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SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF PARENT
 12 Months Ended
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.