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SEMPRA ENERGY 10-Q 2010

 


 

 

  

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q

(Mark One)

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended

September 30, 2010

 

 

 

or

 

 

[   ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from

 

 

to

 

 

 

 

 

Commission File No.

Exact Name of Registrants as Specified in their Charters, Address and Telephone Number

States of Incorporation

I.R.S. Employer
Identification Nos.

Former name, former address and former fiscal year, if changed since last report

1-14201

SEMPRA ENERGY

California

33-0732627

No change

 

101 Ash Street

 

 

 

 

San Diego, California 92101

 

 

 

 

(619)696-2034

 

 

 

 

 

 

 

 

1-3779

SAN DIEGO GAS & ELECTRIC COMPANY

California

95-1184800

No change

 

8326 Century Park Court

 

 

 

 

San Diego, California 92123

 

 

 

 

(619)696-2000

 

 

 

 

 

 

 

 

1-40

PACIFIC ENTERPRISES

California

94-0743670

No change

 

101 Ash Street

 

 

 

 

San Diego, California 92101

 

 

 

 

(619)696-2020

 

 

 

 

 

 

 

 

1-1402

SOUTHERN CALIFORNIA GAS COMPANY

California

95-1240705

No change

 

555 West Fifth Street

 

 

 

 

Los Angeles, California 90013

 

 

 

 

(213)244-1200

 

 

 

 

 

 

 

 

 


Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

 

 

 

 

 

 

 

Yes

X

 

No

 


 


Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).

 

 

 

 

 

 

Sempra Energy

Yes

X

 

No

 

San Diego Gas & Electric Company

Yes

 

 

No

 

Pacific Enterprises

Yes

 

 

No

 

Southern California Gas Company

Yes

 

 

No

 


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 

 

Large
accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Sempra Energy

[  X  ]

[      ]

[       ]

[      ]

San Diego Gas & Electric Company

[       ]

[      ]

[  X  ]

[      ]

Pacific Enterprises

[       ]

[      ]

[  X  ]

[      ]

Southern California Gas Company

[       ]

[      ]

[  X  ]

[      ]


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

 

 

 

 

 

Sempra Energy

Yes

 

 

No

X

San Diego Gas & Electric Company

Yes

 

 

No

X

Pacific Enterprises

Yes

 

 

No

X

Southern California Gas Company

Yes

 

 

No

X

 

 

 

 

 

 

Indicate the number of shares outstanding of each of the issuers' classes of common stock, as of the latest practicable date.

 

 

 

 

 

 

Common stock outstanding on November 5, 2010:

 

 

 

 

 

 

 

 

 

 

 

Sempra Energy

240,054,962 shares

San Diego Gas & Electric Company

Wholly owned by Enova Corporation, which is wholly owned by Sempra Energy

Pacific Enterprises

Wholly owned by Sempra Energy

Southern California Gas Company

Wholly owned by Pacific Enterprises, which is wholly owned by Sempra Energy

 

 

 


 

SEMPRA ENERGY FORM 10-Q
TABLE OF CONTENTS

 

 

Page

 

Information Regarding Forward-Looking Statements

4

 

 

PART I – FINANCIAL INFORMATION

 

Item 1.

Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

73

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

99

Item 4.

Controls and Procedures

100

 

 

 

PART II – OTHER INFORMATION

 

Item 1.

Legal Proceedings

101

Item 1A.

Risk Factors

101

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

102

Item 6.

Exhibits

103

 

 

 

Signatures

105

 

 

 

 

This combined Form 10-Q is separately filed by Sempra Energy, San Diego Gas & Electric Company, Pacific Enterprises and Southern California Gas Company. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company provides information only as to itself and its consolidated entities and not as to any other company.

 

You should read this report in its entirety as it pertains to each respective reporting company. No one section of the report deals with all aspects of the subject matter. Separate Part I - Item 1 sections are provided for each reporting company, except for the Notes to Condensed Consolidated Financial Statements. The Notes to Condensed Consolidated Financial Statements for all of the reporting companies are combined. All Items other than Part I – Item 1 are combined for the reporting companies.


 

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

We make statements in this report that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are necessarily based upon assumptions with respect to the future, involve risks and uncertainties, and are not guarantees of performance. These forward-looking statements represent our estimates and assumptions only as of the date of this report.

In this report, when we use words such as "believes," "expects," "anticipates," "plans," "estimates," "projects," "contemplates," "intends," "depends," "should," "could," "would," "may," "potential," "target," "goals," or similar expressions, or when we discuss our strategy, plans or intentions, we are making forward-looking statements.

Factors, among others, that could cause our actual results and future actions to differ materially from those described in forward-looking statements include

§local, regional, national and international economic, competitive, political, legislative and regulatory conditions and developments;

§actions by the California Public Utilities Commission, the California State Legislature, the California Department of Water Resources, the Federal Energy Regulatory Commission, the Federal Reserve Board, and other regulatory and governmental bodies in the United States and other countries in which we operate;

§capital markets conditions and inflation, interest and exchange rates;

§energy and trading 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 our control.

We caution you not to rely unduly on any forward-looking statements. You should review and consider carefully the risks, uncertainties and other factors that affect our business as described in this report and other reports that we file with the Securities and Exchange Commission.


 

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

SEMPRA ENERGY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in millions, except per share amounts)

 

Three months ended

Nine months ended

 

September 30,

September 30,

 

2010 

2009 

2010 

2009 

 

(unaudited)

REVENUES

 

 

 

 

 

 

 

 

Sempra Utilities

$

 1,575 

$

 1,424 

$

 4,999 

$

 4,382 

Sempra Global and parent

 

 541 

 

 429 

 

 1,659 

 

 1,268 

    Total revenues

 

 2,116 

 

 1,853 

 

 6,658 

 

 5,650 

EXPENSES AND OTHER INCOME

 

 

 

 

 

 

 

 

Sempra Utilities:

 

 

 

 

 

 

 

 

    Cost of natural gas

 

 (285)

 

 (208)

 

 (1,402)

 

 (997)

    Cost of electric fuel and purchased power

 

 (203)

 

 (208)

 

 (480)

 

 (508)

Sempra Global and parent:

 

 

 

 

 

 

 

 

    Cost of natural gas, electric fuel and purchased power

 

 (292)

 

 (220)

 

 (887)

 

 (675)

    Other cost of sales

 

 (23)

 

 (19)

 

 (68)

 

 (52)

Litigation expense

 

 (17)

 

 (3)

 

 (184)

 

 - 

Other operation and maintenance

 

 (590)

 

 (568)

 

 (1,782)

 

 (1,673)

Depreciation and amortization

 

 (218)

 

 (196)

 

 (643)

 

 (568)

Franchise fees and other taxes

 

 (76)

 

 (77)

 

 (243)

 

 (228)

Write-off of long-lived assets

 

 - 

 

 - 

 

 - 

 

 (132)

Equity earnings (losses):

 

 

 

 

 

 

 

 

    RBS Sempra Commodities LLP

 

 (281)

 

 105 

 

 (290)

 

 384 

    Other

 

 8 

 

 18 

 

 24 

 

 27 

Other income, net

 

 66 

 

 24 

 

 82 

 

 97 

Interest income

 

 5 

 

 5 

 

 13 

 

 16 

Interest expense

 

 (111)

 

 (96)

 

 (323)

 

 (257)

Income before income taxes and equity earnings

 

 

 

 

 

 

 

 

    of certain unconsolidated subsidiaries

 

 99 

 

 410 

 

 475 

 

 1,084 

Income tax benefit (expense)

 

 32 

 

 (128)

 

 (85)

 

 (327)

Equity earnings (losses), net of income tax

 

 (4)

 

 20 

 

 42 

 

 59 

Net income

 

 127 

 

 302 

 

 432 

 

 816 

Losses attributable to noncontrolling interests

 

 6 

 

 17 

 

 34 

 

 22 

Preferred dividends of subsidiaries

 

 (2)

 

 (2)

 

 (7)

 

 (7)

Earnings

$

 131 

$

 317 

$

 459 

$

 831 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

 0.53 

$

 1.30 

$

 1.86 

$

 3.42 

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

 

 246,668 

 

 243,925 

 

 246,513 

 

 242,806 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

 0.53 

$

 1.27 

$

 1.84 

$

 3.37 

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

 

 249,811 

 

 248,461 

 

 249,773 

 

 246,875 

Dividends declared per share of common stock

$

 0.39 

$

 0.39 

$

 1.17 

$

 1.17 

See Notes to Condensed Consolidated Financial Statements.


 

SEMPRA ENERGY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

 

September 30,

December 31,

 

2010 

2009

 

(unaudited)

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

    Cash and cash equivalents

$

 547 

$

 110 

    Restricted cash

 

 4 

 

 35 

    Trade accounts receivable

 

 632 

 

 971 

    Other accounts and notes receivable

 

 144 

 

 159 

    Due from unconsolidated affiliate

 

 30 

 

 41 

    Income taxes receivable

 

 312 

 

 221 

    Deferred income taxes

 

 - 

 

 10 

    Inventories

 

 296 

 

 197 

    Regulatory assets

 

 97 

 

 54 

    Fixed-price contracts and other derivatives

 

 84 

 

 77 

    Insurance receivable related to wildfire litigation (Note 10)

 

 150 

 

 273 

    Other

 

 199 

 

 147 

        Total current assets

 

 2,495 

 

 2,295 

 

 

 

 

 

Investments and other assets:

 

 

 

 

    Restricted cash

 

 27 

 

 - 

    Regulatory assets arising from fixed-price contracts and other derivatives

 

 241 

 

 241 

    Regulatory assets arising from pension and other postretirement

 

 

 

 

        benefit obligations

 

 950 

 

 959 

    Other regulatory assets

 

 973 

 

 603 

    Nuclear decommissioning trusts

 

 737 

 

 678 

    Investment in RBS Sempra Commodities LLP

 

 825 

 

 2,172 

    Other investments

 

 2,317 

 

 2,151 

    Goodwill and other intangible assets

 

 542 

 

 524 

    Sundry

 

 621 

 

 608 

        Total investments and other assets

 

 7,233 

 

 7,936 

 

 

 

 

 

Property, plant and equipment:

 

 

 

 

    Property, plant and equipment

 

 26,286 

 

 25,034 

    Less accumulated depreciation and amortization

 

 (7,065)

 

 (6,753)

        Property, plant and equipment, net ($523 at September 30, 2010 related to VIE)

 

 19,221 

 

 18,281 

Total assets

$

 28,949 

$

 28,512 

See Notes to Condensed Consolidated Financial Statements.


 

SEMPRA ENERGY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

 

September 30,

December 31,

 

2010 

2009

 

(unaudited)

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

    Short-term debt

$

 574 

$

 618 

    Accounts payable - trade

 

 572 

 

 522 

    Accounts payable - other

 

 130 

 

 171 

    Due to unconsolidated affiliates

 

 12 

 

 29 

    Deferred income taxes

 

 16 

 

 - 

    Dividends and interest payable

 

 232 

 

 190 

    Accrued compensation and benefits

 

 247 

 

 264 

    Regulatory balancing accounts, net

 

 242 

 

 382 

    Current portion of long-term debt

 

 313 

 

 573 

    Fixed-price contracts and other derivatives

 

 107 

 

 95 

    Customer deposits

 

 133 

 

 145 

    Reserve for wildfire litigation (Note 10)

 

 344 

 

 270 

    Other

 

 855 

 

 629 

        Total current liabilities

 

 3,777 

 

 3,888 

Long-term debt ($357 at September 30, 2010 related to VIE)

 

 8,032 

 

 7,460 

 

 

 

 

 

Deferred credits and other liabilities:

 

 

 

 

    Due to unconsolidated affiliate

 

 - 

 

 2 

    Customer advances for construction

 

 147 

 

 146 

    Pension and other postretirement benefit obligations, net of plan assets

 

 1,225 

 

 1,252 

    Deferred income taxes

 

 1,516 

 

 1,318 

    Deferred investment tax credits

 

 52 

 

 54 

    Regulatory liabilities arising from removal obligations

 

 2,635 

 

 2,557 

    Asset retirement obligations

 

 1,327 

 

 1,277 

    Other regulatory liabilities

 

 144 

 

 181 

    Fixed-price contracts and other derivatives

 

 336 

 

 312 

    Deferred credits and other

 

 672 

 

 735 

        Total deferred credits and other liabilities

 

 8,054 

 

 7,834 

Contingently redeemable preferred stock of subsidiary

 

 79 

 

 79 

 

 

 

 

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

    Preferred stock (50 million shares authorized; none issued)

 

 - 

 

 - 

    Common stock (750 million shares authorized; 242 million and 247 million shares

 

 

 

 

        outstanding at September 30, 2010 and December 31, 2009, respectively; no par

 

 

 

 

        value)

 

 2,012 

 

 2,418 

    Retained earnings

 

 7,143 

 

 6,971 

    Deferred compensation

 

 (9)

 

 (13)

    Accumulated other comprehensive income (loss)

 

 (344)

 

 (369)

        Total Sempra Energy shareholders' equity

 

 8,802 

 

 9,007 

    Preferred stock of subsidiaries

 

 100 

 

 100 

    Other noncontrolling interests

 

 105 

 

 144 

        Total equity

 

 9,007 

 

 9,251 

Total liabilities and equity

$

 28,949 

$

 28,512 

See Notes to Condensed Consolidated Financial Statements.


 

SEMPRA ENERGY

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Dollars in millions)

 

Nine months ended September 30,

 

2010 

2009 

 

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

    Net income

$

 432 

$

 816 

    Adjustments to reconcile net income to net cash provided

 

 

 

 

        by operating activities:

 

 

 

 

            Depreciation and amortization

 

 643 

 

 568 

            Deferred income taxes and investment tax credits

 

 133 

 

 181 

            Equity losses (earnings)

 

 224 

 

 (470)

            Write-off of long-lived assets

 

 - 

 

 132 

            Fixed-price contracts and other derivatives

 

 19 

 

 (27)

            Other

 

 (24)

 

 42 

    Net change in other working capital components

 

 (77)

 

 220 

    Distributions from RBS Sempra Commodities LLP

 

 198 

 

 407 

    Changes in other assets

 

 76 

 

 81 

    Changes in other liabilities

 

 (22)

 

 (66)

        Net cash provided by operating activities

 

 1,602 

 

 1,884 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

    Expenditures for property, plant and equipment

 

 (1,354)

 

 (1,371)

    Proceeds from sale of assets

 

 - 

 

 179 

    Expenditures for investments and acquisition of businesses, net of cash acquired

 

 (385)

 

 (762)

    Distributions from RBS Sempra Commodities LLP

 

 849 

 

 - 

    Distributions from other investments

 

 259 

 

 16 

    Purchases of nuclear decommissioning and other trust assets

 

 (261)

 

 (167)

    Proceeds from sales by nuclear decommissioning and other trusts

 

 261 

 

 155 

    Other

 

 (2)

 

 (20)

        Net cash used in investing activities

 

 (633)

 

 (1,970)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

    Common dividends paid

 

 (269)

 

 (255)

    Preferred dividends paid by subsidiaries

 

 (7)

 

 (7)

    Issuances of common stock

 

 29 

 

 52 

    Repurchases of common stock

 

 (502)

 

 - 

    Increase (decrease) in short-term debt, net

 

 184 

 

 (52)

    Issuances of debt (maturities greater than 90 days)

 

 771 

 

 1,181 

    Payments on debt (maturities greater than 90 days)

 

 (727)

 

 (325)

    Purchase of noncontrolling interest

 

 - 

 

 (94)

    Other

 

 (11)

 

 11 

        Net cash (used in) provided by financing activities

 

 (532)

 

 511 

 

 

 

 

 

Increase in cash and cash equivalents

 

 437 

 

 425 

Cash and cash equivalents, January 1

 

 110 

 

 331 

Cash and cash equivalents, September 30

$

 547 

$

 756 

See Notes to Condensed Consolidated Financial Statements.


 

SEMPRA ENERGY

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Dollars in millions)

 

Nine months ended September 30,

 

2010 

2009 

 

(unaudited)

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

 

    Interest payments, net of amounts capitalized

$

 264 

$

 201 

    Income tax payments, net of refunds

 

 32 

 

 98 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES

 

 

 

 

    Acquisition of business:

 

 

 

 

        Assets acquired

$

 303 

$

 - 

        Cash paid, net of cash acquired

 

 (292)

 

 - 

        Liabilities assumed

$

 11 

$

 - 

 

 

 

 

 

    Increase in capital lease obligations for investments in property, plant and

 

 

 

 

        equipment

$

 183 

$

 2 

    Dividends declared but not paid

 

 97 

 

 99 

See Notes to Condensed Consolidated Financial Statements.


 

SAN DIEGO GAS & ELECTRIC COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in millions)

 

Three months ended

Nine months ended

 

September 30,

September 30,

 

2010 

2009 

2010 

2009 

 

(unaudited)

Operating revenues

 

 

 

 

 

 

 

 

    Electric

$

 718 

$

 695 

$

 1,870 

$

 1,783 

    Natural gas

 

 93 

 

 78 

 

 375 

 

 353 

        Total operating revenues

 

 811 

 

 773 

 

 2,245 

 

 2,136 

Operating expenses

 

 

 

 

 

 

 

 

    Cost of electric fuel and purchased power

 

 203 

 

 208 

 

 480 

 

 508 

    Cost of natural gas

 

 37 

 

 30 

 

 170 

 

 154 

    Operation and maintenance

 

 235 

 

 236 

 

 704 

 

 649 

    Depreciation and amortization

 

 96 

 

 81 

 

 283 

 

 239 

    Franchise fees and other taxes

 

 42 

 

 46 

 

 126 

 

 126 

        Total operating expenses

 

 613 

 

 601 

 

 1,763 

 

 1,676 

Operating income

 

 198 

 

 172 

 

 482 

 

 460 

Other income (expense), net

 

 (2)

 

 1 

 

 (18)

 

 45 

Interest income

 

 - 

 

 1 

 

 - 

 

 1 

Interest expense

 

 (37)

 

 (29)

 

 (99)

 

 (75)

Income before income taxes

 

 159 

 

 145 

 

 365 

 

 431 

Income tax expense

 

 (56)

 

 (53)

 

 (131)

 

 (141)

Net income

 

 103 

 

 92 

 

 234 

 

 290 

Losses (earnings) attributable to noncontrolling interests

 

 5 

 

 18 

 

 34 

 

 (9)

Earnings

 

 108 

 

 110 

 

 268 

 

 281 

Preferred dividend requirements

 

 (2)

 

 (2)

 

 (4)

 

 (4)

Earnings attributable to common shares

$

 106 

$

 108 

$

 264 

$

 277 

See Notes to Condensed Consolidated Financial Statements.


 

SAN DIEGO GAS & ELECTRIC COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

 

September 30,

December 31,

 

2010 

2009 

 

(unaudited)

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

    Cash and cash equivalents

$

 332 

$

 13 

    Restricted cash

 

 4 

 

 8 

    Accounts receivable - trade

 

 216 

 

 229 

    Accounts receivable - other

 

 33 

 

 85 

    Due from unconsolidated affiliates

 

 4 

 

 8 

    Income taxes receivable

 

 114 

 

 59 

    Deferred income taxes

 

 36 

 

 41 

    Inventories

 

 67 

 

 61 

    Regulatory assets arising from fixed-price contracts and other derivatives

 

 73 

 

 30 

    Other regulatory assets

 

 4 

 

 4 

    Fixed-price contracts and other derivatives

 

 29 

 

 40 

    Insurance receivable related to wildfire litigation (Note 10)

 

 150 

 

 273 

    Other

 

 61 

 

 35 

        Total current assets

 

 1,123 

 

 886 

 

 

 

 

 

Other assets:

 

 

 

 

    Due from unconsolidated affiliate

 

 - 

 

 2 

    Deferred taxes recoverable in rates

 

 474 

 

 415 

    Regulatory assets arising from fixed-price contracts and other derivatives

 

 241 

 

 241 

    Regulatory assets arising from pension and other postretirement

 

 

 

 

        benefit obligations

 

 331 

 

 342 

    Regulatory assets arising from wildfire litigation costs

 

 311 

 

 - 

    Other regulatory assets

 

 72 

 

 53 

    Nuclear decommissioning trusts

 

 737 

 

 678 

    Sundry

 

 50 

 

 43 

        Total other assets

 

 2,216 

 

 1,774 

 

 

 

 

 

Property, plant and equipment:

 

 

 

 

    Property, plant and equipment

 

 10,816 

 

 10,156 

    Less accumulated depreciation and amortization

 

 (2,659)

 

 (2,587)

        Property, plant and equipment, net ($523 at September 30, 2010 related to VIE)

 

 8,157 

 

 7,569 

Total assets

$

 11,496 

$

 10,229 

See Notes to Condensed Consolidated Financial Statements.


 

SAN DIEGO GAS & ELECTRIC COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions)

 

September 30,

December 31,

 

2010 

2009

 

(unaudited)

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

    Short-term debt

$

 - 

$

 33 

    Accounts payable

 

 229 

 

 249 

    Due to unconsolidated affiliate

 

 21 

 

 - 

    Accrued compensation and benefits

 

 93 

 

 104 

    Regulatory balancing accounts, net

 

 79 

 

 159 

    Current portion of long-term debt

 

 22 

 

 45 

    Fixed-price contracts and other derivatives

 

 50 

 

 51 

    Customer deposits

 

 53 

 

 56 

    Reserve for wildfire litigation (Note 10)

 

 344 

 

 270 

    Other

 

 172 

 

 157 

        Total current liabilities

 

 1,063 

 

 1,124 

Long-term debt ($357 at September 30, 2010 related to VIE)

 

 3,473 

 

 2,623 

 

 

 

 

 

Deferred credits and other liabilities:

 

 

 

 

    Customer advances for construction

 

 21 

 

 23 

    Pension and other postretirement benefit obligations, net of plan assets

 

 354 

 

 370 

    Deferred income taxes

 

 953 

 

 774 

    Deferred investment tax credits

 

 26 

 

 26 

    Regulatory liabilities arising from removal obligations

 

 1,376 

 

 1,330 

    Asset retirement obligations

 

 601 

 

 585 

    Fixed-price contracts and other derivatives

 

 278 

 

 265 

    Deferred credits and other

 

 161 

 

 145 

        Total deferred credits and other liabilities

 

 3,770 

 

 3,518 

Contingently redeemable preferred stock

 

 79 

 

 79 

 

 

 

 

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

    Common stock (255 million shares authorized; 117 million shares outstanding;

 

 

 

 

        no par value)

 

 1,138 

 

 1,138 

    Retained earnings

 

 1,875 

 

 1,611 

    Accumulated other comprehensive income (loss)

 

 (9)

 

 (10)

        Total SDG&E shareholders' equity

 

 3,004 

 

 2,739 

    Noncontrolling interest

 

 107 

 

 146 

        Total equity

 

 3,111 

 

 2,885 

Total liabilities and equity

$

 11,496 

$

 10,229 

See Notes to Condensed Consolidated Financial Statements.


 

SAN DIEGO GAS & ELECTRIC COMPANY

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Dollars in millions)

 

Nine months ended

 

September 30,

 

2010 

2009

 

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

    Net income

$

 234 

$

 290 

    Adjustments to reconcile net income to net cash provided by

 

 

 

 

        operating activities:

 

 

 

 

            Depreciation and amortization

 

 283 

 

 239 

            Deferred income taxes and investment tax credits

 

 125 

 

 35 

            Fixed-price contracts and other derivatives

 

 42 

 

 (28)

            Other

 

 (24)

 

 (14)

    Net change in other working capital components

 

 (247)

 

 115 

    Changes in other assets

 

 15 

 

 20 

    Changes in other liabilities

 

 (12)

 

 (38)

        Net cash provided by operating activities

 

 416 

 

 619 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

    Expenditures for property, plant and equipment

 

 (822)

 

 (633)

    Expenditures for short-term investments

 

 - 

 

 (152)

    Proceeds from sale of short-term investments

 

 - 

 

 176 

    Purchases of nuclear decommissioning trust assets

 

 (256)

 

 (161)

    Proceeds from sales by nuclear decommissioning trusts

 

 248 

 

 155 

    Decrease in loans to affiliates, net

 

 13 

 

 33 

    Net decrease in restricted cash

 

 4 

 

 - 

    Other

 

 - 

 

 2 

        Net cash used in investing activities

 

 (813)

 

 (580)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

    Common dividends paid

 

 - 

 

 (150)

    Capital contribution received by Otay Mesa VIE

 

 - 

 

 4 

    Capital distribution made by Otay Mesa VIE

 

 (10)

 

 - 

    Preferred dividends paid

 

 (4)

 

 (4)

    Issuances of long-term debt

 

 744 

 

 386 

    Payments on long-term debt

 

 (7)

 

 - 

    Other

 

 (7)

 

 (3)

        Net cash provided by financing activities

 

 716 

 

 233 

 

 

 

 

 

Increase in cash and cash equivalents

 

 319 

 

 272 

Cash and cash equivalents, January 1

 

 13 

 

 19 

Cash and cash equivalents, September 30

$

 332 

$

 291 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

 

    Interest payments, net of amounts capitalized

$

 67 

$

 51 

    Income tax payments, net of refunds

 

 61 

 

 144 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES

 

 

 

 

    Increase in capital lease obligations for investments in property, plant and

 

 

 

 

        equipment

$

 183 

$

 - 

    Dividends declared but not paid

 

 1 

 

 1 

See Notes to Condensed Consolidated Financial Statements.


 

PACIFIC ENTERPRISES AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in millions)

 

Three months ended

Nine months ended

 

September 30,

September 30,

 

2010 

2009 

2010 

2009 

 

(unaudited)

 

 

 

 

 

 

 

 

 

Operating revenues

$

 776 

$

 662 

$

 2,792 

$

 2,276 

Operating expenses

 

 

 

 

 

 

 

 

    Cost of natural gas

 

 252 

 

 180 

 

 1,244 

 

 849 

    Operation and maintenance

 

 283 

 

 249