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Brooklyn,____IncGas Company Bugged By Labor Problems And Low Quarterly EarningsBY ROB TAYLORNearly 2,200 Brooklyn Union Gas Company (BUG) employees did not show forwork August 12 following an overwhelmingunion-member vote by mail to reject athree-year contract forcing the utilitycompany to declare a work stoppage.The contract offer had been submitted tomembers for a vote July 16 and was turneddown, 1,937 to 126, sparking a series of uniondemonstrations in front of BUG%u2019S MontagueSt. headquarters. Union members weregiven 12 days to respond to the offer. Thestrike also com es on the heels of the releaseof BUG%u2019S third quarter report that announced a decline in consolidated earnings of $11.5million for the three months ending June 30.The Transport Workers Union Local 101,representing meter readers, clerks andother union workers, released the results ofthe vote August 11 claiming that the newcontract with four percent yearly increaseswas rejected because of %u201ctakeawaydemands in the areas of work rules and themedical plan.%u201d The previous contract,which had expired July 15, was extended bya federal mediator who had demanded theunion-wide vote.Local 101 officials said there %u201cwas noneed for concessions%u201d in the negotiationsover the renewal of the contract. %u201cThe dropin earnings was related to the subsidiaries,%u201dsaid John Herrity of Local 101 about thecompany%u2019s quarterly report. %u201cWe representworkers from BUG.%u201dHerrity also charged that some of the top27 executive officers at BUG had received a30 percent across-the-board increase insalary. BUG officials refused to commenton the actual executive pay hikes but didsay %u201cthey were justified.%u201dA large number of workers marchedAugust 11 at the entrance to Montague St.which had been closed off for thedemonstration. When union officials endedthe day%u2019s picketing, workers, caught up inthe excitement of a strike, began to chant%u201cWe want to stay.%u201dLater, when union officials learned thatBUG%u2019S president, Elwin Larson, was speaking at the Brooklyn Club on nearby RemsenStreet, the picket forces walked around thecomer to continue their demonstration atthe club%u2019s front door.Union officials sent a telegram to BUG%u2019Sexecutive officers stating that they werewilling to resume negotiations but as thefirst day of picketing came to an end, theyhad not received a formal answer.The strike only affects the Brooklyn andQueens em ployees. Another union, the International Brotherhood of ElectricalWorkers represents about 300 workers inStaten Island. They voted to accept the contract Aug. 1.With the difficult labor problems, BUG isalso contending with a 12-month slide inconsolidated earnings of approximately 23percent, though utility analysts say thestrike will have no immediate effect on thecompany%u2019s short-term financial performance.In the BUG%u2019S third quarter report released August 1, consolidated results for thepast 12 months show a $12.5 million lossover the previous year, the company says.The largest portion of the loss, $11.5 million,is recorded for the most recent quarter andis attributed to depletion expenses from twoBUG subsidiaries, according to the report.%u201cDuring summer months we always expect less sales than in the winter, normallythere was a loss and there was nothingunusual,%u201d says Hussain Mirza, a seniorfinancial analyst with BUG. %u201cBecause ofthe reduction in the value of our gas we hadto value the inventory of our subsidiaries atexisting prices.%u201dDespite the downward trend, BUG agreedto pay its 151st consecutive quarterly dividend on common stock August 1. The company says its dividend policy is based onutility earnings and not on the results ofsubsidiary operations. The divident, 40.5cents per share, will be paid to allshareholders of record by July 8.Explaining the sources of BUG performance problems during the quarter, industryQuarterlyReport 1986Brooklyn Union Gasanalysts say the continued slide in the priceof oil and gas and the increased competitionbetween the two fuels has caused a numberof large volume, industrial companies touse oU instead of natural gas as theirenergy source.The immediate future of oil and gas competition is unpredictable due to the overproduction and low prices offered by the oilproducing countries, ini analysts say thatuntil North Sea Oil production slows andOPEC countries can agree on a higherprice, the use of oil as an alternative tonatural gas will continue. They are quick toadd, however, that the total supply ofnatural gas is far greater than the supply ofoil.%u201cAt present, oil burning is a littlecheaper, but no one can predict how longthat will last,%u201d says Sylvia Lanka, of MerrillLynch and Company%u2019s Brooklyn office. %u201cOfcourse things always change, though.%u201dThe decline in oil and gas prices also accounts for the poor performance of twoBUG subsidiaries, Fuel Resources, Inc.(FRI) and Methane Development Corporation (MDC). FRI, the company%u2019s oil and gasexploration subsidiary, recorded a depletionexpense of $9.3 million after taxes. Thequarterly report says the adjustment is dueto the %u201ccapitalized costs of exploration anddevelopment projects,%u201d and reflects theuncertain future value of oil and gasrevenues.The other subsidiary, MDC, a companythat reclaim s gas from land fills, wasreported to have %u201cexpensed%u201d $1.2 millionafter taxes from preconstruction costsrelated to several pending projects. As aresult, MDC is reviewing the planned landfill projects and says it is hoping torenegotiate the terms of their leaseagreements.BUG says, however, it will continue gasand oil exploration operations, claimingthat long-term returns are still attractive.%u201cThe company has a very strongcustomer base, and as Brooklyn%u2019s economygrows stronger, so will Brooklyn Union%u2019sperformance,%u201d adds Lanka. %u201cAs an investment, Brooklyn Union%u2019s stock performanceis converse to its earnings.%u201d Lanka saysthat due to the declining interest rates,BUG%u2019S dividend offer pays as much as mostmoney market accounts and the stock isstill a %u201csuperior performer.%u201dServing Brooklynfor 136 yearsPartners in Heaith CarePage 12, THE PHOENIX/BROOKLYN.INC SECTION TWO, August 14, 1986BRIGHT IDEAS FROM...M AN H ATTANELECTRICCOMPUTERIZED INVENTORYEXTENSIVE INVENTORY AND FULL PRODUCTKNOWLEDGERAPID-RESPONSE JOB SITE DELIVERYANYWHERE IN THE METROPOLITAN AREADISTRIBUTOR FOR MAJOR ELECTRICALMANUFACTURERSCOMPLETE LINE OF INDOOR-OUTDOORLIGHTING FIXTURES, INCLUDING:%u2022 UGHT0UER %u2022 PROGRESS %u2022 CAPRICOMPETITIVE PRICESResidential %u2022 Industrial %u2022 CommercialtTTAN ElIUS GIFT PR(______Become Our Customer-Accumulate Points Based On YouMnvoice Totals' Select Valuable Gifts From Our Gift Catalogue!!SWITCH TO A PERMANENT FIXTUREiN DOWN i UW N BHOOKLYNE1 _ MANHATTANEL9EJ?LRI(CAo, SUPPLY AND LIGHTING255 Water Street, Brooklyn, N.Y. 11201(718) 643-2200