UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period ended December 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from ________ to ________
Commission File Number 1-1822
LACLEDE GAS COMPANY
(Exact name of registrant as specified in its charter)
Missouri 43-0368139
(State of Incorporation) (I.R.S. Employer
Identification Number)
720 Olive Street, St. Louis, Missouri 63101
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 314-342-0500
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes (X) No ( )
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
17,627,987 shares, Common Stock, par value $1 per share at 2/11/99.
Page 1<PAGE>
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LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
PART I
FINANCIAL INFORMATION
The interim financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. These financial statements should be
read in conjunction with the financial statements and the notes thereto
included in the Company's Form 10-K for the year ended September 30, 1998.
Page 2<PAGE>
<PAGE>
<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED INCOME
(UNAUDITED)
(In Thousands, Except Per Share Amounts)
<CAPTION>
Three Months Ended
December 31,
1998 1997
---- ----
<S> <C> <C>
Utility Operating Revenues $149,696 $199,667
--------------------
Utility Operating Expenses:
Natural and propane gas 86,648 126,309
Other operation expenses 23,649 22,659
Maintenance 5,057 4,942
Depreciation and amortization 5,285 6,601
Taxes, other than income taxes 10,517 12,742
Income taxes (Note 3) 5,064 8,153
--------------------
Total Utility Operating Expenses 136,220 181,406
--------------------
Utility Operating Income 13,476 18,261
Miscellaneous Income and Income Deductions
(less applicable income taxes) (Note 3) 1,535 867
--------------------
Income Before Interest Charges 15,011 19,128
--------------------
Interest Charges:
Interest on long-term debt 3,347 3,853
Other interest charges 1,957 1,642
--------------------
Total Interest Charges 5,304 5,495
--------------------
Net Income 9,707 13,633
Dividends on Preferred Stock 24 24
--------------------
Earnings Applicable to Common Stock $ 9,683 $ 13,609
====================
Average Number of Common Shares Outstanding 17,628 17,558
Earnings Per Share of Common Stock $ .55 $ .78
Dividends Declared Per Share of Common Stock $.335 $.330
<FN>
See notes to consolidated financial statements.
</TABLE>
Page 3<PAGE>
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<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
<CAPTION>
Dec. 31 Sept. 30
1998 1998
---- ----
(Thousands of Dollars)
(UNAUDITED)
ASSETS
<S> <C> <C>
Utility Plant $843,185 $833,685
Less: Accumulated depreciation and amortization 346,219 343,100
--------------------
Net Utility Plant 496,966 490,585
--------------------
Other Property and Investments 35,238 33,834
--------------------
Current Assets:
Cash and cash equivalents 5,651 3,718
Accounts receivable - net 99,204 46,055
Materials, supplies, and merchandise at avg cost 5,720 5,591
Natural gas stored underground for current use
at LIFO cost 50,933 54,973
Propane gas for current use at FIFO cost 12,698 12,840
Prepayments and other 3,399 2,927
Deferred income taxes 8,062 9,933
--------------------
Total Current Assets 185,667 136,037
--------------------
Deferred Charges 110,639 110,691
--------------------
Total Assets $828,510 $771,147
====================
<FN>
See notes to consolidated financial statements.
</TABLE>
Page 4 <PAGE>
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<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (Continued)
<CAPTION>
Dec. 31 Sept. 30
1998 1998
---- ----
(Thousands of Dollars)
(UNAUDITED)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock (19,493,625 shares issued) $ 19,494 $ 19,494
Paid-in capital 62,966 62,966
Retained earnings 202,119 198,342
Treasury stock, at cost (1,865,638 shares held) (24,017) (24,017)
--------------------
Total common stock equity 260,562 256,785
Redeemable preferred stock 1,960 1,960
Long-term debt (less sinking fund requirements) 179,256 179,238
--------------------
Total Capitalization 441,778 437,983
--------------------
Current Liabilities:
Notes payable 136,157 98,500
Accounts payable 33,897 20,692
Refunds due customers 5,538 7,589
Advance customer billings 8,912 8,936
Taxes accrued 5,571 8,690
Unamortized purchased gas adjustments 11,572 15,815
Other 20,608 23,429
--------------------
Total Current Liabilities 222,255 183,651
--------------------
Deferred Credits and Other Liabilities:
Deferred income taxes 103,208 102,856
Unamortized investment tax credits 6,846 6,933
Other 54,423 39,724
--------------------
Total Deferred Credits and Other Liabilities 164,477 149,513
--------------------
Total Capitalization and Liabilities $828,510 $771,147
====================
<FN>
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
December 31,
1998 1997
---- ----
(Thousands of Dollars)
<S> <C> <C>
Operating Activities:
Net Income $ 9,707 $ 13,633
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,317 6,625
Deferred income taxes and investment tax credits 2,518 556
Other - net (1,868) (557)
Changes in assets and liabilities:
Accounts receivable - net (53,149) (70,253)
Unamortized purchased gas adjustments (4,243) (7,148)
Deferred purchased gas costs 14,990 13,242
Advance customer billings - net (24) (12,025)
Accounts payable 13,205 12,816
Refunds due customers (2,051) 8,152
Taxes accrued (3,119) 3,208
Natural gas stored underground 4,040 2,101
Other assets and liabilities (4,075) (5,748)
--------------------
Net cash used in operating activities $(18,752) $(35,398)
--------------------
Investing Activities:
Construction expenditures (11,249) (11,082)
Investments - non-utility 967 (416)
Employee benefit trusts (540) (34)
Other (308) 15
--------------------
Net cash used in investing activities $(11,130) $(11,517)
--------------------
Financing Activities:
Issuance of short-term debt - net 37,657 28,500
Dividends paid (5,842) (5,731)
Issuance of first mortgage bonds - 25,000
---------------------
Net cash provided by financing activities $ 31,815 $ 47,769
---------------------
Net Increase in Cash and Cash Equivalents $ 1,933 $ 854
Cash and Cash Equivalents at Beg of Period 3,718 4,508
--------------------
Cash and Cash Equivalents at End of Period $ 5,651 $ 5,362
====================
Supplemental Disclosure of Cash Paid/(Refunded)
During the Period for:
Interest $8,396 $8,407
Income taxes (15) (148)
<FN>
See notes to consolidated financial statements.
</TABLE>
Page 6<PAGE>
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LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, this interim report includes all
adjustments (consisting only of normal recurring accruals) necessary
for the fair presentation of the results of the periods covered.
2. The registrant is a natural gas distribution utility having a material
seasonal cycle; therefore, this interim statement of consolidated
income is not necessarily indicative of annual results nor
representative of succeeding quarters of the fiscal year.
3. Net provisions for income taxes were charged as follows during the
periods set forth below:
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------
1998 1997
---- ----
(Thousands of Dollars)
<S> <C> <C>
Utility Operations
Current:
Federal $ 2,529 $ 6,520
State and local 421 1,099
Deferred:
Federal 1,771 400
State and local 343 134
--------------------
Subtotal $ 5,064 $ 8,153
--------------------
Miscellaneous Income and
Income Deductions
Current:
Federal $ 86 $ 100
State and local 11 16
Deferred:
Federal 349 18
State and local 55 3
--------------------
Subtotal $ 501 $ 137
--------------------
Total $ 5,565 $ 8,290
====================
</TABLE>
Page 7<PAGE>
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4. The Company's Gas Supply Incentive Plan, which became effective October
1, 1996 for a three-year period ending September 30, 1999 as part of a
settlement reached in the Company's 1996 rate case, continues to provide
significant benefits for both the Company's share owners and customers.
Under the Plan, the Company and its customers share the income from off-
system sales and also in certain gains and losses related to the
acquisition of the Company's gas supply assets, as measured against
benchmark levels. As part of this Plan, the Company sells available gas
supply and pipeline capacity in markets outside of its normal service
territory. Results of the Plan are set forth below. Such results may
not be representitive of future periods due to the volatile and seasonal
nature of these efforts.
<TABLE>
<CAPTION> Three Months Ended
December 31,
----------------------
1998 1997
---- ----
(Thousands of Dollars)
<S> <C> <C>
Incentive Plan Revenues $6,098 $6,533
Incentive Plan Gas Expense 4,885 4,442
------ ------
Company Share - Pretax Income $1,213 $2,091
====== ======
</TABLE>
On January 14, 1999, the Company filed with the Missouri Public Service
Commission (MoPSC) modifications to its Gas Supply Incentive Plan and
requested that the program be approved for another three-year period.
5. As part of its review of the Company's gas costs, the Staff of
the MoPSC has recommended an adjustment which, if approved by the MoPSC
and upheld by the courts, would require the Company to refund to its
customers approximately $3.6 million of gains realized by the Company
from various sales made outside of Missouri between November 1995 and
March 1996 (prior to the approval of the Incentive Plan). A hearing was
held before the MoPSC in this matter on October 6, 1998. The Company
vigorously opposed the Staff's recommended adjustment before the MoPSC
on the grounds that such adjustment violates Missouri law, is
impermissible under the Company's MoPSC-approved tariffs, and is
otherwise unlawful and unreasonable. The Company believes that the
outcome of this matter is unlikely to have a material adverse impact on
the Company.
6. The Company is subject to various laws and regulations relating to the
environment, which thus far have not had a material effect on the
Company's financial position and results of operations.
In the past, the Company operated various manufactured gas plants which
produced certain by-products and residuals. At the request of the
United States Environmental Protection Agency (EPA), Laclede performed
an investigation of one of the Company's former manufactured gas plant
sites located in Shrewsbury, Missouri (the Shrewsbury Site). As
previously reported by the Company, the Company has had lengthy
discussions with the EPA and the Missouri Department of Natural
Resources (MoDNR) as to what additional actions are required for the
site. On October 17, 1997, the Company submitted to the EPA an
Engineering Evaluation/Cost Analysis (EE/CA) relative to the site. The
EPA, the MoDNR and the Company subsequently agreed on several changes to
the EE/CA. The EPA on September 25, 1998 issued its approval of the
revised EE/CA, conditional only on receipt of public comment regarding
the EE/CA. The EPA received no adverse public comments regarding the
Page 8<PAGE>
<PAGE>
EE/CA during the public comment period. Assuming the EE/CA is finally
approved with no additional changes, the Company estimates that the
overall costs to remediate the Shrewsbury Site will be approximately
$1,135,000. As of December 31, 1998, $627,000 of such overall costs had
been paid, and an additional $508,000 was reserved by the Company. Any
additional actions with regard to the site will incur additional costs.
The Company has notified its insurers that it intends to seek
reimbursement from them of its investigation, remediation, clean-up and
defense costs.
In a separate matter, MoDNR has accepted the Company's application to
place the site of a different former manufactured gas plant located in
the City of St. Louis, Missouri (which site was also used by subsequent
owners as the site of a coke manufacturing facility) in the Missouri
Voluntary Cleanup Program, for the purpose of characterizing the site.
As required by MoDNR, the Company submitted its sampling plan on
November 16, 1998 and has begun implementation of the plan. The Company
currently estimates that the cost of its investigation, MoDNR oversight
costs and associated legal and engineering consulting costs relative to
such site would together approximate $534,000. Currently, $144,000 has
been paid and an additional $390,000 has been reserved on the Company's
books. The Company has notified its insurers that the Company intends
to seek reimbursement from them for investigation, remediation, clean-up
and defense costs. The Company has also requested that other former
site owners and/or operators participate in the cost of any site
investigation, but none has yet agreed to do so. The Company plans to
seek proportionate reimbursement of all costs incurred with respect to
this site from such parties and/or any other potentially responsible
parties, to the extent practicable. Recently, one of the potentially
responsible parties filed for bankruptcy. The Company intends to take
such actions as necessary and appropriate to preserve any claims
it may have against the party.
The Company is presently unable to evaluate or quantify further the
scope or cost of any environmental response activity with regard to the
above two former manufactured gas plant sites.
In the Company's previously concluded rate case, the MoPSC approved the
continued use of a cost deferral mechanism for the Company's use in
applying appropriate rate recovery of various environmental costs in
connection with former manufactured gas plants. In any event, the
recovery of costs thus deferred may be challenged in rate
proceedings.
7. This Form 10-Q should be read in conjunction with the Notes to
Consolidated Financial Statements contained in the Company's 1998 Form
10-K.
Page 9<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Weather has a significant impact on the use of heating energy, the sale of
which is Laclede's primary business. Not only did warmer-than-normal
temperatures adversely impact Laclede's earnings during the first quarter of
this fiscal year, but the colder-than-normal temperatures during the same
quarter last year magnify the period-to-period comparison. During the
quarter ended December 31, 1998, a period when temperatures in Laclede's
service area were 14% warmer than normal and 20% warmer than last year,
earnings were $.55 per share, compared with $.78 per share for the same
period last year. This decrease in earnings was largely due to weather-
related lower gas sales and customer consumption.
Utility operating revenues for the quarter ended December 31, 1998 were
$149.7 million compared with $199.7 million for the quarter ended December
31, 1997. The $50.0 million, or 25.0%, decrease was principally due to
lower gas sales volumes arising from the warmer weather and lower wholesale
gas costs (which are passed on to Laclede's customers under the Company's
Purchased Gas Adjustment Clause). System therms sold and transported
decreased by 61.4 million therms, or 17.2%, below the quarter ended December
31, 1997.
Utility operating expenses for the quarter ended December 31, 1998 decreased
by $45.2 million, or 24.9%, below the same quarter last year. Natural and
propane gas expense this quarter decreased $39.7 million, or 31.4%, below
last year mainly due to reduced volumes purchased for sendout (resulting
from the warmer weather) and lower rates charged by the Company's suppliers.
Other operation and maintenance expenses increased $1.1 million, or 4.0%,
principally due to lower gains recognized this quarter on lump sum pension
settlements, a higher provision for uncollectible accounts, higher wage
rates and other increases in the costs of doing business. These increases
were partially offset by lower net pension costs and decreased group
insurance charges. Depreciation and amortization expense decreased 19.9%
primarily due to lower depreciation rates (as authorized in Case No. GR-98-
374 and instituted July 1, 1998) partially offset by additional depreciable
property. Taxes, other than income taxes, decreased 17.5% mainly due to
lower gross receipts taxes (reflecting decreased revenues) slightly offset
by higher real estate and personal property taxes this quarter. The $3.1
million decrease in income taxes is principally due to lower taxable income.
Miscellaneous income and income deductions increased $.7 million primarily
due to a pre-tax gain of approximately $1.9 million recognized by the
Company's wholly owned subsidiary, Laclede Development Company, on the sale
of undeveloped property known as Centre Park 40. Laclede Development owned
its interest in Centre Park 40 through a real estate investment partnership.
This gain was partially offset by lower subsidiary income and minor
variations in several areas. The 3.5% decrease in interest expense is
mainly due to lower interest on long-term debt resulting from the redemption
in May 1998 of a 9 5/8% First Mortgage Bond issue. This decrease was
largely offset by increased short-term interest expense due to higher
average borrowings.
Page 10<PAGE>
<PAGE>
On January 26, 1999, Laclede filed a request with the Missouri Public
Service Commission (MoPSC) for a general rate increase, to take effect later
this year, to offset cost and investment return requirements related to its
gas distribution system. Laclede does not anticipate that its request will
result in higher rate levels during the current heating season because the
Commission generally suspends the implementation of general rate increases
until the Company's filing has been thoroughly audited and reviewed.
Laclede's request is for a rate adjustment that, if approved as filed, would
increase its annual revenues by $30.5 million. The proposed new rates would
increase a typical residential heating customer's bill by 5.8%, an average
of $3.37 a month.
On January 14, 1999, the Company filed with the MoPSC modifications to its
Gas Supply Incentive Plan and requested that the program be approved for
another three-year period. The current program, which is scheduled to
expire on September 30, 1999, has provided significant benefits to Laclede's
share owners and customers. It allows Laclede and its customers to share in
income from off-system sales and also in certain gains and losses related to
the acquisition of the Company's gas supply assets, as measured against
benchmark levels. Since the Company began operating under the Incentive
Plan in October 1996, Laclede has achieved overall gas cost savings of
nearly $73 million. During calendar 1998 alone, the Company's Incentive
Plan operations resulted in gas cost savings of $24.0 million to its
customers and $5.5 million in pretax income to its share owners.
LIQUIDITY AND CAPITAL RESOURCES
The Company's short-term borrowing requirements typically peak during colder
months, principally because of required payments for natural gas made in
advance of the receipt of cash from the Company's customers for the sale of
that gas. Such short-term cash requirements have traditionally been met
through the sale of commercial paper supported by lines of credit with
banks. In January 1999, the Company renewed three primary lines of bank
credit under which it may borrow up to an aggregate of $30 million prior to
January 31, 2000, with renewal of any loans outstanding on that date
permitted up to June 30, 2000. An additional $10 million primary line of
credit was renewed through March 31, 1999. This, along with a previously
obtained $100 million supplemental line of credit extending through
August 30, 1999, and an additional $20 million supplemental line of credit
obtained for the period of January 1999 through March 20, 1999, provides
total lines of credit of $160 million for the 1998-1999 heating season.
During fiscal 1999 to date, the Company sold commercial paper aggregating to
a maximum of $142.5 million at any one time, but did not borrow from the
banks under the aforementioned agreements. Short-term borrowings amounted
to $137.5 million at January 31, 1999.
Construction expenditures for the quarter were $11.2 million compared with
$11.1 million for the same period last year.
Capitalization at December 31, 1998 increased $3.8 million since September
30, 1998 and consisted of 59.0% common stock equity, .4% preferred stock
equity and 40.6% long-term debt.
The seasonal effect on the Company's financial position affects the
comparison of certain balance sheet items at December 31, 1998 and at
September 30, 1998 such as Accounts Receivable - Net, Notes Payable,
Accounts Payable and Advance Customer Billings.
Page 11<PAGE>
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ENVIRONMENTAL MATTERS
The Company is subject to various environmental laws and regulations, which
thus far have not had a material effect on the Company's financial position
and results of operations. The Company has, however, reported certain
environmental liabilities in connection with two manufactured gas plants
previously operated by the Company which produced certain by-products and
residuals. The Company has either already paid or reserved overall costs of
$1,669,000 which are estimated to cover the performance of certain limited
actions at these locations. At this time, the ultimate costs to be incurred
remain unclear, as does the amount of any recovery which the Company may be
able to obtain from other responsible parties and/or the Company's insurers.
In the Company's 1998 rate case, the MoPSC approved the continued use of a
cost deferral mechanism for the appropriate rate recovery of various
environmental costs. In any event, the recovery of costs thus deferred may
be challenged in rate proceedings. For additional information on the
Company's environmental matters, see Note 6 of Notes to Consolidated
Financial Statements, on page 8.
YEAR 2000 ISSUE
The Company has undertaken a comprehensive Year 2000 upgrade, conversion and
replacement program, pursuant to which the Company is upgrading and
replacing its mainframe computer hardware and attendant operating system
software along with its key mainframe systems and applications, such as the
customer records and billing system and the accounting system. The
conversion and upgrade of a majority of the Company's systems and
applications have been completed, and the Company is currently in the
process of testing these systems and applications. Integrated testing with
third parties with whom the Company exchanges information is scheduled to
occur in the coming months. Also well underway is a comprehensive personal
computer hardware and software replacement/upgrade that is part of the
aformentioned program.
Additionally, the Company has undertaken a company-wide program to
inventory, evaluate, remediate and test all of the other equipment,
products, services and supplies used within the Company. An inventory of all
such equipment, products, services and supplies was completed in August,
1998, and an evaluation of the criticality of each item in the inventory was
completed during September, 1998. The Company's Year 2000 readiness plan
provides that each piece of equipment and product in the inventory, critical
and noncritical, will be tested and, to the extent problems are discovered,
the problems will be remediated and the piece of equipment or product
retested, or the piece of equipment or product will be replaced.
The Company has developed or is developing comprehensive contingency plans
to address unforeseen critical system or equipment failures, including, but
not limited to electrical and communication losses. The Company has
developed contingency plans for two possible worst case scenarios: the
failure of the ability to remotely operate a small number of pressure
regulator stations or the possible failure of its third-party provided
communication capabilities. With regard to the pressure regulator stations,
the Company will have employees located at each of its remotely controlled
pressure regulator stations starting December 31, 1999 to make any needed
manual overrides of the control system. With regard to communications, the
Company is developing an in-house radio relay system using its current
equipment to maintain communications among the Company's system control and
dispatch personnel and its employees in the field.
Page 12 <PAGE>
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The Company has engaged in conversations with, and received correspondence
from, many of the vendors of both critical and noncritical equipment,
products, services and supplies used within the company regarding the Year
2000 capability of such equipment, products, services and supplies.
Notwithstanding the written assurances that the Company has received from
many of these vendors, the Company is making such further inquiries as
deemed necessary on a case-by-case basis to verify independently the ability
of the vendors to continue to supply services and supplies to the Company on
and after January 1, 2000, and the Year 2000 readiness of such vendors'
equipment and products. The Company has also received written assurances
from natural gas suppliers and pipelines that they will be able to supply
natural gas to Laclede after 1999 without interruption. Here as well, the
Company will, on a case-by-case basis, be making further inquiries and
conducting such additional investigations as are deemed necessary to verify
such written assurances. As of this date, the Company has not verified the
contents of the written assurances received from the above-described vendors
and/or natural gas suppliers and pipelines.
To date, the Company has incurred total costs of approximately $11.9 million
related to replacements and modifications of various computer systems. Of
this amount, $10.4 million has been capitalized and $1.5 million has been
charged to expense. The Company currently estimates that costs remaining to
be incurred during fiscal 1999 will amount to approximately $3.0 million.
In the Company's previously concluded rate case, No. GR-98-374, the MoPSC
authorized the Company to capitalize the costs incurred in connection with
making its information systems ready for year 2000 operations. In addition,
the MoPSC also authorized the Company to defer any interim property tax,
depreciation or carrying cost expenses that may be incurred by the Company
in connection with these capitalized items. The Company may apply for
recovery of these interim expenses in rate proceedings.
OTHER MATTERS
As part of its review of the Company's gas costs, the Staff of the MoPSC has
recommended an adjustment which, if approved by the MoPSC and upheld by the
courts, would require the Company to refund to its customers
approximately $3.6 million of gains realized by the Company from various
sales made outside of Missouri between November 1995 and March 1996
(prior to the approval of the Incentive Plan). A hearing was held
before the MoPSC on this matter on October 6, 1998. The Company
vigorously opposed the Staff's recommended adjustment before the MoPSC
on the grounds that such adjustment violates Missouri law, is
impermissible under the Company's MoPSC-approved tariffs, and is
otherwise unlawful and unreasonable. The Company believes that the
outcome of this matter is unlikely to have a material adverse impact on
the Company.
FORWARD-LOOKING STATEMENTS
Certain statements in this report are forward-looking statements based on
management's beliefs using current assumptions. These forward-looking
statements may be identified by the use of such terms as "anticipate,"
"believe," "estimate," "expect," "intend," "plan," "seek" and similiar
expressions. In addition to any assumptions and other factors specifically
referenced with such forward-looking statements, factors that may cause the
Page 13 <PAGE>
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Company's actual results to differ materially from those contemplated in any
forward-looking statements include, but are not limited to, weather
conditions, changes in transportation and gas supply costs or availability,
the effects of competition and industry restructuring, economic factors such
as changes in the conditions of capital markets and inflation, effects of
employee work force issues, regulatory and statutory changes, changes in
accounting standards, and the effectiveness of Year 2000 remediation by
third parties.
Page 14<PAGE>
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LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
Part II
OTHER INFORMATION
Page 15<PAGE>
<PAGE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
Item 1. Legal Proceedings
For a discussion of environmental matters, see Note 6 of the Notes
to Consolidated Financial Statements in Part I, Financial
Information.
During the quarter ended December 31, 1998, there were no new
legal proceedings required to be disclosed.
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index
(b) Reports on Form 8-K
The Company filed a Form 8-K during the quarter ended
December 31, 1998.
Item reported:
On October 29, 1998 the Company issued its news release announcing
its financial results as of September 30, 1998. The news release
was attached as Exhibit 1 to the Form 8-K.
Date of Report (Date of Earliest Event Reported):
October 29, 1998
Page 16<PAGE>
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LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LACLEDE GAS COMPANY
Date: February 11, 1999 G. T. McNeive, Jr.
-------------------
G. T. McNeive, Jr.
Sr. Vice President - Finance
and General Counsel
(Authorized Signatory and
Chief Financial Officer)
Page 17<PAGE>
<PAGE>
Index to Exhibits
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------- ------- ------------
4 Amendments to the Company's Wage Deferral Savings
Plan adopted October 5, 1998. 19
10 Amendments to the Company's Salary Deferral
Savings Plan adopted October 5, 1998. 30
27 Financial Data Schedule UT 40
Page 18
Exhibit 4
October 5, 1998
Douglas H. Yaeger, as President of Laclede Gas Company, and Gerald T.
McNeive, Jr., as Senior Vice President - Finance and General Counsel of
Laclede Gas Company, pursuant to certain resolutions adopted by the Laclede
Gas Company Board of Directors on July 24, 1997, and on October 23, 1997,
which resolutions, among other things, granted to certain Company officers
the authority to execute such amendments as they may deem necessary,
appropriate or desirable (A) to reflect changes in benefits to be afforded
the Company's non-union employees, which changes in benefits shall be
generally comparable to the changes in benefits afforded to members of
the Oil, Chemical and Atomic Workers Union, Local 5-6 and Local 5-194 under
the collective bargaining agreements between the Company and each of such
Locals; and (B) in connection with the appointment of American Express
Trust Company as trustee of the Laclede Gas Company Wage Deferral Savings
Plan (the "Plan"); do deem it necessary, appropriate and desirable that the
Plan amendments in the attached Exhibit A be effectuated by the Company,
such amendments to be effective on the dates specified for each such
amendment in Exhibit A and to be evidenced by the signatures on the
attached Exhibit A of Douglas H. Yaeger and Gerald T. McNeive, Jr.
Page 19<PAGE>
<PAGE>
AMENDMENTS FOR THE LACLEDE GAS COMPANY
WAGE DEFERRAL SAVINGS PLAN
The following amendments are effective February 1, 1998, except where
otherwise noted.
1. Section 1.2 is hereby amended in its entirety to read as follows:
"1.2 Named Plan Fiduciaries
The authority to control and manage the operation and
administration of this Plan shall be vested in the Plan
Administrator. As the sponsor of this Plan, the Company shall have
the right to amend this Plan, to designate this Plan's named
fiduciaries, and to exercise all functions necessary to the
operation of this Plan, except those which are, by this Plan or the
related Trust Agreement, assigned to another named fiduciary or to
Participants, and, as the Plan Administrator, the Company shall
have the authority and responsibility for the general
administration of this Plan, with the right to appoint an
Administrator or Administrative Committee to exercise such
authority and responsibility, including the right to appoint one or
more Investment Managers. Except to the extent that authority and
discretion are allocated to one or more Investment Managers, the
Trustee shall have the exclusive authority and discretion to
invest, manage and control the assets of the Trust by which this
Plan will be funded, subject to and in accordance with the
provisions hereof and of the separate Trust Agreement and to
matters in which the Trustee is directed by the Participants, the
Administrator or the Company. The rights and responsibilities of
each named fiduciary shall be exercised severally and not jointly,
but any party may serve in more than one fiduciary capacity with
respect to this Plan."
2. A new unnumbered paragraph is hereby added at the end of Section 2.14
to read as follows:
"In the event that an individual who was not classified as an Employee
or a common-law employee is legally reclassified as an Employee or a
common-law employee of the Company, such Employee shall only first be
considered to be an Employee at the time of such reclassification, or,
if later, at the time that such individual is initially treated as an
Employee or common-law employee on the payroll records of the
Company."
3. Section 2.16 is hereby amended in its entirety to read as follows:
"2.16 "Equity Fund"
The separate portion of the Fund or Funds which is to be invested
in accordance with Section 6.5 of this Plan."
4. Section 2.32 is hereby amended in its entirety to read as follows:
"2.32 "Trustee"
That corporation designated by the Company from time to time to
act as Trustee under the Trust Agreement."
Page 20<PAGE>
<PAGE>
5. A new Section 2.36 is hereby added to read as follows:
"2.36 "Investment Manager"
Any entity designated by the Company to direct the investment and
reinvestment of one, or more, of the Investment Funds subject to
the Trust Agreement. The Company shall have the authority to
confirm or deny the appointment of any Investment Manager."
6. A new Section 2.37 is hereby added to read as follows:
"2.37 "Valuation Date"
Valuation Date means any day that the New York Stock Exchange is
open for business or any other date chosen by the Administrator."
7. The third sentence of Section 4.2(a) is hereby replaced in its entirety
to read as follows:
"Such agreement shall be delivered at least ten (10) days in advance of
its intended effective date (or such shorter period as the
Administrator shall determine to be administratively feasible), which
shall always be the first payroll date on or after the next succeeding
Enrollment Date, and shall be effective beginning with the first
payment of Compensation made on or after such Enrollment Date."
8. Effective July 1, 1997, the fourth sentence of Section 4.2(a) is hereby
amended in its entirety to read as follows:
"All such wage deferrals shall be expressed as a percentage of
Compensation (which must be at least nine-tenths (0.9%) of Compensation
and which must be in one-tenth percent (0.1%) increments) or in dollar
or half-dollar amounts (which at a minimum must be five dollars ($5.00)
for each weekly payroll period), up to, but not exceeding, fifteen
percent (15%) of the Participant's rate of Compensation determined
prior to such deferral; however, in the event that a Participant's wage
deferral for a particular weekly payroll period should exceed fifteen
percent (15%) for such weekly payroll period, wage deferrals for
subsequent weekly payroll periods shall be adjusted, as necessary, to
ensure that the fifteen percent (15%) maximum wage deferral is not
exceeded on an annual basis for such Plan Year."
9. Section 4.2(b) is hereby amended in its entirety to read as follows:
"(b) A Participant may change his rate or amount of wage deferral by
filing a properly completed and signed change order with the
Administrator at least ten (10) days in advance of the intended
effective date stated in such change order, which shall always be
the first payroll date on or after the next succeeding Enrollment
Date, and such change shall be effective beginning with the first
payment of Compensation made on or after such Enrollment Date."
10. Section 4.2(c) is hereby amended in its entirety to read as follows:
"(c) A Participant may discontinue his wage deferral at any time, but
only once in any Plan Year, by filing a properly completed and
signed change order with the Administrator at least ten (10)
days in advance of the intended effective date stated in such
change order, which may be any date specified by the
Participant, and such cessation shall be effective beginning
with the first payment of Compensation made on or after such
Page 21<PAGE>
<PAGE>
effective date or as soon as administratively feasible
thereafter. A Participant who has discontinued his wage
deferral pursuant to this subsection may resume wage deferral
effective as of any subsequent Enrollment Date by following the
procedure set out in subsection (a) of this Section 4.2."
11. A new Section 4.2(d) is hereby added to read as follows:
"(d) Notwithstanding any provision in this Plan to the contrary,
investment elections, changes or transfers, loans, and certain
other decisions or elections by a Participant under this Plan
may be accomplished by electronic or telephonic means which are
not otherwise prohibited by law and which are in accordance with
procedures and/or systems approved or arranged by the
Administrator or its delegate expressly for that purpose."
12. Effective August 1, 1998, Section 5.1(a) is hereby amended in its
entirety to read as follows:
"(a) Subject to subsection (b) of this Section 5.1, for each weekly
payroll period, the Company shall contribute to the Trust under
this Plan an amount (not to exceed three and one-half percent
(3-1/2%) of the Compensation of such Participant for such
payroll period) equal to one-half (1/2) of the wage deferral of
each Participant for such payroll period, provided that the
amount of such Matching Contribution shall not exceed the
current and accumulated profits of the Company."
13. Section 6.1 is hereby amended in its entirety to read as follows:
"6.1 Investment of Contributions
Each Participant shall be permitted to direct the investment of
his Account into any one (1) or more of the Investment Funds,
provided, however, that (i) in the case of an investment
direction under Section 6.2 of this Plan, at least one percent
(1%) of the total amount of Wage Deferral Contribution and
Matching Contribution with respect to such Participant shall be
designated for investment in each Investment Fund selected by
the Participant, and (ii) in the case of an investment direction
for all or a portion of the accumulated balance of such
Participant's Account under Section 6.3 of this Plan, at least
one percent (1%) of the total amount over which such investment
direction is made shall be designated for each Investment Fund
selected by the Participant."
14. A new unnumbered paragraph is hereby added at the end of Section 6.2
to read as follows:
"Participant investment elections which Participants originate
electronically or by telephone pursuant to Section 4.2(d) will be
effective no later than on the first Valuation Date following the date
on which the Participant originated the election."
15. Section 6.3 is hereby amended in it entirety to read as follows:
"6.3 A Participant's Investment Direction for Accumulated Account
Balances
Either with or without changing his investment direction with
respect to Contributions to be made thereafter, subject to the
Page 22<PAGE>
<PAGE>
provisions of Section 6.1 of this Plan, a Participant may, by
written notice given to the Administrator at least ten (10) days
in advance of the first day of any calendar month (the intended
effective date), direct that the accumulated balance in his
Account be invested in one or more of the Investment Funds as
soon as practicable on or after the intended effective date. The
valuation of the Participant's Account as of the end of the day
immediately preceding the intended effective date of such
investment direction shall be controlling for purposes of
implementing the investment direction. A change in investment
direction under this Section 6.3 can be made only two (2) times
per month.
Participant investment directions which Participants originate
electronically or by telephone pursuant to Section 4.2(d) will be
effective no later than on the first Valuation Date following the
date on which the Participant originated the election."
16. Section 6.4 is hereby amended in its entirety to read as follows:
"6.4 Company Stock Fund
The Company Stock Fund shall be invested by the Trustee in a
pooled investment account consisting of Shares and the Money
Market Fund; provided however, that the Trustee may invest such
portion in the Money Market Fund as may, from time to time, be
determined necessary to maintain liquidity and operation of the
Plan. The Trustee may also receive and retain in the Company
Stock Fund any Shares issued as a stock dividend or stock split,
or in any other reclassification of Shares, and any warrant,
right, option or similar instrument which gives the holder the
right to acquire any Shares under any circumstances, distributed
on or in respect of any Shares held in the Company Stock Fund
(and shall sell any other instrument or property so received
which does not give the holder the right to acquire Shares).
Contributions to the Company Stock Fund shall be applied by the
Trustee to the purchase of Shares as soon as is reasonably
possible after the Trustee's receipt thereof. Shares shall be
purchased on the open market at a price not greater than the
current market price per share on the New York Stock Exchange on
the date of purchase."
17. Section 6.5 is hereby amended in its entirety to read as follows:
"6.5 Equity Funds
The Equity Funds shall consist of such capital, common and
preferred stocks, bonds or other instruments convertible into
such stocks, or other equity securities (including, without
limitation, any common, collective or commingled trust fund
established and maintained by the Trustee for the assets of
plans qualified and exempt under Sections 401 and 501 of the
Code, which is invested primarily in equity securities), as may
be selected by the Trustee from time to time subject to consent
thereto by the Company; cash derived from Contributions which
are to be invested in such Equity Fund or Funds and from
earnings on or sales of other assets in the respective Equity
Fund or Funds; and such interim investments (including, without
limitation, money market funds, certificates of deposit,
bankers' acceptances and obligations of the United States
Government) as may be selected by the Trustee from time to time.
Page 23<PAGE>
<PAGE>
All assets in the Equity Funds shall be held in the name of the
Trustee, or a nominee."
18. Section 6.6 is hereby amended in its entirety to read as follows:
"6.6 Fixed Income Fund
The Fixed Income Fund shall consist of assets which are invested
or held for investment intended to provide income on a fixed
income basis, including, but not limited to, short-term and long
-term governmental or corporate obligations, trust and
participation certificates, mortgages and such interim
investments (including, without limitation, money market funds,
certificates of deposit, bankers' acceptances and obligations of
the United States Government) as may be selected by the Trustee
from time to time. The Trustee is also specifically authorized
from time to time upon consent by the Company to invest all or
part of the Fixed Income Fund in any common, collective or
commingled trust fund established and maintained by the Trustee
for the assets of plans qualified and exempt under Sections 401
and 501 of the Code, which is invested primarily in fixed-income
securities; and to purchase or hold one or more guaranteed
investment contracts providing for the accumulation of
contributions thereunder at rates of interest which may be
changed from time to time. All assets in the Fixed Income Fund
shall be held in the name of the Trustee, a nominee or in bearer
form."
19. Section 6.7 is hereby amended in its entirety to read as follows:
"6.7 Money Market Fund
The Money Market Fund shall consist of assets purchased or held
for investment by the Trustee, which are invested or held by the
Trustee, and which are intended to earn income based upon then
prevailing money market interest rates. Such assets may include,
without limitation, short-term securities backed by the United
States Government, governmental or corporate obligations,
certificates of deposit, bankers' acceptances, commercial paper,
repurchase agreements, and money market certificates. The
Trustee is also specifically authorized from time to time upon
consent by the Company to invest all or part of the Money Market
Fund in any common, collective or commingled trust fund
established and maintained by the Trustee for the assets of plans
qualified and exempt under Sections 401 and 501 of the Code,
which is invested primarily in securities intended to earn income
based upon then prevailing money market rates. All assets in the
Money Market Fund shall be held in the name of the Trustee, a
nominee or in bearer form."
20. Section 6.10 is hereby amended in its entirety to read as follows:
"6.10 Reports to Participants
The Administrator shall furnish each Participant, at least
quarterly, a statement of his Account, showing, at a minimum,
the number of whole and fractional Shares credited thereto,
whether there are other investments in the Account, and if so,
identifying such investments (by Investment Fund or item), and
the market value of the Account and of each separate portion
thereof as of the end of such period."
Page 24<PAGE>
<PAGE>
21. Section 7.3(a) and (b) are hereby amended in their entirety to read as
follows:
"7.3 Special Limitation On Contributions For Any Participant For Any
Plan Year
The Additions made to a Participant's Account under Article V
with respect to any Plan Year, which shall be the Limitation Year
for the purpose of Code Section 415, shall not exceed the
limitations described in this Section 7.3.
(a) For purposes of this Section 7.3, "Additions" for any Plan
Year means the total of Contributions allocated to a
Participant's Account for such Plan Year, plus for Plan
Years beginning after July 31, 1989, the Employee's after
-tax contributions, if any, to the Participant's Account.
(b) The amount of such Additions with respect to any Participant
for any Plan Year shall not exceed the lesser of:
(i) Thirty thousand dollars ($30,000) (or such greater
amount allowed by the Secretary of Treasury for Cost of
Living increases after September 2, 1974), or
(ii) Twenty-five percent (25%) of the Participant's
Compensation for such Limitation Year, excluding for
this purpose for Plan Years beginning before 1998 any
wage amounts deferred by said Participant under this
Plan, as the same may be hereafter amended,
supplemented, or replaced.
In applying the foregoing limitation, the Administrator
shall take into account all defined contribution plans
of the Company."
22. A new Section 7.8 is hereby added to read as follows:
"7.8 Unit Valuations
The Administrator may establish unit values for one or more
Investment Funds, or portion thereof, and maintain each
Participant's interest in such Investment Fund in units
in accordance with such rules and procedures as the Administrator
deems appropriate. To the extent that unit accounting is
utilized for any Investment Fund or portion thereof, the value of
a Participant's interest in the Investment Fund at any time shall
be an amount equal to the value of a unit of such Investment Fund
multiplied by the number of units then credited to the
Participant plus such portion of the Participant's interest in
such Investment Fund which is not accounted for in units."
23. Effective August 1, 1998, the second paragraph of Section 9.2(a) is
hereby amended in its entirety to read as follows:
"Upon cessation of employment, a Participant whose entire Account
balance exceeds $5,000 may, notwithstanding the foregoing, elect
(subject to the provisions of subsection (c) of this Section 9.2) to
have his entire Account balance remain in the Fund and continue to be
subject to, and invested in accordance with, the Plan provisions, for
a period of not more than five (5) years following cessation of
employment or to age sixty-five (65), if later. If he elects the
Page 25<PAGE>
<PAGE>
above deferral, he may choose, upon thirty (30) days advance written
notice, to have his entire Account balance distributed to him at any
time during such elected deferral period."
24. The final sentence of Section 9.2(b) is amended to read as follows:
"Interests in the Equity Fund or Funds, the Fixed Income Fund and the
Money Market Fund shall always be distributed in cash."
25. The seventh complete sentence of Section 9.2(c)(ii) is amended to read
as follows:
"Minimum distributions shall be withdrawn from each Investment Fund or
Funds in the same proportion as the balance of the Investment Funds
bear to each other."
26. Section 9.2(d) is amended in its entirety as follows:
"(d) Payment to an alternate payee pursuant to a Qualified Domestic
Relations Order shall be made in one lump-sum payment, as soon
as administratively feasible after the Administrator determines
that the domestic relations order is a Qualified Domestic
Relations Order (as defined in Section 414(p) of the Code), and
after the Administrator has delivered notice of the distribution
to the alternate payee (as described by Section 9.2(f) of the
Plan), in an amount specified in such domestic relations order.
Payment to an alternate payee may be made before the time the
Participant's vested account balance becomes payable to the
Participant.
To the extent the Qualified Domestic Relations Order requires
payment of all or any portion of a Participant's account to an
alternate payee on or after the Participant's earliest
retirement age (as defined in Section 414(p) of the Code), such
amount shall be segregated into a separate account for such
alternate payee and shall be invested among the respective
Investment Funds in the same ratio as the Participant's account
immediately prior to such segregation, and, if directed
investments are available, the alternate payee shall then be
entitled to direct the investment of the segregated funds.
Payment shall then be made to the alternate payee at the time
and in the form specified in the Qualified Domestic Relations
Order."
27. The final sentence of Section 9.2(e) is amended to read as follows:
"Participant and/or spousal consent shall not be required if
distribution is being made because the Participant's account balance
is less than $5,000."
28. Section 9.3(c)(iv) is hereby amended in its entirety to read as
follows:
"(iv) If a Participant, who has one outstanding loan, applies for a
hardship withdrawal and if the amount necessary to satisfy the
Participant's financial hardship is not in excess of the
additional loan amount allowable under Section 9.4, then the
Participant shall borrow such additional amount by applying for
a second loan from the Plan instead of taking a hardship
withdrawal."
Page 26<PAGE>
<PAGE>
29. Section 9.3(c)(v) is hereby amended in its entirety to read as
follows:
"(v) If a Participant has two outstanding loans and applies for a
hardship withdrawal, such hardship withdrawal may be permitted
up to the amount of the hardship and subject to the limitations
of Section 9.3(a). If a Participant has one outstanding loan
and if the amount of the Participant's financial hardship
exceeds the maximum loan amount allowable under Section 9.4,
then a hardship withdrawal may be permitted up to the amount of
hardship and subject to the limitations of Section 9.3(a)."
30. Section 9.3(c)(vi) is amended in its entirety to read as follows:
"(vi) The withdrawal shall be made from each Investment Fund or Funds
in the same proportion as the balance of the Investment Funds
bear to each other."
31. Section 9.3(c)(viii) is hereby amended in its entirety to read as
follows:
"(viii) A Participant who receives a hardship distribution, as
provided in this subsection (c), or who has an outstanding
loan and receives an additional loan to relieve a hardship,
as provided in subclause (iv) of this subsection (c), shall
not be permitted to make wage deferrals pursuant to this Plan
until the first payroll date of the calendar month following
the expiration of a twelve (12) month period after receipt of
either such hardship distribution or such new loan in lieu of
the hardship distribution. The Participant must give the
Administrator at least ten (10) days advance notice to resume
wage deferrals."
32. Section 9.4(b) is hereby amended in its entirety to read as follows:
"(b) The loan may be applied for over the telephone, shall be
evidenced by a Promissory Note on a form available from the
Administrator, shall bear interest at a rate comparable to the
prevailing interest rate charged by commercial lenders for
similar loans, shall be secured by the Participant's Account,
and shall be repayable in installments, by payroll deductions,
over a period not to exceed 234 weeks from the date of such
loan, or not to exceed 494 weeks in the case of a loan for the
purchase of the Participant's primary residence. If the
Participant is on unpaid leave, payments must be made monthly
and must be received by the Payroll Department no later than the
Wednesday preceding the first payday of the month for which the
payment is being made. The note shall be subject to repayment
in whole or in part at any time without premium or penalty, with
no less than one hundred percent (100%) of the outstanding
balance to be repaid. Notes shall become due and payable in
full when the Participant ceases to be an Employee."
33. Section 9.4(e) is hereby amended in its entirety to read as follows:
"(e) An application for a loan may be received at any time, and an
approved loan shall be disbursed as soon as administratively
practicable thereafter. A new loan cannot begin until after
repayment in full of the prior loan. The dollar amounts to be
Page 27<PAGE>
<PAGE>
loaned shall be taken from the investment accounts in the same
proportion as the Investment Fund balances bear to each other.
No Participant may borrow any sum hereunder so long as any
previous loan to such Participant remains unpaid, except as
provided under Section 9.3(c)."
34. Section 9.4(g) is hereby amended in its entirety to read as follows:
"(g) Once the Administrator has approved a loan application for a
Participant and has determined the rate of interest such loan
will bear, the Administrator will provide the Participant with
the form of Promissory Note to evidence such loan and as a
precondition to the disbursement of such loan, the Participant
shall sign and date such Promissory Note and return it to the
Administrator within thirty (30) days for disbursement within
five (5) days thereafter. A copy of such Note shall be retained
by the Participant."
35. Effective February 1, 1996, Section 9.4(h) is hereby amended in its
entirety to read as follows:
"(h) For the purposes of this Section 9.4, the Plan Administrator is
the Treasurer and Assistant Secretary. The Administrator will
impose no specific limitations on the type or amount of
Participant loans, except as provided in Section 9.4(a) above."
36. A new paragraph is hereby added at the end of Section 16.3(a) to read
as follows:
"The Administrator shall also have the authority and discretion to
engage an Administrative Delegate who shall perform, without
discretionary authority or control, administrative functions within
the framework of policies, interpretations, rules, practices, and
procedures made by the Administrator or other Plan fiduciary. Any
action made or taken by the Administrative Delegate may be appealed by
an affected Participant to the Administrator in accordance with the
claims review procedures provided in Section 13.6. Any decisions
which call for interpretations of Plan provisions not previously made
by the Administrator shall be made only by the Administrator.
Administrative Delegate means one or more persons or institutions to
whom the Administrator has delegated certain administrative functions
pursuant to a written agreement."
37. Section 16.5 is hereby amended in its entirety to read as follows:
"16.5 Valuation Of Shares
The value of a fractional Share for purposes of Section 9.2(b)
of this Plan shall be based on the value of a full Share at the
closing price per Share on the New York Stock Exchange on the
Valuation Date which is one day prior to distribution."
DOUGLAS H. YAEGER
_______________________________________
Title: President and Chief
Operating Officer
Page 28<PAGE>
<PAGE>
GERALD T. MCNEIVE, JR.
_______________________________________
Title: Senior Vice President - Finance
and General Counsel
Page 29
Exhibit 10
Date: October 5, 1998
Douglas H. Yaeger, as President of Laclede Gas Company, and Gerald T.
McNeive, Jr., as Senior Vice President - Finance and General Counsel of
Laclede Gas Company, pursuant to certain resolutions adopted by the Laclede
Gas Company Board of Directors on July 24, 1997, and on October 23, 1997,
which resolutions, among other things, granted to certain Company officers
the authority to execute such amendments as they may deem necessary,
appropriate or desirable (A) to reflect changes in benefits to be afforded
the Company's non-union employees, which changes in benefits shall be
generally comparable to the changes in benefits afforded to members of the
Oil, Chemical and Atomic Workers Union, Local 5-6 and Local 5-194 under the
collective bargaining agreements between the Company and each of such
Locals; and (B) in connection with the appointment of American Express
Trust Company as trustee of the Laclede Gas Company Salary Deferral Savings
Plan (the "Plan"); do deem it necessary, appropriate and desirable that the
Plan amendments in the attached Exhibit A be effectuated by the Company,
such amendments to be effective on the dates specified for each such
amendment in Exhibit A and to be evidenced by the signatures on the
attached Exhibit A of Douglas H. Yaeger and Gerald T. McNeive, Jr.
Page 30<PAGE>
<PAGE>
AMENDMENTS FOR THE LACLEDE GAS COMPANY
SALARY DEFERRAL SAVINGS PLAN
The following amendments are effective February 1, 1998, except where
otherwise noted.
1. Section 1.2 is hereby amended in its entirety to read as follows:
"1.2 Named Plan Fiduciaries
The authority to control and manage the operation and
administration of this Plan shall be vested in the Plan
Administrator. As the sponsor of this Plan, the Company shall
have the right to amend this Plan, to designate this Plan's named
fiduciaries, and to exercise all functions necessary to the
operation of this Plan, except those which are, by this Plan or
the related Trust Agreement, assigned to another named fiduciary
or to Participants, and, as the Plan Administrator, the
Company shall have the authority and responsibility for the
general administration of this Plan, with the right to appoint an
Administrator or Administrative Committee to exercise such
authority and responsibility, including the right to appoint one
or more Investment Managers. Except to the extent that authority
and discretion are allocated to one or more Investment Managers,
the Trustee shall have the exclusive authority and discretion to
invest, manage and control the assets of the Trust by which this
Plan will be funded, subject to and in accordance with the
provisions hereof and of the separate Trust Agreement and to
matters in which the Trustee is directed by the Participants, the
Administrator or the Company. The rights and responsibilities of
each named fiduciary shall be exercised severally and not
jointly, but any party may serve in more than one fiduciary
capacity with respect to this Plan."
2. A new unnumbered paragraph is hereby added at the end of Section 2.14
to read as follows:
"In the event that an individual who was not classified as an Employee
or a common-law employee is legally reclassified as an Employee or a
common-law employee of the Company, such Employee shall only first be
considered to be an Employee at the time of such reclassification, or,
if later, at the time that such individual is initially treated as an
Employee or common-law employee on the payroll records of the Company."
3. Section 2.16 is hereby amended in its entirety to read as follows:
"2.16 "Equity Fund"
The separate portion of the Fund or Funds which is to be invested
in accordance with Section 6.5 of this Plan."
4. Section 2.32 is hereby amended in its entirety to read as follows:
"2.32 "Trustee"
That corporation designated by the Company from time to time to
act as Trustee under the Trust Agreement."
5. A new Section 2.35 is hereby added to read as follows:
Page 31<PAGE>
<PAGE>
"2.35 "Investment Manager"
Any entity designated by the Company to direct the investment and
reinvestment of one, or more, of the Investment Funds subject to
the Trust Agreement. The Company shall have the authority to
confirm or deny the appointment of any Investment Manager."
6. A new Section 2.36 is hereby added to read as follows:
"2.36 "Valuation Date"
Valuation Date means any day that the New York Stock Exchange is
open for business or any other date chosen by the Administrator."
7. The third sentence of Section 4.2(a) is hereby replaced in its entirety
to read as follows:
"Such agreement shall be delivered at least ten (10) days in advance of
its intended effective date (or such shorter period as the
Administrator shall determine to be administratively feasible), which
shall always be an Enrollment Date, and shall be effective beginning
with the first payment of Compensation made on or after such Enrollment
Date."
8. Section 4.2(b) is hereby amended in its entirety to read as follows:
"(b) A Participant may change his rate of salary deferral by filing a
properly completed and signed change order with the Administrator
at least ten (10) days in advance of the intended effective date
stated in such change order, which shall always be an Enrollment
Date, and such change shall be effective beginning with the first
payment of Compensation made on or after such Enrollment Date."
9. Section 4.2(c) is hereby amended in its entirety to read as follows:
"(c) A Participant may discontinue his salary deferral at any time,
but only once in any Plan Year, by filing a properly completed
and signed change order with the Administrator at least ten (10)
days in advance of the intended effective date stated in such
change order, which may be any date specified by the Participant,
and such cessation shall be effective beginning with the first
payment of Compensation made on or after such effective date or
as soon as administratively feasible thereafter. A Participant
who has discontinued his salary deferral pursuant to this
subsection may resume salary deferral effective as of any
subsequent Enrollment Date by following the procedure set out in
subsection (a) of this Section 4.2."
10. A new Section 4.2(d) is hereby added to read as follows:
"(d) Notwithstanding any provision in this Plan to the contrary,
investment elections, changes or transfers, loans, and certain
other decisions or elections by a Participant under this Plan may
be accomplished by electronic or telephonic means which are not
otherwise prohibited by law and which are in accordance with
procedures and/or systems approved or arranged by the
Administrator or its delegate expressly for that purpose."
11. Effective August 1, 1997, Section 5.1(a)(ii) is hereby amended in its
entirety to read as follows:
Page 32<PAGE>
<PAGE>
"(ii) three and one-half percent (3-1/2%) of the Compensation of
such Participant for such month."
12. Section 6.1 is hereby amended in its entirety to read as follows:
"6.1 Investment of Contributions
Each Participant shall be permitted to direct the investment of
his Account into any one (1) or more of the Investment Funds,
provided, however, that (i) in the case of an investment
direction under Section 6.2 of this Plan, at least one percent
(1%) of the total amount of Salary Deferral Contribution and
Matching Contribution with respect to such Participant shall be
designated for investment in each Investment Fund selected by
the Participant, and (ii) in the case of an investment direction
for all or a portion of the accumulated balance of such
Participant's Account under Section 6.3 of this Plan, at least
one percent (1%) of the total amount over which such investment
direction is made shall be designated for each Investment Fund
selected by the Participant."
13. A new unnumbered paragraph is hereby added at the end of Section 6.2
to read as follows:
"Participant investment elections which Participants originate
electronically or by telephone pursuant to Section 4.2(d) will be
effective no later than on the first Valuation Date following the date
on which the Participant originated the election."
14. Section 6.3 is hereby amended in it entirety to read as follows:
"6.3 A Participant's Investment Direction for Accumulated Account
Balance
Either with or without changing his investment direction with
respect to Contributions to be made thereafter, subject to the
provisions of Section 6.1 of this Plan, a Participant may, by
written notice given to the Administrator at least ten (10) days
in advance of the first day of any calendar month (the intended
effective date), direct that the accumulated balance in his
Account be invested in one or more of the Investment Funds as
soon as practicable on or after the intended effective date. The
valuation of the Participant's Account as of the end of the day
immediately preceding the intended effective date of such
investment direction shall be controlling for purposes of
implementing the investment direction. A change in investment
direction under this Section 6.3 can be made only two (2) times
per month.
Participant investment directions which Participants originate
electronically or by telephone pursuant to Section 4.2(d) will be
effective no later than on the first Valuation Date following the
date on which the Participant originated the election."
15. Section 6.4 is hereby amended in its entirety to read as follows:
"6.4 Company Stock Fund
The Company Stock Fund shall be invested by the Trustee in a
pooled investment account consisting of Shares and the Money
Market Fund; provided however, that the Trustee may invest such
portion in the Money Market Fund as may, from time to time, be
Page 33<PAGE>
<PAGE>
determined necessary to maintain liquidity and operation of the
Plan. The Trustee may also receive and retain in the Company
Stock Fund any Shares issued as a stock dividend or stock split,
or in any other reclassification of Shares, and any warrant,
right, option or similar instrument which gives the holder the
right to acquire any Shares under any circumstances, distributed
on or in respect of any Shares held in the Company Stock Fund
(and shall sell any other instrument or property so received
which does not give the holder the right to acquire Shares).
Contributions to the Company Stock Fund shall be applied by the
Trustee to the purchase of Shares as soon as is reasonably
possible after the Trustee's receipt thereof. Shares shall be
purchased on the open market at a price not greater than the
current market price per share on the New York Stock Exchange on
the date of purchase."
16. Section 6.5 is hereby amended in its entirety to read as follows:
"6.5 Equity Funds
The Equity Funds shall consist of such capital, common and
preferred stocks, bonds or other instruments convertible into
such stocks, or other equity securities (including, without
limitation, any common, collective or commingled trust fund
established and maintained by the Trustee for the assets of plans
qualified and exempt under Sections 401 and 501 of the Code,
which is invested primarily in equity securities), as may be
selected by the Trustee from time to time subject to consent
thereto by the Company; cash derived from Contributions which are
to be invested in such Equity Fund or Funds and from earnings on
or sales of other assets in the respective Equity Fund or Funds;
and such interim investments (including, without limitation,
money market funds, certificates of deposit, bankers'
acceptances and obligations of the United States Government) as
may be selected by the Trustee from time to time. All assets in
the Equity Funds shall be held in the name of the Trustee, or a
nominee."
17. Section 6.6 is hereby amended in its entirety to read as follows:
"6.6 Fixed Income Fund
The Fixed Income Fund shall consist of assets which are invested
or held for investment intended to provide income on a fixed
income basis, including, but not limited to, short-term and long-
term governmental or corporate obligations, trust and
participation certificates, mortgages and such interim
investments (including, without limitation, money market funds,
certificates of deposit, bankers' acceptances and obligations of
the United States Government) as may be selected by the Trustee
from time to time. The Trustee is also specifically authorized
from time to time upon consent by the Company to invest all or
part of the Fixed Income Fund in any common, collective or
commingled trust fund established and maintained by the Trustee
for the assets of plans qualified and exempt under Sections 401
and 501 of the Code, which is invested primarily in fixed-income
securities; and to purchase or hold one or more guaranteed
investment contracts providing for the accumulation of
contributions thereunder at rates of interest which may be
changed from time to time. All assets in the Fixed Income Fund
shall be held in the name of the Trustee, a nominee or in bearer
form."
Page 34<PAGE>
<PAGE>
18. Section 6.7 is hereby amended in its entirety to read as follows:
"6.7 Money Market Fund
The Money Market Fund shall consist of assets purchased or held
for investment by the Trustee, which are invested or held by the
Trustee, and which are intended to earn income based upon then
prevailing money market interest rates. Such assets may include,
without limitation, short-term securities backed by the United
States Government, governmental or corporate obligations,
certificates of deposit, bankers' acceptances, commercial paper,
repurchase agreements, and money market certificates. The
Trustee is also specifically authorized from time to time
upon consent by the Company to invest all or part of the Money
Market Fund in any common, collective or commingled trust fund
established and maintained by the Trustee for the assets of plans
qualified and exempt under Sections 401 and 501 of the Code,
which is invested primarily in securities intended to earn income
based upon then prevailing money market rates. All assets in
the Money Market Fund shall be held in the name of the Trustee, a
nominee or in bearer form."
19. Section 6.10 is hereby amended in its entirety to read as follows:
"6.10 Reports to Participants
The Administrator shall furnish each Participant, at least
quarterly, a statement of his Account, showing, at a minimum,
the number of whole and fractional Shares credited thereto,
whether there are other investments in the Account, and if so,
identifying such investments (by Investment Fund or item), and
the market value of the Account and of each separate portion
thereof as of the end of such period."
20. Section 7.3(a) and (b) are hereby amended in their entirety to read as
follows:
"7.3 Special Limitation On Contributions For Any Participant For Any
Plan Year
The Additions made to a Participant's Account under Article V
with respect to any Plan Year, which shall be the Limitation Year
for the purpose of Code Section 415, shall not exceed the
limitations described in this Section 7.3.
(a) For purposes of this Section 7.3, "Additions" for any Plan
Year means the total of Contributions allocated to a
Participant's Account for such Plan Year, plus for Plan
Years beginning after September 30, 1987, the Employee's
after-tax contributions, if any, to the Participant's
Account.
(b) The amount of such Additions with respect to any Participant
for any Plan Year shall not exceed the lesser of:
(i) Thirty thousand dollars ($30,000) (or such greater
amount allowed by the Secretary of Treasury for Cost of
Living increases after September 2, 1974), or
(ii) Twenty-five percent (25%) of the Participant's
Compensation for such Plan Year, excluding for this
purpose for Plan Years beginning before 1998 any salary
Page 35<PAGE>
<PAGE>
amounts deferred by said Participant under this Plan,
as the same may be hereafter amended, supplemented, or
replaced.
In applying the foregoing limitation, the Administrator
shall take into account all defined contribution plans
of the Company."
21. A new Section 7.8 is hereby added to read as follows:
"7.8 Unit Valuations
The Administrator may establish unit values for one or more
Investment Funds, or portion thereof, and maintain each
Participant's interest in such Investment Fund in units in
accordance with such rules and procedures as the
Administrator deems appropriate. To the extent that unit
accounting is utilized for any Investment Fund or portion
thereof, the value of a Participant's interest in the Investment
Fund at any time shall be an amount equal to the value of a
unit of such Investment Fund multiplied by the number of units
then credited to the Participant plus such portion of the
Participant's interest in such Investment Fund which is not
accounted for in units."
22. Effective October 1, 1997, Section 10.1(a)(ii) is hereby amended in
its entirety to read as follows:
"(ii) in the case of a Participant whose entire Account balance
exceeds $5,000, for a period of not more than five (5) years
following cessation of employment, or to age sixty-five (65), if
later; in either which case such Participant may, subject to the
provisions of subclause (ii) of subsection (c) of Section 10.2
hereof, elect, upon at least thirty (30) days advance written notice,
to have his then entire Account balance distributed to him at any
time during either such elected deferral period."
23. The final sentence of Section 10.2(b) is amended to read as follows:
"Interests in the Equity Fund or Funds, the Fixed Income Fund and the
Money Market Fund shall always be distributed in cash."
24. The seventh complete sentence of Section 10.2(c)(ii) is amended to
read as follows:
"Minimum distributions shall be withdrawn from each Investment Fund or
Funds in the same proportion as the balance of the Investment Funds
bear to each other."
25. The final sentence of Section 10.2(d) is amended to read as follows:
"Participant and/or spousal consent shall not be required if
distribution is being made because the Participant's account balance
is less than $5,000."
26. Section 10.2(e) is amended in its entirety as follows:
"(e) Payment to an alternate payee pursuant to a Qualified Domestic
Relations Order shall be made in one lump-sum payment, as soon
as administratively feasible after the Administrator determines
Page 36<PAGE>
<PAGE>
that the domestic relations order is a Qualified Domestic
Relations Order (as defined in Section 414(p) of the Code), and
after the Administrator has delivered notice of the distribution
to the alternate payee (as described by Section 10.2(f) of the
Plan), in an amount specified in such domestic relations order.
Payment to an alternate payee may be made before the time the
Participant's vested account balance becomes payable to the
Participant.
To the extent the Qualified Domestic Relations Order requires
payment of all or any portion of a Participant's account to an
alternate payee on or after the Participant's earliest
retirement age (as defined in Section 414(p) of the Code), such
amount shall be segregated into a separate account for such
alternate payee and shall be invested among the respective
Investment Funds in the same ratio as the Participant's account
immediately prior to such segregation, and, if directed
investments are available, the alternate payee shall then be
entitled to direct the investment of the segregated funds.
Payment shall then be made to the alternate payee at the time
and in the form specified in the Qualified Domestic Relations
Order."
27. Section 10.3(c)(iv) is hereby amended in its entirety to read as
follows:
"(iv) If a Participant, who has one outstanding loan, applies for a
hardship withdrawal and if the amount necessary to satisfy the
Participant's financial hardship is not in excess of the
additional loan amount allowable under Section 10.4(a), then
the Participant shall borrow such additional amount by applying
for a second loan from the Plan instead of taking a hardship
withdrawal."
28. Section 10.3(c)(v) is hereby amended in its entirety to read as
follows:
"(v) If a Participant has two outstanding loans and applies for a
hardship withdrawal, such hardship withdrawal may be permitted
up to the amount of the hardship and subject to the limitations
of Section 10.3(a). If a Participant has one outstanding loan
and if the amount of the Participant's financial hardship
exceeds the maximum loan amount allowable under Section 10.4,
then a hardship withdrawal may be permitted up to the amount of
hardship and subject to the limitations of Section 10.3(a)."
29. Section 10.3(c)(vi) is hereby amended in its entirety to read as
follows:
"(vi) The withdrawal shall be made from each Investment Fund or Funds
in the same proportion as the balance of the Investment Funds
bear to each other."
30. Section 10.3(c)(viii) is hereby amended in its entirety to read as
follows:
"(viii) A Participant who receives a hardship distribution, as
provided in this subsection (c), or who has an outstanding
loan and receives an additional loan to relieve a hardship,
Page 37<PAGE>
<PAGE>
as provided in subclause (iv) of this subsection (c), shall
not be permitted to make salary deferrals pursuant to this
Plan until the first payroll date of the calendar month
following the expiration of a twelve (12) month period after
receipt of either such hardship distribution or such new loan
in lieu of the hardship distribution. The Participant must
give the Administrator at least ten (10) days advance notice
to resume salary deferrals."
31. Section 10.4(b) is hereby amended in its entirety to read as follows:
"(b) The loan may be applied for over the telephone, shall be
evidenced by a Promissory Note on a form available from the
Administrator, shall bear interest at a rate comparable to
the prevailing interest rate charged by commercial lenders for
similar loans, shall be secured by the Participant's Account,
and shall be repayable in installments, by payroll deductions,
over a period not to exceed five (5) years from the date of such
loan, or not to exceed ten (10) years in the case of a loan for
the purchase of the Participant's primary residence. If the
Participant is on unpaid leave, payments must be made monthly
and must be received by the Payroll Department no later than
three (3) workdays before the first calendar day of the month
for which the payment is being made. The note shall be subject
to repayment in whole or in part at any time without premium or
penalty and shall become due and payable in full when the
Participant ceases to be an Employee."
32. Section 10.4(e) is hereby amended in its entirety to read as follows:
"(e) An application for a loan may be received at any time, and an
approved loan shall be disbursed as soon as administratively
practicable thereafter. Except as provided by Section 10.3(c),
a new loan cannot begin until after repayment in full of the
prior loan. The dollar amounts to be loaned shall be taken from
the investment accounts in the same proportion as the Investment
Fund balances bear to each other."
33. Section 10.4(g) is hereby amended in its entirety to read as follows:
"(g) Once the Administrator has approved a loan application for a
Participant and has determined the rate of interest such loan
will bear, the Administrator will provide the Participant with
the form of Promissory Note to evidence such loan and as a
precondition to the disbursement of such loan, the Participant
shall sign and date such Promissory Note and return it to the
Administrator within thirty (30) days for disbursement within
five (5) days thereafter. A copy of such Note shall be retained
by the Participant."
34. Effective February 1, 1996, Section 10.4(h) is hereby amended in its
entirety to read as follows:
"(h) For the purposes of this Section 10.4, the Plan Administrator is
the Treasurer and Assistant Secretary. The Administrator will
impose no specific limitations on the type or amount of
Participant loans, except as provided in Section 10.4(a) above."
35. A new paragraph is hereby added at the end of subsection (a) of
Section 17.3 to read as follows:
Page 38<PAGE>
<PAGE>
"The Administrator shall also have the authority and discretion to
engage an Administrative Delegate who shall perform, without
discretionary authority or control, administrative functions within
the framework of policies, interpretations, rules, practices, and
procedures made by the Administrator or other Plan fiduciary. Any
action made or taken by the Administrative Delegate may be appealed by
an affected Participant to the Administrator in accordance with the
claims review procedures provided in Section 14.6. Any decisions
which call for interpretations of Plan provisions not previously made
by the Administrator shall be made only by the Administrator.
Administrative Delegate means one or more persons or institutions to
whom the Administrator has delegated certain administrative functions
pursuant to a written agreement."
36. Section 17.5 is hereby amended in its entirety to read as follows:
"17.5 Valuation Of Shares
The value of a fractional Share for purposes of Section 10.2(b)
of this Plan shall be based on the value of a full Share at the
closing price per Share on the New York Stock Exchange on the
Valuation Date which is one day prior to distribution."
DOUGLAS H. YAEGER
_______________________________________
Title: President and Chief
Operating Officer
GERALD T. MCNEIVE, JR.
_______________________________________
Title: Senior Vice President - Finance
and General Counsel
Page 39
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 496,966
<OTHER-PROPERTY-AND-INVEST> 35,238
<TOTAL-CURRENT-ASSETS> 185,667
<TOTAL-DEFERRED-CHARGES> 110,639
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 828,510
<COMMON> 19,494
<CAPITAL-SURPLUS-PAID-IN> 38,949
<RETAINED-EARNINGS> 202,119
<TOTAL-COMMON-STOCKHOLDERS-EQ> 260,562
1,960
0
<LONG-TERM-DEBT-NET> 179,256
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 136,157
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 250,575
<TOT-CAPITALIZATION-AND-LIAB> 828,510
<GROSS-OPERATING-REVENUE> 149,696
<INCOME-TAX-EXPENSE> 5,064
<OTHER-OPERATING-EXPENSES> 131,156
<TOTAL-OPERATING-EXPENSES> 136,220
<OPERATING-INCOME-LOSS> 13,476
<OTHER-INCOME-NET> 1,535
<INCOME-BEFORE-INTEREST-EXPEN> 15,011
<TOTAL-INTEREST-EXPENSE> 5,304
<NET-INCOME> 9,707
24
<EARNINGS-AVAILABLE-FOR-COMM> 9,683
<COMMON-STOCK-DIVIDENDS> 5,905
<TOTAL-INTEREST-ON-BONDS> 3,347
<CASH-FLOW-OPERATIONS> (18,752)
<EPS-PRIMARY> .55
<EPS-DILUTED> .55
<FN>
Capital-surplus-paid-in is net of $24,017 of treasury stock.
Page 40
</TABLE>
