PE/SoCalGas 8-K Earnings Release

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 1, 2003
- -------------------

 


Commission
File Number
- -----------------------------

Name of Registrant, State of
Incorporation, Address and
Telephone Number
- ---------------------------------------

IRS Employer
Identification
Number
- -----------------------------

1-40

Pacific Enterprises
(A California Corporation)
101 Ash Street
San Diego, California 92101
(619) 696-2000

94-0743670

     

1-1402

Southern California Gas Company
(A California Corporation)
555 West Fifth Street
Los Angeles, California 90013
(213) 244-1200

95-1240705

 

 

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






FORM 8-K

Item 12. Results of Operations and Financial Condition

The information in this Current Report on Form 8-K, including exhibit 99.1 attached hereto, is being furnished, not filed, under Item 9 to satisfy the requirements of Item 12, "Results of Operations and Financial Condition" in accordance with SEC Release Nos. 33-8216 and 34-47583.

On May 1, 2003, Sempra Energy, of which Pacific Enterprises and Southern California Gas Company are consolidated subsidiaries, issued its earnings press release for the quarter ended March 31, 2003. The Sempra Energy financial information contained in the press release includes, on a consolidated basis and also separately, information regarding the results of operations and financial condition of Pacific Enterprises and Southern California Gas Company.

 

Item 7. Financial Statements and Exhibits.

(c) Exhibits

99.1 May 1, 2003 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.

Pacific Enterprises

 

 

Date: May 1, 2003

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

 

Name: F. H. Ault
Sr. Vice President and Controller

 

 

Southern California Gas Company

Date: May 1, 2003

By: /s/ D. L. Reed
- -----------------------------------------

 

Name: D. L. Reed
President and Chief Financial Officer

 

SEMPRA ENERGY EARNINGS RELEASE

Exhibit 99.1

 

News Release

 

Media Contacts:

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

 
 
 

Financial Contacts:

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

 

SEMPRA ENERGY REPORTS
FIRST-QUARTER 2003 EARNINGS

        SAN DIEGO, May 1, 2003 -- Sempra Energy today reported unaudited first-quarter 2003 earnings of $88 million, or $0.42 per diluted share, compared with $146 million, or $0.71 per diluted share, for the same period of 2002.

        The 2003 first-quarter results reflect the $38 million, or $0.18 per diluted share, negative effects of implementing new accounting principle EITF 02-3. The components of this non-cash reduction in earnings consist of $29 million, or $0.14 per diluted share, reflected as a cumulative-effect adjustment at Dec. 31, 2002, and an additional $9 million, or $0.04 per diluted share, for the first-quarter effect of the change. EITF 02-3 eliminated mark-to-market accounting for certain commodity-trading assets, changing the timing for revenue recognition.

        For comparison purposes with the first quarter 2002, earnings for the first quarter 2003 would have been $126 million, or $0.60 per diluted share, except for the effects of EITF 02-3.

        Revenues for Sempra Energy rose 27 percent to $1.9 billion in the first quarter 2003 from $1.5 billion in the first quarter 2002. Increased revenues during the first quarter this year resulted from higher commodity prices, primarily at Sempra Energy Utilities.

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        "We expect our 2003 earnings per share to be $2.60 to $2.80, excluding the $0.14-per-share cumulative effect of the change in accounting principle," said Stephen L. Baum, chairman, president and chief executive officer of Sempra Energy. "Our California utilities performed well in the first quarter. We also are making progress on several of our key strategic initiatives, especially our expansion into the liquefied natural gas market and bringing new generation facilities online in the Pacific Southwest. Furthermore, we expect our trading business to rebound from a difficult quarter -- as it has done in the past -- and post solid results by year-end."

        Baum said Sempra Energy's liquidity remains strong with more than $2.6 billion in cash and committed credit available at the end of the first quarter 2003. This liquidity position was strengthened in January 2003 through the company's issuance of $400 million of 10-year, 6-percent notes.

Sempra Energy Utilities

         Sempra Energy Utilities contributed $103 million in net income in the first quarter 2003, compared with net income of $113 million in the first quarter last year.

        This reduction in net income was primarily due to the termination at the end of 2002 of sharing in savings resulting from the 1998 merger that formed Sempra Energy.

        SDG&E reported net income in the first quarter 2003 of $45 million, down from $53 million for the same period in 2002. In addition to the smaller impact from merger savings, earnings also decreased due to higher operating and depreciation expenses, partially offset by a gas-procurement award of $4 million after-tax.

        Net income for SoCalGas for the first quarter 2003 was $58 million, compared with $60 million in the same period in 2002.

Sempra Energy Trading

        Sempra Energy Trading reported a net loss of $18 million for the first quarter of 2003, compared with net income of $42 million in the year-earlier period. The quarter's loss was due to a combination of accounting changes and lower profits from energy trading. For comparison purposes, Sempra Energy Trading's earnings for the quarter would have been $19 million, except for the $37 million cumulative and first-quarter effects of EITF 02-3.

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Sempra Energy Resources

        Sempra Energy Resources, the wholesale power-generation subsidiary of Sempra Energy, reported net income of $10 million in the first quarter 2003, compared with a net loss of $3 million in the first quarter 2002. The increase in earnings was primarily due to scheduled deliveries under its long-term contract with the California Department of Water Resources and contributions from the Twin Oaks power plant, which was acquired in November 2002.

        Sempra Energy Resources remains on schedule to bring online three new power plants, representing 1,510 megawatts of generation capacity, during May and June 2003, with an additional 625 megawatts being added by the end of this year. Through 2005, an average of 85 percent of Sempra Energy Resources' peak-generating capability is sold forward, which will provide the unit with predictable earnings and cash flow.

Sempra Energy International

        For the first quarter of 2003, Sempra Energy International's net income decreased to $7 million from $8 million during the same quarter in 2002. The reduction in earnings was primarily attributed to decreased operating earnings from Argentina, offset partially by a positive contribution from the Gasoducto Bajanorte natural gas pipeline in northern Mexico.

        In April 2003, Sempra Energy International announced that it had received an environmental permit from Mexico's environmental agency for the Energía Costa Azul liquefied natural gas (LNG) receiving terminal in Baja California, Mexico. The company expects to receive the remaining two permits shortly. Energía Costa Azul will have the capacity to process up to 1 billion cubic feet per day of natural gas and is expected to be operational by 2006.

        Last week, Sempra Energy LNG Corp., a newly formed affiliate of Sempra Energy International, completed the acquisition of an LNG project in Hackberry, La., from Dynegy Midstream Services LP. The project has been renamed "Cameron LNG" and is scheduled to begin commercial operation in early 2007, pending final regulatory approvals. The facility has the capacity to process up to 1.5 billion cubic feet per day of natural gas.

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         "With natural gas demand outstripping supply in North America, we believe that LNG will be a critical part of the supply mix over the next decade," said Baum. "The Cameron LNG and Energía Costa Azul projects will give us a major presence in the North American LNG market."

Sempra Energy Solutions

        Sempra Energy Solutions, which offers energy outsourcing and commodity services to commercial and industrial customers, recorded a net loss of $1 million in the first quarter 2003, compared with net income of $1 million in the same period in 2002. The first-quarter loss resulted, in part, from a $1 million cumulative effect related to accounting principle EITF 02-3.

Internet Broadcast

        Sempra Energy will broadcast a live discussion of its earnings results over the Internet today at 1 p.m. EDT with Baum; Neal E. Schmale, executive vice president and chief financial officer, Sempra Energy; Donald E. Felsinger, group president, Sempra Energy Global Enterprises; Edwin A. Guiles, group president, Sempra Energy Utilities; Frank H. Ault, senior vice president and controller, Sempra Energy; and Dennis V. Arriola, vice president of investor relations, Sempra Energy. 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 (719) 457-0820 and entering passcode number 9599599.

        Sempra Energy (NYSE: SRE), based in San Diego, is a Fortune 500 energy services holding company with 2002 revenues of $6 billion. The Sempra Energy companies' 12,000 employees serve more than 9 million customers in the United States, Europe, Canada, Mexico, South America and Asia.

###

Sempra Energy Trading, Sempra Energy Resources, Sempra Energy International, Sempra Energy LNG Corp. and Sempra Energy Solutions are not the same as the utilities, San Diego Gas & Electric and Southern California Gas Co.

 

This press release contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Legislation 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 conditio ns 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.






SEMPRA ENERGY      
Table A      
       
CONSOLIDATED INCOME STATEMENT (Unaudited)  
 
 
  Three Months Ended
  March 31,
(Dollars in millions,except per share amounts) 2003   2002
Operating Revenues  
California utilities:      
Natural gas $ 1,162   $ 878
Electric 395   278
Other 366   314
Total 1,923   1,470
Operating Expenses      
California utilities:      
Cost of natural gas distributed 677   424
Electric fuel and net purchased power 163   61
Other cost of sales 219   132
Other operating expenses 445   410
Depreciation and amortization 148   148
Franchise fees and other taxes 56   44
Total 1,708   1,219
Operating Income 215   251
Other income (loss) - net (5)   19
Income before Financing Costs and Income Taxes 210   270
Interest income 12   11
Interest expense (74)   (69)
Preferred dividends / distributions by subsidiaries (7)   (7)
Income before Income Taxes 141   205
Income taxes 24   59
Income before Cumulative Effect of Change in Accounting Principle 117   146
Cumulative effect of change in accounting principle, net of tax (29)   -
Net Income $ 88   $ 146
       
Weighted-Average Number of Shares Outstanding:      
Basic* 206,393   204,853
Diluted* 207,823   206,416
Income before Cumulative Effect of Change in Accounting Principle      
per Share of Common Stock      
Basic $ 0.57   $ 0.71
Diluted $ 0.56   $ 0.71
Net Income per Share of Common Stock      
Basic $ 0.43   $ 0.71
Diluted $ 0.42   $ 0.71
Dividends Declared per Common Share $ 0.25   $ 0.25
       
*In thousands of shares      





SEMPRA ENERGY      
Table B      
       
KEY CONSOLIDATED BALANCE SHEET STATISTICS (Unaudited)      
       
  Balance at
  March 31,   December 31,
(Dollars in millions, except per share amounts) 2003   2002
       
Short-Term Debt $ 412   $ 570
Current Portion of Long-Term Debt 205   281
Long-Term Debt 4,324   4,083
Total Debt 4,941   4,934
Preferred Stock of Subsidiaries 203   204
Mandatorily Redeemable Trust Preferred Securities 200   200
Common Equity 2,892   2,825
Total Capitalization $ 8,236   $ 8,163
       
Debt to Total Capitalization 60%   60%
Book Value per Share $ 13.97   $ 13.79
Cash and Cash Equivalents $ 803   $ 455
Available Credit Under Committed Lines - Net $ 1,832   $ 1,650
       
CAPITAL EXPENDITURES AND INVESTMENTS (Unaudited)      
   
  Three Months Ended
  March 31,
(Dollars in millions) 2003   2002
California Utilities:      
Southern California Gas $ 58   $ 70
San Diego Gas & Electric 89   77
Total California Utilities 147   147
       
Global Enterprises:      
Resources 84   56
Trading 7   50
International 26   25
Total Global Enterprises 117   131
       
Parent & Other 9   11
       
Consolidated Capital Expenditures and Investments $ 273   $ 289





SEMPRA ENERGY      
Table C      
       
BUSINESS UNIT EARNINGS (Unaudited)      
       
  Three Months Ended
  March 31,
(Dollars in millions) 2003   2002
Income before Financing Costs and Income Taxes      
California Utilities:      
San Diego Gas & Electric $ 106   $ 119
Southern California Gas 116   113
Total California Utilities 222   232
       
Global Enterprises:      
Trading 22   65
Resources 11   (5)
International 4   1
Solutions 1   3
Total Global Enterprises 38   64
       
Financial (14)   (13)
       
Parent & Other (36)   (13)
       
Consolidated Income before Financing Costs and Income Taxes $ 210   $ 270
       
       
Net Income      
California Utilities:      
San Diego Gas & Electric $ 45   $ 53
Southern California Gas 58   60
Total California Utilities 103   113
       
Global Enterprises:      
Trading (18) (1) 42
Resources 10   (3)
International 7   8
Solutions (1) (1) 1
Total Global Enterprises (2)   48
       
Financial 11   7
       
Parent & Other (2) (24)   (22)
       
Consolidated Net Income $ 88 (1) $ 146
       
(1) Consolidated net income includes ($29M) cumulative effect of    
change in accounting principle. The effects to Trading and Solutions      
were ($28M) and ($1M), respectively.      
       
(2) Parent interest expense is not allocated to the business units.      





SEMPRA ENERGY      
Table D      
       
OTHER OPERATING STATISTICS (Unaudited)      
   
  Three Months Ended
  March 31,
CALIFORNIA UTILITIES 2003   2002
Revenues (Dollars in millions)      
SDG&E (excludes intercompany sales) $ 559   $ 427
SoCalGas (excludes intercompany sales) $ 998   $ 729
       
Gas Sales (BCF) 121   142
Transportation and Exchange (BCF) 134   138
Total Deliveries (BCF) 255   280
Total Gas Customers (Thousands) 6,146   6,072
       
Electric Sales (Millions of kWhs) 3,609   3,524
Direct Access (Millions of kWhs) 806   803
Total Deliveries (Millions of kWhs) 4,415   4,327
Total Electric Customers (Thousands) 1,284   1,263
       
       
RESOURCES      
Power Sold (Millions of kWhs) 1,403   506
       
SOLUTIONS      
Revenues (Dollars in millions) 42   38
       
INTERNATIONAL      
(Represents 100% of these subsidiaries, although only the Mexican      
subsidiaries are 100% owned by Sempra Energy).      
Natural Gas Sales (BCF)      
Argentina 42   38
Mexico 9   9
Chile 1   1
Natural Gas Customers (Thousands)      
Argentina 1,367   1,324
Mexico 85   72
Chile 36   35
Electric Sales (Millions of kWhs)      
Peru 1,018   976
Chile 481   468
Electric Customers (Thousands)      
Peru 721   709
Chile 487   476





SEMPRA ENERGY          
Table D (Continued)          
           
TRADING          
           
  Three Months Ended    
  March 31,    
Trading Margin (Dollars in millions) 2003 2002      
Geographical:          
North America $ 62 $ 90      
Europe/Asia 22 47      
Total $ 84 $ 137      
           
Product Line:          
Gas $ 30 $ 67      
Power (2) 23      
Oil - Crude & Products 32 39      
Metals 7 4      
Other 17 4      
Total $ 84 $ 137      
           
Physical Statistics          
Natural Gas (BCF/Day) 13.5 9.5      
Electric (Billions of kWhs) 66.1 22.8      
Oil & Liquid Products (Millions Bbls/Day) 1.4 2.4      
           
  Fair        
  Market Value        
  March 31, Scheduled Maturity (in months)
Liquidity of Net Unrealized Revenue (Dollars in millions) 2003 0 - 12 13 - 24 25 - 36 > 36
Sources of Over-the-Counter (OTC) Fair Value:          
Prices actively quoted $ 428 $ 460 $ (62) $ 28 $ 2
Prices provided by other external sources (1) (4) (2) - 5
Prices based on models and other valuation methods 25 5 7 2 11
Total OTC Fair Value (1) 452 461 (57) 30 18
           
Maturity of OTC Fair Value          
Percentage 100.0% 102.0% (12.6%) 6.6% 4.0%
Cumulative Percentages   102.0% 89.4% 96.0% 100.0%
           
Exchange Contracts (2) (10) $ (18) $ 5 $ (1) $ 4
           
Total Net Unrealized Revenue $ 442        
           
(1) The present value of unrealized revenue to be received or (paid) from outstanding OTC contracts          
(2) Cash (paid) or received associated with open Exchange Contracts          
           
  March 31, December 31, September 30, June 30, March 31,
Credit Quality of Unrealized Trading Assets (net of margin) 2003 2002 2002 2002 2002
Commodity Exchanges 7% 3% 6% 11% 12%
Investment Grade 62% 67% 69% 69% 64%
Below Investment Grade 31% 30% 25% 20% 24%
           
  Three Months Ended    
  March 31,    
Risk Adjusted Performance Indicators 2003 2002      
VaR at 95% (Dollars in millions) (1) $ 10.0 $ 6.5      
VaR at 99% (Dollars in millions) (2) $ 14.1 $ 9.2      
Risk Adjusted Return on Capital (RAROC) (3) 14% 34%      
           
(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