-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ClAy68QyJ9I/1s9DWGKuZ9hykaZjBNMrqtypmOX8vQRECxLq6Zz5MGRPQ86Hyd/1 4w1b9oATll1mtpkMOR50fA== 0000057183-95-000032.txt : 19951227 0000057183-95-000032.hdr.sgml : 19951227 ACCESSION NUMBER: 0000057183-95-000032 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951226 SROS: CSX SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LACLEDE GAS CO CENTRAL INDEX KEY: 0000057183 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 430368139 STATE OF INCORPORATION: MO FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-01822 FILM NUMBER: 95604462 BUSINESS ADDRESS: STREET 1: 720 OLIVE ST CITY: ST LOUIS STATE: MO ZIP: 63101 BUSINESS PHONE: 3143420500 MAIL ADDRESS: STREET 1: 720 OLIVE ST CITY: ST LOUIS STATE: MO ZIP: 63101 10-K 1 ANNUAL REPORT ON FORM 10K, 9/30/95 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 September 30, 1995 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from ________ to ________ Commission File Number 1-1822 LACLEDE GAS COMPANY (Exact name of registrant as specified in its charter) Missouri 43-0368139 (State of incorporation) (I.R.S. Employer Identification Number) 720 Olive Street, St. Louis, Missouri 63101 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 314-342-0500 Securities registered pursuant to Section 12(b) of the Act: Name of each stock exchange Title of each class on which registered Common Stock - $1 par value New York and Chicago Common Stock Purchase Rights New York and Chicago Securities registered pursuant to Section 12(g) of the Act: Title of each class Preferred Stock - $25 par value (5% Series B Preferred Stock and 4.56% Series C Preferred Stock) 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. ( ) The aggregate market value of the Common Stock of the Company, none of which is owned by an affiliate, at October 31, 1995 was $354,475,754. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the close of the period covered by this report. 17,419,627 Incorporated by Reference: Form 10-K Part Proxy Statement dated December 26, 1995* III Index to Exhibits is found on page 50. * The information under the captions "Compensation Committee Report Regarding Compensation" and "Performance Graph" on pages 13-16 is NOT incorporated by reference. 1 PART I Item 1. Business Laclede Gas Company is a public utility engaged in the retail distribution and transportation of natural gas. The Company, which is subject to the jurisdiction of the Missouri Public Service Commission, serves the City of St. Louis, St. Louis County, the City of St. Charles, and parts of St. Charles, Franklin, Jefferson, St. Francois, Ste. Genevieve, Iron, Madison and Butler Counties, all in Missouri. As an adjunct to its gas distribution and transportation business, the Company operates underground natural gas storage fields and is engaged in the transportation and storage of liquid propane. The Company has engaged in exploration for and development of natural gas on a utility and non-utility basis. Certain gas production sales are subject to the regulation of the Federal Energy Regulatory Commission. The Company has also made investments in other non-utility businesses as part of a diversification program. NATURAL GAS SUPPLY Laclede obtains the majority of its gas from Gulf Coast and Mid-Continent producing areas and has it transported through several interstate pipelines into the pipeline systems of Mississippi River Transmission Corporation (MRT) and Missouri Pipeline Company (MPC) for ultimate delivery to Laclede's service area. Laclede utilizes firm pipeline transportation capacity, which connects the pipelines "upstream" of the MRT system to the onshore and offshore gas-producing basins. During fiscal year 1995, Laclede continued to release firm transportation capacity to other gas users when it was not required to meet the needs of the Company's own customers. This resulted in reducing Laclede's overall gas costs during 1995 by almost $2.8 million. Laclede's gas supply portfolio matches its high-priority, temperature- sensitive market. The primary focus is dependability - gas supply must be delivered when and where the Company's customers need it -- and all winter supply contracts are firm as are all pipeline transportation arrangements. A second important focus is that supply remains priced as economically as possible consistent with dependability. The Company's delivered price of natural gas maintains an advantage over the price of electricity, the principal competitive residential energy source. During fiscal 1995, Laclede purchased natural gas from a diverse group of 38 suppliers to meet its current gas sales and storage injection requirements. Natural gas purchased by Laclede for delivery to our service area through the MRT system during fiscal 1995 totalled 76.6 billion cubic feet (Bcf). In addition, Laclede purchased 10.2 Bcf of gas from the Mid-Continent region under a firm supply contract with Vesta Energy Company (Vesta). This gas, which Vesta purchases and transports through Panhandle Eastern Pipeline Company, was delivered through MPC to Laclede take-points in St. Charles and Franklin Counties. The fiscal 1995 peak day sendout of 937,000 MMBtu of gas occurred on Wednesday, January 4, 1995, when the average temperature was 12 degrees Fahrenheit. This peak day sendout was met by using 635,000 MMBtu of gas purchased and transported using the MRT system, 186,000 MMBtu of gas withdrawn from Laclede's storage facilities, 59,000 MMBtu of gas purchased under the Company's long-term gas supply contract with Vesta, and 57,000 2 MMBtu of gas not owned by the Company that was transported for Laclede customers. Temperatures during the heating season on average were 15% warmer than fiscal 1994 and 15% warmer than normal. The Company sold and transported 978.1 million therms of gas this year, an decrease of 92.0 million therms from fiscal 1994. UNDERGROUND NATURAL GAS STORAGE The Company has a firm storage service agreement with MRT for approximately 23.5 billion cubic feet of allocated storage capacity on MRT's system located primarily in Unionville, Louisiana. MRT's tariffs provide for injections into the allocated storage capacity between May 16 through November 15. The Company must withdraw all but 2.3 Bcf during the November 16 through May 15 period. The Company supplements flowing pipeline gas with natural gas withdrawn from its underground storage fields located in St. Louis and St. Charles Counties. The fields are designed under normal operations to provide 357,000 MMBtu of natural gas withdrawals on a peak day, and annual withdrawals of approximately 5,500,000 MMBtu based on the inventory level which the Company plans to maintain. PROPANE SUPPLY Laclede Pipeline Company, a wholly owned subsidiary, owns and operates a propane pipeline which connects the parent company's 800,000-barrel (approximately 33,000,000 gallons) propane storage facilities in St. Louis County, Missouri, to propane supply terminal facilities located at Wood River and Cahokia, Illinois. Liquid propane is transported through this pipeline for delivery to the parent company for storage, to be ultimately vaporized and used during those periods of operation when the natural gas supply has to be supplemented to meet the peak demands of the distribution system. The Company's contract with Phillips Petroleum Company provides for delivery of up to 35 million gallons of propane annually through March 31, 1999, and year to year thereafter unless terminated by either party. EXPLORATION AND DEVELOPMENT The Company's exploration and development activities are segregated into two distinct functions: utility and non-utility. Under the utility program, the Company has participated in drilling 96 wells over its twenty-four year span with 52 of the wells being commercially productive. Since 1981, this program has been limited to development activities. Capital expenditures in recent years have not been significant, amounting to $(8,000) in 1995, $10,000 in 1994 and $84,000 in 1993, for the utility program. Beginning in 1981, the Company continued its search for gas and oil discoveries through Laclede Energy Resources, Inc. (LER), a wholly owned, non-utility subsidiary, which is the general partner in LIMA Resources Associates, a limited partnership in which Laclede Energy Resources, Inc. holds a 39.6% interest. LIMA has four limited partners, three of which are subsidiaries of gas transportation and/or distribution companies, each holding an interest of 19.8%. The remaining limited partner, a stock brokerage firm, has a 1.0% interest. Laclede's non-utility exploratory drilling program to date has involved participation in drilling a total of 92 wells. Fifty of these wells were 3 successfully completed after testing commercial quantities of hydrocarbon reserves. Forty-two wells were plugged and abandoned. The investment in the program changed only slightly during 1995, 1994 and 1993. Presently, Laclede is not actively seeking new gas and oil exploration discoveries through LIMA, or otherwise. REGULATORY MATTERS At the federal level, Laclede actively participated this year before the Federal Energy Regulatory Commission (FERC) in various interstate pipeline company rate proceedings that directly affect the interests of Laclede and its customers, including those filed by NorAm Gas Transmission Company (NGT), Natural Gas Pipeline Company of America (NGPL) and Trunkline Gas Company (Trunkline). Laclede has contracts with each of these pipeline companies to transport the majority of the gas supplies purchased to the transmission facilities of MRT, which in turn transports these supplies to Laclede. The NGT and Trunkline proceedings have culminated in settlements that are pending final approval by the FERC. No settlement has yet been reached in the NGPL proceeding, and Laclede continues to be involved to assure that any rate increase ultimately granted is no more than is reasonably justified. At the state level, the Missouri Public Service Commission in August adopted Laclede's position and determined that no changes to Laclede's rate structure for recovering its fixed pipeline transportation and storage costs were appropriate. Various parties, including the Commission Staff and Laclede's main competitor, Union Electric Company, had proposed that Laclede be required to implement seasonal differentials so that the rates it charges its customers for such costs would be higher in the winter and lower during the summer. The Commission also continued to reassess how Laclede and other gas distributors in Missouri should be regulated in the aftermath of FERC Order 636. The Commission is seeking to determine whether some form of incentive ratemaking procedure should be adopted for the recovery of gas supply costs in lieu of the current arrangement under which all increases and decreases in such costs are passed through directly to customers. In effect, an incentive ratemaking mechanism would establish some predetermined benchmark level of gas costs, with distributors such as Laclede allowed to retain a share of any gas cost savings they managed to achieve below that level or required to absorb a share of gas cost increases if the benchmark level is exceeded. Laclede has been actively participating in this activity to ensure that the interests of its share owners and customers are fully represented and protected. The Company filed a request with the Missouri Public Service Commission on December 15, 1995 seeking approval of a general rate increase which would add $23.8 million operating revenues on an annual basis. By law, the Missouri Commission has up to eleven months before it must act on this request. The Company's last general rate increase was effective September 1, 1994, and amounted to $12.2 million annually. OTHER PERTINENT MATTERS The business of the Company is subject to a seasonal fluctuation with the peak period occurring in the winter season. ***** 4 As of September 30, 1995, the Company had 2,098 employees, which includes 2 part-time employees. ***** The Company has a three-year labor agreement, which expires July 31, 1997, with Locals 5-6 and 5-194 of the Oil, Chemical and Atomic Workers International Union, two unions which represent most of the Company's employees. The agreement provided for wage increases of 3.25% in August 1, 1995 and 3.25% in August 1, 1996. ***** The Company's business has monopoly characteristics in that it is the only distributor of natural gas within its (franchised) service area. The principal competition is the local electric company. Other competitors in Laclede's service area include two major suppliers of fuel oil, a major supplier of coal, numerous suppliers of liquefied petroleum gas in outlying areas, and in a portion of downtown St. Louis, a district steam system. Gas for househeating, certain other household uses, and commercial and industrial space heating is now being sold by Laclede at prices generally lower than are charged for competitive fuels and other energy forms. Coal is competitive as a fuel source for very large boiler plant loads, but environmental concerns have forestalled any significant market inroads. Oil and propane can be used to fuel boiler loads and certain direct-fired process applications, but these fuels vary widely in price throughout the year, thus limiting the competitiveness of these fuels. In certain cases, district steam has been competitive with gas for downtown area heating users. In the past five years, Laclede has converted 53 steam customers representing approximately 1.8 million annual therms. Laclede's residential, commercial, and small industrial markets, representing 90% of sales, remain committed to gas. The Company knows of no reason why natural gas should not continue generally to have a price advantage over electricity and other forms of energy in the foreseeable future. The Company's exposure to price competition is not presently a substantial factor and exists primarily in the large industrial and commercial boiler fuel market where coal is the competing form of energy. Laclede offers gas transportation service to its large user industrial and commercial customers. The tariff approved for that type of service produces a margin similar to that which Laclede would have received under its regular sales rates. The availability of gas transportation service and favorable spot market prices for natural gas during certain times of the year may offer additional competitive advantages to Laclede and new opportunities for cogeneration and large tonnage air conditioning applications. ***** The Company is subject to various laws and regulations relating to the environment, which thus far have not had a material effect on the Company's financial position and results of operations. Prior to the widespread availability of natural gas, the Company operated various manufactured gas plants, the last of which was closed in 1961. The process for manufacturing gas produced by-products and residuals, including various hydrocarbons. Certain remnants of these residuals are typically found at former gas manufacturing sites. The United States Environmental Protection Agency 5 (EPA) has been engaged in a survey of a large number of former manufactured gas plant sites across the nation. In this regard, the Company and the EPA have determined that manufactured gas residuals are present at one of the former manufactured gas plant sites operated by the Company. While no conclusion has been reached as to the extent of any remedial action that will be required, the Company and the EPA have entered into an Administrative Order on Consent (AOC), effective March 31, 1994, with regard to this site. The AOC provides for the Company to conduct certain investigative activities (i.e., a removal site evaluation and an engineering evaluation cost analysis), and to reimburse the EPA for response costs under the AOC. The AOC requires only investigations and does not cover any removal action. If remedial action is necessary, then a subsequent order will cover such action. The investigative activities required by the AOC have been completed and, on July 31, 1995, the Company submitted a draft removal site evaluation report to the EPA, which concludes that no further action is necessary. The EPA has advised that such overall conclusion may be premature because the Company's report does not contain a full characterization of the contaminants on certain small areas of the site. EPA has observed that a limited removal program may be more reasonable than to continue to characterize these areas in order to determine any actual degree of risk. Although the Company and the EPA are further analyzing the site, if the aforementioned limited removal action is taken, the cost thereof is estimated by the Company to range from approximately $40,000 to as much as $125,000. Based on currently available information, such costs, together with EPA oversight costs and other associated legal and engineering consulting costs relating to the site, would likely aggregate approximately $600,000. At September 30, 1995, $375,000 of such amount has been paid and the additional $225,000 balance has been reserved by the Company. The Company has notified its insurers that the Company intends to seek reimbursement from them of its investigation, remediation, clean-up and defense costs in regard to the foregoing. In addition to pursuing insurance proceeds to the extent feasible, the Company also plans to seek recovery, if practicable, from any other potentially responsible parties. In a separate matter, the Missouri Department of Natural Resources (the "MoDNR") has advised the Company that it believes that hazardous substances may be present on the site of a different former manufactured gas plant (which was also used as the site of a coke facility), which site was sold by the Company in 1950. The Company has made application to the MoDNR for the placement of that site in the Missouri environmental remediation program, and has offered to conduct a preliminary assessment and site evaluation investigation to determine the nature and extent of any hazardous substances that may be present on such site. The Company's application has been accepted by MoDNR, subject to the Company's entering into an agreement regarding the investigation and MoDNR oversight costs. The cost of such an investigation, including MoDNR oversight costs and associated legal and engineering consulting costs relating to that site, is estimated by the Company to be approximately $75,000, for which the Company has established a liability reserve. The Company has requested that other former owners and/or operators participate in the cost of such an investigation, but none has as yet agreed to do so, and the Company plans to seek reimbursement, if feasible, from such parties and any other potentially responsible parties, as well as from its insurers, to the extent practicable. The Company is presently unable to evaluate or quantify further the scope or cost of any environmental response activity. 6 An environmental cost deferral procedure was established by the Missouri Public Service Commission in the Company's last rate case, effective September 1, 1994, for use by the Company in applying for appropriate rate recovery of various investigation, remediation and other costs to be incurred by the Company in connection with former manufactured gas plant sites. The authorization to begin deferring such costs shall only be triggered to the extent that the cumulative liability incurred by the Company during the deferral period is not offset by the cumulative costs of $250,000 per year reflected in the Company's current rates. In the event the cumulative liability incurred by the Company for such costs during the deferral period is less than the cumulative amount of such annualized costs reflected in the rates approved in the settlement, then the Company shall refund the difference. The recovery of costs deferred under the above authorization is subject to challenge in future rate cases. ***** During 1995, the Company issued 1,575,000 shares of common stock through a public offering. The net proceeds of the offering, after deducting discount and expenses, was $28.6 million. The Company issued 174,604 and 83,561 shares of its common stock during fiscal years 1995 and 1994, respectively, under its Dividend Reinvestment and Stock Purchase Plan. ***** Customers and revenues contributed by each class of customers for the last three fiscal years are as follows: Revenues $(000)
1995 1994 1993 ---- ---- ---- Residential $302,770 $363,058 $348,494 Commercial & Industrial 109,270 142,042 136,462 Interruptible 1,655 1,966 2,455 Transportation 13,211 14,898 11,437 Exploration & Development 1,447 1,600 1,488 Provision for Refunds - (3,770) - Other 3,564 4,072 3,612 -------- -------- -------- Total $431,917 $523,866 $503,948 ======== ======== ======== Customers (End of Period) 1995 1994 1993 ---- ---- ---- Residential 566,421 559,225 555,467 Commercial & Industrial 37,409 36,684 36,514 Interruptible 16 14 13 Transportation 129 124 115 ------- ------- ------- Total 603,975 596,047 592,109 ======= ======= =======
7 ***** The Company has, or in one instance will seek renewal of, franchises having initial terms varying from five years to indefinite duration. All of the franchises are free from unduly burdensome restrictions. The foregoing are adequate for the conduct of its public utility business in the State of Missouri as now conducted. ***** Laclede Investment Corporation, a wholly owned subsidiary, invests in other enterprises and has made loans to several joint ventures engaged in real estate development. Laclede Energy Resources, Inc., a wholly owned subsidiary of Laclede Investment, engaged in the exploration and development of oil and gas properties on a non-utility basis. Exploration and development projects were conducted through LIMA Resources Associates, a limited partnership. As general partner, Laclede Energy Resources, Inc. has a 39.6% interest in LIMA. Laclede Energy is not presently actively seeking new gas and oil exploration discoveries through LIMA, or otherwise. In the coming months, Laclede Energy Resources, Inc. plans to initiate non-utility gas marketing efforts involving the non-utility sale of gas to customers outside the Company's regulated service area, and to provide large gas transportation customers with an additional alternative to their present non-regulated gas supplies. Laclede Gas Family Services, Inc., a wholly owned subsidiary of Laclede Energy Resources, Inc., is a registered insurance agency in the State of Missouri. It is currently promoting the sale of supplemental hospitalization, accident, supplemental medicare and life insurance by Life Insurance Company of North America, Washington National Insurance Company and Fidelity Security Life Insurance Company. Laclede Development Company, a wholly owned subsidiary, participates in real estate development, primarily through joint ventures. In 1992, Laclede Development filed a lawsuit alleging fraud, negligent misrepresentation, and other claims against the Resolution Trust Corporation (RTC) and certain former senior executives of Germania Bank, a federal savings institution, now in conservatorship ("Germania"). This suit arose in connection with Laclede Development's loss on an investment in a $5.8 million convertible debenture issued by Germania. That lawsuit was recently settled with the RTC, but remains pending against certain individual defendants. Laclede Venture Corp., a wholly owned subsidiary of Laclede Development Company, has a 28.5% interest in the LBP Partnership, a general partnership which previously engaged in research and development of light beam profiling technology. While a third party has been licensed to review the possibility of further development of the technology, LBP does not presently earn or receive any compensation from any such licensing or development. Laclede Venture Corp. has also recently begun to offer services for the compression of natural gas to third parties who desire to use or to sell compressed natural gas for use in vehicles. The lines of business which constitute the non-utility activities of the corporate family are not considered significant as defined. 8 Item 2. Properties The principal utility properties of Laclede consist of approximately 7,481 miles of gas main and related service pipes, meters and regulators. Other physical properties include regional office buildings and holder stations. Extensive underground gas storage facilities and equipment are located in an area in North St. Louis County extending under the Missouri River into St. Charles County. Substantially all of the Company's utility plant is subject to the liens of its mortgage. All of the utility properties of Laclede are held in fee or by easement or under lease agreements. The principal lease agreements include underground storage rights which are of indefinite duration and the general office building. The current lease on the general office building extends through February 2000 with options to renew for up to 20 additional years. Laclede Gas Company jointly owns oil and gas properties in Texas, Oklahoma and Louisiana. The non-utility properties of Laclede do not constitute a significant portion of the properties of the Company. Item 3. Legal Proceedings For a discussion of environmental matters, see Part I, Item 1, Business, Other Pertinent Matters. Item 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of security holders during the fourth quarter of fiscal year 1995. 9 EXECUTIVE OFFICERS OF REGISTRANT Name, Age, and Position with Company Appointed (1) R. C. Jaudes, Age 61 Chairman, President and Chief Executive Officer January 27, 1994 President and Chief Executive Officer August 1, 1991 President and Chief Operating Officer October 1, 1990 Executive Vice President - Operations and Marketing July 1, 1989 D. H. Yaeger, Age 46 Executive Vice President - Operations and Marketing September 1, 1995 Senior Vice President - Operations, Gas Supply and Technical Services January 27, 1994 Vice President - Operations, Gas Supply and Technical Services September 1, 1992 Vice President - Planning (2) December 1, 1990 D. L. Godiner, Age 62 Senior Vice President - General Counsel and Secretary January 24, 1991 Vice President - General Counsel and Secretary September 1, 1990 R. M. Lee, Age 54 Senior Vice President - Administrative Services September 1, 1995 Senior Vice President - Marketing January 27, 1994 Vice President - Marketing January 22, 1987 G. T. McNeive, Jr., Age 53 Senior Vice President - Finance and Chief Financial Officer September 1, 1995 Vice President - Associate General Counsel January 27, 1994 Assistant Vice President - Associate General Counsel September 1, 1992 (Associate General Counsel) August 1, 1986 K. J. Neises, Age 54 Senior Vice President - Gas Supply and Regulatory Affairs September 1, 1995 Senior Vice President - Federal Regulatory Affairs January 27, 1994 Vice President - Federal Regulatory Affairs October 27, 1988 J. G. Hofer, Age 58 Vice President - Operations July 1, 1992 (Superintendent of Operations) July 1, 1991 (Chief Engineer - Director of Support Services) February 1, 1991 (Superintendent - Engineering and Support Services) April 1, 1988 M. E. McMillian, Age 49 Vice President - Human Resources September 22, 1983 10 J. Moten, Jr., Age 54 Vice President - Community Relations January 27, 1994 (Director of Community Affairs/Conservation) November 1, 1986 P. J. Palumbo, Age 50 Vice President - Industrial Relations September 1, 1992 (Director of Industrial Relations) (3) January 7, 1991 V. O. Steinberg, Age 57 Vice President - Treasurer and Assistant Secretary January 27, 1994 Treasurer and Assistant Secretary September 1, 1990 Assistant Secretary-Treasurer September 28, 1978 ( ) Indicates a non-officer position. (1) Officers of Laclede Gas Company are normally reappointed at the Annual Meeting of the Board of Directors in January of each year "to serve for the ensuing year and until their successors are elected and qualify". (2) Mr. Yaeger served as Executive Vice President of Arkla Energy Marketing company from April 1990 through November 1990; and prior to that he was employed at Mississippi River Transmission Corporation as its Vice President - Marketing from September 1982 to July 1986; Senior Vice President - Marketing from July 1986 to April 1988; and Executive Vice President from April 1988 through April 1990. (3) Mr. Palumbo served as Senior Vice President - Resource Management at Peabody Development Company from 1985 through 1990. 11 Part II Item 5. Market for the Registrant's Common Equity and Related Share Owner Matters The Company's common stock is listed on the New York Stock Exchange and the Chicago Stock Exchange. At September 30, 1995, there were 11,541 holders of record of the Company's common stock. Common Stock Market and Dividend Information
Price Range Dividends Fiscal 1995 High Low Declared - -------------------------------------------------------- 1st Quarter 21-1/2 18-1/4 $.31 2nd Quarter 20-1/4 18-1/2 $.31 3rd Quarter 20 18-3/8 $.31 4th Quarter 20-3/4 19 $.31
Price Range Dividends Fiscal 1994 High Low Declared - -------------------------------------------------------- 1st Quarter 25 23 $.305 2nd Quarter 25-5/8 23-1/2 $.305 3rd Quarter 24-5/8 21 $.305 4th Quarter 22-3/4 20-5/8 $.305
12 Item 6. Selected Financial Data
Fiscal Years Ended September 30 (Thousands Except Per Share 1995 1994 1993 1992 1991 Amounts) ---- ---- ---- ---- ---- Summary of Operations Utility Operating Revenues $431,917 $523,866 $503,948 $418,190 $438,050 ----------------------------------------------- Utility Operating Expenses: Natural and propane gas 221,423 308,515 291,057 235,562 254,288 Other operation expenses 80,573 84,906 81,027 73,521 73,811 Maintenance 17,508 18,351 16,693 15,358 14,309 Depreciation & amortization 23,676 19,332 18,704 18,033 17,048 Taxes, other than income taxes 40,529 42,627 41,061 35,333 35,289 Income Taxes 9,878 12,517 14,997 8,272 10,795 ----------------------------------------------- Total Utility Operating Expenses 393,587 486,248 463,539 386,079 405,540 ----------------------------------------------- Utility Operating Income 38,330 37,618 40,409 32,111 32,510 Allowance for Funds Used During Construction 247 203 186 377 156 Miscellaneous Income and Income Deductions - Net 851 790 785 1,400 1,950 ----------------------------------------------- Income Before Interest Charges 39,428 38,611 41,380 33,888 34,616 ----------------------------------------------- Interest Charges: Interest on long-term debt 12,544 12,626 14,415 13,803 13,062 Other interest charges 5,983 3,768 1,798 1,811 1,524 ----------------------------------------------- Total Interest Charges 18,527 16,394 16,213 15,614 14,586 ----------------------------------------------- Net Income 20,901 22,217 25,167 18,274 20,030 Dividends on Preferred Stock 97 97 97 97 97 ----------------------------------------------- Earnings Applicable to Common Stock $ 20,804 $ 22,120 $ 25,070 $ 18,177 $ 19,933 =============================================== Earnings Per Share of Common Stock $1.27 $1.42 $1.61 $1.17 $1.28 ===============================================
13 Item 6. Selected Financial Data
Fiscal Years Ended September 30 (Thousands Except Per Share 1995 1994 1993 1992 1991 Amounts) ---- ---- ---- ---- ---- Dividends Declared- Common Stock $ 20,538 $ 19,054 $ 18,938 $ 18,703 $ 18,703 Dividends Declared Per Share of Common Stock $1.24 $1.22 $1.215 $1.20 $1.20 Utility Plant Gross Plant-End of Period $745,629 $709,563 $677,613 $643,587 $605,298 Net Plant-End of Period 434,336 411,677 390,826 367,287 339,317 Construction Expenditures 45,804 39,193 40,880 44,660 38,291 Property Retirements 9,199 6,757 6,135 5,693 5,196 Total Assets 636,694 608,295 515,312 470,463 501,149 Capitalization - End of Period Common Stock and Paid-In Capital $ 77,686 $ 45,638 $ 43,702 $ 43,702 $ 43,702 Retained Earnings 173,584 173,318 170,252 164,120 164,646 Treasury Stock (24,017) (24,017) (24,017) (24,017) (24,017) ----------------------------------------------- Common Stock Equity 227,253 194,939 189,937 183,805 184,331 Redeemable Preferred Stock 1,960 1,960 1,960 1,960 1,960 Long-Term Debt 154,279 154,211 165,745 146,640 164,822 ----------------------------------------------- Total Capitalization $383,492 $351,110 $357,642 $332,405 $351,113 =============================================== Shares of Common Stock Outstanding-End of Period 17,420 15,670 15,586 15,586 15,586 Book Value Per Share $13.05 $12.44 $12.19 $11.79 $11.83
14 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Earnings applicable to common stock for the fiscal year ended September 30, 1995 were $20.8 million, compared with $22.1 million for 1994 and $25.1 million for 1993. Earnings per share of common stock based on average shares outstanding were $1.27 in 1995, compared with $1.42 in 1994 and $1.61 in 1993. The $.15 per share decrease in fiscal 1995 (from fiscal 1994) was primarily due to decreased sales volumes arising from warmer weather, higher depreciation rates (as authorized in Case No. GR-94-220 by the Missouri Public Service Commission), higher interest charges and increased operating costs. These decreases were partially offset by the benefit of the Company's general rate increase effective September 1, 1994, lower pension expense and the Company's on-going cost reduction efforts. The $.19 per share decrease in earnings in fiscal 1994 (from fiscal 1993) was primarily due to increases in the costs of doing business and decreased sales volumes arising from warmer weather. These decreases were partially offset by the one-month benefit from the aforementioned general rate increase. Weather in the metropolitan St. Louis area was 15% warmer than normal in 1995, 1% warmer than normal in 1994, and 2% colder than normal in 1993. Utility operating revenues for fiscal year 1995 decreased $91.9 million, or 17.6%, below fiscal 1994, and in 1994 increased $20.0 million, or 4.0%, above fiscal 1993. The 1995 decrease was principally due to lower wholesale gas costs of $56.0 million (which are passed on to customers in accordance with the Purchased Gas Adjustment Clause), lower therms sold and transported (principally due to the warmer weather) and other variations netting to $47.4 million. These decreases were partially offset by increased revenues arising from the general rate increase effective September 1, 1994 of $11.5 million. The 1994 increase was due to higher wholesale gas costs of $21.3 million and increased revenues arising from the general rate increase effective September 1, 1994 of $.9 million. These increases were partially offset by lower therms sold and transported (principally due to the warmer weather) and other variations netting to $2.2 million. Therms sold and transported for 1995 were 978.1 million compared with 1,070.1 million in 1994 and 1,080.1 million in 1993. Utility operating expenses decreased $92.7 million, or 19.1%, in fiscal 1995, and in 1994 increased $22.7 million, or 4.9%, above fiscal 1993. Natural and propane gas expense decreased $87.1 million in 1995 reflecting lower natural gas prices and reduced volumes required for sendout. In 1994, natural and propane gas expense increased $17.5 million due to higher natural gas prices, partially offset by reduced volumes required for sendout. Other operation and maintenance expenses decreased $5.2 million, or 5.0%, in 1995 mainly due to the recording of pension credits and cost reduction efforts. The pension credits include the recognition of gains on significant lump-sum settlements and the establishment of a regulatory asset (necessary to reflect pension costs consistent with the regulatory accounting treatment ordered by the MoPSC in Case No. GR-94-220). These reduced expenses were partially offset by a higher provision for uncollectible accounts, higher wage rates, and increased group insurance charges. In 1994, other operation and maintenance charges increased $5.5 million, or 5.7%, mainly due to increased pension expense of $5.9 million, reflecting the effect of recognition in fiscal 1993 of gains arising from significant lump-sum settlements (no such gains were recognized during fiscal 1994) coupled with higher net pension costs. This increase was 15 partially offset by several changes netting to a $.4 million reduction in expense. These include a lower provision for uncollectibles, reduced group insurance expenses, and other reductions in expense; the benefits of which were largely offset by increased expense resulting from the adoption of Statement of Financial Accounting Standard (SFAS) No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions", increased maintenance requirements, and higher contract wage rates. Depreciation and amortization expense increased 22.5% in 1995 primarily due to increased depreciation rates (as authorized in Case No. GR-94-220) and, to a lesser extent, additional depreciable property. In 1994, depreciation and amortization expense increased 3.4% primarily as a result of additional depreciable property. Taxes, other than income taxes, decreased 4.9% in 1995 primarily due to lower gross receipts taxes (reflecting decreased revenues), partially offset by higher real estate and personal property taxes. In 1994, taxes, other than income taxes, increased 3.8% principally due to higher gross receipts taxes (reflecting increased revenues). The variations in income tax expense are mainly due to changes in income and tax adjustments in 1995 and 1993. Miscellaneous income and income deductions (net of applicable income tax expense) increased $.1 million in 1995 mainly due to slightly improved results from non-utility diversification activities, while 1994 was essentially the same as 1993. Interest expense increased by 13.0% in fiscal year 1995 principally due to higher short-term interest expense (reflecting higher borrowings and increased rates) and increased interest on refunds due customers. In 1994, interest expense increased 1.1% primarily due to increased short-term debt, largely offset by reduced interest on long-term debt (reflecting the benefit of redemptions of First Mortgage Bonds totalling $51.7 million in fiscal 1993 and $12.0 million in fiscal 1994, partially offset by the effect of the issuance of $40 million of 7-1/2% First Mortgage Bonds in November 1992 and $25 million of 6-1/4% First Mortgage Bonds in May 1993). During the first quarter of fiscal year 1996, the Company plans to file a request with the MoPSC seeking a general rate increase. The amount of the request has yet to be determined. The Company's last general rate increase was effective September 1, 1994, and amounted to $12.2 million annually. Accounting Changes In March 1995, the Financial Accounting Standards Board (FASB) issued SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", which will require the Company to review for impairment long-lived assets and certain identifiable intangibles to be held and used by the Company whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Adoption of SFAS No. 121 is required in fiscal year 1997. In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock- Based Compensation", which establishes a fair value base method for financial accounting and reporting for stock-based employee compensation plans. However, the new standard allows compensation to continue to be measured by using the intrinsic value based method of accounting prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", but requires expanded disclosures. SFAS No. 123 is effective in fiscal year 1997. 16 While the Company does not know precisely the impact that will result from adopting SFAS No. 121 and SFAS No. 123, the Company does not expect the adoption of SFAS No. 121 or SFAS No. 123 to have a material effect on the Company's financial position or results of operations. Inflation The accompanying Financial Statements reflect the historical costs of events and transactions, regardless of the purchasing power of the dollar at the time. Due to the capital intensive nature of the Company's business, the most significant impact of inflation is on the Company's depreciation of utility plant. Rate regulation to which the Company is subject allows recovery through its rates of only the historical cost of utility plant as depreciation. While no plans exist to undertake other than normal replacements of plant in service, the Company believes that any higher costs experienced upon replacement of existing facilities would be recovered through the normal regulatory process. Liquidity and Capital Resources Cash flow from operations, net of dividend payments, has generally provided the principal liquidity to meet operating requirements and to fund a portion of the Company's construction program. Any remaining funding requirement for construction or for other needs has been provided by long- term and short-term financing. The issuance of long-term financing is dependent on management's evaluation of need, financial market conditions, and other factors. Short-term financing is used to meet seasonal cash requirements and/or to defer long-term financing until market conditions are favorable. Short-term borrowing requirements typically peak during colder months, principally because of required payments for natural gas made in advance of the receipt of cash from our customers for the sale of that gas. Such short-term cash requirements have traditionally been met through the sale of commercial paper supported by lines of credit with banks. In January 1995, the Company renewed its primary line of bank credit under which it may borrow up to $40 million prior to January 31, 1996, with renewal of any loans outstanding on that date permitted up to June 30, 1996. This, along with the Company's previously obtained $70 million supplemental line of credit, which was in effect from October 18, 1994 to March 1, 1995, provided a total line of credit for the 1994-1995 primary heating season of $110 million. Since cash needs typically decline at the end of the heating season, on March 1, 1995, the Company reduced the supplemental line to $50 million. The supplemental line of credit was further reduced to $25 million until September 1, 1995 as a result of the receipt of $28.6 million in net proceeds from a common stock offering (discussed below). On September 1, 1995, the supplemental line of credit was increased to $50 million and on November 1, 1995 extended to March 1, 1996. The supplemental line was increased to $60 million for one day on November 20, 1995. At this writing, the total line of credit for the remainder of the 1995-1996 heating season is $90 million, compared with a maximum of $110 million during the 1994-1995 heating season. The Company anticipates that the supplemental line will again be reduced after March 1, 1996. Short-term borrowings outstanding at September 30, 1995 were $59.5 million. 17 After receiving requisite regulatory approvals, the Company issued and sold 1,550,000 shares of the Company's common stock on May 22, 1995 to the public through an underwriting group led by Merrill Lynch & Co. and co- managed by A.G. Edwards & Sons, Inc. and Smith Barney Inc. On June 2, 1995, the Company issued and sold an additional 25,000 shares of the Company's common stock to the underwriting group. During 1995, the Company issued 174,604 shares of common stock under the Dividend Reinvestment and Stock Purchase Plan. Total shares outstanding were 17,419,627 at September 30, 1995. On April 28, 1995, the Company received approval from the Missouri Public Service Commission for a two-year extension, to April 21, 1997, of its previously granted authority to sell additional First Mortgage Bonds. The original authorization was for $100 million of First Mortgage Bonds of which $25 million have already been issued and sold. On November 16, 1995, the Board of Directors received competitive bids from various underwriters related to the issuance and sale of First Mortgage Bonds and the Board elected to sell $25 million of First Mortgage Bonds to the lowest bidder, at an overall cost to the Company of 6.55%. The Bonds were dated November 15, 1995 and mature in 2010. The proceeds were used for the payment of outstanding short-term borrowings. The bonds were rated AA- by Fitch, Aa3 by Moody's, and AA- by Standard & Poor's, the same ratings as applicable to the Company's outstanding bonds. The amounts and timing of any future issuance will depend on management's evaluation of need, financial market conditions, and other factors. Construction expenditures for utility purposes were $45.8 million in fiscal 1995 compared with $39.2 million in fiscal 1994 and $40.9 million in fiscal 1993. The Company expects fiscal 1996 utility construction expenditures to approximate $35.5 million. The Company is subject to various laws and regulations relating to the environment, which thus far have not had a material effect on the Company's financial position and results of operations. Prior to the widespread availability of natural gas, the Company operated various manufactured gas plants, the last of which was closed in 1961. The process for manufacturing gas produced by-products and residuals, including various hydrocarbons. Certain remnants of these residuals are typically found at former gas manufacturing sites. The United States Environmental Protection Agency (EPA) has been engaged in a survey of a large number of former manufactured gas plant sites across the nation. In this regard, the Company and the EPA have determined that manufactured gas residuals are present at one of the former manufactured gas plant sites operated by the Company. While no conclusion has been reached as to the extent of any remedial action that will be required, the Company and the EPA have entered into an Administrative Order on Consent (AOC), effective March 31, 1994, with regard to this site. The AOC provides for the Company to conduct certain investigative activities (i.e., a removal site evaluation and an engineering evaluation cost analysis), and to reimburse the EPA for response costs under the AOC. The AOC requires only investigations and does not cover any removal action. If remedial action is necessary, then a subsequent order will cover such action. The investigative activities required by the AOC have been completed and, on July 31, 1995, the Company submitted a draft removal site evaluation report to the EPA, which concludes that no further action is necessary. The EPA has advised that such overall 18 conclusion may be premature because the Company's report does not contain a full characterization of the contaminants on certain small areas of the site. EPA has observed that a limited removal program may be more reasonable than to continue to characterize these areas in order to determine any actual degree of risk. Although the Company and the EPA are further analyzing the site, if the aforementioned limited removal action is taken, the cost thereof is estimated by the Company to range from approximately $40,000 to as much as $125,000. Based on currently available information, such costs, together with EPA oversight costs and other associated legal and engineering consulting costs relating to the site, would likely aggregate approximately $600,000. At September 30, 1995, $375,000 of such amount has been paid and the additional $225,000 balance has been reserved by the Company. The Company has notified its insurers that the Company intends to seek reimbursement from them of its investigation, remediation, clean-up and defense costs in regard to the foregoing. In addition to pursuing insurance proceeds to the extent feasible, the Company also plans to seek recovery, if practicable, from any other potentially responsible parties. In a separate matter, the Missouri Department of Natural Resources (the "MoDNR") has advised the Company that it believes that hazardous substances may be present on the site of a different former manufactured gas plant (which was also used as a site of a coke facility), which site was sold by the Company in 1950. The Company has made application to the MoDNR for the placement of that site in the Missouri environmental remediation program, and has offered to conduct a preliminary assessment and site evaluation investigation to determine the nature and extent of any hazardous substances that may be present on such site. The Company's application has been accepted by MoDNR, subject to the Company's entering into an agreement regarding the investigation and MoDNR oversight costs. The cost of such an investigation, including MoDNR oversight costs and associated legal and engineering consulting costs relating to that site, is estimated by the Company to be approximately $75,000, for which the Company has established a liability reserve. The Company has requested that other former owners and/or operators participate in the cost of such an investigation, but none has as yet agreed to do so, and the Company plans to seek reimbursement, if feasible, from such parties and any other potentially responsible parties, as well as from its insurers, to the extent practicable. The Company is presently unable to evaluate or quantify further the scope or cost of any environmental response activity. An environmental cost deferral procedure was established by the MoPSC in the Company's most recent rate case, effective September 1, 1994, for use by the Company in applying for appropriate rate recovery of various investigation, remediation and other costs to be incurred by the Company in connection with former manufactured gas plant sites. The authorization to begin deferring such costs shall only be triggered to the extent that the cumulative liability incurred by the Company during the deferral period is not offset by the cumulative costs of $250,000 per year reflected in the Company's current rates. In the event the cumulative liability incurred by the Company for such costs during the deferral period is less than the cumulative amount of such annualized costs reflected in the rates approved in the settlement, then the Company shall refund the difference. The above authorization will become null and void if the Company does not file for a general rate increase by September 1, 1996, and, in any event, the recovery of costs deferred thereunder is subject to challenge in future rate cases. 19 Capitalization at September 30, 1995, excluding current redemption requirements of long-term debt, consisted of 59.3% common stock equity, .5% preferred stock and 40.2% long-term debt. The Company's ratio of earnings before taxes to interest charges was 2.6 for 1995, 3.1 for 1994 and 3.5 for 1993. It is management's view that the Company has adequate access to capital markets and will have sufficient capital resources both internal and external to meet anticipated capital requirements. 20 Item 8. Financial Statements and Supplementary Data Independent Auditors' Report We have audited the accompanying consolidated balance sheets and statements of consolidated capitalization of Laclede Gas Company and its subsidiary companies as of September 30, 1995 and 1994, and the related statements of consolidated income, retained earnings, and cash flows for each of the three years in the period ended September 30, 1995. Our audits also included the financial statement schedule listed in the Index at Part IV, Item 14(a)2. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedule 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, such consolidated financial statements present fairly, in all material respects, the financial position of Laclede Gas Company and its subsidiary companies as of September 30, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 1995 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. As discussed in Notes 1 and 2 to the consolidated financial statements, effective October 1, 1993, Laclede Gas Company and its subsidiary companies changed their method of accounting for income taxes to conform with Statement of Financial Accounting Standards No. 109 and changed their method of accounting for postretirement benefits other than pensions to conform with Statement of Financial Accounting Standards No. 106. Deloitte & Touche LLP November 16, 1995 (except for the matter described in Note 5 as to which the date is November 21, 1995) 21 Management Report Management is responsible for the preparation, presentation and integrity of the consolidated financial statements and other financial information in this report. The statements were prepared in conformity with generally accepted accounting principles and include amounts that are based on management's best estimates and judgments. In the opinion of management, the financial statements fairly reflect the Company's financial position, results of operations and cash flows. The Company maintains internal accounting systems and related administrative controls that are designed to provide reasonable assurance, on a cost effective basis, that transactions are executed in accordance with management's authorization, that consolidated financial statements are prepared in conformity with generally accepted accounting principles, and that the Company's assets are properly accounted for and safeguarded. The Company's Internal Audit Department, which has unrestricted access to all levels of Company management, monitors compliance with established controls and procedures. Deloitte and Touche LLP, the Company's independent auditors, whose report is contained herein, are responsible for auditing the Corporation's financial statements in accordance with generally accepted auditing standards. Such standards include obtaining an understanding of the internal control structure in order to design the audit of the financial statements. The Audit Committee of the Board of Directors, which consists of five outside directors, meets periodically with management, the internal auditor, and the independent auditors to review the manner in which they are performing their responsibilities. Both the internal auditor and the independent auditors periodically meet alone with the Audit Committee and have access to the Audit Committee at any time. Robert C. Jaudes Chairman of the Board, President and Chief Executive Officer Gerald T. McNeive, Jr. Senior Vice President-Finance and Chief Financial Officer 22 Item 8. Financial Statements and Supplementary Data STATEMENTS OF CONSOLIDATED INCOME (Thousands Except Per Share Amounts)
- --------------------------------------------------------------------------- Years Ended September 30 1995 1994 1993 - --------------------------------------------------------------------------- Utility Operating Revenues $431,917 $523,866 $503,948 ------------------------------ Utility Operating Expenses Natural and propane gas 221,423 308,515 291,057 Other operation expenses 80,573 84,906 81,027 Maintenance 17,508 18,351 16,693 Depreciation and amortization 23,676 19,332 18,704 Taxes, other than income taxes 40,529 42,627 41,061 Income taxes (Note 7) 9,878 12,517 14,997 ------------------------------ Total utility operating expenses 393,587 486,248 463,539 ------------------------------ Utility Operating Income 38,330 37,618 40,409 Miscellaneous Income and Income Deductions- Net (less applicable income taxes - Note 7) 1,098 993 971 ------------------------------ Income Before Interest Charges 39,428 38,611 41,380 ------------------------------ Interest Charges: Interest on long-term debt 12,544 12,626 14,415 Other interest charges 5,983 3,768 1,798 ------------------------------ Total interest charges 18,527 16,394 16,213 ------------------------------ Net Income 20,901 22,217 25,167 Dividends on Preferred Stock 97 97 97 ------------------------------ Earnings Applicable to Common Stock $ 20,804 $ 22,120 $ 25,070 ============================== Average Shares of Common Stock Outstanding 16,344 15,619 15,586 ============================== Earnings Per Share of Common Stock (after preferred dividends) $1.27 $1.42 $1.61 ============================== See the accompanying notes to financial statements.
23 STATEMENTS OF CONSOLIDATED RETAINED EARNINGS (Thousands Except Per Share Amounts)
- --------------------------------------------------------------------------- Years Ended September 30 1995 1994 1993 - --------------------------------------------------------------------------- Balance at Beginning of Year $173,318 $170,252 $164,120 Add - Net income, per statements 20,901 22,217 25,167 ----------------------------- Total 194,219 192,469 189,287 ----------------------------- Deduct - Cash Dividends Declared: Preferred stock at required annual rates 97 97 97 Common stock, $1.24 per share in 1995, $1.22 per share in 1994 and $1.215 per share in 1993 20,538 19,054 18,938 ----------------------------- Total 20,635 19,151 19,035 ----------------------------- Balance at End of Year $173,584 $173,318 $170,252 ============================= See the accompanying notes to financial statements.
24 CONSOLIDATED BALANCE SHEETS (Thousands of Dollars)
- --------------------------------------------------------------------------- September 30 1995 1994 - --------------------------------------------------------------------------- Assets Utility Plant $745,629 $709,563 Less - Accumulated depreciation & amortization 311,293 297,886 -------------------- Net utility plant 434,336 411,677 -------------------- Other Property and Investments, at Cost or Less (net of accumulated depreciation and amortization, 1995, $9,473; 1994 $9,447) 22,744 22,956 -------------------- Current Assets: Cash and cash equivalents 1,555 1,588 Accounts receivable: Gas customers - Billed and unbilled 34,726 39,835 Other 4,861 4,207 Less - Allowances for doubtful accounts (5,189) (4,943) Inventories: Materials, supplies, and merchandise at avg. cost 5,377 5,059 Natural gas stored underground for current use at LIFO cost 41,629 48,333 Propane gas for current use at FIFO cost 13,566 13,582 Prepayments 1,484 1,853 Unamortized purchased gas adjustments 9,776 1,998 Deferred income taxes (Note 7) - 3,717 -------------------- Total current assets 107,785 115,229 -------------------- Deferred Charges 71,829 58,433 -------------------- Total Assets $636,694 $608,295 ==================== See the accompanying notes to financial statements.
25 CONSOLIDATED BALANCE SHEETS (Continued) (Thousands of Dollars)
- -------------------------------------------------------------------------- September 30 1995 1994 - -------------------------------------------------------------------------- Capitalization and Liabilities Capitalization, per statements: Common stock equity $227,253 $194,939 Redeemable preferred stock 1,960 1,960 Long-term debt 154,279 154,211 -------------------- Total capitalization 383,492 351,110 -------------------- Current Liabilities: Notes payable (Note 8) 59,500 53,500 Accounts payable 21,069 20,124 Refunds due customers 4,110 29,782 Advance customer billings 13,058 7,062 Wages payable 3,117 3,072 Dividends payable 5,538 4,937 Customer deposits 3,447 3,978 Interest accrued 6,953 6,951 Taxes accrued 8,430 9,855 Deferred income taxes (Note 7) 167 - Other current liabilities 2,387 2,564 -------------------- Total current liabilities 127,776 141,825 -------------------- Deferred Credits and Other Liabilities: Deferred income taxes (Note 7) 83,563 76,662 Unamortized investment tax credits (Note 7) 8,018 8,329 Other 33,845 30,369 -------------------- Total deferred credits and other liabilities 125,426 115,360 -------------------- Commitments and Contingencies (Note 9) Total Capitalization and Liabilities $636,694 $608,295 ==================== See the accompanying notes to financial statements.
26 STATEMENTS OF CONSOLIDATED CAPITALIZATION (Thousands of Dollars)
- -------------------------------------------------------------------------- September 30 1995 1994 - -------------------------------------------------------------------------- Common Stock Equity (Note 3): Common stock, par value $1 per share: Authorized - 1995 and 1994, 50,000,000 shares Issued - 1995, 19,285,265 shares; 1994, 17,535,661 shares $ 19,285 $ 17,536 Paid-in capital 58,401 28,102 Retained earnings, per statements 173,584 173,318 Treasury stock, at cost - 1995 and 1994, 1,865,638 shares (24,017) (24,017) -------------------- Total common stock equity 227,253 194,939 -------------------- Redeemable Preferred Stock, par value $25 per share (1,480,000 shares authorized) issued and outstanding (Note 4): 5% Series B - 1995 and 1994, 71,890 shares 1,797 1,797 4.56% Series C - 1995 and 1994, 6,510 shares 163 163 -------------------- Total redeemable preferred stock 1,960 1,960 -------------------- Long-Term Debt (Note 5): First mortgage bonds: 6-1/4% Series, due May 1, 2003 25,000 25,000 8-1/2% Series, due November 15, 2004 25,000 25,000 8-5/8% Series, due May 15, 2006 40,000 40,000 7-1/2% Series, due November 1, 2007 40,000 40,000 9-5/8% Series, due May 15, 2013 25,000 25,000 -------------------- Total 155,000 155,000 Unamortized discount, net of premium, on long-term debt (721) (789) -------------------- Total long-term debt 154,279 154,211 -------------------- Total $383,492 $351,110 ==================== See the accompanying notes to financial statements.
27 STATEMENTS OF CONSOLIDATED CASH FLOWS (Thousands of Dollars)
- -------------------------------------------------------------------------- Years Ended September 30 1995 1994 1993 - -------------------------------------------------------------------------- Operating Activities: Net Income $20,901 $22,217 $25,167 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 23,728 19,393 18,917 Deferred income taxes and investment tax credits 9,459 508 5,202 Other - net 679 567 280 Changes in assets and liabilities: Accounts receivable - net 4,701 (6,208) (6,185) Unamortized purchased gas adjustments (7,778) 4,280 (2,552) Deferred purchased gas costs 493 (355) 459 Accounts payable 945 3,379 3,950 Refunds due customers (25,672) 29,568 (4,064) Taxes accrued (1,425) (1,690) 2,050 Natural gas stored underground 6,704 (34,254) (2,843) Other assets and liabilities (4,529) 6,280 (10,363) ------------------------------- Net cash provided by operating activities 28,206 43,685 30,018 ------------------------------- Investing Activities: Construction expenditures (45,804) (39,193) (40,880) Employee benefit trusts 974 1,006 (373) Investments - non-utility (1,290) (1,673) (1,747) Other (153) (655) (903) ------------------------------- Net cash used in investing activities (46,273) (40,515) (43,903) ------------------------------- Financing Activities: Issuance of first mortgage bonds - - 65,000 Issuance of short-term debt 6,000 26,000 20,500 Issuance of common stock 33,380 1,973 - Dividends paid (20,015) (19,126) (18,957) Retirement of first mortgage bonds - (11,991) (51,660) Other (1,331) (144) (2,614) ------------------------------- Net cash provided by (used in) financing activities 18,034 (3,288) 12,269 ------------------------------- Net Decrease in Cash and Cash Equivalents (33) (118) (1,616) Cash and Cash Equivalents at Beg. of Year 1,588 1,706 3,322 ------------------------------- Cash and Cash Equivalents at End of Year $ 1,555 $ 1,588 $ 1,706 =============================== Supplemental Disclosure of Cash Paid During the Year for: Interest $17,742 $15,769 $15,081 Income taxes 4,088 11,732 9,489 See the accompanying notes to financial statements.
28 SCHEDULE OF INCOME TAXES (Note 7) (Thousands of Dollars)
- ------------------------------------------------------------------------- Years Ended September 30 1995 1994 1993 - ------------------------------------------------------------------------- Included in Statements of Consolidated Income as: Utility Operating Expenses: Federal Current $ 347 $10,286 $ 8,833 Deferred 8,474 720 5,024 Investment tax credit adjustments - net (350) (352) (332) State and local Current 65 1,708 937 Deferred 1,342 155 535 ----------------------------- 9,878 12,517 14,997 ----------------------------- Miscellaneous Income and Income Deductions: Federal Current 239 160 1,026 Deferred (5) (12) (21) Investment tax credit adjustments - net (1) (2) (2) State and local Current 19 (24) 67 Deferred (1) (1) (2) ----------------------------- 251 121 1,068 ----------------------------- Total $10,129 $12,638 $16,065 ============================= See the accompanying notes to financial statements.
29 SCHEDULE OF INTERIM FINANCIAL INFORMATION (Unaudited) (Note 10) (Thousands of Dollars Except Per Share Amounts)
- --------------------------------------------------------------------------- Three Months Ended Dec. 31 March 31 June 30 Sept. 30 - --------------------------------------------------------------------------- 1995 Utility Operating Revenues $122,203 $191,627 $67,598 $50,489 Utility Operating Income (Loss) 13,988 22,463 2,154 (275) Net Income (Loss) 9,210 18,069 (1,971) (4,407) Earnings (Loss) Per Share of Common Stock (after preferred dividends) $ .58 $1.15 $(.12) $(.25) - --------------------------------------------------------------------------- Three Months Ended Dec. 31 March 31 June 30 Sept. 30 - --------------------------------------------------------------------------- 1994 Utility Operating Revenues $167,245 $233,035 $74,644 $48,942 Utility Operating Income (Loss) 15,621 22,203 1,286 (1,492) Net Income (Loss) 11,920 18,645 (2,738) (5,610) Earnings (Loss) Per Share of Common Stock (after preferred dividends) $ .76 $1.19 $(.18) $(.36) See the accompanying notes to financial statements.
30 NOTES TO FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Basis of Consolidation - The consolidated financial statements include the accounts of the Laclede Gas Company and its subsidiary companies (Company). The net operating results of the Company's non-utility subsidiaries, all of which are wholly owned, are included under the caption "Miscellaneous Income and Income Deductions - Net" in the Statements of Consolidated Income. Revenues from non-utility subsidiaries are insignificant. All appropriate intercompany transactions have been eliminated. System of Accounts - The accounts of the Company are maintained in accordance with the uniform system of accounts prescribed by the Missouri Public Service Commission (MoPSC), which system substantially conforms to that prescribed by the Federal Energy Regulatory Commission. Utility Plant, Depreciation and Amortization - Utility plant is stated at original cost. The cost of additions to utility plant includes contracted work, direct labor and materials, allocable overheads, and an allowance for funds used during construction. The costs of units of property retired, replaced, or renewed are removed from utility plant and such costs, plus removal costs, less salvage are charged to accumulated depreciation. Maintenance and repairs of property and replacement and renewal of items determined to be less than units of property are charged to operating expenses. Utility plant, excluding exploration and development, is depreciated on the straight-line basis at rates based on estimated service lives of the various classes of property. Annual depreciation in 1995, 1994 and 1993 averaged approximately 3.3%, 2.8% and 2.8%, respectively, of the original cost of depreciable property. In August 1994, the MoPSC approved a settlement agreement which authorized a net increase in depreciation rates for the Company effective on September 1, 1994. Regulatory Operations - The Company accounts for its regulated operations in accordance with Statement of Financial Accounting Standard (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation". This statement sets forth the application of generally accepted accounting principles for those companies whose rates are established by or are subject to approval by an independent third-party regulator. The provisions of SFAS No. 71 require, among other things, that financial statements of a regulated enterprise reflect the actions of regulators, where appropriate. These actions may result in the recognition of revenues and expenses in time periods that are different than non-regulated enterprises. When this occurs, costs are deferred as assets in the balance sheet (regulatory assets) and recorded as expenses when those amounts are reflected in rates. Also, regulators can impose liabilities upon a regulated company for amounts previously collected from customers and for recovery of costs that are expected to be incurred in the future (regulatory liabilities). 31 The following regulatory assets and regulatory liabilities were reflected in the Consolidated Balance Sheets as of September 30:
(Thousands of Dollars) 1995 1994 - -------------------------------------------------------------- Regulatory Assets: Amounts due from customers for future income taxes $32,235 $31,009 Pension costs 3,514 - Unamortized loss on reacquired debt 1,450 1,703 Unamortized purchased gas adjustments 9,776 1,988 Other 693 435 --------------------- Total Regulatory Assets $47,668 $35,135 ===================== Regulatory Liabilities: Unamortized investment tax credits $ 8,018 $ 8,329 Amounts due to customers for future income taxes 294 391 Purchased gas costs 1,157 664 Other 422 3 --------------------- Total Regulatory Liabilities $ 9,891 $ 9,387 =====================
Gas Stored Underground - Inventory of gas in storage is priced on a last-in, first-out (LIFO) basis. The replacement cost of gas stored underground for current use at September 30, 1995 and 1994 was less than the LIFO cost by $1,203,000 and $8,437,000, respectively. The inventory carrying value has not been reduced to market prices because, pursuant to the Company's Purchased Gas Adjustment Clause, actual gas costs are recovered in customer rates. Oil & Gas Exploration and Development - The Company uses the full cost method of accounting for utility exploration and development costs as ordered by the MoPSC. Under the full cost method, all exploration and development costs of productive and non-productive wells are capitalized. Such costs are charged to expense based on oil and gas produced in relation to total estimated recoverable reserves. Depreciation and amortization charges amounted to $907,000 in 1995, $812,000 in 1994 and $1,213,000 in 1993. Operating Revenues - The Company records revenues from gas sales and transportation service on the accrual basis which includes estimated amounts for gas delivered, where applicable, but not yet billed. Purchased Gas Adjustments and Deferred Account - Pursuant to the provisions of the Company's Purchased Gas Adjustment (PGA) Clause, increases or decreases in gas costs are passed on to its customers. The difference between actual costs incurred and costs recovered through the application of the PGA is reflected as a deferred charge or credit until September 30, at which time the balance is classified as a current asset or liability and is recovered from or credited to customers over an annual period commencing in November. The balance in the current account is amortized as amounts are reflected in customer billings. 32 Income Taxes - The Company has elected, for tax purposes only, various accelerated depreciation provisions of the Internal Revenue Code. In addition, intangible drilling and unsuccessful exploration costs, and certain other costs are expensed currently for tax purposes while being deferred for book purposes. The provision for current income taxes reflects the tax treatment of these items. The Company adopted Statement of Financial Accounting Standard (SFAS) No. 109, "Accounting for Income Taxes" effective October 1, 1993. SFAS No. 109 requires the establishment of deferred tax liabilities and assets, as measured by enacted tax rates, for the net tax effects of all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes, and the amounts used for income tax purposes. Substantially all of the adjustments required by SFAS No. 109 were recorded to deferred tax balance sheet accounts, with the corresponding adjustments to regulatory assets and liabilities. At October 1, 1993, the cumulative effect of adopting SFAS No. 109 was an increase in net deferred tax liabilities of $30,200,000, and recognition of a regulatory asset of $30,200,000. The adoption of this standard did not have an impact on the Company's cash flows or results of operations due to the effect of rate regulation. In 1993, the Company accounted for income taxes in accordance with the provisions of Accounting Principles Board Opinion No. 11. The benefit of investment tax credits utilized prior to 1986 has been deferred and is being amortized over the useful life of the related property for financial statement purposes. Cash and Cash Equivalents - For the purpose of the statements of cash flows, the Company considers all highly liquid debt instruments purchased, which generally have a maturity of three months or less, to be cash equivalents. Such instruments are carried at cost, which approximates market value. Reclassification - Certain prior-year amounts have been reclassified to conform to current-year presentation. Accounting Changes - In March 1995, the Financial Accounting Standards Board (FASB) issued SFAS No. 121, "Accounting for the Impairment of Long- Lived Assets and for Long-Lived Assets to Be Disposed Of", which will require the Company to review for impairment long-lived assets and certain identifiable intangibles to be held and used by the Company whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Adoption of SFAS No. 121 is required in fiscal year 1997. In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock- Based Compensation", which establishes a fair value based method for financial accounting and reporting for stock-based employee compensation plans. However, the new standard allows compensation to continue to be measured by using the intrinsic value based method of accounting prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", but requires expanded disclosures. SFAS No. 123 is effective in fiscal year 1997. While the Company does not know precisely the impact that will result from adopting SFAS No. 121 and SFAS No. 123, the Company does not expect the adoption of SFAS No. 121 or SFAS No. 123 to have a material effect on the Company's financial position or results of operations. 33 2. Pension Plans and Other Postemployment Benefits The Company has non-contributory defined benefit, trusteed forms of pension plans covering substantially all employees over the age of twenty- one. Benefits are based on years of service and the employee's compensation during the last three years of employment. The Company's funding policy is to contribute an amount not less than the minimum required by government funding standards, nor more than the maximum deductible amount for federal income tax purposes. Plan assets consist primarily of corporate and U.S. government obligations. Pension costs in 1995, 1994 and 1993 amounted to $(5,692,000), $1,895,000 and $50,000, respectively, including amounts charged to construction. The net pension costs (credits) include the following components:
(Thousands of Dollars) 1995 1994 1993 - ------------------------------------------------------------------ Service cost - benefits earned during the period $ 6,412 $ 6,467 $ 5,891 Interest cost on projected benefit obligation 13,966 13,132 13,209 Actual return on plan assets (50,765) 9,849 (50,003) Net amortization and deferral 28,184 (27,553) 30,953 Regulatory adjustment (3,489) - - ----------------------------- Net pension cost $ (5,692) $ 1,895 $ 50 =============================
The MoPSC ordered in Case No. GR-94-220, effective October 1, 1994, that certain pension costs are to be recovered on a payment basis up to $281,000, the difference between actual payments and the $281,000 to be deferred. Case No. GR-94-220 also provided for the elimination of the corridor and a ten-year amortization period for unrecognized gains and losses. Other variances in net pension cost is primarily attributable to actuarial and investment experience. 34 The following table sets forth the funded status of the plans and amounts recognized in the Company's consolidated balance sheets at September 30:
(Thousands of Dollars) 1995 1994 - ------------------------------------------------------------------ Actuarial present value of benefit obligation: Vested benefit obligation $128,508 $122,709 =================== Accumulated benefit obligation $149,641 $140,603 =================== Projected benefit obligation $187,522 $174,539 Plan assets at fair value 256,662 225,482 ------------------- Plan assets in excess of projected benefit obligation 69,140 50,943 Unrecognized net gain (51,803) (40,793) Unrecognized prior service cost 14,856 15,483 Unrecognized net transition asset (7,156) (8,717) Minimum liability adjustment (2,449) (1,926) ------------------- Prepaid pension cost recognized in the consolidated balance sheets $ 22,588 $ 14,990 ===================
The projected benefit obligation, which is based on a June 30 measurement date, was determined using a weighted-average discount rate of 7.75% for 1995 and 8.25% for 1994, and a weighted-average rate of future compensation of 4.75% for 1995 and 5.0% for 1994. The expected long-term rate of return on plan assets was 8.25% for 1995 and 1994. Pursuant to the provisions of the Company's pension plans, pension obligations may be settled by lump-sum cash payments. Significant settlements in 1995 and 1993 resulted in pre-tax gains of approximately $3,937,000 and $4,355,000, respectively. There were no such gains in 1994. The cost of the Company's defined contribution plans, which cover substantially all employees, amounted to $1,803,000, $1,706,000 and $1,595,000 for the years 1995, 1994 and 1993, respectively. The Company provides life insurance benefits to all employees after retirement and medical insurance is available after early retirement until age 65. In the first quarter of fiscal year 1994, the Company adopted Statement of Financial Accounting Standard (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions (OPEB)". Under the provisions of SFAS No. 106, the future cost of providing these postretirement benefits is recognized as an expense and a liability during the employees' service periods. As permitted by SFAS No. 106, the liability for any unfunded accumulated postretirement benefit obligations existing at October 1, 1993 is being recognized as a transition obligation and amortized over 20 years. Prior to the adoption of SFAS No. 106, life insurance costs were accrued systematically in order to provide for future payments. The cost of medical insurance, net of payments by the retirant, was recognized as claims were paid. Postretirement benefit costs in 1995, 1994 and 1993 amounted to approximately $6,100,000, $6,063,000 and $4,300,000, respectively, including amounts charged to construction. 35 The 1995 and 1994 net postretirement benefit costs consisted of the following components:
(Thousands of Dollars) 1995 1994 - ----------------------------------------------------------------- Service cost - benefits earned during the period $1,568 $1,597 Interest cost on accumulated postretirement benefit obligation 2,676 2,767 Amortization of transition obligation 1,267 1,699 Net amortization an deferral 190 - Regulatory adjustment 399 - ----------------- Net postretirement benefit cost $6,100 $6,063 =================
The following table sets forth the funded status of the plans and amounts recognized in the Company's consolidated balance sheets at September 30:
(Thousands of Dollars) 1995 1994 - ----------------------------------------------------------------- Accumulated postretirement benefit obligation (APBO): Retirees $(19,286) $(16,227) Active Employees (15,162) (20,827) ------------------- Total APBO (34,448) (37,054) Plan assets at fair value 1,450 - ------------------- APBO in excess of plan assets (32,998) (37,054) Unrecognized transition obligation 22,781 32,265 Unrecognized prior service cost 5,271 - Unrecognized net gain (3,479) (2,961) ------------------- Accrued postretirement benefit cost $ (8,425) $ (7,750) ===================
The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation was 9% for 1995, and gradually decreases each successive year until it reaches 5% in 1998. A one percent increase in the assumed health care cost trend rate for each year would increase accumulated postretirement benefit costs as of September 30, 1995 by $917,000 and the sum of the service cost and interest cost by approximately $228,000. The accumulated postretirement benefit obligation was determined using a weighted-average discount rate of 7.75% for 1995 and 8.25% in 1994, and a weighted-average rate of future compensation of 4.75% for 1995 and 5.0% for 1994. In July 1994, a state law was enacted which requires SFAS No. 106 accrued costs to be recognized for ratemaking purposes provided that such costs are funded through an independent, external funding mechanism. The approved settlement of the Company's 1994 rate case included recovery of such costs, effective on September 1, 1994. During 1995, the Company established Voluntary Employees' Beneficiary Associations and Rabbi trusts as its external funding mechanisms. The 1994 rate case settlement also provided 36 for the deferral, net of any applicable tax effects, of the difference between the costs funded by the Company and $6,100,000 of annualized OPEB costs included in rates. Any such deferrals will be reflected in rates established in the next general rate case proceeding. During fiscal 1995, Statement of Financial Accounting Standard (SFAS) No. 112, "Employers' Accounting for Postemployment Benefits" became effective for the Company. SFAS No. 112 requires an accrual for the estimated future cost of providing postemployment benefits to former or inactive employees after employment but before retirement. SFAS No. 112 did not have a material impact on the Company's financial position or results of operations. 3. Common Stock and Paid-in Capital During 1995, the Company issued 1,575,000 shares of common stock through a public offering. The net proceeds of the offering, after deducting discount and expenses, was $28.6 million. The Company issued 174,604 and 83,561 shares of its common stock during fiscal years 1995 and 1994, respectively, under its Dividend Reinvestment and Stock Purchase Plan. Total shares of common stock outstanding were 17,419,627 at September 30, 1995. On March 27, 1986, the Company declared a dividend of one Common Share Purchase Right for each outstanding share of common stock as of May 1, 1986. The rights expire on May 1, 1996, and may be redeemed by the Company for five cents each at any time before they become exercisable. The rights will not be exercisable or transferable apart from the common stock, until ten days after a person or group acquires or obtains the right to acquire 20% or more of the common stock, or commences or announces its intention to commence a tender or exchange offer for 30% or more of the common stock. Each right entitles its holder to buy one share of common stock at an exercise price of $50. In certain circumstances, each right will entitle the holder to purchase one share of common stock at one-third of the market price, or to purchase, at the exercise price, common stock of an acquiring entity having a value equal to twice the exercise price. A total of 17,419,627 rights were outstanding at September 30, 1995. Paid-in capital increased $30,299,000 in 1995 and $1,852,000 in 1994 due to the sale of common stock in the above mentioned public offering and the issuance of common stock under the Dividend Reinvestment and Stock Purchase Plan. 4. Redeemable Preferred Stock The preferred stock, which is non-voting except in certain circumstances, may be redeemed at the option of the Board of Directors. The redemption price is equal to par of $25.00 a share. During 1995, 1994, and 1993 no shares of preferred stock were reacquired. Any default in a sinking fund payment must be cured before the Company may pay dividends on or acquire any common stock. Sinking fund requirements on preferred stock for the five years subsequent to September 30, 1995 are: 1996-1999, none; 2000, $37,000. 5. Long-Term Debt There are no maturities or sinking fund requirements on long-term debt for the five years subsequent to September 30, 1995. On April 28, 1995, the Company received approval from the Missouri Public Service Commission for a two-year extension, to April 21, 1997, of its previously granted authority to sell additional First Mortgage Bonds. 37 The original authorization was for $100 million of First Mortgage Bonds of which $25 million have already been issued and sold. In November 1995, the Company issued $25 million of 6 1/2% First Mortgage Bonds at a cost to the Company of 6.55%. The proceeds of the issuance were used to reduce outstanding short-term borrowings. Substantially all of the Company's utility plant is subject to the liens of its mortgage. The Company's mortgage contains provisions which restrict retained earnings from declaration or payment of cash dividends. As of September 30, 1995, approximately $164,600,000 of consolidated retained earnings was free from such restrictions. 6. Fair Value of Financial Instruments The carrying amounts and estimated fair values of the Company's financial instruments at September 30, 1995, are as follows:
Carrying Fair (Thousands of Dollars) Amount Value - ------------------------------------------------------------------ Cash and cash equivalents $ 1,555 $ 1,555 Short-term debt 59,500 59,500 Long-term debt 154,279 168,397 Redeemable preferred stock 1,960 1,644
The carrying amounts for cash and cash equivalents and short-term debt approximate fair value due to the short maturity of these investments. Fair value of long-term debt and preferred stock is estimated based on market prices for similar issues. 38 7. Income Taxes Net provisions for income taxes were charged during the years ended September 30, 1995, 1994 and 1993 as shown on the Schedule of Income Taxes. Deferred tax expense results from the change in temporary tax differences in 1995 and 1994, and from timing differences in the recognition of revenue and expense for tax and book purposes in 1993. The sources of these differences and the related tax effect of each are as follows:
(Thousands of Dollars) 1995 1994 1993 - --------------------------------------------------------------------------- Excess of accelerated over straight-line depreciation $2,248 $ 3,531 $ 3,477 Excess of full cost accounting charges per books over depreciation, intangible drilling and unsuccessful exploration costs expensed on tax return (311) (281) (423) Gas costs deferred for book purposes and expensed on tax return (reversal) 2,819 (1,419) 772 Uncollectible accounts expense for books (in excess of) less than expense per tax return (136) 962 (486) Pension income per books in excess of amounts recognized per tax return 3,551 66 2,697 Supplier refund (income) expense not recognized per books 1,464 (907) - Postretirement insurance benefits expense per books in excess of expense per tax return (335) (1,149) - Other items - net 510 59 (501) ------------------------- Total deferred income tax $9,810 $ 862 $ 5,536 =========================
The effective income tax rate varied from the federal statutory income tax rate for each year due to the following:
1995 1994 1993 - --------------------------------------------------------------------------- Federal income tax statutory rate 35.0% 35.0% 34.7% State and local income taxes, net of federal income tax benefits 3.0 3.4 2.4 Certain expenses capitalized on books and deducted on tax return (3.3) (3.0) (2.0) Reversal of deferred taxes related to gas costs - ( .1) .1 Taxes related to prior years (1.3) - 2.1 Other items - net (.8) 1.0 1.7 ---------------------- Effective income tax rate 32.6% 36.3% 39.0% ======================
39 The significant items comprising the Company's net deferred tax liability recognized in the consolidated balance sheets as of September 30 are as follows:
(Thousands of Dollars) 1995 1994 - ---------------------------------------------------------------------- Deferred tax assets: Reserves not currently deductible $ 12,927 $13,481 Unamortized investment tax credits 5,048 5,269 Other 2,661 2,395 -------- ------- Total deferred tax assets 20,636 21,145 -------- ------- Deferred tax liabilities: Relating to utility property 86,997 84,202 Pension 11,538 7,996 Other 5,831 1,892 -------- ------- Total deferred tax liabilities 104,366 94,090 -------- ------- Net deferred tax liability 83,730 72,945 Net deferred tax asset (liability)-current (167) 3,717 -------- ------- Net deferred tax liability-non-current $ 83,563 $76,662 ======== =======
8. Notes Payable and Credit Agreements The Company has a primary line of bank credit which permits borrowing of up to $40 million at any time before January 31, 1996. Such borrowings are on a 90-day basis, renewable from time to time, with no note maturing beyond June 30, 1996. The borrowings may be repaid at any time without penalty. The Company anticipates renewal of this primary line of $40 million in January 1996. This, along with the Company's previously obtained $70 million supplemental line of credit, which was in effect from October 18, 1994 to March 1, 1995, provided a total line of credit for the 1994-1995 primary heating season of $110 million, compared with a maximum of $95 million during the 1993-1994 heating season. Since cash needs typically decline at the end of the heating season, on March 1, 1995, the Company reduced the supplemental line with a reduced supplemental line to $50 million. This supplemental line of credit was further reduced to a $25 million supplemental line of credit, which extended to September 1, 1995, thus providing a total line of credit of $65 million to September 1, 1995. The reduction in the supplemental line of credit was made possible by the receipt of $28.6 million in net proceeds from a common stock offering. On September 1, 1995, the supplemental line of credit was increased to $50 million and on November 1, 1995 was extended to March 1, 1996. The total line of credit for the remainder of the 1995-1996 heating season is $90 million. The Company anticipates that the supplemental line will again be reduced after March 1, 1996. Alternatively, the Company has an agreement for the issuance of commercial paper which is supported by the bank loan lines of credit. During fiscal year 1995, the Company's short-term borrowing requirements were met by the sale of commercial paper. As of September 30, 1995, the Company had $59.5 million in commercial paper outstanding at an average interest rate of 5.83%. 40 9. Commitments and Contingencies The Company estimates fiscal year 1996 utility construction expenditures at $35,500,000. The lease agreement covering the Company's general office space extends through February 2000 with options to renew for up to 20 additional years. The aggregate rental expense for fiscal years 1995, 1994 and 1993 was $780,000, $770,000 and $760,000, respectively. Annual minimum rental payments for fiscal years 1996-1999 are $780,000 per year. The lease agreement provides for an annual rent escalation which is not determinable as of the balance sheet date; however, the maximum amount of rental expense increase is $8,800 per year. The Company has other rental arrangements which provide for minimum rental payments that are relatively minor. The Company has entered into various contracts which in the aggregate require it to pay approximately $92 million on an annual basis, at present rate levels, for the reservation of gas supplies and pipeline transmission and storage capacity. These costs are recovered from customers in accordance with the Purchased Gas Adjustment Clause of the Company's tariff. The contracts have various expiration dates ranging from 1996 to 1999. A consolidated subsidiary is a general partner in an unconsolidated partnership which invests in real estate partnerships. The subsidiary and third parties are jointly and severally liable for the payment of mortgage loans in the aggregate outstanding amount of approximately $8.7 million incurred in connection with various real estate ventures. The Company has no reason to believe that the other principal liable parties will not be able to meet their proportionate share of these obligations. The Company further believes that the asset values of the real estate properties are sufficient to support these mortgage loans. The Company is subject to various laws and regulations relating to the environment, which thus far have not had a material effect on the Company's financial position and results of operations. Prior to the widespread availability of natural gas, the Company operated various manufactured gas plants, the last of which was closed in 1961. The process for manufacturing gas produced by-products and residuals, including various hydrocarbons. Certain remnants of these residuals are typically found at former gas manufacturing sites. The United States Environmental Protection Agency (EPA) has been engaged in a survey of a large number of former manufactured gas plant sites across the nation. In this regard, the Company and the EPA have determined that manufactured gas residuals are present at one of the former manufactured gas plant sites operated by the Company. While no conclusion has been reached as to the extent of any remedial action that will be required, the Company and the EPA have entered into an Administrative Order on Consent (AOC), effective March 31, 1994, with regard to this site. The AOC provides for the Company to conduct certain investigative activities (i.e., a removal site evaluation and an engineering evaluation cost analysis), and to reimburse the EPA for response costs under the AOC. The AOC requires only investigations and does not cover any removal action. If remedial action is necessary, then a subsequent order will cover such action. The investigative activities required by the AOC have been completed and, on July 31, 1995, the Company submitted a draft removal site evaluation report to the EPA, which concludes that no further action is necessary. The EPA has advised that such overall conclusion may be premature because the Company's report does not contain a full characterization of the contaminants on certain small areas of the site. EPA has observed that a limited removal program may be more reasonable than to continue to characterize these areas in order to determine any actual degree of risk. Although the Company and the EPA are further analyzing the site, if 41 the aforementioned limited removal action is taken, the cost thereof is estimated by the Company to range from approximately $40,000 to as much as $125,000. Based on currently available information, such costs, together with EPA oversight costs and other associated legal and engineering consulting costs relating to the site, would likely aggregate approximately $600,000. At September 30, 1995, $375,000 of such amount has been paid and the additional $225,000 balance has been reserved by the Company. The Company has notified its insurers that the Company intends to seek reimbursement from them of its investigation, remediation, clean-up and defense costs in regard to the foregoing. In addition to pursuing insurance proceeds to the extent feasible, the Company also plans to seek recovery, if practicable, from any other potentially responsible parties. In a separate matter, the Missouri Department of Natural Resources (the "MoDNR") has advised the Company that it believes that hazardous substances may be present on the site of a different former manufactured gas plant (which was also used as the site of a coke facility), which site was sold by the Company in 1950. The Company has made application to the MoDNR for the placement of that site in the Missouri environmental remediation program, and has offered to conduct a preliminary assessment and site evaluation investigation to determine the nature and extent of any hazardous substances that may be present on such site. The Company's application has been accepted by MoDNR, subject to the Company's entering into an agreement regarding the investigation and MoDNR oversight costs. The cost of such an investigation, including MoDNR oversight costs and associated legal and engineering consulting costs relating to that site, is estimated by the Company to be approximately $75,000, for which the Company has established a liability reserve. The Company has requested that other former owners and/or operators participate in the cost of such an investigation, but none has as yet agreed to do so, and the Company plans to seek reimbursement, if feasible, from such parties and any other potentially responsible parties, as well as from its insurers, to the extent practicable. The Company is presently unable to evaluate or quantify further the scope or cost of any environmental response activity. An environmental cost deferral procedure was established by the Missouri Public Service Commission in the Company's recent rate case, effective September 1, 1994, for use by the Company in applying for appropriate rate recovery of various investigation, remediation and other costs to be incurred by the Company in connection with former manufactured gas plant sites. The authorization to begin deferring such costs shall only be triggered to the extent that the cumulative liability incurred by the Company during the deferral period is not offset by the cumulative costs of $250,000 per year reflected in the Company's current rates. In the event the cumulative liability incurred by the Company for such costs during the deferral period is less than the cumulative amount of such annualized costs reflected in the rates approved in the settlement, then the Company shall refund the difference. The above authorization will become null and void if the Company does not file for a general rate increase by September 1, 1996, and, in any event, the recovery of costs deferred thereunder is subject to challenge in future rate cases. The Company is involved in litigation, claims, and investigations arising in the normal course of business. While the results of such litigation cannot be predicted with certainty, management, after discussion with counsel, believes the final outcome will not have a material adverse effect on the consolidated financial position and results of operations reflected in the financial statements presented herein. 42 10. Interim Financial Information (Unaudited) In the opinion of the Company, the quarterly information presented in the Schedule of Interim Financial Information for fiscal years 1995 and 1994 includes all adjustments, consisting of normal recurring adjustments necessary for a fair statement of the results of operations for such periods. Variations in operations reported on a quarterly basis reflect the seasonal nature of the Company's business. Item 9. Changes in and Disagreements on Accounting and Financial Disclosure There have been no disagreements on accounting and financial disclosure with the Company's outside auditors which are required to be disclosed. Part III Item 10. Directors and Executive Officers of the Registrant The information concerning directors required by this item is set forth on pages 3 through 7 and 18 in the Company's proxy statement dated December 26, 1995 and is incorporated herein by reference. The information concerning executive officers required by this item is reported in Part I of this Form 10-K. Item 11. Executive Compensation The information required by this item is set forth on pages 8 through 17 in the Company's proxy statement dated December 26, 1995 and is incorporated herein by reference but the information under the captions "Compensation Committee Report Regarding Compensation" and "Performance Graph" on pages 13 through 16 of such proxy statement is expressly NOT incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management Information required by this item is set forth on page 7 in the Company's proxy statement dated December 26, 1995 and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions There were no transactions required to be disclosed pursuant to this item. 43 Part IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) 1. Consolidated Financial Statements: 1995 10-K Page For Years Ended September 30, 1995, 1994, and 1993: Statements of Income 23 Statements of Retained Earnings 24 Statements of Cash Flows 28 Schedule of Income Taxes 29 As of September 30, 1995 & 1994: Balance Sheets 25-26 Statements of Capitalization 27 For Years Ended 1995 & 1994: Schedule of Interim Financial Information 30 Notes to Financial Statements 31-43 Independent Auditors' Report 21 Management Report 22 2. Supplemental Schedules II - Reserves 49 Schedules not included have been omitted because they are not applicable or the required data has been included in the financial statements or notes to financial statements. 3. Exhibits Incorporated herein by reference to Index to Exhibits, page 50. (b) During the last quarter of fiscal year 1995, no reports on Form 8-K were required to be filed by the Company. 44 (c) Management contracts and compensatory plans or arrangements listed in the Index to Exhibits required to be filed as exhibits to this form pursuant to Item 14(c) of this report: Exhibit No. Description 10.01 - Incentive Compensation Plan of the Company, as amended. 10.01a - Amendment adopted by the Board of Directors on July 26, 1990 to the Incentive Compensation Plan. 10.01b - Amendments adopted by the Board of Directors on August 23, 1990 to the Incentive Compensation Plan. 10.01c - Amendments to Laclede Gas Company Incentive Compensation Plan, effective January 26, 1995. 10.02 - Senior Officers' Life Insurance Program of the Company, as amended. 10.02a - Certified copy of resolutions of the Company's Board of Directors adopted on June 27, 1991 amending the Senior Officers' Life Insurance Program. 10.02b - Certified copy of resolutions of the Company's Board of Directors adopted on January 28, 1993 amending the Senior Officers' Life Insurance Program. 10.03 - Employees' Retirement Plan of Laclede Gas Company - Management Employees, effective as of July 1, 1990, as amended. 10.03a - Amendment to the Employees' Retirement Plan of Laclede Gas Company - Management Employ- ees adopted by the Board of Directors on September 27, 1990. 10.03b - Amendments, dated December 12, 1990 to the Employees' Retirement Plan of Laclede Gas Company - Management Employees. 10.03c - Amendment to the Employees' Retirement Plan of Laclede Gas Company - Management Employees dated January 10, 1994. 10.03d - Amendments to the Employees' Retirement Plan of Laclede Gas Company - Management Employees dated July 29, 1994. 10.03e - Amendments to the Employee's Retirement Plan of Laclede Gas Company-Management Employees dated February 21, 1995. 10.03f - Amendments to the Employees' Retirement Plan of Laclede Gas Company-Management Employees dated March 7, 1995. 10.03g - Amendments to the Employees' Retirement Plan of Laclede Gas Company-Management Employees dated September 11, 1995. 10.04 - Laclede Gas Company Supplemental Retirement Benefit Plan, as amended and restated effec- tive July 25, 1991. 10.05 - Laclede Gas Company Salary Deferral Savings Plan, as amended through February 27, 1992. 10.05a - Amendment to the Company's Salary Deferral Savings Plan, effective January 31, 1992, adopted by the Board of Directors on August 27, 1992. 45 10.05b - Amendment to the Company's Salary Deferral Savings Plan dated January 10, 1994. 10.05c - Amendments to the Company's Salary Deferral Savings Plan, dated July 29, 1994. 10.05d - Amendments to the Company's Salary Deferral Savings Plan effective August 1, 1994 adopted by the Board of Directors on August 25, 1994. 10.05e - Amendments to the Company's Salary Deferral Savings Plan dated September 27, 1994. 10.05f - Amendments to the Company's Salary Deferral Savings Plan dated February 21, 1995. 10.05g - Amendments to the Company's Salary Deferral Savings Plan dated March 7, 1995. 10.05h - Amendments to the Laclede Gas Company Salary Deferral Savings Plan dated June 26, 1995. 10.05i - Amendments to the Company's Salary Deferral Savings Plan dated August 3, 1995. 10.06 - Laclede Gas Company Deferred Compensation Plan for Non-Employee Directors dated March 26, 1981. 10.06a - First Amendment to the Company's Deferred Compensation Plan for Non-Employee Directors, adopted by the Board of Directors on July 26, 1990. 10.06b - Amendment to the Company's Deferred Com- pensation Plan for Non-Employee Directors, adopted by the Board of Directors on August 27, 1992. 10.08 - The Retirement Plan for Non-Employee Direc- tors of Laclede Gas Company dated January 24, 1985. 10.08a - First Amendment to Retirement Plan for the Company's Non-Employee Directors, adopted by the Board of Directors on July 26, 1990. 10.08b - Amendments to the Retirement Plan for Non- Employee Directors, adopted by the Board of Directors on January 23, 1992. 10.09 - Salient Features of the Laclede Gas Company Deferred Income Plan for Directors and Selected Executives, including amendments adopted by the Board of Directors on July 26, 1990. 10.09a - Amendment to the Company's Deferred Income Plan for Directors and Selected Executives, adopted by the Board of Directors on August 27, 1992. 10.10 - Form of Indemnification Agreement between the Company and its Directors and Officers. 10.11 - Laclede Gas Company Management Continuity Protection Plan, as amended, effective at the close of business on January 27, 1994, by the Board of Directors. 10.12 - Laclede Gas Company Restricted Stock Plan for Non-Employee Directors, effective as of January 25, 1990. 46 10.12a - Extension and amendment of the Laclede Gas Company Restricted Stock Plan for Non-Employee Directors adopted by the Board of Directors on November 17, 1994. 10.14 - Salient Features of the Laclede Gas Company Deferred Income Plan II for Directors and Selected Executives adopted by the Board of Directors on September 23, 1993. 47 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. LACLEDE GAS COMPANY December 21, 1995 By Gerald T. McNeive, Jr. Gerald T. McNeive, Jr. Senior Vice President - Finance and Chief Financial Officer 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. Date Signature Title 12/21/95 Robert C. Jaudes Chairman of the Board, Robert C. Jaudes President and Chief Executive Officer (Principal Executive Officer) 12/21/95 Gerald T. McNeive, Jr. Senior Vice President - Gerald T. McNeive, Jr. Finance and Chief Financial Officer (Principal Financial and Accounting Officer) 12/21/95 Andrew B. Craig, III Director Andrew B. Craig, III 12/21/95 Henry Givens, Jr. Director Henry Givens, Jr. 12/21/95 C. Ray Holman Director C. Ray Holman 12/21/95 Mary Ann Krey Director Mary Ann Krey 12/21/95 William E. Nasser Director William E. Nasser 12/21/95 Boyd F. Schenk Director Boyd F. Schenk 12/21/95 Robert P. Stupp Director Robert P. Stupp 12/21/95 H. Edwin Trusheim Director H. Edwin Trusheim 48 SCHEDULE II LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES RESERVES FOR THE YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
- ---------------------------------------------------------------------------- COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E BALANCE AT ADDITIONS CHARGED DEDUCTIONS BALANCE AT BEGINNING TO TO OTHER FROM AT CLOSE DESCRIPTION OF PERIOD INCOME ACCOUNTS RESERVES OF PERIOD - ---------------------------------------------------------------------------- (Thousands of Dollars) YEAR ENDED SEPTEMBER 30, 1995: DOUBTFUL ACCOUNTS $ 4,943 $6,040 $3,397 (a) $9,191 (b) $ 5,189 ===================================================== MISCELLANEOUS: Injuries and property damage $ 4,070 $1,708 $ - $2,180 (c) $ 3,598 Deferred compensation 7,175 1,079 30 737 7,547 ----------------------------------------------------- TOTAL $11,245 $2,787 $ 30 $2,917 $11,145 ===================================================== YEAR ENDED SEPTEMBER 30, 1994: DOUBTFUL ACCOUNTS $ 7,704 $2,818 $2,842 (a) $8,421 (b) $ 4,943 ===================================================== MISCELLANEOUS: Injuries and property damage $ 3,684 $1,657 $ - $1,271 (c) $ 4,070 Deferred compensation 6,777 1,010 - 612 7,175 Equalization group insurance premium(d) 4,754 - - 4,754 - ----------------------------------------------------- TOTAL $15,215 $2,667 $ - $6,637 $11,245 ===================================================== YEAR ENDED SEPTEMBER 30, 1993: DOUBTFUL ACCOUNTS $ 6,384 $4,842 $2,329 (a) $5,851 (b) $ 7,704 ====================================================== MISCELLANEOUS: Injuries and property damage $ 2,866 $2,027 $ - $1,209 (c) $ 3,684 Deferred compensation 6,251 684 - 158 6,777 Equalization group insurance premium 5,139 1,076 - 1,461 4,754 ----------------------------------------------------- TOTAL $14,256 $3,787 $ - $2,828 $15,215 ====================================================== (a) Accounts reinstated, cash recoveries, etc. (b) Accounts written off. (c) Claims settled, less reimbursements from insurance companies. (d) Adjusted as a result of the adoption of SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" on October 1, 1993.
49 INDEX TO EXHIBITS ----------------- Sequentially Exhibit Numbered No. Pages - ------- ------------ 3.01(i)* - Articles of Incorporation, as of February 11, 1994; filed as Exhibit 4(a) to the Company's Form S-3 Registration Statement No. 33-52357. 3.01(ii)* - By-Laws of the Company effective January 26, 1995; filed as Exhibit 4.2 to the Company's Registration Statement No. 33-58757. 4.01* - Mortgage and Deed of Trust, dated as of February 1, 1945; filed as Exhibit 7-A to Registration Statement No. 2-5586. 4.02* - Fourteenth Supplemental Indenture, dated as of October 26, 1976; filed on June 26, 1979 as Exhibit b-4 to Registration Statement No. 2-64857. 4.03* - Seventeenth Supplemental Indenture, dated as of May 15, 1988; filed as Exhibit 28(a) to the Registration Statement No. 33-38413. 4.04* - Eighteenth Supplemental Indenture, dated as of November 15, 1989; filed as Exhibit 28(b) to the Registration Statement No. 33-38413. 4.05* - Nineteenth Supplemental Indenture, dated as of May 15, 1991; filed on May 16, 1991 as Exhibit 4.01 to the Company's Form 8-K (File No. 1-1822). 4.06* - Twentieth Supplemental Indenture, dated as of November 1, 1992; filed on November 4, 1992 as Exhibit 4.01 to the Company's Form 8-K (File No. 1-1822). 4.07* - Twenty-First Supplemental Indenture, dated as of May 1, 1993; filed on May 13, 1993 as Exhibit 4.01 to the Company's Form 8-K (File No. 1-1822). 4.08* - Laclede Gas Company Board of Directors' Resolution dated August 28, 1986 which generally provides that the Board may delegate its authority in the adoption of certain employee benefit plan amend- ments to certain designated Executive Officers; filed as Exhibit 4.12 to the Company's 10-K for the fiscal year ended September 30, 1991 (File No. 1-1822). 4.08a* - Laclede Gas Company Board of Directors' Resolu- tions dated August 25, 1988, which generally provide for certain amendments to the Company's Wage Deferral Savings Plan and Salary Deferral Savings Plan and that certain Officers are authorized to execute such amendments; filed as Exhibit 4.12g to the Company's 10-K for the fiscal year ended September 30, 1988 (File No. 1-1822). * Incorporated herein by reference and made a part hereof. 50 INDEX TO EXHIBITS ----------------- Sequentially Exhibit Numbered No. Pages - ------- ------------ 4.09* - Laclede Gas Company Wage Deferral Savings Plan, incorporating amendments through December 12, 1990; filed as Exhibit 4.13 to the Company's 10-K for the fiscal year ended September 30, 1991 (File No. 1-1822). 4.09a* - Amendments to the Company's Wage Deferral and Salary Deferral Savings Plans, effective May 1, 1992, adopted by the Board of Directors on February 27, 1992; filed as Exhibit 4.13 to the Company's 10-Q for the fiscal quarter ended March 31, 1992 (File No. 1-1822). 4.09b* - Amendment to the Company's Wage Deferral Savings Plan, effective August 1, 1992, adopted by the Board of Directors on August 27, 1992; filed as Exhibit 4.13b to the Company's 10-K for the fiscal year ended September 30, 1992 (File No. 1-1822). 4.09c* - Amendments to the Company's Wage Deferral Savings Plan dated July 29, 1994; filed as Exhibit 4.09c to the Company's 10-K for the fiscal year ended September 30, 1994 (File No. 1-1822). 4.09d* - Amendments to the Company's Wage Deferral Savings Plan effective August 1, 1994 and adopted by the Board of Directors August 25, 1994; filed as Exhibit 4.09d to the Company's 10-K for the fiscal year ended September 30, 1994 (File No. 1-1822). 4.09e* - Amendments to the Company's Wage Deferral Savings Plan dated February 21, 1995; filed as Exhibit 4.1 to the Company's 10-Q for the fiscal quarter ended March 31, 1995 (File No. 1-1822). 4.09f* - Amendments to the Company's Wage Deferral Savings Plan dated March 7, 1995; filed as Exhibit 4.2 to the Company's 10-Q for the fiscal quarter ended March 31, 1995 (File No. 1-1822). 4.09g* - Amendments to the Laclede Gas Company Wage Deferral Savings Plan dated June 26, 1995; filed as Exhibit 4.1 to the Company's 10-Q for the fiscal quarter ended June 30, 1995 (File No. 1-1822). 4.10* - Missouri Natural Gas Division of the Laclede Gas Company Dual Savings Plan incorporating amendments through December 12, 1990; filed as Exhibit 4.01 to the Company's 10-Q for the fiscal quarter ended December 31, 1990 (File No. 1-1822). 4.10a* - Amendment to the Missouri Natural Gas Division of Laclede Gas Company Dual Savings Plan effective April 11, 1993, adopted by the Board of Directors on August 26, 1993; filed as Exhibit 4.10a to the Company's 10-K for the fiscal year ended September 30, 1993 (File No. 1-1822). * Incorporated herein by reference and made a part hereof. 51 INDEX TO EXHIBITS ----------------- Sequentially Exhibit Numbered No. Pages - ------- ------------ 4.10b* - Amendments to the Missouri Natural Gas Division of Laclede Gas Company Dual Savings Plan dated July 29, 1994; filed as Exhibit 4.10b to the Company's 10-K for the fiscal year ended September 30, 1994 (File No. 1-1822). 4.10c* - Amendment dated October 27, 1994 to the Missouri Natural Gas Division of Laclede Gas Company Dual Savings Plan; filed as Exhibit 4.1 to the Company's 10-Q for the fiscal quarter ended December 31, 1994 (File No. 1-1822). 4.10d* - Amendment dated November 21, 1994 to the Missouri Natural Gas Division of Laclede Gas Company Dual Savings Plan; filed as Exhibit 4.2 to the Company's 10-Q for the fiscal quarter ended December 31, 1994 (File No. 1-1822). 4.10e* - Amendments to the Missouri Natural Gas Division of Laclede Gas Company Dual Savings Plan dated February 21, 1995; filed as Exhibit 4.3 to the Company's 10-Q for the fiscal quarter ended March 31, 1995 (File No. 1-1822). 4.10f* - Amendments to the Missouri Natural Gas Division of Laclede Gas Company Dual Savings Plan dated March 7, 1995; filed as Exhibit 4.4 to the Company's 10-Q for the fiscal quarter ended March 31, 1995 (File No. 1-1822). 4.10g* - Amendments to the Missouri Natural Gas Division of Laclede Gas Company Dual Savings Plan adopted by the Laclede Gas Company Board of Directors on May 25, 1995; filed as Exhibit 4.2 to the Company's 10-Q for the fiscal quarter ended June 30, 1995 (File No. 1-1822). 4.10h* - Amendments to the Missouri Natural Gas Division of Laclede Gas Company Dual Savings Plan dated June 26, 1995; filed as Exhibit 4.3 to the Company's 10-Q for the fiscal quarter ended June 30, 1995 (File No. 1-1822). 4.10i - Amendments to the Missouri Natural Gas Division of Laclede Gas Company Dual Savings Plan dated August 3, 1995. 60 4.11* - Rights Agreement dated as of April 17, 1986; filed on April 18, 1986 as Exhibit 1 to the Company's Form 8-A (File No. 1-1822). 10.01* - Incentive Compensation Plan of the Company, as amended; filed as Exhibit 10.03 to the Company's 10-K for the fiscal year ended September 30, 1989. * Incorporated herein by reference and made a part hereof. 52 INDEX TO EXHIBITS ----------------- Sequentially Exhibit Numbered No. Pages - ------- ------------ 10.01a* - Amendment adopted by the Board of Directors on July 26, 1990 to the Incentive Compensation Plan; filed as Exhibit 10.02a to the Company's 10-K for the fiscal year ended September 30, 1990 (File No. 1-1822). 10.01b* - Amendments adopted by the Board of Directors on August 23, 1990 to the Incentive Compensation Plan; filed as Exhibit 10.02b to the Company's 10-K for the fiscal year ended September 30, 1990 (File No. 1-1822). 10.01c* - Amendments to Laclede Gas Company Incentive Comp- ensation Plan, effective January 26, 1995; filed as Exhibit 10.3 to the Company's 10-Q for the fiscal quarter ended March 31, 1995 (File No. 1-1822). 10.02* - Senior Officers' Life Insurance Program of the Company, as amended; filed as Exhibit 10.03 to the Company's 10-K for the fiscal year ended September 30, 1990 (File No. 1-1822). 10.02a* - Certified copy of resolutions of the Company's Board of Directors adopted on June 27, 1991 amending the Senior Officers' Life Insurance Program; filed as Exhibit 10.01 to the Company's 10-Q for the fiscal quarter ended June 30, 1991 (File No. 1-1822). 10.02b* - Certified copy of resolutions of the Company's Board of Directors adopted on January 28, 1993 amending the Senior Officers' Life Insurance Program; filed as Exhibit 10.03 to the Company's 10-Q for the fiscal quarter ended March 31, 1993 (File No. 1-1822). 10.03* - Employees' Retirement Plan of Laclede Gas Company - Management Employees, effective as of July 1, 1990, as amended; filed as Exhibit 10.01 to the Company's 10-Q for the fiscal quarter ended June 30, 1990 (File No. 1-1822). 10.03a* - Amendment to the Employees' Retirement Plan of Laclede Gas Company - Management Employees adopted by the Board of Directors on September 27, 1990; filed as Exhibit 10.04a to the Company's 10-K for the fiscal year ended September 30, 1990 (File No. 1-1822). 10.03b* - Amendments, dated December 12, 1990 to the Employees' Retirement Plan of Laclede Gas Company - Management Employees; filed as Exhibit 10.04b to the Company's 10-K for the fiscal year ended September 30, 1990 (File No. 1-1822). 10.03c* - Amendment to the Employees' Retirement Plan of Laclede Gas Company - Management Employees dated January 10, 1994; filed as Exhibit 10.01 to the Company's 10-Q for the fiscal quarter ended December 31, 1993 (File No. 1-1822). * Incorporated herein by reference and made a part hereof. 53 INDEX TO EXHIBITS ----------------- Sequentially Exhibit Numbered No. Pages - ------- ------------ 10.03d* - Amendments to the Employees' Retirement Plan of Laclede Gas Company - Management Employees dated July 29, 1994; filed as Exhibit 10.3d to the Company's 10-K for the fiscal year ended September 30, 1994 (File No. 1-1822). 10.03e* - Amendments to the Employee's Retirement Plan of Laclede Gas Company-Management Employees dated February 21, 1995; filed as Exhibit 10.4 to the Company's 10-Q for the fiscal quarter ended March 31, 1995 (File No. 1-1822). 10.03f* - Amendments to the Employees' Retirement Plan of Laclede Gas Company-Management Employees dated March 7, 1995; filed as Exhibit 10.5 to the Company's 10-Q for the fiscal quarter ended March 31, 1995 (File No. 1-1822). 10.03g - Amendments to the Employees' Retirement Plan of Laclede Gas Company - Management Employees dated September 11, 1995. 62 10.04* - Laclede Gas Company Supplemental Retirement Benefit Plan, as amended and restated effective July 25, 1991; filed as Exhibit 10.05 to the Company's 10-K for the fiscal year ended September 30, 1991 (File No. 1-1822). 10.04a* - Trust Agreement with Boatmen's Trust Company, dated September 4, 1990; filed as Exhibit 10.05c to the Company's 10-K for the fiscal year ended September 30, 1990 (File No. 1-1822). 10.04b* - First Amendment to Laclede Gas Company Trust Agreement dated as of September 4, 1990, adopted by the Board of Directors on September 23, 1993; filed as Exhibit 10.05(b) to the Company's 10-K for the fiscal year ended September 30, 1993 (File No. 1-1822). 10.05* - Laclede Gas Company Salary Deferral Savings Plan, as amended through February 27, 1992; filed as Exhibit 10.08 to the Company's 10-Q for the fiscal quarter ended March 31, 1992 (File No. 1-1822). 10.05a* - Amendment to the Company's Salary Deferral Savings Plan, effective January 31, 1992, adopted by the Board of Directors on August 27, 1992; filed as Exhibit 10.08a to the Company's Form 10-K for the fiscal year ended September 30, 1992 (File No. 1-1822). 10.05b* - Amendment to the Company's Salary Deferral Savings Plan dated January 10, 1994; filed as Exhibit 10.02 to the Company's 10-Q for the fiscal quarter ended December 31, 1993 (File No. 1-1822). * Incorporated herein by reference and made a part hereof. 54 INDEX TO EXHIBITS ----------------- Sequentially Exhibit Numbered No. Pages - ------- ------------ 10.05c* - Amendments to the Company's Salary Deferral Savings Plan, dated July 29, 1994; filed as Exhibit 10.05c to the Company's 10-K for the fiscal year ended September 30, 1994 (File No. 1-1822). 10.05d* - Amendments to the Company's Salary Deferral Savings Plan effective August 1, 1994 adopted by the Board of Directors on August 25, 1994; filed as Exhibit 10.05d to the Company's 10-K for the fiscal year ended September 30, 1994 (File No. 1-1822). 10.05e* - Amendments to the Company's Salary Deferral Savings Plan dated September 27, 1994; filed as Exhibit 10.05e to the Company's 10-K for the fiscal year ended September 30, 1994 (File No. 1-1822). 10.05f* - Amendments to the Company's Salary Deferral Savings Plan dated February 21, 1995; filed as Exhibit 10.1 to the Company's 10-Q for the fiscal quarter ended March 31, 1995 (File No. 1-1822). 10.05g* - Amendments to the Company's Salary Deferral Savings Plan dated March 7, 1995; filed as Exhibit 10.2 to the Company's 10-Q for the fiscal quarter ended March 31, 1995 (File No. 1-1822). 10.05h* - Amendments to the Laclede Gas Company Salary Deferral Savings Plan dated June 26, 1995; filed as Exhibit 10.1 to the Company's 10-Q for the fiscal quarter ended June 30, 1995 (File No. 1-1822). 10.05i - Amendments to the Company's Salary Deferral Savings Plan dated August 3, 1995. 67 10.06* - Laclede Gas Company Deferred Compensation Plan for Non-Employee Directors dated March 26, 1981; filed as Exhibit 10.12 to the Company's 10-K for the fiscal year ended September 30, 1989 (File No. 1-1822). 10.06a* - First Amendment to the Company's Deferred Compen- sation Plan for Non-Employee Directors, adopted by the Board of Directors on July 26, 1990; filed as Exhibit 10.09a to the Company's 10-K for the fiscal year ended September 30, 1990 (File No. 1-1822). 10.06b* - Amendment to the Company's Deferred Compensation Plan for Non-Employee Directors, adopted by the Board of Directors on August 27, 1992; filed as Exhibit 10.09b to the Company's Form 10-K for the fiscal year ended September 30, 1992 (File No. 1-1822). * Incorporated herein by reference and made a part hereof. 55 INDEX TO EXHIBITS ----------------- Sequentially Exhibit Numbered No. Pages - ------- ------------ 10.07* - Agency Agreement Between Laclede Gas Company and Mississippi River Transmission Corporation dated August 26, 1993; filed as Exhibit 10.10 to the Company's 10-K for the fiscal year ended September 30, 1993 (File No. 1-1822). 10.07a* - Propane sales contract between Phillips 66 Company and Laclede Pipeline Company, dated February 2, 1989; filed as Exhibit 10.10d to the Company's 10-K for the fiscal year ended September 30, 1990 (File No. 1-1822). 10.07b* - Amendment, dated August 6, 1992, to Propane Sales Contract between the Company and Phillips 66 Company; filed as Exhibit 10.10c to the Company's Form 10-K for the fiscal year ended September 30, 1992 (File No. 1-1822). 10.07c* - Gas Purchase and Sales Agreement effective November 1, 1990 between the Company and ESCO Energy, Inc. and its affiliated companies; filed as Exhibit 10.10d to the Company's 10-K for the fiscal year ended September 30, 1991 (File No. 1-1822). 10.07d - Letter Agreement dated December 22, 1994 between Vesta Natural Gas Company and the Company. 69 10.08* - The Retirement Plan for Non-Employee Directors of Laclede Gas Company dated January 24, 1985; filed as Exhibit 10.01 to the Company's 10-Q for the fiscal quarter ended March 31, 1990 (File No. 1-1822). 10.08a* - First Amendment to Retirement Plan for the Company's Non-Employee Directors, adopted by the Board of Directors on July 26, 1990; filed as Exhibit 10.11a to the Company's 10-K for the fiscal year ended September 30, 1990 (File No. 1-1822). 10.08b* - Amendments to the Retirement Plan for Non-Employee Directors, adopted by the Board of Directors on January 23, 1992; filed as Exhibit 10.11 to the Company's 10-Q for the fiscal quarter ended March 31, 1992 (File No. 1-1822). 10.09* - Salient Features of the Laclede Gas Company Deferred Income Plan for Directors and Selected Executives, including amendments adopted by the Board of Directors on July 26, 1990; filed as Exhibit 10.12 to the Company's 10-K for the fiscal year ended September 30, 1991 (File No. 1-1822). 10.09a* - Amendment to the Company's Deferred Income Plan for Directors and Selected Executives, adopted by the Board of Directors on August 27, 1992; filed as Exhibit 10.12a to the Company's Form 10-K for the fiscal year ended September 30, 1992 (File No. 1-1822). * Incorporated herein by reference and made a part hereof. 56 INDEX TO EXHIBITS ----------------- Sequentially Exhibit Numbered No. Pages - ------- ------------ 10.10* - Form of Indemnification Agreement between the Company and its Directors and Officers; filed as Exhibit 10.13 to the Company's 10-K for the fiscal year ended September 30, 1990 (File No. 1-1822). 10.11* - Laclede Gas Company Management Continuity Protection Plan, as amended, effective at the close of business on January 27, 1994, by the Board of Directors; filed as Exhibit 10.1 to the Company's 10-Q for the fiscal quarter ended March 31, 1994 (File No. 1-1822). 10.12* - Laclede Gas Company Restricted Stock Plan for Non- Employee Directors, effective as of January 25, 1990; filed as Exhibit 10.03 to the Company's 10-Q for the fiscal quarter ended March 31, 1990 (File No. 1-1822). 10.12a* - Extension and amendment of the Laclede Gas Company Restricted Stock Plan for Non-Employee Directors adopted by the Board of Directors on November 17, 1994; filed as Exhibit 10.1 to the Company's 10-Q for the quarter ended December 31, 1994 (File No. 1-1822). 10.13* - Laclede Gas Company Trust Agreement with Boatmen's Trust Company, dated December 7, 1989; filed as Exhibit 10.16 to the Company's 10-K for the fiscal year ended September 30, 1990 (File No. 1-1822). 10.13a* - First Amendment to Laclede Gas Company Trust Agreement, adopted by the Board of Directors on July 26, 1990; filed as Exhibit 10.16a to the Company's 10-K for the fiscal year ended September 30, 1990 (File No. 1-1822). 10.13b* - Second Amendment to Laclede Gas Company Trust Agreement dated as of December 7, 1989, adopted by the Board of Directors on September 23, 1993; filed as Exhibit 10.16b to the Company's 10-K for the fiscal year ended September 30, 1993 (File No. 1-1822). 10.14* - Salient Features of the Laclede Gas Company Deferred Income Plan II for Directors and Selected Executives adopted by the Board of Directors on September 23, 1993; filed as Exhibit 10.17 to the Company's 10-K for the fiscal year ended September 30, 1993 (File No. 1-1822). 10.15* - January 18, 1995 line of credit agreement with Mercantile Bank of St. Louis, N.A.; filed as Exhibit 10.8 to the Company's 10-Q for the fiscal quarter ended March 31, 1995 (File No. 1-1822). * Incorporated herein by reference and made a part hereof. 57 INDEX TO EXHIBITS ----------------- Sequentially Exhibit Numbered No. Pages - ------- ------------ 10.16* - January 18, 1995 line of credit agreement with The Boatmen's National Bank of St. Louis; filed as Exhibit 10.6 to the Company's 10-Q for the fiscal quarter ended March 31, 1995 (File No. 1-1822). 10.17* - January 18, 1995 line of credit agreement with Commerce Bank, N.A.; filed as Exhibit 10.7 to the Company's 10-Q for the fiscal quarter ended March 31, 1995 (File No. 1-1822). 10.18* - January 18, 1995 line of credit agreement with Chemical Bank; filed as Exhibit 10.9 to the Company's 10-Q for the fiscal quarter ended March 31, 1995 (File No. 1-1822). 10.19* - October 18, 1993 Supplemental Line of Credit Agreement with Chemical Bank, The Boatmen's National Bank of St. Louis and Mercantile Bank, N.A.; filed as Exhibit 10.6 to the Company's 10-Q for the quarter ended March 31, 1994 (File No. 1-1822). 10.19a* - Amendment and Extension dated April 18, 1994 of Supplemental Line of Credit Agreement dated October 18, 1993 among Laclede Gas Company, Chemical Bank, The Boatmen's National Bank of St. Louis and Mercantile Bank of St. Louis National Association; filed as Exhibit 10 to the Company's 10-Q for the quarter ended June 30, 1994 (File No. 1-1822). 10.19b* - Amendment and Further Extension dated August 18, 1994 of Supplemental Line of Credit Agreement dated October 18, 1993 among Laclede Gas Company, Chemical Bank, The Boatmen's National Bank of St. Louis and Mercantile Bank of St. Louis National Association; filed as Exhibit 10.19b to the Company's 10-K for the fiscal year ended September 30, 1994 (File No. 1-1822). 10.19c* - Amendment and Further Extension dated October 18, 1994 of Supplemental Line of Credit Agreement dated October 18, 1993, as amended and/or extended by letters dated April 18, 1994 and August 18, 1994, among Laclede Gas Company, Chemical Bank, The Boatmen's National Bank of St. Louis and Mercantile Bank of St. Louis National Association; filed as Exhibit 10.2 to the Company's 10-Q for the fiscal quarter ended December 31, 1994 (File No. 1-1822). * Incorporated herein by reference and made a part hereof. 58 INDEX TO EXHIBITS ----------------- Sequentially Exhibit Numbered No. Pages - ------- ------------ 10.19d* - Amendment and Further Extension dated March 1, 1995 of Supplemental Line of Credit Agreement dated October 18, 1993 as amended and/or extended by letters dated April 18, 1994, August 18, 1994 and October 18, 1994, among Laclede Gas Company, Chemical Bank, The Boatmen's National Bank of St. Louis, and Mercantile Bank of St. Louis National Association; filed as Exhibit 10.2 to the Company's 10-Q for the fiscal quarter ended June 30, 1995 (File No. 1-1822). 10.19e - Amendment and Further Extension dated September 1, 1995 of Supplemental Line of Credit Agreement dated October 18, 1993, as amended and/or extended by letters dated April 18, 1994, August 18, 1994, October 18, 1994 and March 1, 1995 among Laclede Gas Company, Chemical Bank, The Boatmen's National Bank of St. Louis, and Mercantile Bank of St. Louis National Association. 73 12 - Ratio of Earnings to Fixed Charges. 88 21 - Subsidiaries of the Registrant. 89 23 - Consent of Independent Public Auditors 90 27 - Financial Data Schedule UT 91 * Incorporated herein by reference and made a part hereof. 59 EX-4.10I 2 Exhibit 4.10i Date: August 3, 1995 Robert C. Jaudes (as Chairman of the Board, President and Chief Executive Officer of Laclede Gas Company) and Robert J. Carroll (as Senior Vice President - Finance of Laclede Gas Company), pursuant to the resolutions adopted by the Board of Directors on July 27, 1995, which resolutions, among other things, granted to the President and any Senior Vice President of the Company the authority to: (1) amend any or all of the benefit plans of the Company insofar as they relate to employees of the Missouri Natural Gas Division of the Company (the "Missouri Natural Gas Division") to reflect the benefits to be afforded under such plans to members of the new bargaining unit at the Missouri Natural Gas Division under the new collective bargaining agreement effective July 15, 1995 between the Missouri Natural Gas Division and the Oil, Chemical and Atomic Workers Union, Local Union No. 5-884; and (2) execute any and all documents effectuating, implementing and/or evidencing any and all such plan amendments; do hereby amend the Missouri Natural Gas Division of Laclede Gas Company Dual Savings Plan as set forth in the attached exhibit, such amendments to be effectuated and evidenced by our signatures on said amendments. 60 AMENDMENTS TO THE MISSOURI NATURAL GAS DIVISION OF LACLEDE GAS COMPANY DUAL SAVINGS PLAN -------------------------------------- 1. The first paragraph of Section I(o) is hereby amended, effective July 15, 1995, to read as follows: ""Employee" means any employee of the Missouri Natural Gas Division of the Company who is covered under a collective bargaining agreement between the Missouri Natural Gas Division of Laclede Gas Company and the Oil, Chemical and Atomic Workers International Union, Local Union No. 5-884." 2. A new unnumbered paragraph is hereby added at the end of subsection (i) of Section VIII, effective July 15, 1995, to read as follows: "If an employee of the Missouri Natural Gas Division of Laclede Gas Company participating in the Missouri Natural Gas Division of Laclede Gas Company Savings Plan ("MoNat Savings Plan") and/or the Laclede Gas Company Salary Deferral Savings Plan ("Salary Deferral Plan") becomes covered under a collective bargaining agreement between the Missouri Natural Gas Division of Laclede Gas Company and the Oil, Chemical and Atomic Workers International Union, Local Union No. 5-884, such employee shall have his Participant Deposit and Company Contribution Accounts transferred from the MoNat Savings Plan into the Post-Tax Deposit and Post-Tax Match Accounts, respectively, in this Plan and shall have his Salary Deferral Contributions and Matching Contributions, including any unpaid loan balances, in the Salary Deferral Plan transferred into the Pre-Tax Deposit Account and Pre-Tax Match Account, respectively, in this Plan. Upon such transfer into this Plan, such Participant's Account shall be allocated among the investment funds in the same respective manner in which they were allocated in the MoNat Savings Plan and the Salary Deferral Plan. The Participant shall be vested in his Accounts in this Plan in the same amounts and in the same manner as if his funds had been on deposit in the MoNat Savings Plan and the Salary Deferral Plan from the original date of contribution. The Participant shall be permitted to designate his Participant Matchable Deposits and Non-Matchable Deposits at the time of the transfer; however, any other changes in elections shall be subject to the provisions of this Plan." ROBERT C. JAUDES ------------------------------- Title: Chairman, President and Chief Executive Officer ROBERT J. CARROLL ------------------------------- Title: Senior Vice President - Finance 61 EX-10.03G 3 Exhibit 10.03g Date: September 11, 1995 Robert C. Jaudes (as Chairman of the Board, President and Chief Executive Officer of Laclede Gas Company), and Gerald T. McNeive, Jr. (as Senior Vice President - Finance of Laclede Gas Company), pursuant to resolutions adopted by the Board of Directors on August 28, 1986, which resolutions, among other things, granted to any two executive officers who hold one of the following offices: Chairman of the Board; President; Executive Vice President; or Senior Vice President; the authority to amend any or all of the benefit plans and/or related trust agreements of the Company (collectively the "Plans") to the extent such amendments deal with changes necessary or appropriate: (1) to comply with, or obtain the benefit of, applicable laws and/or regulations, as amended from time to time; (2) to reflect minor or routine administrative factors; (3) to clarify the meaning of any of the provisions of the Plans; and/or (4) to evidence changes in then existing Plans to reflect the interrelationship thereof with newly adopted Plans or amendments to Plans, which newly adopted Plans or amendments affect the terms of such other then existing Plans; do hereby amend the Employees' Retirement Plan of Laclede Gas Company - Management Employees as set forth in the attached exhibit, such amendment to be effectuated and evidenced by our signatures on said exhibit. 62 AMENDMENTS TO THE EMPLOYEES' RETIREMENT PLAN OF LACLEDE GAS COMPANY - MANAGEMENT EMPLOYEES --------------------------------------------- 1. The last sentence of the first paragraph of Section 1.1.10. is hereby replaced in its entirety, effective October 1, 1994, with the following: "Beginning October 1, 1989 and before October 1, 1994, Normal Compensation is limited to $200,000 per Plan Year, which amount is subject to annual adjustment by the U. S. Treasury Department. Effective October 1, 1994, Normal Compensation is limited to $150,000 per Plan Year, which amount is subject to annual adjustment by the U. S. Treasury Department." 2. Section 3.4 is hereby replaced in its entirety, effective October 1, 1994, with the following: "Section 3.4 - Accrued Benefit ----------------------------- An Employee, other than an Employee whose Normal Compensation is reduced by reason of Section 1.1.10., shall have a monthly Accrued Benefit, which includes without limitation the monthly amount, if any, to which the Employee is entitled under the Insured Plan, as of any date, computed as the product of A. multiplied by the sum of B. and C.: A. The number of Management Plan Years of Credited Service (including fractions of a year) for which the Employee has credit. B. 1.70% times the Employee's Average Final Compensation. C. 0.30% times the excess, if any, of (1) over (2): (1) the Employee's Average Final Compensation; and (2) the Employee's Covered Compensation. An Employee whose Normal Compensation is reduced by reason of Section 1.1.10. shall have a monthly Accrued Benefit, including the monthly amount, if any, to which the Employee is entitled under the Insured Plan, which monthly Accrued Benefit will be the greater of the Accrued Benefit as calculated under A. or B. below: A. The Employee's Accrued Benefit as calculated above in this section, except that Normal Compensation for all periods prior to October 1, 1994 shall be limited to $150,000, or 63 B. The sum of: (1) The Employee's Accrued Benefit, as calculated under the first paragraph of this Section 3.4, as of September 30, 1994 (the "Fresh Start Date"), frozen in accordance with regulation Section 1.401(a)(4)-13 of the Code, and (2) The Employee's Accrued Benefit computed, with Normal Compensation limited to $150,000, as adjusted, as the product of (i) multiplied by the sum of (ii) and (iii): (i) The number of Management Plan Years of Credited Service after the Fresh Start Date for which the Employee has credit. (ii) 1.70% times the Employee's Average Final Compensation. (iii) 0.30% times the excess, if any, of the Employee's Average Final Compensation over the Employee's Covered Compensation. The Accrued Benefit of an Employee who has received minimum required distributions pursuant to Section 15.5 of the Plan shall be reduced, but not below zero, by the Actuarial Equivalent of all the paid minimum required distributions." 3. Section 14.7 is hereby replaced in its entirety, effective October 1, 1994, with the following: "Section 14.7 - Restrictions on Highest Paid ------------------------------------------- A. Restricted Employees are those Employees or former Employees who are or were covered by the Plan and who constitute the top twenty-five (25) highest paid employees of the Company. The top twenty-five (25) employees will be determined based on compensation of all employees during the life of the Company, which compensation is defined by Internal Revenue Service Regulation Section 1.414(s)- 1(c). B. The payment of benefits to or on behalf of a Restricted Employee shall not exceed an amount (the "Nonrestricted Amount") equal to the payments that would be made to or on behalf of the Restricted Employee in that year under: (1) a straight life annuity that is the actuarial equivalent of the accrued benefit and other benefits to which the Restricted Employee is entitled under the Plan (other than a social security supplement); and (2) a social security supplement, if any, that the Restricted Employee is entitled to receive. 2 64 Restricted Amount means the excess of the accumulated amount of benefits that would have been payable to or on behalf of the Restricted Employee but for the limits set forth in the immediately preceding unnumbered paragraph of this Section 14.7B., over the accumulated amount of the Restricted Employee's Nonrestricted Amount. The accumulated Restricted and Nonrestricted Amounts shall be increased by a reasonable amount of interest from the date each such distribution was made (or would have been made) until the date for the determination of the Restricted Amount. C. The restrictions on the payment of benefits to a Restricted Employee will not apply if any one of the following conditions is satisfied. (1) After taking into account payment to or on behalf of the Restricted Employee of all benefits payable to or on behalf of that Restricted Employee under the Plan, the value of Plan assets equals or exceeds one hundred ten percent (110%) of current liabilities, as specified in Code Section 412(l)(7). Current liabilities will be calculated using the interest rate to determine costs as specified in the Plan. The current liability for each Employee with less than five Years of Credited Service shall be adjusted (reduced) by 20% increments for each Year of Credited Service which is less than five. (2) The value of the benefits payable to or on behalf of the Restricted Employee is less than one percent (1%) of the Plan's current liabilities before the distribution is made. (3) The value of the benefits payable to or on behalf of the Restricted Employee does not exceed $3,500 as provided by Code Section 411(a)(11)(A). D. The restrictions on the payment of benefits to a Restricted Employee will terminate upon the occurrence of one of the conditions as provided in C. above or as then specified by the Secretary of Treasury, and distribution, including interest as provided in B. above, will be made as soon as administratively practicable thereafter. In addition, distribution of the Restricted Amount will be permitted only if the Restricted Employee agrees in writing to repay any Restricted Amounts to the Plan as permitted by rules and regulations promulgated by the Secretary of Treasury." 4. A new Section 1.1.40. is hereby added, effective August 5, 1993, to read as follows: "40. "FMLA" means the Family and Medical Leave Act of 1993, as the same may be amended from time to time, and the regulations promulgated thereunder." 3 65 5. A new sentence is hereby added to the end of Section 2.1, effective August 5, 1993, to read as follows: "For eligibility purposes, an Employee who is absent from work due to a leave of absence under the FMLA shall receive credit for the Hours of Service which otherwise would have been credited to such individual but for such absence." 6. Section 2.6 is hereby replaced in its entirety, effective August 5, 1993, with the following: "An Employee shall incur a Break in Service for any calendar year in which he does not have more than 500 Hours of Service; provided that for purposes of determining whether a Break in Service has occurred, an Employee who is absent from work due to a leave of absence under the FMLA shall receive credit for the Hours of Service which otherwise would have been credited to such individual but for such absence." 7. Paragraph G. of Section 3.7 is hereby replaced in its entirety, effective October 1, 1989, with the following: "G. Solely for the purpose of paragraph D. above, the determination of Actuarial Equivalent value shall include an interest discount factor of five percent (5%). Solely for the purpose of paragraph E. above, the determination of Actuarial Equivalent value shall include an interest discount factor of the lesser of five percent (5%) or the amount determined in accordance with Section 1.1.15." ROBERT C. JAUDES --------------------------------- Title: Chairman, President and Chief Executive Officer GERALD T. MCNEIVE, JR. --------------------------------- Title: Senior Vice President - Finance 4 66 EX-10.05I 4 Exhibit 10.05i Date: August 3, 1995 Robert C. Jaudes (as Chairman of the Board, President and Chief Executive Officer of Laclede Gas Company) and Robert J. Carroll (as Senior Vice President - Finance of Laclede Gas Company), pursuant to the resolutions adopted by the Board of Directors on July 27, 1995, which resolutions, among other things, granted to the President and any Senior Vice President of the Company the authority to: (1) amend any or all of the benefit plans of the Company insofar as they relate to employees of the Missouri Natural Gas Division of the Company (the "Missouri Natural Gas Division") to reflect the benefits to be afforded under such plans to members of the new bargaining unit at the Missouri Natural Gas Division under the new collective bargaining agreement effective July 15, 1995 between the Missouri Natural Gas Division and the Oil, Chemical and Atomic Workers Union, Local Union No. 5-884; and (2) execute any and all documents effectuating, implementing and/or evidencing any and all such plan amendments; do hereby amend The Laclede Gas Company Salary Deferral Savings Plan as set forth in the attached exhibit, such amendments to be effectuated and evidenced by our signatures on said amendments. 67 AMENDMENTS TO THE LACLEDE GAS COMPANY SALARY DEFERRAL SAVINGS PLAN ------------------------------------- 1. The first unnumbered paragraph of Section 10.5 is hereby amended effective April 15, 1989, to read as follows: "If an Employee who participates in this Plan becomes a "Contract Employee" (as hereinafter defined) eligible to participate in the Laclede Gas Company Wage Deferral Savings Plan (the "Wage Deferral Savings Plan"), such Employee's Account in this Salary Deferral Savings Plan, including any unpaid loan balances, shall be transferred to the Wage Deferral Savings Plan, and such Employee shall thereupon cease to participate in this Salary Deferral Savings Plan. Such transfer shall be effective on the first day of the calendar month following the effective date on which such Employee becomes a Contract Employee, and such transfer shall be subject to the terms, conditions and provisions of the Wage Deferral Savings Plan." 2. A new unnumbered paragraph is hereby added after the first unnumbered paragraph of Section 10.5, effective July 15, 1995, to read as follows: "If an Employee who participates in this Plan becomes a "Contract Employee" (as hereinafter defined) eligible to participate in the Missouri Natural Gas Division of Laclede Gas Company Dual Savings Plan (the "MoNat Dual Savings Plan"), such Employee's Salary Deferral and Matching Contributions in this Salary Deferral Savings Plan, including any unpaid loan balances, shall be transferred to the Pre-Tax Deposit and Pre-Tax Match Accounts, respectively, of the MoNat Dual Savings Plan, and such Employee shall thereupon cease to participate in this Salary Deferral Savings Plan. Such transfer shall be subject to the terms, conditions and provisions of the MoNat Dual Savings Plan, except that the Contract Employee shall be vested in his Accounts in the MoNat Dual Savings Plan in the same amount and in the same manner as if his funds had been on deposit in the Salary Deferral Savings Plan from the original date of contribution." ROBERT C. JAUDES ------------------------------- Title: Chairman, President and Chief Executive Officer ROBERT J. CARROLL ------------------------------- Title: Senior Vice President - Finance 68 EX-10.07D 5 December 22, 1994 Mr. David J. Tudor Executive Vice President Vesta Natural Gas Company 320 ONEOK Plaza 100 West Fifth Street Tulsa, Oklahoma 74103 Dear David: This letter (the "Settlement Letter") states the principles of the agreement between Vesta Natural Gas Company ("VNG") and Laclede Gas Company ("Laclede") to resolve their respective present disputes, claims or causes of action arising out of or related to the subject matter (the "Subject Matter") of the November 1, 1990 Gas Purchase and Sales Agreement (the "Agreement") by and between Laclede and ESCO Energy, Inc. (now known as Vesta Natural Gas Company). Effective November 1, 1990 Laclede and VNG entered into the Agreement, pursuant to which Laclede was to purchase up to 55,000 MMBtu/day of natural gas from VNG and VNG was to sell the same to Laclede for a term beginning November 1, 1990 and for a primary term ending October 31, 2000. Laclede and VNG have conducted natural gas business pursuant to the Agreement since November 1, 1990. The Agreement contains a section (Article VI, paragraph 3), which Laclede and VNG have referred to as the "Pricing Cap Provision." The Pricing Cap Provision delineates a method pursuant to which the "Contract Year" total aggregate price paid by Laclede to VNG is limited to the cost Laclede ". . . would have incurred during the same period had all Base Volumes been purchased from MRT under its Rate Schedule CD-1." The initials MRT refer to Mississippi River Transmission Corporation which is an interstate pipeline company that delivers gas to Laclede. On November 1, 1993 MRT revised its interstate pipeline tariff pursuant to Federal Energy Regulatory Commission Order No. 636 ("FERC Order 636"). The revised tariff does not reflect an "MRT Rate CD-1." FERC Order 636 prohibits an interstate natural gas pipeline from establishing or charging a rate in the nature of the MRT Rate CD-1, which was a "bundled rate." Laclede and VNG have asserted differing opinions about the effect of FERC Order 636 on the Pricing Cap Provision. VNG has asserted that the prohibition of a "bundled rate" has removed the MRT Rate CD-1 and therefore the Pricing Cap Provision no longer is applicable. Laclede has asserted that 69 the Pricing Cap Provision is still applicable, however that a "restructured" Pricing Cap must be applied. Laclede and VNG also differ on their respective obligations under the Agreement (Article VI, paragraph 6) regarding transportation under the Agreement on and after November 1, 1996. Throughout the course of such disputes, assertions have arisen as to other claims or causes of action related to the Subject Matter. In consideration of the mutual promises and other considerations stated herein, Laclede and VNG have agreed to settle their Pricing Cap Provision dispute and other present disputes, claims or causes of action of any kind in any way related to the Subject Matter in accordance with the following terms and conditions: 1. This Settlement Letter is specifically contingent upon the "Closing" of the Missouri Pipeline Company and Missouri Gas Company asset sale to Utilicorp United, Inc., as addressed in Missouri Public Service Commission Case No. GM-94-252, in which Laclede is an Intervenor (the "Closing"). In the event the Closing does not occur on or before 5:00 P.M., C.S.T., January 31, 1995, then this Settlement Letter shall be deemed null and void and neither VNG nor Laclede shall be bound by the terms and conditions set forth herein. 2. As final and total settlement of VNG's refund obligation under the Agreement through October 31, 1994, VNG agrees to pay Laclede and Laclede agrees to accept $2,410,000 (the "Settlement Payment"). The Settlement Payment shall be paid by wire transfer to be received by Laclede within one business day after the date of "Closing". 3. Effective November 1, 1994, Article VI of the Agreement shall be revised as follows: a) Amend paragraph 3 to limit VNG's refund obligations for the contract years beginning November 1, 1994 and November 1, 1995 to $2.1 million and $2.0 million respectively. b) Amend paragraph 3 to provide that the calculation and comparison of costs required by such paragraph 3 shall be made comparing: (i) Laclede's actual gas costs for delivery of gas from the MRT system, calculated in accordance with the method reflected in Amended Schedule II (which is attached and replaces Schedule II attached to the Agreement); with (ii) the annual calculation of Seller's charges to Buyer calculated in accordance with Schedule I attached to the Agreement. Each contract quarter, Laclede shall be required to provide VNG with comparison of cost data and such other information as may be reasonably necessary for VNG to ascertain the then current status of any refund exposure. Upon reasonable notice, and no more than once a year, VNG shall have the right to audit reasonably Laclede's records to verify the accuracy of data supporting the comparison calculations, including, but not limited to, gas purchase costs and MRT pipeline statements. 2 70 Such audit right may be exercised only by VNG utilizing a third party mutually agreeable to VNG and Laclede. Any costs related to such audit will be borne by VNG. c) Amend paragraph 3 to provide that refunds for contract years beginning November 1, 1994 and November 1, 1995 shall be accomplished by the application of an invoice credit, equal to the total refund due for the contract year, to the invoices presented to Laclede by VNG for October 1995 and October 1996 deliveries, respectively. Paragraph 3 shall be further amended to provide that Laclede shall have the right to set off any such refunds against amounts due on any invoices received by Laclede under the Agreement in the event VNG violates the Agreement, ceases to be engaged in the natural gas marketing business, is placed into a judicially administered receivership, files for bankruptcy, or is determined to be bankrupt by a Court of competent jurisdiction at any time before the invoice for October, 1996 becomes due and payable. d) Amend paragraph 1 to reflect Laclede's agreement to pay VNG 2.0 cents per MMBtu in addition to the charges set forth in such paragraph. The additional fee shall become effective November 1, 1994. Such additional charges shall not be included in the calculation and comparison of costs required by Article VI, paragraph 3, but will be included in VNG's monthly invoice to Laclede. e) Amend paragraph 6 to provide that in the event the parties are, for any reason whatsoever, unable to agree on price redetermination within the period specified therein, Laclede shall have no further purchase or transportation obligations under the Agreement on or after November 1, 1996, and VNG shall have no further sales or transportation obligations to Laclede under the Agreement on or after November 1, 1996. 4. VNG commits to Laclede: (a) that VNG's firm transportation on Missouri Pipeline Company through October 31, 1996 is to be provided at rates no greater than those reflected in the tariffs filed with the Missouri Public Service Commission as of November 1, 1994; and (b) that through October 31, 1996, VNG's transportation service on Panhandle Eastern Pipe Line Company ("PEPL") is to be provided under PEPL's Rate Schedule EFT. During such time, Laclede's charges for base volumes under the Agreement attributable to Panhandle services shall not exceed $7.7 million annually, including surcharges and exclusive of fuel. If the rates billed VNG by Panhandle result in total charges of less than $7.7 million for base volumes, VNG will reduce the rates billed Laclede to reflect the lower total charges, as required by the existing Agreement. 5. Laclede agrees not to seek judicial review of the Missouri Public Service Commission's October 12, 1994 Report and Order in Case No. GM- 94-252 if the Closing occurs as provided for in paragraph number 1 hereof and the payment of $2,410,000 is received by Laclede in accordance with paragraph 2 hereof. Until such time as the Closing occurs and the Settlement Payment has been received by Laclede, Laclede may proceed with such filings and/or procedural actions, including administrative rehearing and judicial review, as are necessary to protect its previously asserted legal positions. In the event such 3 71 filings are made, Laclede agrees to withdraw the same and to seek termination of the proceedings upon receipt of the Settlement Payment. 6. This Settlement Letter is a compromise and settlement of all present disputes, claims or causes of action between VNG and Laclede related to the entire Subject Matter. It is not intended to be, nor shall it be construed as, an admission on the part of either party that its respective interpretations were or are incorrect, or otherwise an admission of liability regarding any dispute, claim or cause of action between them related to the Subject Matter. 7. The Agreement shall be amended as specifically set forth in this Settlement Letter. All other provisions of the Agreement shall remain in full force and effect. 8. Laclede, VNG, and their respective successors and assigns, shall be bound by this letter unless and until it is expressly superseded by a more formal amendment to the Agreement, and any provisions of this Settlement Letter not expressly superseded by such formal amendment to the Agreement shall survive. Please indicate VNG's agreement with the above by signing this letter on the line below. VESTA NATURAL GAS COMPANY LACLEDE GAS COMPANY By: DAVID J. TUDOR By: KENNETH J. NEISES ----------------------------- --------------------------- David J. Tudor Kenneth J. Neises Executive Vice President Senior Vice President Federal Regulatory Affairs 4 72 EX-10.19E 6 Exhibit 10.19e September 1, 1995 Chemical Bank 270 Park Avenue New York, New York 10017 Attention: Mr. Robert Gillham The Boatmen's National Bank of St. Louis One Boatmen's Plaza 800 Market Street St. Louis, Missouri 63166-0236 Attention: Mr. Thomas Guyton Mercantile Bank of St. Louis National Association Eighth & Locust, 12th Floor P.O. Box 524 St. Louis, Missouri 63101 Attention: Mr. John A. Holland Ladies and Gentlemen: Re: Amendment and Further Extension of line of credit agreement dated October 18, 1993, as amended and extended by letter of Amendment and Extension dated April 18, 1994, and further amended and extended by letters of Amendment and Further Extension dated August 18, 1994, October 18, 1994 and March 1, 1995 and further amended by letter dated May 23, 1995 among Laclede Gas Company ("Laclede"), Chemical Bank ("Chemical"), The Boatmen's National Bank of St. Louis ("Boatmen's") and Mercantile Bank of St. Louis National Association ("Mercantile") (said banks being hereinafter collectively called the "Banks" and said line of credit agreement, as thus amended and extended, being hereinafter called the "Line of Credit Agreement"). This amendatory agreement will confirm our agreement to further amend and extend the above-referenced Line of Credit Agreement from September 1, 1995 to November 1, 1995 on the same terms and conditions set forth in the original Line of Credit Agreement as amended and extended on April 18, 1994, August 18, 1994, October 18, 1994 and March 1, 1995 and further amended by letter dated May 23, 1995; subject only to the modifications expressly set forth in numbered Paragraphs 1 through 5 below, each of which Paragraphs shall be effective on September 1, 1995. 73 Chemical Bank The Boatmen's National Bank of St. Louis Mercantile Bank of St. Louis National Association September 1, 1995 2 1. NEW MAXIMUM AMOUNTS OF ADVANCES. The combined ------------------------------- aggregate principal amount of Advances at any time outstanding from any Bank under the Line of Credit Agreement shall not, on or after September 1, 1995, exceed the amount set forth opposite the name of such Bank below (such Bank's "Maximum Amount"), and shall be in a combined aggregate principal amount at any time outstanding which shall not exceed $50 million: Name of Bank Maximum Amount ------------ -------------- Chemical $25,000,000 Boatmen's $12,500,000 Mercantile $12,500,000 2. NEW TERMINATION DATE. The phrase "Termination Date" -------------------- as defined in the Line of Credit Agreement is hereby amended from September 1, 1995 to November 1, 1995. Accordingly, all references in the Line of Credit Agreement to the Termination Date shall hereafter refer to November 1, 1995. 3. NEW FORM OF NOTE. Each executed Note in the form of ---------------- Exhibit A to the Line of Credit Agreement, as previously amended, as to which no sums are then due and payable thereunder shall be returned to Laclede immediately for cancellation, upon the holder Bank's receipt of an executed Note to that Bank in the form attached as Exhibit A to this amendatory agreement. 4. ABSENCE OF MATERIAL ADVERSE CHANGE. The making of ---------------------------------- Advances under the Line of Credit Agreement as amended by this letter agreement is also subject to the absence of any material adverse change since June 30, 1995, in the financial condition of Laclede. 5. INTEREST RATE ON LIBO RATE ADVANCES; FACILITY FEE RATE. ------------------------------------------------------ The interest rate on LIBO Rate Advances and the Facility Fee shall remain as specified respectively in Paragraphs 3 and 4 of the letter of Amendment and Extension dated August 18, 1994. 6. RATIFICATION OF REMAINDER OF LINE OF CREDIT AGREEMENT. ----------------------------------------------------- Subject only to the amendments expressly set forth in numbered Paragraphs 1 through 5 above, the Line of Credit Agreement is hereby ratified, confirmed and approved in all respects. 74 Chemical Bank The Boatmen's National Bank of St. Louis Mercantile Bank of St. Louis National Association September 1, 1995 3 Please indicate your acceptance of this amendment and extension by signing in the appropriate space below and returning to Laclede Gas Company the enclosed duplicate of the original of this letter. This letter may be executed in counterparts, each of which shall be an original, and all of which when taken together, shall constitute one agreement which shall amend and extend the Line of Credit Agreement as hereinbefore provided. Very truly yours, LACLEDE GAS COMPANY By: VERNON O. STEINBERG Name: Vernon O. Steinberg Title: V.P.-Treas. & Asst. Secy. Accepted and Agreed to as of the date first written above. CHEMICAL BANK By: RONALD POTTER Name: Ronald Potter Title: Managing Director THE BOATMEN'S NATIONAL BANK OF ST. LOUIS By: Name: Title: MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION By: Name: Title: 75 Chemical Bank The Boatmen's National Bank of St. Louis Mercantile Bank of St. Louis National Association September 1, 1995 3 Please indicate your acceptance of this amendment and extension by signing in the appropriate space below and returning to Laclede Gas Company the enclosed duplicate of the original of this letter. This letter may be executed in counterparts, each of which shall be an original, and all of which when taken together, shall constitute one agreement which shall amend and extend the Line of Credit Agreement as hereinbefore provided. Very truly yours, LACLEDE GAS COMPANY By: VERNON O. STEINBERG Name: Vernon O. Steinberg Title: V.P.-Treas. & Asst. Secy. Accepted and Agreed to as of the date first written above. CHEMICAL BANK By: Name: Title: THE BOATMEN'S NATIONAL BANK OF ST. LOUIS By: THOMAS C. GUYTON Name: Thomas C. Guyton Title: Vice President MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION By: Name: Title: 76 Chemical Bank The Boatmen's National Bank of St. Louis Mercantile Bank of St. Louis National Association September 1, 1995 3 Please indicate your acceptance of this amendment and extension by signing in the appropriate space below and returning to Laclede Gas Company the enclosed duplicate of the original of this letter. This letter may be executed in counterparts, each of which shall be an original, and all of which when taken together, shall constitute one agreement which shall amend and extend the Line of Credit Agreement as hereinbefore provided. Very truly yours, LACLEDE GAS COMPANY By: VERNON O. STEINBERG Name: Vernon O. Steinberg Title: V.P.-Treas. & Asst. Secy. Accepted and Agreed to as of the date first written above. CHEMICAL BANK By: Name: Title: THE BOATMEN'S NATIONAL BANK OF ST. LOUIS By: Name: Title: MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION By: JOHN HOLLAND Name: John Holland Title: Vice President 77 EXHIBIT A NOTE $ ,000,000 New York, New York September 1, 1995 FOR VALUE RECEIVED, the undersigned, LACLEDE GAS COMPANY, a Missouri corporation (the "Company"), hereby promises to pay to the order of (the "Bank"), at the office of the Bank at : (a) on the last day of each Interest Period, as defined in the letter agreement dated as of October 18, 1993, as amended by amendatory agreements dated April 18, 1994, August 18, 1994, October 18, 1994, March 1, 1995 and May 23, 1995, and as further amended by an amendatory agreement dated September 1, 1995 (said letter agreement, as thus amended, being hereinafter called the "Line Letter"), between the Company, the Bank and certain other banks, the aggregate unpaid principal amount of each Advance (as defined in the Line Letter) made by the Bank to which such Interest Period relates; and (b) on November 1, 1995, the lesser of $ and the aggregate principal amount of all Advances made by the Bank under the Line Letter and remaining unpaid; in each case in lawful money of the United States of America in immediately available funds. The undersigned promises to pay interest on the unpaid principal amount of each Advance at the rates and payable on the dates provided for in the Line Letter. The Company hereby waives diligence, presentment, demand, protest and notice of any kind. The nonexercise by the holder of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance. All Advances by the Bank evidenced by this Note, the interest rates applicable thereto and all payments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; PROVIDED, HOWEVER, that the failure of the holder hereof to make such a notation or any error in such a notation shall not affect the obligations of the Company under this Note. This Note shall be construed in accordance with and governed by the laws of the State of New York and any applicable laws of the United States of America. LACLEDE GAS COMPANY By: VERNON O. STEINBERG Name: Vernon O. Steinberg Title: V.P. Treas. & Asst. Secy. 78 NOTE $25,000,000 New York, New York September 1, 1995 FOR VALUE RECEIVED, the undersigned, LACLEDE GAS COMPANY, a Missouri corporation (the "Company"), hereby promises to pay to the order of CHEMICAL BANK (the "Bank"), at the office of the Bank at 270 Park Avenue, 8th Floor, New York, New York 10017: (a) on the last day of each Interest Period, as defined in the letter agreement dated as of October 18, 1993, as amended by amendatory agreements dated April 18, 1994, August 18, 1994, October 18, 1994, March 1, 1995 and May 23, 1995, and as further amended by an amendatory agreement dated September 1, 1995 (said letter agreement, as thus amended, being hereinafter called the "Line Letter"), between the Company, the Bank and certain other banks, the aggregate unpaid principal amount of each Advance (as defined in the Line Letter) made by the Bank to which such Interest Period relates; and (b) on November 1, 1995, the lesser of $25,000,000 and the aggregate principal amount of all Advances made by the Bank under the Line Letter and remaining unpaid; in each case in lawful money of the United States of America in immediately available funds. The undersigned promises to pay interest on the unpaid principal amount of each Advance at the rates and payable on the dates provided for in the Line Letter. The Company hereby waives diligence, presentment, demand, protest and notice of any kind. The nonexercise by the holder of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance. All Advances by the Bank evidenced by this Note, the interest rates applicable thereto and all payments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; PROVIDED, HOWEVER, that the failure of the holder hereof to make such a notation or any error in such a notation shall not affect the obligations of the Company under this Note. This Note shall be construed in accordance with and governed by the laws of the State of New York and any applicable laws of the United States of America. LACLEDE GAS COMPANY By: VERNON O. STEINBERG Name: Vernon O. Steinberg Title: V.P.-Treas. & Asst. Secy. 79 Loans By and Payments to the Bank --------------------------------- Referred to in the Foregoing Note --------------------------------- Payments Name of -------- Person Amount Type of Interest Maturity Making Date of Loan Loan Rate Date Principal Interest Notation - ---------------------------------------------------------------------------- 80 CHEMICAL BANK September 1, 1995 Laclede Gas Company 720 Olive Street St. Louis, Missouri 63101 Attention of: Vernon O. Steinberg, V.P.-Treasurer & Asst. Secretary Laclede Gas Company ------------------- Dear Sirs: Reference is made to the line of credit letter agreement dated October 18, 1993 as amended by amendatory agreements dated April 18, 1994, August 18, 1994, October 18, 1994, March 1, 1995 and May 23, 1995, and as further amended by an amendatory agreement dated the date hereof (said letter agreement, as thus amended, being hereinafter called the "Letter Agreement") among Chemical Bank ("Chemical"), certain other banks and Laclede Gas Company ("Laclede") providing for advances by Chemical to Laclede in an aggregate principal amount at any time outstanding not to exceed $25,000,000. Chemical confirms that nothing in the Letter Agreement is intended to alter the arrangements set forth in the letter of Chemical to Laclede dated January 18, 1995, or the availability of up to $10,000,000 of advances thereunder on the terms set forth therein. Very truly yours, CHEMICAL BANK, By: RONALD POTTER Name: Ronald Potter Title: Managing Director 81 NOTE $12,500,000 New York, New York September 1, 1995 FOR VALUE RECEIVED, the undersigned, LACLEDE GAS COMPANY, a Missouri corporation (the "Company"), hereby promises to pay to the order of THE BOATMEN'S NATIONAL BANK OF ST. LOUIS (the "Bank"), at the office of the Bank at One Boatmen's Plaza, 800 Market Street, St. Louis, Missouri 63166-0236: (a) on the last day of each Interest Period, as defined in the letter agreement dated as of October 18, 1993, as amended by amendatory agreements dated April 18, 1994, August 18, 1994, October 18, 1994, March 1, 1995 and May 23, 1995, and as further amended by an amendatory agreement dated September 1, 1995 (said letter agreement, as thus amended, being hereinafter called the "Line Letter"), between the Company, the Bank and certain other banks, the aggregate unpaid principal amount of each Advance (as defined in the Line Letter) made by the Bank to which such Interest Period relates; and (b) on November 1, 1995, the lesser of $12,500,000 and the aggregate principal amount of all Advances made by the Bank under the Line Letter and remaining unpaid; in each case in lawful money of the United States of America in immediately available funds. The undersigned promises to pay interest on the unpaid principal amount of each Advance at the rates and payable on the dates provided for in the Line Letter. The Company hereby waives diligence, presentment, demand, protest and notice of any kind. The nonexercise by the holder of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance. All Advances by the Bank evidenced by this Note, the interest rates applicable thereto and all payments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; PROVIDED, HOWEVER, that the failure of the holder hereof to make such a notation or any error in such a notation shall not affect the obligations of the Company under this Note. This Note shall be construed in accordance with and governed by the laws of the State of New York and any applicable laws of the United States of America. LACLEDE GAS COMPANY By: VERNON O. STEINBERG Name: Vernon O. Steinberg Title: V.P.-Treas. & Asst. Secy. 82 Loans By and Payments to the Bank --------------------------------- Referred to in the Foregoing Note --------------------------------- Payments Name of -------- Person Amount Type of Interest Maturity Making Date of Loan Loan Rate Date Principal Interest Notation - ---------------------------------------------------------------------------- 83 THE BOATMEN'S NATIONAL BANK OF ST. LOUIS September 1, 1995 Laclede Gas Company 720 Olive Street St. Louis, Missouri 63101 Attention of: Vernon O. Steinberg, V.P.-Treasurer & Asst. Secretary Laclede Gas Company ------------------- Dear Sirs: Reference is made to the line of credit letter agreement dated October 18, 1993 as amended by amendatory agreements dated April 18, 1994, August 18, 1994, October 18, 1994, March 1, 1995 and May 23, 1995, and as further amended by an amendatory agreement dated the date hereof (said letter agreement, as thus amended, being hereinafter called the "Letter Agreement") among The Boatmen's National Bank of St. Louis ("Boatmen's"), certain other banks and Laclede Gas Company ("Laclede") providing for advances by Boatmen's to Laclede in an aggregate principal amount at any time outstanding not to exceed $12,500,000. Boatmen's confirms that nothing in the Letter Agreement is intended to alter the arrangements set forth in the letter of Laclede to Boatmen's dated January 18, 1995, or the availability of up to $10,000,000 of advances thereunder on the terms set forth therein. Very truly yours, THE BOATMEN'S NATIONAL BANK OF ST. LOUIS, By: THOMAS C. GUYTON Name: Thomas C. Guyton Title: Vice President 84 NOTE $12,500,000 New York, New York September 1, 1995 FOR VALUE RECEIVED, the undersigned, LACLEDE GAS COMPANY, a Missouri corporation (the "Company"), hereby promises to pay to the order of MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION (the "Bank"), at the office of the Bank at Eighth & Locust, 12th Floor, St. Louis, Missouri 63101: (a) on the last day of each Interest Period, as defined in the letter agreement dated as of October 18, 1993, as amended by amendatory agreements dated April 18, 1994, August 18, 1994, October 18, 1994, March 1, 1995 and May 23, 1995, and as further amended by an amendatory agreement dated September 1, 1995 (said letter agreement, as thus amended, being hereinafter called the "Line Letter"), between the Company, the Bank and certain other banks, the aggregate unpaid principal amount of each Advance (as defined in the Line Letter) made by the Bank to which such Interest Period relates; and (b) on November 1, 1995, the lesser of $12,500,000 and the aggregate principal amount of all Advances made by the Bank under the Line Letter and remaining unpaid; in each case in lawful money of the United States of America in immediately available funds. The undersigned promises to pay interest on the unpaid principal amount of each Advance at the rates and payable on the dates provided for in the Line Letter. The Company hereby waives diligence, presentment, demand, protest and notice of any kind. The nonexercise by the holder of any of its rights hereunder in any particular instance shall not constitute a waiver thereof in that or any subsequent instance. All Advances by the Bank evidenced by this Note, the interest rates applicable thereto and all payments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the holder hereof on the schedule attached hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof, or otherwise recorded by such holder in its internal records; PROVIDED, HOWEVER, that the failure of the holder hereof to make such a notation or any error in such a notation shall not affect the obligations of the Company under this Note. This Note shall be construed in accordance with and governed by the laws of the State of New York and any applicable laws of the United States of America. LACLEDE GAS COMPANY By: VERNON O. STEINBERG Name: Vernon O. Steinberg Title: V.P. Treas. & Asst. Secy. 85 Loans By and Payments to the Bank --------------------------------- Referred to in the Foregoing Note --------------------------------- Payments Name of -------- Person Amount Type of Interest Maturity Making Date of Loan Loan Rate Date Principal Interest Notation - ---------------------------------------------------------------------------- 86 MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION September 1, 1995 Laclede Gas Company 720 Olive Street St. Louis, Missouri 63101 Attention of: Vernon O. Steinberg, V.P.-Treasurer & Asst. Secretary Laclede Gas Company ------------------- Dear Sirs: Reference is made to the line of credit letter agreement dated October 18, 1993 as amended by amendatory agreements dated April 18, 1994, August 18, 1994, October 18, 1994, March 1, 1995 and May 23, 1995, and as further amended by an amendatory agreement dated the date hereof (said letter agreement, as thus amended, being hereinafter called the "Letter Agreement") among Mercantile Bank of St. Louis National Association ("Mercantile"), certain other banks and Laclede Gas Company ("Laclede") providing for advances by Mercantile to Laclede in an aggregate principal amount at any time outstanding not to exceed $12,500,000. Mercantile confirms that nothing in the Letter Agreement is intended to alter the arrangements set forth in the letter of Mercantile to Laclede dated January 18, 1995, or the availability of up to $10,000,000 of advances thereunder on the terms set forth therein. Very truly yours, MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION By: JOHN HOLLAND Name: John Holland Title: Vice President 87 EX-12 7 Exhibit 12 LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES SCHEDULE OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES -------------------------------------------------------------
Fiscal Year Ended September 30, ---------------------------------------- 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- (Thousands of Dollars) Income before interest charges and the cumulative effect of change in accounting $39,428 $38,611 $41,380 $33,888 $34,616 Add: Taxes based on utility income 9,878 12,517 14,997 8,272 10,795 Taxes based on miscellaneous income 252 121 1,068 172 281 One third of applicable rentals charged to operating expense (which approximates the interest factor) 288 287 284 279 269 ------------------------------------------- Total Earnings $49,846 $51,536 $57,729 $42,611 $45,961 =========================================== Interest on long-term debt $12,544 $12,626 $14,415 $13,803 $13,062 Other interest 5,983 3,768 1,798 1,811 1,524 One-third of applicable rentals charged to operating expense (which approximates the interest factor) 288 287 284 279 269 ------------------------------------------- Total Fixed Charges $18,815 $16,681 $16,497 $15,893 $14,855 =========================================== Ratio of Earnings to Fixed Charges 2.65 3.09 3.50 2.68 3.09
88 EX-21 8 Exhibit 21 LACLEDE GAS COMPANY AND SUBSIDIARIES SUBSIDIARIES OF THE REGISTRANT PERCENT OF VOTING STOCK OWNED ------------ Subsidiaries of Laclede Gas Company (Parent) Laclede Pipeline Company 100% Laclede Investment Corporation* 100% Laclede Development Company** 100% *Subsidiary Company of Laclede Investment Corporation Laclede Energy Resources, Inc. 100% Subsidiary Company of Laclede Energy Resources, Inc. 100% Laclede Gas Family Services, Inc. ***Subsidiary Company of Laclede Development Company Laclede Venture Corp. 100% All of the above corporations have been organized under the laws of the State of Missouri. 89 EX-23 9 Exhibit 23 DELOITTE & TOUCHE LLP One City Centre St. Louis, MO 63101 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 33-60996 and 33-52357 of Laclede Gas Company and its subsidiary companies on Form S-3 and in Registration Statement Nos. 33-38413, 33-57573 and 33-64933 of Laclede Gas Company and its subsidiary companies on Form S-8 of our report (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the changes in methods of accounting for income taxes and postretirement benefits other than pensions effective October 1, 1993) dated November 16, 1995 (except for the matter described in Note 5 as to which the date is November 21, 1995), appearing in this Annual Report on Form 10-K of Laclede Gas Company and its subsidiary companies for the year ended September 30, 1995. Deloitte & Touche LLP December 26, 1995 90 EX-27 10
UT 1,000 YEAR SEP-30-1995 SEP-30-1995 PER-BOOK 434,336 22,744 107,785 71,829 0 636,694 19,285 34,384 173,584 227,253 1,960 0 154,279 0 0 59,500 0 0 0 0 193,702 636,694 431,917 9,878 80,573 393,587 38,330 1,098 39,428 18,527 20,901 97 20,804 20,538 12,544 28,206 1.27 1.27 Capital surplus, paid in includes $(24,017) treasury stock. 91
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