<PAGE>
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 December 31, 1993
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.
7,793,231 shares, Common Stock, par value $2 per share at 2/10/94.
Index to Exhibits is found on page 20.
Page 1 of 27<PAGE>
<PAGE>
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>
<PAGE>
<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED INCOME
(UNAUDITED)
(In Thousands, Except Per Share Amounts)
<CAPTION>
Three Months Ended
December 31,
1993 1992
---- ----
<S> <C> <C>
Utility Operating Revenues $167,245 $160,044
--------------------
Utility Operating Expenses:
Natural and propane gas 104,143 98,625
Other operation expenses 21,243 17,875
Maintenance 4,621 4,161
Depreciation and amortization 4,786 4,645
Taxes, other than income taxes 10,209 10,346
Income taxes (Note 3) 6,622 7,046
--------------------
Total Utility Operating Expenses 151,624 142,698
--------------------
Utility Operating Income 15,621 17,346
Miscellaneous Income and Income Deductions - Net
(less applicable income taxes) (Note 3) 319 359
--------------------
Income Before Interest Charges 15,940 17,705
--------------------
Interest Charges:
Interest on long-term debt 3,218 3,838
Other interest charges 802 382
--------------------
Total Interest Charges 4,020 4,220
--------------------
Net Income 11,920 13,485
Dividends on Preferred Stock 24 24
--------------------
Earnings Applicable to Common Stock $ 11,896 $ 13,461
====================
Average Number of Common Shares Outstanding 7,793 7,793
Earnings Per Share of Common Stock $1.53 $1.73
Dividends Declared Per Share of Common Stock $0.61 $0.60
<FN>
Note: Average Number of Common Shares Outstanding, Earnings Per Share of
Common Stock and Dividends Declared Per Share of Common Stock do not
reflect a 2-for-1 stock split which will be effective 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>
Dec. 31 Sept. 30
1993 1993
---- ----
(Thousands of Dollars)
(UNAUDITED)
ASSETS
<S> <C> <C>
Utility Plant $685,244 $677,613
Less: Accumulated depreciation and amortization 289,620 286,787
--------------------
Net Utility Plant 395,624 390,826
--------------------
Other Property and Investments 23,152 22,668
--------------------
Current Assets:
Cash and cash equivalents 3,625 1,706
Accounts receivable - net 91,463 32,891
Materials, supplies, and merchandise at avg cost 5,002 5,202
Natural gas stored underground for current use
at LIFO cost 14,662 14,079
Propane gas for current use at FIFO cost 13,655 13,657
Prepayments 2,871 1,774
Unamortized purchased gas adjustments 4,280 6,278
Delayed customer billings 3,248 -
--------------------
Total Current Assets 138,806 75,587
--------------------
Deferred Charges 56,851 26,231
--------------------
Total Assets $614,433 $515,312
====================
<FN>
See the accompanying notes to financial statements.
</TABLE>
Page 4 <PAGE>
<PAGE>
<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (Continued)
<CAPTION>
Dec. 31 Sept. 30
1993 1993
---- ----
(Thousands of Dollars)
(UNAUDITED)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock (8,726,050 shares issued) $ 17,452 $ 17,452
Paid-in capital 26,250 26,250
Retained earnings 177,394 170,252
Treasury stock, at cost (932,819 shares held) (24,017) (24,017)
--------------------
Total common stock equity 197,079 189,937
Redeemable preferred stock 1,960 1,960
Long-term debt (less sinking fund requirements) 154,161 165,745
--------------------
Total Capitalization 353,200 357,642
--------------------
Current Liabilities:
Notes payable $ 68,500 $ 27,500
Accounts payable 47,692 16,745
Refunds due customers 7 214
Advance customer billings - 3,901
Current sinking fund requirements - 391
Taxes accrued 15,988 11,545
Deferred income taxes 1,541 2,312
Other 23,581 26,589
--------------------
Total Current Liabilities 157,309 89,197
--------------------
Deferred Credits and Other Liabilities:
Deferred income taxes 65,995 36,989
Unamortized investment tax credits 8,600 8,682
Other 29,329 22,802
--------------------
Total Deferred Credits and Other Liabilities 103,924 68,473
--------------------
Total Capitalization and Liabilities $614,433 $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>
Three Months Ended
December 31,
1993 1992
---- ----
<S> <C> <C>
Operating Activities:
Net Income $ 11,920 $ 13,485
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,804 4,704
Deferred income taxes and investment tax credits (1,942) (613)
Other - net 19 40
Changes in assets and liabilities:
Accounts receivable - net (58,572) (56,261)
Unamortized purchased gas adjustments 1,998 1,355
Deferred purchased gas costs 5,138 5,049
Accounts payable 30,947 33,877
Refunds due customers (207) (1,459)
Taxes accrued 4,443 4,157
Other assets and liabilities (10,791) (16,316)
--------------------
Net cash used in operating activities $(12,193) $(11,982)
--------------------
Investing Activities:
Construction expenditures (9,394) (10,189)
Investments - non-utility (478) (1,023)
Other (91) (250)
--------------------
Net cash used in investing activities $ (9,963) $(11,462)
--------------------
Financing Activities:
Issuance of first mortgage bonds - 40,000
Issuance of short-term debt 41,000 -
Dividends paid (4,778) (4,700)
Retirement of first mortgage bonds (11,991) -
Repayment of short-term debt - (7,000)
Other (106) (620)
---------------------
Net cash provided by financing activities $ 24,125 $ 27,680
---------------------
Net Increase in Cash and Cash Equivalents $ 1,919 $ 4,236
Cash and Cash Equivalents at Beg of Period 1,706 3,322
---------------------
Cash and Cash Equivalents at End of Year $ 3,625 $ 7,558
=====================
Supplemental Disclosure of Cash Paid
During the Period for:
Interest $7,061 $5,834
Income taxes 8 564
<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>
<PAGE>
Net provisions for income taxes were charged (credited) as follows
during the periods set forth below:
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------
1993 1992
---- ----
(Thousands of Dollars)
<S> <C> <C>
Utility Operations
Current:
Federal $ 7,388 $ 6,856
State and local 1,244 799
Deferred:
Federal (1,733) (579)
State and local (277) (30)
---------------------
Subtotal $ 6,622 $ 7,046
---------------------
Miscellaneous Income and
Income Deductions
Current:
Federal $ 35 $ 90
State and local (25) (3)
Deferred:
Federal 62 (4)
State and local 6 -
---------------------
Subtotal $ 78 $ 83
---------------------
Total $ 6,700 $ 7,129
=====================
</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 three months ended December 31,
1993, including amounts charged to construction, consisted of the
following components:
<TABLE>
<CAPTION>
Thousands of Dollars
<S> <C>
Service Cost $ 371
Interest cost on projected benefit
obligation 720
Amortization transition obligation 424
-------
Net cost $ 1,515
=======
</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. The effect of these laws and
regulations on the Company's financial position and results of operation
has thus far not been material. In the 1800s and early 1900s, prior to
the widespread availability of natural gas, manufactured gas was used
nationwide as an inexpensive source of fuel. The Company operated
various manufactured gas plants during that period, extending into the
1950s, to produce gas as a source of fuel for lighting, cooking and
heating. The process for manufacturing gas involved heating certain
combustibles such as coal and fuel oil in a low oxygen atmosphere, which
also produced certain by-products and residuals including
hydrocarbons such as lamp black and coal tar. Such products and
residues typically were stored on site or sold for commercial use, and
most former manufactured gas sites contain remnants of such
hydrocarbons. 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 now 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, as
requested by the EPA, the Company intends, in the near future, to
conduct studies to determine more specifically the extent of any risk of
contamination, and, if necessary, possible alternative remediation
procedures; and we are presently discussing with the EPA a possible
Administrative Order on Consent with regard to such matters. If the
above studies should determine that remedial action is necessary, then
the Administrative Order will provide for the subsequent implementation
of such action. The cost of such studies, together with the costs
incurred to date by the EPA in performing the EPA's own investigation,
is likely to approximate $250,000, and the Company has established a
reserve in that amount in its financial statements. As indicated above,
the Company is unable at this time to evaluate and quantify further the
scope or cost of the environmental response activity that will be
required. In any case, however, 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.
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.
Page 10<PAGE>
<PAGE>
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 will be effective
on February 11, 1994. New stock certificates are expected to be
distributed on or about 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 from the Company under the Plan.
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 December 31, 1993 were $1.53 per share
compared with $1.73 per share for the same three months last year. The
weather for the quarter was essentially normal, but was 3% colder than last
year. The erosion in earnings is primarily attributable to higher costs of
doing business, offset to some extent by higher gas sales arising from the
colder weather.
Utility operating revenues for the first quarter of fiscal year 1994
were $167.2 million compared with $160.0 million for the quarter ended
December 31, 1992. The $7.2 million, or 4.5%, increase is due to higher
therm sales reflecting the colder weather, higher wholesale gas costs which
are passed on to Laclede's customers under the Company's Purchased Gas
Adjustment Clause, and other variations. Therms sold and transported
increased by 13.9 million therms, or 4.1%, above the quarter ended December
31, 1992.
Utility operating expenses for the quarter ended December 31, 1993
increased by $8.9 million, or 6.3%, above the same quarter last year.
Natural and propane gas expense this quarter increased $5.5 million, or
5.6%, above last year mainly due to increased volumes purchased for sendout
(resulting from the colder weather) and higher rates charged by our
suppliers. Other operation and maintenance expenses increased $3.8 million,
or 17.4%, primarily due to increased pension expense reflecting the
recognition of gain applicable to lump-sum settlements during the same
quarter ended December 31, 1992 (no gain was recognized during the quarter
ended December 31, 1993), higher wage rates, and increased maintenance
charges, partially offset by a lower provision for uncollectible accounts.
Depreciation and amortization expense increased 3.0% due to additional
property. Taxes, other than income taxes, decreased 1.3% principally due to
lower property taxes, largely offset by higher gross receipts taxes
(reflecting increased revenues). The $.4 million decrease in income taxes
is primarily due to lower taxable income partially offset by higher tax
rates.
The decrease in interest expense on long-term debt is mainly due to
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. Other interest expense increased due to higher short-term borrowings.
On January 14, 1994, the Company filed a request with the Missouri
Public Service Commission for a general rate increase which would add $27.1
million to operating revenues on an annual basis. This increase is
necessary to offset increased costs of doing business arising from higher
operating costs as well as the added costs of operating, maintaining, and
financing the increased investment in distribution plant and other
Page 12<PAGE>
<PAGE>
facilities the Company has installed since the filing of its last general
rate increase in January 1992. By law, the Missouri Commission has up to
eleven months before it must act on this 1994 request, but the Company is
hopeful the Commission will allow new rates to be implemented prior to
December 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
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.
Page 13<PAGE>
<PAGE>
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 cash 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. Also, the Company has obtained agreements for an additional $40
million of bank loans effective from October 18, 1993 to April 18, 1994,
which resulted in a line of credit totalling $80 million for the 1993-1994
heating season. These agreements also provide for an additional $15 million
of short-term credit needs for the week of maximum credit requirement from
January 20, 1994 to January 27, 1994, and an additional $5 million extending
from January 28 through February 28, 1994. During January 1994, the Company
sold commercial paper aggregating to a maximum of $95.0 million at any one
time, but did not borrow from the banks under the aforementioned agreements.
Short-term borrowings amounted to $76.0 million at January 31, 1994.
In November 1993, the Company redeemed $12.0 million of its
outstanding long-term debt, primarily to take advantage of the prevailing
lower interest rates.
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 will increase the Company's authorized common stock
to 50 million shares with a new par value of $1.00 per share and will
reclassify 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 will be
effective on February 11, 1994. New stock certificates are expected to be
distributed on or about 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 from the Company
under the Plan. The Company plans to file a Registration Statement with the
Securities and Exchange Commission in late February 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. The effect of these laws and
regulations on the Company's financial position and results of operation has
thus far not been material. In the 1800s and early 1900s, prior to the
Page 14 <PAGE>
<PAGE>
widespread availability of natural gas, manufactured gas was used nationwide
as an inexpensive source of fuel. The Company operated various manufactured
gas plants during that period, extending into the 1950s, to produce gas as a
source of fuel for lighting, cooking and heating. The process for
manufacturing gas involved heating certain combustibles such as coal and
fuel oil in a low oxygen atmosphere, which also produced certain by-products
and residuals including hydrocarbons such as lamp black and coal tar. Such
products and residues typically were stored on site or sold for commercial
use, and most former manufactured gas sites contain remnants of such
hydrocarbons. 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 now
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, as requested by the EPA, the Company intends, in the near future,
to conduct studies to determine more specifically the extent of any risk of
contamination, and, if necessary, possible alternative remediation
procedures; and we are presently discussing with the EPA a possible
Administrative Order on Consent with regard to such matters. If the above
studies should determine that remedial action is necessary, then the
Administrative Order will provide for the subsequent implementation of such
action. The cost of such studies, together with the costs incurred to date
by the EPA in performing the EPA's own investigation, is likely to
approximate $250,000, and the Company has established a reserve in that
amount in its financial statements. As indicated above, the Company is
unable at this time to evaluate and quantify further the scope or cost of
the environmental response activity that will be required. In any case,
however, 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.
On November 1, 1993, Order 636 issued by the Federal Energy Regulatory
Commission became effective causing a complete restructuring of the
Company's gas supply arrangements, as discussed fully in the Annual Report
which stockholders recently received. Thus far it appears that Laclede's
gas supply arrangements are accomplishing the Company's dual objectives of
assuring adequate and reliable supplies of gas to our customers at the
lowest reasonable cost consonant therewith.
The new system has transferred to distributors like Laclede the
responsibility for purchasing their own gas supplies in the field and has
removed that responsibility from the interstate pipelines. This has caused
a substantial increase in risk to the gas distributors and has,
concurrently, considerably lessened the risk on the interstate pipelines.
We are acquainting the regulatory authorities with this reallocation of risk
and asking them to recognize such in the rate of return allowed in order to
compensate appropriately for such offsetting changes in responsibility.
Page 15<PAGE>
<PAGE>
Construction expenditures for the quarter were $9.4 million compared
with $10.2 million for the same period last year.
Capitalization at December 31, 1993 (excluding current redemption
requirements of long-term debt) decreased $4.4 million since September 30,
1993 and consisted of 55.8% common stock equity, .6% preferred stock and
43.6% long-term debt.
The seasonal effect of the Company's financial position affects the
comparison of certain balance sheet items at December 31, 1993 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 December 31, 1993, 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 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index
(b) Reports on Form 8-K
The Company filed a Form 8-K Report during the quarter ended
December 31, 1993.
Items Reported:
On November 18, 1993, the Board of Directors adopted
resolutions which, conditioned upon receipt of: (1) stockholder
approval at the Company's 1994 Annual Meeting of Stockholders to be
held on January 27, 1994 and (2) certain approvals by the Missouri
Public Service Commission on or before February 10, 1994 (or
affirmance that such approval is not required) would:
(a) effectuate a two-for-one stock split effective on
February 11, 1994 to stockholders of record on that date, by
amending the Articles of Incorporation of the Company (i) to
change, effective on February 11, 1994, the number and par value of
the authorized shares of common stock of the Company from
20,000,000 shares of common stock having a par value of $2.00 per
share to 50,000,000 shares of common stock having a par value of
$1.00 per share, and (ii) to reclassify, effective on February 11,
1994, all presently issued shares of $2.00 per share par value
common stock of the Company, to $1.00 per share par value common
stock of the Company; and
(b) amend the Company's Dividend Reinvestment Program
principally to allow additional cash purchases of Company common
stock and to provide for, at the discretion of the Company, the
primary issuance of Company common stock thereunder.
The expected distribution date for new stock certificates in
connection with the aforesaid stock split, if requisite approvals
are obtained, is on or about March 7, 1994.
Financial Statement Filed: None
Date of Report (Date of Earliest Event Reported):
November 18, 1993
Date Report Filed: November 19, 1993
Page 18 <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: February 10, 1994 R. J. Carroll
-------------------
R. J. Carroll
Sr. Vice President - FInance
(Authorized Signatory and
Chief Financial Officer)
Page 19 <PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit Page
- ----------- ------- ----
10.01 Amendment to the Employees' Retirement Plan 21
of Laclede Gas Company - Management Employees
dated January 10, 1994.
10.02 Amendment to the Company's Salary Deferral 25
Savings Plan dated January 10, 1994.
Page 20
Date: January 10, 1994
Robert C. Jaudes (as President of Laclede Gas Company), and Donald L.
Godiner (as Senior Vice President, General Counsel and Secretary of Laclede
Gas Company), pursuant to resolutions adopted by the Board of Directors on
August 28, 1986, which resolutions, among other things, granted to any two
executive officers who hold one of the following offices: Chairman of the
Board; President; Executive Vice President; or Senior Vice President; the
authority to amend any or all of the benefit plans and/or related trust
agreements of the Company (collectively the "Plans") to the extent such
amendments deal with changes necessary or appropriate: (1) to comply with,
or obtain the benefit of, applicable laws and/or regulations, as amended
from time to time; (2) to reflect minor or routine administrative factors;
(3) to clarify the meaning of any of the provisions of the Plans; and/or
(4) to evidence changes in then existing Plans to reflect the
interrelationship thereof with newly adopted Plans or amendments to Plans,
which newly adopted Plans or amendments affect the terms of such other then
existing Plans; do hereby amend the Employees' Retirement Plan of Laclede
Gas Company - Management Employees as set forth in the attached exhibit,
such amendment to be effectuated and evidenced by our signatures on said
exhibit.
Page 21<PAGE>
<PAGE>
AMENDMENTS TO THE EMPLOYEES' RETIREMENT
PLAN OF LACLEDE GAS COMPANY - MANAGEMENT EMPLOYEES
The following amendments are effective January 1, 1985:
1. Paragraph (3) of subclause B. of subsection 21. of Section 1.1 is
amended as follows:
"(3) No credit will be given to an Employee during any period in which
such Employee received any payment under this Plan, except for minimum
required distributions after age seventy and one-half (70-1/2) as
provided in Sectiion 15.5."
2. A sentence is added at the end of Section 3.4 as follows:
"The Accrued Benefit of an Employee who has received minimum required
distributions pursuant to Section 15.5 of the Plan shall be reduced, but
not below zero, by the Actuarial Equivalent of all the paid minimum
required distributions."
3. Section 15.5 is replaced in its entirety as follows:
"Section 15.5 - Required Distribution of Employee's Interest
Notwithstanding anything to the contrary in this Plan, minimum required
distributions, as required by and in accordance with Internal Revenue
Code Section 401(a)(9) and the regulations thereunder then in effect,
shall begin not later than April 1 following the end of the calendar
year in which the Employee attained age seventy and one-half (70-1/2).
The first such distribution shall be for the calendar year in which the
Employee attained age seventy and one-half (70-1/2) (hereinafter
referred to as the "First Benefit Year"). Subsequent minimum required
distributions shall be made by the following December 31, and at least
annually thereafter by December 31 and will be in each case for the
calendar year then ending or for the then current calendar year, if made
prior to December 31 (the "Subsequent Benefit Year").
The amount of a minimum required distribution for the First Benefit Year
or any Subsequent Benefit Year shall be calculated by dividing the
amount determined under subsection (a) below, by the life expectancy as
determined under subsection (b) below:
(a) The lump-sum Actuarial Equivalent of the Employee's Accrued Benefit
as of December 31 immediately prior to:
(i) the First Benefit Year for the first minimum required
distribution, or
(ii) each Subsequent Benefit Year, in the case of all subsequent
distributions; reduced, but not below zero, by the amount of
all prior payments of previous minimum required distributions,
plus interest computed as described in subclause (B) of this
subsection (a). For purposes of this subsection (a):
Page 22<PAGE>
<PAGE>
(A) the definition of Actuarial Equivalent is modified by
using the first day of the First Benefit Year or
Subsequent Benefit Year, as applicable, as the
"determination date" for the determination of
the mortality and interest discount factors; and
(B) the interest referred to above shall be the interest
accrued on any previous minimum required distribution
(I) beginning on the date following the day such minimum
required distribution was actually paid and ending on
the payment date for the subsequent minimum required
distribution being calculated, and
(II) at the Pension Benefit Guaranty Corporation's rate
for valuing immediate annuities as in effect for each
month during which such interest accrues.
(b) The life expectancy shall be calculated using the Employee's age at
December 31 of the First Benefit Year; or, if applicable, life
expectancies for an Employee and the Employee's Designated
Dependent will be based on the Employee's and the Designated
Dependent's ages at December 31 of the First Benefit Year. Each
year thereafter, the Employee's (or the Employee's and Designated
Dependent's) life expectancy (or life expectancies) shall be
reduced by one year.
If the Employee dies after attaining age seventy and one-half (70-1/2)
but before the minimum required distributions have begun, distributions
must commence no later than December 31 of the year following the
calendar year of the Employee's death. If the Employee dies after the
minimum required distributions have begun, the remainder of the
Employee's Accrued Benefit will be distributed at least as rapidly as
under the distribution method used before the Employee's death.
Distributions in accordance with this Section 15.5 will comply with the
minimum distribution requirements, including the minimum distribution
incidental benefit requirements, of Internal Revenue Code Section
401(a)(9) and regulations thereunder then in effect. If any provision
of this Plan conflicts with these distribution requirements, then the
Internal Revenue Code Section 401(a)(9) distribution requirements will
apply."
4. Sections 15.6 and 15.7 are renumbered Sections 15.7 and 15.8 as follows:
"Section 15.7 - Top-Heavy Definitions
Section 15.8 - Top-Heavy Effect"
Page 23 <PAGE>
<PAGE>
5. A new Section 15.6 is added as follows:
"Section 15.6 -Retirement After Minimum Required Distributions
When an Employee who has received a minimum required distribution
pursuant to Section 15.5 elects to retire, the Employee's monthly
Accrued Benefit at retirement shall be calculated as of the date of
commencement of the Employee's first minimum required distribution
("Employee's First Distribution Date") and as of the Employee's date of
retirement ("Employee's Retirement Date"); and the Employee's Accrued
Benefit as of the Employee's Retirement Date shall be reduced by the
lesser of:
(a) the amount by which the Employee's monthly Accrued Benefit as of
the Employee's Retirement Date exceeds the Employee's monthly
Accrued Benefit as of the Employee's First Distribution Date; or
(b) the amount determined by dividing (i) by (ii) below:
(i) the sum of all minimum required distributions paid pursuant to
Section 15.5 of this Plan, plus imputed interest, determined
monthly using the Pension Benefit Guaranty Corporation's
interest discount factor for valuing immediate annuities as in
effect for each month and computed from the first day of the
month of payment of each minimum required distribution until
the applicable Retirement Date;
(ii) the lump-sum factor (as determined by the actuaries for the
Plan) which is in effect on the Retirement Date for converting
monthly payments (for the Employee's lifetime only and
commencing on the Retirement Date) to lump-sum payments and
vice versa."
Robert C. Jaudes
-----------------------------
Title: President and Chief
Executive Officer
Donald L. Godiner
-----------------------------
Title: Senior Vice President,
General Counsel and
Secretary
Page 24
Date: January 10, 1994
Robert C. Jaudes (as President of Laclede Gas Company), and Donald L.
Godiner (as Senior Vice President, General Counsel and Secretary of Laclede
Gas Company), pursuant to resolutions adopted by the Board of Directors on
August 28, 1986, which resolutions, among other things, granted to any two
executive officers who hold one of the following offices: Chairman of the
Board; President; Executive Vice President; or Senior Vice President; the
authority to amend any or all of the benefit plans and/or related trust
agreements of the Company (collectively the "Plans") to the extent such
amendments deal with changes necessary or appropriate: (1) to comply with,
or obtain the benefit of, applicable laws and/or regulations, as amended
from time to time; (2) to reflect minor or routine administrative factors;
(3) to clarify the meaning of any of the provisions of the Plans; and/or
(4) to evidence changes in then existing Plans to reflect the
interrelationship thereof with newly adopted Plans or amendments to Plans,
which newly adopted Plans or amendments affect the terms of such other then
existing Plans; do hereby amend the Laclede Gas Company Salary Deferral
Savings Plan as set forth in the attached exhibit, such amendment to be
effectuated and evidenced by our signatures on said exhibit.
Page 25 <PAGE>
<PAGE>
AMENDMENTS TO THE LACLEDE GAS COMPANY
SALARY DEFERRAL SAVINGS PLAN
The following amendments are all effective January 1, 1985:
1. A new subsection (c) is added to Section 10.1 reading as follows:
"(c) Notwithstanding anything to the contrary in this Plan, a
Participant who is required under Code Section 401(a)(9) to take a
mandatory distribution due to attainment of age seventy and one-half
(70-1/2) shall receive such distribution in accordance with Section
10.2(c)(ii)."
2. The first sentence of Section 10.2(b) is replaced by the following
sentence:
(b) "All distributions shall be made in a single, lump sum distribution
except as provided in subsection (a) of this Section 10.2 with
respect to subsequent contributions or as provided in subclause
(ii) of subsection (c) of this Section 10.2 with respect to
Employees who have attained age seventy and one-half (70-1/2)."
3. Section 10.2(c)(ii) is amended by replacing said subclause (ii) with the
following subclause (ii):
"(ii) as required by and in accordance with Code Section 401(a)(9) and
regulations thereunder, not later than April 1 following the end of the
calendar year in which the Participant attained age seventy and one-half
(70-1/2), if the Participant is then an Employee. For purposes of the
required distributions, the Participant may elect to receive a total
distribution of the Participant's Account, or the minimum distribution
which is required. The first such distribution will be for the
distribution year which is the calendar year in which the Participant
attained age seventy and one-half (70-1/2). If the Participant elects
the minimum required distribution, it will be based upon the value of
the Participant's Account at December 31 of the calendar year preceding
the distribution year, divided by remaining life expectancy. Life
expectancy will be calculated using the Participant's age at December 31
of the distribution year; life expectancies for a Participant with a
designated Beneficiary will be based on the Participant's and
Beneficiary's ages at December 31 of the distribution year. (If there
is more than one designated Beneficiary, the remaining life expectancy
of the designated Beneficiary with the shortest life expectancy will be
used.) Each year thereafter, the Participant's (or the Participant's and
designated Beneficiary's) life expectancy (or life expectancies) shall
be reduced by one year. The Participant must specify the Investment
Fund or Funds from which the minimum distributions shall be withdrawn.
Subsequent distributions will be made at least annually thereafter, by
December 31 and will be for the calendar year which ended on the prior
December 31. If the Participant dies after the Participant has attained
age seventy and one-half (70-1/2) but before all of the Participant's
Account has been distributed, then the remainder of the Participant's
Account shall be distributed to the Participant's designated Beneficiary
not later than
Page 26 <PAGE>
<PAGE>
sixty (60) days after the date of the Participant's death. Mandatory
distributions under this subclause (ii) will comply with the
distribution requirements, including the minimum distribution incidental
benefit requirements, as provided under Code Section 401(a)(9). If any
provision of this Plan conflicts with such distribution requirements,
then the Code Section 401(a)(9) distribution requirements will govern."
Robert C. Jaudes
----------------------------
Title: President and Chief
Executive Officer
Donald L. Godiner
-----------------------------
Title: Senior Vice President,
General Counsel and
Secretary
Page 27
