UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE
ACT OF 1934
(Mark One)
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x
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2011
OR
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¨
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TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Transition period from to
Commission file number
1-6196
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A.
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Full title of the plan and address of the plan, if different from that of the issuer named below:
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Piedmont Natural Gas Company, Inc. 401(k) Plan
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B.
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Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
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Piedmont Natural Gas Company, Inc.
4720 Piedmont Row Drive
Charlotte, North Carolina 28210
Contents
Report of Independent Registered Public Accounting Firm
To the Benefits Committee and Participants in
Piedmont Natural Gas Company, Inc. 401(k) Plan
Charlotte, North Carolina
We have audited the
accompanying statements of net assets available for benefits of Piedmont Natural Gas Company, Inc. 401(k) Plan (the “Plan”) as of December 31, 2011 and 2010, and the related statement of changes in net assets available for benefits
for the year ended December 31, 2011. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets
available for benefits of Piedmont Natural Gas Company, Inc. 401(k) Plan as of December 31, 2011 and 2010, and the changes in net assets available for benefits for the year ended December 31, 2011, in conformity with U.S. generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a
whole. The supplemental Schedule of Assets (Held at End of Year) as of December 31, 2011, is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required
by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule
has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ McGladrey LLP
Charlotte, North Carolina
June 27, 2012
1
Piedmont Natural Gas Company, Inc. 401(k) Plan
Statements of Net Assets Available for Benefits
December 31, 2011 and 2010
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2011
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2010
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Assets
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Plan interest in the Master Trust (Notes 3, 4, 7, 8, and 9)
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$
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159,131,494
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$
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—
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Participant-directed investments (Notes 3, 7, 8 and 9)
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—
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149,652,536
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Receivable - due from broker for securities sold
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—
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99,905
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Receivable - participant loans
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—
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6,287,258
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Total assets
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159,131,494
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156,039,699
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Liabilities
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Due to broker for securities purchased
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—
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90,405
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Other
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—
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9,500
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Net assets available for benefits at fair value
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159,131,494
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155,939,794
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Adjustment from fair value to contract value for interest in common collective trust relating to fully benefit-responsive
investment contracts
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(871,579
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)
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(626,268
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)
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Net assets available for benefits
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$
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158,259,915
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$
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155,313,526
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See Notes to Financial Statements.
2
Piedmont Natural Gas Company, Inc. 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2011
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Additions to net assets attributed to:
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Investment income in Master Trust:
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Net depreciation in fair value of investments (Note 3)
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$
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(1,214,453
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)
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Interest, dividends and other
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1,997,005
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Total investment income in Master Trust
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782,552
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Interest income on participant loans receivable
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431,470
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Contributions:
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Employer
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5,276,999
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Participant
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8,104,616
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Participant rollovers
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387,395
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Total contributions
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13,769,010
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Total additions
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14,983,032
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Deductions from net assets attributed to:
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Benefits paid to participants
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11,567,237
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Expenses (Note 7)
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469,406
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Total deductions
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12,036,643
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Net increase
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2,946,389
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Net assets available for benefits:
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Beginning of year
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155,313,526
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End of year
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$
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158,259,915
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See Notes to Financial Statements.
3
Piedmont Natural Gas Company, Inc. 401(k) Plan
Notes to Financial Statements
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Note 1.
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Description of the Plan
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The following
description of Piedmont Natural Gas Company, Inc. (the “Company”) 401(k) Plan (“the Plan”) is provided for general information purposes only. Participants should refer to the Plan document for more complete information.
General
: The Plan is a defined contribution plan providing benefits to participating employees or their beneficiaries upon retirement,
death or termination of employment (following a break in service, as defined in the Plan). As a result of a plan merger effective on October 1, 2001, participants’ accounts in the Company’s employee stock ownership plan (ESOP) were
transferred into the Plan. Former ESOP participants may remain invested in Piedmont Natural Gas Company, Inc. (“Piedmont”) common stock in the Plan or may sell the common stock at any time and reinvest the proceeds in other available
investment options.
Employees become eligible to participate in the Plan on the first day of any pay period after they have completed thirty
days of continuous service with the Company and attained age 18. The Benefits Committee of the Board of Directors of the Company controls and manages the operation and administration of the Plan. Wells Fargo Bank, N.A. (“Wells Fargo”)
serves as the trustee of the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
Plan administration
: The Plan is administered by the Benefits Committee. Effective January 1, 2011, the Company entered into an agreement with Wells Fargo to create the Piedmont Natural Gas
Company, Inc. Master Trust (the “Master Trust”). The Master Trust includes the investment assets of each of the benefit plans maintained by the Company as further described in more detail in Note 4. Wells Fargo is responsible for the
custody and management of the Plan’s assets.
Contributions
: Employees are able to contribute up to 50% of eligible pay to the
Plan on a pre-tax basis, up to the Tax Code annual contribution limit. Employees are able to receive a company match of 100% up to the first 5% of eligible pay contributed. The Company automatically enrolls all newly eligible employees in the Plan
at a 2% contribution rate unless the employee chooses not to participate by notifying the Plan trustee. For employees who are automatically enrolled in the Plan, the Company will automatically increase their contributions by 1% each year to a
maximum of 5% unless the employee chooses to opt out of the automatic increase by contacting the trustee. If the employee does not make an investment election, employee contributions and matches are automatically invested in a diversified portfolio
of stocks and bonds. Participants may invest in Piedmont common stock up to a maximum of 20% of their account. Employees may change their contribution rate and investments at any time. Additional amounts may be contributed by the Company at the
discretion of the Company’s Board of Directors. There were no discretionary Company contributions during the year ended December 31, 2011. Participants may also contribute amounts representing distributions from other qualified defined
benefit or defined contribution plans.
Participant accounts
: Individual accounts are maintained for each Plan participant. Each
participant’s account is credited with the participant’s contribution, the Company’s matching contribution, and allocations of Company discretionary contributions, if applicable, and Plan earnings, and charged with any benefit
payments and allocations of plan losses and expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s
vested account.
4
Piedmont Natural Gas Company, Inc. 401(k) Plan
Notes to Financial Statements
|
Note 1.
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Description of the Plan (Continued)
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Investments
: Participants direct the investment of their contributions into various investment options offered by the Plan. Currently, the Plan
offers eleven mutual funds, one common trust fund, one common collective trust fund, and one common stock fund as investment options for participants.
Vesting
: All participant contributions and earnings thereon are fully vested and nonforfeitable upon allocation to the participants’ accounts. A participant will become 100% vested in his
employer matching contributions after the participant completes six months of service.
Participant loans
: Participants may borrow from
their fund accounts a minimum of $1,000 up to a maximum of $50,000 or 50% of their account balances, whichever is less. Loans must be entirely repaid within 5 years unless the loan is for the purchase of a primary residence. The loans are secured by
the balance in the participant’s account and bear interest at the average yield of five-year U.S. Treasury notes. Principal and interest are paid ratably through payroll deductions. Interest rates on loans range from 6.77% to 7.00% at
December 31, 2011.
Payment of benefits
: Upon termination of service, the vested balance of a participant’s account will be
paid to the participant, or, in the case of death, to the spouse or beneficiary, if any, in a single, lump sum of cash or common stock as permitted by the Plan.
|
Note 2.
|
Summary of Significant Accounting Policies
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Basis of accounting
: The accompanying financial statements of the Plan are prepared under the accrual method of accounting.
Use of estimates
: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make
estimates and assumptions that affect the financial statements and accompanying notes. Actual results could differ from those estimates.
Investment contracts
: As described in the authoritative guidance, fully benefit-responsive investment contracts held by a defined contribution
plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive
investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan.
The Plan invests in investment contracts through a collective trust in the Wells Fargo Stable Return Fund (G) for 2011 and the Union Bond & Trust Company in 2010. As required by the
guidance, the statements of net assets available for benefits presents the fair value of the investments in the collective trust as well as the adjustment of the investment in the collective trust from fair value to contract value relating to the
investment contracts. The statement of changes in net assets available for benefits is prepared on a contract value basis.
5
Piedmont Natural Gas Company, Inc. 401(k) Plan
Notes to Financial Statements
|
Note 2.
|
Summary of Accounting Policies (Continued)
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Investment valuation and income recognition
: Investments are reported at fair value. Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 8 for disclosure of our fair value measurements.
We utilize market data or assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally observable. We
primarily apply the market approach for recurring fair value measurements and endeavor to utilize the best available information. Accordingly, we use valuation techniques that maximize the use of observable inputs and minimize the use of
unobservable inputs. We are able to classify fair value balances based on the observance of those inputs into the fair value hierarchy levels as set forth in the fair value accounting guidance.
Following is a description of the valuation methodologies used for our investment assets measured at fair value. There have been no changes in the
methodologies used at December 31, 2011 and 2010.
Cash equivalents
: Valued at the net asset value (“NAV”) of the
funds in which it participates at year-end.
Common stock and hedging instruments
: Valued at the closing price reported on the
active market on which individual securities are traded.
Common stock fund
: Calculated based on the closing price reported on
the active market on which the securities in the fund are traded.
Mutual funds and net assets held in 401(h) account
: Valued at
the NAV of shares held by the Master Trust at year-end.
Common trust fund, commodities fund, and multi-strategy hedge fund
:
Valued at the NAV of the funds in which it participates at year-end.
Hedge fund of funds
: Valued based on a quarterly
compilation of the financial statements from the underlying partnerships in which the fund invests.
Corporate bonds, collateralized
mortgage obligations, government and agency bonds, municipal bonds, and mortgage-backed pass-throughs
: Valued based on a compilation of primary observable market information or a broker quote in a non-active market.
Common collective trust fund
: Valued at NAV based on information provided by the trustee and using the audited financial statements of the
common collective trust at year-end.
Level 1 inputs are quoted prices (unadjusted) or NAVs in active markets that we have the ability to
access as of the reporting date and consist of investments in cash equivalents, common stock, a common stock fund, hedging instruments, and mutual funds. Level 2 inputs are inputs other than quoted prices in active markets included in
Level 1, which are either directly or indirectly corroborated or observable as of the reporting date and generally use valuation methodologies, and consist of common trust funds, various fixed income investment types, multi-strategy hedge
funds, commodities funds, and a common collective trust fund as discussed in “Investment contracts” above. These investments are classified as Level 2 as their fair value is estimated using pricing models and discounted cash flows that
consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, and credit spreads. Level 3 inputs include significant pricing inputs that are generally less observable from
objective sources and consist of hedge fund of funds.
6
Piedmont Natural Gas Company, Inc. 401(k) Plan
Notes to Financial Statements
|
Note 2.
|
Summary of Accounting Policies (Continued)
|
The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair
values. Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could
result in a different fair value measurement at the reporting date.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plan’s gains and losses on investments bought and sold as well as held during the year.
Management fees and operating expenses charged to the Plan for investments in the mutual funds and common trust fund are deducted from income earned on a
daily basis and are not separately reflected.
Consequently, management fees and operating expenses are reflected as a reduction of investment
return for such investments.
Contributions
: Contributions from employees of the Plan Sponsor and matching contributions from the Plan
Sponsor are recorded in the year in which the employee contributions are withheld along with the applicable matching contribution. All employee and employer contributions are participant-directed.
Payment of benefits
: Benefit payments to participants are recorded when paid.
Expenses
: As provided by the plan document, administrative expenses (excluding certain trustee and fund management expenses) of the Plan are paid by the Company.
Subsequent events
: We monitor significant events occurring after the balance sheet date and prior to the issuance of the financial statements to
determine the impacts, if any, of events on the financial statements to be issued. All subsequent events of which we are aware were evaluated through the filing date of this Form 11-K.
Accounting pronouncements
: In January 2010, the FASB released Accounting Standards Update No. 2010-06 (“ASU 2010-06”),
Fair Value Measurements and Disclosures (Topic 820):
Improving Disclosures about Fair Value Measurement
. The update requires the Company to (a) disclose transfers in and out of Levels One and Two, in addition to transfers in and out of Level Three and (b) separately disclose purchases,
sales, issuances, and settlements of Level Three securities. Additionally, ASU 2010-06 clarifies the information the Company currently discloses regarding valuation techniques, inputs used in those valuation models, and at what level of detail fair
value disclosures should be provided. ASU 2010-06 was effective for interim and annual reporting periods beginning after December 15, 2009, except for the disaggregation of the Level Three activity, which was effective for interim and annual
periods beginning after December 15, 2010. ASU 2010-06 did not materially impact the Plan’s fair value disclosures.
7
Piedmont Natural Gas Company, Inc. 401(k) Plan
Notes to Financial Statements
|
Note 2.
|
Summary of Significant Accounting Policies (Continued)
|
In September 2010, the FASB issued an amendment (“ASU 2010-25”),
Plan Accounting – Defined Contribution Pension Plans (Topic 962):
Reporting Loans to Participants by Defined Contribution Plans
, which provides guidance on how loans to participants should be classified and measured by defined contribution pension plans. This amendment requires that participant loans be
classified as notes receivable from participants, which are segregated from plan investments and measured at their principal balance plus any accrued but unpaid interest. This amendment was effective for periods ending after December 15, 2010,
with early adoption permitted. This amendment requires retrospective application to all periods presented. This amendment was adopted for the year ended December 31, 2010.
In May 2011, the FASB issued an amendment (“ASU 2011-04”),
Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS
,
which provides guidance to improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and International Financial Reporting Standards (IFRS). The amendments are not
intended to change the application of the current fair value requirements, but to clarify the application of existing requirements. The guidance does change particular principles or requirements for measuring fair value or disclosing information
about fair value measurements. To improve consistency, language has been changed to ensure that U.S. GAAP and IFRS fair value measurement and disclosure requirements are described in the same way. The guidance will be effective for annual periods
beginning after December 15, 2011. The guidance will primarily impact the Plan’s disclosures but otherwise is not expected to have a material impact on the Plan’s financial statements.
The Master Trust’s
investments that represent 5% or more of net assets available for benefits as of December 31, 2011, which includes the fully benefit-responsive contracts as described in Note 2, are as follows:
|
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Wells Fargo Stable Return Fund (G) ** - 695,298 shares
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$
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34,941,345
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|
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Paps Long Duration Corporate Bond Fund - 5,650,385 shares
|
|
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65,487,958
|
|
As of December 31, 2011, the Plan holds 694,588 shares of the Wells Fargo Stable Return Fund (G) with a fair
value of $34,905,675, which represents 5% or more of the Master Trust’s net assets available for benefits.
8
Piedmont Natural Gas Company, Inc. 401(k) Plan
Notes to Financial Statements
|
Note 3.
|
Investments (Continued)
|
The Plan’s investments that represent 5% or more of net assets available for benefits as of December 31, 2010, which includes the fully
benefit-responsive contracts as described in Note 2, are as follows:
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|
|
|
|
|
|
Wells Fargo Enhanced Stock Market Fund - 173,894 units
|
|
$
|
16,809,633
|
|
|
American Funds The Growth Fund of America (A) - 514,173 shares
|
|
|
15,651,424
|
|
|
Union Bond & Trust Company Stable Value Fund **- 1,396,073 units
|
|
|
32,898,737
|
|
|
Dodge & Cox Income Fund - 1,288,476 shares
|
|
|
17,046,533
|
|
|
Dodge & Cox Stock Fund - 118,118 shares
|
|
|
12,728,358
|
|
|
Munder Mid Cap Core Growth Fund (A) - 331,514 shares
|
|
|
9,245,922
|
|
|
American Europacific Growth Fund (A) - 255,795 shares
|
|
|
10,582,250
|
|
|
**
|
Represents fully benefit-responsive investment contracts.
|
The Plan invests in a fully benefit-responsive investment contract through the Wells Fargo Stable Return Fund (G) in 2011 and invested in the Union Bond & Trust Company Stable Value Fund in
2010 (the “Fund”). The accounts are maintained in a general account. The account is credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The objective of the Fund is to
protect principal while providing a higher rate of return than shorter maturity investments, such as money market funds or certificates of deposit. To achieve this, the Fund invests in instruments which are not expected to experience significant
price fluctuation in most economic or interest rate environments. However, there is no assurance that this objective can be achieved.
Market
value events may limit the ability of the Funds to transact at contract value with the issuer. Such events may include but are not limited to: Fund administration is amended or changed, merger or consolidation of investors, group terminations or
layoffs, implementation of an early retirement program, termination or partial termination of the Fund, and failure to meet certain tax qualifications. The Plan does not believe that such events are likely to occur.
The fair value of the investment contract at December 31, 2011 was $34,941,345 in the Master Trust and at December 31, 2010 was $32,898,737 in
the Plan. The average yield earned based on actual earnings was 0.6% for 2011.
The Plan’s participants invest in various investment
securities offered by the Plan. These investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes
in the values of investment securities will occur and that such changes could materially affect participants’ account balances and the amounts reported in the financial statements.
9
Piedmont Natural Gas Company, Inc. 401(k) Plan
Notes to Financial Statements
|
Note 4.
|
Plan Interest in Master Trust
|
Effective
January 1, 2011, the Plan’s assets are held in a Master Trust. The Master Trust holds the assets of the Piedmont Natural Gas Company, Inc. 401(k) Plan, the Piedmont Natural Gas Company, Inc. Money Purchase Pension Plan, and the Retirement
Plan of Piedmont Natural Gas Company, Inc. (collectively the “Plans”). The investment in the Piedmont Natural Gas Stock Fund represents a specific interest to the Plan, as the Plan is the sole owner of this investment. The Plans’
record keeper maintains supporting records for the purpose of allocating net assets and net gains or losses of the investments to each of the Plans and to each participant’s account, as necessary. The net investment income or loss of the
investment assets is allocated by the record keeper to each Plan and to each participant’s account based on the investment held in participant directed balances.
The net assets of the Master Trust at December 31, 2011 consist of the following:
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Assets
|
|
|
|
|
|
Investments at fair value
|
|
|
|
|
|
Participant-directed investments
|
|
$
|
153,139,333
|
|
|
Non-participant-directed investments
|
|
|
268,641,197
|
|
|
|
|
|
|
|
|
|
|
|
421,780,530
|
|
|
|
|
|
Receivables
|
|
|
|
|
|
Due from broker for securities sold
|
|
|
4,376,381
|
|
|
Participant loans
|
|
|
6,680,260
|
|
|
|
|
|
|
|
|
|
|
|
11,056,641
|
|
|
|
|
|
Other assets
|
|
|
|
|
|
Cash
|
|
|
1,385
|
|
|
Accrued interest and dividends
|
|
|
482,759
|
|
|
Net assets held in 401(h)
|
|
|
5,239,203
|
|
|
|
|
|
|
|
|
|
|
|
5,723,347
|
|
|
|
|
|
Total assets
|
|
|
438,560,518
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Due to broker for securities purchased
|
|
|
17,754,956
|
|
|
Amounts related to obligation of 401(h) account
|
|
|
5,239,203
|
|
|
|
|
|
|
|
|
|
|
|
22,994,159
|
|
|
|
|
|
Net assets available for benefits at fair value
|
|
|
415,566,359
|
|
|
|
|
|
Adjustment from fair value to contract value for interest in common collective trust relating to fully benefit-responsive
investment contracts
|
|
|
(872,470
|
)
|
|
|
|
|
|
|
|
|
|
|
Net assets available for benefits
|
|
$
|
414,693,889
|
|
|
|
|
|
|
|
10
Piedmont Natural Gas Company, Inc. 401(k) Plan
Notes to Financial Statements
|
Note 4.
|
Plan Interest in Master Trust (Continued)
|
|
|
|
|
|
|
|
Net investment in Master Trust - by Plan
|
|
|
|
|
|
Piedmont Natural Gas Company, Inc. 401(k) Plan
|
|
|
|
|
|
Investment in Master Trust
|
|
$
|
158,259,915
|
|
|
Plan’s percentage interest in net assets of the Master Trust
|
|
|
38.2
|
%
|
|
|
|
|
Piedmont Natural Gas Company, Inc. Money Purchase Pension Plan
|
|
|
|
|
|
Investment in Master Trust
|
|
$
|
687,962
|
|
|
Plan’s percentage interest in net assets of the Master Trust
|
|
|
0.2
|
%
|
|
|
|
|
Retirement Plan of Piedmont Natural Gas Company, Inc.
|
|
|
|
|
|
Investment in Master Trust
|
|
$
|
255,746,012
|
|
|
Plan’s percentage interest in net assets of the Master Trust
|
|
|
61.6
|
%
|
Investment income of the Master Trust for the year ended December 31, 2011 consists of the following:
|
|
|
|
|
|
|
Investment income
|
|
|
|
|
|
Interest and dividends
|
|
$
|
20,297,598
|
|
|
|
|
|
|
|
|
|
|
|
Net appreciation/(depreciation) in fair value of investments
|
|
|
|
|
|
Cash equivalents
|
|
|
20,468
|
|
|
Fixed income
|
|
|
(14,323
|
)
|
|
Hedging instruments
|
|
|
196,034
|
|
|
Mutual funds
|
|
|
(434,707
|
)
|
|
Common stock
|
|
|
(2,234,457
|
)
|
|
Common trust funds
|
|
|
(913,987
|
)
|
|
Stable return fund
|
|
|
203,142
|
|
|
Common stock fund
|
|
|
1,401,786
|
|
|
Other types
|
|
|
(1,105,931
|
)
|
|
|
|
|
|
|
|
Total net investment depreciation
|
|
|
(2,881,975
|
)
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
17,415,623
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income from Master Trust - by Plan
|
|
|
|
|
|
Piedmont Natural Gas Company, Inc. 401(k) Plan
|
|
$
|
782,552
|
|
|
Piedmont Natural Gas Company, Inc. Money Purchase Pension Plan
|
|
|
(22,082
|
)
|
|
Retirement Plan of Piedmont Natural Gas Company, Inc.
|
|
|
16,655,153
|
|
|
|
|
|
|
|
|
|
|
$
|
17,415,623
|
|
|
|
|
|
|
|
11
Piedmont Natural Gas Company, Inc. 401(k) Plan
Notes to Financial Statements
|
Note 5.
|
Federal Income Tax Status
|
The Plan has
filed for a determination letter from the Internal Revenue Service regarding the Plan’s qualification under Section 401(a) and the related trust’s tax-exempt status under the provisions of Section 501(a) of the Internal Revenue
Code (“IRC”). The Benefits Committee believes the Plan is currently designed and is being operated in compliance with the applicable requirements of the IRC. The Benefits Committee will make any changes deemed necessary to ensure that the
Plan is granted tax-exempt status.
Accounting principles generally accepted in the United States of America require Plan management to
evaluate tax positions taken by the Plan. Management evaluated the Plan’s tax positions and concluded that the Plan had maintained its tax exempt status and had taken no uncertain tax positions that require recognition or disclosure in the
financial statements. With few exceptions, the Plan is no longer subject to income tax examinations by the U.S. federal, state, or local tax authorities for years before 2008.
Although it has not
expressed any intention to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA.
|
Note 7.
|
Exempt Party-in-Interest Transactions
|
Certain plan investments are shares of mutual funds and units of participation in a common trust fund managed by Wells Fargo. Wells Fargo is the trustee
as defined by the Plan, and therefore, these transactions qualify as exempt party-in-interest transactions. Fees paid by the Plan to Wells Fargo for investment management services amounted to $128,165 for the year ended December 31, 2011 and
are included in the expenses line item in the Statement of Changes in Net Assets Available for Benefits. Additional expenses not paid to Wells Fargo include investment advisory fees and other various expenses.
At December 31, 2011 and 2010, the Plan held 369,628 and 361,246 units, respectively, of common stock of the Company, the sponsoring employer, with
a cost basis of $6,083,657 and $5,683,100, respectively, and fair value of $8,248,132 and $6,674,950, respectively. During the year ended December 31, 2011, the Plan recorded dividend income on the common stock of the Company of $252,445.
12
Piedmont Natural Gas Company, Inc. 401(k) Plan
Notes to Financial Statements
|
Note 8.
|
Fair Value of Financial Instruments
|
The
investments reported in the Statement of Net Assets Available for Benefits, including investments held in Master Trust and participant-directed investments, are classified in their entirety based on the lowest level of input that is significant to
the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and their consideration within the fair value hierarchy levels.
The following tables set forth, by level within the fair value hierarchy, the assets measured at fair value as of December 31, 2011 and 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
Quoted Prices
in
Active
Markets
(Level 1)
|
|
|
Significant
Other Observable
Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level
3)
|
|
|
Total
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
8,130,894
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,130,894
|
|
|
Mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High yield bond
|
|
|
12,588,545
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,588,545
|
|
|
Long duration bonds
|
|
|
65,487,958
|
|
|
|
—
|
|
|
|
—
|
|
|
|
65,487,958
|
|
|
Equity
|
|
|
10,870,261
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,870,261
|
|
|
Global real estate
|
|
|
14,325,093
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,325,093
|
|
|
International
|
|
|
26,817,557
|
|
|
|
—
|
|
|
|
—
|
|
|
|
26,817,557
|
|
|
Small Cap
|
|
|
12,628,834
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,628,834
|
|
|
Mid Cap
|
|
|
12,052,473
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,052,473
|
|
|
Large Cap
|
|
|
42,401,103
|
|
|
|
—
|
|
|
|
—
|
|
|
|
42,401,103
|
|
|
Moderate Allocation
|
|
|
7,582,506
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,582,506
|
|
|
Bond funds - intermediate and inflation adjusted
|
|
|
19,985,505
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,985,505
|
|
|
Fixed income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government and agencies
|
|
|
—
|
|
|
|
21,329,268
|
|
|
|
—
|
|
|
|
21,329,268
|
|
|
Corporate bonds
|
|
|
—
|
|
|
|
26,065,787
|
|
|
|
—
|
|
|
|
26,065,787
|
|
|
Municipal bonds
|
|
|
—
|
|
|
|
321,960
|
|
|
|
—
|
|
|
|
321,960
|
|
|
Collateralized Mortgage-Backed
|
|
|
—
|
|
|
|
1,468,301
|
|
|
|
—
|
|
|
|
1,468,301
|
|
|
Common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health care
|
|
|
2,863,296
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,863,296
|
|
|
Utilities
|
|
|
1,977,277
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,977,277
|
|
|
Financials
|
|
|
8,351,526
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,351,526
|
|
|
Consumer staples
|
|
|
990,413
|
|
|
|
—
|
|
|
|
—
|
|
|
|
990,413
|
|
|
Consumer discretionary
|
|
|
5,111,481
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,111,481
|
|
|
Materials
|
|
|
1,212,363
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,212,363
|
|
|
Energy
|
|
|
2,027,051
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,027,051
|
|
|
Information technology
|
|
|
2,676,271
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,676,271
|
|
|
Industrials
|
|
|
3,850,871
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,850,871
|
|
|
Telecommunication service
|
|
|
72,306
|
|
|
|
—
|
|
|
|
—
|
|
|
|
72,306
|
|
|
Miscellaneous
|
|
|
3,171,896
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,171,896
|
|
|
Common trust funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
—
|
|
|
|
17,021,779
|
|
|
|
—
|
|
|
|
17,021,779
|
|
|
Enhanced stock
|
|
|
—
|
|
|
|
16,766,149
|
|
|
|
—
|
|
|
|
16,766,149
|
|
|
Common stock fund - energy
|
|
|
8,248,132
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,248,132
|
|
|
Common collective trust fund - Stable Return
|
|
|
—
|
|
|
|
34,941,345
|
|
|
|
—
|
|
|
|
34,941,345
|
|
|
Other types of instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedging instruments
|
|
|
124,246
|
|
|
|
—
|
|
|
|
—
|
|
|
|
124,246
|
|
|
Multi-strategy hedge funds
|
|
|
—
|
|
|
|
16,296,961
|
|
|
|
—
|
|
|
|
16,296,961
|
|
|
Hedge fund of funds
|
|
|
—
|
|
|
|
—
|
|
|
|
2,353,300
|
|
|
|
2,353,300
|
|
|
Commodities funds
|
|
|
—
|
|
|
|
11,667,822
|
|
|
|
—
|
|
|
|
11,667,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
273,547,858
|
|
|
$
|
145,879,372
|
|
|
$
|
2,353,300
|
|
|
$
|
421,780,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets held in 401(h) accounts
|
|
$
|
5,239,203
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,239,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
Piedmont Natural Gas Company, Inc. 401(k) Plan
Notes to Financial Statements
|
Note 8.
|
Fair Value of Financial Instruments (Continued)
|
Included in the preceding table are the following assets and corresponding fair values that represent a 100% specific interest to the Plan: Wells Fargo
Enhanced Stock Market Fund $16,766,149, Piedmont Natural Gas Stock Fund $8,248,132, American Funds Balanced Fund (A) $7,582,506, and American Century Inflation Adjustment Bond Fund Advisor $1,805,237.
As of December 31, 2011, the fair value of the Plan’s portion of investments held in the Master Trust was $152,450,480. See Note 4 for further
discussion on the Master Trust.
The Company reassessed the inputs of the enhanced stock common trust fund and determined that Level 2 is
the appropriate fair value level as of December 31, 2011 and is reflected as such in the above table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level
3)
|
|
|
Total
|
|
|
Mutual funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Small cap
|
|
$
|
12,345,577
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,345,577
|
|
|
Mid cap
|
|
|
12,124,532
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,124,532
|
|
|
Large cap
|
|
|
28,379,782
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28,379,782
|
|
|
Foreign
|
|
|
14,850,457
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,850,457
|
|
|
Moderate allocation
|
|
|
7,055,773
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,055,773
|
|
|
Bond funds - intermediate and inflation adjusted
|
|
|
18,513,095
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18,513,095
|
|
|
Common stock fund - energy
|
|
|
6,674,950
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,674,950
|
|
|
Common trust fund - enhanced stock
|
|
|
16,809,633
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,809,633
|
|
|
Common collective trust fund - stable value
|
|
|
—
|
|
|
|
32,898,737
|
|
|
|
—
|
|
|
|
32,898,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets at fair value
|
|
$
|
116,753,799
|
|
|
$
|
32,898,737
|
|
|
$
|
—
|
|
|
$
|
149,652,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The changes in the Master Trust’s Level 3 assets measured at fair value are summaries as follows:
|
|
|
|
|
|
|
|
|
Hedge Fund
of Funds
|
|
|
Balance, beginning of year
|
|
$
|
—
|
|
|
Transfer in to Master Trust
|
|
|
982,215
|
|
|
Purchases
|
|
|
1,285,800
|
|
|
Unrealized gain
|
|
|
85,285
|
|
|
|
|
|
|
|
|
Balance, end of year
|
|
$
|
2,353,300
|
|
|
|
|
|
|
|
14
Piedmont Natural Gas Company, Inc. 401(k) Plan
Notes to Financial Statements
|
Note 9.
|
Net Asset Value Per Share
|
The following
table sets forth additional disclosures of the investments whose fair value is estimated using net asset value per share (or its equivalent) as of December 31, 2011 for the Master Trust and December 31, 2010 for the Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Estimated Using Net Asset Value per Share
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
Redemption
|
|
|
|
|
|
|
Unfunded
|
|
|
Redemption
|
|
Redemption
|
|
Notice
|
|
Investment
|
|
Fair Value
|
|
|
Commitment
|
|
|
Frequency
|
|
Restrictions
|
|
Period
|
|
|
|
|
|
|
|
|
Common collective trust fund (a)
|
|
$
|
34,941,345
|
|
|
$
|
—
|
|
|
Daily
|
|
Written notice
|
|
30 days
|
|
Common trust fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enhanced Stock (c)
|
|
|
16,766,149
|
|
|
|
—
|
|
|
Daily
|
|
None
|
|
None
|
|
International (d)
|
|
|
17,021,779
|
|
|
|
—
|
|
|
Monthly
|
|
None
|
|
10 days
|
|
Multi-strategy hedge fund (e)
|
|
|
16,296,961
|
|
|
|
—
|
|
|
Quarterly
|
|
None
|
|
65 days
|
|
Hedge fund of funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US (f)
|
|
|
1,293,083
|
|
|
|
—
|
|
|
Limited
|
|
**
|
|
Limited
|
|
Global (g)
|
|
|
561,255
|
|
|
|
—
|
|
|
Limited
|
|
**
|
|
Limited
|
|
Direct (h)
|
|
|
419,028
|
|
|
|
—
|
|
|
Limited
|
|
**
|
|
Limited
|
|
Emerging (i)
|
|
|
79,934
|
|
|
|
—
|
|
|
Limited
|
|
**
|
|
Limited
|
|
Commodities fund (j)
|
|
|
11,667,822
|
|
|
|
—
|
|
|
Monthly
|
|
*
|
|
35 days
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Estimated Using Net Asset Value per Share
|
|
|
|
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
Redemption
|
|
|
|
|
|
|
Unfunded
|
|
|
Redemption
|
|
Redemption
|
|
Notice
|
|
Investment
|
|
Fair Value
|
|
|
Commitment
|
|
|
Frequency
|
|
Restrictions
|
|
Period
|
|
|
|
|
|
|
|
|
Common collective trust fund (b)
|
|
$
|
32,898,737
|
|
|
$
|
—
|
|
|
Daily
|
|
Written notice
|
|
30 days
|
|
*
|
If 95% or more of the balance is requested, 95% of the balance will be paid within 30 days. Any outstanding balance or interest owed will be paid after the annual audit
is complete.
|
|
**
|
Investors will have only very limited withdrawal rights for specific legal or regulatory reasons, and any transfer of an interest will be subject to approval.
|
15
Piedmont Natural Gas Company, Inc. 401(k) Plan
Notes to Financial Statements
|
Note 9.
|
Net Asset Value Per Share (Continued)
|
|
(a)
|
The objective of the Fund is to protect principal while providing a higher rate of return than shorter maturity investments, such as money market funds or certificates
of deposit. To achieve this, the Fund invests in instruments which are not expected to experience significant price fluctuation in most economic or interest rate environments. However, there is no assurance that this objective can be achieved.
|
|
(b)
|
The objective of the Fund is to provide a diversified group of investments offering competitive levels of yield consistent with stable fixed-income methodology and the
careful and prudent assumption of investment risk providing for preservation of capital, stability, and predictability of returns, liquidity to pay plan benefits, and high credit quality.
|
|
(c)
|
The objective of the Fund is to achieve long-term total return greater than the return on the S&P 500 Index while maintaining risk characteristics similar to the
risk characteristics of the stocks in the S&P 500 Index.
|
|
(d)
|
The Fund seeks to outperform the MSCI EAFE Index on average by 2-7% per annum over a full market cycle by investing in securities of issuers domiciled outside the
United States.
|
|
(e)
|
The Fund seeks to generate capital appreciation over the long term through a portfolio having a diversified risk profile with relatively low volatility and a low
correlation with traditional equity and fixed income markets.
|
|
(f)
|
The Fund seeks global and regional strategies. Over a three to four-year period, the US strategy typically invests in 60-75 total funds that invest a substantial
portion of their assets in North American companies.
|
|
(g)
|
The Fund’s strategy allocates capital to private equity investments that invest a substantial portion of their assets in companies primarily located in Western
Europe with a primary focus on buyout and growth equity.
|
|
(h)
|
The Fund’s strategy is to leverage relationships with venture, growth, and equity, and buyout general partners around the globe to generate differentiated deal
flow.
|
|
(i)
|
The Fund’s strategy is to invest in a diversified portfolio of private equity partnerships that in turn will invest principally in companies based in emerging
markets.
|
|
(j)
|
The fund seeks to produce attractive long-term risk adjusted returns in excess of traditional commodity index exposure.
|
16
Piedmont Natural Gas Company, Inc. 401(k) Plan
Notes to Financial Statements
|
Note 10.
|
Reconciliation of Financial Statements to Form 5500
|
The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31
|
|
|
|
|
2011
|
|
|
2010
|
|
|
Net assets available for benefits as presented in these financial statements
|
|
$
|
158,259,915
|
|
|
$
|
155,313,526
|
|
|
Adjustment from fair value to contract value for fully benefit-responsive investment contracts
|
|
|
871,579
|
|
|
|
626,268
|
|
|
Differences in:
|
|
|
|
|
|
|
|
|
|
Receivable-participant loans held in Master Trust
|
|
|
(6,680,260
|
)
|
|
|
—
|
|
|
Investment in participant loans
|
|
|
6,680,260
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets available for benefits per the Form 5500
|
|
$
|
159,131,494
|
|
|
$
|
155,939,794
|
|
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of the net increase in net assets available for benefits per the financial statements
to the Form 5500:
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
Total net increase per the financial statements
|
|
$
|
2,946,389
|
|
|
Change in adjustment from fair value to contract value for fully benefit-responsive investment contracts
|
|
|
245,311
|
|
|
|
|
|
|
|
|
Total net income per the Form 5500
|
|
$
|
3,191,700
|
|
|
|
|
|
|
|
17
Piedmont Natural Gas Company, Inc. 401(k) Plan
Form 5500, Schedule H, Part IV, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Identity of issuer, borrower,
lessor, or similar party
|
|
Description of investment
|
|
Current
value
|
|
|
|
|
|
|
|
*
|
|
Plan interest in investment held in Master Trust
|
|
Piedmont Natural Gas Company, Inc. Master Trust
|
|
$
|
152,451,234
|
|
|
|
|
|
|
|
*
|
|
Participants
|
|
Loans to participants, at interest rates from 6.77% to 7.00% with maturities ranging from 2012 to 2026
|
|
|
6,680,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
159,131,494
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Represents a party-in-interest.
|
18
SIGNATURE
The Plan
. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
|
|
|
|
|
|
|
Piedmont Natural Gas Company, Inc. 401(k) Plan
|
|
|
|
(Name of Plan)
|
|
|
|
|
Date June 27, 2012
|
|
/s/ Renee H. Metzler
|
|
|
|
Renee H. Metzler
|
|
|
|
Director – Compensation and Benefits and Plan Administrator
|
19
Exhibit Index
|
|
|
|
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm – Piedmont Natural Gas Company, Inc. 401(k) Plan
|
20
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