-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P6n6xYEA4lM4hqyMIjTPDRNhW4k/sSaCN15f9NxfeMqqKN68p3toLKANklRSBAcJ mUmwkeUzhtYsSTNZBduPVA== 0000950144-96-000891.txt : 19960312 0000950144-96-000891.hdr.sgml : 19960312 ACCESSION NUMBER: 0000950144-96-000891 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960131 FILED AS OF DATE: 19960311 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIEDMONT NATURAL GAS CO INC CENTRAL INDEX KEY: 0000078460 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 560556998 STATE OF INCORPORATION: NY FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06196 FILM NUMBER: 96533621 BUSINESS ADDRESS: STREET 1: 1915 REXFORD RD CITY: CHARLOTTE STATE: NC ZIP: 28211 BUSINESS PHONE: 7043643120 MAIL ADDRESS: STREET 1: P.O. BOX 33068 CITY: CHARLOTTE STATE: NC ZIP: 28233 10-Q 1 PIEDMONT NATURAL GAS 10-Q 1-31-96 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) /x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 1996 or / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------------- ---------------------- Commission file number 1-6196 ------ PIEDMONT NATURAL GAS COMPANY, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) North Carolina 56-0556998 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1915 Rexford Road, Charlotte, North Carolina 28211 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 704-364-3120 ----------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- ---- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at March 6, 1996 - ----------------------------- ----------------------------- Common Stock, no par value 29,000,160 ================================================================================ Page 1 of 13 pages 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements PIEDMONT NATURAL GAS COMPANY, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in thousands)
January 31, October 31, ASSETS 1996 1995 ------ ---- ---- Utility Plant, at original cost $1,097,379 $1,074,666 Less accumulated depreciation 282,109 273,350 ---------- ---------- Utility plant, net 815,270 801,316 ---------- ---------- Other Physical Property (net of accumulated depreciation of $13,282 in 1996 and $12,869 in 1995) 26,606 26,299 ---------- ---------- Current Assets: Cash and cash equivalents 12,466 5,811 Restricted cash 18,195 17,948 Receivables (less allowance for doubtful accounts of $2,322 in 1996 and $972 in 1995) 110,326 21,118 Gas in storage 15,703 39,992 Deferred cost of gas 20,074 3,352 Refundable income taxes 574 15,265 Other 13,208 13,799 ---------- ---------- Total current assets 190,546 117,285 ---------- ---------- Deferred Charges and Other Assets 16,831 19,995 ---------- ---------- Total $1,049,253 $ 964,895 ========== ========== CAPITALIZATION AND LIABILITIES ------------------------------ Capitalization: Common stock equity: Common stock $ 234,328 $ 230,964 Retained earnings 150,166 124,015 ---------- ---------- Total common stock equity 384,494 354,979 Long-term debt 361,000 361,000 ---------- ---------- Total capitalization 745,494 715,979 ---------- ---------- Current Liabilities: Current maturities of long-term debt and sinking fund requirements 7,000 7,000 Notes payable 20,000 13,500 Accounts payable 89,324 38,303 Deferred income taxes 20,124 14,166 Taxes accrued 16,407 9,008 Refunds due customers 4,409 22,289 Other 17,470 19,392 ---------- ---------- Total current liabilities 174,734 123,658 ---------- ---------- Deferred Credits and Other Liabilities 129,025 125,258 ---------- ---------- Total $1,049,253 $ 964,895 ========== ==========
See notes to condensed consolidated financial statements. -2- 3 PIEDMONT NATURAL GAS COMPANY, INC. AND SUBSIDIARIES Condensed Statements of Consolidated Income (in thousands except per share amounts)
Three Months Twelve Months Ended Ended January 31 January 31 --------------- --------------- 1996 1995 1996 1995 ---- ---- ---- ---- Operating Revenues $239,160 $202,476 $541,907 $544,721 Cost of Gas 132,707 104,707 275,567 299,662 -------- -------- -------- -------- Margin 106,453 97,769 266,340 245,059 -------- -------- -------- -------- Other Operating Expenses: Operations 25,669 24,145 95,612 93,804 Maintenance 3,561 3,705 16,266 15,627 Depreciation 9,015 7,872 33,086 26,412 General taxes 9,380 8,836 27,936 26,722 Income taxes 19,924 17,841 24,161 21,380 -------- -------- -------- -------- Total other operating expenses 67,549 62,399 197,061 183,945 -------- -------- -------- -------- Operating Income 38,904 35,370 69,279 61,114 Other Income, Net 3,290 2,605 5,824 3,885 -------- -------- -------- -------- Income Before Utility Interest Charges 42,194 37,975 75,103 64,999 Utility Interest Charges 8,096 7,742 30,927 27,003 -------- -------- -------- -------- Net Income $ 34,098 $ 30,233 $ 44,176 $ 37,996 ======== ======== ======== ======== Average Shares of Common Stock Outstanding 28,909 26,665 28,455 26,467 Earnings Per Share of Common Stock $ 1.18 $ 1.13 $ 1.55 $ 1.44 Cash Dividends Declared Per Share of Common Stock $ .275 $ 0.26 $ 1.10 $ 1.04
See notes to condensed consolidated financial statements. -3- 4 PIEDMONT NATURAL GAS COMPANY, INC. AND SUBSIDIARIES Condensed Statements of Consolidated Cash Flows (in thousands)
Three Months Twelve Months Ended Ended January 31 January 31 ------------------------- ----------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Cash Flows from Operating Activities: Net income $34,098 $30,233 $44,176 $37,996 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 10,015 8,854 36,918 30,277 Other, net 2,403 2,511 9,807 6,050 Change in operating assets and liabilities (17,422) (13,066) 547 (10,213) ------- ------- -------- -------- Net cash provided by operating activities 29,094 28,532 91,448 64,110 ------- ------- -------- -------- Cash Flows from Investing Activities: Utility construction expenditures (22,608) (23,403) (98,385) (108,595) Other (592) (839) (3,064) (4,098) ------- ------- -------- -------- Net cash used in investing activities (23,200) (24,242) (101,449) (112,693) ------- ------- -------- -------- Cash Flows from Financing Activities: Increase (Decrease) in bank loans, net 6,500 500 (44,000) 31,000 Issuance of long-term debt - - 55,000 40,000 Retirement of long-term debt - - (5,000) (5,000) Sale of common stock, net of expenses - - 33,023 - Issuance of common stock through dividend reinvestment and employee stock plans 2,208 2,099 8,543 8,350 Dividends paid (7,947) (6,939) (31,572) (27,524) ------- ------- -------- -------- Net cash provided by (used in) financing activities 761 (4,340) 15,994 46,826 ------- ------- -------- -------- Net Increase (Decrease) in Cash and Cash Equivalents 6,655 (50) 5,993 (1,757) Cash and Cash Equivalents at Beginning of Period 5,811 6,523 6,473 8,230 ------- ------- -------- -------- Cash and Cash Equivalents at End of Period $12,466 $ 6,473 $ 12,466 $ 6,473 ======= ======= ======== ======== Cash Paid During the Period for: Interest $ 8,909 $ 7,235 $ 28,984 $ 26,175 Income Taxes $ 199 $ 124 $ 30,163 $ 26,114
See notes to condensed consolidated financial statements. -4- 5 PIEDMONT NATURAL GAS COMPANY, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) 1. The condensed consolidated financial statements have not been audited by independent auditors. These financial statements should be read in conjunction with the Notes to Consolidated Financial Statements included in the Company's 1995 Annual Report. 2. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements include all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position of the Company at January 31, 1996, and October 31, 1995, and the results of its operations and its cash flows for the three months and twelve months ended January 31, 1996 and 1995. 3. The Company's business is seasonal in nature. The results of operations for the three-month period ended January 31, 1996, are not necessarily indicative of the results to be expected for the full year. 4. Certain financial statement items for 1995 have been reclassified in order to conform with the 1996 presentation. -5- 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition The Company finances its current cash requirements through internally generated cash, the issuance of new common stock through dividend reinvestment and employee stock purchase plans and committed bank lines of credit totaling $57 million. In addition, the Company sells common stock and long-term debt to cover cash requirements when market or other conditions warrant such long-term financing. Because of the seasonal nature of the natural gas business, a substantial portion of the Company's earnings are realized in the winter period which is the first six months of the fiscal year. Injections of natural gas into storage occur during periods of warm weather (principally April 1 through October 31) for withdrawal from storage during periods of cold weather (principally November 1 through March 31). Due to this seasonality and the demand for gas during the winter season, inventory of stored gas decreased and receivables increased from October 31, 1995, to January 31, 1996. The Company has a substantial capital expansion program to sustain its approximately 6% current annual growth in customer base. The capital expansion program is dependent on the continuing ability to generate the necessary funds required for this growth. Utility construction expenditures for the three and twelve months ended January 31, 1996, were $22.9 million and $99.8 million, respectively, as compared with $23.9 million and $110.9 million, respectively, for similar prior periods. At January 31, 1996, the Company's capital structure consisted of long-term debt of 48% and common equity of 52%. Results of Operations Margin for the three months ended January 31, 1996, increased $8.7 million compared with the same period last year due to regulatory-approved rate changes and to greater volumes of gas sold, particularly to weather-sensitive residential and commercial customers on which a higher margin is earned. Delivered volumes of natural gas for the current three-month period increased over the similar prior period by 8.6 million dekatherms, a 21% increase. Weather for the three months ended January 31, 1996, was 31% colder than in the similar prior period. As a result, the weather normalization adjustment (WNA), in effect from November 1 through March 31, decreased operating revenues by $8.6 million for the three months ended January 31, 1996, as compared with an increase of $8.9 million for the similar prior period. Margin for the twelve months ended January 31, 1996, increased $21.3 million compared with the similar prior period due to regulatory-approved rate changes and greater volumes of gas sold. -6- 7 Weather for the twelve months ended January 31, 1996, was 18% colder than the similar prior period. The WNA decreased operating revenues by $7.1 million in the current period and increased operating revenues by $12.1 million in the similar prior period. Delivered volumes of natural gas for the current twelve months increased over the similar prior period by 11.2 million dekatherms, a 9% increase. The Company's rate schedules include gas cost recovery provisions that permit the recovery of prudently incurred gas costs, subject to annual prudence reviews covering an historical twelve-month period. The Company's rates are revised periodically without formal rate proceedings to reflect changes in the cost of gas. Charges to cost of gas are based on the amount recoverable under approved rate schedules. The net of any over- or under-recoveries of gas costs are charged or credited to cost of gas and included in refunds due customers. Operations and maintenance expenses for the three months and twelve months ended January 31, 1996, increased over similar prior periods primarily due to increases in maintenance and repairs of mains, advertising, payroll and employee benefit costs. Depreciation expense for the three months and twelve months ended January 31, 1996, increased over similar prior periods due to the growth of plant in service and to an increase in depreciation rates for South Carolina operations effective November 1, 1995. For the current twelve-month period as compared with the similar prior period, the increase is also due to an increase in depreciation rates for North Carolina operations effective November 1, 1994. The two state commissions have approved recovery of the increased depreciation rates in rates charged to customers. General taxes for the three months ended January 31, 1996, increased over the similar prior period primarily due to an increase in gross receipts taxes resulting from increased revenues. This increase was partially offset by decreases in property taxes and payroll taxes. General taxes for the twelve months ended January 31, 1996, increased over the similar prior period primarily due to increases in property taxes from rate increases and additions to taxable property and to increases in payroll taxes. Other income for the three months and twelve months ended January 31, 1996, increased over similar prior periods primarily due to increases in earnings from propane operations attributable to the colder weather noted above. The twelve-month period also reflects an increase in interest earned on temporary cash investments. Such increases were partially offset by decreases in the allowance for funds used during construction (AFUDC) due to changes in rates and decreases in the balances on which AFUDC is computed, decreases in earnings from merchandise activities and, for the three month-period only, to a decrease in earnings from energy marketing services. -7- 8 Utility interest charges for the three months ended January 31, 1996, increased over the similar prior period primarily due to interest on long-term debt resulting from higher balances outstanding. This increase was partially offset by decreases in interest on short-term debt and refunds due customers due to lower balances outstanding. Utility interest charges for the twelve months ended January 31, 1996, increased over the similar period due to increases in interest on long-term debt for the same reason noted above, increases in short-term debt due to higher balances outstanding and at higher rates and increases in interest on refunds due customers due to higher balances outstanding. -8- 9 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The Annual Meeting of Shareholders of the Company was held on February 23, 1996, for the purpose of electing four directors and ratifying the selection of independent auditors. The record date for the determination of shareholders entitled to notice of and to vote at the meeting was January 10, 1996. Proxies for the meeting were solicited pursuant to section 14(a) of the Securities and Exchange Act of 1934. There was no solicitation in opposition to management's solicitations. All of management's nominees for directors for terms expiring in 1999 as listed in the proxy statement were elected as indicated below:
Shares Shares Shares Share Voted Voted Voted NOT FOR WITHHELD ABSTAINING VOTED ----- -------- ---------- ----- Muriel W. Helms - --------------- 23,560,888 260,853 -0- 5,077,214 Ned R. McWherter - ---------------- 23,584,690 237,051 -0- 5,077,214 Donald S. Russell, Jr. - ---------------------- 23,611,717 210,024 -0- 5,077,214 John E. Simkins, Jr. - -------------------- 23,605,463 216,278 -0- 5,077,214
Directors continuing in office until 1997 are C. M. Butler III, Sam J. DiGiovanni and John F. McNair III. Directors continuing in office until 1998 are Jerry W. Amos, John H. Maxheim and Walter S. Montgomery, Jr. The proposal to ratify the selection by the Board of Directors of the firm of Deloitte & Touche LLP as independent auditors of the Company for the fiscal year ending October 31, 1996, was approved by the following vote:
Shares Shares Shares Shares Voted Voted Voted NOT FOR AGAINST ABSTAINING VOTED ----- ------- ---------- ----- 23,608,725 75,233 137,783 5,214,997
-9- 10 Item 5. Other Information Expansion of Services As previously reported, the Company filed a petition in September 1994 with the North Carolina Utilities Commission (NCUC) for a certificate of public convenience and necessity to serve four counties in North Carolina not presently receiving natural gas service. The Company estimated that the expansion would require capital expenditures of $57.7 million over a period of five years and would result in the addition of approximately 10,000 customers. The Company also filed applications to establish an expansion fund and place $14.8 million of supplier refunds into this fund. The Company requested permission to use the fund to offset a portion of the cost of the construction in the four counties. Another company, not currently providing natural gas service in North Carolina or elsewhere, also filed an application to serve the four counties; however, this company did not request permission to use expansion funds. On June 19, 1995, the NCUC granted a conditional certificate to the Company to serve the four-county area but prohibited the Company from utilizing available expansion funds. On July 10, the Company filed its exceptions to the order declining the conditional certificate and requesting that a final order be granted which would not prohibit the Company from using expansion funds. On July 20, the NCUC conditionally granted a certificate to the competing applicant. A hearing was held on December 12 to determine whether the conditions of the certificate were met and whether an unconditional certificate should be granted to the competing applicant. On January 30, 1996, the NCUC granted a final certificate to the competing applicant to serve the four-county area. On February 27, the Company requested a rehearing before the full NCUC. The outcome of these proceedings cannot be determined at this time. South Carolina Consumer Advocate On February 1, 1996, the South Carolina Consumer Advocate filed a notice of Appeal in the Richland County Court of Appeals regarding the order of the Public Service Commission of South Carolina (PSCSC) approving the Company's rate increase of $7.8 million annually, effective November 7, 1995. The Company is opposing this appeal. The outcome of this proceeding cannot be determined at this time. -10- 11 Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - 12 Computation of Ratio of Earnings to Fixed Charges. 27 Financial Data Schedule (for Securities and Exchange Commission use only). (b) Reports on Form 8-K - None.
-11- 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PIEDMONT NATURAL GAS COMPANY, INC. ---------------------------------- (Registrant) Date March 11, 1996 /s/ David J. Dzuricky -------------------- -------------------------------- David J. Dzuricky Senior Vice President-Finance (Principal Financial Officer) Date March 11, 1996 /s/ Barry L. Guy -------------------- -------------------------------- Barry L. Guy Vice President and Controller (Principal Accounting Officer) -12- EX-12 2 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES 1 Exhibit 12 PIEDMONT NATURAL GAS COMPANY, INC. AND SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges For Fiscal Years Ended October 31, 1991 through 1995 and Twelve Months Ended January 31, 1996 (in thousands except ratio amounts)
January 31, 1996 1995 1994 1993 1992 1991 -------- ---- ---- ---- ---- ---- Earnings: Net income from continuing operations $ 44,176 $ 40,310 $35,506 $37,534 $35,310 $20,552 Income taxes 27,981 25,442 21,407 23,427 21,259 11,408 Fixed charges 35,715 35,651 29,736 26,715 26,246 26,823 -------- -------- ------- ------- ------- ------- Total Adjusted Earnings $107,872 $101,403 $86,649 $87,676 $82,815 $58,783 ======== ======== ======= ======= ======= ======= Fixed Charges: Interest $33,662 $33,224 $27,671 $24,870 $24,570 $25,253 Amortization of debt expense 337 336 334 192 180 259 One-third of rental expense 1,716 2,091 1,731 1,653 1,496 1,311 ------- ------- ------- ------- ------- ------- Total Fixed Charges $35,715 $35,651 $29,736 $26,715 $26,246 $26,823 ======= ======= ======= ======= ======= ======= Ratio of Earnings to Fixed Charges 3.02 2.84 2.91 3.28 3.16 2.19 ==== ==== ==== ==== ==== ====
-13- EX-27 3 FINANCIAL DATA SCHEDULE
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF PIEDMONT NATURAL GAS FOR THE 3 MONTHS ENDED JANUARY 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS OCT-31-1996 NOV-01-1995 JAN-31-1996 PER-BOOK 815,270 26,606 190,546 16,831 0 1,049,253 234,328 0 150,166 384,494 0 0 361,000 20,000 0 0 7,000 0 0 0 276,759 1,049,253 239,160 19,924 180,332 200,256 38,904 3,290 42,194 8,096 34,098 0 34,098 7,947 0 29,094 1.18 0
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