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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
1-8809 SCANA Corporation 57-0784499
(A South Carolina Corporation)
1426 Main Street
Columbia, South Carolina 29201
(803) 217-9000
1-3375 South Carolina Electric & Gas Company 57-0248695
(A South Carolina Corporation)
1426 Main Street
Columbia, South Carolina 29201
(803) 217-9000
Indicate by check mark whether the registrants: (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No
Description of Shares Outstanding
Registrant Common Stock at April 28, 2000
SCANA Corporation Without Par Value 104,729,133
South Carolina Electric Par Value $4.50 Per Share 40,296,1471
& Gas Company
1Held, beneficially and of record, by SCANA Corporation.
This combined Form 10-Q is separately filed by SCANA Corporation and
South Carolina Electric & Gas Company. Information contained herein relating to
SCANA Corporation or any of its direct or indirect subsidiaries, other than
South Carolina Electric & Gas Company and its consolidated operations, is
provided solely by SCANA Corporation and shall be deemed not included in the
Form 10-Q of South Carolina Electric & Gas Company.
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<PAGE>
INDEX
Page
PART 1. FINANCIAL INFORMATION
SCANA Corporation Financial Section......................................... 3
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999... 4
Consolidated Statements of Income and Retained Earnings for the Periods
Ended March 31, 2000 and 1999......................................... 6
Consolidated Statements of Cash Flows for the Periods Ended March 31,
2000 and 1999......................................................... 7
Notes to Consolidated Financial Statements.............................. 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................14
Item 3. Quantitative and Qualitative Disclosures About Market Risk..........20
South Carolina Electric & Gas Company Financial Section......................22
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999..23
Consolidated Statements of Income and Retained Earnings for the Periods
Ended March 31, 2000 and 1999........................................25
Consolidated Statements of Cash Flows for the Periods Ended
March 31, 2000 and 1999..............................................26
Notes to Consolidated Financial Statements...............................27
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................31
Item 3. Quantitative and Qualitative Disclosures About Market Risk..........35
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...................................................36
Item 6. Exhibits and Reports on Form 8-K....................................36
Signatures...................................................................37
Exhibit Index................................................................39
<PAGE>
SCANA CORPORATION
FINANCIAL SECTION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SCANA CORPORATION
CONSOLIDATED BALANCE SHEETS
As of March 31, 2000 and December 31, 1999
(Unaudited)
March 31, December 31,
- ------------------------------------------------------------ ------------------
2000 1999
- ------------------------------------------------------------ ------------------
Assets (Millions of Dollars)
Utility Plant:
Electric $4,629 $4,633
Gas 1,387 632
Other 190 191
- ------------------------------------------------------------- ------------------
Total 6,206 5,456
Less accumulated depreciation and amortization 2,116 1,829
- ------------------------------------------------------------- ------------------
Total 4,090 3,627
Construction work in progress 220 159
Nuclear fuel, net of accumulated amortization 43 41
Acquisition adjustment-gas, net of accumulated
amortization 485 22
- ------------------------------------------------------------ ------------------
Utility Plant, Net 4,836 3,851
- ------------------------------------------------------------- ------------------
Nonutility Property, net of accumulated depreciation 62 61
Investments 860 938
- --------------------------------------------------------------------------------
Nonutility Property and Investments, net of
accumulated depreciation 922 999
- -------------------------------------------------------------------------------
Current Assets:
Cash and temporary cash investments 116 98
Receivables (including unbilled revenues) 423 320
Inventories (at average cost):
Fuel 55 79
Materials and supplies 78 55
Prepayments 27 35
Deferred income taxes 16 15
- ------------------------------------------------------------- ------------------
Total Current Assets 705 612
- ------------------------------------------------------------ ------------------
Deferred Debits:
Emission allowances 31 30
Environmental 24 25
Nuclear plant decommissioning fund 64 66
Pension asset, net 162 144
Other regulatory assets 167 175
Other 116 111
- ------------------------------------------------------------- ------------------
Total Deferred Debits 549 566
- ----------------------------------------- ------------------- ------------------
Total $6,011 $7,029
========================================== ================== ==================
<PAGE>
SCANA CORPORATION
CONSOLIDATED BALANCE SHEETS
As of March 31, 2000 and December 31, 1999
(Unaudited)
March 31, December 31,
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
Capitalization and Liabilities (Millions of Dollars)
Stockholders' Investment:
Common Equity $ 2,100 $2,099
Preferred stock (not subject to purchase
or sinking funds) 106 106
- -------------------------------------------------------------- -----------------
Total Stockholders' Investment 2,206 2,205
Preferred Stock, net (subject to purchase or
sinking funds) 11 11
SCE&G-Obligated Mandatorily Redeemable Preferred
Securities of SCE&G's Subsidiary Trust, SCE&G
Trust I, holding solely $50 million principal
amount of the 7.55% Junior Subordinated
Debentures of SCE&G, due 2027 50 50
Long-Term Debt, net 2,413 1,563
- -------------------------------------------------------------- -----------------
Total Capitalization 4,680 3,829
- -------------------------------------------------------------- -----------------
Current Liabilities:
Short-term borrowings 345 266
Current portion of long-term debt 309 303
Accounts payable 192 189
Customer deposits 20 16
Taxes accrued 51 86
Interest accrued 46 29
Dividends declared 32 31
Other 23 13
- -------------------------------------------------------------- -----------------
Total Current Liabilities 1,018 933
- -------------------------------------------------------------- -----------------
Deferred Credits:
Deferred income taxes 861 805
Deferred investment tax credits 118 116
Postretirement benefits 109 98
Reserve for nuclear plant decommissioning 66 64
Other regulatory liabilities 75 64
Other 102 102
- ------------------------------------------------------------- -----------------
Total Deferred Credits 1,331 1,249
- ------------------------------------------------------------- -----------------
Total $7,029 $6,011
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See Notes to Consolidated Financial Statements.
<PAGE>
SCANA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Periods Ended March 31, 2000 and 1999
(Unaudited)
Three Months Ended
March 31,
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2000 1999
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(Millions of Dollars)
Operating Revenues:
Electric $ 294 $ 266
Gas - Regulated 311 130
Gas - Nonregulated 216 149
Transit - 1
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Total Operating Revenues 821 546
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Operating Expenses:
Fuel used in electric generation 70 61
Purchased power 7 4
Gas purchased for resale 379 228
Other operation 90 80
Maintenance 21 18
Depreciation and amortization 55 42
Income taxes 50 21
Other taxes 29 27
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Total Operating Expenses 701 481
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Operating Income 120 65
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Other Income:
Allowance for equity funds used
during construction 1 1
Other income, net of income taxes 11 8
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Total Other Income 12 9
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Income Before Interest Charges and
Preferred Stock Dividends 132 74
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Interest Charges (Credits):
Interest expense on long-term debt 44 31
Other interest expense 11 4
Allowance for borrowed funds used
during construction (1) (1)
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Total Interest Charges, Net 54 34
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Income Before Preferred Dividend Requirements
on Mandatorily Redeemable Preferred Securities 78 40
Preferred Dividend Requirement of SCE&G -
Obligated Mandatorily Redeemable
Preferred Securities 1 1
--------------------------------------------------------- -----------------
Income Before Preferred Stock Cash Dividends
of Subsidiary 77 39
Preferred Stock Cash Dividends of Subsidiary
(At Stated Rates) (2) (2)
--------------------------------------------------------- -----------------
Income Before Cumulative Effect of
Accounting Change 75 37
Cumulative Effect of Accounting Change,
net of taxes (Note 2) 29 -
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Net Income 104 37
Retained Earnings at Beginning of Period 720 678
Common Stock Cash Dividends Declared (30) (40)
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Retained Earnings at End of Period $ 794 $ 675
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Net Income $ 104 $ 37
Weighted Average Number of Common Shares
Outstanding (Millions) 104.0 103.6
Earnings Per Weighted Average Share of
Common Stock (Basic and Diluted) Before
Cumulative Effect of Accounting Change $ .72 $ .36
Cumulative Effect of Accounting Change (Note 2) $ .28 -
Earnings Per Weighted Average Share of Common Stock
(Basic and Diluted) $ 1.00 $ .36
Cash Dividends Declared Per Share of Common Stock $.2875 $.3850
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See Notes to Consolidated Financial Statements.
<PAGE>
SCANA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Periods Ended March 31, 2000 and 1999
(Unaudited)
Three Months Ended
March 31,
- ------------------------------------------------------------------ -------------
2000 1999
- ------------------------------------------------------------------ -------------
(Millions of Dollars)
Cash Flows From Operating Activities:
Net income $104 $37
Adjustments to reconcile net income to net
cash provided from operating activities, net
of effect of subsidiary acquisition:
Cumulative effect of accounting change (29) -
Depreciation and amortization 55 44
Amortization of nuclear fuel 5 5
Deferred income taxes, net 21 3
Pension asset (18) (6)
Other regulatory assets (6) 7
Other regulatory liabilities 7 4
Post-retirement benefits 11 3
Allowance for funds used during construction (2) (3)
Over (under) collections, fuel adjustment clauses 14 9
Changes in certain current assets and liabilities:
(Increase) decrease in receivables (5) 11
(Increase) decrease in inventories 36 (10)
Increase (decrease) in accounts payable (47) (23)
Increase (decrease) in taxes accrued (40) (60)
Other, net 21 -
- ---------------------------------------------------------------------- --------
Net Cash Provided From Operating Activities 127 21
- ---------------------------------------------------------------------- --------
Cash Flows From Investing Activities:
Utility property additions and construction
expenditures, net of AFC (52) (50)
Increase in other property and investments (7) (13)
Purchase of subsidiary, net of cash acquired (691) -
Sale of subsidiary assets 1 3
- ---------------------------------------------------------------------- --------
Net Cash Used For Investing Activities (749) (60)
- ---------------------------------------------------------------------- --------
Cash Flows From Financing Activities:
Proceeds:
Issuance of First Mortgage Bonds - 99
Issuance of notes and loans 700 -
Repayments:
Other long-term debt (1) (1)
Dividend payments:
Common stock (34) (40)
Preferred stock of subsidiary (2) (2)
Short-term borrowings, net (59) (21)
Fuel and emission allowance financings, net - 13
- ---------------------------------------------------------------------- --------
Net Cash Provided From Financing Activities 604 48
- ---------------------------------------------------------------------- --------
Net Increase (Decrease) In Cash And Temporary
Cash Investments (18) 9
Cash And Temporary Cash Investments At January 1 116 62
- ---------------------------------------------------------------------- --------
Cash And Temporary Cash Investments At March 31 $ 98 $71
====================================================================== ========
Supplemental Cash Flow Information:
Cash paid for - Interest (includes capitalized
interest of $1 for 2000 and 1999) $ 37 $24
- Income taxes 26 5
Noncash investing activities
- Unrealized gain/(loss) on securities
available for sale, net of (73) 18
taxes
In conjunction with the acquisition of Public Service Company of North
Carolina, Inc., liabilities were assumed as follows:
Fair value of assets acquired $1,171
Cash paid for capital stock (212)
Stock issued for consideration (475)
--------
Liabilities assumed $ 484
=======
See Notes to Consolidated Financial Statements.
<PAGE>
SCANA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
(Unaudited)
The following notes should be read in conjunction with the Notes to
Consolidated Financial Statements appearing in SCANA Corporation's (the Company)
Annual Report on Form 10-K for the year ended December 31, 1999. These are
interim financial statements, and due to the seasonality of the Company's
business, 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 except as described in Notes 2 and 3, which are
necessary for a fair statement of the results for the interim periods reported.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A. Basis of Accounting
The Company accounts for its regulated utility operations, assets and
liabilities in accordance with the provisions of Statement of Financial
Accounting Standards No. 71 (SFAS 71). The accounting standard requires
cost-based rate-regulated utilities to recognize in their financial
statements revenues and expenses in different time periods than do
enterprises that are not rate-regulated. As a result, the Company has
recorded, as of March 31, 2000, approximately $194 million and $75
million of regulatory assets and liabilities, respectively, including
amounts recorded for deferred income tax assets and liabilities of
approximately $131 million and $48 million, respectively. The electric
and gas regulatory assets (excluding deferred income tax assets) of
approximately $35 million and $26 million, respectively, are being
recovered through rates, and the Public Service Commission of South
Carolina (PSC) has approved accelerated recovery of approximately $5
million of the electric regulatory assets. In the future, as a result of
deregulation or other changes in the regulatory environment, the Company
may no longer meet the criteria for continued application of SFAS 71 and
could be required to write off its regulatory assets and liabilities.
Such an event could have a material adverse effect on the Company's
results of operations in the period that a write-off would be required,
but it is not expected that cash flows or financial position would be
materially affected.
B. Other Comprehensive Income
Other comprehensive income includes net income and all other changes in
equity except those resulting from investments by and distributions to
stockholders. Other comprehensive income of the Company totaled $31
million and $56 million for the three months ended March 31, 2000 and
1999, respectively. For each period, other comprehensive income included
net income and unrealized gains/losses on securities available for sale.
Accumulated other comprehensive income of the Company totaled $521
million and $286 million at March 31, 2000 and 1999, respectively.
C. Reclassifications
Certain amounts from prior periods have been reclassified to conform
with the 2000 presentation.
2. Cumulative Effect of Accounting Change
Effective January 1, 2000 the Company changed its method of accounting
for operating revenues from cycle billing to full accrual. The
cumulative effect of this change was $29 million, net of tax. Accruing
unbilled revenues more closely matches revenues and expenses. Unbilled
revenues represent the estimated amount customers will be charged for
service received, but that has not yet been billed as of the end of the
accounting period. Previously these revenues were recognized as
operating revenues as customers were billed.
If this method had been applied retroactively, net income would have
been $54 million ($0.52 per share) for the three months ended March 31,
1999, compared to $37 million ($0.36 per share) as previously reported.
<PAGE>
3. ACQUISITION
On February 10, 2000 the Company completed its acquisition of Public
Service Company of North Carolina, Inc. (PSNC) in a business combination
accounted for as a purchase. PSNC became a wholly owned subsidiary of
the Company. PSNC is a public utility engaged primarily in transporting,
distributing and selling natural gas to approximately 351,000
residential, commercial and industrial customers in 31 counties in North
Carolina. Pursuant to the Agreement and Plan of Merger, PSNC
shareholders were paid approximately $212 million in cash and 17,413,013
shares of SCANA common stock. The results of operations of PSNC are
included in the accompanying financial statements as of January 1, 2000,
the effective date of acquisition . The total cost of acquisition was
approximately $700 million, which exceeded the fair value of the net
assets by approximately $466 million. The excess is being amortized over
35 years.
Operating revenues and net income previously reported by the separate
companies and the combined amounts presented in the accompanying
Consolidated Statements of Income, including the cumulative effect of
accounting change (See Note 2), are as follows:
- --------------------------------------------------------------------------------
For the Three Months Ended
March 31, 1999
(Dollars in millions,
except per share amounts) SCANA PSNC Adjustments1 Combined
- --------------------------------------------------------------------------------
Operating revenues $546 $134 $ - $680
Income before cumulative effect 37 22 (11) 48
Cumulative effect of accounting change 17 5 - 22
Net income 54 27 (11) 70
Earnings per share 0.52 1.30 0.67
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1Adjustments include interest charges (net of income tax effect) on
additional debt issued in conjunction with the acquisition and
amortization of the acquisition adjustment.
4. RATE MATTERS
On December 7, 1999 the North Carolina Utilities Commission (NCUC)
issued an order approving the acquisition of PSNC by the Company. As
specified in the NCUC order, PSNC will reduce its rates by approximately
$2 million ($1 million in August 2000 and another $1 million in August
2001) and has agreed to a five-year moratorium on general rate cases.
General rate relief can be obtained during this period to recover costs
associated with materially adverse governmental actions and force
majeure events. The Carolina Utility Customers Association, Inc. (CUCA)
filed an appeal of this order, which is pending in the North Carolina
Court of Appeals. While management cannot predict the ultimate outcome
of this appeal, management does not expect that such outcome will have a
material adverse impact on the Company's financial position, results of
operations or cash flows.
On October 30, 1998 the NCUC issued an order in PSNC's general rate case
filed in April 1998. The order, effective November 1, 1998, granted PSNC
additional revenue of $12.4 million and allowed a 9.82 percent overall
rate of return on PSNC's net utility investment. It also approved the
continuation of the Weather Normalization Adjustment and Rider D
Mechanisms and full margin transportation rates. PSNC's Rider D rate
mechanism authorizes the recovery of all prudently incurred gas costs
from customers on a monthly basis. Any difference in amounts paid and
collected for these costs is deferred for subsequent refund to or
collection from customers. CUCA, a party to PSNC's general rate case,
formally appealed the general rate case order on December 18, 1998. On
February 4, 2000 the Supreme Court of North Carolina affirmed the NCUC
order.
On November 6, 1997 the NCUC issued an order permitting PSNC, on a trial
basis, to establish its commodity cost of gas for large commercial and
industrial customers on the basis of market prices for natural gas. This
procedure allows PSNC to manage its deferred gas costs better by
ensuring that the amount paid for natural gas to serve these customers
approximates the amount collected from them. PSNC's request for
permanent approval of this mechanism was approved by the NCUC in an
order issued April 6, 2000.
<PAGE>
5. 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 its
First and Refunding Mortgage Bonds contain provisions that, under
certain circumstances, could limit the payment of cash dividends on its
common stock. In addition, with respect to hydroelectric projects, the
Federal Power Act requires the appropriation of a portion of certain
earnings therefrom. At March 31, 2000, approximately $30.8 million of
retained earnings were restricted by this requirement as to payment of
cash dividends on SCE&G's common stock.
6. INVESTMENTS IN EQUITY SECURITIES:
At March 31, 2000, SCANA Communications Holdings, Inc. (SCH), a wholly
owned, indirect subsidiary of SCANA, held the following investments in
ITC Holding Company, Inc. (ITC) and its affiliates:
o Powertel, Inc. (Powertel) is a publicly traded company that owns and
operates personal communications services (PCS) systems in several
major Southeastern markets. SCH owns approximately 4.9 million common
shares of Powertel at a cost of approximately $74.1 million. Powertel
common stock closed at $69.1875 per share on March 31, 2000, resulting
in a pre-tax unrealized holding gain of $265.1 million (a decline of
$152.7 million from December 31, 1999). Accumulated other
comprehensive income includes the after-tax amount of all unrealized
holding gains and losses. In addition, SCH owns the following series
of non-voting convertible preferred shares, at the approximate cost
noted: 100,000 shares series B ($75.1 million); 50,000 shares series D
($22.5 million); and 50,000 shares 6.5 percent series E ($75.0
million). Dividends on preferred series E shares are paid in common
shares of Powertel. Preferred series B shares are convertible in March
2002 at a conversion price of $16.50 per common share or approximately
4.5 million common shares. Preferred series D shares are convertible
in March 2002 at a conversion price of $12.75 per common share or
approximately 1.7 million common shares. Preferred series E shares are
convertible in June 2003 at a conversion price of $22.01 per common
share or approximately 3.4 million common shares. The market value of
the convertible preferred shares of Powertel is not readily
determinable. However, as converted, the market value of the
underlying common shares for the preferred shares was approximately
$672.3 million at March 31, 2000, resulting in an unrecorded pre-tax
holding gain of $499.7 million (a decline of $303.0 million from
December 31, 1999).
o ITC^DeltaCom, Inc. (ITCD) is a fiber optic telecommunications
provider. SCH owns approximately 5.1 million common shares of ITCD at
a cost of approximately $42.7 million. ITCD common stock closed at
$35.625 per share on March 31, 2000, resulting in a pre-tax unrealized
holding gain of $139.2 million (an increase of $40.8 million from
December 31, 1999). Accumulated other comprehensive income includes
the after-tax amount of all unrealized holding gains and losses. In
addition, SCH owns 1,480,771 shares of series A preferred stock of
ITCD at a cost of approximately $11.2 million. Series A preferred
shares are convertible in March 2002 into 2,961,542 shares of ITCD
common stock. The market value of series A preferred stock of ITCD is
not readily determinable. However, as converted, the market value of
the underlying common stock for the series A preferred stock was
approximately $105.5 million at March 31, 2000, resulting in an
unrecorded pre-tax holding gain of $94.3 million (an increase of $23.7
million from December 31, 1999).
o Knology Inc. (Knology), previously Knology Holdings, Inc., is a
broad-band service provider of cable, television, telephone and
internet services. SCH owns 71,050 units of Knology. Each unit
consists of one 11.875% Senior Discount Note due 2007 and one warrant
entitling the holder to purchase .003734 shares of preferred stock of
Knology. The cost of this investment was approximately $40 million.
Prior to February 24, 2000, SCH owned 451,800 shares of series A
preferred stock of Knology at a cost of approximately $1.1 million. On
February 24, 2000 Knology Holdings, Inc. was spun off from ITC and was
renamed Knology, Inc. As a result of this spin off, SCH received 6.8
million shares of Knology Series A preferred stock. The market value
of these investments is not readily determinable.
o ITC has an ownership interest in several Southeastern communications
companies. SCH owns approximately 3.1 million common shares, 645,153
series A convertible preferred shares, and 133,664 series B
convertible preferred shares of ITC. These investments cost
approximately $5.8 million, $7.2 million, and $4.0 million,
respectively. Preferred series A shares are convertible in March 2002
at a conversion price of $13.45 per common share or approximately 2.6
million common shares. Preferred series B shares are convertible in
March 2002 into ITC common shares on a four to one basis. The market
values of these investments are not readily determinable.
7. CONTINGENCIES:
With respect to commitments at March 31, 2000, 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,
1999. Contingencies at March 31, 2000 are as follows:
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
$9.5 billion. Each reactor licensee is currently liable for up to $88.1
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 V. C. Summer Nuclear
Station (Summer Station), would be approximately $58.7 million per
incident, but not more than $6.7 million per year.
SCE&G currently maintains policies (for itself and on behalf of the
South Carolina Public Service Authority) with Nuclear Electric Insurance
Limited (NEIL). These policies covering the nuclear facility for
property damage, excess property damage and outage costs permit
assessments under certain conditions to cover insurer's losses. Based on
the current annual premium, SCE&G's portion of the retroactive premium
assessment would not exceed $8.1 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 material adverse impact on the Company's results of
operations, cash flows and financial position.
B. Environmental
SCE&G has an environmental assessment program to identify and assess
current and former operations sites that could require environmental
cleanup. As site assessments are initiated, estimates are made of the
expenditures, if any, deemed necessary to investigate and clean up each
site. These estimates are refined as additional information becomes
available; therefore, actual expenditures could differ significantly
from the original estimates. Amounts estimated and accrued to date for
site assessments and cleanup relate primarily to regulated operations.
Such amounts are deferred and amortized with recovery provided through
rates. SCE&G has also recovered portions of its environmental
liabilities through settlements with various insurance carriers. SCE&G
has recovered all amounts previously deferred for its electric
operations. SCE&G expects to recover all deferred amounts related to its
gas operations by December 2005. Deferred amounts, net of amounts
recovered through rates and insurance settlements, totaled $20.5 million
at March 31, 2000. The deferral includes the estimated costs associated
with the following matters.
<PAGE>
o 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
encompasses approximately 30 acres and includes properties which were
locations for industrial operations, including a wood preserving
(creosote) plant, one of SCE&G's decommissioned manufactured gas
plants (MGP), properties owned by the National Park Service and the
City of Charleston, and private properties. The site has not been
placed on the National Priorities List, but may be added in the
future. The Potentially Responsible Parties (PRPs) have negotiated an
administrative order by consent for the conduct of a Remedial
Investigation/Feasibility Study and a corresponding Scope of Work.
Field work began in November 1993, and the EPA approved a Remedial
Investigation Report in February 1997 and a Feasibility Study Report
in June 1998. In July 1998 the EPA approved SCE&G's Removal Action
Work Plan for soil excavation. SCE&G completed Phase One of the
Removal Action in 1998 at a cost of approximately $1.5 million. Phase
Two, which cost approximately $3.5 million, included excavation and
installation of several permanent barriers to mitigate coal tar
seepage. On September 30, 1998 a Record of Decision was issued which
sets forth the EPA's view of the extent of each PRP's responsibility
for site contamination and the level to which the site must be
remediated. SCE&G estimates that the Record of Decision will result in
costs of approximately $13.3 million, of which approximately $4
million remains. On January 13, 1999 the EPA issued a Unilateral
Administrative Order for Remedial Design and Remedial Action directing
SCE&G to design and carry out a plan of remediation for the Calhoun
Park site. The Order is temporarily stayed pending further
negotiations between SCE&G and the EPA. However, SCE&G submitted a
Comprehensive Remedial Design Work Plan on December 17, 1999 and is
proceeding with implementation pending agency approval.
In October 1996 the City of Charleston and SCE&G settled all
environmental claims the City may have had against SCE&G involving the
Calhoun Park area for a payment of $26 million over four years
(1996-1999) by SCE&G to the City. SCE&G is recovering the amount of
the settlement, which does not encompass site assessment and cleanup
costs, through rates in the same manner as other amounts accrued for
site assessments and cleanup. As part of the environmental settlement,
SCE&G constructed an 1,100 space parking garage on the Calhoun Park
site (construction was completed in April 2000) and transferred the
facility to the City in exchange for a 20-year municipal bond backed
by revenues from the parking garage and a mortgage on the parking
garage. The total amount of the bond is still being finalized, but is
not to exceed $16.9 million, the maximum expected project cost.
o SCE&G owns three other decommissioned MGP sites which contain residues
of by-product chemicals. For the site located in Sumter, South
Carolina, effective September 15, 1998, SCE&G entered into a Remedial
Action Plan Contract with the South Carolina Department of Health and
Environmental Control (DHEC) pursuant to which it agreed to undertake
a full site investigation and remediation under the oversight of DHEC.
Site investigation and characterization are proceeding according to
schedule. Upon selection and successful implementation of a site
remedy, DHEC will give SCE&G a Certificate of Completion and a
covenant not to sue. SCE&G is continuing to investigate the other two
sites, and is monitoring the nature and extent of residual
contamination.
In addition, PSNC owns, or has owned, all or portions of six sites in
North Carolina on which MGPs were formerly operated. Intrusive
investigation (including drilling, sampling and analysis) has begun at
only one site and the remaining sites have been evaluated using
historical records and observations of current site conditions. These
evaluations have revealed that MGP residuals are present or suspected at
several of the sites. The North Carolina Department of Environment and
Natural Resources has recommended that no further action be taken with
respect to one site. In March and April 1994, an environmental consulting
firm retained by PSNC estimated that the aggregate cost of investigating
and monitoring the extent of environmental degradation and of
implementing remedial procedures with respect to the remaining five sites
may range from $3.7 million to $50.1 million over a 30-year period. PSNC
is unable to determine the rate at which costs may be incurred over this
time period. The estimated cost range has not been discounted to present
value. The range includes the cost of investigating and monitoring the
sites at the low end of the range and investigating, monitoring and
extensively remediating the sites at the high end of the range. PSNC's
associated actual costs for these sites will depend on a number of
factors, such as actual site conditions, third-party claims and
recoveries from other PRPs.
An order of the NCUC dated May 11, 1993 authorized deferral accounting
for all costs associated with the investigation and remediation of MGP
sites. As of March 31, 2000, PSNC has recorded a liability and associated
regulatory asset at the minimum amount of the range, or $3.7 million.
The NCUC concluded that it is proper and in the public interest to allow
recovery of prudently incurred clean-up costs from current customers as
reasonable operating expenses even though the MGP sites are not used and
useful in providing gas service to current customers. However, the NCUC
will not allow recovery of carrying costs on deferred amounts.
8. SEGMENT OF BUSINESS INFORMATION:
The Company's reportable segments are listed in the following table. The
Consolidated Financial Statements report operating revenues, comprised of
reportable segments and the non-reportable transit operations segment. The
Company uses operating income to measure profitability for its Electric
Operations and Gas Distribution segments. Therefore, net income is not allocated
to these segments. The Company uses net income to measure profitability for its
Energy Marketing segment, which includes the Company's unregulated gas sales in
Georgia. Affiliate revenue is derived from transactions between reportable
segments as well as transactions between separate legal entities that are
combined into the same reportable segment. Assets for the period ended March 31,
1999 did not change significantly.
<TABLE>
Disclosure of Reportable Segments
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------- ------------- ------------- ----------- ------- ----------------------------
Electric Gas Gas Energy All Adjustments/ Consolidated
March 31, 2000 Operations Distribution Transmission Marketing Other Eliminations Total
- ------------------------------------- ------------- ------------- ----------- ------- ----------------------------
External Revenue $294 $255 $56 $217 - - $822
Intersegment Revenue 77 - 62 2 - (141) -
Operating Income (Loss) 69 37 5 n/a (1) 10 120
Net Income n/a n/a 4 9 (11) 102 104
Segment Assets 4,778 1,547 246 136 1,156 (834) 7,029
- ------------------------------------- ------------- ------------- ----------- ------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------- ----------- ------------- ------------- ----------------- -------------- ---------------
Electric Gas Gas Energy All Adjustments/ Consolidated
March 31, 1999 Operations Distribution Transmission Marketing Other Eliminations Total
- ------------------------- ----------- ------------- ------------- ----------------- -------------- ---------------
External Revenue $266 $86 $44 $149 1 $546 -
Intersegment Revenue 68 - 49 - - (117) -
Operating Income (Loss) 62 14 4 n/a (1) (14) 65
Net Income n/a n/a 3 (13) - 47 37
Segment Assets 4,642 384 229 82 807 (801) 5,343
- ------------------------- ----------- ------------- ------------- ----------------- -------------- ---------------
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
SCANA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations
appearing in SCANA Corporation's (the Company) Annual Report on Form 10-K for
the year ended December 31, 1999.
Statements included in this discussion and analysis (or elsewhere in
this quarterly report) which are not statements of historical fact are intended
to be, and are hereby identified as, "forward-looking statements" for purposes
of the safe harbor provided by Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Readers are cautioned that any such forward-looking statements are not
guarantees of future performance and involve a number of risks and
uncertainties, and that actual results could differ materially from those
indicated by such forward-looking statements. Important factors that could cause
actual results to differ materially from those indicated by such forward-looking
statements include, but are not limited to, the following: (1) that the
information is of a preliminary nature and may be subject to further and/or
continuing review and adjustment, (2) changes in the utility regulatory
environment, (3) changes in the economy in areas served by SCANA's subsidiaries,
(4) the impact of competition from other energy suppliers, (5) the management of
the Company's operations, (6) variations in prices of natural gas and fuels used
for electric generation, (7) growth opportunities for the Company's regulated
and non-regulated subsidiaries, (8) the results of financing efforts, (9)
changes in the Company's accounting policies, (10) weather conditions in areas
served by the Company's subsidiaries , (11) performance of the
telecommunications companies in which the Company has made significant
investments, (12) inflation, (13) exposure to environmental issues and
liabilities, (14) changes in environmental regulations and (15) the other risks
and uncertainties described from time to time in the Company's periodic reports
filed with the Securities and Exchange Commission. The Company disclaims any
obligation to update any forward-looking statements.
MATERIAL CHANGES IN CAPITAL RESOURCES AND LIQUIDITY
SINCE DECEMBER 31, 1999
North Carolina Gas Market
On February 10, 2000 the Company completed its acquisition of Public
Service Company of North Carolina, Inc. (PSNC) in a transaction valued at
approximately $900 million, including the assumption of debt. The transaction is
being accounted for as a purchase. PSNC is operated as a wholly owned subsidiary
of the Company. As a result of the transaction, the Company became a registered
public utility holding company under the Public Utilities Holding Company Act of
1935 (PUHCA).
Georgia Retail Gas Market
During the first quarter of 2000, Energy Marketing's Georgia retail gas
operations maintained a base of approximately 431,000 customers, compared to the
first quarter of 1999 when the customer base grew from approximately 78,000 at
January 1 to approximately 236,000 at March 31. In addition, Georgia retail gas
operations reported net income of approximately $8.9 million for the three
months ended March 31, 2000, compared to a net loss of approximately $12.5
million for the corresponding period in 1999. This increase resulted from
lowering costs and improving efficiency by transitioning from start-up to
ongoing operations and from an improved margin on natural gas sales. Due to the
seasonality of the retail gas business in Georgia, management anticipates
incurring losses through much of the remainder of the year 2000, and breaking
even for the year.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
On September 14, 1999 the PSC approved an accelerated capital recovery
plan for SCE&G's Cope Generating Station. The plan was implemented January 1,
2000 for a three-year period. The PSC approved an accelerated capital recovery
methodology wherein SCE&G will increase depreciation of its Cope Generating
Station in excess of amounts that would be recorded based upon currently
approved depreciation rates. The amount of the accelerated depreciation will be
determined by SCE&G based on the level of revenues and operating expenses, not
to exceed $36 million annually without the approval of the PSC. Any unused
portion of the $36 million in any given year could be carried forward for
possible use in the succeeding year. The accelerated capital recovery plan will
be accomplished through existing customer rates.
On August 7, 1996 the City of Charleston executed 30-year electric and
gas franchise agreements with SCE&G. In consideration for the electric franchise
agreement, SCE&G is paying the City $25 million over seven years (1996 through
2002) and has donated to the City the existing transit assets in Charleston. The
$25 million is included in electric plant-in-service. In settlement of
environmental claims the City may have had against SCE&G involving the Calhoun
Park area, where SCE&G and its predecessor companies operated a manufactured gas
plant until the 1960's, SCE&G paid the City $26 million over a four-year period
(1996 through 1999). As part of the environmental settlement, SCE&G constructed
an 1,100 space parking garage on the Calhoun Park site (construction was
completed in April 2000) and transferred the facility to the City in exchange
for a 20-year municipal bond backed by revenues from the parking garage and a
mortgage on the parking garage. The total amount of the bond is still being
finalized, but is not to exceed $16.9 million, the maximum expected project
cost.
The following table summarizes how the Company generated funds for
property additions and construction expenditures during the three months ended
March 31, 2000 and 1999:
- -------------------------------------------------------------------------------
Three Months Ended
March 31,
2000 1999
- -------------------------------------------------------------------------------
(Millions of Dollars)
Net cash provided from operating activities $127 $ 21
Net cash provided from financing activities 604 48
Cash provided from sale of subsidiary assets 1 3
Cash and temporary cash investments available
at the beginning of the period 116 62
================================================================================
Net cash available for property additions
and construction $848 $134
expenditures
================================================================================
Funds used for purchase of subsidiary $691 -
Funds used for utility property additions
and construction expenditures,
net of noncash allowance for funds
used during construction $ 52 $ 50
================================================================================
Funds used for nonutility property
additions $ 7 $ 13
================================================================================
On December 1, 1999 SCANA signed a credit agreement with banks for a
maximum of $300 million for a three-year term loan, all of which was drawn on
February 10, 2000 to consummate SCANA's acquisition of PSNC.
On February 8, 2000 SCANA issued $400 million of two-year floating rate
notes maturing February 8, 2002. The interest rate on the notes is reset
quarterly based on a three-month LIBOR plus 50 basis points. The proceeds from
these privately sold notes were used to consummate SCANA's acquisition of PSNC.
PSNC has committed lines of credit with three commercial banks totaling
$40 million. PSNC also has uncommitted lines of credit totaling $85 million.
<PAGE>
The Company anticipates that the remainder of its 2000 cash requirements
will be met through internally generated funds and the incurrence of additional
short-term and long-term debt. The Company anticipates incurring short-term and
long-term debt to refinance long-term debt obligations. The timing and amount of
such financings will depend upon market conditions and other factors. The
Company expects that it has or can obtain adequate sources of financing to meet
its projected cash requirements for the next 12 months and for the foreseeable
future. The ratio of earnings to fixed charges for the 12 months ended March 31,
2000 was 3.41.
Investments in Equity Securities
At March 31, 2000, SCANA Communications Holdings, Inc. (SCH), a wholly
owned, indirect subsidiary of SCANA, held the following investments in ITC
Holding Company, Inc. (ITC) and its affiliates:
o Powertel, Inc. (Powertel) is a publicly traded company that owns and
operates personal communications services (PCS) systems in several
major Southeastern markets. SCH owns approximately 4.9 million common
shares of Powertel at a cost of approximately $74.1 million. Powertel
common stock closed at $69.1875 per share on March 31, 2000, resulting
in a pre-tax unrealized holding gain of $265.1 million (a decline of
$152.7 million from December 31, 1999). Accumulated other
comprehensive income includes the after-tax amount of all unrealized
holding gains and losses. In addition, SCH owns the following series
of non-voting convertible preferred shares, at the approximate cost
noted: 100,000 shares series B ($75.1 million); 50,000 shares series D
($22.5 million); and 50,000 shares 6.5 percent series E ($75.0
million). Dividends on preferred series E shares are paid in common
shares of Powertel. Preferred series B shares are convertible in March
2002 at a conversion price of $16.50 per common share or approximately
4.5 million common shares. Preferred series D shares are convertible
in March 2002 at a conversion price of $12.75 per common share or
approximately 1.7 million common shares. Preferred series E shares are
convertible in June 2003 at a conversion price of $22.01 per common
share or approximately 3.4 million common shares. The market value of
the convertible preferred shares of Powertel is not readily
determinable. However, as converted, the market value of the
underlying common shares for the preferred shares was approximately
$672.3 million at March 31, 2000, resulting in an unrecorded pre-tax
holding gain of $499.7 million (a decline of $303.0 million from
December 31, 1999).
o ITC^DeltaCom, Inc. (ITCD) is a fiber optic telecommunications
provider. SCH owns approximately 5.1 million common shares of ITCD at
a cost of approximately $42.7 million. ITCD common stock closed at
$35.625 per share on March 31, 2000, resulting in a pre-tax unrealized
holding gain of $139.2 million (an increase of $40.8 million from
December 31, 1999). Accumulated other comprehensive income includes
the after-tax amount of all unrealized holding gains and losses. In
addition, SCH owns 1,480,771 shares of series A preferred stock of
ITCD at a cost of approximately $11.2 million. Series A preferred
shares are convertible in March 2002 into 2,961,542 shares of ITCD
common stock. The market value of series A preferred stock of ITCD is
not readily determinable. However, as converted, the market value of
the underlying common stock for the series A preferred stock was
approximately $105.5 million at March 31, 2000, resulting in an
unrecorded pre-tax holding gain of $94.3 million (an increase of $23.7
million from December 31, 1999).
o Knology Inc. (Knology), previously Knology Holdings, Inc., is a
broad-band service provider of cable, television, telephone and
internet services. SCH owns 71,050 units of Knology. Each unit
consists of one 11.875% Senior Discount Note due 2007 and one warrant
entitling the holder to purchase .003734 shares of preferred stock of
Knology. The cost of this investment was approximately $40 million.
Prior to February 24, 2000, SCH owned 451,800 shares of series A
preferred stock of Knology at a cost of approximately $1.1 million. On
February 24, 2000 Knology Holdings, Inc. was spun off from ITC and was
renamed Knology, Inc. As a result of this spin off, SCH received 6.8
million shares of Knology Series A preferred stock. The market value
of these investments is not readily determinable.
<PAGE>
o ITC has an ownership interest in several Southeastern communications
companies. SCH owns approximately 3.1 million common shares, 645,153
series A convertible preferred shares, and 133,664 series B
convertible preferred shares of ITC. These investments cost
approximately $5.8 million, $7.2 million, and $4.0 million,
respectively. Preferred series A shares are convertible in March 2002
at a conversion price of $13.45 per common share or approximately 2.6
million common shares. Preferred series B shares are convertible in
March 2002 into ITC common shares on a four to one basis. The market
values of these investments are not readily determinable.
<PAGE>
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
AS COMPARED TO THE CORRESPONDING PERIOD IN 1999
Earnings and Dividends
Earnings per share of common stock for the three months ended March 31,
2000 and 1999 were as follows:
2000 1999
----------------------------------------------------------------------
Earnings derived from:
Continuing operations $ .72 $.36
Change in accounting .28 -
======================================================================
Earnings per weighted average share $1.00 $.36
======================================================================
Earnings from continuing operations increased $.36. This was primarily
attributable to improved results of $.21 from the Company's entry into the
Georgia retail gas market (earnings of $.09 for 2000 compared to a loss of $.12
for 1999), the Company's acquisition of Public Service Company of North
Carolina, Inc. (PSNC) in 2000 ($.18), and improved electric margins ($.10).
These increases were partially offset by interest costs associated with the PSNC
acquisition ($.09) and other ($.04).
Earnings from a change in accounting resulted from the recording of
unbilled revenues by SCANA's retail utility subsidiaries (See Note 2 of NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS).
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 1% and 5% of
income before income taxes for the three months ended March 31, 2000 and 1999,
respectively.
The Company's Board of Directors declared the following quarterly
dividends on common stock:
- -------------------- --------------- ------------------ ----------------------
Declaration Dividend Record Payment
Date Per Share Date Date
- -------------------- --------------- ------------------ ----------------------
February 22, 2000 $.2875 March 10, 2000 April 1, 2000
April 27, 2000 $.2875 June 9, 2000 July 1, 2000
- -------------------- --------------- ------------------ ----------------------
Electric Operations
Changes in the electric operations sales margins (including transactions
with affiliates) for the three months ended March 31, 2000, when compared to the
corresponding period in 1999, were as follows:
- --------------------------------------------- -----------------------------
Three Months
(Millions of Dollars) Change % Change
- --------------------------------------------- -------------- --------------
Electric operating revenue $28.1 10.6
Less: Fuel used in generation 9.0 14.8
Purchased power 3.1 84.0
- --------------------------------------------- -------------- --------------
Margin $16.0 7.9
============================================= ============== ==============
Electric operations sales margins increased for the three months ended
March 31, 2000, when compared to the corresponding period in 1999, primarily as
a result of more favorable weather and customer growth.
<PAGE>
Gas Distribution
Changes in the gas distribution sales margins (including transactions
with affiliates) for the three months ended March 31, 2000, when compared to the
corresponding period in 1999, were as follows:
- --------------------------------------------------------------------------------
Three Months
(Millions of Dollars) 2000 1999 Change % Change
-
- --------------------------------------------------------------------------------
Gas distribution operating revenue $255.6 $86.1 $169.5 *
Less: Gas purchased for resale 152.7 49.1 103.6 *
- --------------------------------------------------------------------------------
Margin $102.9 $37.0 $ 65.9 *
================================================================================
* Greater than 100%
Gas distribution sales margins for the three months ended March 31, 2000
increased from 1999 levels primarily as a result of the acquisition of PSNC
(which contributed $64.2 million to the change). The remaining increase was
attributable to more favorable weather and customer growth at SCE&G.
Gas Transmission
Changes in the gas transmission sales margins (including transactions
with affiliates) for the three months ended March 31, 2000, when compared to the
corresponding period in 1999, were as follows:
- --------------------------------------------------------------------------------
Three Months
(Millions of Dollars) 2000 1999 Change % Change
- --------------------------------------------------------------------------------
Gas transmission operating revenue $118.0 $93.0 $25.0 26.9
Less: Gas purchased for resale 102.1 80.5 21.6 26.8
- --------------------------------------------------------------------------------
Margin $ 15.9 $12.5 $ 3.4 27.2
================================================================================
Gas transmission sales margins for the three months ended March 31, 2000
increased from 1999 levels primarily as a result of improved industrial margins
due to an improved competitive position relative to alternate fuels.
Energy Marketing
Changes in the energy marketing sales margins for the three months ended
March 31, 2000, when compared to the corresponding period in 1999, were as
follows:
- ------------------------------------------------------------------------------
Three Months
(Millions of Dollars) 2000 1999 Change % Change
- ---------------------------------------------------------------- ------------
Gas and electric sales revenue $217.0 $149.5 $67.5 45.2
Less: Gas and electricity
purchased for resale 186.0 147.8 38.2 25.8
================================================================ ============
Margin $ 31.0 $ 1.7 $29.3 *
================================================================ ============
*Greater than 100%
Energy marketing sales margins for the three months ended March 31, 2000
increased primarily as a result of improved margins in the Georgia retail
natural gas market. See LIQUIDITY AND CAPITAL RESOURCES.
<PAGE>
Other Operating Expenses
Changes in other operating expenses, including taxes, for the three
months ended March 31, 2000, when compared to the corresponding period in 1999,
were as follows:
-------------------------------------------- ----------------------------------
Three Months
(Millions of Dollars) 2000 1999 Change % Change
-------------------------------------------- ----------------------------------
Other operation and maintenance $110.8 $ 98.0 $12.8 13.1
Depreciation and amortization 54.9 41.9 13.0 30.9
Income taxes 50.3 20.9 29.4 140.7
Other taxes 29.4 27.2 2.2 8.1
-------------------------------------------- ----------------------------------
Total $245.4 $188.0 $57.4 30.5
============================================ ==================================
Other operating expenses for the three months ended March 31, 2000
increased from 1999 levels primarily as a result of the acquisition of PSNC.
This acquisition accounted for the following increases: Other operation and
maintenance ($16.2 million), Depreciation and amortization ($10.4 million),
Income taxes ($17.5 million) and Other taxes ($1.7 million).
Apart from the PSNC acquisition, changes in other operating expenses for
the three months ended March 31, 2000 compared to the corresponding period for
1999 were as follows: Other operation and maintenance expenses decreased $3.4
million. This decrease was primarily attributable to decreased operating
expenses at Energy Marketing ($8.3 million), which were partially offset by
higher operating and maintenance expenses at SCE&G. Depreciation and
amortization expenses increased $2.6 million due to normal property additions.
The increase in income taxes ($12.4 million) primarily reflects the change in
operating income.
Other Income
Other income, net of income taxes, for the three months ended March 31,
2000 increased approximately $2.7 million, when compared to the corresponding
period of 1999. This increase was primarily attributable to increased earnings
on pension assets.
Interest Expense
Interest expense, excluding the debt component of AFC, for the three
months ended March 31, 2000 increased approximately $19.8 million, when compared
to the corresponding period in 1999. The increase was primarily due to the
issuance of debt in the first quarter of 2000 to complete the acquisition of
PSNC.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
All financial instruments held by the Company described below are held for
purposes other than trading.
Interest rate risk - The table below provides information about the
Company's financial instruments that are sensitive to changes in interest rates.
For debt obligations, the table presents principal cash flows and related
weighted average interest rates by expected maturity dates.
<TABLE>
March 31, 2000
Expected Maturity Date
-------- ------------------------------------- ---------- ----------------
(Millions of Dollars)
There- Fair
Liabilities 2000 2001 2002 2003 2004 After Total Value
-------- ---------------- ---------------- ---------- ---------- ----------
Long-Term Debt:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate ($) 159.3 38.1 36.8 296.8 186.3 1,276.1 1,993.4 1,835.5
Average Fixed Interest Rate (%) 6.63 7.31 7.22 6.26 7.58 7.35 7.13
Variable Rate ($) 150.0 - 550.0 150.0 - - 850.0 850.0
Average Variable Interest Rate (%) 7.16 - 7.53 8.02 - - 7.45
<PAGE>
March 31, 1999
Expected Maturity Date
------- -------- ------------------------------- ---------------------------
(Millions of Dollars)
There- Fair
Liabilities 2000 2001 2002 2003 2004 After Total Value
------- -------- ---------- --------------------------- ---------- ----------
Long-Term Debt:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate ($) 213.5 27.5 27.5 284.4 129.4 1,166.7 1,849.0 1,869.2
Average Fixed Interest Rate (%) 5.95 6.86 6.86 6.29 7.52 7.33 7.
</TABLE>
While a decrease in interest rates would increase the fair value of debt,
it is unlikely that events which would result in a realized loss will occur.
In addition, the Company has invested in a telecommunications company
approximately $40 million for 11.875% senior discount notes due 2007. The fair
value of these notes approximates their carrying value. An increase in market
interest rates would result in a decrease in fair value of these notes and a
corresponding adjustment, net of tax, to other comprehensive income.
Commodity price risk - The table below provides information about the
Company's financial instruments that are sensitive to changes in natural gas
prices. Weighted average settlement prices are per 10,000 mmbtu.
March 31, 2000 Expected Maturity in 2000
Weighted Avg Contract Fair
Natural Gas Derivatives: Settlement Price Amount Value
- --------------------------- ----------------------------------- --------------
(Millions of Dollars)
Future Contracts:
Long $2.9741 $ .9 $1.2
Short $3.1770 $2.2 $2.6
SET Futures Contracts (1):
Long $2.9553 $ .1 $ .2
Short - - -
March 31, 1999 Expected Maturity in 2000
Weighted Avg Contract Fair
Natural Gas Derivatives: Settlement Price Amount Value
- ------------------------------- ----------------------------------- ---------
(Millions of Dollars)
Future Contracts:
Long $2.4818 $10.2 $10.6
Short $ - $ - $ -
SET Futures Contracts (1):
None
March 31, 1999 Expected Maturity in 1999
Weighted Avg Contract Fair
Natural Gas Derivatives: Settlement Price Amount Value
- ------------------------------ -------------------------------------------------
(Millions of Dollars)
Future Contracts:
Long $2.1654 $30.1 $31.6
Short $2.0434 $ 0.2 $ 0.2
SET Futures Contracts (1):
None
(1) SCANA Energy Trading, LLC (SET) is a 70% owned subsidiary of SCANA Energy
Marketing, Inc. Amounts shown are at 100%.
Equity price risk - Investments in telecommunications companies' marketable
equity securities are carried at their market value of $780.0 million. A ten
percent decline in market value would result in a $78.0 million reduction in
fair value and a corresponding adjustment, net of tax effect, to the related
equity account for unrealized gains/losses, a component of other comprehensive
income.
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
FINANCIAL SECTION
<PAGE>
Item 1. Financial Statements
SOUTH CAROLINA ELECTRIC & GAS COMPANY
CONSOLIDATED BALANCE SHEETS
As of March 31, 2000 and December 31, 1999
(Unaudited)
March 31, December 31,
- --------------------------------------------------------------------------------
2000 1999
- -------------------------------------------------------------------------------
Assets (Millions of Dollars)
Utility Plant:
Electric $4,334 $4,337
Gas 390 392
Other 190 191
- -------------------------------------------------------------------------------
Total 4,914 4,920
Less accumulated depreciation and amortization 1,643 1,611
- -------------------------------------------------------------------------------
Total 3,271 3,309
Construction work in progress 186 149
Nuclear fuel, net of accumulated amortization 41 43
- --------------------------------------------------------------------------------
Utility Plant, Net 3,498 3,501
- --------------------------------------------------------------------------------
Nonutility Property and Investments, net of accumulated
depreciation 19 19
- --------------------------------------------------------------------------------
Current Assets:
Cash and temporary cash investments 62 78
Receivables (including unbilled revenues) 211 195
Inventories (at average cost):
Fuel 28 30
Materials and supplies 47 48
Prepayments 13 8
Deferred income taxes 14 16
- -------------------------------------------------------------------------------
Total Current Assets 375 375
- --------------------------------------------------------------------------------
Deferred Debits:
Emission allowances 30 31
Environmental 21 24
Nuclear plant decommissioning fund 66 64
Pension asset, net 154 144
Other regulatory assets 152 162
Other 87 84
- --------------------------------------------------------------------------------
Total Deferred Debits 510 509
- --------------------------------------------------------------------------------
Total $4,402 $4,404
================================================================================
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
CONSOLIDATED BALANCE SHEETS
As of March 31, 2000 and December 31, 1999
(Unaudited)
March 31, December 31,
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
Capitalization and Liabilities (Millions of Dollars)
Stockholders' Investment:
Common equity $1,601 $1,558
Preferred stock (not subject to purchase
or sinking funds) 106 106
- --------------------------------------------------------------------------------
Total Stockholders' Investment 1,707 1,664
Preferred Stock, net (subject to purchase or
sinking funds) 11 11
SCE&G-Obligated Mandatorily Redeemable Preferred
Securities of SCE&G's Subsidiary Trust, SCE&G
Trust I, holding solely $50 million principal
amount of the 7.55% Junior Subordinated
Debentures of SCE&G, due 2027 50 50
Long-Term Debt, net 1,120 1,121
- --------------------------------------------------------------------------------
Total Capitalization 2,888 2,846
- --------------------------------------------------------------------------------
Current Liabilities:
Short-term borrowings 187 213
Current portion of long-term debt 127 128
Accounts payable 64 78
Accounts payable - affiliated companies 24 33
Customer deposits 17 17
Taxes accrued 39 60
Interest accrued 25 22
Dividends declared 34 28
Other 7 10
- --------------------------------------------------------------------------------
Total Current Liabilities 524 589
- --------------------------------------------------------------------------------
Deferred Credits:
Deferred income taxes 579 560
Deferred investment tax credits 108 108
Reserve for nuclear plant decommissioning 66 64
Postretirement benefits 99 98
Other regulatory liabilities 67 59
Other 71 80
- --------------------------------------------------------------------------------
Total Deferred Credits 990 969
- --------------------------------------------------------------------------------
Total $4,402 $4,404
================================================================================
See Notes to Consolidated Financial Statements.
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Periods Ended March 31, 2000 and 1999
(Unaudited)
Three Months Ended
March 31,
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
(Millions of Dollars)
Operating Revenues:
Electric $294 $266
Gas 101 86
Transit - 1
- --------------------------------------------------------------------------------
Total Operating Revenues 395 353
- --------------------------------------------------------------------------------
Operating Expenses:
Fuel used in electric generation 57 45
Purchased power (including affiliated purchases) 29 28
Gas purchased from affiliate for resale 62 49
Other operation 57 53
Maintenance 18 17
Depreciation and amortization 40 38
Income taxes 29 26
Other taxes 25 25
- --------------------------------------------------------------------------------
Total Operating Expenses 317 281
- --------------------------------------------------------------------------------
Operating Income 78 72
- --------------------------------------------------------------------------------
Other Income:
Allowance for equity funds used during construction - 1
Other income, net of income taxes 4 1
- --------------------------------------------------------------------------------
Total Other Income 4 2
- --------------------------------------------------------------------------------
Income Before Interest Charges 82 74
- --------------------------------------------------------------------------------
Interest Charges (Credits):
Interest expense on long-term debt 24 23
Other interest expense 3 3
Allowance for borrowed funds used during construction (1) (1)
- --------------------------------------------------------------------------------
Total Interest Charges, Net 26 25
- --------------------------------------------------------------------------------
Income Before Preferred Dividend Requirements
on Mandatorily Redeemable Preferred Securities 56 49
Preferred Dividend Requirement of SCE&G - Obligated
Mandatorily Redeemable Preferred Securities 1 1
- --------------------------------------------------------------------------------
Income Before Cumulative Effect of Accounting Change 55 48
Cumulative Effect of Accounting Change, net of taxes 22 -
- --------------------------------------------------------------------------------
Net Income 77 48
Preferred Stock Cash Dividends (At stated rates) (2) (2)
- --------------------------------------------------------------------------------
Earnings Available for Common Stock 75 46
Retained Earnings at Beginning of Period 550 491
Common Stock Cash Dividends Declared (32) (36)
================================================================================
Retained Earnings at End of Period $593 $501
================================================================================
See Notes to Consolidated Financial Statements.
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Periods Ended March 31, 2000 and 1999
(Unaudited)
Three Months Ended
March 31,
- ------------------------------------------------------------------ -------------
2000 1999
- ------------------------------------------------------------------ -------------
(Millions of Dollars)
Cash Flows From Operating Activities:
Net income $77 $48
Adjustments to reconcile net income to net
cash provided from operating activities:
Cumulative effect of accounting change (22) -
Depreciation and amortization 40 38
Amortization of nuclear fuel 5 5
Deferred income taxes, net 21 22
Pension asset (10) (7)
Post retirement benefits 1 3
Other regulatory assets 10 7
Regulatory liabilities 8 4
Allowance for funds used during construction (1) (2)
Over (under) collections, fuel adjustment clauses 14 9
Changes in certain current assets and liabilities:
(Increase) decrease in receivables 6 14
(Increase) decrease in inventories 3 (15)
Increase (decrease) in accounts payable (23) (12)
Increase (decrease) in taxes accrued (21) (49)
Other, net (30) (33)
- --------------------------------------------------------------------------------
Net Cash Provided From Operating Activities 78 32
- --------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Utility property additions and construction
expenditures, net of AFC (39) (48)
- --------------------------------------------------------------------------------
Net Cash Used For Investing Activities (39) (48)
- --------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Proceeds:
Issuance of First Mortgage Bonds - 99
Repayments:
Other long-term debt (1) -
Dividend payments:
Common stock (26) (36)
Preferred stock (2) (2)
Short-term borrowings, net (26) (48)
Fuel and emission allowance financings, net - 13
- --------------------------------------------------------------------------------
Net Cash Provided From (Used For)
Financing Activities (55) 26
- --------------------------------------------------------------------------------
Net Increase (Decrease) In Cash And Temporary
Cash Investments (16) 10
Cash And Temporary Cash Investments At January 1 78 36
================================================================================
Cash And Temporary Cash Investments At March 31 $62 $46
================================================================================
Supplemental Cash Flow Information:
Cash paid for - Interest (includes capitalized
interest of $1 for 2000 and 1999) $24 $21
- Income taxes 7 4
See Notes to Consolidated Financial Statements.
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
(Unaudited)
The following notes should be read in conjunction with the Notes to
Consolidated Financial Statements appearing in South Carolina Electric & Gas
Company's (the Company) Annual Report on Form 10-K for the year ended December
31, 1999. These are interim financial statements, and 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 except as
described in Notes 2 and 3, which are necessary for a fair statement of the
results for the interim periods reported.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A. Basis of Accounting
The Company accounts for its regulated utility operations, assets and
liabilities in accordance with the provisions of Statement of Financial
Accounting Standards No. 71 (SFAS 71). This accounting standard requires
cost-based rate-regulated utilities to recognize in their financial
statements revenues and expenses in different time periods than do
enterprises that are not rate-regulated. As a result, the Company has
recorded, as of March 31, 2000, approximately $175 million and $67
million of regulatory assets and liabilities, respectively, including
amounts recorded for deferred income tax assets and liabilities of
approximately $121 million and $43 million, respectively. The electric
and gas regulatory assets (excluding deferred income tax assets) of
approximately $26 million each are being recovered through rates, and the
Public Service Commission of South Carolina (PSC) has approved
accelerated recovery of approximately $5 million of the electric
regulatory assets. In the future, as a result of deregulation or other
changes in the regulatory environment, the Company may no longer meet the
criteria for continued application of SFAS 71 and could be required to
write off its regulatory assets and liabilities. Such an event could have
a material adverse effect on the Company's results of operations in the
period that a write-off would be required, but it is not expected that
cash flows or financial position would be materially affected.
B. Reclassifications
Certain amounts from prior periods have been reclassified to conform with
the 2000 presentation.
2. Cumulative Effect of Accounting Change
Effective January 1, 2000 the Company changed its method of accounting
for operating revenues from cycle billing to full accrual. The
cumulative effect of this change was $22 million, net of tax. Accruing
unbilled revenues more closely matches revenues and expenses. Unbilled
revenues represent the estimated amount customers will be charged for
service received, but that has not yet been billed, as of the end of the
accounting period. Previously these revenues were recognized as
operating revenues as customers were billed.
If this method had been applied retroactively, net income would have
been $65 million for the three months ended March 31, 1999, compared to
$48 million as previously reported.
<PAGE>
3. RETAINED EARNINGS
The Restated Articles of Incorporation of the Company and the Indenture
underlying its First and Refunding Mortgage Bonds contain provisions
that, under certain circumstances, could limit the payment of cash
dividends on its common stock. In addition, with respect to hydroelectric
projects, the Federal Power Act requires the appropriation of a portion
of certain earnings therefrom. At March 31, 2000, approximately $30.8
million of retained earnings were restricted by this requirement as to
payment of cash dividends on common stock.
4. CONTINGENCIES
With respect to commitments at March 31, 2000, 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,
1999. Contingencies at March 31, 2000 are as follows:
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 $9.5 billion.
Each reactor licensee is currently liable for up to $88.1 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. The Company's maximum assessment,
based on its two-thirds ownership of the V. C. Summer Nuclear Station
(Summer Station), would be approximately $58.7 million per incident, but
not more than $6.7 million per year.
The Company currently maintains policies (for itself and on behalf of
the South Carolina Public Service Authority) with Nuclear Electric
Insurance Limited (NEIL). These policies covering the nuclear facility
for property damage, excess property damage and outage costs permit
assessment under certain conditions to cover insurer's losses. Based on
the current annual premium, the Company's portion of the retroactive
premium assessment would not exceed $8.1 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 the Company's rates would not
recover the cost of any purchased replacement power, the Company will
retain the risk of loss as a self-insurer. The Company has no reason to
anticipate a serious nuclear incident at Summer Station. If such an
incident were to occur, it could have a material adverse impact on the
Company's results of operations, cash flows and 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, estimates are
made of the expenditures, if any, deemed necessary to investigate and
clean up each site. These estimates are refined as additional
information becomes available; therefore, actual expenditures could
differ significantly from the original estimates. Amounts estimated and
accrued to date for site assessments and cleanup relate primarily to
regulated operations. Such amounts are deferred and amortized with
recovery provided through rates. The Company has also recovered portions
of its environmental liabilities through settlements with various
insurance carriers. The Company has recovered all amounts previously
deferred for its electric operations. The Company expects to recover all
deferred amounts related to its gas operations by December 2005.
Deferred amounts, net of amounts recovered through rates and insurance
settlements, totaled $20.8 million at March 31, 2000. The deferral
includes the estimated costs associated with the following matters.
<PAGE>
o In September 1992 the Environmental Protection Agency (EPA) notified
the Company, 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 encompasses approximately 30 acres and includes properties
which were locations for industrial operations, including a wood
preserving (creosote) plant, one of the Company's decommissioned
manufactured gas plants (MGP), properties owned by the National Park
Service and the City of Charleston, and private properties. The site
has not been placed on the National Priorities List, but may be added
in the future. The Potentially Responsible Parties (PRPs) have
negotiated an administrative order by consent for the conduct of a
Remedial Investigation/Feasibility Study and a corresponding Scope of
Work. Field work began in November 1993, and the EPA approved a
Remedial Investigation Report in February 1997 and a Feasibility Study
Report in June 1998. In July 1998 the EPA approved the Company's
Removal Action Work Plan for soil excavation. The Company completed
Phase One of the Removal Action in 1998 at a cost of approximately
$1.5 million. Phase Two, which cost approximately $3.5 million,
included excavation and installation of several permanent barriers to
mitigate coal tar seepage. On September 30, 1998 a Record of Decision
was issued which sets forth the EPA's view of the extent of each PRP's
responsibility for site contamination and the level to which the site
must be remediated. The Company estimates that the Record of Decision
will result in costs of approximately $13.3 million, of which
approximately $4 million remains. On January 13, 1999 the EPA issued a
Unilateral Administrative Order for Remedial Design and Remedial
Action directing the Company to design and carry out a plan of
remediation for the Calhoun Park site. The Order is temporarily stayed
pending further negotiations between the Company and the EPA. However,
the Company submitted a Comprehensive Remedial Design Work Plan on
December 17, 1999 and is proceeding with implementation pending agency
approval.
In October 1996 the City of Charleston and the Company settled all
environmental claims the City may have had against the Company
involving the Calhoun Park area for a payment of $26 million over four
years (1996-1999) by the Company to the City. The Company is
recovering the amount of the settlement, which does not encompass site
assessment and cleanup costs, through rates in the same manner as
other amounts accrued for site assessments and cleanup. As part of the
environmental settlement, the Company constructed an 1,100 space
parking garage on the Calhoun Park site (construction was completed in
April 2000) and transferred the facility to the City in exchange for a
20-year municipal bond backed by revenues from the parking garage and
a mortgage on the parking garage. The total amount of the bond is
still being finalized but is not to exceed $16.9 million, the maximum
expected project cost.
o The Company owns three other decommissioned MGP sites which contain
residues of by-product chemicals. For the site located in Sumter,
South Carolina, effective September 15, 1998, the Company entered into
a Remedial Action Plan Contract with the South Carolina Department of
Health and Environmental Control (DHEC) pursuant to which it agreed to
undertake a full site investigation and remediation under the
oversight of DHEC. Site investigation and characterization are
proceeding according to schedule. Upon selection and successful
implementation of a site remedy, DHEC will give the Company a
Certificate of Completion and a covenant not to sue. The Company is
continuing to investigate the other two sites, and is monitoring the
nature and extent of residual contamination.
5. SEGMENT OF BUSINESS INFORMATION
The Company's reportable segments are listed in the following table. The Company
uses operating income to measure profitability for its Electric Operations and
Gas Distribution segments. Therefore, net income is not allocated to these
segments. Affiliate revenue is derived from transactions between reportable
segments as well as transactions between separate legal entities that are
combined into the same reportable segment. Assets for the period did not change
significantly.
<PAGE>
Disclosure of Reportable Segments
(Millions of Dollars)
- ----------------------------------------------- --------------------------------
Electric Gas All Adjustments/ Consolidated
March 31, 2000 Operations Distribution Other Eliminations Total
- ----------------------------------------------- --------------------------------
External Revenue $294 $101 - - $395
Intersegment Revenue 55 - - (55) -
Operating Income (Loss) 65 15 (1) (1) 78
- ----------------------------------------------- --------------------------------
- ------------------------------------ ------------ ---------- -------------------
- --------------------------------------------- ----------------------------------
Electric Gas All Adjustments/ Consolidated
March 31, 1999 Operations Distribution Other Eliminations Total
- --------------------------------------------- ---------------------------------
External Revenue $266 $86 $ 1 - $353
Intersegment Revenue 44 - - (44)
-
Operating Income (Loss) 60 14 (1) (1) 72
- --------------------------------------------- ----------------------------------
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
SOUTH CAROLINA ELECTRIC & GAS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations
appearing in South Carolina Electric & Gas Company's (SCE&G) Annual Report on
Form 10-K for the year ended December 31, 1999.
Statements included in this discussion and analysis (or elsewhere in
this quarterly report) which are not statements of historical fact are intended
to be, and are hereby identified as, "forward looking statements" for purposes
of the safe harbor provided by Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Readers are cautioned that any such forward-looking statements are not
guarantees of future performance and involve a number of risks and
uncertainties, and that actual results could differ materially from those
indicated by such forward-looking statements. Important factors that could cause
actual results to differ materially from those indicated by such forward-looking
statements include, but are not limited to, the following: (1) that the
information is of a preliminary nature and may be subject to further and/or
continuing review and adjustment, (2) changes in the utility regulatory
environment, (3) changes in the economy in SCE&G's service territory, (4) the
impact of competition from other energy suppliers, (5) the management of SCE&G's
operations, (6) variations in prices of natural gas and fuels used for electric
generation, (7) growth opportunities, (8) the results of financing efforts, (9)
changes in SCE&G's accounting policies, (10) weather conditions in areas served
by SCE&G, (11) inflation, (12) exposure to environmental issues and liabilities,
(13) changes in environmental regulations and (14) the other risks and
uncertainties described from time to time in SCE&G's periodic reports filed with
the Securities and Exchange Commission. SCE&G disclaims any obligation to update
any forward-looking statements.
MATERIAL CHANGES IN CAPITAL RESOURCES AND LIQUIDITY
SINCE DECEMBER 31, 1999
LIQUIDITY AND CAPITAL RESOURCES
On September 14, 1999 the PSC approved an accelerated capital recovery
plan for SCE&G's Cope Generating Station. The plan will be implemented beginning
January 1, 2000 for a three-year period. The PSC approved an accelerated capital
recovery methodology wherein SCE&G will increase depreciation of its Cope
Generating Station in excess of amounts that would be recorded based upon
currently approved depreciation rates. The amount of the accelerated
depreciation will be determined by SCE&G based on the level of revenues and
operating expenses, not to exceed $36 million annually without the approval of
the PSC. Any unused portion of the $36 million in any given year could be
carried forward for possible use in the succeeding year. The accelerated capital
recovery plan will be accomplished through existing customer rates.
<PAGE>
The following table summarizes how SCE&G generated funds for its utility
property additions and construction expenditures during the three months ended
March 31, 2000 and 1999:
- -------------------------------------------------------------------------------
Three Months Ended
March 31,
2000 1999
- ------------------------------------------------------------------ -------------
(Millions of Dollars)
Net cash provided from operating activities $ 78 $32
Net cash provided from (used for) financing
activities (55) 26
Cash and temporary cash investments available
at the beginning of the period 78 36
- --------------------------------------------------------------------------------
Net cash available for utility property
additions and construction expenditures $101 $94
- --------------------------------------------------------------------------------
Funds used for utility property additions
and construction expenditures, net of
noncash allowance for funds used during construction $ 39 $48
- --------------------------------------------------------------------------------
Funds used for (provided from) nonutility property
additions and investments $ - $ -
================================================================================
SCE&G anticipates that the remainder of its 2000 cash requirements will
be met through internally generated funds and the incurrence of additional
short-term and long-term debt. The timing and amount of such financings will
depend upon market conditions and other factors. SCE&G expects that it has or
can obtain adequate sources of financing to meet its projected cash requirements
for the next twelve months and for the foreseeable future. The ratio of earnings
to fixed charges for the twelve months ended March 31, 2000 was 3.71.
<PAGE>
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
AS COMPARED TO THE CORRESPONDING PERIOD IN 1999
Earnings and Dividends
Net income for the three months ended March 31, 2000 and 1999 were as
follows:
(Millions of Dollars) 2000 1999
- ---------------------------------------------------------- ------------
Net income derived from:
Continuing operations $54.2 $47.8
Change in accounting 22.3 -
- ------------------------------------------------- ------------ ------------
Total net income $76.5 $47.8
================================================= ============ ============
Net income from continuing operations increased $6.4 million. This was
primarily attributable to improved electric and gas margins ($17.1 million) and
other income which were partially offset by increased other operating expenses
($10.8 million).
Earnings from a change in accounting resulted from recording of
unbilled revenue (See NOTES TO CONSOLIDATED FINANCIAL STATEMENTS).
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 1% and 3% of
income before income taxes for the three months ended March 31, 2000 and 1999
respectively.
SCE&G's Board of Directors authorized payment of dividends on common
stock held by SCANA, as follows:
- -------------------- ----------------- ------------------- ------------------
Declaration Dividend Quarter Payment
Date Amount Ended Date
- -------------------- ----------------- ------------------- ------------------
February 22, 2000 $32.0 million March 31, 2000 April 1, 2000
April 27, 2000 $32.0 million June 30, 2000 July 1, 2000
- -------------------- ----------------- ------------------- ------------------
Electric Operations
Changes in the electric operations sales margins (including
transactions with affiliates) for the three months ended March 31, 2000, when
compared to the corresponding period in 1999, were as follows:
- -------------------------------------------------------------------------------
Three Months Ended
(Millions of Dollars) 2000 1999 Change % Change
-
- ----------------------------------------------------------------------------
Electric operating revenue $294.3 $266.2 $28.1 10.6
Less: Fuel used in generation 57.0 44.6 12.4 27.7
Purchased power 29.0 28.7 0.3 1.2
- ----------------------------------------------------------------------------
Margin $208.3 $192.9 $15.4 8.0
============================================================================
Electric operations sales margins increased for the three months
ended March 31, 2000, when compared to the corresponding period in 1999,
primarily as a result of more favorable weather and customer growth.
<PAGE>
Gas Distribution
Changes in the gas distribution sales margins for the three months
ended March 31, 2000, when compared to the corresponding period in 1999, were as
follows:
- ------------------------------------------------------------------------------
Three Months Ended
(Millions of Dollars) 2000 1999 Change % Change
- ------------------------------------------------------------------------------
Gas operating revenue $100.4 $86.1 $14.3 16.6
Less: Gas purchased for resale 61.7 49.1 12.6 25.6
- ------------------------------------------------------------------------------
Margin $ 38.7 37.0 $ 1.7 4.6
==============================================================================
Gas distribution sales margins for the three months ended March 31, 2000
increased from the corresponding period in 1999 primarily as a result of more
favorable weather and customer growth.
Other Operating Expenses
Changes in other operating expenses, including taxes, for the three months
ended March 31, 2000 when compared to the corresponding period in 1999, were as
follows:
- --------------------------------------------------------------------------------
Three Months Ended
(Millions of Dollars) 2000 1999 Change % Change
- --------------------------------------------------------------------------------
Other operation and maintenance $ 75.3 $ 70.2 $ 5.1 7.3
Depreciation and amortization 40.4 38.2 2.2 5.6
Income taxes 29.0 26.1 2.9 11.2
Other taxes 25.3 24.7 0.6 2.5
- --------------------------------------------------------------------------------
Total $170.0 $159.2 $10.8 6.8
================================================================================
Other operation and maintenance expenses for the three months ended March
31, 2000 increased from 1999 levels primarily as a result of increased operating
and maintenance costs for electric generation and distribution facilities. The
increase in depreciation and amortization expenses resulted from normal property
additions. The change in income taxes primarily reflects the change in operating
income.
Other Income
Other income, net of income taxes, for the three months ended March 31,
2000 increased approximately $2.7 million and is primarily due to earnings on
pension assets.
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
All financial instruments held by SCE&G described below are held for
purposes other than trading.
Interest rate risk - The table below provides information about SCE&G's
financial instruments that are sensitive to changes in interest rates. For debt
obligations, the table presents principal cash flows and related weighted
average interest rates by expected maturity dates.
<TABLE>
March 31, 2000
Expected Maturity Date
--------- ---------------------------------- ------ --------------
(Millions of Dollars)
There- Fair
Liabilities 2000 2001 2002 2003 2004 After Total Value
------------- ----------------------------------------------------
Long-Term Debt:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate ($) 127.5 27.6 27.6 129.4 123.9 933.0 1,369.0 1,232.7
Average Interest Rate (%) 6.16 6.73 6.73 6.37 7.52 7.72 7.39
March 31, 1999
Expected Maturity Date
--------- ------------- -------------------- ---------------------
(Millions of Dollars)
There- Fair
Liabilities 2000 2001 2002 2003 2004 After Total Value
------- ----------------------------------------------------------
Long-Term Debt:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate ($) 122.6 22.6 22.6 124.5 124.5 944.2 1,361.0 1,356.4
Average Interest Rate (%) 7.52 6.72 6.72 7.56 7.52 7.57 7.53
</TABLE>
While a decrease in interest rates would increase the fair value of debt,
it is unlikely that events which would result in a realized loss will occur.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
SCANA Corporation:
For information regarding legal proceedings see Note 2 "Rate Matters,"
appearing in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999, and Note 7 "Contingencies" of Notes to
Consolidated Financial Statements appearing in this Quarterly Report on
Form 10-Q.
South Carolina Electric & Gas Company:
For information regarding legal proceedings see Note 2 "Rate Matters, "
appearing in South Carolina Electric & Gas Company's Annual Report on
Form 10-K for the year ended December 31, 1999, and Note 4
"Contingencies" of Notes to Consolidated Financial Statements appearing
in this Quarterly Report on Form 10-Q.
Items 2, 3, 4 and 5 are not applicable for SCANA Corporation or South Carolina
Electric & Gas Company.
Item 6. Exhibits and Reports on Form 8-K
SCANA Corporation and South Carolina Electric & Gas Company:
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 during the first quarter 2000 were as follows:
SCANA filed a current report on Form 8-K:
Date of report: February 10, 2000
Items reported: Items 5 and 7
SCE&G: None
<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)
May 12, 2000 By: s/M. R. Cannon
--------------------
M. R. Cannon
Controller
(principal accounting officer)
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
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.
SOUTH CAROLINA ELECTRIC & GAS COMPANY
(Registrant)
May 12, 2000 By: s/Mark R. Cannon
Mark R. Cannon
Controller
(Principal accounting officer)
<PAGE>
EXHIBIT INDEX
Applicable to
Exhibit Form 10-Q of
No. SCANA SCE&G Description
- --- --------- -------------------------------------------------------------
2.01 X X Agreement and Plan of Merger, dated as of February 16, 1999
as amended and restated as of May 10, 1999, by and among
Public Service Company of North Carolina, Incorporated,
SCANA Corporation , New Sub I, Inc. and New Sub II, Inc.
(Filed as Exhibit 2.1 to Registration Statement No
333-78227)
3.01 X Restated Articles of Incorporation of SCANA as adopted on
April 26, 1989 (Filed as Exhibit 3-A to Registration
Statement No. 33-49145)
3.02 X Restated Articles of Incorporation of SCE&G, as adopted on
December 15, 1993 (Filed as Exhibit 3.01 to Registration
Statement No. 333-86387)
3.03 X Articles of Amendment of SCANA, dated April 27, 1995 (Filed
as Exhibit 4-B to Registration Statement No. 33-62421)
3.04 X Articles of Amendment of SCE&G, dated June 7, 1994 filed
June 9, 1994 (Filed as Exhibit 3.02 to Registration
Statement No. 333-86387)
3.05 X Articles of Amendment of SCE&G, dated November 9, 1994(Filed
as Exhibit 3.03 to Registration Statement No. 333-86387)
3.06 X Articles of Amendment of SCE&G, dated December 9, 1994
(Filed as Exhibit 3.04 to Registration Statement No.
333-86387)
3.07 X Articles of Correction of SCE&G, dated January 17, 1995
(Filed as Exhibit 3.05 to Registration Statement No.
333-86387)
3.08 X Articles of Amendment of SCE&G, dated January 13, 1995 and
filed January 17, 1995 (Filed as Exhibit 3.06 to
Registration Statement No. 333-86387)
3.09 X Articles of Amendment of SCE&G, dated March 30, 1995
(Filed as Exhibit 3.07 to Registration Statement No.
333-86387)
3.10 X Articles of Correction of SCE&G - Amendment to Statement
filed March 31, 1995, dated December 13, 1995 (Filed as
Exhibit 3.08 to Registration Statement No. 333-86387)
3.11 X Articles of Amendment of SCE&G, dated December 13, 1995
(Filed as Exhibit 3.09 to Registration Statement No.
333-86387)
3.12 X Articles of Amendment of SCE&G, dated February 18, 1997
(Filed as Exhibit 3-L to Registration Statement No.
333-24919)
3.13 X Articles of Amendment of SCE&G, dated February 21, 1997
(Filed as Exhibit 3.11 to Registration Statement No.
333-86387)
3.14 X Articles of Amendment of SCE&G, dated April 22, 1997 (Filed
as Exhibit 3.12 to Registration Statement No. 333-86387)
<PAGE>
Applicable to
Exhibit Form 10-Q of
No. SCANA SCE&G Description
3.15 X Articles of Amendment of SCE&G, dated April 9, 1998 (Filed
as Exhibit 3.13 to Registration Statement No. 333-86387)
3.16 X Articles of Amendment of SCE&G, dated May 19, 1999 (Filed
as Exhibit 3.16 to Form 10-K for the year ended December
31, 1999)
3.17 X Articles of Amendment of SCE&G, dated August 13, 1999
(Filed as Exhibit 3.17 to Form 10-K for the year ended
December 31, 1999)
3.18 X Articles of Amendment of SCE&G, dated March 1, 2000 (Filed
as Exhibit 3.18 to Form 10-K for the year ended December
31, 1999)
3.19 X By-Laws of SCANA as revised and amended on February 22,
2000 (Filed as Exhibit 3.19 to Form 10-K for the year
ended December 31, 1999)
3.20 X By-Laws of SCE&G as amended and adopted on February 22,
2000 (Filed as Exhibit 3.20 to Form 10-K for the year
ended December 31, 1999)
4.01 X Articles of Exchange of South Carolina Electric and Gas
Company and SCANA Corporation (Filed as Exhibit 4-A to
Post-Effective Amendment No. 1 to Registration Statement
No. 2-90438)
4.02 X Indenture dated as of November 1, 1989 between SCANA
Corporation and The Bank of New York, as Trustee (Filed as
Exhibit 4-A to Registration Statement No. 33-32107)
4.03 X X Indenture dated as of January 1, 1945, between the South
Carolina Power Company and Central Hanover Bank and Trust,
as Trustee, as supplemented by Supplemental Indentures
dated respectively as of May 1, 1946, May 1, 1947 and July
1, 1949 (Filed as Exhibit 2-B to Registration Statement
No. 2-26459)
4.04 X X Fourth Supplemental Indenture dated as of April 1, 1950,
to Indenture referred to in Exhibit 4.03, pursuant to
which SCE&G assumed said Indenture (Filed as Exhibit 2-C
to Registration Statement No. 2-26459)
4.05 X X Fifth through Fifty-third Supplemental Indenture referred
to in Exhibit 4.03 dated as of the dates indicated below
and filed as exhibits to the Registration Statements whose
file numbers are set forth below:
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
<PAGE>
Applicable to
Exhibit Form 10-Q of
No. SCANA SCE&G Description
December 1, 1969 Exhibit 4-O 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 2-B 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 2-A-3 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
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
May 1, 1999 Exhibit 4.04 to Registration No. 333-86387
4.06 X X 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)
4.07 X X First Supplemental Indenture to Indenture referred to in
Exhibit 4.07 dated as of June 1, 1993 (Filed as Exhibit 4-G
to Registration Statement No. 33-49421)
4.08 X X Second Supplemental Indenture to Indenture referred to in
Exhibit 4.07 dated as of June 15, 1993 (Filed as Exhibit
4-G to Registration Statement No. 33-57955)
<PAGE>
Applicable to
Exhibit Form 10-Q of
No. SCANA SCE&G Description
4.09 X X Trust Agreement for SCE&G Trust I (Filed as
Exhibit 4-G to SCE&G Form 10-K for the year
ended December 31, 1997)
4.10 X X Certificate of Trust for SCE&G Trust I (Filed as
Exhibit 4-H to SCE&G Form 10-K for the
year ended December 31, 1997)
4.11 X X Junior Subordinated Indenture for SCE&G Trust I
(Filed as Exhibit 4-I to SCE&G Form 10-K
for the year ended December 31, 1997)
4.12 X X Guarantee Agreement for SCE&G Trust I (Filed as
Exhibit 4-J to SCE&G Form 10-K for the
year ended December 31, 1997)
4.13 X X Amended and Restated Trust Agreement for SCE&G
Trust I (Filed as Exhibit 4-K to SCE&G
Form 10-K for the year ended December 31, 1997)
10.01 X SCANA Voluntary Deferral Plan as amended through
October 21, 1997 (Filed as Exhibit
10.01(a) to Registration Statement No. 333-86803)
10.02 X X Supplemental Executive Retirement Plan (Filed as
Exhibit 10.01(b) to Registration
Statement No. 333-86803)
10.03 X SCANA Supplementary Voluntary Deferral Plan as
amended and restated through October 21,
1997 (Filed as Exhibit 10-B to SCANA Form 10-K
for the year ended December 31, 1997)
10.04 X SCANA Key Executive Severance Benefits Plan as
amended and restated effective as of
October 21, 1997 (Filed as Exhibit 10.01(c) to
Registration Statement No. 333-86803)
10.05 X SCANA Supplementary Key Executive Severance
Benefits Plan as amended and restated effective
October 21, 1997 (Filed as Exhibit 10.01(d) to
Registration Statement No.
333-86803)
10.06 X SCANA Performance Share Plan as amended and
restated effective January 1, 1998 (Filed as
Exhibit 10.01(e) to Registration Statement No.
333-86803)
10.07 X SCANA Key Employee Retention Plan as amended
and restated effective as of October 21, 1997
(Filed as Exhibit 10-E to SCANA Form 10-K for
the year ended December 31, 1997)
10.08 X Description of SCANA Whole Life Option (Filed
as Exhibit 10-F to SCANA Form 10-K for the
year ended December 31, 1991, under cover of
Form SE, File No. 1-8809)
10.09 X Description of SCANA Corporation Annual
Incentive Plan (Filed as Exhibit 10-G to SCANA
Form 10-K for the year ended December 31, 1991,
under cover of Form SE, File No. 1-8809)
18.01 X Independent Auditor's Letter regarding change
in accounting principles (Filed herewith on
page 43)
18.02 X Independent Auditor's Letter regarding change
in accounting principles (Filed herewith on
page 44)
27.01 X Financial Data Schedule (Filed herewith)
27.02 X Financial Data Schedule (Filed herewith)
<PAGE>
Exhibit 18.01
Deloitte & Touche LLP
Suite 820
1426 Main Street
P. O. Drawer 7128
Columbia, South Carolina 29202
May 12, 2000
SCANA Corporation
1426 Main Street
Columbia, South Carolina 29201
Dear Sirs/Madams:
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
March 31, 2000, of the facts relating to the change in accounting method to
record an estimate of unbilled revenues for electricity and gas delivered but
not yet billed. 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, 1999. 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, 1999.
Yours truly,
s/Deloitte & Touche LLP
Deloitte & Touche LLP
<PAGE>
Exhibit 18.02
Deloitte & Touche LLP
Suite 820
1426 Main Street
P. O. Drawer 7128
Columbia, South Carolina 29202
May 12, 2000
South Carolina Electric & Gas Company
1426 Main Street
Columbia, South Carolina 29201
Dear Sirs/Madams:
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
March 31, 2000, of the facts relating to the change in accounting method to
record an estimate of unbilled revenues for electricity and gas delivered but
not yet billed. 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 South Carolina
Electric & Gas Company and its consolidated subsidiaries as of any date or for
any period subsequent to December 31, 1999. 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
South Carolina Electric & Gas Company and its consolidated subsidiaries as of
any date or for any period subsequent to December 31, 1999.
Yours truly,
s/Deloitte & Touche LLP
Deloitte & Touche LLP
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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