SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934 (Fee Required)
For the fiscal year ended December 31, 1999
Commission File Number 1-14201
A. Full title of the Plans and the address of the Plans, if different from
that of the issuer named below: Sempra Energy Savings Plan, Sempra Energy
Trading Retirement Savings Plan, San Diego Gas & Electric Company Savings
Plan and Southern California Gas Company Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the Plans and the address
of its principal executive office: Sempra Energy, 101 Ash Street, San
Diego, CA 92101-3017
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SAN DIEGO GAS & ELECTRIC COMPANY SAVINGS PLAN
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998,
SUPPLEMENTAL SCHEDULE FOR THE YEAR ENDED DECEMBER 31, 1999, AND
INDEPENDENT AUDITORS' REPORT
SAN DIEGO GAS & ELECTRIC COMPANY SAVINGS PLAN
TABLE OF CONTENTS
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PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 AND 1998 AND FOR THE YEARS THEN
ENDED:
Statements of Assets Available for Benefits 2
Statements of Changes in Assets Available for Benefits 3
Notes to Financial Statements 4-8
SUPPLEMENTAL SCHEDULE:
Schedule of Reportable Transactions for the Year Ended December 31, 1999 9
All other schedules required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974 are omitted because of the absence of conditions under
which they are required or as they are filed by the Trustee of the Master
Trust in which the Plan participates.
INDEPENDENT AUDITORS' REPORT
San Diego Gas & Electric Company Savings Plan:
We have audited the accompanying statements of assets available for benefits
of the San Diego Gas & Electric Company Savings Plan (the "Plan") as of
December 31, 1999 and 1998, and the related statements of changes in assets
available for benefits for the years then ended. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the assets available for benefits of the Plan as of December 31,
1999 and 1998, and the changes in assets available for benefits of the Plan
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of
reportable transactions for the year ended December 31, 1999 is presented for
the purpose of additional analysis and is not a required part of the basic
1999 financial statements, but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. This supplemental
schedule is the responsibility of the Plan's management. Such supplemental
schedule has been subjected to the auditing procedures applied in our audit
of the basic 1999 financial statements and, in our opinion, is fairly stated
in all material respects when considered in relation to the basic 1999
financial statements taken as a whole.
/s/ Deloitte & Touche LLP
June 23, 2000
-1-
SAN DIEGO GAS & ELECTRIC COMPANY SAVINGS PLAN
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
(DOLLARS IN THOUSANDS)
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1999 1998
CASH AND CASH EQUIVALENTS $ 4 $ 747
INVESTMENTS:
At fair value:
Investment in Master Trust 311,949
Sempra Energy common stock 205,544
Mutual funds 158,761
---------- ----------
Total investments 311,949 364,305
---------- ----------
RECEIVABLES:
Dividends and interest 2,568 3,175
Employer contributions 1,030 108
Participating employee contributions 392
---------- ----------
Total receivables 3,598 3,675
---------- ----------
ASSETS AVAILABLE FOR BENEFITS $ 315,551 $ 368,727
========== ==========
The accompanying notes are an integral part of these financial statements.
-2-
SAN DIEGO GAS & ELECTRIC COMPANY SAVINGS PLAN
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1999 AND 1998
(DOLLARS IN THOUSANDS)
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1999 1998
ADDITIONS
NET INVESTMENT INCOME (LOSS):
Equity in net investment income of the Master Trust $ 17,571
Net (depreciation) apppreciation in fair value of investments (54,483) $ 7,796
Cash dividends on common stock of Plan sponsor 9,512 13,488
Interest and dividends 480 1,733
---------- ----------
Total investment (loss) income (26,920) 23,017
Less investment expenses 504 602
---------- ----------
Net investment (loss) income (27,424) 22,415
---------- ----------
CONTRIBUTIONS:
Employer 5,716 3,913
Participating employees 14,183 14,587
---------- ----------
Total contributions 19,899 18,500
---------- ----------
Net additions (7,525) 40,915
---------- ----------
DEDUCTIONS
DISTRIBUTIONS TO PARTICIPANTS OR THEIR BENEFICIARIES 44,089 62,723
TRANSFERS TO PLANS OF RELATED ENTITIES 1,562 16,625
---------- ----------
Total deductions 45,651 79,348
---------- ----------
NET DECREASE (53,176) (38,433)
ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 368,727 407,160
---------- ----------
END OF YEAR $ 315,551 $ 368,727
========== ==========
The accompanying notes are an integral part of these financial statements.
-3-
SAN DIEGO GAS & ELECTRIC COMPANY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
(DOLLARS IN THOUSANDS)
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1. DESCRIPTION OF PLAN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF PLAN - The San Diego Gas & Electric Company Savings Plan
(the "Plan") is a contributory defined contribution plan. It is subject to
the provisions of the Employee Retirement Income Security Act of 1974
("ERISA"). The terms of the Plan are described more completely in the most
recent Summary Plan Description dated January 1996, which has been
distributed to all participants.
At June 26, 1998, Pacific Enterprises, the holding company for Southern
California Gas Company, and Enova Corporation, the holding company for San
Diego Gas & Electric Company, combined into a new company named Sempra
Energy. As a result of the combination, each outstanding share of common
stock of Pacific Enterprises was converted into 1.5038 shares of common
stock of Sempra Energy, and each outstanding share of common stock of
Enova Corporation was converted into one share of common stock of Sempra
Energy. The combination was approved by the shareholders of both companies
on March 11, 1997. As a result of the combination, employees were moved
among the related companies of Sempra Energy. Plan account balances of
Sempra Energy employees were transferred if the employee so requested in
writing.
Effective April 1, 1998, the Plan was amended to allow the Company, in its
discretion, to authorize the transfer of a participant's interest in the
Plan in a direct trust-to-trust transfer from the trustee of the Plan to
the trustee of another qualified retirement plan.
The Company approved the change of the Plan's recordkeeper and trustee
from Watson Wyatt Worldwide Company and Union Bank of California,
respectively, to T. Rowe Price Trust Company ("T. Rowe Price") effective
October 1, 1999. At that time, the Plan was amended to allow for
participant loans.
Effective December 31, 1999, the Plan was amended to allow all employees
of the Company who are employed on the last day of the Plan year to
participate in the discretionary incentive contribution.
ADMINISTRATION - Certain administrative functions are performed by
officers or employees of the Company. No such officer or employee receives
compensation from the Plan. Certain administrative expenses are paid
directly by the Company, such as legal and accounting fees. All investment
expenses are paid by the Plan, including recordkeeping, trustee fees and
investment management fees
-4-
ELIGIBILITY - Prior to the combination, substantially all regular
employees of SDG&E and the other subsidiaries of Enova could enroll in the
Plan if they had completed at least one year of service and were at least
age 21.
Effective January 1, 1999, the Plan was amended to allow for immediate
Plan participation for salary deferrals and participation in employer
matching contributions after one year of service.
CONTRIBUTIONS - Each year, participants may elect to contribute up to 15%
of pre-tax or after-tax compensation or a combination of both. The Plan
provides for employer contributions equal to 50% of the amount a
participant elects to contribute, up to 6% of the participant's eligible
compensation, as defined in the Plan document. Employer contributions are
invested solely in common stock of Sempra Energy in the Master Trust.
DISCRETIONARY INCENTIVE CONTRIBUTION - If established performance goals
and targets of Sempra Energy are met in accordance with the terms of the
incentive match guidelines established each year, the Company will make an
additional matching contribution as determined by the Board of Directors
of Sempra Energy. For 1999, an incentive contribution of 3/4 of 1% of
eligible compensation was made on March 15, 2000 to all employees employed
on December 31, 1999. The contribution was made in the form of Company
stock. There were no discretionary incentive contributions in 1998.
INVESTMENT FUNDS - Prior to October 1, 1999, Union Bank of California was
trustee of the Plan. Employees could elect to have their contributions
invested in increments of 1% in Sempra Energy common stock or five mutual
funds offered by Fidelity Investment Managers. Participants could transfer
their funds among investment options and change their contribution
percentage and allocation monthly.
Effective October 1, 1999, T. Rowe Price became the trustee. All
investments are held in a Master Trust (see Note 6). Employees elect to
have their contributions invested in increments of 1% in Sempra Energy
common stock or specific mutual funds offered by T. Rowe Price and
Fidelity Investment Managers.
PARTICIPANT ACCOUNTS - Each participant's account is credited with the
participant's contribution and allocations of (a) the employer's
contribution and (b) account earnings, and charged with an allocation of
administrative expenses. The benefit to which a participant is entitled is
the benefit that can be provided from the participant's vested account.
VESTING - Effective January 1, 1999, all participant accounts are fully
vested and nonforfeitable.
PAYMENT OF BENEFITS - Provisions of the Plan include certain restrictions
on the form and timing of distributions to withdrawing participants. In
general, benefits are payable upon retirement, death, disability or
termination of service.
PAYMENT OF DIVIDENDS - Active employees not covered by a collective
bargaining agreement have the option to receive distributions of cash
dividends on the shares of Sempra Energy common stock in their account
balances or to reinvest the dividends in Sempra Energy common stock.
Dividends will automatically be passed through to former employees who
have terminated or retired and elected to leave their accounts in the
Plan.
-5-
Effective January 1, 1999, the Plan was amended to give employees covered
by a collective bargaining agreement the option to elect to receive
distributions of cash dividends on Sempra Energy common stock. Prior to
the amendment, such employees were required to have cash dividends
reinvested.
TERMINATION OF THE PLAN - Although it has not expressed any intent to do
so, the Company has the right under the Plan to discontinue its
contributions and to terminate the Plan at any time subject to the
provisions of ERISA.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The Plan's financial statements are prepared on the
accrual basis of accounting.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of net assets
and disclosures at the date of the financial statements and the reported
changes in net assets during the reporting period. Actual results may
differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION - The Plan's investments are
stated at fair value based on quoted market prices. Loans are carried at
cost plus accrued interest which approximates fair value.
Purchases and sales of securities are recorded on the trade date. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
BENEFIT PAYMENTS - Payments are recorded when paid.
3. INVESTMENT INFORMATION
The Plan's investments were held by a bank-administered trust fund
through September 30, 1999. Beginning October 1, 1999, the Plan's
investments were transferred to a trust account at T. Rowe Price (see
Note 6). The fair values of the investments representing 5% or more of
the Plan's assets at December 31, 1998 are separately identified below.
-6-
Sempra Energy common stock:
Participant-directed $ 108,838
Nonparticipant-directed 96,707
Mutual funds:
Fidelity Select Equity Discipline Market Index Portfolio 88,583
Fidelity Select Equity Small Capitalization Collective Trust 32,682
Other 37,495
---------
Total Investments $ 364,305
=========
The net appreciation (depreciation) in the fair value of investments is
summarized as follows for the nine months ended September 30, 1999 and for
the year ended December 31, 1998:
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 DECEMBER 31, 1998
Sempra Energy common stock $ (59,648) $ (14,845)
Mutual funds 5,165 22,641
---------- ----------
Net appreciation (depreciation) $ (54,483) $ 7,796
========== ==========
4. TAX STATUS
On May 23, 1995, the Internal Revenue Service issued the Plan a
determination letter stating that the Plan, as then designed, was in
compliance with the applicable sections of the Internal Revenue Code (the
"IRC"), and the underlying trust is therefore exempt from taxation under
Section 501(a) of the IRC. The Plan has been amended since receiving the
determination letter. The Plan's administrator and the Plan's tax counsel
believe that the Plan is currently designed and being operated in
compliance with the applicable requirements of the IRC.
-7-
5. PARTICIPANT LOANS
Participants may borrow against the balances in their individual accounts
within the Plan. A participant is limited to borrowing a maximum of 50% of
the value of his/her account balance or $50,000, whichever is less. The
minimum amount that can be borrowed is $1,000, and the fee charged to
process each loan is paid by a participant who takes out the loan. All
loans have a maximum repayment period of five years. The loans bear
interest at 1% above the prime rate, as published in the Wall Street
Journal, at the time the loan is made.
6. INVESTMENTS IN THE MASTER TRUST
Beginning October 1, 1999, the Plan's assets are held in a trust
account at T. Rowe Price, the trustee of the Plan, and consist of an
interest in the Sempra Energy Savings Master Trust, (the "Master
Trust"). Use of the Master Trust permits the commingling of the trust
assets of two or more similar employee benefit plans sponsored by
Sempra Energy, for investment and administrative purposes. The Plan has
an approximate 36% interest in the net assets available for plan
benefits of the Master Trust at December 31, 1999.
Net earnings of the Master Trust are allocated daily by T. Rowe Price to
each participant account balance. Net earnings include interest income,
dividend income and net appreciation (depreciation) of investments.
Benefit payments, contributions and expenses are made on a
specific-identification basis.
The net assets available for plan benefits of the Master Trust at December
31, 1999 are summarized as follows:
Sempra Energy common stock $397,997
Mutual funds 444,210
Participant loans 15,835
--------
Net assets available for plan benefits $858,042
========
Net appreciation, dividends, and interest for the Master Trust for the
three months ended December 31, 1999 are as follows:
Net appreciation (depreciation) of investments:
Sempra Energy common stock $(55,951)
Mutual funds 42,675
Dividends 19,788
Interest 360
-8-
7. NONPARTICIPANT-DIRECTED INVESTMENTS
The Company's contributions to the Plan are invested solely in Sempra
Energy common stock and are therefore classified as
nonparticipant-directed investments. The Company is unable to separate
the activity of the participant-directed and nonparticipant-directed
components of the investment in Sempra Energy common stock prior to the
transfer from Union Bank to T. Rowe Price on October 1, 1999. Union Bank
did not segregate employer and employee purchased stock activity. The
trustee held all Sempra stock in one sub-trust account and separate
accounting is not available. As a result, all Plan investments in Sempra
Energy common stock are considered nonparticipant-directed. Information
about the net assets and the significant components of the changes in net
assets relating to the Sempra Energy common stock for the years ended
December 31, 1999 and 1998 are as follows:
1999 1998
NET ASSETS:
Sempra Energy
common stock in the Master Trust $ 137,574 $ 205,544
========= =========
CHANGES IN NET ASSETS:
Contributions $ 10,826 $ 8,898
Net investment loss (52,274) (1,342)
Benefits paid to participants (41,304) (42,714)
Fund transfers into Sempra Energy common stock 13,725 3,553
Transfers to plans of related entities 1,057 (382)
--------- ---------
$ (67,970) $ (31,987)
========= =========
8. CONTINGENCIES
In September 1997, a complaint was filed against the Company on behalf of
temporary employees and independent contractors employed by the Company
during the last 31 years. The plaintiffs allege that they are common law
employees of the Company and, as such, under a recent Ninth Circuit
decision, are and have been entitled to participate in the Company's
health and welfare, defined benefit and defined contribution plans. The
plaintiffs seek to recover past and future benefits under each plan. In
October 1997, the Company filed its answer to the complaint, denying the
appropriateness of the claim. The ultimate liability to the Plan, if any,
that may be assessed in this regard cannot presently be determined and
consequently, no provision has been recorded in the accompanying financial
statements.
-9-
SAN DIEGO GAS & ELECTRIC COMPANY SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
SERIES OF TRANSACTIONS INVOLVING SECURITIES OF THE SAME ISSUE:
PURCHASES SALES
------------------------------- ---------------------------------------------------------
NUMBER OF PURCHASE NUMBER OF SELLING COST NET
DESCRIPTION OF ASSET TRANSACTIONS PRICE TRANSACTIONS PRICE OF ASSET GAIN (LOSS)
Sempra Energy Common Stock 50 11,750,025 4 1,102,620 1,243,116 (140,496)
NOTE: The transactions included in this schedule meet the definition of
reportable transactions under Section 103 of the Employee Retirement Income
Security Act of 1974 and consist of single or series of transactions during
the year involving nonparticipant-directed investment assets of an amount in
excess of 5% of the fair value of Plan assets as of the beginning of the Plan
year.
-11-
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SEMPRA ENERGY
SAVINGS PLAN
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999 AND THE
PERIOD JULY 1, 1998 (INCEPTION) THROUGH DECEMBER 31, 1998 AND
INDEPENDENT AUDITORS' REPORT
SEMPRA ENERGY SAVINGS PLAN
TABLE OF CONTENTS
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PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Assets Available for Benefits as of December 31, 1999 and 1998 2
Statements of Changes in Assets Available for Benefits for the Year Ended
December 31, 1999 and the Period July 1, 1998 (Inception) through December
31, 1998 3
Notes to Financial Statements 4-7
All schedules required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974 are omitted because of the absence of conditions under which they are
required or as they are filed by the trustee of the Master Trust in which the
Plan participates.
INDEPENDENT AUDITORS' REPORT
Sempra Energy Savings Plan:
We have audited the accompanying statements of assets available for benefits
of Sempra Energy Savings Plan (the "Plan") as of December 31, 1999 and 1998,
and the related statements of changes in assets available for benefits for
the year ended December 31, 1999 and the period July 1, 1998 (inception)
through December 31, 1998. These financial statements are the responsibility
of the Plan's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the assets available for benefits of the Plan at December 31, 1999
and 1998, and the changes in assets available for benefits of the Plan for
the year ended December 31, 1999 and the period July 1, 1998 (inception)
through December 31, 1998 in conformity with accounting principles generally
accepted in the United States of America.
/s/ Deloitte & Touche LLP
June 23, 2000
-1-
SEMPRA ENERGY SAVINGS PLAN
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1999 1998
CASH AND CASH EQUIVALENTS $ 53 $ 15
--------- --------
INVESTMENTS:
At fair value:
Investment in Master Trust 114,802 89,755
--------- --------
RECEIVABLES:
Dividends 784
Employer contributions 755 89
Participating employee contributions 283
--------- --------
Total receivables 1,539 372
--------- --------
ASSETS AVAILABLE FOR BENEFITS $ 116,394 $ 90,142
========= ========
The accompanying notes are an integral part of these financial statements.
-2-
SEMPRA ENERGY SAVINGS PLAN
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1999 AND THE PERIOD JULY 1, 1998 (INCEPTION)
THROUGH DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1999 1998
ADDITIONS:
Net investment income:
Equity in net investment income of the Master Trust $ 469 $ 12,533
Less investment expenses 35 18
--------- --------
Net investment income 434 12,515
--------- --------
Contributions:
Employer 3,372 988
Participating employees 9,944 3,296
--------- --------
Total contributions 13,316 4,284
--------- --------
Transfers from plans of related entities and other additions 18,416 74,990
--------- --------
Total additions 32,166 91,789
DEDUCTIONS:
Distributions to participants or their beneficiaries 5,914 1,647
--------- --------
NET INCREASE 26,252 90,142
ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of period 90,142 0
--------- --------
End of period $ 116,394 $ 90,142
========= ========
The accompanying notes are an integral part of these financial statements.
-3-
SEMPRA ENERGY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND THE PERIOD JULY 1, 1998 (INCEPTION)
THROUGH DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
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1. PLAN DESCRIPTION AND RELATED INFORMATION
The following description of the Sempra Energy Savings Plan (the "Plan")
is provided for general information purposes only. Participants should
refer to the Plan document for a more complete description of the Plan's
provisions.
GENERAL - The Plan is a defined contribution plan, adopted on July 1,
1998, that provides employees of Sempra Energy or any affiliate who has
adopted this Plan (the "Company" or "Employer") with retirement benefits.
The Company was formed on June 26, 1998, upon the combination of Pacific
Enterprises and Enova Corporation. As a result of the combination,
employees were moved among the related companies of Sempra Energy and
their existing account balances in the savings plans in which they
participated were transferred to the appropriate company's savings plan,
if the employee requested in writing.
Employees may participate immediately in the Plan and, after one year in
which they complete 1,000 hours of service, receive an employer matching
contribution. Employees may make regular savings investments in Sempra
Energy common stock and other optional investments permitted by the Plan.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
Effective August 31, 1999, the Pacific Enterprise Retirement Savings Plan
(the "PE Plan") merged into the Plan and all PE Plan assets were
transferred into the Plan.
Effective December 31, 1999, the Plan was amended to allow all employees
of the Company who are employed on the last day of the Plan year to
participate in the discretionary incentive contribution.
ADMINISTRATION - Certain administrative functions are performed by
officers or employees of the Company. No such officer or employee receives
compensation from the Plan. Certain administrative expenses are paid
directly by the Company, such as legal and accounting fees. All investment
expenses are paid by the Plan, including recordkeeping, trustee fees and
investment management fees.
CONTRIBUTIONS - Contributions to the Plan can be made under the following
provisions:
PARTICIPATING EMPLOYEE CONTRIBUTIONS - Pursuant to Section 401(a)
of the Internal Revenue Code (the "IRC"), each participant may
contribute up to 15% of eligible pay on a pre-tax basis, an
after-tax basis, or a combination. Total individual pre-tax
contributions in calendar years 1999 and 1998 were limited by law
to $10,000 in each year.
EMPLOYER NONELECTIVE MATCHING CONTRIBUTIONS - The Company makes
matching contributions to the Plan equal to 50% of each
participant's contribution up to the first 6% of eligible pay. The
Company's contributions are invested in Sempra Energy common
stock.
DISCRETIONARY INCENTIVE CONTRIBUTION - If established performance
goals and targets of Sempra Energy are met in accordance with the
terms of the incentive match guidelines established each year, the
Company will make an additional matching contribution as
determined by the Board of
-4-
Directors of Sempra Energy. For 1999, an incentive contribution
of 3/4 of 1% of eligible compensation was made on March 15,
2000 to all employees employed on December 31, 1999. The
contribution was made in the form of Company stock. There were
no discretionary incentive contributions in 1998.
PARTICIPANT ACCOUNTS - Separate accounts are maintained for each
participant. Each participant employee's account is credited with the
participant's contributions and the Employer's nonelective matching
contribution, as well as an allocation of investment earnings of the Plan
and fees. Allocations are based on participants' contributions or account
balances, as defined in the Plan document.
VESTING - All participant accounts are fully vested and nonforfeitable at
all times.
INVESTMENT OPTIONS - All investments are held in a Master Trust (see Note
5). Employees elect to have their contributions invested in increments of
10% in Sempra Energy common stock or specific mutual funds offered by T.
Rowe Price Trust Company ("T. Rowe Price"), trustee of the Plan.
PAYMENT OF BENEFITS - Provisions of the Plan include certain restrictions
on the form and timing of distributions to withdrawing participants. In
general, benefits are payable upon retirement, death, disability or
termination of service.
PLAN TERMINATION - Although it has not expressed any intent to do so, the
Company has the right under the Plan to discontinue its contributions at
any time and to terminate the Plan subject to the provisions of ERISA.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The Plan maintains its financial statements on the
accrual basis of accounting.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of net assets
and disclosures at the date of the financial statements and the reported
changes in net assets during the reporting period. Actual results could
differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION - The Plan's investments are
stated at fair value based on quoted market prices. Loans are carried at
cost plus accrued interest which approximates fair value.
Purchases and sales of securities are recorded on trade date. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
BENEFIT PAYMENTS - Payments are recorded when paid.
RECLASSIFICATIONS - Certain amounts in the 1998 financial statements have
been reclassified to conform to the 1999 presentation.
3. TAX STATUS
The Company has not yet requested from the Internal Revenue Service a
determination letter stating that the Plan, as designed, is in compliance
with the applicable requirements of the IRC. The Plan's administrator and
tax counsel believe that the Plan is designed and operated in accordance
with the applicable sections of the IRC, and that the underlying trust is
exempt from taxation under Section 501(a) of the IRC.
-5-
4. PARTICIPANT LOANS
The Participants may borrow against the balances in their individual
accounts within the Plan. A participant is limited to borrowing a maximum
of 50% of the value of his/her account balance or $50,000, whichever is
less. The minimum amount that can be borrowed is $1,000, and the fee
charged to process a loan is paid by the participant who takes out the
loan. Loans have a maximum repayment period of five years. The loans bear
interest at 1% above the prime rate, as published in the Wall Street
Journal, at the time the loan is made.
5. INVESTMENTS IN THE MASTER TRUST
The Plan's assets are held in a trust account at T. Rowe Price, the
trustee of the Plan, and consist of an interest in the Sempra Energy
Savings Master Trust (the "Master Trust"). Use of the Master Trust
permits the commingling of the trust assets of two or more similar
employee benefit plans sponsored by Sempra Energy for investment and
administrative purposes. The Plan has an approximate interest of 13%
and 15% in the net assets available for plan benefits of the Master
Trust at December 31, 1999 and 1998, respectively.
Net earnings of the Master Trust are allocated daily by T. Rowe Price to
each participant account balance. Net earnings include interest income,
dividend income and net appreciation (depreciation) of investments.
Benefit payments, contributions and expenses are made on a
specific-identification basis.
The net assets available for plan benefits of the Master Trust at December
31, 1999 and 1998 are summarized as follows:
1999 1998
Sempra Energy common stock $ 397,997 $ 359,143
Mutual funds 444,210 217,870
Participant loans 15,835 15,675
----------- -----------
Total $ 858,042 $ 592,688
=========== ===========
Net appreciation, dividend and interest income of the Master Trust for the
year ended December 31, 1999 and the six months ended December 31, 1998 is
summarized as follows:
YEAR SIX MONTHS
ENDED ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
Net appreciation (depreciation) of investments:
Sempra Energy common stock $ (120,700) $ (29,268)
Mutual funds 47,813 12,940
Dividends 38,051 9,154
Interest 1,340 651
-6-
6. NONPARTICIPANT-DIRECTED INVESTMENTS
The Company's contributions to the Plan are invested solely in Sempra
Energy common stock. These contributions are classified as
nonparticipant-directed investments. Information about the net assets and
the significant components of the changes in net assets relating to the
nonparticipant-directed investments for the year ended December 31, 1999
and the period July 1, 1998 (inception) through December 31, 1998 are as
follows:
DECEMBER 31,
1999 1998
NET ASSETS:
Sempra Energy
common stock in the Master Trust $ 21,401 $ 21,355
========== ==========
YEAR ENDED SIX MONTHS
DECEMBER 31, 1999 DECEMBER 31, 1998
CHANGES IN NET ASSETS:
Contributions $ 3,372 $ 988
Net investment (loss) income (6,430) 3,648
Benefits paid to participants (1,274) (496)
Transfers from plans of related entities 4,378 17,215
---------- ----------
$ 46 $ 21,355
========== ==========
* * * * * *
-7-
- --------------------------------------------------------------------------------
SEMPRA ENERGY TRADING RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999, AND 1998
INDEPENDENT AUDITORS' REPORT
SEMPRA ENERGY TRADING RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 and 1998 AND FOR THE YEARS THEN
ENDED:
Statement of Assets Available for Benefits 2
Statement of Changes in Assets Available for Benefits 3
Notes to Financial Statements 4-7
All schedules required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974 are omitted because of the absence of conditions under which they are
required or as they are filed by the Trustee of the Master Trust in which the
Plan participates.
INDEPENDENT AUDITORS' REPORT
Sempra Energy Trading Retirement Savings Plan:
We have audited the accompanying statements of assets available for benefits
of Sempra Energy Trading Retirement Savings Plan (the "Plan") as of December
31, 1999 and 1998, and the related statements of changes in assets available
for benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the assets available for benefits of the Plan at December 31, 1999
and 1998, and the changes in assets available for benefits for the years then
ended in conformity with accounting principles generally accepted in the
United States of America.
/s/ Deloitte & Touche LLP
June 23, 2000
-1-
SEMPRA ENERGY TRADING RETIREMENT SAVINGS PLAN
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1999 1998
INVESTMENTS:
At fair value:
Investment in Master Trust $ 4,742
Participant loans $ 32
Mutual funds 2,167
Sempra Energy common stock 934
-------- --------
Total investments 4,742 3,133
-------- --------
RECEIVABLES:
Employer contributions 102
Dividends 22
-------- --------
Total receivables 124
-------- --------
ASSETS AVAILABLE FOR BENEFITS $ 4,866 $ 3,133
======== ========
The accompanying notes are an integral part of these financial statements.
-2-
SEMPRA ENERGY TRADING RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1999 AND 1998
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1999 1998
ADDITIONS:
Net investment income:
Equity in net investment income of the Master Trust $ 224
Net appreciation in fair value of investments $ 43
Interest and dividends 93
-------- --------
Total investment income 224 136
Less investment expenses 6 7
-------- --------
Net investment income 218 129
-------- --------
Contributions:
Employer 516 350
Participating employees 1,412 1,142
-------- --------
Total contributions 1,928 1,492
-------- --------
Transfers (to) from plans of related entities (315) 1,544
-------- --------
Total additions 1,831 3,165
DEDUCTIONS:
Distributions to participants or their beneficiaries 98 32
-------- --------
NET INCREASE 1,733 3,133
ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 3,133 0
-------- --------
End of year $ 4,866 $ 3,133
======== =========
The accompanying notes are an integral part of these financial statements.
-3-
SEMPRA ENERGY TRADING RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999 AND 1998
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1. PLAN DESCRIPTION AND RELATED INFORMATION
The following description of the Sempra Energy Trading Retirement Savings
Plan (the "Plan") is provided for general information purposes only.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
GENERAL - The Plan is a defined contribution plan adopted on January 1,
1998, that provides employees of Sempra Energy Trading or any affiliate
who has adopted this Plan (the "Company" or "Employer") with retirement
benefits. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA").
At June 26, 1998, Pacific Enterprises, the holder of a 50% interest in the
Company, and Enova Corporation, the holder of the other 50% interest in
the Company, combined into a new company named Sempra Energy. As a result
of the combination, employees were moved among the related companies of
Sempra Energy and their existing account balances in the savings plans in
which they participated were transferred to the appropriate company's
savings plan, if the employee requested in writing.
Effective July 1, 1998, the Plan was amended to allow for immediate Plan
participation for salary deferrals.
Effective December 31, 1999, the Plan was amended to allow all employees
of the Company who are employed on the last day of the Plan year to
participate in the discretionary incentive contribution.
ADMINISTRATION - Certain administrative functions are performed by
officers or employees of the Company. No such officer or employee receives
compensation from the Plan. Certain administrative expenses are paid
directly by the Company, such as legal and accounting fees. All investment
expenses are paid by the Plan, including recordkeeping, trustee fees and
investment management fees.
CONTRIBUTIONS - Contributions to the Plan can be made under the following
provisions:
PARTICIPATING EMPLOYEE CONTRIBUTIONS - Pursuant to Section 401(a) of
the Internal Revenue Code (the "IRC"), each participant may
contribute, on a pre-tax basis, up to 9% of eligible pay. Additional
after-tax contributions may be made up to a total contribution (before
and after-tax) of 14% of a participant's base pay. Total individual
pre-tax contributions in calendar years 1999 and 1998 were limited by
law to $10,000 in each year.
Effective January 1, 1999, the Plan was amended to allow each
participant to contribute, on a pre-tax and post-tax basis, up to 15%
of eligible pay.
EMPLOYER NONELECTIVE MATCHING CONTRIBUTION - After one year of service
in which an employee worked at least 1,000 hours of service, the
Company makes contributions to the Plan based on the participant's
contributions and years of service as follows:
Less than five years of service.....1/3 of participant contributions up to 6% of eligible pay
Five to ten years of service........2/3 of participant contributions up to 6% of eligible pay
Ten years or more of service........100% of participant contributions up to 6% of eligible pay
-4-
The Company will also provide an additional matching contribution of
15% of the participant's total pre-tax contribution, subject to
certain limitations described in the Plan document.
The Company's matching contributions are invested in Sempra Energy
common stock.
DISCRETIONARY INCENTIVE CONTRIBUTION - If established performance
goals and targets of Sempra Energy are met in accordance with the
terms of the incentive match guidelines established each year, the
Company will make an additional matching contribution as determined by
the Board of Directors of Sempra Energy. For 1999, an incentive
contribution of 3/4 of 1% of eligible compensation was made on March
15, 2000 to all employees employed on December 31, 1999. The
contribution was made in the form of Company stock. There were no
discretionary incentive contributions in 1998.
PARTICIPANT ACCOUNTS - Separate accounts are maintained for each
participant. Each participant employee's account is credited with the
participant's contributions, allocations of the Employer's non-elective
matching contribution, investment earnings of the Plan and fees.
Allocations are based on participants' contributions or account balances,
as defined in the Plan document.
VESTING - All participant accounts are fully vested and nonforfeitable at
all times.
INVESTMENT OPTIONS - Employees elect to have their contributions invested
in increments of 10% in Sempra Energy common stock or specific mutual
funds offered by T. Rowe Price Trust Company ("T. Rowe Price"), trustee
of the Plan.
PAYMENT OF BENEFITS - Provisions of the Plan include certain restrictions
on the form and timing of distributions to withdrawing participants. In
general, benefits are payable upon retirement, death, disability or
termination of service.
PLAN TERMINATION - Although it has not expressed any intent to do so, the
Company has the right under the Plan to discontinue its contributions at
any time and to terminate the Plan subject to the provisions of ERISA.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The Plan maintains its financial statements on the
accrual basis of accounting.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of net assets
and disclosures at the date of the financial statements and the reported
changes in net assets during the reporting period. Actual results could
differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION - The Plan's investments are
stated at fair value based on quoted market prices. Loans are carried at
cost plus accrued interest, which approximates fair value.
Purchases and sales of securities are recorded on the trade date. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
BENEFIT PAYMENTS - Payments are recorded when paid.
-5-
3. INVESTMENTS
The Plan's investments were held by T. Rowe Price Trust Company, the
trustee, for the year ended December 31, 1998 and in a Master Trust for
the year ended December 31, 1999 (see Note 6). Investments that represent
5% or more of the Plan's net assets at December 31, 1998 are as follows:
Sempra Energy common stock:
Participant-directed $ 200
Nonparticipant-directed 734
T. Rowe Price Mutual Funds:
Equity Index Fund 610
Personal Strategy Income Fund 355
Personal Strategy Growth Fund 288
New Horizons Fund 286
International Stock Fund 234
Personal Strategy Balanced Fund 212
The net appreciation in the fair value of investments is summarized as
follows for the year ended December 31, 1998:
Sempra Energy common stock $ (12)
Mutual funds 55
-------
Total $ 43
=======
4. TAX STATUS
The Company has not yet requested from the Internal Revenue Service a
determination letter stating that the Plan, as designed, is in compliance
with the applicable requirements of the IRC. The Plan's administrator and
tax counsel believe that the Plan is designed and operated in accordance
with the applicable sections of the IRC, and that the underlying trust is
exempt from taxation under Section 501(a) of the IRC.
5. PARTICIPANT LOANS
The Plan permits participants to borrow against the balances in their
individual accounts within the Master Trust. A participant is limited to
borrowing a maximum of 50% of the value of his/her account balance or
$50,000, whichever is less. The minimum amount that can be borrowed is
$1,000, and the fee charged for processing a loan is paid by the
participant who takes out the loan. Loans have a maximum repayment period
of five years. The loans bear interest at 1% above the prime rate, as
published in the Wall Street Journal, at the time the loan is made.
6. INVESTMENTS IN THE MASTER TRUST
Effective January 1, 1999, the Plan's assets are held in a trust
account at T. Rowe Price, the trustee of the Plan, and consist of an
interest in the Sempra Energy Savings Master Trust, (the "Master
Trust"). Use of the Master Trust permits the commingling of the trust
assets of two or more similar employee benefit plans sponsored by
Sempra Energy, for investment and administrative purposes. The Plan has
an approximate 1% interest in the net assets available for plan
benefits of the Master Trust at December 31, 1999.
-6-
Net earnings of the Master Trust are allocated daily by T. Rowe Price to
each participant account balance. Net earnings include interest income,
dividend income and net appreciation (depreciation) of investments.
Benefit payments, contributions and expenses are made on a
specific-identification basis.
The net assets available for plan benefits of the Master Trust at December
31, 1999 are summarized as follows:
Sempra Energy common stock $ 397,997
Mutual funds 444,210
Participant loans 15,835
----------
Net assets available for plan benefits $ 858,042
==========
Net appreciation, dividends, and interest for the Master Trust for the
year ended December 31, 1999 are as follows:
Net appreciation (depreciation) of investments:
Sempra Energy common stock $ (120,700)
Mutual funds 47,813
Dividends 38,051
Interest 1,340
7. NONPARTICIPANT-DIRECTED INVESTMENTS
The Company's contributions to the Plan are invested solely in Sempra
Energy common stock. These contributions are classified as
nonparticipant-directed investments. Information about the net assets and
the significant components of the changes in net assets relating to the
nonparticipant-directed investments for the years ended December 31, 1999
and 1998 are as follows:
1999 1998
NET ASSETS:
Sempra Energy
common stock (included in Master Trust at December 31, 1999) $ 922 $ 733
====== ======
CHANGES IN NET ASSETS:
Contributions $ 516 $ 350
Net investment (loss) income (240) 9
Benefits paid to participants (14) (11)
Transfers (to) from plans of related entities (73) 385
------ ------
$ 189 $ 733
====== ======
* * * * * *
-7-
- --------------------------------------------------------------------------------
SOUTHERN CALIFORNIA GAS COMPANY RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 AND
INDEPENDENT AUDITORS' REPORT
SOUTHERN CALIFORNIA GAS COMPANY
RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 AND 1998 AND FOR THE YEARS THEN
ENDED:
Statements of Assets Available for Benefits 2
Statements of Changes in Assets Available for Benefits 3
Notes to Financial Statements 4-7
All schedules required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974 are omitted because of the absence of conditions under which they are
required or as they are filed by the trustee of the Master Trust in which the
Plan participates.
INDEPENDENT AUDITORS' REPORT
Southern California Gas Company Retirement Savings Plan:
We have audited the accompanying statements of assets available for benefits
of Southern California Gas Company Retirement Savings Plan (the "Plan") as of
December 31, 1999 and 1998, and the related statements of changes in assets
available for benefits for the years then ended. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the assets available for benefits of the Plan at December 31, 1999
and 1998, and the changes in assets available for benefits of the Plan for
the years then ended in conformity with accounting principles generally
accepted in the United States of America.
/s/ Deloitte & Touche LLP
June 23, 2000
-1-
SOUTHERN CALIFORNIA GAS COMPANY
RETIREMENT SAVINGS PLAN
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1999 1998
CASH AND CASH EQUIVALENTS $ 49 $ 1
---------- ----------
INVESTMENTS:
At fair value:
Investment in Master Trust 425,008 482,967
---------- ----------
RECEIVABLES:
Dividends 4,279
Employer contributions 650 230
Participating employee contributions 639
Interest 45
---------- ----------
Total receivables 4,929 914
---------- ----------
ASSETS AVAILABLE FOR BENEFITS $ 429,986 $ 483,882
========== ==========
The accompanying notes are an integral part of these financial statements.
-2-
SOUTHERN CALIFORNIA GAS COMPANY
RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1999 AND 1998
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1999 1998
ADDITIONS:
Net investment income:
Equity in net investment (loss) income of the Master Trust $ (51,789) $ 50,907
Less investment expenses 186 255
---------- ----------
Net investment (loss) income (51,975) 50,652
---------- ----------
Contributions:
Employer 7,108 7,248
Participating employees 18,411 19,744
---------- ----------
Total contributions 25,519 26,992
---------- ----------
Net additions (26,456) 77,644
DEDUCTIONS:
Distributions to employees, retirees or their beneficiaries 26,049 84,122
TRANSFERS TO PLANS OF RELATED ENTITIES 1,391 25,841
---------- ----------
NET DECREASE (53,896) (32,319)
ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 483,882 516,201
---------- ----------
End of year $ 429,986 $ 483,882
========== ==========
The accompanying notes are an integral part of the financial statements.
-3-
SOUTHERN CALIFORNIA GAS COMPANY
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1. PLAN DESCRIPTION AND RELATED INFORMATION
The following description of the Southern California Gas Company
Retirement Savings Plan (the "Plan") is provided for general information
purposes only. Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
GENERAL - The Plan is a defined contribution plan that provides employees
of Southern California Gas Company or any affiliate who has adopted this
Plan (the "Company" or "Employer") with retirement benefits. Employees may
participate upon completion of one year of service, in which they work
1,000 hours, and may make regular savings investments in Sempra Energy,
formerly Pacific Enterprises, common stock and other optional investments
permitted by the Plan. The Plan also permits employees to defer part of
their earnings on a pre-tax basis. Effective July 1, 1998, the Plan was
amended to allow for immediate plan participation for salary deferrals for
employees not covered by a collective bargaining agreement. The Plan is
subject to the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA").
At June 26, 1998, Pacific Enterprises, the holding company for Southern
California Gas Company, and Enova Corporation, the holding company for San
Diego Gas & Electric Company, combined into a new company named Sempra
Energy. As a result of the combination, each outstanding share of common
stock of Pacific Enterprises was converted into 1.5038 shares of common
stock of Sempra Energy, and each outstanding share of common stock of
Enova Corporation was converted into one share of common stock of Sempra
Energy. The combination was approved by the shareholders of both companies
on March 11, 1997. As a result of the combination, employees were moved
among the related companies of Sempra Energy and their existing account
balances in the savings plans in which they participated were transferred
to the appropriate company's savings plan, if the employee requested in
writing.
Effective October 1, 1998, the Plan was amended to give active employees
the option to receive distributions of cash dividends on the shares of
Sempra Energy common stock in their account balances or to reinvest the
dividends in Sempra Energy common stock. Dividends will automatically be
passed through to former employees who have terminated or retired and
elected to leave their accounts in the Plan.
Effective December 31, 1999, the Plan was amended to allow all employees
of the Company who are employed on the last day of the Plan year to
participate in the discretionary incentive contribution.
ADMINISTRATION - Certain administrative functions are performed by
officers or employees of the Company. No such officer or employee receives
compensation from the Plan. Certain administrative expenses are paid
directly by the Company, such as legal and accounting fees. All investment
expenses are paid by the Plan, including recordkeeping, trustee fees and
investment management fees.
-4-
CONTRIBUTIONS - Contributions to the Plan can be made under the following
provisions:
PARTICIPATING EMPLOYEE CONTRIBUTIONS: NON-REPRESENTED EMPLOYEES -
Pursuant to Section 401(a) of the Internal Revenue Code (the "IRC"),
each participant may contribute up to 15% of base pay on a pre-tax
basis, after-tax basis, or a combination. Prior to June 1, 1998,
contributions by non-represented employees were limited to 14% of
base pay with a maximum of 9% on a pre-tax basis. Total individual
pre-tax contributions in calendar years 1999 and 1998 were limited by
law to $10,000 in each year.
PARTICIPATING EMPLOYEE CONTRIBUTIONS: REPRESENTED EMPLOYEES -
Pursuant to Section 401(a) of the IRC, each participant may
contribute up to 14% (up to 9% pre-tax) of base pay for represented
employees. Total individual pre-tax contributions in calendar years
1999 and 1998 were limited by law to $10,000 in each year.
EMPLOYER NONELECTIVE MATCHING CONTRIBUTION - The Company makes
matching contributions to the Plan equal to 50% of each participant's
contribution, up to the first 6% of eligible pay. The Company's
contributions are invested in Sempra Energy (formerly Pacific
Enterprises) common stock. Employer contributions have been funded in
part from the Sempra Energy Stock Ownership Plan and Trust (formerly
Pacific Enterprises Stock Ownership Plan and Trust).
DISCRETIONARY INCENTIVE CONTRIBUTION - If established performance
goals and targets of Sempra Energy are met in accordance with the
terms of the incentive match guidelines established each year, the
Company will make an additional matching contribution as determined
by the Board of Directors of Sempra Energy. For 1999, an incentive
contribution of 3/4 of 1% of eligible compensation was made on March
15, 2000 to all employees employed on December 31, 1999. The
contribution was made in the form of Company stock. There were no
discretionary incentive contributions in 1998.
PARTICIPANT ACCOUNTS - Separate accounts are maintained for each
participant. Each participant employee's account is credited with the
participant's contributions, the Employer's nonelective matching
contributions, and an allocation of investment earnings and fees.
VESTING - All participant accounts are fully vested and nonforfeitable at
all times.
INVESTMENT OPTIONS - All investments are held in a Master Trust (see Note
5). Employees elect to have their contributions invested in increments of
10% in Sempra Energy common stock or specific mutual funds offered by T.
Rowe Price Trust Company ("T. Rowe Price"), trustee of the Plan.
PAYMENT OF BENEFITS - Provisions of the Plan include certain restrictions
on the form and timing of distributions to withdrawing participants. In
general, benefits are payable upon retirement, death, disability or
termination of service.
PLAN TERMINATION - Although it has not expressed any intent to do so, the
Company has the right under the Plan to discontinue its contributions at
any time and to terminate the Plan subject to the provisions ERISA.
-5-
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The Plan maintains its financial statements on the
accrual basis of accounting.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of net assets
and disclosures at the date of the financial statements and the reported
changes in net assets during the reporting period. Actual results could
differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION - The Plan's investments are
stated at fair value based on quoted market prices. Loans are carried at
cost plus accrued interest which approximates fair value.
Purchases and sales of securities are recorded on the trade date. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
BENEFIT PAYMENTS - Payments are recorded when paid. Assets available for
Plan benefits at December 31, 1999 and 1998 include $0 and $120,
respectively, for participants who have withdrawn from the Plan but have
not yet been paid their vested benefits.
RECLASSIFICATIONS - Certain amounts in the 1998 financial statements have
been reclassified to conform to the 1999 presentation.
3. TAX STATUS
On November 19, 1996, the Internal Revenue Service issued the Plan a
favorable determination letter stating that the Plan, as then designed was
in compliance with the applicable sections of the IRC, and the underlying
trust is therefore exempt from taxation under Section 501(a) of the IRC.
Once qualified, the Plan is required to operate in accordance with
applicable sections of the IRC and ERISA. The Plan has been amended since
receiving the determination letter. The Plan's administrator and the
Plan's tax counsel believe that the Plan is currently designed and being
operated in compliance with the applicable requirements of the IRC.
4. PARTICIPANT LOANS
The Plan permits participants to borrow against the balances in their
individual accounts within the Master Trust. A participant is limited to
borrowing a maximum of 50% of the value of his/her account balance or
$50,000, whichever is less. The minimum amount that can be borrowed is
$1,000, and the fee charged to process each loan is paid by each
participant who takes out a loan. All loans have a maximum repayment
period of five years. The loans bear interest at 1% above the prime rate,
as published in the Wall Street Journal, at the time the loan is made.
5. INVESTMENTS IN THE MASTER TRUST
The Plan's assets are held in a trust account at T. Rowe Price, the
trustee of the Plan, and consist of an interest in the Sempra Energy
Savings Master Trust, formerly the Pacific Enterprises Retirement
Savings Plan and Southern California Gas Company Retirement Savings
Plan Master Trust, (the "Master Trust"). Use of the Master Trust
permits the commingling of the trust assets of two or more similar
employee benefit plans sponsored by Sempra Energy, for investment and
administrative purposes. The Plan has an approximate interest of 50%
and 82% in the net assets available for plan benefits of the Master
Trust at December 31, 1999 and 1998, respectively.
-6-
Net earnings of the Master Trust are allocated daily by T. Rowe Price to
each participant account balance. Net earnings include interest income,
dividend income and net appreciation (depreciation) of investments.
Benefit payments, contributions and expenses are made on a
specific-identification basis.
The net assets available for plan benefits of the Master Trust at December
31, 1999 and 1998 are summarized as follows:
1999 1998
Sempra Energy common stock $ 397,997 $ 359,143
Mutual funds 444,210 217,870
Participant loans 15,835 15,675
---------- ---------
Net assets available for plan benefits $ 858,042 $ 592,688
========== =========
Net appreciation, dividends, and interest for the Master Trust for the
years ended December 31, 1999 and 1998 are as follows:
1999 1998
Net appreciation (depreciation) of investments:
Sempra Energy common stock $ (120,700) $ 23,278
Mutual funds 47,813 20,161
Dividends 38,051 23,384
Interest 1,340 1,372
6. NONPARTICIPANT-DIRECTED INVESTMENTS
The Company's contributions to the Plan are invested solely in Sempra
Energy common stock. These contributions are classified as
nonparticipant-directed investments. Information about the net assets and
the significant components of the changes in net assets relating to the
nonparticipant-directed investments for the years ended December 31, 1999
and 1998 are as follows:
1999 1998
NET ASSETS:
Sempra Energy
common stock in the Master Trust $ 96,212 $ 128,126
=========== ==========
CHANGES IN NET ASSETS:
Contributions $ 7,108 $ 7,248
Net investment (loss) income (32,957) 8,788
Benefits paid to participants (5,797) (23,183)
Transfers to plans of related entities (268) (6,711)
----------- ----------
$ (31,914) $ (13,858)
=========== ==========
* * * * *
-7-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Plans' sponsors have duly caused this annual report to be signed on their
behalf by the undersigned thereunto duly authorized.
San Diego Gas & Electric Company Savings Plan
Date: June 28, 2000 /s/ G. Joyce Rowland
-----------------------------------------------
G. Joyce Rowland, Senior Vice President
Sempra Energy Savings Plan
Date: June 28, 2000 /s/ G. Joyce Rowland
-----------------------------------------------
G. Joyce Rowland, Senior Vice President
Sempra Energy Trading Retirement Savings Plan
Date: June 28, 2000 /s/ G. Joyce Rowland
-----------------------------------------------
G. Joyce Rowland, Senior Vice President
Southern California Gas Company Retirement Savings Plan
Date: June 28, 2000 /s/ G. Joyce Rowland
-----------------------------------------------
G. Joyce Rowland, Senior Vice President
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
Numbers 333-51309 and 333-77843 on Form S-3 and Registration Statement Number
333-56161 on Form S-8 of Sempra Energy of our reports relating to Sempra
Energy Savings Plan, Sempra Energy Trading Retirement Savings Plan, Southern
California Gas Company Retirement Savings Plan, and San Diego Gas & Electric
Company Savings Plan dated June 23, 2000 appearing in the Annual Report on
Form 11-K of Sempra Energy for the year ended December 31, 1999.
/s/ Deloitte & Touche LLP
San Diego, California
June 28, 2000
