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SEMPRA ENERGY 10-Q 2012
Sempra Energy/SDG&E/SoCalGas 03/31/2012 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
March 31, 2012
   
 
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 April 30, 2012:
         
           
Sempra Energy
240,991,088 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
62
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
92
Item 4.
Controls and Procedures
93
     
PART II – OTHER INFORMATION
 
Item 1.
Legal Proceedings
94
Item 1A.
Risk Factors
94
Item 6.
Exhibits
94
     
Signatures
96
     

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 filing date of this report. We assume no obligation to update or revise any forward-looking statement as a result of new information, future events or other factors.
 
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,” “pursue,” “goals,” or similar expressions, or when we discuss our guidance, strategy, plans, goals, initiatives, objectives 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, U.S. Department of Energy, 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, including the availability of credit and the liquidity of our investments;
 
§  
inflation, interest and exchange rates;
 
§  
the impact of benchmark interest rates, generally U.S. Treasury bond and Moody’s A-rated utility bond yields, on our California Utilities’ cost of capital;
 
§  
the timing and success of business development efforts and construction, maintenance and capital projects, including risks inherent in the ability to obtain, and the timing of granting of, permits, licenses, certificates and other authorizations;
 
§  
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, including disruptions caused by failures in the North American transmission grid, pipeline explosions and equipment failures;
 
§  
weather conditions, natural disasters, catastrophic accidents, and conservation efforts;
 
§  
risks inherent in nuclear power generation and radioactive materials storage, including the catastrophic release of such materials;
 
§  
risks posed by decisions and actions of third parties who control the operations of investments in which we do not have a controlling interest;
 
§  
wars, terrorist attacks and cybersecurity threats;
 
§  
business, regulatory, environmental and legal decisions and requirements;
 
§  
expropriation of assets by foreign governments and title and other property disputes;
 
§  
the status of deregulation of retail natural gas and electricity delivery;
 
§  
the inability or determination not to enter into long-term supply and sales agreements or long-term firm capacity agreements;
 
§  
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 March 31,
     
 
 
2012 
2011(1)
     
 
 
(unaudited)
     
REVENUES
 
 
 
 
     
Utilities
$
 2,091 
$
 1,946 
     
Energy-related businesses
 
 292 
 
 488 
     
    Total revenues
 
 2,383 
 
 2,434 
     
EXPENSES AND OTHER INCOME
 
 
 
 
     
Utilities:
 
 
 
 
     
    Cost of natural gas
 
 (431)
 
 (642)
     
    Cost of electric fuel and purchased power
 
 (388)
 
 (171)
     
Energy-related businesses:
 
 
 
 
     
    Cost of natural gas, electric fuel and purchased power
 
 (129)
 
 (230)
     
    Other cost of sales
 
 (33)
 
 (23)
     
Operation and maintenance
 
 (671)
 
 (639)
     
Depreciation and amortization
 
 (257)
 
 (230)
     
Franchise fees and other taxes
 
 (96)
 
 (95)
     
Equity earnings, before income tax
 
 12 
 
 1 
     
Other income, net
 
 75 
 
 43 
     
Interest income
 
 5 
 
 3 
     
Interest expense
 
 (113)
 
 (108)
     
Income before income taxes and equity earnings
 
 
 
 
     
    of certain unconsolidated subsidiaries
 
 357 
 
 343 
     
Income tax expense
 
 (117)
 
 (114)
     
Equity earnings, net of income tax
 
 11 
 
 31 
     
Net income
 
 251 
 
 260 
     
Earnings attributable to noncontrolling interests
 
 (13)
 
 (4)
     
Preferred dividends of subsidiaries
 
 (2)
 
 (2)
     
Earnings
$
 236 
$
 254 
     
 
 
 
 
 
 
     
Basic earnings per common share
$
 0.98 
$
 1.06 
     
Weighted-average number of shares outstanding, basic (thousands)
 
 240,566 
 
 240,128 
     
 
 
 
 
 
 
     
Diluted earnings per common share
$
 0.97 
$
 1.05 
     
Weighted-average number of shares outstanding, diluted (thousands)
 
 243,761 
 
 241,903 
     
Dividends declared per share of common stock
$
 0.60 
$
 0.48 
     
(1)
As adjusted for the retrospective effect of a change in accounting principle as we discuss in Note 1.
     
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 


 
 
 
 


SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in millions)
 
 
Three months ended March 31,
 
 
2012
 
2011(1)
 
 
(unaudited)
 
 
 
Non-
 
 
 
Non-
 
 
 
Sempra
controlling
 
 
Sempra
controlling
 
 
 
Energy
Interests
Total
 
Energy
Interests
Total
Net income
$
 238 
$
 13 
$
 251 
 
$
 256 
$
 4 
$
 260 
Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
 
 
 
 
 
 
    Foreign currency translation adjustments
 
 67 
 
 4 
 
 71 
 
 
 (6)
 
 ― 
 
 (6)
    Net actuarial gain
 
 1 
 
 ― 
 
 1 
 
 
 2 
 
 ― 
 
 2 
    Financial instruments
 
 3 
 
 ― 
 
 3 
 
 
 2 
 
 1 
 
 3 
Total other comprehensive income (loss)
 
 71 
 
 4 
 
 75 
 
 
 (2)
 
 1 
 
 (1)
Total comprehensive income
 
 309 
 
 17 
 
 326 
 
 
 254 
 
 5 
 
 259 
Preferred dividends of subsidiaries
 
 (2)
 
 ― 
 
 (2)
 
 
 (2)
 
 ― 
 
 (2)
Total comprehensive income, after preferred
 
 
 
 
 
 
 
 
 
 
 
 
 
    dividends of subsidiaries
$
 307 
$
 17 
$
 324 
 
$
 252 
$
 5 
$
 257 
(1)
As adjusted for the retrospective effect of a change in accounting principle as we discuss in Note 1.
See Notes to Condensed Consolidated Financial Statements.

 
 
 
 


SEMPRA ENERGY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 
 
March 31,
December 31,
 
2012 
2011(1)(2)
 
 
(unaudited)
 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
    Cash and cash equivalents
$
 404 
$
 252 
    Restricted cash
 
 23 
 
 24 
    Trade accounts receivable, net
 
 1,062 
 
 1,198 
    Other accounts and notes receivable, net
 
 177 
 
 147 
    Inventories
 
 222 
 
 346 
    Regulatory balancing accounts — undercollected
 
 71 
 
 38 
    Regulatory assets
 
 105 
 
 89 
    Fixed-price contracts and other derivatives
 
 83 
 
 85 
    Settlement receivable related to wildfire litigation
 
 5 
 
 10 
    Other
 
 146 
 
 143 
        Total current assets
 
 2,298 
 
 2,332 
 
 
 
 
 
 
Investments and other assets:
 
 
 
 
    Restricted cash
 
 24 
 
 22 
    Regulatory assets arising from pension and other postretirement
 
 
 
 
        benefit obligations
 
 1,074 
 
 1,126 
    Regulatory assets arising from wildfire litigation costs
 
 603 
 
 594 
    Other regulatory assets
 
 1,070 
 
 1,060 
    Nuclear decommissioning trusts
 
 865 
 
 804 
    Investments
 
 1,722 
 
 1,671 
    Goodwill
 
 1,071 
 
 1,036 
    Other intangible assets
 
 443 
 
 448 
    Sundry
 
 799 
 
 691 
        Total investments and other assets
 
 7,671 
 
 7,452 
 
 
 
 
 
 
Property, plant and equipment:
 
 
 
 
    Property, plant and equipment
 
 31,995 
 
 31,192 
    Less accumulated depreciation and amortization
 
 (7,919)
 
 (7,727)
        Property, plant and equipment, net ($488 and $494 at March 31, 2012 and
            December 31, 2011, respectively, related to VIE)
 
 24,076 
 
 23,465 
Total assets
$
 34,045 
$
 33,249 
(1)
As adjusted for the retrospective effect of a change in accounting principle as we discuss in Note 1.
(2)
Derived from audited financial statements.
 
 
 
 
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 

 
 
 
 


SEMPRA ENERGY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 
 
March 31,
December 31,
 
2012 
2011(1)(2)
 
 
(unaudited)
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
    Short-term debt
$
 426 
$
 449 
    Accounts payable — trade
 
 901 
 
 983 
    Accounts payable — other
 
 112 
 
 124 
    Income taxes payable
 
 53 
 
 5 
    Deferred income taxes
 
 172 
 
 173 
    Dividends and interest payable
 
 297 
 
 219 
    Accrued compensation and benefits
 
 203 
 
 323 
    Regulatory balancing accounts — overcollected
 
 240 
 
 105 
    Current portion of long-term debt
 
 713 
 
 336 
    Fixed-price contracts and other derivatives
 
 92 
 
 92 
    Customer deposits
 
 148 
 
 142 
    Reserve for wildfire litigation
 
 441 
 
 586 
    Other
 
 682 
 
 615 
        Total current liabilities
 
 4,480 
 
 4,152 
Long-term debt ($342 and $345 at March 31, 2012 and December 31, 2011, respectively,
        related to VIE)
 
 10,180 
 
 10,078 
 
 
 
 
 
 
Deferred credits and other liabilities:
 
 
 
 
    Customer advances for construction
 
 143 
 
 142 
    Pension and other postretirement benefit obligations, net of plan assets
 
 1,373 
 
 1,423 
    Deferred income taxes
 
 1,601 
 
 1,520 
    Deferred investment tax credits
 
 48 
 
 49 
    Regulatory liabilities arising from removal obligations
 
 2,621 
 
 2,551 
    Asset retirement obligations
 
 1,927 
 
 1,905 
    Other regulatory liabilities
 
 80 
 
 87 
    Fixed-price contracts and other derivatives
 
 281 
 
 301 
    Deferred credits and other
 
 862 
 
 784 
        Total deferred credits and other liabilities
 
 8,936 
 
 8,762 
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; 241 million and 240 million shares
 
 
 
 
        outstanding at March 31, 2012 and December 31, 2011, respectively; no par value)
 
 2,117 
 
 2,104 
    Retained earnings
 
 8,254 
 
 8,162 
    Deferred compensation
 
 (1)
 
 (2)
    Accumulated other comprehensive income (loss)
 
 (418)
 
 (489)
        Total Sempra Energy shareholders’ equity
 
 9,952 
 
 9,775 
    Preferred stock of subsidiaries
 
 20 
 
 20 
    Other noncontrolling interests
 
 398 
 
 383 
        Total equity
 
 10,370 
 
 10,178 
Total liabilities and equity
$
 34,045 
$
 33,249 
(1)
As adjusted for the retrospective effect of a change in accounting principle as we discuss in Note 1.
(2)
Derived from audited financial statements.
 
 
 
 
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 

 
 
 
 


SEMPRA ENERGY
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(Dollars in millions)
 
 
 
Three months ended March 31,
 
 
 
2012 
2011(1)
 
 
 
(unaudited)
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
    Net income
$
 251 
$
 260 
 
    Adjustments to reconcile net income to net cash provided
 
 
 
 
 
        by operating activities:
 
 
 
 
 
            Depreciation and amortization
 
 257 
 
 230 
 
            Deferred income taxes and investment tax credits
 
 31 
 
 82 
 
            Equity earnings
 
 (23)
 
 (32)
 
            Fixed-price contracts and other derivatives
 
 (12)
 
 (9)
 
            Other
 
 14 
 
 (13)
 
    Net change in other working capital components
 
 168 
 
 297 
 
    Changes in other assets
 
 12 
 
 (5)
 
    Changes in other liabilities
 
 1 
 
 (5)
 
        Net cash provided by operating activities
 
 699 
 
 805 
 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
    Expenditures for property, plant and equipment
 
 (811)
 
 (607)
 
    Expenditures for investments
 
 (51)
 
 (4)
 
    Distributions from investments
 
 8 
 
 21 
 
    Purchases of nuclear decommissioning and other trust assets
 
 (134)
 
 (45)
 
    Proceeds from sales by nuclear decommissioning and other trusts
 
 135 
 
 46 
 
    Decrease in restricted cash
 
 39 
 
 160 
 
    Increase in restricted cash
 
 (40)
 
 (320)
 
    Other
 
 (5)
 
 (7)
 
        Net cash used in investing activities
 
 (859)
 
 (756)
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
    Common dividends paid
 
 (115)
 
 (94)
 
    Preferred dividends paid by subsidiaries
 
 (2)
 
 (2)
 
    Issuances of common stock
 
 13 
 
 15 
 
    Repurchases of common stock
 
 (16)
 
 (18)
 
    Issuances of debt (maturities greater than 90 days)
 
 1,008 
 
 803 
 
    Payments on debt (maturities greater than 90 days)
 
 (347)
 
 (260)
 
    Decrease in short-term debt, net
 
 (224)
 
 (192)
 
    Other
 
 (7)
 
 6 
 
        Net cash provided by financing activities
 
 310 
 
 258 
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
 
 2 
 
 ― 
 
 
 
 
 
 
 
 
Increase in cash and cash equivalents
 
 152 
 
 307 
 
Cash and cash equivalents, January 1
 
 252 
 
 912 
 
Cash and cash equivalents, March 31
$
 404 
$
 1,219 
 
(1)
As adjusted for the retrospective effect of a change in accounting principle as we discuss in Note 1.
 
 
See Notes to Condensed Consolidated Financial Statements.
 
 
 
 
     

 
 
 
 


SEMPRA ENERGY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
 
Three months ended March 31,
 
2012 
2011 
 
(unaudited)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 
 
 
 
    Interest payments, net of amounts capitalized
$
 62 
$
 63 
    Income tax payments, net of refunds
 
 38 
 
 37 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
 
 
 
 
    Accrued capital expenditures
$
 336 
$
 233 
    Dividends declared but not paid
 
 151 
 
 118 
See Notes to Condensed Consolidated Financial Statements.

 
 
 
 

SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions)
 
 
 
Three months ended March 31,
 
2012 
2011 
 
(unaudited)
Operating revenues
 
 
 
 
    Electric
$
 671 
$
 665 
    Natural gas
 
 163 
 
 175 
        Total operating revenues
 
 834 
 
 840 
Operating expenses
 
 
 
 
    Cost of electric fuel and purchased power
 
 163 
 
 171 
    Cost of natural gas
 
 67 
 
 83 
    Operation and maintenance
 
 268 
 
 273 
    Depreciation and amortization
 
 112 
 
 103 
    Franchise fees and other taxes
 
 46 
 
 47 
        Total operating expenses
 
 656 
 
 677 
Operating income
 
 178 
 
 163 
Other income, net
 
 30 
 
 16 
Interest expense
 
 (36)
 
 (36)
Income before income taxes
 
 172 
 
 143 
Income tax expense
 
 (60)
 
 (49)
Net income
 
 112 
 
 94 
Earnings attributable to noncontrolling interest
 
 (6)
 
 (4)
Earnings
 
 106 
 
 90 
Preferred dividend requirements
 
 (1)
 
 (1)
Earnings attributable to common shares
$
 105 
$
 89 
See Notes to Condensed Consolidated Financial Statements.
 
 

 
SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in millions)
 
Three months ended March 31,
 
2012
 
2011
 
(unaudited)
 
 
Non-
 
 
 
Non-
 
 
 
controlling
 
 
 
controlling
 
 
SDG&E
Interest
Total
 
SDG&E
Interest
Total
Net income
$
 106 
$
 6 
$
 112 
 
$
 90 
$
 4 
$
 94 
Other comprehensive income, net of tax:
 
 
 
 
 
 
 
 
 
 
 
 
 
    Financial instruments
 
 ― 
 
 ― 
 
 ― 
 
 
 ― 
 
 1 
 
 1 
Total other comprehensive income
 
 ― 
 
 ― 
 
 ― 
 
 
 ― 
 
 1 
 
 1 
Total comprehensive income
$
 106 
$
 6 
$
 112 
 
$
 90 
$
 5 
$
 95 
See Notes to Condensed Consolidated Financial Statements.

 
 
 
 


SAN DIEGO GAS & ELECTRIC COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 
 
March 31,
December 31,
 
 
2012 
2011(1)
 
 
(unaudited)
 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
    Cash and cash equivalents
$
 139 
$
 29 
    Restricted cash
 
 18 
 
 21 
    Accounts receivable – trade, net
 
 228 
 
 267 
    Accounts receivable – other, net
 
 23 
 
 23 
    Due from unconsolidated affiliates
 
 1 
 
 67 
    Income taxes receivable
 
 109 
 
 102 
    Inventories
 
 77 
 
 82 
    Regulatory balancing accounts, net
 
 71 
 
 38 
    Regulatory assets arising from fixed-price contracts and other derivatives
 
 81 
 
 67 
    Other regulatory assets
 
 11 
 
 11 
    Fixed-price contracts and other derivatives
 
 28 
 
 27 
    Settlement receivable related to wildfire litigation
 
 5 
 
 10 
    Other
 
 37 
 
 51 
        Total current assets
 
 828 
 
 795 
 
 
 
 
 
 
Other assets:
 
 
 
 
    Restricted cash
 
 24 
 
 22 
    Deferred taxes recoverable in rates
 
 585 
 
 570 
    Regulatory assets arising from fixed-price contracts and other derivatives
 
 183 
 
 191 
    Regulatory assets arising from pension and other postretirement
 
 
 
 
        benefit obligations
 
 314 
 
 309 
    Regulatory assets arising from wildfire litigation costs
 
 603 
 
 594 
    Other regulatory assets
 
 162 
 
 160 
    Nuclear decommissioning trusts
 
 865 
 
 804 
    Income taxes receivable
 
 104 
 
 ― 
    Sundry
 
 73 
 
 70 
        Total other assets
 
 2,913 
 
 2,720 
 
 
 
 
 
 
Property, plant and equipment:
 
 
 
 
    Property, plant and equipment
 
 13,352 
 
 13,003 
    Less accumulated depreciation and amortization
 
 (3,045)
 
 (2,963)
        Property, plant and equipment, net ($488 and $494 at March 31, 2012 and
            December 31, 2011, respectively, related to VIE)
 
 10,307 
 
 10,040 
Total assets
$
 14,048 
$
 13,555 
(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)
 
 
March 31,
December 31,
 
 
2012 
2011(1)
 
 
(unaudited)
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
    Accounts payable
$
 305 
$
 375 
    Due to unconsolidated affiliates
 
 36 
 
 14 
    Deferred income taxes
 
 59 
 
 62 
    Accrued compensation and benefits
 
 65 
 
 124 
    Current portion of long-term debt
 
 19 
 
 19 
    Fixed-price contracts and other derivatives
 
 59 
 
 55 
    Customer deposits
 
 67 
 
 62 
    Reserve for wildfire litigation
 
 441 
 
 586 
    Other
 
 202 
 
 139 
        Total current liabilities
 
 1,253 
 
 1,436 
Long-term debt ($342 and $345 at March 31, 2012 and December 31, 2011,
    respectively, related to VIE)
 
 4,303 
 
 4,058 
 
 
 
 
 
 
Deferred credits and other liabilities:
 
 
 
 
    Customer advances for construction
 
 19 
 
 20 
    Pension and other postretirement benefit obligations, net of plan assets
 
 347 
 
 342 
    Deferred income taxes
 
 1,337 
 
 1,167 
    Deferred investment tax credits
 
 25 
 
 26 
    Regulatory liabilities arising from removal obligations
 
 1,527 
 
 1,462 
    Asset retirement obligations
 
 704 
 
 693 
    Fixed-price contracts and other derivatives
 
 232 
 
 243 
    Deferred credits and other
 
 270 
 
 188 
        Total deferred credits and other liabilities
 
 4,461 
 
 4,141 
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 
 
 1,338 
    Retained earnings
 
 2,516 
 
 2,411 
    Accumulated other comprehensive income (loss)
 
 (10)
 
 (10)
        Total SDG&E shareholder's equity
 
 3,844 
 
 3,739 
    Noncontrolling interest
 
 108 
 
 102 
        Total equity
 
 3,952 
 
 3,841 
Total liabilities and equity
$
 14,048 
$
 13,555 
(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)
 
Three months ended
March 31,
 
2012 
2011
 
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
    Net income
$
 112 
$
 94 
    Adjustments to reconcile net income to net cash provided by
 
 
 
 
        operating activities:
 
 
 
 
            Depreciation and amortization
 
 112 
 
 103 
            Deferred income taxes and investment tax credits
 
 152 
 
 75 
            Fixed price contracts and other derivatives
 
 (3)
 
 (4)
            Other
 
 (27)
 
 (12)
    Net change in other working capital components
 
 (85)
 
 241 
    Changes in other assets
 
 8 
 
 7 
    Changes in other liabilities
 
 (3)
 
 (3)
        Net cash provided by operating activities
 
 266 
 
 501 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
    Expenditures for property, plant and equipment
 
 (398)
 
 (348)
    Purchases of nuclear decommissioning trust assets
 
 (133)
 
 (44)
    Proceeds from sales by nuclear decommissioning trusts
 
 131 
 
 42 
    Decrease in restricted cash
 
 37 
 
 109 
    Increase in restricted cash
 
 (36)
 
 (311)
        Net cash used in investing activities
 
 (399)
 
 (552)
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
    Capital contribution
 
 ― 
 
 200 
    Preferred dividends paid
 
 (1)
 
 (1)
    Issuance of long-term debt
 
 249 
 
 ― 
    Payments on long-term debt
 
 (3)
 
 (3)
    Other
 
 (2)
 
 ― 
        Net cash provided by financing activities
 
 243 
 
 196 
 
 
 
 
 
Increase in cash and cash equivalents
 
 110 
 
 145 
Cash and cash equivalents, January 1
 
 29 
 
 127 
Cash and cash equivalents, March 31
$
 139 
$
 272 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 
 
 
 
    Interest payments, net of amounts capitalized
$
 17 
$
 17 
    Income tax (refunds) payments, net
 
 (62)
 
 24 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES
 
 
 
 
    Accrued capital expenditures
$
 134 
$
 145 
    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 March 31,
 
2012 
2011 
 
(unaudited)
 
 
 
 
 
Operating revenues
$
 880 
$
 1,056 
Operating expenses
 
 
 
 
    Cost of natural gas
 
 349 
 
 531 
    Operation and maintenance
 
 289 
 
 288 
    Depreciation and amortization
 
 87 
 
 81 
    Franchise fees and other taxes
 
 36 
 
 37 
        Total operating expenses
 
 761 
 
 937 
Operating income
 
 119 
 
 119 
Other income, net
 
 4 
 
 3 
Interest expense
 
 (17)
 
 (17)
Income before income taxes
 
 106 
 
 105 
Income tax expense
 
 (40)
 
 (37)
Net income/Earnings attributable to common shares
$
 66 
$
 68 
See Notes to Condensed Consolidated Financial Statements.
 
 

 
SOUTHERN CALIFORNIA GAS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in millions)
 
Three months ended March 31,
 
2012
 
2011
 
(unaudited)
Net income
$
 66 
 
$
 68 
Total other comprehensive income, net of tax
 
 ― 
 
 
 ― 
Comprehensive income attributable to common and preferred shareholders
$
 66 
 
$
 68 
See Notes to Condensed Consolidated Financial Statements.

 
 
 
 


SOUTHERN CALIFORNIA GAS COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
 
 
March 31,
December 31,
 
 
2012 
2011(1)
 
 
(unaudited)
 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
    Cash and cash equivalents
$
 70 
$
 36 
    Accounts receivable – trade, net
 
 457 
 
 578 
    Accounts receivable – other, net
 
 70 
 
 63 
    Due from unconsolidated affiliates
 
 229 
 
 40 
    Income taxes receivable
 
 ― 
 
 17 
    Inventories
 
 42 
 
 151 
    Regulatory assets
 
 7 
 
 9 
    Temporary LIFO liquidation
 
 32 
 
 ― 
    Other
 
 26 
 
 28 
        Total current assets
 
 933 
 
 922 
 
 
 
 
 
Other assets:
 
 
 
 
    Regulatory assets arising from pension and other postretirement
 
 
 
 
        benefit obligations
 
 751 
 
 808 
    Other regulatory assets
 
 138 
 
 137 
    Sundry
 
 8 
 
 8 
        Total other assets
 
 897 
 
 953 
 
 
 
 
 
Property, plant and equipment:
 
 
 
 
    Property, plant and equipment
 
 10,679 
 
 10,565 
    Less accumulated depreciation and amortization
 
 (4,017)
 
 (3,965)
        Property, plant and equipment, net
 
 6,662 
 
 6,600 
Total assets
$
 8,492 
$
 8,475 
(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)
 
 
March 31,
December 31,
 
 
2012 
2011(1)
 
 
(unaudited)
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
    Accounts payable – trade
$
 195 
$
 315 
    Accounts payable – other
 
 73 
 
 78 
    Due to unconsolidated affiliate
 
 ― 
 
 2 
    Income taxes payable
 
 5 
 
 ― 
    Deferred income taxes
 
 44 
 
 44 
    Accrued compensation and benefits
 
 82 
 
 99 
    Regulatory balancing accounts, net
 
 240 
 
 105 
    Current portion of long-term debt
 
 256 
 
 257 
    Customer deposits
 
 76 
 
 75 
    Other
 
 197 
 
 172 
        Total current liabilities
 
 1,168 
 
 1,147 
Long-term debt
 
 1,063 
 
 1,064 
Deferred credits and other liabilities:
 
 
 
 
    Customer advances for construction
 
 111 
 
 110 
    Pension and other postretirement benefit obligations, net of plan assets
 
 778 
 
 833 
    Deferred income taxes
 
 599 
 
 576 
    Deferred investment tax credits
 
 22 
 
 23 
    Regulatory liabilities arising from removal obligations
 
 1,080 
 
 1,075 
    Asset retirement obligations
 
 1,173 
 
 1,161 
    Deferred taxes refundable in rates
 
 80 
 
 87 
    Deferred credits and other
 
 209 
 
 206 
        Total deferred credits and other liabilities
 
 4,052 
 
 4,071 
 
 
 
 
 
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
 
 1,342 
 
 1,326 
    Accumulated other comprehensive income (loss)
 
 (21)
 
 (21)
        Total shareholders' equity
 
 2,209 
 
 2,193 
Total liabilities and shareholders' equity
$
 8,492 
$
 8,475 
(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)
 
Three months ended March 31,
 
2012 
2011 
 
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
    Net income
$
 66 
$
 68 
    Adjustments to reconcile net income to net cash provided by
 
 
 
 
        operating activities:
 
 
 
 
            Depreciation and amortization
 
 87 
 
 81 
            Deferred income taxes and investment tax credits
 
 14 
 
 48 
            Other
 
 (1)
 
 (2)
    Net change in other working capital components
 
 280 
 
 168 
    Changes in other assets
 
 3 
 
 12 
    Changes in other liabilities
 
 ― 
 
 (4)
        Net cash provided by operating activities
 
 449 
 
 371 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
    Expenditures for property, plant and equipment