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 June 30, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 1-7296
NORTHERN ILLINOIS GAS COMPANY
(Doing business as Nicor Gas Company)
(Exact name of registrant as specified in its charter)
Illinois 36-2863847
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1844 Ferry Road
Naperville, Illinois 60563-9600
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (630) 983-8888
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 July 31, 1999, 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 and Six Months Ended
June 30, 1999 and 1998 ............................. 2
Consolidated Statement of Cash Flows -
Six Months Ended
June 30, 1999 and 1998 ............................. 3
Consolidated Balance Sheet -
June 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 .................................... 13
Item 6. Exhibits and Reports on Form 8-K ..................... 13
Signature ............................................ 14
Exhibit Index ........................................ 15
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.
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 Six months ended
June 30 June 30
1999 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating revenues $ 203.4 $ 214.8 $ 716.1 $ 719.1
Operating expenses
Cost of gas 84.5 96.1 402.9 414.3
Operating and maintenance 38.3 35.3 77.4 69.4
Depreciation 20.4 19.8 71.6 69.4
Taxes, other than income taxes 20.2 19.9 62.5 62.8
Income taxes 11.4 12.5 30.2 30.0
174.8 183.6 644.6 645.9
Operating income 28.6 31.2 71.5 73.2
Other income (expense)
Other, net 1.4 3.6 1.6 5.3
Income taxes on other income (.5) (1.4) (.6) (2.0)
.9 2.2 1.0 3.3
Interest expense
Interest on debt, net of
amounts capitalized 9.6 9.6 20.3 21.9
Other (.6) .3 (.2) .6
9.0 9.9 20.1 22.5
Net income 20.5 23.5 52.4 54.0
Dividends on preferred stock .1 .2 .2 .3
Earnings applicable to common stock $ 20.4 $ 23.3 $ 52.2 $ 53.7
<F1>
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>
Six months ended
June 30
1999 1998
Operating activities
<S> <C> <C> <C> <C>
Net income $ 52.4 $ 54.0
Adjustments to reconcile net income to net cash flow
provided from operating activities:
Depreciation 71.6 69.4
Deferred income tax expense 2.1 3.9
Change in assets and liabilities:
Receivables, less allowances 122.1 182.2
Gas in storage 96.0 111.6
Deferred/accrued gas costs (27.9) (8.1)
Accounts payable (12.3) (7.1)
Temporary LIFO liquidation 59.2 24.2
Other (7.5) (39.5)
Net cash flow provided from operating activities 355.7 390.6
Investing activities
Capital expenditures (48.8) (47.6)
Other (.2) 6.5
Net cash flow used for investing activities (49.0) (41.1)
Financing activities
Net proceeds from issuing long-term debt 99.6 99.1
Disbursements to retire long-term debt (102.7) (104.5)
Short-term borrowings (repayments), net (214.5) (254.6)
Dividends paid (46.6) (59.0)
Other (.5) (.5)
Net cash flow used for financing activities (264.7) (319.5)
Net increase in cash and cash equivalents 42.0 30.0
Cash and cash equivalents, beginning of period 31.5 -
Cash and cash equivalents, end of period $ 73.5 $ 30.0
Supplemental information
Income taxes paid, net of refunds $ 29.7 $ 26.6
Interest paid, net of amounts capitalized 20.0 40.1
<F1>
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
Nicor Gas Company Page 4
Consolidated Balance Sheet (Unaudited)
(millions)
<CAPTION>
June 30 December 31 June 30
1999 1998 1998
Assets
<S> <S> <C> <C> <C>
Gas distribution plant, at cost $ 3,144.6 $ 3,105.2 $ 3,052.4
Less accumulated depreciation 1,551.7 1,487.4 1,446.3
1,592.9 1,617.8 1,606.1
Current assets
Cash and cash equivalents - Affiliates - 29.2 17.6
- Other 73.5 2.3 12.4
Receivables, less allowances of $7.6,
$6.1 and $7.3, respectively 114.0 236.1 139.2
Gas in storage, at last-in, first-out (LIFO) cost 9.5 105.5 16.2
Other 22.6 23.3 24.0
219.6 396.4 209.4
Other assets 121.0 111.2 101.5
$ 1,933.5 $ 2,125.4 $ 1,917.0
Capitalization and liabilities
Capitalization
Long-term debt $ 471.3 $ 520.8 $ 521.0
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 494.7 495.1 496.7
1,158.7 1,209.0 1,210.8
Current liabilities
Long-term obligations due within one year 50.5 .5 25.5
Short-term borrowings - 214.5 -
Accounts payable 230.6 242.9 206.9
Temporary LIFO liquidation 59.2 - 24.2
Accrued gas costs 2.0 29.9 17.0
Dividends payable 26.3 20.2 27.3
Other 20.7 26.8 24.1
389.3 534.8 325.0
Deferred credits and other liabilities
Deferred income taxes 201.2 196.2 191.5
Regulatory income tax liability 76.6 78.6 80.1
Unamortized investment tax credits 43.0 44.1 45.2
Other 64.7 62.7 64.4
385.5 381.6 381.2
$ 1,933.5 $ 2,125.4 $ 1,917.0
<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. Depreciation is calculated using a straight-line method for
the calendar year. For interim periods, depreciation is allocated based on
gas deliveries.
Gas in Storage. Gas in storage injections and withdrawals are valued using
the last-in, first-out (LIFO) method on a calendar-year basis. For interim
periods, the difference between current replacement cost and the LIFO cost
for quantities of gas temporarily withdrawn from storage is recorded in cost
of gas as a temporary LIFO liquidation.
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
early November and, if approved in a manner acceptable to Nicor Gas, the
company intends to implement the plan next January.
Customer Select Program. In July 1999, Nicor Gas filed a request with the
ICC to expand Customer Select, the company's three-year pilot program that
allows more customers to choose their natural gas commodity supplier. If
approved, an additional 170,000 single-family residential customers will be
eligible to participate in the program. 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 and respond
to emergencies.
LONG-TERM DEBT
In July 1999, Nicor Gas called for redemption $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.
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 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.
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 decreased $3 million and $1.6 million for the three- and six-
month periods, respectively. For the three-month period, the decrease was
due to higher operating and maintenance expenses and the prior year's gains
on real estate sales. These factors were partially offset in the six-month
period by higher deliveries due primarily to 8 percent colder weather.
Operating revenues. Operating revenues decreased $11.4 million in the
second quarter due to lower gas prices, which are passed directly through to
customers. For the year-to-date period, operating revenues decreased
$3 million as lower gas prices were essentially offset by the impact of
colder weather.
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:
Three months ended Six months ended
June 30 June 30
1999 1998 1999 1998
Margin (millions) $ 103.2 $ 103.4 $ 260.4 $ 251.7
Margin per Mcf delivered 1.21 1.17 .90 .91
Margin rose $8.7 million in the six-month period due to increased deliveries
related primarily to colder weather. Margin per Mcf increased in the three-
month period due primarily to a decrease in lower-margin deliveries for
electric power generation.
Operating and maintenance. Operating and maintenance expenses increased
$3 million and $8 million for the three- and six-month periods,
respectively, due in part to higher information technology costs. Higher
bad debt expense also contributed to the increase in the six-month period.
Nonoperating items. Other income decreased in both periods as the prior
year's gains on real estate sales more than offset the positive impact of
higher investment levels on interest income.
Interest expense decreased in both periods due primarily to the positive
impact of reversing accrued interest expense as a result of a settlement.
The impact of reduced average borrowing levels and lower interest rates also
contributed to the decrease in the six-month period.
FINANCIAL CONDITION AND LIQUIDITY
Operating. Net cash flow from operating activities decreased $34.9 million
for the six months ended June 30, 1999, due primarily to changes in working
capital items. Working capital can swing sharply due to certain factors
Nicor Gas Company Page 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
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 June 30, 1999, these agreements, which serve
as backup for the issuance of commercial paper, totaled $250 million. The
company had no outstanding commercial paper at June 30, 1999.
In July 1999, Nicor Gas called for redemption $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 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.
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 utilizes consultants to assist in the Year 2000
project and belongs to an industry alliance which 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.
Nicor Gas Company Page 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
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 and testing are
complete. A number of systems have been replaced by Year 2000 compliant
systems on client-server platforms. During the second 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 its critical mainframe systems to confirm proper
remediation. A few minor errors were identified and are being corrected and
tested. Hardware and software failure contingency plans have been
established.
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 items are scheduled
to be completed and tested during the third quarter of 1999. Functional
areas have developed contingency plans to perform their responsibilities in
the event of failure. Contingency plans to address possible longer-term
disruptions have been updated and are scheduled for testing in the third
quarter of 1999.
Telecommunications. Inventory and assessment of telecommunication issues,
which involve data and voice communications, have also been completed.
Remediation has been accomplished through upgrading hardware and software.
Testing has been completed. Contingency plans have been updated, and by the
end of the third quarter of 1999 these plans will be tested. In addition to
the telecommunications issues over which it has direct control, the company
has worked closely with telecommunication service providers to assist in the
development and execution of additional testing procedures and the
formulation of contingency plans. These efforts are scheduled to be
completed by the end of the third quarter of 1999.
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. Virtually all items have been remediated and tested with a few
items remaining to be fixed and tested during the third quarter of 1999. In
critical gas supply and storage areas, disaster recovery plans exist and
have been 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 has contacted, through written communication,
entities with which 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 and the results of
ongoing communications, Nicor Gas will consider new business relationships
with alternative providers of products and services as necessary and to the
extent alternatives are available.
In addition to written communications, the company has met directly with
interstate pipelines and gas suppliers, upon which the company has
historically been materially dependent, and certain large industrial
customers to determine their state of readiness. Further communications and
meetings have also been conducted with other critical vendors and suppliers.
Additional meetings and assessment of communications and any resulting
necessary actions are scheduled to be completed during the third quarter of
1999. Testing of updated contingency plans is scheduled to be completed by
the end of the third quarter of 1999.
Costs. Nicor Gas has incurred operating expenses of approximately $4 million
through June 30, 1999, and estimates an additional $2 million may be
incurred in connection with its Year 2000 efforts. These amounts represent
costs incurred relating 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 as much as an additional
$1 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.
Nicor Gas Company Page 11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
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 alternate sites. The
company has updated its contingency plans that address a variety of
scenarios that could emerge and expects testing and further refinement of
plans to continue throughout 1999.
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 Program. In July 1999, Nicor Gas filed a request with the
ICC to expand Customer Select, the company's three-year pilot program that
allows more customers to choose their natural gas commodity supplier. 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 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, customers and other statistics are presented below.
<CAPTION>
Three months ended Six months ended
June 30 June 30
1999 1998 1999 1998
Operating revenues (millions):
Sales
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Residential $ 128.2 $ 136.5 $ 472.4 $ 466.2
Commercial 25.1 31.3 101.7 120.9
Industrial 3.2 5.0 15.0 18.6
156.5 172.8 589.1 605.7
Transportation
Residential .4 - .4 -
Commercial 14.7 11.5 38.1 28.3
Industrial 9.9 8.5 21.7 19.0
25.0 20.0 60.2 47.3
Revenue taxes and other 21.9 22.0 66.8 66.1
$ 203.4 $ 214.8 $ 716.1 $ 719.1
Deliveries (Bcf):
Sales
Residential 26.3 25.8 126.7 113.7
Commercial 5.4 6.2 26.5 29.0
Industrial .6 1.2 4.2 4.9
32.3 33.2 157.4 147.6
Transportation
Residential .1 - .1 -
Commercial 12.0 10.0 46.1 36.1
Industrial 41.0 44.9 87.0 93.1
53.1 54.9 133.2 129.2
85.4 88.1 290.6 276.8
Customers at end of period (thousands):
Sales
Residential 1,729.7 1,718.6
Commercial 104.2 125.2
Industrial 7.1 9.0
1,841.0 1,852.8
Transportation
Residential 17.0 -
Commercial 59.6 36.9
Industrial 6.9 5.0
83.5 41.9
1,924.5 1,894.7
Other statistics:
Degree days 491 532 3,365 3,105
Colder (warmer) than normal (28.6)% (22.7)% (12.5)% (19.3)%
Average gas cost per Mcf sold $ 2.54 $ 2.90 $ 2.53 $ 2.80
</TABLE>
Nicor Gas Company Page 13
PART II - Other Information
Item 1. Legal Proceedings
For information concerning legal proceedings, see Regulatory Matters on page
5 and Contingencies on page 6, which are 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 second
quarter of 1999.
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 August 11, 1999 By DAVID L. CYRANOSKI
David L. Cyranoski
Senior Vice President,
Secretary, Treasurer and Controller
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
June 30, Year Ended December 31
1999 1998 1997 1996 1995 1994
Earnings available to cover fixed charges:
<S> <C> <C> <C> <C> <C> <C>
Net income $ 92,572 $ 94,119 $ 106,922 $ 107,106 $ 85,448 $ 93,078
Add:Income taxes 54,003 55,299 64,714 63,579 49,881 50,958
Fixed charges 42,505 44,870 46,886 46,747 39,400 37,729
Allowance for funds used
during construction (317) (269) (11) (5) (911) (151)
Total $ 188,763 $ 194,019 $ 218,511 $ 217,427 $ 173,818 $ 181,614
Fixed charges:
Interest on debt $ 40,867 $ 42,624 $ 45,246 $ 43,762 $ 38,129 $ 36,726
Other interest charges and
amortization of debt discount,
premium and expense, net 1,638 2,246 1,640 2,985 1,271 1,003
Total $ 42,505 $ 44,870 $ 46,886 $ 46,747 $ 39,400 $ 37,729
Ratio of earnings to fixed charges 4.44 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,593
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 220
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 121
<TOTAL-ASSETS> 1,934
<COMMON> 76
<CAPITAL-SURPLUS-PAID-IN> 108
<RETAINED-EARNINGS> 495
<TOTAL-COMMON-STOCKHOLDERS-EQ> 679
8
1
<LONG-TERM-DEBT-NET> 471
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 50
1
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 724
<TOT-CAPITALIZATION-AND-LIAB> 1,934
<GROSS-OPERATING-REVENUE> 716
<INCOME-TAX-EXPENSE> 30
<OTHER-OPERATING-EXPENSES> 615
<TOTAL-OPERATING-EXPENSES> 645
<OPERATING-INCOME-LOSS> 71
<OTHER-INCOME-NET> 1
<INCOME-BEFORE-INTEREST-EXPEN> 72
<TOTAL-INTEREST-EXPENSE> 20
<NET-INCOME> 52
0
<EARNINGS-AVAILABLE-FOR-COMM> 52
<COMMON-STOCK-DIVIDENDS> 53
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 356
<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>
