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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
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SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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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
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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.
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The aggregate market value of the voting stock held by non-
affiliates of the registrant on September 12, 1997, was
$224,553,757. The number of shares of the registrant's Common
Stock outstanding on September 12, 1997 was 17,122,736.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Stockholders for
the year ended June 30, 1997, 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 11, 1997, are
incorporated by reference into Part III.
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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. Southern Union is one of the top 15
gas utilities in the United States, as measured by number of
customers. The Company's principal line of business is the dis-
tribution of natural gas as a public utility through Southern
Union Gas and Missouri Gas Energy (MGE), each of which is a divi-
sion of Southern Union. Southern Union Gas, headquartered in
Austin, Texas, serves 497,000 residential, commercial, indus-
trial, agricultural and other customers in Texas (including the
cities of Austin, Brownsville, El Paso, Galveston and Port
Arthur). MGE, headquartered in Kansas City, Missouri, serves
474,000 customers in central and western Missouri (including the
cities of Kansas City, St. Joseph, Joplin and Monett). The
diverse geographic area of the Company's natural gas distribution
systems reduces the sensitivity of Southern Union's operations to
weather risk and local economic conditions.
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 pro-
pane 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 dis
tribution and sales businesses from natural gas sales to special-
ized energy consulting services. The Company distributes propane
to 3,600 customers in western Texas. Certain subsidiaries own or
hold interests in real estate and other assets, which are pri-
marily used in the Company's utility business. Central to all of
the Company's present businesses and strategies is the sale and
transportation of natural gas. See Company Operations.
The Company is a sales and market-driven energy company whose
management is committed to achieving profitable growth of its
utility businesses in an increasingly competitive business
environment. Management's strategies for achieving these objec-
tives principally consist of: (i) promoting new sales opportuni
ties and markets for natural gas and propane; (ii) enhancing
financial and operating performance; and (iii) expanding the Com-
pany through development of existing utility businesses and
selective acquisition of new utilities businesses. Management
develops and continually evaluates these strategies and their
implementation by applying their experience and expertise in
analyzing the energy industry, technological advances, market
opportunities and general business trends. Each of these
strategies, as implemented throughout the Company's existing
businesses, reflects the Company's commitment to its core gas
utility business.
The Company has a goal of selected growth and expansion, pri-
marily in the utilities industry. To that extent, the Company
intends to consider, when appropriate, and if financially practi-
cable to pursue, the acquisition of other utility distribution 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.
See Management's Discussion and Analysis of Results of Operations
and Financial Condition (MD&A) -- Cautionary Statement Regarding
Forward-Looking Information contained in the Company's Annual
Report to Stockholders for the year ended June 30, 1997 (the
Annual Report), portions of which are filed as Exhibit 13 hereto.
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-
ion 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 7.60% Senior Debt
Securities due 2024 (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 de-
fer 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 sub-
sidiary 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.
The following table sets forth the summary capitalization of the
Company.
June 30, 1997 June 30, 1996
---------------- ----------------
Amount Percent Amount Percent
-------- ------- -------- -------
(thousands, except percentages)
Long-term debt
Senior Notes............... $384,515 $384,515
Other...................... 1,642 879
-------- --------
386,157 51.2% 385,394 52.7%
Company-obligated Preferred
Securities of Trust........ 100,000 13.3 100,000 13.7
Common stockholders' equity.. 267,462 35.5 245,915 33.6
-------- ----- -------- -----
Total capitalization....... $753,619 100.0% $731,309 100.0%
======== ===== ======== =====
Company Operations
The Company's principal line of business is the distribution of
natural gas through its Southern Union Gas and MGE 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. MGE 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 sub-
sidiary of Southern Union, owns and operates intrastate pipelines
which connect the cities of Lockhart, Luling, Cuero, Shiner,
Yoakum, and Gonzales, Texas, as well as a line that provides gas
to an industrial customer in Port Arthur, Texas. Southern also
owns a transmission line which supplies gas to the community of
Sabine Pass, Texas. In September 1997, Southern purchased a 45-
mile intrastate pipeline for $305,000 which will augment gas
supply to the city of Eagle Pass, Texas, and ultimately into
Piedras Negras, Mexico.
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. Norteno transported a combined 17 billion cubic feet
(Bcf) for the city of Juarez, Mexico and the Samalayuca Power
Plant in north Mexico in fiscal 1997.
SUPro Energy Company (SUPro), a wholly-owned subsidiary of
Southern Union formed in August 1996, primarily provided propane
gas services to 2,300 customers located principally in El Paso,
Texas during 1997 while selling 2,417,000 gallons of propane. On
June 30, 1997, SUPro acquired additional propane operations,
adding 1,300 customers located in and around Alpine, Texas.
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 Total Energy Systems, Inc., formerly Southern
Union Energy Products and Services Company, a wholly-owned sub-
sidiary 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. (SUEI) and Southern
Union International Investments, Inc. (Investments), both wholly-
owned subsidiaries of Southern Union, participate in energy
related projects internationally. Energia Estrella del Sur,
S. A. de C. V. (Estrella), a wholly-owned Mexican subsidiary of
SUEI and Investments, participate in energy-related projects in
Mexico. Subsequent to June 30, 1997, Estrella acquired a 42%
equity ownership in a natural gas distribution company which
serves 16,000 customers in Piedras Negras, Mexico, across the
border from Southern Union Gas' Eagle Pass, Texas service area.
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.
Econofuel Company (Econofuel), a formerly wholly-owned subsidiary
of Southern Union, marketed and sold natural gas for natural gas
vehicles (NGVs) as an alternative fuel to gasoline. Econofuel
owned fuel dispensing equipment in Austin, El Paso, Port Arthur,
and Galveston, Texas, located at independent retail fuel stations
for NGVs. In January 1997, Econofuel was dissolved. See MD&A --
Other Income (Expense), Net contained in the Annual Report.
The Company also holds investments principally in commercially
developed real estate in Austin, El Paso and Kansas City through
Southern Union's wholly-owned subsidiary, Lavaca Realty Company
(Lavaca Realty).
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 other
pipeline systems. The Company has offered transportation
arrangements 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 suc-
cessfully used flexible rate provisions, when needed, to retain
customers who may have access to alternative energy sources.
As energy providers, Southern Union Gas and MGE have historically
competed with alternative energy sources, particularly electri-
city 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 com-
mercial customers in the Company's service areas generally is
higher than the effective cost of 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 requirements of
electricity in some of Southern Union Gas' and MGE's 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 oils, natural gas and pro-
pane, particularly by industrial, electric generation and agri-
cultural customers, has also increased due to the volitility of
natural gas prices and increased marketing efforts from various
energy companies. While competition between such fuels is
generally more intense outside the Company's service areas, this
competition affects the nationwide market for natural gas. Addi-
tionally, the general economic conditions in its service areas
continue to affect certain customers and market areas, thus
impacting the results of 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) required the
"unbundling" of services offered by interstate pipeline companies
beginning in 1992. As a result, gas purchasing and transporta-
tion decisions and associated risks have been shifted from the
pipeline 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
distribution companies such as Southern Union who have demon-
strated a history of contracting favorable and efficient gas
supply arrangements in an open market system.
The majority of Southern Union Gas' 1997 gas requirements for
utility operations were delivered under long-term transportation
contracts through four major pipeline companies. The majority of
MGE's 1997 gas requirements were delivered under short- and long-
term transportation contracts through three major pipeline com-
panies. These contracts have various expiration dates ranging
from 1998 through 2016. 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 MGE both have
firm supply commitments for all areas that are supplied with gas
purchased under short-term arrangements. MGE also holds contract
rights to over 16 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 MGE utility
sales customers during the last ten years.
During 1997, the Company was impacted by significant increases in
natural gas prices. 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 years ended June 30,
1997 and 1996 and the average cost per thousand cubic feet (Mcf)
of gas in 1997.
Percent
Percent of Gas
of Gas Utility Average
Utility Sales Cost
Service Area Revenues Volume Per Mcf
- ---------------------- ---------- --------- -----------
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ----- -----
Southern Union Gas
Austin and South Texas.... 12 11 11 11 $3.47 $2.43
El Paso and West Texas.... 13 10 16 15 3.36 2.02
Rio Grande Valley......... 4 5 3 4 3.90 3.73
Other..................... 6 7 6 6 3.33 2.49
--- --- --- ---
35 33 36 36
Missouri Gas Energy......... 65 67 64 64 4.03 3.42
--- --- --- ---
100 100 100 100
=== === === ===
The Company is committed under various agreements to purchase
certain quantities of gas in the future. At June 30, 1997, 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. MGE currently does not
have any fixed price commitment contracts for the 1997/1998
winter heating season. At June 30, 1997, the Company also has
purchase commitments for certain quantities of gas at variable,
market-based prices. These market-based price commitments have
an annual value of $49,700,000 for Southern Union Gas and
$72,100,000 for MGE. 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 methodolo-
gies.
In August 1997, the Missouri Public Service Commission (MPSC)
issued an order authorizing MGE to begin making semi-annual pur-
chase gas adjustments in November and April, instead of more
frequent adjustments as in the past. Additionally, the order
authorized MGE to establish an Experimental Price Stabilization
Fund for purposes of procuring natural gas financial instruments
to hedge a portion of its gas purchase costs for the 1997/1998
winter heating season. The Company anticipates that these proce-
dures will help stabilize the monthly heating bills for Missouri
customers and, depending on market conditions, could ultimately
reduce the cost of gas which is traditionally passed on to custo-
mers. The Company believes it bears minimal risk under the
authorized transactions.
The MPSC approved a gas supply incentive plan for MGE effective
July 1, 1996. Under the plan, the Company and MGE's customers
share in certain savings below benchmark levels of gas costs
achieved as a result of the Company's gas procurement activities.
Likewise, if natural gas is acquired above benchmark levels, both
the Company and customers share in such costs. For the year
ended June 30, 1997, the incentive plan achieved a reduction of
overall gas costs of $10,200,000, resulting in savings to
Missouri customers of $5,600,000. The Company recorded revenues
of $4,600,000 in 1997 under this program.
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 1998; 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
financing 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 impor-
tant because the cost of natural gas accounts for a significant
portion of the Company's total expenses. The appropriate regula-
tory authority must receive notice of such adjustments prior to
billing implementation.
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. In recent
years, the majority of the Company's rate increases in Texas have
resulted in increased monthly fixed charges which help stabilize
earnings. Weather normalization clauses, in place in Austin, El
Paso service area cities other than the City of El Paso (effec-
tive September 1, 1996), Galveston, Port Arthur (effective
September 1, 1996) and two other service areas in Texas, also
help stabilize earnings. The city of El Paso also approved
implementation of a weather normalization clause effective
September 1, 1996, but rescinded the clause effective February 1,
1997.
On January 22, 1997, MGE was notified by the MPSC of its decision
to grant an $8,847,000 annual increase to revenue effective on
February 1, 1997. Pursuant to a 1989 MPSC order, MGE is engaged
in a major gas safety program in its service area (Missouri
Safety Program). In connection with this program, the MPSC
issued an accounting authority order (AAO) in Case No. GO-92-234
in 1994 which authorized MGE to defer depreciation expenses,
property taxes and carrying costs at a rate of 10.54% on the
costs incurred in the Missouri Safety Program. This AAO was con-
sistent with those which were issued by the MPSC from 1990 to
1993 to MGE's prior owner. The MPSC rate order of January 22,
1997, however, retroactively reduced the carrying cost rate
applied by the Company on the expenditures incurred on the
Missouri Safety Program since early 1994 to an Allowance for
Funds Used During Construction (AFUDC) rate. The Company has
filed an appeal of that portion of the rate order in the Missouri
State Court of Appeals, Western District. The Company intends to
vigorously pursue this appeal since it believes this portion of
the rate order is unlawful. The Company believes it will ulti-
mately be successful in litigating this matter and, therefore,
will not have a material adverse affect on its financial posi-
tion, results of operations or cash flows. Accordingly, the Com-
pany has not provided for any potential disallowance relative to
this matter in its financial statements. Absent a reversal of
this part of the rate order, the Company will have to record a
one-time $5,600,000 pre-tax write-off of the previously deferred
carrying costs. See MD&A -- Cautionary Statement Regarding
Forward-Looking Information and Commitments and Contingencies in
the Notes to the Consolidated Financial Statements contained in
the Annual Report.
Subsequent to June 30, 1997, the Company, the Missouri Office of
Public Counsel (OPC) and MPSC staff proposed global settlements
to resolve complaints brought by the OPC and the MPSC staff
regarding billing errors during the past two winters. The set-
tlements call for credits to gas bills by MGE totaling approxi-
mately $1,575,000 to those customers overbilled and a $550,000
contribution by MGE to a social service organization for the
express purpose of assisting needy MGE customers in paying their
gas bills. The settlement is currently pending final approval by
the MPSC. These balances were accrued as of June 30, 1997.
The approval of the January 31, 1994 acquisition of the Missouri
properties by the MPSC was subject to the terms of a stipulation
and settlement agreement which, among other things, requires MGE
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
acquisition.
During the three-year period ended June 30, 1997, the Company did
not file for any other rate increases in any of its major service
areas other than several annual cost of service adjustments. In
addition to the regulation of its utility and pipeline busi-
nesses, the Company is affected by numerous other regulatory con-
trols, including, among others, pipeline safety requirements of
the United States Department of Transportation, safety regula-
tions 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.
Environmental
The Company has been named as a potentially responsible party in
a special notice letter from the United States Environmental Pro-
tection Agency for costs associated with removing hazardous sub-
stances from the site of a former coal gasification plant in
Vermont. The Company also assumed responsibility for certain
environmental matters in connection with the acquisition of MGE.
Additionally, the Company is investigating the possibility that
the Company or predecessor companies may have been associated
with Manufactured Gas Plant sites in other of its past, princi-
pally in Arizona and New Mexico, and present service areas in
Texas. See MD&A -- Cautionary Statement Regarding Forward-
Looking Information and Commitments and Contingencies in the
Notes to the Consolidated Financial Statements contained in the
Annual Report.
Statistics of Utility and Related Operations
Gas Utility Customers
as of June 30,
----------------------------
1997 1996 1995
-------- -------- --------
Southern Union Gas:
Austin and South Texas........... 163,938 159,129 152,382
El Paso and West Texas........... 173,825 169,861 168,526
Galveston and Port Arthur........ 50,856 51,392 51,241
Panhandle and North Texas (a).... 24,903 24,777 31,384
Rio Grande Valley................ 76,704 76,707 77,105
------- ------- -------
490,226 481,866 480,638
------- ------- -------
Missouri Gas Energy:
Kansas City, Missouri
Metropolitan Area.............. 346,060 340,248 337,689
St. Joseph, Joplin, Monett and
others......................... 122,946 119,878 120,038
------- ------- -------
469,006 460,126 457,627
------- ------- -------
SUPro.............................. 3,647 -- --
------- ------- -------
Total.............................. 962,879 941,992 938,265
======= ======= =======
- ---------------------
(a) Effective May 1, 1996, the Company sold certain gas distri-
bution operations in the Texas and Oklahoma Panhandles.
Southern Union Gas, Mercado, Norteno and Southern. The following
table shows certain operating statistics of the Company's gas
distribution, transportation, marketing and transmission opera-
tions principally in Texas, the Oklahoma Panhandle and Arizona:
Year Ended June 30,
----------------------------
1997 1996 1995
-------- -------- --------
Average number of gas sales custo-
mers served (a):
Residential...................... 456,972 457,187 457,052
Commercial....................... 29,030 29,873 29,549
Industrial and irrigation........ 274 346 382
Public authorities and other..... 2,673 2,812 2,798
Pipeline and marketing........... 189 165 150
-------- -------- --------
Total average customers served. 489,138 490,383 489,931
======== ======== ========
Gas sales in millions of cubic
feet (MMcf):
Residential...................... 23,135 22,945 21,596
Commercial....................... 9,759 9,990 9,927
Industrial and irrigation........ 1,562 1,992 2,112
Public authorities and other..... 2,756 2,708 2,798
Pipeline and marketing........... 18,485 11,848 7,596
-------- -------- --------
Gas sales billed............... 55,697 49,483 44,029
Net change in unbilled gas sales. (70) (5) (10)
Total gas sales................ 55,627 49,478 44,019
======== ======== ========
Gas sales revenues (thousands of
dollars):
Residential...................... $152,737 $127,255 $118,818
Commercial....................... 51,392 42,353 42,112
Industrial and irrigation........ 6,122 6,315 6,746
Public authorities and other..... 12,975 9,338 7,938
Pipeline and marketing........... 47,664 27,688 16,409
-------- -------- --------
Gas revenues billed............ 270,890 212,949 192,023
Net change in unbilled gas
sales revenues................... (150) 856 (204)
-------- -------- --------
Total gas sales revenues....... $270,740 $213,805 $191,819
======== ======== ========
Gas sales margin (thousands of
dollars) (b):...................... $ 98,225 $ 97,718 $ 95,399
Gas sales revenue per Mcf
billed (c):
Residential...................... $ 6.602 $ 5.546 $ 5.502
Commercial....................... 5.266 4.240 4.242
Industrial and irrigation........ 3.920 3.170 3.194
Public authorities and other..... 4.708 3.448 2.837
Pipeline and marketing........... 2.579 2.337 2.160
Weather effect:
Degree days (d).................. 1,962 1,901 1,669
Percent of 30-year measure (e)... 100% 96% 83%
Gas transported in MMcf............ 32,895 31,906 34,133
Gas transportation revenues
(thousands of dollars)............. $ 9,103 $ 9,008 $ 8,378
- -----------------------
(a) Variances in the average number of customers served is pri-
marily due to the divestiture of the Texas and Oklahoma Pan-
handle distribution operations in May 1996 involving 7,000
customers.
(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:
Year Ended June 30,
----------------------------
1997 1996 1995
-------- -------- --------
Average number of gas sales
customers served:
Residential..................... 407,505 405,782 401,641
Commercial...................... 56,988 56,448 55,825
Industrial...................... 348 321 294
-------- -------- --------
Total average customers
served........................ 464,841 462,551 457,760
======== ======== ========
Gas sales in MMcf:
Residential..................... 45,566 46,775 41,354
Commercial...................... 21,121 21,578 18,863
Industrial...................... 496 592 241
-------- -------- --------
Gas sales billed.............. 67,183 68,945 60,458
Net change in unbilled gas
sales........................... (88) 31 (19)
-------- -------- --------
Total gas sales............... 67,095 68,976 60,439
======== ======== ========
Gas sales revenues (thousands
of dollars):
Residential..................... $284,803 $259,401 $186,716
Commercial...................... 123,684 111,840 77,101
Industrial...................... 3,539 4,294 1,731
-------- -------- --------
Gas sales revenues billed..... 412,026 375,535 265,548
Net change in unbilled gas
sales revenues.................. (1,745) 2,090 (740)
-------- -------- --------
Total gas sales revenues...... $410,281 $377,625 $264,808
======== ======== ========
Gas sales margin (thousands of
dollars) (a)...................... $134,656 $131,462 $116,353
======== ======== ========
Gas sales revenue per Mcf
billed:(b)
Residential..................... $ 6.250 $ 5.546 $ 4.515
Commercial...................... 5.856 5.183 4.087
Industrial...................... 7.135 7.253 7.183
Weather effect:
Degree days (c)................. 5,506 5,495 4,779
Percent of 30-year measure: (d). 105% 105% 90%
Gas transported in MMcf........... 30,439 30,269 30,464
Gas transportation revenues
(thousands of dollars)............ $ 11,970 $ 10,299 $ 8,336
- ----------------------
(a) Gas sales margin is equal to gas sales revenues less pur-
chased gas.
(b) Fluctuations in gas price billed between each period reflect
changes in the average cost of purchased gas and the effect
of rate adjustments.
(c) "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.
(d) 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 51% of the office space at Lavaca
Plaza is used in the Company's business while the remainder is
leased to non-affiliated entities. Lavaca Realty also owns a 2-
story office building in El Paso, Texas. Other significant real
estate investments held at June 30, 1997 include 190,500 square
feet of undeveloped land in Harlingen, Texas, and 36,000 square
feet of improved property in Kansas City, Missouri, which is
leased to a non-affiliated entity.
Employees
As of August 31, 1997, the Company has 1,561 employees, of whom
1,214 are paid on an hourly basis, 321 are paid on a salary basis
and 26 are paid on a commission basis. Of the 1,214 hourly paid
employees, 49% are represented by unions. Of those employees
represented by unions, 95% are employed by Missouri Gas Energy.
On June 4, 1997, Southern Union Gas employees in Austin, Texas
covered by a collective bargaining agreement voted to decertify
their representing union. From time to time the Company may be
subject to labor disputes; however, such disputes have not
previously disrupted its business. 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 7,669 miles of mains, 4,369 miles of ser-
vice lines and 105 miles of transmission lines. Southern and
Norteno have 122.8 miles and 6.7 miles, respectively, of trans- mission lines.
MGE has 7,354 miles of mains, 4,509 miles of service lines and 47
miles of transmission lines. MGE is engaged in the Missouri
Safety Program in its service territories. At the direction of
the MPSC, the Company deferred depreciation expense, property
taxes and carrying costs of $3,729,000, $7,703,000 and $4,154,000
for 1997, 1996 and 1995, respectively, relative to this program.
See Utility Regulation and Rates and Commitments and Contin-
gencies in the Notes to Consolidated Financial Statements con-
tained in the Annual Report.
The Company considers its systems to be in good condition and
well-maintained, and it has continuing replacement programs based
on historical performance and system surveillance.
ITEM 3. Legal Proceedings.
See Commitments and Contingencies in the Notes to Consolidated
Financial Statements contained in the Annual Report for a discus-
sion of the Company's legal proceedings. See MD&A -- Cautionary
Statement Regarding Forward-Looking Information contained in the
Annual Report.
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, 1997.
PART II
ITEM 5. Market for the Registrant's Common Stock and Related
Stockholder Matters.
Market Information
Southern Union's common stock is traded on the New York Stock
Exchange under the symbol "SUG". The high and low sales prices
(adjusted for any stock dividends and stock splits) for shares of
Southern Union common stock since July 1, 1995 are set forth
below:
$/Share
---------------
High Low
------ ------
July 1 to September 12, 1997................. 23 7/8 21 3/4
(Quarter Ended)
June 30, 1997................................ 25 1/4 22
March 31, 1997............................... 24 3/8 21 1/4
December 31, 1996............................ 24 7/8 21
September 30, 1996........................... 26 3/8 19 1/8
(Quarter Ended)
June 30, 1996................................ 24 1/4 19 1/4
March 31, 1996............................... 21 3/8 15 7/8
December 31, 1995............................ 18 7/8 12
September 30, 1995........................... 13 1/4 11 3/4
Holders
As of September 12, 1997, there were 645 holders of record of
Southern Union's common stock. This number does not include per-
sons 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 17,122,736 shares of Southern Union's common stock
outstanding on September 12, 1997 of which 9,555,479 shares were
held by non-affiliates.
Dividends
Southern Union paid no cash dividends on its common stock during
the two years ended June 30, 1997. Provisions in certain of
Southern Union's long-term notes and its bank credit facilities
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, Southern Union distributed a stock split as a
stock dividend of 33 1/3%. On December 10, 1996 and November 27,
1995, the Company distributed its annual 5% common stock dividend
to stockholders of record on November 22, 1996 and November 15,
1995, respectively. The 5% stock dividends are consistent with
Southern Union's Board of Directors' February 1994 decision to
commence regular stock dividends of approximately 5% each year.
The specific amount and declaration, 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 11, 1997. A portion of the 5% stock dividend dis-
tributed on November 27, 1995 was characterized as a distribution
of capital due to the level of the Company's retained earnings
available for distribution as of the date of declaration.
ITEM 6. Selected Financial Data.
Year Ended
Years Ended June 30, December 31,
----------------------------------------- ------------
1997(a)(b) 1996(a)(b) 1995(a) 1994(a)(c) 1993(c)(d)
---------- ---------- -------- ---------- ------------
(thousands of dollars, except per share amounts)
Total
operating
revenues. $717,031 $620,391 $479,983 $372,043 $209,393
Earnings
from con-
tinuing
opera-
tions.... 19,032 20,839 16,069 8,378 7,733
Earnings
per com-
mon and
common
share
equiva-
lents
(e)...... 1.07 1.19 .93 .56 .56
Total
assets... 990,403 964,460 992,597 887,807 416,207
Common
stock-
holders'
equity... 267,462 245,915 225,664 208,975 201,938
Short-term
debt..... 687 615 770 889 40,655
Long-term
debt, ex-
cluding
current
maturi-
ties..... 386,157 385,394 462,503 479,048 89,019
Company-
obligated
manda-
torily
redeem-
able pre-
ferred
securi-
ties of
subsidi-
ary
trust.... 100,000 100,000 100,000 -- --
Average
custo-
mers
served... 955,895 952,934 947,691 653,102 421,233
- ------------------
(a) Missouri Gas Energy, a division of Southern Union, was
acquired on January 31, 1994 and was accounted for as a pur-
chase. 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 opera-
tions of the Company for the periods subsequent to the
acquisition are not comparable to prior periods.
(b) Certain Texas and Oklahoma Panhandle distribution operations
and WGI, exclusive of the Del Norte interconnect, were sold
on May 1, 1996.
(c) During 1994, the Company changed its fiscal year-end from
December 31 to June 30. The Company believes the June 30
fiscal year-end more closely conforms its financial condi-
tion 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.
(d) The Company completed the Berry Gas, Eagle Pass and Rio
Grande Valley Gas Company acquisitions during 1993.
(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 (i) the 5%
stock dividends distributed on December 10, 1996,
November 27, 1995 and June 30, 1994, and (ii) the 33 1/3%
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 20 through 27 of the Com-
pany's Annual Report to Stockholders for the year ended June 30,
1997, 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, 1997,
are incorporated herein by reference:
Consolidated statement of operations -- years ended June 30,
1997, 1996 and 1995.
Consolidated balance sheet -- June 30, 1997 and 1996.
Consolidated statement of cash flows -- years ended June 30,
1997, 1996 and 1995.
Consolidated statement of common stockholders' equity -- years
ended June 30, 1997, 1996 and 1995.
Notes to consolidated financial statements.
Report of independent accountants.
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
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 1997
Annual Meeting of Stockholders under the captions Board of
Directors -- Board Size and Composition and Executive Officers
and Compensation -- Executive Officers Who Are Not 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 1997
Annual Meeting of Stockholders under the captions Executive
Officers and Compensation -- Executive 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 1997
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 1997
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-
--------------------
cial statements of Southern Union and its consolidated
subsidiaries, included in the Company's Annual Report to
Stockholders for the year ended June 30, 1997, are incor-
porated by reference in Part II, Item 8:
Consolidated statement of operations -- years ended
June 30, 1997, 1996 and 1995.
Consolidated balance sheet -- June 30, 1997 and 1996.
Consolidated statement of cash flows -- years ended
June 30, 1997, 1996 and 1995.
Consolidated statement of common stockholders' equity
-- years ended June 30, 1997, 1996 and 1995.
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 incorporated 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
Registration 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
Registration 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 State-
ment 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 Subordi-
nated 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 State-
ment 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 State-
ment 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 instru-
ments 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
Company 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.)(*)
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 Incen-
tive 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.)(*)
10(i) Southern Union Company Director's Deferred Compen-
sation 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.)(*)
10(j) Southern Union Company Supplemental Deferred Com-
pensation 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.)(*)
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, 1997, are
incorporated by reference herein: Pages 20 - 50.
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,
1997.
- -----------------
(*) 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 19, 1997.
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 19, 1997.
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