<PAGE>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-7530
WISCONSIN GAS COMPANY
(Exact name of registrant as specified in its charter)
Wisconsin 39-0476515
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
626 East Wisconsin Avenue
P.O. Box 334
Milwaukee, Wisconsin 53202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 414-291-7000
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. / X / Yes / / No.
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
Aggregate market value of the voting stock held by non-affiliates
of the registrant: None
Number of shares outstanding of each of the registrant's classes of
common stock, as of March 23, 1994:
Common Stock, $8 par value 1,125 shares
Documents Incorporated by Reference.
WICOR, Inc. proxy statement dated March 10, 1994 (Part III)
Reduced Disclosure Format
The registrant meets the conditions set forth in General
Instructions (J)(1)(a) and (b) of Form 10-K and is therefore filing
with the reduced disclosure format.<PAGE>
<PAGE> 2
TABLE OF CONTENTS
PAGE
PART I. 1
Item 1. Business 1
(a) General 1
(b) Gas Supply and
Pipeline Capacity 1
(1) General 1
(2) Pipeline Capacity 2
(3) Long-Term Gas Supply 3
(4) Spot Market Gas Supply 3
(c) Employee 3
Item 2. Properties 3
Item 3. Legal Proceedings 4
Item 4. Submission of Matters to a Vote of
Security Holders 5
PART II. 5
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters 5
Item 6. Selected Financial Data 5
Item 7. Management's Discussion and Analysis of
Results of Operations and Financial
Condition 5
Item 8. Financial Statements and
Supplementary Data 5
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 5
Part III. 6
Item 10. Directors and Executive Officers
of the Registrant 6
Item 11. Executive Compensation 6
Item 12. Security Ownership of Certain
Beneficial Owners and Management 6
Item 13. Certain Relationships and Related
Transactions 6
Part IV. 6
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K 6
(a) Documents Filed as Part of the Report 6
1. All Financial Statements and Report of
Independent Public Accountants 6
2. Financial Statement Schedules 6
3. Exhibits 6
(b) Reports on Form 8-K 8
(i)<PAGE>
<PAGE> 3
PART I
Item 1. BUSINESS
(a) General
Wisconsin Gas Company (the "Company" or "Wisconsin Gas") is a
Wisconsin corporation and a wholly-owned subsidiary of WICOR, Inc.
("WICOR") and maintains its principal executive offices in
Milwaukee, Wisconsin. The Company is the largest natural gas
distribution public utility in Wisconsin, where all of its business
is conducted. At December 31, 1993, Wisconsin Gas distributed gas
to approximately 485,000 residential, commercial and industrial
customers in 487 communities throughout Wisconsin with an estimated
population of 1,867,000 based on the State of Wisconsin's estimates
for 1993. The Company is subject to the jurisdiction of the Public
Service Commission of Wisconsin ("PSCW") as to various phases of
its operations, including rates, service and issuance of
securities.
Wisconsin Gas' business is highly seasonal, particularly as to
residential and commercial sales for space heating purposes, with a
substantial portion of its sales occurring in the winter heating
season. The following table sets forth the volumes of natural gas
delivered by Wisconsin Gas to its customers.
<TABLE>
<CAPTION>
Year Ended
-------------------------------------------
December 31, 1993 December 31, 1992
-------------------- --------------------
Thousands Thousands
Customer Class of Therms* Percent of Therms* Percent
----------------------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Residential 479,640 39.8 459,050 39.2
Commercial 190,600 15.8 178,400 15.2
Large Volume Commercial
and Industrial Firm 152,460 12.7 144,880 12.4
Commercial and Industrial
Interruptible 208,490 17.3 173,880 14.9
Transported 174,080 14.4 213,790 18.3
---------- -------- ---------- --------
Total Gas Purchased
and Transported 1,205,270 100.0 1,170,000 100.0
========== ======== ========== ========
*One therm equals 100,000 BTU's
</TABLE>
The volumes shown as transported represent customer-owned gas
that was delivered by Wisconsin Gas to such customers. The
remaining volumes represent quantities sold to customers by the
Company.<PAGE>
<PAGE> 4
(b) Gas Supply and Pipeline Capacity
(1) General
In recent years, the natural gas industry has undergone
structural changes designed to increase competition. In 1992, the
Federal Energy Regulatory Commission ("FERC") issued Order No. 636
which fundamentally restructured the interstate natural gas
pipeline industry. Prior to Order No. 636, the pipelines serving
Wisconsin Gas were major sellers of gas to Wisconsin Gas. They
sold gas on a "bundled" or delivered-to-Wisconsin basis. Under
Order No. 636, the pipelines are required to "unbundle" the sale of
gas from the related transportation service. Consequently,
pipelines may no longer provide the delivered-to-Wisconsin gas
sales service. Rather, they must sell gas at or near the point of
production in competition with other gas sellers. Under Order No.
636, purchasers such as Wisconsin Gas contract separately with one
or more sellers for gas supply and with pipelines for capacity to
move the gas to markets or into market area storage for future
delivery. In the opinion of management, Order No. 636 will not
have a material impact on Wisconsin Gas' earnings.
The Company's principal pipeline suppliers, ANR Pipeline
Company ("ANR") and Northern Natural Gas Company ("NNG"), completed
the transition to unbundled service on November 1, 1993.
Consequently, Wisconsin Gas has replaced all of its "bundled"
pipeline services with "unbundled" firm pipeline transportation and
storage services and long-term contracts with producers and
marketers for firm gas supply. Thus, 1993 was a transition year in
which Wisconsin Gas purchased gas supply and capacity under interim
arrangements with pipeline suppliers for much of the year and under
the Order No. 636 restructured regime described above for the last
two months of the year. The following table sets forth the sources
and volumes of gas purchased by Wisconsin Gas and volumes of
customer-owned gas transported by Wisconsin Gas.
<TABLE>
<CAPTION>
Year Ended
---------------------------------------------
December 31, 1993 December 31, 1992
---------------------- ----------------------
Thousands Thousands
of Therms* Percent of Therms* Percent
---------- ------- ---------- -------
<S> <C> <C> <C> <C>
Natural Gas Purchased
ANR 467,544 38.8 408,230 34.9
NNG 20,348 1.7 17,880 1.5
Viking 11,917 1.0 6,990 0.6
Term contracts
(in excess of 30 days) 398,197 33.0 - -
Spot Market 133,184 11.1 523,110 44.7
---------- ------- ---------- -------
Total Gas Purchased 1,031,190 85.6 956,210 81.7
Customer Gas Transported 174,080 14.4 213,790 18.3
---------- ------- ---------- -------
Total Gas Purchased
and Transported 1,205,270 100.0 1,170,000 100.0
========== ======= ========== =======
</TABLE>
*One therm equals 100,000 BTU's.<PAGE>
<PAGE> 5
(2) Pipeline Capacity
Interstate pipelines serving Wisconsin originate in three major
gas producing areas of North America: the traditional Oklahoma and
Texas basins; the Gulf of Mexico off-shore from Texas and Louisiana
and the adjacent on-shore producing areas of those states and
western Canada. Wisconsin Gas has contracted for long-term firm
capacity on a relatively equal basis from each of these areas.
This strategy reflects management's belief that overall supply
security is enhanced by geographic diversification of the Company's
supply portfolio and that Canada represents an important long-term
source of reliable, competitively priced gas.
Because of the seasonal variations in gas usage in Wisconsin,
Wisconsin Gas has also contracted with ANR and NNG for substantial
underground storage capacity, primarily in Michigan. There is no
known underground storage capability in Wisconsin. Storage enables
Wisconsin Gas to optimize its overall gas supply and capacity
costs. In summer, gas in excess of market demand is transported
into the storage fields, and in winter, gas is withdrawn from
storage and combined with gas purchased in or near the production
areas ("flowing gas") to meet the increased winter market demand.
As a result, Wisconsin Gas can contract for less pipeline capacity
than would otherwise be necessary, and it can purchase gas on a
more uniform daily basis from suppliers year-around. Each of these
capabilities enables Wisconsin Gas to reduce its overall costs.
Wisconsin Gas' firm winter daily transportation and storage
capacity entitlements from pipelines under long-term contracts are
set forth below.
Maximum
(Thousands
Pipeline of Therms*)
--------------- -----------
ANR
Mainline 3,175
Storage 4,996
NNG
Mainline 1,226
Storage 149
Viking Mainline 64
-----------
Total 9,610
*One therm equals 100,000 BTU's.
(3) Long-Term Gas Supply
Wisconsin Gas has long-term firm contracts with approximately
30 gas suppliers for gas produced in each of the three producing
areas discussed above. The following table sets forth Wisconsin
Gas' winter season maximum daily firm total gas supply.<PAGE>
<PAGE> 6
Maximum Daily
(Thousands
of Therms*)
------------
Domestic flowing gas 2,259
Canadian flowing gas 1,396
Storage withdrawals 5,157
------------
Total 8,812
*One therm equal 100,000 BTU's.
(4) Spot Market Gas Supply
Wisconsin Gas expects to continue to make gas purchases in the
30-day spot market as price and other circumstances dictate. The
Company has purchased spot market gas since 1985 and has supply
relationships with a number of sellers from whom it purchases spot
gas.
(c) Employees
The Company had 1,353 full-time equivalent active employees at
December 31, 1993.
Item 2. PROPERTIES
Wisconsin Gas owns a distribution system which, on Decem-
ber 31, 1993, included approximately 7,800 miles of distribution
and transmission mains, 399,000 services and 488,000 active meters.
The Company's distribution system consists almost entirely of
plastic and coated steel pipe. The Company owns its main office
building in Milwaukee, office buildings in certain other
communities in which it serves, gas regulating and metering
stations, peaking facilities and its major service centers,
including garage and warehouse facilities. The Milwaukee and other
office buildings, the principal service facilities and the gas
distribution systems of Wisconsin Gas are owned by it in fee
subject to the lien of its Indenture of Mortgage and Deed of Trust,
dated as of November 1, 1950, under which its first mortgage bonds
are issued, and to permissible encumbrances as therein defined.
Item 3. LEGAL PROCEEDINGS
There are no material legal proceedings pending, other than
ordinary routine litigation incidental to the Company's business,
to which the Company is a party, except as discussed below. There
are no material legal proceedings to which any officer or director
is a party or has a material interest adverse to the Company's.
There are no material administrative or judicial proceedings
arising under environmental quality or civil rights statutes
pending or known to be contemplated by governmental agencies to
which the Company is or would be a party.
Wisconsin Gas has identified two previously owned sites on
which it operated manufactured gas plants that are of environmental
concern. Such plants ceased operations prior to the mid-1950's.
Wisconsin Gas has engaged an environmental consultant to help
determine the nature and extent of the contamination at these<PAGE>
<PAGE> 7
sites. Based on the test results obtained and the possible
remediation alternatives available, the Company has estimated that
cleanup costs could range from $22 million to $75 million. As of
December 31, 1993, the Company has accrued $40 million for cleanup
costs in addition to $1.6 million of costs already incurred. These
estimates are based on current undiscounted costs. It should also
be noted that the numerous assumptions such as the type and extent
of contamination, available remediation techniques, and regulatory
requirements which are used in developing these estimates are
subject to change as new information becomes available. Any such
changes in assumptions could have a significant impact on the
potential liability.
A formal remediation plan is currently being developed for
presentation to the Wisconsin Department of Natural Resources
("DNR"). Following plan approval and pilot studies, remediation
will commence. Barring unforeseen delays, expenditures by
Wisconsin Gas on this remediation work will commence in 1994 and
increase in future years as plan approvals are obtained.
Expenditures over the next three years are expected to total
approximately $20 million. Although most of the work and costs
will be incurred in the first few years of the plan, monitoring of
the sites and other necessary actions may last up to 30 years.
Wisconsin Gas is pursuing recovery of these costs from
insurance carriers. Any amounts not recoverable from insurance
carriers will be allowed full recovery in rates, based on recent
PSCW orders. Accordingly, the accrual has been offset by a
deferred charge to a regulatory asset. Certain related
investigation costs incurred to date are currently being recovered
in utility rates. However, any incurred costs not yet recovered in
rates are not allowed by the PSCW to earn a return. As of December
31, 1993, $1.6 million of such costs have been incurred.
In 1992, the owner of a portion of one of the properties on
which manufactured gas operations were conducted commenced suit in
Federal district court against Wisconsin Gas. The suit, which was
settled in 1993, generally sought indemnity and contribution under
Federal statutes and alleges that Wisconsin Gas is liable for
remediating the environmental conditions found to be caused by any
releases of hazardous substances from the gasification activities
at the site. Under the settlement, Wisconsin Gas agreed to
indemnify the owner from any remediation costs attributable to the
release of hazardous substances from the gasification activities on
the site. In the judgment of management, the suit will not
materially change Wisconsin Gas' responsibility as required by
Federal and State statutes for remediating the environmental
conditions found to be caused by any releases of hazardous
substances from the gasification activities at the site, which
ceased about 40 years ago, the cost of any remediation actions that
may be required, or its ability to recover such costs in its rates
or from insurers.
<PAGE>
<PAGE> 8
Wisconsin Gas also owns a service center that is constructed
on a site that was previously owned by the City of Milwaukee and
was used by the City as a public dump site. The Company has
conducted a site assessment at the request of the DNR and has sent
the report of its assessment to the DNR. Management cannot predict
whether or not the DNR will require any remediation action, nor the
extent or cost of any remediation actions that may be required. In
the judgment of management, any remediation costs incurred by the
Company will be recoverable from the City of Milwaukee or in
Wisconsin Gas' rates.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Omitted pursuant to General Instruction J (2) (c).
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
WICOR owns all the issued and outstanding common stock of the
Company. The Wisconsin Business Corporation Law, the Company's
Indenture of Mortgage and Deed of Trust and the indentures
supplemental thereto, and the agreements under which debt is
outstanding each contain certain restrictions on the payment of
dividends on common stock. By order of the PSCW, Wisconsin Gas is
generally permitted to pay dividends up to the amount projected in
its rate case. The Company may pay dividends in excess of the
projected dividend amount so long as payment will not caused the
equity ratio to fall below 48.43%. If payment of projected
dividends would cause its equity ratio to fall below 43% or if
payment of additional dividends would cause its equity ratio to
fall below 48.43%, Wisconsin Gas must obtain PSCW approval to pay
such dividends. Wisconsin Gas has projected the payment of $16
million of dividends during the 12 months ending October 31, 1994.
See Note 6 to Notes to Financial Statements. The PSCW desires
Wisconsin Gas to target its common equity level at 43% to 50% of
total capitalization. For the year ended December 31, 1993, the
Company's average common equity level was 45.16%.
The Company paid cash dividends of $16,000,000 and $14,000,000
on common stock to WICOR in 1993 and 1992, respectively.
Item 6. SELECTED FINANCIAL DATA
Omitted pursuant to General Instruction J(2)(a).
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Reference is made to "Financial Review" included in Exhibit
13, which, insofar as it pertains to the Company, is hereby
incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements for the Company together with the report
of independent public accountants are included in Part IV of this
report.<PAGE>
<PAGE> 9
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
There has been no change in or disagreement with the Company's
independent auditors on any matter of accounting principles or
practices or financial statement disclosure required to be reported
pursuant to this item.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Omitted pursuant to General Instruction J(2)(c).
Item 11. EXECUTIVE COMPENSATION
Omitted pursuant to General Instruction J(2)(c).
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Omitted pursuant to General Instruction J(2)(c).
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Omitted pursuant to General Instruction J(2)(c).
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) The following documents are filed as part of the report:
1. All financial statements and Report of Independent Public
Accountants.
Statement of Income.
Balance Sheet.
Statement of Cash Flows.
Statement of Common Equity.
Statement of Capitalization.
Notes to Financial Statements.
2. Financial statement schedules.
Schedule V -- Property, Plant and Equipment for the
Years Ended December 31, 1993, 1992 and
1991.
Schedule VI -- Accumulated Depreciation for the Years
Ended December 31, 1993, 1992 and 1991.
<PAGE> 10
Schedule VIII -- Valuation and Qualifying Accounts for
the Years Ended December 31, 1993, 1992
and 1991.
Schedule IX -- Short-term Borrowings for the Years
Ended December 31, 1993, 1992 and 1991.
Schedule X -- Supplemental Income Statement
Information for the Years Ended
December 31, 1993, 1992 and 1991.
Schedules other than those referred to above have been
omitted as not applicable or not required.
3. Exhibits
3.1 Wisconsin Gas Company Restated Articles of
Incorporation, as amended (incorporated by reference
to Exhibit 3.1 to the Company's Form 10-K Annual
Report for 1988).
3.2 Wisconsin Gas Company By-laws, as amended.
4.1 Indenture of Mortgage and Deed of Trust dated as of
November 1, 1950, between Milwaukee Gas Light
Company and Mellon National Bank and Trust Company
and D. A. Hazlett, Trustees (incorporated by
reference to Exhibit 7-E to the Company's
Registration Statement No. 2-8631).
4.2 Eleventh Supplemental Indenture dated as of February
15, 1982, between Wisconsin Gas Company and Mellon
Bank, N.A., and N. R. Smith, Trustees (incorporated
by reference to Exhibit 4.5 to the Company's Form S-
3 Registration Statement No. 33-43729).
4.3 Bond Purchase Agreement dated December 31, 1981,
between Wisconsin Gas Company and Teachers Insurance
and Annuity Association of America relating to the
issuance and sale of $30,000,000 principal amount of
First Mortgage Bonds, Adjustable Rate Series due
2002 (incorporated by reference to Exhibit 4-6 to
the Company's Form S-3 Registration Statement No.
33-43729).
4.4 Indenture dated as of September 1, 1990, between
Wisconsin Gas Company and First Wisconsin Trust
Company, Trustee (incorporated by reference to
Exhibit 4.11 to the Company's Form S-3 Registration
Statement No. 33-36639).
4.5 Officers' Certificate dated as of November 28, 1990,
setting forth the terms of the Company's 9-1/8%
Notes due 1997 (incorporated by reference to Exhibit
4.1 to the Company's Form 8-K Current Report for
November 30, 1990).<PAGE>
<PAGE> 11
4.6 Officers' Certificate dated as of November 19, 1991,
setting forth the terms of Wisconsin Gas Company's
7-1/2% Notes due 1998 (incorporated by reference to
Exhibit 4.1 to Wisconsin Gas Company's Form 8-K
Current Report for November 19, 1991).
4.7 Officers' Certificate, dated as of September 15,
1993, setting forth the terms of the Company's 6.60%
debentures due 2013 (incorporated by reference to
Exhibit 4.1 to the Company's Form 8-K Current Report
for September, 1993).
4.8 Revolving Credit and Term Loan Agreement dated as of
March 29, 1993, among Wisconsin Gas Company and the
Bank of New York, Citibank, N.A., Firstar Bank of
Milwaukee, N. A. Harris Trust & Savings Bank, M&I
Marshall & Ilsley Bank and Citibank, N.A., as Agent
(incorporated by reference to Exhibit 4.2 to the
Company's Quarterly Report on Form 10-Q dated as of
August 9, 1993).
4.9 Loan Agreement dated as of November 4, 1991, by and
among M&I Marshall & Ilsley Bank, Wisconsin Gas
Company Employee's Savings Plans Trust and WICOR,
Inc. (incorporated by reference to Exhibit 4.16 to
the Company's Form 10-K Annual Report for 1991).
10.1 Service Agreement dated as of January 1, 1988, among
WICOR, Inc., Wisconsin Gas Company, Sta-Rite
Industries, Inc. and WEXCO of Delaware, Inc.
(incorporated by reference to Exhibit 10.1 the
Company's Form 10-K Annual Report for 1988).
10.2# WICOR, Inc. 1987 Stock Option Plan, as amended
(incorporated by reference to Exhibit 4.1 to the
WICOR, Inc. Form S-8 Registration Statement No. 33-
67134).
10.3# Forms of nonstatutory stock option agreement used
in connection with the WICOR, Inc. 1987 Stock
Option Plan (incorporated by reference to Exhibit
10.20 to the Company's Form 10-K Annual Report for
1991).
10.4# WICOR, Inc. 1992 Director Stock Option Plan
(incorporated by reference to Exhibit 4.1 to WICOR,
Inc's Form S-8 Registration No. 33-67132).
10.5# Form of nonstatutory stock agreement used in
conjunction with the WICOR, Inc. 1992 Director
Stock Option Plan (incorporated by reference to
Exhibit 4.2 to WICOR, Inc.'s Form S-8 Registration
No. 37-67132).
10.6# Wisconsin Gas Company Principal Officers'
Supplemental Retirement Income Program.
10.7# Wisconsin Gas Company 1994 Officers' Incentive
Compensation Plan.<PAGE>
<PAGE> 12
10.8# Wisconsin Gas Company Officers' Medical Expense
Reimbursement Plan (incorporated by reference to
Exhibit 10.22 to the Company's Form 10-K Annual
Report in 1992).
10.9# Wisconsin Gas Company Group Travel Accident Plan
(incorporated by reference to Exhibit 10.23 to the
Company's Form 10-K Annual Report for 1992).
10.10# Form of Deferred Compensation Agreement between
Wisconsin Gas Company and certain of its officers
(incorporated by reference to Exhibit 10.25 to the
Company's Form 10-K Annual Report for 1991).
10.11# WICOR, Inc. Retirement Plan for Directors, as
amended (incorporated by reference to Exhibit
10.25 to the Company's Form 10-K Annual Report for
1992).
13 "Financial Review" portions of WICOR, Inc. 1993
Annual Report to Shareholders.
(b) Reports on Form 8-K.
No Form 8-K Current Report was filed in the fourth
quarter of 1993.
# Indicates a plan under which compensation is paid or payable to
directors or executive officers of the Company.<PAGE>
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto
duly authorized.
WISCONSIN GAS COMPANY
Date: March 29, 1994 By JOSEPH P. WENZLER
-----------------------
Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed on the succeeding pages by the
following persons on behalf of the registrant and in the capacities
and on the dates indicated.
<PAGE>
<PAGE> 14
WISCONSIN GAS COMPANY
<TABLE>
<CAPTION>
Signature Title Date
--------- ------------------------------- ----------------
<S> <C> <C>
THOMAS F. SCHRADER
- ------------------
Thomas F. Schrader President, Chief Executive
Officer and Director
(Principal Executive Officer) March 29, 1993
JOSEPH P. WENZLER
- -----------------
Joseph P. Wenzler Vice President and March 29, 1993
Chief Financial Officer
(Principal Financial and
Principal Accounting Officer)
WENDELL F. BUECHE
- -----------------
Wendell F. Bueche Director March 29, 1993
WILLIE D. DAVIS Director March 29, 1993
- ---------------
Willie D. Davis
JAMES L. FORBES Director March 29, 1993
- ---------------
James L. Forbes
JERE D. MCGAFFEY
- ----------------
Jere D. McGaffey Director March 29, 1993
DANIEL F. MCKEITHAN, JR.
- ------------------------
Daniel F. McKeithan, Jr. Director March 29, 1993
GUY A. OSBORN
- -------------
Guy A. Osborn Director March 29, 1993
STUART W. TISDALE
- -----------------
Stuart W. Tisdale Director March 29, 1993
GEORGE E. WARDEBERG
- -------------------
George E. Wardeberg Director March 29, 1993
ESSIE M. WHITELAW
- -----------------
Essie M. Whitelaw Director March 29, 1993
WILLIAM B. WINTER
- -----------------
William B. Winter Director March 29, 1993
</TABLE>
<PAGE>
<PAGE> 15
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wisconsin Gas Company:
We have audited the accompanying balance sheet and statement of
capitalization of WISCONSIN GAS COMPANY (a Wisconsin corporation
and a wholly owned subsidiary of WICOR, Inc.) as of December 31,
1993 and 1992, and the related statements of income, common equity
and cash flows for each of the three years in the period ended
December 31, 1993. These financial statements and the schedules
referred to below are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements and schedules 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
Wisconsin Gas Company as of December 31, 1993 and 1992, and the
results of its operations and its cash flows for each of the three
years in the period ended December 31, 1993, in conformity with
generally accepted accounting principles.
As discussed in Notes 5 and 10 to Wisconsin Gas Company's Financial
Statements, effective January 1, 1992, Wisconsin Gas Company
changed its methods of accounting for income taxes and
postretirement benefits other than pensions.
Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. Supplemental
Schedules V, VI, VIII, IX, and X are presented for purposes of
complying with the Securities and Exchange Commission's rules and
are not part of the basic financial statements. These schedules
have been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly state
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 & CO.
Milwaukee, Wisconsin,
February 11, 1994.<PAGE>
<PAGE> 16
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY
Statement of Income
Year Ended December 31,
-------------------------------
1993 1992 1991
-------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues.......................... $574,835 $495,415 $474,702
-------- -------- --------
Operating Expenses:
Purchased gas............................. 382,027 319,377 303,441
Operations................................ 102,385 91,782 92,290
Maintenance............................... 7,279 6,952 7,313
Depreciation.............................. 27,892 25,477 23,900
Taxes, other than income taxes............ 9,063 8,548 8,274
-------- -------- --------
528,646 452,136 435,218
-------- -------- --------
Operating Income............................ 46,189 43,279 39,484
-------- -------- --------
Other Income and (Deductions):
Interest income........................... 10 51 354
Other, net................................ (268) (170) (284)
-------- -------- --------
(258) (119) 70
-------- -------- --------
Income Before Interest Expense.............. 45,931 43,160 39,554
-------- -------- --------
Interest Expense:
First mortgage bonds and notes............ 12,816 13,472 12,047
Other..................................... 1,965 1,417 732
-------- -------- --------
14,781 14,889 12,779
-------- -------- --------
Income Before Income Taxes.................. 31,150 28,271 26,775
Income Taxes................................ 11,280 10,211 9,689
-------- -------- --------
Net Income.................................. $ 19,870 $ 18,060 $ 17,086
======== ======== ========
<FN>
The accompanying notes are an integral part of this statement.
/TABLE
<PAGE>
<PAGE> 17
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY
Balance Sheet
As of December 31,
----------------------
1993 1992
----------------------
(Thousands of Dollars)
<S> <C> <C>
Assets
- ------
Property, Plant and Equipment, at cost (Schedule V).. $679,968 $642,863
Less - Accumulated depreciation (Schedule VI)...... 330,259 306,051
-------- --------
349,709 336,812
-------- --------
Current Assets:
Cash and cash equivalents.......................... 9,680 6,493
Accounts receivable, less allowance for doubtful
accounts of $7,365,000 and $5,452,000,
respectively (Schedule VIII)..................... 64,006 59,639
Accrued utility revenues........................... 53,483 48,029
Materials and supplies, at weighted average cost... 3,255 3,689
Gas in storage, at weighted average cost........... 44,697 6,647
Deferred income taxes.............................. 8,280 3,312
Prepaid taxes...................................... 6,090 3,639
Other.............................................. 2,128 4,051
-------- --------
191,619 135,499
-------- --------
Deferred Charges and Other:
Deferred systems development costs................. 38,808 36,265
Deferred environmental costs....................... 41,641 -
Other regulatory assets............................ 57,211 58,973
Gas transition costs............................... 15,485 25,329
Prepaid pension costs.............................. 24,418 23,117
Other.............................................. 18,321 18,635
-------- --------
195,884 162,319
-------- --------
$737,212 $634,630
======== ========
<FN>
The accompanying notes are an integral part of this statement.
/TABLE
<PAGE>
<PAGE> 18
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY
Balance Sheet
As of December 31,
----------------------
1993 1992
----------------------
(Thousands of Dollars)
<S> <C> <C>
Capitalization and Liabilities
- ------------------------------
Capitalization (See accompanying statement):
Long-term debt....................................... $147,644 $149,487
Preferred stock...................................... - -
Common equity........................................ 174,646 158,551
-------- --------
322,290 308,038
-------- --------
Current Liabilities:
Accounts payable..................................... 45,828 57,112
Accounts payable - intercompany, net................. 5,720
(3,825)
Refundable gas costs................................. 15,596 13,641
Short-term borrowings (Schedule IX).................. 108,000 49,000
Current portion of long-term debt.................... 2,000 2,211
Accrued payroll and benefits......................... 7,560 6,080
Accrued taxes........................................ 2,462 1,030
Other................................................ 3,715 4,734
-------- --------
190,881 129,983
-------- --------
Deferred Credits and Other:
Deferred income taxes................................ 43,590 43,473
Postretirement benefit obligation.................... 53,895 54,686
Environmental remediation costs...................... 40,000 -
Other regulatory liabilities......................... 50,179 52,544
Unamortized investment tax credit.................... 8,654 9,128
Gas transition costs................................. 15,485 25,329
Other................................................ 12,238 11,449
-------- --------
224,041 196,609
-------- --------
Commitments and Contingencies (Note 7)
-------- --------
$737,212 $634,630
======== ========
<FN>
The accompanying notes are an integral part of this statement.
/TABLE
<PAGE>
<PAGE> 19
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY
Statement of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
Year Ended December 31,
--------------------------------
(Thousands of Dollars) 1993 1992 1991
--------------------------------
<S> <C> <C> <C>
Operations:
Net income............................... $ 19,870 $ 18,060 $ 17,086
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization.......... 34,786 30,520 28,369
Deferred income taxes.................. (4,851) 6,392 4,230
Change in:
Receivables.......................... (9,821) (7,281) (8,612)
Gas in storage....................... (38,050) (6,252) 4,754
Other current assets................. (94) (2,691) (5,851)
Deferred systems development costs... (6,530) (9,976) (10,174)
Accounts payable..................... (11,284) (2,370) (108)
Accrued taxes........................ 1,432 1,646 2,563
Refundable gas costs................. 1,955 5,633 (3,884)
Other current liabilities............ 10,006 (544) 1,077
Other noncurrent assets and
liabilities........................ (5,974) (6,633) (4,691)
-------- -------- --------
(8,555) 26,504 24,759
-------- -------- --------
Investment Activities:
Capital expenditures..................... (42,253) (62,125) (34,473)
Other,net................................ 541 274 595
-------- -------- --------
(41,712) (61,851) (33,878)
-------- -------- --------
Financing Activities:
Change in short-term borrowings.......... 59,000 37,000 (3,000)
Issuance of long-term debt............... 45,000 - 40,000
Reduction of long-term debt.............. (46,771) (4,950) (14,115)
Donated capital from WICOR, Inc.......... 12,000 15,000 4,000
Cash dividends paid to WICOR, Inc........ (16,000) (14,000) (16,000)
Other.................................... 225 141 109
-------- -------- --------
53,454 33,191 10,994
-------- -------- --------
Change in Cash and Cash Equivalents........ 3,187 (2,156) 1,875
Cash and Cash Equivalents at beginning
of year.................................. 6,493 8,649 6,774
-------- -------- --------
Cash and Cash Equivalents at end of year... $ 9,680 $ 6,493 $ 8,649
======== ======== ========
<FN>
The accompanying notes are an integral part of this statement.
/TABLE
<PAGE>
<PAGE> 20
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY
Statement of Common Equity
Year Ended December 31,
--------------------------------
1993 1992 1991
--------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Common Stock
Balance at beginning and end of year.... $ 9 $ 9 $ 9
-------- -------- --------
Other Paid-In Capital
Balance at beginning of year............ 101,075 85,933 81,824
Donated capital from WICOR, Inc....... 12,000 15,000 4,000
Other................................. 225 142 109
-------- -------- --------
Balance at end of year.................. 113,300 101,075 85,933
-------- -------- --------
Retained Earnings
Balance at beginning of year............ 57,467 53,407 52,321
Net income............................ 19,870 18,060 17,086
Cash dividends paid to WICOR, Inc..... (16,000) (14,000) (16,000)
-------- -------- --------
Balance at end of year.................. 61,337 57,467 53,407
-------- -------- --------
Total Common Equity at end of year........ $174,646 $158,551 $139,349
======== ======== ========
The accompanying notes are an integral part of this statement.
/TABLE
<PAGE>
<PAGE> 21
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY
Statement of Capitalization
As of December 31,
----------------------
1993 1992
----------------------
(Thousands of Dollars)
<S> <C> <C>
Long-Term Debt, Excluding Current Portion
First mortgage bonds
8-1/2% Series due 1994.............................. $ - $ 9,560
9-3/4% Series due 1995.............................. - 35,000
Adjustable Rate Series, 8.1% and 8.8%,
respectively, due 2002............................ 14,000 16,000
9-1/8% Notes due 1997................................. 50,000 50,000
7-1/2% Notes due 1998................................. 40,000 40,000
6.6% Notes due 2013................................... 45,000 -
Unamortized debt discount and expense................. (1,356)
(1,073)
-------- --------
147,644 149,487
-------- --------
Preferred Stock
Without par value, cumulative; authorized 1,500,000
shares, none outstanding............................ - -
-------- --------
Common Equity
Common Stock, $8 par value, authorized 5,000,000
shares, 1,125 shares outstanding.................... 9 9
Other paid-in capital................................. 113,300 101,075
Retained earnings..................................... 61,337 57,467
-------- --------
174,646 158,551
-------- --------
$322,290 $308,038
======== ========
<FN>
The accompanying notes are an integral part of this statement.
/TABLE
<PAGE>
<PAGE> 22
Wisconsin Gas Company
Notes to Financial Statements
1. Accounting Policies
a. Business
Wisconsin Gas Company (the Company or Wisconsin Gas) is a public
utility engaged in the distribution of natural gas and a wholly-
owned subsidiary of WICOR, Inc. (WICOR). It serves a diversified
base of residential, commercial and industrial customers throughout
the State of Wisconsin while deriving most of its revenues from gas
delivered in southeastern Wisconsin. Wisconsin Gas is subject to
regulation by the Public Service Commission of Wisconsin (PSCW) and
gives recognition to ratemaking policies substantially in
accordance with the Federal Energy Regulatory Commission (FERC)
System of Accounts, which the PSCW adopted effective January 1,
1990. Statement of Financial Accounting Standards (SFAS) No. 71
"Accounting for the Effects of Certain Types of Regulation"
provides that rate-regulated public utilities such as Wisconsin Gas
record certain costs and credits allowed in the ratemaking process
in different periods than that of an unregulated company. These
costs and credits are deferred as regulatory assets or regulatory
liabilities and are recorded on the income statement at the time
they are recognized in rates.
b. Gas Distribution Revenues and Purchased Gas Costs
Utility billings are rendered on a cycle basis. Revenues
include estimated amounts accrued for service provided but not yet
billed.
Wisconsin Gas' rate schedules contain purchased gas adjustment
(PGA) provisions which permit the recovery of actual purchased gas
costs incurred. The difference between actual costs incurred and
costs recovered in rates, adjusted for inventory activity, is
deferred as a current asset or liability. The deferred balance is
returned to or recovered from customers at intervals throughout the
year and any residual balance at the annual October 31
reconciliation date is subsequently refunded to or recovered from
customers.
The PSCW is currently permitting Wisconsin Gas to recover
pipeline supplier take-or-pay settlement costs, allocating a
portion of the direct-billed costs to each customer class,
including transportation customers.
c. Plant and Depreciation
Property, plant and equipment is stated at original cost,
including overhead allocations. Upon ordinary retirement of plant
assets, their cost plus cost of removal, net of salvage, is charged
to accumulated depreciation, and no gain or loss is recognized.
Wisconsin Gas depreciation is computed using straight-line rates
established by the PSCW equivalent to composite rates of 4.7% for
each of the years 1993, 1992 and 1991.
d. Deferred Charges
Consistent with PSCW regulation, Wisconsin Gas has deferred
computer systems development costs which are to be amortized over a
five to ten year period, generally as the respective systems become
operational.<PAGE>
<PAGE> 23
Wisconsin Gas is precluded from discontinuing service to
residential customers within its service area during a certain
portion of the heating season. Any differences between doubtful
account provisions based on actual experience and provisions
allowed for ratemaking purposes by the PSCW are deferred for later
recovery in rates as a cost of service. The most recent PSCW rate
order provides for a $16.1 million allowable annual provision for
doubtful accounts, including amortization of prior deferred
amounts. See Notes 7, 8 and 10 for discussion of additional
deferred charges.
e. Income Taxes
WICOR includes Wisconsin Gas in its consolidated Federal income
tax return and allocates current tax expense or credits to
Wisconsin Gas based on its separate tax computation. Wisconsin Gas
provides deferred income taxes to reflect tax effects of
recognizing book and taxable income and expenses in different
periods. Beginning in 1992, the Company provides deferred income
taxes in accordance with SFAS 109, "Accounting for Income Taxes",
to reflect tax effects of reporting book and taxable income in
different periods (See Note 5).
Unamortized Wisconsin Gas investment tax credits were recorded
as a deferred credit on the balance sheet and are being amortized
to income over the applicable service lives of the related
properties in accordance with regulatory treatment.
f. Cash Flows
Wisconsin Gas considers all highly liquid debt instruments
purchased with an original maturity of three months or less to be
cash equivalents. Due to the short maturity of these instruments,
market value approximates cost.
For purposes of the Statement of Cash Flows, income taxes paid
(net of refunds) and interest paid (excluding capitalized interest)
were as follows for each of the years ended December 31, 1993, 1992
and 1991:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1993 1992 1991
------------------------ -------- -------- --------
<S> <C> <C> <C>
Interest paid $ 15,043 $ 14,334 $ 12,476
Income taxes paid $ 8,188 $ 4,824 $ 7,934
</TABLE>
g. Reclassifications
Certain prior year financial statement amounts have been
reclassified to conform to their current year presentation.
2. Short-Term Borrowings
As of December 31, 1993, Wisconsin Gas had lines of credit
available from banks of $110.0 million. At December 31, 1993,
$108.0 million of commercial paper was outstanding at a weighted
average interest rate of 3.3%. At December 31, 1992, $49.0 million
of commercial paper was outstanding at a weighted average interest
rate of 3.6%.
These borrowing arrangements may require the maintenance of
average compensating balances, which are generally satisfied by
balances maintained for normal business operations, and which may
be withdrawn at any time.<PAGE>
<PAGE> 24
3. Long-Term Debt
In September 1993, Wisconsin Gas issued $45 million of 6.6%
Notes due in 2013, the proceeds of which were used to refinance $45
million of outstanding higher cost first mortgage bonds due in 1994
and 1995.
In November, 1991, Wisconsin Gas issued $40 million of 7-1/2%
Notes due 1998. A portion of the proceeds was used to redeem the
remaining $10.4 million of 6-5/8% First Mortgage Bonds at their
maturity dates.
Substantially all property and plant is subject to a first
mortgage lien. Maturities and sinking fund requirements during the
succeeding five years on all long-term debt are $2.0 million, $2.0
million, $2.0 million, $52.0 million and $42.0 million in 1994,
1995, 1996, 1997 and 1998, respectively.
4. Preferred Stock
Authorized preferred stock consists of 1.5 million shares of
cumulative preferred stock, without par; as of December 31, 1993
and 1992 no such shares were issued or outstanding.
5. Income Taxes
In the fourth quarter of 1992, Wisconsin Gas adopted SFAS No.
109, "Accounting for Income Taxes", retroactive to January 1, 1992.
Under the liability method prescribed by SFAS No. 109, deferred
taxes are provided based upon enacted tax laws and rates applicable
to the periods in which the taxes become payable. Changes in
Wisconsin Gas' deferred income taxes arising from the adoption
represent amounts recoverable or refundable through future rates
and have been recorded as regulatory assets totalling $4.6 million
and regulatory liabilities totalling $29.7 million on the balance
sheet for 1992. Prior years' financial statements have not been
restated to apply the provisions of SFAS No. 109.
The current and deferred components of income tax expense are
as follows:
<TABLE>
<CAPTION>
(Thousands of Dollars)
Year Ended December 31, 1993 1992 1991
- ---------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Current
Federal $ 15,082 $ 1,916 $ 4,237
State 3,761 811 1,221
---------- ---------- ----------
Total Current 18,843 2,727 5,458
---------- ---------- ----------
Deferred
Federal (6,432) 5,916 3,622
State (1,131) 1,568 609
---------- ---------- ----------
Total Deferred (7,563) 7,484 4,231
---------- ---------- ----------
Total Provision $ 11,280 $ 10,211 $ 9,689
========== ========== ==========
/TABLE
<PAGE>
<PAGE> 25
The components of deferred income tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31, 1993 1992
- ------------------------------------- ---------- ----------
<S> <C> <C>
Deferred Income Tax Assets
Recoverable gas costs $ 5,928 $ 1,267
Deferred compensation 1,194 1,105
Other 1,158 940
---------- -----------
$ 8,280 $ 3,312
========== ===========
Deferred Income Tax Liabilities
Property related $ 31,477 $ 29,577
System development costs 15,576 14,268
Gas transition costs 5,633 9,765
Recoverable gas costs - (3,400)
Investment tax credit (5,725) (5,896)
Deferred compensation (1,959) (1,367)
Other (1,412) 526
---------- -----------
$ 43,590 $ 43,473
========== ===========
</TABLE>
The provision for income taxes differs from the amount of
income tax determined by applying the applicable U.S. statutory
federal income tax rate to pretax income as a result of the
following differences:
<TABLE>
<CAPTION>
(Thousands of Dollars)
Year Ended December 31, 1993 1992 1991
- ---------------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Statutory U.S. tax rates $10,910 35.0% $ 9,612 34.0% $ 9,104 34.0%
State income taxes, net 1,601 5.1 1,470 5.2 1,391 5.2
Investment credit restored (473) (1.5) (502) (1.8) (481) (1.8)
Excess deferred tax amortization (532) (1.7) (507) (1.8) (474) (1.8)
Other, net (226) (0.7) 138 0.5 149 0.6
-------- ------ -------- ------ -------- ------
Effective Tax Rates $11,280 36.2% $10,211 36.1% $ 9,689 36.2%
======== ====== ======== ====== ======== ======
</TABLE>
6. Restrictions
A November 1993 PSCW rate order set an equity range of 43% to
50% and also require Wisconsin Gas to request PSCW approval prior
to the payment of dividends on its common stock to WICOR if the
payment would reduce its common equity (net assets) below 43% of
total capitalization (including short-term debt). Under this
requirement, $8.1 million of Wisconsin Gas' net assets at December
31, 1993, plus future earnings, were available for such dividends
without PSCW approval. In addition, the PSCW imposed certain
limitations on the<PAGE>
<PAGE> 26
ability of Wisconsin Gas to pay dividends to WICOR in excess of the
level indicated in the projected test year if such dividends would
dilute Wisconsin Gas' total equity below 48.43% of its total
capitalization. The utility dividend payout indicated in the
projected test year ending October 31, 1994 is $16 million, of
which $4 million was paid in November, 1993.
7. Commitments and Contingencies
Certain commitments have been made in connection with 1994
capital expenditures. Wisconsin Gas capital expenditures for 1994
are estimated at $57.4 million.
Wisconsin Gas has variable-term contracts with its interstate
pipelines and gas suppliers to purchase transportation capacity and
natural gas. PGA provisions permit the recovery of actual
purchased capacity and gas costs incurred.
Wisconsin Gas has identified two previously owned sites on
which it operated manufactured gas plants that are of environmental
concern. Such plants ceased operations prior to the mid-1950s.
Wisconsin Gas has engaged an environmental consultant to help
determine the nature and extent of the contamination at these
sites. Based on the test results obtained and the possible
remediation alternatives available, the Company has estimated that
cleanup costs could range from $22 million to $75 million. As of
December 31, 1993 the Company has accrued $40 million for cleanup
costs in addition to $1.6 million of costs already incurred. These
estimates are based on current undiscounted costs. It should also
be noted that the numerous assumptions such as the type and extent
of contamination, available remediation techniques and regulatory
requirements which are used in developing these estimates are
subject to change as new information becomes available. Any such
changes in assumptions could have a significant impact on the
potential liability.
A formal remediation plan is being developed for presentation
to the Wisconsin Department of Natural Resources. Following plan
approval and pilot studies, remediation work will commence.
Barring unforeseen delays, expenditures by Wisconsin Gas on this
remediation will commence in 1994 and increase in future years as
plan approvals are obtained. Expenditures over the next three
years are expected to total approximately $20 million. Although
most of the work and costs will be incurred in the first few years
of the plan, monitoring of the sites and other necessary techniques
may last up to 30 years.
Wisconsin Gas is pursuing recovery of these costs from
insurance carriers. Any amounts not recoverable from insurance
carriers will be allowed full recovery in rates based on recent
PSCW orders. Accordingly, the accrual has been offset by a
deferred charge to a regulatory asset. Certain related
investigation costs incurred to date are currently being recovered
in utility rates. However, any incurred costs not yet recovered in
rates are not allowed by the PSCW to earn a return. As of December
31, 1993, $1.6 million of such costs have been incurred.
The Company is party to various legal proceedings arising in
the ordinary course of business which are not expected to have a
material effect on the financial statements of the Company.<PAGE>
<PAGE> 27
8. FERC Order No. 636
On April 8, 1992, the FERC issued Order No. 636 which
restructured the interstate natural gas pipeline business.
Pipeline suppliers will be allowed to recover significant
transition costs from Wisconsin Gas necessary to implement
"unbundled" services such that gas supplies would be sold
separately from interstate transportation services. Wisconsin Gas'
liability for certain of these costs is being contested at FERC and
in court. The extent of this future liability is not estimable at
this time due to a number of factors including the future cost of
gas and the outcome of ongoing litigation. However, on the basis
of previous PSCW ratemaking relative to the recovery of gas
purchased and related costs, Wisconsin Gas anticipates that
pipeline transition cost billings will also be recoverable from
ratepayers.
9. Common Stock and Other Paid-In Capital
During the first, third and fourth quarters of 1993, WICOR
invested $2 million, $8 million and $2 million, respectively, in
Wisconsin Gas. In the first and third quarters of 1992, WICOR
invested $5 million and $10 million, respectively, in Wisconsin
Gas.
10. Benefit Plans
a. Pension Plans
Wisconsin Gas has non-contributory pension plans which cover
substantially all employees and include benefits based on levels of
compensation and years of service. Employer contributions and
funding policies are consistent with funding requirements of
Federal law and regulations. Commencing on November 1, 1992,
Wisconsin Gas pension costs or credits are calculated in accordance
with SFAS No. 87 and are recoverable from or refunded to customers.
Prior to this date, pension costs were recoverable in rates as
funded.
The following table sets forth the funded status of pension
plans at December 31, 1993 and 1992:<PAGE>
<PAGE> 28
<TABLE>
<CAPTION>
Assets Exceed Accumulated Benefits
Accumulated Benefits Exceed Assets
----------------------------------------------------
(Thousands of Dollars) 1993 1992 1993 1992
- ------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Accumulated benefit obligation-
Vested benefits $(65,913) $(67,238) $ (5,696) $ (4,255)
Nonvested benefits (9,842) (4,780) - -
-------- -------- -------- --------
(75,755) (72,018) (5,696) (4,255)
Effect of projected future
compensation levels (42,985) (30,594) (360) (132)
-------- -------- -------- --------
Projected benefit obligation (118,740) (102,612) (6,056) (4,387)
Plan assets at fair value 176,053 163,641 - -
-------- -------- -------- --------
Plan assets greater (less) than
projected benefit obligation 57,313 61,029 (6,056) (4,387)
Unrecognized net asset at September 30,
1985 being recognized over approx-
imately 16 years (18,458) (20,182) 959 903
Unrecognized prior service cost 5,174 3,442 - -
Unrecognized net (gain) (19,611) (21,172) 438 119
Additional minimum liability recorded - - (1,037) (890)
-------- -------- -------- --------
Accrued pension asset (liability) $ 24,418 $ 23,117 $ (5,696) $ (4,255)
======== ======== ======== ========
</TABLE>
The weighted average discount rate assumptions used in
determining the actuarial present value of the projected benefit
obligation were 7.5%, 7.75% and 7.75% for 1993, 1992 and 1991,
respectively. For 1991 through 1993, the expected long-term rate
of return on assets and long-term rate of compensation growth were
8.0% and 6.0%, respectively.
Net pension costs include the following (income) expense:
<TABLE>
<CAPTION>
(Thousands of Dollars)
Year Ended December 31 1993 1992 1991
- ---------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Service cost $ 4,872 $ 3,882 $ 3,394
Interest cost on projected
benefit obligations 9,023 7,512 6,933
Actual return on assets (13,474) (11,879) (22,662)
Net amortization and deferral (1,424) (993) 10,306
Adjustment to utility funded amount - 1,513 2,029
---------- ---------- ----------
Net pension (income) cost $ (1,003) $ 35 $ -
========== ========== ==========
/TABLE
<PAGE>
<PAGE> 29
b. Postretirement Health Care and Life Insurance
Wisconsin Gas provides certain health care and life insurance
benefits for retired employees when they reach normal retirement
age while working for the Company.
As provided for in its rates, Wisconsin Gas accrues for these
anticipated benefits in recognition that these benefits are a type
of deferred compensation incurred as employees render the services
necessary to earn their postretirement benefits. The benefit
accrual includes unfunded past service costs which are being
amortized over 20 years.
Effective January 1, 1992, Wisconsin Gas adopted SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," for its retiree benefit plans. Under SFAS No. 106, the
Company is required to accrue the estimated cost of retiree benefit
payments, other than pensions, during the employee's active service
period. Wisconsin Gas, as mandated by the PSCW, recognized the
accumulated postretirement benefit obligation (APBO) and a related
regulatory asset. Accordingly, the cumulative effects for the
Company of adopting SFAS No. 106 on December 31, 1992, were an
increase in the APBO of $54.7 million which was offset by the
related regulatory asset. Total Wisconsin Gas expenses recorded
were $8.0 million for 1991.
Net postretirement health care and life insurance costs
consisted of the following components:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1993 1992
- --------------------------------------------- ---------- ----------
<S> <C> <C>
Service cost $ 2,575 $ 2,475
Interest cost on projected benefit obligation 5,396 5,173
Return on plan assets (1,414) (895)
Amortization of transition obligation 2,651 2,778
Adjustment to utility funded amount - (2,108)
---------- ----------
Net postretirement health care cost $ 9,208 $ 7,423
========== ==========
</TABLE>
The following table sets forth the plans' funded status,
reconciled with amounts recognized in the Company's Statement of
Financial Position at December 31, 1993 and 1992. The Company
funds its postretirement benefit plans based on the maximum tax
deductible amount.<PAGE>
<PAGE> 30
<TABLE>
<CAPTION>
Accumulated benefit obligation
(Thousands of Dollars) 1993 1992
- ----------------------------------------- ---------- ----------
<S> <C> <C>
Retirees $ (32,855) $ (32,679)
Active employees (48,009) (40,576)
---------- ----------
Accumulated Benefit obligation (80,864) (73,255)
Plan assets at fair value 25,753 19,138
---------- ----------
Accumulated benefit obligation
in excess of plan assets (55,111) (54,117)
Unrecognized actuarial loss (gain) 1,216 (569)
---------- ----------
Accrued postretirement benefit cost $ (53,895) $ (54,686)
========== ==========
</TABLE>
The postretirement benefit cost components for 1993 were
calculated assuming health care cost trend rates beginning at 11%
in 1993 and decreasing to 6% in 25 years. The health care cost
trend rate has a significant effect on the amounts reported.
Increasing the assumed health care cost trend rates by one
percentage point in each year would increase the APBO as of
December 31, 1993 by $13.2 million and the aggregate of the service
and interest cost components of postretirement expense by $1.8
million.
The assumed discount rate used in determining the actuarial
present value of the accumulated postretirement benefit obligation
was 7.5% and 7.75% in 1993 and 1992, respectively. Plan assets are
primarily invested in common stock and fixed income securities.
c. Retirement Savings Plans
Wisconsin Gas maintains various employee saving plans
including 401(k) plans which provide employees a mechanism to
contribute amounts up to 16% of their compensation for the year.
Company matching contributions may be made up to 5% of eligible
compensation including 1% for the Employee Stock Ownership Plan
(ESOP). Total contributions were $1.3 million, $1.2 million and
$.9 million in 1993, 1992 and 1991, respectively.
d. Employee Stock Ownership Plan
In November 1991 WICOR established an ESOP covering non-union
employees of Wisconsin Gas. The ESOP funds employee benefits of up
to 1% of compensation with WICOR common stock distributed through
the ESOP.
The ESOP used the proceeds from a $10 million, 3-year
adjustable rate loan with a 3.98% interest rate at December 31,
1993, guaranteed by WICOR, to purchase 431,266 shares of original
issue WICOR common stock. Because WICOR has guaranteed the loan,
the unpaid balance is shown as long-term debt with a like amount of
unearned compensation being recorded as a reduction of common
equity on WICOR's balance sheet.
The ESOP trustee is repaying the $10 million loan with
dividends paid on shares of WICOR common stock in the ESOP and with
Wisconsin Gas contributions to the ESOP.<PAGE>
<PAGE> 31
e. Postemployment Benefit Plans
The FASB has issued a new statement SFAS No. 112, "Employers'
Accounting for Postemployment Benefits," to be adopted no later
than January 1, 1994, which requires accrual for all other
postemployment benefits. In management's opinion, any unrecorded
liabilities are expected to be recoverable in future rates and are
not significant.
11. Fair Value of Financial Instruments
The fair value of Wisconsin Gas's long-term debt is estimated
based on the quoted market prices of U.S. Treasury issues having a
similar term to maturity, adjusted for the Company's bond rating
and the present value of future cash flows.
Because Wisconsin Gas operates in a regulated environment,
WICOR shareholders would probably not be affected by realization of
gains or losses on extinguishment of its outstanding fixed-rate
debt. Realized gains would be refunded to and losses would be
recovered from customers through gas rates.
The estimated fair value of Wisconsin Gas's long-term debt at
December 31, is as follows:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1993 1992
- -------------------------- ---------- ----------
<S> <C> <C>
Carrying amount $ 147,644 $ 149,487
Fair value $ 158,578 $ 160,355
</TABLE>
12. Quarterly Financial Data (Unaudited)
Because seasonal factors significantly affect Wisconsin Gas
operations, the following data is not comparable between quarters
(thousands of dollars):
<TABLE>
<CAPTION>
First Second Third Fourth
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1993 Quarters
Operating Revenues $ 205,426 $ 112,448 $ 81,761 $ 175,200
Operating Income (Loss) 37,647 (1,454) (12,937) 22,933
Net Income (Loss) 21,661 (3,253) (10,747) 12,209
- ----------------------------------------------------------------------------
1992 Quarters
Operating Revenues $ 183,506 $ 83,673 $ 59,944 $ 168,292
Operating Income (Loss) 29,928 (332) (11,733) 25,416
Net Income (Loss) 16,476 (2,490) (9,488) 13,562
- ----------------------------------------------------------------------------
/TABLE
<PAGE>
<PAGE> 32
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY Schedule V
Schedule V--PROPERTY, PLANT AND EQUIPMENT
Year Ended December 31, 1993
Retirements
Balance at or Sales Balance
Beginning at Cost at End
Major Classifications of Period Additions (Note 1) Other Changes of Period
- ------------------------------------- ----------- ----------- ------------- ------------- -----------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
GAS UTILITY PLANT, at original cost:
Production $ 784 $ 8 $ 6 $ - $ 786
Storage 1,377 - - - 1,377
Transmission 14,106 - - - 14,106
Distribution 536,571 29,569 1,910 - 564,230
General 82,017 14,486 3,073 - 93,430
Construction work in progress 3,289 (2,326) - - 963
Intangibles 211 - - - 211
----------- ----------- ------------- ------------- -----------
638,355 41,737 4,989 - 675,103
OTHER PHYSICAL PROPERTY, at cost 4,508 516 159 - 4,865
----------- ----------- ------------- ------------- -----------
Total $ 642,863 $ 42,253 $ 5,148 $ - $ 679,968
=========== =========== ============= ============= ===========
<FN>
Note 1 - Retirements for Wisconsin Gas include $100,000 of land.
</TABLE>
<PAGE>
<PAGE> 33
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY Schedule V
Schedule V--PROPERTY, PLANT AND EQUIPMENT
Year Ended December 31, 1992
Balance at Retirements Balance
Beginning or Sales at End
Major Classifications of Period Additions at Cost Other Changes of Period
- ------------------------------------ ---------- --------- ----------- ------------- ---------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
GAS UTILITY PLANT, at original cost:
Production $ 784 $ - $ - $ - $ 784
Storage 1,377 - - - 1,377
Transmission 14,108 - 2 - 14,106
Distribution 486,298 52,589 1,834 (482) 536,571
General 73,838 9,594 1,975 560 82,017
Construction work in progress 4,000 (711) - - 3,289
Intangibles 211 - - - 211
---------- --------- ----------- ------------- ---------
580,616 61,472 3,811 78 638,355
OTHER PHYSICAL PROPERTY, at cost 4,149 653 216 (78) 4,508
---------- --------- ----------- ------------- ---------
Total $ 584,765 $ 62,125 $ 4,027 $ - $642,863
========== ========= =========== ============= =========
</TABLE>
<PAGE>
<PAGE> 34
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY Schedule V
Schedule V--PROPERTY, PLANT AND EQUIPMENT
Year Ended December 31, 1991
Balance at Retirements Balance
Beginning or Sales at End
Major Classifications of Period Additions at Cost (1) Other Changes of Period
- ------------------------------------ ---------- --------- ----------- ------------- ---------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
GAS UTILITY PLANT, at original cost:
Production $ 784 $ - $ - $ - $ 784
Storage 1,377 - - - 1,377
Transmission 14,177 24 2 (91) 14,108
Distribution 465,423 22,863 1,988 - 486,298
General 68,312 8,088 2,562 - 73,838
Construction work in progress 993 3,007 - - 4,000
Intangibles 211 - - - 211
---------- --------- ----------- ------------- ---------
551,277 33,982 4,552 (91) 580,616
OTHER PHYSICAL PROPERTY, at cost 3,783 491 216 91 4,149
---------- --------- ----------- ------------- ---------
Total $ 555,060 $ 34,473 $ 4,768 $ - $584,765
========== ========= =========== ============= =========
<FN>
Note 1 - Retirements for Wisconsin Gas include $46,000 of land.
</TABLE>
<PAGE>
<PAGE> 35
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY Schedule VI
SCHEDULE VI--ACCUMULATED DEPRECIATION
Year Ended December 31, 1993
Additions (Note 2)
----------------------- Deductions
Provisions Charged to ----------------------------
Balance at ----------------------- Retirements Removal Balance
Beginning Clearing and or Sales Cost, Less at End
Description of Period Income Other Accounts at Cost Salvage Other of Period
- -------------------------- ----------- -------- -------------- ----------- ---------- ----- ----------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
GAS UTILITY PLANT:
General $ 293,462 $27,624 $ - $ 3,002 $ 783 $ - $ 317,301
Amortization of other
limited-term
utility investments 1,439 268 - - - - 1,707
Transportation, tools
and work equipment 8,512 - 1,610 1,887 (405) 404 8,236
Retirement work
in progress - - - - - - -
----------- -------- -------------- ----------- ---------- ----- ----------
303,413 27,892(a) 1,610 4,889 378 404 327,244
OTHER PHYSICAL PROPERTY 2,638 536(b) - 159 - - 3,015
----------- -------- -------------- ----------- ---------- ----- ----------
Total accumulated
depreciation $ 306,051 $28,428 $ 1,610(b) $ 5,048 $ 378 $404 $ 330,259
=========== ======== ============== =========== ========== ===== ==========
<FN>
Notes 1 - Composite depreciation rates approximated 4.7% for 1993
2 Provisions charged per the Statement of Cash Flows were as follows:
(a) Depreciation as shown per the accompanying Statement of Income $ 27,892
(b) Depreciation charged to other income, clearing and other accounts 2,146
Amortization charged to income accounts 4,748
--------
Depreciation and amortization as shown per the accompanying Statement of Cash Flows $34,786
========
/TABLE
<PAGE>
<PAGE> 36
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY Schedule VI
SCHEDULE VI--ACCUMULATED DEPRECIATION
Year Ended December 31, 1992
Additions (Note 2)
----------------------- Deductions
Provisions Charged to --------------------------------
Balance at ----------------------- Retirements Removal Balance
Beginning Clearing an or Sales Cost, Less at End
Description of Period Income Other Accounts at Cost Salvage Other of Period
- ----------------------- --------- -------- -------------- ----------- ---------- ------- ---------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
GAS UTILITY PLANT:
General $272,115 $ 25,245 $ - $ 3,235 $ 666 $ (3) $293,462
Amortization of other
limited-term utility
investments 1,220 232 - 8 5 - 1,439
Transportation, tools
and work equipment 7,386 - 1,694 568 (103) 103 8,512
Retirement work
in progress (10) - - - (10) - -
--------- -------- -------------- ----------- ---------- ------- ---------
280,711 25,477(a) 1,694 3,811 558 100 303,413
OTHER PHYSICAL PROPERTY 2,364 490(b) - 216 - - 2,638
--------- -------- -------------- ----------- ---------- ------- ---------
Total accumulated
depreciation $283,075 $ 25,967 $ 1,694(b) $ 4,027 $ 558 $ 100 $306,051
========= ======== ============== =========== ========== ======= =========
<FN>
Notes 1 - Composite depreciation rates approximated 4.7% for 1992
2 Provisions charged per the Statement of Cash Flows were as follows:
(a) Depreciation as shown per the accompanying Statement of Income $25,477
(b) Depreciation charged to other income, clearing and other accounts 2,184
Amortization charged to income accounts 2,859
-------
Depreciation and amortization as shown per the accompanying Statement of Cash Flows $30,520
=======
/TABLE
<PAGE>
<PAGE> 37
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY Schedule VI
SCHEDULE VI--ACCUMULATED DEPRECIATION
Year Ended December 31, 1991
Additions (Note 2)
----------------------- Deductions
Provisions Charged to -------------------------------
Balance at ----------------------- Retirements Removal Balance at
Beginning Clearing and or Sales Cost, Less End of
Description of Period Income Other Accounts at Cost Salvage Other Period
- ---------------------- ---------- -------- -------------- ----------- ---------- ------- ----------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C>
GAS UTILITY PLANT:
General $ 251,711 $23,700 $ - $ 2,735 $ 635 $ (74) $ 272,115
Amortization of
other limited-term
utility investments 1,020 200 - - - - 1,220
Transportation, tools
and work equipment 7,441 - 1,716 1,771 (290) 290 7,386
Retirement work
in progress (56) - - - (46) - (10)
---------- -------- -------------- ----------- ---------- ------- ----------
260,116 23,900(a) 1,716 4,506 299 216 280,711
OTHER PHYSICAL PROPERTY 2,133 447(b) - 216 - - 2,364
---------- -------- -------------- ----------- ---------- ------- ----------
Total accumulated
depreciation $ 262,249 $24,347 $ 1,716(b) $ 4,722 $ 299 $ 216 $ 283,075
========== ======== ============== =========== ========== ======= ==========
<FN>
Notes 1 - Composite depreciation rates approximated 4.7% for 1991
2 Provisions charged per the Statement of Cash Flows were as follows:
(a) Depreciation as shown per the accompanying Statement of Income $23,900
(b) Depreciation charged to other income, clearing and other accounts 2,163
Amortization charged to income accounts 2,306
--------
Depreciation and amortization as shown per the accompanying Statement of Cash Flows $28,369
========
</TABLE>
<PAGE>
<PAGE> 38
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY Schedule VIII
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1993, 1992 and 1991
Additions
------------------------ Deductions From
Provisions Charged to Reserves for
Balance at ----------------------- Purposes for
Balance
Beginning Other Which the Reserves at End
Description of Period Income (Note 1) Were Provided of Period
----------- ---------- ---------- ---------- ------------------ ----------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:
- -----------------------------
Reserves deducted from assets in
the accompanying Balance Sheet-
Allowance for doubtful accounts $ 5,452 $ 12,979 $ 1,684 $ 12,750 $ 7,365
========== ========== ========== ================== ==========
Year Ended December 31, 1992:
- ----------------------------
Reserves deducted from assets in
the accompanying Balance Sheet-
Allowance for doubtful accounts $ 3,736 $ 10,830 $ 3,546 $ 12,660 $ 5,452
========== ========== ========== ================== ==========
Year Ended December 31, 1991:
- ----------------------------
Reserves deducted from assets in
the accompanying Balance Sheet-
Allowance for doubtful accounts $ 2,759 $ 11,027 $ 742 $ 10,792 $ 3,736
========== ========== ========== ================== ==========
<FN>
Note 1 Other provisions primarily represent deferred provisions for doubtful accounts over or (under)
the amount allowed for ratemaking purposes of $12,931,000, $10,807,000, and $10,912,000 in 1993,
1992, and 1991, respectively, less amortizations of $1,166,000, $(1,046,000), and $(742,000) in
1993, 1992 and 1991, respectively, relating to deferrals from prior years, as ordered by the
PSCW. See Note 1d of Notes to Financial Statements.
/TABLE
<PAGE>
<PAGE> 39
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY Schedule IX
SCHEDULE IX--SHORT-TERM BORROWINGS
Years Ended December 31, 1993, 1992 and 1991
Daily
Category of Balance Weighted Maximum Amount Average Amount Weighted Average
Aggregate short- at End Average Outstanding Outstanding Interest Rate
term Borrowings of Period Interest Rat During the Period During the Period During the Period
- ----------------- ------------ --------------- ----------------- ----------------- -----------------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
1993
- ----
Commercial paper $ 108,000 3.3% $ 108,000 $ 49,424 3.3%
1992
- ----
Commercial paper $ 49,000 3.6% $ 49,000 $ 11,515 3.6%
1991
- ----
Commercial paper $ 12,000 4.5% $ 35,000 $ 7,640 6.1%
</TABLE>
<PAGE>
<PAGE> 40
<TABLE>
<CAPTION>
Schedule X
WISCONSIN GAS COMPANY
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
Years Ended December 31, 1993, 1992 and 1991
Year Ended December 31,
---------------------------------
1993 1992 1991
---------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Taxes, other than income taxes:
Gross receipts tax $ 4,805 $ 4,604 $ 4,419
Other 4,258 3,944 3,855
--------- --------- ---------
Total $ 9,063 $ 8,548 $ 8,274
========= ========= =========
<FN>
Amortization of intangible assets and advertising costs did not exceed one
percent of Operating Revenues as shown in the related Statement of Income,
and thus are not set forth above.
Maintenance expense is included in the related Statement of Income and thus
is not set forth above.
</TABLE>
<PAGE>
<PAGE> 41
TABLE OF CONTENTS
TO EXHIBITS
PAGE
3.1 Wisconsin Gas Company Restated Articles of
Incorporation, as amended (incorporated by
reference)
3.2* Wisconsin Gas Company By-Laws, as amended
4.1 Indenture of Mortgage and Deed of Trust dated as of
November 1, 1950, between Milwaukee Gas Light
Company and Mellon National Bank and Trust Company
and D. A. Hazlett, Trustees (incorporated by
reference)
4.2 Eleventh Supplemental Indenture dated as of
February 15, 1982, between Wisconsin Gas Company and
Mellon Bank, N.A., and N. R. Smith, Trustees
(incorporated by reference)
4.3 Bond Purchase Agreement dated December 31, 1981,
between Wisconsin Gas Company and Teachers Insurance
and Annuity Association of America relating to the
issuance and sale of $30,000,000 principal amount of
First Mortgage Bonds, Adjustable Rate Series due
2002 (incorporated by reference)
4.4 Indenture dated as of September 1, 1990, between
Wisconsin Gas Company and First Wisconsin Trust
Company, Trustee (incorporated by reference)
4.5 Officers' Certificate dated as of November 28, 1990,
setting forth the terms of Wisconsin Gas Company's
9-1/8% Notes due 1997 (incorporated by reference)
4.6 Officers' Certificate dated as of November 19, 1991,
setting forth the terms of Wisconsin Gas Company's
7-1/2% Notes due 1988 (incorporated by reference)
4.7 Officers' Certificate, dated as of September 15,
1993, setting forth the terms of the Company's 6.60%
Debentures due 2013 (incorporated by reference)
4.8 Revolving Credit and Term Loan Agreement dated as of
March 29, 1993, among Wisconsin Gas Company and
Citibank, N.A., Firstar Bank of Milwaukee, N. A.,
Harris Trust Savings Bank, M&I Marshall & Ilsley
Bank and Citibank, N.A., as Agent (incorporated by
reference)
4.9 Loan Agreement dated as of November 4, 1991, by and
among M&I Marshall & Ilsley Bank, Wisconsin Gas
Company Employees' Savings Plan Trust and WICOR,
Inc. (incorporated by reference).
10.1 Service Agreement dated as of January 1, 1988, among
WICOR, Inc., Wisconsin Gas Company, Sta-Rite
Industries, Inc. and WEXCO of Delaware, Inc.
(incorporated by reference)
(i)<PAGE>
<PAGE> 42
PAGE
10.2# WICOR, Inc. 1987 Stock Option Plan, as amended
(incorporated by reference)
10.3# Form of nonstatutory stock option agreement used in
connection with WICOR, Inc. 1987 Stock Option Plan
(incorporated by reference)
10.4# WICOR, Inc. 1992 Director Stock Option Plan
(incorporated by reference)
10.5# Form of nonstatutory stock option agreement used in
conjunction with the WICOR, Inc. 1992 Director Stock
Option Plan (incorporated by reference)
10.6#* Wisconsin Gas Company Principal Officers'
Supplemental Retirement Income Program
10.7#* Wisconsin Gas Company 1994 Officers' Incentive
Compensation Plan
10.8# Wisconsin Gas Company Officers' Medical Expense
Reimbursement Plan (incorporated by reference)
10.9# Wisconsin Gas Company Group Travel Accident Plan
(incorporated by reference)
10.10# Form of Deferred Compensation Agreement between
Wisconsin Gas Company and certain of its officers
(incorporated by reference)
10.11# WICOR, Inc. Retirement Plan for Directors, as
amended (incorporated by reference)
13* "Financial Review" portion of WICOR, Inc. 1993
Annual Report to Shareholders
* Indicates document filed herewith
# Indicates a plan under which compensation is paid or
payable to directors or executive officers of the
Company.
(ii) <PAGE>
<PAGE>
<PAGE> 1
BY-LAWS
OF
WISCONSIN GAS COMPANY
(a Wisconsin corporation)
Effective August 1, 1993
<PAGE>
<PAGE> 2
ARTICLE I. OFFICES
1.01. Principal and Business Offices. The corporation may
have such principal and other business offices, either within or
without the State of Wisconsin, as the Board of Directors may
designate or as the business of the corporation may require from time
to time.
1.02. Registered Office. The registered office of the
corporation required by the Wisconsin Business Corporation Law to be
maintained in the State of Wisconsin may be, but need not be,
identical with the principal office in the State of Wisconsin, and
the address of the registered office may be changed from time to time
by the Board of Directors or by the registered agent. The business
office of the registered agent of the corporation shall be identical
to such registered office.
ARTICLE II. SHAREHOLDERS
2.01. Annual Meeting. The annual meeting of the
shareholders shall be held on the fourth Thursday in April of each
year at 9:00 a.m. local time, or at such other time and date within
thirty days before or after such date as may be fixed by or under the
authority of the Board of Directors, for the purpose of electing
directors and for the transaction of such other business as may come
before the meeting. If the day fixed for the annual meeting shall be
a legal holiday in the State of Wisconsin, such meeting shall be held
on the next succeeding business day.
2.02. Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise
prescribed by the Wisconsin Business Corporation Law, may be called
by the Board of Directors, the Chairman, the Vice Chairman or the
President. The corporation shall call a special meeting of
shareholders in the event that the holders of at least 10% of all of
the votes entitled to be cast on any issue proposed to be considered
at the proposed special meeting sign, date and deliver to the
corporation one or more written demands for the meeting describing
one or more purposes for which it is to be held. The corporation
shall give notice of such a special meeting within thirty (30) days
after the date that the demand is delivered to the corporation.
2.03. Place of Meeting. The Board of Directors may
designate any place, either within or without the State of Wisconsin,
as the place of meeting for any annual or special meeting of
shareholders. If no designation is made, the place of meeting shall
be the principal office of the corporation. Any meeting may be
adjourned to reconvene at any place designated by vote of the shares
represented thereat.
<PAGE>
<PAGE> 3
2.04. Notice of Meeting. Written notice stating the date,
time and place of any meeting of shareholders and, in case of a
special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than ten (10) days nor more than
sixty (60) days before the date of the meeting (unless a different
time is provided by the Wisconsin Business Corporation Law or the
articles of incorporation), either personally or by mail, by or at
the direction of the Chairman, the Vice Chairman, the President or
the Secretary, to each shareholder of record entitled to vote at such
meeting and to such other persons as required by the Wisconsin
Business Corporation Law. If mailed, such notice shall be deemed to
be effective when deposited in the United States mail, addressed to
the shareholder at his or her address as it appears on the stock
record books of the corporation, with postage thereon prepaid. If an
annual or special meeting of shareholders is adjourned to a different
date, time or place, the corporation shall not be required to give
notice of the new date, time or place if the new date, time or place
is announced at the meeting before adjournment; PROVIDED, HOVEVER,
that if a new record date for an adjourned meeting is or must be
fixed, the corporation shall give notice of the adjourned meeting to
persons who are shareholders as of the new record date.
2.05. Waiver of Notice. A shareholder may waive any
notice required by the Wisconsin Business Corporation Law, the
articles of incorporation or these by-laws before or after the date
and time stated in the notice. The waiver shall be in writing and
signed by the shareholder entitled to the notice, contain the same
information that would have been required in the notice under
applicable provisions of the Wisconsin Business Corporation Law
(except that the time and place of meeting need not be stated) and be
delivered to the corporation for inclusion in the corporate records.
A shareholder's attendance at a meeting, in person or by proxy,
waives objection to all of the following: (a) lack of notice or
defective notice of the meeting, unless the shareholder at the
beginning of the meeting or promptly upon arrival objects to holding
the meeting or transacting business at the meeting; and (b)
consideration of a particular matter at the meeting that is not
within the purpose described in the meeting notice, unless the
shareholder objects to considering the matter when it is presented.
2.06. Fixing of Record Date. The Board of Directors may
fix in advance a date as the record date for the purpose of
determining shareholders entitled to notice of and to vote at any
meeting of shareholders, shareholders entitled to demand a special
meeting as contemplated by Section 2.02 hereof, shareholders entitled
to take any other action, or shareholders for any other purpose.
Such record date shall not be more than seventy (70) days prior to
the date on which the particular action, requiring such determination
of shareholders, is to be taken. If no record date is fixed by the
Board of Directors or by the Wisconsin Business Corporation Law for
the determination of shareholders entitled to <PAGE>
<PAGE> 4
notice of and to vote at a meeting of shareholders, the record date
shall be the close of business on the day before the first notice is
given to shareholders. If no record date is fixed by the Board of
Directors or by the Wisconsin Business Corporation Law for the
determination of shareholders entitled to demand a special meeting as
contemplated in Section 2.02 hereof, the record date shall be the
date that the first shareholder signs the demand. Except as provided
by the Wisconsin Business Corporation Law for a court-ordered
adjournment, a determination of shareholders entitled to notice of
and to vote at a meeting of shareholders is effective for any
adjournment of such meeting unless the Board of Directors fixes a new
record date, which it shall do if the meeting is adjourned to a date
more than one hundred twenty (120) days after the date fixed for the
original meeting. The record date for determining shareholders
entitled to a distribution (other than a distribution involving a
purchase, redemption or other acquisition of the corporation's
shares) or a share dividend is the date on which the Board of
Directors authorized the distribution or share dividend, as the case
may be, unless the Board of Directors fixes a different record date.
2.07. Shareholders' List for Meetings. After a record
date for a special or annual meeting of shareholders has been fixed,
the corporation shall prepare a list of the names of all of the
shareholders entitled to notice of the meeting. The list shall be
arranged by class or series of shares, if any, and show the address
of and number of shares held by each shareholder. Such list shall be
available for inspection by any shareholder, beginning two (2)
business days after notice of the meeting is given for which the list
was prepared and continuing to the date of the meeting, at the
corporation's principal office or at a place identified in the
meeting notice in the city where the meeting will be held. A
shareholder or his or her agent may, on written demand, inspect and,
subject to the limitations imposed by the Wisconsin Business
Corporation Law, copy the list, during regular business hours and at
his or her expense, during the period that it is available for
inspection pursuant to this Section 2.07. The corporation shall make
the shareholders' list available at the meeting and any shareholder
or his or her agent or attorney may inspect the list at any time
during the meeting or any adjournment thereof. Refusal or failure to
prepare or make available the shareholders' list shall not affect the
validity of any action taken at a meeting of shareholders.
2.08. Quorum and Voting Requirements. Shares entitled to
vote as a separate voting group may take action on a matter at a
meeting only if a quorum of those shares exists with respect to that
matter. If the corporation has only one class of common stock
outstanding, such class shall constitute a separate voting group for
purposes of this Section 2.08. Except as otherwise provided in the
articles of incorporation, any by-law adopted under authority granted
in the articles of incorporation, or the Wisconsin Business
Corporation Law, a majority of the votes entitled to be cast on the
matter shall constitute a quorum of the voting group for action on<PAGE>
<PAGE> 5
that matter. Once a share is represented for any purpose at a
meeting, other than for the purpose of objecting to holding the
meeting or transacting business at the meeting, it is considered
present for purposes of determining whether a quorum exists for the
remainder of the meeting and for any adjournment of that meeting
unless a new record date is or must be set for the adjourned meeting.
If a quorum exists, except in the case of the election of directors,
action on a matter shall be approved if the votes cast within the
voting group favoring the action exceed the votes cast opposing the
action, unless the articles of incorporation, any by-law adopted
under authority granted in the articles of incorporation, or the
Wisconsin Business Corporation Law requires a greater number of
affirmative votes. Unless otherwise provided in the articles of
incorporation, directors shall be elected by a plurality of the votes
cast by the shares entitled to vote in the election of directors at
a meeting at which a quorum is present. For purposes of this Section
2.08, "plurality" means that the individuals with the largest number
of votes are elected as directors up to the maximum number of
directors to be chosen at the meeting. Though less than a quorum of
the outstanding votes of a voting group are represented at a meeting,
a majority of the votes so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at
which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as
originally noticed.
2.09. Conduct of Meeting. The Chairman, and in his or her
absence, the Vice Chairman, and in his or her absence, the President,
and in his or her absence, a Vice President in the order provided
under Section 4.10 hereof, and in their absence, any person chosen by
the shareholders present shall call the meeting of the shareholders
to order and shall act as chairman of the meeting, and the Secretary
of the corporation shall act as secretary of all meetings of the
shareholders, but, in the absence of the Secretary, the presiding
officer may appoint any other person to act as secretary of the
meeting.
2.10. Proxies. At all meetings of shareholders, a
shareholder may vote his or her shares in person or by proxy. A
shareholder may appoint a proxy to vote or otherwise act for the
shareholder by signing an appointment form, either personally or by
his or her attorney-in-fact. An appointment of a proxy is effective
when received by the Secretary or other officer or agent of the
corporation authorized to tabulate votes. An appointment is valid
for eleven (11) months from the date of its signing unless a
different period is expressly provided in the appointment form. The
presence of a shareholder who has filed a proxy shall not of itself
constitute revocation. The Board of Directors shall have the power
and authority to make rules establishing presumptions as to the
validity and sufficiency of proxies.
<PAGE>
<PAGE> 6
2.11. Voting of Shares. Except as provided in the
articles of incorporation or in the Wisconsin Business Corporation
Law, each outstanding share, regardless of class, is entitled to one
vote on each matter voted on at a meeting of shareholders.
2.12. Action without Meeting. Any action required or
permitted by the articles of incorporation or these by-laws or any
provision of the Wisconsin Business Corporation Law to be taken at a
meeting of the shareholders may be taken without a meeting and
without action by the Board of Directors if a written consent or
consents, describing the action so taken, is signed by all of the
shareholders entitled to vote with respect to the subject matter
thereof and delivered to the corporation for inclusion in the
corporate records.
2.13. Acceptance of Instruments Showing Shareholder
Action. If the name signed on a vote, consent, waiver or proxy
appointment corresponds to the name of a shareholder, the
corporation, if acting in good faith, may accept the vote, consent,
waiver or proxy appointment and give it effect as the act of a
shareholder. If the name signed on a vote, consent, waiver or proxy
appointment does not correspond to the name of a shareholder, the
corporation, if acting in good faith, may accept the vote, consent,
waiver or proxy appointment and give it effect as the act of the
shareholder if any of the following apply:
(a) The shareholder is an entity and the name signed
purports to be that of an officer or agent of the entity.
(b) The name purports to be that of a personal
representative, administrator, executor, guardian or conservator
representing the shareholder and, if the corporation requests,
evidence of fiduciary status acceptable to the corporation is
presented with respect to the vote, consent, waiver or proxy
appointment.
(c) The name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the corporation
requests, evidence of this status acceptable to the corporation is
presented with respect to the vote, consent, waiver or proxy
appointment.
(d) The name signed purports to be that of a pledgee,
beneficial owner, or attorney-in-fact of the shareholder and, if the
corporation requests, evidence acceptable to the corporation of the
signatory's authority to sign for the shareholder is presented with
respect to the vote, consent, waiver or proxy appointment.
(e) Two or more persons are the shareholders as co-tenants
or fiduciaries and the name signed purports to be the name of at
least one of the co-owners and the person signing appears to be
acting on behalf of all co-owners.
<PAGE>
<PAGE> 7
The corporation may reject a vote, consent, waiver or proxy
appointment if the Secretary or other officer or agent of the
corporation who is authorized to tabulate votes, acting in good
faith, has reasonable basis for doubt about the validity of the
signature on it or about the signatory's authority to sign for the
shareholder.
ARTICLE III. BOARD OF DIRECTORS
3.01. General Powers, Classification and Number. All
corporate powers shall be exercised by or under the authority of, and
the business affairs of the corporation managed under the direction
of, the Board of Directors. The number of directors of the
corporation shall be eleven (11).
3.02. Tenure and Qualifications. Each director shall hold
office until the next annual meeting of shareholders and until his or
her successor shall have been elected and, if necessary, qualified,
or until his or her prior retirement, death, resignation or removal.
The retirement or resignation of a director who is an officer of this
corporation or an affiliated corporation, but not also the chief
executive officer of this corporation's parent corporation, shall
take effect at the time he or she ceases to hold his or her position
as an officer of this corporation or an affiliated corporation. Any
other director shall resign from the Board of Directors effective as
of the annual meeting of shareholders next following the date on
which he or she attains the age of seventy (70) years. A director
may be removed from office at a meeting of the shareholders called
for the purpose of removing the director, and the meeting notice
shall state that the purpose, or one of the purposes, of the meeting
is removal of the director. A director may be removed from office
with or without cause if the number of votes cast to remove the
director exceeds the number of votes cast not to remove such
director. A director may resign at any time by delivering written
notice which complies with the Wisconsin Business Corporation Law to
the Board of Directors, to the Chairman or to the corporation. A
director's resignation is effective when the notice is delivered
unless the notice specifies a later effective date. Directors need
not be residents of the State of Wisconsin or shareholders of the
corporation. No other restrictions, limitations or qualifications
may be imposed on individuals for service as a director.
3.03. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this by-law
immediately after the annual meeting of shareholders and each
adjourned session thereof. The place of such regular meeting shall
be the principal business office of the corporation in the State of
Wisconsin, or such other suitable place as may be announced at such
meeting of shareholders. The Board of Directors may provide, by
resolution, the date, time and place, either within or without the
State of Wisconsin, for the holding of additional regular meetings of
the Board of Directors without other notice than such resolution.
<PAGE>
<PAGE> 8
3.04. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman, the
Vice Chairman, the President, Secretary or any two (2) directors.
The Chairman, the Vice Chairman, the President or Secretary may fix
any place, either within or without the State of Wisconsin, as the
place for holding any special meeting of the Board of Directors, and
if no other place is fixed the place of the meeting shall be the
principal business office of the corporation in the State of
Wisconsin.
3.05. Notice; Waiver. Notice of each meeting of the Board
of Directors (unless otherwise provided in or pursuant to Section
3.03) shall be given by written notice delivered or communicated in
person, by telegraph, teletype, facsimile or other form of wire or
wireless communication, or by mail or private carrier, to each
director at his business address or at such other address as such
director shall have designated in writing filed with the Secretary,
in each case not less than forty-eight (48) hours prior to the
meeting. The notice need not describe the purpose of the meeting of
the Board of Directors or the business to be transacted at such
meeting. If mailed, such notice shall be deemed to be effective when
deposited in the United States mail so addressed, with postage
thereon prepaid. If notice is given by telegram, such notice shall
be deemed to be effective when the telegram is delivered to the
telegraph company. If notice is given by private carrier, such
notice shall be deemed to be effective when delivered to the private
carrier. Whenever any notice whatever is required to be given to any
director of the corporation under the articles of incorporation or
these by-laws or any provision of the Wisconsin Business Corporation
Law, a waiver thereof in writing, signed at any time, whether before
or after the date and time of meeting, by the director entitled to
such notice shall be deemed equivalent to the giving of such notice.
The corporation shall retain any such waiver as part of the permanent
corporate records. A director's attendance at or participation in a
meeting waives any required notice to him or her of the meeting
unless the director at the beginning of the meeting or promptly upon
his or her arrival objects to holding the meeting or transacting
business at the meeting and does not thereafter vote for or assent to
action taken at the meeting.
3.06. Quorum. Except as otherwise provided by the
Wisconsin Business Corporation Law or by the articles of
incorporation or these by-laws, a majority of the number of directors
specified in Section 3.01 of these by-laws shall constitute a quorum
for the transaction of business at any meeting of the Board of
Directors. Except as otherwise provided by the Wisconsin Business
Corporation Law or by the articles of incorporation or by these
by-laws, a quorum of any committee of the Board of Directors created
pursuant to Section 3.12 hereof shall consist of a majority of the
number of directors appointed to serve on the committee. A majority
of the directors present (though less than such quorum) may adjourn
any meeting of the Board of Directors or any committee thereof, as
the case may be, from time to time without further notice.<PAGE>
<PAGE> 9
3.07. Manner of Acting. The affirmative vote of a
majority of the directors present at a meeting of the Board of
Directors or a committee thereof at which a quorum is present shall
be the act of the Board of Directors or such committee, as the case
may be, unless the Wisconsin Business Corporation Law, the articles
of incorporation or these by-laws require the vote of a greater
number of directors.
3.08. Conduct of Meetings. The Chairman, and in his or
her absence, the Vice Chairman, and in his or her absence, the
President, and in his or her absence, a Vice President in the order
provided under Section 4.10, and in their absence, any director
chosen by the directors present, shall call meetings of the Board of
Directors to order and shall act as chairman of the meeting. The
Secretary of the corporation shall act as secretary of all meetings
of the Board of Directors but in the absence of the Secretary, the
presiding officer may appoint any other person present to act as
secretary of the meeting. Minutes of any regular or special meeting
of the Board of Directors shall be prepared and distributed to each
director.
3.09. Vacancies. Any vacancies occurring in the Board of
Directors, including a vacancy created by an increase in the number
of directors, shall be filled only as provided in the articles of
incorporation. A vacancy that will occur at a specific later date,
because of a resignation effective at a later date or otherwise, may
be filled before the vacancy occurs, but the new director may not
take office until the vacancy occurs.
3.10. Compensation. The Board of Directors, irrespective
of any personal interest of any of its members, may establish
reasonable compensation of all directors for services to the
corporation as directors, officers or otherwise, or may delegate such
authority to an appropriate committee. The Board of Directors also
shall have authority to provide for or delegate authority to an
appropriate committee to provide for reasonable pensions, disability
or death benefits, and other benefits or payments, to directors,
officers and employees and to their estates, families, dependents or
beneficiaries on account of prior services rendered by such
directors, officers and employees to the corporation.
3.11. Presumption of Assent. A director who is present
and is announced as present at a meeting of the Board of Directors or
any committee thereof created in accordance with Section 3.12 hereof,
when corporate action is taken, assents to the action taken unless
any of the following occurs: (a) the director objects at the
beginning of the meeting or promptly upon his or her arrival to
holding the meeting or transacting business at the meeting; (b) the
director dissents or abstains from an action taken and minutes of the
meeting are prepared that show the director's dissent or abstention
from the action taken; (c) the director delivers written notice that
complies with the Wisconsin Business Corporation Law <PAGE>
<PAGE> 10
of his or her dissent or abstention to the presiding officer of the
meeting before its adjournment or to the corporation immediately
after adjournment of the meeting; or (d) the director dissents or
abstains from an action taken, minutes of the meeting are prepared
that fail to show the director's dissent or abstention from the
action taken, and the director delivers to the corporation a written
notice of that failure that complies with the Wisconsin Business
Corporation Law promptly after receiving the minutes. Such right of
dissent or abstention shall not apply to a director who votes in
favor of the action taken.
3.12. Committees. The Board of Directors by resolution
adopted by the affirmative vote of a majority of all of the directors
then in office may create one or more committees, appoint members of
the Board of Directors to serve on the committees and designate other
members of the Board of Directors to serve as alternates. Each
committee shall have two (2) or more members who shall, unless
otherwise provided by the Board of Directors, serve at the pleasure
of the Board of Directors. A committee may be authorized to exercise
the authority of the Board of Directors, except that a committee may
not do any of the following: (a) authorize distributions; (b)
approve or propose to shareholders action that the Wisconsin Business
Corporation Law requires to be approved by shareholders; (c) fill
vacancies on the Board of Directors or, unless the Board of Directors
provides by resolution that vacancies on a committee shall be filled
by the affirmative vote of the remaining committee members, on any
Board committee; (d) amend the corporation's articles of
incorporation; (e) adopt, amend or repeal by-laws; (f) approve a plan
of merger not requiring shareholder approval; (g) authorize or
approve reacquisition of shares, except according to a formula or
method prescribed by the Board of Directors; and (h) authorize or
approve the issuance or sale or contract for sale of shares, or
determine the designation and relative rights, preferences and
limitations of a class or series of shares, except that the Board of
Directors may authorize a committee to do so within limits prescribed
by the Board of Directors. Unless otherwise provided by the Board of
Directors in creating the committee, a committee may employ counsel,
accountants and other consultants to assist it in the exercise of its
authority.
3.13. Alternate Members of Committees. The Board of
Directors may appoint annually and from time to time, as alternate
members of any committee of the Board of Directors, directors to
serve whenever designated by the committee or by the Chairman, the
Vice Chairman or the President to take the place of absent members,
or to fill vacancies on such committee until the next meeting of the
Board of Directors. An alternate member of any committee so
designated to serve shall receive compensation for such service as
fixed by the Board of Directors.
3.14. Telephonic Meetings. Except as herein provided and
notwithstanding any place set forth in the notice of the meeting or
these by-laws, members of the Board of Directors (and any committees
thereof created pursuant to Section 3.12 hereof) may participate in
regular or special meetings by, or through the<PAGE>
<PAGE> 11
use of, any means of communication by which all participants may
simultaneously hear each other, such as by conference telephone. If
a meeting is conducted by such means, then at the commencement of
such meeting the presiding officer shall inform the participating
directors that a meeting is taking place at which official business
may be transacted. Any participant in a meeting by such means shall
be deemed present in person at such meeting. Notwithstanding the
foregoing, no action may be taken at any meeting held by such means
on any particular matter which the presiding officer determines, in
his or her sole discretion, to be inappropriate under the
circumstances for action at a meeting held by such means. Such
determination shall be made and announced in advance of such meeting.
3.15. Action Without Meeting. Any action required or
permitted by the Wisconsin Business Corporation Law to be taken at a
meeting of the Board of Directors or a committee thereof created
pursuant to Section 3.12 hereof may be taken without a meeting if the
action is taken by all members of the Board or of the committee. The
action shall be evidenced by one or more written consents describing
the action taken, signed by each director or committee member and
retained by the corporation. Such action shall be effective when the
last director or committee member signs the consent, unless the
consent specifies a different effective date.
ARTICLE IV. OFFICERS
4.01. Number. The principal officers of the corporation
shall be a Chairman, a President, the number of Vice Presidents as
authorized from time to time by the Board of Directors, a Secretary,
and a Treasurer, each of whom shall be elected by the Board of
Directors. A Vice Chairman and such other officers and assistant
officers as may be deemed necessary may be elected or appointed by
the Board of Directors. The Board of Directors may also authorize
any duly appointed officer to appoint one or more officers or
assistant officers. Any two (2) or more offices may be held by the
same person.
4.02. Election and Term of Office. The officers of the
corporation to be elected by the Board of Directors shall be elected
annually by the Board of Directors at the first meeting of the Board
of Directors held after each annual meeting of the shareholders. If
the election of officers shall not be held at such meeting, such
election shall be held as soon thereafter as is practicable. Each
officer shall hold office until his or her successor shall have been
duly elected or until his or her prior death, resignation or removal.
4.03. Removal. The Board of Directors may remove any
officer and, unless restricted by the Board of Directors or these
by-laws, an officer may remove any officer or assistant officer
appointed by that officer, at any time, with or without cause and
notwithstanding the contract rights, if any, of the officer removed.
The appointment of an officer does not of itself create contract
rights.<PAGE>
<PAGE> 12
4.04. Resignation. An officer may resign at any time by
delivering notice to the corporation that complies with the Wisconsin
Business Corporation Law. The resignation shall be effective when
the notice is delivered, unless the notice specifies a later
effective date and the corporation accepts the later effective date.
4.05. Vacancies. A vacancy in any principal office
because of death, resignation, removal, disqualification or
otherwise, shall be filled by the Board of Directors for the
unexpired portion of the term. If a resignation of an officer is
effective at a later date as contemplated by Section 4.04 hereof, the
Board of Directors may fill the pending vacancy before the effective
date if the Board provides that the successor may not take office
until the effective date.
4.06. Chief Executive Officer. The Board of Directors
shall from time to time designate the Chairman, the Vice Chairman, if
any, or the President as the Chief Executive Officer of the
corporation. The President shall be the Chief Executive Officer when
the offices of Chairman and Vice Chairman are vacant, or when the
Board of Directors has not designated the Chairman or the Vice
Chairman, if any, as Chief Executive Officer. Subject to the control
of the Board of Directors, the Chief Executive Officer shall in
general supervise and control all of the business and affairs of the
corporation and shall perform all duties incident to the office of
Chief Executive Officer and such other duties as may be prescribed by
the Board of Directors from time to time.
4.07. Chairman. The Chairman shall, when present, preside
at all meetings of the shareholders and the Board of Directors. He
or she shall have authority, subject to such rules as may be
prescribed by the Board of Directors, to appoint such agents and
employees of the corporation as he or she shall deem necessary, to
prescribe their powers, duties and compensation, and to delegate
authority to them. Such agents and employees shall hold office at
the discretion of the Chairman. He or she shall have authority to
sign, execute and acknowledge, on behalf of the corporation, all
deeds, mortgages, bonds, stock certificates, contracts, leases,
reports and all other documents or instruments necessary or proper to
be executed in the course of the corporation's regular business, or
which shall be authorized by resolution of the Board of Directors;
and, except as otherwise provided by law or the Board of Directors,
he or she may authorize any other officer or agent of the corporation
to sign, execute and acknowledge such documents or instruments in his
or her place and stead. In general, he or she shall perform all
duties incident to the office of Chairman and such other duties as
may be prescribed by the Board of Directors from time to time.
<PAGE>
<PAGE> 13
4.08. Vice Chairman. The Vice Chairman, if any, shall
have such authority and responsibilities as may be prescribed by the
Board of Directors from time to time. In the absence of the
Chairman, or in the event of the Chairman's death or inability to
act, or in the event for any reason it shall be impracticable for the
Chairman to act personally, the Vice Chairman shall perform the
duties of the Chairman, and when so acting, shall have all the powers
of and be subject to all of the restrictions upon the Chairman. He
or she shall have authority, subject to such rules as may be
prescribed by the Board of Directors, to appoint such agents and
employees of the corporation as he or she shall deem necessary, to
prescribe their powers, duties and compensation, and to delegate
authority to them. Such agents shall hold office at the discretion
of the Vice Chairman. He or she shall have authority to sign,
execute and acknowledge, on behalf of the corporation, all deeds,
mortgages, bonds, stock certificates, contracts, leases, reports and
all other documents or instruments necessary or proper to be executed
in the course of the corporation's regular business, or which shall
be authorized by resolution of the Board of Directors; and, except as
otherwise provided by law or the Board of Directors, he or she may
authorize the President or other officer or agent of the corporation
to sign, execute and acknowledge such documents or instruments in his
or per place and stead. In general, he or she shall perform all
duties incident to the office of Vice Chairman and such other duties
as may be prescribed by the Chairman or the Board of Directors from
time to time.
4.09. President. Subject to Section 4.06 hereof, the
President shall be the Chief Executive Officer of the corporation
and, subject to the control of the Board of Directors, shall
supervise and control all the affairs of the corporation. In the
absence of the Vice Chairman, or in the event of the Vice Chairman's
death or inability to act, or in the event for any reason it shall be
impracticable for the Vice Chairman to act personally, the President
shall perform the duties of the Vice Chairman, and when so acting,
shall have all the powers of and be subject to all the restrictions
upon the Vice Chairman. He or she shall have authority, subject to
such rules as may be prescribed by the Board of Directors, to appoint
such agents and employees of the corporation as he or she shall deem
necessary, to prescribe their powers, duties and compensation, and to
delegate authority to them. Such agents shall hold office at the
discretion of the President. He or she shall have authority to sign,
execute and acknowledge, on behalf of the corporation, all deeds,
mortgages, bonds, stock certificates, contracts, leases, reports and
all other documents or instruments necessary or proper to be executed
in the course of the corporation's regular business, or which shall
be authorized by resolution of the Board of Directors; and, except as
otherwise provided by law or the Board of Directors, he or she may
authorize any other officer or agent of the corporation to sign,
execute and acknowledge such documents or instruments in his or her
place and stead. In general, he or she shall perform all duties
incident to the office of President and such other duties as may be
prescribed by the Chairman, or the Vice Chairman, if any, or the
Board of Directors from time to time.<PAGE>
<PAGE> 14
4.10. The Vice Presidents. In the absence of the
President, or in the event of the President's death, inability or
refusal to act, or in the event for any reason it shall be
impracticable for the President to act personally, the Vice President
(or in the event there be more than one Vice President, the Vice
Presidents in the order designated by the Board of Directors, or in
the absence of any designation, then in the order of their election)
shall perform the duties of the President and, when so acting, shall
have all the powers of and be subject to all the restrictions upon
the President. Any Vice President may sign, with the Secretary or
Assistant Secretary, certificates for shares of the corporation; and
shall perform such other duties and have such authority as from time
to time may be delegated or assigned to him or her by the Chairman,
the Vice Chairman, the President or the Board of Directors. The
execution of any instrument of the corporation by any Vice President
shall be conclusive evidence, as to third parties, of his or her
authority to act in the stead of the Chairman, the Vice Chairman or
the President.
4.11. The Secretary. The Secretary shall: (a) keep
minutes of the meetings of the shareholders and of the Board of
Directors (and of committees thereof) in one or more books provided
for that purpose (including records of actions taken by the
shareholders or the Board of Directors (or committees thereof)
without a meeting); (b) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by the
Wisconsin Business Corporation Law; (c) be custodian of the corporate
records and of the seal of the corporation and see that the seal of
the corporation is affixed to all documents the execution of which on
behalf of the corporation under its seal is duly authorized; (d)
maintain a record of the shareholders of the corporation, in a form
that permits preparation of a list of the names and addresses of all
shareholders, by class or series of shares and showing the number and
class or series of shares held by each shareholder; (e) sign with the
Chairman, the Vice Chairman, the President or a Vice President,
certificates for shares of the corporation, the issuance of which
shall have been authorized by resolution of the Board of Directors;
(f) have general charge of the stock transfer books of the
corporation; and (g) in general perform all duties incident to the
office of Secretary and have such other duties and exercise such
authority as from time to time may be delegated or assigned by the
Chairman, the Vice Chairman, the President or the Board of Directors.
4.12. The Treasurer. The Treasurer shall: (a) have
charge and custody of and be responsible for all funds and securities
of the corporation; (b) maintain appropriate accounting records; (c)
receive and give receipts for moneys due and payable to the
corporation from any source whatsoever, and deposit all such moneys
in the name of the corporation in such banks, trust companies or
other depositaries as shall be selected in accordance with the
provisions of Section 5.04; and (d) in general perform all of the
duties incident to the office of Treasurer and have such other duties
and exercise such other authority as from time to time<PAGE>
<PAGE> 15
may be delegated or assigned by the Chairman, the Vice Chairman, the
President or the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge
of his or her duties in such sum and with such surety or sureties as
the Board of Directors shall determine.
4.13. Assistant Secretaries and Assistant Treasurers.
There shall be such number of Assistant Secretaries and Assistant
Treasurers as the Board of Directors may from time to time authorize.
The Assistant Secretaries may sign with the Chairman, the Vice
Chairman, the President or a Vice President certificates for shares
of the corporation the issuance of which shall have been authorized
by a resolution of the Board of Directors. The Assistant Treasurers
shall respectively, if required by the Board of Directors, give bonds
for the faithful discharge of their duties in such sums and with such
sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such
duties and have such authority as shall from time to time be
delegated or assigned to them by the Secretary or the Treasurer,
respectively, or by the Chairman, the Vice Chairman, the President or
the Board of Directors.
4.14. Other Assistants and Acting Officers. The Board of
Directors shall have the power to appoint, or to authorize any duly
appointed officer of the corporation to appoint, any person to act as
assistant to any officer, or as agent for the corporation in his or
her stead, or to perform the duties of such officer whenever for any
reason it is impracticable for such officer to act personally, and
such assistant or acting officer or other agent so appointed by the
Board of Directors or an authorized officer shall have the power to
perform all the duties of the office to which he or she is so
appointed to be an assistant, or as to which he or she is so
appointed to act, except as such power may be otherwise defined or
restricted by the Board of Directors or the appointing officer.
ARTICLE V. CONTRACTS, LOANS, CHECKS
AND DEPOSITS; SPECIAL CORPORATE ACTS
5.01. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or
execute or deliver any instrument in the name of and on behalf of the
corporation, and such authorization may be general or confined to
specific instances. In the absence of other designation, all deeds,
mortgages and instruments of assignment or pledge made by the
corporation shall be executed in the name of the corporation by the
Chairman, the Vice Chairman, the President or one of the Vice
Presidents and by the Secretary, an Assistant Secretary, the
Treasurer or an Assistant Treasurer; the Secretary or an Assistant
Secretary, when necessary or required, shall affix the corporate
seal, if any, thereto; and when so executed no other party to such
instrument or any third party shall be required to make any inquiry
into the authority of the signing officer or officers.
<PAGE>
<PAGE> 16
5.02. Loans. No indebtedness for borrowed money shall be
contracted on behalf of the corporation and no evidences of such
indebtedness shall be issued in its name unless authorized by or
under the authority of a resolution of the Board of Directors. Such
authorization may be general or confined to specific instances.
5.03. Checks, Drafts, etc. All checks, drafts or other
orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the corporation, shall be signed
by such officer or officers, agent or agents of the corporation and
in such manner as shall from time to time be determined by or under
the authority of a resolution of the Board of Directors.
5.04. Deposits. All funds of the corporation not
otherwise employed shall be deposited from time to time to the credit
of the corporation in such banks, trust companies or other
depositaries as may be selected by or under the authority of a
resolution of the Board of Directors.
5.05. Voting of Securities Owned by this Corporation.
Subject always to the specific directions of the Board of Directors,
(a) any shares or other securities issued by any other corporation
and owned or controlled by this corporation may be voted at any
meeting of security holders of such other corporation by the Chairman
of this corporation if he or she be present, or in his or her
absence, by the Vice Chairman of this corporation if he or she be
present, or in his or her absence, by the President of this
corporation if he or she be present, or in his or her absence by any
Vice President of this corporation who may be present, and (b)
whenever, in the judgment of the Chairman, or in his or her absence,
of the Vice Chairman, or in his or her absence, of the President, or
in his or her absence, any Vice President, it is desirable for this
corporation to execute a proxy or written consent in respect to any
shares or other securities issued by any other corporation and owned
by this corporation, such proxy or consent shall be executed in the
name of this corporation by the Chairman, the Vice Chairman, the
President or one of the Vice Presidents of this corporation, without
necessity of any authorization by the Board of Directors, affixation
of corporate seal, if any, or countersignature or attestation by
another officer. Any person or persons designated in the manner
above stated as the proxy or proxies of this corporation shall have
full right, power and authority to vote the shares or other
securities issued by such other corporation and owned by this
corporation the same as such shares or other securities might be
voted by this corporation.
<PAGE>
<PAGE> 17
ARTICLE VI. CERTIFICATES FOR SHARES; TRANSFER OF SHARES
6.01. Certificates for Shares. Certificates representing
shares of the corporation shall be in such form, consistent with the
Wisconsin Business Corporation Law, as shall be determined by the
Board of Directors. Such certificates shall be signed by the
Chairman, the Vice Chairman, the President or a Vice President and by
the Secretary or an Assistant Secretary. All certificates for shares
shall be consecutively numbered or otherwise identified. The name
and address of the person to whom the shares represented thereby are
issued, with the number of shares and date of issue, shall be entered
on the stock transfer books of the corporation. All certificates
surrendered to the corporation for transfer shall be cancelled and no
new certificate shall be issued until the former certificate for a
like number of shares shall have been surrendered and cancelled,
except as provided in Section 6.06.
6.02. Facsimile Signatures and Seal. The seal of the
corporation on any certificates for shares may be a facsimile. The
signature of the Chairman, the Vice Chairman, the President or Vice
President and the Secretary or Assistant Secretary upon a certificate
may be facsimiles if the certificate is manually signed on behalf of
a transfer agent, or a registrar, other than the corporation itself
or an employee of the corporation.
6.03. Signature by Former Officers. The validity of a
share certificate is not affected if a person who signed the
certificate (either manually or in facsimile) no longer holds office
when the certificate is issued.
6.04. Transfer of Shares. Prior to due presentment of a
certificate for shares for registration of transfer the corporation
may treat the registered owner of such shares as the person
exclusively entitled to vote, to receive notifications and otherwise
to have and exercise all the rights and power of an owner. Where a
certificate for shares is presented to the corporation with a request
to register for transfer, the corporation shall not be liable to the
owner or any other person suffering loss as a result of such
registration of transfer if (a) there were on or with the certificate
the necessary endorsements, and (b) the corporation had no duty to
inquire into adverse claims or has discharged any such duty. The
corporation may require reasonable assurance that such endorsements
are genuine and effective and compliance with such other regulations
as may be prescribed by or under the authority of the Board of
Directors.
6.05. Restrictions on Transfer. The face or reverse side
of each certificate representing shares shall bear a conspicuous
notation of any restriction imposed by the corporation upon the
transfer of such shares.
<PAGE>
<PAGE> 18
6.06. Lost, Destroyed or Stolen Certificates. Where the
owner claims that certificates for shares have been lost, destroyed
or wrongfully taken, a new certificate shall be issued in place
thereof if the owner (a) so requests before the corporation has
notice that such shares have been acquired by a bona fide purchaser,
(b) files with the corporation a sufficient indemnity bond if
required by the Board of Directors or any principal officer, and (c)
satisfies such other reasonable requirements as may be prescribed by
or under the authority of the Board of Directors.
6.07. Consideration for Shares. The Board of Directors
may authorize shares to be issued for consideration consisting of any
tangible or intangible property or benefit to the corporation,
including cash, promissory notes, services performed, contracts for
services to be performed or other securities of the corporation.
Before the corporation issues shares, the Board of Directors shall
determine that the consideration received or to be received for the
shares to be issued is adequate. The determination of the Board of
Directors is conclusive insofar as the adequacy of consideration for
the issuance of shares relates to whether the shares are validly
issued, fully paid and nonassessable. The corporation may place in
escrow shares issued in whole or in part for a contract for future
services or benefits, a promissory note, or otherwise for property to
be issued in the future, or make other arrangements to restrict the
transfer of the shares, and may credit distributions in respect of
the shares against their purchase price, until the services are
performed, the benefits or property are received or the promissory
note is paid. If the services are not performed, the benefits or
property are not received or the promissory note is not paid, the
corporation may cancel, in whole or in part, the shares escrowed or
restricted and the distributions credited.
6.08. Stock Regulations. The Board of Directors shall
have the power and authority to make all such further rules and
regulations not inconsistent with law as it may deem expedient
concerning the issue, transfer and registration of shares of the
corporation.
ARTICLE VII. SEAL
7.01. The Board of Directors shall provide for a corporate
seal for the corporation which shall be circular in form and shall
have inscribed thereon the name of the corporation, the state of
incorporation and the words "Corporate Seal".
ARTICLE VIII. INDEMNIFICATION
8.01. Provision of Indemnification. The corporation
shall, to the fullest extent permitted or required by Sections
180.0850 to 180.0859, inclusive, of the Wisconsin Business
Corporation Law, including any amendments thereto (but in the case of
any such amendment, only to the extent such amendment permits or
requires the corporation to provide broader indemnification rights
than prior to such amendment), indemnify its Directors and<PAGE>
<PAGE> 19
Officers against any and all Liabilities, and advance any and all
reasonable Expenses, incurred thereby in any Proceeding to which any
such Director of Officer is a Party because he or she is or was a
Director or Officer of the corporation. The corporation shall also
indemnify an employee who is not a Director or Officer, to the extent
that the employee has been successful on the merits or otherwise in
defense of a Proceeding, for all reasonable Expenses incurred in the
Proceeding if the employee was a Party because he or she is or was an
employee of the corporation. The rights to indemnification granted
hereunder shall not be deemed exclusive of any other rights to
indemnification against Liabilities or the advancement of Expenses
which a Director, Officer or employee may be entitled under any
written agreement, Board resolution, vote of shareholders, the
Wisconsin Business Corporation Law or otherwise. The corporation
may, but shall not be required to, supplement the foregoing rights to
indemnification against Liabilities and advancement of Expenses under
this Section 8.01 by the purchase of insurance on behalf of any one
or more of such Directors, Officers or employees, whether or not the
corporation would be obligated to indemnify or advance Expenses to
such Director, Officer or employee under this Section 8.01. All
capitalized terms used in this Article VIII and not otherwise defined
herein shall have the meaning set forth in Section 180.0850 of the
Wisconsin Business Corporation Law.
ARTICLE IX. AMENDMENTS
9.01. By Shareholders. Except as otherwise provided in
the articles of incorporation, the shareholders shall have the power
to adopt, amend, alter, change or repeal any of the by-laws of the
corporation at any annual or special meeting of the shareholders at
which a quorum is in attendance.
9.02. By Directors. Except as otherwise provided by the
Wisconsin Business Corporation Law or in the articles of
incorporation, the Board of Directors shall have the power to adopt,
amend, alter, change or repeal any of the by-laws of the corporation
by the affirmative vote of a majority of the directors present at any
meeting of the Board of Directors at which a quorum is in attendance;
but no by-law adopted by the shareholders shall be amended or
repealed by the Board of Directors if the by-law so adopted so
provides. The manner of adoption of these by-laws or any section or
provision thereof shall not be deemed to impair or negate the power
of the Board of Directors to adopt, amend, alter, change or repeal
these by-laws as provided herein.
9.03. Implied Amendments. Any action taken or authorized
by the shareholders or by the Board of Directors which would be
inconsistent with the by-laws then in effect but which is taken or
authorized by affirmative vote of not less than the number of shares
or the number of directors required to amend the by-laws so that the
by-laws would be consistent with such action shall be given the same
effect as though the by-laws had been temporarily amended or
suspended so far, but only so far, as is necessary to permit the
specific action so taken or authorized.<PAGE>
<PAGE>
<PAGE> 1
WISCONSIN GAS COMPANY Exhibit 10.6
PRINCIPAL OFFICERS' SUPPLEMENTAL RETIREMENT INCOME PROGRAM
1. Purpose of the Program
The purpose of the Wisconsin Gas Company Supplemental Retire-
ment Income Program (the "Program") is fivefold: (i) to reimburse
a corporate officer of Wisconsin Gas Company (the "Company") for
any reduction in his benefit payments under the Wisconsin Gas
Company Pension Plan for Non-Union Employees (the "Pension Plan")
which may be caused by the limitations imposed thereon by Internal
Revenue Code Section 415 (the "415 Limit") or Internal Revenue Code
Section 401(a)(17) (the "Compensation Limit") and/or by the
exclusion from the definition of compensation under the Pension
Plan of any earnings paid by Sta-Rite Industries, Inc. to its
corporate officers, any such earnings voluntarily deferred pursuant
to a non-qualified deferred compensation arrangement or any bonuses
(the "Sta-Rite/Bonus Exclusion"), any amounts voluntarily deferred
from Company salary pursuant to a non-qualified deferred
compensation arrangement (the "Deferred Compensation Exclusion") or
any bonuses payable by the Company (provided that any bonus
payments shall be pro-rated on a monthly basis over the calendar
year for which the bonus payments are applicable) (the "Company
Bonus Exclusion); (ii) to reimburse a corporate officer of the
Company for any reduction in his employer or employee contribution
allocations under the Wisconsin Gas Company Employees' Savings Plan
(the "Savings Plan") which may be caused by the 415 Limit and/or by
the Deferred Compensation Exclusion; (iii) to provide retirement
income for any principal corporate officer retiring on or after
January 1, 1987 to replace the post-retirement life insurance
benefit program which will not be available to anyone retiring
after December 31, 1986; (iv) to provide incentive and reward to
such principal officer through additional retirement income in
recognition of his meritorious service and material contribution to
the Company's continued growth and development; and (v) to assist
the Company in retaining and attracting high caliber key executives
upon whose efforts the future successful and profitable operation
of its business is dependent.
2. Effective Date
The Program was originally adopted effective as of January 1,
1983 as the replacement for the Wisconsin Gas Company Corporate
Officer Post-Retirement Benefit Plan in effect prior to that date
and was amended effective April 1, 1991 and January 1, 1993. This
is an amendment and restatement of the Program and is effective
January 1, 1994.<PAGE>
<PAGE> 2
3. Participants in the Program
Any principal officer of Wisconsin Gas Company and any
employee of WICOR, Inc. who either is a WICOR, Inc. officer or
holds a position with WICOR, Inc. equivalent to a Company salary
grade fifteen (15) and sixteen (16) shall be eligible to
participate in this Program. An officer who is concurrently
employed by and participating in the employee benefit plans of an
affiliate corporation shall not be eligible to participate. As
soon as practicable after the Board's adoption of the restated
Program, each present eligible corporate officer shall be notified
of his participant status under the Program and given a copy
thereof by the Wisconsin Gas Company Employee Benefit Plan
Committee (the "Committee"). The Committee shall provide similar
notice to any individual who subsequently becomes an eligible
corporate officer within thirty (30) days of such event. As a
condition of Program participation, each such principal officer
shall execute a written document in a form prescribed by the
Committee evidencing, among other things, his understanding and
acceptance of all terms and conditions of the Program.
4. Savings Plan Benefits
The Company shall establish a Savings Plan Bookkeeping Reserve
Account (the "Reserve Account") for each participant as follows:
(a) As of each December 31 during the participant's
employment with the Company as an officer commencing
December 31, 1983, an amount shall be credited to the
Reserve Account equal to the difference between (i) four
percent (4%) of the participant's aggregate compensation
as defined in the Savings Plan and the amount by which
such compensation is reduced by the Deferred Compensation
Exclusion for such calendar year; and (ii) the actual
employer contribution to the Savings Plan allocable to
the account of the participant for such calendar year,
excluding any participant deposits thereunder. Notwith-
standing the foregoing, in the event a participant fails
to make deposits equal to four percent (4%) of his
Compensation as defined in the Savings Plan during a
calendar year and such failure was not caused by the
415 Limit as estimated by the Company, the reference to
four percent (4%) in (i) above shall be reduced to the
percentage of the participant's compensation as defined
in the Savings Plan contributed by the participant to the
Savings Plan for such year.
(b) Pursuant to a salary reduction agreement, if any,
executed by the Company and a participant in the form
attached hereto as Exhibit A (the "Salary Reduction
Agreement"), an amount shall be credited by the Company
to the Reserve Account for such participant equal to the
amount, if any, by which the participant's salary is
reduced by the Salary Reduction Agreement (the "Pre-Tax
Employee Contribution"). The credit to the Reserve
Account for the Pre-Tax Employee Contribution shall be<PAGE>
<PAGE> 3
made as of the time specified in the Salary Reduction
Agreement. The Pre-Tax Employee Contribution under the
Salary Reduction Agreement is a non-qualified deferred
compensation agreement for purposes of computing the
Deferred Compensation Exclusion under the Program.
(c) The Salary Reduction Agreement may also provide that the
participant will contribute an amount to the Company to
be credited to the Reserve Account for such participant
(the "Post-Tax Employee Contribution"). The credit to
the Reserve Account for the Post-Tax Employee
Contribution shall be made as of the time specified in
the Salary Reduction Agreement and may be made by payroll
deduction or other method provided therein.
(d) As of the last day of each month, commencing January 31,
1984, and prior to any distribution pursuant to
subparagraphs (e) and (f) below, an additional amount
shall be credited to the Reserve Account as an interest
equivalent on the balance credited to the Reserve Account
as of the last day of the previous month. The interest
rate earned will be that rate earned for such month by
the "Fixed-Income Fund" under the Savings Plan.
(e) Payment of the amounts credited to the Reserve Account
for each participant shall commence during the month of
January immediately following the calendar year in which
occurs the participant's termination of employment with
the Company or WICOR, Inc. and shall be made in a lump
sum. A transfer of employment to Sta-Rite Industries,
Inc. shall not be treated as a termination of employment
causing a required distribution hereunder.
(f) In the event of a participant's death before benefits
hereunder have been paid to him, any amount allocated to
the Reserve Account shall be paid in a lump sum in the
month following such death to such beneficiary or
beneficiaries as the participant shall designate by
written instrument delivered to the Secretary of the
Company, or if no such written instrument is properly
delivered or if such designated beneficiary predeceases
the participant, to the executors, administrators, or
personal representatives of the participant's estate.
(g) The Reserve Account shall be utilized solely as a device
for the measurement and determination of the amount to be
paid to a participant at the times specified above for
the payment of Savings Plan benefits. Neither the
Reserve Account nor any other reserve established on the
Company's books to reflect the liabilities under this
Plan shall constitute or be treated as a trust fund of
any kind. On the contrary, it is expressly agreed and
understood that the Company shall not be required to set
aside any assets with respect hereto and that any assets
actually held by the Company with reference to this Plan
shall be and remain the sole property of the Company, and
that neither a participant nor a participant's<PAGE>
<PAGE> 4
beneficiaries, heirs, legal representatives or assigns
shall have ownership rights of any nature with respect
thereto, unless and until such time as such assets are
paid over and transferred to the participant or the
participant's beneficiaries, as herein provided.
(h) The Program shall accept a transfer from the Sta-Rite
Industries Officers' Supplemental Retirement Income
Program ("Sta-Rite Supplemental Plan") for Stuart W.
Tisdale and Joseph P. Wenzler of the obligations and
liabilities under Section 4 thereof with respect to a
deferred savings plan account, which amount shall be
treated as the opening balance of said individual's
Reserve Account.
5. Pension Plan Benefits
For purposes of this paragraph, "Unrestricted Pension Benefit"
means the amount which would have been payable from the Pension
Plan if the: (1) 415 Limit, (2) Compensation Limit, (3) Sta-
Rite/Bonus Exclusion, (4) Wisconsin Bonus Exclusion, (5) Deferred
Compensation Exclusion and (6) the amendment that froze benefit
accruals as of December 31, 1988 for "super highly compensated"
participants (provided such frozen benefit accruals have not been
adjusted by subsequent amendments to the Pension Plan) did not
apply, calculated as of the participant's date of retirement based
on the applicable optional payment method, but subject to
adjustment from time to time for applicable cost of living
increases. "Restricted Benefit Amount" means the amount actually
payable from the Pension Plan calculated as of the participant's
date of retirement based on the applicable optional payment method,
but subject to adjustment from time to time for applicable cost of
living increases and for reductions in the 415 Limit and the
Compensation Limit.
For purposes of calculating Mr. Tisdale's Unrestricted Pension
Benefit, this Program shall recognize the transfer from the Sta-
Rite Supplemental Plan of the obligations and liabilities under
Section 5 thereof, using the terms of the Company's Pension Plan,
including the special years of service granted for purposes of the
supplement pursuant to Exhibit I of the Sta-Rite Supplemental Plan.
Pension Plan benefits are only available to a participant who
is a corporate officer immediately prior to his normal or early
retirement from the Company under the terms of the Pension Plan.
An eligible participant and his beneficiary(ies) shall receive from
the Company amounts as specified below.
(a) Married Participants - Joint and Survivor Annuity. A
participant who is lawfully married at his retirement
date and elects to receive his benefits from the Pension
Plan in any joint and survivor annuity form available
thereunder with his spouse designated as the survivor
annuitant, shall receive a monthly supplement for his
lifetime. The supplement shall be equal to the
difference between (i) the Unrestricted Pension Benefit
payable on a life only annuity basis under the terms of<PAGE>
<PAGE> 5
the Pension Plan and (ii) the Restricted Benefit Amount
payable on a joint and fifty percent (50%) survivor
annuity basis under the terms of the Pension Plan. If
the participant predeceases his spouse, fifty percent
(50%) of such difference shall then be paid monthly to
his surviving spouse during her lifetime. If both the
participant and his spouse die prior to the end of the
ten (10) year period commencing on his retirement date,
fifty percent (50%) of the aggregated monthly amount
received by him under the Pension Plan and this
subparagraph 5(a) shall be paid for the balance of such
ten (10) year period to the beneficiary designated in
writing by him for that purpose or, in the absence of
such a designated beneficiary, to the estate of the last
survivor of the participant and his spouse.
(b) Unmarried Participants - Ten-Year Certain Annuity. A
participant who is unmarried at his retirement date and
elects to receive his benefits from the Pension Plan in
the ten (10) year period certain annuity form available
thereunder, shall receive a monthly supplement for his
lifetime. The supplement shall be equal to the
difference between (i) the Unrestricted Pension Benefit
payable on a life only annuity basis under the terms of
the Pension Plan and (ii) the Restricted Benefit Amount
payable in a ten (10) year period certain annuity form
under the terms of the Pension Plan. If the participant
dies prior to the end of the ten (10) year period
commencing on his retirement date, the supplement shall
be paid for the balance of such ten (10) year period to
the beneficiary designated in writing by him for the
purpose or, in the absence of such a designated
beneficiary, to the estate of the participant.
(c) Lump Sum Pension Plan Distribution. A participant who
elects to receive his benefits from the Pension Plan in
a lump sum distribution at his retirement date shall
receive a supplement hereunder based on the difference
between (i) the Unrestricted Pension Benefit, and (ii)
the restricted Benefit Amount, both calculated on a life
only annuity basis. In the event the lump sum value of
such difference payable on a monthly life only annuity
basis calculated using the Pension Plan factors is less
than $100,000, such amount shall be paid to the
participant in a lump sum with no survivor benefits. In
the event the lump sum value is $100,000 or more, the
difference between (i) and (ii) above shall be paid
monthly to the participant for his lifetime. If the
participant predeceases the spouse to whom he was married
at his retirement date, if any, fifty percent (50%) of
such monthly supplement shall be paid monthly to his
surviving spouse during her lifetime. If both the
participant and his spouse, if applicable, die prior to
the end of the ten (10) year period commencing on his
retirement date, fifty percent (50%) of such supplement
to the participant shall be paid for the balance of such
ten (10) year period to the beneficiary designated in<PAGE>
<PAGE> 6
writing by him for that purpose or, in the absence of
such a designated beneficiary, to the estate of the last
survivor of the participant and his spouse as of his
retirement date, if any.
(d) Other Participants. A participant who retires pursuant
to the normal or early retirement provisions of the
Pension Plan and does not satisfy the requirements for a
supplement under subparagraph (a), (b) or (c) above shall
receive a monthly supplement pursuant to this
subparagraph (d). The supplement shall be equal to the
difference between (i) the Unrestricted Pension Benefit
and (ii) the Restricted Benefit Amount, both calculated
according to the form of payment elected for his Pension
Plan benefits. The supplement shall be paid for the
participant's lifetime, and in the event the
participant's death and payment election form cause a
Pension Plan payment to a beneficiary, a portion of the
supplement shall be paid to such beneficiary during the
period of any related Pension Plan payment. The portion
of the supplement to be paid shall equal the portion of
the participant's Pension Plan benefit which is continued
for such beneficiary.
6. Supplemental Retirement Benefits
Supplemental retirement benefits shall be available to a
participant who is a principal corporate officer immediately prior
to his normal or early retirement from the Company under the terms
of the Pension Plan, if such retirement occurs on or after
January 1, 1987 but before December 31, 1992. After December 31,
1992, these supplemental Retirement Benefits shall be available to
the following Company officers to the extent that they satisfy the
retirement qualification requirement herein: Messrs. Schrader,
Nuernberg, Giroux, Osborn, Petry and Zeddun. The monthly
supplement is equal to $2,083.33 ($25,000 annually) and shall
commence to the participant at the later of attainment of age
sixty-five (65) or retirement. Payments shall be made as of the
first day of the month commencing with the month following the
qualifying event and shall continue for one hundred eighty (180)
months. If the participant dies (i) after commencement of benefits
but prior to the end of the fifteen (15) year period or (ii) after
retirement but prior to attainment of age sixty-five (65), the
supplement shall be paid for the balance of such period to the
beneficiary designated in writing by him for that purpose or, in
the absence of such a designated beneficiary, to the estate of the
participant. Payments under (ii) above shall commence as of the
month following the participant's death and shall continue for the
fifteen (15) year period.
7. Administration of the Program
The Program shall be administered by the Committee; provided
that a participant in the Program who is a Committee member may not
participate in any Committee action regarding his benefits
hereunder. The Committee shall have all such powers that may be
necessary to carry out the provisions of the Program in the absence<PAGE>
<PAGE> 7
of any action by the Board, including without limitation, the power
to delegate administrative matters to other persons, to construe
and interpret the Program, to adopt and revise rules, regulations
and forms relating to and consistent with the Program's terms and
to make any other determinations which it deems necessary or
advisable for the implementation and administration of the Program;
provided, however, that the right and power to amend and/or
terminate the Program are reserved exclusively to the Board.
Subject to the foregoing, all decisions and determinations by the
Committee shall be final, binding and conclusive as to all parties,
including without limitation the Company, any participant hereunder
and all other employees and persons.
8. Source of Benefit Payments
No funds or other assets of the Company shall be segregated
and attributable to any benefit payments to be made at a later time
as hereinabove provided, but rather benefit payments under the
Program shall be made from the general assets of the Company at the
time any such payment becomes due and payable. Benefit payments
under the Program are to be taken as deductions for income tax
purposes in the Company's fiscal year that they are actually made.
At such time as any benefit payments are made, it shall be
determined by the Company whether any portion thereof is allocable
to WICOR, Inc. and/or Sta-Rite Industries, Inc. because of their
recipient having also served as a corporate officer of either or
both of those corporation; and, if such is the case, the Company
shall obtain reimbursement from WICOR, Inc. and/or Sta-Rite
Industries, Inc., as appropriate, for such allocable portion. No
participant or surviving spouse or beneficiary thereof shall have
any proprietary rights of any nature whatsoever with respect to any
benefit payments, unless and until such time a benefit payment, and
then only as to the amount of such payment, is made to such
participant or the surviving spouse or beneficiaries thereof, as
the case may be.
9. Non-Alienation of Payments
Any benefits payable under the Program shall not be subject in
any manner to alienation, sale, transfer, assignment, pledge,
attachment, garnishment or encumbrance of any kind, by will, or by
inter vivos instrument. Any attempt to alienate, sell, transfer,
assign, pledge or otherwise encumber any such benefit payment,
whether currently or thereafter payable, shall not be recognized by
the Committee or the Company. Any benefit payment due hereunder
shall not in any manner be liable for or subject to the debts or
liabilities of any participant or the surviving spouse or
beneficiary thereof, as the case may be. If any such participant,
surviving spouse or beneficiary shall attempt to alienate, sell,
transfer, assign, pledge or otherwise encumber any benefit payments
to be made to that person under the Program or any part thereof, or
if by reason of such person's bankruptcy or other event happening
at any time, such payments would devolve upon anyone else or would
not be enjoyed by such person, then the Committee, in its
discretion, may terminate such person's interest in any such
benefit payment, and hold or apply it to or for the benefit of that
person, the spouse, children, or other dependents thereof, or any<PAGE>
<PAGE> 8
of them, in such manner as the Committee may deem proper.
10. Incompetency
Every person receiving or claiming benefit payments under the
Program shall be conclusively presumed to be mentally competent
until the date on which the Committee receives a written notice, in
a form and manner acceptable to the Committee, that such person is
incompetent and that a guardian, conservator, or other person
legally vested with the care of his estate has been appointed. In
the event a guardian or conservator of the estate of any person
receiving or claiming benefit payments under this Program shall be
appointed by a court of competent jurisdiction, payments may be
made to such guardian or conservator; provided that proper proof of
appointment and continuing qualification is furnished in a form and
manner acceptable to the Committee. Any such payment so made shall
be a complete discharge of any liability therefor.
11. Limitation of Rights against the Company
Participation in this Program, or any modifications thereof,
or the payments of any benefits hereunder, shall not be construed
as giving to any participant any right to be retained in the
service of the Company, limiting in any way the right of the
Company to terminate such participant's employment at any time,
evidencing any agreement or understanding express or implied, that
the Company will employ such participant in any particular position
or at any particular rate of compensation and/or guaranteeing such
participant any right to receive any other form or amount of
remuneration from the Company.
12. Construction
The Program shall be construed, administrated and governed in
all respects under and by the laws of the State of Wisconsin.
Wherever any words are used herein in the masculine, they shall be
construed as though they were used in the feminine for all cases
where they would so apply; and wherever any words are used herein
in the singular or the plural, they shall be construed as though
they were used in the plural or the singular, as the case may be,
in all cases where they would so apply. The words "hereof",
"herein", "hereunder" and other similar compounds of the word
"here" shall mean and refer to this entire documents and not to any
particular paragraph.
13. Liability
Neither the Company nor any shareholder, director, officer or
other employee of the Company or any member of the Committee or any
other person shall be jointly or severally liable for any act or
failure to act hereunder, except for gross negligence or fraud.
14. Amendment or Termination of the Plan
The Company, by action of the Board, reserves the right to
amend, modify, terminate or discontinue the Program at any time;
and such action shall be final, binding and conclusive as to all<PAGE>
<PAGE> 9
parties, including any participant hereunder, any surviving spouse
or beneficiary thereof and all other Company employees and persons;
provided, however, that any such Board action to terminate or
discontinue the Program or to change the monthly payment amount or
the time and manner of payment thereof as then provided in the
Program shall not be effective and operative unless and until
written consent thereto is obtained from each participant affected
by such action or, if any such participant is not then living, from
the surviving spouse or beneficiary thereof, as the case may be.
15. Successors or Assigns
The terms and conditions of the Program, as amended and in
effect from time to time, shall be binding upon the successors and
assigns of the Company, including without limitation any entity
into which the Company may be merged or with which the Company may
be consolidated. <PAGE>
<PAGE> 10
WISCONSIN GAS COMPANY PRINCIPAL OFFICERS'
SUPPLEMENTAL RETIREMENT INCOME PROGRAM
Exhibit A
Salary Reduction Agreement
This Agreement is being made and entered into as of this
______ day of _______________, 19___, by and between Wisconsin Gas
Company, a Wisconsin corporation (the "Company") and
________________________________ (the "Participant").
1. Effective with respect to salary earned on and after
_______________________ (a payroll period commencement date after
the execution of this Agreement), the Company and the Participant
agree to defer $______________ per payroll period from the
Participant's salary. Such deferred amount shall be credited to
the Reserve Account as a Pre-Tax Employee Contribution as of the
time the deferred amount would have been paid to the Employee but
for this Agreement.
2. Effective on and after ______________________ (a payroll
period commencement date after the execution of this Agreement),
the Participant directs the Company to deduct from the
Participant's salary $________________ per payroll period on an
after-tax basis as a Post-Tax Employee Contribution. Such deducted
amount shall be credited to the Reserve Account as of the time the
deducted amount would have been paid to the participant but for
this Agreement.
3. On ______________________, the Participant shall give to
the Company in a lump sum $_______________ as a Post-Tax Employee
Contribution. Such amount shall be credited to the Reserve Account
as of the first day of the month following the date of receipt.
Any election under paragraphs 1 or 2 above may be changed
on a prospective basis by action of either the Company or the
Participant.
WISCONSIN GAS COMPANY
By: _______________________________
_______________________________
Participant
Instructions
- ------------
This form is an optional election by principal corporate
officers participating under the Program. Company-paid benefits
are provided under the Program whether or not Pre-Tax Employee
Contributions or Post-Tax Employee Contributions are elected. An
officer can elect any combination of 1, 2 or 3 (or note of them),
but the maximum amount of such contribution will be determined from
time to time by the Company. <PAGE>
<PAGE> 11
WISCONSIN GAS COMPANY
PRINCIPAL OFFICERS' SUPPLEMENTAL RETIREMENT INCOME PROGRAM
I, ___________________________, hereby acknowledge that I
received a copy of this Program, as restated, effective January 1,
1994 and that I understand and accept all the terms and conditions
thereof.
__________________________ _______________________________
Date Signature
[Execution of this form is a condition of participation in the
Wisconsin Gas Company Principal Officers' Supplemental Retirement
Income Program.]<PAGE>
<PAGE>
<PAGE> 1
Exhibit 10.7
Wisconsin Gas Company
Officers' Incentive Compensation Plan
1994
I. OBJECTIVES
The principal objectives of the Plan are:
A. To motivate and to provide incentive for key officers of
Wisconsin Gas Company to achieve superior operating
results for the benefit of both customers and
stockholders.
B. To assist in the retention of quality senior management.
C. To yield competitive total compensation levels when
performance goals are attained.
II. ELIGIBILITY
Participation in the Plan is limited to designated corporate
officers of Wisconsin Gas. The Chief Executive Officer of
WICOR will be responsible for recommending eligibility changes
to the Compensation Committee of the Board of Directors of
WICOR, Inc.
III. AMOUNT OF POTENTIAL AWARD
A. The minimum, target and maximum award opportunities for
each officer, as a percentage of base salary, are as
follows:
<TABLE>
<CAPTION>
Award as % of Salary
-------------------------------------------
Position Minimum Target Maximum
--------------- ------------- ------------ ------------
<S> <C> <C> <C>
President & CEO 0% 40% 60%
VP 0% 20% 30%
</TABLE>
B. Only 50% of the President & CEO's award opportunity will
be determined according to the provisions of this Plan.
Of that 50%, 67% will be determined by Performance Plus
and 33% will be determined by Net Income as a percentage
of budget. The remaining 50% will be determined based on
the WICOR Officers' Incentive Compensation Plan.
<PAGE>
<PAGE> 2
IV. PERFORMANCE CRITERIA AND OBJECTIVE SETTING
A. Each executive's incentive award will be related to the
achievement of Company performance goals, and a component
reflecting individual performance.
B. Total incentive opportunity is further based on the
following measures:
- 50% Performance Plus (Company-wide operational and
financial incentive Plan)
- 25% Net Income as a percentage of budget
- 25% Individual
Therefore, 75% of the total bonus opportunity is based on
operational and financial results and 25% is based on
individual performance.
The individual portion of the incentive payout will be
based on the individual's overall performance as measured
against previously identified and agreed upon goals and
objectives. The award may vary up to 150% of the
individual performance portion of the target award, and
will be determined and paid independently of Company
financial performance.
C. If the Compensation Committee of WICOR, Inc. determines
that the Net Income level was inadequate or that services
to customers did not meet corporate goals or standards
developed, it may exercise discretion to reduce or
eliminate any or all bonus payments.
V. PERFORMANCE PERIOD
Company performance goals will be for the 1994 calendar year.
VI. BONUS AWARD DETERMINATION
A. Performance Plus. Each year management will recommend
specific goals for safety, customer service and cost
effectiveness. Associated with various levels of
performance for each goal will be a certain number of
award points. The cumulative total of these points
adjusted by a "multiplier", based on Net Income as a
percent of budget, will determine the formula payout under
this portion of the Plan.
For 1994, the performance measures and related points and
the "multiplier" are set forth in Exhibit I.
B. Net Income as a Percentage of Budget
Actual net income as a percentage of budget will generate
incentive compensation equal to 25% of the target award
multiplied by the following percentages:<PAGE>
<PAGE> 3
<TABLE>
<CAPTION>
Net Income Award Determination
-------------------------------------------------
Net Income as % of Target
Performance Level % of Budget Awarded
------------------- ------------- -----------
<S> <C> <C>
Less than Threshold Less than 87% 0.0%
Threshold 87% 1.0%
Target 100% 100.0%
Maximum 120% 150.0%
</TABLE>
For performance at levels between Threshold and Target or
between Target and Maximum, award calculations will be
pro-rated on a linear basis.
For 1994, the amount of targeted net income is set forth
in Exhibit 10.9a.
C. Total performance awards will be calculated by combining
the payouts from Performance Plus, Net Income and
Individual Components.
VII. FORM AND TIMING OF AWARD PAYMENTS
A. Awards will be determined and paid as soon as practicable
after the close of the Plan year.
B. At each participant's discretion and with the concurrence
of the Compensation Committee of WICOR, Inc., awards may
be paid in one of three ways:
1. Lump Sum
2. Partly in lump sum, and the remainder in deferred
annual installments.
3. Completely in deferred annual installments.
C. The Company will offer a deferred payment option to those
officers who prefer not to receive their awards in current
cash, following these guidelines:
1. Deferred incentive award payments will be carried as an
accrued liability with an interest rate (three-year
treasury bill rate) credited each year.
2. Deferral elections must be made prior to the end of the
performance period, and a definite time period for
deferral must be specified.
<PAGE>
<PAGE> 4
VIII. PLAN ADMINISTRATION
A. Compensation Committee:
1. The Plan will be administered by the Compensation
Committee of the Board of Directors of WICOR, Inc.
2. The Committee's administration is subject to approval
of the Board of Directors of WICOR, Inc.
3. The decisions of the Board are final and binding on all
Plan participants.
4. The Board retains the right to terminate or amend the
Plan as it may deem advisable.
5. In evaluating actual Company performance results in
comparison with pre-established objectives established
for the Plan year, and in establishing resulting
incentive compensation levels, the Compensation
Committee, at their sole discretion, may take unusual
and unique factors into consideration as they deem
appropriate. Similarly, the Committee may modify
performance targets during the course of a Plan year
if significant change takes place which would affect
the measure.
6. It shall be the Committee's responsibility to review
the overall reasonableness of incentive compensation
paid to participants of this Plan in relation to
overall services performed and results obtained by the
Company during the Plan year. The Committee shall make
its determination on the basis of its judgement as to
what constitutes satisfactory performance with respect
to the fulfillment of the Company's mission or charter.
Issues to be considered shall include, but not be
limited to the following:
a. Quality and level of service provided to customers.
b. Health and safety considerations.
c. Maintenance of specific required standards of
performance.
d. Representation of shareholders' interests (including
Rate of Return achieved compared to allowed).
Based upon this review, the incentive compensation paid to
participants may be reduced or withheld so that the total
compensation paid will be reasonable in relation to services
performed. The decisions of the Committee are final and
binding on all parties.
<PAGE>
<PAGE> 5
B. Partial Year Participation:
1. Participants must be employed by the Company on the
last day of the Plan year in order to receive a bonus
for that year. However, once earned, a bonus will be
paid to a participant regardless of whether he/she is
employed by the Company on the date payment is made.
2. Awards for part year participants will be pro-rated
based on the proportion of the year that the
participant was in the Plan. This includes
participants who terminate employment due to death,
disability or retirement.
3. Participants who terminate employment with the Company
prior to the last day of the Plan year shall forfeit
all rights to an incentive award payment under the Plan
except for terminations due to death, retirement or
disability.
4. A participant is deemed to be disabled if he/she
becomes eligible for benefits under the Company's Long
Term Disability Plan.
<PAGE>
<PAGE> 6
Exhibit 10.7a
Wisconsin Gas Company
Incentive Compensation Plan
Formula Performance Goals
1994
Performance Plus*
-----------------
Maximum
Points
----------
1. Customer Service
Favorability/Customer Satisfaction 10
2. Safety
On-the-Job Injuries 5
Claims 5
3. Cost Effectiveness
Operation & Maintenance Expense 5
Change in Residential Rates 5
-------------
Maximum Total Points (Target = 20 points) 30
=============
4. Multiplier
Net Income as % of Budget Multiplier
------------------------- ----------
Less than 87% 0.0000
87% 0.0100
90% 0.2385
95% 0.6192
100% 1.0000
110% 1.1667
120% 1.3333
* This is a summarization of the Performance Plus Plan which
will govern the actual calculation of the payout amounts.
<TABLE>
<CAPTION>
NET INCOME AS A % OF BUDGET
<S> <C> <C>
Minimum (87%) $19,819,000
Target (100%) $22,780,000
Maximum (120%) $27,336,000
/TABLE
<PAGE>
<PAGE>
<PAGE> 1
EXHIBIT 13
GENERAL OVERVIEW
WICOR has two significant business segments: gas distribution
and manufacturing. Gas distribution is the primary business as it
accounted for 68% of consolidated revenues and 72% of consolidated
operating income in 1993 with manufacturing contributing the
balance. The manufacturing segment has grown significantly through
the 1993 acquisition of SHURflo Pump Manufacturing Co. (Shurflo),
a manufacturer of small pumps for the food service and
recreational markets. The acquisition was accounted for as a
pooling of interests. As a result, prior years have been restated.
Shurflo added $46.6 million of revenues and $5.0 million of
operating income to consolidated results in 1993. During the
second quarter the Company sold all of its oil and gas properties
held by its subsidiary, Wexco of Delaware, Inc. at approximately
book value for $4.0 million.
WICOR earnings were $29.3 million in 1993, or $1.82 per share
of common stock, compared with $22.8 million, or $1.47 per share
in 1992 ($14.8 million, or $.96 per share after the cumulative
effect of accounting changes) and $23.0 million, or $1.54 per
share in 1991.
Gas sales increased in 1993 as a result of colder weather and
customer additions in 1992 and 1993. Manufacturing operations
showed significant improvement as a result of an improved
competitive domestic position, continuing strong international
sales, and the recovering residential construction market.
Net cash flows from operations for the years 1991 through
1993 totalled $90.8 million. Cash proceeds of $24.4 million
received in 1991 from the sale of discontinued operations and a
$129.5 million net increase in long-term debt, common stock and
short-term debt, along with the net cash flows from operations
provided the funding for $168.9 million of capital expenditures
and $59.2 million of dividends for the three years. Segment data
for WICOR's operations are summarized below.
<TABLE>
<CAPTION>
Operating Revenues (Millions of Dollars) 1993 1992 1991
- ---------------------------------------- -------- -------- --------
<S> <C> <C> <C>
Gas Distribution $ 574.8 $ 495.4 $ 474.7
Manufacturing 274.7 252.0 242.1
-------- -------- --------
$ 849.5 $ 747.4 $ 716.8
======== ======== ========
Depreciation, Depletion and Amortization
(Millions of Dollars)
- ----------------------------------------
Gas Distribution $ 34.8 $ 30.5 $ 28.3
Manufacturing 8.9 9.7 8.0
-------- -------- --------
$ 43.7 $ 40.2 $ 36.3
======== ======== ========
Operating Income (Millions of Dollars)
- ----------------------------------------
Gas Distribution $ 46.2 $ 43.3 $ 39.5
Manufacturing 17.8 10.0 11.7
-------- -------- --------
$ 64.0 $ 53.3 $ 51.2
======== ======== ========
/TABLE
<PAGE>
<PAGE> 2
<TABLE>
<CAPTION>
Actual
Capital Expenditures Estimated ------------------------------
(Millions of Dollars) 1994 1993 1992 1991
- ------------------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
Gas Distribution $ 57.4 $ 42.3 $ 62.1 $ 34.6
Manufacturing 13.9 9.6 9.8 10.5
-------- -------- -------- --------
$ 71.3 $ 51.9 $ 71.9 $ 45.1
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Identifiable Assets at December 31
(Millions of Dollars) 1993 1992 1991
- ---------------------------------- -------- -------- --------
<S> <C> <C> <C>
Gas Distribution $ 737.2 $ 634.6 $ 486.2
Manufacturing 196.5 191.2 184.1
-------- -------- --------
$ 933.7 $ 825.8 $ 670.3
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
VERTICAL BAR GRAPH OF WICOR OPERATING INCOME
millions of dollars 1989 1990 1991 1992 1993
- -------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Gas Distribution $ 53.8 $ 34.9 $ 39.5 $ 43.3 $ 46.2
Manufacturing 16.9 9.7 11.7 10.0 17.8
-------- -------- -------- -------- --------
$ 70.7 $ 44.6 $ 51.2 $ 53.3 $ 64.0
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
VERTICAL BAR GRAPH OF WICOR'S RETURN ON AVERAGE COMMON EQUITY
BEFORE CUMULATIVE EFFECTS OF ACCOUNTING CHANGES
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
percent 14.3% 6.8% 9.5% 9.2% 11.2%
<FN>
Note: 1989 and 1990 are based on income from continuing operations
/TABLE
<PAGE>
<PAGE> 3
RESULTS OF OPERATIONS
Gas Distribution
- ----------------
Increased sales margins in 1993 and 1992 were sufficient to
offset higher levels of operating expenses, resulting in increases
in operating income. Margins benefited in 1993 from rate increases
effective in November 1992 and November 1993. The 1993 earnings
reflect an 11.3% return on weighted average common equity. A $12.3
million or 2.9% annual rate increase, effective on November 12,
1993, included a reduction in the authorized return on common
equity to 11.8% from the previously authorized 12.75%.
Revenues, margins and volumes are summarized below. Margin,
defined as revenues less cost of gas, is a better comparative
performance indicator than revenues. Transportation service
revenues are recorded at margin with no corresponding cost of gas
amount. Therefore, for a given rate class, the volume mix between
sales and transportation service affects revenues but not margin.
In addition, changes in cost of gas are flowed through to revenue
under a gas adjustment clause, with no effect on margin.
<TABLE>
<CAPTION>
(Millions of Dollars) 1993 1992 1991
- ------------------------------- -------- -------- --------
<S> <C> <C> <C>
Gas sales revenue $ 565.1 $ 485.3 $ 465.4
Gas purchase costs 382.0 319.4 303.4
-------- -------- --------
Gas sales margin 183.1 165.9 162.0
Gas transportation margin 9.7 10.1 9.3
-------- -------- --------
Total margin $ 192.8 $ 176.0 $ 171.3
======== ======== ========
(Millions of Therms)
- -------------------------------
Sales volumes
Firm 823 782 792
Interruptible 208 174 174
Transportation volumes 174 214 197
-------- -------- --------
Total throughput 1,205 1,170 1,163
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
VERTICAL BAR GRAPH OF ANNUAL DEGREE DAYS
% COLDER (WARMER) THAN 20-YEAR AVERAGE
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
% colder (warmer) 1.5% (16.0%) (10.8%) (6.4%) (4.1%)
</TABLE>
Total gas margin increased by 10% and 3% for 1993 and 1992,
respectively. Weather in 1993 was 1% colder than 1992. Weather in
1992 was 4% colder than 1991. The number of residential customers
increased by 3% in 1993 and 2% in 1992 due to expansion into rural
markets. Industrial throughput remained at the same approximate
level in 1993 and 1992. Much of the industrial market has dual
fuel capability and as such is sensitive to changing prices of
natural gas and alternate fuels.<PAGE>
<PAGE> 4
Operation and maintenance expenses increased by $10.9 million
or 11% in 1993. In addition to normal inflation, the increase was
due to higher costs for employee benefits, business systems
software amortization, conservation programs, and uncollectible
receivables. Operation and maintenance expenses decreased by $0.9
million or 1% in 1992. The reduction was in large measure due to
decreases in employee benefits and other operating costs.
Manufacturing Operations
- ------------------------
Manufacturing operating income in 1993 was $17.8 million
compared with $10.0 million in 1992 and $11.7 million in 1991.
Sales in 1993 were $274.7 million, an increase of 9% over
1992 sales of $252.0 million. Improvements were noted in sales of
water systems, drainers and environmental pumps as well as pumps
for the food service, marine, water purification and industrial
markets. The improved economy and favorable weather conditions
were significant factors contributing to the increase.
Sales in 1992 were $252.0 million, an increase of 4% over
1991 sales of $242.1 million. International and export sales
increases were somewhat offset by decreases in domestic markets.
International and export sales represented 34% of
manufacturing sales in both 1993 and 1992. Significant growth has
occurred in the Australian and European markets, despite a weak
European economy.
<TABLE>
<CAPTION>
VERTICAL BAR GRAPH OF MANUFACTURING
INTERNATIONAL AND EXPORT SALES
1989 1990 1991 1992 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
millions of dollars $63.3 $64.9 $75.5 $85.9 $93.8
</TABLE>
As a result of continuing efforts to control costs, operating
expenses decreased by 2% in 1993, despite the 9% increase in
sales. This is a significant improvement over the 6% increase in
1992. Much of the 1993 savings was generated through
administrative personnel reductions in 1992 and 1993.
Other Income (Deductions) and Income Taxes
- ------------------------------------------
Other net deductions increased by less than 1% in 1993. Both
interest income and interest expense declined as a result of lower
interest rates. In September 1993 the utility refinanced $45
million of long-term debt to take advantage of lower interest
rates. The 1992 increase in other net deductions was due to a
higher interest expense as increased borrowings were used to
finance higher utility capital expenditures.
Income tax expense increased in 1993 primarily as a result of
higher pre-tax book income and a 1% increase in the federal tax
rate effective January 1, 1993. Income tax expense increased in
1992 as both pre-tax book income and the effective tax rate
increased.<PAGE>
<PAGE> 5
Accounting Changes
- ------------------
The cumulative effect of accounting changes related to the
recording of income taxes and postretirement benefits totaled $8.0
million in 1992 . The impact of adopting these two accounting
changes, effective January 1, 1992, is discussed in Notes 3 and
10.
Effects of Changing Prices
- --------------------------
It is management's view that changes in the rate of inflation
have not had a significant effect on income over the past three
years. Utility operating cost increases due to inflation are
generally recoverable through increased revenues due to the
utility's forward looking test year. Wisconsin Gas has proposed to
the Public Service Commission of Wisconsin (PSCW) an alternative
method of ratemaking that may have an impact on how inflationary
costs are recovered. This alternative method is discussed in the
following section.
LIQUIDITY AND CAPITAL RESOURCES
Over the last three years, the Company has generated
sufficient cash flows from operations to cover operating expenses,
dividends, and a portion of investment activities. Cash flow from
operations decreased to $3.4 million in 1993, compared with $37.0
million in 1992 and $50.4 million in 1991. The 1993 decrease is
primarily due to funds used by the utility to purchase gas held in
storage. As discussed under regulatory matters, one of the impacts
of Federal Energy Regulatory Commission (FERC) Order No. 636 is
that utilities such as Wisconsin Gas must assume the
responsibility for purchasing gas supplies and maintaining gas in
storage. Previously, the pipelines performed those functions.
Accordingly, Wisconsin Gas is now required to finance its own gas
in storage. In the future, Wisconsin Gas does not expect to
experience increases of gas in storage as large as that of 1993.
Investment Activities
- ---------------------
Capital expenditures decreased by $20.0 million in 1993 after
increasing by $26.8 million in 1992. Utility expenditures returned
to more normal levels in 1993 following completion of a major
expansion project in 1992. Utility capital expenditures are
expected to increase substantially in 1994 as several expansion
projects are anticipated.
In July 1993, WICOR merged with Shurflo by exchanging
approximately $27 million of WICOR stock for the outstanding
common stock of Shurflo. See Note 2 for a further discussion of
this transaction. The Company, either directly or through its
subsidiaries, has invested $2.1 million, $9.8 million and $4.2
million in 1993, 1992 and 1991, respectively, in other acquisition
activity.
In January 1992, the PSCW issued an order prescribing an
equity-based formula for determining the limitation on non-utility
investments. As of December 31, 1993, WICOR would be permitted to
invest an additional $77.8 million in nonutility investments under
this order. Nonutility subsidiaries can also borrow additional
amounts for acquisitions within certain PSCW guidelines (See Note
6).<PAGE>
<PAGE> 6
<TABLE>
<CAPTION>
VERTICAL BAR GRAPH OF WICOR CAPITAL EXPENDITURES
1994
millions of dollars 1989 1990 1991 1992 1993 Est
- ------------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Gas distribution $25.8 $28.0 $34.6 $62.1 $42.3 $57.4
Manufacturing 9.1 8.3 10.5 9.8 9.6 13.9
------ ------ ------ ------ ------ ------
$34.9 $36.3 $45.1 $71.9 $51.9 $71.3
====== ====== ====== ====== ====== ======
</TABLE>
Funds from Financing
- --------------------
During 1993, the utility issued $45 million of 6.6% Notes due
in 2013, the proceeds of which were used to refinance $45 million
of outstanding higher cost first mortgage bonds due in 1994 and
1995. There were no issues of long-term debt in 1992. The Company
does not anticipate the need to issue any long-term debt in 1994.
The Company's debt portion of capitalization decreased to 38% in
1993 as compared to 40% in 1992 and 41% in 1991. The utility's
embedded cost of long-term debt decreased from 9.2% at December
31, 1992 to 8.9% at December 31, 1993.
WICOR raised its dividend by 3% in both 1993 and 1992. The
annual rate is now $1.56 per share. At December 31, 1993 the
company had $35.4 million of unrestricted retained earnings
available for dividend payments to shareholders.
In October 1992, the Company established the WICOR Plan which
allows customers, shareholders, employees and Wisconsin residents
to purchase WICOR common stock directly and through dividend
reinvestment without paying fees or service charges. During 1993,
685,000 shares of common stock were issued through the WICOR Plan
and by the exercise of employee stock options. These stock sales
provided funds to the Company of $16.7 million.
The holding company structure provides the Company with the
flexibility to maintain its financial strength in a changing
business environment while insulating Wisconsin Gas from
nonutility risk. Centralized equity financing is available whereby
equity capital raised may be reinvested by the Company in its
subsidiaries.
As described in Note 6, a November 1993 PSCW rate order
updated certain limitations with respect to equity levels and
dividend payments of Wisconsin Gas. Under the order, the equity
floor was lowered to reflect the need for increased short-term
debt financing for seasonal gas storage. The limitations on
dividend payments were unchanged from prior years.
<TABLE>
<CAPTION>
VERTICAL BAR GRAPH OF WICOR'S CAPITALIZATION
percent 1989 1990 1991 1992 1993
- ------------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
long-term debt 33.4% 35.4% 40.9% 40.1% 37.9%
common stock 66.6 64.6 59.1 59.9 62.1
/TABLE
<PAGE>
<PAGE> 7
Restrictions imposed by the PSCW are not expected to have any
material effect on WICOR's ability to meet its cash obligations.
WICOR invested $12 million and $15 million in Wisconsin Gas during
1993 and 1992, respectively.
The utility's ratio of pre-tax earnings to fixed charges
increased to 2.9 in 1993 due to higher earnings and lower interest
rates compared with 2.8 in 1992. The decrease in 1992 from 3.0 in
1991 was due to higher debt levels in 1992.
Access to securities markets can be correlated to credit
quality. The utility's unsecured bond rating was increased in 1993
by Moody's Investors Service from A1 to Aa3. The rating from
Standard & Poor's Corporation remained at AA-. Commercial paper
carrying an A-1+ rating by Standard & Poor's Corporation and P-1
by Moody's Investors Service is routinely issued by the utility as
needed to finance seasonal working capital needs, principally
customer receivables and gas in storage.
In March 1993, WICOR and its subsidiaries renewed a
three-year revolving credit agreement, including separate
agreements for $25 million for the WICOR parent company, $30
million for Wisconsin Gas, and $15 million for Sta-Rite. In 1993,
Sta-Rite renewed a $25 million commercial paper issuance facility.
Commercial paper outstanding at December 31, 1993 and 1992 was
$117.1 million and $56.3 million, respectively. The increase was
due, primarily, to financing of higher levels of gas in storage.
Regulatory Matters
- ------------------
In 1993, the PSCW adopted a biennial rate case process to
replace the existing annual process. The biennial process utilizes
a traditional cost based rate of return regulatory procedure with
the resulting rates made effective for two years. As an
alternative, Wisconsin Gas has proposed to the PSCW the adoption
of a Productivity-based Alternative Ratemaking Mechanism (PARM).
Developed as a four year pilot program, the PARM would feature an
inflation-based rate cap and a weather adjustment mechanism. The
PARM is designed to focus management's attention on long-term
productivity improvements rather than on responding to
uncontrollable weather variations. This will provide Wisconsin Gas
with appropriate incentives to control costs and to prepare for
the competitive environment that is resulting from the
deregulation and restructuring of the gas industry. The PARM
proposal is currently being reviewed by the PSCW. Management is
not able to assess the ultimate outcome of the proposal.
In April 1992, the FERC issued Order 636 requiring interstate
pipelines to "unbundle" their services. As a result, gas supplies
are sold separately from interstate transportation services.
Distribution companies such as Wisconsin Gas contract separately
with gas suppliers to buy gas to be delivered to the pipelines and
contract with the pipelines for transportation from gas production
areas to utility market areas. While Wisconsin Gas has been buying
a portion of its supply requirements in this manner for several
years, as FERC policies have evolved, it is now required to
purchase all of its supplies in this manner. As a result, the
utility has greater responsibility for managing its gas supply in
a more competitive market. Variable-term market sensitive
contracts and the increased use of gas in storage are being used
to assure future supply.<PAGE>
<PAGE> 8
Pipelines have been allowed to pass through to local gas
distributors such as Wisconsin Gas various costs incurred in the
transition to Order 636. The PSCW has authorized that such costs
that have been passed through to Wisconsin Gas be recovered in
rates charged to customers. Although complete assurance cannot be
given, it is believed that any additional future transition costs
will also be recoverable from customers.
Environmental Matters
- ---------------------
Wisconsin Gas has investigated its past gas manufacturing
practices to determine the environmental remediation efforts that
will be required. Wisconsin Gas has identified two previously
owned sites on which it operated manufactured gas plants where
contaminated soils are present. Wisconsin Gas is in the process of
reviewing investigative reports and developing a feasibility study
for presentation to and discussion with the Wisconsin Department
of Natural Resources. The utility anticipates that the costs
incurred in this effort will be recoverable from insurers or
through rates. (See Note 7 for a more detailed discussion of this
matter.)
The manufacturing segment has provided reserves believed
sufficient to cover its estimated costs related to contamination
associated with Sta-Rite's manufacturing facilities.
<PAGE>
<PAGE> 9
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of WICOR, Inc.:
We have audited the accompanying consolidated balance sheets
and statements of capitalization of WICOR, Inc. (a Wisconsin
corporation) and subsidiaries as of December 31, 1993 and 1992,
and the related consolidated statements of income, common equity
and cash flows for each of the three years in the period ended
December 31, 1993. These financial statements are the
responsibility of WICOR, Inc.'s management. Our responsibility is
to express an opinion on these statements 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 WICOR, Inc. and subsidiaries as of December 31, 1993 and 1992,
and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1993, in
conformity with generally accepted accounting principles.
As discussed in Notes 3 and 10 to the Consolidated Financial
Statements, effective January 1, 1992, WICOR, Inc. changed its
methods of accounting for income taxes and postretirement benefits
other than pensions.
Milwaukee, Wisconsin, ARTHUR ANDERSEN & CO.
February 11, 1994.<PAGE>
<PAGE> 10
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
(Thousands of Dollars, Except
per Share Amounts) Year Ended December 31, 1993 1992* 1991*
---------- ---------- ----------
<S> <C> <C> <C>
Operating Revenues
Gas distribution $ 574,835 $ 495,415 $ 474,702
Manufacturing and other 274,693 251,994 242,065
---------- ---------- ----------
849,528 747,409 716,767
---------- ---------- ----------
Operating Costs and Expenses
Purchased gas 382,027 319,377 303,441
Manufacturing cost of sales 197,297 180,388 173,014
Operations and maintenance 169,068 159,009 156,015
Depreciation, depletion and amortization 28,044 26,650 24,759
Taxes, other than income taxes 9,141 8,670 8,360
---------- ---------- ----------
785,577 694,094 665,589
---------- ---------- ----------
Operating Income 63,951 53,315 51,178
---------- ---------- ----------
Other Income (Deductions)
Interest expense (17,428) (18,126) (16,804)
Interest income 590 1,084 1,575
Other, net (324) 40 (307)
---------- ---------- ----------
(17,162) (17,002) (15,536)
---------- ---------- ----------
Income Before Income Taxes 46,789 36,313 35,642
Income taxes 17,476 13,549 12,676
---------- ---------- ----------
Income Before Cumulative Effects
of Accounting Changes 29,313 22,764 22,966
Cumulative effects of accounting changes:
Postretirement benefits other than pensions
(net of $4.1 million income tax benefit) - (6,165) -
Income taxes - (1,800) -
---------- ---------- ----------
Net Income $ 29,313 $ 14,799 $ 22,966
========== ========== ==========
Per Share of Common Stock Income before
cumulative effects of accounting changes $ 1.82 $ 1.47 $ 1.54
Cumulative effect of accounting change
for postretirement benefits - (0.40) -
Cumulative effect of accounting change
for income taxes - (0.11) -
---------- ---------- ----------
Net Income $ 1.82 $ 0.96 $ 1.54
========== ========== ==========
Cash dividends $ 1.54 $ 1.50 $ 1.46
Average Common Shares Outstanding (thousands) 16,096 15,490 14,890
========== ========== ==========
<FN>
*Restated to reflect the merger with Shurflo, which has been accounted for as a
pooling of interests (see Note 2).The accompanying notes are an integral part of
this statement.
/TABLE
<PAGE>
<PAGE> 11
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31,
-------------------------
1993 1992*
---------- ----------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 22,953 $ 16,632
Accounts receivable, less allowance for
doubtful accounts of $9,351 and
$7,344, respectively 111,408 103,063
Accrued utility revenues 53,483 48,029
Manufacturing inventories 58,079 54,873
Gas in storage, at weighted average cost 44,697 6,647
Deferred income taxes 10,005 6,829
Prepayments and other 13,969 13,339
---------- ----------
314,594 249,412
---------- ----------
Property, Plant and Equipment, at cost
Gas distribution 679,968 642,863
Manufacturing 97,736 90,139
Oil and gas - 32,838
---------- ----------
777,704 765,840
Less accumulated depreciation,
depletion and amortization 377,004 374,293
---------- ----------
400,700 391,547
---------- ----------
Deferred Charges and Other
Deferred systems development costs 38,808 36,265
Other regulatory assets 57,211 58,973
Deferred environmental costs 41,641 -
Prepaid pension costs 29,580 28,158
Gas transition costs 15,485 25,329
Other 35,707 36,090
---------- ----------
218,432 184,815
---------- ----------
$ 933,726 $ 825,774
========== ==========
<FN>
* Restated to reflect the merger with Shurflo, which has been accounted for as a
pooling of interests (see Note 2). The accompanying notes are an integral part
of this statement.
</TABLE>
<PAGE>
<PAGE> 12
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31,
-------------------------
1993 1992*
---------- ----------
<S> <C> <C>
Liabilities and Capitalization
Current Liabilities
Accounts payable $ 62,683 $ 73,785
Short-term borrowings 134,918 73,100
Refundable gas costs 15,596 13,641
Current portion of long-term debt 2,847 5,829
Accrued taxes 10,089 920
Accrued payroll and benefits 14,656 12,087
Other 15,199 19,135
---------- ----------
255,988 198,497
---------- ----------
Deferred Credits and Other
Environmental remediation costs 40,000 -
Unamortized investment tax credit 8,654 9,128
Deferred income taxes 45,878 46,671
Gas transition costs 15,485 25,329
Other regulatory liabilities 50,179 52,544
Postretirement benefit obligation 67,510 67,938
Other 14,526 16,209
---------- ----------
242,232 217,819
---------- ----------
Commitments and Contingencies (Note 7)
Capitalization (See accompanying statement)
Long-term debt 165,230 164,171
Redeemable preferred stock - -
Common equity 270,276 245,287
---------- ----------
435,506 409,458
---------- ----------
$ 933,726 $ 825,774
========== ==========
<FN>
* Restated to reflect the merger with Shurflo, which has been accounted for as a
pooling of interests (see Note 2). The accompanying notes are an integral part
of this statement.
/TABLE
<PAGE>
<PAGE> 13
CONSOLIDATED STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
(Thousands of Dollars)
Year Ended December 31, 1993 1992* 1991*
--------- --------- ---------
<S> <C> <C> <C>
Operations
Net income $ 29,313 $ 14,799 $ 22,966
Adjustments to reconcile net income to
net cash flow from operating activities:
Cumulative effect of changes in
accounting principles, net of $4,110
income tax benefit - 7,965 -
Depreciation, depletion and amortization 43,738 40,200 36,282
Deferred income taxes (3,969) (2,958) 2,953
Changes in:
Receivables (13,993) (8,627) (7,056)
Manufacturing inventories (2,590) (839) 9,384
Gas in storage (38,050) (6,252) 4,754
Other current assets (569) 6,016 (261)
Systems development costs (6,530) (9,976) (10,174)
Accounts payable (11,055) (2,259) 270
Refundable gas costs 1,955 5,633 (3,884)
Accrued taxes 9,169 (2,098) (1,567)
Other current liabilities (292) (1,754) (136)
Other noncurrent assets and liabilities (3,726) (2,838) (1,293)
Net assets of discontinued operations - - (1,825)
--------- --------- ---------
Cash provided by operating activities 3,401 37,012 50,413
--------- --------- ---------
Investment Activities
Capital expenditures (51,906) (71,873) (45,113)
Net proceeds from sale of assets 5,328 761 -
Net proceeds from sale of
discontinued operations - - 24,395
Acquisitions (2,120) (9,776) (4,152)
Other, net 541 274 994
--------- --------- ---------
Cash (used in) investing activities (48,157) (80,614) (23,876)
--------- --------- ---------
Financing Activities
Change in short-term borrowings 59,603 35,726 (5,729)
Issuance of long-term debt 47,446 173 40,023
Reduction of long-term debt (50,982) (8,674) (22,691)
Issuance of common stock 16,682 6,079 11,844
Dividends paid on common stock,
less amounts reinvested (21,450) (19,459) (18,304)
Other (222) (734) (710)
--------- --------- ---------
Cash provided by financing activities 51,077 13,111 4,433
--------- --------- ---------
Change in Cash and Cash Equivalents 6,321 (30,491) 30,970
Cash and cash equivalents at
beginning of year 16,632 47,123 16,153
--------- --------- ---------
Cash and Cash Equivalents at End of Year $ 22,953 $ 16,632 $ 47,123
========= ========= =========
<FN>
*Restated to reflect the merger with Shurflo, which has been accounted for as a
pooling of interests (see Note 2). The accompanying notes are an integral part
of this statement.
/TABLE
<PAGE>
<PAGE> 14
CONSOLIDATED STATEMENT OF CAPITALIZATION
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31, 1993 1992*
- ------------------------------------------- ---------- ----------
<S> <C> <C>
Long-Term Debt, Excluding Current Portion
Wisconsin Gas:
First mortgage bonds
8-1/2% Series due 1994 $ - $ 9,560
9-3/4% Series due 1995 - 35,000
Adjustable Rate Series, 8.1% and 8.8%,
respectively, due 2002 14,000 16,000
9-1/8% Notes due 1997 50,000 50,000
7-1/2% Notes due 1998 40,000 40,000
6.6% Notes due 2013 45,000 -
Sta-Rite:
First mortgage bonds, adjustable rate, 7.8%
to 8.1%, due semi-annually through 2000 1,431 2,107
Industrial revenue bonds, 7-7/8%,
payable through 2000 2,575 2,935
Commercial paper under multi-year credit agreement 4,758 -
Capital lease obligations and other 1,338 1,041
Unamortized (discount), net (1,356) (1,073)
ESOP loan guarantee 7,484 8,601
---------- ----------
165,230 164,171
---------- ----------
Redeemable Preferred Stock
WICOR:
$1.00 par value; authorized 1,500,000 shares - -
Wisconsin Gas:
Without par value, cumulative;
authorized 1,500,000 shares - -
---------- ----------
- -
---------- ----------
Common Equity
Common stock, $1.00 par value, authorized
60,000,000 shares; outstanding 16,407,000 and
15,722,000 shares, respectively 16,407 15,722
Other paid in capital 166,710 148,064
Retained earnings 94,643 90,102
Unearned compensation-ESOP (7,484) (8,601)
---------- ----------
270,276 245,287
---------- ----------
Total Capitalization $ 435,506 $ 409,458
========== ==========
<FN>
* Restated to reflect the merger with Shurflo, which has been accounted for as a
pooling of interests (see Note 2).The accompanying notes are an integral part
of this statement.
/TABLE
<PAGE>
<PAGE> 15
CONSOLIDATED STATEMENT OF COMMON EQUITY
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31, 1993 1992* 1991*
---------- ---------- ----------
<S> <C> <C> <C>
Common Stock
Balance at beginning of year* $ 15,722 $ 15,366 $ 14,731
Issued in connection with dividend
reinvestment, customer stock purchase
and employee benefit plans 685 356 635
---------- ---------- ----------
Balance at end of year 16,407 15,722 15,366
---------- ---------- ----------
Other Paid-in Capital
Balance at beginning of year* 148,064 139,931 126,589
Received in connection with dividend
reinvestment, customer stock purchase
and employee benefits plans 18,646 8,133 13,342
---------- ---------- ----------
Balance at end of year 166,710 148,064 139,931
---------- ---------- ----------
Retained Earnings
Balance at beginning of year* 90,102 97,906 96,087
Net income 29,313 14,799 22,966
Dividends on common stock (24,099) (21,869) (20,437)
Other (673) (734) (710)
---------- ---------- ----------
Balance at end of year 94,643 90,102 97,906
---------- ---------- ----------
Unearned Compensation-ESOP
Balance at beginning of year (8,601) (9,750) -
Loan for ESOP shares purchased - - (10,000)
Loan payments 1,117 1,149 250
---------- ---------- ----------
Balance at End of Year (7,484) (8,601) (9,750)
---------- ---------- ----------
Total Common Equity at End of Year $ 270,276 $ 245,287 $ 243,453
========== ========== ==========
<FN>
* Restated to reflect the merger with Shurflo, which has been accounted for as a
pooling of interests (see Note 2). The accompanying notes are an integral part
of this statement.
/TABLE
<PAGE>
<PAGE> 16
QUARTERLY FINANCIAL DATA (UNAUDITED)
Because seasonal factors significantly affect Wisconsin Gas
operations, the following data is not comparable between quarters:
<TABLE>
<CAPTION>
(Thousands of Dollars, Except
per Share Amounts) Quarters: First Second Third Fourth
- ----------------------------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1993 (b)
Operating revenues $272,660 $190,223 $152,801 $233,844
Operating income 41,689 5,881 (8,406) 24,787
Income available for common stock 23,935 576 (8,597) 13,399
Net income per common share (a) 1.51 0.04 (0.53) 0.82
- -------------------------------------------------------------------------------
1992 (b)
Operating revenues $242,271 $155,514 $125,295 $224,329
Operating income 32,266 5,221 (8,532) 24,360
Income before cumulative effect
of changes in accounting 17,629 367 (8,253) 13,021
Income available for common stock 9,664 367 (8,253) 13,021
Income per common share before
cumulative effect (a) 1.14 0.02 (0.53) 0.83
Net income per common share (a) 0.63 0.02 (0.53) 0.83
- -------------------------------------------------------------------------------
<FN>
(a) Quarterly earnings per share may not total to the amounts reported for the
year since the computation is based on weighted average common shares
outstanding during each quarter.
(b) Restated all quarters of 1992 and first and second quarters of 1993 to reflect
the merger with Shurflo, which has been accounted for as a pooling of
interests (see Note 2).
/TABLE
<PAGE>
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
a. Principles of Consolidation
The consolidated financial statements include the accounts of
WICOR, Inc., and its wholly-owned subsidiaries (WICOR or the
Company): Wisconsin Gas Company (Wisconsin Gas), Sta-Rite
Industries, Inc. (Sta-Rite), and SHURflo Pump Manufacturing Co.
(Shurflo). All appropriate intercompany transactions have been
eliminated.
b. Business
Wisconsin Gas is a public utility engaged in the distribution
of natural gas throughout Wisconsin. Most of its revenues,
however, are derived from gas delivered in southeastern Wisconsin.
Wisconsin Gas is subject to regulation by the Public Service
Commission of Wisconsin (PSCW) and gives recognition to ratemaking
policies substantially in accordance with the Federal Energy
Regulatory Commission (FERC) System of Accounts. Statement of
Financial Accounting Standards (SFAS) No. 71 "Accounting for the
Effects of Certain Types of Regulation" provides that
rate-regulated public utilities such as Wisconsin Gas record
certain costs and credits allowed in the ratemaking process in
different periods than for the unregulated subsidiaries. These
costs and credits are deferred as regulatory assets or regulatory
liabilities and are recorded on the income statement at the time
they are recognized in rates.
Sta-Rite manufactures pumps and water processing equipment
and sells its products in approximately 110 countries.
Shurflo, which merged with the Company during the third
quarter of 1993 (See Note 2), manufactures pumps for the food
service, recreational vehicle, marine, industrial and water
purification markets.
c. Gas Distribution Revenues and Purchased Gas Costs
Utility billings are rendered on a cycle basis. Revenues
include estimated amounts accrued for service provided but not yet
billed.
Wisconsin Gas' rate schedules contain purchased gas
adjustment (PGA) provisions which permit the recovery of actual
purchased gas costs incurred. The difference between actual gas
costs incurred and costs recovered through rates, adjusted for
inventory activity, is deferred as a current asset or liability.
The deferred balance is returned to or recovered from customers at
intervals throughout the year and any residual balance at the
annual October 31 reconciliation date is subsequently refunded to
or recovered from customers.
The PSCW is currently permitting Wisconsin Gas to recover
pipeline supplier take-or-pay settlement costs, allocating a
portion of the direct-billed costs to each customer class,
including transportation customers (See Note 8).<PAGE>
<PAGE> 18
d. Plant and Depreciation
Gas distribution property, plant and equipment is stated at
original cost, including overhead allocations. Upon ordinary
retirement of plant assets, their cost plus cost of removal, net
of salvage, is charged to accumulated depreciation, and no gain or
loss is recognized.
Wisconsin Gas depreciation is computed using straight-line
rates established by the PSCW equivalent to composite rates of
4.7% for each of the years 1993, 1992 and 1991.
Depreciation of manufacturing property is calculated under
the straight-line method over the estimated useful lives of the
assets (3 to 10 years for equipment and 30 years for buildings)
and is primarily reported as a cost of sales.
e. Deferred Charges
Consistent with PSCW regulation, Wisconsin Gas has deferred
computer systems development costs which are to be amortized over
a five to ten year period, generally as the respective systems
become operational.
Wisconsin Gas is precluded from discontinuing service to
residential customers within its service area during a certain
portion of the heating season. Any differences between doubtful
account provisions based on actual experience and provisions
allowed for ratemaking purposes by the PSCW are deferred for later
recovery in rates as a cost of service. The most recent PSCW rate
order provides for a $16.1 million allowable annual provision for
doubtful accounts, including amortization of prior deferred
amounts. See Notes 7, 8 and 10 for discussion of additional
deferred charges.
f. Income Taxes
The Company files a consolidated Federal income tax return
and allocates Federal current tax expense or credits to each
subsidiary based on its respective separate tax computation.
Beginning with 1992, the Company has provided deferred income
taxes in accordance with SFAS 109 "Accounting for Income Taxes,"
to reflect tax effects of reporting book and taxable income in
different periods (See Note 3).
For Wisconsin Gas, investment tax credits were recorded as a
deferred credit on the balance sheet and are being amortized to
income over the applicable service lives of the related properties
in accordance with regulatory treatment.
g. Net Income per Common Share
Net income per common share is based on the weighted average
number of shares. Employee stock options are not recognized in the
computation of earnings per common share as they are not
materially dilutive.
h. Manufacturing Inventories
Approximately 54% and 57% of manufacturing inventories, in
1993 and 1992 respectively, are priced using the last-in,
first-out (LIFO) method (not in excess of market), with the
remaining inventories priced using first-in, first-out (FIFO).<PAGE>
<PAGE> 19
If the (FIFO) method had been used entirely, manufacturing
inventories would have been $8.0 million and $8.3 million higher
at December 31, 1993 and 1992, respectively.
i. Cash Flows
The Company considers all highly liquid debt instruments
purchased with an original maturity of three months or less to be
cash equivalents. Due to the short maturity of these instruments,
market value approximates cost.
In connection with the sale of discontinued operations,
Sta-Rite received $1.4 million in notes receivable in 1991.
The Company's dividends reinvested (pursuant to its dividend
reinvestment plan) totalled $2.6 million, $2.4 million and $2.1
million for 1993, 1992, and 1991, respectively.
For purposes of the Consolidated Statement of Cash Flows,
income taxes paid (net of refunds) and interest paid (excluding
capitalized interest) were as follows for each of the years ended
December 31, 1993, 1992 and 1991:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1993 1992 1991
- ---------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Income taxes paid $ 16,106 $ 8,805 $ 11,418
Interest paid $ 17,678 $ 17,404 $ 16,827
</TABLE>
j. Reclassifications
Certain prior year financial statement amounts have been
reclassified to conform to their current year presentation.
2. MERGERS AND ACQUISITIONS
On July 28, 1993, a subsidiary of the Company completed its
merger with Carr-Griff, Inc. which became SHURflo Pump
Manufacturing Co., a wholly-owned subsidiary of WICOR, Inc.
Shurflo designs, manufactures and sells pumps to the food service,
recreational vehicle, marine, industrial and water purification
markets. The Company issued approximately 0.9 million shares of
common stock, valued at approximately $27 million, for all the
outstanding common stock of Shurflo. This transaction was
accounted for as a pooling of interests; therefore, prior
financial statements have been restated to reflect this merger.<PAGE>
<PAGE> 20
Net sales and net income included in the Company's
Consolidated Statements of Income are as follows:
<TABLE>
<CAPTION>
(Thousands of Dollars)
Year Ended December 31, 1992 1991
- -------------------------------- ---------- ----------
<S> <C> <C>
Net sales:
WICOR $ 704,905 $ 681,708
Shurflo 42,504 35,059
---------- ----------
$ 747,409 $ 716,767
========== ==========
Net income before accounting changes:
WICOR $ 20,469 $ 21,527
Shurflo 2,295 1,439
---------- ----------
$ 22,764 $ 22,966
========== ==========
</TABLE>
3. INCOME TAXES
In the fourth quarter of 1992, the Company adopted SFAS No.
109, "Accounting for Income Taxes," retroactive to January 1,
1992. Under the liability method prescribed by SFAS No. 109,
deferred taxes are provided based upon enacted tax laws and rates
applicable to the periods in which the taxes became payable. This
adoption resulted in a net loss from the cumulative effect of the
change in accounting principle of $1.8 million for the
nonregulated subsidiaries. Changes in Wisconsin Gas's deferred
income taxes arising from the adoption represent amounts
recoverable or refundable through future rates and have been
recorded as regulatory assets totalling $4.6 million and
liabilities totalling $29.7 million on the balance sheet for 1992.
The current and deferred components of income tax expense from
continuing operations are as follows:
<TABLE>
<CAPTION>
(Thousands of Dollars) Year ended December 31, 1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Current
Federal $18,576 $ 3,818 $ 6,706
State 4,742 1,405 1,788
Foreign 834 800 266
-------- -------- --------
Total Current 24,152 6,023 8,760
-------- -------- --------
Deferred
Federal (6,432) 5,974 3,725
State (961) 1,588 618
Foreign 717 (36) (427)
-------- -------- --------
Total Deferred (6,676) 7,526 3,916
-------- -------- --------
Total Provision $17,476 $13,549 $12,676
======== ======== ========
/TABLE
<PAGE>
<PAGE> 21
The components of deferred income tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31 1993 1992
-------- --------
<S> <C> <C>
Deferred Income Tax Assets
Recoverable gas costs $ 5,928 $ 1,267
Inventory (2,052) (2,036)
Deferred compensation 1,873 1,711
Other 4,256 5,887
-------- --------
$10,005 $ 6,829
======== ========
Deferred Income Tax Liabilities
Property related $37,496 $37,617
Systems development costs 15,576 14,268
Investment tax credit (5,725) (5,896)
Gas transition costs 5,633 9,765
Postretirement benefits (5,503) (4,509)
Deferred compensation (2,747) (2,459)
Pension benefits 2,249 1,469
Recoverable gas costs - (3,400)
Other (1,101) (184)
-------- --------
$45,878 $46,671
======== ========
The provision for income taxes differs from the amount of
income tax determined by applying the applicable U.S. statutory
federal income tax rate to pretax income as a result of the
following differences:
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
-------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Statutory U.S. tax rates $16,376 35.0% $12,346 34.0% $12,118 34.0%
State income taxes, net 2,326 5.0 1,841 5.1 1,795 5.0
Excess of foreign over U.S.
statutory tax rate 886 1.9 843 2.3 (336) (0.9)
Investment credit restored (473) (1.0) (502) (1.4) (481) (1.4)
Excess deferred tax amortization (532) (1.1) (507) (1.4) (474) (1.3)
Other, net (1,107) (2.4) (472) (1.3) 54 0.2
-------- ----- -------- ----- -------- -----
Effective Tax Rates $17,476 37.4% $13,549 37.3% $12,676 35.6%
======== ===== ======== ===== ======== =====
</TABLE>
Under SFAS No. 109, assets and liabilities acquired in
purchase business combinations are assigned their fair values
assuming equal bases, and deferred taxes are provided for lower or
higher tax bases. Under previous accounting rules, values
assigned were net-of-tax. In adopting SFAS No. 109, the Company
adjusted the carrying amount of various WICOR, Inc. acquisitions
made in prior years.<PAGE>
<PAGE> 22
4. SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31 1993 1992
- ---------------------------------- ---------- ----------
<S> <C> <C>
Notes payable to banks
U.S. subsidiaries $ 3,600 $ 1,410
Non U.S. subsidiaries 14,218 15,415
Commercial paper - U.S. 117,100 56,275
---------- ----------
$ 134,918 $ 73,100
========== ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Weighted average interest rates
on debt outstanding at end of year:
Notes payable to banks
U.S. subsidiaries 4.1% 5.1%
Non-U.S. subsidiaries 5.3% 8.9%
Commercial paper - U.S. 3.4% 3.6%
</TABLE>
As of December 31, 1993 and 1992, the Company had total
unsecured lines of credit available from banks of $183.4 million
and $95.8 million, respectively. These borrowing arrangements may
require the maintenance of average compensating balances, which
are generally satisfied by balances maintained for normal business
operations, and may be withdrawn at any time.
5. LONG-TERM DEBT
In September 1993, Wisconsin Gas issued $45 million of 6.6%
Notes due in 2013, the proceeds of which were used to refinance
$45 million of outstanding higher cost first mortgage bonds due in
1994 and 1995. There were no issuances of long-term debt in 1992.
In November 1991, Wisconsin Gas issued $40 million of 7-1/2%
Notes due in 1998. A portion of the proceeds was used to redeem
the remaining $10.4 million of 6-5/8% First Mortgage Bonds at
their maturity dates.
Substantially all gas distribution and certain manufacturing
property and plant is subject to first mortgage liens. Maturities
and sinking fund requirements during the succeeding five years on
all long-term debt total $3.0 million, $3.0 million, $7.6 million,
$53.4 million and $43.0 million in 1994, 1995, 1996, 1997 and
1998, respectively.
6. RESTRICTIONS
A November 1993 rate order sets an equity range of 43% to 50%
for the utility and also requires Wisconsin Gas to request PSCW
approval prior to the payment of dividends on its common stock to
WICOR if the payment would reduce its common equity (net assets)
below 43% of total capitalization (including short-term debt).<PAGE>
<PAGE> 23
Under this requirement, $8.1 million of Wisconsin Gas's net assets
at December 31, 1993, plus future earnings, were available for
such dividends without PSCW approval. In addition, the PSCW
imposes certain limitations on the ability of Wisconsin Gas to pay
dividends to WICOR in excess of the level indicated in the
projected test year if such dividends would dilute Wisconsin Gas's
total equity below 48.43% of its total capitalization. The utility
dividend payout indicated in the projected test year ending
October 31, 1994 is $16 million of which $4 million was paid in
November, 1993.
In connection with its long-term debt agreements, Sta-Rite is
subject to restrictions on working capital, shareholder's equity
and debt. These agreements also limit the amount of retained
earnings available for the payment of cash dividends to WICOR and
for certain investments. At December 31, 1993, $8.6 million of
Sta-Rite net assets plus 50% of its future retained earnings were
available for payment of dividends to WICOR.
Combined restricted common equity of the Company's
subsidiaries totaled $234.8 million under the most restrictive
provisions as of December 31, 1993; accordingly, $35.5 million of
consolidated retained earnings is available for payment of
dividends.
Historically, the PSCW has imposed restrictions on public
utility holding companies, including WICOR, relating to future
nonutility investments. In January 1992, the PSCW approved
amendments to limitations set on the Company. The PSCW order
states that the utility should remain the predominant business,
generally as measured by equity, within the holding company
system. The amount allowable for such future investment at
December 31, 1993 was $77.8 million. Also, nonutility subsidiaries
can borrow additional amounts for acquisitions; however, if debt
for the consolidated nonutility entities exceeds 40% of total
capitalization for these entities, further PSCW actions may be
necessary.
7. COMMITMENTS AND CONTINGENCIES
Certain commitments have been made in connection with 1994
capital expenditures. Wisconsin Gas capital expenditures for 1994
are estimated at $57.4 million. Manufacturing capital expenditures
for 1994 are estimated at $13.9 million.
Wisconsin Gas has variable-term contracts with its interstate
pipeline and gas suppliers to purchase transportation capacity and
natural gas. PGA provisions permit the recovery of actual
purchased capacity and gas costs incurred.
Wisconsin Gas has identified two previously owned sites on
which it operated manufactured gas plants that are of
environmental concern. Such plants ceased operations prior to the
mid-1950's. Wisconsin Gas has engaged an environmental consultant
to help determine the nature and extent of the contamination at
these sites. Based on the test results obtained and the possible
remediation alternatives available, the Company has estimated that
cleanup costs could range from $22 million to $75 million. As of
December 31, 1993 the Company has accrued $40 million for cleanup
costs in addition to $1.6 million of costs already incurred. These
estimates are based on current undiscounted costs. It should also
be noted that the numerous assumptions such as the type and extent
of contamination, available remediation techniques, and regulatory
requirements which are used in developing these estimates are
subject to change as new information becomes available.<PAGE>
<PAGE> 24
Any such changes in assumptions could have a significant impact on
the potential liability.
A formal remediation plan is currently being developed for
presentation to the Wisconsin Department of Natural Resources.
Following plan approval and pilot studies, remediation will
commence. Barring unforeseen delays, expenditures by Wisconsin Gas
on this remediation work will commence in 1994 and increase in
future years as plan approvals are obtained. Expenditures over the
next three years are expected to total approximately $20 million.
Although most of the work and costs will be incurred in the first
few years of the plan, monitoring of the sites and other necessary
techniques may last up to 30 years.
Wisconsin Gas is pursuing recovery of these costs from
insurance carriers. Any amounts not recoverable from insurance
carriers will be allowed full recovery in rates based on recent
PSCW orders. Accordingly, the accrual has been offset by a
deferred charge to a regulatory asset. Certain related
investigation costs incurred to date are currently being recovered
in utility rates. However, any incurred costs not yet recovered in
rates are not allowed by the PSCW to earn a return. As of December
31, 1993 $1.6 million of such costs have been incurred.
During 1990, Sta-Rite contracted with the Wisconsin Department
of Natural Resources to complete the investigation and remediation
phases of the federal Superfund environmental process for
contaminants associated with one of Sta-Rite's manufacturing
facilities. Management believes the amounts reserved will be
adequate to remedy the problem.
The Company is party to various legal proceedings arising in
the ordinary course of business which are not expected to have a
material effect on the financial statements of the Company.
8. FERC ORDER NO. 636
On April 8, 1992, the FERC issued Order No. 636 which
restructured the interstate natural gas pipeline business.
Pipeline suppliers will be allowed to recover significant
transition costs from Wisconsin Gas necessary to implement
"unbundled" services such that gas supplies would be sold
separately from interstate transportation services. Wisconsin Gas'
liability for certain of these costs is being contested at FERC
and in court. The extent of this future liability is not estimable
at this time due to a number of factors including the future cost
of gas and the outcome of ongoing litigation. However, on the
basis of previous PSCW ratemaking relative to the recovery of gas
purchased and related costs, Wisconsin Gas anticipates that
pipeline transition cost billings will also be recoverable from
ratepayers.
9. COMMON STOCK AND OTHER PAID-IN CAPITAL
As of December 31, 1993, 16,407,234 shares were issued and
outstanding and 2,813,538 shares are reserved for issuance under
the Company's dividend reinvestment, stock option and 401(k)
plans. In addition, 19,221,072 shares are reserved pursuant to the
Company's shareholder rights plan.
Under certain circumstances, each right entitles the
shareholder to purchase one common share at an exercise price of
$75, subject to adjustment. The rights are not exercisable until
ten business days after a person or group announces a tender offer<PAGE>
<PAGE> 25
or exchange offer which would result in their acquiring ownership
of 20% or more of the Company's outstanding common stock or after
a person or group acquires at least 20% of the Company's
outstanding common shares. If, after 20% or more of the
outstanding shares of WICOR common stock is acquired by a person
or group and the Company is then acquired by that person or group,
rights holders would be entitled to purchase shares of common
stock of the acquiring person or group having a market value of
two times the exercise price of the rights. The rights do not have
any voting rights and may be redeemed at a price of $.01 per
right. The rights expire on August 29, 1999.
During the first, third and fourth quarters of 1993, the
Company invested $2 million, $8 million and $2 million,
respectively, in Wisconsin Gas. In the first and third quarters of
1992, the Company invested $5 million and $10 million,
respectively, in Wisconsin Gas.
10. BENEFIT PLANS
a. Pension Plans
The Company's subsidiaries have non-contributory pension plans
which cover substantially all their employees and include benefits
based on levels of compensation and years of service. Employer
contributions and funding policies are consistent with funding
requirements of Federal law and regulations. Commencing on
November 1, 1992, Wisconsin Gas pension costs or credits are
calculated in accordance with SFAS No. 87 and are recoverable from
or refunded to customers. Prior to this date, pension costs were
recoverable in rates as funded.
The following table sets forth the funded status of pension
plans, including minor underfunded plans, at December 31, 1993 and
1992. The recorded cumulative adjustment to the utility funded
amount was $21.3 million and was offset by a regulatory liability.<PAGE>
<PAGE> 26
<TABLE>
<CAPTION>
Assets Exceed Accumulated Benefits
Accumulated Benefits Exceed Assets
--------------------- ---------------------
(Thousands of Dollars) December 31, 1993 1992 1993 1992
- ----------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Accumulated benefit obligation
Vested benefits $(103,260) $(101,717) $ (6,471) $ (4,971)
Nonvested benefits (11,198) (6,119) (87) (81)
---------- ---------- ---------- ----------
(114,458) (107,836) (6,558) (5,052)
Effect of projected future
compensation levels (49,961) (38,121) (537) (364)
---------- ---------- ---------- ----------
Projected benefit obligation (164,419) (145,957) (7,095) (5,416)
Plan assets at fair value 228,091 212,463 176 177
---------- ---------- ---------- ----------
Plan assets greater (less) than
projected benefit obligation 63,672 66,506 (6,919) (5,239)
Unrecognized net (asset) liability
at September 30, 1985 being
recognized over approximately
16 years (21,185) (23,191) 1,104 1,074
Unrecognized prior service costs 6,166 4,518 - 1
Unrecognized net (gain) loss (19,073) (19,675) 348 -
Additional minimum liability recorded - - (1,037) (890)
---------- ---------- ---------- ----------
Accrued pension asset (liability) $ 29,580 $ 28,158 $ (6,504) $ (5,054)
========== ========== ========== ==========
</TABLE>
The weighted average discount rate assumptions used in
determining the actuarial present value of the projected benefit
obligation were 7.5%, 7.75% and 7.75% for 1993, 1992 and 1991,
respectively. For 1991 through 1993, the expected long-term rate
of return on assets and long-term rate of compensation growth were
8.2% and 6.0%, respectively.
Net pension costs include the following (income) expense:
<TABLE>
<CAPTION>
(Thousands of Dollars)
Year Ended December 31 1993 1992 1991
- -------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Service costs $ 5,658 $ 5,189 $ 4,695
Interest costs on projected
benefit obligations 11,807 10,977 10,255
Actual return on assets (18,016) (16,085) (31,029)
Net amortization and deferral (69) (1,127) 14,326
Adjustment to utility funded amount - 1,513 2,029
---------- ---------- ----------
Net pension (income) cost $ (620) $ 467 $ 276
========== ========== ==========
/TABLE
<PAGE>
<PAGE> 27
The decrease in pension cost from 1992 to 1993 was due to the
adoption by the PSCW of SFAS No. 87 for ratemaking purposes,
effective November 1, 1992.
b. Postretirement Health Care and Life Insurance
In addition to providing pension benefits, the Company
provides certain health care and life insurance benefits for
retired employees when they reach normal retirement age while
working for the Company.
Wisconsin Gas funds the accrual annually based on the maximum
tax deductible amount. For Sta-Rite, until 1992, the cost of these
retiree benefits has been recognized as an expense as claims were
incurred. Company expenses recorded totalled $8.4 million for
1991.
Effective January 1, 1992, the Company adopted SFAS No. 106,
"Employers Accounting for Postretirement Benefits Other Than
Pensions", for its retiree benefit plans. Under SFAS No. 106, the
Company is required to accrue the estimated cost of retiree
benefit payments, other than pensions, during the employees'
active service period. Wisconsin Gas, as mandated by the PSCW,
recognized the accumulated benefit obligation and a related
regulatory asset of $54.1 million at adoption. Amortization of the
regulatory asset is recoverable in its rates over a 20-year
period. Sta-Rite recognized such amounts as a cumulative effect.
Accordingly, the cumulative effects for the Company of adopting
SFAS No. 106 as of December 31, 1992, were an increase in the
accumulated postretirement benefit obligation (APBO) of $65.0
million and a decrease in 1992 net earnings of $6.2 million ($0.40
per share).
Net postretirement health care and life insurance costs
consisted of the following components:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1993 1992
- -------------------------------------- ---------- ----------
<S> <C> <C>
Service cost $ 2,813 $ 2,711
Interest cost on projected
benefit obligation 6,495 6,181
Return on plan assets (1,414) (895)
Amortization of transition obligation 2,651 2,778
Adjustment to utility funded amount - (2,108)
---------- ----------
Net postretirement benefit cost $ 10,545 $ 8,667
========== ==========
</TABLE>
The increase in postretirement benefit cost from 1992 to 1993
was due to the adoption by the PSCW of SFAS No. 106 for ratemaking
purposes, effective November 1, 1992.<PAGE>
<PAGE> 28
The following table sets forth the plans' funded status,
reconciled with amounts recognized in the Company's Statement of
Financial Position at December 31, 1993 and 1992, respectively.
<TABLE>
<CAPTION>
Accumulated benefit obligation
(Thousands of Dollars) 1993 1992
- ------------------------------------- ---------- ----------
<S> <C> <C>
Retirees $ (43,548) $ (42,313)
Active employees (52,327) (44,141)
---------- ----------
Accumulated benefit obligation (95,875) (86,454)
Plan assets at fair value 25,753 19,139
---------- ----------
Accumulated benefit obligation
in excess of plan assets (70,122) (67,315)
Unrecognized actuarial loss/(gain) 2,612 (623)
---------- ----------
Accrued postretirement benefit $ (67,510) $ (67,938)
========== ==========
</TABLE>
The postretirement benefit cost components for 1993 were
calculated assuming health care cost trend rates ranging up to 13%
for 1993 and decreasing to 6% over 10 to 25 years. The health care
cost trend rate has a significant effect on the amounts reported.
Increasing the assumed health care cost trend rates by one
percentage point in each year would increase the APBO as of
December 31, 1993 by $14.7 million and the aggregate of the
service and interest cost components of postretirement expense by
$1.8 million.
The assumed discount rate used in determining the actuarial
present value of the accumulated postretirement benefit obligation
was 7.50% and 7.75% in 1993 and 1992, respectively. Plan assets
are primarily invested in common stock and fixed income
securities.
c. Retirement Savings Plans
Wisconsin Gas and Sta-Rite maintain various employee savings
plans, which provide employees a mechanism to contribute amounts
up to 16% of their compensation for the year. Company matching
contributions may be made up to 5% of eligible compensation
including 1% for the ESOP. Total contributions were valued at $1.8
million in 1993, $1.6 million in 1992 and $1.4 million in 1991.
d. Employee Stock Ownership Plan
In November 1991, WICOR established an Employee Stock
Ownership Plan (ESOP) covering non-union employees of Wisconsin
Gas. The ESOP funds employee benefits of up to 1% of compensation
with Company common stock distributed through the ESOP.<PAGE>
<PAGE> 29
The ESOP used the proceeds from a $10 million, 3-year
adjustable rate loan with a 3.98% interest rate at December 31,
1993, guaranteed by the Company, to purchase 431,266 shares of
original issue WICOR common stock. Because the Company has
guaranteed the loan, the unpaid balance is shown as long-term debt
with a like amount of unearned compensation being recorded as a
reduction of common equity on the Company's balance sheet.
The ESOP trustee is repaying the $10 million loan with
dividends on shares of WICOR common stock in the Employee Stock
Ownership Plan and with Wisconsin Gas contributions to the ESOP.
e. Stock Options
The Company has a total of 151 employees participating in one
or more of its common stock option plans. Changes in stock options
outstanding for all plans were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Outstanding at January 1 763,342 712,392 703,562
Granted 180,350 178,900 143,700
Exercised/Canceled (148,767) (127,950) (134,870)
---------- ---------- ----------
Outstanding at December 31 794,925 763,342 712,392
========== ========== ==========
Exercise price per share $10.38- $10.38- $10.38-
$27.31 $24.44 $23.06
========== ========== ==========
Available for future grant at year-end 783,116 261,000 433,200
</TABLE>
All options, except for 45,333 and 46,850 granted in 1993 and
1992, respectively, which may vest in 1996 and 1995, respectively,
are currently exercisable at prices not less than the fair market
value on the date of grant and expire not later than eleven years
from the date of grant.
f. Postemployment Benefit Plans
The FASB has issued statement SFAS No. 112, "Employers
Accounting for Postemployment Benefits," to be adopted no later
than January 1, 1994, which requires accrual for all other
postemployment benefits. In management's opinion, any unrecorded
liabilities are expected to be recoverable in future rates for
utility operations and are not significant.<PAGE>
<PAGE> 30
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company's long-term debt is estimated
based on the quoted market prices of U.S. Treasury issues having
a similar term to maturity, adjusted for the Company's bond rating
and the present value of future cash flows.
Because Wisconsin Gas operates in a regulated environment,
shareholders would probably not be affected by realization of
gains or losses on extinguishment of its outstanding fixed-rate
debt. Realized gains would be refunded to and losses would be
recovered from customers through gas rates.
The estimated fair value of WICOR's long-term debt at
December 31, is as follows:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1993 1992
- ----------------------------------- ---------- ----------
<S> <C> <C>
Carrying amount $ 165,230 $ 164,171
Fair value $ 175,213 $ 175,411
</TABLE>
12. OTHER FINANCIAL INFORMATION
See page 22 for unaudited quarterly financial data. See
Financial Review on page 13 for industry segment data.<PAGE>
<PAGE> 31
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
(Thousands of Dollars, Except
Per Share Amounts) 1993 1992 1991 1990
- ----------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
INCOME STATEMENT (2)(4)
Operating revenues $849,528 $747,409 $716,767 $696,023
Net income $ 29,313 $ 14,799 $ 22,966 $ 16,651
Net income per common share (1) $ 1.82 $ 0.96 $ 1.54 $ 1.14
========= ========= ========= =========
BALANCE SHEET (4)
Capitalization at year-end
Long-term debt $165,230 $164,171 $168,366 $130,215
Redeemable preferred stock - - - -
Common equity 270,276 245,287 243,453 237,407
--------- --------- --------- ---------
$435,506 $409,458 $411,819 $367,622
========= ========= ========= =========
Total assets at year-end (2) $933,726 $825,774 $670,250 $651,559
========= ========= ========= =========
COMMON STOCK DATA
Dividends per common share (1) $ 1.54 $ 1.50 $ 1.46 $ 1.42
Book value per common share (1)(4) $ 16.47 $ 15.60 $ 15.84 $ 16.12
Market-to-book at year-end (%)(4) 191 175 153 122
Dividend payout ratio (%)(2)(3)(5) 82.2 96.1 89.0 117.2
Yield at year-end (%) 5.0 5.6 6.1 7.3
Return on average common
equity(%)(2)(3)(6) 11.2 9.2 9.5 6.8
P/E ratio at year-end (2)(3)(4) 17.3 18.5 15.7 17.2
Price range $ 25-5/8- $ 22-7/8- $ 18-5/8- $ 18-1/4-
$ 32-7/8 $ 27-3/8 $ 24-3/8 $ 25-1/4
Shareholders at year-end 17,091 17,780 18,503 19,463
========= ========= ========= =========
OTHER GENERAL DATA (2)(4)
Cash flow from operations $ 3,401 $ 37,012 $ 50,413 $ 10,022
Capital expenditures $ 51,906 $ 71,873 $ 45,113 $ 37,529
Debt/equity ratio at year-end 38/62 40/60 41/59 35/65
Employees at year-end 3,222 3,178 3,196 3,152
========= ========= ========= =========
GAS DISTRIBUTION OPERATIONS
Gas sold and transported (thousands
of dekatherms-MDth)
Residential 47,964 45,905 45,614 43,020
Commercial 19,060 17,840 17,861 16,319
Industrial firm 15,246 14,488 15,690 15,106
Industrial interruptible 20,849 17,388 17,440 16,620
Transported 17,408 21,379 19,658 16,565
--------- --------- --------- ---------
120,527 117,000 116,263 107,630
========= ========= ========= =========
Customers at year-end 485,103 470,956 460,549 452,906
Customers served per employee 359 331 323 321
Average cost of gas per Dth purchased $ 3.76 $ 3.34 $ 3.18 $ 3.30
Average annual residential bill $ 779 $ 712 $ 677 $ 670
Average use per residential
customer (Dth) 116 115 117 113
Degree days 6,775 6,683 6,416 6,103
% colder (warmer) than normal (4.1) (6.4) (10.8) (16.0)
========= ========= ========= =========
MANUFACTURING OPERATIONS (2)(4)
Operating revenues $274,693 $251,994 $242,065 $238,484
International and export sales
as a % of total sales 34 34 31 27
========= ========= ========= =========
DATA FOR CONTINUING OPERATIONS (3)(4)
Operating revenues $849,528 $747,409 $716,767 $696,023
Net income $ 29,313 $ 22,764 $ 22,966 $16,651
Net income per common share (1) $ 1.82 $ 1.47 $ 1.54 $ 1.04
<FN>
(1) Adjusted for a two-for-one stock split in March 1989.
(2) Includes continuing operations and discontinued operations up to the year
disposition was authorized.
(3) Before effects of 1992 accounting changes (See Note 2).
Adjusted for merger with Shurflo through (4) 1984, (5) 1988 and (6) 1989.
/TABLE
<PAGE>
<PAGE> 32
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
(Thousands of Dollars, Except
per Share Amounts) 1989 1988 1987 1986
- ---------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
INCOME STATEMENT(2)(4)
Operating revenues $741,218 $780,633 $699,418 $761,104
Net income $ 33,881 $ 34,163 $ 19,682 $ 19,780
Net income per common share(1) $ 2.33 $ 2.38 $ 1.39 $ 1.53
========= ========= ========= =========
BALANCE SHEET(4)
Capitalization at year end
Long-term debt $122,639 $133,034 $127,833 $144,495
Redeemable preferred stock - - 8,000 14,267
Common equity 244,351 227,080 207,658 203,477
--------- --------- --------- ---------
$366,990 $360,114 $343,491 $362,239
========= ========= ========= =========
Total assets at year end(2) $620,548 $565,967 $536,998 $542,036
========= ========= ========= =========
COMMON STOCK DATA
Dividends per common share(1) $ 1.37 $ 1.32 $ 1.30 $ 1.28
Book value per common share(1)(4) $ 16.83 $ 15.82 $ 14.68 $ 15.74
Market-to-book at year-end(%)(4) 148 123 117 134
Dividend payout ratio(%)(2)(3)(5) 55.0 52.0 91.1 79.9
Yield at year-end(%) 5.6 6.9 7.6 6.1
Return on average common
equity(%)(2)(3)(6) 14.3 15.3 9.3 10.5
P/E ratio at year-end(2)(3)(4) 10.7 8.2 12.4 13.8
Price range $ 19-3/8- $ 15-5/8- $ 13-3/8- $ 14-3/4-
$ 25-3/8 $ 20-7/8 $ 21-7/8 $ 23
Shareholders at year end 20,509 21,611 23,010 23,987
========= ========= ========= =========
OTHER GENERAL DATA(2)(4)
Cash flow from operations $ 94,623 $ 73,526 $ 41,237 $ 63,583
Capital expenditures $ 40,944 $ 48,295 $ 34,264 $ 36,498
Debt/equity ratio at year end 33/67 37/63 37/63 40/60
Employees at year end 3,696 3,927 4,040 3,932
========= ========= ========= =========
GAS DISTRIBUTION OPERATIONS
Gas sold and transported (thousands
of dekatherms-MDth)
Residential 48,154 46,769 39,369 42,837
Commercial 18,089 17,012 14,510 15,292
Industrial firm 16,915 16,808 16,106 19,379
Industrial interruptible 5,475 3,752 4,714 22,403
Transported 29,158 29,639 26,129 5,502
--------- --------- --------- ---------
117,791 113,980 100,828 105,413
========= ========= ========= =========
Customers at year-end 445,771 439,063 432,509 426,481
Customers served per employee 319 311 288 277
Average cost of gas per Dth purchased $ 3.15 $ 3.68 $ 3.74 $ 3.75
Average annual residential bill $ 758 $ 770 $ 660 $ 761
Average use per residential
customer (Dth) 129 127 108 120
Degree days 7,382 7,124 6,185 6,788
% colder (warmer) than normal 1.5 (2.0) (14.8) (7.3)
========= ========= ========= =========
MANUFACTURING OPERATIONS(2)(4)
Operating revenues $298,791 $303,071 $274,335 $228,306
International and export sales as
a % of total sales 24 22 20 16
========= ========= ========= =========
DATA FOR CONTINUING OPERATIONS(3)(4)
Operating revenues $684,900 $717,081
Net income $ 33,359 $ 30,400
Net income per common share(1) $ 2.30 $ 2.12
<FN>
(1) Adjusted for a two-for-one stock split in March 1989.
(2) Includes continuing operations and discontinued operations up to the year
disposition was authorized.
(3) Before effects of 1992 accounting changes (See Note 2).
Adjusted for merger with Shurflo through (4) 1984, (5) 1988 and (6) 1989.
/TABLE
<PAGE>
<PAGE> 33
<TABLE>
<CAPTION>
(Thousands of Dollars, Except
Per Share Amounts) 1985 1984 1983
- ---------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
INCOME STATEMENT(2)(4)
Operating Revenues $853,175 $839,965 $789,847
Net income $ 24,900 $ 24,145 $ 16,837
Net income per common share(1) $ 1.98 $ 1.95 $ 1.49
========= ========= =========
BALANCE SHEET(4)
Capitalization at year-end
Long-term debt $154,159 $131,750 $153,052
Redeemable preferred stock 18,200 19,000 19,800
Common equity 173,941 160,690 143,626
--------- --------- ---------
$346,300 $311,440 $316,478
========= ========= =========
Total assets at year-end(2) $531,192 $499,734 $483,174
========= ========= =========
COMMON STOCK DATA
Dividends per common share(1) $ 1.18 $ 1.11 $ 1.07
Book value per common share(1)(4) $ 13.81 $ 12.97 $ 12.60
Market-to-book ratio at year-end(%)(4) 112 104 84
Dividend payout ratio(%)(2)(3)(5) 57.0 54.0 71.6
Yield at year-end(%) 7.6 8.3 10.1
Return on average common
equity(%)(2)(3)(6) 14.6 15.1 11.9
Price/earnings ratio at year-end(2)(3)(4) 7.8 6.9 7.1
Price range $ 13- $10-1/8- $ 9-3/8-
$ 15-3/4 $ 13-7/8 $ 11-5/8
Shareholders at year-end 26,083 28,581 31,077
========= ========= =========
OTHER GENERAL DATA
Cash flow from operations $ 46,342 $ 45,801 $ 36,249
Capital expenditures $ 32,381 $ 32,273 $ 22,962
Debt/equity ratio at year-end 45/55 42/58 48/52
Employees at year-end 3,641 3,513 3,228
========= ========= =========
GAS DISTRIBUTION OPERATIONS
Gas sold and transported (thousands
of dekatherms-MDth)
Residential 44,813 43,961 44,611
Commercial 16,394 15,007 14,769
Industrial firm 22,541 22,969 23,350
Industrial interruptible 31,675 34,056 31,262
Transported 1,716 - -
--------- --------- ---------
117,139 115,993 113,992
========= ========= =========
Customers at year-end 420,967 415,297 411,070
Customers served per employee 279 268 265
Average cost of gas per Dth purchased $ 4.13 $ 4.16 $ 4.36
Average annual residential bill $ 838 $ 849 $ 856
Average use per residential
customer (Dth) 128 127 131
Degree days 7,325 6,844 7,203
% colder(warmer) than normal (0.5) (7.0) (2.3)
========= ========= =========
MANUFACTURING OPERATIONS(2)(4)
Operating revenues $214,644 $197,737 $152,929
International and export sales as a
% of total sales 12 14 15
<FN>
(1) Adjusted for a two-for-one stock split in March 1989.
(2) Includes continuing operations and discontinued operations up to the year
disposition was authorized.
(3) Before effects of 1992 accounting changes (See Note 2).
Adjusted for merger with Shurflo through (4) 1984, (5) 1988 and (6) 1989.
/TABLE
<PAGE>
<PAGE> 34
INVESTOR INFORMATION
Common Stock Dividends
Dividends on common stock are normally paid in February, May,
August and November. The following table shows cash dividends
paid per share in 1993 and 1992:
<TABLE>
<CAPTION>
Quarter 1993 1992
- ------------------- -------- --------
<S> <C> <C>
first $ .380 $ .370
second .380 .370
third .390 .380
fourth .390 .380
</TABLE>
VERTICAL BAR CHART OF WICOR'S HIGH AND LOW
COMMON STOCK PRICE PER SHARE BY QUARTER
<TABLE>
<CAPTION>
Year/Quarter
--------------------------------------
93/1 93/2 93/3 93/4
-------- -------- -------- --------
<S> <C> <C> <C> <C>
high $ 29 $31-3/8 $32-3/4 $32-7/8
low $25-5/8 $27-3/4 $29-3/8 $ 28
</TABLE>
<TABLE>
<CAPTION>
Year/Quarter
--------------------------------------
92/1 92/2 92/3 92/4
-------- -------- -------- --------
<S> <C> <C> <C> <C>
high $26-1/8 $24-5/8 $27-1/4 $27-3/8
low $ 23 $22-7/8 $ 23 $24-3/8
</TABLE>
WICOR's stock price reached a record high of $32-7/8 during
the last quarter of 1993.<PAGE>
