability of electric power, natural gas and liquefied 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 resolution 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 reports that Sempra Energy has filed with the Securities and Exchange Commission. These reports are available through the EDGAR system without charge at the SEC's Web site, www.sec.gov and on the company's Web site, at www.sempra.com.
Sempra Pipelines & Storage, Sempra Generation, Sempra LNG and Sempra Commodities are not the same companies as the utility, San Diego Gas & Electric (SDG&E) or Southern California Gas Company (SoCalGas), and Sempra Pipelines & Storage, Sempra Generation, Sempra LNG and Sempra Commodities are not regulated by the California Public Utilities Commission.
SEMPRA ENERGY
Table A
STATEMENTS OF CONSOLIDATED INCOME
Three months ended Years ended
December 31, December 31,
(Dollars in millions, except -------------------- --------------------
per share amounts) 2008 2007 2008 2007
--------- --------- --------- ---------
(unaudited)
Revenues
Sempra Utilities $ 1,782 $ 1,859 $ 7,972 $ 7,053
Sempra Global and parent 511 1,251 2,786 4,385
--------- --------- --------- ---------
Total revenues 2,293 3,110 10,758 11,438
--------- --------- --------- ---------
Expenses and Other Income
Sempra Utilities:
Cost of natural gas (536) (721) (3,244) (2,763)
Cost of electric fuel and
purchased power (206) (203) (900) (699)
Sempra Global and parent:
Cost of natural gas, electric
fuel and purchased power (318) (357) (1,671) (1,302)
Other cost of sales (14) (192) (182) (988)
Operation and maintenance (720) (892) (2,536) (3,032)
Depreciation and amortization (179) (172) (687) (686)
Franchise fees and other taxes (82) (74) (312) (295)
Gains on sale of assets - - 114 6
Equity earnings (losses):
RBS Sempra Commodities LLP 241 - 383 -
Other 8 2 37 (9)
Other income (expense), net (77) 18 (54) 90
Interest income 9 10 45 72
Interest expense (88) (68) (253) (272)
Preferred dividends of
subsidiaries (3) (3) (10) (10)
--------- --------- --------- ---------
Income from continuing
operations before income taxes
and equity earnings of
certain unconsolidated
subsidiaries 328 458 1,488 1,550
Income tax expense (15) (183) (438) (524)
Equity earnings, net of income
tax 6 13 63 99
--------- --------- --------- ---------
Income from continuing
operations 319 288 1,113 1,125
Discontinued operations, net of
income tax - 1 - (26)
--------- --------- --------- ---------
Net income $ 319 $ 289 $ 1,113 $ 1,099
========= ========= ========= =========
Basic earnings per share:
Income from continuing
operations $ 1.32 $ 1.12 $ 4.50 $ 4.34
Discontinued operations, net
of income tax - - - (0.10)
--------- --------- --------- ---------
Net income $ 1.32 $ 1.12 $ 4.50 $ 4.24
========= ========= ========= =========
Weighted-average number of
shares outstanding (thousands) 241,660 257,864 247,387 259,269
========= ========= ========= =========
Diluted earnings per share:
Income from continuing
operations $ 1.30 $ 1.10 $ 4.43 $ 4.26
Discontinued operations, net
of income tax - - - (0.10)
--------- --------- --------- ---------
Net income $ 1.30 $ 1.10 $ 4.43 $ 4.16
========= ========= ========= =========
Weighted-average number of
shares outstanding (thousands) 244,531 262,839 251,159 264,004
========= ========= ========= =========
Dividends declared per share of
common stock $ 0.35 $ 0.31 $ 1.37 $ 1.24
========= ========= ========= =========
SEMPRA ENERGY
Table B
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
(Dollars in millions) 2008 2007
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 331 $ 668
Short-term investments 176 -
Restricted cash 27 1
Accounts receivable, net 981 1,074
Income taxes receivable 195 99
Deferred income taxes 31 247
Trading-related receivables and deposits, net - 2,719 *
Derivative trading instruments - 2,170 *
Commodities owned - 2,231
Inventories 320 224
Regulatory assets 121 106
Fixed-price contracts and other derivatives 160 28 *
Other 134 397
------------ ------------
Total current assets 2,476 9,964
------------ ------------
Investments and other assets:
Regulatory assets arising from fixed-price
contracts and other derivatives 264 309
Regulatory assets arising from pension and
other postretirement benefit obligations 1,188 162
Other regulatory assets 534 460
Nuclear decommissioning trusts 577 739
Investment in RBS Sempra Commodities LLP 2,082 -
Other investments 1,166 1,243
Goodwill and intangible assets 539 179
Sundry 709 777
------------ ------------
Total investments and other assets 7,059 3,869
------------ ------------
Property, plant and equipment, net 16,865 14,884
------------ ------------
Total assets $ 26,400 $ 28,717
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt $ 503 $ 1,064
Accounts payable 856 1,563
Due to unconsolidated affiliates 38 60
Trading-related payables - 2,265 *
Derivative trading instruments - 1,672 *
Commodities sold with agreement to repurchase - 500
Dividends and interest payable 156 145
Accrued compensation and benefits 280 265
Regulatory balancing accounts, net 335 481
Current portion of long-term debt 410 7
Fixed-price contracts and other derivatives 180 53 *
Customer deposits 170 143
Other 684 802
------------ ------------
Total current liabilities 3,612 9,020
------------ ------------
Long-term debt 6,544 4,553
------------ ------------
Deferred credits and other liabilities:
Due to unconsolidated affiliate 102 102
Customer advances for construction 155 153
Pension and other postretirement benefit
obligations, net of plan assets 1,487 434
Deferred income taxes 946 531
Deferred investment tax credits 57 61
Regulatory liabilities arising from removal
obligations 2,430 2,522
Asset retirement obligations 1,159 1,129
Other regulatory liabilities 219 265
Fixed-price contracts and other derivatives 392 332
Deferred credits and other 909 949
------------ ------------
Total deferred credits and other
liabilities 7,856 6,478
------------ ------------
Preferred stock of subsidiaries 179 179
------------ ------------
Minority interests 240 148
------------ ------------
Shareholders' equity 7,969 8,339
------------ ------------
Total liabilities and shareholders' equity $ 26,400 $ 28,717
============ ============
* December 31, 2007 amounts have been reclassified due to the adoption of
FASB Staff Position FIN 39-1.
SEMPRA ENERGY
Table C
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
Years ended
December 31,
--------------------
(Dollars in millions) 2008 2007
--------- ---------
Cash Flows from Operating Activities:
Net income $ 1,113 $ 1,099
Adjustments to reconcile net income to net cash
provided by operating activities:
Discontinued operations -- 26
Depreciation and amortization 687 686
Gains on sale of assets, net (114) (6)
Deferred income taxes and investment tax credits 324 149
Noncash rate-reduction bond expense -- 55
Equity earnings (483) (90)
Other 141 46
Net changes in other working capital components (483) 25
Distributions from RBS Sempra Commodities LLP 85 --
Changes in other assets (15) 22
Changes in other liabilities (74) 79
--------- ---------
Net cash provided by continuing operations 1,181 2,091
Net cash used in discontinued operations - (3)
--------- ---------
Net cash provided by operating activities 1,181 2,088
--------- ---------
Cash Flows from Investing Activities:
Expenditures for property, plant and equipment (2,061) (2,011)
Proceeds from sale of assets from continuing
operations, net of cash sold 2,295 103
Expenditures for investments and acquisition of
business, net of cash acquired (2,675) (121)
Distributions from investments 34 18
Purchases of nuclear decommissioning and other trust
assets (485) (646)
Proceeds from sales by nuclear decommissioning and
other trusts 469 613
Decrease in notes receivable from unconsolidated
affiliates 60 --
Other (23) (29)
--------- ---------
Net cash used in investing activities (2,386) (2,073)
--------- ---------
Cash Flows from Financing Activities:
Common dividends paid (339) (316)
Issuances of common stock 18 40
Repurchases of common stock (1,018) (185)
Issuance of long-term debt 1,706 404
Payments on long-term debt (79) (1,072)
Increase in short-term debt, net 564 812
Other 16 21
--------- ---------
Net cash provided by (used in) financing activities 868 (296)
--------- ---------
Decrease in cash and cash equivalents (337) (281)
Cash and cash equivalents, January 1 668 920
Cash assumed in connection with FIN 46(R) initial
consolidation - 29
--------- ---------
Cash and cash equivalents, December 31 $ 331 $ 668
========= =========
SEMPRA ENERGY
Table D
BUSINESS UNIT EARNINGS AND CAPITAL EXPENDITURES & INVESTMENTS
Three months ended Years ended
December 31, December 31,
-------------------- --------------------
(Dollars in millions) 2008 2007 2008 2007
------- ------- ------- -------
(unaudited)
Net Income (Loss)
San Diego Gas & Electric $ 81 $ 47 $ 339 $ 283
Southern California Gas 54 58 244 230
Sempra Commodities(1) 164 186 345 499
Sempra Generation 60 40 222 162
Sempra Pipelines & Storage 22 14 106 64
Sempra LNG (13) (19) (46) (46)
Parent & Other (49) (38) (97) (67)
------- ------- ------- -------
Continuing Operations 319 288 1,113 1,125
Discontinued Operations, Net of
Income Tax - 1 - (26)
------- ------- ------- -------
Consolidated Net Income $ 319 $ 289 $ 1,113 $ 1,099
======= ======= ======= =======
(1) Includes the company's portion of RBS Sempra Commodities' joint venture
earnings since the formation of the joint venture on April 1, 2008, and
100% of the commodities-marketing businesses prior to April 1, 2008.
Also includes the operating results of Sempra Rockies Marketing, as
well as interest, income taxes, cost allocations and other items
associated with the joint venture.
Three months ended Years ended
December 31, December 31,
-------------------- --------------------
(Dollars in millions) 2008 2007 2008 2007
------- ------- ------- -------
(unaudited)
Capital Expenditures and
Investments(1)
San Diego Gas & Electric $ 430 (2) $ 235 $ 1,372 (2) $ 714
Southern California Gas 104 157 454 457
Sempra Commodities - 15 37 64
Sempra Generation 44 5 59 13
Sempra Pipelines & Storage(3) 564 187 909 367
Sempra LNG 55 152 365 498
Parent & Other 229 (2) 7 655 (2) 19
Eliminations (411) (4) - (715) (4) -
------- ------- ------- -------
Consolidated Capital
Expenditures and Investments $ 1,015 $ 758 $ 3,136 $ 2,132
======= ======= ======= =======
(1) Investments do not include the $1.6 billion contribution to RBS Sempra
Commodities in the second quarter of 2008.
(2) Purchases of industrial development bonds for SDG&E and Parent & Other
were $184 and $227, respectively, in the three months ended December
31, 2008 and $488 and $640, respectively, for year ended December 31,
2008.
(3) Amounts for the three months and the year ended December 31, 2008
include $495 for the acquisition of EnergySouth, which is net of cash
acquired.
(4) Represents purchases and sales of industrial development bonds between
SDG&E and Parent & Other.
SEMPRA ENERGY
Table E
OTHER OPERATING STATISTICS (Unaudited)
Three months
ended Years ended
December 31, December 31,
--------------- -----------------
SEMPRA UTILITIES 2008 2007 2008 2007
------- ------- ------- -------
Revenues (Dollars in millions)
SDG&E (excludes intercompany sales) $ 801 $ 765 $ 3,240 $ 2,839
SoCalGas (excludes intercompany
sales) $ 981 $ 1,094 $ 4,732 $ 4,214
Gas Sales (Bcf) 103 114 391 404
Transportation and Exchange (Bcf) 156 145 601 566
------- ------- ------- -------
Total Deliveries (Bcf) 259 259 992 970
------- ------- ------- -------
Total Gas Customers (Thousands) 6,575 6,531
Electric Sales (Millions of kWhs) 4,386 4,198 17,398 17,045
Direct Access (Millions of kWhs) 939 819 3,235 3,220
------- ------- ------- -------
Total Deliveries (Millions of kWhs) 5,325 5,017 20,633 20,265
------- ------- ------- -------
Total Electric Customers (Thousands) 1,372 1,365
SEMPRA GENERATION
======= ======= ======= =======
Power Sold (Millions of kWhs) 5,903 5,613 22,728 20,856
SEMPRA PIPELINES & STORAGE
(Represents 100% of these subsidiaries, although only the Mexican
subsidiaries are 100% owned by Sempra Energy.)
======= ======= ======= =======
Natural Gas Sales (Bcf)
Argentina 78 79 332 320
Mexico 11 11 47 46
Chile - - - 1
Natural Gas Customers (Thousands)
Argentina 1,670 1,603
Mexico 95 96
Chile - * 39
Electric Sales (Millions of kWhs)
Peru 1,352 1,278 5,415 5,078
Chile 620 632 2,417 2,500
Electric Customers (Thousands)
Peru 837 809
Chile 562 549
* The decrease from 2007 is due to the sale of interests in certain South
American operations in the fourth quarter of 2008.
SEMPRA ENERGY
Table E (Continued)
SEMPRA COMMODITIES
The following information for the Sempra Commodities segment includes
information related to RBS Sempra Commodities LLP. RBS Sempra Commodities
LLP acquired the commodities-marketing businesses of Sempra Energy on
April 1, 2008. For the three and nine months ended December 31, 2008,
the Sempra Commodities segment is composed primarily of the company's
equity interest in RBS Sempra Commodities LLP, but also includes the
results of Sempra Rockies Marketing. The margin and financial data
below represent the total results of RBS Sempra Commodities LLP as
calculated under International Financial Reporting Standards (IFRS).
RBS Sempra Commodities LLP
Operating Statistics
(in millions of US dollars)
Three Nine
months ended months ended
RBS Sempra Commodities LLP - Joint Venture December 31, December 31,
level margin* 2008 2008
------------- -------------
Geographical:
North America $ 373 $ 816
Europe/Asia 340 603
------------- -------------
Total $ 713 $ 1,419
============= =============
Product Line:
Natural Gas $ 171 $ 534
Oil - Crude & Products 243 357
Metals 149 253
Power 129 222
Other 21 53
------------- -------------
Total $ 713 $ 1,419
============= =============
* Margin consists of operating revenues less cost of sales (primarily
transportation and storage costs) reduced by certain transaction-related
execution costs (primarily brokerage and other fees) and net interest
income/expense.
Financial Information
(in millions of US dollars)
RBS Sempra Commodities LLP Three months ended
December 31, 2008
----------------------------
Joint Venture Sempra
Total Share**
Fee income and trading revenue, net of
selling costs $ 713
Operating and other expenses (339)
-------------
Joint Venture distributable income $ 374
=============
Preferred return on capital $ 103 $ 61
1st allocation - 70% Sempra / 30% RBS*** 271 192
2nd allocation - 30% Sempra / 70% RBS - -
------------- -------------
Distributable income $ 374 $ 253
============= =============
Nine months ended
December 31, 2008
----------------------------
Joint Venture Sempra
Total Share**
Fee income and trading revenue, net of
selling costs $ 1,419
Operating and other expenses (744)
-------------
Joint Venture distributable income $ 675
=============
Preferred return on capital $ 382 $ 181
1st allocation - 70% Sempra / 30% RBS*** 293 208
2nd allocation - 30% Sempra / 70% RBS - -
------------- -------------
Distributable income $ 675 $ 389
============= =============
Sempra Earnings from RBS Sempra Commodities
LLP
Three Nine
months ended months ended
December 31, December 31,
(in millions of US dollars) 2008 2008
------------- -------------
Sempra share of distributable income - IFRS
basis $ 253 $ 389
U.S. GAAP conversion impact (12) (6)
------------- -------------
Sempra equity earnings - U.S. GAAP basis 241 383
Income tax expense (79) (131)
------------- -------------
Sempra equity earnings from RBS Sempra
Commodities LLP $ 162 $ 252
============= =============
** After a 15% preferred return to Sempra and then a 15% return to RBS,
Sempra receives 70% of the next $500 million and 30% of any remaining
income on an annual basis.
*** Includes certain transition costs specifically allocated to Sempra and
RBS.
Doug Kline
Sempra Energy
(877) 866-2066
www.sempra.com
Financial Contact:
Glen Donovan
Sempra Energy
(877) 736-7727
Email Contact