SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-3375
South Carolina Electric & Gas Company
(Exact name of registrant as specified in its charter)
South Carolina 57-0248695
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1426 Main Street, Columbia, South Carolina 29201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (803) 748-3000
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X . No .
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d) of
the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes . No .
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
As of September 30, 1995, there were issued and outstanding
40,296,147 shares of the registrant's common stock $4.50 par value, all
of which were held, beneficially and of record, by SCANA Corporation.
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SOUTH CAROLINA ELECTRIC & GAS COMPANY
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1995
and December 31, 1994........................................ 3
Consolidated Statements of Income and Retained Earnings
for the Periods Ended September 30, 1995 and 1994............ 5
Consolidated Statements of Cash Flows for the Periods
Ended September 30, 1995 and 1994............................ 6
Notes to Consolidated Financial Statements..................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings......................................... 14
Item 6. Exhibits and Reports on Form 8-K.......................... 14
Signatures............................................................ 15
Exhibit Index......................................................... 16
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PART I
FINANCIAL INFORMATION
SOUTH CAROLINA ELECTRIC & GAS COMPANY
CONSOLIDATED BALANCE SHEETS
As of September 30, 1995 and December 31, 1994
(Unaudited)
September 30, December 31,
1995 1994
<S> <C> <C> <C>
(Thousands of Dollars)
ASSETS
Utility Plant:
Electric............................................. $3,180,231 $3,165,391
Gas.................................................. 307,916 307,929
Transit.............................................. 3,519 3,785
Common............................................... 77,881 77,327
Total.............................................. 3,569,547 3,554,432
Less accumulated depreciation and amortization....... 1,168,555 1,171,758
Total.............................................. 2,400,992 2,382,674
Construction work in progress........................ 664,832 571,867
Nuclear fuel, net of accumulated amortization........ 34,088 43,591
Utility Plant, Net............................... 3,099,912 2,998,132
Nonutility Property and Investments, net of
accumulated depreciation............................. 11,876 11,931
Current Assets:
Cash and temporary cash investments.................. 79,078 346
Receivables - customer and other..................... 143,687 127,679
Receivables - affiliated companies................... 11,259 18,121
Inventories (at average cost):
Fuel............................................... 28,138 31,310
Materials and supplies............................. 41,978 43,228
Prepayments.......................................... 11,419 14,389
Accumulated deferred income taxes.................... 17,931 17,931
Total Current Assets............................. 333,490 253,004
Deferred Debits:
Emission allowances.................................. 28,074 19,409
Unamortized debt expense............................. 11,410 11,690
Unamortized deferred return on plant investment...... 7,430 10,614
Nuclear plant decommissioning fund................... 34,648 30,383
Other................................................ 276,242 251,928
Total Deferred Debits............................ 357,804 324,024
Total................................. $3,803,082 $3,587,091
See notes to consolidated financial statements.
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SOUTH CAROLINA ELECTRIC & GAS COMPANY
CONSOLIDATED BALANCE SHEETS
As of September 30, 1995 and December 31, 1994
(Unaudited)
<S> <C> <S> <C> <C> <C>
September 30, December 31,
1995 1994
(Thousands of Dollars)
CAPITALIZATION AND LIABILITIES
Stockholders' Investment:
Common Equity:
Common stock ($4.50 par value)...................... $ 181,333 $ 181,333
Premium on common stock and other paid-in capital... 766,640 633,441
Capital stock expense (debit)....................... (5,400) (5,443)
Retained earnings................................... 371,318 324,101
Total Common Equity............................... 1,313,891 1,133,432
Preferred stock (not subject to purchase or sinking
funds).............................................. 26,027 26,027
Total Stockholders' Investment.................... 1,339,918 1,159,459
Preferred stock, net (subject to purchase or
sinking funds)........................................ 46,629 49,528
Long-term debt, net..................................... 1,280,920 1,231,191
Total Capitalization............................ 2,667,467 2,440,178
Current Liabilities:
Short-term borrowings................................. 86,700 100,000
Notes payable - affiliated companies.................. - 19,409
Current portion of long-term debt..................... 51,415 33,042
Current portion of preferred stock.................... 2,472 2,418
Accounts payable...................................... 36,490 61,466
Accounts payable - affiliated companies............... 13,883 33,357
Customer deposits..................................... 12,499 12,668
Taxes accrued......................................... 78,436 46,646
Interest accrued...................................... 25,142 21,534
Dividends declared.................................... 32,833 28,489
Other................................................. 14,118 15,525
Total Current Liabilities....................... 353,988 374,554
Deferred Credits:
Accumulated deferred income taxes..................... 500,501 503,723
Accumulated deferred investment tax credits........... 79,124 81,546
Accumulated reserve for nuclear plant decommissioning. 34,648 30,383
Other................................................. 167,354 156,707
Total Deferred Credits.......................... 781,627 772,359
Total ................................. $3,803,082 $3,587,091
See notes to consolidated financial statements.
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SOUTH CAROLINA ELECTRIC & GAS COMPANY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Periods Ended September 30, 1995 and 1994
(Unaudited)
<S> <C> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(Thousands of Dollars)
OPERATING REVENUES:
Electric.................................... $307,665 $294,404 $777,311 $754,512
Gas......................................... 31,376 31,650 143,586 145,928
Transit..................................... 896 1,012 2,939 2,981
Total Operating Revenues............... 339,937 327,066 923,836 903,421
OPERATING EXPENSES:
Fuel used in electric generation............ 54,321 48,270 129,590 136,203
Purchased power (including
affiliated purchases)..................... 25,357 32,982 79,884 83,273
Gas purchased from affiliate
for resale................................ 22,132 22,926 86,686 91,326
Other operation............................. 51,916 52,087 157,525 157,435
Maintenance................................. 13,410 15,876 41,914 45,574
Depreciation and amortization............... 28,108 26,705 83,482 80,147
Income taxes................................ 38,709 30,788 81,317 70,712
Other taxes................................. 18,961 18,299 56,073 52,782
Total Operating Expenses............... 252,914 247,933 716,471 717,452
OPERATING INCOME.............................. 87,023 79,133 207,365 185,969
OTHER INCOME:
Allowance for equity funds used
during construction....................... 2,631 1,435 7,407 5,419
Other income (loss),net of
income taxes.............................. (579) (302) (530) (559)
Total Other Income..................... 2,052 1,133 6,877 4,860
INCOME BEFORE INTEREST CHARGES................ 89,075 80,266 214,242 190,829
INTEREST CHARGES (CREDITS):
Interest expense............................ 27,485 24,057 81,775 68,227
Allowance for borrowed funds
used during construction.................. (3,450) (1,410) (8,693) (4,711)
Total Interest Charges, net............ 24,035 22,647 73,082 63,516
NET INCOME.................................... 65,040 57,619 141,160 127,313
Preferred Stock Cash Dividends
(at stated rates)........................... (1,416) (1,482) (4,280) (4,483)
Earnings Available for Common Stock........... 63,624 56,137 136,880 122,830
Retained Earnings at Beginning
of Period................................... 339,094 300,706 324,101 291,713
Common Stock Cash Dividends
Declared.................................... (31,400) (29,000) (89,663) (86,700)
Retained Earnings at End of Period............ $371,318 $327,843 $371,318 $327,843
See notes to consolidated financial statements.
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SOUTH CAROLINA ELECTRIC & GAS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Periods Ended September 30, 1995 and 1994
(Unaudited)
<S> <C> <C> <C>
Nine Months Ended
September 30,
1995 1994
(Thousands of Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................... $141,160 $127,313
Adjustments to reconcile net income to net cash
provided from operating activities:
Depreciation and amortization...................... 83,589 80,261
Amortization of nuclear fuel....................... 5,264 12,863
Deferred income taxes, net......................... (3,774) 11,124
Deferred investment tax credits, net............... (2,422) (2,099)
Net regulatory asset-adoption of SFAS No. 109...... (2,645) (1,509)
Nuclear refueling accrual.......................... 5,218 3,148
Allowance for funds used during construction....... (16,100) (10,130)
Amortization of loss on reacquired debt............ (3,645) -
Over (under) collections, fuel adjustment clause... 20,750 (7,804)
Early retirements.................................. (21,291) -
Emission allowances................................ (8,665) -
Changes in certain current assets and liabilities:
Decrease in receivables........................... (9,145) (32,961)
Increase in inventories........................... 4,422 7,568
Increase in accounts payable...................... (44,451) (7,329)
Decrease in estimated rate refunds and
related interest................................ - (2,509)
Increase in taxes accrued......................... 31,790 22,588
Increase in interest accrued...................... 3,608 4,047
Other, net........................................ (8,127) 23,715
Net Cash Provided From Operating Activities............ 175,536 228,286
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility property additions and construction
expenditures, net of capitalized interest.......... (172,613) (323,231)
Nonutility property and investments.................. (52) (224)
Principal noncash items:
Transfer of assets from parent..................... - 6,285
Net Cash Used For Investing Activities................. (172,665) (317,170)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds:
Issuance of bank note.............................. 1,019 -
Issuance of First Mortgage Bonds................... 99,583 99,207
Equity contribution from parent.................... 133,240 35,774
Repayments:
Repayment of note payable to affiliated company.... (19,409) -
First and Refunding Mortgage Bonds................. (48,779) -
Pollution Control Bonds............................ (100) (100)
Other long-term debt............................... (11,871) (998)
Preferred stock.................................... (2,846) (2,964)
Dividend payments:
Common stock....................................... (85,263) (86,100)
Preferred stock.................................... (4,336) (4,568)
Short-term borrowings, net........................... (13,300) 38,489
Fuel financings, net................................. 27,923 11,510
Advances - affiliated companies, net................. - (1,559)
Net Cash Provided From Financing Activities............ 75,861 88,691
NET INCREASE (DECREASE) IN CASH AND
TEMPORARY CASH INVESTMENTS........................... 78,732 (193)
CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1....... 346 193
CASH AND TEMPORARY CASH INVESTMENTS AT SEPTEMBER 30.... $ 79,078 $ -
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for - Interest (includes capitalized
interest of $8,693 and $4,711....... $ 23,500 $ 62,922
- Income taxes......................... 2,392 37,959
See notes to consolidated financial statements.
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SOUTH CAROLINA ELECTRIC & GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
The following notes should be read in conjunction with the Notes to
Consolidated Financial Statements appearing in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994. These are
interim financial statements and, because of temperature variations between
seasons of the year, the amounts reported in the Consolidated Statements of
Income are not necessarily indicative of amounts expected for the year. In
the opinion of management, the information furnished herein reflects all
adjustments, all of a normal recurring nature, which are necessary for a
fair statement of the results for the interim periods reported.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A. Principles of Consolidation:
The Company, a public utility, is a South Carolina corporation
organized in 1924 and a wholly owned subsidiary of SCANA Corporation
(SCANA), a South Carolina holding company. The accompanying
Consolidated Financial Statements include the accounts of the Company
and South Carolina Fuel Company, Inc. (Fuel Company), an affiliate.
Intercompany balances and transactions between the Company and Fuel
Company have been eliminated in consolidation.
The Company has entered into agreements with certain affiliates to
purchase gas for resale to its distribution customers and to purchase
electric energy. The Company purchases all of its natural gas
requirements from South Carolina Pipeline Corporation. The Company
purchases all of the electric generation of Williams Station, which is
owned by South Carolina Generating Company, Inc., under a unit power
sales agreement. Such unit power purchases are included in "Purchased
power."
B. Basis of Accounting:
The Company prepares its financial statements in accordance with the
provisions of Statement of Financial Accounting Standard No. 71 (SFAS
71), "Accounting for the Effects of Certain Types of Regulations."
The accounting standard allows cost-based rate-regulated utilities,
such as the Company, to recognize in their financial statements
revenues and expenses in different time periods than do enterprises
that are not rate-regulated. As a result, the Company has recorded,
as of September 30, 1995, approximately $110 million and $3
million of regulatory assets and liabilities, respectively, excluding
net accumulated deferred income tax assets of approximately $50
million. In the future, as a result of deregulation or other changes
in the regulatory environment, the Company may no longer meet the
criteria for continued application of SFAS 71 and would be required to
write off its regulatory assets and liabilities. Such an event could
have a material adverse effect on the Company's results of operation
in the period the write-off is recorded. The Company's cash flows
would not be affected.
C. Recently Issued Accounting Standard
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of." The
provisions of the Statement, which must be implemented by the
Company for the fiscal year beginning January 1, 1996, require the
recognition of a loss in the income statement and related disclosures
whenever events or changes in circumstances indicate that the carrying
amount of a long-lived asset may not be recoverable. The Company does
not believe that adoption of the provisions of the Statement will have
a material adverse impact on its results of operations or financial
position.
D. Reclassifications:
Certain amounts from prior periods have been reclassified to conform
with the 1995 presentation.
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2. RATE MATTERS:
With respect to rate matters at September 30, 1995, reference is made
to Note 2 of Notes to Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the year ended December 31,
1994. On July 10, 1995, the Company filed an application with the
Public Service Commission of South Carolina (PSC) for an increase in
retail electric rates. The proposed increase of 8.35% would produce
additional revenues of approximately $76.7 million annually, if
approved. The Company has requested that the increase be implemented
in two phases. The first phase, an increase in revenues of
approximately $61.8 annually, or 6.73%, would commence at the time the
Company's 385 MW generating station currently under construction near
Cope, S. C. begins commercial operation, which is expected in January
1996. The second phase is planned in January 1997 and would produce
additional revenues of approximately $14.9 million annually, or 1.62%
more than current rates. No assurance can be given as to the adequacy
or timing of the rate relief that will be granted by the PSC.
Hearings are scheduled to begin during November 1995.
3. RETAINED EARNINGS:
The Restated Articles of Incorporation of the Company and the
Indenture underlying certain of its bond issues contain provisions
that may limit the payment of cash dividends on common stock. In
addition, with respect to hydroelectric projects, the Federal Power
Act may require the appropriation of a portion of the earnings
therefrom. At September 30, 1995 approximately $15.1 million of
retained earnings were restricted as to payment of dividends on common
stock.
4. COMMITMENTS AND CONTINGENCIES:
With respect to commitments at September 30, 1995, reference is made
to Note 10 of Notes to Consolidated Financial Statements appearing
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994. No significant changes have occurred with respect
to those matters as reported therein.
Contingencies at September 30, 1995 are as follows:
A. Nuclear Insurance
The Price-Anderson Indemnification Act, which deals with the Company's
public liability for a nuclear incident, currently establishes the
liability limit for third-party claims associated with any nuclear
incident at $8.9 billion. Each reactor licensee is currently liable
for up to $79.3 million per reactor owned for each nuclear incident
occurring at any reactor in the United States, provided that not more
than $10 million of the liability per reactor would be assessed per
year. The Company's maximum assessment, based on its two-thirds
ownership of Summer Station, would be approximately $52.9 million per
incident but not more than $6.7 million per year.
The Company currently maintains policies (for itself and on behalf of
the PSA) with American Nuclear Insurers (ANI) and Nuclear Electric
Insurance Limited (NEIL) providing combined primary and excess
property and decontamination insurance coverage of $1.9 billion for
any losses at Summer Station. The Company pays annual premiums and, in
addition, could be assessed a retrospective premium assessment not to
exceed 7.5 times its annual premium in the event of property damage
loss to any nuclear generating facility covered under the NEIL
program. Based on the current annual premium, this retrospective
premium assessment would not exceed $8.2 million.
To the extent that insurable claims for property damage,
decontamination, repair and replacement and other costs and expenses
arising from a nuclear incident at Summer Station exceed the policy
limits of insurance, or to the extent such insurance becomes
unavailable in the future, and to the extent that the Company's rates
would not recover the cost of any purchased replacement power, the
Company will retain the risk of loss as a self-insurer. The Company
has no reason to anticipate a serious nuclear incident at Summer
Station. If such an incident were to occur, it could have a
material adverse impact on the Company's financial position and
results of operations.
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B. Environmental
The Company has an environmental assessment program to identify and
assess current and former operations sites that could require
environmental cleanup. As site assessments are initiated, an estimate
is made of the amount of expenditures, if any, necessary to
investigate and clean up each site. These estimates are refined as
additional information becomes available; therefore actual
expenditures could significantly differ from the original estimates.
Amounts estimated and accrued to date for site assessment and cleanup
relate primarily to regulated operations; such amounts have been
deferred (approximately $19.2 million) and are being amortized and
recovered through rates over a ten-year period for electric operations
and an eight-year period for gas operations.
In September 1992 the Environmental Protection Agency (EPA) notified
the Company, the City of Charleston and the Charleston Housing
Authority of their potential liability for the investigation and
cleanup of the Calhoun Park Area Site in Charleston, South Carolina.
This site originally encompassed approximately 18 acres and included
properties which were the locations for industrial operations,
including a wood preserving (creosote) plant and one of the Company's
decommissioned manufactured gas plants. The original scope of this
investigation has been expanded to approximately 30 acres including
adjacent properties owned by the National Park Service and the City of
Charleston, and private properties. The site has not been placed on
the National Priority List, but may be added before cleanup is
initiated. The potentially responsible parties (PRP) have agreed with
the EPA to participate in an innovative approach to site investigation
and cleanup called "Superfund Accelerated Cleanup Model," allowing the
pre-cleanup site investigations process to be compressed
significantly. The PRPs have negotiated an administrative order by
consent for the conduct of a Remedial Investigation/Feasibility Study
(RI/FS) and a corresponding Scope of Work. Actual field work began
November 1, 1993 after final approval and authorization was granted by
EPA. The Company is also working with the City of Charleston to
investigate potential contamination from the manufactured gas plant
which may have migrated to the city's aquarium site. In 1994 the City
of Charleston notified the Company that it considers the Company to be
responsible for a projected $43.5 million increase in costs of the
aquarium project allegedly attributable to delays resulting from
contamination of the Calhoun Park area site. The Company believes it
has meritorious defenses against this claim and does not expect its
resolution to have a material impact on its financial position or
results of operations.
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SOUTH CAROLINA ELECTRIC & GAS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Competition
The electric utility industry has begun a major transition that could
lead to expanded market competition and less regulatory protection. Future
deregulation of electric wholesale and retail markets will create
opportunities to compete for new and existing customers and markets. As a
result, profit margins and asset values of some utilities could be
adversely affected. The pace of deregulation, the future market price of
electricity, and the regulatory actions which may be taken by the Public
Service Commission of South Carolina (PSC) in response to the changing
environment cannot be predicted. However, the Company is aggressively
pursuing actions to position itself strategically for the transformed
environment.
Regulated public utilities are allowed to record as assets some costs
that would be expensed by other enterprises. If deregulation or other
changes in the regulatory environment occur, the Company may no longer be
qualified to apply this accounting treatment and may be required to
eliminate such regulatory assets from its balance sheet. Such an event
could have a material adverse effect on the Company's results of
operations. The Company reported approximately $110 million and $3
million of regulatory assets and liabilities, respectively, excluding
amounts related to net accumulated deferred income tax assets of approximately
$50 million, on its balance sheet at September 30, 1995. The Company's cash
flows would not be affected.
Material Changes in Capital Resources and Liquidity
From December 31, 1994 to September 30, 1995
Liquidity and Capital Resources
The cash requirements of the Company arise primarily from its
operational needs and construction program. The ability of the Company to
replace existing plant investment, as well as to expand to meet future
demands for electricity and gas, will depend upon its ability to attract the
necessary financial capital on reasonable terms. The Company recovers the
costs of providing services through rates charged to customers. Rates for
regulated services are based on historical costs. As customer growth and
inflation occur and the Company expands its construction program it is
necessary to seek increases in rates. As a result the Company's future
financial position and results of operations will be impacted by its ability
to obtain adequate and timely rate relief.
On July 10, 1995, the Company filed an application with the PSC for an
increase in retail electric rates. The proposed increase of 8.35% would
produce additional revenues of approximately $76.7 million annually, if
approved. The Company has requested that the increase be implemented in two
phases. The first phase, an increase in revenues of approximately $61.8
annually, or 6.73%, would commence at the time the Company's 385 MW
generating station currently under construction near Cope, S. C. begins
commercial operation, which is expected in January 1996. The second phase is
planned in January 1997 and would produce additional revenues of
approximately $14.9 million annually, or 1.62% more than current rates. No
assurance can be given as to the adequacy or timing of the rate relief that
will be granted by the PSC. Hearings are scheduled to begin during November
1995.
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The following table summarizes how the Company generated funds for its
utility property additions and construction expenditures during the nine
months ended September 30, 1995 and 1994:
Nine months Ended
September 30,
1995 1994
(Thousands of Dollars)
Net cash provided from operating activities $175,536 $228,286
Net cash provided from financing activities 75,861 88,691
Cash and temporary cash investments available
at the beginning of the period 346 193
Net cash available for utility property
additions and construction expenditures $251,743 $317,170
Funds used for utility property additions
and construction expenditures, net of
noncash allowance for funds used during
construction and transfer of assets
from parent $172,613 $316,946
On April 12, 1995 the Company issued $100 million of First Mortgage
Bonds, 7 5/8% series due April 1, 2025 to repay short-term borrowings.
The Company anticipates that the remainder of its 1995 cash requirements
will be met primarily through internally generated funds, sales of additional
securities, additional equity contributions from SCANA and the incurrence of
additional short-term and long-term indebtedness. The timing and amount of
such financings will depend upon market conditions and other factors.
The ratio of earnings to fixed charges for the twelve months ended
September 30, 1995 was 3.38.
The Company expects that it has or can obtain adequate sources of
financing to meet its cash requirements for the next twelve months and for
the foreseeable future.
Statements of Financial Accounting Standards Not Yet Adopted
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of." The provisions of the
Statement, which must be implemented by the Company for the fiscal year
beginning January 1, 1996, require the recognition of a loss in the income
statement and related disclosures whenever events or changes in circumstances
indicate that the carrying amount of a long-lived asset may not be
recoverable. The Company does not believe that adoption of the provisions of
the Statement will have a material adverse impact on its results of
operations or financial position.
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SOUTH CAROLINA ELECTRIC & GAS COMPANY
Results of Operations
For the Three and Nine months ended September 30, 1995
As Compared to the Corresponding Periods in 1994
Earnings and Dividends
Net income for the three and nine months ended September 30, 1995
increased approximately $7.4 million and $13.8 million, respectively,
compared to the corresponding periods in 1994. Increases in electric and gas
margins more than offset increases in fixed operating costs.
Allowance for funds used during construction (AFC) is a utility
accounting practice whereby a portion of the cost of both equity and borrowed
funds used to finance construction (which is shown on the balance sheet as
construction work in progress) is capitalized. Both the equity and the debt
portions of AFC are noncash items of nonoperating income which have the
effect of increasing reported net income. AFC represented approximately 7%
and 5% of income before income taxes for the nine months ended September 30,
1995 and 1994, respectively.
On February 14, 1995 the Company's Board of Directors authorized the
payment of a dividend on common stock of approximately $28.6 million for the
quarter ended March 31, 1995. The dividend was paid on April 1, 1995 to
SCANA Corporation, the Company's parent.
On April 27, 1995, the Company's Board of Directors authorized the
payment of a dividend on common stock of $29.7 million for the quarter ended
June 30, 1995. The dividend was paid on July 1, 1995 to SCANA Corporation,
the Company's parent.
On August 23, 1995 the Company's Board of Directors authorized the
payment of a dividend on common stock of $31.4 million for the quarter ended
September 30, 1995. The dividend was paid on October 1, 1995 to SCANA
Corporation, the Company's parent.
On October 17, 1995 the Company's Board of Directors authorized the
payment of a dividend on common stock of $31.7 million for the quarter ending
December 31, 1995. The dividend is payable January 1, 1996 to
SCANA Corporation, the Company's parent.
Sales Margins
The changes in the electric sales margins for the three and nine months
ended September 30, 1995, when compared to the corresponding periods in 1994,
were as follows:
Three Months Nine months
Change % Change Change % Change
(Millions) (Millions)
Electric operating revenues $13.3 4.5 $22.8 3.0
Less: Fuel used in electric
generation 6.1 12.5 (6.6) (4.8)
Purchased power (7.6) (23.1) (3.4) (4.1)
Margin $14.8 7.0 $32.8 6.1
The electric sales margin increased for the three months ended September
30, 1995 compared to the corresponding period in 1994 primarily as a result
of increased sales attributable to warmer weather. For the nine months ended
September 30, 1995, the increase in the electric margin over the comparable
1994 period is a result of the combined impact of warmer weather in the third
quarter of 1995, improved economic conditions and the base rate increase
received by the Company in mid-1994, which more than offset the negative
impact of milder weather experienced during the first half of 1995.
12
<PAGE>
The changes in the gas sales margins for the three and nine months ended
September 30, 1995, when compared to the corresponding periods in 1994, were
as follows:
Three Months Nine months
Change % Change Change % Change
(Millions) (Millions)
Gas operating revenues $(0.3) (0.9) $(2.3) (1.6)
Less: Gas purchased for resale (0.8) (3.5) (4.6) (5.1)
Margin $ 0.5 6.0 $ 2.3 4.2
The increases in the gas sales margins for the three and nine months
reflect increases in interruptible industrial sales.
Other Operating Expenses
Increases (decreases) in other operating expenses, including taxes, for
the three and nine months ended September 30, 1995 compared to the
corresponding periods in 1994 are presented in the following table:
Three Months Nine months
Change % Change Change % Change
(Millions) (Millions)
Other operation and maintenance $(2.6) (3.9) $(3.6) (1.8)
Depreciation and amortization 1.4 5.3 3.3 4.2
Income taxes 7.9 25.7 10.6 15.0
Other taxes 0.7 3.6 3.3 6.2
Total $ 7.4 5.1 $13.6 3.4
Other operation and maintenance expenses for the three and nine months
ended September 30, 1995 remained slightly below 1994 levels primarily as a
result of lower costs at electric generating stations. Increases in
depreciation and amortization expenses for the three and nine months'
comparisons reflect additions to plant in service. The increases in income
tax expense for the two periods correspond to the increases in operating
income. The increases in other taxes reflect higher property taxes resulting
from higher millages and assessments partially offset by lower payroll taxes
resulting from early retirements of employees.
Interest Charges
Interest expense, excluding the debt component of AFC, for the three and
nine months ended September 30, 1995 increased $3.8 million and $13.5 million
respectively, compared to the corresponding periods of 1994. The increases
are due primarily to the issuance of additional debt, including commercial
paper, during the latter part of 1994 and early 1995.
13
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
Part II
OTHER INFORMATION
Item 1. Legal Proceedings
For information regarding legal proceedings see Note 2 "Rate
Matters" and Note 4 "Commitments and Contingencies" of Notes to
Consolidated Financial Statements.
Items 2, 3, 4 and 5 are not applicable.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibits filed with this Quarterly Report on Form 10-Q are listed in
the following Exhibit Index. Certain of such exhibits which have
heretofore been filed with the Securities and Exchange Commission and
which are designated by reference to their exhibit numbers in prior
filings are hereby incorporated herein by reference and made a part
hereof.
B. Reports on Form 8-K
None
14
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUTH CAROLINA ELECTRIC & GAS COMPANY
(Registrant)
November 10, 1995 By: s/Jimmy E. Addison
Jimmy E. Addison
Vice President and Controller
(Principal Accounting Officer)
15
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY Sequentially
EXHIBIT INDEX Numbered
Number Pages
2. Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession
Not Applicable
3. Articles of Incorporation and By-Laws
A. Restated Articles of Incorporation of the
Company as adopted on December 15, 1993
(Exhibit 3-A to Form 10-Q for the quarter
ended June 30, 1994, File No. 1-3375)...................... #
B. Articles of Amendment, dated June 7, 1994,
filed June 9, 1994 (Exhibit 3-B to Form 10-Q
for the quarter ended June 30, 1994, File
No. 1-3375)
C. Articles of Amendment, dated November 9, 1994
(Exhibit 3-C to Form 10-K for the year ended
December 31, 1994, File No. 1-3375)....................... #
D. Articles of Amendment, dated December 9, 1994
(Exhibit 3-D to Form 10-K for the year ended
December 31, 1994, File No. 1-3375)....................... #
E. Articles of Correction, dated January 17, 1995
(Exhibit 3-E to Form 10-K for the year ended
December 31, 1994, File No. 1-3375)....................... #
F. Articles of Amendment, dated January 13, 1995
(Exhibit 3-F to Form 10-K for the year ended
December 31, 1994, File No. 1-3375)....................... #
G. Articles of Amendment, dated March 31, 1995
(Exhibit 3-G to Form 10-Q for the quarter
ended March 31, 1995, File No. 1-3375).................... #
H. Copy of By-Laws of the Company as revised and
amended thru December 15, 1993 (Exhibit 3-AZ to
Form 10-K for the year ended December 31, 1993,
File No. 1-3375).......................................... #
4. Instruments Defining the Rights of Security
Holders, Including Indentures
A. Indenture dated as of January 1, 1945, from the
South Carolina Power Company (the "Power Company")
to Central Hanover Bank and Trust Company, as
Trustee, as supplemented by three Supplemental
Indentures dated respectively as of May 1, 1946,
May 1, 1947 and July 1, 1949 (Exhibit 2-B to
Registration No. 2-26459).................................. #
B. Fourth Supplemental Indenture dated as of April 1,
1950, to Indenture referred to in Exhibit 4A,
pursuant to which the Company assumed said
Indenture (Exhibit 2-C to Registration No. 2-26459)........ #
C. Fifth through Fifty-second Supplemental Indentures
to Indenture referred to in Exhibit 4A dated as
of the dates indicated below and filed as
exhibits to the Registration Statements and
1934 Act reports whose file numbers are set
forth below................................................ #
December 1, 1950 Exhibit 2-D to Registration No. 2-26459
July 1, 1951 Exhibit 2-E to Registration No. 2-26459
June 1, 1953 Exhibit 2-F to Registration No. 2-26459
June 1, 1955 Exhibit 2-G to Registration No. 2-26459
November 1, 1957 Exhibit 2-H to Registration No. 2-26459
September 1, 1958 Exhibit 2-I to Registration No. 2-26459
September 1, 1960 Exhibit 2-J to Registration No. 2-26459
# Incorporated herein by reference as indicated.
16
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY Sequentially
EXHIBIT INDEX Numbered
Number Pages
4. (Continued)
June 1, 1961 Exhibit 2-K to Registration No. 2-26459
December 1, 1965 Exhibit 2-L to Registration No. 2-26459
June 1, 1966 Exhibit 2-M to Registration No. 2-26459
June 1, 1967 Exhibit 2-N to Registration No. 2-29693
September 1, 1968 Exhibit 4-O to Registration No. 2-31569
June 1, 1969 Exhibit 4-C to Registration No. 33-38580
December 1, 1969 Exhibit 4-Q to Registration No. 2-35388
June 1, 1970 Exhibit 4-R to Registration No. 2-37363
March 1, 1971 Exhibit 2-B-17 to Registration No. 2-40324
January 1, 1972 Exhibit 4-C to Registration No. 33-38580
July 1, 1974 Exhibit 2-A-19 to Registration No. 2-51291
May 1, 1975 Exhibit 4-C to Registration No. 33-38580
July 1, 1975 Exhibit 2-B-21 to Registration No. 2-53908
February 1, 1976 Exhibit 2-B-22 to Registration No. 2-55304
December 1, 1976 Exhibit 2-B-23 to Registration No. 2-57936
March 1, 1977 Exhibit 2-B-24 to Registration No. 2-58662
May 1, 1977 Exhibit 4-C to Registration No. 33-38580
February 1, 1978 Exhibit 4-C to Registration No. 33-38580
June 1, 1978 Exhibit 2-A-3 to Registration No. 2-61653
April 1, 1979 Exhibit 4-C to Registration No. 33-38580
June 1, 1979 Exhibit 4-C to Registration No. 33-38580
April 1, 1980 Exhibit 4-C to Registration No. 33-38580
June 1, 1980 Exhibit 4-C to Registration No. 33-38580
December 1, 1980 Exhibit 4-C to Registration No. 33-38580
April 1, 1981 Exhibit 4-D to Registration No. 33-49421
June 1, 1981 Exhibit 4-D to Registration No. 2-73321
March 1, 1982 Exhibit 4-D to Registration No. 33-49421
April 15, 1982 Exhibit 4-D to Registration No. 33-49421
May 1, 1982 Exhibit 4-D to Registration No. 33-49421
December 1, 1984 Exhibit 4-D to Registration No. 33-49421
December 1, 1985 Exhibit 4-D to Registration No. 33-49421
June 1, 1986 Exhibit 4-D to Registration No. 33-49421
February 1, 1987 Exhibit 4-D to Registration No. 33-49421
September 1, 1987 Exhibit 4-D to Registration No. 33-49421
January 1, 1989 Exhibit 4-D to Registration No. 33-49421
January 1, 1991 Exhibit 4-D to Registration No. 33-49421
February 1, 1991 Exhibit 4-D to Registration No. 33-49421
July 15, 1991 Exhibit 4-D to Registration No. 33-49421
August 15, 1991 Exhibit 4-D to Registration No. 33-49421
April 1, 1993 Exhibit 4-E to Registration No. 33-49421
July 1, 1993 Exhibit 4-D to Registration No. 33-57955
D. Indenture dated as of April 1, 1993 from South Carolina
Electric & Gas Company to NationsBank of Georgia, National
Association (Filed as Exhibit 4-F to Registration
Statement No. 33-49421)...................................... #
E. First Supplemental Indenture to Indenture referred to
in 4-D dated as of June 1, 1993 (Filed as Exhibit 4-G
to Registration Statement No. 33-49421)...................... #
F. Second Supplemental Indenture to Indenture referred to
in 4-D dated as of June 15, 1993 (Filed as Exhibit 4-G
to Registration Statement No. 33-57955) ..................... #
10. Material Contracts
Not Applicable
11. Statement Re Computation of Per Share Earnings
Not Applicable
# Incorporated herein by reference as indicated.
17
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
Exhibit Index (Continued)
Number
15. Letter Re Unaudited Interim Financial Information
Not Applicable
18. Letter Re Change in Accounting Principles
Not Applicable
19. Report Furnished to Security Holders
Not Applicable
22. Published Report Regarding Matters Submitted to
Vote of Security Holders
Not Applicable
23. Consents of Experts and Counsel
Not Applicable
24. Power of Attorney
Not Applicable
27. Financial Data Schedule (Filed herewith)
99. Additional Exhibits
Not Applicable
18
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE CONSOLIDATED
BALANCE SHEET AS OF SEPTEMBER 30, 1995 AND THE CONSOLIDATED STATEMENTS OF
INCOME AND RETAINED EARNINGS AND OF CASH FLOWS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,099,912
<OTHER-PROPERTY-AND-INVEST> 11,876
<TOTAL-CURRENT-ASSETS> 333,490
<TOTAL-DEFERRED-CHARGES> 357,804
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 3,803,082
<COMMON> 181,333
<CAPITAL-SURPLUS-PAID-IN> 761,240
<RETAINED-EARNINGS> 371,318
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,313,891
46,629
26,027
<LONG-TERM-DEBT-NET> 1,280,920
<SHORT-TERM-NOTES> 86,700
<LONG-TERM-NOTES-PAYABLE> 0
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2,472
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<OTHER-OPERATING-EXPENSES> 214,205
<TOTAL-OPERATING-EXPENSES> 252,914
<OPERATING-INCOME-LOSS> 87,023
<OTHER-INCOME-NET> 2,052
<INCOME-BEFORE-INTEREST-EXPEN> 89,075
<TOTAL-INTEREST-EXPENSE> 24,035
<NET-INCOME> 65,040
(1,416)
<EARNINGS-AVAILABLE-FOR-COMM> 63,624
<COMMON-STOCK-DIVIDENDS> 31,400
<TOTAL-INTEREST-ON-BONDS> 0
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