Sempra Energy
SEMPRA ENERGY (Form: 8-K, Received: 02/28/2017 11:38:47)


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):
February 28, 2017

 
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))
 
 









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 February 28, 2017 Sempra Energy issued a press release announcing consolidated earnings of $379 million, or $1.51 per diluted share of common stock, for the fourth quarter of 2016. 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 Statement of Operations Data by Segment for the three months and years ended December 31, 2016 and 2015. A copy of such information is attached as Exhibit 99.2.



Item 9.01 Financial Statements and Exhibits.
  
Exhibits

99.1
February 28, 2017 Sempra Energy News Release (including tables).

99.2
Sempra Energy’s Statement of Operations Data by Segment for the three months and years ended December 31, 2016 and 2015.











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: February 28, 2017
By: /s/ Trevor I. Mihalik
 
Trevor I. Mihalik
Senior Vice President, Controller and Chief Accounting Officer
 








Exhibit 99.1

SEMPRAGRAPHIC2.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 ANNOUNCES
2016 EARNINGS

2017 Earnings-Per-Share Guidance Range Raised to $4.85 to $5.25

Dividend Increased 9 Percent to Annualized $3.29 Per Share

California Utilities Reach Proposed Settlement on Two-Year Extension in Cost-of-Capital Proceeding

SAN DIEGO, Feb. 28, 2017 - Sempra Energy (NYSE: SRE) today reported 2016 earnings of $1.37 billion, or $5.46 per diluted share, compared with 2015 earnings of $1.35 billion, or $5.37 per diluted share.
These results reflect certain significant items, as described on an after-tax basis in the following table of GAAP earnings, reconciled to adjusted earnings, for the fourth quarter and full year of 2016 and 2015.

 
 
 
 
 
 
 
 
 
 Three months ended
 
 Years ended
 
December 31,
 
December 31,
(Dollars, except EPS, and shares, in millions)
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Earnings
$
379

 
$
369

 
$
1,370

 
$
1,349

 
 
 
 
 
 
 
 
Gain in Connection with Gasoductos de Chihuahua Acquisition

 

 
(350
)
 

 
 
 
 
 
 
 
 
Gain on Sale of EnergySouth

 

 
(78
)
 

 
 
 
 
 
 
 
 
Permanent Releases of Pipeline Capacity

 

 
123

 

 
 
 
 
 
 
 
 
Losses Related to Termoeléctrica de Mexicali Held For Sale
4

 

 
95

 

 
 
 
 
 
 
 
 
Tax Repairs Adjustments Related to General Rate Case

 

 
80

 

 
 
 
 
 
 
 
 
Loss Related to Sale of Investment in Rockies Express Pipeline

 

 
27

 

 
 
 
 
 
 
 
 
Adjustment to Loss on SONGS Plant Closure

 
(2
)
 

 
(15
)
 
 
 
 
 
 
 
 
Gain on Sale of Mesquite Power Block 2

 

 

 
(36
)
 
 
 
 
 
 
 
 
Adjusted Earnings(1)
$
383

 
$
367

 
$
1,267

 
$
1,298

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted Weighted-Average Shares Outstanding
252

 
251

 
251

 
251

 
 
 
 
 
 
 
 
GAAP Earnings Per Share (EPS)
$
1.51

 
$
1.47

 
$
5.46

 
$
5.37

 
 
 
 
 
 
 
 
Adjusted EPS(1)
$
1.52

 
$
1.46

 
$
5.05

 
$
5.17


(1) Sempra Energy adjusted earnings and adjusted EPS are non-GAAP financial measures and are shown after-tax, and if applicable, after noncontrolling interests. See Table A in the appendix for information regarding non-GAAP financial measures and descriptions of adjustments above. Adjusted earnings and adjusted EPS for the three months and year ended Dec. 31, 2015, have been revised to include after-tax LNG development expenses of $3 million and $10 million, respectively, for consistency with the comparable periods in 2016. LNG development expenses are included in adjusted earnings and adjusted EPS in 2016.

Sempra Energy’s fourth-quarter earnings increased to $379 million, or $1.51 per diluted share, in 2016 from $369 million, or $1.47 per diluted share, in 2015. Sempra Energy’s adjusted earnings in the fourth quarter 2016 were $383 million, or $1.52 per diluted share, compared with $367 million, or $1.46 per diluted share, in the fourth quarter 2015.
Last week, Sempra Energy’s board of directors approved a 9-percent increase in the company’s annualized dividend to $3.29 per share from $3.02 per share.
“In 2016, we met our key financial targets and executed well on our strategic plan, positioning ourselves for strong performance in 2017 and enabling us to raise our 2017 earnings guidance,” said Debra L. Reed, chairman and CEO of Sempra Energy. “In the past year, we received regulatory approval of our California utilities’ General Rate Case, so they have more revenue certainty through 2018. Our utilities also received regulatory approval to proceed with several major reliability projects. Additionally, in 2016, our Mexican subsidiary, IEnova, completed a successful $1.6 billion equity offering to raise capital and we completed the divestiture of several non-strategic assets.”
Sempra Energy has reorganized its subsidiaries under two new operating groups. The Sempra Utilities group includes the company’s utility operations: Southern California Gas Co. (SoCalGas), San Diego Gas & Electric (SDG&E) and Sempra South American Utilities. The Sempra Infrastructure group includes the company’s energy infrastructure development activities, investments and operations: Sempra Mexico, Sempra LNG & Midstream and Sempra Renewables.

SEMPRA UTILITIES
San Diego Gas & Electric
SDG&E’s fourth-quarter earnings increased to $151 million in 2016 from $144 million in 2015, due primarily to higher California Public Utilities Commission (CPUC) base margin and lower operating expenses, partially offset by lower regulatory rewards and lower earnings associated with an income-tax tracking mechanism in the utility’s final General Rate Case (GRC) decision in 2016. The 2016 GRC final decision requires tracking of tax differences from rate-case-authorized levels.
SDG&E’s full-year earnings were $570 million in 2016, compared with $587 million in 2015.

Southern California Gas Co.
In the fourth quarter 2016, SoCalGas’ earnings rose to $151 million from $143 million in the fourth quarter 2015, due primarily to higher CPUC base margin and lower operating expenses, as well as higher earnings from the pipeline safety and advanced meter programs. These items were partially offset by lower earnings associated with an income-tax tracking mechanism in SoCalGas’ final GRC decision in 2016 and lower regulatory rewards. The 2016 GRC final decision requires tracking of tax differences from rate-case-authorized levels.
SoCalGas’ full-year earnings were $349 million in 2016, compared with $419 million in 2015.
Earlier this month, SoCalGas and SDG&E announced that they have entered into a Memorandum of Understanding (MOU) with other parties for a two-year extension through 2018 and 2019 for the utilities to file their next applications in the Cost-of-Capital proceeding at the CPUC. The MOU terms are materially consistent with the Cost-of-Capital assumptions provided for SDG&E and SoCalGas in the five-year financial plan at Sempra Energy’s 2016 Analyst Conference. The MOU is subject to approval by the CPUC.

Sempra South American Utilities
In the fourth quarter 2016, Sempra South American Utilities earnings were $29 million, compared with $46 million in the year-ago quarter, due primarily to a $14 million increase in deferred income-tax expense related to Peruvian tax reform.
In 2016, full-year earnings for Sempra South American Utilities were $156 million, compared with $175 million in 2015.

SEMPRA INFRASTRUCTURE
Sempra Mexico
Sempra Mexico’s fourth-quarter 2016 earnings increased to $56 million from $53 million in the fourth quarter 2015.
Sempra Mexico’s full-year earnings increased to $463 million in 2016 from $213 million in 2015, due primarily to the $350 million after-tax remeasurement gain in the third quarter 2016 on the Gasoductos de Chihuahua acquisition, offset by $95 million in after-tax losses related to the planned sale of the Termoeléctrica de Mexicali plant, and a lower favorable impact from foreign currency and inflation effects.
In December, Sempra Energy’s Mexican operating subsidiary, IEnova, completed its acquisition of the Ventika wind complex in Mexico. The Ventika complex is Mexico’s largest wind farm, with generating capacity of 252 megawatts (MW).

Sempra Renewables
Fourth-quarter earnings for Sempra Renewables were $12 million in 2016, compared with $16 million in 2015, primarily due to a $5 million gain on the sale of the Rosamond Solar project in the fourth quarter 2015.
In 2016, full-year earnings for Sempra Renewables were $55 million, compared with $63 million in 2015.
Sempra Renewables placed three solar facilities and one wind farm into operation in December, representing 422 MW of clean energy from expansions of the company’s Mesquite Solar complex in Arizona and Copper Mountain Solar complex in Nevada, as well as commissioning of the Black Oak Getty wind farm in Minnesota.

Sempra LNG & Midstream
Sempra LNG & Midstream recorded a loss of $3 million in the fourth quarter 2016, compared with earnings of $1 million in the fourth quarter 2015.
For the full year, Sempra LNG & Midstream recorded a loss of $107 million in 2016, compared with earnings of $44 million in 2015, due primarily to losses on the permanent release of pipeline capacity contracts.

2017 EARNINGS GUIDANCE
Sempra Energy today increased its 2017 earnings-per-share guidance range to $4.85 to $5.25 from the prior range of $4.80 to $5.20.

NON-GAAP FINANCIAL MEASURES
Non-GAAP financial measures for Sempra Energy include fourth-quarter and full-year 2016 and 2015 adjusted earnings and adjusted earnings per share. Additional information regarding these non-GAAP financial measures is in the appendix on Table A of the fourth-quarter 2016 financial tables.
INTERNET BROADCAST
Sempra Energy will broadcast a live discussion of its earnings results over the Internet 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 5358106.
Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2016 revenues of more than $10 billion. The Sempra Energy companies’ more than 16,000 employees serve approximately 32 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 like "believes," "expects," "anticipates," "plans," "estimates,"  "projects," "forecasts," "contemplates," "assumes," "depends," "should," "could," "would," "will," "confident," "may," "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 actual results and future actions to differ materially from those described in forward-looking statements include: 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 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, states, cities and counties, and other regulatory and governmental bodies in the United States and other countries in which we operate; the timing and success of business development efforts and construction projects, including risks in obtaining or maintaining permits and other authorizations on a timely basis, risks in completing construction projects on schedule and on budget, and risks in obtaining the consent and participation of partners; 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; modifications of settlements; and delays in, or disallowance or denial of, regulatory agency authorizations to recover costs in rates from customers (including with respect to regulatory assets associated with the San Onofre Nuclear Generating Station facility and 2007 wildfires) or regulatory agency approval for projects required to enhance safety and reliability; 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 on the withdrawal or injection of natural gas from or into storage facilities, and equipment failures; changes in energy markets; volatility in commodity prices; moves to reduce or eliminate reliance on natural gas; and the impact on the value of our investment in natural gas storage and related assets from low natural gas prices, low volatility of natural gas prices and the inability to procure favorable long-term contracts for storage services; 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, 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) or may be disputed by insurers; 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; the ability to win competitively bid infrastructure projects against a number of strong and aggressive competitors; 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; changes in the tax code as a result of potential federal tax reform, such as the elimination of the deduction for interest and non-deductibility of all, or a portion of, the cost of imported materials, equipment and commodities; changes in foreign and domestic trade policies and laws, including border tariffs, revisions to favorable international trade agreements, and changes that make our exports less competitive or otherwise restrict our ability to export; 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; 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 Securities and Exchange Commission. These reports are available through the EDGAR system free-of-charge on the SEC's website, www.sec.gov, and on the company's website at www.sempra.com. 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 and Sempra Mexico are not the same as the California utilities, San Diego Gas & Electric (SDG&E) or Southern California Gas Company (SoCalGas), and are not regulated by the California Public Utilities Commission.









SEMPRA ENERGY
Table A
 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
Three months ended
December 31,
 
Years ended
December 31,
(Dollars in millions, except per share amounts)
 
2016
 
2015
 
2016
 
2015
 
 
(unaudited)
 
 
 
 
REVENUES
 
 
 
 
 
 
 
 
Utilities
 
$
2,561

 
$
2,486

 
$
9,261

 
$
9,254

Energy-related businesses
 
309

 
215

 
922

 
977

Total revenues
 
2,870

 
2,701

 
10,183

 
10,231

 
 
 
 
 
 
 
 
 
EXPENSES AND OTHER INCOME
 
 
 
 
 
 
 
 
Utilities:
 
 
 
 
 
 
 
 
Cost of electric fuel and purchased power
 
(508
)
 
(491
)
 
(2,188
)
 
(2,136
)
Cost of natural gas
 
(365
)
 
(348
)
 
(1,067
)
 
(1,134
)
Energy-related businesses:
 
 
 
 
 
 
 
 
Cost of natural gas, electric fuel and purchased power
 
(64
)
 
(73
)
 
(277
)
 
(335
)
Other cost of sales
 
(29
)
 
(37
)
 
(322
)
 
(148
)
Operation and maintenance
 
(861
)
 
(814
)
 
(2,970
)
 
(2,886
)
Depreciation and amortization
 
(342
)
 
(325
)
 
(1,312
)
 
(1,250
)
Franchise fees and other taxes
 
(111
)
 
(109
)
 
(426
)
 
(423
)
Impairment losses
 
1

 
(9
)
 
(153
)
 
(9
)
Plant closure adjustment
 

 
5

 

 
26

Gain on sale of assets
 
3

 
8

 
134

 
70

Equity earnings, before income tax
 
2

 
25

 
6

 
104

Remeasurement of equity method investment
 

 

 
617

 

Other income, net
 
34

 
38

 
132

 
126

Interest income
 
7

 
6

 
26

 
29

Interest expense
 
(132
)
 
(145
)
 
(553
)
 
(561
)
Income before income taxes and equity earnings of certain unconsolidated subsidiaries
 
505

 
432

 
1,830

 
1,704

Income tax expense
 
(105
)
 
(65
)
 
(389
)
 
(341
)
Equity earnings, net of income tax
 
9

 
21

 
78

 
85

Net income
 
409

 
388

 
1,519

 
1,448

Earnings attributable to noncontrolling interests
 
(30
)
 
(19
)
 
(148
)
 
(98
)
Preferred dividends of subsidiary
 

 

 
(1
)
 
(1
)
Earnings
 
$
379

 
$
369

 
$
1,370

 
$
1,349

 
 
 
 
 
 
 
 
 
Basic earnings per common share
 
$
1.51

 
$
1.48

 
$
5.48

 
$
5.43

Weighted-average number of shares outstanding, basic (thousands)
 
250,645

 
248,722

 
250,217

 
248,249

 
 
 
 
 
 
 
 
 
Diluted earnings per common share
 
$
1.51

 
$
1.47

 
$
5.46

 
$
5.37

Weighted-average number of shares outstanding, diluted (thousands)
 
251,611

 
251,450

 
251,155

 
250,923

 
 
 
 
 
 
 
 
 
Dividends declared per share of common stock
 
$
0.75

 
$
0.70

 
$
3.02

 
$
2.80

 
 
 
 
 
 
 
 
 






SEMPRA ENERGY
Table A (Continued)
RECONCILIATION OF SEMPRA ENERGY GAAP EARNINGS TO SEMPRA ENERGY ADJUSTED EARNINGS (Unaudited)
Sempra Energy Adjusted Earnings and Adjusted Earnings Per Share exclude items (after the effects of taxes and, if applicable, noncontrolling interests) in 2016 and 2015 as follows:
Three months ended December 31, 2016:
$(4) million deferred income tax expense related to our decision to hold Termoeléctrica de Mexicali (TdM) for sale
Three months ended December 31, 2015:
$2 million reduction in the plant closure loss at San Diego Gas & Electric (SDG&E) related to the San Onofre Nuclear Generating Station (SONGS) for the shareholder portion of a settlement agreement with Nuclear Electric Insurance Limited to resolve all of SONGS’ insurance claims arising out of the failures of replacement steam generators

Year ended December 31, 2016:
$350 million noncash gain from the remeasurement of our equity method investment in GdC
$78 million gain on the sale of EnergySouth
$(123) million losses from the permanent release of pipeline capacity at Sempra LNG & Midstream
$(80) million adjustments related to tax repairs deductions reallocated to ratepayers as a result of the 2016 General Rate Case Final Decision (2016 GRC FD) at the California Utilities
$(27) million impairment charge related to Sempra LNG & Midstream’s investment in Rockies Express Pipeline LLC (Rockies Express)
$(90) million impairment of TdM assets held for sale
$(5) million deferred income tax expense related to our decision to hold TdM for sale
Year ended December 31, 2015:
$36 million gain on the sale of the remaining block of Sempra LNG & Midstream’s Mesquite Power plant
$15 million reduction in the plant closure loss related to SONGS, $13 million of which is due to California Public Utilities Commission approval of a compliance filing related to SDG&E’s authorized recovery of its investment in SONGS
Sempra Energy Adjusted Earnings and Adjusted Earnings Per Share are non-GAAP financial measures (GAAP represents accounting principles generally accepted in the United States of America). Because of the significance and nature of these items, management believes that these non-GAAP financial measures provide a meaningful comparison of the performance of Sempra Energy’s business operations from 2016 to 2015 and to future periods, and also as a base for projection of future earnings-per-share compound annual growth rate (EPS CAGR) from 2016 to 2020. 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 Earnings and 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 expense (benefit)(1)
Non-controlling interests
Earnings
 
Pretax amount
Income tax expense(1)
Non-controlling interests
Earnings
 
(Dollars in millions, except per share amounts)
Three months ended December 31, 2016
 
Three months ended December 31, 2015
 
Sempra Energy GAAP Earnings
 
 
 
$
379

 
 
 
 
$
369

 
Exclude:
 
 
 
 
 
 
 
 
 
 
   Deferred income tax expense associated with TdM
$

$
7

$
(3
)
4

 
$

$

$


 
   SONGS plant closure adjustment




 
(5
)
3


(2
)
 
Sempra Energy Adjusted Earnings
 
 
 
$
383

 
 
 
 
$
367

(2)  
 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share:
 
 
 
 
 
 
 
 
 
 
   Sempra Energy GAAP Earnings
 
 
 
$
1.51

 
 
 
 
$
1.47

 
   Sempra Energy Adjusted Earnings
 
 
 
$
1.52

 
 
 
 
$
1.46

(2)  
Weighted-average number of shares outstanding, diluted (thousands)
 
 
 
251,611

 
 
 
 
251,450

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2016
 
Year ended December 31, 2015
 
Sempra Energy GAAP Earnings
 
 
 
$
1,370

 
 
 
 
$
1,349

 
Exclude:
 
 
 
 
 
 
 
 
 
 
   Remeasurement gain in connection with GdC
$
(617
)
$
185

$
82

(350
)
 
$

$

$


 
   Gain on sale of EnergySouth
(130
)
52


(78
)
 




 
   Permanent release of pipeline capacity
206

(83
)

123

 




 
   SDG&E tax repairs adjustments related to 2016 GRC FD
52

(21
)

31

 




 
   SoCalGas tax repairs adjustments related to 2016 GRC FD
83

(34
)

49

 




 
   Impairment of investment in Rockies Express
44

(17
)

27

 




 
Impairment of TdM assets held for sale
131

(20
)
(21
)
90

 




 
   Deferred income tax expense associated with TdM

8

(3
)
5

 




 
   Gain on sale of Mesquite Power block 2




 
(61
)
25


(36
)
 
   SONGS plant closure adjustment




 
(26
)
11


(15
)
 
Sempra Energy Adjusted Earnings
 
 
 
$
1,267

 
 
 
 
$
1,298

(2)  
 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share:
 
 
 
 
 
 
 
 
 
 
   Sempra Energy GAAP Earnings
 
 
 
$
5.46

 
 
 
 
$
5.37

 
   Sempra Energy Adjusted Earnings
 
 
 
$
5.05

 
 
 
 
$
5.17

(2)  
Weighted-average number of shares outstanding, diluted (thousands)
 
 
 
251,155

 
 
 
 
250,923

 
(1)
Income taxes were calculated based on applicable statutory tax rates, except for adjustments that are solely income tax. Income taxes on the impairment of TdM were calculated based on the applicable statutory tax rate, including translation from historic to current exchange rates.
 
(2)
Adjusted earnings and adjusted earnings per share for the three months and year ended December 31, 2015 have been revised to include after-tax LNG development expenses of $3 million and $10 million, respectively, for consistency with the comparable periods in 2016. LNG development expenses are included in adjusted earnings and diluted earnings per common share in 2016.
 






SEMPRA ENERGY
Table B
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
December 31,
2016
 
December 31, 2015
 
 
 
 
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
349

 
$
403

Restricted cash
66

 
27

Accounts receivable, net
1,554

 
1,473

Due from unconsolidated affiliates
26

 
6

Income taxes receivable
43

 
30

Inventories
258

 
298

Regulatory balancing accounts - undercollected
259

 
307

Fixed-price contracts and other derivatives
83

 
80

Assets held for sale
201

 

Other
271

 
267

Total current assets
3,110

 
2,891

 
 
 
 
Other assets:
 
 
 
Restricted cash
10

 
20

Due from unconsolidated affiliates
201

 
186

Regulatory assets
3,414

 
3,273

Nuclear decommissioning trusts
1,026

 
1,063

Investments
2,097

 
2,905

Goodwill
2,364

 
819

Other intangible assets
548

 
404

Dedicated assets in support of certain benefit plans
430

 
464

Insurance receivable for Aliso Canyon costs
606

 
325

Deferred income taxes
234

 
120

Sundry
815

 
641

Total other assets
11,745

 
10,220

Property, plant and equipment, net
32,931

 
28,039

Total assets
$
47,786

 
$
41,150

 
 
 
 
Liabilities and Equity
 
 
 
Current liabilities:
 
 
 
Short-term debt
$
1,779

 
$
622

Accounts payable
1,476

 
1,275

Due to unconsolidated affiliates
11

 
14

Dividends and interest payable
319

 
303

Accrued compensation and benefits
409

 
423

Regulatory balancing accounts - overcollected
122

 
34

Current portion of long-term debt
913

 
907

Fixed-price contracts and other derivatives
83

 
56

Customer deposits
158

 
153

Reserve for Aliso Canyon costs
53

 
274

Liabilities held for sale
47

 

Other
557

 
551

Total current liabilities
5,927

 
4,612

Long-term debt
14,429

 
13,134

 
 
 
 
Deferred credits and other liabilities:
 
 
 
Customer advances for construction
152

 
149

Pension and other postretirement benefit plan obligations, net of plan assets
1,208

 
1,152

Deferred income taxes
3,745

 
3,157

Deferred investment tax credits
28

 
32

Regulatory liabilities arising from removal obligations
2,697

 
2,793

Asset retirement obligations
2,431

 
2,126

Fixed-price contracts and other derivatives
405

 
240

Deferred credits and other
1,523

 
1,176

Total deferred credits and other liabilities
12,189

 
10,825

Equity:
 
 
 
Total Sempra Energy shareholders’ equity
12,951

 
11,809

Preferred stock of subsidiary
20

 
20

Other noncontrolling interests
2,270

 
750

Total equity
15,241

 
12,579

Total liabilities and equity
$
47,786

 
$
41,150






SEMPRA ENERGY
Table C
 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
 
 
 
 
 
 
Years ended December 31,
(Dollars in millions)
 
2016
 
2015
 
 
 
Cash Flows from Operating Activities
 
 
 
 
Net income
 
$
1,519

 
$
1,448

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
1,312

 
1,250

Deferred income taxes and investment tax credits
 
217

 
239

Impairment losses
 
153

 
9

Plant closure adjustment
 

 
(26
)
Gain on sale of assets
 
(134
)
 
(70
)
Equity earnings
 
(84
)
 
(189
)
Remeasurement of equity method investment
 
(617
)
 

Fixed-price contracts and other derivatives
 
21

 
(10
)
Other
 
63

 
66

Net change in other working capital components
 
(59
)
 
699

Insurance receivable for Aliso Canyon costs
 
(281
)
 
(325
)
Changes in other assets
 
56

 
(162
)
Changes in other liabilities
 
153

 
(24
)
Net cash provided by operating activities
 
2,319

 
2,905

 
 
 
 
 
Cash Flows from Investing Activities
 
 
 
 
Expenditures for property, plant and equipment
 
(4,214
)
 
(3,156
)
Expenditures for investments and acquisition of businesses, net of cash and
cash equivalents acquired
 
(1,582
)
 
(200
)
Proceeds from sale of assets, net of cash sold
 
763

 
373

Distributions from investments
 
25

 
15

Purchases of nuclear decommissioning and other trust assets
 
(1,034
)
 
(531
)
Proceeds from sales by nuclear decommissioning and other trusts
 
1,134

 
577

Increases in restricted cash
 
(139
)
 
(100
)
Decreases in restricted cash
 
175

 
93

Advances to unconsolidated affiliates
 
(25
)
 
(31
)
Repayments of advances to unconsolidated affiliates
 
11

 
74

Other
 

 
1

Net cash used in investing activities
 
(4,886
)
 
(2,885
)
 
 
 
 
 
Cash Flows from Financing Activities
 
 
 
 
Common dividends paid
 
(686
)
 
(628
)
Preferred dividends paid by subsidiary
 
(1
)
 
(1
)
Issuances of common stock
 
51

 
52

Repurchases of common stock
 
(56
)
 
(74
)
Issuances of debt (maturities greater than 90 days)
 
2,951

 
2,992

Payments on debt (maturities greater than 90 days)
 
(2,057
)
 
(1,854
)
Increase (decrease) in short-term debt, net
 
692

 
(622
)
Proceeds from sale of noncontrolling interests, net of $40 in offering costs
 
1,692

 

Net distributions to noncontrolling interests
 
(63
)
 
(73
)
Tax benefit related to share-based compensation
 

 
52

Other
 
(10
)
 
(17
)
Net cash provided by (used in) financing activities
 
2,513

 
(173
)
Effect of exchange rate changes on cash and cash equivalents
 

 
(14
)
 
 
 
 
 
Decrease in cash and cash equivalents
 
(54
)
 
(167
)
Cash and cash equivalents, January 1
 
403

 
570

Cash and cash equivalents, December 31
 
$
349

 
$
403






SEMPRA ENERGY
Table D
 
 
 
 
 
 
 
 
SEGMENT EARNINGS (LOSSES) AND CAPITAL EXPENDITURES, INVESTMENTS AND ACQUISITION OF BUSINESSES
 
 
 
 
 
 
 
 
 
Three months ended
December 31,
 
Years ended
December 31,
(Dollars in millions)
2016
 
2015
 
2016
 
2015
 
    (unaudited)
 
 
 
 
Earnings (Losses)
 
 
 
 
 
 
 
Sempra Utilities:
 
 
 
 
 
 
 
San Diego Gas & Electric
$
151

 
$
144

 
$
570

 
$
587

Southern California Gas
151

 
143

 
349

 
419

Sempra South American Utilities
29

 
46

 
156

 
175

Sempra Infrastructure:
 
 
 
 
 
 
 
Sempra Mexico
56

 
53

 
463

 
213

Sempra Renewables
12

 
16

 
55

 
63

Sempra LNG & Midstream
(3
)
 
1

 
(107
)
 
44

Parent and other
(17
)
 
(34
)
 
(116
)
 
(152
)
Earnings
$
379

 
$
369

 
$
1,370

 
$
1,349

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
December 31,
 
Years ended
December 31,
(Dollars in millions)
2016
 
2015
 
2016
 
2015
 
    (unaudited)
 
 
 
 
Capital Expenditures, Investments and Acquisition of Businesses
 
 
 
 
 
 
 
Sempra Utilities:
 
 
 
 
 
 
 
San Diego Gas & Electric
$
440

 
$
298

 
$
1,399

 
$
1,133

Southern California Gas
370

 
406

 
1,319

 
1,352

Sempra South American Utilities
61

 
49

 
194

 
154

Sempra Infrastructure:
 
 
 
 
 
 
 
Sempra Mexico
452

 
117

 
1,818

 
302

Sempra Renewables
140

 
38

 
879

 
105

Sempra LNG & Midstream
28

 
38

 
164

 
261

Parent and other
6

 

 
23

 
49

Consolidated Capital Expenditures, Investments and Acquisition of Businesses
$
1,497

 
$
946

 
$
5,796

 
$
3,356

 
 
 
 
 
 
 
 






SEMPRA ENERGY
Table E
 
OTHER OPERATING STATISTICS (Unaudited)
 
 
Three months ended
December 31,
 
Years ended or at
December 31,
UTILITIES
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
SDG&E and SoCalGas
 
 
 
 
 
 
 
Gas Sales (Bcf) (1)
92

 
102

 
334

 
329

Transportation (Bcf) (1)
164

 
169

 
641

 
669

Total Deliveries (Bcf) (1)
256

 
271

 
975

 
998

 
 
 
 
 
 
 
 
Total Gas Customers (Thousands)
 
 
 
 
6,808

 
6,774

 
 
 
 
 
 
 
 
Electric Sales (Millions of kWhs) (1)
3,987

 
4,314

 
15,649

 
16,264

Direct Access (Millions of kWhs)
942

 
969

 
3,515

 
3,652

Total Deliveries (Millions of kWhs) (1)
4,929

 
5,283

 
19,164

 
19,916

 
 
 
 
 
 
 
 
Total Electric Customers (Thousands)
 
 
 
 
1,434

 
1,426

 
 
 
 
 
 
 
 
Other Utilities
 
 
 
 
 
 
 
Natural Gas Sales (Bcf)
 
 
 
 
 
 
 
Sempra Mexico
7

 
6

 
29

 
25

Mobile Gas (2) (3)

 
12

 
33

 
47

Willmut Gas (3)

 
1

 
2

 
3

Natural Gas Customers (Thousands)
 
 
 
 
 
 
 
Sempra Mexico
 
 
 
 
119

 
113

Mobile Gas (2) (3)
 
 
 
 

 
85

Willmut Gas (3)
 
 
 
 

 
19

Electric Sales (Millions of kWhs)
 
 
 
 
 
 
 
Peru
1,780

 
1,854

 
7,387

 
7,549

Chile
739

 
715

 
2,900

 
2,887

Electric Customers (Thousands)
 
 
 
 
 
 
 
Peru
 
 
 
 
1,078

 
1,053

Chile
 
 
 
 
688

 
672

 
 
 
 
 
 
 
 
ENERGY-RELATED BUSINESSES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sempra Infrastructure
 
 
 
 
 
 
 
Power Sold (Millions of kWhs)
 
 
 
 
 
 
 
Sempra Mexico (4)
826

 
1,088

 
3,173

 
3,956

Sempra Renewables (5)
815

 
740

 
2,956

 
2,851

Sempra LNG & Midstream (6)
383

 
806

 
1,230

 
3,129

 
 
(1)
Includes intercompany sales.
(2)
Includes transportation.
(3)
On September 12, 2016, Sempra LNG & Midstream completed the sale of the parent company of Mobile Gas and Willmut Gas.
(4)
Includes power 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 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.
(5)
Includes 50 percent of total power sold related to solar and wind projects in which Sempra Energy has a 50-percent ownership interest. These subsidiaries are not consolidated within Sempra Energy, and the related investments are accounted for under the equity method.
(6)
Includes power sold from marketing activities and from the remaining 625-megawatt block of the Mesquite Power natural gas-fired power plant before its sale in April 2015.





Exhibit 99.2
 
         SEMPRA ENERGY
           Table F (Unaudited)
STATEMENT OF OPERATIONS DATA BY SEGMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
SDG&E
 
SoCalGas
 
Sempra South American Utilities
 
Sempra Mexico
 
Sempra Renewables
 
Sempra LNG & Midstream
 
Consolidating Adjustments, Parent & Other
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
1,061

 
$
1,135

 
$
386

 
$
244

 
$
9

 
$
124

 
$
(89
)
 
 
$
2,870

Cost of sales and other expenses
(632
)
 
(779
)
 
(318
)
 
(124
)
 
(16
)
 
(127
)
 
58

 
 
(1,938
)
Depreciation and amortization
(168
)
 
(121
)
 
(8
)
 
(30
)
 
(2
)
 
(10
)
 
(3
)
 
 
(342
)
Adjustment to impairment losses

 
1

 

 

 

 

 

 
 
1

(Loss) gain on sale of assets

 

 
(1
)
 

 
4

 

 

 
 
3

Equity earnings (losses), before income tax

 

 

 

 
4

 
(2
)
 

 
 
2

Other income (expense), net
12

 
8

 
11

 
6

 
1

 
1

 
(5
)
 
 
34

Income (loss) before interest and tax (1)
273

 
244

 
70

 
96

 

 
(14
)
 
(39
)
 
 
630

Net interest (expense) income (2)
(50
)
 
(25
)
 
(3
)
 
1

 
(1
)
 
9

 
(56
)
 
 
(125
)
Income tax (expense) benefit
(76
)
 
(68
)
 
(34
)
 
(18
)
 
9

 
3

 
79

 
 
(105
)
Equity earnings, net of income tax

 

 

 
9

 

 

 

 
 
9

Losses (earnings) attributable to noncontrolling interests
4

 

 
(4
)
 
(32
)
 
4

 
(1
)
 
(1
)
 
 
(30
)
Earnings (losses)
$
151

 
$
151

 
$
29

 
$
56

 
$
12

 
$
(3
)
 
$
(17
)
 

$
379

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
SDG&E
 
SoCalGas
 
Sempra South American Utilities
 
Sempra Mexico
 
Sempra Renewables
 
Sempra LNG & Midstream
 
Consolidating Adjustments, Parent & Other
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
1,051

 
$
1,041

 
$
393

 
$
161

 
$
6

 
$
141

 
$
(92
)
 
 
$
2,701

Cost of sales and other expenses
(649
)
 
(706
)
 
(309
)
 
(101
)
 
(15
)
 
(153
)
 
61

 
 
(1,872
)
Depreciation and amortization
(158
)
 
(119
)
 
(13
)
 
(18
)
 
(1
)
 
(13
)
 
(3
)
 
 
(325
)
Impairment losses

 
(9
)
 

 

 

 

 

 
 
(9
)
Plant closure adjustment
5

 

 

 

 

 

 

 
 
5

Gain on sale of asset

 

 

 

 
8

 

 

 
 
8

Equity earnings (losses), before income tax

 

 

 

 
4

 
25

 
(4
)
 
 
25

Other income, net
10

 
5

 
4

 
9

 
1

 

 
9

 
 
38

Income (loss) before interest and tax (1)
259

 
212

 
75

 
51

 
3

 

 
(29
)
 
 
571

Net interest (expense) income (2)
(49
)
 
(22
)
 
(5
)
 
(3
)
 
1

 

 
(61
)
 
 
(139
)
Income tax (expense) benefit
(67
)
 
(47
)
 
(17
)
 
(4
)
 
12

 
1

 
57

 
 
(65
)
Equity earnings, net of income tax

 

 

 
21

 

 

 

 
 
21

Losses (earnings) attributable to noncontrolling interests
1

 

 
(7
)
 
(12
)
 

 

 
(1
)
 
 
(19
)
Earnings (losses)
$
144

 
$
143

 
$
46

 
$
53

 
$
16

 
$
1

 
$
(34
)
 
 
$
369

 
 
(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 of subsidiary.
 
 
 





         SEMPRA ENERGY
           Table F (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATEMENT OF OPERATIONS DATA BY SEGMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
SDG&E
 
SoCalGas
 
Sempra South American Utilities
 
Sempra Mexico
 
Sempra Renewables
 
Sempra LNG & Midstream
 
Consolidating Adjustments, Parent & Other
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
4,253

 
$
3,471

 
$
1,556

 
$
725

 
$
34

 
$
508

 
$
(364
)
 
 
$
10,183

Cost of sales and other expenses
(2,617
)
 
(2,416
)
 
(1,255
)
 
(413
)
 
(56
)
 
(780
)
 
287

 
 
(7,250
)
Depreciation and amortization
(646
)
 
(476
)
 
(49
)
 
(77
)
 
(6
)
 
(47
)
 
(11
)
 
 
(1,312
)
Impairment losses

 
(22
)
 

 
(131
)
 

 

 

 
 
(153
)
Gain on sale of assets

 

 

 

 
4

 
130

 

 
 
134

Equity earnings (losses), before income tax

 

 

 

 
34

 
(28
)
 

 
 
6

Remeasurement of equity method investment

 

 

 
617

 

 

 

 
 
617

Other income (expense), net
50

 
32

 
21

 
(5
)
 
2