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SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ...X..Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 March 31, 1994 For the quarterly period ended.................................................. Or ......Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________________ to __________________________ Commission File Number 1-3779 SAN DIEGO GAS & ELECTRIC COMPANY ................................................................................ (Exact name of registrant as specified in its charter) CALIFORNIA 95-1184800 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 101 ASH STREET, SAN DIEGO, CALIFORNIA 92101 ................................................................................ (Address of principal executive offices) (Zip Code) (619) 696-2000 Registrant's telephone number, including area code.............................. No Change ................................................................................ Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes...X... No...... Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 116,479,790 Common Stock outstanding March 31, 1994 ........................................ PART I - FINANCIAL INFORMATION SAN DIEGO GAS & ELECTRIC COMPANY STATEMENTS OF CONSOLIDATED INCOME (In thousands except per share amounts) Three Months Ended March 31, 1994 1993 -------------------- (Unaudited) Operating Revenues Electric . . . . . . . . . . . . . . . . . . . . . $ 375,904 $ 368,841 Gas . . . . . . . . . . . . . . . . . . . . . . . 98,850 99,590 Diversified operations . . . . . . . . . . . . . . 29,664 23,912 ---------- ---------- Total operating revenues . . . . . . . . . . . 504,418 492,343 ---------- ---------- Operating Expenses Electric fuel . . . . . . . . . . . . . . . . . . 34,876 42,501 Purchased power . . . . . . . . . . . . . . . . . 81,525 79,686 Gas purchased for resale . . . . . . . . . . . . . 49,674 54,673 Maintenance . . . . . . . . . . . . . . . . . . . 16,361 15,641 Depreciation and decommissioning . . . . . . . . . 65,197 60,726 Property and other taxes . . . . . . . . . . . . . 11,377 11,610 Other . . . . . . . . . . . . . . . . . . . . . . 118,137 106,807 Income taxes . . . . . . . . . . . . . . . . . . . 47,139 42,913 ---------- ---------- Total operating expenses . . . . . . . . . . . 424,286 414,557 ---------- ---------- Operating Income . . . . . . . . . . . . . . . . . . 80,132 77,786 ---------- ---------- Other Income and (Deductions) Allowance for equity funds used during construction . . . . . . . . . . . . . . . . . . 2,685 5,334 Taxes on nonoperating income . . . . . . . . . . . (536) (624) Other--net . . . . . . . . . . . . . . . . . . . . 1,966 2,412 ---------- ---------- Total other income and (deductions) . . . . . 4,115 7,122 ---------- ---------- Income Before Interest Charges . . . . . . . . . . . 84,247 84,908 ---------- ---------- Interest Charges Long-term debt . . . . . . . . . . . . . . . . . . 22,644 25,158 Short-term debt and other . . . . . . . . . . . . 2,981 2,336 Allowance for borrowed funds used during construction . . . . . . . . . . . . . . . . . . (1,174) (1,163) ---------- ---------- Net interest charges . . . . . . . . . . . . . 24,451 26,331 ---------- ---------- Net Income (before preferred dividend requirements) 59,796 58,577 Preferred Dividend Requirements . . . . . . . . . . 1,916 2,182 ---------- ---------- Earnings Applicable to Common Shares . . . . . . . . $ 57,880 $ 56,395 ========== ========== Average Common Shares Outstanding . . . . . . . . . 116,492 115,450 ========== ========== Earnings Per Common Share . . . . . . . . . . . . . $ 0.50 $ 0.49 ========== ========== Dividends Declared Per Common Share . . . . . . . . $ 0.38 $ 0.37 ========== ========== See notes to consolidated financial statments. 2 SAN DIEGO GAS & ELECTRIC COMPANY CONSOLIDATED BALANCE SHEETS (In thousands of dollars) March 31, December 31, 1994 1993 ----------- ------------ (Unaudited) ASSETS Utility plant--at original cost . . . . . . . . . $5,173,902 $5,134,251 Accumulated depreciation and decommissioning . . . (2,046,174) (2,016,618) ----------- ----------- Utility plant--net . . . . . . . . . . . . . . . 3,127,728 3,117,633 ----------- ----------- Investments and other property . . . . . . . . . . 465,937 464,101 ---------- ----------- Current assets Cash and temporary investments . . . . . . . . . 20,924 17,450 Accounts receivable . . . . . . . . . . . . . . 189,883 205,712 Notes receivable . . . . . . . . . . . . . . . . 29,201 29,201 Inventories . . . . . . . . . . . . . . . . . . 77,586 84,922 Other . . . . . . . . . . . . . . . . . . . . . 36,033 40,810 ----------- ----------- Total current assets . . . . . . . . . . . . 353,627 378,095 ----------- ----------- Construction funds held by trustee . . . . . . . . 21,279 58,042 Goodwill . . . . . . . . . . . . . . . . . . . . . 53,845 53,921 Deferred taxes recoverable in rates . . . . . . . 300,054 311,564 Deferred charges and other assets . . . . . . . . 310,167 318,880 ----------- ----------- Total . . . . . . . . . . . . . . . . . . . $4,632,637 $4,702,236 =========== =========== CAPITALIZATION AND LIABILITIES Capitalization Common equity . . . . . . . . . . . . . . . . . $1,528,938 $1,516,240 Preferred stock not subject to mandatory redemption . . . . . . . . . . . . . . . . . . 93,493 93,493 Preferred stock subject to mandatory redemption 25,000 25,000 Long-term debt . . . . . . . . . . . . . . . . . 1,401,269 1,411,948 ----------- ----------- Total capitalization . . . . . . . . . . . . 3,048,700 3,046,681 ----------- ----------- Current liabilities Short-term borrowings . . . . . . . . . . . . . 45,775 131,197 Long-term debt redeemable within one year . . . 88,000 88,000 Current portion of long-term debt . . . . . . . 74,143 76,161 Accounts payable . . . . . . . . . . . . . . . . 139,020 166,622 Dividends payable . . . . . . . . . . . . . . . 46,178 44,962 Taxes accrued . . . . . . . . . . . . . . . . . 95,279 36,830 Interest accrued . . . . . . . . . . . . . . . . 23,229 20,396 Regulatory balancing accounts overcollected--net 32,259 33,179 Other . . . . . . . . . . . . . . . . . . . . . 111,147 104,353 ----------- ----------- Total current liabilities . . . . . . . . . 655,030 701,700 ----------- ----------- Customer advances for construction . . . . . . . . 40,703 41,729 Accumulated deferred income taxes--net . . . . . . 508,371 520,076 Accumulated deferred investment tax credits . . . 112,684 114,159 Deferred credits and other liabilities . . . . . . 267,149 277,891 ----------- ----------- Total . . . . . . . . . . . . . . . . . . . $4,632,637 $4,702,236 =========== =========== See notes to consolidated financial statements. 3 SAN DIEGO GAS & ELECTRIC COMPANY STATEMENTS OF CONSOLIDATED CASH FLOWS (In thousands of dollars) Three Months Ended March 31, 1994 1993 ---------------------- (Unaudited) Cash Flows From Operating Activities Net income . . . . . . . . . . . . . . . . . . . . $ 59,796 $ 58,577 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and decommissioning . . . . . . . 65,197 60,726 Amortization of deferred charges and other assets . . . . . . . . . . . . . . . . 3,260 955 Amortization of deferred credits and other liabilities . . . . . . . . . . . . . . . . (7,436) (3,050) Allowance for equity funds used during construction . . . . . . . . . . . . (2,685) (5,334) Deferred income taxes and investment tax credits . . . . . . . . . . . . . . . . (4,970) (10,774) Other--net . . . . . . . . . . . . . . . . . . (309) (5,904) Changes in working capital components net of effects from purchases of subsidiaries Accounts and notes receivable . . . . . . . . 15,829 (5,937) Regulatory balancing accounts . . . . . . . . (920) 14,488 Inventories . . . . . . . . . . . . . . . . . 7,336 10,833 Other current assets . . . . . . . . . . . . . 4,777 (319) Accrued interest and taxes . . . . . . . . . . 61,649 55,010 Accounts payable and other current liabilities . . . . . . . . . . . . . . . . (20,808) (23,281) ---------- ---------- Net cash provided by operating activities 180,716 145,990 ---------- ---------- Cash Flows From Financing Activities Dividends paid . . . . . . . . . . . . . . . . (44,962) (43,298) Short-term borrowings--net . . . . . . . . . . (85,422) 9,223 Issuance of long-term debt . . . . . . . . . . - 5,307 Repayment of long-term debt . . . . . . . . . (8,606) (90,209) Sale (redemption) of common stock . . . . . . (920) 13,919 Redemption of preferred stock . . . . . . . . - (170) ---------- ---------- Net cash used by financing activities . . . (139,910) (105,228) ---------- ----------- Cash Flows From Investing Activities Utility construction expenditures . . . . . . (68,084) (56,823) Withdrawals from construction trust funds - net . . . . . . . . . . . . . . . . 36,763 23,125 Contributions to decommissioning funds . . . . (5,505) (5,505) Other--net . . . . . . . . . . . . . . . . . . (506) (1,430) ---------- ----------- Net cash used by investing activities . . . (37,332) (40,633) ---------- ----------- Net increase . . . . . . . . . . . . . . . . . . . . 3,474 129 Cash and temporary investments, beginning of period 17,450 11,079 ---------- ----------- Cash and temporary investments, end of period . . . $ 20,924 $ 11,208 ========== =========== Supplemental Disclosure of Cash Flow Information Income tax payments . . . . . . . . . . . . . . . $ - $ 4,950 ========== =========== Interest payments, net of amounts capitalized . . $ 21,618 $ 29,828 ========== =========== Supplemental Schedule of Noncash Investing and Financing Activities Real estate investments acquired . . . . . . . . $ - $ 30,088 Cash paid . . . . . . . . . . . . . . . . . . . - - ---------- ----------- Liabilities assumed . . . . . . . . . . . . . . $ - $ 30,088 ========== =========== See notes to consolidated financial statments. 4 SAN DIEGO GAS & ELECTRIC COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. GENERAL SDG&E believes all adjustments necessary to present a fair statement of the consolidated financial position and results of operations for the periods covered by this report, consisting of recurring accruals, have been made. Certain prior year amounts have been reclassified for comparability. SDG&E's significant accounting policies are described in the notes to consolidated financial statements in its 1993 Annual Report to Shareholders. SDG&E follows the same accounting policies for interim reporting purposes. This quarterly report should be read in conjunction with SDG&E's 1993 Annual Report on Form 10-K. The consolidated financial statements and Management Discussion & Analysis of Financial Condition and Results of Operations included in SDG&E's 1993 Annual Report to Shareholders were incorporated by reference into SDG&E's 1993 Annual Report on Form 10-K and filed as an exhibit thereto. 2. MATERIAL CONTINGENCIES INVESTMENT IN WAHLCO ENVIRONMENTAL SYSTEMS, INC. SDG&E's investment in and advances to Wahlco aggregate $80 million at March 31, 1994. At March 31, 1994 Wahlco had consolidated net assets of $69 million (including $53 million of goodwill). During the years ended December 31, 1991, 1992 and 1993, Wahlco's net income (loss) was $12 million,($13 million) and ($11 million). During those years Wahlco's cash flow provided by (used in) operations was $7 million, ($7 million) and ($12 million). For the three months ended March 31, 1994 Wahlco had a net loss but its operations provided a positive cash flow. Historically, Wahlco's primary and most profitable product line has been flue gas conditioning equipment, which is sold to utilities with coal-fired generating plants. Since the passage of the 1990 Clean Air Act Amendments, Wahlco's prospects for future profitability have been significantly associated with the size and timing of flue gas conditioning equipment orders from utilities responding to that legislation. Phase I of that legislation requires certain utilities to submit compliance plans to the Environmental Protection Agency by February 28, 1993 and to be in compliance by January 1, 1995. Phase II requires the remaining utilities with coal-fired generation to be in compliance by January 1, 2000. Thus far, sales of and orders for flue gas conditioning equipment have not reached anticipated levels. Therefore, SDG&E has been considering alternative strategies relative to its investment in Wahlco. Continued operating losses or implementation of an alternative strategy could lead to the writeoff of a significant portion of SDG&E's investment in Wahlco, resulting in a significant adverse effect on SDG&E's earnings. 5 SAN DIEGO GAS & ELECTRIC COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NUCLEAR INSURANCE: Public liability claims that could arise from a nuclear incident are limited by law to $9.3 billion for each licensed nuclear facility. For this exposure, SDG&E and the co-owners of the San Onofre units have purchased primary insurance of $200 million, the maximum amount available. The remaining coverage is provided by secondary financial protection required by the Nuclear Regulatory Commission and provides for loss sharing among utilities owning nuclear reactors if a costly accident occurs. SDG&E could be assessed retrospective premium adjustments of up to $50 million in the event of a nuclear incident involving any of the licensed, commercial reactors in the United States, if the amount of the loss exceeds $200 million. Insurance coverage is provided for up to $2.8 billion of property damage and decontamination liability. Coverage is also provided for the cost of replacement power, which includes indemnity payments for up to two years, after a waiting period of 21 weeks. Coverage is provided primarily through mutual insurance companies owned by utilities with nuclear facilities. If losses at any of the nuclear facilities covered by the risk-sharing arrangements were to exceed the accumulated funds available for these insurance programs, SDG&E could be assessed retrospective premium adjustments of up to $8 million. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS EARNINGS: Earnings per share for the three months ended March 31, 1994 were up one cent from the same period in 1993. The increase in earnings was due to increased earnings at Califia and other, minor items, partially offset by increased losses at Wahlco Environmental Systems, Inc. As a result of many companies' delaying decisions on how to comply with the Clean Air Act, the market for flue gas conditioning systems (Wahlco's primary and most profitable product line) has not developed in the United States. Wahlco also faces increasing competition from the availability of federal pollution credits, suppliers of lower-cost alternative systems and other options. In late 1993 Wahlco recorded a restructuring charge to reflect the planned relocation of Wahlco's manufacturing operations in Canada and West Virginia to its other U.S. facilities. Additional information concerning Wahlco is provided in Note 2 of the notes to consolidated financial statements. REGULATORY MATTERS: CALIFORNIA PUBLIC UTILITIES COMMISSION PROPOSES INDUSTRY RESTRUCTURING On April 20, 1994 the CPUC announced its proposal to restructure California's regulated electric utility industry to stimulate competition and to lower rates. The CPUC has also proposed to increase access to California's transmission network, develop an active spot market for electricity and to promote competition in the energy efficiency services market. The proposed regulatory framework would be phased in over a six-year period. Beginning in 1996, the California utilities' largest customers (i.e. receiving service at the transmission level) would be allowed to purchase their energy from either utility or nonutility suppliers. Other industrial and commercial customers would have this choice by between 1997 and 1999 depending on their level of service. Residential customers would have this choice by 2002. The utilities would continue to provide transmission and distribution services to customers that switch to other suppliers. The cost of providing these services and the cost of serving remaining utility customers would be recovered through a performance- based ratemaking process, replacing traditional cost-of-service ratemaking. However, to the extent a power plant is not competitive in the restructured environment, the utility would continue to recover a portion of the plant's cost from customers switching to other suppliers. Comments from interested parties on the CPUC's proposal are due in May 1994 and hearings will be held in June 1994. A final CPUC decision is expected in August 1994. SDG&E cannot predict the impact of the CPUC's final decision and the transition to a more competitive environment on SDG&E's financial condition and results of operations. As a result of the CPUC's proposal, Moody's Investors Service and Standard & Poor's have placed the financial ratings of SDG&E's, Southern California Edison's and Pacific Gas & Electric's debt and preferred stock under review for possible downgrade. The review, to be completed after the CPUC decision, will focus on how the restructuring and competition will affect the utilities' credit quality and cash flows. 7 SONGS UNITS 2 & 3 On March 15, 1994 the CPUC's Division of Ratepayer Advocates issued its report on Edison's 1995 General Rate Case proceeding. As a result of Edison's request for a rate increase, the DRA suggests that the cost of continuing to operate SONGS 2 & 3 would be more expensive than alternative resources and the units should be shut down by 1998. As an alternative recommendation, the DRA has also proposed a performance- based pricing mechanism that would tie recovery of the cost of operating the SONGS units to performance. A CPUC decision on Edison's GRC is expected in late 1994. If the CPUC's industry restructuring is implemented as proposed (see preceding discussion) and the SONGS units are unable to produce electricity competitively, then Edison and SDG&E would be allowed to recover a portion of their investment in SONGS 2 & 3 through a proposed "competition transition charge" paid by customers that switch to other suppliers. BIENNIAL RESOURCE PLAN UPDATE PROCEEDING On March 16, 1994 the CPUC issued a proposed order to revise its June 1993 Biennial Resource Plan Update to lessen the decision's impact on utilities' energy costs. The proposed revision would require prices for BRPU energy to be capped at the lowest losing bid price determined in the BRPU auction. In addition, the order would lower SDG&E's BRPU- required capacity purchases from 491 mw to 368 mw. The capacity reduction would be proportionately allocated between fossil resources (such as natural gas and fuel oil) and renewable resources. The CPUC has proposed to reassess in 1998 SDG&E's need for the remaining 123 mw of capacity. SDG&E would be committed to begin purchasing BRPU energy in late 1997. In addition, the CPUC indicated that it would review the reasonableness of the auction selection process at a later date. At the CPUC's April 20, 1994 conference the CPUC held that further action on the BRPU proceeding would be delayed to consider comments on the CPUC's proposed industry restructuring (discussed above). In connection with the CPUC's proposed industry restructuring, the CPUC is considering eliminating future BRPU proceedings and allowing the need for future electric generating resources to be determined by market demand. A CPUC decision is expected in June 1994. SDG&E cannot predict the impact of the CPUC's industry restructuring decision on the current BRPU proceeding. SOUTH BAY REPOWER PROJECT On March 4, 1994 SDG&E filed a request with the CPUC to withdraw its application for approval of the 500 mw South Bay Repower project. SDG&E wishes to postpone making a long-term commitment for additional capacity as a result of uncertainty arising from the CPUC's proposal to restructure California's electric utility industry and from the BRPU proceeding. SDG&E will reconsider the need for the project once the CPUC issues its decision on the restructuring proposal (see preceding discussion) and provides clear direction on the process for utilities to meet their needs for additional generating capacity. The CPUC's Division of Ratepayer Advocates, the Utility Consumers' Action Network and other interested parties have filed comments with the CPUC opposing SDG&E's request, claiming that the CPUC should complete its review of the project so that alternative proposals can be considered. A CPUC decision on SDG&E's request to withdraw the application is expected in the second quarter of 1994. SDG&E has requested the California Energy Commission to extend the review process for SDG&E's application for certification of the project and to delay the CEC's final decision until early 1995. The extension would allow SDG&E and the CEC to resolve various environmental concerns about the plant's discharge of heated water into San Diego Bay and the location and configuration of the plant's transmission lines. The CEC is considering alternative generation projects that would lessen any potential impact on the local environment. UCAN, the Independent Energy Producers Association and a neighborhood group located near the project's transmission path have filed a request with the CEC to 8 terminate the application due to these concerns. The CEC is expected to decide on that request in the second quarter of 1994. ENERGY COST ADJUSTMENT CLAUSE PROCEEDINGS On March 9, 1994 the CPUC issued its decision finding SDG&E's electric fuel and purchased-power expenses to be reasonable for the year ended July 31, 1992. This decision included the finding that SDG&E's administration of its Portland General Electric purchased-power contract was reasonable during the three-year period ended July 31, 1992. The DRA is currently reviewing the reasonableness of SDG&E's fuel and purchased-power expenses for the year ended July 31, 1993. A CPUC decision is expected in the fourth quarter of 1994. On April 20, 1994 the CPUC issued its decision on the forecast phase of SDG&E's 1994 Energy Cost Adjustment Clause proceeding, approving a $57 million increase in electric rates to cover higher expected fuel and purchased-power expenses and to recover prior undercollections from customers. The fuel and purchased-power portion of the forecast also establishes the generation and dispatch benchmark for shareholder gains and losses under the Performance-Based Ratemaking mechanism for the year beginning May 1, 1994. The rate increase is effective May 1, 1994. DEMAND-SIDE MANAGEMENT In the audit of one or more utilities' prior years' tax returns, the Internal Revenue Service took the position that certain demand-side management expenditures are intangible assets and must be capitalized, instead of being deducted when incurred as SDG&E and other utilities have been doing. Federal legislation has been proposed supporting the current deductibility of these costs. SDG&E and other California utilities have filed requests with the CPUC to establish a memorandum account to track for future rate recovery the income taxes, and related interest, resulting from this change if the IRS's present position is imposed. SDG&E cannot predict the outcome of this issue. HAZARDOUS WASTE COLLABORATIVE On March 10, 1994 a CPUC Administrative Law Judge recommended approval of the November 1993 hazardous waste collaborative settlement agreement between the major California investor-owned utilities and the DRA. The agreement would generally provide rate recovery of 90 percent of expenses incurred by utilities to clean up hazardous wastes. Currently SDG&E recovers hazardous waste expenses pursuant to CPUC reasonableness reviews. A CPUC decision is expected in the second quarter of 1994. OTHER OPERATING HIGHLIGHTS: Electric fuel expense and gas purchased for resale decreased primarily due to lower sales volumes. Revenues from diversified operations during the three months ended March 31, 1994 were up over the corresponding 1993 period, primarily due to Califia's increased leasing activities, partially offset by Wahlco Environmental System's lower sales as a result of the continuing poor market for air pollution control products. Other operating expenses increased primarily due to Califia's increased leasing activities. 9 LIQUIDITY AND CAPITAL RESOURCES: Sources of cash for 1994 through 1998 are expected to consist of income from operations and issuances of stock and debt. Cash requirements for 1994 through 1998 include the construction program and retirements of long-term debt. SDG&E conducts a continuing review of its construction, investment and financing programs. They are revised in response to changes in competition, customer growth, inflation, customer rates, the cost of capital and environmental and regulatory requirements. SDG&E anticipates that it will continue to have short-term borrowings in 1994 due to construction expenditures' continuing to exceed the amount of available funds generated internally. SDG&E also plans to issue up to $60 million of preference stock in 1994. In conjunction with its employee savings and common stock investment plans, SDG&E can either issue common stock or purchase it on the open market. Currently, SDG&E is purchasing the stock on the open market. SDG&E's utility capital structure is one factor that has enabled it to obtain long-term financing at attractive rates. The following table lists key financial ratios for SDG&E's utility operations. The capital structures are shown net of construction funds held by trustee: March 31, December 31, 1994 1993 or the twelve or the year months then ended then ended Pretax interest coverage 5.0X 4.7X Internal cash generation 71% 78% Construction expenditures as a percent of capitalization 12.8% 12.0% Capital structure: Common equity 47% 47% Preferred stock 4% 4% Debt and leases 49% 49% Besides the effects of items discussed in the preceding pages, the only significant change in cash flows for the three months ended March 31, 1994 compared to the corresponding 1993 period was related to the change in accounts receivable which resulted primarily from lower sales volumes in 1994. Construction expenditures were $354 million in 1993 and are expected to be approximately $260 million in 1994. The level of expenditures in the next few years after 1994 will depend heavily on the CPUC's proposed industry restructuring, whether SDG&E proceeds with its proposed South Bay Repower project, the timing of expenditures to comply with air emission reduction and other environmental requirements, and its plan to transport natural gas to Mexico. 10 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There have been no significant subsequent developments in the Century Power, American Trails, Subsidiary Shareholder, Public Service Company of New Mexico and Transphase proceedings. Background information concerning these and the following proceedings is contained in SDG&E's 1993 Annual Report on Form 10-K. Canadian Natural Gas: On March 14, 1994, SDG&E voluntarily dismissed its complaint against Bow Valley Energy Inc. without prejudice. SDG&E cannot predict the ultimate outcome of this proceeding. McCartin: Trial began on April 11, 1994 and is expected to conclude in early May. SDG&E filed a demurrer to the Covalt complaint on April 13, 1994. The Covalt proceeding was not consolidated with the McCartin proceeding and each will be handled separately. SDG&E cannot predict the ultimate outcome of these proceedings. North City West: On February 16, 1994, SDG&E filed an answer with the CPUC to the motion for reconsideration filed by one of the plaintiffs. A decision on the motion is expected in the second quarter of 1994. SDG&E cannot predict the ultimate outcome of this proceeding. Blackburn vs. Watt: On April 14, 1994, SDG&E filed a motion for summary judgment on the cross- complaints filed against it. The motion will be heard by the court on May 13, 1994. SDG&E cannot predict the ultimate outcome of this proceeding. Graybill/MTDB Graybill: Due to a potential conflict of interest, Graybill has retained new counsel, resulting in a rescheduling of the trial to June 1994. SDG&E cannot predict the ultimate outcome of this proceeding. MTDB: Trial has been scheduled to begin in October 1994. SDG&E cannot predict the ultimate outcome of this proceeding. Tang: A settlement was reached on March 14, 1994 between the plaintiff and the defendant owners of SONGS. Pursuant to the settlement agreement, the parties agreed not to disclose the settlement amount to be paid to plaintiff. However, it will not have a material adverse effect on the net income of SDG&E. Pursuant to the settlement agreement, plaintiff dismissed her complaint with prejudice. 11 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The shareholders elected eight directors at the annual meeting on April 26, 1994. The name of each nominee and the number of shares voted for or withheld were as follows: Nominees Votes For Votes Withheld -------- --------- -------------- Richard C. Atkinson 102,351,908 1,544,065 ------------- ----------- Ann Burr 102,390,194 1,505,779 ------------- ----------- Richard A. Collato 102,423,305 1,472,668 ------------- ----------- Daniel W. Derbes 102,492,544 1,403,429 ------------- ----------- Robert H. Goldsmith 102,323,739 1,572,234 ------------- ----------- Ralph R. Ocampo 102,097,177 1,798,796 ------------- ----------- Thomas A. Page 102,295,692 1,600,281 ------------- ----------- Catherine Fitzgerald Wiggs 102,425,971 1,470,002 ------------- ----------- Additional information concerning the election of the board of directors is contained in SDG&E's March 1994 Proxy Statement and Notice of Annual Meeting. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 3(i) - Articles of Incorporation 3.1 Restated Articles of Incorporation of San Diego Gas & Electric Company as amended through April 26, 1994 Exhibit 12 - Computation of ratios 12.1 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends as required under SDG&E's August 1993 registration of 5,000,000 shares of Preference Stock (Cumulative). (b) Reports on Form 8-K A Current Report on Form 8-K was filed on January 11, 1994 announcing the retirement of Jack Thomas as President of San Diego Gas & Electric Company. A Current Report on Form 8-K was filed on March 31, 1994 announcing a reorganization of SDG&E's treasurer's division in response to Malyn Malquist's resignation as SDG&E vice president and treasurer. 12 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report to be signed on its behalf by the undersigned thereunto duly authorized. SAN DIEGO GAS & ELECTRIC COMPANY (Registrant) April 28, 1994 By /s/ F. H. Ault - -------------- ---------------------------- Date (Signature) F. H. Ault Vice President and Controller 13
24
RESTATED ARTICLES OF INCORPORATION
OF
SAN DIEGO GAS & ELECTRIC COMPANY
(As amended through April 26, 1994)
T. A. Page and N. A. Peterson certify that:
1. They are the Chairman of the Board and Secretary,
respectively of SAN DIEGO GAS & ELECTRIC COMPANY.
2. The Articles of Incorporation of the Corporation are
restated to read as follows:
KNOW ALL MEN BY THESE PRESENTS: That we, the
undersigned, a majority of whom are citizens and residents of
the State of California, have this day voluntarily associated
ourselves together for the purpose of forming a corporation
under the laws of the State of California.
AND WE HEREBY CERTIFY:
FIRST: That the name of the Corporation shall be SAN DIEGO
GAS & ELECTRIC COMPANY.
SECOND: This Corporation elects to be governed by all of the
provisions of the General Corporation Law of 1977 not
otherwise applicable to it under Chapter 23 thereof. The
purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the
General Corporation Law of California other than the banking
business, the trust company business or the practice of a
profession permitted to be incorporated by the California
Corporations Code.
THIRD: That the place where the principal business of said
Corporation is to be transacted is the City of San Diego,
County of San Diego, State of California.
FOURTH: That said Corporation shall have perpetual existence.
FIFTH: The total number of shares which the Corporation shall
have authority to issue shall be 266,375,000. The Corporation
is authorized to issue three classes of stock, designated,
respectively, "Cumulative Preferred Stock," "Preference Stock
(Cumulative)," and "Common Stock." The number of shares of
Cumulative Preferred Stock which the Corporation is authorized
to issue is 1,375,000, each of the par value of $20. The
number of shares of Preference Stock (Cumulative) the
Corporation is authorized to issue is 10,000,000, each without
par value. The number of shares of Common Stock which the
Corporation is authorized to issue is 255,000,000 each without
par value.
I. PREFERRED STOCK
A. ISSUANCE IN SERIES.
1. Cumulative Preferred Stock:
The Cumulative Preferred Stock has been issued in series.
The initial series of Cumulative Preferred Stock consists of
375,000 shares, designated "Cumulative Preferred Stock, 5%
Series, $20 par value." The remaining series consist of the
following: 300,000 shares, designated "Cumulative Preferred
Stock, 4 1/2% Series, $20 par value"; 325,000 shares,
designated "Cumulative Preferred Stock, 4.40% Series, $20 par
value"; and 375,000 shares, designated "Cumulative Preferred
Stock, 4.60% Series, $20 par value." Each series is entitled
to dividends at the rate, is subject to redemption at the
price and has the liquidating preferences, hereinafter set
forth. All shares of Cumulative Preferred Stock purchased or
redeemed by the Corporation shall be retired and cancelled and
none of such shares shall thereafter be reissued.
2. Preference Stock (Cumulative):
Shares of the Preference Stock (Cumulative) may be issued
in one or more series, and each series shall be distinguished
from each other series by a serial or other distinctive
designation. Each series shall be constituted of such number
of shares and shall have such dividend rate, conversion
rights, rights and terms of redemption (including sinking fund
provisions), redemption prices and liquidation, as shall be
fixed by the Board of Directors in the resolution or
resolutions providing for the creation of such series, or
every such series.
B. GENERAL VOTING RIGHTS.
1. Cumulative Preferred Stock:
Except as hereinafter provided in Section C of Part I of
this Article FIFTH or as otherwise required by law, the
holders of shares of Cumulative Preferred Stock shall be
entitled to two votes for each share of stock held by such
holders on all questions upon which the holders of Common
Stock are entitled to vote, and on any question as to which it
is at the time provided by law that action may be taken on
approval by vote of a specified percentage of the outstanding
shares the vote of stockholders holding such specified
percentage of the voting power shall also be required.
2. Preference Stock (Cumulative):
The holders of shares of Preference Stock (Cumulative)
shall have no voting rights except as hereinafter provided in
Section C of part I of this Article FIFTH or as otherwise
required by law.
C. PROVISIONS APPLICABLE TO ALL SERIES OF PREFERRED STOCK.
1. Special Voting Rights:
The affirmative consent (given in writing or by vote at a
meeting duly called for that purpose) of the holders of at
least two-thirds of the aggregate number of shares of
Cumulative Preferred Stock and Preference Stock (Cumulative),
hereinafter collectively referred to as "Preferred Stock",
then outstanding shall be necessary in order to:
a. Increase the authorized number of shares of Preferred
Stock or create or authorize any class of stock which shall be
entitled to any preference over, or to parity with, the
Preferred Stock;
b. Make any change in any of the provisions relative to the
Preferred Stock or any series thereof, which would change the
express terms or provisions of such stock in any manner
prejudicial to the holders thereof, except that if such change
is prejudicial to the holders of one or more, but not all of
such series, the consent of the holders of two-thirds of the
total number of shares then outstanding of the series so
affected shall be required; or
c. Merge with or consolidate into any other corporation or
corporations, provided that the provisions of this sub-
paragraph c shall not apply to the merger of a wholly-owned
subsidiary of the Corporation or to a purchase or other
acquisition by the Corporation of franchises or assets of
another corporation in any manner which does not involve a
merger or consolidation.
For the purposes of this paragraph 1, the holders of the
Preferred Stock shall vote and be referred to as one class and
shall be entitled to one vote for each share of stock so held.
Nothing in this paragraph 1 provided shall require the
consent or vote of the holders of shares of any series of
Preferred Stock for the creation of any class of stock
entitled to any preference over, or to parity with, such
series of Preferred Stock, as to dividend or assets, if the
purpose of the creation thereof is, and the proceeds derived
from the issue and sale thereof are to be used for, the
redemption of all shares of such series of Preferred Stock
then outstanding.
If and whenever dividends accrued and unpaid on the
outstanding Preferred Stock, or any series thereof, equal or
exceed an amount equivalent to eight full quarterly dividends
on all shares of any series of the Preferred Stock at the time
outstanding, then until all dividends in default on the
Preferred Stock shall have been paid, or declared and set
aside, the holders of the Preferred Stock voting together as
one class, shall be entitled to elect the smallest number of
directors necessary to constitute a majority of the full Board
of Directors, and the holders of the Common Stock, voting
separately as a class, shall be entitled to elect the
remaining members of the Board of Directors.
If and when all dividends theretofore in default on the
Preferred Stock shall be paid, or declared and set aside (and
such dividends shall be declared and paid out of any funds
legally available therefor, as soon as reasonably practicable)
the holders of Preferred Stock shall thereupon be divested of
such special right to elect any members of the Board of
Directors, but subject always to the same provisions for the
vesting of special rights of the holders of the Preferred
Stock in case of further like default or defaults.
Whenever, under the provisions hereof, a change in the
voting powers of the holders of the Preferred Stock and Common
Stock shall have occurred, a meeting of the holders of such
stock shall be held upon notice promptly given, as provided in
the By-Laws of the Corporation for a special meeting of
stockholders, by the President or the Secretary of the
Corporation. If within fifteen days after the accrual or
termination of such special right of the holders of the
Preferred Stock or Common Stock, with respect to the election
of directors, the President and the Secretary of the
Corporation shall fail to call such meeting, (to be held on a
date not more than thirty days after the mailing of the notice
therefor), then such meeting shall be held upon notice as
provided in the By-Laws for a special meeting of stockholders
given by the holders of not less than one thousand shares of
Preferred Stock or Common Stock after filing with the
Corporation a notice of their intention to do so.
At all meetings of stockholders held for the purpose of
electing directors, during such times as the holders of shares
of the Preferred Stock shall have the right to elect directors
pursuant to the foregoing provisions, the presence in person
or by proxy of the majority of the outstanding shares of all
series of the Preferred Stock entitled to vote shall be
required to constitute a quorum of such combined class for the
election of such directors, and the presence in person or by
proxy of the holders of a majority of the outstanding shares
of the Common Stock shall be required to constitute a quorum
of such class for the election of directors; provided,
however, that the absence of a quorum of the holders of either
such class shall not prevent the election at any such meeting,
or an adjournment thereof, or directors by the other such
class if the necessary quorum of the holders of stock of such
class is present in person or by proxy at such meeting; and
provided further that in the absence of a quorum of the
holders of stock of either of such class, a majority of those
holders of the stock of such class who are present in person
or by proxy shall have the power to adjourn the meeting for
the election of the directors to be elected by such class from
time to time without notice, other than announcement at the
meeting, until the requisite amount of holders of such class
shall be present in person or by proxy, but such adjournment
shall not be made to a date beyond the date for the mailing of
notice of the next annual meeting of stockholders or special
meeting in lieu thereof.
Forthwith upon the election of a majority of the Board of
Directors of the Corporation by the holders of Preferred Stock
pursuant to the foregoing provisions hereof, the terms of
office of all persons who were directors of the Corporation
immediately prior to such election shall terminate, whether or
not holders of Common Stock entitled to vote shall then have
elected the remaining members of the Board of Directors, and
if the holders of Common Stock entitled to vote shall not have
elected the remaining members of the Board of Directors, then
the directors so elected by the holders of Preferred Stock
shall constitute the Board of Directors pending such election
of the remaining directors by such holders of Common Stock.
Upon the reversion pursuant to the foregoing provisions of the
voting powers to their status prior to default, then
forthwith, upon the election of new directors by the holders
of all stock of the Corporation, the term of office of the
directors elected by vote of the holders of Preferred Stock
shall forthwith terminate.
2. Dividends:
The holders of the Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out
of the surplus or net profits of the Corporation, cumulative
dividends at the full cumulative rate and no more, payable
quarterly at dates fixed by the Board of Directors, before any
dividend shall be declared, set aside for, or paid upon the
Common Stock, but accumulations of dividends shall not bear
interest. Dividends on the Preferred Stock shall accrue from
the date of issuance thereof.
3. Redemption provisions:
The Corporation, at the option of the Board of Directors,
may redeem at any time or times or from time to time the whole
or any part of the Preferred Stock, or the whole or any part
of any series thereof at the time outstanding at such price or
prices as shall have been fixed as being payable in case of
redemption in respect thereof, together with the amount of any
dividends accrued or unpaid thereon to the date of redemption.
At least thirty days' previous notice of every such
redemption of Preferred Stock shall be mailed, addressed to
the holders of record of the shares to be redeemed at their
respective addresses, as the same shall appear on the books of
the Corporation, or in any case where no such address shall
appear, then addressed to such stockholder at the principal
office of the Corporation, but the failure to mail such notice
as aforesaid shall not invalidate the redemption of the shares
so redeemed.
Unless the certificate setting forth the preferences
fixed by the Board of Directors for any series shall otherwise
provide, in the case of a redemption of a part only of any
series of the Preferred Stock at any time outstanding the
Corporation shall select by lot the shares of such series so
to be redeemed. Subject to the limitations and provisions
herein contained, the Board of Directors shall have full power
and authority to prescribe the manner in which the selection
by lot shall be made.
If notice of redemption shall have been given by mail as
herein above provided and the Corporation shall, on or prior
to the date fixed for redemption, deposit in trust, for the
benefit of the holders of the Preferred Stock to be redeemed,
with a bank or trust company in good standing, organized under
the laws of the United States of America or of the State of
California, and doing business in the City of San Diego,
California, or in the City of Los Angeles, California, a sum
sufficient to redeem the shares called for redemption,
together with irrevocable written instructions and authority
to such bank or trust company, on behalf of the Corporation,
to pay on or after the time of making such deposit, to the
respective holders of all such shares, the redemption price
thereof, together with accrued dividends, upon the surrender
for cancellation of the certificates representing such shares,
then from and after the date of such deposit (although prior
to the date fixed for redemption) notwithstanding that any
certificate for the shares of Preferred Stock so called for
redemption shall not have been surrendered for cancellation,
all shares of Preferred Stock with respect to which such
deposit shall have been made shall no longer be deemed to be
outstanding, and all rights with respect to such shares of
Preferred Stock shall cease and terminate except only the
right of the holders thereof to receive from such bank or
trust company, at any time after the time of the making of
such deposit, the redemption price of such shares so to be
redeemed, together with accrued dividends, in the case of each
share to be so redeemed, to the date fixed for redemption, but
without interest thereon. Any moneys so deposited by the
Corporation and unclaimed at the end of six years from the
date fixed for such redemption shall be repaid to the
Corporation upon its request expressed in a resolution of its
Board of Directors after which repayment the holders of the
shares so called for redemption shall look only to the
Corporation for the payment thereof.
4. Rights on Liquidation, Dissolution or Winding Up of the
Corporation:
In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the
holders of shares of the Preferred Stock of the Corporation
shall be entitled to be paid in full, out of the assets of the
Corporation, without priority between series, the respective
liquidation price (for voluntary or involuntary liquidation)
fixed for each series, plus all accrued and unpaid dividends
thereon to the date of such liquidation, dissolution or
winding up of the Corporation prior to any payment or
distribution of any assets of the Corporation to the holders
of the Common Stock.
D. PROVISIONS RELATING TO THE CUMULATIVE PREFERRED STOCK, 5%
SERIES, $20 PAR VALUE, BEING THE INITIAL SERIES.
1. Dividend Rate:
The dividend rate on the Cumulative Preferred Stock, 5%
Series, $20 par value, shall be 5% of the par value thereof
per annum.
2. Liquidation Price, Voluntary and Involuntary:
The voluntary liquidation price of the Cumulative
Preferred Stock, 5% Series, $20 par value, shall be $24 per
share, and the involuntary liquidation price shall be $20 per
share.
3. Redemption Price:
The redemption price of the Cumulative Preferred Stock,
5% Series, $20 par value, shall be $24 per share.
E. PROVISIONS RELATING TO THE CUMULATIVE PREFERRED STOCK,
4 % SERIES, $20 PAR VALUE.
1. Dividend Rate:
The dividend rate on the Cumulative Preferred Stock, 4%
Series, $20 par value, shall be 4% of the par value thereof
per annum.
2. Liquidation Price, Voluntary and Involuntary:
The voluntary liquidation price of the Cumulative
Preferred Stock, 4%, Series, $20 par value, shall be $21.20
per share, and the involuntary liquidation price shall be $20
per share.
3. Redemption Price:
The redemption price of the Cumulative Preferred Stock,
4% Series, $20 par value, shall be $21.20 per share.
F. PROVISIONS RELATING TO THE CUMULATIVE PREFERRED STOCK,
4.40% SERIES, $20 PAR VALUE.
1. Dividend Rate:
The dividend rate on the Cumulative Preferred Stock, 4.4%
Series, $20 par value, shall be 4.40% of the par value thereof
per annum.
2. Liquidation Price, Voluntary and Involuntary:
The voluntary liquidation price of the Cumulative
Preferred Stock, 4.40% Series, $20 par value, shall be $21 per
share, and the involuntary liquidation price shall be $20 per
share.
3. Redemption Price:
The redemption price of the Cumulative Preferred Stock,
4.40% Series, $20 par value, shall be $21 per share.
G. PROVISIONS RELATING TO THE CUMULATIVE PREFERRED STOCK,
4.60% SERIES, $20 PAR VALUE.
1. Dividend Rate:
The dividend rate on the Cumulative Preferred Stock,
4.60% Series, $20 par value, shall be 4.60% of the par value
thereof per annum.
2. Liquidation Price, Voluntary and Involuntary:
The voluntary liquidation price of the Cumulative
Preferred Stock, 4.60% Series, $20 par value, shall be $21 per
share to and including January 15, 1973, $20.75 per share
thereafter and to and including January 15, 1978, and $20.25
per share thereafter. The involuntary liquidation price shall
be $20 per share.
3. Redemption Price:
The redemption price of the Cumulative Preferred Stock,
4.60% Series, $20 par value, shall be $21 per share if
redeemed to and including January 15, 1973, $20.75 per share
if redeemed thereafter and to and including January 15, 1978,
and $20.25 per share if redeemed thereafter.
II. COMMON STOCK
A. Voting Rights:
The holders of shares of Common Stock shall be entitled
to one vote for each share of stock held by such holders on
all questions upon which they are entitled to vote in
accordance with the law, except as otherwise provided in part
I of this Article FIFTH.
B. Dividends:
The Board of Directors may declare, and the Corporation
may pay, dividends upon the Common Stock providing the
dividends upon the Cumulative Preferred Stock and Preference
Stock (Cumulative) with all accumulations, up to the beginning
of the respective current quarter-yearly dividend period shall
have been declared and shall have been paid in full, or a sum
sufficient for the payment thereof shall have been set aside
for that purpose and a sum equal to all other unpaid accrued
dividends upon the Cumulative Preferred Stock and Preference
Stock (Cumulative) shall have been set aside in a reserve for
accrued dividends.
C. Rights on Liquidation:
Upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, and after all
payments of the full preferential amounts, on liquidation,
dissolution, or winding up, to the holders of the Cumulative
Preferred Stock and Preference Stock (Cumulative) as may be at
the time outstanding, the holders of the Common Stock shall be
entitled to share ratably in all assets of the Corporation
remaining after such payment to the exclusion of all other
classes of stock.
SIXTH: Fair Price.
A. REQUIRED SHAREHOLDER VOTE FOR CERTAIN TRANSACTIONS.
Unless all of the conditions set forth in either
Subsection 1 or 2 of Section B of this Article have been
fulfilled, any agreement, contract, transaction or other
arrangement providing for or resulting in a Business
Combination must be approved by the affirmative vote of two-
thirds of the number of shares of common stock outstanding at
the time voting as a separate class. Such affirmative vote
shall be required, notwithstanding the fact that no vote may
be required by law or these articles or that a lesser
percentage, different, or additional vote may be specified by
law, these articles, or in any agreement with any national
securities exchange or otherwise, in which case each vote
requirement shall be satisfied individually.
B. EXCEPTIONS.
Section A of this Article shall not apply to any Business
Combination if the conditions specified in either Subsection 1
or 2 below are met.
1. The Business Combination shall have been approved by a
resolution adopted by two-thirds of the authorized directors
of this Corporation, or
2. All of the following conditions have been met:
a. Any consideration to be received for any stock as a
result of the Business Combination shall be in cash or in the
same form as a Dominant Shareholder has previously paid for
shares of that class. If varying forms of consideration have
been used, the form of consideration shall be the form used to
acquire the largest number of shares of the class receiving
consideration.
b. The aggregate amount of cash and the fair market value of
any other form of consideration shall, on a per share basis,
at least equal the Highest Purchase Price paid by a Dominant
Shareholder for shares of the same class.
c. "Highest Purchase Price" shall mean the highest amount of
consideration paid by a Dominant Shareholder at any time
within two years prior to the date of becoming a Dominant
Shareholder and during any time while having the status of
Dominant Shareholder, provided, however, that the Highest
Purchase Price shall be appropriately adjusted to reflect the
occurrence of any reclassification, recapitalization, stock
split, reverse stock split or other readjustment to the number
of outstanding shares of stock in a class, or the payment of a
stock dividend thereon occurring between the last date upon
which such Dominant Shareholder paid the Highest Purchase
Price and the effective date of the Business Combination.
d. After such Dominant Shareholder has become a Dominant
Shareholder and prior to the consummation of such Business
Combination:
(1) There shall have been no failure to declare and pay in
full at the regular rate any periodic dividends on any
outstanding preferred stock unless such failure is approved by
two-thirds of the authorized directors of the Corporation;
(2) There shall have been no reduction in the annual rate of
dividends, if any, paid on common shares (such rate to be
appropriately adjusted to reflect the occurrence of any
reclassification, reverse stock split, recapitalization,
reorganization or other similar transaction having the effect
of changing the number of outstanding common shares) unless
such reduction is approved by two-thirds of the authorized
directors of the Corporation; and
(3) Neither a Dominant Shareholder nor an affiliate thereof
shall have become the beneficial owner of any additional
shares of voting stock of the Corporation except as part of
the transaction which resulted in the Dominant Shareholder
becoming a Dominant Shareholder, as a result of a transaction
resulting from a pro rata recapitalization, or as a result of
a transaction which has been approved by a resolution adopted
by two-thirds of the authorized Board of Directors.
3. Definitions.
a. Affiliate means: a person that directly, or indirectly
through one or more intermediaries, controls or is controlled
by, or is under common control with, a specified person.
b. Beneficial Ownership means: holding the right to vote
pursuant to any agreement, arrangement, or understanding;
having the right to acquire pursuant to any agreement,
arrangement, understanding, option, right, warrant or right of
conversion; ownership by an Affiliate or by an officer,
director, or employee of a Dominant Shareholder or any
Affiliate thereof.
c. Business combination means: (1) a merger or
consolidation of the Corporation or any subsidiary with a
Dominant Shareholder or with any other corporation or entity
which is, or after such merger or consolidation would be, an
Affiliate of a Dominant Shareholder; (2) the sale, lease,
exchange, pledge, transfer or other disposition by the
Corporation, or a subsidiary, of assets exceeding 10 percent
of the total assets of the Corporation in a transaction or
series of transactions in which a Dominant Shareholder is
either a party or has an interest; (3) the issuance, sale,
exchange, disposition or other transfer by this Corporation,
or any subsidiary, in one transaction or a series of
transactions, of any securities of this Corporation, or any
subsidiary, to any Dominant Shareholder or any Affiliate of
any Dominant Shareholder in exchange for cash, securities or
other property having an aggregate fair market value in excess
of $200,000,000.00; (4) any reclassification of securities,
any reverse stock split, or any recapitalization of the
Corporation or any other transaction which has the effect,
directly or indirectly, of increasing the proportionate
portion or voting power of the outstanding shares of any class
of equity or convertible securities, or otherwise increasing
the voting power over the Corporation or any subsidiary by any
class of equity or convertible securities which are directly
or indirectly owned by any Dominant Shareholder or any
Affiliate of any Dominant Shareholder.
d. Dominant Shareholder means: any Person (except this
Corporation, any Subsidiary of this Corporation, and any
Saving, Pension, TRAESOP or other benefit plan of this
Corporation or any fiduciary, trustee or custodian thereof
acting in such a capacity) who is the Beneficial Owner,
directly or indirectly, of more than 10 percent (10%) but less
than 99 percent (99%) of the shares of the Corporation having
the power to vote for the Board of Directors. The relevant
time for calculating this percentage shall be each date on
which any approval (board, shareholder, governmental, or any
other) necessary to complete any agreement, contract,
transaction or other arrangement providing for or resulting in
a Business Combination is obtained.
e. Persons means: any individual, group, partnership,
association, firm, corporation or other entity.
f. Subsidiary means: any corporation in which this
Corporation beneficially owns at least a majority of any class
of stock having the right to vote for directors.
4. The Board of Directors by a majority vote of the
Authorized Directors shall have the right to make any
determinations required under this Article.
5. To amend or repeal, or adopt any provisions inconsistent
with this Article, there shall be required the affirmative
vote of two-thirds of the number of shares of common stock
outstanding at the time voting as a separate class. Such
affirmative vote shall be required, notwithstanding the fact
that no vote may be required by law or these articles or that
a lesser percentage, different, or additional vote may be
specified by law, these articles, or in any agreement with any
national securities exchange or otherwise, in which case each
vote requirement shall be satisfied individually.
SEVENTH:
A. LIMITATION OF DIRECTORS' LIABILITY.
The liability of the directors of the Corporation for
monetary damages shall be eliminated to the fullest extent
permissible under California law.
B. INDEMNIFICATION OF CORPORATE AGENTS.
The Corporation is authorized to provide indemnification
of agents (as defined in Section 317 of the California
Corporations Code) through bylaw provisions, agreements with
agents, vote of shareholders or disinterested directors, or
otherwise, in excess of the indemnification otherwise
permitted by Section 317 of the California Corporations Code,
subject only to the applicable limits set forth in Section 204
of the California Corporations Code.
EIGHTH: CERTIFICATE OF DETERMINATION OF PREFERENCES OF
PREFERENCE STOCK (CUMULATIVE), $7.20 SERIES, WITHOUT PAR
VALUE: The Certificate of Determination of Preferences of
Preference Stock (Cumulative), $7.20 Series, Without Par
Value, which is attached hereto as Exhibit A is hereby
incorporated by reference as Article Ninth of these Articles
of Incorporation.
NINTH: CERTIFICATE OF DETERMINATION OF PREFERENCE STOCK
(CUMULATIVE), $2.0625 SERIES, WITHOUT PAR VALUE: The
Certificate of Determination of Preference Stock (Cumulative),
$2.0625 Series, Without Par Value, which is attached hereto as
Exhibit B is hereby incorporated by reference as Article Ninth
of these Articles of Incorporation.
TENTH: CERTIFICATE OF AMENDMENT OF CERTIFICATE OF
DETERMINATION: The Certificate of Amendment of Certificate of
Determination, amending the designation of the Preference
Stock (Cumulative), $2.0625 Series, Without Par Value, to the
Preference Stock (Cumulative), $1.7625 Series, Without Par
Value, which is attached hereto as Exhibit C is hereby
incorporated by reference as Article Tenth of these Articles
of Incorporation.
ELEVENTH: CERTIFICATE OF DETERMINATION OF PREFERENCES OF
PREFERENCE STOCK (CUMULATIVE), $1.70 SERIES, WITHOUT PAR
VALUE: The Certificate of Determination of Preferences of
Preference Stock (Cumulative), $1.70 Series, Without Par
Value, which is attached hereto as Exhibit D is hereby
incorporated by reference as Article Eleventh of these
Articles of Incorporation.
TWELFTH: CERTIFICATE OF DETERMINATION OF PREFERENCES OF
PREFERENCE STOCK (CUMULATIVE), $1.82 SERIES, WITHOUT PAR
VALUE: The Certificate of Determination of Preferences of
Preference Stock (Cumulative), $1.82 Series, Without Par
Value, which is attached hereto as Exhibit E is hereby
incorporated by reference as Article Twelfth of these Articles
of Incorporation.
3. This restatement of Articles of Incorporation does
not itself alter or amend the Articles of Incorporation in any
respect and has been duly approved by the Board of Directors
by resolution dated April 26, 1994.
We further declare under penalty of perjury under the
laws of the State of California that the matters set forth in
this certificate are true and correct of our own knowledge.
DATE: April 26, 1994
T. A. Page
Chairman of the Board of
San Diego Gas & Electric Company
N. A. Peterson
Secretary of
San Diego Gas & Electric Company
EXHIBIT A
SAN DIEGO GAS & ELECTRIC COMPANY
CERTIFICATE OF DETERMINATION
OF PREFERENCES OF PREFERENCE STOCK (CUMULATIVE),
$7.20 SERIES, WITHOUT PAR VALUE
The undersigned, W. A. ZITLAU, President, and J. A.
Graham, Secretary, of SAN DIEGO GAS & ELECTRIC COMPANY, a
corporation organized under the laws of the State of
California, and having its office and principal place of
business in the City of San Diego, County of San Diego, State
of California, do hereby certify that:
1. On Monday, March 13, 1972, at 1:00 o'clock p.m., a
special meeting of the Board of Directors of this corporation
was duly held in its principal office at 101 Ash Street, San
Diego, California. A quorum of said Board was at all times
present and acting at said meeting. Pursuant to Article Sixth
of this Corporation's Articles of Incorporation, as amended,
the following resolution was duly adopted by the unanimous
vote of the members present:
RESOLVED, that one hundred fifty thousand (150,000)
shares of this Corporation's unissued Preference Stock
(Cumulative) shall constitute a series designated "Preference
Stock (Cumulative), $7.20 Series, without par value"; that the
dividend rate of such shares shall be $7.20 per annum; that
such shares shall have no conversion rights; that the
redemption prices of such shares shall be: $107.50 per share
if redeemed to and including March 31, 1977, $105.00 per share
if redeemed thereafter and to and including March 31, 1982,
$102.50 per share if redeemed thereafter and to and including
March 31, 1987, and $101.00 per share if redeemed thereafter,
provided that none of such shares shall be redeemed prior to
April 1, 1977, for the purpose or in anticipation of refunding
any such shares through the sale of Common Stock or through
the use of borrowed funds or of proceeds raised from the issue
of stock ranking senior to Common Stock if the effective cost
of money to the Company of such borrowing or such stock issue
(computed in accordance with generally accepted financial
practice) is below 7.20% per annum; that the involuntary
liquidation price of such shares shall be $100.00 per share;
and that the voluntary liquidation prices of such shares shall
be the same as the respective redemption prices therefor.
2. The total number of share of Preference Stock
(Cumulative) which this corporation is authorized to issue is
Eight Hundred Sixty Thousand (860,000) and the total number of
share constituting the series designated "Preference Stock
(Cumulative), $7.20 Series, without par value" is One Hundred
Fifty Thousand (150,000) and none of the shares of said series
has been issued.
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IN WITNESS WHEREOF, the undersigned have hereunto
subscribed their names and caused the corporate seal of SAN
DIEGO GAS & ELECTRIC COMPANY to be affixed this 13 day of
March, 1972.
/s/ W. A. Zitlau
(W. A. Zitlau)
President of
San Diego Gas & Electric Company
/s/ J. A. Graham
(J. A. Graham)
Secretary of
San Diego Gas & Electric Company
Each of the undersigned declares under penalty of perjury
that the matters set forth in the foregoing certificate are
true and correct.
Executed at San Diego, California, on March 13, 1972.
/s/ W. A. Zitlau
W. A. Zitlau
/s/ J. A. Graham
J. A. Graham
EXHIBIT B
SAN DIEGO GAS & ELECTRIC COMPANY
CERTIFICATE OF DETERMINATION
OF PREFERENCE STOCK (CUMULATIVE),
$2.0625 SERIES WITHOUT PAR VALUE
The undersigned, J. E. Thomas, President, and D. M.
Richardson, Secretary, of SAN DIEGO GAS & ELECTRIC COMPANY, a
corporation organized under the laws of the State of
California, and having its office and principal place of
business in the City of San Diego, County of San Diego, State
of California, do hereby certify that:
1. On September 24, 1992, a special meeting of the
Executive Committee of the Board of Directors of this
corporation was duly held in its principal office at 101 Ash
Street, San Diego, California. A quorum of said Committee was
at all times present and acting at said meeting. Pursuant to
Article FIFTH of this Corporation's Restated Articles of
Incorporation, as amended, and the authority vested in the
Executive Committee by the Board of Directors on February 24,
1992, the following resolution was duly adopted by the
unanimous vote of the Executive Committee members present:
RESOLVED, that one million four hundred thousand
(1,400,000) shares of this Corporation's unissued Preference
Stock (Cumulative), without par value, shall constitute a
series designated "Preference Stock (Cumulative), $2.0625
Series, Without Par Value"; that the dividend rate of such
shares shall be $2.065 per annum; that such shares shall have
no sinking fund or conversion rights; that none of the shares
shall be redeemable prior to November 1, 1997; and the
redemption price of such shares shall be $27.50 per share if
redeemed thereafter, provided that none of such shares shall
be redeemed prior to December 1, 1997, for the purpose of or
in anticipation of refunding any such shares through the use
of borrowed funds or of proceeds raised from the issue of
stock ranking on a parity with, or senior to, such shares, of
the effective cost of money to this corporation of such
borrowing or such stock issue (computed in accordance with
generally accepted financial practice) is below 7.78% per
annum; that the involuntary liquidation price of such shares
shall be $25.00 per share; that the voluntary liquidation
price of such shares shall be the same as the redemption price
therefor on the date of voluntary liquidation; and that the
rights, preferences, restrictions and privileges expressly set
forth in this Corporation's Restated Articles of
Incorporation, as amended, with respect to Preference Stock
(Cumulative) are hereby incorporated by this reference.
2. The total number of shares of Preference Stock
(Cumulative) which this corporation is authorized to issue is
ten million (10,000,000) and the total number of shares of
such class constituting the series designated "Preference
Stock (Cumulative), $2.0625 Series, Without Par Value" is one
million four hundred thousand (1,400,000) and none of the
shares of said series has been issued.
//
//
//
//
//
//
IN WITNESS WHEREOF, the undersigned have subscribed their
names and caused the corporate seal of SAN DIEGO GAS &
ELECTRIC COMPANY to be affixed this 24th day of September,
1992.
/s/ J. E. Thomas
J. E. Thomas
President of
San Diego Gas & Electric Company
(SEAL)
/s/ D. M. Richardson
D. M. Richardson
Secretary of
San Diego Gas & Electric Company
Each of the undersigned declares under penalty of perjury
that the matters set forth in the foregoing certificate are
true and correct.
Executed at San Diego, California, on September 24, 1992.
/s/ J. E. Thomas
J. E. Thomas
President of
San Diego Gas & Electric Company
/s/ D. M. Richardson
D. M. Richardson
Secretary of
San Diego Gas & Electric Company
EXHIBIT C
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DETERMINATION
The undersigned, J. E. Thomas, President, and D. M.
Richardson, Secretary, of SAN DIEGO GAS & ELECTRIC COMPANY, a
corporation organized under the laws of the State of
California, and having its office and principal place of
business in the City of San Diego, County of San Diego, State
of California, do hereby certify that:
1. On December 2, 1992, a special meeting of the
Executive Committee of the Board of Directors of this
corporation was duly held in its principal office at 101 Ash
Street, San Diego, California. A quorum of said Committee was
at all times present and acting at said meeting. Pursuant to
Article FIFTH of this Corporation's Restated Articles of
Incorporation, as amended, and the authority vested in the
Executive Committee by the Board of Directors on February 24,
1992, the following resolution was duly adopted by the
unanimous vote of the Executive Committee members present:
NOW THEREFORE, BE IT RESOLVED, that this Executive
Committee of the Board does hereby amend the designation of
the Preference Stock (Cumulative), $2.0625 Series, Without Par
Value", to be as follows: "Preference Stock (Cumulative),
$1.7625 Series, Without Par Value" (referred to hereinafter as
the "$1.7625 Series Preference Stock"), does hereby leave the
number of shares constituting such series of Preferred Stock
(Cumulative) unaltered at one million four hundred thousand
(1,400,000), and does hereby amend the rights, preferences,
privileges, and restrictions of such series of Preference
Stock (Cumulative) to be as follows:
SECTION 1
DIVIDEND RATE, LIQUIDATION PREFERENCES
1.1 Dividend Rate. The holders of the $1.7625 Series
Preference Stock shall be entitled to receive cumulative
dividends at the rate of $.440625 per share per quarter-annual
period from the date on which each respective share of the
$1.7625 Series Preference Stock is originally issued. Such
dividends shall be payable on January 15, 1993 for the period
commencing on the date of original issuance of the $1.7625
Series Preference Stock and ending on said January 15, and
thereafter quarterly on the fifteenth day of January, April,
July and October in each year.
1.2 Pro-Rata Dividends. The corporation shall not
declare or pay any dividend on any shares of the $1.7625
Series Preference Stock or on any shares of any other series
of Preference Stock (Cumulative) or Cumulative Preferred Stock
of the Corporation (together, the "Preferred Stock") which
ranks on a parity with the $1.7625 Series Preference Stock for
any quarter-annual dividend period unless the Corporation
shall declare and pay or set apart for payment a ratable
dividend on the $1.7625 Series Preference Stock and such
parity Preferred Stock in proportion to the full preferential
amounts to which each such series is entitled.
1.3 Liquidation Preferences. In the event of any
liquidation, dissolution or winding-up of the Corporation, the
holders of the $1.7625 Series Preference Stock shall be
entitled to receive out of the assets of the Corporation
available for distribution to shareholders, before any
distribution of the assets shall be made to the holders of the
Common Stock or any other class or series of stock ranking as
to dividends or assets junior to the $1.7625 Series Preference
Stock, $25 per share, plus an amount equal to the dividends
accrued and unpaid thereon, whether or not declared, to the
date fixed for payment.
1.4. Pro-Rata Distribution. If upon any liquidation,
dissolution or winding-up of the Corporation, the amounts
payable with respect to the $1.7625 Series Preference Stock
and any other series of Preferred Stock of the Corporation
which ranks on a parity with the $1.7625 Series Preference
Stock are not paid in full, the holders of the $1.7625 Series
Preference Stock and such parity Preferred Stock shall share
ratably in any distribution of assets in proportion to the
full preferential amounts to which they are entitled.
SECTION 2
SINKING FUND, REDEMPTION
2.1 Sinking Fund Redemption. So long as any shares of
the $1.7625 Series Preference Stock shall be outstanding, the
Corporation, as a sinking fund of the redemption thereof
(hereinafter called the "Sinking Fund"), shall set aside,
after full payment or provision for payment of dividends
accrued on all stock on a parity with the $1.7625 Series
Preference Stock or senior thereto, in cash out of any monies
legally available for the redemption of shares, on January 15,
2003 and on the 15 day of January in each year thereafter, a
sum equal to $1,250,000 (or, if less than 50,000 shares of the
$1.7625 Series Preference Stock are then outstanding, a sum
equal to $25 times the number of shares of the $1.7625 Series
Preference Stock then outstanding), plus an amount equal to
dividends accrued and unpaid on 50,000 shares of the $1.7625
Series Preference Stock (or the number of shares of the
$1.7625 Series Preference Stock then outstanding if less than
50,000). So long as any shares of the $1.7625 Series
Preference Stock shall be outstanding, on January 15, 2003,
and on the 15th day of January in each year thereafter, the
Corporation shall redeem 50,000 shares of the $1.7625 Series
Preference Stock (or the number of shares of the $1.7625
Series Preference Stock then outstanding if less than 50,000)
at the price of $25 per share plus accrued and unpaid
dividends thereon, using for each such redemption the monies
theretofore set aside as the Sinking Fund. The obligations of
the Corporation under this section 2.1 shall be cumulative, so
that if the full number of shares required to be redeemed on
any January 15 are not so redeemed, the redemption shall be
made as soon thereafter as funds become available therefor and
redemption can be effected in compliance with California law.
In addition, if any shares of the $1.7625 Series
Preference Stock are then outstanding, the Corporation, as
part of the Sinking Fund for the redemption thereof, shall set
aside, after full payment or provision for payment of
dividends accrued on all stock on a parity with the $1.7625
Series Preference Stock or senior thereto, in cash out of any
monies legally available for the redemption of shares, on
January 15, 2008, a sum equal to $25 times the number of
shares of the $1.7625 Series Preference Stock then
outstanding, plus an amount equal to dividends accrued and
unpaid on the number of shares of the $1.7625 Series
Preference Stock then outstanding. On January 15, 2008, the
Corporation shall redeem any and all shares of $1.7625 Series
Preference Stock then outstanding at the price of $25 per
share plus accrued and unpaid dividends thereon, using for
such redemption the monies theretofore set aside as the
Sinking Fund. If the full number of shares required to be
redeemed on January 15, 2008 are not so redeemed, the
redemption shall be made as soon thereafter as funds become
available therefor and redemption can be effected in
compliance with California law.
2.2 Optional Redemption. In addition to the mandatory
sinking fund payments and redemptions pursuant to section
2.1, the Corporation may at its option set aside additional
monies in the Sinking Fund and redeem up to an additional
50,000 shares of the $1.7625 Series Preference Stock on
January 15, 2003, and on the 15th day of January in any year
thereafter, at the price of $25 per share plus accrued and
unpaid dividends thereon; provided, however, that the right to
make such optional payments and up to 50,000 shares per year
redemptions shall be non-cumulative.
2.3 Credit for Repurchases. Any shares of the $1.7625
Series Preference Stock acquired by the Corporation from time
to time by way of purchase other than pursuant to section 2.1
and/or section 2.2 may be applied to reduce any of the Sinking
Fund obligations, including those set forth in either or both
of the paragraphs of section 2.1.
2.4 General. At least thirty (but not more than sixty)
days' previous notice of every redemption of the $1.7625
Series Preference Stock pursuant to section 2.1 and/or section
2.2 shall be mailed, addressed to the holders of record of the
shares to be redeemed at their respective addresses, as the
same shall appear on the books of the Corporation, or in any
case where no such address shall appear, then addressed to
such stockholder at the principal office of the Corporation,
but the failure to mail such notice as aforesaid shall not
invalidate the redemption of the shares so redeemed. The
particular share of $1.7625 Series Preference Stock to be
redeemed by reason of section 2.1 and/or section 2.2 shall be
determined by the Corporation by lot.
SECTION 3
MISCELLANEOUS PROVISIONS
3.1 Ranking. The $1.7625 Series Preference Stock shall
rank equally with the Cumulative Preferred stock ($20 par
value) and all other series of Preference Stock (Cumulative)
of the Corporation with respect to priority in the payment of
dividends, mandatory redemptions, and in the distribution of
assets upon any liquidation, whether voluntary or involuntary.
3.2 Restrictions on Dividend Rights and Acquisitions of
Other Stock. So long as any of the $1.7625 Series Preference
Stock is outstanding, the Corporation shall not declare or pay
any dividend on or make any distribution of property with
respect to any of the Common Stock or on any other stock of
the Corporation having rights or preferences as to dividends
or assets junior to the rights and preferences of the $1.7625
Series Preference Stock, or redeem, purchase or otherwise
acquire any such stock or any stock on a parity with the
$1.7625 Series Preference Stock for value unless in each case:
(a) full cumulative dividends on the $1.7625 Series Preference
Stock then due and payable shall have been declared and paid
or a sum in cash sufficient for the payment thereof set apart
for payment; and (b) in the event that any such declaration or
payment or redemption, purchase or other acquisition is
proposed to occur on or after January 15, 2003, all sinking
fund payments and redemptions required by section 2.1 hereof
shall have been made.
3.3 Status of Redeemed or Reacquired shares. All shares
of $1.7625 Series Preference Stock redeemed or otherwise
reacquired by the Corporation shall not be reissued or
otherwise disposed of as part of the series created hereby but
shall be retired and restored to the status of authorized but
unissued shares of Preference Stock (Cumulative).
3.4 No Conversion Rights. All $1.7625 Series Preference
Stock shall not be convertible into or exchangeable for other
securities of the Corporation.
3.5 Voting Rights. The holders of the $1.7625 Series
Preference Stock shall have the voting rights set forth with
respect to the Corporation's Preference Stock (Cumulative) in
the Restated Articles of Incorporation of the Corporation.
3.6 Incorporation by Reference. The rights,
preferences, privileges and restrictions expressly set forth
in the Corporation's Restated Articles of Incorporation, as
amended, with respect to Preference Stock (Cumulative) are
hereby incorporated by this reference.
2. The total number of shares of Preference Stock
(Cumulative) which this corporation is authorized to issue is
ten million (10,000,000) and the total number of shares of
such class constituting the series designated "Preference
Stock (Cumulative), $2.0625 Series, Without Par Value" is one
million four hundred thousand (1,400,000) and none of the
shares of said series has been issued.
//
//
//
//
IN WITNESS WHEREOF, the undersigned have subscribed their
names and caused the corporate seal of SAN DIEGO GAS &
ELECTRIC COMPANY to be affixed this 2nd day of December, 1992.
/s/ J. E. Thomas
J. E. Thomas
President of
San Diego Gas & Electric Company
(SEAL)
/s/ D. M. Richardson
D. M. Richardson
Secretary of
San Diego Gas & Electric Company
Each of the undersigned declares under penalty of perjury
that the matters set forth in the foregoing certificate are
true and correct.
Executed at San Diego, California, on December 2, 1992.
/s/ J. E. Thomas
J. E. Thomas
President of
San Diego Gas & Electric Company
/s/ D. M. Richardson
D. M. Richardson
Secretary of
San Diego Gas & Electric Company
EXHIBIT D
CERTIFICATE OF DETERMINATION
OF PREFERENCES OF PREFERENCE STOCK (CUMULATIVE),
$1.70 SERIES, WITHOUT PAR VALUE,
OF SAN DIEGO GAS & ELECTRIC COMPANY
THOMAS A. PAGE and D. M. RICHARDSON certify that:
1. They are the Chairman of the Board and Chief
Executive Officer, and the Corporate Secretary, respectively,
of San Diego Gas & Electric Company, a California corporation.
2. The total number of shares of Preference Stock
(Cumulative) which this corporation is authorized to issue is
10,000,000 and the total number of shares constituting the
series designated "Preference Stock (Cumulative), $1.70
Series, Without Par Value" is 1,400,000 and none of the shares
of said series have been issued.
3. The Executive Committee of the Board of Directors
duly adopted the following resolutions:
NOW, THEREFORE, BE IT RESOLVED, that One Million Four Hundred
Thousand (1,400,000) shares of this Corporation's unissued
Preference Stock (Cumulative), without par value, shall
constitute a series designated "Preference Stock (Cumulative),
$1.70 Series, Without Par Value" (referred to hereinafter as
the "$1.70 Series Preference Stock"), and having the rights,
preferences, privileges and restrictions as follows:
SECTION 1
DIVIDEND RATE, LIQUIDATION PREFERENCES
1.1 Dividend Rate. The holders of the $1.70 Series
Preference Stock shall be entitled to receive cumulative
dividends at the rate of $.425 per share per quarterly period
from the date on which each respective share of the $1.70
Series Preference Stock is originally issued. The first such
dividends shall be payable on October 15, 1993 for the period
commencing on the date of original issuance of the $1.70
Series Preference Stock and ending on said October 15, and
thereafter quarterly on the fifteenth day of January, April,
July and October in each year. Dividends payable on the $1.70
Series Preference Stock for any period less than a full
quarterly dividend period, including the initial dividend
period, shall be computed on the basis of a 360-day year
consisting of 12 30-day months.
1.2 Pro-Rata Dividends. The Corporation shall not
declare or pay any dividend on any shares of the $1.70 Series
Preference Stock or on any shares of any other series of
Preference Stock (Cumulative) or Cumulative Preferred Stock of
the Corporation (together, the "Preferred Stock") which ranks
on a parity with the $1.70 Series Preference Stock for any
quarterly dividend period unless the Corporation shall declare
and pay or set apart for payment a ratable dividend on the
$1.70 Series Preference Stock and such parity Preferred Stock
in proportion to the full preferential amounts to which each
such series is entitled.
1.3 Liquidation Preferences. In the event of any
liquidation, dissolution or winding-up of the Corporation, the
holders of the $1.70 Series Preference Stock shall be entitled
to receive out of the assets of the Corporation available for
distribution to shareholders, before any distribution of the
assets shall be made to the holders of the Common Stock or any
other class or series of stock ranking as to dividends or
assets junior to the $1.70 Series Preference Stock, an amount,
in the case of voluntary liquidation, dissolution or winding-
up, equal to $25.850 per share prior to October 15, 2003 and,
thereafter, to the redemption price specified in section 2.1
below applicable on the date of such voluntary liquidation,
dissolution or winding-up, and, in the case of involuntary
liquidation, dissolution or winding-up, $25 per share, plus,
in the case of each share (whether on voluntary or involuntary
liquidation, dissolution or winding-up), an amount equal to
the dividends accrued and unpaid thereon, whether or not
declared, to the date fixed for payment.
1.4 Pro-Rata Distribution. If upon any liquidation,
dissolution or winding-up of the Corporation, the amounts
payable with respect to the $1.70 Series Preference Stock and
any other series of Preferred Stock of the Corporation which
ranks on a parity with the $1.70 Series Preference Stock are
not paid in full, the holders of the $1.770 Series Preference
Stock and such parity Preferred Stock shall share ratably in
any distribution of assets in proportion to the full
preferential amounts to which they are entitled.
SECTION 2
REDEMPTION
2.1 Optional Redemption. The $1.70 Series Preference
Stock shall not be redeemable prior to October 15, 2003.
Thereafter, the $1.70 Series Preference Stock shall be
redeemable at the option of the Corporation, at any time as a
whole, or from time to time in part, at the following
redemption prices per share if redeemed during the 12-month
period beginning October 15 in each of the following years:
2003 at $25.850; 2004 at $25.765; 2005 at $25.680; 2006 at
$25.595; 2007 at $25.510; 2008 at $25.425; 2009 at $25.340;
2010 at $25.255; 2011 at $25.170; 2012 at $25.085; 2013 and
thereafter at $25.00 per share, plus in each case an amount
equal to dividends accrued and unpaid thereon to the
redemption date.
2.2 General. At least 30 (but not more than 60) days'
previous notice of every redemption of the $1.70 Series
Preference Stock pursuant to section 2.1 shall be mailed,
addressed to the holders of record of the shares to be
redeemed at their respective addresses, as the same shall
appear on the books of the Corporation, or in any case where
no such address shall appear, then addressed to such
shareholder at the principal office of the Corporation, but
the failure to mail such notice as aforesaid shall not
invalidate the redemption of the shares so redeemed. The
particular shares of $1.70 Series Preference Stock to be
redeemed by reason of section 2.1 shall be selected pro rata
in proportion to the number of shares of $1.70 Series
Preference Stock held by such holder; provided that any
fractional share that would otherwise be redeemed by virtue of
any pro-rata redemption shall be rounded to the nearest whole
share.
SECTION 3
MISCELLANEOUS PROVISIONS
3.1 Ranking. The $1.70 Series Preference Stock shall
rank equally with the Cumulative Preferred Stock ($20 par
value) and all other series of Preference Stock (Cumulative)
of the Corporation with respect to priority in the payment of
dividends, mandatory redemptions, and in the distribution of
assets upon any liquidation, whether voluntary or involuntary.
3.2 Restrictions on Dividend Rights and Acquisitions of
Other Stock. So long as any of the $1.70 Series Preference
Stock is outstanding, the Corporation shall not declare or pay
any dividend on or make any distribution of property with
respect to any of the Common Stock or on any other stock of
the Corporation having rights or preferences as to dividends
or assets junior to the rights and preferences of the $1.70
Series Preference Stock, or redeem, purchase or otherwise
acquire any such stock or any stock on a parity with the $1.70
Series Preference Stock for value unless in each case full
cumulative dividends on the $1.70 Series Preference Stock then
due and payable shall have been declared and paid or a sum in
cash sufficient for the payment thereof set apart for payment.
3.3 Status of Redeemed or Re acquired Shares. All
shares of $1.70 Series Preference Stock redeemed or otherwise
reacquired by the Corporation shall not be reissued or
otherwise disposed of as part of the series created hereby but
shall be retired and restored to the status of authorized but
unissued shares of Preference Stock (Cumulative).
3.4 No Conversion Rights. No $1.70 Series Preference
Stock shall be convertible into or exchangeable for other
securities of the Corporation.
3.5 Voting Rights. The holders of the $1.70 Series
Preference Stock shall have the voting rights set forth with
respect to the Corporation's Preference Stock (Cumulative) in
the Restated Articles of Incorporation of the Corporation.
3.6 Incorporation by Reference. The rights,
preferences, privileges and restrictions expressly set forth
in the Corporation's Restated Articles of Incorporation, as
amended, with respect to Preference Stock (Cumulative) are
hereby incorporated by this reference.
We further declare under penalty of perjury under the
laws of the State of California that we have read the
foregoing Certificate and know the contents thereof and that
the same is true and correct of our own knowledge.
Date: August 18, 1993
/s/ Thomas A. Page
Thomas A. Page
Chairman of the Board and
Chief Executive Officer of
San Diego Gas & Electric Company
Date: August 18, 1993
/s/ D. M. Richardson
D. M. Richardson
Secretary of
San Diego Gas & Electric Company
EXHIBIT E
CERTIFICATE OF DETERMINATION
OF PREFERENCES OF PREFERENCE STOCK (CUMULATIVE),
$1.82 SERIES, WITHOUT PAR VALUE, OF
SAN DIEGO GAS & ELECTRIC COMPANY
MALYN K. MALQUIST and CONSTANCE K. GOATES certify that:
1. They are the Vice President of Finance and
Treasurer, and the Assistant Secretary, respectively, of San
Diego Gas & Electric Company, a California corporation.
2. The Executive Committee of the Board of Directors
duly adopted the following resolutions:
NOW, THEREFORE, BE IT RESOLVED, that Six Hundred Forty
Thousand (640,000) shares of this Corporation's unissued
Preference Stock (Cumulative), without par value, shall
constitute a series designated "Preference Stock (Cumulative),
$1.82 Series, Without Par Value" (referred to hereinafter as
the "$1.82 Series Preference Stock"), and having the rights,
preferences, privileges and restrictions as follows:
SECTION 1
DIVIDEND RATE, LIQUIDATION PREFERENCES
1.1 Dividend Rate. The holders of the $1.82 Series
Preference Stock shall be entitled to receive cumulative
dividends at the rate of $.455 per share per quarterly period
from the date on which each respective share of the $1.82
Series Preference Stock is originally issued. The first such
dividends shall be payable on January 15, 1994 for the period
commencing on the date of original issuance of the $1.82
Series Preference Stock and ending on said January 15, and
thereafter quarterly on the fifteenth day of January, April,
July and October in each year.
1.2 Pro-Rata Dividends. The Corporation shall not
declare or pay any dividend on any shares of the $1.82 Series
Preference Stock or on any shares of any other series of
Preference Stock (Cumulative) or Cumulative Preferred Stock of
the Corporation (together, the "Preferred Stock") which ranks
on a parity with the $1.82 Series Preference Stock for any
quarterly dividend period unless the Corporation shall declare
and pay or set apart for payment a ratable dividend on the
$1.82 Series Preference Stock and such parity Preferred Stock
in proportion to the full preferential amounts to which each
such series is entitled.
1.3 Liquidation Preferences. In the event of any
liquidation, dissolution or winding-up of the Corporation, the
holders of the $1.82 Series Preference Stock shall be entitled
to receive out of the assets of the Corporation available for
distribution to shareholders, before any distribution of the
assets shall be made to the holders of the Common Stock or any
other class or series of stock ranking as to dividends or
assets junior to the $1.82 Series Preference Stock, $25.00 per
share, plus an amount equal to the dividends accrued and
unpaid thereon, whether or not declared, to the date fixed for
payment.
1.4 Pro-Rata Distribution. If upon any liquidation,
dissolution or winding-up of the Corporation, the amounts
payable with respect to the $1.82 Series Preference Stock and
any other series of Preferred Stock of the Corporation which
ranks on a parity with the $1.82 Series Preference Stock are
not paid in full, the holders of the $1.82 Series Preference
Stock and such parity Preferred Stock shall share ratably in
any distribution of assets in proportion to the full
preferential amounts to which they are entitled.
SECTION 2
REDEMPTION
2.1 Optional Redemption. The $1.82 Series Preference
stock shall not be redeemable prior to November 15, 1998.
Thereafter, the $1.82 Series Preference Stock shall be
redeemable, at the option of the Corporation, at any time as a
whole, or from time to time in part, at $26.00 per share, plus
in each case an amount equal to dividends accrued and unpaid
thereon to the redemption date.
2.2 General. At least 30 (but not more than 60) days'
previous notice of every redemption of the $1.82 Series
Preference Stock pursuant to section 2.1 shall be mailed,
addressed to the holders of record of the shares to be
redeemed at their respective addresses, as the same shall
appear on the books of the Corporation, or in any case where
no such address shall appear, then addressed to such
shareholder at the principal office of the Corporation, but
the failure to mail such notice as aforesaid shall not
invalidate the redemption of the shares so redeemed. The
particular shares of $1.82 Series Preference Stock to be
redeemed by reason of section 2.1 shall be selected pro-rata
in proportion to the number of shares of $1.82 Series
Preference Stock held by such holder; provided that any
fractional share that would otherwise be redeemed by virtue of
any pro-rata redemption shall be rounded to the nearest whole
share.
SECTION 3
MISCELLANEOUS PROVISIONS
3.1 Ranking. The $1.82 Series Preference Stock shall
rank equally with all series of the Cumulative Preferred Stock
($20 par value) and all series of Preference Stock
(Cumulative) of the Corporation with respect to priority in
the payment of dividends, mandatory redemptions, and in the
distribution of assets upon any liquidation, whether voluntary
or involuntary.
3.2 Restrictions on Dividend Rights and Acquisitions of
Other Stock. So long as any of the $1.82 Series Preference
Stock is outstanding, the Corporation shall not declare or pay
any dividend on or make any distribution of property with
respect to any of the Common Stock or on any other stock of
the Corporation having rights or preferences as to dividends
or assets junior to the rights and preferences of the $1.82
Series Preference Stock, or redeem, purchase or otherwise
acquire any such stock or any stock on a parity with the $1.82
Series Preference Stock for value unless in each case full
cumulative dividends on the $1.82 Series Preference Stock then
due and payable shall have been declared and paid or a sum in
cash sufficient for the payment thereof set apart for payment.
3.3 Status of Redeemed or Reacquired Shares. All shares
of $1.82 Series Preference Stock redeemed or otherwise
reacquired by the Corporation shall not be reissued or
otherwise disposed of as part of the series created hereby but
shall be retired and restored to the status of authorized but
unissued shares of Preference Stock (Cumulative).
3.4 No Conversion Rights. No $1.82 Series Preference
Stock shall be convertible into or exchangeable for other
securities of the Corporation.
3.5 Voting Rights. The holders of the $1.82 Series
Preference Stock shall have the voting rights set forth with
respect to the Corporation's Preference Stock (Cumulative) in
the Restated Articles of Incorporation of the Corporation.
3.6 Incorporation by Reference. The rights,
preferences, privileges and restrictions expressly set forth
in the Corporation's Restated Articles of Incorporation, as
amended, with respect to Preference Stock (Cumulative) are
hereby incorporated by this reference.
3. The total number of shares of Preference Stock
(Cumulative) which this corporation is authorized to issue is
10,000,000 and the total number of shares constituting the
series designated "Preference Stock (Cumulative), $1.82
Series, Without Par Value" is 640,000, and none of the shares
of said series have been issued.
We further declare under penalty of perjury under the
laws of the State of California that we have read the
foregoing Certificate and know the contents thereof and that
the same is true and correct of our own knowledge.
Date: November 15, 1993
/s/ Malyn K. Malquist
Malyn K. Malquist,
Vice President of Finance and
Treasurer of
San Diego Gas & Electric Company
Date: November 15, 1993
/s/ Constance K. Goates
Constance K. Goates,
Assistant Secretary of
San Diego Gas & Electric Company
EXHIBIT 12.1
SAN DIEGO GAS & ELECTRIC COMPANY
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS