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, 1998
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.
17,611,142 shares, Common Stock, par value $1 per share at 5/1/98.
Page 1<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, 1997.
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,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Utility Operating Revenues $213,826 $264,031 $413,493 $457,896
------------------- -------------------
Utility Operating Expenses:
Natural and propane gas 130,081 172,134 256,390 292,382
Other operation expenses 23,101 22,958 45,760 44,247
Maintenance 4,513 4,518 9,455 9,025
Depreciation and amortization 6,666 6,480 13,267 12,949
Taxes, other than income taxes 15,765 19,295 28,507 30,711
Income taxes (Note 3) 10,425 12,464 18,578 21,857
------------------- -------------------
Total Utility Operating Expenses 190,551 237,849 371,957 411,171
------------------- -------------------
Utility Operating Income 23,275 26,182 41,536 46,725
Miscellaneous Income and Income
Deductions - Net (less
applicable income taxes) (Note 3) 722 325 1,589 856
------------------- -------------------
Income Before Interest Charges 23,997 26,507 43,125 47,581
------------------- -------------------
Interest Charges:
Interest on long-term debt 3,949 3,542 7,802 7,084
Other interest charges 1,678 1,459 3,320 2,885
------------------- -------------------
Total Interest Charges 5,627 5,001 11,122 9,969
------------------- -------------------
Net Income 18,370 21,506 32,003 37,612
Dividends on Preferred Stock 25 25 49 49
------------------- -------------------
Earnings Applicable to Common Stock $ 18,345 $ 21,481 $ 31,954 $ 37,563
=================== ===================
Average Number of Common
Shares Outstanding 17,594 17,558 17,575 17,558
Earnings Per Share of Common Stock $1.04 $1.22 $1.82 $2.14
Dividends Declared Per Share
of Common Stock $.33 $.325 $.66 $.65
<FN>
See notes to consolidated financial statements.
</TABLE>
Page 3<PAGE>
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<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Mar. 31 Sept. 30
1998 1997
---- ----
(Thousands of Dollars)
(UNAUDITED)
ASSETS
<S> <C> <C>
Utility Plant $812,685 $792,661
Less: Accumulated depreciation and amortization 335,864 325,088
--------------------
Net Utility Plant 476,821 467,573
--------------------
Other Property and Investments 30,562 29,724
--------------------
Current Assets:
Cash and cash equivalents 5,928 4,508
Accounts receivable - net 87,696 47,932
Materials, supplies, and merchandise at avg cost 5,441 5,216
Natural gas stored underground for current use
at LIFO cost 21,343 56,867
Propane gas for current use at FIFO cost 12,840 12,917
Prepayments 2,871 1,986
Deferred income taxes 9,606 9,881
Delayed customer billings 23,630 -
--------------------
Total Current Assets 169,355 139,307
--------------------
Deferred Charges 87,955 84,106
--------------------
Total Assets $764,693 $720,710
====================
<FN>
See notes to consolidated financial statements.
</TABLE>
Page 4 <PAGE>
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<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS (Continued)
<CAPTION>
Mar. 31 Sept. 30
1998 1997
---- ----
(Thousands of Dollars)
(UNAUDITED)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock (19,459,396 shares issued) $ 19,459 $ 19,423
Paid-in capital 62,147 61,205
Retained earnings 214,129 193,776
Treasury stock, at cost (1,865,638 shares held) (24,017) (24,017)
--------------------
Total common stock equity 271,718 250,387
Redeemable preferred stock 1,960 1,960
Long-term debt (less sinking fund requirements) 179,128 154,413
--------------------
Total Capitalization 452,806 406,760
--------------------
Current Liabilities:
Notes payable 34,500 74,000
Accounts payable 37,981 29,628
Refunds due customers 8,940 731
Advance customer billings - 12,700
Current portion of long-term debt 25,000 25,000
Taxes accrued 23,542 6,848
Unamortized purchased gas adjustments 5,863 13,022
Other 24,180 22,509
--------------------
Total Current Liabilities 160,006 184,438
--------------------
Deferred Credits and Other Liabilities:
Deferred income taxes 74,525 85,013
Unamortized investment tax credits 7,106 7,280
Other 70,250 37,219
--------------------
Total Deferred Credits and Other Liabilities 151,881 129,512
--------------------
Total Capitalization and Liabilities $764,693 $720,710
====================
<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>
Six Months Ended
March 31,
1998 1997
---- ----
(Thousands of Dollars)
<S> <C> <C>
Operating Activities:
Net Income $ 32,003 $ 37,612
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,316 12,970
Deferred income taxes and investment tax credits (5,603) (3,826)
Other - net (646) 87
Changes in assets and liabilities:
Accounts receivable - net (39,764) (50,252)
Unamortized purchased gas adjustments (7,159) (17,071)
Deferred purchased gas costs 30,883 31,527
Delayed customer billings - net (36,330) (36,166)
Accounts payable 8,353 11,086
Refunds due customers 8,209 (930)
Taxes accrued 16,694 14,574
Natural gas stored underground 35,524 41,455
Other assets and liabilities (6,069) (3,449)
--------------------
Net cash provided by operating activities $ 49,411 $ 37,617
--------------------
Investing Activities:
Construction expenditures (22,054) (19,432)
Investments - non-utility (1,011) (1,427)
Employee benefit trusts 267 171
Other (122) (111)
--------------------
Net cash used in investing activities $(22,920) $(20,799)
--------------------
Financing Activities:
Repayment of short-term debt (39,500) (3,600)
Issuance of common stock 978 -
Dividends paid (11,549) (11,285)
Issuance of first mortgage bonds 25,000 -
--------------------
Net cash used in financing activities $(25,071) $ (14,885)
---------------------
Net Increase in Cash and Cash Equivalents $ 1,420 $ 1,933
Cash and Cash Equivalents at Beginning of Period 4,508 4,360
--------------------
Cash and Cash Equivalents at End of Period $ 5,928 $ 6,293
====================
Supplemental Disclosure of Cash Paid
During the Period for:
Interest $ 9,572 $ 9,250
Income taxes 4,435 8,285
<FN>
See notes to consolidated financial statements.
</TABLE>
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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 succeeding quarters of the fiscal year.
3. 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,
------------------ -----------------
1998 1997 1998 1997
---- ---- ---- ----
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Utility Operations
Current:
Federal $14,146 $15,589 $20,666 $22,006
State and local 2,475 2,635 3,574 3,716
Deferred:
Federal (5,348) (4,991) (4,948) (3,430)
State and local (848) (769) (714) (435)
----------------- -----------------
Subtotal $10,425 $12,464 $18,578 $21,857
----------------- -----------------
Miscellaneous Income and
Income Deductions
Current:
Federal $ 305 $ 164 $ 405 $ 222
State and local 42 17 58 20
Deferred:
Federal 33 20 51 33
State and local 5 3 8 6
----------------- -----------------
Subtotal $ 385 $ 204 $ 522 $ 281
----------------- -----------------
Total $10,810 $12,668 $19,100 $22,138
================= =================
</TABLE>
Page 7 <PAGE>
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4. The Company's Gas Supply Incentive Plan, which became effective October
1, 1996 as part of the settlement reached in the Company's last rate
case, continues to provide significant benefits for both the Company's
share owners and customers. Under the Plan, the Company and its
customers share in certain gains and losses as measured against
benchmark levels of gas costs as related to the acquisition, utilization
and management of the Company's gas supply assets. As part of this
Plan, the Company sells gas supply and pipeline capacity in markets
outside of its normal service territory. Results of the Plan are set
forth below:
<TABLE>
<CAPTION> Three Months Ended Six Months Ended
March 31, March 31,
------------------- -------------------
1998 1997 1998 1997
---- ---- ---- ----
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Incentive Plan Revenues $11,094 $12,469 $17,627 $21,004
Incentive Plan Gas Expense 9,796 10,493 14,238 17,405
------- ------- ------- -------
Income Before Income Taxes $ 1,298 $ 1,976 $ 3,389 $ 3,599
======= ======= ======= =======
</TABLE>
5. As part of its annual review of the Company's gas costs, the Staff of
the Missouri Public Service Commission (MoPSC) has recommended an
adjustment which, if approved by the MoPSC and upheld by the courts,
would require the Company to refund to its customers approximately $3.6
million of gains realized by the Company from various sales made outside
of Missouri between November 1995 and March 1996. The Company will
continue to vigorously oppose the Staff's recommended adjustment before
the MoPSC on the grounds that such adjustment violates Missouri law, is
impermissible under the Company's MoPSC-approved tariffs, and is
otherwise unlawful and unreasonable. The Company believes that the
outcome of this matter is unlikely to have a material adverse impact on
the Company.
6. The Company is subject to various 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.
In the past, the Company operated various manufactured gas plants which
produced certain by-products and residuals. At the request of the
United States Environmental Protection Agency (EPA), Laclede performed
an investigation of one of the Company's former manufactured gas plant
sites located in Shrewsbury, Missouri (the Shrewsbury Site). As
previously reported by the Company, the Company has had lengthy
discussions with the EPA and the Missouri Department of Natural
Resources (MoDNR) on the question of what additional actions are
required for the site. On October 17, 1997, the Company submitted to
the EPA an Engineering Evaluation/Cost Analysis (EE/CA), together with
an accompanying letter (collectively the "Submitted EE/CA Documents"),
in which the Company proposed to maintain various institutional controls
at this site, to stabilize the bank of a drainageway located at the edge
of the site, and to perform a limited removal of some contaminants
located in certain small areas of the site. The EPA and the MoDNR have
proposed changes to the Submitted EE/CA Documents, to which Laclede has
responded. At this time, given the lack of final agreement as to what
additional actions should be taken, the ultimate costs to be
incurred regarding the Shrewsbury Site remain unclear. Assuming the
Company performs the limited actions described in the Submitted EE/CA
Page 8<PAGE>
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Documents and the actions included in the Company's response to the
EPA's and MoDNR's proposed changes to the submitted EE/CA Documents, the
Company estimates that the overall costs will be approximately $778,000.
As of March 31, 1998, $541,000 of such overall costs had been paid,
and an additional $237,000 was reserved by the Company. If the Company
is required to take any additional actions with regard to the site, the
Company may have to incur additional costs, the extent of which cannot
practicably be estimated currently. The Company has notified its
insurers that it intends to seek reimbursement from them of its
investigation, remediation, clean-up and defense costs. The Company
intends to seek recovery, if practicable, from any other potentially
responsible parties.
In a separate matter, MoDNR has accepted the Company's application to
place the site of a different former manufactured gas plant located in
the City of St. Louis, Missouri (which site was also used by subsequent
owners as the site of a coke manufacturing facility) in the Missouri
Voluntary Cleanup Program, for the purpose of characterizing the site.
MoDNR's preliminary tests conducted at the site reflect the presence of
coke and gas plant manufacturing wastes, as well as certain heavy metal
wastes. The Company has also conducted an initial investigation,
consisting of soil sampling and the drilling of nine monitoring wells to
assess the condition of groundwater at this site. The Company currently
estimates that the cost of such investigation, MoDNR oversight costs and
associated legal and engineering consulting costs relative to such
investigation of the site would together approximate $145,000.
Currently, $36,000 has been paid and an additional $109,000 has been
reserved on the Company's books. The City of St. Louis, the current
owner of the site, received proposals from several different groups to
develop this site. Various portions of the development proposals dealt
with the issue of the environmental condition of the site, and the
impact of such condition on possible development plans. Unless and
until any development proposal is selected, the Company is unable to
determine the impact, if any, that any proposed development will have on
actions to be taken regarding the site, and the cost of any such
actions. The Company has notified its insurers that the Company intends
to seek reimbursement from them for investigation, remediation, clean-up
and defense costs. The Company has also requested that other former
site owners and/or operators participate in the cost of any site
investigation, but none has yet agreed to do so. The Company plans to
seek proportionate reimbursement of all costs incurred with respect to
this site from such parties and/or any other potentially responsible
parties, to the extent practicable.
The Company is presently unable to evaluate or quantify further the
scope or cost of any environmental response activity with regard to the
above two former manufactured gas plant sites.
The Missouri Public Service Commission approved, effective September 1,
1996, the continued use of a cost deferral mechanism, originally
approved as part of a 1994 rate case settlement, for the Company's use
in applying for appropriate rate recovery of various environmental costs
in connection with former manufactured gas plants. Laclede has proposed
to continue this deferral mechanism in its rate case which is currently
pending before the Commission. In any event, the recovery of costs thus
deferred may be challenged in the current or future rate proceedings.
7. This Form 10-Q should be read in conjunction with the Notes to
Consolidated Financial Statements contained in the Company's 1997 Form
10-K.
Page 9<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Earnings for the quarter ended March 31, 1998 were $1.04 per share compared
with $1.22 per share for the comparable quarter last year. The weather for
the quarter was 11% warmer than the same period last year. The decrease in
earnings was primarily attributable to lower gas sales volumes (resulting
from the warmer weather) and higher costs of doing business.
Utility operating revenues for the quarter ended March 31, 1998 were $213.8
million compared with $264.0 million for the quarter ended March 31, 1997.
The $50.2 million, or 19.0%, decrease was principally due to lower wholesale
gas costs (which are passed on to Laclede's customers under the Company's
Purchased Gas Adjustment Clause) and lower gas sales volumes arising from
the warmer weather. System therms sold and transported decreased by 34.8
million therms, or 7.6%, below the quarter ended March 31, 1997.
Utility operating expenses for the quarter ended March 31, 1998 decreased by
$47.3 million, or 19.9%, below the same quarter last year. Natural and
propane gas expense this quarter decreased $42.1 million, or 24.4%, below
last year mainly due to decreased rates charged by the Company's suppliers
and lower volumes purchased for sendout (resulting from the warmer weather).
Other operation and maintenance expenses increased slightly due to higher
wage rates, increased distribution charges and other increases in the costs
of doing business. These increases were largely offset mainly by higher
gains recognized on lump sum pension settlements. Depreciation and
amortization expense increased 2.9% primarily due to additional property.
Taxes, other than income taxes, decreased 18.3% mainly due to lower gross
receipts taxes (reflecting decreased revenues). The $2.0 million decrease
in income taxes is principally due to lower taxable income.
Miscellaneous income and income deductions increased $.4 million primarily
due to improved subsidiary results and minor variations in several areas.
The 12.5% increase in interest expense is mainly due to higher interest on
long-term debt resulting from the issuance of $25 million of 6-1/2% First
Mortgage Bonds in October 1997 and increased short-term interest charges.
Earnings for the six months ended March 31, 1998 were $1.82 per share
compared with $2.14 per share for the comparable period last year. The
weather was 7% warmer than last year. The decrease in earnings was
primarily due to lower gas sales volumes (arising from the warmer weather)
and higher costs of doing business. Due to the seasonal nature of its
business, the Company's earnings are concentrated during the first six
months of the fiscal year, which covers most of the heating season. As
sales volumes decline during the summer, the Company experiences losses in
the second half of the fiscal year.
Utility operating revenues for the first six months of fiscal year 1998
decreased $44.4 million, or 9.7%, below the corresponding period of fiscal
year 1997. This decrease was primarily due to lower gas sales volumes
(arising from the warmer weather) and lower wholesale gas costs (which are
passed on to Laclede's customers under the Company's Purchased Gas
Adjustment Clause). System therms sold and transported decreased by 39.0
million therms, or 4.7%, below the level experienced during the six months
ended March 31, 1997.
Page 10<PAGE>
<PAGE>
Utility operating expenses for the six months ended March 31, 1998 decreased
by $39.2 million, or 9.5%, below last year. Natural and propane gas expense
during the first six months of fiscal year 1998 decreased by $36.0 million,
or 12.3%, below last year mainly due to reduced volumes purchased for
sendout (resulting from the warmer weather) and lower rates charged by our
suppliers. Other operation and maintenance expenses increased $1.9 million,
or 3.6%, due to increased distribution and maintenance charges, higher wage
rates and other increases in the costs of doing business. These increases
were partially offset by higher gains recognized on lump sum pension
settlements and lower net pension costs. Depreciation and amortization
expense increased 2.5% primarily due to additional property. Taxes, other
than income taxes, decreased by 7.2% principally due to lower gross receipts
taxes (mainly reflecting decreased revenues). The $3.3 million decrease in
income taxes is mainly due to lower taxable income.
Miscellaneous income and income deductions for the first six months of
fiscal 1998 increased $.7 million above the same period last year primarily
due to improved subsidiary results and minor variations in several areas.
The 11.6% increase in interest expense is mainly due to higher interest on
long-term debt resulting from the issuance of $25 million of 6-1/2% First
Mortgage Bonds in October 1997 and increased short-term interest charges.
On February 27, 1998, the Company filed a request with the Missouri Public
Service Commission (MoPSC) for a general rate increase which would add $25.4
million to operating revenues on an annual basis. This increase is
necessary to offset generally higher operating costs as well as the added
costs of operating, maintaining, and financing the increased investment in
new facilities the Company has installed since the filing of its last
general rate increase in December 1995. By law, the Missouri Commission has
up to eleven months before it must act on this 1998 request, but the Company
is hopeful the Commission will allow new rates to be implemented prior to
January, 1999.
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 the Company's 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 1998, the Company renewed its primary lines of bank
credit under which it may borrow up to $40 million prior to January 31,
1999, with renewal of any loans outstanding on that date permitted to June
30, 1999. This, along with a previously obtained $70 million supplemental
line of credit which runs through August 30, 1998, provides a total line of
credit of $110 million for the 1997-1998 heating season. During fiscal 1998
to date, the Company sold commercial paper aggregating to a maximum of
$110.0 million at any one time, but did not borrow from the banks under the
aforementioned agreements. Short-term borrowings amounted to $34.5 million
at March 31, 1998.
The Company anticipates redeeming the $25 million of 9-5/8% Series First
Mortgage Bonds due May 15, 2013, on May 15, 1998 (the date at which such
bonds are first redeemable). Initially, funds for this purpose will be
supplied by short-term borrowing agreements currently in place. The Company
currently has $25 million of First Mortgage Bonds remaining unissued from a
previously authorized shelf registration.
As part of its annual review of the Company's gas costs, the Staff of the
MoPSC has recommended an adjustment which, if approved by the MoPSC and
Page 11<PAGE>
<PAGE>
upheld by the courts, would require the Company to refund to its customers
approximately $3.6 million of gains realized by the Company from various
sales made outside of Missouri between November 1995 and March 1996. The
Company will continue to vigorously oppose the Staff's recommended
adjustment before the MoPSC on the grounds that such adjustment violates
Missouri law, is impermissible under the Company's MoPSC-approved tariffs,
and is otherwise unlawful and unreasonable. The Company believes that the
outcome of this matter is unlikely to have a material adverse impact on the
Company.
The Company is subject to various 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. However, the Company has
reported certain environmental liabilities in connection with two
manufactured gas plants operated by the Company in the past which produced
certain by-products and residuals. The Company has either already paid or
reserved overall costs of $923,000 which are estimated to cover the
performance of certain limited actions at these locations. At this time,
the ultimate costs to be incurred remain unclear, as does the amount of any
recovery which the Company may be able to obtain from other responsible
parties and/or the Company's insurers. The Missouri Public Service
Commission approved, effective September 1, 1996, the continued use of a
cost deferral mechanism, originally approved as part of a 1994 rate case
settlement, for the Company's use in applying for appropriate rate recovery
of various environmental costs in connection with former manufactured gas
plants. Laclede has proposed to continue this deferral mechanism in its
rate case which is currently pending before the Commission. In any event,
the recovery of costs thus deferred may be challenged in the current or
future rate proceedings. Refer to Note 6 of Notes to Consolidated Financial
Statements on page 8 for additional information on the Company's
environmental matters.
Construction expenditures for the six months ended March 31, 1998 were $22.1
million compared with $19.4 million for the same period last year.
Many of the Company's computer systems and applications will not recognize
the turn of the century and, thus, require programming modification or
replacement. For more than two years, the Company, through the use of
internal and external resources, has been involved in the process of
modifying and replacing significant portions of its computer systems in
order to make such systems operational in the year 2000 and beyond, as well
as to provide additional benefits. The costs associated with the
replacement of certain computer systems are being recorded as assets and
will be amortized, while the costs of modifying the remaining systems to fix
the year 2000 problem are being charged to expense. Currently, the Company
estimates that the costs remaining to be incurred and ultimately charged to
expense are approximately $2 million. Actual costs, however, may differ
materially from such estimate to the extent the Company encounters
unforeseen issues and/or problems during its ongoing year 2000 assessment.
In March, the Company announced that it had reached an agreement with
Williams Gas Pipelines Central of Tulsa, Oklahoma under which Williams will
provide additional natural gas service to the Company's service area. Under
the agreement, Williams will convert to natural gas service an existing 200-
mile petroleum products line that stretches eastward from Kansas City to St.
Louis. Williams presently owns and operates the nation's largest interstate
natural gas pipeline system in terms of volumes transported and is connected
to diverse and abundant natural gas reserves. The new pipeline will provide
for the delivery of competitive, supplemental gas supplies that are needed
Page 12<PAGE>
<PAGE>
by the Company to ensure continued reliable service to the fast-growing St.
Charles area. Williams is expected to begin firm transportation service to
the Company through the new line in October 1998.
Capitalization at March 31, 1998 increased $46.0 million since September 30,
1997 and consisted of 60.0% common stock equity, .4% preferred stock equity
and 39.6% long-term debt.
The seasonal effect of the Company's financial position affects the
comparison of certain balance sheet items at March 31, 1998 and at September
30, 1997 such as Accounts Receivable - Net, Natural Gas Stored Underground
for Current Use, Delayed and Advanced Customer Billings, and Accounts
Payable.
Page 13<PAGE>
<PAGE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
Part II
OTHER INFORMATION
Page 14<PAGE>
<PAGE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
Item 1. Legal Proceedings
For a discussion of environmental matters, see Note 6 of the Notes
to Consolidated Financial Statements in Part I, Financial
Information.
During the quarter ended March 31, 1998, there were no new legal
proceedings required to be disclosed.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of Laclede Gas Company was
held on January 22, 1998 for the purpose of electing four
directors to the Board of Directors and ratifying the appointment
of independent auditors. 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
Director Nominee Voted For Voted Withheld
---------------- --------- --------------
Dr. Henry Givens, Jr. 13,985,556 220,306
Mary Ann Krey 13,990,286 215,576
H. Edwin Trusheim 13,954,384 251,478
Douglas H. Yaeger 13,991,336 214,526
The proposal to ratify the appointment of Deloitte & Touche LLP,
Certified Public Accountants, to audit the accounts of the
Company for the fiscal year ending September 30, 1998 was passed
upon the following vote:
Shares Voted:
------------
For the proposal 13,750,871
Against the proposal 101,503
Abstain regarding the proposal 189,090
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, 1998.
Page 15<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 1, 1998 G. T. McNeive, Jr.
--------------------
G. T. McNeive, Jr.
Sr. Vice President - Finance
and General Counsel
(Authorized Signatory and
Chief Financial Officer)
Page 16 <PAGE>
<PAGE>
Index to Exhibits
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------- ------- ------------
10.01 Line of Credit Agreement dated January 16, 1998
with NationsBank, N.A. 18
10.02 Line of Credit Agreement dated January 16, 1998
with Mercantile Bank National Association. 19
10.03 Line of Credit Agreement dated January 9, 1998
with Commerce Bank. 21
10.04 Line of Credit Agreement dated January 13, 1998
with The Chase Manhattan Bank. 23
27 Financial Data Schedule UT 25
Page 17
January 16, 1998
NationsBank, N.A.
One NationsBank Plaza, 13th Floor
800 Market Street
St. Louis, Missouri 63102
Gentlemen:
In order to help finance our construction through January 31, 1999, and
to provide funds for general corporate purposes, we are asking you to make
available to us until January 31, 1999, bank credit in the amount of
$10,000,000.00.
Notes issued under this agreement shall mature not more than ninety
(90) days from date. Notes maturing after January 31, 1999, may be renewed
in whole or in part provided no note shall mature later than June 30, 1999.
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 August 13, 1997, or the availability of up to
$20,000,000.00 of advances thereunder from NationsBank, N.A. on the terms
set forth in said August 13, 1997 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 s/Ronald L. Krutzman
Treasurer & Asst. Secretary
NATIONSBANK, N.A.
By s/Thomas C. Guyton
RLK/dkk
Page 18
Mercantile Bank National Association
Mercantile Tower
P. O. Box 524
St. Louis, MO 63166-0524
January 16, 1998
Mr. Ronald L. Krutzman
Treasurer and Assistant Secretary
Laclede Gas Company
720 Olive Street
St. Louis, MO 63101
Dear Ron:
Mercantile Bank of St. Louis National Association is pleased to provide a
$10,000,000 line of credit maturing January 31, 1999 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 whole note is outstanding with a maturity after January 31,
1999, the note shall be renewed in whole or in part provided no note shall
mature later than June 30, 1999.
Interest shall be payable at maturity or on date of repayment. Interest
shall be computed on the basis of actual 365/366 for prime borrowings and
actual 360 basis for IBOR or CD loans. Notes issued 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 conditions, 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 August 13, 1997 or the availability of up to $20,000,000
of advances thereunder from Mercantile Bank of St. Louis National
Association on the terms set forth in said August 13, 1997 agreement.
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 below.
MERCANTILE BANK OF ST. LOUIS N.A.
Page 19<PAGE>
<PAGE>
By: s/Timothy W. Hassler
Name: Timothy W. Hassler
Title: Vice President
Accepted this 16th day of January 1998
LACLEDE GAS COMPANY
By: s/Ronald L. Krutzman
Name: Ronald L. Krutzman
Title: Treasurer & Assistant Secretary
Page 20
Commerce Bank
8000 Forsyth Boulevard
St. Louis, Missouri 63105-1797
(314) 726-2255
January 9, 1998
Mr. Ronald Krutzman, Treasurer
Laclede Gas Company
720 Olive
St. Louis, MO 63101
Dear Mr. Krutzman:
Commerce Bank, N.A. ("Bank") is pleased to offer a discretionary 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 fund.
Term: Until January 31, 1999
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, 1999, may be renewed in
whole or part provided no note matures later than June 30, 1999. 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
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.
Page 21<PAGE>
<PAGE>
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 within 15 days from this date. We are pleased to be
able to provide this service and look forward to expanding our relationship.
Sincerely,
s/Ann E. Steck
Ann E. Steck
Vice President
AES: jc
Accepted and approved this 14th day of January, 1998.
LACLEDE GAS COMPANY
By: s/Ronald L. Krutzman
Page 22
The Chase Manhattan Bank
270 Park Avenue, 32nd Floor
New York, NY 10017-2070
January 13, 1998
Mr. Ronald L. Krutzman
Treasurer
Laclede Gas Company
720 Olive Street
St. Louis, MO 63101
Dear Ron:
The Chase Manhattan Bank (the "Bank") is pleased to advise you that it is
prepared to offer a line of credit to Laclede Gas Company (the "Company") up
to the maximum amount of $10,000,000. The Bank will consider requests for
advances under the line of credit until January 31, 1999. The purpose of
the line of credit is general corporate purposes. Accordingly, our officers
may, at their discretion, make short term loans to the Company on such terms
as may be mutually agreed upon from time to time.
Notes issued under this arrangement shall mature not more than ninety days
(90) from date of issuance. Notes maturing after January 31, 1999, may be
renewed in whole or in part provided no notes mature later than June 30,
1999. 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.
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 the Company
whether or not they are guaranteed by the Company are excluded from this
arrangement and shall not be charged against the credit stated above.
This letter constitutes the entire understanding between the Bank and the
Company, supersedes all prior discussions and replaces the Bank's letter to
you dated January 17, 1997 regarding a line of credit.
Nothing in this letter is intended to alter the arrangement set forth in the
agreement dated August 13, 1997 or the availability of up to $30,000,000 of
advances thereunder from the Bank on the terms set forth in said August 13,
1997 Agreement.
Please acknowledge your understanding of the above by signing and returning
the attached copy of this letter by January 25, 1998.
Page 23<PAGE>
<PAGE>
The Chase Manhattan Bank
s/Kevin P. O'Neill
Kevin P. O'Neill
Vice President
Acknowledged:
Laclede Gas Company
By: s/Ronald L. Krutzman 1/14/98
Name: Ronald L. Krutzman
Title: Treasurer
Page 24
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 476,821
<OTHER-PROPERTY-AND-INVEST> 30,562
<TOTAL-CURRENT-ASSETS> 169,355
<TOTAL-DEFERRED-CHARGES> 87,955
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 764,693
<COMMON> 19,459
<CAPITAL-SURPLUS-PAID-IN> 38,130
<RETAINED-EARNINGS> 214,129
<TOTAL-COMMON-STOCKHOLDERS-EQ> 271,718
1,960
0
<LONG-TERM-DEBT-NET> 179,128
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 34,500
<LONG-TERM-DEBT-CURRENT-PORT> 25,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 252,387
<TOT-CAPITALIZATION-AND-LIAB> 764,693
<GROSS-OPERATING-REVENUE> 413,493
<INCOME-TAX-EXPENSE> 18,578
<OTHER-OPERATING-EXPENSES> 353,379
<TOTAL-OPERATING-EXPENSES> 371,957
<OPERATING-INCOME-LOSS> 41,536
<OTHER-INCOME-NET> 1,589
<INCOME-BEFORE-INTEREST-EXPEN> 43,125
<TOTAL-INTEREST-EXPENSE> 11,122
<NET-INCOME> 32,003
49
<EARNINGS-AVAILABLE-FOR-COMM> 31,954
<COMMON-STOCK-DIVIDENDS> 11,600
<TOTAL-INTEREST-ON-BONDS> 7,802
<CASH-FLOW-OPERATIONS> 49,411
<EPS-PRIMARY> 1.82
<EPS-DILUTED> 1.82
<FN>
Capital-surplus-paid-in is net of $24,017 of treasury stock.
Page 25
</TABLE>
