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):
August 6, 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 August 6, 2018, Sempra Energy issued a press release announcing consolidated losses of $561 million, or $2.11 per diluted share of common stock, for the second 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 six months ended June 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 August 6, 2018 Sempra Energy News Release (including tables).

99.2 Sempra Energy’s Statements of Operations Data by Segment for the three months and six months ended June 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: August 6, 2018
By: /s/ Peter R. Wall
 
Peter R. Wall
Vice President, Controller and Chief Accounting Officer
 



Exhibit
Exhibit 99.1

https://cdn.kscope.io/61082fa32bfc429d787091b106005cd7-sempragraphic2a02.gif
NEWS RELEASE

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


SEMPRA ENERGY REPORTS
SECOND-QUARTER 2018 RESULTS

Development Advancing for LNG Export Projects

Asset Sales Process Underway for U.S. Wind, Solar and Gulf Coast Natural Gas Storage

$1.82 Billion Raised in Successful Equity Offerings

SAN DIEGO, Aug. 6, 2018 - Sempra Energy (NYSE: SRE) today reported
second-quarter 2018 losses of $561 million, or $2.11 per diluted share, compared with earnings of $259 million, or $1.03 per diluted share, in the second quarter 2017. Sempra Energy’s second-quarter 2018 results included a $755 million impairment (after tax and noncontrolling interests) related to the planned sale of certain U.S. midstream assets and a $145 million after-tax impairment related to the planned sale of U.S. wind investments. On an adjusted basis, excluding the aforementioned impairment charges, Sempra Energy’s second-quarter 2018 earnings were $361 million, or $1.35 per diluted share, up from $276 million, or $1.10 per diluted share, in last year’s second quarter.
“In the second quarter, we achieved solid operating results and, with our recent successful equity offerings, we have strengthened our balance sheet,” said Jeffrey W. Martin, CEO of Sempra Energy. “We also have taken significant steps to begin optimizing our portfolio of assets and expand our liquefied natural gas (LNG) business. These initiatives are



integral to our long-term strategic plan, which should deliver shareholder value through superior earnings and dividend growth.”
Sempra Energy’s losses for the first six months of 2018 were $214 million, or $0.82 per diluted share, compared with earnings of $700 million, or $2.77 per diluted share, in the first six months of 2017. Adjusted earnings for the first six months of 2018 were $733 million, or $2.78 per diluted share, compared with $714 million, or $2.83 per diluted share, in the first six months of 2017.
On June 28, following the company’s annual strategic review, Sempra Energy announced a portfolio optimization initiative designed to create incremental shareholder value. The company intends to sell several energy infrastructure assets, including its entire portfolio of U.S. wind and U.S. solar assets and investments, as well as certain U.S. midstream storage assets. Proceeds from the sales will be used to support growth opportunities in the company’s other businesses and further strengthen Sempra Energy’s balance sheet.
On July 13, Sempra Energy successfully completed equity offerings that are expected to raise $1.82 billion, assuming settlement of all forward sale agreements by issuance of common stock. The funds will be used to complete the financing for the acquisition earlier this year of an 80.25-percent stake in Oncor Electric Delivery Co. with approximately 65 percent in equity.
OPERATING HIGHLIGHTS
In the second quarter, Sempra LNG & Midstream advanced development of its Port Arthur LNG and Energía Costa Azul natural gas liquefaction-export projects. On June 26, Port Arthur LNG entered into a preliminary 20-year agreement for the sale of 2 million tonnes per annum (Mtpa) of natural gas to the Polish national oil company, beginning in 2023, subject to reaching a definitive agreement. On June 22 and June 25, respectively, Sempra LNG & Midstream announced the selection of Bechtel as the engineering, procurement, construction and commissioning (EPC) contractor for the Port Arthur liquefaction project under development in Texas and a partnership of TechnipFMC and Kiewit as the EPC contractor for the Energía Costa Azul liquefaction project under development in Mexico.
Last month, Sempra Energy’s Mexican operating unit, IEnova, announced it had been awarded a 20-year contract by the Topolobampo Port Administration in Mexico to build and operate an estimated $150 million receipt, storage and send-out liquid fuels marine terminal in the state of Sinaloa. Operations are expected to commence in the fourth quarter 2020. To support the project, IEnova has entered into 10- and 15-year U.S. dollar-denominated contracts for 100 percent of the terminal’s capacity. The two contracts are with refining and fuel marketing companies. Both contracts have the potential to be extended to 20 years.

NON-GAAP FINANCIAL MEASURES
    Non-GAAP financial measures include Sempra Energy’s 2018 adjusted earnings and adjusted earnings per share for both the second quarter and first six months of 2018 and 2017. Information regarding these non-GAAP financial measures is in the appendix on Table A of the second-quarter financial tables.




INTERNET BROADCAST
Sempra Energy will broadcast a live discussion of its earnings results over the Internet today at 12 p.m. EDT 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 7703894.
Sempra Energy, based in San Diego, is a Fortune 500 energy services holding
company with 2017 revenues of more than $11 billion. Sempra Energy 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 discussions of guidance, strategies, plans, goals, 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 and construction projects, including risks in timely obtaining or maintaining permits and other authorizations, risks in completing construction projects on schedule and on budget, and risks in obtaining the consent and participation of partners and counterparties; 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 or modifications of 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, any of which may raise our cost of capital and materially impair our ability to finance our operations; 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 in cases where the inverse condemnation doctrine 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, natural gas and liquefied natural gas, and natural gas pipeline and storage capacity, including disruptions caused by failures in the transmission grid, moratoriums or limitations on the withdrawal or injection of natural gas from or into storage facilities, and equipment failures; changes in energy markets, volatility in commodity prices and moves to reduce or eliminate reliance on natural gas; risks posed by actions of third parties who control the operations of our investments, and risks that our partners or counterparties will be unable or unwilling to fulfill their contractual commitments; 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 greenhouse gases, radioactive materials and harmful emissions, 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 insurance, to the extent that such insurance is available or not prohibitively expensive; 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 common stock, preferred stock and other securities and disrupt our operations as a result of, among other things, requiring significant time and attention by management and our board of directors; capital markets and economic conditions, including the availability of credit and the liquidity of our investments; fluctuations in inflation, interest and currency exchange rates and our ability to effectively hedge the risk of such fluctuations; 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 international trade agreements, such as the North American Free Trade Agreement, that make us less competitive 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 Company’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 the corresponding decrease in demand for power delivered through SDG&E’s electric transmission and distribution system 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; the ability to realize the anticipated benefits from our investment in Oncor Electric Delivery Holdings Company LLC (Oncor Holdings); Oncor Electric Delivery Company LLC’s (Oncor) ability to eliminate or reduce its quarterly dividends due to regulatory capital requirements, certain reductions in its senior secured credit rating, 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 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 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
June 30,
 
Six months ended
June 30,
(Dollars in millions, except per share amounts)
2018
 
2017(1)
 
2018
 
2017(1)
 
(unaudited)
REVENUES
 
 
 
 
 
 
 
Utilities
$
2,190

 
$
2,197

 
$
4,788

 
$
4,895

Energy-related businesses
374

 
336

 
738

 
669

Total revenues
2,564


2,533


5,526


5,564

 
 
 
 
 
 
 
 
EXPENSES AND OTHER INCOME
 
 
 
 
 
 
 
Utilities:
 
 
 
 
 
 
 
Cost of electric fuel and purchased power
(557
)
 
(553
)
 
(1,103
)
 
(1,080
)
Cost of natural gas
(179
)
 
(228
)
 
(527
)
 
(713
)
Energy-related businesses:
 
 
 
 
 
 
 
Cost of natural gas, electric fuel and purchased power
(69
)
 
(62
)
 
(138
)
 
(129
)
Other cost of sales
(19
)
 
38

 
(37
)
 
16

Operation and maintenance
(783
)
 
(748
)
 
(1,564
)
 
(1,467
)
Depreciation and amortization
(392
)
 
(368
)
 
(778
)
 
(728
)
Franchise fees and other taxes
(104
)
 
(101
)
 
(221
)
 
(211
)
Impairment losses
(1,300
)
 
(71
)
 
(1,300
)
 
(71
)
Other (expense) income, net
(54
)
 
108

 
99

 
282

Interest income
21

 
8

 
54

 
14

Interest expense
(237
)
 
(159
)
 
(453
)
 
(328
)
(Loss) income before income taxes and equity (losses) earnings of unconsolidated subsidiaries
(1,109
)

397


(442
)

1,149

Income tax benefit (expense)
583

 
(167
)
 
294

 
(462
)
Equity (losses) earnings
(4
)
 
18

 
(24
)
 
13

Net (loss) income
(530
)

248


(172
)

700

(Earnings) losses attributable to noncontrolling interests
(5
)
 
12

 
12

 
1

Mandatory convertible preferred stock dividends
(25
)
 

 
(53
)
 

Preferred dividends of subsidiary
(1
)
 
(1
)
 
(1
)
 
(1
)
(Losses) earnings attributable to common shares
$
(561
)

$
259


$
(214
)

$
700

 
 
 
 
 
 
 
 
Basic (losses) earnings per common share
$
(2.11
)
 
$
1.03

 
$
(0.82
)
 
$
2.79

Weighted-average number of shares outstanding, basic (thousands)
265,837

 
251,447

 
261,906

 
251,290

 
 
 
 
 
 
 
 
Diluted (losses) earnings per common share
$
(2.11
)
 
$
1.03

 
$
(0.82
)
 
$
2.77

Weighted-average number of shares outstanding, diluted (thousands)
265,837

 
252,822

 
261,906

 
252,609

 
 
 
 
 
 
 
 
Dividends declared per share of common stock
$
0.89

 
$
0.83

 
$
1.79

 
$
1.65

(1) 
As adjusted for the retrospective adoption of 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 (LOSSES) EARNINGS (Unaudited)
Sempra Energy Adjusted Earnings and Adjusted Earnings Per Share exclude items (after the effects of income taxes and, if applicable, noncontrolling interests) in 2018 and 2017 as follows:
Three months ended June 30, 2018:
$(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 litigation at SoCalGas

Three months ended June 30, 2017:
$(47) million impairment of Sempra Mexico’s Termoeléctrica de Mexicali (TdM) assets that were held for sale until June 2018
$2 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

Six months ended June 30, 2018:
$(755) million impairment of certain non-utility natural gas storage assets
$(145) million other-than-temporary impairment of certain U.S. wind equity method investments
$(22) million impacts associated with Aliso Canyon litigation
$(25) million income tax expense to adjust Tax Cuts and Jobs Act of 2017 (TCJA) provisional amounts

Six months ended June 30, 2017:
$(47) million impairment of TdM assets that were held for sale
$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

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 (Losses) Earnings and GAAP Diluted (Losses) 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
(Losses) earnings
 
Pretax amount
Income tax (benefit) expense(1)
Non-controlling interests
Earnings
(Dollars in millions, except per share amounts)
Three months ended June 30, 2018
 
Three months ended June 30, 2017
Sempra Energy GAAP (Losses) Earnings
 
 
 
$
(561
)
 
 
 
 
$
259

Excluded items:
 
 
 
 
 
 
 
 
 
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

 




Impairment of TdM assets held for sale




 
71


(24
)
47

Deferred income tax benefit associated with TdM




 

(3
)
1

(2
)
Recoveries related to 2016 permanent release of pipeline capacity




 
(47
)
19


(28
)
Sempra Energy Adjusted Earnings
 
 


$
361

 
 
 
 
$
276

 
 
 
 
 
 
 
 
 
 
 
Diluted (losses) earnings per common share:
 
 
 
 
 
 
 
 
 
Sempra Energy GAAP (Losses) Earnings
 
 
 
$
(2.11
)
(2) 
 
 
 
$
1.03

Sempra Energy Adjusted Earnings
 
 
 
$
1.35

 
 
 
 
$
1.10

Weighted-average number of shares outstanding, diluted (thousands)
 
 
 
267,536

(2) 

 
 
 
252,822

 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2018
 
Six months ended June 30, 2017
Sempra Energy GAAP (Losses) Earnings
 
 
 
$
(214
)
 
 
 
 
$
700

Excluded items:
 
 
 
 
 
 
 
 
 
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

 




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
 
 
 
$
733

 
 
 
 
$
714

 
 
 
 
 
 
 
 
 
 
 
Diluted (losses) earnings per common share:
 
 
 
 
 
 
 
 
 
   Sempra Energy GAAP (Losses) Earnings
 
 
 
$
(0.82
)
(2) 
 
 
 
$
2.77

   Sempra Energy Adjusted Earnings
 
 
 
$
2.78

 
 
 
 
$
2.83

Weighted-average number of shares outstanding, diluted (thousands)
 
 
 
263,584

(2) 

 
 
 
252,609

(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.
(2) 
In both the three months and six months ended June 30, 2018, total weighted-average number of potentially dilutive securities of 1.7 million were not included in the computation of GAAP losses per common share since to do so would have decreased the loss per share.





SEMPRA ENERGY
Table B
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
(Dollars in millions)
June 30, 2018
 
December 31, 2017(1)
 
(unaudited)
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
252

 
$
288

Restricted cash
60

 
62

Accounts receivable, net
1,441

 
1,584

Due from unconsolidated affiliates
40

 
37

Income taxes receivable
96

 
110

Inventories
288

 
307

Regulatory assets
337

 
325

Fixed-price contracts and other derivatives
69

 
66

Greenhouse gas allowances
339

 
299

Assets held for sale
1,877

 
127

Other
148

 
136

Total current assets
4,947

 
3,341

 
 
 
 
Other assets:
 
 
 
Restricted cash
15

 
14

Due from unconsolidated affiliates
634

 
598

Regulatory assets
1,644

 
1,517

Nuclear decommissioning trusts
1,022

 
1,033

Investment in Oncor Holdings
9,407

 

Other investments
2,576

 
2,527

Goodwill
2,371

 
2,397

Other intangible assets
221

 
596

Dedicated assets in support of certain benefit plans
443

 
455

Insurance receivable for Aliso Canyon costs
502

 
418

Deferred income taxes
139

 
170

Greenhouse gas allowances
228

 
93

Sundry
842

 
792

Total other assets
20,044

 
10,610

Property, plant and equipment, net
34,916

 
36,503

Total assets
$
59,907

 
$
50,454

 
 
 
 
Liabilities and Equity
 
 
 
Current liabilities:
 
 
 
Short-term debt
$
3,708

 
$
1,540

Accounts payable
1,215

 
1,523

Due to unconsolidated affiliates
10

 
7

Dividends and interest payable
491

 
342

Accrued compensation and benefits
317

 
439

Regulatory liabilities
282

 
109

Current portion of long-term debt
1,108

 
1,427

Fixed-price contracts and other derivatives
73

 
109

Customer deposits
175

 
162

Reserve for Aliso Canyon costs
160

 
84

Greenhouse gas obligations
339

 
299

Liabilities held for sale
158

 
49

Other
566

 
545

Total current liabilities
8,602

 
6,635

Long-term debt
21,278

 
16,445

 
 
 
 
Deferred credits and other liabilities:
 
 
 
Customer advances for construction
148

 
150

Due to unconsolidated affiliates
36

 
35

Pension and other postretirement benefit plan obligations, net of plan assets
1,241

 
1,148

Deferred income taxes
2,078

 
2,767

Deferred investment tax credits
26

 
28

Regulatory liabilities
3,945

 
3,922

Asset retirement obligations
2,732

 
2,732

Fixed-price contracts and other derivatives
275

 
316

Greenhouse gas obligations
57

 

Deferred credits and other
1,125

 
1,136

Total deferred credits and other liabilities
11,663

 
12,234

Equity:
 
 
 
Sempra Energy shareholders’ equity
15,826

 
12,670

Preferred stock of subsidiary
20

 
20

Other noncontrolling interests
2,518

 
2,450

Total equity
18,364

 
15,140

Total liabilities and equity
$
59,907

 
$
50,454

(1) Derived from audited financial statements.





SEMPRA ENERGY
Table C
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 30,
(Dollars in millions)
 
2018
 
2017(1)
 
 
(unaudited)
Cash Flows from Operating Activities
 
 
 
 
Net (loss) income
 
$
(172
)
 
$
700

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
778

 
728

Deferred income taxes and investment tax credits
 
(401
)
 
411

Impairment losses
 
1,300

 
71

Equity losses (earnings)
 
24

 
(13
)
Fixed-price contracts and other derivatives
 
(9
)
 
(142
)
Other
 
143

 
(19
)
Net change in other working capital components
 
208

 
138

Insurance receivable for Aliso Canyon costs
 
(84
)
 
52

Changes in other noncurrent assets and liabilities, net
 
(158
)
 
(37
)
Net cash provided by operating activities
 
1,629

 
1,889

 
 
 
 
 
Cash Flows from Investing Activities
 
 
 
 
Expenditures for property, plant and equipment
 
(1,941
)
 
(1,802
)
Expenditures for investments and acquisitions
 
(9,823
)
 
(97
)
Distributions from investments
 
9

 
18

Purchases of nuclear decommissioning trust assets
 
(487
)
 
(823
)
Proceeds from sales of nuclear decommissioning trust assets
 
487

 
823

Advances to unconsolidated affiliates
 
(84
)
 
(183
)
Repayments of advances to unconsolidated affiliates
 
69

 
2

Other
 
30

 
4

Net cash used in investing activities
 
(11,740
)
 
(2,058
)
 
 
 
 
 
Cash Flows from Financing Activities
 
 
 
 
Common dividends paid
 
(416
)
 
(368
)
Preferred dividends paid
 
(28
)
 

Preferred dividends paid by subsidiary
 
(1
)
 
(1
)
Issuances of mandatory convertible preferred stock, net of $32 in offering costs
 
1,693

 

Issuances of common stock, net of $38 in offering costs in 2018
 
2,090

 
28

Repurchases of common stock
 
(20
)
 
(14
)
Issuances of debt (maturities greater than 90 days)
 
7,407

 
1,932

Payments on debt (maturities greater than 90 days)
 
(1,878
)
 
(1,006
)
Increase (decrease) in short-term debt, net
 
1,266

 
(493
)
Proceeds from sale of noncontrolling interest, net of $1 in offering costs
 
85

 

Net distributions to noncontrolling interests
 
(17
)
 
(25
)
Settlement of cross-currency swaps
 
(33
)
 

Other
 
(71
)
 
(9
)
Net cash provided by financing activities
 
10,077

 
44

 
 
 
 
 
Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
(3
)
 
10

 
 
 
 
 
Decrease in cash, cash equivalents and restricted cash
 
(37
)
 
(115
)
Cash, cash equivalents and restricted cash, January 1
 
364

 
425

Cash, cash equivalents and restricted cash, June 30
 
$
327

 
$
310

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





SEMPRA ENERGY
Table D
 
 
 
 
 
 
 
 
SEGMENT EARNINGS (LOSSES) AND CAPITAL EXPENDITURES, INVESTMENTS AND ACQUISITIONS
 
 
 
 
 
 
 
 
 
Three months ended
June 30,
 
Six months ended
June 30,
(Dollars in millions)
2018
 
2017
 
2018
 
2017
 
    (unaudited)
Earnings (Losses)
 
 
 
 
 
 
 
Sempra Utilities:
 
 
 
 
 
 
 
San Diego Gas & Electric
$
146

 
$
149

 
$
316

 
$
304

Southern California Gas
33

 
58

 
258

 
261

Sempra Texas Utility
114

 

 
129

 

Sempra South American Utilities
44

 
45

 
90

 
92

Sempra Infrastructure:
 
 
 
 
 
 
 
Sempra Mexico
97

 
(9
)
 
117

 
39

Sempra Renewables
(109
)
 
23

 
(88
)
 
34

Sempra LNG & Midstream
(764
)
 
27

 
(780
)
 
28

Parent and other
(122
)
 
(34
)
 
(256
)
 
(58
)
Total
$
(561
)
 
$
259

 
$
(214
)
 
$
700

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
June 30,
 
Six months ended
June 30,
(Dollars in millions)
2018
 
2017
 
2018
 
2017
 
    (unaudited)
Capital Expenditures, Investments and Acquisitions
 
 
 
 
 
 
 
Sempra Utilities:
 
 
 
 
 
 
 
San Diego Gas & Electric
$
376

 
$
345

 
$
851

 
$
763

Southern California Gas
380

 
325

 
783

 
682

Sempra Texas Utility
117

 

 
9,278

 

Sempra South American Utilities
51

 
34

 
107

 
77

Sempra Infrastructure:
 
 
 
 
 
 
 
Sempra Mexico
81

 
87

 
168

 
227

Sempra Renewables
6

 
31

 
37

 
100

Sempra LNG & Midstream
91

 
22

 
137

 
37

Parent and other
10

 
4

 
403

 
13

Total
$
1,112

 
$
848

 
$
11,764

 
$
1,899








SEMPRA ENERGY
Table E
 
 
 
 
 
OTHER OPERATING STATISTICS (Unaudited)
 
 
 
 
 
 
 
 
 
 
Three months ended
June 30,
 
Six months ended
June 30,
UTILITIES
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
SDG&E and SoCalGas
 
 
 
 
 
 
 
 
Gas sales (Bcf)(1)
76

 
71

 
189

 
197

 
Transportation (Bcf)(1)
137

 
148

 
284

 
304

 
Total deliveries (Bcf)(1)
213

 
219

 
473

 
501

 
 
 
 
 
 
 
 
 
Total gas customer meters (thousands)
 
 
 
 
6,865

 
6,825

 
 
 
 
 
 
 
 
 
SDG&E
 
 
 
 
 
 
 
 
Electric sales (millions of kWhs)(1)
3,394

 
3,565

 
7,000

 
7,329

 
Direct access (millions of kWhs)
926

 
786

 
1,671

 
1,573

 
Total deliveries (millions of kWhs)(1)
4,320

 
4,351

 
8,671

 
8,902

 
 
 
 
 
 
 
 
 
Total electric customer meters (thousands)
 
 
 
 
1,453

 
1,438

 
 
 
 
 
 
 
 
Oncor(2)
 
 
 
 
 
 
 
 
Total deliveries (millions of kWhs)
32,658

 

 
39,313

 

 
Total electric customer meters (thousands)
 
 
 
 
3,590

 

 
 
 
 
 
 
 
 
Ecogas
 
 
 
 
 
 
 
 
Natural gas sales (Bcf)

 
7

 
6

 
15

 
Natural gas customer meters (thousands)
 
 
 
 
121

 
120

 
 
 
 
 
 
 
 
Chilquinta Energía
 
 
 
 
 
 
 
 
Electric sales (millions of kWhs)
710

 
691

 
1,508

 
1,502

 
Tolling (millions of kWhs)
81

 
24

 
143

 
44

 
Total deliveries (millions of kWhs)
791

 
715

 
1,651

 
1,546

 
 
 
 
 
 
 
 
 
 
Electric customer meters (thousands)
 
 
 
 
714

 
696

 
 
 
 
 
 
 
 
Luz Del Sur
 
 
 
 
 
 
 
 
Electric sales (millions of kWhs)
1,716

 
1,780

 
3,458

 
3,674

 
Tolling (millions of kWhs)
583

 
461

 
1,141

 
906

 
Total deliveries (millions of kWhs)
2,299

 
2,241

 
4,599

 
4,580

 
 
 
 
 
 
 
 
 
 
Electric customer meters (thousands)
 
 
 
 
1,116

 
1,086

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ENERGY-RELATED BUSINESSES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Power generated and sold (millions of kWhs)
 
 
 
 
 
 
 
Sempra Mexico(3)
1,175

 
650

 
2,396

 
1,705

Sempra Renewables(4)
1,382

 
1,192

 
2,574

 
2,206

 
 
 
 
 
 
 
 
 
(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 six months ended June 30, 2018 only include volumes from the March 9, 2018 acquisition date.
(3)
Includes power generated and sold at the Termoeléctrica de Mexicali 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 June 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
$
1,051

 
$
772

 
$

 
$
389

 
$
310

 
$
40

 
$
79

 
$
(77
)
 
 
$
2,564

Cost of sales and other expenses
(667
)
 
(565
)
 

 
(301
)
 
(123
)
 
(23
)
 
(91
)
 
59

 
 
(1,711
)
Depreciation and amortization
(169
)
 
(138
)
 

 
(15
)
 
(43
)
 
(14
)
 
(11
)
 
(2
)
 
 
(392
)
Impairment losses

 

 

 

 

 

 
(1,300
)
 

 
 
(1,300
)
Other income (expense), net
25

 
13

 

 
2

 
(95
)
 

 

 
1

 
 
(54
)
Income (loss) before interest and tax(1)
240

 
82

 

 
75

 
49

 
3

 
(1,323
)
 
(19
)
 
 
(893
)
Net interest (expense) income(2)
(52
)
 
(26
)
 

 
(3
)
 
(14
)
 
(3
)
 
6

 
(150
)
 
 
(242
)
Income tax (expense) benefit
(42
)
 
(23
)
 

 
(21
)
 
55

 
58

 
506

 
50

 
 
583

Equity earnings (losses), net

 

 
114

 

 
71

 
(187
)
 
1

 
(3
)
 
 
(4
)
(Earnings) losses attributable to noncontrolling interests

 

 

 
(7
)
 
(64
)
 
20

 
46

 

 
 
(5
)
Earnings (losses)
$
146

 
$
33

 
$
114

 
$
44

 
$
97

 
$
(109
)
 
$
(764
)
 
$
(122
)
 
 
$
(561
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended June 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
$
1,058

 
$
770

 
$

 
$
381

 
$
273

 
$
26

 
$
122

 
$
(97
)
 
 
$
2,533

Cost of sales and other expenses(3)
(655
)
 
(564
)
 

 
(294
)
 
(130
)
 
(20
)
 
(71
)
 
80

 
 
(1,654
)
Depreciation and amortization
(166
)
 
(126
)
 

 
(13
)
 
(37
)
 
(10
)
 
(11
)
 
(5
)
 
 
(368
)
Impairment losses

 

 

 

 
(71
)
 

 

 

 
 
(71
)
Other income, net(3)
19

 
24

 

 
2

 
60

 
1

 

 
2

 
 
108

Income (loss) before interest and tax(1)(4)
256

 
104

 

 
76

 
95

 
(3
)
 
40

 
(20
)
 
 
548

Net interest (expense) income(2)
(49
)
 
(27
)
 

 
(5
)
 
(17
)
 
(2
)
 
3

 
(55
)
 
 
(152
)
Income tax (expense) benefit
(54
)
 
(19
)
 

 
(20
)
 
(102
)
 
5

 
(18
)
 
41

 
 
(167
)
Equity earnings, net(4)

 

 

 

 

 
16

 
2

 

 
 
18

(Earnings) losses attributable to noncontrolling interests
(4
)
 

 

 
(6
)
 
15

 
7

 

 

 
 
12

Earnings (losses)
$
149

 
$
58

 
$

 
$
45

 
$
(9
)
 
$
23

 
$
27

 
$
(34
)
 
 
$
259

 
 
(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)
Includes interest income, interest expense and preferred dividends.
(3)
As adjusted for the retrospective adoption of ASU 2017-07.
(4)
As adjusted for a reclassification to conform to current year presentation.





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
         SEMPRA ENERGY
           Table F (Unaudited)
STATEMENTS OF OPERATIONS DATA BY SEGMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 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
$
2,106

 
$
1,898

 
$

 
$
815

 
$
618

 
$
65

 
$
183

 
$
(159
)
 
 
$
5,526

Cost of sales and other expenses
(1,308
)
 
(1,278
)
 

 
(638
)
 
(252
)
 
(44
)
 
(193
)
 
123

 
 
(3,590
)
Depreciation and amortization
(335
)
 
(273
)
 

 
(29
)
 
(86
)
 
(27
)
 
(22
)
 
(6
)
 
 
(778
)
Impairment losses

 

 

 

 

 

 
(1,300
)
 

 
 
(1,300
)
Other income (expense), net
53

 
46

 

 
3

 
(2
)
 

 

 
(1
)
 
 
99

Income (loss) before interest and tax(1)
516

 
393

 

 
151

 
278

 
(6
)
 
(1,332
)
 
(43
)
 
 
(43
)
Net interest (expense) income(2)
(103
)
 
(53
)
 

 
(7
)
 
(29
)
 
(6
)
 
11

 
(266
)
 
 
(453
)
Income tax (expense) benefit
(98
)
 
(82
)
 

 
(41
)
 
(100
)
 
65

 
494

 
56

 
 
294

Equity earnings (losses), net

 

 
129

 
1

 
30

 
(182
)
 
1

 
(3
)
 
 
(24
)
Losses (earnings) attributable to noncontrolling interests
1

 

 

 
(14
)
 
(62
)
 
41

 
46

 

 
 
12

Earnings (losses)
$
316

 
$
258

 
$
129

 
$
90

 
$
117

 
$
(88
)
 
$
(780
)
 
$
(256
)
 

$
(214
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 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
$
2,115

 
$
2,011

 
$

 
$
793

 
$
537

 
$
48

 
$
254

 
$
(194
)
 
 
$
5,564

Cost of sales and other expenses(3)
(1,275
)
 
(1,367
)
 

 
(620
)
 
(251
)
 
(35
)
 
(199
)
 
163

 
 
(3,584
)
Depreciation and amortization
(329
)
 
(252
)
 

 
(26
)
 
(73
)
 
(19
)
 
(21
)
 
(8
)
 
 
(728
)
Impairment losses

 

 

 

 
(71
)
 

 

 

 
 
(71
)
Other income (expense), net(3)
41

 
38

 

 
5

 
187

 
1

 
1

 
9

 
 
282

Income (loss) before interest and tax(1)(4)
552

 
430

 

 
152

 
329

 
(5
)
 
35

 
(30
)
 
 
1,463

Net interest (expense) income(2)
(98
)
 
(52
)
 

 
(9
)
 
(47
)
 
(5
)
 
9

 
(113
)
 
 
(315
)
Income tax (expense) benefit
(144
)
 
(117
)
 

 
(39
)
 
(244
)
 
16

 
(19
)
 
85

 
 
(462
)
Equity earnings (losses), net(4)

 

 

 
1

 
(9
)
 
18

 
3

 

 
 
13

(Earnings) losses attributable to noncontrolling interests
(6
)
 

 

 
(13
)
 
10

 
10

 

 

 
 
1

Earnings (losses)
$
304

 
$
261

 
$

 
$
92

 
$
39

 
$
34

 
$
28

 
$
(58
)
 
 
$
700

 
 
(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)
Includes interest income, interest expense and preferred dividends.
(3)
As adjusted for the retrospective adoption of ASU 2017-07.
(4)
As adjusted for a reclassification to conform to current year presentation.