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SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF PARENT
 12 Months Ended
Dec. 31, 2019
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; shares in thousands)
 
Years ended December 31,
 
2019
 
2018
 
2017
Interest income
$
3

 
$
14

 
$
—

Interest expense
(521
)
 
(495
)
 
(293
)
Operating expenses
(124
)
 
(82
)
 
(80
)
Other income (expense), net
59

 
(16
)
 
100

Income tax benefit
163

 
154

 
33

Loss before equity in earnings of subsidiaries
(420
)
 
(425
)
 
(240
)
Equity in earnings of subsidiaries, net of income taxes
2,617

 
1,474

 
496

Net income
2,197

 
1,049

 
256

Mandatory convertible preferred stock dividends
(142
)
 
(125
)
 
—

Earnings
$
2,055

 
$
924

 
$
256

 
 
 
 
 
 
Basic EPS:
 
 
 
 
 
Earnings
$
7.40

 
$
3.45

 
$
1.02

Weighted-average common shares outstanding
277,904

 
268,072

 
251,545

 
 
 
 
 
 
Diluted EPS:
 
 
 
 
 
Earnings
$
7.29

 
$
3.42

 
$
1.01

Weighted-average common shares outstanding
282,033

 
269,852

 
252,300


See Notes to Condensed Financial Information of Parent.
SEMPRA ENERGY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
 
Years ended December 31, 2019, 2018 and 2017
 
Pretax
amount
 
Income tax
benefit (expense)
 
Net-of-tax
amount
2019:
 
 
 
 
 
Net income
$
2,034

 
$
163

 
$
2,197

Other comprehensive income (loss):
 

 
 

 
 

Foreign currency translation adjustments
(43
)
 
—

 
(43
)
Financial instruments
(161
)
 
53

 
(108
)
Pension and other postretirement benefits
25

 
(7
)
 
18

Total other comprehensive loss
(179
)
 
46

 
(133
)
Comprehensive income
$
1,855

 
$
209

 
$
2,064

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


See Notes to Condensed Financial Information of Parent.
SEMPRA ENERGY
CONDENSED BALANCE SHEETS
(Dollars in millions)
 
December 31,
2019
 
December 31,
2018
Assets:
 
 
 
Cash and cash equivalents
$
6

 
$
14

Due from affiliates
98

 
93

Income taxes receivable, net
—

 
397

Other current assets
34

 
9

Total current assets
138

 
513

 
 
 
 
Investments in subsidiaries
32,604

 
28,778

Due from affiliates
3

 
3

Deferred income taxes
1,766

 
1,554

Other long-term assets
682

 
572

Total assets
$
35,193

 
$
31,420

 
 
 
 
Liabilities and shareholders’ equity:
 

 
 

Current portion of long-term debt
$
1,399

 
$
1,498

Due to affiliates
369

 
287

Income taxes payable, net
274

 
—

Other current liabilities
561

 
527

Total current liabilities
2,603

 
2,312

 
 
 
 
Long-term debt
8,856

 
9,647

Due to affiliates
3,138

 
1,812

Other long-term liabilities
667

 
511

 
 
 
 
Commitments and contingencies (Note 4)


 


 
 
 
 
Shareholders’ equity
19,929

 
17,138

Total liabilities and shareholders’ equity
$
35,193

 
$
31,420


See Notes to Condensed Financial Information of Parent.
SEMPRA ENERGY
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in millions)
 
Years ended December 31,
 
2019
 
2018
 
2017
Net cash provided by operating activities
$
294

 
$
213

 
$
89

 
 
 
 
 
 
Expenditures for property, plant and equipment
(8
)
 
(11
)
 
(11
)
Expenditures for acquisition
—

 
(329
)
 
—

Capital contributions to investees
(1,528
)
 
(9,457
)
 
—

Increase in loans to affiliates, net
—

 
(1
)
 
—

Expenditures for Merger-related costs
—

 
—

 
(12
)
Other
4

 
—

 
—

Net cash used in investing activities
(1,532
)

(9,798
)

(23
)
 
 
 
 
 
 
Common stock dividends paid
(993
)
 
(877
)
 
(755
)
Preferred dividends paid
(142
)
 
(89
)
 
—

Issuances of mandatory convertible preferred stock, net
—

 
2,258

 
—

Issuances of common stock, net
1,830

 
2,272

 
47

Repurchases of common stock
(26
)
 
(21
)
 
(15
)
Issuances of long-term debt
758

 
4,969

 
1,595

Payments on long-term debt
(1,500
)
 
(500
)
 
(600
)
Increase (decrease) in loans from affiliates, net
1,328

 
1,520

 
(239
)
Debt issuance costs
(25
)
 
(37
)
 
(7
)
Net cash provided by financing activities
1,230

 
9,495

 
26

 
 
 
 
 
 
(Decrease) increase in cash and cash equivalents
(8
)
 
(90
)
 
92

Cash and cash equivalents, January 1
14

 
104

 
12

Cash and cash equivalents, December 31
$
6

 
$
14

 
$
104

 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
 

 
 

 
 

Accrued Merger-related transaction costs
$
—

 
$
—

 
$
31

Preferred dividends declared but not paid
36

 
36

 
—

Common dividends issued in stock
55

 
54

 
53

Common dividends declared but not paid
283

 
245

 
207

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:
▪
$61 million, $(6) million and $56 million of gains (losses) on dedicated assets in support of our executive retirement and deferred compensation plans in 2019, 2018 and 2017, respectively;
▪
$3 million and $50 million net gains 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 and 2017, respectively; and
▪
$15 million losses in 2019 from foreign currency derivatives used to hedge exposure of fluctuations in the Peruvian Sol related to the sale of our operations in Peru.
Sempra Energy received cash dividends from its consolidated subsidiaries totaling $150 million, $300 million and $450 million in 2019, 2018 and 2017, 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.
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 adopted the lease standard on January 1, 2019 using the optional modified retrospective transition method to apply the new guidance as of January 1, 2019, rather than as of the earliest period presented. The adoption of the lease standard had 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 increases (decreases) on our balance sheet at January 1, 2019 from adoption of the lease standard.
IMPACT FROM ADOPTION OF THE LEASE STANDARD
(Dollars in millions)
Right-of-use assets – operating leases(1)
 
$
191

Deferred income tax assets
 
(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 Long-Term Assets.
(2) 
Included in Shareholders’ Equity.

As a result of the adoption of the lease standard, we derecognized the asset and liability associated with our corporate headquarters building 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 initial impact is included in the above table.
ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”: We adopted ASU 2018-02 on January 1, 2019 and reclassified the income tax effects of the TCJA from AOCI to retained earnings. The impact from adoption of ASU 2018-02 on January 1, 2019 was an increase of $14 million to beginning Retained Earnings and Accumulated Other Comprehensive Loss.
ASU 2019-12, “Simplifying the Accounting for Income Taxes”: ASU 2019-12 simplifies certain areas of accounting for income taxes. In addition to other changes, this standard amends ASC 740, “Income Taxes,” as follows:
▪
removes the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items, including discontinued operations or other comprehensive income;
▪
simplifies the recognition of deferred taxes related to basis differences as a result of ownership changes in investments;
▪
specifies an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements; and
▪
requires an entity to reflect the effect of an enacted change in tax laws or rates in the annual ETR computation in the interim period that includes the enactment date.
For public entities, ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods therein, with early adoption permitted. The transition method related to the amendments made by ASU 2019-12 vary based on the nature of the change. We are currently evaluating our planned adoption date and the effect of the standard on our ongoing financial reporting.
LONG-TERM DEBT
The following table shows the detail and maturities of long-term debt outstanding:
LONG-TERM DEBT
(Dollars in millions)
 
December 31,
 
2019
 
2018
9.8% Notes February 15, 2019
$
—

 
$
500

Notes at variable rates (2.69% at December 31, 2018) July 15, 2019
—

 
500

1.625% Notes October 7, 2019
—

 
500

2.4% Notes February 1, 2020
500

 
500

2.4% Notes March 15, 2020
500

 
500

2.85% Notes November 15, 2020
400

 
400

Notes at variable rates (2.50% at December 31, 2019) January 15, 2021(1)
700

 
700

Notes at variable rates (3.069% after floating-to-fixed rate swaps effective 2019) March 15, 2021
850

 
850

2.875% Notes October 1, 2022
500

 
500

2.9% Notes February 1, 2023
500

 
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

 
1,000

3.8% Notes February 1, 2038
1,000

 
1,000

6% Notes October 15, 2039
750

 
750

4% Notes February 1, 2048
800

 
800

5.75% Junior Subordinated Notes July 1, 2079(1)
758

 
—

Build-to-suit arrangement(2)
—

 
138

 
10,358

 
11,238

Current portion of long-term debt
(1,399
)
 
(1,498
)
Unamortized discount on long-term debt
(35
)
 
(38
)
Unamortized debt issuance costs
(68
)
 
(55
)
Total long-term debt
$
8,856

 
$
9,647


(1) 
Callable long-term debt not subject to make-whole provisions.
(2) 
This arrangement is now accounted for as an operating lease liability upon adoption of the lease standard on January 1, 2019. See Note 2.

Maturities of long-term debt at December 31, 2019 are $1.4 billion in 2020, $1.6 billion in 2021, $500 million in 2022, $1.0 billion in 2023, $500 million in 2024 and $5.4 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 CONTINGENCIES
Sempra Energy has an operating lease commitment related to its corporate headquarters building of approximately $267 million. Sempra Energy expects payments for its operating lease to be $10 million in 2020, $11 million in 2021, $11 million in 2022, $11 million in 2023, $12 million in 2024 and $212 million thereafter.
For other contingencies and guarantees related to Sempra Energy, refer to Notes 6, 7 and 16 of the Notes to Consolidated Financial Statements.