<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1994 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 1-3562
UTILICORP UNITED INC.
(Exact name of registrant as specified in its charter)
DELAWARE 44-0541877
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3000 Commerce Tower, 911 Main, Kansas City, Missouri 64105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (816) 421-6600
(Former name, former address and former fiscal year,
if changed since last report)
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.
Class Outstanding at November 10, 1994
Common Stock, $1 par value 44,827,135
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Information regarding the condensed consolidated financial
statements is set forth on pages 3 through 11.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and
results of operations can be found on pages 12 through 16.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Legal proceedings can be found on page 17.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits and reports on Form 8-K can be found on page 17.
2
<PAGE> 3
UTILICORP UNITED INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
IN MILLIONS, EXCEPT PER SHARE DATA 1994 1993
<S> <C> <C>
Revenues:
Electric operations $ 162.0 $ 160.3
Gas operations 66.6 79.2
Energy related businesses 86.5 90.6
Total revenues 315.1 330.1
Expenses:
Fuel used for generation 23.3 24.8
Power purchased 27.0 26.7
Gas purchased for resale 32.8 45.4
Other operating 56.2 50.8
Maintenance 12.0 12.0
Depreciation and amortization 20.0 19.4
Taxes, other than income taxes 19.8 18.8
Energy related businesses 75.6 83.2
Total expenses 266.7 281.1
Income from operations 48.4 49.0
Interest Charges and Other:
Long-term debt 21.9 21.8
Short-term debt and other interest 3.9 2.1
Minority interests .7 - -
Other (income) expense, net (.9) .4
Total interest charges and other 25.6 24.3
Income before income taxes 22.8 24.7
Income taxes 8.3 13.7
Net Income 14.5 11.0
Preference Dividends .5 1.8
Earnings Available for Common Shares $ 14.0 $ 9.2
Weighted Average Common Shares Outstanding:
Primary 44.82 41.76
Fully diluted 45.37 41.76
Earnings Per Common Share:
Primary $ .31 $ .22
Fully diluted .31 .22
Cash Dividends Per Common Share $ .43 $ .40
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
<TABLE>
<CAPTION>
UTILICORP UNITED INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
NINE MONTHS ENDED
SEPTEMBER 30,
IN MILLIONS, EXCEPT PER SHARE DATA 1994 1993
<S> <C> <C>
Revenues:
Electric operations $ 429.9 $ 417.4
Gas operations 447.8 475.6
Energy related businesses 246.3 247.4
Total revenues 1,124.0 1,140.4
Expenses:
Fuel used for generation 60.3 53.2
Power purchased 83.7 95.9
Gas purchased for resale 279.0 306.8
Other operating 162.0 153.3
Maintenance 36.2 33.4
Depreciation and amortization 59.5 56.3
Taxes, other than income taxes 56.5 54.5
Energy related businesses 220.1 224.9
Total expenses 957.3 978.3
Income from operations 166.7 162.1
Interest Charges and Other:
Long-term debt 65.9 66.6
Short-term debt and other interest 9.4 7.5
Minority interests 2.1 - -
Other income, net (7.8) (5.0)
Total interest charges and other 69.6 69.1
Income before income taxes 97.1 93.0
Income taxes 36.3 39.9
Net Income 60.8 53.1
Preference Dividends 2.9 5.5
Earnings Available for Common Shares $ 57.9 $ 47.6
Weighted Average Common Shares Outstanding:
Primary 43.83 40.33
Fully diluted 44.39 41.00
Earnings Per Common Share:
Primary $ 1.32 $ 1.18
Fully diluted 1.31 1.17
Cash Dividends Per Common Share $ 1.27 $ 1.20
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
<TABLE>
<CAPTION>
UTILICORP UNITED INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
TWELVE MONTHS ENDED
SEPTEMBER 30,
IN MILLIONS, EXCEPT PER SHARE DATA 1994 1993
<S> <C> <C>
Revenues:
Electric operations $ 559.4 $ 545.7
Gas operations 658.3 668.3
Energy related businesses 337.6 331.0
Total revenues 1,555.3 1,545.0
Expenses:
Fuel used for generation 79.9 72.2
Power purchased 112.2 126.5
Gas purchased for resale 415.6 438.2
Other operating 222.2 201.8
Maintenance 50.0 42.9
Depreciation and amortization 77.7 73.2
Taxes, other than income taxes 74.0 70.2
Energy related businesses 297.0 299.7
Restructuring charge 69.8 - -
Total expenses 1,398.4 1,324.7
Income from operations 156.9 220.3
Interest Charges and Other:
Long-term debt 88.5 87.4
Short-term debt and other interest 12.8 10.0
Gain on sale of subsidiary stock (47.8) - -
Minority interests 2.4 - -
Other income, net (19.0) (11.5)
Total interest charges and other 36.9 85.9
Income before income taxes 120.0 134.4
Income taxes 25.9 55.7
Net Income 94.1 78.7
Preference Dividends 4.3 7.2
Earnings Available for Common Shares $ 89.8 $ 71.5
Weighted Average Common Shares Outstanding:
Primary 43.36 39.05
Fully diluted 45.31 39.74
Earnings Per Common Share:
Primary $ 2.07 $ 1.83
Fully diluted 2.04 1.82
Cash Dividends Per Common Share $ 1.69 $ 1.60
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
<TABLE>
<CAPTION>
UTILICORP UNITED INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
DOLLARS IN MILLIONS 1994 1993
<S> <C> <C>
(unaudited)
UTILITY PLANT AND OTHER ASSETS
Utility Plant in Service:
Electric $ 1,533.6 $ 1,526.6
Gas 929.1 896.3
2,462.7 2,422.9
Less-accumulated depreciation 904.3 865.0
Net utility plant in service 1,558.4 1,557.9
Construction work in progress 42.0 22.3
Total utility plant, net 1,600.4 1,580.2
Non-Regulated Property, Net:
Energy related 506.1 498.0
Non-regulated generating assets and other 217.5 183.6
Total non-regulated property 723.6 681.6
Current Assets:
Cash and cash equivalents 102.5 70.3
Accounts receivable, net 83.2 158.0
Accrued utility revenues 34.6 76.6
Fuel inventory, at average cost 79.0 63.1
Materials and supplies, at average cost 40.7 38.7
Prepayments and other 37.2 31.4
Total current assets 377.2 438.1
Deferred Charges 173.5 150.6
Total Utility Plant and Other Assets $ 2,874.7 $ 2,850.5
CAPITALIZATION AND LIABILITIES
Capitalization:
Common shareholders' equity $ 905.4 $ 851.7
Preference stock, not mandatorily redeemable 25.0 25.0
Preference stock, convertible and mandatorily redeemable - - 58.5
Preferred stock of subsidiary, retractable .4 .4
Long-term debt 1,006.3 1,009.7
Total capitalization 1,937.1 1,945.3
Current Liabilities:
Current maturities of long-term debt 1.0 1.8
Short-term debt 182.5 70.0
Accounts payable 262.1 392.5
Accrued taxes 39.6 9.3
Accrued interest 25.8 20.1
Other 64.0 52.1
Total current liabilities 575.0 545.8
Deferred Credits and Liabilities:
Deferred income tax liabilities 246.6 231.9
Investment tax credits 21.3 22.1
Minority interests 27.9 27.2
Other 66.8 78.2
Total deferred credits and liabilities 362.6 359.4
Total Capitalization and Liabilities $ 2,874.7 $ 2,850.5
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE> 7
<TABLE>
<CAPTION>
UTILICORP UNITED INC.
CONDENSED CONSOLIDATED STATEMENTS OF CAPITALIZATION
SEPTEMBER 30, DECEMBER 31,
DOLLARS IN MILLIONS 1994 1993
<S> <C> <C>
(unaudited)
Common Shareholders' Equity:
Common stock, par value $1 per share, authorized
100,000,000 shares, outstanding 44,826,713 shares
(42,021,160 at December 31, 1993) $ 44.8 $ 42.0
Premium on capital stock 773.9 722.4
Retained earnings 93.8 93.4
Currency translation adjustment (7.1) (6.1)
Total common shareholders' equity 905.4 851.7
Preference Stock, not mandatorily redeemable,
$2.05 series, without par value, authorized
10,000,000 shares, outstanding 1,000,000 shares 25.0 25.0
Preference Stock, convertible and mandatorily
redeemable, $1.775 series, no outstanding
shares (2,885,000 at December 31, 1993) - - 58.5
Preferred Stock of Subsidiary, retractable .4 .4
Long-Term Debt:
First mortgage bonds 23.0 36.1
Senior notes 875.0 875.0
Secured debentures 57.1 57.9
Subordinated debentures 21.8 23.9
Notes and other obligations 30.4 18.6
1,007.3 1,011.5
Less current maturities 1.0 1.8
Total long-term debt 1,006.3 1,009.7
Total Capitalization $ 1,937.1 $ 1,945.3
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE> 8
<TABLE>
<CAPTION>
UTILICORP UNITED INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
THREE MONTHS ENDED
September 30,
DOLLARS IN MILLIONS 1994 1993
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 14.5 $ 11.0
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation, depletion and amortization 38.8 37.0
Deferred taxes and investment tax credits 11.3 15.2
Changes in certain current assets and liabilities,
net of effects of acquisition:
Accounts receivable and accrued revenues 50.6 (4.6)
Accounts receivable sold (13.6) - -
Fuel and materials (26.2) (24.2)
Accounts payable (49.2) (9.8)
Accrued taxes 17.3 1.4
Other, including purchased gas adjustment (5.9) (1.1)
Changes in other assets and liabilities, net 7.9 7.4
Cash provided from operating activities 45.5 32.3
Cash Flows From Investing Activities:
Additions to utility plant (33.2) (19.7)
Purchase of utility operations (21.7) - -
Investment in non-regulated generating assets (8.3) (14.0)
Investments in energy related properties (20.7) (21.2)
Other (12.3) (13.6)
Cash used for investing activities (96.2) (68.5)
Cash Flows From Financing Activities:
Issuance of common stock 1.9 8.8
Retirement of preference stock - - - -
Issuance of long-term debt, net of premium paid 3.4 5.0
Retirement of long-term debt - - (31.3)
Short-term borrowings (repayments), net 72.4 79.7
Cash dividends paid (19.8) (18.5)
Cash provided from financing activities 57.9 43.7
Increase (decrease) in cash and cash equivalents 7.2 7.5
Cash and cash equivalents at beginning of period 95.3 29.9
Cash and Cash Equivalents at End of Period $ 102.5 $ 37.4
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for -
Interest, net of amount capitalized $ 18.9 $ 17.1
Income taxes 4.2 2.9
Liabilities Assumed In Acquisition -
Fair value of assets acquired $ 23.0 $ - -
Cash paid for acquisition 21.7 - -
Liabilities assumed 1.3 - -
</TABLE>
See accompanying notes to condensed consolidated financial statements.
8
<PAGE> 9
<TABLE>
<CAPTION>
UTILICORP UNITED INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
NINE MONTHS ENDED
September 30,
DOLLARS IN MILLIONS 1994 1993
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 60.8 $ 53.1
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation, depletion and amortization 115.8 111.2
Deferred taxes and investment tax credits 13.8 42.3
Changes in certain current assets and liabilities:
Accounts receivable and accrued revenues 133.8 119.1
Accounts receivable sold (17.0) (19.8)
Fuel and materials (18.0) (4.9)
Accounts payable (130.4) (76.8)
Accrued taxes 30.3 (11.6)
Other, including purchased gas adjustment 9.1 6.6
Changes in other assets and liabilities, net (17.2) (24.3)
Cash provided from operating activities 181.0 194.9
Cash Flows From Investment Activities:
Additions to utility plant (84.4) (83.1)
Purchase of utility operations (21.7) (94.0)
Investment in non-regulated generating assets (9.0) (19.3)
Investments in energy related properties (59.9) (60.9)
Other (28.7) (13.0)
Cash used for investment activities (203.7) (270.3)
Cash Flows From Financing Activities:
Issuance of common stock 2.3 175.2
Retirement of preference stock (.9) - -
Issuance of long-term debt, net of premium paid 9.3 204.6
Retirement of long-term debt (9.6) (101.1)
Short-term borrowings (repayments), net 112.5 (129.7)
Cash dividends paid (58.7) (54.9)
Cash provided from financing activities 54.9 94.1
Increase in cash and cash equivalents 32.2 18.7
Cash and cash equivalents at beginning of period 70.3 18.7
Cash and Cash Equivalents at End of Period $ 102.5 $ 37.4
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for-
Interest, net of amount capitalized $ 65.1 $ 59.0
Income taxes 8.9 12.9
Liabilities Assumed In Acquisition -
Fair value of assets acquired $ 23.0 $ 106.9
Cash paid for acquisition 21.7 94.0
Liabilities assumed 1.3 12.9
</TABLE>
See accompanying notes to condensed consolidated financial statements.
9
<PAGE> 10
<TABLE>
<CAPTION>
UTILICORP UNITED INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
TWELVE MONTHS ENDED
September 30,
DOLLARS IN MILLIONS 1994 1993
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 94.1 $ 78.7
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation, depletion and amortization 150.6 147.4
Gain on sale of subsidiary stock (47.8) - -
Restructuring charge 69.8 - -
Deferred taxes and investment tax credits (24.3) 57.7
Changes in certain current assets and liabilies,
net of effects of acquisition and restructuring:
Accounts receivable and accrued revenues 61.5 9.6
Accounts receivable sold (8.1) 28.5
Fuel and materials (20.7) (8.0)
Accounts payable (39.7) (4.7)
Accrued taxes 32.9 (16.6)
Other, including purchased gas adjustment 13.9 1.9
Changes in other assets and liabilities, net (6.8) (38.6)
Cash provided from operating activities 275.4 255.9
Cash Flows From Investing Activities:
Additions to utility plant (141.8) (143.2)
Purchase of utility operations (26.7) (94.0)
Sale of subsidiary stock 74.6 - -
Investment in non-regulated generating assets (18.5) (29.6)
Investments in energy related properties (93.5) (82.7)
Other (17.3) (10.5)
Cash used for investing activities (223.2) (360.0)
Cash Flows From Financing Activities:
Issuance of common stock 5.9 182.6
Retirement of preference stock (9.9) - -
Issuance of long-term debt, net of premium paid 22.1 315.0
Retirement of long-term debt (8.3) (231.3)
Short-term borrowings (repayments), net 81.3 (85.5)
Cash dividends paid (78.2) (70.7)
Cash provided from financing activities 12.9 110.1
Increase (decrease) in cash and cash equivalents 65.1 6.0
Cash and cash equivalents at beginning of period 37.4 31.4
Cash and Cash Equivalents at End of Period $ 102.5 $ 37.4
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for-
Interest, net of amount capitalized $ 100.6 $ 94.5
Income taxes 20.5 20.3
Liabilities Assumed In Acquisition -
Fair value of assets acquired $ 28.0 $ 106.9
Cash paid for acquisition 26.7 94.0
Liabilities assumed 1.3 12.9
</TABLE>
See accompanying notes to condensed consolidated financial statements.
10
<PAGE> 11
UTILICORP UNITED INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(unaudited)
(1) Summary of Significant Accounting Policies: The accompanying
unaudited condensed consolidated financial statements have been prepared
in accordance with the accounting policies described in the consolidated
financial statements and related notes included in the company's 1993
Annual Report to Shareholders incorporated by reference in the company's
1993 Form 10-K. It is suggested that those consolidated financial statements
be read in conjunction with this report. The year-end financial statements
presented were derived from the company's audited financial statements,
but do not include all disclosures required by generally accepted
accounting principles. In the opinion of management, the accompanying
condensed consolidated financial statements reflect all adjustments
necessary for a fair representation of the financial position of the
company and the results of its operations.
(2) In February 1994, the Board of Directors of UtiliCorp United (the
Board) authorized the redemption of all outstanding shares of the $1.775
Series Convertible Preference Stock. During the first and second
quarters of 1994, approximately 1.3 million and 1.5 million shares of
the company's $1.775 Series Convertible Preference Stock were converted
into approximately 2.7 million shares of UtiliCorp common stock. The
remaining shares, approximately .1 million, were redeemed on May 26,
1994 at a price of $21.60 per share plus accrued dividends.
(3) On August 3, 1994, the Board voted to increase the quarterly cash
dividend on common stock from 42 cents to 43 cents.
(4) In July 1994, the company revised its agreements with certain
financial institutions to sell, on a continuing basis, up to $205
million of eligible accounts receivable. Prior to this date, the limit
of eligible accounts receivable was $175 million.
(5) On September 30, 1994, the company acquired NorAm Energy Corp.'s
Kansas gas distribution and certain pipeline properties for $23.0
million. The revenues and operating expenses associated with this
acquisition will be reflected in the company's consolidated totals
beginning in the fourth quarter.
(6) During July 1994, the company completed its secondary
investigation at one former manufactured gas plant site. This testing
identified the location, distribution and nature of manufactured gas
plant residuals at the site. The results of this testing have been
provided to the appropriate environmental agencies. The company does
not presently know what, if any, additional work will be required at
this site.
11
<PAGE> 12
UTILICORP UNITED INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
UtiliCorp United Inc. (herein referred to as "the company") contains
three segments: electric operations, gas operations and energy related
businesses. Each segment is discussed separately in the Results of
Operations section. The Liquidity and Capital Resources section is
prepared on a consolidated basis.
HIGHLIGHTS
Net income increased for each of the three, nine and twelve month
periods ended September 30, 1994, as compared to the same periods in
1993. The increases for each period are due to increased contributions
from UtilCo Group, Aquila Energy and the effects of increased income
taxes recorded in the third quarter of 1993 related to the Revenue
Reconciliation Act of 1993 (RRA).
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operating activities for the three and twelve
month periods ended September 30, 1994, as compared to the same period
last year increased by $13.2 million and $19.5 million, respectively.
Cash provided from operating activities decreased by $13.9 million for
the nine month period ended September 30, 1994, compared to the year-
earlier period. The changes in operating cash flow between the periods
is primarily due to the timing of cash receipts and cash payments and
its effect on working capital.
Cash used for investing activities consists primarily of utility
construction expenditures and investments in energy related property.
The variances between the nine and twelve month periods as compared to
the previous year's are primarily due to the timing of the Nebraska gas
system purchase from NorAm Energy Corp (formerly Arkla, Inc.) and the
sale of stock in an indirect subsidiary. Additionally, all periods are
affected by the purchase of NorAm Energy Corp's Kansas gas properties
for approximately $23.0 million.
In February 1994, the Board of Directors of UtiliCorp United (the
Board) authorized the redemption of all outstanding shares of the $1.775
Series Convertible Preference Stock. The majority of the outstanding
shares were converted to UtiliCorp common stock based on a conversion
price of $20.6569 per common share, with any remaining shares not
converted being redeemed on May 26, 1994 at a price of $21.60 per share
plus accrued dividends.
The company has two revolving credit agreements (Agreements) with
a consortium of banks aggregating $400 million. The Agreements support
the company's commercial paper program and provide for additional short-
term borrowing capacity. As of September 30, 1994, the company had no
outstanding borrowings under these Agreements.
As of September 30, 1994, the company had agreements with
financial institutions to sell, on a continuing basis, up to $205
million of eligible accounts receivable on a limited recourse basis.
The amount of accounts receivable sold under these agreements generally
fluctuates with the level of the company's accounts receivable balance.
In October, UtilCo Group, a subsidiary of the company, agreed to
invest approximately $12 million in a power project in Jamaica. UtilCo
Group will own approximately 21 percent of the project which will
generate and sell power to Jamaica Public Service Company under a 20-
year contract. The project is expected to begin commercial operation in
1996.
12
<PAGE> 13
In November, the company issued $100 million of unsecured senior
notes due in 1999. The interest rate for the notes is 8.45% and the
funds will be used to reduce short-term debt of $182.5 million as of
September 30, 1994.
The company believes that its capital resources are adequate to
continue to meet its capital needs.
RESULTS OF OPERATIONS
ELECTRIC OPERATIONS
The company's electric segment includes the electric operations of
Missouri Public Service, West Kootenay Power, West Virginia Power, and
WestPlains Energy.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
Dollars in Millions 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Revenues $162.0 $160.3 $429.9 $417.4 $559.4 $545.7
Expenses:
Fuel and purchased power 50.3 51.5 144.0 149.1 192.1 198.7
Other operations and maintenance 50.9 47.0 144.7 131.3 197.6 173.3
Depreciation and amortization 12.4 12.0 37.0 33.9 49.1 44.4
Total expenses 113.6 110.5 325.7 314.3 438.8 416.4
Income from operations $ 48.4 $ 49.8 $104.2 $103.1 $120.6 $129.3
Electric sales (MWH 000's) 2,873 2,801 8,146 7,894 10,861 10,467
</TABLE>
Electric Revenues
Electric revenues are based on rates authorized by various
regulatory jurisdictions, which result in differing rate design and
margins.
Revenues increased in each period compared to the prior year due
to more favorable weather patterns experienced at Missouri Public
Service (MPS) and WestPlains Energy (WPE) which were partially offset by
milder weather experienced at West Virginia Power. Revenue increases
were also partially offset in each period by adjustments made to reflect
final rate orders for West Kootenay Power.
Electric Expenses
Fuel and purchased power costs decreased in each period despite
higher sales volumes, due to lower purchased power demand charges and
reduced coal prices. Operating and maintenance expenses increased $3.9
million, $13.4 million and $24.3 million, respectively, for the three,
nine and twelve month periods when compared to the same periods in 1993.
The increases are mainly due to higher payroll and benefit costs. The
company has also experienced an increase in property taxes due to higher
tax rates and increased property balances. Depreciation and
amortization expenses increased for all periods presented as a result of
increased plant in service.
13
<PAGE> 14
GAS OPERATIONS
The company's gas segment includes gas operations of Missouri
Public Service, Kansas Public Service, Peoples Natural Gas, Northern
Minnesota Utilities, Michigan Gas Utilities and West Virginia Power.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30 September 30,
Dollars in Millions 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 66.6 $ 79.2 $447.8 $475.6 $658.3 $668.3
Expenses:
Gas purchased for resale 32.8 45.4 279.0 306.8 415.6 438.2
Other operations and maintenance 37.1 34.6 110.0 109.9 148.6 141.6
Depreciation and amortization 7.6 7.4 22.5 22.4 28.6 28.8
Total expenses 77.5 87.4 411.5 439.1 592.8 608.6
Income(loss) from operations $(10.9) $ (8.2) $ 36.3 $ 36.5 65.5 $ 59.7
Gas sales and transportation (BCF) 47.2 45.3 190.9 184.8 267.2 249.4
</TABLE>
Gas Revenues
Gas revenues are based on rates authorized by various regulatory
jurisdictions, which result in differing rate designs and margins.
Gas revenues decreased $12.6 million, $27.8 million and $10.0
million, respectively, for the three, nine and twelve month periods
ended September 30, 1994, when compared to the same periods in the prior
year. The decrease in revenues is primarily due to warmer weather and
customers switching from tariff sales to transportation sales. While
switching services has reduced revenues, it has had no significant
impact on net income.
Gas Expenses
Gas purchased for resale decreased $12.6 million, $27.8 million
and $22.6 million, respectively, for the three, nine and twelve month
periods ended September 30, 1994, when compared to the same periods in
the prior year. Similar to the reduction in gas revenues discussed
above, these decreases relate primarily to customers switching from
tariff sales to transportation sales and warmer weather patterns.
Operating and maintenance expenses for the three, nine and twelve month
periods increased due to payroll and benefit costs. Depreciation and
amortization expense remained relatively flat between the periods due
primarily to a change in depreciation rates used in one state offset by
increased plant balances.
14
<PAGE> 15
ENERGY RELATED BUSINESSES
The energy related businesses segment includes the consolidated
operations of the company's Aquila Energy subsidiary. Aquila is
involved in the gathering, processing and marketing of natural gas,
acquisition and production of gas and oil reserves and extraction and
sale of natural gas liquids.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
<S> <C> <C> <C> <C> <C> <C>
Dollars in Millions 1994 1993 1994 1993 1994 1993
Revenues $ 86.5 $ 90.6 $246.3 $247.4 $337.6 $331.0
Expenses:
Gas purchases, operations and maintenance 60.0 67.7 174.0 178.7 236.4 240.4
Depreciation, depletion and amortization 15.6 15.5 46.1 46.2 60.6 59.3
Restructuring charge -- -- -- -- 69.8 --
Total expenses 75.6 83.2 220.1 224.9 366.8 299.7
Income<loss> from operations $ 10.9 $ 7.4 $ 26.2 $ 22.5 $(29.2) $ 31.3
Marketing Volumes (BCF) 76.2 102.1 236.5 362.6 327.1 506.4
</TABLE>
Energy Related Businesses Revenues
Revenues from Aquila Energy decreased $4.1 million and $1.1
million during the three and nine month periods ended September 30,
1994, as compared to the prior year. The primary reason for this
decline is lower natural gas and natural gas liquids prices, offset
partially by improved marketing performance. Additionally, Aquila
Energy settled certain long-term contracts for amounts less than those
accrued for in the fourth quarter of 1993 related to the revised
business strategy. The favorable settlements increased revenue by
approximately $3.4 million.
Although marketing volumes for all periods presented were lower
than the prior year, marketing margins were higher. The reduction in
marketing volumes and the improved marketing margins are the result of
the revised business strategy adopted by Aquila which is discussed more
fully below. As part of this revised strategy, Aquila will rely more on
long-term sales contracts and focus on higher margin short-term
contracts in its gas marketing activities.
Revenues for the twelve month period ended September 30, 1994,
increased $6.6 million as compared to the year-earlier period. The
improved marketing performance and increased throughput at Aquila Gas
Pipeline Corporation, which is 82 percent owned by Aquila Energy,
contributed to the increase in revenues between periods.
Energy Related Businesses Expenses
Consistent with the decline in revenues, expenses for the Energy
Related Businesses segment declined by $7.6 million and $4.8 million for
the three and nine month periods ended September 30, 1994, as compared
to the prior year. This decrease in expenses is attributable to a
decrease in the cost of gas purchased resulting from the decline in gas
prices discussed previously, partially offset by an increase in
operations and maintenance expenses.
For the twelve month period ended September 30, 1994, expenses
increased by $67.1 million as compared to the same period in 1993. The
primary component behind the increased expense level is a $69.8 million
pre-tax charge which was recorded in the fourth quarter of 1993. This
charge resulted from the implementation of a revised business strategy
at Aquila and consisted of an estimated $43.0 million for the
disposition of certain non-strategic long-term sales and transportation
contracts, a $16.6 million impairment of non-strategic offshore pipeline
15
<PAGE> 16
assets, $6.5 million related to the cost of implementing other programs
made necessary by the strategy revision, and $3.7 million related to the
write-off of certain investments owned by the company on behalf of
Aquila. Cash outlays associated with the restructuring plan totaled
approximately $21.3 million through September 30, 1994. Cash outlays
were primarily related to the disposition of three long-term contracts
and other costs of implementing the business unit restructuring.
Additional cash outlays to complete the restructuring plan of
approximately $4.1 million are expected. The liability recorded for the
remaining restructuring related costs approximates $10.0 million at
September 30, 1994.
INTEREST CHARGES AND OTHER
Interest expense for all periods presented has remained relatively
unchanged from the levels of the prior year.
Other income, net consists primarily of the operations of UtilCo
Group, an independent power producer, foreign operations consisting of a
gas marketing venture in the United Kingdom and a utility investment in
New Zealand, and other energy marketing ventures. For the three, nine
and twelve month periods ended September 30, 1994, other income, net
increased $1.3 million, $2.8 million and $7.5 million, respectively.
The improved results relate to improved performance from UtilCo Group
resulting from better operating performance of some of its generating
projects and increased gas transportation sales from some of the
company's utility divisions.
INCOME TAXES
Income taxes are lower for the three and nine month periods ended
September 30, 1994, while income before taxes increased. This is due to
the effect of the RRA on the company's income tax expense. In the third
quarter of 1993, the company made an adjustment to retroactively reflect
the increase in the corporate tax rate of 34 percent to 35 percent,
effective January 1, 1993. Income tax expense and the effective tax
rate are significantly lower for the twelve months ended September 30,
1994, than in the same period in 1993 due to the tax-free gain on the
sale of subsidiary common stock. The gain on the sale was $47.8
million.
REGULATORY MATTERS
In June 1994, the company's West Kootenay Power subsidiary was
granted a two-step electric rate increase of 2.4%, or $1.9 million per
year, effective January 1, 1994, and 3.1%, or $2.7 million per year,
effective January 1, 1995. The increases were necessary to offset
increased purchased power costs and other operating expense increases.
West Kootenay Power originally requested increases of $6.0 million in
1994 and $5.1 million in 1995, and had been allowed to implement an
interim increase of $4.5 million subject to refund. As a result of the
June decision, a $1.2 million rate refund was granted to customers of
West Kootenay Power. A provision for this refund was established in
June 1994.
NEW ACCOUNTING STANDARD
In October 1994, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 119 Disclosure about
Derivative Financial Instruments and Fair Value of Financial
Instruments (SFAS 119). SFAS 119 requires companies to disclose
certain information pertaining to derivative instruments into two
groupings--trading and other than for trading. The disclosure
requirements vary depending on how the activity is classified. SFAS
119 does not change how derivative instruments are recorded or reflected
in the financial statements. The company is currently evaluating these
new disclosure requirements and will incorporate these new disclosures
in its 1994 annual report.
16
<PAGE> 17
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The lawsuit UtiliCorp et al. v. Stegall et al, which has previously been
reported on in the company's Forms 10-Q for the quarters ended March 31, 1994,
and June 30, 1994, has now been resolved just prior to its scheduled trial
setting of October 24, 1994. In August and September, the plaintiffs, UtiliCorp
and Aquila Energy Resources Corporation, reached settlements with several minor
defendants. On October 6, the plaintiffs concluded a settlement with one of
the major defendants which provides for payment of $4,310,000 to plaintiffs,
which is expected to be received by year-end 1994. On October 18, the Court
granted plaintiffs summary judgment on the remaining defendants, in which all
counterclaims and third-party claims of defendants are to be dismissed and
agreed upon judgments are to be entered for plaintiffs against these defendants.
The company believes that, due to the financial condition of these defendants,
any substantial recovery upon these judgments is remote.
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits
11 Statement regarding Computation of Per Share Earnings
12 Statement regarding Computation of Fixed Charge Coverage
27 Financial Data Schedule - For the Three, Nine and Twelve Month Periods
Ended September 30, 1994
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three month period
ended September 30, 1994.
17
<PAGE> 18
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 hereunto duly authorized.
UtiliCorp United Inc.
(Registrant)
November 14, 1994 /S/ Richard C. Green, Jr.
Richard C. Green, Jr.
Chairman of the Board, President
(Chief Executive Officer)
November 14, 1994 /S/ Dale J. Wolf
Dale J. Wolf
Vice President
Finance & Corporate Secretary
18
<PAGE> 19
UTILICORP UNITED, INC.
COMPUTATION OF EARNINGS PER SHARE
(in millions except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
September 30, September30, September 30,
1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Line No.
Earnings Available for Common Shares:
(a) Earnings available for common shares as reported 14.0 9.2 57.9 47.6 89.8 71.5
(b) Elimination of interest on convertible subordinated
debenture, net of tax .1 - .4 .5 .5 .7
(c) Elimination of dividends on cumulativ
convertible preference stock - - - - 2.3 -
(d) Fully Diluted Earnings Available 14.1 9.2 58.3 48.1 92.6 72.2
Weighted Average Common Shares Outstanding:
(e) Primary weighted average shares outstanding
as reported 44.82 41.76 43.83 40.33 43.36 39.05
(f) Assumed conversion of convertible subordinated
debenture .55 - .56 .67 .58 .69
(g) Assumed conversion of cumulative convertible
preference shares - - - - 1.37 -
(h) Fully Diluted Weighted Average Shares
Outstanding 45.37 41.76 44.39 41.00 45.31 39.74
Earnings Per Common Share:
Primary (a/e) $ .31 $ .22 $ 1.32 $ 1.18 $ 2.07 $ 1.83
Fully Diluted (d/h) .31 .22 1.31 1.17 2.04 1.82
</TABLE>
19
<PAGE> 20
<TABLE>
<CAPTION>
EXHIBIT 12
UTILICORP UNITED INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Twelve months ended Years ended Dec 31,
Sept 30, 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Income from continuing operations
before provision for income taxes...... $120,036 $115,889 $ 84,541 $115,200 $ 69,900 $ 65,100
Add:
Interest on long-term debt............. 88,479 89,243 88,857 65,100 44,200 39,400
Interest on short-term debt and other.. 13,673 12,607 12,729 18,939 20,189 11,247
Portion of rents representative of
the interest factor.................... 15,543 15,008 14,600 6,548 4,120 3,804
Income as adjusted....................... $237,731 $232,747 $200,727 $205,787 $138,409 $119,551
Fixed Charges
Interest on long-term debt............. $ 88,479 $ 89,243 $ 88,857 $ 65,100 $ 44,200 $ 39,400
Interest on short-term debt............ 13,673 12,607 12,729 18,939 20,189 11,247
Portion of rents representative of
the interest factor.................... 15,543 15,008 14,600 6,548 4,120 3,804
Fixed Charges............................ $117,695 $116,858 $116,186 $ 90,587 $ 68,509 $ 54,451
Ratio of Earnings to Fixed Charges......... 2.02 1.99 1.73 2.27 2.02 2.2
</TABLE>
20
<TABLE> <S> <C>
<ARTICLE> OPUR1
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994 DEC-31-1994
<PERIOD-END> SEP-30-1994 SEP-30-1994 SEP-30-1994
<BOOK-VALUE> PER-BOOK PER-BOOK PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,600,400,000 1,600,400,000 1,600,400,000
<OTHER-PROPERTY-AND-INVEST> 723,600,000 723,600,000 723,600,000
<TOTAL-CURRENT-ASSETS> 377,200,000 377,200,000 377,200,000
<TOTAL-DEFERRED-CHARGES> 173,500,000 173,500,000 173,500,000
<OTHER-ASSETS> 0 0 0
<TOTAL-ASSETS> 2,874,700,000 2,874,700,000 2,874,700,000
<COMMON> 44,800,000 44,800,000 44,800,000
<CAPITAL-SURPLUS-PAID-IN> 773,900,000 773,900,000 773,900,000
<RETAINED-EARNINGS> 93,800,000 93,800,000 93,800,000
<TOTAL-COMMON-STOCKHOLDERS-EQ> 905,400,000 905,400,000 905,400,000
0 0 0
25,000,000 25,000,000 25,000,000
<LONG-TERM-DEBT-NET> 1,006,300,000 1,006,300,000 1,006,300,000
<SHORT-TERM-NOTES> 182,500,000 182,500,000 182,500,000
<LONG-TERM-NOTES-PAYABLE> 0 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 1,000,000 1,000,000 1,000,000
0 0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0 0
<LEASES-CURRENT> 0 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 754,500,000 754,500,000 754,500,000
<TOT-CAPITALIZATION-AND-LIAB> 2,874,700,000 2,874,700,000 2,874,700,000
<GROSS-OPERATING-REVENUE> 315,100,000 1,124,000,000 1,555,300,000
<INCOME-TAX-EXPENSE> 8,300,000 36,300,000 25,900,000
<OTHER-OPERATING-EXPENSES> 56,200,000 162,000,000 222,200,000
<TOTAL-OPERATING-EXPENSES> 266,700,000 957,300,000 1,398,400,000
<OPERATING-INCOME-LOSS> 48,400,000 166,700,000 156,900,000
<OTHER-INCOME-NET> 900,000 7,800,000 19,000,000
<INCOME-BEFORE-INTEREST-EXPEN> 48,600,000 172,400,000 221,300,000
<TOTAL-INTEREST-EXPENSE> 25,800,000 75,300,000 101,300,000
<NET-INCOME> 14,500,000 60,800,000 94,100,000
500,000 2,900,000 4,300,000
<EARNINGS-AVAILABLE-FOR-COMM> 14,000,000 57,900,000 89,800,000
<COMMON-STOCK-DIVIDENDS> 0 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0 0
<CASH-FLOW-OPERATIONS> 45,500,000 181,000,000 275,400,000
<EPS-PRIMARY> .31 1.32 2.07
<EPS-DILUTED> .31 1.31 2.04
</TABLE>
