-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MtDlmzhwqGi+O3s4/sxc8hFoc6pc11k5EMmuit+LLyabA0KN2LdLpRXXOofogeBq 3WRkuFKvyzUQNaFEb6QBFQ== 0000203248-02-000012.txt : 20020807 0000203248-02-000012.hdr.sgml : 20020807 20020807112245 ACCESSION NUMBER: 0000203248-02-000012 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020630 ITEM INFORMATION: Other events FILED AS OF DATE: 20020807 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN UNION CO CENTRAL INDEX KEY: 0000203248 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 750571592 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06407 FILM NUMBER: 02721348 BUSINESS ADDRESS: STREET 1: 504 LAVACA ST 8TH FL CITY: AUSTIN STATE: TX ZIP: 78701 BUSINESS PHONE: 5124775852 8-K 1 form8k4-02.txt FORM 8-K (YEAR-END EARNINGS RELEASE) ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) August 7, 2002 SOUTHERN UNION COMPANY (Exact name of registrant as specified in its charter) Delaware 1-6407 75-0571592 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) One PEI Center 18711 Wilkes-Barre, Pennsylvania (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (570) 820-2400 ================================================================================ ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (c) Exhibit No. ----------- 99.a Press Release issued by Southern Union Company dated August 7, 2002. ITEM 9. REGULATION FD DISCLOSURE On August 7, 2002 Southern Union Company (the Company) will release summary financial information to the general public, including the investment community, regarding the Company's operating performance for the quarter and year-ended June 30, 2002 and 2001. The financial information released is included herein. The following information is summary in nature and should not be considered complete financial statements. SOUTHERN UNION COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) Three Months Ended Twelve Months Ended June 30, June 30, ------------------------ ------------------------ 2002 2001 2002 2001 ----------- ----------- ----------- ----------- (thousands of dollars, except shares and per share amounts) Operating revenues...... $ 211,477 $ 268,352 $ 1,290,185 $ 1,932,813 Cost of gas and other energy................ (111,411) (170,888) (763,202) (1,374,750) Revenue-related taxes... (7,145) (6,204) (47,125) (68,801) ----------- ----------- ----------- ----------- Operating margin.... 92,921 91,260 479,858 489,262 Operating expenses: Operating, mainte- nance and general... 59,182 70,619 221,243 239,554 Business restruc- turing charges...... (1,394) -- 31,312 -- Depreciation and amortization........ 19,355 22,666 77,176 86,985 Taxes, other than on income and revenues. 5,802 8,570 28,558 29,860 ----------- ----------- ----------- ----------- Total operating expenses........ 82,945 101,855 358,289 356,399 ----------- ----------- ----------- ----------- Net operating revenues........ 9,976 (10,595) 121,569 132,863 ----------- ----------- ----------- ----------- Other income (expenses): Interest.............. (20,733) (27,747) (91,725) (103,519) Dividends on preferred securities of sub- sidiary trust....... (2,370) (2,370) (9,480) (9,480) Other, net............ (12,114) 53,058 14,368 76,819 ----------- ----------- ----------- ----------- Total other income (expenses), net... (35,217) 22,941 (86,837) (36,180) ----------- ----------- ----------- ----------- Earnings (loss) be- fore income taxes (benefit)......... (25,241) 12,346 34,732 96,683 Federal and state income taxes (benefit)....... (11,730) 1,211 15,108 40,000 ----------- ----------- ----------- ----------- Earnings (loss) before cumulative effect of change in accounting principle............. (13,511) 11,135 19,624 56,683 Cumulative effect of change in accounting principle, net of tax. -- -- -- 602 ----------- ----------- ----------- ----------- Net earnings (loss) available for common stock................. $ (13,511) $ 11,135 $ 19,624 $ 57,285 =========== =========== =========== =========== Diluted earnings (loss) per share: Before cumulative effect of change in accounting principle......... $ (.25) $ .19 $ .35 $ .98 Cumulative effect of change in accounting prin- ciple, net of tax. -- -- -- .01 ----------- ----------- ----------- ----------- $ (.25) $ .19 $ .35 $ .99 =========== =========== =========== =========== Weighted average shares outstanding - diluted. 53,708,758 58,135,957 56,762,623 57,711,276 =========== =========== =========== =========== See Notes to Condensed Consolidated Financial Statements. SOUTHERN UNION COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) ASSETS June 30, -------------------------- 2002 2001 ----------- ----------- Property, plant and equipment: Utility plant, at cost.......................... $ 2,277,605 $ 2,227,495 Less accumulated depreciation and amortization.. (821,539) (771,170) ----------- ----------- Net property, plant and equipment............. 1,456,066 1,456,325 ----------- ----------- Current assets: Cash and cash equivalents....................... 3,514 1,219 Accounts receivable, billed and unbilled, net... 121,024 218,912 Inventories, principally at average cost........ 91,224 106,505 Deferred gas purchase costs..................... 91 65,171 Investment securities available for sale........ 1,163 29,447 Prepayments and other........................... 9,698 14,778 ----------- ----------- Total current assets.......................... 226,714 436,032 ----------- ----------- Goodwill, net..................................... 713,390 724,620 Deferred charges.................................. 209,076 209,644 Investment securities, at cost.................... 10,786 19,081 Real estate....................................... -- 2,506 Other............................................. 46,189 41,872 ----------- ----------- Total assets.................................. $ 2,662,221 $ 2,890,080 =========== =========== CAPITALIZATION AND LIABILITIES Capitalization: Common stockholders' equity..................... $ 692,282 $ 721,857 Preferred stock of subsidiary trust, $25 par.... 100,000 100,000 Long-term debt and capital lease obligation..... 1,082,210 1,329,631 ----------- ----------- Total capitalization.......................... 1,874,492 2,151,488 ----------- ----------- Current liabilities: Long-term debt due within one year.............. 108,203 5,913 Notes payable................................... 131,800 190,600 Accounts payable................................ 75,839 103,623 Federal, state and local taxes.................. 39,392 32,342 Accrued dividends on preferred stock of sub- sidiary trust................................. 2,370 2,370 Other........................................... 87,629 103,773 ----------- ----------- Total current liabilities..................... 445,233 438,621 ----------- ----------- Deferred credits and other liabilities............ 342,496 299,971 Commitments and contingencies..................... -- -- ----------- ----------- Total capitalization and liabilities............ $ 2,662,221 $ 2,890,080 =========== =========== See Notes to Condensed Consolidated Financial Statements. SOUTHERN UNION COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 -- BASIS OF PRESENTATION: The condensed consolidated financial statements have been prepared by Southern Union Company (the Company) and certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. The condensed consolidated financial statement presentation in this report will produce the same net income as the consolidated financial statements and, in management's opinion, is a fair representation of the operations of the Company. NOTE 2 -- OTHER INCOME (EXPENSE), NET Other expense for the three-month period ended June 30, 2002 was $12,114,000 compared with other income of $53,058,000 in 2001. Other expense for the three-month period ended June 30, 2002 includes a non-cash charge of $10,380,000 to reserve for the impairment of the Company's investment in a technology company and $2,994,000 of legal costs associated with ongoing litigation from the unsuccessful acquisition of Southwest Gas Corporation (Southwest). This was partially offset by a gain of $1,203,000 realized through the sale of the propane assets of PG Energy Services Inc. Other income for the three-month period ended June 30, 2001 included $53,219,000 of realized gains on the sale of investment securities and $4,258,000 of interest and dividend income. This was partially offset by $4,389,000 of costs associated with the aforementioned unsuccessful acquisition and related litigation. Other income for the year-ended June 30, 2002 was $14,368,000 compared with $76,819,000 in 2001. Other income for the year-ended June 30, 2002 includes gains of $17,166,000 generated through the settlement of several interest rate swaps, the recognition of $6,204,000 in previously recorded deferred income related to financial derivative energy trading activity of a wholly-owned subsidiary, a gain of $4,653,000 realized through the sale of marketing contracts held by PG Energy Services Inc., income of $2,369,000 generated from the sale and/or rental of gas-fired equipment and appliances by various operating subsidiaries, a gain of $1,203,000 realized through the sale of the propane assets of PG Energy Services Inc., $1,004,000 of realized gains on the sale of investment securities, and power generation and sales income of $971,000 from PEI Power Corporation. These items were partially offset by an investment reserve of $10,380,000, $9,100,000 of legal costs associated with Southwest, and a $1,500,000 loss on the sale of South Florida Natural Gas, a natural gas division of Southern Union, and Atlantic Gas Corporation, a Florida propane subsidiary of the Company. Other income for the year-ended June 30, 2001 included realized gains on the sale of investment securities of $74,582,000, a $13,532,000 gain on the sale of non-core real estate and $7,643,000 of interest and dividend income. These items were partially offset by $12,855,000 of legal costs associated with Southwest and $5,684,000 of non-cash trading losses. SOUTHERN UNION COMPANY AND SUBSIDIARIES SELECTED STATISTICAL DATA The following table sets forth certain information regarding the Company's gas utility operations for the quarter- and year-ended June 30, 2002 and 2001: Three Months Twelve Months Ended June 30, Ended June 30, ---------------------- ---------------------- 2002 2001 2002 2001 ---------- ---------- ---------- ---------- Average number of gas sales customers served: Residential............... 1,340,800 1,329,456 1,333,201 1,329,258 Commercial................ 129,995 128,744 128,986 128,477 Industrial and irrigation. 4,335 4,350 4,266 4,337 Public authorities and other................... 3,219 3,186 3,191 3,172 ---------- ---------- ---------- ---------- Total average customers served................ 1,478,349 1,465,736 1,469,644 1,465,244 ========== ========== ========== ========== Gas sales in millions of cubic feet (MMcf) Residential............... 18,942 18,425 91,567 108,026 Commercial................ 7,543 7,551 36,563 43,930 Industrial and irrigation. 1,212 1,187 4,767 4,958 Public authorities and other................... 439 549 2,660 3,245 ---------- ---------- ---------- ---------- Gas sales billed........ 28,136 27,712 135,557 160,159 Net change in unbilled gas sales................... (8,647) (8,928) (375) 165 ---------- ---------- ---------- ---------- Total gas sales....... 19,489 18,784 135,182 160,324 ========== ========== ========== ========== Gas sales revenues (thousands of dollars): Residential............... $ 176,829 $ 211,984 $ 844,175 $1,122,584 Commercial................ 58,465 74,839 294,246 418,012 Industrial and irrigation. 8,795 10,158 35,456 41,744 Public authorities and other................... 2,604 3,779 15,085 26,593 ---------- ---------- ---------- ---------- Gas revenues billed... 246,693 300,760 1,188,962 1,608,933 Net change in unbilled gas sales revenues.......... (55,705) (95,255) (6,149) 6,796 ---------- ---------- ---------- ---------- Total gas sales revenues............ $ 190,988 $ 205,505 $1,182,813 $1,615,729 ========== ========== ========== ========== Gas sales revenue per thousand cubic feet billed: Residential............... $ 9.34 $ 11.51 $ 9.22 $ 10.39 Commercial................ 7.75 9.91 8.05 9.52 Industrial and irrigation. 7.26 8.56 7.44 8.42 Public authorities and other................... 5.93 6.88 5.67 8.19 Weather: Degree days: Southern Union Gas service territories............. 26 53 1,945 2,380 Missouri Gas Energy service territories..... 413 261 4,419 5,541 PG Energy service territories............. 786 733 5,373 6,621 New England service territories............. 767 728 4,980 5,273 Percent of 30-year measure: Southern Union Gas service territories............. 37% 77% 92% 112% Missouri Gas Energy service territories..... 90% 59% 85% 106% PG Energy service territories............. 100% 96% 86% 105% New England service territories............. 95% 90% 85% 102% Gas transported in millions of cubic feet............... 18,706 24,162 83,616 90,503 Gas transportation revenues (thousands of dollars)...... $ 9,415 $ 5,978 $ 45,437 $ 45,611 The above information does not include the Company's 43% equity ownership in a natural gas distribution company serving 23,000 customers in Piedras Negras, Mexico. Information for Fall River Gas and ProvEnergy, acquired September 28, 2000, and Valley Resources, acquired September 20, 2000, is included since October 1, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SOUTHERN UNION COMPANY ---------------------- (Registrant) Date August 7, 2002 By DAVID J. KVAPIL ---------------- --------------------------------------- David J. Kvapil Executive Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit Number Description - ------- ---------------------------------------------------------------------- 99.a Press Release issued by Southern Union Company dated August 7, 2002 EXHIBIT 99.a 02-12 For further information: Richard N. Marshall Treasurer & Director of Investor Relations 570.829.8662 SOUTHERN UNION COMPANY ANNOUNCES FISCAL YEAR 2002 NET EARNINGS Conference Call & Webcast Scheduled ----------------------------------- WILKES-BARRE, Pa., (August 7, 2002) - Southern Union Company ("Southern Union" or the "Company") (NYSE: SUG) announced today that net earnings for the fiscal year ended June 30, 2002, were $19,624,000 ($.35 per common share, diluted for outstanding options and warrants - hereafter referred to as "per share") compared with net earnings of $57,285,000 ($.99 per share) in 2001. Both fiscal year 2002 and 2001 results were significantly affected by certain non-recurring gains and charges, and the effect of a new accounting pronouncement adopted in fiscal 2002. Excluding those items (described below), net earnings for fiscal year 2002 were $33,482,000 ($.59 per share) compared with $23,089,000 ($.39 per share) in 2001. All per share data reflects the 5% common stock dividend distributed on July 15, 2002. Fiscal year 2002 results reflect a restructuring charge totaling $17,692,000 ($.31 per share), net of tax, recorded in the first quarter ended September 30, 2001, as well as a non-cash charge of $5,865,000 ($.10 per share), net of tax, recorded in the fourth quarter ended June 30, 2002, to reserve for the impairment of the Company's investment in a technology company. These 2002 charges were partially offset by $9,699,000 ($.17 per share) in after-tax gains generated from the settlement of interest rate swaps, also recorded in the first quarter ended September 30, 2001. Fiscal 2001 results reflect after-tax gains totaling $51,659,000 ($.90 per share) on the sale of non-core real estate and investment holdings. In addition, fiscal 2001 results reflect goodwill amortization of $17,463,000 ($.30 per share) while goodwill amortization ceased in fiscal 2002 as a result of the adoption of a new accounting pronouncement. For the quarter ended June 30, 2002, the Company reported a net loss of $13,511,000 ($.25 per share) compared with net earnings of $11,135,000 ($.19 per share) in 2001. Because of the seasonal nature of the natural gas distribution business, Southern Union typically records a fourth quarter loss. The quarters ended June 30, 2002 and 2001 also reflect non-recurring items and the impact of the accounting change. Excluding certain non-recurring items (as described above), the net loss for the quarter ended June 30, 2002 was $7,646,000 ($.15 per share), compared with a net loss of $15,353,000 ($.28 per share) in 2001. Included in the results for the quarter ended June 30, 2002 is a non-cash charge of $5,865,000 ($.10 per share), net of tax, related to the investment reserve (as described above). Net earnings for the quarter ended June 30, 2001, included one-time after-tax gains totaling $31,399,000 ($.54 per share) from the sale of investment holdings (as described above), partially offset by goodwill amortization of $4,911,000 ($.08 per share). Southern Union Company president and chief operating officer Thomas F. Karam noted, "We have now substantially completed our asset rationalization and we will continue to focus on improving the fundamentals of our core business. Our ability to meet the goals of our Cash Flow Improvement Plan a full quarter ahead of schedule allows us to operate from a more stable platform. Quarter over quarter, results have improved over last year and we intend to continue on a course of earnings growth." Announced in July 2001, Southern Union's Cash Flow Improvement Plan was designed to increase annualized pre-tax cash flow from operations by at least $50 million by the end of the fiscal year. The Plan consists of strategies aimed at restructuring the Company's corporate operation, better focusing its operating divisions on meeting their allowed rates of return, and divesting non-core assets, using the proceeds to reduce debt. The Company is continuing its strategic implementation of operating efficiencies and is pursuing the sale of remaining non-core assets. Southern Union will host a live Webcast and conference call on Wednesday, August 7, 2002 at 2 p.m. ET (1 p.m. CT) to discuss fourth quarter and annual results and outlook. To participate, visit www.southernunionco.com or call 800.218.0204 approximately ten minutes prior to the start and refer to conference 484983. A replay of the call will be available through August 14, 2002, by dialing 800.405.2236 and entering conference ID 484983#. A replay of the Webcast will also be available for thirty days on Southern Union's Web site. The Company expects to file its Form 10-K in late September, with its annual shareholder meeting tentatively scheduled for mid November. Southern Union Company is an international energy distribution company serving approximately 1.5 million customers in Texas, Missouri, Pennsylvania, Rhode Island, Massachusetts and Mexico. For more information, visit www.southernunionco.com. This release and other Company reports and statements issued or made from time to time contain certain "forward-looking statements" concerning projected future financial performance, expected plans or future operations. Southern Union Company cautions that actual results and developments may differ materially from such projections or expectations. Investors should be aware of important factors that could cause actual results to differ materially from the forward-looking projections or expectations. These factors include, but are not limited to: weather conditions in the Company's service territories; cost of gas; regulatory and court decisions; the receipt of timely and adequate rate relief; the achievement of operating efficiencies and the purchase and implementation of new technologies for attaining such efficiencies; impact of relations with labor unions of bargaining-unit employees; the effect of any stock repurchases; and the effect of strategic initiatives (including: any recent, pending or potential acquisition or merger, recent corporate restructuring activities, any sales of non-core assets, and any related financing arrangements including refinancings and debt repurchases) on earnings and cash flow. Following are the unaudited comparative, summarized financial results of Southern Union Company and Subsidiaries for the three- and twelve-month periods ended June 30, 2002 and 2001 (amounts in thousands except shares and per share amounts): Three months ended Twelve months ended June 30, June 30, (a) ------------------------ ------------------------ 2002(b) 2001(c) 2002(b) 2001(c) ----------- ----------- ----------- ----------- Operating revenues....... $ 211,477 $ 268,352 $ 1,290,185 $ 1,932,813 =========== =========== =========== =========== Net operating margin (d). $ 92,921 $ 91,260 $ 479,858 $ 489,262 =========== =========== =========== =========== Net earnings (loss) available for common stock.................. $ (13,511) $ 11,135 $ 19,624 $ 57,285 =========== =========== =========== ========== Net earnings (loss) per share (e): Basic................ $ (0.25) $ 0.20 $ 0.36 $ 1.05 =========== =========== =========== ========== Diluted.............. $ (0.25) $ 0.19 $ 0.35 $ .99 =========== =========== =========== ========== Weighted average shares outstanding (e): Basic................ 53,708,758 55,043,336 53,880,374 54,675,110 =========== =========== =========== =========== Diluted.............. 53,708,758 58,135,957 56,762,623 57,711,276 =========== =========== =========== =========== (a) The Company acquired Providence Energy Corporation and Fall River Gas Company on September 28, 2000, and Valley Resources, Inc. on September 20, 2000 (collectively, now New England Gas Company). These acquisitions were accounted for as a purchase and their respective results of operations have been included in the Company's consolidated results of operations since their respective acquisition dates. The consolidated results of operations of the Company for the periods subsequent to the acquisitions are not comparable to the same periods in prior years. (b) The three- and twelve-month periods ended June 30, 2002, include a non-cash, after-tax charge of $5,865,000 to reserve for the impairment of the cost of Southern Union's investment in a technology company. The twelve-month period ended June 30, 2002, also includes an after-tax restructuring charge of $17,692,000, the impact of which was partially offset by $9,699,000 in after-tax gains generated from the settlement of several interest rate swaps. Goodwill amortization ceased in fiscal 2002 as a result of the adoption of a new accounting pronouncement. (c) The three-month period ended June 30, 2001, includes after-tax gains of $31,399,000 from the sale of a portion of Southern Union's investment holdings in Capstone Turbine Corporation, which was partially offset by goodwill amortization of $4,911,000. The twelve-month period ended June 30, 2001, includes after tax gains of $7,933,000 and $43,726,000, respectively, from the sale of non-core real estate and investment holdings, as noted above, the impact of which was partially offset by goodwill amortization of $17,463,000. (d) Net operating margin consists of operating revenues less gas purchase costs and revenue-related taxes. (e) All periods have been adjusted for the 5% stock dividend distributed on July 15, 2002. ##### -----END PRIVACY-ENHANCED MESSAGE-----