-----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, QLQtoJJJvBu3pmxHXHJ/uTO0lYaHw4NZTtwf+TF1aKx6RZzfA/4Os3x5yVrNUTwH DeEzw3fKxT6G3l7wJ17aBQ== 0000057183-00-000010.txt : 20000214 0000057183-00-000010.hdr.sgml : 20000214 ACCESSION NUMBER: 0000057183-00-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000211 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-Q SEC ACT: SEC FILE NUMBER: 001-01822 FILM NUMBER: 536389 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-Q 1 QUARTERLY REPORT ON FORM 10-Q, 2/11/00 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period ended December 31, 1999 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 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 18,877,987 shares, Common Stock, par value $1 per share at 2/11/00. Page 1 LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES PART I FINANCIAL INFORMATION The interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Form 10-K for the year ended September 30, 1999. Page 2 LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED) (In Thousands, Except Per Share Amounts)
Three Months Ended December 31, 1999 1998 ---- ---- Operating Revenues: Utility operating revenues $144,659 $149,759 Non-utility operating revenues 6,775 3,753 -------------------- Total Operating Revenues 151,434 153,512 -------------------- Operating Expenses: Utility operating expenses Natural and propane gas 81,596 86,704 Other operation expenses 22,653 23,667 Maintenance 4,708 5,082 Depreciation and amortization 5,495 5,287 Taxes, other than income taxes 10,372 10,520 -------------------- Total utility operating expenses 124,824 131,260 Non-utility operating expenses 6,595 3,640 -------------------- Total Operating Expenses 131,419 134,900 -------------------- Operating Income 20,015 18,612 Other Income and Income Deductions-Net (Note 5) 776 1,964 -------------------- Income Before Interest and Income Taxes 20,791 20,576 -------------------- Interest Charges: Interest on long-term debt 3,784 3,347 Other interest charges 2,189 1,957 -------------------- Total Interest Charges 5,973 5,304 -------------------- Income Before Income Taxes 14,818 15,272 Income Taxes (Note 3) 5,237 5,565 -------------------- Net Income 9,581 9,707 Dividends on Preferred Stock 24 24 -------------------- Earnings Applicable to Common Stock $ 9,557 $ 9,683 ==================== Average Number of Common Shares Outstanding 18,878 17,628 Earnings Per Share of Common Stock $ .51 $ .55 Dividends Declared Per Share of Common Stock $.335 $.335 See notes to consolidated financial statements.
Page 3 LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET
Dec. 31 Sept. 30 1999 1999 ---- ---- (Thousands of Dollars) (UNAUDITED) ASSETS Utility Plant $888,716 $876,431 Less: Accumulated depreciation and amortization 361,618 357,053 -------------------- Net Utility Plant 527,098 519,378 -------------------- Other Property and Investments 26,537 26,122 -------------------- Current Assets: Cash and cash equivalents 3,411 9,352 Accounts receivable - net 102,828 42,028 Materials, supplies, and merchandise at avg cost 6,250 5,680 Natural gas stored underground for current use at LIFO cost 57,847 64,112 Propane gas for current use at FIFO cost 12,202 11,697 Prepayments and other 4,507 2,309 Deferred income taxes 9,058 10,216 -------------------- Total Current Assets 196,103 145,394 -------------------- Deferred Charges: Prepaid pension cost 85,293 80,994 Regulatory assets 60,425 58,024 Other 1,765 1,707 -------------------- Total deferred charges 147,483 140,725 -------------------- Total Assets $897,221 $831,619 ==================== See notes to consolidated financial statements.
Page 4 LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET (Continued)
Dec. 31 Sept. 30 1999 1999 ---- ---- (Thousands of Dollars) (UNAUDITED) CAPITALIZATION AND LIABILITIES Capitalization: Common stock (20,743,625 shares issued) $ 20,744 $ 20,744 Paid-in capital 85,831 85,826 Retained earnings 203,081 199,848 Accumulated other comprehensive income (77) (77) Treasury stock, at cost (1,865,638 shares held) (24,017) (24,017) -------------------- Total common stock equity 285,562 282,324 Redeemable preferred stock 1,913 1,923 Long-term debt (less sinking fund requirements) 204,345 204,323 -------------------- Total Capitalization 491,820 488,570 -------------------- Current Liabilities: Notes payable 152,700 84,700 Accounts payable 36,043 31,716 Refunds due customers 1,191 1,425 Advance customer billings 10,451 15,665 Current portion of preferred stock - 35 Taxes accrued 3,501 5,804 Unamortized purchased gas adjustments 6,099 8,956 Other 21,055 25,104 -------------------- Total Current Liabilities 231,040 173,405 -------------------- Deferred Credits and Other Liabilities: Deferred income taxes 128,027 124,756 Unamortized investment tax credits 6,500 6,586 Pension and postretirement benefit costs 20,889 19,259 Other 18,945 19,043 -------------------- Total Deferred Credits and Other Liabilities 174,361 169,644 -------------------- Total Capitalization and Liabilities $897,221 $831,619 ==================== See notes to consolidated financial statements.
Page 5 LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
Three Months Ended December 31, 1999 1998 ---- ---- (Thousands of Dollars) Operating Activities: Net Income $ 9,581 $ 9,707 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,521 5,317 Deferred income taxes and investment tax credits 5,000 2,518 Other - net 127 (1,868) Changes in assets and liabilities: Accounts receivable - net (60,800) (53,149) Unamortized purchased gas adjustments (2,857) (4,243) Deferred purchased gas costs (2,023) 14,990 Advance customer billings - net (5,214) (24) Accounts payable 4,327 13,205 Refunds due customers (234) (2,051) Taxes accrued (2,303) (3,119) Natural gas stored underground 6,265 4,040 Other assets and liabilities (10,562) (4,075) -------------------- Net cash used in operating activities $(53,172) $(18,752) -------------------- Investing Activities: Construction expenditures (13,401) (11,249) Investments - non-utility (216) 967 Employee benefit trusts (452) (540) Other (312) (308) -------------------- Net cash used in investing activities $(14,381) $(11,130) -------------------- Financing Activities: Issuance of short-term debt - net 68,000 37,657 Dividends paid (6,348) (5,842) Preferred stock reacquired and other (40) - --------------------- Net cash provided by financing activities $ 61,612 $ 31,815 --------------------- Net Increase in Cash and Cash Equivalents $ (5,941) $ 1,933 Cash and Cash Equivalents at Beg of Period 9,352 3,718 -------------------- Cash and Cash Equivalents at End of Period $ 3,411 $ 5,651 ==================== Supplemental Disclosure of Cash Paid/(Refunded) During the Period for: Interest $10,161 $8,396 Income taxes (28) (15) See notes to consolidated financial statements.
Page 6 LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of management, this interim report includes all adjustments (consisting only of normal recurring accruals) necessary for the fair presentation of the results of the periods covered. 2. Laclede Gas Company is a natural gas distribution utility having a material seasonal cycle. As a result, this interim statement of consolidated income is not necessarily indicative of annual results nor representative of succeeding quarters of the fiscal year. Due to the seasonal nature of the Company's business, earnings are typically concentrated in the first six months of the fiscal year, which generally corresponds with the heating season. Fiscal year earnings will likely be lower than earnings during the first six months of the fiscal year, reflecting typically lower summer sales volumes, partially offset by lower operating expenses. 3. Net provisions for income taxes were charged as follows during the periods set forth below:
Three Months Ended December 31, --------------------- 1999 1998 ---- ---- (Thousands of Dollars) Federal Current $ 212 $ 2,615 Deferred 4,201 2,120 State and Local Current 25 432 Deferred 799 398 -------------------- Total $ 5,237 $ 5,565 ====================
4. The Missouri Public Service Commission extended the Company's Gas Supply Incentive Plan for an additional year, effective October 1, 1999, with specific modifications. Under the modified plan, the Company continues to share with its customers certain gains and losses related to the acquisition of its gas supply assets. Additionally, Laclede is now permitted to retain all income resulting from sales made outside of its traditional service area. Page 7 Results of the Plan and off system sales activities are set forth below. These results may not be representative of results in future periods due to the volatile and seasonal nature of these efforts.
Three Months Ended December 31, ---------------------- 1999 1998 ---- ---- (Thousands of Dollars) Net Benefits to Customers and Shareholders $8,870 $6,796 ------------------------------------------------------------- Shareholder Benefits Off system and Incentive Plan Revenues $9,014 $6,098 Off system and Incentive Plan Expense 6,502 4,885 ------ ------ Company Share - Pretax Income $2,512 $1,213 ====== ======
5. Other Income and Income Deductions - Net
Three Months Ended December 31, ---------------------- 1999 1998 ---- ---- (Thousands of Dollars) Gain on Sale of Property $ - $1,911 Allowance on Funds Used For Construction 257 121 Other 519 (68) ------ ------ Other Income and Income Deductions - Net $ 776 $1,964 ====== ======
A pre-tax gain of $1.9 million was recognized in the quarter ended December 31, 1998 by the Company's wholly-owned subsidiary, Laclede Development Company, on the November 1998 sale of property known as Centre Park 40. Laclede Development owned its interest in Centre Park 40 through a real estate partnership. Page 8 6. Laclede Gas Company is a public utility engaged in the retail distribution of natural gas. The Company has also made investments in some non-utility businesses as part of a diversification program, none of which are reportable segments. These non-regulated operations are conducted through five wholly-owned subsidiaries. There are no material intersegment revenues. Assets for the periods presented did not change significantly.
Gas All Other (Thousands of Dollars) Utility (Non-Utility) Eliminations Consolidated ----------------------------------------------------------------------- Three Months Ended December 31, 1999 Operating revenues $144,659 $ 6,775 $ - $151,434 Net income (loss) 9,664 (83) - 9,581 Total assets 897,044 13,758 (13,581) 897,221 Three Months Ended December 31, 1998 Operating revenues $149,759 $ 3,753 $ - $153,512 Net income 9,027 680 - 9,707 Total assets 823,995 12,195 (7,280) 828,510
7. The Company is subject to various environmental laws and regulations. To date they have not materially affected the Company's financial position and results of operations. In the past, the Company operated various manufactured gas plants which produced certain by-products and residuals. At the request of the United States Environmental Protection Agency, Laclede performed an investigation of one of the Company's former manufactured gas plant sites located in Shrewsbury, Missouri. Subsequently, the Company and the state and federal environmental regulatory agencies agreed upon the actions needed at this site. The Company currently estimates the overall costs of these actions will be approximately $1,135,000. As of December 31, 1999, the Company has paid $675,000 and reserved $460,000 for these actions. If the regulatory agencies require any additional actions, Laclede will incur additional costs. The Company also applied to place the site of a different former manufactured gas plant in the City of St. Louis, Missouri in the Missouri Voluntary Cleanup Program. Laclede ceased its operations and sold this site in 1950. Subsequent owners of this site used it as a coke manufacturing facility. The Missouri Department of Natural Resources accepted the Company's application. Acceptance provides opportunities to minimize costs of remediation and maximize possibilities of site development. Laclede submitted a site investigation plan to the Missouri Department of Natural Resources on November 16, 1998, which investigation has been completed. Recently, Laclede sent its report on the investigation to the Missouri Department of Natural Resources. Laclede currently estimates that the cost of the investigation, oversight costs and legal and engineering consulting costs for this site may be approximately $534,000. Currently, the Company has paid $363,000 and reserved an additional $171,000. The Company has requested that other former site owners and operators participate in the cost of any site investigation. One former owner and operator agreed to participate in these costs and has reimbursed the Company to date for $127,000. The Company plans to seek proportionate reimbursement of all costs relative to this site from any other potentially responsible parties if practicable. Page 9 While the scope of costs relative to the site in Shrewsbury will not be material, the scope of costs relative to the City of St. Louis site are unknown and may be material. The Company has notified its insurers that it intends to seek reimbursement from them of its costs at both these sites. None of the Company's insurers have agreed that its insurance covers the costs for which the Company intends to seek reimbursement. The majority of the insurers have sent Laclede letters reserving their rights with respect to the manufactured gas plant issues addressed in the Company's notices to them. While some of the insurers have denied coverage with respect to these issues, the Company continues to seek reimbursement from them. With regard to the Shrewsbury site, the denial of coverage will not have any material impact on the Company. With regard to the City of St. Louis site, since the scope of costs relative to this site are unknown and may be material, the denial of coverage may have a material impact on the Company. Previously, the MoPSC approved the Company's use of a cost deferral mechanism for these costs. Deferral of such costs terminated July 31, 1999, and any subsequent costs will be charged to expense. The Commission authorized previously deferred costs to be included in rates (without return on investment) and amortized over a fifteen-year period, effective with the implementation of new rates on December 27, 1999. 8. In October 1999, the staff of the MoPSC recommended that the Company credit ratepayers with $2.5 million of pre-tax income the Company had realized in fiscal 1997 and fiscal 1998 in connection with its treatment of a gas supply contract under the operation of the Company's Gas Supply Incentive Plan. The Company filed a response in opposition to the staff's recommendation, and hearings are scheduled before the Commission on this matter in the spring of 2000. Laclede believes that there is no basis for staff's recommendation and is confident that the Company will ultimately prevail on the merits. 9. In January 2000, Laclede Energy Resources, Inc., a wholly-owned non- utility subsidiary, finalized a multi-year arrangement with UtiliCorp United, Inc. (UtiliCorp) to provide a significant portion of the gas supply for a natural gas fired power plant currently under construction in Pleasant Hill, Missouri. The four-year agreement is scheduled to go into effect June 1, 2001. LER will provide UtiliCorp with up to 5 billion cubic feet of natural gas annually - the equivalent of about 5% of the annual sendout of Laclede Gas Company in a normal year - and will manage fluctuations in UtiliCorp's gas-purchase requirements on an as- needed basis to satisfy summer power needs. 10. Certain prior-period amounts have been reclassified to conform to current-period presentation. These reclassifications did not affect consolidated net income for the periods presented. 11. This Form 10-Q should be read in conjunction with the Notes to Consolidated Financial Statements contained in the Company's 1999 Form 10-K. Page 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Quarter Ended December 31, 1999 - ------------------------------- Temperatures for the quarter ended December 31, 1999, which is the first quarter of Laclede's fiscal year 2000, equaled the fourth warmest comparable quarter in the last 100 years with 18% warmer than normal weather. Temperatures this year were 5% warmer than the same quarter last year. Laclede was able to offset a portion of such weather impact through the continued success of its cost-control program, as well as improved results related to the Company's Gas Supply Incentive Plan. Earnings per share based on average shares outstanding were $.51 per share this quarter compared with $.55 per share during the same period last year. However, despite the warmer weather this year, earnings from the Company's core gas distribution operations actually were greater in the first quarter of fiscal 2000 than in last year's first quarter, which reflected a one-time $.07 per share gain from the November 1998 sale of Laclede's interest in the Centre Park 40 property, a real estate venture of a non-utility subsidiary. Utility operating revenues for the quarter ended December 31, 1999 were $144.7 million compared with $149.8 million for the quarter ended December 31, 1998. The $5.1 million, or 3.4%, decrease was principally due to lower gas sales volumes arising from the warmer weather and lower wholesale gas costs (which are passed on to Laclede's customers under the Company's Purchased Gas Adjustment Clause). These decreases were partially offset by increased off system sales revenues this year. System therms sold and transported decreased by 14.4 million therms, or 4.9%, below the quarter ended December 31, 1998. Non-utility operating revenues for this quarter increased $3.0 million from those revenues for the same quarter last year mainly due to increased gas marketing sales by Laclede Energy Resources, Inc., a wholly-owned non- utility subsidiary of the Company. Utility operating expenses for the quarter ended December 31, 1999 decreased by $6.4 million, or 4.9%, below the same quarter last year. Natural and propane gas expense this quarter decreased $5.1 million, or 5.9%, below last year primarily due to reduced volumes purchased for sendout (mainly due to the warmer weather) and lower rates charged by the Company's suppliers. These decreases were partially offset by increased off system sales gas expense. Other operation and maintenance expenses decreased $1.4 million, or 4.8%, principally due to lower net pension costs, a lower provision for uncollectible accounts, lower maintenance charges and other decreases in the costs of doing business. These decreases were slightly offset by increased group insurance charges and higher wage rates. Depreciation and amortization expense increased 3.9% primarily due to additional depreciable property. Taxes, other than income taxes, decreased 1.4% mainly due to lower gross receipts taxes (reflecting decreased revenues), partially offset by higher real estate and personal property taxes this quarter. Page 11 Non-utility operating expenses increased $3.0 million this quarter mainly due to increased gas expense associated with gas marketing sales by Laclede Energy Resources, Inc., a wholly-owned non-utility subsidiary of the Company. Other income and income deductions-net decreased $1.2 million compared to the same quarter last year primarily due to a pre-tax gain of approximately $1.9 million recognized in the same quarter last year by the Company's wholly owned subsidiary, Laclede Development Company, on the sale of undeveloped property known as Centre Park 40. Laclede Development owned its interest in Centre Park 40 through a real estate investment partnership. The 12.6% increase in interest expense is mainly due to higher interest on long- term debt resulting from the issuance of $25 million of 7% first mortgage bonds in June 1999 and increased short-term interest expense due to higher rates. The reduction in income taxes is mainly due to lower pre-tax income. Updated Regulatory Matters - -------------------------- On December 14, 1999 the Missouri Public Service Commission (MoPSC) issued its report and order in the Company's 1999 rate case, in which the Commission: (1) approved a partial settlement reached earlier in the year by the parties on some issues (2) determined certain contested issues and (3) authorized the Company to increase its rates for gas service by $11.24 million on an annual basis. The new rates and settlement became effective for service rendered on and after December 27, 1999. Under the partial settlement, the Company discontinued deferring certain costs for future recovery. As approved by the Commission, previously deferred costs will be recovered (without return on investment) beginning with implementation of the new rates. The deferral of certain costs was eliminated going forward, as the ongoing expenses associated with those specific areas are included in the newly approved rates. The MoPSC extended the Company's Gas Supply Incentive Plan for an additional year, effective October 1, 1999, with specific modifications. Under the modified plan, the Company continues to share with its customers certain gains and losses related to the acquisition of its gas supply assets. Additionally, Laclede is now permitted to retain all income resulting from sales made outside its traditional service area. These activities continue to provide significant benefits to both the Company's customers and shareholders. During the quarter ended December 31, 1999, Laclede's efforts resulted in cost savings of $6.4 million for our customers and $2.5 million in pretax income to our shareholders. Liquidity and Capital Resources - ------------------------------- The Company's short-term borrowing requirements typically peak during colder months when the Company borrows money to cover the gap between when the Company purchases its natural gas and when the Company's customers pay the Company for that gas. These short-term cash requirements have traditionally been met through the sale of commercial paper supported by lines of credit with banks. In January 2000, the Company renewed three primary lines of bank credit under which it may borrow up to an aggregate of $30 million prior to January 31, 2001, with repayment of any loans outstanding on that Page 12 date permitted from April 30, 2001 to June 30, 2001. This, along with $140 million of previously obtained supplemental lines of credit extending through the fall of 2000, provides total lines of credit of $170 million for the 1999-2000 heating season. During fiscal 2000 to date, the Company sold commercial paper aggregating to a maximum of $158.2 million at any one time, but did not borrow from the banks under the aforementioned agreements. Short-term borrowings amounted to $148.7 million at January 31, 2000. Construction expenditures for utility purposes for the quarter were $13.4 million compared with $11.2 million for the same period last year. Capitalization at December 31, 1999 increased $3.3 million since September 30, 1999 and consisted of 58.1% common stock equity, .4% preferred stock equity and 41.5% long-term debt. The seasonal effect on the Company's financial position affects the comparison of certain balance sheet items at December 31, 1999 and at September 30, 1999 such as Accounts Receivable - Net, Gas Stored Underground, Notes Payable, Accounts Payable and Advance Customer Billings. Environmental Matters - --------------------- The Company is subject to various environmental laws and regulations. To date these laws and regulations and the Company's involvement with environmental regulatory agencies relative to two sites, one currently owned and one previously owned, have not materially affected the Company's financial position and results of operations. For a more detailed discussion of these matters, see Note 7 to the unaudited Notes to Consolidated Financial Statements on page 9. Previously, the MoPSC approved the Company's use of a cost deferral mechanism for its costs relative to environmental matters. Deferral of such costs terminated July 31, 1999, and any subsequent costs will be charged to expense. The Commission authorized previously deferred costs to be included in rates (without return on investment) and amortized over a fifteen-year period, effective with the implementation of new rates on December 27, 1999. Year 2000 Issue - --------------- After more than three years of preparing for any potential year 2000 problems that threatened non-compliant computer programs and processes, the Company met the turn of the century without incident. Its computer-based systems operated normally and continue to do so. The Company incurred total costs of approximately $20.7 million through December 31, 1999 for replacements and modifications of various computer systems. Nearly all of this amount was capitalized. The Company used funds from internally generated cash flows and short-term borrowings to pay these costs. In the 1998 rate case, the Missouri Public Service Commission authorized Laclede to capitalize the costs incurred in connection with making its information systems ready for year 2000 operations. The MoPSC also authorized Laclede to defer any interim property tax, depreciation or carrying cost expenses that it may incur in connection with these Page 13 capitalized items. As a result of the 1999 rate case, however, deferral of these costs ceased December 27, 1999. In 1999, the Commission authorized previously deferred costs to be included in rates (without return on investment) and amortized over a fifteen-year period effective with the implementation of new rates on December 27, 1999. Other Matters - ------------- On October 30, 1998 the MoPSC issued an order opening a docket addressing the adequacy of Laclede's copper service line replacement program. The staff filed its report on August 31, 1999 and its direct testimony on January 5, 2000, containing a modified replacement schedule for such service lines. In response, the Company proposed an alternative program based upon the evaluation of recent survey data. After appropriate review of the matter, the Commission is expected to issue its order on the matter sometime this year. Laclede is unable to predict at this time what action the MoPSC may take. The Company currently faces one lawsuit relative to direct buried copper service lines. In October 1999, the staff of the MoPSC recommended that the Company credit ratepayers with $2.5 million of pre-tax income the Company had realized in fiscal 1997 and fiscal 1998 in connection with its treatment of a gas supply contract under the operation of the Company's Gas Supply Incentive Plan. The Company filed a response in opposition to the staff's recommendation, and hearings are scheduled before the Commission on this matter in the spring of 2000. Laclede believes that there is no basis for staff's recommendation and is confident that the Company will ultimately prevail on the merits. In January 2000, Laclede Energy Resources, Inc., a wholly-owned non-utility subsidiary, finalized a multi-year arrangement with UtiliCorp United, Inc. (UtiliCorp) to provide a significant portion of the gas supply for a natural gas fired power plant currently under construction in Pleasant Hill, Missouri. The four-year agreement is scheduled to go into effect June 1, 2001. LER will provide UtiliCorp with up to 5 billion cubic feet of natural gas annually - the equivalent of about 5% of the annual sendout of Laclede Gas Company in a normal year - and will manage fluctuations in UtiliCorp's gas-purchase requirements on an as-needed basis to satisfy summer power needs. Forward-Looking Statements - -------------------------- Certain statements in this 10-Q are forward-looking statements made based upon the Company's expectations and beliefs concerning future developments and their potential effect on Laclede. These statements, however, do not include financial statements and other statements of historical fact. The forward-looking statements may be identified by the use of such terms as "anticipate," "believe," "estimate," "expect," "intend," "plan," "seek" and similar expressions. Future developments may not be in accordance with the Company's expectations or beliefs and the effect of future developments on Laclede may not be those anticipated. Among the factors that may cause actual results to differ materially from those contemplated in any forward- looking statements are: - weather conditions and catastrophic events - changes in transportation and gas supply costs or availability - regulatory actions and initiatives of federal and state regulatory agencies, some of which could be retroactive, including those affecting: -- financings Page 14 -- allowed rates of return -- incentive regulation -- industry and rate structure -- purchase gas adjustment provisions -- franchise renewal -- environmental or safety requirements - the effects of any industry or corporate restructuring - the results of litigation - conservation efforts of our customers - economic factors such as changes in the conditions of capital markets, interest rates and rates of inflation - inability to retain existing customers or to attract new customers - ability to obtain funds from operations or the sale of debt or equity to finance necessary capital expenditures and other investments - employee work force issues - statutory or tax changes - changes in accounting standards and - the effectiveness of Year 2000 computer system remediation efforts by third parties and unknown Year 2000 related problems The Company does not, by including this statement, assume any obligation to review or revise any particular forward-looking statement referenced herein in light of future events. Page 15 LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES Part II OTHER INFORMATION Page 16 LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES Item 1. Legal Proceedings For a description of the Company's environmental matters, see Note 7 to the unaudited Notes to Consolidated Financial Statements on page 9. For a description of the Company's pending regulatory matters, see "Updated Regulatory Matters" and "Other Matters" in the "Management's Discussion and Analysis" section on pages 12 and 14. Item 6. Exhibits and Reports on Form 8-K (a) See Exhibit Index (b) Reports on Form 8-K The Company filed a Form 8-K during the quarter ended December 31, 1999. Item reported: On October 28, 1999 the Company issued its news release announcing its financial results as of September 30, 1999. The news release was attached as Exhibit 1 to the Form 8-K. Date of Report (Date of Earliest Event Reported): October 28, 1999 Page 17 LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. LACLEDE GAS COMPANY Date: February 11, 2000 G. T. McNeive, Jr. ---------------------------- G. T. McNeive, Jr. Sr. Vice President - Finance and General Counsel (Authorized Signatory and Chief Financial Officer) Page 18 Index to Exhibits Sequentially Exhibit Numbered Number Exhibit Page - ------- ------- ------------ 10.01 Amendment to the Laclede Gas Company 20 Restricted Stock Plan for Non-employee Directors adopted December 16, 1999. 27 Financial Data Schedule UT 21 Page 19 EX-10.01 2 Exhibit 10.01 EXTENSION OF RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS WHEREAS, this Corporation has previously adopted the Laclede Gas Company Restricted Stock Plan for Non-Employee Directors, which became effective January 25, 1990 and was extended through January 26, 2000; and WHEREAS, this Corporation desires to extend the term of the Plan through the period ending January 31, 2005, subject to further extension of the Corporation's Board of Directors; NOW, THEREFORE, BE IT RESOLVED, that Section 3 of Article V of the Plan is hereby amended, effective on December 16, 1999 by deleting the date "January 26, 2000" in such section and substituting, in lieu of such deleted date, the date "January 31, 2005," and FURTHER RESOLVED, that except as expressly amended and extended above, the Plan is hereby ratified, confirmed and approved under the same terms and conditions as existed immediately prior to the above amendments; and FURTHER RESOLVED, that the officers of the Corporation are hereby authorized and directed, jointly and severally, for and in the name and on behalf of the Corporation and without the need for any countersignatures, unless otherwise required by applicable law, to execute and deliver any and all certificates, agreements and other documents; take any and all steps and do any and all things which they may deem necessary or appropriate to effectuate the purposes of the foregoing resolutions and the extension and amendment to the Plan set forth above. Page 20 EX-27 3
UT 1,000 3-MOS SEP-30-2000 DEC-31-1999 PER-BOOK 527,098 26,537 196,103 147,483 0 897,221 20,744 61,814 203,081 285,562 1,913 0 204,345 0 0 152,700 0 0 0 0 252,701 897,221 151,434 5,237 131,419 136,656 14,778 776 15,554 5,973 9,581 24 9,557 6,324 3,784 (53,172) .51 .51 Capital-surplus-paid-in is net of $24,017 of treasury stock. Page 21
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