UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
<TABLE>
<CAPTION>
I.R.S Employer
Commission File Registrant, State of Incorporation, Identification
Number Address and Telephone Number 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>
Securities registered pursuant to Section 12(b) or 12(g) of the Act: None
----
The registrant meets the conditions set forth in General Instruction I(1)(a) and
(b) of Form 10-K and is therefore filing this Form with the 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Shares of common stock, par value $5, outstanding at February 29, 2000, were
15,232,414, all of which are owned by Nicor Inc.
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Nicor Gas Company Page i
Table of Contents
Item No.
Part I
1. Business ............................................................. 1
2. Properties ........................................................... 4
3. Legal Proceedings..................................................... 4
4. Submission of Matters to a Vote of Security Holders................... *
Part II
5. Market for Registrant's Common Equity and Related Stockholder Matters 4
6. Selected Financial Data .............................................. *
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................. 5
7A. Quantitative and Qualitative Disclosures about Market Risk............ 10
8. Financial Statements and Supplementary Data .......................... 11
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................................. 24
Part III
10. Directors and Executive Officers of the Registrant.................... *
11. Executive Compensation................................................ *
12. Security Ownership of Certain Beneficial Owners and Management........ *
13. Certain Relationships and Related Transactions........................ *
Part IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K...... 24
Signatures............................................................ 26
Supplemental Information.............................................. 27
Exhibit Index......................................................... 28
* The Registrant meets the conditions set forth in General Instruction I(1)(a)
and (b) of Form 10-K and is therefore omitting the information called for by
the otherwise required item.
Glossary
Degree day........The extent to which the daily average temperature
falls below 65 degrees Fahrenheit. Normal weather for Nicor
Gas' service territory is about 6,100 degree days.
FERC..............Federal Energy Regulatory Commission, the agency that
regulates the interstate transportation of natural gas, oil
and electricity.
HVAC..............Heating, ventilating and air conditioning.
ICC...............Illinois Commerce Commission, the agency that regulates
investor-owned Illinois utilities.
Mcf, MMcf, Bcf ...Thousand cubic feet, million cubic feet, billion cubic feet.
PBR...............Performance-based rate, a plan that provides economic
incentives based on performance.
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Nicor Gas Company Page 1
PART I
Item 1. Business
Northern Illinois Gas Company (doing business as Nicor Gas Company), an Illinois
corporation formed in 1954, is a wholly owned subsidiary of Nicor Inc., a
holding company. Certain terms used herein are defined in the glossary on page
i.
GENERAL
Nicor Gas, a regulated natural gas distribution utility, is one of the nation's
largest distributors of natural gas. The company serves more than 1.9 million
customers in a service territory that encompasses most of the northern third of
Illinois, excluding the city of Chicago. The company's service territory is
diverse and has grown steadily over the years, providing the company with a
well-balanced mix of residential, commercial and industrial customers. In 1999,
residential customers accounted for about 41 percent of natural gas deliveries,
while commercial and industrial customers accounted for about 24 percent and 35
percent, respectively. The company's large residential customer base provides
relative stability during weak economic periods. In addition, Nicor Gas'
industrial and commercial customer base is well diversified, lessening the
impact of industry-specific economic swings. See Operating Statistics on page 9
for operating revenues, deliveries and customers by customer classification.
Gas deliveries are seasonal since about one-half are used for space heating.
Typically, about 70 percent of deliveries and revenues occur from October
through March. Fluctuations in weather can have a significant impact on
year-to-year comparisons of operating income and cash flow. To provide
protection from the financial impact of unusually warm weather, Nicor Gas
purchased a weather insurance policy which will protect 2000 earnings and cash
flow if weather for the year is more than 6.5 percent warmer than normal.
Nicor Gas maintains franchise agreements with most of the communities it serves,
allowing it to construct, operate and maintain distribution facilities in those
communities. Franchise agreement terms range up to 50 years. Currently, less
than 5 percent of the agreements will expire within five years. The company has
approximately 2,300 employees.
CUSTOMER SERVICES
In addition to gas sales to all customer classes, Nicor Gas provides
transportation service to commercial and industrial customers who purchase their
own gas supplies. Beginning in 1999, the company's Customer Select(R) voluntary
pilot program allowed residential customers in certain communities to choose
their natural gas supplier. Nicor Gas supports full customer choice and is
presently evaluating providing all customers the ability to choose their natural
gas supplier. Additional information on the program is presented in Factors
Affecting Business Performance beginning on page 7. Transportation customers
have options that include the use of the company's storage system, the choice of
individual or group billing, and the ability to choose varying supply backup
levels and service options. The company receives a margin generally comparable
to gas sales for transportation service with full supply backup.
In recent years, Nicor Gas has been pursuing several nontraditional activities.
These activities include finding innovative ways to utilize its physical assets
by providing natural gas storage and transmission-related services to marketers,
other gas distribution companies and electric power generation facilities.
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Nicor Gas Company Page 2
Item 1. Business (continued)
SOURCES OF GAS SUPPLY
Nicor Gas purchases gas supplies on a deregulated basis directly from producers
and marketers. Pipeline transportation and purchased storage services are
contracted for at rates regulated by the FERC. Firm pipeline capacity and
purchased storage services held by the company that are temporarily not needed
can be released in the secondary market under FERC-mandated capacity release
provisions, with proceeds reducing the company's cost of gas charged to
customers.
The company's peak day requirements are met through utilization of company-owned
storage facilities, firm pipeline capacity, purchased storage services and other
supply arrangements. Nicor Gas has been able to obtain sufficient supplies of
natural gas to meet customer requirements. The company believes natural gas
supply availability will be sufficient to meet market demands in the foreseeable
future.
Gas supply. Nicor Gas maintains a diversified portfolio of gas supply contracts.
Firm gas supply contracts are diversified by supplier, producing region,
quantity and available transportation. Contract pricing is generally tied to
published price indices so as to approximate current market prices. The
contracts also generally provide for the payment of fixed demand charges to
ensure the availability of supplies on any given day and are generally
negotiated annually.
The company also purchases gas supplies on the spot market to fulfill its supply
requirements or to take advantage of favorable short-term pricing. Spot gas
purchases accounted for about one-half of the company's total gas purchases in
the last three years.
Customers served under the company's transportation service tariffs purchase
their own gas supplies. About one-half of the gas that the company delivered in
1999 was purchased by transportation customers directly from producers and
marketers rather than from the company.
Pipeline transportation. Nicor Gas is directly connected to six interstate
pipelines which provide access to most of the major natural gas producing
regions in North America. The company's primary firm transportation contracts
are with: Natural Gas Pipeline Company of America, which accounts for about
two-thirds of the contracted capacity, Midwestern Gas Transmission Company and
Northern Natural Gas Company. Nearly all of the contracted capacity will expire
by 2004.
Storage. Nicor Gas owns and operates seven underground gas storage facilities.
This storage system is one of the largest in the gas distribution industry and
is designed to meet about 55 percent of the company's peak day deliveries and
approximately 30 percent of its normal winter deliveries. On an annual basis,
about 130 Bcf of gas is cycled through the company's storage fields. In addition
to the company-owned facilities, Nicor Gas purchases about 40 Bcf of storage
service. Storage provides supply flexibility, improves reliability of deliveries
and allows the company to maintain rates that are among the lowest in the
nation.
COMPETITION/DEMAND
Nicor Gas is one of the largest utility energy suppliers in Illinois, delivering
about one-third of all utility energy consumed in the state. About 97 percent of
all single-family homes in Nicor Gas' service territory are heated with natural
gas. The company's gas services compete with other forms of energy, such as
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Nicor Gas Company Page 3
Item 1. Business (concluded)
electricity and oil, based on such factors as price, service and reliability.
Significant factors that impact demand for natural gas include weather, economic
conditions and the price of gas relative to competitive fuels.
The energy industry has undergone fundamental changes over the past several
years. In 1997, Illinois adopted legislation directing the process of
deregulating the state's electric utility industry. Although Nicor Gas'
traditional pricing advantage compared to electricity may decrease as the price
of electricity declines, the company expects to maintain a pricing advantage in
the foreseeable future.
Additional information on competition and demand is presented in Factors
Affecting Business Performance beginning on page 7.
REGULATION
Nicor Gas is regulated by the ICC, which establishes the rules and regulations
governing utility rates and services in Illinois. Rates are generally designed
to allow the company to recover its costs and provide an opportunity to earn a
fair return for its investors. Changes in the regulatory environment could
affect the longer-term performance of Nicor Gas.
The cost of gas the company purchases for customers is recovered through a
monthly gas supply charge, which accounts for approximately 70 percent of a
typical residential customer's annual bill. The company's cost of gas is passed
on to the customer without markup.
On January 1, 2000, Nicor Gas' performance-based rate (PBR) plan for natural gas
costs went into effect. Under the PBR, Nicor Gas' total gas supply costs will be
compared to a benchmark tied to a market index. Savings and losses relative to
the benchmark will be shared equally with customers. At the end of two years,
the plan will be subject to ICC review. Additional information on the plan is
presented in Factors Affecting Business Performance beginning on page 7.
Customer Select, a voluntary pilot program that offers customers a choice of
natural gas suppliers, is in its third year. Additional information on the
program is presented in Factors Affecting Business Performance beginning on page
7.
ENVIRONMENTAL MATTERS
For information on environmental matters, see Contingencies beginning on page
22.
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Nicor Gas Company Page 4
Item 2. Properties
The company's properties are located in the territory described under Item 1,
Business, and are suitable, adequate and utilized in its operations.
The gas distribution, transmission and storage system includes approximately
30,000 miles of steel, plastic and cast iron main; approximately 27,000 miles of
steel, plastic/aluminum composite, plastic and copper service pipe connecting
the mains to customers' premises; and seven underground storage fields. Other
properties include buildings, land, motor vehicles, meters, regulators,
compressors, construction equipment, tools, communication and computer
equipment, software and office equipment.
The principal real properties are held under easements, permits, licenses or in
fee. Land in fee is owned for essentially all administrative offices and for
certain transmission mains and underground storage fields. Substantially all
properties are subject to the lien of the indenture securing the company's first
mortgage bonds.
Item 3. Legal Proceedings
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. Nicor Gas has reached a
settlement with one of the insurance carriers. On February 10, 2000, the Circuit
Court of Cook County dismissed the company's case on summary judgement motions
by certain defendants. The company plans to appeal. For further information, see
Contingencies beginning on page 22, which is incorporated herein by reference.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
All of the outstanding common stock of Nicor Gas is owned by Nicor Inc. There is
no public trading market for the company's common stock. During 1999 and 1998,
the company declared quarterly dividends on its common stock totaling $99.6
million and $96 million, respectively.
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Nicor Gas Company Page 5
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The purpose of this financial review is to explain changes in Nicor Gas'
operating results and financial condition from 1997 to 1999, and to discuss
business trends and uncertainties that might affect Nicor Gas.
Certain terms used herein are defined in the glossary on page i.
RESULTS OF OPERATIONS
Net income for 1999 increased $2 million to $96.1 million due to higher
deliveries of natural gas related primarily to 9 percent colder weather. The
positive impact of higher deliveries was partially offset by increased operating
and maintenance expenses. Net income for 1998 of $94.1 million decreased $12.8
million from 1997 due to the impact of weather that was 23 percent warmer that
the prior year, partially offset by a 4 percent reduction in operating and
maintenance expenses.
Operating revenues. Operating revenues increased $97.2 million in 1999 to
$1,326.2 million due to higher deliveries of natural gas, and higher natural gas
prices which are passed directly through to customers. Partially offsetting this
increase was the impact of customers switching from sales to transportation
service. In 1998, operating revenues of $1,229 million were down significantly
from 1997 due principally to lower natural gas prices and lower deliveries of
natural gas.
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:
1999 1998 1997
------------ ------------ ------------
Margin (millions) $ 487.2 $ 469.4 $ 496.0
Margin per Mcf delivered .96 .96 .91
Weather was the largest factor impacting the fluctuation in margin during 1999
and 1998, and margin per Mcf delivered in 1998. Margin per Mcf delivered was
unchanged in 1999 as the impact of a reduction in lower-margin electric
generation deliveries offset the effect of weather.
Operating and maintenance. In 1999, operating and maintenance expenses increased
$8.5 million to $153.3 million due, in part, to higher information technology
spending levels. The $6 million decrease in 1998 to $144.8 million was due to
lower retirement-benefits costs, resulting principally from favorable pension
fund investment returns.
Depreciation. Depreciation increased 3 percent in 1999 to $123.9 million and 4
percent in 1998 to $120.8 million due primarily to plant additions.
Nonoperating items. In 1999, other income decreased $9.4 million as a result of
a decline in real estate sales and the write-off of software development costs.
Interest on debt decreased 7 percent in 1999 to $40.4 million and 5 percent in
1998 to $43.4 million due primarily to refinancing at lower interest rates and
reduced average borrowing levels. Other interest declined $2.8 million in 1999
due to the impact of interest benefits on tax-related matters.
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Nicor Gas Company Page 6
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
FINANCIAL CONDITION AND LIQUIDITY
The company believes it has access to adequate resources to meet its needs for
capital expenditures, debt redemptions, dividend payments and working capital.
These resources include net cash flow from operating activities, access to
capital markets and lines of credit.
Operating cash flows. Net cash flow provided from operating activities was
$170.9 million, $314.9 million and $204.3 million in 1999, 1998 and 1997,
respectively. Year-to-year changes in operating cash flow result largely from
fluctuations in working capital items because of 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.
Capital expenditures. Capital expenditures were $127.4 million in 1999 compared
with $112.6 million in 1998 and $101.8 million in 1997. Capital expenditures
rose in 1999 due primarily to enhancements to the company's operating system. In
1998, the increase was due largely to expenditures for information technology.
Capital spending in 2000 is expected to be about $135 million.
Financing activities. Nicor Gas has earned the highest long-term debt ratings
given in the industry and maintains relatively low debt percentages and high
ratios of earnings to fixed charges.
1999 1998 1997
------------ ----------- -----------
Long-term debt, net of current maturities,
as a percent of capitalization 38.2% 43.1% 43.0%
Ratio of earnings to fixed charges 4.9 4.3 4.7
Long-term debt. Nicor Gas has $250 million of First Mortgage Bonds remaining
available for issuance under a December 1998 shelf registration filing. Net
proceeds from securities issued are typically used for the refinancing of
certain outstanding First Mortgage Bonds, for construction programs to the
extent not provided by internally generated funds and for general corporate
purposes.
In January 2000, Nicor Gas issued $50 million of adjustable rate unsecured notes
due in 2001 at an initial rate of 6.11% to fund the redemption of $50 million of
unsecured notes at 5.065% due in 2000.
During 1999, Nicor Gas issued $50 million of First Mortgage Bonds at 5.37% due
in 2009 and $50 million of unsecured notes at 5.065% due in 2000. Redemptions of
First Mortgage Bonds during 1999 were as follows: $50 million at 5.875% due in
2000, $50 million at 7.375% due in 2023 and $50 million at 8.25% due in 2024.
In 1998, Nicor Gas issued First Mortgage Bonds as follows: $50 million at 5.75%
due in 2003 and $50 million at 6.58% due in 2028. Redemptions of First Mortgage
Bonds during 1998 were as follows: $25 million at 5.875% due in 1998, $25
million at 6.25% due in 1999 and $75 million at 8.25% due in 2022.
During 1997, Nicor Gas issued First Mortgage Bonds as follows: $50 million at
6.75% due in 2002 and $50 million at 7.375% due in 2027. Redemptions of First
Mortgage Bonds during 1997 were as follows: $25 million at 5.5% due in 1997 and
$50 million at 9% due in 2019.
<PAGE>
Nicor Gas Company Page 7
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Short-term debt. Nicor Gas maintains short-term credit agreements with major
domestic and foreign banks. At December 31, 1999, these agreements, which serve
as backup for the issuance of commercial paper, totaled $275 million. The
company had $275 million and $214.5 million of commercial paper outstanding at
year-end 1999 and 1998, respectively.
Common and preferred stock. The company paid dividends of $98.1 million, $107.9
million and $109.1 million in 1999, 1998 and 1997, respectively.
FACTORS AFFECTING BUSINESS PERFORMANCE
The following factors can impact year-to-year comparisons and may affect the
future performance of Nicor Gas.
Nicor Gas, a regulated natural gas distribution utility, serves more than 1.9
million customers in a service territory that encompasses most of the northern
third of Illinois, excluding the city of Chicago. The region's economy is
diverse and has grown steadily over the years, providing Nicor Gas with a
well-balanced mix of residential, commercial and industrial customers. In 1999,
residential, commercial and industrial customers accounted for about 41 percent,
24 percent and 35 percent of natural gas deliveries, respectively.
Since about one-half of gas deliveries are used for space heating, fluctuations
in weather can have a significant impact on year-to-year comparisons of
operating income and cash flow. To provide protection from the financial impact
of unusually warm weather, Nicor Gas purchased a weather insurance policy which
will protect 2000 earnings and cash flow if weather for the year is more than
6.5 percent warmer than normal.
In addition to the impact of weather, significant changes in gas prices or
economic conditions can impact gas usage. However, Nicor Gas' large residential
customer base provides relative stability during weak economic periods. Also,
the industrial and commercial customer base is well diversified, lessening the
impact of industry-specific economic swings.
Nicor Gas competes with other energy suppliers based on such factors as price,
service and reliability. The company is well positioned to deal with the
possibility of fuel switching by customers because it has rates and services
designed to compete against alternative fuels and because of its competitively
priced supply of gas. In addition, the company has a rate which allows
negotiation with potential bypass customers, and no customer has bypassed since
the rate became effective in 1987. Nicor Gas also offers commercial and
industrial customers flexibility and alternatives in rates and service,
increasing its ability to compete in these markets.
Direct connection to six interstate pipelines and extensive underground storage
capacity allow the company to maintain rates that are among the lowest in the
nation, while also providing transportation customers with direct access to gas
supplies and storage services. In addition, in an effort to ensure supply
reliability, the company purchases gas from several different producing regions
under varied contract terms.
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Nicor Gas Company Page 8
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Nicor Gas' growth in deliveries has traditionally come from a combination of
customer additions and increased usage among existing commercial and industrial
customers. Deliveries to power generation facilities have also contributed to
growth. While the company anticipates continued growth in deliveries
attributable to these factors, a partial offset is expected by customers'
installation of more energy-efficient equipment.
On January 1, 2000, Nicor Gas' performance-based rate (PBR) plan for natural gas
costs went into effect. Under the PBR, Nicor Gas' total gas supply costs will be
compared to a benchmark tied to a market index. Savings and losses relative to
the benchmark will be shared equally with customers. Transportation customers
who are responsible for their own gas supplies are not affected by the PBR plan.
Assuming a benchmark of $1 billion, each one-percent deviation from the
benchmark would affect net income by about $3 million. At the end of two years,
the plan will be subject to ICC review.
In another regulatory development, Nicor Gas received approval from the ICC in
1999 to expand Customer Select(R), a voluntary pilot program that offers
customers a choice of natural gas suppliers. Customer Select is in its third
year and now all commercial and industrial customers, as well as more than
250,000 residential customers in 16 communities, are eligible to participate. In
the program's first two years, about 30 percent of eligible business customers
and 20 percent of eligible residential customers signed up. The choice of
another natural gas commodity supplier has no impact on Nicor Gas' operating
income, and in all cases, Nicor Gas continues to deliver the natural gas, read
meters, maintain its distribution system, ensure safety and respond to service
and emergency calls. Nicor Gas supports full customer choice and is presently
evaluating providing all customers the ability to choose their natural gas
supplier.
In order to generate additional contributions to earnings growth, Nicor Gas has
been pursuing several nontraditional activities. The Chicago area has become a
major market hub for natural gas, and demand for storage and
transmission-related services by marketers, other gas distribution companies and
for electric power generation is expected to increase significantly. In
addition, the company continues to assess its nonstrategic real estate holdings,
and is evaluating the potential to maximize the value from these holdings
through additional property sales or development over the next several years.
Nicor Gas is regulated by the ICC, which establishes the rules and regulations
governing utility rates and services in Illinois. Rates are generally designed
to allow the company to recover its costs and provide an opportunity to earn a
fair return for its investors. Further changes in the regulatory environment
could affect the longer-term performance of Nicor Gas.
Nicor Gas Company Page 9
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Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Operating Statistics
1999 1998 1997
--------- --------- ---------
Operating revenues (millions)
Sales
Residential $ 899.8 $ 813.6 $ 1,126.0
Commercial 172.3 189.4 314.8
Industrial 24.5 27.5 56.8
--------- --------- ---------
1,096.6 1,030.5 1,497.6
--------- --------- ---------
Transportation
Residential 1.7 - -
Commercial 70.3 57.2 55.3
Industrial 43.7 39.2 48.3
Other 4.2 1.6 .1
--------- --------- ---------
119.9 98.0 103.7
--------- --------- ---------
Revenue taxes and other 109.7 100.5 129.2
--------- --------- ---------
$ 1,326.2 $ 1,229.0 $ 1,730.5
========= ========= =========
Deliveries (Bcf)
Sales
Residential 209.0 192.4 233.2
Commercial 39.8 44.3 65.2
Industrial 6.1 7.1 12.9
--------- --------- ---------
254.9 243.8 311.3
--------- --------- ---------
Transportation
Residential .9 - -
Commercial 82.1 67.5 66.0
Industrial 170.2 175.7 168.0
--------- --------- ---------
253.2 243.2 234.0
--------- --------- ---------
508.1 487.0 545.3
========= ========= =========
Year-end customers (thousands)
Sales
Residential 1,753.0 1,737.6 1,710.0
Commercial 108.9 127.9 143.0
Industrial 7.4 9.1 11.1
--------- --------- ---------
1,869.3 1,874.6 1,864.1
--------- --------- ---------
Transportation
Residential 16.2 - -
Commercial 57.2 35.9 18.7
Industrial 6.6 5.0 3.0
--------- --------- ---------
80.0 40.9 21.7
--------- --------- ---------
1,949.3 1,915.5 1,885.8
========= ========= =========
Other statistics
Degree days (normal 6,116) 5,272 4,834 6,254
Colder (warmer) than normal (14)% (21)% 2%
Average gas cost per Mcf sold $ 2.93 $ 2.76 $ 3.54
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Nicor Gas Company Page 10
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (concluded)
Market risk. Nicor Gas is generally not exposed to market risk caused by changes
in commodity prices. This is due to current Illinois rate regulation governing
the recovery of all prudently incurred natural gas supply costs from customers.
Although the company has a PBR plan for natural gas costs, the plan does not
expose the company to commodity price risk because actual gas costs are compared
to a market-based benchmark as opposed to a fixed benchmark. Additional
information about the PBR plan is presented on page 8. The company has
established policies and procedures governing the management of the use of
derivative commodity instruments to hedge its exposure to such risks. A risk
management committee exists to oversee compliance with such policies and
procedures.
The company is exposed to changes in interest rates, primarily as a result of
its short- and long-term debt. The company manages its interest rate risk
primarily by issuing long-term fixed-rate debt with varying maturities and
refinancing certain debt. For further information about debt securities,
interest rates and fair values, see the Consolidated Statement of Capitalization
on page 16 and Fair Value of Financial Instruments and Short- and Long-Term Debt
on page 19.
New accounting pronouncements. 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. The company plans
to adopt this statement on January 1, 2001 and does not expect it to have a
material impact on its financial condition or results of operations. For further
information, see New Accounting Pronouncements on page 19.
Year 2000 rollover. Nicor Gas' preparation for the rollover to January 1, 2000
proved successful as no interruptions in service to customers or disruptions of
normal business operations were experienced. Since inception of the company's
efforts in 1996, about $5.5 million has been incurred for hardware and software
modifications and replacements, internal information technology resources
devoted solely to the Year 2000 effort and outside consultants. Although the
company does not anticipate any issues relating to the year 2000 to arise, the
company maintains contingency plans to address scenarios that could still
emerge.
Other contingencies. The company is involved in legal or administrative
proceedings before various courts and agencies with respect to rates, taxes and
other matters. In addition, the company is conducting environmental
investigations and remedial activities at former manufactured gas plant sites.
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. For further information, see
Contingencies beginning on page 22.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
For disclosures about market risk, see Market Risk above, which is incorporated
herein by reference.
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Nicor Gas Company Page 11
Item 8. Financial Statements and Supplementary Data
Page
Report of Independent Public Accountants............................... 12
Financial Statements:
Consolidated Statement of Income................................... 13
Consolidated Statement of Cash Flows............................... 14
Consolidated Balance Sheet......................................... 15
Consolidated Statement of Capitalization........................... 16
Consolidated Statement of Retained Earnings........................ 17
Notes to the Consolidated Financial Statements..................... 18
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Nicor Gas Company Page 12
Report of Independent Public Accountants
To Northern Illinois Gas Company (Doing business as Nicor Gas Company):
We have audited the accompanying consolidated balance sheet and statement of
capitalization of Nicor Gas Company (an Illinois corporation and a wholly owned
subsidiary of Nicor Inc.) and subsidiary company as of December 31, 1999 and
1998, and the related consolidated statements of income, retained earnings and
cash flows for each of the three years in the period ended December 31, 1999.
These financial statements and the schedule referred to below are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements and the schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nicor Gas Company and
subsidiary company as of December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The financial statement schedule on page
25 is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Chicago, Illinois
January 27, 2000
Nicor Gas Company Page 13
- -------------------------------------------------------------------------------
Consolidated Statement of Income
(millions)
Year ended December 31
--------------------------------
1999 1998 1997
--------- --------- ---------
Operating revenues $ 1,326.2 $ 1,229.0 $ 1,730.5
--------- --------- ---------
Operating expenses
Cost of gas 756.2 681.5 1,129.0
Operating and maintenance 153.3 144.8 150.8
Depreciation 123.9 120.8 116.6
Taxes, other than income taxes 101.1 96.4 124.0
Income taxes 56.4 52.1 61.5
--------- --------- ---------
1,190.9 1,095.6 1,581.9
--------- --------- ---------
Operating income 135.3 133.4 148.6
--------- --------- ---------
Other income (expense)
Other, net (.9) 8.5 8.6
Income taxes on other income .5 (3.2) (3.2)
--------- --------- ---------
(.4) 5.3 5.4
--------- --------- ---------
Interest expense
Interest on debt, net of amounts capitalized 40.4 43.4 45.9
Other (1.6) 1.2 1.2
--------- --------- ---------
38.8 44.6 47.1
--------- --------- ---------
Net income 96.1 94.1 106.9
Dividends on preferred stock .4 .4 .4
--------- --------- ---------
Earnings applicable to common stock $ 95.7 $ 93.7 $ 106.5
========= ========= =========
The accompanying notes are an integral part of this statement.
Nicor Gas Company Page 14
- -------------------------------------------------------------------------------
Consolidated Statement of Cash Flows
(millions)
Year ended December 31
--------------------------------
1999 1998 1997
--------- --------- ---------
Operating activities
Net income $ 96.1 $ 94.1 $ 106.9
Adjustments to reconcile net income
to net cash flow provided from
operating activities:
Depreciation 123.9 120.8 116.6
Deferred income tax expense - 8.3 8.2
Changes in assets and liabilities:
Receivables, less allowances (80.4) 85.3 (17.8)
Gas in storage 83.4 22.3 3.8
Deferred/accrued gas costs (45.8) 4.8 76.2
Accounts payable .2 28.9 (77.5)
Postretirement benefits (16.5) (19.2) (7.9)
Other 10.0 (30.4) (4.2)
--------- --------- ---------
Net cash flow provided from
operating activities 170.9 314.9 204.3
--------- --------- ---------
Investing activities
Capital expenditures (127.4) (112.6) (101.8)
Other 1.7 8.4 10.8
--------- --------- ---------
Net cash flow used for investing activities (125.7) (104.2) (91.0)
--------- --------- ---------
Financing activities
Net proceeds from issuing long-term debt 99.5 98.9 99.1
Disbursements to retire long-term debt (155.7) (129.5) (77.6)
Short-term borrowings (repayments), net 88.3 (40.1) (29.6)
Dividends paid (98.1) (107.9) (109.1)
Other (.4) (.6) (.5)
--------- --------- ---------
Net cash flow used for financing activities (66.4) (179.2) (117.7)
--------- --------- ---------
Net increase (decrease) in cash
and cash equivalents (21.2) 31.5 (4.4)
Cash and cash equivalents, beginning of year 31.5 - 4.4
--------- --------- ---------
Cash and cash equivalents, end of year $ 10.3 $ 31.5 $ -
========= ========= =========
Supplemental information
Income taxes paid, net of refunds $ 57.3 $ 50.7 $ 56.1
Interest paid, net of amounts capitalized 40.0 61.2 47.3
The accompanying notes are an integral part of this statement.
Nicor Gas Company Page 15
- -------------------------------------------------------------------------------
Consolidated Balance Sheet
(millions)
December 31
--------------------
1999 1998
--------- ---------
Assets
Gas distribution plant, at cost $ 3,200.3 $ 3,105.2
Less accumulated depreciation 1,589.6 1,487.4
--------- ---------
1,610.7 1,617.8
--------- ---------
Current assets
Cash and cash equivalents - Affiliates - 29.2
- Other 10.3 2.3
Receivables, less allowance of $6.1 316.5 236.1
Gas in storage, at last-in, first-out cost 22.1 105.5
Deferred gas costs 15.9 -
Other 23.0 23.3
--------- ---------
387.8 396.4
--------- ---------
Other assets 138.7 111.2
--------- ---------
$ 2,137.2 $ 2,125.4
========= =========
Capitalization and liabilities
Capitalization
Long-term debt $ 421.7 $ 520.8
Preferred stock 8.5 9.0
Common equity 675.3 679.2
--------- ---------
1,105.5 1,209.0
--------- ---------
Current liabilities
Long-term obligations due within one year 50.5 .5
Short-term borrowings 302.8 214.5
Accounts payable 243.1 242.9
Accrued gas costs - 29.9
Other 49.1 47.0
--------- ---------
645.5 534.8
--------- ---------
Deferred credits and other liabilities
Deferred income taxes 202.3 196.2
Regulatory income tax liability 74.8 78.6
Unamortized investment tax credits 42.7 44.1
Other 66.4 62.7
--------- ---------
386.2 381.6
--------- ---------
$ 2,137.2 $ 2,125.4
========= =========
The accompanying notes are an integral part of this statement.
Nicor Gas Company Page 16
- -------------------------------------------------------------------------------
Consolidated Statement of Capitalization
(millions, except share data)
December 31
-------------------------------------
1999 1998
------------------ -----------------
First Mortgage Bonds
Maturity Interest rate
-------- ---------
2000 5.875% $ - $ 50.0
2001 6.45 75.0 75.0
2002 6.75 50.0 50.0
2003 5.75 50.0 50.0
2009 5.37 50.0 -
2021 8.875 50.0 50.0
2023 7.375 - 50.0
2024 8.25 - 50.0
2025 7.26 50.0 50.0
2027 7.375 50.0 50.0
2028 6.58 50.0 50.0
--------- ---------
425.0 525.0
Less: Unamortized debt discount,
net of premium 3.3 4.2
--------- ---------
421.7 38.2 % 520.8 43.1 %
--------- ---------
Other long-term debt
Notes payable due 2000, 5.065% 50.0 -
Less: Amount due within one year 50.0 -
--------- ---------
- - - -
--------- ---------
Preferred stock, cumulative, $100 par
value, 800,000 shares authorized
Redeemable preferred stock,
4.48% and 5.00% series, 54,000
and 22,000 shares outstanding,
respectively, in 1999, and 57,000
and 24,000 shares outstanding,
respectively, in 1998 7.6 8.1
Less: Amount due within one year .5 .5
--------- ---------
7.1 .6 7.6 .6
--------- ---------
Nonredeemable preferred stock,
4.60% and 5.00% convertible
series, 8,750 and 5,258 shares
outstanding, respectively 1.4 .1 1.4 .1
--------- ---------
Common equity
Common stock, $5 par value,
25,000,000 shares authorized,
32,365 shares reserved for conversion
and 15,232,414 shares outstanding 76.1 76.1
Paid-in capital 108.0 108.0
Retained earnings 491.2 495.1
--------- ---------
675.3 61.1 679.2 56.2
--------- ---- --------- ----
$ 1,105.5 100.0 % $ 1,209.0 100.0%
========= ======= ======== =======
The accompanying notes are an integral part of this statement.
Nicor Gas Company Page 17
- -------------------------------------------------------------------------------
Consolidated Statement of Retained Earnings
(millions)
Year ended December 31
--------------------------------
1999 1998 1997
--------- --------- ---------
Balance at beginning of year $ 495.1 $ 497.4 $ 498.4
Net income 96.1 94.1 106.9
Dividends declared on common stock (99.6) (96.0) (107.5)
Dividends declared on preferred stock (.4) (.4) (.4)
--------- --------- ---------
Balance at end of year $ 491.2 $ 495.1 $ 497.4
========= ========= =========
The accompanying notes are an integral part of this statement.
<PAGE>
Nicor Gas Company Page 18
Notes to the Consolidated Financial Statements
Nicor Gas is one of the nation's largest distributors of natural gas, serving
more than 1.9 million customers in a service territory that encompasses most of
the northern third of Illinois, excluding the city of Chicago.
ACCOUNTING POLICIES
General. Nicor Gas is a wholly owned subsidiary of Nicor Inc. Nicor Gas and its
affiliates reimburse each other for transactions between the companies.
Consolidation. The consolidated financial statements include the accounts of
Nicor Gas and its subsidiary. All significant intercompany balances and
transactions have been eliminated.
Use of estimates. The preparation of the financial statements requires
management to make estimates that affect reported amounts. Actual results could
differ from those estimates.
Reclassifications. Certain reclassifications have been made to conform the prior
years' financial statements to the current year's presentation.
Regulation. Nicor Gas is regulated by the ICC which establishes the rules and
regulations governing utility rates and services in Illinois. The company
applies accounting standards that recognize the economic effects of rate
regulation and, accordingly, has recorded regulatory assets and liabilities. The
company had net regulatory liabilities at December 31, 1999 and 1998 of about
$40 million and $95 million, respectively.
Operating revenues and gas costs. Operating revenues are recorded when gas is
delivered to customers. The cost of gas purchased, adjusted for inventory
activity, is reflected in volumetric charges to customers through operation of
the Uniform Purchased Gas Adjustment Clause (PGA). Any difference between PGA
revenues and recoverable gas costs is deferred or accrued with a corresponding
decrease or increase to cost of gas. This difference is amortized as it is
collected from or refunded to customers through the PGA.
Depreciation. Property, plant and equipment are depreciated over estimated
useful lives on a straight-line basis. The composite depreciation rate is 4.1
percent.
Income taxes. Deferred income taxes are provided for temporary differences
between the tax basis of an asset or liability and its reported amount in the
financial statements. Although the federal investment tax credit has been
eliminated, Nicor Gas continues to amortize prior deferred amounts to income
over the lives of the applicable properties.
Cash and cash equivalents. The company considers investments purchased with a
maturity of three months or less to be cash equivalents.
Receivable credit risk. The company has a diversified customer base and prudent
credit policies which mitigate risk.
<PAGE>
Nicor Gas Company Page 19
Notes to the Consolidated Financial Statements (continued)
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities. In June
1999, the FASB issued Statement No. 137, which deferred the effective date of
FASB Statement No. 133. Statement No. 133 requires that an entity recognize all
derivatives as either assets or liabilities on the balance sheet 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. Statement No. 133, as
amended, requires adoption no later than the first quarter of the company's 2001
fiscal year and must be adopted as a cumulative effect of a change in accounting
principle. The company plans to adopt this statement on January 1, 2001.
Implementation is not expected to have a material impact on the company's
financial condition or results of operations.
GAS IN STORAGE
Based on the average cost of gas purchased in December 1999 and 1998, the
estimated replacement cost of inventory at December 31, 1999 and 1998, exceeded
the last-in, first-out cost by $172.4 million and $159.1 million, respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The recorded amount of short-term borrowings approximates fair value because of
the short maturity of the instruments. Based on quoted market interest rates,
the recorded amount of long-term debt outstanding, including current maturities,
also approximates fair value.
SHORT- AND LONG-TERM DEBT
The company maintains short-term credit agreements with major domestic and
foreign banks. These agreements, which serve as backup for the issuance of
commercial paper, totaled $275 million at December 31, 1999. Commitment fees of
up to .07 percent per annum were paid on these lines. All credit agreements have
variable interest rate options tied to short-term markets.
The company had $275 million and $214.5 million of commercial paper outstanding
with a weighted average interest rate of 5.9 percent and 5.7 percent at December
31, 1999 and 1998, respectively.
Bank cash balances averaged about $1 million during 1999, which partially
compensated for the cost of maintaining accounts and other banking services.
Such demand balances may be withdrawn at any time.
First mortgage bonds are secured by liens on substantially all gas distribution
property.
<PAGE>
Nicor Gas Company Page 20
Notes to the Consolidated Financial Statements (continued)
INCOME TAXES
The components of income tax expense are presented below:
(millions) 1999 1998 1997
------------ ------------ ------------
Current
Federal $ 47.7 $ 40.3 $ 48.8
State 9.7 8.8 9.9
------------ ------------ ------------
57.4 49.1 58.7
------------ ------------ ------------
Deferred
Federal (.4) 6.5 6.0
State .4 1.8 2.2
------------ ------------ ------------
- 8.3 8.2
------------ ------------ ------------
Amortization of investment
tax credits, net (1.5) (2.1) (2.2)
------------ ------------ ------------
Income tax expense $ 55.9 $ 55.3 $ 64.7
============ ============ ============
The temporary differences which gave rise to the net deferred tax liability at
December 31, 1999 and 1998, are as follows:
(millions) 1999 1998
----------- -----------
Deferred tax liabilities
Property, plant and equipment $ 221.3 $ 230.1
Other 28.7 18.0
------------ ------------
250.0 248.1
------------ ------------
Deferred tax assets
Unamortized investment tax credits 27.8 29.0
Regulatory income tax liability 18.6 19.7
Other 15.9 15.6
------------ ------------
62.3 64.3
------------ ------------
Net deferred tax liability $ 187.7 $ 183.8
============ ============
The effective combined federal and state income tax rate was 36.8 percent, 37
percent and 37.7 percent in 1999, 1998 and 1997, respectively. Differences
between federal income taxes computed using the statutory rate and reported
income tax expense are shown below:
(millions) 1999 1998 1997
------------ ------------ ------------
Federal income taxes using
statutory rate $ 53.2 $ 52.3 $ 60.1
State income taxes, net 7.3 7.2 8.2
Other, net (4.6) (4.2) (3.6)
------------ ------------ ------------
Income tax expense $ 55.9 $ 55.3 $ 64.7
============ ============ ============
<PAGE>
Nicor Gas Company Page 21
Notes to the Consolidated Financial Statements (continued)
POSTRETIREMENT BENEFITS
Nicor Gas maintains noncontributory defined benefit pension plans covering
substantially all employees hired prior to January 1, 1998 and provides health
care and life insurance benefits to eligible retired employees. Certain
employees' postretirement health care benefits have been capped to a defined
annual per capita medical cost. The following table sets forth the components of
the changes in the plans' benefit obligations and assets for the years ended
October 1 and reconciles the October 1 funded status to the prepaid (accrued)
benefit cost recorded in the financial statements at December 31:
<TABLE>
<CAPTION>
Pension benefits Other benefits
-------------------------- -------------------------
(millions) 1999 1998 1999 1998
------------- ------------ ------------ ------------
Change in benefit obligation
<S> <C> <C> <C> <C>
Benefit obligation at beginning of $ 242.3 $ 223.9 $ 118.3 $ 115.0
period
Service cost 6.4 6.7 1.3 1.3
Interest cost 15.7 16.0 7.7 8.3
Actuarial (gain) loss (25.8) 18.5 (1.0) .9
Participant contributions - - .6 .7
Benefits paid (23.8) (22.8) (10.8) (7.9)
------------- ------------ ------------ ------------
Benefit obligation at end of period 214.8 242.3 116.1 118.3
------------- ------------ ------------ ------------
Change in plan assets
Fair value of plan assets at
beginning of period 401.7 422.6 16.6 16.6
Actual return on plan assets 67.1 1.5 2.8 -
Employer contributions .3 .4 10.2 7.2
Participant contributions - - .6 .7
Benefits paid (23.8) (22.8) (10.8) (7.9)
------------- ------------ ------------ ------------
Fair value of plan assets at end of 445.3 401.7 19.4 16.6
period
------------- ------------ ------------ ------------
Funded status 230.5 159.4 (96.7) (101.7)
Unrecognized net actuarial (gain) (119.0) (61.7) 3.9 6.4
loss
Unrecognized transition (asset) (8.6) (12.5) 40.2 43.2
obligation
Unrecognized prior service cost 3.0 3.3 - -
Other 4.7 3.2 (1.1) .8
------------- ------------ ------------ ------------
Prepaid (accrued) benefit cost $ 110.6 $ 91.7 $ (53.7) $ (51.3)
============= ============ ============ ============
Assumptions used in the computations included the following:
Pension benefits Other benefits
--------------------------- ---------------------------
1999 1998 1999 1998
------------- ------------- ------------- ------------
Discount rate 7.50% 6.75% 7.50% 6.75%
Expected return on plan assets 9.00 9.00 9.00 9.00
Rate of compensation increase 4.00 4.00 4.00 4.00
</TABLE>
<PAGE>
Nicor Gas Company Page 22
Notes to the Consolidated Financial Statements (continued)
For measurement purposes, the health care cost trend rate for pre-Medicare
benefits was assumed to be 7 percent for 2000, declining to 5 percent by 2004
and remaining at that level thereafter. The health care cost trend rate for
post-Medicare benefits was assumed to be 5 percent.
Net periodic benefit cost (credit) included the following components:
<TABLE>
<CAPTION>
Pension benefits Other benefits
---------------------------- ----------------------------
(millions) 1999 1998 1997 1999 1998 1997
--------- --------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 6.4 $ 6.7 $ 6.5 $ 1.3 $ 1.3 $ 1.7
Interest cost 15.7 16.0 17.6 7.7 8.3 8.3
Expected return on plan
assets (35.3) (35.1) (31.6) (1.6) (1.4) (1.2)
Recognized net actuarial gain (1.8) (4.7) (1.6) - - -
Amortization of unrecognized
transition (asset) obligation (3.8) (3.8) (3.8) 3.1 3.1 3.3
Amortization of prior service
cost .3 .4 .4 - - -
--------- --------- -------- --------- -------- --------
Net periodic benefit cost
(credit) $ (18.5) $ (20.5) $ (12.5) $ 10.5 $ 11.3 $ 12.1
========= ========= ======== ========= ======== ========
</TABLE>
Assumed health care cost trend rates can have a significant effect on the
amounts reported for the health care plans. A one-percentage-point change in the
assumed health care cost trend rates would have the following effects:
One-percent
-------------------------
(millions) Increase Decrease
----------- -----------
Effect on total of service and interest cost
components $ 1.1 $ (.9)
Effect on benefit obligation 12.0 (10.1)
REGULATORY MATTERS
On January 1, 2000, Nicor Gas' performance-based rate (PBR) plan for natural gas
costs went into effect. Under the PBR, Nicor Gas' total gas supply costs will be
compared to a benchmark tied to a market index. Savings and losses relative to
the benchmark will be shared equally with customers. At the end of two years,
the plan will be subject to ICC review.
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 more than 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, which
oversees the company's investigations and remedial actions. More detailed
investigations and remedial activities have either been completed, are in
progress or are being 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.
<PAGE>
Nicor Gas Company Page 23
Notes to the Consolidated Financial Statements (concluded)
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. Nicor Gas has reached a
settlement with one of the insurance carriers. In January 2000, the court stated
it would dismiss the company's case on summary judgment motions by certain
defendants. If dismissed by written order, the company plans to appeal.
Management cannot predict the outcome of the lawsuit against the remaining
insurance carriers. Any recoveries will be refunded 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.
QUARTERLY RESULTS (UNAUDITED)
Quarterly results fluctuate due mainly to the seasonal nature of the gas
distribution business.
Quarter ended
---------------------------------------------------
(millions) Mar. 31 June 30 Sept. 30 Dec. 31
------------ ------------ ------------ ------------
1999
Operating revenues $ 512.6 $ 203.4 $ 161.8 $ 448.3
Operating income 42.9 28.6 25.8 38.0
Net income 31.9 20.5 16.7 27.0
1998
Operating revenues $ 504.2 $ 214.8 $ 148.0 $ 362.0
Operating income 42.1 31.2 26.1 34.1
Net income 30.5 23.5 17.0 23.1
<PAGE>
Nicor Gas Company Page 24
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1) Financial Statements:
See Item 8, Financial Statements and Supplementary Data, on page 11
filed herewith, for a list of financial statements.
2) Financial Statement Schedules:
Schedule
Number Page
Report of Independent Public Accountants 12
II Valuation and Qualifying Accounts 25
Schedules other than those listed are omitted because they are not
applicable.
3) Exhibits Filed:
See Exhibit Index beginning on page 28 filed herewith.
(b) The company did not file a report on Form 8-K during the fourth quarter of
1999.
Nicor Gas Company Page 25
- -------------------------------------------------------------------------------
Schedule II
VALUATION AND QUALIFYING ACCOUNTS
(millions)
Additions
--------------------
Balance at Charged to Charged to Balance
beginning costs and other (a) at end
Description of period expenses accounts Deductions of period
- ------------------- -------- -------- -------- -------- --------
1999
- -------
Allowance
for uncollectible
accounts receivable $ 6.1 $ 11.8 $ - $ 11.8 $ 6.1
1998
- -------
Allowance
for uncollectible
accounts receivable $ 7.6 $ 12.6 $ - $ 14.1 $ 6.1
1997
- -------
Allowance
for uncollectible
accounts receivable $ 6.1 $ 15.3 $ - $ 13.8 $ 7.6
(a) Accounts receivable written off, net of recoveries.
<PAGE>
Nicor Gas Company Page 26
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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 March 20, 2000 By DAVID L. CYRANOSKI
------------------------- -----------------------------
David L. Cyranoski
Senior Vice President,
Secretary, Treasurer
and Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on March 20, 2000.
Signature Title
- --------------------------------------------- ---------------------------
THOMAS L. FISHER
- ---------------------------------------------
Thomas L. Fisher Chairman, President and
(Principal Executive Officer) Chief Executive Officer
KATHLEEN L. HALLORAN
- ---------------------------------------------
Kathleen L. Halloran Executive Vice President
(Principal Financial Officer) Finance and Administration
DAVID L. CYRANOSKI
- ---------------------------------------------
David L. Cyranoski Senior Vice President,
(Principal Accounting Officer) Secretary, Treasurer and
Controller
ROBERT M. BEAVERS, JR.* Director
BRUCE P. BICKNER* Director
JOHN H. BIRDSALL, III* Director
THOMAS A. DONAHOE* Director
DENNIS J. KELLER* Director
CHARLES S. LOCKE* Director
WILLIAM A. OSBORN* Director
SIDNEY R. PETERSEN* Director
JOHN RAU* Director
PATRICIA A. WIER* Director
* By MARIANNE T. LORENZ
Marianne T. Lorenz
(Attorney-in-fact)
Nicor Gas Company Page 27
Supplemental Information
Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act:
No annual report or proxy material has been sent to security holders as Nicor
Gas is a wholly owned subsidiary of Nicor Inc.
<PAGE>
Nicor Gas Company Page 28
Exhibit Index
Exhibit
Number Description of Document
3.01 * Articles of Incorporation of the company. (File No. 1-7296, Form 10-K for
1980, Exhibit 3-01.)
3.02 * Amendment to Articles of Incorporation of the company. (File No. 1-7296,
Form 10-Q for June 1994, Exhibit 3.01.)
3.03 * By-Laws of the company as amended by the company's Board of Directors on
May 3, 1995. (File No. 1-7296, Form 10-Q for March 1995, Exhibit 3(ii).01.)
4.01 * Indenture of Commonwealth Edison Company to Continental Illinois National
Bank and Trust Company of Chicago, Trustee, dated as of January 1, 1954. (File
No. 1-7296, Form 10-K for 1995, Exhibit 4.01.)
4.02 * Indenture of Adoption of the company to Continental Illinois National
Bank and Trust Company of Chicago, Trustee, dated February 9, 1954. (File No.
1-7296, Form 10-K for 1995, Exhibit 4.02.)
4.03 * Supplemental Indenture, dated June 1, 1963, of the company to Continental
Illinois National Bank and Trust Company of Chicago, Trustee, under Indenture
dated as of January 1, 1954. (File No. 2-21490, Form S-9, Exhibit 2-8.)
4.04 * Supplemental Indenture, dated May 1, 1966, of the company to Continental
Illinois National Bank and Trust Company of Chicago, Trustee, under Indenture
dated as of January 1, 1954. (File No. 2-25292, Form S-9, Exhibit 2-4.)
4.05 * Supplemental Indenture, dated June 1, 1971, of the company to Continental
Illinois National Bank and Trust Company of Chicago, Trustee, under Indenture
dated as of January 1, 1954. (File No. 2-44647, Form S-7, Exhibit 2-03.)
4.06 * Supplemental Indenture, dated April 30, 1976, between Nicor Inc. and
Continental Illinois National Bank and Trust Company of Chicago, Trustee, under
Indenture dated as of January 1, 1954. (File No. 2-56578, Form S-9, Exhibit
2-25.)
4.07 * Supplemental Indenture, dated April 30, 1976, of the company to
Continental Illinois National Bank and Trust Company of Chicago, Trustee, under
Indenture dated as of January 1, 1954. (File No. 2-56578, Form S-9, Exhibit
2-21.)
4.08 * Supplemental Indenture, dated August 15, 1991, of the company to
Continental Bank, National Association, Trustee, under Indenture dated as of
January 1, 1954. (File No. 1-7296, Form 8-K for August 1991, Exhibit 4-01.)
4.09 * Supplemental Indenture, dated October 15, 1995, of the company to Bank of
America Illinois, Trustee, under Indenture dated as of January 1, 1954. (File
No. 1-7296, Form 10-Q for September 1995, Exhibit 4.01.)
<PAGE>
Nicor Gas Company Page 29
Exhibit Index (continued)
Exhibit
Number Description of Document
4.10 * Supplemental Indenture, dated May 10, 1996, of the company to Harris
Trust and Savings Bank, Trustee, under Indenture dated as of January 1, 1954.
(File No. 1-7296, Form 10-Q for June 1996, Exhibit 4.01.)
4.11 * Supplemental Indenture, dated August 1, 1996, of the company to Harris
Trust and Savings Bank, Trustee, under Indenture dated as of January 1, 1954.
(File No. 1-7296, Form 10-Q for June 1996, Exhibit 4.02.)
4.12 * Supplemental Indenture, dated June 1, 1997, of the company to Harris
Trust and Savings Bank, Trustee, under Indenture dated as of January 1, 1954.
(File No. 1-7296, Form 10-Q for June 1997, Exhibit 4.01.)
4.13 * Supplemental Indenture, dated October 15, 1997, of the company to Harris
Trust and Savings Bank, Trustee, under Indenture dated as of January 1, 1954.
(File No. 1-7296, Form 10-Q for September 1997, Exhibit 4.01.)
4.14 * Supplemental Indenture, dated February 15, 1998, of the company to Harris
Trust and Savings Bank, Trustee, under Indenture dated as of January 1, 1954.
(File No. 1-7296, Form 10-K for 1997, Exhibit 4.19.)
4.15 * Supplemental Indenture, dated June 1, 1998, of the company to Harris
Trust and Savings Bank, Trustee, under Indenture dated as of January 1, 1954.
(File No. 1-7296, Form 10-Q for June 1998, Exhibit 4.01.)
4.16 * Supplemental Indenture, dated February 1, 1999, of the company to Harris
Trust and Savings Bank, Trustee, under Indenture dated as of January 1, 1954.
(File No. 1-7296, Form 10-K for 1998, Exhibit 4.19.)
Other debt instruments are omitted in accordance with Item 601(b)(4)(iii)(A) of
Regulation S-K. Copies of such agreements will be furnished to the Commission
upon request.
12.01 Computation of Consolidated Ratio of Earnings to Fixed Charges.
23.01 Consent of Independent Public Accountants.
24.01 Powers of Attorney.
<PAGE>
Nicor Gas Company Page 30
Exhibit Index (concluded)
Exhibit
Number Description of Document
27.01 Financial Data Schedule.
* These exhibits have been previously filed with the Securities and Exchange
Commission as exhibits to registration statements or to other filings with
the Commission and are incorporated herein as exhibits by reference. The
file number and exhibit number of each such exhibit, where applicable, are
stated, in parentheses, in the description of such exhibit.
Upon written request, the company will furnish free of charge a copy of any
exhibit. Requests should be sent to Investor Relations at the corporate
headquarters.
<TABLE>
Nicor Gas Company
Form 10-K
Exhibit 12.01
Nicor Gas Company
Computation of Consolidated Ratio of Earnings to Fixed Charges
(thousands)
<CAPTION>
Year ended December 31
- -----------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------
Earnings available to cover fixed charges:
<S> <C> <C> <C> <C> <C>
Net income $ 96,142 $ 94,119 $ 106,922 $ 107,106 $ 85,448
Add: Income taxes 55,896 55,299 64,714 63,579 49,881
Fixed charges 38,914 44,870 46,886 46,747 39,400
Allowance for funds
used during
construction (118) (269) (11) (5) (911)
--------- ---------- --------- ---------- ---------
$ 190,834 $ 194,019 $ 218,511 $ 217,427 $ 173,818
========= ========== ========= ========== =========
Fixed charges:
Interest on debt $ 39,245 $ 42,624 $ 45,246 $ 43,762 $ 38,129
Other interest charges
and amortization of
debt discount, premium,
and expense, net (331) 2,246 1,640 2,985 1,271
--------- ---------- --------- ---------- ---------
$ 38,914 $ 44,870 $ 46,886 $ 46,747 $ 39,400
========= ========== ========= ========== =========
Ratio of earnings to fixed
charges 4.90 4.32 4.66 4.65 4.41
========= ========== ========= ========== =========
</TABLE>
Nicor Gas Company
Form 10-K
Exhibit 23.01
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report, dated January 27, 2000, included in this Form 10-K,
into the company's previously filed Form S-3 Registration Statement in
connection with the Nicor Gas Company $225,000,000 First Mortgage Bond shelf
filing (No. 333-69135).
ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Chicago, Illinois
March 20, 2000
Nicor Gas Company
Form 10-K
Exhibit 24.01
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director, Officer, or Director and Officer of
Northern Illinois Gas Company (doing business as Nicor Gas Company), an Illinois
corporation, does hereby constitute and appoint D. L. CYRANOSKI and M. T.
LORENZ, and each of them, the undersigned's true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute in the name and on behalf of the undersigned as such Director,
Officer, or Director and Officer, the 1999 Annual Report on Form 10-K (and such
amendment or amendments thereto as may be necessary) to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, hereby granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and hereby ratifying and confirming all that such
attorneys and agents, or any of them, may do or cause to be done by virtue of
these presents.
IN WITNESS WHEREOF, I have hereunto signed this Power of Attorney this
20th day of January, 2000.
ROBERT M. BEAVERS, JR.
Robert M. Beavers, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director, Officer, or Director and Officer of
Northern Illinois Gas Company (doing business as Nicor Gas Company), an Illinois
corporation, does hereby constitute and appoint D. L. CYRANOSKI and M. T.
LORENZ, and each of them, the undersigned's true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute in the name and on behalf of the undersigned as such Director,
Officer, or Director and Officer, the 1999 Annual Report on Form 10-K (and such
amendment or amendments thereto as may be necessary) to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, hereby granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and hereby ratifying and confirming all that such
attorneys and agents, or any of them, may do or cause to be done by virtue of
these presents.
IN WITNESS WHEREOF, I have hereunto signed this Power of Attorney this
20th day of January, 2000.
BRUCE P. BICKNER
Bruce P. Bickner
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director, Officer, or Director and Officer of
Northern Illinois Gas Company (doing business as Nicor Gas Company), an Illinois
corporation, does hereby constitute and appoint D. L. CYRANOSKI and M. T.
LORENZ, and each of them, the undersigned's true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute in the name and on behalf of the undersigned as such Director,
Officer, or Director and Officer, the 1999 Annual Report on Form 10-K (and such
amendment or amendments thereto as may be necessary) to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, hereby granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and hereby ratifying and confirming all that such
attorneys and agents, or any of them, may do or cause to be done by virtue of
these presents.
IN WITNESS WHEREOF, I have hereunto signed this Power of Attorney this
20th day of January, 2000.
JOHN H. BIRDSALL, III
John H. Birdsall, III
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director, Officer, or Director and Officer of
Northern Illinois Gas Company (doing business as Nicor Gas Company), an Illinois
corporation, does hereby constitute and appoint D. L. CYRANOSKI and M. T.
LORENZ, and each of them, the undersigned's true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute in the name and on behalf of the undersigned as such Director,
Officer, or Director and Officer, the 1999 Annual Report on Form 10-K (and such
amendment or amendments thereto as may be necessary) to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, hereby granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and hereby ratifying and confirming all that such
attorneys and agents, or any of them, may do or cause to be done by virtue of
these presents.
IN WITNESS WHEREOF, I have hereunto signed this Power of Attorney this
20th day of January, 2000.
THOMAS A. DONAHOE
Thomas A. Donahoe
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director, Officer, or Director and Officer of
Northern Illinois Gas Company (doing business as Nicor Gas Company), an Illinois
corporation, does hereby constitute and appoint D. L. CYRANOSKI and M. T.
LORENZ, and each of them, the undersigned's true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute in the name and on behalf of the undersigned as such Director,
Officer, or Director and Officer, the 1999 Annual Report on Form 10-K (and such
amendment or amendments thereto as may be necessary) to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, hereby granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and hereby ratifying and confirming all that such
attorneys and agents, or any of them, may do or cause to be done by virtue of
these presents.
IN WITNESS WHEREOF, I have hereunto signed this Power of Attorney this
20th day of January, 2000.
DENNIS J. KELLER
Dennis J. Keller
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director, Officer, or Director and Officer of
Northern Illinois Gas Company (doing business as Nicor Gas Company), an Illinois
corporation, does hereby constitute and appoint D. L. CYRANOSKI and M. T.
LORENZ, and each of them, the undersigned's true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute in the name and on behalf of the undersigned as such Director,
Officer, or Director and Officer, the 1999 Annual Report on Form 10-K (and such
amendment or amendments thereto as may be necessary) to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, hereby granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and hereby ratifying and confirming all that such
attorneys and agents, or any of them, may do or cause to be done by virtue of
these presents.
IN WITNESS WHEREOF, I have hereunto signed this Power of Attorney this
20th day of January, 2000.
CHARLES S. LOCKE
Charles S. Locke
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director, Officer, or Director and Officer of
Northern Illinois Gas Company (doing business as Nicor Gas Company), an Illinois
corporation, does hereby constitute and appoint D. L. CYRANOSKI and M. T.
LORENZ, and each of them, the undersigned's true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute in the name and on behalf of the undersigned as such Director,
Officer, or Director and Officer, the 1999 Annual Report on Form 10-K (and such
amendment or amendments thereto as may be necessary) to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, hereby granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and hereby ratifying and confirming all that such
attorneys and agents, or any of them, may do or cause to be done by virtue of
these presents.
IN WITNESS WHEREOF, I have hereunto signed this Power of Attorney this
20th day of January, 2000.
WILLIAM A. OSBORN
William A. Osborn
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director, Officer, or Director and Officer of
Northern Illinois Gas Company (doing business as Nicor Gas Company), an Illinois
corporation, does hereby constitute and appoint D. L. CYRANOSKI and M. T.
LORENZ, and each of them, the undersigned's true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute in the name and on behalf of the undersigned as such Director,
Officer, or Director and Officer, the 1999 Annual Report on Form 10-K (and such
amendment or amendments thereto as may be necessary) to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, hereby granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and hereby ratifying and confirming all that such
attorneys and agents, or any of them, may do or cause to be done by virtue of
these presents.
IN WITNESS WHEREOF, I have hereunto signed this Power of Attorney this
20th day of January, 2000.
SIDNEY R. PETERSEN
Sidney R. Petersen
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director, Officer, or Director and Officer of
Northern Illinois Gas Company (doing business as Nicor Gas Company), an Illinois
corporation, does hereby constitute and appoint D. L. CYRANOSKI and M. T.
LORENZ, and each of them, the undersigned's true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute in the name and on behalf of the undersigned as such Director,
Officer, or Director and Officer, the 1999 Annual Report on Form 10-K (and such
amendment or amendments thereto as may be necessary) to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, hereby granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and hereby ratifying and confirming all that such
attorneys and agents, or any of them, may do or cause to be done by virtue of
these presents.
IN WITNESS WHEREOF, I have hereunto signed this Power of Attorney this
20th day of January, 2000.
JOHN RAU
John Rau
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, a Director, Officer, or Director and Officer of
Northern Illinois Gas Company (doing business as Nicor Gas Company), an Illinois
corporation, does hereby constitute and appoint D. L. CYRANOSKI and M. T.
LORENZ, and each of them, the undersigned's true and lawful attorneys and
agents, each with full power and authority (acting alone and without the other)
to execute in the name and on behalf of the undersigned as such Director,
Officer, or Director and Officer, the 1999 Annual Report on Form 10-K (and such
amendment or amendments thereto as may be necessary) to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, hereby granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and hereby ratifying and confirming all that such
attorneys and agents, or any of them, may do or cause to be done by virtue of
these presents.
IN WITNESS WHEREOF, I have hereunto signed this Power of Attorney this
20th day of January, 2000.
PATRICIA A. WIER
Patricia A. Wier
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME, THE CONSOLIDATED BALANCE SHEET, THE
CONSOLIDATED STATEMENT OF CAPITALIZATION, THE CONSOLIDATED STATEMENT OF RETAINED
EARNINGS 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> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,611
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 388
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 138
<TOTAL-ASSETS> 2,137
<COMMON> 76
<CAPITAL-SURPLUS-PAID-IN> 108
<RETAINED-EARNINGS> 491
<TOTAL-COMMON-STOCKHOLDERS-EQ> 675
8
1
<LONG-TERM-DEBT-NET> 422
<SHORT-TERM-NOTES> 28
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 275
<LONG-TERM-DEBT-CURRENT-PORT> 50
1
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 677
<TOT-CAPITALIZATION-AND-LIAB> 2,137
<GROSS-OPERATING-REVENUE> 1,326
<INCOME-TAX-EXPENSE> 56
<OTHER-OPERATING-EXPENSES> 1,135
<TOTAL-OPERATING-EXPENSES> 1,191
<OPERATING-INCOME-LOSS> 135
<OTHER-INCOME-NET> 0
<INCOME-BEFORE-INTEREST-EXPEN> 135
<TOTAL-INTEREST-EXPENSE> 39
<NET-INCOME> 96
0
<EARNINGS-AVAILABLE-FOR-COMM> 96
<COMMON-STOCK-DIVIDENDS> 100
<TOTAL-INTEREST-ON-BONDS> 34
<CASH-FLOW-OPERATIONS> 171
<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>
