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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 16, 1996
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United Cities Gas Company
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(Exact name of registrant as specified in its charter)
Illinois & Virginia 0-12841 36-1801540
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(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
5300 Maryland Way, Brentwood, Tennessee 37027
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (615) 373-5310
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ITEM 5. OTHER EVENTS
Pursuant to Instruction F to Form 8-K, the information contained in
the press release filed as Exhibit 20.1 hereto is hereby incorporated by
reference in answer to Item 5 of this Form 8-K.
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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 hereunto duly authorized.
UNITED CITIES GAS COMPANY
Date: February 16, 1996 By /s/ James B. Ford
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James B. Ford
Senior Vice President and Treasurer
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EXHIBIT INDEX
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EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF EXHIBIT NUMBERED PAGE
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20.1 Press release dated February 16, 1996 relating to 1995 Earnings
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E-1
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NEWS RELEASE
FOR RELEASE: CONTACT:
Immediately Linda A. Kelley
615-373-0104
Ext. 224
UNITED CITIES GAS COMPANY ANNOUNCES 1995 EARNINGS
BRENTWOOD, TENN. -- February 16, 1996 -- United Cities Gas Co.,
(NASDAQ:UCIT), a multistate distributor of natural and propane gas, today
reported 1995 common stock earnings of $9.9 million or $.84 per share compared
to $12.1 million or $1.16 per share in 1994.
Revenues were down by approximately $9.1 million for the twelve month
period, despite fourth quarter revenues that were up $17.1 million due to colder
than normal weather during the last two months of the year. "Our lower earnings
are the result of several factors," said Gene C. Koonce, United Cities'
president and chief executive officer. "Warmer than normal temperatures during
the first quarter of the year, when we traditionally sell the greatest volume of
gas, negatively affected our natural and propane operations and lowered our
income from Woodward Marketing L.L.C., a gas brokerage operation in which we
hold a 45% equity interest," said Koonce. "Our 1995 earnings also reflect
significantly higher operating expenses, which rose by $7.4 million over the
previous year's expenses."
Koonce attributed higher operating costs to increases in service and
construction payrolls and related benefits, depreciation expense due to new
plant investments, and higher property
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[LOGO UNITED CITIES GAS COMPANY] UNITED CITIES GAS COMPANY
5300 Maryland Way
Brentwood, Tennessee 37027
615-373-0104
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taxes in Kansas. The 1995 operating expenses included approximately $900,000
related to the consolidation of the company's East Tennessee operations, booked
during the third quarter, and an accrual of $545,000 during the fourth quarter
to true-up the company's deferred tax liabilities and provide for permanent
timing differences settled in the latest IRS audit covering the period up to
December 31, 1993.
An increase in the number of shares outstanding diluted the earnings per
share figure by 13.1 percent. Average common shares outstanding increased from
10.4 million to 11.8 million in 1995 as a result of additional shares issued
through a public stock offering, various stock plans, and shares issued in
exchange for the acquired interest in Woodward Marketing L.L.C.
"While earnings for 1995 were disappointing, several positive events took
place in 1995 that will favorably impact 1996 and future years," said Koonce.
"We completed our alliance with Woodward Marketing L.L.C., which we believe will
strengthen our ability to service our utility customers and generate a growing
source of income in this deregulated part of the gas industry.
"The consolidation of our East Tennessee operations, which began last fall,
will serve to increase our productivity while reducing our expenses by
approximately $1 million per year on an annual basis.
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"As part of a new financing plan, we are now utilizing a $200 million shelf
registration to issue new stock and publicly rated debt securities in order to
attain low-cost capital needed to serve growing areas within our service
territory. In 1995, the company successfully sold approximately 1.4 million
shares of common stock through a public offering and issued approximately
413,000 additional shares primarily through our dividend reinvestment and
customer stock purchase plans. During the last quarter of 1995, we were able
to place $22 million in medium-term notes at very favorable interest rates."
Koonce added that rate increases granted in Kansas, Tennessee, Missouri and
Virginia, representing approximately $6.6 million in additional annual revenues,
coupled with near-normal temperatures during the first quarter, should return
the company to normal earnings potential in 1996. "We continue to look for ways
to lower our imbedded costs so that even in years when the weather is warmer
than normal, our earnings can at least exceed our dividend payout."
United Cities' board recently declared the regular quarterly dividend of
$.255 per share, payable March 15 to all shareholders of record on February 29.
"Our board has great confidence in the company and our ability to manage and
grow the company in a way that benefits our shareholders, customers and
employees," said Koonce.
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United Cities Gas Company distributes natural and propane gas to
approximately 335,000 customers in ten states. The company is also engaged in
other energy-related businesses.
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See Financial Table
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UNITED CITIES GAS COMPANY
FINANCIAL HIGHLIGHTS TABLE
FOR THE PERIOD ENDED DECEMBER 31, 1995
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3 MONTHS ENDED 12 MONTHS ENDED
DECEMBER 31, DECEMBER 31,
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1995 1994 1995 1994
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Total Operating Revenues $91,360,000 $74,298,000 $271,860,000 $280,984,000
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Net Income $ 7,486,000 $ 6,387,000 $ 9,935,000 $ 12,093,000
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Net Income Per Share $ 0.59 $ 0.61 $ 0.84 $ 1.16
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Average Common Shares Outstanding 12,680,000 10,526,000 11,792,000 10,409,000
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Weather Data -
Percent Colder (Warmer) Than Normal 9.8% (21.3)% (2.3)% (10.2)%
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Average Number of Customers Served 328,000 319,000 325,000 316,000
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