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, 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.
17,627,987 shares, Common Stock, par value $1 per share at 8/7/98.
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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 Nine Months Ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Utility Operating Revenues $77,193 $84,191 $490,686 $542,087
------------------ -------------------
Utility Operating Expenses:
Natural and propane gas 34,486 38,016 290,876 330,398
Other operation expenses 20,239 21,217 65,999 65,464
Maintenance 4,636 4,607 14,091 13,632
Depreciation and amortization 6,771 6,426 20,038 19,375
Taxes, other than income taxes 8,636 8,956 37,143 39,667
Income taxes (Note 3) (1,100) 244 17,478 22,101
------------------ -------------------
Total Utility Operating Expenses 73,668 79,466 445,625 490,637
------------------ -------------------
Utility Operating Income 3,525 4,725 45,061 51,450
Miscellaneous Income and Income
Deductions - Net (less
applicable income taxes) (Note 3) 561 602 2,150 1,458
------------------ -------------------
Income Before Interest Charges 4,086 5,327 47,211 52,908
------------------ -------------------
Interest Charges:
Interest on long-term debt 3,648 3,543 11,450 10,627
Other interest charges 1,344 972 4,664 3,857
------------------ -------------------
Total Interest Charges 4,992 4,515 16,114 14,484
------------------ -------------------
Net Income (Loss) (906) 812 31,097 38,424
Dividends on Preferred Stock 24 24 73 73
------------------ -------------------
Earnings (Loss) Applicable to
Common Stock $ (930) $ 788 $ 31,024 $ 38,351
================== ===================
Average Number of Common
Shares Outstanding 17,611 17,558 17,587 17,558
Earnings (Loss) Per Share of
Common Stock $(.05) $ .04 $1.76 $2.18
Dividends Declared Per Share
of Common Stock $.33 $.325 $.99 $.975
<FN>
See notes to unaudited consolidated financial statements.
</TABLE>
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<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30 Sept. 30
1998 1997
---- ----
(Thousands of Dollars)
(UNAUDITED)
ASSETS
<S> <C> <C>
Utility Plant $824,754 $792,661
Less: Accumulated depreciation and amortization 340,798 325,088
--------------------
Net Utility Plant 483,956 467,573
--------------------
Other Property and Investments 31,170 29,724
--------------------
Current Assets:
Cash and cash equivalents 4,342 4,508
Accounts receivable - net 51,942 47,932
Materials, supplies, and merchandise at avg cost 5,678 5,216
Natural gas stored underground for current use
at LIFO cost 28,480 56,867
Propane gas for current use at FIFO cost 12,839 12,917
Prepayments 2,433 1,986
Deferred income taxes 6,038 9,881
Delayed customer billings 9,546 -
--------------------
Total Current Assets 121,298 139,307
--------------------
Deferred Charges 93,101 84,106
--------------------
Total Assets $729,525 $720,710
====================
<FN>
See notes to unaudited consolidated financial statements.
</TABLE>
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<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS (Continued)
<CAPTION>
June 30 Sept. 30
1998 1997
---- ----
(Thousands of Dollars)
(UNAUDITED)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock (Shares issued - 1998, 19,476,780;
1997, 19,423,178) $ 19,477 $ 19,423
Paid-in capital 62,566 61,205
Retained earnings 207,388 193,776
Treasury stock, at cost (1,865,638 shares held) (24,017) (24,017)
--------------------
Total common stock equity 265,414 250,387
Redeemable preferred stock 1,960 1,960
Long-term debt (less sinking fund requirements) 179,217 154,413
--------------------
Total Capitalization 446,591 406,760
--------------------
Current Liabilities:
Notes payable 65,000 74,000
Accounts payable 23,666 29,628
Refunds due customers 8,210 731
Advance customer billings - 12,700
Current portion of long-term debt - 25,000
Taxes accrued 14,730 6,848
Unamortized purchased gas adjustments 2,041 13,022
Other 19,332 22,509
--------------------
Total Current Liabilities 132,979 184,438
--------------------
Deferred Credits and Other Liabilities:
Deferred income taxes 81,846 85,013
Unamortized investment tax credits 7,020 7,280
Other 61,089 37,219
--------------------
Total Deferred Credits and Other Liabilities 149,955 129,512
--------------------
Total Capitalization and Liabilities $729,525 $720,710
====================
<FN>
See notes to unaudited consolidated financial statements.
</TABLE>
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<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months Ended
June 30,
1998 1997
---- ----
(Thousands of Dollars)
<S> <C> <C>
Operating Activities:
Net Income $ 31,097 $ 38,424
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 20,112 19,405
Deferred income taxes and investment tax credits 2,423 3,065
Other - net (700) (116)
Changes in assets and liabilities:
Accounts receivable - net (4,010) (11,089)
Unamortized purchased gas adjustments (10,981) (20,717)
Deferred purchased gas costs 22,694 21,015
Delayed customer billings - net (22,246) (14,695)
Accounts payable (5,962) 8,643
Refunds due customers 7,479 (998)
Taxes accrued 7,882 8,694
Natural gas stored underground 28,387 34,763
Other assets and liabilities (14,009) (13,889)
--------------------
Net cash provided by operating activities 62,166 72,505
--------------------
Investing Activities:
Construction expenditures (35,920) (31,491)
Investments - non-utility (1,344) (1,708)
Employee benefit trusts (160) 478
Other 56 2,750
--------------------
Net cash used in investing activities (37,368) (29,971)
--------------------
Financing Activities:
Repayment of short-term debt - net (9,000) (25,100)
Issuance of common stock 1,415 -
Dividends paid (17,379) (17,016)
Issuance of first mortgage bonds 25,000 -
Retirement of first mortgage bonds (25,000) -
--------------------
Net cash used in financing activities (24,964) (42,116)
--------------------
Net Increase (Decrease) in Cash and Cash Equivalents (166) 418
Cash and Cash Equivalents at Beginning of Period 4,508 4,360
--------------------
Cash and Cash Equivalents at End of Period $ 4,342 $ 4,778
====================
Supplemental Disclosure of Cash Paid
During the Period for:
Interest $18,669 $17,115
Income taxes 4,766 9,249
<FN>
See notes to unaudited consolidated financial statements.
</TABLE>
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LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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. 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,
------------------ -----------------
1998 1997 1998 1997
---- ---- ---- ----
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Utility Operations
Current:
Federal $(7,772) $(5,730) $12,894 $16,276
State and local (1,321) (974) 2,253 2,742
Deferred:
Federal 6,774 5,875 1,826 2,445
State and local 1,219 1,073 505 638
----------------- -----------------
Subtotal $(1,100) $ 244 $17,478 $22,101
----------------- -----------------
Miscellaneous Income and
Income Deductions
Current:
Federal $ (234) $ 57 $ 171 $ 279
State and local (2) 40 56 60
Deferred:
Federal 28 (50) 79 (16)
State and local 5 (7) 13 (2)
----------------- -----------------
Subtotal $ (203) $ 40 $ 319 $ 321
----------------- -----------------
Total $(1,302) $ 284 $17,798 $22,422
================= =================
</TABLE>
Page 7 <PAGE>
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4. The Company's Gas Supply Incentive Plan, which became effective October
1, 1996 for a three-year period 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 Nine Months Ended
June 30, June 30,
------------------- -------------------
1998 1997 1998 1997
---- ---- ---- ----
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Incentive Plan Revenues $ 6,877 $ 6,916 $24,504 $27,920
Incentive Plan Gas Expense 5,424 5,229 19,662 22,634
------- ------- ------- -------
Company Share - Pretax Income $ 1,453 $ 1,687 $ 4,842 $ 5,286
======= ======= ======= =======
</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
Page 8 <PAGE>
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regarding the Shrewsbury Site remain unclear. Assuming the
Company performs the limited actions described in the Submitted EE/CA
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 June 30, 1998, $562,000 of such overall costs had been paid,
and an additional $216,000 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 groundwater
monitoring portion of the initial investigation is scheduled to take one
year. The Company currently estimates that the cost of its
investigation, MoDNR oversight costs and associated legal and
engineering consulting costs relative to such investigation of the site
would together approximate $145,000. Currently, $112,000 has been paid
and an additional $33,000 has been reserved on the Company's books. 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.
Superior Oil Company and Union Pacific Railroad Company (the Plaintiffs)
named Laclede as an additional defendant in a lawsuit
previously filed by the Plaintiffs against Allied Signal, Inc. and
Monsanto Company. In this lawsuit the Plaintiffs are seeking
contribution from the defendants under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (CERCLA) for response
costs which have been incurred, and which will be incurred, by the
Plaintiffs to remediate contamination at a site located in St. Louis,
Missouri which the Plaintiffs currently own and/or lease (the Superior
Page 9 <PAGE>
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Oil Site). The Plaintiffs contend that the three defendants should be
held jointly and severally liable for past and future response costs, in
Laclede's case, because: (a) coal tar wastes allegedly are and have
been migrating onto the Superior Oil Site from an adjacent site, which
is the former location of one of Laclede's gas manufacturing plants; and
(b) Laclede allegedly previously arranged for the disposal of coal
tar wastes at the Superior Oil Site through the operations of Barrett
Manufacturing Company (the predecessor in interest of Allied Signal,
Inc.). The other parties to the lawsuit have filed an Engineering
Evaluation/Cost Analysis (EE/CA) with the EPA for the Superior Oil Site.
The EE/CA contains no apparent evidence that Laclede contributed
contaminants to the Superior Oil Site. Laclede has commenced formal
discovery to determine what evidence, if any, exists which demonstrates
that Laclede contributed any contaminants to the Superior Oil Site. The
Superior Oil Site was also the subject of a separate CERCLA lawsuit
filed by the EPA against the Plaintiffs and several other potentially
responsible parties. Laclede has been informed that the CERCLA lawsuit
filed by the EPA has been settled. Laclede was not a party to the
lawsuit initiated by the EPA and has never been named by the EPA as a
responsible party at the Superior Oil Site. Based upon the information
currently available to Laclede, Laclede believes that if Laclede is
found to have contributed at all to the contamination at the Superior
Oil Site, Laclede's share of the liability for response costs applicable
to the Superior Oil Site would be relatively small. Accordingly, such
liability should have no material adverse impact on Laclede's financial
condition or results of operations. Laclede intends to defend
vigorously the lawsuit in which it has been named a party.
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 10<PAGE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Due to the seasonal nature of a business that primarily sells heating energy,
the Company normally experiences losses during the summer season, which
encompasses the third and fourth quarters of the fiscal year. This year was
no different, and for the quarter ended June 30, 1998 the Company lost $.05 per
share. However, during the third quarter of last year the weather was
significantly cooler. This, coupled with the sale of the Company's remaining
exploration and development (E&D) properties during May 1997, produced positive
quarterly earnings of $.04 per share last year. Thus, this year's decrease in
earnings primarily reflects reduced sales from weather that was warmer than
last year and the net proceeds of the sale of the Company's E&D properties.
Utility operating revenues for the quarter ended June 30, 1998 were $77.2
million compared with $84.2 million for the quarter ended June 30, 1997. The
$7.0 million, or 8.3%, decrease was principally due to lower gas sales volumes
arising from the warmer weather. This decrease was slightly offset by higher
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 23.2 million therms, or 14.1%, below the quarter ended June 30,
1997.
Utility operating expenses for the quarter ended June 30, 1998 decreased by
$5.8 million, or 7.3%, below the same quarter last year. Natural and propane
gas expense this quarter decreased $3.5 million, or 9.3%, below last year
mainly due to lower volumes purchased for sendout (resulting from the warmer
weather) partially offset by higher rates charged by the Company's
suppliers. Other operation and maintenance expenses decreased $.9 million,
or 3.7%, due to decreased distribution charges and other decreases in the costs
of doing business. Depreciation and amortization expense increased 5.4%
primarily due to additional property. Taxes, other than income taxes,
decreased 3.6% mainly due to lower gross receipts taxes (reflecting decreased
revenues). The $1.3 million decrease in income taxes is principally due to the
taxable loss experienced this quarter.
The slight decrease in miscellaneous income and income deductions reflects
gains recorded last year resulting from the sale of E&D properties, largely
offset by minor variations in several areas. The 10.6% increase in interest
expense is mainly due to higher short-term borrowings and higher interest on
long-term debt resulting from the issuance of $25 million of 6-1/2% First
Mortgage Bonds in October 1997.
Earnings for the nine months ended June 30, 1998 were $1.76 per share compared
with $2.18 per share for the same period a year ago. Lower sales resulting
from weather that was 11% warmer than last year and from reduced customer
consumption experienced this past heating season, as well as increases in the
costs of doing business, were largely responsible for the decreased earnings.
Utility operating revenues for the first nine months of fiscal year 1998
decreased $51.4 million, or 9.5%, below the corresponding period of fiscal year
1997. This decrease was principally due to the warmer weather conditions,
reduced customer consumption, and the effect of lower wholesale gas prices
(which are passed on to Laclede's customers under the Company's Purchased Gas
Adjustment Clause). System therms sold and transported decreased by 62.2
million therms, or 6.3%, below the level experienced during the nine months
ended June 30, 1997.
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Utility operating expenses for the nine months ended June 30, 1998 decreased
by $45.0 million, or 9.2%, below last year. Natural and propane gas expense
for the nine months ended June 30, 1998 decreased by $39.5 million, or 12.0%,
below last year primarily due to reduced volumes purchased for sendout
(resulting mainly from the warmer weather) and lower rates charged by our
suppliers. Other operation and maintenance expenses increased $1.0 million,
or 1.3%, due to increased distribution 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.
Depreciation and amortization expense increased 3.4% primarily due to
additional property. Taxes, other than income taxes, decreased by 6.4%
principally due to lower gross receipts taxes (mainly reflecting decreased
revenues), partially offset by higher property taxes. The $4.6 million
decrease in income taxes is mainly due to lower taxable income.
Miscellaneous income and income deductions for the nine months ended June 30,
1998 increased $.7 million above the same period last year primarily due to
improved subsidiary results and minor variations in several areas. The 11.3%
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 borrowings.
On February 27, 1998, the Company filed a request with the Missouri Public
Service Commission 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. The Commission suspended the Company's proposed general rate
increase, pending formal hearings. Such hearings are currently scheduled to
commence in October 1998. Under Missouri law, the 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 $65.0 million at June 30, 1998.
The Company redeemed 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 were first
redeemable). The funds for this purpose were 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.
Page 12<PAGE>
<PAGE>
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
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 the Unaudited Notes to Consolidated
Financial Statements on page 8 for additional information on the Company's
environmental matters.
Construction expenditures for the nine months ended June 30, 1998 were $35.9
million compared with $31.5 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 will not exceed $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
Page 13<PAGE>
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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 by
the Company to ensure continued reliable service to the fast-growing St.
Charles, Missouri area. Williams is expected to begin firm transportation
service to the Company through the new line in October 1998.
Capitalization at June 30, 1998 increased $39.8 million since September 30,
1997 and consisted of 59.5% common stock equity, .4% preferred stock equity and
40.1% long-term debt.
Page 14<PAGE>
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LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
Part II
OTHER INFORMATION
Page 15<PAGE>
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LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
Item 1. Legal Proceedings
On October 6, 1997, Energy Source, Inc. (Energy Source, Inc. and
its affiliates are hereinafter referred to individually and
collectively as "ESI") filed an amended petition (Amended Petition)
in the district court of Harris County, Texas, in which ESI has
named the Company as a party defendant to certain litigation
previously initiated among ESI, Panhandle Eastern Pipe Line Company
(PEPL) and PanEnergy Corporation (PanEnergy) (PEPL and PanEnergy
are hereinafter referred to individually and collectively as
"Panhandle"). ESI previously supplied natural gas to the Company
under an agreement which gas expired. The Company selected a
different supplier to furnish gas beyond the expiration date of
such agreement. PEPL provided pipeline transportation services
under both the arrangement with ESI and the Company's new
arrangement with the Company's current supplier. In its Amended
Petition, ESI asserts, among other things, that the Company:
(a) allegedly conspired with Panhandle, in violation of the Texas
Business and Commerce Code, in Panhandle's alleged attempt to
monopolize certain gas transportation markets, through unlawful
tying arrangements and other anti-competitive means; and (b)
interfered with ESI's contractual arrangements with Panhandle by
misrepresenting to ESI the status of the Company's then pending
negotiations with ESI, and other potential suppliers. On July 29,
1998, ESI filed a Notice of Nonsuit indicating that it was
dismissing, without prejudice, all of its claims against the
Company in this litigation, effective immediately upon the filing
of the Notice.
For a discussion of environmental matters, see Note 6 of the
Unaudited Notes to Consolidated Financial Statements in Part I,
Financial Information.
During the quarter ended June 30, 1998, there were no new legal
proceedings required to be disclosed.
Item 5. Other Information
In certain proceedings, the MoPSC has examined the operation of
purchased gas adjustment clauses under which gas distribution
utilities, such as the Company, pass through to customers increases
and decreases in the wholesale cost of natural gas. In January
1996, the MoPSC issued an order in which it rejected arguments that
such clauses were unlawful and affirmed the legality of such a
clause utilized by another utility. In December 1996, the Circuit
Court of Cole County, Missouri upheld the MoPSC's order. The
Circuit Court's decision was subsequently appealed by several
parties to the Missouri Court of Appeals, Western District. On
June 2, 1998, the Missouri Court of Appeals, Western District,
issued its opinion wherein it also upheld the MoPSC's order.
Certain parties continue to seek further review of the matter.
The Company continues to participate in the appellate proceedings
supporting the affirmation of the MoPSC's order.
Page 16<PAGE>
Effective September 1, 1998, the Company has appointed UMB Bank,
National Association ("UMB") to serve as transfer agent, as well as
in various other capacities with regard to shareholders' stock
interests in the Company. UMB will succeed ChaseMellon Shareholder
Services, L.L.C. ("CMSS") and its affiliate, The Chase Manhattan
Bank, in these capacities. As a result of such appointment, the
Company, effective September 1, 1998, is removing CMSS as Rights
Agent under the Company's Rights Agreement dated as of April 3,
1996, and UMB will be the successor Rights Agent.
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, 1998.
Page 17<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 7, 1998 G. T. McNeive, Jr.
-------------------
G. T. McNeive, Jr.
Sr. Vice President - Finance
and General Counsel
(Authorized Signatory and
Chief Financial Officer)
Page 18 <PAGE>
<PAGE>
Index to Exhibits
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------- ------- ------------
10.01 Amendment (effective as of January 15, 1998) to
Laclede Gas Company Trust Agreement (dated as of
September 4, 1990) relating to the Laclede Gas
Company Supplemental Retirement Plan. 20
10.02 Amendment (effective as of January 15, 1998) to
Laclede Gas Company Trust Agreement (dated as of
December 7, 1989). 29
27 Financial Data Schedule UT 38
Page 19
Exhibit 10.01
AMENDMENT TO LACLEDE GAS COMPANY TRUST AGREEMENT
RELATING TO THE LACLEDE GAS COMPANY SUPPLEMENTAL
RETIREMENT BENEFIT PLAN
This is an amendment to the Laclede Gas Company Trust Agreement Relating
to the Laclede Gas Company Supplemental Retirement Benefit Plan made as of
September 4, 1990, between Boatmen's Trust Company ("Boatmen's") and Laclede
Gas Company ("Company") applicable to the Trust ("Trust") relative to the
Laclede Gas Company Supplemental Retirement Benefit Plan (such Trust Agreement
as previously amended being herein referred to as the "Trust Agreement").
WHEREAS, Boatmen's is currently serving as the Trustee under the Trust
Agreement; and
WHEREAS, Boatmen's is ceasing to offer trust services of this type, and,
accordingly, has decided not to continue, beyond the Effective Date (as defined
in Section 1 below), to serve as Trustee under the Trust Agreement; and
WHEREAS, the Company desires to name Mercantile Bank National Association
("Mercantile") as successor trustee under the Trust Agreement, as evidenced by
the Company's Board of Directors' resolutions, a certified copy of which is
attached as Exhibit A hereto, such succession by Mercantile to be effective on
the Effective Date (as defined in Section 1 below).
NOW, THEREFORE, the Company, Boatmen's and Mercantile, for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby agree as follows:
Section 1. Effective as of the opening of business on January 15, 1998
(herein called the "Effective Date"), Boatmen's hereby resigns as the Trustee
under the Trust Agreement and, simultaneously, as of such Effective Date,
Boatmen's hereby assigns, vests and confirms in Mercantile: (i) all right,
title and interest as Trustee under the Trust Agreement in, and with respect
to, the "Trust Fund" (as that term is used in the Trust Agreement); and
(ii) all rights, powers, trusts, duties and obligations of the Trustee under
the Trust Agreement. Without limiting the generality of the foregoing, the
parties agree that Boatmen's will pay over, assign and deliver the Fund to
Mercantile on the Effective Date, and Boatmen's shall deliver to the Company
and to each Trust Beneficiary (as that term is defined in the Trust Agreement)
a written account as provided in Section 6 of the Trust Agreement.
Section 2. Mercantile hereby represents and warrants that it is now, and
will remain, fully qualified to serve as Trustee under the Trust Agreement.
Effective on the Effective Date, Mercantile hereby accepts, and agrees to
perform, all of the rights, powers, trusts, duties and obligations as Trustee
under, and in accordance with, the terms of, the Trust Agreement.
Section 3. In order to facilitate the assignment, vesting and confirmation
on the Effective Date in Mercantile of: (i) all right, title and interest of
Boatmen's as Trustee under the Trust Agreement in, and with respect to, the
Fund; and (ii) all rights, powers, trusts, duties and obligations of the
Trustee under the Trust Agreement; Boatmen's agrees that Boatmen's shall, by
the Effective Date, complete those items listed on Exhibit B hereto ("Boatmen's
Action Items"). In order to facilitate
Page 20<PAGE>
<PAGE>
Mercantile's acceptance and agreement to perform all of the rights, powers,
trusts, duties and obligations as Trustee, as hereinbefore provided,
Mercantile agrees that Mercantile shall, by the Effective Date, complete
those items listed on Exhibit C hereto ("Mercantile's Action Items"). In order
to further facilitate the completion of Mercantile's Action Items and Boatmen's
Action Items by the Effective Date, the Company agrees that the Company shall,
by the Effective Date, complete those items listed on Exhibit D hereto.
Section 4. Notices, requests, instructions and other writings shall be
delivered to the Company at 720 Olive Street, St. Louis, Missouri 63101,
Attention: James A. Fallert, or mailed postage prepaid, or sent by facsimile,
to Mr. Fallert's attention, or to such other address or designee as the Company
may from time to time designate in writing; and upon receipt thereof by the
Company, such notice, request, instruction or other writing shall be deemed to
have been properly delivered or given to the Company. Notices, requests,
instructions and other writings shall be delivered, mailed postage prepaid,
or sent by facsimile to Mercantile and Boatmen's respectively as follows, and
shall be deemed to have been properly delivered or given upon receipt thereof:
If to Mercantile:
Mercantile Bank National Association
P. O. Box 387, Tram 16-2
St. Louis, MO 63166
Attention: Marcus Hendershot.
If to Boatmen's:
Boatmen's Trust Company
P. O. Box 14737
St. Louis, MO 63178-4737
Attention: John M. Bascio.
5. Except as expressly amended hereby, the Trust Agreement is hereby
ratified, confirmed and approved.
6. This Amendment shall be governed by, and construed in accordance with,
the laws of the State of Missouri.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
Laclede Gas Company Trust Agreement Relating to the Laclede Gas Company
Supplemental Retirement Benefit Plan to be executed by their respective
officers thereunto duly authorized, and their corporate seals to be hereunto
affixed and attested as of the day and year first above written.
LACLEDE GAS COMPANY
By: ___________________________
Attest: Name: _________________________
Title: ________________________
___________________________
Secretary
BOATMEN'S TRUST COMPANY
By: ___________________________
Attest: Name: _________________________
Title: ________________________
___________________________
Secretary
Page 21 <PAGE>
<PAGE>
MERCANTILE BANK NATIONAL ASSOCIATION
By: _________________________
Attest: Name: _________________________
Title: ________________________
___________________________
Secretary
Page 22<PAGE>
<PAGE>
EXHIBIT A
RESOLUTIONS REGARDING APPOINTMENT OF NEW
TRUSTEE IN CONNECTION WITH
VARIOUS PLANS AND TRUSTS
WHEREAS, Boatmen's Trust Company is currently serving as trustee under each
of the trust agreements listed in Part 1, Part 2 and Part 3 of Exhibit A; and
WHEREAS, Boatmen's Trust Company has decided not to continue to serve as
trustee under any of such trust agreements, and as a result, this Corporation
must appoint one or more entities to serve as trustee under each of such trust
agreements (and/or new replacement trust agreements) and amend the accompanying
plans, as, and to the extent, appropriate to effectuate such change of trustee
thereunder; and
WHEREAS, this Corporation desires to arrange for American Express Trust
Company ("American Express") to serve, and American Express has expressed its
desire to serve, as trustee under each of the trust agreements listed, and the
accompanying defined contribution plans referenced, in Part 1 of Exhibit A
attached hereto and incorporated herein by reference (and/or new trust
agreements to replace those listed in Part 1 of Exhibit A); and
WHEREAS, this Corporation desires to arrange for Mercantile Bank National
Association ("Mercantile") to serve, and Mercantile has expressed its desire
to serve, as trustee under: (1) each of the trust agreements listed, and the
accompanying defined benefit retirement plans referenced, in Part 2 of Exhibit
A (and/or new trust agreements to replace those listed in Part 2 of Exhibit A);
and (2) each of the trust agreements listed in Part 3 of Exhibit A (and/or new
trust agreements to replace those listed in Part 3 of Exhibit A); and
WHEREAS, the Investment Review Committee of the Board of Directors of this
Corporation has recommended that this Corporation arrange for Mercantile to be
appointed to serve as trustee under each of the trust agreements listed, and
accompanying defined benefit retirement plans referenced, in Part 2 of
Exhibit A (and/or new trust agreements to replace those listed in Part 2 of
Exhibit A).
NOW, THEREFORE, BE IT RESOLVED, that the Chairman of the Board, the
President or the Senior Vice President-Finance, acting separately (without the
need for any countersignature) be, and each of them is, hereby authorized to
execute and deliver, on behalf of this Corporation, without the necessity for
any further action by the Board of Directors: (1) such agreements with American
Express on such terms and conditions as any such officer may deem necessary or
desirable in connection with the appointment of American Express to serve as
trustee under each of the trust agreements listed in Part 1 of Exhibit A
(and/or new trust agreements to replace those listed in Part 1 of Exhibit A);
and (2) such amendments to the defined contribution plans referenced in Part 1
of Exhibit A as any such officer may deem necessary or desirable in connection
with the appointment of American Express as said trustee; and
BE IT FURTHER RESOLVED, that the Chairman of the Board, the President or
the Senior Vice President-Finance, acting separately (without the need for any
countersignature) be, and each of them is, hereby authorized to execute and
deliver, on behalf of this Corporation, without the necessity for any further
action by the Board of Directors: (1) such agreements with Mercantile on such
terms and conditions as any such officer may deem necessary or desirable in
connection with the appointment of Mercantile to
Page 23<PAGE>
<PAGE>
serve as trustee under each of the trust agreements listed in Part 2 of
Exhibit A (and/or new trust agreements to replace those listed in Part 2 of
Exhibit A); and (2) such amendments to the defined benefit retirement plans
referenced in Part 2 of Exhibit A as any such officer may deem necessary or
desirable in connection with the appointment of Mercantile as said trustee; and
BE IT FURTHER RESOLVED, that the Chairman of the Board, the President or
the Senior Vice President-Finance, acting separately (without the need for any
countersignature) be, and each of them is, hereby authorized to execute and
deliver, on behalf of this Corporation, without the necessity for any further
action by the Board of Directors, such agreements with Mercantile on such
terms and conditions as any such officer may deem necessary or desirable in
connection with the appointment of Mercantile to serve as trustee under each
of the trust agreements listed in Part 3 of Exhibit A (and/or new trust
agreements to replace those listed in Part 3 of Exhibit A); and
BE IT FURTHER RESOLVED, that the Chairman of the Board, the President, the
Corporate Secretary, the Senior Vice President-Finance, or any other Vice
President or other appropriate officer, of this Corporation, acting separately
(without the need for any countersignature) be, and each of them is, hereby
authorized to execute and deliver, on behalf of this Corporation, without the
necessity for any further action by the Board of Directors, such further
agreements with American Express and/or Mercantile and others on such terms and
conditions as any such officer shall in his or her discretion approve, and/or
such other documents, instruments, and papers as any such officer may deem
necessary or desirable in connection with the full effectuation and/or
implementation of the intention of any or all of the foregoing resolutions; and
BE IT FURTHER RESOLVED, that the existence of the signature of any
appropriate officer of this Corporation on any agreement, document, instrument
and/or paper shall be evidence of the fact that said officer deemed such
agreement, document, instrument and/or paper to be necessary or desirable, and
that he or she approved of the terms and conditions contained in such
agreement, document, instrument and/or paper; and
BE IT FURTHER RESOLVED, that any officer of this Corporation is hereby
separately authorized to perform such other acts, on behalf of this
Corporation, without the necessity for any further action by the Board of
Directors, as may be necessary or appropriate to effectuate and/or implement
fully the intention of any or all of the foregoing resolutions, including, but
not limited to, the attestation by the Secretary or any Assistant Secretary of
this Corporation of any agreement, document, instrument and/or paper referred
to in the above resolutions, and the affixing of the corporate seal by such
Secretary or Assistant Secretary to any such agreement, document, instrument
and/or paper.
Page 24<PAGE>
<PAGE>
EXHIBIT A
Part 1
1. Trust Agreement dated June 26, 1986 between Laclede Gas Company and
The Boatmen's National Bank of St. Louis, as amended, relating to The
Laclede Gas Company Wage Deferral Savings Plan *
2. Trust Agreement dated May 24, 1984 between Laclede Gas Company and The
Boatmen's National Bank of St. Louis, as amended, relating to The
Laclede Gas Company Salary Deferral Savings Plan
3. Missouri Natural Gas Company Savings Plan Trust dated November 1, 1967
between Missouri Natural Gas Company and St. Louis Union Trust
Company, as amended, relating the Missouri Natural Gas Company Savings
Plan
4. Trust Agreement dated July 27, 1989 between Laclede Gas Company and
Boatmen's Trust Company, as amended, relating to the Missouri Natural
Gas Division of Laclede Gas Company Dual Savings Plan
Part 2
1. Trust Agreement dated February 26, 1982 between Laclede Gas Company
and Centerre Trust Company of St. Louis, as amended, relating to the
Employees' Retirement Plan of Laclede Gas Company - Management
Employees and the Employees' Retirement Plan of Laclede Gas Company -
Contract Employees
2. Trust Agreement dated as of January 1, 1973 between Laclede Gas
Company d/b/a Missouri Natural Gas Company and The Boatmen's National
Bank of St. Louis, as amended, relating to the Missouri Natural Gas
Company Retirement Income Plan
Part 3
1. Trust Agreement dated as of December 7, 1989 between Laclede Gas
Company and Boatmen's Trust Company, as amended
2. Trust Agreement dated as of September 4, 1990 between Laclede Gas
Company and Boatmen's Trust Company, as amended
3. Trust Under Certain Laclede Gas Company Benefit Plans dated November
18, 1994 between Laclede Gas Company and Boatmen's Trust Company, as
amended
4. Laclede Gas Company Benefit Plan Trust/VEBA for Certain Non-Union
Employees dated November 18, 1994 between Laclede Gas Company and
Boatmen's Trust Company, as amended
5. Laclede Gas Company Benefit Plan Trust/VEBA for Contract (Union)
Employees dated November 18, 1994 between Laclede Gas Company and
Boatmen's Trust Company
* All references in this Exhibit A to any Plan shall be deemed to relate
to the then current version of such Plan, as then amended
Page 25<PAGE>
<PAGE>
EXHIBIT B
Action Items of Boatmen's Trust Company
- - Provide asset list for each Laclede Gas Company account to be
transferred to Mercantile and update the asset list immediately prior
to transfer of assets.
- - Review trades and activity occurring at time of transfer to ensure
proper settlement.
- - On Effective Date, transfer assets to Mercantile.
- - Produce final accounting as of the Effective Date.
Page 26<PAGE>
<PAGE>
EXHIBIT C
Action Items of Mercantile Bank National Association
- - Open accounts on SEI System that match up to accounts being
transferred from Boatmen's.
- - Instruct Boatmen's on how to transfer different asset types to
Mercantile.
- - For transaction statements/asset review statements/ audited financial
report with accruals, determine with Laclede:
Information/schedules required
Frequency of reports
Individuals to receive reports
- - Establish with Laclede cycle to produce fee invoices.
- - Receive assets and book them into appropriate SEI accounts; reconcile
accounts with previous day's asset list from Boatmen's and make any
needed adjustments or corrections.
- - At the end of the first month after the Effective Date, run monthly
reports and review and discuss them with Laclede; make any needed
changes to the reporting package.
Page 27<PAGE>
<PAGE>
EXHIBIT D
Action Items of Laclede Gas Company
Deliver a list of authorized signatories to Mercantile for each trust
Deliver a list of trust beneficiaries and their approximate level of benefits
under the Plan as of the Effective Date to Mercantile
Page 28
Exhibit 10.02
AMENDMENT TO LACLEDE GAS COMPANY TRUST AGREEMENT
This is an amendment to the Laclede Gas Company Trust Agreement dated as
of December 7, 1989, between Boatmen's Trust Company ("Boatmen's") and Laclede
Gas Company ("Company") relative to the payment of benefits under certain
incentive and deferred compensation plans for the benefit of several of its
present and future directors and executives (such Trust Agreement as previously
amended being herein referred to as the "Trust Agreement").
WHEREAS, Boatmen's is currently serving as the Trustee under the Trust
Agreement; and
WHEREAS, Boatmen's is ceasing to offer trust services of this type, and,
accordingly, has decided not to continue, beyond the Effective Date (as defined
in Section 1 below), to serve as Trustee under the Trust Agreement; and
WHEREAS, the Company desires to name Mercantile Bank National Association
("Mercantile") as successor trustee under the Trust Agreement, as evidenced by
the Company's Board of Directors' resolutions attached as Exhibit A hereto,
such succession by Mercantile to be effective on the Effective Date (as defined
in Section 1 below).
NOW, THEREFORE, the Company, Boatmen's and Mercantile, for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, hereby agree as follows:
Section 1. Effective as of the opening of business on January 15, 1998
(herein called the "Effective Date"), Boatmen's hereby resigns as the Trustee
under the Trust Agreement and, simultaneously, as of such Effective Date,
Boatmen's hereby assigns, vests and confirms in Mercantile: (i) all right,
title and interest as Trustee under the Trust Agreement in, and with respect
to, the "Trust Fund" (as that term is used in the Trust Agreement); and
(ii) all rights, powers, trusts, duties and obligations of the Trustee under
the Trust Agreement. Without limiting the generality of the foregoing, the
parties agree that Boatmen's will pay over, assign and deliver the Trust Fund
held under the Trust Agreement to Mercantile on the Effective Date, and
Boatmen's shall deliver to the Company and each Trust Beneficiary (as that term
is defined in the Trust Agreement) a written account as provided for in Section
6 of the Trust Agreement.
Section 2. Mercantile hereby represents and warrants that it is now, and
will remain, fully qualified to serve as Trustee under the Trust Agreement.
Effective on the Effective Date, Mercantile hereby accepts, and agrees to
perform, all of the rights, powers, trusts, duties and obligations as Trustee
under, and in accordance with, the terms of the Trust Agreement.
Section 3. In order to facilitate the assignment, vesting and confirmation
on the Effective Date in Mercantile of: (i) all right, title and interest of
Boatmen's as Trustee under the Trust Agreement in, and with respect to, the
Fund; and (ii) all rights, powers, trusts, duties and obligations of the
Trustee under the Trust Agreement; Boatmen's agrees that Boatmen's shall, by
the Effective Date, complete those items listed on Exhibit B hereto ("Boatmen's
Action Items"). In order to facilitate Mercantile's acceptance and agreement
to perform all of the rights, powers, trusts, duties and obligations as
Trustee, as hereinbefore provided,
Page 29<PAGE>
<PAGE>
Mercantile agrees that Mercantile shall, by the Effective Date, complete
those items listed on Exhibit C hereto ("Mercantile's Action Items"). In
order to further facilitate the completion of Mercantile's Action Items and
Boatmen's Action Items by the Effective Date, the Company agrees that the
Company shall, by the Effective Date, complete those items listed on Exhibit
D hereto.
Section 4. Notices, requests, instructions and other writings shall be
delivered to the Company at 720 Olive Street, St. Louis, Missouri 63101,
Attention: James A. Fallert, or mailed postage prepaid, or sent by facsimile,
to Mr. Fallert's attention, or to such other address or designee as the Company
may from time to time designate in writing; and upon receipt thereof by the
Company, such notice, request, instruction or other writing shall be deemed to
have been properly delivered or given to the Company. Notices, requests,
instructions and other writings shall be delivered, mailed postage prepaid, or
sent by facsimile to Mercantile and Boatmen's respectively as follows, and
shall be deemed to have been properly delivered or given upon receipt thereof:
If to Mercantile:
Mercantile Bank National Association
P. O. Box 387, Tram 16-2
St. Louis, MO 63166
Attention: Marcus Hendershot.
If to Boatmen's:
Boatmen's Trust Company
P. O. Box 14737
St. Louis, MO 63178-4737
Attention: John M. Bascio.
5. Except as expressly amended hereby, the Trust Agreement is hereby
ratified, confirmed and approved.
6. This Amendment shall be governed by, and construed in accordance with,
the laws of the State of Missouri.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
Laclede Gas Company Trust Agreement to be executed by their respective officers
thereunto duly authorized, and their corporate seals to be hereunto affixed and
attested as of the day and year first above written.
LACLEDE GAS COMPANY
By: ___________________________
Attest: Name: _________________________
Title: ________________________
___________________________
Secretary
BOATMEN'S TRUST COMPANY,
By: ___________________________
Attest: Name: _________________________
Title: ________________________
___________________________
Secretary
Page 30<PAGE>
<PAGE>
MERCANTILE BANK NATIONAL ASSOCIATION
By: ___________________________
Attest: Name: _________________________
Title: ________________________
___________________________
Secretary
Page 31<PAGE>
<PAGE>
EXHIBIT A
RESOLUTIONS REGARDING APPOINTMENT OF NEW
TRUSTEE IN CONNECTION WITH
VARIOUS PLANS AND TRUSTS
WHEREAS, Boatmen's Trust Company is currently serving as trustee under each
of the trust agreements listed in Part 1, Part 2 and Part 3 of Exhibit A; and
WHEREAS, Boatmen's Trust Company has decided not to continue to serve as
trustee under any of such trust agreements, and as a result, this Corporation
must appoint one or more entities to serve as trustee under each of such trust
agreements (and/or new replacement trust agreements) and amend the accompanying
plans, as, and to the extent, appropriate to effectuate such change of trustee
thereunder; and
WHEREAS, this Corporation desires to arrange for American Express Trust
Company ("American Express") to serve, and American Express has expressed its
desire to serve, as trustee under each of the trust agreements listed, and the
accompanying defined contribution plans referenced, in Part 1 of Exhibit A
attached hereto and incorporated herein by reference (and/or new trust
agreements to replace those listed in Part 1 of Exhibit A); and
WHEREAS, this Corporation desires to arrange for Mercantile Bank National
Association ("Mercantile") to serve, and Mercantile has expressed its desire
to serve, as trustee under: (1) each of the trust agreements listed, and the
accompanying defined benefit retirement plans referenced, in Part 2 of Exhibit
A (and/or new trust agreements to replace those listed in Part 2 of Exhibit A);
and (2) each of the trust agreements listed in Part 3 of Exhibit A (and/or new
trust agreements to replace those listed in Part 3 of Exhibit A); and
WHEREAS, the Investment Review Committee of the Board of Directors of this
Corporation has recommended that this Corporation arrange for Mercantile to be
appointed to serve as trustee under each of the trust agreements listed, and
accompanying defined benefit retirement plans referenced, in Part 2 of
Exhibit A (and/or new trust agreements to replace those listed in Part 2 of
Exhibit A).
NOW, THEREFORE, BE IT RESOLVED, that the Chairman of the Board, the
President or the Senior Vice President-Finance, acting separately (without the
need for any countersignature) be, and each of them is, hereby authorized to
execute and deliver, on behalf of this Corporation, without the necessity for
any further action by the Board of Directors: (1) such agreements with American
Express on such terms and conditions as any such officer may deem necessary or
desirable in connection with the appointment of American Express to serve as
trustee under each of the trust agreements listed in Part 1 of Exhibit A
(and/or new trust agreements to replace those listed in Part 1 of Exhibit A);
and (2) such amendments to the defined contribution plans referenced in Part 1
of Exhibit A as any such officer may deem necessary or desirable in connection
with the appointment of American Express as said trustee; and
BE IT FURTHER RESOLVED, that the Chairman of the Board, the President or
the Senior Vice President-Finance, acting separately (without the need for any
countersignature) be, and each of them is, hereby authorized to execute and
deliver, on behalf of this Corporation, without the necessity for any further
action by the Board of Directors: (1) such agreements with Mercantile on such
terms and conditions as any such officer may deem necessary or desirable in
connection with the appointment of Mercantile to
Page 32<PAGE>
<PAGE>
serve as trustee under each of the trust agreements listed in Part 2 of
Exhibit A (and/or new trust agreements to replace those listed in Part 2 of
Exhibit A); and (2) such amendments to the defined benefit retirement plans
referenced in Part 2 of Exhibit A as any such officer may deem necessary or
desirable in connection with the appointment of Mercantile as said trustee; and
BE IT FURTHER RESOLVED, that the Chairman of the Board, the President or
the Senior Vice President-Finance, acting separately (without the need for any
countersignature) be, and each of them is, hereby authorized to execute and
deliver, on behalf of this Corporation, without the necessity for any further
action by the Board of Directors, such agreements with Mercantile on such
terms and conditions as any such officer may deem necessary or desirable in
connection with the appointment of Mercantile to serve as trustee under each
of the trust agreements listed in Part 3 of Exhibit A (and/or new trust
agreements to replace those listed in Part 3 of Exhibit A); and
BE IT FURTHER RESOLVED, that the Chairman of the Board, the President, the
Corporate Secretary, the Senior Vice President-Finance, or any other Vice
President or other appropriate officer, of this Corporation, acting separately
(without the need for any countersignature) be, and each of them is, hereby
authorized to execute and deliver, on behalf of this Corporation, without the
necessity for any further action by the Board of Directors, such further
agreements with American Express and/or Mercantile and others on such terms and
conditions as any such officer shall in his or her discretion approve, and/or
such other documents, instruments, and papers as any such officer may deem
necessary or desirable in connection with the full effectuation and/or
implementation of the intention of any or all of the foregoing resolutions; and
BE IT FURTHER RESOLVED, that the existence of the signature of any
appropriate officer of this Corporation on any agreement, document, instrument
and/or paper shall be evidence of the fact that said officer deemed such
agreement, document, instrument and/or paper to be necessary or desirable, and
that he or she approved of the terms and conditions contained in such
agreement, document, instrument and/or paper; and
BE IT FURTHER RESOLVED, that any officer of this Corporation is hereby
separately authorized to perform such other acts, on behalf of this
Corporation, without the necessity for any further action by the Board of
Directors, as may be necessary or appropriate to effectuate and/or implement
fully the intention of any or all of the foregoing resolutions, including, but
not limited to, the attestation by the Secretary or any Assistant Secretary of
this Corporation of any agreement, document, instrument and/or paper referred
to in the above resolutions, and the affixing of the corporate seal by such
Secretary or Assistant Secretary to any such agreement, document, instrument
and/or paper.
Page 33<PAGE>
<PAGE>
EXHIBIT A
Part 1
1. Trust Agreement dated June 26, 1986 between Laclede Gas Company and The
Boatmen's National Bank of St. Louis, as amended, relating to The
Laclede Gas Company Wage Deferral Savings Plan *
2. Trust Agreement dated May 24, 1984 between Laclede Gas Company and The
Boatmen's National Bank of St. Louis, as amended, relating to The
Laclede Gas Company Salary Deferral Savings Plan
3. Missouri Natural Gas Company Savings Plan Trust dated November 1, 1967
between Missouri Natural Gas Company and St. Louis Union Trust Company,
as amended, relating the Missouri Natural Gas Company Savings Plan
4. Trust Agreement dated July 27, 1989 between Laclede Gas Company and
Boatmen's Trust Company, as amended, relating to the Missouri Natural
Gas Division of Laclede Gas Company Dual Savings Plan
Part 2
1. Trust Agreement dated February 26, 1982 between Laclede Gas Company and
Centerre Trust Company of St. Louis, as amended, relating to the
Employees' Retirement Plan of Laclede Gas Company - Management Employees
and the Employees' Retirement Plan of Laclede Gas Company -Contract
Employees
2. Trust Agreement dated as of January 1, 1973 between Laclede Gas Company
d/b/a Missouri Natural Gas Company and The Boatmen's National Bank of
St. Louis, as amended, relating to the Missouri Natural Gas Company
Retirement Income Plan
Part 3
1. Trust Agreement dated as of December 7, 1989 between Laclede Gas Company
and Boatmen's Trust Company, as amended
2. Trust Agreement dated as of September 4, 1990 between Laclede Gas
Company and Boatmen's Trust Company, as amended
3. Trust Under Certain Laclede Gas Company Benefit Plans dated November 18,
1994 between Laclede Gas Company and Boatmen's Trust Company, as amended
4. Laclede Gas Company Benefit Plan Trust/VEBA for Certain Non-Union
Employees dated November 18, 1994 between Laclede Gas Company and
Boatmen's Trust Company, as amended
5. Laclede Gas Company Benefit Plan Trust/VEBA for Contract (Union)
Employees dated November 18, 1994 between Laclede Gas Company and
Boatmen's Trust Company
* All references in this Exhibit A to any Plan shall be deemed to relate
to the then current version of such Plan, as then amended
Page 34<PAGE>
<PAGE>
EXHIBIT B
Action Items of Boatmen's Trust Company
- - Provide asset list for each Laclede Gas Company account to be
transferred to Mercantile and update the asset list immediately prior to
transfer of assets.
- - Review trades and activity occurring at time of transfer to ensure
proper settlement.
- - On Effective Date, transfer assets to Mercantile.
- - Produce final accounting as of the Effective Date.
Page 35<PAGE>
<PAGE>
EXHIBIT C
Action Items of Mercantile Bank National Association
- - Open accounts on SEI System that match up to accounts being transferred
from Boatmen's.
- - Instruct Boatmen's on how to transfer different asset types to
Mercantile.
- - For transaction statements/asset review statements/ audited financial
report with accruals, determine with Laclede:
Information/schedules required
Frequency of reports
Individuals to receive reports
- - Establish with Laclede cycle to produce fee invoices.
- - Receive assets and book them into appropriate SEI accounts; reconcile
accounts with previous day's asset list from Boatmen's and make any
needed adjustments or corrections.
- - At the end of the first month after the Effective Date, run monthly
reports and review and discuss them with Laclede; make any needed
changes to the reporting package.
Page 36<PAGE>
<PAGE>
EXHIBIT D
Action Items of Laclede Gas Company
Deliver a list of authorized signatories to Mercantile for each trust
Deliver a list of trust beneficiaries and their approximate level of
benefits under the Plan as of the Effective Date to Mercantile
Page 37
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 483,956
<OTHER-PROPERTY-AND-INVEST> 31,170
<TOTAL-CURRENT-ASSETS> 121,298
<TOTAL-DEFERRED-CHARGES> 93,101
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 729,525
<COMMON> 19,477
<CAPITAL-SURPLUS-PAID-IN> 38,549
<RETAINED-EARNINGS> 207,388
<TOTAL-COMMON-STOCKHOLDERS-EQ> 265,414
1,960
0
<LONG-TERM-DEBT-NET> 179,217
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 65,000
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 217,934
<TOT-CAPITALIZATION-AND-LIAB> 729,525
<GROSS-OPERATING-REVENUE> 490,686
<INCOME-TAX-EXPENSE> 17,478
<OTHER-OPERATING-EXPENSES> 428,147
<TOTAL-OPERATING-EXPENSES> 445,625
<OPERATING-INCOME-LOSS> 45,061
<OTHER-INCOME-NET> 2,150
<INCOME-BEFORE-INTEREST-EXPEN> 47,211
<TOTAL-INTEREST-EXPENSE> 16,114
<NET-INCOME> 31,097
73
<EARNINGS-AVAILABLE-FOR-COMM> 31,024
<COMMON-STOCK-DIVIDENDS> 17,412
<TOTAL-INTEREST-ON-BONDS> 11,450
<CASH-FLOW-OPERATIONS> 62,166
<EPS-PRIMARY> 1.76
<EPS-DILUTED> 1.76
<FN>
Capital-surplus-paid-in is net of $24,017 of treasury stock.
Page 38
</TABLE>
