Form U-3A-2
File No. 69-232
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT BY HOLDING COMPANY CLAIMING EXEMPTION
UNDER RULE U-3A-2 FROM THE PROVISIONS OF THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
SEMCO Energy, Inc. hereby files with the Securities and Exchange
Commission, pursuant to Rule 2, its statement claiming exemption as a holding
company from the provisions of the Public Utility Holding Company Act of 1935
and submits the following information:
1. Claimant - SEMCO Energy, Inc.
405 Water Street
Port Huron, Michigan 48060
State of organization - Michigan
Nature of business - Holding Company
All subsidiaries (both first and second tier) are
incorporated in Michigan.
Subsidiaries - SEMCO Energy Gas Company
2915 Lapeer Road
Port Huron, Michigan 48060
Nature of business - Purchase, distribution, sale, and
transport of natural gas to residential, commercial and
industrial customers in several service areas,
including in and about Port Huron in southeastern
Michigan, in and about Albion in south-central
Michigan, the southwest portion of lower Michigan, the
central and western area of the upper peninsula of
Michigan and in and about Battle Creek, Michigan. The
Company's general offices are located in Port Huron.
Also sells propane through a subsidiary.
SEMCO Energy Services, Inc.
405 Water Street
Port Huron, Michigan 48060
State of organization - Michigan
-1-
<PAGE>
Nature of business - Primarily markets natural gas to
approximately 150 customers located in several states.
Its customers include industrial, commercial and
municipal natural gas users, natural gas distribution
companies and other marketers.
SEMCO Energy Ventures, Inc.
405 Water Street
Port Huron, Michigan 48060
State of organization - Michigan
Nature of business - An asset-based company with
investments in many segments of the natural gas
industry. Ventures operates pipeline engineering and
qulaity assurance services, construction services,
propane distribution, intrastate pipelines and natural
gas storage businesses.
At 12/31/98 Ventures had the following wholly-owned
subsidiaries:
Hotflame Gas, Inc.
King Energy & Construction Co.
Maverick Pipeline Services, Inc.
Oilfield Materials Consultants, Inc.
SEMCO Arkansas Pipeline Company
SEMCO Energy Construction Co.
SEMCO Gas Storage Company
SEMCO Gathering Company
SEMCO Pipeline Company
Southeastern Development Company (SEDCO)
Southeastern Financial Services, Inc. (SFS)
Sub-Surface Construction Co.
Utility Construction Services, Inc.
Hotflame Gas, Inc. sells propane to residential and
commercial customers in the upper peninsula of
Michigan.
King Energy & Construction Co. provides underground gas
distribution pipeline construction services.
Maverick Pipeline Services, Inc. provides engineering
and design services with full project management mainly
in the natural gas utility industry.
Oilfield Materials Consultants, Inc. is a consulting
and quality assurance/quality control company serving
the natural gas, oil transmission and
exploration/production industry.
SEMCO Arkansas Pipeline Company formerly held a general
partnership interest in a partnership which operates a
pipeline crossing northern Arkansas.
-2-
<PAGE>
SEMCO Energy Construction Co. has no assets at this
time.
SEMCO Gas Storage Company holds an equity interest in a
natural gas storage system located in Michigan.
SEMCO Gathering Company has no assets at this time.
SEMCO Pipeline Company principally holds investments in
various transmission pipelines located in Michigan.
Southeastern Development Company holds real property
and related improvements held for resale and office
properties leased to affiliates and third parties.
Southeastern Financial Services, Inc. leases vehicles
and data processing equipment primarily to affiliates.
Sub-Surface Construction Co. provides underground gas
distribution pipeline construction services.
Utility Construction Services, Inc. has no assets at
this time.
2. Properties of Claimant and Subsidiary Public Utility Companies.
(a) Claimant (SEMCO Energy, Inc.) -
The total properties of the Claimant consist of the Common Stock
of SEMCO Energy Gas Gas Company, SEMCO Energy Services, Inc., SEMCO
Energy Ventures, Inc., leasehold improvements and office equipment.
(b) Subsidiaries
SEMCO Energy Gas Company
SEMCO Energy Gas Company owns gas supply systems which include
approximately 151 miles of transmission pipelines and 5,170 miles of
distribution pipelines. The pipelines are located in southeastern
Michigan (centered in and around the City of Port Huron) and
south-central Michigan (centered in and around the City of Albion),
the southwest portion of Michigan's lower peninsula and the central
and western areas of Michigan's upper peninsula.
SEMCO Energy Gas Company's underground storage system consists of
eight salt caverns, a depleted oil field and a depleted gas field,
located in St. Clair County, Michigan, and the Battle Creek, Michigan,
areas, together with dehydration, measuring, compressor and
transmission facilities. The aggregate working capacity of the system
is approximately 5.0 billion cubic feet (Bcf), with a capacity to
deliver 86 million cubic feet (MMcf) on a peak day. Underground
storage services are provided to others on a short-term basis,
depending on available capacity.
SEMCO Energy Gas Company also owns meters and service lines, gas
regulating and metering stations, garages, warehouses and other
buildings necessary and useful in the conduct of its business. The
Company leases computer and transportation equipment.
-3-
<PAGE>
SEMCO Energy Gas Company's distribution system and service lines
are, for the most part, located on or under public streets, alleys,
highways, and other public places, or on private property not owned by
SEMCO Energy Gas Company with permission or consent, except to an
inconsequential extent, of the individual owners. SEMCO Energy Gas
Company's mains and distribution system located on or under public
streets, alleys, highways, and other public places were all installed
under valid rights and consents granted by appropriate local
authorities.
All of SEMCO Energy Gas Company's properties are located in the State
of Michigan.
3. The following information is submitted for the calendar year 1998 with
respect to the Claimant and its subsidiary public utility company:
<TABLE>
<CAPTION>
Claimant Subsidiary
(SEMCO Energy, Inc.) SEMCO Energy Gas Company
<S> <C> <C>
(a) Mcf of Natural or manufactured gas
distributed at retail None Michigan
32,200,000 Mcf
$166,700,000
(b) Mcf of natural or manufactured gas
distributed at retail outside of the
State in which each company is organized None None
(c) Mcf of natural or manufactured gas sold at
wholesale outside the State in which each
company is organized or at the State line None None
(d) Mcf of natural or manufactured gas
purchased outside the State in which each
company is organized or at the State line None State Line
32,150,000 Mcf
$109,200,000
</TABLE>
4. Not Applicable.
EXHIBIT A - FINANCIAL STATEMENTS
A consolidating statement of income and surplus of the Claimant and
its subsidiary companies for the last calendar year, together with a
consolidating balance sheet of Claimant and its subsidiary companies as of
the close of such calendar year accompanies this filing.
EXHIBIT B - FINANCIAL DATA SCHEDULE
Financial Data Schedule showing consolidated Total Assets, Total
Operating Revenues and Net Income.
-4-
<PAGE>
EXHIBIT C
Not applicable.
The above-named Claimant has caused this statement to be duly executed
on its behalf by its authorized officer on this 24th day of February, 1999.
SEMCO ENERGY, INC.
(Name of Claimant)
By /s/Sebastian Coppola
Sebastian Coppola
Senior Vice President and C.F.O.
Corporate Seal
Attest:
/s/Sherry L. Abbott
Sherry L. Abbott, Secretary
Name, title, and address of officer to whom notices and correspondence
concerning this statement should be addressed:
Sebastian Coppola Senior Vice President and C.F.O.
(Name) (Title)
405 Water Street, Port Huron, Michigan 48060
(Address)
-5-
<PAGE>
Exhibit A
<TABLE>
SEMCO ENERGY, INC.
CONSOLIDATED AND CONSOLIDATING INCOME STATEMENT
DECEMBER 1998
(Unaudited Statement)
<CAPTION>
TWELVE MONTHS TO DATE SEMCO SEMCO SEMCO
--------------------- ENERGY GAS ENERGY ENERGY
1998 ELIM. PARENT COMPANY SERVICES VENTURES
------------ ------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUE:
Gas sales revenue
Residential $118,219,673 $ 0 $ 0 $118,219,673 $ 0 $ 0
Commercial 42,040,625 0 0 42,040,625 0 0
Industrial 6,439,279 0 0 6,439,279 0 0
------------ ------------ ----------- ------------ ------------ ------------
$166,699,577 $ 0 $ 0 $166,699,577 $ 0 $ 0
Gas marketing 392,788,872 (7,070,887) 0 0 397,887,650 1,972,109
Transportation 14,832,065 0 0 14,832,065 0 0
Other operations 63,164,371 (10,278,527) 0 2,689,894 0 70,753,004
------------ ------------ ----------- ------------ ------------ ------------
Total Operating Revenue $637,484,885 $(17,349,414) $ 0 $184,221,536 $397,887,650 $ 72,725,113
------------ ------------ ----------- ------------ ------------ ------------
OPERATING EXPENSES:
Cost of Gas Sold $109,388,153 $ 0 $ 0 $109,388,153 $ 0 $ 0
Cost of Gas Marketed 387,608,567 (7,070,887) 0 0 393,761,978 917,476
Operations 89,481,749 (10,278,527) 476,599 29,558,454 4,783,887 64,941,336
Maintenance 2,295,805 0 133 2,292,046 3,626 0
Depreciation 15,349,131 0 221 12,109,969 43,952 3,194,990
Income Taxes 2,833,336 3,977,631 (5,070,009) 4,069,752 (517,510) 373,472
Taxes Other Than Income 9,166,189 0 504 8,509,468 (9,713) 665,930
------------ ------------ ----------- ------------ ------------ ------------
$616,122,930 $(13,371,783) $(4,592,552) $165,927,842 $398,066,220 $ 70,093,204
------------ ------------ ----------- ------------ ------------ ------------
OPERATING INCOME: $ 21,361,955 $ (3,977,631) $ 4,592,552 $ 18,293,694 $ (178,570) $ 2,631,909
Other Income (Loss), Net
Non-Operating Income $ 7,900,217 $(11,468,028) $11,116,676 $ 1,756,370 $ 106,665 $ 6,388,534
Non-Operating Expenses 2,016,636 0 0 2,016,636 0 0
Other Income Taxes 3,487,271 (3,977,631) 3,737,790 (18,295) 13,621 3,731,786
------------ ------------ ----------- ------------ ------------ ------------
$ 2,396,310 $ (7,490,397) $ 7,378,886 $ (241,971) $ 93,044 $ 2,656,748
------------ ------------ ----------- ------------ ------------ ------------
Income Before Income Deductions $ 23,758,265 $(11,468,028) $11,971,438 $ 18,051,723 $ (85,526) $ 5,288,657
------------ ------------ ----------- ------------ ------------ ------------
INCOME DEDUCTIONS:
Interest on Long-Term Debt $ 11,487,618 $ (4,374,000) $11,110,274 $ 4,751,344 $ 0 $ 0
Other Interest 2,873,332 (7,094,028) 2,547,515 4,729,395 875,407 1,815,042
Amortization of Debt Expense 449,825 0 105,347 344,478 0 0
Dividends on Pref. Stock of LDCs 178,008 0 0 178,008 0 0
------------ ------------ ----------- ------------ ------------ ------------
$ 14,988,783 $(11,468,028) $13,763,136 $ 10,003,225 $ 875,407 $ 1,815,042
------------ ------------ ----------- ------------ ------------ ------------
Net Income Before Preferred
Dividends and Other $ 8,769,482 $ 0 $(1,791,698) $ 8,048,498 $ (960,933) $ 3,473,615
Equity Earnings of Subsidiaries 0 (14,394,107) 14,394,107 0 0 0
Dividends on Conv. Preferred 14,653 0 14,653 0 0 0
------------ ------------ ----------- ------------ ------------ ------------
Net Income Before Accounting
Change and Extraordinary Item $ 8,754,829 $(14,394,107) $12,587,756 $ 8,048,498 $ (960,933) $ 3,473,615
Change in Accounting Method 1,783,707 0 0 1,783,707 0 0
Extraordinary Item (498,958) 0 (498,958) 0 0 0
------------ ------------ ----------- ------------ ------------ ------------
Net Income for Common $ 10,039,578 $(14,394,107) $12,088,798 $ 9,832,205 $ (960,933) $ 3,473,615
============ ============ =========== ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
SEMCO ENERGY, INC.
CONSOLIDATED AND CONSOLIDATING BALANCE SHEET
DECEMBER 1998
(Unaudited Statement)
<CAPTION>
SEMCO SEMCO SEMCO
ENERGY GAS ENERGY ENERGY
ASSETS 1998 ELIMINATIONS PARENT COMPANY SERVICES VENTURES
------ ------------ ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
UTILITY PLANT:
Plant in Service, at Cost $379,223,938 $ 0 $ 0 $362,914,464 $ 0 $16,309,474
Construction Work in Progress 743,137 0 0 743,137 0 0
------------ ------------- ------------ ------------ ----------- -----------
$379,967,075 $ 0 $ 0 $363,657,601 $ 0 $16,309,474
Less-Accumulated Depreciation 112,594,650 0 0 107,786,858 0 4,807,792
------------ ------------- ------------ ------------ ----------- -----------
Net Utility Plant $267,372,425 $ 0 $ 0 $255,870,743 $ 0 $11,501,682
------------ ------------- ------------ ------------ ----------- -----------
OTHER PROPERTY, NET:
Other Property, Gross $ 28,402,565 $ 0 $ 1,735,949 $ 855,758 $ 104,000 $25,706,858
Less-Accumulated Depreciation 5,536,763 0 997,629 235,196 0 4,303,938
------------ ------------- ------------ ------------ ----------- -----------
$ 22,865,802 $ 0 $ 738,320 $ 620,562 $ 104,000 $21,402,920
------------ ------------- ------------ ------------ ----------- -----------
CURRENT ASSETS:
Cash $ 4,952,581 $ 0 $ 825,436 $ 165,016 $ 50,667 $ 3,911,462
Accounts receivable:
Accounts Rec. - Non-Affiliate $ 31,569,755 $ (2,771,508) $ 0 $ 20,280,663 $ 4,056,539 $10,004,061
Accounts Rec. - Affiliate (1) 34,082 (1,165,441) 342,614 96,085 692,659
Less-Reserve for Uncollectibles 631,530 0 0 501,684 70,270 59,576
------------ ------------- ------------ ------------ ----------- -----------
$ 30,938,224 $ (2,737,426) $ (1,165,441) $ 20,121,593 $ 4,082,354 $10,637,144
Notes Receivable Affiliate $ 65,230 $(205,333,569) $205,398,799 $ 0 $ 0 $ 0
Accrued Utility Revenue 60,914,918 0 0 16,432,613 44,507,682 (25,377)
Materials and Supplies 2,191,010 0 0 2,191,010 0 0
Gas in Storage 38,526,347 (1,148,545) 0 30,687,152 8,879,462 108,278
Prepaid Property Taxes 4,860,480 0 24,024 4,780,986 55,292 178
Prepayments 9,045,139 0 987,884 640,706 7,173,460 243,089
Other Current Assets 11,555,671 1,148,545 0 10,325,748 0 81,378
------------ ------------- ------------ ------------ ----------- -----------
Total Current Assets $163,049,600 $(208,070,995) $206,070,702 $ 85,344,824 $64,748,917 $14,956,152
INVESTMENT IN SUBSIDIARIES:
SEMCO Energy Gas Company $ 0 $(110,784,877) $110,784,877 $ 0 $ 0 $ 0
SEMCO Energy Services, Inc. 0 (1,165,749) 1,165,749 0 0 0
SEMCO Energy Ventures, Inc. 0 (22,926,819) 22,926,819 0 0 0
------------ ------------- ------------ ------------ ----------- -----------
$ 0 $(134,877,445) $134,877,445 $ 0 $ 0 $ 0
DEFERRED CHARGES:
Unamortized Debt Expense $ 5,619,135 $ 0 $ 1,113,625 $ 4,505,510 $ 0 $ 0
Deferred Gas Charges 9 0 0 9 0 0
Advances to Equity Investees 0 0 0 0 0 0
Other Deferred Charges 30,754,943 0 1,004,297 13,250,033 163,999 16,336,614
------------ ------------- ------------ ------------ ----------- -----------
$ 36,374,087 $ 0 $ 2,117,922 $ 17,755,552 $ 163,999 $16,336,614
TOTAL ASSETS $489,661,914 $(342,948,440) $343,804,389 $359,591,681 $65,016,916 $64,197,368
============ ============= ============ ============ =========== ===========
</TABLE>
<PAGE>
<TABLE>
SEMCO ENERGY, INC.
CONSOLIDATED AND CONSOLIDATING BALANCE SHEET
DECEMBER 1998
(Unaudited Statement)
<CAPTION>
SEMCO SEMCO SEMCO
STOCKHOLDERS' INVESTMENT ENERGY GAS ENERGY ENERGY
AND LIABILITIES 1998 ELIMINATIONS PARENT COMPANY SERVICES VENTURES
------------------------ ------------ ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCK EQUITY:
Common stock, par $1 $ 17,382,229 $ (7,929,331) $ 17,382,229 $ 7,477,130 $ 0 $ 452,201
Capital surplus 116,662,647 (103,402,933) 116,662,648 72,106,684 4,100,000 27,196,248
Retained earnings (1,817,195) (23,545,181) (1,817,196) 31,201,063 (2,934,251) (4,721,630)
------------ ------------- ------------ ------------ ----------- -----------
$132,227,681 $(134,877,445) $132,227,681 $110,784,877 $ 1,165,749 $22,926,819
------------ ------------- ------------ ------------ ----------- -----------
Cumulative Conv. Preferred Equity $ 155,450 $ 0 $ 155,450 $ 0 $ 0 $ 0
Cumul. Preferred Stock of SEGC $ 3,100,000 $ 0 $ 0 $ 3,100,000 $ 0 $ 0
LONG TERM DEBT:
Long-term debt $170,000,000 $ (54,000,000) $170,000,000 $ 54,000,000 $ 0 $ 0
Capital lease obligations 0 0 0 0 0 0
------------ ------------- ------------ ------------ ----------- -----------
$170,000,000 $ (54,000,000) $170,000,000 $ 54,000,000 $ 0 $ 0
------------ ------------- ------------ ------------ ----------- -----------
Total Capitalization $305,483,131 $(188,877,445) $302,383,131 $167,884,877 $ 1,165,749 $22,926,819
------------ ------------- ------------ ------------ ----------- -----------
CURRENT LIABILITIES:
Cur. Maturities of Long-term debt $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Notes Payable Nonaffiliates 63,575,670 0 44,792,158 15,000,000 0 3,783,512
Notes Payable Affililiates 0 (151,333,569) 0 101,447,655 24,405,979 25,479,935
Accounts Payable Nonaffiliates 57,498,264 (2,771,508) 636,122 18,279,067 39,440,295 1,914,288
Accounts Payable Affiliates 0 34,082 148,693 640,052 (404,367) (418,460)
Customer Advance Payments 10,417,397 0 0 10,417,397 0 0
General Taxes Accrued (39,224) 0 (7,543) (526,093) 16,614 477,798
Income Taxes Accrued (199,437) 0 (5,074,655) 6,934,377 (2,552,694) 493,535
Interest Accrued 1,934,665 0 1,934,665 0 0 0
Amounts Payable to Customers 0 0 0 0 0 0
Accum. Deferred FIT - Current 2,344,354 0 (44,457) 1,596,666 0 792,145
Other Current Liabilities 7,508,024 0 180,903 (232,261) 2,939,389 4,619,993
------------ ------------- ------------ ------------ ----------- -----------
Total Current Liabilities $143,039,713 $(154,070,995) $ 42,565,886 $153,556,860 $63,845,216 $37,142,746
------------ ------------- ------------ ------------ ----------- -----------
DEFERRED CREDITS:
Accum. Deferred FIT - Deferred $ 17,984,571 $ 0 $ (2,209,132) $ 16,441,627 $ 5,951 $ 3,746,125
Unamortized Investment Tax Credit 2,247,205 0 0 2,247,205 0 0
Customer Adv. For Construction 3,146,889 0 0 3,146,889 0 0
Other Deferred Credits 17,760,405 0 1,064,504 16,314,223 0 381,678
------------ ------------- ------------ ------------ ----------- -----------
$ 41,139,070 $ 0 $ (1,144,628) $ 38,149,944 $ 5,951 $ 4,127,803
------------ ------------- ------------ ------------ ----------- -----------
TOTAL CAPITALIZATION AND
LIABILITIES $489,661,914 $(342,948,440) $343,804,389 $359,591,681 $65,016,916 $64,197,368
============ ============= ============ ============ =========== ===========
</TABLE>
<PAGE>
<TABLE>
SEMCO ENERGY, INC.
CONSOLIDATED AND CONSOLIDATING STATEMENT OF RETAINED EARNINGS
DECEMBER 31, 1998
(Unaudited Statement)
<CAPTION>
SEMCO SEMCO SEMCO
ENERGY GAS ENERGY ENERGY
1998 ELIMINATIONS PARENT COMPANY SERVICES VENTURES
------------ ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Beginning of Year $ (20,748) $(20,457,149) $ (20,748) $30,518,858 $(1,973,317) $(8,088,392)
Year to Date Net Income 10,039,578 (14,394,107) 12,088,798 9,832,205 (960,934) 3,473,616
Cash Dividends on Common (11,836,026) 9,256,855 (11,836,026) (9,150,000) 0 (106,855)
------------ ------------ ------------ ----------- ----------- -----------
End of Year To Date $ (1,817,196) $(25,594,401) $ 232,024 $31,201,063 $(2,934,251) $(4,721,631)
============ ============ ============ =========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
SEMCO ENERGY, INC.
CONSOLIDATED AND CONSOLIDATING STATEMENT OF CAPITAL SURPLUS
FOR THE YEAR ENDED DECEMBER 31, 1998
UNAUDITED
---------
<CAPTION>
SEMCO SEMCO SEMCO
ENERGY GAS ENERGY ENERGY
1998 ELIMINATIONS PARENT COMPANY SERVICES VENTURES
------------ ------------ ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL SURPLUS - BEGINNING OF YEAR $ 81,085,594 $ (91,135,270) $ 81,085,594 $70,899,826 $ 0 $20,235,444
ADD -
Excess of common stock issued
in connection with dividend
reinvestment plan over par value 5,833,117 0 5,833,117 0 0 0
Excess of common stock issued in
connection with conversion of
preferred shares over par value 11,136 0 11,136 0 0 0
Additional capital added 0 (5,306,858) 0 1,206,858 4,100,000 0
Issuance of common stock
through public offering 25,480,000 0 25,480,000 0 0 0
through business acquisitions 5,938,095 (6,960,804) 5,938,095 0 0 6,960,804
Excess of common stock issued
in connection with 401(k)
matching plan 461,123 0 461,123 0 0 0
DEDUCT -
Issuance of 5% stock dividend $ 726,173 $ 0 $ 726,173 $ 0 $ 0 $ 0
Stock registration costs 1,420,244 0 1,420,244 0 0 0
------------ ------------- ------------ ----------- ---------- -----------
CAPITAL SURPLUS - END OF YEAR $116,662,648 $(103,402,932) $116,662,648 $72,106,684 $4,100,000 $27,196,248
============ ============= ============ =========== ========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR3
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statement of income and the consolidated balance sheet and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-ASSETS> 489,662
<TOTAL-OPERATING-REVENUES> 637,485
<NET-INCOME> 10,040
</TABLE>
