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, 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
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.
18,877,987 shares, Common Stock, par value $1 per share at 2/11/00.
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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, 1999.
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<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED INCOME
(UNAUDITED)
(In Thousands, Except Per Share Amounts)
<CAPTION>
Three Months Ended
December 31,
1999 1998
---- ----
<S> <C> <C>
Operating Revenues:
Utility operating revenues $144,659 $149,759
Non-utility operating revenues 6,775 3,753
--------------------
Total Operating Revenues 151,434 153,512
--------------------
Operating Expenses:
Utility operating expenses
Natural and propane gas 81,596 86,704
Other operation expenses 22,653 23,667
Maintenance 4,708 5,082
Depreciation and amortization 5,495 5,287
Taxes, other than income taxes 10,372 10,520
--------------------
Total utility operating expenses 124,824 131,260
Non-utility operating expenses 6,595 3,640
--------------------
Total Operating Expenses 131,419 134,900
--------------------
Operating Income 20,015 18,612
Other Income and Income Deductions-Net (Note 5) 776 1,964
--------------------
Income Before Interest and Income Taxes 20,791 20,576
--------------------
Interest Charges:
Interest on long-term debt 3,784 3,347
Other interest charges 2,189 1,957
--------------------
Total Interest Charges 5,973 5,304
--------------------
Income Before Income Taxes 14,818 15,272
Income Taxes (Note 3) 5,237 5,565
--------------------
Net Income 9,581 9,707
Dividends on Preferred Stock 24 24
--------------------
Earnings Applicable to Common Stock $ 9,557 $ 9,683
====================
Average Number of Common Shares Outstanding 18,878 17,628
Earnings Per Share of Common Stock $ .51 $ .55
Dividends Declared Per Share of Common Stock $.335 $.335
<FN>
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
<CAPTION>
Dec. 31 Sept. 30
1999 1999
---- ----
(Thousands of Dollars)
(UNAUDITED)
ASSETS
<S> <C> <C>
Utility Plant $888,716 $876,431
Less: Accumulated depreciation and amortization 361,618 357,053
--------------------
Net Utility Plant 527,098 519,378
--------------------
Other Property and Investments 26,537 26,122
--------------------
Current Assets:
Cash and cash equivalents 3,411 9,352
Accounts receivable - net 102,828 42,028
Materials, supplies, and merchandise at avg cost 6,250 5,680
Natural gas stored underground for current use
at LIFO cost 57,847 64,112
Propane gas for current use at FIFO cost 12,202 11,697
Prepayments and other 4,507 2,309
Deferred income taxes 9,058 10,216
--------------------
Total Current Assets 196,103 145,394
--------------------
Deferred Charges:
Prepaid pension cost 85,293 80,994
Regulatory assets 60,425 58,024
Other 1,765 1,707
--------------------
Total deferred charges 147,483 140,725
--------------------
Total Assets $897,221 $831,619
====================
<FN>
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET (Continued)
<CAPTION>
Dec. 31 Sept. 30
1999 1999
---- ----
(Thousands of Dollars)
(UNAUDITED)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common stock (20,743,625 shares issued) $ 20,744 $ 20,744
Paid-in capital 85,831 85,826
Retained earnings 203,081 199,848
Accumulated other comprehensive income (77) (77)
Treasury stock, at cost (1,865,638 shares held) (24,017) (24,017)
--------------------
Total common stock equity 285,562 282,324
Redeemable preferred stock 1,913 1,923
Long-term debt (less sinking fund requirements) 204,345 204,323
--------------------
Total Capitalization 491,820 488,570
--------------------
Current Liabilities:
Notes payable 152,700 84,700
Accounts payable 36,043 31,716
Refunds due customers 1,191 1,425
Advance customer billings 10,451 15,665
Current portion of preferred stock - 35
Taxes accrued 3,501 5,804
Unamortized purchased gas adjustments 6,099 8,956
Other 21,055 25,104
--------------------
Total Current Liabilities 231,040 173,405
--------------------
Deferred Credits and Other Liabilities:
Deferred income taxes 128,027 124,756
Unamortized investment tax credits 6,500 6,586
Pension and postretirement benefit costs 20,889 19,259
Other 18,945 19,043
--------------------
Total Deferred Credits and Other Liabilities 174,361 169,644
--------------------
Total Capitalization and Liabilities $897,221 $831,619
====================
<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,
1999 1998
---- ----
(Thousands of Dollars)
<S> <C> <C>
Operating Activities:
Net Income $ 9,581 $ 9,707
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,521 5,317
Deferred income taxes and investment tax credits 5,000 2,518
Other - net 127 (1,868)
Changes in assets and liabilities:
Accounts receivable - net (60,800) (53,149)
Unamortized purchased gas adjustments (2,857) (4,243)
Deferred purchased gas costs (2,023) 14,990
Advance customer billings - net (5,214) (24)
Accounts payable 4,327 13,205
Refunds due customers (234) (2,051)
Taxes accrued (2,303) (3,119)
Natural gas stored underground 6,265 4,040
Other assets and liabilities (10,562) (4,075)
--------------------
Net cash used in operating activities $(53,172) $(18,752)
--------------------
Investing Activities:
Construction expenditures (13,401) (11,249)
Investments - non-utility (216) 967
Employee benefit trusts (452) (540)
Other (312) (308)
--------------------
Net cash used in investing activities $(14,381) $(11,130)
--------------------
Financing Activities:
Issuance of short-term debt - net 68,000 37,657
Dividends paid (6,348) (5,842)
Preferred stock reacquired and other (40) -
---------------------
Net cash provided by financing activities $ 61,612 $ 31,815
---------------------
Net Increase in Cash and Cash Equivalents $ (5,941) $ 1,933
Cash and Cash Equivalents at Beg of Period 9,352 3,718
--------------------
Cash and Cash Equivalents at End of Period $ 3,411 $ 5,651
====================
Supplemental Disclosure of Cash Paid/(Refunded)
During the Period for:
Interest $10,161 $8,396
Income taxes (28) (15)
<FN>
See notes to consolidated financial statements.
</TABLE>
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LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, this interim report includes all
adjustments (consisting only of normal recurring accruals) necessary
for the fair presentation of the results of the periods covered.
2. Laclede Gas Company is a natural gas distribution utility having a
material seasonal cycle. As a result, this interim statement of
consolidated income is not necessarily indicative of annual results nor
representative of succeeding quarters of the fiscal year. Due to the
seasonal nature of the Company's business, earnings are typically
concentrated in the first six months of the fiscal year, which generally
corresponds with the heating season. Fiscal year earnings will likely
be lower than earnings during the first six months of the fiscal year,
reflecting typically lower summer sales volumes, partially offset by
lower operating expenses.
3. Net provisions for income taxes were charged as follows during the
periods set forth below:
<TABLE>
<CAPTION> Three Months Ended
December 31,
---------------------
1999 1998
---- ----
(Thousands of Dollars)
<S> <C> <C>
Federal
Current $ 212 $ 2,615
Deferred 4,201 2,120
State and Local
Current 25 432
Deferred 799 398
--------------------
Total $ 5,237 $ 5,565
====================
</TABLE>
4. The Missouri Public Service Commission extended the Company's Gas Supply
Incentive Plan for an additional year, effective October 1, 1999, with
specific modifications. Under the modified plan, the Company continues
to share with its customers certain gains and losses related to the
acquisition of its gas supply assets. Additionally, Laclede is now
permitted to retain all income resulting from sales made outside of its
traditional service area.
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Results of the Plan and off system sales activities are set forth below.
These results may not be representative of results in future periods due
to the volatile and seasonal nature of these efforts.
<TABLE>
<CAPTION> Three Months Ended
December 31,
----------------------
1999 1998
---- ----
(Thousands of Dollars)
<S> <C> <C>
Net Benefits to Customers
and Shareholders $8,870 $6,796
-------------------------------------------------------------
Shareholder Benefits
Off system and Incentive Plan Revenues $9,014 $6,098
Off system and Incentive Plan Expense 6,502 4,885
------ ------
Company Share - Pretax Income $2,512 $1,213
====== ======
</TABLE>
5. Other Income and Income Deductions - Net
<TABLE>
<CAPTION> Three Months Ended
December 31,
----------------------
1999 1998
---- ----
(Thousands of Dollars)
<S> <C> <C>
Gain on Sale of Property $ - $1,911
Allowance on Funds Used For Construction 257 121
Other 519 (68)
------ ------
Other Income and Income Deductions - Net $ 776 $1,964
====== ======
</TABLE>
A pre-tax gain of $1.9 million was recognized in the quarter ended
December 31, 1998 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.
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6. Laclede Gas Company is a public utility engaged in the retail
distribution of natural gas. 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. There are no material
intersegment revenues. Assets for the periods presented did not change
significantly.
<TABLE>
<CAPTION> Gas All Other
(Thousands of Dollars) Utility (Non-Utility) Eliminations Consolidated
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Three Months Ended
December 31, 1999
Operating revenues $144,659 $ 6,775 $ - $151,434
Net income (loss) 9,664 (83) - 9,581
Total assets 897,044 13,758 (13,581) 897,221
<S> <C> <C> <C> <C>
Three Months Ended
December 31, 1998
Operating revenues $149,759 $ 3,753 $ - $153,512
Net income 9,027 680 - 9,707
Total assets 823,995 12,195 (7,280) 828,510
</TABLE>
7. 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
December 31, 1999, the Company has paid $675,000 and reserved
$460,000 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
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 has been completed. 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 $363,000 and reserved an additional $171,000. The
Company has requested that other former site owners and operators
participate in the cost of any site investigation. One former owner and
operator agreed to participate in these costs and has reimbursed
the Company to date for $127,000. The Company plans to seek
proportionate reimbursement of all costs relative to this site from any
other potentially responsible parties if practicable.
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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.
Previously, the MoPSC approved the Company's use of a cost deferral
mechanism for these costs. Deferral of such costs terminated July 31,
1999, and any subsequent costs will be charged to expense. The
Commission authorized previously deferred costs to be included in rates
(without return on investment) and amortized over a fifteen-year period,
effective with the implementation of new rates on December 27, 1999.
8. 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 filed a response in opposition to the
staff's recommendation, and hearings are scheduled before the Commission
on this matter in the spring of 2000. Laclede believes that there is no
basis for staff's recommendation and is confident that the Company will
ultimately prevail on the merits.
9. In January 2000, Laclede Energy Resources, Inc., a wholly-owned non-
utility subsidiary, finalized a multi-year arrangement with UtiliCorp
United, Inc. (UtiliCorp) to provide a significant portion of the gas
supply for a natural gas fired power plant currently under construction
in Pleasant Hill, Missouri. The four-year agreement is scheduled to go
into effect June 1, 2001. LER will provide UtiliCorp with up to 5
billion cubic feet of natural gas annually - the equivalent of about 5%
of the annual sendout of Laclede Gas Company in a normal year - and will
manage fluctuations in UtiliCorp's gas-purchase requirements on an as-
needed basis to satisfy summer power needs.
10. 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.
11. This Form 10-Q should be read in conjunction with the Notes to
Consolidated Financial Statements contained in the Company's 1999 Form
10-K.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Quarter Ended December 31, 1999
- -------------------------------
Temperatures for the quarter ended December 31, 1999, which is the first
quarter of Laclede's fiscal year 2000, equaled the fourth warmest comparable
quarter in the last 100 years with 18% warmer than normal weather.
Temperatures this year were 5% warmer than the same quarter last year.
Laclede was able to offset a portion of such weather impact through the
continued success of its cost-control program, as well as improved results
related to the Company's Gas Supply Incentive Plan.
Earnings per share based on average shares outstanding were $.51 per share
this quarter compared with $.55 per share during the same period last year.
However, despite the warmer weather this year, earnings from the Company's
core gas distribution operations actually were greater in the first quarter
of fiscal 2000 than in last year's first quarter, which reflected a one-time
$.07 per share gain from the November 1998 sale of Laclede's interest in the
Centre Park 40 property, a real estate venture of a non-utility subsidiary.
Utility operating revenues for the quarter ended December 31, 1999 were
$144.7 million compared with $149.8 million for the quarter ended December
31, 1998. The $5.1 million, or 3.4%, 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). These decreases were partially offset by
increased off system sales revenues this year. System therms sold and
transported decreased by 14.4 million therms, or 4.9%, below the quarter
ended December 31, 1998.
Non-utility operating revenues for this quarter increased $3.0 million from
those revenues for the same quarter last year mainly due to increased gas
marketing sales by Laclede Energy Resources, Inc., a wholly-owned non-
utility subsidiary of the Company.
Utility operating expenses for the quarter ended December 31, 1999 decreased
by $6.4 million, or 4.9%, below the same quarter last year. Natural and
propane gas expense this quarter decreased $5.1 million, or 5.9%, below last
year primarily due to reduced volumes purchased for sendout (mainly due to
the warmer weather) and lower rates charged by the Company's suppliers.
These decreases were partially offset by increased off system sales gas
expense. Other operation and maintenance expenses decreased $1.4 million,
or 4.8%, principally due to lower net pension costs, a lower provision for
uncollectible accounts, lower maintenance charges and other decreases in the
costs of doing business. These decreases were slightly offset by increased
group insurance charges and higher wage rates. Depreciation and amortization
expense increased 3.9% primarily due to additional depreciable property.
Taxes, other than income taxes, decreased 1.4% mainly due to lower gross
receipts taxes (reflecting decreased revenues), partially offset by higher
real estate and personal property taxes this quarter.
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Non-utility operating expenses increased $3.0 million this quarter mainly
due to increased gas expense associated with gas marketing sales by Laclede
Energy Resources, Inc., a wholly-owned non-utility subsidiary of the
Company.
Other income and income deductions-net decreased $1.2 million compared to
the same quarter last year primarily due to a pre-tax gain of approximately
$1.9 million recognized in the same quarter last year 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. The
12.6% increase in interest expense is mainly due to higher interest on long-
term debt resulting from the issuance of $25 million of 7% first mortgage
bonds in June 1999 and increased short-term interest expense due to higher
rates.
The reduction in income taxes is mainly due to lower pre-tax income.
Updated Regulatory Matters
- --------------------------
On December 14, 1999 the Missouri Public Service Commission (MoPSC) issued
its report and order in the Company's 1999 rate case, in which the
Commission: (1) approved a partial settlement reached earlier in the year by
the parties on some issues (2) determined certain contested issues and (3)
authorized the Company to increase its rates for gas service by $11.24
million on an annual basis. The new rates and settlement became effective
for service rendered on and after December 27, 1999. Under the partial
settlement, the Company discontinued deferring certain costs for future
recovery. As approved by the Commission, previously deferred costs will be
recovered (without return on investment) beginning with implementation of
the new rates. The deferral of certain costs was eliminated going forward,
as the ongoing expenses associated with those specific areas are included in
the newly approved rates.
The MoPSC extended the Company's Gas Supply Incentive Plan for an additional
year, effective October 1, 1999, with specific modifications. Under the
modified plan, the Company continues to share with its customers certain
gains and losses related to the acquisition of its gas supply assets.
Additionally, Laclede is now permitted to retain all income resulting from
sales made outside its traditional service area. These activities continue
to provide significant benefits to both the Company's customers and
shareholders. During the quarter ended December 31, 1999, Laclede's efforts
resulted in cost savings of $6.4 million for our customers and $2.5 million
in pretax income to our shareholders.
Liquidity and Capital Resources
- -------------------------------
The Company's short-term borrowing requirements typically peak during colder
months when the Company borrows money to cover the gap between when the
Company purchases its natural gas and when the Company's customers pay the
Company for that gas. These short-term cash requirements have traditionally
been met through the sale of commercial paper supported by lines of credit
with banks. In January 2000, 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, 2001, with repayment of any loans outstanding on that
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date permitted from April 30, 2001 to June 30, 2001. This, along with $140
million of previously obtained supplemental lines of credit extending
through the fall of 2000, provides total lines of credit of $170 million for
the 1999-2000 heating season.
During fiscal 2000 to date, the Company sold commercial paper aggregating to
a maximum of $158.2 million at any one time, but did not borrow from the
banks under the aforementioned agreements. Short-term borrowings amounted
to $148.7 million at January 31, 2000.
Construction expenditures for utility purposes for the quarter were $13.4
million compared with $11.2 million for the same period last year.
Capitalization at December 31, 1999 increased $3.3 million since September
30, 1999 and consisted of 58.1% common stock equity, .4% preferred stock
equity and 41.5% long-term debt.
The seasonal effect on the Company's financial position affects the
comparison of certain balance sheet items at December 31, 1999 and at
September 30, 1999 such as Accounts Receivable - Net, Gas Stored
Underground, Notes Payable, Accounts Payable and Advance Customer Billings.
Environmental Matters
- ---------------------
The Company is subject to various environmental laws and regulations. To
date these laws and regulations and the Company's involvement with
environmental regulatory agencies relative to two sites, one currently owned
and one previously owned, have not materially affected the Company's
financial position and results of operations. For a more detailed
discussion of these matters, see Note 7 to the unaudited Notes to
Consolidated Financial Statements on page 9.
Previously, the MoPSC approved the Company's use of a cost deferral
mechanism for its costs relative to environmental matters. Deferral of such
costs terminated July 31, 1999, and any subsequent costs will be charged to
expense. The Commission authorized previously deferred costs to be included
in rates (without return on investment) and amortized over a fifteen-year
period, effective with the implementation of new rates on December 27, 1999.
Year 2000 Issue
- ---------------
After more than three years of preparing for any potential year 2000
problems that threatened non-compliant computer programs and processes, the
Company met the turn of the century without incident. Its computer-based
systems operated normally and continue to do so.
The Company incurred total costs of approximately $20.7 million through
December 31, 1999 for replacements and modifications of various computer
systems. Nearly all of this amount was capitalized. The Company used funds
from internally generated cash flows and short-term borrowings to pay these
costs. In the 1998 rate case, the Missouri Public Service Commission
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
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<PAGE>
capitalized items. As a result of the 1999 rate case, however, deferral of
these costs ceased December 27, 1999. In 1999, the Commission authorized
previously deferred costs to be included in rates (without return on
investment) and amortized over a fifteen-year period effective with the
implementation of new rates on December 27, 1999.
Other Matters
- -------------
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 and its direct testimony on
January 5, 2000, 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
this year. Laclede is unable to predict at this time what action the MoPSC
may take. The Company currently faces one lawsuit relative to direct buried
copper service lines.
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 filed a response in opposition to the staff's recommendation,
and hearings are scheduled before the Commission on this matter in the
spring of 2000. Laclede believes that there is no basis for staff's
recommendation and is confident that the Company will ultimately prevail on
the merits.
In January 2000, Laclede Energy Resources, Inc., a wholly-owned non-utility
subsidiary, finalized a multi-year arrangement with UtiliCorp United, Inc.
(UtiliCorp) to provide a significant portion of the gas supply for a natural
gas fired power plant currently under construction in Pleasant Hill,
Missouri. The four-year agreement is scheduled to go into effect June 1,
2001. LER will provide UtiliCorp with up to 5 billion cubic feet of natural
gas annually - the equivalent of about 5% of the annual sendout of Laclede
Gas Company in a normal year - and will manage fluctuations in UtiliCorp's
gas-purchase requirements on an as-needed basis to satisfy summer power
needs.
Forward-Looking Statements
- --------------------------
Certain statements in this 10-Q 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
Page 14
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<PAGE>
-- 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
- the results of litigation
- 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.
Page 15
<PAGE>
<PAGE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
Part II
OTHER INFORMATION
Page 16
<PAGE>
<PAGE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
Item 1. Legal Proceedings
For a description of the Company's environmental matters, see Note
7 to the unaudited Notes to Consolidated Financial Statements on
page 9. For a description of the Company's pending regulatory
matters, see "Updated Regulatory Matters" and "Other Matters" in
the "Management's Discussion and Analysis" section on pages 12 and
14.
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, 1999.
Item reported:
On October 28, 1999 the Company issued its news release announcing
its financial results as of September 30, 1999. The news release
was attached as Exhibit 1 to the Form 8-K.
Date of Report (Date of Earliest Event Reported):
October 28, 1999
Page 17
<PAGE>
<PAGE>
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LACLEDE GAS COMPANY
Date: February 11, 2000
G. T. McNeive, Jr.
----------------------------
G. T. McNeive, Jr.
Sr. Vice President - Finance
and General Counsel
(Authorized Signatory and
Chief Financial Officer)
Page 18
<PAGE>
<PAGE>
Index to Exhibits
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------- ------- ------------
10.01 Amendment to the Laclede Gas Company 20
Restricted Stock Plan for Non-employee
Directors adopted December 16, 1999.
27 Financial Data Schedule UT 21
Page 19
Exhibit 10.01
EXTENSION OF RESTRICTED STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS
WHEREAS, this Corporation has previously adopted the Laclede Gas
Company Restricted Stock Plan for Non-Employee Directors, which became
effective January 25, 1990 and was extended through January 26, 2000; and
WHEREAS, this Corporation desires to extend the term of the Plan
through the period ending January 31, 2005, subject to further extension of
the Corporation's Board of Directors;
NOW, THEREFORE, BE IT RESOLVED, that Section 3 of Article V of the Plan
is hereby amended, effective on December 16, 1999 by deleting the date
"January 26, 2000" in such section and substituting, in lieu of such deleted
date, the date "January 31, 2005," and
FURTHER RESOLVED, that except as expressly amended and extended above,
the Plan is hereby ratified, confirmed and approved under the same terms and
conditions as existed immediately prior to the above amendments; and
FURTHER RESOLVED, that the officers of the Corporation are hereby
authorized and directed, jointly and severally, for and in the name and on
behalf of the Corporation and without the need for any countersignatures,
unless otherwise required by applicable law, to execute and deliver any and
all certificates, agreements and other documents; take any and all steps and
do any and all things which they may deem necessary or appropriate to
effectuate the purposes of the foregoing resolutions and the extension and
amendment to the Plan set forth above.
Page 20
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> DEC-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 527,098
<OTHER-PROPERTY-AND-INVEST> 26,537
<TOTAL-CURRENT-ASSETS> 196,103
<TOTAL-DEFERRED-CHARGES> 147,483
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 897,221
<COMMON> 20,744
<CAPITAL-SURPLUS-PAID-IN> 61,814
<RETAINED-EARNINGS> 203,081
<TOTAL-COMMON-STOCKHOLDERS-EQ> 285,562
1,913
0
<LONG-TERM-DEBT-NET> 204,345
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 152,700
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 252,701
<TOT-CAPITALIZATION-AND-LIAB> 897,221
<GROSS-OPERATING-REVENUE> 151,434
<INCOME-TAX-EXPENSE> 5,237
<OTHER-OPERATING-EXPENSES> 131,419
<TOTAL-OPERATING-EXPENSES> 136,656
<OPERATING-INCOME-LOSS> 14,778
<OTHER-INCOME-NET> 776
<INCOME-BEFORE-INTEREST-EXPEN> 15,554
<TOTAL-INTEREST-EXPENSE> 5,973
<NET-INCOME> 9,581
24
<EARNINGS-AVAILABLE-FOR-COMM> 9,557
<COMMON-STOCK-DIVIDENDS> 6,324
<TOTAL-INTEREST-ON-BONDS> 3,784
<CASH-FLOW-OPERATIONS> (53,172)
<EPS-BASIC> .51
<EPS-DILUTED> .51
<FN>
Capital-surplus-paid-in is net of $24,017 of treasury stock.
Page 21
</TABLE>
