<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 January 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 file number 1-6196
Piedmont Natural Gas Company, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-0556998
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1915 Rexford Road, Charlotte, North Carolina 28211
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 704-364-3120
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 3, 2000
- -------------------------- ----------------------------
Common Stock, no par value 31,499,642
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Page 1 of 15 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>
January 31, October 31,
2000 1999
Unaudited Audited
---------- ----------
<S> <C> <C>
ASSETS
Utility Plant, at original cost $1,450,030 $1,441,322
Less accumulated depreciation 429,454 420,140
---------- ----------
Utility plant, net 1,020,576 1,021,182
---------- ----------
Other Physical Property (net of accumulated
depreciation of $19,452 in 2000 and $18,967 in 1999) 25,543 25,793
---------- ----------
Current Assets:
Cash and cash equivalents 10,520 6,174
Restricted cash 40,556 40,156
Receivables (less allowance for doubtful
accounts of $1,678 in 2000 and $864 in 1999) 120,506 32,106
Receivables from affiliate 22,629 22,354
Gas in storage 38,289 48,685
Deferred cost of gas 32,313 8,267
Refundable income taxes 17,670 17,670
Other 10,708 22,983
---------- ----------
Total current assets 293,191 198,395
---------- ----------
Deferred Charges and Other Assets 60,440 43,287
---------- ----------
Total $1,399,750 $1,288,657
---------- ----------
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock equity:
Common stock $ 302,514 $ 297,149
Retained earnings 227,869 194,598
---------- ----------
Total common stock equity 530,383 491,747
Long-term debt 423,000 423,000
---------- ----------
Total capitalization 953,383 914,747
---------- ----------
Current Liabilities:
Current maturities of long-term debt and
sinking fund requirements 2,000 2,000
Notes payable 101,500 79,500
Accounts payable 71,964 63,116
Deferred income taxes 19,634 23,002
Income taxes accrued 30,197 0
General taxes accrued 6,508 11,904
Refunds due customers 48,148 26,204
Other 15,067 20,978
---------- ----------
Total current liabilities 295,018 226,704
---------- ----------
Deferred Credits and Other Liabilities 151,349 147,206
---------- ----------
Total $1,399,750 $1,288,657
---------- ----------
</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 Twelve Months
Ended Ended
January 31 January 31
------------------------ ------------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating Revenues $268,648 $255,742 $699,376 $707,763
Cost of Gas 151,575 134,186 383,351 386,445
-------- -------- -------- --------
Margin 117,073 121,556 316,025 321,318
-------- -------- -------- --------
Other Operating Expenses:
Operations 26,749 24,678 103,333 104,046
Maintenance 3,950 3,621 15,892 14,957
Depreciation 11,845 10,712 45,264 42,397
General taxes 5,029 9,496 24,997 30,640
Income taxes 23,740 25,543 36,526 37,614
-------- -------- -------- --------
Total other operating expenses 71,313 74,050 226,012 229,654
-------- -------- -------- --------
Operating Income 45,760 47,506 90,013 91,664
Other Income, Net 7,627 1,343 5,194 1,153
-------- -------- -------- --------
Income Before Utility Interest Charges 53,387 48,849 95,207 92,817
Utility Interest Charges 9,293 8,285 33,469 33,189
-------- -------- -------- --------
Net Income $ 44,094 $ 40,564 $ 61,738 $ 59,628
======== ======== ======== ========
Average Shares of Common Stock:
Basic 31,382 30,822 31,154 30,610
Diluted 31,562 31,054 31,371 30,878
Earnings Per Share of Common Stock:
Basic $ 1.41 $ 1.32 $ 1.98 $ 1.95
Diluted $ 1.40 $ 1.31 $ 1.97 $ 1.93
Cash Dividends Per Share
of Common Stock $ 0.345 $ 0.325 $ 1.38 $ 1.30
</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 Twelve Months
Ended Ended
January 31 January 31
------------------------ ------------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $ 44,094 $ 40,564 $ 61,738 $ 59,628
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 12,762 11,713 48,966 46,318
Other, net 716 1,883 96 2,395
Change in operating assets and liabilities (48,367) (58,963) (65,189) (17,218)
-------- -------- -------- --------
Net cash provided by (used in) operating activities 9,205 (4,803) 45,611 91,123
-------- -------- -------- --------
Cash Flows from Investing Activities:
Utility construction expenditures (19,490) (21,478) (96,588) (95,818)
Other (283) (345) (1,582) (1,147)
-------- -------- -------- --------
Net cash used in investing activities (19,773) (21,823) (98,170) (96,965)
-------- -------- -------- --------
Cash Flows from Financing Activities:
Increase in bank loans, net 22,000 32,000 37,500 34,000
Issuance of long-term debt -- -- 90,000 --
Retirement of long-term debt -- -- (46,000) (10,000)
Issuance of common stock through dividend
reinvestment and employee stock plans 3,736 3,675 15,801 15,123
Dividends paid (10,822) (10,014) (42,977) (39,780)
-------- -------- -------- --------
Net cash provided by (used in)
financing activities 14,914 25,661 54,324 (657)
-------- -------- -------- --------
Net Increase (Decrease) in Cash and
Cash Equivalents 4,346 (965) 1,765 (6,499)
Cash and Cash Equivalents at Beginning
of Period 6,174 9,720 8,755 15,254
-------- -------- -------- --------
Cash and Cash Equivalents at End of Period $ 10,520 $ 8,755 $ 10,520 $ 8,755
======== ======== ======== ========
Cash Paid During the Period for:
Interest $ 13,518 $ 11,343 $ 34,822 $ 33,077
Income taxes $ 1,639 $ 1,733 $ 49,744 $ 46,357
</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. Independent auditors have not audited the condensed consolidated
financial statements. These financial statements should be read in
conjunction with the Notes to Consolidated Financial Statements included
in our 1999 Annual Report.
2. In our opinion, the unaudited condensed consolidated financial
statements include all normal recurring adjustments necessary for a fair
statement of financial position at January 31, 2000, and October 31,
1999, and the results of operations and cash flows for the three months
and twelve months ended January 31, 2000 and 1999.
We make estimates and assumptions when preparing financial statements.
Those estimates and assumptions affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from our estimates.
3. Our business is seasonal in nature. The results of operations for the
three-month period ended January 31, 2000, do not necessarily reflect the
results to be expected for the full year.
4. Basic earnings per share are computed by dividing net income by the
weighted average number of shares of common stock outstanding for the
period. Diluted earnings per share reflect the potential dilution that
could occur when common stock equivalents are added to common shares
outstanding. Shares that may be issued under the long-term incentive plan
are our only common stock equivalents. A reconciliation of basic and
diluted earnings per share is shown below:
<TABLE>
<CAPTION>
Three Months Twelve Months
Ended Ended
January 31 January 31
--------------------- ---------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
(in thousands except per share amounts)
Net Income $44,094 $40,564 $61,738 $59,628
======= ======= ======= =======
Average shares of common stock
outstanding for basic earnings per share 31,382 30,822 31,154 30,610
Contingently issuable shares under the
long-term incentive plan 180 232 217 268
------- ------- ------- -------
Average shares of dilutive stock 31,562 31,054 31,371 30,878
======= ======= ======= =======
Earnings Per Share:
Basic $ 1.41 $ 1.32 $ 1.98 $ 1.95
Diluted $ 1.40 $ 1.31 $ 1.97 $ 1.93
</TABLE>
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<PAGE> 6
5. Business Segments
We have one reportable business segment, domestic natural gas
distribution. This business is conducted by the parent company and two
wholly owned subsidiaries, Piedmont Intrastate Pipeline Company and
Piedmont Interstate Pipeline Company. Piedmont Intrastate is a member of
Cardinal Pipeline Company, L.L.C., which owns and operates a natural gas
pipeline. Piedmont Interstate is a member of Pine Needle LNG Company,
L.L.C., which owns a liquified natural gas peak-demand storage facility.
All of our other activities are conducted by wholly owned subsidiaries,
Piedmont Propane Company and Piedmont Energy Company. Piedmont Propane
markets propane and propane appliances to residential, commercial and
industrial customers. Piedmont Energy has an equity interest in SouthStar
Energy Services LLC which offers a combination of unregulated energy
products and services to industrial, commercial and residential customers
in the southeastern United States.
Performance is evaluated based on margin, operations and maintenance
expenses, operating income and income before taxes. There have been no
changes in the basis of segmentation or in the basis of measurement of
segment profit or loss from that reported in our audited financial
statements for the year ended October 31, 1999.
Continuing operations by segment for the three months ended January 31,
2000 and 1999, are presented below:
<TABLE>
<CAPTION>
Domestic
Natural Gas
Distribution Other Total
------------ ----- -----
<S> <C> <C> <C>
2000 (in thousands)
----
Revenues from external customers $268,648 $ 15,221 $ 283,869
Margin 117,073 6,595 123,668
Operations and maintenance expenses 30,699 2,365 33,064
Operating income 45,734 3,506 49,240
Other income 2,006 6,907 8,913
Income before income taxes 62,194 10,634 72,828
Capital expenditures 20,609 258 20,867
1999
----
Revenues from external customers $255,742 $ 10,908 $ 266,650
Margin 121,556 5,919 127,475
Operations and maintenance expenses 28,299 2,441 30,740
Operating income 47,489 2,683 50,172
Other income 820 (1,161) (341)
Income before income taxes 65,567 1,422 66,989
Capital expenditures 22,299 345 22,644
</TABLE>
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<PAGE> 7
A reconciliation of net income in the consolidated financial statements
for the three months ended January 31, 2000 and 1999, is presented below:
<TABLE>
<CAPTION>
2000 1999
------- -------
(in thousands)
<S> <C> <C>
Income before income taxes for reportable segments $62,194 $65,567
Income before income taxes for other non-utility activities 10,634 1,422
Income taxes 28,734 26,425
------- -------
Net income $44,094 $40,564
======= =======
</TABLE>
A reconciliation of consolidated assets in the consolidated financial
statements as of January 31, 2000 and October 31, 1999, is presented
below:
<TABLE>
<CAPTION>
2000 1999
----------- -----------
(in thousands)
<S> <C> <C>
Domestic natural gas operations $ 1,408,638 $ 1,304,453
Other 71,723 59,997
Eliminations/Adjustments (80,611) (75,793)
----------- -----------
Consolidated assets $ 1,399,750 $ 1,288,657
=========== ===========
</TABLE>
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<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward-Looking Statements
Our discussion contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Statements concerning plans,
objectives, proposed capital expenditures and future events or performance are
some of the items included in forward-looking statements. Our statements reflect
our current expectations and involve a number of risks and uncertainties.
Although we believe that our expectations are based on reasonable assumptions,
we can give no assurances that these expectations will be achieved. Important
factors that could cause actual results to differ include:
- regulatory issues, including those that affect allowed rates of
return, rate structure and financings,
- industrial, commercial and residential growth in the service
territories,
- deregulation, unanticipated impacts of restructuring and increased
competition in the energy industry,
- the potential loss of large-volume industrial customers due to
bypass or the shift by such customers to special competitive
contracts at lower per unit margins,
- economic and capital market conditions,
- the ability to meet internal performance goals,
- the capital intensive nature of our business, including
development project delays or changes in project costs,
- changes in the availability and price of natural gas,
- changes in demographic patterns and weather conditions and
- changes in environmental requirements and cost of compliance.
Financial Condition
We finance current cash requirements primarily from operating cash flows and
short-term borrowings. Various banks provide lines of credit totaling $75
million for these direct short-term borrowings. We sell common stock and
long-term debt to cover cash requirements when market and other conditions favor
such long-term financing. Our dividend reinvestment and stock purchase plan is
also a source of capital.
The natural gas business is seasonal in nature resulting in fluctuations in
balances in accounts receivable from customers, inventories of stored natural
gas and accounts payable to suppliers. From April 1 to October 31, we build up
natural gas inventories by injecting gas into storage for sale in the colder
months. Inventory of stored gas decreased and accounts payable and accounts
receivable increased from October 31, 1999, to January 31, 2000, due to this
seasonality and the
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<PAGE> 9
demand for gas during the winter season. Most of our annual earnings are
realized in the winter period, which is the first five months of our fiscal
year.
We have a substantial capital expansion program for construction of distribution
facilities, purchase of equipment and other general improvements funded through
sources noted above. The capital expansion program supports our approximately 5%
current annual growth in customer base. Utility construction expenditures for
the three months ended January 31, 2000, were $20.6 million, compared with $22.3
million for the same period in 1999. Utility construction expenditures for the
twelve-month period ended January 31, 2000, were $100.3 million, compared with
$98.8 million for the same period in 1999.
At January 31, 2000, our capitalization consisted of 44% in long-term debt and
56% in common equity.
Results of Operations
We will discuss the results of operations for the three months and twelve months
ended January 31, 2000, compared with similar periods in 1999.
Margin
Margin (operating revenues less cost of gas) for the three months ended January
31, 2000, decreased $4.5 million compared with the same period in 1999 primarily
for the reasons listed below.
- Margin was reduced in North Carolina, effective for bills rendered
after August 1, 1999 (which included volumes delivered in July),
due to the elimination of the gross receipts tax that was
previously included in rates billed to customers. Gross receipts
tax expense in the same amount also acted to reduce general taxes.
- Secondary market volumes decreased from the same period in 1999 by
8.2 million dekatherms, a 61% decrease.
- Regulatory adjustments resulted in margin decreases from the same
period in 1999.
Decreases in margin for the three-month period were partially offset by the
following increases.
- Delivered volumes of natural gas, which we refer to as system
throughput, increased 1.1 million dekatherms over the same period
in 1999, primarily due to increased customer growth and 10% colder
weather than the same period in 1999.
- Weather that was warmer than normal generated operating revenues
of $12.6 million from the weather normalization adjustment (WNA).
The WNA is designed to offset the impact of unusually cold or warm
weather on customer billings and operating margin. The same period
in 1999 reflected increased operating revenues of $10.8 million
from the WNA.
- Greater margin was earned on capacity release transactions.
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<PAGE> 10
Margin for the twelve months ended January 31, 2000, decreased $5.3 million
compared with the same period in 1999 primarily for the reasons listed below.
- Margin was reduced due to the elimination of the gross receipts
tax as noted above.
- Secondary market volumes decreased from the same period in 1999 by
10.9 million dekatherms, a 29% decrease.
- Margin was reduced in South Carolina, effective November 1, 1998,
as ordered by the Public Service Commission of South Carolina
(PSCSC), to eliminate the recovery of demand side management (DSM)
costs included in rates. The amortization of such costs in
operation and maintenance expenses was reversed in the same amount
and recorded as a regulatory asset for recovery in future rates.
Decreases in margin for the twelve-month period were partially offset by the
following increases.
- Weather that was warmer than normal generated operating revenues
of $21.5 million from the WNA. The same period in 1999 reflected
operating revenues of $16.5 million from the WNA.
- System throughput increased by 511,000 dekatherms over the same
period in 1999, primarily due to increased customer growth and 10%
colder weather than the same period in 1999.
Our rate schedules include provisions permitting the recovery of prudently
incurred gas costs. Regulatory commissions in North Carolina and South Carolina
require annual prudence reviews covering a historical twelve-month period;
however, such review is not required in Tennessee.
We revise rates in all three states periodically without formal rate proceedings
to reflect changes in the cost of gas. Charges to cost of gas are based on the
amount recoverable under approved rate schedules. The net of any over- or
under-recoveries of gas costs are added to or deducted from cost of gas and
included in refunds due customers in the consolidated financial statements.
Operations and Maintenance Expenses
Operations and maintenance expenses for the three months ended January 31, 2000,
compared with the same period in 1999 increased by $2.4 million primarily for
the reasons listed below.
- Increase in payroll,
- Increase in transportation expense,
- Increase in rents and leases,
- Increase in the provision for uncollectibles,
- Increase in advertising expense and
- Increase in office supplies and expense.
Decreases in materials expense and outside labor expense partially offset these
increases for the three months ended January 31, 2000, compared with the same
period in 1999.
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<PAGE> 11
Operations and maintenance expenses for the twelve months ended January 31,
2000, compared with the same period in 1999 increased by $222,000 primarily for
the reasons listed below.
- Increase in outside labor expense and
- Increase in advertising expense.
Increases in operations and maintenance expenses for the twelve-month period
were partially offset by the following decreases.
- Decrease in risk insurance expense,
- Decrease in employee benefits expense and
- Decrease in materials expense.
General Taxes
General taxes for the three months ended January 31, 2000, compared with the
same period in 1999 decreased by $4.5 million primarily for the reasons listed
below.
- Elimination of the gross receipts tax in North Carolina as noted
above,
- Decrease in payroll taxes and
- Decrease in property taxes.
An increase in franchise tax expense partially offset these decreases for the
three months ended January 31, 2000, compared with the same period in 1999.
General taxes for the twelve months ended January 31, 2000, compared with the
same period in 1999 decreased by $5.6 million primarily due to the elimination
of the gross receipts tax in North Carolina. Increases in franchise taxes and
payroll taxes partially offset this decrease.
Other Income
Other income for the three months ended January 31, 2000, compared with the same
period in 1999 increased by $6.3 million. The primary reasons for these
increases are listed below.
- Increase in earnings from unregulated retail energy marketing
services,
- Increase in earnings from propane operations,
- Increase in earnings from non-utility LNG operations and
- Increase in pipeline operations.
Other income for the twelve months ended January 31, 2000, compared with the
same period in 1999 increased by $4 million. The primary reasons for these
increases are listed below.
- Increase in earnings from unregulated retail energy marketing
services,
- Increase in earnings from non-utility LNG operations,
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<PAGE> 12
- Increase in earnings from pipeline operations and
- Increase in the portion of the allowance for funds used during
construction attributable to equity funds.
Increases in other income for the twelve-month period were partially offset by
decreases in earnings from jobbing operations and interest income.
Utility Interest Charges
Utility interest charges for the three months and twelve months ended January
31, 2000, compared with the same periods in 1999 increased by $1 million and
$280,000, respectively. The primary reasons for these increases are listed
below.
- Increase in interest on long-term debt from higher amounts of debt
outstanding and
- Increase in interest on short-term debt due to higher amounts of
debt outstanding at slightly higher interest rates.
Increases in utility interest charges for the three-month and twelve-month
periods were partially offset by the following decreases.
- Decrease in interest on refunds due customers from lower balances
outstanding during the periods and
- Increase in the portion of the allowance for funds used during
construction attributable to borrowed funds.
Year 2000
During the Year 2000 transition weekend of December 31, 1999 through January 3,
2000, our personnel conducted extensive tests of embedded systems, technical
infrastructure and applications. We did not discover any incidents of Year 2000
malfunctions based upon this testing and we believe that the risks of any future
impacts to our business are minimal. In addition, no significant Year 2000
related issues have been discovered to date.
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<PAGE> 13
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
We held our Annual Meeting of Shareholders on February 25, 2000, to elect four
directors and to ratify the selection of independent auditors. The record date
for determining the shareholders entitled to receive notice of and to vote at
the meeting was January 13, 2000. We solicited proxies for the meeting according
to section 14(a) of the Securities and Exchange Act of 1934. There was no
solicitation in opposition to management's solicitations.
Shareholders elected all of management's nominees for director as listed in the
proxy statement for terms expiring in 2003 by the following votes:
Shares Shares Shares
Voted Voted NOT
FOR WITHHELD VOTED
------ -------- ------
C. M. Butler III 26,222,679 343,196 4,806,341
Sam J. DiGiovanni* 26,225,971 339,904 4,806,341
John W. Harris 26,234,288 331,587 4,806,341
Ware F. Schiefer 26,237,063 328,812 4,806,341
*As reported in the proxy statement, Mr. DiGiovanni has agreed to resign from
the Board effective at the 2001 annual meeting of shareholders since he will
have attained the mandatory retirement age of 72.
Directors Jerry W. Amos, John H. Maxheim and Walter S. Montgomery, Jr., continue
to hold office until 2001. Directors Muriel W. Helms, Ned R. McWherter, Donald
S. Russell, Jr., and John E. Simkins, Jr., will continue to hold office until
2002.
Shareholders approved the selection by the Board of Directors of the firm of
Deloitte & Touche LLP as our independent auditors for the fiscal year ending
October 31, 2000, by the following vote:
Shares Shares Shares Shares
Voted Voted Voted NOT
FOR AGAINST ABSTAINING VOTED
------ ------- ---------- ------
26,354,163 104,582 107,130 4,806,341
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<PAGE> 14
Item 5. Other Information
Rate Proceedings
In December 1999, we filed with the Tennessee Regulatory Commission (TRA) for a
general rate increase of $10.7 million annually. A hearing date has not been set
at this time.
On March 1, 2000, we filed with the North Carolina Utilities Commission a letter
of intent to file for a general rate increase. The amount of proposed increase
has not been determined.
Corporate Organization
On February 25, 2000, the Board of Directors elected Ware F. Schiefer, President
and Chief Executive Officer. Prior to his election, he was President and Chief
Operating Officer. John H. Maxheim retired on February 29, 2000, as Chief
Executive Officer but retains the title of Chairman of the Board.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
3.1 By-Laws of the Company, as amended, dated February 25,
2000.
10.1 Consulting Agreement between the Company and John H.
Maxheim, dated March 1, 2000.
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 -
On February 22, 2000, we filed a Form 8-K to announce that we entered
into an agreement to form a joint venture which combines our propane
operations with the propane operations of three other companies. For
us, certain aspects of this transaction are subject to approval by the
North Carolina Utilities Commission. The participating companies expect
the transaction to be completed by May 1, 2000.
-14-
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Piedmont Natural Gas Company, Inc.
----------------------------------
(Registrant)
Date March 10, 2000 /s/ David J. Dzuricky
-------------- ----------------------------------
David J. Dzuricky
Senior Vice President-Finance
(Principal Financial Officer)
Date March 10, 2000 /s/ Barry L. Guy
-------------- ----------------------------------
Barry L. Guy
Vice President and Controller
(Principal Accounting Officer)
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<PAGE> 1
Exhibit 3.1
BY-LAWS
OF
PIEDMONT NATURAL GAS COMPANY, INC.
----------------
FEBRUARY 25, 2000
<PAGE> 2
ARTICLE I. MEETING OF SHAREHOLDERS.............................................1
Section 1.1. Annual Meetings.............................................1
Section 1.2. Special Meetings............................................1
Section 1.3. Notice of Meetings..........................................1
Section 1.4. Waiver of Notice............................................1
Section 1.5. Quorum......................................................2
Section 1.6. Proxies.....................................................2
Section 1.7. Inspectors..................................................2
Section 1.8. Vote of Shareholders........................................2
ARTICLE II. BOARD OF DIRECTORS.................................................2
Section 2.1. Number, Nominations, Election, Term of Office and
Qualifications............................................2
Section 2.2. Regular Meetings............................................3
Section 2.3. Special Meetings............................................3
Section 2.4. Quorum and Manner of Acting.................................3
Section 2.5. Resignations................................................3
Section 2.6. Removal of Directors........................................4
Section 2.7. Filling of Vacancies........................................4
Section 2.8. Directors' Fees.............................................4
Section 2.9. Informal Action by Directors................................4
Section 2.10 Chairman of the Board and Vice Chairman of the Board........4
ARTICLE III. SPECIAL COMMITTEES...............................................4
Section 3.1. Committees..................................................4
Section 3.2. Executive Committee.........................................5
Section 3.3. Committees' Fees and Expenses...............................5
ARTICLE IV. OFFICERS - POWERS AND DUTIES......................................5
Section 4.1. Officers....................................................5
Section 4.2. Term of Office..............................................5
Section 4.3. Removal of Elected Officers.................................6
Section 4.4. Vacancies...................................................6
Section 4.5. President...................................................6
Section 4.6. Vice-Presidents.............................................6
Section 4.7. Secretary...................................................6
Section 4.8. Treasurer...................................................6
Section 4.9. Additional Powers and Duties................................7
Section 4.10. Compensation................................................7
<PAGE> 3
ARTICLE V. SHARES AND TRANSFERS OF SHARES.....................................7
Section 5.1. Share Certificates..........................................7
Section 5.2. Transfers of shares.........................................8
Section 5.3. Lost Certificates...........................................8
Section 5.4. Record Date.................................................8
ARTICLE VI. INDEMNIFICATION OF OFFICERS AND DIRECTORS..........................8
Section 6.1. Definitions.................................................8
Section 6.2. Indemnification.............................................9
Section 6.3. Determination..............................................10
Section 6.4. Advances for Expenses......................................10
Section 6.5. Reliance and Consideration.................................11
Section 6.6. Insurance..................................................11
ARTICLE VII. FISCAL YEAR.....................................................11
Section 7.1. Fiscal Year................................................11
ARTICLE VIII. AMENDMENTS.....................................................11
Section 8.1. Amendment of By-Laws.......................................11
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BY-LAWS
OF
PIEDMONT NATURAL GAS COMPANY, INC.
ARTICLE I
MEETING OF SHAREHOLDERS
Section 1.1. Annual Meetings. The annual meeting of shareholders shall
be held on the fourth Friday in February of each year, or, if that date is a
legal holiday on the next succeeding day not a legal holiday at 9:30 a.m., or at
such time as may be fixed by the Board of Directors, for the election of
directors and the transaction of such other business as may come before the
meeting. Such meeting shall be held at such place within or without the State of
North Carolina as may be fixed from time to time by the Board of Directors and
stated in the notice of the meeting.
Section 1.2. Special Meetings. A special meeting of shareholders may be
called at any time and for any purpose or purposes by the Board of Directors and
shall be called by the Secretary upon the written request of the holders of at
least eighty per cent of the outstanding shares of stock entitled to vote in the
election of Directors. Each such request shall state the purpose or purposes of
each meeting.
Section 1.3. Notice of Meetings. Notice of the date, time, place and
purpose of any meeting of shareholders shall be signed by the President or the
Secretary and a copy thereof shall be served upon each shareholder of record
entitled to vote at such meeting, either personally or by mailing the same
postage prepaid not less than ten nor more than fifty days before the meeting.
If mailed, such notice shall be directed to a shareholder at his or her address
as it appears on the record of shareholders, unless he or she shall have filed
with the Secretary a written request that notices intended for him or her be
mailed to some other address, in which case it shall be mailed to the address
designated in such request.
Section 1.4. Waiver of Notice. Notice of any meeting of shareholders
shall not be required as to any shareholder who shall attend such meeting in
person or by proxy without protesting prior to the conclusion of the meeting the
lack of notice of such meeting. If any shareholder shall, in writing, in person
or by proxy, before or after the meeting, submit a waiver of notice of any
meeting, notice thereof shall not be required.
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2
Section 1.5. Quorum. At all meetings of shareholders (except where
otherwise provided by statute or by the Articles of Incorporation) the presence,
in person or by proxy, of the holders of a majority of the shares entitled to
vote shall constitute a quorum for the transaction of business. In the absence
of a quorum, a majority of the shares present may adjourn the meeting from time
to time until a quorum shall be present. At any such adjourned meeting at which
a quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally called. No notice of an adjourned
meeting need be given if the time and place to which the meeting is adjourned
are announced at the meeting to which the adjournment is taken; provided that
the new date is not more than 120 days after the date of the original meeting.
However, if after the adjournment, the Board of Directors shall fix a new record
date for the adjourned meeting, notice of the adjourned meeting shall be given
to each shareholder of record on the new record date entitled to notice as
specified herein.
Section 1.6. Proxies. No proxy shall be valid after the expiration of
eleven months from the date of its execution unless the shareholder executing it
shall have specified therein a longer period for its duration.
Section 1.7. Inspectors. The Board of Directors, in advance of any
meeting of shareholders, may appoint one or more inspectors to act at the
meeting or any adjournment thereof. If inspectors are not so appointed, the
person presiding at the meeting may, and on the request of any shareholder
entitled to vote at the meeting shall, appoint one or more Inspectors. In case
any person appointed fails to appear or act, the vacancy may be filled by
appointment made by the Board of Directors in advance of the meeting or at the
meeting by the chairman of the meeting. Each inspector, before entering upon the
discharge of his or her duties, shall take an oath faithfully to execute the
duties of inspector at such meeting with strict impartiality and according to
the best of his or her ability.
Section 1.8. Vote of Shareholders. Each shareholder having the right to
vote shall be entitled at every meeting of shareholders to one vote for every
share standing in his or her name on the record of shareholders. Directors shall
be elected as provided in Section 2.1 of Article II, and whenever any other
corporate action is to be taken by vote of the shareholders, it shall, except as
otherwise required by statute or by the Articles of Incorporation, be authorized
by a majority of votes cast by such voters.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1. Number, Nominations, Election, Term of Office and
Qualifications. The number of Directors to serve from time to time shall be
determined by a resolution adopted by the affirmative vote of a majority of the
entire Board of Directors, but shall not be less than nine (9). Each Director
shall be at least twenty-one years of age. Directors shall be elected in the
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3
manner and for the terms provided in the Articles of Incorporation. At each
meeting of the shareholders for the election of Directors, at which a quorum is
present, the persons receiving a plurality of the votes cast shall be elected.
No Director shall be elected at an annual or special meeting of shareholders
unless he or she shall have been nominated to serve as a Director at least sixty
(60) days prior to the meeting at which he or she is elected; provided, however,
that should any nominee die, indicate his or her refusal to serve or otherwise
become disqualified to serve within said sixty (60) day period, a replacement
may be nominated by a majority of the entire Board of Directors, or, upon the
failure of the Board to nominate a replacement, by any shareholder at the
meeting at which the disqualified nominee was to have been elected. Directors
need not be shareholders of the Corporation.
Section 2.2. Regular Meetings. The Board of Directors may, by
resolution, from time to time, appoint the time and place for holding regular
meetings of the Board, if it be deemed advisable; and such regular meetings may
thereupon be held without the giving of any special notice. In case the day
appointed for a regular meeting shall fall on a legal holiday, such meeting
shall be held on the next following day not a legal holiday at the regular
appointed hour.
Section 2.3. Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board, the
President or by any two of the Directors. Notice of any special meeting shall be
mailed to each Director, postage prepaid, addressed to him or her at his or her
residence or usual place of business, not later than the second day before the
day on which the meeting is to be held, or shall be sent to him or her at such
place by telegram, telefax, telex or similar facsimile means or be delivered
personally, or by telephone, not later than the day before the day on which the
meeting is to be held. Notice of any meeting of the Board of Directors need not
be given, however, to any Director if waived by him or her in writing or by
telegraph, before or after the holding of the meeting, or if he or she shall be
present at the meeting without protesting.
Section 2.4. Quorum and Manner of Acting. Any two Directors in office
at the time of any meeting of the Board, but in any event not less than
one-third of the entire Board, shall be present in person to constitute a quorum
for the transaction of business; and, except as otherwise required by statute or
by the Articles of Incorporation, the vote of a majority of the Directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors. In the absence of a quorum, a majority of the Directors
present may adjourn the meeting from time to time and no notice of any adjourned
meeting need be given. Any one or more members of the Board may participate in
any meeting of the Board by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time. Participation by such means shall constitute
presence in person at a meeting.
Section 2.5. Resignations. Any Director may resign at any time either
by oral tender of resignation at any meeting of the Board or by giving written
notice thereof to the Secretary. Such resignation shall take effect at the time
specified therefor, and unless otherwise specified with respect thereto, the
acceptance of such resignation shall not be necessary to make it effective.
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4
Section 2.6. Removal of Directors. Subject to the rights of the holders
of any series of Preferred Stock then outstanding, any Director, or the entire
Board of Directors, may be removed from office at any time for cause by the
affirmative vote of at least 80% of the outstanding shares entitled to vote in
the election of Directors.
Section 2.7. Filling of Vacancies. Subject to the rights of the holders
of any series of Preferred Stock then outstanding, newly created directorships
resulting from an increase in the authorized number of Directors may be filled
by vote of the Board of Directors. If the number of Directors then in office is
less than a quorum, such newly-created directorships and vacancies may be filled
by a majority of the Directors then in office. Any Director elected to fill a
vacancy shall hold office until the next annual meeting of shareholders. In no
case shall a decrease in the number of Directors shorten the term of any
incumbent Director.
Section 2.8. Directors' Fees. In consideration of his or her serving in
such capacity, each Director of the Corporation who is not a full-time officer
shall receive an annual fee and such additional fees in such amounts and payable
in such installments as the Board of Directors, by vote of the majority of the
entire Board, may from time to time determine. Members of the Board of Directors
shall be entitled to reimbursement of reasonable expenses incurred for
attendance at regular or special meetings of the Board of Directors.
Section 2.9. Informal Action by Directors. Action taken by all of the
Directors without a meeting is nevertheless Board action if written consent to
the action is signed by all the Directors and filed with the minutes of the
proceedings of the Board, whether done before or after the action so taken.
Section 2.10. Chairman of the Board and Vice Chairman of the Board. The
Board may elect from among its members a Chairman of the Board of Directors. If
elected, the Chairman of the Board of Directors when present shall preside at
all meetings of Directors and shall have such other duties, if any, as provided
by the Board by resolution. The Board may also elect a Vice Chairman of the
Board of Directors. The Vice Chairman of the Board of Directors shall, in the
absence of the Chairman, preside at meetings of the Directors and shall have
such other duties, if any, as provided by the Board by resolution. The positions
of Chairman of the Board of Directors and Vice Chairman of the Board of
Directors shall not be that of an employee or an officer of the Corporation.
ARTICLE III
SPECIAL COMMITTEES
Section 3.1. Committees. The Board of Directors, by resolution adopted
by a majority of the entire Board, may from time to time designate from among
its members committees, each
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5
consisting of three or more Directors, for any purpose or purposes and may
delegate to any such committee such powers as the Board may deem expedient.
Section 3.2. Executive Committee. The Board of Directors may, by
resolution adopted by a majority of the entire Board, designate from among its
members an Executive Committee consisting of three or more Directors which shall
be empowered to perform such functions as may be delegated to it by the Board
subject to applicable statutory requirements. The Executive Committee shall
elect its own chairman and shall appoint its own Secretary, and shall have full
power and authority to make rules for the conduct of its business, including
notices required to be given in connection with regular or special meetings of
the Executive Committee. A majority of the Executive Committee shall constitute
a quorum for the transaction of business, and the vote of a majority of those
present at a meeting, at which a quorum is present, shall be the act of the
Executive Committee. The members of the Executive Committee shall act only as a
committee, and the individual members shall have no power as such. The Executive
Committee shall keep minutes of its proceedings and shall submit the same from
time to time to the Board of Directors. Any vacancy in the Executive Committee
shall be filled by a vote of a majority of the entire Board of Directors.
Section 3.3. Committees' Fees and Expenses. In consideration of his or
her serving in such capacity, each member of any committee who is not a salaried
officer of the Corporation may be compensated in such amount as the Board of
Directors, by vote of the majority of the entire Board, may from time to time
determine. Members of the committees shall be entitled to reimbursement of
reasonable expenses incurred for attendance at regular or special meetings of
the committees.
ARTICLE IV
OFFICERS - POWERS AND DUTIES
Section 4.1. Officers. The elected officers of the Corporation shall be
a President, a Secretary and a Treasurer. There may also be elected one or more
Vice-Presidents. The Board of Directors may appoint a General Manager, one or
more Assistant Vice-Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and such other officers and agents as may from time to
time appear to be necessary or advisable in the conduct of the affairs of the
Corporation. Any two of the aforesaid officers may be held by the same person,
except that the office of President and the office of Secretary may not be held
by the same person.
Section 4.2. Term of Office. So far as practicable, all elected
officers shall be elected at the first meeting of the Board held following the
annual meeting of shareholders in each year and shall hold office until the
organization meeting of the Board in the next subsequent year and until their
respective successors are elected and qualify. All other officers shall hold
office during the pleasure of the Board.
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Section 4.3. Removal of Elected Officers. Any elected officer may be
removed at any time, either for or without cause, by vote of a majority of the
whole Board of Directors at any meeting.
Section 4.4. Vacancies. If any vacancy occurs in any office, the Board
of Directors may elect or appoint a successor to fill such vacancy for the
remainder of the term.
Section 4.5 President. The President of the Corporation shall be the
chief executive officer of the Corporation and, subject to the control of the
Board of Directors, shall have general and active control of all of the affairs
and business of the Corporation. He or she shall perform such other duties and
have such other powers as may be assigned to him or her from time to time by the
Board. The President shall see that all orders and resolutions of the Board of
Directors are put into effect. Unless the Board of Directors shall have
designated another person for such purpose, he or she shall preside at all
meetings of shareholders. In the event that the Board shall not have elected a
Chairman of the Board of Directors or a Vice Chairman of the Board of Directors
or shall have elected one or more of such positions and neither of such
positions shall be present, he or she shall preside at all meetings of the Board
of Directors. Subject to the control of the Board of Directors, he or she shall
have the power to sign in the name and on behalf of the Corporation, bonds,
notes, deeds and any and all contracts and other instruments of a contractual
nature pertaining to matters which arise in the normal conduct and ordinary
course of the business of the Corporation; and to appoint and fix the
compensation of all employees and agents whose appointment is not otherwise
provided for, and to remove or suspend the same.
Section 4.6. Vice-Presidents. The several Vice-Presidents shall perform
such duties and have such powers as shall be assigned to them from time to time
by the Board of Directors or the President. In case of the absence or disability
of the President, his or her duties and powers shall be exercised and performed
by the several Vice-Presidents acting in his or her place in such order of
seniority as the Board of Directors may prescribe from time to time.
Section 4.7. Secretary. The Secretary shall attend to the giving of
notice of meetings of the shareholders and of the Board of Directors,
respectively, and shall keep and attest true records of all proceedings at such
meetings and shall have charge of the corporate seal and, when authorized by the
Board of Directors, shall have authority to attest any and all instruments or
writings to which the same may be affixed. He or she shall keep and account for
all books, documents, papers and records of the Corporation, except those which
are herein directed to be in the charge of the Treasurer. He or she shall have
authority to sign stock certificates and shall generally perform all the duties
usually appertaining to the office of secretary of a corporation. In the absence
of the Secretary, an Assistant Secretary or Secretary pro tempore shall perform
his or her duties.
Section 4.8. Treasurer. The Treasurer shall have the care and custody
of all moneys and funds of the Corporation, and shall deposit or cause to be
deposited all funds of the Corporation in and with such depositaries as the
Board of Directors shall designate from time to time. He or
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she shall have power to sign stock certificates, to endorse for deposit or
collection, or otherwise, all checks, drafts, notes, bills of exchange or other
commercial paper payable to the Corporation, and to give proper receipts or
discharges therefor. He or she shall keep accurate books of account relating to
the moneys and financial affairs of the Corporation and shall render an account
of the Corporation's funds, whenever required so to do by the Board of Directors
or the President. In the absence of the Treasurer, an Assistant Treasurer shall
perform his or her duties.
Section 4.9. Additional Powers and Duties. In addition to the foregoing
especially enumerated duties and powers, the several officers of the Corporation
shall perform such other duties and exercise such further powers as may be
provided in these By-Laws or as the Board of Directors may, from time to time,
determine, or as may be assigned to them by any competent superior officer.
Section 4.10. Compensation. The compensation of all elected officers of
the Corporation shall be fixed, from time to time, by the Board of Directors;
and the compensation of all appointed officers shall be fixed, or the method of
so doing shall be provided, from time to time, by the Board of Directors.
ARTICLE V
SHARES AND TRANSFERS OF SHARES
Section 5.1. Share Certificates. Certificates of shares shall be in
such form as the Board of Directors may from time to time prescribe, and shall
be signed by the Chairman of the Board or the President or a Vice-President, and
by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer, and sealed with the corporate seal or a facsimile thereof. The
signatures of the officers upon a certificate may be facsimiles if the
certificate is countersigned by a Transfer Agent or registered by a Registrar
other than the Corporation or its employees. In case any officer who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer before such certificate is issued, it may be issued by
the Corporation with the same effect as if he or she were such officer at the
date of issue.
The Certificates shall be consecutively numbered or otherwise
identified; and the name and address of the persons to whom they are issued,
with the number of shares and the date of issue, shall be entered on the stock
transfer books of the Corporation. Such information may be stored or retained on
discs, tapes, cards or any other approved storage device relating to data
processing equipment; provided that such device is capable of reproducing all
information contained therein in legible and understandable form, for inspection
by shareholders or for any other corporate purpose. Such certificates shall
indicate thereon a reference to any and all restrictive conditions imposed on
the shares represented thereby.
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The Board of Directors may authorize the issuance of some or all of the
shares of the Corporation, or some or all of any class of shares, without
certificates. When shares are not represented by certificates, then within a
reasonable time after the issuance or transfer of such shares, the Corporation
shall send the shareholder to whom such shares have been issued or transferred a
written statement of the information required by the Act to be on certificates.
The Board of Directors shall comply with N.C.G.S. sec. 25-4-408 with respect to
all uncertified shares.
Section 5.2. Transfers of shares. Shares may be transferred on the
books of the Corporation by delivery of the certificates therefor, accompanied
either by an assignment in writing on the back of the certificates or by written
power of attorney to assign and transfer the same, signed by the record holders
thereof; but no transfer shall affect the right of the Corporation to pay any
dividend upon the shares to the holder of record thereof, or to treat the holder
of record as the holder in fact thereof for all purposes, and no transfer shall
be valid, except between the parties thereto, until such transfer shall have
been made upon the books of the Corporation.
Section 5.3. Lost Certificates. In case any certificate representing
shares shall be lost, stolen or destroyed, the Board of Directors, in its
discretion, may authorize the issue of a substitute certificate in place of the
certificate so lost, stolen or destroyed; provided that, in each such case, the
applicant for a substitute certificate shall furnish to the Corporation evidence
satisfactory to it of the loss, theft or destruction of such certificate and of
the ownership thereof, and also security or indemnity satisfactory to it.
Section 5.4. Record Date. The Board of Directors may fix a time, not
exceeding fifty days preceding the date fixed for the payment of any dividend or
for the making of any distribution, or for the delivery of evidences of rights
or evidences of interests arising out of any change, conversion or exchange of
capital stock, as a record time for the determination of the shareholders
entitled to receive any such dividend, distribution, rights or interests, and in
such case only shareholders of record at the time so fixed shall be entitled to
receive such dividend, distribution, rights or interests.
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 6.1. Definitions. For purposes of this Article, the following
definitions shall apply:
(a) "Corporation" means the Corporation and all "predecessors"
thereof, as such term is defined in Section 55-8-50(b)(1) of the Act.
<PAGE> 12
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(b) "Director" means an individual who is or was a director of
the Corporation or an individual who, while a director of the
Corporation, is or was serving at the Corporation's request as a
director, officer, partner, trustee, employee or agent or another
foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise. A director is considered to
be serving an employee benefit plan at the Corporation's request if
such director's duties to the Corporation also impose duties on, or
otherwise involve services by, the director to the plan or to
participants in or beneficiaries of the plan. "Director" includes,
unless the context requires otherwise, the estate or personal
representative of a director.
(c) "Expenses" means expenses of every kind incurred in
defending a Proceeding, including, but not limited to, legal,
accounting, expert and investigatory fees and expenses.
(d) "Indemnified Officer" shall mean each officer of the
Corporation who is also a director of the Corporation and each other
officer of the Corporation who is designated by the Board of Directors
from time to time as an Indemnified Officer. An Indemnified Officer
shall be entitled to indemnification hereunder to the same extent as a
Director, including, without limitation, indemnification with respect
to service by the Indemnified Officer at the Corporation's request as a
director, officer, partner, trustee, employee or agent of another
foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise.
(e) "Liabilities" means any obligation to pay any or all of
the following: a judgment, a settlement, a penalty, a fine (including
an excise tax assessed with respect to an employee benefit plan) and
reasonable expenses, including, but not limited to, attorneys' fees of
opposing parties incurred with respect to a Proceeding.
(f) "Proceeding" means any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, whether formal or informal, and any appeal therein (and
any inquiry or investigations that could lead to such a proceeding).
Section 6.2. Indemnification. In addition to, and not in any way in
limitation of, all indemnification rights and obligations otherwise provided by
law, the Corporation shall indemnify and hold harmless its Directors and
Indemnified Officers against all Liabilities and Expenses in any Proceeding
(including, without limitation, a Proceeding brought by or on behalf of the
Corporation itself) arising out of their status as Directors or officers, or
their service at the Corporation's request as a Director, officer, partner,
trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise, or
their activities in any such capacity; provided, however, that the Corporation
shall not indemnify a Director or an Indemnified Officer against Liabilities or
Expenses that such person may incur on account of activities of such person
which at the time taken were known or
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believed by him or her, or a reasonable person would have or should have known,
to be clearly in conflict with the best interests of the Corporation.
The Corporation shall also indemnify each Director and Indemnified
Officer for his or her reasonable costs, expenses and attorneys' fees incurred
in connection with the enforcement of the rights to indemnification granted
herein, if it is determined in accordance with Section 6.3 that the Director or
Indemnified Officer is entitled to indemnification hereunder.
The Board of Directors shall have the authority to adopt such
resolutions pertaining to the implementation of this Section as it may from time
to time determine, and such resolutions shall be given full effect, even though
they supplement, amplify or go beyond the provisions of this Section, provided
and to the extent such resolution does not violate any provision of the Act or
the Corporation's Articles of Incorporation. This Section shall be construed in
a manner to fully effect the purpose and intent of the resolution of the
Corporation's Board of Directors approving and adopting this provision.
Section 6.3. Determination. Any indemnification under Section 6.2 shall
be paid by the Corporation in a specific case only after a determination that
the Director or Indemnified Officer has met the standard of conduct set forth in
Section 6.2. Such determination shall be made:
(a) by the Board of Directors by a majority vote of a quorum
consisting of directors not at the time parties to the Proceeding;
(b) if a quorum cannot be obtained under paragraph (a), by a
majority vote of a committee duly designated by the Board of Directors
(in which vote directors who are parties to the Proceeding may
participate), consisting solely of two or more directors not at the
time parties to the Proceeding;
(c) by special legal counsel (i) selected by the Board of
Directors or a committee thereof in the manner prescribed in paragraph
(a) or (b); or (ii) if a quorum of the Board of Directors cannot be
obtained under paragraph (a) and a committee cannot be designated under
paragraph (b), selected by a majority vote of the full Board of
Directors (in which selection directors who are parties in the
Proceeding may participate); or
(d) by the shareholders, but shares owned by or voted under
the control of directors who are at the time parties to the Proceeding
may not be voted on the determination. The Board of Directors shall
take all such action as may be necessary and appropriate to enable the
Corporation to pay the indemnification required by this Article.
Section 6.4. Advances for Expenses. The Expenses incurred by a Director
or an Indemnified Officer in defending a Proceeding may be paid by the
Corporation in advance of the final disposition of such Proceeding as authorized
by the Board of Directors in the specific case upon receipt of an undertaking by
or on behalf of the Director or Indemnified Officer to repay
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such amount unless it shall ultimately be determined that such person is
entitled to be indemnified by the Corporation against such Expenses. Subject to
receipt of such undertaking, the Corporation shall make reasonable periodic
advances for Expenses pursuant to this Section, unless the Board of Directors
shall determine, in the manner provided in Section 6.3 and based on the facts
then known, that indemnification under this Article is or will be precluded.
Section 6.5. Reliance and Consideration. Any Director or Indemnified
Officer who at any time after the adoption of this Article serves or has served
in any of the aforesaid capacities for or on behalf of the Corporation shall be
deemed to be doing or to have done so in reliance upon, and as consideration
for, the right of indemnification provided herein. Such right, however, shall
not be exclusive of any other rights to which such person may be entitled apart
from the provisions of this Article. No amendment, modification or repeat of
this Article shall adversely affect the right of any Director or Indemnified
Officer to indemnification hereunder with respect to any activities occurring
prior to the time of such amendment, modification or repeal.
Section 6.6. Insurance. The Corporation may purchase and maintain
insurance on behalf of its directors, officers, employees and agents and those
persons who were or are serving at the request of the Corporation in any
capacity with another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise against any liability asserted against or
incurred by such person in any such capacity, or arising out of his or her
status as such, whether or not the Corporation would have the power to indemnify
such person against such liability under the provisions of this Article or
otherwise. Any full or partial payment made by an insurance company under any
insurance policy covering any director, officer, employee, agent or other person
indemnified above made to or on behalf of a person entitled to indemnification
under this Article shall relieve the Corporation of its liability for
indemnification provided for in this Article or otherwise to the extent of such
payment, and no insurer shall have a right of subrogation against the
Corporation with respect to such payment.
ARTICLE VII
FISCAL YEAR
Section 7.1. Fiscal Year. The fiscal year of the Corporation shall be
the twelve months ended October 31.
ARTICLE VIII
AMENDMENTS
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Section 8.1. Amendments of By-Laws. The By-Laws of the Corporation
shall be subject to alteration or repeal, and new By-Laws may be adopted by (i)
the affirmative vote of at least 80% of the outstanding shares entitled to vote
in the election of Directors or by (ii) a majority of the entire Board of
Directors at any meeting at which a quorum is present; provided that the Board
of Directors shall not have power to adopt any By-Law, or expand the
authorization conferred by any By-Law, which by statute only the shareholders
have power to so adopt or expand. Any By-Law adopted by the Board of Directors
may be amended or repealed by shareholders entitled to vote thereon as herein
provided; and any By-Law adopted by the shareholders may be amended or repealed
by the Board of Directors except as limited by statute as above provided and
except when the shareholders have expressly provided otherwise with respect to
any particular By-Law. Further provided, in each case, that notice of the
proposed amendment shall have been contained in the notice of the meeting.
<PAGE> 1
Exhibit 10.1
CONSULTING AGREEMENT
This Agreement is made and entered into as of the 1st day of March,
2000, by and between Piedmont Natural Gas Company, Inc., a North Carolina
corporation ("Piedmont"), and John H. Maxheim, an individual residing in
Charlotte, North Carolina ("Consultant").
WHEREAS, Piedmont is a local distribution company ("LDC") primarily
engaged in the transportation, distribution and sale of natural gas, propane and
other sources of energy (the "Energy Distribution Business"); and
WHEREAS, Consultant has extensive experience in the Energy Distribution
Business; and
WHEREAS, Piedmont desires to obtain and Consultant desires to provide
the consulting services described herein on the terms and conditions set forth
herein.
NOW, THEREFORE, it is agreed as follows:
1. DESCRIPTION OF SERVICES. During the term of this Agreement,
Consultant will provide advice and assistance to the Chief Executive Officer and
the Board of Directors on various governmental, regulatory and civic matters and
undertake such other duties as may be requested by the Chief Executive Officer
or the Board of Directors. The services described above are hereinafter referred
to as "Consulting Services."
2. TERM OF SERVICES. Subject to the provisions of Paragraph 8 of this
Agreement, Consultant will provide the Consulting Services to Piedmont for a
period of 12 months, beginning March 1, 2000 and ending February 28, 2001;
provided, however, that the term of this Agreement shall automatically extend
for an additional 12 months period if neither party gives notice of termination
on or before January 29, 2001 and shall automatically extend for an additional
12 months period if neither party gives notice of termination on or before
January 29, 2002.
3. CONSULTING FEES. For providing the Consulting Services to Piedmont,
Consultant will receive annual consulting fees of $195,000, payable in 12 equal
monthly payments, payable in advance on the 1st day of each month during the
term of this Agreement.
4. REIMBURSEMENT OF EXPENSES. Piedmont will reimburse Consultant for
reasonable travel and other out-of-pocket expenses incurred and documented by
Consultant in connection with the Consulting Services. Consultant will submit a
documented statement of reimbursable expenses not less than on a monthly basis,
and reimbursement of such expenses shall be due and payable at the next monthly
payment date for consulting fees.
5. OFFICE SPACE AND SECRETARIAL SERVICES. Piedmont will provide
Consultant with office space at Piedmont's general office building; provided,
however, that Piedmont has no obligation to
<PAGE> 2
provide office space at any specific location within Piedmont's general office
building. In addition, Piedmont will provide Consultant with secretarial
services.
6. CONFIDENTIAL INFORMATION. Piedmont and Consultant acknowledge that
Consultant may have access to confidential and proprietary information belonging
to Piedmont in order for Consultant to perform the Consulting Services.
Consultant agrees to hold in confidence all knowledge or information of a
confidential or proprietary nature ("Confidential Information") with respect to
the business of Piedmont or any parent, subsidiary or affiliated corporation of
Piedmont received by him during the term of this Agreement, and Consultant will
not disclose or make use of such information either during or for a period of
five years after the term of this Agreement without the prior written consent of
Piedmont. For the purpose of this paragraph, "Confidential Information" shall
not include information which is (i) already known by Consultant without an
obligation of confidentiality (it being understood that any information acquired
by Consultant while he was an officer of Piedmont and not excluded by (ii),
(iii) or (iv) below shall be subject to an obligation of confidentiality), (ii)
publicly known or becomes publicly known through no unauthorized act of
Consultant, (iii) approved in writing by Piedmont for disclosure, or (iv)
required to be disclosed pursuant to a requirement of a governmental agency or
law so long as the disclosing party provides the other party with notice of such
requirement prior to any such disclosure. Upon termination of this Agreement,
Consultant will return to Piedmont any and all copies of any written
Confidential Information. Piedmont may specifically enforce any undertaking or
enjoin any action contained in or prohibited by this paragraph in the event of
breach or threatened or anticipated breach of the obligations herein. Such
remedies are in addition to all other remedies that may be available to
Piedmont.
7. NON-DISCLOSURE. Piedmont and Consultant agree that except to the
extent required by applicable governmental regulation or law the existence of or
the terms and conditions of this Agreement will not be disclosed to any person
other than an employee or agent of Piedmont or Consultant who agrees not to
disclose such information except as permitted by this paragraph.
8. INDEPENDENT CONTRACTOR. Consultant is an independent contractor.
This Agreement does not make Consultant an employee or agent of Piedmont, and
does not create a partnership or joint venture. Consultant shall not have the
power to obligate or bind Piedmont in any manner whatsoever. Consultant may
accept other engagement provided that such other engagement is not by a
competitor of Piedmont and does not interfere with his performance of the
Consulting Services. For the purpose of this paragraph "competitor" means any
entity who receives 5% or more of its revenues from the sale of natural gas,
electricity, propane or other energy products or services competing with
Piedmont.
9. TERMINATION.
(a) Unless sooner terminated as provided herein, this Agreement shall
terminate at 12:00 midnight on February 28, 2003.
2
<PAGE> 3
(b) This Agreement shall terminate upon the death of Consultant during
the term of this Agreement, in which event Consultant's estate shall be entitled
to receive all fees and expense reimbursement due Consultant through the date of
death.
(c) This Agreement shall terminate upon the total permanent disability
of Consultant during the term of this Agreement, in which event Consultant shall
receive all fees and expense reimbursement due Consultant through the date of
determination of such disability. For purposes of this Section, Consultant shall
be deemed to have suffered permanent disability upon the determination of such
status by the United States Social Security Administration or a certification to
such effect by Consultant's regular physician.
(d) This Agreement may be terminated at any time by the Consultant upon
60 days' written notice to Piedmont. Upon such termination, the Consultant shall
be entitled to receive all fees and expense reimbursement through the effective
date of such termination.
(e) This Agreement may be terminated by Piedmont at any time, but any
termination by Piedmont, other than termination for cause, shall entitle
Consultant to receive the monthly retainer fee provided in paragraph 3 of this
Agreement on the first day of each month from the date of termination through
February, 2003 . The Consultant shall have no right to receive fees and expense
reimbursement for any period after termination for "cause." Termination for
cause shall mean termination because of Consultant's personal dishonesty
(whether occurring prior to or during the term of this Agreement), incompetence,
willful material misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform the Consulting Services, willful material
violation of an law, rule or regulation (other than traffic or traffic-related
violations or similar offenses) or final cease-and-desist order, or material
breach of any provisions of this Agreement.
10. FORCE MAJEURE. In the event that either Consultant or Piedmont is
rendered unable, wholly or in part, by force majeure to carry out his or its
obligations under this Agreement, it is agreed that the obligations of both
parties, so far as they are affected by such force majeure, shall be suspended
during such period of force majeure, but for no longer period, and such cause
shall so far as practicable be remedied with all reasonable dispatch. As used
herein, the term force majeure means acts of God, strikes, lockouts or other
industrial disturbances, acts of the public enemy, wars, blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires,
floods, arrests, the order of any court or governmental authority having
jurisdiction while the same is in force and effect, civil disturbances, or any
other cause whether of the kind herein enumerated or otherwise, not reasonably
within the control of the party claiming suspension and which by exercise of due
diligence such party is unable to prevent or overcome. By way of example, but
not limitation, an injunction which prevents Consultant from performing the
Consulting Services or which prevents Piedmont for accepting the Consulting
Services is an event of force majeure that would excuse Consultant from
performing any Consulting Services and Piedmont from making any payments for any
Consulting Services not performed as a result of the event of force majeure.
Neither party shall be liable in damages to the other party for any act,
omission or circumstance occasioned by, or in consequence of, force majeure as
herein defined.
11. ASSIGNMENT.
3
<PAGE> 4
(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of Piedmont which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the voting securities or assets of Piedmont.
(b) Since Piedmont is contracting for the unique and personal skills of
Consultant, Consultant shall be precluded from assigning or delegating his
rights or duties hereunder.
12. ARBITRATION. All disputes between Piedmont and Consultant arising
out of this Agreement, including disputes as to arbitrability, shall be
submitted to binding arbitration in Charlotte, North Carolina under the rules of
the American Arbitration Association. Any decision of the arbitrators shall be
final, binding and nonappealable. Any amounts determined to be due by one party
to another shall be paid within thirty days of such determination.
13. MODIFICATION; WAIVER; AMENDMENTS. No provision of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing, signed by Consultant and Piedmont. No waiver
by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No amendments or
additions to this Agreement shall be binding unless in writing and signed by
both parties, except as herein otherwise provided.
14. APPLICABLE LAW. This Agreement shall be governed in all respects
whether as to validity, construction, capacity, performance or otherwise, by the
laws of North Carolina.
15. SEVERABILITY. The provision of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first hereinabove written.
Piedmont Natural Gas Company, Inc.
By: /s/ Ware F. Schiefer
----------------------------------
/s/ John H. Maxheim
-------------------------------------
Consultant
4
<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, 1995 through 1999
and Twelve Months Ended January 31, 2000
(in thousands except ratio amounts)
<TABLE>
<CAPTION>
January 31,
2000 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Net income from continuing
operations $ 61,738 $ 58,207 $ 60,313 $ 54,074 $ 48,562 $ 40,310
Income taxes 39,954 37,645 38,807 34,650 30,928 25,442
Fixed charges 38,532 37,978 38,415 39,263 37,009 35,651
-------- -------- -------- -------- -------- --------
Total Adjusted Earnings $140,224 $133,830 $137,535 $127,987 $116,499 $101,403
======== ======== ======== ======== ======== ========
Fixed Charges:
Interest $ 37,121 $ 35,911 $ 36,453 $ 36,949 $ 34,511 $ 33,224
Amortization of debt expense 362 323 304 346 345 336
One-third of rental expense 1,049 1,744 1,658 1,968 2,153 2,091
-------- -------- -------- -------- -------- --------
Total Fixed Charges $ 38,532 $ 37,978 $ 38,415 $ 39,263 $ 37,009 $ 35,651
======== ======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges 3.64 3.52 3.58 3.26 3.15 2.84
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-2000
<PERIOD-START> NOV-01-1999
<PERIOD-END> JAN-31-2000
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,020,576
<OTHER-PROPERTY-AND-INVEST> 25,543
<TOTAL-CURRENT-ASSETS> 293,191
<TOTAL-DEFERRED-CHARGES> 60,440
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,399,750
<COMMON> 302,514
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 227,869
<TOTAL-COMMON-STOCKHOLDERS-EQ> 530,383
0
0
<LONG-TERM-DEBT-NET> 423,000
<SHORT-TERM-NOTES> 101,500
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 2,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 342,867
<TOT-CAPITALIZATION-AND-LIAB> 1,399,750
<GROSS-OPERATING-REVENUE> 268,648
<INCOME-TAX-EXPENSE> 23,740
<OTHER-OPERATING-EXPENSES> 199,148
<TOTAL-OPERATING-EXPENSES> 222,888
<OPERATING-INCOME-LOSS> 45,760
<OTHER-INCOME-NET> 7,627
<INCOME-BEFORE-INTEREST-EXPEN> 53,387
<TOTAL-INTEREST-EXPENSE> 9,293
<NET-INCOME> 44,094
0
<EARNINGS-AVAILABLE-FOR-COMM> 44,094
<COMMON-STOCK-DIVIDENDS> 10,822
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 9,205
<EPS-BASIC> 1.41
<EPS-DILUTED> 1.40
</TABLE>
