Back to GetFilings.com
=================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- - ---
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- - ---
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-6407
SOUTHERN UNION COMPANY
(Exact name of registrant as specified in its charter)
Delaware 75-0571592
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
504 Lavaca Street, Eighth Floor 78701
Austin, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
(512) 477-5852
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
Common Stock, par value New York Stock Exchange
$1 per share
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursu-
ant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
----
The aggregate market value of the voting stock held by non-
affiliates of the registrant on September 5, 1996, was
$188,481,223. The number of shares of the registrant's Common
Stock outstanding on September 5, 1996 was 16,223,667.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Stockholders for
the year ended June 30, 1996, are incorporated by reference in
Parts II and IV.
Portions of the registrant's proxy statement for its annual
meeting of stockholders to be held on November 12, 1996, are
incorporated by reference into Part III.
=================================================================
PART I
ITEM 1. Business.
Introduction
Southern Union Company (Southern Union and together with its sub-
sidiaries, the Company) was incorporated under the laws of the
State of Delaware in 1932. The Company's principal line of busi-
ness is the distribution of natural gas as a public utility
through Southern Union Gas and Missouri Gas Energy, each of which
is a division of Southern Union. Southern Union Gas, head-
quartered in Austin, Texas, serves 497,000 residential, commer-
cial, industrial, agricultural and other customers in Texas
(including the cities of Austin, Brownsville, El Paso, Galveston
and Port Arthur). Missouri Gas Energy, headquartered in Kansas
City, Missouri, serves 471,000 customers in central and western
Missouri (including the cities of Kansas City, St. Joseph, Joplin
and Monett). See Acquisitions and Divestiture.
Subsidiaries of Southern Union have been established to support
and expand natural gas sales and to capitalize on the Company's
gas energy expertise. These subsidiaries market natural gas to
end-users, operate natural gas pipeline systems, distribute and
sell propane and sell commercial gas air conditioning and other
gas-fired engine-driven applications. By providing "one-stop
shopping," the Company can serve its various customers' specific
energy needs, which encompass substantially all of the natural
gas distribution and sales businesses from natural gas sales to
specialized energy consulting services. Certain subsidiaries
also own or hold interests in real estate and other assets, which
are primarily used in the Company's utility business. See
Company Operations.
The Company is a sales and market-driven energy company whose
management is committed to achieving profitable growth of its
natural gas energy businesses in an increasingly competitive
business environment. Management's strategies for achieving
these objectives principally consist of: (i) promoting new sales
opportunities and markets for natural gas; (ii) enhancing finan-
cial and operating performance; and (iii) expanding the Company
through development of existing systems and selective acquisition
of new systems. Management develops and continually evaluates
these strategies and the Company's implementation of them by
applying their experience and expertise in analyzing the energy
industry, technological advances, market opportunities and
general business trends. Each of these strategies, as imple-
mented throughout the Company's businesses, reflects the Com-
pany's commitment to its core natural gas utility business.
Central to all of the Company's businesses and strategies is the
sale and transportation of natural gas.
The Company has a goal of selected growth and expansion, pri-
marily in the natural gas industry. To that extent, the Company
intends to consider, when appropriate, and if financially prac-
ticable to pursue, the acquisition of other natural gas distribu-
tion or transmission businesses. The nature and location of any
such properties, the structure of any such acquisitions, and the
method of financing any such expansion or growth will be deter-
mined by management and the Southern Union Board of Directors.
Acquisitions and Divestiture
On January 31, 1994, Southern Union purchased certain Missouri
natural gas distribution operations (Missouri Acquisition) which
Southern Union operates as Missouri Gas Energy for $400,300,000
in cash, based on account balances as of December 31, 1993. The
final purchase price, which was determined through post-closing
adjustments and subsequent arbitration, was $401,600,000. The
Missouri Acquisition was financed through the sale of
$475,000,000 of 7.60% Senior Debt Securities due 2024 (Senior
Notes) completed on January 31, 1994 and net proceeds from a
$50,000,000 common stock subscription rights offering (Rights
Offering) completed on December 31, 1993. See Management's
Discussion and Analysis of Results of Operations and Financial
Condition (MD&A) -- Liquidity and Capital Resources and Debt in
the Notes to the Consolidated Financial Statements contained in
the Company's Annual Report to Stockholders for the year ended
June 30, 1996, portions of which are filed as Exhibit 13 hereto
(the Annual Report).
As a result of the Missouri Acquisition, the Company nearly
doubled the number of customers served by its natural gas dis-
tribution system and became one of the top 15 gas utilities in
the United States, as measured by number of customers. In addi-
tion, the Missouri Acquisition lessens the sensitivity of the
Company's operations to weather risk and local economic condi-
tions by diversifying operations into a different geographic
area.
The approval of the Missouri Acquisition by the Missouri Public
Service Commission (MPSC) was subject to the terms of a stipula-
tion and settlement agreement (MPSC Stipulation) which among
other things: (i) provided that the Company attain a total debt
to total capital ratio that does not exceed Standard and Poor's
Corporation's Utility Financial Benchmark ratio of BBB which cur-
rently is approximately 58%, in order for Missouri Gas Energy to
implement any general rate increase; (ii) prohibited Missouri Gas
Energy from implementing a general rate increase in Missouri be-
fore January 31, 1997 except in certain unusual events; and (iii)
required the Company to contribute an additional $3,000,000 to
the Company's qualified defined benefit plan for the benefit of
Missouri Gas Energy's employees and retirees; and (iv) required
Missouri Gas Energy to reduce rate base by $30,000,000 (amortized
over a ten-year period on a straight-line basis) to compensate
rate payers for rate base reductions that were eliminated as a
result of the Missouri Acquisition. The Company has subsequently
attained the financial benchmark ratio described above and on
March 1, 1996 filed for a rate increase with the MPSC primarily
for the recovery of certain capital expenditures under the
Missouri Safety Program. See Changes in Capital Structure,
Utility Regulation and Rates and Properties.
Southern Union and the seller of the Missouri properties entered
into an Environmental Liability Agreement at the closing of the
Missouri Acquisition which provides for a tiered approach to the
allocation of certain liabilities under environmental laws that
may exist or arise with respect to Missouri Gas Energy. At the
present time, and based upon information available to management,
the Company believes that the costs of any remediation efforts
that may be required for Missouri Gas Energy for which it may
ultimately have responsibility will not exceed the aggregate
amount subject to substantial sharing by the seller. The Company
believes that it will be able to obtain substantial reimbursement
or recovery for any environmental liabilities from other
potentially responsible third parties, under insurance or through
rates charged to customers. See Commitments and Contingencies in
the Notes to the Consolidated Financial Statements contained in
the Annual Report.
On September 30, 1993, the Company acquired the Rio Grande Valley
Gas Company (Rio Grande) for $30,500,000. Rio Grande currently
serves 75,000 customers in the south Texas counties of Willacy,
Cameron and Hidalgo which includes 32 towns and cities along the
Mexico border, including Harlingen, McAllen and Brownsville (the
southernmost city in the continental U.S.). The Company
initially funded the purchase with borrowings from its revolving
credit facility which were subsequently repaid with proceeds from
the sale of the Senior Notes and the Rights Offering. See MD&A -
- - - Liquidity and Capital Resources.
On October 16, 1995, Southern Union Company entered into an
agreement to sell certain gas distribution operations of the Com-
pany in the Texas and Oklahoma Panhandles and to sell Western Gas
Interstate Company (WGI), a wholly-owned subsidiary of the Com-
pany, exclusive of the Del Norte interconnect operation which
transports natural gas into Mexico, for $14,770,000 subject to
post-closing adjustments. The sale was closed on May 1, 1996.
Changes in Capital Structure
On May 17, 1995, Southern Union Financing I (Subsidiary Trust), a
consolidated wholly-owned subsidiary of Southern Union, issued
$100,000,000 of 9.48% Trust Originated Preferred Securities (Pre-
ferred Securities). In connection with the Subsidiary Trust's
issuance of the Preferred Securities and the related purchase by
Southern Union of all of the Subsidiary Trust's common securities
(Common Securities), Southern Union issued to the Subsidiary
Trust $103,092,800 principal amount of its 9.48% Subordinated
Deferrable Interest Notes, due 2025 (Subordinated Notes). The
issuance of the Preferred Securities was part of a $300,000,000
shelf registration filed with the Securities and Exchange Commis-
sion on March 29, 1995. Southern Union may sell a combination of
preferred securities of financing trusts and senior and subordi-
nated debt securities of Southern Union of up to $196,907,200
(the remaining shelf) from time to time, at prices determined at
the time of any offering. The net proceeds from the Preferred
Securities offering, along with working capital from operations,
were used to repurchase $90,485,000 of Senior Notes through June
1996 with the remaining balance used to provide working capital
for seasonal needs. See Preferred Securities of Subsidiary Trust
and Debt in the Notes to the Consolidated Financial Statements
contained in the Annual Report.
Southern Union has the right under the Subordinated Notes to
defer interest payment periods up to 20 consecutive quarters,
and, as a consequence, quarterly distributions on the Preferred
Securities may be deferred (but will continue to accrue with
interest thereon at a per annum rate of 9.48% compounded quar-
terly) by the Subsidiary Trust during any such extended interest
payment period. If interest payments are deferred by Southern
Union, Southern Union: (i) may not pay cash dividends, or redeem,
purchase or acquire, or make a liquidation payment with respect
to, any of its capital stock or the capital stock of any subsidi-
ary of Southern Union; and (ii) shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities issued by Southern Union that rank
pari passu with or junior to the subordinate debentures.
June 30, 1996 June 30, 1995
---------------- ----------------
Amount Percent Amount Percent
-------- ------- -------- -------
(thousands, except percentages)
Short-term debt................ $ 615 $ 770
======== ========
Long-term debt
Senior Notes................ 384,515 460,000
Other....................... 879 2,503
-------- --------
385,394 52.7% 462,503 58.7%
Company-obligated Preferred
Securities of Trust.......... 100,000 13.7 100,000 12.7
Common stockholders' equity.... 245,915 33.6 225,664 28.6
-------- ----- -------- -----
Total capitalization........ $731,309 100.0% $788,167 100.0%
======== ===== ======== =====
Company Operations
The Company's principal line of business is the distribution of
natural gas through its Southern Union Gas and Missouri Gas
Energy divisions. Southern Union Gas provides service to a
number of communities and rural areas in Texas, including the
municipalities of Austin, Brownsville, El Paso, Galveston,
Harlingen, McAllen and Port Arthur. Missouri Gas Energy provides
service to various cities and communities in central and western
Missouri including Kansas City, St. Joseph, Joplin and Monett.
The Company's gas utility operations are generally seasonal in
nature, with a significant percentage of its annual revenues and
earnings occurring in the traditional winter heating season.
Mercado Gas Services Inc. (Mercado), a wholly-owned subsidiary of
Southern Union, markets natural gas to commercial and industrial
customers. Mercado's sales and purchasing activities are made
through short-term and long-term contracts. These contracts and
business activities are not subject to direct rate regulation.
Southern Transmission Company (Southern), a wholly-owned subsidi-
ary of Southern Union, owns and operates approximately 310 miles
of intrastate pipeline. Southern's system connects the cities of
Lockhart, Luling, Cuero, Shiner, Yoakum, and Gonzales, Texas, as
well as an industrial customer in Port Arthur, Texas. Southern
also owns a transmission line which supplies gas to the community
of Sabine Pass, Texas.
Norteno Pipeline Company (Norteno), a wholly-owned subsidiary of
Southern Union, operates interstate pipeline systems principally
serving the Company's gas distribution properties in the El Paso,
Texas area, via unbundled transportation service pursuant to FERC
Order No. 636. Norteno also transported 5,545 million cubic feet
(MMcf) to the city of Juarez, Mexico and the Samalayuca Power
Plant in north Mexico in fiscal 1996. These assets, along with
the three Del Norte interconnects, were transferred to Norteno
from WGI during the year due to the sale of WGI on May 1, 1996.
WGI operated interstate pipeline systems which served the Com-
pany's gas distribution properties in the Texas and Oklahoma
panhandles. See Business -- Acquisitions and Divestiture.
Econofuel Company (Econofuel), a wholly-owned subsidiary of
Southern Union, markets and sells natural gas for natural gas
vehicles (NGVs) as an alternative fuel to gasoline. Econofuel
owns fuel dispensing equipment in Austin, El Paso, Port Arthur,
and Galveston, Texas, located at independent retail fuel stations
for NGVs. These stations primarily serve fleet and governmental
vehicles which have been manufactured or converted to operate on
natural gas. Up until January 5, 1996, Econofuel and Natural Gas
Development Company, Inc. of California operated the Natural Gas
Vehicle Technology Centers, L.L.P. (Tech Center), under a joint
venture agreement. The Tech Center converted gasoline-driven
vehicles to operate using natural gas. Legislation enacted in
Texas in 1995 allowing reformulated gasoline to qualify as an
alternative fuel essentially eliminated the incentive for Texas
fleet owners to convert vehicles to natural gas by 1998. As a
result, the operations of the Tech Center were scaled back and
subsequently closed during 1996. See MD&A -- Other Income and
Expenses, Net contained in the Annual Report.
Energy WorX, a wholly-owned subsidiary of Southern Union formed
in March 1996, provides interactive computer-based training for
the natural gas transmission and distribution industry.
Southern Union Energy Products and Services Company (SUEPASCO), a
wholly-owned subsidiary of Southern Union, markets and sells
commercial gas air conditioning, irrigation pumps and other gas-
fired engine-driven applications and related services.
Southern Union Energy International, Inc. (International), a
wholly-owned subsidiary of Southern Union, seeks to participate
in energy related projects internationally.
ConTigo, Inc., a wholly-owned subsidiary of Southern Union formed
in January 1996, provides centralized call center services for
the majority of the Texas service areas.
The Company also holds investments principally in commercially
developed real estate in Austin and Kansas City, as well as
undeveloped tracts of land through Southern Union's wholly-owned
subsidiary, Lavaca Realty Company (Lavaca Realty).
SUPro Energy Company, a wholly-owned subsidiary of Southern Union
formed in August 1996, provides propane gas services to 1,100
customers located principally in El Paso, Texas.
Competition
The Company's gas distribution divisions are not currently in
significant direct competition with any other distributors of
natural gas to residential and small commercial customers within
their service areas. However, in recent years, certain large
volume customers, primarily industrial and significant commercial
customers, have had opportunities to access alternative natural
gas supplies and, in some instances, delivery service from pipe-
line systems. The Company has offered transportation arrange-
ments to customers who secure their own gas supplies. These
transportation arrangements, coupled with the efforts of Southern
Union's unregulated marketing subsidiary, Mercado, enable the
Company to provide competitively priced gas service to these
large volume customers. In addition, the Company has success-
fully used flexible rate provisions, when needed, to retain cus-
tomers who may have access to alternative energy sources.
As energy providers, Southern Union Gas and Missouri Gas Energy
have historically competed with alternative energy sources, par-
ticularly electricity and also propane, coal, natural gas liquids
and other refined products available in the Company's service
areas. At present rates, the cost of electricity to residential
and commercial customers in the Company's service areas generally
is higher than the effective cost of its natural gas service.
There can be no assurance, however, that future fluctuations in
gas and electric costs will not reduce the cost advantage of
natural gas service. The cost of expansion for peak load re-
quirements of electricity in some of Southern Union Gas' service
areas has historically provided opportunities to allow energy
switching to natural gas pursuant to integrated resource planning
techniques. Electric competition has responded by offering
equipment rebates and incentive rates.
Competition between the use of fuel oil and natural gas, particu-
larly by industrial, electric generation and agricultural custo-
mers, has increased as oil prices have decreased. While
competition between such fuels is generally more intense outside
the Company's service areas, this competition affects the nation-
wide market for natural gas. Additionally, the general economic
conditions in its service areas continue to affect certain custo-
mers and market areas, thus impacting the results of the Com-
pany's the Company's operations.
Gas Supply
The low cost of natural gas service is dependent upon the Com-
pany's ability to contract for natural gas using favorable mixes
of long-term and short-term supply arrangements and favorable
transportation contracts. The Company has been directly
acquiring its gas supplies since the mid-1980s when interstate
pipeline systems opened their systems for transportation service.
The Company has the organization, personnel and equipment neces-
sary to dispatch and monitor gas volumes on a daily and even
hourly basis to ensure reliable service to customers.
The Federal Energy Regulatory Commission (FERC) has recently
required the "unbundling" of services offered by interstate pipe-
line companies. As a result, gas purchasing and transportation
decisions and associated risks have been shifted from the pipe-
line companies to the gas distributors. The increased demands on
distributors to effectively manage their gas supply in an
environment of volatile gas prices provides an advantage to dis-
tribution companies such as Southern Union who have demonstrated
a history of contracting favorable and efficient gas supply
arrangements in an open market system.
The majority of Southern Union Gas' 1996 gas requirements for
utility operations were delivered under long-term transportation
contracts through four major pipeline companies. All of Missouri
Gas Energy's 1996 gas requirements were delivered under short-
and long-term transportation contracts through three pipeline
companies. These contracts have various expiration dates ranging
from 1997 through 2013. Southern Union Gas also purchases sig-
nificant volumes of gas under long-term and short-term arrange-
ments with suppliers. The amounts of such short-term purchases
are contingent upon price. Southern Union Gas and Missouri Gas
Energy both have firm supply commitments for all areas that are
supplied with gas purchased under short-term arrangements.
Missouri Gas Energy also holds contract rights to over 16 billion
cubic feet (Bcf) of storage capacity to assist in meeting peak
demands.
Gas sales and/or transportation contracts with interruption pro-
visions, whereby large volume users purchase gas with the under-
standing that they may be forced to shut down or switch to
alternate sources of energy at times when the gas is needed for
higher priority customers, have been utilized for load management
by Southern Union and the gas industry as a whole for many years.
In addition, during times of special supply problems, curtail-
ments of deliveries to customers with firm contracts may be made
in accordance with guidelines established by appropriate federal
and state regulatory agencies. There have been no supply-related
curtailments of deliveries to Southern Union Gas or Missouri Gas
Energy utility sales customers during the last ten years.
The following table shows, for each of the Company's principal
utility service areas, the percentage of gas utility revenues and
sales volume for the year ended June 30, 1996 and the average
cost per Mcf of gas in 1996.
Percent
Percent of Gas
of Gas Utility
Utility Sales Average Cost
Service Area Revenues Volume Per Mcf
- - ------------------------------ -------- ------- ------------
Southern Union Gas
Austin and South Texas..... 11 9 $ 2.43
El Paso and West Texas..... 10 12 2.02
Rio Grande Valley.......... 5 3 3.73
Other...................... 7 5 2.49
--- ---
33 29
Missouri Gas Energy........... 67 71 3.55
--- ---
100 100
=== ===
The Company is committed under various agreements to purchase
certain quantities of gas in the future. At June 30, 1996, the
Company has purchase commitments for nominal quantities of gas at
fixed prices. These fixed price commitments have an annual value
of $2,500,000 for Southern Union Gas. Missouri Gas Energy cur-
rently does not have any fixed price commitment contracts for the
1996/1997 winter heating season. At June 30, 1996, the Company
also has purchase commitments for certain quantities of gas at
variable, market-based prices. These market-based priced commit-
ments have an annual value of $41,300,000 for Southern Union Gas
and $79,800,000 for Missouri Gas Energy. The Company's purchase
commitments may extend over a period of several years depending
upon when the required quantity is purchased. The Company has
purchase gas tariffs in effect for all its utility service areas
that provide for recovery of its purchase gas costs under defined
methodologies.
Utility Regulation and Rates
The Company's rates and operations are subject to regulation by
federal, state and local authorities. In Texas, municipalities
have primary jurisdiction over rates within their respective
incorporated areas. Rates in adjacent environs and appellate
matters are the responsibility of the Railroad Commission of
Texas. In Missouri, rates are established by the MPSC on a
system-wide basis. The FERC and the Railroad Commission of Texas
have jurisdiction over rates, facilities and services of Norteno
and Southern, respectively.
The Company holds non-exclusive franchises with varying expira-
tion dates in all incorporated communities where it is necessary
to carry on its business as it is now being conducted. In the
five largest cities in which the Company's utility customers are
located, such franchises expire as follows: Kansas City,
Missouri in 1997; El Paso, Texas in 2000; Austin, Texas in 2006;
and Port Arthur, Texas in 2013. The franchise in St. Joseph,
Missouri is perpetual. The Company fully expects these fran-
chises to be renewed upon their expiration.
Gas service rates are established by regulatory authorities to
permit utilities to recover operating, administrative and finance
costs, and the opportunity to earn a reasonable return on equity.
Gas costs are billed to customers through purchase gas adjustment
clauses which permit the Company to adjust its sales price as the
cost of purchased gas changes. This is important because the
cost of natural gas accounts for a significant portion of the
Company's total expenses. The appropriate regulatory authority
must receive notice of such adjustments prior to billing imple-
mentation.
The Company must support any service rate changes to its regula-
tors using a historic test year of operating results adjusted to
normal conditions and for any known and measurable revenue or
expense changes. Because the rate regulatory process has certain
inherent time delays, rate orders may not reflect the operating
costs at the time new rates are put into effect.
The monthly customer bill contains a fixed service charge, a
usage charge for service to deliver gas, and a charge for the
amount of natural gas used. While the monthly fixed charge pro-
vides an even revenue stream, the usage charge increases the Com-
pany's annual revenue and earnings in the traditional heating
load months when usage of natural gas increases. The majority of
the Company's rate increases in Texas in recent years have
resulted in increased monthly fixed charges which help stabilize
earnings. Weather normalization clauses, in place in Austin,
Galveston and two other service areas in Texas, also help
stabilize earnings. The cities of El Paso and Port Arthur also
approved implementation of weather normalization clauses effec-
tive September 1, 1996, with the El Paso clause approved for a
three-year trial period.
Missouri Gas Energy filed a $34,000,000 request for rate
increases with the MPSC on March 1, 1996. The proposed effective
date for the rate increase, in accordance with the MPSC Stipula-
tion, is February 1, 1997. In addition to the requested
increase, Missouri Gas Energy proposed an annual rider to recoup
costs associated with the Missouri Safety Program; an annual
incentive regulation rider; a change in Missouri Gas Energy's
main extension policy; a weather normalization clause; and a
change in transportation service availability that would extend
transportation service to more customers on their system. Addi-
tionally, the proposed rates would recover a larger percentage of
fixed costs through the monthly customer charge and reduce the
level of fixed costs recovered through the volumetric charge. On
October 15, 1993, Missouri Gas Energy's rates increased by
$9,750,000 annually. On November 1, 1993, El Paso rates changed
to provide an approximate annual revenue increase of $463,000.
During the three-year period ended June 30, 1996, the Company did
not file for any other rate increases in any of its service areas
other than several annual cost of service adjustments. In addi-
tion to the regulation of its utility and pipeline businesses,
the Company is affected by numerous other regulatory controls,
including, among others, pipeline safety requirements of the
U. S. Department of Transportation, safety regulations under the
Occupational Safety and Health Act, and various state and federal
environmental statutes and regulations. The Company believes
that its operations are in compliance with applicable safety and
environmental statutes and regulations.
Statistics of Gas Utility and Related Operations
Gas Utility Customers
as of June 30,
-------------------------
1996 1995 1994
------- ------- -------
Southern Union Gas:
Austin and South Texas.......... 159,129 152,382 153,757
El Paso and West Texas.......... 169,861 168,526 168,350
Galveston and Port Arthur....... 51,392 51,241 52,329
Panhandle and North Texas (1)... 24,777 31,384 31,652
Rio Grande Valley............... 76,707 77,105 77,832
------- ------- -------
481,866 480,638 483,920
------- ------- -------
Missouri Gas Energy:
Kansas City, Missouri
Metropolitan Area............ 372,797 368,440 362,147
St. Joseph, Joplin, Monett
and others................... 103,733 102,714 100,732
------- ------- -------
476,530 471,154 462,879
------- ------- -------
Total........................... 958,396 951,792 946,799
======= ======= =======
- - -----------------
(1) Effective May 1, 1996, the Company sold certain gas distri-
bution operations in the Texas and Oklahoma Panhandles. See
Acquisitions and Divestiture.
Southern Union Gas, Mercado, Norteno, Southern and WGI. The fol-
lowing table shows certain operating statistics of the Company's
gas distribution, transportation, marketing and transmission
operations principally in Texas, the Oklahoma Panhandle and
Arizona:
Year Ended June 30,
--------------------------------
1996 1995 1994
---------- ---------- ----------
Average number of gas sales
customers served (a):
Residential................ 457,187 457,052 432,474
Commercial................. 29,873 29,549 28,593
Industrial and irrigation.. 346 382 722
Public authorities and
other.................... 2,812 2,798 2,522
Pipeline and marketing..... 495 450 273
--------- --------- ---------
Total average customers
served................. 490,713 490,231 464,584
========= ========= =========
Gas sales in millions of
cubic feet (MMcf):
Residential................ 22,945 21,596 23,852
Commercial................. 9,990 9,927 10,173
Industrial and irrigation.. 1,992 2,112 2,216
Public authorities and
other.................... 2,708 2,798 2,959
Pipeline and marketing..... 11,848 7,596 7,482
--------- --------- ---------
Gas sales billed......... 49,483 44,029 46,682
Net change in unbilled
gas sales................ (5) (10) (18)
--------- --------- ---------
Total gas sales........ 49,478 44,019 46,664
========= ========= =========
Gas sales revenues
(thousands of dollars):
Residential................ $ 127,255 $ 118,818 $ 37,135
Commercial................. 42,353 42,112 47,020
Industrial and irrigation.. 6,315 6,746 8,848
Public authorities and
other.................... 9,338 7,938 10,943
Pipeline and marketing..... 27,688 16,409 17,759
--------- --------- ---------
Gas revenues billed...... 212,949 192,023 221,705
Net change in unbilled
gas sales revenues....... 856 (204) (2,018)
--------- --------- ---------
Total gas sales
revenues............. $ 213,805 $ 191,819 $ 219,687
========= ========= ==========
Gas sales margin
(thousands of dollars) (b):.. $ 97,718 $ 95,399 $ 95,136
========= ========= ==========
Gas sales revenue per thousand
cubic feet (Mcf) billed (c):
Residential................ $ 5.546 $ 5.502 $ 5.750
Commercial................. 4.240 4.242 4.622
Industrial and irrigation.. 3.170 3.194 3.992
Public authorities and
other.................... 3.448 2.837 3.698
Pipeline and marketing..... 2.337 2.160 2.374
Weather effect:
Degree days (d).............. 1,901 1,669 1,946
Percent of 30-year
measure (e)................ 96% 83% 96%
Gas transported in millions
of cubic feet (MMcf)......... 31,906 34,133 24,461
Gas transportation revenues
(thousands of dollars)....... $ 9,008 $ 8,378 $ 7,393
- - -----------------------
(a) Variances in the average number of customers served is pri-
marily due to the divestiture of the Texas and Oklahoma
Panhandle distribution operations in May 1996 and the
acquisition of Rio Grande in September 1993, involving 7,000
and 74,000 customers, respectively.
(b) Gas sales margin is equal to gas sales revenues less pur-
chased gas costs.
(c) Fluctuations in gas price billed between each period reflect
changes in the average cost of purchased gas and the effect
of rate adjustments.
(d) "Degree days" are a measure of the coldness of the weather
experienced. A degree day is equivalent to each degree that
the daily mean temperature for a day falls below 65 degrees
Fahrenheit.
(e) Information with respect to weather conditions is provided
by the National Oceanic and Atmospheric Administration.
Percentages of 30-year measure are computed based on the
weighted average volumes of gas sales billed.
Missouri Gas Energy. The following table shows certain operating
statistics of the gas distribution and transportation operations
in Missouri:
Five
Year Ended Months Year
------------------- Ended Ended
June 30, June 30, June 30, June 30,
1996(a) 1995(a) 1994(a) 1994(a)
--------- --------- --------- ---------
Average number of gas
sales customers served:
Residential......... 414,788 410,291 410,934 400,222
Commercial.......... 59,690 59,087 58,830 57,300
Industrial.......... 322 296 254 257
-------- -------- -------- --------
Total average cus-
tomers served... 474,800 469,674 470,018 457,779
======== ======== ======== ========
Gas sales in millions
of cubic feet (MMcf):
Residential......... 46,775 41,354 21,569 45,407
Commercial.......... 21,578 18,863 10,023 21,363
Industrial.......... 592 241 26 143
-------- -------- -------- --------
Gas sales billed.. 68,945 60,458 31,618 66,913
Net change in un-
billed gas sales.. 31 (19) (6,059) (104)
-------- -------- -------- --------
Total gas sales... 68,976 60,439 25,559 66,809
======== ======== ======== ========
Gas sales revenues
(thousands of dollars):
Residential......... $259,401 $186,716 $108,871 $234,360
Commercial.......... 111,840 77,101 47,257 102,036
Industrial.......... 4,294 1,731 458 1,480
-------- -------- -------- --------
Gas sales reve-
nues billed..... 375,535 265,548 156,586 337,876
Net change in un-
billed gas sales
revenues.......... 2,090 (740) (28,564) (1,210)
-------- -------- -------- --------
Total gas sales
revenues...... $377,625 $264,808 $128,022 $336,666
======== ======== ======== ========
Gas sales margin
(thousands of
dollars) (b).......... $131,462 $116,353 $ 41,445 $103,191
======== ======== ======== ========
Gas sales revenue per
thousand cubic feet
(Mcf) billed:(c)
Residential......... $ 5.546 $ 4.515 $ 5.048 $ 5.161
Commercial.......... 5.183 4.087 4.715 4.776
Industrial.......... 7.253 7.183 17.615 10.350
Weather effect:
Degree days (d)....... 5,495 4,779 1,916 5,277
Percent of 30-year
measure: (e)........ 105% 90% 93% 100%
Gas transported in
millions of cubic
feet (MMcf)........... 30,746 30,464 11,673 29,498
Gas transportation reve-
nues (thousands of
dollars).............. $ 10,299 $ 8,336 $ 2,568 $ 6,614
- - ---------------
(a) Missouri Gas Energy was acquired on January 31, 1994 and,
therefore, its results of operations were consolidated with
the Company beginning February 1, 1994. The increase in the
average number of customers served during the five-month
period ended June 30, 1994 is due to the seasonality of the
Company's business in which a greater number of customers
are served during the winter-heating season.
(b) Gas sales margin is equal to gas sales revenues less pur-
chased gas.
(c) Fluctuations in gas price billed between each period reflect
changes in the average cost of purchased gas and the effect
of rate adjustments.
(d) "Degree days" are a measure of the coldness of the weather
experienced. A degree day is equivalent to each degree that
the daily mean temperature for a day falls below 65 degrees
Fahrenheit.
(e) Information with respect to weather conditions is provided
by the National Oceanic and Atmospheric Administration.
Percentages of 30-year measure are computed based on the
weighted average volumes of gas sales billed.
Investments in Real Estate
Lavaca Realty owns a commercially developed tract of land in the
central business district of Austin, Texas, containing a combined
11-story office building, parking garage and drive-through bank
(Lavaca Plaza). Approximately 49% of the office space at Lavaca
Plaza is used in the Company's business while the remainder is
leased to non-affiliated entities. The Company sold a mini-bank
facility adjoining Lavaca Plaza subsequent to June 30, 1996.
Lavaca Realty also owns a 2-story office building in El Paso,
Texas. Other real estate investments held at June 30, 1996
include two small commercial tracts in downtown Austin, one-half
acre of undeveloped land in Dallas, Texas, 625 square feet of
undeveloped land in San Antonio, Texas, and 36,000 square feet of
improved property in Kansas City, Missouri, which is leased to a
non-affiliated entity. The Company is attempting to sell all
remaining undeveloped real estate.
Employees
As of July 31, 1996, the Company has 1,623 employees, of whom
1,278 are paid on an hourly basis, 322 are paid on a salary basis
and 23 are paid on a commission basis. Of the 1,278 hourly paid
employees, 54% are represented by unions. Of those employees
represented by unions, 83% are employed by Missouri Gas Energy.
In May 1994, the Company announced an early retirement program
for certain employees of Missouri Gas Energy with an election
period from May 20 to June 23, 1994. Of an eligible 133
employees, 81 accepted the 1994 early retirement program.
From time to time the Company may be subject to labor disputes;
however, such disputes have not previously disrupted its busi-
ness. The Company believes that its relations with its employees
are good.
ITEM 2. Properties.
See Item 1, Business, for information concerning the general
location and characteristics of the important physical properties
and assets of the Company.
Southern Union Gas has 7,600 miles of mains, 4,213 miles of ser-
vice lines and 105 miles of transmission lines. Missouri Gas
Energy has 7,249 miles of mains, 4,453 miles of service lines and
47 miles of transmission lines. Southern Transmission Company
has 310 miles of transmission lines and 217 miles of gathering
lines. Norteno has 6.7 miles of transmission lines. The Company
considers its systems to be in good condition and to be well-
maintained, and it has continuing replacement programs based on
historical performance and system surveillance.
Pursuant to a 1989 MPSC order, Missouri Gas Energy is engaged in
a major gas safety program in its service territories. This pro-
gram includes replacement of company- and customer-owned gas ser-
vice and yard lines, the movement and resetting of meters, the
replacement of cast iron mains and the replacement and cathodic
protection of bare steel mains (Missouri Safety Program). In
recognition of the significant capital expenditures associated
with this safety program, the MPSC permits the deferral, and sub-
sequent recovery through rates, of depreciation expense, property
taxes and associated carrying costs, related to the Missouri
Safety Program. Missouri Gas Energy was required to continue the
Missouri Safety Program and has deferred depreciation expense,
property taxes and carrying costs of $7,703,000, $4,154,000 and
$600,000 for 1996, 1995 and 1994, respectively.
ITEM 3. Legal Proceedings.
See Commitments and Contingencies in the Notes to Consolidated
Financial Statements contained in the Annual Report for discus-
sions of the Company's legal proceedings.
ITEM 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of security holders of
Southern Union during the quarter ended June 30, 1996.
PART II
ITEM 5. Market for the Registrant's Common Stock and Related
Stockholder Matters.
Market Information
On March 6, 1995, Southern Union's common stock began trading on
the New York Stock Exchange under the symbol "SUG." Prior to
March 6, 1995, Southern Union's common stock was traded on the
American Stock Exchange under the same symbol.
The high and low sales prices (adjusted for any stock dividends
and stock splits) for shares of Southern Union common stock since
July 1, 1994 are set forth below:
$/Share
--------------
High Low
------ ------
July 1 to September 5, 1996................. 24 5/8 20 3/8
(Quarter Ended)
June 30, 1996............................. 25 1/2 20 1/4
March 31, 1996............................ 22 3/8 16 3/4
December 31, 1995......................... 19 7/8 12 5/8
September 30, 1995........................ 13 7/8 12 3/8
(Quarter Ended)
June 30, 1995............................. 13 3/4 11 3/4
March 31, 1995............................ 12 3/4 11 1/8
December 31, 1994......................... 13 11 3/4
September 30, 1994........................ 13 1/8 11 7/8
Holders
As of September 5, 1996, there were 273 holders of record of
Southern Union's common stock. This number does not include
persons whose shares are held of record by a bank, brokerage
house or clearing agency, but does include any such bank,
brokerage house or clearing agency.
There were 16,223,667 shares of Southern Union's common stock
outstanding on September 5, 1996 of which 9,194,206 shares were
held by non-affiliates.
Dividends
Southern Union paid no cash dividends on its common stock during
the three-year period ended June 30, 1996. Provisions in certain
of Southern Union's long-term notes and its bank revolving credit
facility limit the payment of cash or asset dividends on capital
stock. Under the most restrictive provisions in effect, Southern
Union may not declare or pay any cash or asset dividends on its
common stock or acquire or retire any of Southern Union's common
stock, unless no event of default exists and the Company meets
certain financial ratio requirements.
On March 11, 1996 and March 9, 1994 Southern Union distributed a
stock split as a stock dividend of 33 % and 50%, respectively.
On November 27, 1995 and June 30, 1994 the Company distributed
its annual 5% common stock dividend to stockholders of record on
November 15, 1995 and June 14, 1994, respectively. The 5% stock
dividends are consistent with Southern Union's Board of Direc-
tors' February 1994 decision to commence regular stock dividends
of approximately 5% each year. The specific amount and declara-
tion, record and distribution dates for an annual stock dividend
will be determined by the Board and announced at a date that is
not expected to be later than the annual stockholders meeting
each year. The next annual stock dividend is expected to be
declared in connection with the Company's annual meeting of
stockholders to be held on November 12, 1996. A portion of each
of the annual 5% stock dividends was characterized as a distribu-
tion of capital due to the level of the Company's retained
earnings available for distribution as of the date of declara-
tion.
ITEM 6. Selected Financial Data.
Years Ended
Years Ended June 30, December 31,
---------------------------- ---------------------
1996(a) 1995(a) 1994(a)(b) 1993(b)(c) 1992(c)(d)
-------- -------- ---------- ---------- ----------
(thousands of dollars, except per share amounts)
Total
operating
revenues.... $620,391 $479,983 $372,043 $209,393 $191,646
Earnings from
continuing
operations.. 20,839 16,069 8,378 7,733 6,391
Earnings per
common and
common share
equivalents
(e)......... 1.25 .98 .59 .59 .12
Total assets. 964,460 992,597 887,807 416,207 377,167
Common stock-
holders'
equity...... 245,915 225,664 208,975 201,938 148,003
Short-term
debt........ 615 770 889 40,655 14,360
Long-term
debt, ex-
cluding cur-
rent
maturities.. 385,394 462,503 479,048 89,019 109,464
Redeemable
preferred
stock....... -- -- -- -- 24,900
Company-
obligated
mandatorily
redeemable
preferred
securities
of subsidi-
ary trust... 100,000 100,000 -- -- --
Average cus-
tomers
served...... 965,513 959,905 660,425 421,233 394,199
- - ---------------
(a) Missouri Gas Energy, a division of Southern Union was
acquired on January 31, 1994 and was accounted for as a
purchase. Missouri Gas Energy's assets were included in the
Company's consolidated balance sheet at January 31, 1994 and
its results of operations were included in the Company's
consolidated results of operations beginning February 1,
1994. For these reasons, the consolidated results of
operations of the Company for the periods subsequent to the
acquisition are not comparable to prior periods. See Busi-
ness -- Acquisitions and Divestiture.
(b) During 1994, the Company changed its fiscal year-end from
December 31 to June 30. The Company believes the new fiscal
year more closely conforms its financial condition and
results of operations to its natural business cycle. The
consolidated results of operations for the year ended
June 30, 1994 and the year ended December 31, 1993 include
the effects of the following which occurred in the two
quarters in common during the six-month period ended
December 31, 1993: (i) a non-recurring adjustment of
$2,489,000 to reverse a tax reserve upon the final settle-
ment of prior period federal income tax audits; (ii) a pre-
tax gain of $494,000 on the sale of undeveloped real
estate; and (iii) the write-off of $357,000 of acquisition-
related costs as a result of the termination of negotiations
for various acquisitions.
(c) The Company completed the Berry Gas, Eagle Pass and Rio
Grande acquisitions during 1993 and the Nixon acquisition in
1992. For these reasons, 1993 and 1992 results of opera-
operations are not comparable between periods.
(d) In February 1993, the Company sold Southern Union Explora-
tion Company, its former oil and gas exploration and produc-
tion company. The Company recorded an after-tax loss of
$4,400,000 at December 31, 1992 in connection with the sale.
(e) Earnings per share for all periods presented were computed
based on the weighted average number of shares of common
stock outstanding during the year adjusted for the 5% stock
dividends distributed on November 27, 1995 and June 30,
1994, the 33 % stock dividend distributed on March 11, 1996
and the 50% stock dividend distributed on March 9, 1994.
ITEM 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition.
"Management's Discussion and Analysis of Results of Operations
and Financial Condition" on pages 23 through 32 of the Company's
Annual Report to Stockholders for the year ended June 30, 1996,
is incorporated herein by reference.
ITEM 8. Financial Statements and Supplementary Data.
The following consolidated financial statements of Southern Union
and its consolidated subsidiaries, included in the Company's
Annual Report to Stockholders for the year ended June 30, 1996,
are incorporated herein by reference:
Consolidated statement of operations -- years ended June 30,
1996, 1995 and 1994.
Consolidated balance sheet -- June 30, 1996 and 1995.
Consolidated statement of cash flows -- years ended June 30,
1996, 1995 and 1994.
Consolidated statement of common stockholders' equity -- years
ended June 30, 1996, 1995 and 1994.
Notes to consolidated financial statements.
Report of independent accountants.
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
Not applicable.
PART III
ITEM 10. Directors and Executive Officers of Registrant.
There is incorporated in this Item 10 by reference the informa-
tion in the Company's definitive proxy statement for the 1996
Annual Meeting of Stockholders under the captions Election of
Directors, Executive Officers Who Are Not Directors and The Board
of Directors.
ITEM 11. Executive Compensation.
There is incorporated in this Item 11 by reference the informa-
tion in the Company's definitive proxy statement for the 1996
Annual Meeting of Stockholders under the captions Management
Compensation and Certain Relationships.
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management.
There is incorporated in this Item 12 by reference the informa-
tion in the Company's definitive proxy statement for the 1996
Annual Meeting of Stockholders under the caption Security Owner-
ship.
ITEM 13. Certain Relationships and Related Transactions.
There is incorporated in this Item 13 by reference the informa-
tion in the Company's definitive proxy statement for the 1996
Annual Meeting of Stockholders under the caption Certain Rela-
tionships.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a)(1) Financial Statements. The following consolidated finan-
--------------------
financial statements of Southern Union and its consoli-
dated subsidiaries, included in the Company's Annual
Report to Stockholders for the year ended June 30, 1996,
are incorporated by reference in Part II, Item 8:
Consolidated statement of operations -- years ended
June 30, 1996, 1995 and 1994.
Consolidated balance sheet -- June 30, 1996 and 1995.
Consolidated statement of cash flows -- years ended
June 30, 1996, 1995 and 1994.
Consolidated statement of common stockholders' equity --
years ended June 30, 1996, 1995 and 1994.
Notes to consolidated financial statements.
Report of independent accountants.
(a)(2) Financial Statement Schedules. All schedules are omitted
-----------------------------
as the required information is not applicable or the
information is presented in the consolidated financial
statements or related notes.
(a)(3) Exhibits.
--------
3(a) Restated Certificate of Incorporation of Southern
Union Company. (Filed as Exhibit 3(a) to Southern
Union's Transition Report on Form 10-K for the year
ended June 30, 1994 and incorporated herein by
reference.)
3(b) Southern Union Company Bylaws, as amended. (Filed as
Exhibit 3(b) to Southern Union's Transition Report on
Form 10-K for the year ended June 30, 1994 and incor-
porated herein by reference.)
4(a) Specimen Common Stock Certificate. (Filed as Exhibit
4(a) to Southern Union's Annual Report on Form 10-K
for the year ended December 31, 1989 and incorporated
herein by reference.)
4(b) Indenture between Chase Manhattan Bank, N.A., as
trustee, and Southern Union Company dated January 31,
1994. (Filed as Exhibit 4.1 to Southern Union's
Current Report on Form 8-K dated February 15, 1994
and incorporated herein by reference.)
4(c) Officers' Certificate dated January 31, 1994 setting
forth the terms of the 7.60% Senior Debt Securities
due 2024. (Filed as Exhibit 4.2 to Southern Union's
Current Report on Form 8-K dated February 15, 1994
and incorporated herein by reference.)
4(d) Certificate of Trust of Southern Union Financing I.
(Filed as Exhibit 4-A to Southern Union's Registra-
tion Statement on Form S-3 (No. 33-58297) and
incorporated herein by reference.)
4(e) Certificate of Trust of Southern Union Financing II.
(Filed as Exhibit 4-B to Southern Union's Registra-
tion Statement on Form S-3 (No. 33-58297) and
incorporated herein by reference.)
4(f) Certificate of Trust of Southern Union Financing III.
(Filed as Exhibit 4-C to Southern Union's Registra-
tion Statement on Form S-3 (No. 33-58297) and
incorporated herein by reference.)
4(g) Form of Amended and Restated Declaration of Trust of
Southern Union Financing I. (Filed as Exhibit 4-D to
Southern Union's Registration Statement on Form S-3
(No. 33-58297) and incorporated herein by reference.)
4(h) Form of Subordinated Debt Securities Indenture among
Southern Union Company and The Chase Manhattan Bank,
N. A., as Trustee. (Filed as Exhibit 4-G to Southern
Union's Registration Statement on Form S-3 (No. 33-
58297) and incorporated herein by reference.)
4(i) Form of Supplemental Indenture to Subordinated Debt
Securities Indenture with respect to the Subordinated
Debt Securities issued in connection with the
Southern Union Financing I Preferred Securities.
(Filed as Exhibit 4-H to Southern Union's Registra-
tion Statement on Form S-3 (No. 33-58297) and
incorporated herein by reference.)
4(j) Form of Southern Union Financing I Preferred Security
(included in 4(g) above.) (Filed as Exhibit 4-I to
Southern Union's Registration Statement on Form S-3
(No. 33-58297) and incorporated herein by reference.)
4(k) Form of Subordinated Debt Security (included in 4(i)
above.) (Filed as Exhibit 4-J to Southern Union's
Registration Statement on Form S-3 (No. 33-58297) and
incorporated herein by reference.)
4(l) Form of Guarantee with respect to Southern Union
Financing I Preferred Securities. (Filed as Exhibit
4-K to Southern Union's Registration Statement on Form
S-3 (No. 33-58297) and incorporated herein by
reference.)
4(m) The Company is a party to other debt instruments, none
of which authorizes the issuance of debt securities in
an amount which exceeds 10% of the total assets of the
Company. The Company hereby agrees to furnish a copy
of any of these instruments to the Commission upon
request.
10(a) Revolving Credit Agreement, Revolving Note and Loan
Documents between Southern Union Company and the Banks
named therein dated September 30, 1993. (Filed as
Exhibit 99.2 to Southern Union's Current Report on
Form 8-K dated October 13, 1993 and incorporated
herein by reference.)
10(b) First Amendment to Revolving Credit Agreement,
Revolving Notes and Loan Documents dated as of
November 15, 1993. (Filed as Exhibit 10.1 to Southern
Union's Registration Statement on Form S-3 (No. 33-
70604) and incorporated herein by reference.)
10(c) Second Amendment to Revolving Credit Agreement dated
August 31, 1994. (Filed as Exhibit 10(c) to Southern
Union's Transition Report on Form 10-K for the year
ended June 30, 1994 and incorporated herein by
reference.)
10(d) Third Amendment to Revolving Credit Agreement dated
April 28, 1995. (Filed as Exhibit 10.1 to Southern
Union's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995 and incorporated herein by
reference.)
10(e) Asset Purchase Agreement between Southern Union Com-
pany and Western Resources, Inc. dated July 9, 1993.
(Filed as Exhibit 10.1 to the Company's Current Report
on Form 8-K dated July 12, 1993 and incorporated
herein by reference.)
10(f) Southern Union Company 1982 Incentive Stock Option
Plan and form of related Stock Option Agreement.
(Filed as Exhibits 4.1 and 4.2 to Form S-8, File No.
2-79612 and incorporated herein by reference.)(1)
10(g) Form of Indemnification Agreement between Southern
Union Company and each of the Directors of Southern
Union Company. (Filed as Exhibit 10(i) to Southern
Union's Annual Report on Form 10-K for the year ended
December 31, 1986 and incorporated herein by
reference.)
10(h) Southern Union Company 1992 Long-Term Stock Incentive
Plan. (Filed as Exhibit 10(i) to Southern Union's
Annual Report on Form 10-K for the year ended
December 31, 1992 and incorporated herein by
reference.)(1)
10(i) Southern Union Company Director's Deferred Compensa-
tion Plan. (Filed as Exhibit 10(g) to Southern
Union's Annual Report on Form 10-K for the year ended
December 31, 1993 and incorporated herein by
reference.)(1)
10(j) Southern Union Company Supplemental Deferred Compensa-
tion Plan. (Filed as Exhibit 10(h) to Southern
Union's Annual Report on Form 10-K for the year ended
December 31, 1993 and incorporated herein by
reference.)(1)
10(k) Form of warrant granted to Fleischman and Walsh L.L.P.
(Filed as Exhibit 10(j) to Southern Union's Transition
Report on Form 10-K for the year ended June 30, 1994
and incorporated herein by reference.)
10(l) Renewal Promissory Note Agreement between
Peter H. Kelley and Southern Union Company dated
May 31, 1995. (Filed as Exhibit 10(I) to Southern
Union's Annual Report on Form 10-K for the year ended
June 30, 1995 and incorporated herein by reference.)
11 Computation of Per Share Earnings.
13 Portions of the Company's Annual Report to Stock-
holders for the year ended June 30, 1996, are incorpo-
rated by reference herein: Pages 23-56.
21 Subsidiaries of the Company.
23 Consent of Independent Accountants.
24 Power of Attorney.
27 Financial Data Schedule.
(b) Reports on Form 8-K. Southern Union filed no current
-------------------
reports on Form 8-K during the three months ended June 30,
1996.
- - ----------------
(1) Indicates a Management Compensation Plan.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Southern Union has duly caused
this report to be signed by the undersigned, thereunto duly
authorized, on September 10, 1996.
SOUTHERN UNION COMPANY
By PETER H. KELLEY
---------------
Peter H. Kelley
President and Chief Operating
Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on
behalf of Southern Union and in the capacities indicated as of
September 10, 1996.
Signature/Name Title
-------------- -----
GEORGE L. LINDEMANN* Chairman of the Board, Chief Executive
Officer and Director
JOHN E. BRENNAN* Director
FRANK W. DENIUS* Director
AARON I. FLEISCHMAN* Director
KURT A. GITTER, M.D.* Director
PETER H. KELLEY Director
- - ---------------
Peter H. Kelley
ADAM M. LINDEMANN* Director
ROGER J. PEARSON* Director
GEORGE ROUNTREE, III* Director
DAN K. WASSONG* Director
RONALD J. ENDRES Executive Vice President and Chief
- - ----------------
Ronald J. Endres Financial Officer
DAVID J. KVAPIL Vice President and Controller
- - ---------------
David J. Kvapil (Principal Accounting Officer)
*By PETER H. KELLEY
---------------
Peter H. Kelley
Attorney-in-fact
INDEX TO EXHIBITS
Exhibit No.
- - -----------
11 Computation of Per Share Earnings
13 Portions of Company's Annual Report to Stockholders
21 Subsidiaries of the Company
23 Consent of Independent Accountants
24 Power of Attorney
27 Financial Data Schedule