Annual Report — [x] Reg. S-K Item 405 — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K405 Annual Report -- [x] Reg. S-K Item 405 51± 220K
2: EX-3.(A) Articles of Incorporation/Organization or By-Laws 1 7K
3: EX-3.(B) Articles of Incorporation/Organization or By-Laws 19± 50K
4: EX-10.(A) Material Contract 5± 22K
5: EX-10.(B) Material Contract 8± 31K
6: EX-10.(C) Material Contract 8± 28K
7: EX-12 Statement re: Computation of Ratios 1 5K
8: EX-21 Subsidiaries of the Registrant 1 5K
9: EX-27 Financial Data Schedule (Pre-XBRL) 2± 9K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 2-26983
THE PEOPLES GAS LIGHT AND COKE COMPANY
(Exact name of registrant as specified in its charter)
Illinois 36-1613900
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
24th Floor, 130 East Randolph Drive, Chicago, Illinois 60601-6207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 240-4000
Securities registered pursuant to Section 12(b) of the Act: None
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 reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (#229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]
State the aggregate market value of the voting stock held by non-
affiliates of the registrant:
None.
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Common Stock, without par value, 24,817,566 shares outstanding at
November 30, 1997.
Documents Incorporated by Reference
None
CONTENTS
Page
Item No. No.
Part I
1. Business 3
2. Properties 7
3. Legal Proceedings 8
4. Submission of Matters to a Vote of Security Holders 8
Part II
5. Market for the Company's Common Stock and Related
Stockholder Matters 8
6. Selected Financial Data 9
7. Management's Discussion and Analysis of Results
of Operations and Financial Condition 10
8. Financial Statements and Supplementary Data 16
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 34
Part III
10. Directors and Executive Officers of the Company 35
11. Executive Compensation 37
12. Security Ownership of Certain Beneficial Owners and
Management 43
13. Certain Relationships and Related Transactions 44
Part IV
14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 45
Signatures 47
Exhibit Index 48
The Peoples Gas Light and Coke Company
ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED SEPTEMBER 30, 1997
PART I
ITEM 1. BUSINESS
GENERAL
The Peoples Gas Light and Coke Company (Company) is a corporation
created by a special act of the General Assembly of the State of Illinois
(State), approved February 12, 1855, as amended on February 7, 1865.
The Company, an operating public utility, is engaged primarily in the
purchase, storage, distribution, sale, and transportation of natural gas.
It has approximately 836,000 residential, commercial, and industrial
retail sales and transportation customers within the City of Chicago
(City). The Company had 2,602 employees at September 30, 1997.
At September 30, 1997, the common stock of the Company and of its
utility affiliate, North Shore Gas Company (North Shore Gas), was wholly
owned by Peoples Energy Corporation (Peoples Energy).
COMPETITION
The Company is authorized by statute and/or certificates of public
convenience and necessity to conduct operations in the territory that it
serves. The Company holds a perpetual, non-exclusive franchise from the
City.
Absent extraordinary circumstances, potential competitors are barred
from constructing competing gas distribution systems in the Company's
service territory by a judicial doctrine known as the "first in the
field" doctrine. In addition, the high cost of installing duplicate
distribution facilities would render the construction of a competing
system impractical.
Competition in varying degrees exists between natural gas and other
fuels or forms of energy available to consumers in the Company's service
area. The capital cost of heating and cooling facilities in new high-
rise buildings is higher for gas than for electricity. This
circumstance, combined with relatively stagnant high-rise construction
activity, has adversely affected the ability of the Company to attach
commercial high-rise buildings.
On December 16, 1997, the State of Illinois enacted legislation to
restructure the electric market in Illinois. Under the legislation,
approximately one-third of non-residential electric customers, including
customers with very large loads, will be able to purchase electric power
from the supplier of their choice beginning on October 1, 1999. All non-
residential customers will have this choice by December 31, 2000. All
residential customers will be given choice on May 1, 2002. Customers
who buy their electricity from a supplier other than the local electric
utility will be required to pay transition charges to the utility
through the year 2006. These charges are intended to compensate the
electric utilities for revenues lost because of customers buying
electricity from other suppliers. The legislation also allows an
electric utility to issue bonds, in aggregate amounts up to 50% of its
Illinois jurisdictional capitalization, to be financed by a specific charge
to its customers. An electric utility also may transfer up to
15% of its assets to an affiliated or unaffiliated entity without
approval from the Illinois Commerce Commission. In return for these and
other benefits, electric utilities are required to reduce their
rates to residential customers. The state's two largest electric
utilities, including the utility that serves northeastern Illinois, must
reduce their residential rates by 15% on August 1, 1998 and by another 5%
on May 1, 2002. The legislation does not require electric utilities to
divest their power generation assets. It is too early to determine what
effects this restructuring of the electric market will have on the
competitive position of the Company.
In addition to restructuring the electric market, the legislation
provides for additional funding for assistance to low-income energy
users, including customers of the Company. The legislation creates a fund,
financed by charges to electric and gas customers of public utilities and
participating municipal utilities and electric co-ops, which
supplements currently available federal energy assistance.
A substantial portion of the gas that the Company delivers to its
customers consists of gas that the Company's customers purchase directly
from producers and marketers rather than from the Company. These direct
customer purchases have little effect on net income because the Company
provides transportation service for such gas volumes and recovers margins
similar to those applicable to conventional gas sales.
A pipeline may seek to provide transportation service directly to end-
users. Such direct service by a pipeline to an end-user would bypass the
local distributor's service and reduce the distributor's earnings.
However, none of the Company's pipeline suppliers has undertaken any
service bypassing the Company. The Company has a bypass rate approved by
the Illinois Commerce Commission (Commission) which allows the Company to
renegotiate rates with customers that are potential bypass candidates.
(See Other Matters - Large Volume Gas Service Agreements in Item 7.)
SALES AND RATES
The Company sells natural gas having an average heating value of
approximately 1,000 British thermal units (Btu's) per cubic foot.* Sales
are made and service rendered by the Company pursuant to a rate schedule
on file with the Commission containing various service classifications
largely reflecting customers' different uses and levels of consumption.
The Gas Charge is determined in accordance with the provisions in Rider
2, Gas Charge, to recover the costs incurred by the Company to purchase,
transport, manufacture, and store gas supplies. The level of the Gas
Charge under the Company's rate schedules is adjusted monthly to reflect
increases or decreases in natural gas supplier charges, purchased storage
service costs, transportation charges, and liquefied petroleum gas costs.
In addition, under the tariffs of the Company, the difference for any
month between costs recoverable through the Gas Charge and the revenues
billed to customers under the Gas Charge is refunded to or recovered from
customers. Consistent with these tariff provisions, such difference for
any month is recorded either as a current liability or a current asset
(with a contra entry to Gas Costs). The Company also has been
recovering, through its rates, pipeline charges billed for transition
costs resulting from the implementation of Federal Energy Regulatory
Commission (FERC) Order No. 636. (See Notes 1L, 2A, and 2B of the Notes
to Consolidated Financial Statements.)
The business of the Company is influenced by seasonal weather
conditions because a large element of the Company's customer load
consists of space heating. Weather-related deliveries can, therefore,
have a significant positive or negative impact on net income. (For
discussion of the effect of the seasonal nature of gas revenues on cash
flow, see Liquidity in Item 7.)
The basic marketing plan of the Company is to maintain its existing
share in all market segments and develop opportunities emerging from
changes in the utility environment and technological equipment advances
for new, expanded, or current natural gas applications, including
cogeneration, prime movers, natural gas-fueled vehicles, and natural gas
air-conditioning.
* All volumes of natural gas set forth in this report are stated on a
1,000 Btu (per cubic foot) billing basis.
(100 cubic feet = 1 therm; 10 therms = 1 Dekatherm - Dth)
STATE LEGISLATION AND REGULATION
The Company is subject to the jurisdiction of and regulation by the
Commission, which has general supervisory and regulatory powers over
practically all phases of the public utility business in Illinois,
including rates and charges, issuance of securities, services and
facilities, systems of accounts, investments, safety standards,
transactions with affiliated interests, as defined in the Illinois
Public Utilities Act, and other matters.
In 1994, the Commission entered orders providing for full recovery by
the Company of FERC Order 636 transition costs from the Company's gas
service customers. The Commission's orders have been appealed to the
Illinois Supreme Court. (See Notes 1L, 2A, and 2B of the Notes to
Consolidated Financial Statements.)
On November 8, 1995, the Commission issued an order approving changes
in rates of the Company. (See Note 2A of the Notes to Consolidated
Financial Statements.)
FEDERAL LEGISLATION AND REGULATION
By Order entered on December 6, 1968 (Holding Company Act Release No.
16233), the Securities and Exchange Commission, pursuant to Section
3(a)(1) of the Public Utility Holding Company Act of 1935 (Act), exempted
Peoples Energy and its subsidiary companies as such (including the
Company) from the provisions of the Act, other than Section 9(a)(2)
thereof.
Most of the gas distributed by the Company is transported to the
Company's distribution system by interstate pipelines. In their
provision of gas services (gathering, transportation and storage
services, and gas supply) pipelines are regulated by the FERC under the
Natural Gas Act and the Natural Gas Policy Act of 1978. (See "Sales and
Rates" and "Current Gas Supply" in Item 1.)
ENVIRONMENTAL MATTERS
The Company is subject to federal and state environmental laws. The
Company is conducting environmental investigations and work at certain
sites that were the location of former manufactured gas plant operations.
(See Note 3 of the Notes to Consolidated Financial Statements.)
CURRENT GAS SUPPLY
The Company has entered into various long-term and short-term firm gas
supply contracts. When used in conjunction with contract peaking and
contract storage, company-owned storage, and company-owned peak-shaving
facilities, such supply is deemed sufficient to meet current and
foreseeable peak and annual market requirements.
Although the Company believes North American supply to be sufficient
to meet U.S. market demands for the foreseeable future, it is unable to
quantify or otherwise make specific representations regarding national
supply availability.
The following tabulation shows the expected design peak-day
availability of gas in thousands of dekatherms (MDth) during the 1997-
1998 heating season for the Company:
Design Peak-Day Year of
Availability Contract
Source (MDth) Expiration
Firm direct purchases (1) 608 1998-2000
Liquefied petroleum gas 40
Peaking Service:
Peoples Energy Resources 60 (2)
The Uno-Ven Co. 10 (3)
Storage gas:
Leased (4) 563 1998-2000
Peoples-Manlove (5) 993
Customer-owned gas (6) 260
Total expected design
peak-day availability 2,534
(1)Consists of firm gas purchases from non-pipeline suppliers delivered
utilizing firm pipeline transportation. The majority of the gas
purchase contracts are negotiated annually. The terms of the
transportation contracts vary, with the longest term being 5 years.
(2)The contract with Peoples Energy Resources is for an initial term
expiring November 30, 1999; the contract continues in effect from
year to year thereafter unless canceled by either party upon 12
months' prior notice.
(3)The contract with The Uno-Ven Company was for an initial term ending
September 30, 1997; however, by its terms, the contract continues in
effect for an additional two year term subject to cancellation by
either party any time on or after September 30, 1997 upon one year's
prior notice.
(4)Consists of leased storage services required to meet design day
requirements with contract lengths varying from 3 to 5 years.
(5)Manlove Field, the Company's underground storage facility located
near Champaign, Illinois, has a seasonal top-gas capacity (excluding
volumes required to support late-season peaking requirements) of
approximately 27,000 MDth, of which approximately 1,566 MDth is
dedicated to North Shore Gas. The Company also owns a liquefied
natural gas (LNG) plant at Manlove Field for the primary purpose of
supporting late-season deliverability from the storage facility. The
LNG plant has a storage capacity of 2,000 MDth and is capable of
regasifying 300 MDth of gas per day. For the 1997-98 heating season,
Manlove Field complex will have a maximum design peak-day delivery
capability of approximately 1,056 MDth (including 63 MDth for the use
of North Shore Gas).
(6)Consists of gas supplies purchased directly from producers and
marketers by the Company's commercial, industrial, and larger residential
customers.
The sources of gas supply (including gas transported for customers) in
MDth for the Company for the three fiscal years ended September 30, 1997,
1996, and 1995, were as follows:
1997 1996 1995
Gas purchases 156,097 174,552 103,476
Synthetic natural gas (SNG) (a) - - 7,622
Liquefied petroleum gas produced 7 114 14
Customer-owned gas-received 91,476 93,141 93,225
Underground storage-net (3,786) 228 28,352
Exchange gas-net (39) (4,446) -
Company use and unaccounted-for gas (2,071) (3,169) (3,733)
Total (b) 241,684 260,420 228,956
(a)The SNG facility terminated production during fiscal 1995.
(b) See "Gas Sold and Transported" in Item 6.
SYNTHETIC NATURAL GAS SUPPLY
The Company owned and operated an SNG plant, the McDowell Energy
Center, located near Joliet, Illinois that used refinery fuel gas and a
variety of natural gas liquids, including ethane, naphtha, natural
gasoline, normal butane, propane, and ethane/propane mix as feedstock for
the production of SNG. The SNG facility terminated production in fiscal
1995.
ITEM 2. PROPERTIES
All of the principal plants and properties of the Company have been
maintained in the ordinary course of business and are believed to be in
satisfactory operating condition. The following is a brief description
of the principal plants and operating units of the Company.
The distribution system of the Company, at September 30, 1997,
consisted of approximately 4,000 miles of distribution mains and
necessary pressure regulators, approximately 495,000 services (pipe
connecting the mains with piping on the customers' premises), and
approximately 881,000 meters installed on customers' premises. The
Company has liquefied petroleum gasification and storage facilities. In
addition, it owns and has a substantial investment in office and service
buildings, garages, repair shops, and motor vehicles, together with the
equipment, tools, and fixtures necessary to conduct utility business.
The Company has gas storage easements covering approximately 32,000
acres located at Manlove Field near Champaign, Illinois, overlying an
aquifer-type underground natural gas storage reservoir, together with
wells, pipes, compressors, dehydration, metering, and other equipment
required to operate the facility. At September 30, 1997, the Company had
approximately 129,000 MDth of gas stored in the reservoir, of which
approximately 95,500 MDth was cushion gas. (Cushion gas is gas injected
into the storage reservoir to hold back surrounding or underlying water
and to provide the pressure necessary to make the wells deliver inventory
gas at desired levels.)
Also located at Manlove Field is an LNG plant, which has a storage
capacity of 2,000 MDth and is capable of regasifying 300 MDth of gas per
day. Such gas, together with the gas withdrawn from the Manlove Field
reservoir, and the gas transmitted by Trunkline Gas Company, is carried
to Chicago in Company-owned transmission mains totaling 254 miles.
Most of the principal plants and properties of the Company, other than
mains, services, meters, regulators, and cushion gas in underground
storage, are located on property owned in fee. Substantially all gas
mains are located in public streets and alleys. A small portion of the
distribution facilities is located on private property under easement
grants. Meters and house regulators in use and a portion of services are
located on premises being served. Certain storage wells and other
facilities of the Manlove Field storage reservoir, and certain portions
of the transmission system are located on land held pursuant to leases,
easements, or permits. Such land rights, as well as the gas storage
easements for the reservoir, have been obtained from the apparent record
owners of the land involved, in some cases without joinder of all such
owners, and all such leases, easements, and permits may be subject to
mortgages or other liens to which the Company is not a party.
Substantially all of the physical properties now owned or hereafter
acquired by the Company are subject to (a) the first-mortgage lien of the
Company's mortgage to First Trust, National Association, as Trustee, to
secure the principal amount of the Company's outstanding first and
refunding mortgage bonds and (b) in certain cases, other exceptions and
defects that do not interfere with the use of the property.
ITEM 3. LEGAL PROCEEDINGS
See Notes 2 and 3 of the Notes to Consolidated Financial Statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Company is a wholly owned subsidiary of Peoples Energy.
[Enlarge/Download Table]
ITEM 6. SELECTED FINANCIAL DATA (a)
For fiscal years ended September 30, 1997 1996 1995 1994 1993
OPERATING RESULTS (thousands)
Operating Revenues:
Residential $ 812,225 $ 757,598 $ 648,762 $ 820,383 $ 807,674
Commercial 127,029 122,825 101,436 139,078 135,838
Industrial 24,558 27,776 20,807 35,587 36,193
Transportation (b) 119,282 114,664 109,626 98,943 106,198
Other 16,390 13,712 18,312 17,181 15,517
Total Operating Revenues 1,099,484 1,036,575 898,943 1,111,172 1,101,420
Less- Gas costs 519,334 445,724 387,675 566,903 555,256
- Revenue taxes 115,430 110,421 100,562 121,773 121,051
Net Operating Revenues $ 464,720 $ 480,430 $ 410,706 $ 422,496 $ 425,113
Net Income applicable to common stock $ 85,098 $ 88,752 $ 53,666 $ 63,825 $ 63,637
Dividends declared on common stock $ 72,715 $ 52,117 $ 56,833 $ 55,343 $ 55,095
ASSETS AT YEAR-END (thousands)
Property, plant and equipment $ 1,819,567 $ 1,761,007 $ 1,815,407 $ 1,760,004 $ 1,702,401
Less - Accumulated depreciation 614,224 571,255 628,258 596,808 557,855
Net Property, Plant and Equipment $ 1,205,343 $ 1,189,752 $ 1,187,149 $ 1,163,196 $ 1,144,546
Total assets $ 1,557,627 $ 1,522,762 $ 1,561,481 $ 1,548,792 $ 1,506,107
Capital expenditures - construction $ 75,382 $ 72,194 $ 81,081 $ 74,623 $ 108,863
CAPITALIZATION AT YEAR-END (thousands)
Common equity $ 574,969 $ 564,182 $ 528,308 $ 531,475 $ 522,993
Long-term debt 462,400 462,400 549,150 549,150 447,150
Total Capitalization $ 1,037,369 $ 1,026,582 $ 1,077,458 $ 1,080,625 $ 970,143
CAPITALIZATION AT YEAR-END (per cent)
Common equity 55 55 49 49 54
Long-term debt 45 45 51 51 46
Total Capitalization 100 100 100 100 100
GAS SOLD AND TRANSPORTED (MDth)
Gas Sales:
Residential 121,258 131,339 111,509 122,648 124,190
Commercial 21,379 23,692 19,206 22,565 22,656
Industrial 4,515 5,873 4,357 6,320 6,670
Transportation (b) 94,532 99,516 93,884 90,059 87,952
Total Gas Sales and Transportation 241,684 260,420 228,956 241,592 241,468
Margin per Dth delivered 1.92 $ 1.84 $ 1.79 $ 1.75 $ 1.76
NUMBER OF CUSTOMERS (average)
Residential 781,169 783,782 784,290 786,271 787,672
Commercial 42,750 42,888 43,198 43,299 43,243
Industrial 2,816 2,839 2,963 3,125 3,260
Transportation (b) 9,300 9,671 9,308 8,768 8,335
Total Customers 836,035 839,180 839,759 841,463 842,510
DEGREE DAYS 6,806 7,080 5,897 6,701 6,679
Per cent of normal (6,536) 104 108 90 103 102
(a) The Company is a wholly owned subsidiary of Peoples Energy; therefore,
per-share data are omitted.
(b) Includes commercial, industrial, and larger residential customers.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net Income
Net income decreased $3.7 million, to $85.1 million, in fiscal 1997
from 1996, due principally to decreased gas deliveries due to weather
that was four per cent warmer than the previous fiscal year and
conservation. Also hindering this year's comparative results was the
year-ago period's gain on the expiration of gas storage contracts (see
Note 5 of the Notes to Consolidated Financial Statements), increased
computer support services, and increased depreciation and amortization
expense. Partially offsetting these decreases were a decrease in pension
expense (see Note 6A of the Notes to Consolidated Financial Statements),
a full year effect of the company's November 1995 rate increase (see Note
2A of the Notes to the Consolidated Financial Statements), and increased
other operating revenue and a tax accrual adjustment.
In 1996, net income applicable to common stock increased $35.1
million, to $88.8 million, due principally to weather that was 20 per
cent colder than in 1995 and to a rate increase that went into effect on
November 14, 1995 for the Company (see Note 2A of the Notes to
Consolidated Financial Statements). In addition, net income benefited
from a one-time gain associated with the expiration of certain natural
gas storage contracts (see Note 5 of the Notes to Consolidated Financial
Statements) and a net credit in pension expense. These increases were
partly offset by last year's recognition of the federal income tax
settlement (see Note 7D of the Notes to Consolidated Financial
Statements) and the current year's higher operating costs.
A summary of variations affecting income between years is presented
below, with explanations of significant differences following:
Fiscal 1997 Fiscal 1996
over 1996 over 1995
Amount Amount
(000's) Per Cent (000's) Per Cent
Net operating revenues (a) $(15,710) (3.3) $69,724 17.0
Operation and maintenance expenses (15,330) (6.6) 18,925 8.9
Depreciation and amortization expense 3,069 4.9 3,836 6.5
Income taxes (2,832) (5.7) 24,886 101.3
Other income and deductions (3,801) (14.0) 13,444 33.2
Net income applicable to common stock (3,654) (4.1) 35,086 65.4
(a) Operating revenues, net of gas costs and revenue taxes.
Net Operating Revenues
Gross revenues of the Company are affected by changes in the unit cost
of the Company's gas purchases and do not include the cost of gas
supplies for customers who purchase gas directly from producers and
marketers rather than from the Company. The direct customer purchases
have no effect on net income because the Company provides transportation
service for such gas volumes and recovers margins similar to those
applicable to conventional gas sales. Except for the effect of customer
conservation that may result from substantial increases in the commodity
cost of gas supplies, changes in the unit cost of gas do not
significantly affect net income because the Company's tariffs provide for
dollar-for-dollar recovery of gas costs. (See Note 1L of the Notes to
Consolidated Financial Statements.) The Company's tariffs also provide
for dollar-for-dollar recovery of the cost of revenue taxes imposed by
the State and the City.
Since income is not significantly affected by changes in revenue from
customers' gas purchases from producers or marketers rather than from the
Company, changes in gas costs (except for the effect of customer
conservation that may result from substantial increases in the commodity
cost of gas supplies), or changes in revenue taxes, the discussion below
pertains to "net operating revenues" (operating revenues, net of gas
costs and revenue taxes). The Company considers net operating revenues
to be a more pertinent measure of operating results than gross revenues.
Net operating revenues decreased $15.7 million, to $464.7 million, in
1997. Natural gas deliveries decreased 18.7 bcf, to 241.7 bcf, due to
weather that was four per cent warmer than in 1996 and conservation. Net
operating revenues decreased approximately $23.1 million ($13.9 million
after income taxes) as a result of warmer weather and conservation.
However, a full year effect of the company's rate increase improved net
operating revenues by approximately $4.0 million ($2.4 million after
income taxes).
In 1996, net operating revenues increased $69.7 million, to $480.4
million. Natural gas deliveries increased 31.5 bcf, to 260.4 bcf, due to
weather that was 20 per cent colder than in 1995 and over 8 per cent
colder than normal. Net operating revenues increased approximately $25
million ($15.1 million after income taxes) as a result of the colder
weather. Also, the Company's aforementioned rate increase improved net
operating revenues by about $29.7 million ($17.9 million after income
taxes).
See Other Matters - Operating Statistics for details of selected
financial and operating information by gas service classification.
Operation and Maintenance Expenses
Operation and maintenance expenses decreased $15.3 million, to $217.0
million, in 1997, due primarily to a $17.8 million decrease in pension
expense caused by changes in settlement accounting attributed to
employees choosing early retirement and actuarial assumptions (see Note
6A of the Notes to Consolidated Financial Statements.) and also lower
reengineering expenses ($2.1 million). In addition, reductions in costs
associated with liability insurance premiums and claim settlements ($1.6
million) and group insurance expense ($1.5 million). These decreases
were partially offset by an increase in payments for outside services
($3.2 million) and higher administrative and general expenses.
In 1996, operation and maintenance expenses increased $18.9 million,
to $232.4 million, due chiefly to the reduction of expense from the prior
year's recognition of about $12.7 million for an IRS settlement. (See
Note 7D of the Notes to Consolidated Financial Statements.) Also, the
provision for uncollectible accounts increased ($5.3 million), due
largely to greater sales revenue attributable to the colder weather and
higher rates. In addition, increases between years resulted from greater
labor costs ($3.8 million), outside services ($2.4 million), distribution
system expenses ($2.6 million), and environmental costs recovered through
rates ($2 million). These increases were offset, in part, by decreased
pension costs ($12.9 million). (See Note 6A of the Notes to Consolidated
Financial Statements.)
Depreciation and Amortization Expense
Deprecation and amortization expense increased $3.1 million, to $66.1
million, in 1997, due largely to depreciable property additions.
In 1996, depreciation and amortization expense increased $3.8 million,
to $63 million, due mainly to depreciable property additions and the
amortization of costs associated with the closing of the SNG plant.
Income Taxes
Income taxes, exclusive of the $1.7 million included in other income
and deductions, declined $2.8 million, to $46.6 million, primarily due to
a tax accrual adjustment.
In 1996, income taxes, exclusive of the $4.1 million included in other
income and deductions, increased $24.9 million, to $49.4 million, due
primarily to higher pre-tax income.
Other Income and Deductions
Other income and deductions increased $3.8 million, from the prior
year, due principally to the prior period's gain associated with the
expiration of natural gas storage contracts. (See Note 5 of the Notes to
Consolidated Financial Statements.) Partially offsetting this increase
were reductions in interest expense on long-term debt resulting from
early redemption of first mortgage bonds (see Note 12B of the Notes to
Consolidated Financial Statements) and decreased amounts refunded to
customers.
In 1996, other income and deductions decreased $13.4 million from the
prior year, due largely to the gain of $6.7 million, after income taxes,
associated with the expiration of certain natural gas storage contracts.
(See Note 5 of the Notes to Consolidated Financial Statements.)
Additionally, the current year includes lower interest on long-term debt
resulting from the Company's early redemption of first mortgage bonds.
(See Note 12B of the Notes to Consolidated Financial Statements.) These
decreases were offset, in part, by decreased interest income reflecting
lower cash balances due mainly to the above mentioned bond redemption.
Other Matters
Effect of Weather. Weather variations affect the volumes of gas
delivered for heating purposes and, therefore, can have a significant
positive or negative impact on net income and coverage ratios.
FERC Order 636 Costs. The Commission entered orders providing for full
recovery by the Company of FERC Order 636 transition costs from the
Company's gas service customers. The Commission's orders have been
appealed to the Illinois Supreme Court. (See Notes 1L, 2A, and 2B of the
Notes to Consolidated Financial Statements.)
Large-Volume Gas Service Agreements. The Company has entered into gas
service contracts with certain large-volume customers under a specific
rate schedule approved by the Commission. These contracts were
negotiated to overcome the potential threat of bypassing the utility's
distribution system. The contracts will not have a material adverse
effect on the financial position or results of operations of the Company.
Small-Volume Transportation Service. On June 25, 1997, the Commission
allowed Riders SVT and AGG to go into effect for the Company, which will
initiate a two year pilot program designed to provide transportation
service to certain small-volume industrial and commercial customers of
the utility as well as to some of its large residential customers. The
Commission also ordered a concurrent investigation of the program to
ascertain if program adjustments or revisions are required.
Operating Statistics. The following table represents gas distribution
margin components:
For fiscal years ended September 30, 1997 1996 1995
Operating Revenues (thousands):
Gas sales
Residential $ 812,225 $ 757,598 $ 648,762
Commercial 127,029 122,825 101,436
Industrial 24,558 27,776 20,807
963,812 908,199 771,005
Transportation
Residential 34,028 35,281 36,617
Commercial 43,090 44,944 43,459
Industrial 25,890 30,376 29,550
Contract Pooling 15,868 4,063 -
Other 406 - -
119,282 114,664 109,626
Other 16,390 13,712 18,312
Total Operating Revenues 1,099,484 1,036,575 898,943
Less- Gas Costs (519,334) 445,724 387,675
- Revenues Taxes (115,430) 110,421 100,562
Net Operating Revenues $ 464,720 $ 480,430 $ 410,706
Deliveries (MDth):
Gas Sales
Residential 121,258 131,339 111,509
Commercial 21,379 23,692 19,206
Industrial 4,515 5,873 4,357
147,152 160,904 135,072
Transportation (a)
Residential 25,154 25,106 24,232
Commercial 36,628 37,316 36,130
Industrial 32,516 37,094 33,522
Other 234 - -
94,532 99,516 93,884
Total Gas Sales and Transportation $ 241,684 260,420 228,956
Margin per Dth delivered $ 1.92 $ 1.84 $ 1.79
(a) Volumes associated with contract pooling service are included in the
respective customer classes.
LIQUIDITY
Source of Funds. The Company has access to outside capital markets and
to internal sources of funds that together provide sufficient resources
to meet capital requirements. It does not anticipate any changes that
would materially alter its current liquidity position.
Due to the seasonal nature of gas usage, a major portion of cash
collections occurs between December and May. Because of timing
differences in the receipt and disbursement of cash and the level of
construction requirements, the Company may borrow on a short-term basis.
Short-term borrowings are repaid with cash from operations, other short-
term borrowings, or refinanced on a permanent basis with debt or equity,
depending on capital market conditions and capital structure
considerations.
Credit Lines. The Company has lines of credit of approximately
$129.4 million of which North Shore Gas may borrow up to $30 million. At
September 30, 1997, the Company and North Shore Gas had unused credit
available from banks of $126.5 million. (See Note 11 of the Notes to
Consolidated Financial Statements.)
Cash Flow Activities. Net cash provided by operating activities in 1997
increased by $78.2 million, due primarily to changes in other assets, gas
costs refundable and recoverable, and net receivables. Partially
offsetting these items were changes in accounts payable and gas in
storage. In 1996, net cash provided by operating activities declined by
$133.2 million, due primarily to changes related to gas sales revenue
refundable, net receivables, and other assets. Such items were partially
offset by increases from net income, due mainly to colder weather and the
rate increase, and from accounts payable. In 1995, net cash provided by
operating activities increased by $25.9 million, due primarily to changes
related to gas in storage, other assets, and deferred income taxes.
These items were offset, in part, by changes in gas costs recoverable and
net receivables.
Net cash used in investing activities for 1997, 1996, and 1995 mainly
represents the level of capital expenditures in the respective years.
Net cash used in financing activities in 1997 reflects dividends paid
to the common stockholder. In 1996, net cash used in financing
activities reflects the redemption of previously issued debt. (See Note
12B of the Notes to Consolidated Financial Statements.) In 1995 net cash
used in financing activities included drawdowns from the trust fund
associated with prior financing for utility construction activities.
Interest Coverage. The fixed charges coverage ratios for the Company for
fiscal 1997, 1996, and 1995 were 5.01, 4.84, and 2.76, respectively. The
increase in the ratio in the current fiscal year is due primarily to
lower interest expense on amounts refundable to customers and on long-
term debt. The increase in the ratio for fiscal year 1996 reflects the
redemption of long-term debt and higher pre-tax income resulting from
colder weather and the Commission approved rate increase. (See Results
of Operations - Net Income.) The ratio for fiscal year 1995 includes the
recording of an IRS settlement in income. (See Note 7D of the Notes to
Consolidated Financial
Statements.)
Debt Ratings. The long-term debt of the Company has been rated Aa3 by
Moody's Investors Service and AA- by Standard & Poor's Ratings Group
since fiscal 1985. On November 25, 1997, Moody's raised the Company's
long-term debt rating to Aa2. The commercial paper of the Company has
the top rating from both agencies.
Environmental Matters. The Company is conducting environmental
investigations and work at certain sites that were the location of former
manufactured gas operations. (See Note 3 of the Notes to Consolidated
Financial Statements.)
Regulatory Actions. On November 8, 1995, the Commission issued an order
approving changes in rates of the Company. (See Note 2A of the Notes to
Consolidated Financial Statements.)
Year 2000. The Company is modifying all of its computer programs to be
year 2000 compatible. The Company does not believe that the amount of
expenditures it will incur in connection with its year 2000 modification
will have a material adverse effect on the financial position or results
of operations of the Company.
CAPITAL RESOURCES
Capital Spending. Capital expenditures for additions, replacements, and
improvements to the utility plant were $75.4 million in 1997, $72.2
million in 1996, and $81.1 million in 1995.
Expenditures in fiscal 1997 increased $3.2 million from 1996
reflecting an increase of $12.6 million for a new customer information
system, offset, in part, by the continuation of a cost containment
program. In fiscal 1996, expenditures decreased $8.9 million from 1995
reflecting the continuation of a cost containment program.
Capital expenditures for fiscal 1998 are expected to be about $99.2
million, an increase of $23.8 million from the 1997 level. The estimate
of expenditures for 1998 includes $26.0 million for the customer
information system and $13.5 million for the remote automatic meter
reading project.
There are no sinking fund requirements for long-term debt in fiscal
1998. (See Note 12C of the Notes to Consolidated Financial Statements.)
The Company anticipates that future cash needs for capital
expenditures and debt maturities will be met through internally generated
funds, intercompany loans from Peoples Energy, borrowing arrangements
with banks and/or the issuance of commercial paper on an interim basis,
and periodic long-term financing involving first mortgage bonds or equity
from Peoples Energy.
Bonds Redeemed. On December 29, 1995, the Company redeemed, from general
corporate funds, approximately $87 million aggregate principal amount of
the City of Joliet's 1984 Gas Supply Revenue Bonds, Series A and B, which
were secured by the Company's Series U and V First and Refunding Mortgage
Bonds. (See Note 12B of the Notes to Consolidated Financial Statements.)
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Statement of Management's Responsibility 17
Report of Independent Public Accountants 18
Consolidated Statements of Income for fiscal years ended
September 30, 1997, 1996, and 1995 19
Consolidated Statements of Retained Earnings for fiscal
years ended September 30, 1997, 1996, and 1995 19
Consolidated Balance Sheets at September 30, 1997 and 1996 20
Consolidated Capitalization Statements at September 30, 1997
and 1996 21
Consolidated Statements of Cash Flows for fiscal years ended
September 30, 1997, 1996, and 1995 22
Notes to Consolidated Financial Statements 23
STATEMENT OF MANAGEMENT'S RESPONSIBILITY
The financial statements and other financial information included in
this report were prepared by management, who is responsible for the
integrity and objectivity of the presented data. The consolidated
financial statements of the Company and its subsidiaries were prepared in
conformity with generally accepted accounting principles and necessarily
include some amounts that are based on the best estimates and judgments
of management.
The Company maintains internal accounting systems and related
administrative controls, along with internal audit programs, that are
designed to provide reasonable assurance that the accounting records are
accurate and assets are safeguarded from loss or unauthorized use.
Consequently, management believes that the accounting records and
controls are adequate to produce reliable financial statements.
Arthur Andersen LLP, the Company's independent public accountants
approved by Peoples Energy's shareholders, as a part of its audit of the
financial statements, selectively reviews and tests certain aspects of
internal accounting controls solely to determine the nature, timing, and
extent of audit tests. Management has made available to Arthur Andersen
LLP all of the Company's financial records and related data and believes
that all representations made to the independent public accountants
during its audit were valid and appropriate.
The Audit Committee of the Board of Directors of Peoples Energy,
comprised of six outside directors, meets periodically with management,
the internal auditors, and Arthur Andersen LLP, jointly and separately,
to assure that appropriate responsibilities are discharged. These
meetings include discussion and review of accounting principles and
practices, internal accounting controls, audit results, and the
presentation of financial information in the annual report of Peoples
Energy.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Peoples Gas Light and Coke Company:
We have audited the accompanying consolidated balance sheets and
consolidated capitalization statements of The Peoples Gas Light and Coke
Company (an Illinois corporation, hereinafter referred to as the Company
and a wholly owned subsidiary of Peoples Energy Corporation) and
subsidiary companies at September 30, 1997 and 1996, and the related
consolidated statements of income, retained earnings, and cash flows for
each of the three years in the period ended September 30, 1997. These
financial statements and the schedule referred to below are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company
and subsidiary companies at September 30, 1997 and 1996, and the results
of their operations and cash flows for each of the three years in the
period ended September 30, 1997, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The financial statement
schedule listed in Item 14(a)2 is presented for purposes of complying
with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. The financial statement schedule has
been subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, fairly states, in all
material respects, the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois
October 31, 1997
CONSOLIDATED STATEMENTS OF INCOME
The Peoples Gas Light and Coke Company
For fiscal years ended September 30, 1997 1996 1995
(Thousands)
Operating Revenues:
Gas sales $ 963,812 $ 908,199 $ 771,005
Transportation 119,282 114,664 109,626
Other 16,390 13,712 18,312
Total Operating Revenues 1,099,484 1,036,575 898,943
Operating Expenses:
Gas costs 519,334 445,724 387,675
Operation 172,333 189,949 174,701
Maintenance 44,693 42,407 38,730
Depreciation and amortization 66,075 63,006 59,170
Taxes - Income 46,612 49,444 24,558
- State and local revenue 115,430 110,421 100,562
- Other 19,040 19,804 19,369
Total Operating Expenses 983,517 920,755 804,765
Operating Income 115,967 115,820 94,178
Other Income and (Deductions):
Allowance for funds used during construction 267 23 -
Interest income 4,152 4,030 8,669
Interest on long-term debt (31,094) (32,889) (40,507)
Other interest expense (2,195) (4,163) (6,079)
Income taxes (1,657) (4,089) (3,606)
Miscellaneous - net (see Note 9) (342) 10,020 1,011
Total Other Income and Deductions (30,869) (27,068) (40,512)
Net Income Applicable to Common Stock $ 85,098 $ 88,752 $ 53,666
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
The Peoples Gas Light and Coke Company
For fiscal years ended September 30, 1997 1996 1995
(Thousands)
Balance at Beginning of Year $ 398,875 $ 363,001 $ 366,168
Add - Net Income 85,098 88,752 53,666
Deduct- Dividends declared on common stock 72,715 52,117 56,833
- Additional minimum liability for
non-qualified pension plan, net of tax 1,596 761 -
Balance at End of Year $ 409,662 $ 398,875 $ 363,001
The Notes to Consolidated Financial Statements are an integral part of
these statements.
CONSOLIDATED BALANCE SHEETS
The Peoples Gas Light and Coke Company
At September 30, 1997 1996
(Thousands)
Properties and Other Assets
Capital Investments:
Property, plant and equipment, at original cost $1,819,567 $1,761,007
Less - Accumulated depreciation 614,224 571,255
Net property, plant and equipment 1,205,343 1,189,752
Other investments 5,470 6,607
Total Capital Investments - Net 1,210,813 1,196,359
Current Assets:
Cash and cash equivalents 18,509 17,537
Temporary cash investments 15,500 500
Receivables -
Customers, net of allowance for uncollectible
accounts of $28,959 and $25,279, respectively 67,330 63,152
Other 40,159 32,045
Accrued unbilled revenues 20,109 25,534
Materials and supplies, at average cost 13,225 14,017
Gas in storage, at last-in, first-out cost 67,536 55,876
Gas costs recoverable through rate adjustments 3,328 17,420
Prepayments 39,802 11,897
Total Current Assets 285,498 237,978
Other Assets:
Regulatory assets (see Note 1H) 45,612 76,176
Deferred charges 15,704 12,249
Total Other Assets 61,316 88,425
Total Properties and Other Assets $1,557,627 $1,522,762
Capitalization and Liabilities
Capitalization (see Consolidated Capitalization Statement $1,037,369 $1,026,582
Current Liabilities:
Interim loans 700 700
Accounts payable 113,502 121,653
Dividends payable on common stock 32,015 13,153
Customer gas service and credit deposits 39,753 37,121
Accrued taxes 19,056 31,242
Gas sales revenue refundable through rate adjustments 14,484 10,734
Accrued interest 8,763 8,758
Total Current Liabilities 228,273 223,361
Deferred Credits and Other Liabilities:
Deferred income taxes - primarily accelerated depreciatio 229,225 211,623
Investment tax credits being amortized over
the average lives of related property 30,350 31,696
Other 32,410 29,500
Total Deferred Credits and Other Liabilities 291,985 272,819
Total Capitalization and Liabilities $1,557,627 $1,522,762
The Notes to Consolidated Financial Statements are an integral part of
these statements.
CONSOLIDATED CAPITALIZATION STATEMENTS
The Peoples Gas Light and Coke Company
At September 30, 1997 1996
(Thousands, except number of shares)
Common Stockholder's Equity:
Common stock, without par value -
Authorized 40,000,000 shares
Outstanding 24,817,566 shares $ 165,307 $ 165,307
Retained earnings (see Consolidated Statements
of Retained Earnings) 409,662 398,875
Total Common Stockholder's Equity 574,969 564,182
Long-Term Debt:
Exclusive of sinking fund payments and maturities
due within one year
First and Refunding Mortgage Bonds -
Adjustable-Rate Series W (3.95% and 4% through
September 30, 1997 and September 30, 1996, respectively),
due October 1, 1999 (see Note 12A) 10,400 10,400
6.875% Series X, due March 1, 2015 50,000 50,000
7.50% Series Y, due March 1, 2015 50,000 50,000
7.50% Series Z, due March 1, 2015 50,000 50,000
8.10% Series BB, due May 1, 2020 75,000 75,000
6.37% Series CC, due May 1, 2003 75,000 75,000
5-3/4% Series DD, due December 1, 2023 75,000 75,000
Adjustable-Rate Series EE (3.70% and 3.85% through
November 30, 1997 and November 30, 1996, respectively),
due December 1, 2023 (see Note 12A) 27,000 27,000
6.10% Series FF, due June 1, 2025 50,000 50,000
Total Long-Term Debt 462,400 462,400
Total Capitalization $ 1,037,369 $ 1,026,582
The Notes to Consolidated Financial Statements are an integral part of
these statements.
[Enlarge/Download Table]
CONSOLIDATED STATEMENTS OF CASH FLOWS
The Peoples Gas Light and Coke Company
For fiscal years ended September 30, 1997 1996 1995
(Thousands)
Operating Activities:
Net Income $ 85,098 $ 88,752 $ 53,666
Adjustments to reconcile net income to net cash:
Depreciation and amortization 66,075 63,006 59,170
Deferred income taxes and investment tax credits - net 16,398 14,169 7,295
Change in deferred credits and other liabilities 2,768 18,923 (8,305)
Change in other assets 21,496 (50,395) (2,327)
Other - 74 55
Change in current assets and liabilities:
Receivables - net (12,292) (40,390) 17,356
Accrued unbilled revenues 5,425 (7,083) (890)
Materials and supplies 792 (174) 7,721
Gas in storage (11,660) 26,275 41,433
Gas costs recoverable 14,092 (15,288) 9,892
Prepayments (27,905) (9,970) (279)
Accounts payable (8,151) 33,960 (7,334)
Customer gas service and credit deposits 2,632 2,109 (4,531)
Accrued taxes (12,186) 4,280 271
Gas sales revenue refundable 3,750 (57,824) 27,391
Accrued interest 5 (2,267) 821
Net Cash Provided by Operating Activities 146,337 68,157 201,405
Investing Activities:
Capital expenditures of subsidiaries - construction (75,382) (72,194) (81,081)
Other assets (11) 11,497 (2,042)
Other capital investments (1,118) (2,416) 1,153
Other temporary cash investments (15,000) 100 -
Net Cash Used in Investing Activities (91,511) (63,013) (81,970)
Financing Activities:
Interim loans - net - (200) -
Issuance of long-term debt - - 50,000
Retirement of long-term debt - (86,750) (50,000)
Trust fund - utility construction - - 31,493
- bond redemption - 237 (237)
Dividends paid on common stock (53,854) (53,109) (56,584)
Net Cash Used in Financing Activities (53,854) (139,822) (25,328)
Net Increase (Decrease) in Cash and Cash Equivalents 972 (134,678) 94,107
Cash and Cash Equivalents at Beginning of Year 17,537 152,215 58,108
Cash and Cash Equivalents at End of Year $ 18,509 $ 17,537 $152,215
The Notes to Consolidated Financial Statements are an integral part of
these statements.
The Peoples Gas Light and Coke Company
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1A Principles of Consolidation
All subsidiaries are included in the consolidated financial
statements. All significant intercompany transactions have been
eliminated in consolidation. Certain items previously reported
for years prior to 1997 have been reclassified to conform with
the current-year presentation.
1B Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent
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.
1C Concentration of Credit Risk
The Company provides natural gas service to approximately
836,000 customers within the City. Credit risk for the Company
is spread over a diversified base of residential, commercial, and
industrial retail sales and transportation customers.
The Company encourages customers to participate in its long-
standing budget payment program that allows the cost of higher
gas consumption levels associated with the heating season to be
spread over a 12-month billing cycle. Customers' payment records
are continually monitored and credit deposits are required, when
appropriate, to minimize uncollectible write-offs.
1D Revenue Recognition
Gas sales revenues are recorded on the accrual basis for all
gas delivered during the month, including an estimate for gas
delivered but unbilled at the end of each month.
1E Property, Plant and Equipment
Property, plant and equipment is stated at original cost and
includes appropriate amounts of capitalized labor costs, payroll
taxes, employee benefit costs, administrative costs, and an
allowance for funds used during construction.
1F Accounts Payable
The Company utilizes controlled disbursement banking
arrangements under which certain bank accounts have negative book
balances due to checks in transit. The negative balances are
classified as Accounts Payable.
1G Maintenance and Depreciation
The Company charges the cost of maintenance and repairs of
property and minor renewals and improvements of property to
maintenance expense. When depreciable property is retired, its
original cost is charged to the accumulated provision for
depreciation.
The provision for depreciation substantially reflects the
systematic amortization of the original cost of depreciable
property over estimated useful lives on the straight-line method.
Additionally, actual dismantling cost, net of salvage, is
included in the provision for depreciation in the month incurred.
The amounts provided are designed to cover not only losses due to
wear and tear that are not restored by maintenance, but also
losses due to obsolescence and inadequacy.
The provision for depreciation, expressed as an annual
percentage of original cost of depreciable property, is as
follows:
For fiscal years ended 1997 1996 1995
September 30,
Provision for depreciation 3.7% 3.6% 3.6%
1H Regulated Operations
The Company's utility operations are subject to regulation by
the Commission. Regulated operations are accounted for in
accordance with SFAS No. 71, "Accounting for the Effects of
Certain Types of Regulation." This standard controls the
application of generally accepted accounting principles for
companies whose rates are determined by an independent regulator
such as the Commission. Regulatory assets represent certain
costs that are expected to be recovered from customers through
the ratemaking process. When incurred, such costs are deferred
as assets in the balance sheet and subsequently recorded as
expenses when those same amounts are reflected in rates.
The following regulatory assets were reflected in Other Assets
in the Consolidated Balance Sheets at September 30, 1997 and
1996:
1997 1996
(Thousands)
Environmental costs, net of recoveries (see Note 3) $ 10,821 $ 12,218
Transition costs from pipeline supplier (see Note 2B) 6,921 32,692
Regulatory income tax assets (see Note 1I) 7,146 4,340
Discount, premium, expenses, and loss on reacquired bonds 2,909 3,247
SNG plant - decommissioning 17,543 23,156
Other 272 523
Total regulatory assets $ 45,612 $ 76,176
1I Income Taxes
The Company follows the liability method of accounting for
deferred income taxes. Under the liability method, deferred
income taxes have been recorded using currently enacted tax rates
for the differences between the tax basis of assets and
liabilities and the basis reported in the financial statements.
Due to the effects of regulation on the Company, certain
adjustments made to deferred income taxes are, in turn, debited
or credited to regulatory assets or liabilities. (See Note 7C.)
Each Company within the consolidated group nets its income tax
related regulatory assets and liabilities. At September 30, 1997
and 1996, net regulatory income tax assets recorded in Other
Assets amounted to $7.1 million and $4.3 million, while net
regulatory income tax liabilities recorded in Other Liabilities
equaled $0 and $50,000, respectively.
Investment tax credits have been deferred and are being
amortized through credits to income over the book lives of
related property.
The preceding deferred-tax and tax-credit accounting conforms
with regulations of the Commission.
1J Gas in Storage
Storage injections are priced at the fiscal-year average of
costs of supply. Withdrawals from storage are priced on the last-
in, first-out (LIFO) cost method. The estimated current
replacement cost of gas in inventory at September 30, 1997 and
1996 exceeded the LIFO cost by approximately $88 million and
$78 million, respectively.
1K Statement of Cash Flows
For purposes of the balance sheet and the statement of cash
flows, the Company considers all short-term liquid investments
with maturities of three months or less to be cash equivalents.
Income taxes and interest paid (excluding capitalized
interest) were as follows:
For fiscal years ended 1997 1996 1995
September 30,
(Thousands)
Income taxes paid $45,781 $35,096 $15,501
Interest paid 32,017 36,267 41,378
1L Recovery of Gas Costs, Including Charges for Transition Costs
Under the tariffs of the Company, the difference for any month
between costs recoverable through the Gas Charge and revenues
billed to customers under the Gas Charge is refunded to or
recovered from customers. Consistent with these tariff
provisions, such difference for any month is recorded either as a
current liability or as a current asset (with a contra entry to
Gas Costs).
For each gas utility, the Commission conducts annual
proceedings regarding, the reconciliation of revenues from the
Gas Charge and related costs incurred for gas. In such
proceedings, costs recovered by a utility through the Gas Charge
are subject to challenge. Such proceedings regarding the Company
for fiscal years 1996 and 1997 are currently pending before the
Commission.
Pursuant to FERC Order No. 636 and successor orders, pipelines
are allowed to recover from their customers transition costs.
These costs arise from the restructuring of pipeline service
obligations required by the 636 Orders. The Company is currently
recovering pipeline charges for transition costs through the Gas
Charge. (See Notes 2A and 2B.)
1M Recovery of Costs of Environmental Activities Relating to
Former Manufactured Gas Operations
The Company is recovering the costs of environmental
activities relating to its former manufactured gas operations,
including carrying charges on the unrecovered balances, under a
rate mechanism approved by the Commission. For each utility with
such a rate mechanism, the Commission conducts annual proceedings
regarding the reconciliation of revenues from the rate mechanism
and related costs. In such proceedings, costs recovered by a
utility through the rate mechanism are subject to challenge.
Such proceedings, regarding the Company for fiscal years 1994
through 1996 are currently pending before the Commission. (See
Note 3.)
2. RATES AND REGULATION
2A Utility Rate Proceedings
Rate Order. On November 8, 1995, the Commission issued an order
approving changes in rates of the Company that were designed to
increase annual revenues by approximately $30.8 million,
exclusive of additional charges for revenue taxes. The Company
was allowed a rate of return on original-cost rate base of 9.19
per cent, which reflects an 11.10 per cent cost of common equity.
The new rates were implemented on November 14, 1995.
FERC Order 636 Cost Recovery. In 1994, the Commission issued
orders concluding its investigation into the appropriate means of
recovery by Illinois gas utilities of pipeline charges for FERC
Order 636 transition costs. The orders provided for the full
recovery of transition costs from the Company's gas service
customers. The Commission directed that gas supply realignment
(GSR) costs (one of the four categories of transition costs) be
recovered on a uniform volumetric basis from all transportation
and sales customers. A group of industrial transportation
customers has filed a petition with the Illinois Supreme Court
appealing the Commission's orders. If the Illinois Supreme Court
accepts the appeal, any changes made by it to the Commission's
orders would have a prospective effect only. (See Notes 1L and
2B.)
2B FERC Orders 636, 636-A, and 636-B
FERC Order 636 and successor orders require pipelines to make
separate rate filings to recover transition costs. Under a
Stipulation and Agreement (Agreement) filed by Natural Gas
Pipeline Company of America (Natural) and approved by FERC,
Natural's charges to the Company for GSR transition costs are
subject to a cap of approximately $103 million. At September 30,
1997, the Company had made payments of $96.1 million and had
accrued an additional $6.9 million toward the cap.
The 636 Orders are not expected to have a material effect on
financial position or results of operations of the Company. (See
Notes 1L and 2A.)
3. ENVIRONMENTAL MATTERS
The Company, its predecessors, and certain former affiliates
operated facilities in the past at multiple sites for the purpose
of manufacturing gas and storing manufactured gas (Manufactured
Gas Sites). In connection with manufacturing and storing gas,
various by-products and waste materials were produced, some of
which might have been disposed of rather than sold. Under
certain laws and regulations relating to the protection of the
environment, the Company might be required to undertake remedial
action with respect to some of these materials. Two of the
Manufactured Gas Sites are discussed in more detail below. The
Company, under the supervision of the Illinois Environmental
Protection Agency (IEPA), is conducting investigations of an
additional 27 Manufactured Gas Sites. These investigations may
require the Company to perform additional investigation and
remediation. The investigations are in a preliminary stage and
are expected to occur over an extended period of time.
The Company has observed what appear to be gas purification
wastes on a Manufactured Gas Site in Chicago, formerly called the
110th Street Station, and property contiguous thereto (110th
Street Station Site). The Company has fenced the 110th Street
Station Site and is conducting a study under the supervision of
the IEPA to determine the feasibility of a limited removal
action.
The current owner of a site in Chicago, formerly called Pitney
Court Station, filed suit against the Company in federal district
court under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended. The suit
seeks recovery of the past and future costs of investigating and
remediating the site and an order directing the Company to
remediate the site. The Company is contesting this suit.
The Company is accruing and deferring the costs it incurs in
connection with all of the Manufactured Gas Sites, including
related legal expenses, pending recovery through rates or from
insurance carriers or other entities. At September 30, 1997, the
total of the costs deferred by the Company, net of recoveries and
amounts billed to other entities, was $10.8 million. This amount
includes an estimate of the costs of the investigations being
conducted under the supervision of the IEPA referred to above.
The amount also includes an estimate of the costs of remediation
at the 110th Street Station Site, at the minimum amount of the
current estimated range of such costs. The costs of remediation
at the other sites cannot be determined at this time. While the
Company intends to seek contribution from other entities for the
costs incurred at the sites, the full extent of such
contributions cannot be determined at this time.
The Company has filed suit against a number of insurance
carriers for the recovery of environmental costs relating to its
former manufactured gas operations. The suit asks the court to
declare that the insurers are liable under policies in effect
between 1937 and 1986 for costs incurred or to be incurred by the
Company in connection with three Manufactured Gas Sites in
Chicago. The Company is also asking the court to award damages
stemming from the insurers' breach of their contractual
obligation to defend and indemnify the Company against these
costs. At this time, management cannot determine the timing and
extent of the Company's recovery of costs from its insurance
carriers. Accordingly, the costs deferred at September 30, 1997
have not been reduced to reflect recoveries from insurance
carriers.
Costs incurred by the Company for environmental activities
relating to former manufactured gas operations will be recovered
from insurance carriers or other entities or through rates for
utility service. Accordingly, management believes that the costs
incurred by the Company in connection with former manufactured
gas operations will not have a material adverse effect on the
financial position or results of operations of the Company. The
Company is recovering the costs of environmental activities
relating to its former manufactured gas operations, including
carrying charges on the unrecovered balances, under a rate
mechanism approved by the Commission. At September 30, 1997, it
had recovered $5.4 million of such costs through rates.
4. LONG-TERM LEASE
In October 1993, the Company entered into a 15-year operating
lease for its headquarters office.
The rental obligation consists of a base rent of $2.3 million
plus operating expenses and taxes. The base rent escalates by 2
per cent each year through the 10th year. Base rent in the 11th
year is approximately $3.6 million with annual increases of 2 per
cent each year through the 15th year.
Rental expenses for the headquarters office were $6.4 million,
$6.5 million, and $6.4 million, for fiscal years 1997, 1996, and
1995, respectively.
5. EXPIRATION OF GAS STORAGE CONTRACTS
The Company had certain natural gas storage contracts with
Natural that expired on or before December 1, 1995. Associated
with the expiration of the contracts during fiscal 1996, the
Company realized a gain, of approximately $11.1 million ($6.7
million after income taxes).
6. RETIREMENT AND POSTEMPLOYMENT BENEFITS
6A Pension Benefits
The Company participates in two defined benefit pension plans
covering substantially all employees. These plans provide
pension benefits that generally are based on an employee's length
of service, compensation during the five years preceding
retirement, and social security benefits. Annual contributions
are made to the plans based upon actuarial determinations and in
consideration of tax regulations and funding requirements under
federal law.
The Company also has non-qualified pension plans that provide
employees with pension benefits in excess of qualified plan
limits imposed by federal tax law.
Net pension cost for all plans for fiscal 1997, 1996, and 1995
included the following components:
1997 1996 1995
(Millions)
Service cost - benefits earned during year $ 10.9 $ 12.7 $ 13.4
Interest cost on projected benefit obligations 27.5 30.6 27.9
Actual return on plan assets (gain) (104.0) (64.9) (80.5)
Net amortization and deferral 56.5 20.4 43.2
Settlement accounting (17.7) (7.8) -
Net pension cost (credit) $ (26.8) $ (9.0) $ 4.0
In 1997 and 1996, the Company recognized net gains of $17.7
million and $7.8 million, respectively, from the settlement of
portions of pension plan obligations.
The calculation of pension cost assumed a long-term rate of
return on assets of 9.0 per cent for 1997, 8.5 per cent for 1996
and 7.5 per cent for 1995. The settlement accounting cost for
1997 and 1996 was determined using a discount rate of 7.5 per
cent and assumed future compensation increases of 4.5 per cent
per year.
The following table shows the estimated funded status of the
Company's pension plans at September 30, 1997 and 1996:
1997 1996
(Millions)
Plan assets at market value $ 547.7 $ 547.4
Actuarial present value of plan benefits:
Vested 246.9 279.8
Non-vested 30.9 31.1
Accumulated benefit obligation 277.8 310.9
Effect of projected future compensation increases 76.0 70.5
Projected benefit obligation 353.8 381.4
Excess of plan assets over projected benefit obligation 193.9 166.0
Less:
Unrecognized transition asset 18.4 23.3
Unrecognized prior service cost (5.6) (4.5)
Unrecognized net gain 145.4 139.5
Non-qualified plan contributions: 7-1-97 to 9-30-97 1.5 -
Recognition of non-qualified plan additional minimum liability (4.5) (1.9)
Accrued pension asset $ 32.7 $ 5.8
The projected benefit obligation and plan assets at September
30, 1997 and 1996, are based on a July 1 measurement date using a
discount rate of 7.5 per cent and assumed future compensation
increases of 4.5 per cent per year. Plan assets consist
primarily of marketable equity and fixed-income securities.
6B Other Postretirement Benefits
The Company also provides certain health care and life
insurance benefits for retired employees. Substantially all
employees may become eligible for such benefit coverage if they
reach retirement age while working for the company. The plans
are funded based upon actuarial determinations and in
consideration of tax regulations and funding requirements under
federal law. The Company accrues the expected costs of such
benefits during the employees' years of service.
Net postretirement benefit cost for all plans for fiscal 1997,
1996, and 1995 included the following components:
1997 1996 1995
(Millions)
Service cost - benefits earned during year $ 2.9 $ 3.1 $ 2.5
Interest cost on projected benefit obligation 7.9 7.1 7.2
Actual return on plan assets (gain) (6.2) (2.9) (3.6)
Amortization of transition obligation 4.5 4.5 4.5
Net amortization and deferral 3.1 1.1 2.4
Net postretirement benefit cost $ 12.2 $ 12.9 $ 13.0
The calculation of postretirement benefit cost assumed a long-
term rate of return on assets of 9.0 per cent for 1997 and 7.5
per cent for 1996 and 1995.
Of the above total postretirement costs recognized for fiscal
years 1997, 1996, and 1995, $5.5 million, $5.6 million, and
$5.7 million, respectively, were funded through trust funds for
future benefit payments.
The following table sets forth the estimated funded status for
the postretirement health care and life insurance plans at
September 30, 1997 and 1996:
1997 1996
(Millions)
Plan assets at market value $ 44.9 $ 33.7
Accumulated postretirement benefit obligation (APBO):
Retirees 62.7 59.8
Fully eligible active plan participants 13.4 17.2
Other active plan participants 29.2 29.2
Total APBO 105.3 106.2
Deficiency of plan assets over the APBO (60.4) (72.5)
Less:
Unrecognized transition obligation
(being amortized over 20 years) (72.1) (76.5)
Unrecognized net gain 19.3 11.8
Contributions: July 1 to September 30 7.1 7.3
Accrued postretirement benefit (liability) $ (0.5) $ (0.5)
The total APBO and plan assets at September 30, 1997 and 1996,
are based on a July 1 measurement date using a discount rate of
7.5 per cent and assumed future compensation increases of 4.5 per
cent per year. Plan assets consist primarily of marketable
equity and fixed-income securities.
For measurement purposes, a health care cost trend rate of 7.9 per
cent was assumed for fiscal 1998, and that rate thereafter will
decline gradually to 4.75 per cent in 2003 and subsequent years. The
health care cost trend rate assumption has a significant effect on the
amounts reported. Increasing the assumed health care cost trend rate
by one percentage point for each future year would have increased the
APBO at September 30, 1997, by $7.7 million and the aggregate of
service and interest cost components of the net periodic
postretirement benefit cost by $1.2 million annually.
7. TAX MATTERS
7A Provision for Income Taxes
Total income tax expense as shown on the Consolidated Statements of
Income is composed of the following:
For fiscal years ended September 30, 1997 1996 1995
(Thousands)
Current:
Federal $ 26,036 $ 32,590 $ 17,311
State 5,850 6,859 3,208
Total current income taxes 31,886 39,449 20,519
Deferred:
Federal 14,049 13,121 7,115
State 3,746 3,554 2,243
Total deferred income taxes 17,795 16,675 9,358
Investment tax credits - net:
Federal (1,524) (2,635) (1,784)
State 11 12 167
Total investment tax credits - (1,412) (2,506) (1,617)
Total provision for income taxes 48,269 53,618 28,260
Less - Included in operation expense - 85 96
Net provision for income taxes $ 48,269 $ 53,533 $ 28,164
7B Tax Rate Reconciliation
The following is a reconciliation between the computed federal
income tax expense (tax rate of 35 per cent times pre-tax book income)
and the total provision for federal income tax expenses:
[Download Table]
For fiscal years ended September 30, 1997 1996 1995
Per Cent Per Cent Per Cent
of of of
Amount Pre-tax Amount Pre-tax Amount Pre-tax
(000's) Income (000's) Income (000's) Income
Computed federal income
tax expense $43,281 35.00 $46,140 35.00 $26,708 35.00
Amortization of investment
tax credits (1,524) (1.23) (2,635) (2.00) (1,784) (2.34)
Nontaxable-tax settlement - - - - (1,772) (2.32)
Accrual adjustment (2,000) (1.62) - - - -
Other, net (1,196) (0.97) (429) (0.32) (510) (0.67)
Total provision for federal
income taxes $38,561 31.18 $43,076 32.68 $22,642 29.67
7C Deferred Income Taxes
Set forth in the table below are the temporary differences which
gave rise to the net deferred income tax liabilities (see Note 1I):
At September 30, 1997 1996
(Thousands)
Deferred tax liabilities:
Property - accelerated depreciation and
other property related items $ 226,537 $ 214,875
Other 33,249 24,167
Total deferred income tax liabilities 259,786 239,042
Deferred tax assets:
Uncollectible accounts (11,651) (10,191)
Unamortized investment tax credits (12,049) (12,572)
Other (6,861) (4,656)
Total deferred income tax assets (30,561) (27,419)
Net deferred income tax liabilities $ 229,225 $ 211,623
7D Income Tax Settlement
On September 30, 1993, the Company received notification from the
IRS that settlement of past income tax returns had been reached for
fiscal years 1978 through 1990. The IRS settlement resulted in
payments of principal and interest to the Company in 1994 of
approximately $25 million, or $19.4 million after income taxes. The
Company received regulatory authorization to defer the recognition of
the settlement amount in income for fiscal year 1993, and to
recognize its portion of the settlement amount in income for fiscal
years 1994 and 1995. The Company represented to the Commission that,
having received this accounting authorization, it would not file a
request for an increase in base rates before December 1994.
As a result of the Commission's accounting authorization, the
fiscal year 1995 portion of the settlement amount for the Company was
amortized (credited) to operation expense. The effect was to offset
increases in costs that the Company would incur during the year. In
fiscal 1995, the Company amortized approximately $12.7 million, or
$9.7 million after income taxes.
8. ASSETS SUBJECT TO LIEN
The Indenture of Mortgage, dated January 2, 1926, as supplemented,
securing the first and refunding mortgage bonds issued by the
Company, constitutes a direct, first-mortgage lien on substantially
all property owned by the Company.
9. OTHER INCOME AND DEDUCTIONS - MISCELLANEOUS
[Enlarge/Download Table]
For fiscal years ended September 30, 1997 1996 1995
(Thousands)
Amortization of net gain on sale of Peoples Gas Building $ - $ - $ 576
Interest on amounts recoverable from customers 126 - 99
Gain on expiration of gas storage contracts (see Note 5) - 11,093 -
Amortization of gain (loss) on reacquired bonds (165) (65) 317
Loss on donation of property (650) - -
Earnings from subsidiary companies 304 275 188
Other 43 (1,283) (169)
Total other income and deductions - miscellaneous $ (342) $ 10,020 $ 1,011
10. CAPITAL COMMITMENTS
Total contract and purchase order commitments of the Company at
September 30, 1997, amounted to approximately $2.9 million.
11. SHORT-TERM BORROWINGS AND CREDIT LINES
At September 30, 1997 1996
(Thousands)
Bank Loans
Peoples Gas
8.50% due March 27, 1998 $ 700 $ -
8.25% due February 11, 1997 - 700
Commercial Paper
North Shore Gas
due October 1, 1997 $ 2,110 $ -
due October 1, 1996 - 1,925
Letters of Credit
Peoples Gas $ 100 $ -
Available lines of credit
Unused bank lines $ 126,490 $ 126,775
Short-term cash needs of the Company and North Shore Gas are met
through intercompany loans from Peoples Energy, bank loans, and/or
the issuance of commercial paper. The outstanding total amount of
bank loans and commercial paper issuances cannot at any time exceed
total bank credit then in effect.
At September 30, 1997 and 1996, the Company and North Shore Gas
had combined lines of credit totaling $129.4 million. Of these
amounts, North Shore Gas could borrow up to $30 million. Agreements
covering $92 million of the total at September 30, 1997 will expire
on August 30, 1998; the agreement covering the remaining $37.4
million will expire on January 31, 1999. Such lines of credit cover
projected short-term credit needs of the Company and North Shore Gas
and support the long-term debt treatment of the Company's adjustable-
rate mortgage bonds. (See Note 12A.) Payment for the lines of
credit is by fee.
12. LONG-TERM DEBT
12A Interest-Rate Adjustments
The rate of interest on the City of Joliet 1984 Series C Bonds,
which are secured by the Company's Adjustable-Rate First and
Refunding Mortgage Bonds, Series W, is subject to adjustment annually
on October 1. Owners of the Series C Bonds have the right to tender
such bonds at par during a limited period prior to that date. The
Company is obligated to purchase any such bonds tendered if they
cannot be remarketed. All Series C Bonds that were tendered prior to
October 1, 1997, have been remarketed. The interest rate on such
bonds is 3.875 per cent for the period October 1, 1997, through
September 30, 1998.
The rate of interest on the City of Chicago 1993 Series B Bonds,
which are secured by the Company's Adjustable-Rate First and
Refunding Mortgage Bonds, Series EE, is subject to adjustment
annually on December 1. Owners of the Series B Bonds have the right
to tender such bonds at par during a limited period prior to that
date. The Company is obligated to purchase any such bonds tendered
if they cannot be remarketed. The interest rate on such bonds is
3.70 per cent for the period December 1, 1996, through
November 30, 1997.
The Company classifies these adjustable-rate bonds as long-term
liabilities since it would refinance them on a long-term basis if
they could not be remarketed. In order to ensure its ability to do
so, on February 1, 1994, the Company established a $37.4 million
three year line of credit with The Northern Trust Company which has
since been extended to January 31, 1999. (See Note 11.)
12B Bonds Redeemed
On December 29, 1995, the Company redeemed, from general corporate
funds, approximately $87 million aggregate principal amount of the
City of Joliet's 1984 Gas Supply Revenue Refunding Bonds, Series A
and B, which were secured by the Company's Series U and V First and
Refunding Mortgage Bonds.
12C Sinking Fund Requirements and Maturities
At September 30, 1997, long-term debt sinking fund requirements
and maturities for the next five years are:
Fiscal Amounts
Year
(Thousands)
1998 $ --
1999 --
2000 10,400
2001 --
2002 --
12D Fair Value of Financial Instruments
At September 30, 1997, the carrying amount of the Company's long-
term debt of $462.4 million had an estimated fair value of $497.0
million. At September 30, 1996, the carrying amount of the Company's
long-term debt of $462.4 million had an estimated fair value of
$494.5 million. The estimated fair value of the Company's long-term
debt is based on yields for issues with similar terms and remaining
maturities. Since the Company is subject to regulation, any gains or
losses related to the difference between the carrying amount and the
fair value of financial instruments may not be realized by the
Company's shareholder. The carrying amount of all other financial
instruments approximates fair value. The $15.5 million in temporary
cash investments approximates its fair market value.
13. QUARTERLY FINANCIAL DATA (UNAUDITED)
The first quarter of fiscal 1997 included a full quarter's impact
of the Commission-approved rate orders. (See Note 2A of the Notes to
Consolidated Financial Statements.) All four quarters reflected the
decrease in gas deliveries due primarily to warmer weather and
conservation. However, this was offset in all four quarters by
reduced pension expense. The last three quarters of fiscal 1996
reflected the gain from the expiration of gas storage contracts.
(See Note 5 of the Notes to Consolidated Financial Statements.)
Net Income
Operating Operating Applicable to
Fiscal Quarters Revenues Income Common Stock
(Thousands)
1997
Fourth $ 96,349 $ (4,144) $ (11,734)
Third 177,308 18,146 10,394
Second 489,348 61,642 54,328
First 336,479 40,323 32,110
1996
Fourth $ 116,395 $ (971) $ (7,570)
Third 216,438 17,197 11,905
Second 429,115 58,918 52,912
First 274,627 40,675 31,505
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
IDENTIFICATION OF DIRECTORS
Company
Name, Principal Occupation, Age at Directorship
and Other Directorships 11-30-97 Since
Kenneth S. Balaskovits 55 1993
Vice President and Controller
of the Company, Peoples Energy,
and North Shore Gas; Director of North Shore Gas.
J. Bruce Hasch 59 1986
President and Chief Operating Officer of
the Company, Peoples Energy, and North Shore Gas;
Director of Peoples Energy and North Shore Gas.
James Hinchliff 57 1985
Senior Vice President and General Counsel
of the Company, Peoples Energy,
and North Shore Gas; Director of North Shore Gas.
Thomas M. Patrick 51 1996
Executive Vice President of the Company,
Peoples Energy, and North Shore Gas;
Director of North Shore Gas.
Richard E. Terry 60 1982
Chairman of the Board and Chief Executive
Officer of the Company, Peoples Energy, and
North Shore Gas; Director of Peoples Energy
and North Shore Gas. Mr. Terry is also a
Director of Harris Bankcorp, Inc., Harris Trust
and Savings Bank, Bankmont Financial Corp.,
and Amsted Industries.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY (Continued)
IDENTIFICATION OF EXECUTIVE OFFICERS
Position at Age at Position
Name November 30,1997 11-30-97 Held Since
Kenneth S. Balaskovits Vice President and Controller 55 1993
Emmet P. Cassidy Secretary and Treasurer 64 1989
Katherine A. Donofrio Vice President 40 1997
Willard S. Evans, Jr. Vice President 42 1997
Donald M. Field Vice President 48 1996
Joan T. Gagen Vice President 46 1994
J. Bruce Hasch President and Chief Operating 59 1990
Officer
James Hinchliff Senior Vice President and 57 1989
General Counsel
John C. Ibach Vice President 50 1992
James M. Luebbers Vice President 51 1997
William E. Morrow Vice President 41 1996
Thomas M. Patrick Executive Vice President 51 1996
Desiree Rogers Vice President 38 1997
Norman F. Sidler, Jr. Assistant Vice President 58 1997
Richard E. Terry Chairman of the Board and 60 1990
Chief Executive Officer
Directors and executive officers of the Company were elected to
serve for a term of one year or until their successors are duly
elected and qualified, except for Ms. Donofrio, Messrs. Evans,
Luebbers, Morrow, Ms. Rogers, and Mr. Sidler, who were appointed.
There are no family relationships among directors and executive
officers of the Company.
All of the directors and executive officers of the Company have
been continuously employed by the Company and/or its affiliates in
various capacities for at least five years with the exception of Ms.
Rogers.
ITEM 11. EXECUTIVE COMPENSATION
The following tables set forth information concerning annual and long-
term compensation and grants of stock options, stock appreciation rights
(SARs) and restricted stock awards under Peoples Energy's Long-Term
Incentive Compensation Plan. All compensation was paid by the Company and
its affiliates (Peoples Energy and North Shore Gas) for services in all
capacities during the three fiscal years set forth below, to (1) the Chief
Executive Officer and (2) the four most highly compensated executive
officers of the Company other than the Chief Executive Officer.
[Enlarge/Download Table]
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards
Restricted Stock All Other
Name and Awards(1)(2) Options/SARs Compensation
Principal Position Year Salary($) Bonus($) ($) (#) (3)($)
Richard E. Terry 1997 548,500 237,900 152,663 17,800 16,455
Chairman and Chief 1996 473,500 191,600 145,722 21,200 14,205
Executive Officer 1995 455,300 137,200 137,119 21,400 12,354
J. Bruce Hasch 1997 345,900 106,700 84,525 9,800 10,377
President and Chief 1996 332,600 86,000 80,803 11,800 9,978
Operating Officer 1995 319,800 61,500 76,606 11,800 9,594
James Hinchliff 1997 260,700 67,700 54,338 6,400 7,821
Senior Vice President 1996 250,700 54,500 51,797 7,600 7,521
And General Counsel 1995 241,100 39,000 48,925 7,600 7,233
Thomas M. Patrick 1997 231,600 67,700 54,338 6,400 6,948
Executive 1996 186,800 31,900 33,150 4,800 5,604
Vice President 1995 176,800 39,200 30,900 4,800 5,304
Kenneth S. Balaskovits 1997 210,400 53,100 43,988 5,200 6,312
Vice President and 1996 172,500 25,700 33,150 4,800 5,175
Controller 1995 162,700 24,200 30,900 4,800 4,881
(1) Restricted stock awards are valued at the closing market price as of
the date of grant. The total number of restricted shares held by the
named executive officers and the aggregate market value of such shares
at September 30, 1997 were as follows: Mr. Terry, 14,020 shares,
valued at $528,378.75; Mr. Hasch, 7,990 shares, valued at $301,123.13;
Mr. Hinchliff, 5,130 shares, valued at $193,336.88; Mr. Patrick, 3,830
shares, valued at $144,343.13; and Mr. Balaskovits, 3,455 shares,
valued at $130,210.31. Dividends are paid on the restricted shares at
the same time and at the same rate as dividends paid to all
shareholders of common stock. Aggregate market value is based on a
per share price of $37.6875, the closing price of Peoples Energy's
stock on the New York Stock Exchange on September 30, 1997.
ITEM 11. EXECUTIVE COMPENSATION (Continued)
(2) Restricted stock awards granted to date vest in equal
annual increments over a five-year period. If a
recipient's employment with the Company terminates,
other than by reason of death, disability, or
retirement after attaining age 65, the recipient
forfeits all rights to the unvested portion of the
restricted stock award. In addition, the Compensation-
Nominating Committee (and with respect to the CEO, the
Compensation-Nominating Committee, subject to the
approval of the non-employee directors) may, in its
sole discretion, accelerate the vesting of any
restricted stock awards granted under the Long-Term
Incentive Compensation Plan. Total restricted stock
awarded to the named individuals for 1995 constitutes
12,600 shares, of which 2,520 shares vested in 1996;
2,520 shares vested in 1997; 2,520 shares will vest in
1998; 2,520 shares will vest in 1999; and the remaining
2,520 shares will vest in 2000. Total restricted stock
awarded to the named individuals for 1996 constitutes
12,475 shares, of which 2,495 shares vested in 1997;
2,495 shares will vest in 1998; 2,495 shares will vest
in 1999; 2,495 shares will vest in 2000; and the
remaining 2,495 shares will vest in 2001. Total
restricted stock awarded to the named individuals for
1997 constitutes 11,300 shares, of which 2,260 shares
will vest in 1998; 2,260 shares will vest in 1999;
2,260 shares will vest in 2000; 2,260 shares will vest
in 2001; and the remaining 2,260 shares will vest in
2002.
(3) Company contributions to the Capital Accumulation Plan
accounts of the named executive officers during the above
fiscal years. Employee contributions under the plan are
subject to a maximum limitation under the Internal Revenue
Code of 1986. The Company pays an employee who is subject
to this limitation an additional 50 cents for each dollar
that the employee is prevented from contributing solely by
reason of such limitation. The amounts shown in the table
above reflect, if applicable, this additional Company
payment.
[Enlarge/Download Table]
ITEM 11. EXECUTIVE COMPENSATION (Continued)
OPTIONS/SAR GRANTS IN FISCAL 1997
Individual Grants
% of Total Options/
Options/SARs SARs Granted to Exercise or Grant Date
Granted Employees in Fiscal Base Price Expiration Present Value
Name (#) (1) Year (2) ($/Sh) Date ($)(3)
Richard E. Terry 17,800 10.1% $34.19 02-Oct-06 $51,620
Chairman and Chief
Executive Officer
J. Bruce Hasch 9,800 5.6 34.19 02-Oct-06 28,420
President and Chief
Operating Officer
James Hinchliff 6,400 3.6 34.19 02-Oct-06 18,560
Senior Vice President
And General Counsel
Thomas M. Patrick 6,400 3.6 34.19 02-Oct-06 18,560
Executive Vice
President
Kenneth S. Balaskovits 5,200 2.9 34.19 02-Oct-06 15,080
Vice President and
Controller
(1)The grant of an Option enables the recipient to purchase Peoples
Energy common stock at a purchase price equal to the fair market
value of the shares on the date the Option is granted. The grant
of an SAR enables the recipient to receive, for each SAR granted,
cash in an amount equal to the excess of the fair market value of
one share of Peoples Energy common stock on the date the SAR is
exercised over the fair market value of such common stock on the
date the SAR was granted. Options or SARs that expire unexercised
become available for future grants. Before an Option or SAR may
be exercised, the recipient must complete 12 months of continuous
employment subsequent to the grant of the Option or SAR. Options
and SARs may be exercised within 10 years from the date of grant,
subject to earlier termination in case of death, retirement, or
termination of employment.
(2)Based on 88,200 Options and 88,200 SARs granted to all employees
under Peoples Energy's Long-Term Incentive Compensation Plan
during fiscal 1997.
(3)Present value is determined a variation of using a variation of the Black-
Scholes Option-Pricing Model. The model assumes: a) that Options and SARs
are exercised teo years after the date of grant-the average tie Options and
SARs were held by recipients under Peoples Energy Long-Term Incentive
Compensation Plan over the past ten years; b) use of an interest rate
equal to the interest rate on a U.S. Treasury security with a maturity
date corresponding to the assumed exercise date; c) a level of
volatility calculated using weekly stock prices for the two years
prior to the date of grant; d) an expected dividend yield; and e)
that no adjustments were made for non-transferability or risk of
forfeiture. This is a theoretical value for the Options and SARs.
The amount realized from an Option or SAR ultimately depends upon
the excess of the market value of Peoples Energy's stock over the
exercise price on the date the option or SAR is exercised.
ITEM 11. EXECUTIVE COMPENSATION (Continued)
[Enlarge/Download Table]
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1997
AND FISCAL YEAR-END OPTION/SAR VALUES
Shares Number of Unexercised Value of Unexercised
Acquired on Options/SARs at Fiscal In-the-Money Options/SARs
(Option/ SAR) Value Year-End (#) at Fiscal Year-End($)
Name Exercise Realized($) Exercisable Unexercisable Exercisable Unexercisable
(#) (1)
Richard E. Terry 21,200 178,875 29,000 17,800 $204,790 $62,300
Chairman and Chief
Executive Officer
J. Bruce Hasch 21,400 172,977 9,400 9,800 64,014 34,300
President and Chief
Operating Officer
James Hinchliff 13,800 118,732 6,200 6,400 42,222 22,400
Senior Vice President
And General Counsel
Thomas M. Patrick 2,400 27,900 10,200 6,400 79,574 22,400
Executive Vice
President
Kenneth S. Balaskovits 11,000 97,119 0 5,200 0.00 18,200
Vice President and
Controller
(1)Includes cash-only SARs exercised by the named executive officers
in the following amounts: Mr. Terry, 10,600; Mr. Hasch, 10,700;
Mr. Hinchliff, 6,900, Mr. Patrick, 1,200, and Mr. Balaskovits, 5,500.
ITEM 11. EXECUTIVE COMPENSATION (Continued)
PENSION PLAN TABLE
Years Of Service
Average Annual
Compensation 20 25 30 35 40
$150,000 $ 54,682 $ 68,352 $ 82,022 $ 91,397 $100,772
200,000 74,682 93,352 112,022 124,522 137,022
250,000 94,682 118,352 142,022 157,647 173,272
300,000 114,682 143,352 172,022 190,772 209,522
350,000 134,682 168,352 202,022 223,897 245,772
400,000 154,682 193,352 232,022 257,022 282,022
450,000 174,682 218,352 262,022 290,147 318,272
500,000 194,682 243,352 292,022 323,272 354,522
550,000 214,682 268,352 322,022 356,397 390,772
600,000 234,682 293,352 352,022 389,522 427,022
650,000 254,682 318,352 382,022 422,647 463,272
700,000 274,682 343,352 412,022 455,772 499,522
750,000 294,682 368,352 442,022 488,897 535,772
The above table illustrates various annual straight-life
benefits at normal retirement (age 65) for the indicated levels
of average annual compensation and various periods of service,
assuming no future changes in Peoples Energy's pension benefits.
The compensation used in the computation of annual retirement
benefits is substantially equivalent to the salary and bonus
reported in the Summary Compensation Table. The benefit amounts
shown reflect reduction for applicable Social Security benefits.
Average annual compensation is the average 12-month
compensation for the highest 60 consecutive months of the last
120 months of service prior to retirement. Compensation is total
salary paid to an employee by the Company and/or its affiliates,
including bonuses under Peoples Energy's Short-Term Incentive
Compensation Plan, pre-tax contributions under Peoples Energy's
Capital Accumulation Plan, pre-tax contributions under Peoples
Energy's Health and Dependent Care Spending Accounts Plan, and
pre-tax contributions for life and health care insurance, but
excluding moving allowances, exercise of stock options and SARs,
and other compensation that has been deferred.
At September 30, 1997, the credited years of retirement
benefit service for the individuals listed in the Summary
Compensation Table were as follows: Mr. Terry, 33 years; Mr.
Hasch, 37 years; Mr. Hinchliff, 25 years, Mr. Patrick, 21 years;
and Mr. Balaskovits, 30 years. The benefits shown in the
foregoing table are subject to maximum limitations under the
Employee Retirement Income Security Act of 1974, as amended, and
the Internal Revenue Code of 1986, as amended. Should these
benefits at the time of retirement exceed the then-permissible
limits of the applicable Act, the excess would be paid by the
Company as supplemental pensions pursuant to Peoples Energy's
Supplemental Retirement Benefit Plan. The benefits shown give
effect to these supplemental pension benefits.
SEVERANCE AGREEMENTS
Peoples Energy has entered into separate severance agreements
with certain key executives including each of the executives
named in the Summary Compensation Table. The intent of the
severance agreements is to assure the continuity of the
administration and operations of Peoples Energy and its
subsidiaries, including the Company in the event of a Change in
Control of the Company (as described below). The severance
agreements were developed in accordance with the advice of
outside consultants.
The term of each severance agreement is for the longer of 36
months after the date in which a Change in Control of Peoples
Energy occurs or 24 months after the completion of the
transaction approved by shareholders described in (iii) below of
the description of a Change in Control. A Change in Control is
defined as occurring when (i) Peoples Energy receives a report on
Schedule 13D filed with the Securities and Exchange Commission
pursuant to Section 13(d) of the Securities Exchange Act of 1934,
as amended, disclosing that any person, group, corporation, or
other entity is the beneficial owner, directly or indirectly, of
20% or more of the common stock of Peoples Energy; (ii) any
person, group, corporation, or other entity (except Peoples
Energy or a wholly-owned subsidiary), after purchasing common
stock of Peoples Energy in a tender offer or exchange offer,
becomes the beneficial owner, directly or indirectly, of 20% or
more of such common stock; (iii) the shareholders of Peoples
Energy approve (a) any consolidation or merger of Peoples Energy
in which Peoples Energy is not the continuing or surviving
corporation, other than a consolidation or merger in which
holders of Peoples Energy's common stock prior to the
consolidation or merger have substantially the same proportionate
ownership of common stock of the surviving corporation
immediately after the consolidation or merger as immediately
before; (b) any consolidation or merger in which Peoples Energy
is the continuing or surviving corporation, but in which the
common shareholders of Peoples Energy immediately prior to the
consolidation or merger do not hold at least 90% of the
outstanding common stock on Peoples Energy; (c) any sale, lease,
exchange or other transfer of all or substantially all of the
assets of Peoples Energy, except where Peoples Energy owns all of
the outstanding stock of the transferee entity or Peoples
Energy's common shareholders immediately prior to such
transaction own at least 90% of the transferee entity or group of
transferee entities immediately after such transaction; or (d)
any consolidation or merger of Peoples Energy where, after the
consolidation or merger, one entity or group of entities owns
100% of the shares of Peoples Energy, except where Peoples
Energy's common shareholders immediately prior to such merger or
consolation own at least 90% of the outstanding stock of such
entity or group of entities immediately after such consolidation
or merger; or (iv) a change in the majority of the members of
Peoples Energy's Board of Directors within a 24-month period,
unless approved by two-thirds of the directors then still in
office who were in office at the beginning of the 24-month
period.
Each severance agreement provides for payment of severance
benefits to the executive in the event that, during the term of
the severance agreement, (i) the executive's employment is
terminated by Peoples Energy or the Company, except for "cause"
as defined therein; or (ii) the executive's employment is
terminated due to a constructive discharge, which includes (a) a
material change in the executive's responsibilities, which change
would cause the executive's position with Peoples Energy or the
Company to become of less dignity, responsibility, prestige or
scope; (b) reduction, which is more than de minimis, in total
compensation; (c) assignment without the executive's consent to a
location more than 50 miles from the current place of employment;
or (d) liquidation, dissolution, consolidation, merger, or sale
of all or substantially all of the assets of Peoples Energy or
the Company, unless the successor corporation has a net worth at
least equal to that of Peoples Energy or the Company, as
applicable, and expressly assumes the obligations of Peoples
Energy under the executive's severance agreement.
The principal severance benefits payable under each severance
agreement consist of the following: (i) the executive's base
salary and accrued benefits through the date of termination,
including a pro rata portion of awards under Peoples Energy's
Short-Term Incentive Compensation (STIC) Plan; (ii) three times
the sum of the individual's base salary, the average of the STIC
Plan awards for the prior three years and the value of the Long-
Term Incentive Compensation (LTIC) Plan awards in the prior
calendar year; and (iii) the present value of the executive's
accrued benefits under the Peoples Energy's Supplemental
Retirement Benefits Plan (SRBP) that would be payable upon
retirement at normal retirement age, computed as if the executive
had completed three years of additional service. In addition,
the executive will be entitled to continuation of life insurance
and medical benefits for the longer of (a) a period of three
years after termination or (b) a period commencing after
termination and ending when the executive may receive pension
benefits without actuarial reduction, provided that Peoples
Energy's obligation for such benefits under the severance
agreement shall cease upon the executive's employment with
another employer that provides life insurance and medical
benefits. Each severance agreement also provides that the
executive's Options and SARs shall become exercisable upon a
Change in Control and that all Options and SARs shall remain
exercisable for the shorter of (a) three years after termination
or (b) the term of such Options and SARs. Any restricted stock
previously awarded to the executive under the LTIC Plan would
vest upon a Change in Control if such vesting does not occur due
to a Change in Control under the terms of the LTIC Plan. Peoples
Energy is also obligated under each severance agreement to pay an
additional amount to the executive sufficient on an after-tax
basis to satisfy any excise tax liability imposed by Section 4999
of the Internal Revenue Code of 1986, as amended. The benefits
received by the executive under each agreement are in lieu of
benefits under Peoples Energy's termination allowance plan and
the executive's benefits under the SRBP. Each executive would be
required to waive certain claims prior to receiving any severance
benefits.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
At November 30, 1997, voting securities of the Company were
beneficially owned as follows:
Title of Number of Per Cent of
Class Name and Address Shares Owned Class
Common Stock Peoples Energy Corporation
without 130 East Randolph Drive
par value Chicago, Illinois 60601-6207 24,817,566 100
SECURITY OWNERSHIP OF MANAGEMENT
No equity securities of the Company are beneficially owned
directly or indirectly by any director or officer of the Company.
Shares of common stock, without par value, of Peoples Energy
beneficially owned directly or indirectly by all directors and
certain executive officers of the Company and all directors and
executive officers of the Company as a group at November 30,
1997, are as follows:
Shares of Peoples Energy
Common Stock Beneficially
Name Owned at November 30, 1997 (1)
Kenneth S. Balaskovits* 12,238 (2)(3)
J. Bruce Hasch* 46,656 (2)(3)
James Hinchliff* 31,005 (2)(3)
Thomas M. Patrick* 19,554
Richard E. Terry* 76,717 (2)(3)
All directors and officers of the Company
as a group, including those named above
(23 in number) 326,454 (1)(2)(3)
* Director of the Company
(1) The total of 326,454 shares held by all directors and
executive officers as a group is less than one per cent of
Peoples Energy's outstanding common stock. Unless otherwise
indicated, each individual has sole voting and investment
power with respect to the shares of common stock attributed
to him or her in the table.
(2) Includes shares that the following have a right to acquire
within 60 days following November 30, 1997, through the
exercise of stock options granted under Peoples Energy's
Long-Term Incentive Compensation Plan: Messrs. Balaskovits,
2,600; Hasch, 9,600; Hinchliff, 6,300; Patrick, 8,300;
Terry, 23,400; and all executive officers of the Company, as
a group, 83,600.
(3)Includes shares of restricted stock awarded under Peoples
Energy's Long-Term Incentive Compensation Plan, the
restrictions on which had not lapsed at November 30, 1997, as
follows: Messrs. Balaskovits, 3,583; Hasch, 8,025;
Hinchliff, 4,925; Patrick, 4,125; Terry, 14,685; and all
executive officers as a group, 41,620. Owners of shares of
restricted stock have the right to vote such shares and to
receive dividends thereon, but have no investment power with
respect to such shares until the restrictions thereon lapse.
CHANGES IN CONTROL
None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company provides general corporate and support services to
Peoples Energy pursuant to an Intercompany Service Agreement
(Agreement), the terms of which were approved by the Commission.
In fiscal 1997, the Company furnished general corporate services
in the amount of $3,360,094 and support services in the amount of
$120,128 to Peoples Energy under the Agreement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) 1. Financial
Statements: Page
See Part II, Item 8. 16
2. Financial Statement Schedules:
Schedule
Number
VIII Valuation and Qualifying Accounts 46
3. Exhibits:
See Exhibit Index on page 48.
(b) Reports on Form 8-K filed during the final quarter of
fiscal year 1997:
None.
[Enlarge/Download Table]
Schedule VIII
The Peoples Gas Light and Coke Company and Subsidiary Companies
VALUATION AND QUALIFYING ACCOUNTS
(Thousands)
Column A Column B Column C Column D Column E
Additions Deductions
Charged Charges for the
Balance to costs purpose for which the Balance
at beginning and reserves or deferred at end of
Description of period expenses credits were created period
Fiscal Year Ended September 30, 1997
RESERVES (deducted from assets in balance sheet):
Uncollectible items $ 25,279 $27,068 $23,388 $28,959
Fiscal Year Ended September 30, 1996
RESERVES (deducted from assets in balance sheet):
Uncollectible items $ 18,315 $27,345 $20,381 $25,279
Fiscal Year Ended September 30, 1995
RESERVES (deducted from assets in balance sheet):
Uncollectible items $ 23,400 $22,063 $27,148 $18,315
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the registrant has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE PEOPLES GAS LIGHT AND COKE COMPANY
Date: December 22, 1997 By: /s/ RICHARD E. TERRY
Richard E. Terry
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities indicated on December 22, 1997.
/s/ RICHARD E. TERRY Chairman of the Board and Chief Executive
Richard E. Terry Officer and Director
(Principal Executive Officer)
/s/ KENNETH S. BALASKOVITS Vice President and Controller and Director
Kenneth S. Balaskovits (Principal Financial and Accounting Officer)
/s/ J. BRUCE HASCH Director
J. Bruce Hasch
/s/ JAMES HINCHLIFF Director
James Hinchliff
/s/ THOMAS M. PATRICK Director
Thomas M. Patrick
The Peoples Gas Light and Coke Company and Subsidiary Companies
EXHIBIT INDEX
(a) The exhibits listed below are filed herewith and made a part
hereof:
Exhibit
Number Description of Document
3(a) Amendment to the By-Laws of the Registrant, dated August 31, 1997.
3(b) By-Laws of the Registrant, as amended, dated August 31, 1997.
10(a) Firm Transportation Service Agreement under Rate Schedule
FTS between the Company and Natural Gas Pipeline
Company of America, dated November 13, 1996.
10(b) Firm Transportation Service Agreement under Rate Schedule FT-
A or FT-G between the Company and Midwestern Gas
Transmission Company, dated November 1, 1997.
10(c) Firm Transportation Service Agreement under Rate Schedule FT-
A between the Company and Tennessee Gas Pipeline
Company, dated November 1, 1997.
12 Statement re: Computation of Ratio of Earnings to Fixed Charges.
21 Subsidiaries of the Registrant
27 Financial Data Schedule
(b) Exhibits listed below have been filed heretofore with the
Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended, and/or the Securities Exchange Act of
1934, as amended, and are incorporated herein by reference. The
file number and exhibit number of each such exhibit are stated
in the description of such exhibits.
3(c) Articles of Incorporation of the Registrant, as amended on April
24, 1995 (Registrant Form 10-K for fiscal year ended
September 30, 1995, Exhibit 3(b)).
4(a) First and Refunding Mortgage, dated January 2, 1926,
from Chicago By-Product Coke Company to Illinois Merchants
Trust Company, Trustee, assumed by the Company by Indenture
dated March 1, 1928 (May 17, 1935, Exhibit B-6a,
Exhibit B-6b A-2 File No. 2-2151, 1936); Supplemental
Indenture dated as of May 20, 1936, from the Company to
Continental Illinois National Bank and Trust Company of
Chicago, Trustee (Form 8-K for the year 1936, Exhibit B-
6f); Supplemental Indenture dated as of March 10, 1950
(Form 8-K for the month of March 1950, Exhibit B-6i);
Supplemental Indenture dated as of June 1, 1951 (File
No. 2-8989, Post-Effective, Exhibit 7-4(b));
Supplemental Indenture dated as of August 15, 1967
(File No. 2-26983, Post-Effective, Exhibit 2-4);
Supplemental Indenture dated as of September 15, 1970
(File No. 2-38168, Post-Effective Exhibit 2-2);
The Peoples Gas Light and Coke Company and Subsidiary Companies
EXHIBIT INDEX (Continued)
Exhibit
Number Description of Document
4(a) Supplemental Indenture dated October 1, 1984,
Cont'd Exhibit 4-3 (Form 10-K for fiscal year ended September
30, 1984); Supplemental Indentures dated March 1, 1985,
Exhibit 4-3 (Form 10-K for fiscal year ended September 30,
1985); Supplemental Indenture dated May 1, 1990 (Form 10-K for
the fiscal year ended September 30, 1990, Exhibit 4);
Supplemental Indenture dated as of April 1, 1993 (Form 8-K dated
as of May 5, 1933, Exhibit 1); Supplemental Indenture
dated as of December 1, 1993 (Form 10-Q for the
quarterly period ended December 31, 1993, Exhibit
4(a)); Supplemental Indentures dated as of
December 1, 1993 (Form 10-Q for the quarterly period
ended December 31, 1993, Exhibit 4(b)); Supplemental
Indenture dated June 1, 1995. (Form 10-K for fiscal
year ended September 30, 1995.)
10(d) Firm Transportation Service Agreement Under Rate Schedule FT
between the Company and Trunkline Gas Company, dated as
of December 1, 1993 (Registrant Form 10-K for the
fiscal year ended September 30, 1994, Exhibit 10). ETS
Service Agreement between the Company and ANR Pipeline
Company, dated September 21, 1994. (Registrant Form 10-
K for fiscal year ended September 30, 1995, Exhibit
10(a)); FSS Service Agreement between the Company and
ANR Pipeline Company, dated September 21, 1994.
(Registrant Form 10-K for fiscal year ended September
30, 1995, Exhibit 10(b)); Storage Rate Schedule NSS
Agreement between the Company and Natural Gas Pipeline
Company of America, dated October 19, 1995.
(Registrant Form 10-K for fiscal year ended September
30, 1995, Exhibit 10(c)); Transportation Rate Schedule
FTS Agreement between the Company and Natural Gas
Pipeline Company of America, dated October 19, 1995.
(Registrant Form 10-K for fiscal year ended September
30, 1995, Exhibit 10(d)); Storage Rate Schedule DSS
Agreement between the Company and Natural Gas Pipeline
Company of America, dated December 1, 1995.
(Registrant Form 10-K for fiscal year ended September
30, 1995, Exhibit 10(e)); Transportation Rate Schedule
FTS Agreement between the Company and Natural Gas
Pipeline Company of America, dated December 1, 1995.
(Registrant Form 10-K for fiscal year ended September
30, 1995, Exhibit 10(f)); Firm Transportation Service
Agreement Under Rate Schedule FT between the Company
and Trunkline Gas Company, dated as of April 1, 1995.
(Registrant Form 10-K for fiscal year ended September
30, 1995, Exhibit10(g)); Quick Notice Transportation
Service Agreement Under Rate Schedule QNT between the
Company and Trunkline Gas Company, dated as of December
1, 1995. (Registrant Form 10-K for fiscal year ended
September 30, 1995, Exhibit 10(h)); Quick Notice
Transportation Service Agreement Under Rate Schedule
QNT between the Company and Trunkline Gas Company,
dated as of December 1, 1995. (Registrant Form 10-K
for fiscal year ended September 30, 1995, Exhibit
10(i)); Firm Transportation Service Agreement under
Rate Schedule FTS-1 between the Company and ANR
Pipeline Company,
The Peoples Gas Light and Coke Company and Subsidiary Companies
EXHIBIT INDEX (Continued)
Exhibit
Number Description of Document
10(d) dated as of September 20, 1995. (Registrant Form
Cont'd 10-K for fiscal year ended cont'd September 30,
1996, Exhibit 10(j)); Firm Transportation Service
Agreement under Rate Schedule FTS between the Company
and Natural Gas Pipeline Company of America, dated as
of February 21, 1996. (Registrant form 10-K for fiscal
year ended September 30, 1996, Exhibit 10(k)); Firm
Transportation Service Agreement under Rate Schedule
FTS between the Company and Natural Gas Pipeline
Company of America, dated as of February 21, 1996.
(Registrant form 10-K for fiscal year ended September
30, 1996, Exhibit 10(l)).
10(e) Lease dated October 20, 1993, between Prudential Plaza
Associates, as Landlord, and the Company, as Tenant
(Registrant Form 10-Q for the quarterly period ended
December 31, 1993, Exhibit 10(a)).
Dates Referenced Herein and Documents Incorporated by Reference
This ‘10-K405’ Filing | | Date | | Other Filings |
---|
| | |
| | 12/1/23 |
| | 5/1/02 |
| | 12/31/00 | | 10-Q |
| | 11/30/99 |
| | 10/1/99 |
| | 1/31/99 |
| | 9/30/98 | | 10-K405 |
| | 8/30/98 |
| | 8/1/98 |
| | 3/27/98 |
Filed on: | | 12/22/97 |
| | 12/16/97 |
| | 11/30/97 |
| | 11/25/97 |
| | 11/1/97 |
| | 10/31/97 |
| | 10/1/97 |
For Period End: | | 9/30/97 |
| | 8/31/97 |
| | 6/25/97 |
| | 2/11/97 |
| | 12/1/96 |
| | 11/30/96 |
| | 11/13/96 |
| | 10/1/96 |
| | 9/30/96 | | 10-K405 |
| | 2/21/96 |
| | 12/29/95 |
| | 12/1/95 |
| | 11/14/95 |
| | 11/8/95 |
| | 10/19/95 |
| | 9/30/95 | | 10-K405 |
| | 9/20/95 |
| | 6/1/95 |
| | 4/24/95 |
| | 4/1/95 |
| | 9/30/94 | | 10-K |
| | 9/21/94 |
| | 2/1/94 |
| | 12/31/93 | | 10-Q |
| | 12/1/93 |
| | 10/20/93 |
| | 9/30/93 |
| | 4/1/93 |
| List all Filings |
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