Efficient Financing & Incremental Investment Opportunities
FUNDS FROM OPERATIONS (FFO) TO DEBT RATIO
(UNAUDITED)
Funds from Operations (FFO), and thereby the ratio of FFO to Debt, are non-GAAP financial measures. As defined and used by management, FFO, which is
comprised of Net Cash Provided by Operating Activities (also referred to as operating cash flows), which we consider to be the most directly comparable GAAP
measure, is adjusted to exclude changes in working capital and cash flows from discontinued operations. We believe that FFO is a useful measure and management
uses it to evaluate our business because it is one of the key metrics used by rating agencies to evaluate how leveraged a company is, and therefore how much debt a
company can issue without negatively impacting its credit rating. It also provides management with a measure of cash available for debt service and for shareholders
in the form of potential dividends or potential share repurchases.
FFO has limitations due to the fact it does not represent the residual cash flow available for discretionary purposes. For example, FFO does not incorporate dividend
payments and debt service. Therefore, we believe it is important to view FFO as a complement to the entire Statement of Cash Flows. Non-GAAP financial measures
are supplementary information that should be considered in addition to, but not as a substitute for, the information in accordance with GAAP.
The table below reconciles FFO to Net Cash Provided by Operating Activities, which we consider to be the most directly comparable financial measure calculated in
accordance with GAAP, and we provide the ratio of Net Cash Provided by Operating Activities to Debt, which we consider to be the most comparable financial
measure calculated in accordance with GAAP to the ratio of FFO to Debt.
(Dollars in millions)
2020 Net Cash Provided by Operating Activities
Exclude:
Decreases in working capital
Cash flows from discontinued operations
2020 FFO
Short-term debt
Current portion of long-term debt and finance leases
Long-term debt and finance leases
2020 Total Debt
Net Cash Provided by Operating Activities-to-Debt
FFO-to-Debt
102
Sempra
$
2,591
550
1,051
$
4,192
$
885
1,540
21,781
$ 24,206
11%
17%
SEMPRAView entire presentation