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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
FORM 10-K
ANNUAL REPORT
For the Fiscal Year Ended September 30, 1999
LACLEDE GAS COMPANY
720 Olive Street, St. Louis, MO 63101
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 1999
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
Securities registered pursuant to Section 12(b) of the Act:
Name of each stock exchange
Title of each class on which registered
Common Stock - $1 par value New York and Chicago
Common Stock Purchase Rights New York and Chicago
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Preferred Stock - $25 par value
(5% Series B Preferred Stock and
4.56% Series C Preferred Stock)
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. ( )
The aggregate market value of the Common Stock of the Company, none of
which is owned by an affiliate, at November 30, 1999 was $412,486,989.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the close of the period covered by this
report. 18,877,987
Incorporated by Reference: Form 10-K Part
Proxy Statement dated December 16, 1999* III
Index to Exhibits is found on page 54.
* The information under the captions "Compensation Committee Report
Regarding Executive Compensation" and "Performance Graph" on
pages 12-14 of the Proxy Statement is NOT incorporated by reference.
1
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PART I
Item 1. Business
Laclede Gas Company is a public utility engaged in the retail distribution
and transportation of natural gas. The Company, which is subject to the
jurisdiction of the Missouri Public Service Commission, serves the City of
St. Louis, St. Louis County, the City of St. Charles, and parts of St.
Charles, Franklin, Jefferson, St. Francois, Ste. Genevieve, Iron, Madison
and Butler Counties, all in Missouri. As an adjunct to its gas distribution
and transportation business, the Company operates underground natural gas
storage fields and is engaged in the transportation and storage of liquid
propane.
NATURAL GAS SUPPLY
Laclede's fundamental gas supply strategy remains unchanged: to meet the
two-fold objective of ensuring that the gas supplies we acquire are
dependable and will be delivered when needed and, insofar as it is
compatible with that dependability, purchasing gas that is economically
priced.
In structuring our natural gas supply portfolio, we continue to focus on a
diverse group of suppliers that either own or control significant natural
gas assets and that are strategically positioned to meet Laclede's primary
objectives. Laclede utilizes both Mid-Continent and Gulf Coast gas sources
to provide a level of supply diversity that facilitates the optimization of
pricing differentials, as well as protection against the potential of
regional supply disruptions. The gas is then transported from these areas
through several interstate pipelines to Laclede's service area.
During fiscal 1999, Laclede had additional direct access to competitively
priced supplies from the Mid-Continent producing region through the Williams
Gas Pipeline. The Williams project, which converted an existing 200-mile
petroleum products pipeline across Missouri, was successfully completed
prior to the winter season. It allowed Laclede to build new supplier
relationships and further strengthen its existing supply arrangements.
Natural gas from the Williams system supplements the gas Laclede receives
through Missouri Pipeline Company (MPC), which transports natural gas to the
western portion of Laclede's service area from a connection with Panhandle
Eastern Pipeline Company. Laclede continues to receive the majority of its
natural gas through the Mississippi River Transmission Corporation (MRT).
Laclede has a contractual right to use capacity on several pipelines that
deliver gas from the various onshore and offshore gas-producing basins to
MRT's system, which in turn connects to Laclede's system. During fiscal
year 1999, Laclede released portions of this pipeline capacity to which it
had a contractual right to other shippers when Laclede did not need the
capacity.
Laclede purchased natural gas this year from 28 different suppliers to meet
its current gas sales and storage injection requirements. Natural gas
purchased by Laclede for delivery to its service area through the MRT system
during the warmer- than-normal fiscal 1999 period totaled 65 billion cubic
feet (Bcf). Laclede's western takepoints received an additional 10 Bcf of
gas from Panhandle Eastern and the Missouri Pipeline system and 9 Bcf of gas
from the Williams system. Also during fiscal 1999, some of Laclede's
commercial and industrial customers purchased their own gas and delivered to
Laclede approximately 19 Bcf for transportation to them through Laclede's
distribution system.
2
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The fiscal 1999 peak day sendout of gas to Laclede's customers occurred on
January 4, 1999, when the average temperature was 3 degrees Fahrenheit. On
that day, Laclede's customers consumed 1,052,000 Million British Thermal
Units (Mmbtu) of gas. About 73% of the peak day demand was met with natural
gas transported to St. Louis through the MRT, MPC, and Williams
transportation systems, and 27% was met with gas withdrawn from Laclede's
underground storage facilities. The Company sold and transported 1,025.9
million therms of gas this year, a decrease of 95.4 million therms from
fiscal 1998.
UNDERGROUND NATURAL GAS STORAGE
Laclede has a contractual right to store approximately 23.1 Bcf of gas in
MRT's storage system located in Unionville, Louisiana. MRT's tariffs allow
injections into storage from May 16 through November 15 and require the
withdrawal from storage of all but 2.2 Bcf from November 16 through May 15.
In addition the Company supplements flowing pipeline gas with natural gas
withdrawn from its underground storage field located in St. Louis and St.
Charles Counties. The field is designed to provide 357,000 MMBtu of natural
gas withdrawals on a peak day, and annual withdrawals of approximately
5,500,000 MMBtu of gas based on the inventory level which the Company plans
to maintain.
PROPANE SUPPLY
Laclede Pipeline Company, Laclede Gas Company's wholly-owned subsidiary,
owns and operates a propane pipeline that connects Laclede Gas Company's
propane storage facilities in St. Louis County, Missouri, to propane supply
terminal facilities located at Wood River and Cahokia, Illinois. In June
1999, Laclede Pipeline Company purchased from Phillips Pipe Line Company for
approximately $1.4 million a section of existing propane pipeline, which
completed Laclede Gas Company's ownership of all facets of its propane peak
shaving assets and allowing greater access to supply markets. Laclede Gas
Company vaporizes the propane to supplement its natural gas supply and meet
the peak demands on the distribution system. Laclede Pipeline Company's
previous contract arrangement with Phillips Petroleum Company, to provide
transportation of propane on an annual basis and which expired on March 31,
1999, is no longer needed.
REGULATORY MATTERS
At the federal level, the Federal Energy Regulatory Commission (FERC)
continues to consider changes in the regulation of interstate pipeline
transportation service that could affect the Company's future costs and,
ultimately, the rates its customers pay. The Company is monitoring these
developments closely and will intervene when necessary to promote the best
interests of both the Company and its customers.
At the state level, there have been several important developments during
the last fiscal year affecting Laclede, some of which are still pending.
The MoPSC is expected to rule in mid-December on Laclede's request for a
general rate increase, which was filed in January 1999 to offset increased
costs of distributing gas to its customers. For additional information on
this general rate increase request and details on the settlement reached in
the Company's 1998 rate case, see Regulatory Matters in Management's
Discussion and Analysis of Financial Condition and Results of Operations on
page 14.
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On July 21, 1999, the MoPSC gave final approval to Laclede's proposal to
extend and significantly modify its existing Price Stabilization Program.
Under the initial program, which was first approved in 1997, Laclede was
authorized to purchase certain financial instruments to protect its
customers during the heating season from unusually large increases in the
unregulated cost of natural gas. Under the modifications proposed by the
Company and approved by the Commission, Laclede still will provide
significant price protection for its customers above a predetermined level
but it will now have the opportunity to share in any gains and cost
reductions realized under the program. Laclede believes this new program
can provide significant benefits for both its customers and shareholders.
On September 9, 1999, the Commission approved, with certain modifications, a
one-year extension of the Company's highly successful Gas Supply Incentive
Plan. Laclede has operated under a Gas Supply Incentive Plan for the past
three years. Operating under the plan, Laclede generated $94.4 million in
gas-cost savings, producing $75.2 million in savings to its customers, with
$19.2 million being retained by its shareholders as pre-tax income. In
addition to the financial benefits of the program, the innovative structure
under which the Company operates allows its customers to retain the
reliability inherent in Laclede's long-standing supply relationships. The
Company anticipates requesting an extension of this program. For additional
information on both Plans, see Note 3 of Notes to Consolidated Financial
Statements on page 39.
In September 1997, the staff of the MoPSC recommended that Laclede refund
$3.6 million to its ratepayers in connection with the sale of gas outside of
Missouri during fiscal 1996, prior to the approval of the Gas Supply
Incentive Plan. On April 20, 1999 the MoPSC issued its order rejecting the
proposal of the staff. One party sought a rehearing of the order, which was
denied, and no further appeals were taken.
In October 1999, the staff of the MoPSC recommended that the Company credit
ratepayers with $2.5 million of pre-tax income the Company had realized in
fiscal 1997 and fiscal 1998 in connection with its treatment of a gas supply
contract under the operation of the Company's Gas Supply Incentive Plan.
The Company, which has recently filed a response in opposition to the
staff's recommendation, believes that there is no basis for such
recommendation and is confident that the Company will ultimately prevail on
the merits.
On October 30, 1998, the MoPSC issued an order opening a docket addressing
the adequacy of Laclede's copper service line replacement program. The
staff filed its report on August 31, 1999 containing a modified replacement
schedule for such service lines. In response, the Company proposed an
alternative program based upon the evaluation of recent survey data. After
appropriate review of the matter, the Commission is expected to issue its
order on the matter sometime next year. Laclede is unable to predict at this
time what action the MoPSC may take. The Company currently faces two
lawsuits and one claim relative to direct buried copper service lines.
OTHER PERTINENT MATTERS
The business of the Company is subject to a seasonal fluctuation with the
peak period occurring in the winter season.
*****
As of September 30, 1999, the Company had 2,040 employees, which includes 3
part-time employees.
4
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*****
The Company has a three-year labor agreement, which expires July 31, 2000,
with Locals 5-6 and 5-194 of the Paper, Allied-Industrial, Chemical & Energy
Workers International Union (formerly known as the Oil, Chemical and Atomic
Workers International Union), two locals which represent approximately 70%
of the Company's employees. The agreement provided for wage increases of
2.5% in all three years, along with lump-sum payment provisions and other
benefit improvements.
*****
The Company's business has monopoly characteristics in that it is the only
distributor of natural gas within its (franchised) service area. The
principal competition is the local electric company. Other competitors in
Laclede's service area include suppliers of fuel oil, coal, liquefied
petroleum gas in outlying areas, and in a portion of downtown St. Louis, a
district steam system. Gas for househeating, certain other household uses,
and commercial and industrial space heating is now being sold by Laclede at
prices generally lower than are charged for competitive fuels and other
energy forms. Coal is competitive as a fuel source for very large boiler
plant loads, but environmental concerns have forestalled any significant
market inroads. Oil and propane can be used to fuel boiler loads and
certain direct-fired process applications, but these fuels vary widely in
price throughout the year, thus limiting the competitiveness of these fuels.
In certain cases, district steam has been competitive with gas for downtown
area heating users. In the past five years, Laclede has made a net
conversion of 18 steam customers representing approximately 2.2 million
annual therm sales.
Laclede's residential, commercial, and small industrial markets,
representing 90% of sales, remain committed to gas. The Company knows of no
reason why natural gas should not continue generally to have a price
advantage over electricity and other forms of energy in the foreseeable
future. The Company's exposure to price competition is not presently a
substantial factor and exists primarily in the large industrial and
commercial boiler fuel market where coal is the competing form of energy.
Laclede offers gas transportation service to its large user industrial and
commercial customers. The tariff approved for that type of service produces
a margin similar to that which Laclede would have received under its regular
sales rates. The availability of gas transportation service and favorable
spot market prices for natural gas during certain times of the year may
offer additional competitive advantages to Laclede and new opportunities for
cogeneration and large tonnage air conditioning applications.
*****
The Company is subject to various environmental laws and regulations. To
date they have not materially affected 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, Laclede performed an investigation
of one of the Company's former manufactured gas plant sites located in
Shrewsbury, Missouri. Subsequently, the Company and the state and federal
environmental regulatory agencies agreed upon the actions needed at this
site. The Company currently estimates the overall costs of these actions
5
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will be approximately $1,135,000. As of September 30, 1999, the Company has
paid $646,000 and reserved $489,000 for these actions. If the regulatory
agencies require any additional actions, Laclede will incur additional
costs.
The Company also applied to place the site of a different former
manufactured gas plant in the City of St. Louis, Missouri in the Missouri
Voluntary Cleanup Program. Laclede ceased its operations at and sold this
site in 1950. Subsequent owners of this site used it as a coke
manufacturing facility. The Missouri Department of Natural Resources
accepted the Company's application. Acceptance provides opportunities to
minimize costs of remediation and maximize possibilities of site
development. Laclede submitted a site investigation plan to the Missouri
Department of Natural Resources on November 16, 1998, which investigation is
now complete. Recently, Laclede sent its report on the investigation to the
Missouri Department of Natural Resources.
Laclede currently estimates that the cost of the investigation, oversight
costs and legal and engineering consulting costs for this site may be
approximately $534,000. Currently, the Company has paid $346,000 and
reserved an additional $188,000. The Company has requested that other
former site owners and operators participate in the cost of any site
investigation. One former owner and operator, who is currently in a Chapter
11 bankruptcy proceeding, agreed to participate and is participating in
these costs. The Company plans to seek proportionate reimbursement of all
costs relative to this site from any other potentially responsible parties
if practicable.
While the scope of costs relative to the site in Shrewsbury will not be
material, the scope of costs relative to the City of St. Louis site are
unknown and may be material. The Company has notified its insurers that it
intends to seek reimbursement from them of its costs at both these sites.
None of the Company's insurers have agreed that its insurance covers the
costs for which the Company intends to seek reimbursement. The majority of
the insurers have sent Laclede letters reserving their rights with respect
to the manufactured gas plant issues addressed in the Company's notices to
them. While some of the insurers have denied coverage with respect to these
issues, the Company continues to seek reimbursement from them. With regard
to the Shrewsbury site, the denial of coverage will not have any material
impact on the Company. With regard to the City of St. Louis site, the
Company expects its cost-sharing agreement with the former owner and
operator of the site will mitigate the impact of any denial of coverage.
In the Company's 1998 rate case, the MoPSC approved the Company's continued
use of a cost deferral mechanism for these costs. Through this, the Company
applied for appropriate rate recovery of these costs in its current rate
case. Deferral of such costs terminated July 31, 1999, and any subsequent
costs will be charged to expense. Previously deferred costs will be put
into rates (without return on investment) and amortized over a fifteen-year
period, upon the Commission's approval of the partial settlement of the
Company's current rate case, no later than December 26, 1999.
*****
During 1999 the Company issued 1,250,000 shares of common stock through a
public offering. The net proceeds of the offering, after deducting discount
and expenses, were $24.1 million. In 1999, shares of common stock required
by the Company's Dividend Reinvestment and Stock Purchase Plan were
purchased on the open market. The Company issued 70,447 shares of its
common stock during fiscal year 1998 under its Dividend Reinvestment and
Stock Purchase Plan.
6
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Customers and revenues contributed by each class of customers for the last
three fiscal years are as follows:
<TABLE>
Utility Operating Revenues $(000)
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Residential $324,115 $365,768 $395,250
Commercial & Industrial 112,890 132,504 152,222
Interruptible 1,808 2,254 2,098
Transportation 14,132 12,734 13,042
Off System and Other Incentive 16,216 29,852 34,288
Exploration & Development - - 1,273
Provision for Refunds and Other 4,549 5,080 9,063
-------- -------- --------
Total $473,710 $548,192 $607,236
======== ======== ========
Customers (End of Period)
1999 1998 1997
---- ---- ----
Residential 582,719 577,224 572,794
Commercial & Industrial 39,041 38,519 37,985
Interruptible 13 15 16
Transportation 155 149 142
------- ------- -------
Total 621,928 615,907 610,937
======= ======= =======
</TABLE>
The Company has franchises having initial terms varying from five years to
an indefinite duration. Generally, a franchise allows the Company to lay
pipes and other facilities in the community. The Company's franchise in
Florissant, Missouri expired in 1992 and since that time the Company has
continued to provide service in that community without a formal franchise.
In April 1999, the Company received a 20-year non-exclusive franchise to
provide natural gas service to much of the city of Wentzville as well as the
MoPSC's approval to serve this portion of Wentzville as well as currently
unincorporated adjacent areas. This will allow Laclede to continue
expansion of its service area where the Company anticipates significant
growth to occur during the next few years. All of the franchises are free
from unduly burdensome restrictions and are adequate for the conduct of the
Company's current public utility business in the State of Missouri.
*****
Laclede Investment Corporation, a wholly-owned subsidiary of Laclede Gas
Company, invests in other enterprises and has made loans to several joint
ventures engaged in real estate development.
Laclede Energy Resources, Inc. (LER), a wholly-owned subsidiary of Laclede
Investment Corporation, is engaged in non-utility efforts to market natural
gas and related activities.
Laclede Gas Family Services, Inc., a wholly-owned subsidiary of Laclede
Energy Resources, Inc., is a registered insurance agency in the State of
Missouri. It promotes the sale of supplemental hospitalization, accident,
supplemental Medicare and life insurance by Life Insurance Company of North
America, Washington National Insurance Company, Fidelity Security Life
Insurance Company and Union Fidelity Life Insurance Company.
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Laclede Development Company (Laclede Development), a wholly-owned subsidiary
of Laclede Gas Company, participates in real estate development, primarily
through joint ventures.
Laclede Venture Corp., a wholly-owned subsidiary of Laclede Development
Company, offers services for the compression of natural gas to third parties
who desire to use or to sell compressed natural gas for use in vehicles.
Laclede Venture Corp. also has a 28.5% interest in the LBP Partnership, a
general partnership which previously engaged in research and development of
light beam profiling technology. There is presently no book value and no
effect on earnings is anticipated from this partnership investment.
The lines of business which constitute the non-utility activities of the
corporate family are not considered reportable operating segments as defined
by current accounting standards.
Item 2. Properties
The principal utility properties of Laclede consist of approximately 7,900
miles of gas main, related service pipes, meters and regulators. Other
physical properties include regional office buildings and holder stations.
Extensive underground gas storage facilities and equipment are located in an
area in North St. Louis County extending under the Missouri River into St.
Charles County. Substantially all of the Company's utility plant is subject
to the liens of its mortgage.
All of the utility properties of Laclede are held in fee or by easement or
under lease agreements. The principal lease agreements include underground
storage rights which are of indefinite duration and the general office
building. The current lease on the general office building extends through
February 2005 with options to renew for up to 15 additional years.
The non-utility properties of Laclede do not constitute a significant
portion of the properties of the Company.
Item 3. Legal Proceedings
Superior Oil Company and Union Pacific Railroad Company dismissed, without
prejudice, their action against Laclede Gas Company seeking contribution
under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 for costs incurred and to be incurred in remediating a site for
St. Louis.
For a description of the Company's environmental matters, see Part I, Item
1, Business, Other Pertinent Matters. For a description of the Company's
pending regulatory matters, see Part I, Item I, Business, Regulatory
Matters.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the
fourth quarter of fiscal year 1999.
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EXECUTIVE OFFICERS OF REGISTRANT
Name, Age, and Position with Company Appointed (1)
D. H. Yaeger, Age 50
Chairman, President and Chief Executive Officer January 28, 1999
President and Chief Executive Officer January 1, 1999
President and Chief Operating Officer December 1, 1997
Executive Vice President - Operations and
Marketing September 1, 1995
Senior Vice President - Operations, Gas
Supply and Technical Services January 27, 1994
Vice President - Operations, Gas Supply
and Technical Services September 1, 1992
Vice President - Planning December 1, 1990
G. T. McNeive, Jr., Age 57
Senior Vice President - Finance and General
Counsel March 1, 1998
Senior Vice President - Finance and Chief
Financial Officer September 1, 1995
Vice President - Associate General
Counsel January 27, 1994
Assistant Vice President - Associate
General Counsel September 1, 1992
K. J. Neises, Age 58
Senior Vice President - Energy and
Administrative Services March 1, 1998
Senior Vice President - Gas Supply and
Regulatory Affairs September 1, 1995
Senior Vice President - Federal Regulatory
Affairs January 27, 1994
Vice President - Federal Regulatory Affairs October 27, 1988
R. L. Russell, Age 62
Senior Vice President - Operations and Marketing August 1, 1998
Vice President - Marketing February 1, 1997
(Director of Marketing) September 1, 1995
(General Sales Manager) October 1, 1994
M. A. Huneidi, Age 41
Vice President - Information Systems February 1, 1999
Assistant Vice President - Information Systems February 1, 1997
(Director of Information Systems) July 1, 1991
M. E. McMillian, Age 53
Vice President - Human Resources September 22, 1983
J. Moten, Jr., Age 58
Vice President - Community Relations January 27, 1994
P. J. Palumbo, Age 54
Vice President - Industrial Relations September 1, 1992
J. G. Smith, Age 62
Vice President - Operations August 1, 1998
Assistant Vice President - Operations February 1, 1997
(Superintendent of Services and Facilities Management) April 1, 1988
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J. A. Fallert, Age 44
Controller February 1, 1998
(Manager, Financial Services) February 1, 1992
R. L. Krutzman, Age 53
Treasurer and Assistant Secretary February 1, 1996
(Manager, Tax and Payroll) February 1, 1992
M. C. Kullman, Age 39
Secretary and Associate Counsel February 1, 1998
(Associate Counsel) August 20, 1990
( ) Indicates a non-officer position.
(1) Officers of Laclede Gas Company are normally reappointed at the Annual
Meeting of the Board of Directors in January of each year "to serve for the
ensuing year and until their successors are elected and qualify".
Part II
Item 5. Market for the Registrant's Common Equity and Related Shareholder
Matters
The Company's common stock is listed on the New York Stock Exchange and the
Chicago Stock Exchange. At September 30, 1999, there were 9,278 holders of
record of the Company's common stock.
<TABLE>
Common Stock Market and Dividend Information
<CAPTION>
Price Range Dividends
Fiscal 1999 High Low Declared
- - --------------------------------------------------------
<S> <C> <C> <C>
1st Quarter 27 23 $.335
2nd Quarter 27 20-5/8 $.335
3rd Quarter 23-5/8 20 $.335
4th Quarter 23-3/4 21-1/4 $.335
</TABLE>
<TABLE>
<CAPTION>
Price Range Dividends
Fiscal 1998 High Low Declared
- - --------------------------------------------------------
<S> <C> <C> <C>
1st Quarter 28- 5/8 23- 5/8 $.330
2nd Quarter 27-15/16 23-13/16 $.330
3rd Quarter 25- 7/16 22-15/16 $.330
4th Quarter 25 22- 3/8 $.330
</TABLE>
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<TABLE>
Item 6. Selected Financial Data
<CAPTION>
Fiscal Years Ended September 30
(Thousands Except Per Share 1999 1998 1997 1996 1995
Amounts) ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Summary of Operations
Utility Operating Revenues $473,710 $548,192 $607,236 $560,684 $432,628
Non-utility Operating
Revenues 17,878 13,795 8,494 32,494 2,780
------------------------------------------------
Total operating revenues 491,588 561,987 615,730 593,178 435,408
------------------------------------------------
Utility Operating Expenses:
Natural and propane gas 246,350 311,869 357,755 319,595 221,533
Other operation expenses 83,762 86,183 90,778 84,956 80,655
Maintenance 19,583 18,720 18,273 18,232 17,547
Depreciation & amortization 21,490 25,310 25,890 25,015 23,676
Taxes, other than
income taxes 41,669 43,782 46,543 44,995 40,537
------------------------------------------------
Total utility operating
expenses 412,854 485,864 539,239 492,793 383,948
Non-utility Operating
Expenses 17,245 12,659 7,547 30,587 2,000
------------------------------------------------
Total operating expenses 430,099 498,523 546,786 523,380 385,948
------------------------------------------------
Operating Income 61,489 63,464 68,944 69,798 49,460
Allowance for Funds Used
During Construction 739 609 367 17 247
Other Income and Income
Deductions - Net (1,212) 530 597 (647) (150)
------------------------------------------------
Income Before Interest
Charges and Income Taxes 61,016 64,603 69,908 69,168 49,557
------------------------------------------------
Interest Charges:
Interest on long-term debt 13,966 14,797 14,169 13,939 12,544
Other interest charges 6,627 6,473 4,919 4,008 5,983
------------------------------------------------
Total interest charges 20,593 21,270 19,088 17,947 18,527
------------------------------------------------
Income Before Income Taxes 40,423 43,333 50,820 51,221 31,030
Income Taxes 14,361 15,441 18,354 18,397 10,129
------------------------------------------------
Net Income 26,062 27,892 32,466 32,824 20,901
Dividends on Preferred Stk 97 97 97 97 97
------------------------------------------------
Earnings Applicable to
Common Stock $ 25,965 $ 27,795 $ 32,369 $ 32,727 $ 20,804
================================================
Earnings Per Share of
Common Stock $1.43 $1.58 $1.84 $1.87 $1.27
================================================
</TABLE>
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<TABLE>
Item 6. Selected Financial Data
<CAPTION>
Fiscal Years Ended September 30
(Thousands Except Per Share 1999 1998 1997 1996 1995
Amounts) ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Dividends Declared-
Common Stock $ 24,459 $ 23,229 $ 22,825 $ 22,079 $ 20,538
Dividends Declared Per
Share of Common Stock $1.34 $1.32 $1.30 $1.26 $1.24
Utility Plant
Gross Plant-End of Period $876,431 $835,923 $794,901 $782,235 $747,820
Net Plant-End of Period 519,378 490,682 467,678 452,270 434,384
Construction Expenditures 48,698 47,254 42,842 41,267 45,847
Property Retirements 8,190 6,205 6,241 6,506 9,199
Total Assets $831,619 $771,147 $720,710 $689,395 $636,694
Capitalization -
End of Period
Common Stock and Paid-In
Capital $106,570 $ 82,460 $ 80,628 $ 80,628 $ 77,686
Retained Earnings 199,848 198,342 193,776 184,232 173,584
Accumulated Other
Comprehensive Income (77) - - - -
Treasury Stock (24,017) (24,017) (24,017) (24,017) (24,017)
-----------------------------------------------
Common stock equity 282,324 256,785 250,387 240,843 227,253
Redeemable Preferred Stock 1,923 1,960 1,960 1,960 1,960
Long-Term Debt 204,323 179,238 154,413 179,346 154,279
-----------------------------------------------
Total capitalization $488,570 $437,983 $406,760 $422,149 $383,492
===============================================
Shares of Common Stock
Outstanding-End of Period 18,878 17,628 17,558 17,558 17,420
Book Value Per Share $14.96 $14.57 $14.26 $13.72 $13.05
</TABLE>
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Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Laclede's earnings for fiscal 1999 were adversely effected by warmer-
than-normal weather, resulting from temperatures that were the seventh
warmest this century. Earnings applicable to common stock for the fiscal
year ended September 30, 1999 were $26.0 million, compared with $27.8
million for fiscal 1998 and $32.4 million for fiscal 1997. Earnings per
share of common stock based on average shares outstanding were $1.43 in
1999, compared with $1.58 in 1998 and $1.84 in 1997. The $.15 per share
decrease in fiscal 1999 (from fiscal 1998) was primarily due to lower system
sales volumes arising from weather that was 6% warmer than last year and 12%
warmer than normal, as well as a non-recurring investment loss recorded this
year. These decreases were partially offset by reduced expenses largely
attributable to effective cost-cutting efforts this year and the effects of
regulatory accounting changes approved in the Company's 1998 rate case
settlement (which are discussed further at the end of this paragraph). The
$.26 per share decrease in fiscal 1998 (from fiscal 1997) was primarily due
to reduced system sales volumes resulting from weather that was 11% warmer
than 1997 and the attendant lower consumption by customers. These decreases
were partially offset by efforts during the year to control costs and by
expense reductions attributable to regulatory accounting changes instituted
July 1, 1998 as part of the settlement of rate case GR-98-374. The
settlement of the Company's 1998 rate case authorized, among other things,
lower depreciation rates and changes in the regulatory accounting treatment
for pension costs.
Utility operating revenues for fiscal year 1999 decreased $74.5
million, or 13.6%, below fiscal 1998, and in 1998 decreased $59.0 million,
or 9.7%, below fiscal 1997. The 1999 decrease in utility operating revenues
was mainly attributable to: lower wholesale gas costs of $38.5 million
(which are passed on to customers in accordance with the Purchased Gas
Adjustment Clause), reduced gas sales volumes (due to warmer weather) and
other variations of $22.4 million, and decreased incentive plan revenues of
$13.6 million. The 1998 decrease in utility operating revenues was
primarily due to lower system sales (arising from the warmer weather coupled
with reduced consumption by customers) and other variations netting to $52.3
million. Utility operating revenues in 1998 also declined due to lower
wholesale gas costs of $6.7 million. Total therms sold and transported in
1999 were 1,025.9 million compared with 1,121.3 million in 1998 and 1,211.0
million in 1997.
Non-utility operating revenues increased $4.1 million in fiscal 1999
(from 1998) and $5.3 million in fiscal 1998 (from 1997). The increase each
year was primarily due to higher gas marketing sales in both periods.
Utility operating expenses in fiscal 1999 decreased $73.0 million, or
15.0%, from fiscal 1998, and in 1998 decreased $53.4 million, or 9.9%, below
fiscal 1997. Natural and propane gas expense decreased $65.5 million in
fiscal 1999 from fiscal 1998 primarily due to reduced volumes purchased for
sendout, lower rates charged by our suppliers, and lower incentive plan gas
costs. In 1998, natural and propane gas expense decreased $45.9 million
from 1997 primarily due to reduced volumes purchased for sendout and lower
rates charged by our suppliers. Other operation and maintenance expenses in
1999 decreased $1.6 million, or 1.5%, from 1998 principally due to lower net
pension cost resulting from the effects of the settlement reached in the
1998 rate case (see below) and cost cutting reductions. These decreases were
partially offset by higher wage rates, lower gains applicable to lump sum
pension settlements, and higher provisions for uncollectible accounts and
injuries and damages. Other operation and maintenance expenses in 1998
decreased $4.1 million, or 3.8%, from 1997 principally due to a lower
provision for uncollectible accounts, higher gains applicable to lump-sum
pension settlements, and lower net pension costs resulting from the
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regulatory accounting treatment, effective July 1, 1998, as authorized by
the Missouri Public Service Commission (MoPSC) in the 1998 rate case. These
factors more than offset increases in wage rates and other costs.
Depreciation and amortization expense in 1999 decreased $3.8 million, or
15.1% from 1998 as a result of lower depreciation rates effective, July 1,
1998, as authorized in the same rate case. The effect of lower
depreciation rates was partially offset by additional depreciable property.
In 1998, depreciation and amortization expense decreased 2.2% from 1997
primarily due to the lower rates instituted July 1, 1998, partially offset
by additional depreciable property. Taxes, other than income taxes,
decreased 4.8% in 1999 compared with 1998 and 5.9% in 1998 compared with
1997 principally attributable in both periods to lower gross receipts taxes
(mainly reflecting decreased revenues), the effect of which was partially
offset by higher property taxes.
Non-utility operating expenses increased $4.6 million in fiscal 1999
(compared with 1998), and increased $5.1 million in fiscal 1998 (compared
with 1997). The increase in both periods was primarily due to higher gas
expense associated with gas marketing and related activities.
Other income and income deductions-net decreased by $1.6 million from
1998 mainly due to a one-time $3.2 million pre-tax charge resulting from the
Company's minority participation in Clark Enterprises. Clark Enterprises
was comprised of a group of civic-minded St. Louis firms that owned the St.
Louis Blues Hockey team and also financed and operated the Kiel Center in
downtown St. Louis, the sale of which was negotiated and completed in
September, 1999. This non-recurring charge was partially offset by a pre-
tax gain of approximately $1.9 million recognized by the Company's wholly-
owned subsidiary, Laclede Development Company, on the sale of property known
as Centre Park 40. Laclede Development owned its interest in Centre Park 40
through a real estate partnership. In 1998, other income and income
deductions increased by $.2 million from 1997 due to minor variations in
several areas.
Interest expense decreased 3.2% in fiscal year 1999 from 1998
principally due to lower interest charges on long-term debt reflecting the
net effect of the May 1998 redemption of a 9-5/8% first mortgage bond issue
of $25 million and the issuance of $25 million of 7% first mortgage bonds in
June 1999. This decrease was partially offset by increased short-term
interest expense due to higher average borrowings. In 1998, interest
expense increased 11.4% over 1997 primarily due to increased short-term
interest expense attributable to higher average borrowings and increased
interest charges on long-term debt reflecting the full-year effect of the
issuance of $25 million of 6-1/2% first mortgage bonds in October 1997.
These increases were partially offset by the redemption in May 1998 of a 9-
5/8% first mortgage bond issue.
The reductions in income tax expenses for all periods reported are
mainly due to lower pre-tax income.
Regulatory Matters
On January 26,1999, Laclede filed a request with the MoPSC for a
general rate increase to recover costs related to the operation of its gas
distribution system. By statute, the MoPSC process may take no longer then
eleven months. Laclede's request is for a rate adjustment that would
increase its annual revenues by $30.5 million and increase a typical
residential heating customer's bill by about 5.8%, or $3.37 per month. A
series of pre-hearing conferences were held in mid-July with the
Commission's Staff, the Office of Public Counsel and other parties regarding
our proposed general rate increase. The MoPSC held hearings on this matter
from August 30, 1999 through September 3, 1999. The parties reached a
settlement on some of the issues prior to and during the hearings.
Settlement on those issues, if approved by the Commission, would provide
approximately $5.1 million in additional annual revenues, assuming the MoPSC
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staff's recommended return on common equity. The partial settlement also
provides that the Company discontinue deferring certain costs for future
recovery and that previously deferred costs be recovered beginning with
implementation of new rates. Under Missouri law, the Commission must rule
on the remaining issues and implement new rates no later than December 26,
1999. Historically, the MoPSC has not granted the Company's request for
rate increases in full. However, favorable rulings by the Commission on the
remaining issues, including return on common equity, will provide an
increase in general rate levels greater than the $5.1 million agreed to in
the partial settlement.
Settlement of the Company's 1998 general rate case provided that rates
charged to the vast majority of the Company's customers, including all
residential customers, remained unchanged. Also, the settlement allowed the
Company to record, beginning July 1, 1998, substantially reduced expense
levels resulting from the authorization of lower depreciation rates and
changes in the regulatory accounting treatment for the recovery of pension
costs. The MoPSC authorized the continued use of certain cost deferral
mechanisms under which the Company subsequently applied for future rate
recovery of certain costs. In addition, the MoPSC approved a similar cost
deferral mechanism by which the Company subsequently applied for future rate
recovery of certain costs incurred after July 1, 1998 related to the
Company's Year 2000 readiness program. Settlement of the Company's 1996
general rate case provided an annual increase in revenues of $9.5 million
effective September 1, 1996, and provided for the Gas Supply Incentive Plan
to be effective October 1, 1996 for a three-year period ending September 30,
1999.
On July 21, 1999, the MoPSC gave final approval to Laclede's proposal
to extend and significantly modify its existing Price Stabilization Program.
Under the initial program, which was first approved in 1997, Laclede was
authorized to purchase certain financial instruments to protect its
customers during the heating season from unusually large increases in the
unregulated cost of natural gas. Under the modifications proposed by the
Company and approved by the Commission, Laclede still will provide
significant price protection for its customers above a predetermined level
but it will now have the opportunity to share in any gains and cost
reductions realized under the program. Laclede believes this new program
can provide significant benefits for both its customers and shareholders.
Laclede's customers and shareholders continued to share the benefits
derived from the Gas Supply Incentive Plan during fiscal 1999, the last year
of this Plan's three-year effective period. Under this Incentive Plan,
Laclede and its customers shared the income from off-system sales and
certain gains and losses related to the acquisition of the Company's gas
supply assets. As part of this Plan, Laclede sold available gas supply and
pipeline capacity in markets outside of its normal service territory. The
Company achieved overall gas cost savings under the Plan for Laclede and its
customers of $28.4 million in fiscal 1999, $31.0 million in fiscal 1998, and
$35.0 million in fiscal 1997. These overall savings resulted in pre-tax
income to the Company of $5.4 in fiscal 1999, $6.4 million in fiscal 1998,
and $7.4 million in fiscal 1997. On September 9, 1999, the MoPSC approved
the implementation of a modified Gas Supply Incentive Plan to be in effect
for one year beginning October 1, 1999 extending through September 30, 2000.
Under this new Plan, the Company will continue to share in benefits from:
releases of pipeline capacity, savings from discounts off of maximum
pipeline transportation rates, and gains and losses as measured against a
benchmark level of gas cost. This Plan no longer includes, and the Company
generally retains, all income generated from sales of gas outside its
traditional service area. This plan also provides for the Company to share
in increases or decreases in the costs related to changes in the mix of
pipeline services. While results of the previous Incentive Plan may not be
representative of fiscal 2000 results due to plan changes and the volatile
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and seasonal nature of such efforts, the Company believes that both the
Company and its customers will continue to benefit from the recently
modified Incentive Plan. For additional information on both Plans, see Note
3 of Notes to Consolidated Financial Statements on page 39.
Accounting Changes
The American Institute of Certified Public Accountants issued Statement
of Position (SOP) No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". SOP 98-1 provides guidance on
accounting for the costs of computer software developed or obtained for
internal use, including criteria for capitalization of certain costs. It is
effective in fiscal 2000. Based on current circumstances, the Company does
not expect its adoption to have a material effect on its financial position
or results of operations.
The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 would have been effective
in fiscal 2000, however, its effective date has been delayed until fiscal
2001 as a result of the issuance of SFAS No. 137. SFAS No. 133 provides
accounting and reporting standards for derivative instruments and hedging
activities. Management is presently evaluating the impact that adoption of
SFAS No. 133 will have on the Company's financial position and results of
operations.
The Emerging Issues Task Force (EITF) issued EITF 98-10, "Accounting
for Energy Trading and Risk Management Activities", which will be effective
in fiscal 2000. EITF 98-10 requires that energy contracts associated with
trading activities be recorded at fair value on the balance sheet, with the
changes in fair value included in earnings. Management is presently
evaluating the impact that adoption of EITF 98-10 will have on the Company's
financial position and results of operations.
Inflation
The accompanying Financial Statements reflect the historical costs of
events and transactions, regardless of the purchasing power of the dollar at
the time. Due to the capital-intensive nature of the Company's business,
the most significant impact of inflation is on the Company's depreciation of
utility plant. Rate regulation to which the Company is subject allows
recovery through its rates of only the historical cost of utility plant as
depreciation. While no plans exist to undertake replacements of plant in
service other than normal replacements and those under existing replacement
programs, the Company believes that any higher costs experienced upon
replacement of existing facilities would be recovered through the normal
regulatory process.
Liquidity and Capital Resources
Cash flow from operations, net of dividend payments, has generally
provided the principal liquidity to meet operating requirements and to fund
the majority of the Company's construction program. Any remaining funding
requirements for construction or other needs has been provided by long-term
and short-term financing. The issuance of long-term financing is dependent
on management's evaluation of need, financial market conditions, and other
factors. Short-term financing is used to meet seasonal cash requirements
and/or to defer long-term financing until market conditions are favorable.
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.
During fiscal year 1999, the Company had lines of credit in place
aggregating from $80 million to $160 million. During fiscal 1999, the
Company sold commercial paper aggregating to a maximum of $142.5 million at
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any one time, but did not borrow from the banks under the aforementioned
agreements. Currently, the Company has aggregate lines of credit of $170
million. Short-term borrowings outstanding at September 30, 1999 were $84.7
million at an average interest rate of 5.4%. Based on short-term borrowings
at September 30, 1999, a change in interest rates of 100 basis points would
increase or decrease earnings and cash flows by approximately $847,000 on an
annual basis.
On April 8, 1999, the MoPSC approved the Company's request for a two-
year extension, to April 21, 2001, of its authority to sell up to $25
million of additional first mortgage bonds. The MoPSC originally authorized
the issuance and sale of $100 million of first mortgage bonds, of which $75
million had already been issued and sold. On June 2, 1999, the Company
issued the remaining $25 million first mortgage bonds with an interest rate
of 7%, at an overall cost to the Company of 7.04%. The bonds were dated
June 1, 1999 and mature June 1, 2029. The proceeds were used to repay short-
term debt. The bonds were rated Aa3 by Moody's and AA- by Standard &
Poor's. The ratings also apply to the Company's other outstanding bonds.
On October 21, 1997, the Company issued $25 million of first mortgage
bonds, at an overall cost to the Company of 6.675%. The bonds were dated
October 15, 1997 and mature October 15, 2012. The proceeds were used for
the payment of outstanding short-term borrowings.
On May 15, 1998, the Company redeemed, at its first opportunity, $25
million of 9-5/8% first mortgage bonds due May 15, 2013. The funds for this
redemption were supplied by short-term borrowing agreements.
At September 30, 1999, the Company had fixed-rate long-term debt
totaling $205 million. While these long-term debt issues are fixed-rate,
they are subject to changes in fair value as market interest rates change.
However, increases or decreases in fair value would impact earnings and cash
flows only if the Company were to reacquire any of these issues in the open
market prior to maturity.
On May 5, 1999, the Company issued and sold 1,250,000 shares of its
common stock to the public. Net proceeds of $24.1 million were used to
repay short-term debt.
Laclede Pipeline Company, Laclede Gas Company's wholly-owned
subsidiary, owns and operates a propane pipeline that connects Laclede Gas
Company's propane storage facilities in St. Louis County, Missouri, to
propane supply terminal facilities located at Wood River and Cahokia,
Illinois. In June 1999, Laclede Pipeline Company purchased from Phillips
Pipe Line Company for approximately $1.4 million a section of existing
propane pipeline, which completed Laclede Gas Company's ownership of all
facets of its propane peak shaving assets allowing greater access to supply
markets. Laclede Gas Company vaporizes the propane to supplement its
natural gas supply and meet the peak demands on the distribution system.
Laclede Pipeline Company's previous contract arrangement with Phillips
Petroleum Company, to provide transportation of propane on an annual basis
and which expired on March 31, 1999, is no longer needed.
Construction expenditures for utility purposes were $48.7 million in
fiscal 1999 compared with $47.3 million in fiscal 1998 and $42.8 million in
fiscal 1997. The Company expects fiscal 2000 utility construction
expenditures to approximate $43 million.
Capitalization at September 30, 1999, consisted of 57.8% common stock
equity, .4% preferred stock and 41.8% long-term debt.
The Company's ratio of earnings before taxes to interest charges was
2.9 for 1999, 2.9 for 1998 and 3.6 for 1997.
It is management's view that the Company has adequate access to capital
markets and will have sufficient capital resources, both internal and
external; to meet anticipated capital requirements.
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Environmental Matters
The Company is subject to various environmental laws and regulations.
To date they have not materially affected 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, Laclede performed an investigation
of one of the Company's former manufactured gas plant sites located in
Shrewsbury, Missouri. Subsequently, the Company and the state and federal
environmental regulatory agencies agreed upon the actions needed at this
site. The Company currently estimates the overall costs of these actions
will be approximately $1,135,000. As of September 30, 1999, the Company has
paid $646,000 and reserved $489,000 for these actions. If the regulatory
agencies require any additional actions, Laclede will incur additional
costs.
The Company also applied to place the site of a different former
manufactured gas plant in the City of St. Louis, Missouri in the Missouri
Voluntary Cleanup Program. Laclede ceased its operations at and sold this
site in 1950. Subsequent owners of this site used it as a coke
manufacturing facility. The Missouri Department of Natural Resources
accepted the Company's application. Acceptance provides opportunities to
minimize costs of remediation and maximize possibilities of site
development. Laclede submitted a site investigation plan to the Missouri
Department of Natural Resources on November 16, 1998, which investigation is
now complete. Recently, Laclede sent its report on the investigation to the
Missouri Department of Natural Resources. Laclede currently estimates that
the cost of the investigation, oversight costs and legal and engineering
consulting costs for this site may be approximately $534,000. Currently,
the Company has paid $346,000 and reserved an additional $188,000. The
Company has requested that other former site owners and operators
participate in the cost of any site investigation. One former owner and
operator, who is currently in a Chapter 11 bankruptcy proceeding, agreed to
participate in these costs, and the agreement received the bankruptcy
court's approval. The Company plans to seek proportionate reimbursement of
all costs relative to this site from any other potentially responsible
parties if practicable.
While the scope of costs relative to the site in Shrewsbury will not be
material, the scope of costs relative to the City of St. Louis site are
unknown and may be material. The Company has notified its insurers that it
intends to seek reimbursement from them of its costs at both these sites.
None of the Company's insurers have agreed that its insurance covers the
costs for which the Company intends to seek reimbursement. The majority of
the insurers have sent Laclede letters reserving their rights with respect
to the manufactured gas plant issues addressed in the Company's notices to
them. While some of the insurers have denied coverage with respect to these
issues, the Company continues to seek reimbursement from them. With regard
to the Shrewsbury site, the denial of coverage will not have any material
impact on the Company. With regard to the City of St. Louis site, since the
scope of costs relative to this site are unknown and may be material, the
denial of coverage may have a material impact on the Company.
In the Company's 1998 rate case, the MoPSC approved the Company's
continued use of a cost deferral mechanism for these costs. Through this,
the Company applied for appropriate rate recovery of these costs in its
current rate case. Deferral of such costs terminated July 31, 1999, and any
subsequent costs will be charged to expense. Previously deferred costs will
be put into rates (without return on investment) and amortized over a
fifteen-year period, upon the Commission's approval of the partial
settlement of the Company's current rate case, no later than December 26,
1999.
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Year 2000 Issue
Laclede Gas Company is year 2000 capable in all of its mission critical
systems. Under the mainframe portion of the Company's year 2000 readiness
plan, it has upgraded, converted and replaced its mainframe computer
hardware, attendant operating system software, and key mainframe systems and
applications. These systems include customer records, billing and accounting
systems. Any personal computer applications necessary to the operations of
the Company's business have been similarly upgraded/replaced. Additionally,
Laclede conducted a company-wide program to inventory, evaluate, remediate
and test significant equipment, products, services and supplies that it
uses.
The Company has developed and continues to refine its contingency plans
for unforeseen critical system or equipment failures. With regard to a
temporary loss of electrical and/or communication services, it would at most
impair Laclede's ability to operate remotely a small number of pressure
regulator stations. Laclede will place trained employees at each of the
remotely controlled pressure regulator stations to make any adjustments
needed on a manual basis. In addition, the Company will use an in-house
radio relay system to maintain any needed communications with its employees
in the field. With regard to any temporary natural gas supply
interruptions, Laclede operates a large, local natural gas underground
storage facility as well as a local propane storage facility which it would
use if needed. Contingency planning is substantially complete. The plans
continue to be reviewed for adequacy and improved upon if necessary during
the remainder of this calendar year. The Company has directly contacted and
received assurances from many of its vendors. This group of vendors
includes the natural gas suppliers and transporting pipelines who have
assured Laclede that they will be able to supply natural gas to us after
1999 without interruption. Laclede has, to the extent possible, verified
the vendors' ability to continue to supply the items and services to Laclede
in the year 2000. The Company will further verify its vendors' ability to
continue to supply items and services through the transition into the year
2000 and beyond. If the Company does not believe a vendor will be able to
provide a needed item or service in the year 2000, it will use alternate
vendors and implement contingency plans for any prospective unavailability
of the needed item or service.
Based on all of the information available to us at this time, we do not
expect to experience any interruption in Laclede's business operations, or
to cause any materially adverse consequences to our customers, as a result
of the year 2000 situation.
As of September 30, 1999, the Company has incurred total costs of
approximately $19.1 million for replacements and modifications of various
computer systems. Of this amount, Laclede capitalized $17.6 million and
charged $1.5 million to expense. The Company has used funds from internally
generated cash flows and short-term borrowings to pay these costs. The
Company currently anticipates that any costs remaining to be incurred
through December 31, 1999 will be immaterial. In the 1998 rate case, the
MoPSC authorized Laclede to capitalize the costs incurred in connection with
making its information systems ready for year 2000 operations. The MoPSC
also authorized Laclede to defer any interim property tax, depreciation or
carrying cost expenses that it may incur in connection with these
capitalized items. Laclede applied for recovery of these interim expenses
in its current rate proceeding. Deferral of these costs will cease December
26, 1999. At such time, upon the approval of the partial settlement in the
Company's current rate case by the Commission, previously deferred costs
will be put into rates (without return on investment) and amortized over a
fifteen-year period.
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Other Matters
In September 1997, the staff of the MoPSC recommended that Laclede refund
$3.6 million to its ratepayers in connection with its sale of gas outside of
Missouri during fiscal 1996, prior to the approval of the incentive plan.
Believing that it had full authority to enter into these transactions,
Laclede filed testimony opposing the recommendation made by the staff of the
MoPSC. Formal hearings were held on this issue in October 1998. On April
20, 1999 the MoPSC issued its order rejecting the proposal of its staff.
This order became effective on April 30, 1999. One of the parties sought a
rehearing of the MoPSC's order denying the staff's refund proposal, which
was also denied. No further appeals were taken and this matter is now
closed.
In October 1999, the staff of the MoPSC recommended that the Company
credit ratepayers with $2.5 million of pre-tax income the Company had
realized in fiscal 1997 and fiscal 1998 in connection with its treatment of
a gas supply contract under the operation of the Company's Gas Supply
Incentive Plan. The Company, which has recently filed a response in
opposition to the staff's recommendation, believes that there is no basis
for such recommendation and is confident that the Company will ultimately
prevail on the merits.
On October 30, 1998, the MoPSC issued an order opening a docket
addressing the adequacy of Laclede's copper service line replacement
program. The staff filed a report on August 31, 1999 containing a modified
replacement schedule for such service lines. In response, the Company
proposed an alternative program based upon the evaluation of recent survey
data. After appropriate review of the matter, the Commission is expected to
issue its order on the matter sometime next year. Laclede is unable to
predict at this time what action the MoPSC may take. The Company currently
faces two lawsuits and one claim relative to direct buried copper service
lines.
On April 6, 1999, voters in Wentzville, Missouri, in western St.
Charles County, granted Laclede, by a 3-to-1 margin, a 20 year non-exclusive
franchise to provide natural gas service to much of the city south of
Interstate 70, west of Lake St. Louis. This will allow Laclede to continue
expansion of its service area in areas where the Company anticipates
significant growth to occur during the next few years. The Company received
the MoPSC's approval to serve specifically this portion of Wentzville, as
well as currently unincorporated adjacent areas.
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Forward-Looking Statements
Certain statements in this 10-K are forward-looking statements made
based upon the Company's expectations and beliefs concerning future
developments and their potential effect on Laclede. These statements,
however, do not include financial statements and other statements of
historical fact. The forward-looking statements may be identified by the
use of such terms as "anticipate," "believe," "estimate," "expect,"
"intend," "plan," "seek" and similar expressions. Future developments may
not be in accordance with the Company's expectations or beliefs and the
effect of future developments on Laclede may not be those anticipated.
Among the factors that may cause actual results to differ materially from
those contemplated in any forward-looking statements are:
- weather conditions and catastrophic events
- changes in transportation and gas supply costs or availability
- regulatory actions and initiatives of federal and state regulatory
agencies, some of which could be retroactive, including those
affecting:
-- financings
-- allowed rates of return
-- incentive regulation
-- industry and rate structure
-- purchase gas adjustment provisions
-- franchise renewal
-- environmental or safety requirements
- the effects of any industry or corporate restructuring
- conservation efforts of our customers
- economic factors such as changes in the conditions of capital
markets, interest rates and rates of inflation
- inability to retain existing customers or to attract new customers
- ability to obtain funds from operations or the sale of debt or
equity to finance necessary capital expenditures and other
investments
- employee work force issues
- statutory or tax changes
- changes in accounting standards and
- the effectiveness of Year 2000 computer system remediation efforts by
third parties and unknown Year 2000 related problems
The Company does not, by including this statement, assume any
obligation to review or revise any particular forward-looking statement
referenced herein in light of future events.
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Item 8. Financial Statements and Supplementary Data
Independent Auditors' Report
We have audited the consolidated balance sheets and statements of
consolidated capitalization of Laclede Gas Company and its subsidiary
companies as of September 30, 1999 and 1998, and the related statements of
consolidated income, retained earnings, comprehensive income and cash flows
for each of the three years in the period ended September 30, 1999. Our
audits also included the financial statement schedule listed in the Index at
Part IV, Item 14(a)2. These financial statements and financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Laclede Gas Company and its
subsidiary companies as of September 30, 1999 and 1998, and the results of
their operations and their cash flows for each of the three years in the
period ended September 30, 1999 in conformity with generally accepted
accounting principles. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
November 18, 1999
22
<PAGE>
<PAGE>
Management Report
Management is responsible for the preparation, presentation and integrity of
the consolidated financial statements and other financial information in
this report. The statements were prepared in conformity with generally
accepted accounting principles and include amounts that are based on
management's best estimates and judgments. In the opinion of management,
the financial statements fairly reflect the Company's financial position,
results of operations and cash flows.
The Company maintains internal accounting systems and related administrative
controls that are designed to provide reasonable assurance, on a cost-
effective basis, that transactions are executed in accordance with
management's authorization, that consolidated financial statements are
prepared in conformity with generally accepted accounting principles, and
that the Company's assets are properly accounted for and safeguarded. The
Company's Internal Audit Department, which has unrestricted access to all
levels of Company management, monitors compliance with established controls
and procedures.
Deloitte & Touche LLP, the Company's independent auditors, whose report is
contained herein, are responsible for auditing the Company's financial
statements in accordance with generally accepted auditing standards. Such
standards include obtaining an understanding of the internal control
structure in order to design the audit of the financial statements.
The Audit Committee of the Board of Directors, which consists of five
outside directors, meets periodically with management, the internal auditor,
and the independent auditors to review the manner in which they are
performing their responsibilities. Both the internal auditor and the
independent auditors periodically meet alone with the Audit Committee and
have access to the Audit Committee at any time.
Douglas H. Yaeger
Chairman of the Board, President
and Chief Executive Officer
Gerald T. McNeive, Jr.
Senior Vice President
Finance and General Counsel
23
<PAGE>
<PAGE>
Item 8. Financial Statements and Supplementary Data
<TABLE>
STATEMENTS OF CONSOLIDATED INCOME
(Thousands Except Per Share Amounts)
<CAPTION>
- - ---------------------------------------------------------------------------
Years Ended September 30 1999 1998 1997
- - ---------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues:
Utility operating revenues $473,710 $548,192 $607,236
Non-utility operating revenues 17,878 13,795 8,494
------------------------------
Total operating revenues 491,588 561,987 615,730
------------------------------
Operating Expenses:
Utility operating expenses
Natural and propane gas 246,350 311,869 357,755
Other operation expenses 83,762 86,183 90,778
Maintenance 19,583 18,720 18,273
Depreciation and amortization 21,490 25,310 25,890
Taxes, other than income taxes 41,669 43,782 46,543
------------------------------
Total utility operating expenses 412,854 485,864 539,239
Non-utility operating expenses 17,245 12,659 7,547
------------------------------
Total operating expenses 430,099 498,523 546,786
------------------------------
Operating Income 61,489 63,464 68,944
Other Income and Income Deductions-
Net (Note 10) (473) 1,139 964
------------------------------
Income Before Interest and
Income Taxes 61,016 64,603 69,908
------------------------------
Interest Charges:
Interest on long-term debt 13,966 14,797 14,169
Other interest charges 6,627 6,473 4,919
------------------------------
Total interest charges 20,593 21,270 19,088
------------------------------
Income Before Income Taxes 40,423 43,333 50,820
Income Taxes (Note 8) 14,361 15,441 18,354
------------------------------
Net Income 26,062 27,892 32,466
Dividends on Preferred Stock 97 97 97
------------------------------
Earnings Applicable to Common Stock $ 25,965 $ 27,795 $ 32,369
==============================
Average Shares of Common Stock Outstanding 18,138 17,598 17,558
==============================
Earnings Per Share of Common Stock
(after preferred dividends) $1.43 $1.58 $1.84
==============================
<FN>
See the accompanying notes to financial statements.
</TABLE>
24
<PAGE>
<PAGE>
<TABLE>
STATEMENTS OF CONSOLIDATED RETAINED EARNINGS
(Thousands Except Per Share Amounts)
<CAPTION>
- - ---------------------------------------------------------------------------
Years Ended September 30 1999 1998 1997
- - ---------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at Beginning of Year $198,342 $193,776 $184,232
Add - Net Income, per statements 26,062 27,892 32,466
-----------------------------
Total 224,404 221,668 216,698
-----------------------------
Deduct - Cash Dividends Declared:
Preferred stock at required annual rates 97 97 97
Common stock, $1.34 per share in 1999,
$1.32 per share in 1998 and $1.30 per
share in 1997 24,459 23,229 22,825
-----------------------------
Total 24,556 23,326 22,922
-----------------------------
Balance at End of Year $199,848 $198,342 $193,776
=============================
<FN>
See the accompanying notes to financial statements.
</TABLE>
<TABLE>
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
<CAPTION>
(Thousands of Dollars)
- - ---------------------------------------------------------------------------
Years Ended September 30 1999 1998 1997
- - ---------------------------------------------------------------------------
<S> <C> <C> <C>
Net Income $ 26,062 $ 27,892 $ 32,466
-----------------------------
Other Comprehensive Income (Loss):
Minimum pension liability adjustment (125) - -
Income tax benefit (48) - -
-----------------------------
Other Comprehensive Income (Loss) (77) - -
-----------------------------
Comprehensive Income $ 25,985 $ 27,892 $ 32,466
=============================
<FN>
See the accompanying notes to financial statements.
</TABLE>
25
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<CAPTION>
- - --------------------------------------------------------------------------
September 30 1999 1998
- - --------------------------------------------------------------------------
<S> <C> <C>
Assets
Utility Plant $876,431 $835,923
Less - Accumulated depreciation & amortization 357,053 345,241
--------------------
Net utility plant 519,378 490,682
--------------------
Other Property and Investments, at Cost or Less
(net of accumulated depreciation and amortization,
1999, $2,237; 1998, $7,426) 26,122 33,737
--------------------
Current Assets:
Cash and cash equivalents 9,352 3,718
Accounts receivable:
Gas customers - Billed and unbilled 38,051 42,023
Other 10,218 9,682
Less - Allowances for doubtful accounts (6,241) (5,650)
Inventories:
Materials, supplies and merchandise at
average cost 5,680 5,591
Natural gas stored underground for current use
at LIFO cost 64,112 54,973
Propane gas for current use at FIFO cost 11,697 12,840
Prepayments and other 2,309 2,927
Deferred income taxes (Note 8) 10,216 9,933
--------------------
Total current assets 145,394 136,037
--------------------
Deferred Charges:
Prepaid pension cost 80,994 62,027
Regulatory assets 58,024 45,218
Other 1,707 3,446
--------------------
Total deferred charges 140,725 110,691
--------------------
Total Assets $831,619 $771,147
====================
<FN>
See the accompanying notes to financial statements.
</TABLE>
26
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS (Continued)
(Thousands of Dollars)
<CAPTION>
- - --------------------------------------------------------------------------
September 30 1999 1998
- - --------------------------------------------------------------------------
<S> <C> <C>
Capitalization and Liabilities
Capitalization, per statements:
Common stock equity $282,324 $256,785
Redeemable preferred stock 1,923 1,960
Long-term debt 204,323 179,238
--------------------
Total capitalization 488,570 437,983
--------------------
Current Liabilities:
Notes payable (Note 9) 84,700 98,500
Accounts payable 31,716 20,692
Refunds due customers 1,425 7,589
Advance customer billings 15,665 8,936
Current portion of preferred stock 35 -
Wages payable 4,575 4,123
Dividends payable 6,391 6,002
Customer deposits 3,961 3,123
Interest accrued 8,092 7,501
Taxes accrued 5,804 8,690
Unamortized purchased gas adjustments 8,956 15,815
Other current liabilities 2,085 2,680
--------------------
Total current liabilities 173,405 183,651
--------------------
Deferred Credits and Other Liabilities:
Deferred income taxes (Note 8) 124,756 102,856
Unamortized investment tax credits 6,586 6,933
Pension and postretirement benefit costs 19,259 21,566
Other 19,043 18,158
--------------------
Total deferred credits and other liabilities 169,644 149,513
--------------------
Commitments and Contingencies (Note 12)
Total Capitalization and Liabilities $831,619 $771,147
====================
<FN>
See the accompanying notes to financial statements.
</TABLE>
27
<PAGE>
<PAGE>
<TABLE>
STATEMENTS OF CONSOLIDATED CAPITALIZATION
(Thousands of Dollars)
<CAPTION>
- - --------------------------------------------------------------------------
September 30 1999 1998
- - --------------------------------------------------------------------------
<S> <C> <C>
Common Stock Equity (Note 4):
Common stock, par value $1 per share:
Authorized - 1999 and 1998, 50,000,000 shares
Issued - 1999, 20,743,625 shares;
1998, 19,493,625 shares $ 20,744 $ 19,494
Paid-in capital 85,826 62,966
Retained earnings, per statements 199,848 198,342
Accumulated other comprehensive income
(Minimum pension liability adjustment) (77) -
Treasury stock, at cost - 1999 and 1998,
1,865,638 shares (24,017) (24,017)
--------------------
Total common stock equity 282,324 256,785
--------------------
Redeemable Preferred Stock,
par value $25 per share (1,480,000 shares
authorized) issued and outstanding (Note 5):
5% Series B - 1999, 71,820 shares; 1998, 71,890
shares 1,760 1,797
4.56% Series C - 1999 and 1998, 6,510 shares 163 163
--------------------
Total redeemable preferred stock 1,923 1,960
--------------------
Long-Term Debt (Note 6):
First mortgage bonds:
6-1/4% Series, due May 1, 2003 25,000 25,000
8-1/2% Series, due November 15, 2004 25,000 25,000
8-5/8% Series, due May 15, 2006 40,000 40,000
7-1/2% Series, due November 1, 2007 40,000 40,000
6-1/2% Series, due November 15, 2010 25,000 25,000
6-1/2% Series, due October 15, 2012 25,000 25,000
7 % Series, due June 1, 2029 25,000 -
--------------------
Total 205,000 180,000
Unamortized discount, net of premium,
on long-term debt (677) (762)
--------------------
Total long-term debt 204,323 179,238
--------------------
Total $488,570 $437,983
====================
<FN>
Long-term debt and preferred stock amounts are exclusive of current
obligations.
See the accompanying notes to financial statements.
</TABLE>
28
<PAGE>
<PAGE>
<TABLE>
STATEMENTS OF CONSOLIDATED CASH FLOWS
(Thousands of Dollars)
<CAPTION>
- - --------------------------------------------------------------------------
Years Ended September 30 1999 1998 1997
- - --------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities:
Net Income $26,062 $27,892 $32,466
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 21,592 25,403 25,923
Deferred income taxes and investment
tax credits 14,486 8,891 8,681
Other - net 911 (675) (635)
Changes in assets and liabilities:
Accounts receivable - net 4,027 1,877 (2,354)
Unamortized purchased gas adjustments (6,859) 2,793 (13,722)
Deferred purchased gas costs (67) (3,863) 394
Accounts payable 11,024 (8,936) 8,991
Refunds due customers (6,164) 6,858 (517)
Taxes accrued (2,886) 1,842 (3,364)
Natural gas stored underground (9,139) 1,894 1,902
Other assets and liabilities (9,922) (15,087) (3,635)
------------------------------
Net cash provided by operating activities 43,065 48,889 54,130
------------------------------
Investing Activities:
Construction expenditures (48,698) (47,252) (42,842)
Employee benefit trusts (997) (2,560) (3,094)
Investments - non-utility 2,215 (2,571) (2,228)
Other (1,211) (413) 2,529
------------------------------
Net cash used in investing activities (48,691) (52,796) (45,635)
------------------------------
Financing Activities:
Issuance of first mortgage bonds 25,000 25,000 -
Issuance of short-term debt - net (13,800) 24,500 14,400
Issuance of common stock 24,110 1,832 -
Dividends paid (24,048) (23,215) (22,747)
Redemption of first mortgage bonds - (25,000) -
Redemption of preferred stock (2) - -
------------------------------
Net cash provided by (used in)
financing activities 11,260 3,117 (8,347)
------------------------------
Net Increase (Decrease) in Cash and
Cash Equivalents 5,634 (790) 148
Cash and Cash Equivalents at
Beginning of Year 3,718 4,508 4,360
------------------------------
Cash and Cash Equivalents at End of Year $ 9,352 $ 3,718 $ 4,508
==============================
Supplemental Disclosure of Cash Paid
During the Year for:
Interest $19,003 $20,005 $18,087
Income taxes 4,768 4,110 13,966
<FN>
See the accompanying notes to financial statements.
</TABLE>
29
<PAGE>
<PAGE>
<TABLE>
SCHEDULE OF INCOME TAXES (Note 8)
(Thousands of Dollars)
<CAPTION>
- - -------------------------------------------------------------------------
Years Ended September 30 1999 1998 1997
- - -------------------------------------------------------------------------
<S> <C> <C> <C>
Included in Statements of
Consolidated Income:
Federal
Current $ 310 $ 5,514 $ 8,282
Deferred 12,291 7,777 7,583
Investment tax credit
adjustments - net (347) (347) (389)
State and local
Current (435) 1,036 1,391
Deferred 2,542 1,461 1,487
-----------------------------
Total 14,361 15,441 18,354
=============================
<FN>
See the accompanying notes to financial statements.
</TABLE>
30
<PAGE>
<PAGE>
<TABLE>
SCHEDULE OF INTERIM FINANCIAL INFORMATION
(Unaudited) (Note 11)
(Thousands of Dollars Except Per Share Amounts)
<CAPTION>
- - --------------------------------------------------------------------------
Three Months Ended Dec. 31 March 31 June 30 Sept. 30
- - --------------------------------------------------------------------------
1999
<S> <C> <C> <C> <C>
Total Operating Revenues $153,512 $211,932 $70,398 $55,746
Operating Income 18,613 38,008 3,742 1,126
Net Income (Loss) 9,707 20,138 171 (3,954)
Earnings (Loss) Per Share
of Common Stock
(after preferred dividends) $ .55 $1.14 $ .01 $(.21)
<CAPTION>
- - --------------------------------------------------------------------------
Three Months Ended Dec. 31 March 31 June 30 Sept. 30
- - --------------------------------------------------------------------------
1998
<S> <C> <C> <C> <C>
Total Operating Revenues $203,851 $218,452 $80,268 $59,416
Operating Income 26,793 34,705 2,645 (679)
Net Income (Loss) 13,633 18,370 (906) (3,205)
Earnings (Loss) Per Share
of Common Stock
(after preferred dividends) $ .78 $1.04 $(.05) $(.18)
<FN>
See the accompanying notes to financial statements.
</TABLE>
31
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Consolidation - The consolidated financial statements include
the accounts of the Laclede Gas Company and its subsidiary companies
(Company). All subsidiaries are wholly owned and material intercompany
transactions have been eliminated.
Nature of Operations - Laclede Gas Company is a public utility engaged
in the retail distribution of natural gas. The Company serves an area in
eastern Missouri, with a population of approximately 2.0 million, including
the City of St. Louis, St. Louis County, and parts of eight other counties.
As an adjunct to its gas distribution business, the Company operates
underground natural gas storage fields and is engaged in the transportation
and storage of liquid propane. The Company has also made investments in
some non-utility businesses as part of a diversification program.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
System of Accounts - The accounts of the Company are maintained in
accordance with the uniform system of accounts prescribed by the Missouri
Public Service Commission (MoPSC), which system substantially conforms to
that prescribed by the Federal Energy Regulatory Commission.
Utility Plant, Depreciation and Amortization - Utility plant is stated
at original cost. The cost of additions to utility plant includes
contracted work, direct labor and materials, allocable overheads, and an
allowance for funds used during construction. The costs of units of
property retired, replaced, or renewed are removed from utility plant and
such costs, plus removal costs, less salvage are charged to accumulated
depreciation. Maintenance and repairs of property and replacement and
renewal of items determined to be less than units of property are charged to
maintenance expenses.
Utility plant (excluding insignificant exploration and development
property held during 1997) is depreciated on the straight-line basis at
rates based on estimated service lives of the various classes of property.
Annual depreciation in 1999, 1998 and 1997 averaged approximately 2.6%, 3.1%
and 3.4%, respectively, of the original cost of depreciable property. In
the Company's 1998 rate case, the MoPSC approved a settlement agreement
which authorized a decrease in depreciation rates for the Company which was
instituted July 1, 1998.
Regulated Operations - The Company accounts for its regulated
operations in accordance with Statement of Financial Accounting Standards
(SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation".
This statement sets forth the application of generally accepted accounting
principles for those companies whose rates are established by or are subject
to approval by an independent third-party regulator. The provisions of SFAS
No. 71 require, among other things, that financial statements of a regulated
enterprise reflect the actions of regulators, where appropriate. These
actions may result in the recognition of revenues and expenses in time
periods that are different than non-regulated enterprises. When this occurs,
costs are deferred as assets in the balance sheet (regulatory assets) and
recorded as expenses when those amounts are reflected in rates. Also,
regulators can impose liabilities upon a regulated company for amounts
32
<PAGE>
<PAGE>
previously collected from customers and for recovery of costs that are
expected to be incurred in the future (regulatory liabilities).
<TABLE>
The following regulatory assets and regulatory liabilities were
reflected in the Consolidated Balance Sheets as of September 30:
<CAPTION>
(Thousands of Dollars) 1999 1998
- - -------------------------------------------------------------------------
<S> <C> <C>
Regulatory Assets:
Future income taxes due from customers $42,339 $33,810
Pension and postretirement benefit costs 7,559 4,931
Purchased gas costs 3,092 3,025
Other 5,609 3,609
-----------------------
Total Regulatory Assets $58,599 $45,375
=======================
Regulatory Liabilities:
Unamortized investment tax credits $ 6,586 $ 6,933
Unamortized purchased gas adjustments 8,956 15,815
Other 260 1,025
-----------------------
Total Regulatory Liabilities $15,802 $23,773
=======================
</TABLE>
On January 26, 1999, the Company filed a request with the MoPSC for
a general rate increase. The parties reached a settlement on some of the
issues prior to and during hearings before the Commission. The partial
settlement, if approved by the Commission, provides, among other things,
that the Company shall discontinue deferring certain costs for future
recovery, and provides for previously deferred amounts to be put into rates
(without return on investment) when new rates are implemented. Previously
deferred costs of $10,529,000 will be amortized over a fifteen-year period,
and $2,064,000 will be amortized over a ten-year period. Under Missouri
law, the Commission must rule on the remaining issues and implement new
rates no later than December 26, 1999.
Gas Stored Underground - Inventory of gas in storage is priced on a
last-in, first-out (LIFO) basis. The replacement cost of gas stored
underground for current use was $15,450,000 more than the LIFO cost at
September 30, 1999 and $10,847,000 less than the LIFO cost at September 30,
1998. The inventory carrying value has not been adjusted to market prices
because, pursuant to the Company's Purchased Gas Adjustment Clause, actual
gas costs are recovered in customer rates.
Operating Revenues - The Company records revenues from gas sales and
transportation service on the accrual basis which includes estimated amounts
for gas delivered, where applicable, but not yet billed.
Purchased Gas Adjustments and Deferred Account - Pursuant to the
provisions of the Company's Purchased Gas Adjustment (PGA) Clause, increases
and decreases in gas costs are passed on to its customers. The Company
makes two scheduled PGA filings each year, one for the winter period and one
for the summer. In addition, the Company may make one unscheduled
adjustment during the winter if significant, unforeseen increases or
decreases in gas costs occur.
The provisions of the PGA Clause also include the operation of the Gas
Supply Incentive Plan, which expired September 30, 1999 and the modified Gas
Supply Incentive Plan, which became effective October 1, 1999. These plans
allow for the Company to record income as part of a sharing mechanism
related to off system sales and gas supply acquisition, with certain amounts
33
<PAGE>
<PAGE>
being passed on to customers. See Note 3 for more information on the
operation of these plans.
The MoPSC authorized the Company to purchase financial instruments for
the fiscal 1998 and 1999 heating seasons to protect the Company and its
customers from any unusually large winter period gas price increases. The
costs of purchasing these instruments and any financial gains derived from
such activities were passed on to the Company's customers through the
operation of its PGA Clause. Accordingly, there was no earnings impact as a
result of the use of these financial instruments. In July 1999, the MoPSC
approved modifications to the PGA Clause with respect to the purchase of
financial instruments for the next three heating seasons. Under the new
provisions, Laclede will continue to provide significant price protection
for the Company and its customers above a predetermined level, but it will
now have the opportunity to share in any gains and cost reductions realized
under the program. These modifications had no effect on fiscal 1999
earnings.
Pursuant to the provisions of the PGA Clause, the difference between
actual costs incurred and costs recovered through the application of the
PGA, amounts due to or from customers related to the operation of the
Incentive Plan, and amounts related to the use of financial instruments are
reflected as a deferred charge or credit until September 30, at which time
the balance is classified as a current asset or liability and is recovered
from or credited to customers over an annual period commencing in November.
The balance in the current account is amortized as amounts are reflected in
customer billings.
Income Taxes - The Company has elected, for tax purposes only, various
accelerated depreciation provisions of the Internal Revenue Code. In
addition, certain other costs are expensed currently for tax purposes while
being deferred for book purposes. The provision for current income taxes
reflects the tax treatment of these items. The Company records deferred tax
liabilities and assets measured by enacted tax rates for the net tax effect
of all temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes, and the amounts used for
income tax purposes. Changes in enacted tax rates, if any, will be
reflected by entries to regulatory asset or liability accounts.
Investment tax credits utilized prior to 1986 have been deferred and are
being amortized in accordance with regulatory treatment over the useful life
of the related property.
Cash and Cash Equivalents - For the purpose of the statements of cash
flows, the Company considers all highly liquid debt instruments purchased to
be cash equivalents. Such instruments are carried at cost, which
approximates market value.
Reclassification - Certain prior-period amounts have been reclassified
to conform to current-period presentation. These reclassifications did not
affect consolidated net income for the periods presented.
Accounting Changes - The Company has adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income". SFAS
No. 130 establishes standards for reporting and display of comprehensive
income and its components in a full set of general-purpose financial
statements. Comprehensive income includes net income plus items under
existing accounting standards that are reported as changes in stockholders'
equity. The Company's comprehensive income includes net income and minimum
pension liability adjustments. Comprehensive income is presented in the
Consolidated Statements of Comprehensive Income, and accumulated
comprehensive income is presented in the Statements of Consolidated
Capitalization.
34
<PAGE>
<PAGE>
The Company also adopted SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information". SFAS No. 131 establishes standards
for the way that a public business enterprise reports information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports. The adoption of this statement did not impact the
Company's financial position or results of operations, but did require
disclosure of segment information as provided in Note 11 on page 44.
The adoption of SFAS No. 132, "Employers' Disclosures about Pensions
and Other Postretirement Benefits" did not affect the Company's financial
position or results of operations, but did require changes in the disclosure
of pension and other postretirement benefits information and required
additional information on changes in benefit obligations and fair values of
plan assets. See Note 2 on page 35.
The American Institute of Certified Public Accountants issued Statement
of Position (SOP) No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". SOP 98-1 provides guidance on
accounting for the costs of computer software developed or obtained for
internal use, including criteria for capitalization of certain costs. It is
effective in fiscal 2000. Based on current circumstances, the Company does
not expect its adoption to have a material effect on its financial position
or results of operations.
The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 would have been effective
in fiscal 2000, however, its effective date has been delayed until fiscal
2001 as a result of the issuance of SFAS No. 137. SFAS No. 133 provides
accounting and reporting standards for derivative instruments and hedging
activities. Management is presently evaluating the impact that adoption of
SFAS No. 133 will have on the Company's financial position and results of
operations.
The Emerging Issues Task Force (EITF) issued EITF 98-10, "Accounting
for Energy Trading and Risk Management Activities", to be effective in
fiscal 2000. EITF 98-10 requires that energy contracts associated with
trading activities be recorded at fair value on the balance sheet, with the
changes in fair value included in earnings. Management is presently
evaluating the impact that adoption of EITF 98-10 will have on the Company's
financial position and results of operations.
2. Pension Plans and Other Postretirement Benefits
The Company has non-contributory defined benefit, trusteed forms of
pension plans covering substantially all employees over the age of twenty-
one. Benefits are based on years of service and the employee's compensation
during the last three years of employment. The Company's funding policy is
to contribute an amount not less than the minimum required by government
funding standards, nor more than the maximum deductible amount for federal
income tax purposes. Plan assets consist primarily of equities and
corporate and U.S. government obligations.
In February 1998, the Financial Accounting Standards Board issued SFAS
No. 132, "Employers' Disclosures about Pensions and other Postretirement
Benefits". This statement revises employers' disclosures about pension and
other postretirement benefit plans and requires additional information on
changes in the benefit obligations and fair values of plan assets.
Restatement of disclosures for earlier periods provided for comparative
purposes is required.
Pension costs in 1999, 1998 and 1997 amounted to $(10,653,000),
$(3,345,000) and $(3,091,000), respectively, including amounts charged to
construction.
35
<PAGE>
<PAGE>
<TABLE>
The net periodic pension costs (credits) include the following
components:
<CAPTION>
(Thousands of Dollars) 1999 1998 1997
- - --------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned
during the period $ 9,909 $ 8,866 $ 7,757
Interest cost on projected
benefit obligation 14,355 14,327 13,510
Expected return on plan assets (25,689) (21,100) (18,910)
Amortization of transition obligation (760) (826) (877)
Amortization of prior service cost 1,082 1,143 1,004
Amortization of actuarial gain (8,975) (4,994) (4,926)
Regulatory adjustment (575) (761) (649)
--------------------------------
Net pension cost (credit) $(10,653) $ (3,345) $ (3,091)
================================
</TABLE>
The MoPSC ordered in the 1998 general rate case, effective October 27,
1998, certain pension costs to be recovered on a payment basis up to a
$314,000 allowance, with the difference between actual payments and the
allowance to be deferred. The allowance was previously $313,000 effective
September 1, 1996. Amounts deferred pursuant to the September 1, 1996 and
October 27, 1998 allowances were considered for recovery in Laclede's
current general rate case proceeding. Such deferrals terminated July 31,
1999. Previously deferred costs will be put into rates (without return on
investment) and amortized over a fifteen-year period, upon approval by the
Commission no later than December 26, 1999. The MoPSC also ordered in the
1998 rate case that, beginning July 1, 1998, the return on plan assets be
based on the market value of plan assets. Previously, such calculations
were based on a market-related value of plan assets, which method recognized
certain gains and losses in assets over a three-year period. Also beginning
July 1, 1998, the unrecognized net gain or loss balances subject to
amortization are based upon the most recent five-year average of the
unrecognized gain or loss balance. Such methodology was implemented
prospectively. In fiscal 1997, net gains and losses subject to amortization
were amortized over a five-year period, as ordered by the MoPSC. Other
variances in net pension costs are primarily attributable to actuarial and
investment experience.
<TABLE>
The following table sets forth the reconciliation of the beginning and
ending balances of the pension benefit obligation at September 30:
<CAPTION>
(Thousands of Dollars) 1999 1998
- - --------------------------------------------------------------------------
<S> <C> <C>
Benefit obligation at beginning of year $237,938 $201,030
Service cost 9,909 8,866
Interest cost 14,355 14,327
Actuarial (gain)/loss (26,932) 41,297
Settlements (20,929) (18,144)
Gross benefits paid (9,167) (9,438)
---------------------
Benefit obligation at end of year $205,174 $237,938
=====================
</TABLE>
<TABLE>
The following table sets forth the reconciliation of the beginning and
ending balances of the fair value of plan assets recognized in the Company's
consolidated balance sheets at September.
36
<PAGE>
<PAGE>
<CAPTION>
(Thousands of Dollars) 1999 1998
---------------------
<S> <C> <C>
Fair value of plan assets at
beginning of year $309,288 $272,299
Actual return on plan assets 22,428 60,405
Employer contributions 8,538 4,166
Settlements (20,929) (18,144)
Gross benefits paid (9,167) (9,438)
---------------------
Fair value of plan assets at
end of year 310,158 309,288
---------------------
Funded status at end of year 104,984 71,350
Unrecognized net actuarial gain (44,925) (31,701)
Unrecognized prior service cost 13,810 14,892
Unrecognized net transition asset (2,377) (3,307)
Fourth quarter contribution adjustment 56 56
---------------------
Net amount recognized at end of year 71,548 51,290
---------------------
Amounts recognized in the consolidated
balance sheets consist of:
Prepaid pension cost 80,994 62,027
Accrued benefit liability (9,895) (12,766)
Intangible asset 324 2,029
Accumulated other comprehensive income 125 -
---------------------
Net amount recognized at end of year $ 71,548 $ 51,290
=====================
</TABLE>
The projected benefit obligation, which is based on a June 30
measurement date, was determined using a weighted-average discount rate of
7.5% for 1999 and 6.75% for 1998, and a weighted-average rate of future
compensation of 4.25% for 1999 and 4.0% for 1998. The effect of the above
changes in pension assumptions was to decrease the projected benefit
obligation by approximately $32 million. The expected long-term rate of
return on plan assets was 8.50% for 1999 and 8.25% for 1998.
The aggregate projected benefit obligation and fair value of plan
assets for plans with benefit obligations in excess of plan assets were
$56,881,000 and $39,163,000, respectively, for fiscal 1999 and $69,507,000
and $43,118,000, respectively, for fiscal 1998. The aggregate accumulated
benefit obligation and fair value of plan assets for plans with accumulated
benefit obligations in excess of plan assets were $3,944,000 and $0,
respectively, for fiscal 1999, and $54,044,000 and $43,118,000,
respectively, for fiscal 1998.
Pursuant to the provisions of the Company's pension plans, pension
obligations may be settled by lump-sum cash payments. Settlements in 1999,
1998 and 1997 resulted in pre-tax gains of approximately $1,641,000,
$3,771,000 and $2,490,000, respectively.
The cost of the Company's defined contribution plans, which cover
substantially all employees, amounted to $2,480,000, $2,304,000 and
$2,103,000 for the years 1999, 1998 and 1997, respectively.
The Company also provides certain life insurance benefits at
retirement. Medical insurance is available after early retirement until age
65.
State law provides for the recovery in rates of SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions"
(OPEB), accrued costs provided that such costs are funded through an
independent, external funding mechanism. The Company established Voluntary
Employees' Beneficiary Association (VEBA) and Rabbi trusts as its external
37
<PAGE>
<PAGE>
funding mechanisms. VEBA and Rabbi trusts assets consist primarily of money
market securities. The unrecognized transition obligation is being
amortized over 20 years.
Postretirement benefit costs in 1999, 1998 and 1997 amounted to
approximately $3,856,000, $4,265,000 and $4,265,000, respectively, including
amounts charged to construction.
<TABLE>
Net periodic postretirement benefit costs consisted of the following
components:
<CAPTION>
(Thousands of Dollars) 1999 1998 1997
- - ---------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned
during the period $1,959 $1,354 $1,463
Interest cost on accumulated
postretirement benefit
obligation 2,478 2,327 2,469
Expected return on plan assets (431) (337) (295)
Amortization of transition
obligation 1,267 1,267 1,267
Amortization of prior service cost 365 365 365
Amortization of actuarial (gain)/loss 52 (1,151) (1,052)
Regulatory adjustment (1,834) 440 48
------------------------------
Net postretirement benefit cost $3,856 $4,265 $4,265
==============================
</TABLE>
<TABLE>
The following table sets forth the reconciliation of the beginning
and ending balances of the postretirement benefit obligation at September
30:
<CAPTION>
(Thousands of Dollars) 1999 1998
- - --------------------------------------------------------------------------
<S> <C> <C>
Benefit obligation at beginning of year $36,813 $33,230
Service cost 1,959 1,354
Interest cost 2,478 2,327
Actuarial (gain)/loss (1,986) 3,285
Gross benefits paid (3,421) (3,383)
--------------------
Benefit obligation at end of year $35,843 $36,813
====================
</TABLE>
38
<PAGE>
<PAGE>
<TABLE>
The following table sets forth the reconciliation of the beginning and
ending balances of the fair value of plan assets recognized in the Company's
consolidated balance sheets at September 30:
<CAPTION>
(Thousands of Dollars) 1999 1998
- - --------------------------------------------------------------------------
<S> <C> <C>
Fair value of plan assets at
beginning of year $ 4,305 $ 4,061
Actual return on plan assets 211 233
Employer contributions 5,127 3,394
Gross benefits paid (3,421) (3,383)
--------------------
Fair value of plan assets at
end of year 6,222 4,305
--------------------
Funded status at end of year (29,620) (32,508)
Unrecognized net actuarial (gain)/loss (1,026) 793
Unrecognized prior service cost 3,569 3,935
Unrecognized net transition asset 17,713 18,980
--------------------
Net amount recognized at end of year
as postretirement benefit cost $(9,364) $(8,800)
====================
</TABLE>
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation was 5% for 1999 and future
years. A one-percentage-point increase or (decrease) in the assumed health
care cost trend rate for each future year would have increased or
(decreased) the aggregate of the service and interest cost components of the
1999 net periodic postretirement benefit cost by approximately $260,000 or
$(250,000) and would have increased or (decreased) the postretirement
benefit obligation by $1,270,000 or $(1,220,000). The accumulated
postretirement benefit obligation was determined using a weighted-average
discount rate of 7.50% for 1999 and 6.75% for 1998, and a
weighted-average rate of future compensation of 4.25% for 1999 and 4.0% for
1998. These changes in assumptions decreased the postretirement benefit
obligation by approximately $ 2 million. The weighted-average rate for the
expected return on medical plan assets was 7.75% for both 1999 and 1998 and
the weighted-average rate for the expected return on life insurance plan
assets was 8.5% for both 1999 and 1998.
The 1998 rate case settlement provided for the deferral, net of any
applicable tax effects, of the difference between the costs funded by the
Company and a $3,825,000 allowance of annualized OPEB costs included in
rates effective October 27, 1998. The allowance was previously $4,265,000
effective September 1, 1996. Amounts deferred were considered for future
rate recovery in the current general rate case proceeding. Pending approval
by the Commission, deferrals ceased September 30, 1999 and previously
deferred amounts will be put into rates (without return on investment) no
later than December 26, 1999, and amortized over a fifteen-year period.
3. Incentive Plan
The Company's Gas Supply Incentive Plan became effective October 1,
1996 for a three-year period ending September 30, 1999 as part of a
settlement reached in the Company's 1996 rate case. This plan continued to
provide significant benefits for both the Company's shareholders and
customers. Under this plan, the Company and its customers shared as
follows:
- sales of gas outside of the Company's traditional service area, of
39
<PAGE>
<PAGE>
which 70% of the income was allocated to Laclede's customers and the
balance to the Company's shareholders
- releases of pipeline capacity, of which 70% to 90% of the revenues
were allocated to Laclede's customers and the balance was allocated
to its shareholders
- savings from discounts off of maximum pipeline transportation rates,
of which 80% to 90% of the savings was allocated to Laclede's
customers and the balance to its shareholders, and
- gains and losses as measured against a benchmark level of gas cost,
of which the Company was allocated 50%.
The incentive plan revenues are included in the utility operating
revenues line in the Company's financial statements. Expenses related to
the incentive plan are included in the natural and propane gas expense line
in the financial statements. Results of the Plan are set forth below:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1999 1998 1997
- - ---------------------------------------------------------------------------
<S> <C> <C> <C>
Net Benefits to Customers
and Shareholders $28,362 $31,028 $35,021
- - ---------------------------------------------------------------------------
Shareholder Benefits
Incentive Plan Revenues $16,217 $29,851 $34,288
Incentive Plan Gas Expense 10,806 23,482 26,886
-------------------------------
Company Share - Pretax Income $ 5,411 $ 6,369 $ 7,402
===============================
</TABLE>
On September 9, 1999, the MoPSC approved the implementation of a
modified Gas Supply Incentive Plan to be in effect for one year beginning
October 1, 1999 extending through September 30, 2000. The new plan no
longer includes, and the Company generally retains, all income generated
from sales of gas outside of its traditional service area. Under this new
Plan, the Company will continue to share in benefits from:
- releases of pipeline capacity, of which 70% to 90% of the revenues
are allocated to Laclede's customers and the balance is allocated to
its shareholders
- savings from discounts off of maximum pipeline transportation rates,
of which the excess over a predetermined baseline of $13 million is
allocated 70% to Laclede's customers and the balance to its
shareholders
- gains and losses as measured against a benchmark level of gas cost,
of which 10% to 50% is allocated to the shareholders depending on
the change from a predetermined price, and
- increases or decreases related to changes in the mix of pipeline
services, of which a portion is allocated to shareholders.
While previous results of the Incentive Plan may not be representative
of fiscal 2000 results due to plan changes and the volatile and seasonal
nature of such efforts, the Company believes that both the Company and its
customers will continue to benefit from the recently modified Incentive
Plan.
4. Common Stock and Paid-in Capital
During 1999, the Company issued 1,250,000 shares of common stock
through a public offering. The net proceeds of the offering, after
deducting discount and expenses, were $24.1 million. The Company issued
70,447 shares of its common stock during fiscal 1998 under its Dividend
Reinvestment and Stock Purchase Plan.
40
<PAGE>
<PAGE>
Paid-in capital increased $22,860,000 in 1999 and $1,761,000 in 1998
due to the sale of common stock in the above-mentioned public offering and
the issuance of common stock under the Dividend Reinvestment and Stock
Purchase Plan.
Total shares of common stock outstanding were 18,877,987 at September
30, 1999 and 17,627,987 at September 30, 1998.
On March 14, 1996,the Company declared a dividend of one Common Share
Purchase Right for each outstanding share of common stock as of May 1, 1996,
each of which common share purchase rights gives the Rightholder the right
to purchase one common share for a purchase price of $60, subject to
adjustment. The rights expire on May 1, 2006, and may be redeemed by the
Company for one cent each at any time before they become exercisable. The
rights will not be exercisable or transferable apart from the common stock,
until ten days after a person or group acquires or obtains the right to
acquire 20% or more of the common stock, or commences or announces its
intention to commence a tender or exchange offer for 20% or more of the
common stock. Following the former event, a right will entitle its holder
to purchase, at the purchase price, the number of shares equal to the
purchase price (initially $60 per share) divided by one-half of the market
price. Alternatively, the Company may exchange each Right for one share of
Company common stock. A total of 18,877,987 rights were outstanding at
September 30, 1999.
5. Redeemable Preferred Stock
The preferred stock, which is non-voting except in certain
circumstances, may be redeemed at the option of the Board of Directors. The
redemption price is equal to par of $25.00 a share.
During 1999, 70 shares of 5% Series B preferred stock were reacquired;
in 1998, no shares of preferred stock were reacquired.
Any default in a sinking fund payment must be cured before the Company
may pay dividends on or acquire any common stock. Sinking fund requirements
on preferred stock for the five years subsequent to September 30, 1999 are:
2000, $35,500; 2001-2004, $160,000 per year.
6. Long-Term Debt
Maturities or sinking fund requirements on long-term debt for the five
years subsequent to September 30, 1999 are as follows: 2000-2002, none;
2003, $25 million; 2004, none.
On April 8, 1999 the Company received approval from the MoPSC for a
two-year extension, to April 21, 2001, of its previously granted authority
to sell additional first mortgage bonds. The original authorization was for
$100 million of first mortgage bonds of which $75 million had already been
issued and sold. In June 1999, the Company issued the remaining $25 million
of first mortgage bonds with an interest rate of 7% and an overall cost to
the Company of 7.04%. In October 1997, the Company issued $25 million of 6-
1/2% first mortgage bonds at a cost to the Company of 6.675%. The proceeds
of both issuances were used to reduce outstanding short-term borrowings.
On May 15, 1998, the Company redeemed, at its first opportunity, $25
million of 9-5/8% first mortgage bonds due May 15, 2013. The funds for this
redemption were supplied by short-term borrowing agreements.
Substantially all of the Company's utility plant is subject to the
liens of its mortgage.
The Company's mortgage contains provisions which restrict retained
earnings from declaration or payment of cash dividends. As of September 30,
1999, all of the Company's consolidated retained earnings were free from
such restrictions.
41
<PAGE>
<PAGE>
7. Fair Value of Financial Instruments
<TABLE>
The carrying amounts and estimated fair values of the Company's
financial instruments at September 30, 1999 and 1998 are as follows:
<CAPTION>
Carrying Fair
(Thousands of Dollars) Amount Value
- - ------------------------------------------------------------------------
1999:
<S> <C> <C>
Cash and cash equivalents $ 9,352 $ 9,352
Short-term debt 84,700 84,700
Long-term debt 204,323 201,659
Redeemable preferred stock 1,958 1,812
Non-utility financial instruments 131 86
1998:
<S> <C> <C>
Cash and cash equivalents $ 3,718 $ 3,718
Short-term debt 98,500 98,500
Long-term debt 179,238 198,411
Redeemable preferred stock 1,960 1,624
Non-utility financial instruments 941 620
</TABLE>
The carrying amounts for cash and cash equivalents and short-term debt
approximate fair value due to the short maturity of these investments. Fair
value of long-term debt and preferred stock is estimated based on market
prices for similar issues. The fair value of non-utility financial
instruments reflects trading prices at September 30, 1999.
8. Income Taxes
Net provisions for income taxes were charged during the years ended
September 30, 1999, 1998 and 1997 as shown on the Schedule of Income Taxes.
The effective income tax rate varied from the federal statutory income tax
rate for each year due to the following:
<TABLE>
<CAPTION>
1999 1998 1997
- - ---------------------------------------------------------------------------
<S> <C> <C> <C>
Federal income tax statutory rate 35.0% 35.0% 35.0%
State and local income taxes,
net of federal income tax benefits 3.4 3.7 3.7
Certain expenses capitalized on books
and deducted on tax return (3.2) (2.0) (1.6)
Taxes related to prior years .5 (1.2) -
Other items - net (.2) .1 (1.0)
----------------------------
Effective income tax rate 35.5% 35.6% 36.1%
============================
</TABLE>
42
<PAGE>
<PAGE>
<TABLE>
The significant items comprising the Company's net deferred tax
liability recognized in the consolidated balance sheets as of September 30
are as follows:
<CAPTION>
(Thousands of Dollars) 1999 1998
- - --------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Reserves not currently deductible $ 16,777 $ 14,447
Deferred gas cost 3,679 6,386
Unamortized investment tax credits 4,147 4,365
Other 2,339 3,580
---------------------
Total deferred tax assets 26,942 28,778
---------------------
Deferred tax liabilities:
Relating to utility property 102,870 93,322
Pension 30,196 23,453
Other 8,416 4,926
---------------------
Total deferred tax liabilities 141,482 121,701
---------------------
Net deferred tax liability 114,540 92,923
Net deferred tax asset - current 10,216 9,933
---------------------
Net deferred tax liability - non-current $124,756 $102,856
=====================
</TABLE>
9. Notes Payable and Credit Agreements
In January 1999, the Company renewed three base lines of bank credit
under which it may borrow up to an aggregate of $30 million prior to January
31, 2000, with repayment of any loans outstanding on that date permitted
from April 30, 2000 to June 30, 2000. The borrowings may be repaid at any
time without penalty. The Company anticipates renewal of these primary lines
totaling $30 million in January 2000. An additional $10 million line of
credit was renewed through March 31, 1999. This, along with a previously
obtained $100 million supplemental line of credit which ran through August
31, 1999, and an additional $20 million supplemental line of credit obtained
for the period of December 20, 1998 through March 20, 1999, provided total
lines of credit of $160 million for the majority of the 1998-1999 heating
season. The Company acquired an additional $20 million base line of credit
for the period September 13, 1999 through September 13, 2000. Under current
bank loan agreements, Laclede may borrow up to $170 million, which includes
the Company's base lines of credit of $50 million, and a $120 million
supplemental line of credit that extends through the fall of 2000.
Alternatively, the Company has an agreement for the issuance of
commercial paper which is supported by the bank loan lines of credit.
During fiscal year 1999, the Company's short-term borrowing requirements,
which peaked at $142.5 million, were met by the sale of commercial paper.
The Company had $84.7 million in commercial paper outstanding as of
September 30, 1999 at an average interest rate of 5.4%, and $98.5 million
outstanding as of September 30, 1998 at an average interest rate of 5.6%.
43
<PAGE>
<PAGE>
10. Other Income and Income Deductions - Net
<TABLE>
<CAPTION>
(Thousands of Dollars) 1999 1998 1997
- - ---------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Losses $(3,409) $ - $ -
Gains on Sale of Property 2,275 - 514
Allowance on Funds Used For Construction 739 609 367
Other Income 1,260 1,202 908
Other Income Deductions (1,338) (672) (825)
-------------------------------
Other Income and Income Deductions - Net $ (473) $1,139 $ 964
===============================
</TABLE>
In fiscal 1999, the Company recorded a $3.2 million pre-tax investment
loss. This non-recurring loss resulted from the Company's minority
participation in Clark Enterprises, an entity comprised of a group of civic-
minded St. Louis firms that owned the St. Louis Blues Hockey team and also
financed and operated the Kiel Center in downtown St. Louis, the sale of
which was negotiated and completed during September 1999.
A pre-tax gain of $1.9 million was recognized in fiscal 1999 by the
Company's wholly-owned subsidiary, Laclede Development Company, on the
November 1998 sale of property known as Centre Park 40. Laclede Development
owned its interest in Centre Park 40 through a real estate partnership.
11. Information by Operating Segment
Laclede Gas Company is a public utility engaged in the retail
distribution of natural gas. The Company serves an area of eastern
Missouri, with a population of approximately 2.0 million. As an adjunct to
its gas distribution business, Laclede operates underground natural gas
storage fields and stores liquid propane and is engaged in the
transportation of liquid propane through its wholly-owned subsidiary,
Laclede Pipeline Company.
The Company has also made investments in some non-utility businesses as
part of a diversification program, none of which are reportable segments.
These non-regulated operations are conducted through five wholly-owned
subsidiaries which are engaged in gas marketing, the sale of insurance
products through an insurance agency in the State of Missouri, real estate
development, the compression of natural gas, and financial investments in
other enterprises. These subsidiaries have the same accounting policies as
those described in the summary of significant accounting policies in Note 1.
There are no material intersegment revenues.
44
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
All Other
(Thousands of Dollars) Gas Utility (Non-Utility) Eliminations Consolidated
- - ---------------------------------------------------------------------------
Fiscal 1999
<S> <C> <C> <C> <C>
Operating revenues $473,710 $17,878 $ - $491,588
Depreciation & amortization 21,490 - - 21,490
Interest charges 20,593 - - 20,593
Income tax expense 13,670 691 - 14,361
Net income 25,012 1,050 - 26,062
Total assets 824,991 13,774 (7,146) 831,619
Construction expenditures 48,698 7 - 48,705
Fiscal 1998
<S> <C> <C> <C> <C>
Operating revenues $548,192 $13,795 $ - $561,987
Depreciation & amortization 25,310 - - 25,310
Interest charges 21,270 - - 21,270
Income tax expense 15,019 422 - 15,441
Net income 27,201 691 - 27,892
Total assets 768,023 10,298 (7,174) 771,147
Construction expenditures 47,254 185 - 47,439
Fiscal 1997
<S> <C> <C> <C> <C>
Operating revenues $607,236 $ 8,494 $ - $615,730
Depreciation & amortization 25,890 - - 25,890
Interest charges 19,088 - - 19,088
Income tax expense 17,918 436 - 18,354
Net income 31,858 608 - 32,466
Total assets 718,460 9,016 (6,766) 720,710
Construction expenditures 42,842 1,264 - 44,106
</TABLE>
12. Commitments and Contingencies
The Company estimates fiscal year 2000 utility construction
expenditures at $43 million. The lease agreement covering the Company's
general office space extends through February 2005 with options to renew for
up to 15 additional years. The aggregate rental expense for fiscal years
1999, 1998 and 1997 was $812,000, $803,000 and $794,000, respectively. The
annual minimum rental payments for fiscal year 2000 is anticipated to be
$821,000 with a maximum annual rent escalation of $8,800 per year for each
year through fiscal 2005. The Company has other rental arrangements that
provide for minimum rental payments that are relatively minor. The Company
has entered into various contracts, which in the aggregate require it to pay
approximately $72 million on an annual basis, at present rate levels, for
the reservation of gas supplies and pipeline transmission and storage
capacity. These costs are recovered from customers in accordance with the
Purchased Gas Adjustment Clause of the Company's tariff. The contracts have
various expiration dates ranging from 2000 to 2001.
A consolidated subsidiary is a general partner in an unconsolidated
partnership, which invests in real estate partnerships. The subsidiary and
third parties are jointly and severally liable for the payment of mortgage
loans in the aggregate outstanding amount of approximately $2.2 million
incurred in connection with various real estate ventures. The Company has
no reason to believe that the other principal liable parties will not be
able to meet their proportionate share of these obligations. The Company
further believes that the asset values of the real estate properties are
sufficient to support these mortgage loans.
45
<PAGE>
<PAGE>
Laclede Pipeline Company, Laclede Gas Company's wholly-owned
subsidiary, owns and operates a propane pipeline that connects Laclede Gas
Company's propane storage facilities in St. Louis County, Missouri, to
propane supply terminal facilities located at Wood River and Cahokia,
Illinois. In June 1999, Laclede Pipeline Company purchased from Phillips
Pipe Line Company for approximately $1.4 million a section of existing
propane pipeline, which completed Laclede Gas Company's ownership of all
facets of its propane peak shaving assets and allowing greater access to
supply markets. Laclede Gas Company vaporizes the propane to supplement its
natural gas supply and meet the peak demands on the distribution system.
Laclede Pipeline Company's previous contract arrangement with Phillips
Petroleum Company, to provide transportation of propane on an annual basis
and which expired on March 31, 1999, is no longer needed.
In September 1997, the staff of the MoPSC recommended that Laclede
refund $3.6 million to its ratepayers in connection with its sale of gas
outside of Missouri during fiscal 1996, prior to the approval of the
incentive plan. On April 20, 1999 the MoPSC issued its order rejecting the
proposal of its staff. This order became effective April 30, 1999, and this
matter is now closed.
In October 1999, the staff of the MoPSC recommended that the Company
credit ratepayers with $2.5 million of pre-tax income the Company had
realized in fiscal 1997 and fiscal 1998 in connection with its treatment of
a gas supply contract under the operation of the Company's Gas Supply
Incentive Plan. The Company, which has recently filed a response in
opposition to the staff's recommendation, believes that there is no basis
for such recommendation and is confident that the Company will ultimately
prevail on the merits.
The Company is subject to various environmental laws and regulations.
To date they have not materially affected 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, Laclede performed an investigation
of one of the Company's former manufactured gas plant sites located in
Shrewsbury, Missouri. Subsequently, the Company and the state and federal
environmental regulatory agencies agreed upon the actions needed at this
site. The Company currently estimates the overall costs of these actions
will be approximately $1,135,000. As of September 30, 1999, the Company has
paid $646,000 and reserved $489,000 for these actions. If the regulatory
agencies require any additional actions, Laclede will incur additional
costs.
The Company also applied to place the site of a different former
manufactured gas plant in the City of St. Louis, Missouri in the Missouri
Voluntary Cleanup Program. Laclede ceased its operations at and sold this
site in 1950. Subsequent owners of this site used it as a coke
manufacturing facility. The Missouri Department of Natural Resources
accepted the Company's application. Acceptance provides opportunities to
minimize costs of remediation and maximize possibilities of site
development. Laclede submitted a site investigation plan to the Missouri
Department of Natural Resources on November 16, 1998, which investigation is
now complete. Laclede sent its report on the investigation to the Missouri
Department of Natural Resources. Laclede currently estimates that the cost
of the investigation, oversight costs and legal and engineering consulting
costs for this site may be approximately $534,000. Currently, the Company
has paid $346,000 and reserved an additional $188,000. The Company has
requested that other former site owners and operators participate in the
cost of any site investigation. One former owner and operator, who is
currently in a Chapter 11 bankruptcy proceeding, agreed to participate in
these costs, and the agreement received the bankruptcy court's approval.
The Company plans to seek proportionate reimbursement of all costs relative
to this site from any other potentially responsible parties if practicable.
46
<PAGE>
<PAGE>
While the scope or costs relative to the site in Shrewsbury will not be
material, the scope or costs relative to the City of St. Louis site are
unknown and may be material. The Company has notified its insurers that it
intends to seek reimbursement from them of its costs at both these sites.
None of the Company's insurers has agreed that its insurance covers the
costs for which the Company intends to seek reimbursement. The majority of
the insurers have sent Laclede letters reserving their rights with respect
to the manufactured gas plant issues addressed in the Company's notices to
them. While some of the insurers have denied coverage with respect to these
issues, the Company continues to seek reimbursement from them. With regard
to the Shrewsbury site, the denial of coverage will not have any material
impact on the Company. With regard to the City of St. Louis site, since the
scope or costs relative to this site are unknown and may be material, the
denial of coverage may have a material impact on the Company.
In the Company's 1998 rate case, the MoPSC approved the Company's
continued use of a cost deferral mechanism for these costs. Through this,
the Company applied for appropriate rate recovery of these costs in its
current rate case. Deferral of such costs terminated July 31, 1999, and any
subsequent costs will be charged to expense. Previously deferred costs will
be put into rates (without return on investment) and amortized over a
fifteen-year period, upon the Commission's approval of the partial
settlement of the Company's current rate case, no later than December 26,
1999.
On October 30, 1998, the MoPSC issued an order opening a docket
addressing the adequacy of Laclede's copper service line replacement
program. The staff filed its report on August 31, 1999 containing a
modified replacement schedule for such service lines. In response, the
Company proposed an alternative program based upon the evaluation of recent
survey data. After appropriate review of the matter, the Commission is
expected to issue its order on the matter sometime next year. Laclede is
unable to predict at this time what action the MoPSC may take. The Company
currently faces two lawsuits and one claim relative to direct buried copper
service lines.
Superior Oil Company and Union Pacific Railroad Company dismissed,
without prejudice, their action against Laclede Gas Company seeking
contribution under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 for costs incurred and to be incurred in
remediating a site for St. Louis.
The Company is involved in litigation, claims, and investigations
arising in the normal course of business. While the results of such
litigation cannot be predicted with certainty, management, after discussion
with counsel, believes the final outcome will not have a material adverse
effect on the consolidated financial position and results of operations
reflected in the financial statements presented herein.
13. Interim Financial Information (Unaudited)
In the opinion of the Company, the quarterly information presented in
the Schedule of Interim Financial Information for fiscal years 1999 and 1998
includes all adjustments, consisting of normal recurring adjustments
necessary for a fair statement of the results of operations for such
periods. Variations in operations reported on a quarterly basis reflect the
seasonal nature of the Company's business.
Item 9. Changes in and Disagreements on Accounting and Financial Disclosure
There have been no disagreements on accounting and financial disclosure with
the Company's outside auditors which are required to be disclosed.
47
<PAGE>
<PAGE>
Part III
Item 10. Directors and Executive Officers of the Registrant
The information concerning directors required by this item is set forth on
pages 3 through 6 in the Company's proxy statement dated December 16, 1999
and is incorporated herein by reference.
The information concerning executive officers required by this item is
reported in Part I of this Form 10-K.
Item 11. Executive Compensation
The information required by this item is set forth on pages 8 through 15 in
the Company's proxy statement dated December 16, 1999 and is incorporated
herein by reference but the information under the captions "Compensation
Committee Report Regarding Executive Compensation" and "Performance Graph"
on pages 12 through 14 of such proxy statement is expressly NOT incorporated
herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information required by this item is set forth on page 7 in the Company's
proxy statement dated December 16, 1999 and is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
There were no transactions required to be disclosed pursuant to this item.
48
<PAGE>
<PAGE>
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) 1. Consolidated Financial Statements: 1999 10-K Page
For Years Ended September 30, 1999, 1998, and 1997:
Statements of Consolidated Income 24
Statements of Consolidated Retained Earnings 25
Statements of Consolidated Comprehensive Income 25
Statements of Consolidated Cash Flows 29
Schedule of Income Taxes 30
As of September 30, 1999 & 1998:
Consolidated Balance Sheets 26-27
Statements of Consolidated Capitalization 28
For Years Ended 1999 & 1998:
Schedule of Interim Financial Information 31
Notes to Financial Statements 32-47
Independent Auditors' Report 22
Management Report 23
2. Supplemental Schedules
II - Reserves 53
Schedules not included have been omitted because they are not
applicable or the required data has been included in the financial
statements or notes to financial statements.
3. Exhibits
Incorporated herein by reference to Index to Exhibits, page 54.
Management contracts and compensatory plans or arrangements listed in the
Index to Exhibits required to be filed as exhibits to this form pursuant to
Item 14(c) of this report:
Exhibit No. Description
10.01 - Incentive Compensation Plan of the Company, as
amended.
10.01a - Amendment adopted by the Board of Directors on
July 26, 1990 to the Incentive Compensation Plan.
10.01b - Amendments adopted by the Board of Directors on
August 23, 1990 to the Incentive Compensation Plan.
10.01c - Amendments to Laclede Gas Company Incentive
Compensation Plan, effective January 26, 1995.
10.02 - Senior Officers' Life Insurance Program of the
Company, as amended.
10.02a - Certified copy of resolutions of the Company's
Board of Directors adopted on June 27, 1991
amending the Senior Officers' Life Insurance Program.
10.02b - Certified copy of resolutions of the Company's
Board of Directors adopted on January 28, 1993
amending the Senior Officers' Life Insurance Program.
10.03 - Employees' Retirement Plan of Laclede Gas Company -
Management Employees, effective as of July 1, 1990,
as amended.
49
<PAGE>
<PAGE>
10.03a - Amendment to the Employees' Retirement Plan of
Laclede Gas Company - Management Employees adopted
by the Board of Directors on September 27, 1990.
10.03b - Amendments dated December 12, 1990 to the Employees'
Retirement Plan of Laclede Gas Company - Management
Employees.
10.03c - Amendment to the Employees' Retirement Plan of
Laclede Gas Company - Management Employees dated
January 10, 1994.
10.03d - Amendments to the Employees' Retirement Plan of
Laclede Gas Company - Management Employees dated
July 29, 1994.
10.03e - Amendments to the Employees' Retirement Plan of
Laclede Gas Company - Management Employees dated
February 21, 1995.
10.03f - Amendments to the Employees' Retirement Plan of
Laclede Gas Company - Management Employees dated
March 7, 1995.
10.03g - Amendments to the Employees' Retirement Plan of
Laclede Gas Company - Management Employees dated
September 11, 1995.
10.03h - Amendments to the Employees' Retirement Plan of
Laclede Gas Company - Management Employees dated
August 14, 1996.
10.03i - Amendments to the Employees' Retirement Plan of
Laclede Gas Company - Management Employees adopted
December 19, 1996.
10.03j - Amendments to the Employees' Retirement Plan of
Laclede Gas Company - Management Employees adopted
February 7, 1997.
10.04 - Laclede Gas Company Supplemental Retirement Benefit
Plan, as amended and restated effective July 25,
1991.
10.05 - Laclede Gas Company Salary Deferral Savings Plan,
as amended through February 27, 1992.
10.05a - Amendment to the Company's Salary Deferral Savings
Plan, effective January 31, 1992, adopted by the
Board of Directors on August 27, 1992.
10.05b - Amendment to the Company's Salary Deferral Savings
Plan dated January 10, 1994.
10.05c - Amendments to the Company's Salary Deferral
Savings Plan, dated July 29, 1994.
10.05d - Amendments to the Company's Salary Deferral
Savings Plan effective August 1, 1994 adopted by
the Board of Directors on August 25, 1994.
10.05e - Amendments to the Company's Salary Deferral
Savings Plan dated September 27, 1994.
10.05f - Amendments to the Company's Salary Deferral
Savings Plan dated February 21, 1995.
10.05g - Amendments to the Company's Salary Deferral
Savings Plan dated March 7, 1995.
10.05h - Amendments to the Company's Salary Deferral
Savings Plan dated June 26, 1995.
10.05i - Amendments to the Company's Salary Deferral
Savings Plan dated August 3, 1995.
10.05j - Amendments to the Company's Salary Deferral
Savings Plan adopted April 21, 1997.
10.05k - Amendments to the Company's Salary Deferral
Savings Plan adopted October 5, 1998.
10.06 - Laclede Gas Company Deferred Compensation Plan for
Non-Employee Directors dated March 26, 1981.
50
<PAGE>
<PAGE>
10.06a - First Amendment to the Company's Deferred
Compensation Plan for Non-Employee Directors,
adopted by the Board of Directors on July 26,
1990.
10.06b - Amendment to the Company's Deferred Compensation
Plan for Non-Employee Directors, adopted by the
Board of Directors on August 27, 1992.
10.08 - The Retirement Plan for Non-Employee Directors of
Laclede Gas Company dated January 24, 1985.
10.08a - First Amendment to Retirement Plan for the
Company's Non-Employee Directors, adopted by the
Board of Directors on July 26, 1990.
10.08b - Amendments to the Retirement Plan for Non-Employee
Directors, adopted by the Board of Directors on
January 23, 1992.
10.09 - Salient Features of the Laclede Gas Company
Deferred Income Plan for Directors and Selected
Executives, including amendments adopted by the
Board of Directors on July 26, 1990.
10.09a - Amendment to the Company's Deferred Income Plan
for Directors and Selected Executives, adopted by
the Board of Directors on August 27, 1992.
10.10 - Form of Indemnification Agreement between the
Company and its Directors and Officers.
10.11 - Laclede Gas Company Management Continuity
Protection Plan, as amended, effective at the
close of business on January 27, 1994, by the
Board of Directors.
10.12 - Laclede Gas Company Restricted Stock Plan for
Non-Employee Directors, effective as of January 25,
1990.
10.12a - Extension and amendment of the Laclede Gas Company
Restricted Stock Plan for Non-Employee Directors
adopted by the Board of Directors on November 17,
1994.
10.12b - Amendment to the Laclede Gas Company Restricted Stock
Plan for Non-Employee Directors adopted August 14,
1998.
10.14 - Salient Features of the Laclede Gas Company Deferred
Income Plan II for Directors and Selected Executives
adopted by the Board of Directors on September 23, 1993.
(b) The Company filed no reports on Form 8-K during the last quarter of
fiscal year 1999.
(c) Incorporated herein by reference to Index to Exhibits, page 54.
51
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
December 16, 1999 By Gerald T. McNeive, Jr.
Gerald T. McNeive, Jr.
Senior Vice President -
Finance and General Counsel
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date Signature Title
12/16/99 Douglas H. Yaeger Chairman of the Board,
Douglas H. Yaeger President, and Chief Executive
Officer
(Principal Executive Officer)
12/16/99 Gerald T. McNeive, Jr. Senior Vice President -
Gerald T. McNeive, Jr. Finance and General Counsel
(Principal Financial and
Accounting Officer)
12/16/99 Andrew B. Craig, III Director
Andrew B. Craig, III
12/16/99 Henry Givens, Jr. Director
Henry Givens, Jr.
12/16/99 C. Ray Holman Director
C. Ray Holman
12/16/99 Robert C. Jaudes Director
Robert C. Jaudes
12/16/99 Mary Ann Krey Director
Mary Ann Krey
12/16/99 W. Stephen Maritz Director
W. Stephen Maritz
12/16/99 William E. Nasser Director
William E. Nasser
12/16/99 Robert P. Stupp Director
Robert P. Stupp
12/16/99 H. Edwin Trusheim Director
H. Edwin Trusheim
52
<PAGE>
<PAGE>
<TABLE>
SCHEDULE II
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
RESERVES
FOR THE YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
<CAPTION>
- - ---------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
BALANCE AT ADDITIONS CHARGED DEDUCTIONS BALANCE
BEGINNING TO TO OTHER FROM AT CLOSE
DESCRIPTION OF PERIOD INCOME ACCOUNTS RESERVES OF PERIOD
- - ---------------------------------------------------------------------------
(Thousands of Dollars)
YEAR ENDED
SEPTEMBER 30, 1999:
<S> <C> <C> <C> <C> <C>
DOUBTFUL ACCOUNTS $ 5,650 $6,062 $4,184 (a) $ 9,655 (b) $ 6,241
====================================================
MISCELLANEOUS:
Injuries and
property damage $ 3,366 $2,125 $ - $ 1,791 (c) $ 3,700
Deferred compensation 8,924 1,242 - 982 9,184
----------------------------------------------------
TOTAL $12,290 $3,367 $ - $ 2,773 $12,884
====================================================
YEAR ENDED
SEPTEMBER 30, 1998:
DOUBTFUL ACCOUNTS $ 8,051 $5,312 $4,214 (a) $11,927 (b) $ 5,650
====================================================
MISCELLANEOUS:
Injuries and
property damage $ 4,227 $ 935 $ - $ 1,796 (c) $ 3,366
Deferred compensation 8,475 1,290 - 841 8,924
----------------------------------------------------
TOTAL $12,702 $2,225 $ - $ 2,637 $12,290
====================================================
YEAR ENDED
SEPTEMBER 30, 1997:
DOUBTFUL ACCOUNTS $ 7,984 $8,556 $3,583 (a) $12,072 (b) $ 8,051
====================================================
MISCELLANEOUS:
Injuries and
property damage $ 3,655 $1,780 $ - $ 1,208 (c) $ 4,227
Deferred compensation 8,040 1,228 59 852 8,475
----------------------------------------------------
TOTAL $11,695 $3,008 $ 59 $ 2,060 $12,702
====================================================
<FN>
(a) Accounts reinstated, cash recoveries, etc.
(b) Accounts written off.
(c) Claims settled, less reimbursements from insurance companies.
</TABLE>
53
<PAGE>
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
3.01(i)* Articles of Incorporation, as of February 11, 1994;
filed as Exhibit 4(a) to the Company's Form S-3
Registration Statement No. 33-52357.
3.01(ii)* By-Laws of the Company effective January 26, 1995;
filed as Exhibit 4.2 to the Company's Registration
Statement No. 33-58757.
3.01(ii)(a)* Amendment to the Company's By-Laws, effective at the
close of business on July 24, 1997, adopted by the
Company's Board of Directors on July 24, 1997; filed as
Exhibit 3.01 to the Company's 10-Q for the fiscal
quarter ended June 30, 1997 (File No. 1-1822).
3.01(ii)(b)* Amendment to the Company's By-Laws, effective at the
close of business on November 20, 1997, adopted by the
Company's Board of Directors on November 20, 1997; filed
as Exhibit 3.01(ii) to the Company's 10-Q for the fiscal
quarter ended December 31, 1997 (File No. 1-1822).
4.01* - Mortgage and Deed of Trust, dated as of February 1,
1945; filed as Exhibit 7-A to Registration Statement
No. 2-5586.
4.02* - Fourteenth Supplemental Indenture, dated as of
October 26, 1976; filed on June 26, 1979 as Exhibit b-4
to Registration Statement No. 2-64857.
4.03* - Seventeenth Supplemental Indenture, dated as of May 15,
1988; filed as Exhibit 28(a) to the Registration
Statement No. 33-38413.
4.04* - Eighteenth Supplemental Indenture, dated as of
November 15, 1989; filed as Exhibit 28(b) to the
Registration Statement No. 33-38413.
4.05* - Nineteenth Supplemental Indenture, dated as of May 15, 1991;
filed on May 16, 1991 as Exhibit 4.01 to the Company's
Form 8-K (File No. 1-1822).
4.06* - Twentieth Supplemental Indenture, dated as of
November 1, 1992; filed on November 4, 1992 as Exhibit 4.01 to
the Company's Form 8-K (File No. 1-1822).
4.07* - Twenty-First Supplemental Indenture, dated as of May 1, 1993;
filed on May 13, 1993 as Exhibit 4.01 to the Company's
Form 8-K (File No. 1-1822).
4.08* - Twenty-Second Supplemental Indenture dated as of
November 15, 1995; filed on December 8, 1995 as Exhibit
4.01 to the Company's Form 8-K (File No. 1-1822).
4.09* - Twenty-Third Supplemental Indenture dated as of
October 15, 1997; filed on November 6, 1997 as Exhibit
4.01 to the Company's Form 8-K (File No. 1-1822).
4.10* - Twenty-Fourth Supplemental Indenture dated as of June 1,1999,
filed on June 4, 1999 as Exhibit 4.01 to the Company's
Form 8-K (File No. 1-1822).
4.11* - Laclede Gas Company Board of Directors' Resolution dated
August 28, 1986 which generally provides that the Board
may delegate its authority in the adoption of certain
employee benefit plan amendments to certain designated
Executive Officers; filed as Exhibit 4.12 to the
Company's 10-K for the fiscal year ended September 30,
1991 (File No. 1-1822).
* Incorporated herein by reference and made a part hereof.
54
<PAGE>
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
4.11a* - Laclede Gas Company Board of Directors' Resolutions
dated August 25, 1988, which generally provide for
certain amendments to the Company's Wage Deferral
Savings Plan and Salary Deferral Savings Plan and that
certain Officers are authorized to execute such
amendments; filed as Exhibit 4.12g to the Company's 10-K
for the fiscal year ended September 30, 1988
(File No. 1-1822).
4.12* - Laclede Gas Company Wage Deferral Savings Plan,
incorporating amendments through December 12, 1990;
filed as Exhibit 4.13 to the Company's 10-K for the
fiscal year ended September 30, 1991 (File No. 1-1822).
4.12a* - Amendments to the Company's Wage Deferral and Salary
Deferral Savings Plans, effective May 1, 1992, adopted
by the Board of Directors on February 27, 1992; filed as
Exhibit 4.13 to the Company's 10-Q for the fiscal
quarter ended March 31, 1992 (File No. 1-1822).
4.12b* - Amendment to the Company's Wage Deferral Savings Plan,
effective August 1, 1992, adopted by the Board of
Directors on August 27, 1992; filed as Exhibit 4.13b to
the Company's 10-K for the fiscal year ended
September 30, 1992 (File No. 1-1822).
4.12c* - Amendments to the Company's Wage Deferral Savings Plan
dated July 29, 1994; filed as Exhibit 4.09c to the
Company's 10-K for the fiscal year ended September 30,
1994 (File No. 1-1822).
4.12d* - Amendments to the Company's Wage Deferral Savings Plan
effective August 1, 1994 and adopted by the Board of
Directors August 25, 1994; filed as Exhibit 4.09d to
the Company's 10-K for the fiscal year ended
September 30, 1994 (File No. 1-1822).
4.12e* - Amendments to the Company's Wage Deferral Savings Plan
dated February 21, 1995; filed as Exhibit 4.1 to the
Company's 10-Q for the fiscal quarter ended March 31,
1995 (File No. 1-1822).
4.12f* - Amendments to the Company's Wage Deferral Savings Plan
dated March 7, 1995; filed as Exhibit 4.2 to the
Company's 10-Q for the fiscal quarter ended March 31,
1995 (File No. 1-1822).
4.12g* - Amendments to the Company's Wage Deferral Savings Plan
dated June 26, 1995; filed as Exhibit 4.1 to the
Company's 10-Q for the fiscal quarter ended June 30,
1995 (File No. 1-1822).
* Incorporated herein by reference and made a part hereof.
55
<PAGE>
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
4.12h* - Amendments to the Company's Wage Deferral Savings Plan
adopted April 21, 1997; filed as Exhibit 4.2 to the
Company's 10-Q for the fiscal quarter ended June 30,
1997 (File No. 1-1822).
4.12i* - Amendments to the Company's Wage Deferral Savings Plan adopted
October 5, 1998; filed as Exhibit 4 to the Company's 10-Q for
the fiscal quarter ended December 31, 1998 (File No. 1-1822).
4.13* - Missouri Natural Gas Division of the Laclede Gas Company
Dual Savings Plan incorporating amendments through
December 12, 1990; filed as Exhibit 4.01 to the
Company's 10-Q for the fiscal quarter ended December 31,
1990 (File No. 1-1822).
4.13a* - Amendment to the Missouri Natural Gas Division of
Laclede Gas Company Dual Savings Plan effective
April 11, 1993, adopted by the Board of Directors on
August 26, 1993; filed as Exhibit 4.10a to the Company's
10-K for the fiscal year ended September 30, 1993 (File
No. 1-1822).
4.13b* - Amendments to the Missouri Natural Gas Division of
Laclede Gas Company Dual Savings Plan dated July 29,
1994; filed as Exhibit 4.10b to the Company's 10-K for
the fiscal year ended September 30, 1994
(File No. 1-1822).
4.13c* - Amendment dated October 27, 1994 to the Missouri
Natural Gas Division of Laclede Gas Company Dual Savings
Plan; filed as Exhibit 4.1 to the Company's 10-Q for the
fiscal quarter ended December 31, 1994 (File No. 1-1822).
4.13d* - Amendment dated November 21, 1994 to the Missouri
Natural Gas Division of Laclede Gas Company Dual Savings
Plan; filed as Exhibit 4.2 to the Company's 10-Q for the
fiscal quarter ended December 31, 1994 (File No. 1-1822).
4.13e* - Amendments to the Missouri Natural Gas Division of
Laclede Gas Company Dual Savings Plan dated February 21,
1995; filed as Exhibit 4.3 to the Company's 10-Q for the
fiscal quarter ended March 31, 1995 (File No. 1-1822).
4.13f* - Amendments to the Missouri Natural Gas Division of
Laclede Gas Company Dual Savings Plan dated March 7,
1995; filed as Exhibit 4.4 to the Company's 10-Q for the
fiscal quarter ended March 31, 1995 (File No. 1-1822).
4.13g* - Amendments to the Missouri Natural Gas Division of
Laclede Gas Company Dual Savings Plan adopted by the
Board of Directors on May 25, 1995; filed as Exhibit 4.2
to the Company's 10-Q for the fiscal quarter ended
June 30, 1995 (File No. 1-1822).
4.13h* - Amendments to the Missouri Natural Gas Division of
Laclede Gas Company Dual Savings Plan dated June 26,
1995; filed as Exhibit 4.3 to the Company's 10-Q for the
fiscal quarter ended June 30, 1995 (File No. 1-1822).
* Incorporated herein by reference and made a part hereof.
56
<PAGE>
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
4.13i* - Amendments to the Missouri Natural Gas Division of
Laclede Gas Company Dual Savings Plan dated August 3,
1995; filed as Exhibit 4.10i to the Company's 10-K for
the fiscal year ended September 30, 1995
(File No. 1-1822).
4.13j* - Amendments to the Missouri Natural Gas Division of
Laclede Gas Company Dual Savings Plan adopted April 21,
1997; filed as Exhibit 4.3 to the Company's 10-Q for the
fiscal quarter ended June 30, 1997 (File No. 1-1822).
4.14* - Rights Agreement dated as of April 3, 1996; filed on
April 3, 1996 as Exhibit 1 to the Company's Form 8-A
(File No. 1-1822).
10.01* - Incentive Compensation Plan of the Company, as amended;
filed as Exhibit 10.03 to the Company's 10-K for the
fiscal year ended September 30, 1989 (File No. 1-1822).
10.01a* - Amendment adopted by the Board of Directors on July 26,
1990 to the Incentive Compensation Plan; filed as
Exhibit 10.02a to the Company's 10-K for the fiscal
year ended September 30, 1990 (File No. 1-1822).
10.01b* - Amendments adopted by the Board of Directors on
August 23, 1990 to the Incentive Compensation Plan;
filed as Exhibit 10.02b to the Company's 10-K for the
fiscal year ended September 30, 1990 (File No. 1-1822).
10.01c* - Amendments to the Company's Incentive Compensation
Plan, effective January 26, 1995; filed as Exhibit 10.3
to the Company's 10-Q for the fiscal quarter ended
March 31, 1995 (File No. 1-1822).
10.02* - Senior Officers' Life Insurance Program of the Company,
as amended; filed as Exhibit 10.03 to the Company's 10-K
for the fiscal year ended September 30, 1990
(File No. 1-1822).
10.02a* - Certified copy of resolutions of the Company's Board of
Directors adopted on June 27, 1991 amending the Senior
Officers' Life Insurance Program; filed as Exhibit 10.01
to the Company's 10-Q for the fiscal quarter ended
June 30, 1991 (File No. 1-1822).
10.02b* - Certified copy of resolutions of the Company's Board of
Directors adopted on January 28, 1993 amending the
Senior Officers' Life Insurance Program; filed as
Exhibit 10.03 to the Company's 10-Q for the fiscal
quarter ended March 31, 1993 (File No. 1-1822).
10.03* - Employees' Retirement Plan of Laclede Gas Company -
Management Employees, effective as of July 1, 1990, as
amended; filed as Exhibit 10.01 to the Company's 10-Q
for the fiscal quarter ended June 30, 1990 (File
No. 1-1822).
* Incorporated herein by reference and made a part hereof.
57
<PAGE>
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
10.03a* - Amendment to the Employees' Retirement Plan of Laclede
Gas Company - Management Employees adopted by the Board
of Directors on September 27, 1990; filed as
Exhibit 10.04a to the Company's 10-K for the fiscal year
ended September 30, 1990 (File No. 1-1822).
10.03b* - Amendments dated December 12, 1990 to the Employees'
Retirement Plan of Laclede Gas Company - Management
Employees; filed as Exhibit 10.04b to the Company's 10-K
for the fiscal year ended September 30, 1990 (File
No. 1-1822).
10.03c* - Amendment to the Employees' Retirement Plan of Laclede
Gas Company - Management Employees dated January 10,
1994; filed as Exhibit 10.01 to the Company's 10-Q for
the fiscal quarter ended December 31, 1993 (File No.
1-1822).
10.03d* - Amendments to the Employees' Retirement Plan of Laclede
Gas Company - Management Employees dated July 29, 1994;
filed as Exhibit 10.3d to the Company's 10-K for the
fiscal year ended September 30, 1994 (File No. 1-1822).
10.03e* - Amendments to the Employees' Retirement Plan of Laclede
Gas Company - Management Employees dated February 21,
1995; filed as Exhibit 10.4 to the Company's 10-Q for
the fiscal quarter ended March 31, 1995 (File No.
1-1822).
10.03f* - Amendments to the Employees' Retirement Plan of Laclede
Gas Company - Management Employees dated March 7, 1995;
filed as Exhibit 10.5 to the Company's 10-Q for the
fiscal quarter ended March 31, 1995 (File No. 1-1822).
10.03g* - Amendments to the Employees' Retirement Plan of Laclede
Gas Company - Management Employees dated September 11,
1995; filed as Exhibit 10.03g to the Company's 10-K for
the fiscal year ended September 30, 1995 (File No.
1-1822).
10.03h* - Amendments to the Employees' Retirement Plan of Laclede
Gas Company - Management Employees dated August 14,
1996; filed as Exhibit 10.03h to the Company's 10-K for
the fiscal year ended September 30, 1996 (File No.
1-1822).
10.03i* - Amendment to the Employees' Retirement Plan of Laclede
Gas Company - Management Employees adopted by the Board
of Directors on December 19, 1996; filed as Exhibit
10.01 to the Company's 10-Q for the fiscal quarter
ended December 31, 1996 (File No. 1-1822).
* Incorporated herein by reference and made a part hereof.
58
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
10.03j* - Amendment to the Employees' Retirement Plan of Laclede
Gas Company - Management Employees adopted February 7,
1997; filed as Exhibit 10.01 to the Company's 10-Q for
the fiscal quarter ended March 31, 1997 (File No.
1-1822).
10.04* - Laclede Gas Company Supplemental Retirement Benefit
Plan, as amended and restated effective July 25, 1991;
filed as Exhibit 10.05 to the Company's 10-K for the
fiscal year ended September 30, 1991 (File No. 1-1822).
10.04a* - Trust Agreement with Boatmen's Trust Company, dated
September 4, 1990; filed as Exhibit 10.05c to the
Company's 10-K for the fiscal year ended September 30,
1990 (File No. 1-1822).
10.04b* - First Amendment to Laclede Gas Company Trust Agreement
dated as of September 4, 1990, adopted by the Board of
Directors on September 23, 1993; filed as Exhibit
10.05b to the Company's 10-K for the fiscal year ended
September 30, 1993 (File No. 1-1822).
10.04c* - 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; filed as Exhibit 10.01 to the Company's
10-Q for the fiscal quarter ended June 30, 1998 (File No.
1-1822).
10.05* - Laclede Gas Company Salary Deferral Savings Plan, as
amended through February 27, 1992; filed as Exhibit
10.08 to the Company's 10-Q for the fiscal quarter ended
March 31, 1992 (File No. 1-1822).
10.05a* - Amendment to the Company's Salary Deferral Savings Plan,
effective January 31, 1992, adopted by the Board of
Directors on August 27, 1992; filed as Exhibit 10.08a to
the Company's 10-K for the fiscal year ended
September 30, 1992 (File No. 1-1822).
10.05b* - Amendment to the Company's Salary Deferral Savings Plan
dated January 10, 1994; filed as Exhibit 10.02 to the
Company's 10-Q for the fiscal quarter ended December 31,
1993 (File No. 1-1822).
10.05c* - Amendments to the Company's Salary Deferral Savings
Plan, dated July 29, 1994; filed as Exhibit 10.05c to
the Company's 10-K for the fiscal year ended
September 30, 1994 (File No. 1-1822).
10.05d* - Amendments to the Company's Salary Deferral Savings Plan
effective August 1, 1994 adopted by the Board of
Directors on August 25, 1994; filed as Exhibit 10.05d
to the Company's 10-K for the fiscal year ended
September 30, 1994 (File No. 1-1822).
10.05e* - Amendments to the Company's Salary Deferral Savings Plan
dated September 27, 1994; filed as Exhibit 10.05e to the
Company's 10-K for the fiscal year ended September 30,
1994 (File No. 1-1822).
* Incorporated herein by reference and made a part hereof.
59
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<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
10.05f* - Amendments to the Company's Salary Deferral Savings
Plan dated February 21, 1995; filed as Exhibit 10.1 to
the Company's 10-Q for the fiscal quarter ended
March 31, 1995 (File No. 1-1822).
10.05g* - Amendments to the Company's Salary Deferral Savings
Plan dated March 7, 1995; filed as Exhibit 10.2 to the
Company's 10-Q for the fiscal quarter ended March 31,
1995 (File No. 1-1822).
10.05h* - Amendments to the Company's Salary Deferral Savings Plan
dated June 26, 1995; filed as Exhibit 10.1 to the
Company's 10-Q for the fiscal quarter ended June 30, 1995
(File No. 1-1822).
10.05i* - Amendments to the Company's Salary Deferral Savings
Plan dated August 3, 1995; filed as Exhibit 10.05 to the
Company's 10-K for the fiscal year ended September 30,
1995 (File No. 1-1822).
10.05k* - Amendments to the Company's Salary Deferral Savings Plan
adopted October 5, 1998; filed as Exhibit 10 to the Company's
10-Q for the fiscal quarter ended December31, 1998 (File No,
1-1822).
10.05j* - Amendments to the Company's Salary Deferral Savings Plan
adopted April 21, 1997; filed as Exhibit 4.1 to the
Company's 10-Q for the fiscal quarter ended June 30,
1997 (File No. 1-1822).
10.05k* - Amendments to the Company's Salary Deferral Savings Plan
adopted October 5, 1998; filed as Exhibit 10 to the
Company's 10-Q for the fiscal quarter ended December 31,
1998 (File No. 1-1822).
10.06* - Laclede Gas Company Deferred Compensation Plan for
Non-Employee Directors dated March 26, 1981; filed as
Exhibit 10.12 to the Company's 10-K for the fiscal year
ended September 30, 1989 (File No. 1-1822).
10.06a* - First Amendment to the Company's Deferred Compensation
Plan for Non-Employee Directors, adopted by the Board of
Directors on July 26, 1990; filed as Exhibit 10.09a to
the Company's 10-K for the fiscal year ended
September 30, 1990 (File No. 1-1822).
10.06b* - Amendment to the Company's Deferred Compensation Plan
for Non-Employee Directors, adopted by the Board of
Directors on August 27, 1992; filed as Exhibit 10.09b
to the Company's 10-K for the fiscal year ended
September 30, 1992 (File No. 1-1822).
* Incorporated herein by reference and made a part hereof.
60
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<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
10.07* - Transportation Service Agreement dated October 13, 1993
between Mississippi River Transmission Corporation and
the Company; filed as exhibit 10.07d to the Company's 10-K
for the fiscal year ended September 30, 1997 (File No.
1-1822).
10.07a* - Storage Service Agreement dated October 13, 1993 between
Mississippi River Transmission Corporation and the
Company; filed as exhibit 10.07e to the Company's 10-K
for the fiscal year ended September 30, 1997 (File No.
1-1822).
10.08* - The Retirement Plan for Non-Employee Directors of
Laclede Gas Company dated January 24, 1985; filed as
Exhibit 10.01 to the Company's 10-Q for the fiscal
quarter ended March 31, 1990 (File No. 1-1822).
10.08a* - First Amendment to Retirement Plan for the Company's
Non-Employee Directors, adopted by the Board of
Directors on July 26, 1990; filed as Exhibit 10.11a to
the Company's 10-K for the fiscal year ended
September 30, 1990 (File No. 1-1822).
10.08b* - Amendments to the Retirement Plan for Non-Employee
Directors, adopted by the Board of Directors on
January 23, 1992; filed as Exhibit 10.11 to the
Company's 10-Q for the fiscal quarter ended March 31,
1992 (File No. 1-1822).
10.09* - Salient Features of the Laclede Gas Company Deferred
Income Plan for Directors and Selected Executives,
including amendments adopted by the Board of Directors
on July 26, 1990; filed as Exhibit 10.12 to the
Company's 10-K for the fiscal year ended September 30,
1991 (File No. 1-1822).
10.09a* - Amendment to the Company's Deferred Income Plan for
Directors and Selected Executives, adopted by the Board
of Directors on August 27, 1992; filed as Exhibit 10.12a
to the Company's 10-K for the fiscal year ended
September 30, 1992 (File No. 1-1822).
10.10* - Form of Indemnification Agreement between the Company
and its Directors and Officers; filed as Exhibit 10.13
to the Company's 10-K for the fiscal year ended
September 30, 1990 (File No. 1-1822).
10.11* - Laclede Gas Company Management Continuity Protection
Plan, as amended, effective at the close of business on
January 27, 1994, by the Board of Directors; filed as
Exhibit 10.1 to the Company's 10-Q for the fiscal
quarter ended March 31, 1994 (File No. 1-1822).
* Incorporated herein by reference and made a part hereof.
61
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<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
10.12* - Laclede Gas Company Restricted Stock Plan for
Non-Employee Directors, effective as of January 25,
1990; filed as Exhibit 10.03 to the Company's 10-Q for
the fiscal quarter ended March 31, 1990 (File No.
1-1822).
10.12a* - Extension and amendment of the Company's Restricted
Stock Plan for Non-Employee Directors adopted by the
Board of Directors on November 17, 1994; filed as
Exhibit 10.1 to the Company's 10-Q for the quarter ended
December 31, 1994 (File No. 1-1822).
10.12b* - Amendment to the Laclede Gas Company Restricted Stock
Plan for Non-Employee Directors adopted August 14, 1998;
filed as Exhibit 10.12b to the Company's 10-K for the year
ended September 30, 1998 (File No. 1-1822).
10.13* - Laclede Gas Company Trust Agreement with Boatmen's Trust
Company, dated December 7, 1989; filed as Exhibit 10.16
to the Company's 10-K for the fiscal year ended
September 30, 1990 (File No. 1-1822).
10.13a* - First Amendment to the Company's Trust Agreement,
adopted by the Board of Directors on July 26, 1990;
filed as Exhibit 10.16a to the Company's 10-K for the
fiscal year ended September 30, 1990 (File No. 1-1822).
10.13b* - Second Amendment to the Company's Trust Agreement
dated as of December 7, 1989, adopted by the Board of
Directors on September 23, 1993; filed as Exhibit 10.16b
to the Company's 10-K for the fiscal year ended
September 30, 1993 (File No. 1-1822).
10.13c* - Third Amendment to Laclede Gas Company Trust Agreement
dated as of December 7, 1989 adopted by the Board of
Directors on August 28, 1997; filed as exhibit 10.13c
to the Company's 10-K for the fiscal year ended September
30, 1997 (File No. 1-1822).
10.13d* - Amendment (effective as of January 15, 1998) to Laclede
Gas Company Trust Agreement (dated as of December 7,
1989); filed as Exhibit 10.02 to the Company's 10-Q for
the fiscal quarter ended June 30, 1998 (File No. 1-1822).
10.14* - Salient Features of the Laclede Gas Company Deferred
Income Plan II for Directors and Selected Executives
adopted by the Board of Directors on September 23, 1993;
filed as Exhibit 10.17 to the Company's 10-K for the
fiscal year ended September 30, 1993 (File No. 1-1822).
10.15* - January 22, 1999 line of credit agreement with
Mercantile Bank National Association; filed as Exhibit
10.1 to the Company's 10-Q for the fiscal quarter ended
March 31, 1999 (File No. 1-1822).
10.16* - January 31, 1999 line of credit agreement with Nations
Bank, N.A.; filed as Exhibit 10.3 to the Company's 10-Q for
the fiscal quarter ended March 31, 1999 (File No. 1-1822).
10.17* - January 15, 1999 line of credit agreement with Commerce
Bank, N.A.; filed as Exhibit 10.2 to the Company's 10-Q
for the fiscal quarter ended March 31, 1999 (File No.
1-1822).
* Incorporated herein by reference and made a part hereof.
62
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<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
10.18 - September 13, 1999 bank credit agreement with Mercantile
Bank National Association.
10.19 - September 11, 1999 bank credit agreement with UMB Bank,
N.A.
10.20 - Supplemental line of credit agreement dated October 22,
1999 among Mercantile Bank National Association, Bank of
America, N.A. and Credit Suisse First Boston.
12 - Ratio of Earnings to Fixed Charges.
21 - Subsidiaries of the Registrant.
23 - Consent of Independent Public Accountants.
27 - Financial Data Schedule UT
* Incorporated herein by reference and made a part hereof.
63
Exhibit-10.18
September 13, 1999
Mr. Ronald L. Krutzman
Treasurer and Assistant Secretary
Laclede Gas Company
720 Olive Street
St. Louis, MO 63101
Dear Ron:
Mercantile Bank National Association is pleased to provide a $20,000,000
line of credit maturing September 13, 2000 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, or LIBOR adjusted + 1/4% for available maturities to 90 days.
Notes issued under this line shall not exceed 90 days. No note shall have a
maturity date after September 13, 2000.
Interest shall be payable at the end of each calendar quarter beginning
September 30, 1999 and at maturity. Interest shall be computed on the basis
of actual 365/366 for prime borrowings and actual 360 basis for LIBOR.
Notes issued may be prepaid at any time without penalty, subject to standard
funding loss provisions for LIBOR loans.
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 25, 1999 or the availability of up to $50,000,000
of advances thereunder from Mercantile Bank National Association on the
terms set forth in said August 25, 1999 agreement.
64
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Page 2
Laclede Gas Company
September 13, 1999
We appreciate the opportunity to serve Laclede's needs and to continue the
long standing relationship between our companies. If the foregoing is
acceptable to you, please sign below.
MERCANTILE BANK NATIONAL ASSOCIATION
By: /s/ Timothy W. Hassler
Name: Timothy W. Hassler
Title: Vice President
Accepted this 13th day of September, 1999
LACLEDE GAS COMPANY
By: /s/ Ronald L. Krutzman
Name: Ronald L. Krutzman
Title: Treasurer & Asst. Secretary
65
Exhibit-10.19
September 1, 1999
Mr. Ronald L. Krutzman
Treasurer and Assistant Secretary
Laclede Gas Company
720 Olive Street
St. Louis, Missouri 63101
Dear Mr. Krutzman:
UMB Bank of St. Louis, n.a. (the "Bank") is pleased to provide a
$10,000,000.00 line of credit maturing January 31, 2000 to Laclede Gas
Company ("Laclede") for general corporate purposes and for commercial paper
backup. The Bank will consider requests for advances under the line of
credit until January 31, 2000. Our officers may, at their discretion, make
short-term loans to Laclede under the following terms.
All borrowings will be priced at Laclede's option at (i) Bank's prime rate,
(ii) at Libor for a similar principal amount and maturity adjusted +1/4%, or
(iii) CD's adjusted +1/2% for available maturities up 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, 2000, the note shall be
renewed in whole or in part provided no note shall mature later than May 1,
2000.
Interest shall be payable at maturity or on date of repayment. Interest
shall be computed on the basis of actual 365/366 days for prime borrowings
and on actual 360 day basis for LIBOR or CD loans. Notes issued 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 line of
credit described above.
66
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<PAGE>
Page 2
We ask that you 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. The Bank may terminate this agreement at any
time if Bank determines in good faith that we are not satisfied with your
conditions, operations or performance, financial or otherwise. This letter,
a/k/a the Line of Credit Agreement, constitutes the entire understanding
between the Bank and Laclede regarding the line of credit.
UMB Bank of St. Louis, n.a.
By: /s/ Ken E. Kotiza
Name: Ken E. Kotiza
Title: Regional President
Accepted this 10th day of September, 1999
Laclede Gas Company
By: /s/ Ronald L. Krutzman
Name: Ronald L. Krutzman
Title: Treasurer & Asst. Secretary
67
Exhibit-10.20
LOAN AGREEMENT
--------------
THIS LOAN AGREEMENT (this "Agreement") is made and entered into as of
the 22nd day of October, 1999, by and among LACLEDE GAS COMPANY, a Missouri
corporation ("Borrower"), and the Banks from time to time party hereto,
including MERCANTILE BANK NATIONAL ASSOCIATION in its capacity as a Bank and
as agent for the Banks under this Agreement (the "Agent"), BANK OF AMERICA,
N.A., in its capacity as a Bank and syndication agent for the Banks and
CREDIT SUISSE FIRST BOSTON in its capacity as a Bank and as documentation
agent for the Banks.
WITNESSETH:
-----------
WHEREAS, Borrower has applied for a revolving credit facility from the
Banks in the aggregate principal amount of up to $120,000,000.00; and
WHEREAS, the Banks are willing to make said revolving credit facility
available to Borrower upon, and subject to, the terms, provisions and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower, the Banks and the Agent hereby mutually covenant and
agree as follows:
SECTION 1. DEFINITIONS.
- - ------------------------
1.01 Definitions. In addition to the terms defined elsewhere in this
Agreement or in any Exhibit or Schedule hereto, when used in this Agreement,
the following terms shall have the following meanings (such meanings shall
be equally applicable to the singular and plural forms of the terms used, as
the context requires):
Affected Bank shall have the meaning ascribed thereto in Section 2.19.
Agent shall mean Mercantile Bank National Association in its capacity
as agent for the Banks under this Agreement and certain of the other
Transaction Documents and its successors in such capacity.
Assignee shall have the meaning ascribed thereto in Section 8.10(c).
Bank shall mean each bank from time to time party to this Agreement and
its successors and permitted assigns; and Banks shall mean all of the Banks.
Borrower's Obligations shall mean any and all present and future
indebtedness (principal, interest, fees, collection costs and expenses,
attorneys' fees and other amounts), liabilities and obligations (including,
without limitation, indemnity obligations) of Borrower to the Agent and/or
any Bank evidenced by or arising under or in respect of this Agreement, the
Notes and/or any of the other Transaction Documents.
Default shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice or both, become an
Event of Default.
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Domestic Business Day shall mean any day except a Saturday, Sunday or
legal holiday observed by the Agent or any Bank.
Eurodollar Business Day shall mean any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
Event of Default shall have the meaning ascribed thereto in Section 6.
Fed Funds Base Rate shall mean, as of the date of any determination
thereof, the rate per annum (rounded upwards, if necessary, to the next
higher 1/100 of 1%) for overnight Federal Funds transactions which appears
on the Telerate Page 5 as of 9:00 a.m. (St. Louis time) on such date.
Fed Funds Rate shall mean a rate per annum equal to One-Quarter of One
Percent (1/4%) over and above the Fed Funds Base Rate, which Fed Funds Rate
shall fluctuate as and when said Fed Funds Base Rate changes.
Floating Rate shall mean a rate per annum equal to (a) the Fed Funds
Rate if such rate is available or (b) if the Fed Funds Rate is not
available, the Prime Rate. The Floating Rate shall fluctuate as and when the
Fed Funds Rate or the Prime Rate, as applicable, changes.
Floating Rate Loan shall mean any Loan bearing interest based on the
Floating Rate.
GAAP shall mean, at any time, generally accepted accounting principles
at such time in the United States.
Granting Bank shall have the meaning ascribed thereto in Section
8.10(e).
Interest Period shall mean with respect to each LIBOR Loan:
(a) initially, the period commencing on the date of such Loan and
ending 1, 2, 3 or 6 months thereafter (or such other period agreed upon
in writing by Borrower and each Bank), as Borrower may elect in the
applicable Notice of Borrowing; and
(b) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such Loan and
ending 1, 2, 3 or 6 months thereafter (or such other period agreed upon
in writing by Borrower and each Bank), as Borrower may elect pursuant
to Section 2.04(a);
provided that:
(c) subject to clauses (d) and (e) below, any Interest Period which
would otherwise end on a day which is not a Eurodollar Business Day
shall be extended to the next succeeding Eurodollar Business Day unless
such Eurodollar Business Day falls in another calendar month, in which
case such Interest Period shall end on the immediately preceding
Eurodollar Business Day;
(d) subject to clause (e) below, any Interest Period which begins on
the last Eurodollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Eurodollar
Business Day of a calendar month; and
(e) no Interest Period may extend beyond the last day of the
Revolving Credit Period.
69
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<PAGE>
LIBOR Base Rate shall mean, with respect to the applicable Interest
Period, (a) t he LIBOR Index Rate for such Interest Period, if such rate is
available or (b) if the LIBOR Index Rate is not available, the average
(rounded upward, if necessary, to the next higher 1/100 of 1%) of the
respective rates per annum of interest at which deposits in dollars are
offered to Mercantile in the London interbank market by two (2) Eurodollar
dealers of recognized standing, selected by Mercantile in its sole
discretion, at or about 9:00 a.m. (St. Louis time) on the date two (2)
Eurodollar Business Days before the first day of such Interest Period, for
delivery on the first day of the applicable Interest Period for a number of
days comparable to the number of days in such Interest Period and in an
amount approximately equal to the principal amount of the LIBOR Loan to
which such Interest Period is to apply.
LIBOR Index Rate shall mean, with respect to the applicable Interest
Period, the rate per annum (rounded upwards, if necessary, to the next
higher 1/100 of 1%) for deposits in U.S. Dollars for a period equal to such
Interest Period, which appears on the Telerate Page 3750 as of 9:00 a.m.
(St. Louis time) on the day two (2) Eurodollar Business Days before the
first day of such Interest Period.
LIBOR Loan shall mean any Loan bearing interest based on the LIBOR
Rate.
LIBOR Rate shall mean (a) the quotient of the (i) LIBOR Base Rate
divided by (ii) one minus the applicable LIBOR Reserve Percentage plus (b)
One-Quarter of One Percent (1/4%) per annum. The LIBOR Rate shall be
adjusted automatically on and as of the effective date of any change in the
LIBOR Reserve Percentage.
LIBOR Reserve Percentage shall mean for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor), for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System with respect to "Eurocurrency liabilities" (or in respect of
any other category of liabilities which includes deposits by reference to
which the interest rate on LIBOR Loans is determined or any category of
extensions of credit or other assets which include loans by a non-United
States office of any Bank to United States residents). The LIBOR Rate shall
be adjusted automatically on and as of the effective date of any change in
the LIBOR Reserve Percentage.
Loan and Loans shall have the meanings ascribed thereto in Section
2.01(a).
Material Adverse Effect shall mean (a) a material adverse effect on the
properties, assets, liabilities, business, operations, prospects, income or
condition (financial or otherwise) of Borrower and its Subsidiaries taken as
a whole, (b) material impairment of Borrower's ability to perform any of its
obligations under this Agreement, any of the Notes or any of the other
Transaction Documents or (c) material impairment of the enforceability of
the rights of, or benefits available to, the Agent or any of the Banks under
this Agreement, any of the Notes or any of the other Transaction Documents.
Mercantile shall mean Mercantile Bank National Association, a national
banking association, in its individual corporate capacity as a Bank
hereunder and not as the Agent hereunder.
Notes shall have the meaning ascribed thereto in Section 2.03(a).
Notice of Borrowing shall have the meaning ascribed thereto in Section
2.02.
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Participant shall have the meaning ascribed thereto in Section 8.10(b).
Person shall mean any individual, sole proprietorship, partnership,
joint venture, limited liability company, trust, unincorporated
organization, association, corporation, institution, entity or government
(whether national, Federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body
or department thereof).
Prime Rate shall mean the interest rate announced from time to time by
Mercantile as its "prime rate" (which rate shall fluctuate as and when said
prime rate shall change). Borrower acknowledges that such "prime rate" is a
reference rate and does not necessarily represent the lowest or best rate
offered by Mercantile or any Bank to its customers.
Pro Rata Share shall mean for the item at issue, with respect to each
Bank, a fraction (expressed as a percentage), the numerator of which is the
portion of such item owned or held by such Bank and the denominator of which
is the total amount of such item owned or held by all of the Banks. For
example, (a) if the amount of the Revolving Credit Commitment of a Bank is
$1,000,000.00 and the total amount of the Revolving Credit Commitments of
all of the Banks is $5,000,000.00, such Bank's Pro Rata Share of the
Revolving Credit Commitments would be Twenty Percent (20%) and (b) if the
original principal amount of a Loan is $5,000,000.00 and the portion of such
Loan made by one Bank is $500,000.00, such Bank's Pro Rata Share of such
Loan would be Ten Percent (10%). As of the date of this Agreement, the Pro
Rata Shares of the Banks with respect to the Revolving Credit Commitments
and the Loans are as follows: (a) Mercantile - Forty-One and
666,666/1,000,000 Percent (41.666666%); (b) Bank of America, N.A. - Twenty-
Nine and 166,667/1,000,000 Percent (29.166667%); and (c) Credit Suisse First
Boston - Twenty-Nine and 166,667/1,000,000 Percent (29.166667%).
Purchasing Bank and Purchasing Banks shall have the respective meanings
ascribed thereto in Section 2.19.
Regulation D shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as amended.
Regulatory Change shall have the meaning ascribed thereto in Section
2.12.
Required Banks shall mean at any time Banks having at least Sixty
Percent (60%) of the aggregate amount of Loans then outstanding or, if no
Loans are then outstanding, at least Sixty Percent (60%) of the total
Revolving Credit Commitments of all of the Banks.
Revolving Credit Commitment shall mean, subject to (a) any reduction of
the Revolving Credit Commitments pursuant to Section 2.01(c), (b)
assignments of the Revolving Credit Commitments by the Banks to the extent
permitted by Section 8.10 and (c) the addition of any new Banks to this
Agreement: (i) with respect to Mercantile, $50,000,000.00; (ii) with respect
to Bank of America, N.A., $35,000,000.00; and (iii) with respect to Credit
Suisse First Boston, $35,000,000.00.
Revolving Credit Period shall mean the period commencing on the date of
this Agreement and ending October 20, 2000.
SPC shall have the meaning ascribed thereto in Section 8.10(e).
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<PAGE>
Subsidiary shall mean any corporation or other entity of which more
than Fifty Percent (50%) of the issued and outstanding capital stock or
other equity interests entitled to vote for the election of directors or
persons performing similar functions (other than by reason of default in the
payment of dividends or other distributions) is at the time owned directly
or indirectly by Borrower or any Subsidiary.
Telerate Page 5 shall mean the display designated as "Page 5" on the
Telerate Service (or such other page as may replace Page 5 on that service
or such other service as may be used by the Agent for the purpose of
determining the rate per annum for overnight Federal Funds transactions).
Telerate Page 3750 shall mean the display designated as "Page 3750" on
the Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for U.S. Dollar Deposits).
Transaction Documents shall mean this Agreement, the Notes and any and
all other agreements, documents and instruments heretofore, now or hereafter
delivered to the Agent or any Bank with respect to or in connection with or
pursuant to this Agreement, any Loans made hereunder or any of the other
Borrower's Obligations, and executed by or on behalf of Borrower, all as the
same may from time to time be amended, modified, extended, renewed or
restated.
SECTION 2. THE LOANS.
- - ----------------------
2.01 Revolving Credit Commitments. (a) Subject to the terms and
conditions set forth in this Agreement and so long as no Default or Event of
Default has occurred and is continuing, during the Revolving Credit Period,
each Bank severally agrees to make such loans to Borrower (individually, a
"Loan" and collectively, the "Loans") as Borrower may from time to time
request pursuant to Section 2.02. Each Loan under this Section 2.01(a)
which is a Floating Rate Loan shall be for an aggregate principal amount of
at least $50,000.00 or any larger multiple of $25,000.00. Each Loan under
this Section 2.01(a) which is a LIBOR Loan shall be for an aggregate
principal amount of at least $2,500,000.00 or any larger multiple of
$1,000,000.00. The aggregate principal amount of Loans which each Bank
shall be required to have outstanding under this Agreement as of any date
shall not exceed the amount of such Bank's Revolving Credit Commitment;
provided, however, that in no event shall (i) the aggregate principal amount
of all Loans outstanding as of any date exceed the total Revolving Credit
Commitments of all of the Banks as of such date or (ii) the aggregate
principal amount of all outstanding Loans made by any Bank exceed such
Bank's Pro Rata Share of the total Revolving Credit Commitments of all of
the Banks. Each Loan under this Section 2.01 shall be made from the several
Banks ratably in proportion to their respective Pro Rata Shares. Within the
foregoing limits, Borrower may borrow under this Section 2.01(a), prepay
under Section 2.08 and reborrow at any time during the Revolving Credit
Period under this Section 2.01(a). All Loans not paid prior to the last day
of the Revolving Credit Period, together with all accrued and unpaid
interest thereon and all fees and other amounts owing by Borrower to the
Agent and/or any Bank with respect thereto, shall be due and payable on the
last day of the Revolving Credit Period. The failure of any Bank to make
any Loan required under this Agreement shall not release any other Bank from
its obligation to make Loans as provided herein.
(b) If the total Revolving Credit Commitments of all of the Banks on
any date should be less than the aggregate principal amount of Loans
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outstanding on such date, whether as a result of Borrower's election to
decrease the amount of the Revolving Credit Commitments of the Banks
pursuant to Section 2.01(c) or otherwise, Borrower shall be automatically
required (without demand or notice of any kind by the Agent or any Bank, all
of which are hereby expressly waived by Borrower) to immediately repay the
Loans in an amount sufficient to reduce the aggregate principal amount of
outstanding Loans to an amount equal to or less than the total Revolving
Credit Commitments of all of the Banks.
(c) Borrower may, upon five (5) Domestic Business Days' prior written
notice to the Agent and each Bank, terminate entirely at any time, or
proportionately reduce from time to time on a pro rata basis among the Banks
based on their respective Pro Rata Shares by an aggregate amount of
$10,000,000.00 or any larger multiple of $1,000,000.00 the unused portions
of the Revolving Credit Commitments; provided, however, that (i) at no time
shall the Revolving Credit Commitments be reduced to a figure less than the
aggregate principal amount of outstanding Loans, (ii) at no time shall the
Revolving Credit Commitments be reduced to a figure greater than zero but
less than $50,000,000.00 and (iii) any such termination or reduction shall
be permanent and Borrower shall have no right to thereafter reinstate or
increase, as the case may be, the Revolving Credit Commitment of any Bank.
2.02 Method of Borrowing. (a) Borrower shall give notice (a "Notice
of Borrowing") to the Agent by 10:00 a.m. (St. Louis time) on the Domestic
Business Day of each Floating Rate Loan to be made to Borrower, and by 10:00
a.m. (St. Louis Time) at least three (3) Eurodollar Business Days before
each LIBOR Loan to be made to Borrower, specifying:
(i) the date of such Loan, which shall be a Domestic Business Day in
the case of a Floating Rate Loan and a Eurodollar Business Day in the
case of a LIBOR Loan;
(ii) the aggregate principal amount of such Loan;
(iii) whether such Loan is to be a Floating Rate Loan or a LIBOR Loan;
and
(iv) in the case of a LIBOR Loan, the duration of the initial
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing given to it, the Agent shall
notify each Bank by 11:00 a.m. (St. Louis time) on the date of receipt
of such Notice of Borrowing by the Agent (which must be a Domestic
Business Day) of the contents thereof and of such Bank's Pro Rata Share
of such Loan. A Notice of Borrowing shall not be revocable by
Borrower.
(c) Not later than 1:00 p.m. (St. Louis time) on the date of each Loan,
each Bank shall (except as provided in subsection (d) of this Section)
make available its Pro Rata Share of such Loan, in Federal or other
funds immediately available in St. Louis, Missouri, to the Agent at its
address specified in or pursuant to Section 8.05. Unless the Agent
determines that any applicable condition specified in Section 3 has not
been satisfied, the Agent will make the funds so received from the
Banks available to Borrower immediately thereafter at the Agent's
aforesaid address by crediting such funds to a demand deposit account
of Borrower at Mercantile specified by Borrower (or such other account
mutually agreed upon in writing between the Agent and Borrower). The
Agent shall not be required to make any amount available to Borrower
hereunder except to the extent the Agent shall have received such
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amounts from the Banks as set forth herein, provided, however, that
unless the Agent shall have been notified by a Bank prior to the time a
Loan is to be made hereunder that such Bank does not intend to make its
Pro Rata Share of such Loan available to the Agent, the Agent may
assume that such Bank has made such Pro Rata Share available to the
Agent prior to such time, and the Agent may in reliance upon such
assumption make available to Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by such
Bank and the Agent has made such amount available to Borrower, the
Agent shall be entitled to receive such amount from such Bank forthwith
upon its demand, together with interest thereon in respect of each day
during the period from and including the date such amount was made
available to Borrower to but excluding the date the Agent recovers such
amount from such Bank at a rate per annum equal to the Fed Funds Base
Rate.
(d) If any Bank makes a new Loan to Borrower under this Agreement on a
day on which Borrower is required to or has elected to repay all or any
part of an outstanding Loan to Borrower from such Bank, such Bank shall
apply the proceeds of its new Loan to make such repayment and only an
amount equal to the difference (if any) between the amount being
borrowed and the amount being repaid shall be made available by such
Bank to the Agent as provided in subsection (c) of this Section, or
remitted by Borrower to the Agent as provided in Section 2.09, as the
case may be.
(e) Borrower hereby irrevocably authorizes the Agent to rely on
telephonic, telegraphic, telecopy, telex or written instructions of any
person identifying himself or herself as one of the individuals listed
on Schedule 2.02 attached hereto (or any other individual from time to
time authorized to act on behalf of Borrower pursuant to a resolution
adopted by the Board of Directors of Borrower and certified by the
Secretary of Borrower and delivered to the Agent) with respect to any
request to make a Loan or a repayment hereunder, and on any signature
which the Agent believes to be genuine, and Borrower shall be bound
thereby in the same manner as if such individual were actually
authorized or such signature were genuine. Borrower also hereby agrees
to defend and indemnify the Agent and each Bank and hold the Agent and
each Bank harmless from and against any and all claims, demands,
damages, liabilities, losses, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) relating to or
arising out of or in connection with the acceptance of instructions for
making Loans or repayments under this Agreement.
2.03 Notes. (a) The Loans of each Bank to Borrower shall be evidenced
by a Revolving Credit Note of Borrower payable to the order of such
Bank in a principal amount equal to the amount of such Bank's Revolving
Credit Commitment, each of which Revolving Credit Notes shall be in
substantially the form of Exhibit A attached hereto and incorporated
herein by reference (with appropriate insertions) (collectively, as the
same may from time to time be amended, modified, extended, renewed,
restated or replaced (including, without limitation, any Revolving
Credit Note issued in full or partial replacement of an existing
Revolving Credit Note as a result of an assignment by a Bank), the
"Revolving Credit Notes").
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(b) Each Bank shall record in its books and records the date, amount,
type and maturity of each Loan made by it to Borrower and the date and
amount of each payment of principal and/or interest made by Borrower
with respect thereto; provided, however, that the obligation of
Borrower to repay each Loan made by a Bank to Borrower under this
Agreement shall be absolute and unconditional, notwithstanding any
failure of such Bank to make any such recordation or any mistake by
such Bank in connection with any such recordation. The books and
records of each Bank showing the account between such Bank and Borrower
shall be conclusive evidence of the items set forth therein in the
absence of manifest error.
2.04 Duration of Interest Periods and Selection of Interest Rates. (a)
The duration of the initial Interest Period for each LIBOR Loan shall
be as specified in the applicable Notice of Borrowing. Borrower shall
elect the duration of each subsequent Interest Period applicable to
such LIBOR Loan and the interest rate to be applicable during such
subsequent Interest Period (and Borrower shall have the option (i) in
the case of any Floating Rate Loan, to elect that such Floating Rate
Loan become a LIBOR Loan and the Interest Period to be applicable
thereto, and (ii) in the case of any LIBOR Loan, to elect that such
LIBOR Loan become a Floating Rate Loan), by giving notice of such
election to the Agent by 10:00 a.m. (St. Louis time) on the Domestic
Business Day of, in the case of the election of the Floating Rate, and
by 10:00 a.m. (St. Louis time) at least three (3) Eurodollar Business
Days before, in the case of the election of the LIBOR Rate, the end of
the immediately preceding Interest Period applicable thereto, if any;
provided, however, that notwithstanding the foregoing, in addition to
and without limiting the rights and remedies of the Agent and the Banks
under Section 6 hereof, so long as any Default or Event of Default
under this Agreement has occurred and is continuing, Borrower shall not
be permitted to renew any LIBOR Loan as a LIBOR Loan or to convert any
Floating Rate Loan into a LIBOR Loan. Upon receipt of any such notice
given by Borrower to the Agent under this Section 2.04, the Agent shall
notify each Bank by 11:00 a.m. (St. Louis time) on the date of receipt
of such notice (which must be a Domestic Business Day) of the contents
thereof. If the Agent does not receive a notice of election for a Loan
pursuant to this Section 2.04(a) within the applicable time limits
specified herein, Borrower shall be deemed to have elected to pay such
Loan in whole pursuant to Section 2.09 on the last day of the current
Interest Period with respect thereto and to reborrow the principal
amount of such Loan on such date as a Floating Rate Loan.
(b) Borrower may not have outstanding and the Banks shall not be
obligated to make more than ten (10) LIBOR Loans at any one time.
2.05 Interest Rates. (a) So long as no Event of Default under this
Agreement has occurred and is continuing, each Floating Rate Loan shall
bear interest on the outstanding principal amount thereof, for each day
from the date such Loan is made until it becomes due, at a rate per
annum equal to the Floating Rate. So long as any Event of Default
under this Agreement has occurred and is continuing, each Floating Rate
Loan shall bear interest on the outstanding principal amount thereof,
for each day from the date such Floating Rate is made until it becomes
due, at a rate per annum equal to Two Percent (2%) over and above the
Floating Rate. Such interest shall be payable monthly in arrears on
the last day of each month commencing on the first such date after such
Floating Rate Loan is made, and at the maturity of the Revolving Credit
Notes (whether by reason of acceleration or otherwise). From and after
the maturity of the Revolving Credit Notes, whether by reason of
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acceleration or otherwise, each Floating Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to
Two Percent (2%) over and above the Floating Rate.
(b) So long as no Event of Default under this Agreement has occurred
and is continuing, each LIBOR Loan shall bear interest on the
outstanding principal amount thereof for each Interest Period
applicable thereto at a rate per annum equal to the applicable LIBOR
Rate. So long as any Event of Default under this Agreement has
occurred and is continuing, each LIBOR Loan shall bear interest on the
outstanding principal amount thereof for each Interest Period
applicable thereto at a rate per annum equal to Two Percent (2%) over
and above the applicable LIBOR Rate. Interest shall be payable for
each Interest Period on the last day thereof, unless the duration of
such Interest Period exceeds three (3) months, in which case such
interest shall be payable at the end of the first three (3) months of
such Interest Period and on the last day of such Interest Period, and
at the maturity of the Revolving Credit Notes (whether by reason of
acceleration or otherwise). From and after the maturity of the
Revolving Credit Notes, whether by reason of acceleration or otherwise,
each LIBOR Loan shall bear interest, payable on demand, for each day until
paid, at a rate per annum equal to Two Percent (2%) over and above the
higher of (i) the LIBOR Rate for the immediately preceding Interest Period
applicable to such LIBOR Loan or (ii) the Floating Rate.
(c) The Agent shall determine each interest rate applicable to the
Loans hereunder and its determination thereog shall be conclusive in
the absence of manifest error.
2.06 Computation of Interest. Interest on Floating Rate Loans hereunder
shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding
the last day). Interest on LIBOR Loans shall be computed on the basis
of a year of 360 days and paid for the actual number of days elapsed,
calculated as to each Interest Period from and including the first day
thereof to but excluding the last day thereof.
2.07 Fees. (a) From and including the date of this Agreement to but
excluding the last day of the Revolving Credit Period, Borrower shall
pay to the Agent for the account of each Bank a nonrefundable
commitment fee on the unused portion of the Revolving Credit Commitment
of such Bank (determined by subtracting the aggregate principal amount
of outstanding Loans made by such Bank to Borrower from such Bank's
Revolving Credit Commitment) at the rate of Five-Hundredths of One
Percent (.05%) per annum. Said commitment fee shall be (i) calculated
on a daily basis, (ii) payable quarterly in arrears on each March 31,
June 30, September 30 and December 31 during the Revolving Credit
Period commencing December 31, 1999, and on the last day of the
Revolving Credit Period and (iii) calculated on an actual day, 360-day
year basis.
(b) Borrower agrees to pay the Agent for its own account certain fees
in the amounts set forth in a letter agreement between Borrower and the
Agent dated October 22, 1999, as the same may from time to time be
amended, modified, extended, renewed or restated.
2.08 Prepayments. (a) Borrower may, upon notice to the Agent
specifying that it is paying the Floating Rate Loans, pay without
penalty or premium the Floating Rate Loans in whole at any time or in
part from time to time, by paying the principal amount to be paid.
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Each such optional payment shall be applied to pay the Floating Rate
Loans of the several Banks in proportion to their respective Pro Rata
Shares.
(b) Borrower may, upon at least three (3) Eurodollar Business Day's
notice to the Agent specifying that it is paying the LIBOR Loans, pay
the LIBOR Loans to which a given Interest Period applies, in whole, or
in part in amounts aggregating $2,500,000.00 or any larger multiple of
$1,000,000.00, by paying the principal amount to be paid together with
all accrued and unpaid interest thereon to and including the date of
payment and any funding losses and other amounts payable under Section
2.10; provided, however, that in no event may Borrower make a partial
payment of LIBOR Loans which results in the total outstanding LIBOR
Loans with respect to which a given Interest Period applies being
greater than $0.00 but less than $2,500,000.00. Each such optional
payment shall be applied to pay the LIBOR Loans of the several Banks in
proportion to their respective Pro Rata Shares.
(c) Upon receipt of a notice of payment pursuant to this Section, the
Agent shall promptly notify each Bank of the contents thereof and of
such Bank's Pro Rata Share of such payment and such notice shall not
thereafter be revocable by Borrower.
2.09 General Provisions as to Payments. Borrower shall make each
payment of principal of, and interest on, the Loans and of fees and all
other amounts payable by Borrower under this Agreement, not later than
12:00 noon (St.Louis time) on the date when due and payable, without
condition or deduction for any counterclaim, defense, recoupment or
setoff, in Federal or other funds immediately available in St.Louis,
Missouri, to the Agent at its address referred to in Section 8.05. All
payments received by the Agent after 12:00 noon (St. Louis time) shall
be deemed to have been received by the Agent on the next succeeding
Domestic Business Day. The Agent will distribute to each Bank in
immediately available funds its Pro Rata Share of each such payment
received by the Agent for the account of the Banks by 2:00 p.m. (St.
Louis time) on the day of receipt of such payment by the Agent if such
payment is received by the Agent from Borrower by 12:00 noon (St. Louis
time) on such day or by 12:00 noon (St. Louis time) on the next
succeeding Domestic Business Day if such payment is received by the
Agent from Borrower after 12:00 noon (St. Louis time) on such day. Any
such payment owed by the Agent to any Bank which is not paid within the
applicable time period shall bear interest until paid (payable by the Agent)
at the Fed Funds Base Rate. Whenever any payment of principal of, or
interest on, the Loans or of fees shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended to the
next succeeding Domestic Business Day. If the date for any payment of
principal is extended by operation of law or otherwise, interest thereon, at
the then applicable rate, shall be payable for such extended time.
2.10 Funding Losses. Notwithstanding any provision contained in this
Agreement to the contrary, (a) if Borrower makes any payment of
principal with respect to any LIBOR Loan (pursuant to Sections 2 or 6
or otherwise) on any day other than the last day of the Interest Period
applicable thereto, or if Borrower fails to borrow or pay any LIBOR Loan
after notice has been given by Borrower to the Agent in accordance with
Section 2.02, 2.04, 2.08 or otherwise, Borrower shall reimburse each Bank on
demand for any resulting losses and expenses incurred by it, including,
without limitation, any losses incurred in obtaining, liquidating or
employing deposits from third parties and any loss of margin for the period
after any such payment, provided that such Bank shall have delivered to
Borrower a certificate setting forth in reasonable detail the calculation of
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the amount of such losses and expenses, which calculation shall be
conclusive in the absence of manifest error.
2.11 Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period:
(a) deposits in dollars (in the applicable amounts) are not being
offered to any Bank in the relevant market for such Interest Period, or
(b) any Bank determines in good faith that the LIBOR Rate as determined
pursuant to the definition thereof will not adequately and fairly reflect
the cost to such Bank of maintaining or funding the LIBOR Loans for such
Interest Period, such Bank shall forthwith give notice thereof to Borrower
which notice shall set forth in detail the basis for such notice, whereupon
until such Bank notifies Borrower that the circumstances giving rise to such
suspension no longer exist, (i) the LIBOR Rate shall not be available to
Borrower as an interest rate option on any Loans made by such Bank and (ii)
all of the then outstanding LIBOR Loans made by such Bank shall
automatically convert to Floating Rate Loans on the last day of the then
current Interest Period applicable to each such LIBOR Loan. Interest accrued
on each such LIBOR Loan prior to any such conversion shall be due and
payable on the date of such conversion.
2.12 Illegality. If, after the date of this Agreement, the adoption of
any applicable law, rule or regulation, or any change therein, or any change
in the interpretation or administration thereof by any governmental or
regulatory authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank with any
request or directive (whether or not having the force of law) of any such
governmental or regulatory authority, central bank or comparable agency (a
"Regulatory Change") shall make it unlawful or impossible for any Bank to
make, maintain or fund its LIBOR Loans to Borrower, such Bank shall
forthwith give notice thereof to Borrower. Upon receipt of such notice,
Borrower shall convert all of its then outstanding LIBOR Loans from such
Bank on either (a)the last day of the then current Interest Period
applicable to such LIBOR Loan if such Bank may lawfully continue to maintain
and fund such LIBOR Loan to such day or (b)immediately if such Bank may not
lawfully continue to fund and maintain such LIBOR Loan to such day, to a
Floating Rate Loan in an equal principal amount. Interest accrued on each
such LIBOR Loan prior to any such conversion shall be due and payable on the
date of such conversion together with any funding losses and other amounts
due under Section 2.10.
2.13 Increased Cost. (a) If (i) Regulation D or (ii) a Regulatory
Change:
(A) shall subject any Bank to any tax, duty or other charge with
respect to its LIBOR Loans, its Note or its obligation to make LIBOR
Loans, or shall change the basis of taxation of payments to any Bank of
the principal of or interest on its LIBOR Loans or any other amounts
due under this Agreement in respect of its LIBOR Loans or its
obligation to make LIBOR Loans (except for taxes on or changes in the
rate of tax on the overall net income of such Bank); or
(B) shall impose, modify or deem applicable any reserve (including,
without limitation, any reserve imposed by the Board of Governors of
the Federal Reserve System), special deposit, capital or similar
requirement against assets of, deposits with or for the account of, or
credit extended or committed to be extended by, any Bank or shall, with
respect to any Bank impose, modify or deem applicable any other
condition affecting such Bank's LIBOR Loans, such Bank's Note or such
Bank's obligation to make LIBOR Loans;
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and the result of any of the foregoing is to increase the cost to (or
in the case of Regulation D, to impose a cost on or increase the cost
to) such Bank of making or maintaining any LIBOR Loan, or to reduce the
amount of any sum received or receivable by such Bank under this
Agreement or under its Note with respect thereto, by an amount deemed
by such Bank to be material, and if such Bank is not otherwise fully
compensated for such increase in cost or reduction in amount received
or receivable by virtue of the inclusion of the reference to "LIBOR
Reserve Percentage" in the calculation of the LIBOR Rate, then upon
notice by such Bank to Borrower, which notice shall set forth such
Bank's supporting calculations and the details of the Regulatory
Change, Borrower shall pay such Bank, as additional interest, such
additional amount or amounts as will compensate such Bank for such
increased cost or reduction. The determination by any Bank under this
Section of the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. In determining
such amount or amounts, the Banks may use any reasonable averaging and
attribution methods.
(b) If any Bank demands compensation under Section 2.13(a) above,
Borrower may at any time, upon at least three (3) Eurodollar Business Day's
prior notice to such Bank, convert its then outstanding LIBOR Loans to
Floating Rate Loans in an equal principal amount. Interest accrued on each
such LIBOR Loan prior to any such conversion shall be due and payable on the
date of such conversion together with any funding losses and other amounts
due under Section 2.10 and this Section 2.13.
2.14 Floating Rate Loans Substituted for Affected LIBOR Loans. If
notice has been given by a Bank pursuant to Sections 2.11 or 2.12 or by
Borrower pursuant to Section 2.13 requiring LIBOR Loans of any Bank to be
repaid, then, unless and until such Bank notifies Borrower that the
circumstances giving rise to such repayment no longer apply, all Loans which
would otherwise be made by such Bank to Borrower as LIBOR Loans shall be
made instead as Floating Rate Loans. Such Bank shall promptly notify
Borrower if and when the circumstances giving rise to such repayment no
longer apply.
2.15 Capital Adequacy. If, after the date of this Agreement, any Bank
shall have determined in good faith that a Regulatory Change has occurred
which has or will have the effect of reducing the rate of return on such
Bank's capital in respect of its obligations hereunder to a level below that
which such Bank could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy), then from time to time Borrower shall pay to such Bank
upon demand such additional amount or amounts as will compensate such Bank
for such reduction. All determinations made in good faith by such Bank of
the additional amount or amounts required to compensate such Bank in respect
of the foregoing shall be conclusive in the absence of manifest error. In
determining such amount or amounts, such Bank may use any reasonable
averaging and attribution methods.
2.16 Survival of Indemnities. All indemnities and all provisions
relating to reimbursement to the Banks of amounts sufficient to protect the
yield to the Banks with respect to the Loans, including, without limitation,
Sections 2.10, 2.13 and 2.15 hereof, shall survive the payment of the Notes
and the other Borrower's Obligations and the expiration or termination of
this Agreement. Notwithstanding the foregoing, if any Bank fails to notify
Borrower of any event which will entitle such Bank to compensation pursuant
to Sections 2.10, 2.13 and/or 2.15 hereof within one hundred eighty (180)
days after such Bank obtains knowledge of such event, then such Bank shall
not be entitled to any compensation from Borrower for any loss, expense,
increased cost and/or reduction of return arising from such event.
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2.17 Discretion of Banks as to Manner of Funding. Notwithstanding any
provision contained in this Agreement to the contrary, each Bank shall be
entitled to fund and maintain its funding of all or any part of its LIBOR
Loans in any manner it elects, it being understood, however, that for
purposes of this Agreement all determinations hereunder (including, without
limitation, the determination of each Bank's funding losses and expenses
under Section 2.10) shall be made as if such Bank had actually funded and
maintained each LIBOR Loan through the purchase of deposits having a
maturity corresponding to the maturity of the applicable Interest Period
relating to the applicable LIBOR Loan and bearing an interest rate equal to
the applicable LIBOR Base Rate.
2.18 Sharing of Payments. The Banks agree among themselves that, in
the event that any Bank shall directly or indirectly obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-
off, banker's lien or counterclaim, through the realization, collection,
sale or liquidation of any collateral or otherwise) on account of or in
respect of any of the Loans or any of the other Borrower's Obligations in
excess of its Pro Rata Share of all such payments, such Banks shall
immediately purchase from the other Banks participations in the Loans or
other Borrower's Obligations owed to such other Banks in such amounts, and
make such other adjustments from time to time, as shall be equitable to the
end that the Banks share such payment ratably in accordance with their
respective Pro Rata Shares of the outstanding Loans and other Borrower's
Obligations. The Banks further agree among themselves that if any such
excess payment to a Bank shall be rescinded or must otherwise be restored,
the other Banks which shall have shared the benefit of such payment shall,
by repurchase of participation theretofore sold, or otherwise, return its
share of that benefit to the Bank whose payment shall have been rescinded or
otherwise restored. Borrower agrees that any Banks so purchasing a
participation in the Loans or other Borrower's Obligations to the other
Banks may exercise all rights of set-off, banker's lien and/or counterclaim
as fully as if such Banks were a holder of such Loan or other Borrower's
Obligations in the amount of such participation. If under any applicable
bankruptcy, insolvency or other similar law any Bank receives a secured
claim in lieu of a set-off to which this Section 2.18 would apply, such
Banks shall, to the extent practicable, exercise their rights in respect of
such secured claim in a manner consistent with the rights of the Banks
entitled under this Section 2.18 to share in the benefits of any recovery of
such secured claim.
2.19 Substitution of Bank. If (a) the obligation of any Bank to make
LIBOR Loans has been suspended pursuant to Section 2.11 or (b) any Bank has
demanded compensation under Sections 2.13 and/or 2.15 (in each case, an
"Affected Bank"), Borrower shall have the right, with the assistance of the
Agent, to seek a mutually satisfactory substitute bank or banks (which may
be one or more of the Banks) (the "Purchasing Bank" or "Purchasing Banks")
to purchase the Note and assume the Revolving Credit Commitment of such
Affected Bank. The Affected Bank shall be obligated to sell its Note and
assign its Revolving Credit Commitment to such Purchasing Bank or Purchasing
Banks within fifteen (15) days after receiving notice from Borrower
requiring it to do so, at an aggregate price equal to the outstanding
principal amount thereof plus unpaid interest accrued thereon up to but
excluding the date of sale. In connection with any such sale, and as a
condition thereof, Borrower shall pay to the Affected Bank the sum of (a)
all fees accrued for its account under this Agreement to but excluding the
date of such sale, (b) the amount of any compensation which would be due to
the Affected Bank under Section 2.10 if Borrower had prepaid the outstanding
LIBOR Loans of the Affected Bank on the date of such sale and (c) any
additional compensation accrued for its account under Sections 2.13 and/or
2.15 to but excluding said date. Upon such sale, (a) the Purchasing Bank or
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Purchasing Banks shall assume the Affected Bank's Revolving Credit
Commitment and the Affected Bank shall be released from its obligations
under this Agreement to a corresponding extent and (b) the Affected Bank, as
assignor, such Purchasing Bank, as assignee, Borrower and the Agent shall
enter into an Assignment and Assumption Agreement in accordance with Section
8.10(c), whereupon such Purchasing Bank shall be a Bank party to this
Agreement, shall be deemed to be an Assignee under this Agreement and shall
have all the rights and obligations of a Bank with a Revolving Credit
Commitment equal to its ratable share of the Revolving Credit Commitment of
the Affected Bank. In connection with any assignment pursuant to this
Section, Borrower shall pay to the Agent the administrative fee of $2,500.00
for processing such assignment referred to in Section 8.10(c). Upon the
consummation of any sale pursuant to this Section 2.19, the Affected Bank,
the Agent and the Borrower shall make appropriate arrangements so that, if
required, each Purchasing Bank receives a new Note.
2.20 Taxes.
(a) Any and all payments by Borrower to or for the account of any Bank
or the Agent under any Transaction Document shall be made free and clear of
and without deduction for any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each Bank and the Agent,
taxes imposed on or measured by its net income, and franchise taxes imposed
on it, by the jurisdiction under the laws of which such Bank or the Agent
(as the case may be) is organized or any political subdivision thereof (all
such non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If
Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable under any Transaction Document to any Bank or the Agent, (i)
the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums
payable under this Section 2.20(a)) such Bank or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deduction of Taxes been made, (ii) Borrower shall make such deductions,
(iii) Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law and (iv)
Borrower shall furnish to the Agent (who shall forward the same to the
applicable Bank), at its address referred to in Section 8.05, the original
or a certified copy of a receipt evidencing payment thereof.
(b) In addition, Borrower agrees to pay any present or future stamp or
documentary taxes and any other excise or property taxes, or charges or
similar levies which arise from any payment made under any of the
Transaction Documents or from the execution or delivery of, or otherwise
with respect to, any of the Transaction Documents (hereinafter referred to
as "Other Taxes").
(c) Borrower agrees to indemnify each Bank and the Agent for the full
amount of Taxes or Other Taxes, respectively (including, without limitation,
any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts
payable under this Section 2.20), paid by such Bank or the Agent (as the
case may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. This indemnification shall be
made within fifteen (15) days from the date such Bank or the Agent (as the
case may be) makes demand therefor, accompanied by a certificate of such
Bank or the Agent (as the case may be) setting forth in reasonable detail
its computation of the amount or amounts to be paid to it hereunder.
(d) The provisions of this Section 2.20 shall survive any expiration or
termination of this Agreement and the payment of the Notes and the other
Borrower's Obligations.
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SECTION 3. PRECONDITIONS TO LOANS.
- - -----------------------------------
3.01 Initial Loans. Notwithstanding any provision contained in this
Agreement to the contrary, none of the Banks shall have any obligation to
make the initial Loans under this Agreement unless the Agent shall have
first received:
(a) this Agreement and the Notes, each executed by a duly authorized
officer of Borrower;
(b) a copy of resolutions of the Board of Directors of Borrower,
duly adopted, which authorize the execution, delivery and performance
of this Agreement, the Notes and the other Transaction Documents,
certified by the Secretary of Borrower;
(c) a copy of the Articles of Incorporation of Borrower, including
any amendments thereto, certified by the Secretary of Borrower;
(d) a copy of the By-Laws of Borrower, including any amendments
thereto, certified by the Secretary of Borrower;
(e) an incumbency certificate, executed by the Secretary of Borrower,
which shall identify by name and title and bear the signatures of all
of the officers of Borrower executing any of the Transaction Documents;
(f) a certificate of corporate good standing of Borrower issued by
the Secretary of State of the State of Missouri;
(g) an opinion of the General Counsel of Borrower in form and
substance satisfactory to the Agent and each of the Banks;
(h) the Notice of Borrowing required by Section 2.02; and
(i) such other agreements, documents, instruments and certificates as
the Agent or any Bank may reasonably request.
3.02 All Loans. Notwithstanding any provision contained in this
Agreement to the contrary, none of the Banks shall have any obligation to
make any Loan under this Agreement unless:
(a) the Agent shall have received a Notice of Borrowing for such Loan
as required by Section 2.02;
(b) both immediately before and immediately after giving effect to
such Loan, no Default or Event of Default under this Agreement shall
have occurred and be continuing;
(c) no material adverse change in the properties, assets,
liabilities, business, operations, prospects, income or condition
(financial or otherwise) of Borrower and its Subsidiaries taken as a
whole shall have occurred since the date of this Agreement and be
continuing; and
(d) all of the representations and warranties made by Borrower in
this Agreement and/or in any of the other Transaction Documents shall
be true and correct in all material respects on and as of the date of
such Loan as if made on and as of the date of such Loan (and for
purposes of this Section 3.02(d), the representations and warranties
made by Borrower in Section 4.04 shall be deemed to refer to the most
recent financial statements of Borrower delivered to the Banks pursuant
to Section 5.01(a)).
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Each request for a Loan by Borrower under this Agreement shall be
deemed to be a representation and warranty by Borrower on the date of such
Loan as to the facts specified in clauses (b), (c) and (d) of this Section
3.02.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
- - -------------------------------------------
Borrower hereby represents and warrants to the Agent and each Bank that:
4.01 Corporate Existence and Power. Borrower: (a) is duly
incorporated, validly existing and in good standing under the laws of the
State of Missouri; (b) has all requisite corporate powers required to carry
on its business as now conducted; (c) has all requisite governmental and
regulatory licenses, authorizations, consents and approvals required to
carry on its business as now conducted, except such licenses,
authorizations, consents and approvals the failure to have could not
reasonably be expected to have a Material Adverse Effect; and (d) is
qualified to transact business as a foreign corporation in, and is in good
standing under the laws of, all states in which it is required by applicable
law to maintain such qualification and good standing except for those states
in which the failure to qualify or maintain good standing could not
reasonably be expected to have a Material Adverse Effect.
4.02 Corporate Authorization. The execution, delivery and performance
by Borrower of this Agreement, the Notes and the other Transaction Documents
are within the corporate powers of Borrower and have been duly authorized by
all necessary corporate and other action on the part of Borrower.
4.03 Binding Effect. This Agreement, the Notes and the other
Transaction Documents have been duly executed and delivered by Borrower and
constitute the legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar
laws affecting creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
4.04 Financial Statements. Borrower has furnished the Agent and each
of the Banks with the following financial statements: (a) consolidated and
consolidating balance sheets and statements of income, retained earnings and
cash flows of Borrower and its Subsidiaries as of and for the fiscal year of
Borrower ended December 31, 1998, all certified by Borrower's independent
certified public accountants, which financial statements have been prepared
in accordance with GAAP consistently applied; and (b) unaudited consolidated
and consolidating balance sheets and statements of income, retained earnings
and cash flows of Borrower and its Subsidiaries as of and for the fiscal
quarter of Borrower ended June 30, 1999, certified by the chief financial
officer of Borrower as being true, correct and complete in all material
respects and as being prepared in accordance with GAAP consistently applied.
Borrower further represents and warrants to the Agent and each Bank that (a)
said balance sheets and their accompanying notes (if any) fairly present the
condition of Borrower and its Subsidiaries as of the dates thereof, (b)
there has been no material adverse change in the condition or operation,
financial or otherwise, of Borrower and its Subsidiaries taken as a whole
since June 30, 1999, and (c) neither Borrower nor any of its Subsidiaries
had any direct or contingent liabilities which were not disclosed on said
financial statements or the notes thereto (to the extent such disclosure is
required by GAAP).
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4.05 Compliance With Other Instruments; None Burdensome. None of the
execution and delivery by Borrower of the Transaction Documents, the
performance by Borrower of its obligations under the Transaction Documents
or the borrowing and/or repayment of Loans by Borrower under this Agreement
will conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under or result in any violation of,
any law, rule, regulation, order, writ, judgment, injunction, decree or
award binding on Borrower, any of the provisions of the Articles of
Incorporation or By-Laws of Borrower or any of the provisions of any
indenture, agreement, document, instrument or undertaking to which Borrower
is a party or subject, or by which Borrower or any property or assets of
Borrower is bound, or result in the creation or imposition of any security
interest, lien or encumbrance on any of the property or assets of Borrower
pursuant to the terms of any such indenture, agreement, document, instrument
or undertaking. No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by,
any governmental, regulatory, administrative or public body,
instrumentality, authority, agency or official, or any subdivision thereof,
or any other Person is required to authorize, or is required in connection
with, (a) the execution, delivery or performance of, or the legality,
validity, binding effect or enforceability of, any of the Transaction
Documents and/or (b) the borrowing and/or repayment of Loans by Borrower
under this Agreement.
4.06 Regulation U. Borrower is not engaged principally, or as one of
its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U of The Board of Governors of the Federal Reserve System, as
amended) and no part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately
(a) to purchase or carry margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock, or to refund or repay
indebtedness originally incurred for such purpose or (b) for any purpose
which entails a violation of, or which is inconsistent with, the provisions
of any of the Regulations of The Board of Governors of the Federal Reserve
System, including, without limitation, Regulations U, T or X thereof, as
amended. If requested by the Agent or any Bank, Borrower shall furnish to
the Agent and each Bank a statement in conformity with the requirements of
Federal Reserve Form U-1 referred to in Regulation U.
4.07 Investment Company Act of 1940; Public Utility Holding Company Act
of 1935. Borrower is not an "investment company" as that term is defined
in, and is not otherwise subject to regulation under, the Investment Company
Act of 1940, as amended. Borrower is not a "holding company" as that term
is defined in, and is not otherwise subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended.
4.08 No Default. No Default or Event of Default under this Agreement
has occurred and is continuing. There is no existing default or event of
default under or with respect to any indenture, contract, agreement, lease
or other instrument to which Borrower is a party or by which any property or
assets of Borrower is bound or affected, a default under which could
reasonably be expected to have a Material Adverse Effect. Borrower has and
is in full compliance with and in good standing with respect to all
governmental permits, licenses, certificates, consents and franchises
necessary to continue to conduct its business as previously conducted by it
and to own or lease and operate its properties and assets as now owned or
leased by it, the failure to have or noncompliance with which could
reasonably be expected to have a Material Adverse Effect. Borrower is not
in violation of any applicable statute, law, rule, regulation or ordinance
of the United States of America, of any state, city, town, municipality,
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county or of any other jurisdiction, or of any agency thereof, a violation
of which could reasonably be expected to have a Material Adverse Effect.
4.09 Year 2000. Borrower has (a) initiated a review and assessment of
all material areas within its and each of its Subsidiaries' businesses and
operations (including those affected by customers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications and/or devices containing imbedded computer chips used
by Borrower or any of its Subsidiaries (or their respective customers and
vendors) may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to, on and/or after December 31,
1999), (b) developed a plan and timeline for addressing the Year 2000
Problem on a timely basis and (c) to date, implemented that plan in
accordance with that timetable. Based on the foregoing, Borrower believes
that all computer applications and devices containing imbedded computer
chips (including those of its and its Subsidiaries' customers and vendors)
that are material to its or any of its Subsidiaries businesses and/or
operations are reasonably expected on a timely basis to be able to properly
perform date-sensitive functions for all dates before, on and after January
1, 2000 (that is, be "Year 2000 compliant"), except to the extent that a
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
SECTION 5. COVENANTS.
- - ----------------------
5.01 Covenants of Borrower. Borrower covenants and agrees that, so
long as any Bank has any obligation to make any Loan under this Agreement
and/or any of the Borrower's Obligations remain unpaid:
(a) Information. Borrower will deliver or cause to be delivered to the
Agent with sufficient copies for each Bank:
(i)within one hundred (100) days after the end of each fiscal year
of Borrower: (A) a consolidated balance sheet of Borrower and its
Subsidiaries as of the end of such fiscal year and the related
consolidated statements of income, retained earnings and cash flows for
such fiscal year, setting forth in each case, in comparative form, the
figures for the previous fiscal year, all such financial statements to
be prepared in accordance with GAAP consistently applied and reported
on by and accompanied by the unqualified opinion of independent
certified public accountants selected by Borrower and reasonably
acceptable to the Required Banks; provided, however, that delivery to
the Agent of copies of the Annual Report on Form 10-K of Borrower for
such fiscal year filed with the Securities and Exchange Commission
shall be deemed to satisfy the requirements of this Section 5.01(a)(i);
(ii) within fifty (50) days after the end of the first three (3)
fiscal quarters of each fiscal year of Borrower, a consolidated balance
sheet of Borrower and its Subsidiaries as of the end of such fiscal
quarter and the related consolidated statements of income, retained
earnings and cash flows for such fiscal quarter and for the portion of
Borrower's fiscal year ended at the end of such fiscal quarter, setting
forth in each case in comparative form, the figures for the
corresponding fiscal quarter and the corresponding portion of
Borrower's previous fiscal year, all in reasonable detail and
satisfactory in form to the Required Banks and certified (subject to
normal year-end adjustments and absence of footnote disclosures) as to
fairness of presentation, consistency and compliance with GAAP by the
chief financial officer of Borrower; provided, however, that delivery
to the Agent of copies of the Quarterly Report on Form 10-Q of Borrower
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for such fiscal quarter filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section
5.01(a)(ii);
(iii) simultaneously with the delivery of each set of financial
statements referred to in Sections 5.01(a)(i) and (ii) above, a
certificate of an authorized officer of Borrower in the form attached
hereto as Exhibit B and incorporated herein by reference (A) stating
whether there exists on the date of such certificate any Default or
Event of Default and, if any Default or Event of Default then exists,
setting forth the details thereof and the action which Borrower is
taking or proposes to take with respect thereto and (B) certifying that
all of the representations and warranties made by Borrower in this
Agreement and/or in any other Transaction Document are true and correct
in all material respects on and as of the date of such certificate as
if made on and as of the date of such certificate; and
(iv) with reasonable promptness, such further information regarding
the business, affairs and financial condition of Borrower as the Agent
or any Bank may from time to time reasonably request.
(b) Corporate Existence. Borrower will do all things necessary to (i)
preserve and keep in full force and effect at all times its corporate
existence and all permits, licenses, franchises and other rights material to
its business and (ii) be duly qualified to do business and be in good
standing in all jurisdictions where the nature of its business or its
ownership of property or assets requires such qualification except for those
jurisdictions in which the failure to qualify or be in good standing could
not reasonably be expected to have a Material Adverse Effect.
(c) Compliance with Laws, Regulations, Etc. Borrower will comply with
any and all laws, ordinances and governmental and regulatory rules and
regulations to which Borrower is subject and obtain any and all licenses,
permits, franchises and other governmental and regulatory authorizations
necessary to the ownership of its properties or assets or to the conduct of
its business, which violation or failure to obtain could reasonably be
expected to have a Material Adverse Effect.
(d) Further Assurances. Borrower will execute and deliver to Agent and
each Bank, at any time and from time to time, any and all further
agreements, documents and instruments, and take any and all further actions
which may be required under applicable law, or which the Agent or any Bank
may from time to time reasonably request, in order to effectuate the
transactions contemplated by this Agreement and the other Transaction
Documents.
(e) Consolidation or Merger. Borrower will not directly or indirectly
merge or consolidate with or into any other Person.
5.02 Use of Proceeds. Borrower covenants and agrees that (a) the
proceeds of the Loans will be used solely for the working capital and
general corporate purposes of Borrower, (b) no part of the proceeds of any
Loan will be used in violation of any applicable law, rule or regulation and
(c) no part of the proceeds of any Loan will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately (i) to
purchase or carry margin stock or to extend credit to others for the purpose
of purchasing or carrying margin stock, or to refund or repay indebtedness
originally incurred for such purpose or (ii) for any purpose which entails a
violation of, or which is inconsistent with, the provisions of any of the
Regulations of The Board of Governors of the Federal Reserve System,
including, without limitation, Regulations U, T or X thereof, as amended.
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SECTION 6. EVENTS OF DEFAULT.
- - ------------------------------
If any of the following (each of the following herein sometimes called
an "Event of Default") shall occur and be continuing:
6.01 Borrower shall fail to pay any of the Borrower's Obligations
constituting principal due under the Loans as and when the same shall become
due and payable, whether by reason of demand, maturity, acceleration or
otherwise;
6.02 Borrower shall fail to pay any of the Borrower's Obligations
constituting interest, fees or other amounts (other than principal due under
the Loans) within five (5) Domestic Business Days after the date the same
shall first become due and payable, whether by reason of demand, maturity,
acceleration or otherwise;
6.03 Any representation or warranty made by Borrower in this Agreement,
in any other Transaction Document or in any certificate, agreement,
instrument or written statement furnished or made or delivered pursuant
hereto or thereto or in connection herewith or therewith, shall prove to
have been untrue or incorrect in any material respect when made or effected;
6.04 Borrower shall fail to perform or observe any term, covenant or
provision contained in Section 5.01(e) or Section 5.02;
6.05 Borrower shall fail to perform or observe any other term, covenant
or provision contained in this Agreement (other than those specified in
Sections 6.01, 6.02 or 6.03 above) and any such failure shall remain
unremedied for thirty (30) days after the earlier of (i) written notice of
default is given to Borrower by the Agent or any Bank or (ii) any officer of
Borrower obtaining actual knowledge of such default;
6.06 This Agreement or any of the other Transaction Documents shall at
any time for any reason (other than termination of this Agreement or such
other Transaction Documents, as the case may be, in accordance with its
terms) cease to be in full force and effect or shall be declared to be null
and void by a court of competent jurisdiction, or if the validity or
enforceability thereof shall be contested or denied by Borrower, or if the
transactions completed hereunder or thereunder shall be contested by
Borrower or if Borrower shall deny that it has any further liability or
obligation hereunder or thereunder;
6.07 Borrower shall (i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code or any
other Federal, state or foreign bankruptcy, insolvency, receivership,
liquidation or similar law, (ii) consent to the institution of, or fail to
contravene in a timely and appropriate manner, any such proceeding or the
filing of any such petition, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator or similar official of
itself or of a substantial part of its property or assets, (iv) file an
answer admitting the material allegations of a petition filed against itself
in any such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take any corporate or
other action for the purpose of effecting any of the foregoing;
6.08 An involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking
(i)relief in respect of Borrower, or of a substantial part of the property
or assets of Borrower, under Title 11 of the United States Code or any other
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Federal, state or foreign bankruptcy, insolvency, receivership, liquidation
or similar law, (ii) the appointment of a receiver, trustee, custodian,
sequestrator or similar official of Borrower or of a substantial part of the
property or assets of Borrower or (iii) the winding-up or liquidation of
Borrower, and such proceeding or petition shall continue undismissed for
sixty (60) consecutive days or an order or decree approving or ordering any
of the foregoing shall continue unstayed and in effect for sixty (60)
consecutive days;
6.09 Borrower shall be declared by any Bank to be in default on, or
pursuant to the terms of, (i) any other present or future obligation to such
Bank, including, without limitation, any other loan, line of credit,
revolving credit, guaranty or letter of credit reimbursement obligation, or
(ii) any other present or future agreement purporting to convey to such Bank
a security interest in, or a lien or encumbrance upon, upon any property or
assets of Borrower;
6.10 The occurrence of any default or event of default under or within
the meaning of any agreement, document or instrument evidencing, securing,
guaranteeing the payment of or otherwise relating to any indebtedness of
Borrower for borrowed money (other than the Borrower's Obligations) having
an aggregate outstanding principal balance in excess of $5,000,000.00 which
is not cured or waived in writing within any applicable cure or grace
period; or
6.11 Borrower shall have a judgment in an amount in excess of
$5,000,000.00 entered against it by a court having jurisdiction in the
premises and such judgment shall not be appealed in good faith (and
execution of such judgment stayed during such appeal) or satisfied by
Borrower within thirty (30) days after the entry of such judgment;
THEN, and in each such event (other than an event described in Sections
6.07 or 6.08), the Agent may, and if requested in writing by the Required
Banks the Agent shall, declare that the obligations of the Banks to make
Loans under this Agreement have terminated, whereupon such obligations of
the Banks shall be immediately and forthwith terminated, and the Agent may
further, and if requested in writing by the Required Banks the Agent shall
further, declare the entire outstanding principal balance of and all accrued
and unpaid interest on the Notes and all of the other Borrower's Obligations
to be forthwith due and payable, whereupon all of the unpaid principal
balance of and all accrued and unpaid interest on the Notes and all of such
other Borrower's Obligations shall become and be immediately due and
payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by Borrower, and the Agent and the
Banks may exercise any and all other rights and remedies which they may have
under any of the other Transaction Documents or under applicable law;
provided, however, that upon the occurrence of any event described in
Sections 6.07 or 6.08, the obligation of the Banks to make Loans under this
Agreement under this Agreement shall automatically terminate and the entire
outstanding principal balance of and all accrued and unpaid interest on the
Notes and all of the other Borrower's Obligations shall automatically become
immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Borrower,
and the Agent and the Banks may exercise any and all other rights and
remedies which they may have under any of the other Transaction Documents or
under applicable law.
SECTION 7. AGENT
- - -----------------
7.01 Appointment. Mercantile Bank National Association is hereby
appointed by the Banks as Agent under this Agreement, the Notes and the
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other Transaction Documents. The Agent agrees to act as such upon the
express conditions contained in this Agreement.
7.02 Powers. The Agent shall have and may exercise such powers
hereunder as are specifically delegated to the Agent by the terms of this
Agreement and the other Transaction Documents, together with such powers as
are reasonably incidental thereto. The Agent shall have no implied duties
to the Banks, nor any obligation to the Banks to take any action under this
Agreement or any of the other Transaction Documents, except any action
specifically provided by this Agreement or any of the other Transaction
Documents to be taken by the Agent. Without limiting the generality of the
foregoing, the Agent shall not be required to take any action with respect
to any Default or Event of Default, except as expressly provided in Section
6, Section 7.06 and Section 7.14.
7.03 General Immunity. Neither the Agent nor any of its directors,
officers, employees, agents or advisors shall be liable to any of the Banks
for any action taken or not taken by it in connection with this Agreement or
any of the other Transaction Documents (a) with the consent or at the
request of the Required Banks or (b) in the absence of its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction in a final, nonappealable order.
7.04 No Responsibility for Loans, Recitals, etc. Neither the Agent nor
any of its directors, officers, employees, agents or advisors shall (a) be
responsible for or have any duty to ascertain, inquire into or verify any
recitals, reports, statements, representations or warranties contained in
this Agreement or any of the other Transaction Documents or furnished
pursuant hereto or thereto, (b) except as set forth in Sections 2.02 and
2.09, be responsible for any Loans hereunder, (c) be bound to ascertain or
inquire as to the performance or observance of any of the terms of this
Agreement or any of the other Transaction Documents, (d) be responsible for
the satisfaction of any condition specified in Section 3, except receipt of
items required to be delivered to the Agent, (e) be responsible for the
validity, effectiveness, genuineness or enforceability of this Agreement or
any of the other Transaction Documents or (f) be responsible for the
creation, attachment, perfection or priority of any security interests or
liens purported to be granted to the Agent or any Bank pursuant to this
Agreement or any of the other Transaction Documents.
7.05 Right to Indemnity. Notwithstanding any other provision contained
in this Agreement to the contrary, to the extent Borrower fails to reimburse
the Agent pursuant to Section 8.03 or Section 8.04, or if any Default or
Event of Default shall occur under this Agreement, the Banks shall ratably
in accordance with their respective Pro Rata Shares of the aggregate
principal amount of outstanding Loans indemnify the Agent and hold it
harmless from and against any and all liabilities, losses (except losses
occasioned solely by failure of Borrower to make any payments or to perform
any obligations required by this Agreement (excepting those described in
Sections 8.03 and 8.04), the Notes or any of the other Transaction
Documents), costs and/or expenses, including, without limitation, any
liabilities, losses, costs and/or expenses arising from the failure of any
Bank to perform its obligations hereunder or in respect of this Agreement,
and also including, without limitation, reasonable attorneys' fees and
expenses, which the Agent may incur, directly or indirectly, in connection
with this Agreement, the Notes or any of the other Transaction Documents, or
any action or transaction related hereto or thereto; provided only that the
Agent shall not be entitled to such indemnification for any losses,
liabilities, costs and/or expenses resulting from its own gross negligence
or willful misconduct as determined by a court of competent jurisdiction in
a final, nonappealable order. This indemnity shall be a continuing
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indemnity, contemplates all liabilities, losses, costs and expenses related
to the execution, delivery and performance of this Agreement, the Notes and
the other Transaction Documents, and shall survive the satisfaction and
payment of the Borrower's Obligations and the termination of this Agreement.
7.06 Action Upon Instructions of Required Banks. The Agent agrees,
upon the written request of the Required Banks, to take any action of the
type specified in this Agreement or any of the other Transaction Documents
as being within the Agent's rights, duties, powers or discretion.
Notwithstanding the foregoing, the Agent shall be fully justified in failing
or refusing to take any action hereunder, unless it shall first be
indemnified to its satisfaction by the Banks pro rata against any and all
liabilities, losses, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) which may be incurred by it by
reason of taking or continuing to take any such action, other than any
liability resulting from the Agent's gross negligence or willful misconduct
as determined by a court of competent jurisdiction in a final, nonappealable
order. The Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with written instructions
signed by the Required Banks, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on all of the Banks and on
all holders of the Notes. In the absence of a request by the Required
Banks, the Agent shall have authority, in its good faith discretion, to take
or not to take any action, unless this Agreement or any of the other
Transaction Documents specifically requires the consent of the Required
Banks or of all of the Banks.
7.07 Employment of Agents and Counsel. The Agent may execute any of
its duties as Agent hereunder by or through employees, agents and attorneys-
in-fact and shall not be answerable to the Banks, except as to money or
securities received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected by it in good
faith and with reasonable care. The Agent shall be entitled to advice and
opinion of legal counsel concerning all matters pertaining to the duties of
the agency hereby created.
7.08 Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper Person or Persons,
and, in respect to legal matters, upon the opinion of legal counsel selected
by the Agent.
7.09 May Treat Payee as Owner. The Agent may deem and treat the payee
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof shall have been filed
with the Agent. Any request, authority or consent of any Person who at the
time of making such request or giving such authority or consent is the
holder of any such Note shall be conclusive and binding on any subsequent
holder, transferee or assignee of such Note or of any Note issued in
exchange therefor.
7.10 Agent's Reimbursement. Each Bank agrees to reimburse the Agent
pro rata in accordance with its Pro Rata Share of the aggregate principal
amount of outstanding Loans for (a) any out-of-pocket costs and expenses not
reimbursed by Borrower for which the Agent is entitled to reimbursement by
the Borrower under this Agreement or any of the other Transaction Documents
and (b) for any other out-of-pocket costs and expenses incurred by the Agent
on behalf of the Banks in connection with the preparation, execution,
delivery, amendment, modification, extension, renewal, administration and/or
enforcement of this Agreement and/or any of the other Transaction Documents.
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7.11 Rights as a Bank. With respect to its Revolving Credit
Commitment, the Loans made by it and the Note issued to it, the Agent shall
have the same rights and powers hereunder as any Bank and may exercise the
same as though it were not the Agent, and the terms "Bank" and "Banks"
shall, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to,
issue letters of credit for the account of and generally engage in any kind
of banking or trust business with the Borrower and its Subsidiaries and
affiliates as if it were not the Agent.
7.12 Independent Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and
based on the financial statements referred to in Section 4.04 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Transaction
Documents. Each Bank also acknowledges that it will, independently and
without reliance upon the Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under this
Agreement and the other Transaction Documents.
7.13 Resignation of Agent. Subject to the appointment of a successor
Agent, the Agent may resign as Agent for the Banks under this Agreement and
the other Transaction Documents at any time by thirty (30) days' notice in
writing to the Banks and Borrower. Such resignation shall take effect upon
appointment of such successor Agent. Subject to the consent of Borrower
(which consent shall not be unreasonably withheld or delayed), the Required
Banks shall have the right to appoint a successor Agent who shall be a Bank
and who shall be entitled to all of the rights of, and vested with the same
powers as, the original Agent under this Agreement and the other Transaction
Documents. In the event a successor Agent shall not have been appointed
within the thirty (30) day period following the giving of notice by the
Agent, subject to the consent of Borrower (which consent shall not be
unreasonably withheld or delayed), the Agent may appoint its own successor.
Resignation by the Agent shall not affect or impair the rights of the Agent
under Sections 7.05 and 7.10 hereof with respect to all matters preceding
such resignation. Any successor Agent must be a national banking
association or a bank chartered in any State of the United States having a
combined capital and surplus of at least $100,000,000.00.
7.14 Delivery of Documents. The Agent agrees to promptly provide each
Bank with copies of (a) this Agreement and the other Transaction Documents
(including any amendments thereto), (b) any default notices sent by the
Agent to Borrower with respect to this Agreement or any of the other
Transaction Documents, (c) any waivers or consents signed by the Agent or
otherwise sent by the Agent to Borrower with respect to this Agreement or
any of the other Transaction Documents, (d) any notices of default sent by
Borrower to the Agent with respect to this Agreement or any of the other
Transaction Documents and (e) any requests for any amendments, waivers or
consents sent to the Agent by Borrower with respect to this Agreement or any
of the other Transaction Documents. The Agent agrees to provide each Bank,
within ten (10) Domestic Business Days after written request by such Bank
and at such Bank's expense, a copy of such other information, reports,
certificates and/or other materials prepared by Borrower or otherwise
required by the Transaction Documents and which are in the possession of the
Agent which are reasonably requested by such Bank in writing.
7.15 Duration of Agency. The agency established by Section 7.01 hereof
shall continue, and Sections 7.01 through and including this Section 7.15
shall remain in full force and effect, until all of the Borrower's
Obligations shall have been paid in full and this Agreement and the Banks'
Revolving Credit Commitments shall have terminated or expired.
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SECTION 8. GENERAL.
- - --------------------
8.01 No Waiver. No failure or delay by the Agent or any Bank in
exercising any right, remedy, power or privilege under this Agreement or
under any other Transaction Document shall operate as a waiver thereof; nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights and remedies provided in this Agreement and in the
other Transaction Documents are cumulative and not exclusive of any remedies
provided by law. Nothing herein contained shall in any way affect the right
of the Agent or any Bank to exercise any statutory or common law right of
banker's lien or set-off.
8.02 Right of Set-Off. Upon the occurrence and during the continuance
of any Event of Default, each Bank is hereby authorized at any time and from
time to time, without notice to Borrower (any such notice being expressly
waived by Borrower) and to the fullest extent permitted by law, to set-off
and apply any and all deposits (general or special, time or demand,
provisional or final, but specifically excluding any trust or segregated
accounts) at any time held by such Bank and any and all other indebtedness
at any time owing by such Bank to or for the credit or account of Borrower
against any and all of the Borrower's Obligations irrespective of whether or
not such Bank shall have made any demand under this Agreement or under any
of the other Transaction Documents and although such obligations may be
contingent or unmatured. Each Bank agrees to promptly notify Borrower after
any such set-off and application made by such Bank, provided, however, that
the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Banks under this Section 8.02
are in addition to any other rights and remedies (including, without
limitation, other rights of set-off) which the Banks may have. Nothing
contained in this Agreement or any other Transaction Document shall impair
the right of any Bank to exercise any right of set-off or counterclaim it
may have against Borrower and to apply the amount subject to such exercise
to the payment of indebtedness of Borrower unrelated to this Agreement or
the other Transaction Documents.
8.03 Cost and Expenses. Borrower agrees, whether or not any Loan is
made under this Agreement, to pay or reimburse the Agent and each Bank upon
demand for (a)all out-of-pocket costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses up to a maximum amount
of $3,000.00) incurred by the Agent in connection with the preparation,
documentation, negotiation and/or execution of this Agreement and/or any of
the other Transaction Documents, (b) all recording, filing and search fees
and expenses incurred by the Agent in connection with this Agreement and/or
any of the other Transaction Documents, (c) all out-of-pocket costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) incurred by the Agent in connection with the (i) the preparation,
documentation, negotiation and execution of any amendment, modification,
extension, renewal or restatement of this Agreement and/or any of the other
Transaction Documents or (ii) the preparation of any waiver or consent under
this Agreement or under any of the other Transaction Documents and (d) if an
Event of Default occurs, all out-of-pocket costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) incurred by the
Agent or any Bank in connection with such Event of Default and collection
and other enforcement proceedings resulting therefrom. Borrower further
agrees to pay or reimburse the Agent and each Bank upon demand for any stamp
or other similar taxes which may be payable with respect to the execution,
delivery, recording and/or filing of this Agreement and/or any of the other
Transaction Documents. All of the obligations of Borrower under this
Section 8.03 shall survive the satisfaction and payment of the Borrower's
Obligations and the termination of this Agreement.
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8.04 General Indemnity. In addition to the payment of expenses
pursuant to Section 8.03, whether or not the transactions contemplated
hereby shall be consummated, Borrower hereby agrees to defend, indemnify,
pay and hold the Agent and each Bank and any holders of the Notes, and the
officers, directors, employees, agents and affiliates of the Agent and each
Bank and such holders (collectively, the "Indemnitees") harmless from and
against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, disbursements, costs and
expenses of any kind or nature whatsoever (including, without limitation,
the reasonable fees and disb ursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitees shall be designated
a party thereto), that may be imposed on, incurred by or asserted against
the Indemnitees, in any manner relating to or arising out of this Agreement,
any of the other Transaction Documents or any other agreement, document or
instrument executed and delivered by Borrower in connection herewith or
therewith, the statements contained in any commitment letters delivered by
the Agent or any Bank, the agreement of the Banks to make the Loans under
this Agreement or the use or intended use of the proceeds of any Loan under
this Agreement (collectively, the "indemnified liabilities"); provided that
(a) Borrower shall have no obligation to an Indemnitee hereunder with
respect to indemnified liabilities directly and solely resulting from the
gross negligence or willful misconduct of that Indemnitee as determined by a
court of competent jurisdiction in a final, nonappealable order and (b)
Borrower shall have no obligation to indemnify the Agent or any Bank with
respect to disputes between the Agent and any Bank or with respect to
disputes among the Banks. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, Borrower
shall contribute the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all indemnified
liabilities incurred by the Indemnitees or any of them. The provisions of
the undertakings and indemnification set out in this Section 8.04 shall
survive satisfaction and payment of the Borrower's Obligations and the
termination of this Agreement.
8.05 Notices. Each notice, request, demand, consent, confirmation or
other communication under this Agreement shall be in writing and delivered
in person or sent by facsimile or registered or certified mail, return
receipt requested and postage prepaid, to the applicable party at its
address or facsimile number set forth on the signature pages hereof, or at
such other address or facsimile number as any party hereto may designate as
its address for communications hereunder by notice so given. Such notices
shall be deemed effective on the day on which delivered or sent if delivered
in person or sent by facsimile (with answerback confirmation received), or
on the third (3rd) Domestic Business Day after the day on which mailed, if
sent by registered or certified mail.
8.06 Consent to Jurisdiction; Waiver of Jury Trial. BORROWER
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE
COURT SITTING IN THE CITY OR COUNTY OF ST. LOUIS, MISSOURI OR ANY UNITED
STATES OF AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI, EASTERN
DISTRICT, AS THE AGENT MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.
BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT TO SUCH SUIT,
ACTION OR PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH COURTS.
BORROWER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, AND BORROWER
FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
BORROWER AUTHORIZES THE SERVICE OF PROCESS UPON BORROWER BY REGISTERED MAIL
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SENT TO BORROWER AT ITS ADDRESS DETERMINED PURSUANT TO SECTION 8.05.
BORROWER, THE AGENT AND EACH BANK HEREBY IRREVOCABLY WAIVE THE RIGHT TO
TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH BORROWER AND THE AGENT OR
ANY BANK ARE PARTIES RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS.
8.07 Governing Law. This Agreement shall be governed by and construed
in accordance with the substantive laws of the State of Missouri (without
reference to conflict of law principles).
8.08 Amendments and Waivers. Any provision of this Agreement, the
Notes or any of the other Transaction Documents to which Borrower is a party
may be amended or waived if, but only if, such amendment or waiver is in
writing and is signed by Borrower, the Required Banks and the Agent;
provided however, that notwithstanding the foregoing, (a) no such amendment
shall increase the Revolving Credit Commitment of a Bank unless such
amendment is signed by such Bank, (b) no such amendment or waiver shall,
unless signed by each Bank, (i) decrease the Revolving Credit Commitment of
any Bank (other than ratable decreases of the Revolving Credit Commitments
of each Bank effected in accordance with Section 2.01(c)), (ii) extend the
term of the Revolving Credit Period, (iii) reduce the principal amount of or
rate of interest on any Loan or any fees hereunder, (iv) postpone the date
fixed for any payment of principal of or interest on any Loan or any fees
hereunder, (v) waive any Event of Default caused by the failure of Borrower
to pay any principal of and/or interest on any Loan or any fees hereunder
when due, (vi) change the percentage of the Revolving Credit Commitments or
of the aggregate principal amount of Loans which shall be required for the
Banks or any of them to take any action or obligations under this Section or
any other provision of this Agreement, (vii) change the definition of
"Required Banks", (viii) amend Section 2.18 or (ix) amend this Section 8.08
and (c) Borrower may, with the consent of the Agent, add additional Banks to
this Agreement so long as the total Revolving Credit Commitments of all of
the Banks does not exceed the sum of $150,000,000.00.
8.09 References; Headings for Convenience. Unless otherwise specified
herein, all references herein to Section numbers refer to Section numbers of
this Agreement, all references herein to Exhibits "A", "B" and "C" refer to
annexed Exhibits "A", "B" and "C" which are hereby incorporated herein by
reference and all references herein to Schedule 2.02 refers to annexed
Schedule 2.02 which is hereby incorporated herein by reference. The Section
headings are furnished for the convenience of the parties and are not to be
considered in the construction or interpretation of this Agreement.
8.10 Successors and Assigns. (a) Subject to paragraphs (b), (c), (d)
and (e) of this Section 8.10, the provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Notwithstanding the foregoing, Borrower
may not assign or otherwise transfer any of its rights or delegate any of
its obligations or duties under this Agreement without the prior written
consent of the Agent and each Bank.
(b) Any Bank may at any time grant to one or more banks or other
financial institutions (each a "Participant") participating interests in its
Revolving Credit Commitment, any or all of its Loans and/or any or all of
its other rights and/or obligations under this Agreement. In the event of
any such grant by a Bank of a participating interest to a Participant,
whether or not upon notice to Borrower and the Agent, such Bank shall remain
responsible for the performance of its obligations under this Agreement, and
Borrower and the Agent shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this
Agreement. Any agreement pursuant to which any Bank may grant such a
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participating interest shall provide that such Bank shall retain the sole
right and responsibility to enforce the obligations of Borrower hereunder
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such participation agreement may provide that the applicable Bank will not
agree to any amendment, modification or waiver of this Agreement described
in clauses (b)(ii), (b)(iii) or (b)(iv) of Section 8.08 without the consent
of the Participant. Borrower agrees that each Participant shall, to the
extent provided in its participation agreement, be entitled to the benefits
of Sections 2.10, 2.11, 2.12, 2.13, 2.14, 2.15, 2.16 and 2.17 of this
Agreement with respect to its participating interest, but Borrower's
liability in respect thereof shall not be greater than its liability
thereunder to the Bank granting the applicable participation.
(c) Any Bank may at any time assign to one or more banks or other
financial institutions (each an "Assignee") all, or a proportionate part of
all, of its rights and obligations under this Agreement and its Note, and
such Assignee shall assume such rights and obligations, pursuant to an
Assignment and Assumption Agreement in substantially the form of Exhibit C
attached hereto executed by such Assignee and such transferor Bank, with
(and subject to) the subscribed consent of Borrower and the Agent, which, in
each case, shall not be unreasonably withheld or delayed; provided, however,
that (i) the minimum amount of any such assignment shall be $5,000,000.00,
(ii) in no event may a Bank have a Revolving Credit Commitment of more than
$0.00 but less than $10,000,000.00, (iii) if any Assignee is an affiliate of
such transferor Bank or, immediately prior to such assignment, a Bank, no
consent shall be required and (iv) if any Event of Default under this
Agreement has occurred and is continuing no consent of Borrower to such
assignment shall be required. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall
have all the rights and obligations of a Bank with a Revolving Credit
Commitment as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding
extent, and no further consent or action by any party shall be required.
Upon the consummation of any assignment pursuant to this subsection (c), the
transferor Bank, the Agent and Borrower shall make appropriate arrangements
so that, if required, new Notes are issued to the Assignor and/or the
Assignee, as applicable. In connection with any such assignment, the
transferor Bank shall pay to the Agent an administrative fee for processing
such assignment in the amount of $2,500.00.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Notes to secure its obligations to a Federal
Reserve Bank. No such assignment shall release the transferor Bank from any
of its obligations hereunder.
(e) Any Bank (a "Granting Bank") may grant to a special purpose funding
vehicle (an "SPC"), identified as such in writing from time to time by the
Granting Bank to the Agent and Borrower, the option to provide to Borrower
all or any part of any Loan that such Granting Bank would otherwise be
obligated to make to Borrower pursuant to this Agreement; provided that (i)
nothing herein shall constitute a commitment by any SPC to make any Loan,
(ii) if an SPC elects not to exercise such option or otherwise fails to
provide all or any part of such Loan, the Granting Bank shall be obligated
to make such Loan pursuant to the terms of this Agreement, (iii) the SPC
shall fund all of the Loans which it makes to the Granting Bank which shall
forward such funds to the Agent, (iv) the Agent shall send all payments of
principal, interest and other amounts due with respect to Loans made by an
SPC which are received by the Agent to the applicable Granting Bank for the
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account of such SPC, (iii) no SPC shall be deemed to be a Bank for purposes
of this Agreement, have any voting rights under this Agreement (all voting
rights shall remain with the Granting Bank) or have any right to any fees
payable under this Agreement (all rights to fees shall remain with the
Granting Bank). The making of a Loan by an SPC under this Agreement shall
utilize the Revolving Credit Commitment of the Granting Bank to the same
extent, and as if, such Loan were made by such Granting Bank. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or
similar payment obligation under this Agreement (all liability for which
shall remain with the Granting Bank). In furtherance of the foregoing, each
party hereto hereby agrees (which agreement shall survive the termination of
this Agreement) that, prior to the date that is one year and one day after
the payment in full of all outstanding commercial paper or other senior
indebtedness of any SPC, it will not institute against, or join any other
Person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the
United States or any State thereof. In addition, notwithstanding anything
to the contrary contained in this Section 8.10, any SPC may (i) with notice
to, but without the prior written consent of, Borrower and the Agent and
without paying any processing fee therefor, assign all or a portion of its
interests in any Loans to the Granting Bank or to any financial institutions
(consented to by Borrower and the Agent) providing liquidity and/or credit
support to or for the account of such SPC to support the funding or
maintenance of Loans and (ii) disclose on a confidential basis any non-
public information relating to its Loans to any rating agency, commercial
paper dealer or provider of any surety, guarantee or credit or liquidity
enhancement to such SPC. This Section may not be amended without the
written consent of each SPC having Loans outstanding on the date of such
amendment.
8.11 NO ORAL AGREEMENTS; ENTIRE AGREEMENT. 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 BORROWER, THE AGENT AND THE BANKS FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS REACHED BY BORROWER, THE
AGENT AND THE BANKS COVERING SUCH MATTERS ARE CONTAINED IN THIS AGREEMENT
AND THE OTHER TRANSACTION DOCUMENTS, WHICH AGREEMENT AND OTHER TRANSACTION
DOCUMENTS ARE A COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENTS AMONG
BORROWER, THE AGENT AND THE BANKS, EXCEPT AS BORROWER, THE AGENT AND THE
BANKS MAY LATER AGREE IN WRITING TO MODIFY THEM. This Agreement embodies
the entire agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings (oral or written)
relating to the subject matter hereof.
8.12 Severability. In the event any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
8.13 Counterparts. This Agreement may be executed in any number of
counterparts (including facsimile counterparts), each of which shall be
deemed an original, but all of which together shall constitute one and the
same instrument.
8.14 Confidentiality. Any information received by any Bank from
Borrower (or from the Agent on Borrower's behalf) and clearly marked as
confidential shall be treated as confidential by such Bank in accordance
with its customary practices and procedures. Notwithstanding such
agreement, nothing herein contained shall limit or impair the right or
obligation of any Bank to disclose such information: (a) to its auditors,
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attorneys, trustees, employees, directors, officers, advisors, affiliates or
agents, (b) when and as required by any law, ordinance, subpoena or
governmental order, rule or regulation, (c) as may be required, requested or
otherwise appropriate in any report, statement or testimony submitted to any
municipal, state, provincial or federal regulatory body or any
self-regulatory body having or claiming to have jurisdiction over such Bank,
(d) which is publicly available or readily ascertainable from public
sources, or which is received by any Bank from a third Person which or which
is not known by such Bank to be bound to keep the same confidential, (e) in
connection with any proceeding, case or matter pending (or on its face
purported to be pending) before any court, tribunal or any governmental
agency, commission, authority, board or similar entity, (f) in connection
with protection of its interests under this Agreement, the Notes or any of
the other Transaction Documents, including, without limitation, the
enforcement of the terms and conditions of this Agreement, the Notes and the
other Transaction Documents, (g) to any entity utilizing such information to
rate the creditworthiness of such Bank or to rate or classify the debt or
equity securities of such Bank or report to the public concerning the
industry of which such Bank is a part or (h) to any actual or prospective
Participant or Assignee (it being understood and agreed that prior to
disclosure of any confidential information to any actual or prospective
Participant or Assignee, such actual or prospective Participant or Assignee
shall have agreed in writing to be bound by the terms and provisions of this
Section 8.14). It is agreed and understood that no Bank shall be liable to
Borrower or any other Person for failure to comply with the foregoing except
in any case involving such Bank's gross negligence or willful misconduct as
determined by a court of competent jurisdiction in a final, nonappealable
order.
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IN WITNESS WHEREOF, Borrower, the Agent and the Banks have executed
this Loan Agreement as of the 22nd day of October, 1999.
LACLEDE GAS COMPANY
By /s/ Ronald L. Krutzman
Title: Treasurer and Asst. Secretary
Address:
720 Olive Street, Suite 1522
St. Louis, Missouri 63101
Attention: Treasurer
Facsimile No.: (314) 421-1979
MERCANTILE BANK NATIONAL ASSOCIATION
By /s/ Timothy W. Hassler
Title: Vice President
Address:
721 Locust Street
St. Louis, Missouri 63101
Attention: Large Corporate Department
Facsimile No.: (314) 418-2203
BANK OF AMERICA, N.A.
By /s/ Brian D. Corum
Title: Managing Director
Address:
901 Main Street, 64th Floor
Dallas, TX 75202
Attention: David Sisler
Facsimile No.: (214) 209-3943
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CREDIT SUISSE FIRST BOSTON
By /s/ Douglas E. Maher /s/ Jeffrey B. Ulmer
Title: Vice President Vice President
Address:
Attention:
Facsimile No.: ()
MERCANTILE BANK NATIONAL ASSOCIATION, as Agent
By /s/ Timothy W. Hassler
Title: VP
Address:
721 Locust Street
St. Louis, Missouri 63101
Attention: Large Corporate
Facsimile No.: (314) 418-2203
99
<TABLE>
Exhibit-12
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
-------------------------------------------------------------
<CAPTION>
Fiscal Year Ended September 30,
----------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Income before interest
charges and income taxes $61,016 $64,603 $69,908 $69,168 $49,557
Add: One third of applicable
rentals charged to
operating expense
(which approximates the
interest factor) 301 297 294 291 288
-------------------------------------------
Total Earnings $61,317 $64,900 $70,202 $69,459 $49,845
===========================================
Interest on long-term debt $13,966 $14,797 $14,169 $13,939 $12,544
Other interest 6,627 6,473 4,919 4,008 5,983
One-third of applicable rentals
charged to operating expense
(which approximates the
interest factor) 301 297 294 291 288
-------------------------------------------
Total Fixed Charges $20,894 $21,567 $19,382 $18,238 $18,815
===========================================
Ratio of Earnings to
Fixed Charges 2.93 3.01 3.62 3.81 2.65
</TABLE>
100
Exhibit-21
LACLEDE GAS COMPANY AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
PERCENT OF
VOTING STOCK
OWNED
------------
Subsidiaries of Laclede Gas Company (Parent)
Laclede Pipeline Company 100%
Laclede Investment Corporation* 100%
Laclede Development Company** 100%
*Subsidiary Company of Laclede Investment Corporation
Laclede Energy Resources, Inc. 100%
Subsidiary Company of Laclede Energy Resources, Inc. 100%
Laclede Gas Family Services, Inc.
***Subsidiary Company of Laclede Development Company
Laclede Venture Corp. 100%
All of the above corporations have been organized under the laws of the
State of Missouri.
101
Exhibit-23
DELOITTE & TOUCHE LLP
One City Centre
St. Louis, MO 63101
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-52357 of Laclede Gas Company and its subsidiary companies on Form S-3 and
in Registration Statement Nos. 33-38413, 33-57573 and 33-64933 of Laclede
Gas Company and its subsidiary companies on Form S-8 of our report dated
November 18, 1999, appearing in this Annual Report on Form 10-K of Laclede
Gas Company and its subsidiary companies for the year ended September 30,
1999.
Deloitte & Touche LLP
December 16, 1999
102
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<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> SEP-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 519,378
<OTHER-PROPERTY-AND-INVEST> 26,122
<TOTAL-CURRENT-ASSETS> 145,394
<TOTAL-DEFERRED-CHARGES> 140,725
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 831,619
<COMMON> 20,744
<CAPITAL-SURPLUS-PAID-IN> 61,809
<RETAINED-EARNINGS> 199,848
<TOTAL-COMMON-STOCKHOLDERS-EQ> 282,324
1,923
0
<LONG-TERM-DEBT-NET> 204,323
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 84,700
<LONG-TERM-DEBT-CURRENT-PORT> 0
35
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 258,314
<TOT-CAPITALIZATION-AND-LIAB> 831,619
<GROSS-OPERATING-REVENUE> 491,588
<INCOME-TAX-EXPENSE> 14,361
<OTHER-OPERATING-EXPENSES> 430,099
<TOTAL-OPERATING-EXPENSES> 444,460
<OPERATING-INCOME-LOSS> 47,128
<OTHER-INCOME-NET> (473)
<INCOME-BEFORE-INTEREST-EXPEN> 46,655
<TOTAL-INTEREST-EXPENSE> 20,593
<NET-INCOME> 26,062
97
<EARNINGS-AVAILABLE-FOR-COMM> 25,965
<COMMON-STOCK-DIVIDENDS> 24,459
<TOTAL-INTEREST-ON-BONDS> 13,966
<CASH-FLOW-OPERATIONS> 43,065
<EPS-BASIC> 1.43
<EPS-DILUTED> 1.43
<FN>
Capital surplus, paid in includes $(24,017) treasury stock.
103
</TABLE>
