8-K

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 9, 2007

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.)

5444 Westheimer Road Houston, Texas (Address of principal executive offices) 77056-5306 (Zip Code)

Registrant's telephone number, including area code: (713) 989-2000

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 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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

ITEMS 2.02 AND 7.01 RESULTS OF OPERATIONS AND FINANCIAL CONDITION; REGULATION FD DISCLOSURE

Southern Union Company (the “Company”) today issued a press release reporting its second quarter 2007 results and announcing an investor call scheduled for 2 p.m. (ET) today to discuss those 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 press release contains earnings guidance affirming expected financial performance for the year ending December 31, 2007. The earnings guidance presented in the press release 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, the Company 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).

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(c) Exhibits.

                    Exhibit No.                               Exhibit

99.1  Southern Union Company August 9, 2007 Press Release.  

This 8-K includes forward-looking statements. Although Southern Union believes that its expectations are based on reasonable assumptions, it can give no assurance that such assumptions will materialize. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein are enumerated in Southern Union's Forms 10-K and 10-Q as filed with the Securities and Exchange Commission. The Company assumes no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made by the Company, whether as a result of new information, future events, or otherwise.

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 9, 2007	By:	/s/ Robert M. Kerrigan, III
		Robert M. Kerrigan, III
		Vice President - Assistant General Counsel and Secretary

EXHIBIT INDEX

                          Exhibit No.                          Description

 99.1  Southern Union Company August 9, 2007 Press Release.  

EX-99.1

07-XX

For further information:

John F. Walsh

Vice President, Investor Relations

Southern Union Company

212-659-3208

SOUTHERN UNION REPORTS STRONG SECOND QUARTER 2007 RESULTS; REAFFIRMS 2007 EARNINGS GUIDANCE

Investor Call & Webcast Scheduled for Today at 2 P.M. ET

HOUSTON, August 9, 2007 – Southern Union Company (NYSE: SUG) today reported second quarter 2007 earnings from continuing operations of $51.0 million ($.39 per diluted share; hereafter referred to as “per share”), compared to $16.3 million ($.10 per share) for the second quarter of 2006.  Operating revenues were $588.0 million for the quarter, compared to $552.4 million in the same period last year.

For the six-month period ended June 30, 2007, the company reported earnings from continuing operations of $129.7 million ($1.00 per share), compared to $89.7 million ($.70 per share) for the same period in 2006.  Operating revenues were $1.4 billion for the six-month period, compared to $1.1 billion in the same period last year.

For the quarter ended June 30, 2007, Southern Union reported earnings before interest and taxes from continuing operations (“EBIT”) of $117.1 million, compared with $87.2 million in the prior year.  For the six-month period ended June 30, 2007, EBIT was $277.9 million, compared to $238.7 million in the prior year.

Second Quarter 2007 Segment Performance

The company’s transportation and storage segment recorded EBIT of $95.5 million for the quarter ended June 30, 2007, compared with $76.0 million for the same period in 2006.  The $19.5 million increase was attributable to improved contributions by Panhandle Energy of $9.2 million and higher equity earnings of $10.3 million principally from the company’s investment in Citrus Corp.  Panhandle Energy posted higher operating revenue of $27.6 million in the current quarter, principally driven by higher transportation and storage revenue of $18.9 million and higher LNG terminalling revenue of $10.2 million.  This increase was partially offset by a $13.3 million increase in operating expenses including $4.4 million of higher LNG power costs, $4.1 million of higher contract storage costs and $3.4 million of increased corporate service charges.

Southern Union Gas Services (“SUGS”), the company’s gathering and processing segment, recorded EBIT of $12.6 million for the second quarter, compared with $17.9 million for the same period in the prior year.  The decrease was largely driven by a $7.5 million increase in flared and unaccounted for gas on the company’s North System, primarily a result of treating capacity constraints due to volume growth and high levels of carbon dioxide and acidic contaminants in the treated natural gas products.  In June, the company completed construction of an 18-mile, $6.1 million high-pressure pipeline connecting its Jal and Keystone plants to alleviate treating capacity limitations.  Additionally, the gathering and processing segment realized higher operating expenses of $2.3 million, higher depreciation expense of $1.1 million and lower commodity driven processing spreads of approximately $.7 million in 2007 compared with 2006.  Favorable variances in the year over year period include approximately $5.5 million of higher margin as a result of higher natural gas prices and $1.1 million of non-hedging derivative income.

The company’s distribution segment contributed EBIT of $6.4 million in the quarter compared with a loss before interest and taxes of $6.4 million in 2006.  The segment’s results benefited from the Missouri Public Service Commission’s April 3, 2007 approval

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of a $27.2 million increase in annual base revenues, including a change in the company’s residential customer class rate structure to straight-fixed variable, as well as a three percent increase in consumption volumes (excluding Missouri’s residential customers) resulting from colder weather.

For the quarter, interest expense decreased $11.8 million to $51.1 million.  The decrease is due primarily to the retirement in 2006 of the $1.6 billion bridge loan that was used to initially fund the SUGS acquisition on March 1, 2006.  The company retired $1.1 billion of the bridge loan in August 2006 with proceeds from the sales of certain distribution assets.  The remainder of the bridge loan was retired in October 2006 with proceeds from the issuance of $600 million of junior subordinated notes.  Lower average balances on the company’s revolving credit facilities accounted for the remainder of the decrease, partially offset by higher average interest rates and debt balances at Panhandle Energy.

The company’s corporate and other segment reported EBIT of $2.5 million for the second quarter of 2007, an increase of $2.9 million over the prior year.  The increase was due primarily to larger allocation of corporate service charges to the company’s business units in 2007.

Management’s Perspective

Commenting on the quarter, George L. Lindemann, chairman, president and CEO, said, “Our transportation and distribution segments continue to meet or exceed our expectations.  Our gathering and processing segment exhibited noticeable improvement over the first quarter; however, it was still modestly below our expectations.  We believe the recently completed construction of a new pipeline connecting our Jal and Keystone processing plants should alleviate treating capacity limitations on our North System and allow us to reduce our flared and unaccounted for commodity volumes.”

Senior executive vice president Eric D. Herschmann added, “We have made significant progress in evaluating our various MLP alternatives for our gathering and processing

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assets.  We are pleased with the valuations of recent initial public offerings in the MLP space, as well as the valuations that we have received from interested parties.  We expect any of these alternatives will create significant value for our shareholders.”

2007 Earnings Guidance

Southern Union reaffirms its 2007 net earnings guidance in the range of $1.60 to $1.70 per diluted share.

Form 10-Q

Southern Union will provide additional information about its second quarter 2007 results on Form 10-Q expected to be filed today with the Securities and Exchange Commission.  Once made, this filing may be accessed through the Investors section of the company’s web site at www.sug.com.

Investor Call & Webcast

Southern Union will host a live investor call and webcast today at 2:00 p.m. Eastern time to discuss quarterly results, recent events and outlook.  To access the call, dial 888-680-0879 (international callers dial 617-213-4856) and enter passcode 38334494.  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 49938841.

Please use the following link to pre-register and view important information about this conference call. Pre-registering is not mandatory but is recommended as it will provide you immediate entry into the call and will facilitate the timely start of the call. Pre-registration takes only a few minutes and you may pre-register at any time, including up to and after the call start time. To pre-register, please click Pre-register (control + click on the link) and enter the registration key PH4YT7V4J or enter the following URL www.theconferencingservice.com/prereg/key.process and use the same registration key.

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The investor call is being webcast by CCBN and may be accessed through Southern Union’s web site at www.sug.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 Houston, is one of the nation’s leading diversified natural gas companies, engaged primarily in the transportation, storage, gathering, processing and distribution of natural gas. The company owns and operates one of the nation’s largest natural gas pipeline systems with approximately 20,000 miles of gathering and transportation pipelines and North America’s largest liquefied natural gas import terminal.

Through Panhandle Energy, Southern Union’s interstate pipeline interests operate approximately 15,000 miles of interstate pipelines that transport natural gas from the Anadarko and San Juan basins, the Rockies, the Gulf of Mexico, Mobile Bay and South Texas to major markets in the Southeast, Midwest and Great Lakes region.

Southern Union Gas Services, with approximately 4,800 miles of pipelines, is engaged in the gathering, transmission, treating, processing and redelivery of natural gas and natural gas liquids in Texas and New Mexico.

Through its local distribution companies, Missouri Gas Energy and New England Gas Company, Southern Union also serves more than half a million natural gas end-user customers in Missouri and Massachusetts.

For further information, visit www.sug.com.

Forward-Looking Information

This news release includes forward-looking statements.  Although Southern Union believes that its expectations are based on reasonable assumptions, it can give no assurance that such assumptions will materialize.  Important factors that could cause actual results to differ materially from those in the forward-looking statements herein are enumerated in Southern Union’s Forms 10-K and 10-Q as filed with the Securities and Exchange Commission.  The company assumes no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made by the company, whether as a result of new information, future events, or otherwise.

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Select Financial Information

The following table sets forth unaudited financial information for the company for the three and six months ended June 30, 2007 and 2006.

	Three months ended June 30,						Six months ended June 30,
	2007			2006			2007			2006
	(In thousands, except per share amounts)
Operating revenues	$	588,049		$	552,355		$	1,368,281		$	1,099,521
Operating expenses:
Cost of gas and other energy		324,626			330,297			807,711			636,899
Operating, maintenance and general		115,309			98,357			210,504			177,135
Depreciation and amortization		43,666			38,657			87,130			69,521
Revenue-related taxes		5,675			4,156			22,694			20,373
Taxes, other than on income and revenues		11,373			11,096			23,248			22,954
Total operating expenses		500,649			482,563			1,151,287			926,882
Operating income		87,400			69,792			216,994			172,639
Other income (expenses):
Interest expense		(51,146	)		(62,978	)		(103,331	)		(105,199	)
Earnings from unconsolidated investments		26,270			15,833			57,166			27,399
Other, net		3,474			1,550			3,761			38,643
Total other income (expenses), net		(21,402	)		(45,595	)		(42,404	)		(39,157	)
Earnings from continuing operations before income taxes		65,998			24,197			174,590			133,482
Federal and state income tax expense		15,023			7,876			44,894			43,742
Earnings from continuing operations		50,975			16,321			129,696			89,740
Discontinued operations:
Earnings (Loss) from discontinued operations before income taxes		-			(4,460	)		-			33,549
Federal and state income tax expense (benefit)		-			(1,873	)		-			11,607
Earnings (Loss) from discontinued operations		-			(2,587	)		-			21,942
Net earnings		50,975			13,734			129,696			111,682
Preferred stock dividends		(4,341	)		(4,341	)		(8,682	)		(8,682	)
Net earnings available for common stockholders	$	46,634		$	9,393		$	121,014		$	103,000
Earnings available for common stockholders from
continuing operations per share:
Basic	$	0.39		$	0.11		$	1.01		$	0.72
Diluted	$	0.39		$	0.10		$	1.00		$	0.70
Net earnings available for common stockholders per share:
Basic	$	0.39		$	0.08		$	1.01		$	0.92
Diluted	$	0.39		$	0.08		$	1.00		$	0.90
Dividends declared on common stock per share	$	0.10		$	0.10		$	0.20		$	0.20
Weighted average shares outstanding:
Basic		119,873			111,945			119,832			111,807
Diluted		120,799			114,981			120,546			114,993

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Select Financial Information Continued

The following table sets forth select unaudited financial information for the company’s segments and a reconciliation of EBIT to net earnings for the three and six months ended June 30, 2007 and 2006.

	Three Months Ended June 30,						Six Months Ended June 30,
Segment Data	2007			2006			2007			2006
	(In thousands)
Revenues from external customers:
Transportation and Storage	$	161,706		$	134,109		$	330,736		$	278,752
Gathering and Processing		305,874			329,094			601,929			432,325
Distribution		119,514			88,292			433,771			386,521
Total segment operating revenues		587,094			551,495			1,366,436			1,097,598
Corporate and other		955			860			1,845			1,923
	$	588,049		$	552,355		$	1,368,281		$	1,099,521
Depreciation and amortization:
Transportation and Storage	$	21,062		$	16,985		$	41,771		$	34,459
Gathering and Processing		14,549			13,400			29,136			18,952
Distribution		7,395			7,792			15,013			15,375
Total segment depreciation and amortization		43,006			38,177			85,920			68,786
Corporate and other		660			480			1,210			735
	$	43,666		$	38,657		$	87,130		$	69,521
Earnings (loss) from unconsolidated investments:
Transportation and Storage	$	26,138		$	15,823		$	56,522		$	27,387
Gathering and Processing		158			-			684			-
Corporate and other		(26	)		10			(40	)		12
	$	26,270		$	15,833		$	57,166		$	27,399
Other income (expense), net:
Transportation and Storage	$	479		$	1,522		$	1,067		$	3,294
Gathering and Processing		1,851			775			976			1,184
Distribution		(409	)		(927	)		(804	)		(2,135	)
Total segment other income (expense), net		1,921			1,370			1,239			2,343
Corporate and other		1,553			180			2,522			36,300
	$	3,474		$	1,550		$	3,761		$	38,643
Segment performance:
Transportation and Storage EBIT	$	95,559		$	76,011		$	210,777		$	162,812
Gathering and Processing EBIT		12,604			17,917			21,486			25,030
Distribution EBIT		6,444			(6,376	)		39,989			23,613
Total segment EBIT		114,607			87,552			272,252			211,455
Corporate and other		2,537			(377	)		5,669			27,226
Interest expense		51,146			62,978			103,331			105,199
Federal and state income tax expense		15,023			7,876			44,894			43,742
Earnings from continuing operations		50,975			16,321			129,696			89,740
Earnings (Loss) from discontinued operations before
income taxes		-			(4,460	)		-			33,549
Federal and state income tax (benefit) expense		-			(1,873	)		-			11,607
Earnings from discontinued operations		-			(2,587	)		-			21,942
Net earnings		50,975			13,734			129,696			111,682
Preferred stock dividends		4,341			4,341			8,682			8,682
Net earnings available for common stockholders	$	46,634		$	9,393		$	121,014		$	103,000

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The company evaluates segment performance based on several factors, of which the primary financial measure is earnings before interest and taxes (EBIT).  EBIT allows management and investors to more effectively evaluate the performance of all of the company’s consolidated subsidiaries and unconsolidated investments.  The company defines EBIT as net earnings (loss) available for common stockholders, 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 is a non-GAAP financial measure and 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.

Select Financial Information Continued

The following table sets forth certain select, unaudited financial information for the company as of June 30, 2007 and December 31, 2006 and for the six months ended June 30, 2007 and 2006.

	June 30,			December 31,
	2007			2006
	(In thousands of dollars)
Total assets	$	6,883,439		$	6,782,790
Long Term Debt		3,012,415			2,689,656
Short term debt and notes payable		226,384			561,011
Preferred stock		230,000			230,000
Common equity		1,923,213			1,820,408
Total capitalization		5,392,012			5,301,075
	Six months ended June 30,
	2007			2006
Cash flow information:	(In thousands of dollars)
Cash flow provided by operating activities	$	289,300		$	300,100
Changes in working capital		11,100			104,400
Net cash flow provided by operating activities
before changes in working capital		278,200			195,700
Net cash flow used in investing activities		243,249			1,669,700
Net cash flow (used in) provided by financing activities		(51,705	)		1,389,900

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