Corporate Information
Corporate Info
FAQ


Printer Friendly Version Print Version
SEMCO ENERGY Reports Second Quarter 2002 Results

FARMINGTON HILLS, Mich., Aug. 7 /PRNewswire-FirstCall/ -- SEMCO ENERGY (NYSE: SEN) today reported net income of $45,000 for the second quarter of 2002, or breakeven on a per share basis, compared to a net loss of $3.3 million, or $0.18 per share, for the second quarter of 2001. The $3.4 million improvement in net results for the quarter is attributed primarily to an increase in operating income from the Gas Distribution Business and the Construction Services Business. In addition, in accordance with new accounting standards, the Company did not record goodwill amortization during 2002, which also contributed to the increase in net income. Goodwill amortization for the three months ended June 30, 2001 reduced net income by $.7 million, or $0.04 per share.

Net income for the first six months of 2002 was $11.4 million, or $0.62 per share, compared to $5.7 million or $0.30 per share for the same period of 2001. An increase in operating income from the Gas Distribution Business and the Construction Services Business was a primary reason for the $5.7 million increase in net income during the first six months of 2002. Goodwill amortization for the six months ended June 30, 2001 reduced net income by $1.4 million, or $0.08 per share. In addition, net income for the first six months of 2001 includes $.4 million, or $0.02 per share, in losses from the Company's discontinued engineering operations.

On a weather-normalized basis, the Company would have reported a net loss of $.8 million, or $0.04 per share, for the second quarter of 2002 compared to a net loss of $2.2 million, or $0.12 per share, for the second quarter of 2001. Net income for the first six months of 2002, on a weather-normalized basis, would have been $12.9 million, or $0.70 per share, compared to $9.1 million, or $0.48 per share, for the first six months of 2001.

Marcus Jackson, Chairman, President and Chief Executive Officer said, "We are pleased with the improving results of the Company. The Company is beginning to see the positive results of the restructuring activities undertaken since late last year." Mr. Jackson also said, "We currently expect earnings per share to be between $0.80 and $0.85 for 2002."

For the twelve months ended June 30, 2002, the Company had a net loss of $.7 million, or $0.04 per share, compared to net income of $13.5 million, or $0.71 per share, for the twelve months ended June 30, 2001. Results for the twelve months ended June 30, 2002 include losses from discontinued operations, restructuring charges, asset impairments and other unusual items that reduced net income by $10.8 million. These items were recorded in the fourth quarter of 2001 as part of the Company's strategic redirection. Warmer than normal temperatures reduced net income for the twelve months ended June 30, 2002 by $3.6 million, or $0.20 per share, and reduced net income for the twelve months ended June 30, 2001 by $3.9 million, or $0.21 per share.

BUSINESS SEGMENT RESULTS

GAS DISTRIBUTION

The Gas Distribution Business reported operating income of $8.5 million for the second quarter of 2002 compared to $4.9 million for the second quarter of 2001. The increase in operating income is attributed primarily to colder weather, increased gas costs savings, the addition of new customers and the elimination of goodwill amortization.

Operating income for the six months ended June 30, 2002 and 2001, was $38.7 million and $32.8 million, respectively. New customers, increased gas costs savings and the elimination of goodwill amortization were the primary items contributing to the increase in operating income. In addition, administrative costs were also lower as a result of cost reductions associated with the Company's redirected business strategy. These cost reductions were offset partially by an increase in employee benefit costs, such as pension expense, health care costs and retiree medical costs.

Temperatures in Michigan and Alaska combined were approximately 12 percent colder than normal during the second quarter of 2002 compared to approximately 19 percent warmer than normal during the second quarter of 2001. Temperatures during the six months ended June 30, 2002 were approximately 2 percent warmer than normal compared to approximately 10 percent warmer than normal during the first six months of 2001.

The Company realized increased gas costs savings in 2002 under the terms of its third-party natural gas supply and management agreements. The increase in gas costs savings, the majority of which occurred in the first quarter of 2002, was due to the effective management of the Company's Michigan gas supply. In addition, savings associated with natural gas costs were lower in 2001 as a result of purchasing gas with a higher than normal thermal content for the Michigan gas distribution operation. A significant portion of the gas costs savings realized during the first quarter of 2002 is non-recurring.

CONSTRUCTION SERVICES

The Construction Services business reported operating income of $1.9 million for the second quarter of 2002 compared to $1.1 million for the second quarter of 2001. For the six months ended June 30, 2002, the Construction Services business reported operating income of $.6 million compared to an operating loss of $1.0 million for the same period of 2001. The improvement in operating results is due primarily to an increase in construction projects in the southern regions of the country. This was offset partially by reduced construction activity and lower than expected margins on projects in the northern regions of the country.

INFORMATION TECHNOLOGY SERVICES

The operating income of the Information Technology Services business for the second quarter of 2002 was $.1 million, which was essentially unchanged from the second quarter of 2001. Operating income for the six months ended June 30, 2002 and 2001 was $.3 million and $.2 million, respectively. The increase was due primarily to lowered general and administration expenses and additional non-affiliate revenue.

PROPANE, PIPELINES AND STORAGE

The Propane, Pipelines and Storage business reported operating income of $.4 million for the second quarter of 2002 compared to $.3 million for the second quarter of 2001. The increase is due to higher propane sales and related margins due to colder weather during the second quarter of 2002.

Operating income for the six months ended June 30, 2002 and 2001 was $1.0 million and $1.1 million, respectively. The decrease was due primarily to warmer weather during the first quarter of 2002 compared to the first quarter of 2001, which reduced propane sales and margins. This was offset partially by the impact of colder weather during the second quarter of 2002.

GOODWILL IMPAIRMENT TESTING

The Company adopted Statement of Financial Accounting Standards No. 142 on January 1, 2002. The Standard requires that the Company complete a goodwill impairment test in the year the Standard is adopted. The required impairment tests have been performed for the Company's business units, and they indicate that no impairment existed as of January 1, 2002. The Standard also requires the Company to complete impairment tests annually or at any time when events occur which could impact the value of the Company's business units.

SEMCO ENERGY, Inc. is a diversified energy and infrastructure company that distributes natural gas to more than 377,000 Customers in Michigan and Alaska. It also owns and operates businesses involved in pipeline construction services, propane distribution, intrastate pipelines and natural gas storage in various regions of the United States. In addition, it provides information technology and outsourcing services, specializing in the mid-range computer market.

The following is a "Safe-Harbor" statement under the Private Securities Litigation Reform Act of 1995. This release contains forward-looking statements that involve risks and uncertainties. Statements that are not historic facts, including statements about the Company's outlook, beliefs, plans, goals and expectations, are forward-looking statements. Factors that may impact forward-looking statements include, but are not limited to, the effects of weather, the economic climate, competition, commodity prices, changing conditions in the capital markets, regulatory approval processes, success in obtaining new business and other risks detailed from time to time in the company's Securities and Exchange Commission filings.

                              SEMCO ENERGY, INC.
                     News Release Statistics (Unaudited)
                   (in thousands, except per share amounts)


                                                      Three Months Ended
                                                           June 30,
                                                    2002              2001

    Financial Summary

      Operating revenues                          $106,100           $86,512

      Restructuring and impairment
       charges                                           -                 -
      Other operating expenses                      95,759            81,168

      Operating income                              10,341             5,344

      Other income and (deductions)
        Interest expense                            (7,477)           (7,717)
        Other                                          709               499
          Total other income and
           (deductions)                             (6,768)           (7,218)

      Income tax provision (credit)                  1,378              (679)
      Income before dividends on trust
       preferred securities
        and discontinued operations                  2,195            (1,195)

      Dividends on trust preferred
       securities, net of income taxes              (2,150)           (2,150)

      Net income (loss) from continuing
       operations                                       45            (3,345)

      Income (loss) from discontinued
       operations, net of income taxes                   -                 6

      Net income (loss) available to
       common shareholders                             $45           $(3,339)

      Earnings per share - basic
        Net income (loss) from
         continuing operations                          $-            $(0.18)
        Net income (loss) available to
         common shareholders                            $-            $(0.18)

      Earnings per share - diluted
        Net income (loss) from
         continuing operations                          $-            $(0.18)
        Net income (loss) available to
         common shareholders                            $-            $(0.18)

      Cash dividends per share                      $0.125            $0.210

      Average number of common shares
       outstanding
        Basic                                       18,431            18,062
        Diluted                                     18,472            18,062

    Impact of Certain Unusual Items

      Net income (loss) available to
       common shareholders                             $45           $(3,339)
      Impact on net income of the
       following unusual items:
        Income (loss) from discontinued
         operations                                     $-                $6
        Restructuring charges,
         impairments and other unusual
         items                                          $-                $-
      Net income, excluding the unusual
       items                                           $45           $(3,345)
      Weather-normalized net income,
       excluding the unusual items                   $(821)          $(2,243)

      Earnings per share - diluted
        Net income (loss)                            $0.00            $(0.18)
        Impact on earnings per share of
         the following unusual items:
          Income (loss) from
           discontinued operations                      $-             $0.00
          Restructuring charges,
           impairments and other unusual
           items                                        $-                $-
        Net income, excluding the
         unusual items                               $0.00            $(0.18)
        Weather-normalized net income,
         excluding the unusual items                $(0.04)           $(0.12)



                                                       Six Months Ended
                                                           June 30,
                                                    2002              2001

    Financial Summary

      Operating revenues                          $262,011          $236,490

      Restructuring and impairment
       charges                                           -                 -
      Other operating expenses                     223,051           205,479

      Operating income                              38,960            31,011

      Other income and (deductions)
        Interest expense                           (15,151)          (15,719)
        Other                                        1,034             1,366
          Total other income and
           (deductions)                            (14,117)          (14,353)

      Income tax provision (credit)                  9,168             6,225
      Income before dividends on trust
       preferred securities
        and discontinued operations                 15,675            10,433

      Dividends on trust preferred
       securities, net of income taxes              (4,300)           (4,300)

      Net income (loss) from continuing
       operations                                   11,375             6,133

      Income (loss) from discontinued
       operations, net of income taxes                   -              (416)

      Net income (loss) available to
       common shareholders                         $11,375            $5,717

      Earnings per share - basic
        Net income (loss) from
         continuing operations                       $0.62             $0.34
        Net income (loss) available to
         common shareholders                         $0.62             $0.32

      Earnings per share - diluted
        Net income (loss) from
         continuing operations                       $0.62             $0.32
        Net income (loss) available to
         common shareholders                         $0.62             $0.30

      Cash dividends per share                      $0.335            $0.420

      Average number of common shares
       outstanding
        Basic                                       18,374            18,060
        Diluted                                     18,400            18,916

    Impact of Certain Unusual Items

      Net income (loss) available to
       common shareholders                         $11,375            $5,717
      Impact on net income of the
       following unusual items:
        Income (loss) from discontinued
         operations                                     $-             $(416)
        Restructuring charges,
         impairments and other unusual
         items                                          $-                $-
      Net income, excluding the unusual
       items                                       $11,375            $6,133
      Weather-normalized net income,
       excluding the unusual items                 $12,948            $9,467

      Earnings per share - diluted
        Net income (loss)                            $0.62             $0.30
        Impact on earnings per share of
         the following unusual items:
          Income (loss) from
           discontinued operations                      $-            $(0.02)
          Restructuring charges,
           impairments and other unusual
           items                                        $-                $-
        Net income, excluding the
         unusual items                               $0.62             $0.32
        Weather-normalized net income,
         excluding the unusual items                 $0.70             $0.50



                                                     Twelve Months Ended
                                                           June 30,
                                                    2002              2001

    Financial Summary

      Operating revenues                          $471,343          $447,424

      Restructuring and impairment
       charges                                       6,103                 -
      Other operating expenses                     412,901           381,910

      Operating income                              52,339            65,514

      Other income and (deductions)
        Interest expense                           (31,216)          (32,536)
        Other                                        2,005             2,485
          Total other income and
           (deductions)                            (29,211)          (30,051)

      Income tax provision (credit)                  9,522            12,984
      Income before dividends on trust
       preferred securities
        and discontinued operations                 13,606            22,479

      Dividends on trust preferred
       securities, net of income taxes              (8,603)           (8,548)

      Net income (loss) from continuing
       operations                                    5,003            13,931

      Income (loss) from discontinued
       operations, net of income taxes              (5,707)             (440)

      Net income (loss) available to
       common shareholders                           $(704)          $13,491

      Earnings per share - basic
        Net income (loss) from
         continuing operations                       $0.27             $0.77
        Net income (loss) available to
         common shareholders                        $(0.04)            $0.75

      Earnings per share - diluted
        Net income (loss) from
         continuing operations                       $0.27             $0.74
        Net income (loss) available to
         common shareholders                        $(0.04)            $0.71

      Cash dividends per share                      $0.755            $0.840

      Average number of common shares
       outstanding
        Basic                                       18,261            18,051
        Diluted                                     18,274            18,887

    Impact of Certain Unusual Items

      Net income (loss) available to
       common shareholders                           $(704)          $13,491
      Impact on net income of the
       following unusual items:
        Income (loss) from discontinued
         operations                                 (5,707)             (440)
        Restructuring charges,
         impairments and other unusual
         items                                      (5,083)                -
      Net income, excluding the unusual
       items                                       $10,086           $13,931
      Weather-normalized net income,
       excluding the unusual items                 $13,675           $17,855

      Earnings per share - diluted
        Net income (loss)                           $(0.04)            $0.71
        Impact on earnings per share of
         the following unusual items:
          Income (loss) from
           discontinued operations                  $(0.31)           $(0.03)
          Restructuring charges,
           impairments and other unusual
           items                                    $(0.28)               $-
        Net income, excluding the
         unusual items                               $0.55             $0.74
        Weather-normalized net income,
         excluding the unusual items                 $0.75             $0.95



                              SEMCO ENERGY, INC.
                     News Release Statistics (Unaudited)
               (dollars in thousands, except per share amounts)


                                                       Three Months Ended
                                                            June 30,
                                                    2002               2001

    Business Segment Information

      Operating revenues
        Gas Distribution                           $70,354           $54,457
        Construction Services                       36,524            34,149
        Information Technology Services              2,318             2,938
        Propane, Pipelines and Storage               1,416             1,369
        Corporate and Other (includes
         intercompany eliminations)                 (4,512)           (6,401)
          Total operating revenues                $106,100           $86,512

      Operating income (loss)  (a)
        Gas Distribution                            $8,535            $4,886
        Construction Services                        1,939             1,076
        Information Technology Services                143                85
        Propane, Pipelines and Storage                 380               347
        Corporate and Other (includes
         intercompany eliminations)                   (656)           (1,050)
          Total operating income                   $10,341            $5,344

    Operating Statistics

      Gas distribution:
        Volumes sold (MMcf)                         11,645             9,806
        Volumes transported (MMcf)                  10,939             9,277
        Number of customers at end of
         period                                    377,480           368,733
        Weather statistics:
          Degree days                                1,233               885
          Percent colder (warmer) than
           normal                                     12.2%            (19.4)%
          Weather related increase
           (decrease) from normal:
            Net income (in thousands)                 $835           $(1,090)
            Earnings per share - basic               $0.04            $(0.06)
            Earnings per share - diluted             $0.04            $(0.06)

      Construction:
        Feet of pipe installed                   1,189,000         1,652,000

      Propane Distribution:
        Volumes sold (gallons)                     784,000           600,000
        Weather related increase
         (decrease) from normal:
          Net income (in thousands)                    $31              $(12)
          Earnings per share - basic and
           diluted                                      $-                $-



                                                       Six Months Ended
                                                           June 30,
                                                    2002              2001

    Business Segment Information

      Operating revenues
        Gas Distribution                          $201,807          $185,426
        Construction Services                       62,105            51,997
        Information Technology Services              4,578             5,148
        Propane, Pipelines and Storage               3,654             4,118
        Corporate and Other (includes
         intercompany eliminations)                (10,133)          (10,199)
          Total operating revenues                $262,011          $236,490

      Operating income (loss)  (a)
        Gas Distribution                           $38,727           $32,845
        Construction Services                          629              (997)
        Information Technology Services                319               237
        Propane, Pipelines and Storage                 990             1,082
        Corporate and Other (includes
         intercompany eliminations)                 (1,705)           (2,156)
          Total operating income                   $38,960           $31,011

    Operating Statistics

      Gas distribution:
        Volumes sold (MMcf)                         38,207            36,761
        Volumes transported (MMcf)                  22,990            21,849
        Number of customers at end of
         period                                    377,480           368,733
        Weather statistics:
          Degree days                                4,473             4,139
          Percent colder (warmer) than
           normal                                     (2.3)%           (9.8)%
          Weather related increase
           (decrease) from normal:
            Net income (in thousands)              $(1,520)          $(3,300)
            Earnings per share - basic              $(0.08)           $(0.18)
            Earnings per share - diluted            $(0.08)           $(0.18)

      Construction:
        Feet of pipe installed                   2,244,000         2,581,000

      Propane Distribution:
        Volumes sold (gallons)                   2,386,000         2,277,000
        Weather related increase
         (decrease) from normal:
          Net income (in thousands)                   $(53)             $(34)
          Earnings per share - basic and
           diluted                                      $-                $-



                                                     Twelve Months Ended
                                                           June 30,
                                                    2002              2001

    Business Segment Information

      Operating revenues
        Gas Distribution                          $340,746          $331,661
        Construction Services                      136,313           118,283
        Information Technology Services              9,704             8,729
        Propane, Pipelines and Storage               6,979             7,778
        Corporate and Other (includes
         intercompany eliminations)                (22,399)          (19,027)
          Total operating revenues                $471,343          $447,424

      Operating income (loss)  (a)
        Gas Distribution                           $56,219           $61,714
        Construction Services                          251             5,524
        Information Technology Services                513               591
        Propane, Pipelines and Storage               1,779             1,864
        Corporate and Other (includes
         intercompany eliminations)                 (6,423)           (4,179)
          Total operating income                   $52,339           $65,514

    Operating Statistics

      Gas distribution:
        Volumes sold (MMcf)                         64,573            65,294
        Volumes transported (MMcf)                  44,133            43,891
        Number of customers at end of
         period                                    377,480           368,733
        Weather statistics:
          Degree days                                7,386             7,268
          Percent colder (warmer) than
           normal                                     (4.0)%            (5.5)%
          Weather related increase
           (decrease) from normal:
            Net income (in thousands)              $(3,482)          $(3,885)
            Earnings per share - basic              $(0.19)           $(0.22)
            Earnings per share - diluted            $(0.19)           $(0.21)

      Construction:
        Feet of pipe installed                   6,983,000         7,617,000

      Propane Distribution:
        Volumes sold (gallons)                   4,342,000         4,457,000
        Weather related increase
         (decrease) from normal:
          Net income (in thousands)                  $(107)             $(39)
          Earnings per share - basic and
           diluted                                  $(0.01)               $-


(a) Results for the twelve months ended June 30, 2002 include restructuring charges, impairments and other unusual items.

MAKE YOUR OPINION COUNT - Click Here

http://tbutton.prnewswire.com/prn/11690X98473585
SOURCE SEMCO ENERGY, Inc.
Web site: http: //www.semcoenergy.com
CONTACT: Analysts Contact: Thomas Connelly, Director of Investor Relations, +1-248-702-6000, ext. 6240, or Media Contact: Francis R. Lieder, Manager of Media Relations, +1-810-987-2200, ext. 4186, fax: +1-810-989-4098, e-mail: francis.lieder@semcoenergy.com , both of SEMCO ENERGY, Inc.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding SEMCO Energy's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.

 
©2006 SEMCO ENERGY, Inc., All Rights Reserved.