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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
____________________________

FORM 10-Q


For the quarterly period ended

March 31, 2005


Commission File No. 1-6407

____________________________


SOUTHERN UNION COMPANY
(Exact name of registrant as specified in its charter)


Delaware
75-0571592
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
   
   
One PEI Center, Second Floor
18711
Wilkes-Barre, Pennsylvania
(Zip Code)
(Address of principal executive offices)
  

Registrant's telephone number, including area code: (570) 820-2400

Securities Registered Pursuant to Section 12(b) of the Act:


Title of each class
  
Name of each exchange in which registered
Common Stock, par value $1 per share
  
New York Stock Exchange
7.55% Depositary Shares
  
New York Stock Exchange
5.75% Corporate Units
  
New York Stock Exchange
5.00% Corporate Units
  
New York Stock Exchange

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  ü  No___

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).
Yes  ü  No___

The number of shares of the registrant's Common Stock outstanding on April 29, 2005 was 105,592,087.



SOUTHERN UNION COMPANY AND SUBSIDIARIES
FORM 10-Q
March 31, 2005
Table of Contents

 
PART I. FINANCIAL INFORMATION:
Page(s)
   
ITEM 1. Financial Statements (Unaudited):
  
   
Consolidated statement of operations - three months ended March 31, 2005 and 2004.
2
   
Consolidated balance sheet - March 31, 2005 and December 31, 2004.
3-4
   
Consolidated statement of stockholders’ equity and comprehensive income -- three months ended March 31, 2005.
5
 
 
Consolidated statement of cash flows - three months ended March 31, 2005 and 2004.
6
   
Notes to consolidated financial statements.
7-26
   
ITEM 2. Management's Discussion and Analysis of Results of Operation and Financial Condition.
27-38
   
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.
37
   
ITEM 4. Controls and Procedures.
37-38
   
PART II. OTHER INFORMATION:
  
   
ITEM 1. Legal Proceedings.
  
   
(See "COMMITMENTS AND CONTINGENCIES" in Notes to Consolidated Financial Statements)
17-24
 
  
ITEM 6. Exhibits.
38
   
SIGNATURES
39
   


1

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SOUTHERN UNION COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)

   
Three Months Ended March 31,
  
   
2005
  
2004
  
   
(thousands of dollars, except shares and per share amounts)
  
Operating revenues:
              
Gas distribution
  
$
631,056
  
$
635,384
  
Gas transportation and storage
    
135,400
    
138,169
  
Other
    
1,100
    
1,016
  
Total operating revenues
    
767,556
    
774,569
  
               
Cost of gas and other energy
    
(448,472
)
  
(454,736
)
Revenue-related taxes
    
(22,239
)
  
(21,951
)
Net operating revenues, excluding depreciation and amortization
    
296,845
    
297,882
  
               
Operating expenses:
              
Operating, maintenance and general
    
95,822
    
106,809
  
Depreciation and amortization
    
31,311
    
26,419
  
Taxes, other than on income and revenues
    
14,130
    
14,299
  
Total operating expenses
    
141,263
    
147,527
  
Operating income
    
155,582
    
150,355
  
               
Other income (expenses):
              
       Interest
    
(35,205
)
  
(31,055
)
       Earnings (losses) from unconsolidated investments
    
15,341
    
(2
)
       Other, net
    
(3,670
)
  
1,463
  
Total other expenses, net
    
(23,534
)
  
(29,594
)
               
Earnings before income taxes
    
132,048
    
120,761
  
               
Federal and state income taxes
    
39,852
    
45,394
  
               
Net earnings
    
92,196
    
75,367
  
               
Preferred stock dividends
    
(4,341
)
  
(4,341
)
               
Net earnings available for common shareholders
 
$
87,855
  
$
71,026
  
               
               
Net earnings available for common shareholders per share:
              
Basic
  
$
.89
  
$
.94
  
Diluted
  
$
.86
  
$
.92
  
               
Weighted average shares outstanding:
              
Basic
    
98,169,411
    
75,497,527
  
Diluted
    
102,575,756
    
77,566,078
  
See accompanying notes.

2

SOUTHERN UNION COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
(Unaudited)



   
March 31,
  
December 31,
  
   
2005
  
2004
  
ASSETS
  
(thousands of dollars)
  
           
Property, plant and equipment:
              
Plant in service
  
$
3,887,630
  
$
3,869,221
  
Construction work in progress
    
275,837
    
237,283
  
     
4,163,467
    
4,106,504
  
Less accumulated depreciation and amortization
    
(808,356
)
  
(778,876
)
Net property, plant and equipment
    
3,355,111
    
3,327,628
  
               
Current assets:
              
Cash and cash equivalents
    
47,493
    
30,053
  
Accounts receivable, billed and unbilled, net
    
365,515
    
333,492
  
Federal and state taxes receivable
    
3,285
    
--
  
Inventories
    
179,572
    
267,136
  
Gas imbalances - receivable
    
36,992
    
36,122
  
Prepayments and other
    
43,004
    
45,705
  
Total current assets
    
675,861
    
712,508
  
               
Goodwill
    
640,547
    
640,547
  
               
Deferred charges
    
196,684
    
199,064
  
               
Unconsolidated investments
    
646,451
    
631,893
  
               
Other
    
55,989
    
56,649