UNITED STATES 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 June 30, 1997
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 1-3576
ST. JOSEPH LIGHT & POWER COMPANY
(Exact name of registrant as specified in its charter)
State of Missouri 44-0419850
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
520 Francis St., P.O. Box 998, St. Joseph, Missouri 64502-0998
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (816) 233-8888
Former name, former address and former fiscal year, if changed since
last report.
Indicate by check mark whether the registrant (l) has filed all
reports required to be filed by Section l3 or l5(d) of the Securities
Exchange Act of l934 during the preceding l2 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.
Common Stock, without par value 7,994,233 shares
(Class) (Outstannding at July 31, 1997)
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ST. JOSEPH LIGHT & POWER COMPANY
INDEX
Page Number
Part I. Financial Information
Item 1. Consolidated Financial Statements:
Statements of Income . . . . . . . . . . . . . . . . 3
Balance Sheets . . . . . . . . . . . . . . . . . . . 4
Statements of Capitalization . . . . . . . . . . . . 5
Statements of Retained Earnings. . . . . . . . . . . 5
Statements of Cash Flow. . . . . . . . . . . . . . . 6
Note to Consolidated Financial Statements. . . . . . 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . 8
Part II. Other Information
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . 10
Item 2. Changes in the Rights of the Company's
Security Holders . . . . . . . . . . . . . . . . . . 10
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . 10
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . 10
Item 5. Other Information. . . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Forms 8-K. . . . . . . . . . 10
Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
ST. JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
June 30
1997 1996
OPERATING REVENUES:
Electric utility $20,887,102 $20,723,728
Other utility 2,184,739 2,213,491
Manufacturing 2,127,233 --
25,199,074 22,937,219
OPERATING EXPENSES:
Production fuel 4,166,070 3,925,612
Purchased power 2,116,515 2,439,631
Gas purchased for
resale 379,333 405,289
Manufacturing cost
of goods sold 1,775,602 --
Other operations 4,852,421 4,563,047
Maintenance 2,391,444 2,227,916
Depreciation 2,731,565 2,616,268
Taxes other than
income taxes 1,686,032 1,622,932
20,098,982 17,800,695
OPERATING INCOME 5,100,092 5,136,524
INTEREST CHARGES (Net):
Long-term debt 1,526,806 1,462,400
Other 58,655 34,547
Allowance for borrowed
funds used during
construction (13,914) (47,188)
1,571,547 1,449,759
OTHER INCOME & DEDUCTIONS:
Allowance for equity
funds used during
construction 23,824 74,301
Other - net 19,996 119,388
43,820 193,689
INCOME BEFORE INCOME TAXES
& MINORITY INTEREST 3,572,365 3,880,454
INCOME TAXES 1,318,709 1,386,733
INCOME BEFORE MINORITY
INTEREST 2,253,656 2,493,721
MINORITY INTEREST IN
LOSS OF SUBSIDIARY (14,911) --
NET INCOME $ 2,268,567 $ 2,493,721
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 7,979,852 7,851,217
EARNINGS PER AVERAGE
COMMON SHARE $0.28 $0.32
DIVIDENDS PAID PER
COMMON SHARE $0.24 $0.235
ST. JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Six Months Ended
June 30
1997 1996
OPERATING REVENUES:
Electric utility $39,846,076 $40,170,709
Other utility 6,736,251 6,385,572
Manufacturing 2,127,233 --
48,709,560 46,556,281
OPERATING EXPENSES:
Production fuel 8,791,597 8,275,486
Purchased power 3,847,352 5,011,349
Gas purchased for
resale 2,223,922 1,851,995
Manufacturing cost
of goods sold 1,775,602 --
Other operations 9,817,591 9,199,470
Maintenance 3,932,899 4,092,313
Depreciation 5,428,164 5,153,552
Taxes other than
income taxes 3,427,707 3,295,413
$39,244,834 $36,879,578
OPERATING INCOME $ 9,464,726 $ 9,676,703
INTEREST CHARGES (Net):
Long-term debt 2,989,206 2,924,800
Other 96,231 69,094
Allowance for borrowed
funds used during
construction (27,461) (110,977)
3,057,976 2,882,917
OTHER INCOME & DEDUCTIONS:
Allowance for equity
funds used during
construction 47,020 151,611
Other - net 73,545 126,108
120,565 277,719
INCOME BEFORE INCOME TAXES
& MINORITY INTEREST 6,527,315 7,071,505
INCOME TAXES 2,283,073 2,435,926
INCOME BEFORE MINORITY
INTEREST 4,244,242 4,635,579
MINORITY INTEREST IN LOSS
OF SUBSIDIARY (14,911) --
NET INCOME $ 4,259,153 $ 4,635,579
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 7,960,105 7,836,676
EARNINGS PER AVERAGE
COMMON SHARE $0.54 $0.59
DIVIDENDS PAID PER
COMMON SHARE $0.48 $0.47
See Notes to Consolidated Financial Statements.
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ST JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1997 1996
(Unaudited)
ASSETS
PROPERTY,PLANT AND EQUIPMENT:
Electric utility plant $302,333,799 $298,995,660
Other 18,326,812 10,005,809
320,660,611 309,001,469
Less-Reserves for
depreciation (152,316,521) (147,539,255)
$168,344,090 $161,462,214
Construction work in progress 5,295,925 4,588,513
$173,640,015 $166,050,727
OTHER INVESTMENTS $ 2,443,850 $ 2,298,785
CURRENT ASSETS:
Cash and cash equivalents $ 516,555 $ 688,466
Temporary investments 711,488 5,822,979
Receivables, less reserves 9,679,861 7,718,866
Accrued utility revenue 3,951,632 3,651,310
Manufacturing inventories 4,181,061 --
Fuel 4,027,384 2,961,316
Materials and supplies 5,913,884 5,545,927
Prepayments and other 1,620,207 1,309,328
30,602,072 27,698,192
DEFERRED CHARGES
Debt expense 1,585,911 1,552,704
Lease payments receivable 3,350,799 3,412,528
Prepaid pension expense 12,343,303 11,150,659
Regulatory assets 14,529,634 14,769,131
Other 2,171,653 317,094
33,981,300 31,202,116
$240,667,237 $227,249,820
CAPITALIZATION & LIABILITIES
CAPITALIZATION (See statements):
Common equity $ 87,674,225 $ 86,170,013
Long-term debt 76,888,550 73,100,000
164,562,775 159,270,013
MINORITY INTEREST IN
CONSOLIDATED SUBSIDIARY 1,412,436 --
CURRENT LIABILITIES:
Outstanding checks in
excess of cash balances 432,901 3,034,793
Current maturities of
long-term obligations 1,683,038 --
Accounts payable 11,599,699 8,839,419
Notes payable 2,185,304 --
Accrued income & general taxe 2,374,998 511,474
Accrued interest 1,956,826 1,961,526
Accrued vacation 1,322,909 1,119,376
Other 541,911 422,907
22,097,586 15,889,495
DEFERRED CREDITS AND
NON-CURRENT LIABILITIES:
Capital lease obligations 3,183,618 3,270,593
Deferred income taxes 29,091,501 28,734,335
Investment tax credit 4,299,221 4,502,729
Accrued claims and benefits 1,971,024 1,749,015
Deferred revenues 2,313,449 2,372,348
Regulatory liabilities 9,416,766 9,416,766
Other 2,318,861 2,044,526
52,594,440 52,090,312
$240,667,237 $227,249,820
See Notes to Consolidated Financial Statements.
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ST JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
June 30, December 31,
1997 1996
(Unaudited)
COMMON EQUITY:
Common stock--authorized
25,000,000 shares, without par
value,issued 9,252,748 shares $ 33,816,099 $ 33,816,099
Retained earnings 67,976,664 67,532,568
Other paid-in capital 1,074,648 816,995
Less-treasury stock, at cost,
1,259,663 and 1,326,272 shares (15,193,186) (15,995,649)
87,674,225 86,170,013
LONG-TERM DEBT:
First mortgage bonds -
9.44% series due
February 1, 2021 22,500,000 22,500,000
Unsecured pollution control
revenue bonds-5.85% series
due February 1, 2013 5,600,000 5,600,000
Medium-term notes-
5.77% due December 8, 1998 5,000,000 5,000,000
7.13% due November 29, 2013 1,000,000 1,000,000
7.16% due November 29, 2013 9,000,000 9,000,000
7.17% due December 1, 2023 7,000,000 7,000,000
7.33% due November 30, 2023 3,000,000 3,000,000
8.36% due March 15, 2005 20,000,000 20,000,000
45,000,000 45,000,000
Other long-term debt 5,471,588 --
Less current maturities (1,683,038) --
76,888,550 73,100,000
Total Capitalization $164,562,775 $159,270,013
ST. JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Unaudited)
Three Months
Ended June 30
1997 1996
Balance at beginning of period $65,708,402 $63,025,035
Net income 2,268,567 2,493,721
67,976,969 65,518,756
Less-dividends on common stock (305) (166)
Balance at end of period $67,976,664 $65,518,590
ST JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Six Months
Ended June 30
1997 1996
Balance at beginning of period $67,532,568 $64,560,183
Net Income 4,259,153 4,635,579
71,791,721 69,195,762
Less-dividends on common stock (3,815,057) (3,677,172)
Balance at end of period $67,976,664 $65,518,590
See Notes to Consolidated Financial Statements.
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ST. JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,259,153 $ 4,635,579
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation 5,428,164 5,153,552
Pension expense (965,872) (717,923)
Deferred taxes and investment credit 153,658 185,920
Allowance for equity funds used
during construction (47,020) (151,611)
Net changes in working capital items
not considered elsewhere:
Accounts receivable and accrued
utility revenues 65,629 (917,960)
Fuel (1,066,068) 1,732,843
Accounts payable and outstanding
checks (4,983,580) (3,441,072)
Accrued income and general taxes 1,387,995 1,922,853
Other, net (953,855) (351,900)
Net changes in regulatory
assets and liabilities 239,497 (29,307)
Net changes in other assets
and liabilities 178,002 (609,724)
Net cash provided by
operating activities 3,695,703 7,411,250
CASHFLOWS FROM INVESTING ACTIVITIES:
Gross additions to plant (4,906,797) (5,959,312)
Allowance for borrowed funds used
during construction 27,461 110,977
Investments 4,966,426 1,452,881
Other (55,441) 40,634
Net cash provided by (used in)
investing activities 31,649 (4,354,820)
CASHFLOWS FROM FINANCING ACTIVITIES:
Notes payable decrease (898,102) --
Principal payments under capital
lease obligations (86,975) (47,447)
Long-term debt retired (159,244) --
Common stock purchased (3,431) (17,446)
Common stock issued 1,063,546 731,164
Dividends paid (3,815,057) (3,677,172)
Net cash used in financing
activities (3,899,263) (3,010,901)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (171,911) 45,529
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 688,466 287,319
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 516,555 $ 332,848
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the period for:
Interest $ 3,032,435 $ 2,943,751
Income taxes $ 1,717,000 $ 1,690,000
For purposes of the Consolidated Statements of Cash Flow, the Company
considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.
See Notes to Consolidated Financial Statements.
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ST. JOSEPH LIGHT & POWER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include
St. Joseph Light & Power Company and its wholly owned subsidiary, SJLP
Inc. and its subsidiary (see note 2). Collectively, these entities are
referred to herein as the "Company." All significant intercompany
transactions have been eliminated.
General: The unaudited consolidated financial statements included
herein have been prepared by the Company, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. See Notes
to Consolidated Financial Statements included in the Company's 1996
Annual Report to Shareholders incorporated by reference in the
Company's 1996 Annual Report on Form 10-K.
There are no significant differences in the Company's interim and
annual accounting policies. However, due to estimates inherent in the
accounting process for other than annual periods, the accuracy of the
amounts in the interim financial statements is in some respects
dependent upon facts that will exist and reviews that will be
performed by the Company later in the fiscal year. The information
contained in these consolidated financial statements reflects all
adjustments which are, in the opinion of management, necessary to
state fairly the results of the interim periods.
The results for the six months ended June 30, 1997 are not
necessarily indicative of the results for the entire year 1997.
2) ACQUISITION
Effective May 31, 1997, SJLP Inc. acquired a controlling interest in
Percy Kent Bag Co., Inc. (Percy Kent). Percy Kent designs and
manufactures multiwall and small paper bags primarily for food
products, agricultural products, specialty chemicals, pet foods and
other consumer packaging companies throughout the United States. The
acquisition has been accounted for as a purchase. Acquired goodwill
of $1,467,000 is included in other deferred charges in the
accompanying balance sheet and is being amortized on the straight-line
basis over 15 years. Percy Kent's operating results for the
month of June, which are included in the Company's consolidated
financial statements, had minimal impact on the Company's earnings.
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The Company is engaged primarily in the business of generating and
distributing electric energy in a ten-county area of northwestern Missouri.
It also sells natural gas and industrial steam in limited areas. In the
electric utility industry, results of operations generally show a seasonal
pattern of higher revenues and earnings in the third quarter due to
weather. SJLP Inc. was formed to pursue investments in non-utility areas.
Its operations were not material to the Company's financial position or
results of operations.
RESULTS OF OPERATIONS
Comparison of the quarters ended June 30, 1997 and 1996
Electric retail and other revenues decreased 1% for the quarter
primarily due to milder than normal temperatures. Sales to
residential customers decreased 3% reflecting the cooler temperatures
as compared to the warmer than normal spring of the prior year.
Continued economic growth in the Company's service territory expanded
sales to commercial and industrial customers to partially offset the
decrease. Sales for resale increased reflecting strong demand from
regional utilities and energy marketers for low-cost power.
Other utility operating revenues decreased slightly for both the
natural gas and industrial steam segments. Natural gas revenues
decreased 2% despite a small increase in sales. The decrease in
revenues was primarily attributable to lower market prices for
natural gas which are passed on to the customer through the Purchased
Gas Adjustment (PGA).
Manufacturing revenues and related manufacturing cost of goods
sold reflect the inclusion of one month of operations of Percy Kent
Bag Co., Inc. (Percy Kent).
Total energy costs decreased 1% primarily due to the reduced
system requirements and lower costs at the Lake Road plant, partially
offset by higher resale requirements. Modifications to the Lake Road
plant to burn a blend of lower cost, low-sulfur coal have resulted in
increased generation at the plant to replace more expensive purchased
power.
Gas purchased for resale decreased 6% primarily due to the lower
market price for natural gas.
The increase in other operations is primarily attributable to
administrative expenses of Percy Kent.
Maintenance expense for the period increased primarily due to
maintenance requirements at the Lake Road plant.
The increase in interest charges on long-term debt is a result of
interest expense on Percy Kent's borrowings.
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Comparison of the six months ended June 30, 1997 and 1996
Electric retail and other revenues decreased 1% for the period
with sales remaining relatively stable. Sales to the commercial and
industrial segments increased 2% as the area's economy continued to
expand. More moderate weather reduced residential sales by 3% to
offset the gain. Sales for resale decreased slightly for the period due
to reduced demand from regional utilities during the winter months.
Other utility operating revenue increased 5% primarily due to an
8% increase in natural gas revenues. The increase in natural gas
revenues and related gas purchased for resale reflects the
significantly higher winter prices for natural gas which are passed
on to customers through the PGA. Natural gas sales for the period
decreased 4% due to warmer than normal weather conditions.
Industrial steam revenues increased 2% while sales increased 1%
reflecting a rate increase for a major customer.
Manufacturing revenues and related manufacturing cost of goods
sold is attributable to Percy Kent.
Total energy costs decreased 5% while total requirements remained
relatively stable. Lower coal costs at the Lake Road plant resulted
in increased generation replacing more expensive purchased power.
The increase in other operations is primarily attributable to
Percy Kent.
The increase in interest expense is due to interest charges for
Percy Kent.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had $1.2 million in cash and
temporary investments. In addition, the Company has bank credit
arrangements of $5.5 million in conventional lines of credit with
$4.8 million available under these agreements at June 30, 1997.
Financial coverages are at levels in excess of those required for
issuance of debt and preferred stock.
Capital expenditures, net of allowance for funds used during
construction and including non-utility investments, are currently
projected to be $15 million for the remainder of 1997 and about $93
million for the five-year period ending 2001. The Company expects to
finance these expenditures through internally generated funds and the
issuance of short-term debt and common equity.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in the Rights of the Company's Security Holders
None.
Item 3. Default Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
a. The annual meeting of common stockholders was held May 21, 1996.
b. The following persons were elected Directors of the Company
to serve until the 2000 annual meeting of common stockholders:
Daniel A. Burkhardt (6,359,816 votes for; 95,347 withheld)
James P. Carolus (6,354,555 votes for; 100,608 withheld)
Terry F. Steinbecker (6,367,727 votes for; 87,436 withheld)
c. The appointment of Arthur Andersen LLP as independent auditors
for 1997 was approved.
(6,365,262 votes for; 51,633 against; and 38,268 withheld)
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibit 27 - Financial Data Schedule
b. No Current Report on Form 8-K was filed during the
quarter ended June 30, 1997.
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SIGNATURE
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.
ST. JOSEPH LIGHT & POWER COMPANY
(Registrant)
Dated: August 14, 1997 /s/ L. S. Stoll
Vice President-Finance, Treasurer
and Assistant Secretary
(Duly Authorized Officer)
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