[ X ]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934 For the Quarter Ended March 31, 2011
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934 For the Transition Period from __________ to __________
|
Missouri
(State of Incorporation)
|
74-2976504
(I.R.S. Employer Identification number)
|
720 Olive Street
St. Louis, MO 63101
(Address and zip code of principal executive offices)
314-342-0500
(Registrant’s telephone number, including area code)
|
Large accelerated filer
|
[ X ]
|
Accelerated filer
|
[ ]
|
||
Non-accelerated filer
|
[ ]
|
Smaller reporting company
|
[ ]
|
Page No.
|
|||||
Three Months Ended
|
Six Months Ended
|
||||||||||||||
March 31,
|
March 31,
|
||||||||||||||
(Thousands, Except Per Share Amounts)
|
2011
|
2010
|
2011
|
2010
|
|||||||||||
Operating Revenues:
|
|||||||||||||||
Regulated Gas Distribution
|
$
|
388,375
|
$
|
373,520
|
$
|
665,818
|
$
|
656,449
|
|||||||
Non-Regulated Gas Marketing
|
155,111
|
261,473
|
321,519
|
458,998
|
|||||||||||
Other
|
292
|
332
|
643
|
11,044
|
|||||||||||
Total Operating Revenues
|
543,778
|
635,325
|
987,980
|
1,126,491
|
|||||||||||
Operating Expenses:
|
|||||||||||||||
Regulated Gas Distribution
|
|||||||||||||||
Natural and propane gas
|
260,706
|
250,238
|
434,071
|
432,238
|
|||||||||||
Other operation expenses
|
39,500
|
37,779
|
74,362
|
75,242
|
|||||||||||
Maintenance
|
6,441
|
7,219
|
12,581
|
13,393
|
|||||||||||
Depreciation and amortization
|
9,739
|
9,385
|
19,377
|
18,748
|
|||||||||||
Taxes, other than income taxes
|
24,686
|
26,050
|
40,434
|
42,274
|
|||||||||||
Total Regulated Gas Distribution Operating Expenses
|
341,072
|
330,671
|
580,825
|
581,895
|
|||||||||||
Non-Regulated Gas Marketing
|
152,302
|
254,161
|
315,655
|
448,891
|
|||||||||||
Other
|
461
|
223
|
806
|
4,771
|
|||||||||||
Total Operating Expenses
|
493,835
|
585,055
|
897,286
|
1,035,557
|
|||||||||||
Operating Income
|
49,943
|
50,270
|
90,694
|
90,934
|
|||||||||||
Other Income and (Income Deductions) – Net
|
467
|
318
|
2,312
|
1,905
|
|||||||||||
Interest Charges:
|
|||||||||||||||
Interest on long-term debt
|
5,740
|
6,145
|
11,682
|
12,291
|
|||||||||||
Other interest charges
|
549
|
526
|
1,293
|
1,089
|
|||||||||||
Total Interest Charges
|
6,289
|
6,671
|
12,975
|
13,380
|
|||||||||||
Income Before Income Taxes
|
44,121
|
43,917
|
80,031
|
79,459
|
|||||||||||
Income Tax Expense
|
16,228
|
15,897
|
28,769
|
28,553
|
|||||||||||
Net Income
|
$
|
27,893
|
$
|
28,020
|
$
|
51,262
|
$
|
50,906
|
|||||||
Average Number of Common Shares Outstanding:
|
|||||||||||||||
Basic
|
22,100
|
21,980
|
22,070
|
21,968
|
|||||||||||
Diluted
|
22,172
|
22,027
|
22,145
|
22,014
|
|||||||||||
Basic Earnings Per Share of Common Stock
|
$
|
1.25
|
$
|
1.26
|
$
|
2.30
|
$
|
2.29
|
|||||||
Diluted Earnings Per Share of Common Stock
|
$
|
1.25
|
$
|
1.26
|
$
|
2.30
|
$
|
2.29
|
|||||||
Dividends Declared Per Share of Common Stock
|
$
|
0.405
|
$
|
0.395
|
$
|
0.810
|
$
|
0.790
|
|||||||
Three Months Ended
|
Six Months Ended
|
||||||||||||||
March 31,
|
March 31,
|
||||||||||||||
(Thousands)
|
2011
|
2010
|
2011
|
2010
|
|||||||||||
Net Income
|
$
|
27,893
|
$
|
28,020
|
$
|
51,262
|
$
|
50,906
|
|||||||
Other Comprehensive Income (Loss), Before Tax:
|
|||||||||||||||
Net gains (losses) on cash flow hedging derivative instruments:
|
|||||||||||||||
Net hedging gain arising during the period
|
960
|
3,733
|
1,174
|
7,476
|
|||||||||||
Reclassification adjustment for gains included in net income
|
(147
|
)
|
(1,565
|
)
|
(3,237
|
)
|
(5,616
|
)
|
|||||||
Net unrealized gains (losses) on cash flow hedging
|
|||||||||||||||
derivative instruments
|
813
|
2,168
|
(2,063
|
)
|
1,860
|
||||||||||
Amortization of actuarial loss included in net periodic
|
|||||||||||||||
pension and postretirement benefit cost
|
106
|
99
|
213
|
197
|
|||||||||||
Other Comprehensive Income (Loss), Before Tax
|
919
|
2,267
|
(1,850
|
)
|
2,057
|
||||||||||
Income Tax Expense (Benefit) Related to Items of Other
|
|||||||||||||||
Comprehensive Income (Loss)
|
355
|
877
|
(715
|
)
|
796
|
||||||||||
Other Comprehensive Income (Loss), Net of Tax
|
564
|
1,390
|
(1,135
|
)
|
1,261
|
||||||||||
Comprehensive Income
|
$
|
28,457
|
$
|
29,410
|
$
|
50,127
|
$
|
52,167
|
|||||||
March 31,
|
Sept. 30,
|
March 31,
|
||||||||||||
(Thousands)
|
2011
|
2010
|
2010
|
|||||||||||
ASSETS
|
||||||||||||||
Utility Plant
|
$
|
1,351,293
|
$
|
1,326,284
|
$
|
1,301,013
|
||||||||
Less: Accumulated depreciation and amortization
|
453,271
|
442,200
|
435,205
|
|||||||||||
Net Utility Plant
|
898,022
|
884,084
|
865,808
|
|||||||||||
Non-utility property
|
4,418
|
4,551
|
4,072
|
|||||||||||
Other investments
|
53,485
|
50,226
|
49,193
|
|||||||||||
Other Property and Investments
|
57,903
|
54,777
|
53,265
|
|||||||||||
Current Assets:
|
||||||||||||||
Cash and cash equivalents
|
22,982
|
86,919
|
83,765
|
|||||||||||
Accounts receivable:
|
||||||||||||||
Utility
|
146,821
|
70,053
|
130,460
|
|||||||||||
Non-utility
|
43,079
|
56,160
|
78,857
|
|||||||||||
Other
|
7,505
|
11,671
|
6,466
|
|||||||||||
Allowance for doubtful accounts
|
(11,095
|
)
|
(10,295
|
)
|
(12,782
|
)
|
||||||||
Delayed customer billings
|
32,398
|
—
|
38,955
|
|||||||||||
Inventories:
|
||||||||||||||
Natural gas stored underground at LIFO cost
|
40,225
|
113,576
|
43,757
|
|||||||||||
Propane gas at FIFO cost
|
16,927
|
15,625
|
15,625
|
|||||||||||
Materials, supplies, and merchandise at average cost
|
4,402
|
3,867
|
4,338
|
|||||||||||
Natural gas receivable
|
18,183
|
22,963
|
25,672
|
|||||||||||
Derivative instrument assets
|
10,491
|
10,285
|
14,600
|
|||||||||||
Unamortized purchased gas adjustments
|
6,470
|
23,718
|
—
|
|||||||||||
Deferred income taxes
|
7,310
|
—
|
626
|
|||||||||||
Prepayments and other
|
5,437
|
9,653
|
7,836
|
|||||||||||
Total Current Assets
|
351,135
|
414,195
|
438,175
|
|||||||||||
Deferred Charges:
|
||||||||||||||
Regulatory assets
|
420,733
|
479,462
|
467,078
|
|||||||||||
Other
|
6,624
|
7,678
|
6,579
|
|||||||||||
Total Deferred Charges
|
427,357
|
487,140
|
473,657
|
|||||||||||
Total Assets
|
$
|
1,734,417
|
$
|
1,840,196
|
$
|
1,830,905
|
||||||||
March 31,
|
Sept. 30,
|
March 31,
|
||||||||||||
(Thousands, except share amounts)
|
2011
|
2010
|
2010
|
|||||||||||
CAPITALIZATION AND LIABILITIES
|
||||||||||||||
Capitalization:
|
||||||||||||||
Common stock (70,000,000 shares authorized, 22,400,309,
22,292,804, and 22,271,064 shares issued, respectively)
|
$
|
22,400
|
$
|
22,293
|
$
|
22,271
|
||||||||
Paid-in capital
|
160,152
|
158,698
|
156,018
|
|||||||||||
Retained earnings
|
394,887
|
361,723
|
376,142
|
|||||||||||
Accumulated other comprehensive loss
|
(8,272
|
)
|
(7,137
|
)
|
(905
|
)
|
||||||||
Total Common Stock Equity
|
569,167
|
535,577
|
553,526
|
|||||||||||
Long-term debt (less current portion) – Laclede Gas
|
364,327
|
364,298
|
364,269
|
|||||||||||
Total Capitalization
|
933,494
|
899,875
|
917,795
|
|||||||||||
Current Liabilities:
|
||||||||||||||
Notes payable
|
—
|
129,650
|
114,950
|
|||||||||||
Accounts payable
|
96,808
|
95,595
|
122,844
|
|||||||||||
Advance customer billings
|
—
|
16,809
|
—
|
|||||||||||
Current portion of long-term debt
|
—
|
25,000
|
25,000
|
|||||||||||
Wages and compensation accrued
|
13,504
|
13,410
|
12,893
|
|||||||||||
Dividends payable
|
9,244
|
8,942
|
8,962
|
|||||||||||
Customer deposits
|
10,719
|
11,244
|
11,663
|
|||||||||||
Interest accrued
|
9,023
|
9,639
|
9,865
|
|||||||||||
Taxes accrued
|
36,509
|
10,501
|
42,830
|
|||||||||||
Unamortized purchased gas adjustments
|
—
|
—
|
1,148
|
|||||||||||
Deferred income taxes
|
—
|
155
|
—
|
|||||||||||
Other
|
13,307
|
12,979
|
12,839
|
|||||||||||
Total Current Liabilities
|
189,114
|
333,924
|
362,994
|
|||||||||||
Deferred Credits and Other Liabilities:
|
||||||||||||||
Deferred income taxes
|
293,466
|
292,391
|
248,968
|
|||||||||||
Unamortized investment tax credits
|
3,432
|
3,538
|
3,646
|
|||||||||||
Pension and postretirement benefit costs
|
208,727
|
207,607
|
201,643
|
|||||||||||
Asset retirement obligations
|
26,610
|
25,837
|
26,266
|
|||||||||||
Regulatory liabilities
|
49,077
|
47,365
|
45,088
|
|||||||||||
Other
|
30,497
|
29,659
|
24,505
|
|||||||||||
Total Deferred Credits and Other Liabilities
|
611,809
|
606,397
|
550,116
|
|||||||||||
Commitments and Contingencies (Note 11)
|
||||||||||||||
Total Capitalization and Liabilities
|
$
|
1,734,417
|
$
|
1,840,196
|
$
|
1,830,905
|
||||||||
Six Months Ended
|
|||||||||
March 31,
|
|||||||||
(Thousands)
|
2011
|
2010
|
|||||||
Operating Activities:
|
|||||||||
Net Income
|
$
|
51,262
|
$
|
50,906
|
|||||
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
|
|||||||||
Depreciation, amortization, and accretion
|
19,635
|
18,891
|
|||||||
Deferred income taxes and investment tax credits
|
(9,012
|
)
|
(15,953
|
)
|
|||||
Other – net
|
71
|
1,375
|
|||||||
Changes in assets and liabilities:
|
|||||||||
Accounts receivable – net
|
(58,721
|
)
|
(83,006
|
)
|
|||||
Unamortized purchased gas adjustments
|
17,248
|
(1,982
|
)
|
||||||
Deferred purchased gas costs
|
60,725
|
25,323
|
|||||||
Accounts payable
|
2,658
|
50,986
|
|||||||
Delayed customer billings – net
|
(49,207
|
)
|
(60,095
|
)
|
|||||
Taxes accrued
|
25,997
|
26,752
|
|||||||
Natural gas stored underground
|
73,351
|
49,556
|
|||||||
Other assets and liabilities
|
5,987
|
7,096
|
|||||||
Net cash provided by operating activities
|
139,994
|
69,849
|
|||||||
Investing Activities:
|
|||||||||
Capital expenditures
|
(29,746
|
)
|
(24,850
|
)
|
|||||
Other investments
|
(1,514
|
)
|
(3,560
|
)
|
|||||
Net cash used in investing activities
|
(31,260
|
)
|
(28,410
|
)
|
|||||
Financing Activities:
|
|||||||||
Maturity of first mortgage bonds
|
(25,000
|
)
|
—
|
||||||
Repayment of short-term debt – net
|
(129,650
|
)
|
(14,850
|
)
|
|||||
Changes in book overdrafts
|
(291
|
)
|
(207
|
)
|
|||||
Issuance of common stock
|
1,427
|
1,041
|
|||||||
Non-employee directors’ restricted stock awards
|
(494
|
)
|
(406
|
)
|
|||||
Dividends paid
|
(17,782
|
)
|
(17,297
|
)
|
|||||
Employees’ taxes paid associated with restricted shares withheld upon vesting
|
(1,162
|
)
|
(576
|
)
|
|||||
Excess tax benefits from stock-based compensation
|
265
|
66
|
|||||||
Other
|
16
|
(36
|
)
|
||||||
Net cash used in financing activities
|
(172,671
|
)
|
(32,265
|
)
|
|||||
Net (Decrease) Increase in Cash and Cash Equivalents
|
(63,937
|
)
|
9,174
|
||||||
Cash and Cash Equivalents at Beginning of Period
|
86,919
|
74,591
|
|||||||
Cash and Cash Equivalents at End of Period
|
$
|
22,982
|
|
$
|
83,765
|
||||
|
|||||||||
Supplemental Disclosure of Cash Paid During the Period for:
|
|||||||||
Interest
|
$
|
13,241
|
$
|
13,305
|
|||||
Income taxes
|
5,651
|
13,772
|
|||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||
March 31,
|
March 31,
|
|||||||||||||
(Thousands)
|
2011
|
2010
|
2011
|
2010
|
||||||||||
Service cost – benefits earned during the period
|
$
|
2,388
|
$
|
2,189
|
$
|
4,776
|
$
|
4,463
|
||||||
Interest cost on projected benefit obligation
|
4,705
|
4,924
|
9,410
|
9,881
|
||||||||||
Expected return on plan assets
|
(4,712
|
)
|
(5,075
|
)
|
(9,424
|
)
|
(10,107
|
)
|
||||||
Amortization of prior service cost
|
160
|
172
|
320
|
411
|
||||||||||
Amortization of actuarial loss
|
2,557
|
2,025
|
5,114
|
4,059
|
||||||||||
Sub-total
|
5,098
|
4,235
|
10,196
|
8,707
|
||||||||||
Regulatory adjustment
|
(862
|
)
|
(2,657
|
)
|
(4,395
|
)
|
(5,550
|
)
|
||||||
Net pension cost
|
$
|
4,236
|
$
|
1,578
|
$
|
5,801
|
$
|
3,157
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||
March 31,
|
March 31,
|
|||||||||||||
(Thousands)
|
2011
|
2010
|
2011
|
2010
|
||||||||||
Service cost – benefits earned during the period
|
$
|
1,919
|
$
|
1,611
|
$
|
3,838
|
$
|
3,221
|
||||||
Interest cost on accumulated
|
||||||||||||||
postretirement benefit obligation
|
1,211
|
1,129
|
2,422
|
2,258
|
||||||||||
Expected return on plan assets
|
(912
|
)
|
(758
|
)
|
(1,823
|
)
|
(1,516
|
)
|
||||||
Amortization of transition obligation
|
34
|
34
|
68
|
68
|
||||||||||
Amortization of prior service credit
|
(582
|
)
|
(582
|
)
|
(1,164
|
)
|
(1,164
|
)
|
||||||
Amortization of actuarial loss
|
1,111
|
995
|
2,221
|
1,990
|
||||||||||
Sub-total
|
2,781
|
2,429
|
5,562
|
4,857
|
||||||||||
Regulatory adjustment
|
(400
|
)
|
(518
|
)
|
(1,271
|
)
|
(1,036
|
)
|
||||||
Net postretirement benefit cost
|
$
|
2,381
|
$
|
1,911
|
$
|
4,291
|
$
|
3,821
|
STOCK-BASED COMPENSATION
|
Weighted
|
|||||||||
Average
|
|||||||||
Shares/
|
Grant Date
|
||||||||
Units
|
Fair Value
|
||||||||
Nonvested at September 30, 2010
|
255,300
|
$
|
34.07
|
||||||
Granted (maximum shares that can be earned)
|
81,525
|
$
|
30.78
|
||||||
Vested
|
(72,750
|
)
|
$
|
29.32
|
|||||
Forfeited
|
(15,000
|
)
|
$
|
32.65
|
|||||
Nonvested at March 31, 2011
|
249,075
|
$
|
34.46
|
Weighted
|
|||||||||
Average
|
|||||||||
Shares/
|
Grant Date
|
||||||||
Units
|
Fair Value
|
||||||||
Nonvested at September 30, 2010
|
121,850
|
$
|
36.62
|
||||||
Granted
|
41,750
|
$
|
36.99
|
||||||
Vested
|
(26,250
|
)
|
$
|
35.15
|
|||||
Forfeited
|
(1,000
|
)
|
$
|
35.47
|
|||||
Nonvested at March 31, 2011
|
136,350
|
$
|
37.03
|
Weighted
|
|||||||||||||||
Average
|
|||||||||||||||
Weighted
|
Remaining
|
Aggregate
|
|||||||||||||
Average
|
Contractual
|
Intrinsic
|
|||||||||||||
Stock
|
Exercise
|
Term
|
Value
|
||||||||||||
Options
|
Price
|
(Years)
|
($000)
|
||||||||||||
Outstanding at September 30, 2010
|
335,975
|
$
|
30.75
|
||||||||||||
Granted
|
—
|
$
|
—
|
||||||||||||
Exercised
|
(22,975
|
)
|
$
|
30.88
|
|||||||||||
Forfeited
|
—
|
$
|
—
|
||||||||||||
Expired
|
—
|
$
|
—
|
||||||||||||
Outstanding at March 31, 2011
|
313,000
|
$
|
30.74
|
3.8
|
$
|
2,302
|
|||||||||
Fully Vested and Expected to Vest
at March 31, 2011
|
313,000
|
$
|
30.74
|
3.8
|
$
|
2,302
|
|||||||||
Exercisable at March 31, 2011
|
313,000
|
$
|
30.74
|
3.8
|
$
|
2,302
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||
March 31,
|
March 31,
|
|||||||||||||
(Thousands)
|
2011
|
2010
|
2011
|
2010
|
||||||||||
Total equity compensation cost
|
$
|
822
|
$
|
1,041
|
$
|
1,540
|
$
|
1,909
|
||||||
Compensation cost capitalized
|
(177
|
)
|
(219
|
)
|
(331
|
)
|
(357
|
)
|
||||||
Compensation cost recognized in net income
|
645
|
822
|
1,209
|
1,552
|
||||||||||
Income tax benefit recognized in net income
|
(248
|
)
|
(316
|
)
|
(466
|
)
|
(598
|
)
|
||||||
Compensation cost recognized in net income,
|
||||||||||||||
net of income tax
|
$
|
397
|
$
|
506
|
$
|
743
|
$
|
954
|
EARNINGS PER COMMON SHARE
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||
March 31,
|
March 31,
|
|||||||||||||
(Thousands, Except Per Share Amounts)
|
2011
|
2010
|
2011
|
2010
|
||||||||||
Basic EPS:
|
||||||||||||||
Net Income
|
$
|
27,893
|
$
|
28,020
|
$
|
51,262
|
$
|
50,906
|
||||||
Less: Income allocated to participating securities
|
226
|
280
|
430
|
508
|
||||||||||
Net Income Available to Common Shareholders
|
$
|
27,667
|
$
|
27,740
|
$
|
50,832
|
$
|
50,398
|
||||||
Weighted Average Shares Outstanding
|
22,100
|
21,980
|
22,070
|
21,968
|
||||||||||
Earnings Per Share of Common Stock
|
$
|
1.25
|
$
|
1.26
|
$
|
2.30
|
$
|
2.29
|
||||||
Diluted EPS:
|
||||||||||||||
Net Income
|
$
|
27,893
|
$
|
28,020
|
$
|
51,262
|
$
|
50,906
|
||||||
Less: Income allocated to participating securities
|
226
|
279
|
429
|
508
|
||||||||||
Net Income Available to Common Shareholders
|
$
|
27,667
|
$
|
27,741
|
$
|
50,833
|
$
|
50,398
|
||||||
Weighted Average Shares Outstanding
|
22,100
|
21,980
|
22,070
|
21,968
|
||||||||||
Dilutive Effect of Stock Options
|
||||||||||||||
and Restricted Stock
|
72
|
47
|
75
|
46
|
||||||||||
Weighted Average Diluted Shares
|
22,172
|
22,027
|
22,145
|
22,014
|
||||||||||
Earnings Per Share of Common Stock
|
$
|
1.25
|
$
|
1.26
|
$
|
2.30
|
$
|
2.29
|
||||||
Outstanding Shares Excluded from the
|
||||||||||||||
Calculation of Diluted EPS Attributable to:
|
||||||||||||||
Antidilutive stock options
|
—
|
77
|
—
|
77
|
||||||||||
Performance-contingent restricted stock
|
193
|
145
|
193
|
145
|
||||||||||
Total
|
193
|
222
|
193
|
222
|
FAIR VALUE OF FINANCIAL INSTRUMENTS
|
(Thousands)
|
Carrying
Amount
|
Fair
Value
|
||||||
As of March 31, 2011
|
||||||||
Cash and cash equivalents
|
$
|
22,982
|
$
|
22,982
|
||||
Marketable securities
|
17,022
|
17,022
|
||||||
Derivative instrument assets
|
11,301
|
11,301
|
||||||
Derivative instrument liabilities
|
195
|
195
|
||||||
Long-term debt
|
364,327
|
391,877
|
||||||
As of September 30, 2010
|
||||||||
Cash and cash equivalents
|
$
|
86,919
|
$
|
86,919
|
||||
Marketable securities
|
12,856
|
12,856
|
||||||
Derivative instrument assets
|
12,761
|
12,761
|
||||||
Derivative instrument liabilities
|
14
|
14
|
||||||
Short-term debt
|
129,650
|
129,650
|
||||||
Long-term debt, including current portion
|
389,298
|
443,959
|
||||||
As of March 31, 2010
|
||||||||
Cash and cash equivalents
|
$
|
83,765
|
$
|
83,765
|
||||
Marketable securities
|
12,083
|
12,083
|
||||||
Derivative instrument assets
|
14,600
|
14,600
|
||||||
Derivative instrument liabilities
|
436
|
436
|
||||||
Short-term debt
|
114,950
|
114,950
|
||||||
Long-term debt, including current portion
|
389,269
|
408,429
|
FAIR VALUE MEASUREMENTS
|
(Thousands)
|
Quoted
Prices in
Active
Markets
(Level 1)
|
Significant
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Effects of Netting and Cash Margin Receivables
/Payables
|
Total
|
||||||||||||
As of March 31, 2011
|
|||||||||||||||||
Assets
|
|||||||||||||||||
U. S. Stock/Bond Mutual Funds
|
$
|
17,022
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
17,022
|
|||||||
NYMEX natural gas contracts
|
5,718
|
—
|
—
|
4,416
|
10,134
|
||||||||||||
NYMEX gasoline and heating
|
|||||||||||||||||
oil contracts
|
369
|
—
|
—
|
(38
|
)
|
331
|
|||||||||||
Natural gas commodity contracts
|
—
|
930
|
57
|
(151
|
)
|
836
|
|||||||||||
Total
|
$
|
23,109
|
$
|
930
|
$
|
57
|
$
|
4,227
|
$
|
28,323
|
|||||||
Liabilities
|
|||||||||||||||||
NYMEX natural gas contracts
|
$
|
27,841
|
$
|
—
|
$
|
—
|
$
|
(27,841
|
)
|
$
|
—
|
||||||
Natural gas commodity contracts
|
—
|
313
|
33
|
(151
|
)
|
195
|
|||||||||||
Total
|
$
|
27,841
|
$
|
313
|
$
|
33
|
$
|
(27,992
|
)
|
$
|
195
|
||||||
As of September 30, 2010
|
|||||||||||||||||
Assets
|
|||||||||||||||||
U. S. Stock/Bond Mutual Funds
|
$
|
12,856
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
12,856
|
|||||||
NYMEX natural gas contracts
|
5,087
|
—
|
—
|
7,214
|
12,301
|
||||||||||||
NYMEX gasoline and heating
|
|||||||||||||||||
oil contracts
|
59
|
—
|
—
|
220
|
279
|
||||||||||||
Natural gas commodity contracts
|
—
|
161
|
76
|
(56
|
)
|
181
|
|||||||||||
Total
|
$
|
18,002
|
$
|
161
|
$
|
76
|
$
|
7,378
|
$
|
25,617
|
|||||||
Liabilities
|
|||||||||||||||||
NYMEX natural gas contracts
|
$
|
53,677
|
$
|
—
|
$
|
—
|
$
|
(53,677
|
)
|
$
|
—
|
||||||
NYMEX gasoline & heating
|
|||||||||||||||||
oil contracts
|
37
|
—
|
—
|
(37
|
)
|
—
|
|||||||||||
Natural gas commodity contracts
|
—
|
17
|
53
|
(56
|
)
|
14
|
|||||||||||
Total
|
$
|
53,714
|
$
|
17
|
$
|
53
|
$
|
(53,770
|
)
|
$
|
14
|
||||||
As of March 31, 2010
|
|||||||||||||||||
Assets
|
|||||||||||||||||
U. S. Stock/Bond Mutual Funds
|
$
|
12,083
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
12,083
|
|||||||
NYMEX natural gas contracts
|
10,953
|
—
|
—
|
3,303
|
14,256
|
||||||||||||
NYMEX gasoline and heating
|
|||||||||||||||||
oil contracts
|
233
|
—
|
—
|
(6
|
)
|
227
|
|||||||||||
Natural gas commodity contracts
|
—
|
303
|
40
|
(226
|
)
|
117
|
|||||||||||
Total
|
$
|
23,269
|
$
|
303
|
$
|
40
|
$
|
3,071
|
$
|
26,683
|
|||||||
Liabilities
|
|||||||||||||||||
NYMEX natural gas contracts
|
$
|
79,677
|
$
|
—
|
$
|
—
|
$
|
(79,677
|
)
|
$
|
—
|
||||||
Natural gas commodity contracts
|
—
|
607
|
55
|
(226
|
)
|
436
|
|||||||||||
Total
|
$
|
79,677
|
$
|
607
|
$
|
55
|
$
|
(79,903
|
)
|
$
|
436
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||
March 31,
|
March 31,
|
|||||||||||||
(Thousands)
|
2011
|
2010
|
2011
|
2010
|
||||||||||
Beginning of period
|
$
|
76
|
$
|
(209
|
)
|
$
|
23
|
$
|
(101
|
)
|
||||
Issuances and settlement - net
|
(81
|
)
|
176
|
(52
|
)
|
37
|
||||||||
Net losses related to derivatives not held
at end of period
|
(5
|
)
|
—
|
(16
|
)
|
—
|
||||||||
Net gains related to derivatives still held
at end of period
|
34
|
18
|
69
|
49
|
||||||||||
End of period
|
$
|
24
|
$
|
(15
|
)
|
$
|
24
|
$
|
(15
|
)
|
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
|
Laclede Gas Company
|
Laclede Energy
Resources, Inc.
|
|||||||||||||
MMBtu
(millions)
|
Avg. Price
Per
MMBtu
|
MMBtu
(millions)
|
Avg. Price
Per
MMBtu
|
|||||||||||
Open short futures positions
|
||||||||||||||
Fiscal 2011
|
—
|
$
|
—
|
3.54
|
$
|
4.56
|
||||||||
Fiscal 2012
|
—
|
—
|
2.53
|
4.45
|
||||||||||
Open long futures positions
|
||||||||||||||
Fiscal 2011
|
3.76
|
$
|
7.40
|
4.00
|
$
|
6.12
|
||||||||
Fiscal 2012
|
13.07
|
5.17
|
2.53
|
6.18
|
||||||||||
Fiscal 2013
|
0.47
|
4.80
|
0.08
|
5.35
|
The Effect of Derivative Instruments on the Statements of Consolidated Income and Statements of Consolidated Comprehensive Income
|
|||||||||||||||
Three Months Ended
|
Six Months Ended
|
||||||||||||||
Location of Gain (Loss)
|
March 31,
|
March 31,
|
|||||||||||||
(Thousands)
|
Recorded in Income
|
2011
|
2010
|
2011
|
2010
|
||||||||||
Derivatives in Cash Flow Hedging Relationships
|
|||||||||||||||
Effective portion of gain recognized in OCI on derivatives:
|
|||||||||||||||
NYMEX natural gas contracts
|
$
|
693
|
$
|
3,673
|
$
|
734
|
$
|
7,250
|
|||||||
NYMEX gasoline and heating oil contracts
|
267
|
60
|
440
|
226
|
|||||||||||
Total
|
$
|
960
|
$
|
3,733
|
$
|
1,174
|
$
|
7,476
|
|||||||
Effective portion of gain (loss) reclassified from AOCI to income:
|
|||||||||||||||
NYMEX natural gas contracts
|
Non-Regulated Gas Marketing Operating Revenues
|
$
|
757
|
$
|
1,726
|
$
|
5,591
|
$
|
6,251
|
||||||
Non-Regulated Gas Marketing | |||||||||||||||
Operating Expenses
|
(682
|
)
|
(235
|
)
|
(2,475
|
)
|
(771
|
)
|
|||||||
Sub-total
|
75
|
1,491
|
3,116
|
5,480
|
|||||||||||
NYMEX gasoline and heating oil contracts
|
Regulated Gas Distribution Other Operation Expenses
|
72
|
74
|
121
|
136
|
||||||||||
Total
|
$
|
147
|
$
|
1,565
|
$
|
3,237
|
$
|
5,616
|
|||||||
Ineffective portion of gain (loss) on derivatives recognized in income:
|
|||||||||||||||
NYMEX natural gas contracts
|
Non-Regulated Gas Marketing Operating Revenues
|
$
|
551
|
$
|
864
|
$
|
560
|
$
|
1,389
|
||||||
Non-Regulated Gas Marketing | |||||||||||||||
Operating Expenses
|
(498
|
)
|
105
|
(623
|
)
|
(2,244
|
)
|
||||||||
Sub-total
|
53
|
969
|
(63
|
)
|
(855
|
)
|
|||||||||
NYMEX gasoline and heating oil contracts | Regulated Gas Distribution Other | ||||||||||||||
|
Operation Expenses
|
19
|
(23
|
)
|
48
|
(79
|
)
|
||||||||
Total
|
$
|
72
|
$
|
946
|
$
|
(15
|
)
|
$
|
(934
|
)
|
|||||
Derivatives Not Designated as Hedging Instruments *
|
|||||||||||||||
Gain (loss) recognized in income on derivatives:
|
|||||||||||||||
Natural gas commodity contracts
|
Non-Regulated Gas Marketing Operating Revenues
|
$
|
143
|
$
|
121
|
$
|
(299
|
)
|
$
|
4,115
|
|||||
Non-Regulated Gas Marketing Operating Expenses
|
746
|
(194
|
)
|
1,196
|
(3,708
|
)
|
|||||||||
NYMEX natural gas contracts
|
Non-Regulated Gas Marketing Operating Revenues
|
(42
|
)
|
42
|
(78
|
)
|
42
|
||||||||
Non-Regulated Gas Marketing Operating Expenses
|
—
|
2
|
—
|
(552
|
)
|
||||||||||
NYMEX gasoline and heating oil contracts
|
Other Income and (Income Deductions) - Net
|
47
|
2
|
63
|
2
|
||||||||||
Total
|
$
|
894
|
$
|
(27
|
)
|
$
|
882
|
$
|
(101
|
)
|
*
|
Gains and losses on Laclede Gas’ NYMEX natural gas derivative instruments, which are not designated as hedging instruments for financial reporting purposes, are deferred pursuant to the Utility’s PGA Clause and recorded as regulatory assets or regulatory liabilities. These gains and losses are excluded from the table above because they have no direct impact on the Statements of Consolidated Income.
|
Fair Value of Derivative Instruments in the Consolidated Balance Sheet at March 31, 2011
|
|||||||||
Asset Derivatives
|
Liability Derivatives
|
||||||||
(Thousands)
|
Balance Sheet Location
|
Fair Value
|
*
|
Balance Sheet Location
|
Fair Value
|
*
|
|||
Derivatives designated as hedging instruments
|
|||||||||
NYMEX natural gas contracts
|
Derivative Instrument Assets
|
$
|
688
|
Derivative Instrument Assets
|
$
|
10,926
|
|||
Other Deferred Charges
|
11
|
Other Deferred Charges
|
61
|
||||||
NYMEX gasoline and heating oil contracts
|
Derivative Instrument Assets
|
341
|
Derivative Instrument Assets
|
—
|
|||||
Sub-total
|
1,040
|
10,987
|
|||||||
Derivatives not designated as hedging instruments
|
|||||||||
NYMEX natural gas contracts
|
Derivative Instrument Assets
|
4,353
|
Derivative Instrument Assets
|
16,854
|
|||||
Other Deferred Charges
|
666
|
Other Deferred Charges
|
—
|
||||||
Natural gas commodity contracts
|
Derivative Instrument Assets
|
957
|
Derivative Instrument Assets
|
121
|
|||||
Other Current Liabilities
|
30
|
Other Current Liabilities
|
225
|
||||||
NYMEX gasoline and heating oil contracts
|
Derivative Instrument Assets
|
28
|
Derivative Instrument Assets
|
—
|
|||||
Sub-total
|
6,034
|
17,200
|
|||||||
Total derivatives
|
$
|
7,074
|
$
|
28,187
|
|||||
Fair Value of Derivative Instruments in the Consolidated Balance Sheet at September 30, 2010
|
|||||||||
Asset Derivatives
|
Liability Derivatives
|
||||||||
(Thousands)
|
Balance Sheet Location
|
Fair Value
|
*
|
Balance Sheet Location
|
Fair Value
|
*
|
|||
Derivatives designated as hedging instruments
|
|||||||||
NYMEX natural gas contracts
|
Derivative Instrument Assets
|
$
|
3,174
|
Derivative Instrument Assets
|
$
|
9,705
|
|||
Other Deferred Charges
|
4
|
Other Deferred Charges
|
3,435
|
||||||
NYMEX gasoline and heating oil contracts
|
Derivative Instrument Assets
|
56
|
Derivative Instrument Assets
|
34
|
|||||
Sub-total
|
3,234
|
13,174
|
|||||||
Derivatives not designated as hedging instruments
|
|||||||||
NYMEX natural gas contracts
|
Derivative Instrument Assets
|
1,401
|
Derivative Instrument Assets
|
37,457
|
|||||
Other Deferred Charges
|
508
|
Other Deferred Charges
|
3,080
|
||||||
Natural gas commodity contracts
|
Derivative Instrument Assets
|
237
|
Derivative Instrument Assets
|
56
|
|||||
Other Current Liabilities
|
—
|
Other Current Liabilities
|
14
|
||||||
Derivative Instrument Assets
|
3
|
Derivative Instrument Assets
|
3
|
||||||
Sub-total
|
2,149
|
40,610
|
|||||||
Total derivatives
|
$
|
5,383
|
$
|
53,784
|
|||||
Fair Value of Derivative Instruments in the Consolidated Balance Sheet at March 31, 2010
|
|||||||||
Asset Derivatives
|
Liability Derivatives
|
||||||||
(Thousands)
|
Balance Sheet Location
|
Fair Value
|
*
|
Balance Sheet Location
|
Fair Value
|
*
|
|||
Derivatives designated as hedging instruments
|
|||||||||
NYMEX natural gas contracts
|
Derivative Instrument Assets
|
$
|
8,068
|
Derivative Instrument Assets
|
$
|
9,508
|
|||
NYMEX gasoline and heating oil contracts
|
Derivative Instrument Assets
|
231
|
Derivative Instrument Assets
|
—
|
|||||
Sub-total
|
8,299
|
9,508
|
|||||||
Derivatives not designated as hedging instruments
|
|||||||||
NYMEX natural gas contracts
|
Derivative Instrument Assets
|
2,885
|
Derivative Instrument Assets
|
70,170
|
|||||
Natural gas commodity contracts
|
Derivative Instrument Assets
|
268
|
Derivative Instrument Assets
|
151
|
|||||
Other Current Liabilities
|
75
|
Other Current Liabilities
|
511
|
||||||
NYMEX gasoline and heating oil contracts
|
Derivative Instrument Assets
|
2
|
Derivative Instrument Assets
|
—
|
|||||
Sub-total
|
3,230
|
70,832
|
|||||||
Total derivatives
|
$
|
11,529
|
$
|
80,340
|
*
|
The fair values of Asset Derivatives and Liability Derivatives exclude the fair value of cash margin receivables or payables with counterparties subject to netting arrangements. Fair value amounts of derivative contracts (including the fair value amounts of cash margin receivables and payables) for which there is a legal right to set off are presented net on the Consolidated Balance Sheets. As such, the gross balances presented in the table above are not indicative of the Company’s net economic exposure. Refer to Note 6, Fair Value Measurements, for information on the valuation of derivative instruments.
|
March 31,
|
Sept. 30,
|
March 31,
|
|||||||||
(Thousands)
|
2011
|
2010
|
2010
|
||||||||
Fair value of asset derivatives presented above
|
$
|
7,074
|
$
|
5,383
|
$
|
11,529
|
|||||
Fair value of cash margin receivables
|
32,258
|
61,148
|
82,981
|
||||||||
Netting of assets and liabilities with the same counterparty
|
(28,031
|
)
|
(53,770
|
)
|
(79,910
|
)
|
|||||
Total
|
$
|
11,301
|
$
|
12,761
|
$
|
14,600
|
|||||
Derivative Instrument Assets, per Consolidated Balance Sheets:
|
|||||||||||
Derivative instrument assets
|
$
|
10,491
|
$
|
10,285
|
$
|
14,600
|
|||||
Other deferred charges
|
810
|
2,476
|
—
|
||||||||
Total
|
$ |
11,301
|
$ |
12,761
|
$ |
14,600
|
|||||
Fair value of liability derivatives presented above
|
$
|
28,187
|
$
|
53,784
|
$
|
80,340
|
|||||
Fair value of cash margin payables
|
39
|
—
|
6
|
||||||||
Netting of assets and liabilities with the same counterparty
|
(28,031
|
)
|
(53,770
|
)
|
(79,910
|
)
|
|||||
Derivative instrument liabilities, per Consolidated Balance Sheet*
|
$
|
195
|
$
|
14
|
$
|
436
|
|||||
*
|
Included in the Other line of the Current Liabilities section
|
CONCENTRATIONS OF CREDIT RISK
|
OTHER INCOME AND (INCOME DEDUCTIONS) – NET
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||
March 31,
|
March 31,
|
|||||||||||||
(Thousands)
|
2011
|
2010
|
2011
|
2010
|
||||||||||
Interest income
|
$
|
267
|
$
|
361
|
$
|
715
|
$
|
896
|
||||||
Net investment gain
|
390
|
196
|
1,127
|
670
|
||||||||||
Other income
|
61
|
25
|
74
|
25
|
||||||||||
Other income deductions
|
(251
|
)
|
(264
|
)
|
396
|
314
|
||||||||
Other Income and (Income Deductions) – Net
|
$
|
467
|
$
|
318
|
$
|
2,312
|
$
|
1,905
|
INFORMATION BY OPERATING SEGMENT
|
Non-
|
|||||||||||||||||
Regulated
|
Regulated
|
||||||||||||||||
Gas
|
Gas
|
||||||||||||||||
(Thousands)
|
Distribution
|
Marketing
|
Other
|
Eliminations
|
Consolidated
|
||||||||||||
Three Months Ended
|
|||||||||||||||||
March 31, 2011
|
|||||||||||||||||
Revenues from external customers
|
$
|
387,737
|
$
|
151,305
|
$
|
33
|
$
|
—
|
$
|
539,075
|
|||||||
Intersegment revenues
|
638
|
3,806
|
259
|
—
|
4,703
|
||||||||||||
Total Operating Revenues
|
388,375
|
155,111
|
292
|
—
|
543,778
|
||||||||||||
Net Economic Earnings (Losses)
|
26,203
|
1,335
|
(76
|
)
|
—
|
27,462
|
|||||||||||
Total assets
|
1,634,674
|
165,403
|
130,172
|
(195,832
|
)
|
1,734,417
|
|||||||||||
Six Months Ended
|
|||||||||||||||||
March 31, 2011
|
|||||||||||||||||
Revenues from external customers
|
$
|
664,242
|
$
|
309,006
|
$
|
124
|
$
|
—
|
$
|
973,372
|
|||||||
Intersegment revenues
|
1,576
|
12,513
|
519
|
—
|
14,608
|
||||||||||||
Total Operating Revenues
|
665,818
|
321,519
|
643
|
—
|
987,980
|
||||||||||||
Net Economic Earnings (Losses)
|
47,637
|
3,281
|
(68
|
)
|
—
|
50,850
|
|||||||||||
Total assets
|
1,634,674
|
165,403
|
130,172
|
(195,832
|
)
|
1,734,417
|
|||||||||||
Three Months Ended
|
|||||||||||||||||
March 31, 2010
|
|||||||||||||||||
Revenues from external customers
|
$
|
373,198
|
$
|
252,321
|
$
|
73
|
$
|
—
|
$
|
625,592
|
|||||||
Intersegment revenues
|
322
|
9,152
|
259
|
—
|
9,733
|
||||||||||||
Total Operating Revenues
|
373,520
|
261,473
|
332
|
—
|
635,325
|
||||||||||||
Net Economic Earnings
|
23,440
|
3,787
|
96
|
—
|
27,323
|
||||||||||||
Total assets
|
1,630,495
|
193,967
|
117,820
|
(111,377
|
)
|
1,830,905
|
|||||||||||
Six Months Ended
|
|||||||||||||||||
March 31, 2010
|
|||||||||||||||||
Revenues from external customers
|
$
|
654,309
|
$
|
442,208
|
$
|
10,525
|
$
|
—
|
$
|
1,107,042
|
|||||||
Intersegment revenues
|
2,140
|
16,790
|
519
|
—
|
19,449
|
||||||||||||
Total Operating Revenues
|
656,449
|
458,998
|
11,044
|
—
|
1,126,491
|
||||||||||||
Net Economic Earnings
|
40,872
|
8,399
|
3,849
|
—
|
53,120
|
||||||||||||
Total assets
|
1,630,495
|
193,967
|
117,820
|
(111,377
|
)
|
1,830,905
|
Reconciliation of Consolidated Net Economic Earnings to Consolidated Net Income
|
|||||||||||||||
Three Months Ended
|
Six Months Ended
|
||||||||||||||
March 31,
|
March 31,
|
||||||||||||||
(Thousands)
|
2011
|
2010
|
2011
|
2010
|
|||||||||||
Total Net Economic Earnings above
|
$
|
27,462
|
$
|
27,323
|
$
|
50,850
|
$
|
53,120
|
|||||||
Add: Unrealized gain (loss) on energy-related
|
|||||||||||||||
derivative contracts, net of tax
|
431
|
697
|
412
|
(2,214
|
)
|
||||||||||
Net Income
|
$
|
27,893
|
$
|
28,020
|
$
|
51,262
|
$
|
50,906
|
COMMITMENTS AND CONTINGENCIES
|
SUBSEQUENT EVENT
|
•
|
weather conditions and catastrophic events, particularly severe weather in the natural gas producing areas of the country;
|
|
•
|
volatility in gas prices, particularly sudden and sustained changes in natural gas prices, including the related impact on margin deposits associated with the use of natural gas derivative instruments;
|
|
•
|
the impact of changes and volatility in natural gas prices on our competitive position in relation to suppliers of alternative heating sources, such as electricity;
|
|
•
|
changes in gas supply and pipeline availability, particularly those changes that impact supply for and access to our markets in which our subsidiaries transact business;
|
|
•
|
legislative, regulatory and judicial mandates and decisions, some of which may be retroactive, including those affecting
|
|
•
|
allowed rates of return
|
|
•
|
incentive regulation
|
|
•
|
industry structure
|
|
•
|
purchased gas adjustment provisions
|
|
•
|
rate design structure and implementation
|
|
•
|
regulatory assets
|
|
•
|
non-regulated and affiliated transactions
|
|
•
|
franchise renewals
|
|
•
|
environmental or safety matters, including the potential impact of legislative and regulatory actions related to climate change
|
|
•
|
taxes
|
|
•
|
pension and other postretirement benefit liabilities and funding obligations
|
|
•
|
accounting standards, including the effect of potential changes relative to adoption of or convergence with international accounting standards;
|
|
•
|
the results of litigation;
|
|
•
|
retention of, ability to attract, ability to collect from, and conservation efforts of, customers;
|
|
•
|
capital and energy commodity market conditions, including the ability to obtain funds with reasonable terms for necessary capital expenditures and general operations and the terms and conditions imposed for obtaining sufficient gas supply;
|
|
•
|
discovery of material weakness in internal controls; and
|
|
•
|
employee workforce issues.
|
•
|
the Utility’s ability to recover the costs of purchasing and distributing natural gas from its customers;
|
•
|
the impact of weather and other factors, such as customer conservation, on revenues and expenses;
|
•
|
changes in the regulatory environment at the federal, state, and local levels, as well as decisions by regulators, that impact the Utility’s ability to earn its authorized rate of return;
|
•
|
the Utility’s ability to access credit markets and maintain working capital sufficient to meet operating requirements; and,
|
•
|
the effect of natural gas price volatility on the business.
|
•
|
the risks of competition;
|
•
|
regional fluctuations in natural gas prices;
|
•
|
new national pipeline infrastructure projects;
|
•
|
credit and/or capital market access;
|
•
|
counterparty risks; and,
|
•
|
the effect of natural gas price volatility on the business.
|
1)
|
changes in fair values of physical and/or financial derivatives prior to the period of settlement; and,
|
2)
|
ineffective portions of accounting hedges, required to be recorded in earnings prior to settlement, due to differences in commodity price changes between the locations of the forecasted physical purchase or sale transactions and the locations of the underlying hedge instruments.
|
(Millions, except per share amounts)
|
Net Economic Earnings
(Non-GAAP)
|
Add: Unrealized gain (loss) on energy-related derivative contracts*
|
Net Income
(GAAP)
|
||||||||||
Quarter Ended March 31, 2011
|
|||||||||||||
Regulated Gas Distribution
|
$
|
26.2
|
$
|
—
|
$
|
26.2
|
|||||||
Non-Regulated Gas Marketing
|
1.3
|
0.4
|
1.7
|
||||||||||
Other
|
—
|
—
|
—
|
||||||||||
Total
|
$
|
27.5
|
$
|
0.4
|
$
|
27.9
|
|||||||
Per Share Amounts **
|
$
|
1.23
|
$
|
0.02
|
$
|
1.25
|
|||||||
Quarter Ended March 31, 2010
|
|||||||||||||
Regulated Gas Distribution
|
$
|
23.4
|
$
|
—
|
$
|
23.4
|
|||||||
Non-Regulated Gas Marketing
|
3.8
|
0.7
|
4.5
|
||||||||||
Other
|
0.1
|
—
|
0.1
|
||||||||||
Total
|
$
|
27.3
|
$
|
0.7
|
$
|
28.0
|
|||||||
Per Share Amounts **
|
$
|
1.23
|
$
|
0.03
|
$
|
1.26
|
|||||||
*
|
Amounts presented net of income taxes. Income taxes are calculated by applying federal, state, and local income tax rates applicable to ordinary income to the amounts of unrealized gain (loss) on energy-related derivative contracts. For the quarters ended March 31, 2011 and 2010, the amounts of income tax expense included in the reconciling items above are $0.3 million and $0.4 million, respectively.
|
||||||||||||
**
|
Net economic earnings per share is calculated by replacing consolidated net income with consolidated net economic earnings in the GAAP diluted earnings per share calculation.
|
•
|
the benefit of the general rate increase, effective September 1, 2010, totaling $7.2 million.
|
•
|
lower Infrastructure System Replacement Surcharge (ISRS) revenues totaling $1.5 million; and,
|
•
|
increases in operation and maintenance expense, totaling $0.9 million.
|
(Millions)
|
||||
Higher off-system sales volumes
|
$
|
35.8
|
||
Lower system sales volumes and other variations
|
(14.9
|
)
|
||
General rate increase, effective September 1, 2010
|
7.2
|
|||
Lower wholesale gas costs passed on to Utility customers (subject to prudence review by the MoPSC)
|
(5.9
|
)
|
||
Lower prices charged for off-system sales
|
(5.8
|
)
|
||
Lower ISRS revenues
|
(1.5
|
)
|
||
Total Variation
|
$
|
14.9
|
(Millions, except per share amounts)
|
Net Economic Earnings
(Non-GAAP)
|
Add: Unrealized gain (loss) on energy-related derivative contracts*
|
Net Income
(GAAP)
|
||||||||||
Six Months Ended March 31, 2011
|
|||||||||||||
Regulated Gas Distribution
|
$
|
47.6
|
$
|
0.1
|
$
|
47.7
|
|||||||
Non-Regulated Gas Marketing
|
3.3
|
0.3
|
3.6
|
||||||||||
Other
|
—
|
—
|
—
|
||||||||||
Total
|
$
|
50.9
|
$
|
0.4
|
$
|
51.3
|
|||||||
Per Share Amounts **
|
$
|
2.28
|
$
|
0.02
|
$
|
2.30
|
|||||||
Six Months Ended March 31, 2010
|
|||||||||||||
Regulated Gas Distribution
|
$
|
40.9
|
$
|
(0.1
|
)
|
$
|
40.8
|
||||||
Non-Regulated Gas Marketing
|
8.4
|
(2.1
|
)
|
6.3
|
|||||||||
Other
|
3.8
|
—
|
3.8
|
||||||||||
Total
|
$
|
53.1
|
$
|
(2.2
|
)
|
$
|
50.9
|
||||||
Per Share Amounts **
|
$
|
2.39
|
$
|
(0.10
|
)
|
$
|
2.29
|
||||||
*
|
Amounts presented net of income taxes. Income taxes are calculated by applying federal, state, and local income tax rates applicable to ordinary income to the amounts of unrealized gain (loss) on energy-related derivative contracts. For the six months ended March 31, 2011 and 2010, the amounts of income tax expense (benefit) included in the reconciling items above are $0.3 million and $(1.4) million, respectively.
|
||||||||||||
**
|
Net economic earnings per share is calculated by replacing consolidated net income with consolidated net economic earnings in the GAAP diluted earnings per share calculation.
|
•
|
the benefit of the general rate increase, effective September 1, 2010, totaling $14.8 million; and,
|
•
|
decreases in operation and maintenance expense totaling $1.7 million.
|
•
|
lower Infrastructure System Replacement Surcharge (ISRS) revenues totaling $3.5 million; and,
|
•
|
lower system gas sales volumes and other variations totaling $1.6 million.
|
(Millions)
|
||||
Higher off-system sales volumes
|
$
|
46.7
|
||
Lower system sales volumes and other variations
|
(20.4
|
)
|
||
Lower wholesale gas costs passed on to Utility customers (subject to prudence review by the MoPSC)
|
(19.6
|
)
|
||
General rate increase, effective September 1, 2010
|
14.8
|
|||
Lower prices charged for off-system sales
|
(8.6
|
)
|
||
Lower ISRS revenues
|
(3.5
|
)
|
||
Total Variation
|
$
|
9.4
|
•
|
Accounts receivable and allowance for doubtful accounts
|
|
•
|
Employee benefits and postretirement obligations
|
|
•
|
Regulated operations
|
|
•
|
Non-regulated gas marketing energy contracts
|
Laclede Gas Commercial Paper Borrowings
|
|
Six Months Ended March 31, 2011
|
|
Weighted average borrowings outstanding
|
$91.5 million
|
Weighted average interest rate
|
0.3%
|
Range of borrowings outstanding
|
$0 – $172.1 million
|
As of March 31, 2011
|
|
Borrowings outstanding at end of period
|
None
|
Weighted average interest rate
|
N/A
|
Payments due by period
|
||||||||||||||||
Remaining
|
Fiscal Years
|
|||||||||||||||
Contractual Obligations
|
Total
|
Fiscal Year
2011
|
Fiscal Years
2012-2013
|
Fiscal Years
2014-2015
|
2016 and
thereafter
|
|||||||||||
Principal Payments on Long-Term Debt
|
$
|
365.0
|
$
|
—
|
$
|
25.0
|
$
|
—
|
$
|
340.0
|
||||||
Interest Payments on Long-Term Debt
|
472.6
|
11.5
|
45.1
|
42.7
|
373.3
|
|||||||||||
Capital Leases (a)
|
0.3
|
0.1
|
0.1
|
0.1
|
—
|
|||||||||||
Operating Leases (a)
|
13.8
|
2.6
|
7.7
|
3.5
|
—
|
|||||||||||
Purchase Obligations – Natural Gas (b)
|
723.7
|
272.8
|
409.6
|
26.9
|
14.4
|
|||||||||||
Purchase Obligations – Other (c)
|
92.7
|
13.6
|
24.1
|
17.8
|
37.2
|
|||||||||||
Total (d)
|
$
|
1,668.1
|
$
|
300.6
|
$
|
511.6
|
$
|
91.0
|
$
|
764.9
|
(a)
|
Lease obligations are primarily for office space, office equipment, vehicles, and power operated equipment in the Regulated Gas Distribution segment. Additional payments will be incurred if renewal options are exercised under the provisions of certain agreements.
|
(b)
|
These purchase obligations represent the minimum payments required under existing natural gas transportation and storage contracts and natural gas supply agreements in the Regulated Gas Distribution and Non-Regulated Gas Marketing segments. These amounts reflect fixed obligations as well as obligations to purchase natural gas at future market prices, calculated using March 31, 2011 forward market prices. Laclede Gas recovers the costs related to its purchases, transportation, and storage of natural gas through the operation of its PGA Clause, subject to prudence review; however, variations in the timing of collections of gas costs from customers affect short-term cash requirements. Additional contractual commitments are generally entered into prior to or during the heating season.
|
(c)
|
These purchase obligations primarily reflect miscellaneous agreements for the purchase of materials and the procurement of services necessary for normal operations.
|
(d)
|
The category of Other Long-Term Liabilities has been excluded from the table above because there are no material amounts of contractual obligations under this category. Long-term liabilities associated with unrecognized tax benefits, totaling $6.3 million, have been excluded from the table above because the timing of future cash outflows, if any, cannot be reasonably estimated. Also, commitments related to pension and postretirement benefit plans have been excluded from the table above. At this writing, the Company expects to make contributions to its qualified, trusteed pension plans of at least $11.9 million during the remaining six months of fiscal year 2011. Laclede Gas anticipates a $1.6 million contribution relative to its non-qualified pension plans during the remaining six months of fiscal year 2011. With regard to the postretirement benefits, the Company anticipates Laclede Gas will contribute $8.3 million to the qualified trusts and $0.2 million directly to participants from Laclede Gas’ funds during the remaining six months of fiscal year 2011. For further discussion of the Company’s pension and postretirement benefit plans, refer to Note 2, Pension Plans and Other Postretirement Benefits, of the Notes to Consolidated Financial Statements.
|
(Thousands)
|
Derivative
Fair
Values
|
Cash
Margin
|
Derivatives
and Cash
Margin
|
|||||||
Net balance of derivative (liabilities) assets at September 30, 2010
|
$
|
(9,962
|
)
|
$
|
11,568
|
$
|
1,606
|
|||
Changes in fair value
|
591
|
—
|
591
|
|||||||
Settlements
|
(917
|
)
|
—
|
(917
|
)
|
|||||
Changes in cash margin
|
—
|
486
|
486
|
|||||||
Net balance of derivative (liabilities) assets at March 31, 2011
|
$
|
(10,288
|
)
|
$
|
12,054
|
$
|
1,766
|
At March 31, 2011
|
|||||||||||||
Maturity by Fiscal Year
|
|||||||||||||
(Thousands)
|
Total
|
2011
|
2012
|
2013
|
|||||||||
Fair values of exchange-traded/cleared natural gas derivatives - net
|
$
|
(10,288
|
)
|
$
|
(6,332
|
)
|
$
|
(3,943
|
)
|
$
|
(13
|
)
|
|
MMBtu – net long (short) futures/swap positions
|
530
|
458
|
(3
|
)
|
75
|
(Thousands)
|
||||
Net balance of derivative assets at September 30, 2010
|
$
|
168
|
||
Changes in fair value
|
897
|
|||
Settlements
|
(424
|
)
|
||
Net balance of derivative assets at March 31, 2011
|
$
|
641
|
(a)
|
See Exhibit Index
|
The Laclede Group, Inc.
|
|||||
Dated:
|
April 29, 2011
|
By:
|
/s/ Mark D. Waltermire
|
||
Mark D. Waltermire
|
|||||
Chief Financial Officer
|
|||||
(Authorized Signatory and Chief Financial Officer)
|
Exhibit No.
|
||
-
|
||
-
|
||
-
|
||
THE LACLEDE GROUP, INC. AND SUBSIDIARY COMPANIES
|
|||||||||||||||||||||
SCHEDULE OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
|
|||||||||||||||||||||
Twelve Months Ended
|
|||||||||||||||||||||
Mar. 31,
|
September 30,
|
||||||||||||||||||||
(Thousands of Dollars)
|
2011
|
2010
|
2009
|
2008
|
2007
|
2006
|
|||||||||||||||
Income from continuing
operations before interest
|
|||||||||||||||||||||
charges and income taxes
|
$
|
108,154
|
$
|
107,986
|
$
|
126,517
|
$
|
113,228
|
$
|
101,867
|
$
|
100,080
|
|||||||||
Add: One third of applicable
|
|||||||||||||||||||||
rentals charged to operating
|
|||||||||||||||||||||
expense (which approximates
|
|||||||||||||||||||||
the interest factor)
|
1,841
|
1,825
|
1,833
|
1,691
|
1,485
|
1,291
|
|||||||||||||||
Total Earnings
|
$
|
109,995
|
$
|
109,811
|
$
|
128,350
|
$
|
114,919
|
$
|
103,352
|
$
|
101,371
|
|||||||||
Interest on long-term debt –
|
|||||||||||||||||||||
Laclede Gas
|
$
|
23,973
|
$
|
24,583
|
$
|
24,583
|
$
|
19,851
|
$
|
22,502
|
$
|
22,329
|
|||||||||
Other interest
|
2,474
|
2,269
|
5,163
|
9,626
|
11,432
|
10,555
|
|||||||||||||||
Add: One third of applicable
|
|||||||||||||||||||||
rentals charged to operating
|
|||||||||||||||||||||
expense (which approximates
|
|||||||||||||||||||||
the interest factor)
|
1,841
|
1,825
|
1,833
|
1,691
|
1,485
|
1,291
|
|||||||||||||||
Total Fixed Charges
|
$
|
28,288
|
$
|
28,677
|
$
|
31,579
|
$
|
31,168
|
$
|
35,419
|
$
|
34,175
|
|||||||||
Ratio of Earnings to Fixed
|
|||||||||||||||||||||
Charges
|
3.89
|
3.83
|
4.06
|
3.69
|
2.92
|
2.97
|
|||||||||||||||
1.
|
I have reviewed this quarterly report on Form 10-Q of The Laclede Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
April 29, 2011
|
Signature:
|
/s/ Douglas H. Yaeger
|
||
Douglas H. Yaeger
|
|||||
Chairman of the Board,
|
|||||
President and Chief
|
|||||
Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of The Laclede Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
April 29, 2011
|
Signature:
|
/s/ Mark D. Waltermire
|
||
Mark D. Waltermire
|
|||||
Chief Financial Officer
|
|||||
(a)
|
To the best of my knowledge, the accompanying report on Form 10-Q for the quarter ended March 31, 2011 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
|
|
(b)
|
To the best of my knowledge, the information contained in the accompanying report on Form 10-Q for the quarter ended March 31, 2011 fairly presents, in all material respects, the financial condition and results of operations of The Laclede Group, Inc.
|
Date:
|
April 29, 2011
|
/s/ Douglas H. Yaeger
|
|||
Douglas H. Yaeger
|
|||||
Chairman of the Board, President
|
|||||
and Chief Executive Officer
|
|||||
(a)
|
To the best of my knowledge, the accompanying report on Form 10-Q for the quarter ended March 31, 2011 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
|
|
(b)
|
To the best of my knowledge, the information contained in the accompanying report on Form 10-Q for the quarter ended March 31, 2011 fairly presents, in all material respects, the financial condition and results of operations of The Laclede Group, Inc.
|
Date:
|
April 29, 2011
|
/s/ Mark D. Waltermire
|
|||
Mark D. Waltermire
|
|||||
Chief Financial Officer
|
|||||
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