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 June 30, 1999
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 28053-1398
(Address of principal executive offices) (Zip Code)
(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 July 31, 1999......................................................20,577,967
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 (Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended Twelve Months Ended
June 30 June 30 June 30
------------------ ------------------ -------------------
1999 1998 1999 1998 1999 1998
-------- -------- -------- -------- -------- --------
Operating revenues $ 54,063 $ 54,532 $261,590 $298,520 $293,742 $332,545
Cost of gas 21,823 25,890 118,971 160,669 132,603 176,779
-------- -------- -------- -------- -------- ---------
Gross margin 32,240 28,642 142,619 137,851 161,139 155,766
-------- -------- -------- -------- -------- ---------
Operating expenses and taxes:
Operating and maintenance 16,128 14,500 53,509 45,028 68,398 59,993
Provision for depreciation 5,673 6,265 19,109 18,520 25,638 24,387
General taxes 3,179 3,409 13,322 14,533 15,972 17,043
Income taxes 2,303 345 18,128 18,633 14,622 14,835
-------- -------- -------- -------- -------- --------
27,283 24,519 104,068 96,714 124,630 116,258
-------- -------- -------- -------- -------- --------
Operating income 4,957 4,123 38,551 41,137 36,509 39,508
Other income, net 802 742 2,460 2,643 3,337 3,650
Interest deductions 4,023 4,063 13,485 13,261 18,002 17,870
-------- -------- -------- -------- -------- --------
Net income $ 1,736 $ 802 $ 27,526 $ 30,519 $ 21,844 $ 25,288
======== ======== ======== ======== ======== ========
Average common shares
outstanding 20,578 20,178 20,495 20,051 20,436 19,976
Basic earnings per share $.08 $.04 $1.34 $1.52 $1.07 $1.27
Diluted common shares
outstanding 20,826 20,307 20,697 20,172 20,607 20,089
Diluted earnings per share $.08 $.04 $1.33 $1.51 $1.06 $1.26
Cash dividends declared
per share $.2475 $.24 $.7275 $ .70 $.9675 $ .93
See notes to consolidated financial statements.
2
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
ASSETS
Jun 30 Sep 30 Jun 30
1999 1998 1998
-------- -------- --------
Gas utility plant $767,397 $743,721 $730,182
Less - Accumulated depreciation 237,212 224,204 221,472
-------- -------- --------
530,185 519,517 508,710
-------- -------- --------
Non-utility property, net 562 595 606
-------- -------- --------
Current assets:
Cash and temporary investments 3,481 3,277 3,571
Restricted cash and temporary investments 19,648 10,247 10,109
Receivables, less allowance for
doubtful accounts 27,600 20,836 23,471
Materials and supplies 6,150 6,992 8,721
Stored gas inventory 20,491 24,406 18,773
Deferred gas costs, net 7,129 13,576 6,822
Prepayments and other 2,136 2,260 2,636
-------- -------- --------
86,635 81,594 74,103
-------- -------- --------
Deferred charges and other assets 24,840 17,047 18,217
-------- -------- --------
Total $642,222 $618,753 $601,636
======== ======== ========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common equity -
Common stock, $1 par $ 20,578 $ 20,274 $ 20,189
Capital in excess of par value 138,551 132,787 130,977
Retained earnings 81,720 69,778 80,324
-------- -------- --------
240,849 222,839 231,490
Long-term debt 157,250 171,550 174,050
-------- -------- --------
398,099 394,389 405,540
-------- -------- --------
Current liabilities:
Maturities of long-term debt 6,800 9,300 9,300
Accounts payable 21,005 20,015 21,218
Accrued taxes 13,636 1,180 11,493
Customer prepayments and deposits 5,927 7,021 5,819
Cash dividends and interest 7,320 9,210 7,480
Restricted supplier refunds 19,648 10,247 10,109
Other 6,453 4,184 4,070
-------- -------- --------
80,789 61,157 69,489
Interim bank loans 69,000 70,500 38,000
-------- -------- --------
149,789 131,657 107,489
-------- -------- --------
Deferred credits and other liabilities:
Income taxes, net 69,284 66,527 62,105
Investment tax credits 2,973 3,411 3,324
Accrued pension cost 5,445 7,985 8,991
Deferred revenues 1,387 2,121 2,366
Other 15,245 12,663 11,821
-------- -------- --------
94,334 92,707 88,607
-------- -------- --------
Total $642,222 $618,753 $601,636
======== ======== ========
See notes to consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (Unaudited)
(In thousands)
Twelve Months Ended
June 30
-------------------
1999 1998
------- -------
Balance beginning of period $80,324 $73,900
Add - Net income 21,844 25,288
Deduct - Common stock dividends
and other 20,448 18,864
------- -------
Balance end of period $81,720 $80,324
======= =======
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Nine Months Ended Twelve Months Ended
June 30 June 30
------------------ -------------------
1999 1998 1999 1998
-------- ------- -------- -------
Cash Flows From Operating Activities:
Net income $27,526 $30,519 $21,844 $25,288
Adjustments to reconcile net income
to net cash provided by operating
activities -
Depreciation, depletion and other 21,660 20,836 28,993 27,835
Deferred income taxes, net 2,758 2,667 7,179 3,421
------- ------- ------- -------
51,944 54,022 58,016 56,544
Change in operating assets and liabilities:
Receivables, net (7,535) 2,535 (4,831) 7,751
Inventories 4,757 1,039 853 (4,562)
Accounts payable 990 (6,581) (213) 1,661
Accrued pension cost (2,540) (541) (3,546) (215)
Other 20,699 14,645 7,263 8,795
------- ------- ------- -------
68,315 65,119 57,542 69,974
------- ------- ------- -------
Cash Flows From Investing Activities:
Construction expenditures (31,972) (47,472) (49,828) (67,381)
Non-utility and other (8,752) (3,004) (7,275) 1,743
------- ------- ------- -------
(40,724) (50,476) (57,103) (65,638)
------- ------- ------- -------
Cash Flows From Financing Activities:
Issuance of common stock through
dividend reinvestment, stock purchase
and stock option plans 6,268 8,093 7,971 10,096
Increase (decrease) in interim bank
loans, net (1,500) - 31,000 15,000
Retirement of long-term debt
and common stock (17,465) (7,069) (19,965) (9,569)
Cash dividends (14,690) (13,737) (19,535) (18,257)
------- ------- ------- -------
(27,387) (12,713) (529) (2,730)
------- ------- ------- -------
Net increase (decrease) in cash and
temporary investments 204 1,930 (90) 1,606
Cash and temporary investments
at beginning of period 3,277 1,641 3,571 1,965
------- ------- ------- -------
Cash and temporary investments
at end of period $ 3,481 $ 3,571 $ 3,481 $ 3,571
======= ======= ======= =======
Cash paid during the period for:
Interest (net of amount capitalized) $15,035 $15,135 $17,800 $17,854
Income taxes 3,765 8,812 8,490 10,187
See notes to consolidated financial statements.
4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited consolidated financial statements and notes should
be read in conjunction with the audited consolidated financial statements and
notes included in PSNC's 1998 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. During the quarter ended December 31, 1998, PSNC recorded net restructuring
charges of $4,027,000 in connection with Plan 2001, a three-year operating plan
for translating PSNC's vision, mission, strategies and corporate goals into
specific actions. These charges consisted of severance benefits of approximately
$4,200,000, a one-time payment to 152 employees of approximately $1,100,000 in
connection with an automobile fleet restructuring and a net curtailment loss on
post-retirement benefit obligations of approximately $447,000 offset by pension
gains of approximately $1,720,000. The severance charges are the result of a
plan approved by the Board of Directors to eliminate approximately 200 positions
from PSNC's workforce through the involuntary termination of selected employees
or job classifications. Severance benefit arrangements under the plan were
communicated to employees during the first quarter of fiscal 1999. The net
curtailment loss on post-retirement benefits and the pension gains relate
directly to the severance activity. The combined one-time impact on quarterly
earnings from all of the above items was a decrease of $0.12 per share net of
tax.
3. In June 1997, the Financial Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income."
This statement establishes standards for reporting and display of comprehensive
income and its components. Comprehensive income is the total of net income and
all other non-owner changes in equity. This statement was adopted by PSNC
effective October 1, 1998. For the three months ended June 30, 1999,
comprehensive income does not differ materially from net income.
4. In June 1997, the FASB issued SFAS No. 131, "Disclosure About Segments of an
Enterprise and Related Information." This information introduces a new model for
segment reporting based on the way senior management organizes segments within
the company for operating decisions and assessing performance. This statement
was adopted by PSNC October 1, 1998 and becomes effective for its 1999 annual
financial statements.
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." In June 1999, the FASB issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities--Deferral of the
Effective Date of FASB Statement No. 133" delaying the effectiveness of SFAS No.
133 to fiscal quarters of all fiscal years beginning after June 15, 2000. SFAS
No. 133 establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at fair value. The statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item, in the income statement, and requires that a company must formally
document, designate and assess the effectiveness of transactions that receive
hedge accounting. This statement becomes effective for PSNC on July 1, 2000.
PSNC has not yet quantified the impact of adopting SFAS No. 133 on its financial
statements and has not determined the method of adoption.
6. On February 16, 1999, PSNC and SCANA Corporation (SCANA), a South Carolina
corporation, entered into an Agreement and Plan of Merger (Agreement), which was
amended and restated on May 10, 1999, providing for a strategic business
combination of the two companies. Pursuant to the Agreement, PSNC will be merged
with and into a wholly owned subsidiary of SCANA. Under the terms of the
Agreement, the holders of PSNC's $1.00 par value common stock will receive
consideration valued at $33.00 per share, subject to a collar on the market
price of SCANA common stock around the time of the merger. Each shareholder may
elect to receive 100 percent of the consideration in SCANA common stock, 100
percent in cash, or a combination thereof, subject to the total cash allocated
to PSNC shareholders being no higher than 50 percent of the total consideration
received by PSNC shareholders. PSNC shareholders who elect to receive stock will
receive between 1.02 and 1.45 shares of SCANA common stock depending upon the
average market price of SCANA common stock over a 20 trading-day period
preceding the election deadline date. Accordingly, the value of SCANA common
stock delivered to PSNC shareholders will equal $33.00 if the average market
price of SCANA common stock is between $22.75 and $32.40. If the average market
price of SCANA common stock over such period is more or less than this range,
the value of the SCANA shares delivered to holders of PSNC common stock would be
more than or less than $33.00. SCANA will allocate $700 million in cash for
payment to PSNC and SCANA shareholders under the election process. A maximum of
approximately $350 million, under a right of first refusal, will be allocated to
PSNC's shareholders who elect to receive cash. The transaction will be accounted
for as a purchase.
The Agreement has been approved by the Boards of Directors of PSNC and
SCANA. Consummation of the merger is subject to certain closing conditions,
including the approvals by both companies' common shareholders and the
appropriate governmental and regulatory bodies. The North Carolina Utilities
Commission's hearing on the proposed merger is set for August 31, 1999. In
addition, the merger was conditioned upon the effectiveness of a joint
6
proxy statement/registration statement filed on May 11, 1999 with respect to the
SCANA common stock to be issued pursuant to the merger and to solicit
shareholder votes for approval of the merger. The joint proxy
statement/registration statement became effective May 12, 1999.
In separate meetings held on Thursday, July 1, 1999, shareholders of
PSNC and SCANA Corporation approved a merger transaction under which PSNC will
become a wholly owned subsidiary of SCANA. At PSNC's meeting, 98.3 percent of
the votes cast were in favor of the merger agreement and related transactions.
Operating and maintenance expenses for the nine months ended June 30,
1999 include merger-related charges of $2,194,000, or $0.11 per share. Excluding
these charges and the one-time restructuring charges in Note 2 above, diluted
earnings per share would have been $1.56.
Currently, ten key executives have severance agreements with PSNC.
Under these severance agreements, approximately $4,223,000 in the aggregate may
be payable to them in connection with the merger.
PSNC sponsors a deferred compensation plan for outside directors and a
retirement plan for all directors. Upon a change in control, such as
consummation of the merger with SCANA, approximately $2,746,000 will be payable
in cash to directors pursuant to these plans. Of this amount, approximately
$145,000 will be expensed for the deferred compensation plan, and approximately
$422,000 will be expensed for the retirement plan.
PSNC has a 1992 Nonqualified Stock Option Plan and a 1997 Nonqualified
Stock Option Plan. In accordance with the plans, options are exercisable
beginning two years and expiring five years from the date of the grant. An
exception to the two-year exercise date is allowed upon the retirement,
disability or death of a participant. An exception is also allowed upon a change
in control. Because the approval by PSNC shareholders of the proposed merger
with SCANA constitutes a change in control as defined in the plans,
approximately 707,000 options are currently outstanding and exercisable. The
Agreement states, at the election of the optionee, participants in the plans can
receive cash payments equal to the differential between each option exercise
price and $33.00 per share for each option outstanding at the date of the
transaction. All participants have elected the cash payment option. These
payments of approximately $9,600,000 will be made from the approximately
$350 million allocated by SCANA to PSNC's shareholders, as discussed above.
SCANA is a holding company principally engaged, through subsidiaries,
in electric and natural gas utility operations, telecommunications and other
energy-related businesses. SCANA's subsidiaries serve approximately 517,000
electric customers in South Carolina and more than 500,000 natural gas customers
in South Carolina and Georgia. SCANA also has significant investments in
telecommunications companies that serve more than 350,000 customers throughout
the Southeast.
7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. The following tables summarize the effect on earnings per share of dilutive
securities as required by SFAS No. 128. Shares needed to satisfy exercised stock
options are currently being acquired through open market purchases. Therefore,
the number of outstanding shares is not expected to increase as a result of
exercised stock options.
Three Months Ended Three Months Ended
June 30, 1999 June 30, 1998
------------------------------------------------ -------------------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
Basic EPS
Net income $ 1,736,000 20,578,000 $ .08 $ 802,000 20,178,000 $ .04
Effect of dilutive
securities (Options) 248,000 129,000
----------- ----------
Diluted EPS
Net income $ 1,736,000 20,826,000 $ .08 $ 802,000 20,307,000 $ .04
=========== ==========
Nine Months Ended Nine Months Ended
June 30, 1999 June 30,1998
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
Basic EPS
Net income $27,526,000 20,495,000 $1.34 $30,519,000 20,051,000 $1.52
Effect of dilutive
securities (Options) 202,000 121,000
---------- ----------
Diluted EPS
Net income $27,526,000 20,697,000 $1.33 $30,519,000 20,172,000 $1.51
========== ==========
Twelve Months Ended Twelve Months Ended
June 30, 1999 June 30, 1998
-------------------------------------------------------- ----------------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
Basic EPS
Net income $21,844,000 20,436,000 $1.07 $25,288,000 19,976,000 $1.27
Effect of dilutive
securities (Options) 171,000 113,000
----------- -----------
Diluted EPS
Net income $21,844,000 20,607,000 $1.06 $25,288,000 20,089,000 $1.26
========== ===========
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Changes in Results of Operations
(Amounts in thousands except
degree day and customer data) Three Months Ended June 30
-----------------------------------------
Increase
1999 1998 (Decrease) %
-------- -------- --------- ---
Gross margin $ 32,240 $ 28,642 $ 3,598 13
Less - Franchise taxes 1,719 1,727 (8) -
-------- -------- -------
Net margin $ 30,521 $ 26,915 $ 3,606 13
======== ======== =======
Total volume throughput (DT):
Residential 3,333 3,169 164 5
Commercial/small industrial 2,345 2,198 147 7
Large commercial/industrial 7,859 7,695 164 2
-------- -------- --------
13,537 13,062 475 4
======== ======== ========
System average degree days:
Actual 217 228 (11) (5)
Normal 259 258
Percent warmer than normal 16% 12%
Weather normalization adjustment
income, net of franchise taxes $ 281 $ 285 $ 5
Customers at end of period:
Residential 292,888 276,990 15,898 6
Commercial/small industrial 41,649 40,669 980 2
Large commercial/industrial (1) 2,129 2,433 (304) NMF
-------- -------- --------
336,666 320,092 16,574 5
======== ======== ========
(1) During the three months ended June 30, approximately 300 customers
were reclassified from large commercial/industrial to commercial/small
industrial.
Net margin for the three months ended June 30, 1999 increased $3,606,000
as compared to the same period last year. This increase in net margin is
attributable to the items shown below (in thousands):
Commercial/ Large
Small Commercial/
Residential Industrial Industrial Other Total
----------- ---------- ----------- ----- ------
Price variance * $1,372 $ 965 $ 442 $ - $2,779
Volume variances, net 840 344 23 - 1,207
Other - - - (380) (380)
------ ------ ------- ------ ------
Total $2,212 $1,309 $ 465 $ (380) $3,606
====== ====== ======= ====== ======
*Includes changes in sales mix.
9
The increase in net margin is primarily attributable to the general rate
increase effective November 1, 1998 and to an increase in the number of
customers served.
(Amounts in thousands except
degree day data) Nine Months Ended June 30
------------------------------------------
Increase
1999 1998 (Decrease) %
-------- -------- --------- ---
Gross margin $142,619 $137,851 $ 4,768 3
Less - Franchise taxes 8,398 9,580 (1,182) (12)
-------- -------- ---------
Net margin $134,221 $128,271 $ 5,950 5
======== ======== =========
Total volume throughput (DT):
Residential 18,340 19,717 (1,377) (7)
Commercial/small industrial 10,638 11,297 (659) (6)
Large commercial/industrial 24,977 26,731 (1,754) (7)
-------- -------- ---------
53,955 57,745 (3,790) (7)
======== ======== =========
System average degree days:
Actual 3,021 3,360 (339) (10)
Normal 3,365 3,365
Percent warmer than normal 10% -
Weather normalization adjustment
income, net of franchise taxes $ 7,361 $ 113 $ 7,248
Net margin for the nine months ended June 30, 1999 increased $5,950,000 as
compared to the same period last year. This increase in net margin is
attributable to the items shown below (in thousands):
Commercial/ Large
Small Commercial/
Residential Industrial Industrial Other Total
----------- ---------- ----------- ----- ------
Price variance * $ 4,685 $1,609 $(1,349) $ - $4,945
Volume variances, net 2,191 259 (1,272) - 1,178
Other - - - (173) (173)
------- ------ ------- ----- ------
Total $ 6,876 $1,868 $(2,621) $(173) $5,950
======= ====== ======= ===== ======
* Includes changes in sales mix.
The increase in net margin is due primarily to the general rate increase
effective November 1, 1998 and to an increase in the number of customers served.
Although natural gas deliveries decreased over the same period the prior year,
due to weather that was 10% warmer, the weather normalization adjustment (WNA)
helped offset the impact that the warmer than normal weather had on net margin.
Throughput to non-WNA large commercial and industrial customers decreased 7% as
compared to the same period in
10
fiscal 1998 as a result of the warmer than normal weather for the period and
price competition with alternate fuels.
(Amounts in thousands except
degree day data) Twelve Months Ended June 30
-----------------------------------------
Increase
1999 1998 (Decrease) %
-------- -------- --------- ---
Gross margin $161,139 $155,766 $ 5,373 3
Less - Franchise taxes 9,408 10,644 (1,236) (12)
-------- -------- ---------
Net margin $151,731 $145,122 $ 6,609 5
======== ======== =========
Total volume throughput (DT):
Residential 19,418 20,825 (1,407) (7)
Commercial/small industrial 11,959 12,658 (699) (6)
Large commercial/industrial 32,272 34,114 (1,842) (5)
-------- -------- ---------
63,649 67,597 (3,948) (6)
======== ======== =========
System average degree days:
Actual 3,027 3,382 (355) (10)
Normal 3,382 3,382
Percent warmer than normal 10% -
Weather normalization adjustment
income, net of franchise taxes $ 7,361 $ 113 $ 7,248
Net margin for the twelve months ended June 30, 1999 increased $6,609,000
as compared to the same period last year. This increase in net margin is
attributable to the items shown below (in thousands):
Commercial/ Large
Small Commercial/
Residential Industrial Industrial Other Total
----------- ---------- ---------- ------ -------
Price variance * $ 4,668 $1,601 $ (1,451) $ - $ 4,818
Volume variances, net 2,480 234 (1,252) - 1,462
Other - - - 329 329
------- ------ -------- ------ -------
Total $ 7,148 $1,835 $ (2,703) $ 329 $ 6,609
======= ====== ======== ====== =======
* Includes changes in sales mix.
The increase in net margin is due primarily to the general rate
increase effective November 1, 1998 and to an increase in the number of
customers served. Although natural gas deliveries decreased over the same period
the prior year, due to weather that was 10% warmer, the WNA helped offset the
impact that the warmer than normal weather had on net margin. Throughput to
non-WNA large commercial and industrial customers decreased 5% as compared to
the same period in fiscal 1998 as a result of the warmer than normal weather for
the period and price competition with alternate fuels.
11
MANAGEMENT'S DISCUSSION (Continued)
Operating and maintenance expenses for the three, nine and twelve
months ended June 30, 1999 increased 11%, 19% and 14%, respectively, as compared
to the same periods last year. The increase for the three months ended June 30,
1999 includes an additional $600,000 of costs incurred during the period related
to the proposed business combination with SCANA Corporation discussed further in
Note 6 to the accompanying unaudited consolidated financial statements. Total
merger costs for the nine- and twelve-month periods are $2,194,000. The change
for the nine- and twelve-month periods also includes net restructuring charges
recognized during the first quarter of fiscal 1999 of $4,027,000 in connection
with Plan 2001 discussed further in Note 2. Excluding these acquisition and
restructuring charges, operating and maintenance expenses increased 7%, 5% and
4% for the three-, nine- and twelve-month periods, respectively. Attributing to
the increase for all three periods are the amortization of deferred Year 2000
costs and accrued employee cash compensation awards.
PSNC estimates that implementation of Plan 2001 over the course of
fiscal 1999 should produce approximately $9,800,000 of pre-tax annualized cost
savings and incremental margin. Additionally, PSNC expects Plan 2001 initiatives
during the fiscal 2000-01 period to provide approximately $6,000,000 of pre-tax
annualized cost savings and incremental margin.
Depreciation expense decreased for the three months ended June 30,
1999, while increasing for the nine- and twelve-month periods. The decrease for
the three-month period is due to a revised estimate to current year depreciation
expense in connection with implementation of a new accounting system and a
change to vintage year accounting for certain utility plant accounts.
General taxes decreased for all three periods. This decrease is due to
a change in the method of calculating property tax values and to lower franchise
taxes based on lower operating revenues for the respective periods. Income taxes
increased $1,958,000 for the three months ended June 30, 1999 as compared to the
same period last year. This increase reflects the nondeductibility of merger
costs associated with the proposed business combination with SCANA.
Other income for the three months ended June 30, 1999 increased
$60,000, while decreasing $183,000 and $313,000 for the nine- and twelve-month
periods, respectively, as compared to the same periods for the prior year. The
increase for the three months ended June 30, 1999 is primarily due to earnings
from PSNC's investment in Pine Needle LNG Company, LLC (Pine Needle) which
became operational May 1, 1999. (See Regulatory Matters included herein for
further discussion on Pine Needle.) This increase is offset for the nine- and
twelve-month periods by a decrease in interest income on amounts due from
customers through the operation of the Rider D rate mechanism. This mechanism
allows PSNC to recover all prudently incurred gas costs from customers. It also
allows PSNC to recover margin losses on negotiated sales to large commercial and
industrial customers. Through an increment in its rates, PSNC collected
previously under-
12
collected gas costs and was able to match its benchmark gas cost more closely to
market prices. This resulted in a lower average Rider D receivable balance.
Additionally, contributing to the decrease in both the nine- and twelve-month
periods is a $204,000 pre-tax write-off on PSNC Production Corporation's
investment in American Gas Finance Company, a limited liability company
established by the American Gas Association to provide financing for residential
energy-efficiency improvements.
Interest deductions for the three months ended June 30, 1999 decreased
1% while increasing 2% and 1%, respectively, for the nine and twelve months
ended June 30, 1999 as compared to the same periods last year. The decrease for
the three-month period reflects a decrease in long-term interest expense
resulting from a lower average amount of long-term debt outstanding. The
increase for both the nine- and twelve-month periods reflects an increase in
interest expense on short-term debt resulting from higher average short-term
bank loans outstanding during the period. Also, included in this increase is
$200,000 of debt expense recognized due to the prepayment on February 26, 1999
of the remaining $10,000,000 of 8.65% senior debentures due 2002.
The change in diluted earnings per share for the three-, nine- and
twelve-month periods reflects an increase of 3% in the average number of diluted
common shares outstanding as compared to the same periods last year. These
increases are due to shares issued through PSNC's dividend reinvestment, stock
option, and employee stock purchase plans. In March 1999, PSNC began purchasing
shares on the open market to satisfy the requirements of the dividend
reinvestment and stock option plans. PSNC terminated the employee stock purchase
plan on June 30, 1999.
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 1999
construction budget is approximately $45,000,000, compared to actual
construction expenditures for fiscal 1998 of $65,329,000. This 31% reduction in
budgeted construction expenditures is partially due to the completion of PSNC's
bare main replacement program and management's emphasis on improving the return
made on capital investments. 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 nine and twelve months
ended June 30, 1999 were $31,972,000 and $48,828,000, respectively, as compared
to $47,472,000 and $67,381,000 for the same periods the prior year.
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
13
MANAGEMENT'S DISCUSSION (Continued)
credit with five commercial banks which vary monthly depending upon seasonal
requirements and a five-year revolving line of credit with one bank. For the
twelve-month period beginning April 1, 1999, total committed lines of credit
range from a minimum of $55,000,000 to a winter-period maximum of $75,000,000,
and uncommitted annual lines of credit total $70,000,000. 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 budgeted construction expenditures, stored gas inventories
and other corporate needs.
Restricted cash and temporary investments and restricted supplier
refunds relate to refunds of $19,648,000 received from PSNC's pipeline
transportation providers that have not been deposited into the expansion fund in
the Office of the State Treasurer. This fund was created by an order of the NCUC
to finance the construction of natural gas lines into unserved areas of PSNC's
service territory that otherwise would not be economically feasible to serve.
PSNC's business is seasonal in nature as fluctuations in weather
dictate natural gas storage injections and withdrawals. Injections of natural
gas into storage occur during periods of warm weather (April through October).
Withdrawals from storage occur during periods of cold weather (November through
March). This seasonality is the primary reason for lower volumes of gas in
storage at June 30, 1999 as compared to September 30, 1998. The increase in
stored gas inventory at June 30, 1999 as compared to June 30, 1998 is due to
adding a storage service and acquiring additional storage capacity through two
existing storage services.
The increase in accounts receivable at June 30, 1999 as compared to
September 30, 1998 and June 30, 1998 reflects an increase in sales due to a 5
percent increase in customers and the impact of PSNC's general rate increase
effective November 1, 1998.
As of June 30, 1999, September 30, 1998, and June 30, 1998, net
deferred gas costs include $728,000, $863,000 and $828,000, respectively, of gas
costs related to unbilled volumes. The remaining balance of net deferred gas
costs fluctuates in response to the operation of PSNC's Rider D rate mechanism.
This mechanism 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. It also allows PSNC to recover margin losses on negotiated sales to
large commercial and industrial customers with alternate fuel capability. Net
deferred gas costs for all three periods presented reflect undercollections from
customers. 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. PSNC's strategy is to manage the balance of deferred gas costs
14
to a minimal level. On November 6, 1997, the NCUC issued an order permitting
PSNC, on a two-year trial basis, to establish its commodity cost of gas monthly
for large commercial and industrial customers on the basis of market prices for
natural gas. PSNC will continue to establish a benchmark cost of gas for
residential and small commercial customers pursuant to its existing procedures,
which are based upon market prices projected for the succeeding twelve months.
The increase in deferred charges and other assets as compared to
September 30, 1998 and June 30, 1998 is due to the capital contribution of
$9,095,000 in May 1999 by PSNC's subsidiary, PSNC Blue Ridge Corporation, to
Pine Needle LNG Company, LLC. This contribution is discussed herein more
thoroughly in Regulatory Matters. Partially offsetting this increase is a
decrease in long-term restricted cash. Long-term restricted cash represents a
restricted cash contribution from Sonat Marketing Company L.P. (Sonat
Marketing), a subsidiary of Sonat Inc. PSNC's subsidiary, PSNC Production
Corporation (PSNC Production), and Sonat Marketing created Sonat Public Service
Company L.L.C. (Sonat Public Service) in December 1996. Upon creation of Sonat
Public Service, Sonat Marketing contributed $4,944,000 for its 50% ownership, of
which $4,845,000 was restricted. Restricted cash of equal amounts are being
released annually beginning in December 1998 through December 2001. PSNC
Production received its first payment of $1,211,000 in December 1998, lowering
the balance in long-term restricted cash to $3,634,000 at June 30, 1999. Sonat
Marketing is entitled to a partial refund of its contribution if the economics
of the transaction are adversely modified by any regulatory body over a
five-year period. PSNC has not determined what operating or financial impacts,
if any, the proposed mergers of PSNC and SCANA Corporation or Sonat Inc. and El
Paso Energy Corporation will have on the joint venture.
The decrease in long-term debt at June 30, 1999 is due to the
prepayment in February 1999 of the remaining $10,000,000 of 8.65% senior
debentures due 2002 and to scheduled sinking fund payments.
The change in deferred credits and other liabilities from September 30,
1998 includes a decrease in accrued pension costs of $1,720,000 offset by an
increase of $447,000 in post-retirement benefits, both related to the company's
severance activity. Also impacting the change from June 30, 1998 is the increase
in deferred compensation plan expenses for outside directors.
15
MANAGEMENT'S DISCUSSION (Continued)
Regulatory Matters
On October 30, 1998, the NCUC issued an order in PSNC's general rate
case filed in April 1998. The order, effective November 1, 1998, granted PSNC
additional annual revenue of approximately $12,400,000 and allowed a 9.82%
overall rate of return on PSNC's net utility investment. It also approved the
continuation of the Weather Normalization Adjustment, Rider D mechanism and full
margin transportation rates. The Carolina Utility Customers Association, Inc.
(CUCA), a party to PSNC's general rate case, has formally appealed the general
rate case order. Management cannot predict the outcome of this appeal.
On February 22, 1999, the NCUC approved PSNC's application to use
expansion funds to extend natural gas service into Alexander County, and
authorized disbursements from the fund of approximately $4,301,000. Most of
Alexander County lies within PSNC's certificated service territory and does not
currently have natural gas service. PSNC estimates that the project will be
completed prior to April 2000 at a cost of approximately $6,188,000.
PSNC and a subsidiary of Piedmont Natural Gas Company, Inc. (Piedmont)
formed Cardinal Pipeline Company, LLC (Cardinal) in March 1994, to construct and
operate a 24-inch, 37.5-mile natural gas pipeline. PSNC owns 64.5% of the
pipeline, which extends from Wentworth to near Haw River, North Carolina, where
it interconnects with PSNC and Piedmont. It was placed in service on December
31, 1994, and provides 130 million cubic feet per day (mmcf/day) of additional
firm capacity (70 mmcf/day for PSNC and 60 mmcf/day for Piedmont). In 1995,
PSNC, Piedmont, Transcontinental Gas Pipe Line Corporation (Transco) and North
Carolina Natural Gas Corporation (NCNG) formed Cardinal Extension Company, LLC
(Cardinal Extension) to purchase and extend the Cardinal pipeline. The new
pipeline will extend 67 miles from the existing termination point of Cardinal
Pipeline near Haw River to a point southeast of Raleigh and will provide 140
mmcf/day of additional capacity (100 mmcf/day for PSNC and 40 mmcf/day for
NCNG). The extension is project-financed with an estimated cost of approximately
$75,000,000. Through their respective subsidiaries, PSNC will own approximately
33%, Piedmont will own approximately 17%, Transco will own approximately 45% and
NCNG will own approximately 5% of Cardinal Extension. PSNC, through a
subsidiary, will contribute to Cardinal Extension its net book investment in the
existing pipeline plus additional equity capital of approximately $1,000,000. On
November 6, 1997, the NCUC issued an order approving this project and the merger
of Cardinal and Cardinal Extension, with the resulting entity being named
Cardinal Pipeline Company, LLC. Construction began in November 1998. The
facilities are expected to be in service on or before November 1, 1999.
Pine Needle LNG Company, LLC (Pine Needle) was formed by subsidiaries
of Transco, Piedmont, NCNG, Amerada Hess, and PSNC, and the Municipal Gas
Authority of Georgia. Pine Needle owns and operates a liquefied natural gas
storage facility, built at a cost of approximately $107,000,000. This facility
is located on a site near Transco's pipeline northwest of Greensboro, North
Carolina, and has a storage capacity of four billion cubic feet with
vaporization capability of 400 mmcf/day. The facility became
16
operational on May 1, 1999. PSNC, through its subsidiary, PSNC Blue Ridge
Corporation (Blue Ridge), owns 17% of the facility, and PSNC has contracted to
use 25% of the facility's gas storage capacity and withdrawal capabilities. Blue
Ridge made its required capital contribution of $9,095,000 on May 3, 1999.
On March 24, 1999, PSNC filed an application with the NCUC requesting
authorization to issue and sell up to $150,000,000 of senior unsecured debt
securities. This amount includes $25,000,000 of senior debt previously
authorized by the NCUC that has not been issued and sold. On April 14, 1999, the
NCUC issued an order permitting PSNC to issue and sell senior unsecured debt as
described and requested in its application. PSNC will use these funds primarily
to repay all of its then outstanding short-term bank loans and to finance the
construction of facilities. A registration statement under Form S-3 was filed
with the Securities and Exchange Commission on May 21, 1999 and amended under
Form S-3/A on June 7, 1999.
On November 14, 1996, PSNC filed an application with the NCUC
requesting deferral accounting for the costs of a project to ensure that PSNC's
computer operating systems function properly in the year 2000. On April 29,
1997, the NCUC issued an order authorizing the deferral of each year's costs and
requiring a three-year amortization of these costs beginning in the year
incurred. Approximately $4,200,000 of these costs have been incurred to date.
PSNC began amortizing these costs in September 1997. The NCUC allowed recovery
of a majority of the unamortized Year 2000 costs in the general rate case order
issued on October 30, 1998.
On May 17, 1999, PSNC and SCANA Corporation filed an application with
the NCUC requesting authorization to engage in a business combination
transaction. Public hearings are being held during July and August, and a
hearing before the NCUC will be held on August 31, 1999.
Year 2000 Readiness
The Year 2000 issue exists because many computer systems and
applications, including those with embedded chips in equipment or facilities,
use two digit date fields rather than four digit date fields to designate the
applicable year. As a result, these date-sensitive applications may not
properly recognize the year 2000 or years thereafter, or process data containing
them, potentially causing critical systems including, but not limited to,
business and operational systems to function improperly or not at all.
PSNC began its Year 2000 efforts in 1995 by interviewing vendors and
gaining awareness of this issue. An assessment of PSNC's Year 2000 impact was
performed in 1996, and PSNC began addressing its major business computer
systems. PSNC decided to renovate its customer information system and to replace
its financial and materials management systems. The renovation of PSNC's
customer information system was completed in September 1998. Year 2000 ready
financial and materials management systems were implemented on April 1, 1999.
Upgrades to the Supervisory Control and Data Acquisition (SCADA) system that
monitors the flow of gas through PSNC's distribution system have been completed.
Remaining activities include completion of scheduled desktop hardware and
software upgrades. Additional forward date testing of computer systems will
continue throughout 1999.
17
MANAGEMENT'S DISCUSSION (Continued)
During 1998, PSNC established a centrally managed, company-wide Year
2000 project office. PSNC's Year 2000 project scope was expanded to include:
business continuity planning; embedded systems containing microprocessors, i.e.,
automated meter reading and process control equipment; end-user computing
hardware and software, i.e., personal computers; facility equipment, such as
heating and cooling systems and facsimile devices; and business relationships
with PSNC's customers and key suppliers. The Year 2000 project office reports
daily to the chief information officer. Frequent formal and informal discussions
are held with the chief financial officer as the Year 2000 project executive.
The audit committee of the board of directors is updated quarterly by the chief
financial officer and the internal audit department. The full board is updated
by the audit committee. Senior officers of PSNC are updated monthly on the
project team's status, and they participate in making contingency planning
decisions related to their functional areas.
While PSNC believes that it has minimized the risks of encountering
serious problems associated with the Year 2000 issue, it still faces the risk
that some systems and processes that are not Year 2000 ready either will not be
identified or will not be corrected before 2000. Additionally, PSNC has no
assurance that the Year 2000 issues of other entities will not have a material
impact on PSNC's systems or results of operations.
Year 2000 Costs
The estimated cost of completion, including costs incurred to date, is
$17,500,000. This estimated cost includes external contractors and service
providers, the purchase of computer hardware and software, and dedicated
internal resources. The majority of these costs are currently being recovered in
rates charged to PSNC's customers. A portion of PSNC's costs will not be
incremental costs, but a redeployment of existing resources. PSNC does not track
the cost and time of internal employees who are not fully dedicated to the Year
2000 effort.
Approximately $12,500,000 to replace existing systems is being
capitalized as utility plant. Approximately $11,000,000 of these costs has been
incurred. Approximately $5,000,000 to modify existing computer systems is being
expensed over a three-year period in accordance with the NCUC order discussed
more fully in Regulatory Matters. Approximately $4,200,000 of these costs has
been incurred. These costs are estimates based on PSNC's analysis to date and
are subject to change after the modifications of its systems are completed.
The project completion dates and costs are estimates based on numerous
assumptions. These assumptions include the continued availability of personnel
resources and third-party vendor compliance.
Risk Assessment
At this time, PSNC believes a "worst case scenario" is that its
customers could experience some temporary disruptions in their gas service. The
natural gas that PSNC distributes and sells to its sales customers, and the
natural gas that it transports and
18
delivers to its transportation customers, comes principally from the producing
areas along the Gulf of Mexico (including the states of Alabama, Louisiana,
Mississippi, and Texas, and adjacent offshore areas). Prior to PSNC's receipt of
that gas, it must be extracted and processed to be useable. It is then delivered
to an interstate pipeline company (or companies) for transportation to PSNC or
to storage for PSNC's account; the gas that is stored for PSNC's account must
then be withdrawn and delivered to PSNC by an interstate pipeline, generally in
the winter. A disruption in PSNC's service to its customers could be caused by a
disruption in the extraction or processing of this gas, the transmission and/or
storage of such gas or finally the distribution of such gas by PSNC.
Even if the flow of gas is not disrupted, customers may not be able to
use the available gas if electrical service is disrupted and electronic controls
do not work.
Although PSNC does not believe that these disruptions will occur, it
has no assurance that such disruptions will not occur. PSNC has assessed the
impact of such a scenario and continues to evaluate this scenario. PSNC believes
that its contingency plans will lessen the impact of any disruption.
If such disruption does occur, PSNC does not believe that it will have
a material adverse impact on its financial position, cash flows or results of
operations.
Contingency Plans
Business continuity planning is underway. The initial version of a plan
based on worst case scenarios has been drafted. Testing of the plan will
continue throughout 1999. The plan will address the mitigation of risks
associated with key business processes and those processes critical to the
delivery of gas services. It will include the short-term localized impact of
losing one or more of the following services: electricity, telecommunications,
water/sewer, gas pressure, information technology systems and staffing (order
does not imply priority). PSNC is not implying that disruption will occur, but
that the risk does exist.
The assessment of critical supplier and third-party vendor progress,
although external to PSNC, will continue throughout calendar 1999. PSNC cannot
quantify the impact of any failure by a critical supplier or third-party vendor
at this time. PSNC is presently developing a contingency plan to address the
mitigation of risks and continuance of operations if critical suppliers or
third-party vendors have a failure. PSNC is scheduled to meet with its major
pipeline transporter on August 25 to discuss the transporter's Year 2000 status
and its business continuity plans.
The foregoing information is based on PSNC's current best estimates,
which were derived using numerous assumptions of future events, including the
availability and future costs of certain technological and other resources,
third-party modifications and remediation actions and other factors. Given the
complexity of the issues and possible as yet unidentified risks, actual results
may vary from those anticipated and discussed above. Specific factors that might
cause such differences include, among others, the availability and cost of
trained personnel, the ability to locate and correct all affected computer code,
the timing and success of remedial efforts of third-party suppliers and similar
uncertainties.
19
Each of the components of PSNC's Year 2000 program is progressing, and
the company believes it is taking all reasonable steps necessary to be able to
operate successfully through and beyond the turn of the century.
Year 2000 Communications
PSNC meets quarterly with the other North Carolina gas utilities to
exchange information and discuss the best practices that may be used to address
Year 2000 requirements. Additionally, PSNC frequently participates in industry
and community forums attended by representatives of the electric and
telecommunications industries. Electric and telecommunications service providers
to PSNC will be further evaluated during the business continuity planning
process.
SCANA Corporation reviewed PSNC's Year 2000 program strategy during its
due diligence efforts prior to the execution of the merger agreement referred to
in Note 6 to the accompanying consolidated financial statements. PSNC will
continue to share information with SCANA throughout the due diligence and
integration process.
A customer bill insert and additional customer awareness information is
being distributed beginning in July 1999.
Forward-looking Statements
Statements contained in this document and the notes to the financial
statements which are not historical in nature are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are subject to risks and uncertainties that may cause
future results to differ materially from those set forth in such forward-looking
statements. PSNC undertakes no obligation to update forward-looking statements
to reflect events or circumstances after the date hereof. Such risks and
uncertainties with respect to PSNC include, but are not limited to, its ability
to successfully implement internal performance goals, performance issues with
natural gas suppliers and transporters, the capital-intensive nature of PSNC's
business, regulatory issues (including rate relief to recover increased capital
and operating costs), legislative issues, competition, weather, exposure to
environmental issues and liabilities, variations in natural gas prices,
unanticipated problems related to internal Year 2000 initiatives as well as
potential adverse consequences related to third-party Year 2000 compliance, and
general and specific economic conditions. From time to time, subsequent to the
date of the filing of this document, PSNC may include forward-looking statements
in oral statements or other written documents.
20
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 audited consolidated financial statements in the Annual
Report on Form 10-K for the period ending September 30, 1998, PSNC owns, or has
owned, all or portions of six sites in North Carolina on which manufactured gas
plants were formerly operated and is cooperating with the North Carolina
Department of Environment 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
At a Special Meeting of Shareholders held on July 1, 1999, shareholders
approved the agreement and plan of merger, dated as of February 16, 1999, as
amended and restated as of May 10, 1999, under which PSNC will become a wholly
owned subsidiary of SCANA Corporation.
For - 16,109,536 Against - 172,706 Abstain - 100,428
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Part I Exhibits:
27 - Financial Data Schedule.
Part II Exhibits:
10-A-42 Storage Service Transportation Agreement under Rate
Schedule SST, dated November 7, 1995, between PSNC
and Columbia Gas Transmission Corporation.
10-A-43 Firm Storage Service Agreement under Rate Schedule
FSS, dated November 7, 1995, between PSNC and
Columbia Gas Transmission Corporation.
21
10-A-44 Firm Storage Service Agreement under Rate Schedule
FSS, dated November 7, 1995, between PSNC and
Columbia Gas Transmission Corporation.
10-A-45 Storage Service Transportation Agreement under Rate
Schedule SST, dated November 7, 1995, between PSNC
and Columbia Gas Transmission Corporation.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during three months
ended June 30, 1999.
22
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 08/13/99 /s/ Charles E. Zeigler, Jr.
Charles E. Zeigler, Jr.
Chairman, President and
Chief Executive Officer
Date 08/13/99 /s/ Jack G. Mason
Jack G. Mason
Vice President - Finance
23