UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
<TABLE>
Commission Registrant, State of Incorporation, I.R.S Employer
File Number Address and Telephone Number Identification Number
- -------------------- ----------------------------------------------------- --------------------------
<S> <C> <C>
1-7296 Northern Illinois Gas Company 36-2863847
(Doing business as Nicor Gas Company)
(An Illinois Corporation)
1844 Ferry Road
Naperville, Illinois 60563-9600
(630) 983-8888
</TABLE>
The 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, 1999, were
15,232,414, all of which are owned by Nicor Inc.
<PAGE>
Nicor Gas Company Page i
Table of Contents
Part I - Financial Information
Item 1. Financial Statements (Unaudited) ................... 1
Consolidated Statement of Income:
Three and nine months ended
September 30, 1999 and 1998 ..................... 2
Consolidated Statement of Cash Flows:
Nine months ended
September 30, 1999 and 1998 ..................... 3
Consolidated Balance Sheet:
September 30, 1999 and 1998, and
December 31, 1998 ............................... 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 .................................. 12
Item 6. Exhibits and Reports on Form 8-K ................... 12
Signature .......................................... 13
Exhibit Index ...................................... 14
Glossary
Degree day. The extent to which the daily average temperature falls below 65
degrees Fahrenheit.
ICC. Illinois Commerce Commission.
Mcf, Bcf. Thousand cubic feet, billion cubic feet.
<PAGE>
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. Results for the
interim periods presented are not necessarily indicative of the results to be
expected for the full fiscal year due to seasonal and other factors.
<TABLE>
Nicor Gas Company Page 2
- -------------------------------------------------------------------------------------------------------------------
Consolidated Statement of Income (Unaudited)
(millions)
<CAPTION>
Three months ended Nine months ended
September 30 September 30
------------------------------ -----------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operating revenues $ 161.8 $ 148.0 $ 877.9 $ 867.0
------------- ------------- ------------- -------------
Operating expenses
Cost of gas 61.4 51.5 464.3 465.7
Operating and maintenance 37.7 35.7 115.1 105.1
Depreciation 15.1 14.7 86.8 84.1
Taxes, other than income taxes 12.2 11.1 74.7 73.9
Income taxes 9.6 8.9 39.7 38.9
------------- ------------- ------------- -------------
136.0 121.9 780.6 767.7
------------- ------------- ------------- -------------
Operating income 25.8 26.1 97.3 99.3
------------- ------------- ------------- -------------
Other income (expense)
Other, net .4 2.1 2.1 7.5
Income taxes on other income (.1) (.8) (.7) (2.8)
------------- ------------- ------------- -------------
.3 1.3 1.4 4.7
------------- ------------- ------------- -------------
Interest expense
Interest on debt, net of amounts
capitalized 9.1 10.1 29.4 32.1
Other .3 .3 .1 .9
------------- ------------- ------------- -------------
9.4 10.4 29.5 33.0
------------- ------------- ------------- -------------
Net income 16.7 17.0 69.2 71.0
Dividends on preferred stock .1 .1 .4 .4
------------- ------------- ------------- -------------
Earnings applicable to common stock $ 16.6 $ 16.9 $ 68.8 $ 70.6
============= ============= ============= =============
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
September 30
-----------------------------
1999 1998
------------- -------------
Operating activities
<S> <C> <C>
Net income $ 69.2 $ 71.0
Adjustments to reconcile net income to net cash flow
provided from operating activities:
Depreciation 86.8 84.1
Deferred income tax expense 4.2 4.4
Change in assets and liabilities:
Receivables, less allowances 123.2 197.4
Gas in storage 46.5 8.2
Deferred/accrued gas costs (63.7) (4.0)
Accounts payable 64.5 36.2
Other (29.2) (53.2)
------------- -------------
Net cash flow provided from operating activities 301.5 344.1
------------- -------------
Investing activities
Capital expenditures (83.7) (74.0)
Other (.4) 7.5
------------- -------------
Net cash flow used for investing activities (84.1) (66.5)
------------- -------------
Financing activities
Net proceeds from issuing long-term debt 99.5 99.0
Disbursements to retire long-term debt (155.7) (129.5)
Short-term borrowings (repayments), net (111.5) (158.1)
Dividends paid (72.9) (86.3)
Other (.5) (.6)
------------- -------------
Net cash flow used for financing activities (241.1) (275.5)
------------- -------------
Net increase (decrease) in cash and cash equivalents (23.7) 2.1
Cash and cash equivalents, beginning of period 31.5 -
------------- -------------
Cash and cash equivalents, end of period $ 7.8 $ 2.1
============= =============
Supplemental information
Income taxes paid, net of refunds $ 44.5 $ 39.0
Interest paid, net of amounts capitalized 30.3 51.6
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
1999 1998 1998
--------------- ---------------- ---------------
Assets
<S> <C> <C> <C>
Gas distribution plant, at cost $ 3,171.3 $ 3,105.2 $ 3,075.1
Less accumulated depreciation 1,559.6 1,487.4 1,458.3
--------------- ---------------- ---------------
1,611.7 1,617.8 1,616.8
--------------- ---------------- ---------------
Current assets
Cash and cash equivalents - Affiliates - 29.2 -
- Other 7.8 2.3 2.1
Receivables, less allowances of $6.3,
$6.1 and $6.1, respectively 112.9 236.1 124.0
Gas in storage, at last-in, first-out cost 59.0 105.5 119.6
Deferred gas costs 33.8 - -
Other 36.1 23.3 27.7
--------------- ---------------- ---------------
249.6 396.4 273.4
--------------- ---------------- ---------------
Other assets 134.2 111.2 108.0
--------------- ---------------- ---------------
$ 1,995.5 $ 2,125.4 $ 1,998.2
=============== ================ ===============
Capitalization and liabilities
Capitalization
Long-term debt $ 421.7 $ 520.8 $ 520.8
Preferred stock 8.5 9.0 9.0
Common equity
Common stock 76.2 76.1 76.2
Paid-in capital 108.0 108.0 107.9
Retained earnings 486.2 495.1 492.1
--------------- ---------------- ---------------
1,100.6 1,209.0 1,206.0
--------------- ---------------- ---------------
Current liabilities
Long-term obligations due within one year 50.5 .5 .5
Short-term borrowings 103.0 214.5 96.5
Accounts payable 307.4 242.9 250.2
Accrued gas costs - 29.9 21.1
Dividends payable 25.2 20.2 21.6
Other 17.8 26.8 19.6
--------------- ---------------- ---------------
503.9 534.8 409.5
--------------- ---------------- ---------------
Deferred credits and other liabilities
Deferred income taxes 205.2 196.2 193.0
Regulatory income tax liability 75.7 78.6 79.3
Unamortized investment tax credits 42.7 44.1 44.7
Other 67.4 62.7 65.7
--------------- ---------------- ---------------
391.0 381.6 382.7
--------------- ---------------- ---------------
$ 1,995.5 $ 2,125.4 $ 1,998.2
=============== ================ ===============
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
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 PRONOUNCEMENT
In June 1999, the Financial Accounting Standards Board approved an amendment to
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities.
The amendment defers the effective date of the statement one year, requiring
adoption no later than the first quarter of the company's 2001 fiscal year.
Implementation of this statement is not expected to have a material impact on
the company's financial condition or results of operations.
REGULATORY MATTERS
Performance-Based Rate Filing. In March 1999, Nicor Gas filed a
performance-based rate plan for natural gas supply costs with the ICC. The plan
would establish economic incentives for Nicor Gas when purchasing gas supplies
for customers, and amounts above or below a market benchmark would be shared
with customers. The ICC is required to rule on the proposal by late November
and, if approved in a manner acceptable to Nicor Gas, the company intends to
implement the plan next January.
Customer Select(R). In September 1999, Nicor Gas received approval from the ICC
to expand Customer Select, the company's voluntary pilot program which offers
customers a choice of natural gas commodity suppliers. An additional 170,000
single-family residential customers in select communities will be eligible to
participate in the program in 2000. During the first two phases of the program,
more than 60,000 residential, commercial and industrial customers enrolled,
accounting for about 25 Bcf in annual deliveries of natural gas. In all
instances, Nicor Gas will continue to deliver natural gas to the customer, read
customer meters, maintain the distribution system, ensure safety and respond to
service and emergency calls.
LONG-TERM DEBT
In August 1999, Nicor Gas redeemed $50 million of 8.25% First Mortgage Bonds due
in 2024.
In January 1999, Nicor Gas sold $50 million of First Mortgage Bonds at 5.37% due
in 2009 and $50 million of unsecured notes at 5.065% due in 2000 to fund the
redemption of First Mortgage Bonds as follows: $50 million at 5.875% due in 2000
and $50 million at 7.375% due in 2023.
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
<PAGE>
Nicor Gas Company Page 6
Notes to the Consolidated Financial Statements (Unaudited) (Concluded)
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 ICC 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.
<PAGE>
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 1998 Annual Report on Form
10-K.
RESULTS OF OPERATIONS
Net income for the third quarter of 1999 was $16.7 million, compared with $17
million in 1998. For the nine months ended September 30, 1999, net income was
$69.2 million, compared with $71 million in 1998, as the positive impact of
higher deliveries was more than offset by higher operating and maintenance
expense and a decline in real estate sales.
Operating revenues. For the three-month period, revenues increased $13.8 million
from the prior year due primarily to higher natural gas prices, which are passed
directly through to customers. For the nine-month period, revenues increased
$10.9 million as the impact of colder weather more than offset lower natural gas
prices.
Margin. Margin, defined as operating revenues less cost of gas and revenue
taxes, which are both passed directly through to customers, and margin per Mcf
delivered are shown in the following table:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
--------------------------- ---------------------------
1999 1998 1999 1998
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Margin (millions) $ 92.6 $ 89.6 $ 353.0 $ 341.3
Margin per Mcf delivered 1.32 1.28 .98 .98
</TABLE>
Margin rose $3 million in the three-month period due, in part, to the positive
impact of colder weather. Margin per Mcf delivered increased in the quarter due
mainly to a decline in lower-margin deliveries for electric power generation.
For the nine-month period, margin increased $11.7 million due to higher
deliveries which were attributable to 10 percent colder weather, increased usage
among existing customers and the addition of new customers.
Operating and maintenance. Operating and maintenance expense increased $2
million in the three-month period due primarily to increased credit and
collection activities. For the nine-month period, operating and maintenance
expense increased $10 million due primarily to higher information technology
costs and increased credit and collection activities.
Nonoperating items. Other income decreased in both periods as a result of a
decline in real estate sales which more than offset the positive impact of
higher investment levels on interest income. The company continues to assess its
nonstrategic real estate holdings, and is evaluating the potential to maximize
the value of these holdings through additional property sales or development
over the next several years.
Interest expense decreased in both periods due primarily to lower interest rates
and reduced average borrowing levels.
<PAGE>
Nicor Gas Company Page 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
FINANCIAL CONDITION AND LIQUIDITY
Operating. Net cash flow from operating activities decreased $42.6 million for
the nine months ended September 30, 1999, due primarily to changes in working
capital items. Working capital can swing sharply due to certain factors
including weather, the price of gas, 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.
Financing. The company maintains short-term credit agreements with major
domestic and foreign banks. At September 30, 1999, these agreements, which serve
as backup for the issuance of commercial paper, totaled $275 million and the
company had $103 million of commercial paper outstanding.
In August 1999, Nicor Gas redeemed $50 million of 8.25% First Mortgage Bonds due
in 2024.
In January 1999, Nicor Gas sold $50 million of First Mortgage Bonds at 5.37% due
in 2009 and $50 million of unsecured notes at 5.065% due in 2000 to fund the
redemption of First Mortgage Bonds as follows: $50 million at 5.875% due in 2000
and $50 million at 7.375% due in 2023.
YEAR 2000 READINESS
The Year 2000 issue arose because many existing computer programs use only the
last two digits to refer to a year. If date-sensitive devices incorrectly read
the year 2000 and assume it to be 1900, many computer systems and software
applications, as well as embedded chips, could fail or produce erroneous
results.
This disclosure contains forward-looking statements. In connection with the Safe
Harbor provisions of the Private Securities Litigation Reform Act of 1995, the
company cautions that, while it believes such statements to be reasonable and
makes them in good faith, actual results may vary. Nicor Gas' ability to meet
its objectives identified below is dependent upon several factors, 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 remediate their critical systems and
processes in a timely manner. Each component of the company's Year 2000 project
has progressed as planned and the company believes it is taking all necessary
steps to be able to operate successfully in the year 2000 and beyond. The
following summarizes the company's preparedness for the year 2000.
In 1996, Nicor Gas 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 has utilized consultants to assist in the Year 2000 project and belongs
to an industry alliance that facilitates the sharing of information among
companies. The company's Year 2000 effort encompasses mainframe systems,
client-server and desktop systems, telecommunications, embedded systems and
third parties. This effort consists of the following phases: inventory,
assessment, remediation, testing and contingency planning.
Mainframe Systems. Nicor Gas' mainframe hardware and most core business
applications, which include customer service, billing and payroll, fall into
this category. System inventory, assessment, remediation, testing and
contingency planning are complete. A number of systems have been replaced by
<PAGE>
Nicor Gas Company Page 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
Year 2000 compliant systems on client-server platforms. During the second and
third quarter of 1999, the company performed additional testing of all critical
systems at a remote site. In addition, outside consultants completed independent
verification of program code for the company's critical mainframe systems to
confirm proper remediation. The few minor errors that were identified have been
corrected and tested.
Client-server and Desktop Systems. Nicor Gas has completed an inventory and
assessment of its client-server and desktop systems. Many of the systems are new
and were designed to be compliant. Remediation and testing are complete with the
exception of a few minor applications that are dependent on upgrades or
modifications by software vendors. These minor items will be completed by the
end of 1999. Functional areas have developed and tested contingency plans to
perform their responsibilities in the event of disruption.
Telecommunications. The company has completed all phases of its Year 2000 effort
relating to telecommunication issues, which involve data and voice
communications. In addition to the telecommunication issues over which it has
direct control, the company has worked closely with telecommunication service
providers to develop and execute test procedures and to formulate contingency
plans.
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. A more detailed inventory and assessment of about 2,200 items
at the component level in critical areas has been completed and independently
verified and validated by outside consultants. Less than 5 percent of the
inventoried items appeared to require remediation. All such items have been
remediated and tested. In critical gas supply and storage areas, disaster
recovery plans exist which have been updated and tested for various potential
Year 2000 scenarios.
Third Parties. Nicor Gas has contacted entities with which it has a material
relationship to determine their state of readiness. These entities include, but
are not limited to, natural gas suppliers, interstate pipelines, electric
utilities, telecommunication service providers, banks, industrial customers and
other suppliers of goods and services. In addition, the company has met directly
with interstate pipelines, natural gas suppliers and certain large industrial
customers. Based upon ongoing communications, Nicor Gas will consider new
business relationships, as necessary, with alternative product and service
providers, to the extent alternatives are available. Contingency plans to
address potential disruption of the receipt of goods and services have been
completed.
Costs. Nicor Gas has incurred operating expenses of approximately $4.5 million
through September 30, 1999, and estimates less than an additional $1 million may
be incurred in connection with its Year 2000 efforts. These amounts represent
costs incurred that are related to hardware and software modifications and
replacements, internal information technology resources devoted solely to the
effort, and outside consultants. 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 estimates that any additional capital improvement costs to support
this project will not be significant.
<PAGE>
Nicor Gas Company Page 10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
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.
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 was 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 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 update, test and refine its 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 in the gas
distribution system can be manually overridden, and customer calls can be
handled at alternate sites. The company has updated and tested its contingency
plans that address scenarios that could emerge and expects further refinement
and testing of these plans throughout the remainder of 1999.
During the third quarter of 1999, Nicor Gas conducted a Year 2000 preparedness
drill to test and further evaluate its contingency plans and to demonstrate its
ability to respond to potential issues effectively and quickly. The drill,
conducted with interstate pipelines and other natural gas utilities, simulated
the loss of communications, electricity and gas supply. The drill was
successful.
OTHER
Performance-Based Rate Filing. In March 1999, Nicor Gas filed a
performance-based rate plan for natural gas supply costs with the ICC. For
further information see Regulatory Matters on page 5.
Customer Select(R). In September 1999, Nicor Gas received approval from the ICC
to expand Customer Select, the company's voluntary pilot program which offers
customers a choice of natural gas commodity suppliers. For further information
see Regulatory Matters on page 5.
New Accounting Pronouncement. In June 1999, the Financial Accounting Standards
Board approved an amendment to defer the effective date of Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities. For further
information see New Accounting Pronouncement on page 5.
<TABLE>
Nicor Gas Company Page 11
- -------------------------------------------------------------------------------------------------------------------
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, customers and other statistics are presented below.
<CAPTION>
Three months ended Nine months ended
September 30 September 30
------------------------------ -----------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
Operating revenues (millions):
Sales
<S> <C> <C> <C> <C>
Residential $ 103.6 $ 96.0 $ 576.1 $ 562.2
Commercial 16.3 17.2 118.0 138.0
Industrial 2.4 2.3 17.4 20.9
------------- ------------- ------------- -------------
122.3 115.5 711.5 721.1
------------- ------------- ------------- -------------
Transportation
Residential .7 - 1.0 -
Commercial 13.6 11.8 51.8 40.1
Industrial 11.3 9.2 33.0 28.2
------------- ------------- ------------- -------------
25.6 21.0 85.8 68.3
------------- ------------- ------------- -------------
Revenue taxes and other 13.9 11.5 80.6 77.6
------------- ------------- ------------- -------------
$ 161.8 $ 148.0 $ 877.9 $ 867.0
============= ============= ============= =============
Deliveries (Bcf):
Sales
Residential 15.1 15.1 141.9 128.8
Commercial 2.4 2.7 28.9 31.8
Industrial .5 .5 4.6 5.4
------------- ------------- ------------- -------------
18.0 18.3 175.4 166.0
------------- ------------- ------------- -------------
Transportation
Residential .2 - .2 -
Commercial 9.3 8.1 55.5 44.2
Industrial 42.4 43.5 129.4 136.6
------------- ------------- ------------- -------------
51.9 51.6 185.1 180.8
------------- ------------- ------------- -------------
69.9 69.9 360.5 346.8
============= ============= ============= =============
Customers at end of period (thousands):
Sales
Residential 1,733.7 1,718.8
Commercial 104.0 124.5
Industrial 7.0 8.9
------------- -------------
1,844.7 1,852.2
------------- -------------
Transportation
Residential 16.6 -
Commercial 58.4 36.5
Industrial 6.7 5.0
------------- -------------
81.7 41.5
------------- -------------
1,926.4 1,893.7
============= =============
Other statistics:
Degree days 67 18 3,432 3,123
Colder (warmer) than normal (23.9)% (79.5)% (12.8)% (20.6)%
Average gas cost per Mcf sold $ 3.31 $ 2.71 $ 2.61 $ 2.79
</TABLE>
<PAGE>
Nicor Gas Company Page 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
For information concerning legal proceedings, see Regulatory Matters on page 5
and Contingencies beginning on page 5, which are incorporated herein by
reference.
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index on page 14 filed herewith.
(b) The company did not file a report on Form 8-K during the third
quarter of 1999.
<PAGE>
Nicor Gas Company Page 13
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 10, 1999 By DAVID L. CYRANOSKI
------------------ -----------------------
David L. Cyranoski
Senior Vice President,
Secretary, Treasurer and Controller
<PAGE>
Nicor Gas Company Page 14
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 Year ended December 31
September 30, ----------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
------------- ------------- ------------- -------------- ------------- -------------
Earnings available to cover fixed
charges:
<S> <C> <C> <C> <C> <C> <C>
Net income $ 92,302 $ 94,119 $ 106,922 $ 107,106 $ 85,448 $ 93,078
Add: Income taxes 54,047 55,299 64,714 63,579 49,881 50,958
Fixed charges 41,350 44,870 46,886 46,747 39,400 37,729
Allowance for funds used
during construction (181) (269) (11) (5) (911) (151)
------------- ------------- ------------- -------------- ------------- -------------
$ 187,518 $ 194,019 $ 218,511 $ 217,427 $ 173,818 $ 181,614
============= ============= ============= ============== ============= =============
Fixed charges:
Interest on debt $ 39,713 $ 42,624 $ 45,246 $ 43,762 $ 38,129 $ 36,726
Other interest charges and
amortization of debt dis-
count, premium, and expense,
net 1,637 2,246 1,640 2,985 1,271 1,003
------------- ------------- ------------- -------------- ------------- -------------
$ 41,350 $ 44,870 $ 46,886 $ 46,747 $ 39,400 $ 37,729
============= ============= ============= ============== ============= =============
Ratio of earnings to fixed charges 4.54 4.32 4.66 4.65 4.41 4.81
============= ============= ============= ============== ============= =============
</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
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,612
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 250
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 134
<TOTAL-ASSETS> 1,996
<COMMON> 76
<CAPITAL-SURPLUS-PAID-IN> 108
<RETAINED-EARNINGS> 486
<TOTAL-COMMON-STOCKHOLDERS-EQ> 670
7
2
<LONG-TERM-DEBT-NET> 422
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 103
<LONG-TERM-DEBT-CURRENT-PORT> 50
1
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 741
<TOT-CAPITALIZATION-AND-LIAB> 1,996
<GROSS-OPERATING-REVENUE> 878
<INCOME-TAX-EXPENSE> 40
<OTHER-OPERATING-EXPENSES> 741
<TOTAL-OPERATING-EXPENSES> 781
<OPERATING-INCOME-LOSS> 97
<OTHER-INCOME-NET> 1
<INCOME-BEFORE-INTEREST-EXPEN> 98
<TOTAL-INTEREST-EXPENSE> 29
<NET-INCOME> 69
0
<EARNINGS-AVAILABLE-FOR-COMM> 69
<COMMON-STOCK-DIVIDENDS> 78
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 302
<EPS-BASIC> 0 <F1>
<EPS-DILUTED> 0 <F1>
<FN>
<F1>NICOR GAS IS A WHOLLY OWNED SUBSIDIARY OF NICOR INC. EARNINGS AND DIVIDENDS
PER SHARE INFORMATION IS THEREFORE OMITTED.
</FN>
</TABLE>
