<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-1398
UGI UTILITIES, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1174060
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
UGI UTILITIES, INC.
100 Kachel Boulevard, Suite 400
Green Hills Corporate Center, Reading, PA
(Address of principal executive offices)
19607
(Zip Code)
(610) 796-3400
(Registrant's telephone number, including area code)
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
----- -----
At April 30, 1996, there were 26,781,785 shares of UGI Utilities, Inc.
Common Stock, par value $2.25 per share, outstanding all of which were held,
beneficially and of record, by UGI Corporation.
<PAGE> 2
UGI UTILITIES, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGES
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<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 1996
September 30, 1995 and March 31, 1995 1
Condensed Consolidated Statements of Income for the
three, six and twelve months ended March 31, 1996 and 1995 2
Condensed Consolidated Statements of Cash Flows for the
six and twelve months ended March 31, 1996 and 1995 3
Notes to Condensed Consolidated Financial Statements 4 - 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 - 16
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holder 17
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
</TABLE>
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<PAGE> 3
PART I FINANCIAL INFORMATION
UGI UTILITIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Thousands of dollars)
<TABLE>
<CAPTION>
March 31, September 30, March 31,
1996 1995 1995
--------- ------------- ----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,731 $ 48,171 $ 20,686
Accounts receivable (less allowances for doubtful accounts of
$4,291, $2,660 and $3,732, respectively) 70,169 22,494 48,167
Accrued utility revenues 17,914 7,895 12,107
Inventories 7,445 23,427 9,083
Deferred income taxes 12,631 9,998 18,614
Prepayments and other current assets 6,360 5,182 8,629
--------- --------- ---------
Total current assets 118,250 117,167 117,286
Investments 4,051 5,040 5,393
Property, plant and equipment, at cost (less accumulated depreciation
and amortization of $214,185, $209,864 and $202,962, respectively) 494,390 487,794 467,272
Deferred recoverable utility costs 43,583 41,356 31,459
Other assets 13,158 10,123 8,082
--------- --------- ---------
Total assets $ 673,432 $ 661,480 $ 629,492
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 25,543 $ 53,179 $ 7,323
Bank loans 25,500 42,000 37,500
Accounts payable 34,811 33,623 22,159
Other current liabilities 69,528 46,914 79,560
--------- --------- ---------
Total current liabilities 155,382 175,716 146,542
Long-term debt 158,243 154,983 160,028
Deferred income taxes 89,386 84,225 81,894
Other noncurrent liabilities 24,349 24,551 19,851
Redeemable preferred stock 35,187 35,202 35,202
Common stockholder's equity:
Common Stock, $2.25 par value (authorized - 40,000,000 shares;
issued and outstanding - 26,781,785 shares) 60,259 60,259 60,259
Additional paid-in capital 68,052 68,052 68,052
Retained earnings 82,574 58,492 57,664
--------- --------- ---------
Total common stockholder's equity 210,885 186,803 185,975
--------- --------- ---------
Total liabilities and stockholders' equity $ 673,432 $ 661,480 $ 629,492
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 1 -
<PAGE> 4
UGI UTILITIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(Thousands of dollars)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
March 31, March 31, March 31,
------------------ ------------------ -------------------
1996 1995 1996 1995 1996 1995
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues $172,219 $137,722 $291,276 $237,247 $411,393 $357,556
-------- -------- -------- -------- -------- --------
Costs and expenses:
Gas, fuel and purchased power 91,376 70,624 148,071 119,315 198,450 173,827
Operating and administrative expenses 33,831 29,785 62,173 56,569 114,118 107,206
Operating and administrative expenses
- related parties 1,418 1,839 2,918 3,477 6,026 6,919
Depreciation and amortization 5,365 4,949 10,673 9,897 20,530 19,013
Miscellaneous (income), net (266) (1,045) (766) (2,128) (2,418) (3,721)
-------- -------- -------- -------- -------- --------
131,724 106,152 223,069 187,130 336,706 303,244
-------- -------- -------- -------- -------- --------
Operating income 40,495 31,570 68,207 50,117 74,687 54,312
Interest charges 4,071 4,392 8,315 8,600 16,553 16,601
-------- -------- -------- -------- -------- --------
Income before income taxes 36,424 27,178 59,892 41,517 58,134 37,711
Income taxes 13,999 10,981 22,807 16,681 17,867 15,818
-------- -------- -------- -------- -------- --------
Income before accounting change 22,425 16,197 37,085 24,836 40,267 21,893
Change in accounting for
postemployment benefits - - - (1,028) - (1,028)
-------- -------- -------- -------- -------- --------
Net income 22,425 16,197 37,085 23,808 40,267 20,865
Dividends on preferred stock 691 687 1,382 1,391 2,769 2,123
-------- -------- -------- -------- -------- --------
Net income after dividends
on preferred stock $ 21,734 $ 15,510 $ 35,703 $ 22,417 $ 37,498 $ 18,742
======== ======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 5
UGI UTILITIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Thousands of dollars)
<TABLE>
<CAPTION>
Six Months Ended Twelve Months Ended
March 31, March 31,
--------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 37,085 $ 23,808 $ 40,267 $ 20,865
Adjustments to reconcile net income to net cash provided
by continuing operating activities:
Depreciation and amortization 10,673 9,897 20,530 19,013
Deferred income taxes, net (54) (4,117) 6,437 (260)
Change in accounting for postemployment benefits - 1,028 - 1,028
Other, net 3,058 2,790 3,152 4,396
-------- -------- -------- --------
50,762 33,406 70,386 45,042
Net change in:
Accounts receivable and accrued utility revenues (60,447) (35,084) (35,168) 14,691
Inventories 15,982 17,366 1,439 (1,202)
Deferred fuel adjustments 6,211 15,815 (9,742) (1,246)
Pipeline transition recoveries, net 1,042 2,398 560 992
Producer settlement (payments) recoveries, net (1,717) (5,932) (5,292) 7,478
Accounts payable 1,188 (6,417) 15,408 (5,971)
Other current assets and liabilities 16,390 7,504 5,432 713
-------- -------- -------- --------
Net cash provided by continuing operations 29,411 29,056 43,023 60,497
Net cash used by discontinued operations - - - (114)
-------- -------- -------- --------
Net cash provided by operating activities 29,411 29,056 43,023 60,383
-------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (16,799) (21,450) (46,570) (44,336)
Net costs of property, plant and equipment disposals (635) (235) (1,373) (849)
Other, net 725 725 1,225 725
-------- -------- -------- --------
Net cash used by investing activities (16,709) (20,960) (46,718) (44,460)
-------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends (12,942) (15,515) (14,324) (30,958)
Issuance of long-term debt 20,000 - 68,000 -
Repayment of long-term debt (47,685) (10,000) (54,921) (17,197)
Bank loans increase (decrease) (16,500) 20,500 (12,000) 12,500
Contribution of capital by UGI Corporation - - - 4,000
Issuance of Series Preferred Stock - - - 19,827
Redemption of Series Preferred Stock (15) - (15) -
-------- -------- -------- --------
Net cash used by financing activities (57,142) (5,015) (13,260) (11,828)
-------- -------- -------- --------
Cash and cash equivalents increase (decrease) $(44,440) $ 3,081 $(16,955) $ 4,095
======== ======== ======== ========
CASH AND CASH EQUIVALENTS:
End of period $ 3,731 $ 20,686 $ 3,731 $ 20,686
Beginning of period 48,171 17,605 20,686 16,591
-------- -------- -------- --------
Increase (decrease) $(44,440) $ 3,081 $(16,955) $ 4,095
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 6
UGI UTILITIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(Thousands of dollars)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements include
the accounts of UGI Utilities, Inc. (UGI Utilities) and its
subsidiaries (collectively, "the Company"). All significant
intercompany accounts and transactions have been eliminated in
consolidation. UGI Utilities is a wholly owned subsidiary of UGI
Corporation (UGI) and operates a natural gas distribution utility (Gas
Utility) and an electric utility (Electric Utility) in Pennsylvania.
The accompanying condensed consolidated financial statements are
unaudited and have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission (SEC). They
include all adjustments which the Company considers necessary for a
fair statement of the results for the interim periods presented. Such
adjustments consisted only of normal recurring items unless otherwise
disclosed. These financial statements should be read in conjunction
with the financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the year ended September 30,
1995. Due to the seasonal nature of the Company's businesses, the
results of operations for interim periods are not necessarily
indicative of the results to be expected for a full year.
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<PAGE> 7
UGI UTILITIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SEGMENT INFORMATION
Information on revenues, operating income (loss), depreciation and
amortization, identifiable assets and certain operating statistics by
business segment for the periods presented follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
March 31, March 31, March 31,
------------------ ------------------ ------------------
1996 1995 1996 1995 1996 1995
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Gas utility $152,981 $119,571 $254,945 $202,876 $343,327 $292,923
Electric utility 19,238 18,151 36,331 34,371 68,066 64,633
-------- -------- -------- -------- -------- --------
Total $172,219 $137,722 $291,276 $237,247 $411,393 $357,556
======== ======== ======== ======== ======== ========
OPERATING INCOME (LOSS)
Gas utility $ 39,159 $ 29,604 $ 66,161 $ 46,924 $ 71,184 $ 50,499 (a)
Electric utility 2,747 3,143 4,911 5,419 8,601 8,679
Other 7 662 53 1,251 928 2,053
Corporate general (1,418) (1,839) (2,918) (3,477) (6,026) (6,919)
-------- -------- -------- -------- -------- --------
Total $ 40,495 $ 31,570 $ 68,207 $ 50,117 $ 74,687 $ 54,312
======== ======== ======== ======== ======== ========
DEPRECIATION AND AMORTIZATION
Gas utility $ 4,356 $ 4,017 $ 8,656 $ 8,034 $ 16,690 $ 15,443
Electric utility 1,008 931 2,015 1,862 3,835 3,569
Corporate general and other 1 1 2 1 5 1
-------- -------- -------- -------- -------- --------
Total $ 5,365 $ 4,949 $ 10,673 $ 9,897 $ 20,530 $ 19,013
======== ======== ======== ======== ======== ========
IDENTIFIABLE ASSETS
(at period end)
Gas utility $583,889 $524,422 $583,889 $524,422 $583,889 $524,422
Electric utility 85,416 82,511 85,416 82,511 85,416 82,511
Corporate general and other 4,127 22,559 4,127 22,559 4,127 22,559
-------- -------- -------- -------- -------- --------
Total $673,432 $629,492 $673,432 $629,492 $673,432 $629,492
======== ======== ======== ======== ======== ========
OPERATING STATISTICS
Natural gas throughput -
billions of cubic feet 30.3 29.9 55.4 52.4 85.4 81.5
Electric sales - millions of kilowatt hours 260.9 247.5 485.6 461.6 884.9 851.9
</TABLE>
(a) Includes income from producer settlement refunds of $2,293.
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<PAGE> 8
UGI UTILITIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. REGULATORY MATTERS
On June 22, 1993, the Pennsylvania Public Utility Commission (PUC)
entered an order permitting Gas Utility to record a regulatory asset
for the difference between the costs incurred under Statement of
Financial Accounting Standards (SFAS) No. 106, "Employers Accounting
for Postretirement Benefits other than Pensions" (SFAS 106) and costs
incurred on a pay-as-you-go basis. Under the terms of the order, the
regulatory asset resulting from the deferral of SFAS 106 costs was
allowable for ratemaking purposes subject to prior review in a base
rate proceeding. As part of Gas Utility's August 31, 1995 base rate
settlement (Gas Utility Base Rate Settlement) with the PUC, Gas
Utility was permitted the recovery over 17.25 years of the
approximately $4,000 in deferred excess SFAS 106 costs for the period
January 1, 1993 (the date Gas Utility adopted SFAS 106) through August
31, 1995. The Gas Utility Base Rate Settlement, however, reserved the
right of any party to challenge the prospective recovery of these
deferred excess SFAS 106 costs in future rate proceedings.
In a proceeding involving an unaffiliated Pennsylvania utility,
Pennsylvania Power & Light Company (PP&L), the Commonwealth Court of
Pennsylvania (Commonwealth Court) reversed a PUC declaratory order
outside a full base rate proceeding permitting PP&L to defer excess
SFAS 106 costs pending its next base rate order. PP&L and the PUC
appealed the Commonwealth Court decision to the Pennsylvania Supreme
Court which, on March 12, 1996, declined to review the matter. The
Company will continue to monitor administrative and judicial
proceedings involving deferred excess SFAS 106 costs and recognizes
that, based on applicable law, it is possible that in future base rate
proceedings Gas Utility could prospectively be denied recovery of some
or all of its deferred excess SFAS 106 costs.
Also as part of the Gas Utility Base Rate Settlement, Gas Utility was
permitted to recover in its rates approximately $2,400 in ongoing
annual costs incurred under the provisions of SFAS 106. Gas Utility
is required to defer the difference between the amount of SFAS 106
costs included in rates and the actuarially determined annual SFAS 106
costs for recovery or refund to ratepayers in future rate proceedings.
The ultimate recovery of SFAS 106 costs in excess of pay-as-you-go
costs was subject to the outcome of a legal challenge brought by the
Pennsylvania Office of Consumer Advocate (OCA) against an unaffiliated
Pennsylvania utility, Pennsylvania-American Water Company (PAWC). In
Irwin Popowsky v. PA P.U.C. (1994), the Commonwealth Court rejected
the claim of the OCA that principles of ratemaking prohibit the PUC
from permitting PAWC to recover excess SFAS 106 costs. The OCA filed
a petition for allowance of appeal with the Pennsylvania Supreme Court
with respect to this decision and the Pennsylvania Supreme Court, on
March 12, 1996, denied this petition.
4. COMMITMENTS AND CONTINGENCIES
UGI Utilities, along with other companies, has been named as a
potentially responsible party in several administrative proceedings
for the cleanup of various waste sites, including some Superfund
sites. Also, certain private parties have filed, or threatened to
file, suit against UGI Utilities to recover costs of investigation
and, as appropriate, remediation of several waste sites. In addition,
UGI Utilities has identified environmental contamination at several of
its properties
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<PAGE> 9
UGI UTILITIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
and has voluntarily undertaken investigation and, as appropriate,
remediation of these sites in cooperation with appropriate
environmental agencies or private parties.
At a manufactured gas plant site in Burlington, Vermont, the United
States Environmental Protection Agency (EPA) has named nineteen
parties, including UGI Utilities, as potentially responsible parties
for gas plant contamination that resulted from the operations of a
former subsidiary of UGI Utilities. In May 1993, after receiving and
reviewing extensive public comment, EPA withdrew a proposed plan of
remediation that would have cost an estimated $50,000. EPA is now
working with community groups and potentially responsible parties to
develop a revised remediation plan. These groups continue to study
the site and evaluate the effect of the contamination on the
environment. UGI Utilities cannot estimate the cost associated with
any revised plan, but it does not believe such cost will exceed the
estimated cost of the originally proposed plan.
With respect to a manufactured gas plant site in Concord, New
Hampshire, EnergyNorth Natural Gas, Inc. (EnergyNorth) has filed suit
against UGI Utilities alone seeking UGI Utilities' purportedly
allocable share of response costs associated with remediating gas
plant related contaminants at that site. EnergyNorth alleges that to
date it has spent $3,500 to remediate part of the site and that it
will be required to spend an unknown amount in the future to complete
remediation.
At Burlington, Concord and other sites, management believes that UGI
Utilities should not have significant liability in those instances in
which a former subsidiary operated a manufactured gas plant because
UGI Utilities generally is not legally liable for the obligations of
its subsidiaries. Under certain circumstances, however, courts have
found parent companies liable for environmental damage caused by
subsidiary companies when the parent company exercised such
substantial control over the subsidiary that the court concluded that
the parent company either (i) itself operated the facility causing the
environmental damage or (ii) otherwise so controlled the subsidiary
that the subsidiary's separate corporate form should be disregarded.
There could be, therefore, significant future costs of an uncertain
amount associated with environmental damage caused by manufactured gas
plants that UGI Utilities owned or directly operated or that were
owned or operated by former subsidiaries of UGI Utilities, if a court
were to conclude that the level of control exercised by UGI Utilities
over the subsidiary satisfies the standard described above. In many
circumstances where UGI Utilities may be liable, expenditures may not
be reasonably quantifiable because of a number of factors including
various costs associated with potential remedial alternatives, the
unknown number of other potentially responsible parties involved and
their ability to contribute to the costs of investigation and
remediation, and changing environmental laws and regulations.
The Company's policy is to accrue environmental investigation and
cleanup costs when it is probable that a liability exists and the
amount or range of amounts is reasonably estimable. The Company
intends to pursue recovery of any incurred costs through all
appropriate means, including regulatory relief, although such recovery
cannot be assured. Under the terms of the Gas Utility Base Rate
Settlement, Gas Utility is permitted to amortize as removal costs
site-specific environmental investigation and remediation costs, net
of related third-party payments,
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<PAGE> 10
UGI UTILITIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
associated with Pennsylvania sites. Gas Utility will be permitted to
include in rates through future base rate proceedings, a five-year
average of such prudently incurred removal costs.
In addition to these environmental matters, there are various other
pending claims and legal actions arising out of the normal conduct of
the Company's businesses. The final results of environmental and
other matters cannot be predicted with certainty. However, it is
reasonably possible that some of them could be resolved unfavorably to
the Company. Management believes, after consultation with counsel,
that damages or settlements, if any, recovered by the plaintiffs in
such claims or actions will not have a material adverse effect on the
Company's financial position but could be material to operating
results or cash flows in future periods depending on the nature and
timing of future developments with respect to these matters and the
amounts of future operating results and cash flows.
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<PAGE> 11
UGI UTILITIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ANALYSIS OF RESULTS OF OPERATIONS
The following analyses of the Company's results of operations should be read in
conjunction with the segment information included in Note 2 to the Condensed
Consolidated Financial Statements. Due to the seasonal nature of the Company's
businesses, the results of operations for interim periods are not necessarily
indicative of the results to be expected for a full year.
RESULTS OF OPERATIONS:
THREE MONTHS ENDED MARCH 31, 1996 (1996 THREE-MONTH PERIOD) COMPARED WITH THREE
MONTHS ENDED MARCH 31, 1995 (1995 THREE-MONTH PERIOD)
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------
Increase
Three Months Ended March 31, 1996 1995 (Decrease)
- - ---------------------------------------------------------------------------------------------------------
(Millions of dollars)
<S> <C> <C> <C> <C>
REVENUES
Gas utility $153.0 $119.6 $33.4 27.9%
Electric utility 19.2 18.2 1.0 5.5
TOTAL MARGIN (a)
Gas utility $ 64.5 $ 52.7 $11.8 22.4%
Electric utility 8.8 8.5 .3 3.5
OPERATING INCOME (LOSS)
Gas utility $ 39.2 $ 29.6 $ 9.6 32.4%
Electric utility 2.7 3.1 (.4) (12.9)
Other - .7 (.7) (100.0)
Corporate general (1.4) (1.8) (.4) (22.2)
OPERATING DATA
Natural gas throughput-bcf 30.3 29.9 .4 1.3%
Electric sales-gwh 260.9 247.5 13.4 5.4
Degree days-% colder (warmer) than
normal - Gas Utility 4.7% (5.1)% N.M. N.M.
- - ---------------------------------------------------------------------------------------------------------
</TABLE>
bcf - billions of cubic feet. gwh - millions of kilowatt hours.
N.M. - Not meaningful.
(a) Gas and Electric utilities' total margin represents total revenues
less cost of sales and revenue-related taxes.
GAS UTILITY. Weather in the Gas Utility service area during the 1996
three-month period was 4.7% colder than normal compared with weather in the
prior-year period that was 5.1% warmer than normal. Although the colder
weather had a significant impact on sales to firm-residential, firm-commercial,
and
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<PAGE> 12
UGI UTILITIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
firm-industrial (collectively, "core-market") customers, total system
throughput increased only 1.3%. The relatively modest increase in total system
throughput reflects more frequent interruptions of gas transported or sold to
interruptible customers resulting from higher 1996-period firm customer
requirements. Gas Utility total revenues increased $33.4 million (27.9%)
principally as a result of higher sales to core market customers, higher base
rates, and to a lesser extent, higher purchased gas cost (PGC) rates in effect
during the three months ended March 31, 1996. Cost of gas sold by Gas Utility
was $81.8 million during the 1996 three-month period, an increase of $20.0
million (32.4%) over the prior-year period, reflecting higher gas costs
associated with the increased sales to core market customers and higher average
PGC rates.
Gas Utility total margin increased $11.8 million (22.4%) during the 1996
three-month period reflecting a $15.6 million increase in total margin from
core market customers partially offset by lower total margin from interruptible
customers. The increase in core market total margin reflects the impact of
higher volumes and higher base rates. Total interruptible margin declined $3.9
million as a result of lower interruptible delivery service throughput and
lower margins from sales to interruptible customers due to significantly higher
gas costs. Gas Utility operating income for the three months ended March 31,
1996 increased $9.6 million (32.4%) reflecting the previously discussed higher
total margin partially offset by higher system maintenance expenses, higher
general and administrative expenses, and higher charges for depreciation.
ELECTRIC UTILITY. Electric Utility sales increased 5.4% during the 1996
three-month period over sales in the prior-year period on weather that was
17.5% colder. Electric Utility revenues increased $1.0 million (5.5%)
reflecting the higher sales and a higher 1996 three-month period Energy Cost
Rate (ECR). Cost of sales was $9.6 million in the 1996 three-month period
compared with $8.8 million in the prior-year period as a result of the higher
sales and higher ECR.
Electric Utility total margin increased $.3 million (3.5%) in the three months
ended March 31, 1996 reflecting the benefit of the higher sales.
Notwithstanding the higher total margin, operating income declined $.4 million
(12.9%) as the increase in total margin was more than offset by higher
customer-related expenses and higher general and administrative expenses.
CORPORATE GENERAL AND OTHER. Corporate general expenses, which represent an
allocated share of corporate headquarters' expenses incurred by UGI, were $1.4
million in the three months ended March 31, 1996 compared with $1.8 million in
the three months ended March 31, 1995. Other operating income in the
prior-year principally reflects income from the gas marketing activities of
GASMARK, a former division of UGI Utilities' wholly owned subsidiary, UGI
Development Company. Effective August 1, 1995, the business assets of GASMARK
were dividended to UGI.
INTEREST EXPENSE AND INCOME TAXES. Interest expense during the three months
ended March 31, 1996 was $4.1 million compared with interest expense of $4.4
million in the prior-year period. The decrease in interest expense reflects a
reduction in average long-term debt outstanding. The effective income tax rate
for the three months ended March 31, 1996 was 38.4% compared with a rate of
40.4% in the three months ended March 31, 1995. The decrease in the effective
income tax rate is due in large part to a
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<PAGE> 13
UGI UTILITIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
reduction in the Pennsylvania corporate income tax rate from 11.99% to 9.99%,
effective for the Company on October 1, 1995.
RESULTS OF OPERATIONS:
SIX MONTHS ENDED MARCH 31, 1996 (1996 SIX-MONTH PERIOD) COMPARED WITH SIX
MONTHS ENDED MARCH 31, 1995 (1995 SIX-MONTH PERIOD)
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------
Increase
Six Months Ended March 31, 1996 1995 (Decrease)
- - --------------------------------------------------------------------------------------------------------
(Millions of dollars)
<S> <C> <C> <C> <C>
REVENUES
Gas utility $254.9 $202.9 $52.0 25.6%
Electric utility 36.3 34.4 1.9 5.5
TOTAL MARGIN (a)
Gas utility $113.7 $ 91.5 $22.2 24.3%
Electric utility 16.9 16.4 .5 3.0
OPERATING INCOME (LOSS)
Gas utility $ 66.2 $ 46.9 $19.3 41.2%
Electric utility 4.9 5.4 (.5) (9.3)
Other .1 1.3 (1.2) (92.3)
Corporate general (2.9) (3.5) (.6) (17.1)
OPERATING DATA
Natural gas throughput-bcf 55.4 52.4 3.0 5.7%
Electric sales-gwh 485.6 461.6 24.0 5.2
Degree days-% colder (warmer) than
normal - Gas Utility 5.0% (7.2)% N.M. N.M.
- - --------------------------------------------------------------------------------------------------------
</TABLE>
bcf - billions of cubic feet. gwh - millions of kilowatt hours.
N.M. - Not meaningful.
(a) Gas and Electric utilities' total margin represents total revenues
less cost of sales and revenue-related taxes.
GAS UTILITY. Weather in Gas Utility's service territory in the 1996 six-month
period was 5.0% colder than normal compared with weather which was 7.2% warmer
than normal in the 1995 six-month period. Due in large part to the colder
weather's impact on sales to core market customers, total system throughput
increased 3.0 bcf (5.7%) in the 1996 six-month period. The higher throughput
reflects a 19.6% increase in throughput to core market customers partially
offset by lower throughput to firm delivery service customers. The lower firm
delivery service throughput reflects customer switching to interruptible
delivery service tariffs. Gas Utility total revenues increased $52.0 million
(25.6%) in the 1996 six-month period principally as a result of higher sales to
core market customers, higher base rates
- 11 -
<PAGE> 14
UGI UTILITIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
and lower refunds of prior-year gas cost overcollections partially offset by
lower average PGC rates during the 1996 six-month period. Cost of gas sold by
Gas Utility was $130.3 million during the 1996 six-month period, an increase of
$27.4 million (26.7%) over the 1995 six-month period, reflecting higher gas
costs associated with the increased sales to core market customers and lower
refunds of prior-year gas cost overcollections partially offset by lower
average PGC rates.
Gas Utility total margin increased $22.2 million (24.3%) during the 1996
six-month period reflecting a $26.3 million increase in total margin from core
market customers partially offset by lower total margin from interruptible
customers. The higher total margin from core market customers reflects the
effects of higher base rates and higher 1996 six-month period volumes. Total
margin from interruptible customers declined $3.8 million principally as a
result of higher 1996 six-month period gas costs associated with sales of gas
to interruptible-retail customers. Firm delivery service total margin in the
1996 six-month period was also lower due principally to reduced throughput
resulting in large part from customer switching to interruptible delivery
service. Gas Utility operating income increased $19.3 million (41.2%)
reflecting the previously discussed higher total margin partially offset by
higher operating and administrative expenses and higher charges for
depreciation.
ELECTRIC UTILITY. Electric Utility sales increased 5.2% during the 1996
six-month period from weather that was 22.3% colder than in the 1995 six-month
period. Electric Utility revenues increased $1.9 million (5.5%) reflecting the
impact of the higher sales and higher ECR revenues. Electric Utility cost of
sales was $17.8 million in the 1996 six-month period compared with $16.5
million in the prior-year period reflecting the higher sales and higher ECR.
Electric Utility total margin increased $.5 million (3.0%) in the 1996
six-month period reflecting the benefit of the higher sales. Operating income
decreased, however, as the increase in Electric Utility total margin was more
than offset by higher distribution system maintenance expenses, higher general
and administrative expenses, and higher charges for depreciation.
CORPORATE GENERAL AND OTHER. Corporate general expenses were $2.9 million in
the 1996 six-month period compared with $3.5 million in the 1995 six-month
period. The decrease reflects a smaller allocable share of UGI corporate
expenses charged to the Company. Other operating income was $.1 million in the
1996 six-month period compared with $1.3 million in the prior-year period which
includes income from the gas brokerage activities which were dividended to UGI
on August 1, 1995.
INTEREST EXPENSE AND INCOME TAXES. Interest expense was $8.3 million during
the 1996 six-month period compared with interest expense of $8.6 million in the
prior-year period. The decrease in interest expense principally reflects a
decrease in average long-term debt outstanding. The effective income tax rate
for the 1996 six-month period was 38.1% compared with an effective rate of
40.2% in the 1995 six-month period. The lower rate principally reflects a
reduction in the Pennsylvania corporate income tax rate.
- 12 -
<PAGE> 15
UGI UTILITIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS:
TWELVE MONTHS ENDED MARCH 31, 1996 (1996 TWELVE-MONTH PERIOD) COMPARED WITH
TWELVE MONTHS ENDED MARCH 31, 1995 (1995 TWELVE-MONTH PERIOD)
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------
Increase
Twelve Months Ended March 31, 1996 1995 (Decrease)
- - ---------------------------------------------------------------------------------------------------------
(Millions of dollars)
<S> <C> <C> <C> <C>
REVENUES
Gas utility $343.3 $292.9 $50.4 17.2%
Electric utility 68.1 64.6 3.5 5.4
TOTAL MARGIN (a)
Gas utility $163.1 $137.6 $25.5 18.5%
Electric utility 32.6 31.4 1.2 3.8
OPERATING INCOME (LOSS)
Gas utility $ 71.2 $ 50.5 $20.7 41.0%
Electric utility 8.6 8.7 (.1) (1.1)
Other .9 2.1 (1.2) (57.1)
Corporate general (6.0) (6.9) (.9) (13.0)
OPERATING DATA
Natural gas throughput-bcf 85.4 81.5 3.9 4.8%
Electric sales-gwh 884.9 851.9 33.0 3.9
Degree days-% colder (warmer) than
normal - Gas Utility 5.2% (6.6)% N.M. N.M.
- - ---------------------------------------------------------------------------------------------------------
</TABLE>
bcf - billions of cubic feet. gwh - millions of kilowatt hours.
N.M. - Not meaningful.
(a) Gas and Electric utilities' total margin represents total revenues
less cost of sales and revenue-related taxes.
GAS UTILITY. Weather in Gas Utility's service territory, as measured by degree
days for heating, was 5.2% colder than normal in the 1996 twelve-month period
compared with weather which was 6.6% warmer than normal in the 1995
twelve-month period. Total system throughput increased 3.9 bcf (4.8%) from
higher core market sales and slightly higher throughput to interruptible
delivery service customers.
Gas Utility revenues increased $50.4 million (17.2%) in the 1996 twelve-month
period as a result of higher sales to core market customers, higher base rates
in effect since August 31, 1995, and lower refunds of prior-year PGC and other
gas cost overcollections. These increases in Gas Utility revenues were
partially offset by the recovery of lower average purchased gas costs through
PGC rates.
- 13 -
<PAGE> 16
UGI UTILITIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Cost of gas sold was $166.0 million in the 1996 twelve-month period compared
with $143.4 million in the 1995 twelve-month period. The increase principally
reflects the higher core market sales and lower 1996-period refunds of prior
year PGC overcollections partially offset by the recovery of lower average
purchased gas costs through PGC rates.
Gas Utility total margin increased $25.5 million (18.5%) during the 1996
twelve-month period principally reflecting a $28.1 million increase in total
margin from core market customers partially offset by a $1.8 million decrease
in total margin from firm delivery service customers as a result of lower
volumes transported for these customers and slightly lower average margins.
Interruptible delivery service total margin increased during the 1996
twelve-month period reflecting higher volumes and higher average margins.
Interruptible retail margin declined, however, due to lower volumes sold and
higher 1996-period gas costs. In addition, Gas Utility margin in the 1995
twelve-month period includes $1.4 million of income resulting from the PUC's
June 2, 1994 decision on the sharing of producer settlement refunds. Gas
Utility operating income increased $20.7 million (41.0%) reflecting the higher
total margin partially offset by higher operating expenses and charges for
depreciation.
ELECTRIC UTILITY. Electric Utility sales increased 3.9% in the 1996
twelve-month period as heating-related sales benefitted from colder
heating-season weather and air conditioning related sales benefitted from
record setting temperatures in July and August 1995. Electric Utility revenues
increased $3.5 million (5.4%) as a result of the greater sales, a higher 1996
twelve-month period ECR and an increase in base rate revenues resulting from
the full-year effect of the July 27, 1994, $1.3 million base rate increase.
Cost of sales increased $2.0 million as a result of a higher average ECR rate
and higher sales.
Electric Utility total margin increased $1.2 million (3.8%) in the 1996
twelve-month period due to the greater 1996 twelve-month period sales and the
full-year effect of the July 1994 base rate increase. However, operating
income declined $.1 million as the increase in total margin was more than
offset by higher operating and administrative expenses and higher charges for
depreciation.
CORPORATE GENERAL AND OTHER. Corporate general expenses were $6.0 million in
the 1996 twelve-month period compared with $6.9 million in the 1995
twelve-month period. The decrease represents a smaller allocated share of UGI
corporate expenses. Other operating income, including income from the
Company's former gas brokerage activities through August 1, 1995, was $.9
million in the 1996 twelve-month period compared with $2.1 million in the
prior-year period.
INTEREST EXPENSE AND INCOME TAXES. Interest expense was $16.6 million during
the 1996 twelve-month period, virtually unchanged from the prior-year period.
The effective income tax rate for the 1996 twelve-month period was 30.7%
compared with an effective rate of 41.9% in the 1995 twelve-month period. The
lower income tax rate in the 1996 twelve-month period reflects the benefit of
an adjustment to deferred state income taxes of $4.3 million recorded in
September 1995 and a lower Pennsylvania corporate income tax rate effective
October 1, 1995.
- 14 -
<PAGE> 17
UGI UTILITIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
FINANCIAL CONDITION AND LIQUIDITY
CAPITAL STRUCTURE
The Company's consolidated debt-to-total-capitalization ratio was 46.0% at
March 31, 1996 compared with a ratio of 53.0% at September 30, 1995. The lower
ratio reflects a net reduction in total debt outstanding and an increase in
common stockholder's equity. In October 1995, UGI Utilities redeemed $45.9
million face value of 9% Series and 9% Series B First Mortgage Bonds at a
redemption price of 104% of the principal amount outstanding. The redemption
was paid principally from the proceeds of UGI Utilities' issuance of $48
million of notes on September 29, 1995 under its Medium-Term Note program. In
accordance with utility practice, the amount of the premium on the redemption
has been deferred and is being amortized over the term of the refunding debt.
On November 6, 1995, UGI Utilities issued $20 million of notes due May 15, 2005
under its Medium-Term Note program bearing interest at a rate of 6.62% the
proceeds of which were used to reduce UGI Utilities' bank loans. In early May
1996, the Company filed, and the SEC declared effective, a registration
statement for the issuance from time to time of up to $75 million of debt
securities, none of which has been issued.
REGULATORY MATTERS
On January 26, 1996, Electric Utility filed with the PUC for a $6.2 million
increase in its base rates to be effective March 26, 1996. In accordance with
its normal practice, the effective date was suspended by the PUC for up to an
additional seven months from the proposed effective date for investigation and
public hearings.
On June 22, 1993, the PUC entered an order permitting Gas Utility to record a
regulatory asset for the difference between the costs incurred under SFAS 106,
"Employers Accounting for Postretirement Benefits other than Pensions" and
costs incurred on a pay-as-you-go basis. Under the terms of the order, the
regulatory asset resulting from the deferral of SFAS 106 costs was allowable
for ratemaking purposes subject to prior review in a base rate proceeding. As
part of the Gas Utility Base Rate Settlement with the PUC, Gas Utility was
permitted the recovery over 17.25 years of the approximately $4.0 million in
deferred excess SFAS 106 costs for the period January 1, 1993 (the date Gas
Utility adopted SFAS 106) through August 31, 1995. The Gas Utility Base Rate
Settlement, however, reserved the right of any party to challenge the
prospective recovery of these deferred excess SFAS 106 costs in future rate
proceedings.
In a proceeding involving an unaffiliated Pennsylvania utility, PP&L, the
Commonwealth Court reversed a PUC declaratory order outside a full base rate
proceeding permitting PP&L to defer excess SFAS 106 costs pending its next base
rate order. PP&L and the PUC appealed the Commonwealth Court decision to the
Pennsylvania Supreme Court which, on March 12, 1996, declined to review the
matter. The Company will continue to monitor administrative and judicial
proceedings involving deferred excess SFAS 106 costs and recognizes that, based
on applicable law, it is possible that in future base rate proceedings Gas
Utility could prospectively be denied recovery of some or all of its deferred
excess SFAS 106 costs.
- 15 -
<PAGE> 18
UGI UTILITIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
CASH FLOWS
Cash and cash equivalents totaled $3.7 million at March 31, 1996 compared with
$48.2 million at September 30, 1995. The balance at September 30, 1995
reflects cash received from the issuance of a combined $48 million face value
of long-term debt on September 29, 1995 the proceeds of which were used in
October to redeem $45.9 million face value of UGI Utilities' 9% Series and 9%
Series B First Mortgage Bonds. The Company's cash flows from operating
activities are seasonal and are generally greatest during the second and third
fiscal quarters when customers pay bills incurred during the heating season.
Conversely, cash flows from operating activities during the first and fourth
fiscal quarters are typically at their lowest levels as the Company purchases
natural gas inventories and finances increases in other working capital in
advance of the heating season. Accordingly, cash flows from operations during
the six months ended March 31, 1996 are not necessarily indicative of cash
flows to be expected for a full year.
OPERATING ACTIVITIES. Cash flow from operating activities was $29.4 million
during the six months ended March 31, 1996 compared with $29.1 million in the
six months ended March 31, 1995. Cash flow from operating activities before
changes in operating working capital totaled $50.8 million in the six months
ended March 31, 1996 compared with $33.4 million in the prior-year period. The
increase in cash flow before changes in operating working capital reflects Gas
Utility's improved operating results. However, the cash flow benefits of the
improved operating results were offset by a higher use of funds to finance
changes in operating working capital including a significant increase in
customer accounts receivable.
INVESTING ACTIVITIES. Cash expenditures for property, plant and equipment
totaled $16.8 million in the six months ended March 31, 1996 compared with
$21.5 million in the comparable prior-year period. The decrease principally
reflects lower Gas Utility capital expenditures.
FINANCING ACTIVITIES. Cash flows from financing activities for the six months
ended March 31, 1996 include $11.6 million in dividend payments to UGI compared
with $14.5 million in the prior-year period. UGI Utilities repaid $16.5
million of borrowings under its revolving credit agreements during the six
months ended March 31, 1996 compared with borrowings of $20.5 million in the
prior-year period. During the six months ended March 31, 1996, UGI Utilities
redeemed $45.9 million face value of its 9% Series and 9% Series B First
Mortgage Bonds at a redemption price of 104% of the principal amount
outstanding and issued $20 million of notes under its Medium-Term Note program.
- 16 -
<PAGE> 19
UGI UTILITIES, INC. AND SUBSIDIARIES
PART II OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER
On January 30, 1996, UGI Corporation, the owner of all of the issued
and outstanding shares of common stock of UGI Utilities, Inc., executed a
written consent of shareholder in lieu of a meeting reelecting the ten nominees
from the existing Board of Directors to another term. Each of the following
nominees received 26,781,785 votes for his or her election: Stephen D. Ban,
Richard L. Bunn, Robert C. Forney, Richard C. Gozon, Lon R. Greenberg, Cyrus H.
Holley, Anne Pol, Quentin I. Smith, Jr., James W. Stratton, James A. Sutton,
and David I. J. Wang.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits:
12 (a) Computation of ratio of earnings to fixed charges
12 (b) Computation of ratio of earnings to combined fixed
charges and preferred stock dividends
27. Financial Data Schedule
(b) The Company did not file any Reports on Form 8-K during the
fiscal quarter ended March 31, 1996.
- 17 -
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UGI Utilities, Inc.
(Registrant)
Date: May 13, 1996 By: J. C. Barney
- - ------------------- ---------------------------------
J. C. Barney, Vice President -
Finance and Accounting
(Principal Financial Officer)
- 18 -
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- - ----------- -----------
<S> <C>
12(A) COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
12(B) COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
27 FINANCIAL DATA SCHEDULE
</TABLE>
<PAGE> 1
UGI UTILITIES INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES - EXHIBIT 12(a)
(Thousands of dollars)
<TABLE>
<CAPTION>
Nine
Six Months Months
Ended Year Ended September 30, Ended Year Ended December 31,
March 31, ------------------------ September 30, -----------------------
1996 1995 1994 1993 1992 1991
--------- ------- ------- ------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS:
Earnings before income taxes $59,892 $39,759 $41,244 $28,009 $43,054 $24,470
Interest expense 8,236 16,632 16,482 12,664 21,913 22,600
Amortization of debt discount and expense 79 206 187 147 250 265
Interest component of rental expense 923 1,604 1,344 953 1,256 940
------- ------- ------- ------- ------- -------
$69,130 $58,201 $59,257 $41,773 $66,473 $48,275
======= ======= ======= ======= ======= =======
FIXED CHARGES:
Interest expense $ 8,236 $16,632 $16,482 $12,664 $21,913 $22,600
Amortization of debt discount and expense 79 206 187 147 250 265
Allowance for funds used during
construction (capitalized interest) 107 65 136 87 57 126
Interest component of rental expense 923 1,604 1,344 953 1,256 940
------- ------- ------- ------- ------- -------
$ 9,345 $18,507 $18,149 $13,851 $23,476 $23,931
======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges 7.40 3.14 3.27 3.02 2.83 2.02
======= ======= ======= ======= ======= =======
</TABLE>
<PAGE> 1
UGI UTILITIES INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS - EXHIBIT 12(b)
(Thousands of dollars)
<TABLE>
<CAPTION>
Nine
Six Months Months
Ended Year Ended September 30, Ended Year Ended December 31,
March 31, ------------------------ September 30, -----------------------
1996 1995 1994 1993 1992 1991
--------- ------- ------- ------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS:
Earnings before income taxes $59,892 $39,759 $41,244 $28,009 $43,054 $24,470
Interest expense 8,236 16,632 16,482 12,664 21,913 22,600
Amortization of debt discount and expense 79 206 187 147 250 265
Interest component of rental expense 923 1,604 1,344 953 1,256 940
------- ------- ------- ------- ------- -------
$69,130 $58,201 $59,257 $41,773 $66,473 $48,275
======= ======= ======= ======= ======= =======
COMBINED FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS:
Interest expense $ 8,236 $16,632 $16,482 $12,664 $21,913 $22,600
Amortization of debt discount and expense 79 206 187 147 250 265
Allowance for funds used during
construction (capitalized interest) 107 65 136 87 57 126
Interest component of rental expense 923 1,604 1,344 953 1,256 940
Preferred stock dividend requirements 1,382 2,778 1,356 2,124 2,613 2,034
Adjustment required to state preferred stock
dividend requirements on a pretax basis 850 1,164 1,018 1,589 1,846 1,306
------- ------- ------- ------- ------- -------
$11,577 $22,449 $20,523 $17,564 $27,935 $27,271
======= ======= ======= ======= ======= =======
Ratio of earnings to combined fixed charges
and preferred stock dividends 5.97 2.59 2.89 2.38 2.38 1.77
======= ======= ======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND INCOME STATEMENT OF UGI UTILITIES, INC.
AND SUBSIDIARIES AS OF AND FOR THE SIX MONTHS ENDED MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN
UGI UTILITIES QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31,
1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1996
<CASH> 3,731
<SECURITIES> 0
<RECEIVABLES> 92,374
<ALLOWANCES> 4,291
<INVENTORY> 7,445
<CURRENT-ASSETS> 118,250
<PP&E> 708,575
<DEPRECIATION> 214,185
<TOTAL-ASSETS> 673,432
<CURRENT-LIABILITIES> 155,382
<BONDS> 158,243
35,187
0
<COMMON> 60,259
<OTHER-SE> 150,626
<TOTAL-LIABILITY-AND-EQUITY> 673,432
<SALES> 291,276
<TOTAL-REVENUES> 291,276
<CGS> 148,071
<TOTAL-COSTS> 148,071
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,315
<INCOME-PRETAX> 59,892
<INCOME-TAX> 22,807
<INCOME-CONTINUING> 37,085
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,085
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>There are no publicly held shares outstanding.
</FN>
</TABLE>
