<PAGE> 1
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994.
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 0-1284-2
UNITED CITIES GAS COMPANY
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois and Virginia 36-1801540
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
5300 Maryland Way, Brentwood, TN 37027
(Address of principal (Zip Code)
executive offices)
(615) 373-5310
- - -------------------------------------------------------------------------------
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 preceeding 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.
/X/ Yes
/ / No
At July 31, 1994, 10,401,410 shares of the common stock of the Registrant
were outstanding.
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<PAGE> 2
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
Quarterly Report on Form 10-Q
For the Quarter Ended June 30, 1994
Table of Contents
<TABLE>
<CAPTION>
Item Page
Number PART I -- FINANCIAL INFORMATION Number
- - ------ -----
<S> <C> <C>
1 Financial Statements:
Consolidated Statements of Income (Unaudited) for the Three, Six and
Twelve Months Ended June 30, 1994 and June 30, 1993. 3
Consolidated Statements of Cash Flows (Unaudited) for the Three, Six
and Twelve Months Ended June 30, 1994 and June 30, 1993. 4
Consolidated Balance Sheets at June 30, 1994 (Unaudited) 5
and December 31, 1993.
Consolidated Statements of Capitalization at June 30, 1994
(Unaudited) and December 31, 1993. 6
Notes to Consolidated Financial Statements. 7
2 Management's Discussion and Analysis of Financial Condition
and Results of Operations. 8
PART II -- OTHER INFORMATION
1 Legal Proceedings. 11
6 Exhibits and Reports on Form 8-K. 11
List of Exhibits. 12
Signature 13
11.01 Computation of Common Stock Earnings Per Share. 14
</TABLE>
2
<PAGE> 3
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
------------------ ----------------- ------------------
(Unaudited, in thousands, except per share amounts) 1994 1993 1994 1993 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues.................................... $48,352 $48,934 $172,543 $165,404 $294,646 $290,875
Natural gas cost................................... 30,033 31,128 110,035 104,667 186,375 185,048
------- ------- -------- -------- -------- --------
Operating Margin...................................... 18,319 17,806 62,508 60,737 108,271 105,827
------- ------- -------- -------- -------- --------
Other Operating Expenses:
Operations and maintenance......................... 14,754 14,396 29,644 29,045 57,522 57,901
Depreciation and amortization...................... 3,506 3,271 6,934 6,417 13,621 11,785
Federal and state income taxes..................... (2,333) (2,167) 4,907 5,155 3,227 4,667
Other taxes........................................ 2,498 2,411 5,557 5,394 10,448 10,372
------- ------- -------- -------- -------- --------
Total other operating expenses................... 18,425 17,911 47,042 46,011 84,818 84,725
------- ------- -------- -------- -------- --------
Operating Income (Loss)............................... (106) (105) 15,466 14,726 23,453 21,102
------- ------- -------- -------- -------- --------
Other Income (Loss):
Operations of UCG Energy Corporation-
Revenues........................................ 5,984 7,243 19,726 18,170 40,465 36,362
Operating expenses.............................. 4,930 5,621 14,291 13,012 30,062 26,120
Interest expense................................ 201 229 386 439 996 853
Depreciation and amortization................... 857 842 1,736 1,724 3,479 3,414
Federal and state income taxes.................. (2) 208 1,257 733 2,359 1,788
------- ------- -------- -------- -------- --------
(2) 343 2,056 2,262 3,569 4,187
------- ------- -------- -------- -------- --------
Operations of United Cities Gas Storage Company.... 126 104 226 202 493 436
------- ------- -------- -------- -------- --------
Other income (loss), net........................... (49) (68) (125) (116) 232 97
------- ------- -------- -------- -------- --------
Income (Loss) Before Interest Expense................. (31) 274 17,623 17,074 27,747 25,822
Interest Expense...................................... 3,289 3,393 6,707 6,852 14,904 13,372
------- ------- -------- -------- -------- --------
Net Income (Loss)..................................... (3,320) (3,119) 10,916 10,222 12,843 12,450
Preferred and Preference Stock Dividends.............. - 12 - 30 - 80
------- ------- -------- -------- -------- --------
Common Stock Earnings (Loss).......................... ($3,320) ($3,131) $ 10,916 $ 10,192 $ 12,843 $ 12,370
======= ======= ======== ======== ======== ========
Common Stock Earnings (Loss) Per Share:................ ($0.32) ($0.31) $ 1.05 $ 1.01 $ 1.25 $ 1.23
======= ======= ======== ======== ======== ========
Average Number of Common Shares Outstanding........... 10,369 10,162 10,350 10,126 10,309 10,063
======= ======= ======== ======== ======== ========
Common Stock Dividends Per Share...................... $ .25 $ .245 $ .50 $ .49 $ .995 $ .975
======= ======= ======== ======== ======== ========
</TABLE>
3
<PAGE> 4
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
--------------------- ------------------- -------------------
(Unaudited, in thousands) 1994 1993 1994 1993 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (loss).............................................. $ (3,320) $ (3,119) $ 10,916 $ 10,222 $ 12,843 $12,450
-------- --------- -------- -------- -------- -------
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization................................ 4,453 4,263 8,859 8,430 17,559 15,685
Deferred taxes............................................... (72) - (144) (18) 485 2,022
Investment tax credits, net.................................. (93) (94) (185) (187) (372) (384)
Loss (gain) on sale of assets................................ (8) 36 (7) 15 - 28
Changes in current assets and current liabilities:
Receivables................................................ 27,121 25,392 30,650 30,613 (411) (2,600)
Materials and supplies..................................... (471) 311 (399) 183 175 454
Gas in storage............................................. (10,644) (4,272) 5,013 (2,829) (10,799) (3,846)
Gas costs to be billed in the future....................... (1,997) (1,314) (3,069) (166) (5,074) 6,176
Prepayments and other...................................... (845) 481 117 (954) 527 783
Accounts payable........................................... (5,622) (9,489) (14,224) (11,702) 7,384 (5,301)
Customer deposits and advance payments..................... 575 301 (3,352) (3,177) 1,365 (637)
Accrued interest........................................... (2,574) (2,262) (1,187) 146 (399) 242
Supplier refunds due customers............................. (2,787) (3,691) 2,800 2,676 (4,035) 2,002
Accrued taxes.............................................. (4,258) (5,415) 3,110 (4,374) 63 (1,877)
Other, net................................................. (806) 139 538 5,920 (2,883) 6,938
-------- --------- -------- -------- -------- -------
Total adjustments........................................ 1,972 4,386 28,520 24,576 3,585 19,685
-------- --------- -------- -------- -------- -------
Net cash provided by (used in) operating activities.... (1,348) 1,267 39,436 34,798 16,428 32,135
-------- --------- -------- -------- -------- -------
Cash Flows from Investing Activities:
Additions to property - utility................................ (6,692) (6,843) (14,026) (12,829) (28,227) (25,430)
Additions to property - non-utility............................ (851) (2,018) (1,446) (2,491) (2,892) (5,476)
-------- --------- -------- -------- -------- -------
Net cash used in investing activities.................. (7,543) (8,861) (15,472) (15,320) (31,119) (30,906)
-------- --------- -------- -------- -------- -------
Cash Flows from Financing Activities:
Short-term borrowings - net.................................... 10,620 - (12,243) - 10,620 (7,131)
Proceeds from issuance of long-term debt....................... - - - 150 - 23,900
Proceeds from issuance of common stock......................... 273 436 625 1,078 1,496 1,495
Long-term debt retirements..................................... (1,127) (426) (5,678) (3,486) (6,770) (4,385)
Dividends paid................................................. (2,284) (2,224) (4,564) (4,443) (9,067) (8,779)
Redemption of preferred stock.................................. - (106) - (106) - (714)
-------- --------- -------- -------- -------- -------
Net cash provided by (used in) financing activities.... 7,482 (2,320) (21,860) (6,807) (3,721) 4,386
-------- --------- -------- -------- -------- -------
Net Increase (Decrease) in Cash and Temporary Investments.......... (1,409) (9,914) 2,104 12,671 (18,412) 5,615
Cash and Temporary Investments at Beginning of Period.............. 4,311 31,228 798 8,643 21,314 15,699
-------- --------- -------- -------- -------- -------
Cash and Temporary Investments at End of Period.................... $ 2,902 $ 21,314 $ 2,902 $ 21,314 $ 2,902 $21,314
======== ========= ======== ======== ======== =======
Cash Paid During the Period for:
Interest, net of amounts capitalized........................... $ 6,301 $ 5,360 $ 8,768 $ 7,504 $ 17,391 $15,259
======== ========= ======== ======== ======== =======
Income taxes................................................... $ 2,499 $ 3,354 $ 2,862 $ 7,041 $ 7,779 $ 8,078
======== ========= ======== ======== ======== =======
Noncash Investing and Financing Activities:
Dividends reinvested........................................... $ 308 $ 279 $ 611 $ 551 $ 1,190 $ 1,116
======== ========= ======== ======== ======== =======
</TABLE>
4
<PAGE> 5
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
June 30, December 31,
(In thousands) 1994 1993
----------- ------------
ASSETS (Unaudited)
<S> <C> <C>
Utility Plant:
Plant in service, at cost................................ $387,384 $374,205
Less-accumulated depreciation.......................... 134,102 127,856
-------- --------
253,282 246,349
Non-Utility Property: -------- --------
Property, plant, and equipment........................... 69,773 68,082
Less-accumulated depreciation.......................... 21,113 19,843
-------- --------
48,660 48,239
-------- --------
Current Assets:
Cash and temporary investments........................... 2,902 798
Receivables, less allowance for uncollectible accounts
of $1,338 in 1994 and $1,150 in 1993................... 19,712 50,362
Materials and supplies................................... 5,772 5,373
Gas in storage........................................... 20,970 25,983
Gas costs to be billed in the future..................... 11,115 8,046
Prepayments and other.................................... 2,936 3,053
-------- --------
63,407 93,615
-------- --------
Deferred Charges:
Unamortized debt discount and expense, net............... 2,678 2,788
Non-compete agreements, net.............................. 3,048 3,952
Deferred system improvement costs, net................... 1,731 2,036
Other deferred charges................................... 5,214 4,541
-------- --------
12,671 13,317
-------- --------
$378,020 $401,520
======== ========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock equity...................................... $118,865 $111,888
Long-term debt........................................... 146,482 151,843
-------- --------
265,347 263,731
-------- --------
Current Liabilities:
Current portion of long-term obligations................. 6,085 6,402
Notes payable............................................ 10,620 22,863
Accounts payable for gas costs........................... 20,168 33,271
Other accounts payable................................... 3,218 4,339
Accrued taxes............................................ 6,996 3,886
Customer deposits and advance payments................... 8,631 11,983
Accrued interest......................................... 3,270 4,457
Supplier refunds due customers........................... 7,014 4,214
Other.................................................... 8,373 7,630
-------- --------
74,375 99,045
-------- --------
Deferred Credits:
Accumulated deferred income tax.......................... 23,127 23,142
Deferred investment tax credits.......................... 4,830 5,015
Income taxes due customers............................... 6,473 6,617
Other.................................................... 3,868 3,970
-------- --------
38,298 38,744
-------- --------
$378,020 $401,520
======== ========
</TABLE>
5
<PAGE> 6
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITALIZATION
<TABLE>
<CAPTION>
June 30, December 31,
(In thousands, except share amounts) 1994 1993
------------- ----------------
<S> <C> <C> <C> <C>
Common Stock Equity: (Unaudited)
Common stock without par value, authorized
40,000,000 shares, outstanding 10,390,998 in
1994 and 10,314,026 in 1993...................................... $ 68,342 $ 67,106
Capital surplus.................................................... 22,462 22,462
Retained earnings.................................................. 28,061 22,320
-------- --------
Total common stock equity........................................ 118,865 44.8% 111,888 42.4%
-------- ----- -------- -----
Long-Term Debt:
First mortgage bonds .............................................. 129,000 133,955
Senior secured storage term notes due in
installments through 2007....................................... 10,671 10,895
Rental property adjustable rate term notes due in
installments through 1999....................................... 11,047 9,043
Other long-term obligations due in installments through 2013....... 1,849 4,352
-------- --------
152,567 158,245
Less-current requirements...................................... 6,085 6,402
-------- --------
Total long-term debt, excluding amounts due within one year.... 146,482 55.2% 151,843 57.6%
-------- ----- -------- -----
Total Capitalization................................................... $265,347 100.0% $263,731 100.0%
======== ===== ======== =====
</TABLE>
6
<PAGE> 7
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The accompanying unaudited financial statements reflect all adjustments
(which are of a normal recurring nature) that are, in the opinion of
management, necessary for a fair statement of the results for the interim
periods presented. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to SEC rules and
regulations. The statements should be read in conjunction with the Summary of
Significant Accounting Policies and Notes to Consolidated Financial Statements
included in the Company's annual report for the year ended December 31, 1993.
The Company's business is seasonal in nature resulting in greater earnings
during the winter months. The results of operations for the three month and
six month periods ended June 30, 1994 are not necessarily indicative of the
results to be expected for the full year.
The Company has been named, along with 17 other defendants, in a class
action, anti-trust case filed March 5, 1993 in the United States District Court
for the Eastern District of Tennessee, Knoxville Division. This action
involves alleged price-fixing in the 1980's in eastern Tennessee by Holston Oil
Co., Inc. (Holston), which at the time of the alleged events was a wholly-owned
subsidiary of Tennessee-Virginia Energy Corporation (TVEC). Subsequent to the
alleged events and prior to TVEC's merger with the Company in 1986, TVEC sold
the common stock of Holston to an unrelated party. The Company has filed a
Motion for Summary Judgment with regard to the entire matter and is awaiting
the Court's ruling. The case is at the early stages of discovery and
management cannot predict the outcome. The Company intends to vigorously
defend this matter.
Certain reclassifications were made conforming prior year's financial
statements with 1994 financial statement presentation.
7
<PAGE> 8
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Overview
The Company's 1994 second quarter common stock loss was
$3,320,000 compared to the second quarter 1993 loss of $3,131,000. The loss
per common share was $.32 on an additional 207,000 average number of shares
outstanding, compared to the loss of $.31 for the comparable period in 1993.
The common stock earnings for the first six months of 1994 were $10,916,000
compared to $10,192,000 in 1993. Common stock earnings per share increased
from $1.01 in the six month period in 1993 to $1.05 in 1994 on an additional
224,000 average number of shares outstanding. Common stock earnings for the
twelve month period ended June 30, 1994 were $12,843,000 compared to
$12,370,000 for the twelve month period ended June 30, 1993. Common stock
earnings per share increased from $1.23 in the twelve month period in 1993 to
$1.25 in the twelve month period in 1994. Average shares outstanding
increased by 246,000 for the twelve month period ended June 30, 1994.
The following table summarizes certain information regarding the
operation of each segment of the Company's business for the periods ended
June 30:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
------------------ ---------------- -------------------
(Unaudited, in thousands) 1994 1993 1994 1993 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues:
Utility.................................... $48,352 $48,934 $172,543 $165,404 $294,646 $290,875
------- ------- -------- -------- -------- --------
Subsidiaries:
UCG Energy Corporation-
Propane Division....................... 1,651 1,966 11,082 8,917 20,368 18,047
Rental Division........................ 1,614 1,613 3,258 3,314 6,577 6,690
Utility Services Division.............. 2,719 3,664 5,386 5,939 13,520 11,625
------- ------- -------- -------- -------- --------
Total UCG Energy Corporation......... 5,984 7,243 19,726 18,170 40,465 36,362
United Cities Gas Storage Company........ 1,741 1,878 4,757 4,788 8,805 8,627
------- ------- -------- -------- -------- --------
Total Subsidiaries................... 7,725 9,121 24,483 22,958 49,270 44,989
------- ------- -------- -------- -------- --------
Total Revenues............................. $56,077 $58,055 $197,026 $188,362 $343,916 $335,864
======= ======= ======== ======== ======== ========
Common Stock Earnings (Loss):
Utility.................................... $(3,444) $(3,578) $ 8,634 $ 7,728 $ 8,781 $ 7,747
------- ------- -------- -------- -------- --------
Subsidiaries:
UCG Energy Corporation-
Propane Division....................... (695) (264) 698 624 1,083 1,047
Rental Division........................ 506 477 1,021 1,382 1,810 2,567
Utility Services Division.............. 187 130 337 256 676 573
------- ------- -------- -------- -------- --------
Total UCG Energy Corporation......... (2) 343 2,056 2,262 3,569 4,187
United Cities Gas Storage Company........ 126 104 226 202 493 436
------- ------- -------- -------- -------- --------
Total Subsidiaries................... 124 447 2,282 2,464 4,062 4,623
------- ------- -------- -------- -------- --------
Total Common Stock Earnings (Loss)......... $(3,320) $(3,131) $ 10,916 $ 10,192 $ 12,843 $ 12,370
======= ======= ======== ======== ======== ========
</TABLE>
Operating Results-Utility
The utility loss decreased by $134,000 for the second quarter and
utility income increased by $906,000 and $1,034,000, respectively, for the six
and twelve month periods in 1994 from the comparable 1993 periods due
predominantly to the factors mentioned below:
The operating margin increased from $17,806,000 in the second quarter of
1993 to $18,319,000 in the second quarter of 1994. The operating margin for
the six month period ended June 30, 1994 was $62,508,000 compared to
$60,737,000 for the same period in 1993, and the margin increased $2,444,000
to $108,271,000 for the twelve months ended June 30, 1994. The increase in
margin in all periods can be attributed to volumes sold to an increased number
of residential and commercial natural gas customers and rate increases in
certain jurisdictions. In addition, the increased margin in the six and
twelve month periods reflects the additional revenues from certain
interruptible customers who did not go off the Company's system when curtailed
during the extremely cold weather in the first quarter of 1994.
8
<PAGE> 9
Item 2. Continued
Operations and maintenance expenses other than natural gas cost
increased $358,000 and $599,000, respectively, for the second quarter and six
month period ended June 30, 1994 primarily as a result of normal increases in
operating expenses, primarily in payroll related expenses. Operations and
maintenance expenses for the twelve month period ended June 30, 1994
decreased $379,000 from the prior year period. Expenses for the twelve month
period ended June 30, 1993 reflect the December, 1992 adjustment to expense
the difference in the approved amount of system improvement costs in Kansas
and the amount previously deferred. The effect of this adjustment was
slightly offset by normal increases in operating expenses in the twelve month
period ended June 30, 1994.
Depreciation and amortization expense increased in the second quarter,
six and twelve month periods primarily due to depreciation expense on
additional plant in service. Interest expense decreased in the quarter and
six month period but increased $1,532,000 for the twelve month period
primarily as a result of interest assessed on additional income taxes related
to the 1993 settlement of the Internal Revenue Service audit.
The table below reflects operating revenues, gas sales volumes and
weather data for the periods ended June 30:
<TABLE>
<CAPTION>
Operating Statistics-Utility
Three Months Ended Six Months Ended Twelve Months Ended
------------------ ---------------- -------------------
(Unaudited, in thousands) 1994 1993 1994 1993 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues:
Residential.............................. $18,048 $19,238 $82,732 $79,320 $138,268 $134,140
Commercial............................... 11,473 11,543 46,528 43,617 77,272 76,497
Industrial............................... 16,761 15,578 38,466 36,328 70,093 68,960
Transportation........................... 1,684 1,635 3,336 3,648 6,612 7,492
Other Revenues........................... 386 940 1,481 2,491 2,401 3,786
------- ------- -------- -------- -------- --------
Total Operating Revenues.............. $48,352 $48,934 $172,543 $165,404 $294,646 $290,875
======= ======= ======== ======== ======== ========
Gas Sales (Mcf):
Residential.............................. 2,585 3,061 13,553 13,780 22,828 22,664
Commercial............................... 2,120 2,218 8,560 8,361 14,634 14,354
Industrial-
Firm................................... 1,861 1,605 4,536 4,034 8,010 7,428
Interruptible.......................... 2,569 2,713 5,426 5,984 11,104 11,185
------- ------- -------- -------- -------- --------
9,135 9,597 32,075 32,159 56,576 55,631
======= ======= ======== ======== ======== ========
Transported Volumes (Mcf).................. 3,244 2,892 5,911 6,165 11,628 11,859
======= ======= ======== ======== ======== ========
Weather Data-colder (warmer)
than normal*............................. (7.4%) 19.9% (3.8%) .9% - .9%
======= ======= ======== ======== ======== ========
*Based on system weighted average. Data for 1994 is preliminary.
</TABLE>
Operating Results-Subsidiaries
Revenues of UCG Energy Corporation (UCG Energy) decreased $1,259,000
from the second quarter ended June 30, 1993 and increased $1,556,000 and
$4,103,000 from the six and twelve month periods then ended. The propane
division's revenues decreased from the second quarter in 1993 as a result of a
change in the billing date of facility fees from June, 1994 to October,
1994. The propane division's revenues increased in the six and twelve month
periods due to additional volumes sold. The utility services division's
revenues decreased in the second quarter and six month periods from 1993 due
to decreased distribution sales of American Meter Company and other companies'
products. In addition, brokerage sales to certain industrial customers, local
distribution companies and others were lower in the second quarter of 1994.
Revenues for the utility services division increased in the twelve month
period from 1993 due to increased brokerage sales.
Expenses of UCG Energy, including cost of sales, decreased $691,000 from
the second quarter ended June 30, 1993 and increased $1,279,000 and $3,942,000
from the six and twelve month periods then ended. Expenses increased in all
periods in the propane division due to the addition of the Boone, North
Carolina propane operation and the cost of additional volumes sold. Cost of
sales in the utility services division decreased in the second quarter and six
month periods due to lower sales levels, but increased in the twelve month
period as a result of additional cost of sales from increased brokerage
activities.
9
<PAGE> 10
Item 2. Continued
UCG Energy's net income decreased $345,000, $206,000 and $618,000 from
the second quarter, six and twelve month periods ended June 30, 1993. The
decrease in the second quarter is principally due to the change in the
billing date of the propane division's facility fees. The decrease in the
six and twelve month periods is also the result of the cumulative effect of a
change in accounting principle that resulted from the adoption in 1993 of
Statement No. 109 "Accounting for Income Taxes" issued by the Financial
Accounting Standards Board. The effect of the implementation of the
statement amounted to income of approximately $443,000 in 1993.
United Cities Gas Storage Company had net income for the three, six and
twelve month periods of $126,000, $226,000 and $493,000, respectively, as
compared to $104,000, $202,000 and $436,000 for the same periods in 1993.
The revenues of the subsidiary were primarily derived from natural gas
storage services and natural gas provided to United Cities Gas Company.
Financial Condition, Liquidity and Capital Resources
Total cash used in operations for the three month period ended June 30,
1994 was $1,348,000. Total cash provided by operations for the six and
twelve month periods ended June 30, 1994 was $39,436,000 and $16,428,000,
respectively. The financing activities of all periods reflect the retirement
of long-term debt, dividend payments and the net activity of short-term
borrowings.
The Company has authorized as of June 30, 1994, specific purchases and
construction projects amounting to $15,490,000 of its 1994 utility capital
budget of $28,200,000 and $2,674,000 of its non-utility capital budget of
$3,400,000. The Company anticipates incurring capital expenditures of
approximately $32,000,000 for each of 1995, 1996 and 1997. In addition, the
Company is constructing a twenty-eight mile main which will connect two of
its distribution systems in Middle Tennessee. The project has an estimated
cost of approximately $8,200,000 and is scheduled to be completed by the fall
heating season of 1995. As of June 30, 1994, capital expenditures of
$4,537,000 had been authorized related to this project.
The Company believes its short-term lines of credit are sufficient to
meet anticipated short-term requirements. At June 30, 1994, the Company had
$84,000,000 in short-term lines of credit, including master and banker's
acceptance notes, bearing interest primarily at the lesser of prime or a
negotiated rate during the term of each borrowing. At June 30, 1994,
$10,620,000 was outstanding.
10
<PAGE> 11
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
Part II. Other Information
For The Three Months Ended June 30, 1994
Item 1. Legal Proceedings.
See December 31, 1993 Form 10-K
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits-See list of Exhibits on page 12 hereof.
(b) Reports on Form 8-K.
None
11
<PAGE> 12
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
LIST OF EXHIBITS
11.01 Computation of Common Stock Earnings Per Share. (Page 14).
12
<PAGE> 13
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
Signature
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.
UNITED CITIES GAS COMPANY
/s/ James B. Ford
------------------------------
James B. Ford
Senior Vice President and Treasurer
and Chief Financial Officer
On behalf of the Registrant
Date: August 10, 1994
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<PAGE> 1
Exhibit 11.01
UNITED CITIES GAS COMPANY AND SUBSIDIARIES
COMPUTATION OF COMMON STOCK EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
------------------ ---------------- -------------------
(Unaudited, in thousands, except per share amounts) 1994 1993 1994 1993 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Common Stock Earnings (Loss).......................... ($3,320) ($3,131) $10,916 $10,192 $12,843 $12,370
Add: Preference Stock Dividends...................... - 12 - 30 - 71
------- ------- ------- ------- ------- -------
Common Stock Earnings (Loss) after Conversion......... ($3,320) ($3,119) $10,916 $10,222 $12,843 $12,441
======= ======= ======= ======= ======= =======
Average Number of Common Shares Outstanding
During the Period.................................. 10,369 10,162 10,350 10,126 10,309 10,063
Add: Conversion of 11 1/2% Preference Stock**........ - - - - - -
------- ------- ------- ------- ------- -------
Average Number of Common Shares Outstanding
after Conversion................................... 10,369 10,162 10,350 10,126 10,309 10,063
======= ======= ======= ======= ======= =======
Common Stock Earnings (Loss) per Share:
Primary............................................ ($0.32) ($0.31) $ 1.05 $ 1.01 $ 1.25 $ 1.23
======= ======= ======= ======= ======= =======
Fully Diluted...................................... ($0.32) ($0.31) $ 1.05 $ 1.01 $ 1.25 $ 1.24 *
======= ======= ======= ======= ======= =======
</TABLE>
* This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an anti-dilutive result.
** There was no 11-1/2% Preference Stock outstanding at June 30, 1994 and 1993.
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