Corporate Information
Corporate Info
FAQ


Printer Friendly Version Print Version
Southeastern Michigan Gas Enterprises Reports Fourth Quarter Results

PORT HURON, Mich., Feb. 14 /PRNewswire/ -- Southeastern Michigan Gas Enterprises, Inc. (Nasdaq: SMGS) reported net income of $6,057,000 ($.49 per share), excluding a previously announced one-time charge, for the fourth quarter of 1996, compared to net income of $6,267,000 ($.51 per share) for the fourth quarter of 1995. After recording the previously announced one- time charge of $21,000,000, net of tax, reflecting a write-down of the Company's investment in the NOARK pipeline project, the loss for the fourth quarter of 1996 was $14,943,000 or $1.20 per share.

William L. Johnson, President and Chief Executive Officer, reported net income for the year 1996 of $12,035,000 ($.97 per share), excluding the NOARK write-down, compared to $11,311,000 ($.91 per share) in 1995. After the NOARK $21 million after-tax write-down, 1996 resulted in a net loss of $8,965,000 or $.72 per share.

In reporting the earnings, Johnson said, "As I have told our shareholders, I am glad to have the NOARK write-down and earnings drag behind us. We will continue our efforts to improve the performance of the project or sell our interest in it." In a letter to shareholders, Johnson added, "We are continuing to explore opportunities for acquisitions and alliances related to our core business. If we are successful in pursuing these opportunities, I anticipate 1997 will be even better."

Quarter Results

Gross margin on gas sales increased by $236,000 (1%) as gas volumes sold for the three month period ended December 31, 1996 decreased 2% from the same period in 1995. Volumes decreased primarily due to the weather which was almost 9% warmer than 1995, offset by the addition of over 7,000 gas sales customers. Weather in the fourth quarter of 1996 was approximately 1% colder than normal.

Gas marketing revenue increased by $84,699,000 (214%) as volumes increased by 25,277,000 thousand cubic feet (Mcf) (121%). Gas marketing volumes increased significantly due to new business generated by the Northeast, Midwest and Mid-Atlantic marketing units of SEMCO Energy Services, Inc. These large increases in revenues and volumes increased gas marketing margin by $1,804,000 (269%).

Other income (loss), net, reflects an after-tax loss of $332,000 in 1996 compared to income of $381,000 in 1995. The 1995 income includes a non- recurring gain of $1,251,000, net of tax, on the settlement of a lawsuit involving NOARK.

Year-End Results

Gas sales margin increased $4,831,000 (8%) for 1996 compared to 1995. The addition of over 6,400 gas sales customers contributed to the increase offset by slightly warmer weather in 1996 compared to 1995.

Gas marketing revenues and volumes increased $177,988,000 (133%) and 46,925,000 Mcf (57%), respectively, from the prior year, generating a $2,680,000 (81%) increase in marketing margin. The increase in marketing activities highlights the increased volumes from SEMCO's establishment of new marketing offices in late-1995.

Transportation volumes decreased 3,317,000 Mcf (14%) in 1996 compared to 1995. The decrease was primarily due to decreased volumes from gas transportation customers who have alternative fuel sources -- primarily coal. During 1996, "coal-displacement" transportation volumes were significantly lower than the prior year. Transportation revenues declined only slightly, despite the larger volume declines, because coal-displacement volumes generally contribute a lower margin per unit.

    Further detail is shown in the following table (unaudited):

                                            Quarter Ended December 31,
                                               1996            1995
                                                    (unaudited)
    Financial Summary
      Total Operating Revenues               $198,030,000   $101,885,000
        Gas Distribution Margin              $ 20,472,000   $ 20,236,000
        Gas Marketing Margin                 $  2,474,000   $    670,000
        Transportation Revenue               $  3,548,000   $  3,450,000
      Operating Income                       $  9,506,000   $      8,800
      Other Income (Loss), Net               $   (332,000)  $    381,000
      Write-down of NOARK investment, net    $(21,000,000)  $     -0-
      Net Income (Loss) Before Preferred
        Dividends                            $(14,894,000)  $  6,316,000
      Dividends on Preferred Stock           $     49,000   $     49,000
      Net Income (Loss)                      $(14,943,000)  $  6,267,000
      Earnings (Loss) Per Share*             $      (1.20)  $        .51
      Net Income, excluding the NOARK
        write-down                           $  6,057,000   $  6,267,000
      Earnings per share, excluding the
        NOARK write-down*                    $        .49   $        .51
      Dividends Per Share*                   $        .20   $        .19
      Average Common Shares Outstanding*       12,406,000     12,408,000

    Operations Summary
      Volumes -- million cubic feet
        Gas Sold                                   13,861         14,162
        Gas Marketed                               46,228         20,951
        Gas Transported                             5,791          5,953
      Gas Sales Customers - Average               230,954        223,891
      Degree Days - Percent of Normal                 101%           109%
                  - Actual                          2,404          2,629


                                              Years Ended December 31,
                                                1996            1995
                                                     (unaudited)
    Financial Summary
      Total Operating Revenues               $547,630,000   $335,538,000
        Gas Distribution Margin              $ 68,236,000   $ 63,405,000
        Gas Marketing Margin                 $  5,989,000   $  3,309,000
        Transportation Revenue               $ 12,358,000   $ 12,448,000
      Operating Income                       $ 24,095,000   $ 22,426,000
      Other Income (Loss), Net               $   (813,000)  $   (179,000)
      Write-down of NOARK investment, net    $(21,000,000)  $     -0-
      Net Income (Loss) Before Preferred
        Dividends                            $ (8,771,000)  $ 11,526,000
      Dividends on Preferred Stock           $    194,000   $    195,000
      Net Income (Loss)                      $ (8,965,000)  $ 11,331,000
      Earnings (Loss) Per Share*             $       (.72)  $        .91
      Net Income, excluding the NOARK
        write-down                           $ 12,035,000   $ 11,331,000
      Earnings per share, excluding the
        NOARK write-down*                    $        .97   $        .91
      Dividends Per Share*                   $        .78   $        .74
      Average Common Shares Outstanding*       12,397,000     12,423,000

    Operations Summary
      Volumes -- million cubic feet
        Gas Sold                                   43,758         40,787
        Gas Marketed                              129,429         82,504
        Gas Transported                            20,532         23,849
     Gas Sales Customers - Average                228,802        222,303
      Degree Days - Percent of Normal                 105%           105%
                  - Actual                          7,099          7,158


    * Adjusted to give retroactive effect to 5% stock dividends in May 1996
      and May 1995.

SOURCE Southeastern Michigan Gas Enterprises
CONTACT: Robert F. Caldwell, Executive Vice President and CFO of Southeastern Michigan Gas Enterprises, 810-989-4101

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding SEMCO Energy's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.

 
©2006 SEMCO ENERGY, Inc., All Rights Reserved.