Sempra Energy Reports Higher First-Quarter 2011 Earnings

- Earnings Per Share Rise 34 Percent, Excluding 2010 Litigation Charge

- Sempra Generation Receives Approval on 20-Year Contract for Arizona Solar Plant

News provided by

Sempra Energy

May 09, 2011, 09:00 ET

SAN DIEGO, May 9, 2011 /PRNewswire/ -- Sempra Energy (NYSE: SRE) today reported first-quarter 2011 earnings of $258 million, or $1.07 per diluted share, up from 2010 earnings of $106 million, or $0.42 per diluted share.

(Logo:  http://photos.prnewswire.com/prnh/20110108/SEMPRAENERGYLOGO)

First-quarter 2010 earnings included an after-tax charge of $96 million, or $0.38 per diluted share, related to a litigation settlement.  Excluding the 2010 litigation charge, Sempra Energy’s first-quarter 2011 earnings per share increased approximately 34 percent from last year.

“After refocusing our strategy on regulated utilities and contracted energy infrastructure, we are pleased that first-quarter results were strong across all of our business segments,” said Donald E. Felsinger, chairman and chief executive officer of Sempra Energy.

SUBSIDIARY OPERATING RESULTS

San Diego Gas & Electric

First-quarter earnings for San Diego Gas & Electric (SDG&E) increased to $89 million in 2011 from $83 million in 2010.

SDG&E has signed six renewable energy contracts this year, boosting its renewable portfolio capacity by more than 700 megawatts (MW), and increasing its total amount of renewable resources under contract to more than 29 percent of forecasted retail sales by 2015.  The contracts are subject to regulatory approval.

Southern California Gas Co.

Earnings for Southern California Gas Co. (SoCalGas) in the first quarter 2011 were $68 million, compared with $65 million in last year’s first quarter.

Sempra Generation

Sempra Generation’s first-quarter earnings were $44 million in 2011, compared with a loss of $51 million in 2010.  First-quarter 2010 results included an $84 million after-tax charge related to a litigation settlement.  The improvement in the first quarter 2011 was due to lower operating and maintenance costs.

Last month, Sempra Generation entered into a 20-year contract to sell SDG&E wind power from the 156-MW first phase of the Energia Sierra Juarez wind project under development in Baja California, Mexico.  The contract is subject to regulatory approval.

Also in April, the California Public Utilities Commission approved Pacific Gas & Electric’s 20-year power-purchase agreement with Sempra Generation for solar power from the first 150-MW phase of Sempra Generation’s Mesquite Solar project in Arizona.  

Sempra Pipelines & Storage

Earnings for Sempra Pipelines & Storage in the first quarter 2011 rose to $54 million from $38 million in the first quarter 2010, due primarily to additional earnings from the Mexican pipeline assets acquired in April 2010 and higher operating results from its utilities in Chile and Peru.

Last month, Sempra Pipelines & Storage completed the acquisition of controlling ownership in Chilquinta Energia and Luz del Sur, two South American utilities that Sempra Pipelines & Storage previously co-owned with a partner.  The purchase price was $875 million.  Sempra Pipelines & Storage now owns 100 percent of Chilquinta Energia and 76 percent of Luz del Sur, with the remaining shares of Luz del Sur held by institutional investors and the general public.

Sempra LNG

Sempra LNG earned $33 million in the first quarter 2011, compared with $32 million in the first quarter 2010.

INTERNET BROADCAST

Sempra Energy will broadcast a live discussion of its earnings results over the Internet today at 1 p.m. EDT with senior management of the company.  Access is available by logging onto the website 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 3265782.

Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2010 revenues of $9 billion.  The Sempra Energy companies’ nearly 16,000 employees serve about 26 million consumers worldwide.

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,” ”will,” “would,” ”could,” “should,” “potential,” “target,” “depends,” 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, Federal Energy Regulatory Commission, Nuclear Regulatory Commission, California Energy Commission, California Air Resources Board, and other regulatory, governmental and environmental bodies in the United States and other countries where the company does business; capital market conditions and inflation, interest and exchange rates; energy 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 free-of-charge on the SEC’s website, www.sec.gov, and on the company’s website at www.sempra.com.

Sempra Pipelines & Storage, Sempra Generation, Sempra LNG and Sempra Energy Trading 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 RBS Sempra Commodities dba Sempra Energy Solutions and Sempra Energy Trading are not regulated by the California Public Utilities Commission.

SEMPRA ENERGY

Table A




CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS





Three months ended March 31,

(Dollars in millions, except per share amounts)

2011

2010

(unaudited)

REVENUES


Sempra Utilities

$   1,881

$   1,912

Sempra Global and parent

553

622

   Total revenues

2,434

2,534

EXPENSES AND OTHER INCOME


Sempra Utilities:


   Cost of natural gas

(609)

(758)

   Cost of electric fuel and purchased power

(171)

(148)

Sempra Global and parent:


   Cost of natural gas, electric fuel and purchased power

(263)

(338)

   Other cost of sales

(23)

(25)

Litigation expense

(7)

(168)

Other operation and maintenance

(632)

(576)

Depreciation and amortization

(231)

(210)

Franchise fees and other taxes

(95)

(90)

Equity earnings, before income tax

1

15

Other income, net

43

8

Interest income

3

4

Interest expense

(108)

(109)

Income before income taxes and equity earnings of certain


   unconsolidated subsidiaries

342

139

Income tax expense

(109)

(58)

Equity earnings, net of income tax

31

19

Net income

264

100

(Earnings) losses attributable to noncontrolling interests

(4)

8

Preferred dividends of subsidiaries

(2)

(2)

Earnings

$      258

$      106




Basic earnings per common share

$     1.07

$     0.43

Weighted-average number of shares outstanding, basic (thousands)

240,128

246,083




Diluted earnings per common share

$     1.07

$     0.42

Weighted-average number of shares outstanding, diluted (thousands)

241,903

250,373

Dividends declared per share of common stock

$     0.48

$     0.39

SEMPRA ENERGY

Table B







CONDENSED CONSOLIDATED BALANCE SHEETS










March 31,

December 31,

(Dollars in millions)

2011

2010 (1)




(unaudited)

Assets

Current assets:



Cash and cash equivalents

$      1,219

$             912

Restricted cash

318

131

Accounts receivable

1,058

1,032

Due from unconsolidated affiliates

17

34

Income taxes receivable

261

248

Deferred income taxes

36

75

Inventories

176

258

Regulatory assets

73

90

Fixed-price contracts and other derivatives

97

81

Settlement receivable related to wildfire litigation

-

300

Other

171

192



Total current assets

3,426

3,353







Investments and other assets:



Restricted cash

-

27

Regulatory assets arising from pension and other postretirement






benefit obligations

885

869

Regulatory assets arising from wildfire litigation costs

348

364

Other regulatory assets

932

934

Nuclear decommissioning trusts

796

769

Investment in RBS Sempra Commodities LLP

779

787

Other investments

2,163

2,164

Goodwill and other intangible assets

537

540

Sundry

630

600



Total investments and other assets

7,070

7,054

Property, plant and equipment, net

20,200

19,876

Total assets

$    30,696

$        30,283







Liabilities and Equity


Current liabilities:



Short-term debt

$         566

$             158

Accounts payable

709

864

Due to unconsolidated affiliates

37

36

Dividends and interest payable

251

188

Accrued compensation and benefits

211

311

Regulatory balancing accounts, net

379

241

Current portion of long-term debt

89

349

Fixed-price contracts and other derivatives

91

106

Customer deposits

131

129

Reserve for wildfire litigation

489

639

Other

701

765



Total current liabilities

3,654

3,786

Long-term debt

9,174

8,980







Deferred credits and other liabilities:



Customer advances for construction

132

154

Pension and other postretirement benefit obligations, net of plan assets

1,114

1,105

Deferred income taxes

1,633

1,561

Deferred investment tax credits

49

50

Regulatory liabilities arising from removal obligations

2,671

2,630

Asset retirement obligations

1,469

1,449

Other regulatory liabilities

130

138

Fixed-price contracts and other derivatives

285

290

Deferred credits and other

903

823



Total deferred credits and other liabilities

8,386

8,200

Contingently redeemable preferred stock of subsidiary

79

79

Equity:



Total Sempra Energy shareholders' equity

9,186

9,027

Preferred stock of subsidiaries

100

100

Other noncontrolling interests

117

111



Total equity

9,403

9,238

Total liabilities and equity

$    30,696

$        30,283







(1)  Derived from audited financial statements.  

SEMPRA ENERGY

Table C






CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS










Three months ended
March 31,

(Dollars in millions)

2011

2010



(unaudited)

Cash Flows from Operating Activities:


Net income

$    264

$ 100

Adjustments to reconcile net income to net cash  



 provided by operating activities:




Depreciation and amortization

231

210

Deferred income taxes and investment tax credits

88

61

Equity earnings

(32)

(34)

Fixed-priced contracts and other derivatives

(9)

-

Other

(13)

7

Net change in other working capital components

286

534

Changes in other assets

(5)

18

Changes in other liabilities

(5)

(8)

Net cash provided by operating activities

805

888






Cash Flows from Investing Activities:



Expenditures for property, plant and equipment

(607)

(446)

Expenditures for investments

(4)

(74)

Distributions from investments

21

24

Purchases of nuclear decommissioning and other trust assets

(45)

(44)

Proceeds from sales by nuclear decommissioning and other trusts

46

46

Decrease in restricted cash

160

14

Increase in restricted cash

(320)

(23)

Other


(7)

7

Net cash used in investing activities

(756)

(496)






Cash Flows from Financing Activities:



Common dividends paid

(94)

(86)

Preferred dividends paid by subsidiaries

(2)

(2)

Issuances of common stock

15

14

Repurchases of common stock

(18)

(2)

Issuances of debt (maturities greater than 90 days)

803

12

Payments on debt (maturities greater than 90 days)

(260)

(507)

(Decrease) increase in short-term debt, net

(192)

294

Other


6

(3)

Net cash provided by (used in) financing activities

258

(280)






Increase in cash and cash equivalents

307

112

Cash and cash equivalents, January 1

912

110

Cash and cash equivalents, March 31

$ 1,219

$ 222

SEMPRA ENERGY

Table D




BUSINESS UNIT EARNINGS AND CAPITAL EXPENDITURES & INVESTMENTS






Three months ended March 31,

(Dollars in millions)

2011

2010

(unaudited)

Earnings (Losses)




San Diego Gas & Electric

$   89

$   83

Southern California Gas

68

65

Sempra Generation

44

(51)

Sempra Pipelines & Storage

54

38

Sempra LNG

33

32

Parent & Other

(30)

(61)

Earnings

$ 258

$ 106





Three months ended March 31,

(Dollars in millions)

2011

2010

(unaudited)

Capital Expenditures and Investments


San Diego Gas & Electric

$ 348

$ 290

Southern California Gas

168

114

Sempra Generation

52

4

Sempra Pipelines & Storage

40

110

Sempra LNG

3

2

Consolidated Capital Expenditures and Investments

$ 611

$ 520

SEMPRA ENERGY

Table E







OTHER OPERATING STATISTICS (Unaudited)








Three months ended
March 31,

SEMPRA UTILITIES

2011

2010

Revenues (Dollars in millions)




SDG&E (excludes intercompany sales)

$

838

$

741

SoCalGas (excludes intercompany sales)

$

1,043

$

1,171







Gas Sales (bcf)

138

132

Transportation (bcf)

123

117

Total Deliveries (bcf)

261

249

Total Gas Customers (Thousands)

6,639

6,614







Electric Sales (Millions of kWhs)

4,145

4,055

Direct Access (Millions of kWhs)

786

720

Total Deliveries (Millions of kWhs)

4,931

4,775

Total Electric Customers (Thousands)

1,388

1,380







SEMPRA GENERATION



Power Sold (Millions of kWhs)

4,123

4,952














SEMPRA PIPELINES & STORAGE



(Represents 100% of the distribution operations of these subsidiaries, although subsidiaries in Argentina, Chile and Peru are not 100% owned by Sempra Energy. These subsidiaries are not consolidated within Sempra Energy and the related investments are accounted for under the equity method).

Natural Gas Sales (bcf)




Argentina

70

64

Mexico

6

6

Mobile Gas

10

10

Natural Gas Customers (Thousands)




Argentina

1,766

1,717

Mexico

89

91

Mobile Gas

92

92

Electric Sales (Millions of kWhs)




Peru

1,594

1,479

Chile

680

600

Electric Customers (Thousands)




Peru

899

870

Chile

598

582

SEMPRA ENERGY

Table F (Unaudited)

Statement of Operations Data by Business Unit

Three Months Ended March 31, 2011

(Dollars in millions)

SDG&E

SoCalGas

Generation

Pipelines & Storage

LNG

Consolidating Adjustments, Parent & Other

Total
















Revenues

$  840

$   1,056

$        269

$        109

$ 186

$              (26)

$ 2,434
















Cost of Sales and Other Expenses

(571)

(856)

(187)

(69)

(119)

9

(1,793)
















Litigation Expense

(3)

-

(1)

-

(2)

(1)

(7)
















Depreciation & Amortization

(103)

(81)

(19)

(13)

(13)

(2)

(231)
















Equity Earnings (Losses) Recorded Before Income Tax

-

-

1

9

-

(9)

1
















Other Income, Net

16

3

-

-

2

22

43
















Income (Loss) Before Interest & Tax (1)

179

122

63

36

54

(7)

447
















Net Interest (Expense) Income (2)

(37)

(17)

3

(6)

(10)

(40)

(107)
















Income Tax (Expense) Benefit

(49)

(37)

(22)

(7)

(11)

17

(109)
















Equity Earnings Recorded Net of Income Tax

-

-

-

31

-

-

31
















Earnings Attributable to Noncontrolling Interests

(4)

-

-

-

-

-

(4)
















Earnings (Losses)

$    89

$        68

$          44

$          54

$   33

$              (30)

$    258















Three Months Ended March 31, 2010
















(Dollars in millions)

SDG&E

SoCalGas

Generation

Pipelines & Storage

LNG

Consolidating Adjustments, Parent & Other

Total
















Revenues

$  742

$   1,182

$        318

$        110

$ 205

$              (23)

$ 2,534
















Cost of Sales and Other Expenses

(505)

(973)

(253)

(78)

(136)

10

(1,935)
















Litigation Expense

(7)

-

(139)

-

(1)

(21)

(168)
















Depreciation & Amortization

(92)

(75)

(15)

(11)

(12)

(5)

(210)
















Equity Earnings Recorded Before Income Tax

-

-

-

10

-

5

15
















Other Income (Expense), Net

-

4

2

(1)

-

3

8
















Income (Loss) Before Interest & Tax (1)

138

138

(87)

30

56

(31)

244
















Net Interest Expense (2)

(32)

(17)

(2)

(5)

(12)

(39)

(107)
















Income Tax (Expense) Benefit

(31)

(56)

38

(6)

(12)

9

(58)
















Equity Earnings Recorded Net of Income Tax

-

-

-

19

-

-

19
















Losses Attributable to Noncontrolling Interests

8

-

-

-

-

-

8
















Earnings (Losses)

$    83

$        65

$        (51)

$          38

$   32

$              (61)

$    106
















(1) Management believes "Income (Loss) before Interest & Tax" is a useful measurement of our business units' performance because it can be used to evaluate the effectiveness of our operations exclusive of interest and income tax, neither of which is directly relevant to the efficiency of those operations.

(2) Net Interest (Expense) Income includes Interest Income, Interest Expense and Preferred Dividends of Subsidiaries.

SOURCE Sempra Energy

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