<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) January 1, 1994
WISCONSIN NATURAL GAS COMPANY
(Exact name of registrant as specified in its charter)
2-2066
(Commission file number)
Wisconsin 39-0713260
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
231 West Michigan Street, P.O. Box 2046, Milwaukee, Wisconsin 53201
(Address of principal executive offices) (Zip Code)
(414) 221-2590
(Registrant's telephone number, including area code)
NOT APPLICABLE
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
FORM 8-K
WISCONSIN NATURAL GAS COMPANY
-----------------------------
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION OF WISCONSIN SOUTHERN GAS COMPANY, INC.
Effective at 12:01 a.m. on January 1, 1994, Wisconsin Southern Gas Company,
Inc. ("Wisconsin Southern") was acquired by Wisconsin Energy Corporation
("Wisconsin Energy") through a merger (the "Merger") of Wisconsin Southern
into Wisconsin Natural Gas Company ("Wisconsin Natural"), a wholly-owned
subsidiary of Wisconsin Energy. In the transaction, structured as a tax-free
reorganization, all outstanding shares of Wisconsin Southern common stock were
converted into shares of Wisconsin Energy common stock based on an exchange
ratio (the "Exchange Ratio") of 1.6330 shares of Wisconsin Energy common stock
for each outstanding share of Wisconsin Southern common stock. In lieu of
issuing fractional shares, Wisconsin Energy will pay a sum in cash equal to
the value of such fractional shares based on the average closing price of
Wisconsin Energy common stock on the New York Stock Exchange for the ten
trading days immediately preceding the closing date (the "Average Closing
Price"), which was $27.70. As of December 31, 1993, Wisconsin Southern had
1,003,392 shares outstanding.
On December 7, 1993, the Public Service Commission of Wisconsin issued an
order approving the Merger.
The Merger was effected pursuant to the Agreement and Plan of Reorganization,
dated as of July 30, 1993, by and among Wisconsin Energy, Wisconsin Natural
and Wisconsin Southern, including the related Plan and Agreement of Merger
between Wisconsin Southern and Wisconsin Natural (together, the
"Reorganization Agreement"). The Reorganization Agreement was approved by the
requisite vote of the stockholders of Wisconsin Southern at a special meeting
of stockholders held on November 24, 1993.
Wisconsin Southern was a gas utility engaged in the purchase, distribution,
transportation and sale of natural gas for residential, commercial and
industrial consumption in 37 cities, villages and unincorporated towns in
southeastern Wisconsin, having a population of approximately 104,000, and in
and around Prairie du Chien, Wisconsin, a community of approximately 7,300
persons located in southwestern Wisconsin. Wisconsin Southern's service
territory in southeastern Wisconsin was contiguous to the Wisconsin Natural
service territory west and south of Milwaukee, Wisconsin. Wisconsin Natural
will to continue to use the acquired facilities of Wisconsin Southern for the
distribution and transportation of natural gas.
The Exchange Ratio was determined by negotiations among the parties to the
Reorganization Agreement after Wisconsin Southern determined to negotiate
exclusively with Wisconsin Energy following two rounds of bidding by companies
who were solicited by Wisconsin Southern's financial advisor to submit offers
to enter into a business combination transaction with Wisconsin Southern. If
the Average Closing Price had been less than $25.7195 or more than $28.7814,
the Exchange Ratio would have been calculated by dividing $44.50 by the
Average Closing Price, but in no event would the Exchange Ratio have been more
than 1.8167 or less than 1.4830 shares of Wisconsin Energy common stock for
each share of Wisconsin Southern common stock.
- 2 -
<PAGE> 3
FORM 8-K
WISCONSIN NATURAL GAS COMPANY
-----------------------------
ACQUISITION OF WISCONSIN SOUTHERN GAS COMPANY, INC. (Cont'd)
The Merger has been structured to qualify as a pooling of interests for
accounting and financial reporting purposes.
Further information concerning the Merger is set forth in the Proxy
Statement/Prospectus dated October 20, 1993 contained in the Registration
Statement of Wisconsin Energy on Form S-4 (No. 33-50653) relating to the
transaction.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements, pro forma financial information and
exhibits are filed as part of this report:
(a) FINANCIAL STATEMENTS:
Filed as Exhibit (99)-2 to this report, as listed in paragraph (c) of
this Item. (The audited financial statements so listed are incorporated
herein by reference to pages F-2 through F-13 of the Proxy
Statement/Prospectus dated October 20, 1993 contained in the Registration
Statement of Wisconsin Energy Corporation on Form S-4, No. 33-50653, the
unaudited interim financial statements so listed are incorporated herein
by reference to pages 2 - 8 of the Quarterly Report on Form 10-Q of
Wisconsin Southern Gas Company, Inc. for the quarter ended September 30,
1993, and copies thereof are filed as exhibits to this report in
accordance with Rule 12b-23 under the Securities Exchange Act of 1934.)
(b) PRO FORMA FINANCIAL INFORMATION:
Condensed Income Statements for the Twelve Months Ended
September 30, 1993 and for the Years Ended December 31,
1992, 1991 and 1990
Condensed Balance Sheets at September 30, 1993,
December 31, 1992 and December 31, 1991
(c) EXHIBITS:
The following exhibits are filed herewith:
(4)-1 Conformed Thirteenth Supplemental Indenture of Wisconsin Natural,
dated January 1, 1994 (to reflect the conveyance of properties
acquired by merger with Wisconsin Southern Gas Company, Inc.).
2 Conformed Thirteenth Supplemental Indenture, dated January 1, 1994,
to Indenture dated September 1, 1950 of Wisconsin Southern Gas
Company, Inc. (to reflect the assumption of bonds by Wisconsin
Natural in connection with merger).
- 3 -
<PAGE> 4
FORM 8-K
WISCONSIN NATURAL GAS COMPANY
-----------------------------
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Cont'd)
(23)-1 Consent of Arthur Andersen & Co.
(99)-1 News Release dated January 3, 1994.
2 FINANCIAL STATEMENTS:
(a) Audited Financial Statements of Wisconsin Southern Gas
Company, Inc.
Report of Independent Public Accountants
Statements of Income for the Years Ended December 31,
1992, 1991 and 1990
Balance Sheets at December 31, 1992 and 1991
Statements of Cash Flows for the Years Ended December 31,
1992, 1991 and 1990
Statements of Common Shareholders' Equity for the Years
Ended December 31, 1992, 1991 and 1990
Notes to Financial Statements
(b) Unaudited Interim Financial Statements of Wisconsin Southern
Gas Company, Inc.
Statements of Income for the Three and Nine Months Ended
September 30, 1993 and 1992
Balance Sheets at September 30, 1993 and December 31, 1992
Statements of Cash Flows for the Nine Months Ended
September 30, 1993 and 1992
Notes to Financial Data
The following exhibits are incorporated herein by reference:
(2)-1 Agreement and Plan of Reorganization, dated as of July 30, 1993,
by and among Wisconsin Energy Corporation, Wisconsin Natural Gas
Company and Wisconsin Southern Gas Company, Inc., including the
related Plan and Agreement of Merger between Wisconsin Natural
and Wisconsin Southern. (Incorporated herein by reference to
Appendix A to the Proxy Statement/Prospectus dated October 20,
1993 contained in the Registration Statement of Wisconsin Energy
Corporation on Form S-4, No. 33-50653.)
- 4 -
<PAGE> 5
FORM 8-K
WISCONSIN NATURAL GAS COMPANY
-----------------------------
The following pro forma income statements are based on the individual
historical statements of income of Wisconsin Natural and Wisconsin Southern,
and combine the results of operations of Wisconsin Natural and of Wisconsin
Southern for the twelve months ended September 30, 1993 and the years ended
December 31, 1992, December 31, 1991 and December 31, 1990, as if the
transaction occurred at the beginning of each period.
<TABLE>
PRO FORMA FINANCIAL INFORMATION
(Unaudited)
<CAPTION>
Condensed Income Statement for the Twelve Months Ended September 30, 1993
Wisconsin Wisconsin
Natural Southern Wisconsin Natural
As Reported As Reported Pro Forma
----------- ----------- -----------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues $276,079 $ 49,526 $325,605
Operating Expenses
Cost of gas sold 180,739 30,595 211,334
Other operation expenses 47,852 12,120 59,972
Maintenance 5,808 886 6,694
Depreciation 14,377 1,747 16,124
Income taxes 7,384 1,002 8,386
-------- -------- --------
Total Operating Expenses 256,160 46,350 302,510
-------- -------- --------
Operating Income 19,919 3,176 23,095
Other Income and Deductions 206 44 250
-------- -------- --------
Income Before Interest Charges 20,125 3,220 23,345
Interest Charges 7,080 1,238 8,318
-------- -------- --------
Net Income $ 13,045 $ 1,982 $ 15,027
======== ======== ========
Condensed Income Statement for the Year Ended December 31, 1992
Operating Revenues $239,991 $ 43,708 $283,699
Operating Expenses
Cost of gas sold 151,548 26,399 177,947
Other operation expenses 42,865 11,237 54,102
Maintenance 6,018 826 6,844
Depreciation 13,746 1,654 15,400
Income taxes 6,911 786 7,697
-------- -------- --------
Total Operating Expenses 221,088 40,902 261,990
-------- -------- --------
Operating Income 18,903 2,806 21,709
Other Income and Deductions 311 64 375
-------- -------- --------
Income Before Interest Charges 19,214 2,870 22,084
Interest Charges 6,594 1,281 7,875
-------- -------- --------
Net Income $ 12,620 $ 1,589 $ 14,209
======== ======== ========
<FN>
NOTE: Earnings and Dividends per share of common stock are not applicable
because all of Wisconsin Natural's common stock is owned by Wisconsin
Energy Corporation.
- 5 -
</TABLE>
<PAGE> 6
FORM 8-K
WISCONSIN NATURAL GAS COMPANY
-----------------------------
<TABLE>
PRO FORMA FINANCIAL INFORMATION (Cont'd)
(Unaudited)
<CAPTION>
Condensed Income Statement for the Year Ended December 31, 1991
Wisconsin Wisconsin
Natural Southern Wisconsin Natural
As Reported As Reported Pro Forma
----------- ----------- -----------------
(Thousands of Dollars)
<S> <C> <C> <C>
Operating Revenues $233,120 $ 40,684 $273,804
Operating Expenses
Cost of gas sold 148,386 24,912 173,298
Other operation expenses 41,326 10,941 52,267
Maintenance 6,055 790 6,845
Depreciation 12,699 1,556 14,255
Income taxes 6,375 448 6,823
-------- -------- --------
Total Operating Expenses 214,841 38,647 253,488
-------- -------- --------
Operating Income 18,279 2,037 20,316
Other Income and Deductions 458 135 593
-------- -------- --------
Income Before Interest Charges 18,737 2,172 20,909
Interest Charges 6,642 1,354 7,996
-------- -------- --------
Net Income $ 12,095 $ 818 $ 12,913
======== ======== ========
Condensed Income Statement for the Year Ended December 31, 1990
Operating Revenues $222,331 $ 37,341 $259,672
Operating Expenses
Cost of gas sold 144,717 22,521 167,238
Other operation expenses 40,442 9,441 49,883
Maintenance 5,022 804 5,826
Depreciation 12,739 1,566 14,305
Income taxes 4,379 705 5,084
-------- -------- --------
Total Operating Expenses 207,299 35,037 242,336
-------- -------- --------
Operating Income 15,032 2,304 17,336
Other Income and Deductions 1,061 33 1,094
-------- -------- --------
Income Before Interest Charges 16,093 2,337 18,430
Interest Charges 6,632 968 7,600
-------- -------- --------
Net Income $ 9,461 $ 1,369 $ 10,830
======== ======== ========
<FN>
NOTE: Earnings and Dividends per share of common stock are not applicable
because all of Wisconsin Natural's common stock is owned by Wisconsin
Energy Corporation.
- 6 -
</TABLE>
<PAGE> 7
FORM 8-K
WISCONSIN NATURAL GAS COMPANY
-----------------------------
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS (Cont'd)
The following pro forma balance sheets are based on the historical balance
sheets of Wisconsin Natural and Wisconsin Southern, and combine the balances
of Wisconsin Natural and of Wisconsin Southern as of September 30, 1993,
December 31, 1992 and December 31, 1991.
- 7 -
<PAGE> 8
FORM 8-K
WISCONSIN NATURAL GAS COMPANY
-----------------------------
<TABLE>
PRO FORMA FINANCIAL INFORMATION (Cont'd)
(Unaudited)
<CAPTION>
Condensed Balance Sheet As of September 30, 1993
Wisconsin Wisconsin
Natural Southern Wisconsin Natural
As Reported As Reported Pro Forma
----------- ----------- -----------------
(Thousands of Dollars)
<S> <C> <C> <C>
Assets
------
Utility Plant
Plant $385,909 $ 49,742 $435,651
Accumulated provision for depreciation (175,931) (25,327) (201,258)
Gas stored underground - noncurrent - 941 941
-------- -------- --------
Net Utility Plant 209,978 25,356 235,334
Other Property and Investments 70 1,148 1,218
Current Assets
Cash and cash equivalents 7,847 673 8,520
Accounts receivable 11,557 2,499 14,056
Accrued utility revenues 16,954 966 17,920
Materials, supplies and natural gas
stored 46,560 5,052 51,612
Prepayments and other assets 2,194 1,687 3,881
-------- -------- --------
Total Current Assets 85,112 10,877 95,989
Deferred Charges and Other Assets
Accumulated deferred income taxes 11,532 - 11,532
Other 7,785 606 8,391
Deferred environmental costs - 3,182 3,182
-------- -------- --------
Total Deferred Charges and Other Assets 19,317 3,788 23,105
-------- -------- --------
Total Assets $314,477 $ 41,169 $355,646
======== ======== ========
Capitalization and Liabilities
------------------------------
Capitalization
Common stock $ 59,500 $ 11,515 $ 71,015
Retained earnings 40,678 990 41,668
-------- -------- --------
Total Common Stock Equity 100,178 12,505 112,683
Long-term debt 71,171 10,074 81,245
-------- -------- --------
Total Capitalization 171,349 22,579 193,928
Current Liabilities
Long-term debt due currently 1,200 669 1,869
Short-term debt 62,599 3,900 66,499
Accounts payable 23,120 3,850 26,970
Accrued liabilities 5,462 196 5,658
Other 1,850 2,594 4,444
-------- -------- --------
Total Current Liabilities 94,231 11,209 105,440
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 28,442 228 28,670
Other 20,455 4,153 24,608
Accrued environmental costs - 3,000 3,000
-------- -------- --------
Total Deferred Credits and
Other Liabilities 48,897 7,381 56,278
-------- -------- --------
Total Capitalization and Liabilities $314,477 $ 41,169 $355,646
======== ======== ========
- 8 -
</TABLE>
<PAGE> 9
FORM 8-K
WISCONSIN NATURAL GAS COMPANY
-----------------------------
<TABLE>
PRO FORMA FINANCIAL INFORMATION (Cont'd)
(Unaudited)
<CAPTION>
Condensed Balance Sheet As of December 31, 1992
Wisconsin Wisconsin
Natural Southern Wisconsin Natural
As Reported As Reported Pro Forma
----------- ----------- -----------------
(Thousands of Dollars)
<S> <C> <C> <C>
Assets
------
Utility Plant
Plant $372,956 $ 48,117 $421,073
Accumulated provision for depreciation (165,920) (23,974) (189,894)
Gas stored underground - noncurrent - 941 941
-------- -------- --------
Net Utility Plant 207,036 25,084 232,120
Other Property and Investments 71 1,151 1,222
Current Assets
Cash and cash equivalents 6,470 432 6,902
Accounts receivable 20,644 6,085 26,729
Accrued utility revenues 32,407 3,757 36,164
Materials, supplies and natural gas
stored 14,178 2,544 16,722
Prepayments and other assets 2,950 1,614 4,564
-------- -------- --------
Total Current Assets 76,649 14,432 91,081
Deferred Charges and Other Assets
Accumulated deferred income taxes 3,993 - 3,993
Other 5,903 531 6,434
Deferred environmental costs - 3,171 3,171
-------- -------- --------
Total Deferred Charges and Other Assets 9,896 3,702 13,598
-------- -------- --------
Total Assets $293,652 $ 44,369 $338,021
======== ======== ========
Capitalization and Liabilities
------------------------------
Capitalization
Common stock $ 59,500 $ 11,381 $ 70,881
Retained earnings 41,214 1,199 42,413
-------- -------- --------
Total Common Stock Equity 100,714 12,580 113,294
Long-term debt 74,059 10,743 84,802
-------- -------- --------
Total Capitalization 174,773 23,323 198,096
Current Liabilities
Long-term debt due currently 1,200 1,099 2,299
Short-term debt 43,583 4,900 48,483
Accounts payable 28,309 4,993 33,302
Accrued liabilities 6,012 1,109 7,121
Other 509 1,917 2,426
-------- -------- --------
Total Current Liabilities 79,613 14,018 93,631
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 28,264 1,809 30,073
Other 11,002 2,219 13,221
Accrued environmental costs - 3,000 3,000
-------- -------- --------
Total Deferred Credits and
Other Liabilities 39,266 7,028 46,294
-------- -------- --------
Total Capitalization and Liabilities $293,652 $ 44,369 $338,021
======== ======== ========
- 9 -
</TABLE>
<PAGE> 10
FORM 8-K
WISCONSIN NATURAL GAS COMPANY
-----------------------------
<TABLE>
PRO FORMA FINANCIAL INFORMATION (Cont'd)
(Unaudited)
<CAPTION>
Condensed Balance Sheet As of December 31, 1991
Wisconsin Wisconsin
Natural Southern Wisconsin Natural
As Reported As Reported Pro Forma
----------- ----------- -----------------
(Thousands of Dollars)
<S> <C> <C> <C>
Assets
------
Utility Plant
Plant $353,087 $ 45,795 $398,882
Accumulated provision for depreciation (154,739) (22,613) (177,352)
Gas stored underground - noncurrent - 941 941
-------- -------- --------
Net Utility Plant 198,348 24,123 222,471
Other Property and Investments 71 1,190 1,261
Current Assets
Cash and cash equivalents 3,361 279 3,640
Accounts receivable 22,280 5,331 27,611
Accrued utility revenues 29,559 2,913 32,472
Materials, supplies and natural gas
stored 11,117 2,262 13,379
Prepayments and other assets 2,864 1,020 3,884
-------- -------- --------
Total Current Assets 69,181 11,805 80,986
Deferred Charges and Other Assets
Accumulated deferred income taxes 2,546 - 2,546
Other 6,051 300 6,351
Deferred environmental costs - 344 344
-------- -------- --------
Total Deferred Charges and Other Assets 8,597 644 9,241
-------- -------- --------
Total Assets $276,197 $ 37,762 $313,959
======== ======== ========
Capitalization and Liabilities
------------------------------
Capitalization
Common stock $ 59,500 $ 11,116 $ 70,616
Retained earnings 37,081 884 37,965
-------- -------- --------
Total Common Stock Equity 96,581 12,000 108,581
Long-term debt 48,603 11,842 60,445
-------- -------- --------
Total Capitalization 145,184 23,842 169,026
Current Liabilities
Long-term debt due currently 8,957 1,675 10,632
Short-term debt 48,423 1,800 50,223
Accounts payable 23,250 3,599 26,849
Accrued liabilities 8,741 1,093 9,834
Other 927 2,334 3,261
-------- -------- --------
Total Current Liabilities 90,298 10,501 100,799
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 26,920 1,699 28,619
Other 13,795 1,420 15,215
Accrued environmental costs - 300 300
-------- -------- --------
Total Deferred Credits and
Other Liabilities 40,715 3,419 44,134
-------- -------- --------
Total Capitalization and Liabilities $276,197 $ 37,762 $313,959
======== ======== ========
- 10 -
</TABLE>
<PAGE> 11
FORM 8-K
WISCONSIN NATURAL GAS COMPANY
-----------------------------
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 NATURAL GAS COMPANY
--------------------------------------
(Registrant)
/s/J. G. Remmel
--------------------------------------
Date: January 3, 1994 J. G. Remmel, Vice President - Finance
- 11 -
<PAGE> 12
WISCONSIN NATURAL GAS COMPANY
-----------------------------
EXHIBIT INDEX
Current Report on Form 8-K
Report Dated January 1, 1994
Exhibit
Number
- -------
(4)-1 Conformed Thirteenth Supplemental Indenture of Wisconsin
Natural, dated January 1, 1994 (to reflect the conveyance of
properties acquired by merger with Wisconsin Southern Gas
Company, Inc.).
2 Conformed Thirteenth Supplemental Indenture (to Indenture dated
September 1, 1950 of Wisconsin Southern Gas Company, Inc.)
dated January 1, 1994 (to reflect the assumption of bonds by
Wisconsin Natural in connection with merger).
(23)-1 Consent of Arthur Andersen & Co.
(99)-1 News release dated January 3, 1994.
2 FINANCIAL STATEMENTS:
(a) Audited Financial Statements of Wisconsin Southern Gas
Company, Inc.
Report of Independent Public Accountants
Statements of Income for the Years Ended December 31,
1992, 1991 and 1990
Balance Sheets at December 31, 1992 and 1991
Statements of Cash Flows for the Years Ended December 31,
1992, 1991 and 1990
Statements of Common Shareholders' Equity for the Years
Ended December 31, 1992, 1991 and 1990
Notes to Financial Statements
(b) Unaudited Interim Financial Statements of Wisconsin Southern
Gas Company, Inc.
Statements of Income for the Three and Nine Months Ended
September 30, 1993 and 1992
Balance Sheets at September 30, 1993 and December 31, 1992
Statements of Cash Flows for the Nine Months Ended
September 30, 1993 and 1992
Notes to Financial Data
<PAGE> 1
EXHIBIT (4)-1
CONFORMED
==============================================================================
WISCONSIN NATURAL GAS COMPANY
TO
FIRSTAR TRUST COMPANY
(formerly First Wisconsin Trust Company)
As Trustee
__________
THIRTEENTH SUPPLEMENTAL INDENTURE
DATED JANUARY 1, 1994
__________
Conveyance of Properties Acquired by
Merger with Wisconsin Southern Gas Company, Inc.
==============================================================================
<PAGE> 2
WISCONSIN NATURAL GAS COMPANY
Thirteenth Supplemental Indenture dated January 1, 1994
________________
TABLE OF CONTENT*
________________
PAGE
PARTIES .................................................................. 1
RECITALS ................................................................. 1
GRANTING CLAUSE .......................................................... 3
HABENDUM ................................................................. 3
EXCEPTIONS AND RESERVATIONS .............................................. 4
GRANT IN TRUST ........................................................... 4
GENERAL COVENANT ......................................................... 4
ARTICLE I.
COVENANT OF TITLE.
Title to mortgaged property .............................................. 5
ARTICLE II.
EFFECT OF TRUST INDENTURE REFORM ACT OF 1990.
Text of Original Indenture not physically changed to reflect
effect of Trust Indenture Reform Act of 1990 ........................... 5
ARTICLE III.
THE TRUSTEE.
Acceptance of trusts by the Trustee....................................... 5
Trustee not responsible for validity of Thirteenth Supplemental Indenture. 5
__________
*Note: The Table of Contents is not part of the Supplemental Indenture
and should not be considered as such. It is included herein only
for purposes of convenience.
<PAGE> 3
ii
ARTICLE IV.
MISCELLANEOUS PROVISIONS.
PAGE
Certain Recording Data ................................................... 5
Meanings of terms in Thirteenth Supplemental Indenture ................... 6
Date of execution ........................................................ 6
Execution of Thirteenth Supplemental Indenture in counterparts ........... 6
TESTIMONIUM .............................................................. 7
EXECUTION ................................................................ 7
COMPANY'S ACKNOWLEDGEMENT ................................................ 9
TRUSTEE'S ACKNOWLEDGEMENT ................................................ 10
SCHEDULE A.
DESCRIPTION OF PROPERTIES.
Part I
Properties Acquired or Constructed by Wisconsin Natural Gas Company
Parcels of Real Estate ................................................... 11
Part II
Properties Acquired by Merger with Wisconsin Southern Gas Company, Inc.
Property Incorporated by Reference ....................................... 15
SCHEDULE B.
Information Relating to the Recording in Certain Counties of the
Wisconsin Natural Gas Company Original Indenture and First through
Twelfth Supplemental Indentures ........................................ 21
<PAGE> 4
SUPPLEMENTAL INDENTURE, dated the first day of January, 1994, made by
and between WISCONSIN NATURAL GAS COMPANY, a corporation organized and
existing under the laws of the State of Wisconsin (hereinafter called the
"Company"), party of the first part, and FIRSTAR TRUST COMPANY, formerly First
Wisconsin Trust Company, a corporation organized and existing under the laws
of the State of Wisconsin (hereinafter called the "Trustee"), as Trustee under
the Mortgage and Deed of Trust dated June 1, 1950, hereinafter mentioned,
party of the second part;
WHEREAS, the Company has heretofore executed and delivered to the
Trustee its Mortgage and Deed of Trust dated June 1, 1950, as amended
September 1, 1957, September 15, 1986, January 15, 1992 and November 1, 1992,
(said Mortgage and Deed of Trust, as so amended, being hereinafter sometimes
referred to as the "Original Indenture" and, together with all supplemental
indentures thereto, being sometimes referred to herein collectively as the
"Indenture"), to secure the payment of the principal of and the interest and
premium, if any, on all Bonds at any time issued and outstanding thereunder,
and to declare the terms and conditions upon which Bonds are to be issued
thereunder; and indentures supplemental thereto dated June 1, 1950,
October 15, 1955, September 1, 1957, October 15, 1961, November 1, 1962,
October 1, 1965, September 15, 1967, September 15, 1969, July 1, 1971,
September 15, 1986, January 15, 1992 and November 1, 1992, respectively, have
heretofore been entered into between the Company and the Trustee; and
WHEREAS, prior to the date hereof, Bonds have been issued by the Company
under said Mortgage and Deed of Trust and said indentures supplemental thereto
as follows:
(1) $3,500,000 principal amount of First Mortgage Bonds, 2 7/8% Series due
1975, which are described in the First Supplemental Indenture dated
June 1, 1950, all of which have been retired for sinking fund purposes
or paid at maturity prior to the date of execution hereof;
(2) $2,500,000 principal amount of First Mortgage Bonds, 3 3/8% Series due
1980, which are described in the Second Supplemental Indenture dated
October 15, 1955, all of which have been retired for sinking fund
purposes or paid at maturity prior to the date of execution hereof;
(3) $2,500,000 principal amount of First Mortgage Bonds, 5 1/2% Series due
1982, which are described in the Third Supplemental Indenture dated
September 1, 1957, all of which have been retired for sinking fund
purposes or redeemed prior to the date of execution hereof;
<PAGE> 5
2
(4) $4,000,000 principal amount of First Mortgage Bonds, 4 3/4% Series due
1986, which are described in the Fourth Supplemental Indenture dated
October 15, 1961, all of which have been retired for sinking fund
purposes or paid at maturity prior to the date of execution hereof;
(5) $5,000,000 principal amount of First Mortgage Bonds, 4 3/8% Series due
1987, which are described in the Fifth Supplemental Indenture dated
November 1, 1962, all of which have been retired for sinking fund
purposes or paid at maturity prior to the date of execution hereof;
(6) $8,000,000 principal amount of First Mortgage Bonds, 4 7/8% Series due
1990, which are described in the Sixth Supplemental Indenture dated
October 1, 1965, all of which have been retired for sinking fund
purposes or paid at maturity prior to the date of execution hereof;
(7) $10,000,000 principal amount of First Mortgage Bonds, 6 3/8% Series due
1992, which are described in the Seventh Supplemental Indenture dated
September 15, 1967, all of which have been retired for sinking fund
purposes or paid at maturity prior to the date of execution hereof;
(8) $10,000,000 principal amount of First Mortgage Bonds, 8 3/4% Series due
1994, which are described in the Eighth Supplemental Indenture dated
September 15, 1969, all of which have been retired for sinking fund
purposes or redeemed prior to the date of execution hereof;
(9) $10,000,000 principal amount of First Mortgage Bonds, 8 3/8% Series due
1996, which are described in the Ninth Supplemental Indenture dated
July 1, 1971, all of which have been retired for sinking fund purposes
or redeemed prior to the date of execution hereof;
(10) $30,000,000 principal amount of First Mortgage Bonds, 9 1/4% Series due
2016, which are described in the Tenth Supplemental Indenture dated
September 15, 1986, of which $3,000,000 principal amount remain
outstanding at the date of execution hereof;
(11) $10,000,000 principal amount of First Mortgage Bonds, 5 5/8% Series due
January 15, 1995, which are described in the Eleventh Supplemental
Indenture dated January 15, 1992, all of which remain outstanding at the
date of execution hereof;
(12) $10,000,000 principal amount of First Mortgage Bonds, 6 5/8% Series due
January 15, 1997, which are described in the Eleventh Supplemental
Indenture dated January 15, 1992, all of which remain outstanding at the
date of execution hereof;
<PAGE> 6
3
and
WHEREAS, the Original Indenture provides, in Section 14.01 thereof, that
the Company, when authorized by resolution of its Board of Directors, and the
Trustee may enter into indentures supplemental to the Original Indenture to
convey, transfer and assign to the Trustee and to subject to the lien of the
Original Indenture additional properties acquired by the Company through
merger; and to add, to the covenants and agreements of the Company contained
in the Original Indenture, other covenants and agreements thereafter to be
observed; and
WHEREAS, the Company, in the exercise of the powers and authority
conferred upon and reserved to it under the provisions of the Original
Indenture and pursuant to appropriate resolutions of its Board of Directors,
has duly resolved and determined to make, execute and deliver to the Trustee a
supplemental indenture in the form hereof for the purposes herein provided;
and
WHEREAS, all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument have been done,
performed and fulfilled and the execution and delivery hereof have been in all
respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That the Company, in consideration of the premises and of the mutual
covenants herein contained and the acceptance by the Trustee of the trusts
created hereby and of the sum of One Dollar to it duly paid by the Trustee at
or before the time of the execution of this Supplemental Indenture, and for
other valuable considerations, the receipt whereof is hereby acknowledged, and
in order further to secure the payment of the principal of and interest (and
premium, if any) on all Bonds at any time issued and outstanding under the
Original Indenture and all indentures supplemental thereto according to their
tenor and effect and the performance and observance of all the covenants and
conditions in the Bonds and Indenture contained, has executed and delivered
this Supplemental Indenture and has granted, bargained, sold, warranted,
aliened, remised, released, conveyed, assigned, transferred, mortgaged,
pledged, set over and confirmed and by these presents does grant, bargain,
sell, warrant, alien, remise, release, convey, assign, transfer, mortgage,
pledge, set over and confirm unto Firstar Trust Company, as Trustee, and to
its successors and assigns forever, all and singular the properties described
in Schedule A to this Supplemental Indenture (in addition to all other
properties heretofore specifically subjected to the lien of the Indenture and
not heretofore released from the lien thereof);
TO HAVE AND TO HOLD all said properties, real, personal and mixed,
mortgaged, pledged and conveyed by the Company as aforesaid, or intended so to
be, unto the Trustee and its successors and assigns forever;
<PAGE> 7
4
SUBJECT, HOWEVER, to the exceptions and reservations and matters recited
in the Indenture and in Schedule A to this Supplemental Indenture (including
without limitation the prior lien of the Indenture dated September 1, 1950, as
amended and supplemented, referred to in Part II of such Schedule A, insofar
as concerns the properties specifically described in such Part II as subject
to such prior lien and any other properties subject thereto), to existing
leases, to existing mortgages or other liens upon easements or rights-of-way
for pipe line, transmission line or distribution line purposes, as defined in
Article I of the Indenture, and any extensions thereof, and subject to
existing easements for streets, alleys, highways, rights-of-way and railroad
purposes over, upon and across certain of the property described in Schedule A
to this Supplemental Indenture, and subject also to all the terms, conditions,
agreements, covenants, exceptions and reservations, expressed or provided in
the deeds or other instruments respectively under and by virtue of which
Company acquired the properties described in Schedule A to this Supplemental
Indenture, and to undetermined liens and charges, if any, incidental to
construction or other existing permitted liens as defined in Article I of the
Original Indenture;
IN TRUST, NEVERTHELESS, upon the terms and trusts in the Original
Indenture and the indentures supplemental thereto, including this Supplemental
Indenture, set forth, for the equal and proportionate benefit and security of
all present and future holders of the Bonds and coupons issued and to be
issued thereunder, or any of them, without preference of any of said Bonds and
coupons of any particular series over the Bonds and coupons of any other
series, by reason of priority in the time of the issue, sale or negotiation
thereof, or by reason of the purpose of issue or otherwise howsoever, except
as otherwise provided in Section 4.02 of the Original Indenture.
PROVIDED, HOWEVER, and these presents are upon the condition that if the
Company, its successors or assigns shall pay or cause to be paid unto the
holders of the Bonds the principal and interest (and premium, if any) to
become due in respect thereof at the times and in the manner stipulated
therein and in the Indenture, and shall keep, perform and observe all and
singular the covenants and promises in the Bonds and in the Indenture
expressed as to be kept, performed and observed by or on the part of the
Company, then this Supplemental Indenture and the estate and rights hereby
granted shall cease, determine and be void, otherwise to remain in full force
and effect;
AND IT IS HEREBY COVENANTED, DECLARED AND AGREED, by and between the
parties hereto, for the benefit of those who shall hold the Bonds, or any of
them, to be issued under the Indenture, as follows:
<PAGE> 8
5
ARTICLE I.
COVENANT OF TITLE.
The Company hereby covenants, warrants and agrees that it is lawfully
seized and possessed of all of the mortgaged property described in Schedule A
to this Supplemental Indenture; that it has good right and lawful authority to
mortgage the same as provided in this Supplemental Indenture; and that such
mortgaged property is free and clear of any deed of trust, mortgage, lien,
charge or encumbrance thereon or affecting the title thereto prior to the
Indenture, except as set forth in the granting clauses of the Indenture or
this Supplemental Indenture.
ARTICLE II.
EFFECT OF TRUST INDENTURE REFORM ACT OF 1990.
The Trust Indenture Reform Act of 1990 has, by operation of law,
effective November 15, 1990, amended the Original Indenture to conform to the
provisions of Sections 310 through 317 of the Trust Indenture Act of 1939, as
amended by the Trust Indenture Reform Act of 1990, in accordance with Section
318(c) of the Trust Indenture Act of 1939 added by the Trust Indenture Reform
Act of 1990. The text of the Original Indenture has not been physically
changed to reflect such amendment.
ARTICLE III.
THE TRUSTEE.
The Trustee hereby accepts the trusts hereby declared and provided, and
agrees to perform the same upon the terms and conditions in the Original
Indenture and in this Supplemental Indenture set forth, and upon the following
terms and conditions.
The Trustee shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this Supplemental Indenture or the
due execution hereof by the Company or for or in respect of the recitals
contained herein, all of which recitals are made by the Company solely.
ARTICLE IV.
MISCELLANEOUS PROVISIONS.
Schedule B to this Supplemental Indenture sets forth certain information
relating to the recording of copies of the Original Indenture and all
indentures supplemental thereto prior to this Supplemental Indenture in
counties in the State of Wisconsin in which are located properties acquired by
the Company from Wisconsin Southern Gas Company, Inc. in the merger effective
on January 1, 1994 referred to in Part II of Schedule A to this Supplemental
Indenture.
<PAGE> 9
6
All terms contained in this Supplemental Indenture and not defined
herein shall, for all purposes hereof, have the meanings given to such terms
in Article I of the Original Indenture.
Although the actual date of execution of this Supplemental Indenture by
the Company and by the Trustee is as indicated by their respective
acknowledgements hereto annexed, the granting clause and the covenant of title
of the Company herein, and Schedule A hereto, shall become effective at 12:01
a.m., Central Standard Time, on and as of January 1, 1994.
This Supplemental Indenture may be simultaneously executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original; but such counterparts shall together constitute but one and the same
instrument.
<PAGE> 10
7
IN WITNESS WHEREOF, said Wisconsin Natural Gas Company has caused this
Supplemental Indenture to be executed on its behalf by its President or one of
its Vice Presidents and its corporate seal to be hereto affixed and said seal
and this Supplemental Indenture to be attested by its Secretary or one of its
Assistant Secretaries; and said Firstar Trust Company, in evidence of its
acceptance of the trusts hereby created, has caused this Supplemental
Indenture to be executed on its behalf by its President or one of its Vice
Presidents, and its corporate seal to be hereto affixed and said seal and this
Supplemental Indenture to be attested by its Secretary or one of its Assistant
Secretaries; all as of the first day of January, One thousand nine hundred and
ninety-four.
WISCONSIN NATURAL GAS COMPANY
\s\ J. G. REMMEL
By_________________________________
J. G. Remmel
Vice President
(CORPORATE SEAL)
Attested:
\s\ ANN MARIE BRADY
________________________________
Ann Marie Brady
Secretary
Signed, sealed and delivered by
WISCONSIN NATURAL GAS
COMPANY in the presence of:
\s\ K. A. KUSSEROW
________________________________
K. A. Kusserow
\s\ J. R. LUETTGEN
________________________________
J. R. Luettgen
As Witnesses
<PAGE> 11
8
FIRSTAR TRUST COMPANY
\s\ JOSEPH S. QUINN
By_________________________________
Joseph S. Quinn
Vice President
(CORPORATE SEAL)
Attested:
\s\ PAMELA WARNER
________________________________
Pamela Warner
Assistant Secretary
Signed, sealed and delivered by
FIRSTAR TRUST COMPANY
in the presence of:
\s\ K. STICK
________________________________
K. Stick
\s\ AMY LORENZ
________________________________
Amy Lorenz
As Witnesses
<PAGE> 12
9
STATE OF WISCONSIN, )
COUNTY OF MILWAUKEE. ) SS.:
On this 16th day of December, 1993, before me personally appeared
J. G. REMMEL and ANN MARIE BRADY, to me personally known, who being by me
severally duly sworn, did say: that J. G. REMMEL is a Vice President and
ANN MARIE BRADY is Secretary of WISCONSIN NATURAL GAS COMPANY, and that the
seal affixed to the foregoing instrument is the corporate seal of said
corporation and that said instrument was signed and sealed on behalf of said
corporation by authority of its Board of Directors; and said J. G. REMMEL and
ANN MARIE BRADY severally acknowledged said instrument to be the free act and
deed of said corporation.
\s\ MARGARET M. PEARSON
________________________________
Margaret M. Pearson
Notary Public
State of Wisconsin
My Commission expires March 19, 1995
[Seal of Notary Public]
<PAGE> 13
10
STATE OF WISCONSIN, )
COUNTY OF MILWAUKEE. ) SS.:
On this 16th day of December, 1993, before me personally appeared
JOSEPH S. QUINN and PAMELA WARNER, to me personally known, who being by me
severally duly sworn, did say: that JOSEPH S. QUINN is a Vice President and
PAMELA WARNER is an Assistant Secretary of FIRSTAR TRUST COMPANY, and that the
seal affixed to the foregoing instrument is the corporate seal of said
corporation and that said instrument was signed and sealed on behalf of said
corporation by authority of its Board of Directors; and said JOSEPH S. QUINN
and PAMELA WARNER severally acknowledged said instrument to be the free act
and deed of said corporation.
\s\ WILLIAM R. CARUSO
________________________________
William R. Caruso
Notary Public
State of Wisconsin
My Commission expires February 2, 1997
[Seal of Notary Public]
This instrument was drafted by James D. Zakrajsheck and Bruce C. Davidson
on behalf of Wisconsin Natural Gas Company.
<PAGE> 14
11
SCHEDULE A
PART I--PROPERTIES ACQUIRED OR CONSTRUCTED BY WISCONSIN NATURAL GAS COMPANY,
OTHER THAN THOSE REFERRED TO IN PART II BELOW.
PARCELS OF REAL ESTATE
The following described parcels of real estate, all of which are located
in the State of Wisconsin in the respective counties hereinafter specified:
JEFFERSON COUNTY
1. CONCORD REGULATOR AND METERING STATION:
Pt. of the Southwest 1/4 of Section 11, Township 8 North, Range 15 East,
Town of Watertown, Jefferson County, Wisconsin, being described as
follows:
Commencing at the intersection of C.T.H. "E" and the south line of said
SW 1/4; thence N. 89 degrees 49'46"E., 290' along said south line, thence
north, 105' +/- to a chain link fence corner and the point of beginning;
thence continuing north along said fence, 100'; thence east 100' to the
west line of a service road; thence south along said west line, 100' to
a chain link fence, thence west along said fence, 100' to the P.O.B.
containing 0.23 acres of leased land.
OUTAGAMIE COUNTY
2. CNG COMPRESSOR STATION:
Pt. of the Northeast 1/4 of Section 33, Township 21 North, Range 17 East,
City of Appleton, Outagamie County, Wisconsin, more particularly
described as follows:
Commencing at the N 1/4 corner of said NE 1/4; thence east, 618' along
the C/L of W. Spencer Street; thence south, 342' to the point of
beginning; thence continuing south, 125'; thence west, 54'; thence
north, 125'; thence east, 54' to the P.O.B. containing 0.15 acres.
<PAGE> 15
12
WINNEBAGO COUNTY
3. MENASHA GATE STATION:
Pt. of the Northeast 1/4 of Section 9, Township 20 North, Range 17 East,
Town of Menasha, Winnebago County, being described as follows:
Lot 1 according to Certified Survey Map filed in Volume 1 of Certified
Survey Maps on Page 2723 as Document No. 835805.
MAJOR GAS DISTRIBUTION SYSTEM MAINS
The following described major gas distribution system mains, all of which
are located in the State of Wisconsin in the respective counties hereinafter
specified:
LINE 204 MEADE STREET 6-INCH LINE
Beginning 240 feet east of the intersection of Meade Street and
Mackville Road in the Northwest 1/4 of S. 36 - T. 22 N.
- R. 17 E., T/Center, Outagamie County; thence easterly in
Mackville Road to its intersection with C.T.H. "EE" at the N.E.
corner of said Section 36. Said point being labeled Point A.
Thence north from said Point A and in the right-of-way of C.T.H.
"EE" to the S. R/W line of C.T.H. "O" at the N.W. corner of S. 30
- T. 22 N. - R. 18 E., T/Freedom, Outagamie County; also,
continuing from said Point A 2,000 feet south in the right-of-way
of C.T.H. "EE" in the N.W. 1/4 of S. 36 - T. 22 N. - R. 18 E.
T/Grand Chute, Outagamie County.
LINE 205 CTH "E" 6-INCH LINE
Commencing at the intersection of C.T.H. "E" and Davies Road in
the S.E. 1/4 S. 8, T. 6 N. - R. 18 E., V/Wales. Thence north in
the R/W of Davies Road and S. Wales Road (S.T.H. "18") to a point
approximately 950 feet north of the center line of C.T.H. "G"
a/k/a Brandybrook Road in the N.W. 1/4 S. 9 - T. 6 N. - R. 18 E.,
T/Genesee, Waukesha County.
<PAGE> 16
13
LINE 206 NORTH STREET TO SPRING ROAD DRIVE 6-INCH LINE
Commencing at the intersection of North Street and Green Bay
Road, also being the S.E. corner of the N.E. 1/4 S. 20 - T. 20 N.
- R. 17 E., T/Menasha, Winnebago County; thence north in Green
Bay Road to its intersection with C.T.H. "II" a/k/a S.T.H. "150"
and the N.E. corner of said S. 20, thence west in S.T.H. "150"
a/k/a Winchester Road to the west R/W line of Spring Road Drive
in the N.E. 1/4 of said S. 20.
LINE 207 CTH "11" TO HAASE STREET 6-INCH LINE
Commencing at the intersection of C.T.H. "II", a/k/a Winchester
Road, and American Drive in the S.W. 1/4 S. 16 T. 20 N.
- R. 17 E., T/Menasha, thence east in Winchester Road, a/k/a
C.T.H. "II", to C.T.H. "PP", a/k/a N. Lake Street, thence
northerly in C.T.H. "PP", a/k/a North Lake Street, to the N.R/W
line of Haase Street, all being in the south one-half of said
S. 16, T/Menasha, Winnebago County.
LINE 208 MACKVILLE ROAD 6-INCH LINE
Commencing at a point in the N.W. 1/4 S. 36, T. 22 N. - R. 17 E.,
which is 310 feet S. of Mackville Road and 6 feet west of the
E. R/W line of N. Meade Street, thence south in Meade Street to
a point which is 970 feet south of Valley View Lane and is in the
S.W. 1/4 of said S. 36, T/Center, Outagamie County.
LINE 209 PAUL ROAD TO ROUNDY DRIVE 6-INCH LINE
Commencing at the intersection of C.T.H. "J" and Paul Road in the
N.W. 1/4 S. 14, T. 7 N. - R. 19 E., T/Pewaukee, Waukesha County;
thence east in Paul Road to its intersection with Roundy Drive in
the N.E. 1/4 of said S. 14.
LINE 210 CTH "J" 6-INCH LINE
Commencing at the intersection of C.T.H. "M", a/k/a Watertown
Road, and C.T.H. "J" in the S.W. 1/4 of S. 14, T. 7 N. - R. 19
E., T/Pewaukee, Waukesha County, thence southeasterly in C.T.H.
"M", a/k/a Watertown Road, to a point approximately 900 feet
southeasterly of the S. line of said S. 14 and in the N.E. 1/4 of
S. 23, T. 7 N. - R. 19 E., T/Pewaukee, Waukesha County.
<PAGE> 17
14
LINE 211 WNGCO REGULATOR STATION TO WN METERING STATION 20-INCH LINE
Beginning at the Wisconsin Natural Gas Company regulator station
in the S.E. 1/4 of S. 6, T. 7 N. - R. 17 E., T/Summit, Waukesha
County and on the south side of the Oconomowoc River and the west
side of C.T.H. "BB", thence north along the east line of said S.
6, to the south line of River Highlands Subdivision, thence west
and north on easement along the south and west lines of said
River Highlands Subdivision and the Orchards of Oconomowoc
Subdivision to the center of said S. 6, thence northwesterly on
easement to a point approximately 1,000 feet west of the N. 1/4
of said S. 6, thence continuing northwesterly on easement through
the west 1/2 of S. 31, T. 8 N. - R. 17 E., T/Oconomowoc to the WE
R/W in the N.W. 1/4 of said S. 31, thence northwesterly in the WE
R/W through S. 31 - T/Oconomowoc, Waukesha County, and through S.
36 and S. 35 to its intersection with Rockvale Road in the N.E.
1/4 S. 35, T. 8 N. - R. 19 E., T/Ixonia, Jefferson County, thence
west in Rockvale Road along the north line of S. 35, S. 34, and
S. 33, all in the T/Ixonia, to where Rockvale Road leaves the
north section line of said S. 33, thence west on easement along
the north line of S. 33 and S. 32 to the intersection of the
north line of S. 32 and C.T.H. "E", all in T/Ixonia, thence north
and northwesterly in C.T.H. "E" through S. 32, S. 29, S. 30, and
S. 19, all in T. 8 N. - R. 16 E., T/Ixonia, Jefferson County,
thence continuing in C.T.H. "E" in the N.E. 1/4 of S. 24 T. 8 N.
- R. 15 T/Watertown, Jefferson County, westerly and northwesterly
through S. 24, S. 23, and S. 14, to the WE R/W in the N.W. 1/4 of
said S. 14, thence northeasterly to a point approximately 100
feet north of the south line of S. 11, T. 8 N. - R. 15 E.,
T/Watertown; said point being the south fence line of a WN
metering station in the S.W. 1/4 of said S. 11 and the point
of termination.
<PAGE> 18
15
PART II--PROPERTIES ACQUIRED BY WISCONSIN NATURAL GAS COMPANY IN THE MERGER OF
WISCONSIN SOUTHERN GAS COMPANY, INC. INTO IT EFFECTIVE ON JANUARY 1, 1994.
All of the properties specifically described in the granting clauses of
the Indenture dated September 1, 1950, between Wisconsin Southern Gas Company
(the corporate predecessor to Wisconsin Southern Gas Company, Inc.) and Harris
Trust and Savings Bank and F. O. Mann (the predecessor to J. Bartolini),
Trustees, and of the Supplemental Indentures thereto listed below;
PROVIDED, HOWEVER, that there are excluded from the such properties:
(a) The properties described in the release documents listed below;
and
(b) Any other properties which have been abandoned, sold or
otherwise disposed of by Wisconsin Southern Gas Company, Inc.,
as permitted in Article VIII of such Indenture dated
September 1, 1950, as amended and supplemented;
and
PROVIDED, FURTHER, that all such properties, not so excluded, are subject
to the prior lien of such Indenture dated September 1, 1950, as amended and
supplemented (as well as to the other matters set forth or referred to in the
granting clauses referred to above in this Part II and in the granting clauses
of the Supplemental Indenture to which this Schedule A is attached).
The Indenture dated September 1, 1950 referred to above in this Part II,
and the Supplemental Indentures thereto referred to above in this Part II as
listed herein (and which are so listed as follows), were recorded in the
following counties (and with the Office of the Secretary of State where
indicated), all in the State of Wisconsin:
INDENTURE DATED SEPTEMBER 1, 1950:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Volume or Page or Page Number
Kenosha November 15, 1950 305 384 - 326249
Racine November 16, 1950 488 503 - 567243
Rock November 14, 1961 30 453 - 640825a
Walworth November 16, 1950 271 417 - 430381
<PAGE> 19
16
FIRST SUPPLEMENTAL INDENTURE DATED AUGUST 18, 1955:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Volume or Page or Page Number
Kenosha September 2, 1955 366 558 569 368601
Racine September 7, 1955 575 001 012 636608
Rock November 14, 1961 30 418 - 640822a
Walworth September 7, 1955 332 423 434 474061
SECOND SUPPLEMENTAL INDENTURE DATED OCTOBER 1, 1956:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Volume or Page or Page Number
Kenosha October 29, 1956 384 058 070 379796
Racine October 29, 1956 604 117 129 654963
Rock November 14, 1961 30 426 - 640823a
Walworth October 29, 1956 346 297 310 485334
THIRD SUPPLEMENTAL INDENTURE DATED OCTOBER 1, 1958:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Volume or Page or Page Number
Kenosha October 28, 1958 496 308 319 398023
Racine October 28, 1958 640 670 682 681476
Rock November 14, 1961 30 440 - 640824a
Walworth October 28, 1958 371 46 58 504550
<PAGE> 20
17
FOURTH SUPPLEMENTAL INDENTURE DATED NOVEMBER 1, 1961:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Volume or Page or Page Number
Kenosha November 21, 1961 594 612 624 433184
Racine November 21, 1961 723 1 - 729229
Rock November 21, 1961 31 311 - 641083
Walworth November 21, 1961 406 41 - 534644
FIFTH SUPPLEMENTAL INDENTURE DATED DECEMBER 1, 1963:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Volume or Page or Page Number
Kenosha December 3, 1963 655 459 472 457127
Racine December 3, 1963 803 523 265 762221
Rock December 4, 1963 106 360 374 667650
Walworth December 3, 1963 432 659 672 555262
SIXTH SUPPLEMENTAL INDENTURE DATED FEBRUARY 1, 1967:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Volume or Page or Page Number
Crawford February 7, 1967 235 290 - 167241
Kenosha February 7, 1967 746 367 381 492187
Racine February 7, 1967 934 581 595 818148
Rock February 7, 1967 236 412 - 712869
Walworth February 6, 1967 473 41 - 588961
<PAGE> 21
18
SEVENTH SUPPLEMENTAL INDENTURE DATED APRIL 1, 1970:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Volume or Page or Page Number
Crawford April 28, 1970 254 217 - 173977
Kenosha April 27, 1970 821 534 - 521713
Racine April 27, 1970 1049 553 - 867036
Rock April 27, 1970 354 603 - 754545
Walworth April 27, 1970 26 197 - 623354
EIGHTH SUPPLEMENTAL INDENTURE DATED JANUARY 1, 1973:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Volume or Page or Page Number
Crawford January 24, 1973 277 86 - 180057
Kenosha January 23, 1973 891 852 869 555884
Racine January 23, 1973 1165 568 578 914907
Rock January 22, 1973 462 - - 794203
Walworth January 22, 1973 85 611 - 659941
NINTH SUPPLEMENTAL INDENTURE DATED AUGUST 1, 1975:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Volume or Page or Page Number
Crawford August 21, 1975 301 72 95 185543
Kenosha August 20, 1975 944 885 908 589687
Racine August 22, 1975 1278 419 442 961521
Rock August 20, 1975 562 418 441 833226
Walworth August 20, 1975 141 613 636 695305
<PAGE> 22
19
TENTH SUPPLEMENTAL INDENTURE DATED JANUARY 1, 1983:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Volume or Page or Page Number
Crawford January 31, 1983 395 321 344 207036
Kenosha February 1, 1983 1126 451 474 698746
Racine February 1, 1983 1667 52 75 1119002
Rock February 1, 1983 125 748 772 963182
Walworth February 1, 1983 296 897 920 86257
Waukesha February 1, 1983 526 863 886 1203187
ELEVENTH SUPPLEMENTAL INDENTURE DATED JANUARY 1, 1988:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Volume or Page or Page Number
Crawford January 22, 1988 454 303 315 221755
Kenosha January 21, 1988 1300 51 63 794760
Racine January 21, 1988 1899 265 277 1248593
Rock January 21, 1988 337 213 225 1065338
Walworth January 21, 1988 RE 421 149 - 157972
January 21, 1988 Chattel 424706
TWELFTH SUPPLEMENTAL INDENTURE DATED FEBRUARY 1, 1991:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Volume or Page or Page Number
Crawford March 4, 1991 494 236 250 231077
Kenosha March 5, 1991 1431 392 406 860902
Racine March 5, 1991 2056 635 649 1332924
Rock March 4, 1991 468 622 637 1128365
Walworth March 4, 1991 RE 512 759 773 207606
March 4, 1991 Chattel 433705
Secretary March 1, 1991 1183930
of State
<PAGE> 23
20
The release documents, referred to above as listed herein (and which are
so listed as follows) were recorded in the following counties, all in the
State of Wisconsin:
COUNTY DATE RECORDED
Walworth August 7, 1951
Walworth October 3, 1952
Walworth June __, 1954
Walworth August 9, 1960
Walworth February 20, 1967
Racine May 1, 1973
__________________
The specific references in Parts I and II of this Schedule A to certain
properties as mortgaged under the Mortgage and Deed of Trust dated June 1,
1950, as amended and supplemented, shall not be deemed to exclude any other
properties not specifically referred to therein but mortgaged pursuant to the
terms of such Mortgage and Deed of Trust.
<PAGE> 24
21
SCHEDULE B
INFORMATION RELATING TO THE RECORDING IN CERTAIN COUNTIES OF THE
ORIGINAL INDENTURE AND FIRST THROUGH TWELFTH SUPPLEMENTAL INDENTURES.
Copies of the Mortgage and Deed of Trust dated June 1, 1950, and the
First through Twelfth Supplemental Indentures thereto, between Wisconsin
Natural Gas Company and Firstar Trust Company (formerly First Wisconsin Trust
Company), Trustee, were recorded (among other places) in the Office of the
Register of Deeds in each of the counties, in the State of Wisconsin, in which
are located properties acquired by Wisconsin Natural Gas Company from
Wisconsin Southern Gas Company, Inc. in the merger effective on January 1,
1994, as follows:
MORTGAGE AND DEED OF TRUST DATED JUNE 1, 1950:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Time Volume or Page or Page Number
Crawford November 16, 1993 10:40AM V540 113 343 241086
Kenosha June 9, 1950 1:16PM 299 1 117 321629
Racine June 9, 1950 1:01PM 479 277 392 560476
Rock October 6, 1955 10:50AM 434 151 267 568952
Walworth June 9, 1950 1:06PM 272 111 - 425735
FIRST SUPPLEMENTAL INDENTURE DATED JUNE 1, 1950:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Time Volume or Page or Page Number
Crawford November 16, 1993 10:40AM V540 344 381 241087
Kenosha June 9, 1950 1:17PM 299 118 138 321630
Racine June 9, 1950 1:02PM 479 393 412 560477
Rock October 6, 1955 10:50AM 434 268 288 568953
Walworth June 9, 1950 1:07PM 272 229 - 425736
<PAGE> 25
22
SECOND SUPPLEMENTAL INDENTURE DATED OCTOBER 15, 1955:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Time Volume or Page or Page Number
Crawford November 16, 1993 10:40AM V540 382 417 241088
Kenosha October 26, 1955 12:45PM 369 205 225 370184
Racine October 26, 1955 1:00PM 578 321 341 638913
Rock October 26, 1955 1:30PM 435 299 319 569737
Walworth October 26, 1955 2:25PM 334 395 416 475650
THIRD SUPPLEMENTAL INDENTURE DATED SEPTEMBER 1, 1957:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Time Volume or Page or Page Number
Crawford November 16, 1993 10:40AM V541 1 34 241089
Kenosha September 17, 1957 2:30PM 465 151 169 387454
Racine September 17, 1957 1:50PM 614 450 466 666545
Rock September 17, 1957 1:05PM 470 414 432 591868
Walworth September 17, 1957 2:45PM 356 351 370 493741
FOURTH SUPPLEMENTAL INDENTURE DATED OCTOBER 15, 1961:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Time Volume or Page or Page Number
Crawford November 16, 1993 10:40AM V541 35 69 241090
Kenosha October 19, 1991 1:40PM 592 182 200 432185
Racine October 19, 1991 1:05PM 719 145 164 727844
Rock October 19, 1991 1:50PM 28 307 325 640047
Walworth October 19, 1991 1:45PM 405 418 437 533752
<PAGE> 26
23
FIFTH SUPPLEMENTAL INDENTURE DATED NOVEMBER 1, 1962:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Time Volume or Page or Page Number
Crawford November 16, 1993 10:40AM V541 70 101 241091
Kenosha November 1, 1962 2:50PM 621 500 517 443732
Racine November 1, 1962 2:15PM 759 451 467 743444
Rock November 1, 1962 2:50PM 64 16 33 652666
Walworth November 1, 1962 2:20PM 418 37 56 543973
SIXTH SUPPLEMENTAL INDENTURE DATED OCTOBER 1, 1965:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Time Volume or Page or Page Number
Crawford November 16, 1993 10:40AM V541 102 139 241092
Kenosha October 8, 1965 8:05AM 713 235 255 479326
Racine October 8, 1965 8:00AM 881 157 177 796009
Rock October 8, 1965 8:00AM 184 118 138 694733
Walworth October 8, 1965 8:00AM 456 573 593 574952
SEVENTH SUPPLEMENTAL INDENTURE DATED SEPTEMBER 15, 1967:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Time Volume or Page or Page Number
Crawford November 16, 1993 10:40AM V541 140 176 241093
Kenosha September 14, 1967 8:35AM 760 415 434 497775
Racine September 14, 1967 8:15AM 958 74 93 827939
Rock September 14, 1967 8:00AM 259 504 523 721056
Walworth September 14, 1967 8:00AM 480 453 473 595334
<PAGE> 27
24
EIGHTH SUPPLEMENTAL INDENTURE DATED SEPTEMBER 15, 1969:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Time Volume or Page or Page Number
Crawford November 16, 1993 10:40AM V541 177 211 241094
Kenosha September 12, 1969 9:40AM 807 594 614 516490
Racine September 12, 1969 8:05AM 1030 105 124 858915
Rock September 12, 1969 8:00AM 335 605 623 747782
Walworth September 12, 1969 8:18AM 16 53 87 617511
NINTH SUPPLEMENTAL INDENTURE DATED JULY 1, 1971:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Time Volume or Page or Page Number
Crawford November 16, 1993 10:40AM V541 212 244 241095
Kenosha June 28, 1971 10:00AM 850 356 387 533523
Racine June 28, 1971 8:05AM 1093 543 560 884733
Rock June 28, 1971 11:45AM 396 283 300 769121
Walworth June 28, 1971 10:29AM 49 627 659 637411
TENTH SUPPLEMENTAL INDENTURE DATED SEPTEMBER 15, 1986:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Time Volume or Page or Page Number
Crawford November 16, 1993 10:40AM V541 245 284 241096
Kenosha September 15, 1986 9:16AM 1238 27 - 761936
Racine September 15, 1986 8:25AM 1820 798 - 1205712
Rock September 15, 1986 10:53AM 272 453 - 1034563
Walworth September 15, 1986 9:41AM 379 28 - 134689
<PAGE> 28
25
ELEVENTH SUPPLEMENTAL INDENTURE DATED JANUARY 15, 1992:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Time Volume or Page or Page Number
Crawford November 16, 1993 10:40AM V541 285 322 241097
Kenosha January 23, 1992 8:42AM V1483 259 296 884263
Racine January 23, 1992 8:05AM V2118 416 453 1362178
Rock January 23, 1992 10:08AM cd518 349 386 1150801
Walworth January 23, 1992 8:53AM V550 710 747 225596
TWELFTH SUPPLEMENTAL INDENTURE DATED NOVEMBER 1, 1992:
Card, Beginning Ending
Reel or Image Image Document
County Date Recorded Time Volume or Page or Page Number
Crawford November 16, 1993 10:40AM V541 323 333 241098
Kenosha November 4, 1992 9:04AM V1548 367 378 910683
Racine November 4, 1992 8:05AM V2199 858 869 1396042
Rock November 4, 1992 10:49AM cd583 I547 I558 1178473
Walworth November 4, 1992 8:56AM V596 505 516 245001
<PAGE> 1
EXHIBIT (4)-2
CONFORMED
==============================================================================
THIRTEENTH SUPPLEMENTAL INDENTURE
_________
WISCONSIN NATURAL GAS COMPANY
to
HARRIS TRUST AND SAVINGS BANK
and
J. BARTOLINI
As Trustees
________________________________________
Indenture dated September 1, 1950
Of Wisconsin Southern Gas Company, Inc.
________________________________________
Assumption of Bonds
by
Wisconsin Natural Gas Company
in connection with merger
________________________________________
DATED JANUARY 1, 1994
==============================================================================
<PAGE> 2
Thirteenth Supplemental Indenture Dated January 1, 1994
to
Indenture dated September 1, 1950
of Wisconsin Southern Gas Company, Inc.
____________
TABLE OF CONTENTS*
____________
PAGE
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GENERAL COVENANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE I.
ASSUMPTION AND DECLARATION.
Assumption of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II.
THE TRUSTEES.
Trustees not responsible for validity of Thirteenth Supplemental Indenture 4
ARTICLE III.
MISCELLANEOUS PROVISIONS.
Meanings of terms in Thirteenth Supplemental Indenture . . . . . . . . . 4
Effective Time of Covenants, Declarations and Agreements Contained in
Thirteenth Supplemental Indenture . . . . . . . . . . . . . . . . . . . 4
Execution of Thirteenth Supplemental Indenture in counterparts. . . . . . 4
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
EXECUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
WISCONSIN NATURAL'S ACKNOWLEDGMENT . . . . . . . . . . . . . . . . . . . 7
TRUSTEES' ACKNOWLEDGMENT . . . . . . . . . . . . . . . . . . . . . . . . 8
____________
* NOTE: The Table of Contents is not part of the Supplemental Indenture
and should not be considered as such. It is included herein only
for purposes of convenience.
<PAGE> 3
SUPPLEMENTAL INDENTURE, dated the first day of January, Nineteen hundred
and ninety-four (1994) made by and between WISCONSIN NATURAL GAS COMPANY, a
corporation organized and existing under the laws of the State of Wisconsin
(hereinafter called "Wisconsin Natural"), party of the first part, and HARRIS
TRUST AND SAVINGS BANK, a banking corporation authorized to accept and
administer trusts having its principal place of business in Chicago, Illinois,
and J. BARTOLINI, as Trustees under the Indenture dated September 1, 1950,
hereinafter mentioned, parties of the second part;
WHEREAS, WISCONSIN SOUTHERN GAS COMPANY, INC., a Wisconsin
corporation ("Wisconsin Southern"), has heretofore executed and delivered to
Harris Trust and Savings Bank, and J. Bartolini (the successor to F. O. Mann,
R. H. Long and R. G. Mason), as Trustees, the Indenture dated September 1,
1950, from WISCONSIN SOUTHERN GAS COMPANY (corporate predecessor of WISCONSIN
SOUTHERN GAS COMPANY, INC.) as amended by a supplemental indenture dated
August 18, 1955 (by which Wisconsin Southern Gas Company, Inc. assumed all the
obligations of its said predecessor) and by supplemental indentures dated as
of October 1, 1956, October 1, 1958, November 1, 1961, December 1, 1963,
February 1, 1967, April 1, 1970, January 1, 1973, August 1, 1975, January 1,
1983, January 1, 1988 and February 1, 1991 (said Indenture, as so amended,
being hereinafter sometimes referred to as the "Original Indenture" and,
together with all supplemental indentures thereto, being sometimes referred to
herein collectively as the "Indenture"), to secure the payment of the
principal of and the interest and premium, if any, on all Bonds at any time
issued and outstanding thereunder, and to declare the terms and conditions
upon which Bonds are to be issued thereunder; and the above-mentioned
indentures supplemental thereto have heretofore been entered into between
Wisconsin Southern and such Trustees; and
WHEREAS, Bonds have been issued by Wisconsin Southern under said
Indenture and indentures supplemental thereto prior to the date hereof as
follows:
(1) $1,400,000 principal amount of First Mortgage Bonds, 3 3/8%
Series A due September 1, 1975, which are described in the Indenture
dated September 1, 1950, all of which have been redeemed prior to the
date of execution hereof;
(2) $800,000 principal amount of First Mortgage Bonds, 4 1/2% Series
B due October 1, 1981, which are described in the Supplemental Indenture
dated October 1, 1956, all of which have been redeemed prior to the date
of execution hereof;
<PAGE> 4
2
(3) $500,000 principal amount of First Mortgage Bonds, 5% Series C
due October 1, 1983, which are described in the Third Supplemental
Indenture dated October 1, 1958, all of which have been redeemed prior
to the date of execution hereof;
(4) $850,000 principal amount of First Mortgage Bonds, 5 3/8% Series
D due November 1, 1986, which are described in the Fourth Supplemental
Indenture dated November 1, 1961, all of which have been redeemed prior
to the date of execution hereof;
(5) $1,200,000 principal amount of First Mortgage Bonds, 4.85%
Series E due December 1, 1988, which are described in the Fifth
Supplemental Indenture dated December 1, 1963, all of which have been
redeemed prior to the date of execution hereof;
(6) $1,500,000 principal amount of First Mortgage Bonds, 6.75%
Series F due February 1, 1992, which are described in the Sixth
Supplemental Indenture dated February 1, 1967, all of which have been
redeemed prior to the date of execution hereof;
(7) $1,300,000 principal amount of First Mortgage Bonds, 9 5/8%
Series G due April 1, 1995, which are described in the Seventh
Supplemental Indenture dated April 1, 1970, of which $403,000 principal
amount remain outstanding at the date of execution hereof;
(8) $1,000,000 principal amount of First Mortgage Bonds, 8 3/8%
Series H due January 1, 1993, which are described in the Eighth
Supplemental Indenture dated January 1, 1973, all of which have been
redeemed prior to the date of execution hereof;
(9) $1,500,000 principal amount of First Mortgage Bonds, 11% Series
I due August 1, 1995, which are described in the Ninth Supplemental
Indenture dated August 1, 1975, of which $480,000 principal amount
remain outstanding at the date of execution hereof;
(10) $2,500,000 principal amount of First Mortgage Bonds, 12 3/4%
Series J due January 1, 1995, which are described in the Tenth
Supplemental Indenture dated January 1, 1983, all of which have been
redeemed prior to the date of execution hereof;
(11) $4,000,000 principal amount of First Mortgage Bonds, 10 1/4%
Series K due January 15, 1998, which are described in the Eleventh
Supplemental Indenture dated January 1, 1988, of which $2,860,000
principal amount remain outstanding at the date of execution hereof;
<PAGE> 5
3
(12) $7,000,000 principal amount of First Mortgage Bonds, 9.47%
Series L due March 1, 2006, which are described in the Twelfth
Supplemental Indenture dated February 1, 1991, all of which remain
outstanding at the date of execution hereof;
and
WHEREAS, pursuant to Articles of Merger dated December 28, 1993,
Wisconsin Southern is being merged into Wisconsin Natural, effective at 12:01
a.m., Central Standard Time, on January 1, 1994, with Wisconsin Natural as the
successor corporation; and
WHEREAS, it is provided in Section 14.01 of the Original Indenture that,
upon any merger of Wisconsin Southern into another corporation, the due and
punctual payment of the principal and interest of all Bonds at the time
outstanding according to their tenor and the due and punctual performance of
all the covenants of the Indenture shall, by supplemental indenture be
expressly assumed by the successor corporation resulting from such merger; and
WHEREAS, it is provided in Section 14.03 of the Original Indenture that
a successor corporation resulting from a merger of Wisconsin Southern into
another corporation shall possess, subject to the terms and conditions of the
Original Indenture, and may from time to time exercise, each and every right
and power of Wisconsin Southern, in the name of such successor corporation or
otherwise; and
WHEREAS, Wisconsin Natural, pursuant to appropriate resolutions of its
Board of Directors, has duly resolved and determined to make, execute and
deliver to the Trustees a Supplemental Indenture in the form hereof for the
purpose of complying with the above-mentioned provisions of Sections 14.01 and
14.03 of the Original Indenture; and
WHEREAS, all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument have been done,
performed and fulfilled and the execution and delivery hereof have been in all
respects duly authorized;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
That, in consideration of the premises and of the mutual covenants
herein contained and of the sum of One Dollar duly paid by the Trustees to
Wisconsin Natural at or before the time of the execution of this Supplemental
Indenture, and of other valuable considerations, the receipt whereof is hereby
acknowledged, Wisconsin Natural does hereby covenant, declare and agree to and
with the Trustees, and their successors in trust, under the Indenture, for the
benefit of those who shall hold the Bonds and related coupons, or any of them,
issued or to be issued under the Indenture, as follows:
<PAGE> 6
4
ARTICLE I.
ASSUMPTION AND DECLARATION.
Wisconsin Natural hereby assumes, as of the effective time specified in
Article III hereof, (a) the due and punctual payment of the principal of and
interest on all Bonds outstanding under the Indenture at such time, according
to their tenor, and (b) the due and punctual performance of all the covenants
of the Indenture to be kept or performed by Wisconsin Southern.
It is hereby declared that, in accordance with Section 17.06 of the
Original Indenture, the lien of the Indenture shall not extend to the property
of Wisconsin Natural not acquired from Wisconsin Southern and not then subject
to the lien of the Indenture, unless Wisconsin Natural shall have expressly
agreed that such shall be the case, in the manner specified in Section 14.02
of the Original Indenture.
ARTICLE II.
THE TRUSTEES.
The Trustees shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this Supplemental Indenture or the
due execution hereof by Wisconsin Natural or for or in respect of the recitals
contained herein, all of which recitals are made by Wisconsin Natural solely.
ARTICLE III.
MISCELLANEOUS PROVISIONS.
All terms contained in this Supplemental Indenture, and not herein
defined, shall for all purposes thereof, have the meanings given to such terms
in Article II of the Original Indenture.
Although the actual date of execution of this Supplemental Indenture by
Wisconsin Natural and by the Trustees is as indicated by their respective
acknowledgments hereto annexed, the covenants, declarations and agreements of
Wisconsin Natural herein contained shall become effective at 12:01 a.m.,
Central Standard Time, on January 1, 1994, the effective time of the merger
referred to herein.
This Supplemental Indenture may be simultaneously executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original; but such counterparts shall together constitute but one and the same
instrument.
<PAGE> 7
5
IN WITNESS WHEREOF, said Wisconsin Natural Gas Company has caused this
Supplemental Indenture to be executed on its behalf by its President or one of
its Vice Presidents and its corporate seal to be hereto affixed and said seal
and this Supplemental Indenture to be attested by its Secretary or one of its
Assistant Secretaries; said Harris Trust and Savings Bank has caused this
Supplemental Indenture to be executed on its behalf by its President or one of
its Vice Presidents, and its corporate seal to be hereto affixed and said seal
and this Supplemental Indenture to be attested by its Secretary or one of its
Assistant Secretaries; and said J. Bartolini has caused this Supplemental
Indenture to be executed; all as of the first day of January, one thousand
nine hundred and ninety-four.
WISCONSIN NATURAL GAS COMPANY
\s\ J. G. REMMEL
By_________________________________
J. G. Remmel
Vice President
(CORPORATE SEAL)
Attested:
\s\ ANN MARIE BRADY
________________________________
Ann Marie Brady
Secretary
Signed, sealed and delivered by
WISCONSIN NATURAL GAS
COMPANY in the presence of:
\s\ C. L. FISHER
________________________________
C. L. Fisher
\s\ K. L. CRAWFORD
________________________________
K. L. Crawford
As Witnesses
<PAGE> 8
6
HARRIS TRUST AND SAVINGS BANK
\s\ KEVIN O. HEALY
By ________________________________
Kevin O. Healy
(CORPORATE SEAL) Vice President
Attested:
\s\ ROBERT D. FOLTZ
_____________________________
Robert D. Foltz
Assistant Secretary
Signed, sealed and delivered by
HARRIS TRUST AND SAVINGS
BANK in the presence of:
\s\ D. G. DONOVAN
______________________________
D. G. Donovan
\s\ R. JOHNSON
______________________________
R. Johnson
As Witnesses
J. BARTOLINI
\s\ J. BARTOLINI
By ________________________________
J. Bartolini, Co-Trustee
Signed, sealed and delivered by
J. BARTOLINI in the presence of:
\s\ D. G. DONOVAN
______________________________
D. G. Donovan
\s\ R. JOHNSON
______________________________
R. Johnson
As Witnesses
<PAGE> 9
7
STATE OF WISCONSIN, )
COUNTY OF MILWAUKEE. ) SS.:
On this 17th day of December, 1993, before me personally appeared
J. G. REMMEL and ANN MARIE BRADY, to me personally known, who being by me
severally duly sworn, did say: that J. G. REMMEL is a Vice President and ANN
MARIE BRADY is Secretary of WISCONSIN NATURAL GAS COMPANY, and that the seal
affixed to the foregoing instrument is the corporate seal of said corporation
and that said instrument was signed and sealed on behalf of said corporation
by authority of its Board of Directors; and said J. G. REMMEL and ANN MARIE
BRADY severally acknowledged said instrument to be the free act and deed of
said corporation.
\s\ MARGARET M. PEARSON
________________________________
Margaret M. Pearson
Notary Public
State of Wisconsin
My Commission expires March 19, 1995
[Seal of Notary Public]
<PAGE> 10
8
STATE OF ILLINOIS, )
COUNTY OF COOK. ) SS.:
On this 17th day of December, 1993, before me personally appeared
KEVIN O. HEALY and ROBERT D. FOLTZ, to me personally known, who being by me
severally duly sworn, did say: that KEVIN O. HEALY is a Vice President and
ROBERT D. FOLTZ is an Assistant Secretary of HARRIS TRUST AND SAVINGS BANK,
and that the seal affixed to the foregoing instrument is the corporate seal of
said corporation and that said instrument was signed and sealed on behalf of
said corporation by authority of its Board of Directors; and said KEVIN O.
HEALY and ROBERT D. FOLTZ severally acknowledged said instrument to be the
free act and deed of said corporation.
\s\ T. MUZQUIZ
________________________________
T. Muzquiz
Notary Public
State of Illinois
My Commission expires July 12, 1997
[Seal of Notary Public]
STATE OF ILLINOIS, )
COUNTY OF COOK. ) SS.:
On this 17th day of December, 1993, personally appeared J. BARTOLINI,
known to me to be the person whose name is subscribed to the within
instrument, and acknowledged that she executed the same for the purposes
therein contained.
\s\ T. MUZQUIZ
________________________________
T. Muzquiz
Notary Public
State of Illinois
My Commission expires July 12, 1997
[Seal of Notary Public]
This instrument was drafted by James D. Zakrajsheck and Bruce C. Davidson
on behalf of Wisconsin Natural Gas Company.
<PAGE> 1
EXHIBIT (23)-1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 22, 1993 (except with respect to the matter discussed in
Note 9, as to which the date is July 30, 1993) on the financial statements of
Wisconsin Southern Gas Company, Inc. (the "Company") which appears on page 1
of Exhibit (99)-2 to Wisconsin Natural Gas Company's current report on
Form 8-K dated January 1, 1994. It should be noted that we have not audited
any financial statements of the Company subsequent to December 31, 1992 or
performed any audit procedures subsequent to the date of our report. We
further consent to the incorporation by reference of such report in the
Registration Statements on Form S-3 (Nos. 33-41368 and 33-48927) and related
Prospectuses of Wisconsin Natural Gas Company.
/s/Arthur Andersen & Co.
- ------------------------
ARTHUR ANDERSEN & CO.
Milwaukee, Wisconsin
January 3, 1994
<PAGE> 1
EXHIBIT (99)-1
WEC & WN Joint News Release
From: Chuck Ziegler, Wisconsin Energy Corp. (221-4444)
Rick James, Wisconsin Natural Gas Co. (635-2349)
Jan. 3, 1994
RACINE, Wis. -- Effective at 12:01 a.m. on Jan. 1, 1994, Wisconsin
Southern Gas Company, Inc. was acquired by Wisconsin Energy Corp. through a
merger of Wisconsin Southern into Wisconsin Natural Gas Co., a wholly-owned
subsidiary of Wisconsin Energy. In the transaction, structured as a tax-free
reorganization, all outstanding shares of Wisconsin Southern common stock were
converted into 1,638,540 shares of Wisconsin Energy common stock, except for
fractional interests which are payable in cash, based on an exchange ratio of
1.6330 shares of Wisconsin Energy common stock for each outstanding share of
Wisconsin Southern common stock. As of Dec. 31, 1993, Wisconsin Southern had
1,003,392 shares outstanding.
Wisconsin Natural Gas Co. is the state's second largest gas distribution
company. Wisconsin Natural, headquartered in Racine, serves approximately
331,000 customers following the merger.
# # #
<PAGE> 1
EXHIBIT (99)-2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Wisconsin Southern Gas
Company, Inc.:
We have audited the accompanying balance sheets of WISCONSIN SOUTHERN GAS
COMPANY, INC. (a Wisconsin corporation) as of December 31, 1992 and 1991, and
the related statements of income, cash flows and common shareholders' equity
for each of the three years in the period ended December 31, 1992. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Wisconsin Southern Gas
Company, Inc. as of December 31, 1992 and 1991, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1992, in conformity with generally accepted accounting
principles.
/s/Arthur Andersen & Co.
- ------------------------
ARTHUR ANDERSEN & CO.
Milwaukee, Wisconsin
February 22, 1993
(except with respect to
the matter discussed in
Note 9, as to which the
date is July 30, 1993)
- 1 -
<PAGE> 2
<TABLE>
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
STATEMENTS OF INCOME
<CAPTION>
Year ended December 31
------------------------------------------
1992 1991 1990
------------ ------------ ------------
<S> <C> <C> <C>
Operating Revenues ......................... $ 43,707,803 $ 40,683,810 $ 37,341,203
------------ ------------ ------------
Operating Expenses:
Natural gas .............................. 26,398,498 24,911,867 22,520,844
Operations ............................... 10,382,265 10,118,824 8,620,298
Maintenance .............................. 826,385 790,322 803,401
Depreciation ............................. 1,653,925 1,556,445 1,566,343
Taxes -
Federal income ....................... 640,419 386,840 586,258
Investment tax credit restored ....... (47,267) (47,267) (47,244)
State income ......................... 193,077 108,024 165,803
Other ................................ 854,401 822,475 820,639
------------ ------------ ------------
Total operating expenses ................... 40,901,703 38,647,530 35,036,342
------------ ------------ ------------
Operating Income ........................... 2,806,100 2,036,280 2,304,861
Other Income, Net of Tax ................... 63,592 135,934 32,847
------------ ------------ ------------
Income Before Interest Expense ............. 2,869,692 2,172,214 2,337,708
------------ ------------ ------------
Interest:
Interest on long-term debt ........... 1,157,931 1,193,715 750,134
Other ................................ 122,892 160,722 218,286
------------ ------------ ------------
Total interest ............. 1,280,823 1,354,437 968,420
------------ ------------ ------------
Net Income ................................. $ 1,588,869 $ 817,777 $ 1,369,288
============ ============ ============
Weighted Average Number of Common
Shares Outstanding ....................... 995,322 985,702 977,342
======= ======= =======
Net Income Per Share ....................... $1.60 $.83 $1.40
===== ==== =====
Cash Dividends Declared Per
Share of Common Stock .................... $1.28 $1.26 $1.19
===== ===== =====
<FN>
The accompanying notes are an integral part of these financial statements.
- 2 -
</TABLE>
<PAGE> 3
<TABLE>
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
BALANCE SHEETS
<CAPTION>
December 31
-------------------------------
1992 1991
Assets ----------- -----------
------
<S> <C> <C>
Utility Plant:
Original cost ...................................... $48,117,299 $45,795,272
Less - Accumulated depreciation .................... 23,973,996 22,613,433
----------- -----------
24,143,303 23,181,839
Non-current gas in storage, at average cost ........ 941,220 941,220
----------- -----------
Net utility plant .................... 25,084,523 24,123,059
----------- -----------
Current Assets:
Cash ............................................... 432,161 279,104
Accounts receivable (less allowance for doubtful
accounts of $160,000 and $175,000, respectively .. 6,084,929 5,330,843
Accrued revenues ................................... 3,757,636 2,913,147
Natural gas in storage, at average cost ............ 1,939,413 1,617,974
Materials and supplies, at average cost ............ 605,031 644,484
Prepaid expenses and other ......................... 744,545 691,809
Deferred tax benefit ............................... 869,199 327,762
----------- -----------
Total Current Assets ................. 14,432,914 11,805,123
----------- -----------
Deferred Environmental Costs ......................... 3,171,475 344,071
----------- -----------
Deferred Charges and Other Assets .................... 1,680,133 1,490,057
----------- -----------
Total Assets ......................... $44,369,045 $37,762,310
=========== ===========
Capitalization and Liabilities
------------------------------
Capitalization:
Common stock--$5 par value; authorized 2,000,000
shares; issued and outstanding 999,567 and
989,672 shares, respectively ..................... $ 4,997,835 $ 4,948,360
Premium on common stock ............................ 6,383,719 6,167,345
Retained earnings .................................. 1,198,703 884,312
----------- -----------
Total common shareholders' equity .... 12,580,257 12,000,017
Preferred stock--$100 par value; authorized
10,000 shares; none outstanding .................. -- --
Long-term debt, net ................................ 10,743,000 11,842,000
----------- -----------
Total capitalization ................. 23,323,257 23,842,017
----------- -----------
Current Liabilities:
Current maturities of long-term debt ............... 1,099,000 1,674,561
Notes payable ...................................... 4,900,000 1,800,000
Accounts payable ................................... 4,992,585 3,599,215
Gas credits and refunds due customers .............. 1,209,786 1,524,495
Accrued taxes ...................................... 612,800 520,930
Dividends payable .................................. 319,861 316,695
Accrued interest ................................... 496,599 572,121
Other .............................................. 387,134 493,102
----------- -----------
Total current liabilities ............ 14,017,765 10,501,119
----------- -----------
Other Credits:
Unamortized investment tax credits ................. 663,693 710,960
Deferred income taxes .............................. 1,809,289 1,699,466
Accrued environmental costs ........................ 3,000,000 300,000
Other long-term liabilities ........................ 1,555,041 708,748
----------- -----------
Total other credits .................. 7,028,023 3,419,174
----------- -----------
Commitments and Contingencies (Note 7)
Total Capitalization and Liabilities ..... $44,369,045 $37,762,310
=========== ===========
<FN>
The accompanying notes are an integral part of these balance sheets.
- 3 -
</TABLE>
<PAGE> 4
<TABLE>
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
STATEMENTS OF CASH FLOWS
<CAPTION>
Year ended December 31
---------------------------------------
1992 1991 1990
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows Provided By Operating Activities:
Net income ............................................... $ 1,588,869 $ 817,777 $ 1,369,288
Adjustments to reconcile net income
to cash provided by operations -
Depreciation and amortization .......................... 1,907,878 1,832,683 1,842,580
Provision (benefit) from deferred income taxes ......... (431,615) (950,507) (574,381)
Investment tax credit restored ......................... (47,267) (47,267) (47,244)
Changes in -
Accounts receivable,net .............................. (1,598,575) (579,986) 236,294
Natural gas in storage ............................... (321,439) 469,395 (418,341)
Accounts payable ..................................... 1,393,370 (489,096) (438,767)
Gas credits and refunds due customers ................ (314,709) (501,117) 795,701
Accrued income taxes ................................. 91,871 524,841 (805,726)
Deferred charges and other assets .................... 42,322 (171,890) (499,910)
Other, net ........................................... 35,308 742,374 (150,789)
----------- ----------- ----------
Cash Provided By Operations ................................ 2,346,013 1,647,207 1,308,705
----------- ----------- -----------
Cash Flows (Used For) Investing Activities:
Additions to utility plant, net ........................ (2,609,766) (3,458,899) (4,149,870)
----------- ----------- -----------
Cash Flows Provided By (Used For) Financing Activities:
Changes in notes payable ................................. 3,100,000 (3,500,000) 4,450,000
Issuance of long-term debt ............................... -- 7,000,000 --
Payments on long-term debt ............................... (1,674,561) (729,554) (451,777)
Issuance of common stock ................................. 80,412 91,416 67,106
Dividends paid on common stock, less amounts reinvested .. (1,089,041) (1,030,474) (983,141)
----------- ----------- -----------
Cash Provided By Financing Activities ...................... 416,810 1,831,388 3,082,188
----------- ----------- -----------
Net Increase in Cash ....................................... 153,057 19,696 241,023
Cash, Beginning of Year .................................... 279,104 259,408 18,385
----------- ----------- -----------
Cash, End of Year .......................................... $ 432,161 $ 279,104 $ 259,408
=========== =========== ===========
Cash Paid During the Year For:
Interest ............................................... $ 1,319,995 $ 1,125,686 $ 965,764
=========== =========== ===========
Income taxes ........................................... $ 1,250,000 $ 1,030,000 $ 2,235,000
=========== =========== ===========
<FN>
The accompanying notes are an integral part of these statements.
- 4 -
</TABLE>
<PAGE> 5
<TABLE>
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
<CAPTION>
Year ended December 31
------------------------------------
1992 1991 1990
---------- ---------- ----------
<S> <C> <C> <C>
Common Stock:
Balance, Beginning of Year ................................ $4,948,360 $4,900,170 $4,725,080
Par value of common stock issued for --
Stock dividends ................................... -- -- 139,575
Dividend Reinvestment and Stock Purchase Plan ..... 49,475 48,190 35,515
---------- ---------- ----------
Balance, End of Year ...................................... $4,997,835 $4,948,360 $4,900,170
========== ========== ==========
Premium on Common Stock:
Balance, Beginning of Year ............................ $6,167,345 $5,912,093 $4,838,547
Excess of market value over par value of common
stock issued ........................................ 216,374 255,252 1,073,546
---------- ---------- ----------
Balance, End of Year ...................................... $6,383,719 $6,167,345 $5,912,093
========== ========== ==========
Retained Earnings:
Balance, Beginning of Year ................................ $ 884,312 $1,309,035 $2,124,055
Add--Net income ....................................... 1,588,869 817,777 1,369,288
Deduct--
Cash dividends declared on common stock ........... (1,274,478) (1,242,500) (1,159,732)
Common stock dividends declared ................... -- -- (1,024,576)
---------- ---------- ----------
Balance, End of Year ...................................... $1,198,703 $ 884,312 $1,309,035
========== ========== ==========
<FN>
The accompanying notes are an integral part of these statements.
- 5 -
</TABLE>
<PAGE> 6
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Wisconsin Southern Gas Company, Inc. (the "Company") is a public utility
engaged in purchasing, distributing, transporting and selling natural gas to a
diversified base of residential, commercial and industrial customers,
principally in portions of southeastern Wisconsin. It is subject to the
accounting and rate regulation of the Public Service Commission of Wisconsin
(PSCW). Significant accounting policies are as follows:
Revenue Recognition--The Company accrues revenues for service rendered but
not yet billed at each month end.
The Company is required to provide service (and grant credit) to customers
within its defined service territory and is precluded by statute from
discontinuing service to residential customers during certain periods of the
year. The Company continuously reviews its customers' credit worthiness and
requests deposits or refunds deposits based on that review.
The Company's rates provide for recovery from all classes of customers of
the cost of gas purchased from its suppliers.
Depreciation--Depreciation provisions are at composite straight-line
rates. The composite straight-line depreciation rate certified by the PSCW was
approximately 3.9% for 1992, 1991 and 1990.
Utility Plant--Utility plant is stated at the original cost of
construction.
Maintenance and repairs to property and replacements of minor items are
charged to maintenance expense. The cost of property retired plus removal
costs, less salvage, is charged to the accumulated provision for depreciation;
as a result, no profit or loss is recognized in connection with ordinary
retirements of depreciable property.
Substantially all of the Company's utility plant is subject to a first
mortgage lien. The Company has no material leases.
Statements of Cash Flows--The Company considers any highly liquid debt
instrument with an original maturity of three months or less at the time of
purchase to be a cash equivalent.
2. Common Stock
As of December 31, 1992, the Company has reserved 30,537 shares of common
stock for issuance under its automatic Dividend Reinvestment and Stock
Purchase Plan.
The Company issued a 3% common stock dividend in 1990. The weighted
average number of common shares outstanding and the earnings per share and
cash dividends per share of common stock, as presented in the Statements of
Income, have been adjusted to reflect the effects of this stock dividend. No
such common stock dividends were declared in 1991 or 1992.
- 6 -
<PAGE> 7
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The following shares of common stock were issued:
1992 1991 1990
------- ------- -------
Stock dividends ................................ -- -- 27,915
Dividend Reinvestment and Stock Purchase Plan .. 9,895 9,638 7,103
------- ------- -------
Total shares issued ........................... 9,895 9,638 35,018
======= ======= =======
Total cash dividends declared by the Company were $1,274,478, $1,242,500
and $1,159,732 for 1992, 1991 and 1990, respectively. Of these amounts,
$185,437, $212,026 and $176,591 were reinvested through the Company's Dividend
Reinvestment and Stock Purchase Plan in 1992, 1991 and 1990, respectively.
3. Long-Term Debt
Long-term debt as of December 31, consisted of the following:
1992 1991
----------- -----------
First Mortgage Bonds:
6.75%, Series F, due 1992 ................. $ -- $ 420,000
9-5/8%, Series G, due 1995 ................. 442,000 481,000
8-3/8%, Series H, due 1993 ................. 430,000 460,000
11%, Series I, due 1995 ................. 540,000 600,000
12-3/4%, Series J, due 1995 ................. -- 555,561
10-1/4%, Series K, due 1998 ................. 3,430,000 4,000,000
9.47%, Series L, due 2006 ................. 7,000,000 7,000,000
----------- -----------
Total debt ................................... 11,842,000 13,516,561
Less--Current maturities ..................... (1,099,000) (1,674,561)
----------- -----------
Net long-term debt ....................... $10,743,000 $11,842,000
=========== ===========
The bond indenture, as supplemented, contains restrictions on the payment
of cash dividends and certain other restrictions. At December 31, 1992, under
these provisions, none of the retained earnings were so restricted. In
addition to these restrictions, the Company follows guidelines as determined
by the PSCW for an optimum long-term capital structure, which can in turn
affect dividend policy.
Long-term debt maturities total $1,099,000, $669,000, $1,354,000, $570,000
and $1,270,000 for the years ending December 31, 1993 through 1997,
respectively.
- 7 -
<PAGE> 8
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
4. Notes Payable and Lines of Credit
The Company normally maintains a $3 million bank line of credit to obtain
short-term borrowing flexibility, with an option to increase it to $5 million.
The Company has also arranged an additional $3.5 million line of credit to be
in effect until May 31, 1993, bringing total available lines to $8.5 million
for this period. The interest rate on these lines is the prime rate. Prior to
placement of long-term bonds in March 1991, the line was temporarily increased
to $7 million after which it was reduced back to $3 million. In accordance
with normal banking practices, unused lines of credit may generally be
withdrawn at the discretion of the lender. Certain cash balances represent
compensating balances for credit lines and bank services; however, there are
no legal restrictions as to withdrawal of these funds.
The following information relates to short-term borrowings and lines of
credit for the years indicated:
1992 1991 1990
---------- ----------- -----------
As of end of year--
Interest rate on notes payable ....... 6.0% 6.5% 10.0%
Unused lines of credit ............... $3,600,000 $1,200,000 $1,700,000
For the year ended--
Maximum amount of notes
payable............................... $4,900,000 $6,900,000 $5,300,000
Average amount of notes payable ....... $1,111,000 $1,069,000 $1,208,000
Average interest rate on notes payable .. 6.2% 9.2% 10.1%
5. Income Taxes
The Company records deferred income taxes on timing differences.
The Company followed the deferral method of accounting for investment tax
credits whereby such credits are being restored as a reduction of income tax
expense over the useful lives of the related property.
The effective income tax rate is computed by dividing total income tax
expense (including investment tax credit restored) by the sum of such expense
and net income. The following table reconciles the statutory
federal rate to the effective income tax rate:
1992 1991 1990
---- ---- ----
Statutory federal tax rate ........................... 34.0% 34.0% 34.0%
State income taxes, net............................. 5.3 5.3 5.2
Effects of various property timing differences
for which deferred taxes had not been provided ... (3.5) 3.4 2.9
Investment tax credit restored ..................... (2.0) (3.5) (2.3)
Reversal of taxes provided at rates
greater than 34 % ................................ -- -- (3.8)
Other, net ......................................... .4 .1 (1.4)
---- ---- ----
Effective income tax rate ....................... 34.2% 39.3% 34.6%
==== ==== ====
- 8 -
<PAGE> 9
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The following table reflects the components of income tax expense:
1992 1991 1990
---------- ---------- ----------
Current federal ................. $1,027,982 $1,224,991 $1,113,161
Current state ................... 278,128 302,200 234,381
Deferred ........................ (431,615) (950,507) (574,381)
ITC restored .................... (47,267) (47,267) (47,244)
---------- ---------- ----------
$ 827,228 $ 529,417 $ 725,917
========== ========== ==========
The components of deferred income tax expense are as follows:
1992 1991 1990
---------- ---------- ----------
Property items .................. $ 160,822 $ 182,165 $ 126,491
Revenue recognition ............. -- -- (302,468)
Gas costs ....................... (394,047) (943,324) (72,217)
Deferred charges................. (49,608) (91,009) (279,228)
Other............................ (148,782) (98,339) (46,959)
---------- ---------- ----------
$ (431,615) $ (950,507) $ (574,381)
========== ========== ==========
Income tax expense is included in the Statements of Income as:
1992 1991 1990
---------- ---------- ----------
Federal and state income taxes .. $ 786,229 $ 447,597 $ 704,817
Other income, net ................. 40,999 81,820 21,100
---------- ---------- ----------
$ 827,228 $ 529,417 $ 725,917
========== ========== ==========
Certain book-tax property differences and other timing items that had not
previously been normalized are being recognized in rates over a 10-year period
that began on October 1, 1991. The remaining unrecorded deferred tax effect of
such items totalled approximately $735,000 as of December 31, 1992.
The Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109), which is
effective in 1993. SFAS 109 requires adjustments to reflect accumulated deferred
income taxes relating to tax rate changes and temporary differences for which
deferred taxes were not previously recorded (as discussed above). The Company
will reflect the initial application of the statement as a cumulative adjustment
in 1993. It is expected that the additional net deferred income tax assets will
be offset by regulatory liabilities totalling $1.6 million, which represent the
expected future revenue requirement impact of these adjustments. As such,
management does not expect the new standard to have a significant impact on the
results of future operations or financial condition.
- 9 -
<PAGE> 10
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
6. Employee Benefit Plans
The Company has two retirement plans (salaried and non-salaried) covering
substantially all employees. Benefits are based on years of service and
compensation. Contributions are intended to provide not only for benefits
attributed to service rendered to date, but also for those expected to be
earned in the future.
The following table sets forth the plans' funded status at December 31:
1992 1991
----------- -----------
Accumulated benefit obligations, including
vested benefits of $10,563,065 and
$9,027,411, respectively ................. $10,583,005 $ 9,045,298
=========== ===========
Projected benefit obligation for service
rendered to date ......................... $13,768,300 $12,332,891
Plan assets at fair value ................. 16,201,285 15,551,305
----------- -----------
Plan assets in excess of projected
benefit obligation ....................... (2,432,985) (3,218,414)
Unrecognized gain on assets................ 3,829,084 3,744,494
Unrecognized prior service cost ........... (1,136,214) (223,255)
Unrecognized net asset at January 1, 1987,
being recognized through 2002 ............ 231,439 260,046
----------- -----------
Accrued pension liability .......... $ 491,324 $ 562,871
=========== ===========
Net pension cost of the plans consisted of:
1992 1991 1990
---------- ---------- ----------
Service cost--benefits earned
during the year .................. $ 490,707 $ 429,609 $ 401,867
Interest cost on projected
benefit obligation ............... 998,665 889,846 817,291
Actual return on plan assets ...... (1,089,149) (4,186,038) (209,566)
Net amortization and deferral ..... (261,154) 3,245,808 (735,571)
Regulatory effect of
accounting for pension cost....... (139,069) (168,609) (274,021)
---------- ---------- ----------
Net pension cost ........... $ -- $ 210,616 $ --
========== ========== ==========
Actuarial assumptions used
were as follows:
Weighted-average
discount rate ................ 8.00% 8.00% 8.00%
Long-term rate of
return on assets ............. 8.00% 8.00% 8.00%
- 10 -
<PAGE> 11
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
In addition to providing pension benefits, the Company provides certain
health care and life insurance benefits for retired employees. Until
October 1, 1990, the cost of retiree health care and the cost of providing
life insurance were recognized as annual insurance premiums were incurred.
These costs totalled approximately $74,000 for 1990. In October 1990, the
Company formed two voluntary employee's beneficiary association (VEBA) trusts
to fund postretirement health and life insurance benefits. In connection with
a rate order effective October 1990, the Company began collecting amounts in
rates to fund such postretirement benefits. In 1992, 1991 and 1990,
$1,060,000, $940,000 and $224,000 were provided and expensed, for such
funding, respectively.
The FASB has issued a statement, SFAS No. 106, which establishes accounting
and reporting standards for retirement benefits other than pensions. The new
statement requires the accrual of the expected cost of such benefits during
the employees' years of service. The assumptions and calculations involved in
determining the accrual closely parallel pension accounting requirements.
The Company expects to prospectively adopt the standard effective
January l, 1993 and to amortize the transition obligation to expense over a
twenty-year period. Management has engaged actuaries who have made a
preliminary review using 1992 data. Based on the actuaries' review, the
postretirement transition obligation at January 1, 1993, measured in
accordance with the new standard, is estimated to be $10.3 million. Had the
standard been adopted in 1992, the actuaries estimate that the additional
postretirement benefit cost charged to expense in 1992 would have been
approximately $758,000 (pre-tax). Management believes the effect of actual
adoption in 1993 will be similar, although it could be changed significantly
by changes in health care costs, work force demographics, interest rates, or
plan changes.
As prescribed by the PSCW, effective January 1, 1993, the Company has
adopted SFAS 106 for accounting and ratemaking purposes.
In November of 1992, the FASB issued Statement of Financial Accounting
Standard (SFAS) No. 112, "Employers' Accounting for Post Employment Benefits."
SFAS No. 112 establishes standards of financial accounting and reporting for
the estimated costs of benefits provided by an employer to former or inactive
employees after employment but before retirement. The impact of adoption,
which must occur no later than 1994, is not expected to be significant.
The Company also has various deferred compensation and supplemental
retirement plans for directors and officers. Total expenses for such plans
were $251,000, $179,000, and $149,000 for 1992, 1991, and 1990, respectively.
7. Commitments and Contingencies
The Company's 1993 planned expenditures for utility plant additions are
estimated at $4.2 million, and certain commitments have been made in
connection therewith.
- 11 -
<PAGE> 12
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
To ensure an adequate supply of natural gas, the Company has entered into
certain long-term contracts. These contracts include a demand component
whereupon payments are required if contracted quantities are not purchased.
Certain conditions may arise that require the Company to make payments under
these demand clauses. The Company has contracts obligating purchases that
total approximately $35 million through 1996. Management believes it will meet
minimum purchase obligations under the contracts.
The Company has hired an environmental engineering firm to perform testing
on a former manufactured gas site previously operated by the Company. Such
testing has determined that remediation work is required at the site; however,
the extent of such work is subject to approval by the Wisconsin Department of
Natural Resources. Future site remediation costs are estimated to total $3-7
million. As of December 31, 1992, the Company has recorded a liability of $3
million for future estimated site remediation costs along with a deferred
charge of $3,171,475, which includes amounts expended through December 31,
1992. Management believes all costs associated with remediation are probable
for recovery in future rates based on correspondence with the PSCW and prior
regulatory treatment by the PSCW. Under current plans, significant
expenditures will not occur until at least 1994.
8. FERC Orders 636 and 636-A
In 1992, the Federal Energy Regulatory Commission (FERC) issued Orders
No. 636 and No. 636-A. The 636 Orders require substantial restructuring of the
service obligations of interstate pipelines. Pipelines have initiated
proceedings to negotiate with customers all elements of restructured tariffs
to be in place by the 1993-1994 winter heating season. Among other things, the
636 Orders mandate "unbundling" of existing pipeline gas sales services and
will replace current statutory abandonment procedures, as applied to firm
transportation contracts of more than one year, with a right-of-first-refusal
mechanism. Mandatory unbundling will require pipelines to sell separately the
various components of their existing gas sales services (gathering,
transportation and storage services, and gas supply). These components are now
combined or "bundled" in gas services purchased by the Company. To address
concerns raised by utilities about reliability of service to their service
territories, the 636 Orders require pipelines to offer a "no-notice"
transportation service under which firm transporters can receive delivery of
gas up to their contractual capacity level on any day without prior
scheduling. In addition, the customer may appoint an agent, which may be the
pipeline, to rebundle the component services into a bundled service
substantially similar to existing pipeline service.
The right-of-first-refusal mechanism contained in the 636 Orders replaces
the current abandonment procedures under which a pipeline must, before
abandoning any service, obtain prior FERC approval that discontinuance of the
service is in the public interest. The 636 Orders authorize a pipeline's
abandonment of a long-term (one year or more) transportation service to a
customer whenever the customer fails to match the highest rate and longest
term, up to a maximum of 20 years, offered to the pipeline by other customers
for the particular capacity. Further, the 636 Orders provide for a mechanism
for pipelines to recover prudently incurred transition costs associated with
the restructuring process.
- 12 -
<PAGE> 13
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
The FERC has initiated individual restructuring proceedings for each
interstate pipeline. Each pipeline is required to submit a proposal to bring
it into compliance with the requirements of the 636 Orders. The Company has
intervened and is participating in the pipeline proceedings, including
settlement negotiations, that are of substantial interest to the Company. The
636 Orders may have transition costs totalling up to $8.1 million; however,
such costs are expected to be recoverable in future rates.
9. Potential Business Combination
In October 1992, the Company's Board of Directors engaged a financial
advisor to study a variety of strategic alternatives including contact with a
select group of companies to investigate their interest in a business
combination. In connection therein, the Company also entered into employment
agreements with certain of its officers and employees. These agreements, which
have terms from two to five years, outline conditions of employment and
specify severance payments which would be paid only after a change in Company
ownership occurs and certain other events take place. If such change in
ownership were to occur, the Company has the possibility of incurring costs
associated with the severance payments, as well as other vested benefits,
recognition of which could be accelerated. The maximum obligation associated
with these agreements would total $2.3 million if all employees subject to the
agreements terminated employment.
On July 30, 1993, Wisconsin Energy Corporation ("Wisconsin Energy"),
Wisconsin Natural Gas Company ("Wisconsin Natural") and the Company entered
into a definitive agreement for the acquisition of the Company by Wisconsin
Energy through the merger of the Company into Wisconsin Natural, a wholly-
owned subsidiary of Wisconsin Energy. Subject to the receipt of various
approvals, the target date for this transaction to close is January 1, 1994.
10. Quarterly Financial Data (Unaudited)
Seasonal factors significantly affect gas distribution utilities, and
therefore, the data presented below should not be expected to be comparable
between quarters. Quarterly data also is not necessarily indicative of the
results to be expected for an annual period.
First Second Third Fourth
----------- ---------- ----------- -----------
1992
Operating revenues ......... $16,236,972 $6,533,765 $ 4,377,210 $16,559,856
Operating income (loss) .... 2,120,470 (114,193) (762,640) 1,562,463
Net income (loss) .......... 1,805,496 (392,692) (1,052,575) 1,228,640
Net income (loss)
per share ................. 1.82 (.40) (1.06) 1.24
1991
Operating revenues ......... $16,672,952 $5,537,053 $ 4,138,106 $14,335,699
Operating income (loss) .... 2,047,779 (447,603) (847,763) 1,283,867
Net income (loss) .......... 1,762,464 (752,889) (1,172,690) 980,892
Net income (loss)
per share ................. 1.79 (.76) (1.19) .99
- 13 -
<PAGE> 14
<TABLE>
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------- ---------------------------
1993 1992 1993 1992
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operating Revenues ......................... $ 4,636,514 $ 4,377,210 $ 32,965,685 $ 27,147,947
------------ ------------ ------------ ------------
Operating Expenses:
Natural gas .............................. 2,605,754 2,352,240 19,717,216 15,520,376
Operations ............................... 2,811,153 2,542,243 8,529,506 7,679,816
Maintenance .............................. 253,600 252,945 688,862 628,741
Depreciation ............................. 451,001 420,066 1,353,005 1,260,208
Taxes - Federal & state income (benefits). (701,400) (635,300) 383,050 167,640
- Other ............................ 227,184 207,656 680,780 647,530
------------ ------------ ------------ ------------
Total Operating Expenses ................... 5,647,292 5,139,850 31,352,419 25,904,311
------------ ------------ ------------ ------------
Operating Income (Loss) .................... (1,010,778) (762,640) 1,613,266 1,243,636
Other Income ............................... 8,779 14,357 32,216 51,658
------------ ------------ ------------ ------------
Income (Loss) Before Interest Expense ...... (1,001,999) (748,283) 1,645,482 1,295,294
Interest Expense ........................... 286,415 304,292 891,748 935,066
------------ ------------ ------------ ------------
Net Income (Loss) .......................... $ (1,288,414) $ (1,052,575) $ 753,734 $ 360,228
============ ============ ============ ============
Average number of common shares outstanding 1,003,392 996,457 1,002,457 994,036
============ ============ ============ ============
Earnings (Loss) per
average share of common stock ............ $ (1.28) $ (1.06) $ .75 $ .36
============ ============ ============ ============
Cash dividends declared per
common share outstanding ................. $ .32 $ .32 $ .96 $ .96
============ ============ ============ ============
Gas volumes (sales and transportation) -
therms ................................... 12,879,747 12,704,502 73,378,748 67,750,209
============ ============ ============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
- 14 -
</TABLE>
<PAGE> 15
<TABLE>
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
BALANCE SHEETS
(Unaudited)
<CAPTION>
September 30, 1993 December 31, 1992
------------------ -----------------
Assets
------
<S> <C> <C>
Utility Plant:
Original cost ...................................... $49,741,415 $48,117,299
Less - Accumulated depreciation .................... 25,326,996 23,973,996
----------- -----------
Net plant in service ................. 24,414,419 24,143,303
Non-current gas in storage ......................... 941,220 941,220
----------- -----------
Net utility plant .................... 25,355,639 25,084,523
----------- -----------
Current Assets:
Cash and cash equivalents .......................... 672,867 432,161
Accounts receivable - net .......................... 3,464,946 9,842,565
Natural gas in storage ............................. 4,175,470 1,939,413
Materials and supplies ............................. 876,862 605,031
Prepaid expenses ................................... 761,558 744,545
Deferred tax benefit ............................... 925,092 869,199
----------- -----------
Total Current Assets ................. 10,876,795 14,432,914
----------- -----------
Deferred Environmental Costs ......................... 3,181,905 3,171,475
----------- -----------
Deferred Charges and Other Assets .................... 1,754,836 1,680,133
----------- -----------
Total ................................ $41,169,175 $44,369,045
=========== ===========
Capitalization and Liabilities
------------------------------
Capitalization:
Common stock ....................................... $ 5,016,960 $ 4,997,835
Premium on common stock ............................ 6,498,604 6,383,719
Retained earnings .................................. 989,897 1,198,703
----------- -----------
Total common equity .................. 12,505,461 12,580,257
Preferred stock .................................... -- --
Long-term debt, net ................................ 10,074,000 10,743,000
----------- -----------
Total capitalization ................. 22,579,461 23,323,257
----------- -----------
Current Liabilities:
Current maturities of long-term debt ............... 669,000 1,099,000
Notes payable ...................................... 3,900,000 4,900,000
Accounts payable ................................... 3,849,833 4,992,585
Gas credits and refunds due customers .............. 1,637,987 1,209,786
Accrued taxes ...................................... -- 612,800
Dividends payable .................................. 321,085 319,861
Accrued interest ................................... 195,853 496,599
Other .............................................. 635,120 387,134
----------- -----------
Total current liabilities ............ 11,208,878 14,017,765
----------- -----------
Other Liabilities and Credits:
Unamortized investment tax credits ................. 628,693 663,693
Deferred income taxes .............................. 228,255 1,809,289
Accrued environmental costs ........................ 3,000,000 3,000,000
Other long-term liabilities ........................ 3,523,888 1,555,041
----------- -----------
7,380,836 7,028,023
----------- -----------
Total ................................ $41,169,175 $44,369,045
=========== ===========
<FN>
The accompanying notes are an integral part of these balance sheets.
- 15 -
</TABLE>
<PAGE> 16
<TABLE>
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1993 and 1992
(Unaudited)
<CAPTION>
1993 1992
---------- ----------
<S> <C> <C>
Cash from Operating Activities:
Net income $ 753,734 $ 360,228
Adjustments to reconcile net income
to cash provided by operations -
Depreciation and amortization ........................ 1,353,005 1,451,263
Changes in -
Accounts receivable and refunds
due customers ....................................... 6,805,820 5,494,127
Natural gas in storage ............................... (2,236,057) (1,541,396)
Accounts payable ..................................... (1,142,752) (305,837)
Accrued and deferred income taxes .................... (871,131) (1,042,058)
Deferred charges and other assets .................... (85,133) 291,321
Other, net ........................................... 214,870 (282,735)
---------- ----------
Cash Provided from Operations ............................ 4,792,356 4,424,913
---------- ----------
Cash from (used in) Investing
Activities:
Additions to utility plant, net ...................... (1,624,121) (1,693,824)
---------- ----------
Cash from (used in) Financing Activities:
Change in notes payable ................................ (1,000,000) (400,000)
Payments on long-term debt ............................. (1,099,000) (1,674,561)
Issuance of common stock ............................... 17,710 59,225
Dividends paid on common stock, net .................... (846,239) (814,797)
---------- ----------
Cash from (used in) Financing Activities ................. (2,927,529) (2,830,133)
---------- ----------
Net Increase (decrease) in Cash
and Cash Equivalents .................................... 240,706 (99,044)
Cash and Cash Equivalents:
Beginning of Period .................................... 432,161 279,104
---------- ----------
End of Period .......................................... $ 672,867 $ 180,060
========== ==========
Cash Paid:
Interest ............................................... $1,185,529 $1,267,900
========== ==========
Income taxes ........................................... $1,252,714 $1,250,000
========== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
- 16 -
</TABLE>
<PAGE> 17
EXHIBIT (99)-2
WISCONSIN SOUTHERN GAS COMPANY, INC.
------------------------------------
NOTES TO FINANCIAL DATA
1. The financial statements have been prepared without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. This
report is presented generally on the same basis as Wisconsin Southern's
annual report, Form 10-K, filed with the Commission. Reference is also
made to Wisconsin Southern's, Form 10-Q for the quarterly period ended
March 31, 1993 for a discussion of the adoption of Statement of Financial
Accounting Standard Nos. 106 and 109.
The information furnished herein reflects all adjustments which are, in
the opinion of management, necessary to a fair statement of the results
for the interim periods. Such adjustments are of a normal recurring
nature.
The results for interim periods are not necessarily indicative of the
results to be expected for the year due to seasonal factors.
2. On July 30, 1993, Wisconsin Energy, Wisconsin Natural and Wisconsin
Southern entered into a definitive agreement for the acquisition of
Wisconsin Southern by Wisconsin Energy through the merger of Wisconsin
Southern into Wisconsin Natural, a wholly-owned subsidiary of Wisconsin
Energy. Subject to receipt of the various approvals, the target date for
the transaction to close is January 1, 1994.
Wisconsin Southern has entered into employment agreements with certain of
its officers and employees. These agreements, which have terms from two
to five years, outline conditions of employment and specify severance
payments which be paid only after a change in Wisconsin Southern ownership
occurs and certain other events take place. If such change in ownership
were to occur, Wisconsin Southern has the possibility of incurring costs
associated with the severance payments, as well as other vested benefits,
recognition of which could be accelerated. The maximum obligation
associated with these agreements would total $2.3 million if all employees
subject to the agreements terminated employment.
3. Wisconsin Southern has hired an environmental engineering firm to perform
testing on a former manufactured gas site previously operated by Wisconsin
Southern. Such testing has determined that remediation work is required
at the site; however, the extent of such work is subject to approval by
the Wisconsin Natural Department of Natural Resources. Wisconsin Southern
has recorded a liability of $3 million for future estimated site
remediation costs, based upon estimates that such costs will total $3 - 7
million in the future. Wisconsin Southern's management believes all costs
associated with remediation are probable for recovery in future rates
based on correspondence with the Public Service Commission of Wisconsin
(PSCW) and prior regulatory treatment by the PSCW. Under current plans,
significant expenditures will not occur until at least 1994.
- 17 -
