UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 1-7296
NORTHERN ILLINOIS GAS COMPANY
(Doing business as Nicor Gas Company)
(Exact name of registrant as specified in its charter)
Illinois 36-2863847
(State of incorporation) (I.R.S. Employer
Identification No.)
1844 Ferry Road
Naperville, Illinois 60563-9600
(Address of principal (Zip Code)
executive offices)
(630) 983-8888
(Registrant's telephone number)
Registrant meets the conditions set forth in General Instruction H(1)(a)
and (b) of Form 10-Q and is therefore filing this Form with a reduced
disclosure format.
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 and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Shares of common stock, par value $5, outstanding at October 31, 1998, were
15,232,414, all of which are owned by Nicor Inc.
Nicor Gas Company Page i
Table of Contents
Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited) 1
Consolidated Statement of Income -
Three, Nine and Twelve Months Ended
September 30, 1998 and 1997 2
Consolidated Statement of Cash Flows -
Nine and Twelve Months Ended
September 30, 1998 and 1997 3
Consolidated Balance Sheet -
September 30, 1998 and 1997, and
December 31, 1997 4
Notes to the Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
Part II. Other Information
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signature 14
Exhibit Index 15
Selected terms:
Ill.C.C. - Illinois Commerce Commission.
Mcf, Bcf - Thousand cubic feet, billion cubic feet.
Degree days - The extent to which the daily average
temperature falls below 65 degrees
Fahrenheit.
Nicor Gas Company Page 1
PART I - Financial Information
Item 1. Financial Statements
The following condensed unaudited financial statements of Nicor Gas
have been prepared by the company pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC).
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
SEC rules and regulations. The condensed financial statements
should be read in conjunction with the financial statements and the
notes thereto included in the company's latest Annual Report on
Form 10-K.
The information furnished reflects, in the opinion of the company,
all adjustments (consisting only of normal recurring adjustments)
necessary for a fair statement of the results for the interim
periods presented. Because of seasonal and other factors, the
results for the interim periods presented are not necessarily
indicative of the results to be expected for the full fiscal year.
<TABLE>
Nicor Gas Company Page 2
Consolidated Statement of Income (Unaudited)
(Millions)
<CAPTION>
Three months ended Nine months ended Twelve months ended
September 30 September 30 September 30
1998 1997 1998 1997 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Operating revenues $ 148.0 $ 151.1 $ 867.0 $1,215.1 $1,382.5 $1,727.0
Operating expenses
Cost of gas 51.5 55.7 465.7 778.0 816.7 1,122.0
Operating and maintenance 35.7 35.1 105.1 109.7 146.3 153.1
Depreciation 14.7 13.2 84.1 81.3 119.5 115.7
Taxes, other than income taxes 11.1 12.0 73.9 94.7 103.2 124.6
Income taxes 8.9 9.1 38.9 44.3 56.0 61.8
121.9 125.1 767.7 1,108.0 1,241.7 1,577.2
Operating income 26.1 26.0 99.3 107.1 140.8 149.8
Other income (expense)
Interest income .2 .6 .4 1.4 .5 1.4
Other, net 1.9 .2 7.1 .6 13.7 1.9
Income taxes on other income (.8) (.3) (2.8) (.7) (5.4) (.9)
1.3 .5 4.7 1.3 8.8 2.4
Interest expense
Interest on debt, net of
amounts capitalized 10.1 10.6 32.1 33.0 45.0 46.1
Other .3 .3 .9 .9 1.2 .9
10.4 10.9 33.0 33.9 46.2 47.0
Net income 17.0 15.6 71.0 74.5 103.4 105.2
Dividends on preferred stock .1 .1 .4 .4 .5 .5
Earnings applicable to common stock $ 16.9 $ 15.5 $ 70.6 $ 74.1 $ 102.9 $ 104.7
<F1>
Nicor Gas is a wholly owned subsidiary of Nicor Inc. Earnings and dividends per share information is
therefore omitted.
<F2>
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
Nicor Gas Company Page 3
Consolidated Statement of Cash Flows (Unaudited)
(Millions)
<CAPTION>
Nine months ended Twelve months ended
September 30 September 30
1998 1997 1998 1997
Operating activities
<S> <C> <C> <C> <C>
Net income $ 71.0 $ 74.5 $ 103.4 $ 105.2
Adjustments to reconcile net income to net cash flow
provided from operating activities:
Depreciation 84.1 81.3 119.5 115.7
Deferred income tax expense (benefit) 4.4 3.7 8.9 4.3
Change in working capital items and other:
Accounts receivable, less allowances 197.4 175.3 4.3 (9.2)
Gas in storage 8.2 (27.0) 39.0 (10.2)
Deferred/accrued gas costs (4.0) 61.7 10.5 53.0
Accounts payable 36.2 (56.6) 15.3 28.6
Other (53.2) (14.0) (51.4) 1.2
Net cash flow provided from operating activities 344.1 298.9 249.5 288.6
Investing activities
Capital expenditures (74.0) (65.7) (110.1) (105.2)
Other 7.5 1.8 16.5 4.4
Net cash flow used for investing activities (66.5) (63.9) (93.6) (100.8)
Financing activities
Net proceeds from issuing long-term debt 99.0 49.7 148.4 49.7
Disbursements to retire long-term debt (129.5) (25.0) (182.1) (25.0)
Short-term borrowings (repayments), net (158.1) (176.1) (11.6) (99.9)
Dividends paid (86.3) (83.8) (111.6) (108.3)
Other (.6) (.5) (.6) (.6)
Net cash flow used for financing activities (275.5) (235.7) (157.5) (184.1)
Net increase (decrease) in cash and cash equivalents 2.1 (.7) (1.6) 3.7
Cash and cash equivalents, beginning of period - 4.4 3.7 -
Cash and cash equivalents, end of period $ 2.1 $ 3.7 $ 2.1 $ 3.7
Supplemental information
Income taxes paid, net of refunds $ 39.0 $ 35.6 $ 59.5 $ 53.0
Interest paid, net of amounts capitalized 51.6 38.4 60.5 44.9
<F1>
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
Nicor Gas Company Page 4
Consolidated Balance Sheet (Unaudited)
(Millions)
<CAPTION>
September 30 December 31 September 30
Assets 1998 1997 1997
<S> <C> <C> <C>
Gas distribution plant, at cost $ 3,075.1 $ 3,012.3 $ 2,999.6
Less accumulated depreciation 1,458.3 1,382.3 1,355.0
1,616.8 1,630.0 1,644.6
Other property and investments, net of accumulated
depletion of $14.5 2.8 4.3 6.8
Current assets
Cash and cash equivalents 2.1 - 3.7
Accounts receivable, less allowances of $6.1,
$7.6 and $7.5, respectively 124.0 321.4 128.3
Gas in storage, at last-in, first-out cost 119.6 127.8 145.2
Other 27.7 22.0 23.5
273.4 471.2 300.7
Other assets 105.2 83.7 77.1
$ 1,998.2 $ 2,189.2 $ 2,029.2
Capitalization and Liabilities
Capitalization
Long-term debt $ 520.8 $ 520.9 $ 520.9
Preferred stock
Redeemable 7.6 8.1 8.1
Nonredeemable 1.4 1.4 1.4
Common equity
Common stock 76.2 76.1 76.2
Paid-in capital 107.9 107.9 107.9
Retained earnings 492.1 497.4 496.6
1,206.0 1,211.8 1,211.1
Current liabilities
Long-term obligations due within one year .5 25.5 25.5
Short-term borrowings 96.5 254.6 108.1
Accounts payable 250.2 214.0 234.9
Accrued gas costs 21.1 25.1 10.6
Dividends payable 21.6 31.7 25.4
Accrued interest 11.5 30.9 26.9
Other 8.1 18.9 12.5
409.5 600.7 443.9
Deferred credits and other liabilities
Deferred income taxes 193.0 184.6 181.0
Regulatory income tax liability 79.3 81.7 82.1
Unamortized investment tax credits 44.7 46.2 46.8
Other 65.7 64.2 64.3
382.7 376.7 374.2
$ 1,998.2 $ 2,189.2 $ 2,029.2
<F1>
The accompanying notes are an integral part of this statement.
</TABLE>
Nicor Gas Company Page 5
Notes to the Consolidated Financial Statements (Unaudited)
ACCOUNTING POLICIES
Depreciation is calculated using a straight-line method for the calendar
year. For interim periods, depreciation is allocated based on gas
deliveries.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities. This
statement requires that an entity recognize all derivatives as either assets
or liabilities in the statement of financial position and measure those
instruments at fair value. Gains or losses resulting from changes in the
values of those derivatives are to be accounted for depending on the use of
the derivative and whether it qualifies for hedge accounting. This
statement requires adoption no later than the first quarter of the company's
2000 fiscal year and must be adopted as a cumulative effect of a change in
accounting principle. Implementation of this statement is not expected to
have a material impact on the company's financial condition or results of
operations.
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use. This statement provides guidance on
accounting for the costs of computer software developed or obtained for
internal use and is required to be adopted no later than the company's 1999
fiscal year. The company plans to modify its method of capitalization of
such costs by adopting this statement prospectively on January 1, 1999.
Implementation of this statement is not expected to have a material impact
on the company's financial condition or results of operations.
LONG-TERM DEBT
In July 1998, Nicor Gas redeemed $25 million of 6-1/4% First Mortgage Bonds
due in 1999. The early debt retirement was financed with short-term
borrowings.
In June 1998, Nicor Gas issued $50 million of 5-3/4% First Mortgage Bonds
due in 2003. The net proceeds from the sale, together with the proceeds
from the February 1998 sale of $50 million of 6.58% First Mortgage Bonds due
in 2028 and other corporate funds, replenished funds used for the March 1998
redemption of $75 million of 8-1/4% First Mortgage Bonds due in 2022 and the
February 1998 maturity of $25 million of 5-7/8% First Mortgage Bonds.
Nicor Gas Company Page 6
Notes to the Consolidated Financial Statements (Unaudited)
(Concluded)
CONTINGENCIES
The company is involved in legal or administrative proceedings before
various courts and agencies with respect to rates, taxes and other matters.
Current environmental laws may require cleanup of certain former
manufactured gas plant sites. To date, Nicor Gas has identified about 40
properties for which it may, in part, be responsible. The majority of these
properties are not presently owned by the company. Information regarding
preliminary site reviews has been presented to the Illinois Environmental
Protection Agency. More detailed investigations and remedial activities are
either in progress or planned at many of these sites. The results of
continued testing and analysis should determine to what extent additional
remediation is necessary and may provide a basis for estimating any
additional future costs which, based on industry experience, could be
significant. In accordance with Ill.C.C. authorization, the company has
been recovering these costs from its customers.
On December 20, 1995, Nicor Gas filed suit in the Circuit Court of Cook
County against certain insurance carriers seeking recovery of environmental
cleanup costs of certain former manufactured gas plant sites. Presently,
management cannot predict the outcome of this lawsuit. Any recoveries from
such litigation or other sources will be flowed back to the company's
customers.
Although unable to determine the outcome of these contingencies, management
believes that appropriate accruals have been recorded. Final disposition of
these matters is not expected to have a material impact on the company's
financial condition or results of operations.
Nicor Gas Company Page 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion should be read in conjunction with the Management's
Discussion and Analysis section of the Nicor Gas 1997 Annual Report on
Form 10-K.
RESULTS OF OPERATIONS
Net income for the third quarter of 1998 increased $1.4 million to $17
million from the third quarter of 1997 due primarily to gains on real estate
sales. For the nine and twelve months ended September 30, 1998, net income
decreased $3.5 million to $71 million and $1.8 million to $103.4 million,
respectively, from the corresponding 1997 periods due to the negative impact
of significantly warmer weather. Positive factors included gains on real
estate sales, a reduction in operating and maintenance expenses and a
significant increase in deliveries of natural gas for electric power
generation.
Operating revenues decreased $348.1 million and $344.5 million for the nine-
and twelve-month periods, respectively. For both periods, the decrease was
due primarily to lower natural gas supply costs, which are passed directly
through to customers, and lower deliveries of natural gas related to
significantly warmer weather.
Margin, defined as operating revenues less cost of gas and revenue taxes,
which are both passed directly through to customers, is shown in the
following table for the periods ended September 30. For the nine- and
twelve-month periods, margin decreased due to the negative impact of warmer
weather. Margin per Mcf delivered decreased in the three-month period due
to additional lower-margin deliveries for electric power generation. In the
nine- and twelve-month periods, margin per Mcf delivered increased as the
impact of a reduction in lower-margin deliveries due to warmer weather more
than offset the effect of additional deliveries for electric power
generation.
Three months Nine months Twelve months
1998 1997 1998 1997 1998 1997
Margin (Millions) $ 89.6 $ 88.1 $341.3 $356.7 $480.6 $499.5
Margin per Mcf
delivered 1.28 1.35 .98 .95 .93 .91
Operating and maintenance expenses declined in the nine- and twelve-month
periods due primarily to lower retirement benefit costs, resulting
principally from favorable pension fund investment returns.
Depreciation expense increased in the nine- and twelve-month periods
primarily due to plant additions.
Other income increased in each period as gains on real estate sales more
than offset the impact of lower investment levels on interest income.
Nicor Gas Company Page 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
FINANCIAL CONDITION
Net cash flow from operating activities increased $45.2 million and
decreased $39.1 million for the nine- and twelve-month periods,
respectively, due primarily to changes in working capital items. The
working capital component of net cash flow from operating activities can
swing sharply due primarily to certain factors including weather, the timing
of collections from customers and gas purchasing practices. The company
generally relies on short-term financing to meet temporary increases in
working capital needs.
The company maintains short-term credit agreements with major domestic and
foreign banks. At September 30, 1998, these agreements, which serve as
backup for the issuance of commercial paper, totaled $250 million, and the
company had $94.5 million of commercial paper outstanding. At September 30,
1998, the unused lines of credit under these credit agreements were $155.5
million.
In July 1998, Nicor Gas redeemed $25 million of 6-1/4% First Mortgage Bonds
due in 1999. The early debt retirement was financed with short-term
borrowings.
In June 1998, Nicor Gas issued $50 million of 5-3/4% First Mortgage Bonds
due in 2003. The net proceeds from the sale, together with the proceeds
from the February 1998 sale of $50 million of 6.58% First Mortgage Bonds due
in 2028 and other corporate funds, replenished funds used for the March 1998
redemption of $75 million of 8-1/4% First Mortgage Bonds due in 2022 and the
February 1998 maturity of $25 million of 5-7/8% First Mortgage Bonds.
YEAR 2000
The following disclosure contains forward-looking statements. Nicor Gas'
ability to meet its objectives identified below is dependent upon several
factors that could cause actual results to differ materially from those set
forth below, including the timely provision of necessary upgrades and
modifications by suppliers and contractors. In addition, Nicor Gas cannot
guarantee that third parties on whom it depends for essential services will
convert their critical systems and processes in a timely manner. Each of
the components of the company's Year 2000 project is progressing and the
company believes it is taking all reasonable and appropriate steps necessary
to be able to operate successfully in the year 2000 and beyond. The
following summarizes the company's preparedness for the Year 2000.
Nicor Gas Company Page 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Nicor Gas has established a company-wide initiative to identify, evaluate
and address Year 2000 issues. A team has been assembled that includes an
officer-level steering committee, full-time staff members and
representatives from key areas of the company. In addition to this team of
employees, the company utilizes consultants to assist in the Year 2000
project and belongs to an industry alliance which facilitates the sharing of
information among companies. Work is progressing in the following phases:
inventory, assessment, remediation, testing and contingency planning. The
company's Year 2000 effort, which began in early 1996, encompasses mainframe
systems, client-server and desktop systems, telecommunications, embedded
systems and third parties.
Mainframe Systems. Nicor Gas' mainframe hardware and most core business
applications, which include customer service, billing and payroll, fall into
this category. System inventory and assessment are complete. Mainframe
remediation is nearly complete, with all but two systems remediated, tested
and in production. The remaining two systems, which are internal payroll
and benefits systems, are scheduled to be in production by the first quarter
of 1999. A number of systems have been or are being replaced by Year 2000
compliant systems on client-server platforms. While hardware failure
contingency plans have been established, plans to address possible extended
failures of critical software will be developed by mid 1999.
Client-server and Desktop Systems. Nicor Gas has completed an inventory of
its client-server and desktop systems. Assessment of these systems is
substantially complete. Many of the systems are new and were designed to be
compliant. Remediation and testing are scheduled to be completed by mid
1999. Most functional areas have already developed contingency plans to
perform their responsibilities in the event of failure. Contingency plans
to address possible longer-term disruptions are scheduled to be completed by
the third quarter of 1999.
Telecommunications. An inventory of telecommunication issues, which involve
data and voice communications, has also been completed. Assessment is
scheduled to be completed by year-end 1998. Remediation in some areas has
been done through upgrading hardware and software. Further remediation and
testing are scheduled to be completed by mid 1999. Contingency plans exist
for many short duration outages, and by the third quarter of 1999, the
company expects to have addressed any potentially more severe problems which
may occur.
Embedded Systems. The company has performed a system level inventory of
embedded systems, which include items such as process controls in the
storage and transmission operations, building security, air conditioning,
heating and elevator systems. The company is now concentrating on a more
detailed inventory and assessment at the component level in critical areas
and expects this to be completed by the first quarter of 1999. It is
estimated that approximately 90 percent of the components identified are
Year 2000 compliant. Remediation has begun and is expected to be completed
by mid 1999. Testing plans for critical processes are being formulated and
testing is expected to be completed by mid 1999. In critical gas supply and
storage areas, disaster recovery plans exist and are being updated for
various potential Year 2000 scenarios.
Nicor Gas Company Page 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Third Parties. Nicor Gas is currently contacting entities with whom it has
a material relationship, such as natural gas suppliers, pipelines, electric
utilities, telecommunication service providers, banks and other suppliers of
goods and services, to determine their state of readiness. Based on their
responses, Nicor Gas will consider new business relationships with
alternative providers of products and services as necessary and to the
extent alternatives are available. Assessment is scheduled to be completed
in early 1999, necessary actions taken by mid 1999, and contingency planning
completed by the third quarter of 1999.
Costs. Nicor Gas has incurred operating expenses of approximately $2 million
through September 30, 1998, and currently estimates an additional $3 million
to $4 million will be incurred in connection with its Year 2000 efforts.
The company has also incurred less than $1 million in capital improvement
costs to date that would have been required in the normal course of
business, but were incurred sooner than originally planned. The company
currently estimates that as much as an additional $5 million in capital
improvement costs may be incurred to support this project. The timing of
expenditures is not indicative of readiness efforts or progress to date.
Risks. The company relies on the producers of natural gas and suppliers of
interstate transportation capacity to deliver natural gas to the company's
distribution system. External infrastructure, such as electric, telephone
and water service, is necessary for the company's basic operations as well
as the operations of many of its customers.
With respect to Nicor Gas' operations, those over which it has direct
control, the company believes the most significant potential risks involve:
its ability to use electronic devices to control and operate its
distribution system, its ability to respond appropriately to customers'
calls for information and assistance, and its ability to maintain its
internal network of computer systems. The company's Year 2000 project is
designed to concentrate its efforts on these critical areas.
Should any third party with which the company has a material relationship
fail, or should Nicor Gas' actions prove to be less than completely
effective, the impact could become a significant challenge to the company's
ability to operate its distribution system and communicate with its
customers. It could also have a material adverse financial impact,
including but not limited to, lost operating revenues, increased operating
costs and claims from customers related to business interruption. Because
of the uncertainties related to this matter, the company continues to
develop contingency plans.
Contingency Planning. The company's Year 2000 contingency planning
encompasses business continuity both within the company and in the external
business environment. As part of normal business practice, the company
maintains plans to follow during emergencies. For example, many of the
components involved in the gas distribution system can be manually
overridden, and customer calls can be handled at an alternate site. The
company continues to develop contingency plans that will address a variety
of scenarios that could emerge and expects that effort to continue through
1999.
Nicor Gas Company Page 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
OTHER
New Accounting Pronouncements. In June 1998, the Financial Accounting
Standards Board issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities. In March 1998, the American Institute
of Certified Public Accountants issued Statement of Position 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use. These statements are not expected to have a material impact
on the company's financial condition or results of operations. For further
information, see New Accounting Pronouncements on page 5.
Customer SelectSM Pilot Program. In September 1998, the Ill.C.C. approved
Nicor Gas' plans for the second year of its pilot program, Customer Select.
In the first year, 20,000 small commercial and industrial customers enrolled
in the program. Beginning January 1999, up to an additional 40,000
commercial and industrial customers, and as many as 80,000 residential
customers in select communities will have the opportunity to choose their
natural gas supplier.
<TABLE>
Nicor Gas Company Page 12
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Concluded)
OPERATING STATISTICS
Changes in weather can materially affect operating results. Operating revenues, deliveries, weather
statistics and other data are presented below.
<CAPTION>
Three months ended Nine months ended Twelve months ended
September 30 September 30 September 30
1998 1997 1998 1997 1998 1997
Operating revenues (Millions):
Sales
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Residential $ 96.0 $ 93.4 $ 562.2 $ 776.3 $ 911.8 $1,112.6
Commercial 17.2 21.1 138.0 219.8 233.1 314.5
Industrial 2.3 5.0 20.9 44.7 33.0 65.2
115.5 119.5 721.1 1,040.8 1,177.9 1,492.3
Transportation
Commercial 11.8 9.3 40.1 38.6 57.0 55.6
Industrial 9.2 10.8 28.2 34.9 41.6 48.5
21.0 20.1 68.3 73.5 98.6 104.1
Revenue taxes and other 11.5 11.5 77.6 100.8 106.0 130.6
$ 148.0 $ 151.1 $ 867.0 $1,215.1 $1,382.5 $1,727.0
Deliveries (Bcf):
Sales
Residential 15.1 15.7 128.8 157.5 204.6 238.2
Commercial 2.7 3.6 31.8 44.8 52.0 67.0
Industrial .5 1.5 5.4 10.6 7.7 16.6
18.3 20.8 166.0 212.9 264.3 321.8
Transportation
Commercial 8.1 6.3 44.2 44.6 65.6 66.7
Industrial 43.5 37.9 136.6 119.6 185.0 158.9
51.6 44.2 180.8 164.2 250.6 225.6
69.9 65.0 346.8 377.1 514.9 547.4
Average gas cost per Mcf sold $ 2.71 $ 2.45 $ 2.79 $ 3.57 $ 3.05 $ 3.40
Weather statistics:
Degree days 18 51 3,123 4,046 5,331 6,387
Percent colder (warmer) than normal (79.5) (42.0) (20.6) 2.8 (12.8) 4.4
Customers at end of period (Thousands):
Sales
Residential 1,718.8 1,690.2
Commercial 124.5 140.0
Industrial 8.9 11.1
1,852.2 1,841.3
Transportation
Commercial 36.5 18.7
Industrial 5.0 2.9
41.5 21.6
1,893.7 1,862.9
</TABLE>
Nicor Gas Company Page 13
PART II - Other Information
Item 1. Legal Proceedings
For information concerning legal proceedings, see Contingencies in
Notes to the Consolidated Financial Statements on page 6, which is
incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index on page 15 filed herewith.
(b) The company did not file a report on Form 8-K during the third
quarter of 1998.
Nicor Gas Company Page 14
Signature
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.
Nicor Gas Company
Date November 12, 1998 By DAVID L. CYRANOSKI
David L. Cyranoski
Senior Vice President,
Secretary and Treasurer
Nicor Gas Company Page 15
Exhibit Index
Exhibit
Number Description of Document
12.01 Computation of Consolidated Ratio of Earnings to Fixed Charges.
27.01 Financial Data Schedule.
<TABLE>
Nicor Gas Company
Form 10-Q
Exhibit 12.01
NICOR GAS COMPANY
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
(Thousands)
<CAPTION>
Twelve
Months Ended
September 30 Year Ended December 31
1998 1997 1996 1995 1994 1993
Earnings available to cover fixed charges:
<S> <C> <C> <C> <C> <C> <C>
Net income $ 103,387 $ 106,922 $ 107,106 $ 85,448 $ 93,078 $ 94,935
Add:Income taxes 61,463 64,714 63,579 49,881 50,958 52,890
Fixed charges 46,365 46,886 46,747 39,400 37,729 40,960
Allowance for funds used
during construction (191) (11) (5) (911) (151) (64)
Total $ 211,024 $ 218,511 $ 217,427 $ 173,818 $ 181,614 $ 188,721
Fixed charges:
Interest on debt $ 44,211 $ 45,246 $ 43,762 $ 38,129 $ 36,726 $ 38,949
Other interest charges and
amortization of debt discount,
premium and expense, net 2,154 1,640 2,985 1,271 1,003 2,011
Total $ 46,365 $ 46,886 $ 46,747 $ 39,400 $ 37,729 $ 40,960
Ratio of earnings to fixed charges 4.55 4.66 4.65 4.41 4.81 4.61
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME, THE CONSOLIDATED BALANCE SHEET AND THE
CONSOLIDATED STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,617
<OTHER-PROPERTY-AND-INVEST> 3
<TOTAL-CURRENT-ASSETS> 273
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 105
<TOTAL-ASSETS> 1,998
<COMMON> 76
<CAPITAL-SURPLUS-PAID-IN> 108
<RETAINED-EARNINGS> 492
<TOTAL-COMMON-STOCKHOLDERS-EQ> 676
8
1
<LONG-TERM-DEBT-NET> 521
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 97
<LONG-TERM-DEBT-CURRENT-PORT> 0
1
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 694
<TOT-CAPITALIZATION-AND-LIAB> 1,998
<GROSS-OPERATING-REVENUE> 867
<INCOME-TAX-EXPENSE> 39
<OTHER-OPERATING-EXPENSES> 729
<TOTAL-OPERATING-EXPENSES> 768
<OPERATING-INCOME-LOSS> 99
<OTHER-INCOME-NET> 5
<INCOME-BEFORE-INTEREST-EXPEN> 104
<TOTAL-INTEREST-EXPENSE> 33
<NET-INCOME> 71
0
<EARNINGS-AVAILABLE-FOR-COMM> 71
<COMMON-STOCK-DIVIDENDS> 76
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 344
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>NICOR GAS IS A WHOLLY OWNED SUBSIDIARY OF NICOR INC. EARNINGS PER SHARE
INFORMATION IS THEREFORE OMITTED.
</FN>
</TABLE>
