COLUMBIA, S.C., July 22, 2005 /PRNewswire-FirstCall/ -- SCANA Corporation
(NYSE: SCG) reported earnings for the quarter ended June 30, 2005, of
$44 million, or 39 cents per share, compared to $60 million, or 54 cents per
share for the same period in 2004. Excluding from the current period results a
net after-tax gain of $4 million, or 3 cents per share, related to
monetization of the Company's telecommunications investment, GAAP-adjusted net
earnings from operations for the second quarter of 2005 were $40 million, or
36 cents per share.
SCANA's reported earnings are prepared in accordance with Generally
Accepted Accounting Principles (GAAP). SCANA's management believes that, in
addition to reported earnings under GAAP, the GAAP-adjusted net earnings from
operations provides a meaningful representation of the Company's fundamental
earnings power and can aid in performing period-over-period financial analysis
and comparison with peer group data. In management's opinion, the GAAP-
adjusted net earnings from operations is a useful indicator of the financial
results of the Company's primary businesses. This measure is also a basis for
management's provision of earnings guidance and growth projections, and it is
used by management in making resource allocation and other budgetary and
operational decisions. This non-GAAP performance measure is not intended to
replace the GAAP measure of net earnings, but is offered as a supplement to
it. A reconciliation of reported (GAAP) earnings per share to GAAP-adjusted
net earnings per share from operations for the three months and six months
ended June 30, 2005 and 2004 is provided in the following table:
3 Months Ended 6 Months Ended
June 30, June 30,
2005 2004 2005 2004
---- ---- ---- ----
Reported (GAAP) Earnings per Share $.39 $.54 $1.28 $1.45
Deduct:
Gain on Sale of Telecommunications
Investment (.03) -- (.03) --
GAAP-Adjusted Net Earnings per Share
From Operations $.36 $.54 $1.25 $1.45
"Milder weather reduced our second quarter earnings by 11 cents per share
compared to last year," said Kevin Marsh, senior vice president and chief
financial officer. "The resulting decrease in sales of electricity, combined
with increases in operation and maintenance expenses, depreciation expense,
interest expense, property taxes and share dilution, more than offset the
favorable impact of solid electric and natural gas customer growth and the
2.89 percent retail electric rate increase that went into effect in January of
this year."
Marsh noted that temperatures across the Company's electric service area
during the second quarter, as measured by cooling degree days, were 32 percent
cooler than last year and 21 percent cooler than normal. As a result, retail
kilowatt-hour sales of electricity in the second quarter were down 5.6 percent
compared to the same quarter in 2004. Weather-sensitive residential sales were
down 10.7 percent, commercial sales declined 4.6 percent and industrial sales
were down 1.2 percent. Wholesale, or off-system, sales were down 6.7 percent,
also reflecting the milder weather. Total kilowatt-hour sales of electricity
in the second quarter were down 5.7 percent compared to the same quarter last
year.
SCANA's consolidated natural gas sales margin was unchanged compared to
the second quarter of 2004. "A slightly higher margin reflecting customer
growth and cooler weather at PSNC Energy, our regulated natural gas
distribution business in North Carolina, was offset by a slightly lower margin
on sales in our non-regulated natural gas marketing business in Georgia," said
Marsh.
Consolidated dekatherm sales of natural gas to retail customers in the
second quarter of 2005 were down 5.1 percent compared to the second quarter of
2004. Residential sales were up 6.3 percent, reflecting the cooler weather,
while commercial and industrial sales declined 4.0 percent and 7.8 percent,
respectively. Total consolidated dekatherm sales of natural gas, which include
sales for resale and transportation volumes, were down 1.1 percent compared to
the same period in 2004. At June 30, 2005, the Company was serving
approximately 1.2 million natural gas customers in South Carolina, North
Carolina and Georgia, a 2.7 percent increase compared to the same date last
year.
SCANA's reported earnings for the first six months of 2005 were
$145 million, or $1.28 per share, compared to $161 million, or $1.45 per
share, for the same period in 2004. Excluding from current period results the
net after-tax gain of $4 million, or 3 cents per share, related to the sale of
telecommunications assets in the second quarter, GAAP-adjusted net earnings
from operations for the first six months of 2005 were $141 million, or $1.25
per share. The decline in year-to-date GAAP-adjusted net earnings per share
from operations was due to milder weather, increases in operating and
maintenance expenses, higher depreciation and interest expense, and to
dilution resulting from the issuance of common stock through the Company's
stock plans, proceeds of which are being applied to debt reduction.
RESULTS BY MAJOR LINES OF BUSINESS
South Carolina Electric & Gas Company
Reported earnings in the second quarter of 2005 at South Carolina Electric
& Gas Company (SCE&G) were $39 million, or 34 cents per share, compared to
$56 million, or 50 cents per share, in the second quarter of 2004. The
decline was due primarily to lower sales of electricity resulting from milder
weather, and to higher expenses. At June 30, 2005, SCE&G was serving
approximately 592,000 electric customers and 283,000 natural gas customers, up
2.6 percent and 2.5 percent, respectively, over the past year.
PSNC Energy
PSNC Energy, the Company's North Carolina-based retail natural gas
distribution subsidiary, reported a seasonal loss of $2 million, or 1 cent per
share, in the second quarter of 2005, compared to a loss of $4 million, or
3 cents per share, in the second quarter of 2004. That improvement was mainly
attributable to a higher sales margin driven by customer growth and cooler
weather. At June 30, 2005, PSNC Energy was serving approximately 405,000
customers, an increase of 4.2 percent over the last twelve months.
South Carolina Pipeline Corporation
South Carolina Pipeline, SCANA's intrastate natural gas transmission
subsidiary, reported earnings of $2 million, or 2 cents per share, in the
second quarter of 2005, compared to earnings of $3 million, or 3 cents per
share, in the same quarter last year. The decline was due primarily to lower
margins on sales of natural gas to industrial interruptible customers.
SCANA Energy - Georgia
SCANA Energy, the Company's retail natural gas marketing business in
Georgia, reported earnings of $1 million, or 1 cent per share, in the second
quarter of 2005, compared to $3 million, or 3 cents per share, in the second
quarter of 2004. That decline was due to a lower sales margin and higher
operating and customer service expenses. At June 30, 2005, SCANA Energy was
serving more than 460,000 customers, maintaining the company's position as the
second largest natural gas marketer in Georgia with about a 30 percent market
share.
Corporate and Other
SCANA's corporate and other businesses, which include Primesouth, SCANA
Communications, ServiceCare, SCANA Energy Marketing, SCG Pipeline, SCANA
Services and the holding company, reported combined earnings of $4 million, or
3 cents per share, in the second quarter of 2005, compared to earnings of $2
million, or 1 cent per share, in the same quarter last year.
Excluding the impact of the monetization of the Company's
telecommunications assets, these companies recorded breakeven results on a
GAAP-adjusted basis in the second quarter of 2005.
GAIN ON SALE OF TELECOMMUNICATIONS INVESTMENT
In May 2005, the Company received approximately $6 million (pre-tax) from
the prior sale of its investment in ITC Holding Company. These additional
sales proceeds had been held in escrow pending resolution of certain
contingencies and resulted in the recording of a net after-tax gain of
approximately $4 million, or 3 cents per share, in the second quarter of 2005.
LAKE MURRAY BACKUP DAM COMPLETED
On June 23, 2005, SCE&G celebrated completion of construction of the
backup dam at Lake Murray with a special dedication ceremony held at the dam.
Spanning approximately 1.5 miles, the $275 million structure is composed of
two rock berms built with more than 3 million cubic yards of rock fill
connected to a 2,300-foot center section of roller-compacted concrete.
Construction of the backup dam, which began in 2001 and was completed on
schedule and on budget, was required by the Federal Energy Regulatory
Commission to meet current earthquake safety standards.
HEARING DATE SET FOR RETAIL NATURAL GAS RATE CASE
On April 26, 2005, SCE&G filed an application with the South Carolina
Public Service Commission (SCPSC) requesting a $28 million, or 7.09 percent,
increase in retail natural gas base rates based on an adjusted test year ended
December 31, 2004. The SCPSC has scheduled a public hearing on that request to
begin on September 19, 2005. If approved, the new rates would go into effect
in November 2005. This rate increase request is largely associated with
recovering costs related to expanding and operating SCE&G's natural gas
distribution system over the past 16 years and with providing a reasonable
return on investment that will allow the company to make additional capital
investments necessary to support future growth and economic development in its
service area. Prior to this filing, SCE&G had not requested an increase in its
retail natural gas base rates since 1989.
SCANA ENERGY CONTINUES AS REGULATED PROVIDER IN GEORGIA
On June 23, 2005, the Georgia Public Service Commission (GPSC) voted to
retain SCANA Energy as Georgia's regulated provider of natural gas. Under the
Natural Gas Consumers' Relief Act of 2002, the Georgia General Assembly
mandated the appointment of a regulated provider to ensure that low-income
Georgians were afforded natural gas at lower rates. The regulated provider
also serves as provider of last resort to natural gas customers who have been
refused service by other marketers. Approximately 65,000 customers are
currently receiving service under both programs. SCANA Energy competed for the
role of regulated provider in 2002 and was awarded the first two-year term.
Last year, the GPSC extended SCANA Energy's participation for another year.
This new selection calls for another two-year term beginning
September 1, 2005, which may be extended for an additional year by the GPSC.
2005 EARNINGS OUTLOOK
The Company currently expects that GAAP-adjusted net earnings from
operations in 2005 will be within the previously announced range of $2.65 -
$2.85 per share. Taking into consideration the gain on the monetization of
telecommunications investment in the second quarter, the Company anticipates
that reported (GAAP) earnings in 2005 will be 3 cents per share higher than
the GAAP-adjusted net earnings per share from operations. The 2005 guidance
assumes normal weather in the Company's electric and natural gas service areas
during the remainder of the year. Other factors that may impact future
earnings are discussed in the Company's Securities and Exchange Commission
filings and below under the Safe Harbor Statement. The Company's goal is to
achieve average annual earnings growth of 4-6 percent over the next 3-5 years.
CONFERENCE CALL NOTICE
SCANA will host its quarterly conference call for security analysts at
10:00 a.m. Eastern Time today. The call-in numbers for the conference call are
1-800-237-9752 (US/Canada) and 1-617-847-8706 (International). The event code
is 87530008. Participants should call in 5 to 10 minutes prior to the
scheduled start time. A replay of the conference call will be available
approximately 2 hours after conclusion of the call through August 5, 2005. To
access the telephone replay, call 1-888-286-8010 (US/Canada) or 1-617-801-6888
(International) and enter the event code 75406190.
All interested persons, including investors, media and the general public,
may listen to a live web cast of the conference call at the Company's web site
at http://www.scana.com. Participants should go to the web site at least 5 to 10
minutes prior to the call start time and follow the instructions. A replay of
the web cast will also be available on the Company's web site approximately 2
hours after conclusion of the call through August 5, 2005.
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 and other energy-related
businesses. Information about SCANA and its businesses is available on the
Company's web site at http://www.scana.com.
SAFE HARBOR STATEMENT
Statements included in this press release which are not statements of
historical fact are intended to be, and are hereby identified as, "forward-
looking statements" for purposes of the safe harbor provided by Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. 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) regulatory
actions or changes in the utility and nonutility regulatory environment, (3)
current and future litigation, (4) changes in the economy, especially in areas
served by the Company's subsidiaries, (5) the impact of competition from other
energy suppliers, including competition from alternate fuels in industrial
interruptible markets, (6) growth opportunities for the Company's regulated
and diversified subsidiaries, (7) the results of financing efforts, (8)
changes in the Company's accounting policies, (9) weather conditions,
especially in areas served by the Company's subsidiaries, (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 United States Securities and
Exchange Commission. The Company disclaims any obligation to update any
forward-looking statements.
FINANCIAL AND OPERATING INFORMATION
Condensed Consolidated Statements of Income
(Millions, except per share amounts) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
---- ---- ---- ----
Operating Revenues:
Electric $438 $434 $853 $814
Gas-Regulated 219 188 680 614
Gas-Non-regulated 234 224 624 547
---- ---- ---- ----
Total Operating Revenues 891 846 2,157 1,975
---- ---- ---- ----
Operating Expenses:
Fuel and purchased power 148 140 283 248
Gas purchased for resale 376 335 1,037 906
Other operation and maintenance 153 144 312 298
Depreciation and amortization (1) 89 66 334 129
Other taxes 40 38 78 77
---- ---- ---- ----
Total Operating Expenses (1) 806 723 2,044 1,658
---- ---- ---- ----
Operating Income (1) 85 123 113 317
---- ---- ---- ----
Other Income, Net (1) 21 17 33 31
Interest Charges, Net (54) (51) (108) (101)
Income Tax (Expense) Benefit (1) (3) (28) 176 (84)
Earnings (Losses) from Equity
Method Investments (1) (3) 1 (65) 2
Preferred Stock Cash Dividends
of SCE&G (2) (2) (4) (4)
---- ---- ---- ----
Net Income $44 $60 $145 $161
---- ---- ---- ----
Common Stock Data:
Wtg. Avg. Common Shares
Outstanding 113.6 111.2 113.3 111.0
Basic and Diluted Reported
Earnings Per Share $.39 $.54 $1.28 $1.45
Note (1): In January 2005, the South Carolina Public Service Commission
approved an accounting methodology which allows the Company to recover the
cost of the Lake Murray back-up dam project through the application of net
synthetic fuel tax credits generated from its synthetic fuel partnerships.
Under this methodology, beginning January 1, 2005, the Company recognized its
accumulated synthetic fuel tax credits to offset an equal amount of
accelerated depreciation on the dam project, net of partnership losses and
income tax benefits. Recognition of accelerated depreciation related to the
back-up dam costs will continue quarterly to the extent net synthetic fuel tax
credits are earned. While these entries resulted in a reduction in operating
income for the three and six months ended June 30, 2005, there was no impact
on net income. However, the Company is allowed to record non-cash carrying
costs on the unrecovered investment. The impact of these entries in the Income
Statement and Balance Sheet is shown in the tables below:
Income Statement Impact: Balance Sheet Impact:
Q2 YTD June
2005 2005 2005
---- ---- ----
Synthetic fuel tax credits Dam costs incurred through
recognized $11 $155 6/30/05, incl. AFC $283
Partnership losses Carrying costs capitalized
recognized (4) (68) in 2005 6
Tax benefit of depreciation Accelerated depreciation
and partnership losses 7 96 recognized in 2005 (183)
Accelerated depreciation Unrecovered Dam Costs ----
recognized (14) (183) at 6/30/05 $106
---- ---- ----
Impact to Net Income $0 $0
---- ----
Carrying costs recognized $3 $6
Condensed Consolidated Balance Sheets
(Millions) (Unaudited)
June 30, December 31,
2005 2004
---- ----
ASSETS
Utility Plant, Net $6,627 $6,762
Other Property and Investments 215 216
Current Assets 1,052 1,149
Deferred Debits 857 869
----- -----
Total Assets $8,751 $8,996
----- -----
CAPITALIZATION AND LIABILITIES
Capitalization:
Common Equity $2,560 $2,451
Preferred Stock 114 115
Long-term Debt, Net 3,072 3,186
----- -----
Total Capitalization 5,746 5,752
----- -----
Current Liabilities:
Short-Term Borrowings 446 211
Current Portion of Long-Term Debt 54 204
Other Current Liabilities 554 775
----- -----
Total Current Liabilities 1,054 1,190
----- -----
Deferred Credits 1,951 2,054
----- -----
Total Capitalization and Liabilities $8,751 $8,996
----- -----
Reported Earnings (Loss) per Share by Company (GAAP Basis):
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
---- ---- ---- ----
SC Electric & Gas $.34 $.50 $.80 $.99
PSNC Energy (.01) (.03) .20 .17
SC Pipeline .02 .03 .05 .06
SCANA Energy-Georgia .01 .03 .21 .22
Corporate and Other .03 .01 .02 .01
---- ---- ---- ----
Basic and Diluted
Reported (GAAP)
Earnings per Share $.39 $.54 $1.28 $1.45
---- ---- ---- ----
GAAP-Adjusted Net Earnings (Loss) per Share From Operations by Company:
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
---- ---- ---- ----
SC Electric & Gas $.34 $.50 $.80 $.99
PSNC Energy (.01) (.03) .20 .17
SC Pipeline .02 .03 .05 .06
SCANA Energy-Georgia .01 .03 .21 .22
Corporate and Other .00 .01 (.01) .01
---- ---- ---- ----
Basic and Diluted
GAAP-Adjusted Net
Earnings from
Operations per Share $.36 $.54 $1.25 $1.45
---- ---- ---- ----
Variances in Reported (GAAP) Earnings (Loss) per Share (2):
(unaudited)
Three Months Ended Six Months Ended
June 30 June 30
------- -------
2004 Basic and Diluted Reported
(GAAP) Earnings Per Share $.54 $1.45
Variances:
Electric Margin (.03) .02
Natural Gas Margin .00 .07
O&M Expense (.05) (.08)
Depreciation Expense (.05) (.12)
Interest Expense (net of AFC) (.01) (.04)
Property Taxes (.01) .00
Additional Shares Outstanding (Dilution) (.01) (.03)
Other (.02) (.02)
---- ----
Variance in GAAP-Adjusted Net Earnings
per Share From Operations (.18) (.20)
Gain on Sale of Telecommunications
Investment .03 .03
---- ----
Variance in Reported (GAAP) Earnings
per Share (.15) (.17)
---- ----
2005 Basic and Diluted Reported
(GAAP) Earnings Per Share $.39 $1.28
---- ----
Note (2): This variance analysis reflects earnings per share (EPS)
components on an after-tax basis, with income tax benefits applied as per
the January 6, 2005 electric rate order. See Note (1) to the
Condensed Consolidated Statements of Income.
Consolidated Operating Statistics
Three Months Ended June 30, Six Months Ended June 30,
2005 2004 % Change 2005 2004 % Change
---- ---- -------- ---- ---- --------
Electric Operations:
Sales (Million KWH):
Residential 1,637 1,833 (10.7) 3,432 3,665 (6.4)
Commercial 1,689 1,770 (4.6) 3,238 3,317 (2.4)
Industrial 1,702 1,722 (1.2) 3,305 3,349 (1.3)
Other 128 134 (4.5) 248 258 (3.9)
----- ----- ----- -----
Total Retail
Sales 5,156 5,459 (5.6) 10,223 10,589 (3.5)
Wholesale 657 704 (6.7) 1,493 1,618 (7.7)
----- ----- ------ ------
Total Sales 5,813 6,163 (5.7) 11,716 12,207 (4.0)
----- ----- ------ ------
Customers 592 577 2.6
(Period-End, Thousands)
Natural Gas Operations:
Sales (Thousand
Dekatherms):
Residential 7,616 7,164 6.3 40,286 40,925 (1.6)
Commercial 6,524 6,795 (4.0) 21,427 22,757 (5.8)
Industrial 30,409 32,984 (7.8) 61,425 61,969 (0.9)
------ ------ ------ ------
Total Retail
Sales 44,549 46,943 (5.1) 123,138 125,651 (2.0)
Sales for Resale 3,382 2,074 63.1 8,562 4,410 94.1
Transportation
Volumes 15,137 14,741 2.7 35,619 29,969 18.9
------ ------ ------ ------
Total Sales 63,068 63,758 (1.1) 167,319 160,030 4.6
------ ------ ------- -------
Customers
(Period-End, Thousands) 1,156 1,125 2.7
Weather Data - Electric Service Territory:
Three Months Ended June 30, Six Months Ended June 30,
Actual Percent Change Actual Percent Change
2005 vs 2004 vs Normal 2005 vs 2004 vs Normal
---- ------- --------- ---- ------- ---------
Heating Degree Days 133 26.7 20.9 1,338 (8.9) 6.7
Cooling Degree Days 604 (32.4) (20.6) 623 (32.8) (22.6)
Security Credit Ratings (as of 07/22/05):
Standard & Poor's Moody's Fitch
SCANA Corporation:
Corporate / Issuer Rating A- A3 -
Senior Unsecured BBB+ A3 A-
Outlook Stable Negative Stable
South Carolina
Electric & Gas Company:
Corporate / Issuer Rating A- A2 -
Senior Secured A- A1 A+
Senior Unsecured BBB+ A2 A
Commercial Paper A-2 P-1 F1
Outlook Stable Negative Stable
PSNC Energy:
Senior Unsecured A- A2 NR
Commercial Paper A-2 P-1 NR
Outlook Stable Stable NR
NR = Not Rated
SOURCE SCANA Corporation
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Related links:
http://www.scana.com
CONTACT:
Media, Eric Boomhower, +1-803-217-7701, or
eboomhower@scana.com , or Investors, John Winn, +1-803-217-9240,
or jwinn@scana.com , both of SCANA Corporation
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