<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 March 31, 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 other 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
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(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 March 31, 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
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PAGE
------
PART I. Financial Information........................ 1
Management's Discussion and Analysis of
Interim Financial Statements................ 2-3
Financial Statements of Wisconsin Gas Company (Unaudited):
----------------------------------------------------------
Statement of Income for the Three Months
Ended March 31, 1995 and 1994............... 4
Balance Sheet as of March 31, 1995 and
December 31, 1994........................... 5-6
Statement of Cash Flows - Three Months Ended
March 31, 1995 and 1994..................... 7
Notes to Financial Statements................. 8
PART II. Other Information............................. 9
Signatures.............................................. 10<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.
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
- ---------------------
Net income decreased by $3.3 million, or 13%, for the first quarter of 1995
compared with the first quarter of 1994. The following factors had a
significant effect on the results of operations during the three month period
ended March 31, 1995
The decrease in net income for the first quarter resulted primarily from
decreased gas margins which were partially offset by a decrease in operating
expenses. Reduced gas margins in 1995 were due primarily to 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 Ended
March 31,
---------------------- %
1995 1994 Change
-------- -------- ------
(Millions of Dollars)
- ---------------------
<S> <C> <C> <C>
Gas Sales Revenues $ 190.3 $ 240.1 (21)
Cost of Gas Sold 115.2 153.3 (25)
-------- --------
Gas Sales Margin 75.1 86.8 (13)
Gas Transport Margin 2.2 2.1 5
-------- --------
Total Margin $ 77.3 $ 88.9 (13)
======== ========
(Millions of Therms)
- --------------------
Sales Volumes
Firm 358.5 401.3 (11)
Interruptible 93.6 85.5 8
Transportation Volume 38.3 34.7 10
-------- --------
Total Throughput 490.4 521.5 (6)
======== ========
Degree Days (Normal = 3,443) 3,168 3,663 (14)
======== ========
</TABLE>
Total gas margins decreased by $11.6 million, or 13%, for the first quarter of
1995 compared to the first quarter of 1994 primarily as a result of a
<PAGE>
<PAGE> 5
11% decrease in firm sales volumes. The weather was 8% warmer than normal
during the first quarter of 1995 and 14% warmer than the same quarter in 1994.
Operations and maintenance expenses decreased by $6.2 million, or 18%, compared
with the first quarter of 1994. The decrease was due primarily to employee
benefits expense ($4.3 million, which includes a one-time charge of $2.7 million
relating to a 1994 early retirement program), conservation programs expense ($.9
million), general office costs ($.5 million) and uncollectible accounts expense
($.5 million). The reduction was partially offset by increases in outside
consultant services ($.6 million).
Non-Operating Income/Expense and Income Taxes
- ---------------------------------------------
The increase in other interest expense is due primarily to higher short-term
interest rates in effect during the first quarter of 1995.
Income tax expense was $1.8 million lower for the first quarter of 1995,
compared to the same period last year, reflecting a decrease in pre-tax income.
Financial Condition
- -------------------
Cash flow from operations for the first quarter of 1995 increased by $11.4
million, or 13%, compared to the first quarter of 1994. The improvement is due
primarily to pipeline refunds of $14.8 million (these amounts are expected to
be refunded to customers), offset in part by lower net income. Cash flow from
changes in both accounts receivable and accounts payable were offsetting and had
little impact on the quarter.
Capital expenditures for the three months ended March 31, 1995 increased $1.2
million to $7.6 million compared to the same period of the prior year.
Additional capital expenditures of $39.3 million are expected for the remainder
of 1995.
There will be a need for additional short-term borrowing during the third and
fourth quarters of 1995 to finance working capital, primarily gas purchased for
injection into storage.<PAGE>
<PAGE> 6
WISCONSIN GAS COMPANY
Statement of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------------------------
1995 1994
--------------------------
(Thousands of Dollars)
<S> <C> <C>
Operating Revenues.......................... $ 192,484 $ 242,148
----------- -----------
Operating Expenses:
Purchased gas costs....................... 115,153 153,291
Operations................................ 27,756 33,633
Maintenance............................... 1,495 1,850
Depreciation.............................. 7,066 7,291
Taxes, other than income taxes............ 2,442 2,752
----------- -----------
153,912 198,817
----------- -----------
Operating Income ........................... 38,572 43,331
----------- -----------
Other Income and (Deductions)............... (184) 80
----------- -----------
Income Before Interest Expense.............. 38,388 43,411
----------- -----------
Interest Expense:
Long-term debt............................ 2,879 2,943
Other..................................... 934 770
----------- -----------
3,813 3,713
----------- -----------
Income Before Income Taxes.................. 34,575 39,698
Income Taxes................................ 13,043 14,820
----------- -----------
Net Income.................................. $ 21,532 $ 24,878
=========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
<PAGE> 7
WISCONSIN GAS COMPANY
Balance Sheet
<TABLE>
<CAPTION>
March 31,
1995 December 31,
(Unaudited) 1994
------------ ------------
(Thousands of Dollars)
Assets
- ------
<S> <C> <C>
Property, Plant and Equipment, at cost............... $ 726,141 $ 718,988
Less - Accumulated depreciation.................... 362,969 356,033
------------ ------------
363,172 362,955
------------ ------------
Current Assets:
Cash and cash equivalents.......................... 16,715 17,279
Accounts receivable, less allowance for doubtful
accounts of $10,755,000 and $7,159,000,
respectively..................................... 80,269 42,662
Accounts receivable, intercompany, net............. 2,980 1,359
Accrued utility revenues........................... 31,351 40,327
Materials and supplies, at weighted average cost... 3,473 2,983
Gas in storage, at weighted average cost........... 3,364 38,050
Deferred income taxes.............................. 13,338 13,183
Prepaid taxes...................................... 5,251 6,813
Other.............................................. 2,533 2,269
------------ ------------
159,274 164,925
------------ ------------
Deferred Charges and Other:
Systems development costs.......................... 32,737 34,071
Deferred environmental costs....................... 41,527 41,942
Other regulatory assets............................ 50,504 51,543
Gas transition costs............................... 5,599 7,411
Prepaid pension costs.............................. 25,686 25,394
Other.............................................. 19,972 19,610
------------ ------------
176,025 179,971
------------ ------------
$ 698,471 $ 707,851
============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
<PAGE> 8
WISCONSIN GAS COMPANY
Balance Sheet
<TABLE>
<CAPTION>
March 31,
1995 December 31,
(Unaudited) 1994
----------- ------------
(Thousands of Dollars)
Capitalization and Liabilities
- ------------------------------
<S> <C> <C>
Capitalization:
Common stock................................. $ 9 $ 9
Other paid-in capital........................ 118,753 118,753
Retained earnings............................ 81,765 64,233
Long-term debt............................... 141,881 143,831
----------- ------------
342,408 326,826
----------- ------------
Current Liabilities:
Accounts payable............................. 33,605 44,645
Refundable gas costs......................... 71,784 18,058
Short-term borrowings........................ - 85,000
Current portion of long-term debt............ 2,000 4,000
Accrued payroll and benefits................. 8,237 7,313
Accrued taxes................................ 14,996 1,164
Other........................................ 4,470 3,477
----------- ------------
135,092 163,657
----------- ------------
Deferred Credits and Other:
Deferred income taxes........................ 40,533 40,002
Postretirement benefit obligation............ 55,295 55,624
Environmental remediation costs.............. 36,753 37,188
Unamortized investment tax credit............ 7,737 8,187
Gas transition costs......................... 5,599 7,411
Other regulatory liabilities................. 60,579 54,636
Other........................................ 14,475 14,320
----------- ------------
220,971 217,368
----------- ------------
$ 698,471 $ 707,851
=========== ============
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
<PAGE> 9
WISCONSIN GAS COMPANY
Statement of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1995 1994
--------- ---------
(Thousands of Dollars)
<S> <C> <C>
Operations:
Net income.................................. $ 21,532 $ 24,878
Adjustments to reconcile net income to
net cash flows:
Depreciation and amortization............. 9,035 9,316
Deferred income taxes..................... 376 1,716
Change in:
Receivables............................. (28,631) (35,996)
Gas in storage.......................... 34,686 37,769
Other current assets.................... (2,375) (901)
Accounts payable........................ (11,040) 100
Accrued taxes........................... 15,394 7,005
Refundable gas costs.................... 53,726 41,388
Other current liabilities............... 1,917 1,404
Other noncurrent assets and liabilities. 5,395 1,974
--------- ---------
100,015 88,653
--------- ---------
Investment Activities:
Capital expenditures........................ (7,624) (6,452)
Other, net.................................. 45 45
--------- ---------
(7,579) (6,407)
--------- ---------
Financing Activities:
Change in short-term borrowings............. (85,000) (82,000)
Reduction of long-term debt................. (4,000) (2,000)
Cash dividends paid to WICOR, Inc........... (4,000) (4,000)
Donated capital from WICOR, Inc............. - 5,000
--------- ---------
(93,000) (83,000)
--------- ---------
Change in Cash and Cash Equivalents........... (564) (754)
Cash and Cash Equivalents at beginning
of period................................... 17,279 9,680
--------- ---------
Cash and Cash Equivalents at end of period.... $ 16,715 $ 8,926
========= =========
The accompanying notes are an integral part of this statement.
<PAGE>
<PAGE> 10
Notes to Financial Statements (Unaudited):
1) At March 31, 1995, Wisconsin Gas had unsecured lines of credit
available from several banks totalling $140.0 million. As of
March 31, 1995, no short-term borrowings were outstanding under these
credit agreements.
2) For purposes of the Statement of Cash Flows, income taxes paid, net of
refunds, and interest paid (excluding capitalized interest) were as
follows:
For the Three Months
Ended March 31,
------------------------
1995 1994
---------- ----------
(Thousands of Dollars)
Income taxes paid $ 1,976 $ 10,117
Interest paid $ 3,260 $ 2,945
3) WICOR invested $5 million in Wisconsin Gas in the first quarter of
1994.
<PAGE>
<PAGE> 11
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4 Extension of Revolving Credit Agreement dated March 10,
1995, among Wisconsin Gas Company and Citibank, N.A.,
Firstar Bank Milwaukee, N.A., Harris Trust and Savings Bank
and M&I Marshall and Ilsley Bank and Citibank, N.A., as
agent.
27 Financial data schedule.
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for
the first quarter of 1995.<PAGE>
<PAGE> 12
SIGNATURES
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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: April 28, 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
- ----------- ---------------------------------------------
4 Extension of Revolving Credit Agreement dated
March 10, 1995, among Wisconsin Gas Company and
Citibank, N.A., Firstar Bank Milwaukee, N.A.,
Harris Trust and Savings Bank and M&I Marshall and
Ilsley Bank and Citibank, N.A., as agent.
27 Financial data schedule<PAGE>
</TABLE>
<PAGE>
<PAGE> 1
EXHIBIT 4
March 10, 1995
To the Lenders parties to the
Credit Agreement referred to below
Ladies and Gentlemen:
We refer to the Revolving Credit Agreement dated as of March 29, 1993, as
amended by the letter amendment, dated November 15, 1994 (as so amended, the
"Credit Agreement"), among WISCONSIN GAS COMPANY, (the "Borrower"), each of you
as Lenders, and Citibank, N.A., as Agent. Unless otherwise defined herein, the
terms, defined in the Credit Agreement shall be used herein as therein defined.
By letter to the Agent dated February 13, 1995, the Borrower requested a one-
year extension of the Termination Date, to March 29, 1998, pursuant to Section
2.17 of the Credit Agreement. As required by Section 2.17, the Borrower
subsequently delivered a certified copy of the unaudited consolidated financial
statements of the Borrower for the fiscal year ending December 31, 1994 and the
Borrower's officer's certificate. The Borrower has informed us that audited
consolidated financial statements will be delivered to you during the week
beginning March 13, 1995, in compliance with Section 2.17 of the Credit
Agreement.
If you agree to the extension of the Termination Date requested by the Borrower,
please evidence such agreement by dating, executing and returning the 8 enclosed
counterparts of this letter on or before March 28, 1995 (the day immediately
preceding the applicable Extension Date) to the Agent, in c/o King & Spaling,
120 West 45th Street, 32nd Floor, New York, New York 10036, Attention to Jeff
V. Nelson, who will distribute a fully executed counterpart for each of us upon
his receipt thereof. The Termination Date will be extended only if each Lender
agrees to the Borrower's request, and the Borrower has timely delivered the
requisite audited financial statements, which financial statements may not
differ materially (in the opinion of the agent and the Lenders) from the
previously-delivered unaudited consolidated financial statements. The Agent
will promptly inform all parties to the Credit Agreement whether the extension
has been approved.
<PAGE>
<PAGE> 2
To the Lenders Parties to the Credit Agreement
March 10, 1995
Page 2
This letter may be executed in any number of counterparts and by any combination
of the parties hereto in separate counterparts, each of which counterparts shall
be an original and all of which taken together shall constitute one and the same
letter.
Very truly yours,
CITIBANK, N.A., as Agent
By /ANITA j. BRICKELL
------------------------
Anita J. Brickell
Vice President
Agreed to:
CITIBANK, N.A. HARRIS TRUST AND SAVINGS BANK
By /ANITA/ J. BRICKELL By /ANDREW PETERS/
------------------------ ------------------------
Anita J. Brickell Andrew Peters
Vice President Vice President
Date 03/29/95 Date 03/28/95
FIRSTAR BANK MILWAUKEE, N.A. M&I MARSHALL & ILSLEY BANK
By /SANDRA HARTEG/ By /BRIAN CASPER/
------------------------ -------------------------
Sandra Hartag Brian Casper
Vice President Vice President
Date 03/28/95 Date 03/24/95<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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 March 31, 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> QTR-1
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 363,172
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 159,274
<TOTAL-DEFERRED-CHARGES> 176,025
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 698,471
<COMMON> 9
<CAPITAL-SURPLUS-PAID-IN> 118,753
<RETAINED-EARNINGS> 81,765
<TOTAL-COMMON-STOCKHOLDERS-EQ> 200,527
0
0
<LONG-TERM-DEBT-NET> 141,881
<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> 354,063
<TOT-CAPITALIZATION-AND-LIAB> 698,471
<GROSS-OPERATING-REVENUE> 192,484
<INCOME-TAX-EXPENSE> 13,043
<OTHER-OPERATING-EXPENSES> 153,912
<TOTAL-OPERATING-EXPENSES> 166,955
<OPERATING-INCOME-LOSS> 25,529
<OTHER-INCOME-NET> (184)
<INCOME-BEFORE-INTEREST-EXPEN> 25,345
<TOTAL-INTEREST-EXPENSE> 3,813
<NET-INCOME> 21,532
0
<EARNINGS-AVAILABLE-FOR-COMM> 21,532
<COMMON-STOCK-DIVIDENDS> 4,000
<TOTAL-INTEREST-ON-BONDS> 246
<CASH-FLOW-OPERATIONS> 100,015
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
