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SEMPRA ENERGY 10-Q 2011
Sempra Energy, SDG&E, SoCalGas 06-30-2011 10-Q
 
 
 
 



  
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
June 30, 2011
   
 
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)696-2000
     
         
1-3779
SAN DIEGO GAS & ELECTRIC COMPANY
California
95-1184800
No change
 
8326 Century Park Court
     
 
San Diego, California 92123
     
 
(619)696-2000
     
         
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 registrant has submitted electronically and posted on its 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
X
 
No
 
Southern California Gas Company
Yes
X
 
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  ]
[      ]
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
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 August 5, 2011:
         
           
Sempra Energy
239,552,287 shares
San Diego Gas & Electric Company
Wholly owned by Enova Corporation, which is 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
SAN DIEGO GAS & ELECTRIC COMPANY FORM 10-Q
SOUTHERN CALIFORNIA GAS COMPANY 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
64
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
93
Item 4.
Controls and Procedures
94
     
PART II – OTHER INFORMATION
 
Item 1.
Legal Proceedings
95
Item 1A.
Risk Factors
95
Item 6.
Exhibits
95
     
Signatures
98
     
     

This combined Form 10-Q is separately filed by Sempra Energy, San Diego Gas & Electric Company and Southern California Gas Company. Information contained herein relating to any individual company is filed by such company on its own behalf. Each company makes representations only as to itself and makes no other representation whatsoever 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," "will," "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, California State Legislature, Federal Energy Regulatory Commission, Nuclear Regulatory Commission, California Energy Commission, California Air Resources Board, and other regulatory, governmental and environmental bodies in the United States and other countries in which we operate;
 
§  
capital markets conditions and inflation, interest and exchange rates;
 
§  
energy 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 in our Annual Report on Form 10-K 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 June 30,
Six months ended June 30,
 
2011 
2010 
2011 
2010 
 
(unaudited)
REVENUES
 
 
 
 
 
 
 
 
Utilities
$
 1,922 
$
 1,550 
$
 3,868 
$
 3,541 
Energy-related businesses
 
 500 
 
 458 
 
 988 
 
 1,001 
    Total revenues
 
 2,422 
 
 2,008 
 
 4,856 
 
 4,542 
EXPENSES AND OTHER INCOME
 
 
 
 
 
 
 
 
Utilities:
 
 
 
 
 
 
 
 
    Cost of natural gas
 
 (403)
 
 (381)
 
 (1,045)
 
 (1,184)
    Cost of electric fuel and purchased power
 
 (397)
 
 (129)
 
 (568)
 
 (277)
Energy-related businesses:
 
 
 
 
 
 
 
 
    Cost of natural gas, electric fuel and purchased power
 
 (212)
 
 (235)
 
 (442)
 
 (528)
    Other cost of sales
 
 (32)
 
 (20)
 
 (55)
 
 (45)
Litigation expense
 
 (6)
 
 1 
 
 (13)
 
 (167)
Other operation and maintenance
 
 (667)
 
 (616)
 
 (1,299)
 
 (1,192)
Depreciation and amortization
 
 (248)
 
 (215)
 
 (479)
 
 (425)
Franchise fees and other taxes
 
 (80)
 
 (77)
 
 (175)
 
 (167)
Equity earnings (losses), before income tax
 
 7 
 
 (8)
 
 8 
 
 7 
Remeasurement of equity method investments
 
 277 
 
 ― 
 
 277 
 
 ― 
Other income, net
 
 31 
 
 8 
 
 74 
 
 16 
Interest income
 
 12 
 
 4 
 
 15 
 
 8 
Interest expense
 
 (118)
 
 (103)
 
 (226)
 
 (212)
Income before income taxes and equity earnings
 
 
 
 
 
 
 
 
    of certain unconsolidated subsidiaries
 
 586 
 
 237 
 
 928 
 
 376 
Income tax expense
 
 (92)
 
 (59)
 
 (201)
 
 (117)
Equity earnings, net of income tax
 
 8 
 
 27 
 
 39 
 
 46 
Net income
 
 502 
 
 205 
 
 766 
 
 305 
Losses attributable to noncontrolling interests
 
 12 
 
 20 
 
 8 
 
 28 
Preferred dividends of subsidiaries
 
 (3)
 
 (3)
 
 (5)
 
 (5)
Earnings
$
 511 
$
 222 
$
 769 
$
 328 
 
 
 
 
 
 
 
 
 
Basic earnings per common share
$
 2.14 
$
 0.90 
$
 3.21 
$
 1.33 
Weighted-average number of shares outstanding, basic (thousands)
 
 239,415 
 
 246,784 
 
 239,769 
 
 246,435 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share
$
 2.12 
$
 0.89 
$
 3.19 
$
 1.31 
Weighted-average number of shares outstanding, diluted (thousands)
 
 240,761 
 
 249,727 
 
 241,154 
 
 249,835 
Dividends declared per share of common stock
$
 0.48 
$
 0.39 
$
 0.96 
$
 0.78 
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 

 
 
 
 


SEMPRA ENERGY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 
 
June 30,
December 31,
 
2011 
2010(1)
 
 
(unaudited)
 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
    Cash and cash equivalents
$
 392 
$
 912 
    Restricted cash
 
 188 
 
 131 
    Trade accounts receivable
 
 1,014 
 
 891 
    Other accounts and notes receivable
 
 162 
 
 141 
    Due from unconsolidated affiliates
 
 ― 
 
 34 
    Income taxes receivable
 
 243 
 
 248 
    Deferred income taxes
 
 ― 
 
 75 
    Inventories
 
 211 
 
 258 
    Regulatory assets
 
 69 
 
 90 
    Fixed-price contracts and other derivatives
 
 87 
 
 81 
    Settlement receivable related to wildfire litigation
 
 ― 
 
 300 
    Other
 
 185 
 
 192 
        Total current assets
 
 2,551 
 
 3,353 
 
 
 
 
 
 
Investments and other assets:
 
 
 
 
    Restricted cash
 
 2 
 
 27 
    Regulatory assets arising from pension and other postretirement
 
 
 
 
        benefit obligations
 
 868 
 
 869 
    Regulatory assets arising from wildfire litigation costs
 
 397 
 
 364 
    Other regulatory assets
 
 948 
 
 934 
    Nuclear decommissioning trusts
 
 808 
 
 769 
    Investment in RBS Sempra Commodities LLP
 
 439 
 
 787 
    Other investments
 
 1,513 
 
 2,164 
    Goodwill
 
 1,059 
 
 87 
    Other intangible assets
 
 450 
 
 453 
    Sundry
 
 645 
 
 600 
        Total investments and other assets
 
 7,129 
 
 7,054 
 
 
 
 
 
 
Property, plant and equipment:
 
 
 
 
    Property, plant and equipment
 
 29,400 
 
 27,087 
    Less accumulated depreciation and amortization
 
 (7,244)
 
 (7,211)
        Property, plant and equipment, net ($503 and $516 at June 30, 2011 and
            December 31, 2010, respectively, related to VIE)
 
 22,156 
 
 19,876 
Total assets
$
 31,836 
$
 30,283 
(1)
Derived from audited financial statements.
 
 
 
 
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 

 
 
 
 


SEMPRA ENERGY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 
 
June 30,
December 31,
 
2011 
2010(1)
 
 
(unaudited)
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
    Short-term debt
$
 453 
$
 158 
    Accounts payable - trade
 
 783 
 
 755 
    Accounts payable - other
 
 132 
 
 109 
    Due to unconsolidated affiliates
 
 ― 
 
 36 
    Deferred income taxes
 
 31 
 
 ― 
    Dividends and interest payable
 
 217 
 
 188 
    Accrued compensation and benefits
 
 269 
 
 311 
    Regulatory balancing accounts, net
 
 277 
 
 241 
    Current portion of long-term debt
 
 144 
 
 349 
    Fixed-price contracts and other derivatives
 
 85 
 
 106 
    Customer deposits
 
 135 
 
 129 
    Reserve for wildfire litigation
 
 422 
 
 639 
    Other
 
 627 
 
 765 
        Total current liabilities
 
 3,575 
 
 3,786 
Long-term debt ($350 and $355 at June 30, 2011 and December 31, 2010, respectively,
        related to VIE)
 
 9,648 
 
 8,980 
 
 
 
 
 
 
Deferred credits and other liabilities:
 
 
 
 
    Customer advances for construction
 
 139 
 
 154 
    Pension and other postretirement benefit obligations, net of plan assets
 
 1,106 
 
 1,105 
    Deferred income taxes
 
 1,826 
 
 1,561 
    Deferred investment tax credits
 
 48 
 
 50 
    Regulatory liabilities arising from removal obligations
 
 2,692 
 
 2,630 
    Asset retirement obligations
 
 1,490 
 
 1,449 
    Other regulatory liabilities
 
 115 
 
 138 
    Fixed-price contracts and other derivatives
 
 279 
 
 290 
    Deferred credits and other
 
 867 
 
 823 
        Total deferred credits and other liabilities
 
 8,562 
 
 8,200 
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; 240 million shares
 
 
 
 
        outstanding at June 30, 2011 and December 31, 2010, no par value)
 
 2,074 
 
 2,036 
    Retained earnings
 
 7,868 
 
 7,329 
    Deferred compensation
 
 (5)
 
 (8)
    Accumulated other comprehensive income (loss)
 
 (358)
 
 (330)
        Total Sempra Energy shareholders' equity
 
 9,579 
 
 9,027 
    Preferred stock of subsidiaries
 
 20 
 
 100 
    Other noncontrolling interests
 
 373 
 
 111 
        Total equity
 
 9,972 
 
 9,238 
Total liabilities and equity
$
 31,836 
$
 30,283 
(1)
Derived from audited financial statements.
 
 
 
 
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 

 
 
 
 


SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
 
Six months ended June 30,
 
2011 
2010 
 
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
    Net income
$
 766 
$
 305 
    Adjustments to reconcile net income to net cash provided
 
 
 
 
        by operating activities:
 
 
 
 
            Depreciation and amortization
 
 479 
 
 425 
            Deferred income taxes and investment tax credits
 
 147 
 
 96 
            Equity earnings
 
 (47)
 
 (53)
            Remeasurement of equity method investments
 
 (277)
 
 ― 
            Fixed-price contracts and other derivatives
 
 (2)
 
 14 
            Other
 
 (23)
 
 (6)
    Net change in other working capital components
 
 53 
 
 294 
    Distributions from RBS Sempra Commodities LLP
 
 53 
 
 198 
    Changes in other assets
 
 2 
 
 53 
    Changes in other liabilities
 
 (12)
 
 (19)
        Net cash provided by operating activities
 
 1,139 
 
 1,307 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
    Expenditures for property, plant and equipment
 
 (1,225)
 
 (839)
    Expenditures for investments and acquisition of businesses, net of cash acquired
 
 (682)
 
 (370)
    Distributions from RBS Sempra Commodities LLP
 
 276 
 
 ― 
    Distributions from other investments
 
 29 
 
 36 
    Purchases of nuclear decommissioning and other trust assets
 
 (97)
 
 (159)
    Proceeds from sales by nuclear decommissioning and other trusts
 
 94 
 
 159 
    Decrease in restricted cash
 
 388 
 
 45 
    Increase in restricted cash
 
 (420)
 
 (40)
    Other
 
 (16)
 
 1 
        Net cash used in investing activities
 
 (1,653)
 
 (1,167)
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
    Common dividends paid
 
 (210)
 
 (172)
    Redemption of subsidiary preferred stock
 
 (80)
 
 ― 
    Preferred dividends paid by subsidiaries
 
 (5)
 
 (5)
    Issuances of common stock
 
 20 
 
 22 
    Repurchases of common stock
 
 (18)
 
 (2)
    Issuances of debt (maturities greater than 90 days)
 
 870 
 
 270 
    Payments on debt (maturities greater than 90 days)
 
 (270)
 
 (710)
    (Decrease) increase in short-term debt, net
 
 (319)
 
 534 
    Other
 
 10 
 
 1 
        Net cash used in financing activities
 
 (2)
 
 (62)
 
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
 
 (4)
 
 ― 
 
 
 
 
 
(Decrease) increase in cash and cash equivalents
 
 (520)
 
 78 
Cash and cash equivalents, January 1
 
 912 
 
 110 
Cash and cash equivalents, June 30
$
 392 
$
 188 
See Notes to Condensed Consolidated Financial Statements.

 
 
 
 


SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
 
Six months ended June 30,
 
2011 
2010 
 
(unaudited)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 
 
 
 
    Interest payments, net of amounts capitalized
$
 211 
$
 212 
    Income tax payments, net
 
 75 
 
 5 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
 
 
 
 
    Acquisition of businesses:
 
 
 
 
       Assets acquired
$
 2,815 
$
 303 
       Cash paid, net of cash acquired
 
 (611)
 
 (285)
       Fair value of equity method investments immediately prior to the acquisition
 
 (882)
 
 ― 
       Fair value of noncontrolling interests
 
 (279)
 
 ― 
       Additional consideration accrued
 
 (32)
 
 (7)
       Liabilities assumed
$
 1,011 
$
 11 
 
 
 
 
 
    Increase in capital lease obligations for investments in property, plant and equipment
$
 ― 
$
 183 
    Accrued capital expenditures
 
 273 
 
 290 
    Dividends declared but not paid
 
 119 
 
 99 
See Notes to Condensed Consolidated Financial Statements.

 
 
 
 

SAN DIEGO GAS & ELECTRIC COMPANY
 
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
Three months ended June 30,
Six months ended June 30,
 
2011 
2010 
2011 
2010 
 
(unaudited)
Operating revenues
 
 
 
 
 
 
 
 
    Electric
$
 583 
$
 589 
$
 1,248 
$
 1,152 
    Natural gas
 
 114 
 
 103 
 
 289 
 
 282 
        Total operating revenues
 
 697 
 
 692 
 
 1,537 
 
 1,434 
Operating expenses
 
 
 
 
 
 
 
 
    Cost of electric fuel and purchased power
 
 156 
 
 129 
 
 327 
 
 277 
    Cost of natural gas
 
 52 
 
 44 
 
 135 
 
 133 
    Operation and maintenance
 
 228 
 
 237 
 
 501 
 
 469 
    Depreciation and amortization
 
 105 
 
 95 
 
 208 
 
 187 
    Franchise fees and other taxes
 
 43 
 
 41 
 
 90 
 
 84 
        Total operating expenses
 
 584 
 
 546 
 
 1,261 
 
 1,150 
Operating income
 
 113 
 
 146 
 
 276 
 
 284 
Other income (expense), net
 
 13 
 
 (16)
 
 29 
 
 (16)
Interest expense
 
 (31)
 
 (31)
 
 (67)
 
 (62)
Income before income taxes
 
 95 
 
 99 
 
 238 
 
 206 
Income tax expense
 
 (42)
 
 (44)
 
 (91)
 
 (75)
Net income
 
 53 
 
 55 
 
 147 
 
 131 
Losses attributable to noncontrolling interests
 
 19 
 
 21 
 
 15 
 
 29 
Earnings
 
 72 
 
 76 
 
 162 
 
 160 
Preferred dividend requirements
 
 (1)
 
 (1)
 
 (2)
 
 (2)
Earnings attributable to common shares
$
 71 
$
 75 
$
 160 
$
 158 
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 

 
 
 
 


SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 
 
June 30,
December 31,
 
 
2011 
2010(1)
 
 
(unaudited)
 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
    Cash and cash equivalents
$
 85 
$
 127 
    Restricted cash
 
 186 
 
 116 
    Accounts receivable - trade
 
 254 
 
 248 
    Accounts receivable - other
 
 38 
 
 59 
    Due from unconsolidated affiliates
 
 1 
 
 12 
    Income taxes receivable
 
 72 
 
 37 
    Deferred income taxes
 
 40 
 
 129 
    Inventories
 
 67 
 
 71 
    Regulatory assets arising from fixed-price contracts and other derivatives
 
 52 
 
 66 
    Other regulatory assets
 
 6 
 
 5 
    Fixed-price contracts and other derivatives
 
 22 
 
 28 
    Settlement receivable related to wildfire litigation
 
 ― 
 
 300 
    Other
 
 32 
 
 50 
        Total current assets
 
 855 
 
 1,248 
 
 
 
 
 
 
Other assets:
 
 
 
 
    Restricted cash
 
 2 
 
 ― 
    Deferred taxes recoverable in rates
 
 536 
 
 502 
    Regulatory assets arising from fixed-price contracts and other derivatives
 
 212 
 
 233 
    Regulatory assets arising from pension and other postretirement
 
 
 
 
        benefit obligations
 
 274 
 
 279 
    Regulatory assets arising from wildfire litigation costs
 
 397 
 
 364 
    Other regulatory assets
 
 73 
 
 73 
    Nuclear decommissioning trusts
 
 808 
 
 769 
    Sundry
 
 127 
 
 56 
        Total other assets
 
 2,429 
 
 2,276 
 
 
 
 
 
 
Property, plant and equipment:
 
 
 
 
    Property, plant and equipment
 
 11,723 
 
 11,247 
    Less accumulated depreciation and amortization
 
 (2,641)
 
 (2,694)
        Property, plant and equipment, net ($503 and $516 at June 30, 2011 and
            December 31, 2010, respectively, related to VIE)
 
 9,082 
 
 8,553 
Total assets
$
 12,366 
$
 12,077 
(1)
Derived from audited financial statements.
 
 
 
 
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 

 
 
 
 


SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 
 
June 30,
December 31,
 
 
2011 
2010(1)
 
 
(unaudited)
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
    Accounts payable
$
 269 
$
 292 
    Due to unconsolidated affiliates
 
 33 
 
 16 
    Accrued compensation and benefits
 
 79 
 
 115 
    Regulatory balancing accounts, net
 
 122 
 
 61 
    Current portion of long-term debt
 
 19 
 
 19 
    Fixed-price contracts and other derivatives
 
 50 
 
 51 
    Customer deposits
 
 59 
 
 54 
    Reserve for wildfire litigation
 
 422 
 
 639 
    Other
 
 120 
 
 136 
        Total current liabilities
 
 1,173 
 
 1,383 
Long-term debt ($350 and $355 at June 30, 2011 and December 31, 2010,
    respectively, related to VIE)
 
 3,470 
 
 3,479 
 
 
 
 
 
 
Deferred credits and other liabilities:
 
 
 
 
    Customer advances for construction
 
 21 
 
 21 
    Pension and other postretirement benefit obligations, net of plan assets
 
 305 
 
 309 
    Deferred income taxes
 
 1,115 
 
 1,001 
    Deferred investment tax credits
 
 24 
 
 25 
    Regulatory liabilities arising from removal obligations
 
 1,460 
 
 1,409 
    Asset retirement obligations
 
 638 
 
 619 
    Fixed-price contracts and other derivatives
 
 236 
 
 248 
    Deferred credits and other
 
 288 
 
 283 
        Total deferred credits and other liabilities
 
 4,087 
 
 3,915 
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)
 
 1,338 
 
 1,138 
    Retained earnings
 
 2,140 
 
 1,980 
    Accumulated other comprehensive income (loss)
 
 (10)
 
 (10)
        Total SDG&E shareholder's equity
 
 3,468 
 
 3,108 
    Noncontrolling interest
 
 89 
 
 113 
        Total equity
 
 3,557 
 
 3,221 
Total liabilities and equity
$
 12,366 
$
 12,077 
(1)
Derived from audited financial statements.
 
 
 
 
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 

 
 
 
 


SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
 
 
 
 
 
 
Six months ended June 30,
 
2011 
2010
 
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
    Net income
$
 147 
$
 131 
    Adjustments to reconcile net income to net cash provided by
 
 
 
 
        operating activities:
 
 
 
 
            Depreciation and amortization
 
 208 
 
 187 
            Deferred income taxes and investment tax credits
 
 167 
 
 23 
            Fixed price contracts and other derivatives
 
 (6)
 
 28 
            Other
 
 (20)
 
 (14)
    Net change in other working capital components
 
 52 
 
 (133)
    Changes in other assets
 
 15 
 
 9 
    Changes in other liabilities
 
 (7)
 
 (10)
        Net cash provided by operating activities
 
 556 
 
 221 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
    Expenditures for property, plant and equipment
 
 (714)
 
 (522)
    Purchases of nuclear decommissioning trust assets
 
 (95)
 
 (155)
    Proceeds from sales by nuclear decommissioning trusts
 
 90 
 
 150 
    Decrease in loans to affiliates, net
 
 ― 
 
 14 
    Decrease in restricted cash
 
 257 
 
 45 
    Increase in restricted cash
 
 (329)
 
 (40)
    Other
 
 ― 
 
 (1)
        Net cash used in investing activities
 
 (791)
 
 (509)
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
    Capital contribution
 
 200 
 
 ― 
    Preferred dividends paid
 
 (2)
 
 (2)
    Issuances of long-term debt
 
 ― 
 
 250 
    Payments on long-term debt
 
 (5)
 
 (5)
    Increase in short-term debt, net
 
 ― 
 
 63 
    Other
 
 ― 
 
 (3)
        Net cash provided by financing activities
 
 193 
 
 303 
 
 
 
 
 
(Decrease) increase in cash and cash equivalents
 
 (42)
 
 15 
Cash and cash equivalents, January 1
 
 127 
 
 13 
Cash and cash equivalents, June 30
$
 85 
$
 28 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 
 
 
 
    Interest payments, net of amounts capitalized
$
 64 
$
 58 
    Income tax payments, net
 
 29 
 
 49 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
 
 
 
 
    Increase in capital lease obligations for investments in property, plant, and equipment
$
 ― 
$
 183 
    Accrued capital expenditures
 
 131 
 
 109 
    Dividends declared but not paid
 
 1 
 
 1 
See Notes to Condensed Consolidated Financial Statements.

 
 
 
 

SOUTHERN CALIFORNIA GAS COMPANY AND SUBSIDIARIES
 
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
Three months ended June 30,
Six months ended June 30,
 
2011 
2010 
2011 
2010 
 
(unaudited)
 
 
 
 
 
 
 
 
 
Operating revenues
$
 876 
$
 834 
$
 1,932 
$
 2,016 
Operating expenses
 
 
 
 
 
 
 
 
    Cost of natural gas
 
 335 
 
 318 
 
 866 
 
 992 
    Operation and maintenance
 
 327 
 
 293 
 
 615 
 
 555 
    Depreciation
 
 82 
 
 77 
 
 163 
 
 152 
    Franchise fees and other taxes
 
 29 
 
 28 
 
 66 
 
 65 
        Total operating expenses
 
 773 
 
 716 
 
 1,710 
 
 1,764 
Operating income
 
 103 
 
 118 
 
 222 
 
 252 
Other income, net
 
 3 
 
 2 
 
 6 
 
 6 
Interest expense
 
 (18)
 
 (16)
 
 (35)
 
 (33)
Income before income taxes
 
 88 
 
 104 
 
 193 
 
 225 
Income tax expense
 
 (28)
 
 (34)
 
 (65)
 
 (90)
Net income
 
 60 
 
 70 
 
 128 
 
 135 
Preferred dividend requirements
 
 (1)
 
 (1)
 
 (1)
 
 (1)
Earnings attributable to common shares
$
 59 
$
 69 
$
 127 
$
 134 
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 

 
 
 
 


SOUTHERN CALIFORNIA GAS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 
 
June 30,
December 31,
 
 
2011 
2010(1)
 
 
(unaudited)
 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
    Cash and cash equivalents
$
 16 
$
 417 
    Accounts receivable - trade
 
 363 
 
 534 
    Accounts receivable - other
 
 54 
 
 49 
    Due from unconsolidated affiliates
 
 287 
 
 63 
    Income taxes receivable
 
 20 
 
 28 
    Inventories
 
 35 
 
 105 
    Regulatory assets
 
 7 
 
 12 
    Other
 
 48 
 
 39 
        Total current assets
 
 830 
 
 1,247 
 
 
 
 
 
Other assets:
 
 
 
 
    Regulatory assets arising from pension and other postretirement
 
 
 
 
        benefit obligations
 
 590 
 
 586 
    Other regulatory assets
 
 126 
 
 123 
    Sundry
 
 16 
 
 8 
        Total other assets
 
 732 
 
 717 
 
 
 
 
 
Property, plant and equipment:
 
 
 
 
    Property, plant and equipment
 
 9,974 
 
 9,824 
    Less accumulated depreciation and amortization
 
 (3,796)
 
 (3,802)
        Property, plant and equipment, net
 
 6,178 
 
 6,022 
Total assets
$
 7,740 
$
 7,986 
(1)
Derived from audited financial statements.
See Notes to Condensed Consolidated Financial Statements.

 
 
 
 


SOUTHERN CALIFORNIA GAS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 
 
June 30,
December 31,
 
 
2011 
2010(1)
 
 
(unaudited)
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
    Accounts payable - trade
$
 223 
$
 327 
    Accounts payable - other
 
 58 
 
 79 
    Due to unconsolidated affiliate
 
 ― 
 
 11 
    Deferred income taxes
 
 17 
 
 17 
    Accrued compensation and benefits
 
 97 
 
 98 
    Regulatory balancing accounts, net
 
 154 
 
 180 
    Current portion of long-term debt
 
 8 
 
 262 
    Customer deposits
 
 69 
 
 73 
    Other
 
 165 
 
 163 
        Total current liabilities
 
 791 
 
 1,210 
Long-term debt
 
 1,317 
 
 1,320 
Deferred credits and other liabilities:
 
 
 
 
    Customer advances for construction
 
 112 
 
 133 
    Pension and other postretirement benefit obligations, net of plan assets
 
 620 
 
 613 
    Deferred income taxes
 
 506 
 
 418 
    Deferred investment tax credits
 
 24 
 
 25 
    Regulatory liabilities arising from removal obligations
 
 1,219 
 
 1,208 
    Asset retirement obligations
 
 808 
 
 788 
    Deferred taxes refundable in rates
 
 115 
 
 138 
    Deferred credits and other
 
 195 
 
 178 
        Total deferred credits and other liabilities
 
 3,599 
 
 3,501 
 
 
 
 
 
Commitments and contingencies (Note 10)
 
 
 
 
 
 
 
 
 
Shareholders' equity:
 
 
 
 
    Preferred stock
 
 22 
 
 22 
    Common stock (100 million shares authorized; 91 million shares outstanding;
 
 
 
 
        no par value)
 
 866 
 
 866 
    Retained earnings
 
 1,166 
 
 1,089 
    Accumulated other comprehensive income (loss)
 
 (21)
 
 (22)
        Total shareholders' equity
 
 2,033 
 
 1,955 
Total liabilities and shareholders' equity
$
 7,740 
$
 7,986 
(1)
Derived from audited financial statements.
See Notes to Condensed Consolidated Financial Statements.

 
 
 
 


SOUTHERN CALIFORNIA GAS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
 
Six months ended June 30,
 
2011 
2010 
 
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
    Net income
$
 128 
$
 135 
    Adjustments to reconcile net income to net cash provided by
 
 
 
 
        operating activities:
 
 
 
 
            Depreciation
 
 163 
 
 152 
            Deferred income taxes and investment tax credits
 
 62 
 
 13 
            Other
 
 (3)
 
 (2)
    Net change in other working capital components
 
 74 
 
 325 
    Changes in other assets
 
 16 
 
 4 
    Changes in other liabilities
 
 (4)
 
 (6)
        Net cash provided by operating activities
 
 436 
 
 621 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
    Expenditures for property, plant and equipment
 
 (325)
 
 (216)
    Increase in loans to affiliates, net
 
 (211)
 
 (252)
        Net cash used in investing activities
 
 (536)
 
 (468)
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
    Common dividends paid
 
 (50)
 
 (100)
    Payment of long-term debt
 
 (250)
 
 ― 
    Preferred dividends paid
 
 (1)