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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2005

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 þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). 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.

     
Class   Outstanding at June 3, 2005
Common Stock, no par value   76,706,027
 
 

Page 1 of 32

 

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

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

                 
    April 30,     October 31,  
    2005     2004  
ASSETS
                
 
                
Utility Plant, at original cost
   $ 2,536,195     $ 2,474,796  
Less accumulated depreciation
     653,769       624,973  
 
            
Utility plant, net
     1,882,426       1,849,823  
 
            
Other Physical Property (net of accumulated depreciation of $1,872 in 2005 and $1,782 in 2004)
     776       973  
 
            
Current Assets:
                
Cash and cash equivalents
     19,999       5,676  
Restricted cash
     12,879       12,732  
Marketable securities, at market value
     —       1,857  
Receivables (less allowance for doubtful accounts of $7,083 in 2005 and $1,086 in 2004)
     141,477       70,987  
Unbilled utility revenues
     39,209       25,711  
Gas in storage
     74,612       128,465  
Income taxes receivable
     —       11,533  
Amounts due from customers
     33,371       34,716  
Prepayments
     2,305       38,709  
Other
     4,458       4,823  
 
            
Total current assets
     328,310       335,209  
 
            
 
Investments, Deferred Charges and Other Assets:
                
Equity method investments in non-utility activities
     64,506       65,322  
Goodwill
     48,152       48,151  
Unamortized debt expense
     5,041       5,261  
Other
     28,635       31,138  
 
            
Total investments, deferred charges and other assets
     146,334       149,872  
 
            
 
                
Total
   $ 2,357,846     $ 2,335,877  
 
            
 
                
CAPITALIZATION AND LIABILITIES
                
 
                
Capitalization:
                
Common stock equity:
                
Common stock, no par value, 100,000 shares authorized; outstanding, 76,786 in 2005 and 76,670 in 2004
   $ 565,567     $ 563,667  
Retained earnings
     368,387       291,397  
Accumulated other comprehensive income (loss)
     (2,971 )     (166 )
 
            
Total common stock equity
     930,983       854,898  
Long-term debt
     660,000       660,000  
 
            
Total capitalization
     1,590,983       1,514,898  
 
            
 
                
Current Liabilities:
                
Notes payable
     —       109,500  
Accounts payable
     112,401       99,599  
Deferred income taxes
     32,840       20,687  
Income taxes accrued
     18,231       306  
General taxes accrued
     7,681       17,097  
Amounts due to customers
     16,750       19,081  
Accrued gas cost on unbilled utility revenues
     4,619       2,479  
Other
     40,661       37,418  
 
            
Total current liabilities
     233,183       306,167  
 
            
 
                
Deferred Credits and Other Liabilities:
                
Deferred income taxes
     205,305       202,155  
Unamortized federal investment tax credits
     4,220       4,492  
Asset retirement obligations
     277,659       266,700  
Other
     46,496       41,465  
 
            
Total deferred credits and other liabilities
     533,680       514,812  
 
            
 
                
Total
   $ 2,357,846     $ 2,335,877  
 
            

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     Six Months     Twelve Months  
    Ended     Ended     Ended  
    April 30     April 30     April 30  
    2005     2004             2005     2004             2005             2004          
Operating Revenues
   $ 508,035     $ 482,398             $ 1,188,591     $ 1,101,183             $ 1,617,146             $ 1,420,740          
Cost of Gas
     367,378       336,543               845,314       758,848               1,127,835               967,233          
 
                                                                    
 
                                                                                
Margin
     140,657       145,855               343,277       342,335               489,311               453,507          
 
                                                                    
 
                                                                                
Operating Expenses:
                                                                                
Operations and maintenance
     52,324       50,539               102,577       100,211               202,648               175,942          
Depreciation
     20,989       20,210               41,737       40,663               83,351               73,268          
General taxes
     7,332       7,421               15,773       13,423               29,361               25,085          
Income taxes
     19,098       21,781               63,357       64,785               49,984               53,065          
 
                                                                    
 
                                                                                
Total operating expenses
     99,743       99,951               223,444       219,082               365,344               327,360          
 
                                                                    
 
                                                                                
Operating Income
     40,914       45,904               119,833       123,253               123,967               126,147          
 
                                                                    
 
                                                                                
Other Income (Expense):
                                                                                
Income from equity method investments
     14,647       12,700               20,460       21,380               26,462               25,584          
Gain on sale of equity method investments
     —       (445 )             —       4,683               —               4,683          
Gain on sale of marketable securities
     1,525       —               1,525       —               1,525               —          
Allowance for equity funds used during construction
     359       344               616       648               1,092               1,242          
Non-operating income
     106       921               521       1,091               1,714               2,495          
Charitable contributions
     (184 )     (705 )             (252 )     (872 )             (8,504 )             (1,191 )        
Non-operating expense
     (49 )     (56 )             (85 )     (85 )             (324 )             (214 )        
Income taxes
     (6,387 )     (5,046 )             (8,704 )     (10,637 )             (8,702 )             (13,111 )        
 
                                                                    
 
                                                                                
Total other income (expense), net of tax
     10,017       7,713               14,081       16,208               13,263               19,488          
 
                                                                                
Utility Interest Charges
     11,201       12,324               23,006       23,535               47,012               43,523          
 
                                                                    
 
                                                                                
Income Before Minority Interest in Income of Consolidated Subsidiary
     39,730       41,293               110,908       115,926               90,218               102,112          
Less Minority Interest in Income (Loss) of Consolidated Subsidiary
     98       34               (1 )     45               1               865          
 
                                                                    
 
                                                                                
Net Income
   $ 39,632     $ 41,259             $ 110,909     $ 115,881             $ 90,217             $ 101,247          
 
                                                                    
 
                                                                                
Average Shares of Common Stock:
                                                                                
Basic
     76,703       76,163       *       76,706       72,158       *       76,621       *       69,586       *  
Diluted
     76,915       76,334       *       76,920       72,346       *       76,872       *       69,805       *  
 
                                                                                
Earnings Per Share of Common Stock:
                                                                                
Basic
   $ 0.52     $ 0.54       *     $ 1.45     $ 1.61       *     $ 1.18       *     $ 1.45       *  
Diluted
   $ 0.52     $ 0.54       *     $ 1.44     $ 1.60       *     $ 1.17       *     $ 1.45       *  
 
                                                                                
Cash Dividends Per Share of Common Stock
   $ 0.23     $ 0.215       *     $ 0.445     $ 0.4225       *     $ 0.875       *       0.8375       *  

*   Reflects a two-for-one stock split effective October 11, 2004.

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 Ended     Six Months Ended     Twelve Months Ended  
    April 30     April 30     April 30  
    2005     2004     2005     2004     2005     2004  
Cash Flows from Operating Activities:
                                                
Net income
   $ 39,632     $ 41,259     $ 110,909     $ 115,881     $ 90,217     $ 101,247  
Adjustments to reconcile net income to net cash provided by operating activities:
                                                
Depreciation and amortization
     22,301       21,426       44,365       43,094       88,606       76,877  
Undistributed earnings from equity method investments
     (14,647 )     (12,700 )     (20,460 )     (21,380 )     (26,462 )     (25,584 )
Gain on sale of equity method investments
     —       445       —       (4,683 )     —       (4,683 )
Change in assets and liabilities
     169,796       145,586       57,686       119,191       (52,926 )     55,271  
Other, net
     372       1,056       4,021       5,056       (5,858 )     431  
 
                                    
Net cash provided by operating activities
     217,454       197,072       196,521       257,159       93,577       203,559  
 
                                    
 
                                                
Cash Flows from Investing Activities:
                                                
Utility construction expenditures
     (46,575 )     (32,866 )     (81,745 )     (60,551 )     (162,954 )     (103,995 )
Reimbursements from bond fund
     7,532       10,303       19,283       16,173       44,607       19,935  
Contributions to equity method investments
     (50 )     —       (319 )     —       (433 )     —  
Distributions from equity method investments
     20,536       15,447       21,958       23,484       24,765       26,484  
Proceeds from sale of equity method investments
     —       —       —       36,096       —       36,096  
Proceeds from sale of marketable securities
     2,394       —       2,394       —       2,394       —  
Proceeds from sale of non-utility plant
     120       —       120       —       120       —  
Purchase of NCNG and EasternNC, net of cash received in the twelve months ended April 30, 2004, of $7,185
     —       (271 )     —       (271 )     —       (450,439 )
Other
     13       1,619       (373 )     2,289       (703 )     1,472  
 
                                    
Net cash provided by (used in) investing activities
     (16,030 )     (5,768 )     (38,682 )     17,220       (92,204 )     (470,447 )
 
                                    
 
                                                
Cash Flows from Financing Activities:
                                                
Decrease in notes payable, net
     (189,500 )     (123,000 )     (109,500 )     (109,500 )     —       —  
Repayment of commercial paper
     —       —       —       (445,559 )     —       —  
Proceeds from issuance of long-term debt
     —       —       —       198,334       —       198,334  
Debt offering costs
     —       (241 )     —       (288 )     12       (539 )
Retirement of long-term debt
     —       —       —       —       (2,000 )     (47,000 )
Proceeds from sale of common stock, net of expenses
     —       (266 )     —       173,828       —       173,828  
Issuance of common stock through dividend reinvestment and employee stock plans
     6,686       5,357       13,083       9,369       23,732       17,981  
Repurchases of common stock
     (6,455 )     —       (12,979 )     —       (17,466 )     —  
Dividends paid
     (17,631 )     (16,373 )     (34,120 )     (30,363 )     (67,024 )     (58,179 )
 
                                    
Net cash provided by (used in) financing activities
     (206,900 )     (134,523 )     (143,516 )     (204,179 )     (62,746 )     284,425  
 
                                    
 
                                                
Net Increase (Decrease) in Cash and Cash Equivalents
     (5,476 )     56,781       14,323       70,200       (61,373 )     17,537  
Cash and Cash Equivalents at Beginning of Period
     25,475       24,591       5,676       11,172       81,372       63,835