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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q

     
(Mark One)
x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
For the quarterly period ended July 31, 2003
     
or
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     
For the Transition period from ____________ to ____________

Commission file number 1-6196

Piedmont Natural Gas Company, Inc.

(Exact name of registrant as specified in its charter)
     
North Carolina   56-0556998
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
     
1915 Rexford Road, Charlotte, North Carolina   28211
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code (704) 364-3120

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x   No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
Yes x   No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

     
Class   Outstanding at September 2, 2003
 
Common Stock, no par value   33,564,851

Page 1 of 31 Pages

 

 

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

Piedmont Natural Gas Company, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(In thousands)
                         
            July 31,   October 31,
            2003   2002
           
 
ASSETS
                
Utility Plant, at original cost
   $ 1,783,891     $ 1,730,968  
 
Less accumulated depreciation
     615,574       572,445  
 
    
     
 
     
Utility plant, net
     1,168,317       1,158,523  
 
    
     
 
Other Physical Property (net of accumulated depreciation of $1,687 in 2003 and $1,531 in 2002)
     1,022       1,078  
 
    
     
 
Current Assets:
                
 
Cash and cash equivalents
     7,511       5,100  
 
Restricted cash
     6,022       8,028  
 
Receivables (less allowance for doubtful accounts of $1,363 in 2003 and $810 in 2002)
     64,605       37,504  
 
Unbilled utility revenues
     11,074       —  
 
Gas in storage
     68,465       65,688  
 
Deferred cost of gas
     —       13,592  
 
Deferred income taxes
     2,043       —  
 
Refundable income taxes
     25,849       10,329  
 
Prepayments
     18,655       19,215  
 
Other
     17,613       16,330  
 
    
     
 
     
Total current assets
     221,837       175,786  
 
    
     
 
Investments, Deferred Charges and Other Assets:
                
   
Investments in non-utility activities, at equity
     90,534       80,342  
   
Unamortized debt expense
     3,682       3,841  
   
Other
     25,415       25,518  
 
    
     
 
     
Total investments, deferred charges and other assets
     119,631       109,701  
 
    
     
 
       
Total
   $ 1,510,807     $ 1,445,088  
 
    
     
 
CAPITALIZATION AND LIABILITIES
                
Capitalization:
                
 
Common stock equity:
                
     
Common stock
   $ 368,611     $ 352,553  
     
Retained earnings
     278,366       240,026  
     
Accumulated other comprehensive income
     (1,833 )     (2,983 )
 
    
     
 
       
Total common stock equity
     645,144       589,596  
 
Long-term debt
     460,000       462,000  
 
    
     
 
       
Total capitalization
     1,105,144       1,051,596  
 
    
     
 
Current Liabilities:
                
 
Current maturities of long-term debt and sinking fund requirements
     2,000       47,000  
 
Notes payable
     45,000       46,500  
 
Accounts payable
     71,175       51,093  
 
Deferred income taxes
     —       1,384  
 
Income taxes accrued
     8,895       —  
 
General taxes accrued
     12,043       15,094  
 
Refunds due customers
     14,546       15,635  
 
Other
     19,438       28,425  
 
    
     
 
     
Total current liabilities
     173,097       205,131  
 
    
     
 
Deferred Credits and Other Liabilities:
                
 
Accumulated deferred income taxes
     187,179       158,275  
 
Unamortized federal investment tax credits
     5,180       5,593  
 
Other
     40,207       24,493  
 
    
     
 
     
Total deferred credits and other liabilities
     232,566       188,361  
 
    
     
 
       
Total
   $ 1,510,807     $ 1,445,088  
 
    
     
 

See notes to condensed consolidated financial statements.

2

 

Piedmont Natural Gas Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands)

                                                     
        Three Months   Nine Months   Twelve Months
        Ended   Ended   Ended
        July 31   July 31   July 31
       
 
 
        2003   2002   2003   2002   2003   2002
       
 
 
 
 
 
Operating Revenues
   $ 140,132     $ 127,928     $ 1,041,397     $ 710,550     $ 1,162,876     $ 821,041  
Cost of Gas
     90,832       80,066       720,389       420,918       795,706       485,300  
 
    
     
     
     
     
     
 
Margin
     49,300       47,862       321,008       289,632       367,170       335,741  
 
    
     
     
     
     
     
 
 
                                                
Other Operating Expenses:
                                                
 
Operations
     31,715       27,013       97,686       83,644       126,463       111,042  
 
Maintenance
     5,977       4,902       16,382       14,559       22,828       19,353  
 
Depreciation
     15,336       14,440       45,895       42,789       60,698       56,293  
 
General Taxes
     6,032       5,541       18,779       17,923       24,720       25,434  
 
Income Taxes
     (7,890 )     (5,662 )     43,889       39,372       35,653       32,718  
 
    
     
     
     
     
     
 
 
                                                
   
Total other operating expenses
     51,170       46,234       222,631       198,287       270,362       244,840  
 
    
     
     
     
     
     
 
 
                                                
Operating Income
     (1,870 )     1,628       98,377       91,345       96,808       90,901  
 
    
     
     
     
     
     
 
 
                                                
Other Income (Expense):
                                                
 
Non-utility activities, at equity
     2,323       (1,975 )     16,092       20,050       15,249       22,328  
 
Allowance for equity funds used during construction
     346       231       967       746       1,318       1,240  
 
Non-operating income
     782       618       1,938       1,182       1,993       1,995  
 
Non-operating expense
     (140 )     (105 )     (556 )     (553 )     (730 )     (915 )
 
Income taxes
     (1,345 )     487       (7,429 )     (8,822 )     (7,265 )     (10,186 )
 
    
     
     
     
     
     
 
 
                                                
   
Total other income (expense), net of tax
     1,966       (744 )     11,012       12,603       10,565       14,462  
 
                                                
Utility Interest Charges
     9,773       9,861       30,070       29,910       39,875       39,206  
 
    
     
     
     
     
     
 
 
                                                
Net Income
     ($9,677 )     ($8,977 )   $ 79,319     $ 74,038     $ 67,498     $ 66,157  
 
    
     
     
     
     
     
 
Average Shares of Common Stock:
                                                
   
Basic
     33,461       32,822       33,327       32,691       33,239       32,610  
   
Diluted
     33,461       32,822       33,439       32,863       33,368       32,798  
 
                                                
Earnings Per Share of Common Stock:
                                                
   
Basic
     ($0.29 )     ($0.27 )   $ 2.38     $ 2.26     $ 2.03     $ 2.03  
   
Diluted
     ($0.29 )     ($0.27 )   $ 2.37     $ 2.25     $ 2.02     $ 2.02  
 
                                                
Cash Dividends Per Share of Common Stock
   $ 0.415     $ 0.40     $ 1.23     $ 1.185     $ 1.63     $ 1.57  

See notes to condensed consolidated financial statements.

3

 

Piedmont Natural Gas Company, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

                                                     
        Three Months   Nine Months   Twelve Months
        Ended   Ended   Ended
        July 31   July 31   July 31
       
 
 
        2003   2002   2003   2002   2003   2002
       
 
 
 
 
 
Cash Flows from Operating Activities:
                                                
 
Net income
     ($9,677 )     ($8,977 )   $ 79,319     $ 74,038     $ 67,498     $ 66,157  
 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
                                                
   
Depreciation and amortization
     15,578       14,648       46,603       43,381       61,614       57,074  
   
Undistributed earnings from equity investments
     (2,323 )     1,975       (16,092 )     (20,050 )     (15,249 )     (22,328 )
   
Change in operating assets and liabilities
     (47,839 )     (70,381 )     (13,895 )     (6,560 )     (10,898 )     14,824  
   
Other, net
     16,486       15,667       26,824       13,909       24,000       (3,837 )
 
    
     
     
     
     
     
 
 
Net cash provided by (used in) operating activities
     (27,775 )     (47,068 )     122,759       104,718       126,965       111,890  
 
    
     
     
     
     
     
 
Cash Flows from Investing Activities:
                                                
 
Utility construction expenditures
     (18,976 )     (22,489 )     (53,531 )     (60,225 )     (73,418 )     (79,344 )
 
Capital contributions to equity investments
     —       (917 )     (2,223 )     (3,229 )     (3,485 )     (5,626 )
 
Capital distributions from equity investments
     1,752       14,780       8,940       20,045       11,039       21,913  
 
Purchase of gas distribution system
     —       —       2,153  <