<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 31, 1997
Commission File No. 0-29604
ENERGYSOUTH, INC.
(Successor to Mobile Gas Service Corporation)
------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Alabama 58-2358943
---------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2828 Dauphin Street, Mobile, Alabama 36606
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 334-450-4774
-------------
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 X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock ($.01 par value) outstanding at February 10, 1998 - 4,862,058
shares.
<PAGE> 2
ENERGYSOUTH, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. Financial Information:
Consolidated Balance Sheets - December 31,
1997 and 1996 and September 30, 1997 3 - 4
Consolidated Statements of Income - Three and
Twelve Months Ended December 31, 1997 and 1996 5
Consolidated Statements of Retained Earnings -
Three and Twelve Months Ended December 31, 1997
and 1996 6
Consolidated Statements of Cash Flows - Three
Months Ended December 31, 1997 and 1996 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 12
PART II. Other Information 13
Exhibit Index 14
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
December 31, September 30,
Assets 1997 1996 1997
------------------------ ---------
(Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents 2,090 3,722 16,260
Receivables:
Gas 7,852 6,819 3,013
Merchandise 3,029 2,757 2,715
Other 607 784 609
Less Allowance for Doubtful Accounts (606) (502) (536)
Materials, Supplies, and Mdse (at average cost) 1,139 1,107 1,241
Gas Stored Underground For Current Use (at avg. cost) 1,524 1,875 2,152
Deferred Purchased Gas Adjustment 951 156 809
Deferred Gas Costs 1,492 1,584 231
Deferred Income Taxes 360 1,316 818
Prepayments 1,328 1,187 1,419
--------- --------- ---------
Total Current Assets 19,766 20,805 28,731
--------- --------- ---------
PROPERTY, PLANT, AND EQUIPMENT:
Property, Plant, and Equipment $ 166,152 $ 154,032 $ 165,208
Less Accumulated Depreciation and Amortization 41,633 37,338 40,289
--------- --------- ---------
Property, Plant, and Equipment in Service - Net 124,519 116,694 124,919
Construction Work in Progress 1,237 3,604 946
--------- --------- ---------
Total Property, Plant, and Equipment 125,756 120,298 125,865
--------- --------- ---------
OTHER ASSETS:
Regulatory Assets 1,081 1,310 1,138
Merchandise Receivables Due After One Year 5,156 4,901 4,827
Deferred Charges 1,302 1,537 1,306
--------- --------- ---------
Total Other Assets 7,539 7,748 7,271
--------- --------- ---------
Total $ 153,061 $ 148,851 $ 161,867
========= ========= =========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
3
<PAGE> 4
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Data)
<TABLE>
<CAPTION>
December 31, September 30,
Liabilities and Capitalization 1997 1996 1997
--------------------- --------
(Unaudited)
<S> <C> <C> <C>
CURRENT LIABILITIES:
Current Maturities of Long-Term Debt 2,471 2,105 2,930
Notes Payable 2,500 10,700
Accounts Payable 4,300 5,329 4,080
Dividends Declared 972 903 971
Customer Deposits 1,460 1,550 1,556
Taxes Accrued 2,619 1,760 2,827
Interest Accrued 1,577 1,556 1,897
Other Liabilities 2,246 2,329 2,168
-------- -------- --------
Total Current Liabilities 18,145 15,532 27,129
-------- -------- --------
Other Liabilities:
Accrued Pension Cost 1,666 1,814 1,718
Accrued Postretirement Benefit Cost 1,061 1,337 1,087
Deferred Income Taxes 10,317 10,087 9,747
Deferred Investment Tax Credits 438 463 444
-------- -------- --------
Total Other 13,482 13,701 12,996
-------- -------- --------
Capitalization:
Stockholders' Equity (Note 1)
Common Stock, $.01 Par Value
(Authorized 10,000,000 Shares;
Outstanding: December 1997 -
4,858,000 Shares; December 1996 -
4,838,000 Shares; September 1997 -
4,855,000 Shares) $ 49 $ 48 $ 49
Capital in Excess of Par Value 17,834 17,435 17,746
Retained Earnings 38,399 34,139 37,382
-------- -------- --------
Total Stockholders' Equity 56,282 51,622 55,177
Minority Interest 3,099 2,722 2,985
Long-Term Debt (Less Current Maturities) 62,053 65,274 63,580
-------- -------- --------
Total Capitalization 121,434 119,618 121,742
-------- -------- --------
Total $153,061 $148,851 $161,867
======== ======== ========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Twelve Months
Ended December 31, Ended December 31,
-------------------------- --------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating Revenues
Gas Revenues $ 18,990 $ 16,942 $ 71,670 $ 69,343
Merchandise Sales and Jobbing 1,084 1,019 3,117 3,177
---------- ---------- ---------- ----------
Total Operating Revenues 20,074 17,961 74,787 72,520
---------- ---------- ---------- ----------
Operating Expenses
Cost of Gas 7,035 5,248 23,683 20,061
Cost of Merchandise and Jobbing 806 746 2,300 2,421
Operations 4,390 4,364 17,921 18,169
Maintenance 399 435 1,505 1,983
Depreciation 1,590 1,499 6,024 5,688
Taxes, Other Than Income Taxes 1,485 1,151 5,603 5,393
---------- ---------- ---------- ----------
Total Operating Expenses 15,705 13,443 57,036 53,715
---------- ---------- ---------- ----------
Operating Income 4,369 4,518 17,751 18,805
---------- ---------- ---------- ----------
Other Income and (Expense)
Interest Expense (1,413) (1,380) (5,744) (5,276)
Allowance for Borrowed Funds Used
During Construction 11 37 151 69
Interest Income 330 231 1,087 925
Minority Interest (136) (143) (509) (479)
---------- ---------- ---------- ----------
Total Other Income (Expense) (1,208) (1,255) (5,015) (4,761)
---------- ---------- ---------- ----------
Income Before Income Taxes 3,161 3,263 12,736 14,044
---------- ---------- ---------- ----------
Income Taxes 1,172 1,225 4,660 5,179
---------- ---------- ---------- ----------
Net Income $ 1,989 $ 2,038 $ 8,076 $ 8,865
========== ========== ========== ==========
Earnings Per Share of Common Stock (Note 4):
Basic $ 0.41 $ 0.42 $ 1.66 $ 1.84
========== ========== ========== ==========
Diluted $ 0.40 $ 0.42 $ 1.65 $ 1.83
========== ========== ========== ==========
Cash Dividends Declared Per Share of Common Stock (Note 1) $ 0.20 $ 0.19 $ 0.79 $ 0.74
========== ========== ========== ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
5
<PAGE> 6
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Three Months Twelve Months
Ended December 31, Ended December 31,
----------------------- -----------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance at Beginning of Period $ 37,382 $ 33,004 $ 34,139 $ 28,849
Net Income 1,989 2,038 8,076 8,865
--------- --------- --------- ---------
Total 39,371 35,042 42,215 37,714
Less: Dividends 972 903 3,816 3,575
--------- --------- --------- ---------
Balance at End of Period $ 38,399 $ 34,139 $ 38,399 $ 34,139
========= ========= ========= =========
</TABLE>
CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Three Months
Ended December 31,
--------------------------
1997 1996
---------- ----------
<S> <C> <C>
Cash Flows Used by Operating Activities $ (1,596) $ (231)
---------- ----------
Cash Flows Used In Investing Activities -
Capital Expenditures (1,506) (2,312)
---------- ----------
Cash Flows From Financing Activities:
Repayment of Long-Term Debt (1,985) (1,948)
Proceeds From Issuance of Long-Term Debt 12,000
Changes in Short-Term Borrowings (8,200) (15,000)
Payment of Dividends, Net of Dividend Reinvestment (883) (817)
---------- ----------
Net Cash Used by Financing Activities (11,068) (5,765)
---------- ----------
Net Decrease in Cash and Cash Equivalents (14,170) (8,308)
---------- ----------
Cash & Cash Equivalents at Beginning of Period 16,260 12,030
---------- ----------
Cash & Cash Equivalents at End of Period $ 2,090 $ 3,722
========== ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. At the 1998 Annual Meeting of Stockholders of Mobile Gas Service
Corporation ("Mobile Gas") held on Friday, January 30, 1998, stockholders
approved the reorganization of Mobile Gas and its subsidiaries into a holding
company structure (the "Reorganization"). As part of the Reorganization,
effective February 2, 1998, Mobile Gas became a subsidiary of EnergySouth, Inc.
("EnergySouth") and shareholders of Mobile Gas automatically became shareholders
of EnergySouth, with each two shares of Mobile Gas common stock outstanding on
that date being converted into three shares of EnergySouth common stock, $.01
par value per share. All capitalization and per share data presented in this
report have been adjusted to reflect the three-for-two conversion of Mobile Gas
common stock into EnergySouth common stock. The consolidated financial
statements of EnergySouth and its subsidiaries (collectively the "Company")
include the accounts of Mobile Gas; MGS Energy Services, Inc.; MGS Storage
Services, Inc.; MGS Marketing Services, Inc.; an 87.5% owned partnership, Bay
Gas Storage Company, Ltd. ("Bay Gas"); and a 51% owned partnership, Southern Gas
Transmission Company ("SGT"). Minority interest represents the respective other
owners' proportionate shares of the equity of Bay Gas and SGT. Certain amounts
in the prior year period financial statements have been reclassified to conform
with the current year statement presentations. All significant intercompany
balances and transactions have been eliminated.
Note 2. The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. All adjustments, consisting of
normal and recurring accruals, which are, in the opinion of management,
necessary to present fairly the results for the interim periods have been made
and are of a recurring nature. The statements should be read in conjunction with
the summary of accounting policies and notes to financial statements included in
the Annual Report on Form 10-K of Mobile Gas for the fiscal year ended September
30, 1997.
Note 3. Due to the high percentage of customers using gas for heating, the
Company's operations are seasonal in nature. Therefore, the results of
operations for the three month periods ended December 31, 1997 and 1996 are not
indicative of the results to be expected for the full year.
Note 4. Statement of Financial Accounting Standards No. 128 "Earnings Per
Share" (SFAS 128), which establishes standards for computing and presenting
earnings per share was effective for the Company for the three months ended
December 31, 1997. SFAS 128 requires presentation of both basic and diluted
earnings per share on the face of the income statement for all periods
presented. Basic earnings per common share is computed based on the weighted
average number of common shares outstanding during each period. Diluted earnings
per common share is computed to reflect the dilutive effect of outstanding stock
options. Earnings per share for each period presented have been restated to
reflect the three shares of EnergySouth, Inc. common stock issued for each two
shares of Mobile Gas common stock, effective February 2, 1998. The restated
weighted average number of common shares outstanding used in computing basic and
diluted earnings per share for each period presented is as follows (in
thousands):
7
<PAGE> 8
<TABLE>
<CAPTION>
Three Months Twelve Months
Ended December 31, Ended December 31,
1997 1996 1997 1996
--------------------- ---------------------
<S> <C> <C> <C> <C>
Weighted average shares outstanding-
Basic Earnings Per Share 4,858 4,838 4,851 4,829
Effect of dilutive outstanding stock options 69 23 49 17
-------- -------- -------- --------
Weighted average shares outstanding-
Diluted Earnings Per Share 4,927 4,861 4,900 4,846
======== ======== ======== ========
</TABLE>
Note 5. Statement of Financial Accounting Standards No. 131, "Disclosure about
Segments of an Enterprise and Related Information" (SFAS 131) was issued in June
1997 and is effective for the Company for the fiscal year beginning October 1,
1998. SFAS 131 establishes standards for reporting operating segments by public
business enterprises in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. SFAS 131 also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. The Company expects to report the required financial and descriptive
information about its operating segments, which include natural gas storage and
merchandising operations, beginning with the quarter ending December 31, 1998.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
On January 30, 1998 stockholders of Mobile Gas Service Corporation ("Mobile
Gas") approved a reorganization of Mobile Gas and its subsidiaries into a
holding company structure (the "Reorganization"). As part of the Reorganization,
on February 2, 1998 shareholders of Mobile Gas automatically became shareholders
of EnergySouth, Inc. ("EnergySouth"), with each two shares of Mobile Gas common
stock then outstanding being converted into three shares of EnergySouth common
stock. All common stock data presented in this report have been restated to
reflect the three-for-two conversion.
The following discussion and analysis refers to EnergySouth, Inc. and its
subsidiaries (collectively referred to as the "Company"). The Company, primarily
through EnergySouth's wholly-owned subsidiary, Mobile Gas, is engaged
principally in the distribution of natural gas to residential, commercial and
industrial customers in Southwest Alabama. Other subsidiaries participate and
own investments in gas pipeline transportation, storage, marketing and other
energy-related services. The gas distribution and storage operations of Mobile
Gas are regulated by the Alabama Public Service Commission (APSC). Interstate
gas storage contracts do not require APSC approval since the Federal Energy
Regulatory Commission allows these contracts to have market-based rates. Because
of the seasonal nature of the Company's gas distribution operations, the results
for the interim periods are not necessarily indicative of the results for an
entire year.
FINANCIAL CONDITION AND LIQUIDITY
The Company generally relies on cash generated from operations and, on a
temporary basis, short-term borrowings to meet working capital requirements and
to finance normal capital expenditures. Operating activities used cash of
$1,596,000 and $231,000, respectively, for the three months ended December 31,
1997 and 1996. The increase in cash used by operating activities is attributed
to a decrease in the non-cash components of net income, primarily deferred
taxes, and the change in operating assets and liabilities which primarily
reflects the timing of cash receipts and payments.
Cash used in capital expenditures has decreased $806,000 for the first quarter
comparison primarily due to completion in fiscal 1997 of certain facilities
added to service a large industrial customer.
Cash used by financing activities was $11,068,000 and $5,765,000, respectively,
for the three months ended December 31, 1997 and 1996. During the first quarter
of fiscal 1997, the Company issued $12,000,000 of 7.27% First Mortgage Bonds to
fund on-going capital projects. Payments on short-term borrowings were lower for
the fiscal 1998 first quarter primarily due to a lower short-term debt balance
at fiscal year-end 1997 as compared to fiscal year-end 1996.
The Company's capital needs are due primarily to its on-going construction
program. Capital expenditures related to the Company's construction program for
the remainder of fiscal 1998 are estimated to be $ 5,835,000. Funds for the
Company's cash needs are expected to come from cash provided by operations and
borrowings under the Company's revolving credit agreement. Management believes
it has adequate financial flexibility to meet its expected cash needs in the
foreseeable future.
9
<PAGE> 10
RESULTS OF OPERATIONS
Net income for the three months ended December 31, 1997 was $1,989,000 or $.40
per share as compared to net income of $2,038,000 or $.42 per share for the
quarter ended December 31, 1996. Net income for the twelve months ended December
31, 1997 and 1996 was $8,076,000 or $1.65 per share and $8,865,000 or $1.83 per
share, respectively.
In December 1996, the State of Alabama approved the Company's claim for refund
of a business license tax. With this approval, the Company recorded a reduction
in other taxes that had been previously recorded, resulting in an increase of
$.03 per share for the three and twelve months ended December 31, 1996. The
decrease in earnings for the fiscal 1998 first quarter as compared to the first
quarter of 1997 is due to the December 1996 reduction in other taxes and was
partially offset by an increase in earnings from natural gas storage and gas
transportation operations. Weather does not affect the comparison of first
quarter earnings since the Company's temperature rate adjustment factor was in
effect during both quarters. This adjustment factor is designed to level out the
effects of temperature extremes on Company earnings.
The effect of weather is a factor, however, in comparing earnings per share to
the prior year for the twelve months ended December 31, 1997, since the
adjustment factor did not go into effect until November 1996. While earnings for
the twelve months ended December 31, 1997 do not reflect any impact of warmer
than normal weather, weather for the twelve month period ended December 31, 1996
was 20% colder than normal, resulting in a $.27 per share increase in earnings.
After considering the impact of weather during 1996, earnings during the twelve
months ended December 31, 1997 increased due to improved natural gas storage and
gas transportation results, and a decrease in operations and maintenance
expenses. The increase in weather-normalized earnings for the twelve month
period comparison was offset partially by the reduction in other taxes in
December 1996.
Gas revenues increased 12% and 3%, respectively, for the three and twelve months
ended December 31, 1997 compared to the corresponding periods of the prior year.
Although colder or warmer than normal weather does not impact the Company's
earnings, it does impact the level of gas revenues since gas costs are passed
through to customers. Weather during the fiscal 1998 first quarter was 46%
colder than the fiscal 1997 first quarter resulting in a 18% increase in gas
volumes sold and delivered to temperature-sensitive customers. In addition to
the effects of increased gas volumes, the Company passed through to customers
higher per unit gas costs compared to the prior year through its purchased gas
adjustment (PGA) component of customer rates. Gas sales volumes to
temperature-sensitive customers decreased 12% for the twelve months ended
December 31, 1997 due to weather which was 15% warmer than the twelve months
ended December 31, 1996; however, gas revenues from temperature-sensitive
customers increased 4% due to increased billings to customers under the PGA rate
mechanism. Revenue from the transportation of gas increased 10% and 6%,
respectively, for the three and twelve month periods ended December 31, 1997 due
primarily to increased volumes resulting from increased plant utilization by
existing customers. Increased revenue from natural gas storage operations is
attributed to new contracts for storage services.
Cost of gas increased 34% and 18%, respectively, for the three and twelve months
ended December 31, 1997 compared to the corresponding periods of the prior year.
Excluding the
10
<PAGE> 11
effect of the increase in natural gas prices, which has been passed through to
customers using the Company's PGA mechanism, cost of gas increased 16% for the
three month period ended December 31, 1997 and decreased 20% for the twelve
month period ended December 31, 1997. These percentage changes are comparable to
total sales volume changes of 13% increase and 16% decrease, respectively, for
the three and twelve month periods ended December 31, 1997. Fluctuations in
billings to customers that are attributed to the PGA component of customer rates
do not affect recorded margins since revenues and cost of gas are affected by
the same amount.
Operations and maintenance expenses for the three months ended December 31, 1997
changed less than 1% compared to the fiscal 1997 first quarter. For the current
twelve month period, operation and maintenance expenses decreased 4% compared to
the prior twelve month period. Significant factors contributing to the decrease
for the twelve month comparison include lower utility maintenance costs due to
completion in the fourth quarter of fiscal 1996 of certain non-routine
maintenance projects, stable utility operations costs due to cost control
efforts throughout the Company, increased capitalized administrative and general
costs resulting from a higher level of construction activity, and lower natural
gas storage operation expenses.
The Company has completed an internal evaluation of the Company's computer
information systems and has identified the systems which will require program
modifications or new software installations in order to function properly in the
year 2000. The Company expects to incur costs approximating $325,000 to complete
the program modifications and new software installations by October 1998.
Estimated costs of $240,000 to modify existing information systems to be Year
2000 compliant will be expensed as incurred and estimated costs of $85,000
related to new software installation will be capitalized. During the three
months ended December 31, 1997, the Company has incurred approximately $25,000
in expense related to the Year 2000 project.
Depreciation expense increased 6% for both the three and twelve month periods
ended December 31, 1997 as compared to the prior year period because of
continued growth in property, plant and equipment.
Taxes, other than income taxes, primarily consist of state and local taxes which
are based on gross revenues and fluctuate accordingly. The fiscal 1997 periods
reflect a $246,000 refund of a business license tax which was recorded in
December 1996. Excluding the effects of this refund, the fiscal 1998 first
quarter increase in other taxes is consistent with the increase in gas revenues.
Allowance for borrowed funds used during construction represents the
capitalization of interest costs to construction work-in-progress. Construction
activity has decreased for the three months ended December 31, 1997 as compared
to the same prior year period resulting in lower capitalized interest costs
during the fiscal 1998 first quarter.
Income tax expense changed primarily in relation to changes in pre-tax income
for the periods ended December 31, 1997.
NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS
128), was issued in February 1997 and was effective for the Company for the
quarter ended December 31, 1997. SFAS 128 establishes standards for computing
and presenting
11
<PAGE> 12
earnings per share. The Company has reported earnings per share in accordance
with SFAS 128 for all periods presented for the quarter ending December 31,
1997.
Statement of Financial Accounting Standards No. 131, "Disclosure about Segments
of an Enterprise and Related Information" (SFAS 131) is effective for the
Company for the fiscal year ending September 30, 1999. SFAS 131 establishes
standards for reporting operating segments by public business enterprises in
interim and annual financial statements. SFAS 131 also establishes standards for
related disclosures about products and services, geographic areas, and major
customers. Interim disclosures are not required in the year of adoption;
therefore, the Company expects to report the required financial and descriptive
information about its operating segments beginning with the fiscal year ending
September 30, 1999.
12
<PAGE> 13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
(a) Exhibit No. Description
<S> <C> <C>
2 Articles of Merger of MBLE Merger Co., Inc.
into Mobile Gas Service Corporation
3(i) Articles of Restatement of the Articles of
Incorporation of EnergySouth, Inc.
11 Computation of Earnings Per Share
27 Financial Data Schedule (EDGAR version only)
(b) Reports on Form 8-K
During the quarter for which this report is filed, there were
no reports on Form 8-K.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C>
ENERGYSOUTH, INC.
(Successor to Mobile Gas Service Corporation)
---------------------------------------------
(Registrant)
Date: February 13, 1998 /s/ John S. Davis
------------------------- ---------------------------------------------
John S. Davis
President and
Chief Executive Officer
Date: February 13, 1998 /s/ Charles P. Huffman
------------------------- ---------------------------------------------
Charles P. Huffman
Vice President, Chief Financial
Officer, and Treasurer
</TABLE>
13
<PAGE> 14
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C> <C>
2 Articles of Merger of MBLE Merger Co., Inc.
into Mobile Gas Service Corporation
3(i) Articles of Restatement of the Articles of
Incorporation of EnergySouth, Inc.
11 Computation of Earnings Per Share
27 Financial Data Schedule (EDGAR version only)
</TABLE>
14
<PAGE> 1
EXHIBIT 2
ARTICLES OF MERGER
OF
MBLE MERGER CO., INC.
INTO
MOBILE GAS SERVICE CORPORATION
Pursuant to Section 10-2B-11.05 of the Alabama Business Corporation Act,
the undersigned corporations, Mobile Gas Service Corporation ("Mobile Gas"), an
Alabama corporation, and MBLE Merger Co., Inc. ("Mergerco"), an Alabama
corporation, adopt the following Articles of Merger for the purpose of merging
Mergerco into Mobile Gas:
FIRST: The Amended and Restated Agreement and Plan of Merger setting
forth the terms and conditions of the merger of Mergerco with and into Mobile
Gas (the "Merger Agreement") is attached hereto as Exhibit A and incorporated
herein by reference.
SECOND: There are 3,239,104 shares of common stock, par value $.01 per
share, of Mobile Gas ("Mobile Gas Stock") issued and outstanding that were
entitled to vote on the Merger Agreement, such shares being the only voting
group of Mobile Gas entitled to vote on the Merger Agreement. 2,508,700 shares
of Mobile Gas Stock were voted in favor of the Merger Agreement and 9,084
shares of Mobile Gas Stock were voted against the Merger Agreement at the
Annual Meeting of Stockholders of Mobile Gas held on January 30, 1998.
THIRD: There are 100 shares of common stock, par value $.01 per
share,of Mergerco ("Mergerco Stock") issued and outstanding that were entitled
to vote on the Merger Agreement, such shares being the only voting group of
Mergerco entitled to vote on the Merger Agreement. 100 shares of Mergerco
Stock were voted in favor of the Merger Agreement, and no shares of Mergerco
Stock were voted against the Merger Agreement, by the sole shareholder of
Mergerco on December 10, 1997.
FOURTH: The respective Articles of Incorporation of each of Mobile
Gas and Mergerco are filed in Mobile County, Alabama.
FIFTH: These Articles of Merger shall take effect at 12:01 a.m. on
February 2, 1998.
<PAGE> 2
IN WITNESS WHEREOF, each of the undersigned corporations has caused these
Articles of Merger to be signed as of January 30, 1998.
MOBILE GAS SERVICE CORPORATION
By: /s/ John S. Davis
John S. Davis
Its: President
and
By: /s/ G. Edgar Downing, Jr.
G. Edgar Downing, Jr.
Its: Secretary
MBLE MERGER CO., INC.
By: /s/ John S. Davis
John S. Davis
Its: President
and
By: /s/ G. Edgar Downing, Jr.
G. Edgar Downing, Jr.
Its: Secretary
<PAGE> 3
Exhibit A
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as
of January 29, 1998, amends and restates the Agreement and Plan of Merger is
made as of December 10, 1997, by and among MOBILE GAS SERVICE CORPORATION, an
Alabama corporation ("Mobile Gas"), MBLE MERGERCO., INC., an Alabama
corporation ("Mergerco"), and ENERGYSOUTH, INC., an Alabama corporation
("EnergySouth").
WHEREAS, Mobile Gas has authorized capital stock consisting of 8,000,000
shares of common stock, one cent ($.01) par value per share ("Mobile Gas Common
Stock"), of which 3,239,104 shares are issued and outstanding; and
WHEREAS, Mergerco has authorized capital stock consisting of 1,000 shares
of common stock ("Mergerco Common Stock"), of which 100 shares are issued and
outstanding and owned beneficially and of record by EnergySouth; and
WHEREAS, EnergySouth has authorized capital stock consisting of 10,000,000
shares of common stock, one cent ($.01) par value per share ("EnergySouth
Common Stock"), of which 100 shares are issued and outstanding and owned
beneficially and of record by Mobile Gas, and 10,000,000 shares of Preferred
Stock, no par value per share, none of which have been issued; and
WHEREAS, the Boards of Directors of the respective parties hereto deem it
advisable to merge Mergerco with and into Mobile Gas in accordance with the
Alabama Business Corporation Act ("Alabama Corporation Act") and this Agreement
for the purpose of establishing EnergySouth as the parent corporation of Mobile
Gas.
NOW, THEREFORE, in consideration of the premises and agreements contained
herein, the parties agree that (i) Mergerco shall be merged with and into
Mobile Gas (the "Merger"), (ii) Mobile Gas shall be the corporation surviving
the Merger, and (iii) the terms and conditions of the Merger, the mode of
carrying it into effect, the manner of converting and exchanging shares of
capital stock of the parties hereto and other matters relating thereto shall be
as follows:
ARTICLE 1
THE MERGER
1.1 Articles of Merger. Subject to and in accordance with the provisions
of this Agreement, in the event this Agreement and Plan of Merger is approved
by the stockholders of Mobile Gas in accordance
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<PAGE> 4
with the Alabama Corporation Act, Articles of Merger of Mobile Gas shall
be delivered to the office of the Secretary of State of Alabama for filing, all
as provided in Section 10-2B-11.05 of the Alabama Corporation Act.
1.2 Effective Time. The Merger shall become effective at the time of
filing on the date on which the Articles of Merger are filed with the Secretary
of State of Alabama as contemplated by Section 1.1 above, unless otherwise
specified in such Articles of Merger (the "Effective Time"). At the Effective
Time, the separate existence of Mergerco shall cease and Mergerco shall be
merged with and into Mobile Gas, which shall continue its corporate existence
as the surviving corporation (Mobile Gas and Mergerco being sometimes referred
to herein as the "Constituent Corporations" and Mobile Gas, as the surviving
corporation, being sometimes referred to herein as the "Surviving
Corporation"). Mobile Gas shall succeed, without other transfer, to all the
rights and property of Mergerco and shall be subject to all the debts and
liabilities of Mergerco in the same manner as if Mobile Gas had itself incurred
them. All rights of creditors and all liens upon the property of each of Mobile
Gas and Mergerco shall be preserved unimpaired.
1.3 Appropriate Actions. Prior to and after the Effective Time,
EnergySouth, Mobile Gas and Mergerco, respectively, shall take all such actions
as may be necessary or appropriate in order to effectuate the Merger. In this
connection, EnergySouth shall issue and pay the shares of EnergySouth Common
Stock and cash in lieu of fractional shares into which outstanding shares of
Mobile Gas Common Stock will be converted on the basis and to the extent
provided in Article 2 of this Agreement, and shall take such other actions as
are necessary to fulfil EnergySouth's obligations hereunder including without
limitation those specified in Article 6 of this Agreement. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full title to all properties, assets, privileges, rights, immunities and
franchises of either of the Constituent Corporations, the officers and
directors of each of the Constituent Corporations as of the Effective Time
shall take all such further action.
ARTICLE 2
TERMS OF CONVERSION AND EXCHANGE OF SHARES
2.1 Mobile Gas Common Stock. (a) At the Effective Time, subject to
subsection (b) below, shares of Mobile Gas Common Stock issued and outstanding
immediately prior to the Merger shall be automatically changed and converted
into shares of EnergySouth Common Stock, at the ratio of three shares of
EnergySouth Common Stock for each two shares of Mobile Gas Common Stock, and
such EnergySouth Common Stock shall thereupon be issued and fully-paid and
non-assessable; provided, however, that such conversion shall not affect shares
of holders, if any, who perfect their rights as dissenting stockholders under
Article 13 of the Alabama Corporation Act with respect to such shares.
(b) No scrip or certificates representing fractional shares of
EnergySouth Common Stock shall
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<PAGE> 5
be issued to any former stockholder of Mobile Gas, and, except as provided
below, no such stockholder shall have any right to vote or receive any dividend
or other distribution on, or any other right with respect to, any fraction of a
share of EnergySouth Common Stock resulting from the conversion described in
Section 2.1. In the event such conversion of shares results in the creation of
fractional shares, in lieu of the issuance of fractional shares of EnergySouth
Common Stock, EnergySouth shall deliver cash to the transfer agent for
EnergySouth Stock (the "Transfer Agent") in an amount equal to the aggregate of
all fractional shares multiplied by the Average Closing Price, and, in such
event, the Transfer Agent shall divide such cash among and remit it (without
interest) to the former stockholders of Mobile Gas in accordance with their
respective interests. The "Average Closing Price" shall be two-thirds the
average of the closing prices of Mobile Gas Common Stock on the Nasdaq National
Market over the period of five (5) consecutive trading days ending on the last
trading day prior to the Effective Date.
2.2 Mergerco Shares. The shares of Mergerco Common Stock issued and
outstanding immediately prior to the Merger shall be automatically changed and
converted into all of the issued and outstanding shares of Common Stock of the
Surviving Corporation, which shall thereupon be issued and fully-paid and
non-assessable, with the effect that the number of issued and outstanding
shares of Common Stock of the Surviving Corporation shall be the same as the
number of issued and outstanding shares of Mergerco Common Stock immediately
prior to the Effective Time.
2.3 EnergySouth Shares. Each share of EnergySouth Common Stock issued
and outstanding immediately prior to the Merger shall be canceled.
ARTICLE 3
ARTICLES OF INCORPORATION AND BYLAWS
3.1 Mobile Gas Restated Articles. From and after the Effective Time, and
until thereafter amended as provided by law, the Restated Articles of
Incorporation of Mobile Gas as in effect immediately prior to the Merger shall
be and continue to be the Restated Articles of Incorporation of the Surviving
Corporation.
3.2 Mobile Gas By-Laws. From and after the Effective Time, and until
thereafter amended as provided by law, the By-Laws of Mobile Gas as in effect
immediately prior to the Merger shall be and continue to be the By-Laws of the
Surviving Corporation.
3.3 EnergySouth Articles and Bylaws. From and after the Effective Time,
and until thereafter amended as provided by law, the Articles of Incorporation
and Bylaws of EnergySouth as in effect immediately prior to the Merger shall be
and continue unchanged to be the Articles of Incorporation and By-Laws of
EnergySouth.
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<PAGE> 6
ARTICLE 4
DIRECTORS AND OFFICERS
4.1 Mobile Gas Directors and Officers. The persons who are directors and
officers of Mobile Gas immediately prior to the Merger shall continue as
directors and officers, respectively, of the Surviving Corporation and shall
continue to hold office as provided in the Bylaws of the Surviving Corporation.
If, at or following the Effective Time, a vacancy shall exist in the Board of
Directors or in the position of any officer of the Surviving Corporation, such
vacancy may be filled in the manner provided in the Bylaws of the Surviving
Corporation.
4.2 EnergySouth Directors and Officers. The persons who are directors
and officers of EnergySouth immediately prior to the Merger shall continue as
directors and officers, respectively, of EnergySouth and shall continue to hold
office as provided in the Bylaws of EnergySouth. If, at or following the
Effective Time, a vacancy shall exist in the Board of Directors or in the
position of any officer of EnergySouth, such vacancy shall be filled in the
manner provided in the Bylaws of EnergySouth.
ARTICLE 5
STOCK CERTIFICATES
5.1 Rights of Holders of Certificates. Following the Effective Time,
certificates representing shares of Mobile Gas Common Stock outstanding at the
Effective Time (herein sometimes referred to as "Mobile Gas Certificates")
shall evidence only the right of the registered holder thereof to receive, and
may be exchanged for, the shares of EnergySouth Common Stock into which such
shares of Mobile Gas Common Stock were converted in accordance with Section
2.1. At the Effective Time, EnergySouth shall issue and deliver, or cause to be
issued and delivered, to the Transfer Agent certificates representing whole
shares of EnergySouth Stock into which outstanding shares of Mobile Gas Stock
have been converted as provided above. As promptly as practicable following the
Effective Time, EnergySouth shall send or cause to be sent to each former
stockholder of record of Mobile Gas immediately prior to the Effective Time
written instructions and transmittal materials (a "Transmittal Letter") for use
in surrendering Mobile Gas Certificates to the Transfer Agent. Upon the proper
surrender and delivery to the Transfer Agent (in accordance with EnergySouth's
instructions, and accompanied by a properly completed Transmittal Letter) by a
former stockholder of Mobile Gas of such stockholder's Mobile Gas
Certificate(s), and in exchange therefor, the Transfer Agent shall as soon as
practicable, (i) in the case of a stockholder whose Mobile Gas Common Stock, or
a portion thereof, has been converted into EnergySouth Stock, issue, register
and deliver to such stockholder a certificate evidencing the number of shares
of EnergySouth Stock to which such stockholder is entitled pursuant to Section
2.1 above, and/or (ii) in the case of a stockholder whose Mobile Gas Common
Stock, or a portion thereof, has been converted into the right to receive cash
in lieu of a fractional share, issue and deliver to such stockholder a check in
the amount of cash to which the stockholder is entitled pursuant to Section 2.1
above.
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<PAGE> 7
5.2 Outstanding Certificates. Each outstanding certificate which, prior
to the Effective Time, represented Mobile Gas Common Stock shall be deemed for
all corporate purposes to represent only the right to receive the number of
shares of EnergySouth Common Stock and/or cash in lieu of fractional shares
into which such Mobile Gas Common Stock was converted.
5.3 Stock Transfer Books. The stock transfer books for Mobile Gas Common
Stock shall be deemed to be closed at the Effective Time and no transfer of
shares of Mobile Gas Common Stock outstanding prior to the Effective Time shall
thereafter be made on such books. As of the Effective Time, EnergySouth shall
establish a stock register reflecting ownership of EnergySouth Common Stock by
former holders of record of Mobile Gas Common Stock.
5.4 Post-Merger Rights of Holders. Following the Effective Time, the
holders of certificates representing Mobile Gas Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to stock of the Surviving Corporation and their sole rights shall be
with respect to the EnergySouth Common Stock and/or cash in lieu of fractional
shares into which their shares of Mobile Gas Common Stock shall have been
converted by the Merger, subject to the rights of any dissenting stockholders
who perfect dissenters' rights under Article 13 of the Alabama Corporation Act.
5.5 Unsurrendered Certificates. Subject to Section 5.6 below, no
EnergySouth Common Stock certificate or cash in lieu of a fractional share
thereof shall be delivered to any former stockholder of Mobile Gas unless and
until such stockholder shall have properly surrendered to the Transfer Agent the
Mobile Gas Certificate(s) formerly representing his or her shares of Mobile Gas
Stock, together with a properly completed Transmittal Letter in such form as
shall be provided to the stockholder by EnergySouth for that purpose. Further,
until such Mobile Gas Certificate(s) are so surrendered, no dividend or other
distribution payable to holders of record of EnergySouth Stock as of any date
subsequent to the Effective Time shall be delivered to the holder of such
Mobile Gas Certificate(s). However, subject to prior escheatment under
applicable law, upon the proper surrender of such Mobile Gas Certificate(s),
the Transfer Agent shall pay to the registered holder of the shares of
EnergySouth Stock represented by such Mobile Gas Certificate(s) the amount of
any such cash, dividends or distributions which have accrued but remain unpaid
with respect to such shares. Neither EnergySouth, Mobile Gas nor the Transfer
Agent shall have any obligation to pay any interest on any such cash, dividends
or distributions for any period prior to such payment.
5.6 Lost, etc., Certificates. Any stockholder of Mobile Gas
whose certificate evidencing shares of Mobile Gas Common Stock has been
lost, destroyed, stolen or otherwise is missing shall be entitled to receive a
certificate representing the shares of EnergySouth Common Stock to which he or
she is entitled in accordance with and upon compliance with conditions imposed
by the Transfer Agent or EnergySouth (including without limitation a requirement
that the stockholder provide a lost instruments indemnity or surety bond in
form, substance and amount satisfactory to the Transfer Agent and EnergySouth).
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<PAGE> 8
ARTICLE 6
MOBILE GAS STOCK PLANS
Mobile Gas and EnergySouth shall take all actions required to provide that,
from and after the Effective time or as soon as practicable thereafter, the
following Mobile Gas plans shall utilize EnergySouth Common Stock instead of
Mobile Gas Common Stock and shall include, where appropriate "EnergySouth" in
the name and text of each such plan: (i) the Employee Savings Plans; (ii) the
Mobile Gas Service Corporation 1992 Stock Option Plan; (iii) the Mobile Gas
Service Corporation Incentive Compensation Plan; and (iv) the Mobile Gas Service
Corporation Dividend Reinvestment and Stock Purchase Plan.
ARTICLE 7
CONDITIONS OF THE MERGER
Completion of the Merger is subject to the satisfaction of the following
conditions:
6.1 Stockholder Approval. The principal terms of this Agreement shall
have been approved by such holders of capital stock of each of the Constituent
Corporations as is required by the Alabama Corporation Act.
6.2 EnergySouth Common Stock Listed. All conditions for the listing on
the NASDAQ National Market as of the Effective Time of the EnergySouth Common
Stock to be issued and to be reserved for issuance pursuant to the Merger shall
have been satisfied.
6.3 Restated Articles of EnergySouth. Restated Articles of Incorporation
of EnergySouth, substantially in the form appended hereto as Exhibit A, shall
have been adopted by EnergySouth and remain in effect.
6.4 Regulatory Approvals. All necessary orders, authorization, approvals
or waivers from the PSC and all other jurisdiction regulatory bodies, boards or
agencies shall have been received, remain in full force and effect, and shall
not include, in the sole judgment of the Board of Directors of Mobile Gas,
unacceptable conditions.
ARTICLE 8
AMENDMENT AND TERMINATION
7.1 Amendment. The parties to this Agreement, by mutual consent of their
respective boards of directors, may amend, modify or supplement this Agreement
in such manner as may be agreed upon by them in writing at any time before or
after approval of this Agreement by the pre-Merger stockholders of
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<PAGE> 9
Mobile Gas (as provided in Section 6.1 above); provided, however, that no such
amendment, modification or supplement shall, if agreed to after such approval by
the pre-Merger stockholders of Mobile Gas, change any of the principal terms of
this Agreement in a manner which would materially and adversely affect the
rights of the stockholders of Mobile Gas.
7.2 Termination. This Agreement may be terminated and the Merger and
other transactions provided for by this Agreement may be abandoned at any time,
whether before or after approval of this Agreement by the pre-Merger
stockholders of Mobile Gas, by action of the board of directors of Mobile Gas if
such board of directors determines for any reason that the completion of the
transactions provided for herein would for any reason be inadvisable or not in
the best interests of Mobile Gas or its stockholders.
ARTICLE 9
MISCELLANEOUS
8.1 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original hereof.
8.2 Alabama Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Alabama.
IN WITNESS WHEREOF, Mobile Gas, EnergySouth and Mergerco, pursuant to
approval and authorization duly given by resolutions adopted by the irrespective
boards of directors, have each caused this Agreement to be executed by its
President or one of its Vice Presidents and attested by its Secretary or one of
its Assistant Secretaries.
Mobile Gas:
MOBILE GAS SERVICE CORPORATION,
an Alabama corporation
By: /s/ John S. Davis
Its: President and Chief Executive
Officer
Attest:
By: /s/ G. Edgar Downing, Jr.
Its: Secretary
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<PAGE> 10
EnergySouth:
ENERGYSOUTH, INC.,
an Alabama corporation
By: /s/ John S. Davis
Its: President and Chief Executive
Officer
Attest:
By: /s/ G. Edgar Downing, Jr.
Its: Secretary
Mergerco:
MBLE MERGER CO., INC.,
an Alabama corporation
By: /s/ John S. Davis
Its: President and Chief Executive
Officer
Attest:
By: /s/ G. Edgar Downing, Jr.
Its: Secretary
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<PAGE> 1
EXHIBIT 3(i)
ARTICLES OF RESTATEMENT
OF THE
ARTICLES OF INCORPORATION
OF
ENERGYSOUTH, INC.
Pursuant to the provisions of Section 10-2B-10.07 of the Alabama Business
Corporation Act, the undersigned corporation, pursuant to a resolution duly
adopted by its Board of Directors, hereby adopts restated articles of
incorporation and certifies in connection therewith:
1. The name of the corporation is ENERGYSOUTH, INC. (the
"Corporation").
2. The text of the Restated Articles of Incorporation of the
Corporation is appended hereto as Exhibit A and incorporated by reference
herein.
3. Said Restated Articles of Incorporation correctly set forth without
change the corresponding provisions of the Articles of Incorporation of the
Corporation as amended, and supersede the original Articles of
Incorporation of the Corporation and all amendments thereto.
4. Said Restated Articles of Incorporation contain amendments to the
Articles of Incorporation of the Corporation ("Amendments") requiring
shareholder approval.
5. The text of the Amendments is included in the Restated Articles of
Incorporation of the Corporation appended hereto as Exhibit A.
6. The Amendments do not provide for an exchange, reclassification or
cancellation of issued shares of the Corporation.
7. The Amendments were adopted by the sole shareholder of the
Corporation on December 10, 1997.
8. At the time of shareholder approval of the Amendments, there were
outstanding one hundred (100) shares of the Corporation's common stock,
$.01 par value per share ("Common Stock"); one hundred (100) votes were
entitled to be cast by the holder of the Common Stock; the holder of Common
Stock constituted the only voting group entitled to vote separately on the
Amendments; and one hundred (100) votes with respect to Common Stock were
undisputedly represented at the meeting at which the Amendments were
approved by the sole shareholder of the Corporation.
<PAGE> 2
9. One hundred (100) votes were cast for and no votes were cast
against the Amendments by the sole holder of the Common Stock.
Dated: January 29, 1998
ENERGYSOUTH, INC.
By: /s/ John S. Davis
John S. Davis
Its: President
and
By: /s/ G. Edgar Downing, Jr.
G. Edgar Downing, Jr.
Its: Secretary
<PAGE> 3
Exhibit A
RESTATED ARTICLES OF INCORPORATION
OF
ENERGYSOUTH, INC.
Pursuant to the provisions of Section 10-2B-10.07 of the Code of Alabama,
EnergySouth, Inc., pursuant to a resolution duly adopted by its Board of
Directors, hereby restates its Articles of Incorporation, as follows:
ARTICLE 1
NAME
The name of the corporation is "EnergySouth, Inc." (hereinafter, the
"Corporation").
ARTICLE 2
AUTHORIZED CAPITAL STOCK
The Corporation is authorized to issue two classes of stock in the
following numbers of shares: (i) TEN MILLION (10,000,000) shares of one cent
($0.01) par value common stock (the "Common Stock") and (ii) TEN MILLION
(10,000,000) shares of no par value preferred stock (the "Preferred Stock").
The preferences, limitations and relative rights of the above two classes
of stock shall be as follows:
A. Common Stock.
(1) Except as may be otherwise required by law or by these Articles of
Incorporation, each holder of Common Stock shall have one vote in respect
of each share of such stock held by such holder on all matters voted upon
by the shareholders of the Corporation.
(2) After distribution in full of the preferential amount, if any,
fixed pursuant to paragraph B(2)(f) of this Article 2 to be distributed to
the holders of any series of Preferred Stock, in the event of the voluntary
or involuntary dissolution or liquidation of the Corporation, the holders
of Common Stock (and the holders of Preferred Stock, if and to the extent
provided pursuant to paragraph B(2)(f) of this Article 2) shall be entitled
to receive the net assets of the Corporation of whatever kind available for
distribution.
B. Preferred Stock.
(1) Shares of Preferred Stock may be issued in one or
<PAGE> 4
more series at such time or times and for such consideration as the
Board of Directors may determine. Each such series shall be given a
distinguishing designation. All shares of any one series shall have
preferences, limitations and relative rights identical with those of other
shares of the same series and, except to the extent otherwise provided in
the description of such series, with those of other shares of Preferred
Stock.
(2) Authority is hereby expressly granted to the Board of Directors to
fix from time to time, by resolution or resolutions providing for the
establishment and/or issuance of any series of Preferred Stock, the
designation of such series and the preferences, limitations and relative
rights of the shares of such series, including the following:
(a) The distinctive designation and number of shares comprising
such series, which number may (except where otherwise provided by the
Board of Directors in creating such series) be increased or decreased
(but not below the number of shares then outstanding) from time to
time by action of the Board of Directors;
(b) The voting rights, if any, which shares of that series shall
have, which may be special, conditional, limited or otherwise;
(c) The rate of dividends, if any, on the shares of that series,
whether dividends shall be non-cumulative, cumulative to the extent
earned, partially cumulative or cumulative (and, if cumulative, from
which date or dates), whether dividends shall be payable in cash,
property or rights, or in shares of the Corporation's capital stock,
and the relative rights of priority, if any, of payment of dividends
on shares of that series over shares of any other series or of any
other class of Corporation stock;
(d) Whether the shares of that series shall be redeemable and, if
so, the terms and conditions of such redemption, including the date or
dates upon or after which they shall be redeemable, the event or
events upon or after which they shall be redeemable, whether they
shall be redeemable at the option of the Corporation, the shareholder
or another person, the amount per share payable in case of redemption
(which amount may vary under different conditions and at different
redemption dates), whether such amount shall be a designated amount or
an amount determined in accordance with a designated formula or by
reference to extrinsic data or events and whether such amount shall be
paid in cash, indebtedness, securities or other property or rights,
including securities of any other corporation;
<PAGE> 5
(e) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series and, if so, the terms
of and amounts payable into such sinking fund;
(f) The rights to which the holders of the shares of that series
shall be entitled in the event of voluntary or involuntary dissolution
or liquidation of the Corporation, and the relative rights of
priority, if any, of payment of shares of that series over shares of
any other series or of any other class of Corporation stock in any
such event;
(g) Whether the shares of that series shall be convertible into
or exchangeable for cash, shares of stock of any other class or any
other series, indebtedness, or other property or rights, including
securities of another corporation, and, if so, the terms and
conditions of such conversion or exchange, including the rate or rates
of conversion or exchange, and whether such rate shall be a designated
amount or an amount determined in accordance with a designated formula
or by reference to extrinsic data or events, the date or dates upon or
after which they shall be convertible or exchangeable, the duration
for which they shall be convertible or exchangeable, the event or
events upon or after which they shall be convertible or exchangeable,
and whether they shall be convertible or exchangeable at the option of
the Corporation, the shareholder or another person, and the method (if
any) of adjusting the rate of conversion or exchange in the event of a
stock split, stock dividend, combination of shares or similar event;
(h) Whether the issuance of any additional shares of such series,
or of any shares of any other series, shall be subject to restrictions
as to issuance, or as to the powers, preferences or rights of any such
other series; and
(i) Any other preferences, privileges and powers and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions of such series, as the Board of Directors
may deem advisable and as shall not be inconsistent with the
provisions of this Article 2 and to the full extent now or hereafter
permitted by the laws of the State of Alabama.
(3) Before issuing any shares of a series of Preferred Stock the
Corporation shall deliver to the Secretary of State for filing articles of
amendment, which (except as may be otherwise required by Alabama law) shall be
effective without shareholder action, that set forth (a) the name of
<PAGE> 6
the Corporation, (b) the text of the amendment determining the terms of the
series, (c) the date it was adopted and (d) a statement that the amendment was
duly adopted by the Board of Directors.
ARTICLE 3
NO PREEMPTIVE RIGHTS
The shareholders of the Corporation shall not have preemptive rights.
ARTICLE 4
INITIAL REGISTERED OFFICE AND AGENT
The street address of the Corporation's initial registered office is 2828
Dauphin Street, Mobile, Alabama, and the name of its initial registered agent at
that office is G. Edgar Downing, Jr.
ARTICLE 5
INCORPORATOR
The name and address of the incorporator are G. Edgar Downing,
Jr., 2828 Dauphin Street, Mobile, Alabama 36606.
ARTICLE 6
DIRECTORS
(a) All corporate powers shall be exercised by or under the authority of, and
the business and affairs of the Corporation managed under the direction of, a
board of directors, which shall consist of not less than nine nor more than
twelve persons. The exact number of directors within the minimum and maximum
limitation specified in the preceding sentence shall be fixed from time to time
by the board of directors pursuant to a resolution adopted by a majority of the
entire board of directors. Until otherwise changed in accordance with this
Article 6, the number of directors shall be eleven. At the annual meeting of
shareholders of the Corporation held in 1998, the directors shall be divided and
classified into three classes, as nearly equal in number as possible, with the
term of office of the first class of directors to expire at the annual meeting
of shareholders of the Corporation to be held in 1999, the term of office of the
second class of directors to expire at the annual meeting of shareholders of the
Corporation to be held in 2000, and the term of office of the third class of
directors to expire at the annual meeting of shareholders of the Corporation to
be held in 2001. At each annual meeting of shareholders of the Corporation
following such initial classification and election, except as provided below in
this Article 6 in the case of electing a successor to a director elected by the
board of directors to fill a vacancy occurring in the membership of the board of
directors, directors elected to succeed those directors whose terms
<PAGE> 7
expire at such annual meeting shall be elected for a term of office to expire at
the third succeeding annual meeting of shareholders of the Corporation after
their election.
(b) Any vacancy occurring in the board of directors, including by reason of an
increase in the number of directors, may be filled by the affirmative vote of a
majority of the remaining directors though less than a quorum of the board of
directors. A director so elected to fill a vacancy shall be elected to serve
until the next annual meeting of shareholders, at which time a director shall be
elected to fill the unexpired portion of the term of office of the director
whose successor was elected by the remaining directors. No decrease in the
number of directors constituting the board of directors shall shorten the term
of any incumbent director.
(c) Notwithstanding the foregoing provisions of this Article 6, any director
whose term of office has expired shall continue to hold office until his
successor shall be elected and qualify.
(d) Directors may be removed from office at any time, without cause, but only
by the affirmative vote of at least seventy-five percent (75%) of the total
number of votes entitled to be cast by the holders of all of the shares of
capital stock of the Corporation then entitled to vote generally in the election
of directors. The holder of each share of capital stock entitled to vote thereon
shall be entitled to cast the same number of votes as the holder of such shares
is entitled to cast generally in the election of each director. Directors may be
removed from office at any time, with cause, in the manner provided by law.
(e) Notwithstanding any other provisions of these Articles of Incorporation or
the Bylaws of the Corporation, the affirmative vote of at least seventy-five
percent (75%) of the total number of votes entitled to be cast by the holders of
all of the shares of capital stock of the Corporation then entitled to vote
generally in the election of directors shall be required to amend, alter, change
or repeal, or to adopt any provision as part of these Articles of Incorporation
inconsistent with, this Article 6.
ARTICLE 7
PURPOSES
The purpose for which the Corporation is formed is the transaction of all
lawful business for which corporations may be incorporated under the laws of the
State of Alabama, including, without limitation, that of being a holding company
for companies engaged in energy related businesses.
ARTICLE 8
BUSINESS COMBINATIONS WITH RELATED PERSONS
Section 8.01 Definitions.
<PAGE> 8
The following definitions shall apply for purposes of this Article 8:
(1) Affiliate. An "Affiliate" of, or Person "affiliated with," a specified
Person, is a Person that directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
specified Person. The term "control" (including the terms "controlling,"
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise, and a Person who is the Beneficial Owner of shares
representing ten percent (10%) or more of the votes entitled to be cast by the
Corporation's voting shares shall be irrebuttably presumed to be in control of
the Corporation.
(2) Associate. The term "Associate," when used to indicate a relationship with
any Person, means (a) any Person (other than the Corporation or a Subsidiary) of
which such Person is an officer, director or partner or is the Beneficial Owner
of ten percent (10%) or more of any class of equity securities, (b) any trust or
other estate in which such Person has a beneficial interest of ten percent (10%)
or more or as to which such Person serves as a trustee or in a similar fiduciary
capacity, and (c) any relative or spouse of such Person, or any relative of such
spouse who has the same home as such Person.
(3) Beneficial Owner. A Person shall be considered to be the "Beneficial
Owner" of any equity securities (which equity securities are referred to herein
as "Beneficially Owned"):
(a) which such Person or any of such Person's Affiliates or Associates
owns, directly or indirectly; or
(b) which such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has (i) the right to acquire, whether such right is
exercisable immediately or only after the passage of time, pursuant to any
agreement, arrangement, or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options or otherwise; or (ii) the right to
vote pursuant to any agreement, arrangement, or understanding; or
(c) which are owned, directly or indirectly, by any other Person with
which such Person or any of its Affiliates or Associates has any agreement,
arrangement, or understanding for the purpose of acquiring, holding, voting, or
disposing of such equity securities.
(4) Business Combination. The term "Business Combination" shall mean:
(a) a merger or consolidation of the Corporation or any Subsidiary with
or into any other Person, or of such other Person with or into the Corporation
or any Subsidiary; or
(b) any sale, exchange, lease, mortgage, pledge, transfer or other
disposition to any other Person, in one transaction or a series of transactions,
of assets of the Corporation or any Subsidiary having an aggregate book value as
of the end of the Corporation's most recently ended fiscal quarter of ten
percent (10%) or more of the net assets of the Corporation;
<PAGE> 9
(c) any sale, exchange, lease, mortgage, pledge, transfer or other
disposition for value by any other Person of any assets to the Corporation or
any Subsidiary in exchange for Outstanding Shares or equity securities of any
Subsidiary, where the result of such transaction is that such other Person is
the Beneficial Owner of a majority of the Outstanding Shares; or
(d) the liquidation or dissolution of the Corporation or any Subsidiary
if such liquidation or dissolution is proposed by or on behalf of a Related
Person; or
(e) any share exchange in which shares of common stock of the Corporation
or of any Subsidiary having an aggregate book value as of the end of the
Corporation's most recently ended fiscal quarter of ten percent (10%) or more of
the net assets of the Corporation are exchanged for shares of stock, other
securities, cash or other property; or
(f) any amendment of these Articles of Incorporation which would effect a
reclassification of any securities of the Corporation (including a reverse stock
split or the equivalent thereof) or any merger of the Corporation with any
Subsidiary, which has the effect, directly or indirectly, of increasing the
proportionate share of any class of the Outstanding Shares or any equity
securities of any Subsidiary, Beneficially Owned by a Related Person.
(5) Continuing Director. (a) The term "Continuing Director" shall mean any
member of the Board of Directors who is not (i) a Related Person or an Affiliate
or Associate of a Related Person or of any such Affiliate or Associate or (ii) a
representative of a Related Person or of any such Affiliate or Associate, and
who was a Director of the Corporation prior to the time a Related Person became
such. (b) Any successor to a Continuing Director described in (a) above shall
also be deemed a Continuing Director if such successor is not an Affiliate or
Associate of a Related Person and was recommended by a majority of the
Continuing Directors then on the Board of Directors, provided that at the time
of such recommendation, Continuing Directors comprised a majority of the Board.
(c) If there is no Related Person, all members of the Board of Directors shall
be deemed to be Continuing Directors.
(6) Date of Determination. The term "Date of Determination" shall mean (a) the
date on which a binding agreement (except for the fulfillment of conditions
precedent, including, without limitation, votes of shareholders to approve such
transaction) is entered into by the Corporation, as authorized by the Board of
Directors, and another Person providing for any Business Combination, or (b) if
such an agreement as referred to in item (a) above is amended so as to make it
less favorable to the Corporation or its shareholders, the date on which such
amendment is entered into by the Corporation, as authorized by the Board of
Directors, or (c) in cases where neither items (a) nor (b) shall be applicable,
the record date for the determination of shareholders of the Corporation
entitled to notice of and to vote upon the transaction in question. The Board of
Directors shall have the power and duty to determine pursuant to the foregoing
the Date of Determination as to any transaction for purposes of this Article 8.
<PAGE> 10
Any such determination made by the Board of Directors in good faith shall be
conclusive and binding for all purposes of this Article 8.
(7) Fair Market Value. The term "Fair Market Value" shall mean, as of any
date: (a) in the case of stock, either (i) the median of the averages of the
daily high and low sale prices during the 30-day period immediately preceding
such date of a share of such stock on the Composite Tape for New York Stock
Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape,
on the New York Stock Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which such stock is listed; or (ii) if
such stock is not listed on any such exchange, the median of the averages of the
daily closing bid and closing asked quotations on the National Association of
Securities Dealers Automated Quotations System ("NASDAQ") (or any successor
system then in use), or the median of the averages of the daily high and low
sales prices on the NASDAQ National Market System, if applicable, for such stock
during the 30-day period preceding such date, or if no such quotations are then
available, the fair market value as determined in good faith by a majority of
the Continuing Directors; and (b) in the case of property other than cash or
stock, the fair market value of such property on such date as determined in good
faith by a majority of the Continuing Directors.
(8) Outstanding Shares. The term "Outstanding Shares" shall mean any issued
shares of capital stock of the Corporation with the right generally to vote for
the election of Directors, but shall not include any shares (prior to issue)
which may be issuable pursuant to any agreement or upon exercise of conversion
rights, warrants, options or otherwise.
(9) Person. The term "Person" shall mean any individual, partnership,
corporation, group or other entity (other than the Corporation, any Subsidiary
or a trustee holding stock for the benefit of employees of the Corporation or
any Subsidiary, or any one of them, pursuant to one or more employee benefit
plans or arrangements). When two or more Persons act as a partnership, limited
partnership, syndicate, association or other group for the purposes of
acquiring, holding, voting or disposing of Outstanding Shares, such partnership,
syndicate, association, or group shall be deemed a "Person."
(10) Related Person. The term "Related Person" shall mean any Person which,
together with the Affiliates and Associates of such Person, is the Beneficial
Owner as of the Date of Determination or immediately prior to the consummation
of a Business Combination, or both, of at least that number of shares of stock
of the Corporation equal to ten percent (10%) of all of the Outstanding Shares,
but does not include any one or a group of more than one Continuing Director.
The term "Related Person" shall include the Affiliates and Associates of such
Related Person.
(11) Subsidiary. The term "Subsidiary" shall mean any corporation of which a
majority of any class of equity security is owned, directly or indirectly, by
the Corporation.
Section 8.02 Determination of Application of Article 8.
The Board of Directors shall have the power and the duty to determine for the
purposes of Article 8, on the basis of the information known to the Board
<PAGE> 11
of Directors, any fact determinable under this Article 8 and the applicability
of all definitions to transactions contemplated by this Article 8, including but
not limited to the following:
(1) the number of shares of stock of the Corporation owned by a
Person, and
(2) whether a Person is an Affiliate or Associate of another, and
(3) the fair market value, to be determined pursuant to the definition of
"Fair Market Value" contained in Section 8.01(7), of consideration other than
cash received or to be received for Outstanding Shares.
Any such determination shall be conclusive and binding for all purposes of
this Article 8, provided that such determination is approved by a majority of
the Continuing Directors then in office.
Section 8.03 Voting Requirements for Business Combinations with Related
Persons.
Except as set forth in Sections 8.04 and 8.05 of this Article 8, if as of the
Date of Determination with respect to any Business Combination, any Person that
is a party to such Business Combination is a Related Person, the affirmative
vote or consent of the holders of at least seventy-five percent (75%) of all
Outstanding Shares shall be required to approve such Business Combination. Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise, and shall be in
addition to any shareholder vote which would be required without reference to
this Article 8.
Section 8.04 Nonapplicability of Special Voting Requirements.
The provisions of Section 8.03 shall not apply if all of the following
conditions shall have been met, provided, however, that nothing contained in
this Article 8 shall be construed to relieve any Related Person from any
fiduciary obligation imposed by law:
(1) The consideration to be received by the Corporation or per share by
holders of Outstanding Shares shall be in cash or in the same form as the
consideration given by the Related Person in acquiring Outstanding Shares at any
time during the period commencing on the date of the first acquisition by such
Related Person of any Outstanding Shares and ending on and including the date
upon which the Related Person became a Related Person. If the Related Person
paid for Outstanding Shares with varying forms of consideration, the form of
consideration to be received by the Corporation or per share by holders of
Outstanding Shares shall be either cash or the form of consideration used to
acquire the largest number of Outstanding Shares acquired by the Related Person
during such period.
(2) The Fair Market Value of the consideration received in such Business
Combination by the Corporation (analyzed on a per share basis) or per share by
holders of Outstanding Shares is not less than the highest per share price
(including brokerage commissions, transfer taxes and soliciting dealers'
<PAGE> 12
fees) paid by such Related Person in acquiring any of its holdings of
Outstanding Shares.
(3) The ratio of:
(a) the Fair Market Value of the consideration to be received in
such Business Combination by the Corporation (analyzed on a per share basis) or
per share by holders of Outstanding Shares to
(b) the per share market price of Outstanding Shares immediately
prior to the announcement of the Business Combination,
is at least as great as the ratio of
(c) the highest per share price (including brokerage commissions,
transfer taxes and soliciting dealers' fees) which such Related Person has paid
for any of the Outstanding Shares acquired by it prior to the Date of
Determination to
(d) the per share market price of Outstanding Shares immediately
prior to the initial acquisition by such Related Person of any Outstanding
Shares.
(4) The Fair Market Value of consideration to be received in such
Business Combination by the Company (analyzed on a per share basis) or per share
by holders of Outstanding Shares shall not be less than the sum of:
(a) the higher of (i) the highest gross per share price paid or agreed to
be paid by the Related Person to acquire any of the Outstanding Shares of the
Company beneficially owned by such Related Person or (ii) the highest per share
market price for such Outstanding Shares since the Related Person became a
Related Person, plus
(b) an amount equal to the highest price/earnings multiple of the
Company, as customarily computed and reported in the financial community,
attained by the Company during the five fiscal years immediately preceding the
Date of Determination multiplied by the aggregate amount, if any, by which seven
percent (7%) of such higher per share price determined under (a) above exceeds
the smallest quarterly common stock dividend per share (annualized) paid in cash
since the date on which such Related Person became a Related Person.
(5) If the Related Person is a corporation, the Fair Market Value of the
consideration to be received in such Business Combination by the Corporation
(analyzed on a per share basis) or per share by holders of Outstanding Shares
shall be not less than the primary earnings per share of Outstanding Shares
during the four full consecutive fiscal quarters immediately preceding the Date
of Determination for solicitation of votes on such Business Combination
multiplied by the then price/earnings multiple (if any) of the voting common
stock of such Related Person as customarily computed and reported in the
financial community.
<PAGE> 13
(6) The Fair Market Value of the consideration to be received in such
Business Combination by the Corporation (analyzed on a per share basis) or per
share by holders of Outstanding Shares shall not be less than the per share book
value of Outstanding Shares at the end of the most recent fiscal year preceding
the Date of Determination, calculated in accordance with generally accepted
accounting principles.
(7) After such Related Person has become a Related Person and prior to
the consummation of such Business Combination there shall have been (i) no
reduction in the annual dividend from that most recently paid on Outstanding
Shares (except as necessary to reflect any subdivision of the Outstanding Shares
through stock dividend, stock split, or otherwise), except as approved by
two-thirds of the Continuing Directors if such Continuing Directors comprise at
least a majority of the Board of Directors at the time of such approval, and
(ii) an increase in such annual dividend as necessary to reflect any
reclassification (including a reverse stock split), recapitalization,
reorganization or any similar transaction which has the effect of reducing the
number of Outstanding Shares, unless the failure so to increase such annual
dividend is approved by two-thirds of the Continuing Directors and such
Continuing Directors comprise at least a majority of the Board of Directors at
the time of such approval.
(8) After such Related Person has become a Related Person, such Related
Person shall not have received the benefit, directly or indirectly (except
proportionately as a shareholder of the Corporation) of any loans, advances,
guarantees, pledges or other financial assistance or benefit or any tax credits
or other tax advantages provided by the Corporation, whether in anticipation of
or in connection with such Business Combination or otherwise.
Section 8.05 Approval by Continuing Directors.
The provisions of Sections 8.03 shall not be applicable to any particular
Business Combination or other event covered thereby, and such Business
Combination or other event covered thereby shall require only such affirmative
vote as is required by law or in any agreement with any national securities
exchange or otherwise and by any other provision of these Articles of
Incorporation, if both of the following conditions with respect to such Business
Combination or other event shall have been satisfied: (1) the Business
Combination or other event shall have been approved by two-thirds of the
Continuing Directors; and (2) at the time of such approval, Continuing Directors
comprised at least a majority of the Board of Directors.
Section 8.06 Amendment.
The affirmative vote of shareholders required to alter, amend or repeal all or
any part of this Article 8, or to alter, amend, or repeal any other provision of
the Articles of Incorporation of the Corporation in any respect which would or
might have the effect, directly or indirectly, of modifying, permitting any
action inconsistent with, or permitting circumvention of, this Article 8
(including, but not limited to, any amendment of the Articles of Incorporation
which would effect a reclassification of any securities of the Corporation which
has the effect, directly or indirectly, of increasing the proportionate share of
Outstanding Shares, or outstanding shares of any Subsidiary, Beneficially Owned
by a Related Person), shall be at least seventy-five percent (75%) of all of the
Outstanding Shares; provided,
<PAGE> 14
however, that if such proposed alteration, amendment or repeal is approved by
two-thirds of the Continuing Directors and at the time of such approval
Continuing Directors comprise at least a majority of the Board of Directors,
then such proposed alteration, amendment or repeal shall require for approval
only such affirmative vote as is required by law or in any agreement with any
national securities exchange or otherwise and by any other provision of these
Articles of Incorporation. The 75% affirmative vote provided for above shall be
in addition to any shareholder vote which would be required without reference to
this Article 8.
ARTICLE 9
LIMITATIONS ON DIRECTOR LIABILITY
A director of the Corporation shall not be liable to the Corporation or its
shareholders for money damages for any action taken, or any failure to take any
action, as a director, except for (i) the amount of a financial benefit received
by such director to which such director is not entitled: (ii) an intentional
infliction of harm by such director on the Corporation or its shareholders;
(iii) a violation of Section 10-2B-8.33 of the Code of Alabama of 1975 or any
successor provision to such section; (iv) an intentional violation by such
director of criminal law; or (v) a breach of such director's duty of loyalty to
the Corporation or its shareholders. If the Alabama Business Corporation Act, or
any successor statute thereto, is hereafter amended to authorize the further
elimination or limitation of the liability of a director of a Corporation, then
the liability of a director of the Corporation, in addition to the limitations
on liability provided herein, shall be limited to the fullest extent permitted
by the Alabama Business Corporation Act, as amended, or any successor statute
thereto. The limitation on liability of directors of the Corporation contained
herein shall apply to liabilities arising out of acts or omissions occurring
subsequent to the adoption of this Article 9 and, except to the extent
prohibited by law, to liabilities arising out of acts or omissions occurring
prior to the adoption of this Article 9. Any repeal or modification of this
Article 9 by the shareholders of the Corporation shall be prospective only and
shall not adversely affect any limitation of the liability of a director of the
Corporation existing at the time of such repeal or modification.
<PAGE> 1
EXHIBIT 11
ENERGYSOUTH, INC.
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS TWELVE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE: (1)
Earnings applicable to common stock $ 1,989 $ 2,038 $ 8,076 $ 8,865
Weighted average common shares outstanding 4,858 4,838 4,851 4,829
Basic earnings per share $ 0.41 $ 0.42 $ 1.66 $ 1.84
DILUTED EARNINGS PER SHARE: (1)
Earnings applicable to common stock $ 1,989 $ 2,038 $ 8,076 $ 8,865
Weighted average common shares outstanding 4,858 4,838 4,851 4,829
Incremental shares resulting from assumed
exercise of stock options 69 23 49 17
Weighted average common shares outstanding,
assuming dilution 4,927 4,861 4,900 4,846
Diluted earnings per share $ 0.40 $ 0.42 $ 1.65 $ 1.83
</TABLE>
(1) Restated to reflect three-for-two conversion of Mobile Gas common stock
into EnergySouth common stock effective February 2, 1998. See Note 1 of
Notes to Consolidated Financial Statements included in the Company's
Quarterly Report on Form 10-Q for the quarter ended December 31, 1997.
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AND INCOME STATEMENT FOR THE COMPANY FOR THE THREE MONTHS ENDED
DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
COMPANY'S FORM 10-Q FOR THE THREE MONTHS ENDED DECEMBER 31, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 124,519
<OTHER-PROPERTY-AND-INVEST> 1,237
<TOTAL-CURRENT-ASSETS> 19,766
<TOTAL-DEFERRED-CHARGES> 1,302
<OTHER-ASSETS> 6,237
<TOTAL-ASSETS> 153,061
<COMMON> 49
<CAPITAL-SURPLUS-PAID-IN> 17,834
<RETAINED-EARNINGS> 38,399
<TOTAL-COMMON-STOCKHOLDERS-EQ> 56,282
0
0
<LONG-TERM-DEBT-NET> 62,053
<SHORT-TERM-NOTES> 2,500
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 2,471
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 29,755
<TOT-CAPITALIZATION-AND-LIAB> 153,061
<GROSS-OPERATING-REVENUE> 20,074
<INCOME-TAX-EXPENSE> 1,172
<OTHER-OPERATING-EXPENSES> 15,705
<TOTAL-OPERATING-EXPENSES> 16,877
<OPERATING-INCOME-LOSS> 3,197
<OTHER-INCOME-NET> 194
<INCOME-BEFORE-INTEREST-EXPEN> 3,391
<TOTAL-INTEREST-EXPENSE> 1,402
<NET-INCOME> 1,989
0
<EARNINGS-AVAILABLE-FOR-COMM> 1,989
<COMMON-STOCK-DIVIDENDS> 972
<TOTAL-INTEREST-ON-BONDS> 4,973<F1>
<CASH-FLOW-OPERATIONS> (1,596)
<EPS-PRIMARY> .41<F2>
<EPS-DILUTED> .40<F2>
<FN>
<F1>TOTAL INTEREST ON BONDS REPRESENTS INTEREST EXPENSE RELATED TO LONG-TERM
DEBT OUTSTANDING UNDER FIRST MORTGAGE BONDS AND LONG-TERM SECURED NOTES.
<F2>REPRESENTS BASIC AND DILUTED EARNINGS PER SHARE COMPUTED IN ACCORDANCE WITH
SFAS 128 WHICH WAS EFFECTIVE FOR THE QUARTER ENDED DECEMBER 31, 1997. AMOUNTS
HAVE BEEN RESTATED TO REFLECT THREE-FOR-TWO CONVERSION OF MOBILE GAS COMMON
STOCK INTO ENERGYSOUTH COMMON STOCK EFFECTIVE FEBRUARY 2, 1998. SEE NOTE 1
AND NOTE 4 OF NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE
COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31,1997.
</FN>
</TABLE>
