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NEWS RELEASE
FOR RELEASE: CONTACT:
Immediately Linda A. Kelley
615-373-0104
Ext. 224
UNITED CITIES REPORTS STRONG FIRST QUARTER
BRENTWOOD, TENN.--May 3, 1996--United Cities Gas Company, (NASDAQ:UCIT), a
multistate distributor of natural and propane gas, today reported a 30%
increase in first quarter earnings, representing a $4.1 million improvement
over the same period a year ago.
First quarter earnings increased to $17.4 million from $13.3 million, while
earnings per share grew to $1.36 from $1.25. The earnings per share total was
diluted as a result of two million additional shares that were issued since the
first quarter of 1995, primarily through a public stock offering and the
company's dividend reinvestment and stock purchase plans.
Gene C. Koonce, United Cities' president and chief executive officer, said
first quarter earnings reflected a return to near normal temperatures
throughout the company's eight-state service territory, as well as a strong
contribution from the company's subsidiary operations.
"While our utility operations contributed most of the income, a substantial
contribution came from our subsidiaries, UCG Energy Corporation and UCG Storage
Company," said Koonce. "Income from the subsidiary operations, which includes
UCG Energy's investment in Woodward Marketing, L.L.C., totaled $2.9 million or
17% of the company's total net income for the quarter."
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The utility's operating margins were up by $6.5 million due to weather that
was 6.2% colder than normal systemwide and the impact of rate increases in
Tennessee, Missouri, Kansas, South Carolina and Virginia. The effect of colder
than normal weather was partially offset by weather normalization adjustments
(WNAs) in Tennessee and Georgia which reduced revenues by approximately $1.2
million as a result of rate adjustments due to the colder than normal weather
during the first quarter.
The company's subsidiary, UCG Energy, benefited from the increased
investment income from Woodward Marketing, L.L.C., as well as an increase in
propane volumes sold as a result of colder than normal weather and additional
customers gained with the acquisitions of Transpro South, Inc. in May 1995, and
Duncan Gas Service, in January of this year.
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.
See Attached Financial Table
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CONDENSED CONSOLIDATED BALANCE SHEETS
United Cities Gas Company & Subsidiaries
March 31,
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(Unaudited, in thousands) 1996 1995
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ASSETS
Utility Property - Net $289,359 $269,503
Nonutility Property - Net 52,095 50,006
Current Assets:
Cash and temporary investments 15,822 4,519
Accounts receivable, less allowances 60,866 36,292
Materials, supplies and gas in storage 12,243 16,132
Gas costs to be billed in the future 11,281 11,233
Other current assets 1,157 981
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Total current assets 101,369 69,157
Deferred Charges and Other Assets 25,687 20,602
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Total Assets $468,510 $409,268
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CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock equity $161,283 $130,298
Long-term debt 162,998 141,829
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Total capitalization 324,281 272,127
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Current Liabilities:
Current portion of long-term obligations 8,915 5,335
Notes payable 8,303 18,061
Accounts payable 30,927 26,947
Other current liabilities 50,833 47,550
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Total current liabilities 98,978 97,893
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Deferred Credits 45,251 39,248
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Total Capitalization and Liabilities $468,510 $409,268
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OTHER INFORMATION
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Number of common shares outstanding
(in thousands) 12,797 10,726
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Book value per share $ 12.60 $ 12.15
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Market value per share $ 17.75 $ 15.50
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Employees 1,280 1,347
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
United Cities Gas Company & Subsidiaries
Three Months Ended Twelve Months Ended
March 31, March 31,
(Unaudited, in thousands, except per share amounts) 1996 1995 1996 1995
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Operating Revenues $143,847 $106,006 $309,701 $262,798
Natural gas cost 93,267 61,922 190,521 154,888
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Operating Margin 50,580 44,084 119,180 107,910
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Other Operating Expenses:
Operations and maintenance 16,125 15,240 62,713 57,653
Depreciation and amortization 4,220 3,664 15,675 14,170
Federal and state income taxes 8,676 6,878 5,848 3,511
Other taxes 3,459 3,419 12,339 11,099
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Total other operating expenses 32,480 29,201 96,575 86,433
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Operating Income 18,100 14,883 22,605 21,477
Other Income, net 159 (42) 856 (228)
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Utility Income Before Interest Expense 18,259 14,841 23,461 21,249
Interest Expense 3,735 3,738 14,296 14,406
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Utility Income 14,524 11,103 9,165 6,843
Other Income:
Net income of UCG Energy Corporation 2,681 2,073 4,058 3,765
Net income of United Cities Gas Storage Company 169 151 759 576
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Common Stock Earnings $ 17,374 $ 13,327 $ 13,982 $ 11,184
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Common Stock Earnings Per Share $ 1.36 $ 1.25 $ 1.14 $ 1.07
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Average Number of Shares 12,755 10,673 12,306 10,493
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Dividends Per Share $ 0.255 $ 0.255 $ 1.02 $ 1.01
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OTHER INFORMATION
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Natural gas through-put (Mcf):*
Residential 12,526 10,366 25,061 20,749
Commercial 7,200 6,245 16,120 13,922
Industrial 5,464 5,786 18,922 19,390
Transportation 4,358 4,283 17,259 14,190
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Total natural gas through-put 29,548 26,680 77,362 68,251
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Customers (average for period):
Residential 275,014 267,972 268,292 261,901
Commercial 35,906 34,925 34,679 34,024
Industrial 632 657 641 652
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Natural Gas 311,552 303,554 303,612 296,577
Propane 25,705 23,002 24,104 22,123
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Total customers 337,257 326,556 327,716 318,700
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Percent colder (warmer) than normal** 6.2% (11.7)% 7.3% (14.7)%
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* In thousands
** Based on system weighted average. Data for 1996 is preliminary.