Exhibit No. 99.1
PRESS
RELEASE
Date: February 28, 2003
Contact: Stephen Conner or Headen Thomas
Telephone: (O) 704/731-4205 (O) 704/731-4438
PIEDMONT REPORTS FIRST QUARTER RESULTS
CHARLOTTE, NC - At its Annual Meeting of Shareholders, Charlotte-based Piedmont
Natural Gas (NYSE:PNY) announced financial results for its first fiscal quarter
ended January 31, 2003. For the quarter, the Company reported net income of $58
million, compared with $41.2 million for the same period last year. Diluted
earnings per share were $1.74, compared with $1.26 reported for the previous
year period. For the twelve months ended January 31, 2003, net income was $79
million and diluted earnings per share were $2.39. For the prior twelve-month
period, net income was $56.4 million and diluted earnings per share were $1.73.
Both the first quarter and twelve-month period include $.53 per share relating
to a one-time, non-recurring item.
The Company performed an analysis of its revenue recognition practices and,
after discussions with its independent accountants, has changed the way it
records revenues and cost of gas related to volumes delivered but not yet
billed. Recording unbilled revenues implements the practice in use by most gas
utilities. The effect on earnings for the quarter and for the twelve months
ended January 31, 2003 was an increase of $.53 per share. Recording unbilled
revenues changes the timing of revenue recognition and will result in increased
earnings in the first and fourth quarters and lower earnings in the second and
third quarters of fiscal year 2003. It is estimated that the net effect in 2003
will be to increase earnings per share on a one-time, non-recurring basis by
$.17.
Weather in the Company's service areas during the first quarter was 41% colder
than in the prior-year quarter. System throughput increased from 41.6 million
dekatherms to 63.6 million dekatherms, including unbilled volumes totaling 11.7
million dekatherms. Operations and maintenance expenses increased primarily due
to higher payroll, pension and other employee benefit expenses and to an
increase in the provision for uncollectibles due to higher gas costs and colder
weather. President and Chief Executive Officer Thomas E. Skains commented, "Our
earnings reflect higher sales and transportation deliveries due to continued
customer growth that significantly exceeds the national average and weather that
was colder than normal and much colder than last year."
Income from non-utility activities was $2.5 million, compared with $4.7 million
in the first quarter of the prior year. The Company's interest in SouthStar
Energy Services LLC, which is primarily engaged in the unregulated retail gas
market in Georgia, contributed $697,000 to net income, or $.02 per share, in the
first quarter, compared with $3.7 million, or $.11 per share, in the first
quarter of the prior year. Two other joint ventures, Pine Needle LNG and
Cardinal Pipeline, contributed combined earnings per share of $.02 in the
current first quarter, compared with $.03 per share in the first quarter of the
prior year. The Company's interest in Heritage Propane benefited from colder
weather during the quarter and initiatives to control expenses. "Our non-utility
interests in retail natural gas and propane marketing and natural gas storage
and transportation continue to positively contribute to earnings," commented
Skains.
Earnings Guidance for 2003
As stated in November 2002 and again in December 2002, earnings for the fiscal
year ending October 31, 2003, continue to be projected to be between $2.05 and
$2.15 per diluted share, excluding the $.17 per share effect of the one-time,
non-recurring income related to the initial recording of revenues on volumes
delivered but not yet billed. The fiscal 2003 guidance, including the
non-recurring income, is between $2.22 and $2.32 per diluted share. This
earnings guidance includes the positive impact of new customer billing rates in
North Carolina and South Carolina effective November 1, 2002, and the estimated
dilutive impact of integrating North Carolina Natural Gas (NCNG) into Piedmont
during fiscal year 2003. The proposed $425 million purchase of NCNG, a natural
gas distribution subsidiary of Progress Energy, and Progress Energy's 50%
investment in EasternNC, remains on track and is expected to be accretive to
earnings in fiscal year 2004, the first full year following the anticipated
mid-year close of the transaction. The acquisition requires approval from the
North Carolina Utilities Commission, the Securities and Exchange Commission
(SEC) and the Federal Trade Commission under Hart-Scott-Rodino.
Forward-Looking Statement
This news release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are subject
to risks and uncertainties, including, but not limited to, regulatory issues,
allowed rates of return, rate structures, deregulation, unanticipated impacts of
regulatory restructuring, the availability and cost of natural gas, competition
in the energy industry, customer growth in our service areas, results of
financing efforts, economic and capital market conditions, changes in the
availability and price of natural gas, changes in demographic patterns and
weather conditions, potential loss of large-volume industrial customers to
alternate fuels or to bypass or the shift to competitive contracts, our ability
to meet internal performance goals, changes in environmental requirements and
cost of compliance, the capital-intensive nature of our business, and risks
associated with earnings of our equity investments. We give no assurances that
those expectations will be achieved. These statements reflect expectations as of
the time they are made and we assume no duty to update these statements should
expectations change. More information about the risks and uncertainties relating
to these forward-looking statements may be found in Piedmont's SEC filings,
which are available on the SEC's website at http://www.sec.gov.
Conference Call
In conjunction with the first quarter earnings release, you are invited to
listen to the conference call that will be broadcast live over the Internet on
Monday, March 3, 2003, at 2:30 p.m. Eastern Standard Time, hosted by President
and Chief Executive Officer Thomas E. Skains. Simply log on to the web at
www.piedmontng.com and click on Investor Relations, then on Presentations. The
conference call will be archived on the web site until March 17, 2003.
PIEDMONT NATURAL GAS COMPANY
SUMMARY OF OPERATIONS
(in thousands except per share amounts)
THREE MONTHS ENDED JANUARY 31 % INCREASE
2003 2002 (DECREASE)
---- ---- ----------
(Unaudited)
Operating Revenues $493,491 $288,757 71%
Cost of Gas 331,797 165,555 100%
Margin 161,694 123,202 31%
Operations and Maintenance Expenses 38,495 33,709 14%
Depreciation 15,250 14,096 8%
General Taxes 6,380 5,255 21%
Utility Income Taxes 35,914 23,537 53%
Operating Income 65,655 46,605 41%
Other Income (Expense), net 2,677 4,769 (44%)
Utility Interest Charges 10,336 10,204 1%
Net Income $57,996 $41,170 41%
THREE MONTHS ENDED JANUARY 31 % INCREASE
2003 2002 (DECREASE)
---- ---- ----------
(Unaudited)
Average Shares of Common Stock:
Basic 33,186 32,560 2%
Diluted 33,300 32,729 2%
Earnings Per Share of Common Stock:
Basic $1.75 $1.26 39%
Diluted $1.74 $1.26 38%
System Throughput - Dekatherms 63,589 41,552 53%
Gas Customers Billed in January 736 699 5%
System Average Degree Days - Actual 2,153 1,526 41%
System Average Degree Days - Normal 1,971 1,975 0%
Percent Normal Degree Days 109% 77% 42%
TWELVE MONTHS ENDED JANUARY 31 % INCREASE
2003 2002 (DECREASE)
---- ---- ----------
(Unaudited)
Operating Revenues $1,036,761 $929,040 12%
Cost of Gas 662,476 596,462 11%
Margin 374,285 332,578 13%
Operations and Maintenance Expenses 138,214 132,567 4%
Depreciation 58,746 53,407 10%
General Taxes 24,988 23,601 6%
Utility Income Taxes 43,276 32,312 34%
Operating Income 109,061 90,691 20%
Other Income (Expense), net 10,427 4,953 111%
Utility Interest Charges 40,445 39,291 3%
Net Income $79,043 $56,353 40%
Average Shares of Common Stock:
Basic 32,921 32,327 2%
Diluted 33,079 32,543 2%
Earnings Per Share of Common Stock:
Basic $2.40 $1.74 38%
Diluted $2.39 $1.73 38%
System Throughput - Dekatherms 148,165 122,629 21%
Gas Customers Billed in January 736 699 5%
System Average Degree Days - Actual 3,631 3,058 19%
System Average Degree Days - Normal 3,529 3,534 0%
Percent Normal Degree Days 103% 87% 18%
Other Income includes net income resulting from the Company's investments, at
equity, in the following non-utility activities (in thousands):
JANUARY 31
2003 2002
---- ----
THREE MONTHS ENDED (Unaudited)
Propane $789 $47
SouthStar Energy Services 697 3,699
Cardinal Pipeline 240 228
Pine Needle LNG 569 602
TWELVE MONTHS ENDED
Propane $(240) $(443)
SouthStar Energy Services 5,860 886
Cardinal Pipeline 984 1,086
Pine Needle LNG 2,269 2,610
Piedmont Natural Gas is an energy services company primarily engaged in the
distribution of natural gas to 740,000 residential, commercial and industrial
customers in North Carolina, South Carolina and Tennessee. The Charlotte-based
company is the second-largest natural gas utility in the Southeast. Piedmont is
also invested in a number of non-utility, energy-related businesses including
companies involved in unregulated retail natural gas and propane marketing, and
interstate and intrastate natural gas storage and transportation. More
information about Piedmont Natural Gas is available on the Internet at
www.piedmontng.com .
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