UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
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Commission file number 1-3779
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SAN DIEGO GAS & ELECTRIC COMPANY
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(Exact name of registrant as specified in its charter)
California 95-1184800
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8330 Century Park Court, San Diego, California 92123
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(Address of principal executive offices)
(Zip Code)
(619) 696-2000
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (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
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Common stock outstanding: Wholly owned by Enova Corporation
ITEM 1. FINANCIAL STATEMENTS.
SAN DIEGO GAS & ELECTRIC COMPANY AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED INCOME
Dollars in millions
Three Months Ended
March 31,
-----------------
2002 2001
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Operating Revenues
Electric $ 278 $ 791
Natural gas 149 338
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Total operating revenues 427 1,129
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Operating Expenses
Electric fuel and net purchased power 61 572
Cost of natural gas distributed 78 245
Other operating expenses 98 116
Depreciation and amortization 54 54
Income taxes 48 47
Other taxes and franchise payments 19 22
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Total operating expenses 358 1,056
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Operating Income 69 73
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Other Income and (Deductions)
Interest income 3 6
Regulatory interest - net (1) 5
Allowance for equity funds used
during construction 2 1
Taxes on non-operating income 2 (4)
Other - net 1 (2)
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Total 7 6
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Interest Charges
Long-term debt 20 21
Other 2 5
Allowance for borrowed funds
used during construction (1) (1)
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Total 21 25
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Net Income 55 54
Preferred Dividend Requirements 2 2
------ ------
Earnings Applicable to Common Shares $ 53 $ 52
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See notes to Consolidated Financial Statements.
SAN DIEGO GAS & ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
Dollars in millions
Balance at
--------------------------
March 31, December 31,
2002 2001
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ASSETS
Utility plant - at original cost $5,076 $5,009
Accumulated depreciation and decommissioning (2,683) (2,642)
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Utility plant - net 2,393 2,367
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Nuclear decommissioning trusts 522 526
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Current assets:
Cash and cash equivalents 315 322
Accounts receivable - trade 156 160
Accounts receivable - other 25 27
Due from unconsolidated affiliates 185 28
Income taxes receivable 22 73
Regulatory assets arising from fixed-price contracts
and other derivatives 66 88
Other regulatory assets 75 75
Inventories 42 70
Other 3 3
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Total current assets 889 846
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Other assets:
Deferred taxes recoverable in rates 157 162
Regulatory assets arising from fixed-price contracts
and other derivatives 576 673
Other regulatory assets 760 842
Deferred charges and other assets 31 28
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Total other assets 1,524 1,705
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Total assets $5,328 $5,444
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See notes to Consolidated Financial Statements.
SAN DIEGO GAS & ELECTRIC COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
Dollars in millions
Balance at
--------------------------
March 31, December 31,
2002 2001
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CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock(255,000,000 shares authorized;
116,583,358 shares outstanding) $ 857 $ 857
Retained earnings 285 232
Accumulated other comprehensive income (loss) (3) (3)
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Total common equity 1,139 1,086
Preferred stock not subject to mandatory redemption 79 79
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Total shareholders' equity 1,218 1,165
Preferred stock subject to mandatory redemption 25 25
Long-term debt 1,212 1,229
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Total capitalization 2,455 2,419
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Current liabilities:
Accounts payable 114 139
Deferred income taxes 111 128
Regulatory balancing accounts - net 598 575
Fixed-price contracts and other derivatives 67 89
Current portion of long-term debt 93 93
Other 192 212
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Total current liabilities 1,175 1,236
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Deferred credits and other liabilities:
Customer advances for construction 40 42
Deferred income taxes 646 639
Deferred investment tax credits 44 45
Fixed-price contracts and other derivatives 576 673
Deferred credits and other liabilities 392 390
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Total deferred credits and other liabilities 1,698 1,789
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Contingencies and commitments (Note 2)
Total liabilities and shareholders' equity $5,328 $5,444
====== ======
See notes to Consolidated Financial Statements.
SAN DIEGO GAS & ELECTRIC COMPANY AND SUBSIDIARY
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
Dollars in millions
Three Months Ended
March 31,
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2002 2001
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Cash Flows from Operating Activities
Net income $ 55 $ 54
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and decommissioning 54 54
Deferred income taxes and investment tax credits (6) 28
Non-cash rate reduction bond expense 22 18
Changes in other assets 52 (298)
Changes in other liabilities 3 (1)
Net change in other working capital components 61 199
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Net cash provided by operating activities 241 54
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Cash Flows from Investing Activities
Capital expenditures (77) (68)
Loan repaid by (paid to) affiliate (149) 19
Contributions to decommissioning funds (1) (1)
Other (2) (2)
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Net cash used in investing activities (229) (52)
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Cash Flows from Financing Activities
Dividends paid (2) (2)
Payments on long-term debt (17) (44)
Issuances of long-term debt -- 93
Increase in short-term debt -- 250
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Net cash provided by (used in) financing
activities (19) 297
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Increase (decrease) in cash and cash equivalents (7) 299
Cash and cash equivalents, January 1 322 256
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Cash and cash equivalents, March 31 $ 315 $ 555
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Supplemental Disclosure of Cash Flow Information
Interest payments, net of amounts capitalized $ 17 $ 19
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Income tax payments (refunds) - net $ -- $ (218)
====== ======
See notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
This Quarterly Report on Form 10-Q is that of San Diego Gas &
Electric Company (SDG&E or the company), the common stock of which
indirectly is wholly owned by Sempra Energy, a California-based
Fortune 500 energy services company. The financial statements herein
are the Consolidated Financial Statements of SDG&E and its sole
subsidiary, SDG&E Funding LLC.
The accompanying Consolidated Financial Statements have been prepared
in accordance with the interim-period-reporting requirements of Form
10-Q. Results of operations for interim periods are not necessarily
indicative of results for the entire year. In the opinion of
management, the accompanying statements reflect all adjustments
necessary for a fair presentation. These adjustments are only of a
normal recurring nature. Certain changes in classification have been
made to prior presentations to conform to the current financial
statement presentation.
The company's significant accounting policies are described in the
notes to Consolidated Financial Statements in the company's Annual
Report on Form 10-K for the year ended December 31, 2001 (Annual
Report). The same accounting policies are followed for interim
reporting purposes.
Information in this Quarterly Report is unaudited and should be read
in conjunction with the company's Annual Report.
As described in the notes to Consolidated Financial Statements in the
company's Annual Report, SDG&E accounts for the economic effects of
regulation on utility operations (excluding generation operations) in
accordance with Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation" (SFAS No.
71).
NEW ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board (FASB) issued
two statements, SFAS 142 "Goodwill and Other Intangible Assets" and
SFAS 143 "Accounting for Asset Retirement Obligations." The former is
not presently relevant to the company.
SFAS 143 addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. This applies to legal obligations
associated with the retirement of long-lived assets. It requires
entities to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred. When the
liability is initially recorded, the entity increases the carrying
amount of the related long-lived asset to reflect the future
retirement cost. Over time, the liability is accreted to its present
value and paid, and the capitalized cost is depreciated over the
useful life of the related asset. SFAS 143 is effective for financial
statements issued for fiscal years beginning after June 15, 2002.
Upon adoption of SFAS 143, the company estimates that it would record
an addition of $540 million to utility plant representing the
company's share of the San Onofre Nuclear Generating Station (SONGS)
estimated future decommissioning costs, and a corresponding
retirement obligation liability of $540 million. The nuclear
decommissioning trusts balance of $522 million at March 31, 2002
represents amounts collected for future decommissioning costs and has
a corresponding offset in accumulated depreciation. Any difference
between the amount of capitalized cost that would have been recorded
and depreciated and the amounts collected in the nuclear
decommissioning trusts will be recorded as a regulatory asset or
liability. Except for SONGS, the company has not yet determined the
effect of SFAS 143 on its financial statements.
In August 2001, the FASB issued SFAS 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets" that replaces SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of." SFAS 144 applies to all long-lived
assets, including discontinued operations. SFAS 144 requires that
those long-lived assets classified as held for sale be measured at
the lower of carrying amount or fair value less cost to sell.
Discontinued operations will no longer be measured at net realizable
value or include amounts for operating losses that have not yet
occurred. SFAS 144 also broadens the reporting of discontinued
operations to include all components of an entity with operations
that can be distinguished from the rest of the entity and that will
be eliminated from the ongoing operations of the entity in a disposal
transaction. The provisions of SFAS 144 are effective for fiscal
years beginning after December 15, 2001. The adoption of SFAS 144 has
not affected the company's financial statements.
2. MATERIAL CONTINGENCIES
ELECTRIC INDUSTRY RESTRUCTURING
The restructuring of California's electric utility industry
significantly affected the company's electric utility operations. The
background of this issue is described in the company's Annual Report.
Subsequent developments are described herein.
SDG&E's undercollection balance has been reduced from $392 million at
December 31, 2001, to $338 million at March 31, 2002. At current
rates, which include no new positive settlements with the California
Public Utilities Commission (CPUC), the balance is expected to be
completely recovered by mid 2005.
On March 21, 2002, the CPUC affirmed its decision prohibiting new
direct access contracts after September 20, 2001, but rejected a
proposal to make the prohibition retroactive to July 1, 2001.
Contracts in place as of September 20, 2001 may be renewed or
assigned to new parties. In a separate proceeding, the CPUC will
examine the use of exit fees as a means of recovering from direct
access customers the adverse effects on the California Department of
Water Resources (DWR) of direct access customer departures from
utility procurement.
On April 4, 2002, the CPUC approved a plan that determines how much
ratepayer revenue the state's investor-owned utilities (IOUs) can
collect in 2002 for utility retained generation. SDG&E continues to
collect the system average rate (the 6.5-cent commodity rate ceiling
plus an amount to repay the DWR for its purchases of power, as
described in the company's Annual Report). The excess, if any, of the
rate ceiling over actual costs is used to reduce the undercollection
balance described above. Incremental Cost Incentive Pricing (ICIP) is
continued for SONGS through 2003. In addition to keeping the ICIP in
place, the decision retains the reduced rate of return authorized for
the SONGS ratebase, both part of an overall mechanism adopted by the
CPUC in 1996.
NUCLEAR INSURANCE
SDG&E and the co-owners of SONGS have purchased primary insurance of
$200 million, the maximum amount available, for public-liability
claims. An additional $9.3 billion of 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 and the co-owners
of SONGS could be assessed retrospective premium adjustments of up to
$176 million (SDG&E's share is $36 million unless default occurs by
any co-owner) 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. In the event the public-liability limit
stated above is insufficient, the Price-Anderson Act provides for
Congress to enact further revenue-raising measures to pay claims,
which could include an additional assessment on all licensed reactor
operators.
Insurance coverage is provided for up to $2.75 billion of property
damage and decontamination liability. Coverage is also provided for
the cost of replacement power, which includes indemnity payments for
up to three years and six weeks, after a waiting period of 12 weeks.
Coverage is provided through a mutual insurance company 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 from these insurance programs, SDG&E could
be assessed retrospective premium adjustments of up to $7.4 million.
Both the public-liability and property insurance include coverage for
SDG&E's and co-owners' losses resulting from acts of terrorism.
LITIGATION
Lawsuits filed in 2000 and currently consolidated in San Diego
Superior Court seek class-action certification and allege that Sempra
Energy, SoCalGas, SDG&E and El Paso Energy Corp. acted to drive up
the price of natural gas for Californians by agreeing to restrict
pipeline capacity into California. Management believes the
allegations are without merit.
SDG&E, along with all other sellers in the western power market, has
been named a defendant in a complaint filed at the FERC by the
California Attorney General's office seeking refunds for electricity
purchases based on alleged violations of FERC tariffs. Management
believes the allegations are without merit.
Except for the matters referred to above, neither the company nor its
subsidiary is party to, nor is their property the subject of, any
material pending legal proceedings other than routine litigation
incidental to their businesses. Management believes that these matters
will not have a material adverse effect on the company's financial
condition or results of operations.
3. COMPREHENSIVE INCOME
Comprehensive income for the three-month periods ended March 31, 2002
and March 31, 2001 was $55 million and $54 million, respectively,
equal to net income for both periods.
4. FINANCIAL INSTRUMENTS
Note 9 of the notes to Consolidated Financial Statements in the
company's Annual Report discusses the company's financial
instruments, including the adoption of SFAS 133, accounting for
derivative instruments and hedging activities, market risk, interest-
rate risk management, energy derivatives and contracts, and fair
value. Additional activity and information since January 1, 2002
related to financial instruments are described herein.
At March 31, 2002, $1 million in other current assets, $67 million in
current liabilities and $576 million in noncurrent liabilities were
recorded in the Consolidated Balance Sheets for fixed-priced
contracts and other derivatives. Regulatory assets and liabilities
were established to the extent that derivative gains and losses are
recoverable or payable through future rates. As such, $66 million in
current regulatory assets, $576 million in noncurrent regulatory
assets and $1 million in other current liabilities were recorded in
the Consolidated Balance Sheets as of March 31, 2002. There was no
material impact to the Statements of Consolidated Income for the
three months ended March 31, 2002.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
financial statements contained in this Form 10-Q and Management's
Discussion and Analysis of Financial Condition and Results of
Operations contained in the company's Annual Report.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report contains statements that are not historical fact
and constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. The words
"estimates," "believes," "expects," "anticipates," "plans," "intends,"
"may," "would" and "should" or similar expressions, or discussions of
strategy or of plans are intended to identify forward-looking
statements. Forward-looking statements are not guarantees of
performance. They involve risks, uncertainties and assumptions. Future
results may differ materially from those expressed in these forward-
looking statements.
Forward-looking statements are necessarily based upon various
assumptions involving judgments with respect to the future and other
risks, including, among others, local, regional, national and
international economic, competitive, political, legislative and
regulatory conditions and developments; actions by the CPUC, the
California Legislature, the DWR and the FERC; capital market
conditions, inflation rates, interest rates and exchange rates; energy
and trading markets, including the timing and extent of changes in
commodity prices; weather conditions and conservation efforts; war and
terrorist attacks; business, regulatory and legal decisions; the pace
of deregulation of retail natural gas and electricity delivery; the
timing and success of business development efforts; and other
uncertainties, all of which are difficult to predict and many of which
are beyond the control of the company. Readers are cautioned not to
rely unduly on any forward-looking statements and are urged to review
and consider carefully the risks, uncertainties and other factors
which affect the company's business described in this report and other
reports filed by the company from time to time with the Securities and
Exchange Commission.
See also "Factors Influencing Future Performance" below.
CAPITAL RESOURCES AND LIQUIDITY
The company's California utility operations have historically been a
major source of liquidity. However, beginning in the third quarter of
2000 and continuing into the first quarter of 2001, SDG&E's liquidity
and its ability to make funds available to Sempra Energy were
adversely affected by the electric cost undercollections resulting
from a temporary ceiling on electric rates legislatively imposed in
response to high electric costs. Significant growth in these
undercollections has ceased as a result of an agreement with the DWR,
under which the DWR is obligated to purchase SDG&E's full net short
position consisting of the power and ancillary services required by
SDG&E's customers that are not provided by SDG&E's nuclear generating
facilities or its previously existing purchase power contracts. The
agreement extends through December 31, 2002. In addition, the CPUC is
conducting proceedings intended to establish guidelines and procedures
for the eventual resumption of electricity procurement by SDG&E and
the other California IOUs. Electric costs are now below and are
expected to remain below the rates under the rate ceiling. See further
discussion in the company's Annual Report.
CASH FLOWS FROM OPERATING ACTIVITIES
For the three-month period ended March 31, 2002, the increase in cash
flows from operations compared to the corresponding period in 2001
was primarily due to SDG&E's undercollection of purchased-power costs
that peaked at $747 million in March of 2001 and which decreased to
$392 million at December 31, 2001 and $338 million at March 31, 2002.
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures for property, plant and equipment are estimated
to be $400 million for the full year 2002 and are being financed
primarily by internally generated funds and security issuances.
Construction, investment and financing programs are continuously
reviewed and revised in response to changes in competition, customer
growth, inflation, customer rates, the cost of capital, and
environmental and regulatory requirements.
CASH FLOWS FROM FINANCING ACTIVITIES
For the three-month period ended March 31, 2002, cash flows from
financing activities decreased from the corresponding period in 2001
due primarily to the above-normal drawdowns of lines of credit in the
2001 period.
In April 2002, Fitch, Inc. confirmed its prior credit ratings of the
company's debt; Standard & Poor's reduced its ratings of the company's
secured debt one notch from AA- with a negative outlook to A+ with a
stable outlook and made corresponding adjustments in the ratings and
outlook of the company's other debt; and Moody's Investors Service,
Inc., confirmed its prior ratings of the short-term debt and variable
rate demand bonds of SDG&E, but placed its ratings of the other debt
of SDG&E under review for possible downgrade.
RESULTS OF OPERATIONS
The company's net income increased for the three-month period ended
March 31, 2002, compared to the corresponding period in 2001
primarily due to lower interest expense in 2002.
The tables below summarize electric and natural gas volumes and
revenues by customer class for the three-month periods ended March
31, 2002 and 2001.
Electric Distribution and Transmission
(Volumes in millions of Kwhrs, dollars in millions)
2002 2001
------------------------------------------
Volumes Revenue Volumes Revenue
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Residential 1,658 $ 174 1,654 $ 225
Commercial 1,425 138 1,506 255
Industrial 419 33 765 170
Direct access 803 24 587 19
Street and highway lighting 22 2 22 3
Off-system sales -- -- 424 89
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4,327 371 4,958 761
Balancing and other (93) 30
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Total 4,327 $ 278 4,958 $ 791
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Gas Sales, Transportation and Exchange
(Volumes in billion cubic feet, dollars in millions)
Gas Sales Transportation & Exchange Total
--------------------------------------------------------------------
Volumes Revenue Volumes Revenue Volumes Revenue
--------------------------------------------------------------------
2002:
Residential 13 $ 100 -- $ -- 13 $ 100
Commercial and industrial 5 30 2 5 7 35
Electric generation plants -- -- 20 4 20 4
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18 $ 130 22 $ 9 40 139
Balancing accounts and other 10
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Total $ 149
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2001:
Residential 14 $ 232 -- $ -- 14 $ 232
Commercial and industrial 6 95 5 7 11 102
Electric generation plants -- -- 18 5 18 5
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20 $ 327 23 $ 12 43 339
Balancing accounts and other (1)
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Total $ 338
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The decreases in electric revenues and in electric fuel and net
purchased power expense were primarily due to the effect of lower
electric commodity costs, which are passed on to customers without
markup, and decreased off-system sales. Under the current regulatory
framework, changes in on-system prices normally do not affect net
income, as explained in the Annual Report.
The decreases in natural gas revenues and in the cost of natural gas
purchased for resale were primarily due to lower natural gas prices.
Under the current regulatory framework, changes in core-market
natural gas prices do not affect net income since, as explained more
fully in the Annual Report, current or future customer rates normally
recover the actual cost of natural gas.
FACTORS INFLUENCING FUTURE PERFORMANCE
Performance of the company will depend primarily on the ratemaking
and regulatory process, electric and natural gas industry
restructuring, and the changing energy marketplace. These factors are
discussed in the company's Annual Report.
NEW ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board (FASB) issued
two statements, SFAS 142 "Goodwill and Other Intangible Assets" and
SFAS 143 "Accounting for Asset Retirement Obligations." The former is
not presently relevant to the company. SFAS 143 addresses financial
accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset
retirement costs. In August 2001, the FASB issued SFAS 144 "Accounting
for the Impairment or Disposal of Long-Lived Assets" that replaces
SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." SFAS 144 applies to all long-
lived assets, including discontinued operations.
See further discussion in Note 1 of the notes to Consolidated
Financial Statements.
ITEM 3. MARKET RISK
There have been no significant changes in the risk issues affecting
the company subsequent to those discussed in the Annual Report. As
noted in that report, SDG&E may, at times, be exposed to limited
market risk in its natural gas purchase and sale activities as a
result of activities under SDG&E's gas Performance-Based Regulation
mechanism. The risk is managed within the parameters of the company's
market-risk management and trading framework. As of March 31, 2002,
the total Value at Risk of SDG&E's natural gas positions was not
material.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Except as otherwise described in this report, neither the company nor
its subsidiary is party to, nor is their property the subject of, any
material pending legal proceedings other than routine litigation
incidental to their businesses.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 12 - Computation of ratios
12.1 Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed after December 31, 2001.
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934,
SDG&E has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SAN DIEGO GAS & ELECTRIC COMPANY
(Registrant)
Date: May 9, 2002 By: /s/ D.L. Reed
-----------------------------
D.L. Reed
President and
Chief Financial Officer
EXHIBIT 12.1
SAN DIEGO GAS & ELECTRIC COMPANY
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(Dollars in millions)
For the three
months ended
March 31,
1997 1998 1999 2000 2001 2002
-------- -------- -------- -------- -------- --------
Fixed Charges and Preferred
Stock Dividends:
Interest $ 88 $118 $131 $119 $ 96 $ 22
Interest portion of
annual rentals 10 7 5 3 3 1
-------- -------- -------- -------- -------- --------
Total Fixed
Charges 98 125 136 122 99 23
Preferred Stock Dividends(1) 13 11 10 13 11 4
-------- -------- -------- -------- -------- --------
Combined Fixed Charges
and Preferred Stock
Dividends for
Purpose of Ratio $111 $136 $146 $135 $110 $ 27
======== ======== ======== ======== ======== ========
Earnings:
Pretax income from
continuing operations $457 $332 $325 $295 $324 $101
Total Fixed Charges
(from above) 98 125 136 122 99 23
Less interest
capitalized (2) (1) (1) (3) (1) -
-------- -------- -------- -------- -------- --------
Total Earnings for
Purpose of Ratio $553 $456 $460 $414 $422 $124
======== ======== ======== ======== ======== ========
Ratio of Earnings
to Combined Fixed
Charges and Preferred
Stock Dividends 4.98 3.35 3.15 3.07 3.84 4.59
======== ======== ======== ======== ======== ========
(1) In computing this ratio, "Preferred stock dividends" represents the before-tax earnings
necessary to pay such dividends, computed at the effective tax rates for the applicable periods.
