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SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF PARENT | 12 Months Ended
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Dec. 31, 2018
Condensed Financial Information Disclosure [Abstract] |
Schedule I - Condensed Financial Information of Parent |
SEMPRA ENERGY
CONDENSED STATEMENTS OF OPERATIONS
(Dollars in millions, except per share amounts)
| Years ended December 31,
| 2018 |  | 2017(1) |  | 2016(1)
Interest income | $ | 14 |  |  | $ | — |  |  | $ | — |
Interest expense | (495 | ) |  | (293 | ) |  | (277 | )
Operating expenses | (82 | ) |  | (80 | ) |  | (76 | )
Other (expense) income, net | (16 | ) |  | 100 |  |  | (7 | )
Income tax benefit | 154 |  |  | 33 |  |  | 181 |
Loss before equity in earnings of subsidiaries | (425 | ) |  | (240 | ) |  | (179 | )
Equity in earnings of subsidiaries, net of income taxes | 1,474 |  |  | 496 |  |  | 1,549 |
Net income | 1,049 |  |  | 256 |  |  | 1,370 |
Mandatory convertible preferred stock dividends | (125 | ) |  | — |  |  | — |
Earnings | $ | 924 |  |  | $ | 256 |  |  | $ | 1,370 |
Basic earnings per common share | $ | 3.45 |  |  | $ | 1.02 |  |  | $ | 5.48 |
Weighted-average shares outstanding, basic (thousands) | 268,072 |  |  | 251,545 |  |  | 250,217 |
Diluted earnings per common share | $ | 3.42 |  |  | $ | 1.01 |  |  | $ | 5.46 |
Weighted-average shares outstanding, diluted (thousands) | 269,852 |  |  | 252,300 |  |  | 251,155 |
(1) | As adjusted for the retrospective adoption of ASU 2017-07, which we discuss in Note 2.
See Notes to Condensed Financial Information of Parent.
SEMPRA ENERGY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
| Years ended December 31, 2018, 2017 and 2016
| Pretax amount |  | Income tax benefit (expense) |  | Net-of-tax amount
2018: |  |  |  |  |
Net income | $ | 895 |  |  | $ | 154 |  |  | $ | 1,049 |
Other comprehensive income (loss): |  |  |  |  |  |  |  |
Foreign currency translation adjustments | (144 | ) |  | — |  |  | (144 | )
Financial instruments | 64 |  |  | (21 | ) |  | 43 |
Pension and other postretirement benefits | (38 | ) |  | 4 |  |  | (34 | )
Total other comprehensive loss | (118 | ) |  | (17 | ) |  | (135 | )
Comprehensive income | $ | 777 |  |  | $ | 137 |  |  | $ | 914 |
2017: |  |  |  |  |  |  |  |
Net income | $ | 223 |  |  | $ | 33 |  |  | $ | 256 |
Other comprehensive income (loss): |  |  |  |  |  |  |  |
Foreign currency translation adjustments | 107 |  |  | — |  |  | 107 |
Financial instruments | 2 |  |  | 1 |  |  | 3 |
Pension and other postretirement benefits | 20 |  |  | (8 | ) |  | 12 |
Total other comprehensive income | 129 |  |  | (7 | ) |  | 122 |
Comprehensive income | $ | 352 |  |  | $ | 26 |  |  | $ | 378 |
2016: |  |  |  |  |  |  |  |
Net income | $ | 1,189 |  |  | $ | 181 |  |  | $ | 1,370 |
Other comprehensive income (loss): |  |  |  |  |  |  |  |
Foreign currency translation adjustments | 42 |  |  | — |  |  | 42 |
Financial instruments | (6 | ) |  | 11 |  |  | 5 |
Pension and other postretirement benefits | (13 | ) |  | 4 |  |  | (9 | )
Total other comprehensive income | 23 |  |  | 15 |  |  | 38 |
Comprehensive income | $ | 1,212 |  |  | $ | 196 |  |  | $ | 1,408 |
See Notes to Condensed Financial Information of Parent.
SEMPRA ENERGY
CONDENSED BALANCE SHEETS
(Dollars in millions)
| December 31, 2018 |  | December 31, 2017
Assets: |  |  |
Cash and cash equivalents | $ | 14 |  |  | $ | 104 |
Due from affiliates | 93 |  |  | 83 |
Income taxes receivable | 397 |  |  | 272 |
Other current assets | 9 |  |  | 6 |
Total current assets | 513 |  |  | 465 |
Investments in subsidiaries | 28,778 |  |  | 17,924 |
Due from affiliates | 3 |  |  | 2 |
Deferred income taxes | 1,554 |  |  | 1,802 |
Other assets | 572 |  |  | 656 |
Total assets | $ | 31,420 |  |  | $ | 20,849 |
Liabilities and shareholders’ equity: |  |  |  |  |
Current portion of long-term debt | $ | 1,498 |  |  | $ | 500 |
Due to affiliates | 287 |  |  | 280 |
Other current liabilities | 527 |  |  | 396 |
Total current liabilities | 2,312 |  |  | 1,176 |
Long-term debt | 9,647 |  |  | 6,198 |
Due to affiliates | 1,812 |  |  | 300 |
Other long-term liabilities | 511 |  |  | 505 |
Commitments and contingencies (Note 4) |  |  |  |  |
Shareholders’ equity | 17,138 |  |  | 12,670 |
Total liabilities and shareholders’ equity | $ | 31,420 |  |  | $ | 20,849 |
See Notes to Condensed Financial Information of Parent.
SEMPRA ENERGY
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in millions)
| Years ended December 31,
| 2018 |  | 2017 |  | 2016
Net cash provided by (used in) operating activities | $ | 213 |  |  | $ | 89 |  |  | $ | (3 | )
Expenditures for property, plant and equipment | (11 | ) |  | (11 | ) |  | (5 | )
Expenditures for acquisition | (329 | ) |  | — |  |  | — |
Capital contributions to investees | (9,457 | ) |  | — |  |  | — |
(Increase) decrease in loans to affiliates, net | (1 | ) |  | — |  |  | 457 |
Expenditures for Merger-related costs | — |  |  | (12 | ) |  | — |
Net cash (used in) provided by investing activities | (9,798 | ) |  | (23 | ) |  | 452 |
Common stock dividends paid | (877 | ) |  | (755 | ) |  | (686 | )
Preferred dividends paid | (89 | ) |  | — |  |  | — |
Issuances of mandatory convertible preferred stock, net of $42 in offering costs in 2018 | 2,258 |  |  | — |  |  | — |
Issuances of common stock, net of $41 in offering costs in 2018 | 2,272 |  |  | 47 |  |  | 51 |
Repurchases of common stock | (21 | ) |  | (15 | ) |  | (56 | )
Issuances of long-term debt | 4,969 |  |  | 1,595 |  |  | 499 |
Payments on long-term debt | (500 | ) |  | (600 | ) |  | (750 | )
Increase (decrease) in loans from affiliates, net | 1,520 |  |  | (239 | ) |  | 504 |
Debt issuance costs | (37 | ) |  | (7 | ) |  | (3 | )
Net cash provided by (used in) financing activities | 9,495 |  |  | 26 |  |  | (441 | )
(Decrease) increase in cash and cash equivalents | (90 | ) |  | 92 |  |  | 8 |
Cash and cash equivalents, January 1 | 104 |  |  | 12 |  |  | 4 |
Cash and cash equivalents, December 31 | $ | 14 |  |  | $ | 104 |  |  | $ | 12 |
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES |  |  |  |  |  |  |  |
Accrued Merger-related transaction costs | $ | — |  |  | $ | 31 |  |  | $ | — |
Preferred dividends declared but not paid | 36 |  |  | — |  |  | — |
Common dividends issued in stock | 54 |  |  | 53 |  |  | 53 |
Common dividends declared but not paid | 245 |  |  | 207 |  |  | 189 |
See Notes to Condensed Financial Information of Parent.BASIS OF PRESENTATION The condensed financial information of Sempra Energy has been prepared in accordance with SEC Regulation S-X Rule 5-04 and Rule 12-04. We apply the same accounting policies as in the financial statements of Sempra Energy Consolidated, except that Sempra Energy accounts for the earnings of its subsidiaries under the equity method in this unconsolidated financial information. Other Income, Net, on the Condensed Statements of Operations includes:
▪ | $(6) million, $56 million and $23 million of (losses) gains on dedicated assets in support of our executive retirement and deferred compensation plans in 2018, 2017 and 2016, respectively; and
▪ | $3 million, $50 million and $(28) million net gains (losses) primarily from the settlement of foreign currency derivatives to hedge Sempra Mexico parent’s exposure to movements in the Mexican peso from its controlling interest in IEnova in 2018, 2017 and 2016, respectively.
Additional information on Sempra Energy’s foreign currency derivatives is provided in Note 11 of the Notes to Consolidated Financial Statements.NEW ACCOUNTING STANDARDS We describe below and in Note 2 of the Notes to Consolidated Financial Statements recent pronouncements that have had a significant effect on Sempra Energy’s financial condition, results of operations, cash flows or disclosures. Additional information on ASU 2018-05 and ASU 2018-14, which may also have a significant effect on Sempra Energy’s financial condition, results of operation, cash flows or disclosures, is provided in Note 2 of the Notes to Consolidated Financial Statements. ASU 2016-02, “Leases,” ASU 2018-10, “Codification Improvements to Topic 842, Leases” and ASU 2018-11, “Leases (Topic 842): Targeted Improvements” (collectively referred to as the “lease standard”): We will adopt the lease standard on January 1, 2019 using the optional transition method to apply the new guidance prospectively as of January 1, 2019, rather than as of the earliest period presented. The adoption of the lease standard will have a material impact on our balance sheet at January 1, 2019 due to the initial recognition of ROU assets and lease liabilities for operating leases. The following table shows the expected increase (decrease) from adoption of the lease standard on our balance sheet at January 1, 2019.
EXPECTED IMPACT FROM ADOPTION OF THE LEASE STANDARD
(Dollars in millions)
Right-of-use assets – operating leases |  | $ | 191 |
Deferred income taxes |  | (3 | )
Property, plant and equipment, net(1) |  | (147 | )
Other current liabilities |  | 3 |
Long-term debt |  | (138 | )
Other long-term liabilities |  | 159 |
Retained earnings(2) |  | 17 |
(1) | Included in Other Assets.
(2) | Included in Shareholders’ Equity.
As a result of the adoption of the lease standard, we will derecognize our corporate headquarters building lease in accordance with the transition provisions for build-to-suit arrangements. On a prospective basis, we will account for the corporate headquarters building lease as an operating lease. The expected impact is included in the above table. ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”: We adopted the standard on January 1, 2018 and elected the practical expedient available under the transition guidance. Upon adoption of ASU 2017-07, our Condensed Statements of Operations were impacted as follows:
IMPACT FROM ADOPTION OF ASU 2017-07
(Dollars in millions)
| Years ended December 31,
| 2017 |  | 2016
| As previously reported | Effect of adoption | As adjusted |  | As previously reported | Effect of adoption | As adjusted
Sempra Energy: |  |  |  |  |  |  |
Operation and maintenance | $ | (87 | ) | $ | 7 |  | $ | (80 | ) |  | $ | (81 | ) | $ | 5 |  | $ | (76 | )
Other income (expense), net | 107 |  | (7 | ) | 100 |  |  | (2 | ) | (5 | ) | (7 | )
ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”: We will adopt ASU 2018-02 on January 1, 2019 and will reclassify the income tax effects of the TCJA from AOCI to retained earnings. We expect the impact from adoption of ASU 2018-02 on January 1, 2019 to be an increase of $14 million to beginning Retained Earnings and Accumulated Other Comprehensive Loss.LONG-TERM DEBT The following table shows the detail and maturities of long-term debt outstanding:
LONG-TERM DEBT
(Dollars in millions)
| December 31,
| 2018 |  | 2017
6.15% Notes June 15, 2018 | $ | — |  |  | $ | 500 |
9.8% Notes February 15, 2019 | 500 |  |  | 500 |
Notes at variable rates (2.69% at December 31, 2018) July 15, 2019 | 500 |  |  | — |
1.625% Notes October 7, 2019 | 500 |  |  | 500 |
2.4% Notes February 1, 2020 | 500 |  |  | — |
2.4% Notes March 15, 2020 | 500 |  |  | 500 |
2.85% Notes November 15, 2020 | 400 |  |  | 400 |
Notes at variable rates (2.94% at December 31, 2018) January 15, 2021(1) | 700 |  |  | — |
Notes at variable rates (3.24% at December 31, 2018) March 15, 2021 | 850 |  |  | 850 |
2.875% Notes October 1, 2022 | 500 |  |  | 500 |
2.9% Notes February 1, 2023 | 500 |  |  | — |
4.05% Notes December 1, 2023 | 500 |  |  | 500 |
3.55% Notes June 15, 2024 | 500 |  |  | 500 |
3.75% Notes November 15, 2025 | 350 |  |  | 350 |
3.25% Notes June 15, 2027 | 750 |  |  | 750 |
3.4% Notes February 1, 2028 | 1,000 |  |  | — |
3.8% Notes February 1, 2038 | 1,000 |  |  | — |
6% Notes October 15, 2039 | 750 |  |  | 750 |
4% Notes February 1, 2048 | 800 |  |  | — |
Fair value adjustments for interest rate swaps, net | — |  |  | (1 | )
Build-to-suit lease | 138 |  |  | 138 |
| 11,238 |  |  | 6,737 |
Current portion of long-term debt | (1,498 | ) |  | (500 | )
Unamortized discount on long-term debt | (38 | ) |  | (13 | )
Unamortized debt issuance costs | (55 | ) |  | (26 | )
Total long-term debt | $ | 9,647 |  |  | $ | 6,198 |
(1) | Callable long-term debt not subject to make-whole provisions.
Excluding the build-to-suit lease and market value adjustments for interest rate swaps, maturities of long-term debt are $1.5 billion in 2019, $1.4 billion in 2020, $1.5 billion in 2021, $500 million in 2022, $1 billion in 2023 and $5.2 billion thereafter. Additional information on Sempra Energy’s long-term debt is provided in Note 7 of the Notes to Consolidated Financial Statements.COMMITMENTS AND CONTINGENCIESFor contingencies and guarantees related to Sempra Energy, refer to Notes 5, 6 and 16 of the Notes to Consolidated Financial Statements.

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- Definition The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 45 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=108774443&loc=d3e5283-111683 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 235 -Section S99 -Paragraph 2 -Subparagraph (SX 210.9-06) -URI http://asc.fasb.org/extlink&oid=6882215&loc=d3e537971-122884 + Details
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