<PAGE>
=================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-3576
ST. JOSEPH LIGHT & POWER COMPANY
(Exact name of registrant as specified in its charter)
State of Missouri 44-0419850
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
520 Francis 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
-------------------
Former name, former address and former fiscal year, if changed
since last report.
Indicate by check mark whether the registrant (l) has filed all
reports required to be filed by Section l3 or l5(d) of the
Securities Exchange Act of l934 during the preceding l2 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, without par value 8,172,350 shares
(Class) (Outstanding at April 30, 1999)
=================================================================
<PAGE>
ST. JOSEPH LIGHT & POWER COMPANY
INDEX
Page Number
Part I. Financial Information
Item 1. Consolidated Financial Statements:
Statements of Income.............................3
Balance Sheets...................................4
Statements of Capitalization.....................5
Statements of Retained Earnings..................5
Statements of Cash Flows.........................6
Notes to Consolidated Financial Statements.......7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................9
Part II. Other Information
Item 1. Legal Proceedings..................................12
Item 2. Changes in the Rights of the Company's Security
Holders............................................12
Item 3. Default Upon Senior Securities.....................12
Item 4. Submission of Matters to a Vote of Security
Holders............................................12
Item 5. Other Information..................................12
Item 6. Exhibits and Reports on Forms 8-K..................12
Signature.....................................................13
Page 2 of 13
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ST. JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31
1999 1998
<S> <C> <C>
OPERATING REVENUES:
Electric utility $ 19,645,347 $ 19,159,974
Other utility 3,673,055 3,974,752
Manufacturing 5,367,171 6,582,284
28,685,573 29,717,010
OPERATING EXPENSES:
Production fuel 4,808,693 4,832,785
Purchased power 2,543,347 1,527,810
Gas purchased for resale 1,099,457 1,371,944
Manufacturing cost of goods sold 4,492,799 5,375,230
Other operations 5,586,570 5,614,484
Merger-related expenses 1,117,250 --
Maintenance 1,692,242 1,412,619
Depreciation 2,986,489 2,833,513
Taxes other than income taxes 1,770,784 1,749,907
26,097,631 24,718,292
OPERATING INCOME 2,587,942 4,998,718
INTEREST CHARGES (Net) 1,717,193 1,702,309
OTHER INCOME 172,531 392,888
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST 1,043,280 3,689,297
INCOME TAXES 626,144 1,180,980
INCOME BEFORE MINORITY INTEREST 417,136 2,508,317
MINORITY INTEREST IN INCOME OF 3,299 107,016
SUBSIDIARY
NET INCOME $ 413,837 $ 2,401,301
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 8,158,109 8,056,020
BASIC AND DILUTED EARNINGS PER AVERAGE
COMMON SHARE $0.05 $0.30
DIVIDENDS PAID PER COMMON SHARE $0.25 $0.245
</TABLE>
See Notes to Consolidated Financial Statements.
Page 3 of 13
<PAGE>
<TABLE>
<CAPTION>
ST. JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED BALANCE SHEETS
March 31,
1999 December 31,
(Unaudited) 1998
A S S E T S
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT:
Electric utility plant $ 326,007,727 $ 324,621,028
Other 20,419,423 20,376,779
346,427,150 344,997,807
Less - Reserves for depreciation (169,710,380) (167,112,141)
176,716,770 177,885,666
Construction work in progress 4,756,821 3,668,931
181,473,591 181,554,597
OTHER INVESTMENTS 5,091,846 4,922,043
CURRENT ASSETS:
Cash and cash equivalents 507,630 371,768
Temporary investments 1,893 1,893
Receivables, net of reserves 11,142,893 10,160,025
Accrued utility revenue 2,816,473 3,673,848
Manufacturing inventories 3,062,385 2,910,801
Fuel 3,974,804 3,366,077
Materials and supplies 5,457,598 5,674,296
Prepayments and other 929,183 1,899,830
27,892,859 28,058,538
DEFERRED CHARGES:
Debt expense 1,318,869 1,348,939
Lease payments receivable 3,134,748 3,165,613
Prepaid pension expense 17,088,953 16,388,954
Regulatory assets 13,725,919 13,843,633
Other 2,281,469 1,972,879
37,549,958 36,720,018
$ 252,008,254 $ 251,255,196
C A P I T A L I Z A T I O N AND L I A B I L I T I E S
CAPITALIZATION (See Statements):
Common equity $ 92,571,702 $ 95,805,327
Long-term debt 73,096,702 73,515,018
165,668,404 169,320,345
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARY 1,371,842 1,368,544
CURRENT LIABILITIES:
Outstanding checks in excess of
cash balances 1,811,587 3,512,473
Current maturities of long-term
obligations 1,221,070 1,212,815
Accounts payable 8,161,298 9,987,970
Notes payable 12,485,000 7,290,000
Accrued income and general taxes 2,145,383 823,006
Accrued interest 1,256,200 1,922,853
Accrued vacation 1,399,329 1,232,774
Dividends declared 2,042,825 --
Other 635,182 678,774
31,157,874 26,660,665
NON-CURRENT LIABILITIES AND DEFERRED
CREDITS:
Capital lease obligations 2,852,529 2,902,496
Deferred income taxes 31,768,794 31,822,287
Investment tax credit 3,587,470 3,689,152
Accrued claims and benefis 1,780,838 1,832,991
Deferred revenues 2,108,584 2,137,719
Regulatory liabilities 8,440,159 8,440,159
Other 3,271,760 3,080,838
53,810,134 53,905,642
$ 252,008,254 $ 251,255,196
</TABLE>
See Notes to Consolidated Financial Statements.
Page 4 of 13
<PAGE>
<TABLE>
<CAPTION>
ST. JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
March 31,
1999 December 31,
(Unaudited) 1998
<S> <C> <C>
COMMON EQUITY
Common stock--authorized 25,000,000
shares, without par value,issued
9,252,748 shares $ 33,816,099 $ 33,816,099
Retained earnings 69,784,361 73,450,443
Other paid-in capital 2,015,132 1,876,625
Less--treasury stock, at cost,
1,081,447 and 1,105,821 shares (13,043,890) (13,337,840)
92,571,702 95,805,327
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-
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
40,000,000 40,000,000
Other long-term debt 6,217,772 6,627,833
Less current maturities (1,221,070) (1,212,815)
73,096,702 73,515,018
Total capitalization $ 165,668,404 $ 169,320,345
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Unaudited)
Three Months Ended
March 31
1999 1998
<S> <C> <C>
Balance at beginning of
period $ 73,450,443 $ 70,714,339
Net income 413,837 2,401,301
73,864,280 73,115,640
Less-dividends on common
stock (4,079,919) (3,953,337)
Balance at end of period $ 69,784,361 $ 69,162,303
</TABLE>
See Notes to Consolidated Financial Statements.
Page 5 of 13
<PAGE>
<TABLE>
<CAPTION>
ST. JOSEPH LIGHT & POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three
Months
Ended
March 31
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 413,837 $ 2,401,301
Adjustment to reconcile net income to
net cash provided by operating
activities:
Depreciation 3,123,474 3,012,787
Pension expense (585,899) (563,516)
Deferred taxes and investment tax
credit (155,175) 381,043
Allowance for equity funds used during
construction (44,386) (34,969)
Net changes in working capital items
not considered elsewhere:
Accounts receivable and accrued utility
revenue (125,493) 1,007,897
Inventories (543,613) 1,113,134
Accounts payable and outstanding checks (3,527,558) (5,519,659)
Accrued income and general taxes 1,322,377 1,150,268
Other,net 426,957 444,641
Net change in regulatory assets and
liabilities 117,714 125,987
Net change in other assets and liabilities (1,283,670) (94,402)
Net cash (used in) provided by
operating activities (861,435) 3,424,512
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to plant (2,007,620) (2,734,287)
Allowance for borrowed funds
used during construction 32,666 20,273
Investments (169,803) 765,375
Other 11,719 14,696
Net cash used in investing activities (2,133,038) (1,933,943)
CASH FLOWS FROM FINANCING ACTIVITIES:
Lines of credit increase (decrease) 5,195,000 (22,232)
Principal payments under capital
lease obligations (49,967) (46,398)
Long-term debt retired (779,800) (113,041)
Long-term debt issued 369,739 --
Common stock issued 432,457 645,860
Dividends paid (2,037,094) (1,971,339)
Net cash provided (used in)
financing activities 3,130,335 (1,507,150)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 135,862 (16,581)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 371,768 350,385
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 507,630 $ 333,804
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 2,386,400 $ 2,302,444
Income taxes (net of refunds) $ 300,000 $ 404,945
</TABLE>
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.
See Notes to Consolidated Financial Statements.
Page 6 of 13
<PAGE>
ST. JOSEPH LIGHT & POWER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial
statements include St. Joseph Light & Power Company and its
wholly owned subsidiary, SJLP Inc., and its subsidiary, Percy
Kent Bag Co., Inc. Collectively, these entities are referred to
herein as the "Company." All significant intercompany
transactions have been eliminated.
GENERAL: The unaudited consolidated financial statements
included herein have been prepared by the Company, pursuant to
the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the
information presented not misleading. See Notes to Consolidated
Financial Statements included in the Company's 1998 Annual Report
to Shareholders incorporated by reference in the Company's 1998
Annual Report on Form 10-K.
There are no significant differences in the Company's interim
and annual accounting policies. However, due to estimates
inherent in the accounting process for other than annual periods,
the accuracy of the amounts in the interim financial statements
is in some respects dependent upon facts that will exist and
reviews that will be performed by the Company later in the fiscal
year. The information contained in these consolidated financial
statements reflects all adjustments which are, in the opinion of
management, necessary to state fairly the results of the interim
periods.
The results for the three months ended March 31, 1999 are not
necessarily indicative of the results for the entire year 1999.
NEW ACCOUNTING PRONOUNCEMENT: In June 1998, the Financial
Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement, to be
effective for fiscal years beginning after June 15, 1999,
establishes accounting and reporting standards requiring that
every derivative instrument be recorded in the balance sheet as
either an asset or liability measured at fair value. The Company
has not quantified the impacts of adopting SFAS 133 on its
financial statements and has not determined the timing of or
method of its adoption of SFAS 133.
Page 7 of 13
<PAGE>
(2) EARNINGS PER SHARE
Basic and diluted earnings per average common share were
calculated by dividing net income by the following:
Three Months Ended March 31
1999 1998
Denominator for
basic EPS:
Weighted average
number of shares
outstanding
during the year 8,158,109 8,056,020
Effect of
Dilutive Securities:
Contingently
issuable shares
pursuant to long-
term incentive
plan 22,221 0
Directors' stock
options 11,137 21,407
Denominator for
diluted EPS 8,191,467 8,077,427
(3) SEGMENTS OF BUSINESS
The following table sets forth certain information regarding
the Company's segments of business:
Electric
Utility Manufacturing All Other Totals
Quarter ended March 31,1999:
Revenues from external
customers $19,645,347 $5,367,171 $3,673,055 $28,685,573
Segment profit (loss) $1,676,791 $ (20,945) $ 243,227 $1,899,073
Non-manufacturing interest
expense (net) (1,549,582)
Other income 107,510
Income taxes on other
income (43,164)
Consolidated net income $ 413,837
Quarter ended March 31, 1998:
Revenues from external
customers $19,159,974 $6,582,284 $3,974,752 $29,717,010
Segment profit (loss) $ 3,113,941 $ 87,005 $ 445,556 $3,646,502
Non-manufacturing interest
expense (net) (1,485,089)
Other income 398,414
Income taxes on other
income (158,526)
Consolidated net income $ 2,401,301
Page 8 of 13
<PAGE>
(4) PROPOSED MERGER
On March 4, 1999, the Company and UtiliCorp United Inc.
entered into an Agreement and Plan of Merger to form a stategic
business combination. Under terms of the agreement, each share of
common stock of the Company, valued at $23 per share, will be
exchanged for shares of UtiliCorp United Inc. common stock. The
transaction is subject to several closing conditions, including
approval by the Company's shareholders and approval by a number
of state and federal agencies. The special meeting for approval
by the Company's shareholders will be June 16, 1999. A joint
application for approval of the merger will be filed by the
Company and Utilicorp United Inc. with the Missouri Public
Service Commission following the special shareholders meeting.
Management expects the merger to be completed in the first half
of 2000.
The Merger Agreement limits the Company's ability to do
certain things prior to closing, including issue or redeem
securities, merge with any entity or make acquisitions, incur
material liens, and declare or pay dividends other than regular
quarterly cash dividends.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of
Financial Condition and Results of Operations should be read in
conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations in the Company's
1998 Annual Report on Form 10-K.
The Company is engaged primarily in the business of generating
and distributing electric energy in a ten-county area of
northwestern Missouri. It also sells natural gas and industrial
steam in limited areas. In the electric utility industry,
results of operations generally show a seasonal pattern of higher
revenues and earnings in the third quarter due to weather.
The Company owns SJLP Inc., a non-regulated subsidiary. SJLP
Inc. holds a controlling interest in Percy Kent Bag Co., Inc.
(Percy Kent), a manufacturer of multiwall and small paper bags.
Neither SJLP Inc.'s nor Percy Kent's operations were material to
the Company's financial position or results of operations.
RESULTS OF OPERATIONS
COMPARISON OF THE QUARTERS ENDED MARCH 31, 1999 AND 1998
Electric operating revenues increased $.5 million or 3%
primarily due to increased sales. Despite milder temperatures
than in the prior quarter, electric retail sales increased 4%
with all classes posting gains. The increase reflects the
continued economic growth in the service territory. Sales for
resale also increased primarily due to increased availability of
Company generation.
Total energy costs (production fuel and purchased power)
increased 16% for the period reflecting increased system
requirements, expensive replacement energy required by outages at
the Iatan generating station, and increased per unit costs for
purchased power. The Company expects these higher prices for
purchased energy to continue.
Natural gas revenues and related gas purchased for resale
were down reflecting reduced heating requirements and lower
natural gas prices.
Manufacturing revenues and related manufacturing cost of
goods at Percy Kent were lower primarily due to reduced demand
and the elimination of lower profit contracts.
The merger-related expenses are related to the proposed
merger with UtiliCorp United Inc. See Note 4, Proposed Merger, in
the Notes to Consolidated Financial Statements. The majority of
merger-related expenses is not deductible for income tax
purposes.
Maintenance expenses were higher primarily due to a
favorable litigation settlement with a vendor in the prior
period.
Other income was lower due primarily to lower investment
earnings.
Page 9 of 13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company believes its liquidity and capital resources are
sufficient and provide adequate financial flexibility.
Historically, operations have generated strong cash flow.
Negative cash flow from operating activities for the period was
primarily due to merger-related expenses and increased energy
costs. At March 31, 1999, the Company had $510,000 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 March 31, 1999, the Company had available lines
of credit of $10.5 million. Subsequent to that time, the Company
has increased its total borrowing capacity by $7 million. In
addition, Percy Kent's secured credit agreement had an available
balance of $2.5 million.
Capital expenditures, excluding allowance for funds used
during construction and including non-utility investments, are
currently projected to be $10.2 million for the remainder of
1999. The Company expects to finance these expenditures primarily
through internally generated funds supplemented by external
financing as necessary.
Page 10 of 13
<PAGE>
IMPACT OF THE YEAR 2000 ISSUE
The Company is in the latter stages of remediation and testing
for the Year 2000 issue with approximately 95% of the remediation
and testing procedures completed. Contingency plans for critical
functions are being reviewed and revised as necessary.
In April 1999, the Company participated in a Year 2000 drill
conducted by the North American Electric Reliability Council
(NERC), who is coordinating Year 2000 preparations of the
electric power industry. The purpose of the drill was to test for
Year 2000 readiness of primary and secondary communications
systems used to operate the electric power grids of the United
States.
The day-long drill simulated the loss of voice and data
communications systems used by the Company to communicate both
within and between electrical delivery systems. The exercise was
considered successful with communications maintained internally
and with interconnecting utilities.
NERC is scheduling more system testing later in the year.
The Company presently believes that with the modifications and
conversions it has made to software, hardware and embedded
systems, the Year 2000 issue can be mitigated with no significant
adverse effect on customers or disruption to business operations. If
such modifications are ineffective, the Year 2000 issue could have a
material adverse effect on the Company.
Refer to Management's Discussion and Analysis in the Company's
1998 Annual Report for a comprehensive discussion of the Year
2000 issue.
FORWARD LOOKING INFORMATION
This quarterly report contains forward looking information
that is intended to qualify for the safe harbors from liability
established by the Private Securities Litigation Reform Act of
1995. Although the Company believes that its expectations are
based on reasonable assumptions, actual results could differ
materially from those currently anticipated. Factors that could
cause actual results to differ from those anticipated include,
but are not limited to, the effects of regulatory actions,
competition, future economic conditions, and weather.
Page 11 of 13
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in the Rights of the Company's Security Holders
None.
Item 3. Default Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibit 27 - Financial Data Schedule
b. A Form 8-K was filed on March 9, 1999 to announce
the proposed merger with UtiliCorp United Inc.
Page 12 of 13
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ST. JOSEPH LIGHT & POWER COMPANY
(Registrant)
/s/ L. J. Stoll
---------------------------------
Dated: May 17, 1999 L. J. STOLL
Vice President-Finance, Treasurer
and Assistant Secretary
(Duly Authorized Officer)
Page 13 of 13
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 173918056
<OTHER-PROPERTY-AND-INVEST> 12647381
<TOTAL-CURRENT-ASSETS> 27892859
<TOTAL-DEFERRED-CHARGES> 37549958
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 252008254
<COMMON> 20772209
<CAPITAL-SURPLUS-PAID-IN> 2015132
<RETAINED-EARNINGS> 69784361
<TOTAL-COMMON-STOCKHOLDERS-EQ> 92571702
0
0
<LONG-TERM-DEBT-NET> 73096702
<SHORT-TERM-NOTES> 12485000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 1221070
0
<CAPITAL-LEASE-OBLIGATIONS> 2852529
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 69781251
<TOT-CAPITALIZATION-AND-LIAB> 252008254
<GROSS-OPERATING-REVENUE> 28685573
<INCOME-TAX-EXPENSE> 596561
<OTHER-OPERATING-EXPENSES> 26097631
<TOTAL-OPERATING-EXPENSES> 26694192
<OPERATING-INCOME-LOSS> 1991381
<OTHER-INCOME-NET> 139649
<INCOME-BEFORE-INTEREST-EXPEN> 2131030
<TOTAL-INTEREST-EXPENSE> 1717193
<NET-INCOME> 413837
0
<EARNINGS-AVAILABLE-FOR-COMM> 413837
<COMMON-STOCK-DIVIDENDS> 4079919
<TOTAL-INTEREST-ON-BONDS> 5646420
<CASH-FLOW-OPERATIONS> (861435)
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
