<PAGE>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 December 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 0-82
NORTH CAROLINA NATURAL GAS CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 56-0646235
- - -------- ----------------
(State or other jurisidiction (I.R.S. Employer
incorporation or organization) Identification No.)
150 Rowan Street, Fayetteville, North Carolina 28301-4993
---------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(910) 483-0315
--------------
(Registrant's telephone number, including area code)
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.
Common Stock, $2.50 par value 6,612,838
- - ----------------------------- ------------------
Class Number of Shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement dated December 6, 1996 relating to
the January 14, 1997 Annual Meeting of Stockholders are incorporated by
reference into Part II of this quarterly report.
<PAGE>2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NORTH CAROLINA NATURAL GAS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
ASSETS
December 31, September 30,
1996 1996
------------ -------------
Gas Utility Plant $287,838 $280,012
Less-Accumulated Depreciation
and Amortization (98,032) (95,578)
------- -------
Utility Plant, net 189,806 184,434
------- -------
Nonutility Property 6,260 5,947
Less-Accumulated Depreciation (2,404) (2,358)
------- -------
Nonutility Property, net 3,856 3,589
------- -------
Current Assets:
Cash 2,034 1,117
Restricted Temporary Cash Investments 1,850 5,691
Accounts Receivable, Less Reserve 27,926 17,302
Recoverable Purchased Gas Costs 5,147 3,237
Inventories, at Average Cost -
Gas in Storage 9,699 9,983
Materials, Supplies & Merchandise 3,990 4,033
Deferred Gas Cost-Unbilled Volumes 3,824 324
Other Current Assets 616 195
------- -------
Total Current Assets 55,086 41,882
------- -------
Investment in Joint Ventures 888 744
Deferred Charges and Other Assets 2,145 2,130
------- -------
Total Assets $251,781 $232,779
======= =======
(The accompanyning notes are an integral part of these balance sheets.)
<PAGE>3
North Carolina Natural Gas Corporation And Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
CAPITALIZATION AND LIABILITIES
------------------------------
December 31, September 30,
1996 1996
----------- ------------
Capitalization:
Stockholders' Investment:
Common Stock, Par Value $2.50;
Shares Outstanding 12/31/96, 6,589;
09/30/96, 6,573 $16,473 $16,432
Capital in Excess of Par Value 30,048 29,634
Retained Earnings 59,243 55,892
------- -------
Total Stockholders' Investment 105,764 101,958
------- -------
Long-Term Debt 63,000 63,000
------- -------
Total Capitalization 168,764 164,958
------- -------
Current Liabilities:
Current Maturities of Long-Term Debt 2,000 2,000
Notes Payable 7,000 3,000
Accounts Payable 29,492 16,339
Restricted Supplier Refunds 1,850 5,691
Taxes Payable 6,589 4,281
Customer Deposits 2,304 1,964
Accrued Interest 1,012 2,334
Other Current Liabilities 2,672 2,266
------- -------
Total Current Liabilities 52,919 37,875
------- -------
Other Credits:
Deferred Income Taxes 21,028 21,015
Unamortized Investment Tax Credits 2,872 2,924
Regulatory Liability Related to
Income Taxes 2,671 2,720
Postretirement and Postemployment
Benefit Liability 2,459 2,262
Other 1,068 1,025
------- -------
Total Other Credits 30,098 29,946
------- -------
Total Capitalization and Liabilities $251,781 $232,779
======= =======
(The accompanying notes are an integral part of these balance sheets.)
<PAGE> 4
North Carolina Natural Gas Corporation And Subsidiaries
Condensed Consolidated Statements Of Income (Unaudited)
For the Three Months Ended December 31, 1996 and 1995
(in thousands except per share amounts)
1996 1995
------ ------
Operating Revenues $53,455 $46,808
Cost of Gas 33,590 30,288
------ ------
Gross Margin 19,865 16,520
------ ------
Operating Expenses and Taxes:
Operations and Maintenance 5,835 5,075
Depreciation 2,457 2,262
General Taxes 2,276 2,083
Income Taxes 3,019 2,146
------ ------
Total Operating Expenses and Taxes 13,587 11,566
------ ------
Operating Income 6,278 4,954
Other Income, net 416 658
------ ------
Income Before Utility Interest Charges 6,694 5,612
Utility Interest Charges 1,205 1,345
------ ------
Net Income $5,489 $4,267
====== ======
Average Common Shares Outstanding 6,577 6,480
====== ======
Earnings Per Share $0.83 $0.66
====== ======
Dividends Declared Per Share $0.325 $0.305
====== ======
(The accompanying notes are an integral part of these statements.)
<PAGE> 5
North Carolina Natural Gas Corporation And Subsidiaries
Condensed Consolidated Statements Of Income (Unaudited)
For The Twelve Months Ended December 31, 1996 And 1995
(In Thousands Except Per Share Amounts)
1996 1995
------ ------
Operating Revenues $203,284 $158,066
Cost of Gas 131,530 98,064
------- -------
Gross Margin 71,754 60,002
------- -------
Operating Expenses and Taxes:
Operations and Maintenance 23,848 21,181
Depreciation 9,642 8,380
General Taxes 9,076 7,537
Income Taxes 9,119 6,803
------- -------
Total Operating Expenses and Taxes 51,685 43,901
------- -------
Operating Income 20,069 16,101
Other Income, net 1,186 1,386
------- -------
Income Before Utility Interest Charges 21,255 17,487
Utility Interest Charges 4,860 4,727
------- -------
Net Income $16,395 $12,760
======= =======
Average Common Shares Outstanding 6,550 6,438
======= =======
Earnings Per Share $2.50 $1.98
======= =======
Dividends Declared Per Share $1.28 $1.22
======= =======
(The accompanying notes are an integral part of these statements.)
<PAGE> 6
North Carolina Natural Gas Corporation And Subsidiaries
Condensed Consolidated Statements Of Cash Flows (Unaudited)
For The Three Months Ended December 31, 1996 And 1995
(In Thousands)
1996 1995
------ ------
Cash Flows From Operating Activities:
Net Income $5,489 $4,267
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Depreciation and amortization 2,516 2,339
Change in deferred income taxes and
deferred investment tax credits, net 62 331
Change in other current assets and
liabilities (4,088) (9,426)
Other 2,912 5,130
------ ------
Net cash provided by operating activities 6,891 2,641
------ ------
Cash Flows From Investing Activities:
Property additions (8,146) (3,920)
Other, net (145) (345)
------ ------
Net cash used in investing activities (8,291) (4,265)
------ ------
Cash Flows From Financing Activities:
Increase (decrease) in notes payable 4,000 (23,000)
Issuance of long-term debt - 30,000
Cash dividends paid (2,137) (1,976)
Issuance of common stock through dividend
reinvestment, employee stock purchase,
and key employee stock option plans 454 380
------ ------
Net cash provided by financing activities 2,317 5,404
------ ------
Net increase in cash and temporary
cash investments 917 3,780
Cash and temporary cash investments,
beginning of period 1,117 1,639
------ ------
Cash and temporary cash investments,
end of period $2,034 $5,419
====== ======
Cash paid for:
Interest, net of amounts capitalized $2,680 $1,992
Income taxes, net of refunds 1,995 13
(The accompanying notes are an integral part of these statements.)
<PAGE>7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
Note 1: The condensed financial statements included in this report reflect only
normal recurring adjustments which are, in the opinion of management, necessary
to a fair statement of the results for the periods shown. Because of the
seasonal nature of the Company's business, the results of operations for the
three month period ended December 31, 1996 are not necessarily indicative of the
results for the full year. These financial statements have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's annual report for the
fiscal year ended September 30, 1996.
Note 2: Certain prior year amounts in the unaudited condensed
consolidated Financial Statements have been reclassified to conform with
current year presentation.
Note 3: Long-Term Debt at December 31, 1996:
Amount Due
Within
Issue One Year Total
7.15% Senior Notes,
due 11/15/15 $ - $30,000,000
9.21% Debentures, Series C,
due 11/15/11 - 25,000,000
8.75% Debentures, Series B,
due 06/15/01 2,000,000 10,000,000
---------- ----------
Long-Term Debt $ 2,000,000 $65,000,000
========== ==========
<PAGE>8
Note 4: At December 31, 1996, the Company had $1.8 million in restricted
supplier refunds, none of which were received in the current quarter. Upon order
of the NCUC, the Company has invested all of these funds in U.S. Treasury
securities until such time as the Commission orders the funds transferred to an
Expansion Fund ( the Fund). The Fund is administered by the Commission pursuant
to legislation passed in July 1991, and it encourages the expansion of Natural
Gas service into unserved areas of the State, including substantial portions of
the Company's franchised service territory. On April 30, 1993, October 19, 1994,
and November 13, 1996, respectively, the Company transferred $3.8 million, $6.6
million, and $3.9 million to the Fund. At December 31, 1996, a total of $16.2
million is in the Fund and is available to the Company only upon application
to the NCUC for an expansion project approved by the NCUC.
<PAGE>9
Item 2.
Management's Discussion And Analysis
Of Financial Condition And Results Of Operations
(1) Material Changes in Financial Condition
Current cash requirements are financed primarily through internally
generated cash, the issuance of new common stock through dividend reinvestment,
employee stock purchase and key employee stock option plans along with committed
bank lines of credit totaling $24.0 million plus the cost of gas in storage. At
December 31, 1996, loans totaling $7.0 million were outstanding under the lines
of credit compared to $3.0 million outstanding at September 30, 1996.
Construction spending was $8.1 million for the three months ended December 31,
1996, compared to $3.9 million for the same period in 1995. This increase in
spending was caused by reduced spending in the 1995 quarter due to certain
budgeted construction projects not being completed as planned. Construction
expenditures for the remainder of the fiscal year 1997 are projected at $30
million. Management believes that the Company's lines of credit and cash
provided from operating activities will be sufficient to satisfy the Company's
anticipated short-term cash requirements during the remainder of fiscal year
1997.
The Company's business is seasonal in nature as fluctuations in weather
dictate injecting and withdrawing from Company storage and billings to
residential and commercial customers. Injections of natural gas into storage and
a reduction in customer billings occur during the periods of warm weather (April
through October). Withdrawals from storage and increased customer billings occur
during periods of cold weather (November through March). In addition, the cost
of gas included in storage and rates is subject to changes in market conditions.
This seasonality is the primary reason for the lower volumes of gas in storage
as of December 31, 1996, which is somewhat offset by higher average gas costs.
The seasonality and higher gas costs included in rates also accounts for the
higher level of accounts receivable in the current quarter.
Recoverable Purchased Gas Costs primarily represent the difference between
the Company's benchmark rate charged to customers and the actual cost of gas.
The increase is due to higher gas costs in the winter of 1996; and the balance
will be recovered in rates to customers in future periods.
<PAGE>10
Net cash provided by operating activities increased $4.3 million for the
three months ended December 31, 1996, as compared to the same period last year.
This increase was due primarily to (1) an increase in accounts payable caused by
higher cost of gas and increased construction activity and (2) an increase in
taxes payable due to higher income and related taxes.
Net cash provided by financing activities decreased $3.1 million for
the three months ended December 31, 1996, as compared to the same period
last year. The primary reason for this decrease was the private placement of
$30.0 million Senior Notes reduced by the net repayment of short-term debt
in the amount of $23.0 million in the 1995 quarter compared to net short-term
borrowings of $4.0 million in the 1996 quarter.
(2) Material Changes in Results of Operations
Net income increased to $5.5 million for the three months ended December
31, 1996 from $4.3 million for the three months ended December 31, 1995, while
earnings per share increased to $.83 in the 1996 quarter from $.66 in the 1995
quarter. For the twelve months ended December 31, 1996, net income increased to
$16.4 million from $12.8 million for the twelve months ended December 31, 1995.
Earnings per share for the twelve months ended December 31, 1996 increased to
$2.50 from $1.98 for the prior year.
Increased earnings in the quarter were primarily the result of a 7%
increase in total throughput volumes driven by above-average customer growth.
Because the weather was 20% warmer this quarter compared to the same period last
year, the company curtailed its industrial customers less resulting in more
sales and transportation from these customers not affected by the Company's
Weather Normalization Adjustment (WNA) rate mechanism.
Increased earnings for the calendar year were primarily affected by (1)
higher sales to residential and commercial customers as result of customer
growth and colder weather; (2) a 4.7% increase in the customer base which
resulted in increased facilities charges; (3) higher earnings realized by the
Company's Propane Division; and (4) the Company's general rate increase
effective November 1, 1995.
<PAGE> 11
Gross margin increased for all customer classes for both the three month
and twelve month periods. Positively affecting both periods were customer growth
and related income in facilities' charges, the change in the Company's last
general rate case to adopt the Price Sensitive Volume Adjustment (PSVA)
mechanism and elimination of the Industrial Sales Tracker (IST) mechanism, as
this change resulted in the Company's retention of more margin from the large
interruptible customers with #6 oil as an alternative fuel. Also affecting the
twelve month period was increased rates as a result of the November 1, 1995
General Rate increase.
The chart below compares margins for the three month and twelve month
periods by customer class (000's omitted):
Gross Margin By Customer Class
3 Month 12 Months
--------------------------- ---------------------------
1996 1995 1996 1995
------ ------ ------ ------
Residential $ 5,974 $ 5,193 $25,009 $18,400
Commercial 3,597 3,001 14,367 10,587
Industrial 7,795 6,052 24,567 24,084
Municipal 2,499 2,274 7,811 6,931
------ ------ ------ ------
Total $19,865 $16,520 $71,754 $60,002
====== ====== ====== ======
The chart on the next page shows sales and transportation throughput
volumes (in thousands of dt) by customer class for both the three month and
twelve month periods for 1996 and 1995:
<PAGE> 12
THROUGHPUT VOLUMES (Mdt) BY CUSTOMER CLASS
3 Months 12 Months
-------------------- --------------------
1996 1995 1996 1995
---- ---- ---- ----
Residential 1,510 1,519 7,129 5,960
Commercial 1,240 1,232 5,518 4,789
Industrial 8,410 7,361 31,919 33,528
Municipal 2,847 2,930 9,480 8,855
------ ------ ------ ------
Total 14,007 13,042 54,046 53,132
====== ====== ====== ======
The following chart shows the same total throughput volumes classified by
sales and transportation:
THROUGHPUT VOLUMES (Mdt) BY TYPE OF SERVICE
3 Months 12 Months
-------------------- --------------------
1996 1995 1996 1995
---- ---- ---- ----
Sales 8,657 10,897 37,992 37,878
Transportation 5,350 2,145 16,054 15,254
------ ------ ------ ------
Total 14,007 13,042 54,046 53,132
====== ====== ====== ======
The Company earns the same profit margin on transportation of
customer-owned gas as it earns from sales transactions to those customers.
However, changes in the mix of transportation and sales volumes can have
significant impacts on operating revenues and cost of gas, because the commodity
cost of gas associated with transportation volumes is paid by the customer
directly to the customer's supplier and is, therefore, not incurred nor billed
by the Company.
<PAGE> 13
Winter Weather in the Company's service area was much warmer than normal-
about 20% - during the quarter ended December 31, 1996 compared to weather that
was 5% colder than normal in the quarter ended December 31, 1995. Because of the
WNA mechanism in the Company's firm service rates to residential, commercial and
municipal customers, margins earned on sales to those customers are normalized
by raising rates when weather is warmer and lowering rates when weather is
colder than normal. However, the industrial rates are not normalized, and the
Company was able to sell or transport more industrial volumes during the 1996
quarter because the warmer-than-normal weather resulted in fewer interruptions
of service to large, interruptible customers compared to the 1995 quarter. This
resulted in a total margin increase in the 1996 quarter as industrial volumes
increased 1,049,000 dekatherms (dt) compared to the 1995 quarter.
Because the early months of the year were colder than normal, for the
entire calendar year 1996 weather was only 2% warmer than normal. The colder
weather in the early months of calendar year 1996 caused interruptible customers
to experience significant curtailments resulting in decreased throughput to
industrials during this period compared to the same period in 1995. Throughout
the remainder of the year, some price sensitive industrial customers switched
from gas to #6 fuel oil. However, the Company's PSVA ratemaking mechanism
protected the company against margin loss. During the same periods in 1995, all
of the Company's large industrial customers remained on gas because gas
was cheaper than oil throughout the period.
In addition, the Company added one large new industrial customer in the
fourth quarter of 1995 that used 949,000 dt of gas in calendar 1996 compared to
118,000 dt in only the fourth quarter of 1995.
The combination of all of these above factors explain why industrial
volumes increased in the 1996 fourth calendar quarter but decreased for the
entire calendar year 1996 compared to calendar year 1995.
Cost of gas increased $3.3 million for the three month period ended
December 31, 1996 as compared to the same period last year. During the current
quarter the commodity cost of gas increased 53%. However, largely mitigating the
increase in the commodity price of gas was a shift from sales to transportation
volumes by some of the Company's industrial customers which resulted in the
Company purchasing 2,565,000 dt less than the same period last year.
<PAGE> 14
Cost of gas increased $33.5 million for the twelve month period ended
December 31, 1996 as compared to the same period last year. This increase was
primarily caused by a 58% increase in the commodity cost of gas.
Operating revenues increased $6.6 million and $45.2 million, respectively,
for the three month and twelve month periods ended December 31, 1996. Affecting
both periods were (1) higher natural gas commodity prices and (2) an increase in
the total customer base. In addition, affecting the twelve month period was (1)
increased sales to residential, commercial and municipal customers and (2) the
general rate increase effective November 1, 1995.
Operations and maintenance expenses increased $760,000, and $2.7 million,
respectively, for the three month and twelve month periods ended December 31,
1996 as compared to the same periods last year. Affecting both periods were
increased transmission operations expenses, distribution maintenance expenses,
higher wages associated with the addition of 6,588 new customers from December
31, 1995 to December 31, 1996, and an increase in the provision for
uncollectible accounts due to an increase in sales as a result of customer
growth and higher rates. Salaries and wages represent a substantial amount of
the Company's operations and maintenance expenses, and they increased
approximately 4% during the twelve months ended December 31, 1996. The second
largest factor was the increased expense of higher provisions for postretirement
and postemployment benefit obligations related to FAS 106 and FAS 112,
respectively.
Depreciation expense increased in all periods as compared to the same
periods last year. These increases were caused by (1) the addition of utility
plant in service, primarily transmission and distribution plant, related to
system expansion and customer growth; and (2) an increase in the depreciation
rate which became effective concurrently with the Company's general rate case,
November 1, 1995.
General taxes increased in both periods as compared to the same periods
last year. The most significant tax is the state gross receipts tax which is
based on revenues and, therefore, it tracks the change in revenues. Also, higher
property and payroll taxes affected all periods.
<PAGE> 15
Income taxes increased $873,000 and $2.3 million, respectively, for the
three month and twelve month periods ended December 31, 1996, as compared to the
same periods last year. These increases were caused by an increase in operating
income.
Other income, net, decreased $242,000 for the quarter ended December 31,
1996 as compared to the same period last year. This decrease was primarily
caused by (1) reduced earnings in the Company's Propane Division due to flat
sales to residential and commercial customers because of warmer weather and
higher cost of propane gas, and (2) reduced net income generated by the
Company's subsidiaries, NCNG Exploration and Cape Fear Energy.
Other income, net, decreased $200,000 for the twelve month period ended
December 31, 1996 as compared to the same period last year. This decrease was
caused primarily by a write-down in mid 1996 of nonutility assets whose
realization is uncertain. Partially offsetting this decrease were increased
profits from the Company's merchandise and jobbing operations associated with
customer and volume growth, and increased revenues from the Company's Propane
Division due to higher sales volumes in early calendar year 1996 and customer
growth.
Utility interest charges decreased $144,000 for the quarter ended December
31, 1996 as compared to the same quarter last year. This decrease was caused by
reduced interest expense on short-term debt because of a reduction in short-term
financing. Partially offsetting this decrease was increased long-term debt
expense associated with the November 10, 1995 issuance of $30 million principal
amount of 7.15% Senior Notes.
Utility interest expense increased $133,000 for the twelve month period
ended December 31, 1996 as compared to the same period last year. This increase
was caused by increased long-term debt charges related to the debt issue
mentioned above and a decrease in allowance for funds used during construction
because of less work in progress during the calendar year. Partially offsetting
this increase was a reduction in interest expense related to reduced short-term
debt financing.
<PAGE> 16
Part II - Other Information
Item 1. Legal Proceedings
None.
Item 2. Changes in the Rights of the Company's Security Holders
None.
Item 3. Default Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
(a) Date of the meeting or of the action without a meeting:
January 14, 1997
(b) Whether the meeting was an annual or a special meeting:
Annual Meeting
(c) Names of each director elected at the meeting and the number of
votes cast for, against or withheld, and abstentions:
James E. S. Hynes For: 4,630,534
Against or Withheld: 44,259
Richard F. Waid For: 4,619,179
Against or Withheld: 55,614
Calvin B. Wells For: 4,623,860
Against or Withheld: 41,933
<PAGE> 17
(d) Name of each other director whose term of office as director
continued after the meeting:
George T. Clark, Jr. Robert T. Johnson
Paul A. DelaCourt John O. McNairy
Frank B. Holding, Jr. William H. Prestage
(e) Brief description of each matter voted upon and the number of
votes cast for, against or withheld, and abstentions:
To consider approval of the Company's Long Term Incentive Plan:
For: 4,325,407
Against: 278,891
Abstentions: 70,495
To consider approval of the Company's Directors' Deferred
Compensation Stock Plan:
For: 4,308,208
Against: 267,233
Abstentions: 99,352
To consider approval of the Company's Directors' Retirement
Compensation Stock Plan:
For: 4,106,945
Against: 457,696
Abstentions: 110,152
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Long Term Incentive Plan, Directors' Deferred Compensation
Stock Plan and Directors' Retirement Compensation Stock Plan previously filed
with the Securities and Exchange Commission as exhibits to the Company's Proxy
Statement dated December 6, 1996 relating to the January 14,1 997 Annual Meeting
of Stockholders are incorporated by reference into Part II, Item 4(e) of this
quarterly report.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
<PAGE> 18
SIGNATURE
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.
NORTH CAROLINA NATURAL GAS CORPORATION
--------------------------------------
(Registrant)
Date: February 14, 1997 /s/ Gerald A. Teele
---------------------------------------
Gerald A. Teele
Senior Vice President, Treasurer and
Chief Financial Officer
(Principal Financial Officer)
Date: February 14, 1997 /s/ Ronald J. Josephson
---------------------------------------
Ronald J. Josephson
Vice President-Financial Services
(Principal Accounting Officer)
<PAGE> 19
NORTH CAROLINA NATURAL GAS CORPORATION
INDEX OF EXHIBITS
The following exhibit is filed as part of this Form 10-Q for the period
ended December 31, 1996:
Exhibit
Number
27 - Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000072596
<NAME> NORTH CAROLINA NATURAL GAS CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 189806
<OTHER-PROPERTY-AND-INVEST> 3856
<TOTAL-CURRENT-ASSETS> 55086
<TOTAL-DEFERRED-CHARGES> 3033
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 251781
<COMMON> 16473
<CAPITAL-SURPLUS-PAID-IN> 30048
<RETAINED-EARNINGS> 59243
<TOTAL-COMMON-STOCKHOLDERS-EQ> 105764
0
0
<LONG-TERM-DEBT-NET> 63000
<SHORT-TERM-NOTES> 7000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 2000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 74017
<TOT-CAPITALIZATION-AND-LIAB> 251781
<GROSS-OPERATING-REVENUE> 53455
<INCOME-TAX-EXPENSE> 3019
<OTHER-OPERATING-EXPENSES> 44158
<TOTAL-OPERATING-EXPENSES> 47177
<OPERATING-INCOME-LOSS> 6278
<OTHER-INCOME-NET> 416
<INCOME-BEFORE-INTEREST-EXPEN> 6694
<TOTAL-INTEREST-EXPENSE> 1205
<NET-INCOME> 5489
0
<EARNINGS-AVAILABLE-FOR-COMM> 5489
<COMMON-STOCK-DIVIDENDS> 2137
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 6891
<EPS-PRIMARY> $.83
<EPS-DILUTED> $.83
</TABLE>
