Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
 
 
 
 
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
Date of Report
 
(Date of earliest event reported):
November 7, 2018

 
SEMPRA ENERGY
(Exact name of registrant as specified in its charter)

 
 
 
 
 
CALIFORNIA
 
1-14201
 
33-0732627
(State or other jurisdiction of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)

 
 
 
488 8th AVENUE, SAN DIEGO, CALIFORNIA
 
92101
(Address of principal executive offices)
 
(Zip Code)

 
 
Registrant's telephone number, including area code
(619) 696-2000

 
 
(Former name or former address, if changed since last report.)









 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 
[   ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
[   ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
[   ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
[   ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging growth company [ ]
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]







FORM 8-K
Item 2.02 Results of Operations and Financial Condition.

The information furnished in this Item 2.02 and in Exhibits 99.1 and 99.2 shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, nor shall it be deemed to be incorporated by reference in any filing of Sempra Energy, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

On November 7, 2018, Sempra Energy issued a press release announcing consolidated earnings of $274 million, or $0.99 per diluted share of common stock, for the third quarter of 2018. The press release has been posted on Sempra Energy’s website (www.sempra.com) and a copy is attached as Exhibit 99.1.

Concurrently with the website posting of such press release and as noted therein, Sempra Energy also posted its Statements of Operations Data by Segment for the three months and nine months ended September 30, 2018 and 2017. A copy of such information is attached as Exhibit 99.2.


Item 9.01 Financial Statements and Exhibits.
  
Exhibits

99.1 November 7, 2018 Sempra Energy News Release (including tables).

99.2 Sempra Energy’s Statements of Operations Data by Segment for the three months and nine months ended September 30, 2018 and 2017.












SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
SEMPRA ENERGY,
 
(Registrant)
 
 
Date: November 7, 2018
By: /s/ Peter R. Wall
 
Peter R. Wall
Vice President, Controller and Chief Accounting Officer
 



Exhibit
Exhibit 99.1

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12535242&doc=4
NEWS RELEASE

 
 
 
 
 
Media Contact:
Doug Kline
 
 
 
 
Sempra Energy
 
 
 
 
(877) 340-8875
 
 
 
 
secorporatecommunications@sempra.com
 
 
 
 
 
 
 
 
Financial Contact:
Patrick Billings
 
 
 
 
Sempra Energy
 
 
 
 
(877) 736-7727
 
 
 
 
investor@sempra.com
 
 
 


SEMPRA ENERGY REPORTS
HIGHER THIRD-QUARTER 2018 EARNINGS

Preliminary Commercial Agreements Announced for Continued Development of LNG Export Projects in Louisiana, Mexico

InfraREIT-Sharyland Transaction to Expand Texas Regulated Transmission Platform

$1.54 Billion Pending Sale of U.S. Solar Assets Advances Asset Portfolio Optimization

SAN DIEGO, Nov. 7, 2018 - Sempra Energy (NYSE: SRE) today reported third-quarter 2018 earnings of $274 million, or $0.99 per diluted share, up from $57 million, or $0.22 per diluted share, in the third quarter 2017.
On an adjusted basis, Sempra Energy’s third-quarter 2018 earnings increased to $339 million, or $1.23 per diluted share, from $265 million, or $1.04 per diluted share, in the third quarter 2017.
“The most recent quarter was very strong - credit goes to our employees,” said Jeffrey W. Martin, CEO of Sempra Energy. “All of our businesses contributed to our third-quarter operating results. We are building momentum, successfully executing on several major initiatives to advance our strategic vision of becoming North America’s premier energy infrastructure company. Our agreement to sell our U.S. solar assets is important. We expect to utilize capital from our solar asset sales to significantly expand our regulated Texas utility platform through Oncor’s acquisition of InfraREIT and our acquisition of a 50-percent interest in Sharyland. We also have made significant progress toward our goal of becoming a market leader in North American liquefied natural gas (LNG) exports, recently securing preliminary commercial agreements for development of several LNG export projects.”




For the first nine months of 2018, Sempra Energy’s earnings were $60 million, or $0.22 per diluted share, compared with $757 million, or $2.99 per diluted share, in the first nine months last year. Adjusted earnings for the first nine months of 2018 were $1.07 billion, or $4 per diluted share, compared with $979 million, or $3.87 per diluted share, in the first nine months of 2017.
These results reflect certain significant items as described in the following table of GAAP earnings reconciled to adjusted earnings (on an after-tax basis) for the third quarter and first nine months of 2018 and 2017:
 
 
 
Three months ended September 30,
 
Nine months ended September 30,
(Unaudited; dollars, except EPS, and shares, in millions)
 
2018
 
2017
 
2018
 
2017
GAAP Earnings(1)
 
$
274

 
$
57

 
$
60

 
$
757

Impairment of Non-Utility Natural Gas Storage Assets
 

 

 
755

 

Impairment of U.S. Wind Equity Method Investments
 

 

 
145

 

Impairment of Investment in RBS Sempra Commodities
 
65

 

 
65

 

Impact from the Tax Cuts and Jobs Act of 2017
 

 

 
25

 

Impacts Associated with Aliso Canyon Litigation
 

 

 
22

 

Write-off of Wildfire Regulatory Asset
 

 
208

 

 
208

Adjustments Related to Termoeléctrica de Mexicali (TdM)
 

 

 

 
42

Recoveries Related to 2016 Permanent Release of Pipeline Capacity
 

 

 

 
(28
)
Adjusted Earnings(1)
 
$
339

 
$
265

 
$
1,072

 
$
979

 
 
 
 
 
 
 
 
 
 
Diluted weighted-average shares outstanding
 
276

 
253

 
268

 
253

GAAP Earnings Per Diluted Share(1)
 
$
0.99

 
$
0.22

 
$
0.22

 
$
2.99

Adjusted Earnings Per Diluted Share(1)
 
$
1.23

 
$
1.04

 
$
4.00

 
$
3.87

1) 
Attributable to common shares. Sempra Energy adjusted earnings and adjusted earnings per share are non-GAAP financial measures. See Table A for information regarding non-GAAP financial measures and descriptions of adjustments above.

OPERATING HIGHLIGHTS
Earlier today, Sempra Energy announced that its IEnova and Sempra LNG & Midstream subsidiaries have signed three Heads of Agreements (HOAs) with affiliates of Total S.A., Mistui & Co., Ltd., and Tokyo Gas Co., Ltd., for the full export capacity of Phase 1 of the Energia Costa Azul (ECA) LNG liquefaction project located in Baja California, Mexico. The HOAs contemplate the parties negotiating and finalizing definitive 20-year LNG sales-and-purchase agreements, with each of the companies purchasing approximately 0.8 million tonnes per annum (Mtpa) of LNG. ECA LNG Phase 1 is expected to include one liquefaction train capable of producing approximately 2.4 Mtpa of LNG.
Earlier this week, Sempra Energy announced a Memorandum of Understanding (MOU) with Total S.A. that contemplates Total potentially contracting for up to 9 Mtpa of LNG offtake from Sempra Energy’s LNG export development projects, including the approximately 0.8 Mtpa at ECA LNG Phase 1, as described above, and at Cameron LNG Phase 2. On Nov. 2, Sempra Energy announced that Cameron LNG has initiated the commissioning process for the first liquefaction train of Phase 1 of the Louisiana joint-venture export project. Commissioning is the last step before the start-up process, when the liquefaction trains become fully operational and LNG can be exported from the facility. The first three liquefaction trains that comprise Cameron LNG Phase 1 are expected to be producing LNG in 2019.
On Oct. 18, Sempra Energy announced that it and Oncor have entered into agreements under which Oncor will acquire 100 percent of the equity interests of InfraREIT, Inc. for $1.275 billion, excluding certain transaction costs, and Sempra Energy will acquire a 50-percent limited-partnership interest in a holding company that will own Sharyland Utilities, LP, for approximately $98 million. Sempra Energy expects to utilize approximately $1.12 billion, excluding



certain transaction costs, from the company’s pending solar asset sales to help fund the transaction, which is slated for completion in mid-2019, subject to regulatory approvals, lender consents and customary closing conditions.
On Sept. 20, Sempra Renewables entered into an agreement to sell all of its U.S. operating solar assets, one U.S. wind generation facility, and its solar and battery storage development projects to a subsidiary of Consolidated Edison for $1.54 billion, subject to regulatory approvals and customary closing conditions. The sales process for the other announced asset sales - U.S. wind and U.S. non-utility natural gas storage assets - is ongoing.
Sempra Energy’s Mexican subsidiary IEnova continues to expand its liquids business with the recent acquisition of a 51-percent equity interest in the Manzanillo marine terminal development project. IEnova will build the terminal, which is estimated to cost approximately $200 million, of which IEnova’s share would be approximately $100 million. The project is expected to commence commercial operations in late 2020 and 50 percent of the terminal’s capacity already is contracted to Trafigura Mexico, S.A. de C.V. In recent months, IEnova also announced new capacity agreements for the Baja Refinados and Topolobampo liquids terminals, both of which are now fully contracted.

EARNINGS GUIDANCE    
Today, Sempra Energy reaffirmed its 2018 GAAP earnings-per-share guidance range of $2.83 to $3.44 and 2018 adjusted earnings-per-share guidance range of $5.30 to $5.80.

NON-GAAP FINANCIAL MEASURES
Non-GAAP financial measures include Sempra Energy’s adjusted earnings and adjusted earnings per share for the third-quarter and nine-month periods in 2018 and 2017, as well as the adjusted 2018 earnings-per-share guidance range. Additional information regarding these non-GAAP financial measures is in Table A of the third-quarter financial tables.

INTERNET BROADCAST
Sempra Energy will webcast a live discussion of its earnings results today at 12 p.m. EST with senior management of the company. Access is available by logging onto the website at www.sempra.com. For those unable to log onto the live webcast, the teleconference will be available on replay a few hours after its conclusion by dialing (888) 203-1112 and entering passcode 9587918.
Sempra Energy, a San Diego-based energy services holding company with 2017 revenues of more than $11 billion, is the utility holding company with the largest U.S. customer base. The Sempra Energy companies' approximately 20,000 employees serve more than 40 million consumers worldwide.
###
This press release contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by words such as “believes,” “expects,” “anticipates,” “plans,” “estimates,” “projects,” “forecasts,” “contemplates,” “assumes,” “depends,” “should,” “could,” “would,” “will,” “confident,” “may,” “can,” “potential,” “possible,” “proposed,” “target,” “pursue,” “outlook,” “maintain,” or similar expressions or when we discuss our guidance, strategy, plans, goals, vision, opportunities, projections, initiatives, objectives or intentions. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future results may differ materially from those expressed in the forward-looking statements.
Factors, among others, that could cause our actual results and future actions to differ materially from those described in any forward-looking statements include risks and uncertainties relating to: actions and the timing of actions, including decisions, new regulations, and issuances of permits and other authorizations by the California Public Utilities Commission, U.S. Department of Energy, California Department of Conservation's Division of Oil, Gas, and Geothermal Resources, Federal Energy Regulatory Commission, U.S. Environmental Protection Agency, Pipeline and Hazardous Materials Safety Administration, Los Angeles County Department of Public Health, Public Utility Commission of Texas, states, cities and counties, and other regulatory and governmental bodies in the U.S. and other countries in which we operate; the timing and success of business development efforts, major acquisitions such as our interest in Oncor, and construction projects, including risks in (i) timely obtaining or maintaining permits and other authorizations, (ii) completing construction projects on schedule and on budget, (iii) obtaining the consent and



participation of partners and counterparties and their ability to fulfill contractual commitments, and (iv) not realizing anticipated benefits; the resolution of civil and criminal litigation and regulatory investigations; deviations from regulatory precedent or practice that result in a reallocation of benefits or burdens among shareholders and ratepayers; denial of approvals of proposed settlements; and delays in, or disallowance or denial of, regulatory agency authorizations to recover costs in rates from customers or regulatory agency approval for projects required to enhance safety and reliability; and moves to reduce or eliminate reliance on natural gas; the greater degree and prevalence of wildfires in California in recent years and risk that we may be found liable for damages regardless of fault, such as where inverse condemnation applies, and risk that we may not be able to recover any such costs in rates from customers in California; the availability of electric power and natural gas and natural gas storage capacity, including disruptions caused by failures in the transmission grid, limitations on the withdrawal or injection of natural gas from or into storage facilities, and equipment failures; risks posed by actions of third parties who control the operations of our investments; weather conditions, natural disasters, accidents, equipment failures, computer system outages, explosions, terrorist attacks and other events that disrupt our operations, damage our facilities and systems, cause the release of harmful materials, cause wildfires and subject us to third-party liability for property damage or personal injuries, fines and penalties, some of which may not be covered by insurance (including costs in excess of applicable policy limits), may be disputed by insurers or may otherwise not be recoverable through regulatory mechanisms or may impact our ability to obtain satisfactory levels of affordable insurance; cybersecurity threats to the energy grid, storage and pipeline infrastructure, the information and systems used to operate our businesses and the confidentiality of our proprietary information and the personal information of our customers and employees; our ability to successfully execute our plan to divest certain non-utility assets within the anticipated timeframe, if at all, or that such plan may not yield the anticipated benefits; actions of activist shareholders, which could impact the market price of our equity and debt securities and disrupt our operations as a result of, among other things, requiring significant time and attention by management and our board of directors; changes in capital markets, energy markets and economic conditions, including the availability of credit and the liquidity of our investments; and volatility in inflation, interest and currency exchange rates and commodity prices and our ability to effectively hedge the risk of such volatility; the impact of recent federal tax reform and uncertainty as to how it may be applied, and our ability to mitigate adverse impacts; actions by credit rating agencies to downgrade our credit ratings or those of our subsidiaries or to place those ratings on negative outlook and our ability to borrow at favorable interest rates; changes in foreign and domestic trade policies and laws, including border tariffs, and revisions to or replacement of international trade agreements, such as the North American Free Trade Agreement, that may increase our costs or impair our ability to resolve trade disputes; the ability to win competitively bid infrastructure projects against a number of strong and aggressive competitors; expropriation of assets by foreign governments and title and other property disputes; the impact on reliability of San Diego Gas & Electric’s (SDG&E) electric transmission and distribution system due to increased amount and variability of power supply from renewable energy sources; the impact on competitive customer rates due to the growth in distributed and local power generation and from possible departing retail load resulting from customers transferring to Direct Access and Community Choice Aggregation or other forms of distributed and local power generation and the potential risk of nonrecovery for stranded assets and contractual obligations; Oncor Electric Delivery Company LLC’s (Oncor) ability to eliminate or reduce its quarterly dividends due to regulatory capital requirements and commitments, or the determination by Oncor’s independent directors or a minority member director to retain such amounts to meet future requirements; and other uncertainties, some of which may be difficult to predict and are beyond our control.
These risks and uncertainties are further discussed in the reports that Sempra Energy has filed with the U.S. Securities and Exchange Commission (SEC). These reports are available through the EDGAR system free-of-charge on the SEC's website, www.sec.gov. Investors should not rely unduly on any forward-looking statements. These forward-looking statements speak only as of the date hereof, and the company undertakes no obligation to update or revise these forecasts or projections or other forward-looking statements, whether as a result of new information, future events or otherwise.
Sempra South American Utilities, Sempra North American Infrastructure, Sempra LNG & Midstream, Sempra Renewables, Sempra Mexico, Sempra Texas Utility, Oncor Electric Delivery Company LLC (Oncor) and Infraestructura Energética Nova, S.A.B. de C.V. (IEnova) are not the same companies as the California utilities, San Diego Gas & Electric Company (SDG&E) or Southern California Gas Company (SoCalGas), and Sempra South American Utilities, Sempra North American Infrastructure, Sempra LNG & Midstream, Sempra Renewables, Sempra Mexico, Sempra Texas Utility, Oncor and IEnova are not regulated by the California Public Utilities Commission.




SEMPRA ENERGY
Table A
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
September 30,
 
Nine months ended
September 30,
(Dollars in millions, except per share amounts)
2018
 
2017(1)
 
2018
 
2017(1)
 
(unaudited)
REVENUES
 
 
 
 
 
 
 
Utilities
$
2,460

 
$
2,277

 
$
7,248

 
$
7,172

Energy-related businesses
480

 
402

 
1,218

 
1,071

Total revenues
2,940


2,679


8,466


8,243

 
 
 
 
 
 
 
 
EXPENSES AND OTHER INCOME
 
 
 
 
 
 
 
Utilities:
 
 
 
 
 
 
 
Cost of electric fuel and purchased power
(675
)
 
(650
)
 
(1,778
)
 
(1,730
)
Cost of natural gas
(255
)
 
(190
)
 
(782
)
 
(903
)
Energy-related businesses:
 
 
 
 
 
 
 
Cost of natural gas, electric fuel and purchased power
(119
)
 
(97
)
 
(257
)
 
(226
)
Other cost of sales
(17
)
 
(21
)
 
(54
)
 
(5
)
Operation and maintenance
(819
)
 
(759
)
 
(2,383
)
 
(2,226
)
Depreciation and amortization
(380
)
 
(378
)
 
(1,158
)
 
(1,106
)
Franchise fees and other taxes
(131
)
 
(114
)
 
(352
)
 
(325
)
Write-off of wildfire regulatory asset

 
(351
)
 

 
(351
)
Impairment losses
(4
)
 
(1
)
 
(1,304
)
 
(72
)
Other income, net
97

 
40

 
196

 
322

Interest income
22

 
12

 
76

 
26

Interest expense
(232
)
 
(165
)
 
(685
)
 
(493
)
Income (loss) before income taxes and equity earnings of unconsolidated subsidiaries
427


5


(15
)

1,154

Income tax (expense) benefit
(167
)
 
84

 
127

 
(378
)
Equity earnings
74

 
13

 
50

 
26

Net income
334


102


162


802

Earnings attributable to noncontrolling interests
(24
)
 
(45
)
 
(12
)
 
(44
)
Mandatory convertible preferred stock dividends
(36
)
 

 
(89
)
 

Preferred dividends of subsidiary

 

 
(1
)
 
(1
)
Earnings attributable to common shares
$
274


$
57


$
60


$
757

 
 
 
 
 
 
 
 
Basic earnings per common share
$
1.00

 
$
0.23

 
$
0.23

 
$
3.01

Weighted-average number of shares outstanding, basic (thousands)
273,944

 
251,692

 
265,963

 
251,425

 
 
 
 
 
 
 
 
Diluted earnings per common share
$
0.99

 
$
0.22

 
$
0.22

 
$
2.99

Weighted-average number of shares outstanding, diluted (thousands)
275,907

 
253,364

 
267,644

 
252,987

(1) 
As adjusted for the retrospective adoption of Accounting Standards Update (ASU) 2017-07 and a reclassification to conform to current year presentation.





SEMPRA ENERGY
Table A (Continued)
RECONCILIATION OF SEMPRA ENERGY ADJUSTED EARNINGS TO SEMPRA ENERGY GAAP EARNINGS (Unaudited)
Sempra Energy Adjusted Earnings and Adjusted Earnings Per Common Share exclude items (after the effects of income taxes and, if applicable, noncontrolling interests) in 2018 and 2017 as follows:
Three months ended September 30, 2018:
$(65) million impairment of RBS Sempra Commodities LLP (RBS Sempra Commodities) equity method investment at Parent and other

Three months ended September 30, 2017:
$(208) million write-off of wildfire regulatory asset at San Diego Gas & Electric Company (SDG&E)

Nine months ended September 30, 2018:
$(65) million impairment of RBS Sempra Commodities equity method investment
$(755) million impairment of certain non-utility natural gas storage assets in the southeast U.S. at Sempra LNG & Midstream
$(145) million other-than-temporary impairment of certain U.S. wind equity method investments at Sempra Renewables
$(22) million impacts associated with Aliso Canyon natural gas storage facility litigation at Southern California Gas Company (SoCalGas)
$(25) million income tax expense to adjust the Tax Cuts and Jobs Act of 2017 (TCJA) provisional amounts

Nine months ended September 30, 2017:
$(208) million write-off of wildfire regulatory asset at SDG&E
$(47) million impairment of Termoeléctrica de Mexicali (TdM) assets that were held for sale until June 2018 at Sempra Mexico
$5 million deferred income tax benefit on the TdM assets that were held for sale
$28 million of recoveries related to 2016 permanent release of pipeline capacity at Sempra LNG & Midstream

Sempra Energy Adjusted Earnings and Adjusted Earnings Per Common Share are non-GAAP financial measures (GAAP represents accounting principles generally accepted in the United States of America). Because of the significance and/or nature of the excluded items, management believes that these non-GAAP financial measures provide a meaningful comparison of the performance of Sempra Energy’s business operations from 2018 to 2017 and to future periods. Non-GAAP financial measures are supplementary information that should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. The table below reconciles for historical periods these non-GAAP financial measures to Sempra Energy GAAP Earnings and GAAP Diluted Earnings Per Common Share, which we consider to be the most directly comparable financial measures calculated in accordance with GAAP.    
 
 
Pretax amount
Income tax (benefit) expense(1)
Non-controlling interests
Earnings
 
Pretax amount
Income tax (benefit) expense(1)
Non-controlling interests
Earnings
(Dollars in millions, except per share amounts)
Three months ended September 30, 2018
 
Three months ended September 30, 2017
Sempra Energy GAAP Earnings
 
 
 
$
274

 
 
 
 
$
57

Excluded items:
 
 
 
 
 
 
 
 
 
Impairment of investment in RBS Sempra Commodities
$
65

$

$

65

 
$

$

$


Write-off of wildfire regulatory asset




 
351

(143
)

208

Sempra Energy Adjusted Earnings
 
 


$
339

 
 
 
 
$
265

 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share:
 
 
 
 
 
 
 
 
 
Sempra Energy GAAP Earnings
 
 
 
$
0.99

 
 
 
 
$
0.22

Sempra Energy Adjusted Earnings
 
 
 
$
1.23

 
 
 
 
$
1.04

Weighted-average number of shares outstanding, diluted (thousands)
 
 
 
275,907

 
 
 
 
253,364

 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2018
 
Nine months ended September 30, 2017
Sempra Energy GAAP Earnings
 
 
 
$
60

 
 
 
 
$
757

Excluded items:
 
 
 
 
 
 
 
 
 
Impairment of investment in RBS Sempra Commodities
$
65

$

$

65

 
$

$

$


Impairment of non-utility natural gas storage assets
1,300

(499
)
(46
)
755

 




Impairment of U.S. wind equity method investments
200

(55
)

145

 




Impacts associated with Aliso Canyon litigation
1

21


22

 




Impact from the TCJA

25


25

 




Write-off of wildfire regulatory asset




 
351

(143
)

208

Impairment of TdM assets held for sale




 
71


(24
)
47

Deferred income tax benefit associated with TdM




 

(8
)
3

(5
)
Recoveries related to 2016 permanent release of pipeline capacity




 
(47
)
19


(28
)
Sempra Energy Adjusted Earnings
 
 
 
$
1,072

 
 
 
 
$
979

 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share:
 
 
 
 
 
 
 
 
 
   Sempra Energy GAAP Earnings
 
 
 
$
0.22

 
 
 
 
$
2.99

   Sempra Energy Adjusted Earnings
 
 
 
$
4.00

 
 
 
 
$
3.87

Weighted-average number of shares outstanding, diluted (thousands)
 
 
 
267,644

 
 
 
 
252,987

(1) 
Except for adjustments that are solely income tax and tax related to outside basis differences, income taxes were primarily calculated based on applicable statutory tax rates. Income taxes associated with TdM were calculated based on the applicable statutory tax rate, including translation from historic to current exchange rates. An income tax benefit of $12 million associated with the 2017 TdM impairment has been fully reserved.





SEMPRA ENERGY
Table A (Continued)
RECONCILIATION OF SEMPRA ENERGY 2018 ADJUSTED EARNINGS-PER-SHARE GUIDANCE RANGE TO SEMPRA ENERGY 2018 GAAP EARNINGS-PER-SHARE GUIDANCE RANGE (Unaudited)

Sempra Energy 2018 Adjusted Earnings-Per-Share Guidance Range of $5.30 to $5.80 excludes items (after the effects of income taxes and, if applicable, noncontrolling interests) as follows:
$(965) million in impairments of certain assets and equity method investments
$(22) million impacts associated with Aliso Canyon natural gas storage facility litigation
$(25) million income tax expense to adjust the TCJA provisional amounts
$340 million - $370 million estimated gain on sale, net of $128 million - $139 million(1) income tax expense, of the Sempra Renewables operating solar assets, Broken Bow 2 wind generation facility and its solar and battery storage development projects (the Renewables Sale) that is expected to close near the end of 2018

Sempra Energy 2018 Adjusted Earnings-Per-Share Guidance is a non-GAAP financial measure. Because of the significance and/or nature of the excluded items, management believes this non-GAAP financial measure provides additional clarity into the ongoing results of the business and the comparability of such results to prior and future periods and also as a base for projected earnings-per-share compound annual growth rate. Sempra Energy 2018 Adjusted Earnings-Per-Share Guidance should not be considered an alternative to Earnings-Per-Share Guidance determined in accordance with GAAP. The table below reconciles Sempra Energy 2018 Adjusted Earnings-Per-Share Guidance Range to Sempra Energy 2018 GAAP Earnings-Per-Share Guidance Range, which we consider to be the most directly comparable financial measure calculated in accordance with GAAP.
 
 
 
Full-Year 2018
Sempra Energy GAAP Earnings-Per-Share Guidance Range
$
2.83

to
$
3.44

Excluded items:
 
 
 
 
 
Impairments of certain assets and equity method investments
3.55

 
3.55

 
Impacts associated with Aliso Canyon litigation
0.08

 
0.08

 
Impact from the TCJA
0.09

 
0.09

 
Estimated gain on the Renewables Sale
(1.25
)
 
(1.36
)
Sempra Energy Adjusted Earnings-Per-Share Guidance Range
$
5.30

to
$
5.80

Weighted-average number of shares outstanding, diluted (millions)
 
 
272

(1) Income taxes on estimated gain were calculated based on applicable statutory tax rates.
.





SEMPRA ENERGY
Table B
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
(Dollars in millions)
September 30, 2018
 
December 31, 2017(1)
 
(unaudited)
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
212

 
$
288

Restricted cash
73

 
62

Accounts receivable, net
1,663

 
1,584

Due from unconsolidated affiliates
43

 
37

Income taxes receivable
99

 
110

Inventories
345

 
307

Regulatory assets
92

 
325

Fixed-price contracts and other derivatives
96

 
66

Greenhouse gas allowances
339

 
299

Assets held for sale
1,881

 
127

Other
202

 
136

Total current assets
5,045

 
3,341

 
 
 
 
Other assets:
 
 
 
Restricted cash
3

 
14

Due from unconsolidated affiliates
682

 
598

Regulatory assets
1,469

 
1,517

Nuclear decommissioning trusts
1,042

 
1,033

Investment in Oncor Holdings
9,553

 

Other investments
2,561

 
2,527

Goodwill
2,363

 
2,397

Other intangible assets
229

 
596

Dedicated assets in support of certain benefit plans
443

 
455

Insurance receivable for Aliso Canyon costs
474

 
418

Deferred income taxes
116

 
170

Greenhouse gas allowances
275

 
93

Sundry
852

 
792

Total other assets
20,062

 
10,610

Property, plant and equipment, net
35,498

 
36,503

Total assets
$
60,605

 
$
50,454

(1) Derived from audited financial statements.

SEMPRA ENERGY
Table B (Continued)
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
(Dollars in millions)
September 30, 2018
 
December 31, 2017(1)
 
(unaudited)
 
 
Liabilities and Equity
 
 
 
Current liabilities:
 
 
 
Short-term debt
$
2,897

 
$
1,540

Accounts payable
1,375

 
1,523

Due to unconsolidated affiliates
7

 
7

Dividends and interest payable
495

 
342

Accrued compensation and benefits
356

 
439

Regulatory liabilities
284

 
109

Current portion of long-term debt
1,464

 
1,427

Fixed-price contracts and other derivatives
63

 
109

Customer deposits
172

 
162

Reserve for Aliso Canyon costs
161

 
84

Greenhouse gas obligations
339

 
299

Liabilities held for sale
156

 
49

Other
722

 
545

Total current liabilities
8,491

 
6,635

 
 
 
 
Long-term debt
21,335

 
16,445

 
 
 
 
Deferred credits and other liabilities:
 
 
 
Customer advances for construction
146

 
150

Due to unconsolidated affiliates
36

 
35

Pension and other postretirement benefit plan obligations, net of plan assets
1,052

 
1,148

Deferred income taxes
2,231

 
2,767

Deferred investment tax credits
25

 
28

Regulatory liabilities
3,974

 
3,922

Asset retirement obligations
2,750

 
2,732

Fixed-price contracts and other derivatives
235

 
316

Greenhouse gas obligations
102

 

Deferred credits and other
1,117

 
1,136

Total deferred credits and other liabilities
11,668

 
12,234

Equity:
 
 
 
Sempra Energy shareholders’ equity
16,617

 
12,670

Preferred stock of subsidiary
20

 
20

Other noncontrolling interests
2,474

 
2,450

Total equity
19,111

 
15,140

Total liabilities and equity
$
60,605

 
$
50,454

(1) Derived from audited financial statements.







SEMPRA ENERGY
Table C
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30,
(Dollars in millions)
 
2018
 
2017(1)
 
 
(unaudited)
Cash Flows from Operating Activities
 
 
 
 
Net income
 
$
162

 
$
802

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
1,158

 
1,106

Deferred income taxes and investment tax credits
 
(289
)
 
302

Write-off of wildfire regulatory asset
 

 
351

Impairment losses
 
1,304

 
72

Equity earnings
 
(50
)
 
(26
)
Fixed-price contracts and other derivatives
 
(44
)
 
(142
)
Other
 
139

 
18

Net change in other working capital components
 
444

 
229

Insurance receivable for Aliso Canyon costs
 
(56
)
 
64

Changes in other noncurrent assets and liabilities, net
 
(177
)
 
(72
)
Net cash provided by operating activities
 
2,591

 
2,704

 
 
 
 
 
Cash Flows from Investing Activities
 
 
 
 
Expenditures for property, plant and equipment
 
(2,815
)
 
(2,880
)
Expenditures for investments and acquisitions
 
(9,921
)
 
(110
)
Proceeds from sale of assets
 
7

 
12

Distributions from investments
 
9

 
25

Purchases of nuclear decommissioning trust assets
 
(703
)
 
(1,082
)
Proceeds from sales of nuclear decommissioning trust assets
 
703

 
1,082

Advances to unconsolidated affiliates
 
(84
)
 
(321
)
Repayments of advances to unconsolidated affiliates
 
71

 
8

Other
 
29

 
6

Net cash used in investing activities
 
(12,704
)
 
(3,260
)
 
 
 
 
 
Cash Flows from Financing Activities
 
 
 
 
Common dividends paid
 
(645
)
 
(561
)
Preferred dividends paid
 
(53
)
 

Preferred dividends paid by subsidiary
 
(1
)
 
(1
)
Issuances of mandatory convertible preferred stock, net of $41 in offering costs
 
2,259

 

Issuances of common stock, net of $41 in offering costs in 2018
 
2,261

 
37

Repurchases of common stock
 
(20
)
 
(15
)
Issuances of debt (maturities greater than 90 days)
 
8,628

 
2,395

Payments on debt (maturities greater than 90 days)
 
(2,967
)
 
(1,829
)
Increase in short-term debt, net
 
707

 
475

Proceeds from sales of noncontrolling interest, net of $1 in offering costs
 
90

 

Net distributions to noncontrolling interests
 
(101
)
 
(109
)
Settlement of cross-currency swaps
 
(33
)
 

Other
 
(80
)
 
(11
)
Net cash provided by financing activities
 
10,045

 
381

 
 
 
 
 
Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
(8
)
 
11

 
 
 
 
 
Decrease in cash, cash equivalents and restricted cash
 
(76
)
 
(164
)
Cash, cash equivalents and restricted cash, January 1
 
364

 
425

Cash, cash equivalents and restricted cash, September 30
 
$
288

 
$
261

(1) 
As adjusted for the retrospective adoption of ASU 2016-15 and ASU 2016-18.





SEMPRA ENERGY
Table D
 
 
 
 
 
 
 
 
SEGMENT EARNINGS (LOSSES) AND CAPITAL EXPENDITURES, INVESTMENTS AND ACQUISITIONS
 
 
 
 
 
 
 
 
 
Three months ended
September 30,
 
Nine months ended
September 30,
(Dollars in millions)
2018
 
2017
 
2018
 
2017
 
    (unaudited)
Earnings (Losses)
 
 
 
 
 
 
 
SDG&E
$
205

 
$
(28
)
 
$
521

 
$
276

SoCalGas
(14
)
 
7

 
244

 
268

Sempra Texas Utility
154

 

 
283

 

Sempra South American Utilities
50

 
42

 
140

 
134

Sempra Mexico
44

 
66

 
161

 
105

Sempra Renewables
34

 
15

 
(54
)
 
49

Sempra LNG & Midstream
16

 
(4
)
 
(764
)
 
24

Parent and other
(215
)
 
(41
)
 
(471
)
 
(99
)
Total
$
274

 
$
57

 
$
60

 
$
757

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
September 30,
 
Nine months ended
September 30,
(Dollars in millions)
2018
 
2017
 
2018
 
2017
 
    (unaudited)
Capital Expenditures, Investments and Acquisitions
 
 
 
 
 
 
 
SDG&E
$
343

 
$
359

 
$
1,194

 
$
1,122

SoCalGas
344

 
351

 
1,127

 
1,033

Sempra Texas Utility

 

 
9,278

 

Sempra South American Utilities
54

 
62

 
161

 
139

Sempra Mexico
152

 
38

 
320

 
265

Sempra Renewables
9

 
261

 
46

 
361

Sempra LNG & Midstream
65

 
16

 
202

 
53

Parent and other
5

 
4

 
408

 
17

Total
$
972

 
$
1,091

 
$
12,736

 
$
2,990








SEMPRA ENERGY
Table E
 
 
 
 
 
OTHER OPERATING STATISTICS (Unaudited)
 
 
 
 
 
 
 
 
 
 
Three months ended
September 30,
 
Nine months ended
September 30,
UTILITIES
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
SDG&E and SoCalGas
 
 
 
 
 
 
 
 
Gas sales (Bcf)(1)
55

 
56

 
244

 
253

 
Transportation (Bcf)(1)
163

 
184

 
447

 
488

 
Total deliveries (Bcf)(1)
218

 
240

 
691

 
741

 
 
 
 
 
 
 
 
 
Total gas customer meters (thousands)
 
 
 
 
6,874

 
6,835

 
 
 
 
 
 
 
 
 
SDG&E
 
 
 
 
 
 
 
 
Electric sales (millions of kWhs)(1)
4,493

 
4,443

 
11,493

 
11,772

 
Direct Access and Community Choice Aggregation (millions of kWhs)
1,009

 
957

 
2,680

 
2,530

 
Total deliveries (millions of kWhs)(1)
5,502

 
5,400

 
14,173

 
14,302

 
 
 
 
 
 
 
 
 
Total electric customer meters (thousands)
 
 
 
 
1,456

 
1,440

 
 
 
 
 
 
 
 
Oncor(2)
 
 
 
 
 
 
 
 
Total deliveries (millions of kWhs)
38,163

 

 
77,476

 

 
Total electric customer meters (thousands)
 
 
 
 
3,607

 

 
 
 
 
 
 
 
 
Ecogas
 
 
 
 
 
 
 
 
Natural gas sales (Bcf)
1

 
7

 
7

 
22

 
Natural gas customer meters (thousands)
 
 
 
 
121

 
120

 
 
 
 
 
 
 
 
Chilquinta Energía
 
 
 
 
 
 
 
 
Electric sales (millions of kWhs)
701

 
699

 
2,209

 
2,201

 
Tolling (millions of kWhs)
75

 
26

 
218

 
70

 
Total deliveries (millions of kWhs)
776

 
725

 
2,427

 
2,271

 
 
 
 
 
 
 
 
 
 
Electric customer meters (thousands)
 
 
 
 
718

 
700

 
 
 
 
 
 
 
 
Luz Del Sur
 
 
 
 
 
 
 
 
Electric sales (millions of kWhs)
1,641

 
1,647

 
5,099

 
5,321

 
Tolling (millions of kWhs)
595

 
478

 
1,736

 
1,384

 
Total deliveries (millions of kWhs)
2,236

 
2,125

 
6,835

 
6,705

 
 
 
 
 
 
 
 
 
 
Electric customer meters (thousands)
 
 
 
 
1,125

 
1,093

 
 
 
 
 
 
 
 
ENERGY-RELATED BUSINESSES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Power generated and sold (millions of kWhs)
 
 
 
 
 
 
 
Sempra Mexico(3)
1,450

 
1,327

 
3,846

 
3,032

Sempra Renewables(4)
1,189

 
894

 
3,763

 
3,100

 
 
 
 
 
 
 
 
 
(1)
Includes intercompany sales.
(2)
Includes 100 percent of the electric deliveries and customer meters of Oncor Electric Delivery Company LLC (Oncor), in which we hold an 80.25-percent interest through our March 2018 acquisition of our equity method investment in Oncor Electric Delivery Holdings Company LLC (Oncor Holdings). Total deliveries for the nine months ended September 30, 2018 only include volumes from the March 9, 2018 acquisition date.
(3)
Includes power generated and sold at the TdM natural gas-fired power plant and the Ventika wind power generation facilities. Also includes 50 percent of total power generated and sold at the Energía Sierra Juárez wind power generation facility, in which Sempra Energy has a 50-percent ownership interest. Energía Sierra Juárez is not consolidated within Sempra Energy, and the related investment is accounted for under the equity method.
(4)  
Includes 50 percent of total power generated and sold related to solar and wind projects in which Sempra Energy has a 50-percent ownership. These subsidiaries are not consolidated within Sempra Energy, and the related investments are accounted for under the equity method. On June 25, 2018, our board of directors approved a plan to sell all U.S. wind and solar assets and investments.


Exhibit


Exhibit 99.2
 
         SEMPRA ENERGY
           Table F (Unaudited)
STATEMENTS OF OPERATIONS DATA BY SEGMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
SDG&E
 
SoCalGas
 
Sempra Texas Utility
 
Sempra South American Utilities
 
Sempra Mexico
 
Sempra Renewables
 
Sempra LNG & Midstream
 
Consolidating Adjustments, Parent & Other
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
1,299

 
$
802

 
$

 
$
375

 
$
410

 
$
38

 
$
147

 
$
(131
)
 
 
$
2,940

Cost of sales and other expenses
(825
)
 
(656
)
 

 
(277
)
 
(201
)
 
(24
)
 
(131
)
 
98

 
 
(2,016
)
Depreciation and amortization
(174
)
 
(141
)
 

 
(14
)
 
(45
)
 

 
(2
)
 
(4
)
 
 
(380
)
Impairment losses

 

 

 

 
(4
)
 

 

 

 
 
(4
)
Other income, net
24

 
3

 

 
1

 
66

 

 

 
3

 
 
97

Income (loss) before interest and tax(1)
324

 
8

 

 
85

 
226

 
14

 
14

 
(34
)
 
 
637

Net interest (expense) income
(55
)
 
(29
)
 

 
(4
)
 
(13
)
 
(3
)
 
7

 
(113
)
 
 
(210
)
Income tax (expense) benefit
(53
)
 
7

 

 
(23
)
 
(126
)
 
2

 
(6
)
 
32

 
 
(167
)
Equity earnings (losses), net

 

 
154

 

 
(28
)
 
12

 

 
(64
)
 
 
74

(Earnings) losses attributable to noncontrolling interests
(11
)
 

 

 
(8
)
 
(15
)
 
9

 
1

 

 
 
(24
)
Preferred dividends

 

 

 

 

 

 

 
(36
)
 
 
(36
)
Earnings (losses)
$
205

 
$
(14
)
 
$
154

 
$
50

 
$
44

 
$
34

 
$
16

 
$
(215
)
 
 
$
274

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
SDG&E
 
SoCalGas
 
Sempra Texas Utility
 
Sempra South American Utilities
 
Sempra Mexico
 
Sempra Renewables
 
Sempra LNG & Midstream
 
Consolidating Adjustments, Parent & Other
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
1,236

 
$
684

 
$

 
$
376

 
$
336

 
$
26

 
$
152

 
$
(131
)
 
 
$
2,679

Cost of sales and other expenses(2)
(773
)
 
(547
)
 

 
(295
)
 
(152
)
 
(22
)
 
(154
)
 
112

 
 
(1,831
)
Depreciation and amortization
(170
)
 
(132
)
 

 
(14
)
 
(41
)
 
(9
)
 
(10
)
 
(2
)
 
 
(378
)
Impairment losses
(351
)
 

 

 

 
(1
)
 

 

 

 
 
(352
)
Other income, net(2)
20

 
13

 

 
2

 
3

 

 
1

 
1

 
 
40

(Loss) income before interest and tax(1)(3)
(38
)
 
18

 

 
69

 
145

 
(5
)
 
(11
)
 
(20
)
 
 
158

Net interest (expense) income
(53
)
 
(25
)
 

 
(4
)
 
(14
)
 
(2
)
 
5

 
(60
)
 
 
(153
)
Income tax benefit (expense)
72

 
14

 

 
(18
)
 
(34
)
 
9

 
2

 
39

 
 
84

Equity earnings, net(3)

 

 

 
1

 
2

 
7

 
3

 

 
 
13

(Earnings) losses attributable to noncontrolling interests
(9
)
 

 

 
(6
)
 
(33
)
 
6

 
(3
)
 

 
 
(45
)
(Losses) earnings
$
(28
)
 
$
7

 
$

 
$
42

 
$
66

 
$
15

 
$
(4
)
 
$
(41
)
 
 
$
57

 
 
(1)
Management believes Income (Loss) Before Interest and Tax is a useful measurement of our segments' performance because it can be used to evaluate the effectiveness of our operations exclusive of interest and income tax, neither of which is directly relevant to the efficiency of those operations.
(2)
As adjusted for the retrospective adoption of ASU 2017-07.
(3)
As adjusted for a reclassification to conform to current year presentation.





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
         SEMPRA ENERGY
           Table F (Unaudited)
STATEMENTS OF OPERATIONS DATA BY SEGMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
SDG&E
 
SoCalGas
 
Sempra Texas Utility
 
Sempra South American Utilities
 
Sempra Mexico
 
Sempra Renewables
 
Sempra LNG & Midstream
 
Consolidating Adjustments, Parent & Other
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
3,405

 
$
2,700

 
$

 
$
1,190

 
$
1,028

 
$
103

 
$
330

 
$
(290
)
 
 
$
8,466

Cost of sales and other expenses
(2,133
)
 
(1,934
)
 

 
(915
)
 
(453
)
 
(68
)
 
(324
)
 
221

 
 
(5,606
)
Depreciation and amortization
(509
)
 
(414
)
 

 
(43
)
 
(131
)
 
(27
)
 
(24
)
 
(10
)
 
 
(1,158
)
Impairment losses

 

 

 

 
(4
)
 

 
(1,300
)
 

 
 
(1,304
)
Other income, net
77

 
49

 

 
4

 
64

 

 

 
2

 
 
196

Income (loss) before interest and tax(1)
840

 
401

 

 
236

 
504

 
8

 
(1,318
)
 
(77
)
 
 
594

Net interest (expense) income
(158
)
 
(81
)
 

 
(11
)
 
(42
)
 
(9
)
 
18

 
(326
)
 
 
(609
)
Income tax (expense) benefit
(151
)
 
(75
)
 

 
(64
)
 
(226
)
 
67

 
488

 
88

 
 
127

Equity earnings (losses), net

 

 
283

 
1

 
2

 
(170
)
 
1

 
(67
)
 
 
50

(Earnings) losses attributable to noncontrolling interests
(10
)
 

 

 
(22
)
 
(77
)
 
50

 
47

 

 
 
(12
)
Preferred dividends

 
(1
)