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Sempra Energy Reports Increased 3Q Earnings;'05 Guidance Boosted

With its commodities unit quadrupling its quarterly results, San Diego, CA-based Sempra Energy reported increased third quarter results compared to the same quarter last year after excluding numerous one-time items, such as a $189 million after-tax boost for outstanding litigation reserves.

The company boosted its guidance for all of 2005 to a range of $3.40-$3.60/share for "generally accepted accounting principles (GAAP)" earnings, compared to the earlier guidance of $3.20-$3.40/share.

Excluding various one-time accounting charges, such as the litigation reserves, Sempra said its net income for the third quarter was $275 million, or $1.07/diluted share, compared with net income was $227 million, or 96 cents/diluted share, in 3Q2004, excluding a $9 million gain from a property sale and $5 million in tax issues that negatively affected earnings. For the first nine months of the year, earnings were $565 million, or $2.26/diluted share, up 3% from the $549 million, or $2.36/diluted share, results for the same period in 2004, the company said.

When the various charges are included, earnings for the third quarter were down slightly compared to the same period last year -- $221 million, or 86 cents/diluted share, in the third quarter of this year, compared to $231 million, or 98 cents/diluted share, for the same quarter in 2004.

"Net income in the third quarter 2005 included the effects of several items, including $71 million from the favorable resolution of prior-years' tax issues, a $38 million gain from the sale of Sempra Commodities, natural gas storage assets, and a $27 million benefit at San Diego Gas & Electric (SDG&E) from an electric-transmission-cost settlement," Sempra said. "The quarterly results were negatively affected by a $189 million after-tax effect from an increase in reserves at the parent company and several of its subsidiaries, almost entirely for continuing litigation."

Among the business units, Sempra Commodities, including its energy and metals trading business, earnings for the third quarter were $161 million, compared to $46 million in the same period last year. Net income for the utilities combined was $138 million, compared to $128 million for the same period in 2004, and net income declined in the generation unit where this past quarter it was $30 million, compared with $64 million for the third quarter of 2004. In the pipelines and storage business for natural gas, net income more than doubled quarter-over-quarter ($19 million for the third quarter this year, compared to $7 million for the same quarter last year).

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