Summary
Sempra Energy's (SRE) second-quarter 2003 report shows a decrease in net income to $116 million ($0.55 per diluted share) from $147 million ($0.71 per diluted share) in the same period of the prior year. This decline is primarily attributed to lower income from the California Utilities (SoCalGas and SDG&E) and a notable tax benefit realized in the second quarter of 2002. Despite the year-over-year dip in quarterly net income, the six-month year-to-date net income was $204 million ($0.98 per diluted share) compared to $293 million ($1.42 per diluted share) in the first half of 2002. The company also reported a significant impact on earnings from accounting standard changes, particularly the rescission of EITF 98-10, which reduced after-tax earnings by $29 million cumulative effect and an additional $16 million for the six months of 2003. Operationally, Sempra's California utilities saw increased revenues in both natural gas and electricity segments, driven by higher commodity prices, although natural gas volumes decreased. The company continues to navigate the complex regulatory landscape in California, with ongoing proceedings related to electric and natural gas industry restructuring, cost of service filings, and affiliate rule compliance. Other business segments, particularly Sempra Energy Trading (SET), experienced increased activity and revenue, though SET's results were also affected by accounting standard changes. The company maintains a strong liquidity position with substantial cash and committed lines of credit, and is proceeding with significant capital expenditure plans for energy infrastructure development.
Key Highlights
- 1Net income for the three months ended June 30, 2003, decreased to $116 million ($0.55/diluted share) from $147 million ($0.71/diluted share) in the prior year, impacted by a tax benefit in 2002 and lower income from the California Utilities.
- 2For the six months ended June 30, 2003, net income was $204 million ($0.98/diluted share), down from $293 million ($1.42/diluted share) in the same period of 2002.
- 3Operating revenues for California utilities increased, with natural gas up 23% and electric up 23% for the three months ended June 30, 2003, primarily due to higher commodity prices.
- 4The company recorded a $29 million after-tax cumulative effect of a change in accounting principle related to the rescission of EITF 98-10, impacting earnings for 2003.
- 5Sempra Energy reported $325 million in cash and $2.3 billion in unused, committed lines of credit at June 30, 2003, indicating a strong liquidity position.
- 6Significant regulatory and legal proceedings are ongoing, including CPUC investigations into affiliate compliance, cost of service filings, and FERC investigations into market manipulation and refunds, which could impact future results.
- 7Capital expenditures for property, plant and equipment are estimated at $1.3 billion for the full year 2003, with substantial investments in power generation projects and LNG infrastructure.