SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
X THE SECURITIES EXCHANGE ACT OF 1934
------
For the quarterly period ended June 30, 1996
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
------ THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-337
WISCONSIN POWER AND LIGHT COMPANY
(Exact name of registrant as specified in its charter)
Wisconsin 39-0714890
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) No.)
222 West Washington Avenue, Madison, Wisconsin 53703
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 608-252-3311
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
-------- --------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock Outstanding at June 30, 1996: 13,236,601 shares
<PAGE>
The registrant hereby amends Item 2 of Part I of its Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996 to provide in its
entirety as follows:
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED June 30, 1996 VS. June 30, 1995:
OVERVIEW
The Company reported consolidated second quarter net income of $20.4
million compared to $9.7 million for the same period in 1995. During the
second quarter a $3.4 million after-tax gain was recognized on the sale of
a combustion turbine. Weather-driven natural gas sales growth, increased
electric sales to other utilities, and continued customer growth
contributed to higher margins as compared with the second quarter of last
year.
Electric margin increased by $5.4 million due to increased sales and
lower aggregate costs per kWh. Gas margin increased $2.2 million due to a
change in the mix of sales from lower margin to higher margin customer
classes. Operations and maintenance declined during the second quarter due
primarily to the timing of nuclear plant refueling.
Partially offsetting the gain on the combustion turbine and the
higher electric and gas margins was an increase in depreciation expense
and income tax expense.
<TABLE>
Electric Operations
<CAPTION>
Revenues
and Costs % kWhs Sold % Customers at %
(In Thousands) Change (In Thousands) Change End of Quarter Change
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential and
Farm $43,776 $43,247 1% 633,695 622,251 2% 334,035 327,319 2%
Industrial 36,450 36,080 1% 1,003,872 991,595 1% 810 778 4%
Commercial 24,519 24,168 1% 421,098 412,304 2% 45,300 44,227 2%
Wholesale and Class
A 31,367 20,319 54% 1,290,219 628,782 105% 92 83 11%
Other 972 2,279 (30%) 15,591 14,856 5% 1,742 1,497 16%
------- ------- --------- --------- ------- -------
Total 137,084 126,093 9% 3,364,475 2,669,788 26% 381,979 373,904 2%
------- ------- ========= ========= === ======= ======= ===
Electric Production
Fuels 27,339 27,898 (6%)
Purchased Power 16,429 10,324 66%
------ --------
Margin $93,316 $87,961 5%
======= ======== ===
</TABLE>
Electric revenues increased $11.0 million, or 9 percent, as compared
to the second quarter of 1995. The increase was the result of a 26 percent
increase in kWh sales primarily due to increased bulk power sales during
the second quarter 1996.
Electric margin increased $5.4 million, or 6 percent, during the
second quarter of 1996 compared to the second quarter of 1995 primarily
due to higher sales (as discussed above). Aggregate costs of production
fuels and purchased power increased as a result of a 26 percent increase
in kWh sales. Because of this increase in sales and the availability of
competitively priced off-system power, purchased power increased 66
percent.
<TABLE>
Gas Operations
<CAPTION>
Revenues
and Costs % Therms Sold % Customers at %
(In Thousands) Change (In Thousands) Change End of Quarter Change
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential and Farm $14,703 $10,697 37% 23,245 18,843 23% 131,093 126,581 4%
Firm 7,855 5,839 35% 15,493 13,419 15% 16,160 15,733 3%
Interruptible 611 606 1% 1,659 1,942 -15% 258 236 9%
Transport. and Other 4,833 5,308 -9% 34,342 40,188 -15% 266 243 9%
------ ------ ------ ------ ------- -------
Total 28,002 22,450 25% 74,739 74,392 0% 147,777 142,793 3%
------ ------ ====== ====== === ======= ======= ===
Purchased Gas 15,690 12,359 27%
------ ------ ---
Margin 12,312 10,091 22%
====== ====== ===
</TABLE>
Gas revenues increased $5.6 million, or 25 percent, in the second
quarter of 1996 as compared to 1995. The increased revenues were the
result of higher commodity costs passed on to customers and a change in
the sales mix while total therm sales remained relatively unchanged, the
mix of these sales indicates a decline of 15 percent in transportation and
interruptible sales with a corresponding increase of 23 percent and 15
percent in higher margin residential and firm sales, respectively. The
gas incentive program authorized by the Public Service Commission of
Wisconsin also resulted in a loss of $0.1 million pre-tax during the
second quarter of 1996 compared with additional savings of $0.3 million
pre-tax for the same period in 1995.
Other Operation and Maintenance
Other operation and maintenance expense decreased $5.8 million primarily
due to the conversion of the Kewaunee Nuclear Plant ("Kewaunee") from a
twelve to eighteenth month fuel cycle. Refueling which used to occur in
the second quarter will take place in the fourth quarter of 1996.
Depreciation
Depreciation expense increased $1.1 million as a result of property
additions.
Income Taxes
Income taxes increased between second quarters consistent with higher
taxable income.
Other Income and Deductions
Other income and deductions increased $3.5 million for the quarter ended
June 30, 1996 compared with the same period in 1995. The increase is
primarily a result of the recognition of a $3.4 million after-tax gain on
the sale of a combustion turbine during the second quarter of 1996.
TWELVE MONTHS ENDED June 30, 1996 VS. June 30, 1995:
OVERVIEW
The Company reported consolidated net income of $100.4 million for the
twelve months ended June 30, 1996 as compared to $63.4 million for the
same period in 1995. Weather-driven sales growth along with continued
customer growth in the service territory contributed to increased electric
and gas margins as compared with the twelve months ended June 30, 1995. In
addition a $3.4 million after-tax gain on the sale of a combustion turbine
was recognized during the second quarter of 1996.
Electric margin increased by $26.6 million, or 7 percent, from increased
sales and lower costs per kWh for both electric production fuels and
purchased power. Gas margins increased $10.7 million, or 21 percent, as a
result of increased therm sales. In addition, other operation expense
decreased primarily due to higher early retirement and severance expenses
during the twelve month period ended June 30, 1995 and a shift in the
refueling cycle at Kewaunee from the second quarter to the fourth quarter
of 1996.
Partially offsetting the increases to income was a $8.8 million
increase in depreciation expense primarily resulting from property
additions.
<TABLE>
Electric Operations
<CAPTION>
Revenues
and Cost % kWh Sold % Customers at %
(In Thousands) Change (In Thousands) Change End of Quarter Change
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential and
Farm $204,141 $192,023 6% 3,013,326 2,779,130 9% 334,035 327,319 2%
Industrial 143,488 140,133 2% 3,933,209 3,816,898 3% 810 778 4%
Commercial 104,590 100,234 4% 1,809,125 1,700,213 6% 45,300 44,227 2%
Wholesale and Class
A 117,570 85,219 38% 4,278,026 2,575,668 66% 92 83 11%
Other 4,875 8,914 (45)% 56,209 53,636 5% 1,742 1,497 16%
------- ------- ---------- ---------- ------- -------
Total 574,664 526,523 7% 13,089,895 10,925,545 20% 381,979 373,904 2%
------- ------- ========== ========== === ======= ======= ===
Electric
production fuels 114,820 116,148 (1)%
Purchased Power 58,406 37,368 61%
------- -------
Margin $401,438 $373,007 7%
======= ======= ===
</TABLE>
Electric revenues increased $48.1 million, or 7 percent, as compared to
the twelve months ended June 30, 1995. The increase was the result of a 20
percent increase in kWh sales primarily due to a much warmer summer in
1995, colder winter weather in 1996, higher sales to other utilities and
customer growth.
Electric margin increased 8 percent during the twelve months ended June
30, 1996 compared to the same period in 1995 primarily due to higher
sales combined with reduced costs per kWh for electric production fuels
and purchased power. Although total fuel and purchased power costs
declined on a per kWh basis, total purchased power expense increased by 61
percent. This increase is due to the Company's higher level of bulk power
sales as well as the opportunity to purchase low cost energy. Partially
offsetting increased purchased power costs are slightly lower delivered
coal and nuclear fuel costs.
<TABLE>
Gas Operations
<CAPTION>
Revenues Therms Sold
and Costs % (In Thousands) % Customers at %
(In Thousands) Change Change End of Quarter Change
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential and
Farm $84,954 $66,029 29% 142,221 114,956 24% 131,093 126,581 4%
Firm 47,481 37,474 27% 99,772 82,297 21% 16,160 15,733 3%
Interruptible 3,607 6,246 (42)% 10,673 19,148 (44)% 258 236 9%
Transport. and 266 243
Other 25,208 30,135 (16)% 174,725 159,560 10% 9%
------- ------- ------- ------- ------- -------
Total 161,250 139,884 15% 427,391 375,961 14% 147,777 142,793 3%
======= ======= ======= ======= === ======= ======= ===
Purchased Gas 98,815 88,138 12%
------- -------
Margin $62,435 $51,746 21%
======= ======= ===
</TABLE>
Gas revenues increased $21.4 million, or 15 percent, during the twelve
months ended June 30, 1996 as compared to the twelve months ended June 30,
1995. The higher revenues were the result of a 14 percent rise in therm
sales primarily due to colder weather and residential and firm customer
growth. The higher sales volumes as well as favorable management of gas
supply costs resulted in a $10.7 million, or 21 percent, increase in gas
margin.
With the elimination of the purchased gas adjustment clause effective
January 1, 1995, the fluctuations in the commodity cost of gas above or
below a prescribed commodity price index will increase or decrease WP&L's
margin on gas sales. Both benefits and exposures are subject to customer
sharing provisions. WP&L's share is capped at $1.1 million, pre-tax. For
the twelve months ended June 1996 the gas incentive program resulted in
additional savings of $1.0 million pre-tax.
Other Operation and Maintenance
Other operation and maintenance expense declined by $22.0 million
primarily due to higher early retirement and severance expenses during the
twelve month period ended June 30, 1995, related to the Company's
reengineering efforts. In addition, refueling costs at Kewaunee which
occurred during the twelve month period ended June 30, 1995 are not
expected to occur until the fourth quarter of 1996.
Depreciation
Depreciation expense increased $8.8 million as a result of property
additions and greater amortization of contributions in aid of construction
( a reduction of expense) in the second quarter of 1995 compared with the
same period in 1996.
Income Taxes
Income taxes increased for the twelve month period ended June 30, 1996,
as a result of higher taxable income.
Other Income and Deductions
Other income and deductions increased $4.3 million for the twelve months
ended June 30, 1996 primarily as a result of the recognition of a $3.4
million after-tax gain on the sale of a combustion turbine during the
second quarter of 1996.
TWELVE MONTHS ENDED JUNE 30, 1996 VS. TWELVE MONTHS ENDED DECEMBER 31,
1995:
OVERVIEW
The Company reported consolidated net income of $100.4 million for
the twelve months ended June 30, 1996 as compared to $78.7 million for the
twelve months ended December 31, 1995. Weather-driven sales growth and
increased electric sales to other utilities contributed to increased
electric and gas margins as compared with the twelve months ended December
31, 1995. In addition a $3.4 million after-tax gain on the sale of a
combustion turbine was recognized during the twelve months ended June 30,
1996.
Electric margin increased by $15.6 million, or 4 percent, from
increased sales and lower costs per kWh for both electric production fuels
and purchased power. Gas margins increased $7.3 million, or 13 percent, as
a result of increased therm sales. In addition, other operation and
maintenance expenses decreased $9.4 million. Partially offsetting the
increases to income was a $3.3 million increase in depreciation expense.
<TABLE>
Electric Operations
<CAPTION>
Revenues
and Cost % kWh Sold % Customers at %
(In Thousands) Change (In Thousands) Change End of Quarter Change
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential
and Farm $204,141 $199,850 2% 3,013,326 2,937,825 3% 334,035 329,643 1%
Industrial 143,488 140,562 2% 3,933,209 3,872,520 2% 810 795 2%
Commercial 104,590 102,129 2% 1,809,125 1,773,406 2% 45,300 44,730 1%
Wholesale and
Class A 117,570 97,350 21% 4,278,026 3,109,385 38% 92 48 92%
Other 4,875 6,433 (24)% 56,209 54,042 4% 1,742 1,294 35%
------- ------- ---------- ---------- ------- -------
Total 574,664 546,324 5% 13,089,895 11,747,178 11% 381,979 376,510 1%
======= ======= ========== ========== ======= =======
Electric
production fuels 114,820 116,488 (1)%
Purchased Power 58,406 44,015 33%
------- -------
Margin $401,438 $385,821 4%
======== ========
</TABLE>
Electric revenues increased $28.3 million, or 5 percent, as compared
to the twelve months ended December 31, 1995. The increase was the result
of an 11 percent increase in kWh sales primarily due to a colder winter in
1996 and higher sales to other utilities.
Electric margin increased $15.6 million or 4 percent during the
twelve months ended June 30, 1996 compared to the twelve months ended
December 31, 1995 primarily due to higher sales (as discussed above).
Aggregate costs of production fuels and purchased power increased as a
result of an 11 percent increase in kWh sales. Because of this increase in
sales and the availability of competitively priced off-system power,
purchased power increased 33 percent.
<TABLE>
Gas Operations
<CAPTION>
Revenues Therms Sold
and Costs % (In Thousands) % Customers at %
(In Thousands) Change Change End of Quarter Change
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential and $84,954 $70,382 21% 142,221 126,903 12% 131,093 129,576 1%
Firm 47,481 39,456 20% 99,772 91,316 9% 16,160 15,976 1%
Interruptible 3,607 3,708 (3)% 10,673 12,148 (12)% 258 257 0%
Transport. and
Other 25,208 25,619 (2)% 174,725 169,121 3% 266 284 (6)%
------- ------- ------- ------- ------- -------
Total 161,250 139,165 16% 427,391 399,488 7% 147,777 146,093 1%
======= ======= ======= ======= ======= =======
Purchased Gas 98,815 84,002 18%
------ ------
Margin $62,435 $55,163 13%
======= ====== ====
</TABLE>
Gas revenues increased $22.1 million, or 16 percent, during the
twelve months ended June 30, 1996 as compared to the twelve months ended
December 31, 1995. The higher revenues were the result of a 7 percent rise
in therm sales primarily due to colder weather during the first six months
of 1996 as compared to the same period in 1995. The sales mix indicates a
decline of 12 percent in interruptible sales with a corresponding increase
of 12 percent and 9 percent in higher margin residential and firm sales,
respectively.
Other Operation and Maintenance
The decrease in other operation and maintenance expense of $9.4
million is due to the continued reengineering of processes and the timing
of nuclear plant refueling costs. The refueling costs which occurred
during the twelve month period ended December 31, 1995 are not scheduled
to occur until the fourth quarter of 1996.
Depreciation
Depreciation expense increased $3.3 million as a result of property
additions, and a greater amortization of contributions in aid of
construction ( a reduction of expense).
Income Taxes
Income taxes increased for the twelve month period ended June 30,
1996, as a result of higher taxable income.
Other Income and Deductions
Other income and deductions increased $4.3 million primarily as a
result of a $3.4 million after-tax gain on the sale of a combustion
turbine during the twelve months ended June 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity is primarily determined by the level of cash
generated from operations and the funding requirements of WP&L's ongoing
construction and maintenance programs. WP&L finances its construction
expenditures through internally generated funds supplemented, and when
required, by outside financing. (Also see: Note 2 in the "Notes to
Financial Statements," page 6.)
During the three and twelve months ended June 30, 1996 and June 30,
1995, the Company generated sufficient cash flows from operations, the
sale of other property and equipment and short-term borrowings to cover
operating expenses, cash dividends and investing activities. Cash flows
from operations decreased to $1.2 million for the three months ended
June 30, 1996, compared to $3.7 million for the same period last year. For
the twelve month period ended June 30, 1996, cash flows from operations
increased to $202.2 million from $180.5 million during the same period in
1995. During the second quarter of 1996, the Company received $36.3
million from the sale of a combustion turbine.
Financing and Capital Structure
The level of short-term borrowing fluctuates based primarily on seasonal
corporate needs, the timing of long-term financing and capital market
conditions. WP&L generally borrows on a short-term basis to provide
interim financing of construction and capital expenditures in excess of
available internally-generated funds. To maintain flexibility in its
capital structure and to take advantage of favorable short-term rates, the
Company also uses proceeds from the sales of accounts receivable and
unbilled revenues to finance a portion of its long-term cash needs. Bank
lines of credit of $70 million at June 30, 1996 are available to support
these borrowings.
The Company's capitalization at June 30, 1996, including the current
maturities of long-term debt, variable rate demand bonds and short-term
debt, consisted of 56 percent common equity, 6 percent preferred stock and
38 percent long-term debt.
Capital Expenditures
WP&L is a capital-intensive business and requires large investments in
long-lived assets. Therefore, the Company's most significant capital
requirements relate to construction expenditures. Construction
expenditures for the three months ended June 30, 1996 were $29.3 million.
The estimated construction expenditures for the remainder of 1996 are
$99.2 million.
The Company has a 41.0 percent ownership interest in Kewaunee. The
operating partner of this plant is Wisconsin Public Service Corporation
(WPSC). The steam generator tubes at Kewaunee are susceptible to corrosion
and cracking phenomena seen throughout the nuclear industry. Steam
Generator A is currently 24.94% effectively plugged and Steam Generator B
is 17.69% effectively plugged for an average of 21.32%. The current
Kewaunee safety analysis report allows an effective tube plugging limit of
up to 25% average for both steam generators, not to exceed 25% in either
steam generator. Analyses are currently being performed which the
operating partner believes will increase the effective plugging limit to
30%. The small reduction in capacity which has resulted from this tube
plugging has not had a material impact on the financial performance of the
Company.
As a result of the need to address the repair or replacement of the
steam generators, the owners of Kewaunee have been evaluating, and are
continuing to evaluate, various alternatives to deal with the degradation of
the steam generator tubes. As part of this evaluation, the owners have or
will take the following actions:
(a) The Nuclear Regulatory Commission ("NRC") has been requested to
redefine the pressure boundary point of the repaired steam generator
tubes, which have been removed from service by plugging, in order to
allow the return of many of the tubes to service; thus, permitting
Kewaunee to return to full licensed power.
(b) The NRC will be requested to increase the steam generator effective
plugging limit from 25% to 30%.
(c) A request will be submitted to the NRC to allow the owners to pursue
welded repair technologies to repair existing sleeved tubes in an
effort to return plugged tubes to service.
(d) The partners continue to evaluate the economics of replacement of
the steam generators. The replacement of steam generators is
estimated to cost approximately $100 million, exclusive of
additional purchased power costs associated with an extended
shutdown.
WP&L believes that the best near term economic alternative for the
owners of Kewaunee is to continue to pursue tube recovery and repair
processes. WP&L will reassess its views of available alternatives based
on the condition of the steam generator tubes during the fall 1996
refueling outage.
Currently, the owners of Kewaunee have different views of the future
market value of energy which impact on the desirability of replacing the
steam generators. During the first quarter of 1996 WPSC filed an
application with the Public Service Commission of Wisconsin (PSCW) seeking
approval to replace the steam generators in 1999. WP&L believes that
analysis and final action on this application will take approximately two
years to complete. The joint owners continue to analyze and discuss
various options related to the future of Kewaunee, including various
ownership transfer alternatives. The net book value of WP&L's share of
Kewaunee as of June 30, 1996 was $57 million.
WP&L has applied to the PSCW for accelerated depreciation of this
remaining book value of Kewaunee such that by the end of the year 2002
there would be full recovery of all plant investment. The request for this
acceleration reflects the condition of the present steam generators and
the evolution of the electric generation marketplace towards a more
competitive model.
Rates and Regulatory Matters
In the PSCW rate order UR-109, effective January 1, 1995, the PSCW
approved certain incentive programs. Based on the 1995 performance of the
SO2 emissions and service reliability incentive programs a $2.5 million
refund to retail electric customers was made after the second quarter of
1996. The refund associated with the gas portion of the program has not
been approved by the PSCW.
Industry Outlook
The PSCW's inquiries into the future structure of the natural gas and
electric utility industries are ongoing. The stated goal of the PSCW in
the natural gas docket is to move all gas supply activities out of the
existing regulated distribution utilities and allow independent units to
compete for the business. The goal of the electric restructuring process
is to create open access transmission and distribution services for all
customers with competitive generation and customer service markets.
Additional proceedings as well as consultation with the legislature are
planned prior to a target implementation date after the year 2000.
On April 24, 1996, the Federal Energy Regulatory Commission ("FERC")
issued two rules ( No. 888 and 889) that will promote competition by
opening access to the nation's wholesale power market. The new rules
require public utilities that own, control or operate transmission
systems to provide other companies with the same transmission
access/service that they provide to themselves. The FERC proposes that
each public utility replace its soon-to-be- filed single open access
tariff with a capacity reservation tariff by December 31, 1997. The
Company presently has on file with the FERC a pro forma open access
transmission tariff, filed on July 8, 1996, in compliance with FERC order
No. 888.
INFLATION
The impacts of inflation on WP&L are currently mitigated through current
rate making methodologies. Although rates will be held flat until at
least 1997, management expects that any impact of inflation will be
mitigated by customer growth and productivity improvements.
OTHER
Proposed Merger
WPL Holdings, Inc. ("WPLH"), IES Industries Inc. ("IES"), and Interstate
Power Co. ("IPC") have entered into an Agreement and Plan of Merger
("Merger Agreement"), dated November 10, 1995, as amended, providing for:
a) IPC becoming a wholly-owned subsidiary of WPLH, and b) the merger of
IES with and into WPLH, which merger will result in the combination of IES
and WPLH as a single holding company (collectively, the "Proposed
Merger"). The holding company will be renamed Interstate Energy
Corporation ("Interstate Energy)".
The Joint Proxy Statement/Prospectus of WPLH, IES and IPC was filed with
the Securities and Exchange Commission on July 11, 1996. The Merger Agree-
ment contemplated an adjustment of the IES Ratio to 1.01 shares of
Interstate Energy Common Stock from the initial ratio of 0.98 in the event
that prior to the consummation of the transaction, McLeod, Inc., a Delaware
corporation in which IES has a significant ownership interest ("McLeod"),
(a) completed a firm commitment underwritten initial public offering of
its Class A common stock at a per share price of at least $13.00 in which
McLeod received gross proceeds of at least $75 million and (b)
immediately following the public offering the Class A common stock was
registered under Section 12 of the Exchange Act. On June 14,1996, McLeod
completed an initial public offering of 13.8 million shares of its Class A
common stock at a price of $20 per share. The McLeod offering satisfied
the conditions of the McLeod contingency and the IES Ratio was adjusted to
the 1.01.
The shareowner vote on the merger is expected to occur at annual
meetings to be held by each of WPLH, IES and IPC on September 5, 1996. The
corporate headquarters of Interstate Energy will be in Madison, Wisconsin.
On August 5, 1996, MidAmerican Energy Company, an electric and natural
gas utility company based in Des Moines, Iowa, announced that it had made
an unsolicited bid to acquire IES in a cash and stock transaction. On
August 16, 1996, WPLH, IES and IPC announced an agreement to increase the
IES Ratio to 1.14 as well as the decision of the IES Board to reject the
unsolicited offer made by MidAmerican. WPLH cannot currently determine
what, if any, impact the unsolicited bid of MidAmerican may have on the
transaction contemplated by the Merger Agreement.
Union Contract
The Company and International Brotherhood of Electrical Workers, Local
965 reached agreement on a new three year collective bargaining contract
on June 14. The new agreement includes increases in the base wage during
the first, second and third years of the contract of 3 percent, 3 percent
and 3.25 percent, respectively. The new agreement is effective retroactive
to June 1, 1996, with wages retroactive to May 26, which is the beginning
of a pay period. At the end of the second quarter, the contract covered
1,587 of WP&L's employees which represents approximately 69 percent of the
total employees at WP&L.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
Wisconsin Power and Light Company
Date: August 16, 1996 /s/ Edward S. Gleason
Edward M. Gleason, Controller,
Treasurer and Corporate Secretary
(principal accounting officer and
officer authorized to sign on behalf
of the registrant)
