<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, 2000
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)
<TABLE>
<S> <C>
Pennsylvania 23-1174060
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
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, 2000, 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.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2000,
September 30, 1999 and March 31, 1999 1
Condensed Consolidated Statements of Income for the three,
six and twelve months ended March 31, 2000 and 1999 2
Condensed Consolidated Statements of Cash Flows for the
six and twelve months ended March 31, 2000 and 1999 3
Notes to Condensed Consolidated Financial Statements 4-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-17
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17-18
PART II OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
</TABLE>
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<PAGE> 3
PART I FINANCIAL INFORMATION
UGI UTILITIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(Thousands of dollars)
<TABLE>
<CAPTION>
March 31, September 30, March 31,
2000 1999 1999
--------- ------------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,838 $ 11,063 $ 4,221
Accounts receivable (less allowances for doubtful accounts
of $2,776, $1,716 and $2,034, respectively) 58,441 21,887 59,660
Accrued utility revenues 16,240 6,867 14,386
Inventories 9,126 28,103 10,554
Deferred income taxes 8,725 2,972 9,281
Prepaid expenses and other current assets 4,913 6,283 10,642
-------- -------- --------
Total current assets 101,283 77,175 108,744
Property, plant and equipment, at cost (less accumulated depreciation
and amortization of $280,570, $270,003 and $263,041, respectively) 560,284 556,793 548,770
Regulatory assets 56,986 61,082 59,906
Other assets 18,229 17,483 16,958
-------- -------- --------
Total assets $736,782 $712,533 $734,378
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 7,143 $ 7,143 $ 7,143
Bank loans 71,200 87,400 72,800
Accounts payable 25,321 37,881 32,004
Other current liabilities 66,720 31,048 61,872
-------- -------- --------
Total current liabilities 170,384 163,472 173,819
Long-term debt 172,914 172,904 180,037
Deferred income taxes 113,585 112,284 109,211
Other noncurrent liabilities 24,182 24,313 27,645
Commitments and contingencies
Redeemable preferred stock 20,000 20,000 20,000
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 68,559 68,559 68,559
Retained earnings 106,899 90,742 94,848
-------- -------- --------
Total common stockholder's equity 235,717 219,560 223,666
-------- -------- --------
Total liabilities and stockholder's equity $736,782 $712,533 $734,378
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 4
UGI UTILITIES, INC.
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,
----------------------- ----------------------- -----------------------
2000 1999 2000 1999 2000 1999
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 169,864 $ 167,692 $ 291,020 $ 280,462 $ 431,205 $ 414,948
--------- --------- --------- --------- --------- ---------
Costs and expenses:
Gas, fuel and purchased power 92,482 87,449 149,915 142,785 212,351 204,258
Operating and administrative expenses 20,529 21,400 40,802 41,212 86,330 86,334
Operating and administrative expenses
- related parties 1,441 1,297 2,002 2,469 4,479 4,917
Taxes other than income taxes 4,170 9,537 11,367 16,179 20,420 25,316
Depreciation and amortization 5,661 5,912 11,408 11,389 23,025 22,571
Other income, net (3,393) (1,077) (7,270) (2,198) (10,241) (5,185)
--------- --------- --------- --------- --------- ---------
120,890 124,518 208,224 211,836 336,364 338,211
--------- --------- --------- --------- --------- ---------
Operating income 48,974 43,174 82,796 68,626 94,841 76,737
Interest expense 4,661 4,324 9,407 8,762 18,177 17,639
--------- --------- --------- --------- --------- ---------
Income before income taxes 44,313 38,850 73,389 59,864 76,664 59,098
Income taxes 17,195 14,683 28,453 22,664 30,060 22,554
--------- --------- --------- --------- --------- ---------
Net income 27,118 24,167 44,936 37,200 46,604 36,544
Dividends on preferred stock 387 387 775 775 1,550 1,553
--------- --------- --------- --------- --------- ---------
Net income after dividends on preferred stock $ 26,731 $ 23,780 $ 44,161 $ 36,425 $ 45,054 $ 34,991
========= ========= ========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 5
UGI UTILITIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Thousands of dollars)
<TABLE>
<CAPTION>
Six Months Ended Twelve Months Ended
March 31, March 31,
--------------------------- ----------------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 44,936 $ 37,200 $ 46,604 $ 36,544
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 11,408 11,389 23,025 22,571
Deferred income taxes, net (5,449) (3,677) 4,020 4,573
Other, net 3,472 1,061 5,288 4,357
-------- -------- -------- --------
54,367 45,973 78,937 68,045
Net change in:
Accounts receivable and accrued utility revenues (48,374) (49,012) (5,382) (4,172)
Inventories 18,977 17,906 1,428 (1,341)
Deferred fuel costs 15,564 12,250 (1,806) (4,643)
Accounts payable (11,658) (6,843) (5,781) 6,457
Other current assets and liabilities 24,019 15,815 11,571 1,722
-------- -------- -------- --------
Net cash provided by operating activities 52,895 36,089 78,967 66,068
-------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (14,963) (16,042) (35,305) (37,646)
Net proceeds (costs) of property, plant and equipment disposals (177) (171) (747) 305
-------- -------- -------- --------
Net cash used by investing activities (15,140) (16,213) (36,052) (37,341)
-------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends (28,780) (24,775) (34,555) (35,851)
Repayment of long-term debt -- -- (7,143) (7,143)
Bank loans increase (decrease) (16,200) 4,400 (1,600) 29,900
Redemption of Series Preferred Stock -- -- -- (15,507)
-------- -------- -------- --------
Net cash used by financing activities (44,980) (20,375) (43,298) (28,601)
-------- -------- -------- --------
Cash and cash equivalents increase (decrease) $ (7,225) $ (499) $ (383) $ 126
======== ======== ======== ========
CASH AND CASH EQUIVALENTS:
End of period $ 3,838 $ 4,221 $ 3,838 $ 4,221
Beginning of period 11,063 4,720 4,221 4,095
-------- -------- -------- --------
Increase (decrease) $ (7,225) $ (499) $ (383) $ 126
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 6
UGI UTILITIES, INC.
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 wholly
owned subsidiaries (collectively, "the Company" or "we"). We eliminate
all significant intercompany accounts and transactions when we
consolidate. We have reclassified certain prior-period balances to
conform with the current period presentation. UGI Utilities is a wholly
owned subsidiary of UGI Corporation ("UGI") and operates a natural gas
distribution utility ("Gas Utility") in parts of eastern and
southeastern Pennsylvania and an electric utility generation and
distribution operation ("Electric Utility") in northeastern
Pennsylvania. Effective October 1, 1999, Electric Utility's interests
in its electric generating facilities were transferred to UGI
Utilities' wholly owned non-utility subsidiary UGI Development Company,
("UGID"). UGID has been granted "Exempt Wholesale Generator" status by
the Federal Energy Regulatory Commission.
The accompanying condensed consolidated financial statements are
unaudited and have been prepared in accordance with the rules and
regulations of the U.S. Securities and Exchange Commission. They
include all adjustments which we consider 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 related notes included in our
Annual Report on Form 10-K for the year ended September 30, 1999
("Company's 1999 Annual Report"). Due to the seasonal nature of our
businesses, the results of operations for interim periods are not
necessarily indicative of the results to be expected for a full year.
UGI Utilities' comprehensive income as determined under Statement of
Financial Accounting Standards ("SFAS") No. 130 "Reporting
Comprehensive Income" was the same as its net income for all periods
presented.
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<PAGE> 7
UGI UTILITIES, INC.
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(Thousands of dollars)
2. SEGMENT INFORMATION
Based upon SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information" ("SFAS 131"), we have determined that the
Company has two reportable segments: (1) Gas Utility and (2) Electric
Utility. Although (1) Pennsylvania's Electricity Customer Choice Act
unbundled prices for electric generation, transmission and distribution
services and (2) on October 1, 1999 we transferred our electric
generation assets to our non-utility subsidiary UGID, we currently
manage and evaluate our electric generation, transmission and
distribution operations on a combined basis. Accordingly, these
electric operations have been combined for segment presentation
purposes.
The accounting policies of our two reportable segments are the same as
those described in the Significant Accounting Policies note contained
in the Company's 1999 Annual Report. We evaluate each segment's
performance principally based upon its earnings before income taxes.
No single customer represents more than 5% of the total revenues of
either Gas Utility or Electric Utility. Financial information by
business segment follows:
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<PAGE> 8
UGI UTILITIES, INC.
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(Thousands of dollars)
2. SEGMENT INFORMATION (continued)
THREE MONTHS ENDED MARCH 31, 2000:
<TABLE>
<CAPTION>
Gas Electric All
Total Eliminations Utility Utility other
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Segment revenues $ 169,864 $ -- $ 148,867 $ 20,997 $ --
Segment profit:
EBITDA $ 54,635 $ -- $ 49,647 $ 4,988 $ --
Depreciation and amortization (5,661) -- (4,538) (1,123) --
-----------------------------------------------------------------------------
Operating income 48,974 -- 45,109 3,865 --
Interest expense (4,661) -- (4,079) (582) --
-----------------------------------------------------------------------------
Income before income taxes $ 44,313 $ -- $ 41,030 $ 3,283 $ --
=============================================================================
Segment assets (at period end) $ 736,782 $ -- $ 637,850 $ 98,932 $ --
=============================================================================
</TABLE>
THREE MONTHS ENDED MARCH 31, 1999:
<TABLE>
<CAPTION>
Gas Electric All
Total Eliminations Utility Utility other
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Segment revenues $ 167,692 $ -- $ 147,623 $ 20,069 $ --
Segment profit (loss):
EBITDA $ 49,086 $ -- $ 44,045 $ 5,049 $ (8)
Depreciation and amortization (5,912) -- (4,777) (1,135) --
-----------------------------------------------------------------------------
Operating income (loss) 43,174 -- 39,268 3,914 (8)
Interest expense (4,324) -- (3,730) (594) --
-----------------------------------------------------------------------------
Income (loss) before income taxes $ 38,850 $ -- $ 35,538 $ 3,320 $ (8)
=============================================================================
Segment assets (at period end) $ 734,378 $ (101) $ 636,335 $ 97,881 $ 263
=============================================================================
</TABLE>
- -------
EBITDA (earnings before interest expense, income taxes, depreciation and
amortization) should not be considered as an alternative to net income (as an
indicator of operating performance) or as an alternative to cash flow (as a
measure of liquidity or ability to service debt obligations) and is not a
measure of performance or financial condition under generally accepted
accounting principles.
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<PAGE> 9
UGI UTILITIES, INC.
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(Thousands of dollars)
2. SEGMENT INFORMATION (continued)
SIX MONTHS ENDED MARCH 31, 2000:
<TABLE>
<CAPTION>
Gas Electric All
Total Eliminations Utility Utility other
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Segment revenues $ 291,020 $ -- $ 250,843 $ 40,177 $ --
Segment profit:
EBITDA $ 94,204 $ -- $ 82,356 $ 11,848 $ --
Depreciation and amortization (11,408) $ -- (9,385) (2,023) --
-----------------------------------------------------------------
Operating income 82,796 -- 72,971 9,825 --
Interest expense (9,407) -- (8,287) (1,120) --
-----------------------------------------------------------------
Income before income taxes $ 73,389 $ -- $ 64,684 $ 8,705 $ --
================================================================
Segment assets (at period end) $ 736,782 $ -- $ 637,850 $ 98,932 $ --
================================================================
</TABLE>
SIX MONTHS ENDED MARCH 31, 1999:
<TABLE>
<CAPTION>
Gas Electric All
Total Eliminations Utility Utility other
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Segment revenues $ 280,462 $ -- $ 242,201 $ 38,261 $ --
Segment profit (loss):
EBITDA $ 80,015 $ -- $ 70,290 $ 9,742 $(17)
Depreciation and amortization (11,389) -- (9,444) (1,945) --
-----------------------------------------------------------------
Operating income (loss) 68,626 -- 60,846 7,797 (17)
Interest expense (8,762) -- (7,574) (1,188) --
-----------------------------------------------------------------
Income (loss) before income taxes $ 59,864 $ -- $ 53,272 $ 6,609 $(17)
================================================================
Segment assets (at period end) $ 734,378 $(101) $ 636,335 $ 97,881 $263
================================================================
</TABLE>
-7-
<PAGE> 10
UGI UTILITIES, INC.
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(Thousands of dollars)
2. SEGMENT INFORMATION (continued)
TWELVE MONTHS ENDED MARCH 31, 2000:
<TABLE>
<CAPTION>
Gas Electric All
Total Eliminations Utility Utility other
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Segment revenues $ 431,205 $ - $ 354,279 $ 76,926 $ -
Segment profit (loss):
EBITDA $ 117,866 $ - $ 99,030 $ 18,886 $ (50)
Depreciation and amortization (23,025) - (18,937) (4,088) -
-----------------------------------------------------------------------------------
Operating income (loss) 94,841 - 80,093 14,798 (50)
Interest expense (18,177) - (15,897) (2,280) -
-----------------------------------------------------------------------------------
Income (loss) before income taxes $ 76,664 $ - $ 64,196 $ 12,518 $ (50)
===================================================================================
Segment assets (at period end) $ 736,782 $ - $ 637,850 $ 98,932 $ -
===================================================================================
</TABLE>
TWELVE MONTHS ENDED MARCH 31, 1999:
<TABLE>
<CAPTION>
Gas Electric All
Total Eliminations Utility Utility other
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Segment revenues $ 414,948 $ - $ 342,298 $ 72,650 $ -
Segment profit (loss):
EBITDA $ 99,308 $ - $ 84,220 $ 15,186 $ (98)
Depreciation and amortization (22,571) - (18,618) (3,953) -
-----------------------------------------------------------------------------------
Operating income (loss) 76,737 - 65,602 11,233 (98)
Interest expense (17,639) - (15,279) (2,360) -
-----------------------------------------------------------------------------------
Income (loss) before income taxes $ 59,098 $ - $ 50,323 $ 8,873 $ (98)
===================================================================================
Segment assets (at period end) $ 734,378 $ (101) $ 636,335 $ 97,881 $ 263
===================================================================================
</TABLE>
-8-
<PAGE> 11
UGI UTILITIES, INC.
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(Thousands of dollars)
3. COMMITMENTS AND CONTINGENCIES
The gas distribution business has been one of UGI Utilities' main
businesses since it began in 1882. Prior to the construction of major
natural gas pipelines in the 1950s, gas used for lighting and heating
was produced at manufactured gas plants ("MGPs") from processes
involving coal, coke or oil. Some constituents of coal tars produced
from this process are today considered hazardous substances under the
Superfund Law and may be located at these sites.
Certain private parties have filed, or threatened to file, suit against
UGI Utilities to recover costs of investigation or remediation of
several MGP sites. In addition, we have identified environmental
contamination at several of our properties and have voluntarily
undertaken investigation and, as appropriate, remediation of these
sites in cooperation with appropriate environmental agencies or private
parties.
At sites where a former subsidiary of UGI Utilities operated an MGP, we
believe that UGI Utilities should not have significant liability
because UGI Utilities generally is not legally liable for the
obligations of its subsidiaries. Under certain circumstances, however,
a court could find a parent company liable for environmental damage at
sites owned by a subsidiary company when the parent company either (1)
itself operated the facility causing the environmental damage or (2)
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 MGPs 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
subsidiary's separate corporate form should be disregarded. In many
circumstances where UGI Utilities may be liable, we may not be able to
reasonably quantify expenditures because of a number of factors. These
factors include the 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.
UGI Utilities has filed suit against more than fifty insurance
companies alleging that the defendants breached contracts of insurance
by failing to indemnify UGI Utilities for certain environmental costs.
The suit seeks to recover more than $11,000 in costs incurred by UGI
Utilities at various MGP sites. The parties have agreed to stay the
litigation pending the voluntary exchange of documents and settlement
negotiations. To date, UGI Utilities has entered into settlement
agreements with several of the insurers and during the three months
ended March 31, 2000 recorded pretax income of $2,400 which is net of
amounts applied to site-specific environmental costs associated with
Pennsylvania sites.
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<PAGE> 12
UGI UTILITIES, INC.
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(Thousands of dollars)
In addition to these environmental matters, there are other pending
claims and legal actions arising in the normal course of our
businesses. We cannot predict with certainty the final results of
environmental and other matters. However, it is reasonably possible
that some of them could be resolved unfavorably to us. 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 our financial position. However, such
damages or settlements could be material to our 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> 13
UGI UTILITIES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ANALYSIS OF RESULTS OF OPERATIONS
The following analyses compare our results of operations for (1) the three
months ended March 31, 2000 ("2000 three-month period") with the three months
ended March 31, 1999 ("1999 three-month period"); (2) the six months ended March
31, 2000 ("2000 six-month period") with the six months ended March 31, 1999
("1999 six-month period"); and (3) the twelve months ended March 31, 2000 ("2000
twelve-month period") with the twelve months ended March 31, 1999 ("1999
twelve-month period"). Our results of operations should be read in conjunction
with the segment information included in Note 2 to the Condensed Consolidated
Financial Statements.
2000 THREE-MONTH PERIOD COMPARED WITH 1999 THREE-MONTH PERIOD
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Three Months Ended March 31, 2000 1999 Increase
- ----------------------------------------------------------------------------------------------------------
(Millions of dollars)
<S> <C> <C> <C> <C>
GAS UTILITY:
Revenues $ 148.9 $ 147.6 $ 1.3 0.9%
Total margin (a) $ 65.4 $ 63.2 $ 2.2 3.5%
EBITDA (b) $ 49.6 $ 44.0 $ 5.6 12.7%
Operating income $ 45.1 $ 39.3 $ 5.8 14.8%
Natural gas system throughput - bcf 29.8 29.1 0.7 2.4%
Heating degree days - % warmer
than normal 11.1 8.4 - -
ELECTRIC UTILITY:
Revenues $ 21.0 $ 20.1 $ 0.9 4.5%
Total margin (a) $ 11.2 $ 10.2 $ 1.0 9.8%
EBITDA (b) $ 5.0 $ 5.0 $ - -%
Operating income $ 3.9 $ 3.9 $ - -%
Electric sales - gwh 258.4 255.2 3.2 1.3%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
bcf - billions of cubic feet. gwh - millions of kilowatt hours.
(a) Gas and Electric utilities' total margin represents total revenues less
cost of sales and revenue-related taxes, i.e. gross receipts taxes. For
financial statement purposes, revenue-related taxes are included in
"taxes other than income taxes" on the condensed consolidated
statements of income.
-11-
<PAGE> 14
UGI UTILITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
(b) EBITDA (earnings before interest expense, income taxes, depreciation
and amortization) should not be considered as an alternative to net
income (as an indicator of operating performance) or as an alternative
to cash flow (as a measure of liquidity or ability to service debt
obligations) and is not a measure of performance or financial condition
under generally accepted accounting principles.
GAS UTILITY. Weather in Gas Utility's service territory during the 2000
three-month period was 11.1% warmer than normal and 2.0% warmer than the
prior-year period. The increase in total system throughput principally resulted
from higher interruptible delivery service volumes and, to a lesser extent,
higher core market sales resulting from an increase in the number of customers.
Gas Utility revenues were virtually unchanged in the 2000 three-month period as
the impact on revenues from higher core market sales, higher average purchased
gas costs, and greater interruptible delivery service volumes was offset by the
elimination of gross receipts tax revenue effective January 1, 2000 pursuant to
the Gas Competition Act. Gas Utility cost of sales was $83.6 million in the 2000
three-month period, an increase of $5.1 million, principally reflecting higher
average purchased gas costs and slightly higher core market sales. Gas Utility
total margin increased $2.2 million principally reflecting (1) increased margin
from interruptible customers as a result of the higher interruptible throughput
and a greater spread between oil and natural gas prices and (2) increased core
market margin.
Gas Utility EBITDA and operating income increased $5.6 million and $5.8 million,
respectively, during the 2000 three-month period. The increase reflects (1) the
previously mentioned $2.2 million increase in total margin; (2) higher other
income; and (3) a decrease in net operating and administrative expenses. Other
income in the 2000 three-month period includes income from the refund of
revenue-related tax overpayments made in prior years and greater income from a
construction project and other activities. Operating and administrative
expenses, excluding depreciation and amortization, declined $1.4 million in the
2000 three-month period principally reflecting modest increases in distribution
system, uncollectible accounts and environmental matters expenses which were
more than offset by income of $2.4 million from an insurance settlement.
ELECTRIC UTILITY. Electric Utility sales during the 2000 three-month period
increased slightly on weather that was generally comparable to the prior year.
Revenues increased as a result of the higher sales as well as higher
transmission revenues from alternate electric power suppliers selling
electricity to some of our customers pursuant to the Electricity Customer Choice
Act. Notwithstanding the higher sales, Electric Utility cost of sales was $8.9
million, a decrease of $0.1 million, reflecting slightly lower average power
costs.
Electric Utility's total margin increased $1.0 million reflecting the impact of
the lower average power costs and the slightly higher sales. EBITDA and
operating income were unchanged from the prior year as the higher margin was
offset by higher utility realty taxes.
-12-
<PAGE> 15
UGI UTILITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
2000 SIX-MONTH PERIOD COMPARED WITH 1999 SIX-MONTH PERIOD
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Six Months Ended March 31, 2000 1999 Increase
- --------------------------------------------------------------------------------------------------------------
(Millions of dollars)
<S> <C> <C> <C> <C>
GAS UTILITY:
Revenues $250.8 $ 242.2 $ 8.6 3.6%
Total margin $113.2 $ 106.4 $ 6.8 6.4%
EBITDA $ 82.4 $ 70.3 $ 12.1 17.2%
Operating income $ 73.0 $ 60.8 $ 12.2 20.1%
Natural gas system throughput - bcf 51.8 49.4 2.4 4.9%
Heating degree days - % warmer
than normal 11.6 12.0 - -
ELECTRIC UTILITY:
Revenues $ 40.2 $ 38.3 $ 1.9 5.0%
Total margin $ 22.2 $ 20.0 $ 2.2 11.0%
EBITDA $ 11.8 $ 9.7 $ 2.1 21.6%
Operating income $ 9.8 $ 7.8 $ 2.0 25.6%
Electric sales - gwh 483.9 478.4 5.5 1.1%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
GAS UTILITY. Weather in Gas Utility's service territory in the 2000 six-month
period was 11.6% warmer than normal but comparable to weather during the prior
year period. Approximately seventy-five percent of the increase in system
throughput reflects increased delivery service volumes to interruptible
customers with the remainder representing higher sales to core market customers
reflecting an increase in the number of core market customers.
The increase in Gas Utility's revenues during the 2000 six-month period
principally resulted from (1) a $6.0 million increase in core market revenues
reflecting higher sales and higher average purchased gas costs partially offset
by the impact of the elimination of gross receipts tax effective January 1, 2000
and (2) a $4.7 million increase in revenues from interruptible customers. These
increases in revenue were partially offset by lower off-system sales and lower
firm delivery service revenues. Gas Utility cost of gas was $133.6 million in
the 2000 six-month period compared with $126.1 million in the prior-year period.
The increase reflects higher average purchased gas cost rates and higher core
market sales partially offset by lower costs associated with the previously
mentioned decline in off-system sales.
Gas Utility total margin increased $6.8 million reflecting (1) an increase in
total interruptible retail and interruptible delivery service margin; (2)
increased core market margin; and (3) slightly higher firm delivery service
total margin.
-13-
<PAGE> 16
UGI UTILITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Gas Utility EBITDA and operating income increased $12.1 million and $12.2
million, respectively, during the 2000 six-month period as a result of (1) the
higher total margin; (2) a $3.7 million increase in other income; and (3) a
slight decrease in net operating expenses. Other income in the 2000 six-month
period includes (1) income from the refund of revenue-related tax overpayments
made in prior years (including associated interest); (2) interest income from
purchased gas cost undercollections; and (3) higher income from a construction
project and other activities. Gas Utility's net operating expenses declined $1.5
million reflecting higher distribution system, environmental matters, and
customer accounts expenses more than offset by (1) $2.4 million in income from
an insurance settlement and (2) $0.9 million from adjustments to incentive
compensation accruals recorded in the three months ended December 31, 1999.
ELECTRIC UTILITY. Electric sales for the 2000 six-month period increased 1.1
percent on weather that was only slightly colder than in the prior year.
Revenues increased as a result of the higher sales as well as an increase in
transmission revenues from alternate electric power suppliers selling
electricity to some of our customers. Cost of sales decreased to $16.4 million
in the 2000 six-month period from $16.7 million in the prior year reflecting
lower average purchased power costs.
Electric Utility operations total margin increased $2.2 million reflecting the
impact of (1) lower power costs and (2) higher sales. EBITDA and operating
income also increased reflecting higher total margin and a $1.4 million increase
in other income reduced by higher operating expenses, principally higher utility
realty taxes.
-14-
<PAGE> 17
UGI UTILITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
2000 TWELVE-MONTH PERIOD COMPARED WITH 1999 TWELVE-MONTH PERIOD
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Twelve Months Ended March 31, 2000 1999 Increase
- --------------------------------------------------------------------------------------------------------------
(Millions of dollars)
<S> <C> <C> <C> <C>
GAS UTILITY:
Revenues $354.3 $ 342.3 $ 12.0 3.5%
Total margin $167.4 $ 158.7 $ 8.7 5.5%
EBITDA $ 99.0 $ 84.2 $ 14.8 17.6%
Operating income $ 80.1 $ 65.6 $ 14.5 22.1%
Natural gas system throughput - bcf 78.5 75.8 2.7 3.6%
Heating degree days - % warmer
than normal 12.4 13.8 - -
ELECTRIC UTILITY:
Revenues $ 76.9 $ 72.7 $ 4.2 5.8%
Total margin $ 40.9 $ 35.7 $ 5.2 14.6%
EBITDA $ 18.9 $ 15.2 $ 3.7 24.3%
Operating income $ 14.8 $ 11.2 $ 3.6 32.1%
Electric sales - gwh 905.9 889.9 16.0 1.8%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
GAS UTILITY. Weather in Gas Utility's service territory during the 2000
twelve-month period was 12.4% warmer than normal but 2.1% colder than the prior
year. Total system throughput increased as a result of the colder weather and an
increase in total customers.
The increase in Gas Utility's revenues during the 2000 twelve-month period
resulted from a $5.1 million increase in core market revenues (due primarily to
higher core market volumes), greater interruptible delivery service revenues,
and slightly higher revenues from off-system sales. Gas Utility cost of sales
was $179.4 million in the 2000 twelve-month period compared with $170.5 million
in the 1999 twelve-month period reflecting higher average purchased gas cost
rates and the higher core market and off-system sales.
Gas Utility total margin increased $8.7 million reflecting (1) increased margin
from interruptible customers from higher volumes transported and higher average
margins, (2) increased core market margin, and (3) a slight increase in firm
delivery service margin.
Gas Utility EBITDA and operating income were higher in the 2000 twelve-month
period principally as a result of the greater total margin and a $4.7 million
increase in other income. Other income in the 2000 twelve-month period includes
(1) income from the refund of revenue-related tax overpayments made in prior
years (including associated interest), (2) greater income from a construction
project and other activities, and (3) interest income from purchased gas cost
undercollections.
-15-
<PAGE> 18
UGI UTILITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
ELECTRIC UTILITY. Total kilowatt-hour sales were higher in the 2000 twelve-month
period reflecting greater air-conditioning related sales during the warmer than
normal summer of 1999 and an increase in the number of customers. Electric
Utility revenues increased $4.2 million as a result of the increased sales and
higher transmission revenues associated with alternate suppliers serving
customers on our distribution system. Cost of sales decreased $0.9 million,
notwithstanding the increase in sales, reflecting (1) lower average purchased
power costs and (2) the benefit of a power supply agreement settlement.
Electric Utility's total margin increased $5.2 million as a result of (1) lower
average purchased power costs, (2) the power supply agreement settlement, and
(3) the higher 2000 twelve-month period sales. EBITDA and operating income
increased $3.7 million and $3.6 million, respectively, reflecting the increase
in total margin and higher other income partially offset by greater (1) utility
realty taxes, (2) power generation maintenance costs, and (3) customer service
and information expenses.
-16-
<PAGE> 19
UGI UTILITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
FINANCIAL CONDITION AND LIQUIDITY
CAPITAL STRUCTURE
The Company's debt outstanding at March 31, 2000 totaled $251.3 million compared
with $267.4 million at September 30, 1999. Included in these amounts are bank
loans of $71.2 million and $87.4 million, respectively. Under our revolving
credit agreements, we may borrow up to $117 million.
CASH FLOWS
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 and are generally lowest during the
first and fourth fiscal quarters. Accordingly, cash flows from operations for
the six months ended March 31, 2000 are not necessarily indicative of cash flows
to be expected for a full year.
OPERATING ACTIVITIES. Cash provided by operating activities was $52.9 million
during the six months ended March 31, 2000 compared with $36.1 million in the
prior-year period. Changes in operating working capital in the 2000 six-month
period required $1.5 million of operating cash flow compared to $9.9 million
required in the prior year. Cash generated by operating activities before
changes in operating working capital totaled $54.4 million, $8.4 million higher
than in the prior year, reflecting the greater operating results.
INVESTING ACTIVITIES. We spent $15.0 million for property, plant and equipment
in the six months ended March 31, 2000 compared with $16.0 million in the
prior-year period. The decrease principally reflects lower information services
capital expenditures.
FINANCING ACTIVITIES. Cash flows from financing activities in each of the 2000
and 1999 six-month periods includes dividends on preferred stock of $0.8
million. During the 2000 six-month period, UGI Utilities paid $28.0 million of
dividends to its parent company, UGI, compared with $24.0 million in the
prior-year period. Net repayments under UGI Utilities' revolving credit
agreements totaled $16.2 million in the 2000 six-month period compared with net
borrowings of $4.4 million in the 1999 six-month period.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from changes in prices for natural gas and
electricity it purchases, and from changes in interest rates. Although Gas
Utility is subject to changes in the price of natural gas, the current
regulatory framework allows Gas Utility to recover prudently incurred gas costs
from its customers. In addition, Pennsylvania's Natural Gas Choice and
-17-
<PAGE> 20
UGI UTILITIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Competition Act permits local distribution companies to recover
prudently incurred costs of gas sold to customers. Because of this ratemaking
mechanism, there is limited commodity price risk associated with our Gas Utility
operations.
The Company's Electric Utility operations include the regulated sale of
electricity through its distribution business and the production of electricity
through its electric generation business unit. Currently our electric generation
operations produces electricity exclusively for our distribution business,
generating approximately 50% of the distribution businesses' electricity needs.
Electric Utility purchases the remainder of its electric power needs under power
supply arrangements of varying length terms with other producers and, to a
lesser extent, on the spot market. Spot market prices for electricity and, to a
lesser extent, monthly market-based contracts can be volatile, especially during
periods of high demand. In accordance with Electric Utility's Restructuring
Order, the transmission and distribution components of Electric Utility's rates
are "capped" through July 1, 2001. In addition, Electric Utility's generation
rate cap is expected to extend through December 31, 2002. Accordingly, Electric
Utility does not currently have the ability to pass on increases in its power
costs through rate increases to its customers.
We have interest rate exposure associated with borrowings under our revolving
credit agreements. These agreements provide for interest rates on borrowings
which are indexed to short-term market interest rates. Based upon the average
level of borrowings outstanding under these agreements during the most recent
fiscal year ended September 30, 1999, an increase in short-term interest rates
of 100 basis points (1%) would have increased annual interest expense by
approximately $0.6 million.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
1. UGI Utilities, Inc. v. Insurance Co. of North America, et. al. On
February 11, 1999, UGI Utilities, Inc. filed suit in the Court of Common Pleas
of Montgomery County, Pennsylvania against more than fifty insurance companies,
including Associated Electric & Gas Insurance Services, Limited (AEGIS). The
complaint alleges that the defendants breached contracts of insurance by failing
to indemnify UGI Utilities for certain environmental costs. The suit seeks to
recover more than $11 million in costs incurred by UGI Utilities at various
manufactured gas plant sites.
The parties have agreed to stay the litigation through July 2000
pending the voluntary exchange of documents and settlement negotiations. To
date, UGI Utilities has settled with three defendants, including AEGIS.
-18-
<PAGE> 21
UGI UTILITIES, INC.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits:
3. Amendment to Articles of Incorporation changing
registered address.
12.1 Computation of ratio of earnings to fixed charges
12.2 Computation of ratio of earnings to combined fixed
charges and preferred stock dividends
27 Financial Data Schedule
(b) The Company did not file any Current Reports on Form 8-K
during the fiscal quarter ended March 31, 2000.
-19-
<PAGE> 22
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.
<TABLE>
<S> <C>
UGI Utilities, Inc.
(Registrant)
Date: May 12, 2000 By: J.C. BARNEY
-----------------------------------
J. C. Barney, Senior Vice President -
Finance
(Principal Financial Officer)
</TABLE>
-20-
<PAGE> 23
UGI UTILITIES, INC.
EXHIBIT INDEX
3. Amendment to Articles of Incorporation changing registered address
12.1 Computation of ratio of earnings to fixed charges
12.2 Computation of ratio of earnings to combined fixed charges and preferred
stock dividends
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 3
<TABLE>
<S> <C>
Microfilm Number 2000-33-1439 Filed with the Department of State on April 27, 2000
--------------
Entity Number 369114 Kim Pizzingrilli
---------------- -----------------------------------------------------
Secretary of the Commonwealth JK
</TABLE>
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 90)
In compliance with the requirements of 15 Pa.C.S. Section 1915
(relating to articles of amendment), the undersigned business corporation,
desiring to amend its Articles, hereby states that:
1. The name of the corporation is: UGI Utilities, Inc.
--------------------------------------------
- -------------------------------------------------------------------------------
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registered office provider and the
county of venue is (the Department is hereby authorized to correct the following
information to conform to the records of the Department):
(a) Box 858 Route 363 Irwin Building Valley Forge, PA 19482 Montgomery
----------------------------------------------------------------------------
Number and Street City State Zip County
(b) c/o: ______________________________________________________________________
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office provider, the
county in (b) shall be deemed the county in which the corporation is located for
venue and official publication purposes.
3. The statute by or under which it was incorporated is: P.L. 408
----------------------
4. The date of its incorporation is: 8/4/25
------------------------------------------
5. (Check and, if appropriate, complete one of the following):
X The amendment shall be effective upon filing these Articles of Amendment
in the Department of State.
_____ The amendment shall be effective on: ________________ at ________________
Date Hour
6. (Check one of the following):
X The amendment was adopted was adopted by the shareholders (or members)
pursuant to 15 Pa.C.S.Section 1914(a) and (b).
_____ The amendment was adopted by the board of directors pursuant to 15
Pa.C.S.Section 1914 (c).
7. (Check and, if appropriate, complete one of the following):
X The amendment adopted by the corporation, set forth in full, is as
follows:
"Resolved , the amendment to the Articles of Incorporation of UGI
Utilities, Inc. to change its registered address to 100 Kachel
Boulevard, Suite 400 Green Hills Corporate Center Reading , PA 19607 is
approved."
_____ The amendment adopted by the corporation is set forth in full in Exhibit
A attached hereto and made a part hereof.
<PAGE> 2
(Check if the amendment restates the Articles):
_____ The restated Articles of Incorporation supersede the original Articles
and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this
20th day of April , 2000.
- ---- ------ ----
UGI Utilities, Inc.
--------------------------------------
(Name of Corporation)
BY: Tom Jackal
------------------------------
(Signature)
TITLE: Vice President - Law
-----------------------------
Associate General Counsel
<PAGE> 1
UGI UTILITIES INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES - EXHIBIT 12.1
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Six
Months
Ended
March 31, Year Ended September 30,
-------------------------------------------------------------
2000 1999 1998 1997 1996
-------------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
EARNINGS:
Earnings before income taxes $ 73,389 $ 63,139 $ 57,007 $ 63,275 $ 61,717
Interest expense 9,302 17,317 17,383 16,696 15,921
Amortization of debt discount and expense 105 215 200 176 173
Interest component of rental expense 659 1,539 1,624 1,887 1,838
-------------- ----------- ----------- ----------- --------------
$ 83,455 $ 82,210 $ 76,214 $ 82,034 $ 79,649
============== =========== =========== =========== ==============
FIXED CHARGES:
Interest expense $ 9,302 $ 17,317 $ 17,383 $ 16,696 $ 15,921
Amortization of debt discount and expense 105 215 200 176 173
Allowance for funds used during
construction (capitalized interest) 38 36 39 114 107
Interest component of rental expense 659 1,539 1,624 1,887 1,838
-------------- ----------- ----------- ----------- --------------
$ 10,104 $ 19,107 $ 19,246 $ 18,873 $ 18,039
============== =========== =========== =========== ==============
Ratio of earnings to fixed charges 8.26 4.30 3.96 4.35 4.42
============== =========== =========== =========== ==============
</TABLE>
<PAGE> 1
UGI UTILITIES INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS - EXHIBIT 12.2
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Six
Months
Ended
March 31, Year Ended September 30,
-------------------------------------------------------------
2000 1999 1998 1997 1996
-------------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
EARNINGS:
Earnings before income taxes $ 73,389 $ 63,139 $ 57,007 $ 63,275 $ 61,717
Interest expense 9,302 17,317 17,383 16,696 15,921
Amortization of debt discount and expense 105 215 200 176 173
Interest component of rental expense 659 1,539 1,624 1,887 1,838
-------------- ----------- ----------- ----------- --------------
$ 83,455 $ 82,210 $ 76,214 $ 82,034 $ 79,649
============== =========== =========== =========== ==============
COMBINED FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS:
Interest expense $ 9,302 $ 17,317 $ 17,383 $ 16,696 $ 15,921
Amortization of debt discount and expense 105 215 200 176 173
Allowance for funds used during
construction (capitalized interest) 38 36 39 114 107
Interest component of rental expense 659 1,539 1,624 1,887 1,838
Preferred stock dividend requirements 775 1,550 2,160 2,764 2,765
Adjustment required to state preferred stock
dividend requirements on a pretax basis 491 968 1,304 1,754 1,685
-------------- ----------- ----------- ----------- --------------
$ 11,370 $ 21,625 $ 22,710 $ 23,391 $ 22,489
============== =========== =========== =========== ==============
Ratio of earnings to combined fixed charges
and preferred stock dividends 7.34 3.80 3.36 3.51 3.54
============== =========== =========== =========== ==============
</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, 2000 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS IN UGI
UTILITIES, INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE SIX MONTHS ENDED
MARCH 31, 2000.
</LEGEND>
<CIK> 0000100548
<NAME> UGI UTILITIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 3,838
<SECURITIES> 0
<RECEIVABLES> 77,457
<ALLOWANCES> 2,776
<INVENTORY> 9,126
<CURRENT-ASSETS> 101,283
<PP&E> 840,854
<DEPRECIATION> 280,570
<TOTAL-ASSETS> 736,782
<CURRENT-LIABILITIES> 170,384
<BONDS> 172,914
20,000
0
<COMMON> 60,259
<OTHER-SE> 175,458
<TOTAL-LIABILITY-AND-EQUITY> 736,782
<SALES> 291,020
<TOTAL-REVENUES> 291,020
<CGS> 149,915
<TOTAL-COSTS> 149,915
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,447
<INTEREST-EXPENSE> 9,407
<INCOME-PRETAX> 73,389
<INCOME-TAX> 28,453
<INCOME-CONTINUING> 44,936
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,936
<EPS-BASIC> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>THERE ARE NO PUBLICLY HELD SHARES OUTSTANDING.
</TABLE>
