Rule 424(b)(4)
Registration Statement No. 333-97563
PROSPECTUS
5,250,000 Shares
SCANA Corporation
Common Stock
Our common stock is listed on the New York Stock Exchange under the
symbol "SCG." The last reported sale price of our common stock on the New York
Stock Exchange on October 9, 2002, was $25.32 per share.
Investing in our common stock involves risks. See "Risk Factors"
beginning on page 5 to read about certain factors you should consider before
buying our common stock.
Per Share Total
Public Offering Price $25.1000 $131,775,000
Underwriting Discounts
and Commissions $0.8157 $4,282,425
Proceeds to Company (before expenses) $24.2843 $127,492,575
The underwriters have an option to purchase 750,000 additional shares
of our common stock within 45 days from the date of this prospectus for $25.10
per share.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
Joint Book-Running Managers
UBS Warburg Banc of America Securities LLC
Co-Managers
Credit Suisse First Boston Wachovia Securities Merrill Lynch & Co.
The date of this prospectus is October 10, 2002.
Table of Contents
Page
Prospectus Summary................................................... 3
Risk Factors......................................................... 5
The Company.......................................................... 9
Where You Can Find More Information.................................. 11
Summary Consolidated Financial and Operating Information............. 14
Supplemental Financial Disclosures................................... 14
Use of Proceeds...................................................... 15
Capitalization....................................................... 16
Description of Common Stock.......................................... 16
Common Stock Dividends and Price Range............................... 19
Underwriting......................................................... 20
Legal Opinions....................................................... 22
Experts.............................................................. 22
Prospectus Summary
SCANA Corporation
SCANA is a fully-integrated energy company focused on the southeastern
United States with the breadth and depth of more than 150 years of experience in
the energy industry. SCANA is an industry leader focused on four areas we
believe are critical to our shareholders, customers, employees and communities:
excellence in customer service, developing our people, cost-effective operations
and profitable growth. We are registered as a public utility holding company
under the Public Utility Holding Company Act of 1935. Through its operating
subsidiaries, SCANA is engaged in the functionally distinct operations described
below. Our most significant operating subsidiaries are South Carolina Electric &
Gas Company ("SCE&G") and Public Service Company of North Carolina, Incorporated
("PSNC").
Millions of Dollars
(Unaudited)
Operating Revenues Six Operating Income
Months Ended June 30 Six Months Ended
June 30
------------------------------ -------------------------
--------------- -------------- ------------- -----------
2002 2001 2002 2001
Electric Operations
Regulated $651 $681 $174 $191
Gas Operations
Regulated 451 642 49 57
Non-regulated 369 736 19 19
Total
Regulated $1,102 $1,323 $223 $248
Non-regulated 369 736 19 19
--- --- -- --
$1,471 $2,059 $242 $267
====== ====== ==== ====
SCANA was incorporated in 1984. Our principal executive offices are
located at 1426 Main Street, Columbia, South Carolina 29201, telephone (803)
217-9000, and our mailing address is Columbia, South Carolina 29218.
The information above concerning us and our subsidiaries is only a
summary and does not purport to be comprehensive. For additional information
concerning us and our subsidiaries, you should refer to the information under
"The Company" on page 9 and to the information described in "Where You Can Find
More Information" on page 11.
The Offering
Common Stock Offered.....5,250,000 shares. We have also granted the
underwriters an option to purchase up to
750,000 additional shares of common stock to
cover over-allotments.
Use of Proceeds The net proceeds from the sale of this offering,
after deducting offering expenses, are
estimated to be approximately $127 million, or
$145 million if the underwriters exercise
their over-allotment option in full. We expect
to use all of the proceeds to make a
capital contribution to SCE&G, which anticipates
using it to pay down short-term debt
incurred primarily to fund capital expenditures.
Any net proceeds not contributed to SCE&G
will be used for general corporate purposes.
Dividend Policy The holders of our common stock
are entitled to receive dividends as
declared by our board of directors,
provided funds are legally available
for the dividends. Since the first
quarter of 2002, we have been paying
per share dividends to our common
shareholders at a rate of $1.30 on an
annualized basis.
Voting Rights Holders of our common stock are entitled to one
vote for each share of common stock held.
Trading Symbol Our common stock is listed on the New York Stock
Exchange under the symbol "SCG".
Risk Factors Your investment in our common
stock will involve risks. You should
carefully consider the discussion of
risks in "Risk Factors" in this
prospectus and the other information
in this prospectus, including our
cautionary statements regarding
"forward-looking statements," before
deciding whether an investment in our
common stock is suitable for you.
Risk Factors
Commodity price changes may affect the operating costs and competitive positions
of our businesses, thereby adversely impacting our results of operations.
Our energy businesses are sensitive to changes in coal, gas, oil and
other commodity prices. Any changes could affect the prices these businesses
charge, their operating costs and the competitive position of their products and
services. SCE&G is able to recover the cost of fuel through retail customers'
bills, but increases in fuel costs affect electric prices and, therefore, the
competitive position of electricity against other energy sources. In the case of
our regulated natural gas operations, costs for purchased gas and pipeline
capacity are recovered through retail customers' bills, but increases in gas
costs affect total retail prices and, therefore, the competitive position of our
gas businesses relative to electricity, other forms of energy and other gas
suppliers.
We are subject to complex government rate regulation, which could adversely
affect revenues and our results of operations.
We are subject to extensive regulation which could adversely affect our
operations. In particular, our electric operations in South Carolina, and our
gas operations in South Carolina and North Carolina, are regulated by state
utilities commissions. Although we believe we have constructive relationships
with our regulators, our ability to obtain rate increases that will allow us to
maintain our current rate of return is dependent upon regulatory discretion, and
there can be no assurance that we will be able to implement requested rate
increases on the schedule desired. Moreover, in connection with our acquisition
of PSNC, we agreed not to seek a general rate increase in the regulated North
Carolina gas market until 2005.
We are vulnerable to interest rate increases and we may not have access to
capital at favorable rates, if at all, which could increase our borrowing costs
and adversely affect our results of operations.
Changes in interest rates can affect the cost of borrowing on variable
rate debt outstanding, on refinancing of debt maturities and on incremental
borrowing to fund new investments. Our business plan reflects the expectation
that we will have access to the equity and capital markets on satisfactory terms
to fund our commitments. Moreover, our ability to maintain short-term liquidity
by utilizing our commercial paper programs is dependent upon our maintaining an
investment grade rating. Our liquidity would be adversely affected by changes in
the commercial paper market or if our bank credit facilities become unavailable.
We may not be able to reduce our leverage as quickly as we have planned. This
could result in downgrades of our debt ratings, thereby increasing our borrowing
costs and adversely affecting our results of operations.
Our leverage ratio of debt to capital increased significantly following
our acquisition of PSNC in 2000, and was 61% at June 30, 2002. We anticipate
that this ratio will increase due to our implementation of Statement of
Financial Accounting Standards No. 142, as a result of which we will record a
non-cash impairment in the probable range of $200-$250 million by December 31,
2002. We have publicly announced our desire to reduce this leverage ratio to
between 50% to 52%, but our ability to do so depends on a number of factors,
including the implementation of our pending electric rate increase in South
Carolina and the successful liquidation of our substantial holdings in Deutsche
Telekom AG. Our ability to liquidate our holdings in Deutsche Telekom will
depend on market conditions for that company's stock, and a further
deterioration of the value of that stock would impact our capital position. If
we are not able to continue to reduce our leverage ratio, our debt ratings may
be affected, we may be required to pay higher interest rates on our long- and
short-term indebtedness, and our access to the capital markets may be limited.
Our operating results may be adversely affected by abnormal weather.
We have historically sold less power, delivered less gas and received
lower prices for natural gas, and consequently earned less income, when weather
conditions are milder than normal. Mild weather in the future could diminish our
revenues and results of operations and harm our financial condition. In addition
severe weather can be destructive, causing outages and property damage,
adversely affecting operating expenses and revenues.
Potential competitive changes may adversely affect our gas and electricity
businesses due to the loss of customers or reductions in revenues.
The utility industry has been undergoing dramatic structural change for
several years, resulting in increasing competitive pressures on electric and
natural gas utility companies. Competition in wholesale power sales has been
introduced on a national level. Some states have also mandated or encouraged
competition at the retail level. Increased competition may create greater risks
to the stability of utility earnings generally and may in the future reduce our
earnings from retail electric and natural gas sales. In a deregulated
environment, formerly regulated utility companies that are not responsive to a
competitive energy marketplace may suffer erosion in market share, revenues and
profits as competitors gain access to their customers.
We are subject to risks associated with recent events affecting capital markets
and changes in business climate which could limit our access to capital, thereby
increasing our costs and adversely affecting our results of operations.
The September 11, 2001 attack on the United States and the ongoing war
against terrorism by the United States have resulted in greater uncertainty in
the financial markets. Additionally, the availability and cost of capital for
our business and those of our competitors could be adversely affected by the
bankruptcy of Enron Corporation and disclosures by Enron and other energy
companies of their trading practices involving electricity and natural gas.
These events have constrained and are expected to continue to constrain the
capital available to our industry and could limit our access to funding for our
operations. Other factors that generally could affect our ability to access
capital include: (1) general economic conditions; (2) market prices for
electricity and gas; and (3) our capital structure. Much of our business is
capital intensive, and achievement of our long-term growth targets is dependent,
at least in part, upon our ability to access capital at rates and on terms we
determine to be attractive. If our ability to access capital becomes
significantly constrained, our interest costs will likely increase and our
financial condition and future results of operations could be significantly
harmed.
We do not fully hedge against price changes in commodities. This could result in
increased costs, thereby resulting in lower margins and adversely affecting our
results of operations.
We enter into contracts to purchase and sell electricity and natural
gas. We attempt to manage our exposure by establishing risk limits and entering
into contracts to offset some of our positions (i.e., to hedge our exposure to
demand, market effects of weather and other changes in commodity prices).
However, we cannot always hedge the entire exposure of our operations from
commodity price volatility. To the extent we do not hedge against commodity
price volatility or our hedges are not effective, our results of operations and
financial position may be diminished.
A downgrade in our credit rating could negatively affect our ability to access
capital and to operate our businesses, thereby adversely impacting our results
of operations and financial condition.
In July 2002, Standard & Poor's lowered its long-term credit rating for
SCANA and its rated subsidiaries by one notch, and Moody's affirmed its ratings.
Standard & Poor's and Moody's rate our senior, unsecured debt at BBB+ and A3,
respectively, with a stable outlook. However, if Standard & Poor's or Moody's
were to further downgrade our long-term rating, particularly below investment
grade, our borrowing costs would increase, which would diminish our financial
results, and our potential pool of investors and funding sources could decrease.
Further, if our short-term ratings were to fall below A-1 or P-1, the current
ratings assigned by Standard & Poor's and Moody's, respectively, it could
significantly limit our access to the commercial paper market and our liquidity.
Changes in the environmental laws and regulations to which we are subject could
increase our costs or curtail our activities, thereby adversely impacting our
results of operations and financial condition.
Compliance with extensive federal, state and local environmental laws
and regulations requires us to commit significant capital toward environmental
monitoring, installation of pollution control equipment, emission fees and
permits at our facilities. These expenditures have been significant in the past
and we expect that they will increase in the future. Changes in compliance
requirements or a more burdensome interpretation by governmental authorities of
existing requirements may impose additional costs on us or require us to curtail
some of our activities. Costs of compliance with environmental regulations could
harm our industry, our business and our results of operations and financial
position, especially if emission and/or discharge limits are tightened, more
extensive permitting requirements are imposed or additional substances become
regulated.
Changing transmission regulatory and energy marketing structures could affect
our ability to compete in our electric markets, thereby adversely impacting our
results of operations, cash flows and financial condition.
The Federal Energy Regulatory Commission ("FERC") has issued a Notice
of Proposed Rulemaking ("NOPR") on Standard Market Design which proposes
sweeping changes to the country's existing regulatory framework governing
transmission, open access and energy markets and will attempt, in large measure,
to standardize the national energy market. While it is anticipated that
significant change to the NOPR may occur and that implementation, presently
scheduled for September 2004, may not occur for some time, any rules
standardizing the markets may have significant impact on our access and/or cost
of power for our native load customers and for our marketing of power outside
our service territory. At this time, management is unable to predict the final
rules or timing of implementation and the impact on our results of operations
and cash flows.
Repeal of PUHCA could adversely impact our business by increasing our costs or
otherwise changing or restricting the nature of activities in which we may
engage. Any such changes could thereby impact our results of operations.
We are a registered holding company under the Public Utility Holding
Company Act of 1935, as amended ("PUHCA"). Repeal of PUHCA has been proposed,
but it is unclear whether or when such a repeal would occur. It is also unclear
to what extent repeal of PUHCA would result in additional or new regulatory
oversight or action at the federal and state levels, or what the impact of those
developments might be on our business.
Problems with operations could cause us to incur substantial costs, thereby
adversely impacting our results of operations and financial condition.
As the operator of power generation facilities, SCE&G could incur
problems such as the breakdown or failure of power generation equipment,
transmission lines, other equipment or processes which would result in
performance below assumed levels of output or efficiency. The failure of a power
generation facility may result in our purchasing replacement power at market
rates. These purchases are subject to state regulatory approval for recovery
through rates.
We are a holding company and our assets consist primarily of investments in our
subsidiaries; covenants in certain of our financial instruments may limit our
ability to pay dividends, thereby adversely impacting the valuation of our
common stock and our access to capital.
Our assets consist primarily of investments in subsidiaries. Dividends
on our common stock depend on the earnings, financial condition and capital
requirements of our subsidiaries, principally SCE&G and PSNC. Our ability to pay
dividends on our common stock may also be limited by existing or future
covenants limiting the right of our subsidiaries to pay dividends on their
common stock. Any significant reduction in our payment of dividends in the
future may result in a decline in the value of our common stock. Such decline in
value could limit our ability to raise debt and equity capital.
A significant portion of our generating capacity is derived from nuclear power,
the use of which exposes us to regulatory, environmental and business risks.
These risks could increase our costs or otherwise constrain our business,
thereby adversely impacting our results of operations and financial condition.
The V.C. Summer nuclear plant, operated by SCE&G, provided approximately
4.5 million MWh, or 21% of our generation capacity, in 2001. Our license to
operate this plant currently expires in 2022. We have filed an application with
the federal Nuclear Regulatory Commission ("NRC") to extend the license for an
additional 20 years, but there can be no assurance that the extension will be
granted.
We are also subject to other risks of nuclear generation, which include the
following:
o The potential harmful effects on the environment and human health
resulting from a release of radioactive materials in connection with
the operation of nuclear facilities and the storage, handling and
disposal of radioactive materials;
o Limitations on the amounts and types of insurance commercially
available to cover losses that might arise in connection with our
nuclear operations or those of others in the United States;
o Uncertainties with respect to contingencies and assessment amounts if
insurance coverage is inadequate; and
o Uncertainties with respect to the technological and financial aspects
of decommissioning nuclear plants at the end of their licensed lives.
The NRC has broad authority under federal law to impose licensing and
safety-related requirements for the operation of nuclear generation facilities.
In the event of non-compliance, the NRC has the authority to impose fines or
shut down a unit, or both, depending upon its assessment of the severity of the
situation, until compliance is achieved. Revised safety requirements promulgated
by the NRC could necessitate capital expenditures at nuclear plants such as
ours. In addition, although we have no reason to anticipate a serious nuclear
incident, if a major incident should occur at a domestic nuclear facility, it
could harm our results of operations or financial condition. A major incident at
a nuclear facility anywhere in the world could cause the NRC to limit or
prohibit the operation or licensing of any domestic nuclear unit. Finally, in
today's environment, there is a heightened risk of terrorist attack on the
nation's nuclear facilities, which has resulted in increased security costs at
our nuclear plant.
The Company
SCANA is an energy-based holding company principally engaged, through
subsidiaries, in electric and natural gas utility operations, telecommunications
and other energy-related businesses. We serve more than 550,000 electric
customers in South Carolina and approximately one million natural gas customers
in South Carolina, North Carolina and Georgia.
Our most significant operating subsidiaries are SCE&G and PSNC. At June 30,
2002, they owned approximately 89% of our consolidated assets and for the 12
months ended June 30, 2002 they generated approximately 89% of our operating
income.
Business Segments
Regulated Utilities
We operate our regulated utility businesses in North Carolina and South
Carolina through wholly-owned subsidiaries. These regulated businesses continue
to be the foundation of our operations and conduct business in an environment
supported by growing service territories and favorable regulatory treatment. In
North Carolina, a strong economy has supported a 3.9% annual customer growth
rate over the three-year period ended June 30, 2002, while in South Carolina the
economy has supported a 2.4% annual customer growth rate over that period. SCANA
also operates in a favorable regulatory environment and maintains a generally
constructive relationship with the regulatory commissions in the states that it
serves. We are allowed, subject to state commission approval during annual fuel
and purchased gas cost hearings, full pass-through to retail customers of our
electric fuel and natural gas costs. Such approval has historically been
granted. There is also a weather normalization clause in effect in the states of
North Carolina and South Carolina. These measures mitigate our commodity price
risk and allow us to focus our efforts on serving our customers.
South Carolina Electric & Gas
SCE&G is a regulated public utility engaged in the generation,
transmission, distribution and sale of electricity and the purchase and sale,
primarily at retail, of natural gas in South Carolina. SCE&G's electric service
area extends into 24 counties covering more than 15,000 square miles of the
central, southern and southwestern portions of South Carolina. SCE&G's service
area for natural gas encompasses all or part of 33 of South Carolina's 46
counties, and covers more than 22,000 square miles. The total population of the
counties representing SCE&G's combined service area in South Carolina is
approximately 2.6 million.
SCE&G has significantly increased its marketing of services to
commercial and industrial customers, and has executed long-term power supply
contracts with a significant portion of its industrial customers. SCE&G provides
all of its electric generation capacity through its own facilities and maintains
a balanced supply and demand position as it relates to electric generation.
SCE&G has executed a contract with a third party for the portion of the
generating capacity of the Jasper plant that it does not expect to be able to
utilize immediately when that plant begins operations, which is scheduled for
2004.
SCE&G is subject to the jurisdiction of the Public Service Commission
of South Carolina, and in August 2002, submitted a request for an electric rate
increase, which if approved would go into effect in February 2003. The rate
increase relates primarily to SCE&G's expenditures for a recently completed
generating station and for the Jasper County, South Carolina generating station.
SCE&G also operates and has a two-thirds interest in the V.C. Summer
nuclear station in South Carolina. This station furnished approximately 21% of
SCE&G's electric generation capacity in 2001. In September 2002, SCE&G filed an
application with the federal Nuclear Regulatory Commission to extend its license
on the plant for an additional twenty years, until 2042.
In 1999 FERC mandated that SCE&G reinforce its Lake Murray dam in order
to maintain the lake in case of an extreme earthquake. Construction for the
project and related activities, which began in the third quarter of 2001, is
expected to cost approximately $250 million and be completed in 2005.
Public Service Company of North Carolina
PSNC is a public utility engaged primarily in purchasing, selling,
transporting and distributing natural gas to more than 375,000 residential,
commercial and industrial customers in North Carolina. PSNC's franchised service
area includes 28 counties covering approximately 12,000 square miles of North
Carolina. PSNC also owns a non-regulated subsidiary that refuels natural gas
vehicles and converts gasoline-fueled vehicles to natural gas.
PSNC is regulated by the North Carolina Utilities Commission ("NCUC").
PSNC's rates are established using a benchmark cost of gas approved by the NCUC,
which may be modified periodically to reflect changes in the market price of
natural gas and changes in the rates charged by PSNC's pipeline transporters.
The NCUC reviews PSNC's gas purchasing practices and prices each year.
In connection with our acquisition of PSNC, the NCUC stipulated and
PSNC agreed to a moratorium on general rate cases until August 2005.
South Carolina Pipeline Corporation
South Carolina Pipeline Corporation ("SCPC") is engaged in the
purchase, transmission and sale of natural gas on a wholesale basis to
distribution companies and directly to industrial customers in 40 counties
throughout South Carolina. SCPC also owns liquified national gas liquefaction
and storage facilities and supplies the natural gas for SCE&G's gas distribution
system.
Principal Nonregulated Businesses
SCANA Energy Marketing
SCANA Energy Marketing markets natural gas and wholesale electricity
primarily in the southeastern United States, and provides energy-related risk
management services to producers and customers. A division of SCANA Energy
Marketing, SCANA Energy, markets natural gas in Georgia's deregulated natural
gas market. At June 30, 2002, SCANA Energy had approximately 355,000 natural gas
customers in the deregulated Georgia market. SCANA Energy is the second-largest
marketer in Georgia's non-regulated retail gas market. SCANA Energy faces
significant competition in the Georgia natural gas market.
In June 2002, SCANA Energy was granted a two year right to serve as the
gas provider in Georgia for credit-challenged and low income customers. The
Georgia Public Service Commission structured this service to enable SCANA Energy
to reduce the risk to us of bad debt exposure from these customers.
SCANA Communications Holdings
SCANA Communications Holdings, Inc. manages investments in Deutsche Telekom
AG, an international telecommunications carrier, and in ITC Holding Company,
Inc., ITCDeltaCom, Inc. and Knology, Inc., which are telecommunication services
companies in the southeastern United States.
Business Strategy
Our business plan is based on traditional utility operations. We have a
straight-forward strategic plan that is focused on retail service to customers
in the southeast. We believe we can implement this strategy by:
o Maintaining excellent customer service. We have received several
prominent customer satisfaction awards, including an award to SCE&G for
the highest marks for overall residential customer satisfaction among
investor-owned utilities in the 12-state southern region in a study
released by J. D. Power and Associates in July 2002 and a number one
ranking for SCE&G in five of seven categories in a national survey of
large electric customers released by TQS Research in August 2002.
o Continuing our ability to provide cost-effective electric generation
with the completion of our Jasper plant and obtaining a license
extension for the V.C. Summer nuclear station.
o Maintaining a strong credit rating and capital structure while continuing our
tradition of consistent dividend payments.
o Developing our personnel by continued training. We conduct ongoing code
of conduct and compliance training for all of our employees annually.
o Minimizing high-risk activities such as speculative energy trading.
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's website at http://www.sec.gov. You may also read and
copy any document we file with the SEC at the SEC's public reference room at 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
room. Our common stock is listed on the New York Stock Exchange, and you may
also read our SEC filings at the Stock Exchange offices at 20 Broad Street, New
York, New York 10005.
This prospectus does not repeat important information that you can find
elsewhere in the registration statement and in the reports and other documents
which we file with the SEC under the Securities Exchange Act of 1934. The SEC
allows us to "incorporate by reference" the information we file with it, which
means that we can disclose important information to you by referring you to
those documents. The information incorporated by reference is an important part
of this prospectus, and information that we file later with the SEC will
automatically update and supersede that information. We incorporate by reference
the documents listed below and all future filings made with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act (File No. 1-08809) until
all of the shares of common stock that we have registered are sold:
o Our Annual Report on Form 10-K for the fiscal year ended December 31, 2001,
as amended;
o Our Quarterly Reports on Form 10-Q for the quarters ended March 31,2002
and June 30, 2002;
o Our Current Reports on Form 8-K dated January 23, 2002, July 29, 2002, and
August 13, 2002; and
o The description of our common stock contained in our Registration
Statement under the Exchange Act on Form 8-B dated November 6, 1984, as
amended May 26, 1995.
In addition, we are also incorporating by reference any additional documents
that we file with the SEC pursuant to these sections of the Exchange Act after
the date of the filing of the registration statement containing this prospectus
and prior to the date of effectiveness of the registration statement.
You may request a copy of our SEC filings, at no cost, by writing or
telephoning us at the following address:
H. John Winn, III
Manager - Investor Relations and Shareholder Services
SCANA Corporation
Columbia, South Carolina 29218
(803) 217-9240
You may obtain more information by contacting our Internet website, at
http://www.scana.com (which is not intended to be an active hyperlink). The
information on our Internet website is not incorporated by reference in this
prospectus, and you should not consider it part of this prospectus.
You should rely only on the information we incorporate by reference or
provide in this prospectus. We have not, and the underwriters have not,
authorized anyone else to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. This prospectus may only be used where it is legal to sell these shares of
our common stock. The information in this prospectus may only be accurate as of
the date of this prospectus. Our business, financial condition, results of
operation and prospects may have changed since that date.
Statements included in this prospectus and in the documents that we
incorporate by reference that 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 Exchange Act. Those statements include statements regarding the
intent, belief or current expectations of us and our management. Although we
believe that our expectations are based on reasonable assumptions, we can give
no assurance that our 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 our subsidiaries, (4) the impact of competition
from other energy suppliers, (5) growth opportunities for our regulated and
diversified subsidiaries, (6) the results of financing efforts, (7) changes in
our accounting policies, (8) weather conditions, especially in areas served by
our subsidiaries, (9) performance of and marketability of our 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 our periodic reports
filed with the SEC. We disclaim any obligation to update any forward-looking
statements.
Summary Consolidated Financial and Operating Information
The following table presents summary selected historical consolidated
financial data of SCANA Corporation. We derived this information from our
audited financial statements for the years ended December 31, 2000 and December
31, 2001 and our unaudited financial statements for the six months ended June
30, 2001 and June 30, 2002. This information is only a summary. You should read
it in connection with our historical financial statements and related notes and
the "Management's Discussion and Analysis of Financial Condition and Results of
Operation," which are incorporated by reference in this prospectus. See "Where
You Can Find More Information" on page 11 of this prospectus.
(Millions of Dollars Except Per Share Amounts)
(Unaudited)
Six Months Twelve Months Ended
Ended
Income Statement Data June 30, December 31,
2002 2001 2001 2000
---- ---- ---- ----
Operating Revenues:
Electric $651 $681 $1,369 $1,344
Gas 820 1,378 2,082 2,089
---- ----- ------ ------
Total Operating Revenues 1,471 2,059 3,451 3,433
Operating Income 242 267 528 554
Net Income (Loss) (32) 464 539 250
Earnings (Loss) per Weighted Average Common Share (0.30) 4.42 5.15 2.40
Dividends Declared per Common Share 0.65 0.60 1.20 1.15
Weighted Average Common Shares
Outstanding (Millions) 104.7 104.7 104.7 104.5
Electric Territorial Sales (Gigawatt Hours) 10,407 10,186 20,948 21,252
Balance Sheet Data As of June 30, As of December 31,
2002 2001 2001 2000
---- ---- ---- ----
Current Assets $1,197 $1,781 $1,557 $1,531
Utility Plant, Net 5,440 5,026 5,263 4,949
Other Property and Investments 280 326 284 282
Deferred Debits 751 715 718 665
------ ------ ------ ------
Total Assets $7,668 $7,848 $7,822 $7,427
====== ====== -====== ======
Supplemental Financial Disclosures
We adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") 142: Goodwill and Other Intangible Assets on January 1, 2002.
This resulted in the elimination of approximately $14.4 million of annual
goodwill amortization. The following table shows the adjusted effect on net
income and net income per share for the years ended December 31, 1999, 2000 and
2001, as if the provisions of SFAS 142 eliminating goodwill amortization had
been applied as of January 1, 1999.
(Millions of Dollars Except Per Share Amounts)
(Unaudited)
For the Year Ended December 31,
-------------------------------
2001 2000 1999
---- ---- ----
Reported net income $539 $250(1) $179
Amortization of acquisition adjustment 14 14 1
----- ---- ----
Adjusted net income $553 $264 $180
==== ==== ====
Basic and diluted earnings per share:
Reported net income $5.15 $2.40(1) $1.73
Amortization of acquisition adjustment .13 .13 .01
----- ---- -----
Adjusted net income $5.28 $2.53 $1.74
===== ===== =====
(1)Includes $29 million ($.28 earnings per share) of cumulative effect of
accounting change.
Use of Proceeds
The net proceeds from the sale of the common stock in this offering are
estimated to be $127 million, or $145 million if the underwriters exercise their
over-allotment option in full. We expect to use all of the proceeds to make a
capital contribution to SCE&G, which anticipates using it to pay down short-term
debt incurred primarily to fund capital expenditures. Any net proceeds not
contributed to SCE&G will be used for general corporate purposes.
The short-term debt to be paid down by SCE&G was incurred under its
commercial paper program. At October 8, 2002, the weighted average maturity of
SCE&G's approximately $221 million of outstanding commercial paper was
approximately 25 days and the weighted average interest rate was 1.81%.
Pending application of the net proceeds for specific purposes, we may
invest the proceeds in short-term or marketable securities.
Capitalization
Capitalization is the amount invested in the company and is a common
measurement of a company's size. The table below sets forth our capitalization
as of June 30, 2002:
o On an actual basis; and
o On an as adjusted basis giving effect to the sale of 5,250,000 shares
of our common stock (assuming no exercise of the underwriters'
over-allotment option), and our application of the net proceeds from
the sale in the manner described in "Use of Proceeds."
(Millions of Dollars)
(Unaudited)
As of June 30, 2002
Capitalization: Actual Percentage As Adjusted (1) Percentage(1)
------ ---------- --------------- -------------
Long-Term Debt, Net $2,993 52% $2,993 51%
Current Portion of Long-Term Debt 396 7 396 7
Preferred Stock (not subject to purchase or sinking funds) 106 2 106 2
Preferred Stock, Net (subject to purchase or sinking funds) 10 - 10 -
Current Portion of Preferred Stock 1 - 1 -
SCE&G-Obligated Mandatorily Redeemable Preferred
Securities of SCE&G's Subsidiary Trust, SCE&G Trust I, 1
Holding Solely $50 million Principal Amount of 7.55%
Junior Subordinated Debentures of SCE&G, Due 2027
50 1 50
Common Shareholders' Equity 2,150 38 2,277 39
----- --- ----- ---
Total Capitalization (2) $5,706 100% $5,833 100%
====== ==== ====== ====
(1) Adjusted to reflect the receipt of the net proceeds from the sale of
the common stock offered hereby.
(2) Total Capitalization excludes short-term borrowings under the
Company's commercial paper program which totaled $213 million
at June 30, 2002. See "Use of Proceeds."
Description of Common Stock
General
The rights of shareholders of our common stock are currently governed
by the South Carolina Business Corporation Act, our restated articles of
incorporation and our bylaws. The following summary describes the material
rights of our shareholders.
Authorized Capital Stock
Under the South Carolina Business Corporation Act, a corporation may
not issue a greater number of shares than have been authorized by its articles
of incorporation. The authorized capital stock of SCANA consists of 150,000,000
shares of SCANA common stock, no par value, and no shares of preferred stock. At
the close of business on September 30, 2002, 104,732,446 shares of our common
stock were issued and outstanding, and not more than 7.5 million shares of our
common stock were reserved for issuance pursuant to our benefit plans and the
Investor Plus Plan.
Voting
Holders of our common stock are entitled to one vote, in person or by
proxy, for each share held on the applicable record date with respect to each
matter submitted to a vote at a meeting of stockholders, and may not cumulate
their votes.
Dividends
Holders of our common stock are entitled to receive dividends as and
when declared by our board of directors out of funds legally available therefor.
Liquidation Rights
In the event we liquidate, dissolve or wind up our affairs, the holders
of our common stock would be entitled to share ratably in all of our assets
available for distribution to shareholders of our common stock remaining after
payment in full of liabilities.
Preemptive Rights
Holders of common stock do not have preemptive rights to subscribe for
additional shares when we offer for sale additional shares of our common stock.
Provisions Relating to Change in Control
Our restated articles of incorporation and bylaws contain provisions
which could have the effect of delaying, deferring or preventing a change in
control of SCANA. These provisions are summarized below.
Corporate Governance Provisions
Our restated articles of incorporation provide that the board of
directors is subdivided into three classes, with each class as nearly equal in
number of directors as possible. Each class of directors serves for three years
and one class is elected each year. We currently have 12 directors (four
directors each in classes with terms expiring in 2003, 2004 and 2005). Our
restated articles of incorporation and bylaws provide that:
o the authorized number of directors may range from a minimum of nine to
a maximum of 20, as determined from time to time by the directors;
o directors can be removed only (x) for cause or (y) otherwise by the
affirmative vote of the holders of 80 percent of the
shares of our stock who are entitled to vote; and
o vacancies and newly created directorships on our board of directors can
be filled by a majority vote of the remaining directors then in office,
even though less than a quorum, and any new director elected to fill a
vacancy will serve until the next shareholders' meeting at which
directors of any class are elected.
Anti-Takeover Provisions
Certain provisions of our restated articles of incorporation and bylaws
may have the effect of discouraging unilateral tender offers or other attempts
to take over and acquire our business. These provisions might discourage some
potentially interested purchaser from attempting a unilateral takeover bid for
us on terms which some shareholders might favor. Our restated articles of
incorporation require that certain corporate actions and fundamental
transactions must be approved by the holders of 80 percent of the outstanding
shares of our capital stock entitled to vote on the matter unless at least 50
percent of the members of the board of directors (other than members related to
the potentially interested purchaser or other person attempting to take over our
business) has approved the action or transaction, in which case the required
shareholder approval will be the minimum approval required by applicable law.
The corporate actions or fundamental transactions that are subject to
these provisions of our restated articles of incorporation are those corporate
actions or transactions that require approval by shareholders under applicable
law or our restated articles of incorporation, including certain amendments of
our restated articles of incorporation or bylaws, certain transactions involving
our merger, consolidation, liquidation, dissolution or winding up, certain sales
or other dispositions of our assets or the assets of any of our subsidiaries,
certain issuances (or reclassifications) of our securities or the securities of
any of our subsidiaries or certain recapitalizations of transactions that have
the effect of increasing the voting power of the potentially interested
purchaser or other person attempting to take over our business.
Prevention of Greenmail
Our restated articles of incorporation provide that we cannot purchase
any of our outstanding common stock at a price we know to be more than the
market price from a person who is known to us to be the beneficial owner of more
than three percent of our outstanding common stock and who has purchased or
agreed to purchase any shares of our common stock within the most recent
two-year period, without the approval of the holders of a majority of the
outstanding shares of our common stock other than such person, unless we offer
to purchase any and all of the outstanding shares of common stock.
Common Stock Dividends and Price Range
Our common stock is traded on the New York Stock Exchange. The
following table sets forth the range of intra-day high and low sale prices per
share, as reported by the New York Stock Exchange-Composite Listing, and the
cash dividends declared per share, of our common stock for the periods
indicated:
Price Range Cash Dividends
High Low Declared Per Share
2000
First Quarter $29.00 $22.00 $.2875
Second Quarter 26.88 22.81 .2875
Third Quarter 30.94 24.38 .2875
Fourth Quarter 31.13 25.75 .2875
2001
First Quarter $30.00 $24.92 $.3000
Second Quarter 29.03 26.61 .3000
Third Quarter 28.49 24.25 .3000
Fourth Quarter 27.99 25.00 .3000
2002
First Quarter $30.66 $26.26 $.3250
Second Quarter 32.15 29.05 .3250
Third Quarter 31.26 23.50 .3250
Fourth Quarter (through
October 9, 2002) 26.77 24.80
On October 9, 2002, the reported last sale price of our common stock on
the New York Stock Exchange was $25.32 per share. As of September 30, 2002, we
had 104,732,446 shares of our common stock outstanding.
Dividends on our common stock are paid as declared by our board of
directors. On August 1, 2002, our board of directors declared a regular
quarterly dividend of $.3250 per share on the common stock, paid on October 1,
2002 to shareholders of record on September 10, 2002. Dividends are typically
paid on the first day of January, April, July and October.
Future dividends will depend on future earnings, which, in large part,
are dependent upon the ability of SCE&G, PSNC and our other regulated
subsidiaries to obtain regulatory approval for future rate increases, our cash
position and financial condition and other factors. At the current dividend
rate, after giving effect to the issuance of the shares of common stock offered
hereby, our quarterly dividend payments on our outstanding common stock will be
approximately $36 million.
Our Investor Plus Plan permits the holders of our common stock and the
holders of SCE&G preferred stock to invest optional cash payments subject to
limitations in amount and reinvest dividends in additional shares of our common
stock. The prospectus describing the Investor Plus Plan and an enrollment form
are available upon request to: SCANA Corporation, Columbia, South Carolina
29218, Attention: Investor Relations and Shareholder Services.
Underwriting
UBS Warburg LLC and Banc of America Securities LLC are acting as
representatives of the underwriters named below (the Representatives). Subject
to the terms and conditions stated in the underwriting agreement dated the date
of this prospectus, each underwriter named below has severally agreed to
purchase, and we have agreed to sell to that underwriter, the number of shares
of our common stock set forth opposite the underwriter's name.
Underwriter Number of Shares
----------- ----------------
UBS Warburg LLC 1,575,000
Banc of America Securities LLC 1,575,000
Credit Suisse First Boston Corporation 787,500
Wachovia Securities, Inc. 787,500
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 525,000
Total................................................... 5,250,000
=============================================================================
The underwriting agreement provides that the obligations of the
underwriters to purchase the shares included in this offering are subject to
approval of legal matters by counsel and to other conditions. The underwriters
are obligated to purchase all the shares, other than those covered by the
over-allotment option described below, if they purchase any of the shares.
The underwriters propose to offer some of the shares directly to the
public at the public offering price set forth on the cover page of this
prospectus and some of the shares to dealers at the public offering price less a
concession not to exceed $0.48 per share. The underwriters may allow, and the
dealers may reallow, a concession not to exceed $0.10 per share on sales to
other dealers. If all of the shares are not sold at the initial offering price,
the representatives may change the public offering price and the other selling
terms.
We have granted to the underwriters an option, exercisable for 45 days
from the date of this prospectus, to purchase up to 750,000 additional shares of
our common stock at the public offering price less the underwriting discount.
The underwriters may exercise the option solely for the purpose of covering
over-allotments, if any, in connection with this offering. To the extent the
option is exercised, each underwriter must purchase a number of additional
shares approximately proportionate to that underwriter's initial purchase
commitment.
We and certain of our executive officers have agreed that for a period
of 90 days from the date of this prospectus, we and they will not, without the
prior written consent of the Representatives dispose of or hedge any shares of
common stock or any securities convertible into or exchangeable or exercisable
for our common stock (other than the exercise of outstanding options and
issuances of shares issuable under plans for employees or stockholders in effect
on the date of this prospectus). Our common stock is listed on the New York
Stock Exchange under the symbol "SCG."
The following table shows the underwriting discounts and commissions
that we are to pay to the underwriters in connection with this offering. These
amounts are shown assuming both no exercise and full exercise of the
underwriters' option to purchase additional shares of our common stock.
Paid by SCANA
Full Exercise
------------------
No Exercise
Per share....................................... $0.8157 $0.8157
Total........................................... $4,282,425 $4,894,200
In connection with this offering, the Representatives on behalf of the
underwriters may purchase and sell shares of our common stock in the open
market. These transactions may include short sales, syndicate covering
transactions and stabilizing transactions. Short sales involve syndicate sales
in excess of the number of shares to be purchased by the underwriters in this
offering, which creates a syndicate short position. "Covered" short sales are
sales made in an amount up to the number of shares represented by the
underwriters' over-allotment option. In determining the source of shares to
close out the covered syndicate short position, the underwriters will consider,
among other things, the price of shares available for purchase in the open
market as compared to the price at which they may purchase shares through the
over-allotment option. Transactions to close out the covered syndicate short
involve either purchases of shares in the open market after the distribution has
been completed or the exercise of the over-allotment option. The underwriters
may also make "naked" short sales of shares in excess of the over-allotment
option. The underwriters must close out any naked short position by purchasing
shares in the open market. A naked short position is more likely to be created
if the underwriters are concerned that there may be downward pressure on the
price of the shares in the open market after pricing that will adversely affect
investors who purchase in the offering. Stabilizing transactions consist of bids
for or purchases of shares in the open market while this offering is in
progress.
The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when the
Representatives repurchase shares originally sold by that syndicate member in
order to cover syndicate short positions or make stabilizing purchases.
Any of these activities may have the effect of preventing or retarding
a decline in the market price of our common stock. They may also cause the price
of our common stock to be higher than the price that would otherwise exist in
the open market in the absence of these transactions. The underwriters may
conduct these transactions on the New York Stock Exchange or in the
over-the-counter market, or otherwise. If the underwriters commence any of these
transactions, they may discontinue them at any time.
We estimate that our portion of the total expenses of this offering
will be $220,000.
The underwriters and their affiliates from time to time perform and
currently perform various investment or commercial banking and financial
advisory services for us in the ordinary course of business.
Some of the underwriters or their affiliates may receive a portion of
the net proceeds of this offering. See "Use of Proceeds." If more than 10% of
the net proceeds of this offering is to be paid to the underwriters or their
affiliates, the NASD Conduct Rules require that the offering be conducted by the
underwriters in compliance with NASD Rule 2710(c)(8).
We have agreed to indemnify the underwriters against some liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments the underwriters may be required to make because of any of those
liabilities. Specifically, the underwriting agreement provides that we will
indemnify the underwriters for losses, claims, liabilities, expenses or damages
arising out of or based on untrue statements of a material fact contained in
this prospectus or the registration statement of which the prospectus is a part
(or any amendment hereto or thereto) or in any document filed under the Exchange
Act and deemed to be incorporated by reference herein, or omissions to state
material facts required to be stated herein or therein in order to make the
statements contained herein or therein not misleading, with certain exceptions.
T+4 Settlement
We expect that delivery of the shares will be made against payment
therefor on or about October 16, 2002, which will be the fourth business day
following the date hereof (this settlement cycle being referred to as "T+4").
Under Rule 15c6-1 of the SEC under the Exchange Act, trades in the secondary
market generally are required to settle in three business days, unless the
parties to that trade expressly agree otherwise. Accordingly, purchasers who
wish to trade shares on the date hereof will be required, by virtue of the fact
that the shares initially will settle in T+4, to specify an alternate settlement
cycle at the time of any such trade to prevent a failed settlement and should
consult their own advisors.
Legal Opinions
Certain legal matters in connection with the validity of the common stock
offered hereby are being passed upon for the Company by McNair Law Firm, P.A.,
Columbia, South Carolina and by H. Thomas Arthur, Esq. or Sarena D. Burch, Esq.
of Columbia, South Carolina, who are our Senior Vice President and General
Counsel and Deputy General Counsel, respectively, and for the underwriters by
Troutman Sanders LLP, Richmond, Virginia. Troutman Sanders LLP will rely as to
all matters of South Carolina law upon the opinion of H. Thomas Arthur, Esq. or
Sarena D. Burch, Esq.
At June 30, 2002, H. Thomas Arthur, Esq. and Sarena D. Burch, Esq. owned
beneficially 16,886 and 3,434, respectively (and options to purchase 70,930 and
29,876, respectively), shares of our common stock, including shares acquired by
the trustee under our Stock Purchase-Savings Plan by use of contributions made
by Mr. Arthur and Ms. Burch, respectively, and earnings thereon, and including
shares purchased by the trustee by use of SCANA contributions and earnings
thereon.
Experts
The consolidated financial statements and related financial
statement schedule incorporated in this prospectus by reference from our Annual
Report on Form 10-K for the year ended December 31, 2001, as amended, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report (which expresses an unqualified opinion and includes an explanatory
paragraph referring to a change in our method of accounting for operating
revenues associated with our regulated utility operations), which is
incorporated herein by reference and has been so incorporated in reliance upon
the report of such firm, given upon their authority as experts in accounting and
auditing.
5,250,000 Shares
SCANA CORPORATION
Common Stock
Prospectus
UBS WARBURG
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
WACHOVIA SECURITIES
MERRILL LYNCH & CO.
October 10, 2002