EARNINGS : Pacific Enterprises Profit Dips; Takeover Costs Cited

Pacific Enterprises, parent of Southern California Gas Co. and the Thrifty drugstore chain, said Tuesday that its 1989 net income fell 5% because of higher interest costs on money borrowed for acquisitions in 1988.

The Los Angeles-based company posted net income of $211 million on revenue of $6.76 billion, compared to 1988 net income of $222 million on revenue of $5.93 billion. The 1988 net income figure included $16 million from the sale of property.

Operating income after taxes rose 7% to $349 million in 1989 from $326 million in 1988.

For the fourth quarter, net income inched up to $42 million from $41 million in the same period of 1988. Pacific Enterprises reported revenue of $1.78 billion, compared to $1.59 billion in the 1988 fourth quarter.

Pacific Enterprises’ higher operating income was offset by a 13% increase in interest expense, which totaled $120 million in 1989. However, the company’s efforts to reduce debt paid off in the fourth quarter as interest expense fell to $30 million, a $4-million decrease from the year-ago quarter.

Pacific Enterprises made three major acquisitions in 1988: the $339-million purchase of Sabine Corp., a Dallas-based oil and gas exploration firm; the $234-million purchase of a drugstore chain and a membership discount store chain in the Pacific Northwest, and the $93-million purchase of mineral rights for oil and gas exploration on a Texas ranch.

Southern California Gas, the nation’s largest natural gas distribution utility, recorded 1989 operating income of $215 million, up 5%.

Thrifty Corp. saw operating income rise 3% to $68 million for its fiscal year. (Thrifty’s fiscal year ended Nov. 30 while the parent company and all other Pacific Enterprises subsidiaries operate on a fiscal year that ended Dec. 31.) Thrifty operates more than 1,000 drugstores and sporting goods stores under a variety of names, including Big 5 Sporting Goods in California.

At Pacific Enterprises Oil, operating income leaped 46% to $51 million because of higher oil prices and greater oil and gas production.