SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF PARENT

12 Months Ended

Dec. 31, 2020

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,
	2020		2019		2018
Interest income	$	4	$	3	$	14
Interest expense	(495)		(521)		(495)
Operating expenses	(86)		(124)		(82)
Other (expense) income, net	(38)		59		(16)
Income tax benefit	176		163		154
Loss before equity in earnings of subsidiaries	(439)		(420)		(425)
Equity in earnings of subsidiaries, net of income taxes	4,371		2,617		1,474
Net income	3,932		2,197		1,049
Preferred dividends	(168)		(142)		(125)
Earnings	$	3,764	$	2,055	$	924
Basic EPS:
Earnings	$	12.93	$	7.40	$	3.45
Weighted-average common shares outstanding	291,077		277,904		268,072
Diluted EPS:
Earnings	$	12.88	$	7.29	$	3.42
Weighted-average common shares outstanding	292,252		282,033		269,852

See Notes to Condensed Financial Information of Parent.

SEMPRA ENERGY
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
	Years ended December 31, 2020, 2019 and 2018
	Pretax amount		Income tax benefit (expense)		Net-of-tax amount
2020:
Net income	$	3,756	$	176	$	3,932
Other comprehensive income (loss):
Foreign currency translation adjustments	547		—		547
Financial instruments	(146)		33		(113)
Pension and other postretirement benefits	11		1		12
Total other comprehensive income	412		34		446
Comprehensive income	$	4,168	$	210	$	4,378
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

See Notes to Condensed Financial Information of Parent.

SEMPRA ENERGY
CONDENSED BALANCE SHEETS
(Dollars in millions)
	December 31, 2020		December 31, 2019
Assets:
Cash and cash equivalents	$	366	$	6
Due from affiliates	58		98
Income taxes receivable, net	42		—
Other current assets	26		34
Total current assets	492		138
Investments in subsidiaries	33,898		32,604
Due from affiliates	1		3
Deferred income taxes	2,187		1,766
Other long-term assets	717		682
Total assets	$	37,295	$	35,193
Liabilities and shareholders’ equity:
Current portion of long-term debt	$	850	$	1,399
Due to affiliates	224		369
Income taxes payable, net	—		274
Other current liabilities	536		561
Total current liabilities	1,610		2,603
Long-term debt	7,317		8,856
Due to affiliates	4,375		3,138
Other long-term liabilities	620		667
Commitments and contingencies (Note 4)
Shareholders’ equity	23,373		19,929
Total liabilities and shareholders’ equity	$	37,295	$	35,193

See Notes to Condensed Financial Information of Parent.

SEMPRA ENERGY
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in millions)
	Years ended December 31,
	2020		2019		2018
Net cash (used in) provided by operating activities	(978)		$	294	$	213
Expenditures for property, plant and equipment	(9)		(8)		(11)
Expenditures for acquisition	—		—		(329)
Capital contributions to investees	(364)		(1,528)		(9,457)
Distribution from investments	3,616		—		—
Decrease (increase) in loans to affiliates, net	2		—		(1)
Other	—		4		—
Net cash provided by (used in) investing activities	3,245		(1,532)		(9,798)
Common stock dividends paid	(1,174)		(993)		(877)
Preferred dividends paid	(157)		(142)		(89)
Issuances of preferred stock, net	891		—		2,258
Issuances of common stock, net	11		1,830		2,272
Repurchases of common stock	(566)		(26)		(21)
Issuances of long-term debt	1,599		758		4,969
Payments on long-term debt	(3,700)		(1,500)		(500)
Increase in loans from affiliates, net	1,194		1,328		1,520
Equity transaction costs with third parties	(4)		—		—
Debt issuance costs	(1)		(25)		(37)
Net cash (used in) provided by financing activities	(1,907)		1,230		9,495
Increase (decrease) in cash and cash equivalents	360		(8)		(90)
Cash and cash equivalents, January 1	6		14		104
Cash and cash equivalents, December 31	$	366	$	6	$	14
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Preferred dividends declared but not paid	$	47	$	36	$	36
Common dividends issued in stock	22		55		54
Common dividends declared but not paid	301		283		245

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 (Expense) Income, Net, on the Condensed Statements of Operations includes:

▪$41 million, $61 million and $(6) million of gains (losses) on dedicated assets in support of our executive retirement and deferred compensation plans in 2020, 2019 and 2018, respectively;

▪$3 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

▪$3 million and $15 million of losses in 2020 and 2019, respectively, from foreign currency derivatives used to hedge exposure to fluctuations in the Peruvian sol and Chilean peso related to the sale of our operations in Peru and Chile.

Sempra Energy received cash dividends from its consolidated subsidiaries totaling $300 million, $150 million and $300 million in 2020, 2019 and 2018, 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 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting”: ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contract modifications that replace LIBOR or another reference rate affected by reference rate reform and to hedging relationships that reference LIBOR or another reference rate affected or expected to be affected by reference rate reform. ASU 2020-04 was effective March 12, 2020 and can be applied through December 31, 2022, with certain exceptions for hedging relationships that continue to exist after this date, and may be applied from January 1, 2020. For contract modifications, the standard allows entities to account for modifications as an event that does not require reassessment or remeasurement (i.e., as a continuation of the existing contract). The standard also allows entities to amend their formal designation and documentation of hedging relationships affected or expected to be affected by reference rate reform, without having to de-designate the hedging relationship. Entities may elect the optional expedients and exceptions on an individual hedging relationship basis and independently from one another. We elected the optional expedients for contract modifications. We elected the cash flow hedging expedients to disregard the potential discontinuation of a reference rate when assessing whether a hedged forecasted interest payment is probable and to disregard certain mismatches between the designated hedging instrument and the hedged item when assessing the hedge effectiveness. We are applying these expedients prospectively from January 1, 2020. Application of these expedients preserves the presentation of derivatives consistent with the past presentation.

ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”: ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. In addition to other changes, this standard amends ASC 470-20, “Debt with Conversion and Other Options,” by removing the accounting models for instruments with beneficial conversion features and cash conversion features. The standard also amends ASC 260, “Earnings Per Share,” as follows:

▪requires an entity to apply the if-converted method when calculating diluted EPS for convertible instruments and no longer use the treasury stock method, which was previously allowed for certain convertible instruments;

▪requires an entity to include the effect of potential share settlement in the diluted EPS calculation when an instrument may be settled in cash or shares, and no longer allows an entity to rebut the presumption of share settlement if it has a history or policy of cash settlement;

▪requires an entity to include equity-classified convertible preferred stock that contains down-round features whereby, if the down-round feature is triggered, its effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS;

▪clarifies that the average market price should be used to calculate the diluted EPS denominator when the exercise price or the number of shares that may be issued is variable, except for certain contingently issuable shares; and

▪clarifies that the weighted-average share count from each quarter should be used when calculating the year-to-date weighted-average share count.

For public entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods therein, with early adoption permitted for fiscal years beginning after December 15, 2020. An entity can use either a full or modified retrospective approach to adopt ASU 2020-06 and must disclose, in the period of adoption, EPS transition information about the effect of the change on affected per-share amounts. We plan to adopt the standard on January 1, 2022 and are currently evaluating 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,
	2020		2019
2.4% Notes February 1, 2020	$	—	$	500
2.4% Notes March 15, 2020	—		500
2.85% Notes November 15, 2020	—		400
Notes at variable rates (2.50% at December 31, 2019) January 15, 2021(1)	—		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		758
	8,258		10,358
Current portion of long-term debt	(850)		(1,399)
Unamortized discount on long-term debt	(32)		(35)
Unamortized debt issuance costs	(59)		(68)
Total long-term debt	$	7,317	$	8,856

(1)    Callable long-term debt not subject to make-whole provisions.

In October 2020, Sempra Energy redeemed $700 million of floating-rate notes, prior to a scheduled maturity in January 2021, utilizing a portion of the proceeds received from the sales of our South American businesses.

Maturities of long-term debt at December 31, 2020 are $850 million in 2021, $500 million in 2022, $1.0 billion in 2023, $500 million in 2024, $350 million in 2025 and $5.1 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 $257 million. Sempra Energy expects payments for its operating lease to be $10 million in 2021, $11 million in 2022, $12 million in 2023, $12 million in 2024, $12 million in 2025 and $200 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.