<PAGE>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10 - Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1995
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 jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
626 East Wisconsin Avenue
Milwaukee, Wisconsin
53202
--------------------------------------
(Address of principal executive office)
(414) 291-7000
---------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at June 30, 1995
-------------------------- ----------------------------
Common Stock, $8 Par Value 1,125<PAGE>
<PAGE> 2
INTRODUCTION
--------------
Wisconsin Gas Company ("Wisconsin Gas" or "Company"), a natural gas
distribution public utility, is a Wisconsin corporation and a wholly owned
subsidiary of WICOR, Inc. ("WICOR"), a diversified holding company.
CONTENTS
----------
PAGE
------
PART I. Financial Information......................... 1
Management's Discussion and Analysis of
Interim Financial Statements................ 2-4
Financial Statements of Wisconsin Gas Company (Unaudited):
----------------------------------------------------------
Statements of Operation for the Three and Six
Months Ended June 30, 1995 and 1994......... 5
Balance Sheets as of June 30, 1995 and
December 31, 1994........................... 6-7
Statements of Cash Flows - Six Months Ended
June 30, 1995 and 1994...................... 8
Notes to Financial Statements................. 9
PART II. Other Information............................. 10
Signatures.............................................. 11<PAGE>
<PAGE> 3
Part I - Financial Information
Financial Statements
--------------------
The financial statements included herein have been prepared without audit
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations, although management believes that the disclosures are
adequate to make the information presented not misleading. These condensed
financial statements should be read in conjunction with the audited financial
statements and the notes thereto included in the latest Wisconsin Gas Annual
Report on Form 10-K for the year ended December 31, 1994 and quarterly report
on Form 10-Q.
In the opinion of management, the information furnished reflects all
adjustments, which in all circumstances were normal and recurring, necessary
for a fair statement of the results of operations for the interim periods.
Because of seasonal factors, the results of operations for the interim
periods presented are not indicative of the results to be expected for the
full calendar year.<PAGE>
<PAGE> 4
Management's Discussion and Analysis
of Interim Financial Statements of
Wisconsin Gas Company
Results of Operations
---------------------
The net loss for the second quarter of 1995 was $3.7 million, or 87%, less
than the net loss for the 1994 second quarter. Net income for the six months
ended June 30, 1995 increased by $0.4 million, or 2%, compared to the same
period of last year. The following factors have had a significant effect on
the results of operations during the three- and six-month periods ended June
30, 1995.
The decrease in the net loss for the second quarter resulted primarily from
decreased operating expenses(excluding cost of gas sold). Colder weather for
the second quarter and an increase in interruptible volumes of 30% were the
primary factors affecting margins. The increase in 1995 year-to-date net
income was due primarily to decreased operating expenses offset in part by
warmer than normal weather.
Revenues, margins and volumes are summarized below. Margin, defined as
revenues less cost of gas sold, is a better comparative performance indicator
than revenues because the mix of volumes between sales and transportation
service affects revenues but not margin. In addition, changes in the cost of
gas sold are flowed through to revenue under a gas adjustment clause with no
resulting effect on margin.
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
---------------- ----------------
1995 1994 Change 1995 1994 Change
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
(Millions of Dollars)
---------------------
Gas Sales Revenues $ 92.5 $ 97.8 (5) $282.9 $337.9 (16)
Cost of Gas Sold 58.1 65.5 (11) 173.3 218.8 (21)
------ ------ ------ ------
Gas Sales Margin 34.4 32.3 7 109.6 119.1 (8)
Gas Transport Margin 1.5 1.5 - 3.6 3.6 -
------ ------ ------ ------
Total Margin $ 35.9 $ 33.8 6 $113.2 $122.7 (8)
====== ====== ====== ======
(Millions of Therms)
--------------------
Sales Volumes
Firm 127.4 112.7 13 486.0 514.0 (5)
Interruptible 79.5 61.3 30 173.0 146.8 18
Transportation Volume 25.7 26.4 (3) 64.0 61.1 5
------ ------ ------ ------
Total Throughput 232.6 200.4 16 723.0 721.9 -
====== ====== ====== ======
Degree Days (Normal:
2nd Qtr. = 954
Six Months = 4,397) 918 843 9 4,086 4,506 (9)
====== ====== ====== ======
/TABLE
<PAGE>
<PAGE> 5
The increase in firm sales volumes for the second quarter of 1995 as compared
with the 1994 second quarter was caused principally by 9% colder weather than
the same period of last year (4% warmer than normal). For the six-months ended
June 30, 1995, the total margin decrease was primarily due to a 5% decrease in
firm sales volumes offset in part by an 18% increase in interruptible sales due
primarily to increased load to existing customers. The weather was 7% warmer
than normal during the first six months of 1995 and 9% warmer than the same
period in 1994.
Operations and maintenance expenses decreased by $3.6 million, or 13%, and $9.8
million, or 16%, for the three- and six- month periods ended June 30, 1995,
respectively, compared with the same periods of 1994. The decrease for the
quarter was due primarily to reductions in employee benefit expense ($1.3
million), conservation program expense ($1.0 million) and uncollectible accounts
expense ($0.6 million). The year to date decrease is due primarily to
reductions in employee benefit expense ($4.9 million, which includes a one-time
charge of $2.7 million relating to a 1994 early retirement program),
conservation program expense ($1.9 million) and uncollectible accounts expense
($1.3 million).
Depreciation expense for the six months ended June 30, 1995 decreased by $0.4
million, or 3%, compared to the same period of last year. In conjunction with
the 1994 rate order, the Company discontinued recording additional depreciation
expense of $3 million per year associated with a reserve deficiency.
Year to date income tax expense increased primarily due to higher pre-tax
income.
Financial Condition
-------------------
Cash flow from operations for the six- months ended June 30, 1995 remained
constant at $121.8 million compared to same period of 1994. Receivables
contributed less to cash flow from operations in 1995 than the same period of
1994. Lower beginning receivable balances in 1995 versus 1994 resulted in lower
cash collections for the period over the prior year. Accrued taxes partially
offset the receivables impact by contributing to cash flow from operations in
1995 while reducing cash flow from operations in 1994. This was due to the
payment of a higher than normal tax liability at the end of 1993. Pipeline
refunds, which are expected to be refunded to customers, also contributed to
cash flow from operations.
There will be a need for additional short-term borrowing during the third and
fourth quarters of 1995 to finance working capital needs primarily related to
gas purchased for injection into storage.
Cash flow from operations exceeded capital expenditures and dividend
requirements for the first six months in both 1995 and 1994.
Capital expenditures through June 1995 amounted to $19.4 million and additional
capital expenditures of approximately $28.7 million are expected for the
remainder of 1995. Cash flow from operations should be sufficient to fund the
remaining capital expenditures for 1995. Most of the expenditures will be for
expansion and renewal of the gas distribution system.
Regulatory Matters
------------------
In July 1995, the Company filed to reduce its base rates by $1.5 million on an
annualized basis effective August 1, 1995. The Company has the ability to raise
or lower margin rates to within a specified range on a quarterly basis under the
guidelines of a November 1994 Public Service Commission of Wisconsin rate order.
<PAGE>
<PAGE> 6
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY
Statements of Operations (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues............... $ 93,985 $ 99,349 $ 286,469 $ 341,497
---------- ---------- ---------- ----------
Operating Expenses:
Cost of gas sold............... 58,120 65,468 173,273 218,759
Operations..................... 22,549 25,989 50,305 59,622
Maintenance.................... 1,684 1,854 3,179 3,704
Depreciation................... 7,146 7,359 14,212 14,650
Taxes, other than income taxes. 2,260 2,359 4,702 5,111
---------- ---------- ---------- ----------
91,759 103,029 245,671 301,846
---------- ---------- ---------- ----------
Operating Income (Loss).......... 2,226 (3,680) 40,798 39,651
---------- ---------- ---------- ----------
Other Income and (Deductions).... 243 (9) 59 71
---------- ---------- ---------- ----------
Income (Loss) Before
Interest Expense............... 2,469 (3,689) 40,857 39,722
---------- ---------- ---------- ----------
Interest Expense:
Long-term debt................. 2,865 2,929 5,744 5,872
Other.......................... 337 303 1,271 1,073
---------- ---------- ---------- ----------
3,202 3,232 7,015 6,945
---------- ---------- ---------- ----------
Income (Loss) Before
Income Taxes................... (733) (6,921) 33,842 32,777
Income Taxes (Benefit)........... (163) (2,629) 12,880 12,191
---------- ---------- ---------- ----------
Net Income (Loss)................ $ (570) $ (4,292) $ 20,962 $ 20,586
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.<PAGE>
<PAGE> 7
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY
Balance Sheets
June 30,
1995 December 31,
(Unaudited) 1994
----------- ------------
(Thousands of Dollars)
<S> <C> <C>
Assets
------
Property, Plant and Equipment, at cost.............. $ 736,775 $ 718,988
Less - Accumulated depreciation................... 369,270 356,033
----------- ------------
367,505 362,955
----------- ------------
Current Assets:
Cash and cash equivalents......................... 22,968 17,279
Accounts receivable, less allowance for
doubtful accounts of $11,437 and
$7,159, respectively............................ 47,681 42,662
Accounts receivable, intercompany, net............ 2,510 1,359
Accrued utility revenues.......................... 8,497 40,327
Materials and supplies, at weighted average cost.. 4,069 2,983
Gas in storage, at weighted average cost.......... 14,468 38,050
Deferred income taxes............................. 13,338 13,183
Prepaid taxes..................................... 5,840 6,813
Other............................................. 1,956 2,269
----------- ------------
121,327 164,925
----------- ------------
Deferred Charges and Other:
Systems development costs......................... 31,404 34,071
Deferred environmental costs...................... 41,504 41,942
Other regulatory assets........................... 49,859 51,543
Gas transition costs.............................. 490 7,411
Prepaid pension costs............................. 26,203 25,394
Other............................................. 19,171 19,610
----------- ------------
168,631 179,971
----------- ------------
$ 657,463 $ 707,851
=========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> 8
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY
Balance Sheets
June 30,
1995 December 31,
(Unaudited) 1994
----------- ------------
(Thousands of Dollars)
<S> <C> <C>
Capitalization and Liabilities
------------------------------
Capitalization:
Common stock................................ $ 9 $ 9
Other paid-in capital....................... 118,753 118,753
Retained earnings........................... 77,195 64,233
Long-term debt.............................. 141,930 143,831
----------- ------------
337,887 326,826
----------- ------------
Current Liabilities:
Accounts payable............................ 34,365 44,645
Refundable gas costs........................ 50,564 18,058
Short-term borrowings....................... - 85,000
Current portion of long-term debt........... 2,000 4,000
Accrued payroll and benefits................ 10,837 7,313
Accrued taxes............................... 3,462 1,164
Other....................................... 3,615 3,477
----------- ------------
104,843 163,657
----------- ------------
Deferred Credits and Other:
Deferred income taxes....................... 40,533 40,002
Postretirement benefit obligation........... 54,296 55,624
Environmental remediation costs............. 36,595 37,188
Unamortized investment tax credit........... 7,802 8,187
Gas transition costs........................ 490 7,411
Other regulatory liabilities................ 60,331 54,636
Other....................................... 14,686 14,320
----------- ------------
214,733 217,368
----------- ------------
$ 657,463 $ 707,851
=========== ============
</TABLE>
The accompanying notes are an integral part of these statements.<PAGE>
<PAGE> 9
<TABLE>
<CAPTION>
WISCONSIN GAS COMPANY
Statements of Cash Flows (Unaudited)
Six Months Ended
June 30,
-----------------------
1995 1994
---------- ----------
(Thousands of Dollars)
<S> <C> <C>
Operations:
Net income................................... $ 20,962 $ 20,586
Adjustments to reconcile net income to
net cash flows:
Depreciation and amortization.............. 17,986 18,707
Deferred income taxes...................... 376 1,716
Change in:
Receivables.............................. 26,811 42,601
Gas in storage........................... 23,582 21,872
Other current assets..................... (1,924) (53)
Accounts payable......................... (10,280) (13,929)
Accrued taxes............................ 3,139 (9,596)
Refundable gas costs..................... 32,506 25,306
Accrued payroll and benefits............. 3,524 3,154
Other current liabilities................ 270 479
Other non-current assets and liabilities. 4,883 10,939
---------- ----------
121,835 121,782
---------- ----------
Investment Activities:
Capital expenditures......................... (19,356) (16,279)
Other, net................................... 210 126
---------- ----------
(19,146) (16,153)
---------- ----------
Financing Activities:
Change in short-term borrowings.............. (85,000) (108,000)
Reduction of long-term debt.................. (4,000) (2,000)
Cash dividends paid to WICOR, Inc............ (8,000) (8,000)
Donated capital from WICOR, Inc.............. - 5,000
---------- ----------
(97,000) (113,000)
---------- ----------
Change in Cash and Cash Equivalents............ 5,689 (7,371)
Cash and Cash Equivalents at beginning
of period.................................... 17,279 9,680
---------- ----------
Cash and Cash Equivalents at end of period..... $ 22,968 $ 2,309
========== ==========
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> 10
Notes to Financial Statements (Unaudited):
------------------------------------------
1) At June 30, 1995, Wisconsin Gas had total unsecured lines of credit available from several
banks of $130 million. As of June 30, 1995, no short-term borrowings were outstanding
under these credit agreements.
2) For purposes of the Statements of Cash Flows, income taxes paid, net of refunds, and
interest paid (excluding capitalized interest) were as follows:
For the six months
ended June 30,
------------------------
1995 1994
---------- ----------
(Thousands of Dollars)
Income taxes paid $ 13,004 $ 21,503
Interest paid $ 7,100 $ 6,850
<PAGE>
<PAGE> 11
Part II - Other Information
Item 4. Results of Votes of Security Holders
On April 27, 1995, the following persons were elected as directors of Wisconsin Gas to
serve one-year terms: George E. Wardeberg, Stuart W. Tisdale, Wendell F. Bueche, Willie
D. Davis, Jere D. McGaffey, Daniel F. McKeithan, Jr., Guy A. Osborn, Thomas F. Schrader,
Essie M. Whitelaw and William B. Winter. All of the issued and outstanding shares of
common stock, $8 par value, of Wisconsin Gas (1,125 shares) were voted in favor of the
election of the foregoing persons.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial data schedule
(b) Reports on Form 8-K. There were no reports on Form 8-K filed by the Company during
the second quarter of 1995.<PAGE>
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
WISCONSIN GAS COMPANY
Dated: July 31, 1995 By: /s/ Joseph P. Wenzler
-------------------------
Joseph P. Wenzler
Vice President and Chief
Financial Officer<PAGE>
<PAGE> 13
Wisconsin Gas Company
Exhibit Index - Form 10-Q
Exhibit No. Exhibit
----------- -----------------------------------
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
Wisconsin Gas Company Form 10-Q for the three months ended June 30, 1995 and is
qualified in its entirety by reference to such financial statements and the
related footnotes.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 367,505
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 121,327
<TOTAL-DEFERRED-CHARGES> 168,631
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 657,463
<COMMON> 9
<CAPITAL-SURPLUS-PAID-IN> 118,753
<RETAINED-EARNINGS> 77,195
<TOTAL-COMMON-STOCKHOLDERS-EQ> 195,957
0
0
<LONG-TERM-DEBT-NET> 141,930
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 135,000
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 2,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 317,576
<TOT-CAPITALIZATION-AND-LIAB> 657,463
<GROSS-OPERATING-REVENUE> 286,469
<INCOME-TAX-EXPENSE> 12,880
<OTHER-OPERATING-EXPENSES> 245,671
<TOTAL-OPERATING-EXPENSES> 258,551
<OPERATING-INCOME-LOSS> 27,918
<OTHER-INCOME-NET> 59
<INCOME-BEFORE-INTEREST-EXPEN> 27,977
<TOTAL-INTEREST-EXPENSE> 7,015
<NET-INCOME> 20,962
0
<EARNINGS-AVAILABLE-FOR-COMM> 20,962
<COMMON-STOCK-DIVIDENDS> 8,000
<TOTAL-INTEREST-ON-BONDS> 478
<CASH-FLOW-OPERATIONS> 121,835
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
