<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, 1996
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
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(Exact name of registrant as specified in its charter)
Wisconsin 39-0476515
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(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
626 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
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(Address of principal executive office)
(414) 385-7000
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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, 1996
- ------------------------ -----------------------------
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):
----------------------------------------------------------
Statements of Income for the Three-
Months Ended March 31, 1996 and 1995....... 4
Balance Sheets as of March 31, 1996 and
December 31, 1995.......................... 5-6
Statements of Cash Flows for the Three-
Months Ended March 31, 1996 and 1995....... 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, 1995.
In the opinion of management, the information furnished reflects
all adjustments, which in all circumstances were normal and
recurring, necessary for a fair presentation of the results of
operations for the interim periods.
Because of seasonal factors, the results of operations for the
interim periods presented are not necessarily 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 increased by $5.0 million, or 23%, for the first quarter of 1996
compared with the first quarter of 1995. The following factors had a
significant effect on the results of operations during the three month
period ended March 31, 1996.
The increase in net income can be attributed, in part, to increased gas
margin which resulted from the colder than normal weather experienced in
the first quarter of this year. In addition, operations and maintenance
expense decreased by $1.5 million, or 5%, over the comparable period of
last year.
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.
Three Months Ended
March 31,
--------------------- %
1996 1995 Change
---------- ---------- --------
(Millions of Dollars)
- ---------------------
Gas Sales Revenues $ 212.6 $ 190.3 12
Cost of Gas Sold 130.8 115.2 14
---------- ----------
Gas Sales Margin 81.8 75.1 9
Gas Transport Margin 3.4 2.2 55
---------- ----------
Total Margin $ 85.2 $ 77.3 10
========== ========== <PAGE>
<PAGE> 5
(Millions of Therms)
- --------------------
Sales Volumes
Firm 407.5 358.5 14
Interruptible 77.2 93.6 (18)
Transportation Volume 64.4 38.3 68
---------- ----------
Total Throughput 549.1 490.4 12
========== ==========
Heating Degree Days
(20 year normal = 3,422) 3,630 3,168 15
Total gas margin increased by $7.9 million, or 10%, for the first
quarter of 1996 compared to the first quarter of 1995 primarily as
a result of a 14% increase in firm sales volumes. The weather was
6% colder than normal during the first quarter of 1996 and 15%
colder than the same quarter in 1995.
Operations and maintenance expenses decreased by $1.5 million, or
5%, compared with the first quarter of 1995. The decrease is
attributable to lower labor and benefit expenses of $1.5 million.
Depreciation expense for the first quarter of 1996 increased $1.2
million over the same period of 1995. The increase is due to
additions to plant and increased depreciation rates allowed by the
Public Service Commission of Wisconsin (PSCW).
Non-Operating Income/Expense and Income Taxes
- ---------------------------------------------
Interest expense decreased by $0.6 million, or 15%, due primarily
to the Company's November 1995 long-term debt refinancing and lower
levels of short-term debt outstanding during the first quarter of
1996. The decrease was partially offset by higher interest rates
on the Company's short-term debt during the same period.
Income tax expense was $3.9 million higher for the first quarter
of 1996, compared to the same period last year, reflecting an
increase in pre-tax income.
Financial Condition
- -------------------
Cash flow from operations for the first quarter of 1996 decreased
by $15.3 million, or 15%, compared to the first quarter of 1995.
The decrease in gas in storage of $14.4 million was due primarily
to a 29% decrease in withdrawals from gas in storage during the<PAGE>
<PAGE> 6
first quarter of 1996, compared to the same period in 1995. Gas
in storage at December 31, 1995 was 5.7 million decatherms lower
than the amount in storage at December 31, 1994 due to a marginally
colder than normal fourth quarter of 1995 and the unusually warm
fourth quarter of 1994. In addition, withdrawals from gas in
storage during the first quarter of 1996 reflected a weighted
average cost of gas that was 18% lower than the same period in
1995. Also contributing to the decrease in cash flow from
operations was a pipeline refund of $14.8 million which was
received in the first quarter of 1995. These amounts were
ultimately refunded to customers during the remainder of 1995.
Higher accounts payable balances, caused by increased gas purchases
at higher prices, partially offset these decreases in cash flow
from operations
Capital expenditures for the three months ended March 31, 1996
decreased $1.9 million to $5.7 million compared to the same period
of the prior year. Additional capital expenditures of $41 million
are expected for the remainder of 1996.
Historically, there has been a need for additional short-term
borrowing during the third and fourth quarters to finance working
capital, primarily gas purchased for injection into storage.<PAGE>
<PAGE> 7
WISCONSIN GAS COMPANY
Statement of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------------------------
1996 1995
--------------------------
(Thousands of Dollars)
<S> <C> <C>
Operating Revenues.......................... $ 216,111 $ 192,484
----------- -----------
Operating Expenses:
Cost of gas sold.......................... 130,763 115,153
Operations................................ 25,876 27,756
Maintenance............................... 1,901 1,495
Depreciation.............................. 8,312 7,066
Taxes, other than income taxes............ 2,506 2,442
----------- -----------
169,358 153,912
----------- -----------
Operating Income ........................... 46,753 38,572
Interest expense............................ 3,230 3,813
Other income and (expenses)................. (95) (184)
----------- -----------
Income Before Income Taxes.................. 43,428 34,575
Income Taxes................................ 16,926 13,043
----------- -----------
Net Income.................................. $ 26,502 $ 21,532
=========== ===========
The accompanying notes are an integral part of this statement.
/TABLE
<PAGE>
<PAGE> 8
WISCONSIN GAS COMPANY
Balance Sheet
<TABLE>
<CAPTION>
March 31,
1996 December 31,
(Unaudited) 1995
------------ ------------
(Thousands of Dollars)
<S> <C> <C>
Assets
- ------
Property, Plant and Equipment, at cost............. $ 761,102 $ 757,825
Less - Accumulated depreciation.................. 389,055 382,424
------------ ------------
372,047 375,401
------------ ------------
Current Assets:
Cash and cash equivalents........................ 19,982 7,463
Accounts receivable, less allowance for
doubtful accounts of $14,060
and $7,955, respectively....................... 106,112 65,477
Accrued utility revenues......................... 39,746 46,935
Materials and supplies, at weighted average cost. 3,091 3,364
Gas in storage, at weighted average cost......... 3,659 23,928
Deferred income taxes............................ 16,781 16,781
Prepaid taxes.................................... 4,145 6,420
Other............................................ 1,803 1,201
------------ ------------
195,319 171,569
------------ ------------
Deferred Charges and Other:
Regulatory assets................................ 104,010 104,145
Systems development costs........................ 27,398 28,868
Prepaid pension costs............................ 27,661 27,012
Other............................................ 7,115 6,458
------------ ------------
166,184 166,483
------------ ------------
$ 733,550 $ 713,453
============ ============
</TABLE>
The accompanying notes are an integral part of this statement.<PAGE>
<PAGE> 9
WISCONSIN GAS COMPANY
Balance Sheet
<TABLE>
<CAPTION>
March 31,
1996 December 31,
(Unaudited) 1995
------------ -------------
(Thousands of Dollars)
<S> <C> <C>
Capitalization and Liabilities
- ------------------------------
Capitalization:
Common stock................................. $ 9 $ 9
Other paid-in capital........................ 118,842 118,842
Retained earnings............................ 97,816 76,310
Long-term debt............................... 152,308 154,246
------------ -------------
368,975 349,407
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Current Liabilities:
Accounts payable............................. 49,139 41,079
Accounts payable, intercompany, net.......... 14,584 5,910
Refundable gas costs......................... 75,973 34,347
Short-term borrowings........................ - 57,500
Current portion of long-term debt............ 2,000 4,000
Accrued payroll and benefits................. 8,716 8,711
Accrued taxes................................ 3,906 1,062
Other........................................ 4,871 4,689
------------ -------------
159,189 157,298
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Deferred Credits and Other:
Regulatory liabilities....................... 64,268 64,896
Deferred income taxes........................ 36,796 36,654
Postretirement benefit obligation............ 52,364 52,968
Environmental remediation costs.............. 36,301 36,381
Unamortized investment tax credit............ 7,342 7,724
Accrued pipeline transition costs............ 240 261
Other........................................ 8,075 7,864
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205,386 206,748
------------ -------------
$ 733,550 $ 713,453
============ =============
</TABLE>
The accompanying notes are an integral part of this statement.<PAGE>
<PAGE> 10
WISCONSIN GAS COMPANY
Statement of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1996 1995
--------- ---------
(Thousands of Dollars)
<S> <C> <C>
Operations:
Net income.................................. $ 26,502 $ 21,532
Adjustments to reconcile net income to
net cash flows:
Depreciation and amortization............. 10,415 9,035
Deferred income taxes..................... 142 376
Change in:
Receivables............................. (33,446) (28,631)
Gas in storage.......................... 20,269 34,686
Other current assets.................... (329) (2,375)
Accounts payable........................ 8,060 (11,040)
Accrued taxes........................... 14,382 15,394
Refundable gas costs.................... 41,626 53,726
Other current liabilities............... (402) 1,917
Other noncurrent assets and liabilities. (2,486) 5,395
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84,733 100,015
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Investment Activities:
Capital expenditures........................ (5,732) (7,624)
Other, net.................................. 18 45
--------- ---------
(5,714) (7,579)
--------- ---------
Financing Activities:
Change in short-term borrowings............. (57,500) (85,000)
Reduction of long-term debt................. (4,000) (4,000)
Cash dividends paid to WICOR, Inc........... (5,000) (4,000)
--------- ---------
(66,500) (93,000)
--------- ---------
Change in Cash and Cash Equivalents........... 12,519 (564)
Cash and Cash Equivalents at beginning
of period................................... 7,463 9,680
--------- ---------
Cash and Cash Equivalents at end of period.... $ 19,982 $ 9,116
========= =========
</TABLE>
The accompanying notes are an integral part of this statement.<PAGE>
<PAGE> 11
Notes to Financial Statements (Unaudited):
1) At March 31, 1996, Wisconsin Gas had total unsecured lines of
credit available from several banks of $120 million. As of
March 31, 1996, there were no amounts 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 three months
ended March 31,
----------------------
1996 1995
-------- --------
(Thousands of Dollars)
Income taxes paid $ 6,502 $ 1,976
Interest paid $ 2,415 $ 3,260
<PAGE>
<PAGE> 12
Part II - Other Information
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 first quarter of 1996.<PAGE>
<PAGE> 13
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: April 26, 1996 By: /s/ Joseph P. Wenzler
-------------------------
Joseph P. Wenzler
Vice President and Chief
Financial Officer<PAGE>
<PAGE> 14
WICOR, Inc.
Exhibit Index - Form 10-Q
Exhibit No. Exhibit
- ----------- ---------------------------------------------------
27 Financial data schedule<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary information extracted from the Wisconsin Gas
Company FORM 10-Q for the three months ended March 31, 1996 and is qualified in
its entirety by reference to such financial statements and the related
footnotes.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 372,047
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 195,319
<TOTAL-DEFERRED-CHARGES> 166,184
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 733,550
<COMMON> 9
<CAPITAL-SURPLUS-PAID-IN> 118,842
<RETAINED-EARNINGS> 97,816
<TOTAL-COMMON-STOCKHOLDERS-EQ> 216,667
0
0
<LONG-TERM-DEBT-NET> 152,308
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 150,000
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 2,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 362,575
<TOT-CAPITALIZATION-AND-LIAB> 733,550
<GROSS-OPERATING-REVENUE> 216,111
<INCOME-TAX-EXPENSE> 16,926
<OTHER-OPERATING-EXPENSES> 169,358
<TOTAL-OPERATING-EXPENSES> 186,284
<OPERATING-INCOME-LOSS> 29,827
<OTHER-INCOME-NET> (95)
<INCOME-BEFORE-INTEREST-EXPEN> 29,732
<TOTAL-INTEREST-EXPENSE> 3,230
<NET-INCOME> 26,502
0
<EARNINGS-AVAILABLE-FOR-COMM> 26,502
<COMMON-STOCK-DIVIDENDS> 5,000
<TOTAL-INTEREST-ON-BONDS> 464
<CASH-FLOW-OPERATIONS> 84,733
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
