SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: March 11, 1998
SEMCO Energy, Inc.
(formerly Southeastern Michigan Gas Enterprises, Inc.)
(Exact name of registrant as specified in its charter)
Michigan 0-8503 38-2144267
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
405 Water Street, Port Huron, Michigan 48060
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 810-987-2200
<PAGE>
Item 5. Other Events.
Accompanying (Exhibit 99) is a press release issued yesterday.
Item 7.(c) Exhibits.
99 Press Release.
SIGNATURES
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.
SEMCO Energy, Inc.
(Registrant)
Dated: March 11, 1998 By: William L. Johnson
President and C.E.O.
<PAGE>
EXHIBIT INDEX
Form 8-K
March 11, 1998
Filed
--------------------
Exhibit By
No. Description Herewith Reference
- -------- ----------- -------- ---------
99 Press Release dated March 10, 1998. x
Exhibit 99
SEMCO ENERGY NEWS
405 Water Street, Port Huron, MI 48060 RELEASE
FOR IMMEDIATE RELEASE
Contact: Edric R. Mason, Jr.
Phone: (810) 989-4104
FAX: (810) 989-4098
SEMCO ENERGY RELEASES 1997 EARNINGS
Port Huron, MI, March 10 -- SEMCO ENERGY, Inc. reported
earnings for 1997 of $14.9 million or $1.14 per share, compared
to a restated net loss of ($12.8) million or ($0.98) per share
for 1996.
"Our Management and employee teams deserve congratulations
for the achievements of the past year. Every member of our
Company is challenged by the direction set by our Strategic Plan
- --Focus 2000, and it has led to the realization of strategic
gains, operational improvements of many types and good results,"
said William L. Johnson, Chairman of the Board, President and
Chief Executive Officer.
SEMCO ENERGY, Inc., is in a transition period as it
repositions itself with a new strategic direction and a goal of
becoming a company with much stronger revenue and earnings growth
than realized in the past. In connection with this transition, a
number of strategic initiatives and policy and procedure
enhancements have been undertaken. Because some of these
efforts have had impact on earnings, identification of these
special items help to better understand the normal operating
results of the Company. Listed below are special items which
occurred in 1997 and 1996 as well as an adjustment to reflect
normal weather:
in millions, after-tax
-----------------------
1997 1996
(Restated)
------ ----------
Earnings based on normal weather
and excluding special items (*) $11.3 $ 7.6
Reserve for NOARK investment (21.0)
Adjustment to NOARK reserve 5.0
Management reorganization costs ( 0.8) ( 0.6)
Cost for policy and systems
enhancement at ENERGY SERVICES ( 0.3)
Costs related to the rate case,
corporate name change and the
phase-out of the appliance
sales business ( 0.3)
Colder than normal weather 1.2
------ ----------
Subtotal - Special items and weather $ 3.6 ($20.4)
------ ----------
Reported earnings $14.9 ($12.8)
====== ==========
*The increase from 1996 to 1997 is primarily due to the change
in operating performance at ENERGY SERVICES and 1996 operating
losses on the NOARK investment.
Fourth quarter 1997 earnings were $8.4 million or $.64 per
share compared to the restated fourth quarter 1996 net loss of
($16.9) million or ($1.30) per share. In the fourth quarter of
1996, the Company accrued a reserve of $21 million after-tax
related to its NOARK investment. In anticipation of the sale of
its NOARK interest, the Company adjusted this reserve in the
fourth quarter of 1997 adding $5 million to net income.
Excluding the impact of the two NOARK items recorded in the
fourth quarter of each year, earnings for the fourth quarter of
1997 were $3.4 million or $.26 per share compared to restated
earnings of $4.1 million or $.31 per share for the fourth
quarter of 1996. The restatement of earnings for the year 1996
reflects the corrections discussed below.
Earnings Restatement
During 1997, the Company began an effort to enhance policies
and procedures for trading activities at ENERGY SERVICES. These
changes include stricter requirements for transaction
confirmation and for account and transaction reconciliation. A
new management team determined during the closing of the
accounting records for 1997 that certain transactions were
incorrectly recorded. The financial impact has been quantified
based upon work completed by the Company, outside consultants
and its independent auditors. The corrections resulted in a
$0.9 million after-tax charge to fourth quarter 1997 earnings
and a $3.8 million reduction of previously reported 1996
earnings. The adjustments related to corrections of: margin on
some sales, gas in storage amounts, and various other items.
Johnson said that the accounting adjustments will not impact
the Company's dividend policy. The Company has had 41 years of
uninterrupted cash dividends and 15 consecutive years of annual
stock dividends. He further indicated that new systems and
stricter controls are now in place to prevent a reoccurrence of
these errors.
New Management Team/Organization Changes
In the fourth quarter of 1997, Robert A. Stone was named
Vice President and Chief Operating Officer of SEMCO ENERGY
SERVICES, Inc. Stone came to the Company in 1996 after working
eight years with Western Resources, Inc. and 20 years at Michigan
Consolidated Gas Company.
More recently, Kurt A. Angermeier was named Vice President
and Chief Accounting Officer of SEMCO ENERGY SERVICES, Inc. and
SEMCO ENERGY VENTURES, Inc. Angermeier was Treasurer of SEMCO
ENERGY GAS COMPANY and has been an employee of the Company for
20 years.
"We continue to implement our strategic plan. Profitable
acquisitions, reduction of debt, greater financial strength and
higher earnings are the focus of our strategy. These items
along with improved services for customers and opportunities for
our employees will grow shareholder value in the years ahead,"
said Johnson.
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