<PAGE> 1
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------ ------------------
Commission file number 1-6196
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PIEDMONT NATURAL GAS COMPANY, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-0556998
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1915 Rexford Road, Charlotte, North Carolina 28211
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 704-364-3120
------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at September 4, 1998
- -------------------------- --------------------------------
Common Stock, no par value 30,643,222
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Page 1 of 14 pages
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PIEDMONT NATURAL GAS COMPANY, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
----------------------------------------------------
<TABLE>
<CAPTION>
July 31, October 31,
1998 1997
ASSETS Unaudited Audited
---------- ----------
<S> <C> <C>
Utility Plant, at original cost $1,313,661 $1,256,772
Less accumulated depreciation 372,570 342,418
---------- ----------
Utility plant, net 941,091 914,354
---------- ----------
Other Physical Property (net of accumulated
depreciation of $17,422 in 1998 and $15,947 in 1997) 26,168 27,382
---------- ----------
Current Assets:
Cash and cash equivalents 17,659 5,210
Restricted cash 25,427 21,385
Receivables (less allowance for doubtful
accounts of $2,520 in 1998 and $2,027 in 1997) 37,358 32,367
Gas in storage 33,275 47,676
Deferred cost of gas 3,777 7,327
Refundable income taxes 2,067 7,115
Other 16,497 11,076
---------- ----------
Total current assets 136,060 132,156
---------- ----------
Deferred Charges and Other Assets 26,670 24,264
---------- ----------
Total $1,129,989 $1,098,156
========== ==========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock equity:
Common stock $ 276,072 $ 262,576
Retained earnings 198,668 157,250
---------- ----------
Total common stock equity 474,740 419,826
Long-term debt 379,000 381,000
---------- ----------
Total capitalization 853,740 800,826
---------- ----------
Current Liabilities:
Current maturities of long-term debt and
sinking fund requirements 10,000 10,000
Notes payable -- 25,000
Accounts payable 57,410 65,103
Deferred income taxes 5,365 10,276
Taxes accrued 10,533 11,041
Refunds due customers 31,142 15,097
Other 13,113 19,012
---------- ----------
Total current liabilities 127,563 155,529
---------- ----------
Deferred Credits and Other Liabilities 148,686 141,801
---------- ----------
Total $1,129,989 $1,098,156
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 3
PIEDMONT NATURAL GAS COMPANY, INC. AND SUBSIDIARIES
Condensed Statements of Consolidated Income (Unaudited)
(in thousands except per share amounts)
-------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Nine Months Twelve Months
Ended Ended Ended
July 31 July 31 July 31
------------------------- ---------------------- ----------------------
1998 1997 1998 1997 1998 1997
--------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues $ 103,026 $ 103,997 $677,758 $675,836 $777,440 $766,515
Cost of Gas 57,527 56,854 395,185 401,204 454,646 452,995
--------- --------- -------- -------- -------- --------
Margin 45,499 47,143 282,573 274,632 322,794 313,520
--------- --------- -------- -------- -------- --------
Other Operating Expenses:
Operations 25,713 27,039 77,236 80,245 107,680 108,140
Maintenance 3,702 3,757 10,463 12,257 14,366 16,706
Depreciation 10,490 9,738 31,472 29,129 41,529 38,123
General taxes 6,166 6,334 26,467 26,987 32,362 33,375
Income taxes (3,655) (3,417) 43,933 39,312 36,593 32,457
--------- --------- -------- -------- -------- --------
Total other operating expenses 42,416 43,451 189,571 187,930 232,530 228,801
--------- --------- -------- -------- -------- --------
Operating Income 3,083 3,692 93,002 86,702 90,264 84,719
Other Income, Net (917) (833) 2,560 2,840 3,769 3,356
--------- --------- -------- -------- -------- --------
Income Before Utility Interest Charges 2,166 2,859 95,562 89,542 94,033 88,075
Utility Interest Charges 8,419 8,636 25,103 25,733 33,308 33,927
--------- --------- -------- -------- -------- --------
Net Income ($ 6,253) ($ 5,777) $ 70,459 $ 63,809 $ 60,725 $ 54,148
Average Shares of Common Stock Outstanding:
Basic 30,535 29,964 30,408 29,806 30,333 29,716
Diluted 30,815 30,257 30,695 30,101 30,635 30,011
Earnings Per Share:
Basic ($ 0.20) ($ 0.19) $ 2.32 $ 2.14 $ 2.00 $ 1.82
Diluted ($ 0.20) ($ 0.19) $ 2.30 $ 2.12 $ 1.98 $ 1.80
Cash Dividends Declared Per Share
of Common Stock $ 0.325 $ 0.305 $ 0.955 $ 0.90 $ 1.26 $ 1.19
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 4
PIEDMONT NATURAL GAS COMPANY, INC. AND SUBSIDIARIES
Condensed Statements of Consolidated Cash Flows (Unaudited)
(in thousands)
-----------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Nine Months Twelve Months
Ended Ended Ended
July 31 July 31 July 31
-------------------- ----------------------- ----------------------
1998 1997 1998 1997 1998 1997
------- ------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income ($ 6,253) ($ 5,777) $ 70,459 $ 63,809 $ 60,725 $ 54,148
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 11,550 11,083 34,639 33,189 45,681 43,214
Other, net (486) 3,175 1,524 7,769 3,216 9,925
Change in operating assets and liabilities (17,237) (2,559) 8,779 50,110 (8,999) 35,555
-------- -------- --------- --------- --------- ---------
Net cash provided by (used in)
operating activities (12,426) 5,922 115,401 154,877 100,623 142,842
-------- -------- --------- --------- --------- ---------
Cash Flows from Investing Activities:
Utility construction expenditures (24,113) (26,314) (57,908) (70,251) (79,714) (96,240)
Other (166) (1,294) (502) (1,704) (1,036) (3,074)
-------- -------- --------- --------- --------- ---------
Net cash used in investing activities (24,279) (27,608) (58,410) (71,955) (80,750) (99,314)
-------- -------- --------- --------- --------- ---------
Cash Flows from Financing Activities:
Increase (Decrease) in bank loans, net -- -- (25,000) (39,000) -- (30,000)
Issuance of long-term debt -- -- -- -- -- 40,000
Retirement of long-term debt (2,000) (2,000) (2,000) (2,000) (10,000) (8,000)
Issuance of common stock through dividend
reinvestment and employee stock plans 4,002 3,855 11,500 11,072 14,848 15,124
Dividends paid (9,920) (9,137) (29,042) (26,825) (38,225) (35,366)
-------- -------- --------- --------- --------- ---------
Net cash provided by (used in)
financing activities (7,918) (7,282) (44,542) (56,753) (33,377) (18,242)
-------- -------- --------- --------- --------- ---------
Net Increase (Decrease) in Cash and
Cash Equivalents (44,623) (28,968) 12,449 26,169 (13,504) 25,286
Cash and Cash Equivalents at Beginning of Period 62,282 60,131 5,210 4,994 31,163 5,877
-------- -------- --------- --------- --------- ---------
Cash and Cash Equivalents at End of Period $ 17,659 $ 31,163 $ 17,659 $ 31,163 $ 17,659 $ 31,163
======== ======== ========= ========= ========= =========
Cash Paid During the Period for:
Interest $ 11,426 $ 11,466 $ 28,041 $ 27,583 $ 33,781 $ 33,537
Income taxes $ 299 $ 182 $ 46,875 $ 34,460 $ 47,051 $ 35,830
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 5
PIEDMONT NATURAL GAS COMPANY, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. The condensed consolidated financial statements have not been audited
by independent auditors. These financial statements should be read in
conjunction with the Notes to Consolidated Financial Statements
included in the Company's 1997 Annual Report.
2. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements include all adjustments (consisting
only of normal recurring accruals) necessary to present fairly the
financial position of the Company at July 31, 1998, and October 31,
1997, and the results of its operations and its cash flows for the
three months, nine months and twelve months ended July 31, 1998 and
1997.
3. The Company's business is seasonal in nature. The results of operations
for the three-month and nine-month periods ended July 31, 1998, are not
necessarily indicative of the results to be expected for the full year.
4. Basic earnings per share are computed based on the weighted average
number of shares of Common Stock outstanding during each period.
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings Per Share". A reconciliation of
basic and diluted earnings per share is presented below:
<TABLE>
<CAPTION>
Three Months Nine Months Twelve Months
Ended Ended Ended
July 31 July 31 July 31
---------------------- ------------------- -------------------
(in thousands except per share amounts)
1998 1997 1998 1997 1998 1997
-------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Income $ (6,253) $ (5,777) $70,459 $63,809 $60,725 $54,148
======== ======== ======= ======= ======= =======
Average Shares of Common Stock
Outstanding for Basic Earnings Per Share 30,535 29,964 30,408 29,806 30,333 29,716
Contingently Issuable Shares Under
the Long-Term Incentive Plan 280 293 287 295 302 295
-------- -------- ------- ------- ------- -------
Average Shares of Dilutive Stock 30,815 30,257 30,695 30,101 30,635 30,011
======== ======== ======= ======= ======= =======
Earnings Per Share:
Basic $ (.20) $ (.19) $ 2.32 $ 2.14 $ 2.00 $ 1.82
Diluted $ (.20) $ (.19) $ 2.30 $ 2.12 $ 1.98 $ 1.80
</TABLE>
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<PAGE> 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition
The Company finances its current cash requirements through internally generated
cash, the issuance of new common stock through dividend reinvestment and
employee stock purchase plans and committed bank lines of credit totaling $75
million. In addition, the Company sells common stock and long-term debt to cover
cash requirements when market or other conditions warrant such long-term
financing.
Because of the seasonal nature of the natural gas business, a substantial
portion of the annual earnings are realized in the winter period, which is the
first six months of the fiscal year. Injections of natural gas into storage
occur during periods of warm weather (principally April 1 through October 31)
for withdrawal from storage during periods of cold weather (principally November
1 through March 31). Due to this seasonality and the demand for gas during the
winter season, inventory of stored gas decreased and receivables increased from
October 31, 1997, to July 31, 1998.
The Company has a substantial capital expansion program to sustain its
approximately 5% current annual growth in customer base. The capital expansion
program is dependent on the continuing ability to generate the necessary funds
required for this growth. Utility construction expenditures for the three, nine
and twelve months ended July 31, 1998, were $24.5 million, $59.2 million and
$81.2 million, respectively, compared with $26.7 million, $71.5 million and
$97.7 million, respectively, for similar prior periods.
At July 31, 1998, capitalization consisted of long-term debt of 44% and common
equity of 56%.
Results of Operations
Margin for the three months ended July 31, 1998, decreased $1.6 million compared
with the same period last year even though increased volumes of natural gas,
including secondary market transactions, were sold or transported to industrial
customers. A lower margin is earned on activity with these customers compared
with other classes of customers. Delivered volumes (system throughput) for the
current three-month period decreased from the similar prior period by 117,000
dekatherms, a less than 1% decrease. Volumes from secondary market sales
increased over the similar prior period by 2 million dekatherms, a 61% increase.
Weather for the three months ended July 31, 1998, was 75% warmer than the
similar prior period; however, weather does not significantly impact margin for
the three months ended July 31.
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<PAGE> 7
Margin for the nine months ended July 31, 1998, increased $7.9 million compared
with the similar prior period due to customer growth and increased volumes of
gas sold or transported, including secondary market transactions. The current
period includes rate increases in Tennessee with only partial inclusion of the
rate increase in the similar prior period as the increases were effective
January 1, 1997. System throughput for the current nine months increased over
the similar prior period by 5.4 million dekatherms, a 5% increase. Volumes from
secondary market sales increased over the similar prior period by 9.1 million
dekatherms, a 51% increase. Weather for the nine months ended July 31, 1998, was
1% warmer than the similar prior period. The weather normalization adjustment
(WNA), in effect from November 1 through March 31, increased operating revenues
by $5 million in the current nine-month period, compared with an increase of
$10.6 million for the similar prior period.
Margin for the twelve months ended July 31, 1998, increased $9.3 million
compared with the similar prior period due to regulatory-approved changes and
increased volumes of gas sold or transported, including secondary market
transactions. The current twelve month period includes higher rates from general
rate cases as compared to partial inclusion in the similar prior period. System
throughput for the current twelve months increased over the similar prior period
by 5.5 million dekatherms, a 4% increase. Volumes from secondary market sales
increased over the similar prior period by 9.5 million dekatherms, a 39%
increase. Weather for the twelve months ended July 31, 1998, was less than 1%
warmer than the similar prior period. The WNA increased operating revenues by $5
million in the current twelve-month period, compared with an increase of $10.6
million for the similar prior period.
The Company's rate schedules include gas cost recovery provisions that permit
the recovery of prudently incurred gas costs. Annual prudence reviews covering a
historical twelve-month period are required in North Carolina and South Carolina
but are not required in Tennessee. Through Purchased Gas Adjustment (PGA)
procedures, rates in all three states are revised periodically without formal
rate proceedings to reflect changes in the cost of gas. Charges to cost of gas
are based on the amount recoverable under approved rate schedules. The net of
any over- or under-recoveries of gas costs is charged or credited to cost of gas
and included in refunds due customers in the financial statements.
Operations and maintenance expenses for the three months, nine months and twelve
months ended July 31, 1998, decreased from similar prior periods primarily due
to decreases in advertising, office supplies, outside consultants and employee
benefit costs, partially offset by increases in outside labor. Compared with the
similar prior period, expenses for the three months decreased for
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<PAGE> 8
payroll and the provision for uncollectibles. For the nine months, expenses for
rents and leases and payroll also decreased. And for the twelve months, expenses
for rents and leases decreased, partially offset by an increase in payroll. Such
results reflect the Company's plan to reduce overall operating expenses
implemented during fiscal 1997.
Depreciation expense for the three months, nine months and twelve months ended
July 31, 1998, increased over similar prior periods due to the growth of plant
in service.
General taxes for the three months, nine months and twelve months ended July 31,
1998, decreased from similar prior periods. Decreases for the nine-month and
twelve-month periods were primarily due to decreases in gross receipts taxes and
payroll taxes, partially offset by increases in property taxes and franchise
taxes. The decrease in the three-month period was primarily due to a decrease in
payroll taxes, partially offset by an increase in property taxes.
Other income for the three months and nine months ended July 31, 1998, decreased
from similar prior periods primarily due to decreases in earnings from energy
marketing services. The decrease in the three-month period was also due to a
decrease in earnings from jobbing operations and non-regulated gas activities,
partially offset by an increase in earnings from merchandise operations. The
nine-month period was also decreased due to decreases in earnings from propane
operations and merchandise activities. Other income for the twelve months ended
July 31, 1998, increased over the similar prior period due to increases in
earnings from propane operations, jobbing activities, interest income and income
from the performance incentive plan in Tennessee. The increase in the
twelve-month period was partially offset by decreases in earnings from energy
marketing services and merchandise operations.
Utility interest charges for the three months, nine months and the twelve months
ended July 31, 1998, decreased from similar prior periods primarily due to
decreases in interest on long-term debt due to lower balances outstanding. The
nine-month and twelve-month periods were also decreased by decreases in interest
on short-term debt due to lower balances outstanding, but at slightly higher
interest rates. The decreases in the nine-month and twelve-month periods were
partially offset by increases in interest on refunds due customers due to higher
balances outstanding.
Year 2000 Issues
The Company has initiated an enterprise project to address the Year 2000 issue
for all technology hardware and software and all interfaces with customers and
suppliers. Based upon comprehensive
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<PAGE> 9
assessments, a master plan has been developed that outlines time and cost
estimates for replacement or remediation, including internal and external
resources. Replacement of the Company's core financial systems with Year 2000
compliant client-server software is in process with an anticipated ready date of
November 1998. The replacement of the human resources/payroll system is in
process with an expected ready date of December 1998. The capital costs of the
core financial and human resources/payroll systems, including infrastructure
costs, are expected to be $11 million, of which $4.4 million has already been
incurred. Mainframe applications are also included in the master plan and have
undergone or are currently undergoing remediation at an expected cost before
testing of $900,000.
The Company's telecommunications and embedded systems are currently being
assessed. The Company plans to upgrade or replace mission-critical components of
the telecommunications and embedded systems. Pending completion of this
assessment, the Company cannot as yet estimate these costs. Overall, the master
plan is to have all mission-critical systems Year 2000 ready by December 31,
1998. The remaining support systems and non-critical embedded systems, as well
as final testing, will be completed before December 31, 1999.
The Company has initiated a formal communications process with critical
suppliers, vendors and large-volume customers through use of a Year 2000 survey
to determine the extent to which those companies are addressing their Year 2000
compliance. The Company is continuing to evaluate their responses and is making
follow-up inquiries to those who have not yet responded. Following further
analysis, the Company will take the appropriate actions necessary to mitigate
any anticipated negative impacts to the Company. At this time, the Company does
not expect a major impact from non-compliant Year 2000 suppliers, vendors or
customers.
The Company expects that all necessary systems will be Year 2000 ready by
December 31, 1999. As progress is made, the master plan is continually revised
to address the risks of the Year 2000 issue, including contingency plans as
appropriate to address "worst case" scenarios. The total capital and operating
costs to be Year 2000 ready, including assessment, replacement and remediation,
are estimated to be $21 million. Such costs are not expected to significantly
impact the Company's financial position or results of operations.
Forward-Looking Statements
Certain forward-looking statements are included in this report. They use such
words as may, will, expect, believe, plan and other similar terminology. These
statements reflect management's current expectations and involve a number of
risks and uncertainties. Actual results in the future may differ materially
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from management's present assessment of information regarding the estimated
future impact of transactions and events that have occurred or are expected to
occur, expected sources of liquidity and capital resources, operating trends,
commitments and uncertainties.
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<PAGE> 11
PART II. OTHER INFORMATION
Item 5. Other Information
South Carolina Rate Proceedings
In November 1995, the Public Service Commission of South Carolina (PSCSC)
approved a general increase in the Company's rates of approximately $7.8 million
annually. The rate increase was based on a return on common equity of 12.5%. The
South Carolina Consumer Advocate appealed the order of the PSCSC. On August 31,
1998, the South Carolina Supreme Court ruled that the PSCSC had failed to set
forth sufficient findings of fact to support the 12.5% return. The matter was
remanded to the PSCSC for further proceedings. The Company believes there is
sufficient evidence in the record to support the allowed return and that the
return will ultimately be upheld once the PSCSC sets forth the findings of fact
upon which it based its decision. The Court also ruled that the PSCSC erred in
permitting the Company to recover certain demand side management costs because
the Company did not provide a cost benefit analysis with respect to these costs.
The Company does not believe this ruling will have an adverse effect on the
Company since these costs will be placed in a deferred account for recovery in a
subsequent rate proceeding when the PSCSC can examine the benefits relating to
these costs.
Tennessee Rate Proceedings
As previously reported, the Tennessee Regulatory Authority (TRA), in a general
rate case proceeding, approved in December 1996 an increase in the Company's
margin in Tennessee, effective January 1, 1997, in the amount of $4.4 million
annually. The TRA's decision was confirmed by a written decision in February
1997. The Tennessee Consumer Advocate filed several pleadings with the TRA
arguing, among other things, that the Company was not entitled to recover the
increased rates prior to the date of the TRA's February order. All parties in
this proceeding, including the Company, petitioned the TRA to reconsider its
February order. In June 1997, the TRA issued an order denying all motions and
upholding its previous orders. In August 1997, the Consumer Advocate petitioned
the Court of Appeals for a review of the TRA's orders. On July 1, 1998, the
Court of Appeals affirmed the TRA's February order.
SouthStar Energy Services Company, LLC and Resource Energy Services
Company, LLC
On July 15, 1998, the Company, along with AGL Resources, Inc., and Dynegy, Inc.,
announced the formation, effective July 1, 1998, of SouthStar Energy Services,
LLC (SouthStar), which will offer a combination of unregulated energy products
and services to industrial, commercial and residential customers in the
southeast
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<PAGE> 12
United States. The products and services will include natural gas, electricity,
fuel oil and propane, along with related retail services. The Company's
investment in the venture is through its wholly owned subsidiary, Piedmont
Energy Company.
SouthStar will initially market energy products and services to industrial and
commercial customers throughout the southeast and will offer residential and
small business energy services to customers within Georgia as that market opens
to competition in November 1998. As other states open their markets to
competition, SouthStar will expand its residential and small business services
to these areas.
Effective April 30, 1998, Piedmont Energy Company sold its 51% interest in
Resource Energy Services Company, LLC (Resource). Piedmont Energy Company
subsequently purchased certain assets from Resource and transferred those assets
to SouthStar. The net result of the loss on the sale of the interest in Resource
and the transfer of assets to SouthStar was immaterial.
Expansion of Services
On June 17, 1998, the Company filed a petition with the North Carolina Utilities
Commission (NCUC) for approval of an expansion project that would extend natural
gas service to the counties of Avery, Mitchell and Yancey which are currently
without natural gas service. The Company also requested authority to use $26.3
million in expansion fund money to partially fund the estimated cost of the
project of $31.9 million. Hearings are scheduled to begin in September. The
outcome of this proceeding cannot be determined at this time.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
12 Computation of Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule (for Securities and Exchange
Commission use only).
(b) Reports on Form 8-K -
None.
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<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PIEDMONT NATURAL GAS COMPANY, INC.
(Registrant)
Date September 10, 1998 /s/ David J. Dzuricky
-------------------- --------------------------
David J. Dzuricky
Senior Vice President-Finance
(Principal Financial Officer)
Date September 10, 1998 /s/ Barry L. Guy
-------------------- ---------------------
Barry L. Guy
Vice President and Controller
(Principal Accounting Officer)
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<PAGE> 1
Exhibit 12
PIEDMONT NATURAL GAS COMPANY, INC. AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
For Fiscal Years Ended October 31, 1993 through 1997
and Twelve Months Ended July 31, 1998
(in thousands except ratio amounts)
<TABLE>
<CAPTION>
July 31,
1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Net income from
continuing operations $ 60,725 $ 54,074 $ 48,562 $ 40,310 $35,506 $37,534
Income taxes 39,091 34,650 30,928 25,442 21,407 23,427
Fixed charges 38,038 39,263 37,009 35,651 29,736 26,715
-------- -------- -------- -------- ------- -------
Total Adjusted Earnings $137,854 $127,987 $116,499 $101,403 $86,649 $87,676
======== ======== ======== ======== ======= =======
Fixed Charges:
Interest $ 36,157 $ 36,949 $ 34,511 $ 33,224 $27,671 $24,870
Amortization of debt
expense 306 346 345 336 334 192
One-third of rental expense 1,575 1,968 2,153 2,091 1,731 1,653
-------- -------- -------- -------- ------- -------
Total Fixed Charges $ 38,038 $ 39,263 $ 37,009 $ 35,651 $29,736 $26,715
======== ======== ======== ======== ======= =======
Ratio of Earnings to Fixed
Charges 3.62 3.26 3.15 2.84 2.91 3.28
======== ======== ======== ======== ======= =======
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PIEDMONT
NATURAL GAS COMPANY FINANCIAL STATEMENTS DATED JULY 31, 1998 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> JUL-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 941,091
<OTHER-PROPERTY-AND-INVEST> 26,168
<TOTAL-CURRENT-ASSETS> 136,060
<TOTAL-DEFERRED-CHARGES> 26,670
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,129,989
<COMMON> 276,072
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 198,668
<TOTAL-COMMON-STOCKHOLDERS-EQ> 474,740
0
0
<LONG-TERM-DEBT-NET> 379,000
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 10,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 266,249
<TOT-CAPITALIZATION-AND-LIAB> 1,129,989
<GROSS-OPERATING-REVENUE> 677,758
<INCOME-TAX-EXPENSE> 43,933
<OTHER-OPERATING-EXPENSES> 540,823
<TOTAL-OPERATING-EXPENSES> 584,756
<OPERATING-INCOME-LOSS> 93,002
<OTHER-INCOME-NET> 2,560
<INCOME-BEFORE-INTEREST-EXPEN> 95,562
<TOTAL-INTEREST-EXPENSE> 25,103
<NET-INCOME> 70,459
0
<EARNINGS-AVAILABLE-FOR-COMM> 70,459
<COMMON-STOCK-DIVIDENDS> 29,042
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 115,401
<EPS-PRIMARY> 2.32
<EPS-DILUTED> 2.30
</TABLE>
