<PAGE>
                                   FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C.  20549

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
               THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]

                 For the fiscal year ended December 31, 1995
                         Commission file number 1-1402

                        SOUTHERN CALIFORNIA GAS COMPANY
        ------------------------------------------------------------
            (Exact name of Registrant as specified in its charter)

          California                                95-1240705
 ----------------------------        ---------------------------------------
   (State of incorporation)             (IRS Employer Identification No.)

555 West Fifth Street, Los Angeles, California                  90013-1011 
- ----------------------------------------------               ----------------
   (Address of principal executive offices)                     (Zip Code)

                                (213) 244-1200
          ----------------------------------------------------------
             (Registrant's telephone number, including area code)

          Securities registered pursuant to Section 12(b) of the Act:



                                                 NAME OF EACH EXCHANGE
      TITLE OF EACH CLASS                        ON WHICH REGISTERED
      -------------------                        ---------------------
Preferred Stock                                  Pacific Stock Exchange
        6% Cumulative
        Preferred - Series A

        7-3/4% Series Preferred Stock

FIRST MORTGAGE BONDS                             New York Stock Exchange
- --------------------

        Series Y, due 2021 (8-3/4%)
        Series Z, due 2002 (6-7/8%)
        Series AA, due 1997 (6-1/2%)
        Series BB, due 2023 (7-3/8%)
        Series CC, due 1998 (5-1/4%)
        Series DD, due 2023 (7-1/2%)
        Series EE, due 2025 (6-7/8%)
        Series FF, due 2003 (5-3/4%)

Securities registered pursuant to Section 12(g) of the Act:  None


<PAGE>

Indicate by check mark whether the Registrant (1) has 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 and (2) has been subject to such filing 
requirements for the past 90 days.

                     Yes   X               No 
                         -----                -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein, and will not be contained, to 
the best of Registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K.  [X]

The aggregate market value of Registrant's voting stock (Preferred Stock) 
held by non-affiliates at March 15, 1996, was approximately $195 million.  
This amount excludes the market value of 49,504 shares of Preferred Stock 
held by Registrant's parent, Pacific Enterprises.  All of the Registrant's 
Common Stock is owned by Pacific Enterprises.


                     DOCUMENTS INCORPORATED BY REFERENCE


Certain information in this Annual Report is incorporated by reference to 
information contained or to be contained in other documents filed or to be 
filed by Registrant with the Securities and Exchange Commission.  The 
following table identifies the information so incorporated in each Part of 
this Annual Report on Form 10-K and the document in which it is or will be 
contained.

                                       Information Incorporated
                                       by Reference and Document
Annual Report                          in Which Information is or
On Form 10-K                           will be Contained
- ------------                           --------------------------


Part III                  -            Information contained under the captions
                                       "Election of  Directors," "Share 
                                       Ownership of Directors and "Executive
                                       Officers" and "Executive Compensation" 
                                       in Registrant's Information Statement for
                                       its Annual Meeting of Shareholders 
                                       scheduled to be held on May 2, 1996.





                                      -2-



<PAGE>

                               TABLE OF CONTENTS
                               -----------------

                                    PART I

<TABLE>
<S>      <C>                                                               <C>
Item 1.  Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5

            Operating Statistics . . . . . . . . . . . . . . . . . . . . . .  5

            Service Area . . . . . . . . . . . . . . . . . . . . . . . . . .  7

            Utility Services . . . . . . . . . . . . . . . . . . . . . . . .  8

            Demand for Gas . . . . . . . . . . . . . . . . . . . . . . . . .  8

            Competition. . . . . . . . . . . . . . . . . . . . . . . . . . .  9

            Supplies of Gas. . . . . . . . . . . . . . . . . . . . . . . . . 10

            Rates and Regulation . . . . . . . . . . . . . . . . . . . . . . 12

            Environmental Matters. . . . . . . . . . . . . . . . . . . . . . 13

            Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

            Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Item 2.  Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Item 3.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 15

Item 4.  Submission of Matters to a Vote of Security Holders . . . . . . . . 15

                                   PART II

Item 5.  Market for Registrant's Common Equity and Related 
         Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . 16

Item 6.  Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . 16

Item 7.  Management's Discussion and Analysis of Financial 
         Condition and Results of Operations . . . . . . . . . . . . . . . . 17

Item 8.  Financial Statements and Supplementary Data . . . . . . . . . . . . 25

Item 9.  Changes in and Disagreements with Accountants on 
         Accounting and Financial Disclosure . . . . . . . . . . . . . . . . 45

                                   PART III


Item 10. Directors and Executive Officers of the Registrant. . . . . . . . . 45

Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . 46

Item 12. Security Ownership of Certain Beneficial Owners 
         and Management. . . . . . . . . . . . . . . . . . . . . . . . . . . 46

</TABLE>


                                      -3-


<PAGE>


<TABLE>
<S>      <C>                                                               <C>
Item 13. Certain Relationships and Related Transactions. . . . . . . . . . . 46

                                   PART IV


Item 14. Exhibits, Financial Statement Schedules, and Reports 
         on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

</TABLE>
























































                                      -4-


<PAGE>

                                    PART I


                               ITEM 1. BUSINESS
                               ----------------

      Southern California Gas Company ("The Gas Company" or the "Company") is 
a public utility owning and operating a natural gas distribution, 
transmission and storage system that supplies natural gas in 535 cities and 
communities throughout a 23,000-square mile service territory comprising most 
of southern California and part of central California.  The Gas Company is 
the principal subsidiary of Pacific Enterprises (the "Parent").

      The Gas Company is the nation's largest natural gas distribution 
utility.  It serves approximately 17 million residential, commercial, 
industrial, utility electric generation and wholesale customers through 
approximately 4.7 million meters in its service territory. The Company's 
markets are separated into core and noncore customers.  Core customers 
consist of approximately 4.7 million customers (4.5 million residential and 
200,000 small commercial and industrial customers).  The noncore market 
consists of approximately 1,600 customers which include utility electric 
generation, wholesale and large commercial and industrial customers.  Most 
noncore customers procure their own gas rather than purchase gas through the 
Company.

      The Company is subject to regulation by the California Public Utilities 
Commission ("CPUC") which, among other things, establishes the rates the 
Company may charge for gas service, including an authorized rate of return on 
investment.  Under current ratemaking policies, the Company's future earnings 
and cash flow will be determined primarily by the allowed rate of return on 
common equity, changes to authorized rate base, noncore market pricing and 
the variance in gas volumes delivered to noncore customers versus 
CPUC-adopted forecast deliveries and the ability of management to control 
expenses and investment in line with the amounts authorized by the CPUC to be 
collected in rates.  The impact of any future regulatory restructuring 
(including the performance based regulation ("PBR") proposal (See "Rates and 
Regulation")), increased competitiveness in the industry (including the 
continuing threat of customers bypassing the Company's system and obtaining 
service directly from interstate pipelines), and electric industry 
restructuring may also affect the Company's future performance.

      For 1996, the CPUC has authorized the Company to earn a rate of return 
on rate base of 9.42 percent and 11.6 percent rate of return on common equity 
compared to 9.67 percent and 12 percent, respectively, in 1995.  Rate base 
declined 3.4 percent in 1995.  In 1996, rate base is expected to decline 
slightly from the 1995 level.  The Company has achieved or exceeded its 
authorized rate of return on rate base for the last thirteen consecutive 
years.

      The Gas Company was incorporated in California in 1910.  Its principal 
executive offices are located at 555 West Fifth Street, Los Angeles, 
California 90013 and its telephone number is (213) 244-1200.

                              OPERATING STATISTICS
                              --------------------

      The following table sets forth certain operating statistics of the 
Company from 1991 through 1995.



                                      -5-



<PAGE>


<TABLE>
<CAPTION>

                                            OPERATING STATISTICS

                                                                    YEAR ENDED DECEMBER 31
                                               ----------------------------------------------------------------
                                                   1995           1994          1993        1992        1991
                                               -------------  -------------  ----------  ----------  ----------
<S>                                            <C>            <C>            <C>         <C>         <C>
Gas Sales, Transportation & Exchange Revenues
 (thousands of dollars):
  Residential                                  $ 1,553,491    $ 1,712,899    $1,652,562  $1,483,654  $1,673,837
  Commercial/Industrial                            751,409        798,180       853,579     836,672     977,065
  Utility Electric Generation                      104,486        118,353       147,208     194,639     148,573
  Wholesale                                         62,256         98,354       116,737     128,881     144,779
  Exchange                                             777            690         3,745       5,863       7,482
                                               -------------  -------------  ----------  ----------  ----------
  Total in rates                                 2,472,419(1)   2,728,476(1)  2,773,831   2,649,709   2,951,736
  Regulatory balancing accounts and other         (193,111)      (141,952)       37,243     190,216     (21,430)
                                               -------------  -------------  ----------  ----------  ----------
    Operating Revenue                          $ 2,279,308    $ 2,586,524    $2,811,074  $2,839,925  $2,930,306
                                               -------------  -------------  ----------  ----------  ----------
                                               -------------  -------------  ----------  ----------  ----------
Volumes (millions of cubic feet):
  Residential                                      239,417        256,400       247,507     243,920     249,522
  Commercial/Industrial                            351,649        347,419       339,706     363,124     460,368
  Utility Electric Generation                      204,582        260,290       212,720     220,642     170,043
  Wholesale                                        128,730        146,279       147,978     149,232     141,931
  Exchange                                          12,735         10,002        16,969      23,888      25,604
                                               -------------  -------------  ----------  ----------  ----------
    Total                                          937,113      1,020,390       964,880   1,000,806   1,047,468
                                               -------------  -------------  ----------  ----------  ----------
                                               -------------  -------------  ----------  ----------  ----------
  Core                                             324,758        341,469       338,795     334,630     351,432
  Noncore                                          612,355        678,921       626,085     666,176     696,036
                                               -------------  -------------  ----------  ----------  ----------
    Total                                          937,113      1,020,390       964,880   1,000,806   1,047,468
                                               -------------  -------------  ----------  ----------  ----------
                                               -------------  -------------  ----------  ----------  ----------
  Sales                                            337,952        362,624       352,052     355,177     411,414
  Transportation                                   586,426        647,764       595,859     621,741     610,450
  Exchange                                          12,735         10,002        16,969      23,888      25,604
                                               -----------    -----------    ----------  ----------  ----------
    Total                                          937,113      1,020,390       964,880   1,000,806   1,047,468
                                               -----------    -----------    ----------  ----------  ----------
                                               -----------    -----------    ----------  ----------  ----------
Revenues (per thousand cubic feet):
  Residential                                  $      6.49    $      6.68    $     6.68  $     6.08  $     6.71
  Commercial/Industrial                        $      2.14    $      2.30    $     2.51  $     2.30  $     2.12
  Utility Electric Generation                  $      0.51    $      0.45    $     0.69  $     0.88  $     0.87
  Wholesale                                    $      0.48    $      0.67    $     0.79  $     0.86  $     1.02
  Exchange                                     $      0.06    $      0.07    $     0.22  $     0.25  $     0.29
Customers
  Active Meters (at end of period):
  Residential                                    4,526,150      4,483,324     4,459,250   4,445,500   4,429,896
  Commercial                                       184,470        187,518       187,602     189,364     193,051
  Industrial                                        22,976         23,505        23,924      24,419      25,642
  Utility Electric Generation                            8              8             8           8           8
  Wholesale                                              3              3             3           2           2
                                               -----------    -----------    ----------  ----------  ----------
    Total                                        4,733,607      4,694,358     4,670,787   4,659,293   4,648,599
                                               -----------    -----------    ----------  ----------  ----------
                                               -----------    -----------    ----------  ----------  ----------
Residential Meter Usage (annual average):
  Revenues (dollars)                           $       345    $       383    $      371  $      334  $      380
  Volumes (thousands of cubic feet)                   53.2           57.4          55.6        55.0        56.6
System Usage (millions of cubic feet):
  Average Daily Sendout                              2,579          2,795         2,611       2,717       2,881
  Peak Day Sendout                                   4,120          4,350         4,578       4,547       4,356
  Sendout Capability (at end of period)              8,059          7,570         7,351       7,419       7,073
Degree Days (2):
  Number                                             1,215(3)       1,459         1,203       1,258       1,409
  Average (20 Year)                                  1,380          1,418         1,430       1,458       1,474
  Percent of Average                                  88.0%         102.9%         84.1%       86.3%       95.6%
 
Population of Service Area (estimated at year
 end)                                           17,260,000     17,070,000    15,600,000  15,600,000  15,600,000
</TABLE>

 
(1)  Beginning  January 1, 1994,  rates included the  ratepayer's portion of the
     Comprehensive Settlement (the amount  included in rates  for 1995 and  1994
     was $84 million and $119 million, respectively).
 
(2)  The  number of  degree days  for any period  of time  indicates whether the
     temperature is relatively hot  or cold. A degree  day is recorded for  each
     degree  the  average  temperature  for  any  day  falls  below  65  degrees
     Fahrenheit.

(3)  Estimated calendar degree days.


                                      -6-



<PAGE>

                                  SERVICE AREA
                                  ------------

      The Gas Company distributes natural gas throughout a 23,000-square mile 
service territory with a population of approximately 17 million people.  As 
indicated by the following map, its service territory includes most of 
southern California and part of central California.






          [MAP OF SOUTHERN CALIFORNIA GAS COMPANY SERVICE TERRITORY]



























Natural gas service is also provided on a wholesale basis to the distribution 
systems of the City of Long Beach, San Diego Gas & Electric Company and 
Southwest Gas Corporation.




                                      -7-




<PAGE>

                               UTILITY SERVICES
                               ----------------

      The Gas Company's customers are separated, for regulatory purposes, 
into core and noncore customers.  Core customers are primarily residential 
and small commercial and industrial customers, without alternative fuel 
capability.  Noncore customers primarily include utility electric generation 
("UEG"), wholesale and large commercial and industrial customers.  Noncore 
customers are especially sensitive to the price relationship between natural 
gas and alternate fuels, and many are capable of readily switching from one  
fuel to another, subject to air quality regulations.

      The Gas Company offers two basic utility services, sale of gas and 
transportation of gas.  There are two business units at The Gas Company, one 
focusing on core distribution customers and the other on large volume gas 
transportation customers.  Residential customers and most other core 
customers purchase gas directly from The Gas Company.  Noncore customers and 
large core customers have the option of purchasing gas either from The Gas 
Company or from other sources (such as brokers or producers) for delivery 
through the Company's transmission and distribution system.  Smaller 
customers are permitted to aggregate their gas requirements and also to 
purchase gas directly from brokers or producers, up to a limit of 10 percent 
of the Company's core market.  The Gas Company generally earns the same 
margin whether the Company buys the gas and sells it to the customer or 
transports gas already owned by the customer.  (See "Item 7. Management's 
Discussion and Analysis of Financial Condition and Results of 
Operations-Operating Results.")

      The Gas Company continues to be obligated to purchase reliable supplies 
of natural gas to serve the requirements of its core customers. However, the 
only gas supplies that the Company may offer for sale to noncore customers 
are the same supplies that it purchases to serve its core customers.

      The Gas Company also provides a gas storage service for noncore 
customers on a bid basis.  The storage service program provides opportunities 
for customers to store gas on an "as available" basis during the summer to 
reduce winter purchases when gas costs are generally higher, or to reduce 
their level of winter curtailment in the event temperatures are unusually 
cold.  As of December 31, 1995, The Gas Company stored approximately 42 
billion cubic feet of customer-owned gas.

                               DEMAND FOR GAS
                               --------------

      Natural gas is a principal energy source in the Company's service area 
for residential, commercial and industrial uses as well as UEG requirements.  
Gas competes with electricity for residential and commercial cooking, water 
heating, space heating uses and clothes drying, and with other fuels for 
large industrial, commercial and UEG uses.  Demand for natural gas in 
southern California is expected to continue to increase but at a slower rate 
due primarily to a slowdown in housing starts, new energy efficient building 
construction and appliance standards and general recessionary business 
conditions.

      During 1995, approximately 97 percent of residential energy customers 
in the Company's service territory used natural gas for water heating and 94 
percent for space heating.  Approximately 78 percent of those customers used 
natural gas for cooking and 72 percent for clothes drying.

      Demand for natural gas by noncore customers such as large volume 
commercial, industrial and UEG customers is very sensitive to the price of 
alternative competitive fuels.  These customers number only approximately 
1,600; however,


                                      -8-


<PAGE>

during 1995, they accounted for approximately 16 percent of total gas 
revenues, 65 percent of total gas volumes delivered and 11 percent of the 
authorized gas margin.  Changes in the cost of gas or alternative fuels, 
primarily fuel oil, can result in significant shifts in this market, subject 
to air quality regulations.  Demand for gas for UEG use is also affected by 
the price and availability of electric power generated in other areas and 
purchased by the Company's UEG customers.  (See "Competition" below.)

                                  COMPETITION
                                  ----------- 
                                 
      Since interstate pipelines began operations in The Gas Company's 
service territories, the Company's throughput to customers in the Kern County 
area who use natural gas to produce steam for enhanced oil recovery projects 
has decreased significantly because of the bypass of the Company's system.  
The decrease in revenues from enhanced oil recovery customers is subject to 
full balancing account treatment, except for a five percent incentive to the 
Company, and therefore, does not have a material impact on earnings. Bypass 
of other Company markets also may occur and the Company is fully at risk for 
lost noncore volumes due to bypass.  The Company is continuing to reduce its 
costs to maintain low cost competitiveness to retain transportation 
customers. Also, significant additional bypass would require construction of 
additional facilities by competing pipelines.

      To respond to bypass, the Company has received authorization from the 
CPUC for expedited review of long-term gas transportation contracts with some 
noncore customers at lower than tariff rates.  The CPUC has also approved 
changes in the methodology for allocating the Company's costs that eliminates 
subsidization of core customer rates by noncore customers.  This allocation 
flexibility, together with negotiating authority, has enabled the Company to 
better  compete with new interstate pipelines for noncore customers.  In 
addition, under a capacity brokering program, for a fee, the Company provides 
to noncore customers, or others, a portion of its control of interstate 
pipeline capacity to allow more direct access to producers.  Also, the 
Comprehensive Settlement (See "Item 7. Management's Discussion and Analysis 
of Financial Condition and Result of Operations - Company Operations - 
Ratemaking Procedures.") improves the Company's competitiveness by reducing 
the cost of transportation service to noncore customers.

      The Company's operations and those of its customers are affected by a 
growing number of environmental laws and regulations.  These laws and 
regulations affect current operations as well as future expansion. 
Historically, environmental laws have favorably impacted the use of natural 
gas in the Company's service territory, particularly by UEG customers and 
large industrial customers. However, increasingly complex administrative and 
reporting requirements of environmental agencies applicable to commercial and 
industrial customers utilizing gas are not generally applicable to those 
using electricity. 

      On December 20, 1995, the CPUC issued a final decision to restructure 
California electric utility regulation.  Implementation of portions of the 
plan is expected to need state legislative or federal administrative 
approval.  The CPUC's proposal has no immediate effect on the Company's 
operations.  However, The Gas Company is continuing to evaluate the decision 
because future volumes of natural gas it transports for electric utilities 
may be adversely affected by increased use of electricity generated by 
out-of-state producers.  UEG customers currently account for 22 percent of 
the Company's annual throughput.  (See "Item 7.  Management's Discussion and 
Analysis of Financial Condition and Results of Operation - Factors 
Influencing Future Financial Performance.")  The restructuring may also 
result in a reduction of electric rates to core customers, but it is unlikely 
to overcome the entire cost advantage of natural gas for existing residential 
uses.


                                      -9-


<PAGE>

                                SUPPLIES OF GAS
                                --------------- 

      In 1995, The Gas Company delivered approximately 937 billion cubic feet 
of natural gas through its system.  Approximately 64 percent of these 
deliveries were customer-owned gas for which The Gas Company provided 
transportation services, compared to 65 percent in 1994.  The balance of gas 
deliveries was gas purchased by The Gas Company and resold to customers.

      Most of the natural gas delivered by The Gas Company is produced 
outside of California.  These supplies are delivered to the Company's
intrastate transmission system by interstate pipeline companies (primarily 
El Paso Natural Gas Company and Transwestern Natural Gas Company) that provide
transportation services for supplies purchased from other sources by The Gas 
Company or its transportation customers.  

      The Gas Company currently has paramount rights to daily deliveries of 
up to 1.9 billion cubic feet of natural gas over the interstate pipeline 
systems of El Paso Natural Gas Company (up to 1,150 million cubic feet) and 
Transwestern Pipeline Company (up to 750 million cubic feet).  The rates that 
interstate pipeline companies may charge for gas and transportation services 
and other terms of service are regulated by the Federal Energy Regulatory 
Commission ("FERC").

      Existing interstate pipeline capacity into California exceeds current 
demand by over 1 billion cubic feet per day.  Up to 2 billion cubic feet per 
day of capacity on the El Paso and Transwestern interstate pipeline systems, 
representing over $175 million and $55 million, respectively, of reservation 
charges annually, may be relinquished within the next few years.  Some of 
this capacity may not be resubscribed.  Current FERC regulation could permit 
costs of unsubscribed capacity to be allocated to remaining firm service 
customers, including The Gas Company.  Under existing regulation in 
California, the Company would have the opportunity to include its portion of 
any such reallocated costs in its rates.

      The FERC has approved a settlement with Transwestern which calls for 
firm customers, including The Gas Company, to subsidize unsubscribed pipeline 
costs for a five-year period with Transwestern assuming full responsibility 
after that time.  On March 15, 1996, El Paso filed a proposed settlement 
agreement with the FERC that is similar to the Transwestern settlement.

                                     -10-



<PAGE>

      The following table sets forth the sources of gas deliveries by The Gas 
Company from 1991 through 1995.



                                 SOURCES OF GAS


<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31
                                                      ---------------------------------------------------------
                                                        1995        1994        1993        1992        1991
                                                      ---------  ----------  ----------  ----------  ----------
<S>                                                   <C>        <C>         <C>         <C>         <C>
Gas Purchases (Millions of Cubic Feet):
 Market Gas:
  30-Day                                                133,298      98,071      84,696      20,695     139,649
  Other                                                  72,792     148,371     159,197     198,049     168,486
                                                      ---------  ----------  ----------  ----------  ----------
    Total Market Gas                                    206,090     246,442     243,893     218,744     308,135
 Affiliates                                              98,460     101,276      96,559      99,226      98,566
 California Producers & Federal Offshore                 29,181      36,158      28,107      42,262      39,613
                                                      ---------  ----------  ----------  ----------  ----------
    Total Gas Purchases                                 333,731     383,876     368,559     360,232     446,314

Customer-Owned Gas and Exchange Receipts                619,721     658,293     622,307     641,080     629,038

Storage Withdrawal (Injection) - Net                    (12,278)     (9,299)     (9,498)     14,379      (8,451)

Company Use and Unaccounted For                          (4,061)    (12,480)    (16,488)    (14,885)    (19,433)
                                                      ---------  ----------  ----------  ----------  ----------

    Net Gas Deliveries                                  937,113   1,020,390     964,880   1,000,806   1,047,468
                                                      ---------  ----------  ----------  ----------  ----------
                                                      ---------  ----------  ----------  ----------  ----------
Gas Purchases: (Thousands of dollars)
  Commodity Costs                                     $ 477,595  $  643,865  $  815,145  $  805,550  $1,071,445

  Fixed Charges*                                        264,269     368,516     397,714     397,579     358,294
                                                      ---------  ----------  ----------  ----------  ----------
    Total Gas Purchases                               $ 741,864  $1,012,381  $1,212,859  $1,203,129  $1,429,739
                                                      ---------  ----------  ----------  ----------  ----------
                                                      ---------  ----------  ----------  ----------  ----------
Average Cost of Gas Purchased
 (Dollars per Thousand Cubic Feet)**                  $    1.42  $     1.68  $     2.21  $     2.24  $     2.40
                                                      ---------  ----------  ----------  ----------  ----------
                                                      ---------  ----------  ----------  ----------  ----------
</TABLE>

 
 * Fixed  charges  primarily  include  pipeline  demand  charges,  take  or  pay
   settlement  costs  and  other  direct  billed  amounts  allocated  over   the
   quantities delivered by the interstate pipelines serving the Company.
 
** The average commodity cost of gas purchased excludes fixed charges.



                                     -11-


<PAGE>


    Market sensitive gas supplies (supplies purchased on the spot market as 
well as under longer-term contracts ranging from one month to ten years based 
on spot prices) accounted for approximately 62 percent of total gas volumes 
purchased by the Company during 1995, as compared with 64 percent and 66 
percent, respectively, during 1994 and 1993.  These supplies were generally 
purchased at prices significantly below those for other long-term sources of 
supply.

    The Gas Company estimates that sufficient natural gas supplies will be 
available to meet the requirements of its customers into the next century.

    In 1994, the CPUC approved a "Gas Cost Incentive Mechanism" ("GCIM") for 
evaluating the Company's gas purchases.  The new GCIM three-year pilot 
program that began in April 1994 substantially replaces the prior process of 
CPUC reasonableness reviews of gas purchases.  The GCIM compares the 
Company's cost of gas with the average market price of 30-day firm spot 
supplies delivered to The Gas Company's service area and permits full 
recovery of all costs within a tolerance band above that average.  Cost of 
gas purchased above the tolerance band or savings from gas purchased below 
the average market price are shared equally between customers and 
shareholders.  (See "Item 7.  Management's Discussion and Analysis of 
Financial Condition and Results of Operations -Ratemaking Procedures.")

                             RATES AND REGULATION
                             --------------------

    The Gas Company is regulated by the CPUC.  The CPUC consists of five 
commissioners appointed by the Governor of California for staggered six-year 
terms.  It is the responsibility of the CPUC to determine that utilities 
operate within the best interests of the ratepayer with an opportunity to 
earn a reasonable return on investment.  The regulatory structure is complex 
and has a very substantial impact on the profitability of the Company.

    Under current ratemaking procedures, the return that the Company is 
authorized to earn is the product of the authorized rate of return on rate 
base and the amount of rate base.  Rate base consists primarily of net 
investment in utility plant.  Thus, the Company's earnings are affected by 
changes in the authorized rate of return on rate base and the growth in rate 
base and by the Company's ability to control expenses and investment in rate 
base within the amounts authorized by the CPUC in setting rates.  In 
addition, the Company's ability to achieve its authorized rate of return is 
affected by other regulatory and operating factors.  (See "Item 7. 

Management's Discussion and Analysis of Financial Condition and Results of 
Operations - Ratemaking Procedures.")

    The Gas Company's operating and fixed costs, including return on rate 
base, are allocated between core and noncore customers under a methodology 
that is based upon the costs incurred in serving these customer classes.  For 
1996, approximately 89 percent of the CPUC-authorized gas margin has been 
allocated to core customers and 11 percent to noncore customers, including 
wholesale customers.  Under the current regulatory framework, costs may be 
reallocated between the core and the noncore customer classes once every 
other year in a biennial cost allocation proceeding ("BCAP").

    The Company has filed a PBR application with the CPUC to replace the 
general rate case and certain other traditional regulatory proceedings. PBR, 
if approved, would allow the Company to be more responsive to consumer 
interests and compete more effectively in contestable markets.  Key elements 
of this proposal include a permanent reduction in base rates of $42 million, 
an indexing measure that would limit future base rate increases to the 
inflation rate less a 


                                     -12-



<PAGE>


productivity factor and rate refunds to customers if service quality were to 
deteriorate.  This new approach would maintain cost based rates, but would 
link financial performance with changes in productivity.  Although PBR could 
result in increased earnings volatility, the Company would have the 
opportunity to improve financial performance to the extent it was able to 
reduce expenses, increase energy deliveries and generate profits from new 
products and services.

    Under the PBR proposal, the Company would be at risk for certain changes 
in interest rates and cost of capital, changes in core volumes not caused by 
weather, and achievement of productivity improvements.  The CPUC's process 
for approval of PBR has been delayed pending determination of additional 
information various parties desire to establish the starting base cost of 
service.  An agreement with several interested parties has been reached under 
which the Company will provide a substantial portion of the supporting 
documentation that would be required for a general rate case proceeding.  This
additional step will delay implementation beyond the proposed January 1, 1997 
starting date.

                              ENVIRONMENTAL MATTERS
                              ---------------------

    The Gas Company has identified and reported to California environmental 
authorities 42 former gas manufacturing sites for which it (together with 
other utilities as to 21 of the sites) may have remedial obligations under 
environmental laws.  As of December 31, 1995, nine of the sites have been 
remediated, of which five have received certification from the California 
Environmental Protection Agency.  Preliminary investigations, at a minimum, 
have been completed on 39 of the sites, including those sites at which the 
remediations described above have been completed.  In addition, the Company 
is one of a large number of major corporations that have been identified as  
a potentially responsible party for environmental remediation of three 
industrial waste disposal sites and two landfill sites.  These 47 sites are 
in various stages of investigation or remediation.  It is anticipated that 
the investigation, and if necessary, remediation of these sites will be 
completed over a period of from ten years to thirty years.

    A settlement between The Gas Company and other California utilities and 
the Division of Ratepayer Advocates provides for rate recovery of 90 percent 
of environmental investigation and remediation costs without reasonableness 
review.  In addition, the utilities have the opportunity to retain a 
portion of any insurance recovery to offset the 10 percent of costs not 
recovered in rates.

    At December 31, 1995, the Company's estimated remaining liability for 
investigation and remediation was approximately $76 million, of which 90 
percent is authorized to be recovered through the rate recovery mechanism 
described above.  The estimated liability is subject to future adjustment 
pending further investigation.  (See "Item 7. Management's Discussion and 
Analysis of Financial Condition and Results of Operation - Factors 
Influencing Future Financial Performance - Environmental Matters.")  Because 
of current and expected rate recovery, the Company believes that compliance 
with environmental laws and regulations will not have a material adverse 
effect on its financial statements.

                                   EMPLOYEES
                                   ---------

    The Company employs approximately 7,200 persons. Most field, clerical and 
technical employees of the Company are represented by the Utility Workers' 
Union of America or the International Chemical Workers' Union.  Agreements 
covering these approximately 5,200 employees related to benefits expired in 
1995 and an agreement covering wages, hours and working conditions will 
expire on March 31, 1996.  Negotiations related to new contracts are ongoing.


                                     -13-



<PAGE>


                                   MANAGEMENT
                                   ---------- 

     The executive officers of Southern California Gas Company are as follows:


<TABLE>
<CAPTION>
                                                                  Became an
                                                                  Executive
Name                     Age  Position                            Officer
- ----                     ---  --------                            ---------
<S>                      <C>  <C>                                 <C>
Warren I. Mitchell       58   President                           August 1981

Larry J. Dagley          47   Senior Vice President               August 1995
                              and Chief Financial Officer 

Debra L. Reed            39   Senior Vice President               August 1988

Lee M. Stewart           50   Senior Vice President               November 1990

Paul J. Cardenas         49   Vice President                      January 1995

Pamela J. Fair           37   Vice President                      January 1995

Leslie E. LoBaugh, Jr.   50   Vice President and General Counsel  January 1995

Richard M. Morrow        46   Vice President                      January 1995

Eric B. Nelson           46   Vice President                      January 1995

Roy M. Rawlings          51   Vice President                      January 1987

Anne S. Smith            42   Vice President                      November 1991

George E. Strang         56   Vice President                      July 1984

Ralph Todaro             45   Vice President and Controller       November 1988

Dennis V. Arriola        35   Treasurer                           August 1994
</TABLE>



    All of the Company's executive officers have been employed by the 
Company, the Parent, or its affiliates in management positions for more than 
the past five years, except for Mr. Dagley and Mr. Arriola.  From 1985 until 
joining Pacific Enterprises in August 1995, Mr. Dagley was Senior Vice 
President and Controller (1985-1993) and Senior Vice President and Chief 
Financial Officer (1993-1995) of Transco Energy Company.  From 1987 until 
joining the Company in August 1994, Mr. Arriola was a Vice President of Bank 
of America NT&SA (1992-1994) and a Vice President of Security Pacific 
National Bank (1987-1992).


                                     -14-



<PAGE>


    Executive officers are elected annually and serve at the pleasure of the 
Board of Directors.  There are no family relationships among any of the 
Company's executive officers.


 
                            ITEM 2.  PROPERTIES
                             -------------------

    At December 31, 1995, The Gas Company owned approximately 2,965 miles of 
transmission and storage pipeline, 43,163 miles of distribution pipeline and 
42,699 miles of service piping.  It also owned 13 transmission compressor 
stations and 6 underground storage reservoirs (with a combined working 
storage capacity of approximately 115 billion cubic feet) and general office 
buildings, shops, service facilities, and certain other equipment necessary 
in the conduct of its business.

    Southern California Gas Tower, a wholly-owned subsidiary of The Gas 
Company, has a 15 percent limited partnership interest in a 52-story office 
building in downtown Los Angeles.  The Gas Company leases, and currently 
occupies about half of the building.


                          ITEM 3.  LEGAL PROCEEDINGS
                          --------------------------

    Except for the matters referred to in the financial statements filed with 
or incorporated by reference in Item 8 or referred to elsewhere in this 
Annual Report, neither the Company nor any of its subsidiaries is a party to, 
nor is their property the subject of, any material pending legal proceedings 
other than routine litigation incidental to their businesses.


                   ITEM 4.  SUBMISSION OF MATTERS TO A VOTE
                   ----------------------------------------
                             OF SECURITY HOLDERS
                             -------------------  

    No matters were submitted during the fourth quarter of 1995 to a vote of 
the Company's security holders.


                                     -15-


<PAGE>


                                    PART II



                      ITEM 5. MARKET FOR REGISTRANT'S COMMON
                      --------------------------------------
                      EQUITY AND RELATED STOCKHOLDER MATTERS
                      --------------------------------------


    The Parent owns all of the Company's Common Stock.  The information 
required by this item concerning dividends declared is included in the 
Statement of Consolidated Shareholders' Equity set forth in Item 8 of this 
Annual Report.  Such information is incorporated herein by reference.


                   RANGE OF MARKET PRICES OF PREFERRED STOCK

<TABLE>
<CAPTION>
                                      1995                                      1994
                       ------------------------------------------------------------------------------
                            7 3/4%            6%-Series A            7 3/4%            6%-Series A
<S>                   <C>                  <C>                  <C>                  <C>
- -----------------------------------------------------------------------------------------------------
Three months ended:
March 31              $24 3/8 - 21         $18 3/4 - 17 3/8     $26 1/4 - 24 5/8     $21 1/2 - 20
June 30               $25 1/2 - 24         $19 7/8 - 18         $25 1/4 - 23 1/4     $20 3/4 - 18 3/4
Sept. 30              $26 1/4 - 25 1/8     $21 - 19             $24 1/4 - 22 3/8     $19 1/2 - 17 3/4
Dec. 31               $25 3/4 - 25         $21 3/4 - 19 7/8     $23 3/8 - 21         $18 - 16 1/4
</TABLE>


     Market prices for the preferred stock were obtained from the Pacific Stock
Exchange.  The 6% Preferred Stock and the Flexible Auction Series Preferred
Stock, Series A and Series C are not listed on any exchange.


                        ITEM 6.  SELECTED FINANCIAL DATA
                        --------------------------------

The following table sets forth certain selected financial data of the Company
for 1991 through 1995.

                            SELECTED FINANCIAL DATA


<TABLE>
<CAPTION>
                                              Year Ended December 31
                        ------------------------------------------------------------------
(Thousands of Dollars)     1995          1994          1993          1992          1991
- ------------------------------------------------------------------------------------------
<S>                     <C>           <C>           <C>           <C>           <C>
Operating revenues      $2,279,308    $2,586,524    $2,811,074    $2,839,925    $2,930,306

Net income              $  214,833    $  190,513    $  193,676    $  194,716    $  211,792*

Total assets            $4,462,279    $4,775,763    $4,950,220    $4,155,399    $4,059,186  

Long-term debt          $1,220,136    $1,396,931    $1,235,622    $1,147,198    $1,147,132
</TABLE>


*Net income for 1991 includes a net after-tax gain of $15 million relating to
the sale of The Gas Company's headquarters office property.

The Gas Company's parent, Pacific Enterprises, owns 96 percent of the voting
stock, including all of the issued and outstanding common stock; therefore, per
share data have been omitted.


                                     - 16 -

<PAGE>


                 ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS
                 ---------------------------------------------
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                ------------------------------------------------

INTRODUCTION

This section includes management's analysis of operating results from 1993
through 1995, and is intended to provide additional information about the
Southern California Gas Company's capital resources, liquidity and financial
performance.  This section also focuses on the major factors expected to
influence future operating results and discusses future investment and
financing plans.  Management's Discussion and Analysis should be read in
conjunction with the Consolidated Financial Statements.

The Company, a subsidiary of Pacific Enterprises (the Parent), is a
Los Angeles-based utility engaged in supplying natural gas throughout most of
southern and part of central California.  The Company is the nation's
largest natural gas distribution utility, serving 4.7 million meters and 535
cities and communities throughout a 23,000 square mile service territory with a
population of approximately 17 million.

The Company markets are separated into core customers and noncore customers.
Core customers consist of approximately 4.7 million customers (4.5 million
residential and 200,000 small commercial and industrial customers).  The
noncore market consists of approximately 1,600 large customers which includes
8 utility electric generation, 3 wholesale, and the remainder large commercial
and industrial customers. Most noncore customers procure their own gas supply
rather than purchase gas through the utility.

In 1995, the Parent completed a realignment into business units which
established a more flexible design to allow a more rapid response to
competitive forces.  There are two business units at the Company, one focusing
on core distribution customers and the other on large volume gas transportation
customers.

CAPITAL RESOURCES AND LIQUIDITY

The Company's primary sources and uses of cash during the last three years are
summarized in the following condensed statement of cash flows:


<TABLE>
<CAPTION>
SOURCES AND (USES) OF CASH                              Year Ended December 31
                                                      --------------------------
(Dollars in millions)                                  1995     1994     1993
- --------------------------------------------------------------------------------
<S>                                                   <C>      <C>      <C>
Operating Activities                                  $ 663    $ 150    $ 415
Capital Expenditures                                   (231)    (245)    (318)
Financing Activities:
  Long-Term Debt                                       (168)     246       62
  Short-Term Debt                                       (44)      11       52
  Dividends                                            (242)    (155)    (145)
                                                      ------   ------   ------
    Total Financing Activities                         (454)     102      (31)
Other                                                   (23)      36      (53)
                                                      --------------------------
Increase (Decrease) in Cash and Cash Equivalents      $ (45)   $  43    $  13
                                                      --------------------------
                                                      --------------------------
</TABLE>



                                     - 17 -

<PAGE>

CASH FLOWS FROM OPERATING ACTIVITIES

The increase in cash flow from operating activities to $663 million in 1995
from $150 million in 1994 is primarily due to a payment of $391 million for the
settlement of gas contract issues made in 1994.  The decrease in cash flow from
operating activities of $265 million in 1994 from 1993 is primarily due to a
payment for the settlement of gas contract issues partially offset by an
increase in collections of regulatory accounts receivable.

There are a number of factors that impact the Company's cash flow from
operations. These include changes in operating expenses and the authorized
return on common equity.


CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures primarily represent rate base investment at the Company.
The table below summarizes capital expenditures by utility plant classification:


<TABLE>
<CAPTION>
CAPITAL EXPENDITURES                                    Year Ended December 31
                                                      --------------------------
 - (Dollars in millions)                                1995     1994     1993
- --------------------------------------------------------------------------------
<S>                                                     <C>      <C>      <C>
 - Distribution                                         $126     $129     $159
 - Transmission                                           19       24       54
 - Storage                                                19       22       33
 - Other                                                  67       70       72
                                                      --------------------------
   - Total                                              $231     $245     $318
                                                      --------------------------
                                                      --------------------------

</TABLE>


Capital expenditures for 1995 are $14 million lower than 1994, primarily the
result of reduced investing requirements for connecting new customers.  The
decrease in expenditures in 1994 compared to 1993 was primarily due to a $30
million decrease in distribution main pipeline extensions as a result of fewer
new customer connections and a $30 million decrease in non-recurring
transmission projects such as the expansion of a compressor station and
pipeline upgrades.

Capital expenditures are estimated to be approximately $224 million in 1996 and
will be financed primarily by internally generated funds.

CASH FLOWS FROM FINANCING ACTIVITIES

In 1995, $454 million was used for financing activities. This was the result of
repayment of short and long-term debt and payment of common dividends.

Cash flow provided by financing activities of $102 million in 1994 was due to
the issuance of long-term debt for financing a comprehensive settlement of gas
supply contracts and other regulatory issues (see Note 2 of Notes to
Consolidated Financial Statements - Comprehensive Settlement of Regulatory
Issues).  The cash flow used for financing activities in 1993 of $31 million
was primarily due to dividend payments partially offset by the issuance of short
and long-term debt.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents are $13 million and $58 million at December 31, 1995
and 1994, respectively.  The Company anticipates that cash required in 1996 for
capital expenditures, dividends and debt payments will be provided by cash
generated from operating activities and existing cash balances.


                                     - 18 -

<PAGE>

In addition to cash from ongoing operations, the Company has available a $650
million multi-year credit agreement requiring annual fees of .075%. The
interest rate on this line varies and is derived from formulas based on market
rates and the Company's credit ratings.  This multi-year credit agreement
expires in February, 2001.  At December 31, 1995, the bank line of credit was
unused. This line of credit provides backing for the Company's commercial paper
program. The Company has $415 million of commercial paper outstanding at
December 31, 1995, including $265 million to finance the Comprehensive
Settlement of gas supply contracts and other regulatory issues, with the
remainder financing seasonal cash needs at the Company.

PREFERRED STOCK REDEMPTION

The Company plans to redeem up to $100 million of variable rate preferred stock
during 1996.

COMPANY OPERATIONS

To fully understand the operations and financial results of the Company it is
important to understand the ratemaking procedures that the Company employs.

RATEMAKING PROCEDURES

The Company is regulated by the California Public Utilities Commission (CPUC).
It is the responsibility of the CPUC to determine that utilities operate in the
best interests of the ratepayer with the opportunity to earn a reasonable
return on investment.  Current ratemaking procedures are summarized below.

In a general rate case, the CPUC establishes a margin, which is the amount of
revenue authorized to be collected from customers to recover authorized
operating expenses (other than the cost of gas), depreciation, interest, taxes
and return on rate base. General rate cases are typically filed every three
years.  On June 1, 1995, the Company filed a "Performance Based Regulation"
(PBR) application with the CPUC which would replace the general rate case. For a
further discussion of PBR, see Factors Influencing Future Financial Performance
- - Performance Based Regulation.

The CPUC annually adjusts rates for years between general rate cases to reflect
the changes in rate base and the effects of inflation as adjusted by a
productivity improvement factor.  Separate proceedings are held annually to
review the Company's cost of capital, including return on common equity,
interest costs and changes in capital structure. The CPUC has authorized annual
allowances for 1996 for increases in operating and maintenance expenses to the
extent that the projected annual inflation rate exceeds 3%.  In 1995, the CPUC
authorized allowances to the extent inflation exceeded 2%.  For further
discussion of annual attrition allowances, see Note 2 of Notes to Consolidated
Financial Statements.

Biennial cost allocation proceedings (BCAP) adjust rates to reflect variances
in the cost of gas and customer demand from estimates adopted in a general rate
case. This mechanism substantially eliminates the effect on income of variances
in core market demand and gas costs subject to limitations of the Gas Cost
Incentive Mechanism and Comprehensive Settlement. For further discussion see
Note 2 of Notes to Consolidated Financial Statements.

The CPUC approved a Gas Cost Incentive Mechanism (GCIM) for evaluating the
Company's gas purchases.  This mechanism compares the Company's cost of gas
with the average market price of 30-day firm spot supplies delivered to the
Company's service area and permits full recovery of all costs within a
tolerance band above that average.  The costs of purchases above the
tolerance band or savings from purchases below the average market price are
shared equally between ratepayers and shareholders.  For further discussion of
GCIM, see Note 2 of Notes to Consolidated Financial Statements.


                                     - 19 -


<PAGE>

1993 - 1995 FINANCIAL RESULTS

Under current utility ratemaking policies, the return that the Company is 
authorized to earn is the product of an authorized rate of return on rate 
base and the amount of rate base.  Rate base consists primarily of net 
investment in utility plant. Thus, the Company's earnings are affected by 
changes in the authorized rate of return on rate base and the change in the 
authorized rate base and by the Company's ability to control expenses and 
investment in rate base within the amounts authorized by the CPUC in setting 
rates.  The Company refunds or collects in the future the amounts by which 
certain defined costs vary from the amounts authorized by the CPUC in the 
rate case or other regulatory proceedings.  Also, variations in core revenues 
from estimates adopted by the CPUC in established rates are refunded or 
collected through the balancing account mechanism.  Thus, full balancing 
account treatment allows the Company to fully recover amounts recorded as 
deferred costs or core revenue shortfalls currently or in the future.

Key financial and operating data for the Company are highlighted in the table
below.


<TABLE>
<CAPTION>

                                                                               YEAR ENDED DECEMBER 31
                                                                         --------------------------------
(DOLLARS IN MILLIONS)                                                         1995       1994      1993
- ---------------------------------------------------------------------------------------------------------
<S>                                                                         <C>        <C>       <C>
Operating revenues                                                          $2,279     $2,587    $2,811
Cost of gas                                                                 $  737     $  992    $1,187
Operating expenses                                                          $  760     $  827    $  868
Net income (after preferred dividends)                                      $  203     $  180    $  184
Authorized return on rate base                                               9.67%      9.22%     9.99%
Authorized return on common equity                                          12.00%     11.00%    11.90%
Weighted average rate base                                                  $2,766     $2,862    $2,769
(Decline) growth in weighted average rate base over prior period            (3.4)%       3.4%      1.8%
                                                                         --------------------------------
</TABLE>



The Company's operating revenues decreased $308 million in 1995.  The 
decrease is primarily due to a reduction in the average unit cost of gas and 
a decrease in noncore transportation volumes.  The Company's cost of gas 
distributed decreased $255 million in 1995 due to lower volumes of gas 
purchased for customers and a decrease in the average unit cost of gas.  The 
decrease in transportation volumes was primarily in the utility electric 
generation market. This was due to an abundance of less expensive 
hydroelectricity resulting from high levels of precipitation last winter. The 
decrease in operating revenue of $224 million in 1994 reflects a reduction in 
authorized gas margin and the average unit cost of gas partially offset by 
the growth in rate base and an increase in noncore volumes transported.  The 
Company's cost of gas distributed decreased $195 million in 1994.  The 
average commodity cost of gas purchased by the Company, excluding fixed 
charges, for 1995 was $1.42 per thousand cubic feet, compared to $1.68 per 
thousand cubic feet in 1994 and $2.21 per thousand cubic feet in 1993.

The Company's operating expenses decreased $67 million in 1995.  The decrease 
primarily reflects savings from cost reduction efforts in 1995 and 
nonrecurring expenses in 1994.  Operating costs for 1994 included expenses 
resulting from the January 1994 earthquake and expenses related to a 
discontinued capital project.  The decrease of $41 million in 1994 was 
primarily due to aggressive reductions in operating expenses partially offset 
by the nonrecurring expenses discussed above.

The Company has achieved or exceeded the rate of return on rate base 
authorized by the CPUC for 13 consecutive years.  In 1995, the Company 
achieved a 10.84% return on rate base  compared to a 9.67% authorized return 
and a 13.89% return on equity compared to a 12% authorized return.  The 
improved returns were primarily due to lower operating costs as a result of 
reduced staffing levels and other cost reduction efforts.

                                    - 20 -


<PAGE>

In 1994, the Company achieved a 9.74% return on rate base compared to a 9.22% 
authorized return and a 12.33% return on equity compared to an 11% authorized 
return.  The improved returns were primarily due to more efficient operations 
through reductions in operating expenses, higher noncore earnings and a 
conservation award.

The Company plans to continue efforts to control costs in 1996.  In 1996, the 
Company is authorized to earn 9.42% return on rate base and 11.6% on common 
equity.  Rate base is expected to decline slightly from the level in 1995.

OPERATING RESULTS

The table below summarizes the components of the Company's throughput and 
rates charged to customers for the past three years.  Beginning January 1, 
1994, rates included the ratepayer portion of the Comprehensive Settlement 
(See Note 2 of Notes to Consolidated Financial Statements).  The amount 
included in rates for 1995 was $84 million and in 1994 was $119 million.


<TABLE>
<CAPTION>

                                         GAS SALES        TRANSPORTATION AND EXCHANGE           TOTAL
                                         ---------        ---------------------------           -----
(DOLLARS IN MILLIONS, VOLUME
IN BILLION CUBIC FEET)            THROUGHPUT   REVENUE    THROUGHPUT        REVENUE     THROUGHPUT   REVENUE
- -------------------------------------------------------------------------------------------------------------
<S>                               <C>          <C>        <C>               <C>         <C>          <C>
1995:
Residential                           237       $1,547          2             $  7          239       $1,554
Commercial/Industrial                  97          546        267              206          364          752
Utility Electric Generation                                   205              104          205          104
Wholesale                               4            7        125               55          129           62
                               ------------------------------------------------------------------------------
Total in Rates                        338       $2,100        599             $372          937        2,472
Balancing and Other                                                                                     (193)
                                                                                                  ----------
  Total Operating Revenues                                                                            $2,279
- ------------------------------------------------------------------------------------------------------------
1994:
Residential                           254       $1,704          2             $  9          256       $1,713
Commercial/Industrial                 100          592        258              207          358          799
Utility Electric Generation                                   260              118          260          118
Wholesale                               8           21        138               77          146           98
                               -----------------------------------------------------------------------------
Total in Rates                        362       $2,317        658             $411        1,020        2,728
Balancing and Other                                                                                     (141)
                                                                                                  ----------
Total Operating Revenues                                                                              $2,587
- ------------------------------------------------------------------------------------------------------------
1993:
Residential                           244       $1,641          4             $ 12          248       $1,653
Commercial/Industrial                  97          610        259              247          356          857
Utility Electric Generation                          4        213              143          213          147
Wholesale                              11           27        137               90          148          117
                               -----------------------------------------------------------------------------
Total in Rates                        352       $2,282        613             $492          965        2,774
Balancing and Other                                                                                       37
                                                                                                  ----------
Total Operating Revenues                                                                              $2,811
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------

</TABLE>


Although the revenues from transportation throughput are less than for gas 
sales, the Company generally earns the same margin whether it buys the gas 
and sells it to the customer or transports gas already owned by the customer. 
For 1996, approximately 89% of total margin authorized is contributed by the 
core market (residential and smaller commercial and industrial customers), 
with 11% contributed by the noncore market.  Throughput, the total gas sales 
and transportation volumes moved through the Company's system, decreased in 
1995 as a result of lower demands, primarily by utility electric generators.  
This was as a result of an abundance of inexpensive hydroelectricity.  The 
increase in throughput in 1994 from 1993 levels was the result of greater 
weather-related demand in noncore volumes, primarily utility electric 
generation.

                                    - 21 -


<PAGE>

FACTORS INFLUENCING FUTURE FINANCIAL PERFORMANCE

Because of the ratemaking and regulatory process as well as the changing 
energy marketplace there are several factors that will influence future 
financial performance.  These factors are summarized below.

Under current ratemaking policies, Company net income and cash flow will be 
determined primarily by the allowed rate of return on common equity, changes 
in authorized rate base, noncore market pricing, the variance in gas volumes 
delivered to noncore customers from CPUC-adopted forecast deliveries, and the 
ability of management to control expenses and investment in line with the 
amounts authorized by the CPUC to be collected in rates.

Future regulatory restructurings (including the PBR proposal from the 
Company), increased competitiveness in the industry (including the continuing 
threat of customers bypassing the Company's system and obtaining service 
directly from interstate pipelines), and electric industry restructuring 
could also affect the Company's future performance.

The following detailed discussion addresses each of the major factors 
expected to influence future financial performance:

ALLOWED RATE OF RETURN.  The Company's earnings for 1996 will be affected by 
a decrease in the authorized rate of return on common equity.  For 1996, the 
Company is authorized to earn a rate of return on rate base of 9.42% and a 
rate of return on common equity of 11.6%, compared to 9.67% and 12%, 
respectively, in 1995.  A change in return on equity of one percentage point 
impacts net income by approximately $13 million.  The CPUC has also 
authorized an increase in the equity component of the Company's capital to 
47.4% in 1996 from 47.0% in 1995. The 40 basis point increase in the equity 
component should add between $1 million to $2 million to earnings.  Rate base 
is expected to decline slightly from the level in 1995.

NONCORE BYPASS.  The Company's throughput to enhanced oil recovery (EOR) 
customers in the Kern County area has decreased significantly because of the 
bypass of the Company's system by competing interstate pipelines. The 
decrease in revenues from EOR customers is subject to full balancing account 
treatment except for a 5% incentive to the Company, and therefore, does not 
have a material impact on the Company's earnings.

Bypass of other markets may also occur, and the Company is fully at risk for 
lost non-EOR noncore volumes due to bypass.  The Company is continuing to 
reduce its costs to maintain low cost competitiveness to retain 
transportation customers.  Also, significant additional bypass would require 
construction of additional facilities by competing pipelines.

NONCORE PRICING.  To respond to bypass, the Company has received 
authorization from the CPUC for expedited review of long-term gas 
transportation service contracts with some noncore customers at lower than 
tariff rates.  In addition, the CPUC has approved changes in methodology that 
eliminates subsidization of core customer rates by noncore customers.  This 
allocation flexibility, together with negotiating authority, has enabled the 
Company to better compete with interstate pipelines for noncore customers.

NONCORE THROUGHPUT.  The Company's earnings may be adversely impacted if gas 
throughput to its noncore customers varies from estimates adopted by the CPUC 
in establishing rates.  There is a continuing risk that an unfavorable 
variance in noncore volumes can result from external factors such as weather, 
electric deregulation, the increased use of hydroelectric power, competing 
pipeline bypass of the Company's system and a downturn in general economic 
conditions. Many noncore customers are especially sensitive to the price 
relationship between natural gas and

                                    - 22 -


<PAGE>

alternative fuels and they are capable of readily switching from one fuel to 
another, subject to air quality regulations.  The Company is at risk for the 
lost revenue.

Through July 31, 1999 any favorable earnings effect of higher revenues 
resulting from higher throughput to noncore customers has been eliminated as 
a result of the Comprehensive Settlement described in Note 2 of Notes to 
Consolidated Financial Statements.

EXCESS INTERSTATE PIPELINE CAPACITY.  Existing interstate pipeline capacity 
into California exceeds  current demand by over 1 billion cubic feet per day. 
Up to 2 billion cubic feet per day of capacity on the El Paso and 
Transwestern interstate pipeline systems, representing over $175 million and 
$55 million, respectively, of annual reservation charges to pipeline 
customers may be relinquished within the next few years.  Some of this 
capacity may not be resubscribed.  Current Federal Energy Regulatory 
Commission (FERC) regulation could permit the cost of unsubscribed capacity 
to be allocated to remaining firm service customers, including the Company.  
Under existing regulation in California, the Company would have the 
opportunity to include its portion of any such reallocated costs in its rates.

The FERC has approved a settlement with Transwestern which calls for firm 
customers, including the Company, to subsidize unsubscribed pipeline costs 
for a five-year period with Transwestern assuming full responsibility after 
that time. Negotiations are continuing with El Paso and a settlement is 
expected to be filed with the FERC in the first quarter of 1996.

MANAGEMENT CONTROL OF EXPENSES AND INVESTMENT.  Over the past 13 years, 
management has been able to control operating expenses and investment within 
the amounts authorized to be collected in rates and intends to continue to do 
so.

PERFORMANCE BASED REGULATION.  The Company has filed a PBR application with 
the CPUC to replace the general rate cases and other traditional regulatory 
proceedings.  PBR, if approved, would allow the Company to be more responsive 
to consumer interests and compete more effectively in contestable markets.  
Key elements of this proposal include a permanent reduction in base rates of 
$42 million, an indexing measure that would limit future base rate increases 
to the inflation rate less a productivity factor, and rate refunds to customers 
if service quality were to deteriorate. This new approach would maintain cost-
based rates but would link financial performance with changes in 
productivity. Although PBR could result in increased earnings volatility, the 
Company would have the opportunity to improve financial performance to the 
extent it was able to reduce expenses, increase energy deliveries and 
generate profits from new products and services.

Under the PBR proposal, the Company would be at risk for certain changes in 
interest rates and cost of capital, changes in core volumes not caused by 
weather, and achievement of productivity improvements.  The CPUC's process 
for approval of PBR has been delayed pending determination of additional 
information various parties desire to establish the starting base cost of
service.  An agreement with several interested parties has been reached under 
which the Company will provide a substantial portion of the supporting 
documentation that would be required for a general rate case proceeding.  This 
additional step will delay implementation beyond the proposed January 1, 1997
starting date.

ELECTRIC INDUSTRY RESTRUCTURING.  Demand for natural gas by electric 
generation customers is sensitive to the price and availability of electric 
power generated in other areas and purchased by these electric generation 
customers.  On December 20, 1995, the CPUC issued a final decision to 
restructure California electric utility regulation.  Implementation of 
portions of the plan is expected to require state legislative or federal 
administrative approval.  The CPUC's decision has no immediate effect on the 
Company's operations.  However, the Company is continuing to evaluate the 
decision because future volumes of natural gas it transports for electric 
utilities may

                                    - 23 -


<PAGE>

be adversely affected by increased use of electricity generated by 
out-of-state producers.  The electric industry restructuring may also result 
in a reduction of electric rates to core customers, but it is unlikely to 
overcome the entire cost advantage of natural gas for existing uses.

ENVIRONMENTAL MATTERS.  The Company's operations and those of its customers 
are affected by a growing number of environmental laws and regulations.  
These laws and regulations affect current operations as well as future 
expansion. Increasingly complex administrative and reporting requirements of 
environmental organizations applicable to commercial and industrial customers 
utilizing natural gas are not generally required by those using electricity.  
However, anticipated advancement in natural gas technologies will enable gas 
equipment to remain competitive with alternate energy sources.  Environmental 
laws also require clean up of facilities no longer in use.  Because of 
current and expected rate recovery, the Company believes that compliance with 
these laws will not have a significant impact on its financial statements. 
For further discussion of environmental and regulatory matters, see Note 4 of 
Notes to Consolidated Financial Statements.

UNION CONTRACT.  Most field, clerical and technical employees of the Company 
are represented by the Utility Workers' Union of America or the International 
Chemical Workers' Union.  A contract with these unions relating to employee 
benefits expired in 1995 and a contract covering wages, hours and working 
conditions will expire March 31, 1996.  Negotiations related to new contracts 
are ongoing.

CALIFORNIA ECONOMY.  Growth in the Company markets is largely dependent on 
the health and expansion of the California economy.  While California has 
undergone a recession in recent years, current economic forecasts indicate the 
state will experience a higher growth in jobs than the rest of the country.

OTHER INCOME AND INTEREST EXPENSE

OTHER INCOME AND DEDUCTIONS.  Other income was $6 million, $17 million and 
$11 million in  1995, 1994 and 1993, respectively.  The decrease from 1994 is 
primarily due to a $13 million reduction in regulatory interest which is 
recognized on balances in the regulatory balancing accounts.  Other - Net 
expense consists primarily of contributions and amortization of loss on 
reacquired debt.

INTEREST EXPENSE.  Interest expense was $91 million, $105 million and $102 
million in 1995, 1994 and 1993, respectively.  Interest expense in 1995 was 
reduced from the 1994 level as a result of repayment of debt and refinancing 
of Company debt at lower interest rates.

                                    - 24 -

<PAGE>


            Item 8.  Financial Statements and Supplementary Data
            ----------------------------------------------------  

STATEMENT OF CONSOLIDATED INCOME


<TABLE>
<CAPTION>

                                                         Year Ended December 31
                                               ------------------------------------------
 (Thousands of Dollars)                              1995           1994           1993
- -----------------------------------------------------------------------------------------
<S>                                              <C>            <C>            <C>
OPERATING REVENUES                               $2,279,308     $2,586,524     $2,811,074
                                                 ----------     ----------     ----------
OPERATING EXPENSES
Cost of Gas Distributed                             736,605        991,625      1,187,072
Operation                                           672,864        745,961        768,677
Maintenance                                          86,255         80,980         99,795
Depreciation                                        237,026        233,580        228,244
Income Taxes                                        151,274        145,603        134,491
Local Franchise Payments                             34,048         41,966         46,217
Ad Valorem Taxes                                     34,974         36,901         32,592
Payroll and Other Taxes                              26,431         31,281         29,488
                                                 ----------     ----------     ----------
         Total                                    1,979,477      2,307,897      2,526,576
                                                 ----------     ----------     ----------
         Net operating revenue                      299,831        278,627        284,498
                                                 ----------     ----------     ----------

OTHER INCOME AND (DEDUCTIONS)

Interest Income                                       7,566          6,623          1,668
Regulatory Interest                                   1,442         14,046          4,924
Allowance for Equity Funds Used During
 Construction                                         5,495          2,394          4,406
Income Taxes on Non-Operating Income                   (277)           941          5,670
Other -  Net                                         (8,606)        (7,033)        (5,245)
                                                 ----------     ----------     ----------
         Total                                        5,620         16,971         11,423
                                                 ----------     ----------     ----------
INTEREST CHARGES AND (CREDITS)
Interest on Long-Term Debt                           86,864         89,023         95,806
Other Interest                                        6,938         17,425          9,180
Allowance for Borrowed Funds Used
 During Construction                                 (3,184)        (1,363)        (2,741)
                                                 ----------     ----------     ----------
         Total                                       90,618        105,085        102,245
                                                 ----------     ----------     ----------
Net Income                                          214,833        190,513        193,676
Dividends on Preferred Stock                         11,613         10,468          9,882
                                                 ----------     ----------     ----------
Net Income Applicable to Common Stock            $  203,220     $  180,045     $  183,794
                                                 ----------     ----------     ----------
                                                 ----------     ----------     ----------
</TABLE>






SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      -25-

<PAGE>

CONSOLIDATED BALANCE SHEET


<TABLE>
<CAPTION>

                                                                       December 31
                                                               --------------------------
 (Thousands of Dollars)                                         1995          1994
- -----------------------------------------------------------------------------------------
<S>                                                             <C>            <C>
                                                                ----------     ----------
ASSETS
Utility Plant - at original cost                                $5,807,940     $5,613,013
Less:  Accumulated Depreciation                                  2,594,713      2,400,601
                                                                ----------     ----------
  Utility plant - net                                            3,213,227      3,212,412
                                                                ----------     ----------

Current Assets:
  Cash and cash equivalents                                         12,611         57,531
  Accounts receivable - trade (less allowance for doubtful
    receivables of $13,456 in 1995 and $10,830 in 1994)            398,515        523,975
  Regulatory accounts receivable - net                             260,573        360,479
  Deferred income taxes                                             25,953
  Gas in storage                                                    54,782         63,470
  Materials and supplies                                            14,504         25,792
  Prepaid expenses                                                  32,593         34,129
                                                                ----------     ----------
         Total current assets                                      799,531      1,065,376
                                                                ----------     ----------
Regulatory Assets                                                  449,521        497,975
                                                                ----------     ----------
         Total                                                  $4,462,279     $4,775,763
                                                                ----------     ----------
                                                                ----------     ----------
CAPITALIZATION AND LIABILITIES
Capitalization:
  Common equity:
        Common stock                                            $  834,889     $  834,889
        Retained earnings                                          613,445        643,040
                                                                ----------     ----------
          Total common equity                                    1,448,334      1,477,929
  Preferred stock                                                  196,551        196,551
  Long-term debt                                                 1,220,136      1,396,931
                                                                ----------     ----------
          Total capitalization                                   2,865,021      3,071,411
                                                                ----------     ----------

Current Liabilities:
  Short-term debt                                                  233,817        278,201
  Accounts payable - trade                                         162,670        212,888
  Accounts payable - affiliates                                      9,734         35,013
  Accounts payable - other                                         255,900        143,235
  Accrued taxes and franchise payments                              45,933        117,576
  Deferred income taxes                                                            40,792
  Long-term debt due within one year                                95,283         86,000
  Accrued interest                                                  43,480         40,057
  Other accrued liabilities                                         50,678        162,489
                                                                ----------     ----------
         Total current liabilities                                 897,495      1,116,251
                                                                ----------     ----------

Customer Advances for Construction                                  47,029         44,269
Deferred Income Taxes                                              404,308        341,149
Deferred Investment Tax Credits                                     66,983         69,969
Other Deferred Credits                                             181,443        132,714
Commitments and Contingent Liabilities (Note 4)
                                                                ----------     ----------
         Total                                                  $4,462,279     $4,775,763
                                                                ----------     ----------
                                                                ----------     ----------
</TABLE>






SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      -26-


<PAGE>

STATEMENT OF CONSOLIDATED CASH FLOWS


<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31
                                                            -------------------------------
(THOUSANDS OF DOLLARS)                                        1995       1994       1993
- --------------------------------------------------------------------------------------------
<S>                                                          <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                   $214,833   $190,513   $193,676
Items Not Requiring Cash:
  Depreciation                                                237,026    233,580    228,244
  Deferred income taxes                                        59,544    (49,432)    33,093
  Deferred investment tax credits                              (2,986)    (3,024)    (3,811)
  Allowance for funds used during construction                 (8,679)    (3,757)    (7,147)
  Other                                                        53,296    (18,983)    22,442
Net Change in Other Working Capital Components:
  Accounts receivable                                         125,460    (20,667)    (3,235)
  Regulatory accounts receivable                              183,723    231,006   (107,320)
  Gas in storage                                                8,688    (10,356)   (13,279)
  Other current assets                                         12,824    (16,332)    19,787
  Accounts payable                                            (16,171)  (521,172)    77,672
  Accrued taxes and franchise payments                        (71,643)    30,386    (74,466)
  Deferred income taxes                                       (76,001)     4,914     23,501
  Other current liabilities                                   (57,144)   103,451     26,245
                                                            ---------  ---------  ---------
    Net cash provided by operating activities                 662,770    150,127    415,402
                                                            ---------  ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures for Utility Plant                       (230,969)  (244,721)  (318,429)
(Increase) Decrease in Other Assets - Net                     (22,492)    35,267    (52,929)
                                                            ---------  ---------  ---------
    Net cash used in investing activities                    (253,461)  (209,454)  (371,358)
                                                            ---------  ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends                                                    (242,333)  (154,723)  (144,590)
Issuance of Long-Term Debt                                               245,847    631,000
Payments of Long-Term Debt                                   (167,512)             (569,239)
Sale of Preferred Stock                                                              75,000
Redemption of Preferred Stock                                                       (75,000)
Increase (Decrease) in Short-Term Debt                        (44,384)    11,201     52,000
                                                            ---------  ---------  ---------
    Net cash provided by (used in) financing activities      (454,229)   102,325    (30,829)
                                                            ---------  ---------  ---------
Increase (Decrease) in Cash and Cash Equivalents              (44,920)    42,998     13,215
Cash and Cash Equivalents - January 1                          57,531     14,533      1,318
                                                            ---------  ---------  ---------
Cash and Cash Equivalents - December 31                      $ 12,611   $ 57,531   $ 14,533
                                                            ---------  ---------  ---------
                                                            ---------  ---------  ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid During the Year for:
  Interest (net of amount capitalized)                       $ 81,932   $107,088   $ 97,514
                                                            ---------  ---------  ---------
                                                            ---------  ---------  ---------  
  Income taxes                                               $231,987   $ 89,135   $142,346
                                                            ---------  ---------  ---------
                                                            ---------  ---------  ---------
</TABLE>



SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                     -27-


<PAGE>


STATEMENT OF CONSOLIDATED SHAREHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                           PREFERRED     COMMON       RETAINED
(THOUSANDS OF DOLLARS)                                                       STOCK        STOCK       EARNINGS
- -----------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>         <C>          <C>
BALANCE AT DECEMBER 31, 1992                                                $196,551    $834,889     $559,492
Net Income                                                                                            193,676
Cash Dividends Declared:
  Preferred stock                                                                                      (9,882)
  Common stock                                                                                       (136,036)
Preferred Stock Sold (3,000,000 shares)                                       75,000
Preferred Stock Redeemed (750 shares)                                        (75,000)
                                                                            --------    --------    ---------
BALANCE AT DECEMBER 31, 1993                                                 196,551     834,889      607,250
Net Income                                                                                            190,513
Cash Dividends Declared
  Preferred stock                                                                                     (10,468)
  Common stock                                                                                       (144,255)
                                                                            --------    --------    ---------
BALANCE AT DECEMBER 31, 1994                                                 196,551     834,889      643,040
Net Income                                                                                            214,833
Cash Dividends Declared:
  Preferred stock                                                                                     (11,613)
  Common stock                                                                                       (232,815)
                                                                            --------    --------    ---------
BALANCE AT DECEMBER 31, 1995                                                $196,551    $834,889     $613,445
                                                                            --------    --------     ---------
                                                                            --------    --------     ---------
</TABLE>


The number of shares of preferred stock and common stock authorized and
outstanding at December 31, 1995  and 1994, is set forth  in Note 9 of Notes to
Consolidated Financial Statements.


SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                     -28-


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Southern California Gas Company (the Company) is a subsidiary of Pacific 
Enterprises (Parent).  The Parent owns approximately 96% of the Company's 
voting stock, including all of its issued and outstanding common stock; 
therefore, per share data have been omitted.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and 
its wholly-owned subsidiaries.  One subsidiary has a 15% limited partnership 
interest in a 52-story office building in which the Company occupies 
approximately one-half of the leasable space.  Investments in 50% or less 
joint ventures and partnerships are accounted for by the equity or cost 
method, as appropriate.

RECLASSIFICATIONS

Certain changes in account classification have been made in the prior years' 
consolidated financial statements to conform to the 1995 financial statement 
presentation.

REGULATION

In conformity with generally accepted accounting principles (GAAP), the 
Company's accounting policies reflect the financial effects of rate 
regulation authorized by the California Public Utilities Commission (CPUC).  
The Company applies the provisions of Statement of Financial Accounting 
Standards No. 71, "Accounting for the Effects of Certain Types of 
Regulation."  This statement requires cost-based rate regulated entities that 
meet certain criteria to reflect the authorized recovery of costs due to 
regulatory decisions in their financial statements. The Company records 
Regulatory Assets which represent assets which are being recovered through 
customer rates or are probable of being recovered through customer rates.  As 
of December 31, 1995, the Company had $450 million of regulatory assets which 
included the following: costs of reacquiring debt - $52 million; 
Comprehensive Settlement costs (see Note 2) - $175 million; deferred income 
taxes - $109 million (see Note 3); environmental remediation - $64 million 
(see Note 4); and other costs - $50 million.  Maintenance of the regulatory 
accounts and regulatory accounts receivable represents the only difference in 
the application of GAAP for the Company versus non-regulated entities.

REGULATORY ACCOUNTS RECEIVABLE - NET

Authorized regulatory balancing accounts are maintained to accumulate 
undercollections and overcollections from the revenue and cost estimates 
adopted by the CPUC in setting rates.  The Company makes periodic filings 
with the CPUC to adjust future gas rates to account for such variances.

GAS IN STORAGE

Gas in storage inventory is stated at last-in, first-out (LIFO) cost.  As a 
result of a regulatory accounting procedure, the pricing of gas in storage 
does not have any effect on net income.  If the first-in, first-out (FIFO) 
method of accounting for gas in storage inventory had been used by the 
Company, inventory would have been higher than reported at December 31, 1995 
and 1994 by $21 million and $34 million, respectively.  Materials and 
supplies are generally stated at the lower of cost, determined on an average 
cost basis, or market.

                                    - 29 -


<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UTILITY PLANT

The costs of additions, renewals and improvements to utility plant are 
charged to the appropriate plant accounts.  These costs include labor, 
material, other direct costs, indirect charges, and an allowance for funds 
used during construction.  The cost of utility plant retired or otherwise 
disposed of, plus removal costs and less salvage, is charged to accumulated 
depreciation. Depreciation is recorded on the straight-line remaining-life 
basis.  The depreciation methods are consistent with those used by 
non-regulated entities.

ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFUDC)

AFUDC represents the cost of funds used to finance the construction of 
utility plant and is added to the cost of utility plant.  Interest expense of 
$9 million in 1995, $4 million in 1994 and $7 million in 1993 was capitalized.

OTHER

Cash equivalents include short-term investments purchased with maturities of 
less than 90 days.

The preparation of financial statements in conformity with GAAP requires 
management to make estimates and assumptions that affect the reported amounts 
of assets and liabilities and disclosure of contingent assets and liabilities 
at the date of the financial statements and the reported amounts of revenues 
and expenses during the reporting period.  Actual results could differ from 
those estimates.

2. REGULATORY MATTERS

RESTRUCTURING OF GAS SUPPLY CONTRACTS

In 1993, the Company and its gas supply affiliates restructured long-term gas 
supply contracts with suppliers of California offshore and Canadian gas.  In 
the past, the Company's cost of these supplies had been substantially in 
excess of its average delivered cost of gas for all gas supplies.

The restructured contracts substantially reduced the ongoing delivered costs 
of these gas supplies and provided lump sum payments totaling $391 million to 
the suppliers.  The expiration  date for the Canadian gas supply contract was 
shortened from 2012 to 2003.

COMPREHENSIVE SETTLEMENT OF REGULATORY ISSUES

On July 20, 1994, the CPUC approved a comprehensive settlement (Comprehensive 
Settlement) of a number of pending regulatory issues including rate recovery 
of a significant portion of the restructuring costs associated with long-term 
gas supply contracts discussed above.  The Comprehensive Settlement permits 
the Company to recover in utility rates approximately 80% of the contract 
restructuring costs of $391 million and accelerated amortization of related 
pipeline assets of approximately $140 million, together with interest, over a 
period of approximately five years.  In addition to the gas supply issues, 
the Comprehensive Settlement addresses the following other regulatory issues:

NONCORE CUSTOMER RATES.  The Comprehensive Settlement changed the procedures 
for determining noncore rates to be charged by the Company to its customers 
for the five-year period commencing August 1, 1994.  Rates charged to the 
customers are established based upon the Company's recorded throughput to 
these customers for 1991.  The Company will bear the full risk of any 
declines in noncore deliveries from 1991 levels.  Any revenue enhancement 
from

                                    - 30 -


<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

deliveries in excess of 1991 levels will be limited by a crediting account 
mechanism that will require a credit to customers of 87.5% of revenues in 
excess of certain limits.  These annual limits above which the credit is 
applicable increase from $11 million to $19 million over the five-year period 
from August 1, 1994 through July 31, 1999. The Company's ability to report as 
earnings the results from revenues in excess of its authorized return from 
noncore customers due to volume increases has been eliminated for the five 
years beginning August 1, 1994 as a consequence of the Comprehensive 
Settlement described above.  This is because forecasted deliveries in excess 
of the 1991 throughput levels used to establish noncore rates were 
contemplated in estimating the costs of the Comprehensive Settlement at 
December 31, 1993.

REASONABLENESS REVIEWS.  The Comprehensive Settlement includes settlement of 
all pending reasonableness reviews with respect to the Company's gas 
purchases from April 1989 through March 1992, as well as certain other 
future reasonableness review issues.

GAS COST INCENTIVE MECHANISM.  On March 16, 1994, the CPUC approved a new 
process for evaluating the Company's gas purchases, substantially replacing 
the previous process of reasonableness reviews.  The Gas Cost Incentive 
Mechanism (GCIM) is a three-year pilot program which began April 1, 1994.  
The GCIM essentially compares the Company's cost of gas with a benchmark 
level, which is the average price of 30-day firm spot supplies delivered to 
the Company's market area.

The Company can recover costs in excess of the benchmark to the extent they 
fall within a tolerance band which extends to 4% above the benchmark.  If the 
Company's cost of gas exceeds the tolerance level, then the excess cost will 
be shared equally between ratepayers and shareholders. All savings from gas 
purchased below the average market price are shared equally between 
ratepayers and shareholders.  For the first year of the program, ended March 
31, 1995, gas purchases were within the established 4.5% tolerance band.

ATTRITION ALLOWANCES.  The Comprehensive Settlement authorizes the Company an 
annual allowance for increases in operating and maintenance expenses for 1996 
to the extent that the projected annual inflation rate exceeds 3%.  In 1995 
attrition was calculated on the inflation rate in excess of 2%.  The rate 
base attrition will continue to be based upon a three year rolling average of 
recorded net utility plant additions.  This is a departure from past 
regulatory practice of allowing recovery in rates of the full effect of 
inflation on operating and maintenance expenses. The Company intends to 
continue to attempt to control operating expenses and investment to amounts 
authorized in rates to offset the effect of this regulatory change.  The most 
recent decision issued by the CPUC in December 1995 authorized the Company to 
collect $12 million in rates for the 1996 attrition allowance.

The Company recorded the impact of the Comprehensive Settlement in 1993 and, 
upon giving effect to liabilities previously recognized at the Company, the 
costs of the Comprehensive Settlement including the restructuring of gas 
supply contracts did not result in any additional charge to the Company's 
consolidated earnings.

                                    - 31 -


<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In the most recent decision issued by the CPUC in December 1995, the Company 
has been authorized to reduce rates by $50 million effective January 1, 1996. 
The reduction is comprised of the following:

           (Millions of Dollars)                   Increase (Decrease)
         ---------------------------------------------------------------
           1996 Cost of Capital                                  $(12)
           BCAP:  Core                                            (94)
                  Noncore                                          20 
           1996 Attrition Allowances                               12 
           1994 Earthquake Costs                                   22 
           Other                                                    2
                                                                ----- 
             Total                                               $(50)
                                                                -----
                                                                -----

Regulatory Accounts Receivable and Regulatory Assets include a total of 
approximately $259 million and $327 million in 1995 and 1994, respectively, 
for the recovery of costs as provided in the Comprehensive Settlement.  The 
CPUC authorized the borrowing of $425 million primarily to provide for funds 
needed under the Comprehensive Settlement.  As of December 31, 1995, the 
Company has $265 million in commercial paper remaining outstanding related to 
the Comprehensive Settlement (See Note 6).

3. INCOME TAXES

A reconciliation of the difference between computed statutory federal income 
tax expense and actual income tax expense for operations is as follows:


<TABLE>
<CAPTION>

                                                                 Year Ended December 31
                                                        -----------------------------------
(Thousands of Dollars)                                         1995       1994        1993
- -------------------------------------------------------------------------------------------
<S>                                                        <C>        <C>         <C>
Computed statutory federal income tax expense              $128,235   $117,311    $112,874
Increase (reductions) resulting from:
Excess book over tax depreciation                            19,638     17,473      17,847
State income taxes - net of federal income tax benefit       21,287     19,119      16,993
Capitalized expenses not deferred                           (10,058)    (6,589)
Federal income tax rate change                                                       1,698 
Research and development credit                                                     (4,000)
Amortization of deferred investment tax credits              (2,986)    (3,024)     (3,811)
Resolution of proposed tax deficiency                        (2,452)     3,850     (10,193)
Other - net                                                  (2,113)    (3,478)     (2,587)
                                                        -----------------------------------
Total income tax expense                                   $151,551   $144,662    $128,821
                                                        -----------------------------------
                                                        -----------------------------------
</TABLE>


                                    - 32 -



<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The components of income tax expense are as follows:

<TABLE>
<CAPTION>
                                                     Year Ended December 31
                                                --------------------------------
(Thousands of Dollars)                            1995        1994        1993
- --------------------------------------------------------------------------------
<S>                                             <C>         <C>         <C>
Federal
  Current                                       $119,489    $147,647    $ 53,831
  Deferred                                           310     (32,500)     46,044
                                                --------------------------------
                                                 119,799     115,147      99,875
                                                --------------------------------
State
  Current                                         37,116      44,289      22,206
  Deferred                                        (5,364)    (14,774)      6,740
                                                --------------------------------
                                                  31,752      29,515      28,946
                                                --------------------------------
Total
  Current                                        156,605     191,936      76,037
  Deferred                                        (5,054)    (47,274)     52,784
                                                --------------------------------
                                                $151,551    $144,662    $128,821
                                                --------------------------------
                                                --------------------------------
</TABLE>


The principal components of net deferred tax liabilities are as follows:


<TABLE>
<CAPTION>
                                                                        December 31
                                  --------------------------------------------------------------------------------------
                                                    1995                                         1994
                                  --------------------------------------------------------------------------------------
(Thousands of Dollars)                Assets     Liabilities        Total         Assets      Liabilities        Total
- ------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>           <C>            <C>            <C>            <C>            <C>       
Depreciation                                      $(449,571)     $(449,571)                    $(399,381)     $(399,381)
Comprehensive Settlement            $ 159,294       (77,504)        81,790      $ 211,996       (107,597)       104,399 
Regulatory accounts receivable                     (103,889)      (103,889)                     (150,767)      (150,767)
Deferred investment tax credits        29,673                       29,673         30,996                        30,996 
Customer advances for                                                                                                   
  construction                         20,787                       20,787         25,527                        25,527
Regulatory asset                                    (30,144)       (30,144)                      (39,604)       (39,604)
Other regulatory                      118,623       (45,624)        72,999        109,084        (62,195)        46,889
                                  --------------------------------------------------------------------------------------
  Total deferred income tax
    assets (liabilities)             $328,377     $(706,732)     $(378,355)      $377,603      $(759,544)     $(381,941)
                                  --------------------------------------------------------------------------------------
                                  --------------------------------------------------------------------------------------

</TABLE>


The Parent files a consolidated federal income tax return and combined
California franchise tax reports which include the Company and the Parent's
other subsidiaries.  The Company pays the amount of taxes applicable to itself
had it filed a separate return.

The Company generally provides for income taxes on the basis of amounts
expected to be paid currently, except for the provision for deferred taxes on
regulatory accounts, customer advances for construction and accelerated
depreciation of property placed in service after 1980.  In addition, the Company
recognizes certain other deferred tax liabilities (primarily accelerated
depreciation of property placed in service prior to 1981 and deferred investment
tax credits) which are expected to be recovered through future rates.  At
December 31, 1995 and 1994, $109 million and $97 million, respectively, of
deferred income taxes have been offset by an equivalent amount in regulatory
assets.


                                     - 33 -

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4.   COMMITMENTS AND CONTINGENT LIABILITIES

ENVIRONMENTAL OBLIGATIONS

The Company has identified and reported to California environmental
authorities 42 former manufactured gas plant sites for which it (together with
other utilities as to 21 of these sites) may have remedial obligations under
environmental laws.  As of December 31, 1995, nine of these sites have been
remediated, of which five have received certification from the California
Environmental Protection Agency.  Preliminary investigations, at a minimum,
have been completed on 39 of the gas plant sites, including those sites at which
the remediations described above have been completed.  In addition, the Company
has been named as a potentially responsible party for two landfill sites and
three industrial waste disposal sites.

On May 4, 1994, the CPUC approved a collaborative settlement between the
Company and other California energy utilities and the Division of Ratepayer
Advocates which provides for rate recovery of 90% of environmental investigation
and remediation costs without reasonableness review.  In addition, the utilities
have the opportunity to retain a percentage of any insurance recoveries to
offset the 10% of costs not recovered in rates.

At December 31, 1995, the Company's estimated remaining investigation and
remediation liability was $76 million of which it is authorized to recover 90%
through the mechanism discussed above.  The estimated liability is subject to
future adjustment pending further investigation.  The Company believes that any
costs not ultimately recovered through rates, insurance or other means, upon
giving effect to previously established liabilities, will not have a material
adverse effect on the Company's financial statements.

LITIGATION

The Company is a defendant in various lawsuits arising in the normal course of
business.  Management believes that the resolution of these pending claims and
legal proceedings will not have a material adverse effect on the Company's
financial statements.

OBLIGATIONS UNDER FIRM COMMITMENTS

The Company has commitments for firm pipeline capacity under contracts with
pipeline companies that expire at various dates through the year 2006. These
agreements provide for payments of an annual demand or reservation charge.  The
Company recovers such fixed charges in rates.  Estimated minimum commitments as
of December 31, 1995 are as follows: 1996 - $258 million, 1997 - $222 million,
1998 - $244 million, 1999 - $244 million, 2000 - $244 million, after 2000 -
$1,327 million.

OTHER COMMITMENTS AND CONTINGENCIES

At December 31, 1995, commitments for capital expenditures were approximately
$27 million.


                                     - 34 -

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5.   LEASES

The Company has leases on real and personal property expiring at various dates
from 1996 to 2011.  The rentals payable under these leases are determined on
both fixed and percentage bases and most leases contain options to extend which
are exercisable by the Company.

Rental expense under operating leases was $45 million, $42 million and $39
million in 1995, 1994 and 1993, respectively.

The following is a schedule of future minimum operating lease commitments as of
December 31, 1995:


<TABLE>
<CAPTION>
                                                            Future Minimum
     (Thousands of Dollars)                                 Lease Payments
     ---------------------------------------------------------------------
     <S>                                                    <C>     
     Year Ending December 31:

     1996                                                         $ 31,739
     1997                                                           32,708
     1998                                                           29,584
     1999                                                           29,909
     2000                                                           30,511
     Later years                                                   271,833
                                                                  --------
       Total                                                      $426,284
                                                                  --------
                                                                  --------
</TABLE>


6.   COMPENSATING BALANCES AND SHORT-TERM BORROWING ARRANGEMENTS

The Company has a $650 million multi-year credit agreement requiring annual fees
of .075%.  The interest rate on this line varies and is derived from formulas
based on market rates and the Company's credit ratings.  The multi-year credit
agreement expires on February 8, 2001.  At December 31, 1995, the bank line of
credit was unused.  The unused bank line of credit provides backing for the
Company's commercial paper program.

At December 31, 1995 and 1994, the Company had $415 million and $524 million,
respectively, of commercial paper obligations outstanding.  The weighted
average annual interest rate of commercial paper obligations outstanding was
5.66% and 5.96% at December 31, 1995 and 1994, respectively.  At December 31,
1995, the Company has classified $181 million of the commercial paper as
long-term debt since it is the Company's intent (supported by the $650 million
multi-year credit agreement above) to continue to refinance that portion of the
debt on a long-term basis.


                                     - 35 -

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


7.   LONG-TERM DEBT


<TABLE>
<CAPTION>
                                                                                  December 31
                                                                         -------------------------
(Thousands of Dollars)                                                        1995          1994
- --------------------------------------------------------------------------------------------------
<S>                                                                        <C>           <C>
FIRST MORTGAGE BONDS:                                                                             
  6 1/2%  December 15, 1997                                                $ 125,000     $ 125,000
  5 1/4%  March 1, 1998                                                      100,000       100,000
  6 7/8%  August 15, 2002                                                    100,000       100,000
  5 3/4%  November 15, 2003                                                  100,000       100,000
  9 3/4%  December 1, 2020                                                                  18,435
  8 3/4%  October 1, 2021                                                    150,000       150,000
  7 3/8%  March 1, 2023                                                      100,000       100,000
  7 1/2%  June 15, 2023                                                      125,000       125,000
  6 7/8%  November 1, 2025                                                   175,000       175,000
                                                                                                 
OTHER LONG-TERM DEBT:                                                                             
  4.69% Notes, June 16, 1995                                                                31,000
  8 3/4% Notes, August 4, 1995                                                              20,000
  5.03% - 5.05% Notes, August 28 - September 1, 1995                                        28,000
  5.81% - 5.85% Notes, December 1, 1995                                                      7,000
  8 3/4% Notes, July 8, 1996                                                  20,000        20,000
  5.98% Notes, August 28, 1997                                                22,000        22,000
  8 3/4% Notes, July 6, 2000                                                  10,000        10,000
  SFr. 150,000,000 7 1/2% Foreign Interest Payment Securities,
    May 14, 1996                                                              75,282        75,282
  SFr. 100,000,000 5 1/8% Bonds, February 6,1998 (foreign currency
    exposure hedged through currency swap at an interest rate of 9.725%)      47,250        47,250
  5.66% Commercial Paper, February 8, 2001                                   181,304       245,847
                                                                          ----------    ----------
  Total outstanding                                                        1,330,836     1,499,814
                                                                          ----------    ----------
Less:
  Payments due within one year                                                95,283        86,000
  Unamortized debt discount less premium                                      15,417        16,883
                                                                          ----------    ----------
                                                                             110,700       102,883
                                                                          ----------    ----------
Long-Term Debt                                                            $1,220,136    $1,396,931
                                                                          ----------    ----------
                                                                          ----------    ----------
</TABLE>



The annual principal payment requirements of long-term debt for the years 1996,
1997, 1998 and 2000 are $95 million, $147 million, $147 million, and
$10 million, respectively.  No amounts are due in 1999.  Substantially all of
utility plant serves as collateral for the First Mortgage Bonds.


                                     - 36 -



<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


CURRENCY RATE SWAPS

In February 1986, the Company issued SFr. 100 million of 5 1/8% bonds which 
will mature on February 6, 1998.  The Company has entered into a swap 
transaction with a major international bank to hedge the currency exposure. 
The terms of the swap result in a U.S. dollar liability of $47 million at an 
interest rate of 9.725% with the principal payable on February 6, 1998.

In May 1986, the Company issued SFr. 150 million of 7 1/2% Foreign Interest 
Payment Securities which are renewable at 10-year intervals at reset interest 
rates.  Interest is payable in U.S. dollars.  The principal was exchanged 
into $75 million at an exchange rate of 1.9925, which is also the minimum 
rate of exchange for determining the amount of principal repayable in Swiss 
francs.

8.   FINANCIAL INSTRUMENTS

The carrying amount of cash and cash equivalents approximates fair value 
because of the short maturity of those instruments.  The Flexible Auction 
preferred stocks of the Company approximate fair value since they are 
remarketed periodically.  The carrying amount of the currency swaps 
approximates fair value.

The fair value of the Company's long-term debt, 6% preferred, 6% Series A 
preferred and 7 3/4% preferred stock is estimated based on the quoted market 
prices for the same or similar issues or on the current rates offered to the 
Company for debt of similar remaining maturities.  The fair value of these 
financial instruments is different from the carrying amount.

The following financial instruments have a fair value which is different from 
the carrying amount as of December 31.


<TABLE>
<CAPTION>
                                          1995                  1994
                               -------------------------------------------
                                  Carrying     Fair     Carrying     Fair
      (Dollars in Millions)        Amount     Value      Amount     Value
      --------------------------------------------------------------------
<S>                                <C>        <C>        <C>        <C>
      Long-Term Debt               $1,315     $1,278     $1,483     $1,377
      Preferred Stocks             $   97     $   93     $   97     $   78
</TABLE>


As a result of the GCIM (See Note 2), the Company enters into a certain 
amount of gas futures contracts in the open market with the intent of 
reducing gas costs within the GCIM tolerance band.  The Company policy is to 
use gas futures contracts to mitigate risk and better manage gas costs.  The 
CPUC has approved the use of gas futures for managing risk associated with 
the GCIM.  For the year ended December 31, 1995, gains or losses from gas 
futures contracts are not material to the Company's financial statements.


                                     - 37 -

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


9.   CAPITAL STOCK

The amount of capital stock outstanding at December 31 is as follows:


<TABLE>
<CAPTION>
                                           December 31, 1995        December 31, 1994
                                    ----------------------------------------------------
                                         Number       Thousands     Number     Thousands
                                        of Shares    of Dollars    of Shares   of Dollars
                                    ------------------------------------------------------
<S>                                    <C>            <C>         <C>           <C>
PREFERRED STOCK:
  cumulative, voting (a)(b)(c):
    6%, $25 par value                       79,011    $  1,975        79,011    $  1,975
    6%, Series A, $25 par value            783,032      19,576       783,032      19,576
    Series Preferred, no par value
      Flexible Auction, Series A               500      50,000           500      50,000
      Flexible Auction, Series C               500      50,000           500      50,000
      7 3/4%, $25 Stated Value           3,000,000      75,000     3,000,000      75,000
                                                      --------                  --------
        Total                                         $196,551                  $196,551
                                                      --------                  --------
                                                      --------                  --------
PREFERENCE STOCK - cumulative, voting,
  no par value (a)(c)
COMMON STOCK - no par value (a)(c)      91,300,000    $834,889     91,300,000   $834,889
                                                      --------                  --------
                                                      --------                  --------
</TABLE>



(a)  The Company's Articles of Incorporation authorize the following stocks: 
100 million shares of Common Stock; 160,000 shares of 6% Preferred Stock; 
840,000 shares of 6% Preferred Stock, Series A; 5 million shares of Series 
Preferred Stock and 5 million shares of Preference Stock.

(b)  Each issue of the Flexible Auction Series Preferred Stock is auctioned 
on specified dividend dates.  The term of each subsequent dividend period is, 
at the Company's option, 49 days or longer, not to exceed ten years.  The 
weighted average dividend rates for the Flexible Auction Preferred Stock for 
1995, 1994 and 1993 were:  Series A, 4.80%, 3.40% and 2.67%, respectively; 
and for Series C, 4.18%, 3.33% and 2.75%, respectively.  Subsequent dividend 
rates may be affected by general market conditions and the credit rating 
assigned to the Flexible Auction Series Preferred Stock.  The Company has the 
option of redeeming the shares, in whole or in part, at $100,000 per share 
plus accumulated dividends on any scheduled dividend payment date.

(c)  In the event of any liquidation, dissolution or winding up of the 
Company, the holders of shares of each series of Preferred Stock and of each 
series of Series Preferred Stock would be entitled to receive the stated 
value or the liquidation preference for their shares, plus accrued dividends 
before any amount shall be paid to the holders of Preference Stock or Common 
Stock.  If the amounts payable with respect to the shares of each series of 
Preferred Stock or Series Preferred Stock are not paid in full, the holders 
of such shares will share ratably in any such distribution.  After payment in 
full to the holders of each series of Preferred Stock, Series Preferred Stock 
and Preference Stock of the liquidating distributions to which they are 
entitled, the remaining assets and funds of the Company would be divided pro 
rata among the holders of the 6% Preferred Stock and the holders of Common 
Stock.


                                     - 38 -

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


10.  TRANSACTIONS WITH AFFILIATES

Pacific Interstate Transmission Company, Pacific Interstate Offshore Company 
and Pacific Offshore Pipeline Company, subsidiaries of the Parent and gas 
supply affiliates of the Company, sell and transport gas to the Company under 
tariffs approved by the Federal Energy Regulatory Commission.  During 1995, 
1994 and 1993, billings for such gas purchases totaled $141 million, $215 
million, and $344 million, respectively.  The Company has long-term gas 
purchase and transportation agreements with the affiliates extending through 
the year 2003 requiring certain minimum payments which allow the affiliates 
to recover the construction cost of their facilities.  The Company is 
obligated to make minimum annual payments to cover the affiliates' operation 
and maintenance expenses, demand charges paid to their suppliers, current 
taxes other than income taxes, and debt service costs, including interest 
expense and scheduled retirement of debt.  These long-term agreements were 
restructured in conjunction with the Comprehensive Settlement previously 
discussed (see Note 2).

11.  PENSION, POSTRETIREMENT AND OTHER EMPLOYEE BENEFIT PLANS

PENSION PLAN

The Company has a noncontributory defined benefit pension plan covering 
substantially all of its employees.  Benefits are based on an employee's 
years of service and compensation during his or her last years of employment. 
The Company's policy is to fund the plan annually at a level which is fully 
deductible for federal income tax purposes and as necessary on an actuarial 
basis to provide assets sufficient to meet the benefits to be paid to plan 
members.

In conformity with generally accepted accounting principles for a rate 
regulated enterprise, the Company has recorded regulatory adjustments to 
reflect, in net income, pension costs calculated under the actuarial method 
allowed for ratemaking.  The cumulative difference between the net periodic 
pension cost calculated for financial reporting and ratemaking purposes has 
been included as a deferred charge or credit in the Consolidated Balance 
Sheet.

Pension expense was as follows:


<TABLE>
<CAPTION>
                                                            Year Ended December 31
                                                     -------------------------------------
(Thousands of Dollars)                                  1995         1994         1993
- ------------------------------------------------------------------------------------------
<S>                                                  <C>           <C>          <C>
Service cost - benefits earned during the period     $  26,038     $  33,627    $  31,828
Interest cost on projected benefit obligation           84,392        80,741       78,727
Actual return on plan assets                          (315,420)       (2,631)    (153,293)
Net amortization and deferral                          210,594       (94,173)      54,816
                                                     -------------------------------------
Net periodic pension cost                                5,604        17,564       12,078
Special early retirement program                        18,011        11,790       17,546
Regulatory adjustment                                    4,582        (1,878)         919
                                                     -------------------------------------
  Total pension expense                              $  28,197     $  27,476    $  30,543
                                                     -------------------------------------
                                                     -------------------------------------
</TABLE>


                                     - 39 -


<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A reconciliation of the plan's funded status to the pension liability 
recognized in the Consolidated Balance Sheet is as follows:


<TABLE>
<CAPTION>
                                                                                       December 31
                                                                               --------------------------
(Thousands of Dollars)                                                             1995           1994
- ---------------------------------------------------------------------------------------------------------
<S>                                                                            <C>            <C>
Actuarial present value of pension benefit obligations                                                        
  Accumulated benefit obligation, including $956,990 and $751,852                                             
    in vested benefits at December 31, 1995 and 1994, respectively             $ 1,083,052    $   844,762     
  Effect of future salary increases                                                270,530        203,995     
                                                                               --------------------------
Projected benefit obligation                                                     1,353,582      1,048,757
Less: plan assets at fair value, primarily publicly traded common                                             
  stocks and equity pooled funds                                                (1,492,891)    (1,237,747)
Unrecognized net gain                                                              185,932        234,372
Unrecognized prior service cost                                                    (40,608)       (35,761)
Unrecognized transition obligation                                                  (4,635)        (5,143)
                                                                               --------------------------
Accrued pension liability included in the Consolidated Balance Sheet           $     1,380     $    4,478
                                                                               --------------------------
                                                                               --------------------------
Deferred pension charge included in the Consolidated Balance Sheet             $    (1,813)    $   (1,489)
                                                                               --------------------------
                                                                               --------------------------
The plans' major actuarial assumptions include:                                                               
   Weighted average discount rate                                                     6.85%          8.00%
   Rate of increase in future compensation levels                                     5.00%          5.00%
   Expected long-term rate of return on plan assets                                   8.00%          8.00%

</TABLE>


POSTRETIREMENT BENEFIT PLANS

In 1993, the Company adopted Statement of Financial Accounting Standards No. 
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" 
(SFAS 106).  SFAS 106 requires the accrual of the cost of certain 
postretirement benefits other than pensions over the active service period of 
the employee. The Company previously recorded these costs when paid or 
funded.  In accordance with SFAS 106, the Company elected to allow 
amortization the unfunded transition obligation of $256 million over 20 
years.  The CPUC in late 1992 authorized SFAS 106 amounts to be recovered in 
rates.

As with pensions, the Company has recorded regulatory adjustments to reflect, 
in net income, postretirement benefit costs calculated under the actuarial 
method allowed for ratemaking.  The cumulative difference between the net 
periodic postretirement benefit cost calculated for financial reporting and 
ratemaking purposes has been included as a deferred charge or credit in the 
Consolidated Balance Sheet.

The Company's postretirement benefit plans currently provide medical and life 
insurance benefits to qualified retirees. The Company's policy is to fund 
these benefits at a level which is fully tax deductible for federal income 
tax purposes, not to exceed amounts recoverable in rates for regulated 
companies, and as necessary on an actuarial basis to provide assets 
sufficient to be paid to plan participants.

Separate trusts for each of the plans have been established exclusively for 
the benefit payments of each plan.  Some of the plans' funds are commingled 
with the pension funds by the trustee for investment purposes but are 
accounted for separately per plan.


                                     - 40 - 


<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The net periodic postretirement benefit expense was as follows:



<TABLE>
<CAPTION>
                                                                  Year Ended December 31 
                                                          -------------------------------------
(Thousands of Dollars)                                     1995            1994           1993
- -----------------------------------------------------------------------------------------------
<S>                                                       <C>            <C>            <C>
Service cost - benefits earned during the period          $12,363        $13,122        $11,917
Interest cost on projected benefit obligation              29,089         26,464         26,848
Actual return on plan assets                              (36,172)        (1,487)       (10,076)
Net amortization and deferral                              35,006          2,561         15,205
                                                          -------------------------------------
Net periodic postretirement benefit cost                   40,286         40,660         43,894
Regulatory adjustment                                      (1,378)        (2,887) 
                                                          -------------------------------------
       Total postretirement benefit expense               $38,908        $37,773        $43,894
                                                          -------------------------------------
                                                          -------------------------------------
</TABLE>


A reconciliation of the plan's funded status to the postretirement liability
recognized in the Consolidated Balance Sheet is as follows:




<TABLE>
<CAPTION>

                                                                                                    December 31
                                                                                           -----------------------------
(Thousands of Dollars)                                                                        1995                1994
- ------------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <S>                 <S>
Accumulated postretirement benefit obligation:
    Retirees                                                                               $ 176,278           $ 160,066
    Fully eligible active plan participants                                                  228,456             174,440
    Other active plan participants                                                            21,301              17,012
                                                                                           -----------------------------
                                                                                             426,035             351,518

Less: plan assets at fair value, primarily publicly traded common stocks                    (209,990)           (144,304)
Unrecognized net transition obligation and equity pooled funds                              (217,266)           (230,047)
Unrecognized net pension service cost                                                         15,050              16,342
Unrecognized net gain (loss)                                                                 (15,207)              3,612
                                                                                           -----------------------------
Prepaid postretirement benefit asset included in the Consolidated Balance Sheet            $  (1,378)          $  (2,879)
                                                                                           -----------------------------
                                                                                           -----------------------------
Deferred postretirement benefit charge included in the Consolidated Balance Sheet          $  (1,378)          $  (2,887)
                                                                                           -----------------------------
                                                                                           -----------------------------
The plan's major actuarial assumptions include:
    Health care cost trend rate                                                                 7.50%               8.00%
    Weighted average discount rate                                                              6.85%               8.00%
    Rate of increase in future compensation levels                                              5.00%               5.00%
    Expected long-term rate of return on plan assets                                            8.00%               8.00%

</TABLE>


The assumed health care cost trend rate is 7.5% for 1996.  The trend rate is
expected to decrease from 1996 to 1998 with a 6.5% ultimate trend rate
thereafter.  The effect of a one-percentage-point increase in the assumed health
care cost trend rate for each future year is $8.1 million on the aggregate of
the service and interest cost components of net periodic postretirement cost for
1995 and $60.1 million on the accumulated postretirement benefit obligation at
December 31, 1995.  The estimated income tax rate used in the return on plan
assets is zero since the assets are invested in tax exempt funds.


                                      -41-


<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

POSTEMPLOYMENT BENEFITS

At December 31, 1992, the Company adopted Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits" (SFAS
112).  SFAS 112 requires the accrual of the obligation to provide benefits to
former or inactive employees after employment but before retirement.  There was
no impact on earnings since these costs are currently recovered in rates as
paid, and as such, have been reflected as a regulatory asset.  At December 31,
1995 and 1994 the liability was $45 million and $49 million, respectively, and
represents primarily workers compensation and disability benefits.

RETIREMENT SAVINGS PLAN

Upon completion of one year of service, all employees of the Company and certain
subsidiaries are eligible to participate in the Company's retirement savings
plan administered by bank trustees.  Employees may contribute from 1% to 14% of
their regular earnings.  The Company generally contributes an amount of cash or
a number of shares of the Company's common stock of equivalent fair market value
which, when added to prior forfeitures, will equal 50% of the first 6% of
eligible base salary contributed by employees.  The employees' contributions, at
the direction of the employees, are primarily invested in the Company's common
stock, mutual funds or guaranteed investment contracts.  In 1993, 1994 and 1995
the Company's contributions were partially funded by the Pacific Enterprises
Employee Stock Ownership Plan and Trust.  The Company's compensation expense was
$7 million in 1995, $8 million in 1994 and $9 million in 1993.


                                      -42-


<PAGE>

STATEMENT OF MANAGEMENT RESPONSIBILITY FOR CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements have been prepared by management.  The
integrity and objectivity of these financial statements and the other financial
information in the Annual Report, including the estimates and judgments on which
they are based, are the responsibility of management.  The financial statements
have been audited by Deloitte & Touche LLP, independent certified public
accountants, appointed by the Board of Directors.  Their report is shown on
page 44.  Management has made available to Deloitte & Touche LLP all of the
Company's financial records and related data, as well as the minutes of
shareholders' and directors' meetings.

Management maintains a system of internal accounting control which it believes
is adequate to provide reasonable, but not absolute, assurance that assets are
properly safeguarded and accounted for, that transactions are executed in
accordance with management's authorization and are properly recorded and
reported, and for the prevention and detection of fraudulent financial
reporting. Management monitors the system of internal control for compliance
through its own review and a strong internal auditing program which also
independently assesses the effectiveness of the internal controls.  In
establishing and maintaining internal controls, the Company exercises judgment
in determining whether the benefits to be derived justify the costs of such
controls.

Management acknowledges its responsibility to provide financial information
(both audited and unaudited) that is representative of the Company's operations,
reliable on a consistent basis, and relevant for a meaningful financial
assessment of the Company.  Management believes that the control process enables
them to meet this responsibility.

Management also recognizes its responsibility for fostering a strong ethical
climate so that the Company's affairs are conducted according to the highest
standards of personal and corporate conduct.  This responsibility is
characterized and reflected in the Company's code of corporate conduct, which is
publicized throughout the Company.  The Company maintains a systematic program
to assess compliance with this policy.

The Board of Directors has an Audit Committee composed solely of directors who
are not officers or employees.  The Committee recommends for approval by the
full Board the appointment of the independent auditors.  The Committee meets
regularly with management, with the Company's internal auditors, and with the
independent auditors.  The independent auditors and the internal auditors
periodically meet alone with the Audit Committee and have free access to the
Audit Committee at any time.




Warren I. Mitchell,
President



Larry J. Dagley,
Senior Vice President and Chief Financial Officer

January 31, 1996


                                      -43-


<PAGE>


INDEPENDENT AUDITORS, REPORT

Southern California Gas Company:

We have audited the consolidated financial statements of Southern California Gas
Company and subsidiaries (pages 25 to 42) as of December 31, 1995 and 1994, and
for each of the three years in the period ended December 31, 1995.  These
financial statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Southern California
Gas Company and its subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995 in conformity with generally accepted
accounting principles.









DELOITTE & TOUCHE LLP

Los Angeles, California
January 31, 1996



                                      -44-


<PAGE>

                             QUARTERLY FINANCIAL DATA (UNAUDITED)


<TABLE>
<CAPTION>

                                                          1995
                                    ------------------------------------------------
THREE MONTHS ENDED                      MARCH 31    JUNE 30    SEPT. 30     DEC. 31
- ------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS) 
<S>                                     <C>         <C>         <C>         <C>
OPERATING REVENUES                      $604,690    $579,559    $505,292    $589,767 
 
NET OPERATING REVENUE                   $ 73,272    $ 73,880    $ 71,499    $ 81,180 
 
NET INCOME                              $ 51,049    $ 53,025    $ 50,650    $ 60,109 
 
NET INCOME APPLICABLE TO COMMON STOCK   $ 48,121    $ 50,107    $ 47,762    $ 57,230 
 
 
<CAPTION>



                                                          1994
                                    ------------------------------------------------
THREE MONTHS ENDED                      MARCH 31    JUNE 30    SEPT. 30     DEC. 31 
- ------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)                                                        
<S>                                     <C>         <C>         <C>        <C>
OPERATING REVENUES                      $689,154    $630,298    $567,929   $699,143

NET OPERATING REVENUE                   $ 67,598    $ 68,094    $ 67,575   $ 75,360
 
NET INCOME                              $ 43,949    $ 45,788    $ 45,197   $ 55,579
 
NET INCOME APPLICABLE TO COMMON STOCK   $ 41,509    $ 43,223    $ 42,532   $ 52,781

</TABLE>





 
                     ITEM 9.  CHANGES IN AND DISAGREEMENTS
                         WITH ACCOUNTANTS ON ACCOUNTING
                            AND FINANCIAL DISCLOSURE
 
               None.




                                    PART III
 

          ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     Information required by this Item with respect to the Company's directors
is set forth under the caption "Election of Directors" in the Company's
Information Statement for its Annual Meeting of Shareholders scheduled to be
held on May 2, 1996.  Such information is incorporated herein by reference. 

          Information required by this Item with respect to the Company's
executive officers is set forth in Item 1 of this Annual Report. 


                                      -45-


<PAGE>


                       ITEM 11.  EXECUTIVE COMPENSATION
 

          Information required by this Item is set forth under the caption
"Election of Directors" and "Executive Compensation" in the Company's
Information Statement for its Annual Meeting of Shareholders scheduled to be
held on May 2, 1996.  Such information is incorporated herein by reference.


                     ITEM 12.  SECURITY OWNERSHIP OF CERTAIN
                        BENEFICIAL OWNERS AND MANAGEMENT
 

          Information required by this Item is set forth under the caption
"Election of Directors" in the Company's Information Statement for its Annual
Meeting of Shareholders scheduled to be held on May 2, 1996.  Such information
is incorporated herein by reference.


                   ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED
                                 TRANSACTIONS
 

          None.



                                      -46-



<PAGE>


                                     PART IV
 

                      ITEM 14.  EXHIBITS, FINANCIAL STATEMENT
                        SCHEDULES, AND REPORTS ON FORM 8-K
 




(a)  Documents filed as part of this report:

1.   CONSOLIDATED FINANCIAL STATEMENTS (SET FORTH IN


     ITEM 8 OF THIS ANNUAL REPORT ON FORM 10-K):

     1.01    Report of Deloitte & Touche LLP,
             Independent Certified Public Accountants.

     1.02    Statement of Consolidated
             Income for the years ended
             December 31, 1995, 1994 and 1993.

     1.03    Consolidated Balance Sheet at December 31,
             1995 and 1994.

     1.04    Statement of Consolidated Cash Flows
             for the years ended December 31, 1995,
             1994 and 1993.

     1.05    Statement of Consolidated Shareholders'
             Equity for the years ended December 31, 1995,
             1994, 1993 and 1992.

     1.06    Notes to Consolidated Financial
             Statements.

3.   ARTICLES OF INCORPORATION AND BY-LAWS:

     3.01    Restated Articles of Incorporation of
             Southern California Gas Company
             (Note 25; Exhibit 3.01).

     3.02    Bylaws of Southern California Gas Company.

4.   INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS:

     (Note:  As permitted by Item 601(b)(4)(iii) of Regulation S-K, certain
     instruments defining the rights of holders of long-term debt for which the
     total amount of securities authorized thereunder does not exceed ten
     percent of the total assets of Southern California Gas Company and its
     subsidiaries on a consolidated basis are not filed as exhibits to this
     Annual Report.  The Company agrees to furnish a copy of each such
     instrument to the Commission  upon request.)

     4.01    Specimen Preferred Stock Certificates of
             Southern California Gas Company
             (Note 13; Exhibit 4.01).


                                      -47-


<PAGE>

     4.02    First Mortgage Indenture of Southern California 
             Gas Company to American Trust Company dated as of
             October 1, 1940 (Note 1; Exhibit B-4).

     4.03    Supplemental Indenture of Southern California Gas
             Company to American Trust Company dated as of
             July 1, 1947 (Note 2; Exhibit B-5).

     4.04    Supplemental Indenture of Southern California
             Gas Company to American Trust Company dated as
             of August 1, 1955 (Note 3; Exhibit 4.07).

     4.05    Supplemental Indenture of Southern California
             Gas Company to American Trust Company dated as
             of June 1, 1956 (Note 4; Exhibit 2.08).

     4.06    Supplemental Indenture of Southern California
             Gas Company to Wells Fargo Bank, National
             Association dated as of August 1, 1972 (Note 7;
             Exhibit 2.19).

     4.07    Supplemental Indenture of Southern California
             Gas Company to Wells Fargo Bank, National
             Association dated as of May 1, 1976 (Note 6;
             Exhibit 2.20).

     4.08    Supplemental Indenture of Southern California
             Gas Company to Wells Fargo Bank, National
             Association dated as of September 15, 1981
             (Note 12; Exhibit 4.25).

     4.09    Supplemental Indenture of Southern California
             Gas Company to Manufacturers Hanover Trust
             Company of California, successor to Wells
             Fargo Bank, National Association, and Crocker
             National Bank as Successor Trustee dated as
             of May 18, 1984 (Note 16; Exhibit 4.29).

     4.10    Supplemental Indenture of Southern California
             Gas Company to Bankers Trust Company of
             California, N.A., successor to Wells Fargo Bank,
             National Association dated as of January 15,
             1988 (Note 18; Exhibit 4.11).

     4.11    Supplemental Indenture of Southern California
             Gas Company to First Trust of California,
             National Association, successor to Bankers
             Trust Company of California, N.A. dated as of
             August 15, 1992 (Note 24; Exhibit 4.37).

     4.12    Specimen Flexible Auction Series A Preferred
             Stock Certificate (Note 21; Exhibit 4.11).


                                      -48-


<PAGE>

     4.13    Specimen Flexible Auction Series B Preferred
             Stock Certificate (Note 22; Exhibit 4.12).

     4.14    Specimen Flexible Auction Series C Preferred
             Stock Certificate (Note 23; Exhibit 4.13).

     4.15    Specimen 7 3/4% Series Preferred Stock
             Certificate (Note 25; Exhibit 4.15).

10.  MATERIAL CONTRACTS

     10.01  Restatement and Amendment of Pacific
            Enterprises 1979 Stock Option Plan
            (Note 10; Exhibit 1.1).

     10.02  Pacific Enterprises Supplemental Medical
            Reimbursement Plan for Senior Officers
            (Note 11; Exhibit 10.24).

     10.03  Pacific Enterprises Financial Services
            Program for Senior Officers (Note 11;
            Exhibit 10.25).

     10.04  Southern California Gas Company Retirement
            Savings Plan, as amended and restated as of
            August 30, 1988 (Note 15; Exhibit 28.02).

     10.05  Southern California Gas Company Statement of
            Life Insurance, Disability Benefit and Pension
            Plans, as amended and restated as of
            January 1, 1985 (Note 16; Exhibit 10.27).

     10.06  Southern California Gas Company Pension
            Restoration Plan For Certain Management
            Employees (Note 11; Exhibit 10.29).

     10.07  Pacific Enterprises Executive Incentive
            Plan (Note 18; Exhibit 10.13)

     10.08  Pacific Enterprises Deferred Compensation
            Plan for Key Management Employees (Note 15;
            Exhibit 10.41).

     10.09  Pacific Enterprises Stock Incentive Plan
            (Note 19; Exhibit 4.01). 

     10.10  Pacific Enterprises Employee Stock Option Plan (Note 27;
            Exhibit 4.01).

21.  SUBSIDIARIES OF THE REGISTRANT

     21.01  List of subsidiaries of Southern
            California Gas Company.


                                      -49-


<PAGE>

23.  CONSENTS OF EXPERTS AND COUNSEL

     23.01  Consent of Deloitte & Touche LLP,
            Independent Certified Public Accountants.

24.  POWER OF ATTORNEY

     24.01  Power of Attorney of Certain Officers
            and Directors of Southern California Gas
            Company  (contained on the signature pages of this
            Annual Report on Form 10-K).

27.  FINANCIAL DATA SCHEDULE

     27.01  Financial Data Schedule.

(b)  REPORTS ON FORM 8-K: 

                    The following report on Form 8-K was filed during the last
               quarter of 1995.

     REPORT DATE                             ITEM REPORTED
     -----------                             -------------

     October 31, 1995                           Item 5

_________________________

     NOTE:     Exhibits referenced to the following notes were filed with the
               documents cited below under the exhibit or annex number following
               such reference.  Such exhibits are incorporated herein by
               reference.











                                      -50-

<PAGE>

   Note
 Reference               Document
 ---------               --------

     1       Registration Statement No. 2-4504 filed by Southern California Gas
             Company on September 16, 1940.

     2       Registration Statement No. 2-7072 filed by Southern California Gas
             Company on March 15, 1947.

     3       Registration Statement No. 2-11997 filed by Pacific Lighting
             Corporation on October 26, 1955.

     4       Registration Statement No. 2-12456 filed by Southern California Gas
             Company on April 23, 1956.

     5       Registration Statement No. 2-45361 filed by Southern California Gas
             Company on August 16, 1972.

     6       Registration Statement No. 2-56034 filed by Southern California Gas
             Company on April 14, 1976.

     7       Registration Statement No. 2-59832 filed by Southern California Gas
             Company on September 6, 1977.

     8       Registration Statement No. 2-42239 filed by Pacific Lighting Gas
             Supply Company (under its former name of Pacific Lighting Service
             Company) on October 29, 1971.

     9       Registration Statement No. 2-43834 filed by Pacific Lighting
             Corporation on April 17, 1972.

     10      Registration Statement No. 2-66833 filed by Pacific Lighting
             Corporation on March 5, 1980.

     11      Annual Report on Form 10-K for the year ended December 31, 1980,
             filed by Pacific Lighting Corporation.

     12      Annual Report on Form 10-K for the year ended December 31, 1981,
             filed by Pacific Lighting Corporation.

     13      Annual Report on Form 10-K for the year ended December 31, 1980
             filed by Southern California Gas Company.

     14      Quarterly Report on Form 10-Q for the quarter ended September 30,
             1983, filed by Southern California Gas Company.

     15      Registration Statement No. 33-6357 filed by Pacific Enterprises on
             December 30, 1988.

     16      Annual Report on Form 10-K for the year ended December 31, 1984,
             filed by Southern California Gas Company.

     17      Current Report on Form 8-K for the month of March 1986, filed by
             Southern California Gas Company.


                                      -51-


<PAGE>

     18      Annual Report on Form 10-K for the year ended December 31, 1987
             filed by Pacific Lighting Corporation.

     19      Registration Statement No. 33-21908 filed by Pacific Enterprises on
             May 17, 1988.

     20      Annual Report on Form 10-K for the year ended December 31, 1988,
             filed by Southern California Gas Company.

     21      Annual Report on Form 10-K for the year ended December 31, 1989,
             filed by Southern California Gas Company.

     22      Annual Report on Form 10-K for the year ended December 31, 1990,
             filed by Southern California Gas Company.

     23      Annual Report on Form 10-K for the year ended December 31, 1991,
             filed by Southern California Gas Company.

     24      Registration Statement No. 33-50826 filed by Southern California
             Gas Company on August 13, 1992.

     25      Annual Report on Form 10-K for the year ended December 31, 1992,
             filed by Southern California Gas Company.

     26      Annual Report on Form 10-K for the year ended December 31, 1993,
             filed by Southern California Gas Company.

     27      Registration Statement No. 33-54055 filed by Pacific Enterprises on
             June 9, 1994.


                                      -52-


<PAGE>





SIGNATURES


               Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                              SOUTHERN CALIFORNIA GAS COMPANY



                                   By:    WARREN I. MITCHELL /s/
                                   -----------------------------
                                   Name:  Warren I. Mitchell
                                   Title: President

                                   Dated: March 20, 1996


                                      -53-


<PAGE>

          Each person whose signature appears below hereby authorizes Warren I.
Mitchell, Larry J. Dagley, Ralph Todaro, and each of them, severally, as
attorney-in-fact, to sign on his or her behalf, individually and in each
capacity stated below, and file all amendments to this Annual Report.

          Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


Signature                        Title                       Date 
- ---------                         -----                       ----- 

WARREN I. MITCHELL /s/            President                   March 20, 1996 
- ------------------------          (Principal Executive 
(Warren I. Mitchell)              Officer) 

 
LARRY J. DAGLEY /s/               Senior Vice President and   March 20, 1996 
- ------------------------          Chief Financial Officer 
(Larry J. Dagley)                 (Principal Financial 
                                  Officer) 

  
RALPH TODARO /s/                  Vice President and          March 20, 1996 
- ------------------------          Controller 
(Ralph Todaro)                    (Principal Accounting 
                                  Officer) 
 
 
HYLA H. BERTEA /s/                Director                    March 20, 1996 
- ------------------------ 
(Hyla H. Bertea) 

 
HERBERT L. CARTER /s/             Director                    March 20, 1996 
- ------------------------ 
(Herbert L. Carter) 

 
 RICHARD D. FARMAN /s/             Director                   March 20, 1996 
- ------------------------ 
(Richard D. Farman) 


WILFORD D. GODBOLD, JR. /s/       Director                    March 20, 1996 
- ------------------------ 
(Wilford D. Godbold, Jr.) 
 
 
IGNACIO E. LOZANO, JR. /s/        Director                    March 20, 1996 
- ------------------------ 
(Ignacio E. Lozano, Jr.) 
 
 
HAROLD M. MESSMER, JR. /s/        Director                    March 20, 1996 
- ------------------------ 
(Harold M. Messmer, Jr.) 

 
PAUL A. MILLER /s/                Director                    March 20, 1996 
- ------------------------ 
(Paul A. Miller) 
 
 
RICHARD J. STEGEMEIER /s/         Director                    March 20, 1996 
- ------------------------ 
(Richard J. Stegemeier) 

 
DIANA L. WALKER /s/               Director                    March 20, 1996 
- ------------------------ 
(Diana L. Walker) 
 
 
WILLIS B. WOOD, JR. /s/           Director                    March 20, 1996 
- ------------------------ 
(Willis B. Wood, Jr.)



                                      -54-





<PAGE>







                                     BYLAWS


                                       OF


                         SOUTHERN CALIFORNIA GAS COMPANY






                                 MARCH 1, 1995



<PAGE>


                                   BYLAWS

                                     OF

                       SOUTHERN CALIFORNIA GAS COMPANY

                                 ------------


                                   ARTICLE I

                               PRINCIPAL OFFICE

    SECTION 1.  The principal executive office of the Company is located at 
555 West Fifth Street, City of Los Angeles, County of Los Angeles, California.


                                   ARTICLE II

                           MEETINGS OF SHAREHOLDERS

    SECTION 1.  All Meetings of Shareholders shall be held either at the 
principal executive office of the Company or at any other place within or 
without the state as may be designated by resolution of the Board of 
Directors.

    SECTION 2.  An Annual Meeting of Shareholders shall be held each year on 
such date and at such time as may be designated by resolution of the Board 
of Directors.

    SECTION 3.  At an Annual Meeting of Shareholders, only such business 
shall be conducted as shall have been properly brought before the Annual 
Meeting. To be properly brought before an Annual Meeting, business must be 
(a) specified in the notice of the Annual Meeting (or any supplement thereto) 
given by or at the direction of the Board of Directors, (b) otherwise 
properly brought before the Annual Meeting by a Shareholder. For business to 
be properly brought before an Annual Meeting by a Shareholder, including the 
nomination
 of any person (other than a person nominated by or at the 
direction of the Board of Directors) for election to the Board of Directors, 
the Shareholder must have given timely and proper written notice to the 
Secretary of the Company. To be timely, the Shareholder's written notice must 
be received at the principal executive office of the Company not less than 
sixty nor more than one hundred twenty days in advance of the date 
corresponding to the date of the last Annual Meeting; provided, however, that 
in the event the Annual Meeting to which the Shareholder's written notice 
relates is to be held on a date which differs by more than sixty days from 
the date corresponding to the date of the last Annual Meeting, the 
Shareholder's written notice to be timely must be so received not later than 
the close of business on the tenth day following the date on which public 
disclosure of the date of the Annual Meeting is made or given to 
Shareholders. To be proper, the Shareholder's written notice must set forth 
as to each matter the Shareholder proposes to bring before the Annual Meeting 
(a) a brief description of the business desired to be brought before the 
Annual Meeting, (b) 



<PAGE>


the name and address of the Shareholder as they appear on the Company's 
books, (c) the class and number of shares of the Company which are 
beneficially owned by the Shareholder, and (d) any material interest of the 
Shareholder in such business. In addition, if the Shareholder's written 
notice relates to the nomination at the Annual Meeting of any person for 
election to the Board of Directors, such notice to be proper must also set 
forth (a) the name, age, business address and residence address of each 
person to be nominated, (b) the principal occupation or employment of each 
such person, (c) the number of shares of capital stock beneficially owned by 
each such person, and (d) such other information concerning each such person 
as would be required under the rules of the Securities and Exchange 
Commission in a proxy statement soliciting proxies for the election of such 
person as a Director, and must be accompanied by a consent, signed by each 
such person, to serve as a Director of the Company if elected. 
Notwithstanding anything in the Bylaws to the contrary, no business shall be 
conducted at an Annual Meeting except in accordance with the procedures set 
forth in this Section 3.

    SECTION 4.  Each Shareholder of the Company shall be entitled to elect 
voting confidentiality as provided in this Section 4 on all matters submitted 
to Shareholders by the Board of Directors and each form of proxy, consent, 
ballot or other written voting instruction distributed by the Company to 
Shareholders shall include a check box or other appropriate mechanism by 
which Shareholders who desire to do so may so elect voting confidentiality.

                All inspectors of election, vote tabulators and other persons 
appointed or engaged by or on behalf of the Company to process voting 
instructions (none of whom shall be a Director or Officer of the Company or 
any of its affiliates) shall be advised of and instructed to comply with this 
Section 4 and, except as required or permitted hereby, not at any time to 
disclose to any person (except to other persons engaged in processing voting 
instructions), the identity and individual vote of any Shareholder electing 
voting confidentiality; provided, however, that voting confidentiality shall 
not apply and the the name and individual vote of any shareholder may be 
disclosed to the Company or to any person (i) to the extent that such 
disclosure is required by applicable law or is appropriate to assert or 
defend any claim relating to voting or (ii) with respect to any matter for 
which votes of Shareholders are solicited in opposition to any of the 
nominees or the recommendations of the Board of Directors unless the persons 
engaged in such opposition solicitation provide Shareholders of the Company 
with voting confidentiality (which, if not otherwise provided, will be 
requested by the Company) comparable in the opinion of the Company to the 
voting confidentiality provided by this Section 4.


                                  ARTICLE III

                              BOARD OF DIRECTORS

    SECTION 1.  The Board of Directors shall have power to:

    a.   Conduct, manage and control the business of the Company, and make 
    rules consistent with law, the Articles of Incorporation and the Bylaws;

    b.   Elect, and remove at their discretion, Officers of the Company, 
    prescribe their duties, and fix their compensation;

    c.   Authorize the issue of shares of stock of the Company upon lawful 
    terms: (i) in consideration of money paid, labor done, services actually 
    rendered to the Company or for its benefit or in its reorganization, 
    debts or securities cancelled, and tangible or intangible property 
    actually received either by this Company or by a wholly-owned 
    subsidiary; but neither promissory notes of the purchaser (unless 
    adequately secured by collateral other than the shares acquired or unless 
    permitted by Section 408 of the California Corporation Code) nor future 
    services shall constitute payment or part payment for shares of this 
    Company; or (ii) as a share dividend or upon a stock split, reverse stock 
    split, reclassifications of outstanding shares into shares of another 
    class, conversion of outstanding shares


                                       2



<PAGE>


    into shares of another class, exchange of outstanding shares for shares of 
    another class or other change affecting outstanding shares;

    d.   Borrow money and incur indebtedness for the purposes of the Company, 
    and cause to be executed and delivered, in the Company name, promissory 
    notes, bonds, debentures, deeds of trust, mortgages, pledges, 
    hypothecations or other evidences of debt;

    e.   Elect an Executive Committee and other committees.


    SECTION 2.  The Board of Directors shall consist of not less than nine 
nor more than seventeen members. The authorized number of Directors shall be 
fixed from time to time, within the limits specified, by a resolution duly 
adopted by the Board of Directors. A majority of the authorized number of 
Directors shall constitute a quorum of the Board.


                                  ARTICLE IV

                             MEETING OF DIRECTORS

    SECTION 1.  Meetings of the Board of Directors shall be held at any place 
which has been designated by resolution of the Board of Directors, or by 
written consent of all members of the Board. In the absence of such 
designation, regular meetings shall be held in the principal executive office.

    SECTION 2.  Immediately following each Annual Meeting of Shareholders 
there shall be a regular meeting of the Board of Directors for the purpose of 
organization, election of Officers and the transaction of other business. In 
all months other the month in which the Annual Meeting of Shareholders is 
held there shall be a regular meeting of the Board of Directors on the first 
Tuesday of each month at such hour as shall be designated by resolution of 
the Board of Directors. Notice of regular meetings of the Directors shall be 
given in the manner described in these Bylaws for giving notice of special 
meetings. No notice of the regular meeting of Board of Directors which follows 
the Annual Meeting of Shareholders need be given.

    SECTION 3.  Special meetings of the Board of Directors for any purpose 
may be called at any time by the President, or by a majority of the 
authorized number of Directors. Notice of the time and place of special 
meetings shall be given to each Director. In case notice is mailed or 
telegraphed, it shall be deposited in the United States mail or delivered to 
the telegraph company in the city in which the principal executive office is 
located at least twenty hours prior to the time of the meeting. In case 
notice is given personally or by telephone, it shall be delivered at least 
six hours prior to the time of the meeting.

    SECTION 4.  The transactions of any meeting of the Board of Directors, 
however called or noticed, shall be as valid as though in a meeting duly held 
after regular call and notice if a quorum be present and each of the 
Directors, either before or after the meeting, signs a written waiver of 
notice, a consent to holding such meeting, or an approval of the minutes 
thereof or attends the meeting without protesting, prior thereto or at its 
commencement, the lack of notice to such Director. All such waivers, consents 
or approvals shall be made a part of the minutes of the meeting.

    SECTION 5.  If any regular meeting of Shareholders or of the Board of 
Directors falls on a legal holiday, then such meeting shall be held on the 
next succeeding business day at the same hour. But a special meeting of 
Shareholders or Directors may be held upon a holiday with the same force and 
effect as if held upon a business day.


                                       3



<PAGE>


                                   ARTICLE V

                                   OFFICERS

    SECTION 1.  The Officers of the Company shall be a President, Vice 
Presidents, one or more of whom, in the discretion of the Board of Directors, 
may be appointed Executive or Senior Vice President, a Secretary and a 
Treasurer. The Company may have, at the discretion of the Board of Directors, 
any other Officers and may also have, at the discretion of and upon 
appointment by the President, one or more Assistant Secretaries and Assistant 
Treasurers. One person may hold two or more offices.


                                  ARTICLE VI

                                 THE PRESIDENT

    SECTION 1.  The President shall be the principal executive officer of the 
Company, shall have general charge of all of the Company's business and 
affairs and all of its Officers and shall have all of the powers and perform 
all of the duties inherent in that office and such additional powers and 
duties as may be prescribed by the Board of Directors.


                                  ARTICLE VII

                                VICE PRESIDENTS

    SECTION 1.  In the President's absence or disability, the Vice Presidents 
in order of their rank shall perform all of the duties of the President and 
when so acting shall have all of the powers and be subject to all of the 
restrictions of the President. The Vice Presidents shall have such other 
powers and perform such additional duties as may be prescribed by the Board 
of Directors or the President.


                                 ARTICLE VIII

                                   SECRETARY

    SECTION 1.  The Secretary shall keep at the principal executive office, a 
book of minutes of all meetings of Directors and Shareholders, which shall 
contain a statement of the time and place of the meeting, whether it was 
regular or special, and if special, how authorized and the notice given, the 
names of those present at Directors' meetings, the number of shares present 
or represented by written proxy at Shareholders' meetings and the proceedings.

    SECTION 2.  The Secretary shall give notice of all meetings of 
Shareholders and the Board of Directors required by the Bylaws or by law to 
be given, and shall keep the seal of the Company in safe custody. The 
Secretary shall have such other powers and perform such additional duties as 
may be prescribed by the Board of Directors or the President.

    SECTION 3.  It shall be the duty of the Assistant Secretaries to help the 
Secretary in the performance of the Secretary's duties. In the absence or 
disability of the Secretary, the Secretary's duties may be performed by an 
Assistant Secretary.


                                      4



<PAGE>


                                  ARTICLE IX

                                   TREASURER

    SECTION 1.  The Treasurer shall have custody and account for all funds or 
moneys of the Company which may be deposited with the Treasurer, or in banks, 
or other places of deposit. The Treasurer shall disburse funds or moneys 
which have been duly approved for disbursement. The Treasurer shall sign 
notes, bonds or other evidences of indebtedness for the Company as the Board 
of Directors may authorize. The Treasurer shall have such other powers and 
perform such additional duties as may be prescribed by the Board of Directors 
or the President.

    SECTION 2.  It shall be the duty of the Assistant Treasurers to help the 
Treasurer in the performance of the Treasurer's duties. In the Treasurer's 
absence or disability, the Treasurer's duties may be performed by an 
Assistant Treasurer.


                                   ARTICLE X

                                  RECORD DATE

    SECTION 1.  The Board of Directors may fix a time in the future as a 
record date for ascertaining the Shareholders entitled to notice and to vote 
at any meeting of Shareholders, to give consent to corporate action in 
writing without a meeting, to receive any dividend, distribution, or 
allotment of rights or to exercise rights related to any change, conversion, 
or exchange of shares. The selected record date shall not be more than sixty 
nor less than 10 days prior to the date of the Meeting nor more than sixty 
days prior to any other action or event for the purposes for which it is 
fixed. When a record date is fixed, only Shareholders of Record on that date 
are entitled to notice and to vote at the Meeting, to give consent to 
corporate action, to receive a dividend, distribution, or allotment of 
rights, or to exercise any rights in respect of any other lawful action, 
notwithstanding any transfer of shares on the books of the Company after the 
record date.


                                       5



<PAGE>


                                  ARTICLE XI

                   INDEMNIFICATION OF AGENTS OF THE COMPANY;
                        PURCHASE OF LIABILITY INSURANCE

    SECTION 1.  For the purposes of this Article, "agent" means any person who 
is or was a Director, Officer, employee or other agent of the Company, or is 
or was serving at the request of the Company as a director, officer, employee 
or agent of another foreign or domestic corporation, partnership, joint 
venture, trust or other enterprise, or was a director, officer, employee or 
agent of a foreign or domestic corporation which was a predecessor 
corporation of the Company or of another enterprise at the request of such 
predecessor corporation; "proceeding" means any threatened, pending or 
completed action or proceeding, whether civil, criminal, administrative, or 
investigative; and "expenses" includes, without limitation, attorneys' fees 
and any expenses of establishing a right to indemnification under Section 4 
or paragraph (d) of Section 5 of this Article.

    SECTION 2.  The Company shall indemnify any person who was or is a party, 
or is threatened to be made a party, to any proceeding (other than an action 
by or in the right of the Company to procure a judgment in its favor) by 
reason of the fact that such person is or was an agent of the Company, 
against expenses, judgments, fines, settlements and other amounts actually 
and reasonably incurred in connection with such proceeding if such person 
acted in good faith and in a manner such person reasonably believed to be in 
the best interests of the Company, and, in the case of a criminal proceeding, 
had no reasonable cause to believe the conduct of such person was unlawful. 
The termination of any proceeding by judgment, order, settlement, conviction 
or upon a plea of nolo contendere or its equivalent shall not, of itself, 
create a presumption that the person did not act in good faith and in a 
manner which the person reasonably believed to be in the best interests of 
the Company or that the person had reasonable cause to believe that the 
person's conduct was unlawful.

    SECTION 3.  The Company shall indemnify any person who was or is a party 
or is threatened to be made a party to any threatened, pending or completed 
action by or in the right of the Company to procure a judgment in its favor 
by reason of the fact that such person is or was an agent of the Company, 
against expenses actually and reasonably incurred by such person in 
connection with the defense or settlement of such action if such person acted 
in good faith and in a manner such person believed to be in the best 
interests of the Company and its Shareholders.

    No indemnification shall be made under this Section 3 for any of the 
following:

    a.   In respect of any claim, issue or matter as to which such person 
    shall have been adjudged to be liable to the Company in the performance 
    of such person's duty to the Company and its Shareholders, unless and 
    only to the extent that the court in which such proceeding is or was 
    pending shall determine upon application that, in view of all the 
    circumstances of the case, such person is fairly and reasonably entitled 
    to indemnity for expenses and then only to the extent that the court 
    shall determine;

    b.   Of amounts paid in settling or otherwise disposing of a pending 
    action without court approval;

    c.   Of expenses incurred in defending a pending action which is settled 
    or otherwise disposed of without court approval.

    SECTION 4.  To the extent that an agent of the Company has been 
successful on the merits in defense of any proceeding referred to in Section 
2 or 3 or in defense of any claim, issue or matter therein, the agent shall 
be indemnified against expenses actually and reasonably incurred by the agent 
in connection therewith.

    SECTION 5.  Except as provided in Section 4, any indemnification under 
this Article shall be made by the Company only if authorized in the specific 
case, upon a determination that indemnification of the agent is proper in the 
circumstances because the agent has met the applicable standard of conduct 
set forth in Section 2 or 3, by any of the following:


                                       6



<PAGE>


    a.   A majority vote of a quorum consisting of Directors who are not 
    parties to such proceeding;

    b.   If such a quorum of Directors is not obtainable, by independent 
    legal counsel in a written opinion;

    c.   Approval of the Shareholders, with the shares owned by the person to 
    be indemnified not being entitled to vote thereon;

    d.   The court in which such proceeding is or was pending upon 
    application made by the Company or the agent or the attorney or other 
    person rendering services in connection with the defense, whether or not 
    such application by the agent, attorney or other person is opposed by the 
    Company.

    SECTION 6.  Expenses incurred in defending any proceeding may be advanced 
by the Company prior to the final disposition of such proceeding upon receipt 
of an undertaking by or on behalf of the agent to repay such amount if it 
shall be determined ultimately that the agent is not entitled to be 
indemnified as authorized in this Article.

    SECTION 7.  The indemnification provided by this Article shall not be 
deemed exclusive of any other rights to which those seeking indemnification 
may be entitled under any agreement, vote of Shareholders or disinterested 
Directors or otherwise, to the extent such additional rights to 
indemnification are authorized in the Articles of Incorporation of the 
Company. The rights to indemnity under this Article shall continue as to a 
person who has ceased to be a Director, Officer, employee, or agent and shall 
inure to the benefit of the heirs, executors and administrators of the person.

    SECTION 8.  No indemnification or advance shall be made under this 
Article, except as provided in Section 4 or paragraph (d) of Section 5, in 
any circumstance where it appears:

    a.   That it would be inconsistent with a provision of the Articles of 
    Incorporation, these Bylaws, a resolution of the Shareholders or an 
    agreement in effect at the time of the accrual of the alleged cause of 
    action asserted in the proceeding in which the expenses were incurred or 
    other amounts were paid, which prohibits or otherwise limits 
    indemnification;

    b.   That it would be inconsistent with any condition expressly imposed 
    by a court in approving a settlement.

    SECTION 9.  The Company shall have the power to purchase and maintain 
insurance on behalf of any agent of the Company against any liability 
asserted against or incurred by the agent in such capacity or arising out of 
the agent's status as such whether or not the Company would have the power to 
indemnify the agent against such liability under the provisions of this 
Article.

    SECTION 10. This Article does not apply to any proceeding against any 
trustee, investment manager or other fiduciary of an employee benefit plan in 
such person's capacity as such, even though such person may also be an agent 
of the Company as defined in Section 1. Nothing contained in this Article 
shall limit any right to indemnification to which such a trustee, investment 
manager or other fiduciary may be entitled by contract or otherwise, which 
shall be enforceable to the extent permitted by applicable law.


                                       7





<PAGE>

                                                                 Exhibit 21.01

               Subsidiaries of Southern California Gas Company


EcoTrans OEM Corporation
Southern California Gas Tower








<PAGE>

                                                                 Exhibit 23.01


INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statement 
Nos. 33-51322, 33-53258, 33-59404 and 33-52663 of Southern California Gas 
Company on Forms S-3 of our report dated January 31, 1996, appearing in this 
Annual Report on Form 10-K of Southern California Gas Company for the year 
ended December 31, 1995.


DELOITTE & TOUCHE LLP

Los Angeles, California
March 21, 1996





<TABLE> <S> <C>


<PAGE>
<ARTICLE> UT
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE STATEMENT
OF CONSOLIDATED INCOME, BALANCE SHEET AND CASH FLOWS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1995
<PERIOD-END>                               DEC-31-1995
<BOOK-VALUE>                                  PER-BOOK
<TOTAL-NET-UTILITY-PLANT>                    3,213,227
<OTHER-PROPERTY-AND-INVEST>                          0
<TOTAL-CURRENT-ASSETS>                         799,531
<TOTAL-DEFERRED-CHARGES>                       449,521
<OTHER-ASSETS>                                       0
<TOTAL-ASSETS>                               4,462,279
<COMMON>                                       834,889
<CAPITAL-SURPLUS-PAID-IN>                            0
<RETAINED-EARNINGS>                            613,445
<TOTAL-COMMON-STOCKHOLDERS-EQ>               1,448,334
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                    196,551
<LONG-TERM-DEBT-NET>                         1,220,136
<SHORT-TERM-NOTES>                             233,817
<LONG-TERM-NOTES-PAYABLE>                            0
<COMMERCIAL-PAPER-OBLIGATIONS>                       0
<LONG-TERM-DEBT-CURRENT-PORT>                   95,283
<PREFERRED-STOCK-CURRENT>                            0
<CAPITAL-LEASE-OBLIGATIONS>                          0
<LEASES-CURRENT>                                     0
<OTHER-ITEMS-CAPITAL-AND-LIAB>               1,268,158
<TOT-CAPITALIZATION-AND-LIAB>                4,462,279
<GROSS-OPERATING-REVENUE>                    2,279,308
<INCOME-TAX-EXPENSE>                           151,274
<OTHER-OPERATING-EXPENSES>                   1,828,203
<TOTAL-OPERATING-EXPENSES>                   1,979,477
<OPERATING-INCOME-LOSS>                        299,831
<OTHER-INCOME-NET>                               5,620
<INCOME-BEFORE-INTEREST-EXPEN>                 305,451
<TOTAL-INTEREST-EXPENSE>                        90,618
<NET-INCOME>
                                   214,833
<PREFERRED-STOCK-DIVIDENDS>                     11,613
<EARNINGS-AVAILABLE-FOR-COMM>                  203,220
<COMMON-STOCK-DIVIDENDS>                             0
<TOTAL-INTEREST-ON-BONDS>                            0
<CASH-FLOW-OPERATIONS>                         662,770
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