UNITED STATES SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

(Mark One)

For the quarterly period ended January 31, 2004

or

For the Transition period from                     to                    

Commission file number 1-6196

Piedmont Natural Gas Company, Inc.

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 þ     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 þ      No o

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

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

Piedmont Natural Gas Company, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(In thousands)

See notes to consolidated financial statements.

2

Piedmont Natural Gas Company, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
(In thousands except per share amounts)

See notes to consolidated financial statements.

3

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

     See notes to consolidated financial statements.

4

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

See notes to consolidated financial statements.

5

Piedmont Natural Gas Company, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)

1.		Independent auditors have not audited the consolidated financial statements. These financial statements should be read in conjunction with the Notes to Consolidated Financial Statements included in our 2003 Annual Report.
2.		In our opinion, the unaudited consolidated financial statements include all normal recurring adjustments necessary for a fair statement of financial position at January 31, 2004 and October 31, 2003, and the results of operations and cash flows for the three months and twelve months ended January 31, 2004 and 2003.
		We make estimates and assumptions when preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from our estimates.
3.		We follow Statement of Financial Accounting Standards (SFAS) No. 71, “Accounting for the Effects of Certain Types of Regulation” (Statement 71). Statement 71 provides that rate-regulated public utilities account for and report assets and liabilities consistent with the economic effect of the manner in which independent third-party regulators establish rates. In applying Statement 71, we have capitalized certain costs and benefits as regulatory assets and liabilities, respectively, pursuant to orders of the state regulatory commissions, either in general rate proceedings or expense deferral proceedings, in order to provide for recovery from or refunds to utility customers in future periods.
4.		All of our goodwill is attributable to the regulated utility segment. The following presents the balance in goodwill as of October 31, 2003 and January 31, 2004, and the changes for the three months ended January 31, 2004.

		The purchase price allocation adjustment is primarily due to an increase in the liability for pension restoration and deferred director’s fees based on additional information obtained subsequent to the initial purchase price allocation.
		We are in the process of evaluating and measuring certain assets acquired and liabilities assumed in the acquisition, primarily working capital. The allocation of the purchase price is subject to refinement according to terms specified in the stock purchase agreement and is expected to be completed in fiscal 2004.
5.		Our business is seasonal in nature. The results of operations for the three-month period ended January 31, 2004, do not necessarily reflect the results to be expected for the full year.

6.

We compute basic earnings per share using the weighted average number of shares of Common Stock

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	outstanding during the period. A reconciliation of basic and diluted earnings per share is presented below:

7.		Based on products and services, regulatory environments and our corporate organization and business decision-making activities, we have two reportable business segments, regulated utility and non-utility activities. Operations of our regulated utility segment are conducted by the parent company and by EasternNC. Operations of our non-utility activities segment comprise all of our other ventures. These operations are primarily conducted by Piedmont Intrastate Pipeline Company, Piedmont Interstate Pipeline Company, Piedmont Energy Company and Piedmont Propane Company.
		Operations of the regulated utility segment are reflected in operating income in the consolidated statements of income. Operations of the non-utility activities segment are included in “Other Income (Expense)” in the consolidated statements of income in either “Non-utility activities, at equity” or “Non-operating income.”
		We evaluate the performance of the regulated utility segment based on margin, operations and maintenance expenses and operating income. We evaluate the performance of the non-utility activities segment based on income from non-utility activities, at equity, and investment in non-utility activities, at equity. The basis of segmentation and the basis of the measurement of segment profit or loss are the same as reported in our audited financial statements for the year ended October 31, 2003.
		Operations by segment for the three months ended January 31, 2004 and 2003, are presented below:

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A reconciliation of operating income and net income in the consolidated financial statements for the three months ended January 31, 2004 and 2003, is presented below:

     A reconciliation of consolidated assets in the consolidated financial statements as of January 31, 2004 and October 31, 2003, is presented below:

8.

The consolidated financial statements include the accounts of a wholly owned subsidiary of Piedmont Natural Gas Company, Piedmont Energy Partners, Inc. (PEP). PEP is a holding company for certain other wholly owned subsidiaries whose investments in joint venture, energy-related businesses are accounted for under the equity method. These subsidiaries include Piedmont Intrastate Pipeline Company, Piedmont Interstate Pipeline Company, Piedmont Propane Company and Piedmont Energy Company. Our ownership interest in each entity is recorded in “Investments in non-utility activities, at equity” in the consolidated balance sheets. Earnings or losses from equity investments are recorded in “Non-utility activities, at equity” in “Other Income (Expense)” in the consolidated statements of income. On November 6, 2003, Piedmont Greenbrier Pipeline Company, LLC, a wholly owned subsidiary of Piedmont Natural Gas Company, sold its equity interest in the proposed Greenbrier interstate natural gas pipeline to the other member of the venture at its book value of $9.2 million.

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		As of January 31, 2004, the amount of our retained earnings that represented undistributed earnings of 50% or less owned entities accounted for by the equity method was $23.7 million.
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