UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period ended March 31, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from ________ to ________
Commission File Number 1-1822
LACLEDE GAS COMPANY
(Exact name of registrant as specified in its charter)
Missouri 43-0368139
(State of Incorporation) (I.R.S. Employer
Identification Number)
720 Olive Street, St. Louis, Missouri 63101
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 314-342-0500
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.
15,631,258 shares, Common Stock, par value $1 per share at 5/10/94.
Index to Exhibits is found on page 21.
Page 1 of 38 <PAGE>
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LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
PART I
FINANCIAL INFORMATION
The interim financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. These financial statements should be
read in conjunction with the financial statements and the notes thereto
included in the Company's Form 10-K for the year ended September 30, 1993.
Page 2<PAGE>
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<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED INCOME
(UNAUDITED)
(In Thousands, Except Per Share Amounts)
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Utility Operating Revenues $233,035 $214,078 $400,280 $374,122
------------------ ------------------
Utility Operating Expenses:
Natural and propane gas 149,133 130,292 253,276 228,917
Other operation expenses 23,306 22,967 44,549 40,842
Maintenance 4,767 4,092 9,388 8,253
Depreciation and amortization 4,803 4,679 9,589 9,324
Taxes, other than income taxes 17,423 16,422 27,632 26,768
Income taxes (Note 3) 11,400 11,885 18,022 18,931
------------------ ------------------
Total Utility Operating Expenses 210,832 190,337 362,456 333,035
------------------ ------------------
Utility Operating Income 22,203 23,741 37,824 41,087
Miscellaneous Income and Income
Deductions - Net (less
applicable income taxes) (Note 3) 453 768 772 1,127
------------------ ------------------
Income Before Interest Charges 22,656 24,509 38,596 42,214
------------------ ------------------
Interest Charges:
Interest on long-term debt 3,136 3,772 6,354 7,610
Other interest charges 875 419 1,677 801
------------------ ------------------
Total Interest Charges 4,011 4,191 8,031 8,411
------------------ ------------------
Net Income 18,645 20,318 30,565 33,803
Dividends on Preferred Stock 25 24 49 48
------------------ ------------------
Earnings Applicable to Common Stock $ 18,620 $ 20,294 $ 30,516 $33,755
================== ==================
Average Number of Common
Shares Outstanding 15,586 15,586 15,586 15,586
Earnings Per Share of Common Stock $1.19 $1.30 $1.96 $2.17
Dividends Declared Per Share
of Common Stock $.305 $.30 $.61 $.60
<FN>
Note: Average Number of Common Shares Outstanding, Earnings Per Share of
Common Stock and Dividends Declared Per Share of Common Stock have
been restated to reflect a 2-for-1 stock split which was on
February 11, 1994.
See notes to consolidated financial statements.
</TABLE>
Page 3<PAGE>
<PAGE>
<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
<CAPTION>
Mar. 31 Sept. 30
1994 1993
---- ----
(Thousands of Dollars)
(UNAUDITED)
ASSETS
<S> <C> <C>
Utility Plant $691,303 $677,613
Less: Accumulated depreciation and amortization 292,213 286,787
--------------------
Net Utility Plant 399,090 390,826
--------------------
Other Property and Investments 23,267 22,668
--------------------
Current Assets:
Cash and cash equivalents 9,717 1,706
Accounts receivable - net 83,808 32,891
Materials, supplies, and merchandise at avg cost 5,366 5,202
Natural gas stored underground for current use
at LIFO cost 9,085 14,079
Propane gas for current use at FIFO cost 12,181 13,657
Prepayments 2,699 1,774
Unamortized purchased gas adjustments 1,366 6,278
Delayed customer billings 27,593 -
--------------------
Total Current Assets 151,815 75,587
--------------------
Deferred Charges 55,780 26,231
--------------------
Total Assets $629,952 $515,312
====================
<FN>
See notes to consolidated financial statements.
</TABLE>
Page 4 <PAGE>
<PAGE>
<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (Continued)
<CAPTION>
Mar. 31 Sept. 30
1994 1993
---- ----
(Thousands of Dollars)
(UNAUDITED)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock (17,452,100 shares issued) $ 17,452 $ 17,452
Paid-in capital 26,250 26,250
Retained earnings 191,261 170,252
Treasury stock, at cost (1,865,638 shares held) (24,017) (24,017)
--------------------
Total common stock equity 210,946 189,937
Redeemable preferred stock 1,960 1,960
Long-term debt (less sinking fund requirements) 154,178 165,745
--------------------
Total Capitalization 367,084 357,642
--------------------
Current Liabilities:
Notes payable 46,000 27,500
Accounts payable 33,344 16,745
Refunds due customers 15,345 214
Advance customer billings - 3,901
Current sinking fund requirements - 391
Taxes accrued 30,057 11,545
Deferred income taxes 465 2,312
Other 26,058 26,589
--------------------
Total Current Liabilities 151,269 89,197
--------------------
Deferred Credits and Other Liabilities:
Deferred income taxes 60,965 36,989
Unamortized investment tax credits 8,518 8,682
Other 42,116 22,802
--------------------
Total Deferred Credits and Other Liabilities 111,599 68,473
--------------------
Total Capitalization and Liabilities $629,952 $515,312
====================
<FN>
See notes to consolidated financial statements.
</TABLE>
Page 5 <PAGE>
<PAGE>
<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Ended
March 31,
1994 1993
---- ----
(Thousands of Dollars)
<S> <C> <C>
Operating Activities:
Net Income $ 30,565 $ 33,803
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 9,623 9,444
Deferred income taxes and investment tax credits (7,665) (6,460)
Other - net 67 40
Changes in assets and liabilities:
Accounts receivable - net (50,917) (52,290)
Unamortized purchased gas adjustments 4,912 2,993
Deferred purchased gas costs 17,017 17,318
Delayed customer billings - net (31,494) (31,755)
Accounts payable 16,599 21,162
Refunds due customers 15,131 (3,342)
Taxes accrued 18,512 18,970
Other assets and liabilities 7,078 4,445
--------------------
Net cash provided by operating activities $ 29,428 $ 14,328
--------------------
Investing Activities:
Construction expenditures $(17,673) $(19,148)
Investments - non-utility (589) (1,597)
Other (2) (440)
--------------------
Net cash used in investing activities $(18,264) $(21,185)
--------------------
Financing Activities:
Issuance of first mortgage bonds $ - $ 40,000
Issuance of short-term debt 18,500 5,000
Dividends paid (9,556) (9,400)
Retirement of first mortgage bonds (11,991) (27,260)
Other (106) (893)
---------------------
Net cash provided by (used in)
financing activities $ (3,153) $ 7,447
---------------------
Net Increase in Cash and Cash Equivalents $ 8,011 $ 590
Cash and Cash Equivalents at Beginning of Period 1,706 3,322
---------------------
Cash and Cash Equivalents at End of Period $ 9,717 $ 3,912
=====================
Supplemental Disclosure of Cash Paid
During the Period for:
Interest $7,742 $7,374
Income taxes 5,477 6,868
<FN>
See notes to consolidated financial statements.
</TABLE>
Page 6<PAGE>
<PAGE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, this interim report includes all
adjustments (consisting only of normal recurring accruals) necessary for
the fair presentation of the results of the periods covered.
2. The registrant is a natural gas distribution utility having a material
seasonal cycle; therefore, this interim statement of consolidated income
is not necessarily indicative of annual results nor representative of
succeeding quarters of the fiscal year.
3. The Company implemented Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes", effective October 1,
1993, without restating previously issued financial statements. SFAS
No. 109 prescribes the liability method of accounting for income taxes,
which required the Company to recognize additional deferred tax assets
and liabilities for certain temporary differences and to adjust deferred
tax accounts for changes in income tax rates.
SFAS No. 109 did not have a material impact on the Company's cash flows
or results of operations due to the effect of rate regulation.
Substantially all of the adjustments required by SFAS No. 109 were
recorded to deferred tax balance sheet accounts, with offsetting
adjustments to regulatory assets and liabilities. At October 1, 1993
the cumulative effect of adopting SFAS No. 109 was an increase in net
deferred tax liabilities of $30.2 million, and recognition of a net
regulatory asset of $30.2 million.
The deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. The tax effects of significant items comprising the
Company's net deferred tax liability as of October 1, 1993 are as
follows:
Thousands of Dollars
Deferred tax liabilities:
Depreciation and other differences between book
and tax basis of property $80,285
Pension income recognition 8,039
Other 3,057
-------
Total deferred tax liabilities 91,381
-------
Deferred tax assets:
Reserves not currently deductible 12,486
Unamortized investment tax credit 5,491
Other 1,727
-------
Total deferred tax assets 19,704
-------
Net deferred tax liability 71,677
Less: Net deferred tax liability - current 2,312
-------
Net deferred tax liability - non-current $69,365
-------
Page 7 <PAGE>
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Net provisions for income taxes were charged (credited) as follows
during the periods set forth below:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
------------------ -----------------
1994 1993 1994 1993
---- ---- ---- ----
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Utility Operations
Current:
Federal $14,647 $15,943 $22,035 $22,799
State and local 2,472 1,784 3,716 2,583
Deferred:
Federal (4,957) (5,314) (6,690) (5,893)
State and local (762) (528) (1,039) (558)
------------------ -----------------
Subtotal $11,400 $11,885 $18,022 $18,931
------------------ -----------------
Miscellaneous Income and
Income Deductions
Current:
Federal $ 173 $ 564 $ 208 $ 654
State and local 10 48 (15) 45
Deferred:
Federal (3) (5) 59 (9)
State and local - - 6 -
------------------ -----------------
Subtotal $ 180 $ 607 $ 258 $ 690
------------------ -----------------
Total $11,580 $12,492 $18,280 $19,621
================== =================
</TABLE>
4. The Company adopted Statement of Financial Accounting Standard (SFAS)
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" in the first quarter of fiscal year 1994. Under the
provisions of SFAS No. 106, the estimated future cost of providing these
postretirement benefits is recognized as an expense and a liability
during the employees' service periods. As permitted by SFAS No. 106,
the liability for any unfunded accumulated postretirement benefit
obligations existing at October 1, 1993, the date of initial application
of the standard, is being recognized as a transition obligation and
amortized over 20 years. The net postretirement benefit cost for fiscal
1994 is currently estimated to be $6.1 million, which represents a $1.9
million increase over estimated pay-as-you-go costs.
Page 8<PAGE>
<PAGE>
Net postretirement benefit cost for the six months ended March 31,
1994, including amounts charged to construction, consisted of the
following components:
<TABLE>
<CAPTION>
Thousands of Dollars
<S> <C>
Service Cost $ 742
Interest cost on projected benefit
obligation 1,440
Amortization transition obligation 849
-------
Net cost $ 3,031
=======
</TABLE>
The funded status of the plans at October 1, 1993 is as follows:
Accumulated postretirement benefit obligation:
<TABLE>
<CAPTION>
Thousands of Dollars
<S> <C>
Retirees $17,101
Active employees 21,840
-------
38,941
Unrecognized transition obligation 33,963
-------
Accrued postretirement benefit cost $ 4,978
=======
</TABLE>
The Company provides life insurance benefits to all employees after
retirement and medical insurance is available after early retirement
until age 65. The medical insurance represents approximately two-thirds
of the Company's SFAS No. 106 costs. The assumed health care cost trend
rate used in measuring the accumulated postretirement benefit obligation
was 10% for 1994, gradually decreasing each successive year until it
reaches 5% in 1998. A one percent increase in the assumed health care
cost trend rate for each year would increase the accumulated
postretirement benefit cost as of October 1, 1993, by 4.9% and the sum
of the service cost and interest cost by approximately 6.3%. The
weighted-average discount rate and weighted-average rate of future
compensation used in determining the accumulated postretirement benefit
obligation was 7.5% and 4.5%, respectively.
In its 1992 rate case, the Company was authorized by the Missouri Public
Service Commission (MoPSC) to defer as a regulatory asset the difference
between the accrued costs calculated under the provisions of SFAS No.
106 and the actual pay-as-you-go costs. The amounts deferred would be
recovered in rates when the benefits are actually paid. However, in
January 1993, the Emerging Issues Task Force (EITF) reached a consensus
requiring more stringent accounting criteria necessary to record a
regulatory asset. The EITF would permit, among other things, rate
regulated entities, such as the Company, to defer for as long as five
years the difference between the accrual method and pay-as-you-go costs
provided that the Company's ratemaking treatment allows deferred costs
Page 9 <PAGE>
<PAGE>
to be fully recovered in the subsequent fifteen-year period. Since the
1992 MoPSC authorization is not in conformity with the 1993 EITF
consensus, the Company has not recorded a regulatory asset. However, the
Company is continuing to review this matter to determine what actions,
if any, would be required to permit it to establish a regulatory asset
or to provide full recovery of SFAS No. 106 costs in rates.
5. The Company is subject to various federal, state and local laws and
regulations relating to the environment, which thus far have not had a
material effect on the Company's financial position or results of
operations. Prior to the widespread availability of natural gas, the
Company operated various manufactured gas plants to produce gas as a
source of fuel for lighting, cooking and heating. The Company closed
the last of such plants in 1961. The process for manufacturing gas
produced by-products and residuals, including hydrocarbons such as lamp
black and coal tar. Certain remnants of these residuals are typically
found at former gas manufacturing sites. The United States
Environmental Protection Agency (the "EPA") has been engaged in a survey
of a large number of former manufactured gas plant sites across the
nation.
In this regard, the Company and the EPA have information which indicates
the presence of manufactured gas residuals on one of the former
manufactured gas plant sites operated by the Company. While no
conclusion has been reached as to the extent of any remedial action that
will be required, the Company is working with environmental authorities
to develop a positive environmental response with respect to this site.
In this vein, the Company and the EPA have entered into an
Administrative Order on Consent ("AOC"), effective March 31, 1994, with
regard to this site, which AOC provides for the Company to conduct
certain investigative activities, i.e. a removal site evaluation and an
engineering evaluation cost analysis, and to reimburse the EPA for past
response costs of $3,773 and for future response costs under the AOC.
The AOC requires only investigations and does not cover any removal
action. If the above investigations indicate that remedial action is
necessary, then a subsequent order will cover such action. Based on
currently available information, it is believed that the costs of the
foregoing investigations, together with the past and future response
costs of the EPA in overseeing such investigations, and other associated
legal and engineering consulting costs, are likely to approximate
$335,000 and the Company has established a reserve in that amount in its
financial statements.
In the absence of the results of the above-referenced investigations,
the Company is presently unable to evaluate and quantify further the
scope or cost of any environmental response activity. The Company has
notified its insurers that the Company intends to seek reimbursement
from them of its investigation, remediation, clean-up and defense costs
in regard to the foregoing. In addition to pursuing insurance proceeds
to the extent feasible, the Company also plans to seek recovery in this
regard, if practicable, from any other potentially responsible parties,
and the Company will also apply for appropriate rate recovery.
Page 10<PAGE>
<PAGE>
The Company is involved in litigation, claims, and investigations
arising in the normal course of business. While the results of such
litigation cannot be predicted with certainty, management, after
discussion with counsel, believes the final outcome will not have a
material adverse effect on the consolidated financial position and
results of operations reflected in the finanical statements presented
herein.
6. At the Annual Meeting held January 27, 1994, the Company's share owners
approved an amendment increasing the authorized Common Stock to 50
million shares with a new par value of $1.00 per share and reclassifying
the par value of the outstanding Common Stock from $2.00 to $1.00 per
share. These changes were approved in connection with a 2-for-1 stock
split as authorized by the Board of Directors, which was effective
on February 11, 1994. New stock certificates were distributed on
March 7, 1994.
Share owners also approved an amendment to the Company's Dividend
Reinvestment Plan to permit cash purchases of common stock through the
Plan, with a minimum purchase of $100 per calendar quarter up to a
maximum purchase of $30,000 per calendar year. The amendment also
provides for the issuance of common shares by the Company to provide
shares purchased under the Plan. The Company filed a Registration
Statement for the Plan with the Securities and Exchange Commission on
February 22, 1994.
The Missouri Public Service Commission granted the necessary approvals
of the stock split and Plan amendments by order dated January 14, 1994.
7. This Form 10-Q should be read in conjunction with the Notes to
Consolidated Financial Statements contained in the Company's 1993 Form
10-K.
Page 11 <PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
RESULTS OF OPERATIONS
Earnings for the quarter ended March 31, 1994 were $1.19 per share
compared with $1.30 per share for the quarter ended March 31, 1993. The
results set out in this report and the comparative prior period reflect the
2-for-1 stock split which became effective February 11, 1994. The weather
for the quarter was 5% warmer than last year and 2% warmer than normal. The
decrease in earnings is primarily attributable to lower gas sales resulting
from warmer weather and higher costs of doing business.
Utility operating revenues for the second quarter of fiscal year 1994
were $233.1 million compared with $214.1 for the same quarter last year.
The $19.0 million, or 8.9%, increase is principally due to higher wholesale
gas costs which are passed on to Laclede's customers under the Company's
Purchased Gas Adjustment Clause, slightly offset by lower therm sales
related to the warmer weather. Therms sold and transported decreased by
13.0 million therms, or 2.7%, below the quarter ended March 31, 1993.
Utility operating expenses for the quarter ended March 31, 1994
increased by $20.5 million, or 10.8%, above the same quarter last year.
Natural and propane gas expense this quarter increased $18.8 million, or
14.5%, above last year mainly due to higher rates charged by our suppliers,
partially offset by decreased volumes purchased for sendout resulting from
the warmer weather. Other operation and maintenance expenses increased $1.0
million, or 3.7%, primarily due to increased pension expense reflecting the
recognition of gain applicable to lump-sum settlements during the same
quarter ended March 31, 1993 (no gain was recognized during the quarter
ended March 31, 1994), higher wage rates, and increased maintenance charges.
These increases were partially offset by a lower provision for uncollectible
accounts. Depreciation and amortization expense increased 2.7% due to
additional property. Taxes, other than income taxes, increased 6.1%
primarily due to higher gross receipts taxes (reflecting increased
revenues), partially offset by lower property taxes this quarter. The $.5
million decrease in income taxes is principally due to lower taxable income
and tax adjustments made last year, the impact of which was partially offset
by higher tax rates.
The 4.3% decrease in interest charges is mainly due to reduced long-term
debt (reflecting reductions in certain long-term debt issues, partially
offset by the issuance of $25 million of 6-1/4% First Mortgage Bonds in May,
1993), largely offset by higher short-term interest expense arising from
increased short-term borrowings.
Earnings for the six months ended March 31, 1994 were $1.96 per share
compared with earnings of $2.17 per share for the same period last year,
restated for the stock split. The weather for the six-month period this
year was 2% warmer than last year and 1% warmer than normal. The decrease
in earnings is primarily due to higher costs of doing business and, to a
lesser extent, lower gas sales resulting from slightly warmer weather. It
is important to realize that due to the seasonal nature of our business, the
Company's earnings are concentrated during the first six months of the
fiscal year, typically reaching a peak level at the conclusion of the
heating season. As sales volumes decline in subsequent months, the Company
experiences losses in the second half of the fiscal year.
Page 12<PAGE>
<PAGE>
Utility operating revenues for the first six months of fiscal year 1994
increased by $26.2 million, or 7.0%, above the corresponding period of
fiscal year 1993. This increase is principally due to increased wholesale
gas costs which are passed on to our customers under the Company's Purchased
Gas Adjustment Clause, partially offset by the warmer weather. Therms sold
and transported increased by .9 million, or .1%, above the level during the
six months ended March 31, 1993.
Utility operating expenses for the six months ended March 31, 1994
increased by $29.4 million, or 8.8%, above last year. Natural and propane
gas expense during the first six months of fiscal year 1994 increased $24.4
million, or 10.6%, above the same period a year ago. This increase is
principally due to higher rates charged by our suppliers. The $4.8 million,
or 9.9%, increase in other operation and maintenance expenses is principally
due to increased pension expense reflecting the recognition of gain
applicable to lump-sum settlements during the same six-month period ended
March 31, 1993 (no gain was recognized during the same six-month period
ended March 31, 1994) higher wage rates, and increased maintenance charges.
These increases were partially offset by a lower provision for
uncollectible accounts. Depreciation and amortization expense increased
2.8% due to additional property. Taxes, other than income taxes, increased
3.2% primarily due to higher gross receipts taxes (reflecting increased
revenues), partially offset by lower property taxes. The $.9 million
decrease in income taxes is principally due to lower taxable income, the
effect of which was partially offset by higher tax rates.
The 4.5% decrease in interest charges is mainly due to reduced long-term
debt (reflecting reductions in certain long-term debt issues, partially
offset by the effect of the issuance of $40 million of 7-1/2% First Mortgage
Bonds in November, 1992 and the issuance of $25 million of 6-1/4% First
Mortgage Bonds in May, 1993), largely offset by higher short-term interest
expense arising from increased short-term borrowings.
The Company filed a request with the Missouri Public Service Commission
(MoPSC) on January 14, 1994 seeking approval of a general rate increase
which would add $27.1 million to operating revenues on an annual basis. The
proposed increased rates have been suspended by the MoPSC pending formal
hearings before the Commission which are currently scheduled to commence in
August 1994. Under Missouri law, the Commission is required to act on our
request prior to December 14, 1994.
The Company adopted Statement of Financial Accounting Standard (SFAS)
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" in the first quarter of fiscal year 1994. Under the provisions of
SFAS No. 106, the estimated future cost of providing these postretirement
benefits is recognized as an expense and a liability during the employees'
service periods. As permitted by SFAS No. 106, the liability for any
unfunded accumulated postretirement benefit obligations existing at October
1, 1993, the date of initial application of the standard, is being
recognized as a transition obligation and amortized over 20 years. The net
postretirement benefit cost for fiscal 1994 is currently estimated to be
$6.1 million, which represents a $1.9 million increase over estimated pay-
as-you-go costs. In its 1992 rate case, the Company was authorized by the
Missouri Public Service Commission (MoPSC) to defer as a regulatory asset
the difference between the accrued costs calculated under the provisions of
SFAS No. 106 and the actual pay-as-you-go costs. The amounts deferred would
be recovered in rates when the benefits are actually paid. However, in
Page 13<PAGE>
<PAGE>
January 1993, the Emerging Issues Task Force (EITF) reached a consensus
requiring more stringent accounting criteria necessary to record a
regulatory asset. The EITF would permit, among other things, rate regulated
entities, such as the Company, to defer for as long as five years the
difference between the accrual method and pay-as-you-go costs provided that
the Company's ratemaking treatment allows deferred costs to be fully
recovered in the subsequent fifteen-year period. Since the 1992 MoPSC
authorization is not in conformity with the 1993 EITF consensus, the Company
has not recorded a regulatory asset. However, the Company is continuing to
review this matter to determine what actions, if any, would be required to
permit it to establish a regulatory asset or to provide full recovery of
SFAS No. 106 costs in rates.
The Company implemented Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes", effective October 1, 1993,
without restating previously issued financial statements. SFAS No. 109
prescribes the liability method of accounting for income taxes, which
required the Company to recognize additional deferred tax assets and
liabilities for certain temporary differences and to adjust deferred tax
accounts for changes in income tax rates.
SFAS No. 109 did not have a material impact on the Company's cash flows
or results of operations due to the effect of rate regulation.
Substantially all of the adjustments required by SFAS No. 109 were recorded
to deferred tax balance sheet accounts, with offsetting adjustments to
regulatory assets and liabilities. At October 1, 1993 the cumulative effect
of adopting SFAS 109 was an increase in net deferred tax liabilities of
$30.2 million, and recognition of a net regulatory asset of $30.2 million.
LIQUIDITY AND CAPITAL RESOURCES
The Company's short-term borrowing requirements typically peak during
colder months, principally because of required payments for natural gas made
in advance of the receipt of cash from our customers for the sale of that
gas. Such short-term borrowing requirements have traditionally been met
through the sale of commercial paper supported by lines of credit with
banks. In January 1994, the Company entered into new bank credit agreements
under which it may borrow up to $40 million prior to January 31, 1995, with
renewal of any loans outstanding (at January 31, 1995) permitted up to
June 30, 1995. These agreements also provide for an additional $15 million
during the period of peak credit requirements (from January 20, 1994 to
January 27, 1994), and a further extension until February 28, 1994 with
respect to $5 million of the additional $15 million lines of credit.
The Company had previously obtained supplemental lines of credit (on
October 18, 1993) totalling $40 million for the period from October 18, 1993
to April 18, 1994. This resulted in lines of credit for the 1993-1994
heating season totalling $95 million to January 27, 1994, $85 million to
February 28, 1994 and $80 million to April 18, 1994.
Recently, the Company amended the October 18, 1993 agreements, which
would have expired on April 18, 1994, to reduce the supplemental lines of
credit thereunder to $20 million and extend these lines of credit until
August 18, 1994. This results in current total lines of credit aggregating
$60 million.
Page 14<PAGE>
<PAGE>
During the first six months of fiscal 1994, the Company sold commercial
paper aggregating to a maximum of $95 million on January 20, 1994, but did
not borrow from the banks under the above mentioned agreements. Short-term
borrowings amounted to $30 million at April 30, 1994.
On January 27, 1994, a proposal to amend Article III-A of the Company's
Articles of Incorporation was approved at the annual meeting of share
owners. This amendment increased the Company's authorized common stock to
50 million shares with a new par value of $1.00 per share and reclassified
the par value of the Company's outstanding common stock from $2.00 per share
to $1.00 per share. These changes were approved in connection with a
planned 2-for-1 common stock split, which was effective on February 11,
1994. New stock certificates were distributed on March 7, 1994.
Share owners also approved an amendment to the Dividend Reinvestment
Plan to permit cash purchases of common stock through the Plan, with a
minimum purchase of $100 per calendar quarter up to a maximum purchase of
$30,000 per calendar year. The amendment also provides for the issuance of
common shares by the Company to provide shares purchased under the Plan.
The Company filed a Registration Statement for the Plan with the Securities
and Exchange Commission on February 22, 1994. The Missouri Public Service
Commission granted the necessary approvals of the stock split and Plan
amendments by order dated January 14, 1994.
The Company is subject to various federal, state and local laws and
regulations relating to the environment, which thus far have not had a
material effect on the Company's financial position or results of
operations. Prior to the widespread availability of natural gas, the
Company operated various manufactured gas plants to produce gas as a source
of fuel for lighting, cooking and heating. The Company closed the last of
such plants in 1961. The process for manufacturing gas produced by-products
and residuals, including hydrocarbons such as lamp black and coal tar.
Certain remnants of these residuals are typically found at former gas
manufacturing sites. The United States Environmental Protection Agency (the
"EPA") has been engaged in a survey of a large number of former manufactured
gas plant sites across the nation.
In this regard, the Company and the EPA have information which indicates
the presence of manufactured gas residuals on one of the former manufactured
gas plant sites operated by the Company. While no conclusion has been
reached as to the extent of any remedial action that will be required, the
Company is working with environmental authorities to develop a positive
environmental response with respect to this site. In this vein, the Company
and the EPA have entered into an Administrative Order on Consent ("AOC"),
effective March 31, 1994, with regard to this site, which AOC provides for
the Company to conduct certain investigative activities, i.e. a removal site
evaluation and an engineering evaluation cost analysis, and to reimburse the
EPA for past response costs of $3,773 and for future response costs under
the AOC. The AOC requires only investigations and does not cover any
removal action. If the above investigations indicate that remedial action
is necessary, then a subsequent order will cover such action. Based on
currently available information, it is believed that the costs of the
foregoing investigations, together with the past and future response costs
of the EPA in overseeing such investigations, and other associated legal and
engineering consulting costs, are likely to approximate $335,000 and the
Company has established a reserve in that amount in its financial
statements.
Page 15<PAGE>
<PAGE>
In the absence of the results of the above-referenced investigations,
the Company is presently unable to evaluate and quantify further the scope
or cost of any environmental response activity. The Company has notified
its insurers that the Company intends to seek reimbursement from them of its
investigation, remediation, clean-up and defense costs in regard to the
foregoing. In addition to pursuing insurance proceeds to the extent
feasible, the Company also plans to seek recovery in this regard, if
practicable, from any other potentially responsible parties, and the Company
will also apply for appropriate rate recovery.
Construction expenditures for the six months ended March 31, 1994 were
$17.7 million compared with $19.1 million for the same period last year.
Capitalization at March 31, 1994 (excluding current redemption
requirements of long-term debt) increased $9.4 million since September 30,
1993 and consisted of 57.5% common stock equity, .5% preferred stock and
42.0% long-term debt.
The seasonal effect of the Company's financial position affects the
comparison of certain balance sheet items at March 31, 1994 and at September
30, 1993 such as Gas Accounts Receivable - Net, Notes Payable and Accounts
Payable.
Page 16<PAGE>
<PAGE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
Part II
OTHER INFORMATION
Page 17<PAGE>
<PAGE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
Item 1. Legal Proceedings
During the quarter ended March 31, 1994, there were no new legal
proceedings required to be disclosed. In addition, for discussion
of environmental matters, see Note 5 to the consolidated financial
statements.
Item 4. Submission of Matters to Vote of Security Holders
The Annual Meeting of Stockholders of Laclede Gas Company was
held on January 27, 1994, for the purpose of electing three
directors to the board of directors, ratifying the appointment of
independent auditors, approving a charter amendment to, among other
things, effect on February 11, 1994 a stock split whereby an
additional share would be issued for each then issued share and
approving certain amendments to the Company's Dividend Reinvestment
Program. Proxies for the meeting were solicited pursuant to
Section 14(a) of the Exchange Act of 1934.
All of management's nominees for directors listed in the proxy
statement were unopposed and were elected upon the following votes:
Name of Shares Shares Voted
Director Nominee Voted For Withheld
---------------- --------- -----------
Andrew B. Craig, III 6,009,378 176,130
C. Ray Holman 6,083,321 176,130
William E. Nasser 6,080,378 176,130
The proposal to ratify the appointment of Deloitte and Touche,
Certified Public Accountants, to audit the accounts of the Company
for the fiscal year ending September 30, 1994 was passed upon the
following vote:
Shares Voted:
------------
For the proposal 6,152,998
Against the proposal 35,591
Abstain from the proposal 67,568
Page 18 <PAGE>
<PAGE>
The proposal to amend ARTICLE III-A of the Articles of
Incorporation of the Company: to increase the Company's authorized
Common Stock to 50 million shares with a new par value of $1.00 per
share, and to reclassify the par value of the Company's outstanding
Common Stock from $2.00 per share to $1.00 per share; in connection
with a proposed two-for-one stock split (as more particularly
described in the Proxy Statement) was approved upon the following
vote:
Shares Voted:
------------
For the proposal 6,070,166
Against the proposal 51,151
Abstain from the proposal 71,864
The proposal to amend the Company's Dividend Reinvestment Program
and to issue stock thereunder (as more particularly described in
the Proxy Statement) was approved upon the following vote:
Shares Voted:
------------
For the proposal 5,798,681
Against the proposal 115,151
Abstain from the proposal 279,250
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the quarter ended
March 31, 1994.
Page 19 <PAGE>
<PAGE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
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.
LACLEDE GAS COMPANY
Date: May 11, 1994 R. J. CARROLL
-------------------
R. J. Carroll
Sr. Vice President - FInance
(Authorized Signatory and
Chief Financial Officer)
Page 20 <PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit Page
- ----------- ------- ----
3.01* Articles of Incorporation, as amended on
February 11, 1994, filed on February 22,
1994 as Exhibit 4(b) to the Company's
Registration Statement No. 33-52357.
10.1 Laclede Gas Company Management Continuity 22
Protection Plan as amended, effective at the
close of business on January 27, 1994, by
the Board of Directors.
10.2 January 19, 1994 line of credit agreement 26
with Mercantile Bank of St. Louis, N.A.
10.3 January 10, 1994 line of credit agreement 28
with The Boatmen's National Bank of
St. Louis.
10.4 January 20, 1994 line of credit agreement 29
with Commerce Bank of St. Louis, N.A.
10.5 January 10, 1994 line of credit agreement 31
with Chemical Bank.
10.6 October 18, 1993 line of credit agreement 32
with Chemical Bank, The Boatmen's National
Bank of St. Louis and Mercantile Bank, N.A.
Page 21 <PAGE>
MANAGEMENT CONTINUITY PROTECTION PLAN
(As of February 24, 1994)
I. Participants
All officers of the Company. It is contemplated
that the features set forth below would be incorporated in
agreements to be entered into between the Company and
each of such officers.
II. Change In Control
Change In Control occurs if and when any "person"
(as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) is or becomes a
beneficial owner, directly or indirectly, of securities
of Laclede representing more than fifty percent (50%) of
the combined voting power of Laclede's then outstanding
securities or when any such person becomes a beneficial
owner, directly or indirectly, of at least thirty
percent (30%) and no more than fifty percent (50%) of
such securities and a majority of the outside members of
the Board of Directors decides that a de facto Change in
Control has occurred.
III. Termination For "Cause"
Termination For "Cause" shall be limited to, and
include, only the following: (1) the irreversible
incapacity or disability of a Participant for a period
I. Amended 2/24/94
Page 22 <PAGE>
<PAGE>
of six (6) months which renders him unable to perform
the services for which he is employed; (2) any conduct
of Participant in the performance of the services to be
rendered by him and for which he has been employed which
involves moral turpitude on his part; or (3) the death
of the Participant.
IV. Benefits
If, following a Change In Control, the Participant
is either terminated (other than for "Cause"), resigns, or
retires, such Participant shall be entitled to receive
at such time a non-discounted lump sum in an amount
equal to the average annual compensation paid to
Participant for the five-year period immediately
preceding cessation of employment by Participant (as
described in Section 280G(b) (3)(A) of the Internal
Revenue Code of 1986, as amended), multiplied by:
(1) in the case of the President or of the Executive
Vice President, 2.99 times; or (2) in the case of all
other Participants, 2.00 times. In the event
Participant remains employed by the Company*
---------------
*For purposes of this Plan, employment with the Company
shall also include employment with any successor of the
Company (or with any affiliate of the Company, or affiliate
of such successor) following a Change in Control.
Page 23<PAGE>
<PAGE>
subsequent to the Change In Control for a period beyond
six (6) months following such Change In Control, the
above benefit shall be reduced as follows: (1) in the
case of the President or of the Executive Vice
President, for each month beyond six months he is
employed with the Company subsequent to a Change In
Control the benefit shall be reduced 1/48; or (2) in the
case of all other Participants, such benefit shall be
reduced for each month beyond six months he is employed
with the Company subsequent to a Change In Control by
1/36. However, notwithstanding the above, in no event
shall the benefit be greater than an amount equal to the
average monthly compensation paid to Participant for the
five-year period immediately preceding cessation of
employment multiplied by the number of months remaining
from such date of cessation of employment until the date
upon which the Participant would have been 65 years of
age.
Moreover, notwithstanding the above, to the extent, if
any, that any payment or distribution of any portion of
the benefit described above would trigger any adverse
tax consequences under Section 280G of the Internal
Revenue Code of 1986, as amended, or Section 4999 of
said Internal Revenue Code, as amended, such as loss of
deductions to the Company, or the payment of an
additional excise tax by the Participant, or both, then
Page 24<PAGE>
<PAGE>
the benefit shall be reduced to that extent, and to no
greater extent.
Page 25
January 19, 1994
Mr. Vernon O. Steinberg
Treasurer and Assistant Secretary
Laclede Gas Company
720 Olive Street
St. Louis, MO 63101
Dear Vernon:
Mercantile Bank of St. Louis N.A. is pleased to provide a
$15,000,000 line of credit until February 28, 1994, reducing
to a $10,000,000 line of credit maturing January 31, 1995 to
Laclede Gas Company for general corporate purposes and for
commercial paper backup.
All borrowings will be priced, at your option, at
Mercantile's Prime rate, floating, IBOR adjusted + 3/8%, or
CD's adjusted + 1/2% for available maturities to 90 days.
Notes issued under this line shall not exceed 90 days. If a
note is outstanding with a maturity before January 31, 1995,
the note shall be renewed in whole or in part provided no
note shall mature later than June 30, 1995.
Interest shall be payable at maturity or on date of prepay-
ment. Interest shall be computed on the basis of actual
365/366 for prime borrowings and actual 360 basis for IBOR of
CD loans. Notes insured may be prepaid at any time without
penalty, subject to standard funding loss provisions.
We may terminate this agreement at any time if we determine,
in good faith, that we are not satisfied with your condi-
tions, operations or performance, financial or otherwise.
It is understood that any loans obtained by any subsidiary of
Laclede Gas Company, whether or not they are guaranteed by
Laclede Gas Company, are excluded from this agreement and
shall not be charged against the line of credit described
above.
Nothing in this letter is intended to alter the arrangements
set forth in the agreement dated October 18, 1993, or the
availability of up to $10,000,000 of advances thereunder from
Mercantile Bank of St. Louis N.A. on the terms set forth in
said October 18, 1993 agreement.
Page 26 <PAGE>
<PAGE>
Page 2
Laclede Gas Company
We appreciate the opportunity to service your credit needs
and to continue the long-standing relationship between our
companies. If the foregoing is acceptable to you, please
sign and date below.
Sincerely,
Edward A. Cheney
Accepted this 19th day of January, 1994
LACLEDE GAS COMPANY
By: Vernon O. Steinberg
Name: Vernon O. Steinberg
Title: Treasurer and Assistant Secretary
Page 27
January 10, 1994
The Boatmen's National Bank of St. Louis
One Boatmen's Plaza, 13th Floor
800 Market Street
St. Louis, Missouri 63102
Gentlemen:
In order to help finance our construction through January 31, 1995,
and to provide funds for general corporate purposes, we are asking you to
make available to us until January 31, 1995, bank credit in the amount of
$10,000,000.00 and a short term step-up provision for additional bank
credit in the amount of $10,000,000.00 from January 20, 1994 to
January 27, 1994.
Notes issued under this agreement shall mature not more than ninety
(90) days from date. Notes maturing after January 31, 1995, may be
renewed in whole or in part provided no note shall mature later than
June 30, 1995. The notes shall bear interest at your lowest rate
extended to the most credit-worthy commercial and industrial borrowers
for ninety (90) day maturities effective at the time of each borrowing or
renewal. Interest shall be payable at maturity or on the date of any
prepayment. Notes issued under this agreement may be prepaid at any time
without penalty.
It is understood that any loans obtained by any subsidiary of
Laclede Gas Company whether or not they are guaranteed by Laclede Gas
Company are excluded from this agreement and shall not be charged against
the credit stated above.
Nothing in this letter is intended to alter the arrangements set
forth in the agreement dated October 18, 1993, or the availability of up
to $10,000,000.00 of advances thereunder from The Boatmen's National Bank
on the terms set forth in said October 18, 1993 agreement.
If the foregoing is acceptable to you, will you kindly sign in the
space indicated below, and this shall then constitute an agreement
between us.
Yours very truly,
LACLEDE GAS COMPANY
By Vernon O. Steinberg
------------------------------
Treasurer and Assistant Secretary
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
By Thomas Guyton
-----------------------
Page 28
January 20, 1994
Mr. Vernon O. Steinberg
Treasurer
Laclede Gas Company
720 Olive Street
St. Louis, Mo. 63101
Dear Mr. Steinberg:
Commerce Bank of St. Louis, N.A., ("Bank") is pleased to
offer a line of credit to Laclede Gas Company ("Borrower")
under the following terms and conditions. Accordingly, our
officers may, at their discretion, make short-term loans to
Laclede Gas Company up to $10,000,000 on such terms as may be
mutually agreed upon from time to time.
Purpose: Working capital.
Amount: Up to $10,000,000 (Ten Million Dollars).
Interest
Rate: Prime rate of Bank or such lesser rate that
may be agreed upon at the time of funding.
Term: Until January 31, 1995.
Method of
Borrowing &
Repayment: Advances shall be evidenced by separate notes
and each note issued under this arrangement
shall mature not more than ninety (90) days
from note date. Notes maturing after
January 31, 1995, may be renewed in whole or
part provided no note matures later than
June 30, 1995. Interest shall be payable at
maturity or on the date of any prepayment.
Notes issued under this arrangement may be
prepaid at any time without penalty.
Collateral: Unsecured.
Page 29<PAGE>
<PAGE>
Vernon O. Steinberg
January 20, 1994
Page 2
Other: Execution of note(s) in form acceptable to
Bank. It is understood that any loans
obtained by any subsidiary of Borrower whether
or not they are guaranteed by Borrower are
excluded from this agreement and shall not be
charged against the amount stated above.
Oral agreements or commitments to loan money, extend credit
or to forbear from enforcing repayment of a debt, including
promises to extend or renew such debt, are not enforceable.
To protect you (borrower(s)) and us (creditor) from
misunderstanding or disappointment, any agreements we reach
covering such matters are contained in this writing, which is
the complete and exclusive statement of the agreement between
us as we may later agree in writing to modify it. By signing
below, you and we agree that there are no unwritten oral
agreements between us.
This offer shall automatically expire upon the Borrower's
failure to accept this offer within 15 days of the date of
this letter.
If the aforementioned terms and conditions are satisfactory,
please indicate the Borrower's acceptance and approval of
same by signing and returning the original of this letter.
We are pleased to be able to provide this service and look
forward to expanding our relationship.
Sincerely,
William A. Springer
Assistant Vice President
Accepted this 21st day of January, 1994
Laclede Gas Company
By: Vernon O. Steinberg
---------------------------
Treasurer
January 20, 1994
Page 30
January 10, 1994
Mr. Vernon O. Steinberg
Treasurer and Assistant Secretary
Laclede Gas Company
720 Olive Street
St. Louis, Missouri 63101
Dear Vern:
In order to provide funds for general corporate purposes, we
are happy to make available to you until January 31, 1995, a
line of credit in the amount of $10,000,000. Accordingly,
our officers may, at their discretion, make short term loans
to Laclede Gas Company up to $10,000,000 on such terms as may
be mutually agreed upon from time to time.
Notes issued under this arrangement shall mature not more
than ninety (90) days from date of issuance. Notes maturing
after January 31, 1995 may be renewed in whole or in part
provided no notes matures later than June 30, 1995. Interest
shall be payable at maturity or on the date of any prepay-
ment. Notes issued under this arrangement may be prepaid at
any time without penalty.
We ask that you continue to supply us with current financial
and other information, which current information will be
furnished to the Bank as it may from time to time reasonably
request.
It is understood that any loans obtained by any subsidiary of
Laclede Gas Company whether or not they are guaranteed by
Laclede Gas Company are excluded from this arrangement and
shall not be charged against the credit stated above.
Nothing in this letter is intended to alter the arrangement
set forth in the agreement dated October 18, 1993 or the
availability of up to $20,000,000 of advances thereunder from
Chemical Bank on the terms set forth in said October 18, 1993
Agreement.
We continue to appreciate the opportunity to do business with
Laclede.
Very truly yours,
Marisa J. Harrey
Vice President
Banking and Corporate Finance
Chemical Bank
Page 31
October 18, 1993
Laclede Gas Company
720 Olive Street
St Louis, Missouri 63101
Ladies and Gentlemen:
We are pleased to advise you that the undersigned
banks (each a "Bank" and collectively the "Banks") have
established for Laclede Gas Company (the "Company") a
committed line of credit (the "Line of Credit") under which
the Company may from time to time prior to the Termination
Date (such term and certain other capitalized terms used
herein being defined below) request advances ("Advances") in
an aggregate principal amount at any time outstanding from
any Bank not to exceed the amount set forth opposite the name
of such Bank below (such Bank's "Maximum Amount") and in a
combined aggregate principal amount at any time outstanding
not to exceed $40,000,000. The Company shall give the Bank
or Banks from which any Advances shall be requested written
or telecopy notice (or telephone notice promptly confirmed in
writing or by telecopy) not later than 10:30 a.m., New York
City time, three Business Days before each proposed LIBO Rate
Advance, and no later than 12:00 p.m., New York City time,
the day of each proposed ABR Advance. Such notice shall be
irrevocable and shall in each case specify (i) whether the
Advance then being requested is to be a LIBO Rate Advance or
an ABR Advance; (ii) the date of such Advance (which shall be
a Business Day) and the amount thereof; and (iii) if such
Advance is to be a LIBO Rate Advance, the Interest Period
with respect thereto. No LIBO Rate Advance may be requested
if the Interest Period applicable thereto would end after the
Termination Date. The proceeds of each Advance pursuant to
the Line of Credit shall be deposited by the Bank making such
Advance in the general deposit account of the Company with
such Bank or disbursed in another manner agreed upon by the
Company and such Bank as promptly as practicable, but in no
event later than 4:00 p.m., New York City time, on the date
of such Advance.
The principal of each Advance shall be due and
payable on the earliest of the last day of the Interest
Period applicable thereto, the Termination Date and the date
of commencement of any bankruptcy, insolvency or similar
proceeding in respect of the Company. Each Bank shall also
Page 32<PAGE>
<PAGE>
2
have the right, upon notice to the Company, to cause the
principal of and all interest accrued but not yet paid on all
Advances made by it hereunder, together with all other
amounts owed to it hereunder, to become immediately due and
payable in the event the Company shall default in the payment
of any amount due to such Bank hereunder and such default
shall continue for three Business Days after notice thereof
from such Bank. Advances may be repaid at any time subject,
in the case of any LIBO Rate Advance repaid other than on the
last day of an Interest Period, to the indemnity obligations
set forth below, but otherwise without premium or penalty.
The Company agrees to pay interest (a) in the case
of each ABR Advance at a rate per annum equal to the
Alternate Base Rate and (b) in the case of each LIBO Rate
Advance at the LIBO Rate applicable to the Interest Period in
effect for such Advance plus 3/8% per annum. Interest on
each Advance shall accrue from and including the date such
Advance is made to but excluding the date such Advance is
repaid, and shall be payable at the time the principal of
such Advance is repaid and, in the case of each ABR Advance
which shall not theretofore have been repaid, on the date 90
days after the date on which such Advance shall have been
made. The Company agrees to pay interest, on demand, on any
overdue principal and, to the extent permitted by applicable
law, overdue interest until paid at a rate per annum equal to
the Alternate Base Rate plus 2%. Interest shall be computed
on the basis of the actual number of days elapsed in a year
of (i) 365 days in the case of ABR Advances when the
Alternate Base Rate is based on the Prime Rate and (b) 360
days in all other cases.
The Company agrees to pay to each Bank, on the last
Business Day of each calendar quarter and on the Termination
Date or any earlier date on which the availability of
Advances from such Bank is terminated as provided herein, a
facility fee of .10% per annum on the Maximum Amount of such
Bank, whether used or unused. Such fee shall accrue from and
including the date hereof to but excluding the earlier of the
Termination Date and any date on which the availability of
Advances from such Bank is terminated as provided herein.
The Company hereby waives diligence, presentment,
demand, protest, notice of dishonor and any other notice of
any kind whatsoever. Neither the failure nor any delay on
the part of any Bank in any particular instance to exercise
any right, power or privilege hereunder shall constitute a
waiver thereof in that or any subsequent instance. No
consent, amendment, modification or waiver of the terms or
provisions hereof shall be effective unless in writing and
executed by the Company and each Bank. All rights and
remedies of each Bank are cumulative and concurrent, and no
single or partial exercise by any Bank of any right, power or
Page 33 <PAGE>
<PAGE>
3
privilege shall preclude any other or further exercise of any
other right, power or privilege.
The aggregate principal amount of Advances at any
time outstanding hereunder from any Bank shall in no event
exceed the Maximum Amount of such Bank. The making of
Advances is also subject to the absence of any material
adverse change since December 31, 1992, in the financial
condition of the Company and to the receipt by each Bank of a
copy of this letter duly executed by the Company and an
executed Note in the form attached as Exhibit A hereto, duly
completed to set forth the name, the address and the amount
of the commitment of each Bank (the "Note"), accompanied by
such evidence of the corporate power and authority of the
Company as the Banks may request.
The Company shall indemnify each Bank against any
loss or reasonable expense which such Bank may sustain or
incur as a consequence of (a) any payment or prepayment of a
LIBO Rate Advance on a date other than the last day of the
Interest Period applicable thereto or (b) any failure of the
Company to borrow any LIBO Rate Advance requested by it
hereunder. Such loss or reasonable expense shall include an
amount equal to the excess, if any, as reasonably determined
by such Bank, of (i) its cost of obtaining the funds for the
Advance being paid, prepaid or not borrowed for the period
from the date of such payment, prepayment or failure to
borrow to the last day of the Interest Period for such
Advance (or, in the case of a failure to borrow, the Interest
Period for such Advance which would have commenced on the
date of such failure) over (ii) the amount of interest (as
reasonably determined by such Bank) that would be realized by
such Bank in reemploying the funds so paid, prepaid or not
borrowed for such period or Interest Period, as the case may
be. A certificate of any Bank setting forth any amount or
amounts which such Bank is entitled to receive pursuant to
this provision shall be delivered to the Company and shall be
conclusive absent manifest error.
If after the date hereof any change in applicable
law or regulation or in the interpretation or administration
thereof by any governmental authority shall change the basis
of taxation of payments to any Bank of the principal of or
interest on any LIBO Rate Advance or any other fees or
amounts payable hereunder, or shall impose, modify or deem
applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by any Bank, or shall impose
on any Bank any other condition affecting the Advances made
by such Bank, and the result of any of the foregoing shall be
to increase the cost to such Bank of making or maintaining
such Advances or to reduce the amount of any sum received or
receivable by such Bank hereunder (whether of principal,
interest or otherwise) in respect thereof by an amount deemed
by such Bank to be material, then the Company agrees to pay
Page 34<PAGE>
<PAGE>
4
to such Bank such additional amount or amounts as will
compensate such Bank for such additional costs or reduction.
A certificate of any Bank setting forth the amount or amounts
which shall be necessary to compensate such Bank and, in
reasonable detail, the method by which such amounts have been
determined shall be delivered to the Company and shall be
conclusive absent manifest error.
The Company agrees to pay the amount or amounts
specified in any certificate delivered pursuant to one of the
two preceding paragraphs to the applicable Bank within 10
days after its receipt of the same.
As used herein, the following terms shall have the
meanings specified below:
"ABR Advance" shall mean any Advance bearing
interest at a rate determined by reference to the Alternate
Base Rate as defined herein.
"Alternate Base Rate" shall mean for any day a rate
per annum (rounded upwards, if not already a whole multiple
of 1/16 of 1%, to the next higher 1/16 of 1%) equal to the
greater of (a) the Prime Rate in effect on such day, and (b)
the Federal Funds Effective Rate in effect for such day plus
1/2 of 1%. For purposes hereof, "Prime Rate" shall mean the
rate of interest per annum announced by Chemical from time to
time as its prime rate in effect at its principal office in
The City of New York; each change in the Prime Rate shall be
effective on the Business Day such change is publicly
announced as being effective. "Federal Funds Effective Rate"
shall mean, for any day, the weighted average of the rates on
overnight Federal funds transactions (calculated on a per
annum basis) with members of the Federal Reserve Bank of New
York, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of
the quotations for the day of such transactions received by
Chemical from three Federal funds brokers of recognized
standing selected by Chemical. If Chemical shall have
determined that it is unable to ascertain the Federal Funds
Effective Rate for any reason, the Alternate Base Rate shall
be determined without regard to clause (b) of the first
sentence of this definition until the circumstances giving
rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective on the
Business Day of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively. The Alternate Base Rate
shall be determined by Chemical Bank and such determination
shall be conclusive absent manifest error.
"Business Day" shall mean any day (other than a
day which is a Saturday, Sunday or legal holiday in the State
Page 35 <PAGE>
<PAGE>
5
of New York) on which Chemical Bank is open for business in
the City of New York; provided that when the term "Business
Day" is used with respect to LIBO Rate Advances, such term
shall exclude any day on which banks in London are not open
for dealings in U.S. Dollar deposits in the London Interbank Market.
"Interest Period" shall mean (i) as to any LIBO
Rate Advance, the period commencing on the date of such LIBO
Rate Advance and ending on the numerically corresponding day
(or, if there is no numerically corresponding day, on the
last day) in the calendar month that is 1, 2 or 3 months
thereafter, as the Company may elect, (ii) as to any ABR
Advance, the period commencing on the date of such ABR
Advance and ending on the Termination Date or any earlier
date specified by the Company in the notice requesting such
Advance; provided, however, that (1) if any Interest Period
would end on a day that shall not be a Business Day, such
Interest Period shall be extended to the next succeeding
Business Day unless, with respect to LIBO Rate Advances only,
such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end
on the next preceding Business Day and (2) interest shall
accrue from and including the first day of an Interest Period
to but excluding the last day of such Interest Period.
"LIBO Rate" shall mean, with respect to any LIBO
Rate Advance for any Interest Period, the interest rate per
annum (rounded upwards, if necessary, to the next higher 1/16
of 1%) at which U.S. Dollar deposits approximately equal in
principal amount to such LIBO Rate Advance and for a maturity
equal to the applicable Interest Period are offered by
leading banks in the London Interbank Market to the London
office of Chemical Bank in immediately available funds at or
near 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period. The LIBO Rate shall be
determined by Chemical Bank and such determination shall be
conclusive absent manifest error.
"LIBO Rate Advance" shall mean any advance bearing
interest at a rate determined by reference to the LIBO Rate
as defined herein.
"Termination Date" shall mean April 18, 1994.
Chemical Bank hereby agrees, at the request of the
Company or any other Bank, promptly to determine and advise
the Company or such other Bank of the LIBO Rate or the
Alternate Base Rate for any Interest Period or day within an
Interest Period.
The availability of Advances hereunder from any
Bank may be terminated by the Company upon written or
telecopy notice to such Bank, and will in any event terminate
Page 36 <PAGE>
<PAGE>
6
on the earlier of the Termination Date and the date of
commencement of any bankruptcy, insolvency or similar
proceeding in respect of the Company.
The Company represents and warrants that it has the
corporate power and authority and all necessary regulatory
approvals to execute, deliver and perform its obligations
under this Agreement and that such execution, delivery and
performance will not violate any law or regulation applicable
to the Company or any agreement to which the Company is
party. Each Bank is hereby authorized to rely on notices
given hereunder by persons reasonably believed by it to be
acting on behalf of the Company.
This letter may not be amended or any provision
hereof waived or modified except by an instrument in writing
signed by each of the parties hereto. This letter shall be
governed by, and construed in accordance with, the laws of
the State of New York.
Please indicate your acceptance of the terms hereof
by signing in the appropriate space below and returning to
Chemical Bank the enclosed duplicate originals of this
letter. This letter may be executed in counterparts, each of
which shall be an original and all of which, when taken
together, shall constitute one agreement.
Commitment Very truly yours,
- ----------
$20,000,000 CHEMICAL BANK
by
Robert Gillham
-------------------------
Name: Robert Gillham
Title: Managing Director
Address for Notices:
270 Park Avenue
New York, New York 10019
Attn. of: Mr. Robert Gillham
Telecopy: (212) 270-5007
Page 37<PAGE>
<PAGE>
7
$10,000,000 THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS,
by
Thomas Guyton
--------------------------
Name: Thomas Guyton
Title: Vice President
Address for Notices
One Boatmen's Plaza
800 Market Street
St. Louis, Missouri 63166-0236
Attn. of: Mr. Thomas Guyton
Telecopy: (314) 466-7783
$10,000,000 MERCANTILE BANK, N.A.,
by
Edward Cheney
----------------------------
Name: Edward Cheney
Title: Vice President
Address for Notices
Eighth & Locust
12th Floor
P.O. Box 524
St. Louis, Missouri 63101
Attn. of: Mr. Edward Cheney
Telecopy: (314) 425-2162
Accepted and agreed to
as of the date first
written above:
LACLEDE GAS COMPANY,
by Robert J. Carroll
------------------------------
Name: Robert J. Carroll
Title: Vice President-Finance
Page 38
