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): July 26, 2000 ------------------- SEMPRA ENERGY - --------------------------------------------------------------------- (Exact name of registrant as specified in its charter) CALIFORNIA 1-14201 33-0732627 - --------------------------------------------------------------------- (State of incorporation (Commission (I.R.S. Employer or organization) File Number) Identification No. 101 ASH STREET, SAN DIEGO, CALIFORNIA 92101 - --------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (619) 696-2034 Registrant's telephone number, including area code------------------- - --------------------------------------------------------------------- (Former name or former address, if changed since last report.)FORM 8-K Item 5. Other Events On July 26, 2000 Sempra Energy announced consolidated net income of $110 million, or 55 cents per diluted share of common stock, for the three months ended June 30, 2000, representing a 34-percent increase from consolidated net income of $82 million, or 35 cents per diluted share, for the three months ended June 30, 1999. Item 7. Financial Statements And Exhibits. (c) Exhibits 99.1 July 26, 2000 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: August 1, 2000 By: /s/ F. H. Ault ----------------- --------------------------- F. H. Ault Vice President and Controller
Exhibit 99.1 Media Contact: Doug Kline (877) 866-2066 www.sempra.com Investor Relations Contact: Clem Teng (877) 736-7727 SEMPRA ENERGY SECOND-QUARTER EARNINGS RISE 34 PERCENT Trading and International Operations Show Improved Results; SDG&E Earnings Decline SAN DIEGO, July 27, 2000 - Based on increased profits at its energy trading and international units, Sempra Energy (NYSE: SRE) today reported unaudited consolidated net income of $110 million, or 55 cents per diluted share of common stock, for the second quarter of 2000, up 34 percent over last year's second-quarter net income of $82 million, or 35 cents per diluted share. Last year's second-quarter income included non-recurring business-combination costs of $12 million after-tax, or 5 cents per diluted share. Second-quarter revenues for Sempra Energy were $1.5 billion in 2000, equal to revenues in the year-earlier period. "We are now seeing significant contributions from new lines of business outside our California utilities," said Stephen L. Baum, vice chairman, president and chief executive officer of Sempra Energy. "These unregulated businesses provided 21 percent of our consolidated net income for the quarter, and we are well on our way to achieving our goal to derive one-third of our annual earnings from them by 2003." -more- The earnings from the unregulated businesses more than offset reduced or flat earnings at the company's two California utilities, San Diego Gas & Electric (SDG&E) and Southern California Gas Company. In California's newly deregulated energy market, SDG&E no longer generates nor prices electricity, but acts as an energy- delivery service provider. SDG&E buys electricity from the California Power Exchange (Cal-PX) and passes that cost directly onto its customers, with no mark-up. The increase in corporate earnings was due primarily to oil and natural gas transactions by Sempra Energy Trading outside of California. More than 90 percent of the trading unit's earnings was derived from its activities in the eastern half of the United States and Europe. "We continue to be concerned about the impact that high Cal-PX electricity prices are having on SDG&E's customers, and we are working with all the participants in California's deregulated energy market to arrive at short- and long-term solutions," Baum said. "We believe regulators need to move quickly to enable the installation of real-time hourly meters statewide to give consumers the ability to capture the full value of their energy conservation. Also, there are significant problems in the wholesale electricity marketplace and we advocate imposition of a wholesale price cap in the entire western region to bring more price stability. In the long term, California needs an infusion of new power generation and transmission to meet growing energy demand in the state." Sempra Energy continues to pursue a focused, integrated business strategy to capitalize on opportunities in the $160 billion U.S. retail energy services marketplace, Baum added. The company is concentrating on growth in six business lines: regulated energy delivery services; energy trading; international energy transmission and distribution; competitive retail energy services for the commercial, industrial and residential markets; wholesale electric generation; and technology ventures. -more- Energy Delivery Services Net income for San Diego Gas & Electric (SDG&E) in the second quarter was $40 million, down 15 percent from $46 million for the same period in 1999. The decline in net income was due primarily to regulatory changes effective in mid-1999 related to California's electric industry restructuring and the elimination of a regulatory balancing account. With the elimination of the balancing account, SDG&E's net income now fluctuates with changes in natural gas demand, due to seasonal and other factors. During the second quarter 2000, this resulted in a $4 million decrease in net income. Southern California Gas Company recorded net income of $47 million in the second quarter 2000, up from $46 million in 1999's second quarter. Parent Company and New Business Activities In the second quarter of 2000, net income for Sempra Energy's non-utility and new-business operations - including Sempra Energy Trading, Sempra Energy International, Sempra Energy Solutions, Sempra Energy Financial, Sempra Energy Resources, Sempra Communications and the parent company - rose to $23 million from a loss of $10 million in the second quarter 1999. Energy Trading Sempra Energy Trading's net income grew to $40 million in the second quarter 2000, compared to $3 million in the year-earlier period. The dramatic increase is primarily due to improved results in oil and natural gas trading in the United States and Europe amidst volatile international commodity markets. "We're pleased with these results - clearly Sempra Energy Trading has demonstrated its value as a key element in our strategic direction," said Baum. "We also are aware that energy trading is more volatile than the traditional utility business and Sempra Energy Trading's results will vary from quarter to quarter." -more- Sempra Energy Trading's physical trading volumes of natural gas increased 91 percent to 8.4 billion cubic feet per day (bcfd) during the quarter, compared to 4.4 bcfd during the same period last year. Trading volumes of crude oil and products increased 4 percent to 2.4 million barrels per day (mbd) in second quarter 2000, compared to 2.3 mbd in second quarter 1999. During the quarter, the company entered the Asian energy trading market, opening a new office in Singapore. In May 2000, Sempra Energy Trading was chosen as the preferred wholesale natural gas supplier to Utility.com, the world's first Internet utility company. Sempra Energy Trading will provide competitively priced natural gas to Utility.com, which currently serves consumers in California and Pennsylvania. International Operations Sempra Energy International's net income grew to $7 million in the second quarter 2000 from a loss of $2 million during the same quarter last year. The increase was due primarily to the profit contributions of Chilquinta Energia and Luz del Sur, two South American electric distribution utilities that Sempra Energy International jointly acquired with PSEG Global in mid-1999. Sempra Energy International achieved three major milestones in its growth strategy during the second quarter. First, the company began delivering U.S. natural gas through the Rosarito Pipeline to the Presidente Juarez Power Plant in Baja California, Mexico, with a current load of approximately 87 million cubic feet per day. The company also announced a partnership with PG&E Corporation's National Energy Group and Mexico's Proxima Gas, S.A. de C.V., to build the proposed North Baja Pipeline, a $230 million, 212-mile pipeline from Arizona across California and Baja California, Mexico. Finally, the international subsidiary signed an agreement with Dominion Resources Inc. to purchase Dominion's assets in Argentina, including an additional 21.5-percent interest in holding companies that control two natural gas distribution utilities. When the transaction is completed, Sempra Energy International will have raised its total stake in the Argentine utility holding companies to 43 percent. -more- Retail Energy Services Revenues from Sempra Energy's retail energy services marketing operations in the second quarter 2000 nearly doubled to $114 million, compared to $59 million in the same quarter last year. These operations are concentrated primarily in Sempra Energy Solutions, which markets integrated energy-services solutions to commercial, industrial and institutional customers, and Energy America, which sells gas and electricity to residential and small- business customers. During the quarter, Sempra Energy Solutions signed a three- year, $85 million contract to offer energy-efficiency services to facilities associated with Premier Inc., a purchasing alliance serving 1,800 non-profit hospitals and health-care systems. The subsidiary also entered into an agreement to acquire full ownership of the energy infrastructure at The Venetian Hotel Resort Casino and Sands Expo & Convention Center in Las Vegas, and DreamWorks Animation Studios in Glendale, Calif., two of the company's largest energy service customers. Earlier this month, Energy America acquired 50,000 residential and small-business customers from Titan Energy of Georgia for $2.5 million. Energy America now sells electricity and natural gas to 425,000 customers in six states. Continued start-up costs at Sempra Energy's retail energy services operations led to a loss of $7 million in the second quarter 2000, compared to a loss of $4 million during the same period last year. Generation Second-quarter earnings from Sempra Energy Resources' generation operations were $3 million, compared to $1 million last year, primarily due to the start-up of commercial operations at El Dorado Energy. The 480-megawatt power plant, jointly owned with Reliant Energy, was operational for approximately two-thirds of the quarter. Located near Las Vegas, the plant sells electricity into the wholesale power markets of Nevada, California and the southwestern United States. Over the next five years, Sempra Energy Resources will develop a portfolio of electric generation plants to meet customer needs as part of Sempra Energy's overall retail energy marketing strategy. -more- Share Repurchases The weighted average number of common shares outstanding (diluted) for the second quarter was 201 million, down from 237 million for the same period in 1999. The decrease in shares outstanding resulted from Sempra Energy's repurchase of 36 million shares of common stock through a Dutch Auction self-tender. In July, Sempra Energy repurchased approximately 160,000 additional shares of common stock on the open market, as part of a board-approved $100 million buyback program. Sempra Energy (NYSE: SRE), based in San Diego, is a Fortune 500 energy services holding company with 12,000 employees and revenues of nearly $5.5 billion. Through its eight principal subsidiaries -- Southern California Gas Company, San Diego Gas & Electric, Sempra Energy Solutions, Sempra Energy Trading, Sempra Energy International, Sempra Energy Resources, Sempra Communications and Sempra Energy Financial -- Sempra Energy serves more than 9 million customers in the United States, Europe, Canada, Mexico and South America. # # # This press release contains statements that are not historical fact and constitute projections, forecasts or forward-looking statements. When we use words like "believes," "expects," "anticipates," "intends," "plans," "estimates," "may," "should" or similar expressions, or when we discuss our strategy or plans, we are making projections, forecasts or forward-looking statements. These statements are not guarantees of performance. They involve risks, uncertainties and assumptions that could cause the company's future results to differ materially from those expressed in these statements. Many of the factors that will determine these results are beyond the company's ability to control or predict. These statements are necessarily based upon various assumptions involving judgments with respect to the future. These risks and uncertainties, include, among others: national, international, regional and local economic, competitive and regulatory conditions and developments; capital market conditions, inflation rates and interest rates; energy 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; technological developments; 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 Annual Report on Form 10-K for the fiscal year ended Dec. 31, 1999, which has been filed with the Securities and Exchange Commission and is 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 Six Months Ended June 30 June 30 ------------------ ---------------- 2000 1999 2000 1999 ----------------------------------------- In Millions of Dollars, Except Per Share Amounts Revenues California utilities: Natural Gas $ 716 $ 706 $ 1,537 $ 1,404 Electric 473 646 822 1,006 Other 347 165 643 298 ------------------ ---------------- Total 1,536 1,517 3,002 2,708 Expenses Cost of natural gas distributed 316 275 706 566 Electric fuel and net purchased power 264 109 397 211 Operating expenses 530 485 1,029 873 Depreciation and decomissioning 144 467 278 609 Franchise payments and other taxes 40 41 91 86 Preferred dividends/distributions by subsidiaries 7 3 12 6 ------------------ ---------------- Total 1,301 1,380 2,513 2,351 ------------------ ---------------- Income Before Interest and Income Taxes 235 137 489 357 Interest expense 76 54 149 112 ------------------ ---------------- Income Before Income Taxes 159 83 340 245 Income taxes 49 1 117 64 ------------------ ---------------- Net Income $ 110 $ 82 $ 223 $ 181 ------------------ ---------------- Weighted Average Shares Outstanding * 201 237 215 237 Net Income Per Share of Common Stock $ 0.55 $ 0.35 $ 1.04 $ 0.76 Dividends Declared Per Common Share $ 0.25 $ 0.39 $ 0.50 $ 0.78 *In millions of shares (basic and diluted) KEY CONSOLIDATED BALANCE SHEET STATISTICS (Unaudited) June 30 ---------------------------- In Millions of Dollars, Except Per Share Amounts 2000 1999 ------------- ----------- Short-Term Debt $ -- $ -- Current Portion of Long-Term Debt 153 334 Long-Term Debt 3,313 2,889 ------------- ----------- Total Debt 3,466 3,223 Preferred Stock of Subsidiaries 204 204 Mandatorily Redeemable Trust Preferred Securities 200 -- Common Equity 2,420 2,909 ------------- ----------- Total Capitalization $ 6,290 $ 6,336 ------------- ----------- Debt to Total Capitalization 55% 51% Book Value per Share $ 12.01 $ 12.26 Cash and Cash Equivalents $ 546 $ 656 SEMPRA ENERGY TABLE B BUSINESS UNIT EARNINGS (Unaudited) Three Months Ended Six Months Ended June 30 June 30 ----------------- ---------------- 2000 1999 Change 2000 1999 Change ------------------------ ------------------------ Delivery Services: SoCal Gas $ 47 $ 46 $ 1 $ 97 $ 93 $ 4 SDG&E 40 46 (6) 92 99 (7) ------------------------ ------------------------ Subtotal 87 92 (5) 189 192 (3) Energy Trading 40 3 37 58 4 54 International 7 (2) 9 12 (8) 20 Generation 3 1 2 3 2 1 Retail Services (7) (4) (3) (13) (8) (5) Technology Ventures (3) (1) (2) (5) (3) (2) Financial 7 7 -- 15 14 1 Parent and Other (24) (2) (22) (36) -- (36) ------------------------ ------------------------ Subtotal 23 2 21 34 1 33 Business-Combination Costs -- (12) 12 -- (12) 12 ------------------------ ------------------------ Total Net Income $ 110 $ 82 $ 28 $ 223 $ 181 $ 42 ------------------------ ------------------------ Shares Outstanding (in millions) 201 237 215 237 ----------------- ---------------- Earnings per Share $ 0.55 $ 0.35 $0.20 $ 1.04 $ 0.76 $0.28 ------------------------ ------------------------ FINANCIAL HIGHLIGHTS (Unaudited) Three Months Ended Six Months Ended June 30 June 30 ----------------------------------------- 2000 1999 2000 1999 ----------------------------------------- Capital Expenditures (in millions) SoCalGas $ 47 $ 34 $ 87 $ 66 SDG&E $ 65 $ 48 $ 130 $ 90 Authorized Return on Common Equity SoCalGas -- -- 11.60% 11.60% SDG&E -- -- 10.60% 10.60% Achieved Return on Common Equity (annualized) SoCalGas -- -- 14.94% 14.10% SDG&E -- -- 14.60% 17.11% Sempra -- -- 16.50% 12.44% SEMPRA ENERGY TABLE C OPERATING STATISTICS (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ------------------- ----------------- 2000 1999 2000 1999 ------------------- ----------------- Delivery Services (California Utilities) Revenues ($ Millions) SDG&E 574 740 1,045 1,201 SoCalGas (excludes intercompany sales) 615 612 1,314 1,209 Gas Sales (BCF) 79 106 212 265 Transportation and Exchange (BCF) 166 117 304 226 ------------------- ----------------- Total Deliveries (BCF) 245 223 516 491 ------------------- ----------------- Total Gas Customers (Thousands) 5,764 5,677 Electric Sales (Millions of Kwhs) 3,674 3,449 7,468 7,186 Direct Access (Millions of Kwhs) 865 746 1,744 1,403 ------------------- ----------------- Total Deliveries (Millions of Kwhs) 4,539 4,195 9,212 8,589 ------------------- ----------------- Total Electric Customers (Thousands) 1,228 1,209 Energy Trading Operating Margins ($ Millions) North America 103 17 145 31 Europe/Asia 31 14 62 20 Natural Gas (Physical, BCF/Day) 8.4 4.4 8.2 5.1 Electric (Physical, Millions of Kwhs) 12,644 4,200 17,357 9,192 Oil & Liquid Products (Physical, Millions Bbls/Day) 2.4 2.3 2.2 1.3 International (1) Revenues ($ Millions) 199 192 469 452 Natural Gas Sales (BCF) Argentina 42 53 105 125 Mexico 4 2 8 5 Natural Gas Customers (Thousands) Argentina 1,287 1,244 Mexico 37 14 Electric Sales (Millions of Kwhs) Chile 395 363 773 707 Peru 891 843 1,792 1,685 Electric Customers (Thousands) Chile 387 383 Peru 683 650 Retail Services Revenues ($ Millions) Commercial and Industrial 73 36 119 68 Mass Market 41 23 91 41 Mass Market Customers (Thousands) 377 320 Mass Market Gas Volumes (BCF) 9 7 23 13 Mass Market Electricity Volumes (Millions of Kwhs) 89 -- 93 -- (1) Represents 100 percent of these subsidiaries, although all are less than 100 percent owned by Sempra