<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 September 30, 1999
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) (Zip Code)
414-385-7000
----------------------------------------------------
(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 October 22, 1999
- -------------------------- -------------------------------
Common Stock, $8 Par Value 1,125
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CONTENTS
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PAGE
PART I - Financial Information 1
Financial Statements of Wisconsin Gas Company (Unaudited):
Statements of Operation for the Three
and Nine Months Ended September 30, 1999 and 1998 2
Balance Sheets as of September 30, 1999 and
December 31, 1998 3-4
Statements of Cash Flows for the Nine
Months Ended September 30, 1999 and 1998 5
Notes to Financial Statements 6
Management's Discussion and Analysis of
Interim Financial Statements 7-9
Quantitative and Qualitative Disclosures About Market Risk 10
PART II. Other Information
Exhibits and Reports on Form 10-K 11
Signatures 12
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.
WICOR has entered into an agreement, dated as of June 27, 1999, as
amended, with Wisconsin Energy Corporation ("Wisconsin Energy")
providing for a strategic business combination of WICOR and Wisconsin
Energy through the merger of WICOR and a wholly-owned subsidiary of
Wisconsin Energy. Consummation of the merger is subject to certain
closing conditions, including the approval of the shareholders of both
WICOR and Wisconsin Energy and the approval of the Public Service
Commission of Wisconsin, the Securities and Exchange Commission and
antitrust regulators. On October 27, 1999, shareholders of WICOR and
Wisconsin Energy approved the merger at the special meetings of their
respective shareholders held for that purpose.
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Forward-Looking Statements
- --------------------------
Certain matters discussed in this report are "forward-looking
statements" intended to qualify for the safe harbor from liability
established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements generally can be identified as such
because they include words such as the Company "believes,"
"anticipates," "expects," or words of similar import. Similarly,
statements that describe the Company's future plans, objectives or
goals also are considered forward-looking. Such statements are subject
to certain risks and uncertainties that could cause actual results to
differ materially from current expectations. These factors include, but
are not limited to, the risks and uncertainties listed below. All of
these factors are difficult to predict and are generally beyond
management's control. Such factors include, but are not limited to,
the following:
>> the impact of warmer- or colder-than-normal weather on the energy
business
>> economic conditions, including the availability of individual
discretionary income and changes in interest rates
>> changes in natural gas prices and supply availability
>> increased competition in deregulated energy markets
>> the pace and extent of energy industry deregulation
>> regulatory, governmental and judiciary decisions
>> increases in costs to clean up environmental contamination
>> the Company's ability to increase prices
>> market demand for the Company's products and services
>> unanticipated expenses or outcomes associated with year 2000
date conversion
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Part 1 - Financial Information
- ------------------------------
Item 1. 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 Company's Annual Report on Form 10-K for the year ended
December 31, 1998.
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.
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WISCONSIN GAS COMPANY
Statements of Operation (Unaudited)
[CAPTION]
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues $ 56,827 $ 53,987 $ 302,546 $ 301,624
---------- ---------- ---------- ----------
Operating Expenses:
Cost of gas sold 33,373 32,073 169,528 180,182
Operations 17,223 16,926 62,513 58,471
Maintenance 2,372 2,266 6,482 6,450
Depreciation 8,942 8,397 26,518 25,079
Taxes, other than income taxes 1,964 2,196 6,186 7,022
---------- ---------- ---------- ----------
63,874 61,858 271,227 277,204
---------- ---------- ---------- ----------
Operating (Loss) Income (7,047) (7,871) 31,319 24,420
---------- ---------- ---------- ----------
Interest Expense 2,811 2,992 8,932 9,108
Other Income and (Expenses), net 265 1,138 833 1,632
---------- ---------- ---------- ----------
(Loss) Income Before Income Taxes (9,593) (9,725) 23,220 16,944
Income Tax (Benefit) Provision (3,575) (3,630) 8,708 6,253
---------- ---------- ---------- ----------
Net (Loss) Earnings $ (6,018) $ (6,095) $ 14,512 $ 10,691
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
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WISCONSIN GAS COMPANY
Balance Sheets
<TABLE>
<CAPTION>
September 30,
1999 December 31,
(Unaudited) 1998
------------- ------------
(Thousands of Dollars)
<S> <C> <C>
Assets
- ------
Property, Plant and Equipment, at cost $ 851,731 $ 828,748
Less - Accumulated depreciation 469,623 448,270
------------- ------------
382,108 380,478
------------- ------------
Current Assets:
Cash and cash equivalents - 6,690
Accounts receivable, less allowance
for doubtful accounts of $10,616
and $10,170, respectively 26,878 39,580
Accounts receivable - intercompany, net 215 440
Accrued revenues 7,798 42,524
Gas in storage, at weighted average cost 45,826 36,751
Materials and supplies, at weighted average cost 6,729 3,590
Deferred income taxes 12,579 12,579
Prepaid taxes 7,802 1,805
Other 1,659 2,330
------------- ------------
109,486 146,289
------------- ------------
Deferred Charges and Other:
Regulatory assets 53,640 59,319
Systems development costs 9,676 12,901
Prepaid pension costs 47,204 42,396
Other 9,410 8,434
------------- ------------
119,930 123,050
------------- ------------
$ 611,524 $ 649,817
============= ============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE> 7
Wisconsin Gas Company
Balance Sheets
(continued)
<TABLE>
<CAPTION>
September 30,
1999 December 31,
(Unaudited) 1998
------------- ------------
(Thousands of Dollars)
<S> <C> <C>
Capitalization and Liabilities
- ------------------------------
Capitalization:
Common stock $ 9 $ 9
Other paid-in capital 120,940 120,888
Retained earnings 89,688 94,673
Accumulated other comprehensive income (2,224) (2,224)
Long-term debt 158,191 158,839
------------- ------------
366,604 372,185
------------- ------------
Current Liabilities:
Accounts payable 38,076 36,844
Short-term borrowings 42,900 65,000
Current portion of long-term debt - 2,000
Refundable gas costs 21,223 18,570
Accrued payroll and benefits 9,213 8,394
Other 3,361 3,077
------------- ------------
114,773 133,885
------------- ------------
Deferred Credits and Other:
Postretirement benefit obligation 39,646 44,741
Deferred income taxes 40,375 40,375
Regulatory liabilities 29,359 32,153
Environmental remediation costs 3,187 7,922
Unamortized investment tax credit 6,124 6,357
Other 11,456 12,199
------------- ------------
130,147 143,747
------------- ------------
$ 611,524 $ 649,817
============= ============
</TABLE>
The accompanying notes are an integral part of these statements.
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WISCONSIN GAS COMPANY
Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------
1999 1998
---------- ----------
(Thousands of Dollars)
<S> <C> <C>
Operations:
Net earnings $ 14,512 $ 10,691
Adjustments to reconcile net earnings
to net cash flows:
Depreciation and amortization 31,496 30,167
Deferred income taxes - -
Net pension and other postretirement benefit (income) (8,603) (5,607)
Change in:
Receivables 47,428 67,405
Gas in storage (9,075) (3,992)
Other current assets (2,468) (549)
Accounts payable 1,232 (11,201)
Accrued taxes (5,997) (1,414)
Refundable gas costs 2,653 (8,845)
Other current liabilities 1,328 1,449
Other non-current assets and liabilities (6,748) (6,954)
---------- ----------
65,758 71,150
---------- ----------
Investment Activities:
Capital expenditures (28,930) (24,300)
Other, net 82 212
---------- ----------
(28,848) (24,088)
---------- ----------
Financing Activities:
Change in short-term borrowings (22,100) (34,725)
Reduction of long-term debt (2,000) (2,000)
Cash dividends paid to WICOR, Inc. (19,500) (18,000)
---------- ----------
(43,600) (54,725)
---------- ----------
Change in Cash and Cash Equivalents (6,690) (7,663)
Cash and Cash Equivalents at Beginning of Period 6,690 7,854
---------- ----------
Cash and Cash Equivalents at End of Period $ - $ 191
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 9
Notes to Financial Statements (Unaudited):
1) At September 30, 1999, Wisconsin Gas had total unsecured lines of
credit available from several banks of $80 million. As of
September 30, 1999, commercial paper totaling $42.9 million was
outstanding under these credit agreements with a weighted average
interest rate of 5.4%.
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 Nine Months
Ended September 30,
----------------------
1999 1998
---------- ----------
(Thousands of Dollars)
Income taxes paid $ 17,291 $ 10,615
Interest paid $ 7,602 $ 7,723
3) For the three and nine month periods ended September 30, 1999 and
1998, net earnings was the only component of other comprehensive income.
4) Certain prior year financial statement amounts have been
reclassified to conform to their current year presentation.
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<PAGE> 10
Management's Discussion and Analysis
of Interim Financial Statements of
Wisconsin Gas Company
Results of Operations
- ---------------------
The Company typically incurs a loss in the third quarter due to the
seasonal nature of the gas distribution business. The net loss for the
third quarter of 1999 was $6.0 million compared to a net loss of $6.1
million for the 1998 third quarter. Net income for the nine months ended
September 30, 1999, was $14.5 million, or 36% better than the same
period last year. The improved earnings for the nine-month period were
attributable to increased sales caused by favorable weather during the
heating season and a $7.5 million annual rate increase effective August
1, 1998, offset in part by increased operating costs.
Revenues, margins and volumes are summarized below for each of the periods
shown. Margin, defined as revenues less cost of gas sold, is a better
comparative performance indicator than revenues because changes in the cost of
gas sold are flowed through to revenue under a gas adjustment clause that does
not impact margin. The Company operates under a gas cost incentive mechanism
(GCIM) which allows it to share in the risk and rewards of purchasing gas. The
GCIM favorably impacted margins by $1.0 million for each of the three months
ended September 30, 1999 and 1998 and $2.2 million for each of the nine month
periods ended September 30, 1999 and 1998.
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<TABLE>
<CAPTION>
Three Nine
Months Ended Months Ended
September 30, September 30,
----------------- % ----------------- %
(Millions of Dollars) 1999 1998 Change 1999 1998 Change
-------- -------- ------ -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Gas Sales Revenues $ 52.8 $ 49.7 6 $ 285.8 $ 285.4 -
Cost of Gas Sold 33.4 32.1 4 169.5 180.2 (6)
Gas Sales Margin 19.4 17.6 10 116.3 105.2 11
Gas Transport Margin 4.1 4.3 (5) 16.7 16.2 3
-------- -------- -------- --------
Total Margin $ 23.5 $ 21.9 7 $ 133.0 $ 121.4 10
======== ======== ======== ========
(Millions of Therms)
Sales Volumes
- -------------
Firm 51.2 44.8 14 475.0 441.9 7
Interruptible 5.0 6.1 (18) 20.6 28.1 (27)
Transportation Volume 96.8 92.4 5 363.5 329.3 10
-------- -------- -------- --------
Total Throughput 153.0 143.3 7 859.1 799.3 7
======== ======== ======== ========
Degree Days
- -----------
Actual 121 47 157 4,231 3,857 10
======== ======== ======== ========
20 year average 155 4,547
======== ========
</TABLE>
The increase in firm sales volumes for the three and nine months ended
September 30, 1999, respectively, was caused principally by colder
weather during the heating season in 1999 compared to 1998. The weather
in 1999 was, however, warmer than the 20-year average. For both the
three- and nine-month periods ended September 30, 1999, transportation
volumes increased, compared to the same periods in 1998, mainly because
more customers purchased gas from sources other than Wisconsin Gas and
transported the volumes over the Wisconsin Gas distribution system.
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Operating and maintenance expenses increased by $0.4 million, or 2%, and
$4.1 million, or 6%, during the three and nine month periods ended
September 30, 1999, respectively, compared with the same periods of last
year. The increase reflects quarterly charges of $1.9 million relating
to PSCW-approved additional uncollectible accounts expense, which became
effective November 1, 1998. The increase for the quarter and year-to-
date periods was partially offset by lower labor and benefit expenses.
Depreciation expense for the three and nine month periods ended
September 30, 1999, increased by $0.5 million, or 6%, and $1.4 million,
or 6%, respectively, as compared to the same periods in the prior year.
The increase in both periods was due to additions to depreciable plant
balances.
Interest expense decreased by $0.2 million, or 6%, and $0.2 million, or
2%, during the three and nine month periods ended September 30, 1999,
respectively, compared with the same periods of last year. The decrease
was due to lower interest rates during each period offset in part by
slightly higher borrowing levels.
Other income and expense decreased during the three- and nine-month
periods ending September 30, 1999, due to a $0.8 million pre-tax gain
resulting from the sale of non-utility land which was recorded in the
third quarter of 1998.
Income tax expense was $2.5 million higher for the first nine months of
1999, compared with the same period last year, reflecting the increase
in pre-tax income.
Financial Condition
- -------------------
Cash flow from operations for the nine months ended September 30, 1999,
decreased by $5.4 million, or 8%, to $65.8 million comparable to the
same period in 1998. Due to the seasonal nature of the energy business,
accrued revenues, accounts receivable and accounts payable are higher in
the heating season.
The Company anticipates additional short-term borrowing during the
fourth quarter of 1999 to finance working capital needs primarily
related to gas storage and the financing of accounts receivable during
the heating season. The Company believes that it has sufficient
borrowing capacity under commercial paper programs or existing lines of
credit to satisfy these working capital needs.
Cash flow from operations exceeded capital expenditures and dividend
requirements for the first nine months in both 1999 and 1998.
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<PAGE> 13
Capital expenditures increased by $4.6 million, or 19%, to $28.9 million
for the nine months ended September 30, 1999 compared to the same period
of last year. Cash flow from operations is expected to be sufficient to
fund remaining capital expenditures for 1999.
Year 2000 Date Conversion
- -------------------------
Issues relating to Year 2000 date conversion are the result of computer
software programs being written using two digits rather than four to
define the applicable year. The Company's software programs, computer
hardware or equipment that have date sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a
temporary inability to process transactions, send invoices, distribute
natural gas or engage in other normal business activities.
The Company has developed a formal plan to ensure that its significant
date-sensitive computer software and hardware systems ("Information
Technology") and other equipment utilized in its various activities
("Operating Equipment") will be Year 2000 compliant and operational on a
timely basis. The plan addresses all of the Company's locations, and
includes a review of computer applications that connect elements of the
Company's business directly to its customers and suppliers. The plan
also includes an assessment process to determine if the Company's
significant customers and suppliers will be Year 2000 compliant.
The Company's plan to resolve issues relating to Year 2000 conversion
includes four major phases - assessment, remediation, testing, and
implementation. To assist the Company in reaching Year 2000 compliance,
the Company has retained third party consultants. The Company has
completed the assessment phase of its plan for all of its significant
Information Technology and Operating Equipment that it believes could be
affected by the Year 2000 conversion. Based upon its assessment, the
Company concluded that it would be necessary to reprogram and/or replace
certain of its Information Technology. The Company also determined that
certain of its Operating Equipment would also require modification to
ensure it remains operational.
For its Information Technology applications as of September 30, 1999,
the Company believes it is substantially compliant on all of its
significant systems, with just a few changes remaining on non mission
critical systems. The Company believes that its Operating Equipment at
September 30, 1999 is also substantially compliant. The few remaining
systems will be verified or upgraded by November 15, 1999.
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With respect to operations that involve third parties, the Company has
made inquiries of its significant customers and suppliers and, at the
present time and based on such inquiries, is not aware of Year 2000
issues facing these third parties that would materially impact the
Company's operations. However, the Company has no means of ensuring
that these customers and suppliers (and, in turn, their customers and
suppliers) will be Year 2000 compliant in a timely manner. The inability
of these parties to successfully resolve their Year 2000 issues could
have a material adverse effect on the Company.
The Company's Year 2000 Program is designed to minimize the possibility
of serious Year 2000 interruptions. However, since this possibility
cannot be eliminated, the Company has developed contingency plans
addressing Year 2000 concerns in mission critical areas of the Company,
and for other areas as deemed practicable and advisable by the Company.
Such plans for mission critical processes will continue to be revised
and updated, through the end of the calendar year; such plans are still
subject to internal approvals and will also be tested on an audit basis
as the end of the calendar year approaches. Other contingency plans
will be prepared, tested and updated as deemed practicable and
appropriate by the Company.
The Company currently believes that the most likely worst-case scenario
is that there will be some Year 2000 disruptions at individual locations
that could affect individual business processes, facilities or third
parties for a short time. The Company does not expect such disruptions
to be long-term or for the disruptions to affect the operations of the
Company as a whole. Because of the uncertainty as to the exact nature
or location of potential Year 2000 related problems that might arise,
the business continuity/contingency planning has focused on development
of flexible plans to minimize the scope, impact and duration of any Year
2000 problems that occur. The Company plans to have personnel and
resources available to deal with any Year 2000 problems that occur.
Some of the currently planned contingency actions include designated
emergency response teams, increased staffing at critical times,
alternative suppliers of critical products and services, heightened
proactive monitoring at likely dates of impact, and manual workarounds.
Through September 30, 1999, the Company has spent approximately $3.9
million for Year 2000 remediation. The amount of additional development
and remediation costs necessary for the Company to prepare for Year 2000
is estimated to be approximately $0.2 million and is expected to be
funded through operating cash flow.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
- -------------------------------------------------------------------
The Company's market risk includes the potential loss arising from
adverse changes in the price of natural gas. The Company's objective in
managing this risk is to reduce fluctuations in earnings and cash flows
associated with changes in natural gas prices. The Company's policy
prohibits the use of derivative financial instruments for trading
purposes.
Wisconsin Gas has a commodity risk management program that has been
approved by the PSCW. This program allows Wisconsin Gas to utilize
purchased call and put option contracts to reduce market risk associated
with fluctuations in the price of natural gas purchases and gas in
storage. Under this program, Wisconsin Gas has the ability to hedge up
to 50% of its planned gas deliveries for the heating season. The PSCW
has also allowed Wisconsin Gas to hedge gas purchased for storage during
non-heating months. The cost of the call and put option contracts, as
well as gains or losses realized under the contracts do not affect net
income as they are recovered dollar for dollar under the purchased gas
adjustment clause. The notional amount of these contracts is not
material to the Company.
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Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits
3.1 Wisconsin Gas Company By-Laws, as amended.
10.1 Form of amendment to the Deferred Compensation Agreement
between Wisconsin Gas Company and Thomas F. Schrader.
27 Financial data schedule (EDGAR version only).
(b) Reports on Form 8-K. There were no reports on Form 8-K filed
by the Company during the third quarter of 1999.
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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: November 12, 1999 By: /s/ Joseph P. Wenzler
-----------------------
Joseph P. Wenzler
Senior Vice President and
Chief Financial Officer
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<PAGE> 18
Wisconsin Gas Company
Form 10-Q Exhibits
Exhibit No. Description
- ----------- --------------------------------------------
3.1 Wisconsin Gas Company By-Laws, as amended.
10.1 Form of amendment to the Deferred Compensation Agreement
between Wisconsin Gas Company and Thomas F. Schrader.
27 Financial data schedule
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<PAGE> 1
EXHIBIT 3.1
BY-LAWS
OF
WISCONSIN GAS COMPANY
(a Wisconsin corporation)
Effective April 22, 1999
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<PAGE> 2
BY-LAWS
OF
WISCONSIN GAS COMPANY
(a Wisconsin corporation)
Effective April 22, 1999
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.
<PAGE>
<PAGE> 3
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.
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,
however, 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
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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.
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<PAGE> 5
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 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.
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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.
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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 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.
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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.
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.
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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.
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<PAGE> 10
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 eight (8).
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.
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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.
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.
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<PAGE> 12
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.
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<PAGE> 13
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.
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<PAGE> 14
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 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.
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<PAGE> 15
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.
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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 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.
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<PAGE> 17
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.
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.
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<PAGE> 18
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.
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<PAGE> 19
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.
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<PAGE> 20
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.
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<PAGE> 21
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.
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<PAGE> 22
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 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.
<PAGE>
<PAGE> 23
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.
<PAGE>
<PAGE> 24
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.
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.
<PAGE>
<PAGE> 25
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.
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.
<PAGE>
<PAGE> 26
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.
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.
<PAGE>
<PAGE> 27
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".
<PAGE>
<PAGE> 28
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
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.
<PAGE>
<PAGE> 29
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> 1
EXHIBIT 10-1
AMENDMENT TO DEFERRED COMPENSATION AGREEMENT
This AGREEMENT, made and entered into as of this 28th day of
July, 1999, as an amendment to the Agreement between Wisconsin
Gas Company and Thomas F. Schrader entered into as of October 31,
1985 (the "Original Agreement"):
WITNESSETH:
WHEREAS, pursuant to the Agreement and Plan of Merger by and
among Wisconsin Energy Corporation and WICOR, Inc. and CEW
Acquisition, Inc. dated as of June 27, 1999, as it may be amended
from time to time (the "Merger Agreement"), it is contemplated
that WICOR, Inc. will be merged with Wisconsin Energy Corporation
or a subsidiary thereof; and
WHEREAS, it is the intention of the parties hereto to
protect Mr. Schrader in the event of the termination without
cause by Wisconsin Energy Corporation or his own voluntary
termination in certain circumstances;
NOW, THEREFORE, Section 4 of the Original Agreement be and
it hereby is amended by the addition of the following at the end
thereof:
Notwithstanding the requirement of "retirement" in the foregoing,
the benefits of this paragraph shall also be payable to Mr.
Schrader in the event that (i) a merger transaction contemplated
in the Merger Agreement in fact occurs prior to his termination
of employment and (ii) any one or more of the following events
occur coincidental with or following such transaction, with each
capitalized word having the meaning indicated in the Wisconsin
Energy Corporation Special Executive Severance Policy reflected
in Exhibit 3 of the Merger Agreement (the "Policy"):
1. his Annual Salary is reduced below the higher of (i) the
amount in effect immediately before the WICOR Closing Date and
(ii) the highest amount in effect at any time thereafter, and he
ceases to be an Employee by his own action within 90 days after
the occurrence of such reduction;
<PAGE>
<PAGE> 2
2. his duties and responsibilities or the program of incentive
compensation or retirement and welfare benefits offered to him
are diminished in comparison to the duties and responsibilities
or the program of incentive compensation or retirement and
welfare benefits enjoyed by him immediately before the WICOR
Closing Date, and he ceases to be an Employee by his own action
within 90 days after the occurrence of such reduction;
3. he is required to be based at a location more than 35 miles
from the location where he was based and performed services
immediately before the WICOR Closing Date, and he ceases to be an
Employee by his own action within 90 days after such relocation;
4. an Employer or any affiliate of an Employer sells or
otherwise distributes or disposes of the subsidiary, branch or
other business unit in which he was employed before such sale,
distribution or disposition and the requirements of Section
4.2(b)(iii) of the Policy are not met and he ceases to be an
Employee by action of the Employer upon or within 90 days after
such sale, distribution or disposition; or
5. he is terminated by the Wisconsin Energy Corporation or any
affiliate thereof of which he is an employee without "Cause" as
defined in Section 4.2(b)(ii) of the Policy.
IN WITNESS WHEREOF, Wisconsin Gas Company has caused this
Agreement to be executed by its duly authorized officers Mr.
Schrader has affixed his hand as of the day and year first above
written.
WISCONSIN GAS COMPANY
By:
Joseph P. Wenzler
Senior Vice President-Finance
Attest:
Robert A. Nuernberg
Secretary
Thomas F. Schrader
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
Wisconsin Gas Company Form 10-Q for the nine months ended September 30,
1999 and is qualified in its entirety by reference to such financial
statements and the related footnotes.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 382,108
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 109,486
<TOTAL-DEFERRED-CHARGES> 119,930
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 611,524
<COMMON> 9
<CAPITAL-SURPLUS-PAID-IN> 120,940
<RETAINED-EARNINGS> 89,688
<TOTAL-COMMON-STOCKHOLDERS-EQ> 208,413
0
0
<LONG-TERM-DEBT-NET> 158,191
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 160,000
<COMMERCIAL-PAPER-OBLIGATIONS> 42,900
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 202,020
<TOT-CAPITALIZATION-AND-LIAB> 611,524
<GROSS-OPERATING-REVENUE> 302,546
<INCOME-TAX-EXPENSE> 8,708
<OTHER-OPERATING-EXPENSES> 271,227
<TOTAL-OPERATING-EXPENSES> 279,935
<OPERATING-INCOME-LOSS> 22,611
<OTHER-INCOME-NET> 833
<INCOME-BEFORE-INTEREST-EXPEN> 23,444
<TOTAL-INTEREST-EXPENSE> 8,932
<NET-INCOME> 14,512
0
<EARNINGS-AVAILABLE-FOR-COMM> 14,512
<COMMON-STOCK-DIVIDENDS> 19,500
<TOTAL-INTEREST-ON-BONDS> 72
<CASH-FLOW-OPERATIONS> 65,758
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
