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, 1998 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, Pacific Enterprises 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
- ------------------------------------------------------------------------------- THE PACIFIC ENTERPRISES RETIREMENT SAVINGS PLAN FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 AND INDEPENDENT AUDITORS' REPORT
THE PACIFIC ENTERPRISES RETIREMENT SAVINGS PLAN TABLE OF CONTENTS - ------------------------------------------------------------------------------- PAGE INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998 AND 1997 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 4-9 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 Pacific Enterprises Retirement Savings Plan: We have audited the accompanying statements of assets available for benefits of Pacific Enterprises Retirement Savings Plan (the "Plan") as of December 31, 1998 and 1997, 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 generally accepted auditing standards. 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 referred to above present fairly, in all material respects, the assets available for benefits of the Plan at December 31, 1998 and 1997, and the changes in assets available for benefits for the years then ended in conformity with generally accepted accounting principles. /S/ DELOITTE & TOUCHE LLP June 11, 1999 - 1 -
PACIFIC ENTERPRISES RETIREMENT SAVINGS PLAN STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1998 AND 1997 (DOLLARS IN THOUSANDS) - ------------------------------------------------------------------------------- 1998 1997 CASH AND CASH EQUIVALENTS $ 8 INVESTMENTS: At fair value: Investment in Master Trust $ 19,839 51,147 Participant Loans 128 831 -------- ------ Total investments 19,967 51,978 -------- ------ RECEIVABLES: Employer contributions 3 Participating employee contributions 1 -------- Total receivables 4 -------- ASSETS AVAILABLE FOR BENEFITS $ 19,971 $51,986 -------- ------ -------- ------ The accompanying notes are an integral part of these financial statements. - 2 -
PACIFIC ENTERPRISES RETIREMENT SAVINGS PLAN STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS YEARS ENDED DECEMBER 31, 1998 AND 1997 (DOLLARS IN THOUSANDS) - ------------------------------------------------------------------------------- 1998 1997 ADDITIONS: Net investment income: Equity in net investment income of the Master Trust $ 4,754 $ 10,219 Less investment expenses 13 17 -------- -------- Net investment income 4,741 10,202 -------- -------- Contributions: Employer 612 955 Participating employees 2,056 2,799 -------- -------- Total contributions 2,668 3,754 -------- -------- Other 2 -------- -------- Total additions 7,409 13,958 -------- -------- DEDUCTIONS: Distributions to employees, retirees or their beneficiaries 9,801 2,151 Other 8 -------- -------- Total deductions 9,809 2,151 -------- -------- TRANSFERS (TO) FROM PLANS OF RELATED ENTITIES (29,615) 932 -------- -------- NET INCREASE (DECREASE) (32,015) 12,739 ASSETS AVAILABLE FOR PLAN BENEFITS: Beginning of year 51,986 39,247 -------- -------- End of year $ 19,971 $ 51,986 -------- -------- -------- -------- The accompanying notes are an integral part of these financial statements. - 3 -
PACIFIC ENTERPRISES RETIREMENT SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1998 AND 1997 (DOLLARS IN THOUSANDS) - ------------------------------------------------------------------------------- 1. PLAN DESCRIPTION AND RELATED INFORMATION The following description of the Pacific Enterprises 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 Pacific Enterprises or any affiliate who has adopted this Plan (the "Company" or "Employer") with retirement benefits. Through June 30, 1998, employees were required to complete one year in which they completed 1,000 hours of service in order to participate in the Plan, and make regular savings investments in Sempra Energy, formerly Pacific Enterprises, common stock and other optional investments permitted by the Plan. On July 1, 1998, the Plan was amended to allow for immediate plan participation for salary deferrals. 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. ADMINISTRATION - Certain administrative functions are performed by officers or employees of the Company. No such officer or employee receives compensation from the Plan. Administrative expenses are paid directly by the Company; however, investment expenses are paid by the Plan. 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 15% of base compensation. Additional after-tax contributions may be made up to a total contribution (before and after-tax) of 15% of each participant's base pay. Total individual pre-tax contributions in calendar years 1998 and 1997 were limited by law to $10,000 and $9,500, respectively. Prior to July 1, 1998, the maximum pre-tax contribution was 9% and the maximum total employee contribution was 14% of base compensation. EMPLOYER NONELECTIVE MATCHING CONTRIBUTIONS - After one year of service, the Company makes contributions to the Plan equal to 50% of each participant's contribution, up to the first 6%. The Company's contributions are invested in Sempra Energy (formerly Pacific Enterprises) common stock. Beginning October 1, 1992, employer contributions have been funded in part from the Pacific Enterprises Stock Ownership Plan and Trust. - 4 -
PARTICIPANT ACCOUNTS - Separate accounts are maintained for each participant. Each participant employee's account is credited with the participant's contributions and allocations of the Employer's nonelective 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 - Beginning April 1, 1996, all investments are held in a Master Trust (see Note 6). Employees elect to have their contributions invested in increments of 10% in Sempra Energy Common Stock or the following funds offered by T. Rowe Price, trustee of the Plan: BLENDED STABLE VALUE FUND - invests in investment contracts issued by high quality insurance companies and banks. PERSONAL STRATEGY BALANCED FUND - invests in a combination of stocks, bonds, and money market securities. PERSONAL STRATEGY INCOME FUND - invests in a combination of bonds, money market securities, and stocks. PERSONAL STRATEGY GROWTH FUND - invests in a combination of stocks, bonds, and money market securities. INTERNATIONAL STOCK FUND - invests primarily in common stocks of established, non-U.S. companies. NEW HORIZONS FUND - invests primarily in common stocks of small, rapidly growing companies. NEW INCOME FUND - invests primarily in marketable debt securities. PRIME RESERVE FUND - invests in high-quality, U.S. dollar-denominated money market securities with an average weighted maturity not exceeding 90 days. EQUITY INDEX FUND - invests in stocks of 500 U.S. companies. 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. - 5 -
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. Dividends are recorded on the ex-dividend date. BENEFIT PAYMENTS - Payments are recorded when paid. Net assets available for plan benefits at December 31, 1998 and 1997 include $256 and $22, respectively, for participants who have withdrawn from the Plan but have not yet been paid their vested benefits. 3. INVESTMENTS The Plan's investments were held by T. Rowe Price, the trustee, for the years ended December 31, 1998 and 1997. Investments that represent 5% or more of the Plan's net assets are identified below. DECEMBER 31, ------------------------ 1998 1997 Investment in Master Trust (Note 6) $19,839 $51,147 4. TAX STATUS On January 16, 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. 5. PARTICIPANT LOANS Effective April 1, 1996, the Plan was amended to allow participants to borrow against the balances in their individual accounts within the Plan. A participant is limited to borrowing a maximum of 50% of the present 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 processing a loan is paid by the 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 monthly in the Wall Street Journal at the time the loan is made. 6. 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, formerly Pacific Enterprises, for investment and administrative purposes. The Plan has an approximate 4% interest in the net assets available for plan benefits of the Master Trust at December 31, 1998. - 6 -
Net earnings of the Master Trust are allocated daily by T. Rowe Price to each participating 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, 1998 and 1997 are summarized as follows: 1998 1997 Sempra Energy (formerly Pacific Enterprises) common stock $359,143 $373,038 Equity Index Fund 124,475 99,830 Personal Strategy Balance Fund 26,497 26,862 Blended Stable Value Fund 24,437 25,614 Prime Reserve Fund 12,099 9,485 New Horizons Fund 11,811 7,668 Personal Strategy Growth Fund 6,515 4,326 International Stock Fund 5,929 3,382 Personal Strategy Income fund 2,405 1,535 New Income Fund 3,702 1,361 -------- -------- Total $577,013 $553,101 -------- -------- -------- -------- Net appreciation, dividends and interest income of the Master Trust for the years ended December 31, 1998 and 1997 are as follows: 1998 1997 Net appreciation of investments $43,439 $96,985 Dividends 23,384 21,080 Interest 1,372 1,207 - 7 -
7. BY FUND INFORMATION Information regarding significant additions to and deductions from assets available for benefits of the Plan by fund option for the years ended December 31, 1998 and 1997 are as follows: DISTRIBUTIONS PARTICIPATING NET TO PARTICIPANTS INTERFUND YEAR ENDED EMPLOYER EMPLOYEE INVESTMENT OR THEIR AND TRANSFERS DECEMBER 31, 1998 CONTRIBUTIONS CONTRIBUTIONS INCOME BENEFICIARIES (TO) FROM Sempra Energy Common Stock $ 612 $ 297 $ 1,221 $ 3,759 $ (13,013) Blended Stable Value Fund 223 168 963 (1,486) Personal Strategy Income Fund 22 37 176 4 Personal Strategy Balanced Fund 214 438 894 (2,870) Personal Strategy Growth Fund 379 58 65 (810) International Stock Fund 70 55 231 (403) New Horizons Fund 102 (50) 192 (618) New Income Fund 13 9 25 (9) Prime Reserve Fund 47 33 144 (476) Equity Index Fund 689 2,772 3,352 (9,311) Participant Loans (623) ----- -------- -------- -------- ---------- Total $ 612 $ 2,056 $ 4,741 $ 9,801 $ (29,615) ----- -------- -------- -------- ---------- ----- -------- -------- -------- ---------- - 8 -
DISTRIBUTIONS PARTICIPATING NET TO PARTICIPANTS INTERFUND YEAR ENDED EMPLOYER EMPLOYEE INVESTMENT OR THEIR AND TRANSFERS DECEMBER 31, 1997 CONTRIBUTIONS CONTRIBUTIONS INCOME BENEFICIARIES (TO) FROM Pacific Enterprises Common Stock $ 955 $ 549 $ 5,443 $ 998 $ (682) Blended Stable Value Fund 285 225 139 (618) Personal Strategy Income Fund 32 47 4 114 Personal Strategy Balanced Fund 337 699 128 139 Personal Strategy Growth Fund 86 62 31 303 International Stock Fund 159 (13) 26 319 New Horizons Fund 176 63 23 270 New Income Fund 10 8 1 47 Prime Reserve Fund 82 41 145 (23) Equity Index Fund 1,083 3,627 613 992 Participant Loans 43 71 ----- -------- -------- -------- -------- Total $ 955 $ 2,799 $ 10,202 $ 2,151 $ 932 ----- -------- -------- -------- -------- ----- -------- -------- -------- -------- 8. SUBSEQUENT EVENT Sempra Energy announced its intention to merge the Plan with the Sempra Energy Savings Plan effective August 31, 1999. * * * * * * - 9 -
- ------------------------------------------------------------------------------- SAN DIEGO GAS & ELECTRIC COMPANY SAVINGS PLAN FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997, SUPPLEMENTAL SCHEDULES FOR THE YEAR ENDED DECEMBER 31, 1998, AND INDEPENDENT AUDITORS' REPORT
SAN DIEGO GAS & ELECTRIC COMPANY SAVINGS PLAN TABLE OF CONTENTS - ------------------------------------------------------------------------------- PAGE INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998 AND 1997 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 SCHEDULES AS OF DECEMBER 31, 1998 AND FOR THE YEAR THEN ENDED: Item 27a - Schedule of Assets Held for Investment Purposes 9 Item 27d - Schedule of Reportable Transactions 10 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.
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, 1998 and 1997, 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 generally accepted auditing standards. 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, the financial statements referred to above present fairly, in all material respects, the assets available for benefits of the Plan as of December 31, 1998 and 1997, and the changes in assets available for benefits of the Plan for the years then ended in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of (1) assets held for investment purposes as of December 31, 1998, and (2) reportable transactions for the year ended December 31, 1998, are presented for the purpose of additional analysis and are not a required part of the basic 1998 financial statements, but are 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. These supplemental schedules are the responsibility of the Plan's management. Such supplemental schedules have been subjected to the auditing procedures applied in our audit of the basic 1998 financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic 1998 financial statements taken as a whole. /S/ DELOITTE & TOUCHE LLP June 11, 1999 - 1 -
SAN DIEGO GAS & ELECTRIC COMPANY SAVINGS PLAN STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1998 AND 1997 - ------------------------------------------------------------------------------- 1998 1997 CASH AND CASH EQUIVALENTS $ 746,705 $ 339,603 ------------ ------------ INVESTMENTS - At fair value: Sempra Energy common stock 205,544,250 246,152,063 Mutual funds 158,761,310 156,537,547 ------------ ------------ Total investments 364,305,560 402,689,610 ------------ ------------ RECEIVABLES: Dividends and interest 3,175,036 3,566,388 Employer contributions 107,918 116,769 Participating employee contributions 391,574 448,041 ------------ ------------ Total receivables 3,674,528 4,131,198 ------------ ------------ ASSETS AVAILABLE FOR BENEFITS $368,726,793 $407,160,411 ------------ ------------ ------------ ------------ 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, 1998 AND 1997 - ------------------------------------------------------------------------------- 1998 1997 ADDITIONS NET INVESTMENT INCOME: Net appreciation in fair value of investments $ 7,795,971 $ 65,391,664 Cash dividends on common stock of Plan sponsor 13,488,190 14,900,966 Interest and dividends 1,732,445 1,713,137 ------------- -------------- Total investment income 23,016,606 82,005,767 Less investment expenses 601,705 564,823 ------------- -------------- Net investment income 22,414,901 81,440,944 ------------- -------------- CONTRIBUTIONS: Employer 3,912,941 4,091,835 Participating employees 14,586,701 14,850,973 ------------- -------------- Total contributions 18,499,642 18,942,808 ------------- -------------- Total additions 40,914,543 100,383,752 ------------- -------------- DEDUCTIONS DISTRIBUTIONS TO PARTICIPANTS OR THEIR BENEFICIARIES 62,722,743 23,529,126 TRANSFERS TO PLANS OF RELATED ENTITIES 16,625,418 ------------- -------------- TOTAL DEDUCTIONS 79,348,161 23,529,126 ------------- -------------- NET (DECREASE) INCREASE (38,433,618) 76,854,626 ASSETS AVAILABLE FOR BENEFITS: BEGINNING OF YEAR 407,160,411 330,305,785 ------------- -------------- END OF YEAR $ 368,726,793 $ 407,160,411 ------------- -------------- ------------- -------------- 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, 1998 AND 1997 - ------------------------------------------------------------------------------- 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. On December 6, 1995, San Diego Gas & Electric Company ("SDG&E" or the "Company") announced the formation of Enova Corporation ("Enova") as the parent company for SDG&E and its unregulated subsidiaries. On January 1, 1996, Enova became the parent of SDG&E and the sponsor of the Plan. SDG&E's outstanding common stock was converted on a share-for-share basis to Enova common stock. 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. ELIGIBILITY - Substantially all regular employees of SDG&E and the other subsidiaries of Enova may enroll in the Plan if they have completed at least one year of service and are at least age 21. Effective January 1, 1999, the Plan was amended to allow for immediate Plan participation for salary deferrals and 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, within specified limits of up to 6% of the participant's basic compensation, as defined in the Plan document, based on the participant's age. Employer contributions are invested solely in common stock of Sempra Energy. Employer contributions are reduced by the fair value of common stock forfeited by participants under the terms of the Plan. - 4 -
Due to a Plan amendment effective January 1, 1998, the amount of the employer matching contribution provided to employees not covered by a collective bargaining agreement is no longer dependent upon the participant's age. As a result of the change, contributions in the amount of 6% of a nonclassified participant's pay are eligible for Company matching contributions of 50% of such amount. Effective January 1, 1999, the Plan was amended to make the same changes for employees covered by a collective bargaining agreement. INVESTMENT FUNDS - Participants may direct the investment of their contributions to the following fund options offered by the Plan: COMMON STOCK OF SEMPRA ENERGY FIDELITY INSTITUTIONAL CASH PORTFOLIOS MONEY MARKET PORTFOLIO - Invests in a portfolio of money market instruments. FIDELITY SELECT EQUITY DISCIPLINE MARKET INDEX PORTFOLIO - Invests in large capitalization publicly traded stocks. FIDELITY SELECT INTERNATIONAL EQUITY PORTFOLIO - Invests in the common stocks of companies based outside the United States. FIDELITY SELECT EQUITY SMALL CAPITALIZATION COLLECTIVE TRUST - Invests in the common or preferred stocks of smaller companies. FIDELITY U.S. BOND INDEX PORTFOLIO - Invests in a diversified portfolio of long-term, investment-grade bonds with ten to thirty year maturities. Participants may transfer their funds among investment options and change their contribution percentage and allocation monthly. PARTICIPANT ACCOUNTS - Each participant's account is credited with the participant's contribution and allocations of (a) the employer's contribution and (b) Plan earnings, and charged with an allocation of administrative expenses. Allocations are calculated in accordance with provisions of the Plan. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. VESTING - Participants' contributions plus actual earnings thereon are fully and immediately vested. Prior to June 30, 1995, the employer's contributions vested after five years of employment; effective July 1, 1995, the employer's contributions fully and immediately vest for all employees not governed by a collective bargaining agreement. A participant is fully vested in the event of early or normal retirement, death, or total and permanent disability, as defined in the Plan document. Effective January 1, 1999, the Plan was amended to allow for immediate vesting for employees governed by a collective bargaining agreement. 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 - Effective December 1, 1994, the Plan became a defined contribution Employee Stock Ownership Plan ("ESOP"). The ESOP must invest in the Plan sponsor's stock. Under the terms of the ESOP, cash dividends on Sempra Energy's stock are required to be distributed to participants who are former employees of Enova or the Company. Active employees not covered by a collective bargaining agreement have the option to elect to receive distributions of cash dividends on Sempra Energy's stock in their accounts or to have the dividends reinvested in Sempra Energy stock. Active employees covered by a collective bargaining agreement must have cash dividends reinvested. - 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 stock. TAX STATUS - The Company received its latest determination letter from the Internal Revenue Service dated May 23, 1995, indicating the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, they believe the Plan is qualified and the related trust is tax-exempt. 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. Upon termination of the Plan, the participants become 100% vested in their accounts. SIGNIFICANT ACCOUNTING POLICIES - The Plan's financial statements are prepared on the accrual basis of accounting. Investments are carried at fair value based on quoted market prices. Investment transactions are accounted for on the trade date. Dividend income is recorded on the ex-dividend date. Participant distributions are recorded when paid. ACCOUNTING ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles requires Plan management to make estimates and assumptions that affect the reported amounts of assets at the date of the financial statements and the reported amounts of additions and deductions during the reporting period. Actual results may differ from those estimates. 2. INVESTMENT INFORMATION The Plan's investments are held by a bank-administered trust fund. The fair values of the investments representing 5% or more of the Plan's assets at December 31, 1998 and 1997 are separately identified below. 1998 1997 Sempra Energy common stock: Participant Directed $ 108,837,678 $ 131,151,028 Non-Participant Directed 96,706,572 115,001,035 Mutual funds: Fidelity Select Equity Discipline Market Index Portfolio 88,583,057 76,515,616 Fidelity Select Equity Small Capitalization Collective Trust 32,682,524 39,542,789 Other 37,495,729 40,479,142 ------------- ------------- Total Investments $ 364,305,560 $ 402,689,610 ------------- ------------- ------------- ------------- The net appreciation (depreciation) in the fair value of investments is summarized as follows for the years ended December 31, 1998 and 1997: 1998 1997 Sempra Energy common stock $ (14,845,131) $ 38,280,914 Mutual funds 22,641,102 27,110,750 ------------- ------------- Net appreciation $ 7,795,971 $ 65,391,664 ------------- ------------- ------------- ------------- - 6 -
3. BY FUND INFORMATION Information regarding significant additions to and deductions from assets available for benefits by fund option for the years ended December 31, 1998 and 1997 are as follows: DISTRIBUTIONS TRANSFERS TO PARTICIPATING NET TO PARTICIPANTS PLANS OF EMPLOYER EMPLOYEE INVESTMENT OR THEIR RELATED 1998 CONTRIBUTIONS CONTRIBUTIONS INCOME BENEFICIARIES ENTITIES PARTICIPANT DIRECTED Sempra Energy Common Stock $ 4,985,094 $ (476,097) $ 23,337,488 $ 208,421 Fidelity Institutional Cash Portfolios Money Market Portfolio 612,037 769,346 4,172,810 1,568,400 Fidelity Select Equity Discipline Market Index Portfolio 4,542,871 21,427,539 8,265,390 7,959,800 Fidelity Select International Equity Portfolio 967,525 1,852,497 1,206,344 1,291,632 Fidelity Select Equity Small Capitalization Collective Trust 2,730,577 (1,442,878) 3,669,834 3,840,630 Fidelity U.S. Bond Index Portfolio 748,597 1,150,890 2,694,569 1,583,491 NON-PARTICIPANT DIRECTED Sempra Energy Common Stock $3,912,941 (866,396) 19,376,308 173,044 ---------- ----------- ----------- ----------- ------------ Total $3,912,941 $14,586,701 $22,414,901 $62,722,743 $16,625,418 ---------- ----------- ----------- ----------- ------------ ---------- ----------- ----------- ----------- ------------ - 7 -
DISTRIBUTIONS PARTICIPATING NET TO PARTICIPANTS EMPLOYER EMPLOYEE INVESTMENT OR THEIR 1997 CONTRIBUTIONS CONTRIBUTIONS INCOME BENEFICIARIES PARTICIPANT DIRECTED Enova Corporation Common Stock $ 5,322,243 $29,764,590 $ 9,452,623 Fidelity Institutional Cash Portfolios Money Market Portfolio 743,529 826,443 1,213,355 Fidelity Select Equity Discipline Market Index Portfolio 4,239,882 17,529,084 3,077,916 Fidelity Select International Equity Portfolio 1,095,141 402,931 431,472 Fidelity Select Equity Small Capitalization Collective Trust 2,660,543 8,377,150 1,462,797 Fidelity U.S. Bond Index Portfolio 789,635 1,088,420 656,460 NON-PARTICIPANT DIRECTED Enova Corporation Common Stock 4,091,835 23,452,326 7,234,503 ---------- ----------- ----------- ----------- Total $4,091,835 $14,850,973 $81,440,944 $23,529,126 ---------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- 4. 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 Court of Appeals 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, if any, that may be assessed in this regard cannot presently be determined and would be assessed against the Plan sponsor rather than the Plan. Consequently, no provision has been recorded in the accompanying financial statements. 5. SUBSEQUENT EVENT The Company has 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 effective October 1, 1999. In addition, the Plan will allow participant loans. * * * * * * - 8 -
SAN DIEGO GAS & ELECTRIC COMPANY SAVINGS PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1998 --------------------------------------------------------------------------- FAIR DESCRIPTION COST VALUE CASH Highmark Money Market Diversified Obligations Fund $ 729,910 $ 729,910 * Union Bank of California Interest Bearing Cash 16,795 16,795 -------------- ------------ Total Cash $ 746,705 $ 746,705 -------------- ------------ -------------- ------------ * SEMPRA ENERGY COMMON STOCK $142,671,643 $205,544,250 -------------- ------------ MUTUAL FUNDS Fidelity Select Equity Discipline Market Index Portfolio 38,497,862 88,583,057 Fidelity Select Equity Small Capitalization Collective Trust 23,435,193 32,682,524 Fidelity Institutional Cash Portfolios Money Market Portfolio 12,976,637 12,976,637 Fidelity U.S. Bond Index Portfolio 12,973,436 13,295,719 Fidelity Select International Equity Portfolio 8,716,215 11,223,373 -------------- ------------ Total Mutual Funds 96,599,343 158,761,310 -------------- ------------ TOTAL INVESTMENTS $239,270,986 $364,305,560 -------------- ------------ -------------- ------------ * Party-in-interest - 9 -
SAN DIEGO GAS & ELECTRIC COMPANY SAVINGS PLAN ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS YEAR ENDED DECEMBER 31, 1998 - ------------------------------------------------------------------------------- SERIES OF TRANSACTIONS INVOLVING SECURITIES OF THE SAME ISSUE: PURCHASES ---------------------------------------- NUMBER OF PURCHASE DESCRIPTION OF ASSET TRANSACTIONS PRICE Highmark Money Market Diversified Obligations Fund 65 $ 41,591,643 Fidelity Institutional Cash Portfolios Money Market Portfolio 83 12,422,087 Fidelity Select Equity Discipline Market Index Portfolio 35 8,032,733 Enova Corporation Common Stock* 53 9,198,003 Sempra Corporation Common Stock* 3 256,738,629 SINGLE REPORTABLE TRANSACTIONS INVOLVING SECURITIES OF THE SAME ISSUE: Enova Corporation Common Stock* Sempra Energy Corporation Common Stock* 254,333,364 SALES ------------------------------------------------------------------------------- NUMBER OF SELLING COST NET DESCRIPTION OF ASSET TRANSACTIONS PRICE OF ASSET GAIN Highmark Money Market Diversified Obligations Fund 70 $ 41,185,696 $ 41,185,696 - Fidelity Institutional Cash Portfolios Money Market Portfolio 47 15,913,425 15,913,425 - Fidelity Select Equity Discipline Market Index Portfolio 53 17,592,889 8,408,715 $ 9,184,174 Enova Corporation Common Stock* 8 257,047,093 245,243,617 11,803,476 Sempra Corporation Common Stock* 7 5,836,498 4,144,010 1,692,488 SINGLE REPORTABLE TRANSACTIONS INVOLVING SECURITIES OF THE SAME ISSUE: Enova Corporation Common Stock* 254,333,364 243,469,810 10,863,554 Sempra Energy Corporation Common Stock* * As a result of the June 26, 1998 merger of Enova Corporation and Pacific Enterprises forming Sempra Energy all shares of Enova Corporation stock held by the Plan were converted on a one-for-one basis into Sempra Energy shares. 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 investment assets of an amount in excess of 5% of the fair value of Plan assets as of the beginning of the Plan year. - 10 -
- ------------------------------------------------------------------------------- SEMPRA ENERGY SAVINGS PLAN FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998 AND FOR THE PERIOD JULY 1, 1998 (INCEPTION) THROUGH DECEMBER 31, 1998 AND INDEPENDENT AUDITORS' REPORT
SEMPRA ENERGY SAVINGS PLAN TABLE OF CONTENTS - -------------------------------------------------------------------------------- PAGE INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS: Statement of Assets Available for Benefits as of December 31, 1998 2 Statement of Changes in Assets Available for Benefits for 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 statement of assets available for benefits of Sempra Energy Savings Plan (the "Plan") as of December 31, 1998, and the related statement of changes in assets available for benefits for 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 audit. We conducted our audit in accordance with generally accepted auditing standards. 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 audit provides a reasonable basis for our opinion. In our opinion, such financial statements referred to above present fairly, in all material respects, the assets available for benefits of the Plan at December 31, 1998, and the changes in assets available for benefits of the Plan for the period July 1, 1998 (inception) through December 31, 1998 in conformity with generally accepted accounting principles. /S/ DELOITTE & TOUCHE LLP June 11, 1999 - 1 -
SEMPRA ENERGY SAVINGS PLAN STATEMENT OF ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1998 (DOLLARS IN THOUSANDS) - ------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS $ 15 INVESTMENTS: At fair value: Investment in Master Trust 87,952 Participant Loans 1,803 ------- Total investments 89,755 ------- RECEIVABLES: Employer contributions 89 Participating employee contributions 283 ------- Total receivables 372 ------- ASSETS AVAILABLE FOR BENEFITS $90,142 ------- The accompanying notes are an integral part of these financial statements. - 2 -
SEMPRA ENERGY SAVINGS PLAN STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS PERIOD OF JULY 1, 1998 (INCEPTION) THROUGH DECEMBER 31, 1998 (DOLLARS IN THOUSANDS) - ------------------------------------------------------------------------------- ADDITIONS: Net investment income: Equity in net investment income of the Master Trust $12,533 Less investment expenses 18 ------- Net investment income 12,515 ------- Contributions: Employer 988 Participating employees 3,296 ------- Total contributions 4,284 ------- Transfers from plans of related entities 74,987 Other 3 ------- Total additions 91,789 DEDUCTIONS: Distributions to participants or their beneficiaries 1,647 ------- NET INCREASE 90,142 ASSETS AVAILABLE FOR PLAN BENEFITS: Inception of plan 0 ------- End of year $90,142 ------- ------- The accompanying notes are an integral part of these financial statements. - 3 -
SEMPRA ENERGY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS JULY 1, 1998 (INCEPTION) THROUGH DECEMBER 31, 1998 (DOLLARS IN THOUSANDS) - ------------------------------------------------------------------------------- 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 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"). ADMINISTRATION - Certain administrative functions are performed by officers or employees of the Company. No such officer or employee receives compensation from the Plan. Administrative expenses are paid directly by the Company; however, investment expenses are paid by the Plan. 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 base pay on a pre-tax basis, an after-tax basis, or a combination. Total individual pre-tax contributions in calendar year 1998 were limited by law to $10,000. EMPLOYER NONELECTIVE MATCHING CONTRIBUTIONS - The Company makes contributions to the Plan equal to 50% of each participant's pre-tax contribution, up to the first 6%. The Company's contributions are invested in Sempra Energy common stock. 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. - 4 -
INVESTMENT OPTIONS - All investments are held in a Master Trust (see Note 6). Employees elect to have their contributions invested in increments of 10% in Sempra Energy Common Stock or the following funds offered by T. Rowe Price, trustee of the Plan: BLENDED STABLE VALUE FUND - invests in investment contracts issued by high quality insurance companies and banks. PERSONAL STRATEGY BALANCED FUND - invests in a combination of stocks, bonds, and money market securities. PERSONAL STRATEGY INCOME FUND - invests in a combination of bonds, money market securities, and stocks. PERSONAL STRATEGY GROWTH FUND - invests in a combination of stocks, bonds, and money market securities. INTERNATIONAL STOCK FUND - invests primarily in common stocks of established, non-U.S. companies. NEW HORIZONS FUND - invests primarily in common stocks of small, rapidly growing companies. NEW INCOME FUND - invests primarily in marketable debt securities. PRIME RESERVE FUND - invests in high-quality, U.S. dollar-denominated money market securities with an average weighted maturity not exceeding 90 days. EQUITY INDEX FUND - invests in stocks of 500 U.S. companies. 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. - 5 -
3. INVESTMENTS The Plan's investments were held by T. Rowe Price, the trustee, for the period ended December 31, 1998. Investments that represent 5% or more of the Plan's net assets are identified below. Investment in Master Trust (Note 6) $87,952 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 Internal Revenue Code ("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 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 present 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 monthly in the Wall Street Journal at the time the loan is made. 6. 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 15% interest in the net assets available for plan benefits of the Master Trust at December 31, 1998. Net earnings of the Master Trust are allocated daily by T. Rowe Price to each participating 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, 1998 are summarized as follows: Sempra Energy common stock $ 359,143 Equity Index Fund 124,475 Personal Strategy Balance Fund 26,497 Blended Stable Value Fund 24,437 Prime Reserve Fund 12,099 New Horizons Fund 11,811 Personal Strategy Growth Fund 6,515 International Stock Fund 5,929 Personal Strategy Income Fund 2,405 New Income Fund 3,702 -------- Total $577,013 -------- -------- - 6 -
Net appreciation, dividend and interest income of the Master Trust for the year ended December 31, 1998 is summarized as follows: Net appreciation $43,439 Dividends 23,384 Interest 1,372 7. BY FUND INFORMATION Information regarding significant additions to and deductions from assets available for benefits of the Plan by fund option for the period July 1, 1998 through December 31, 1998 is as follows: DISTRIBUTIONS PARTICIPATING NET TO PARTICIPANTS INTERFUND EMPLOYER EMPLOYEE INVESTMENT OR THEIR AND TRANSFERS CONTRIBUTIONS CONTRIBUTIONS INCOME BENEFICIARIES (TO) FROM Sempra Energy Common Stock $ 988 $ 456 $ 7,592 $ 531 $ 29,035 Stable Value Fund 130 72 327 3,113 Personal Strategy Income Fund 51 19 25 285 Personal Strategy Balanced Fund 292 314 120 4,413 Personal Strategy Growth Fund 271 139 12 1,440 International Stock Fund 189 170 44 2,082 New Horizons Fund 384 668 171 4,883 New Income Fund 91 27 1,894 Prime Reserve Fund 152 48 38 2,763 Equity Index Fund 1,280 3,466 379 23,741 Settlement Account 15 Participant Loans 1,323 ------- ------- -------- --------- --------- Total $ 988 $ 3,296 $ 12,515 $ 1,647 $ 74,987 ------- ------- -------- --------- --------- ------- ------- -------- --------- --------- 8. SUBSEQUENT EVENT Sempra Energy announced its intention to merge the Pacific Enterprises Retirement Savings Plan with the Plan effective August 31, 1999. * * * * * * - 7 -
- ------------------------------------------------------------------------------- SEMPRA ENERGY TRADING RETIREMENT SAVINGS PLAN FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES FOR THE YEAR ENDED DECEMBER 31, 1998, AND INDEPENDENT AUDITORS' REPORT
SEMPRA ENERGY TRADING RETIREMENT SAVINGS PLAN TABLE OF CONTENTS - ------------------------------------------------------------------------------- PAGE INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998 AND FOR THE YEAR THEN ENDED: Statement of Assets Available for Benefits 2 Statement of Changes in Assets Available for Benefits 3 Notes to Financial Statements 4-7 SUPPLEMENTAL SCHEDULES AS OF DECEMBER 31, 1998 AND FOR THE YEAR THEN ENDED: Item 27a - Schedule of Assets Held for Investment Purposes 8 Item 27d - Schedule of Series Reportable Transactions 9 Item 27d - Schedule of Single Reportable Transactions 10-14 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.
INDEPENDENT AUDITORS' REPORT Sempra Energy Trading Retirement Savings Plan: We have audited the accompanying statement of assets available for benefits of Sempra Energy Trading Retirement Savings Plan (the "Plan") as of December 31, 1998, and the related statement of changes in assets available for benefits for the year 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 audit. We conducted our audit in accordance with generally accepted auditing standards. 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 audit provides a reasonable basis for our opinion. In our opinion, such financial statements referred to above present fairly, in all material respects, the assets available for benefits of the Plan at December 31, 1998, and the changes in assets available for benefits for the year then ended in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of (1) assets held for investment purposes as of December 31, 1998, and (2) reportable transactions for the year ended December 31, 1998, are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are 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. The supplemental schedules are the responsibility of the Plan's management. Such supplemental schedules have been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /S/ DELOITTE & TOUCHE LLP June 11, 1999 - 1 -
SEMPRA ENERGY TRADING RETIREMENT SAVINGS PLAN STATEMENT OF ASSETS AVAILABLE FOR BENEFITS AS OF DECEMBER 31, 1998 - ------------------------------------------------------------------------------- INVESTMENTS: At fair value: Mutual funds $ 2,167,393 Sempra Energy common stock 933,553 Participant loans 31,907 ------------ ASSETS AVAILABLE FOR BENEFITS $ 3,132,853 ------------ ------------ The accompanying notes are an integral part of these financial statements. - 2 -
SEMPRA ENERGY TRADING RETIREMENT SAVINGS PLAN STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS YEAR ENDED DECEMBER 31, 1998 - ------------------------------------------------------------------------------- ADDITIONS: Net investment income: Net appreciation in fair value of investments $ 43,295 Interest and dividends 92,751 ------------- Total investment income 136,046 Less investment expenses 6,566 ------------- Net investment income 129,480 ------------- Contributions: Employer 349,980 Participating employees 1,142,065 ------------- Total contributions 1,492,045 ------------- Transfers from plans of related entities 1,543,759 ------------- Total additions 3,165,284 ------------- DEDUCTIONS: Distributions to participants or their beneficiaries 32,431 ------------- NET INCREASE 3,132,853 ASSETS AVAILABLE FOR PLAN BENEFITS: Beginning of year 0 ------------- End of year $ 3,132,853 ------------- ------------- 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, 1998 - ------------------------------------------------------------------------------- 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. ADMINISTRATION - Certain administrative functions are performed by officers or employees of the Company. No such officer or employee receives compensation from the Plan. Administrative expenses are paid directly by the Company; however, investment expenses are paid by the Plan. 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 base 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 year 1998 were limited by law to $10,000. EMPLOYER NONELECTIVE MATCHING CONTRIBUTION - After one year of service in which employees worked at least 1,000 hours of service, the Company makes contributions to the Plan based on the participant's pre-tax contributions and years of service as follows: Less than five years of service..1/3 of the first 6% of contributions Five to ten years of service.....2/3 of the first 6% of contributions Ten years or more of service.....100% of the first 6% of contributions The Company will also provide an additional matching contribution of 15% of the participant's pre-tax contribution, subject to certain limitations described in the Plan document. The Company's contributions are invested in Sempra Energy (formerly Pacific Enterprises) common stock. - 4 -
Effective January 1, 1999, the Plan was amended to increase the maximum employee pre-tax contributions from 9% to 15% of base pay and to determine Company contributions based on employee pre-tax and after-tax contributions, up to a maximum of 6% of base compensation. 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 the following funds offered by T. Rowe Price, trustee of the Plan: BLENDED STABLE VALUE FUND - invests in investment contracts issued by high quality insurance companies and banks. PERSONAL STRATEGY BALANCED FUND - invests in a combination of stocks, bonds, and money market securities. PERSONAL STRATEGY INCOME FUND - invests in a combination of bonds, money market securities, and stocks. PERSONAL STRATEGY GROWTH FUND - invests in a combination of stocks, bonds, and money market securities. INTERNATIONAL STOCK FUND - invests primarily in common stocks of established, non-U.S. companies. NEW HORIZONS FUND - invests primarily in common stocks of small, rapidly growing companies. NEW INCOME FUND - invests primarily in marketable debt securities. PRIME RESERVE FUND - invests in high-quality, U.S. dollar-denominated money market securities with an average weighted maturity not exceeding 90 days. EQUITY INDEX FUND - invests in stocks of 500 U.S. companies. 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. - 5 -
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. 3. INVESTMENTS The Plan's investments were held by T. Rowe Price, the trustee, for the year ended December 31, 1998. Investments that represent 5% or more of the Plan's net assets at December 31, 1998 are identified below. Sempra Energy Common Stock $ 933,553 Mutual Funds: Equity Index 500 Fund 610,402 Personal Strategy - Income 355,004 Personal Strategy - Growth 288,414 New Horizons Fund 285,503 International Stock Fund 233,963 Personal Strategy - Balanced 212,430 The net appreciation in the fair value of investments is summarized as follows for the year ended December 31, 1998: Sempra Energy Common Stock $ (12,345) Mutual funds 55,640 ------------ Total $ 43,295 ------------ ------------ 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 Internal Revenue Code ("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 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 present 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 monthly in the Wall Street Journal at the time the loan is made. - 6 -
6. BY FUND INFORMATION Information regarding significant additions to and deductions from assets available for benefits by fund option for the year ended December 31, 1998 are as follows: DISTRIBUTIONS PARTICIPATING NET TO PARTICIPANTS INTERFUND EMPLOYER EMPLOYEE INVESTMENT OR THEIR AND TRANSFERS CONTRIBUTIONS CONTRIBUTIONS INCOME BENEFICIARIES (TO) FROM Sempra Energy Common Stock $349,980 $ 14,072 $7,490 $8,406 $ 576,820 Blended Stable Value Fund 51,388 1,445 (34,795) Personal Strategy Income Fund 125,067 16,160 3,121 222,890 Personal Strategy Balanced Fund 89,825 11,661 2,724 116,587 Personal Strategy Growth Fund 141,158 18,980 9,387 145,435 International Stock Fund 122,826 7,829 2,335 107,841 New Horizons Fund 243,326 (5,878) 1,265 55,796 New Income Fund 26,530 2,435 989 58,484 Prime Reserve Fund 4,237 2,286 71,222 Equity Index Fund 323,636 67,072 4,204 223,479 --------- ----------- --------- -------- ----------- Total $ 349,980 $ 1,142,065 $ 129,480 $ 32,431 $ 1,543,759 --------- ----------- --------- -------- ----------- --------- ----------- --------- -------- ----------- * * * * * * - 7 -
ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1998 - ------------------------------------------------------------------------------- FAIR DESCRIPTION COST VALUE * Sempra Energy Common Stock $ 946,467 $ 933,553 ----------- --------- T Rowe Price Mutual Funds: Equity Index Fund 542,939 610,402 Personal Strategy Balanced Fund 211,056 212,430 Blended Stable Value Fund 17,989 17,989 New Horizons Fund 299,955 285,503 Prime Reserve Fund 77,707 77,707 International Stock Fund 234,517 233,963 Personal Strategy Growth Fund 281,760 288,414 Personal Strategy Income Fund 351,560 355,004 New Income Fund 88,230 85,981 ----------- --------- Total mutual funds 2,105,713 2,167,393 Participant loans (interest rates from 8.75% to 9.5%; maturities to 2003) 31,907 31,907 ----------- --------- Total investments $3,084,087 $3,132,853 ----------- --------- * Represents a party-in-interest to the Plan. - 8 -
SEMPRA ENERGY TRADING RETIREMENT SAVINGS PLAN ITEM 27d - SCHEDULE OF SERIES REPORTABLE TRANSACTIONS YEAR ENDED DECEMBER 31, 1998 - ------------------------------------------------------------------------------- PURCHASES SALES ------------------------------------------------------------------------------------------- NUMBER OF PURCHASE NUMBER OF SELLING COST OF NET DESCRIPTION OF ASSET TRANSACTIONS PRICE TRANSACTIONS PRICE ASSET GAIN (LOSS) Blended Stable Value Fund 16 $ 50,385 1 $ 50,385 $ 50,385 Equity Index 500 Fund 47 556,807 16 14,141 13,899 $ 242 International Stock Fund 36 244,288 11 9,678 9,819 (141) New Horizons Fund 34 354,398 16 48,202 54,478 (6,276) New Income Fund 42 89,563 3 1,324 1,333 (9) Personal Strategy Balanced Fund 35 216,970 12 5,760 5,914 (154) Personal Strategy Growth Fund 36 300,035 15 18,540 18,279 261 Personal Strategy Income Fund 37 364,650 12 13,012 13,089 (77) Prime Reserve Fund 38 76,987 1 2 2 TRP Stable Value Fund Schedule E 24 57,703 2 39,714 39,714 Pacific Enterprises Common Stock* 19 519,249 2 519,340 519,295 45 Sempra Energy Common Stock* 20 677,980 16 14,065 13,588 477 * As a result of the June 26, 1998 merger of Enova Corporation and Pacific Enterprises forming Sempra Energy all shares of Pacific Enterprises stock held by the Plan were converted on a basis of one share of Sempra Energy stock for 1.5038 shares of Pacific Enterprises stock. 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 series of transactions during the year involving investment assets of an amount in excess of 5% of the fair value of Plan assets as of the beginning of the Plan year. - 9 -
SEMPRA ENERGY TRADING RETIREMENT SAVINGS PLAN ITEM 27d - SCHEDULE OF SINGLE REPORTABLE TRANSACTIONS YEAR ENDED DECEMBER 31, 1998 - ------------------------------------------------------------------------------- PURCHASES SALES ---------------- ----------------------------------------------- PURCHASE SELLING COST OF NET DESCRIPTION OF ASSET PRICE PRICE ASSET GAIN (LOSS) Blended Stable Value Fund $ 45,877 $ 50,385 $ 50,385 Equity Index 500 Fund 10,346 3,652 3,962 $(310) 10,749 47,847 8,091 8,027 7,946 8,546 3,105 51,913 9,076 12,588 9,117 178,352 8,815 8,609 8,613 3,513 8,530 3,923 7,260 7,808 7,519 35,548 7,361 7,677 7,385 7,338 6,862 6,458 6,141 5,802 10,445 5,846 9,417 International Stock Fund 4,092 5,125 4,980 145 4,349 30,609 4,317 2,941 2,780 2,610 (Continued) - 10 -
SEMPRA ENERGY TRADING RETIREMENT SAVINGS PLAN ITEM 27d - SCHEDULE OF SINGLE REPORTABLE TRANSACTIONS YEAR ENDED DECEMBER 31, 1998 - ------------------------------------------------------------------------------- PURCHASES SALES ---------------- ----------------------------------------------- PURCHASE SELLING COST OF NET DESCRIPTION OF ASSET PRICE PRICE ASSET GAIN (LOSS) International Stock Fund (continued) 3,105 22,810 2,878 2,774 107,882 2,600 2,762 2,614 2,614 2,469 5,084 8,474 2,336 New Horizons Fund 5,720 38,401 44,126 (5,725) 5,749 5,084 5,453 (369) 32,423 5,449 4,131 4,030 4,192 9,193 104,512 4,569 85,000 4,296 4,098 17,223 3,657 2,266 3,089 3,089 3,066 3,061 3,014 2,984 2,977 2,946 3,082 2,673 2,638 2,343 14,498 2,884 (Continued) - 11 -
SEMPRA ENERGY TRADING RETIREMENT SAVINGS PLAN ITEM 27d - SCHEDULE OF SINGLE REPORTABLE TRANSACTIONS YEAR ENDED DECEMBER 31, 1998 - ------------------------------------------------------------------------------- PURCHASES SALES ---------------- ----------------------------------------------- PURCHASE SELLING COST OF NET DESCRIPTION OF ASSET PRICE PRICE ASSET GAIN (LOSS) New Income Fund 11,433 53,358 5,125 Personal Strategy Balanced Fund 2,729 2,915 9,900 2,673 2,527 2,947 3,111 3,105 3,420 3,547 3,236 96,491 3,242 3,221 23,370 3,246 2,674 2,672 2,643 2,613 2,612 2,553 2,542 2,594 2,729 2,498 2,573 2,377 6,184 4,003 Personal Strategy Growth Fund 4,684 5,111 4,980 131 4,705 6,243 6,045 198 20,452 5,719 3,880 3,796 4,011 3,105 9,322 13,218 (Continued) - 12 -
SEMPRA ENERGY TRADING RETIREMENT SAVINGS PLAN ITEM 27d - SCHEDULE OF SINGLE REPORTABLE TRANSACTIONS YEAR ENDED DECEMBER 31, 1998 - ------------------------------------------------------------------------------- PURCHASES SALES ---------------- ----------------------------------------------- PURCHASE SELLING COST OF NET DESCRIPTION OF ASSET PRICE PRICE ASSET GAIN (LOSS) Personal Strategy Growth Fund (Continued) 4,345 78,600 3,982 4,242 37,497 3,876 3,029 3,029 2,983 38,401 2,848 2,932 2,879 2,864 2,933 2,998 2,655 3,379 3,056 11,718 4,089 Personal Strategy Income Fund 2,351 5,081 5,028 53 3,105 2,450 2,540 (90) 4,790 2,353 2,434 (81) 76,308 3,417 227,971 3,303 3,089 2,622 3,445 Prime Reserve Fund 60,309 35,439 35,439 10,192 4,274 4,274 TRP Stable Value Fund Schedule E 50,635 518,848 518,848 3,651 Pacific Enterprises Common Stock* 14,174 14,599 78,821 12,279 10,426 9,476 (Continued) - 13 -
SEMPRA ENERGY TRADING RETIREMENT SAVINGS PLAN ITEM 27d - SCHEDULE OF SINGLE REPORTABLE TRANSACTIONS YEAR ENDED DECEMBER 31, 1998 - ------------------------------------------------------------------------------- PURCHASES SALES ---------------- ----------------------------------------------- PURCHASE SELLING COST OF NET DESCRIPTION OF ASSET PRICE PRICE ASSET GAIN (LOSS) Pacific Enterprises Common Stock* (Continued) 10,706 12,447 12,049 269,174 11,801 11,632 34,029 4,820 11,344 Sempra Energy Common Stock* 518,848 3,404 3,231 173 5,017 9,894 10,179 3,592 10,026 9,945 2,972 9,824 10,738 10,853 23,264 10,459 10,229 10,113 9,153 12,517 * As a result of the June 26, 1998 merger of Enova Corporation and Pacific Enterprises forming Sempra Energy all shares of Pacific Enterprises stock held by the Plan were converted on a basis of one share of Sempra Energy stock for 1.5038 shares of Pacific Enterprises stock. 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 transactions during the year involving investment assets of an amount in excess of 5% of the fair value of Plan assets as of the beginning of the Plan year. (Concluded) - 14 -
---------------------------------------------------------------------------- SOUTHERN CALIFORNIA GAS COMPANY RETIREMENT SAVINGS PLAN FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 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, 1998 AND 1997 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 4-9 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, 1998 and 1997, 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 generally accepted auditing standards. 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 referred to above present fairly, in all material respects, the assets available for benefits of the Plan at December 31, 1998 and 1997, and the changes in assets available for benefits for the years then ended in conformity with generally accepted accounting principles. /S/ DELOITTE & TOUCHE LLP June 11, 1999 - 1 -
SOUTHERN CALIFORNIA GAS COMPANY RETIREMENT SAVINGS PLAN STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1998 AND 1997 (DOLLARS IN THOUSANDS) - -------------------------------------------------------------------------------- 1998 1997 CASH AND CASH EQUIVALENTS $ 1 $ 28 INVESTMENTS: At fair value: Investment in Master Trust 469,222 501,954 Participant loans 13,745 14,219 --------- --------- Total investments 482,967 516,173 --------- --------- RECEIVABLES: Employer contributions 230 Participating employee contributions 639 Interest 45 -------- Total receivables 914 -------- ASSETS AVAILABLE FOR BENEFITS $483,882 $516,201 -------- -------- -------- -------- 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, 1998 AND 1997 (DOLLARS IN THOUSANDS) - -------------------------------------------------------------------------------- 1998 1997 --------- -------- ADDITIONS: Net investment income: Equity in net investment income of the Master Trust $ 50,907 $109,054 Less investment expenses 255 256 -------- -------- Net investment income 50,652 108,798 -------- -------- Contributions: Employer 7,248 7,231 Participating employees 19,744 19,294 -------- -------- Total contributions 26,992 26,525 -------- -------- Other 2 -------- -------- Total additions 77,644 135,325 -------- -------- DEDUCTIONS: Distributions to employees, retirees or their beneficiaries 83,064 26,576 Other 1,058 -------- -------- Total deductions 84,122 26,576 -------- -------- TRANSFERS TO PLANS OF RELATED ENTITIES 25,841 932 -------- -------- NET INCREASE (DECREASE) (32,319) 107,817 ASSETS AVAILABLE FOR PLAN BENEFITS: Beginning of year 516,201 408,384 -------- -------- End of year $483,882 $516,201 -------- -------- -------- -------- 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, 1998 AND 1997 (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. On July 1, 1998, the Plan was amended to allow for immediate plan participation for salary deferrals. 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 stock in their account balances or to reinvest the dividends in Sempra Energy stock. Former employees who have terminated or retired and elected to leave their accounts in the Plan do not have the option to reinvest their dividends. ADMINISTRATION - Certain administrative functions are performed by officers or employees of the Company. No such officer or employee receives compensation from the Plan. Administrative expenses are paid directly by the Company; however, investment expenses are paid by the Plan. 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 14% (up to 9% pre-tax) of base pay for represented employees and up to 15% (pre-tax, after-tax, or a combination) of base pay for non-represented employees. 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 1998 and 1997 were limited by law to $10,000 and $9,500, respectively, in each year. - 4 -
EMPLOYER NONELECTIVE MATCHING CONTRIBUTION - The Company makes contributions to the Plan equal to 50% of each participant's contribution, up to the first 6%. The Company's contributions are invested in Sempra Energy (formerly Pacific Enterprises) common stock. Beginning October 1, 1992, employer contributions have been funded in part from the Pacific Enterprises Stock Ownership Plan and Trust. 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 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. VESTING - All participant accounts are fully vested and nonforfeitable at all times. INVESTMENT OPTIONS - All investments are held in a Master Trust (see Note 6). Employees elect to have their contributions invested in increments of 10% in Sempra Energy Common Stock or the following funds offered by T. Rowe Price, trustee of the Plan: BLENDED STABLE VALUE FUND - invests in investment contracts issued by high quality insurance companies and banks. PERSONAL STRATEGY BALANCED FUND - invests in a combination of stocks, bonds, and money market securities. PERSONAL STRATEGY INCOME FUND - invests in a combination of bonds, money market securities, and stocks. PERSONAL STRATEGY GROWTH FUND - invests in a combination of stocks, bonds, and money market securities. INTERNATIONAL STOCK FUND - invests primarily in common stocks of established, non-U.S. companies. NEW HORIZONS FUND - invests primarily in common stocks of small, rapidly growing companies. NEW INCOME FUND - invests primarily in marketable debt securities. PRIME RESERVE FUND - invests in high-quality, U.S. dollar-denominated money market securities with an average weighted maturity not exceeding 90 days. EQUITY INDEX FUND - invests in stocks of 500 U.S. companies. 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. Net assets available for Plan benefits at December 31, 1998 and 1997 include $120 and $228, respectively, for participants who have withdrawn from The Plan but have not yet been paid their vested benefits. 3. INVESTMENTS The Plan's investments were held by T. Rowe Price for the year ended December 31, 1998 and 1997. Investments that represent 5% or more of the Plan's net assets are identified below. DECEMBER 31, ---------------------- 1998 1997 Investment in Master Trust (Note 6) $469,222 $501,954 4. 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. 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 present 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 monthly in the Wall Street Journal at the time the loan is made. - 6 -
6. 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 81% interest in the net assets available for plan benefits of the Master Trust at December 31, 1998. Net earnings of the Master Trust are allocated daily by T. Rowe Price to each participating 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, 1998 and 1997 are summarized as follows: 1998 1997 Sempra Energy (formerly Pacific Enterprises) common stock $359,143 $373,038 Equity Index Fund 124,475 99,830 Personal Strategy Balance Fund 26,497 26,862 Blended Stable Value Fund 24,437 25,614 Prime Reserve Fund 12,099 9,485 New Horizons Fund 11,811 7,668 Personal Strategy Growth Fund 6,515 4,326 International Stock Fund 5,929 3,382 Personal Strategy Income Fund 2,405 1,535 New Income Fund 3,702 1,361 -------- -------- Net assets available for plan benefits $577,013 $553,101 -------- -------- -------- -------- Net appreciation, dividends, and interest for the Master Trust for the years ended December 31, 1998 and 1997 are as follows: 1998 1997 Net appreciation of investments $43,439 $96,985 Dividends 23,384 21,080 Interest 1,372 1,207 - 7 -
7. BY FUND INFORMATION Information regarding significant additions to and deductions from assets available for benefits of the Plan by fund option for the years ended December 31, 1998 and 1997 are as follows: DISTRIBUTIONS PARTICIPATING NET TO PARTICIPANTS INTERFUND YEAR ENDED EMPLOYER EMPLOYEE INVESTMENT OR THEIR AND TRANSFERS DECEMBER 31, 1998 CONTRIBUTIONS CONTRIBUTIONS INCOME BENEFICIARIES (TO) FROM Sempra Energy Common Stock $ 7,248 $ 8,564 $ 22,106 $ 54,808 $ (17,958) Blended Stable Value Fund 1,346 1,345 3,926 (819) Personal Strategy Income Fund 216 184 265 566 Personal Strategy Balanced Fund 1,548 2,867 4,232 (2,236) Personal Strategy Growth Fund 671 638 713 217 International Stock Fund 499 417 425 201 New Horizons Fund 904 382 898 (1,193) New Income Fund 131 80 224 388 Prime Reserve Fund 445 485 3,189 2,606 Equity Index Fund 5,420 22,148 14,356 (6,844) Settlement Account (27) Participant Loans 28 (742) ------- -------- -------- -------- --------- Total $ 7,248 $ 19,744 $ 50,652 $ 83,064 $ (25,841) ------- -------- -------- -------- --------- ------- -------- -------- -------- --------- - 8 -
DISTRIBUTIONS PARTICIPATING NET TO PARTICIPANTS INTERFUND YEAR ENDED EMPLOYER EMPLOYEE INVESTMENT OR THEIR AND TRANSFERS DECEMBER 31, 1997 CONTRIBUTIONS CONTRIBUTIONS INCOME BENEFICIARIES (TO) FROM Pacific Enterprises Common Stock $ 7,231 $ 8,349 $ 81,965 $ 17,110 $ (8,440) Blended Stable Value Fund 1,591 1,402 1,715 (1,556) Personal Strategy Income Fund 152 88 39 640 Personal Strategy Balanced Fund 1,611 3,349 977 (107) Personal Strategy Growth Fund 417 412 93 2,036 International Stock Fund 447 6 256 904 New Horizons Fund 1,043 484 193 1,472 New Income Fund 127 95 66 575 Prime Reserve Fund 512 455 1,012 507 Equity Index Fund 5,045 20,542 4,799 3,133 Settlement Account (24) Participant Loans 316 (72) ------- -------- -------- -------- --------- Total $ 7,231 $ 19,294 $108,798 $ 26,576 $ (932) ------- -------- -------- -------- --------- ------- -------- -------- -------- --------- * * * * * * - 9 -
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. Sempra Energy Savings Plan Date: June 24, 1999 /s/ G. Joyce Rowland, Senior Vice President ------------------------------------------- G. Joyce Rowland, Senior Vice President Sempra Energy Trading Retirement Savings Plan Date: June 24, 1999 /s/ G. Joyce Rowland, Senior Vice President ------------------------------------------- G. Joyce Rowland, Senior Vice President Pacific Enterprises Retirement Savings Plan Date: June 24, 1999 /s/ G. Joyce Rowland, Senior Vice President ------------------------------------------- G. Joyce Rowland, Senior Vice President San Diego Gas & Electric Company Savings Plan Date: June 24, 1999 /s/ G. Joyce Rowland, Senior Vice President ------------------------------------------- G. Joyce Rowland, Senior Vice President Southern California Gas Company Retirement Savings Plan Date: June 24, 1999 /s/ G. Joyce Rowland, Senior Vice President ------------------------------------------- G. Joyce Rowland, Senior Vice President
INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in 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, Pacific Enterprises Retirement Savings Plan, Southern California Gas Company Retirement Savings Plan, and San Diego Gas & Electric Company Savings Plan dated June 11, 1999 appearing in the Annual Report on Form 11-K of Sempra Energy for the year ended December 31, 1998. /S/ DELOITTE & TOUCHE LLP San Diego, California June 24, 1999