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 September 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 44-04l9850
(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 8,018,630 shares
(Class) (Outstanding at October 31, 1997)
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
Notes 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
<PAGE>
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
ST. JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
September 30
1997 1996
OPERATING REVENUES:
Electric utility $27,947,089 $25,338,769
Other utility 1,736,463 1,964,905
Manufacturing 7,431,932 --
37,115,484 27,303,674
OPERATING EXPENSES:
Production fuel 5,568,407 4,531,010
Purchased power 2,022,056 2,716,108
Gas purchased for
resale 158,860 204,951
Manufacturing cost
of goods sold 6,431,818 --
Other operations 6,179,138 4,143,192
Maintenance 1,875,796 1,860,531
Depreciation 2,789,252 2,659,899
Taxes other than
income taxes 1,862,165 1,721,467
26,887,492 17,837,158
OPERATING INCOME 10,227,992 9,466,516
INTEREST CHARGES (Net):
Long-term debt 1,597,100 1,462,400
Other 171,292 34,547
Allowance for borrowed
funds used during
construction (20,294) (67,944)
1,748,098 1,429,003
OTHER INCOME & DEDUCTIONS:
Allowance for equity
funds used during
construction 34,730 107,304
Other - net 46,329 67,550
81,059 174,854
INCOME BEFORE INCOME TAXES
& MINORITY INTERESTS 8,560,953 8,212,367
INCOME TAXES 3,322,848 2,952,261
INCOME BEFORE MINORITY
INTERESTS 5,238,105 5,260,106
MINORITY INTEREST IN
LOSS OF SUBSIDIARY (156,803) --
NET INCOME $ 5,394,908 $ 5,260,106
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 8,004,627 7,885,649
EARNINGS PER AVERAGE
COMMON SHARE $0.67 $0.67
DIVIDENDS PAID PER
COMMON SHARE $0.24 $0.235
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended
September 30
1997 1996
OPERATING REVENUES:
Electric utility $67,793,165 $65,509,478
Other utility 8,472,714 8,350,477
Manufacturing 9,559,165 --
85,825,044 73,859,955
OPERATING EXPENSES:
Production fuel 14,360,004 12,806,496
Purchased power 5,869,407 7,727,457
Gas purchased for
resale 2,382,781 2,056,946
Manufacturing cost
of goods sold 8,207,420 --
Other operations 15,996,731 13,342,662
Maintenance 5,808,696 5,952,844
Depreciation 8,217,415 7,813,451
Taxes other than
income taxes 5,289,872 5,016,880
$66,132,326 $54,716,736
OPERATING INCOME $19,692,718 $19,143,219
INTEREST CHARGES (Net):
Long-term debt 4,586,306 4,387,200
Other 267,523 103,641
Allowance for borrowed
funds used during
construction (47,755) (178,921)
4,806,074 4,311,920
OTHER INCOME & DEDUCTIONS:
Allowance for equity
funds used during
construction 81,750 258,915
Other - net 119,874 193,658
201,624 452,573
INCOME BEFORE INCOME TAXES
& MINORITY INTERESTS 15,088,268 15,283,872
INCOME TAXES 5,605,921 5,388,187
INCOME BEFORE MINORITY
INTERESTS 9,482,347 9,895,685
MINORITY INTEREST IN LOSS
OF SUBSIDIARY (171,714) --
NET INCOME $ 9,654,061 $ 9,895,685
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 7,975,108 7,853,072
EARNINGS PER AVERAGE
COMMON SHARE $1.21 $1.26
DIVIDENDS PAID PER
COMMON SHARE $0.72 $0.705
See Notes to Consolidated Financial Statements.
ST. JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1997 1996
(Unaudited)
ASSETS
PROPERTY,PLANT AND EQUIPMENT:
Electric utility plant $304,469,154 $298,995,660
Other 18,567,662 10,005,809
323,036,816 309,001,469
Less-Reserves for
depreciation (154,549,949) (147,539,255)
$168,486,867 $161,462,214
Construction work in progress 5,860,496 4,588,513
$174,347,363 $166,050,727
OTHER INVESTMENTS $ 2,463,410 $ 2,298,785
CURRENT ASSETS:
Cash and cash equivalents $ 736,786 $ 688,466
Temporary investments 3,008,620 5,822,979
Receivables, less reserves 12,314,642 7,718,866
Accrued utility revenue 2,990,666 3,651,310
Manufacturing inventories 4,606,576 --
Fuel 3,972,136 2,961,316
Materials and supplies 5,524,610 5,545,927
Prepayments and other 2,062,033 1,309,328
35,216,069 27,698,192
DEFERRED CHARGES
Debt expense 1,509,708 1,552,704
Lease payments receivable 3,319,935 3,412,528
Prepaid pension expense 12,957,447 11,150,659
Regulatory assets 14,411,012 14,769,131
Other 2,243,558 317,094
34,441,660 31,202,116
$246,468,502 $227,249,820
CAPITALIZATION & LIABILITIES
CAPITALIZATION (See Statements):
Common equity $ 89,620,601 $ 86,170,013
Long-term debt 76,620,334 73,100,000
166,240,935 159,270,013
MINORITY INTEREST IN
CONSOLIDATED SUBSIDIARY 1,255,633 --
CURRENT LIABILITIES:
Outstanding checks in
excess of cash balances 154,601 3,034,793
Current maturities of
long-term obligations 1,339,538 --
Accounts payable 11,798,833 8,839,419
Notes payable 3,196,231 --
Accrued income & general taxes 5,047,579 511,474
Accrued interest 1,357,106 1,961,526
Accrued vacation 1,292,806 1,119,376
Dividends declared 1,924,280 --
Other 561,871 422,907
26,672,845 15,889,495
DEFERRED CREDITS AND
NON-CURRENT LIABILITIES:
Capital lease obligations 3,138,907 3,270,593
Deferred income taxes 29,184,225 28,734,335
Investment tax credit 4,197,467 4,502,729
Accrued claims and benefits 1,646,101 1,749,015
Deferred revenues 2,284,057 2,372,348
Regulatory liabilities 9,416,766 9,416,766
Other 2,431,566 2,044,526
52,299,089 52,090,312
$246,468,502 $227,249,820
See Notes to Consolidated Financial Statements.
ST. JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
September 30, December 31,
1997 1996
(Unaudited)
COMMON EQUITY:
Common stock--authorized
250,000,000 shares, without par
value,issued 9,252,748 shares $ 33,816,099 $ 33,816,099
Retained earnings 69,528,676 67,532,568
Other paid-in capital 1,170,551 816,995
Less-treasury stock, at cost,
1,234,915 and 1,326,272 shares (14,894,725) (15,995,649)
89,620,601 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 4,859,872 --
Less current maturities (1,339,538) --
76,620,334 73,100,000
Total Capitalization $166,240,935 $159,270,013
See Notes to Consolidated Financial Statements.
ST. JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Unaudited)
Three Months Ended
September 30
1997 1996
Balance at beginning of period $67,976,664 $65,518,590
Net income 5,394,908 5,260,106
73,371,572 70,778,696
Less-dividends on common stock (3,842,896) (3,707,100)
Balance at end of period $69,528,676 $67,071,596
Nine Months Ended
September 30
1997 1996
Balance at beginning of period $67,532,568 $64,560,183
Net Income 9,654,061 9,895,685
77,186,629 74,455,868
Less-dividends on common stock (7,657,953) (7,384,272)
Balance at end of period $69,528,676 $67,071,596
See Notes to Consolidated Financial Statements.
ST. JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months
Ended September 30
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,654,061 $ 9,895,685
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation 8,217,415 7,813,451
Pension expense (1,463,498) (1,319,488)
Deferred taxes and investment
credit 144,628 385,148
Allowance for equity funds used
during construction (81,750) (258,915)
Net changes in working capital items
not considered elsewhere:
Accounts receivable and accrued
utility revenues (1,608,186) (530,810)
Fuel (1,010,820) 994,631
Accounts payable and outstanding
checks (5,538,274) (5,314,838)
Accrued income and general taxes 4,536,105 3,617,142
Other, net (2,174,645) (1,494,524)
Net changes in regulatory
assets and liabilities 358,119 (159,149)
Net changes in other assets
and liabilities 99,872 (130,713)
Net cash provided by
operating activities 11,133,027 13,497,620
CASH FLOWS FROM INVESTING ACTIVITIES:
Gross additions to plant (8,662,096) (9,992,648)
Allowance for borrowed funds used
during construction 47,755 178,921
Investments 2,649,734 970,959
Other (51,085) 79,994
Net cash provided by (used in)
investing activities (6,015,692) (8,762,774)
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable increase 112,825 --
Principal payments under capital
lease obligations (131,686) (86,420)
Long-term debt retired (770,960) --
Common stock purchased (4,025) (17,446)
Common stock issued 1,458,504 1,062,718
Dividends paid (5,733,673) (5,527,824)
Net cash used in financing
activities (5,069,015) (4,568,972)
NET INCREASE IN CASH
AND CASH EQUIVALENTS 48,320 165,874
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 688,466 287,319
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 736,786 $ 453,193
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the period for:
Interest $ 5,335,314 $ 5,006,918
Income taxes $ 3,167,960 $ 3,330,000
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 Statement.
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 nine months ended September 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 $1,477,000 is included in other
deferred charges in the accompanying balance sheet and is being amortized
on the straight-line basis over 15 years.
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. For the quarter and nine months, the subsidiary had losses
of three cents and four cents, respectively, per common share, primarily
attributable to restructuring costs associated with the June 1997
acquisition of a controlling interest in Percy Kent Bag Co., Inc. (Percy
Kent).
RESULTS OF OPERATIONS
Comparison of the quarters ended September 30, 1997 and 1996
Electric retail and other revenues increased 10% for the quarter, while
sales increased 8%. Warmer summer temperatures compared to the abnormally
cool summer of 1996 resulted in an 8% increase in sales to residential
customers. Sales to commercial and industrial customers also expanded by
8% reflecting the continued economic growth in the Company's service
territory. Sales for resale increased reflecting strong demand from
regional utilities and energy marketers for low-cost power.
Other utility operating revenues decreased for both the natural gas and
industrial steam operations. While sales of natural gas remained stable,
revenues decreased slightly reflecting lower market prices for natural gas
which are passed on to customers through the Purchased Gas Adjustment
(PGA). Lower sales to a major steam customer resulted in reduced
industrial steam revenues for the period.
Manufacturing revenues and related manufacturing cost of goods sold reflect
the operations of Percy Kent.
Total energy costs (production fuel and purchased power) increased 5%
primarily due to higher electric sales. Partially offsetting the increase
were lower per unit coal costs at the Lake Road plant due to the blending
of lower cost, low-sulfur coal. Increased generation at the Lake Road
plant also replaced more expensive purchased power.
Gas purchased for resale decreased reflecting the lower market price for
natural gas.
The increase in other operations is primarily attributable to administrative
expenses of Percy Kent and increased health care costs.
The increase in interest charges on long-term debt and other interest is a
result of interest expense on Percy Kent's borrowings.
Comparison of the nine months ended September 30, 1997 and 1996
Both electric retail and other revenues and sales increased 3% for the
period. The increase was led by a 4% growth in sales to commercial and
industrial customers, indicating an expanding economy. Sales to
residential customers also increased primarily due to increased cooling
requirements during the summer months. Sales for resale increased for the
period reflecting greater demand from regional utilities and energy
marketers for low cost power.
Other utility operating revenue increased 1% primarily due to a 7% 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 9% primarily due to warmer than normal
weather conditions. The natural gas revenue increase was partially offset
by reduced industrial steam revenues and sales due to lower customer
requirements.
Manufacturing revenues and related manufacturing cost of goods sold are
attributable to Percy Kent, whose operating results from June through
September 1997 are included in the Company's consolidated financial
statements.
Total energy costs decreased slightly despite an increase in total energy
requirements. The decrease in costs is primarily attributable to lower
coal costs at the Lake Road plant which resulted in increased generation
replacing more expensive purchased power.
The increase in other operations is primarily attributable to
administrative expenses of Percy Kent.
The increase in interest expense is due to interest charges for Percy Kent
borrowings.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company had $3.7 million in cash and temporary
investments. The Company also has bank credit arrangements of $5.5 million
in conventional lines of credit with no borrowings outstanding under these
agreements at September 30, 1997.
Financial coverages are at levels in excess of those required for issuance
of debt and preferred stock. In October 1997, Standard and Poors upgraded
the Company's senior secured debt rating from A- to A.
Capital expenditures, net of allowance for funds used during construction
and including non-utility investments, are currently projected to be $6.2
million for the remainder of 1997 and about $77.0 million for the remainder
of 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.
<PAGE>
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
None.
Item 5. Other Information
a. Richard M. Burridge resigned from the board of directors effective
October 31, 1997 for personal reasons. The board of directors
expects to select a replacement at the November 19, 1997 board
meeting.
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 September 30, 1997.
<PAGE>
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: November 12, 1997
/s/ L. J. Stoll
L. J. STOLL
Vice President-Finance, Treasurer
and Assistant Secretary
(Duly Authorized Officer)
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