UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended March 31, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ............ to ............
Commission file number 1-11429
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
(Exact name of registrant as specified in its charter)
SOUTH CAROLINA 56-2128483
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 COX ROAD, P.O. BOX 1398
GASTONIA, NORTH CAROLINA 28053-1398
(Address of principal executive offices) (Zip Code)
(704) 864-6731
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of shares of Common Stock, no par value, outstanding
at April 30, 2000.........................................................1,000
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TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION Page
----
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999 2
Consolidated Statements of Income and Retained Earnings for the Periods
Ended March 31, 2000 and 1999 3
Consolidated Statements of Cash Flows for the Periods Ended March 31,
2000 and 1999 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
Exhibit Index 19
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<PAGE> 1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
--------------------
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
CONSOLIDATED BALANCE SHEETS
As of March 31, 2000 and December 31, 1999
(Unaudited)
(Thousands of Dollars)
March 31, December 31,
2000 1999
---------- ------------
ASSETS
Gas utility plant $ 773,901 $ 768,285
Less - Accumulated depreciation 250,981 245,353
Acquisition adjustment, net of accumulated
amortization (Note 4) 462,624 -
---------- ----------
Gas utility plant, net 985,544 522,932
---------- ----------
Non-utility property and investments:
Non-utility property, net of accumulated
depreciation 774 799
Investments 31,590 30,139
---------- ----------
Total non-utility property and investments,
net of accumulated depreciation 32,364 30,938
---------- ----------
Current assets:
Cash and temporary investments 10,369 8,860
Restricted cash and temporary investments 2,513 2,512
Receivables, less allowance for
doubtful accounts (including unbilled revenues) 68,748 58,913
Materials and supplies 5,235 6,940
Stored gas inventory 16,590 29,464
Deferred gas costs, net (Note 5) - 27,126
Prepayments and other 1,352 1,451
---------- ----------
Total current assets 104,807 135,266
---------- ----------
Deferred charges and other assets
Pension asset 8,640 -
Other 8,959 8,691
---------- ----------
Total deferred charges and other assets 17,599 8,691
---------- ----------
Total $1,140,314 $ 697,827
========== ==========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common equity (Note 2) $ 723,438 $ 232,251
Long-term debt 150,450 150,450
---------- ----------
Total capitalization 873,888 382,701
---------- ----------
Current liabilities:
Short-term borrowings 89,000 137,500
Current portion of long-term debt 6,800 6,800
Accounts payable 39,399 49,999
Accrued taxes 19,409 4,835
Customer prepayments and deposits 3,639 7,309
Cash dividends and interest 9,334 8,674
Other 3,609 1,973
---------- ----------
Total current liabilities 171,190 217,090
---------- ----------
Deferred credits and other liabilities:
Deferred income taxes, net 75,624 74,856
Deferred investment tax credits 2,674 3,008
Accrued pension cost - 3,548
Other 16,938 16,624
---------- ----------
Total deferred credits and other liabilities 95,236 98,036
---------- ----------
Total $1,140,314 $ 697,827
========== ==========
See notes to Consolidated Financial Statements.
<PAGE> 2
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Periods Ended March 31, 2000 and 1999
(Unaudited)
(Thousands of Dollars)
Three Months Ended March 31,
2000 1999
-------- --------
Operating revenues $170,963 $134,326
Cost of gas 105,311 63,747
-------- --------
Gross margin 65,652 70,579
-------- --------
Operating expenses:
Operating and maintenance 16,531 18,164
Depreciation and amortization 10,458 6,742
Other taxes 1,683 6,248
Income taxes 13,637 13,666
-------- --------
Total operating expenses 42,309 44,820
-------- --------
Operating income 23,343 25,759
Other income, net 1,182 913
Interest charges 5,063 4,648
-------- --------
Income before cumulative effect of accounting
change 19,462 22,024
Cumulative effect of accounting change,
net of taxes (Note 5) 6,568 -
------- -------
Net income 26,030 22,024
Retained earnings at beginning of period 72,537 68,654
Common stock cash dividends declared and other (78,537) (4,948)
-------- --------
Retained earnings at end of period $ 20,030 $ 85,730
======== ========
See notes to Consolidated Financial Statements.
<PAGE> 3
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Periods Ended March 31, 2000 and 1999
(Unaudited)
(Thousands of Dollars)
Three Months Ended March 31,
2000 1999
------- ------
Cash Flows From Operating Activities:
Net income $26,030 $22,024
Adjustments to reconcile net income
to net cash provided from operating
activities -
Cumulative effect of accounting change (6,568) -
Depreciation, amortization and other 11,861 7,710
Deferred income taxes, net 768 1,354
Change in operating assets and liabilities:
Increase in receivables, net (4,206) (5,307)
Decrease in inventories 14,579 11,103
Increase in pension asset (8,640) -
Decrease in accounts payable (10,600) (5,379)
Decrease in accrued pension cost (3,548) (1,295)
Decrease in deferred gas cost 27,126 13,429
Other, net 17,461 9,382
------- -------
Net Cash Provided From Operating Activities 64,263 53,021
------- -------
Cash Flows From Investing Activities:
Construction expenditures (7,580) (11,166)
Non-utility and other (764) (343)
-------- -------
Net Cash Provided for Investing Activities (8,344) (11,509)
------- -------
Cash Flows From Financing Activities:
Issuance of common stock - 3,987
Increase in short-term borrowings, net (48,500) (32,000)
Retirement of long-term debt
and common stock (868) (10,260)
Cash dividends (5,042) (4,643)
------- -------
Net Cash Provided for Financing Activities (54,410) (42,916)
------- -------
Net increase (decrease)in cash and
temporary investments 1,509 (1,404)
Cash and temporary investments
at beginning of period 8,860 4,347
------- -------
Cash and temporary investments
at end of period $10,369 $ 2,943
======= =======
Supplemental cash flow information:
Cash paid during the period for:
Interest (includes capitalized interest
of $207 for 2000 and $183 for 1999) $ 5,739 $ 3,810
Income taxes 4,830 1,155
In connection with the acquisition of Public Service Company of North Carolina,
Inc. by SCANA Corporation, $20,577 in common stock was cancelled. The
application of push-down accounting for the acquisition resulted in a $466,014
acquisition adjustment.
See notes to Consolidated Financial Statements.
<PAGE> 4
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
(Unaudited)
1. The following notes should be read in conjunction with the Notes to
Consolidated Financial Statements appearing in Public Service Company of North
Carolina, Inc.'s (PSNC) Annual Report on Form 10-K for the fiscal year ended
September 30, 1999. These are interim financial statements, and due to the
seasonality of PSNC's business, the amounts reported in the Consolidated
Statements of Income are not necessarily indicative of amounts expected for the
year. In the opinion of management, all adjustments necessary for a fair
statement of the results of operations for the interim periods have been
recorded. Certain amounts from prior periods have been reclassified to conform
with the 2000 presentation.
2. On February 10, 2000 the acquisition of PSNC by SCANA Corporation (SCANA) was
consummated in a business combination accounted for as a purchase. As a result,
PSNC became a wholly owned subsidiary of SCANA. Pursuant to the Agreement and
Plan of Merger, PSNC shareholders were paid approximately $212,000,000 in cash
and 17,413,013 shares of SCANA common stock.
PSNC agreed to pay approximately $5,000,000 to ten key executives under
severance agreements related to the acquisition. As of April 30, 2000 severance
benefits of approximately $2,700,000 have been paid to seven key executives
whose positions were eliminated. In addition, approximately $3,100,000 was paid
to former directors of PSNC in connection with deferred compensation and
retirement plans, and approximately $8,100,000 was paid to participants in
PSNC's nonqualified stock option plans.
On December 7, 1999 the North Carolina Utilities Commission (NCUC)
issued an order approving the acquisition of PSNC by SCANA. The Carolina Utility
Customers Association, Inc. (CUCA) filed an appeal of this order on December 30,
1999, which is pending in the North Carolina Court of Appeals. While management
cannot predict the ultimate outcome of this appeal, management does not expect
that such outcome will have a material adverse impact on PSNC's financial
position, results of operations or cash flows (see Note 7).
3. On March 27, 2000 PSNC filed a transition report on Form 10-Q/A with the
Securities and Exchange Commission to change its fiscal year end to December 31
from September 30 effective January 1, 2000.
<PAGE> 5
4. PSNC has recorded a utility plant acquisition adjustment of approximately
$466,014,000, which reflects the excess of SCANA's purchase price over the fair
value of PSNC's net assets at January 1, 2000. The adjustment is being amortized
over 35 years on the straight-line basis. Common equity at March 31, 2000
includes the acquisition adjustment.
5. Effective January 1, 2000 PSNC changed its method of accounting for
operating revenues from cycle billing to full accrual. The cumulative effect of
this change was approximately $6,600,000, net of tax. Accruing unbilled revenues
more closely matches revenues and expenses. Unbilled revenues represent the
estimated amount customers will be charged for service received, but that has
not yet been billed, as of the end of the accounting period. Previously these
revenues were recognized as operating revenues as customers were billed. In
addition, at December 31, 1999, the gas costs associated with unbilled revenues
were deferred. Beginning January 1, 2000 these costs are no longer deferred.
If this method had been applied retroactively, net income would have been
$26,745,000 for the three months ended March 31, 1999, compared to $22,024,000,
as previously reported.
6. Effective December 31, 1999 PSNC Production Corporation (PSNC
Production), a wholly owned subsidiary of PSNC, purchased the remaining 50
percent membership interest in Sonat Public Service Company L.L.C. (Sonat). As a
result, Sonat became a wholly owned subsidiary of PSNC Production. PSNC
Production paid $5,300,000 to acquire this interest. Sonat was subsequently
renamed SCANA Public Service Company, L.L.C. (SCANA Public Service).
7. On December 7, 1999 the NCUC issued an order approving the acquisition of
PSNC by SCANA. As specified in the NCUC order, PSNC will reduce its rates by
approximately $2,000,000 ($1,000,000 in August 2000 and another $1,000,000 in
August 2001) and has agreed to a five-year moratorium on general rate cases.
General rate relief can be obtained during this period to recover costs
associated with materially adverse governmental actions and force majeure
events. CUCA filed an appeal of this order December 30, 1999, which is pending
in the North Carolina Court of Appeals. While management cannot predict the
ultimate outcome of this appeal, management does not expect that such outcome
will have a material adverse impact on PSNC's financial position, results of
operations or cash flows.
On October 30, 1998 the NCUC issued an order in PSNC's general rate
case filed in April 1998. The order, effective November 1, 1998, granted PSNC
additional annual revenue of $12,400,000 and allowed a 9.82 percent overall rate
of return on PSNC's net utility investment. It also approved the continuation of
the Weather Normalization Adjustment and Rider D mechanisms and full
<PAGE> 6
margin transportation rates. CUCA, a party to PSNC's general rate case,
appealed the order on December 18, 1998. On February 4, 2000, the Supreme
Court of North Carolina affirmed the NCUC order.
On November 6, 1997 the NCUC issued an order permitting PSNC, on a
trial basis, to establish its commodity cost of gas for large commercial and
industrial customers on the basis of market prices for natural gas. This
procedure allows PSNC to manage its deferred gas costs better by ensuring that
the amount paid for natural gas to serve these customers approximates the amount
collected from them. PSNC's request for permanent approval of this mechanism was
approved by NCUC order issued April 6, 2000.
On February 22, 1999 the NCUC approved PSNC's application to use
expansion funds to extend natural gas service into Alexander County, and
authorized disbursements from the fund of approximately $4,301,000 based upon
budgeted construction costs of approximately $6,188,000. Most of Alexander
County lies within PSNC's certificated service territory and did not previously
have natural gas service. The project was completed and customers began
receiving natural gas service in March 2000.
On December 30, 1999 PSNC filed an application with the NCUC to extend
natural gas service to Madison, Jackson and Swain Counties. PSNC estimates that
the cost of this project will be approximately $31,400,000 and has requested the
use of approximately $30,000,000 from its expansion fund to make this project
economically feasible. Pursuant to state statutes, the NCUC required PSNC to
forfeit its exclusive franchises to serve six counties in western North Carolina
effective January 31, 2000 because these counties were not receiving any natural
gas service. Madison, Jackson and Swain Counties were included in the forfeiture
order. PSNC has requested reassignment of the exclusive franchises for Madison,
Jackson and Swain Counties to PSNC in its request to provide service to these
counties. The NCUC held a hearing on May 9, 2000 and is expected to issue its
order in the summer of 2000.
8. PSNC is a party to certain legal actions. Although it is impossible to
predict the outcomes with certainty, after consultation with legal counsel,
management does not expect the dispositions of these matters to have a
materially adverse effect on PSNC's financial position, cash flows or results
of operations.
PSNC is also a party to the following legal actions involving
potential environmental liability.
PSNC owns, or has owned, all or portions of six sites in North Carolina
on which manufactured gas plants (MGPs) were formerly operated. Intrusive
investigation (including drilling, sampling and analysis) has begun at only
one site and the remaining sites have been evaluated using historical records
and observations of current site conditions made during visits to the sites.
These evaluations have revealed that MGP residuals are present or suspected at
several of the sites. The North Carolina Department of Environment and Natural
Resources has recommended that no further action be taken with respect to one
<PAGE> 7
site. In March and April 1994, an environmental consulting firm retained by
PSNC estimated that the aggregate cost of investigating and monitoring the
extent of environmental degradation and of implementing remedial procedures
with respect to the remaining five sites may range from $3,705,000 to
$50,145,000 over a 30-year period. PSNC is unable to determine the rate at
which costs may be incurred over this time period. The estimated cost range
has not been discounted to present value. The range includes costs of
investigating and monitoring the sites at the low end of the range and
investigating, monitoring and extensively remediating the sites at the high
end of the range. PSNC's associated actual costs for these sites will depend
on a number of factors, such as actual site conditions, third-party claims and
recoveries from other potentially responsible parties (PRPs). Another North
Carolina public utility or its predecessors also operated the MGP sites in
Raleigh, Durham and Asheville, and PSNC is in discussion with that utility
regarding potential cost sharing arrangements for investigation and potential
remediation costs of four of the sites. At this time, PSNC has not reached a
definitive agreement regarding such arrangement.
An order of the NCUC dated May 11, 1993 authorized deferral accounting
for all costs associated with the investigation and remediation of MGP sites. As
of March 31,2000, PSNC has recorded a liability and associated regulatory asset
of the minimum amount of the range, or $3,705,000.
The NCUC concluded that it is proper and in the public interest to
allow recovery of prudently incurred clean-up costs from current customers as
reasonable operating expenses even though the MGP sites are not used and useful
in providing gas service to current customers. However, the NCUC will not allow
recovery of carrying costs on deferred amounts. Amounts incurred to date are not
material. Management intends to request recovery of additional MGP clean-up
costs not recovered from other PRPs in future rate case filings, and believes
that all costs deemed by the NCUC to be prudently incurred will be recoverable
in gas rates.
9. PSNC's reportable segments are listed in the following table. The
Consolidated Financial Statements report operating revenues, comprised of Gas
Distribution and Energy Marketing segments. Gas Distribution uses operating
income to measure profitability, while Energy Marketing, which is comprised
solely of SCANA Public Service (formerly Sonat), uses net income to measure
profitability. Affiliate revenue is derived from transactions between
reportable segments. Prior to December 31, 1999 Sonat was an equity investment
and not a segment of business (see Note 6).
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Disclosure of Reportable Segments
(Thousands of Dollars)
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Gas Energy All Adjustments/ Consolidated
March 31,2000 Distribution Marketing Other Eliminations Total
- -----------------------------------------------------------------------------------------------------------------------
External Revenue $ 166,044 $30,910 $ 26 $(26,017) $ 170,963
Intersegment Revenue - - 29,746 (29,746) -
Operating Income 29,198 n/a n/a (5,854) 23,343
Net Income n/a 740 871 24,419 26,030
Segment Assets 1,132,502 17,656 54,788 (64,632) 1,140,314
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Disclosure of Reportable Segments (continued)
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Gas Energy All Adjustments/ Consolidated
March 31, 1999 Distribution Marketing Other Eliminations Total
- ----------------------------------------------------------------------------------------------------------------------
External Revenue $ 134,326 n/a $ 2,562 $ (2,562) $ 134,326
Intersegment Revenue - n/a 24,462 (24,462) -
Operating Income 25,759 n/a n/a - 25,759
Net Income n/a n/a 456 21,568 22,024
Segment Assets 626,599 n/a 36,152 (19,607) 643,144
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<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations.
-------------
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations appearing in Public Service Company of North Carolina, Inc.'s (PSNC)
Annual Report of Form 10-K for the fiscal year ended September 30, 1999.
Statements included in this discussion and analysis (or elsewhere in
this quarterly report) which are not statements of historical fact are intended
to be, and are hereby identified as, forward-looking statements for purposes of
the safe harbor provided by Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Readers are cautioned that such forward-looking statements are not guarantees of
future performance and involve a number of risks and uncertainties, and that
actual results could differ materially from those indicated by such
forward-looking statements. Important factors that could cause actual results to
differ materially from those indicated by such forward-looking statements
include, but are not limited to, the following: (1) that the information is of a
preliminary nature and may be subject to further and/or continuing review and
adjustment, (2) changes in the utility regulatory environment, (3) changes in
the economy in PSNC's service territory, (4) the impact of competition from
other energy suppliers, (5) the management of PSNC's operations, (6) variations
in prices of natural gas, (7) growth opportunities, (8) the results of financing
efforts, (9) changes in PSNC's accounting policies, (10) weather conditions in
areas served by PSNC, (11) inflation, (12) exposure to environmental issues and
liabilities, (13) changes in environmental regulation, and (14) the other risks
and uncertainties described from time to time in PSNC's periodic reports filed
with the Securities and Exchange Commission. PSNC disclaims any obligation to
update any forward-looking statements.
<PAGE> 10
MATERIAL CHANGES IN CAPITAL RESOURCES AND LIQUIDITY
SINCE DECEMBER 31, 1999
LIQUIDITY AND CAPITAL RESOURCES
PSNC's capital expansion program, through the construction of lines,
services, systems, and facilities, and the purchase of equipment, is designed to
help PSNC meet the growing demand for its product. PSNC's calendar 2000
construction budget is approximately $38,000,000, compared to actual
construction expenditures for calendar 1999 of $44,525,000. The construction
program is reviewed regularly by management and is dependent upon PSNC's
continuing ability to generate adequate funds internally and to sell new issues
of debt on acceptable terms. Construction expenditures during the three months
ended March 31, 2000 were $7,580,000 as compared to $11,166,000 for the same
period ended March 31, 1999.
PSNC generally finances its operations with internally generated funds,
supplemented with bank lines of credit to satisfy seasonal requirements. PSNC
also borrows under its bank lines of credit to finance portions of its
construction expenditures pending refinancing through the issuance of long-term
debt at a later date depending upon prevailing market conditions. As of April 1,
2000, PSNC has committed lines of credit with three commercial banks totaling
$40,000,000. PSNC also has uncommitted lines of credit totaling $85,000,000.
Lines of credit are evaluated periodically by management and renegotiated to
accommodate anticipated short-term financing needs. Management believes these
lines are currently adequate to finance budgeted construction expenditures,
stored gas inventories and other corporate needs. At March 31, 2000 PSNC's
short-term bank loans outstanding had decreased to $89,000,000 as compared to
$137,500,000 at December 31, 1999 due to use of internally generated funds to
reduce short-term borrowings.
The change in net accounts receivable from December 31, 1999 includes
$12,021,000 in unbilled revenues (see Note 5 to the Consolidated Financial
Statements.) The change in net accounts receivable also reflects the
consolidation of SCANA Public Service (formerly Sonat) due to PSNC Production's
purchase of the remaining 50 percent interest in Sonat effective December 31,
1999 (see Note 6 to the Consolidated Financial Statements).
PSNC's business is seasonal in nature as fluctuations in weather
dictate natural gas storage injections and withdrawals. Injections of natural
gas into storage occur mainly during April through October. Withdrawals from
<PAGE> 11
storage occur mainly during November through March. This seasonality is the
primary reason for lower volumes of gas in storage as of March 31, 2000 as
compared to December 31, 1999.
The change in net deferred gas costs from December 31, 1999 primarily
reflects the change in accounting for unbilled revenues discussed in Note 5 to
the Consolidated Financial Statements. At December 31, 1999 the gas costs
associated with unbilled revenues were deferred. Beginning January 1, 2000 these
costs are no longer deferred. The remaining balance of net deferred gas costs
fluctuates in response to the operation of PSNC's Rider D rate mechanism. This
mechanism allows PSNC to recover from customers all prudently incurred gas
costs. On a monthly basis, any difference in amounts paid and collected for
these costs is recorded for subsequent refund to or collection from PSNC's
customers. It also allows PSNC to recover margin losses on negotiated sales to
large commercial and industrial customers with alternate fuel capability. PSNC's
deferred gas costs balances are approved by the North Carolina Utilities
Commission (NCUC) in annual gas cost reviews and are collected from or refunded
to customers over a subsequent 12-month period. Amounts that have not been
collected from or refunded to customers bear interest at an annual rate of 10
percent as required by the NCUC. PSNC's strategy is to manage the balance of
deferred gas costs to a minimal level.
During the quarter ended March 31, 2000, PSNC recorded a pension asset
and reversed accrued pension costs under the purchase accounting method to
reflect the excess fair value of its pension plan assets over the projected
benefit obligation at December 31, 1999. These transactions reduced the utility
plant acquisition adjustment (see Note 4 to the Consolidated Financial
Statements).
The $20,577,000 reduction in common stock reflects the cancellation of
all of PSNC's common stock on February 10, 2000. As a result of PSNC's
acquisition by SCANA, PSNC now has 1,000 common shares issued and outstanding,
all of which are owned by SCANA.
The increase in common equity resulted from the application of purchase
accounting rules in connection with SCANA's acquisition of PSNC. Such accounting
requires that, in certain circumstances, the price paid in excess of the fair
value of the net assets acquired be recorded by the acquired company as common
equity.
The decrease in accounts payable from December 31, 1999 is primarily
due to the payment of $5,300,000 for the purchase of SCANA Public Service
(formerly Sonat), which was an outstanding payable at December 31, 1999.
<PAGE> 12
The increase in accrued taxes at March 31, 2000 as compared to December
31, 1999 is due primarily to increased operating income.
The increase in other current liabilities from December 31, 1999 is
primarily due to approximately $3,800,000 in accrued severance benefits related
to the acquisition by SCANA. Severance benefits were paid during the current
quarter and will continue to be paid throughout calendar 2000.
<PAGE>
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
AS COMPARED TO THE CORRESPONDING PERIOD IN 1999
Earnings and Dividends
Net income for the three months ended March 31, 2000 and 1999 was as follows:
(Thousands of Dollars)
Three Months Ended March 31,
-----------------------------
Net income derived from: 2000 1999
------- ------
Continuing operations $19,462 $22,024
Change in accounting 6,568 -
------- -------
Total net income $26,030 $22,024
======= =======
Net income from continuing operations decreased $2,562,000. This was
primarily due to increased depreciation and amortization expense due to the
amortization of the utility plant acquisition adjustment (see Note 4 to the
Consolidated Financial Statements). The increase was partially offset by the
change in accounting for unbilled revenues (see Note 5 to the Consolidated
Financial Statements).
PSNC's Board of Directors authorized payment of dividends on common
stock held by SCANA, as follows (thousands of dollars):
Declaration Date Dividend Amount Quarter Ended Payment Date
- ---------------- --------------- -------------- ------------
February 22, 2000 $6,000 March 31, 2000 April 1,2000
April 27, 2000 $5,000 June 30, 2000 July 1, 2000
Gas Distribution
The change in gross margin for the three months ended March 31, 2000,
when compared to the corresponding period in 1999, is as follows:
(Thousands of Dollars)
Three Months Ended March 31,
Increase
2000 1999 (Decrease) %
-------- -------- -------- --
Gas operating revenue $170,963 $134,326 $ 36,637 27
Less: Cost of gas 105,311 63,747 41,564 65
-------- -------- --------
Gross margin $ 65,652 $ 70,579 $ (4,927) (7)
======== ======== ========
<PAGE> 14
The change in gross margin at March 31, 2000 includes a change in
accounting for unbilled revenues (see Note 5 to the Consolidated Financial
Statements) and the elimination of franchise taxes in August 1999, which was
partially offset by five percent customer growth and the consolidation of SCANA
Public Service.
Energy Marketing
The energy marketing sales margin (including affiliated transactions)
for the three months ended March 31, 2000 is as follows:
(Thousands of Dollars)
Three Months Ended March 31,
2000
Net income derived from:
Gas revenue $30,910
Less: Cost of gas 29,420
-------
Margin $ 1,490
=======
Other Operating Expenses
Operating and maintenance expenses for the three months ended
March 31, 2000 decreased $1,633,000 or nine percent as compared to the same
period in 1999. This change reflects a decrease in merger related costs from the
prior period.
Depreciation and amortization expense increased $3,716,000 for the
three months ended March 31, 2000 as compared to the same period in 1999 due
primarily to the amortization of the utility plant acquisition adjustment (see
Note 4 to the Consolidated Financial Statements).
The decrease in other taxes for the three months ended March 31, 2000
resulted primarily from the elimination of franchise taxes by the State of North
Carolina effective August 1, 1999. The franchise tax was replaced by an excise
tax. Franchise taxes were included in PSNC's billing rates and were recorded as
both operating revenues and general tax expense. The new excise tax is added to
customer bills based on the volume of natural gas consumed. PSNC does not
include the excise tax in either operating revenues or general tax expense.
Other Income
The change in other income for the three months ended March 31, 2000
compared to the corresponding period for 1999 was not significant.
<PAGE> 15
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
----------------------------------------------------------
All financial instruments held by PSNC described below are held for
purposes other than trading.
Interest rate risk - The table below provides information about PSNC's
financial instruments that are sensitive to changes in interest rates. For debt
obligations, the table presents principal cash flows and related weighted
average interest rates by expected maturity dates.
March 31, 2000
Expected Maturity Date
(Millions of Dollars)
---------------------------------------------------
There- Fair
Liabilities 2000 2001 2002 2003 2004 after Total Value
---------------------------------------------------
Long-term debt
Fixed rate($) 6.8 5.6 4.3 7.5 7.5 125.6 157.3 154.8
Average Interest Rate(%) 10.0 10.0 10.0 9.47 9.47 7.53 7.98
While a decrease in interest rates would increase the fair value of
debt, it is unlikely that events which would result in a realized loss will
occur. Interest rate risk as of March 31, 1999 was not materially different from
March 31, 2000.
<PAGE> 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As more fully disclosed in Part I, Item 1, in Note 8 to the Consolidated
Financial Statements, in this Form 10-Q, under "Environmental Matters" and in
Part II in Note 7 to the financial statements in the Annual Report on Form 10-K
for the period ending September 30, 1999, PSNC owns, or has owned, all or
portions of six sites in North Carolina on which manufactured gas plants were
formerly operated and is cooperating with the North Carolina Department of
Environment and Natural Resources to investigate these sites.
Item 2. Changes in Securities
Common stock, no par. - As described in Part I, Item 1, in Note 2 to the
Consolidated Financial Statements in this Form 10-Q, all previously outstanding
common shares of PSNC were canceled effective February 10, 2000. As a result of
PSNC's acquisition by SCANA, PSNC now has 1,000 common shares issued and
outstanding, all of which are owned by SCANA.
Items 3, 4 and 5 are not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Part I Exhibits:
Exhibits filed with this Quarterly Report on Form 10-Q
are listed in the following Exhibit Index.
(b) Reports on Form 8-K:
The Company filed on February 15, 2000 a Current Report on
Form 8-K dated February 10, 2000 announcing its acquisition by
SCANA Corporation.
<PAGE> 17
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.
PUBLIC SERVICE COMPANY
OF NORTH CAROLINA, INCORPORATED
(Registrant)
May 15, 2000 s/M.R. Cannon
M.R. Cannon, Controller
(Principal accounting officer)
<PAGE> 18
EXHIBIT INDEX
The following documents are filed as a part of this interim report on
Form 10-Q for the period ended March 31, 2000. Those exhibits previously filed
and incorporated herein by reference are identified below with an asterisk and
with a reference to the previous filing.
Exhibit
Number
*2-A - Agreement and Plan of Merger, dated as of February 16, 1999 as amended
and restated as of May 10, 1999, by and among PSNC, SCANA Corporation,
New Sub I, Inc. and New Sub II, Inc. (Filed as Exhibit 2.1 to SCANA
Corporation's Form S-4 on May 11, 1999 and incorporated by reference
herein)
3-A - Articles of Incorporation of New Sub II, Inc., dated February 12, 1999
(Filed herewith)
3-B - Articles of Amendment of New Sub II, Inc. as adopted on February 10,
2000 (Filed herewith)
3-C - Articles of Correction of PSNC dated February 11, 2000(Filed herewith)
*4-B - Debenture Purchase Agreement, dated as of September 15, 1988, for
$25,000,000 of 10% Senior Debentures due October 1, 2003
(File No. 0-1218, 10-K--1988, Exhibit 4-B)
*4-C - Debenture Purchase Agreement, dated as of December 5, 1989, for
$43,000,000 of 10% Senior Debentures due December 1, 2004
(File No. 0-1218, 10-K--1989, Exhibit 4-C)
*4-D - Debenture Purchase Agreement, dated as of June 25, 1992, for
$32,000,000 of 8.75% Senior Debentures due June 30, 2012
(File No. 0-1218, 10-Q--June 30, 1992, Exhibit 4-D)
*4-E-1 - Indenture dated as of January 1, 1996, as supplemented by a First
Supplemental Indenture dated as of January 1, 1996, between PSNC and
First Union National Bank of North Carolina, as trustee
(File No. 1-11429, 10-Q--December 31, 1995, Exhibit 4-E-1)
<PAGE> 19
Exhibit
Number
*4-E-2 - Specimen of the certificate representing the $50,000,000 aggregate
principal amount of 6.99% Senior Debentures Due 2026 issued by PSNC on
January 16, 1996 (File No. 1-11429, 10-Q--December 31, 1995,
Exhibit 4-E-2)
*4-E-3 - Second Supplemental Indenture dated as of December 15, 1996 to
Indenture dated as of January 1, 1996, between PSNC and First Union
National Bank of North Carolina, as trustee (File No. 1-11429,
10-Q--December 31, 1996, Exhibit 4-E-3)
*4-E-4 - Specimen of the certificate representing the $50,000,000 aggregate
principal amount of 7.45% Senior Debentures Due 2026 issued by PSNC on
December 15, 1996 is included in Exhibit 4-E-3 (File No. 1-11429,
10-Q--December 31, 1996, Exhibit 4-E-4)
*10-A-9 - Firm Sales Service Agreement under Rate Schedule FS, dated August 1,
1991, between PSNC and Transcontinental Gas Pipe Line Corporation
(File No. 0-1218, 10-Q--March 31, 1992, Exhibit 10-A-9)
*10-A-10- Firm Sales Service Agreement under Rate Schedule FS, dated August 1,
1991, between PSNC and Transcontinental Gas Pipe Line Corporation
(File No. 0-1218, 10-Q--March 31, 1992, Exhibit 10-A-10)
*10-A-11- Firm Sales Service Agreement under Rate Schedule FS, dated August 1,
1991, between PSNC and Transcontinental Gas Pipe Line Corporation
(File No. 0-1218, 10-Q--March 31, 1992, Exhibit 10-A-11)
*10-A-13- Firm Transportation Service Agreement under Rate Schedule FT, dated
August 1, 1991, between PSNC and Transcontinental Gas Pipe Line
Corporation (File No. 0-1218, 10-K--1992 (Exhibit 10-A-13)
*10-A-15- Firm Transportation Service Agreement under Rate Schedule FT, dated
February 1, 1992, between PSNC and Transcontinental Gas Pipe Line
Corporation (File No. 0-1218, 10-K--1993, Exhibit 10-A-15)
<PAGE> 20
Exhibit
Number
*10-A-16- Firm Transportation Service Agreement under Rate Schedule FT-NN, dated
October 8, 1993, between PSNC and CNG Transmission Corporation
(File No. 0-1218, 10-K--1993, Exhibit 10-A-16)
*10-A-17- Firm Transportation Service Agreement under Rate Schedule FT-NN-GSS,
dated October 8, 1993, between PSNC and CNG Transmission Corporation
(File No. 0-1218, 10-K--1993, Exhibit 10-A-17)
*10-A-18- Firm Transportation Service Agreement under Rate Schedule FT-A, dated
November 1, 1993, between PSNC and Tennessee Gas Pipeline Company
(File No. 0-1218, 10-K--1993, Exhibit 10-A-18)
*10-A-19- Firm Transportation Service Agreement under Rate Schedule FT-1, dated
November 1, 1993, between PSNC and Texas Eastern Transmission
Corporation (File No. 0-1218, 10-K--1993, Exhibit 10-A-19)
*10-A-20- Firm Transportation Service Agreement under Rate Schedule FT, dated
November 1, 1993, between PSNC and Texas Gas Transmission Corporation
(File No. 0-1218, 10-K--1993, Exhibit 10-A-20)
*10-A-21- Firm Transportation Service Agreement under Rate Schedule FT, dated
October 1, 1993, between PSNC and Transcontinental Gas Pipe Line
Corporation (File No. 0-1218, 10-K--1993 (Exhibit 10-A-21)
*10-A-22- Firm Transportation Service Agreement under Rate Schedule FT, dated
June 6, 1994, between PSNC and Transcontinental Gas Pipe Line
Corporation (File No. 1-11429, 10-K--1995, Exhibit 10-A-22)
*10-A-23- Firm Transportation Service Agreement under Rate Schedule FT, dated
April 30, 1995, between PSNC and Transcontinental Gas Pipe Line
Corporation (File No.1-11429, 10-K--1995, Exhibit 10-A-23)
*10-A-24- Firm Transportation Service Agreement under Rate Schedule FT, dated
January 24, 1996, between PSNC and Transcontinental Gas Pipe Line
Corporation (File No.1-11429, 10-Q--June 30, 1996, Exhibit 10-A-24)
<PAGE> 21
Exhibit
Number
*10-A-25- General Storage Service Agreement under Rate Schedule GSS, dated
October 17, 1995, between PSNC and CNG Transmission Corporation
(File No. 1-11429, 10-Q--June 30, 1996, Exhibit 10-A-25)
*10-A-26- Firm Transportation Service Agreement under Rate Schedule FT-NN-GSS,
dated October 17, 1995, between PSNC and CNG Transmission Corporation
(File No. 1-11429, 10-Q--June 30, 1996, Exhibit 10-A-26)
*10-A-27- Firm Transportation Service Agreement under Rate Schedule FT, dated
January 24, 1996, between PSNC and CNG Transmission Corporation
(File No. 1-11429, 10-Q--June 30, 1996, Exhibit 10-A-27)
*10-A-28- Firm Transportation Service Agreement under Rate Schedule FT-NN, dated
October 17, 1995, between PSNC and CNG Transmission Corporation
(File No. 1-11429, 10-Q--June 30, 1996, Exhibit 10-A-28)
*10-A-29- Firm Transportation Service Agreement under Rate Schedule FT, dated
January 19, 1996, between PSNC and Texas Gas Transmission Corporation
(File No. 1-11429, 10-Q--June 30,1996, Exhibit 10-A-29)
*10-A-30- Firm Transportation Service Agreement under Rate Schedule FT-1, dated
October 30, 1995, between PSNC and Texas Eastern Transmission
Corporation (File No. 1-11429, 10-Q--June 30, 1996, Exhibit 10-A-30)
*10-A-31- Interruptible Transportation Service Agreement under Rate Schedule IT,
dated January 23, 1996, between PSNC and Transcontinental Gas Pipe
Line Corporation (File No. 1-11429, 10-Q--June 30, 1996,
Exhibit 10-A-31)
*10-A-32- Firm Transportation Agreement dated November 1, 1995, between PSNC and
Transcontinental Gas Pipe Line Corporation (File No.1-11429,
10-Q--December 31, 1996, Exhibit 10-A-32)
<PAGE> 22
Exhibit
Number
*10-A-33- Amended and Restated Natural Gas Sales Agreement between PSNC and
Transco Energy Marketing Company dated November 1, 1990
(File No. 1-11429, 10-Q--June 30, 1997, Exhibit 10-A-33)
*10-A-33.1- Amendment of Amended and Restated Natural Gas Sales Agreement
between PSNC and Transco Energy Marketing Company dated November 1,
1990 (File No. 1-11429, 10-Q--June 30, 1997, Exhibit 10-A-33.1)
*10-A-33.2- Amendment of Amended and Restated Natural Gas Sales Agreement
between PSNC and Transco Energy Marketing Company dated November 1,
1990 (File No. 1-11429, 10-Q--March 31, 1999, Exhibit 10-A-33.2)
*10-A-34- Firm Transportation Service Agreement under Rate Schedule FT, dated
August 1, 1991, between PSNC and Transcontinental Gas Pipe Line
Corporation (File No. 1-11429, 10-Q--June 30, 1997,
Exhibit 10-A-34)
*10-A-35- Firm Storage Service Agreement under Rate Schedule FSS, dated
November 7, 1995, between PSNC and Columbia Gas
Transmission Corporation (File No. 1-11429, 10-Q--June 30, 1997,
Exhibit 10-A-35)
*10-A-36- Storage Service Transportation Agreement under Rate Schedule SST,
dated November 7, 1995, between PSNC and Columbia Gas Transmission
Corporation (File No. 1-11429 10-Q--June 30, 1997, Exhibit 10-A-36)
*10-A-37- Interruptible Transportation Service Agreement under Rate Schedule
ITS, dated March 31, 1997, between PSNC and Columbia Transmission
Corporation (File No. 1-11429, 10-Q--June 30, 1997,
Exhibit 10-A-37)
*10-A-38- Gas Sales Agreement(Southern Expansion) dated November 1, 1990
between PSNC and Transco Energy Marketing Company (File No. 1-11429,
10-Q--June 30, 1997, Exhibit 10-A-38)
<PAGE> 23
Exhibit
Number
*10-A-39- Firm Transportation Service Agreement under Rate Schedule FT
Service, dated June 26, 1998, between PSNC and Cardinal Extension
Company, LLC (File No.1-11429, 10-Q--March 31, 1999,
Exhibit 10-A-39)
*10-A-40- Firm Transportation Service Agreement under Rate Schedule FT
Service, dated June 26, 1998, between PSNC and Cardinal Extension
Company, LLC (File No. 1-11429, 10-Q--March 31, 1999,
Exhibit 10-A-40)
*10-A-41- Amendment to Firm Service Agreements (Exhibits 10-A-9, 10-A-10 and
10-A-11) under Rate Schedule FT, dated August 1, 1991, between PSNC
and Transcontinental Gas Pipe Line Corporation, dated August 1, 1991
(File No. 1-11429, 10-Q--March 31, 1999, Exhibit 10-A-41)
*10-A-42- Storage Service Transportation Agreement under Rate Schedule SST,
dated November 7, 1995, between PSNC and Columbia Gas Transmission
Corporation (File No. 1-11429, 10-Q--June 30, 1999,
Exhibit 10-A-42)
*10-A-43- Firm Storage Service Agreement under Rate Schedule FSS, dated
November 7, 1995, between PSNC and Columbia Gas Transmission
Corporation (File No. 1-11429, 10-Q--June 30, 1999,
Exhibit 10-A-43)
*10-A-44- Firm Storage Service Agreement under Rate Schedule FSS dated
November 7, 1995, between PSNC and Columbia Gas Transmission
Corporation (File No. 1-11429, 10-Q--June 30, 1999,
Exhibit 10-A-44)
*10-A-45- Storage Service Transportation Agreement under Rate Schedule
SST, dated November 7, 1995, between PSNC and Columbia Gas
Transmission Corporation (File No. 1-11429, 10-Q--June 30,
1999, Exhibit 10-A-45)
*10-B-4- Liquefied Natural Gas Storage Service Agreement under Rate Schedule
LG-A, dated August 5, 1974, between PSNC and Transcontinental Gas
Pipe Line Corporation (Registration No. 2-53708, Exhibit 5.6)
<PAGE> 24
Exhibit
Number
*10-B-4.1- Amendment dated May 16, 1996 to the Liquefied Natural Gas Storage
Service Agreement under Rate Schedule LG-A, between PSNC and
Transcontinental Gas Pipe Line Corporation (File No. 1-11429,
10-K--1997, Exhibit 10-B-4.1)
*10-B-5- Eminence Storage Service Agreement under Rate Schedule ESS, dated
November 1, 1993, and Amendment, dated December 1, 1993, between
PSNC and Transcontinental Gas Pipe Line Corporation
(File No. 0-1218, 10-K--1993, Exhibit 10-B-5)
*10-B-6- Washington Storage Service Agreement under Rate Schedule WSS, dated
August 1, 1991, between PSNC and Transcontinental Gas Pipe Line
Corporation (File No. 0-1218, 10-Q--March 31, 1994,
Exhibit 10-B-6)
*10-B-7- Amendment dated December 1, 1994 to the Eminence Storage Service
Agreement under Rate Schedule ESS, between PSNC and Transcontinental
Gas Pipe Line Corporation (File No. 1-11429, 10-Q--December 31,
1996, Exhibit 10-B-7)
*10-B-8- General Storage Service Agreement under Rate Schedule GSS, dated
July 1, 1996, between PSNC and Transcontinental Gas Pipe Line
Corporation (File No. 1-11429, 10-Q--December 31, 1996,
Exhibit 10-B-8)
*10-D-3- Construction, Operating and Management Agreement by and between
Public Service Company of North Carolina, Inc. and Cardinal Pipeline
Company, LLC, dated March 23, 1994 (File No. 0-1218, 10-Q--March 31,
1994, Exhibit 10-D-3)
*10-D-4- Construction, Operation and Maintenance Agreement by and between
Pine Needle Operating Company and Pine Needle LNG Company, LLC dated
August 8, 1995 (File No. 1-11429, 10-Q--December 31, 1996,
Exhibit 10-D-4)
*10-D-5- Operating Agreement of Pine Needle LNG Company, LLC dated August 8,
1995 (File No. 1-11429, 10-Q--December 31, 1996, Exhibit 10-D-5)
<PAGE> 25
Exhibit
Number
*10-D-5.1- Amendment to Operating Agreement of Pine Needle LNG Company, LLC
dated October 1, 1995 (File No. 1-11429, 10-Q--December 31, 1996,
Exhibit 10-D-5.1)
*10-D-6- Service Agreement under Rate Schedule LNG-1 between Pine Needle LNG
Company, LLC and Public Service Company of North Carolina, Inc.
dated January 29, 1997 (File No. 1-11429, 10-K--1997,
Exhibit 10-D-6)
*10-D-7- Amended Operating Agreement of Cardinal Extension Company, LLC,
dated December 19, 1996 (File No. 1-11429, 10-Q--December 31, 1997,
Exhibit 10-D-7)
*10-D-8- Amended Construction, Operation and Maintenance Agreement by and
between Cardinal Operating Company and Cardinal Extension Company,
LLC, dated December 19, 1996 (File No. 1-11429, 10-Q--December 31,
1997, Exhibit 10-D-8)
*10-E - Underwriting Agreement, dated January 10, 1996, between PSNC and
Morgan Stanley & Co. Incorporated (File No.1-11429,
10-Q--December 31, 1995, Exhibit 10-E)
*10-F - Form of Severance Agreement between the Company and its Executive
Officers. (File No. 1-11429, 10-Q--June 1997, Exhibit 10-F)
18-A - Independent Auditor's Letter regarding change in accounting
principles (Filed herewith)
27 - Financial Data Schedule (Filed herewith)
<PAGE> 26
Exhibit 3-A
STATE OF SOUTH CAROLINA
SECRETARY OF STATE
JIM MILES
ARTICLES OF INCORPORATION
If possible, please print in black ink or type.
1. The name of the proposed corporation is New Sub II, Inc.
-----------------
2. The initial registered office of the corporation is 1301 Gervais St., 17th
Floor
-----------------------
(Street & Number)
Columbia Richland South Carolina 29201
-------------------------------------------------------------------------------
City County State Zip Code
and the initial registered agent at such address is:
John W. Currie
- --------------------------------------------------------------------------------
3. The corporation is authorized to issue shares of stock as follows, Complete
"a" or "b", whichever is applicable:
a. [X] If the corporation is authorized to issue a single class of shares,
the total number of shares authorized is 1,000
-------------------------
b. [ ] The corporation is authorized to issue more than one class of
shares:
Class of Shares Authorized No. of Each Class
-------------------------- ----------------------------
-------------------------- ----------------------------
-------------------------- ----------------------------
The relative rights, preferences, and limitations of the shares of each
class, and of each series within a class, are as follows: Not applicable
4. The existence of the corporation shall begin as of the filing date
with the Secretary of State unless a delayed date indicated (See
Section.33-1-230(b)):
Effective upon filing.
-----------------------------------------------------------------------
5. The optional provisions which the corporation elects to include i
the articles of incorporation are as follows (see Section 33-2-102
and the applicable comments thereto; andss.ss.35-2-105, and 35-2-221 of
the 1976 Code): None
<PAGE> 1
6. The name, address and signature of each incorporator is as follows(only
one is required):
Name Address Signature
John W. Currie 1301 Gervais Street s/John W. Currie
Columbia, SC 29201
7. I, John W. Currie , an attorney licensed to practice in the State of South
Carolina, certify that the corporation, to whose articles of incorporation this
certificate is attached, has complied with the requirements of Chapter 2, Title
33 of the 1976 South Carolina Code, as amended, relating to the articles of
incorporation.
Date February 12, 1999 s/John W. Currie
- ---------------------------------- ---------------------------------
Signature
John W. Currie
----------------------------------
Name (type or print)
McNair Law Firm, P.A.
P.O. Box 11390; Columbia, SC 29211
-----------------------------------
Address
FILING INSTRUCTIONS
1. Two copies of this form, the original and either a duplicate original or a
conformed copy, must be filed.
2. If the space in this form is insufficient, please attach additional sheets
containing a reference to the appropriate paragraph in this form.
3. Enclose one fee of $135.00 payable to the Secretary of State.
4. THIS FORM MUST BE ACCOMPANIED BY THE FIRST REPORT OF CORPORATIONS (SEE
Section 12-19-20).
<PAGE> 2
EXHIBIT 3-B
Approved by South Carolina
Secretary of State Jim Miles 10/94
STATE OF SOUTH CAROLINA
SECRETARY OF STATE
ARTICLES OF AMENDMENT
Pursuant to Section 33-10-106 of the 1976 South Carolina Code, as
amended, the undersigned corporation adopts the following Articles of Amendment
to its Articles of Incorporation:
1. The name of the corporation is New Sub II, Inc.
-----------------
2. On February 10, 2000, the corporation adopted the following Amendment(s) of
its Articles of Incorporation:
(Type or attach the complete text of each Amendment)
Article 1 of the Corporation's Articles of Incorporation is amended by
deleting the current Article 1 in its entirety and substituting in lieu
thereof the following:
"The name of the corporation is Public Service Company of North Carolina
Incorporated."
3. The manner, if not set forth in the amendment, in which any exchange,
reclassification or cancellation of issued shares provided for in the
Amendment shall be effected, is as follows: (if not applicable, insert "not
applicable" or "NA").
Not applicable
4. Complete either a or b, whichever is applicable.
a. X The Amendment(s) was adopted by shareholder action.
---
At the date of adoption of the amendment, the number of
outstanding shares of each voting group entitled to vote separately
on the Amendment, and the vote of such shares was:
<TABLE>
<CAPTION>
Number of Number of Number of Votes Number of Undisputed
Voting Shares Votes Entitled Represented at Shares Voted
Group Outstanding to be Cast the Meeting For Against
- --------- ----------- ---------- ----------- --- -------
<S> <C> <C> <C> <C> <C>
Common 1,000 1,000 1,000 1,000 -0-
Stock
</TABLE>
<PAGE> 1
*NOTE: Pursuant to Section 33-10-106(6)(i), the corporation can
alternatively state the total number of undisputed shares cast
for the amendment by each voting group together with a
statement that the number of votes cast for the amendment by
each voting group was sufficient for approval by that voting
group.
b. The Amendment(s) was duly adopted by the incorporators or
board of directors without shareholder approval pursuant to
ss.33-6-102(d), 33-10-102 and 33-10-105 of the 1976 South
Carolina Code as amended, and shareholder action was not
required.
5. Unless a delayed date is specified, the effective date of these Articles of
Amendment shall be the date of acceptance for filing by the Secretary of State
(See ss.33-1-230(b)). Effective as of the close of business on the date of
filing.
DATE February 10, 2000 New Sub II, Inc.
-------------------------------- -------------------------
(Name of Corporation)
By: s/ W. B. Timmerman
------------------
(Signature)
W.B. Timmerman, Chairman of the
Board, President and Chief
Executive Officer
(Type or Print Name and Office)
FILING INSTRUCTIONS
1. Two copies of this form, the original and either a duplicate original or a
conformed copy, must be filed.
2. If the space in this form is insufficient, please attach additional
sheets containing a reference to the appropriate paragraph in this form.
3. Filing fees and taxes payable to the Secretary of State at time of filing
application.
Filing Fee $ 10.00
Filing tax $100.00
Total $110.00
Form Approved by South Carolina
Secretary of State 1/89
<PAGE> 2
EXHIBIT 3-C
STATE OF SOUTH CAROLINA
SECRETARY OF STATE
ARTICLES OF CORRECTION
The following information is submitted pursuant to Section 33-1-240 of
the 1976 South Carolina Code, as amended:
1. The name of the corporation is Public Service Company of North Carolina
Incorporated.
2. That on February 10, 2000, the corporation filed (fill out whichever is
applicable):
(a) |XX| The following described document: Articles of Amendment dated
February 9, 2000.
(b) | | The attached document (attach copy of the document).
3. That this document was incorrect in the following manner:
A comma was omitted in the new name of the corporation.
4. That the incorrect matters stated in Paragraph 3 should be revised as
follows:
"The name of the corporation is Public Service Company of North
Carolina, Incorporated."
PUBLIC SERVICE COMPANY OF
NORTH CAROLINA, INCORPORATED
Date: February 11, 2000 By:s/Lynn M. Williams
----------------------------
Secretary
<PAGE> 1
EXHIBIT 18-A
May 12, 2000
Public Service Company of North Carolina, Incorporated
400 Cox Road
Gastonia, North Carolina 28053
Dear Sirs/Madams:
At your request, we have read the description included in your Quarterly Report
on Form 10-Q to the Securities and Exchange Commission for the quarter ended
March 31, 2000, of the facts relating to the change in accounting method to
record an estimate of unbilled revenues for gas delivered but not yet billed. We
believe, on the basis of the facts so set forth and other information furnished
to us by appropriate officials of the Company, that the accounting change
described in your Form 10-Q is to an alternative accounting principle that is
preferable under the circumstances.
We have not audited any consolidated financial statements of Public Service
Company of North Carolina, Incorporated and its consolidated subsidiaries as of
any date or for any period. Therefore, we are unable to express, and we do not
express, an opinion on the facts set forth in the above-mentioned Form 10-Q, on
the related information furnished to us by officials of the Company, or on the
financial position, results of operations, or cash flows of Public Service
Company of North Carolina, Incorporated and its consolidated subsidiaries as of
any date or for any period.
Yours truly,
s/Deloitte & Touche LLP
Deloitte & Touche LLP
<PAGE> 1
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-1-2000
<PERIOD-END> MAR-31-2000
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 985,544
<OTHER-PROPERTY-AND-INVEST> 32,364
<TOTAL-CURRENT-ASSETS> 104,807
<TOTAL-DEFERRED-CHARGES> 17,599
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,140,314
<COMMON> 1
<CAPITAL-SURPLUS-PAID-IN> 703,407
<RETAINED-EARNINGS> 20,030
<TOTAL-COMMON-STOCKHOLDERS-EQ> 723,438
0
0
<LONG-TERM-DEBT-NET> 150,450
<SHORT-TERM-NOTES> 89,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 6,800
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 170,626
<TOT-CAPITALIZATION-AND-LIAB> 1,140,314
<GROSS-OPERATING-REVENUE> 170,963
<INCOME-TAX-EXPENSE> 13,637
<OTHER-OPERATING-EXPENSES> 133,983
<TOTAL-OPERATING-EXPENSES> 147,620
<OPERATING-INCOME-LOSS> 23,343
<OTHER-INCOME-NET> 1,182
<INCOME-BEFORE-INTEREST-EXPEN> 31,093
<TOTAL-INTEREST-EXPENSE> 5,063
<NET-INCOME> 26,030
0
<EARNINGS-AVAILABLE-FOR-COMM> 26,030
<COMMON-STOCK-DIVIDENDS> 5,042
<TOTAL-INTEREST-ON-BONDS> 3,136
<CASH-FLOW-OPERATIONS> 64,263
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>