SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
FORM 10-K
ANNUAL REPORT
For the Fiscal Year Ended September 30, 2001
THE LACLEDE GROUP, INC.
LACLEDE GAS COMPANY
720 Olive Street, St. Louis, MO 63101
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, 2001
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from _________ to _____________
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Commission File Exact Name of Registrant as States of I.R.S.
Number Specified in its Charter and Incorporation Employer
Principal Office Address and Identification
Telephone Number Number
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1-16681 The Laclede Group, Inc. Missouri 74-2976504
720 Olive Street
St. Louis, MO 63101
314-342-0500
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1-1822 Laclede Gas Company Missouri 43-0368139
720 Olive Street
St. Louis, MO 63101
314-342-0500
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Securities registered pursuant to Section 12(b) of the Act (as of the date
of this report)
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Name of Registrant Title of Each Name of Each Exchange
Class on which registered
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The Laclede Group, Inc. Common Stock $1.00 New York Stock Exchange
par value
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The Laclede Group, Inc. Preferred Share New York Stock Exchange
Purchase Rights
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Laclede Gas Company None
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Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such report),
The Laclede Group, Inc.: Yes X No
---- ----
Laclede Gas Company: Yes X No
---- ----
and (2) has been subject to such filing requirements for the past 90 days:
The Laclede Group, Inc.: Yes No X
---- ----
Laclede Gas Company: 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
1
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (X)
The aggregate market value of the voting stock held by non-affiliates of the
registrant amounted to $446,896,514 as of November 30, 2001.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
Shares Outstanding At
Registrant Description of Common Stock November 30, 2001
---------- --------------------------- -----------------
The Laclede Group, Inc. Common Stock ($1.00 Par Value) 18,877,987
Laclede Gas Company Common Stock ($1.00 Par Value) 100
Incorporated by Reference: Form 10-K Part III
Proxy Statement dated December 26, 2001*
Index to Exhibits is found on page 57.
*The information under the captions "Compensation Committee Report Regarding
Executive Compensation", "Performance Graph", and "Audit Committee Report"
on pages 12-15 of the Proxy Statement are NOT incorporated by reference.
2
Part I
Item 1. Business
The Laclede Group, Inc. (Laclede Group) is a public utility holding company
committed to providing reliable natural gas service through its regulated
core utility operations while developing its presence in non-regulated
activities that fit well and provide opportunities for sustainable growth.
Its primary subsidiary--Laclede Gas Company (Laclede Gas)--is the largest
natural gas distribution utility in Missouri, serving more than 630,000
residential, commercial and industrial customers in St. Louis and
surrounding counties of eastern Missouri. As an adjunct to its distribution
service, Laclede Gas also operates underground natural gas storage fields.
Non-regulated subsidiaries at this time provide less than 10% of revenues.
To the extent information presented in this annual report on Form 10-K is as
of September 30, 2001, that information is reported for Laclede Gas, and not
Laclede Group.
NATURAL GAS SUPPLY
Beginning with the Natural Gas Policy Act of 1978, the federal government
began the process of deregulating producer prices of natural gas. Today, a
completely unregulated and highly competitive market exists for natural gas
supplies. Prices change by the minute and are heavily impacted by the
weather, storage levels, futures prices and the myriad factors that
influence a market based entirely on the economic forces of supply and
demand. In the early 1990s, the federal government unbundled the traditional
merchant function of interstate pipeline transmission companies, prohibiting
them from entering into bundled relationships with local distribution
companies such as Laclede. Now, we make our own supply, storage, and
transportation arrangements, assuming more responsibility and risk than ever
before. In addition, state regulators are taking a more active role in
utility gas supply strategies and, specifically, gas purchase decisions.
The fundamental gas supply strategy of Laclede Gas remains unchanged--to
meet the two-fold objective of: 1) ensuring that the gas supplies we acquire
are dependable and will be delivered when needed and, 2) insofar as is
compatible with that dependability, purchasing gas that is economically
priced. In structuring our natural gas supply portfolio, we continue to
focus on a diverse group of suppliers that either own or control significant
natural gas assets and that are strategically positioned to meet our primary
objectives. We utilize both Mid-Continent and Gulf Coast gas sources to
provide a level of supply diversity that facilitates the optimization of
pricing differentials as well as protecting against the potential of
regional supply disruptions.
In fiscal 2001, Laclede Gas purchased natural gas from 25 different
suppliers to meet current gas sales and storage injection requirements.
Natural gas purchased by Laclede Gas for delivery to our service area
through the Mississippi River Transmission Corporation (MRT) system during
the year totaled 78.4 billion cubic feet (Bcf). Laclede Gas holds firm
transportation on several interstate pipeline systems that access these gas
supplies upstream of MRT. Our western takepoints received an additional 10.0
Bcf of gas from Panhandle Eastern Pipe Line Company through the Missouri
Pipeline Company (MPC) system and 8.3 Bcf from the Williams Gas Pipeline
system. Some of our commercial and industrial customers also purchased their
own gas and delivered to us approximately 18.2 Bcf for transportation to
them through our distribution system.
The fiscal 2001 peak day sendout of natural gas to Laclede Gas customers
occurred on December 21, 2000, when the average temperature was 8 degrees
Fahrenheit. On that day, our customers consumed 982,244 million Btu of
natural gas. About 77% of this peak day demand was met with natural gas
transported to
3
St. Louis through the MRT, MPC, and Williams transportation systems, and 23%
was met from our on-system storage and peak shaving resources.
UNDERGROUND NATURAL GAS STORAGE
Laclede Gas has a contractual right to store approximately 23.1 Bcf of gas
in MRT's storage system located in Unionville, Louisiana. MRT's tariffs
allow injections into storage from May 16 through November 15 and require
the withdrawal from storage of all but 2.2 Bcf from November 16 through May
15.
In addition, Laclede Gas supplements flowing pipeline gas with natural gas
withdrawn from its underground storage field located in St. Louis and St.
Charles Counties. The field is designed to provide 357,000 MMBtu of natural
gas withdrawals on a peak day, and annual withdrawals of approximately
5,500,000 MMBtu of gas based on the inventory level that Laclede plans to
maintain.
PROPANE SUPPLY
Laclede Pipeline Company, a wholly owned subsidiary, operates a propane
pipeline that connects the propane storage facilities of Laclede Gas in St.
Louis County, Missouri, to propane supply terminal facilities located at
Wood River and Cahokia, Illinois. Laclede Gas vaporizes the propane to
supplement its natural gas supply and meet the peak demands on the
distribution system.
REGULATORY MATTERS
At the federal level, the Federal Energy Regulatory Commission (FERC)
continues to consider changes in the regulation of interstate pipeline
transportation service that could affect the future costs of Laclede Gas
and, ultimately, the rates its customers pay. Laclede Gas is monitoring
these developments closely and will intervene when necessary to promote the
best interests of both Laclede Gas and its customers.
At the state level, there have been several important developments during
the last fiscal year affecting Laclede Gas, some of them are still pending.
On May 18, 2001, Laclede Gas filed a request with the Missouri Public
Service Commission for a general rate increase that would add $39.8 million
in annual revenues. The Commission suspended the implementation of the
proposed rates until April 15, 2002, and set the case for hearing. In
mid-November 2001, we reached an agreement with the Commission's Staff, the
Office of Public Counsel, and other parties on a settlement that would
increase our annual revenues by about $15 million. The Commission approved
this agreement, and new rate schedules became effective for natural gas
service rendered on and after December 1, 2001.
Last winter, natural gas prices at the wellhead soared to approximately $10
per MMBtu as a result of weak supply fundamentals before the start of the
winter season and the record cold temperatures in November and December
2000. As a result, in late January 2001, Laclede Gas made an unscheduled
Purchased Gas Adjustment (PGA) filing to increase the gas cost component of
its rates. The Company subsequently lowered its rates in February in
response to a rapid reduction in natural gas prices and to expedite the
flow-through to customers of certain savings Laclede Gas realized from its
Price Stabilization Program. During the period of high gas bills, several
groups--including the Missouri Attorney General, a special task force
created by the Commission, and the Missouri Energy Task Force created by
Governor Bob Holden--were commissioned to investigate the cause of the high
natural gas prices. The investigations found, as Laclede Gas anticipated,
that Missouri's natural gas distribution companies did not contribute to the
problem of high wholesale prices.
4
In the near future, Laclede Gas plans to make a filing with the Commission
to revise our PGA clause so that we would be permitted to adjust the gas
cost component of our rates more frequently to recover our costs. This is
prompted by our inability, under our current tariffs, to recover our gas
costs on a timely basis during this past winter when natural gas prices
skyrocketed. Since November 1997, we have been restricted to two scheduled
gas cost adjustments per year, one in November at the start of the winter
season and one in April at the start of the summer season. In addition, if
certain conditions were met, we were permitted to make one unscheduled
adjustment during the winter months. Under our proposed new system, we would
implement scheduled gas cost adjustments in November, January, March and
June, thereby enabling us to more closely recover our cost of gas,
especially during the high-volume winter months.
In November 2000 Laclede Gas made a filing to make certain revisions to its
Gas Supply Incentive Plan (GSIP), which was scheduled to expire on September
30, 2001. Our filing was opposed by the Commission Staff and the Office of
the Public Counsel, and on September 20, 2001, the Commission voted to let
the Company's GSIP expire. Laclede Gas has filed for rehearing of this
matter and is prepared to pursue its options in the courts, if necessary.
During fiscal 2001, Laclede Gas achieved approximately $28.6 million in
gains from its incentive-based Price Stabilization Program (PSP), which we
shared with our customers. In December 2000, the Staff of the Commission and
the Office of the Public Counsel recommended to the Commission that the PSP
be terminated at the end of the 2000-2001 winter. We vigorously opposed such
termination and, in February 2001, to resolve the challenges to continuation
of the program, we offered to forego our retention of $4 million of our
share of PSP gains so that additional financial instruments could be
purchased for the 2001-2002 heating season. The Commission subsequently
issued an order in which it accepted our offer and declined to terminate the
PSP before the end of the 2001-2002 heating season. In October 2001, because
of concerns expressed by the Commission in its GSIP order regarding the
pre-approval of parameters for purchasing financial instruments, we decided
not to seek renewal of the PSP beyond the current heating season.
On March 29, 2001, Laclede Gas' principal pipeline supplier, MRT, filed a
rate increase with the Federal Energy Regulatory Commission that would have
increased Laclede's cost for transportation and storage services on MRT's
system by approximately $8 million per year. In October 2001, MRT, Laclede
Gas, and other parties agreed to a settlement that reduces Laclede Gas' cost
on MRT by approximately $6 million over the five-year period beginning
October 1, 2001.
OTHER PERTINENT MATTERS
At its January 25, 2001 annual meeting of shareholders, Laclede Gas
shareholders approved, by a two-thirds majority, a proposal to reorganize
its corporate structure to form a holding company, known as The Laclede
Group, Inc. Laclede subsequently received the necessary approval for this
restructuring from the MoPSC, and the corporate restructuring became
effective on October 1, 2001. Under the new structure, Laclede Gas and its
former subsidiaries operate as separate subsidiaries of The Laclede Group.
The following charts illustrate the major organizational changes resulting
from this restructuring.
5
Organization Structure
Prior to October 1, 2001
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Laclede Gas Company
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Laclede Investment LLC Laclede Development Company Laclede Pipeline Company
----------------------------------- ----------------------------- -------------------------
| |
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Laclede Energy Resources, Inc. Laclede Venture Corp.
----------------------------------- -----------------------------
|
-----------------------------------
Laclede Gas Family Services, Inc.
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Organization Structure
Effective October 1, 2001
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The Laclede Group, Inc.
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|
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| | | |
--------------------- ----------------------------------- ----------------------------- --------------------------
Laclede Gas Company Laclede Investment LLC Laclede Development Company Laclede Pipeline Company
--------------------- ----------------------------------- ----------------------------- --------------------------
| |
----------------------------------- -----------------------------
Laclede Energy Resources, Inc. Laclede Venture Corp.
----------------------------------- -----------------------------
|
-----------------------------------
Laclede Gas Family Services, Inc.
-----------------------------------
Since the October 1, 2001 restructuring, stock certificates previously
representing shares of Laclede Gas common stock have represented the same
number of shares of The Laclede Group common stock. All serial preferred
stock issued by Laclede Gas remains issued and outstanding as shares of
Laclede Gas serial preferred stock. The dividend rate for the preferred
stock has not changed and those dividends will continue to be paid by
Laclede Gas. All outstanding indebtedness and other obligations of Laclede
Gas prior to the restructuring remain outstanding as obligations of Laclede
Gas.
On October 1, 2001, The Laclede Group had no outstanding securities other
than common stock, but it could issue other securities in the future. The
Laclede Group common stock is listed on the New York Stock Exchange and
trades under the ticker symbol "LG".
The consolidated financial statements and these associated notes were based
upon the corporate organizational structure that was in place during the
three fiscal years ended September 30, 2001. As previously discussed, the
corporate reorganization became effective on October 1, 2001. However, had
the reorganization occurred on September 30, 2001, The Laclede Group's
consolidated financial statements and associated notes would have been
virtually identical to those reported in these financial statements and
notes thereto.
On December 12, 2001, Laclede Group reached an agreement with NiSource Inc.
to acquire 100% of the stock of SM&P Utility Resources, Inc., one of the
nation's largest underground locating and marking service businesses. The
$43 million transaction is expected to close in January 2002 and to be
accretive to earnings beginning in fiscal 2002.
SM&P, a Carmel, Indiana-based company, performs over 10 million locates a
year and currently generates approximately $130 million in revenues from the
$1.3 billion facility-locating industry. Its 2,000 employees operate across
10 centrally located states--Illinois, Indiana, Kansas, Michigan, Minnesota,
Missouri, Ohio, Oklahoma, Texas and Wisconsin.
6
Locators mark the placement of underground facilities for major providers of
natural gas, electric, water, cable TV and fiber optic services so that
construction work can be performed without damaging buried facilities.
SM&P's revenue flow is expected to not only diversify Laclede Group's
earnings but also to be counter-seasonal to those of Laclede Gas. This
acquisition will be financed initially with conventional bank debt. When the
transaction is closed, SM&P will operate as a subsidiary of Laclede Group
and will remain headquartered in Indiana.
The business of Laclede Gas is subject to a seasonal fluctuation with the
peak period occurring in the winter season.
*****
As of September 30, 2001, Laclede Gas had 1,997 employees, which includes 14
part-time employees.
*****
Laclede Gas has a labor agreement with Locals 5-6 and 5-194 of the Paper,
Allied-Industrial, Chemical & Energy Workers International Union (formerly
known as the Oil, Chemical and Atomic Workers International Union), two
locals which represent approximately 70% of Laclede's employees. On July 30,
2000, Laclede and Union representatives reached a new four-year labor
agreement replacing the prior agreement which was to expire July 31, 2000.
The new contract extends through July 31, 2004. The settlement resulted in
wage increases of 2.75% in all four years, along with lump-sum payment
provisions and other benefit improvements.
*****
The business of Laclede Gas 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 suppliers of fuel oil, coal, 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 has historically been 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 made a net
conversion of four steam customers representing approximately 2.2 million
annual therm sales.
Laclede Gas' residential, commercial, and small industrial markets,
representing 90% of sales, remain committed to gas. Laclede Gas 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. Laclede'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 Gas 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 Gas 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 Gas
and new opportunities for cogeneration and large tonnage air conditioning
applications.
7
*****
Laclede Gas is subject to various environmental laws and regulations. To
date they have not materially affected the financial position and results of
operations of Laclede Gas. By far, the single largest environmental issue
facing Laclede, and the gas industry as a whole, is the cleanup of former
manufactured gas plants (or "MGPs"). For a detailed discussion of
environmental matters, see Note 13 in the Notes to the Consolidated
Financial Statements on page 46.
*****
No additional common stock shares were issued in fiscal 2001 or fiscal 2000.
Customers and revenues contributed by each class of customers of Laclede Gas
for the last three fiscal years are as follows:
Utility Operating Revenues $(000)
2001 2000 1999
---- ---- ----
Residential $619,090 $346,159 $324,115
Commercial & Industrial 250,741 123,578 112,890
Interruptible 3,063 1,922 1,808
Transportation 14,350 13,722 14,132
Off-System and Other Incentive 30,218 40,163 16,216
Provision for Refunds and Other 12,055 5,608 4,549
-------- -------- --------
Total $929,517 $531,152 $473,710
======== ======== ========
Customers (End of Period)
2001 2000 1999
---- ---- ----
Residential 584,269 586,783 582,719
Commercial & Industrial 39,264 39,419 39,041
Interruptible 15 14 13
Transportation 152 154 155
------- ------- -------
Total Customers 623,700 626,370 621,928
======= ======= =======
Laclede Gas has franchises having initial terms varying from five years to
an indefinite duration. Generally, a franchise allows Laclede Gas to lay
pipes and other facilities in the community. The franchise in Florissant,
Missouri expired in 1992 and since that time Laclede has continued to
provide service in that community without a formal franchise. All of the
franchises are free from unduly burdensome restrictions and are adequate for
the conduct of Laclede Gas' current public utility business in the State of
Missouri.
*****
Laclede Investment LLC, a wholly owned subsidiary of The Laclede Group,
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 LLC, is engaged in non-utility efforts to market natural gas and
related activities.
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 promotes the sale of insurance-related products.
8
Laclede Development Company, a wholly owned subsidiary of The Laclede Group,
participates in real estate development, primarily through joint ventures.
Laclede Venture Corp., a wholly owned subsidiary of Laclede Development
Company, offers services for the compression of natural gas to third parties
who desire to use or to sell compressed natural gas for use in vehicles.
Laclede Venture Corp. also has a 28.5% interest in the LBP Partnership, a
general partnership which previously engaged in research and development of
light beam profiling technology. There is presently no book value and no
effect on earnings is anticipated from this partnership investment.
The lines of business that constitute the non-utility activities of the
corporate family are not considered separately reportable operating segments
as defined by current accounting standards.
Item 2. Properties
The principal utility properties of Laclede Gas consist of approximately
8,092 miles of gas main, 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 Laclede Gas' utility plant is subject
to the liens of its mortgage.
All of the utility properties of Laclede Gas 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 2005 with options to renew for up to 15 additional years.
The non-utility properties of The Laclede Group do not constitute a
significant portion of its properties.
Item 3. Legal Proceedings
For a description of environmental matters, see Note 13 to the Consolidated
Financial Statements on page 46. For a description of pending regulatory
matters of Laclede Gas, see Part I, Item I, Business, Regulatory Matters on
page 4.
In late August 2001, Laclede Gas was named a defendant in a lawsuit in the
Circuit Court of the City of St. Louis, Missouri, Ronald J. Johnson vs.
Laclede Gas Company, alleging that a class of persons residing in homes
provided natural gas by Laclede Gas through direct buried copper service
lines have, among other things, suffered diminution in property values and
annoyance and discomfort due to residing in homes served by such allegedly
corroded lines. The suit seeks actual and punitive damages and an injunction
requiring the repair and/or replacement of all such lines, which are alleged
to number approximately 78,000. By letter dated September 21, 2001, its
liability insurer advised Laclede Gas that the claims in the lawsuit, as
presently pled, fail to qualify for any coverage under its excess general
liability policy. Laclede Gas disagrees and continues to assert its right to
coverage under the policy. The gas distribution business of Laclede Gas is
regulated by the MoPSC, including as to safe and adequate service and rate
matters. Under a current program, the Commission has provided for the
monitoring and replacement of such lines. The costs of replacement,
including carrying costs, have been included in rates established by the
Commission. The MoPSC has filed a Motion to Intervene and a Motion to Strike
Plaintiff's Prayer for Injunctive Relief and to Stay Matters Within the
Primary Jurisdiction of the MoPSC. The court subsequently granted the
MoPSC's request for intervention. Laclede Gas filed a Motion to Dismiss
which urged, among other things, the exclusive jurisdiction of the MoPSC as
to gas safety matters generally and the direct buried copper
9
service replacement program in particular. Laclede Gas presently expects
that the Court will rule on its motion to dismiss the claims by December 31,
2001. If the suit is not dismissed, Laclede Gas currently expects that the
Court would rule on class certification in mid-2002 and that a trial would
be set for sometime after the beginning of 2003. At this time Laclede Gas
does not believe that the ultimate outcome of the case will be materially
adverse. However, litigation is inherently uncertain and to the extent that
Laclede Gas incurs expense above amounts of available insurance, if any, and
those which may be recovered in rates under the Commission's program, the
litigation could have a material effect on the future financial position and
results of operations of Laclede Gas.
Laclede Gas 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.
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 2001.
EXECUTIVE OFFICERS OF REGISTRANT
Name, Age, and Position with Company Appointed (1)
D. H. Yaeger, Age 52
The Laclede Group
-----------------
Chairman, President and Chief Executive Officer October 2000
Laclede Gas
-----------
Chairman, President and Chief Executive Officer January 1999
President and Chief Executive Officer January 1999
President and Chief Operating Officer December 1997
Executive Vice President - Operations and
Marketing September 1995
G. T. McNeive, Jr., Age 59
The Laclede Group
-----------------
Senior Vice President October 2000
Laclede Gas
-----------
Senior Vice President - Finance and General
Counsel March 1998
Senior Vice President - Finance and Chief
Financial Officer September 1995
K. J. Neises, Age 60
Laclede Gas
-----------
Senior Vice President - Energy and
Administrative Services March 1998
Senior Vice President - Gas Supply and
Regulatory Affairs September 1995
J. Moten, Jr., Age 60
Laclede Gas
-----------
Senior Vice President - Operations and Marketing July 2001
Vice President - Community Relations January 1994
10
R. E. Shively, Age 39
Laclede Gas
-----------
Senior Vice President - Business and Services
Development (2) January 2001
C. R. Hoeferlin, Age 39
Laclede Gas
-----------
Vice President - Operations July 2001
Assistant Vice President - Operations January 2001
(Superintendent of Operations) May 1999
(Chief Engineer) December 1996
(Senior Maintenance Engineer) January 1996
M. R. Spotanski, Age 41
Laclede Gas
-----------
Vice President - Finance January 2001
Assistant Vice President - Finance January 2000
(Assistant to the President) March 1998
(Manager, Gas Supply Planning) January 1996
(Senior Rate Analyst) January 1992
P. J. Palumbo, Age 56
Laclede Gas
-----------
Vice President - Industrial Relations September 1992
J. A. Fallert, Age 46
Laclede Gas
-----------
Controller February 1998
(Manager, Financial Services) February 1992
R. L. Krutzman, Age 55
The Laclede Group
-----------------
Treasurer and Assistant Secretary October 2000
Laclede Gas
-----------
Treasurer and Assistant Secretary February 1996
(Manager, Tax and Payroll) February 1992
M. C. Kullman, Age 41
The Laclede Group
-----------------
Corporate Secretary October 2000
Laclede Gas
-----------
Secretary and Associate General Counsel February 2001
Secretary and Associate Counsel February 1998
(Associate Counsel) August 1990
P. B. Hunker, Jr., Age 62
Laclede Gas
-----------
Assistant Vice President - Associate General Counsel February 1997
(Associate General Counsel) January 1981
S. F. Mathews, Age 43
Laclede Gas
-----------
Assistant Vice President - Gas Supply February 2001
(Director of Gas Supply) September 1995
M. C. Pendergast, Age 45
Laclede Gas
-----------
Assistant Vice President - Associate General Counsel January 2000
(Associate General Counsel) November 1997
(Assistant General Counsel) November 1993
11
R. L. Sherwin, Age 48
Laclede Gas
-----------
Assistant Vice President - Regulatory Administration February 1999
Assistant Vice President - Human Resources January 1997
Assistant Vice President - Customer Accounting September 1992
R. A. Skau, Age 44
Laclede Gas
-----------
Assistant Vice President - Human Resources September 2001
(Manager Labor Relations) February 1996
M. D. Waltermire, Age 43
Laclede Gas
-----------
Assistant Vice President - Planning May 2001
(Director - Internal Audit) January 1995
L. D. Rawlings, Age 48
Laclede Gas
-----------
Assistant Treasurer (3) February 2000
( ) 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) Prior to joining Laclede, Mr. Shively was a principal in the Atlanta
office of Scott Madden & Associates since December 1994.
(3) Ms. Rawlings served as Vice President and Assistant Treasurer at
Mercantile Bancorporation, which became Firstar Corp. in September 1999,
from February 1996 to January 2000.
Part II
Item 5. Market for the Registrant's Common Equity and Related Shareholder
Matters
At September 30, 2001, there were 7,922 holders of record of Laclede's
common stock, which was listed on the New York and Chicago Stock Exchanges.
As of October 1, 2001, the certificates for Laclede Gas common stock are
deemed to represent the same number of shares of The Laclede Group common
stock. The Laclede Group's stock is listed on the NYSE and trades under the
symbol "LG."
Common Stock Market and Dividend Information
Price Range Dividends
Fiscal 2001 High Low Declared
--------------------------------------------------------
1st Quarter 24.7500 21.3750 $.335
2nd Quarter 24.6250 21.2500 $.335
3rd Quarter 25.4800 23.1000 $.335
4th Quarter 25.4000 21.7500 $.335
Price Range Dividends
Fiscal 2000 High Low Declared
--------------------------------------------------------
1st Quarter 23.4375 20.0000 $.335
2nd Quarter 21.8750 17.5000 $.335
3rd Quarter 20.6250 18.7500 $.335
4th Quarter 22.6875 19.1875 $.335
12
Item 6. Selected Financial Data
Fiscal Years Ended September 30
(Thousands Except Per Share 2001 2000 1999 1998 1997
Amounts) ---- ---- ---- ---- ----
Summary of Operations
Operating Revenues:
Utility operating revenue $ 929,517 $531,152 $473,710 $548,192 $607,236
Non-utility operating
revenues 72,592 34,976 17,608 13,651 8,494
--------------------------------------------------
Total operating revenues 1,002,109 566,128 491,318 561,843 615,730
--------------------------------------------------
Operating Expenses:
Utility operating expenses:
Natural and propane gas 645,761 295,263 246,350 311,869 357,755
Other operation expenses 101,936 87,063 83,762 86,183 90,778
Maintenance 19,327 18,644 19,583 18,720 18,273
Depreciation & amortization 26,337 24,774 21,490 25,310 25,890
Taxes, other than
income taxes 65,077 42,799 41,669 43,782 46,543
--------------------------------------------------
Total utility operating
expenses 858,438 468,543 412,854 485,864 539,239
Non-utility operating
expenses 71,346 34,242 17,245 12,659 7,547
--------------------------------------------------
Total operating expenses 929,784 502,785 430,099 498,523 546,786
--------------------------------------------------
Operating Income 72,325 63,343 61,219 63,320 68,944
Allowance for Funds Used
During Construction 749 397 739 609 367
Other Income and Income
Deductions - Net 668 338 (942) 674 597
--------------------------------------------------
Income Before Interest
and Income Taxes 73,742 64,078 61,016 64,603 69,908
--------------------------------------------------
Interest Charges:
Interest on long-term debt 18,372 15,164 13,966 14,797 14,169
Other interest charges 10,067 8,844 6,627 6,473 4,919
--------------------------------------------------
Total interest charges 28,439 24,008 20,593 21,270 19,088
--------------------------------------------------
Income Before Income Taxes 45,303 40,070 40,423 43,333 50,820
Income Taxes (Note 9) 14,831 14,105 14,361 15,441 18,354
--------------------------------------------------
Net Income 30,472 25,965 26,062 27,892 32,466
Dividends on Preferred
Stock 87 93 97 97 97
--------------------------------------------------
Earnings Applicable to
Common Stock $ 30,385 $ 25,872 $ 25,965 $ 27,795 $ 32,369
==================================================
Earnings Per Share of
Common Stock $1.61 $1.37 $1.43 $1.58 $1.84
==================================================
13
Item 6. Selected Financial Data (continued)
Fiscal Years Ended September 30
(Thousands Except Per Share 2001 2000 1999 1998 1997
Amounts) ---- ---- ---- ---- ----
Dividends Declared-
Common Stock $ 25,296 $ 25,297 $ 24,459 $ 23,229 $ 22,825
Dividends Declared Per
Share of Common Stock $1.34 $1.34 $1.34 $1.32 $1.30
Utility Plant
Gross Plant-End of Period $ 955,161 $921,378 $876,431 $835,923 $794,901
Net Plant-End of Period 572,619 548,833 519,378 490,682 467,678
Construction Expenditures 46,952 51,635 48,698 47,254 42,842
Property Retirements 13,141 6,663 8,190 6,205 6,241
Total Assets $ 975,910 $931,740 $837,664 $777,291 $726,568
Capitalization-
End of Period
Common Stock and Paid-In
Capital $ 106,590 $106,579 $106,570 $ 82,460 $ 80,628
Retained Earnings 205,512 200,423 199,848 198,342 193,776
Accumulated other
Comprehensive Income - - (77) - -
Treasury Stock (24,017) (24,017) (24,017) (24,017) (24,017)
--------------------------------------------------
Common stock equity 288,085 282,985 282,324 256,785 250,387
Redeemable Preferred Stock 1,588 1,763 1,923 1,960 1,960
Long-Term Debt 284,459 234,408 204,323 179,238 154,413
--------------------------------------------------
Total capitalization $ 574,132 $519,156 $488,570 $437,983 $406,760
==================================================
Shares of Common Stock
Outstanding-End of period 18,878 18,878 18,878 17,628 17,558
Book Value Per Share $15.26 $14.99 $14.96 $14.57 $14.26
14
Item 7. Management's Discussion and Analysis of Financial Condition
This management's discussion analyzes the financial condition and results of
operations of Laclede Gas Company (Laclede Gas) and its subsidiaries, under
the corporate organizational structure that was in place during the three
fiscal years ended September 30, 2001. Effective October 1, 2001, the
corporation reorganized, such that Laclede Gas and its subsidiaries became
separate subsidiaries of The Laclede Group, Inc. (Laclede Group), an exempt
holding company under the Public Utility Holding Company Act of 1935. Note 2
to the Consolidated Financial Statements discusses the new holding company
structure.
RESULTS OF OPERATIONS
The primary use for natural gas in the Laclede Gas service area is for
residential and commercial heating. Colder weather results in increased
volumes of natural gas sold and transported, thus contributing to higher
earnings. Temperatures in the Laclede Gas service area during fiscal 2001
were 10% colder than normal and 30% colder than in fiscal 2000--which was
the third warmest over the last 100 years. Fiscal 2000 temperatures were 16%
warmer than normal and 5% warmer than those experienced in fiscal 1999,
which represented the seventh warmest of the century.
As a result of the colder weather experienced during fiscal 2001 (compared
with fiscal 2000), consolidated earnings, at $1.61 per share, were up nearly
18% over fiscal 2000 earnings of $1.37 per share (both periods on average
shares outstanding of 18,877,987). Earnings per share were $1.43 in fiscal
1999 (on average shares outstanding of 18,138,261). Earnings applicable to
common stock was $30.4 million for fiscal 2001, $25.9 million for fiscal
2000, and $26.0 million for fiscal 1999.
The $0.24 per share increase in fiscal 2001 earnings versus fiscal 2000
($1.61 compared with $1.37) was primarily due to the benefit of the colder
weather experienced during 2001. However, the benefit was partially offset
by higher expenses that resulted from last winter's high wholesale natural
gas prices. These included a higher provision for uncollectible accounts and
higher carrying costs reflecting the interest and other costs incurred by
Laclede Gas from the date it purchased gas in the wholesale market to the
time it received payment from its customers. Laclede Gas does not benefit
from higher wholesale natural gas prices, which are set in a competitive
national market, but passes its actual purchased gas costs through to
customers. In addition to the increased costs related to last winter's high
wholesale gas prices, fiscal 2001 expenses were higher, when compared with
fiscal 2000, due to higher pension costs, expenses related to the formation
of a holding company, and other increased costs of doing business.
The slight decrease in earnings in fiscal 2000 (from fiscal 1999) was
primarily due to lower system sales volumes arising from the warmer weather
experienced during fiscal 2000, higher pension and group insurance costs and
higher depreciation expense. Largely offsetting these factors during fiscal
2000 were the benefit of the Laclede Gas general rate increase which became
effective December 27, 1999, higher income related to the Gas Supply
Incentive Plan and off-system sales, and a lower provision for uncollectible
accounts.
Fiscal 2001 consolidated earnings per share of $1.61 include $0.29 per share
attributable to the Laclede Gas Company Gas Supply Incentive Plan, an
incentive-based program under which Laclede Gas shared with its customers
certain gains and losses related to the acquisition and management of its
gas supply assets. On September 20, 2001, the Missouri Public Service
Commission (MoPSC or Commission), with one dissent, ruled that the program
should be allowed to expire on September 30, 2001. Laclede Gas has requested
clarification and rehearing, to which the Commission has not yet responded.
During its five years of operation, the program has generated more than $160
million in benefits--nearly 80% of which went to reduce customer costs.
These
15
benefits, which were generated overwhelmingly by transactions involving
out-of-state natural gas producers and marketers, were used to help lower
the bills paid by Laclede Gas customers in Missouri. The benefits were
achieved through new, innovative gas supply arrangements developed by
Laclede Gas, many of which involved Laclede Gas assuming increased risk. The
incentive structure rewarded Laclede Gas for its cost-savings effectiveness
by permitting it to retain for its shareholders a portion of the total gas
cost savings it achieved.
Utility operating revenues for fiscal year 2001 increased $398.4 million, or
75.0%, above fiscal 2000, and in 2000 increased $57.4 million, or 12.1%,
above fiscal 1999. The 2001 increase in utility operating revenues was
primarily due to higher wholesale gas costs of $317.3 million (reflecting
the unprecedented rise in market prices last winter), higher gas sales
volumes and other variations amounting to $87.4 million, and, to a lesser
extent, the remaining effect of the Laclede Gas 1999 general rate increase
of $3.6 million. These factors were slightly offset by lower off-system
sales and incentive revenues of $9.9 million. The 2000 increase in utility
operating revenues was primarily due to: higher wholesale gas costs of $47.4
million, higher off-system sales and other incentive plan revenues of $23.9
million, and higher revenues of $7.3 million attributable to the partial
year effect of the 1999 general rate increase. These factors were partially
offset by lower gas sales volumes arising from the warmer weather and other
variations, which combined total $21.2 million. Total therms sold and
transported in 2001 were 1,118.7 million compared with 1,035.2 million in
2000 and 1,025.9 million in 1999.
Non-utility operating revenues increased $37.6 million in fiscal 2001 (from
2000) and $17.4 million in fiscal 2000 (from 1999). The increase each year
was primarily due to higher gas marketing sales in both periods by Laclede
Energy Resources, Inc., a wholly owned non-utility subsidiary.
Utility operating expenses in fiscal 2001 increased $389.9 million, or
83.2%, from fiscal 2000, and in 2000 increased $55.7 million, or 13.5%, from
fiscal 1999. Natural and propane gas expense increased $350.5 million in
fiscal 2001 from fiscal 2000 primarily due to nationwide increases in
natural gas rates charged by our suppliers and higher volumes purchased for
sendout arising from the colder weather, the effects of which were slightly
offset by lower off-system sales gas expense. Natural and propane gas
expense increased $48.9 million in fiscal 2000 from fiscal 1999 primarily
due to higher rates charged by our suppliers and higher off-system sales gas
expense, partially offset by lower volumes purchased for sendout. Other
operation and maintenance expenses in 2001 increased $15.6 million, or
14.8%, over 2000 primarily due to increased net pension costs, a higher
provision for uncollectible accounts, increased distribution and maintenance
costs, higher wage rates, and other increases in the costs of doing
business. Other operation and maintenance expenses in 2000 increased $2.4
million, or 2.3%, over 1999 principally due to increased net pension costs,
higher group insurance charges, and increased wage rates. These increases
were partially offset by lower provisions for uncollectible accounts and
injuries and damages, reduced charges for maintenance and distribution and
successful ongoing cost-control efforts. Depreciation and amortization
expense in 2001 increased $1.6 million, or 6.3%, primarily due to additional
depreciable property. In 2000, depreciation and amortization expense
increased $3.3 million, or 15.3%, primarily due to additional depreciable
property and an increased proportion of amortization related to
shorter-lived property. Taxes, other than income taxes, increased $22.3
million in 2001 compared with 2000 and $1.1 million in 2000 compared with
1999. The increases in both periods were principally attributable to higher
gross receipts taxes (mainly reflecting increased gas sales revenues).
Non-utility operating expenses increased $37.1 million in fiscal 2001
(compared with 2000), and increased $17.0 million in fiscal 2000 (compared
with 1999). The increase in both periods was primarily due to higher gas
expense associated with gas marketing sales by Laclede Energy Resources,
Inc.
Other income and income deductions-net in 2001 increased $.7 million from
2000 primarily due to higher interest income, partially offset by expenses
related
16
to the holding company formation and strategic planning initiatives. Other
income and income deductions-net increased by $1.0 million in 2000 compared
with 1999. The change from 1999 to 2000 mainly reflects the effect of a
one-time $3.2 million pre-tax charge recognized in 1999 resulting from the
minority participation of Laclede Gas in Clark Enterprises. Clark
Enterprises was comprised of a group of civic-minded St. Louis firms that
owned the St. Louis Blues Hockey team and also financed and operated the
Kiel Center in downtown St. Louis, the sale of which was negotiated and
completed in September 1999. This non-recurring charge was partially offset
by a pre-tax gain of approximately $1.9 million recognized in 1999 by a
wholly owned subsidiary of Laclede Gas, Laclede Development Company, on the
sale of property known as Centre Park 40. Laclede Development owned its
interest in Centre Park 40 through a real estate partnership.
Interest expense increased $4.4 million, or 18.5%, in fiscal 2001 from 2000
and increased $3.4 million, or 16.6% in fiscal year 2000 from 1999. The 2001
increase was mainly due to the issuance of $30 million of 7.90% first
mortgage bonds in September 2000, the issuance of $50 million of 6 5/8%
first mortgage bonds in June 2001, and increased short-term interest expense
(reflecting the net effect of higher average borrowings and lower rates).
The 2000 increase was mainly due to increased short-term interest expense
(reflecting higher average borrowings and increased rates) and the issuance
of $25 million of 7% first mortgage bonds in June 1999.
The changes in income tax expenses for all periods reported are mainly due
to changes in pre-tax income.
On July 30, 2000, Laclede Gas and Union representatives reached a new
four-year labor agreement replacing the prior agreement that was to expire
July 31, 2000. The new contract extends through July 31, 2004. The
settlement resulted in wage increases of 2.75% in all four years, along with
lump-sum payment provisions and other benefit improvements.
REGULATORY MATTERS
At the state level, there have been several important developments during
the fiscal year affecting Laclede Gas, some of which are still pending.
On May 18, 2001, Laclede Gas filed a request with the Missouri Public
Service Commission for a general rate increase of $39.8 million annually to
recover costs related to the operation of its distribution system. This
filing culminated in a settlement among the parties to the case, which was
approved by the Commission on November 29, 2001. The settlement provided
Laclede Gas an annual increase of about $12 million effective December 1,
2001. Additionally, effective on December 1, 2001 Laclede Gas is permitted
to charge customers $36 to cover the cost of initiating service at a
particular address. This new charge is anticipated to generate additional
revenue of about $3 million annually. The settlement also provided for the
continued deferral of certain costs related to the Laclede Gas pipe
replacement program as well as recovery of costs previously deferred under
that program. The cost of removing retired utility plant is treated as an
expense pursuant to this settlement, rather than being included in
depreciation rates. However, Laclede Gas will continue to pursue a reversal
of the Commission's treatment of depreciation rates in the courts as
discussed in greater detail below. As part of the settlement, Laclede Gas
agreed to implement the terms of a rulemaking promulgated by the Commission
on November 8, 2001 which relaxed the requirements for this coming winter
heating season for reinstatement of certain customers who had been
disconnected for nonpayment. The settlement provides for a recovery
mechanism under which Laclede Gas will be reimbursed for any incremental
costs associated with the new rule. Finally, under the terms of the
agreement, Laclede Gas continues to be permitted to retain all income
resulting from sales made outside its traditional service area, and
additionally is permitted to retain all income from releases of pipeline
capacity.
17
On April 20, 2001, Laclede Gas filed with the MoPSC a Weather Mitigation
Plan (Plan) that would protect its customers from weather-related
fluctuations in their bills and help stabilize its annual revenues in that
regard. The Plan, as filed, would mitigate the volatile effects of weather
by basing a portion of customers' winter bills on usage associated with
normal weather and adjusting to offset the impact of temperatures that are
colder or warmer than normal. Currently, revenues of Laclede Gas increase or
decrease depending on colder- or warmer-than-normal weather. The weather
adjustment would apply to the distribution costs of Laclede Gas, that
portion of a customer's bill that covers the cost of operating and
maintaining the distribution system and storage facilities. It would not
affect increases and decreases in wholesale gas costs that are passed on to
customers in accordance with the Purchased Gas Adjustment (PGA) Clause. By
stabilizing weather-related revenues, the Plan would allow Laclede Gas to
cover what are primarily fixed costs that do not fluctuate with the weather
while still providing a fair return on investment. On July 12, 2001, the
MoPSC suspended the tariff filing of Laclede Gas in response to motions
filed by the Commission's staff and Office of Public Counsel. A prehearing
conference was held on July 23, 2001. On September 5, 2001, this proceeding
was consolidated with the general rate case proceeding described in the
prior paragraph. As part of the settlement of that case, Laclede Gas agreed
to withdraw this proposal at this time. However, Laclede Gas retains the
right to propose such a program in the future.
On December 14, 1999 the MoPSC issued its report and order in the Laclede
Gas 1999 rate case, in which the MoPSC: (1) approved a partial settlement
reached earlier in the year by the parties on some issues, (2) determined
certain contested issues and (3) authorized Laclede Gas 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, Laclede Gas discontinued deferring
certain costs for future recovery. As approved by the MoPSC, previously
deferred costs are being recovered, without return on investment, effective
with implementation of the new rates on December 27, 1999. The deferral of
certain costs was eliminated going forward, as expenses associated with
those specific areas are included in the approved rates. On May 11, 2000,
Laclede Gas appealed to the Circuit Court of Cole County, Missouri the
MoPSC's decision on one of the contested issues mentioned in item (2) above
relating to the calculation of its depreciation rates. On December 1, 2000,
the court remanded this decision in the MoPSC based on inadequate findings
of fact. On June 28, 2001, the MoPSC issued an Order that upheld its
previous Order. This decision has no adverse impact on the $11.24 million
increase in rates, which became effective December 27, 1999, or the earnings
of Laclede Gas. On September 11, 2001, Laclede Gas appealed the MoPSC's
second order to the Circuit Court. Laclede Gas believes that a favorable
decision, when recognized in rates, would be expected to benefit its cash
flows.
The Price Stabilization Program (PSP) authorizes Laclede Gas to purchase
certain financial instruments in an effort to hedge against significant
increases in the cost of natural gas. The cost of such financial
instruments, however, like the cost of natural gas itself, increased
significantly through this past winter. As a result, the MoPSC granted the
request of Laclede Gas to reduce the amount of natural gas purchases
required to be covered by such financial instruments for this past heating
season. In February 2001, the MoPSC approved modifications to the PSP,
including that $4 million in supplemental funding be added to the PSP for
the purchase of financial instruments for the fiscal 2002 heating season.
Laclede Gas relinquished a claim on $4 million arising from gains realized
from the purchase and sale of such instruments during the fiscal 2001
heating season and offered to utilize a similar amount to provide for future
funding for such instruments. The MoPSC also approved modifications to the
PSP to reduce the fiscal 2002 percentage of gas requirements to be covered
by the PSP. The PSP is scheduled to expire at the end of the fiscal 2002
heating season.
The PGA Clause, through which Laclede Gas flows through to customers the
cost of purchased gas supplies, allows two scheduled PGA filings each year,
one for
18
the summer months and another for the winter period, plus one unscheduled
winter filing if certain conditions are met. The significant fluctuations in
natural gas prices during the past two fiscal years necessitated additional
unscheduled filings, which were approved by the MoPSC, in order to better
match customer billings with market natural gas prices.
In June 2000, the Commission approved an extension of the Gas Supply
Incentive Plan (GSIP) with modifications through September 30, 2001. Under
the GSIP, Laclede Gas shared with its customers certain gains and losses
related to the acquisition and management of its gas supply assets, but was
permitted to retain all income resulting from sales made outside its
traditional service area. These activities continued to provide benefits to
both Laclede Gas' customers and shareholders. Overall cost savings for
Laclede Gas and its customers were $40.4 million in 2001, $28.9 million in
2000, and $28.4 million in 1999. Those efforts resulted in pre-tax income to
shareholders of $10.0 million in 2001, $9.6 million in 2000, and $5.4
million in 1999. In addition to the financial benefits of the program, the
innovative structure under which Laclede Gas operated allowed its customers
to retain the reliability inherent in its longstanding supply relationships.
On November 17, 2000, Laclede Gas filed a proposal with the MoPSC to extend
the GSIP, add a fixed price component and make other modifications to the
plan. On September 20, 2001, the Commission, with one dissent, ruled that
the GSIP should be allowed to expire. Laclede Gas has requested
clarification and rehearing, to which the Commission has not yet responded.
As discussed above, elements of the GSIP related to off-system sales and
capacity release were resolved in the settlement of the 2001 rate case.
However, other issues related to the GSIP remain. For additional information
on the GSIP, see Note 4 of Notes to Consolidated Financial Statements on
page 41.
ACCOUNTING CHANGES
In June 2001, the FASB issued SFAS No. 141, "Business Combinations," which
requires all business combinations in the scope of this Statement to be
accounted for using the purchase method. The provisions of this Statement
apply to all business combinations initiated after June 30, 2001. The FASB
also issued SFAS No. 142, "Goodwill and Other Intangible Assets," which
addresses how acquired goodwill and other intangible assets that are
acquired individually or with a group of other assets (but not those
acquired in a business combination) should be accounted for in financial
statements upon acquisition and after they have been initially recognized in
the financial statements. The provisions of this Statement are required to
be applied at the beginning of fiscal 2003. The adoption of SFAS Nos. 141
and 142 is not expected to have a material effect on the financial position
and results of operations of Laclede Group or Laclede Gas.
The FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations,"
which addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and associated
asset retirement costs. It applies to legal obligations associated with the
retirement of long-lived assets that result from acquisition, construction,
development and/or the normal operation of a long-lived asset, except for
certain obligations of lessees. This Statement is effective for fiscal 2003.
Management is presently evaluating the impact that the adoption of this
Statement will have on the financial position and results of operations of
Laclede Group and Laclede Gas.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets," to consolidate accounting guidance on
various issues related to this matter. Adoption of this Statement is not
expected to have a material effect on the financial position and results of
operations of Laclede Group or Laclede Gas.
19
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 business of Laclede Gas,
the most significant impact of inflation is on the depreciation of utility
plant. Rate regulation to which Laclede Gas is subject allows recovery
through its rates of only the historical cost of utility plan as
depreciation. While no plans exist to undertake replacements of plant in
service other than normal replacements and those under existing replacement
programs, Laclede Gas 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 the operations of Laclede Gas, net of dividend payments, has
generally provided the principal liquidity to meet operating requirements
and to fund the majority of its construction program. Any remaining funding
requirements for construction or other needs have 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 when
Laclede Gas borrows money to cover the gap between when it purchases its
natural gas and when its customers pay 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.
During fiscal year 2001, Laclede Gas had lines of credit in place of up to
$250 million. Laclede Gas sold commercial paper aggregating to a maximum of
$234.8 million at any one time during the fiscal year, but did not borrow
from the banks under the aforementioned agreements. As of November 15, 2001,
Laclede Gas has aggregate lines of credit totaling $170 million. Short-term
borrowings outstanding at September 30, 2001 were $117.1 million at a
weighted average interest rate of 3.2%. Based on short-term borrowings at
September 30, 2001, a change in interest rates of 100 basis points would
increase or decrease pre-tax earnings and cash flows by approximately
$1,171,000 on an annual basis.
On June 26, 2001, Laclede Gas issued $50 million of first mortgage bonds
with an interest rate of 6 5/8% at an overall cost of 6.968%. The bonds were
dated June 15, 2001 and mature June 15, 2016. The proceeds were used to
repay short-term debt. The bonds were rated AAA by Standard & Poor's and
Fitch IBCA and Aaa by Moody's in consideration of insurance issued by Ambac
Assurance covering the timely payment of the principal of, and interest on,
the bonds. These ratings apply only to these insured bonds, and not to the
other outstanding uninsured bonds of Laclede Gas. These bonds were issued
under Laclede Gas' shelf registration statement on Form S-3 and MoPSC
authorization obtained in 2000, of which $270 million remained registered
and unissued as of September 30, 2001. Laclede Group filed a post-effective
amendment to the Form S-3 on October 1, 2001 with respect to the common
stock of Laclede Group that was originally Laclede Gas common stock
registered on Form S-3. The amount, timing and type of securities remaining
to be issued under the shelf registration will depend on cash requirements
and market conditions.
On September 26, 2000, Laclede Gas issued $30 million of first mortgage
bonds with an interest rate of 7.90%, at an overall cost of 7.987%. The
bonds were dated September 15, 2000 and mature September 15, 2030. The
proceeds were used to repay short-term debt. The bonds were rated Aa3 by
Moody's, AA- by Standard & Poor's, and A+ by Fitch. The ratings also apply
to the other outstanding uninsured bonds of Laclede Gas.
20
At September 30, 2001, Laclede Gas had fixed-rate long-term debt totaling
$285 million. While these long-term debt issues are fixed-rate, they are
subject to changes in fair value as market interest rates change. However,
increases or decreases in fair value would impact earnings and cash flows
only if Laclede Gas were to reqcquire any of these issues in the open market
prior to maturity.
Construction expenditures for utility purposes were $47.0 million in fiscal
2001 compared with $51.6 million in fiscal 2000 and $48.7 million in fiscal
1999. Laclede Gas expects fiscal 2002 utility construction expenditures to
approximate $41 million.
Capitalization at September 30, 2001 consisted of 50.2% common stock equity,
.3% preferred stock and 49.5% long-term debt.
The ratio of earnings to fixed charges was 2.6 for 2001, 2.6 for 2000 and
2.9 for 1999.
It is management's view that Laclede Gas has adequate access to capital
markets and will have sufficient capital resources, both internal and
external, to meet anticipated capital requirements.
ENVIRONMENTAL MATTERS
Laclede Gas is subject to various environmental laws and regulations. To
date they have not materially affected the financial position and results of
operations of Laclede Gas. By far, the single largest environmental issue
facing Laclede Gas, and the gas industry as a whole, is the cleanup of
former manufactured gas plants (or "MGPs").
Before the advent of cross-country natural gas pipelines, Laclede Gas
operated MGPs that produced certain by-products and residuals in addition to
"town gas". While the vast majority of those by-products and residuals were
sold as raw material to other industries, it is alleged that some remained
at the MGP sites.
With regard to a former MGP site located in Shrewsbury, Missouri, Laclede
Gas and state and federal environmental regulators have agreed upon certain
actions and those actions are nearing completion. Laclede Gas currently
estimates the overall costs of these actions will be approximately
$1,864,000. As of September 30, 2001, Laclede Gas has paid $1,336,000 and
reserved $528,000 for these actions. If regulators require additional
actions, Laclede Gas will incur additional costs.
Laclede Gas placed a second former MGP site, located in the City of St.
Louis, Missouri, into the Missouri Voluntary Cleanup Program (VCP). The VCP
provides opportunities to minimize the scope and cost of site cleanup while
maximizing possibilities for site development. The City of St. Louis is
presently seeking developers and end-users for this site. If the City is
unsuccessful, Laclede Gas will submit a Remedial Action Plan (or "RAP") in
2002 and work with the City of St. Louis to find a developer to implement
the RAP and develop the site. Laclede Gas currently estimates that the cost
of the site investigations, agency oversight and related legal and
engineering consulting may be approximately $590,000. Currently, Laclede Gas
has paid $485,000 and reserved an additional $105,000. Laclede Gas 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 Laclede Gas to date for
$159,000. Laclede Gas anticipates additional reimbursement from this party
of approximately $69,000. Laclede Gas plans to seek proportionate
reimbursement of all costs relative to this site from other potentially
responsible parties if practicable. For further details, see Note 13 to the
Consolidated Financial Statements on page 46.
21
OTHER MATTERS
In January 2000, Laclede Energy Resources, Inc. (LER) finalized a multi-year
arrangement with UtiliCorp, Inc. (UtiliCorp) to provide a significant
portion of the gas supply for a natural gas fired power plant in Pleasant
Hill, Missouri. The four-year agreement went 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.
In May 2000, the MoPSC approved a copper service line replacement program
for Laclede Gas. In August 2001, a class action lawsuit was filed against
Laclede Gas seeking, among other things, an injunction requiring the
immediate repair and/or replacement of all direct buried copper service
lines, as well as damages, actual and punitive, for alleged diminution in
property values, annoyance and discomfort. At this time, Laclede Gas does
not believe that the ultimate outcome of the case will be materially adverse
to it. For further details on the replacement program and class action
litigation, see Note 13 to the Consolidated Financial Statements on page 46.
FORWARD-LOOKING STATEMENTS
Certain statements in this 10-K are forward-looking statements made based
upon Laclede Group's and its subsidiaries' expectations and beliefs
concerning future developments and their potential effect on the Company.
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 their expectations or beliefs and
the effect of future developments 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 initatives of federal and state regulatory
agencies, some of which could be retroactive, including those
affecting:
o financings
o allowed rates of return
o incentive regulation
o industry and rate structure
o purchased gas adjustment provisions
o franchise renewal
o 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
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.
22
Item 8. Financial Statements and Supplementary Data
Independent Auditors' Report
Laclede Gas Company:
We have audited the consolidated balance sheets and statements of
consolidated capitalization of Laclede Gas Company and its subsidiary
companies as of September 30, 2001 and 2000, and the related statements of
consolidated income, retained earnings, comprehensive income, and cash flows
for each of the three years in the period ended September 30, 2001. Our
audits also included the financial statement schedule listed in the Index at
Part IV, Item 14(a)2. These consolidated financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on the consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated 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, 2001 and 2000, and the results of
their operations and their cash flows for each of the three years in the period
ending September 30, 2001 in conformity with accounting principles generally
accepted in the United States of America. Also, in our opinion, such
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
DELOITTE & TOUCHE LLP
St. Louis, Missouri
November 15, 2001 (November 29, 2001 as to Note 14)
23
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 accounting
principles generally accepted in the United States of America 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 accounting principles generally accepted in the
United States of America 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 Company's financial
statements in accordance with auditing standards generally accepted in the
United States of America. 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.
Douglas H. Yaeger
Chairman of the Board,
President and Chief Executive Officer
Gerald T. McNeive, Jr.
Senior Vice President
Finance and General Counsel
24
Item 8. Financial Statements and Supplementary Data
STATEMENTS OF CONSOLIDATED INCOME
(Thousands Except Per Share Amounts)
----------------------------------------------------------------------
Years Ended September 30 2001 2000 1999
----------------------------------------------------------------------
Operating Revenues:
Utility operating revenues $ 929,517 $531,152 $473,710
Non-utility operating revenues 72,592 34,976 17,608
------------------------------
Total operating revenues 1,002,109 566,128 491,318
------------------------------
Operating Expenses:
Utility operating expenses
Natural and propane gas 645,761 295,263 246,350
Other operation expenses 101,936 87,063 83,762
Maintenance 19,327 18,644 19,583
Depreciation and amortization 26,337 24,774 21,490
Taxes, other than income taxes 65,077 42,799 41,669
------------------------------
Total utility operating expenses 858,438 468,543 412,854
Non-utility operating expenses 71,346 34,242 17,245
------------------------------
Total operating expenses 929,784 502,785 430,099
------------------------------
Operating Income 72,325 63,343 61,219
Other Income and Income Deductions-
Net (Note 11) 1,417 735 (203)
------------------------------
Income Before Interest and
Income Taxes 73,742 64,078 61,016
------------------------------
Interest Charges:
Interest on long-term debt 18,372 15,164 13,966
Other interest charges 10,067 8,844 6,627
------------------------------
Total interest charges 28,439 24,008 20,593
------------------------------
Income Before Income Taxes 45,303 40,070 40,423
Income Taxes (Note 9) 14,831 14,105 14,361
------------------------------
Net Income 30,472 25,965 26,062
Dividends on Preferred Stock 87 93 97
-----------------------------
Earnings Applicable to Common Stock $ 30,385 $ 25,872 $ 25,965
==============================
Average Shares of Common Stock
Outstanding 18,878 18,878 18,138
==============================
Earnings Per Share of Common Stock
(after preferred dividends) $1.61 $1.37 $1.43
==============================
See the accompanying notes to financial statements.
25
STATEMENTS OF CONSOLIDATED RETAINED EARNINGS
(Thousands Except Per Share Amounts)
------------------------------------------------------------------------
Years Ended September 30 2001 2000 1999
------------------------------------------------------------------------
Balance at Beginning of Year $200,423 $199,848 $198,342
Add - Net Income, per statements 30,472 25,965 26,062
------------------------------
Total 230,895 225,813 224,404
------------------------------
Deduct - Cash Dividends Declared:
Preferred stock at required annual rates 87 93 97
Common stock, $1.34 per share in 2001,
2000 and 1999 25,296 25,297 24,459
------------------------------
Total 25,383 25,390 24,556
------------------------------
Balance at End of Year $205,512 $200,423 $199,848
==============================
See the accompanying notes to financial statements.
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
(Thousands of Dollars)
------------------------------------------------------------------------
Years Ended September 30 2001 2000 1999
------------------------------------------------------------------------
Net Income $ 30,472 $ 25,965 $ 26,062
------------------------------
Other Comprehensive Income (Loss):
Minimum pension liability adjustment - 125 (125)
Income tax expense (benefit) - 48 (48)
------------------------------
Other Comprehensive Income (Loss) - 77 (77)
------------------------------
Comprehensive Income $ 30,472 $ 26,042 $25,985
==============================
See the accompanying notes to financial statements.
26
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
--------------------------------------------------------------------------
September 30 2001 2000
--------------------------------------------------------------------------
Assets
Utility Plant $955,161 $921,378
Less - Accumulated depreciation & amortization 382,542 372,545
--------------------
Net utility plant 572,619 548,833
--------------------
Other Property and Investments, at Cost or Less
(net of accumulated depreciation and amortization,
2001, $2,391; 2000, $2,314) 29,914 26,546
--------------------
Current Assets:
Cash and cash equivalents 3,223 4,215
Accounts receivable:
Gas customers - Billed and unbilled 74,604 49,777
Other 13,103 11,488
Less - Allowances for doubtful accounts (9,216) (6,058)
Inventories:
Materials, supplies and merchandise at
average cost 5,393 5,491
Natural gas stored underground for current use
at LIFO cost 76,661 94,787
Propane gas for current use at FIFO cost 14,213 12,201
Prepayments and other 3,999 3,303
Unamortized purchased gas adjustments - 14,907
Deferred income taxes (Note 9) 8,556 2,485
--------------------
Total current assets 190,536 192,596
--------------------
Deferred Charges:
Prepaid pension cost (Note 3) 110,475 97,229
Regulatory assets 68,599 64,336
Other 3,767 2,200
--------------------
Total deferred charges 182,841 163,765
--------------------
Total Assets $975,910 $931,740
====================
See the accompanying notes to financial statements.
27
CONSOLIDATED BALANCE SHEETS (Continued)
(Thousands of Dollars)
------------------------------------------------------------------------
September 30 2001 2000
------------------------------------------------------------------------
Capitalization and Liabilities
Capitalization, per statements:
Common stock equity $288,085 $282,985
Redeemable preferred stock 1,588 1,763
Long-term debt 284,459 234,408
--------------------
Total capitalization 574,132 519,156
--------------------
Current Liabilities:
Notes payable (Note 11) 117,050 127,000
Accounts payable 32,087 45,660
Advance customer billings 11,679 15,290
Current portion of preferred stock 79 50
Wages and compensation accrued 11,785 9,974
Dividends payable 6,400 6,421
Customer deposits 4,404 4,302
Interest accrued 7,963 7,939
Taxes accrued 14,912 12,044
Unamortized purchased gas adjustments 9,026 -
Other current liabilities 2,311 2,248
--------------------
Total current liabilities 217,696 231,104
--------------------
Deferred Credits and Other Liabilities:
Deferred income taxes (Note 9) 142,515 134,944
Unamortized investment tax credits 5,948 6,267
Pension and postretirement benefit costs 15,847 20,261
Other 19,772 20,008
--------------------
Total deferred credits and other liabilities 184,082 181,480
--------------------
Commitments and Contingencies (Note 13)
Total Capitalization and Liabilities $975,910 $931,740
====================
See the accompanying notes to financial statements.
28
STATEMENTS OF CONSOLIDATED CAPITALIZATION
(Thousands of Dollars)
----------------------------------------------------------------------------
September 30 2001 2000
----------------------------------------------------------------------------
Common Stock Equity (Note 5):
Common stock, par value $1 per share:
Authorized - 2001 and 2000, 50,000,000 shares
Issued - 2001 and 2000, 20,743,625 shares $ 20,744 $ 20,744
Paid-in capital 85,846 85,835
Retained earnings, per statements 205,512 200,423
Treasury stock, at cost - 2001 and 2000,
1,865,638 shares (24,017) (24,017)
--------------------
Total common stock equity 288,085 282,985
--------------------
Redeemable Preferred Stock,
par value $25 per share (1,480,000 shares
authorized) issued and outstanding (Note 6):
5% Series B - 2001, 60,755 shares; 2000,
66,012 shares 1,440 1,600
4.56% Series C - 2001, 5,906 shares;
2000, 6,507 shares 148 163
--------------------
Total redeemable preferred stock 1,588 1,763
--------------------
Long-Term Debt (Note 7):
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
6-1/2% Series, due November 15, 2010 25,000 25,000
6-1/2% Series, due October 15, 2012 25,000 25,000
7% Series, due June 1, 2029 25,000 25,000
7.90% Series, due September 15, 2030 30,000 30,000
6.625% Series, due June 15, 2016 50,000 -
--------------------
Total 285,000 235,000
Unamortized discount, net of premium,
on long-term debt (541) (592)
--------------------
Total long-term debt 284,459 234,408
--------------------
Total $574,132 $519,156
====================
Long-term debt and preferred stock amounts are exclusive of current
obligations.
See the accompanying notes to financial statements.
29
STATEMENTS OF CONSOLIDATED CASH FLOWS
(Thousands of Dollars)
-----------------------------------------------------------------------------
Years Ended September 30 2001 2000 1999
-----------------------------------------------------------------------------
Operating Activities:
Net Income $ 30,472 $ 25,965 $ 26,062
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 26,425 24,875 21,592
Deferred income taxes and investment
tax credits (3,454) 14,295 14,486
Other - net (1,745) 112 911
Changes in assets and liabilities:
Accounts receivable - net (23,284) (13,179) 4,027
Unamortized purchased gas adjustments 23,933 (23,863) (6,859)
Deferred purchased gas costs (3,332) 4,028 (67)
Accounts payable (13,572) 13,944 11,024
Refunds due customers (355) (1,249) (6,164)
Taxes accrued 2,868 6,240 (2,886)
Natural gas stored underground 18,126 (30,675) (9,139)
Other assets and liabilities (18,183) (17,447) (9,922)
-------------------------------
Net cash provided by
operating activities 37,899 3,046 43,065
-------------------------------
Investing Activities:
Construction expenditures (46,952) (51,635) (48,698)
Employee benefit trusts (3,522) (448) (997)
Investments - non-utility (515) (656) 2,215
Other (2,433) (2,221) (1,211)
------------------------------
Net cash used in
investing activities (53,422) (54,960) (48,691)
------------------------------
Financing Activities:
Issuance of first mortgage bonds 50,000 30,000 25,000
Issuance of short-term debt - net (9,950) 42,300 (13,800)
Issuance of common stock - - 24,110
Dividends paid (25,383) (25,387) (24,048)
Redemption of preferred stock (136) (136) (2)
------------------------------
Net cash provided by
financing activities 14,531 46,777 11,260
------------------------------
Net Increase (Decrease) in Cash and
Cash Equivalents (992) (5,137) 5,634
Cash and Cash Equivalents at
Beginning of Year 4,215 9,352 3,718
------------------------------
Cash and Cash Equivalents at End of Year $ 3,223 $ 4,215 $ 9,352
==============================
Supplemental Disclosure of Cash Paid
(Refunded) During the Year for:
Interest $ 26,508 $ 23,631 $ 19,003
Income taxes 12,462 (6,721) 4,768
See the accompanying notes to financial statements.
30
SCHEDULE OF INCOME TAXES (Note 9)
(Thousands of Dollars)
---------------------------------------------------------------------------
Years Ended September 30 2001 2000 1999
---------------------------------------------------------------------------
Included in Statements of
Consolidated Income:
Federal
Current $15,639 $ 202 $ 310
Deferred (2,778) 11,987 12,291
Investment tax credit
adjustments - net (319) (319) (347)
State and local
Current 2,646 (392) (435)
Deferred (357) 2,627 2,542
-----------------------------
Total $14,831 $14,105 $14,361
=============================
See the accompanying notes to financial statements.
31
SCHEDULE OF INTERIM FINANCIAL INFORMATION
(Unaudited) (Note 15)
(Thousands of Dollars Except Per Share Amounts)
--------------------------------------------------------------------------
Three Months Ended Dec. 31 March 31 June 30 Sept. 30
--------------------------------------------------------------------------
2001
Total Operating Revenues $345,025 $442,742 $122,901 $91,441
Operating Income (Loss) 35,747 40,972 (750) (3,643)
Net Income (Loss) 18,517 20,707 (3,673) (5,078)
Earnings (Loss) Per Share
of Common Stock
(after preferred dividends) $ .98 $1.10 $(.20) $(.27)
--------------------------------------------------------------------------
Three Months Ended Dec. 31 March 31 June 30 Sept. 30
--------------------------------------------------------------------------
2000
Total Operating Revenues $151,354 $238,311 $ 95,293 $81,170
Operating Income 19,941 38,438 5,619 (655)
Net Income (Loss) 9,581 19,454 322 (3,392)
Earnings (Loss) Per Share
of Common Stock
(after preferred dividends) $ .51 $1.03 $ .02 $(.18)
See the accompanying notes to financial statements.
32
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 (Laclede Gas) and its subsidiary
companies as of September 30, 2001. All subsidiaries were wholly owned and
material intercompany transactions have been eliminated. As discussed in
Note 2, The Laclede Group, Inc. (Laclede Group) became the parent company of
Laclede Gas and its subsidiaries effective October 1, 2001. The information
provided in the accompanying financial statements is based upon the
corporate structure in place as of September 30, 2001 and thus presents the
information at that time for the Laclede Gas Company and not The Laclede
Group, Inc.
Nature of Operations - Laclede Gas is a public utility engaged in the
retail distribution of natural gas. Laclede Gas serves an area in eastern
Missouri, with a population of approximately 2.0 million, including the City
of St. Louis, St. Louis County, and parts of eight other counties. As an
adjunct to its gas distribution business, Laclede Gas operates underground
natural gas storage fields and is engaged in the transportation and storage
of liquid propane. Laclede Gas has also made investments in some non-utility
businesses as part of a diversification program.
Use of Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
System of Accounts - The accounts of Laclede Gas are maintained in
accordance with the uniform system of accounts prescribed by the Missouri
Public Service Commission (MoPSC or Commission), 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 maintenance
expenses.
Utility plant is depreciated on the straight-line basis at rates based
on estimated service lives of the various classes of property. Annual
depreciation and amortization in 2001, 2000 and 1999 averaged approximately
2.9%, 2.8% and 2.6%, respectively, of the original cost of depreciable and
amortizable property.
Regulated Operations - Laclede Gas accounts for its regulated
operations in accordance with Statement of Financial Accounting Standards
(SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation."
This statement sets forth the application of accounting principles generally
accepted in the United States of America 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
33
previously collected from customers and for recovery of costs that are
expected to be incurred in the future (regulatory liabilities).
The following regulatory assets and regulatory liabilities were
reflected in the Consolidated Balance Sheets as of September 30:
(Thousands of Dollars) 2001 2000
------------------------------------------------------------------
Regulatory Assets:
Future income taxes due from customers $45,240 $44,353
Unamortized purchased gas adjustments - 14,907
Pension and postretirement benefit costs 6,671 7,175
Purchased gas costs 2,396 -
Compensated absences 6,472 6,295
Other 9,133 8,257
----------------------
Total Regulatory Assets $69,912 $80,987
======================
Regulatory Liabilities:
Unamortized investment tax credits $ 5,948 $ 6,267
Unamortized purchased gas adjustments 9,026 -
Purchased gas costs - 936
Other 304 287
----------------------
Total Regulatory Liabilities $15,278 $ 7,490
======================
Pursuant to the MoPSC's order in the 1999 rate case, Laclede Gas
discontinued deferring certain costs for future recovery, as expenses
associated with those specific areas were included in the approved rates
effective December 27, 1999. Previously deferred costs, of $10,529,000 and
$2,064,000 are being recovered and amortized on a straight-line basis over
fifteen-year and ten-year periods, respectively, without return on
investment, effective with implementation of those rates. Approximately
$1,238,000 and $364,000 has been amortized, respectively, from December 27,
1999 through September 30, 2001.
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, 2001 was less than the LIFO
cost by $13,500,000 and at September 30, 2000 was more than the LIFO cost by
$31,747,000. The inventory carrying value is not adjusted to the lower of
cost or market prices because, pursuant to the Laclede Gas Purchased Gas
Adjustment (PGA) Clause, actual gas costs are recovered in customer rates.
Operating Revenues - Laclede 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 PGA Clause, increases and decreases in gas costs are
passed on to customers. Currently, Laclede Gas makes two scheduled PGA
filings each year, one for the winter period and one for the summer. In
addition, Laclede Gas may make one unscheduled adjustment during the winter
if significant, unforeseen increases or decreases in gas costs occur. In
order to better match customer billings with market natural gas prices,
Laclede Gas also requested, and received approval, to implement additional
special unscheduled PGA filings allowing Laclede Gas to change rates charged
to its customers in response to significant fluctuations in market prices
during the past two fiscal years.
The provisions of the PGA Clause also include operation of the Gas
Supply Incentive Plan (GSIP or Plan), which was approved, as modified, to
extend through September 30, 2001. The Plan allowed Laclede Gas to record
income as part of a sharing mechanism related to utilization of its gas
supply assets, with certain amounts being passed on to Laclede Gas
customers. On September 20, 2001, the MoPSC, with one dissent, ruled that
the Plan should be allowed to
34
expire. Laclede Gas has requested clarification and rehearing, to which the
Commission has not yet responded. See Note 4 for more information on the
operation of the Plan.
Operation of the Price Stabilization Program (PSP or Program) is also
included in the provisions of the PGA Clause. Under those provisions, the
MoPSC authorized Laclede Gas to purchase financial instruments for the
fiscal 1999 heating season to protect itself and its customers from
unusually large winter period gas price increases. The costs of purchasing
these instruments and financial gains derived from such activities were
passed on to Laclede Gas customers through the operation of its PGA Clause.
Accordingly, there was no earnings impact as a result of the use of these
financial instruments in fiscal 1999. In July 1999, the MoPSC approved
modifications to the PGA Clause with respect to the purchase of financial
instruments for the fiscal 2000-2002 heating seasons. As modified, Laclede
Gas continues to provide significant price protection for itself and its
customers above a predetermined level, but it also has an additional
opportunity to benefit from gains and cost reductions achieved under the
Program. During fiscal 2000, Laclede Gas recorded $27,000 of pre-tax income
under the provisions of the Program. The cost of financial instruments for
the fiscal 2001 heating season, however, like the cost of natural gas
itself, increased significantly. As a result, the MoPSC granted a request
made by Laclede Gas to reduce the amount of natural gas purchases required
to be covered by such financial instruments for that particular heating
season. In February 2001, the MoPSC approved modifications to the program
for the fiscal 2002 heating season, including that $4 million in
supplemental funding be added to the program for the purchase of financial
instruments for the fiscal 2002 heating season and that the percentage of
gas requirements to be covered be reduced. Additionally, Laclede Gas
relinquished a claim on $4 million arising from gains realized from
purchases and sales of financial instruments made during fiscal 2001 and
offered to utilize a similar amount to provide for future funding for such
instruments. The PSP is scheduled to expire at the end of the fiscal 2002
heating season.
Pursuant to the provisions of the PGA Clause, the difference between
actual costs incurred and costs recovered through the application of the
PGA, amounts due to or from customers related to the operation of the GSIP,
and amounts related to the Price Stabilization Program are 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.
Income Taxes - Laclede Gas has elected, for tax purposes only, various
accelerated depreciation provisions of the Internal Revenue Code. In
addition, 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. Laclede Gas records deferred tax
liabilities and assets measured by enacted tax rates for the net tax effect
of all temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes, and the amounts used for
income tax purposes. Changes in enacted tax rates, if any, will be reflected
by entries to regulatory asset or liability accounts.
Investment tax credits utilized prior to 1986 have been deferred and
are being amortized in accordance with regulatory treatment over the useful
life of the related property.
Cash and Cash Equivalents - Laclede Gas considers all highly liquid
debt instruments purchased to be cash equivalents. Such instruments are
carried at cost, which approximates market value.
Reclassification - 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.
Accounting Changes - The Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This
statement
35
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and
for hedge accounting. It requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial position and
measure those instruments at fair value. SFAS No. 133 requires that changes
in the derivative's fair value be recognized currently in earnings, unless
specific hedge accounting criteria are met. SFAS No. 133 would have been
effective in fiscal 2000, however, its effective date was delayed until
fiscal 2001 as a result of the issuance of SFAS No. 137. In June 2000, the
FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities." This statement amends portions of SFAS No. 133.
Among other things, SFAS No. 138 provides an exception for contracts
intended for the normal purchase or normal sales of something other than a
financial instrument or derivative instrument, for which physical delivery
is probable. Some of the gas supply and transportation contracts of Laclede
Gas are derivative instruments as defined under SFAS No. 133; however, all
of these contracts qualify for the normal purchases and normal sales
exception provided by SFAS No. 138. The financial instruments purchased by
Laclede Gas under its Price Stabilization Program to protect itself and its
customers from unusually large winter period gas price increases are
derivative instruments under SFAS No. 133. These financial instruments are
purchased as hedges against increases in the price of natural gas, as
approved by the MoPSC, and are accounted for in accordance with the PGA
Clause. The effect of the adoption of these statements on October 1, 2000
did not have a significant impact on the financial position and results of
operations of Laclede Gas.
In June 2001, the FASB issued SFAS No.141, "Business Combinations,"
which requires all business combinations in the scope of this Statement to
be accounted for using the purchase method. The provisions of this Statement
apply to all business combinations initiated after June 30, 2001. The FASB
also issued SFAS No.142, "Goodwill and Other Intangible Assets," which
addresses how acquired goodwill and other intangible assets that are
acquired individually or with a group of other assets (but not those
acquired in a business combination) should be accounted for and reported on
in financial statements upon acquisition and after they have been initially
recognized in the financial statements. The provisions of this Statement are
required to be applied at the beginning of fiscal 2003. The adoption of SFAS
Nos.141 and 142 is not expected to have a material effect on the financial
position and results of operations of Laclede Group or Laclede Gas.
The FASB issued SFAS No.143, "Accounting for Asset Retirement
Obligations," which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
associated asset retirement costs. It applies to legal obligations
associated with the retirement of long-lived assets that result from
acquisition, construction, development and/or the normal operation of a
long-lived asset, except for certain obligations of lessees. This Statement
is effective for fiscal 2003. Management is presently evaluating the impact
that the adoption of this Statement will have on the financial position and
results of operations of Laclede Group and Laclede Gas.
In August 2001, the FASB issued SFAS No.144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," to consolidate accounting
guidance on various issues related to this matter. Adoption of this
Statement is not expected to have a material effect on the financial
position and results of operations of Laclede Group or Laclede Gas.
2. Corporate Restructuring
At its January 25, 2001 annual meeting of shareholders, Laclede Gas
shareholders approved, by a two-thirds majority, a proposal to reorganize
its corporate structure to form a holding company, known as The Laclede
Group, Inc. Laclede Gas subsequently received the necessary approval for
this restructuring from the MoPSC, and the corporate restructuring became
effective on October 1, 2001. Under the new structure, Laclede Gas and its
former subsidiaries operate as separate subsidiaries of Laclede Group. The
following charts illustrate the major organizational changes resulting from
this restructuring.
36
Organization Structure
Prior to October 1, 2001
-----------------------------
Laclede Gas Company
-----------------------------
|
---------------------------------------------------------------------
| | |
----------------------------------- ----------------------------- -------------------------
Laclede Investment LLC Laclede Development Company Laclede Pipeline Company
----------------------------------- ----------------------------- -------------------------
| |
----------------------------------- -----------------------------
Laclede Energy Resources, Inc. Laclede Venture Corp.
----------------------------------- -----------------------------
|
-----------------------------------
Laclede Gas Family Services, Inc.
-----------------------------------
Organization Structure
Effective October 1, 2001
-------------------------
The Laclede Group, Inc.
-------------------------
|
-------------------------------------------------------------------------------------------
| | | |
--------------------- ----------------------------------- ----------------------------- --------------------------
Laclede Gas Company Laclede Investment LLC Laclede Development Company Laclede Pipeline Company
--------------------- ----------------------------------- ----------------------------- --------------------------
| |
----------------------------------- -----------------------------
Laclede Energy Resources, Inc. Laclede Venture Corp.
----------------------------------- -----------------------------
|
-----------------------------------
Laclede Gas Family Services, Inc.
-----------------------------------
Since the October 1, 2001 restructuring, stock certificates previously
representing shares of Laclede Gas common stock have represented the same
number of shares of Laclede Group common stock. All serial preferred stock
issued by Laclede Gas remains issued and outstanding as shares of Laclede
Gas serial preferred stock. The dividend rate for the preferred stock has
not changed and those dividends will continue to be paid by Laclede Gas. All
outstanding indebtedness and other obligations of Laclede Gas prior to the
restructuring remain outstanding as obligations of Laclede Gas.
On October 1, 2001, Laclede Group had no outstanding securities other
than common stock, but it could issue other securities in the future.
Laclede Group common stock is listed on the New York Stock Exchange and
trades under the ticker symbol "LG".
The accompanying consolidated financial statements and these
associated notes were based upon the corporate organizational structure that
was in place during the three fiscal years ended September 30, 2001. As
previously discussed, the corporate reorganization became effective on
October 1, 2001. However, had the reorganization occurred on September 30,
2001, Laclede Group's consolidated financial statements and associated notes
would have been virtually identical to those reported in these financial
statements and notes thereto.
3. Pension Plans and Other Postemployment Benefits
Laclede Gas 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 funding policy
of Laclede Gas 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 and pooled equity funds.
37
Pension credits in 2001, 2000 and 1999 amounted to $(5,208,000),
$(7,620,000), and $(10,653,000), respectively, including amounts recorded in
construction.
The net periodic pension costs (credits) include the following
components:
(Thousands of Dollars) 2001 2000 1999
-------------------------------------------------------------------------
Service cost - benefits earned
during the period $ 9,575 $ 9,281 $ 9,909
Interest cost on projected
benefit obligation 15,331 14,714 14,355
Expected return on plan assets (25,517) (25,649) (25,689)
Amortization of transition obligation (662) (716) (760)
Amortization of prior service cost 1,174 1,024 1,082
Amortization of actuarial gain (5,544) (6,606) (8,975)
Regulatory adjustment 435 332 (575)
--------------------------------
Net pension cost (credit) $ (5,208) $ (7,620) $(10,653)
================================
The MoPSC ordered in the 1998 general rate case, effective October 27,
1998, certain pension costs to be recovered on a payment basis up to a
$314,000 allowance, with the difference between actual payments and the
allowance to be deferred. Such deferrals terminated July 31, 1999. In the
1999 rate case, the Commission authorized amounts deferred pursuant to
provisions in previous general rate cases 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. Also pursuant to
MoPSC order in the 1998 general rate case, the return on plan assets is
based on the market value of plan assets and the unrecognized net gain or
loss balances subject to amortization are based upon the most recent
five-year average of the unrecognized gain or loss balance. Net gains and
losses subject to amortization are amortized over a five-year period, as
ordered by the MoPSC. Other variances in net pension costs are primarily
attributable to actuarial and investment experience.
The following table sets forth the reconciliation of the beginning and
ending balances of the pension benefit obligation recognized in the
Consolidated Balance Sheets at September 30:
(Thousands of Dollars) 2001 2000
-----------------------------------------------------------------------
Benefit obligation at beginning of year $200,463 $205,174
Service cost 9,575 9,281
Interest cost 15,331 14,714
Plan amendments 162 3,112
Actuarial (gain)/loss 1,684 (9,224)
Settlements (20,652) (13,899)
Gross benefits paid (8,790) (8,695)
--------------------
Benefit obligation at end of year $197,773 $200,463
====================
The following table sets forth the reconciliation of the beginning
and ending balances of the fair value of plan assets recognized in the
consolidated balance sheets at September 30:
38
(Thousands of Dollars) 2001 2000
----------------------------------------------------------------------
Fair value of plan assets at beginning of year $307,820 $310,158
Actual return on plan assets 9,214 14,895
Employer contributions 11,845 5,361
Settlements (20,652) (13,899)
Gross benefits paid (8,790) (8,695)
--------------------
Fair value of plan assets at end of year 299,437 307,820
--------------------
Funded status at end of year 101,664 107,357
Unrecognized net actuarial gain (10,532) (34,629)
Unrecognized prior service cost 14,885 15,897
Unrecognized net transition asset (838) (1,572)
Fourth quarter contribution adjustment 56 56
--------------------
Net amount recognized at end of year $105,235 $ 87,109
====================
Amounts recognized in the consolidated
balance sheets consist of:
Prepaid pension cost 110,475 97,229
Accrued benefit liability (5,451) (10,368)
Intangible asset 211 248
Accumulated other comprehensive income - -
--------------------
Net amount recognized at end of year $105,235 $ 87,109
====================
The pension benefit obligation and the fair value of plan assets are
based on a June 30 measurement date. The projected benefit obligation was
determined using a weighted average discount rate of 7.75% for 2001 and
8.00% for 2000, and a weighted average rate of future compensation increase
of 4.00% for 2001 and 4.25% for 2000. The effect of the above changes in
pension assumptions was to increase the projected benefit obligation by
$1,529,000. The expected long-term rate of return on plan assets was 8.50%
for both 2001 and 2000.
The aggregate projected benefit obligation and fair value of plan
assets for plans with benefit obligations in excess of plan assets were
$54,241,000 and $38,605,000, respectively, for fiscal 2001 and $55,925,000
and $37,701,000, respectively, for fiscal 2000. The aggregate accumulated
benefit obligation and fair value of plan assets for plans with accumulated
benefit obligations in excess of plan assets were $4,195,000 and $0,
respectively, for fiscal 2001, and $42,044,000 and $37,701,000,
respectively, for fiscal 2000.
Pursuant to the provisions of the Laclede Gas pension plans, pension
obligations may be settled by lump-sum cash payments. Settlements in 2001,
2000 and 1999 resulted in pre-tax gains of approximately $639,000,
$2,248,000 and $1,641,000, respectively.
The cost of the defined contribution plans of Laclede Gas, which cover
substantially all employees, amounted to $2,974,000, $2,648,000 and
$2,480,000 for the years 2001, 2000 and 1999, respectively.
Laclede Gas also provides certain life insurance benefits at
retirement. Medical insurance is available after early retirement until age
65.
Missouri state law provides for the recovery of rates of SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions"
(OPEB), accrued costs provided that such costs are funded through an
independent, external funding mechanism. Laclede Gas established the
Voluntary Employees' Beneficiary Association (VEBA) and Rabbi trusts as its
external funding mechanisms. VEBA and Rabbi trusts assets consist primarily
of money market securities. The unrecognized transition obligation is being
amortized over 20 years.
39
Postretirement benefit costs in 2001, 2000 and 1999 amounted to
approximately $6,181,000, $5,962,000 and $3,856,000, respectively, including
amounts charged to construction.
Net periodic postretirement benefit costs consisted of the following
components:
(Thousands of Dollars) 2001 2000 1999
----------------------------------------------------------------------
Service cost - benefits earned
during the period $2,063 $1,973 $1,959
Interest cost on accumulated
postretirement benefit
obligation 3,055 2,814 2,478
Expected return on plan assets (704) (574) (431)
Amortization of transition
obligation 1,267 1,267 1,267
Amortization of prior service cost 365 365 365
Amortization of actuarial (gain)/loss 66 64 52
Regulatory adjustment 69 53 (1,834)
----------------------------
Net postretirement benefit cost $6,181 $5,962 $3,856
============================
The following table sets forth the reconciliation of the beginning and
ending balances of the postretirement benefit obligation at September 30:
(Thousands of Dollars) 2001 2000
---------------------------------------------------------------------
Benefit obligation at beginning of year $ 37,123 $ 35,843
Service cost 2,063 1,973
Interest cost 3,055 2,814
Actuarial (gain)/loss 1,787 527
Gross benefits paid (4,070) (4,034)
----------------------
Benefit obligation at end of year $ 39,958 $ 37,123
======================
The following table sets forth the reconciliation of the beginning and
ending balances of the fair value of plan assets recognized in the
consolidated balance sheets at September 30:
(Thousands of Dollars) 2001 2000
---------------------------------------------------------------------
Fair value of plan assets at beginning of year $ 7,866 $ 6,222
Actual return on plan assets 310 298
Employer contributions 5,609 5,380
Gross benefits paid (4,070) (4,034)
---------------------
Fair value of plan assets at end of year 9,715 7,866
---------------------
Funded status at end of year (30,243) (29,257)
Unrecognized net actuarial (gain)/loss 1,829 (286)
Unrecognized prior service cost 2,839 3,204
Unrecognized net transition asset 15,179 16,446
---------------------
Net amount recognized at end of year
as postretirement benefit cost $(10,396) $ (9,893)
=====================
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation was 5.00% for both 2001 and
2000, and for future years. A one-percentage-point increase or (decrease) in
the assumed health care cost trend rate for each future year would have
increased or
40
(decreased) the aggregate of the service and interest cost components of the
2001 net periodic postretirement benefit cost by approximately $290,000 or
$(280,000) and would have increased or (decreased) the postretirement
benefit obligation by $1,450,000 or $(1,380,000). The accumulated
postretirement benefit obligation was determined using a weighted average
discount rate of 7.75% for 2001 and 8.00% for 2000, and a weighted average
rate of future compensation increase of 4.00% for 2001 and 4.25% for 2000.
These changes in assumptions increased the postretirement benefit obligation
by $520,000. The weighted average rate for the expected return on medical
plan assets was 7.75% for both 2001 and 2000 and the weighted average rate
for the expected return on life insurance plan assets was 8.50% for both
2001 and 2000.
The 1998 rate case settlement provided for the deferral, net of any
applicable tax effects, of the difference between the costs funded by
Laclede Gas and a $3,825,000 allowance of annualized OPEB costs included
in rates effective October 27, 1998. In the 1999 rate case settlement, 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.
Deferrals ceased September 30, 1999 and all OPEB costs are being charged to
expense.
4. Incentive Plan and Off-System Sales
The MoPSC extended the GSIP with specific modifications effective
through September 30, 2001. On September 20, 2001, the Commission, with one
dissent, ruled that the GSIP should be allowed to expire. Laclede Gas has
requested clarification and rehearing, to which the Commission has not yet
responded. Under the modified Plan, Laclede Gas shared with its customers
certain gains and losses related to the acquisition and management of gas
supply assets. Effective October 1, 1999, Laclede Gas was also permitted to
retain all income resulting from sales made outside of its traditional
service area. As modified for fiscal 2001, total pre-tax income derived from
all sharing provisions of the Plan, excluding income generated by sales
outside of the Laclede Gas service area, could not exceed $9.0 million. Of
that amount, pre-tax income derived from sharing gains and losses as
measured against a benchmark level of gas costs could not exceed $5.3
million. Under the provisions of the Plan during fiscal 2001 and fiscal
2000, Laclede Gas and its customers shared as follows:
o releases of pipeline capacity, of which 70% to 90% of the revenues were
allocated to its customers and the balance was allocated to its
shareholders
o savings from discounts off of maximum pipeline transportation rates, of
which the excess over a predetermined baseline of $13 million was
allocated 70% to its customers and the balance to its shareholders
o gains and losses as measured against a benchmark level of gas cost, of
which 50% to 90% depending on the change from a predetermined cost, was
allocated to its customers and the balance to its shareholders, and
o increases or decreases in costs related to changes in the mix of pipeline
services, of which 70% was allocated to its customers and the balance to
its shareholders.
Under the provisions of the Plan during fiscal 1999, Laclede Gas and its
customers shared as follows:
o sales of gas outside of its traditional service area, of which 70% of the
income was allocated to its customers and the balance was allocated to its
shareholders
o releases of pipeline capacity, of which 70% to 90% of the revenues
were allocated to its customers and the balance to its shareholders
o savings from discounts off of maximum pipeline transportation rates, of
which 80% to 90% of the savings was allocated to its customers and the
balance to its shareholders, and
o gains and losses as measured against a benchmark level of gas cost, of
which 50% was allocated to its customers and the balance to its
shareholders.
41
Incentive Plan and off-system sales revenues are included in the utility
operating revenues line in the accompanying financial statements. Expenses
related to the Incentive Plan and off-system sales are included in the
natural gas and propane gas expense line in the accompanying financial
statements. Results of the Plan and off-system sales activities are set
forth below.
(Thousands of Dollars) 2001 2000 1999
---------------------------------------------------------------------
Net Benefits to Customers
and Shareholders $40,415 $28,909 $28,362
---------------------------------------------------------------------
Shareholder Benefits:
Off System and
Incentive Plan Revenues 30,218 40,136 16,217
Off System and
Incentive Plan Gas Expense 20,183 30,493 10,806
-----------------------------
Laclede Share - Pretax Income $10,035 $ 9,643 $ 5,411
=============================
5. Common Stock and Paid-in Capital
No additional common stock shares were issued in fiscal 2001 or 2000.
Paid-in capital increased $11,000 in 2001 and $9,000 in 2000 due to
gains recorded on reacquired preferred stock.
Total shares of common stock outstanding were 18,877,987 at September
30, 2001 and September 30, 2000.
On March 14, 1996, Laclede Gas declared a dividend of one Common Share
Purchase Right for each outstanding share of common stock as of May 1, 1996,
each of which common share purchase right gave the Rightholder the right to
purchase one common share for a purchase price of $60, subject to
adjustment. The rights expired on May 1, 2006, and could be redeemed by
Laclede for one cent each at any time before they became exercisable. The
rights were not exercisable or transferable apart from the common stock,
until ten days after a person or group acquired or obtained the right to
acquire 20% or more of the common stock, or commenced or announced its
intention to commence a tender or exchange offer for 20% or more of the
common stock. Following the former event, a right would entitle its holder
to purchase, at the purchase price, the number of shares equal to the
purchase price (initially $60 per share) divided by one-half of the market
price. Alternatively, Laclede Gas could exchange each Right for one share of
Laclede Gas common stock. A total of 18,877,987 rights were outstanding at
September 30, 2001. Concurrent with implementation of the holding company
structure, ownership of these rights transferred to Laclede Group.
On August 23, 2001, Laclede Group declared a dividend of one preferred
share purchase right for each outstanding share of common stock as of
October 1, 2001, each of which preferred share purchase rights entitles the
registered holder to purchase from Laclede Group one one-hundredth of Series
A junior participating preferred stock for a purchase price of $90.00,
subject to adjustment. The value of one one-hundredth of a preferred share
purchasable upon the exercise of each right should, because of the nature of
the preferred shares' dividend, liquidation and voting rights, approximate
the value of one common share. The rights expire on October 1, 2011 and may
be redeemed by Laclede Group for one cent each at any time before they
become exercisable. The rights will not be exercisable or transferable apart
from the common stock until ten business days after (i) public announcement
that a person or group has acquired beneficial ownership of 20% or more of
the common stock, or (ii) commencement, or announcement of an intention to
make, a tender offer or exchange for beneficial ownership of 20% or more of
the common stock. Following the former event, a right will entitle its
holder to purchase, for the purchase price, the number of shares equal to
the purchase price (currently $90 per share) divided by one-half of the
market price. Alternatively, Laclede Group may exchange each right for one
one-hundredth of a preferred share. A total of 18,877,987 rights were
outstanding on October 1, 2001.
42
6. Redeemable Preferred Stock
The preferred stock, which is non-voting except in certain
circumstances, may be redeemed at the option of the Laclede Gas Board of
Directors. The redemption price is equal to par of $25.00 a share.
During 2001, 5,257 shares of 5% Series B preferred stock and 601
shares of 4.56% Series C preferred stock were reacquired; in 2000, 5,808
shares of 5% Series B preferred stock and 3 shares of 4.56% Series C
preferred stock were reacquired.
Any default in a sinking fund payment must be cured before Laclede Gas
may pay dividends on or acquire any common stock. Sinking fund requirements
on preferred stock for the next five years subsequent to September 30, 2001
are: 2002, $78,875, 2003-2006, $160,000 per year.
7. Long-Term Debt
Maturities or sinking fund requirements on long-term debt for the five
fiscal years subsequent to September 30, 2001 are as follows: 2002, none;
2003, $25 million; 2004, none; 2005, $25 million; 2006, $40 million.
On June 26, 2001, Laclede Gas issued $50 million of first mortgage
bonds with an interest rate of 6 5/8%, at an overall cost of 6.968%. The
bonds were dated June 15, 2001 and mature June 15, 2016. The proceeds were
used to repay short-term debt. The bonds were rated AAA by Standard & Poor's
and Fitch IBCA and Aaa by Moody's in consideration of insurance issued by
Ambac Assurance covering the timely payment of the principal of and interest
on the bonds. These ratings apply only to these insured bonds, and not to
the other outstanding uninsured bonds of Laclede Gas. These bonds were
issued under the Laclede Gas shelf registration Statement on Form S-3 and
MoPSC authorization obtained in fiscal 2000, of which $270 million remained
registered and unissued as of September 30, 2001. Laclede Group filed a
post-effective amendment to the Form S-3 on October 1, 2001 with respect to
the common stock of Laclede Group that was originally Laclede Gas common
stock registered on Form S-3.
On September 21, 2000, Laclede Gas issued $30 million of first
mortgage bonds under this authorization with an interest rate of 7.90%, at
an overall cost of 7.987%. The bonds were dated September 15, 2000 and
mature September 15, 2030. The proceeds were used to repay short-term debt.
The bonds were rated Aa3 by Moody's, AA- by Standard & Poor's, and A+ by
Fitch. The ratings also apply to the other outstanding uninsured bonds of
Laclede Gas.
Substantially all of the utility plant of Laclede Gas is subject to
the liens of its mortgage. Its mortgage contains provisions that restrict
retained earnings from declaration or payment of cash dividends. As of
September 30, 2001, all of the consolidated retained earnings of Laclede Gas
were free from such restrictions.
8. Fair Value of Financial Instruments
The carrying amounts and estimated fair values of financial
instruments at September 30, 2001 and 2000 are as follows:
43
Carrying Fair
(Thousands of Dollars) Amount Value
-----------------------------------------------------------------------
2001:
Cash and cash equivalents $ 3,223 $ 3,223
Short-term debt 117,050 117,050
Long-term debt 284,459 301,761
Redeemable preferred stock 1,667 1,296
2000:
Cash and cash equivalents $ 4,215 $ 4,215
Short-term debt 127,000 127,000
Long-term debt 234,408 233,676
Redeemable preferred stock 1,813 1,640
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.
9. Income Taxes
Net provisions for income taxes were charged during the years ended
September 30, 2001, 2000 and 1999 as shown on the Schedule of Income Taxes.
The effective income tax rate varied from the federal statutory income tax
rate for each year due to the following:
2001 2000 1999
-----------------------------------------------------------------------
Federal income tax statutory rate 35.0% 35.0% 35.0%
State and local income taxes,
net of federal income tax benefits 3.3 3.6 3.4
Certain expenses capitalized on books
and deducted on tax return (2.5) (2.5) (3.2)
Taxes related to prior years .3 .2 .5
Other items - net (3.3) (1.1) (.2)
-------------------------
Effective income tax rate 32.8% 35.2% 35.5%
=========================
The significant items comprising the net deferred tax liability recognized
in the consolidated balance sheets as of September 30 are as follows:
(Thousands of Dollars) 2001 2000
---------------------------------------------------------------------
Deferred tax assets:
Reserves not currently deductible $ 16,278 $ 18,100
Deferred gas cost 5,639 -
Unamortized investment tax credits 3,745 3,946
Other 1,885 2,779
-----------------------
Total deferred tax assets 27,547 24,825
-----------------------
Deferred tax liabilities:
Relating to utility property 111,057 107,604
Pension 41,942 36,384
Deferred gas costs - 4,598
Other 8,507 8,698
-----------------------
Total deferred tax liabilities 161,506 157,284
-----------------------
Net deferred tax liability 133,959 132,459
Net deferred tax asset - current 8,556 2,485
-----------------------
Net deferred tax liability - non-current $142,515 $134,944
========================
44
10. Notes Payable and Credit Agreements
In November 2000, Laclede Gas renewed and increased its syndicated
line of credit to $150 million for a period of 364 days. Laclede Gas also
renewed three other 364-day lines during the year, totalling $35 million,
providing year-round bank lines of $185 million. These lines were
supplemented with seasonal lines during the heating season of up to $65
million, for maximum bank line availability of $250 million during the
fiscal year 2001. As of November 15, 2001, Laclede Gas has reduced its
aggregate lines of credit to $170 million.
Alternatively, Laclede Gas has an agreement for the issuance of
commercial paper which is supported by the bank lines of credit. During
fiscal year 2001, short-term borrowing requirements, which peaked at $234.8
million, were met by the sale of commercial paper. Laclede Gas had $117.1
million in commercial paper outstanding as of September 30, 2001, at a
weighted average interest rate of 3.2%, and $127.0 million outstanding as of
September 30, 2000, at a weighted average interest rate of 6.6%.
11. Other Income and Income Deductions - Net
(Thousands of Dollars) 2001 2000 1999
-------------------------------------------------------------------
Investment Losses $ - $ - $(3,409)
Gains on Sale of Property - - 2,275
Allowance for Funds
Used During Construction 749 397 739
Other Income 2,298 1,209 1,530
Other Income Deductions (1,630) (844) (1,338)
------------------------------
Other Income and
Income Deductions - Net $ 1,417 $ 735 $ (203)
==============================
In fiscal 1999, Laclede Gas recorded a $3.2 million pre-tax investment
loss. This non-recurring loss resulted from its minority participation in
Clark Enterprises, an entity comprised of a group of civic-minded St. Louis
firms that owned the St. Louis Blues Hockey team and also financed and
operated the Kiel Center in downtown St. Louis, the sale of which was
negotiated and completed during September 1999.
A pre-tax gain of $1.9 million was recognized in fiscal 1999 by a
wholly owned subsidiary of Laclede Gas, Laclede Development Company, on the
November 1998 sale of property known as Centre Park 40. Laclede Development
owned its interest in Centre Park 40 though a real estate partnership.
12. Information by Operating Segment
Laclede Gas is a public utility engaged in the retail distribution of
natural gas. Laclede Gas serves an area of eastern Missouri, with a
population of approximately 2.0 million. As an adjunct to its gas
distribution business, Laclede Gas operates underground natural gas storage
fields and stores liquid propane and was engaged in the transportation of
liquid propane through its wholly owned subsidiary, Laclede Pipeline
Company.
Laclede Gas has also made investments in some non-utility businesses
as part of a diversification program, none of which are reportable segments.
These
45
non-regulated operations were conducted through five wholly owned
subsidiaries which are engaged in gas marketing, the sale of insurance
products through an insurance agency in the State of Missouri, real estate
development, the compression of natural gas, and financial investments in
other enterprises. These subsidiaries have the same accounting policies as
those described in the summary of significant accounting policies in Note 1.
There are no material intersegment revenues.
All Other
(Thousands of Dollars) Gas Utility (Non-Utility) Eliminations Consolidated
Fiscal 2001
Operating revenues $929,517 $72,592 $ - $1,002,109
Depreciation &
amortization 26,337 - - 26,337
Interest charges 28,792 - (353) 28,439
Income tax expense 14,170 661 - 14,831
Net income 29,517 955 - 30,472
Total assets 972,465 21,011 (17,566) 975,910
Construction expenditures 46,952 - - 46,952
Fiscal 2000
Operating revenues $531,152 $34,976 $ - $ 566,128
Depreciation &
amortization 24,774 - - 24,774
Interest charges 24,326 - (318) 24,008
Income tax expense 13,755 350 - 14,105
Net income 25,474 491 - 25,965
Total assets 928,298 18,324 (14,882) 931,740
Construction expenditures 51,635 - - 51,635
Fiscal 1999
Operating revenues $473,710 $17,608 $ - $ 491,318
Depreciation &
amortization 21,490 - - 21,490
Interest charges 20,593 - - 20,593
Income tax expense 13,670 691 - 14,361
Net income 25,012 1,050 - 26,062
Total assets 831,036 13,774 (7,146) 837,664
Construction expenditures 48,698 7 - 48,705
13. Commitments and Contingencies
Laclede Gas estimates fiscal year 2002 utility construction
expenditures at $41 million. The lease agreement covering the general office
space of Laclede Gas extends through February 2005 with options to renew for
up to 15 additional years. The aggregate rental expense for fiscal years
2001, 2000 and 1999 was $830,000, $821,000 and $812,000, respectively. The
annual minimum rental payment for fiscal year 2002 is anticipated to be
approximately $839,000 with a maximum annual rental payment escalation of
$8,800 per year for each year through fiscal 2005. Laclede Gas has other
relatively minor rental arrangements that provide for minimum rental
payments. Laclede Gas has entered into various contracts, which in the
aggregate require it to pay approximately $74 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 PGA Clause. The contracts have various expiration
dates ranging from 2002 to 2011.
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 $2.9 million
incurred in connection with various real estate ventures. Laclede Gas has no
reason to believe that the other principal liable parties will not be able to
46
meet their proportionate share of these obligations. Laclede Gas further
believes that the asset values of the real estate properties are sufficient
to support these mortgage loans.
Laclede Gas is subject to various environmental laws and regulations.
To date they have not materially affected financial position and results of
operations of Laclede Gas. By far, the single largest environmental issue
facing Laclede Gas and the gas industry as a whole is the cleanup of former
manufactured gas plants (or "MGPs").
Before the advent of cross-country natural gas pipelines, Laclede Gas
operated MGPs that produced certain by-products and residuals in addition to
"town gas." While the vast majority of those by-products and residuals were
sold as raw material to other industries, it is alleged that some remained
at the MGP sites.
With regard to a former MGP site located in Shrewsbury, Missouri,
Laclede Gas and state and federal environmental regulators have agreed upon
certain actions and those actions are nearing completion. Laclede Gas
currently estimates the overall costs of these actions will be approximately
$1,864,000. As of September 30, 2001, Laclede Gas has paid $1,336,000 and
reserved $528,000 for these actions. If regulators require additional
actions, Laclede Gas will incur additional costs.
Laclede Gas placed a second former MGP site, located in the City of St.
Louis, Missouri, into the Missouri Voluntary Cleanup Program (VCP). The VCP
provides opportunities to minimize the scope and cost of site cleanup while
maximizing possibilities for site development. The City of St. Louis is
presently seeking developers and end-users for this site. If the City is
unsuccessful, Laclede will submit a Remedial Action Plan (or "RAP") in 2002
and work with the City of St. Louis to find a developer to implement the RAP
and develop the site. Laclede Gas currently estimates that the cost of the
site investigations, agency oversight and related legal and engineering
consulting may be approximately $590,000. Currently, Laclede Gas has paid
$485,000 and reserved an additional $105,000. Laclede 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 Laclede Gas to date for $159,000. Laclede Gas
anticipates additional reimbursement from this party of approximately
$69,000. Laclede Gas plans to seek proportionate reimbursement of all costs
relative to this site from other potentially responsible parties if
practicable.
While the scope of costs relative to the Shrewsbury site will not be
significant, the scope of costs relative to the City of St. Louis site are
unknown and may be material. Laclede Gas has notified its insurers that it
intends to seek reimbursement of its costs at both of these sites. The
majority of the insurers have reserved their rights. While some of the
insurers have denied coverage, Laclede Gas continues to seek reimbursement
from them. With regard to the Shrewsbury site, denials of coverage will not
have any significant impact on the financial position and results of
operations of Laclede Gas. With regard to the City of St. Louis site, since
the scope of costs relative to this site are unknown and may be material,
denials of coverage may have a material impact on the financial position and
results of operations of Laclede Gas.
Previously, the MoPSC approved the use of a cost deferral mechanism
for these costs. Deferral of such costs terminated July 31, 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. Any
subsequent costs are being charged to expense, the effects of which are
offset, more or less, by a predetermined level of costs included in the new
rates.
On October 30, 1998, the MoPSC issued an order opening a docket
addressing the adequacy of Laclede Gas' copper service line replacement
program. On February 18, 2000, the staff of the MoPSC, the Office of the
Public Counsel in the State of Missouri and Laclede Gas filed a joint
settlement setting forth a replacement schedule recommendation. Such
settlement was approved by the MoPSC on May 18, 2000. Laclede Gas currently
has completed one phase and continues to proceed in compliance with the
approved program. Costs associated with the program are either being
deferred through a deferral mechanism approved by the MoPSC or capitalized
through the normal course of
47
business. One lawsuit involving a claim for wrongful death and punitive
damages has been settled, the financial effect of which was not significant
and was fully provided for in fiscal 2000.
In late August 2001, Laclede Gas was named a defendant in a lawsuit in
the Circuit Court of the City of St. Louis, Missouri, Ronald J. Johnson vs.
Laclede Gas Company, alleging that a class of persons residing in homes
provided natural gas by Laclede Gas through direct buried copper service
lines have, among other things, suffered diminution in property values and
annoyance and discomfort due to residing in homes served by such allegedly
corroded lines. The suit seeks actual and punitive damages and an injunction
requiring the repair and/or replacement of all such lines, which are alleged
to number approximately 78,000. By letter dated September 21, 2001, its
liability insurer advised Laclede Gas that the claims in the lawsuit, as
presently pled, fail to qualify for any coverage under its excess general
liability policy. Laclede Gas disagrees and continues to assert its right to
coverage under the policy. The gas distribution business of Laclede Gas is
regulated by the MoPSC, including as to safe and adequate service and rate
matters. Under a current program, the Commission has provided for the
monitoring and replacement of such lines. The costs of replacement,
including carrying costs, have been included in rates established by the
Commission. The MoPSC has filed a Motion to Intervene and a Motion to Strike
Plaintiff's Prayer for Injunctive Relief and to Stay Matters Within the
Primary Jurisdiction of the MoPSC. The court subsequently granted the
MoPSC's request for intervention. Laclede Gas filed a Motion to Dismiss
which urged, among other things, the exclusive jurisdiction of the MoPSC as
to gas safety matters generally and the direct buried copper service
replacement program in particular. Laclede Gas presently expects that the
Court will rule on its motion to dismiss the claims by December 31, 2001. If
the suit is not dismissed, Laclede Gas currently expects that the Court
would rule on class certification in mid-2002 and that a trial would be set
for sometime after the beginning of 2003. At this time Laclede Gas does not
believe that the ultimate outcome of the case will be materially adverse.
However, litigation is inherently uncertain and to the extent that Laclede
Gas incurs expense above amounts of available insurance, if any, and those
which may be recovered in rates under the Commission's program, the
litigation could have a material effect on the future financial position and
results of operations of Laclede Gas.
In January 2000, Laclede Energy Resources, Inc. (LER), 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 in
Pleasant Hill, Missouri. The four-year agreement went 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.
Laclede Gas 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.
14. Subsequent Event
On May 18, 2001, Laclede Gas filed a request with the Missouri Public
Service Commission for a general rate increase of $39.8 million annually to
recover costs related to the operation of its distribution system. This
filing culminated in a settlement among the parties to the case, which was
approved by the Commission on November 29, 2001. The settlement provided
Laclede Gas an annual increase of about $12 million effective December 1,
2001. Additionally, effective on December 1, 2001 Laclede Gas is permitted
to charge customers $36 to cover the cost of initiating service at a
particular address. This new charge is anticipated to generate additional
revenue of about $3 million annually. The settlement also provided for the
continued deferral of certain costs related to the Laclede Gas pipe
replacement program as well as recovery
48
of costs previously deferred under that program. The cost of removing
retired utility plant is treated as an expense pursuant to this settlement,
rather than being included in depreciation rates. However, Laclede Gas will
continue to pursue a reversal of the Commission's treatment of depreciation
rates in the courts. As part of the settlement, Laclede Gas agreed to
implement the terms of a rulemaking promulgated by the Commission on
November 8, 2001 which relaxed the requirements for this coming winter
heating season for reinstatement of certain customers who had been
disconnected for nonpayment. The settlement provides for a recovery
mechanism under which Laclede Gas will be reimbursed for any incremental
costs associated with the new rule. Finally, under the terms of the
agreement, Laclede Gas continues to be permitted to retain all income
resulting from sales made outside its traditional service area, and
additionally is permitted to retain all income from releases of pipeline
capacity.
15. Interim Financial Information (Unaudited)
In the opinion of Laclede Gas, the quarterly information presented in
the Schedule of Interim Financial Information for fiscal years 2001 and 2000
includes all adjustments, consisting of normal recurring accruals 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 business of Laclede Gas.
Item 9. Changes in and Disagreements on Accounting and Financial Disclosure
There have been no disagreements on accounting and financial
disclosure with Laclede's outside auditors that 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 5 in the Company's proxy statement dated December
26, 2001 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 7 through
16 in the Company's proxy statement dated December 26, 2001 and is
incorporated herein by reference but the information under the captions
"Compensation Committee Report Regarding Executive Compensation",
"Performance Graph", and "Audit Committee Report" on pages 12 through 15 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 6 in the
Company's proxy statement dated December 26, 2001 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.
49
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) 1. Consolidated Financial Statements: 2001 10-K Page
For Years Ended September 30, 2001, 2000 and 1999:
Statements of Consolidated Income 25
Statements of Consolidated Retained Earnings 26
Statements of Consolidated Comprehensive Income 26
Statements of Consolidated Cash Flows 30
Schedule of Income Taxes 31
As of September 30, 2001 & 2000:
Consolidated Balance Sheets 27-28
Statements of Consolidated Capitalization 29
For Years Ended 2001 & 2000:
Schedule of Interim Financial Information 32
Notes to Financial Statements 33-49
Independent Auditors' Report 23
Management Report 24
2. Supplemental Schedules
II - Reserves 56
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 57.
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, 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 Laclede's Board of
Directors adopted on June 27, 1991 amending the Senior
Officers' Life Insurance Program.
10.02b - Certified copy of resolutions of Laclede'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 Employees 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.
50
Exhibit No. Description
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 Employees' 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.
10.03h - Amendments to the Employees' Retirement Plan of Laclede Gas
Company - Management Employees dated August 14, 1996.
10.03i - Amendments to the Employees' Retirement Plan of Laclede Gas
Company - Management Employees adopted December 19, 1996.
10.03j - Amendments to the Employees' Retirement Plan of Laclede Gas
Company - Management Employees adopted February 7, 1997.
10.03k - Amendments to the Employees' Retirement Plan of Laclede Gas
Company - Management Employees adopted October 1, 2000.
10.04 - Laclede Gas Company Supplemental Retirement Benefit
Plan, as amended and restated effective July 25,
1991.
10.05 - Laclede Gas Company Salary Deferral Savings Plan, as
amended through February 27, 1992.
10.05a - Amendment to Laclede's Salary Deferral Savings Plan,
effective January 31, 1992, adopted by the Board of Directors
on August 27, 1992.
10.05b - Amendment to Laclede's Salary Deferral Savings Plan dated
January 10, 1994.
10.05c - Amendments to Laclede's Salary Deferral Savings Plan, dated
July 29, 1994.
10.05d - Amendments to Laclede's Salary Deferral Savings Plan
effective August 1, 1994 adopted by the Board of Directors on
August 25, 1994.
10.05e - Amendments to Laclede's Salary Deferral Savings Plan dated
September 27, 1994.
10.05f - Amendments to Laclede's Salary Deferral Savings Plan dated
February 21, 1995.
10.05g - Amendments to Laclede's Salary Deferral Savings Plan dated
March 7, 1995.
10.05h - Amendments to Laclede's Salary Deferral Savings Plan dated
June 26, 1995.
10.05i - Amendments to Laclede's Salary Deferral Savings Plan dated
August 3, 1995.
10.05j - Amendments to Laclede's Salary Deferral Savings Plan adopted
April 21, 1997.
10.05k - Amendments to Laclede's Salary Deferral Savings Plan adopted
October 5, 1998.
10.05l - Amendments to Laclede's Salary Deferral Savings Plan adopted
with the following effective dates: October 1, 2000, November
1, 2000, February 3, 1997, August 1, 2000.
10.05m - Amendments to Laclede's Salary Deferral Savings Plan dated
September 18, 2001.
51
Exhibit No. Description
10.06 - Laclede Gas Company Deferred Compensation Plan for Non-
Employee Directors dated March 26, 1981.
10.06a - First Amendment to Laclede's Deferred Compensation Plan for
Non-Employee Directors, adopted by the Board of Directors on
July 26, 1990.
10.06b - Amendment to Laclede's Deferred Compensation Plan for
Non-Employee Directors, adopted by the Board of Directors on
August 27, 1992.
10.08 - The Retirement Plan for Non-Employee Directors of Laclede
Gas Company dated January 24, 1985.
10.08a - First Amendment to Retirement Plan for Laclede'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 Laclede'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 Laclede 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.
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.
10.12b - Amendment to the Laclede Gas Company Restricted Stock Plan
for Non-Employee Directors adopted August 14, 1998.
10.12c - Amendment to the Laclede Gas Company Restricted Stock Plan
for Non-Employee Directors adopted December 16, 1999.
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.
10.18 - Severance Benefits Agreement dated as of July 31, 2000
between Laclede Gas Company and D.H. Yaeger.
(b) Laclede filed five reports on Form 8-K during the last quarter of fiscal
year 2001.
On July 6, 2001, Laclede filed an 8-K reporting the sale of $50 million
principal amount of its first mortgage bonds, 6.625% Series due June 15,
2016 to A. G. Edwards & Sons, Inc., the underwriter. The bonds were issued
under its mortgage and deed of trust, dated as of June 15, 2001. The bonds
were registered under a universal shelf registration statement on Form S-3
(File No. 333-40362), which was filed on June 29, 2000 and declared
effective on July 24, 2000. Copies of the underwriting agreement and the
Twenty-Sixth Supplemental Indenture were filed as exhibits to the Form 8-K.
On July 6, 2001, Laclede filed a Form 8-K with a press release exhibit
providing earnings guidance for the remainder of fiscal year 2001 and
providing the date for the announcement of third quarter earnings.
On July 27, 2001, Laclede filed a Form 8-K with a press release exhibit
announcing Laclede's third quarter earnings.
52
On August 17, 2001, Laclede filed a Form 8-K with a press release
exhibit announcing the MoPSC's approval of Laclede's request to form a
holding company structure.
On September 21, 2001, Laclede filed a Form 8-K with a press release
exhibit regarding the MoPSC's decision to eliminate the gas supply incentive
plan.
(c) Incorporated herein by reference to Index to Exhibits, page 57.
53
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.
THE LACLEDE GROUP, INC.
December 17,2001 By /s/ Gerald T. McNeive, Jr.
Gerald T. McNeive, Jr.
Senior Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date Signature Title
12/20/01 /s/ Douglas H. Yaeger Chairman of the Board,
Douglas H. Yaeger President and Chief
Executive Officer
(Principal Executive
Officer),
12/20/01 /s/ Gerald T. McNeive, Jr. Senior Vice President
Gerald T. McNeive, Jr. (Principal Financial and
Accounting Officer)
12/20/01 /s/ Andrew B. Craig, III Director
Andrew B. Craig, III
12/20/01 /s/ Henry Givens, Jr. Director
Henry Givens, Jr.
12/20/01 /s/ C. Ray Holman Director
C. Ray Holman
12/20/01 /s/ Robert C. Jaudes Director
Robert C. Jaudes
12/20/01 /s/ Mary Ann Van Lokeren Director
Mary Ann Van Lokeren
12/20/01 /s/ W. Stephen Maritz Director
W. Stephen Maritz
12/20/01 /s/ William E. Nasser Director
William E. Nasser
12/20/01 /s/ Robert P. Stupp Director
Robert P. Stupp
54
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 17,2001 By /s/ Gerald T. McNeive, Jr.
Gerald T. McNeive, Jr.
Senior Vice President -
Finance and General Counsel
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
12/20/01 /s/ Douglas H. Yaeger Chairman of the Board,
Douglas H. Yaeger President and Chief Executive
Officer
(Principal Executive Officer),
12/20/01 /s/ Gerald T. McNeive, Jr. Director, Senior Vice President
Gerald T. McNeive, Jr. Finance & General Counsel
(Principal Financial and
Accounting Officer)
12/20/01 /s/ John Moten, Jr. Director, Senior Vice President
John Moten, Jr. Operations & Marketing
12/20/01 /s/ Kenneth J. Neises Director, Senior Vice President
Kenneth J. Neises Energy & Administrative
Services
55
SCHEDULE II
LACLEDE GAS COMPANY AND SUBSIDIARY COMPANIES
RESERVES
FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
BALANCE AT ADDITIONS CHARGED DEDUCTIONS BALANCE
BEGINNING TO TO OTHER FROM AT CLOSE
DESCRIPTION OF PERIOD INCOME ACCOUNTS RESERVES OF PERIOD
------------------------------------------------------------------------
(Thousands of Dollars)
YEAR ENDED
SEPTEMBER 30, 2001:
DOUBTFUL ACCOUNTS $ 6,058 $8,602 $4,641 (a) $10,085 (b) $ 9,216
====================================================
MISCELLANEOUS:
Injuries and
property damage $ 3,314 $1,825 $ - $ 1,716 (c) $ 3,423
Deferred
compensation 9,614 1,415 - 937 10,092
----------------------------------------------------
TOTAL $12,928 $3,240 $ - $ 2,653 $13,515
====================================================
YEAR ENDED
SEPTEMBER 30, 2000:
DOUBTFUL ACCOUNTS $ 6,241 $4,493 $4,305 (a) $ 8,981 (b) $ 6,058
====================================================
MISCELLANEOUS:
Injuries and
property damage $ 3,700 $1,825 $ - $ 2,211 (c) $ 3,314
Deferred
compensation 9,184 1,292 - 862 9,614
----------------------------------------------------
TOTAL $12,884 $3,117 $ - $ 3,073 $12,928
====================================================
YEAR ENDED
SEPTEMBER 30, 1999:
DOUBTFUL ACCOUNTS $ 5,650 $6,062 $4,184 (a) $ 9,655 (b) $ 6,241
====================================================
MISCELLANEOUS:
Injuries and
property damage $ 3,366 $2,125 $ - $ 1,791 (c) $ 3,700
Deferred
compensation 8,924 1,242 - 982 9,184
----------------------------------------------------
TOTAL $12,290 $3,367 $ - $ 2,773 $12,884
====================================================
(a) Accounts reinstated, cash recoveries, etc.
(b) Accounts written off.
(c) Claims settled, less reimbursements from insurance companies.
56
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
2.01* - Agreement and Plan of Merger and Reorganization, filed
as Appendix A to proxy statement/prospectus contained in
the Company's registration statement on Form S-4,
No. 333-48794.
3.01(i)* - Articles of Incorporation, as of February 11, 1994;
filed as Exhibit 4(a) to Laclede's Form S-3
Registration Statement No. 33-52357.
3.01(ii)* - Bylaws of Laclede as amended and restated October 26,
2000; filed as Ex. 3.01(ii) to Laclede's 10-Q for the
quarter ended December 31, 2000.
3.02(i)* - The Company's Articles of Incorporation, filed as
Appendix B to the proxy statement/prospectus contained
in the Company's registration statement on Form S-4,
No. 333-48794.
3.02(ii)* - The Company's Bylaws, filed as Appendix C to the proxy
statement/prospectus contained in the Company's
registration statement on Form S-4, No. 333-48794.
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 Laclede's
Form 8-K.
4.06* - Twentieth Supplemental Indenture, dated as of
November 1,1992; filed on November 4, 1992 as Exhibit 4.01
to Laclede's Form 8-K.
4.07* - Twenty-First Supplemental Indenture, dated as of May 1,
1993; filed on May 13, 1993 as Exhibit 4.01 to Laclede's
Form 8-K.
4.08* - Twenty-Second Supplemental Indenture dated as of
November 15, 1995; filed on December 8, 1995 as Exhibit
4.01 to Laclede's Form 8-K.
4.09* - Twenty-Third Supplemental Indenture dated as of
October 15, 1997; filed on November 6, 1997 as Exhibit
4.01 to Laclede's Form 8-K.
4.10* - Twenty-Fourth Supplemental Indenture dated as of June 1,
1999, filed on June 4, 1999 as Exhibit 4.01 to Laclede's
Form 8-K.
4.11* - Twenty-Fifth Supplemental Indenture dated as of September 15,
2000, filed on September 27, 2000 as Exhibit 4.01 to Laclede's
Form 8-K.
4.12* - Twenty-Sixth Supplemental Indenture dated as of June 15, 2001,
filed on July 6, 2001 as Exhibit 4.01 to Laclede's Form 8-K.
* Incorporated herein by reference and made a part hereof. Laclede's File
No. 1-1822; the Company's File No. 1-16681.
57
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
4.13* - 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 amendments to certain designated
Executive Officers; filed as Exhibit 4.12 to Laclede's
1991 10-K.
4.13a* - Laclede Gas Company Board of Directors' Resolutions
dated August 25, 1988, which generally provide for
certain amendments to Laclede'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 Laclede's 1988 10-K.
4.14* - Laclede Gas Company Wage Deferral Savings Plan,
incorporating amendments through December 12, 1990;
filed as Exhibit 4.13 to Laclede's 1991 10-K.
4.14a* - Amendments to the Laclede'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 Laclede's 10-Q for the fiscal quarter
ended March 31, 1992.
4.14b* - Amendment to Laclede'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
Laclede's 1992 10-K.
4.14c* - Amendments to Laclede's Wage Deferral Savings Plan dated
July 29, 1994; filed as Exhibit 4.09c to Laclede's 1994 10-K.
4.14d* - Amendments to Laclede'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 Laclede's 1994 10-K.
4.14e* - Amendments to Laclede's Wage Deferral Savings Plan dated
February 21, 1995; filed as Exhibit 4.1 to Laclede's 10-Q for
the fiscal quarter ended March 31, 1995.
4.14f* - Amendments to Laclede's Wage Deferral Savings Plan dated
March 7, 1995; filed as Exhibit 4.2 to Laclede's 10-Q for the
fiscal quarter ended March 31, 1995.
4.14g* - Amendments to Laclede's Wage Deferral Savings Plan dated
June 26, 1995; filed as Exhibit 4.1 to Laclede's 10-Q for the
fiscal quarter ended June 30, 1995.
4.14h* - Amendments to Laclede's Wage Deferral Savings Plan adopted
April 21, 1997; filed as Exhibit 4.2 to Laclede's 10-Q for the
fiscal quarter ended June 30, 1997.
4.14i* - Amendments to Laclede's Wage Deferral Savings Plan adopted
October 5, 1998; filed as Exhibit 4 to Laclede's 10-Q for the
fiscal quarter ended December 31, 1998.
4.14j* - Amendments to Laclede's Wage Deferral Savings Plan with the
following effective dates: August 1, 2000, November 1, 2000,
August 1, 1997; filed as Exhibit 4.12j to Laclede's 2000
Form 10-K.
4.15* - Missouri Natural Gas Division of the Laclede Gas Company
Dual Savings Plan incorporating amendments through
December 12, 1990; filed as Exhibit 4.01 to Laclede's
10-Q for the fiscal quarter ended December 31, 1990.
* Incorporated herein by reference and made a part hereof. Laclede's File
No. 1-1822; the Company's File No. 1-16681.
58
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
4.15a* - 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 Laclede's 1993 10-K.
4.15b* - Amendments to the Missouri Natural Gas Division of Laclede
Gas Company Dual Savings Plan dated July 29, 1994; filed as
Exhibit 4.10b to Laclede's 1994 10-K.
4.15c* - Amendment dated October 27, 1994 to the Missouri Natural Gas
Division of Laclede Gas Company Dual Savings Plan; filed as
Exhibit 4.1 to Laclede's 10-Q for the fiscal quarter ended
December 31, 1994.
4.15d* - Amendment dated November 21, 1994 to the Missouri Natural
Gas Division of Laclede Gas Company Dual Savings Plan; filed
as Exhibit 4.2 to Laclede's 10-Q for the fiscal quarter ended
December 31, 1994.
4.15e* - Amendments to the Missouri Natural Gas Division of Laclede
Gas Company Dual Savings Plan dated February 21, 1995; filed
as Exhibit 4.3 to Laclede's 10-Q for the fiscal quarter ended
March 31, 1995.
4.15f* - Amendments to the Missouri Natural Gas Division of Laclede
Gas Company Dual Savings Plan dated March 7, 1995; filed as
Exhibit 4.4 to Laclede's 10-Q for the fiscal quarter ended
March 31, 1995.
4.15g* - Amendments to the Missouri Natural Gas Division of
Laclede Gas Company Dual Savings Plan adopted by the
Board of Directors on May 25, 1995; filed as Exhibit 4.2
to Laclede's 10-Q for the fiscal quarter ended
June 30, 1995.
4.15h* - Amendments to the Missouri Natural Gas Division of Laclede
Gas Company Dual Savings Plan dated June 26, 1995; filed as
Exhibit 4.3 to Laclede's 10-Q for the fiscal quarter ended
June 30, 1995.
4.15i* - Amendments to the Missouri Natural Gas Division of Laclede
Gas Company Dual Savings Plan dated August 3, 1995; filed as
Exhibit 4.10i to Laclede's 1995 10-K.
4.15j* - Amendments to the Missouri Natural Gas Division of Laclede
Gas Company Dual Savings Plan adopted April 21, 1997; filed as
Exhibit 4.3 to Laclede's 10-Q for the fiscal quarter ended
June 30, 1997.
4.15k* - Amendments to the Missouri Natural Gas Division of Laclede
Gas Company Dual Savings Plan adopted November 1, 2000; filed
as Exhibit 4.13k to Laclede's Form 2000 10-K.
4.15l - Amendments to the Missouri Natural Division of Laclede Gas
Company Dual Savings Plan dated September 18, 2001.
4.16* - Rights Agreement dated as of April 3, 1996; filed on
April 3, 1996 as Exhibit 1 to Laclede's Form 8-A.
4.17* - Rights Agreement dated as of October 1, 2001; filed as
Exhibit 4 to the Company's Form 8-A on September 6, 2001.
10.01* - Laclede Incentive Compensation Plan, as
amended; filed as Exhibit 10.03 to Laclede's 1989 10-K.
* Incorporated herein by reference and made a part hereof. Laclede's File
No. 1-1822; the Company's File No. 1-16681.
59
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
10.01a* - Amendment adopted by the Board of Directors on July 26, 1990
to the Incentive Compensation Plan; filed as Exhibit 10.02a to
Laclede's 1990 10-K.
10.01b* - Amendments adopted by the Board of Directors on August 23,
1990 to the Incentive Compensation Plan; filed as
Exhibit 10.02b to Laclede's 1990 10-K.
10.01c* - Amendments to Laclede's Incentive Compensation
Plan, effective January 26, 1995; filed as Exhibit 10.3
to Laclede's 10-Q for the fiscal quarter ended
March 31, 1995.
10.02* - Senior Officers' Life Insurance Program of Laclede, as
amended; filed as Exhibit 10.03 to Laclede's 1990 10-K.
10.02a* - Certified copy of resolutions of Laclede's Board of
Directors adopted on June 27, 1991 amending the Senior
Officers' Life Insurance Program; filed as Exhibit 10.01 to
Laclede's 10-Q for the fiscal quarter ended June 30, 1991.
10.02b* - Certified copy of resolutions of Laclede's Board of
Directors adopted on January 28, 1993 amending the Senior
Officers' Life Insurance Program; filed as Exhibit 10.03 to
Laclede's 10-Q for the fiscal quarter ended March 31, 1993.
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 Laclede's 10-Q
for the fiscal quarter ended June 30, 1990.
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
Laclede's 1990 10-K.
10.03b* - Amendments dated December 12, 1990 to the Employees'
Retirement Plan of Laclede Gas Company - Management Employees;
filed as Exhibit 10.04b to Laclede's 1990 10-K.
10.03c* - Amendment to the Employees' Retirement Plan of Laclede Gas
Company - Management Employees dated January 10, 1994; filed
as Exhibit 10.01 to Laclede's 10-Q for the fiscal quarter
ended December 31, 1993.
10.03d* - Amendments to the Employees' Retirement Plan of Laclede Gas
Company - Management Employees dated July 29, 1994; filed as
Exhibit 10.3d to Laclede's 1994 10-K.
10.03e* - Amendments to the Employees' Retirement Plan of Laclede Gas
Company - Management Employees dated February 21, 1995; filed
as Exhibit 10.4 to Laclede's 10-Q for the fiscal quarter ended
March 31, 1995.
10.03f* - Amendments to the Employees' Retirement Plan of Laclede Gas
Company - Management Employees dated March 7, 1995; filed as
Exhibit 10.5 to Laclede's 10-Q for the fiscal quarter ended
March 31, 1995.
10.03g* - Amendments to the Employees' Retirement Plan of Laclede Gas
Company - Management Employees dated September 11, 1995; filed
as Exhibit 10.03g to Laclede's 1995 10-K.
10.03h* - Amendments to the Employees' Retirement Plan of Laclede Gas
Company - Management Employees dated August 14, 1996; filed as
Exhibit 10.03h to Laclede's 1996 10-K.
* Incorporated herein by reference and made a part hereof. Laclede's File
No. 1-1822; the Company's File No. 1-16681.
60
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
10.03i* - Amendment to the Employees' Retirement Plan of Laclede Gas
Company - Management Employees adopted by the Board of
Directors on December 19, 1996; filed as Exhibit 10.01 to
Laclede's 10-Q for the fiscal quarter ended December 31, 1996.
10.03j* - Amendment to the Employees' Retirement Plan of Laclede Gas
Company - Management Employees adopted February 7, 1997; filed
as Exhibit 10.01 to Laclede's 10-Q for the fiscal quarter
ended March 31, 1997.
10.03k* - Amendment to the Employees' Retirement Plan of Laclede Gas
Company - Management Employees adopted October 1, 2000; filed
as Exhibit 10.03k to Laclede's 2000 10-K.
10.04* - Laclede Gas Company Supplemental Retirement Benefit
Plan, as amended and restated effective July 25, 1991;
filed as Exhibit 10.05 to Laclede's 1991 10-K.
10.04a* - Trust Agreement with Boatmen's Trust Company, dated
September 4, 1990; filed as Exhibit 10.05c to Laclede's
1990 10-K.
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 10.05b to Laclede's
1993 10-K.
10.04c* - Amendment (effective as of January 15, 1998) to Laclede Gas
Company Trust Agreement (dated as of September 4, 1990)
relating to the Laclede Gas Company Supplemental Retirement
Plan; filed as Exhibit 10.01 to Laclede's 10-Q for the fiscal
quarter ended June 30, 1998.
10.05* - Laclede Gas Company Salary Deferral Savings Plan, as
amended through February 27, 1992; filed as Exhibit
10.08 to Laclede's 10-Q for the fiscal quarter ended
March 31, 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; filed as Exhibit 10.08a to Laclede's
1992 10-K.
10.05b* - Amendment to Laclede's Salary Deferral Savings Plan dated
January 10, 1994; filed as Exhibit 10.02 to Laclede's 10-Q for
the fiscal quarter ended December 31, 1993.
10.05c* - Amendments to Laclede's Salary Deferral Savings Plan, dated
July 29, 1994; filed as Exhibit 10.05c to Laclede's 1994 10-K.
10.05d* - Amendments to Laclede'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 Laclede's
1994 10-K.
10.05e* - Amendments to Laclede's Salary Deferral Savings Plan dated
September 27, 1994; filed as Exhibit 10.05e to Laclede's
1994 10-K.
10.05f* - Amendments to Laclede's Salary Deferral Savings Plan dated
February 21, 1995; filed as Exhibit 10.1 to Laclede's 10-Q for
the fiscal quarter ended March 31, 1995.
* Incorporated herein by reference and made a part hereof. Laclede's File
No. 1-1822; the Company's File No. 1-16681.
61
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
10.05g* - Amendments to Laclede's Salary Deferral Savings Plan dated
March 7, 1995; filed as Exhibit 10.2 to Laclede's 10-Q for the
fiscal quarter ended March 31, 1995.
10.05h* - Amendments to Laclede's Salary Deferral Savings Plan dated
June 26, 1995; filed as Exhibit 10.1 to Laclede's 10-Q for the
fiscal quarter ended June 30, 1995.
10.05i* - Amendments to Laclede's Salary Deferral Savings Plan dated
August 3, 1995; filed as Exhibit 10.05 to Laclede's 1995 10-K.
10.05j* - Amendments to Laclede's Salary Deferral Savings Plan adopted
April 21, 1997; filed as Exhibit 4.1 to Laclede's 10-Q for the
fiscal quarter ended June 30, 1997.
10.05k* - Amendments to Laclede's Salary Deferral Savings Plan adopted
October 5, 1998; filed as Exhibit 10 to Laclede's 10-Q for the
fiscal quarter ended December 31, 1998.
10.05l* - Amendments to Laclede's Salary Deferral Savings Plan adopted
with the following effective dates: October 1, 2000, November 1,
2000, February 3, 1997, August 1, 2000; filed as Exhibit 10.05l
to Laclede's 2000 10-K.
10.05m - Amendments to Laclede's Salary Deferral Savings Plan
dated September 18, 2001.
10.06* - Laclede Gas Company Deferred Compensation Plan for
Non-Employee Directors dated March 26, 1981; filed as
Exhibit 10.12 to Laclede's 1989 10-K.
10.06a* - First Amendment to Laclede's Deferred Compensation Plan for
Non-Employee Directors, adopted by the Board of Directors on
July 26, 1990; filed as Exhibit 10.09a to Laclede's 1990 10-K.
10.06b* - Amendment to Laclede's Deferred Compensation Plan for
Non-Employee Directors, adopted by the Board of Directors
on August 27, 1992; filed as Exhibit 10.09b to Laclede's
1992 10-K.
10.07* - Transportation Service Agreement dated October 13, 1993
between Mississippi River Transmission Corporation and
Laclede; filed as exhibit 10.07d to Laclede's 1997 10-K.
10.07a* - Storage Service Agreement dated October 13, 1993 between
Mississippi River Transmission Corporation and Laclede; filed
as exhibit 10.07e to Laclede's 1997 10-K.
10.08* - The Retirement Plan for Non-Employee Directors of
Laclede Gas Company dated January 24, 1985; filed as
Exhibit 10.01 to Laclede's 10-Q for the fiscal
quarter ended March 31, 1990.
10.08a* - First Amendment to Retirement Plan for Laclede's
Non-Employee Directors, adopted by the Board of Directors on
July 26, 1990; filed as Exhibit 10.11a to Laclede's 1990 10-K.
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 Laclede's 10-Q for the fiscal
quarter ended March 31, 1992.
* Incorporated herein by reference and made a part hereof. Laclede's File
No. 1-1822; the Company's File No. 1-16681.
62
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
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 Laclede's
1991 10-K.
10.09a* - Amendment to Laclede'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 Laclede's
1992 10-K.
10.10* - Form of Indemnification Agreement between Laclede
and its Directors and Officers; filed as Exhibit 10.13
to Laclede's 1990 10-K.
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 Laclede's 10-Q for the fiscal quarter
ended March 31, 1994.
10.12* - Laclede Gas Company Restricted Stock Plan for
Non-Employee Directors, effective as of January 25,
1990; filed as Exhibit 10.03 to Laclede's 10-Q for
the fiscal quarter ended March 31, 1990.
10.12a* - Extension and amendment of Laclede's Restricted Stock Plan
for Non-Employee Directors adopted by the Board of Directors
on November 17, 1994; filed as Exhibit 10.1 to Laclede's 10-Q
for the quarter ended December 31, 1994.
10.12b* - Amendment to the Laclede Gas Company Restricted Stock Plan
for Non-Employee Directors adopted August 14, 1998; filed as
Exhibit 10.12b to Laclede's 1998 10-K.
10.12c* - Amendment to the Laclede Gas Company Restricted Stock Plan
for Non-Employee Directors adopted December 16, 1999; filed as
Exhibit 10.01 to Laclede's 10-Q for the quarter ended June 30,
2000.
10.13* - Laclede Gas Company Trust Agreement with Boatmen's Trust
Company, dated December 7, 1989; filed as Exhibit 10.16
to Laclede's 1990 10-K.
10.13a* - First Amendment to Laclede's Trust Agreement, adopted by the
Board of Directors on July 26, 1990; filed as Exhibit 10.16a
to Laclede's 1990 10-K.
10.13b* - Second Amendment to Laclede's Trust Agreement dated as of
December 7, 1989, adopted by the Board of Directors on
September 23, 1993; filed as Exhibit 10.16b to Laclede's
1993 10-K.
10.13c* - Third Amendment to Laclede Gas Company Trust Agreement dated
as of December 7, 1989 adopted by the Board of Directors on
August 28, 1997; filed as Exhibit 10.13c Laclede's 1997 10-K.
10.13d* - Amendment (effective as of January 15, 1998) to Laclede Gas
Company Trust Agreement (dated as of December 7, 1989); filed
as Exhibit 10.02 to Laclede's 10-Q for the fiscal quarter
ended June 30, 1998.
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 Laclede's 1993 10-K.
* Incorporated herein by reference and made a part hereof. Laclede's File
No. 1-1822; the Company's File No. 1-16681.
63
INDEX TO EXHIBITS
-----------------
Exhibit
No.
-------
10.15* - Lines of Credit Agreements dated January 16, 2001
with UMB Bank, N.A.; filed as Exhibit 10.2 to
Laclede's 10-Q for the quarter ended March 31, 2001.
10.16* - Revolving Credit Facility with Firstar Bank N.A., Bank
One, N.A., The Fuji Bank, Ltd., Comerica Bank and Bank
Hapoalim B.M.; filed as Exhibit 10.01 to Laclede's 10-Q
for the quarter ended December 31, 2000.
10.16a - First Amendment to Loan Agreement dated October 1, 2001.
10.17 - Line of Credit Agreement dated September 12, 2001 with
U.S. Bank National Association.
10.18* - Severance Benefits Agreement dated as of July 31, 2000
between Laclede Gas Company and D.H. Yaeger; filed as
Exhibit 10.21 to Laclede's 2000 Form 10-K.
12 - Ratio of Earnings to Fixed Charges.
21 - Subsidiaries of the Registrant.
23 - Consent of Independent Public Accountants.
* Incorporated herein by reference and made a part hereof. Laclede's File
No. 1-1822; the Company's File No. 1-16681.
64