Exhibit 99.1
SCANA Corporation
South Carolina Electric & Gas Company
Public Service Company of North Carolina, Incorporated
1426 Main Street
Columbia, South Carolina 29201
Media Contact: Investor Contact:
Cathy Love John Winn
(803) 217-7777 (803)217-9240 clove@scana.com
jwinn@scana.com
SCANA Reports Third Quarter 2003 Financial Results,
Updates Earnings Guidance
Columbia, SC, October 24, 2003...SCANA Corporation (NYSE: SCG) today announced
financial results for the three months and nine months ended September 30, 2003,
revised the company's 2003 earnings guidance and provided initial guidance for
2004 earnings.
For the three months ended September 30, 2003, SCANA's reported earnings were
$84 million, or 76 cents per share, compared to $78 million, or 74 cents per
share, in the same period in 2002. Results for the third quarter of 2003 include
an after-tax gain of $2 million, or 2 cents per share, related to the previously
announced sale of a portion of the Company's investment in ITC Holding Company.
Excluding this gain from reported earnings, GAAP-adjusted net earnings from
operations for the third quarter of 2003 were $82 million, or 74 cents per
share.
SCANA's reported earnings (loss) are prepared in accordance with Generally
Accepted Accounting Principles (GAAP). SCANA's management believes that, in
addition to reported earnings (loss) under GAAP, the GAAP-adjusted net earnings
from operations provides a meaningful representation of the Company's
fundamental earnings power and improves comparability of period-over-period
financial performance. A reconciliation of reported (GAAP) earnings (loss) per
share to GAAP-adjusted net earnings from operations per share for the three
months and nine months ended September 30, 2003 and 2002 is provided in the
following table:
3 Months Ended 9 Months Ended
September 30, September 30,
2003 2002 2003 2002
---- ---- ---- ----
Reported (GAAP) Earnings (Loss) per Share $.76 $.74 $2.18 $(1.76)
Add:
Impairment Charge on Knology Investment - - .04 -
Impairment Charge on ITC^DeltaCom Investment - - - .07
Impairment Charge on Deutsche Telekom Investment - - - 1.52
Cumulative Effect of Accounting Change re: Goodwill - - - 2.20
Deduct:
Gain on Sale of ITC Holding Company Investment .02 - .35 -
Gain on Sale of Radio Network - - - .09
Gain on Sale of Deutsche Telekom Stock - - - .10
GAAP-Adjusted Net Earnings From Operations per Share $.74 $.74 $1.87 $1.84
"Our third quarter per share results were adversely affected by abnormally cool
summer weather, higher operating expenses, continued volatility in wholesale
natural gas markets and dilution associated with the public offering of 6
million shares of common stock last October, " said Kevin Marsh, senior vice
president and chief financial officer. "These negative factors offset the
favorable impact of the 5.8 percent retail electric rate increase that was
effective in February 2003, improved results in our natural gas marketing
business in Georgia and lower interest expense."
The impact of the cooler summer weather reduced third quarter after-tax electric
sales margins by 10 cents per share compared to the same quarter last year. On a
weather-normalized basis, third quarter 2003 after-tax electric sales margins
would have been 8 cents per share higher.
Marsh noted that SCANA's businesses did not sustain any damage from Hurricane
Isabel, which hit North Carolina's Outer Banks in mid-September and moved up the
Eastern Seaboard, resulting in a number of fatalities and injuries, causing
extensive property damage and knocking out power to millions of people.
Reported earnings for the nine months through September 30, 2003 were $242
million, or $2.18 per share. Those results included a net after-tax gain of $34
million, or 31 cents per share, related to the continued monetization and
valuation of the Company's telecommunications assets. For the nine months ended
September 30, 2002, the Company had a reported loss of $184 million, or $1.76
per share. Those prior period results included impairment charges relating to
the Company's telecommunications investments totaling $166 million, or $1.59 per
share, a non-cash, after-tax impairment charge of $230 million, or $2.20 per
share, related to a mandated change in the method of accounting for goodwill
associated with the Company's acquisition of PSNC Energy in 2000, and a net
after-tax gain of $19 million, or 19 cents per share, from the sale of
telecommunications assets. Excluding from reported earnings in both periods the
effects of the monetization and valuation of telecommunications assets and the
mandated accounting change, GAAP-adjusted net earnings from operations for the
nine months ended September 30, 2003 were $208 million, or $1.87 per share,
compared to $193 million, or $1.84 per share, for the same period in 2002.
"On a year-to-date basis through September, milder than normal weather reduced
after-tax electric sales margins by 11 cents per share," said Marsh. "Since our
original earnings guidance for 2003 assumed normal weather, we are revising our
2003 guidance for GAAP-adjusted net earnings from operations from a range of
$2.50 - $2.60 per share to a range of $2.45 - $2.55 per share to reflect the
impact of the milder than normal weather through September."
For 2004, the Company announced initial earnings guidance in the range of $2.55
- - $2.75 per share. "As a result of the uncertain economic outlook and the
prospect of continued high prices of natural gas relative to alternative fuels
in industrial interruptible markets, we are reducing our goal for average annual
earnings growth from a range of 6 - 8 percent to a range of 4 - 6 percent," said
Marsh. "We believe this slightly lower growth target is more realistic in light
of today's challenging business environment."
"Notwithstanding the impact of milder weather on electric sales margins, we are
pleased with the results we have achieved through the first nine months of the
year," said Marsh. "As we look ahead to the remainder of this year and to 2004,
we will continue to execute our strategic plan, which is focused on providing
high quality services to our customers and increasing value for our shareholders
over the long term."
REGULATED OPERATIONS
South Carolina Electric & Gas Company
Reported earnings in the third quarter of 2003 at South Carolina Electric & Gas
Company (SCE&G), SCANA's principal subsidiary, were $88 million, or 80 cents per
share, compared to $86 million, or 82 cents per share, in the same quarter last
year. Milder weather, higher operating expenses and share dilution offset the
favorable impact of customer growth and the retail electric rate increase that
was effective in February 2003.
The weather in SCE&G's electric service area this past summer, as measured by
cooling degree days, was 13 percent milder compared to the warmer-than-normal
summer in 2002. The milder weather was the primary factor contributing to a 5.4
percent decline in total kilowatt-hour sales of electricity in the third quarter
of 2003 compared to the same period last year. Residential sales were down 8.7
percent and commercial sales were down 5.4 percent. Industrial sales were up 1.9
percent. At September 30, 2003, SCE&G was serving approximately 567,000 electric
customers, an increase of about 2.0 percent over the past year.
PSNC Energy
PSNC Energy, the Company's North Carolina-based retail natural gas distribution
subsidiary, reported a seasonal loss of $7 million, or 6 cents per share, in the
third quarter of 2003, relatively unchanged compared to a loss of $6 million, or
6 cents per share, in the same quarter in 2002. Higher sales margins, driven
primarily by customer growth, were offset by higher operating expenses. PSNC
Energy's customer base, which totaled approximately 378,000 at September 30,
2003, is growing at an annual rate of about 4 percent.
South Carolina Pipeline Corporation
South Carolina Pipeline, SCANA's intrastate gas transmission subsidiary,
reported breakeven results in the third quarter of 2003 compared to earnings of
$4 million, or 3 cents per share in the same quarter last year. That decline
reflects lower margins resulting from intense competition with alternative fuels
in industrial interruptible markets. Pipeline's earnings were also negatively
affected by reduced demand for natural gas as a fuel for electric generation as
a result of the milder weather.
NON-REGULATED OPERATIONS
SCANA Energy - Georgia
SCANA Energy, the Company's retail natural gas marketing business in Georgia,
reported breakeven results in the third quarter of 2003 compared to a loss of $4
million, or 3 cents per share, in the third quarter of 2002. That improvement
was due primarily to improved sales margins resulting from customer growth and
more favorable market conditions, which more than offset the negative impact of
higher operating and customer service expenses.
At September 30, 2003, SCANA Energy was serving more than 350,000 non-regulated
customers, maintaining its position as the second largest natural gas marketer
in Georgia with about a 25 percent market share. The Company also serves about
31,000 low income and credit challenged customers through its Regulated
Division.
Corporate and Other Non-Regulated
SCANA's other non-regulated businesses had combined reported earnings of $2
million, or 2 cents per share, in the third quarter of 2003. Those results
include an additional after-tax gain of $2 million, or 2 cents per share,
related to the sale of a portion of the Company's investment in ITC Holding
Company, which was completed in the second quarter of 2003. Excluding this gain,
2003 GAAP-adjusted net earnings from operations for these businesses were
breakeven in the third quarter of 2003. By comparison, these non-regulated
businesses had a combined reported loss of $2 million, or 2 cents per share, in
the third quarter of 2002. Lower interest expense contributed to that
improvement.
2003 - 2004 EARNINGS OUTLOOK
As a result of the negative impact of milder than normal weather on after-tax
electric sales margins through the first nine months of 2003, the Company is
lowering its guidance for 2003 GAAP-adjusted net earnings from operations from a
range of $2.50 - $2.60 per share to a range of $2.45 - $2.55 per share. The
revised 2003 guidance assumes normal weather in the Company's electric and
natural gas service areas during the fourth quarter of 2003 and excludes any
potential gains or losses from investing activities or sales of certain assets.
Taking into consideration the net effects of the monetization and valuation of
telecommunications investments recorded during the first nine months of 2003,
the Company anticipates that reported earnings in 2003 will be 31 cents per
share higher than the GAAP-adjusted net earnings from operations.
For 2004, the Company estimates that earnings will be in the range of $2.55 -
$2.75 per share. The 2004 guidance assumes normal weather in the Company's
electric and natural gas service areas and excludes any potential gains or
losses from investing activities or sales of certain assets. Other factors that
may impact future earnings include changes in interest rates, the performance of
the Company's pension plan assets, wholesale natural gas prices and other
factors discussed in the Company's Securities and Exchange Commission filings.
Due to the uncertainty of these factors and the slower than expected improvement
in the national and regional economy, the Company is revising its goal for
average annual earnings growth from a range of 6-8 percent to a range of 4-6
percent.
PROFILE
SCANA Corporation, a Fortune 500 company headquartered in Columbia, SC, is an
energy-based holding company principally engaged, through subsidiaries, in
electric and natural gas utility operations, telecommunications and other
energy-related businesses. Information about SCANA and its businesses is
available on the Company's website at www.scana.com.
CONFERENCE CALL NOTICE
SCANA will host its quarterly conference call for financial analysts at 10:00
a.m. Eastern Time today. The call-in numbers for the conference call are
1-800-374-2396 (Domestic) and 1-706-679-5430 (International). Participants
should call in 5 to 10 minutes prior to the scheduled start time. There is no
password or I.D. number required. A tape recording of the conference call will
be available approximately 2 hours after conclusion of the call through November
7, 2003. The telephone replay numbers are 1-800-642-1687 (Domestic) and
1-706-645-9291 (International). The conference I.D. number for the telephone
replay is 3061729.
All interested persons, including investors, media and the general public, may
listen to a live web cast of the conference call at either of the following
internet web sites: www.scana.com or www.videonewswire.com/SCG/102403.
Participants should go to either of these web sites at least 10 minutes prior to
the call start time and follow the instructions. A replay of the conference call
will be available approximately 2 hours after conclusion of the call through
November 7, 2003 on either of these web sites.
SAFE HARBOR STATEMENT
This press release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Those statements include statements
regarding the intent, belief or current expectations of the Company and its
management. Although SCANA Corporation believes that its expectations are based
on reasonable assumptions, it can give no assurance that its goals will be
achieved. Readers are cautioned that any such forward-looking statements are not
guarantees of future performance and involve a number of risks and
uncertainties, and that actual results could differ materially from those
indicated by such forward-looking statements. Important factors that could cause
actual results to differ materially from those indicated by such forward-looking
statements include, but are not limited to, the following: (1) that the
information is of a preliminary nature and may be subject to further and/or
continuing review and adjustment, (2) changes in the utility and non-utility
regulatory environment, (3) changes in the economy, especially in areas served
by the Company's subsidiaries, (4) the impact of competition from other energy
suppliers, including competition from alternative fuels in industrial
interruptible markets, (5) growth opportunities for the Company's regulated and
diversified subsidiaries, (6) the results of financing efforts, (7) changes in
the Company's accounting policies, (8) weather conditions, especially in areas
served by the Company's subsidiaries, (9) performance of and marketability of
the Company's investments in telecommunications companies, (10) performance of
the Company's pension plan assets, (11) inflation, (12) changes in environmental
regulations, (13) volatility in commodity natural gas markets and (14) the other
risks and uncertainties described from time to time in the Company's periodic
reports filed with the Securities and Exchange Commission. The Company disclaims
any obligation to update any forward-looking statements.
# # #
FINANCIAL AND OPERATING INFORMATION
Consolidated Statements of Operations
(Millions, except per share amounts) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Operating Revenues:
Electric $429 $424 $1,121 $1,075
Gas-Regulated 155 136 775 587
Gas-Non-regulated 167 134 650 503
--- --- --- ---
Total Operating Revenues 751 694 2,546 2,165
--- --- ----- -----
Operating Expenses:
Fuel and purchased power 110 112 297 300
Gas purchased for resale 262 215 1,127 828
Other operation and maintenance 135 126 420 383
Depreciation and amortization 60 55 180 163
Other taxes 34 32 104 95
-- --- --- --
Total Operating Expenses 601 540 2,128 1,769
--- --- ----- -----
Operating Income 150 154 418 396
--- --- --- ---
Other Income (Expense), Net 19 17 101 (170)
Interest Charges, Net 48 49 149 151
Income Tax Expense 35 41 120 20
Preferred Dividend Requirement
of SCE&G - Mandatorily Redeemable
Preferred Securities - (1) (2) (3)
Preferred Stock Cash Dividends
of SCE&G (2) (2) (6) (6)
--- ----- --- ---
Income Before Cumulative
Effect of Accounting Change 84 78 242 46
Cumulative Effect of Accounting Change,
Net of Taxes __- __- ___- (230)
- - - -----
Net Income (Loss) $ 84 $ 78 $ 242 $ (184)
----- -- ---- ----
Common Stock Data:
Earnings Per Share Before
Cumulative Effect of Accounting Change $.76 $ .74 $ 2.18 $ .44
Cumulative Effect of Accounting Change - - __ - (2.20)
----- ---- ---- --------
Reported Earnings (Loss) Per Share $.76 $ .74 $ 2.18 $(1.76)
---- --- ---- -------
Wtg. Avg. Common Shares Outstanding 110.9 104.7 110.9 104.7
Consolidated Condensed Balance Sheets
(Millions) (Unaudited)
September 30, December 31,
2003 2002
ASSETS
Utility Plant, Net $5,906 $5,474
Other Property and Investments 315 326
Current Assets 729 1,137
Deferred Debits 838 809
--- ---
Total Assets $7,788 $7,746
----- -----
CAPITALIZATION AND LIABILITIES
Capitalization:
Common Equity $2,306 $2,177
Preferred Stock 115 115
SCE&G Obligated Mandatorily Redeemable Preferred Stock - 50
Long-term Debt, Net 2,852 2,834
----- -----
Total Capitalization 5,273 5,176
------ -----
Current Liabilities:
Short-Term Borrowings 242 209
Current Portion of Long-Term Debt 402 413
Other Current Liabilities 474 651
--- ---
Total Current Liabilities 1,118 1,273
----- -----
Deferred Credits 1,397 1,297
----- -----
Total Capitalization and Liabilities $7,788 $7,746
----- -----
Reported (GAAP) Earnings (Loss) per Share by Company:
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
SC Electric & Gas $.80 $.82 $1.57 $1.68
PSNC Energy (.06) (.06) .15 (2.07)
SC Pipeline .00 .03 .04 .01
SCANA Energy-Georgia (1) .00 (.03) .15 .09
Corporate and Other Non-regulated, Net (1) .02 (.02) .27 (1.47)
--- ----- ------- ------
Reported (GAAP) Earnings (Loss) per Share $.76 $.74 $2.18 $(1.76)
---- ---- ---- -------
GAAP-Adjusted Net Earnings (Loss) From Operations per Share by Company:
(Unaudited)
2002 2003 2002 2003
SC Electric & Gas $.80 $.82 $1.57 $1.68
PSNC Energy (.06) (.06) .15 .13
SC Pipeline .00 .03 .04 .01
SCANA Energy-Georgia (1) .00 (.03) .15 .09
Corporate and Other Non-regulated, Net (1) .00 (.02) (.04) (.07)
--- ----- ----- -----
GAAP-Adjusted Net Earnings from Operations per Share $.74 $.74 $1.87 $1.84
---- ---- ---- ----
(1) Current and prior period results reflect a reclassification of certain
interruptible operations from SCANA Energy-Georgia to SCANA Energy Marketing
Variances in Reported (GAAP) Earnings (Loss) per Share:
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
2002 Reported (GAAP) Earnings (Loss) Per Share $.74 $(1.76)
Variances:
Electric Margin:
Change in Rates .14 .32
Customer Growth .01 .08
Weather (.10) (.11)
Total Electric Margin .05 .29
Gas Margin .03 .21
O&M Expense (.06) (.22)
Depreciation Expense (.03) (.10)
Property Taxes (.02) (.06)
Interest Expense (net of AFC) .01 .01
Additional Shares Outstanding (Dilution) (.03) (.13)
Other, Net .05 .03
--- ---
Variance in GAAP-Adjusted Net Earnings From Operations per Share .00 .03
--- ---
Gain on Sale of ITC Holding Company Investment .02 .35
Impairment Charge on Knology Investment - (.04)
Gain on Sale of Radio Network - (.09)
Impairment Charge on ITC^DeltaCom Investment - .07
Cumulative Effect of Accounting Change re: Goodwill - 2.20
Impairment Charge on Deutsche Telekom Investment - 1.52
Gain on Sale of Deutsche Telekom Stock - (.10)
-------- -----
Variance in Reported (GAAP) Earnings per Share .02 3.94
------- ----
2003 Reported (GAAP) Earnings Per Share $.76 $2.18
---- ----
Consolidated Operating Statistics
Three Months Ended September 30, Nine Months Ended September 30,
2003 2002 % Change 2003 2002 % Change
Electric Operations:
Sales (Million KWH):
Residential 2,071 2,269 (8.7) 5,383 5,498 (2.1)
Commercial 1,907 2,016 (5.4) 5,034 5,082 (0.9)
Industrial 1,702 1,671 1.9 4,938 4,909 0.6
Other 139 156 (10.9) 392 413 (5.1)
--- --- --- ---
Total Retail 5,819 6,112 (4.8) 15,747 15,902 (1.0)
Wholesale 516 588 (12.2) 1,464 1,699 (13.8)
--- --- ----- -----
Total Sales 6,335 6,700 (5.4) 17,211 17,601 (2.2)
----- ----- ------ ------
Customers (Period-End) 566,996 556,697 1.9
Natural Gas Operations:
Sales (MillionTherms):
Residential 42 36 16.7 440 379 16.1
Commercial 57 46 23.9 278 234 18.8
Industrial 289 362 (20.2) 841 995 (15.5)
--- --- --- ---
Total Retail 388 444 (12.6) 1,559 1,608 (3.0)
Sales for Resale 21 57 (63.2) 115 216 (46.8)
Transportation Volumes 84 78 7.7 254 236 7.6
----- -- --- ---
Total Sales 493 579 (14.9) 1,928 2,060 (6.4)
--- --- ----- -----
Customers (Period-End) (2) 1,039,256 990,717 4.9
(2) Current and prior period-end natural gas customers reflects a
reclassification of customers at PSNC Energy implemented during 2002.
Weather Data - Electric Service Territory:
Three Months Ended September 30, Nine Months Ended September 30,
Actual Percent Change Actual Percent Change
2003 vs 2002 vs Normal 2003 vs 2002 vs Normal
Heating Degree Days 8 NM NM 1,390 14.4 4.4
Cooling Degree Days 1,273 (12.7) (7.9) 1,986 (15.0) (9.0)
[NM = Not Meaningful]
Security Credit Ratings (as of 10/24/03):
Standard & Poor's Moody's
Rating Outlook Rating Outlook
SCANA Corporation:
Corporate/Issuer Rating A- Stable A3 Stable
Senior Unsecured BBB+ Stable A3 Stable
South Carolina
Electric & Gas Company:
Corporate/Issuer Rating A- Stable A2 Stable
Senior Secured A- Stable A1 Stable
Commercial Paper A-2 Stable P-1 Stable
PSNC Energy:
Senior Unsecured A- Stable A2 Stable
Commercial Paper A-2 Stable P-1 Stable