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 December 31, 1996
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)
NORTH CAROLINA 56-0233140
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 COX ROAD, P.O. BOX 1398
GASTONIA, NORTH CAROLINA
(Address of principal executive offices)
(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, $1 par value, outstanding
at January 31, 1997..................................................19,468,260
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
The condensed financial statements included herein have been prepared
by the registrant without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Although certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, the registrant believes that the
disclosures herein are adequate to make the information presented not
misleading. It is recommended that these condensed financial statements be read
in conjunction with the financial statements and the notes thereto included in
the registrant's latest annual report on Form 10-K.
1
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31 December 31
----------- -----------
1996 1995 1996 1995
---- ---- ---- ----
Operating revenues $ 93,653 $ 74,922 $327,614 $255,980
Cost of gas 52,201 38,406 181,934 121,735
-------- -------- -------- --------
Gross margin 41,452 36,516 145,680 134,245
-------- -------- -------- --------
Operating expenses and taxes:
Operating and maintenance 15,757 13,212 57,748 53,406
Provision for depreciation 5,394 4,797 20,346 18,520
General taxes 4,393 3,704 16,695 14,003
Income taxes 4,870 4,429 14,937 13,721
-------- -------- -------- --------
30,414 26,142 109,726 99,650
-------- -------- -------- --------
Operating income 11,038 10,374 35,954 34,595
Other income, net 992 434 3,909 642
Interest deductions 4,124 3,677 15,190 13,348
-------- -------- -------- --------
Net income $ 7,906 $ 7,131 $ 24,673 $ 21,889
======== ======== ======== ========
Average common shares outstanding 19,296 18,771 19,126 18,629
Earnings per share $.41 $.38 $1.29 $1.18
Cash dividends declared per share $.22 $.2125 $.8725 $.8425
2
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
Dec 31 Sep 30 Dec 31
1996 1996 1995
---- ---- ----
Gas utility plant $641,294 $629,218 $584,495
Less - Accumulated depreciation 189,212 183,529 171,637
-------- -------- --------
452,082 445,689 412,858
-------- -------- --------
Non-utility property, net 678 691 728
-------- -------- --------
Current assets:
Cash and temporary investments 4,481 3,361 3,285
Restricted cash and temporary investments 11,321 6,395 5,101
Receivables, less allowance for
doubtful accounts 54,740 17,899 37,761
Materials and supplies 6,981 6,705 5,975
Stored gas inventory 14,407 15,863 10,357
Deferred gas costs, net 25,910 17,525 14,878
Prepayments and other 1,903 2,275 1,867
-------- -------- --------
119,743 70,023 79,224
-------- -------- --------
Deferred charges and other assets 9,772 8,486 6,680
-------- -------- --------
Total $582,275 $524,889 $499,490
======== ======== ========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common equity -
Common stock, $1 par $ 19,309 $ 19,204 $ 18,793
Capital in excess of par value 115,847 114,008 108,230
Retained earnings 59,051 55,423 51,166
-------- -------- --------
194,207 188,635 178,189
Long-term debt 183,350 140,150 93,900
-------- -------- --------
377,557 328,785 272,089
-------- -------- --------
Current liabilities:
Maturities of long-term debt 9,300 6,800 9,300
Accounts payable 48,191 20,301 35,159
Accrued taxes 6,674 3,075 4,360
Customer prepayments and deposits 6,611 6,014 6,844
Cash dividends and interest 7,191 7,319 5,615
Restricted supplier refunds 6,475 6,395 5,101
Other 4,435 3,960 3,361
-------- -------- --------
88,877 53,864 69,740
Interim bank loans 30,000 59,500 77,000
-------- -------- --------
118,877 113,364 146,740
-------- -------- --------
Deferred credits and other liabilities:
Income taxes, net 57,380 56,233 53,802
Investment tax credits 4,079 4,210 4,509
Accrued pension cost 10,646 12,214 12,817
Deferred revenues 3,834 - -
Other 9,902 10,083 9,533
-------- -------- --------
85,841 82,740 80,661
-------- -------- --------
Total $582,275 $524,889 $499,490
======== ======== ========
3
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(In thousands)
Twelve Months Ended
December 31
-----------
1996 1995
---- ----
Balance beginning of period $51,166 $45,027
Add - Net income 24,673 21,889
Deduct - Common stock dividends
and other 16,788 15,750
------- -------
Balance end of period $59,051 $51,166
======= =======
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended Twelve Months Ended
December 31 December 31
------------------ ---------------
1996 1995 1996 1995
------- ------- ------- -----
Cash Flows From Operating Activities:
Net income $ 7,906 $ 7,131 $24,673 $21,889
Adjustments to reconcile net income
to net cash provided by operating
activities -
Depreciation, depletion and other 6,441 5,779 24,656 22,177
Deferred income taxes, net 1,147 1,196 3,578 4,439
------- ------- ------- -------
15,494 14,106 52,907 48,505
Change in operating assets and liabilities:
Receivables, net (37,361) (24,572) (18,791) (9,192)
Inventories 1,179 1,386 (5,057) 2,198
Accounts payable 27,891 14,748 13,032 8,807
Accrued pension cost (1,568) (114) (2,170) (2,569)
Other (4,835) (8,183) (6,901) (13,768)
------- ------- ------- -------
800 (2,629) 33,020 33,981
------- ------- ------- -------
Cash Flows From Investing Activities:
Construction expenditures (12,288) (10,765) (61,951) (56,562)
Non-utility and other (512) 112 (2,426) (963)
------- ------- ------- -------
(12,800) (10,653) (64,377) (57,525)
------- ------- ------- -------
Cash Flows From Financing Activities:
Sale of senior debentures, net of expenses 49,404 - 98,718 -
Issuance of common stock through
dividend reinvestment, stock purchase
and stock option plans 1,767 1,525 7,917 7,011
Increase (decrease) in interim bank
loans, net (29,500) 26,000 (47,000) 46,000
Retirement of long-term debt
and common stock (4,329) (7,980) (10,637) (15,765)
Cash dividends (4,222) (3,971) (16,445) (15,464)
------- ------- ------- -------
13,120 15,574 32,553 21,782
------- ------- ------- -------
Net increase (decrease) in cash and
temporary investments 1,120 2,292 1,196 (1,762)
Cash and temporary investments
at beginning of period 3,361 993 3,285 5,047
------- ------- ------- -------
Cash and temporary investments
at end of period $ 4,481 $ 3,285 $ 4,481 $ 3,285
======= ======= ======= =======
Cash paid during the period for:
Interest (net of amount capitalized) $ 4,164 $ 4,411 $13,541 $12,829
Income taxes - - 11,480 11,043
4
NOTES TO FINANCIAL STATEMENTS
1. The accompanying unaudited consolidated financial statements and notes should
be read in conjunction with the financial statements and notes included in
PSNC's 1996 Annual Report. 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 previously reported have been
reclassified to conform with the current period's presentation.
PSNC's business is seasonal in nature; therefore, the financial results
for any interim period are not necessarily indicative of those which may be
expected for the annual period.
2. In October 1995, the Financial Accounting Standards Board issued its
Statement of Financial Accounting Standards No. 123, "Accounting for Awards of
Stock-Based Compensation to Employees." This statement defines a fair value
method of accounting for stock options or similar equity instruments and was
adopted by PSNC beginning October 1, 1996.
SFAS No. 123 permits companies to continue to account for stock-based
compensation awards under existing accounting rules, but requires disclosure in
a note to the financial statements of the pro forma net income and earnings per
share as if PSNC had adopted the new method of accounting. Currently PSNC has
two stock- based compensation plans which are described in Note 3 to the
financial statements in PSNC's 1996 Annual Report. PSNC will continue to apply
current accounting rules and adopt only the disclosure requirements for these
plans. As a result, adoption of the new statement will not directly impact
PSNC's financial position or results of operations.
5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Changes in Results of Operations
(Amounts in thousands except
degree day and customer data) Three Months Ended December 31
-----------------------------------------
Increase
1996 1995 (Decrease) %
---- ---- ---------- -
Gross margin $ 41,452 $ 36,516 $ 4,936 14
Less - Franchise taxes 3,022 2,419 603 25
-------- -------- --------
Net margin $ 38,430 $ 34,097 $ 4,333 13
======== ======== ========
Total volume throughput (DT):
Residential 5,876 5,702 174 3
Commercial/small industrial 3,572 3,721 (149) (4)
Large commercial/industrial 8,726 7,795 931 12
-------- -------- ---------
18,174 17,218 956 6
======== ======== =========
System average degree days:
Actual 1,313 1,454 (141) (10)
Normal 1,289 1,289 - -
Percent of normal 102% 113%
Weather normalization adjustment
income (refund), net of
franchise taxes $ (788) $ (2,030) $ 1,242
Customers at end of period: (1)
Residential 266,014 261,706 4,308 2
Commercial/small industrial 39,179 31,471 7,708 24
Large commercial/industrial 2,388 389 1,999 NMF
-------- -------- ---------
307,581 293,566 14,015 5
======== ======== =========
(1) During fiscal 1996 approximately 8,000 customers were reclassified
from residential to commercial/small industrial, and approximately 2,000 from
commercial/small industrial to large commercial/industrial.
Net margin for the three months ended December 31, 1996 increased
$4,333,000 as compared to the same period last year. This increase in net margin
is attributable to the items shown below (in thousands):
6
Commercial/ Large
Small Commercial/
Residential Industrial Industrial Other Total
----------- ---------- ---------- ----- -----
Price variance *
General rate increase
effective 10/96 $2,199 $ 880 $(1,203) $ - $1,876
Volume variances, net 1,580 (1) 1,014 - 2,593
Other - - - (136) (136)
------ ------ ------- ------ ------
Total $3,779 $ 879 $ (189) $ (136) $4,333
====== ====== ======= ====== ======
*Includes changes in sales mix.
This increase in net margin is due primarily to the general rate
increase effective October 1, 1996 and to an increase in the number of customers
served.
(Amounts in thousands except
degree day data) Twelve Months Ended December 31
-----------------------------------
Increase
1996 1995 (Decrease) %
Gross margin $145,680 $134,245 $ 11,435 9
Less - Franchise taxes 10,489 8,202 2,287 28
-------- -------- --------
Net margin $135,191 $126,043 $ 9,148 7
======== ======== ========
Total volume throughput (DT):
Residential 22,573 19,101 3,472 18
Commercial/small industrial 14,157 12,674 1,483 12
Large commercial/industrial 29,872 29,417 455 2
-------- -------- --------
66,602 61,192 5,410 9
======== ======== ========
System average degree days:
Actual 3,715 * 3,458 257 7
Normal 3,402 * 3,384 18 1
Percent of normal 109% 102%
Weather normalization adjustment
income (refund), net of
franchise taxes $ (7,490) $ 248 $ (7,738)
* Reflects an additional day for leap year.
Net margin for the twelve months ended December 31, 1996 increased
$9,148,000 as compared to the same period last year. This increase in net margin
is attributable to the items shown below (in thousands):
7
MANAGEMENT'S DISCUSSION (Continued)
Commercial/ Large
Small Commercial/
Residential Industrial Industrial Other Total
----------- ---------- ---------- ----- -----
Price variance *
General rate increase
effective 10/96 $2,403 $1,231 $ (518) $ - $ 3,116
Volume variances, net 5,135 1,343 1,177 - 7,655
Southern Expansion - - - (734) (734)
Other - - - (889) (889)
------ ------ ------ ------- -------
Total $7,538 $2,574 $ 659 $(1,623) $ 9,148
====== ====== ====== ======= =======
* Includes changes in sales mix.
This increase in net margin is due primarily to an increase in the
number of customers served and the general rate increase effective October 1,
1996. Net margin for twelve months ending December 31, 1996 was partially offset
by a $734,000 charge to cost of gas expense related to the final resolution of
regulatory and related accounting issues associated with Southern Expansion
pipeline costs.
Operating and maintenance expenses for the three and twelve months
ended December 31, 1996 increased 19% and 8%, respectively, as compared to the
same periods last year. Approximately $1,440,000 of the increase resulted from
expenses related to the voluntary early retirement program offered during the
first quarter of fiscal 1997, as discussed in Note 11 to the financial
statements in PSNC's 1996 Annual Report. Net of this one-time charge, operating
and maintenance expenses increased 8% and 5%, respectively. Operating and
maintenance expenses also increased as a result of annual salary increases,
increased power usage at PSNC's liquefied natural gas facility and increased
reserves for uncollectibles, which are based on revenues. These increases were
partially offset by an insurance refund and adjustment related to group life and
health insurance expense which was the result of favorable experience and the
transfer of employees to a less costly health maintenance provider.
As a result of the early retirement program, PSNC anticipates an
ongoing annual savings in salaries of approximately $1,101,000 partially offset
by an increase in annual pension expense of $200,000. Approximately $675,000 of
these net savings will be allocated to operating and maintenance expenses.
Depreciation expense increased for the three and twelve months ended
December 31, 1996 due to utility plant additions. For the three- and
twelve-month period, general taxes increased 19% due primarily to increased
franchise taxes based on operating revenues that increased 25% and 28%,
respectively.
8
Other income for the three and twelve months ended December 31, 1996
increased $558,000 and $3,267,000 due primarily to increased interest income
associated with deferred gas costs. Other income also increased due to increased
gains realized by PSNC's secondary market transactions and increased income
earned from natural gas brokering activities of PSNC's gas marketing subsidiary.
Also contributing to the increase during the twelve-month period was a $265,000
gain from the sale of land during June 1996. For the three- and twelve-month
periods, the increases were partially offset by a one-time expense of $235,000
for the merchandise and jobbing salaries related to the previously- discussed
voluntary early retirement program.
Interest deductions for the three and twelve months ended December 31,
1996 increased 12% and 14% as compared to the same periods last year. These
increases reflect interest expense on the January 1996 issuance of $50,000,000
of 6.99% Senior Debentures due 2026. Offsetting the increase in interest expense
for the three-month period is a decrease in interest expense on short-term debt
resulting from lower average bank loans outstanding and decreased interest rates
during the period.
The change in earnings per share for the three- and twelve-month
periods reflect an increase of 3% in the average number of common shares
outstanding as compared to the same periods last year. These increases are
primarily due to shares issued through PSNC's dividend reinvestment stock
purchase and stock option plans.
Changes in Financial Condition
The 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 fiscal 1997
construction budget is approximately $64,400,000, compared to actual
construction expenditures for fiscal 1996 of $60,428,000. The construction
program is regularly reviewed by management and is dependent upon PSNC's
continuing ability to generate adequate funds internally and to sell new issues
of debt and equity securities on acceptable terms. Construction expenditures
during the three and twelve months ended December 31, 1996 were $12,288,000 and
$61,951,000, respectively, as compared to $10,765,000 and $56,562,000 for the
same periods a year ago.
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 equity or
long-term debt at a later date depending upon prevailing market conditions. PSNC
has committed lines of credit with seven commercial banks which vary monthly
9
MANAGEMENT'S DISCUSSION (Continued)
depending upon seasonal requirements and a five-year revolving line of credit
with one bank. For the twelve-month period beginning April 1, 1996, total lines
of credit with these banks range from a minimum of $24,000,000 to a winter-
period maximum of $79,000,000. PSNC also has uncommitted annual lines of credit
totaling $80,000,000. 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 a portion of
construction expenditures, stored gas inventories and other corporate needs.
On November 5, 1996, the North Carolina Utility Commission (NCUC)
issued an order that authorized the issuance and sale of up to the remaining
$75,000,000 covered by a $125,000,000 shelf registration statement filed with
the Securities and Exchange Commission in December 1995. On December 17, 1996,
PSNC sold $50,000,000 of 7.45% Senior Debentures due 2026 in a public offering
under the registration statement. The net proceeds of $49,404,000 were used to
pay down a significant portion of the then outstanding short-term bank debt.
At December 31, 1996, restricted cash and temporary investments were
$11,321,000, an increase from $6,395,000 at September 30, 1996. This net
increase was due primarily to the restricted cash contribution from Sonat
Marketing Company L.P. As discussed in Note 11 to the financial statements in
PSNC's 1996 Annual Report, PSNC Production Corporation and Sonat Marketing
Company L.P., a subsidiary of Sonat Inc., created Sonat Public Service Company
L.L.C. Sonat Marketing contributed $4,944,000 for its 50% ownership of which
approximately $4,845,000 is currently restricted. Sonat Marketing is entitled to
a partial refund of its contribution not yet earned if the economics of the
transaction are adversely modified by any regulatory body over a five-year
period. Restrictions on the cash investment will be released annually in equal
amounts over a four-year period.
The increase in receivables at December 31, 1996 as compared to
December 31, 1995, reflects higher customer billings due to increased tariff
rates for residential and small general service customers.
Stored gas inventories increased $4,050,000 as compared to December
1995. This increase was due to an increase in the average cost of natural gas
and the addition of a storage service during fiscal 1996.
Net deferred gas costs fluctuate in response to the operation of PSNC's
Rider D rate mechanism. This mechanism allows PSNC to recover margin losses on
negotiated sales to large commercial and industrial customers with alternate
10
fuel capability. It also 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. Deferred gas costs at December 31, 1996, September 30,
1996, and December 31, 1995 primarily represent undercollections from customers
of $25,910,000, $17,525,000 and $14,878,000, respectively. These
undercollections at December and September 1996 primarily reflect the
unanticipated surge in the price of natural gas. PSNC's deferred gas costs
balances are approved by the NCUC in annual gas cost prudence reviews and are
collected from or refunded to customers over a subsequent twelve-month period.
Amounts that have not been collected from or refunded to customers bear interest
at an annual rate of 10% as required by the NCUC.
The increase in deferred charges and other assets as compared to
September 30, 1996 was primarily the result of the deferred debt expense
associated with the December 12, 1996 sale of 7.45% Senior Debentures previously
discussed and investments in Pine Needle LNG Company, LLC (Pine Needle) and
Cardinal Extension Company, LLC (Cardinal Extension). The increase as compared
to December 31, 1995 is also due to investments in Pine Needle and Cardinal
Extension and increased deferred debt expense for both the January and December
1996 sale of senior debentures.
The increase in accounts payable at December 31, 1996 of $13,032,000 as
compared to December 31, 1995 is primarily due to natural gas purchased at
higher costs.
The increase in accrued taxes at December 31, 1996 as compared to the
prior year is primarily due to an increase in accrued income and franchise
taxes.
The decrease in accrued pension cost at December 31, 1996 is due to the
recognition of $1,475,000 of the unrecognized net gains and assets in the
pension plan during December 1996, related to the voluntary early retirement
program.
Regulatory Matters
PSNC began providing natural gas service in McDowell County during
December 1996. This was the first project undertaken by PSNC using monies from
its NCUC-approved expansion fund. The original estimate to complete this project
was approximately $14,500,000, of which $8,193,500 will be financed by PSNC's
expansion fund. Through December 31, 1996, $12,603,000 was spent with additional
estimated charges of $1,000,000 pending. A total of $7,781,000 has been received
from the expansion fund.
11
PSNC currently provides natural gas service to the eastern portion of
Haywood County, and plans to extend service to western Haywood County, including
the towns of Waynesville, Clyde and Lake Junaluska by late 1997 or early 1998.
The current estimated cost to serve this area is $7,182,000. On December 30,
1996, PSNC filed an application with the NCUC requesting expansion funds for
this project in the amount of $5,006,000. A hearing on this application has been
set for March 26, 1997.
The Cardinal Pipeline was placed into service in December 1994 and
provides additional daily capacity to PSNC's eastern service territory in and
around the Durham and Raleigh areas. In September 1995, PSNC, Piedmont Natural
Gas Company, Inc. (Piedmont), Transcontinental Gas Pipe Line Corporation
(Transco), and North Carolina Natural Gas Corporation (NCNG) signed a letter of
intent to form a limited liability company (LLC) to purchase and extend the
Cardinal Pipeline. As proposed, the pipeline will be extended 67 miles from
Burlington to a point southeast of Raleigh, will add 140 million cubic feet per
day of additional firm capacity (100 million for PSNC and 40 million for NCNG),
and will cost an estimated $75 million. On December 23, 1996, the LLC filed an
application with the NCUC for approval of this project. A public hearing is
scheduled for May 20, 1997.
Pine Needle was formed by subsidiaries of Transco, Piedmont, NCNG,
Amerada Hess and PSNC, and by the Municipal Gas Authority of Georgia. This
liquefied natural gas storage facility, estimated to cost $107 million, will be
located near Transco's pipeline northwest of Greensboro and will have a storage
capacity of four billion cubic feet with vaporization capability of 400 million
cubic feet per day. On April 30, 1996, the Federal Energy Regulatory Commission
(FERC) made a preliminary determination to grant a certificate authorizing the
construction and operation of Pine Needle. It approved a 12.75% return on equity
for the project, and stated that the debt component of the rate structure will
be determined after permanent financing is obtained. The NCUC filed an
application for rehearing of this order, which FERC denied on November 27, 1996.
The NCUC filed a petition for review of FERC's order on January 24, 1997 with
the United States Court of Appeals for the District of Columbia Circuit.
On November 14, 1996, PSNC filed an application with the NCUC
requesting deferred accounting for the costs of a project to ensure that PSNC's
computer operating systems function properly in the year 2000. Similar costs
will be incurred by businesses worldwide and the Emerging Issues Task Force of
the Financial Accounting Standards Board has determined that these costs should
be expensed as incurred. PSNC requested that approximately $3,000,000 of
estimated contractor labor be deferred for subsequent recovery in a future rate
case. On January 30, 1997, the Public Staff of the NCUC responded to the
application by stating that such costs are neither extraordinary
12
nor material, and should be expensed as incurred. PSNC has requested the NCUC to
permit PSNC to file a reply on or before March 4, 1997.
13
EXHIBIT 11
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31 December 31
----------- -----------
1996 1995 1996 1995
---- ---- ---- ----
Net income $ 7,906 $ 7,131 $ 24,673 $ 21,889
-------- -------- -------- --------
Average common shares outstanding 19,296 18,771 19,126 18,629
Additional dilutive effect of
outstanding options (as determined
by the application of the treasury
stock method) 106 93 76 70
-------- -------- -------- --------
Average common shares outstanding
as adjusted 19,402 18,864 19,202 18,699
-------- -------- -------- --------
Earnings per share, as adjusted $ .41 $ .38 $1.28 $1.17
===== ===== ===== =====
This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although not required by footnote 2 to paragraph 14 of APB Opinion
No.
15 because it results in dilution of less than 3%.
14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As more fully disclosed in Part I 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, 1996, PSNC owns or has owned portions of
sites at which manufactured gas plants were formerly operated and is cooperating
with the North Carolina Department of Environment, Health and Natural Resources
to investigate these sites.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Part I Exhibits:
11 - Statement re: computation of per share earnings.
27 - Financial Data Schedule.
Part II Exhibits:
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.
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.
15
10-A-32 Firm Transportation Agreement dated November 1,
1995, between PSNC and Transcontinental Gas
Pipe Line Corporation.
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.
10-B-8 General Storage Service Agreement under Rate
Schedule GSS, dated July 1, 1996, between PSNC
and Transcontinental Gas Pipe Line Corporation.
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.
10-D-5 Operating Agreement of Pine Needle LNG Company,
LLC dated August 8, 1995.
10-D-5.1 Amendment to Operating Agreement of Pine Needle
LNG Company, LLC dated October 1, 1995.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the three months
ended December 31, 1996.
16
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)
Date 2-14-97 /s/Charles E. Zeigler, Jr.
Charles E. Zeigler, Jr.
Chairman, President and
Chief Executive Officer
Date 2-14-97 /s/Jack G. Mason
Jack G. Mason
Vice President - Treasurer
and Chief Financial Officer
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