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PAGE 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 ------------------------------------- Commission file number 1-40 --------------------------------------------- Pacific Enterprises ---------------------------------------------------------- (Exact name of registrant as specified in its charter) California 94-0743670 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 555 West Fifth Street, Suite 2900, Los Angeles, California 90013-1011 - ---------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (213) 244-1200 ---------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- The number of shares of common stock outstanding on May 8, 1998 was 83,556,552. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. PAGE 2 PACIFIC ENTERPRISES AND SUBSIDIARY COMPANIES CONDENSED STATEMENT OF CONSOLIDATED INCOME (Dollars are in Millions except number of shares and per share amounts) Three Months Ended March 31 ------------------ 1998 1997 ------ ------ (Unaudited) Revenues and Other Income: Operating revenues $669 $794 Other 9 9 ---- ---- Total 678 803 ---- ---- Expenses: Cost of gas distributed 290 344 Operating expenses 197 249 Depreciation and amortization 64 64 Franchise payments and other taxes 29 28 Preferred dividends of a subsidiary 1 2 ---- ---- Total 581 687 ---- ---- Income from Operations Before Interest and Taxes 97 116 Interest 19 26 ---- ---- Income from Operations Before Income Taxes 78 90 Income Taxes 38 40 ---- ---- Net Income 40 50 Dividends on Preferred Stock 1 1 ---- ---- Net Income Applicable to Common Stock $ 39 $ 49 ==== ==== Net Income per Share of Common Stock Basic $.48 $.60 ==== ==== Diluted $.47 $.59 ==== ==== Dividends Declared per Share of Common Stock $.38 $.36 ==== ==== Weighted Average Number of Shares of Common Stock Outstanding (000) 81,208 81,936 ====== ====== See Notes to Condensed Consolidated Financial Statements. PAGE 3 PACIFIC ENTERPRISES AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEET ASSETS (Millions of Dollars) March 31 December 31 1998 1997 ---------- ----------- (Unaudited) Current Assets: Cash and cash equivalents $ 135 $ 153 Accounts receivable (less allowance for doubtful receivables of $22 million at March 31, 1998 and $19 million at December 31, 1997) 461 530 Income taxes receivable 3 Deferred income taxes 8 Gas in storage 3 25 Other inventories 15 16 Regulatory accounts receivable 44 355 Prepaid expenses 9 21 ------ ------ Total current assets 675 1,103 ------ ------ Property, Plant and Equipment 6,124 6,097 Less Accumulated Depreciation and Amortization 3,000 2,943 ------ ------ Total property, plant and equipment-net 3,124 3,154 ------ ------ Deferred Charges and Other Assets: Other investments 261 191 Other receivables 55 62 Regulatory assets 396 394 Other assets 80 73 ------ ------ Total deferred charges and other assets 792 720 ------ ------ Total $4,591 $4,977 ====== ====== See Notes to Condensed Consolidated Financial Statements. PAGE 4 PACIFIC ENTERPRISES AND SUBSIDIARY COMPANIES CONDENSED CONSOLIDATED BALANCE SHEET LIABILITIES AND SHAREHOLDERS' EQUITY (Millions of Dollars) March 31 December 31 1998 1997 --------- ----------- (Unaudited) Current Liabilities: Short-term debt $ 82 $ 354 Accounts payable 413 437 Income taxes payable 24 Deferred income taxes 7 Other taxes payable 46 30 Long-term debt due within one year 1 148 Accrued interest 51 52 Other 69 87 ------ ------ Total current liabilities 686 1,115 ------ ------ Long-Term Debt 1,059 988 Debt of Employee Stock Ownership Plan 130 130 ------ ------ Total long-term debt 1,189 1,118 ------ ------ Deferred Credits and Other Liabilities: Long-term liabilities 216 183 Customer advances for construction 32 34 Postretirement benefits other than pensions 210 217 Deferred income taxes 278 272 Deferred investment tax credits 60 61 Other deferred credits 414 413 ------ ------ Total deferred credits and other liabilities 1,210 1,180 ------ ------ Preferred Stocks of a Subsidiary 20 95 ------ ------ Shareholders' equity: Capital stock: Preferred 80 80 Common 1,073 1,064 ------ ------ Total capital stock 1,153 1,144 Retained earnings, after elimination of accumulated deficit of $452 million against common stock at December 31, 1992 as part of quasi-reorganization 380 372 Deferred compensation relating to Employee Stock Ownership Plan (47) (47) ------ ------ Total shareholders' equity 1,486 1,469 ------ ------ Total $4,591 $4,977 ====== ====== See Notes to Condensed Consolidated Financial Statements. PAGE 5 PACIFIC ENTERPRISES AND SUBSIDIARY COMPANIES CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS (Millions of Dollars) Three Months Ended March 31 ------------------ 1998 1997 ------ ----- Cash Flows from Operating Activities: (Unaudited) Net Income $ 40 $ 50 Adjustments to reconcile net income to net cash provided by continuing operations: Depreciation and amortization 64 64 Deferred income taxes 5 2 Other (1) (9) Net change in other working capital components 423 188 ----- ----- Net cash provided by operating activities 531 295 ----- ----- Cash Flows from Investing Activities: Expenditures for property, plant and equipment (31) (54) Other investments (70) Decrease in other receivables, regulatory assets and other assets (2) 8 ----- ----- Net cash used in investing activities (103) (46) ----- ----- Cash Flows from Financing Activities: Sale of common stock 9 2 Repurchase of common stock (18) Repurchase of preferred stock of a subsidiary (75) Increase in long-term debt 75 Decrease in long-term debt (151) (3) Decrease in short-term debt (272) (172) Common dividends paid (31) (30) Preferred dividends paid (1) (1) ----- ----- Net cash used in financing activities (446) (222) ----- ----- Increase (Decrease) in Cash and Cash Equivalents (18) 27 Cash and Cash Equivalents, January 1 153 256 ----- ----- Cash and cash equivalents, March 31 $ 135 $ 283 ===== ===== Supplemental Disclosure of Cash Flow Information: Cash paid during the period for: Interest (net of amount capitalized) $ 20 $ 24 ===== ===== Income taxes $ 20 $ (18) ===== ===== See Notes to Condensed Consolidated Financial Statements. PAGE 6 PACIFIC ENTERPRISES AND SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. MERGER AGREEMENT WITH ENOVA CORPORATION On October 14, 1996, Pacific Enterprises (the Company) and Enova Corporation (Enova), the parent company of San Diego Gas & Electric (SDG&E), announced an agreement, which both Boards of Directors unanimously approved, for the combination of the two companies, tax-free, in a strategic merger of equals to be accounted for as a pooling of interests. The combination was approved by shareholders of both companies on March 11, 1997. As a result of the combination, the Company and Enova will become subsidiaries of a new holding company, named Sempra Energy, and their common shareholders will become common shareholders of the new holding company. The Company's common shareholders will receive 1.5038 shares of the new holding company's common stock for each of their shares of PE common stock, and Enova common shareholders will receive one share of the new holding company's common stock for each of their shares of Enova common stock. Preferred stock of the Company, Southern California Gas Company (SoCalGas), and San Diego Gas & Electric will remain outstanding. The new holding company will be incorporated in California and will be exempt from the Public Utility Holding Company Act as an intrastate holding company. On March 26, 1998, the California Public Utilities Commission (CPUC) approved the merger of the Company and Enova. The decision determined that savings from synergies and cost avoidances be shared between customers and shareholders over a five-year period, for a total net savings of approximately $340 million. In its decision, the commission found that the merger satisfied the key criteria: that it will benefit the state and local economies and customers, maintain or improve the financial condition of the utilities and quality of management, and be fair to employees and shareholders. Additional elements of the CPUC decision include: - Divestiture by SDG&E of its gas-fired generation units, which is already in progress, and sale by SoCalGas of its options to purchase those portions of the Kern River and Mojave Pipeline gas transmission facilities within California by September 1, 1998. These options are not exercisable until the year 2012. - Acknowledgment that the merger will have no significant effect on the environment under the California Environmental Quality Act. - Allowance of $148 million in costs to achieve the merger, rather than the $202 million originally sought by the companies. The difference includes transaction costs for investment bankers, employee retention and communications. PAGE 7 Final regulatory approvals still must be obtained from the Federal Energy Regulatory Commission (FERC), which already conditionally approved the merger on June 25, 1997, and the Securities and Exchange Commission. Expenses incurred in connection with the merger are $1 million and $3 million, after-tax, for the three month period ended March 31, 1998 and 1997, respectively. These costs consist primarily of investment banking, legal, regulatory and consulting fees. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying condensed consolidated financial statements have been prepared in accordance with the interim period reporting requirements of Form 10-Q. Reference is made to the Form 10-K for the year ended December 31, 1997 for additional information. Results of operations for interim periods are not necessarily indicative of results for the entire year. In order to match revenues and costs for interim reporting purposes, SoCalGas defers revenues related to costs which it expects to incur later in the year. In the opinion of management, the accompanying statements reflect all adjustments which are necessary for a fair presentation. These adjustments are of a normal recurring nature. Certain changes in account classification have been made in the prior years' consolidated financial statements to conform to the 1997 financial statement presentation. In conformity with generally accepted accounting principles, SoCalGas' accounting policies reflect the financial effects of rate regulation authorized by the CPUC. SoCalGas applies the provisions of the Statement of Financial Accounting Standards No. 71, "Accounting for the Effects of Certain Types of Regulation" (SFAS 71). This statement requires cost-based rate regulated entities that meet certain criteria to reflect the authorized recovery of costs due to regulatory decisions in their financial statements. The Company continues to meet the criteria of SFAS 71 in accounting for its regulated operations. Income tax expense recognized in a period is the amount of tax currently payable plus or minus the change in the aggregate deferred tax assets and liabilities. Deferred taxes are recorded to recognize the future tax consequences of events that have been recognized in the financial statements or tax returns. For additional information regarding income taxes, see Footnote 5 of Notes to Consolidated Financial Statements in the Company's 1997 Form 10-K. PAGE 8 Estimated liabilities for environmental remediation are recorded when the amounts are probable and estimable. Amounts authorized to be recovered in rates are recorded as regulatory assets. Possible recoveries of environmental remediation liabilities from third parties are not deducted from the liability shown on the balance sheet. For additional information regarding commitments and contingencies, see Footnote 6 of Notes to Consolidated Financial Statements in the Company's 1997 Form 10-K filing. 3. CONTINGENT LIABILITIES QUASI-REORGANIZATION. During 1993, the Company completed a strategic plan to refocus on its natural gas utility and related businesses. The strategy included the divestiture of the Company's retailing operations and all of its oil and gas exploration and production business. In connection with the divestitures, the Company effected a quasi- reorganization for financial reporting purposes effective December 31, 1992. Certain of the liabilities established in connection with discontinued operations and the quasi-reorganization will be resolved in future years. As of March 31, 1998, the provisions previously established for these matters are adequate. 4. COMPREHENSIVE INCOME In conformity with generally accepted accounting principles, the Company has adopted Statement of Financial Accounting Standard's No. 130 "Reporting Comprehensive Income." Comprehensive income for the period ended March 31, 1998 was $40 million. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements contained in this Form 10-Q and Management's Discussion and Analysis contained in the Company's 1997 Annual Report to Shareholders and incorporated into the Company's Annual Report on Form 10-K for the year ended December 31, 1997. INFORMATION REGARDING FORWARD-LOOKING COMMENTS The following discussion includes forward-looking statements with respect to matters inherently involving various risks and uncertainties. These statements are identified by the words "estimates", "expects", "anticipates", "plans", "believes" and similar expressions. These statements are necessarily based upon various assumptions involving judgments with respect to the future including, among others, national, regional and local economic, PAGE 9 competitive and regulatory conditions, technological developments, inflation rates, interest rates, energy markets, weather conditions, business and regulatory decisions, and other uncertainties, all of which are difficult to predict and many of which are beyond the control of the Company. Accordingly, while the Company believes that the assumptions are reasonable, there can be no assurance that they will approximate actual experience, or that the expectations will be realized. CAPITAL RESOURCES AND LIQUIDITY Cash flows from operations were $531 million for the three months ended March 31, 1998. This represents an increase of $236 million from 1997. The increase is primarily due to actual gas costs incurred being lower than amounts collected in rates resulting in a decrease in previously undercollected regulatory balancing accounts and an increase in gas volumes sold. Capital expenditures were $31 million and $54 million for the three months ended March 31, 1998 and 1997, respectively. Capital expenditures are estimated to be $200 million in 1998 and will be financed primarily by internally generated funds and will largely represent investment in SoCalGas operations. Investments were $70 million for the three months ended March 31, 1998 and represent additional investment in Argentine utility operations and the acquisition of CES/Way International, Inc. (See "Energy Management Services" and "International Operations"). There were no investments in the three months ended March 31, 1997. Cash used for financing activities was $446 million and $222 million for the three months ended March 31, 1998 and 1997. The increase is due to greater long-term and short-term debt repayments and the repurchase of SoCalGas Preferred Stock. On February 2, 1998, SoCalGas redeemed all outstanding shares of 7 3/4% Series Preferred Stock at a total price per share of $25.09. This total price per share consisted of a redemption price of $25 and $0.09 of unpaid dividends accruing to the date of redemption. The total cost to SoCalGas was approximately $75.3 million. The Company paid dividends of $31 million on common stock and $1 million on preferred stock for a total of $32 million for the period ended March 31, 1998. This compares to $31 million in 1997. The common stock dividend increase in 1998 is due to the increase in the quarterly common stock dividend rate. The quarterly dividend rate was increased to $.40 per share in the second quarter of 1998 and was increased to $.38 per share in the second quarter of 1997. Cash and cash equivalents at March 31, 1998 were $135 million. This cash is available for investment in new energy-related domestic and international projects, the retirement of debt and other corporate purposes. PAGE 10 In April 1996, the Board of Directors authorized the buyback of up to 4.25 million shares of the Company's common stock representing approximately 5% of outstanding shares over a two-year period. During the first quarter of 1998, the Company did not repurchase any common stock. A total of 2.4 million shares have been repurchased under this program. CONSOLIDATED RESULTS OF OPERATIONS Net income for the three months ended March 31, 1998 was $40 million, or $.48 per common share (basic), compared to $50 million, or $.60 per common share (basic) in 1997. Consolidated earnings include the results of the Company's primary subsidiary, SoCalGas. SoCalGas' net income was $47 million compared with $58 million for the same quarter of 1997, which was primarily impacted from lower base margin established in the Performance Based Regulation (PBR) decision which became effective on August 1, 1997 partially offset by lower operating and maintenance expenses than amounts authorized in rates (See "Regulatory Activity Influencing Future Performance"). Also contributing to lower net income were operating losses at the joint ventures with Enova Corporation: Sempra Energy Solutions and Sempra Energy Trading. In addition, Pacific Enterprises International (PEI) had greater operating costs in the first quarter of 1998 compared to the first quarter of 1997, from efforts to develop international operations. The weighted average number of shares of common stock outstanding for the first quarter of 1998 decreased to 81.2 million shares compared with 81.9 million shares for the first quarter of 1997. PAGE 11 A more detailed discussion of current period results can be found in the business segment information that follows. OPERATING REVENUES Three Months Ended ($ in Millions) March 31 1998 1997 ----------------- SoCalGas $664 $738 Energy Mgmt. Svcs 54 136 Other * 2 3 ----------------- 720 877 Less: Inter-segment 51 83 ----------------- $669 $794 ================= NET INCOME Three Months Ended ($ in Millions) March 31 1998 1997 ----------------- SoCalGas $47 $58 Energy Mgmt. Svcs. (3) (2) International (2) Parent & Other * (2) (6) ----------------- $40 $50 ================= * Includes Sempra Energy Trading Corp. and consolidating entries PAGE 12 SOCALGAS OPERATIONS Net income for the first quarter of 1998 was $47 million, compared to $58 million for the same period in 1997. The decrease is primarily due to a lower base margin established in the PBR decision, partially offset by savings resulting from lower operating and maintenance expenses than the amounts authorized in rates. The table below compares SoCalGas' throughput and revenues by customer class for the three months ended March 31, 1998 and 1997. ($ in Millions, Gas Sales Trans. & Exchg. Total vol. in billion cubic feet) Throughput Revenue Throughput Revenue Throughput Revenue 1998: Residential 96 $710 1 $ 4 97 $714 Comm'l/Ind'l. 24 153 81 66 105 219 Utility Elec. 23 11 23 11 Wholesale 41 13 41 13 Exchange 2 2 ------------------------------------------------------------- Total in Rates 120 863 148 $94 268 957 Balancing Accts. & Other (293) ---- Total Operating Rev. $664* ==== 1997: Residential 84 $566 1 $ 3 85 $569 Comm'l/Ind'l. 25 175 76 65 101 240 Utility Elec. 21 11 21 11 Wholesale 38 14 38 14 ------------------------------------------------------------ Total in Rates 109 $741 136 $93 245 834 Balancing Accts. & Other (96) ---- Total Operating Rev. $738* ==== * Includes inter-segment transactions Operating revenue decreased $74 million for the three months ended March 31, 1998 due to the margin reduction established in PBR and lower cost of gas. Total throughput increased 23 Bcf primarily due to colder weather during the first quarter of 1998 compared to 1997. PAGE 13 Cost of gas distributed was $301 million and $350 million for the three months ended March 31, 1998 and 1997, respectively. The decrease is primarily due to a decrease in the average cost of gas purchased to $2.06 per thousand cubic feet (MCF) for the first quarter of 1998, compared to $2.90 per MCF for the first quarter of 1997. Under the current regulatory framework, changes in revenue resulting from changes in volumes in the core market and cost of gas do not affect net income. Operating and maintenance expenses for the three months ended March 31, 1998 were $8 million lower compared to the same period in 1997, primarily due to a continuing emphasis on reducing operating costs to remain competitive in the energy market place. Recent CPUC Regulatory Activity Under the Gas Cost Incentive Mechanism (GCIM), SoCalGas can recover all costs within a "tolerance band" above the benchmark price and refunds all savings within a "tolerance band" below the benchmark price. The cost of purchases or savings outside the "tolerance band" are shared equally between customers and shareholders. SoCalGas' purchased gas costs were below the specified GCIM benchmark for the annual period ended March 1997. In June 1997 SoCalGas filed a motion with the CPUC requesting a reward for shareholders under the procurement portion of the incentive mechanism. The amount will be recognized in income when a final CPUC decision (expected mid-1998) is issued. The CPUC has approved the use of gas futures for managing risks associated with the GCIM. SoCalGas enters into gas futures contracts in the open market on a limited basis to mitigate risk and better manage gas costs. Regulatory Activity Influencing Future Performance On July 16, 1997, the CPUC issued its final decision on the Company's application for PBR, which was filed with the CPUC in 1995. PBR replaces the general rate case and certain other regulatory proceedings through December 31, 2002. Under PBR, regulators allow future income potential to be tied to achieving or exceeding specific performance and productivity measures, rather than relying solely on expanding utility rate base in a market where the Company already has a highly developed infrastructure. Key elements of the PBR include a reduction in base rates, an indexing mechanism that limits future rate increases to the inflation rate less a productivity factor, a sharing mechanism with customers if earnings exceed the authorized rate of return on ratebase, and rate refunds to customers if service quality deteriorates. PAGE 14 SoCalGas implemented the base margin reduction effective August 1, 1997, and all other PBR elements on January 1, 1998. The CPUC intends the PBR decision to be in effect for five years; however, the CPUC decision allows for the possibility that changes to the PBR mechanism could be adopted in a decision to be issued in the Company's 1998 Biennial Cost Allocation Proceeding (BCAP) application which is anticipated to become effective August 1, 1999. Under PBR, annual cost of capital proceedings are replaced by an automatic adjustment mechanism if changes in certain indices exceed established tolerances. The mechanism is triggered if actual interest rates increase or decrease by more than 150 basis points and are forecasted to vary by at least 150 basis points for the next year. If this occurs, there would be an automatic adjustment of rates for the change in the cost of capital according to a pre-established formula which applies a percentage of the change to various capital components. For 1998, SoCalGas is authorized to earn a rate of return on common equity of 11.6 percent and a 9.49 percent return on rate base, the same as in 1997. The Company has considered the effect of Statement of Financial Accounting Standard No. 121 "Accounting for the Impairment of Long-Lived Assets and Long - -Lived Assets to Be Disposed Of" on the Company's financial statements, including the potential effect of electric industry restructuring. Although the Company believes that the volume of gas transported may be adversely impacted by electric restructuring, it is not anticipated to result in an impairment of assets as defined in SFAS 121 because the expected discounted future cash flows from SoCalGas' investment in its gas transportation infrastructure is greater than its carrying amount. ENERGY MANAGEMENT SERVICES Energy Management Services (EMS) consists of a number of operations including an interstate pipeline subsidiary, a subsidiary which operates and develops centralized heating and cooling plants, and joint ventures with Enova that provide energy products and services and integrated energy management services including Sempra Energy Solutions. Sempra Energy Solutions, formed in 1997, incorporates several existing unregulated businesses from each company. It is pursuing a variety of opportunities, including buying and selling natural gas for large users, integrated energy management services targeted at large governmental and commercial facilities and consumer market products and services such as earthquake shutoff valves. CES/Way International, Inc., acquired in January 1998, provides energy-efficiency services including energy audits, engineering design, project management, construction and financing and contract maintenance. EMS operating revenue was $54 million for the first quarter of 1998 representing a decrease of $82 million compared to the first quarter of 1997. PAGE 15 The decrease is primarily from operating revenues at Ensource in 1997, whose operations were discontinued in late 1997 with the acquisition of Sempra Energy Trading. EMS had a net loss of $3 million for the three months ended March 31, 1998, compared to a net loss of $2 million for the first quarter of 1997. This increase is primarily due to start-up costs and increased operating expenses of the unregulated businesses during the first quarter of 1998. SEMPRA ENERGY TRADING Sempra Energy Trading Corp., jointly acquired by the Company and Enova in December 1997, is a leading natural gas and power marketing firm headquartered in Greenwich, Connecticut. PE's share of Sempra Energy Trading Corp's results were a net loss of $4 million for the three months ended March 31, 1998. The loss was primarily due to the amortization of costs associated with the purchase of the company. INTERNATIONAL OPERATIONS In March 1998, PEI increased its existing investment in two Argentine natural gas utility holding companies (Sodigas Pampeana S.A and Sodigas Sur S.A.) by purchasing an additional 9 percent interest for $40.1 million. With this purchase, PEI's interest in the holding companies was increased to 21.5 percent. The net loss at Pacific Enterprises International (PEI) was $2 million in the first quarter of 1998 compared to net income of $300,000 in 1997. The decrease is primarily due to increased expenses related to the evaluation of international opportunities. PARENT COMPANY Parent company income was $500,000, after-tax, for the three months ended March 31, 1998, including interest expense. This compares to losses of $8 million for the same period in 1997. The increase is primarily due to the lower interest expense due to lower debt levels and lower merger related expenses. Merger costs were $1 million and $3 million, after-tax, for the three months ended March 31, 1998 and 1997, respectively. PAGE 16 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (b) Reports on Form 8-K filed during the quarter ended March 31, 1998. Other Events - January 27, 1998, February 24, 1998, March 13, 1998 March 27, 1998 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 thereunto duly authorized. PACIFIC ENTERPRISES - ------------------- (Registrant) /s/ Ralph Todaro - ----------------------------- Ralph Todaro Vice President and Controller (Chief Accounting Officer and duly authorized signatory) Date: May 11, 1998