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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED).
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 STREET, 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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
COMMON STOCK, NEW YORK STOCK EXCHANGE
WITHOUT PAR VALUE
Securities registered pursuant to Section 12(g) of the Act: None
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the registrant's outstanding
common stock, based on the closing price therefor on the New York
Stock Exchange at February 28, 1998, was $146,792,513.
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 8,071,066 SHARES
(Class) (Outstanding at February 28, 1998)
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1997 Annual Report to Shareholders are
incorporated by reference into Parts I, II and IV.
Portions of the 1998 Definitive Proxy Statement for the 1998
annual meeting are incorporated by reference into Part III,
excluding therefrom the sections titled "Report of Compensation
Committee" and "Cumulative Total Shareholder Return."
The 1997 Annual Report to Shareholders and the 1997 Definitive
Proxy Statement will be mailed to shareholders on or about April
10, 1998.
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ST. JOSEPH LIGHT & POWER COMPANY
PART I
ITEM 1 - BUSINESS.
St. Joseph Light & Power Company is a Missouri corporation,
incorporated in 1895. SJLP Inc., its wholly owned subsidiary, was
formed in September 1996 to pursue investments in non-utility
areas. Collectively, these entities are referred to as the
"Company."
The Company is engaged primarily in the generation,
transmission and distribution of electric energy to customers in
its ten-county service territory in northwest Missouri. It
supplies this service in St. Joseph, the headquarters city, and
52 other incorporated communities and the intervening rural
territory. The service area contains approximately 3,300 square
miles. At December 31, 1997, there were approximately 61,000
electric customers. In 1997, electric revenues accounted for 75%
of total operating revenues. Natural gas for residential,
commercial and industrial purposes is provided to customers in
Maryville, a state university town of about 10,000, and 14 other
smaller communities in northwest Missouri. Natural gas revenues
accounted for 5% of total operating revenues in 1997. Currently
there are about 6,400 natural gas customers. The Company
supplies industrial steam to six customers in St. Joseph.
Industrial steam revenues accounted for 5% of total operating
revenues in 1997.
Effective May 31, 1997, SJLP Inc. acquired a controlling
interest in Percy Kent, a manufacturer of multiwall and small
paper bags, primarily for food products, agricultural products,
specialty chemicals, pet foods and other consumer packaging
companies throughout the United States. In 1997, manufacturing
revenues accounted for 15% of total operating revenues.
SOURCES AND AVAILABILITY OF RAW MATERIALS.
The Company's principal fuel for electric generation is coal.
Small amounts of natural gas and oil are also used. During 1997,
fuels utilized for electric generation consisted of 94% coal, 3%
oil and 3% gas.
The Company, Kansas City Power & Light Company (KCP&L) and The
Empire District Electric Company (EDE), the joint owners of the
Iatan plant, have a twenty-year agreement with a Wyoming mine for
low sulfur western coal. The agreement provides for approximately
two million tons of coal per year through 2003. The coal is
delivered by rail under an agreement which extends through 2000.
The remainder of the coal requirements at the Iatan plant are met
with spot purchases.
Management anticipates meeting coal requirements for the Lake
Road plant in 1998 with present inventory, short-term contracts
and spot purchases. The Company's rail contract provides for a
minimum of 180,000 tons per year and expires at the end of 2001.
Natural gas requirements are met with purchases from regional
suppliers and transported under the industrial tariffs of
Missouri Gas Energy as an interruptible customer. The Company
meets all of its oil requirements through spot purchases.
The Company acquires its natural gas for resale on the open
market and with short-term contracts. An agreement with ANR
Pipeline Company provides natural gas storage and transportation
services until 2003. Management believes the arrangement is
sufficient to fulfill its natural gas requirements.
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ST. JOSEPH LIGHT & POWER COMPANY
FRANCHISES.
The Company currently holds non-exclusive franchises for its
electric utility operations in substantially all of the
incorporated portions of its service area. The Company holds a
perpetual electric franchise without limitation of time in St.
Joseph. Franchises in 51 additional incorporated municipalities
expire in various years until 2016. One small community is
served without a franchise.
The Company holds gas franchises in each of the 15 communities
served, expiring in various years until 2016.
COMPETITION.
There are four rural electric cooperatives (RECs) within the
Company's service area. These RECs purchase their total power
requirements from generating and transmission cooperatives which
are financed partially by government loans or grants.
Two municipally owned electric distribution systems are
located in the Company's territory serving approximately 900
customers.
The Company's rates are significantly lower than the RECs and
municipally owned systems in the area and also compare very
favorably with other investor-owned utilities in the region.
Further competition information is incorporated by reference to
Management's Discussion and Analysis of Financial Condition and
Results of Operations in the 1997 Annual Report to Shareholders,
pages 10-15, which is Exhibit 13 hereto.
FINANCIAL INFORMATION ABOUT SEGMENTS OF BUSINESS.
This information is incorporated by reference to Note 8 of the
Notes to Consolidated Financial Statements in the 1997 Annual
Report to Shareholders, page 27, which is Exhibit 13 hereto.
ENVIRONMENTAL REQUIREMENTS.
This information is incorporated by reference to Management's
Discussion and Analysis of Financial Condition and Results of
Operations of the 1997 Annual Report to Shareholders, pages 10-
15, which is Exhibit 13 hereto.
NUMBER OF EMPLOYEES.
There were 342 full time employees and 7 part time employees
at December 31, 1997.
ITEM 2 - PROPERTIES.
The Company has an agreement with KCP&L and EDE for joint
ownership of the coal-burning generating plant at Iatan,
Missouri. The Company's 18% share of this plant is 121 megawatts
(mw) of net capability. Refer to "Jointly Owned Iatan Plant"
incorporated by reference to Note 1 of Notes to Consolidated
Financial Statements in the 1997 Annual Report to Shareholders,
page 22, which is Exhibit 13 hereto.
The Company owns the Lake Road generating station in St.
Joseph, Missouri with an aggregate net capability of 257 mw
(summer rating), of which 107 mw is coal-fired and 150 mw utilize
natural gas and oil.
Page 3
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ST. JOSEPH LIGHT & POWER COMPANY
ITEM 2 - PROPERTIES (Continued)
The Company owns a 62-mile segment of a 582 mile, 345 KV
transmission line connecting utilities from Kansas City, Missouri
to Minneapolis, Minnesota. A second 345 KV line, 23 miles in
length, is used as a tie-line for two neighboring utilities, one
of which pays all fixed and operating costs. The Company also
owns 32 miles of 345 KV line connecting the Iatan generating
plant with the Company's system. In addition, the Company
constructed, with six other regional utilities, a 103-mile, 345
KV transmission line, primarily in northwest Missouri, to
strengthen the interconnection network. The line provides a high
capacity interconnection facility directly linking the electric
transmission systems of Nebraska Public Power District,
Associated Electric Cooperative of Springfield, Missouri, and St.
Joseph Light & Power Company. The Company has 97 miles of 161 KV
transmission line which serves as the "backbone" for its internal
transmission/distribution system, and owns the necessary lower
voltage distribution lines, distribution substations,
transformers and equipment required to provide service in its
territory.
ITEM 3 - LEGAL PROCEEDINGS.
Certain legal actions are pending which, in management's
opinion, are not expected to materially affect the Company's
financial position or results of operations.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during
the fourth quarter of 1997.
EXECUTIVE OFFICERS OF THE REGISTRANT.
The following are the executive officers of the Company:
T. F. STEINBECKER, President. Age 52. BSBA and MBA, University
of Missouri and CPA. Employed by the Company in 1975;
executive capacity since 1976; present position since May
1986.
G. L. MYERS, Vice President, General Counsel and Secretary. Age
44. AB, Washington University. JD, University of Missouri-
Kansas City. Employed by the Company and executive capacity
since 1979; General Counsel and Secretary from May 1989 -
January 1996; present position since February 1996.
L. J. STOLL, Vice President--Finance, Treasurer and Assistant
Secretary. Age 45. BSBA, Missouri Western State College.
MBA, Northwest Missouri State University. Employed by the
Company in 1975; executive capacity since 1980; present
position since May 1986.
J. A. STUART, Vice President--Customer Services and Energy
Delivery. Age 44. BSEE, California Polytechnic State
University. Employed by the Company in present position
since 1994. Prior positions include Senior Operations
Consultant, Pacific Gas and Electric Company, June 1993-
March 1994, and Gas and Electric Operations Manager, Pacific
Gas and Electric Company, March 1991-June 1993.
D. V. SVUBA, Vice President--Energy Supply. Age 55. BSEE, Iowa
State University. MSEE, University of Missouri. Employed
by the Company in 1966; executive capacity since 1990;
present position since November 1990.
Each officer is covered by a three-year employment agreement.
There are no family relationships between any officers of the
Company.
Page 4
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ST. JOSEPH LIGHT & POWER COMPANY
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Information regarding the principal market for the Company's
common stock, the market prices and the dividends paid on such
stock for the past two years is incorporated by reference to the
1997 Annual Report to Shareholders, pages 9 and 33, which is
Exhibit 13 hereto.
There were 4,584 holders of record of the Company's common
stock as of February 3, 1998, the record date fixed for the
dividend paid on February 18, 1998.
ITEM 6 - SELECTED FINANCIAL DATA.
This information is incorporated by reference to the 1997
Annual Report to Shareholders, page 9, which is Exhibit 13
hereto.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
This information is incorporated by reference to the 1997
Annual Report to Shareholders, pages 10-15, which is Exhibit 13
hereto.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
This information is incorporated by reference to the 1997
Annual Report to Shareholders, pages 16-29, which is Exhibit 13
hereto.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS OF THE REGISTRANT.
Information required by Item 10 regarding directors is not
answered for the reason that the registrant will, within 120 days
after the close of the fiscal year, file with the Securities and
Exchange Commission a "Definitive Proxy Statement" pursuant to
Regulation 14A of the Securities Exchange Act of 1934. The
information required is incorporated by reference to such
Definitive Proxy Statement. Certain information concerning the
executive officers of the Company is set forth in Part I under
the caption "Executive Officers of the Registrant."
Page 5
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ST. JOSEPH LIGHT & POWER COMPANY
ITEM 11 - EXECUTIVE COMPENSATION.
Item 11 is not answered for the reason that the registrant
will, within 120 days after the close of the fiscal year, file
with the Securities and Exchange Commission a "Definitive Proxy
Statement" pursuant to Regulation 14A of the Securities Exchange
Act of 1934. The information required is incorporated by
reference to such Definitive Proxy Statement.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Item 12 is not answered for the reason that the registrant
will, within 120 days after the close of the fiscal year, file
with the Securities and Exchange Commission a "Definitive Proxy
Statement" pursuant to Regulation 14A of the Securities Exchange
Act of 1934. The information required is incorporated by
reference to such Definitive Proxy Statement.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Item 13 is not answered for the reason that the registrant
will, within 120 days after the close of the fiscal year, file
with the Securities and Exchange Commission a "Definitive Proxy
Statement" pursuant to Regulation 14A of the Securities Exchange
Act of 1934. The information required is incorporated by
reference to such Definitive Proxy Statement.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
Financial Statements:
This information is incorporated by reference (as set forth
below) to the 1997 Annual Report to Shareholders, which is
Exhibit 13 hereto.
Consolidated Statements of Income, page 16
Consolidated Balance Sheets, page 17
Consolidated Statements of Capitalization, pages 18-19
Consolidated Statements of Retained Earnings, page 19
Consolidated Statements of Cash Flows, page 20
Consolidated Statements of Taxes, page 21
Notes to Consolidated Financial Statements, pages 22-28
Responsibility for Financial Statements, page 29
Report of Independent Public Accountants, page 29
FINANCIAL STATEMENT SCHEDULES:
Schedule II - Valuation and Qualifying Accounts - For the years
ended December 31, 1997, 1996 and 1995 (page 10).
Schedules not listed above are omitted because of absence of
conditions under which they are required or because the required
information is included in the financial statements submitted.
Page 6
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ST. JOSEPH LIGHT & POWER COMPANY
LIST OF EXHIBITS:
Exhibit 3 (a) - Restated Articles of Incorporation adopted on
May 20, 1987, which are incorporated by
reference to page 16 of the 1987 Form 10-K.
(b) - * By-laws of Company as amended on March 19,
1997.
Exhibit 4 (a) - Indenture of Mortgage and Deed of Trust dated
April 1, 1946, between the Company and Harris
Trust and Savings Bank and Bartlett Boder,
Trustee which is incorporated by reference to
Exhibit(b)(1)-C in File No.2-62825.
(b) - Seventeenth Supplemental Indenture dated as of
February 1, 1991 between the Company and Harris
Trust and Savings Bank, which is incorporated by
reference to the 1995 Form 10-K.
(c) - Medium-Term Notes Issuing and Paying Agency
Agreement dated as of November 19, 1993 between
the Company and Harris Trust and Savings Bank,
which is incorporated by reference to the 1995
Form 10-K.
(d) - Rights Agreement dated September 18, 1996,
which is incorporated by reference to Exhibit 4
to Form 8-K, dated October 1, 1996.
Long-term debt instruments of the Company in
amounts not exceeding ten percent of the total
assets of the Company will be furnished to the
Commission upon request.
Exhibit 10 (a) - Coal Freight Agreement between Burlington
Northern Railroad Company, Seller, and Kansas
City Power & Light Company, St. Joseph Light &
Power Company and The Empire District Electric
Company, Buyers. This exhibit is incorporated
by reference to page 17 of the 1986 Form 10-K.
Amendment to Coal Freight Agreement, as amended
on May 20, 1995, is incorporated by reference to
the 1995 Form 10-K.
(b) - Coal Supply Agreement between Atlantic
Richfield Company, Seller, and Kansas City Power
& Light Company, St. Joseph Light & Power
Company and The Empire District Company, Buyers.
This exhibit is incorporated by reference to
page 17 of the 1983 Form 10-K.
(c) - CFSI Agreement which is incorporated by
reference to page 17 of the 1989 Form 10-K.
(d) - ** Form of Key Management Employment Agreements
which is incorporated by reference to page 18 of
the 1990 Form 10-K. Amendment to Key Management
Employment Agreements as amended on December 1,
1993, which is incorporated by reference to page
18 of the 1993 Form 10-K.
(e) - Directors Indemnification Agreement, which is
incorporated by reference to page 19 of the 1993
Form 10-K.
(f) - ** Supplemental Executive Retirement Plan which
is incorporated by reference to page 19 of the
1990 Form 10-K. Amendment to Supplemental
Executive Retirement Plan as amended on November
17, 1993, which is incorporated by reference to
page 20 of the 1993 Form 10-K.
Page 7
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ST. JOSEPH LIGHT & POWER COMPANY
LIST OF EXHIBITS (CONTINUED):
(g) - Gas Service Agreements with ANR Piepline
Company, which are incorporated by reference to
page 21 of the 1993 Form 10-K.
(h) - *
** Long-Term Incentive Plan (Amended and
Restated)
(i) - ** Long-Term Stock Incentive Plan for Non-
Employee Directors, which is incorporated by
reference to Exhibit 10(I) to the 1996 Form 10-
K.
(j) - Purchased power agreemetn with Nebraska Public
Power District, which is incorporated by
reference to Exhibit 10(j) to the 1996 Form 10-
K.
(k) - *
** Officers' Annual Bonus Plan.
Exhibit 13 - * The 1997 Annual Report to Shareholders.
Exhibit 21 - * Subsidiaries of Registrant.
Exhibit 23 - * Consent of Independent Public Accountants.
Exhibit 27 - * Financial Data Schedule.
* Filed herewith.
** Exhibits marked with a double asterisk related
to management contracts or compensatory
arrangements.
REPORTS ON FORM 8-K:
No Current Report on Form 8-K was filed during the quarter ended
December 31, 1997.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To St. Joseph Light & Power Company:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in St.
Joseph Light & Power Company's Annual Report to Shareholders
incorporated by reference in this Form 10-K, and have issued our
report thereon dated January 23, 1998. Our audits were made for
the purpose of forming an opinion on those statements taken as a
whole. The schedules listed in the index above are presented for
purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial
statements. These schedules have been subjected to the auditing
procedures applied in our audits of the basic financial
statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Kansas City, Missouri,
January 23, 1998
Page 8
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ST. JOSEPH LIGHT & POWER COMPANY
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
March 18, 1998 By /s/ T.F. Steinbecker
President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ Terry F. Steinbecker President & Director March 18, 1998
(Chief Executive Officer)
/s/ Larry J. Stoll Vice-President-Finance, March 18, 1998
Treasurer & Assistant
Secretary (Principal
Financial & Accounting
Officer)
/s/ J.P. Barclay, Jr. Director March 18, 1998
/s/ D.A. Beck Director March 18, 1998
/s/ D.A. Burkhardt Director March 18, 1998
/s/ J.P. Carolus Director March 18, 1998
/s/ W.J. Gremp Director March 18, 1998
/s/ D.W. Shinneman Director March 18, 1998
/s/ R.L. Simpson Director March 18, 1998
/s/ G.R. Sprong Director March 18, 1998
Page 9
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Schedule II
ST. JOSEPH LIGHT & POWER CO.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
Deductions
------------- ------------- for Purposes
Balance at for Which
Begininning Charged to Charged to Reserves Were Balance at
Description of Year Expense Construction Created End of Year
- ---------------------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Valuation accounts deducted
from assets to which they
apply -
Accumulated Provision for
Uncollectible Accounts:
December 31, 1997 $ 232,018 $ 218,224 $ 0 $ 180,214(1) $ 270,028
December 31, 1996 $ 324,130 $ 191,624 $ 0 $ 283,736(2) $ 232,018
December 31, 1995 $ 339,147 $ 161,156 $ 0 $ 176,173(3) $ 324,130
Other reserves -
Accumulated Provision for
Injuries and Damages:
December 31, 1997 $ 392,547 $ 81,304 $ 14,219 $ 131,040 $ 357,029
December 31, 1996 $ 362,395 $ 88,920 $ 5,394 $ 64,162 $ 392,547
December 31, 1995 $ 299,193 $ 394,414 $ 46,845 $ 378,057 $ 362,395
Accumulated Provision for
Major Medical:
December 31, 1997 $ 5,525 $1,262,902 $ 297,971 $1,460,873 $ 105,525
December 31, 1996 $ 5,525 $ 830,819 $ 170,167 $1,000,986 $ 5,525
December 31, 1995 $ 5,525 $ 622,163 $ 128,037 $ 750,200 $ 5,525
Accumulated Provision for
Other Post Employment
Benefits:
December 31, 1997 $1,356,468 $ 996,974 $ 198,567 $1,208,615 $1,343,394(4)
December 31, 1996 $1,336,809 $1,020,914 $ 202,121 $1,203,376 $1,356,468(5)
December 31, 1995 $1,290,991 $1,030,996 $ 182,061 $1,167,239 $1,336,809(6)
(1) Net of $204,682 recovery on accounts previously charged off and $75,000
reserve of Percy Kent Bag Co., Inc. on acquisition date.
(2) Net of $143,935 recovery on accounts previously charged off.
(3) Net of $128,419 recovery on accounts previously charged off.
(4) Includes Iatan reserve of $172,272.
(5) Includes Iatan reserve of $139,157.
(6) Includes Iatan reserve of $133,845.
</TABLE>
Page 10 of 10
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EXHIBIT 10 (h)
ST. JOSEPH LIGHT & POWER COMPANY
LONG-TERM INCENTIVE PLAN
ADOPTED MAY 18, 1994
(AMENDED & RESTATED MARCH 20, 1996)
1. PURPOSE. The purpose of the St. Joseph Light & Power Company
(the "Company") Long-Term Incentive Plan (the "Plan") is to
aid the Company in retaining qualified and competent
management personnel and to encourage significant
contributions by such personnel to the success of the Company
by providing additional incentive to those employees who
contribute to the successful and profitable operations of the
Company. Aggressively pursuing cost savings and expense
reductions where appropriate are integral parts of a
successful operation and translate into significant benefits
for customers and shareholders alike. It is believed that
these purposes will be furthered through granting to officers
and key employees common stock of the Company ("Stock
Awards"), as provided Herein, so that such officers and
employees will be encouraged and enabled to acquire a larger
personal interest in the continued success of the Company.
2. ELIGIBILITY. Officers of the Company shall be granted Stock
Awards in accordance with Section 5 of this Plan. In
addition, grants of Stock Awards may be made by the
Compensation Committee (the "Committee") of the Board of
Directors of the Company (the "Board") to key employees in
accordance with Section 5 of this Plan. A Stock Award may
only be granted to an employee of the Company.
3. GENERAL ADMINISTRATION. The Committee shall have full power
and authority to administer and interpret the Plan, subject
to the provisions of the Plan and as to such matters as are
reserved under the Plan to the Board. Any interpretation of
the Plan or other act of the Committee in administering the
Plan shall be final and binding on all employees. The
Committee may adopt such procedures as it deems necessary or
appropriate in administering the Plan. No member of the
Committee shall be liable for any action or determination
made in good faith with respect to the Plan or any Stock
Award granted under the Plan.
4. SHARES SUBJECT TO THE PLAN. The total number of shares of
common stock of the Company ("common Stock") available for
Stock Awards on and after May 18, 1994, shall not exceed one
hundred sixty thousand (160,000). Shares reserved under the
Plan shall be appropriately adjusted as provided in Section
11. Shares subject to Stock Awards under the Plan may be
either authorized and unissued shares or issued shares which
are reacquired by the Company and held in its treasury.
<PAGE>
5. MANAGEMENT INCENTIVE.
(a) DEFINITIONS.
(i) "Performance Cycles" shall mean three consecutive
calendar years. Performance Cycles shall overlap (for
example, Performance Cycle 1 shall be January 1, 1994
to December 31, 1996 while Performance Cycle 2 shall
be January 1, 1995 to December 31, 1997 and so on).
(ii) "Peer Group Utilities" shall mean all the companies
contained in the "EEI 100 Index of Investor-Owned
Electrics."
(iii)"Total Shareholder Return" shall mean Common Stock
market price appreciation/depreciation and dividends.
(b) THRESHOLD GOAL FORMULA.
(i) Stock Awards shall be granted as of the first day of
a Performance Cycle. The Threshold level of a Stock
Award shall be determined as a percent of the annual
compensation base rate as follows:
Percent of Annual
Compensation
Participants Base Rate
------------ -----------------
President 30%
Other Officers 20%
All Others To be determined by
the Committee but
not to exceed 20%
The respective Threshold percentage of the annual
compensation base rate shall be applied to the
participant's annual compensation base rate as of the
first-day of a Performance Cycle; provided, however,
the Committee may, in its discretion, affix a day
different from the first day of a Performance Cycle
for this purpose for a newly hired or promoted
employee. This product shall be translated into a
number of shares of Common Stock by dividing this
product by the closing price of the Common Stock as
of the first business day of the Performance Cycle.
This amount expressed in shares for each respective
participant shall be that participant's Threshold
Goal.
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(c) PERFORMANCE CRITERION.
(i) Subject to Section 6, a participant shall earn a
Stock Award as of the end of the Performance Cycle
applicable to such award based upon performance
against a "Total Shareholder Return" criterion. A
Total Shareholder Return for the universe of Peer
Group Utilities referenced above shall be examined at
the end of a Performance Cycle in comparison to the
Total Shareholder Return of the Company for that same
period. The amount of Stock Award which is earned
shall be determined based on the Company's percentile
ranking as measured against the Peer Group Utilities
as follows:
Percentile Award as a %
Performance of Threshold Goal
--------------------- -----------------
Up to But
From Excluding
0% 50% 0%
50% 55% 75%
55% 60% 85%
60% 65% 100%
65% 70% 120%
70% 75% 150%
75% 80% 175%
80% or higher 200%
(ii) A prorated Stock Award shall be earned in Accordance
with Section 5(c)(i) prior to the end of such award's
Performance Cycle in the event of a participant's
death, total disability or retirement under the early
or normal provisions of any defined benefit pension
plan sponsored by the Company in which the
participant participates ("Retirement"). Such
terminations of employment are referred to
individually or collectively as a Triggering Event.
In order to make an award determination, the
Committee shall calculate the Peer Group Utilities'
performance for the applicable Performance Cycles to
date (using the beginning of each respective
Performance Cycle through the date of the Triggering
Event) and compare the Company's performance to that
of the Peer Group Utilities'. The Committee shall
prorate the respective Stock Awards applicable to
each Performance Cycle rounded to the nearest month.
Acknowledging that the performance of the Peer Group
Utilities may be difficult to ascertain at a
particular point in time, the Committee shall use the
most recent data available with respect to the
Triggering Event.
(iii) A Stock Award shall be earned in accordance with
Section 5(c)(i) prior to the end of such award's
Performance Cycle in the event of a Change of
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Control, as defined in Section 8. The Committee shall
use the same methodology as outlined in 5(c)(ii)
above with the event of Change of Control treated in
the same manner as a Triggering Event. No proration,
however, shall be applied.
(iv) A Stock Award, or portion thereof, may also be
earned in accordance with Section 5(c)(i) prior to
the end of such award's Performance Cycle in the
event of a participant's voluntary termination of
employment (other than by reason of total disability
or Retirement). If the Committee chooses to make such
an award, it shall use the same methodology as
outlined in 5(c)(ii) above with the event of
voluntary termination treated. in the same manner as
a Triggering Event. Any Stock Award made under this
provision shall be in the absolute discretion of the
Committee.
(v) Notwithstanding anything herein to the contrary, no
Stock Award, or portion thereof, shall be earned for
a Performance Cycle in which the Total Shareholder
Return for the Performance Cycle is not positive.
6. EARNING OF STOCK AWARDS. No Stock Award shall be earned until
the Committee by resolution, written consent or other
appropriate action makes such determination with respect to a
particular employee (the "Grantee") and a Restricted Stock
Agreement is executed by the Company and the Grantee setting
forth the terms and conditions of the Stock Award.
7. STOCK AWARDS.
(a) RESTRICTIONS ON TRANSFER. A certificate or certificates
representing the shares earned with respect to a Stock
Award shall be issued in accordance with Section 10. Such
shares of Common Stock shall be subject to such terms and
conditions as the Committee determines to be appropriate
including, without limitation, restrictions on the sale
or other disposition of such shares. Except as herein
provided, such shares shall be subject to restrictions
Against transfer and shall not be sold, transferred,
assigned or otherwise disposed of by the Grantee.
However, the Grantee may, with the written consent of the
Board, tender such shares for sale or exchange in the
event of any tender offer within the meaning of Section
14(d) of the Securities Exchange Act of 1934. Except as
described in Section 7(b)(ii) and (iii) or as may be
expressly provided otherwise in a written agreement
approved by the Committee between the Company and the
Grantee, in the event of the termination of full-time
employment with the Company prior to the termination date
of restrictions pertaining to the Stock Award, the shares
then subject to restrictions shall be
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forfeited by the Grantee and shall become the property of
the Company.
All restrictions applicable to a Stock Award shall also
apply to any shares resulting from a stock dividend,
stock split or other distribution of shares of the
Company with respect to the Stock Award and shall also
apply to any securities issuable upon any change or any
exchange of stock referred to in Section 11, effective as
of the grant date of such Stock Award.
(b) TERMINATION OF RESTRICTIONS. The restrictions imposed
under Section 7(a) shall lapse, expire or terminate upon
the earliest to occur of:
(i) The third anniversary of the date as of which the
Stock Award is earned; or
(ii) Upon termination of the Grantee's employment with
the Company because of death, total disability or
Retirement; or
(iii)In the event of a Change of Control.
8. CHANGE OF CONTROL. A "Change of Control" of the Company shall
mean:
(1) the acquisition by any individual, entity or group
(a "Person"), including any "person" within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934 (the "Exchange Act"), of beneficial ownership within
the meaning of Rule 13d-3 promulgated under the Exchange Act,
of 20 percent or more of the then outstanding shares of
Common Stock (the "Outstanding Common Stock"); provided that
the following acquisitions shall not constitute a Change of
Control: (A) any acquisition directly from the Company
(excluding any acquisition resulting from the exercise of a
conversion or exchange privilege in respect of outstanding
convertible or exchangeable securities), (B) any acquisition
by the Company, (C) any acquisition by an employee benefit
plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, (D) any
acquisition by any corporation pursuant to a reorganization,
merger or consolidation involving the Company, if,
immediately after such reorganization, merger or
consolidation, each of the conditions described in clauses
(i), (ii) and (iii) of subsection (3) of this Section 8 shall
be satisfied; and provided further, that for purposes of
clause (B), if any Person (other than the Company or any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company) shall become the beneficial owner of 20 percent
or more of the outstanding Common Stock by reason of
acquisition by the Company, and such Person shall, after such
acquisition by the Company, become the beneficial owner of
any additional shares of the
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Outstanding Common Stock and such beneficial ownership is
publicly announced, such additional beneficial ownership
shall constitute a Change of Control;
(2) individuals who, immediately after the Company's
1994 Annual Meeting of Shareholders, constitute the Board of
Directors (the "Incumbent Board"), cease for any reason to
constitute at least a majority of the Board; provided that
any individual who becomes a director subsequent to the date
of the Company's 1994 Annual Meeting of Shareholders whose
election, or nomination for election by the Company's
shareholders, was approved by the vote of at least 66-2/3
percent of the directors then comprising the Incumbent Board
shall be deemed to have been a member of the Incumbent Board;
and provided further, that no individual who was initially
elected as a director as a result of an actual or threatened
election contest, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act, or any
other actual or threatened solicitation of proxies or
consents by or on behalf of any Person other than the Board
shall be deemed to have been a member of the Incumbent Board;
(3) approval by the shareholders of the Company of a
reorganization, merger or consolidation unless, in any such
case, immediately after such reorganization, merger or
consolidation, (i) more than 60 percent of the then
outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation
and more than 60 percent of the combined voting power of the
then outstanding securities of such corporation entitled to
vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals or entities who were the
beneficial owners, respectively, of the Outstanding Common
Stock immediately prior to such reorganization, merger or
consolidation and in substantially the same proportions
relative to each other as their ownership, immediately prior
to such reorganization, merger or consolidation, of the
Outstanding Common Stock, (ii) no Person other than the
Company, any employee benefit plan (or related trust)
sponsored or maintained by the Company or the corporation
resulting from such reorganization, merger or consolidation
(or any corporation controlled by the Company) and any Person
which beneficially owned, immediately prior to such
reorganization, merger or consolidation, directly or
indirectly, 20 percent or more of the outstanding Common
Stock) beneficially owns, directly or indirectly, 15 percent
or more of the then outstanding shares of common stock of
such corporation or 20 percent or more of the combined voting
power of the then outstanding securities of such corporation
entitled to vote generally in the election of directors and
(iii) at least a majority of the members of the board of
directors of the corporation resulting from such
reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial
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agreement or action of the Board of Directors providing for
such reorganization, merger or consolidation; or
(4) approval by the shareholders of the Company of (i) a
plan of complete liquidation or dissolution of the Company or
(ii) the sale or other disposition of all or substantially
all of the assets of the Company other than to a corporation
with respect to which, immediately after such sale or other
disposition, (A) more than 60 percent of the then outstanding
shares of common stock thereof and more than 60 percent of
the combined voting power of the then outstanding securities
thereof entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly,
by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the
Outstanding Common Stock immediately prior to such sale or
other disposition and in substantially the same proportions
relative to each other as their ownership, immediately prior
to such sale or other disposition, of the Outstanding Common
Stock, (B) no Person other than the Company, any employee
benefit plan (or related trust) sponsored or maintained by
the Company or such corporation (or any corporation
controlled by the Company) and any Person which beneficially
owned, immediately prior to such sale or other disposition,
directly or indirectly, 20 percent or more of the Outstanding
Common Stock beneficially owns, directly or indirectly, 20
percent or more of the then outstanding shares of common
stock thereof or 20 percent or more of the combined voting
power of the then outstanding securities thereof entitled to
vote generally in the election of director and (C) at least a
majority of the members of the board of directors thereof
were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board
providing for such sale or other disposition.
9. TAXES. The Company shall have the right to require, prior to
the delivery of any shares of Common Stock, payment by a
Grantee of federal, state, local or other taxes which may be
required to be withheld or paid in connection with a Stock
Award.
10. STOCKHOLDER AND EMPLOYMENT RIGHTS. Effective as of the date
on which all or a portion of a Stock Award is earned in
accordance with Section 5(c), a certificate or certificates
representing the earned shares shall be registered on the
Company's books in the name of the Grantee; however, the
certificates shall be held by the Company for the account of
the Grantee and the Grantee shall deliver to the Company a
stock power or powers executed in blank, covering such
shares. Except as otherwise provided, the Grantee shall have
all the rights of a stockholder including the right to
receive dividends and to vote the shares. As and when
restrictions terminate, the certificates representing such
shares shall be released to the Grantee. While in its
possession, the Company reserves the right to place a legend
on the certificates
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<PAGE>
restricting their transferability and referring to the terms
and conditions (including forfeitures) applicable to the
shares represented by the certificate.
Each Stock Award shall be subject to the requirement that if
at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock
subject to such award upon any securities exchange or under
any law, the consent or approval of any governmental body, or
the taking of any other action is necessary or desirable as a
condition of, or in connection with, the issuance of shares
or the release of certificates representing such shares, such
shares shall not be issued or such certificates released
unless such listing, registration, qualification, consent,
approval or other action shall have been effected or
obtained, free of any conditions not acceptable to the
Company.
Nothing in the Plan or in any Stock Award granted pursuant to
the Plan shall confer on any individual any right to be or to
continue in the employ of the Company or any of its
subsidiaries or shall interfere in any way with the right of
the Company or any of its subsidiaries to terminate the
employment of any individual at any time.
11. CHANGE IN STOCK, ADJUSTMENTS, ETC. If the outstanding shares
of Common Stock shall be changed into or exchanged for a
different number or kind of shares of stock or other
securities of the Company or of another corporation (whether
by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares, or
otherwise), or in the event of a stock dividend, stock split
or other distribution to shareholders (other than a regular
cash dividend) in which the participant does not participate,
the Committee shall make payment adjustments, in its sole
discretion, to the number and kind of securities reserved for
the purposes of the Plan and the number and kind of
securities subject to each outstanding Stock Award. If any
adjustment would result in a fractional security being
subject to a Stock Award, the Company shall pay the Grantee
thereof an amount in cash determined by multiplying the
fraction of such security (rounded to the nearest hundredth)
by the fair market value of a share of Common Stock, as
determined in the Committee's sole discretion.
12. AMENDMENT AND TERMINATION. The Board shall have complete
power and authority to amend or terminate the Plan at any
time; provided, however, that (a) an amendment or termination
of Section 5 of this Plan shall be adopted only at the
regularly scheduled March Board meeting and shall be
effective as of the beginning of the new Performance Cycle in
which such amendment or termination was adopted and no other
action throughout the Performance Cycle shall change the
benefits or performance criteria or goals with respect to an
outstanding Performance Cycle and (b) the category of
officers to be granted Stock Awards, the date of grant of a
Stock Award to
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<PAGE>
such officers, the formula for determining the amount of a
Stock Award earned by such officers during a Performance
Cycle (including applicable performance levels), and other
provisions of this Plan which affect eligibility for, and the
amount, price and timing of, Stock Awards granted to such
officers, shall not be amended more than once every six
months other than to comport with changes in the Internal
Revenue Code and the Employee Retirement Income Security Act
of 1974 and the rules thereunder; provided, further, that no
amendment shall be made without shareholder approval if such
amendment would (a) increase the maximum number of shares of
Common Stock available under this Plan (subject to Section
11), or (b) require the approval of shareholders under
applicable law or regulation.
No termination or amendment of the Plan may, without the
consent of the Grantee of any Stock Award, adversely affect
the rights of such Grantee with respect to any outstanding
Stock Award. This Plan shall continue after its effective
date unless terminated earlier by the Board. The termination
of the Plan shall not affect restrictions on Stock Awards
outstanding or existing at the time of such termination.
13. GOVERNMENTAL REGULATIONS AND CONSTRUCTION. The obligation of
the Company to deliver shares of Common Stock under Stock
Awards granted pursuant to the Plan shall be subject to all
applicable laws, rules and regulations and to such approvals
by any governmental agencies as may be required. The Plan
shall be interpreted and construed in accordance with the
laws of the State of Missouri.
14. EFFECT ON OTHER BENEFITS. The value of any Stock Awards
(either on the date granted or at the time restrictions on
shares are terminated) shall not be included as compensation
or earnings for purposes of the calculation of benefits under
any other benefit plan offered by the Company.
15. EFFECTIVE DATE. This Plan shall be submitted to the
shareholders of the Company at the 1994 Annual Meeting of
Shareholders for approval, and, if approved, shall be
effective for Performance Cycle 1 beginning January 1, 1994.
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EXHIBIT 10 (k)
ST. JOSEPH LIGHT & POWER COMPANY
OFFICERS ANNUAL BONUS PLAN
ADOPTED MARCH 20, 1996
1. PURPOSE. The purpose of the St. Joseph Light & Power Company
(the "Company") Annual Bonus Plan (the "Plan") is to aid the
Company in retaining qualified and competent management and
to encourage significant contributions by such personnel to
the success of the Company by providing additional incentive
to those employees who contribute to the successful and
profitable operations of the Company while simultaneously
managing expenses for the benefit of the customer and
shareholder alike. It is believed that these purposes will be
furthered through the granting of Cash Awards to officers as
provided herein.
2. GENERAL ADMINISTRATION. The Compensation Committee (the
"Committee") shall have full power and authority to
administer and interpret the Plan, subject to the provisions
of the Plan and as to such matters as are reserved under the
Plan to the Board. Any interpretation of the Plan or other
act of the Committee in administering the Plan shall be final
and binding on all employees. The Committee may adopt such
procedures as it deems necessary or appropriate in
administering the Plan. No member of the Committee shall be
liable for any action or determination made in good faith
with respect to the Plan or any Cash Award granted under the
Plan.
3. ELIGIBILITY. Subject to Section 6, the officers of the Company
shall be granted Cash Awards as set forth in Section 4.
4. MANAGEMENT BONUS.
(a) DEFINITIONS.
(i) "Plan Year" shall mean the Company's fiscal year.
(ii) "Return on Equity" (ROE) shall mean the total
after-tax earnings available for common stock
divided by the period ending shareholder equity.
(iii)"Peer Group Utilities" shall mean the investor-owned
companies, or their successors by any merger or
consolidation, participating in the Missouri Valley
Electrical Association for which annual financial
data is readily and publicly available.
<PAGE>
(b) CASH AWARD FORMULA.
(i) A participant shall earn a Cash Award during a Plan
Year based upon the attainment of different
performance levels for the two performance criteria
set forth in Sections 4(c)(i) and (ii), as modified
pursuant to Section 4(d). The value of a Cash Award
for a performance level applicable to each
performance criterion shall be determined as a
percent of base salary as of the last day of a Plan
Year as follows:
PERFORMANCE PERCENT
PARTICIPANTS LEVEL OF SALARY
------------ ----------- ---------
President Threshold 7.5
Target 10.0
Outstanding 12.5
Other Officers Threshold 5.0
Target 7.5
Outstanding 10.0
The total Cash Award shall be the sum of the awards
earned for each performance criterion as set forth
in Sections 4(c)(i) and 4(c)(ii) and as modified by
the "ratepayer protection" factor set forth in
Section 4(d). The failure to attain at least the
threshold performance level for a Plan Year
applicable to one performance criterion shall not
affect the earned portion of a Cash Award
attributable to the other performance criterion.
(ii) Notwithstanding anything herein to the contrary, no
Cash Award, or portion thereof, shall be earned for
a Plan Year in which the total dividends per share
payable on Common Stock are not equal to or greater
than such dividends per share for the prior Plan
Year.
(iii)Further, notwithstanding anything herein to the
contrary, for the purposes of calculating the
incentive award, the Compensation Committee of the
Board, may recommend to the Board, adjustments in
calculating the incentive award(s). The purpose of
such adjustments, if any, is to more accurately
reflect the true operating performance of the
Company. Adjustments may include, but are not
limited to, excluding or including extraordinary
items of income or expense. Decisions of the Board
in regard to this matter shall be final and
conclusive.
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(iv) Regardless of performance based on the incentive
plan performance measures no participant shall be
eligible to receive an award unless his performance
is at least "fully competent" or greater. Where
possible, prior to taking such action, the
participant should be advised of the performance
shortfall at the time the issue arose and the
discussion confirmed in writing. The goal of this
communication process is to ensure that the
appropriate constructive discussions have taken
place and that the participant has the opportunity
to take corrective action.
The purpose and intent of this paragraph is to
ensure that each individual officer through his
personal performance has earned the award as
calculated under the annual plan formula.
Except for his own performance evaluation, the
determination of other officers' performance shall
be based on the recommendation of the President with
the review and modification/approval of the
Compensation Committee. The final determination of
all participants' performance evaluation and award
under the annual plan, in relationship to this plan
paragraph, shall be at the sole discretion of the
Compensation Committee of the Board.
(c) PERFORMANCE CRITERIA. A participant shall earn a Cash
Award based upon performance against two performance
criteria, ROE and controllable expenses.
(i) Return on Equity. The objective of this goal is to
motivate an improved ROE. Return on equity shall be
measured for each Plan Year. Performance levels
shall be determined as the relative percentile
ranking of the Company ROE to all other Peer Group
Utilities.
Relative Percentile Ranking
Performance Level (100% = Best)
----------------- ---------------------------
Threshold 50th
Target 60th
Outstanding 70th or better
(ii) Other Operations and Maintenance Expense Control.
The objective of this goal shall be to reduce
controllable expenses as measured against the
preceding five year average growth in expenses.
Expenses shall be measured in constant dollars to
adjust for inflation. Controllable expenses shall
include, but not be limited to, payroll, pension
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<PAGE>
and medical costs, materials, supplies, and outside
services. Controllable expenses shall not include
taxes, depreciation, interest expense, other
deductions, fuel or purchased power costs.
Five-Year Average Growth
Performance Level In Controllable Expenses
----------------- ------------------------
Threshold 1.0%
Target 0.5%
Outstanding 0.0%
(d) RATEPAYER PROTECTION. To motivate achievement of goals
while protecting customers from increases in rates per
Kilowatt hour ("Kwh"), the value of a participant's Cash
Award which would otherwise be earned pursuant to the two
performance criteria set forth in Sections 4(c)(i) and
(ii) shall be modified based upon the Company's ranking
among the residential rates per Kwh for the Peer Group
Utilities.
Effect on
Value of Cash
Company's Relative Awards Otherwise Modifier
Ranking Payable Factor
------------------ ---------------- --------
1 (lowest Kwh rate) Increased 10% 1.10
2 Increased 5% 1.05
3-4 None 1.00
5 Decreased 10% .90
6 Decreased 30% .70
7-8 Decreased 50% .50
9 or below (Eliminated) .00
(e) DISCRETIONARY INCENTIVE FUND. A Discretionary Incentive
Fund equal to 20% of the Basic Award (i.e., the total of
all awards under the plan prior to any individual
reductions as a result of performance) will be available
to the President and the Compensation Committee. The
purpose of the discretionary fund is to recognize
extraordinary performance on the part of an officer or
group of officers. There is no requirement that any or all
of the discretionary fund dollars be spent. Discretionary
fund dollars not spent would not be carried over to the
next plan year. Awards from the discretionary fund based
on the recommendation of the President and any other
awards from the Discretionary Incentive Fund shall be
determined at the sole and final discretion of the
Committee.
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<PAGE>
(f) Payment of the Award. The amount of the Cash Award earned
during a Plan Year shall be paid as soon as possible
following the March Board meeting subsequent to the Plan
Year.
5. TAXES. The Company shall have the right to deduct from a
participant's Cash Award federal, state, local or other taxes
which may be required to be withheld or paid in connection
with such an Award.
6. GRANTS TO EMPLOYEES. The granting of Cash Awards pursuant to
the Plan shall occur when the Committee by resolution,
written consent or other appropriate action determines to
grant such Cash Award to a particular employee.
7. EMPLOYMENT RIGHTS. Nothing in the Plan or in any Cash Award
granted pursuant to the Plan shall confer on any individual
any right to be or to continue in the employ of the Company
or shall interfere in any way with the right of the Company
to terminate the employment of any individual at any time.
8. AMENDMENT AND TERMINATION. The Board shall have complete power
and authority to amend or terminate the Plan at any time;
provided, however, that an amendment or termination of
Section 4 of this Plan shall be adopted only at the regularly
scheduled March Board meeting and shall be effective as of
the beginning of the Plan Year in which such amendment or
termination was adopted and no other action throughout the
Plan Year shall change the benefits or performance criteria
or goals with respect to a current Plan Year.
9. LEGAL CONSTRUCTION. The Plan shall be interpreted and
construed in accordance with the laws of the State of
Missouri.
10.EFFECTIVE DATE. The Effective Date of the Plan shall be
January 1, 1996.
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EXHIBIT 3 (b)
BYLAWS
OF
ST. JOSEPH LIGHT & POWER COMPANY
ARTICLE I.
OFFICES.
SECTION 1. The principal office of the corporation in the
State of Missouri and the registered office required by The
General and Business Corporation Act of Missouri shall be in the
City of St. Joseph, but the address of such offices need not be
identical. The address of the principal office or the registered
office in the City of St. Joseph may be changed from time to time
by the board of directors.
SECTION 2. The corporation may have such other offices,
either within or without the State of Missouri, as the board of
directors may from time to time determine or the business of the
corporation may require.
ARTICLE II.
SHAREHOLDERS
SECTION 1. An annual meeting of the shareholders shall be
held at the principal office of the corporation in the City of
St. Joseph, Missouri, or at such other place in such municipality
as may be designated from time to time by the board of directors
and stated in the notice of meeting, on the third Wednesday in
May in each year at nine o'clock in the forenoon, at which
meeting the shareholders shall elect a board of directors and
transact such other business as may properly be brought before
the meeting. If the day fixed for the annual meeting of
shareholders shall be a legal holiday in the State of Missouri,
such meeting shall be held at the same time and place on the next
succeeding business day.
For business to be properly brought before the meeting, it
must be: (i) authorized by the board of directors and specified
in the notice, or a supplemental notice, of the meeting, (ii)
otherwise brought before the meeting by or at the direction of
the board of directors or the chairman of the meeting, or (iii)
otherwise properly brought before the meeting by a shareholder.
For business to be properly brought before an annual meeting by a
shareholder, written notice thereof must have been delivered
personally to or otherwise received by the Secretary of the
corporation at least thirty (30) days but no more than ninety
(90) days prior to the anniversary date of the record date for
determination of shareholders entitled to vote in the immediately
preceding Annual Meeting of Shareholders. A shareholder's notice
to the Secretary of the corporation shall set forth as to each
item of business the shareholder proposes to bring before the
meeting (1) a brief description of such item and the
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<PAGE>
reasons for conducting such business at the meeting, (2) the name
and address, as they appear on the corporation's records, of the
shareholder proposing such business, (3) the class and number of
shares of stock of the corporation which are beneficially owned
by the shareholder (for purposes of the regulations under
Sections 13 and 14 of the Securities Exchange Act of 1934, as
amended), and (4) any material interest of the shareholder in
such business. No business shall be conducted at any annual
meeting except in accordance with the procedures set forth in
this Section 1. The chairman of the meeting at which any
business is proposed by a shareholder shall, if the facts
warrant, determine and declare to the meeting that such business
was not properly brought before the meeting in accordance with
the provisions of this Section 1, and, in such event, the
business not properly before the meeting shall not be transacted.
SECTION 2. Special meetings of the shareholders may be
called by the president or by a majority of the members of the
board of directors at the time in office. The board of directors
may by resolution designate any place, either within or without
the State of Missouri, as the place of meeting for any special
meeting of shareholders called by the board of directors. If no
other place is designated by the board of directors, and except
as otherwise provided in Section 4 of this Article II, special
meetings of the shareholders shall be held at the principal
office of the corporation in the City of St. Joseph, Missouri.
SECTION 3. Written or printed notice of each meeting of
shareholders stating the place, day and hour of the meeting, and,
in case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered or given not less than
ten nor more than seventy days before the date of the meeting,
either personally or by mail, by or at the direction of the
president, or the secretary, or the directors or shareholders
calling the meeting, to each shareholder of record entitled to
vote at such meeting. Any notice of a shareholders' meeting sent
by mail shall be deemed to be delivered when deposited in the
United States mail with postage thereon prepaid, addressed to the
shareholder at his address as it appears on the records of the
corporation.
SECTION 4. Meetings of the shareholders of the corporation
may be held without notice at any time and place, either within
or without the State of Missouri, if all shareholders entitled to
vote at any such meeting shall have waived notice thereof or
shall be present in person or represented by proxy, and any
action required to be taken by shareholders may be taken at any
such meeting.
SECTION 5. At least ten days before each meeting of
shareholders, a complete list of the shareholders entitled to
vote at such meeting, arranged in alphabetical order with the
address and number of shares held by each, shall be prepared by
the secretary. Such list shall be kept on file at the registered
office of the corporation and shall be subject to inspection by
any shareholder at any time during usual business hours for a
period of at least ten days immediately prior to the meeting, and
shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original share ledger
or transfer book, or a duplicate thereof kept in the State of
Missouri, shall be prima facie
2
<PAGE>
evidence as to who are the shareholders entitled to examine such
list or share ledger or transfer book or to vote at any meeting
of shareholders.
SECTION 6. Except as otherwise provided by law or the
articles of incorporation, a majority of the outstanding shares
entitled to vote at any meeting, represented in person or by
proxy, shall constitute a quorum for the transaction of business
at any meeting of shareholders, but less than such quorum shall
have the right successively to adjourn the meeting to a specified
date not longer than ninety days after such adjournment. The
time and place of any such adjournment shall be publicly
announced at the meeting, and no notice thereof need be given to
shareholders not present at the meeting. At any such adjourned
meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at
the meeting as originally notified.
SECTION 7. Shareholders entitled to vote at any meeting of
shareholders may vote either in person or by proxy duly
authorized in accordance with Section 351.245 (5) of the Missouri
General and Business Corporation Law. No proxy shall be valid
after eleven months from the date of its execution, unless
otherwise provided in the proxy. Each outstanding share entitled
to vote under the provisions of the articles of incorporation
shall be entitled to one vote on each matter submitted to a vote
at a meeting of shareholders. In accordance with Section
351.245(3) of the Missouri General and Business Corporation Law,
cumulative voting in the election of directors is expressly
denied.
SECTION 8. Upon demand of any shareholder entitled to
vote, the vote on any question before the meeting shall be by
ballot. In all matters, every decision of a majority of shares
entitled to vote on the subject matter and represented in person
or by proxy at a meeting at which a quorum is present shall be
valid as an act of the shareholders, unless otherwise provided by
law or the articles of incorporation.
SECTION 9. Unless otherwise provided by law or the
articles of incorporation, any action required to be taken by the
shareholders may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by
all of the shareholders entitled to vote with respect to the
subject matter thereof.
SECTION 10. The president of the corporation shall call
meetings of the shareholders to order and shall act as chairman
thereof. In the absence of the president, the shareholders
present at the meeting shall elect a chairman who shall be either
a shareholder or a proxy of a shareholder. The secretary of the
corporation shall act as secretary at all meetings of
shareholders. In the absence of the secretary, the chairman may
appoint any person to act as secretary of the meeting.
ARTICLE III.
BOARD OF DIRECTORS.
SECTION 1. The property and business of the corporation
shall be controlled and managed by a board of directors, which
may exercise all such powers of the corporation and do all such
lawful acts and things as
3
<PAGE>
are not by law or by its articles of incorporation or by these
bylaws directed or required to be exercised or done by its
shareholders.
SECTION 2. The board of directors shall consist of nine
directors who shall be elected by ballot at the annual meeting of
shareholders. Except as otherwise provided in the Articles of
Incorporation, each director shall hold office for a three-year
term and until his successor shall be elected and shall qualify.
Directors need not be shareholders of the corporation, but not
less than one member of the board of directors shall be a citizen
and resident of the State of Missouri.
Nominations for the election of directors may be made by the
Board of Directors or a committee appointed by the Board of
Directors or by any stockholder entitled to vote in the election
of directors at the particular meeting at which the nomination is
to occur. However, any stockholder entitled to vote at such
meeting may nominate one or more persons for election as
directors only in person or by proxy at such meeting and only if
written notice of such stockholder's intent to make such
nomination or nominations has been delivered personally to or
otherwise received by the Secretary of the corporation at least
thirty (30) days but no more than ninety (90) days prior to the
anniversary date of the record date for determination of
stockholders entitled to vote in the immediately preceding Annual
Meeting of Stockholders. Each such notice shall contain a
representation that: (i) the stockholder is, and will be on the
record date, a beneficial owner or a holder of record of stock of
the corporation entitled to vote at such meeting; (ii) the
stockholder has, and will have on the record date, full voting
power with respect to such shares; and (iii) the stockholder
intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice.
Additionally, each such notice shall set forth: (a) the name and
address of the stockholder who intends to make the nomination and
of the person or persons to be nominated; (b) a description of
all arrangements or understandings between the stockholder and
each proposed nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (c) the number and
kinds of securities of the corporation held beneficially or of
record by each proposed nominee; (d) such other information
regarding each proposed nominee as would be required to be
included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission for the initial
election of such proposed nominee for director; and (e) the
consent of each proposed nominee to serve as a director if so
elected. The presiding officer of the meeting may refuse to
acknowledge the nomination of any person if any of the
information supplied is false or misleading or if any of the
foregoing requirements are not satisfied.
SECTION 3. If a vacancy or vacancies in the board of
directors shall occur by reason of death, resignation or
otherwise, a majority of the remaining directors may elect a
director or directors to fill such vacancy or vacancies. Such
director shall serve for the remainder of the term of the
replaced director. A director may resign at any time and the
acceptance of his resignation shall not be required in order to
make it effective.
SECTION 4. The board of directors shall hold regular
bimonthly
4
<PAGE>
meetings (a) either within or without the State of Missouri on
the third Wednesday in the months of January, March, May, July,
September and November in each year, unless such day shall be a
legal holiday, in which case the meeting shall be held on the
next succeeding business day or (b) at such time and place as the
board of directors shall by resolution from time to time
determine; and that each of said meetings shall be held at such
time and place as shall be designated in the official notice of
such meeting.
SECTION 5. Special meetings of the board of directors may
be called by or at the request of the president or any three
members of the board of directors. The person or persons
authorized to call a special meeting of the board of directors
shall fix the place, which may be either within or without the
State of Missouri, where such meeting shall be held.
SECTION 6. Notice of every meeting of the board of
directors shall be given by the secretary or an assistant
secretary at least five days prior to the date thereof. Such
notice may be delivered personally or may be given by mail or
telegram addressed to the business or residence address of the
director notified. Any notice sent by mail shall be deemed to be
given when deposited in the United States mail in a sealed
envelope so addressed with postage thereon prepaid. Any notice
given by telegram shall be deemed to be given when the telegram
containing the notice is delivered to the telegraph company. The
time and place, and in the case of a special meeting the purpose
thereof, shall be stated in the notice of each meeting of the
board of directors.
SECTION 7. Any director may waive notice of any meeting of
the board of directors, and in case of such waiver by all the
directors, no notice need be given. The attendance of any
director at any meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
SECTION 8. A majority of the full board of directors shall
constitute a quorum for the transaction of business at any
meeting of the board of directors, provided, that if less than a
majority of the directors are present, a majority of the
directors present may adjourn the meeting from time to time
without further notice until a quorum is present. The act of a
majority of the directors present at any meeting at which a
quorum is present shall be the act of the board of directors.
SECTION 9. By resolution of the board of directors, an
attendance fee may be allowed for each meeting of the board at
which a director is present plus reimbursement for his traveling
expenses and an additional fee may be allowed each director who
is not a salaried officer of the Company.
SECTION 10. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more
committees, each committee to consist of two or more directors of
the corporation, which, to the extent provided in the resolution,
shall have and may exercise, all powers of the board of directors
in the management of the business and affairs of the corporation,
and may authorize the seal of the corporation to be affixed to
all papers which may require it; but no such committee
5
<PAGE>
shall have the power or authority to amend the articles of
incorporation of the corporation, adopt an agreement of merger or
consolidation, recommend to the shareholders the sale, lease or
exchange of all or substantially all of the corporation's
property or assets, recommend to the shareholders a dissolution
of the corporation or the revocation of a dissolution, or amend
the bylaws of the corporation; and, unless the resolution, bylaws
or articles of incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend
or to authorize the issuance of stock. Such committee or
committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of
directors. The board of directors may designate one or more
directors as alternate members of any such committee, who may
replace any absent or disqualified member thereof. In the
absence or disqualification of any member of such committee or
committees, the member or members thereof present at any meeting
are not disqualified from voting, whether or not he or they
constitute a quorum. Each committee shall keep regular minutes
of its meetings and report the same to the board of directors
when required.
SECTION 11. Unless otherwise restricted by the articles of
incorporation or these bylaws, any action required or permitted
to be taken at any meeting of the board of directors, or of any
committee thereof, may be taken without a meeting if all members
of the board of directors or such committee, as the case may be,
consent thereto in writing (which may be in counterparts), and
the written consent or consents are filed with the minutes of
proceedings of the board of directors or such committee.
ARTICLE IV.
OFFICERS.
SECTION 1. The officers of the corporation shall include a
president, one or more vice presidents, a secretary, one or more
assistant secretaries, a treasurer and one or more assistant
treasurers, all of whom shall be chosen by the board of
directors. The president shall be a member of the board of
directors. Any two or more offices may be held by the same
person, except the offices of president and secretary. The board
of directors may designate and appoint any vice president as
executive vice president.
SECTION 2. The officers of the corporation shall be
elected annually by the board of directors at the first meeting
of the board held after each annual meeting of the shareholders.
SECTION 3. The board of directors may from time to time
appoint such other officers as it shall deem necessary, who shall
hold their offices for such terms and shall exercise such powers
and perform such duties as the board of directors or the
president may from time to time determine.
SECTION 4. The officers of the corporation shall hold
office until their successors shall have been chosen and shall
have qualified. Any officer or agent of the corporation may be
removed at any time by the affirmative vote of a majority of the
whole board of directors. If the
6
<PAGE>
office of any officer becomes vacant for any reason, or if any
new office shall be created, such office may be filled at any
meeting of the board of directors.
SECTION 5. The salaries of all officers shall be fixed by
the board of directors.
ARTICLE V.
POWERS AND DUTIES OF OFFICERS.
SECTION 1. The president shall be the chief executive
officer of the corporation. He shall preside at all meetings of
the shareholders and at all meetings of the board of directors.
He shall have general and active management of the business and
affairs of the corporation, subject, however, to the authority of
the board of directors and its right to delegate any specific
power to any other officer or officers of the corporation. The
president shall see that all orders and resolutions of the board
of directors are carried into effect.
SECTION 2. Any vice president designated and appointed by
the board of directors as executive vice president shall, in the
absence or disability or the president, perform and be vested
with all of the president's duties and powers. He shall also
perform such of the duties and exercise such of the powers of the
president as shall be assigned to him from time to time by the
board of directors or the president, and shall perform such other
duties as the board of directors or the president may from time
to time prescribe.
SECTION 3. The vice presidents, other than any one of
their number who may be designated and appointed by the board of
directors as executive vice president, shall perform such of the
duties and exercise such of the powers of the president as shall
be assigned to them from time to time by the board of directors
or the president, and shall perform such other duties as the
board of directors or the president may from time to time
prescribe.
SECTION 4. The secretary shall attend all meetings of the
shareholders and of the board of directors and shall keep the
minutes of such meetings. He shall perform like duties for the
standing committees of the board of directors when required. He
shall give, or cause to be given, notice of all meetings of the
shareholders and of the board of directors, and shall perform
such other duties as may be prescribed by the board of directors
or the president. He shall be the custodian of the seal of the
corporation and shall see that the seal is affixed to any
instrument requiring the same. He shall, in general, perform all
duties incident to the office of secretary.
SECTION 5. The assistant secretaries shall perform such of
the duties and exercise such of the powers of the secretary as
shall be assigned to them from time to time by the board of
directors or the president or the secretary, and shall perform
such other duties as the board of directors or the president may
from time to time prescribe. The assistant secretaries shall act
for and in the place of the secretary in
7
<PAGE>
case of his disability or absence.
SECTION 6. The treasurer shall have charge and custody of
all funds and securities of the corporation. He is authorized to
collect and receive all moneys due the corporation and to receipt
therefore, and to endorse all checks, drafts, vouchers or other
instruments for the payment of money payable to the corporation
when necessary or proper, and he may endorse all commercial
documents for or on behalf of the corporation. He shall deposit
all funds of the corporation in the name of and to the credit of
the corporation in such depositaries, and subject to withdrawal
in such manner and by such persons, as the board of directors may
from time to time designate. Except as otherwise provided by the
board of directors, the treasurer shall, when necessary and
proper, disburse the funds of the corporation, taking proper
vouchers for such disbursements. He shall cause to be kept in
his office true and full accounts of all receipts and
disbursements, and shall render to the board of directors and the
president, whenever they may require it, an account of all his
transactions as treasurer and of the financial condition of the
corporation. He shall also perform such other duties as may be
prescribed by the board of directors or the president. He shall,
in general, perform all duties usually incident to the office of
the treasurer.
SECTION 7. The assistant treasurers shall perform such of
the duties and exercise such of the powers of the treasurer as
shall be assigned to them from time to time by the board of
directors or the president or the treasurer, and shall perform
such other duties as the board of directors or the president may
from time to time prescribe. The assistant treasurers shall act
for and in the place of the treasurer in case of his disability
or absence.
ARTICLE VI.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES.
SECTION 1. The corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, other
than an action by or in the right of the corporation, by reason
of the fact that he is or was a director, officer or employee of
the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to
8
<PAGE>
believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
SECTION 2. The corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer or
employee of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against expenses, including attorneys' fees, and
amounts paid in settlement actually and reasonably incurred by
him in connection with the defense or settlement of the action or
suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
corporation; except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation
unless and only to the extent that the court in which the action
or suit was brought determines upon application that, despite the
adjudication of liability and in view of all the circumstances of
the case, the person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
SECTION 3. Any indemnification under Sections 1 and 2
above, unless ordered by a court, shall be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer or
employee is proper in the circumstances because he has met the
applicable standard of conduct set forth in these sections and
the applicable law. The determination shall be made by the board
of directors by a majority vote of a quorum consisting of
directors who were not parties to the action, suit or proceeding,
or if such a quorum is not obtainable, or even if obtainable a
quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or by the shareholders.
SECTION 4. Expenses incurred in defending a civil or
criminal action, suit or proceeding may be paid by the
corporation in advance of the final disposition of the action,
suit or proceeding as authorized by the board of directors in the
specific case upon receipt of an undertaking by or on behalf of
the director, officer or employee to repay such amount unless it
shall ultimately be determined that he is entitled to be
indemnified by the corporation.
SECTION 5. The indemnification provided by this Article VI
shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under the articles of
incorporation or bylaws or any agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has
ceased to be a director, officer or employee and shall inure to
the benefit of the heirs, executors and administrators of such a
person.
SECTION 6. The corporation shall have the power to give
any further indemnity, in addition to the indemnity authorized or
contemplated under other sections hereof, including section 5, to
any person who is or
9
<PAGE>
was a director, officer or employee of the corporation, or to any
person who is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, provided
such further indemnity is either (i) authorized, directed or
provided for in the articles of incorporation of the corporation
or any duly adopted amendment thereof or (ii) is authorized,
directed or provided for in any bylaw or agreement of the
corporation which has been adopted by a vote of the shareholders
of the corporation, and provided further that no such indemnity
shall indemnify any person from or on account of such person's
conduct which was finally adjudged to have been knowingly
fraudulent, deliberately dishonest or willful misconduct.
Nothing in this section shall be deemed to limit the power of the
corporation under section 5 of this section to enact bylaws or to
enter into agreements without shareholder adoption of the same.
SECTION 7. The corporation shall, if available and at a
reasonable cost, purchase and maintain insurance on behalf of any
person who is or was a director, officer or employee of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the
power to indemnify him against such liability.
ARTICLE VII.
SHARES.
SECTION 1. The shares of the corporation shall be
represented by certificates which, unless otherwise ordered by
the board of directors, shall be signed by the president or a
vice president and by the secretary or an assistant secretary or
the treasurer or an assistant treasurer and sealed with the seal
of the corporation. Any or all the signatures on the certificate
may be by facsimile and the seal may be facsimile, engraved or
printed. In case any such officer who has signed or whose
facsimile signature has been placed upon such certificate shall
have ceased to be such officer before such certificate is issued,
such certificate may nevertheless be issued by the corporation
with the same effect as if such officer had not ceased to be such
officer at the date of its issue.
SECTION 2. Transfers of stock shall be made on the books
of the corporation only by the person in whose name such stock is
registered or by his attorney lawfully constituted in writing,
and unless otherwise authorized by the board of directors only on
surrender and cancellation of the certificate transferred. No
certificate shall be issued to a transferee until the transfer
has been made on the books of the corporation.
SECTION 3. The corporation shall be entitled to treat the
person in whose name any share of the corporation is registered
as the owner thereof, for all purposes, and shall not be bound to
recognize any equitable or other claim to or interest in such
share on the part of any
10
<PAGE>
other person, whether or not it shall have notice thereof, except
as otherwise expressly provided by the laws of Missouri.
SECTION 4. The board of directors may appoint such
transfer agent or agents and such registrar or registrars for the
shares of the corporation, either within or without the State of
Missouri, as said board may from time to time determine.
SECTION 5. In case of the loss or destruction of any
certificate for shares of the corporation, a new certificate may
be issued in lieu thereof under such regulations and restrictions
as the board of directors may from time to time prescribe, upon
the shareholder furnishing such proof of loss or destruction and
giving such security as the board of directors may require.
ARTICLE VIII.
CLOSING OF TRANSFER BOOKS.
SECTION 1. The board of directors shall have power to
close the transfer books of the corporation for a period not
exceeding seventy days preceding the date of any meeting of
shareholders, or the date for payment of any dividend, or the
date for the allotment of rights, or the date when any change or
conversion or exchange of shares shall go into effect, or for a
period not exceeding seventy days in connection with obtaining
the consent of shareholders for any purpose; provided, however,
that in lieu of closing the transfer books as aforesaid, the
board of directors may fix in advance a date not exceeding
seventy days preceding the date of any meeting of shareholders or
the date for the payment of any dividend or the date for the
allotment of rights, or the date when any change or conversion or
exchange of shares shall go into effect, or a date fixed in
connection with obtaining such consent, as a record date for the
determination of the shareholders entitled to notice of, and to
vote at, any such meeting and any adjournment or postponement
thereof, or entitled to receive payment of any such dividend, or
to receive any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of
shares, or to give such consent, and in such case such
shareholders and only such shareholders as shall be shareholders
of record on the date of closing the transfer books or on the
record date so fixed shall be entitled to notice of, and to vote
at, such meeting and any adjournment or postponement thereof, or
to receive payment of such dividend, or to receive such allotment
of rights or to exercise such rights, or to give such consent, as
the case may be, notwithstanding any transfer of any shares on
the books of the corporation after any such record date fixed as
aforesaid.
SECTION 2. If the board of directors shall not have closed
the transfer books or set a record date for the determination of
shareholders entitled to vote as in Section 1 of this Article
VIII provided, only the shareholders who are shareholders of
record at the close of business on the twentieth day preceding
the date of the meeting shall be entitled to notice of, and to
vote at, the meeting, and any adjournment or postponement of the
meeting.
11
<PAGE>
ARTICLE IX.
GENERAL PROVISIONS.
SECTION 1. The president, vice presidents and any other
person duly authorized by resolution of the board of directors
shall severally have power to execute on behalf of the
corporation any deed, bond, indenture, certificate, note,
contract or other instrument authorized or approved by the board
of directors.
SECTION 2. The fiscal year of the corporation shall be the
calendar year.
SECTION 3. As soon as practicable after the close of each
fiscal year, the board of directors shall cause a report of the
business and affairs of the corporation to be made to its
shareholders.
SECTION 4. The corporation shall have a corporate seal
with the name of the corporation enclosed in a circle and the
word "Seal" within the space thus enclosed. The corporate seal
may be used by causing it or a facsimile thereof to be impressed
or affixed or in any manner reproduced.
SECTION 5. The board of directors may in its discretion
require from any officer or employee a bond for the faithful
performance of his duties. Any such bond shall be in such sum
and with such surety or sureties as shall be satisfactory to the
board of directors.
SECTION 6. Unless otherwise ordered by the board of
directors, the president or any vice president of the corporation
(1) shall have full power and authority to act and vote, in the
name and on behalf of this corporation, at any meeting of
shareholders of any corporation in which this corporation may
hold shares, and at any such meeting shall possess and may
exercise any and all of the rights and powers incident to the
ownership of such shares, and (2) shall have full power and
authority to execute, in the name and on behalf of this
corporation, proxies authorizing any suitable person or persons
to act and to vote at any meeting of shareholders of any
corporation in which this corporation may hold shares, and at any
such meeting the person or persons so designated shall possess
and may exercise any and all of the rights and powers incident to
the ownership of such shares.
SECTION 7. Whenever any notice is required to be given
under the provisions of the statutes of the State of Missouri, or
of the articles of incorporation, or of these bylaws, a waiver
thereof in writing signed by the person or persons entitled to
such notice, whether before, at or after the time stated therein,
shall be deemed equivalent to the giving of such notice.
ARTICLE X.
AMENDMENTS.
These bylaws may be amended, altered or repealed, and new
bylaws may
12
<PAGE>
be adopted at any regular or special meeting of the board of
directors at which a majority of the board of directors is
present, provided that such amendment, alteration or repeal, or
adoption of new bylaws, shall require the affirmative vote of a
majority of the members of the board of directors at the time in
office, except with respect to (i) Article II, Section 1
providing for shareholder proposals; and (ii) Article III,
Section 2 providing for shareholder nominations for director,
each of which shall require the affirmative vote of two-thirds of
the members of the Board of Directors at the time in office.
13
EXHIBIT 13
<PAGE>
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT PER SHARE DATA AND PERCENTAGES)
The following table sets forth financial data regarding
St. Joseph Light & Power Company's financial position
and oeprating results. This information should be read
in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of
Operations, and the Consolidated Financial Statements
and Notes thereto, appear elsewhere in this Annual
Report.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
FINANCIAL DATA:
Operating revenues $116,165 $ 95,869 $ 93,521 $ 90,782 $ 88,539
Net income 10,840 10,357 11,040 11,066 7,922
Total assets 243,769 227,250 219,330 199,699 191,690
Long-term obligations 71,837 76,371 75,612 55,627 55,642
COMMON STOCK DATA:
(adjusted to reflect two-for-one
stock split in July 1996)
Weighted average shares outstanding 7,989 7,868 7,813 7,884 8,016
Basic and diluted earnings per
average common share $1.36 $1.32 $1.41 $1.40 $ .99
Dividends per common share $ .96 $ .94 $ .92 $ .90 $ .88
Market price per common share at $17.75 $15.375 $17.75 $14.25 $14.50
year-end
Book value per common share at $11.34 $10.87 $10.42 $ 9.93 $ 9.54
year-end
Return on average common equity 12.2% 12.4% $13.9% 14.4% 10.4%
LIQUIDITY AND CAPITAL RESOURCES
DATA:
Capital -
Expenditures, excluding AFUDC $ 14,346 $ 14,318 $ 21,781 $ 12,224 $ 12,483
Percent of expenditures financed
internally from operations 79% 92% 58% 77% 86%
AFUDC as a percent of net income 2% 5% 4% 2% 3%
Capitalization ratios -
Common equity 57% 54% 53% 59% 59%
Long-term debt 43% 46% 47% 41% 41%
</TABLE>
(Adjusted to reflect two-for-one stock split in July 1996)
COMMON STOCK MARKET PRICES
HIGH LOW
1996 First quarter $17.750 $16.063
Second quarter 16.563 13.875
Third quarter 16.875 14.000
Fourth quarter 16.625 14.625
1997 First quarter $16.625 $15.000
Second quarter 17.250 15.375
Third quarter 16.750 15.563
Fourth quarter 17.938 16.313
DIVIDENDS PAID ON COMMON STOCK
1996 First quarter $.235
Second quarter .235
Third quarter .235
Fourth quarter .235
-----
$.940
1997 First quarter $.24
Second quarter .24
Third quarter .24
Fourth quarter .24
----
$.96
Page 9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
GENERAL
The financial condition and operating results reflect the
operations of St. Joseph Light & Power Company, a public utility,
and its wholly owned subsidiary, SJLP Inc. and its subsidiary,
Percy Kent Bag Co., Inc. (Percy Kent). Collectively, these
entities are referred to as the "Company." The Company is engaged
primarily in the generation and distribution of electric energy,
serving approximately 62,000 customers in northwest Missouri. It
also sells natural gas in 15 communities in the northern part of
its service area and industrial steam to six customers in St.
Joseph. SJLP Inc. was formed in September 1996 to pursue
investments in non-utility areas. Effective May 31, 1997, SJLP
Inc. acquired a controlling interest in Percy Kent, a
manufacturer of multiwall and small paper bags, primarily for
food products, agricultural products, specialty chemicals, pet
foods and other consumer packaging companies throughout the
United States. Neither SJLP Inc.'s nor Percy Kent's operations
were material to the Company's financial position or results of
operations.
As illustrated by Note 8, Segments of Business, in the Notes to
Consolidated Financial Statements, the electric segment
represents 97% of pretax operating income, 96% of capital
expenditures and 88% of identifiable assets. Since the electric
segment is the major portion of the Company's business, the
following discussion focuses primarily on it.
In August 1996, the Company reached agreement on new three-year
contracts with its physical and clerical bargaining units. The
agreements cover approximately two-thirds of the St. Joseph Light
& Power Company's approximately 350 employees. Substantially all
of Percy Kent's manufacturing labor force is covered by a
collective bargaining agreement, which expires in March 2000.
RESULTS OF OPERATIONS
1997 VS. 1996
EARNINGS - Earnings per share totaled $1.36 in 1997, compared
with 1996 earnings of $1.32. The earnings increase was primarily
the result of higher electric sales and lower unit fuel costs.
ELECTRIC REVENUES - 1997 electric operating revenues were $86.9
million, an increase of 4% from 1996. The growth in 1997 revenues
resulted from several factors.
Retail sales totaled 1,577,322 megawatt-hours (mwh) in 1997, a 3%
increase from the 1,529,465 mwh reported in 1996. Despite
moderate summer weather, the strong economy boosted retail sales
to all three customer classes - residential, 1.6%; commercial,
4.0%; and industrial 4.5%.
Sales for resale volume increased 67% as the Company
substantially increased its generation for resale, as a result of
its costs becoming more competitive with regional suppliers. Unit
fuel costs at the Company's Lake Road plant have decreased
substantially due to burning a blend of lower-sulfur coal (see
"Fuel and Purchased Power" and "Environmental Issues").
INDUSTRIAL STEAM REVENUES - Industrial steam sales in 1997
decreased 5%, while revenues decreased 4% from 1996's level,
primarily as a result of reduced sales to a major customer.
NATURAL GAS REVENUES - Gas revenues declined 3% from 1996, due to
a 9% decrease in retail sales and transportation services to
large commercial and industrial customers, partially offset by
higher unit gas prices which are passed on to customers.
MANUFACTURING REVENUES - Manufacturing revenues and cost of goods
sold reflect the acquisition of Percy Kent, whose operating
results from June through December 1997 are included in the
Company's consolidated financial statements.
FUEL AND PURCHASED POWER - Total energy costs (fuel and purchased
power for system energy and resale) were $27.5 million for 1997,
$.3 million less than the 1996
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expense. This decrease was the result of lower unit fuel costs
and lower steam sales, partially offset by increased system and
resale requirements.
Unit fuel costs were lower in 1997 at $1.097 per million British
thermal units (Btu), down from $1.131 per million Btu in 1996. Of
the total fuel burned in 1997, 94% was coal, similar to the
pattern of recent years. The cost of coal burned decreased from
the $1.047 per million Btu in 1996 to $1.002 per million Btu in
1997.
The coal-fired Iatan plant provided approximately 52% of the
Company's overall energy needs in 1997, a decrease from 58% in
1996. A Wyoming mine supplies low-sulfur coal to the plant under
a 20-year contract, which expires in 2003. The coal is delivered
by rail under an agreement which extends through 2000.
The Lake Road units supplied 26% of the Company's energy needs,
up from 16% in 1996. Since modifying the plant's main generating
unit to burn lower cost low-sulfur coal (see "Environmental
Issues"), utilization of the Lake Road plant has increased. Unit
fuel costs at Lake Road were down 15% in 1997 from 1996. Such
modifications and enhancements to optimize performance are
continuing.
The Company met 22% of its energy needs through purchased power
arrangements in 1997 compared to 26% in 1996. Purchased power
fixed charges for firm and peaking capacity were $2.4 million for
1997 and $1.3 million for 1996.
OTHER OPERATIONS - Expenses of other operations for 1997
increased $3.2 million in comparison to 1996. The increase is
primarily the result of the inclusion of Percy Kent's expenses.
MAINTENANCE - Maintenance expense for 1997 was $.5 million less
than for 1996. The balanced expenses in both periods resulted
from the Company's attempt to schedule maintenance outages to
minimize both maintenance and generation replacement expenses.
INTEREST CHARGES - The increase in interest charges on long-term
debt, notes payable and other interest is a result of interest
expense on Percy Kent's borrowings.
1996 VS. 1995
EARNINGS - Earnings per share totaled $1.32 in 1996, compared to
$1.41 in 1995. The decrease in earnings can be attributed to
several factors: a partial year of a July 1995 seasonal rate-
design change aided 1995 revenues, increased energy costs in 1996
and the gain on the sale of unit trains at the Iatan plant in
1995.
ELECTRIC REVENUES - 1996 electric operating revenues reached a
then record $83.5 million, increasing 2% from the $82.0 million
reported in 1995. The growth in revenues is primarily
attributable to increased sales. In addition, a full-year of the
June 1995 allocation case price increase which was designed to
increase annual electric revenues $500,000 increased revenues for
the 1996 period. The rate changes from an allocation case were
designed to be revenue-neutral, increasing electric and gas and
decreasing industrial steam revenues. The increase was partially
offset by a rate-design change effective July 1995 which
increased electric summer rates and reduced winter rate prices.
The less-than-full-year impact of the change added approximately
$1.7 million to 1995 revenues. The change, designed to be revenue-
neutral to the company, reflects the seasonal difference in the
cost of producing electricity.
Retail sales increased 3% to a then record 1,529,465 mwh in 1996,
continuing the growth pattern of 1995 when sales increased 4%.
Sales to all three customer classes increased - residential, 3%;
commercial, 4%; and industrial, 3%. Weather conditions during the
year boosted sales, especially to the residential class, with the
commercial and industrial classes also benefiting from a growing
economy.
The increase in sales for resale and related energy costs
reflects the increase in demand from regional suppliers and
energy marketers for low-cost power.
INDUSTRIAL STEAM REVENUES - In 1996, industrial steam revenues
remained relatively stable despite a sales increase of 14% from
the previous year. Revenues reflect a September 1995 rate
decrease for a major customer and a full year of the June 1995
allocation case which was designed to reduce steam revenues by
$550,000 annually.
NATURAL GAS REVENUES - In the natural gas segment, retail sales
and revenues increased 14% and 20%, respectively. The increase in
sales was primarily attributable to cooler-than-
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normal temperatures which increased heating requirements.
Revenues also were affected by higher unit gas prices which are
passed on to the customer and a full year of the June 1995
allocation case-price increase, which was designed to increase
annual gas revenues by $50,000. A reduction in transportation
services to industrial customers partially offest the increase.
FUEL AND PURCHASED POWER - Total energy costs were $27.7 million
for 1996, an increase of $2.8 million from 1995. The increase was
primarily attributable to increased system and resale
requirements and higher per-unit prices for both fuel and
purchased power.
The average unit cost of fuel rose to $1.131 per million Btu
reflecting higher costs for all fossil fuels in 1996. This
compares to an average unit fuel cost of $1.087 per million Btu
in 1995.
Consistent with recent years, coal accounted for approximately
94% of the total fuel burned during the year. The cost of coal
burned increased 3% from $1.014 per million Btu in 1995 to $1.047
per million Btu in 1996.
The Company met 26% of its energy needs through purchased power
arrangements, as compared to 35% in 1995. The decrease is
primarily a result of reduced purchases due to significantly
higher unit prices for purchased energy, as higher demand from
other areas of the country drove prices up. Purchased power fixed
charges for firm and peaking capacity were $1.3 million for 1996
and $1.1 million in 1995.
The remainder of the Company's energy needs were supplied by the
Lake Road units.
OTHER OPERATIONS - In 1996 other operating expenses decreased
$1.0 million to $18.4 million in comparison with 1995. The
reduction was primarily attributable to decreased pension expense
resulting from strong investment performance.
MAINTENANCE - Maintenance expense for 1996 decreased $1.3 million
reflecting the the overhaul of a generating unit at the Lake Road
plant in 1995.
OTHER INCOME (EXPENSE) - The reduction in other income is
primarily due to the $.5 million net of tax gain from the sale of
the Iatan unit trains in 1995.
FUTURE OUTLOOK
LIQUIDITY AND CAPITAL RESOURCES - The Company's total authorized
capital stock includes 25 million shares of common stock, four
million shares of cumulative preferred stock and two million
shares of preference stock. Common equity was 57%, 54% and 53% of
total capitalization in 1997, 1996 and 1995, respectively.
Financial coverages are at levels in excess of those required for
the issuance of debt and preferred stock. The Company currently
holds a secured debt rating of A and an unsecured debt rating of
A- from Standard & Poors. At year-end, the Company had $2.0
million in cash and temporary investments.
The Company's short-term financing requirements are satisfied
through borrowings under unsecured lines of credit maintained
with banks. At December 31, 1997, the Company had available lines
of credit of $5.5 million. In addition, the Company's
consolidated subsidiaries' secured credit agreements had
available balances of $.2 million.
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Cash generated from operations remains strong. Over the last
three years, operating cash flows have been $18.6 million, $21.2
million and $19.3 million, respectively. The Company's pretax
interest coverage was 3.60 for 1997.
The Company projects capital expenditures (excluding allowance
for funds used during construction and including non-utility
investments) of about $18.1 million for 1998. Capital
expenditures were $14.3 million, $14.5 million and $21.8 million,
respectively for the last three years. Capital expenditures for
the five-year period ending in 2002 are projected to be
approximately $74.7 million. The Company expects to finance these
expenditures primarily through internally generated funds,
supplemented by external financing as necessary.
The combined aggregate amount of maturities and payments for long-
term obligations and for operating leases for the next five years
is $11.3 million. See Note (b), Long-Term Debt, in Consolidated
Statements of Capitalization and Note 7, Commitments and
Contingencies, in Notes to Consolidated Financial Statements.
IMPACT OF INFLATION - Under the ratemaking practices followed by
the Missouri Public Service Commission (PSC), only historical
costs are recoverable in revenues. Assuming adequate and timely
rate relief, the Company will recover the increases in cost of
service caused by inflation.
IMPACT OF ACCOUNTING STANDARDS CHANGES - There were no accounting
changes in 1997, 1996 or 1995 that had a material impact on the
financial statements.
EFFECTS OF REGULATION - The Company is subject to rate regulation
by the PSC. Rates are established to enable the Company to
recover its service costs and also to allow the Company an
opportunity to earn a return on its investment. The Company
currently applies Statements of Financial Accounting Standards
(SFAS) No. 71, "Accounting for the Effects of Certain Types of
Regulation," which recognizes the economic effects of rate
regulation. In the event the Company determines that it no longer
meets the criteria for following SFAS No. 71, the accounting
impact would be a non-cash charge to operations of an amount that
could be material. Criteria that give rise to the discontinuance
of SFAS No. 71 include (1) increasing competition that restricts
the Company's ability to establish prices to recover specific
costs, and (2) a significant change in the manner in which rates
are set by regulators from cost-based regulation to another form
of regulation. The continued applicability of SFAS No. 71 is
continually reviewed based on the current regulatory environment.
Based on a current evaluation of the various factors and
conditions that are expected to impact future cost recovery (see
"Competition/Deregulation"), the Company believes that its
regulatory assets, including those related to generation, are
probable of future recovery and that the utilization of SFAS No.
71 continues to be appropriate. If the generation portion of the
business is deregulated, all or a portion of its net regulatory
assets, which are approximately $.4 million at December 31, 1997,
are expected to be recovered from ratepayers through a charge
collected by the regulated businesses.
COMPETITION/DEREGULATION - The Company is taking a proactive
stance in meeting the increasing competition within the industry.
In early 1996, the Company's management concluded an extensive
review of its strategic plan. The plan focuses on customer
oriented activities designed to provide high levels of customer
satisfaction while continuing to provide low-priced energy. In
late 1997, the Company retained a consulting firm to review and
evaluate the strategies and tactics included in the strategic
plans for both St. Joseph Light & Power Company and SJLP Inc.
The 1992 Energy Policy Act (the Act) promotes competition in the
way electricity is transmitted and marketed. The Act provides for
increased competition in the wholesale electric market by
permitting the Federal Energy Regulatory Commission to order
third party access to utilities' transmission systems and by
liberalizing the rules of generating facility ownership. The
opening up of the nation's transmission system has increased the
size of the market from which the Company buys and sells firm and
non-firm (wholesale) energy. This will increase the options for
expanding markets. It is also management's belief that increased
transmission access will increase the demand for available
wholesale energy supply, and possibly result in higher purchased
energy costs for the Company.
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<PAGE>
The Act also allows wholesale and industrial customers to pursue
co-generation, retail wheeling or relocation to other service
territories. At the present, there are no customer-owned co-
generation projects on the Company's system. With no projected
increase in the Company's current low energy prices, future co-
generation projects are not anticipated.
In March 1997, the PSC opened a docket to investigate
restructuring in the electric utility industry. A retail electric
competition task force, comprised of representatives from
investor-owned utilities, municipals, rural electric
cooperatives, consumer interest groups, industrial organizations,
organized labor, the Office of Public Counsel, Missouri
Department of Natural Resources, PSC staff, and the Missouri
legislature, is charged with preparing comprehensive reports to
the PSC which will then be provided to the legislature in mid-
1998. The reports are to be based upon a thorough investigation
of retail wheeling of electricity and related issues and include
recommendations of how Missouri should implement retail electric
competition in the event that legislation is enacted which
authorizes it.
Based on deregulation plans implemented or considered by other
states, management believes that the most likely scenario is that
the generation portion of the business could become unregulated
and that the transmission and distribution functions will
continue to be regulated. Although bills have been introduced in
the 1998 session of the legislature, most observers believe that
the earliest a bill will be passed is 1999, which would delay
retail competition in Missouri until 2000 or later.
The Company currently has no full-requirement wholesale
customers. As a result, wholesale competition as being
implemented today (no retail wheeling) is not expected to place
the Company's retail customers at risk. Even if retail wheeling
were to be implemented, the Company believes that its current low
prices and the excellent power supply options available to the
Company to meet future requirements will permit the Company to
remain competitive in comparison to other regional suppliers.
While state law currently prohibits competing with rural electric
cooperatives for existing customers, competition remains for new
customers, especially industrial, in the rural areas of the
state. To meet that competition, the Company has an economic
development rate.
ENVIRONMENTAL ISSUES - The Company is subject to various
environmental regulations, including those related to air and
water quality, polychlorinated biphenyl, ash removal, underground
storage tanks and asbestos. Routine testing and maintenance
programs have been put in place to comply with these regulations.
The Company continues to plan and implement projects to meet the
Phase II acid deposition control provisions of the Clean Air Act
Amendments of 1990 (CAAA) which establish standards for electric
utilities to reduce certain emissions from coal-fired generating
stations. Final compliance with this legislation becomes
effective in 2000. Missouri's air quality law is in compliance
with and does not contain requirements that are more stringent
than the federal legislation.
While the Iatan plant meets the Phase II requirements, the Lake
Road plant is undergoing modifications in order to meet the new
requirements. In 1995, alterations to the plant's main generating
unit were begun to allow for the use of low and medium-sulfur
coal. In addition the electrostatic precipitator was modified and
a continuous emissions monitoring system was installed. Projects
completed in 1996 and 1997 include modifications to the ash
handling system and rail modifications which allow coal
deliveries by unit train. The Company anticipates total future
capital expenditures of approximately $7.6 million through 2000
related to the CAAA requirements, for coal handling equipment
modifications, flue gas conditioning, boiler modifications, and
new and replacement continuous emissions monitoring equipment.
The Lake Road unit is exempt from NOx control requirements due to
the economics of applying controls to units under 155 megawatts.
The Kyoto Protocol to the United Nations global warming treaty
mandates that the U.S. reduce its overall greenhouse gas
emissions 7% below 1990 levels by 2008-2012. Most observers
believe that it will not be ratified by the U.S. Congress in its
present form. A study by Energy Security Analysis Inc. indicates
that the treaty could cost the utility industry $10 billion
annually by 2010, primarily in higher fuel costs. Management
cannot currently estimate the impact of the treaty on the
Company, however, it could have a significant continuing impact
on the results of operations and financial position of the
Company.
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<PAGE>
CAPACITY - In July 1996, the Company signed a long-term contract
to purchase both capacity and energy beginning in mid-2000 and
running through mid-2011. In the first year of the contract, the
Company will receive 60 mw of electricity. This will increase by
10 mw each year until it reaches 100 mw in 2004 and remains at
that level for the remainder of the contract.
The Company has contracts to purchase an additional 50-60 mw of
generating capacity from regional suppliers in the next two
years.
Fixed charges under these contracts total $25.8 million for the
five years ending in 2002. These contracts will provide the
Company with the ability to economically provide for the growing
demand in its service territory.
IMPACT OF THE YEAR 2000 ISSUE - The Year 2000 Issue is the result
of computer programs being written using two digits rather than
four to define the applicable year. Any of the Company's computer
programs that have date-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000.
Additionally, other equipment may have microchips with embedded
logic which may fail to function correctly after December 31,
1999. This could result in a system failure or miscalculations
causing disruptions of operations.
Based on a recent assessment, the Company has determined that it
will be required to modify or replace portions of its software so
that its computer systems will properly utilize dates beyond
December 31, 1999. The Company presently believes that with
modifications to existing software and conversions to new
software, the Year 2000 Issue can be mitigated. However, if such
modifications and conversions are not made, or are not completed
timely, the Year 2000 Issue could have a material impact on the
operations of the Company.
The Company will utilize both internal and external resources to
reprogram, or replace, and test the software for Year 2000
modifications. The Company plans to complete the Year 2000
project in 1998 with additional testing scheduled for 1999.
Anticipated spending for this modification will be expensed as
incurred and is not expected to have a significant impact on the
Company's financial position or results of operations.
The costs of the project and the date on which the Company plans
to complete the Year 2000 modifications are based on management's
best estimates, which were derived utilizing numerous assumptions
of future events, including the continued availability of certain
resources, the ability to locate and correct all relevant
computer codes, and similar uncertainties. However, there can be
no guarantee that these estimates will be achieved and actual
results could differ materially from those plans.
The Company has determined it has no significant exposure to
contingencies related to the Year 2000 Issue for third parties'
failure to remediate their own Year 2000 Issue.
FORWARD-LOOKING INFORMATION - This report contains information
based on projections and estimates made by management which
involve risks and uncertainties. Some of the important factors
which could cause actual results to differ materially from those
anticipated include, but are not limited to, future national and
regional economic conditions, inflation rates, regulatory changes
(including but not limited to ongoing state and federal
activities with respect to electric utility deregulation,
competition and restructuring), weather conditions, financial
market conditions, interest rates, future business decisions, and
other uncertainties, all of which are difficult to predict and
many of which are beyond the control of the Company.
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<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31 1997 1996 1995
OPERATING REVENUES:
Electric utility $86,910,000 $83,499,000 $81,994,000
Other utility 11,948,000 12,370,000 11,527,000
Manufacturing 17,307,000 - -
----------- ---------- ----------
116,165,000 95,869,000 93,521,000
----------- ---------- ----------
OPERATING EXPENSES:
Production fuel 19,166,000 17,821,000 14,539,000
Purchased power 8,307,000 9,911,000 10,386,000
Gas purchased for resale 3,456,000 3,376,000 2,746,000
Manufacturing cost of
goods sold 14,864,000 - -
Other operations 21,596,000 18,402,000 19,435,000
Maintenance 7,976,000 8,446,000 9,788,000
Depreciation 11,045,000 10,474,000 10,022,000
Taxes other than income taxes 6,767,000 6,511,000 6,333,000
----------- ----------- -----------
93,177,000 74,941,000 73,249,000
----------- ----------- -----------
OPERATING INCOME 22,988,000 20,928,000 20,272,000
INTEREST CHARGES, NET:
Long-term debt 6,182,000 5,850,000 5,558,000
Notes payable 181,000 - 118,000
Other 192,000 172,000 148,000
Allowance for borrowed funds
used during construction (75,000) (215,000) (269,000)
----------- ----------- -----------
6,480,000 5,807,000 5,555,000
----------- ----------- -----------
OTHER INCOME 440,000 504,000 1,470,000
----------- ----------- -----------
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 16,948,000 15,625,000 16,187,000
INCOME TAXES 6,214,000 5,268,000 5,147,000
----------- ----------- -----------
INCOME BEFORE MINORITY
INTEREST 10,734,000 10,357,000 11,040,000
MINORITY INTEREST IN LOSS
OF SUBSIDIARY (106,000) - -
----------- ----------- -----------
NET INCOME $10,840,000 $10,357,000 $11,040,000
=========== =========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 7,988,714 7,868,169 7,813,372
BASIC AND DILUTED EARNINGS
PER AVERAGE COMMON SHARE $1.36 $1.32 $1.41
===== ===== =====
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
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CONSOLIDATED BALANCE SHEETS
DECEMBER 31 1997 1996
- -ASSETS-
PROPERTY, PLANT AND EQUIPMENT,
at original cost:
Electric utility plant $309,028,000 $298,995,000
Other 18,865,000 10,006,000
------------ ------------
327,893,000 309,001,000
Less - Reserves for depreciation (157,127,000) (147,539,000)
------------ ------------
170,766,000 161,462,000
Construction work in progress 6,086,000 4,589,000
------------ ------------
176,852,000 166,051,000
OTHER INVESTMENTS 3,477,000 2,299,000
CURRENT ASSETS:
Cash and cash equivalents 350,000 688,000
Temporary investments 1,649,000 5,823,000
Accounts receivable, net of
reserves of $270,000 and $232,000 9,820,000 7,719,000
Accrued utility revenue 3,287,000 3,651,000
Manufacturing inventories, at
first-in first-out cost 3,570,000 -
Fuel, at average cost 3,008,000 2,961,000
Materials and supplies, at average
cost 5,778,000 5,546,000
Prepayments and other 1,627,000 1,310,000
------------ ------------
29,089,000 27,698,000
DEFERRED CHARGES:
Debt expense (being amortized
over term of debt) 1,571,000 1,553,000
Lease payments receivable 3,289,000 3,412,000
Prepaid pension expense 13,572,000 11,151,000
Regulatory assets 13,940,000 14,769,000
Other 1,979,000 317,000
------------ ------------
34,351,000 31,202,000
------------ ------------
$243,769,000 $227,250,000
============ ============
- -CAPITALIZATION AND LIABILITIES-
CAPITALIZATION:
Common stock $33,816,000 $33,816,000
Retained earnings 70,714,000 67,533,000
Other paid-in capital 1,251,000 817,000
Less - Treasury stock (14,613,000) (15,996,000)
------------ ------------
91,168,000 86,170,000
Long-term debt 68,744,000 73,100,000
------------ ------------
159,912,000 159,270,000
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARY 1,298,000 -
CURRENT LIABILITIES:
Outstanding checks in excess of
cash balances 3,288,000 3,035,000
Current maturities of long-term
obligations 8,628,000 -
Accounts payable 11,400,000 8,839,000
Notes payable 2,621,000 -
Accrued income and general taxes 735,000 511,000
Accrued interest 1,960,000 1,962,000
Accrued vacation 1,154,000 1,119,000
Other 565,000 423,000
------------ ------------
30,351,000 15,889,000
NON-CURRENT LIABILITIES AND
DEFERRED CREDITS:
Capital lease obligations 3,093,000 3,271,000
Deferred income taxes 29,635,000 28,734,000
Investment tax credit 4,096,000 4,503,000
Accrued claims and benefits 1,744,000 1,749,000
Deferred interest 2,255,000 2,372,000
Regulatory liabilities 8,971,000 9,417,000
Other 2,414,000 2,045,000
------------ ------------
52,208,000 52,091,000
COMMITMENTS AND CONTINGENCIES (Note 7)
------------ ------------
$243,769,000 $227,250,000
============ =============
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
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CONSOLIDATED STATEMENTS OF CAPITALIZATION
DECEMBER 31 1997 1996
COMMON EQUITY:
Common stock - authorized 25,000,000
shares, without par value; issued
9,252,748 shares $ 33,816,000 $ 33,816,000
Retained earnings 70,714,000 67,533,000
Other paid-in capital (principally
gain on issuance of treasury stock) 1,251,000 817,000
Less- Treasury stock, at cost,
1,211,110 and 1,326,272 shares (14,613,000) (15,996,000)
------------ ------------
91,168,000 86,170,000
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
Unsecured 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 4,272,000 -
------------ ------------
77,372,000 73,100,000
Less - Current maturities (8,628,000) -
------------ ------------
68,744,000 73,100,000
------------ ------------
Total capitalization $159,912,000 $159,270,000
============ ============
Notes:
(a) Common Stock:
At December 31, 1997, there were 8,041,638 shares of common stock
outstanding.
The St. Joseph Light & Power Company (the Company) has an
Automatic Dividend Reinvestment and Optional Cash Payment Plan.
Under this Plan, common shares may be newly issued, reissued or
purchased on the open market. At December 31, 1997, the Company
had 411,100 shares of common stock reserved for this Plan. In
addition, the Company has 466,884 shares of stock reserved for
its stock-based compensation plans. Refer to Note 3 in the Notes
to Consolidated Financial Statements.
On September 18, 1996, the Company adopted a new Rights Agreement
replacing the 1986 Rights Agreement, which expired on December 4,
1996. Under the agreement, the Company declared a dividend of one
Right for each share of common stock outstanding at the close of
business on December 4, 1996, to be effective contemporaneously
with the expiration of the 1986 Rights. Each Right entitles the
holder thereof to purchase one-half share of common stock at a
price of $35 per one-half share. The Rights, which expire on
December 4, 2006, have no voting rights.
The Rights are exercisable in the event of certain attempted
business acquisitions. Exercising the Rights will cause
substantial dilution to a person or group attempting to acquire
the Company on terms not approved by the Company's board of
directors. At December 31, 1997, there were 8,041,638 Rights
outstanding.
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
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<PAGE>
(b) Long-Term Debt:
The first mortgage bonds are secured equally and ratably by a
direct lien on substantially all fixed property and franchises
now owned or hereafter acquired.
Other long-term debt includes notes payable to banks and finance
companies which are payable through 2001 and bear interest at
rates ranging from 9.635% to 9.75% and prime plus 1.5% to prime
plus 2.5%. These notes are collateralized by substantially all of
the assets of Percy Kent Bag Co. Inc. (Percy Kent). Refer to Note
1 in the Notes to Consolidated Financial Statements.
The combined aggregate amount of maturities and unfulfilled
sinking fund requirements for the next five years are as follows:
1998 $8,628,000
1999 259,000
2000 211,000
2001 175,000
2002 -
----------
$9,273,000
==========
(c) Cumulative Preferred Stock:
Cumulative preferred stock, without par value, of 4,000,000
shares is authorized.
(d) Preference Stock:
Preference stock, without par value, of 2,000,000 shares is
authorized.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
YEARS ENDED DECEMBER 31 1997 1996 1995
BALANCE AT BEGINNING OF YEAR $67,533,000 $64,560,000 $60,708,000
NET INCOME 10,840,000 10,357,000 11,040,000
----------- ----------- -----------
78,373,000 74,917,000 71,748,000
LESS - Dividends on common
stock of $.96, $.94 and
$.92 per share (7,659,000) (7,384,000) (7,188,000)
----------- ----------- -----------
BALANCE AT END OF YEAR $70,714,000 $67,533,000 $64,560,000
=========== =========== ===========
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
Page 19
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31 1997 1996 1995
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $10,840,000 $10,357,000 $11,040,000
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 11,440,000 10,474,000 10,022,000
Gain from sale of unit
coal trains - - (806,000)
Pension expense (1,961,000) (1,921,000) (950,000)
Deferred taxes and
investment tax credit 402,000 768,000 (457,000)
Allowance for equity funds
used during construction (129,000) (316,000) (139,000)
Net changes in working
capital items not
considered elsewhere:
Accounts receivable and
accrued utility revenue 591,000 (207,000) (654,000)
Inventories (255,000) 1,008,000 (360,000)
Accounts payable and
outstanding checks (2,804,000) 1,416,000 356,000
Accrued income and
general taxes 234,000 (211,000) (116,000)
Other, net (147,000) (225,000) 938,000
Net changes in regulatory
assets and liabilities 464,000 (94,000) 278,000
Net changes in other assets
and liabilities (98,000) 126,000 164,000
----------- ----------- -----------
Net cash provided by
operating activities 18,577,000 21,175,000 19,316,000
----------- ----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Additions to plant (14,128,000)(15,188,000) (22,359,000)
Allowance for borrowed funds
used during construction 75,000 215,000 269,000
Investments 2,996,000 (193,000) (4,593,000)
Proceeds from sale of unit
coal trains - - 931,000
Other (18,000) 101,000 (130,000)
----------- ----------- -----------
Net cash used in investing
activities (11,075,000)(15,065,000) (25,882,000)
----------- ----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Notes payable decrease (462,000) - (6,300,000)
Principal payments under
capital lease obligations (178,000) (129,000) (16,000)
Long-term debt retired (1,358,000) - (5,600,000)
Long-term debt issued - - 25,600,000
Common stock purchased (4,000) (17,000) (50,000)
Common stock issued 1,821,000 1,821,000 -
Dividends paid (7,659,000) (7,384,000) (7,188,000)
----------- ----------- -----------
Net cash used in financing
activities (7,840,000) (5,709,000) 6,446,000
----------- ----------- -----------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (338,000) 401,000 (120,000)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 688,000 287,000 407,000
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF YEAR $350,000 $688,000 $287,000
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $7,444,000 $5,872,000 $5,275,000
Income taxes 5,609,000 4,795,000 5,257,000
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES: A
capital lease obligation of $874,000 was incurred in 1996
when the Company entered into a lease agreement for computer
equipment.
For purposes of the Consolidated Statements of Cash Flows, the
Company considers all highly liquid debt instruments purchased
with an original maturity of three months or less to be cash
equivalents.
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
Page 20
<PAGE>
CONSOLIDATED STATEMENTS OF TAXES
YEARS ENDED DECEMBER 31 1997 1996 1995
COMPONENTS OF INCOME TAX EXPENSE:
Taxes payable currently -
Federal $5,025,000 $4,097,000 $4,838,000
State 787,000 403,000 766,000
---------- ---------- ----------
5,812,000 4,500,000 5,604,000
Provisions for deferred taxes(a)-
Depreciation and other plant-
related differences(b) 255,000 252,000 (80,000)
Pensions 971,000 948,000 429,000
Other (417,000) (24,000) (394,000)
---------- ---------- ----------
809,000 1,176,000 (45,000)
Amortization of investment
tax credits (407,000) (408,000) (412,000)
---------- ---------- ----------
Total income tax expense $6,214,000 $5,268,000 $5,147,000
========== ========== ==========
RECONCILIATION OF INCOME TAX
RATES:
Statutory federal income tax rate 35.0% 35.0% 35.0%
Timing differences flowed through
as required by regulators 1.2 (.2) (2.2)
Amortization of investment tax
credits (2.4) (2.6) (2.6)
Amortization of excess deferred
taxes (1.0) (1.0) (1.0)
State income taxes, net of
federal income tax benefit 5.8 5.2 5.2
Other (2.2) (2.7) (2.6)
---------- ---------- ----------
Effective income tax rate(c) 36.4% 33.7% 31.8%
========== ========== ==========
Notes:
(a) The Company follows the provisions of Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes," which requires the use of the liability method of
accounting for income taxes. Under the liability method,
deferred income taxes are established for the tax consequences of
temporary differences by applying the expected tax rate to
differences between the financial statement carrying amounts and
the tax bases of the Company's assets and liabilities. Such
temporary differences are the result of provisions in the income
tax law that either require or permit certain items to be
reported on the income tax return in a different period than they
are reported in the financial statements.
The Company has recorded regulatory assets and liabilities to
account for the effect of expected future regulatory actions
related to unamortized investment tax credits, income tax
liabilities recorded at tax rates in excess of current rates and
other items for which deferred taxes have not previously been
provided.
The principal components of the Company's deferred income tax
balances at December 31, 1997 and 1996, consist of the following:
1997 1996
Accelerated depreciation and other
plant-related differences $24,286,000 $22,737,000
Pensions 5,080,000 4,164,000
Unamortized investment tax credits (2,806,000) (3,060,000)
Regulatory assets 12,363,000 12,728,000
Regulatory liabilities (6,165,000) (6,357,000)
Net operating loss and tax credit
carryforwards of Percy Kent,
which expire through 2011 (2,403,000) -
Other net (720,000) (1,478,000)
----------- -----------
Net deferred tax liabilities $29,635,000 $28,734,000
=========== ===========
(b) The Company has elected, for tax purposes, various
accelerated depreciation methods allowed by the Internal Revenue
Code.
(c) The effective income tax rate is computed by dividing total
income tax expense on these statements by the sum of tax expense
and net income.
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
Page 21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. STATEMENT OF ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The consolidated financial
statements include the accounts of St. Joseph Light & Power
Company, a public utility, and its wholly owned subsidiary, SJLP
Inc. and its subsidiary, Percy Kent. Collectively, these entities
are referred to as the "Company." All significant intercompany
transactions have been eliminated in consolidation.
The Company is engaged principally in the generation, purchase,
transmission, distribution and sale of electricity, the
generation and distribution of industrial steam and the delivery
of natural gas serving approximately 62,000 customers in
northwest Missouri. SJLP Inc. was formed in September 1996 in
order to pursue investments in non-utility areas. Effective May
31, 1997, SJLP Inc. acquired a controlling interest in Percy
Kent, a manufacturer of 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 $1,406,000, net of amortiziation, is included in
other deferred charges in the Consolidated Balance Sheets and is
being amortized on the straight-line basis over 15 years. The
consolidated financial statements include the results of
operations since the date of acquisition. Pro forma financial
data prior to the date of acquisition does not materially differ
from reported results.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is
stated at original cost. These costs include payroll-related
costs such as taxes, pensions and other fringe benefits and an
allowance for funds used during construction (AFUDC).
Improvements to units of property are capitalized. Utility
property units retired are charged to accumulated depreciation
together with any related removal costs, net of salvage.
Maintenance costs and replacements of assets which do not
constitute units of property are expensed as incurred.
DEPRECIATION - Provisions for utility depreciation have been
computed on a straight-line basis by applying rates approved by
the Missouri Public Service Commission (PSC) to the classified
account balances. The Company's annual depreciation provisions
(including amounts classified elsewhere in the Consolidated
Statements of Income), as a percentage of the average balance of
depreciable property, were 3.7% for 1997 and 3.6% for 1996 and
1995.
JOINTLY OWNED IATAN PLANT - The Company has an agreement with
Kansas City Power and Light Company and The Empire District
Electric Company for joint ownership of a coal-burning generating
plant at Iatan, Missouri. The Company's share of operating
expenses for Iatan is included in operating expenses in the
Consolidated Statements of Income. The amounts below represent
the Company's 18% interest in the 670-megawatt unit.
DECEMBER 31 1997 1996
Electric utility plant $61,306,000 $61,193,000
Reserves for depreciation 33,307,000 31,515,000
REVENUE RECOGNITION - Utility revenues relating to service
rendered but unbilled are recognized in the period the service is
provided. Manufacturing revenues are recognized at the time the
finished bags are shipped to the customer.
ACCOUNTING POLICIES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
The Company will adopt the provisions of SFAS No. 130, "Reporting
Comprehensive Income," and SFAS No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits," effective
January 1, 1998, and SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," effective December 31,
1998. These statements are not expected to have a material effect
on the Company's financial position, results of operations, or
disclosures upon adoption.
EARNINGS PER SHARE - Basic and diluted earnings per average
common share were computed by dividing net income by the
following:
1997 1996 1995
Denominator for basic EPS -
Weighted average number of
shares of common stock
outstanding during the year 7,988,714 7,868,169 7,813,372
Stock options(see Note 3) 7,550 2,182 -
Contingently issuable shares
pursuant to long-term
incentive plan(see Note 3) - 14,306 13,603
--------- --------- ---------
Denominator for diluted EPS 7,996,264 7,884,657 7,826,975
========= ========= =========
Page 22
<PAGE>
All common share information for prior periods has been restated
to give retroactive effect to a two-for-one stock split which
became effective July 15, 1996.
RECLASSIFICATIONS - Certain reclassifications have been made in
the financial statements to enhance comparability.
2. BENEFIT PLANS
PENSION PLANS- The Company has two non-contributory defined
benefit pension plans, one for bargaining and one for non-
bargaining employees, covering all employees with one year or
more of continuous service. Benefits for both plans are based on
years of service and compensation, utilizing the final average
pay plan benefit formula. The Company's funding policy is to
comply with the minimum funding requirements of the Employee
Retirement Income Security Act.
Net pension credits, including amounts capitalized, are:
1997 1996 1995
Service cost-benefits earned
during the period $ 861,000 $ 777,000 $ 755,000
Interest cost on projected
benefit obligation 2,280,000 2,053,000 2,000,000
Less - Actual return on plan
assets (9,188,000) (6,754,000) (10,619,000)
Less - Amortization of
transition asset (431,000) (431,000) (431,000)
Amortization of prior
service cost 175,000 138,000 134,000
Deferred gain on plan assets 3,882,000 1,903,000 7,016,000
----------- ----------- -----------
Net pension credits (2,421,000) (2,314,000) (1,145,000)
Less - Amounts credited to
construction 460,000 393,000 195,000
----------- ----------- -----------
Net pension credits included
in operating expenses $(1,961,000)$(1,921,000) $ (950,000)
The funded status of the pension plans at December 31 is shown
below:
1997 1996
Actuarial present value of
accumulated plan benefits:
Vested $27,607,000 $22,988,000
Non-vested 602,000 639,000
------------ ------------
Accumulated benefit obligation $28,209,000 $23,627,000
Plan assets at fair market value $60,971,000 $53,813,000
Less - Projected benefit
obligation (32,643,000) (27,544,000)
------------ ------------
Plan assets in excess of
projected benefit obligation 28,328,000 26,269,000
Less - Unrecognized transition
asset (1,725,000) (2,156,000)
Unrecognized prior service cost 1,545,000 1,240,000
Less - Unrecognized net gain (14,576,000) (14,202,000)
------------ ------------
Prepaid pension expense $13,572,000 $11,151,000
============ ============
Assumed discount rate 7.25% 7.75%
Assumed average increase in
future compensation 4.3% 4.3%
Assumed rate of return on assets 9.0% 9.0%
The assets of the plans consist primarily of common stocks,
corporate bonds, United States government securities, collective
investment trust funds and commingled employee benefit trust
funds.
Percy Kent also has two non-contributory defined benefit pension
plans, which are insignificant to the Company's consolidated
financial statements.
RETIREMENT SAVINGS PLAN - The Company has a Retirement Savings
Plan under Section 401(k) of the Internal Revenue Code. The plan
covers all regular full-time employees with one year or more of
service. Under this plan, eligible employees may defer and
contribute a portion of current compensation in order to provide
retirement benefits. The Company makes a matching contribution of
25% of employee contributions, up to 6% of compensation, on a
monthly basis. Discretionary matching contributions up to an
additional 25% may be made based on an incentive formula. The
Company made contributions of $300,000 for 1997, $377,000 for
1996 and $369,000 for 1995.
POSTRETIREMENT BENEFIT PLAN - In addition to providing pension
benefits, the Company provides certain postretirement medical and
life insurance benefits. Substantially all of the Company's
employees become eligible for these benefits if they reach
retirement age while working for the Company and have 10 years of
service. Employees hired after December 31, 1992, are not
eligible for postretirement life insurance benefits.
The Company accounts for other postemployment benefits (OPEB)
pursuant to SFAS No. 106, "Employers' Accounting for
Postretirement Benefits other than Pensions," which requires the
accrual of the actuarially determined costs for life insurance
and medical benefits during an employee's period of service. In
accordance with the standard, the Company is amortizing the
estimated unfunded accumulated obligation at January 1, 1993, of
$7,761,000 (transition obligation) over 20 years.
The Company uses Voluntary Employees' Beneficiary Association
trusts which cover both active and retired employees.
Page 23
<PAGE>
The following table summarizes the net postretirement benefit
costs for 1997,1996 and 1995:
1997 1996 1995
Service cost-benefits earned
during the period $ 149,000 $ 213,000 $ 167,000
Interest cost on accumulated
postretirement benefit
obligation 672,000 707,000 608,000
Less - Return on plan assets (298,000) (161,000) (103,000)
Amortization oftransition
obligation 388,000 388,000 388,000
Deferred gain on plan assets 129,000 42,000 7,000
--------- --------- ---------
Net postretirement benefit
costs 1,040,000 1,189,000 1,067,000
Less - Amounts charged to
construction (198,000) (202,000) (182,000)
---------- ---------- ----------
Net postretirement benefit
costs included in
operating expenses $ 842,000 $ 987,000 $ 885,000
========== ========== ==========
The following table summarizes the status of the Company's
postretirement benefit plan and the related amounts included in
the Consolidated Balance Sheets at December 31:
1997 1996
Accumulated postretirement
benefit obligation:
Retirees $5,314,000 $4,742,000
Other fully eligible
participants 1,526,000 1,335,000
Other active participants 3,300,000 2,670,000
----------- ----------
Total benefit obligation 10,140,000 8,747,000
Less - Plan assets at fair
market value (2,783,000) (1,955,000)
Less - Unrecognized transition
obligation (5,795,000) (6,183,000)
Unrecognized net gain (loss) (391,000) 608,000
----------- -----------
Accrued postretirement benefit
cost $1,171,000 $1,217,000
=========== ===========
Assumed discount rate 7.25% 7.75%
Assumed rate of return of assets 9.0% 9.0%
For measurement purposes, an 8 percent annual rate of increase in
the per-capita cost of covered health care benefits was assumed
for 1998; the rate was assumed to decrease gradually to 6 percent
by 2021 and remain at that level thereafter. Increasing the
assumed health care cost trend rates by 1 percentage point in
each year would increase the accumulated postretirement benefit
obligation as of December 31, 1997, by $1,620,000 and increase
the aggregate of the service and interest cost components of the
net periodic postretirement benefit cost for the year then ended
by $195,000.
3. STOCK-BASED COMPENSATION PLANS
In May 1996, the shareholders approved a long-term stock
incentive plan for non-employee directors (the Plan). Under the
Plan, non-employee directors are automatically granted restricted
stock and non-qualified options to purchase shares of common
stock. The Company reserved 300,000 shares of stock for issuance
pursuant to the Plan. For 1997 and 1996, respectively, the
Company awarded 2,500 and 11,000 shares of restricted stock and
recorded compensation expense of $40,000 and $166,000.
All options are exercisable in full from the date of grant and
have exercise prices equal to the stock's market price on the
date of the grant. The following table is a summary of data
regarding stock options:
1997 1996
Shares Wtd. Avg. Shares Wtd. Avg.
Ex. Price Ex. Price
For the year:
Options granted 17,000 $16.03 106,000 $15.125
As of year-end:
Options outstanding
and exercisable 123,000 15.25 106,000 15.125
Shares available for
grant (for options
and restricted stock) 163,500 N/A 183,000 N/A
The Company accounts for the option feature of the Plan under
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," under which no compensation cost has been
recognized. The following table shows the assumptions made for
grants in each year, as well as the amounts the Company's net
income and earnings per share would have been had compensation
cost for this plan been recorded consistent with SFAS No. 123,
"Accounting for Stock-Based Compensation" using the Black-Scholes
pricing model:
1997 1996
Net income: As reported $10,840,000 $10,357,000
Pro forma 10,792,000 10,066,000
Basic and diluted EPS:
As reported $1.36 $1.32
Pro forma 1.35 1.28
Risk-free interest rate 6.89% 6.85%
Expected dividend yield 3% 3%
Expected life 10 years 10 years
Expected volatility 18% 19%
Weighted average fair value of
options granted $4.58 $4.46
Page 24
<PAGE>
The Company also maintains a long-term incentive plan for
officers and certain other key employees. This plan provides for
overlapping three-year performance cycles with stock awards
established on the first day and earned on the last day of each
performance cycle. The Company reserved 320,000 shares of stock
for issuance pursuant to this plan. Compensation of $(9,000),
$14,000 and $188,000 was expensed under this plan in 1997, 1996
and 1995, respectively.
4. SHORT-TERM BORROWINGS
The Company has arrangements with certain banks to provide
unsecured short-term lines of credit on a committed basis with
available amounts at December 31, 1997 totalling $5,500,000.
Outstanding notes bear interest at rates based on the prime rate
or money market rates. In addition, the Company has agreements
with several banks to borrow on an uncommitted, as available,
basis at market-based rates quoted by the banks. Also, the
Company's consolidated subsidiaries maintain secured credit
agreements which had available balances of $235,000 at December
31, 1997.
At December 31, 1997, outstanding borrowings consisted of
$2,621,000 of notes payable to other financial institutions with
weighted average interest rates of 11.0%. During 1997, weighted
average short-term debt outstanding was $1,944,000 with weighted
average interest rates of 10.6%.
5. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the
fair value of each class of financial instruments for which it is
practicable to estimate that value:
CASH AND TEMPORARY INVESTMENTS - The fair value of these
investments is estimated based on quoted market prices for the
same or similar issues and approximates the carrying amount.
OTHER INVESTMENTS - The balance includes investments in
convertible preferred stock of a non-publicly traded company, a
business park joint venture, community betterment projects and a
retirement trust. The fair value of the investments in the
preferred stock, the joint venture and the community betterment
projects are stated at the original cost of $1,028,000, $500,000
and $77,000, respectively, due to the impracticability of
estimating the market value. The fair value of the underlying
instruments of the retirement trust is estimated based on quoted
market prices for the same or similar issues. The investment in
the trust is offset by a corresponding liability for future
obligations in other non-current liabilities.
LONG-TERM DEBT - Most of the Company's long-term debt is not
publicly traded; therefore, a market price does not exist for
these bonds. The fair value of long-term debt is estimated based
upon market prices for comparable securities with similar
maturities.
The difference in carrying amounts and fair values of financial
instruments is not expected to result in a material impact on the
Company's financial position or results of operations. Under the
ratemaking principles followed by the PSC, any gain or loss on
early refinancing of the Company's long-term debt would be used
to reduce or increase the Company's rates over a prescribed
amortization period.
Carrying Fair
Amounts Values
1997
Cash and temporary investments $ 2,000,000 $ 2,000,000
Other investments 3,477,000 3,688,000
Long-term debt 77,372,000 86,155,000
1996
Cash and temporary investments $ 6,511,000 $ 6,524,000
Other investments 2,299,000 2,413,000
Long-term debt 73,100,000 78,154,000
6. EFFECTS OF REGULATION
The Company is subject to rate regulation by the PSC. Rates are
established to enable the Company to recover its service costs
and also to allow the Company an opportunity to earn a return on
its investment. The Company currently applies SFAS No. 71,
"Accounting for the Effects of Certain Types of Regulation,"
which recognizes the economic effects of rate regulation. In the
event the Company determines that it no longer meets the criteria
for following SFAS No. 71, the accounting impact would be a non-
cash charge to operations of an amount that could be material.
Criteria that give rise to the discontinuance of SFAS No. 71
include (1) increasing competition that restricts the Company's
ability to establish prices to recover specific costs, and (2) a
significant change in the manner in which rates are set by
regulators from cost-based regulation to another form of
regulation. The continued applicability of SFAS No. 71 is
continually reviewed based on the current regulatory
environment.
In March 1997, the PSC opened a docket to investigate
restructuring in the electric utility industry. A retail electric
competition task force, comprised of representatives from
investor-owned utilities, municipals, rural electric
Page 25
<PAGE>
cooperatives, consumer interest groups, industrial organizations,
organized labor, the Office of Public Counsel, Missouri
Department of Natural Resources, PSC staff, and the Missouri
legislature, is charged with preparing comprehensive reports to
the PSC which will then be provided to the legislature in mid-
1998. The reports are to be based upon a thorough investigation
of retail wheeling of electricity and related issues and include
recommendations of how Missouri should implement retail electric
competition in the event that legislation is enacted which
authorizes it.
Based on deregulation plans implemented or considered by other
states, management believes that the most likely scenario is that
the generation portion of the business could become unregulated
and that the transmission and distribution functions will
continue to be regulated. Although bills have been introduced in
the 1998 session of the legislature, most observers believe that
the earliest a bill will be passed is 1999, which would delay
retail competition in Missouri until 2000 or later.
Based on a current evaluation of the various factors and
conditions that are expected to impact future cost recovery, the
Company believes that its regulatory assets, including those
related to generation, are probable of future recovery and that
the utilization of SFAS No. 71 continues to be appropriate.
Accordingly, the Company has recorded regulatory assets and
liabilities on the Consolidated Balance Sheets, consisting
primarily of deferred taxes as noted in Note (a) to Consolidated
Statements of Taxes.
The Company incurred approximately $1.3 million in costs to
restore service to customers following an ice storm in December
1994. The PSC approved a request to defer and amortize the
expenses over a five-year period, beginning in March 1995.
In February 1995, the PSC approved a stipulated agreement
regarding the allocation of investments and expenses among the
Company's three utility segments. Revenue neutral to the Company,
the agreement was designed to annually reduce industrial steam
revenue by approximately $550,000 and increase electric and
natural gas revenues by $500,000 and $50,000, respectively. In
addition, electric rates were restructured among various classes.
Summer rates were increased to reflect higher seasonal production
costs in the summer months, while winter rates were lowered.
These revised tariffs were implemented on June 15, 1995.
7. COMMITMENTS AND CONTINGENCIES
Leases - The Company has a 50-year capital lease agreement with
six other regional utilities for a transmission line and related
facilities. Electric utility plant as of December 31, 1997,
includes $3,093,000 for the leased joint facilities and other
property acquired under capital leases.
The future minimum lease payments under this and other capital
leases together with the present value of the net lease payments
(obligations under the capital leases) are:
1998 $ 426,000
1999 426,000
2000 426,000
2001 267,000
2002 216,000
Later years 5,534,000
----------
Total minimum lease payments 7,295,000
Less - Amounts representing
interest 4,202,000
----------
Present value of obligations
under capital leases $3,093,000
==========
The Company also has 50-year direct financing lease agreements
for terminal and associated leased joint facilities. The future
minimum lease payments receivable together with the present value
of net receivables under the leases are:
1998 $ 123,000
1999 123,000
2000 123,000
2001 123,000
2002 123,000
Later years 2,674,000
----------
Total minimum lease payments
receivable 3,289,000
Less - Amounts representing
interest 2,255,000
----------
Present value of net receivables $1,034,000
==========
Page 26
<PAGE>
OTHER COMMITMENTS - The Company's capital budget, excluding AFUDC
and including non-utility investments, for 1998 is approximately
$18,126,000. The five-year capital budget is estimated to be
$74,678,000.
The Company has entered into long-term contracts to purchase
generating capacity, fossil fuels and rail transportation.
Minimum annual amounts to be purchased under these contracts
approximate $10,087,000, $10,364,000, $12,556,000, $11,993,000
and $11,414,000 for each of the next five years, respectively.
ENVIRONMENTAL CONTINGENCIES - The Company is required to meet
various environmental regulations governing air and water
standards. The Company anticipates future capital expenditures of
approximately $7,552,000 at the Lake Road plant related to the
requirements of Phase II of the Clean Air Act Amendments which
become effective in 2000.
OTHER CONTINGENCIES - Certain legal actions are pending which may
impact the Company. In management's opinion, the ultimate
resolution of these matters is not expected to materially affect
the Company's financial position or operating results.
8. SEGMENTS OF BUSINESS
The Company is principally a public utility engaged primarily in
the business of generating and distributing electric energy in a
10-county area in northwest Missouri. The Company also is engaged
in the limited sale of natural gas and industrial steam and the
manufacture of paper bags. The following table sets forth certain
information regarding the Company's segments of business.
1997 1996 1995
Operating information (years
ended December 31)
Operating revenues:
Electric utility $ 86,910,000 $ 83,499,000 $ 81,994,000
Other utility 11,948,000 12,370,000 11,527,000
Manufacturing 17,307,000 - -
------------ ------------ ------------
$116,165,000 $ 95,869,000 $ 93,521,000
============ ============ ============
Operating income:
Electric utility $ 22,356,000 $ 20,073,000 $ 18,931,000
Other utility 658,000 855,000 1,341,000
Manufacturing (26,000) - -
------------ ------------ ------------
$ 22,988,000 $ 20,928,000 $ 20,272,000
============ ============ ============
Other information:
Depreciation expense(a)-
Electric utility $ 10,409,000 $ 9,975,000 $ 9,526,000
Other utility 505,000 499,000 496,000
Manufacturing 526,000 - -
------------ ------------ ------------
$ 11,440,000 $ 10,474,000 $ 10,022,000
============ ============ ============
Capital expenditures,
including AFUDC -
Electric utility $ 13,520,000 $ 14,864,000 $ 22,032,000
Other utility 465,000 324,000 327,000
Manufacturing 143,000 - -
------------ ------------ ------------
$ 14,128,000 $ 15,188,000 $ 22,359,000
============ ============ ============
Asset information (at
December 31)
Identifiable:
Electric utility $209,505,000 $204,372,000 $196,936,000
Other utility 11,586,000 10,189,000 10,550,000
Manufacturing 16,933,000 - -
------------ ------------ ------------
238,024,000 214,561,000 207,486,000
Assets not allocated(b) 5,745,000 12,689,000 11,844,000
------------ ------------ ------------
$243,769,000 $227,250,000 $219,330,000
============ ============ ============
(a) Includes depreciation classified elsewhere in the
Consolidated Statements of Income.
(b) Principally includes investments, cash and deferred charges.
Page 27
<PAGE>
9. QUARTERLY FINANCIAL DATA (UNAUDITED)
First Second Third Fourth
Quarter Quarter Quarter Quarter
1997
Operating revenues$23,510,000 $25,199,000 $37,116,000 $30,340,000
Operating income 4,365,000 5,100,000 10,228,000 3,295,000
Net income 1,991,000 2,268,000 5,395,000 1,186,000
Weighted average
common shares
outstanding 7,940,138 7,979,852 8,004,627 8,029,089
Basic and diluted
earnings per average
common share $.25 $.28 $.67 $.15
1996
Operating revenues$23,619,000 $22,937,000 $27,304,000 $22,009,000
Operating income 4,540,000 5,137,000 9,467,000 1,784,000
Net income 2,142,000 2,494,000 5,260,000 461,000
Weighted average
common shares
outstanding 7,822,158 7,851,217 7,885,649 7,913,133
Basic and diluted
earnings peraverage
common share $.27 $.32 $.67 $.06
Page 28
<PAGE>
RESPONSIBILITY FOR FINANCIAL STATEMENTS
The management of St. Joseph Light & Power Company is responsible
for the preparation and presentation of the financial information
in this Annual Report. The following financial statements have
been prepared in accordance with generally accepted accounting
principles consistently applied and reflect management's best
estimates and informed judgments as required.
To fulfill these responsibilities, management has developed and
maintains a comprehensive system of internal operating,
accounting and financial controls. These controls provide
reasonable assurance that the Company's assets are safeguarded,
transactions are properly recorded and resulting financial
statements are reliable. An internal audit function assists
management in monitoring the effectiveness of the controls.
The Report of Independent Public Accountants on the financial
statements appears on this page. The responsibility for the
independent auditors is limited to the audit of financial
statements presented and the expression of an opinion as to their
fairness.
The Board of Directors maintains oversight of the Company's
financial situation through its monthly review of operations and
financial condition and its selection of the independent
auditors. The Audit Committee, comprised of board members who
are not employees or officers of the Company, also meets
periodically with the independent auditors and the Company's
internal audit staff. The auditors have complete access to and
meet with the Audit Committee, without management representatives
present, to review accounting, auditing and financial matters.
Pertinent items discussed at the meetings are reviewed with the
full Board of Directors.
/s/ Terry F. Steinbecker
President and Chief Executive Officer
/s/ Larry J. Stoll
Vice President-Finance, Treasurer and Assistant Secretary
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of St. Joseph Light & Power Company:
We have audited the accompanying balance sheets and statements of
capitalization of St. Joseph Light & Power Company (a Missouri
corporation) and subsidiaries as of December 31, 1997 and 1996,
and the related consolidated statements of income, retained
earnings, taxes and cash flows for each of the three years in the
period ended December 31, 1997. These financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion of these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of St. Joseph Light & Power Company and subsidiaries as of
December 31, 1997 and 1996, and the results of its operations and
its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with general accepted accounting
principles.
ARTHUR ANDERSON LLP
Kansas City, Missouri
January 23, 1998
Page 29
<PAGE>
SUMMARY OF FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
1992
<S> <C> <C> <C> <C> <C>
<C>
STATEMENTS OF INCOME (Thousands)
Operating revenues $116,165 $ 95,869 $ 93,521 $ 90,782 $ 88,539 $ 82,555
Operating expenses 93,177 74,941 73,249 70,033 77,853 64,792
-------- -------- -------- -------- -------- --------
Operating income 22,988 20,928 20,272 20,749 10,686 17,763
Interest charges 6,480 5,807 5,555 4,460 4,457 4,681
Other (income) expense (440) (504) (1,470) (32) (191) (348)
Income taxes 6,214 5,268 5,147 5,255 (1,502) 4,472
Minority interest (106) - - - - -
-------- -------- -------- -------- -------- --------
Net income 10,840 10,357 11,040 11,066 7,922 8,958
Preferred stock dividend
requirements - - - - - -
-------- -------- -------- -------- -------- --------
Earnings available for
common stock $ 10,840 $ 10,357 $ 11,040 $ 11,066 $ 7,922 $ 8,958
======== ======== ======== ======== ======== ========
COMMON STOCK DATA
(Adjusted to reflect two-
for-one split in July 1996)
Basic and diluted earnings
per common share $1.36 $1.32 $1.41 $1.40 $ .99 $1.11
Dividends paid per share $ .96 $ .94 $ .92 $ .90 $ .88 $ .86
Shares outstanding - average 7,988,714 7,868,169 7,813,372 7,884,292 8,016,384 8,037,956
Return on average common
equity (percent) 12.2 12.4 13.9 14.4 10.4 12.0
Book value per share $11.34 $10.87 $10.42 $9.93 $9.54 $9.42
Market price at year-end $17.75 $15.375 $17.750 $14.250 $14.500 $17.125
CAPITALIZATION (Percent)
Long-term debt 43 46 47 41 41 40
Common equity 57 54 53 59 59 60
--- --- --- --- --- ---
Total 100 100 100 100 100 100
=== === === === === ===
COVERAGE RATIOS
Pretax interest 3.60 3.59 3.78 4.59 2.42 3.82
After tax interest and preferred
dividend 2.65 2.72 2.90 3.43 2.75 2.88
MISCELLANEOUS FINANCIAL DATA (Thousands)
Capital expenditures,
excluding AFUDC $ 14,346 $ 14,318 $ 21,781 $ 12,224 $ 12,483 $ 9,301
Utility plant at original cost 325,156 313,315 300,966 283,637 276,376 267,075
1991 1990 1989 1988
1987
STATEMENTS OF INCOME (Thousands)
Operating revenues $ 89,580 $ 84,178 $ 83,917 $ 77,643 $ 77,400
Operating expenses 69,683 64,583 63,871 57,730 56,055
-------- -------- -------- -------- --------
Operating income 19,897 19,595 20,046 19,913 21,345
Interest charges 4,856 4,133 4,409 4,756 5,011
Other (income) expense 63 (240) (711) (860) (1,161)
Income taxes 5,188 5,487 5,670 5,305 6,802
Minority interest - - - - -
-------- -------- -------- -------- --------
Net income 9,790 10,215 10,678 10,712 10,693
Preferred stock dividend requirements - - - - 13
-------- -------- -------- -------- --------
Earnings available for
common stock $ 9,790 $ 10,215 $ 10,678 $ 10,712 $ 10,680
======== ======== ======== ======== ========
COMMON STOCK DATA
(Adjusted to reflect two-
for-one split in July 1996)
Basic and diluted earnings
per common share $1.22 $1.24 $1.23 $1.17 $1.15
Dividends paid per share $ .83 $ .80 $ .76 $ .70 $ .65
Shares outstanding - average 8,037,994 8,251,274 8,701,298 9,170,014 9,253,202
Return on average common
equity (percent) 13.5 14.2 14.6 14.6 15.1
Book value per share $9.19 $8.81 $8.57 $8.26 $7.87
Market price at year-end $16.938 $14.125 $11.938 $10.125 $9.625
CAPITALIZATION (Percent)
Long-term debt 42 37 38 39 42
Common equity 58 63 62 61 58
--- --- --- --- ---
Total 100 100 100 100 100
=== === === === ===
COVERAGE RATIOS
Pretax interest 4.05 4.71 4.67 4.34 4.47
After tax interest and preferred
dividend 2.99 3.42 3.39 3.23 3.11
MISCELLANEOUS FINANCIAL DATA (Thousands)
Capital expenditures,
excluding AFUDC $ 11,581 $ 12,144 $ 12,557 $ 6,476 $ 5,639
Utility plant at original cost 256,962 245,834 234,757 221,610 215,533
SUMMARY OF OPERATING STATISTICS - ELECTRIC UTILITY
1997 1996 1995 1994 1993
1992
SALES REVENUES (Thousands)
Residential $ 37,066 $ 36,428 $ 36,001 $ 32,791 $ 31,630 $ 28,334
Commercial 25,985 25,055 25,053 23,743 22,946 22,436
Industrial 19,280 18,540 18,352 17,325 18,286 18,312
Other 1,006 1,000 643 518 511 529
-------- -------- -------- -------- -------- --------
Total retail sales revenue $ 83,337 $ 81,023 $ 80,049 $ 74,377 $ 73,373 $ 69,611
======== ======== ======== ======== ======== ========
Sales for resale revenue $ 2,345 $ 1,447 $ 1,052 $ 3,661 $ 1,429 $ 412
======== ======== ======== ======== ======== ========
SALES (mwh)
Residential 621,432 611,911 593,881 562,148 564,885 505,047
Commercial 471,698 453,387 437,008 422,582 406,379 390,495
Industrial 474,972 454,662 440,176 431,468 447,859 438,230
Other 9,220 9,505 8,968 8,976 9,310 9,525
-------- -------- -------- -------- -------- --------
Total retail sales 1,577,322 1,529,465 1,480,033 1,425,174 1,428,433 1,343,297
======== ======== ======== ======== ======== ========
Sales for resale 132,044 79,156 68,769 222,185 91,645 27,355
======== ======== ======== ======== ======== ========
RESIDENTIAL CUSTOMER DATA (Average)
Number of customers 54,621 54,237 53,900 53,424 53,250 53,037
Annual kwh sales 11,377 11,282 11,018 10,522 10,608 9,523
Revenue (Cents per kwh) 5.96 5.95 6.06 5.83 5.60 5.61
SYSTEM DATA
System requirements (mwh) 1,683,048 1,661,029 1,585,624 1,526,088 1,532,022 1,445,880
Load factor (Percent) 54.9 54.8 52.5 55.0 52.5 52.8
Net peak load (mw) 350 346 345 317 333 312
System capability at peak (mw) 432 422 417 439 434 422
SUMMARY OF OPERATING STATISTICS - ELECTRIC UTILITY
1991 1990 1989 1988
1987
SALES REVENUES (Thousands)
Residential $ 31,154 $ 29,285 $ 28,079 $ 28,666 $ 28,711
Commercial 22,655 22,306 22,014 21,476 22,579
Industrial 17,871 17,470 17,096 16,041 15,973
Other 519 516 524 522 591
-------- -------- -------- -------- --------
Total retail sales revenue $ 72,199 $ 69,577 $ 67,713 $ 66,705 $ 67,854
======== ======== ======== ======== ========
Sales for resale revenue $ 5,439 $ 4,426 $ 4,835 $ 785 $ 1,294
======== ======== ======== ======== ========
SALES (mwh)
Residential 558,614 518,563 498,613 506,059 464,656
Commercial 398,129 389,576 386,585 373,465 353,560
Industrial 427,728 418,671 410,493 381,538 352,382
Other 9,322 9,337 9,513 9,534 10,379
-------- -------- -------- -------- --------
Total retail sales 1,393,793 1,336,147 1,305,204 1,270,596 1,180,977
======== ======== ======== ======== ========
Sales for resale 395,293 306,572 339,900 47,288 88,112
======== ======== ======== ======== ========
RESIDENTIAL CUSTOMER DATA (Average)
Number of customers 52,701 52,396 51,860 51,456 51,205
Annual kwh sales 10,600 9,897 9,615 9,835 9,074
Revenue (Cents per kwh) 5.58 5.65 5.63 5.66 6.18
SYSTEM DATA
System requirements (mwh) 1,498,202 1,430,518 1,407,757 1,372,358 1,300,870
Load factor (Percent) 52.6 50.4 51.8 48.4 49.7
Net peak load (mw) 325 324 310 323 299
System capability at peak (mw) 416 391 381 361 342
</TABLE>
Page 31
<PAGE>
DIRECTORS AND OFFICERS
* JOHN P. BARCLAY JR., 68
Chairman, President and Chief Executive Officer
Wire Rope Corporation of America, Inc.
(Manufacturer and distributor of wire rope and wire
rope products)
St. Joseph, Missouri
Director since 1974.
DEBORAH A. BECK, 50
Senior Vice President-Insurance Operations
Northwestern Mutual Life Insurance Company
(Insurance company)
Milwaukee, Wisconsin
Director since 1997.
* DANIEL A. BURKHARDT, 50
Principal
The Jones Financial Companies
(Investment banking and retail securities firm)
St. Louis, Missouri
Director since 1988.
JAMES P. CAROLUS, 47
President
Hillyard Industries, Inc.
(Manufacturer of maintenance cleaning products)
St. Joseph, Missouri
Director since 1989.
* WILLIAM J. GREMP, 55
Managing Director and Senior Vice President
First Union Capital Markets Group
(Banking)
Charlotte, North Carolina
Director since 1995.
DAVID W. SHINNEMAN, 59
President
Shinneman Management Co.
(Operator of McDonald's restaurants)
St. Joseph, Missouri
Director since 1994.
* ROBERT L. SIMPSON, 64
General Partner
St. Joseph Riverboat Partners
(Riverboat casino)
St. Joseph, Missouri
Director since 1983.
GERALD R. SPRONG, 64
President and Chief Executive Officer
The Morris Plan Company of St. Joseph
(Financial management and lending)
St. Joseph, Missouri, and
Director, Chairman and Chief Executive Officer
First Savings Bank, F.S.B.
(Banking)
Manhattan, Kansas, and
President and Chief Executive Officer
Noble Properties of Iowa, L.L.C.
(Ownership & management of hotels)
Des Moines, Iowa
Director since 1976.
TERRY F. STEINBECKER, 52
President and Chief Executive Officer
St. Joseph Light & Power Company
St. Joseph, Missouri
Director since 1985.
OFFICERS
TERRY F. STEINBECKER, 52
President and Chief Executive Officer
GARY L. MYERS, 44
Vice President, General Counsel and Secretary
LARRY J. STOLL, 45
Vice President - Finance, Treasurer and Assistant Secretary
JOHN A. STUART, 44
Vice President - Customer Service & Energy Delivery
DWIGHT V. SVUBA, 55
Vice President - Energy Supply
* Member of Audit Committee
Page 32
<PAGE>
CORPORATE INFORMATION
CORPORATE OFFICES
520 Francis Street
Post Office Box 998
St. Joseph, Missouri 64502-0998
(816) 387-6434
(816) 387-6332 (fax)
1-800-367-4562
http://www.sjlp.com
email: [email protected]
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
1500 Commerce Tower
Kansas City, Missouri 64199
STOCK LISTING AND PRINCIPAL MARKET
New York Stock Exchange
Eleven Wall Street
New York, New York 10005
Symbol: SAJ
COMMON STOCK TRANSFER AGENT AND REGISTRAR
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60690
ANNUAL SHAREHOLDERS MEETING
The annual meeting of shareholders will be at 9 a.m.,
Wednesday, May 20, 1998, at the Albrecht-Kemper Museum
of Art, 2818 Frederick Boulevard, St. Joseph, Missouri.
This report and financial statements contained herein
are submitted for the general information of the
security holders of St. Joseph Light & Power Company,
and are not in connection with, or to induce, any sale
or offer to sell or to buy any securities of the
Company, or in connection with preliminary negotiations
for such sale or purchase.
Page 33
EXHIBIT 21
SUBSIDIARIES OF REGISTRANT
Name Jurisdiction of Incorporation
- --------------------------- ------------------------------
SJLP Inc. Missouri
Subsidiary of SJLP Inc.:
Percy Kent Bag Co., Inc. New York
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included or incorporated by
reference in this Form 10-K, into the Company's previously filed
Form S-3 Registration Statements (Registration No. 33-64687 and
No. 333-42875) and previously filed Form S-8 Registration
Statements (Registration No. 33-28109 and No. 333-03839).
/s/ Arthur Andersen LLP
Kansas City, Missouri,
March 25, 1998
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000086251
<NAME> ST. JOSEPH LIGHT & POWER COMPANY
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 176852000
<OTHER-PROPERTY-AND-INVEST> 3477000
<TOTAL-CURRENT-ASSETS> 29089000
<TOTAL-DEFERRED-CHARGES> 34351000
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 243769000
<COMMON> 19203000
<CAPITAL-SURPLUS-PAID-IN> 1251000
<RETAINED-EARNINGS> 70714000
<TOTAL-COMMON-STOCKHOLDERS-EQ> 91168000
0
0
<LONG-TERM-DEBT-NET> 68744000
<SHORT-TERM-NOTES> 2621000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 8628000
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<CAPITAL-LEASE-OBLIGATIONS> 3093000
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 69515000
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0
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