SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 26, 2002
SCANA Corporation
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(Exact name of registrant as specified in its charter)
South Carolina 1-8809 57-0784499
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1426 Main Street, Columbia, South Carolina 29201
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (803) 217-9000
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Not applicable
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(Former name or former address, if changed since last report)
Item 5. Other Events and Regulation FD Disclosure.
On July 26, 2002 SCANA Corporation (NYSE: SCG) reported that earnings
from ongoing operations for the second quarter of 2002 were $38 million, or 36
cents per share of common stock, compared to $30 million, or 29 cents per share
in the second quarter of last year.
In the second quarter of 2002, SCANA also recorded a non-recurring cash
gain of $9 million, or 9 cents per share, related to the previously announced
sale of its 800 Mhz radio network to Motorola, and a non-cash, non-recurring
charge of $7 million, or 7 cents per share, related to the other than temporary
decline in the market value of the Company's investment in ITC^DeltaCom, Inc.
(NASDAQ: ITCDQ). Additional information regarding these non-recurring items is
included below. In the second quarter of 2001, the Company had recorded a
non-recurring, non-cash gain of $354 million, or $3.38 per share related to the
Company's investment in Powertel, Inc., which was acquired by Deutsche Telekom
AG (NYSE:DT; FSE:DTE) on May 31, 2001.
Including the non-recurring items in both periods, SCANA reported
consolidated earnings in the second quarter of 2002 of $40 million, or 38 cents
per share of common stock, compared to $385 million, or $3.67 per share, in the
second quarter of 2001.
Earnings per share comparisons for the three months and six months
ended June 30, 2002 and 2001 are summarized in the following table:
3 Months Ended June 30, 6 Months Ended June 30,
2002 2001 2002 2001
---- ---- ---- ----
Earnings Per Share From Ongoing Operations $.36 $.29 $1.10 $1.00
Non-Recurring Items Per Share:
Gain on Sale of Radio Network .09 _ .09 _
Impairment Charge on ITC^DeltaCom Investment (.07) (.07)
Gain on Sale of Powertel Investment _ 3.38 _ 3.38
Gain on Sale of Deutsche Telekom Stock .10
Impairment Charge on Deutsche Telekom Investment _ _ (1.52) _
Gain on Sale of SCANA Security _ _ _ .04
Reported Earnings (Loss) Per Share $.38 $3.67 $(.30) $4.42
"Earnings from ongoing operations in the second quarter improved by 7
cents per share, or 24 percent, over the same quarter last year and were in-line
with the earnings guidance we provided for the quarter," said Kevin Marsh,
SCANA's senior vice president and chief financial officer.
Regulated Operations
South Carolina Electric & Gas Company (SCE&G), SCANA's principal
subsidiary, recorded earnings of 37 cents per share in the second quarter, down
from 41 cents per share in the same period last year. "The favorable impact of
warmer weather and customer growth on electric sales margins was more than
offset by higher operating and maintenance expenses," said Marsh.
"As measured by cooling degree days, temperatures across SCE&G's
electric utility service area during the quarter were 7 percent above normal and
5 percent above last year," said Marsh. "The impact of the warmer weather
increased second quarter earnings by 2 cents per share compared to the second
quarter last year."
The warmer weather, combined with 2.2 percent customer growth, resulted
in a 4.0 percent increase in total retail kilowatt-hour sales of electricity in
the second quarter compared to the same period last year. Residential sales,
which are the most weather sensitive, were up 5.3 percent. Commercial sales were
up 3.4 percent and industrial sales rose 3.6 percent.
South Carolina Pipeline, SCANA's regulated gas transmission business,
recorded earnings of 3 cents per share in the second quarter, up from 2 cents
per share in 2001. Those positive results primarily reflect increased margins on
sales of natural gas for electric generation.
PSNC Energy, the Company's North Carolina-based regulated natural gas
distribution subsidiary, recorded a seasonal loss of 2 cents per share in the
second quarter, compared to a loss of 5 cents per share in the same quarter last
year. "That improvement was the result of the elimination this year of the
goodwill amortization expense related to SCANA's acquisition of PSNC in February
2000 and slightly better sales margins resulting primarily from lower gas
costs," said Marsh.
Non-Regulated Operations
SCANA Energy, the Company's non-regulated retail natural gas business
in Georgia, recorded earnings of 1 cent per share in the second quarter of 2002
compared to a loss of 3 cents per share in the same quarter last year. "The more
favorable results at SCANA Energy were driven primarily by lower bad debt
expenses due to lower natural gas prices," said Marsh.
The Company's corporate and other non-regulated operations lost 3 cents
per share in the second quarter on a combined basis compared to a loss of 6
cents per share last year. That improvement was driven primarily by lower
interest expenses and higher investment income.
Explanation of Second Quarter 2002 Non-Recurring Items
In the second quarter of 2002, SCANA Communications, Inc., SCANA's
wholly-owned telecommunications subsidiary, recorded a non-recurring cash gain
of $9 million, or 9 cents per share related to the previously-announced sale of
its 800 Mhz emergency radio network to Motorola in April 2002. SCANA
Communications owns a fiber optic network in South Carolina and North Carolina,
provides tower construction, management and rental services for wireless
providers, and, through a Delaware subsidiary, holds the Company's
telecommunications investments.
Also in the second quarter of 2002, SCANA recorded a non-cash,
non-recurring charge of $7 million, or 7 cents per share, related to the other
than temporary decline in the market value of the Company's investment in
ITC^DeltaCom, Inc.(NASDAQ: ITCDQ), a publicly-held provider of integrated
telecommunications and technology solutions to businesses in the southern United
States. This impairment charge eliminates the Company's investment basis in
ITC^DeltaCom. On June 25, 2002, ITC^DeltaCom filed a Chapter 11 bankruptcy
petition in the United States Bankruptcy Court for the District of Delaware. In
connection with the bankruptcy filing, ITC^DeltaCom announced a proposed plan of
reorganization that it anticipates will result in the elimination of
approximately $515 million principal amount of the company's senior and
subordinated note debt, thereby improving the company's capital structure and
liquidity position and significantly reducing annual interest expense.
Implementation of the proposed plan of reorganization is dependent on a number
of factors and conditions typical in similar reorganizations, including approval
of the reorganization plan by the bankruptcy court and ITC^DeltaCom's security
holders. In connection with that proposed reorganization, SCANA has committed to
purchase up to $15 million of a new issue of the reorganized company's
convertible preferred stock.
Implementation of SFAS 142
As disclosed earlier this year, on January 1, 2002, Statement of
Financial Accounting Standards No. 142, a new accounting standard from the
Financial Accounting Standards Board (FASB) became effective. This new standard
addresses goodwill and other intangible assets recorded on a company's balance
sheet and requires that goodwill no longer be amortized, but instead tested for
impairment at least annually. In accordance with SFAS 142, and as noted above,
SCANA discontinued recording amortization expense related to goodwill associated
with the Company's acquisition of Public Service Company of North Carolina,
Inc., a natural gas distribution company headquartered in Gastonia, North
Carolina. This company is currently a wholly-owned subsidiary of SCANA doing
business as PSNC Energy. As required by the new statement, the Company continues
to evaluate whether the goodwill associated with this transaction that is
recorded on the Company's books is impaired as defined in the statement and, if
so, the amount of any such impairment. While the Company's evaluation is being
finalized, preliminary results indicate that the Company will be required to
record a non-cash impairment in the probable range of $200 - $250 million. As
required by the standard, the Company expects to complete its evaluation of the
carrying value of goodwill and record any required impairment by the end of
2002. Any such impairment would be recorded as the cumulative effect of the
mandated accounting change.
Statements included in this Form 8-K which are not statements of historical fact
are intended to be, and are hereby identified as "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, (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) inflation, (11)
changes in environmental regulations, (12) volatility in commodity natural gas
markets and (13) 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 INFORMATION
Consolidated Statements of Income
(Millions, except per share amounts) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
Operating Revenues: 2002 2001 2002 2001
Electric $ 349 $ 340 $ 651 $ 681
Gas-Regulated 155 175 451 642
Gas-Nonregulated 145 225 369 736
Total Operating Revenues 649 740 1,471 2,059
Operating Expenses:
Fuel and purchased power 108 107 187 222
Gas purchased for resale 234 333 613 1,148
Other operation and maintenance 131 122 258 251
Depreciation and amortization 55 56 108 112
Other taxes 32 29 63 59
Total Operating Expenses 560 647 1,229 1,792
Operating Income 89 93 242 267
Other Income (Loss), Net 24 564 (187) 586
Interest Charges, Net 51 59 102 121
Preferred Dividend Requirement
of SCE&G - Mandatorily Redeemable
Preferred Securities 1 1 2 2
Income Taxes (Benefit) 19 210 (21) 262
Preferred Stock Cash Dividends
of Subsidiary 2 2 4 4
Net Income (Loss) $ 40 $ 385 $ (32) $ 464
Common Stock Data
Earnings(Loss) Per Share $.38 $ 3.67 $ (.30) $ 4.42
Wtg. Avg. Common Shares
Outstanding (000) 104,732 104,729 104,730 104,729
SUMMARY OF EPS BY COMPANY:
Three Months Ended June 30,
2002 2001
SC Electric & Gas $.37 $.41
SC Pipeline .03 .02
PSNC Energy (.02) (.05)
SCANA Energy-Georgia .01 (.03)
Corporate and Other Nonregulated, Net (.03) (.06)
Total Operating EPS .36 .29
Nonrecurring Items .02 3.38
Total Reported EPS $.38 $3.67
Six Months Ended June 30,
2002 2001
SC Electric & Gas $.86 $.91
SC Pipeline (.02) .01
PSNC Energy .18 .15
SCANA Energy-Georgia .14 .06
Corporate and Other Nonregulated, Net (.06) (.13)
Total Operating EPS 1.10 1.00
Nonrecurring Items (1.40) 3.42
Total Reported EPS $(.30) $4.42
SUMMARY OF EPS VARIANCES:
2nd Quarter YTD
2001 Reported EPS $3.67 $4.42
Variances:
Nonrecurring Items:
Gain on Sale of Radio Network .09 .09
Impairment Charge on ITC^DeltaCom Investment (.07) (.07)
Gain on Sale of Powertel Investment (3.38) (3.38)
Gain on Sale of Deutsche Telekom Stock .10
Impairment Charge on Deutsche Telekom Investment (1.52)
Gain on Sale of SCANA Security (.04)
Electric Margin .04 .03
Gas Margin (.01) (.13)
O&M Expense (.05) (.04)
Depreciation Expense .01 .02
Interest Expense .05 .11
Other, Net .03 .11
Total Variance (3.29) (4.72)
2002 Reported EPS $.38 ($.30)
CONSOLIDATED OPERATING STATISTICS
Three Months Ended June 30, Six Months Ended June 30,
2002 2001 % Change 2002 2001 % Change
Electric Operations
Sales (Million KWH):
Residential 1,581 1,501 5.3 3,229 3,196 1.0
Commercial 1,658 1,604 3.4 3,065 2,999 2.2
Industrial 1,705 1,645 3.6 3,238 3,144 3.0
Other 138 138 - 258 259 (0.4)
Total Retail 5082 4,888 4.0 9,790 9,598 2.0
Wholesale 471 948 (50.3) 1,111 1,622 (31.5)
Total Sales 5,553 5,836 (4.8) 10,901 11,220 (2.8)
Customers (Period-End) 552,702 540,842 2.2
Natural Gas Operations
Sales (MillionTherms):
Residential 59 64 (7.8) 343 388 (11.6)
Commercial 58 56 3.6 187 200 (6.5)
Industrial 310 299 3.7 634 622 1.9
Total Retail 427 419 1.9 1,164 1,210 (3.8)
Sales for Resale 80 109 (26.6) 160 321 (50.2)
Transportation Volumes 73 63 15.9 158 127 24.4
Total Sales 580 591 (1.9) 1,482 1,658 (10.6)
Customers (Period-End) 1,001,237 1,032,539 (3.0)
WEATHER DATA - Average of Columbia and Charleston, SC
Three Months Ended June 30, Six Months Ended June 30,
Actual Percent Change Actual Percent Change
2002 vs 2001 vs Normal 2002 vs 2001 vs Normal
Heating Degree Days 74.0 (27.1) (38.1) 1,215.5 (10.6) (8.4)
Cooling Degree Days 814.0 5.4 7.1 878.0 11.4 9.9
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 hereunto duly authorized.
SCANA Corporation
(Registrant)
July 29, 2002 By: s/James E. Swan, IV
James E. Swan, IV
Controller