-----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, SeZFPKy4o4I7WMC0YEyBurHQflTVgkBV2fd37eE3JY6b6oZ/EoyFdiHE9iI74n2i CIRfPBomPqvrI4zmqim9XQ== 0000203248-05-000055.txt : 20050509 0000203248-05-000055.hdr.sgml : 20050509 20050509100126 ACCESSION NUMBER: 0000203248-05-000055 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050509 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050509 DATE AS OF CHANGE: 20050509 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: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06407 FILM NUMBER: 05809968 BUSINESS ADDRESS: STREET 1: ONE PEI CENTER CITY: WILKES-BARRE STATE: PA ZIP: 18711 BUSINESS PHONE: (570) 820-2400 MAIL ADDRESS: STREET 1: ONE PEI CENTER CITY: WILKES-BARRE STATE: PA ZIP: 18711 8-K 1 form8kearnings.htm FORM 8K FIRST QUARTER 2005 RESULTS form 8k first quarter 2005 results

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): May 9, 2005



SOUTHERN UNION COMPANY
(Exact name of registrant as specified in its charter)


Delaware
1-6407
75-0571592
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer
Identification No.)


One PEI Center
18711
Wilkes-Barre, Pennsylvania
(Address of principal executive offices)
(Zip Code)

Registrant's telephone number, including area code: (570) 820-2400

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-(b))


 
ITEMS 2.02 and 7.01 Results of Operations and Financial Condition; Regulation FD Disclosure

Southern Union Company (Southern Union or the Company) today issued a press release reporting its first quarter 2005 results. The Company is furnishing the press release attached as Exhibit 99.1, pursuant to Item 2.02 and Item 7.01 of Form 8-K. The Company is also furnishing pursuant to Item 7.01 a reconfirmation of its previous guidance regarding expected financial performance for the fiscal years ending December 31, 2005 and 2006. The information presented herein under Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.
 
In the attached earnings release, Southern Union uses earnings before interest and taxes (EBIT), a non-GAAP financial measure, as the primary performance measure to evaluate segment performance. As defined in Regulation G, "Conditions for Use of Non-GAAP Financial Measures," a non-GAAP financial measure is a numerical measure of a company's historical or future performance, financial position or cash flow that excludes (includes) amounts, or is subject to adjustments that have the effect of excluding (including) amounts, that are included (excluded) in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (GAAP).
 
Since the Company’s November 2004 investment in CCE Holdings, the operating results of CCE Holdings have been included in Southern Union’s earnings from unconsolidated investments. Southern Union evaluates segment performance based on several factors, of which EBIT is the primary financial measure beginning January 1, 2005. EBIT allows management and investors to more effectively evaluate the performance of all of the Company’s consolidated subsidiaries and unconsolidated investments. Evaluating segment performance based on EBIT is a change from utilizing operating income in prior periods. Accordingly, prior period segment performance information has been conformed to the current period presentation. The Company defines EBIT as net earnings (loss) available for common shareholders, adjusted for: (i) items that do not impact earnings (loss) from continuing operations, such as extraordinary items, discontinued operations and the impact of accounting changes; (ii) income taxes; (iii) interest, and; (iv) dividends on preferred stock. EBIT may not be comparable to measures used by other companies. Additionally, EBIT should be considered in conjunction with net earnings and other performance measures such as operating income or operating cash flow.
 
Item 9.01. Financial Statements and Exhibits.

(c) Exhibits.

        Exhibit No.    Exhibit
 
 
99.1
 
 
Press Release issued by Southern Union Company dated May 9, 2005.
 

This release and other reports and statements issued or made from time to time contain certain forward-looking statements that are based on current expectations, estimates and projections about the industry in which the Company operates, management’s beliefs and assumptions made by management. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements. Similarly, statements that describe our objectives, plans or goals are or may be forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are outside the Company’s control. Therefore, actual results, performance and achievements may differ materially from what is expressed or forecasted in such forward-looking statements. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to put undue reliance on such forward-looking statements. Stockholders may review the Company’s reports filed in the future with the Securities and Exchange Commission for more current descriptions of developments that could cause actual results to differ materially from such forward-looking statements.
 
Factors that could cause actual results to differ materially from those expressed in our forward-looking statements include, but are not limited to: cost of gas; gas sales volumes; gas throughput volumes and available sources of natural gas; discounting of transportation rates due to competition; customer growth; abnormal weather conditions in Southern Union’s service territories; impact of relations with labor unions of bargaining-unit employees; the receipt of timely and adequate rate relief and the impact of future rate cases or regulatory rulings; the outcome of pending and future litigation; the speed and degree to which competition is introduced to Southern Union’s gas distribution business; new legislation and government regulations and proceedings affecting or involving Southern Union; unanticipated environmental liabilities; ability to comply with or to challenge successfully existing or new environmental regulations; changes in business strategy and the success of new business ventures, including the risks that the business acquired and any other businesses or investments that Southern Union has acquired or may acquire may not be successfully integrated with the business of Southern Union; exposure to customer concentration with a significant portion of revenues realized from a relatively small number of customers and any credit risks associated with the financial position of those customers; factors affecting operations such as maintenance or repairs, environmental incidents or gas pipeline system constraints; Southern Union’s, or any of its subsidiaries, debt securities ratings; the economic climate and growth in the energy industry and service territories and competitive conditions of energy markets in general; inflationary trends; changes in gas or other energy market commodity prices and interest rates; the current market conditions causing more customer contracts to be of shorter duration, which may increase revenue volatility; the possibility of war or terrorist attacks; the nature and impact of any extraordinary transactions such as any acquisition or divestiture of a business unit or any assets.



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


   
SOUTHERN UNION COMPANY
   
(Registrant)
     
     
     
Date May 9, 2005
By
/s/ DAVID J. KVAPIL
   
David J. Kvapil
   
Executive Vice President and Chief Financial Officer





EXHIBIT INDEX
 

            Exhibit No.                Description

 
99.1
 
 
Press Release issued by Southern Union Company dated May 9, 2005.
 



 

 
 

 


 EX-99.1 2 pressrelease592005.htm EARNINGS PRESS RELEASE Earnings Press Release
Exhibit 99.1
05-12       
For further information:
John F. Walsh
Director of Investor Relations
Southern Union Company
570-829-8662

SOUTHERN UNION COMPANY REPORTS 1Q EARNINGS OF $88 MILLION;
Investor Call & Webcast Scheduled for Wednesday at 2 P.M. ET

WILKES-BARRE, Pa.--(BUSINESS WIRE)—May 9, 2005 — Southern Union Company (“Southern Union” or the “Company”) (NYSE: SUG) today reported net earnings available for common shareholders of $87,855,000 ($.86 per diluted share, hereafter referred to as “per share”) for its first quarter ended March 31, 2005, compared with net earnings of $71,026,000 ($.92 per share) for the same period in 2004.
 
The Company’s natural gas distribution segment recorded earnings before interest and taxes (“EBIT”) of $90,149,000 for the three-month period, compared with $85,028,000 for the same period in 2004. Southern Union’s natural gas transportation, storage and liquefied natural gas (LNG) segment recorded EBIT of $78,235,000 for the three-month period, compared with $69,678,000 for the same period in 2004.
 
Thomas F. Karam, president and chief operating officer of Southern Union, stated, “These earnings are consistent with our business plan and earnings guidance, while reflecting substantial progress in completing the CrossCountry integration. We expect CrossCountry will be a significant contributor to our earnings and growth well into the future.”
 
Factors Impacting 1Q Performance Relative to Prior Year
 
·  
As a result of the Company’s common stock equity offerings in July 2004 and February 2005, and settlement of its forward sale common stock equity issuance in November 2004, weighted average shares outstanding on a diluted basis increased by over 25 million shares from March 31, 2004 to March 31, 2005. The resulting share increase impacted earnings per share by approximately $.23.
 
·  
November 2004 - A Southern Union/GE Commercial Finance Energy Financial Services joint venture (collectively, “CCE Holdings”) completed its acquisition of the equity interests of CrossCountry Energy from Enron Corporation and its affiliates (“Enron”); CCE Holdings paid Enron approximately $2.45 billion for CrossCountry Energy, including assumption of certain consolidated debt. As a result, earnings from unconsolidated investments increased $15.3 million ($.10 per share) compared to the same period in the prior year.
 
·  
For the three months ended March 31, 2005, the Company’s distribution segment experienced: increased net operating revenue of $1.7 million ($.01 per share) primarily due to additional base revenues granted to Missouri Gas Energy effective October 2004, partially offset by lower revenues resulting from warmer-than-normal weather in its service area; a decrease in reserve for bad debts of $2.8 million ($.02 per share) due to a lower level of aged customer receivables; and a reduction in payroll and related benefit costs of $2.0 million ($.01 per share).
 
·  
The Company experienced a reduction in its estimated annual effective income tax rate from 38% to 30% primarily due to: (i) the anticipated reversal, during 2005, of an $11.9 million deferred tax asset valuation allowance associated with Southern Union’s investment in CCE Holdings, and (ii) the recognition of an 80% dividend received deduction on dividends anticipated to be received from Citrus Corp. in 2005. Accordingly, the Company’s income tax expense decreased $5.5 million ($.05 per share).
 
·  
Interest expense increased by $4.2 million ($.03 per share) for the three months ended March 31, 2005. The increase was primarily due to the $407 million temporary bridge loan facility used to finance the Company’s investment in CCE Holdings and interest on the Company’s 4.375% senior notes issued to help permanently finance the investment in CCE Holdings.
 
·  
Depreciation expense increased by $4.9 million ($.03 per share) primarily due to adjustments recorded in the quarter ended March 31, 2004 related to final purchase price appraisals received on the Company’s acquired Panhandle Energy assets.
 
·  
The Company recorded charges of $4.5 million ($.03 per share) to reserve for impairment in its remaining investment in Advent Networks, Inc. (“Advent”) as well as to reserve for a guarantee by a subsidiary of the Company of a line of credit between Advent and a bank.
 
Reconciliation of EBIT to Net Earnings
 

   
Three Months Ended
  
   
March 31,
  
   
2005
  
2004
  
   
(thousands of dollars)
  
Segment Performance:
              
    Distribution segment EBIT
  
$
90,149
  
$
85,028
  
    Transportation and storage segment EBIT
    
78,235
    
69,678
  
Total Segment EBIT
   
168,384
    
154,706
  
All other
    
(27
)
  
(2,251
)
Corporate
    
(1,104
)
  
(639
)
Interest
    
(35,205
)
  
(31,055
)
Earnings before income taxes
    
132,048
    
120,761
  
Federal and state income taxes
    
(39,852
 )   
(45,394
 ) 
Net earnings
    
92,196
    
75,367
  
Preferred stock dividends
    
(4,341
)
  
(4,341
)
Net earnings available for common stockholders
  
$
87,855
  
$
71,026
  

 
Additional information regarding EBIT, including a discussion of its utility and purpose, is included in the Form 8-K filed with the Securities and Exchange Commission (“SEC”) along with this earnings release.
 
Earnings Guidance
 
Southern Union reconfirms its previously-announced calendar year 2005 earnings guidance of $1.45 to $1.55 per share and expects that calendar year 2006 will experience an additional ten to fifteen percent growth over 2005.
 
Current Report on Form 10-Q
 
Southern Union will provide additional information about its first quarter operating results in a quarterly report on Form 10-Q to be filed with the SEC. The filing will be accessible through the Investors section of the Company’s web site at www.southernunionco.com.
 
Investor Call & Webcast
 
Southern Union will host a live investor call and webcast on Wednesday, May 11, at 2:00 p.m. Eastern Time to discuss first quarter results, recent events and outlook. To access the call, dial 800-299-7928 (international callers dial 617-614-3926) and enter passcode 99318908. A replay of the call will be available for one week after the event by dialing 888-286-8010 (international callers dial 617-801-6888) and entering passcode 44879878.
 
The investor call is being webcast by CCBN and may be accessed through Southern Union’s web site at www.southernunionco.com or through CCBN’s individual investor center at www.companyboardroom.com. Institutional investors may access the call via CCBN’s password-protected event management site - StreetEvents - at www.streetevents.com.
 
About Southern Union Company
Southern Union Company, headquartered in Wilkes-Barre, Pa., is engaged primarily in the transportation, storage and distribution of natural gas.
Through Panhandle Energy, the Company owns and operates 100% of Panhandle Eastern Pipe Line Company, Trunkline Gas Company, Sea Robin Pipeline Company, Southwest Gas Storage Company and Trunkline LNG Company - one of North America’s largest liquefied natural gas import terminals. Through CCE Holdings, LLC, Southern Union also owns a 50% interest in and operates the CrossCountry Energy pipelines, which include 100% of Transwestern Pipeline Company and 50% of Citrus Corp. Citrus Corp. owns 100% of the Florida Gas Transmission pipeline system. Southern Union’s pipeline interests operate more than 18,000 miles of interstate pipelines that transport natural gas from the San Juan, Anadarko and Permian Basins, the Rockies, the Gulf of Mexico, Mobile Bay, South Texas and the Panhandle regions of Texas and Oklahoma to major markets in the Southeast, West, Midwest and Great Lakes region.
Through its local distribution companies, Missouri Gas Energy, PG Energy and New England Gas Company, Southern Union also serves approximately one million natural gas end-user customers in Missouri, Pennsylvania, Rhode Island and Massachusetts.
For further information, visit www.southernunionco.com.

Forward-Looking Information:
This release and other Southern Union 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 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: cost of gas; gas sales volumes; gas throughput volumes and available sources of natural gas; discounting of transportation rates due to competition; customer growth; abnormal weather conditions in Southern Union’s service areas; impact of relations with labor unions of bargaining-unit employees; the receipt of timely and adequate rate relief and the impact of future rate cases or regulatory rulings; the outcome of pending and future litigation; the speed and degree to which competition is introduced to Southern Union’s natural gas distribution businesses; new legislation and government regulations and proceedings involving or impacting Southern Union; unanticipated environmental liabilities; ability to comply with or to challenge successfully existing or new environmental regulations; changes in business strategy and the success of new business ventures, including the risks that the business acquired and any other business or investment that Southern Union has acquired or may acquire may not be successfully integrated with the business of Southern Union; exposure to customer concentration with a significant portion of revenues realized from a relatively small number of customers and any credit risks associated with the financial position of those customers; factors affecting operations - such as maintenance or repairs, environmental incidents or gas pipeline system constraints; Southern Union’s or any of its subsidiaries debt security ratings; the economic climate and growth in the energy industry and service territories and competitive conditions of energy markets in general; inflationary trends; changes in gas or other energy market commodity prices and interest rates; current market conditions causing more customer contracts to be of shorter duration, which may increase revenue volatility; the possibility of war or terrorist attacks; the nature and impact of any extraordinary transactions, such as any acquisition or divestiture of a business unit or any asset.

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