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tfg%u00a7ig%u00a3g@&100William Street, New York, NY. 10038(212) 344-0044jncShareholders Rally Round BrooklynUnion Gas as Competition EscalatesBY ROB TAYLORAfter ten years of continued growth and ahigh compound return on investments,Brooklyn Union Gas Company says it is nowtightening its belt in anticipation of renewedcompetition from decreasing oil prices.In the company%u2019s share holder report forthe second quarter ended March 31, consolidated earnings for the firm, the onlyBrooklyn-based company traded on the NewYork Stock Exchange, were down $1.3million. The report attributed the decreaseto the reductions in oil and gas prices.The news does not surprise BrooklynUnion officals, though it comes on the heelsof a %u201csignificant growth%u201d year at the company which set a consolidated earningsrecord in 1985: an eight percent increaseover the 1984 earnings.%u201cThe return on our equity held up nicelylast year,%u201d says Craig Matthews, newly appointed Senior Vice President and ChiefFinancial Officer. %u201cAlthough our subsidiaries didn%u2019t have a good year%u2014it was better than the year before%u2014we sold someshares of common stock and the price wentfor a premium.%u201dThe decision to sell the common stock ,came after the gas company had forseveral years been able to raise stock internally by selling it to employees. In fact, the3,779 Brooklyn Union Gas and subsidiaryemployees generate about $17 to $18 millionof stock purchases each year.%u201cThe employees are used to a highreturn,%u201d says Matthews about the stockwhich currently sells for approximately $26per share. %u201cWe have a substantial capitalrequirement every year and have toreinvest nearly $70 million. Internally wehad always been able to generate abouttwo-thirds of that need.%u201dBrooklyn Union Gas has been publiclytraded since 1896. Matthews describes thetypical investor as a retired person whoholds 200 shares. The second largest groupof shareholders in the company is located inFlorida where the Brooklyn Union actuallyholds a small meeting every few years tostay in touch with these investors.Despite the decrease in oil and gas pricesand the increased competition that is occurring between energy companies marketingfuels, Matthews believes that BrooklynUnion%u2019s competitive edge will be maintained.%u201cSince 1981, gas utilities have outperformed the 400 companies on the Standard & Poor index,%u201d he says. BrooklynUnion%u2019s 1985 trading volume was 2,570,600shares. %u201cIn the past ten years, the averagecompound return was 13 percent annually.Gas utilities have been immune to manydisasters faced by other utility companiesContinued on Following PageCraig Matthews, senior vice-president at Brooklyn Union Gas, traces the route of theutility com pany%u2019s pipeline that will bring natural gas from Canada to the New Yorkmetropolitan service area. (Brooklyn, inc/Taylor Photo)QuarterlyReport 1986Brooklyn Union GasQuarterlyReport 1986Brooklyn Union GasPago 8, The Phoenlx/Brooktyn.lnc Section Two, Juno 28,1963