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 June 30, 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.
15,670,023 shares, Common Stock, par value $1 per share at 8/12/94.
Index to Exhibits is found on page 20.
Page 1 of 23 <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 Nine Months Ended
June 30, June 30,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Utility Operating Revenues $74,644 $75,993 $474,924 $450,115
------------------ ------------------
Utility Operating Expenses:
Natural and propane gas 37,546 38,264 290,822 267,181
Other operation expenses 20,416 18,940 64,965 59,782
Maintenance 4,177 4,130 13,565 12,383
Depreciation and amortization 4,778 4,637 14,367 13,961
Taxes, other than income taxes 8,637 8,795 36,269 35,563
Income taxes (Note 3) (2,196) (729) 15,826 18,202
------------------ ------------------
Total Utility Operating Expenses 73,358 74,037 435,814 407,072
------------------ ------------------
Utility Operating Income 1,286 1,956 39,110 43,043
Miscellaneous Income and Income
Deductions - Net (less
applicable income taxes) (Note 3) (3) (212) 769 915
------------------ ------------------
Income Before Interest Charges 1,283 1,744 39,879 43,958
------------------ ------------------
Interest Charges:
Interest on long-term debt 3,136 3,445 9,490 11,055
Other interest charges 885 441 2,562 1,242
------------------ ------------------
Total Interest Charges 4,021 3,886 12,052 12,297
------------------ ------------------
Net Income (2,738) (2,142) 27,827 31,661
Dividends on Preferred Stock 24 25 73 73
------------------ ------------------
Earnings Applicable to Common Stock $(2,762) $(2,167) $ 27,754 $ 31,588
================== ==================
Average Number of Common
Shares Outstanding 15,631 15,586 15,601 15,586
Earnings Per Share of Common Stock $(.18) $(.14) $1.78 $2.03
Dividends Declared Per Share
of Common Stock $.305 $.30 $.915 $.90
<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 effective
on February 11, 1994.
See notes to consolidated financial statements.
</TABLE>
Page 3<PAGE>
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<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
<CAPTION>
Jun. 30 Sept. 30
1994 1993
---- ----
(Thousands of Dollars)
(UNAUDITED)
ASSETS
<S> <C> <C>
Utility Plant $700,397 $677,613
Less: Accumulated depreciation and amortization 295,055 286,787
--------------------
Net Utility Plant 405,342 390,826
--------------------
Other Property and Investments 22,696 22,668
--------------------
Current Assets:
Cash and cash equivalents 2,255 1,706
Accounts receivable - net 41,681 32,891
Materials, supplies, and merchandise at avg cost 5,125 5,202
Natural gas stored underground for current use
at LIFO cost 22,560 14,079
Propane gas for current use at FIFO cost 12,180 13,657
Prepayments 2,124 1,774
Unamortized purchased gas adjustments 635 6,278
Delayed customer billings 11,697 -
--------------------
Total Current Assets 98,257 75,587
--------------------
Deferred Charges 55,510 26,231
--------------------
Total Assets $581,805 $515,312
====================
<FN>
See notes to consolidated financial statements.
</TABLE>
Page 4 <PAGE>
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<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (Continued)
<CAPTION>
Jun. 30 Sept. 30
1994 1993
---- ----
(Thousands of Dollars)
(UNAUDITED)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock (17,496,896 shares issued) $ 17,497 $ 17,452
Paid-in capital 27,326 26,250
Retained earnings 183,731 170,252
Treasury stock, at cost (1,865,638 shares held) (24,017) (24,017)
--------------------
Total common stock equity 204,537 189,937
Redeemable preferred stock 1,960 1,960
Long-term debt (less sinking fund requirements) 154,194 165,745
--------------------
Total Capitalization 360,691 357,642
--------------------
Current Liabilities:
Notes payable 30,600 27,500
Accounts payable 22,289 16,745
Refunds due customers 15,015 214
Advance customer billings - 3,901
Current sinking fund requirements - 391
Taxes accrued 20,568 11,545
Deferred income taxes 247 2,312
Other 23,201 26,589
--------------------
Total Current Liabilities 111,920 89,197
--------------------
Deferred Credits and Other Liabilities:
Deferred income taxes 65,060 36,989
Unamortized investment tax credits 8,435 8,682
Other 35,699 22,802
--------------------
Total Deferred Credits and Other Liabilities 109,194 68,473
--------------------
Total Capitalization and Liabilities $581,805 $515,312
====================
<FN>
See notes to consolidated financial statements.
</TABLE>
Page 5 <PAGE>
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<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Ended
June 30,
1994 1993
---- ----
(Thousands of Dollars)
<S> <C> <C>
Operating Activities:
Net Income $ 27,827 $ 31,661
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 14,413 14,139
Deferred income taxes and investment tax credits (3,098) (730)
Other - net 428 399
Changes in assets and liabilities:
Accounts receivable - net (8,790) (9,090)
Unamortized purchased gas adjustments 5,643 3,439
Deferred purchased gas costs 9,718 5,973
Delayed customer billings - net (15,598) (21,085)
Accounts payable 5,544 2,930
Refunds due customers 14,801 (3,863)
Taxes accrued 9,023 11,227
Other assets and liabilities (8,202) (8,761)
--------------------
Net cash provided by operating activities $ 51,709 $ 26,239
--------------------
Investing Activities:
Construction expenditures $(28,246) $(29,585)
Investments - non-utility (322) (2,164)
Other (380) (595)
--------------------
Net cash used in investing activities $(28,948) $(32,344)
--------------------
Financing Activities:
Issuance of first mortgage bonds $ - $ 65,000
Issuance of short-term debt 3,100 8,600
Issuance of common stock 1,121 -
Dividends paid (14,335) (14,179)
Retirement of first mortgage bonds (11,991) (51,660)
Other (107) (2,588)
---------------------
Net cash provided by (used in)
financing activities $(22,212) $ 5,173
---------------------
Net Increase (Decrease) in Cash and Cash Equivalents $ 549 $ (932)
Cash and Cash Equivalents at Beginning of Period 1,706 3,322
---------------------
Cash and Cash Equivalents at End of Period $ 2,255 $ 2,390
=====================
Supplemental Disclosure of Cash Paid
During the Period for:
Interest $14,715 $14,254
Income taxes 8,070 8,319
<FN>
See notes to consolidated financial statements.
</TABLE>
Page 6<PAGE>
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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
the succeeding quarter 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 Nine Months Ended
June 30, June 30,
------------------ -----------------
1994 1993 1994 1993
---- ---- ---- ----
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Utility Operations
Current:
Federal $(5,783) $(5,788) $16,252 $17,011
State and local (983) (675) 2,733 1,908
Deferred:
Federal 3,875 5,190 (2,815) (703)
State and local 695 544 (344) (14)
------------------ -----------------
Subtotal $(2,196) $ (729) $15,826 $18,202
------------------ -----------------
Miscellaneous Income and
Income Deductions
Current:
Federal $ (144) $ 156 $ 64 $ 810
State and local (14) 15 (29) 60
Deferred:
Federal (3) (4) 56 (13)
State and local (1) - 5 -
------------------ -----------------
Subtotal $ (162) $ 167 $ 96 $ 857
------------------ -----------------
Total $(2,358) $ (562) $15,922 $19,059
================== =================
</TABLE>
4. The Company adopted Statement of Financial Accounting Standard (SFAS)
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions (OPEBS)" 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 period. 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 nine months ended June 30,
1994, including amounts charged to construction, consisted of the
following components:
<TABLE>
<CAPTION>
Thousands of Dollars
<S> <C>
Service Cost $ 1,114
Interest cost on projected benefit
obligation 2,160
Amortization transition obligation 1,273
-------
Net cost $ 4,547
=======
</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 recover OPEBS on a pay-as-you-go basis and
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. However, in January 1993, the Emerging Issues Task
Force (EITF) reached a consensus requiring more stringent accounting
criteria necessary to record a regulatory asset. Since the 1992 MoPSC
authorization was not in conformity with the 1993 EITF consensus, the
Company has not recorded a regulatory asset to reflect rate recovery of
these costs on a pay-as-you-go basis. However, in July 1994, a new
state law was enacted which will require SFAS No. 106 accrued costs be
Page 9<PAGE>
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recognized for ratemaking purposes provided that such costs are funded
through an independent, external funding mechanism. In its current rate
case (GR-94-220), the Company requested rate recovery of its prospective
SFAS No. 106 costs under the provisions of this new law. Recovery of
such costs has been included as part of the proposed settlement recently
submitted to the MoPSC.
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. 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.
The Company, in its pending rate case, is also seeking to establish an
appropriate environmental cost deferral procedure for use in applying
for appropriate rate recovery from the Missouri Public Service
Commission; and the proposed settlement in such rate case contains such
a deferral procedure.
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. 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 OPERATIONS
RESULTS OF OPERATIONS
Earnings for the quarter ended June 30, 1994 were a loss of $.18 per
share compared with a loss of $.14 per share for the quarter ended June 30,
1993, restated to reflect the 2-for-1 stock split which became effective
February 11, 1994. The weather for the quarter was 12% warmer than last
year and 8% warmer than normal. The decrease in earnings is primarily
attributable to lower gas sales arising from the warmer weather. Earnings
also decreased due to higher costs of doing business.
Utility operating revenues for the third quarter of fiscal year 1994
were $74.6 million compared with $76.0 million for the same quarter last
year. The $1.4 million, or 1.8%, decrease is principally due to lower therm
sales related to the warmer weather, partially offset by higher wholesale
gas costs which are passed on to Laclede's customers under the Company's
Purchased Gas Adjustment Clause. Therms sold and transported decreased by
9.1 million therms, or 6.0%, below the quarter ended June 30, 1993.
Utility operating expenses for the quarter ended June 30, 1994
decreased by $.7 million, or .9%, below the same quarter last year. Natural
and propane gas expense this quarter decreased $.7 million, or 1.9%, below
last year primarily due to decreased volumes purchased for sendout resulting
from the warmer weather, partially offset by higher rates charged by our
suppliers. Other operation and maintenance expenses increased $1.5 million,
or 6.6%, primarily due to (1) increased pension expense reflecting the
recognition of gains applicable to lump-sum settlements during the quarter
ended June 30, 1993 (no gains were recognized during the quarter ended
June 30, 1994) and higher net pension costs this quarter, (2) higher
contract wage rates, and (3) increased group insurance charges.
Depreciation and amortization expense increased 3.0% due to additional
property. Taxes, other than income taxes, decreased 1.8% primarily due to
lower property taxes this quarter. The $1.5 million decrease in income
taxes is principally due to lower taxable income. Income taxes also
decreased due to the effect of tax adjustments made last year.
The 3.5% increase in interest charges is mainly due to higher refunds
due customers and increased short-term borrowings. These increases were
partially offset by 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).
Earnings for the nine months ended June 30, 1994 were $1.78 per share
compared with earnings of $2.03 per share for the same period last year,
restated for the stock split. The weather for the nine-month period this
year was 2% warmer than last year and 2% warmer than normal. The decrease
in earnings is primarily due to increases in the costs of doing business and
the slightly warmer weather.
Utility operating revenues for the first nine months of fiscal year
1994 increased by $24.8 million, or 5.5%, above the corresponding period of
fiscal year 1993. This increase is principally due to higher wholesale gas
Page 12 <PAGE>
<PAGE>
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 decreased by 8.2 million, or .8%, below the level during the
nine months ended June 30, 1993.
Utility operating expenses for the nine months ended June 30, 1994
increased by $28.7 million, or 7.1%, above last year. Natural and propane
gas expense during the first nine months of fiscal 1994 increased $23.6
million, or 8.8%, above the same period a year ago. This increase is
principally due to higher rates charged by our suppliers, partially offset
by reduced sendout requirements (due to warmer weather). The $6.4 million,
or 8.8%, increase in other operation and maintenance expenses is principally
due to (1) increased pension expense reflecting the recognition of gains
applicable to lump-sum settlements during the nine-month period ended June
30, 1993 (no gains were recognized during the nine-month period ended June
30, 1994) and higher net pensions costs, (2) higher contract wage rates, and
(3) increased maintenance charges. These increases were partially offset by
a lower provision for uncollectible accounts this quarter. Depreciation and
amortization expense increased 2.9% due to additional property. Taxes,
other than income taxes, increased 2.0% primarily due to higher gross
receipts taxes (reflecting increased revenues), partially offset by lower
property taxes. The $2.4 million decrease in income taxes is principally
due to lower taxable income and the effect of tax adjustments made last
year. These decreases were partially offset by higher tax rates.
The 2.0% 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.
On June 28, 1994, Company and Union representatives signed a new three-
year labor agreement replacing the prior agreement which was to expire July
31, 1994. The new contract extends through July 31, 1997. The settlement
resulted in wage increases of 3.5% in the first year, 3.25% the second year,
and 3.25% the third year. Other employee benefit improvements will be
effected during the three-year term.
The Company filed a request (Case No. GR-94-220) 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. A settlement among all active participants to the
proceeding has recently been reached which, among other things, would allow
the Company an annual increase of $12.2 million. The parties have submitted
the settlement to the MoPSC and, if approved, the increased rates are to be
effective on September 1, 1994.
The Company adopted Statement of Financial Accounting Standard (SFAS)
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions (OPEBS)" 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 period. As permitted by SFAS No. 106, the liability
Page 13 <PAGE>
<PAGE>
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 recover OPEBS on a pay-as-you-
go basis and 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. However, in January 1993, the Emerging Issues Task
Force (EITF) reached a consensus requiring more stringent accounting
criteria necessary to record a regulatory asset. Since the 1992 MoPSC
authorization was not in conformity with the 1993 EITF consensus, the
Company has not recorded a regulatory asset to reflect rate recovery of
these costs on a pay-as-you-go basis. However, in July 1994, a new state
law was enacted which will require SFAS No. 106 accrued costs be recognized
for ratemaking purposes provided that such costs are funded through an
independent, external funding mechanism. In its current rate case (GR-94-
220), the Company requested rate recovery of its prospective SFAS No. 106
costs under the provisions of this new law. Recovery of such costs has been
included as part of the proposed settlement recently submitted to the MoPSC.
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.
Page 14<PAGE>
<PAGE>
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.
Subsequently, 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 resulted in current total lines of credit aggregating
$60 million to August 18, 1994.
The Company plans to obtain additional supplemental lines of credit
with banks shortly, the extent of which has not been determined at this
writing.
During the first nine 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 $44 million at July 31, 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 and 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. 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. The Company,
in its pending rate case, is also seeking to establish an appropriate
environmental cost deferral procedure for use in applying for appropriate
rate recovery from the Missouri Public Service Commission; and the proposed
settlement in such rate case contains such a deferral procedure.
Construction expenditures for the nine months ended June 30, 1994 were
$28.2 million compared with $29.6 million for the same period last year.
Capitalization at June 30, 1994 (excluding current redemption
requirements of long-term debt) increased $14.6 million since September 30,
1993 and consisted of 56.7% common stock equity, .5% preferred stock and
42.8% long-term debt.
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 June 30, 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 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
June 30, 1994.
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: August 12, 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 Amendment and Extension dated April 18, 21
1994 of Line of Credit Agreement dated
October 18, 1993 among Laclede Gas
Company, Chemical Bank, The Boatmen's
National Bank of St. Louis and Mercantile
Bank of St. Louis National Association.
Page 20
April 18, 1994
Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Mr. Robert Gillham
The Boatmen's National Bank of St. Louis
One Boatmen's Plaza
800 Market Street
St. Louis, MO 63166-0236
Attention: Mr. Thomas Guyton
Mercantile Bank of St. Louis National Association
Eighth & Locust, 12th Floor
P.O. Box 524
St. Louis, MO 63101
Attention: Mr. Edward Cheney
Ladies and Gentlemen:
Re: Amendment and Extension of line of credit agreement
Dated October 18, 1993 among Laclede Gas Company
("Laclede"), Chemical Bank ("Chemical"), The Boatmen's
National Bank of St. Louis ("Boatmen's") and
Mercantile Bank of St. Louis National Association
("Mercantile") (said banks being hereinafter
collectively called the "Banks" and said line of
credit agreement being hereinafter called the "Line of
Credit Agreement")
This amendatory agreement will confirm our agreement to
amend and extend the above-referenced Line of Credit Agreement
through August 18, 1994 on the same terms and conditions set
forth in the original Line of Credit Agreement, subject only to
the modifications expressly set forth in numbered Paragraphs 1,
2, 3 and 4 below, each of which Paragraphs shall be effective on
April 18, 1994.
1. New Maximum Amounts of Advances. The combined
aggregate principal amount of Advances at any time out-
standing from any Bank under the Line of Credit Agreement
shall not, on or after April 18, 1994, exceed the amount
set forth opposite the name of such Bank below (such Bank's
"Maximum Amount"), and shall be in a combined aggregate
Page 21<PAGE>
<PAGE>
Chemical Bank
The Boatmen's National Bank of St. Louis
Mercantile Bank of St. Louis National Association
April 18, 1994
2
principal amount at any time outstanding which shall not exceed
$20 million:
Name of Bank Maximum Amount
Chemical $10 million
Boatmen's 5 million
Mercantile 5 million
2. New Termination Date. The phrase "Termination
Date" as defined in the Line of Credit Agreement is hereby
amended from April 18, 1994 to August 18, 1994. According-
ly, all references in the Line of Credit Agreement to the
Termination Date shall hereafter refer to August 18, 1994.
3. New Form of Note. Each executed Note in the form
of Exhibit A to the Line of Credit Agreement as to which no
sums are then due and payable thereunder shall be returned
to Laclede immediately for cancellation, upon the holder
Bank's receipt of an executed Note to that Bank in the form
attached as Exhibit A to this amendatory agreement.
4. Absence of Material Adverse Change. The making
of Advances under the Line of Credit Agreement as amended
by this letter agreement is also subject to the absence of
any material adverse change since September 30, 1993, in
the financial condition of Laclede.
5. Ratification of Remainder of Line of Credit
Agreement. Subject only to the amendments expressly set
forth in numbered Paragraphs 1, 2, 3 and 4 above, the Line
of Credit Agreement is hereby ratified, confirmed and
approved in all respects.
Please indicate your acceptance of the terms of this
amendatory agreement by signing in the appropriate space below
and returning to Laclede Gas Company the enclosed duplicate of
the original 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 which
shall extend and amend the Line of Credit Agreement as
hereinbefore provided.
Very truly yours,
LACLEDE GAS COMPANY
By: Vernon O. Steinberg
Name: Vernon O. Steinberg
Title: Vice President-Treasurer
and Assistant Secretary
Page 22<PAGE>
<PAGE>
Chemical Bank
The Boatmen's National Bank of St. Louis
Mercantile Bank of St. Louis National Association
April 18, 1994
3
Accepted and Agreed to as of
the date first written above.
CHEMICAL BANK
By: Marisa J. Harney
Name: Marisa J. Harney
Title: Vice President
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
By: Thomas C. Guyton
Name: Thomas C. Guyton
Title: Vice President
MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION
By: Edward A. Cheney
Name: Edward A. Cheney
Title: Vice President
