SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 June 30, 1995
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 1-8809
SCANA Corporation
(Exact name of registrant as specified in its charter)
South Carolina 57-0784499
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1426 Main Street, Columbia, South Carolina 29201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (803) 748-3000
Former name, former address and former fiscal year, if changed
since last report.
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 .
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes . No .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
97,574,387 Common Shares, without par value, as of June 30, 1995
1
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SCANA CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Page
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1995
and December 31, 1994.......................... 3
Consolidated Statements of Income and Retained
Earnings for the Periods Ended June 30, 1995
and 1994....................................... 5
Consolidated Statements of Cash Flows for the
Periods Ended June 30, 1995 and 1994........... 6
Notes to Consolidated Financial Statements..... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............ 10
PART II. OTHER INFORMATION
Item 1. Legal
Proceedings.................................... 16
Item 6. Exhibits and Reports on Form 8-K............... 17
Signatures..................................... 18
Exhibit Index.................................. 19
2
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PART I
FINANCIAL INFORMATION
SCANA CORPORATION
CONSOLIDATED BALANCE SHEETS
As of June 30, 1995 and December 31, 1994
(Unaudited)
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June 30, December 31,
1995 1994
(Thousands of Dollars)
As adjusted
(Note 1)
ASSETS
Utility Plant:
Electric................................................... $3,481,082 $3,424,951
Gas........................................................ 469,089 467,576
Transit.................................................... 3,456 3,785
Common..................................................... 76,827 77,327
Total.................................................... 4,030,454 3,973,639
Less accumulated depreciation and amortization............. 1,368,506 1,333,360
Total.................................................... 2,661,948 2,640,279
Construction work in progress.............................. 651,033 582,628
Nuclear fuel, net of accumulated amortization.............. 37,114 43,591
Acquisition adjustment-gas, net of accumulated
amortization............................................. 26,671 27,169
Utility Plant, Net.................................... 3,376,766 3,293,667
Nonutility Property and Investments, net of accumulated
depreciation and depletion................................. 327,483 317,309
Current Assets:
Cash and temporary cash investments........................ 13,223 12,938
Receivables................................................ 174,005 183,180
Inventories (at average cost):
Fuel..................................................... 53,017 60,273
Materials and supplies................................... 47,727 47,463
Prepayments................................................ 22,574 19,853
Accumulated deferred income taxes.......................... 18,199 18,629
Total Current Assets.................................. 328,745 342,336
Deferred Debits:
Emission allowances........................................ 22,491 19,409
Unamortized debt expense................................... 13,392 13,488
Unamortized deferred return on plant investment............ 8,492 10,614
Nuclear plant decommissioning fund......................... 33,226 30,383
Other...................................................... 289,807 289,306
Total Deferred Debits................................. 367,408 363,200
Total....................................... $4,400,402 $4,316,512
See notes to consolidated financial statements.
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SCANA CORPORATION
CONSOLIDATED BALANCE SHEETS
As of June 30, 1995 and December 31, 1994
(Unaudited)
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June 30, December 31,
1995 1994
(Thousands of Dollars)
As adjusted
(Note 1)
CAPITALIZATION AND LIABILITIES
Stockholders' Investment:
Common Equity:
Common stock (without par value)......................... $ 920,933 $ 886,770
Retained earnings........................................ 469,247 472,371
Total Common Equity..................................... 1,390,180 1,359,141
Preferred stock (not subject to purchase or sinking funds). 26,027 26,027
Total Stockholders' Investment.......................... 1,416,207 1,385,168
Preferred stock, net (subject to purchase or sinking funds).. 47,543 49,528
Long-term debt, net.......................................... 1,605,907 1,548,824
Total Capitalization.................................. 3,069,657 2,983,520
Current Liabilities:
Short-term borrowings...................................... 168,189 171,827
Current portion of long-term debt.......................... 101,609 38,055
Current portion of preferred stock......................... 2,310 2,418
Accounts payable........................................... 87,118 119,963
Customer deposits.......................................... 13,757 13,768
Taxes accrued.............................................. 17,948 46,670
Interest accrued........................................... 25,942 25,226
Dividends declared......................................... 36,839 35,530
Other...................................................... 12,448 17,220
Total Current Liabilities............................. 466,160 470,677
Deferred Credits:
Accumulated deferred income taxes.......................... 556,967 561,703
Accumulated deferred investment tax credits................ 89,534 91,349
Accumulated reserve for nuclear plant decommissioning...... 33,226 30,383
Other...................................................... 184,858 178,880
Total Deferred Credits................................ 864,585 862,315
Total....................................... $4,400,402 $4,316,512
See notes to consolidated financial statements.
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SCANA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Periods Ended June 30, 1995 and 1994
(Unaudited)
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Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
(Thousands of Dollars, Except Per Share Amounts)
As adjusted As adjusted
(Note 1) (Note 1)
OPERATING REVENUES:
Electric.................................. $239,004 $225,188 $469,578 $460,046
Gas....................................... 71,116 69,910 184,275 181,339
Transit................................... 1,016 948 2,043 1,969
Total Operating Revenues.............. 311,136 296,046 655,896 643,354
OPERATING EXPENSES:
Fuel used in electric generation.......... 54,273 54,312 106,124 111,296
Purchased power........................... 6,708 5,012 7,337 9,798
Gas purchased for resale.................. 44,958 46,158 110,363 114,907
Other operation........................... 57,599 57,859 113,729 112,713
Maintenance............................... 15,746 17,735 30,536 33,221
Depreciation and amortization............. 30,740 29,806 61,519 59,544
Income taxes.............................. 19,743 15,962 48,602 44,053
Other taxes............................... 20,357 19,154 41,628 38,376
Total Operating Expenses.............. 250,124 245,998 519,838 523,908
OPERATING INCOME............................ 61,012 50,048 136,058 119,446
OTHER INCOME:
Allowance for equity funds used
during construction..................... 2,455 1,959 4,923 4,069
Other income, net of income taxes......... (15,358) 5,906 (9,530) 13,564
Total Other Income.................... (12,903) 7,865 (4,607) 17,633
INCOME BEFORE INTEREST CHARGES AND
PREFERRED STOCK DIVIDENDS................. 48,109 57,913 131,451 137,079
INTEREST CHARGES (CREDITS):
Interest expense.......................... 33,819 27,946 67,171 55,811
Allowance for borrowed funds used
during construction..................... (2,726) (1,749) (5,434) (3,429)
Total Interest Charges, Net........... 31,093 26,197 61,737 52,382
INCOME BEFORE PREFERRED STOCK CASH
DIVIDENDS OF SUBSIDIARY................... 17,016 31,716 69,714 84,697
PREFERRED STOCK CASH DIVIDENDS OF
SUBSIDIARY (At stated rates).............. (1,430) (1,462) (2,864) (3,001)
NET INCOME.................................. 15,586 30,254 66,850 81,696
RETAINED EARNINGS AT BEGINNING
OF PERIOD, AS PREVIOUSLY REPORTED......... 535,804 523,402 523,668 506,380
ADJUSTMENTS FOR THE CUMULATIVE EFFECT
ON PRIOR PERIODS OF APPLYING RETRO-
ACTIVELY THE FULL COST METHOD OF
ACCOUNTING FOR OIL AND GAS (NOTE 1C)...... (47,016) (14,232) (51,297) (15,550)
BALANCE AT BEGINNING OF PERIOD, AS ADJUSTED. 488,788 509,170 472,371 490,830
COMMON STOCK CASH DIVIDENDS DECLARED........ (35,127) (33,336) (69,974) (66,438)
RETAINED EARNINGS AT END OF PERIOD.......... $469,247 $506,088 $469,247 $506,088
NET INCOME.................................. $ 15,586 $ 30,254 $ 66,850 $ 81,696
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING (THOUSANDS) (Note 1B). 97,414 94,363 97,026 94,030
EARNINGS PER WEIGHTED AVERAGE SHARE
OF COMMON STOCK.......................... $ .16 $ .32 $ .69 $ .87
CASH DIVIDENDS DECLARED PER SHARE OF
COMMON STOCK............................. $ .36 $ .3525 $ .72 $ .7050
See notes to consolidated financial statements.
5
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SCANA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Periods Ended June 30, 1995 and 1994
(Unaudited)
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Six Months Ended
June 30,
1995 1994
(Thousands of Dollars)
As adjusted
CASH FLOWS FROM OPERATING ACTIVITIES: (Note 1)
Net income............................................ $ 66,850 $ 81,696
Adjustments to reconcile net income to net cash
provided from operating activities:
Depreciation, depletion and amortization............ 112,742 92,626
Amortization of nuclear fuel........................ 9,488 8,885
Deferred income taxes, net.......................... (4,686) 11,588
Deferred investment tax credits, net................ (1,815) (1,823)
Net regulatory asset - adoption of SFAS No. 109..... (1,381) (1,132)
Dividends declared on preferred stock of subsidiary. 2,864 3,001
Equity (earnings) losses of investees............... (1,414) (173)
Nuclear refueling accrual........................... 3,479 3,763
Allowance for funds used during construction........ (10,357) (7,498)
Over (under) collections, fuel adjustment clause.... 24,693 (1,020)
Early retirements................................... (16,684) -
Emission allowances................................. (3,082) -
Changes in certain current assets and liabilities:
(Increase) decrease in receivables................. 9,175 5,048
(Increase) decrease in inventories................. 6,992 9,507
(Increase) decrease in prepayments................. (2,721) -
Increase (decrease) in accounts payable............ (32,844) (48,048)
Increase (decrease) in estimated rate refunds
and related interest............................. - (638)
Increase (decrease) in taxes accrued............... (28,722) (22,564)
Increase (decrease) in interest accrued ........... 716 (276)
Other, net.......................................... (4,048) 2,708
Net Cash Provided From Operating Activities............. 129,245 135,650
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility property additions and construction
expenditures........................................ (152,810) (172,146)
Increase in other property and investments............ (62,178) (63,610)
Sale of assets of subsidiary.......................... - 48,365
Principal noncash item:
Allowance for funds used during construction........ 10,357 7,498
Net Cash Used For Investing Activities.................. (204,631) (179,893)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds:
Issuance of First Mortgage Bonds.................... 99,583 -
Issuance of other long-term debt.................... 64,254 99,000
Issuance of notes and loans......................... 60,000 60,000
Issuance of common stock............................ 32,910 31,245
Repayments:
First and Refunding Mortgage Bonds.................. (48,779) -
Redemption of notes................................. (58,864) (64,000)
Other long-term debt................................ - (13,128)
Preferred stock..................................... (2,094) (2,002)
Dividend payments:
Common stock........................................ (68,731) (65,036)
Preferred stock of subsidiary....................... (2,906) (3,061)
Short-term borrowings, net............................ (3,637) (9,499)
Fuel financings, net.................................. 3,935 7,043
Net Cash Provided From Financing Activities............. 75,671 40,562
NET INCREASE (DECREASE) IN CASH AND
TEMPORARY CASH INVESTMENTS............................ 285 (3,681)
CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1........ 12,938 30,565
CASH AND TEMPORARY CASH INVESTMENTS AT JUNE 30.......... $ 13,223 $ 26,884
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for - Interest (includes capitalized
interest of $5,434 and $3,429)....... $ 65,583 $ 55,266
- Income taxes.......................... 45,501 38,728
See notes to consolidated financial statements.
6
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SCANA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995
(Unaudited)
The following notes should be read in conjunction with the
Notes to Consolidated Financial Statements appearing in the
Company's Annual Report on Form 10-K for the year ended December
31, 1994. These are interim financial statements and, because of
temperature variations between seasons of the year, the amounts
reported in the Consolidated Statements of Income are not
necessarily indicative of amounts expected for the year. In the
opinion of management, the information furnished herein reflects
all adjustments, all of a normal recurring nature, which are
necessary for a fair statement of the results for the interim
periods reported.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A. Principles of Consolidation:
The accounts of the Company and its wholly owned
subsidiaries are consolidated in the accompanying
Consolidated Financial Statements. Certain investments are
reported using the equity method of accounting. Significant
intercompany balances and transactions have been eliminated
in consolidation.
B. Stock Split
On April 27, 1995, the Company's Board of Directors approved
a two-for-one split of the Company's Common Stock effective
at the close of business May 11, 1995. The weighted average
number of common shares outstanding, earnings per weighted
average share of common stock and cash dividends declared
per share of common stock have been restated to reflect the
stock split for all periods reported.
C. Change in Method of Accounting for Oil and Gas
Operations
During the second quarter of 1995 the Company's oil and gas
subsidiary, SCANA Petroleum Resources, Inc. (SPR), changed
from the successful efforts method to the full cost method
of accounting for its oil and gas operations. The Company
believes the full cost method provides a better matching of
revenues and expenses given the change in SPR's primary focus
from a purchaser of producing oil and gas properties to a
developer of reserves on its own or others' properties. The
financial statements of prior periods have been restated to
apply the new method retroactively. The effects of the
accounting change on the income statements for the second
quarters of 1995 and 1994, for the six months ended June 30,
1995 and 1994 and for the years ended December 31, 1994,
1993 and 1992, respectively, are as follows:
<TABLE>
<S> <C> <C> <C> <C>
Increase (Decrease)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
Effect on-- 1995 1994 1995 1994
Other income, net of
income taxes $ (4,629) $1,087 $ (349) $2,405
Net income $ (4,629) $1,087 $ (349) $2,405
Earnings Per Weighted
Average Share of
Common Stock* $ (.05) $ .01 $ - $ .03
</TABLE>
7
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Increase (Decrease)
(In thousands, except per share amounts)
Year Ended December
Effect on-- 1994 1993 1992
Other income, net of
income taxes $(35,747) $(2,741) $ 77
Net income $(35,747) $(2,741) $ 77
Earnings Per Weighted
Average Share of
Common Stock* $ (.38) $ (.03) $ -
* The effect on prior periods has been adjusted for a two-for-one stock
split effective May 11, 1995.
The balances of retained earnings as of March 31, 1995 and
December 31, 1994, have been reduced for the effect (net of
income taxes) of applying retroactively the new method of
accounting.
D. Reclassifications:
Certain amounts from prior periods have been reclassified to
conform with the 1995 presentation.
2. RATE MATTERS:
With respect to rate matters at June 30, 1995, reference is
made to Note 2 of Notes to Consolidated Financial Statements
in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994. On July 10, 1995, South Carolina
Electric & Gas Company (SCE&G) filed an application with the
Public Service Commission of South Carolina (PSC) for an
increase in retail electric rates. The proposed increase of
8.35% would produce additional revenues of approximately
$76.7 million annually, if approved. SCE&G has requested
that the increase be implemented in two phases. The first
phase, an increase in revenues of approximately $61.8
annually, or 6.73%, would commence at the time SCE&G's 385
MW generating station currently under construction near
Cope, S. C. begins commercial operation, which is expected
in January 1996. The second phase is planned in January
1997 and would produce additional revenues of approximately
$14.9 million annually, or 1.62% more than current rates.
No assurance can be given as to the adequacy or timing of
the rate relief that will be granted by the PSC. Hearings
are scheduled to begin during November 1995.
3. RETAINED EARNINGS:
The Restated Articles of Incorporation of the Company do not
limit the dividends that may be payable on its common stock.
However, the Restated Articles of Incorporation of SCE&G and
the Indenture underlying certain of its bond issues contain
provisions that may limit the payment of cash dividends on
common stock. In addition, with respect to hydroelectric
projects, the Federal Power Act may require the
appropriation of a portion of the earnings therefrom. At
June 30, 1995 approximately $14.5 million of SCE&G's
retained earnings were restricted as to payment of cash
dividends on common stock.
4. COMMITMENTS AND CONTINGENCIES:
With respect to commitments at June 30, 1995, reference is made
to Note 10 of Notes to Consolidated Financial
Statements appearing in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994. No
significant changes have occurred with respect to those
matters as reported therein.
A. Nuclear Insurance
The Price-Anderson Indemnification Act, which deals with
public liability for a nuclear incident, currently
establishes the liability limit for third-party claims
associated with any nuclear incident at $9.4 billion. Each
reactor licensee is currently liable for up to $79.3 million
per reactor owned for each nuclear incident occurring at any
reactor in the United States, provided that not more than
$10 million of the liability per reactor would be assessed
per year. SCE&G's maximum assessment, based on its two-
thirds ownership of Summer Station, would be
approximately $52.9 million per incident but not more than
$6.7 million per year.
8
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SCE&G currently maintains policies (for itself and on behalf
of the PSA) with American Nuclear Insurers (ANI) and Nuclear
Electric Insurance Limited (NEIL) providing combined primary
and excess property and decontamination insurance coverage
of $1.9 billion for any losses at Summer Station. SCE&G
pays annual premiums and, in addition, could be assessed a
retrospective premium assessment not to exceed 7.5 times its
annual premium in the event of property damage loss to any
nuclear generating facility covered under the NEIL program.
Based on the current annual premium, this retrospective
premium assessment would not exceed $8.2 million.
To the extent that insurable claims for property damage,
decontamination, repair and replacement and other costs and
expenses arising from a nuclear incident at Summer Station
exceed the policy limits of insurance, or to the extent such
insurance becomes unavailable in the future, and to the
extent that SCE&G's rates would not recover the cost of any
purchased replacement power, SCE&G will retain the risk of
loss as a self-insurer. SCE&G has no reason to anticipate a
serious nuclear incident at Summer Station. If such an
incident were to occur, it could have a materially adverse
impact on the Company's financial position.
B. Environmental
The Company has an environmental assessment program to
identify and assess current and former operations sites that
could require environmental cleanup. As site assessments
are initiated, an estimate is made of the amount of
expenditures, if any, necessary to investigate and clean up
each site. These estimates are refined as additional
information becomes available; therefore actual expenditures
could significantly differ from the original estimates.
Amounts estimated and accrued to date for site assessment
and cleanup relate primarily to regulated operations; such
amounts have been deferred (approximately $19.5 million) and
are being amortized and recovered through rates over a ten-
year period for electric operations and an eight-year period
for gas operations.
In September 1992 the Environmental Protection Agency (EPA)
notified SCE&G, the City of Charleston and the Charleston
Housing Authority of their potential liability for the
investigation and cleanup of the Calhoun Park Area Site in
Charleston, South Carolina. This site originally
encompassed approximately 18 acres and included properties
which were the locations for industrial operations,
including a wood preserving (creosote) plant and one of
SCE&G's decommissioned manufactured gas plants. The
original scope of this investigation has been expanded to
approximately 30 acres including adjacent properties owned
by the National Park Service and the City of Charleston, and
private properties. The site has not been placed on the
National Priority List, but may be added before cleanup is
initiated. The potentially responsible parties (PRP) have
agreed with the EPA to participate in an innovative approach
to site investigation and cleanup called "Superfund
Accelerated Cleanup Model," allowing the pre-cleanup site
investigations process to be compressed significantly. The
PRPs have negotiated an administrative order by consent for
the conduct of a Remedial Investigation/Feasibility Study
(RI/FS) and a corresponding Scope of Work. Actual field
work began November 1, 1993 after final approval and
authorization was granted by EPA. SCE&G is also working
with the City of Charleston to investigate potential
contamination from the manufactured gas plant which may have
migrated to the city's aquarium site. In 1994 the City of
Charleston notified SCE&G that it considers SCE&G to be
responsible for a projected $43.5 million increase in costs
of the aquarium project allegedly attributable to delays
resulting from contamination of the Calhoun Park area site.
SCE&G believes it has meritorious defenses against this
claim and does not expect its resolution to have a material
impact on its future financial position or results of
operations.
C. Loan Guarantee
MPX Systems, Inc. (MPX), a wholly owned subsidiary of SCANA,
through a joint venture with Gulf States Transmission
Systems, Inc., a subsidiary of ITC Holding Company, is
constructing a fiber optic network through Louisiana,
Mississippi, Alabama and Georgia. SCANA has guaranteed
approximately $5.1 million of the financing obtained by the
joint venture, Gulf States Fibernet.
9
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SCANA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Competition
The electric utility industry has begun a major transition
that could lead to expanded market competition and less
regulatory protection. Future deregulation of electric wholesale
and retail markets will create opportunities to compete for new
and existing customers and markets. As a result, profit margins
and asset values of some utilities could be adversely affected.
The pace of deregulation, the future market price of electricity,
and the regulatory actions which may be taken by the Public
Service Commission of South Carolina (PSC) in response to the
changing environment cannot be predicted. However, the Company
is aggressively pursuing actions to position itself strategically
for the transformed environment.
Material Changes in Capital Resources and Liquidity
From December 31, 1994 to June 30, 1995
Liquidity and Capital Resources
The cash requirements of the Company arise primarily from
South Carolina Electric & Gas Company's (SCE&G's) operational
needs, the Company's construction program and the need to fund
the activities or investments of the Company's nonregulated
subsidiaries. The ability of the Company's regulated
subsidiaries to replace existing plant investment, as well as to
expand to meet future demands for electricity and gas, will
depend upon their ability to attract the necessary financial
capital on reasonable terms. The Company's regulated
subsidiaries recover the costs of providing services through
rates charged to customers. Rates for regulated services are
generally based on historical costs. As customer growth and
inflation occur and the regulated subsidiaries expand their
construction programs, it is necessary to seek increases in
rates. As a result, the Company's future financial position and
results of operations will be affected by the regulated
subsidiaries' ability to obtain adequate and timely rate relief.
On July 10, 1995, SCE&G filed an application with the PSC
for an increase in retail electric rates. The proposed increase
of 8.35% would produce additional revenues of approximately $76.7
million annually, if approved. SCE&G has requested that the
increase be implemented in two phases. The first phase, an
increase in revenues of approximately $61.8 annually, or 6.73%,
would commence at the time SCE&G's 385 MW generating station
currently under construction near Cope, S. C. begins commercial
operation, which is expected in January 1996. The second phase
is planned in January 1997 and would produce additional revenues
of approximately $14.9 million annually, or 1.62% more than
current rates. No assurance can be given as to the adequacy or
timing of the rate relief that will be granted by the PSC.
Hearings are scheduled to begin during November 1995.
10
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The following table summarizes how the Company generated
funds for its property acquisitions and utility property
additions and construction expenditures during the six months
ended June 30, 1995 and 1994:
Six Months Ended
June 30,
1995 1994
(Thousands of Dollars)
Net cash provided from operating activities $117,610 $137,475
Net cash provided from financing activities 76,087 40,562
Cash and temporary cash investments available
at the beginning of the period 10,934 20,766
Net cash available for property acquisitions
and utility property additions and
construction expenditures $204,631 $198,803
Funds used for utility property additions
and construction expenditures, net of
noncash allowance for funds used during
construction $142,453 $164,648
Funds used for nonutility property
additions $ 11,474 $ 46,737
On January 14, 1994 the Company closed unsecured bank loans
totaling $60 million due January 13, 1995, and used the proceeds
to pay off a loan in a like amount. In January 1995 the Company
refinanced the loans with a $60 million unsecured bank loan due
January 12, 1996 at an interest rate of 6.44% subject to reset
quarterly at LIBOR plus ten basis points.
On April 12, 1995 SCE&G issued $100 million of First
Mortgage Bonds, 7 5/8% series due April 1, 2025 to repay short-
term borrowings.
Powertel PCS Partners, L.P. (Powertel), a limited
partnership that includes MPX, successfully bid for three
personal communications service licenses in the Southeast offered
by the Federal Communications Commission for the development of a
new generation of wireless communications. Powertel had winning
bids totaling $124.5 million in the FCC's auction for radio
airspace in three Major Trading Areas (MTA) that cover parts of
six states. The areas are the Jacksonville MTA, a 50-county area
of northern Florida and southern Georgia; the Memphis MTA, a 93-
county area that includes southwest Tennessee, northern and
middle Mississippi and parts of eastern Arkansas; and the
Birmingham MTA, a 53-county area of Alabama. MPX holds the
largest partnership interest, approximately 40% of Powertel.
Powertel has agreed in principle to enter into a business
combination with InterCel, Inc., a publicly tracked
cellular telephone company providing services in Georgia,
Alabama and Maine.
SCANA Petroleum Resources (SPR) and Fina Oil and Chemical
Company (Fina) have entered into a joint exploration and
development agreement providing for the exclusive oil and gas
development rights on approximately 183,000 acres of onshore
lands owned by Fina in Terrebonne and LaFourche Parishes in
southern Louisiana. The agreement calls for SPR and Fina to
begin an extensive 3-D seismic acquisition program on the
property beginning this summer and continuing over the next
several years. Fina will be the operator of the multi-million
dollar seismic program which will be financed and owned on a 50-
50 basis between the companies. SPR's participation in the
seismic and drilling activity will be financed largely with
internal cash flows from the existing SPR operations.
11
<PAGE>
SPR's change to the full cost method of accounting during
the second quarter of 1995 provides a better matching of revenues
and expenses given the primary focus of SPR on developing reserves
on its own and others' properties. In connection with the change,
additional reserve adjustments were recorded in the current and
restated prior periods. All reserve adjustments were non-cash
and had no impact on the liquidity of SPR.
The Company anticipates that the remainder of its 1995 cash
requirements will be met through internally generated funds, the
sales of additional equity securities and medium-term notes and
the incurrence of additional short-term and long-term
indebtedness. The timing and amount of such financing will
depend upon market conditions and other factors.
The ratio of earnings to fixed charges for the twelve months
ended June 30, 1995 was 2.24.
The Company expects that it has or can obtain adequate
sources of financing to meet its cash requirements for the next
twelve months and for the foreseeable future.
Statements of Financial Accounting Standards Not Yet Adopted
The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of." The provisions of the Statement, which must be
implemented by the Company for the fiscal year beginning January
1, 1996, require the recognition of a loss in the income
statement and related disclosures whenever events or changes in
circumstances indicate that the carrying amount of a long-lived
asset may not be recoverable. The Company does not believe that
adoption of the provisions of the Statement will have any
materially adverse impact on its results of operations or
financial position.
12
<PAGE>
SCANA CORPORATION
Results of Operations
For the Six Months Ended June 30, 1995
As Compared to the Corresponding Period in 1994
Earnings and Dividends
During the second quarter of 1995 the Company's oil and gas
subsidiary, SCANA Petroleum Resources, Inc. (SPR), changed from the
successful efforts method to the full cost method of accounting for
its oil and gas operations. The Company believes the full cost
method provides a better matching of revenues and expenses given
the change in SPR's operations from a purchaser of producing oil
and gas properties to a developer of reserves on its own or others'
properties. The financial statements of prior periods have been
restated to apply the new method retroactively.
Primarily as a result of operations at SPR, net income for the
three and six months ended June 30, 1995 decreased approximately
$14.7 million and $14.8 million, respectively, when compared to the
corresponding periods in 1994. SPR recorded after-tax losses of
$18.9 million and $19.7 million, respectively, for the three and
six months ended June 30, 1995.
Allowance for funds used during construction (AFC) is a
utility accounting practice whereby a portion of the cost of both
equity and borrowed funds used to finance construction (which is
shown on the balance sheet as construction work in progress) is
capitalized. Both the equity and the debt portions of AFC are
noncash items of nonoperating income which have the effect of
increasing reported net income. AFC represented approximately 9%
and 6% of income before income taxes for the six months ended June
30, 1995 and 1994, respectively.
On February 14, 1995 the Company's Board of Directors
declared a quarterly dividend on common stock of 36 cents per
share, as adjusted for the two-for-one stock split effective May
11, 1995, for the quarter ending March 31, 1995. The dividend was
paid on April 1, 1995 to common stockholders of record on March 10,
1995.
On April 27, 1995, the Company's Board of Directors declared
a quarterly dividend on common stock of 36 cents per share for the
quarter ended June 30, 1995. The dividend was paid on July 1, 1995
to common stockholders of record on June 9, 1995.
Sales Margins
The change in the electric sales margin for the three and six
months ended June 30, 1995, when compared to the corresponding
periods in 1994, were as follows:
Three Months Six Months
Change % Change Change % Change
(Millions) (Millions)
Electric operating revenues $13.8 6.1 $ 9.5 2.1
Less: Fuel used in electric
generation - - (5.2) (4.6)
Purchased power 1.7 33.8 (2.5) (25.1)
Margin $12.1 7.3 $17.2 5.2
13
<PAGE>
The electric sales margins increased for the three and six
months ended June 30, 1995 compared to the corresponding periods in
1994 as a result of the combined impact of improved economic
conditions, which resulted in increased electric sales to
commercial and industrial customers, and the base rate increase
received by SCE&G in mid-1994 which more than offset the adverse
impact of milder weather experienced during the first quarter of
1995.
The changes in the gas sales margins for the three and six
months ended June 30, 1995 compared to the corresponding periods in
1994, were as follows:
Three Months Six Months
Change % Change Change % Change
(Millions) (Millions)
Gas operating revenues $ 1.2 1.7 $ 2.9 1.6
Less: Gas purchased for resale (1.2) (2.6) (4.6) (4.0)
Margin $ 2.4 10.1 $ 7.5 11.3
The increase in the gas sales margin is primarily a result of
lower gas costs, which allowed the Company to compete more
successfully with alternate fuel suppliers in industrial markets,
and a shifting of transportation customers to the industrial class.
Other Operating Expenses
Increases in other operating expenses, including taxes, for
the three and six months ended June 30, 1995 compared to the
corresponding periods in 1994 is presented in the following table:
Three Months Six Months
Change % Change Change % Change
(Millions) (Millions)
Other operation and maintenance $(2.2) (3.0) $(1.7) (1.1)
Depreciation and amortization 0.9 3.1 2.0 3.3
Income taxes 3.8 23.7 4.5 10.3
Other taxes 1.2 6.3 3.3 8.5
Total $ 3.7 2.6 $ 8.1 2.8
Other operation and maintenance expenses for the three and six
months ended June 30, 1995 were slightly below 1994 levels
primarily as a result of lower plant maintenance costs. Increases
in depreciation and amortization expenses for the three and six
months reflect additions to plant in service. The increases in
income tax expense correspond to the increases in operating income.
The increases in other taxes reflect higher property taxes
resulting from higher millages and assessments, offset somewhat in
the second quarter of 1995 by lower payroll taxes resulting from
early retirements of employees.
14
<PAGE>
Other Income
Other income, net of income taxes, for the three and six
months ended June 30, 1995 decreased $21.3 million and $23.1
million, respectively, compared to the corresponding periods of
1994. The declines are due primarily to the effect of depressed
gas prices on SPR's operations.
Interest Charges
Interest expense, excluding the debt component of AFC, for the
three and six months ended June 30, 1995 increased $4.9 million and
$9.4 million, respectively, compared to the corresponding period of
1994. The increases are due primarily to the issuance of
additional debt (including commercial paper) during the latter part
of 1994 and early 1995.
15
<PAGE>
SCANA CORPORATION
Part II
OTHER INFORMATION
Item 1. Legal Proceedings
For information regarding legal proceedings see Note 2
"Rate Matters" and Note 4 "Commitments and Contingencies"
of Notes to Consolidated Financial Statements.
Items 2, 3 and 5 are not applicable.
Item 4. Submission of Matters to a Vote of Security-Holders
The Annual Meeting of the Shareholders of SCANA Common
Stock (No Par Value) was held on April 27, 1995. The
following matters were voted upon at the meeting.
1. To elect six (6) directors for the terms specified in
the Proxy Statement.
Number of Number of Shares Total
Shares Voting Voting to Shares
Nominee For Withhold Authority Voted
William B. Bookhart, Jr. 43,020,921.959 326,101.895 43,347,023.854
James B. Edwards 42,968,491.989 378,531.865 43,347,023.854
Elaine T. Freeman 43,001,684.662 345,339.192 43,347,023.854
W. Hayne Hipp 42,997,395.919 349,627.935 43,347,023.854
F. Creighton McMaster 43,015,148.421 331,875.433 43,347,023.854
John B. Rhodes 43,003,871.454 343,206.400 43,347,023.854
2. To approve the appointment of Deloitte & Touche LLP as
independent accountants for the Corporation
Number
of
Shares
FOR 43,007,813.584
AGAINST 169,414.709
ABSTAIN 169,795.561
TOTAL 43,347,023.854
16
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibits filed with this Quarterly Report on Form 10-Q are
listed in the following Exhibit Index. Certain of such
exhibits which have heretofore been filed with the
Securities and Exchange Commission and which are
designated by reference to their exhibit numbers in prior
filings are hereby incorporated herein by reference and
made a part hereof.
B. Reports on Form 8-K
The Company filed a report on Form 8-K on April 28, 1995
in response to Item 5, "Other Events" regarding a 100%
stock split of the Company's common stock, no par value,
effective at the close of business May 11, 1995.
17
<PAGE>
SCANA CORPORATION
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.
SCANA CORPORATION
(Registrant)
August 11, 1995 By: s/W. B. Timmerman
W. B. Timmerman, Executive Vice
President, Chief Financial Officer
and Controller
(Principal Financial Officer)
18
<PAGE>
SCANA CORPORATION
EXHIBIT INDEX Sequentially
Numbered
Pages
Number
2. Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession
Not Applicable
3. Articles of Incorporation and By-Laws
A. Restated Articles of Incorporation of SCANA
Corporation as adopted on April 26, 1989
(Exhibit 3-A to Registration Statement
No. 33-49145)........................................... #
B. Articles of Amendment dated April 27, 1995
(Exhibit 4 to Form 8-K filed April 28, 1995
File No. 1-8809)........................................ #
C. Copy of By-Laws of SCANA Corporation as revised
and amended on February 15, 1994 (Exhibit 4.2 to
Post-Effective Amendment No. 1 to Registration
Statement No. 33-56923)................................. #
4. Instruments Defining the Rights of Security Holders,
Including Indentures
A. Articles of Exchange of South Carolina
Electric & Gas Company and SCANA Corporation
(Exhibit 4-A to Post-Effective Amendment No. 1
to Registration Statement No. 2-90438).................. #
B. Indenture dated as of November 1, 1989 to
The Bank of New York, Trustee (Exhibit 4-A
to Registration No. 33-32107)........................... #
C. Indenture dated as of January 1, 1945, from
the South Carolina Power Company (the "Power
Company") to Central Hanover Bank and Trust
Company, as Trustee, as supplemented by three
Supplemental Indentures dated respectively as
of May 1, 1946, May 1, 1947 and July 1, 1949
(Exhibit 2-B to Registration No. 2-26459)............... #
D. Fourth Supplemental Indenture dates as of
April 1, 1950, to Indenture referred to in
Exhibit 4C, pursuant to which the Company
assumed said Indenture (Exhibit 2-C to
Registration No. 2-26459)............................... #
E. Fifth through Fifty-second Supplemental
Indenture referred to in Exhibit 4C dated
as of the dates indicated below and filed
as exhibits to the Registration Statements
and 1934 Act reports whose file numbers are
set forth below......................................... #
# Incorporated herein by reference as indicated.
19
<PAGE>
SCANA CORPORATION
EXHIBIT INDEX
Number
December 1, 1950 Exhibit 2-D to Registration No. 2-26459
July 1, 1951 Exhibit 2-E to Registration No. 2-26459
June 1, 1953 Exhibit 2-F to Registration No. 2-26459
June 1, 1955 Exhibit 2-G to Registration No. 2-26459
November 1, 1957 Exhibit 2-H to Registration No. 2-26459
September 1, 1958 Exhibit 2-I to Registration No. 2-26459
September 1, 1960 Exhibit 2-J to Registration No. 2-26459
June 1, 1961 Exhibit 2-K to Registration No. 2-26459
December 1, 1965 Exhibit 2-L to Registration No. 2-26459
June 1, 1966 Exhibit 2-M to Registration No. 2-26459
June 1, 1967 Exhibit 2-N to Registration No. 2-29693
September 1, 1968 Exhibit 4-O to Registration No. 2-31569
June 1, 1969 Exhibit 4-C to Registration No. 33-38580
December 1, 1969 Exhibit 4-Q to Registration No. 2-35388
June 1, 1970 Exhibit 4-R to Registration No. 2-37363
March 1, 1971 Exhibit 2-B-17 to Registration No. 2-40324
January 1, 1972 Exhibit 4-C to Registration No. 33-38580
July 1, 1974 Exhibit 2-A-19 to Registration No. 2-51291
May 1, 1975 Exhibit 4-C to Registration No. 33-38580
July 1, 1975 Exhibit 2-B-21 to Registration No. 2-53908
February 1, 1976 Exhibit 2-B-22 to Registration No. 2-55304
December 1, 1976 Exhibit 2-B-23 to Registration No. 2-57936
March 1, 1977 Exhibit 2-B-24 to Registration No. 2-58662
May 1, 1977 Exhibit 4-C to Registration No. 33-38580
February 1, 1978 Exhibit 4-C to Registration No. 33-38580
June 1, 1978 Exhibit 2-A-3 to Registration No. 2-61653
April 1, 1979 Exhibit 4-C to Registration No. 33-38580
June 1, 1979 Exhibit 4-C to Registration No. 33-38580
April 1, 1980 Exhibit 4-C to Registration No. 33-38580
June 1, 1980 Exhibit 4-C to Registration No. 33-38580
December 1, 1980 Exhibit 4-C to Registration No. 33-38580
April 1, 1981 Exhibit 4-D to Registration No. 33-49421
June 1, 1981 Exhibit 4-D to Registration No. 2-73321
March 1, 1982 Exhibit 4-D to Registration No. 33-49421
April 15, 1982 Exhibit 4-D to Registration No. 33-49421
May 1, 1982 Exhibit 4-D to Registration No. 33-49421
December 1, 1984 Exhibit 4-D to Registration No. 33-49421
December 1, 1985 Exhibit 4-D to Registration No. 33-49421
June 1, 1986 Exhibit 4-D to Registration No. 33-49421
February 1, 1987 Exhibit 4-D to Registration No. 33-49421
September 1, 1987 Exhibit 4-D to Registration No. 33-49421
January 1, 1989 Exhibit 4-D to Registration No. 33-49421
January 1, 1991 Exhibit 4-D to Registration No. 33-49421
February 1, 1991 Exhibit 4-D to Registration No. 33-49421
July 15, 1991 Exhibit 4-D to Registration No. 33-49421
# Incorporated herein by reference as indicated.
20
<PAGE>
SCANA CORPORATION
EXHIBIT INDEX
Sequentially
Numbered
Pages
Number
August 15, 1991 Exhibit 4-D to Registration No. 33-49421
April 1, 1993 Exhibit 4-E to Registration No. 33-49421
July 1, 1993 Exhibit 4-D to Registration No. 33-57955
F. Indenture dated as of April 1, 1993 from
South Carolina Electric & Gas Company to
NationsBank of Georgia, National Association
(Filed as Exhibit 4-F to Registration Statement
No. 33-49421)........................................... #
G. First Supplemental Indenture to Indenture
referred to in Exhibit 4-G dated as of June 1, 1993
(Filed as Exhibit 4-G to Registration Statement
No. 33-49421)........................................... #
H. Second Supplemental Indenture to Indenture
referred to in Exhibit 4-E dated as of June 15, 1993
(Filed as Exhibit 4-G to Registration Statement
No. 33-57955............................................ #
10. Material Contracts
Not Applicable
11. Statement Re Computation of Per Share Earnings
Not Applicable
15. Letter Re Unaudited Interim Financial Information
Not Applicable
18. Letter Re Change in Accounting Principles (Filed herewith). 22
19. Report Furnished to Security Holders
Not Applicable
22. Published Report Regarding Matters Submitted to
Vote of Security Holders
Not Applicable
23. Consents of Experts and Counsel
Not Applicable
24. Power of Attorney
Not Applicable
27. Financial Data Schedule (Filed herewith)
99. Additional Exhibits
Not Applicable
21
<PAGE>
Exhibit 18
July 31, 1995
SCANA Corporation
1426 Main Street
Columbia, South Carolina
Dear Sirs:
At your request, we have read the description included in your
Quarterly Report on Form 10-Q to the Securities and Exchange
Commission for the quarter ended June 30, 1995, of the facts
relating to the change in the method of accounting for oil and gas
operations from the successful efforts method to the full cost
method. We believe, on the basis of the facts so set forth and
other information furnished to us by appropriate officials of the
Company, that the accounting change described in your Form 10-Q is
to an alternative accounting principle that is preferable under the
circumstances.
We have not audited any consolidated financial statements of SCANA
Corporation and its consolidated subsidiaries as of any date or for
any period subsequent to December 31, 1994. Therefore, we are
unable to express, and we do not express, an opinion on the facts
set forth in the above-mentioned Form 10-Q, on the related
information furnished to us by officials of the Company, or on the
financial position, results of operations, or cash flows of SCANA
Corporation and its consolidated subsidiaries as of any date or for
any period subsequent to December 31, 1994.
Yours truly,
s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
22
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE CONSOLIDATED
BALANCE SHEET AS OF JUNE 30, 1995 AND THE CONSOLIDATED STATEMENTS OF INCOME AND
RETAINED EARNINGS AND OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,376,766
<OTHER-PROPERTY-AND-INVEST> 327,483
<TOTAL-CURRENT-ASSETS> 328,745
<TOTAL-DEFERRED-CHARGES> 367,408
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 4,400,402
<COMMON> 920,933
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 469,247
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,390,180
47,543
26,027
<LONG-TERM-DEBT-NET> 1,605,907
<SHORT-TERM-NOTES> 168,189
<LONG-TERM-NOTES-PAYABLE> 0
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<LONG-TERM-DEBT-CURRENT-PORT> 101,609
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,058,637
<TOT-CAPITALIZATION-AND-LIAB> 4,400,402
<GROSS-OPERATING-REVENUE> 311,136
<INCOME-TAX-EXPENSE> 19,743
<OTHER-OPERATING-EXPENSES> 230,381
<TOTAL-OPERATING-EXPENSES> 250,124
<OPERATING-INCOME-LOSS> 61,012
<OTHER-INCOME-NET> (12,903)
<INCOME-BEFORE-INTEREST-EXPEN> 48,109
<TOTAL-INTEREST-EXPENSE> 31,093
<NET-INCOME> 17,016
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<EARNINGS-AVAILABLE-FOR-COMM> 15,586
<COMMON-STOCK-DIVIDENDS> 35,127
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