SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[..X..] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
March 31, 2002
For the quarterly period ended.......................................
Or
[.....] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ________________ to _________________
Commission Name of Registrant, State of IRS Employer
File Incorporation, Address and Identification
Number Telephone Number Number
- ---------- ---------------------------------- --------------
1-40 Pacific Enterprises 94-0743670
(A California Corporation)
101 Ash Street
San Diego, California 92101
(619) 696-2020
1-1402 Southern California Gas Company 95-1240705
(A California Corporation)
555 West Fifth Street
Los Angeles, California 90013
(213) 244-1200
No Change
- -----------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since
last report
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 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......
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock outstanding:
Pacific Enterprises Wholly owned by Sempra Energy
Southern California Gas Company Wholly owned by Pacific Enterprises
ITEM 1. FINANCIAL STATEMENTS.
PACIFIC ENTERPRISES AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
Dollars in millions
Three Months Ended
March 31,
-----------------
2002 2001
------- -------
Operating Revenues $ 722 $ 1,548
------- -------
Operating Expenses
Cost of natural gas distributed 347 1,151
Other operating expenses 171 188
Depreciation 68 65
Income taxes 47 42
Other taxes and franchise payments 24 34
------- -------
Total operating expenses 657 1,480
------- -------
Operating Income 65 68
------- -------
Other Income and (Deductions)
Interest income 2 17
Regulatory interest - net 1 (5)
Allowance for equity funds used
during construction 2 1
Taxes on non-operating income 3 (2)
Other - net 3 (4)
------- -------
Total 11 7
------- -------
Interest Charges
Long-term debt 9 17
Other 9 9
Allowance for borrowed funds used
during construction (1) (1)
------- -------
Total 17 25
------- -------
Net Income 59 50
Preferred Dividend Requirements 1 1
------- -------
Earnings Applicable to Common Shares $ 58 $ 49
======= =======
See notes to Consolidated Financial Statements.
PACIFIC ENTERPRISES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Dollars in millions
Balance at
March 31, December 31,
2002 2001
--------- ------------
ASSETS
Property, plant and equipment $6,655 $6,590
Accumulated depreciation (3,853) (3,793)
------ ------
Property, plant and equipment - net 2,802 2,797
------ ------
Current assets:
Cash and cash equivalents 66 13
Accounts receivable - trade 320 415
Accounts receivable - other 43 14
Due from unconsolidated affiliates 181 --
Income taxes receivable -- 20
Deferred income taxes 44 33
Regulatory assets arising from fixed-price
contracts and other derivatives 94 103
Fixed-price contracts and other derivatives 12 59
Inventories 13 42
Other 3 4
------ ------
Total current assets 776 703
------ ------
Other assets:
Due from unconsolidated affiliates 423 409
Regulatory assets arising from fixed-price
contracts and other derivatives 342 157
Sundry 131 125
------ ------
Total other assets 896 691
------ ------
Total assets $4,474 $4,191
====== ======
See notes to Consolidated Financial Statements.
PACIFIC ENTERPRISES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Dollars in millions
Balance at
March 31, December 31,
2002 2001
--------- ------------
CAPITALIZATION AND LIABILITIES
Capitalization:
Common Stock (600,000,000 shares authorized;
83,917,664 shares outstanding) $1,317 $1,317
Retained earnings 234 177
------ ------
Total common equity 1,551 1,494
Preferred stock 80 80
------ ------
Total shareholders' equity 1,631 1,574
Long-term debt 506 579
------ ------
Total capitalization 2,137 2,153
------ ------
Current liabilities:
Short-term debt -- 50
Current portion of long-term debt 175 100
Accounts payable - trade 195 160
Accounts payable - other 111 81
Due to unconsolidated affiliates 60 168
Regulatory balancing accounts - net 166 85
Income taxes payable 8 --
Dividends and interest payable 37 31
Regulatory liabilities 12 18
Fixed-price contracts and other derivatives 103 103
Other 409 390
------ ------
Total current liabilities 1,276 1,186
------ ------
Deferred credits and other liabilities:
Customer advances for construction 28 24
Post-retirement benefits other than pensions 86 88
Deferred income taxes 138 110
Deferred investment tax credits 49 50
Regulatory liabilities 99 86
Fixed-price contracts and other derivatives 344 162
Deferred credits and other liabilities 297 312
Preferred stock of subsidiary 20 20
------ ------
Total deferred credits and other liabilities 1,061 852
------ ------
Contingencies and commitments (Note 2)
Total liabilities and shareholders' equity $4,474 $4,191
====== ======
See notes to Consolidated Financial Statements.
PACIFIC ENTERPRISES AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
Dollars in millions
Three Months Ended
March 31,
------------------
2002 2001
------ -----
Cash Flows from Operating Activities
Net Income $ 59 $ 50
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 68 65
Deferred income taxes and investment
tax credits 16 9
Changes in other assets -- 13
Changes in other liabilities (12) (3)
Net changes in other working capital components 343 132
----- -----
Net cash provided by operating activities 474 266
----- -----
Cash Flows from Investing Activities
Capital expenditures (70) (46)
Loans repaid by (paid to) affiliates (200) 190
----- -----
Net cash provided by (used in) investing
activities (270) 144
----- -----
Cash Flows from Financing Activities
Common dividends paid (100) (140)
Preferred dividends paid (1) (1)
Decrease in short-term debt (50) --
----- -----
Net cash used in financing activities (151) (141)
----- -----
Increase in cash and cash equivalents 53 269
Cash and cash equivalents, January 1 13 205
----- -----
Cash and cash equivalents, March 31 $ 66 $ 474
===== =====
Supplemental Disclosure of Cash Flow Information:
Interest payments, net of amounts capitalized $ 13 $ 21
===== =====
Income tax payments, net of refunds $ -- $ 102
===== =====
See notes to Consolidated Financial Statements.
SOUTHERN CALIFORNIA GAS COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
Dollars in millions
Three Months Ended
March 31,
-----------------
2002 2001
------- -------
Operating Revenues $ 722 $ 1,548
------- -------
Operating Expenses
Cost of natural gas distributed 347 1,151
Other operating expenses 168 186
Depreciation 68 65
Income taxes 48 44
Other taxes and franchise payments 24 34
------- -------
Total operating expenses 655 1,480
------- -------
Operating Income 67 68
------- -------
Other Income and (Deductions)
Interest income 1 9
Regulatory interest - net 1 (5)
Allowance for equity funds used
during construction 2 1
Taxes on non-operating income 4 (2)
Other - net - (1)
------- -------
Total 8 2
------- -------
Interest Charges
Long-term debt 9 17
Other 7 3
Allowance for borrowed funds used
during construction (1) (1)
------- -------
Total 15 19
------- -------
Earnings Applicable to Common Shares $ 60 $ 51
======= =======
See notes to Consolidated Financial Statements.
SOUTHERN CALIFORNIA GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Dollars in millions
Balance at
March 31, December 31,
2002 2001
--------- ------------
ASSETS
Utility plant - at original cost $6,531 $6,467
Accumulated depreciation (3,769) (3,710)
------ ------
Utility plant - net 2,762 2,757
------ ------
Current assets:
Cash and cash equivalents 66 13
Accounts receivable - trade 320 415
Accounts receivable - other 43 14
Due from unconsolidated affiliates 181 --
Deferred income taxes 73 62
Regulatory assets arising from fixed-price
contracts and other derivatives 94 103
Fixed-price contracts and other derivatives 12 59
Inventories 13 42
Other 3 4
------ ------
Total current assets 805 712
------ ------
Other assets:
Regulatory assets arising from fixed-price
contracts and other derivatives 342 157
Sundry 144 136
------ ------
Total other assets 486 293
------ ------
Total assets $4,053 $3,762
====== ======
See notes to Consolidated Financial Statements.
SOUTHERN CALIFORNIA GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Dollars in millions
Balance at
March 31, December 31,
2002 2001
--------- ------------
CAPITALIZATION AND LIABILITIES
Capitalization:
Common Stock (100,000,000 shares authorized;
91,300,000 shares outstanding) $ 835 $ 835
Retained earnings 430 470
------ ------
Total common equity 1,265 1,305
Preferred stock 22 22
------ ------
Total shareholders' equity 1,287 1,327
Long-term debt 506 579
------ ------
Total capitalization 1,793 1,906
------ ------
Current liabilities:
Short-term debt -- 50
Current portion of long-term debt 175 100
Accounts payable - trade 195 160
Accounts payable - other 111 81
Due to unconsolidated affiliates -- 24
Regulatory balancing accounts - net 166 85
Income taxes payable 63 32
Interest payable 33 29
Regulatory liabilities 12 18
Fixed-price contracts and other derivatives 103 103
Other 408 390
------ ------
Total current liabilities 1,266 1,072
------ ------
Deferred credits and other liabilities:
Customer advances for construction 28 24
Deferred income taxes 209 183
Deferred investment tax credits 49 50
Regulatory liabilities 185 174
Fixed-price contracts and other derivatives 344 162
Deferred credits and other liabilities 179 191
------ ------
Total deferred credits and other liabilities 994 784
------ ------
Contingencies and commitments (Note 2)
Total liabilities and shareholders' equity $4,053 $3,762
====== ======
See notes to Consolidated Financial Statements.
SOUTHERN CALIFORNIA GAS COMPANY AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
Dollars in millions
Three Months Ended
March 31,
------------------
2002 2001
------ ------
Cash Flows from Operating Activities
Net income $ 60 $ 51
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 68 65
Deferred income taxes and investment tax credits 13 8
Changes in other assets -- 13
Changes in other liabilities (10) --
Net changes in other working capital components 342 135
------ ------
Net cash provided by operating activities 473 272
------ ------
Cash Flows from Investing Activities
Capital expenditures (70) (46)
Loan repaid by (paid to) affiliate (200) 183
------ ------
Net cash provided by (used in) investing
activities (270) 137
------ ------
Cash Flows from Financing Activities
Dividends paid (100) (140)
Decrease in short-term debt (50) --
------ ------
Net cash used in financing activities (150) (140)
Increase in cash and cash equivalents 53 269
Cash and cash equivalents, January 1 13 205
------ ------
Cash and cash equivalents, March 31 $ 66 $ 474
====== ======
Supplemental Disclosure of Cash Flow Information:
Interest payments, net of amounts capitalized $ 11 $ 15
====== ======
Income tax payments, net of refunds $ -- $ 90
====== ======
See notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
This Quarterly Report on Form 10-Q is that of Pacific Enterprises (PE)
and of Southern California Gas Company (SoCalGas)(collectively referred
to herein as the companies). PE's common stock is wholly owned by Sempra
Energy, a California-based Fortune 500 energy services company.
SoCalGas' common stock is wholly owned by PE. The financial statements
herein are, in one case, the Consolidated Financial Statements of PE and
its subsidiary, SoCalGas, and, in the second case, the Consolidated
Financial Statements of SoCalGas and its subsidiaries, which comprise
less than one percent of SoCalGas' consolidated financial position and
results of operations.
The accompanying Consolidated Financial Statements have been prepared in
accordance with the interim-period-reporting requirements of Form 10-Q.
Results of operations for interim periods are not necessarily indicative
of results for the entire year. In the opinion of management, the
accompanying statements reflect all adjustments necessary for a fair
presentation. These adjustments are only of a normal recurring nature.
Certain changes in classification have been made to prior presentations
to conform to the current financial statement presentation.
The companies' significant accounting policies are described in the
notes to Consolidated Financial Statements in the companies' Annual
Report on Form 10-K for the year ended December 31, 2001 (Annual
Report). The same accounting policies are followed for interim reporting
purposes.
Information in this Quarterly Report is unaudited and should be read in
conjunction with the companies' Annual Report.
As described in the notes to Consolidated Financial Statements in the
companies' Annual Report, SoCalGas accounts for the economic effects of
regulation on utility operations in accordance with Statement of
Financial Accounting Standards No. 71, "Accounting for the Effects of
Certain Types of Regulation" (SFAS No. 71).
NEW ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board (FASB) issued two
statements, SFAS 142 "Goodwill and Other Intangible Assets" and SFAS 143
"Accounting for Asset Retirement Obligations." The former is not
presently relevant to the companies.
SFAS 143 addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. This applies to legal obligations
associated with the retirement of long-lived assets. It requires
entities to record the fair value of a liability for an asset retirement
obligation in the period in which it is incurred. When the liability is
initially recorded, the entity increases the carrying amount of the
related long-lived asset to reflect the future retirement cost. Over
time, the liability is accreted to its present value and paid, and the
capitalized cost is depreciated over the useful life of the related
asset. SFAS 143 is effective for financial statements issued for fiscal
years beginning after June 15, 2002. The companies have not yet
determined the precise effect of SFAS 143 on their Consolidated Balance
Sheets, but have determined that it will not have a material impact on
their Statements of Consolidated Income.
In August 2001, the FASB issued SFAS 144 "Accounting for the Impairment
or Disposal of Long-Lived Assets" that replaces SFAS 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of." SFAS 144 applies to all long-lived assets, including
discontinued operations. SFAS 144 requires that those long-lived assets
classified as held for sale be measured at the lower of carrying amount
or fair value less cost to sell. Discontinued operations will no longer
be measured at net realizable value or include amounts for operating
losses that have not yet occurred. SFAS 144 also broadens the reporting
of discontinued operations to include all components of an entity with
operations that can be distinguished from the rest of the entity and
that will be eliminated from the ongoing operations of the entity in a
disposal transaction. The provisions of SFAS 144 are effective for
fiscal years beginning after December 15, 2001. The adoption of SFAS 144
has not affected the companies' financial statements.
2. MATERIAL CONTINGENCIES
LITIGATION
Lawsuits filed in 2000 and currently consolidated in San Diego Superior
Court seek class-action certification and allege that Sempra Energy,
SoCalGas, SDG&E and El Paso Energy Corp. acted to drive up the price of
natural gas for Californians by agreeing to restrict pipeline capacity
into California. Management believes the allegations are without merit.
Except for the matter referred to above, neither the companies nor their
subsidiaries are party to, nor is their property the subject of, any
material pending legal proceedings other than routine litigation
incidental to their businesses. Management believes that these matters
will not have a material adverse effect on the companies' financial
condition or results of operations.
QUASI-REORGANIZATION
In 1993, PE divested its merchandising operations and most of its oil
and gas exploration and production business. In connection with the
divestitures, PE effected a quasi-reorganization for financial reporting
purposes effective December 31, 1992. Management believes the remaining
balances of the liabilities established in connection with the quasi-
reorganization are adequate.
3. COMPREHENSIVE INCOME
The following is a reconciliation of net income to comprehensive income.
Pacific Enterprises SoCalGas
------------------- -------------------
Three-month periods Three-month periods
ended March 31, ended March 31,
------------------- -------------------
(Dollars in millions) 2002 2001 2002 2001
- ---------------------------------------------------------------------
Net income $ 59 $ 50 $ 60 $ 51
Financial instruments
(Note 4) (1)* -- (1)* --
-----------------------------------------
Comprehensive income $ 58 $ 50 $ 59 $ 51
- ---------------------------------------------------------------------
* This did not affect the reported balance of accumulated other
comprehensive income ($0 at the beginning and end of the period) due to
rounding.
4. FINANCIAL INSTRUMENTS
Note 8 of the notes to Consolidated Financial Statements in the
companies' Annual Report discusses the companies' financial instruments,
including the adoption of SFAS 133, accounting for derivative
instruments and hedging activities, market risk, interest-rate risk
management, energy derivatives and contracts, and fair value. Additional
activity and information since January 1, 2002 related to financial
instruments are described herein.
At March 31, 2002, $12 million in current assets, $103 million in
current liabilities and $344 million in noncurrent liabilities were
recorded in the Consolidated Balance Sheets for fixed-priced contracts
and other derivatives. Regulatory assets and liabilities were established
to the extent that derivative gains and losses are recoverable or payable
through future rates. As such, $94 million in current regulatory assets,
$342 million in noncurrent regulatory assets, $2 million in regulatory
balancing account liabilities and $1 million in other current liabilities
were recorded in the Consolidated Balance Sheets as of March 31, 2002.
For the three months ended March 31, 2002, $2 million in other operating
losses were recorded in "Other - net" in the Statements of Consolidated
Income. Additionally, $2 million was a market value adjustment to long-
term debt related to a fixed-to-floating interest rate swap agreement.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
financial statements contained in this Form 10-Q and Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the companies' Annual Report.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report contains statements that are not historical fact and
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. The words "estimates,"
"believes," "expects," "anticipates," "plans," "intends," "may," "would"
and "should" or similar expressions, or discussions of strategy or of
plans are intended to identify forward-looking statements. Forward-looking
statements are not guarantees of performance. They involve risks,
uncertainties and assumptions. Future results may differ materially from
those expressed in these forward-looking statements.
Forward-looking statements are necessarily based upon various assumptions
involving judgments with respect to the future and other risks, including,
among others, local, regional, national and international economic,
competitive, political, legislative and regulatory conditions and
developments; actions by the CPUC, the California Legislature and the
FERC; capital market conditions, inflation rates, interest rates and
exchange rates; energy and trading markets, including the timing and
extent of changes in commodity prices; weather conditions and conservation
efforts; war and terrorist attacks; business, regulatory and legal
decisions; the pace of deregulation of retail natural gas and electricity
delivery; the timing and success of business development efforts; and
other uncertainties, all of which are difficult to predict and many of
which are beyond the control of the companies. Readers are cautioned not
to rely unduly on any forward-looking statements and are urged to review
and consider carefully the risks, uncertainties and other factors which
affect the companies' business described in this report and other reports
filed by the companies from time to time with the Securities and Exchange
Commission.
See also "Factors Influencing Future Performance" below.
CAPITAL RESOURCES AND LIQUIDITY
The companies' California utility operations have historically been a
major source of liquidity. See further discussion in the companies' Annual
Report.
CASH FLOWS FROM OPERATING ACTIVITIES
For the three-month period ended March 31, 2002, the increase in cash
flows from operations compared to the corresponding period in 2001 is
primarily due to greater income tax payments made during the first
quarter of 2001 compared to none made during the same period in 2002,
and the increase in overcollected regulatory balancing accounts
resulting from increased natural gas usage due to cooler winter weather.
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures for property, plant and equipment are estimated to
be $300 million for the full year 2002 and are being financed primarily
by internally generated funds and security issuances. Construction,
investment and financing programs are continuously reviewed and revised
in response to changes in competition, customer growth, inflation,
customer rates, the cost of capital, and environmental and regulatory
requirements.
CASH FLOWS FROM FINANCING ACTIVITIES
For the three-month period ended March 31, 2002, cash flows used in
financing activities increased from the corresponding period in 2001 due
primarily to the repayment of short-term debt, partially offset by the
decrease in common dividends paid.
In April 2002, Fitch, Inc. confirmed its prior credit ratings of the
companies' debt; Standard & Poor's reduced its ratings of SoCalGas'
secured debt one notch from AA- with a negative outlook to A+ with a
stable outlook and made corresponding adjustments in the ratings and
outlook of the companies' other debt, including reducing PE's preferred
stock from A- to BBB+; and Moody's Investors Service, Inc., confirmed its
prior ratings of the debt of SoCalGas.
RESULTS OF OPERATIONS
The companies' net income increased for the three-month period ended
March 31, 2002, compared to the corresponding period in 2001 primarily
due to lower operating and interest expenses in 2002.
The table below summarizes natural gas volumes and revenues by
customer class for the three-month periods ended March 31, 2002 and
2001.
Gas Sales, Transportation and Exchange
(Volumes in billion cubic feet, dollars in millions)
Gas Sales Transportation & Exchange Total
--------------------------------------------------------------
Volumes Revenue Volumes Revenue Volumes Revenue
--------------------------------------------------------------
2002:
Residential 95 $ 586 1 $ 2 96 $ 588
Commercial and industrial 29 145 71 31 100 176
Electric generation plants -- -- 43 7 43 7
Wholesale -- -- 45 3 45 3
--------------------------------------------------------------
124 $ 731 160 $ 43 284 $ 774
Balancing accounts and other (52)
--------
Total $ 722
- ------------------------------------------------------------------------------------------
2001:
Residential 104 $1,096 1 $ 2 105 $1,098
Commercial and industrial 28 265 60 56 88 321
Electric generation plants -- -- 100 26 100 26
Wholesale -- -- 52 9 52 9
--------------------------------------------------------------
132 $1,361 213 $ 93 345 1,454
Balancing accounts and other 94
--------
Total $1,548
- ------------------------------------------------------------------------------------------
The decrease in natural gas revenues was primarily due to lower
natural gas prices and decreased transportation for electric
generation plants.
The decrease in the cost of natural gas distributed was primarily due
to lower natural gas prices. Under the current regulatory framework,
the cost of natural gas is passed on to customers without markup and
changes in core-market natural gas prices do not affect net income
since, as explained more fully in the Annual Report, current or
future core customer rates normally recover the actual cost of
natural gas on a substantially concurrent basis.
FACTORS INFLUENCING FUTURE PERFORMANCE
Performance of the companies will depend primarily on the ratemaking
and regulatory process, electric and natural gas industry
restructuring, and the changing energy marketplace. These factors are
discussed in the companies' Annual Report.
NEW ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board (FASB) issued
two statements, SFAS 142 "Goodwill and Other Intangible Assets" and
SFAS 143 "Accounting for Asset Retirement Obligations." The former is
not presently relevant to the companies. SFAS 143 addresses financial
accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset
retirement costs. In August 2001, the FASB issued SFAS 144 "Accounting
for the Impairment or Disposal of Long-Lived Assets" that replaces
SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." SFAS 144 applies to all long-
lived assets, including discontinued operations.
See further discussion in Note 1 of the notes to Consolidated
Financial Statements.
ITEM 3. MARKET RISK
There have been no significant changes in the risk issues affecting
the companies subsequent to those discussed in the Annual Report. As
noted in that report, SoCalGas may, at times, be exposed to limited
market risk in its natural gas purchase and sale activities as a
result of activities under SoCalGas' Gas Cost Incentive Mechanism.
The risk is managed within the parameters of the companies' market-
risk management and trading framework. As of March 31, 2002, the
total Value at Risk of SoCalGas' natural gas positions was not
material.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Except as otherwise described in this report, neither the companies
nor their subsidiaries are party to, nor is their property the
subject of, any material pending legal proceedings other than routine
litigation incidental to their businesses.
ITEM 5. OTHER INFORMATION
A new collective bargaining agreement for field, technical and most
clerical employees at SoCalGas represented by the Utility Workers'
Union of America or the International Chemical Workers' Council has
been negotiated. The new agreement on wages, hours and working
conditions is in effect through December 31, 2004.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 12 - Computation of ratios
12.1 Computation of Ratio of Earnings to Fixed Charges of PE.
12.2 Computation of Ratio of Earnings to Fixed Charges of
SoCalGas.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed after December 31, 2001.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrants have duly cause this report to be signed on their
behalf by the undersigned thereunto duly authorized.
PACIFIC ENTERPRISES
-------------------
(Registrant)
Date: May 9, 2002 By: /s/ F. H. Ault
----------------------------
F. H. Ault
Sr. Vice President and Controller
SOUTHERN CALIFORNIA GAS COMPANY
-------------------------------
(Registrant)
By: /s/ D.L. Reed
---------------------------
D.L. Reed
President and
Chief Financial Officer
EXHIBIT 12.1
PACIFIC ENTERPRISES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
(Dollars in millions)
Three
months
ended
March 31,
1997 1998 1999 2000 2001 2002
-------- -------- -------- -------- -------- ---------
Fixed Charges:
Interest $ 91 $ 84 $ 82 $ 72 $ 88 $ 18
Interest portion of
annual rentals 12 11 3 4 3 -
Preferred dividends
of subsidiaries (1) 13 2 2 2 2 -
-------- -------- -------- -------- -------- ---------
Combined Fixed Charges and
Preferred Stock Dividends
for Purpose of Ratio $116 $ 97 $ 87 $ 78 $ 93 $ 18
======== ======== ======== ======== ======== =========
Earnings:
Pretax income from
continuing operations $335 $274 $350 $396 $377 $103
Add Total Fixed Charges
(from above) 116 97 87 78 93 18
-------- -------- -------- -------- ------- ---------
Total Earnings for
Purpose of Ratio $451 $371 $437 $474 $470 $121
======== ======== ======== ======== ======= ==========
Ratio of Earnings
to Combined Fixed Charges
and Preferred Stock
Dividends 3.89 3.82 5.02 6.08 5.05 6.72
======== ======== ======== ======== ======= ==========
(1) In computing this ratio, "Preferred dividends of subsidiaries" represents the
before-tax earnings necessary to pay such dividends, computed at the effective tax
rates for the applicable periods.
EXHIBIT 12.2
SOUTHERN CALIFORNIA GAS COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
For the three
months ended
March 31,
1997 1998 1999 2000 2001 2002
-------- -------- -------- -------- -------- --------
Fixed Charges:
Interest $ 88 $ 81 $ 62 $ 72 $ 70 $ 16
Interest portion of
annual rentals 5 4 3 4 3 -
-------- -------- -------- -------- -------- --------
Total Fixed Charges for
purpose of ratio $ 93 $ 85 $ 65 $ 76 $ 73 $ 16
======== ======== ======== ======== ======== ========
Earnings:
Pretax income from
continuing operations $416 $287 $383 $390 $377 $104
Add Total Fixed Charges
(from above) 93 85 65 76 73 16
-------- -------- -------- -------- -------- --------
Total Earnings for
Purpose of Ratio $509 $372 $448 $466 $450 $120
======== ======== ======== ======== ======== ========
Ratio of Earnings
To Fixed Charges 5.47 4.38 6.89 6.13 6.16 7.50
======== ======== ======== ======== ======== ========
