<PAGE>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-7951
WICOR, Inc.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1346701
(State or other jurisdiction of (I.R.S. Employer Identification No)
incorporation or organization)
626 East Wisconsin Avenue
P.O. Box 334
Milwaukee, Wisconsin 53201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 414-291-7026
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $1 par value New York Stock Exchange
Associated Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. /X/ Yes / / 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 ]
Aggregate market value of the voting stock held by non-affiliates
of the registrant:
$ 467,902,017 at March 23, 1994.
Number of shares outstanding of each of the registrant's classes of
common stock, as of March 23, 1994:
Common Stock, $1 par value 16,919,445 shares
Documents Incorporated by Reference
WICOR, Inc. proxy statement dated March 10, 1994 (Part III)<PAGE>
<PAGE> 2
TABLE OF CONTENTS
PAGE
PART I 1
Item 1. Business 1
(a) General Development of Business 1
(b) Financial Information about Industry Segments 1
(c) Narrative Description of Business 1
1. Retail Distribution of Natural Gas 1
A. General 1
B. Gas Markets and Competition 2
C. Gas Supply and Pipeline Capacity 3
(1) General 3
(2) Pipeline Capacity 4
(3) Long-Term Gas Supply 4
(4) Spot Market Gas Supply 4
D. Wisconsin Rate and Regulatory Matters 5
(1) Rate Matters 5
(2) Transition Cost Recovery Policy 5
(3) Service Area Expansion 5
E. Employees 5
2. Manufacturing of Pumps and Water Processing
Equipment 5
A. General 5
B. U.S. Operations 6
C. International Operations 6
D. Raw Materials and Patents 6
E. Employees 7
3. Exploration and Development of Oil and
Natural Gas 7
Item 2. Properties 7
(a) Capital Expenditures 7
(b) Retail Distribution of Natural Gas 7
(c) Manufacturing of Pumps and Water Processing
Equipment 7
(d) Exploration and Development of Oil and
Natural Gas 7
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote of
Security Holders 9
Executive Officers of the Registrant 9
PART II 10
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters 10
Item 6. Selected Financial Data 11
Item 7. Management's Discussion and Analysis
of Results of Operations and
Financial Condition 11
(i)<PAGE>
<PAGE> 3
TABLE OF CONTENTS (continued)
PAGE
Item 8. Financial Statements and Supplementary Data 11
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 11
PART III 11
Item 10. Directors and Executive Officers
of the Registrant 11
Item 11. Executive Compensation 11
Item 12. Security Ownership of Certain
Beneficial Owners and Management 11
Item 13. Certain Relationships and Related
Transactions 11
PART IV 12
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 12
(a) Documents Filed as Part of the Report 12
1. and 2. All Financial Statements
and Financial Statement Schedules 12
3. Exhibits 12
(b) Reports on Form 8-K 15
(ii)<PAGE>
<PAGE> 4
PART I
Item 1. BUSINESS
(a) General Development of Business
WICOR, Inc. (the "Company" or "WICOR") is a diversified holding
company with two principal businesses: natural gas distribution and
manufacturing of pumps and water processing equipment. Wisconsin Gas
Company ("Wisconsin Gas") engages in retail distribution of natural
gas. Sta-Rite Industries, Inc. ("Sta-Rite") and SHURflo Pump
Manufacturing Co. ("SHURflo") are manufacturers of pumps and water
processing equipment. WEXCO of Delaware, Inc. ("WEXCO"), another
subsidiary, previously engaged in exploration for and development of
oil and natural gas through financial participation with producers.
WEXCO sold substantially all of its assets in 1993. The Company is
a Wisconsin corporation and maintains its principal executive offices
in Milwaukee, Wisconsin.
The Company was incorporated in 1980 at which time it acquired
all the outstanding common stock of Wisconsin Gas through a merger.
WEXCO, formed in 1978 as a subsidiary of Wisconsin Gas, also became
a subsidiary of the Company. The Company acquired all of the
outstanding common stock of Sta-Rite through a merger in 1982.
In 1991, Sta-Rite completed the sale of its Fluid Power Group
and its Heating Group. This decision was part of Sta-Rite's long-
term strategy to concentrate on its water products operations and
pursue opportunities for further growth.
In 1991, Sta-Rite purchased the operating assets of Aquality,
Inc., a manufacturer of swimming pool accessories. In April 1992,
Sta-Rite purchased a majority shareholder interest in Nocchi Pompe
S.p.A., a manufacturer of small water pumps and related equipment,
located near Pisa, Italy. During 1992, the Company increased its
ownership interest in Filtron Technology Corp. to 21%.
In July 1993, the Company acquired all of the outstanding stock
of SHURflo through a merger. SHURflo is a manufacturer of small
pumps for the food service, recreational vehicle, marine, industrial
and water purification markets.
In November 1993, Sta-Rite acquired Dega Research Pty, a
Melbourne, Australia-based manufacturer of pumps, filters and
accessories for the pool and spa market. This acquisition made Sta-
Rite the largest pool and spa equipment company in Australia, which
is the second largest market in the world for these products.
The Company (including subsidiaries) has 3,222 full-time
equivalent employees.
(b) Financial Information About Industry Segments
Reference is made to "Financial Review-General Overview"
included in Exhibit 13, which is hereby incorporated herein by
reference.
(c) Narrative Description of Business
<PAGE>
<PAGE> 5
1. RETAIL DISTRIBUTION OF NATURAL GAS
A. General
Wisconsin Gas is the largest natural gas distribution public
utility in Wisconsin, where all of its business is conducted. At
December 31, 1993, Wisconsin Gas distributed gas to approximately
485,000 residential, commercial and industrial customers in 487
communities throughout Wisconsin with an estimated population of
1,867,000 based on the State of Wisconsin's estimates for 1993.
Wisconsin Gas is subject to the jurisdiction of the Public Service
Commission of Wisconsin ("PSCW") as to various phases of its
operations, including rates, service and issuance of securities. See
"Wisconsin Rate and Regulatory Matters."
B. Gas Markets and Competition
Wisconsin Gas' business is highly seasonal, particularly as to
residential and commercial sales for space heating purposes, with a
substantial portion of its sales occurring in the winter heating
season. Competition in varying degrees exists between natural gas
and other forms of energy available to consumers. Most of Wisconsin
Gas' large commercial and industrial customers are dual-fuel
customers that are equipped to switch between natural gas and
alternate fuels. Wisconsin Gas offers transportation services for
these customers to enable them to reduce their energy costs and use
gas rather than other fuels. Under gas transportation agreements,
customers seek to purchase lower-priced spot market gas directly from
producers or other sellers and arrange with pipelines and Wisconsin
Gas to have the gas transported to their facilities. Wisconsin Gas
actively assists customers in buying gas and arranging
transportation. Wisconsin Gas also offers gas sales services that
are priced to compete with these transportation services. Wisconsin
Gas earns the same margin (difference between revenue and cost),
whether it sells gas to customers or transports customer-owned gas.
The following table sets forth the volumes of natural gas
delivered by Wisconsin Gas to its customers.
<TABLE>
<CAPTION>
Year Ended
---------------------------------------------
December 31, 1993 December 31, 1992
--------------------- ---------------------
Thousands Thousands
Customer Class of Therms* Percent of Therms* Percent
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Residential 479,640 39.8 459,050 39.2
Commercial 190,600 15.8 178,400 15.2
Large Volume Commercial and
Industrial Firm 152,460 12.7 144,880 12.4
Commercial and Industrial
Interruptible 208,490 17.3 173,880 14.9
Transported 174,080 14.4 213,790 18.3
---------- --------- ---------- ---------
Total Gas Purchased and
Transported 1,205,270 100.0 1,170,000 100.0
========== ========= ========== =========
</TABLE>
*One therm equals 100,000 BTU's.
<PAGE>
<PAGE> 6
The volumes shown as transported represent customer-owned gas
that was delivered by Wisconsin Gas to its customers. The remaining
volumes represent quantities sold to customers by Wisconsin Gas.
Wisconsin Gas has taken certain steps in recent years to
enable it to compete in an increasingly competitive gas industry.
Wisconsin Gas has instituted a service options program which provides
customers an array of sales, transportation and related services from
which they can choose. The service options program also assists
Wisconsin Gas in identifying the peak day and annual gas requirements
that Wisconsin Gas is obligated to supply. The service options
program thus provides customers with a choice of services that they
can select to meet their needs while defining Wisconsin Gas'
obligation to obtain and sell gas to customers.
In 1993, Wisconsin Gas introduced a gas supply management
service aimed at its larger customers. Under this service, Wisconsin
Gas manages the customer's gas supply. Gas management service
customers are freed from the responsibilities imposed by Federal
regulation of dealing with one or more gas suppliers, an interstate
pipeline and a utility on a daily basis to order the precise gas
supply and capacity necessary to meet their varying daily gas
requirements. See "Gas Supply and Pipeline Capacity."
In 1993, Wisconsin Gas added more than 14,000 customers,
surpassing record totals for the fifth consecutive year. See
"Service Area Expansion".
Up to 25% of Wisconsin Gas' Milwaukee area annual market
requirements can be supplied through the interstate pipelines of
either ANR Pipeline Company ("ANR") or Northern Natural Gas Company
("NNG"). This capability enhances competition between ANR and NNG
for services to Wisconsin Gas and its customers, and Wisconsin Gas
believes that such competition provides overall lower gas costs to
all customers than otherwise would exist.
Wisconsin Gas' future ability to maintain its present share
of the industrial dual-fuel market (the market that has installed
capability to use gas or other fuels) depends upon Wisconsin Gas'
success in obtaining long-term and short-term supplies of natural gas
at marketable prices and its success in arranging or facilitating
transportation service for those customers that desire to buy their
own gas supplies. Although the dual-fuel market comprises
approximately 32% of Wisconsin Gas' annual deliveries, it contributes
only about 14% of the company's margin.
C. Gas Supply and Pipeline Capacity
(1) General
In recent years, the natural gas industry has undergone
structural changes designed to increase competition. In 1992, the
Federal Energy Regulatory Commission ("FERC") issued Order No. 636
which fundamentally restructured the interstate natural gas pipeline
industry. Prior to Order No. 636, the pipelines serving Wisconsin
Gas were major sellers of gas to Wisconsin Gas. They sold gas on a
"bundled" or delivered-to-Wisconsin basis. Under Order No. 636, the
pipelines are required to "unbundle" the sale of gas from the related
transportation service. Consequently, pipelines may no longer<PAGE>
<PAGE> 7
provide the delivered-to-Wisconsin gas sales service. Rather, they
must sell gas at or near the point of production in competition with
other gas sellers. Under Order No. 636, purchasers such as Wisconsin
Gas contract separately with one or more sellers for gas supply and
with pipelines for capacity to move the gas to markets or into market
area storage for future delivery. In the opinion of management,
Order No. 636 will not have a material impact on Wisconsin Gas'
earnings.
ANR and NNG completed the transition to unbundled service on
November 1, 1993. Consequently, Wisconsin Gas has replaced all of
its "bundled" pipeline services with "unbundled" firm pipeline
transportation and storage services and long-term contracts with
producers and marketers for firm gas supply. Thus, 1993 was a
transition year in which Wisconsin Gas purchased gas supply and
capacity under interim arrangements with pipeline suppliers for much
of the year and under the Order No. 636 restructured regime described
above for the last two months of the year. The following table sets
forth the sources and volumes of gas purchased by Wisconsin Gas and
volumes of customer-owned gas transported by Wisconsin Gas.
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------------
December 31, 1993 December 31, 1992
---------------------- ----------------------
Thousands Thousands
of Therms* Percent of Therms* Percent
---------- ------- ---------- -------
<S> <C> <C> <C> <C>
Natural Gas Purchased
ANR 467,544 38.8 408,230 34.9
NNG 20,348 1.7 17,880 1.5
Viking 11,917 1.0 6,990 0.6
Term contracts
(in excess of 30 days) 398,197 33.0 - 0.0
Spot Market 133,184 11.1 523,110 44.7
---------- ------- ---------- -------
Total Gas Purchased 1,031,190 85.6 956,210 81.7
Customer Gas Transported 174,080 14.4 213,790 18.3
---------- ------- ---------- -------
Total Gas Purchased
and Transported 1,205,270 100.0 1,170,000 100.0
========== ======= ========== =======
</TABLE>
*One therm equals 100,000 BTU's.
(2) Pipeline Capacity
Interstate pipelines serving Wisconsin originate in three major gas
producing areas of North America: the traditional Oklahoma and Texas
basins; the Gulf of Mexico off-shore from Texas and Louisiana and the
adjacent on-shore producing areas of those states; and western
Canada. Wisconsin Gas has contracted for long-term firm capacity on
a relatively equal basis from each of these areas. This strategy
reflects management's belief that overall supply security is enhanced
by geographic diversification of Wisconsin Gas' supply portfolio and
that Canada represents an important long-term source of reliable,
competitively priced gas.<PAGE>
<PAGE> 8
Because of the seasonal variations in gas usage in Wisconsin,
Wisconsin Gas has also contracted with ANR and NNG for substantial
underground storage capacity, primarily in Michigan. There is no
known underground storage capability in Wisconsin. Storage enables
Wisconsin Gas to optimize its overall gas supply and capacity costs.
In summer, gas in excess of market demand is transported into the
storage fields, and in winter, gas is withdrawn from storage and
combined with gas purchased in or near the production areas ("flowing
gas") to meet the increased winter market demand. As a result,
Wisconsin Gas can contract for less pipeline capacity than would
otherwise be necessary, and it can purchase gas on a more uniform
daily basis from suppliers year-around. Each of these capabilities
enables Wisconsin Gas to reduce its overall costs.
Wisconsin Gas' firm winter daily transportation and storage
capacity entitlements from pipelines under long-term contracts are
set forth below.
Maximum Daily
(Thousands
Pipeline of Therms*)
----------------- -------------
ANR
Mainline 3,175
Storage 4,996
NNG
Mainline 1,226
Storage 145
Viking Mainline 64
-----------
Total 9,606
===========
*One therm equals 100,000 BTU's.
(3) Long-Term Gas Supply
Wisconsin Gas has long-term firm contracts with approximately
30 gas suppliers for gas produced in each of the three producing
areas discussed above. The following table sets forth Wisconsin Gas'
winter season maximum daily firm total gas supply.
Maximum Daily
(Thousands
of Therms*)
-------------
Domestic flowing gas 2,259
Canadian flowing gas 1,396
Storage withdrawals 5,157
-------------
Total 8,812
=============
*One therm equals 100,000 BTU's.
(4) Spot Market Gas Supply
Wisconsin Gas expects to continue to make gas purchases in
the 30-day spot market as price and other circumstances dictate.
Wisconsin Gas has purchased spot market gas since 1985 and has
supply relationships with a number of sellers from whom it
purchases spot gas.<PAGE>
<PAGE> 9
D. Wisconsin Rate and Regulatory Matters
(1) Rate Matters
Wisconsin Gas is subject to the jurisdiction of the PSCW as
to various phases of its operations, including rates, customer
service and issuance of securities.
Effective November 12, 1993, the PSCW granted Wisconsin Gas
a $12.3 million general rate increase. Wisconsin Gas' authorized
return on common equity was reduced from 12.75% to 11.8%.
The PSCW has implemented a bi-annual rate case process for
energy utilities pursuant to which Wisconsin Gas' next rate change
would be effective November 1, 1995. In July 1993, Wisconsin Gas
filed a proposal to adjust rates up to a ceiling amount. The
ceiling amount is based on the latest allowed rates, adjusted
annually for inflation and reduced by a predetermined productivity
factor. A decision on the proposal is expected in April 1994.
Wisconsin Gas is unable to predict whether the PSCW will approve
its proposal.
Wisconsin Gas' rates contain clauses providing for periodic
adjustment, with PSCW approval, to reflect changes in purchased gas
costs including the recovery of transition costs passed through by
pipeline suppliers. See "Transition Cost Recovery Policy".
(2) Transition Cost Recovery Policy
Under Order No. 636, interstate pipelines are permitted to
recover certain costs incurred in the transition from the bundled
sales service to the unbundled Order No. 636 regime. ANR and NNG
have filed to recover transition costs. ANR and NNG may file in
the future to recover additional transition costs, and Wisconsin
Gas will bear a portion of such additional costs approved by the
FERC. The PSCW has permitted Wisconsin Gas to recover transition
costs from customers through its rates.
In the judgment of management, the incurrence of these
transition costs will have no material effect on Wisconsin Gas'
operations or financial condition under current PSCW policy. See
Note 8 to Notes to Consolidated Financial Statements contained in
Exhibit 13, which note is hereby incorporated herein by reference.
(3) Service Area Expansion
In recent years, Wisconsin Gas has increased its efforts to
obtain regulatory approvals to extend gas service to previously
unserved communities. In 1992, Wisconsin Gas extended service to
30 new communities and added 10,400 customers. In 1993, Wisconsin
Gas extended service to 41 new communities and added more than
14,000 customers.
E. Employees
At December 31, 1993, Wisconsin Gas had 1,353 full-time
equivalent active employees.<PAGE>
<PAGE> 10
2. MANUFACTURING OF PUMPS AND WATER PROCESSING EQUIPMENT
A. General
The Company's manufacturing subsidiaries manufacture pumps
and water processing equipment used to pump, control and filter
water, and positive displacement pumps and other accessories used
for fluid handling in a wide array of specialized applications and
markets. Manufacturing and assembly activities are conducted in
plants in the United States, United Kingdom, Canada, Germany,
Italy, Australia, New Zealand and Russia.
B. U.S. Operations
Water products include jet, centrifugal, sump, submersible
and submersible turbine water pumps, water storage and pressure
tanks, filters, and pump and tank systems. These products pump,
filter and store water used for drinking, cooking, washing and
livestock watering, and are used in private and public swimming
pools, spas, "hot tubs", jetted bathtubs, and fountains. The
manufacturing businesses produce large higher pressure and capacity
water pumps used in agricultural and turf irrigation systems and in
a wide variety of commercial, industrial and municipal fluids-
handling applications.
Small, high performance pumps, and related fluids-handling
products, are used in four primary markets: (1) the food service
industry, where gas operated pumps are used for pumping soft drinks
made from syrups, and electric motor driven pumps are used for
water boost and drink dispensing; (2) the recreational vehicle and
marine markets, where electric motor driven pumps are used for a
variety of applications including pumping potable water in travel
trailers, motor homes, camping trailers and boats, and for other
applications including marine wash down, bilge and live well
pumping; (3) industrial markets, where applications are
concentrated in the soil extraction market for use in carpet
cleaning machines, agricultural markets for spraying agricultural
pesticides and fertilizers, and general industrial applications
requiring fluid handling; and (4) the water purification industry,
where electric motor driven pumps are used to pressurize reverse
osmosis systems and for water transfer.
Sales of pumps and water processing equipment are somewhat
related to the seasons of the year as well as the level of activity
in the housing construction industry and are sensitive to weather,
interest rates, discretionary income, and leisure and recreation
spending. The markets for most water and industrial products are
highly competitive, with price, service and product performance all
being important competitive factors. The Company believes it is a
leading producer of pumps for private water systems and swimming
pools and spas and for the food service and recreational vehicle
markets. The Company's centrifugal pumps command a major share of
the agricultural and irrigation centrifugal market. The Company
also ranks among the larger producers of pool and spa filters and
submersible turbine pumps. Major brand names include "STA-RITE",
"BERKELEY", "SHURflo", "FLOTEC", "TOWN & COUNTRY", "SWIMQUIP" and
"AQUALITY."<PAGE>
<PAGE> 11
Domestic pumps and water products are sold and serviced
primarily through a network of independent distributors, dealers
and manufacturers' representatives serving the well drilling,
hardware, plumbing, pump installing, irriga-tion, pool and spa,
food service, recreational vehicle, marine, and industrial markets.
Sales are also made on a private brand basis to large customers in
all water products markets and to original equipment manufacturers.
Backlog of orders for pumps and water products is not a
significant indicator of future sales.
C. International Operations
International operations are conducted primarily by
international subsidiaries and export operations from the United
States. Products are sold to markets in approximately 110
countries on six continents. Foreign manufacturing of products
from imported and locally manufactured components is carried out by
United Kingdom, German, Canadian, Australian, New Zealand, Italian,
and Russian subsidiaries. The products sold in the international
markets are similar to those sold in the United States, but in many
instances have distinct features required for those markets.
Product distribution channels are similar to those for domestic
markets. Non-domestic sales, including exports, were 34% of 1993
manufacturing sales.
D. Raw Materials and Patents
Raw materials essential to the manufacturing operations are
available from various established sources in the United States and
overseas. The principal raw materials needed for production of the
Company's primary lines of products include cast iron, aluminum and
bronze castings for pumps; copper and aluminum wire for motors;
stainless and carbon sheet steel, bar steel and tubing; plastic
resins for injection molded components; and powdered metal
components. The manufacturing units also purchase from third party
suppliers completely assembled electric motors, plastic molded
parts, elastomers for valves and diaphragms, components for
electric motors, stamped and die cast metal parts, and hardware and
electrical components. Although the manufacturing subsidiaries
own a number of patents and hold licenses for manufacturing
rights under other patents, no one patent or group of patents is
critical to the success of the manufacturing businesses as a whole.
E. Employees
At December 31, 1993, the manufacturing businesses had
1,869 full time equivalent active employees.
3. EXPLORATION AND DEVELOPMENT OF OIL AND NATURAL GAS
WEXCO was formed in 1978, a time of national gas shortages,
primarily to develop additional future sources of energy for
Wisconsin Gas. WEXCO participated in gas and oil exploration and
development activities through financial participation with
producers. In 1993, in connection with the Company's strategic
decision to focus on its primary businesses, WEXCO sold
substantially all of its assets.<PAGE>
<PAGE> 12
Item 2. PROPERTIES
(a) Capital Expenditures
The Company's capital expenditures for the year ended
December 31, 1993, totaled $51.9 million. Retirements during this
period totaled $40.0 million, of which $32.8 million represented
the original cost of the WEXCO assets sold. See "Properties -
Exploration and Development of Oil and Natural Gas." Except as
discussed in "Legal Proceedings", the Company does not expect to
make any material capital expenditures for environmental control
facilities in 1994.
(b) Retail Distribution of Natural Gas
Wisconsin Gas owns a distribution system which, on December
31, 1993, included approximately 7,800 miles of distribution and
transmission mains, 399,000 services and 488,000 active meters.
Wisconsin Gas' distribution system consists almost entirely of
plastic and coated steel pipe. Wisconsin Gas also owns its main
office building in Milwaukee, office buildings in certain other
communities in which it serves, gas regulating and metering sta-
tions, peaking facilities and its major service centers, including
garage and warehouse facilities.
The Milwaukee and other office buildings, the principal
service facilities and the gas distribution systems of Wisconsin
Gas are owned by it in fee subject to the lien of its Indenture of
Mortgage and Deed of Trust, dated as of November 1, 1950, under
which its first mortgage bonds are issued, and to permissible
encumbrances as therein defined. Where distribution mains and
services occupy private property, Wisconsin Gas in some, but not
all, instances has obtained consents, permits or easements for such
installations from the apparent owners or those in possession,
generally without an examination of title.
(c) Manufacturing of Pumps and Water Processing Equipment
The manufacturing businesses have 12 manufacturing
facilities located in California (2), Nebraska, Wisconsin (2),
Germany, Italy (2), Australia (2), New Zealand and Russia. These
plants contain a total of approximately 790,000 square feet of
floor space. These businesses also own or lease seven
sales/distribution facilities in the United States, six in
Australia, two each in France and England, and one each in Canada
and Singapore.
(d) Exploration and Development of Oil and Natural Gas
In 1993, WEXCO sold substantially all of its assets for
approximately their book value of $4.0 million.
<PAGE>
<PAGE> 13
Item 3. LEGAL PROCEEDINGS
There are no material legal proceedings pending, other than
ordinary routine litigation incidental to the Company's businesses,
to which the Company or any of its subsidiaries is a party, except
as discussed below. There are no material legal proceedings to
which any officer or director of the Company or any of its
subsidiaries is a party or has a material interest adverse to the
Company. There are no material administrative or judicial
proceedings arising under environmental quality or civil rights
statutes pending or known to be contemplated by governmental
agencies to which the Company or any of its subsidiaries is or
would be a party.
Sta-Rite has entered into a contract with the Wisconsin
Department of Natural Resources ("DNR") to perform and complete the
Remedial Investigation/Feasibility Study and Remedial
Design/Remedial Action phases of the Federal Superfund
environmental process for the Delavan, Wisconsin Municipal Well No.
4, which is located close to one of Sta-Rite's facilities. In 1990
and 1991, Sta-Rite provided reserves to cover the estimated costs
under the contract. No additions to reserves were required in 1992
or 1993. Although management believes the amounts reserved will be
adequate to effect any necessary remediation, there is a
possibility that unexpected additional costs may be incurred.
Sta-Rite, along with other generators, has been sued by
Waste Management of Wisconsin, Inc. for cleanup costs relating to a
landfill near Sta-Rite's former Deerfield operation. Sta-Rite has
established reserves to cover reasonable costs associated with this
litigation.
Sta-Rite has been notified by two environmental groups in
California of their intent to pursue litigation against a number of
submersible pump manufacturers, including Sta-Rite, for violations
of the state's health and safety code (Proposition 65). The
Company is in the process of evaluating the claims.
Wisconsin Gas has identified two previously owned sites on
which it operated manufactured gas plants that are of environmental
concern. Such plants ceased operations prior to the mid-1950's.
Wisconsin Gas has engaged an environmental consultant to help
determine the nature and extent of the contamination at these
sites. Based on the test results obtained and the possible
remediation alternatives available, the Company has estimated that
cleanup costs could range from $22 million to $75 million. As of
December 31, 1993, the Company has accrued $40 million for cleanup
costs in addition to $1.6 million of costs already incurred. These
estimates are based on current undiscounted costs. It should also
be noted that the numerous assumptions such as the type and extent
of contamination, available remediation techniques, and regulatory
requirements which are used in developing these estimates are
subject to change as new information becomes available. Any such
changes in assumptions could have a significant impact on the
potential liability.
A formal remediation plan is currently being developed for
presentation to the DNR. Following plan approval and pilot
studies, remediation will commence. Barring unforeseen delays,
expenditures by Wisconsin Gas on this remediation work will
commence in 1994 and increase in future years as plan approvals are
obtained. Expenditures over the next three years are expected to<PAGE>
<PAGE> 14
total approximately $20 million. Although most of the work and
costs will be incurred in the first few years of the plan,
monitoring of the sites and other necessary actions may last up to
30 years.
Wisconsin Gas is pursuing recovery of these costs from
insurance carriers. Any amounts not recoverable from insurance
carriers will be allowed full recovery in rates, based on recent
PSCW orders. Accordingly, the accrual has been offset by a
deferred charge to a regulatory asset. Certain related
investigation costs incurred to date are currently being recovered
in utility rates. However, any incurred costs not yet recovered in
rates are not allowed by the PSCW to earn a return. As of December
31, 1993, $1.6 million of such costs have been incurred.
In 1992, the owner of a portion of one of the properties on
which manufactured gas operations were conducted commenced suit in
Federal district court against Wisconsin Gas. The suit, which was
settled in 1993, generally sought indemnity and contribution under
Federal statutes and alleged that Wisconsin Gas is liable for
remediating the environmental conditions found to be caused by any
releases of hazardous substances from the gasification activities
at the site. Under the settlement, Wisconsin Gas has agreed to
indemnify the owner from any remediation costs attributable to the
release of hazardous substances from the gasification activities on
the site. In the judgment of management, the settlement does not
materially change Wisconsin Gas' responsibility as required by
Federal or state statutes for remediating the environmental
conditions found to be caused by any releases of hazardous
substances from the gasification activities at the site, which
ceased about 40 years ago, the cost of any remediation actions that
may be required, or its ability to recover such costs in its rates
or from insurers.
Wisconsin Gas also owns a service center that is
constructed on a site that was previously owned by the City of
Milwaukee and was used by the City as a public dump site.
Wisconsin Gas has conducted a site assessment at the request of the
DNR and has sent the report of its assessment to the DNR.
Management cannot predict whether or not the DNR will require any
remediation action, nor the extent or cost of any remediation
actions that may be required. In the judgment of management, any
remediation costs incurred by Wisconsin Gas will be recoverable
from the City of Milwaukee or in Wisconsin Gas' rates.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders
during the fourth quarter of 1993.<PAGE>
<PAGE> 15
EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth the names, ages, and offices held
of the executive officers of the Company. The officers serve one-
year terms commencing with their election at the meeting of the
Board of Directors following the annual meeting of shareholders in
April.
<TABLE>
<CAPTION>
Name Age Offices Held
- -------------------- ---- ----------------------------------------------
<S> <C> <C>
George E. Wardeberg 58 President and Chief Executive Officer of the
Company; Chairman and Chief Executive Officer
of Sta-Rite; Chairman of Wisconsin Gas and
SHURflo.
Thomas F. Schrader 44 Vice President of the Company and President and
Chief Executive Officer of Wisconsin Gas
James C. Donnelly 48 Vice President of the Company and President and
Chief Operating Officer of Sta-Rite
Joseph P. Wenzler 52 Vice President, Treasurer and Chief Financial
Officer of the Company; Vice President and
Chief Financial Officer of Wisconsin Gas; and
Treasurer and Secretary of SHURflo
Robert A. Nuernberg 54 Secretary of the Company and Vice President-
Corporate Relations and Secretary of Wisconsin
Gas
</TABLE>
Mr. Wardeberg was elected to his current positions
effective February 1, 1994. Prior thereto he was President and
Chief Operating Officer of the Company and Vice Chairman and Chief
Executive Officer of Sta-Rite from 1992 to 1994; Vice Chairman of
Wisconsin Gas and SHURflo from 1993 to 1994; and Vice President-
Water Systems of Sta-Rite from 1989 to 1992. Prior thereto, he was
Vice Chairman and Chief Operating Officer of Whirlpool Corporation.<PAGE>
<PAGE> 16
Mr. Schrader was elected Vice President of the Company in
1988 and President and Chief Executive Officer of Wisconsin Gas in
1990. Prior thereto, he served as President and Chief Operating
Officer of Wisconsin Gas from 1988 to 1990, Executive Vice
President from 1986 to 1988, Vice President and Assistant to the
Chairman from 1985 to 1986, and Vice President-Market Services from
1983 to 1985. He held several other positions with Wisconsin Gas
from 1978 to 1983.
Mr. Donnelly was elected President and Chief Operating
Officer of Sta-Rite in 1992. Previously he served as Vice
President, Treasurer and Chief Financial Officer of the Company and
Wisconsin Gas since 1990. He continues as a Vice President of the
Company. Mr. Donnelly joined the Company and Wisconsin Gas in 1987
as Vice President and Treasurer. Prior thereto, he served as Vice
President-Finance of Eastern Gas and Fuel Associates from 1984 to
1987 and as Vice President-Finance of Boston Gas Company, a
subsidiary of Eastern Gas and Fuel Associates, from 1978 to 1984.
Mr. Wenzler was elected Vice President, Treasurer and Chief
Financial Officer of the Company and Vice President and Chief
Financial Officer of Wisconsin Gas in 1992. Prior thereto, he
served as Vice President of the Company and President and Chief
Executive Officer of Sta-Rite from 1990 to 1992, President and
Chief Operating Officer from 1986 to 1990, Executive Vice President
from 1985 to 1986, Vice President-Finance, Secretary and Treasurer
from 1984 to 1985, and Vice President-Finance and Treasurer from
1981 to 1984.
Mr. Nuernberg was elected Secretary of the Company in 1987
and Vice President-Corporate Relations and Secretary of Wisconsin
Gas in 1988. Prior thereto, he served as Vice President-Law and
Secretary of Wisconsin Gas from 1983 to 1988 and as Secretary from
1982 to 1983.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock and the associated common stock
purchase rights (which do not currently trade independent of the
common stock) are traded on the New York Stock Exchange. For
information regarding the high and low sales prices for the
Company's common stock and dividends paid per share in each quarter
of 1993 and 1992, see "Investor Information" included in Exhibit
13, which is hereby incorporated herein by reference.
At December 31, 1993, there were 17,091 holders of record
of WICOR common stock.
The Company's ability to pay dividends is dependent to a
great extent on the ability of its subsidiaries to pay dividends.
The Wisconsin Business Corporation Law and the indentures and
agreements under which debt of the Company and its subsidiaries is
outstanding each contain certain restrictions on the payment of
dividends on common stock by the Company's subsidiaries. See Note
6 of Notes to Consolidated Financial Statements contained in
Exhibit 13, which note is hereby incorporated herein by reference.<PAGE>
<PAGE> 17
By order of the PSCW, Wisconsin Gas is generally permitted
to pay dividends up to the amount projected in its rate case.
Wisconsin Gas may pay dividends in excess of the projected dividend
amount so long as payment will not cause its equity ratio to fall
below 48.43%. If payment of projected dividends would cause its
common equity ratio to fall below 43% of total capitalization
(including short-term debt), or if payment of additional dividends
would cause its common equity ratio to fall below 48.43%, Wisconsin
Gas must obtain PSCW approval to pay such dividends. Wisconsin Gas
has projected the payment of $16 million of dividends to the
Company during the 12 months ending October 31, 1994. See Note 6
of Notes to Consolidated Financial Statements contained in Exhibit
13, which note is hereby incorporated herein by reference. The
PSCW desires Wisconsin Gas to target its common equity level at 43%
to 50% of total capitalization. For the year ended December 31,
1993, Wisconsin Gas' average common equity level was 45.16%.
In addition, $8.6 million of Sta-Rite net assets at
December 31, 1993, plus 50% of Sta-Rite future earnings, are
available for dividends to the Company. See Note 6 of Notes to
Consolidated Financial Statements contained in Exhibit 13, which
note is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA
Reference is made to "Selected Financial Data" included in
Exhibit 13, which is hereby incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Reference is made to "Financial Review" included in Exhibit
13, which is hereby incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the WICOR, Inc. consolidated balance
sheet and consolidated statement of capitalization as of December
31, 1993 and 1992, and the related consolidated statements of
income, common equity and cash flows for each of the three years in
the period ended December 31, 1993, together with the report of
independent public accountants dated February 11, 1994, all
appearing in Exhibit 13, which is hereby incorporated herein by
reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There has been no change in or disagreement with the
Company's independent auditors on any matter of accounting
principles or practices or financial statement disclosure required
to be reported pursuant to this item.<PAGE>
<PAGE> 18
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to "Item No. 1: Election of Directors"
included in the WICOR proxy statement dated March 10, 1994, which
is hereby incorporated herein by reference, for the names, ages,
business experience and other information regarding directors and
nominees for director of the Company. See "Executive Officers of
the Registrant" for information regarding executive officers of the
Company.
Item 11. EXECUTIVE COMPENSATION
Reference is made to "Executive Compensation" included in
the WICOR proxy statement dated March 10, 1994, which is hereby
incorporated herein by reference, for information on compensation
of executive officers of the Company; provided, however, that the
subsections entitled "Board Compensation Committee Report on
Executive Compensation" and "Executive Compensation - Performance
Information" shall not be deemed to be incorporated herein by
reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Reference is made to "Security Ownership of Management"
included in the WICOR proxy statement dated March 10, 1994, which
is hereby incorporated herein by reference, for information
regarding voting securities of the Company beneficially owned by
its directors and officers.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is made to "Item No. 1: Election of Directors"
included in the WICOR proxy statement dated March 10, 1994, which
is hereby incorporated herein by reference, for the information
required to be disclosed under this item.
<PAGE>
<PAGE> 19
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Annual
Report on Form 10-K:
1. and 2. All Financial Statements and financial statement
schedules. The WICOR, Inc. consolidated balance sheet and
statement of capitalization as of December 31, 1993 and
1992, and the related consolidated statements of income,
common equity and cash flows for each of the three years in
the period ended December 31, 1993, together with the
report of independent public accountants dated February 11,
1994, included in Exhibit 13, which is incorporated herein
by reference.
Financial statement schedules.
Schedule III -- Condensed Statements of Income,
Retained Earnings and Cash Flows
(Parent Company Only) for the Years
Ended December 31, 1993, 1992 and
1991; Condensed Balance Sheet (Parent
Company Only) as of December 31, 1993
and 1992; Notes to Parent Company
Only Financial Statements.
Schedule V -- Property, Plant and Equipment for the
Years Ended December 31, 1993, 1992
and 1991.
Schedule VI -- Accumulated Depreciation, Depletion
and Amortization for the Years Ended
December 31, 1993, 1992 and 1991.
Schedule VIII -- Valuation and Qualifying Accounts for
the Years Ended December 31, 1993,
1992 and 1991.
Schedule IX -- Short-term Borrowings for the Years
Ended December 31, 1993, 1992 and
1991.
Schedule X -- Supplementary Income Statement In-
formation for the Years Ended
December 31, 1993, 1992 and 1991.
<PAGE> 20
Financial statement schedules other than those referred to
above have been omitted as not applicable or not required.
3. Exhibits
3.1 WICOR, Inc. Restated Articles of
Incorporation, as amended (incorporated by
reference to Exhibit 3.1 to the Company's Form
10-K Annual Report for 1992).
3.2 WICOR, Inc. By-laws, as amended (incorporated
by reference to Exhibit 4.2 to the Company's
Registration Statement on Form S-3 No. 33-
50781).
4.1 Indenture of Mortgage and Deed of Trust dated
as of November 1, 1950, between Milwaukee Gas
Light Company and Mellon National Bank and
Trust Company and D. A. Hazlett, Trustees
(incorporated by reference to Exhibit 7-E to
Milwaukee Gas Light Company's Registration
Statement No. 2-8631).
4.2 Eleventh Supplemental Indenture dated as of
February 15, 1982, between Wisconsin Gas
Company and Mellon Bank, N.A., and N. R.
Smith, Trustees (incorporated by reference to
Exhibit 4.5 to Wisconsin Gas Company's Form S-
3 Registration Statement No. 33-43729).
4.3 Bond Purchase Agreement dated December 31,
1981, between Wisconsin Gas Company and
Teachers Insurance and Annuity Association of
America relating to the issuance and sale of
$30,000,000 principal amount of First Mortgage
Bonds, Adjustable Rate Series due 2002 (incor-
porated by reference to Exhibit 4.6 to
Wisconsin Gas Company's Form S-3 Registration
Statement No. 33-43729).
4.4 Indenture dated as of September 1, 1990,
between Wisconsin Gas Company and First
Wisconsin Trust Company, Trustee (incorporated
by reference to Exhibit 4.11 to Wisconsin Gas
Company's Form S-3 Registration Statement No.
33-36639).
4.5 Officers' Certificate, dated as of November
28, 1990, setting forth the terms of Wisconsin
Gas Company's 9-1/8% Notes due 1997
(incorporated by reference to Exhibit 4.1 to
Wisconsin Gas Company's Form 8-K Current
Report for November, 1990).
<PAGE>
<PAGE> 21
4.6 Officers' Certificate, dated as of November
19, 1991, setting forth the terms of Wisconsin
Gas Company's 7-1/2% Notes due 1998
(incorporated by reference to Exhibit 4.1 to
Wisconsin Gas Company's Form 8-K Current
Report for November, 1991).
4.7 Officers' Certificate, dated as of September
15, 1993, setting forth the terms of Wisconsin
Gas Company's 6.60% Debentures due 2013
(incorporated by reference to Exhibit 4.1 to
Wisconsin Gas Company' Form 8-K Current Report
for September, 1993).
4.8 Revolving Credit and Term Loan Agreement,
dated as of March 29, 1993, among Wisconsin
Gas Company and Citibank, N.A., Firstar Bank
Milwaukee, N.A., Harris Trust & Savings Bank,
M&I Marshall & Ilsley Bank and Citibank, N.A.,
as Agent (incorporated by reference to Exhibit
4.2 to the Company's Quarterly Report on Form
10-Q dated as of August 9, 1993).
4.9 Note Agreement dated as of December 1, 1986,
among Sta-Rite Industries, Inc., Principal
Mutual Life Insurance Company, Aid Association
for Lutherans, AAL Employees' Retirement Trust
and AAL Savings Plan Trust relating to
$12,000,000 Promissory Notes due December 1,
1993 (incorporated by reference to Exhibit 4-Q
to the Company's Form 10-K Annual Report for
1986).
4.10 Revolving Credit and Term Loan Agreement,
dated as of March 29, 1993, among Sta-Rite
Industries, Inc. and Citibank, N.A., Firstar
Bank Milwaukee, N.A., Harris Trust & Savings
Bank, M&I Marshall & Ilsley Bank and Citibank,
N.A., as Agent (incorporated by reference to
Exhibit 4.3 to the Company's Quarterly Report
on Form 10-Q dated as of August 9, 1993).
4.11 Revolving Credit and Term Loan Agreement,
dated as of March 29, 1993, among WICOR, Inc.
and Citibank, N.A., Firstar Bank Milwaukee,
N.A., Harris Trust & Savings Bank, M&I
Marshall & Ilsley Bank and Citibank, N.A., as
Agent (incorporated by reference to Exhibit
4.1 to the Company's Quarterly Report on
Form 10-Q dated as of August 9, 1993).
4.12 Rights Agreement dated as of August 29, 1989,
between WICOR, Inc. and Manufacturers Hanover
Trust Company, Rights Agent (incorporated by
reference to Exhibit 4 to the Company's Form
8-K current report for August, 1989).
<PAGE>
<PAGE> 22
4.13 Loan Agreement, dated as of November 4, 1991,
by and among M&I Marshall & Ilsley Bank,
Wisconsin Gas Company Employees' Savings Plans
Trust and WICOR, Inc. (incorporated by
reference to Exhibit 4.16 to the Company's
Form 10-K Annual Report for 1991).
4.14 Guaranty, dated as of November 4, 1991, from
WICOR, Inc. to and for the benefit of M&I
Marshall & Ilsley Bank (incorporated by
reference to Exhibit 4.17 to the Company's
Form 10-K Annual Report for 1991).
Sta-Rite Industries, Inc., a wholly-owned
subsidiary of the Registrant, is the obligor
under various loan agreements in connection
with facilities financed through the issuance
of industrial development bonds. The loan
agreements and the additional documentation
relating to these bond issues are
not being filed with this Annual Report on
Form 10-K in reliance upon Item 601(b)(4)(iii)
of Regulation S-K. Copies of these documents
will be furnished to the Securities and
Exchange Commission upon request.
10.1 Service Agreement dated as of January 1, 1988,
among WICOR, Inc., Wisconsin Gas Company, Sta-
Rite Industries, Inc., and WEXCO of Delaware,
Inc. (incorporated by reference to Exhibit
10.1 to the Company's Form 10-K Annual Report
for 1988).
10.2 Endorsement of SHURflo Pump Manufacturing Co.
dated as of July 28, 1993, to Service
Agreement among WICOR, Inc., Wisconsin Gas
Company, Sta-Rite Industries, Inc., and WEXCO
of Delaware, Inc.
10.3# WICOR, Inc. 1987 Stock Option Plan, as amended
(incorporated by reference to Exhibit 4.1 to
the Company's Form S-8 Registration Statement
No. 33-67134).
10.4# Forms of nonstatutory stock option agreement
used in connection with the WICOR, Inc. 1987
Stock Option Plan (incorporated by reference
to Exhibit 10.20 to the Company's Form 10-K
Annual Report for 1991).
10.5# WICOR, Inc. 1992 Director Stock Option Plan,
(incorporated by reference to Exhibit 4.1 to
the Company's Form S-8 Registration Statement
No. 33-67132).
10.6# Form of nonstatutory stock option agreement
used in connection with the WICOR, Inc. 1992
Director Stock Option Plan (incorporated by
reference to Exhibit 4.2 to the Company's Form
S-8 Registration Statement No. 33-67132).<PAGE>
<PAGE> 23
10.7# WICOR, Inc. 1994 Officers' Incentive Compen-
sation Plan.
10.8# Wisconsin Gas Company Principal Officers'
Supplemental Retirement Income Program.
10.9# Wisconsin Gas Company 1994 Officers' Incentive
Compensation Plan.
10.10# Wisconsin Gas Company Officers' Medical
Expense Reimbursement Plan (incorporated by
reference to Exhibit 10.23 to the Company's
Form 10-K Annual Report for 1992).
10.11# Wisconsin Gas Company Group Travel Accident
Plan (incorporated by reference to Exhibit
10.24 to the Company's Form 10-K Annual Report
for 1992).
10.12# Form of Deferred Compensation Agreements
between Wisconsin Gas Company and certain of
its executive officers (incorporated by
reference to Exhibit 10.30 to the Company's
Form 10-K Annual Report for 1990).
10.13# Sta-Rite Industries, Inc. Officers Supple-
mental Retirement Income Program (incorporated
by reference to Exhibit 10.28 to the Company's
Form 10-K Annual Report for 1989).
#Indicates a plan under which compensation is paid or payable to
directors or executive officers of the Company.<PAGE>
<PAGE> 24
10.14# Sta-Rite Industries, Inc. 1994 Officers'
Incentive Compensation Plan.
10.15# Sta-Rite Industries, Inc. Group Travel
Accident Plan (incorporated by reference to
Exhibit 10.28 to the Company's Form 10-K
Annual Report for 1992).
10.16# WICOR, Inc. Retirement Plan for Directors, as
amended (incorporated by reference to Exhibit
10.29 to the Company's Form 10-K Annual Report
for 1992).
"Financial Review" portions of WICOR, Inc.
1993 Annual Report to Shareholders, including:
General Overview, Results of Operations,
Liquidity and Capital Resources, Report of
Independent Public Accountants, Consolidated
Statement of Income, Consolidated Balance
Sheet, Consolidated Statement of Cash Flows,
Consolidated Statement of Capitalization,
Consolidated Statement of Common Equity,
Quarterly Financial Data (Unaudited), Notes to
Consolidated Financial Statements, Selected
Financial Data, and Investor Information.
13* "Financial Review" portion of the WICOR, Inc. 1993
Annual Report to Shareholders.
21 Subsidiaries of WICOR, Inc.
23 Consent of independent public accountants.
99 WICOR, Inc. proxy statement dated March 10,
1994. (Except to the extent incorporated by
reference, this proxy statement is not deemed
"filed" with the Securities and Exchange
Commission as part of this Form 10-K.)
(b) Reports on Form 8-K.
No Form 8-K Current Report was filed during the fourth
quarter of 1993.
#Indicates a plan under which compensation is paid or payable to
directors or executive officers of the Company.
<PAGE>
<PAGE> 25
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.
WICOR, Inc.
Date: March 29, 1994 By JOSEPH P. WENZLER
-----------------------------------
Vice President, Treasurer, and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed on the succeeding pages by
the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
<PAGE>
<PAGE> 26
WICOR, Inc.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------ ------------------------- -----------------
<S> <C> <C>
GEORGE E. WARDEBERG
- ------------------------
George E. Wardeberg President, Chief Executive March 29, 1994
Officer and Director
(Principal Executive Officer)
JOSEPH P. WENZLER
- ------------------------
Joseph P. Wenzler Vice President, Treasurer March 29, 1994
and Chief Financial Officer
(Principal Financial Officer
and Principal Accounting
Officer)
WENDELL F. BUECHE Director March 29, 1994
- ------------------------
Wendell F. Bueche
WILLIE D. DAVIS Director March 29, 1994
- ------------------------
Willie D. Davis
JAMES L. FORBES Director March 29, 1994
- ------------------------
James L. Forbes
JERE D. MCGAFFEY Director March 29, 1994
- ------------------------
Jere D. McGaffey
DANIEL F. MCKEITHAN, JR. Director March 29, 1994
- ------------------------
Daniel F. McKeithan, Jr.
GUY A. OSBORN Director March 29, 1994
- ------------------------
Guy A. Osborn
THOMAS F. SCHRADER Director March 29, 1994
- ------------------------
Thomas F. Schrader
STUART W. TISDALE Director March 29, 1994
- ------------------------
Stuart W. Tisdale
ESSIE M. WHITELAW Director March 29, 1994
- ------------------------
Essie M. Whitelaw
WILLIAM B. WINTER Director March 29, 1994
- ------------------------
William B. Winter
<PAGE>
<PAGE> 27
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To WICOR, Inc.:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in
Exhibit 13 to this Form 10-K, and have issued our report thereon
dated February 11, 1994. Our report on the consolidated financial
statements includes an explanatory paragraph with respect to the
change in the methods of accounting for income taxes and
postretirement benefits other than pensions in 1992 as discussed in
Notes 3 and 10 to the consolidated financial statements. Our audit
was made for the purpose of forming an opinion on those statements
taken as a whole. Supplemental Schedules III, V, VI, VIII, IX and
X are the responsibility of the Company's management and are
presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic
consolidated financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the
basic consolidated financial statements and, in our opinion, fairly
state in all material respects the financial data required to be
set forth therein in relation to the basic consolidated financial
statements taken as a whole.
ARTHUR ANDERSEN & CO.
Milwaukee, Wisconsin,
February 11, 1994.
<PAGE>
<PAGE> 28
Schedule III - Condensed
Parent Company Financial Statements
WICOR, INC.
(Parent Company Only)
Statement of Income
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1993 1992 1991
--------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Income:
Equity in income(loss) of subsidiaries
after dividends:
Wisconsin Gas Company................... $ 3,870 $ 4,060 $ 1,086
Sta-Rite Industries, Inc................ 2,506 (2,540)
(833)
Shurflo Pump Manufacturing Co........... 2,865 2,295 1,439
Wexco of Delaware, Inc.................. (118) 401
(760)
Filtron Technology, Inc................. 233 167 -
-------- -------- --------
9,356 4,383 932
Cash dividends from:
Wisconsin Gas Company................... 16,000 14,000 16,000
Sta-Rite Industries, Inc................ 5,000 5,000 5,000
Shurflo Pump Manufacturing Co........... 500 - -
Wexco of Delaware, Inc.................. - - 1,000
Interest income........................... 267 451 594
-------- -------- --------
31,123 23,834 23,526
-------- -------- --------
Expenses:
Operating (Supplemental Note B)........... 1,942 1,333 494
Interest ................................. 259 63 125
-------- -------- --------
2,201 1,396 619
-------- -------- --------
Income Before Parent Company Income Taxes... 28,922 22,438 22,907
Income Taxes................................ (391) (326)
(59)
-------- -------- --------
Income Before Cumulative Effects of
Accounting Changes........................ 29,313 22,764 22,966
Cumulative Effects of Accounting Changes:
Postretirement benefits other than
pensions (net of income tax benefit of
$4,110)................................. - (6,165) -
Income taxes ............................. - (1,800) -
-------- -------- --------
Net Income.................................. $ 29,313 $ 14,799 $ 22,966
======== ======== ========
<FN>
The accompanying notes are an integral part of this statement.
/TABLE
<PAGE>
<PAGE> 29
Schedule III - Condensed
Parent Company Financial Statements (continued)
WICOR, INC.
(Parent Company Only)
Statement of Retained Earnings
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1993 1992 1991
--------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Balance - Beginning of Year................. $ 90,102 $ 97,906 $ 96,087
Add:
Net income.............................. 29,313 14,799 22,966
-------- -------- --------
119,415 112,705 119,053
Deduct:
Cash dividends on common stock.......... 24,099 21,869 20,437
Other................................... 673 734 710
-------- -------- --------
Balance - End of Year ...................... $ 94,643 $ 90,102 $ 97,906
======== ======== ========
<FN>
The accompanying notes are an integral part of this statement.
/TABLE
<PAGE>
<PAGE> 30
Schedule III - Condensed
Parent Company Only Financial Statements (continued)
<TABLE>
<CAPTION>
WICOR, INC.
Statement of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
Year Ended December 31,
(Thousands of Dollars) --------------------------------
1993 1992 1991
--------------------------------
<S> <C> <C> <C>
Operations-
Net income ............................... $ 29,313 $ 14,799 $ 22,966
Adjustments to reconcile net income to
net cash flows:
Equity in (income) losses of
subsidiaries.......................... (9,356) (4,383) (932)
Cumulative effect of change in
accounting principles, net of income
tax benefit of $4,110................. - 7,965 -
Change in deferred income taxes......... (73) (73) -
Change in intercompany receivables...... (7,342) 4,285 (341)
Change in income taxes payable.......... 6,923 (3,445) 972
Change in other current assets.......... 98 (124) 543
Change in other current liabilities..... 178 176 (843)
Change in other non-current assets and
liabilities........................... (185) (578) (154)
--------- --------- ---------
19,556 18,622 22,211
--------- --------- ---------
Investment Activities-
Investments in subsidiaries............... (12,000) (15,000) (4,000)
Acquisitions.............................. - (3,202) -
--------- --------- ---------
(12,000) (18,202) (4,000)
--------- --------- ---------
Financing Activities-
Issuance of common stock.................. 16,682 6,081 11,844
Dividends paid on common stock, less
amounts reinvested...................... (21,450) (19,458) (18,304)
--------- --------- ---------
(4,768) (13,377) (6,460)
--------- --------- ---------
Change in Cash and Cash Equivalents......... 2,788 (12,957) 11,751
Cash and Cash Equivalents at Beginning
of Year................................... 4,317 17,274 5,523
--------- --------- ---------
Cash and Cash Equivalents at End of Year.... $ 7,105 $ 4,317 $ 17,274
========= ========= =========
Supplemental Disclosure of Cash Flow Information
Cash paid (received) during the year for:
Interest.................................. $ 1 $ 36 $ 89
Income taxes.............................. 2,805 (462) (36)
<FN>
The accompanying notes are an integral part of this statement.
/TABLE
<PAGE>
<PAGE> 31
Schedule III - Condensed
Parent Company Financial Statements (continued)
<TABLE>
<CAPTION>
WICOR, INC.
(Parent Company Only)
Balance Sheet
As of December 31,
----------------------
(Thousands of Dollars) 1993 1992
----------------------
<S> <C> <C>
Assets
- ------
Current Assets:
Cash and cash equivalents............................. $ 7,105 $ 4,317
Intercompany receivable (Supplemental Note A)......... 2,162 (5,180)
Deferred income taxes................................. 146 -
Other................................................. 112 210
--------- ---------
9,525 (653)
--------- ---------
Investment in Subsidiaries, at equity:
Wisconsin Gas Company................................. 174,648 158,551
Sta-Rite Industries, Inc.............................. 75,397 74,362
Shurflo Pump Manufacturing Co......................... 11,639 9,458
Wexco of Delaware, Inc................................ 4,308 4,426
Filtron Technology, Inc............................... 3,623 3,418
--------- ---------
269,615 250,215
--------- ---------
Deferred Taxes ......................................... - 73
Deferred Charges and Other.............................. 591 655
--------- ---------
$ 279,731 $ 250,290
========= =========
Liabilities and Capitalization
- ------------------------------
Current Liabilities:
Income taxes payables ................................ $ 2,875 $ (4,048)
Other................................................. 353 175
--------- ---------
3,228 (3,873)
--------- ---------
Deferred Credits........................................ (1,257) 275
--------- ---------
Capitalization:
ESOP loan guarantee (Supplemental Note C)............. 7,484 8,601
Common equity:
Common stock, $1 par value, authorized 60,000,000
shares; outstanding 16,407,000 and 15,722,000
shares, respectively ............................. 16,407 15,722
Other paid-in-capital .............................. 166,710 148,064
Retained earnings .................................. 94,643 90,102
Unearned compensation (Supplemental Note C)......... (7,484) (8,601)
--------- ---------
277,760 253,888
--------- ---------
$ 279,731 $ 250,290
========= =========
The accompanying notes are an integral part of this statement.
/TABLE
<PAGE>
<PAGE> 32
Schedule III - Condensed
Parent Company Financial Statements (continued)
WICOR, INC.
Notes to Parent Company Only Financial Statements
The following are supplemental notes to the WICOR, Inc. (Parent
Company Only) financial statements and should be read in
conjunction with the WICOR, Inc. Consolidated Financial Statements
and Notes thereto included herein under Item 8:
SUPPLEMENTAL NOTES
A. Net amounts due from subsidiaries result from intercompany
transactions including advances and federal income tax
liabilities, less payments of expenses by subsidiaries on
behalf of WICOR, Inc.
B. During 1993, 1992 and 1991, the parent company allocated
certain administrative and operating expenses to the following
subsidiaries using an allocation method approved by the PSCW:
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Wisconsin Gas Company $1,507,000 $1,325,000 $1,052,000
Sta-Rite Industries, Inc. 747,000 757,000 684,000
Shurflo Pump Manufacturing Co. 127,000 - -
Wexco of Delaware, Inc. 7,000 21,000 18,000
----------- ----------- ------------
$2,388,000 $2,103,000 $1,754,000
=========== =========== ============
</TABLE>
C. In November 1991, WICOR, Inc. (Parent Company Only)
established an Employee Stock Ownership Plan (ESOP) covering
non-union employees of Wisconsin Gas. Because the parent
company has guaranteed the loan, the unpaid balance is shown
as a liability on the balance sheet with a like amount of
unearned compensation recorded as a reduction of stockholders'
equity.
The ESOP trustee is repaying the $10 million loan with
dividends paid on the shares of WICOR common stock in the ESOP
and with Wisconsin Gas contributions to the ESOP.<PAGE>
<PAGE> 33
<TABLE>
<CAPTION>
WICOR, INC. Schedule V
Schedule V--PROPERTY, PLANT AND EQUIPMENT
Year Ended December 31, 1993
Retirements
Balance at or Sales Other Balance at
Beginning at Cost Changes End of
of Period Additions (Note 1) (Note 2) Period
----------- --------- ----------- ----------- ----------
GAS DISTRIBUTION (THOUSANDS OF DOLLARS)
- --------------------------------------
<S> <C> <C> <C> <C> <C>
GAS UTILITY PLANT, at original cost:
Production $ 784 $ 8 $ 6 $ - $ 786
Storage 1,377 - - - 1,377
Transmission 14,106 - - - 14,106
Distribution 536,571 29,569 1,910 - 564,230
General 82,017 14,486 3,073 - 93,430
Construction work in progress 3,289 (2,326) - - 963
Intangibles 211 - - - 211
----------- --------- ----------- ----------- ----------
638,355 41,737 4,989 - 675,103
OTHER PHYSICAL PROPERTY, at cost 4,508 516 159 - 4,865
----------- --------- ----------- ----------- ----------
Total 642,863 42,253 5,148 - 679,968
----------- --------- ----------- ----------- ----------
MANUFACTURING
- -------------------------------
LAND 3,185 (7) 167 105 3,116
BUILDINGS 21,716 775 545 351 22,297
MACHINERY AND EQUIPMENT 61,630 9,140 1,267 (690) 68,813
CONSTRUCTION WORK IN PROGRESS 3,608 (255) - 157 3,510
----------- --------- ----------- ----------- ----------
Total 90,139 9,653 1,979 (77) 97,736
----------- --------- ----------- ----------- ----------
OIL AND GAS 32,838 - 32,838 - -
----------- --------- ----------- ----------- ----------
Total property, plant and equipment $765,840 $51,906 $39,965 $(77) $777,704
=========== ========= =========== =========== ==========
<FN>
Note 1 - Retirements for gas distribution include $100,000 of land.
Note 2 - Other Changes within Manufacturing - Machinery and Equipment include $212,000 of additions for
the two month's ended December 31, 1992. See Note 2 within Notes to Consolidated Financial
Statements.
/TABLE
<PAGE>
<PAGE> 34
<TABLE>
<CAPTION>
WICOR, INC. Schedule V
Schedule V--PROPERTY, PLANT AND EQUIPMENT
Year Ended December 31, 1992
Balance at Retirements Balance at
Beginning or Sales Other Changes End of
of Period Additions at Cost (Note 1) Period
---------- --------- ----------- ------------- ----------
GAS DISTRIBUTION (THOUSANDS OF DOLLARS)
- ---------------------
<S> <C> <C> <C> <C> <C>
GAS UTILITY PLANT, at original cost:
Production $ 784 $ - $ - $ - $ 784
Storage 1,377 - - - 1,377
Transmission 14,108 - 2 - 14,106
Distribution 486,298 52,589 1,834 (482) 536,571
General 73,838 9,594 1,975 560 82,017
Construction work in progress 4,000 (711) - - 3,289
Intangibles 211 - - - 211
---------- --------- ----------- ------------- ----------
580,616 61,472 3,811 78 638,355
OTHER PHYSICAL PROPERTY, at cost 4,149 653 216 (78) 4,508
---------- --------- ----------- ------------- ----------
Total 584,765 62,125 4,027 - 642,863
---------- --------- ----------- ------------- ----------
MANUFACTURING
- -------------------------
LAND 1,631 111 39 1,482 3,185
BUILDINGS 18,761 650 102 2,407 21,716
MACHINERY AND EQUIPMENT 55,465 9,864 2,908 (791) 61,630
CONSTRUCTION WORK IN PROGRESS 4,545 (1,577) - 640 3,608
---------- --------- ----------- ------------- ----------
Total 80,402 9,048 3,049 3,738 90,139
---------- --------- ----------- ------------- ----------
OIL AND GAS 32,397 700 259 - 32,838
---------- --------- ----------- ------------- ----------
Total property, plant and equipment $ 697,564 $ 71,873 $ 7,335 $ 3,738 $ 765,840
========== ========= =========== ============= ==========
<FN>
Note 1 - The Nocchi acquisition accounts for $1,653,000, $2,634,000, $2,542,000 and $65,000 of land,
buildings, machinery and equipment and construction in progress, respectively, in
manufacturing's other changes. The reclass of a mainframe computer residual resulted in a
writedown of gross basis of ($1,148,000) in manufacturing machinery and equipment. Most other
changes are due to currency adjustments and other reclassifications between categories.
/TABLE
<PAGE>
<PAGE> 35
<TABLE>
<CAPTION>
WICOR, INC. Schedule V
Schedule V--PROPERTY, PLANT AND EQUIPMENT
Year Ended December 31, 1991
Retirements
Balance at or Sales Balance at
Beginning at Cost Other Changes End of
of Period Additions (Note 1) (Note 2) Period
GAS DISTRIBUTION ---------- --------- ----------- ------------- ----------
- --------------------- (THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
GAS UTILITY PLANT, at original cost:
Production $ 784 $ - $ - $ - $ 784
Storage 1,377 - - - 1,377
Transmission 14,177 24 2 (91) 14,108
Distribution 465,423 22,863 1,988 - 486,298
General 68,312 8,088 2,562 - 73,838
Construction work in progress 993 3,007 - - 4,000
Intangibles 211 - - - 211
---------- --------- ----------- ------------- ----------
551,277 33,982 4,552 (91) 580,616
OTHER PHYSICAL PROPERTY, at cost 3,783 491 216 91 4,149
---------- --------- ----------- ------------- ----------
Total 555,060 34,473 4,768 0 584,765
---------- --------- ----------- ------------- ----------
MANUFACTURING
- -------------------------
LAND 1,470 - - 161 1,631
BUILDINGS 16,370 447 - 1,944 18,761
MACHINERY AND EQUIPMENT 53,307 7,724 5,997 431 55,465
CONSTRUCTION WORK IN PROGRESS 2,575 2,126 - (156) 4,545
---------- --------- ----------- ------------- ----------
Total 73,722 10,297 5,997 2,380 80,402
---------- --------- ----------- ------------- ----------
OIL AND GAS 32,218 343 164 - 32,397
---------- --------- ----------- ------------- ----------
Total property, plant and equipment $ 661,000 $ 45,113 $ 10,929 $ 2,380 $ 697,564
========== ========= =========== ============= ==========
<FN>
Note 1 - Retirements for gas distribution include $46,000 of land.
Note 2 - The other change in manufacturing buildings includes $2,113,000 for reclassifying Webster
buildings that were not sold in the divestiture from net assets from discontinued operations
to buildings. The other change in manufacturing machinery and equipment is primarily
comprised of the purchase of Aquality machinery.
/TABLE
<PAGE>
<PAGE> 36
<TABLE>
<CAPTION>
WICOR, Inc. SCHEDULE VI-- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION Schedule VI
Year Ended December 31, 1993
Additions (Note 3) Deductions
(Thousands of Dollars) Provisions Charged to ------------------------------
Balance at ------------------------ Retirements Removal Balance
Beginning Clearing and or Sales Cost, Less at End of
GAS DISTRIBUTION (Note 1) of Period Income Other Accounts at Cost Salvage Other Period
- ------------------------- ----------- -------- -------------- ------------- ---------- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
GAS UTILITY PLANT:
General $293,462 $27,624 $ - $ 3,002 $783 $ - $317,301
Amortization of other
limited-term utility
investments 1,439 268 - - - - 1,707
Trans., tools and equip. 8,512 - 1,610 1,887 (405) 404 8,236
Retire. work in progress - - - - - - -
----------- -------- -------------- ------------- ---------- ------ --------
303,413 27,892(a) 1,610 4,889 378 404 327,244
OTHER PHYSICAL PROPERTY 2,638 536(b) - 159 - - 3,015
----------- -------- -------------- ------------- ---------- ------ --------
Total 306,051 28,428 1,610 5,048 378 404 330,259
----------- -------- -------------- ------------- ---------- ------ --------
MANUFACTURING (Note 2)
- -----------------------
BUILDINGS 6,178 933 - 227 - (474) 7,358
MACHINERY AND EQUIPMENT 33,544 7,438 - 986 - 609 39,387
----------- -------- -------------- ------------- ---------- ------ --------
Total 39,722 8,371(c) - 1,213 - 135 46,745
----------- -------- -------------- ------------- ---------- ------ --------
OIL AND GAS 28,520 -(a) - 28,520 - - -
----------- -------- -------------- ------------- ---------- ------ --------
Total $374,293 $36,799 $1,610(b) $34,781 $378 $539 $377,004
=========== ======== ============== ============= ========== ====== ========
<FN>
Notes 1 -Composite depreciation rates approximated 4.7% for 1993.
2 -Depreciation was calculated over the estimated useful lives of the respective assets:
Buildings, 10-40 years; Machinery and equipment, 4-10 years.
3 -Provisions per the Consolidated Statement of Cash Flows were as follows:
(a) Depreciation, depletion and amortization as shown per the Consolidated Statement of Income
(Includes miscellaneous amortizations totalling $152,000 not shown above.) $ 28,044
(b) Depreciation charged to income, clearing and other accounts 2,146
(c) Depreciation charged to manufacturing cost of sales 8,371
Other amortization charged to income accounts 5,177
----------
Depreciation, depletion and amort. as shown per the Consolidated Statement of Cash Flows $ 43,738
==========
/TABLE
<PAGE>
<PAGE> 37
<TABLE>
<CAPTION>
WICOR, Inc. SCHEDULE VI-- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION Schedule VI
Year Ended December 31, 1992
Additions (Note 3) Deductions
(Thousands of Dollars) Provisions Charged to -------------------------------
Balance at ------------------------ Retirements Removal Balance
Beginning Clearing and or Sales Cost, Less at End of
GAS DISTRIBUTION (Note 1) of Period Income Other Accounts at Cost Salvage Other Period
- ------------------------- ---------- -------- -------------- ----------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
GAS UTILITY PLANT:
General $ 272,115 $ 25,245 $ - $ 3,235 $ 666 $ (3) $ 293,462
Amortization of other
limited-term utility
investments 1,220 232 - 8 5 - 1,439
Trans., tools and equip 7,386 - 1,694 568 (103) 103 8,512
Retire. work in prog (10) - - - (10) - -
---------- -------- -------------- ----------- ---------- ------- ---------
280,711 25,477(a) 1,694 3,811 558 100 303,413
OTHER PHYSICAL PROPERTY 2,364 490(b) - 216 - - 2,638
---------- -------- -------------- ----------- ---------- ------- ---------
Total 283,075 25,967 1,694 4,027 558 100 306,051
---------- -------- -------------- ----------- ---------- ------- ---------
MANUFACTURING (Note 2)
- -----------------------
BUILDINGS 5,407 749 - 32 - (54) 6,178
MACHINERY AND EQUIPMENT 30,431 7,313 - 2,455 - 1,745 33,544
---------- -------- -------------- ----------- ---------- ------- ---------
Total 35,838 8,062(c) - 2,487 - 1,691 39,722
---------- -------- -------------- ----------- ---------- ------- ---------
OIL AND GAS 27,726 1,053(a) - 259 - - 28,520
---------- -------- -------------- ----------- ---------- ------- ---------
Total $ 346,639 $ 35,082 $ 1,694(b)$ 6,773 $ 558 $ 1,791 $ 374,293
========== ======== ============== =========== ========== ======= =========
<FN>
Notes 1 - Composite depreciation rates approximated 4.7% for 1992.
2 - Depreciation was calculated over the estimated useful lives of the respective assets:
Buildings, 10-40 years; Machinery and equipment, 4-10 years.
3 - Provisions per the Consolidated Statement of Cash Flows were as follows:
(a) Deprec., depletion and amort. as shown per the Consolidated Statement of Income $ 26,650
(Includes miscellaneous amortizations totalling $120,000 not shown above)
(b) Depreciation charged to income, clearing and other accounts 2,184
(c) Depreciation charged to manufacturing cost of sales 8,062
Other amortization charged to income accounts 3,304
---------
Depreciation, depletion and amortization as shown per the Consolidated Statement of Cash Flows $ 40,200
=========
/TABLE
<PAGE>
<PAGE> 38
<TABLE>
<CAPTION>
WICOR, Inc. SCHEDULE VI-- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION Schedule VI
Year Ended December 31, 1991
Additions (Note 3) Deductions
(Thousands of Dollars) Provisions Charged to -------------------------------
Balance at ------------------------ Retirements Removal Balance
Beginning Clearing and or Sales Cost, Less at End
GAS DISTRIBUTION(Note 1) of Period Income Other Accounts at Cost Salvage Other of Period
- ------------------------ ---------- -------- -------------- ----------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
GAS UTILITY PLANT:
General $251,711 $23,700 $ - $ 2,735 $ 635 $ (74) $272,115
Amortization of other
limited-term utility
investments 1,020 200 - - - - 1,220
Trans., tools and equip 7,441 - 1,716 1,771 (290) 290 7,386
Retirement work in prog (56) - - - (46) - (10)
---------- -------- -------------- ----------- ---------- ------- ---------
260,116 23,900(a) 1,716 4,506 299 216 280,711
OTHER PHYSICAL PROPERTY 2,133 447(b) - 216 - - 2,364
---------- -------- -------------- ----------- ---------- ------- ---------
Total 262,249 24,347 1,716 4,722 299 216 283,075
---------- -------- -------------- ----------- ---------- ------- ---------
MANUFACTURING (Note 2)
- ----------------------
BUILDINGS 3,471 666 - - - (1,270) 5,407
MACHINERY AND EQUIPMENT 29,415 6,511 - 5,049 - 446 30,431
---------- -------- -------------- ----------- ---------- ------- ---------
Total 32,886 7,177(c) - 5,049 - (824) 35,838
---------- -------- -------------- ----------- ---------- ------- ---------
OIL AND GAS 27,031 859(a) - 164 - - 27,726
---------- -------- -------------- ----------- ---------- ------- ---------
Total $ 322,166 $ 32,383 $ 1,716(b) $ 9,935 $ 299 $ (608) $346,639
========== ======== ============== =========== ========== ======= =========
<FN>
Notes 1 - Composite depreciation rates approximated 4.7% for 1991.
2 - Depreciation was calculated over the estimated useful lives of the respective assets:
Buildings, 10-40 years; Machinery and equipment, 4-10 years.
3 - Provisions per the Consolidated Statement of Cash Flows were as follows:
(a) Deprec., depletion and amort. as shown per the Consolidated Statement of Income $ 24,759
(b) Depreciation charged to income, clearing and other accounts 2,163
(c) Depreciation charged to manufacturing cost of sales 7,177
Other amortization charged to income accounts 2,183
--------
Depreciation, depletion and amortization as shown per the Consolidated Statement of Cash Flows $ 36,282
========
/TABLE
<PAGE>
<PAGE> 39
<TABLE>
<CAPTION>
WICOR, Inc. Schedule VIII
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1993, 1992 and 1991
Additions Deductions From
--------------------- Reserves for
Balance at Provisions Charged to Purposes for Balance
Beginning --------------------- Which the Reserves at End
Description of Period Income Other (1) Were Provided of Period
----------- ---------- --------- ---------- ------------------ ----------
(Thousands of Dollars)
Year Ended December 31, 1993:
- ----------------------------
<S> <C> <C> <C> <C> <C>
Reserves deducted from assets in the
accompanying Consolidated Balance Sheet-
Allowance for doubtful accounts $ 7,344 $ 13,784 $ 1,684 $ 13,461 $ 9,351
========== ========= ========== ================== ==========
Year Ended December 31, 1992:
- ----------------------------
Reserves deducted from assets in the
accompanying Consolidated Balance Sheet -
Allowance for doubtful accounts $ 6,014 $ 11,791 $ 3,717 $ 14,178 $ 7,344
========== ========= ========== ================== ==========
Year Ended December 31, 1991:
- ----------------------------
Reserves deducted from assets in the
accompanying Consolidated Balance Sheet -
Allowance for doubtful accounts $ 4,257 $ 12,249 $ 1,345 $ 11,837 $ 6,014
========== ========== ========== ================== =========
<FN>
(1) Other provisions primarily represent deferred Wisconsin Gas Company provisions for doubtful
accounts over or (under) the amount allowed for ratemaking purposes of $12,931,000, $10,807,000 and
$10,912,000 in 1993, 1992 and 1991, respectively, less amortizations of $1,166,000, $(1,046,000)
and $(742,000) in 1993, 1992 and 1991, respectively, relating to deferrals from prior years, as
ordered by the PSCW. See Note 1e of Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<PAGE> 40
<TABLE>
<CAPTION>
WICOR, INC. Schedule IX
SCHEDULE IX--SHORT-TERM BORROWINGS
Years Ended December 31, 1993, 1992 and 1991
Daily
Balance Weighted Maximum Amount Average Amount Weighted Average
Category of Aggregate at End Average Outstanding Outstanding Interest Rate
Short-term Borrowings of Period Interest Rate During the Period During the Period During the Period
- --------------------- ----------- ------------- ----------------- ----------------- -----------------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
1993
- ----
Bank notes payable $ 17,818 5.1% (a) $ 20,053 $ 14,594 7.2%
Commercial paper 117,100 3.4% 118,500 64,208 3.3%
All categories 134,918 3.6% 135,342 78,802 4.0%
1992
- ----
Bank notes payable $ 16,825 8.6% (a) $ 29,271 $ 22,389 10.0%
Commercial paper 56,275 3.6% 56,275 12,689 3.6%
All categories 73,100 4.7% 78,078 35,078 7.7%
1991
- ----
Bank notes payable $ 18,872 8.3% (a) $ 24,414 $ 19,080 11.5%
Commercial paper 12,000 4.5% 35,000 14,349 6.2%
All categories 30,872 6.8% 54,402 33,429 9.2%
<FN>
(a) Includes foreign borrowings based on local prime rates
/TABLE
<PAGE>
<PAGE> 41
<TABLE>
<CAPTION>
SCHEDULE X
WICOR, Inc.
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
Years Ended December 31, 1993, 1992 and 1991
Year Ended December 31
---------------------------------
1993 1992 1991
---------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Maintenance and repairs $ 9,983 $ 9,301 $ 9,495
========= ========= =========
<FN>
Taxes, Other Than Income Taxes did not contain a single category in
excess of one percent of Operating Revenues as shown in the related
Consolidated Statement of Income, and thus are not set forth above.
Royalty expense, advertising costs and amortization of intangible assets
did not exceed one percent of Operating Revenues as shown in the related
Consolidated Statement of Income, and thus are not set forth above.
</TABLE>
<PAGE>
<PAGE> 42
TABLE OF CONTENTS
TO EXHIBITS
Page
3.1 WICOR, Inc. Restated Articles of Incorporation, as
amended (incorporated by reference)
3.2 WICOR, Inc. By-laws, as amended (incorporated by
reference)
4.1 Indenture of Mortgage and Deed of Trust dated as of
November 1, 1950, between Milwaukee Gas Light Company
and Mellon National Bank and Trust Company and D. A.
Hazlett, Trustees (incorporated by reference)
4.2 Eleventh Supplemental Indenture dated as of February
15, 1982, between Wisconsin Gas Company and Mellon
Bank, N.A., and N. R. Smith, Trustees (incorporated by
reference)
4.3 Bond Purchase Agreement dated December 31, 1981,
between Wisconsin Gas Company and Teachers Insurance
and Annuity Association of America relating to the
issuance and sale of $30,000,000 principal amount of
First Mortgage Bonds, Adjustable Rate Series due 2002
(incorporated by reference)
4.4 Indenture dated as of September 1, 1990, between
Wisconsin Gas Company and First Wisconsin Trust
Company, Trustee (incorporated by reference)
4.5 Officers' Certificate, dated as of November 28, 1990,
setting forth the terms of Wisconsin Gas Company's 9-
1/8% Notes due 1997 (incorporated by reference)
4.6 Officers' Certificate, dated as of November 19, 1991,
setting forth the terms of Wisconsin Gas Company's 7-
1/2% Notes due 1988 (incorporated by reference)
4.7 Officers' Certificate, dated as of September 15, 1993,
setting forth the terms of Wisconsin Gas Company's
6.60% Debentures due 2013 (incorporated by reference)
4.6 Officers' Certificate, dated as of November 19, 1991,
setting forth the terms of Wisconsin Gas Company's 7-
1/2% Notes due 1988 (incorporated by reference)
4.8 Revolving Credit and Term Loan Agreement, dated as of
March 29, 1993, among Wisconsin Gas Company and
Citibank, N.A., Firstar Bank Milwaukee, N.A., Harris
Trust Savings Bank, M&I Marshall & Ilsley Bank and
Citibank, N.A., as Agent (incorporated by reference)
4.9 Note Agreement dated as of December 1, 1986, among
Sta-Rite Industries, Inc., Principal Mutual Life
Insurance Company, Aid Association for Lutherans, AAL
Employees' Retirement Trust and AAL Savings Plan Trust
relating to $12,000,000 Promissory Notes due December
1, 1993 (incorporated by reference)
(i)<PAGE>
<PAGE> 43
PAGE
4.10 Revolving Credit and Term Loan Agreement, dated as of
March 29, 1993, among Sta-Rite Industries, Inc. and
Citibank, N.A., Firstar Bank Milwaukee, N.A., Harris
Trust Savings Bank, M&I Marshall & Ilsley Bank and
Citibank, N.A., as Agent (incorporated by reference)
4.11 Revolving Credit and Term Loan Agreement, dated as
of March 29, 1993, among WICOR, Inc. and Citibank,
N.A., Firstar Bank Milwaukee, N.A., Harris Trust
Savings Bank, M&I Marshall & Ilsley Bank and
Citibank, N.A., as Agent (incorporated by reference)
4.12 Rights Agreement dated as of August 29, 1989,
between WICOR, Inc. and Manufacturers Hanover Trust
Company, Rights Agent (incorporated by reference)
4.13 Loan Agreement, dated as of November 4, 1991, by and
among M&I Marshall & Ilsley Bank, Wisconsin Gas
Company Employees' Savings Plan Trust and WICOR,
Inc. (incorporated by reference)
4.14 Guaranty, dated as of November 4, 1991, from WICOR,
Inc. to and for the benefit of M&I Marshall & Ilsley
Bank (incorporated by reference)
10.1 Service Agreement dated as of January 1, 1988, among
WICOR, Inc., Wisconsin Gas Company, Sta-Rite
Industries, Inc., and WEXCO of Delaware, Inc.
(incorporated by reference)
10.2* Endorsement of SHURflo Pump Manufacturing Co. dated
as of July 28, 1993, to Service Agreement among
WICOR, Inc., Wisconsin Gas Company, Sta-Rite
Industries, Inc., and WEXCO of Delaware, Inc.
10.3# WICOR, Inc. 1987 Stock Option Plan (incorporated by
reference)
10.4# Forms of nonstatutory stock option agreement used in
connection with the WICOR, Inc. 1987 Stock Option
Plan (incorporated by reference)
10.5# WICOR, Inc. 1992 Director Stock Option Plan
(incorporated by reference)
10.6# Form of nonstatutory stock option agreement used in
connection with the WICOR, Inc. 1992 Director Stock
Option Plan (incorporated by reference)
10.7*# WICOR, Inc. 1994 Officers' Incentive Compensation
Plan
10.8*# Wisconsin Gas Company Principal Officers'
Supplemental Retirement Income Program
*Indicates document filed herewith.
# Indicates a plan under which compensation is paid or
payable to directors or executive officers of the Company.
(ii)<PAGE>
<PAGE> 44
PAGE
10.9*# Wisconsin Gas Company 1994 Officers' Incentive
Compensation Plan
10.10# Wisconsin Gas Company Officers' Medical Expense
Reimbursement Plan (incorporated by reference)
10.11# Wisconsin Gas Company Group Travel Accident Plan
(incorporated by reference)
10.12# Form of Deferred Compensation Agreements between
Wisconsin Gas Company and certain of its executive
officers (incorporated by reference)
10.13# Sta-Rite Industries Officers' Supplemental
Retirement Income Program (incorporated by
reference)
10.14*# Sta-Rite Industries, Inc. 1994 Officers' Incentive
Compensation Plan
10.15# Sta-Rite Industries, Inc. Group Travel Accident
Plan (incorporated by reference)
10.16# WICOR, Inc. Retirement Plan for Directors
(incorporated by reference)
13* "Financial Review" portions of the WICOR, Inc. 1993
Annual Report to Shareholders
21* Subsidiaries of WICOR, Inc
23* Consent of independent public accountants
99* WICOR, Inc. proxy statement dated March 10, 1994
*Indicates document filed herewith.
# Indicates a plan under which compensation is paid or payable to
directors or executive officers of the Company.
(iii)<PAGE>
<PAGE>
<PAGE> 1
ENDORSEMENT NO. 1 Exhibit 10.2
TO
SERVICE AGREEMENT
(DATED AS OF JANUARY 1, 1988)
WHEREAS, pursuant to Article VII, Section 2 of the Service
Agreement among and between WICOR, Inc. ("WICOR"), Wisconsin Gas
Company, Sta-Rite Industries, Inc. and WEXCO of Delaware, Inc., dated
as of January 1, 1988 ("Agreement"), new subsidiaries acquired by
WICOR may become parties to the Agreement by endorsement after review
and approval by the Public Service Commission of Wisconsin; and
WHEREAS, on July 28, 1993, WICOR acquired all of the outstanding
common stock of Carr-Griff, Inc. (d/b/a SHURflo); and
WHEREAS, the corporate name of Carr-Griff, Inc. has been changed
to SHURflo Pump Manufacturing Co. ("SHURflo"); and
WHEREAS, the parties desire to add SHURflo as a party to the
Agreement and to be bound by all the terms and conditions of the
Agreement.
NOW, THEREFORE, SHURflo agrees to become a party to the
Agreement and to be bound by all the terms and conditions of the
Agreement.
IN WITNESS WHEREOF, SHURflo Pump Manufacturing Co. has caused
this Endorsement to be executed in its name and on its behalf by its
duly authorized officers as of the 28th day of July, 1993.
ATTEST: SHURflo Pump Manufacturing Co.
Karen E. Spors by: Stuart W. Tisdale
- ----------------------- ------------------------------
Assistant Secretary Chairman <PAGE>
<PAGE>
<PAGE> 1
EXHIBIT 10.7
WICOR, INC.
OFFICERS' INCENTINE COMPENSATION PLAN
1994
I. OBJECTIVES
The principal objectives of the Plan are:
A. To motivate and to provide incentive for key officers of
WICOR to achieve superior operating results for the benefit
of both customers and stockholders.
B. To assist in the retention of quality senior management.
C. To yield competitive total compensation levels when
performance goals are attained.
D. To document the basis of participation by plan participants
in subsidiary companies' incentive compensation plans, and
to provide supplemental WICOR incentive compensation as
required to achieve the above objectives.
II. ELIGIBILITY
Participation in the Plan is limited to designated WICOR
corporate officers and subsidiary unit heads. The Chief
Executive Officer will be responsible for recommending
eligibility changes to the Compensation Committee of the Board
of Directors of WICOR, Inc.
III. AMOUNT OF POTENTIAL AWARD
A. The minimum, target and maximum award opportunities for
each executive, as a percentage of base salary, are as
follows:
<TABLE>
<CAPTION>
AWARD AS A PERCENT OF SALARY
------------------------------------------
Position Minimum Target Maximum
---------- ------------ ------------ ------------
<S> <C> <C> <C>
CEO, WICOR 0% 50% 75.0%
Others 0% 40% 60.0%
/TABLE
<PAGE>
<PAGE> 2
B. Each executive's award will be determined based on a
combination of WICOR, subsidiary and individual
performance, with specific weights as follows:
<TABLE>
<CAPTION>
Percentage Of Award Determined By:
------------------------------------
Position WICOR Subsidiary Individual
Performance Performance Performance
-------------- ----------- ----------- -----------
<S> <C> <C> <C>
CEO, WICOR 75% 0% 25%
Subsidiary
Unit Head 25% 50% 25%
CFO, WICOR 75% 0% 25%
</TABLE>
Determination of the WICOR performance and individual
performance portions of the award are described in Section
IV of this document. The Subsidiary performance portion
is determined according to the Officer Incentive
Compensation Plan for that subsidiary.
IV. PERFORMANCE CRITERIA AND OBJECTIVE SETTING
A. Overall WICOR performance will be measured by earnings per
share. Threshold, Target and Maximum EPS performance
levels, and incentive awards corresponding to each
performance level are as follows:
<TABLE>
<CAPTION>
Performance Award As %
Performance As % Of 1994 Of Target
Level Target EPS Award
---------------- -------------- -------------- --------------
<S> <C> <C> <C>
Below Threshold less than 83% less than 0.0%
$1.82
Threshold 83% $1.82 1.0%
Target 100% $2.16 100%
(budget)
Maximum or Above 120% $2.59 150%
or more or more
</TABLE>
For performance at levels between Threshold and Target or
between Target and Maximum, award calculations will be
pro-rated on a linear basis.
<PAGE>
<PAGE> 3
B. The individual component of total incentive compensation
will be determined by the WICOR Compensation Committee
based on recommendations from the CEO reflecting the
individual's overall performance as measured against
previously identified and agreed upon goals and
objectives. The award may vary up to 150% of the individ-
ual performance portion of the target award, and will be
determined and paid independently of Corporate financial
performance.
C. If the Compensation Committee of WICOR, Inc. determines
that corporate performance was inadequate, it may exercise
discretion to reduce or eliminate any or all bonus
payments.
V. PERFORANCE PERIOD
Company performance goals will be for the 1994 calendar year.
VI. FORM AND TIMING OF AWARD PAYMENTS
A. Awards will be determined and paid as soon as practicable
after the close of the Plan year.
B. At each participant's discretion and with the concurrence
of the Compensation Committee of WICOR, Inc., awards may
be paid in one of three ways:
1. Lump Sum
2. Partly in lump sum and the remainder in deferred annual
installments.
3. Completely in deferred annual installments.
C. The Company will offer a deferred payment option to those
officers who prefer not to receive their awards in current
cash, following these guidelines:
1. Deferred incentive award payments will be carried as an
accrued liability with an interest rate (three-year
treasury bill rate) credited each year.
2. Deferred elections must be made prior to the end of the
performance period, and a definite time period for
deferral must be specified.
VII. IMPLEMENTATION
A. The effective date of the Plan is January 1, 1994.
<PAGE>
<PAGE> 4
VIII. PLAN ADMINISTRATION
A. Compensation Committee
1. The Plan will be administered by the Compensation
Committee of the Board of Directors of WICOR, Inc.
2. The Committee's administration is subject to approval of
the Board of Directors of WICOR, Inc.
3. The decisions of the Board are final and binding on all
Plan participants.
4. The Board retains the right to terminate or amend the
Plan as it may deem advisable.
B. Partial Year Participation:
1. Participants must be employed by the Company on the last
day of the Plan year in order to receive a bonus for
that year. However, once earned, a bonus will be paid
to a participant regardless of whether he/she is
employed by the company on the date payment is made.
2. Awards for part year participants will be pro-rated
based on the proportion of the year that the participant
was in the Plan. This includes participants who
terminate employment due to death, disability or
retirement.
3. Participants who terminate employment with the Company
prior to the last day of the Plan year shall forfeit all
rights to an incentive award payment under the Plan
except for terminations due to death, retirement or
disability.
4. A participant is deemed to be disabled if he/she becomes
eligible for benefits under the Company's Long Term
Disability Plan.<PAGE>
<PAGE>
<PAGE> 1
WISCONSIN GAS COMPANY Exhibit 10.8
PRINCIPAL OFFICERS' SUPPLEMENTAL RETIREMENT INCOME PROGRAM
1. Purpose of the Program
The purpose of the Wisconsin Gas Company Supplemental Retire-
ment Income Program (the "Program") is fivefold: (i) to reimburse
a corporate officer of Wisconsin Gas Company (the "Company") for
any reduction in his benefit payments under the Wisconsin Gas
Company Pension Plan for Non-Union Employees (the "Pension Plan")
which may be caused by the limitations imposed thereon by Internal
Revenue Code Section 415 (the "415 Limit") or Internal Revenue Code
Section 401(a)(17) (the "Compensation Limit") and/or by the
exclusion from the definition of compensation under the Pension
Plan of any earnings paid by Sta-Rite Industries, Inc. to its
corporate officers, any such earnings voluntarily deferred pursuant
to a non-qualified deferred compensation arrangement or any bonuses
(the "Sta-Rite/Bonus Exclusion"), any amounts voluntarily deferred
from Company salary pursuant to a non-qualified deferred
compensation arrangement (the "Deferred Compensation Exclusion") or
any bonuses payable by the Company (provided that any bonus
payments shall be pro-rated on a monthly basis over the calendar
year for which the bonus payments are applicable) (the "Company
Bonus Exclusion); (ii) to reimburse a corporate officer of the
Company for any reduction in his employer or employee contribution
allocations under the Wisconsin Gas Company Employees' Savings Plan
(the "Savings Plan") which may be caused by the 415 Limit and/or by
the Deferred Compensation Exclusion; (iii) to provide retirement
income for any principal corporate officer retiring on or after
January 1, 1987 to replace the post-retirement life insurance
benefit program which will not be available to anyone retiring
after December 31, 1986; (iv) to provide incentive and reward to
such principal officer through additional retirement income in
recognition of his meritorious service and material contribution to
the Company's continued growth and development; and (v) to assist
the Company in retaining and attracting high caliber key executives
upon whose efforts the future successful and profitable operation
of its business is dependent.
2. Effective Date
The Program was originally adopted effective as of January 1,
1983 as the replacement for the Wisconsin Gas Company Corporate
Officer Post-Retirement Benefit Plan in effect prior to that date
and was amended effective April 1, 1991 and January 1, 1993. This
is an amendment and restatement of the Program and is effective
January 1, 1994.<PAGE>
<PAGE> 2
3. Participants in the Program
Any principal officer of Wisconsin Gas Company and any
employee of WICOR, Inc. who either is a WICOR, Inc. officer or
holds a position with WICOR, Inc. equivalent to a Company salary
grade fifteen (15) and sixteen (16) shall be eligible to
participate in this Program. An officer who is concurrently
employed by and participating in the employee benefit plans of an
affiliate corporation shall not be eligible to participate. As
soon as practicable after the Board's adoption of the restated
Program, each present eligible corporate officer shall be notified
of his participant status under the Program and given a copy
thereof by the Wisconsin Gas Company Employee Benefit Plan
Committee (the "Committee"). The Committee shall provide similar
notice to any individual who subsequently becomes an eligible
corporate officer within thirty (30) days of such event. As a
condition of Program participation, each such principal officer
shall execute a written document in a form prescribed by the
Committee evidencing, among other things, his understanding and
acceptance of all terms and conditions of the Program.
4. Savings Plan Benefits
The Company shall establish a Savings Plan Bookkeeping Reserve
Account (the "Reserve Account") for each participant as follows:
(a) As of each December 31 during the participant's
employment with the Company as an officer commencing
December 31, 1983, an amount shall be credited to the
Reserve Account equal to the difference between (i) four
percent (4%) of the participant's aggregate compensation
as defined in the Savings Plan and the amount by which
such compensation is reduced by the Deferred Compensation
Exclusion for such calendar year; and (ii) the actual
employer contribution to the Savings Plan allocable to
the account of the participant for such calendar year,
excluding any participant deposits thereunder. Notwith-
standing the foregoing, in the event a participant fails
to make deposits equal to four percent (4%) of his
Compensation as defined in the Savings Plan during a
calendar year and such failure was not caused by the
415 Limit as estimated by the Company, the reference to
four percent (4%) in (i) above shall be reduced to the
percentage of the participant's compensation as defined
in the Savings Plan contributed by the participant to the
Savings Plan for such year.
(b) Pursuant to a salary reduction agreement, if any,
executed by the Company and a participant in the form
attached hereto as Exhibit A (the "Salary Reduction
Agreement"), an amount shall be credited by the Company
to the Reserve Account for such participant equal to the
amount, if any, by which the participant's salary is
reduced by the Salary Reduction Agreement (the "Pre-Tax
Employee Contribution"). The credit to the Reserve
Account for the Pre-Tax Employee Contribution shall be<PAGE>
<PAGE> 3
made as of the time specified in the Salary Reduction
Agreement. The Pre-Tax Employee Contribution under the
Salary Reduction Agreement is a non-qualified deferred
compensation agreement for purposes of computing the
Deferred Compensation Exclusion under the Program.
(c) The Salary Reduction Agreement may also provide that the
participant will contribute an amount to the Company to
be credited to the Reserve Account for such participant
(the "Post-Tax Employee Contribution"). The credit to
the Reserve Account for the Post-Tax Employee
Contribution shall be made as of the time specified in
the Salary Reduction Agreement and may be made by payroll
deduction or other method provided therein.
(d) As of the last day of each month, commencing January 31,
1984, and prior to any distribution pursuant to
subparagraphs (e) and (f) below, an additional amount
shall be credited to the Reserve Account as an interest
equivalent on the balance credited to the Reserve Account
as of the last day of the previous month. The interest
rate earned will be that rate earned for such month by
the "Fixed-Income Fund" under the Savings Plan.
(e) Payment of the amounts credited to the Reserve Account
for each participant shall commence during the month of
January immediately following the calendar year in which
occurs the participant's termination of employment with
the Company or WICOR, Inc. and shall be made in a lump
sum. A transfer of employment to Sta-Rite Industries,
Inc. shall not be treated as a termination of employment
causing a required distribution hereunder.
(f) In the event of a participant's death before benefits
hereunder have been paid to him, any amount allocated to
the Reserve Account shall be paid in a lump sum in the
month following such death to such beneficiary or
beneficiaries as the participant shall designate by
written instrument delivered to the Secretary of the
Company, or if no such written instrument is properly
delivered or if such designated beneficiary predeceases
the participant, to the executors, administrators, or
personal representatives of the participant's estate.
(g) The Reserve Account shall be utilized solely as a device
for the measurement and determination of the amount to be
paid to a participant at the times specified above for
the payment of Savings Plan benefits. Neither the
Reserve Account nor any other reserve established on the
Company's books to reflect the liabilities under this
Plan shall constitute or be treated as a trust fund of
any kind. On the contrary, it is expressly agreed and
understood that the Company shall not be required to set
aside any assets with respect hereto and that any assets
actually held by the Company with reference to this Plan
shall be and remain the sole property of the Company, and
that neither a participant nor a participant's<PAGE>
<PAGE> 4
beneficiaries, heirs, legal representatives or assigns
shall have ownership rights of any nature with respect
thereto, unless and until such time as such assets are
paid over and transferred to the participant or the
participant's beneficiaries, as herein provided.
(h) The Program shall accept a transfer from the Sta-Rite
Industries Officers' Supplemental Retirement Income
Program ("Sta-Rite Supplemental Plan") for Stuart W.
Tisdale and Joseph P. Wenzler of the obligations and
liabilities under Section 4 thereof with respect to a
deferred savings plan account, which amount shall be
treated as the opening balance of said individual's
Reserve Account.
5. Pension Plan Benefits
For purposes of this paragraph, "Unrestricted Pension Benefit"
means the amount which would have been payable from the Pension
Plan if the: (1) 415 Limit, (2) Compensation Limit, (3) Sta-
Rite/Bonus Exclusion, (4) Wisconsin Bonus Exclusion, (5) Deferred
Compensation Exclusion and (6) the amendment that froze benefit
accruals as of December 31, 1988 for "super highly compensated"
participants (provided such frozen benefit accruals have not been
adjusted by subsequent amendments to the Pension Plan) did not
apply, calculated as of the participant's date of retirement based
on the applicable optional payment method, but subject to
adjustment from time to time for applicable cost of living
increases. "Restricted Benefit Amount" means the amount actually
payable from the Pension Plan calculated as of the participant's
date of retirement based on the applicable optional payment method,
but subject to adjustment from time to time for applicable cost of
living increases and for reductions in the 415 Limit and the
Compensation Limit.
For purposes of calculating Mr. Tisdale's Unrestricted Pension
Benefit, this Program shall recognize the transfer from the Sta-
Rite Supplemental Plan of the obligations and liabilities under
Section 5 thereof, using the terms of the Company's Pension Plan,
including the special years of service granted for purposes of the
supplement pursuant to Exhibit I of the Sta-Rite Supplemental Plan.
Pension Plan benefits are only available to a participant who
is a corporate officer immediately prior to his normal or early
retirement from the Company under the terms of the Pension Plan.
An eligible participant and his beneficiary(ies) shall receive from
the Company amounts as specified below.
(a) Married Participants - Joint and Survivor Annuity. A
participant who is lawfully married at his retirement
date and elects to receive his benefits from the Pension
Plan in any joint and survivor annuity form available
thereunder with his spouse designated as the survivor
annuitant, shall receive a monthly supplement for his
lifetime. The supplement shall be equal to the
difference between (i) the Unrestricted Pension Benefit
payable on a life only annuity basis under the terms of<PAGE>
<PAGE> 5
the Pension Plan and (ii) the Restricted Benefit Amount
payable on a joint and fifty percent (50%) survivor
annuity basis under the terms of the Pension Plan. If
the participant predeceases his spouse, fifty percent
(50%) of such difference shall then be paid monthly to
his surviving spouse during her lifetime. If both the
participant and his spouse die prior to the end of the
ten (10) year period commencing on his retirement date,
fifty percent (50%) of the aggregated monthly amount
received by him under the Pension Plan and this
subparagraph 5(a) shall be paid for the balance of such
ten (10) year period to the beneficiary designated in
writing by him for that purpose or, in the absence of
such a designated beneficiary, to the estate of the last
survivor of the participant and his spouse.
(b) Unmarried Participants - Ten-Year Certain Annuity. A
participant who is unmarried at his retirement date and
elects to receive his benefits from the Pension Plan in
the ten (10) year period certain annuity form available
thereunder, shall receive a monthly supplement for his
lifetime. The supplement shall be equal to the
difference between (i) the Unrestricted Pension Benefit
payable on a life only annuity basis under the terms of
the Pension Plan and (ii) the Restricted Benefit Amount
payable in a ten (10) year period certain annuity form
under the terms of the Pension Plan. If the participant
dies prior to the end of the ten (10) year period
commencing on his retirement date, the supplement shall
be paid for the balance of such ten (10) year period to
the beneficiary designated in writing by him for the
purpose or, in the absence of such a designated
beneficiary, to the estate of the participant.
(c) Lump Sum Pension Plan Distribution. A participant who
elects to receive his benefits from the Pension Plan in
a lump sum distribution at his retirement date shall
receive a supplement hereunder based on the difference
between (i) the Unrestricted Pension Benefit, and (ii)
the restricted Benefit Amount, both calculated on a life
only annuity basis. In the event the lump sum value of
such difference payable on a monthly life only annuity
basis calculated using the Pension Plan factors is less
than $100,000, such amount shall be paid to the
participant in a lump sum with no survivor benefits. In
the event the lump sum value is $100,000 or more, the
difference between (i) and (ii) above shall be paid
monthly to the participant for his lifetime. If the
participant predeceases the spouse to whom he was married
at his retirement date, if any, fifty percent (50%) of
such monthly supplement shall be paid monthly to his
surviving spouse during her lifetime. If both the
participant and his spouse, if applicable, die prior to
the end of the ten (10) year period commencing on his
retirement date, fifty percent (50%) of such supplement
to the participant shall be paid for the balance of such
ten (10) year period to the beneficiary designated in<PAGE>
<PAGE> 6
writing by him for that purpose or, in the absence of
such a designated beneficiary, to the estate of the last
survivor of the participant and his spouse as of his
retirement date, if any.
(d) Other Participants. A participant who retires pursuant
to the normal or early retirement provisions of the
Pension Plan and does not satisfy the requirements for a
supplement under subparagraph (a), (b) or (c) above shall
receive a monthly supplement pursuant to this
subparagraph (d). The supplement shall be equal to the
difference between (i) the Unrestricted Pension Benefit
and (ii) the Restricted Benefit Amount, both calculated
according to the form of payment elected for his Pension
Plan benefits. The supplement shall be paid for the
participant's lifetime, and in the event the
participant's death and payment election form cause a
Pension Plan payment to a beneficiary, a portion of the
supplement shall be paid to such beneficiary during the
period of any related Pension Plan payment. The portion
of the supplement to be paid shall equal the portion of
the participant's Pension Plan benefit which is continued
for such beneficiary.
6. Supplemental Retirement Benefits
Supplemental retirement benefits shall be available to a
participant who is a principal corporate officer immediately prior
to his normal or early retirement from the Company under the terms
of the Pension Plan, if such retirement occurs on or after
January 1, 1987 but before December 31, 1992. After December 31,
1992, these supplemental Retirement Benefits shall be available to
the following Company officers to the extent that they satisfy the
retirement qualification requirement herein: Messrs. Schrader,
Nuernberg, Giroux, Osborn, Petry and Zeddun. The monthly
supplement is equal to $2,083.33 ($25,000 annually) and shall
commence to the participant at the later of attainment of age
sixty-five (65) or retirement. Payments shall be made as of the
first day of the month commencing with the month following the
qualifying event and shall continue for one hundred eighty (180)
months. If the participant dies (i) after commencement of benefits
but prior to the end of the fifteen (15) year period or (ii) after
retirement but prior to attainment of age sixty-five (65), the
supplement shall be paid for the balance of such period to the
beneficiary designated in writing by him for that purpose or, in
the absence of such a designated beneficiary, to the estate of the
participant. Payments under (ii) above shall commence as of the
month following the participant's death and shall continue for the
fifteen (15) year period.
7. Administration of the Program
The Program shall be administered by the Committee; provided
that a participant in the Program who is a Committee member may not
participate in any Committee action regarding his benefits
hereunder. The Committee shall have all such powers that may be
necessary to carry out the provisions of the Program in the absence<PAGE>
<PAGE> 7
of any action by the Board, including without limitation, the power
to delegate administrative matters to other persons, to construe
and interpret the Program, to adopt and revise rules, regulations
and forms relating to and consistent with the Program's terms and
to make any other determinations which it deems necessary or
advisable for the implementation and administration of the Program;
provided, however, that the right and power to amend and/or
terminate the Program are reserved exclusively to the Board.
Subject to the foregoing, all decisions and determinations by the
Committee shall be final, binding and conclusive as to all parties,
including without limitation the Company, any participant hereunder
and all other employees and persons.
8. Source of Benefit Payments
No funds or other assets of the Company shall be segregated
and attributable to any benefit payments to be made at a later time
as hereinabove provided, but rather benefit payments under the
Program shall be made from the general assets of the Company at the
time any such payment becomes due and payable. Benefit payments
under the Program are to be taken as deductions for income tax
purposes in the Company's fiscal year that they are actually made.
At such time as any benefit payments are made, it shall be
determined by the Company whether any portion thereof is allocable
to WICOR, Inc. and/or Sta-Rite Industries, Inc. because of their
recipient having also served as a corporate officer of either or
both of those corporation; and, if such is the case, the Company
shall obtain reimbursement from WICOR, Inc. and/or Sta-Rite
Industries, Inc., as appropriate, for such allocable portion. No
participant or surviving spouse or beneficiary thereof shall have
any proprietary rights of any nature whatsoever with respect to any
benefit payments, unless and until such time a benefit payment, and
then only as to the amount of such payment, is made to such
participant or the surviving spouse or beneficiaries thereof, as
the case may be.
9. Non-Alienation of Payments
Any benefits payable under the Program shall not be subject in
any manner to alienation, sale, transfer, assignment, pledge,
attachment, garnishment or encumbrance of any kind, by will, or by
inter vivos instrument. Any attempt to alienate, sell, transfer,
assign, pledge or otherwise encumber any such benefit payment,
whether currently or thereafter payable, shall not be recognized by
the Committee or the Company. Any benefit payment due hereunder
shall not in any manner be liable for or subject to the debts or
liabilities of any participant or the surviving spouse or
beneficiary thereof, as the case may be. If any such participant,
surviving spouse or beneficiary shall attempt to alienate, sell,
transfer, assign, pledge or otherwise encumber any benefit payments
to be made to that person under the Program or any part thereof, or
if by reason of such person's bankruptcy or other event happening
at any time, such payments would devolve upon anyone else or would
not be enjoyed by such person, then the Committee, in its
discretion, may terminate such person's interest in any such
benefit payment, and hold or apply it to or for the benefit of that
person, the spouse, children, or other dependents thereof, or any<PAGE>
<PAGE> 8
of them, in such manner as the Committee may deem proper.
10. Incompetency
Every person receiving or claiming benefit payments under the
Program shall be conclusively presumed to be mentally competent
until the date on which the Committee receives a written notice, in
a form and manner acceptable to the Committee, that such person is
incompetent and that a guardian, conservator, or other person
legally vested with the care of his estate has been appointed. In
the event a guardian or conservator of the estate of any person
receiving or claiming benefit payments under this Program shall be
appointed by a court of competent jurisdiction, payments may be
made to such guardian or conservator; provided that proper proof of
appointment and continuing qualification is furnished in a form and
manner acceptable to the Committee. Any such payment so made shall
be a complete discharge of any liability therefor.
11. Limitation of Rights against the Company
Participation in this Program, or any modifications thereof,
or the payments of any benefits hereunder, shall not be construed
as giving to any participant any right to be retained in the
service of the Company, limiting in any way the right of the
Company to terminate such participant's employment at any time,
evidencing any agreement or understanding express or implied, that
the Company will employ such participant in any particular position
or at any particular rate of compensation and/or guaranteeing such
participant any right to receive any other form or amount of
remuneration from the Company.
12. Construction
The Program shall be construed, administrated and governed in
all respects under and by the laws of the State of Wisconsin.
Wherever any words are used herein in the masculine, they shall be
construed as though they were used in the feminine for all cases
where they would so apply; and wherever any words are used herein
in the singular or the plural, they shall be construed as though
they were used in the plural or the singular, as the case may be,
in all cases where they would so apply. The words "hereof",
"herein", "hereunder" and other similar compounds of the word
"here" shall mean and refer to this entire documents and not to any
particular paragraph.
13. Liability
Neither the Company nor any shareholder, director, officer or
other employee of the Company or any member of the Committee or any
other person shall be jointly or severally liable for any act or
failure to act hereunder, except for gross negligence or fraud.
14. Amendment or Termination of the Plan
The Company, by action of the Board, reserves the right to
amend, modify, terminate or discontinue the Program at any time;
and such action shall be final, binding and conclusive as to all<PAGE>
<PAGE> 9
parties, including any participant hereunder, any surviving spouse
or beneficiary thereof and all other Company employees and persons;
provided, however, that any such Board action to terminate or
discontinue the Program or to change the monthly payment amount or
the time and manner of payment thereof as then provided in the
Program shall not be effective and operative unless and until
written consent thereto is obtained from each participant affected
by such action or, if any such participant is not then living, from
the surviving spouse or beneficiary thereof, as the case may be.
15. Successors or Assigns
The terms and conditions of the Program, as amended and in
effect from time to time, shall be binding upon the successors and
assigns of the Company, including without limitation any entity
into which the Company may be merged or with which the Company may
be consolidated. <PAGE>
<PAGE> 10
WISCONSIN GAS COMPANY PRINCIPAL OFFICERS'
SUPPLEMENTAL RETIREMENT INCOME PROGRAM
Exhibit A
Salary Reduction Agreement
This Agreement is being made and entered into as of this
______ day of _______________, 19___, by and between Wisconsin Gas
Company, a Wisconsin corporation (the "Company") and
________________________________ (the "Participant").
1. Effective with respect to salary earned on and after
_______________________ (a payroll period commencement date after
the execution of this Agreement), the Company and the Participant
agree to defer $______________ per payroll period from the
Participant's salary. Such deferred amount shall be credited to
the Reserve Account as a Pre-Tax Employee Contribution as of the
time the deferred amount would have been paid to the Employee but
for this Agreement.
2. Effective on and after ______________________ (a payroll
period commencement date after the execution of this Agreement),
the Participant directs the Company to deduct from the
Participant's salary $________________ per payroll period on an
after-tax basis as a Post-Tax Employee Contribution. Such deducted
amount shall be credited to the Reserve Account as of the time the
deducted amount would have been paid to the participant but for
this Agreement.
3. On ______________________, the Participant shall give to
the Company in a lump sum $_______________ as a Post-Tax Employee
Contribution. Such amount shall be credited to the Reserve Account
as of the first day of the month following the date of receipt.
Any election under paragraphs 1 or 2 above may be changed
on a prospective basis by action of either the Company or the
Participant.
WISCONSIN GAS COMPANY
By: _______________________________
_______________________________
Participant
Instructions
- ------------
This form is an optional election by principal corporate
officers participating under the Program. Company-paid benefits
are provided under the Program whether or not Pre-Tax Employee
Contributions or Post-Tax Employee Contributions are elected. An
officer can elect any combination of 1, 2 or 3 (or note of them),
but the maximum amount of such contribution will be determined from
time to time by the Company. <PAGE>
<PAGE> 11
WISCONSIN GAS COMPANY
PRINCIPAL OFFICERS' SUPPLEMENTAL RETIREMENT INCOME PROGRAM
I, ___________________________, hereby acknowledge that I
received a copy of this Program, as restated, effective January 1,
1994 and that I understand and accept all the terms and conditions
thereof.
__________________________ _______________________________
Date Signature
[Execution of this form is a condition of participation in the
Wisconsin Gas Company Principal Officers' Supplemental Retirement
Income Program.]<PAGE>
<PAGE>
<PAGE> 1
Exhibit 10.9
Wisconsin Gas Company
Officers' Incentive Compensation Plan
1994
I. OBJECTIVES
The principal objectives of the Plan are:
A. To motivate and to provide incentive for key officers of
Wisconsin Gas Company to achieve superior operating
results for the benefit of both customers and
stockholders.
B. To assist in the retention of quality senior management.
C. To yield competitive total compensation levels when
performance goals are attained.
II. ELIGIBILITY
Participation in the Plan is limited to designated corporate
officers of Wisconsin Gas. The Chief Executive Officer of
WICOR will be responsible for recommending eligibility changes
to the Compensation Committee of the Board of Directors of
WICOR, Inc.
III. AMOUNT OF POTENTIAL AWARD
A. The minimum, target and maximum award opportunities for
each officer, as a percentage of base salary, are as
follows:
<TABLE>
<CAPTION>
Award as % of Salary
-------------------------------------------
Position Minimum Target Maximum
--------------- ------------- ------------ ------------
<S> <C> <C> <C>
President & CEO 0% 40% 60%
VP 0% 20% 30%
</TABLE>
B. Only 50% of the President & CEO's award opportunity will
be determined according to the provisions of this Plan.
Of that 50%, 67% will be determined by Performance Plus
and 33% will be determined by Net Income as a percentage
of budget. The remaining 50% will be determined based on
the WICOR Officers' Incentive Compensation Plan.
<PAGE>
<PAGE> 2
IV. PERFORMANCE CRITERIA AND OBJECTIVE SETTING
A. Each executive's incentive award will be related to the
achievement of Company performance goals, and a component
reflecting individual performance.
B. Total incentive opportunity is further based on the
following measures:
- 50% Performance Plus (Company-wide operational and
financial incentive Plan)
- 25% Net Income as a percentage of budget
- 25% Individual
Therefore, 75% of the total bonus opportunity is based on
operational and financial results and 25% is based on
individual performance.
The individual portion of the incentive payout will be
based on the individual's overall performance as measured
against previously identified and agreed upon goals and
objectives. The award may vary up to 150% of the
individual performance portion of the target award, and
will be determined and paid independently of Company
financial performance.
C. If the Compensation Committee of WICOR, Inc. determines
that the Net Income level was inadequate or that services
to customers did not meet corporate goals or standards
developed, it may exercise discretion to reduce or
eliminate any or all bonus payments.
V. PERFORMANCE PERIOD
Company performance goals will be for the 1994 calendar year.
VI. BONUS AWARD DETERMINATION
A. Performance Plus. Each year management will recommend
specific goals for safety, customer service and cost
effectiveness. Associated with various levels of
performance for each goal will be a certain number of
award points. The cumulative total of these points
adjusted by a "multiplier", based on Net Income as a
percent of budget, will determine the formula payout under
this portion of the Plan.
For 1994, the performance measures and related points and
the "multiplier" are set forth in Exhibit I.
B. Net Income as a Percentage of Budget
Actual net income as a percentage of budget will generate
incentive compensation equal to 25% of the target award
multiplied by the following percentages:<PAGE>
<PAGE> 3
<TABLE>
<CAPTION>
Net Income Award Determination
-------------------------------------------------
Net Income as % of Target
Performance Level % of Budget Awarded
------------------- ------------- -----------
<S> <C> <C>
Less than Threshold Less than 87% 0.0%
Threshold 87% 1.0%
Target 100% 100.0%
Maximum 120% 150.0%
</TABLE>
For performance at levels between Threshold and Target or
between Target and Maximum, award calculations will be
pro-rated on a linear basis.
For 1994, the amount of targeted net income is set forth
in Exhibit 10.9a.
C. Total performance awards will be calculated by combining
the payouts from Performance Plus, Net Income and
Individual Components.
VII. FORM AND TIMING OF AWARD PAYMENTS
A. Awards will be determined and paid as soon as practicable
after the close of the Plan year.
B. At each participant's discretion and with the concurrence
of the Compensation Committee of WICOR, Inc., awards may
be paid in one of three ways:
1. Lump Sum
2. Partly in lump sum, and the remainder in deferred
annual installments.
3. Completely in deferred annual installments.
C. The Company will offer a deferred payment option to those
officers who prefer not to receive their awards in current
cash, following these guidelines:
1. Deferred incentive award payments will be carried as an
accrued liability with an interest rate (three-year
treasury bill rate) credited each year.
2. Deferral elections must be made prior to the end of the
performance period, and a definite time period for
deferral must be specified.
<PAGE>
<PAGE> 4
VIII. PLAN ADMINISTRATION
A. Compensation Committee:
1. The Plan will be administered by the Compensation
Committee of the Board of Directors of WICOR, Inc.
2. The Committee's administration is subject to approval
of the Board of Directors of WICOR, Inc.
3. The decisions of the Board are final and binding on all
Plan participants.
4. The Board retains the right to terminate or amend the
Plan as it may deem advisable.
5. In evaluating actual Company performance results in
comparison with pre-established objectives established
for the Plan year, and in establishing resulting
incentive compensation levels, the Compensation
Committee, at their sole discretion, may take unusual
and unique factors into consideration as they deem
appropriate. Similarly, the Committee may modify
performance targets during the course of a Plan year
if significant change takes place which would affect
the measure.
6. It shall be the Committee's responsibility to review
the overall reasonableness of incentive compensation
paid to participants of this Plan in relation to
overall services performed and results obtained by the
Company during the Plan year. The Committee shall make
its determination on the basis of its judgement as to
what constitutes satisfactory performance with respect
to the fulfillment of the Company's mission or charter.
Issues to be considered shall include, but not be
limited to the following:
a. Quality and level of service provided to customers.
b. Health and safety considerations.
c. Maintenance of specific required standards of
performance.
d. Representation of shareholders' interests (including
Rate of Return achieved compared to allowed).
Based upon this review, the incentive compensation paid to
participants may be reduced or withheld so that the total
compensation paid will be reasonable in relation to services
performed. The decisions of the Committee are final and
binding on all parties.
<PAGE>
<PAGE> 5
B. Partial Year Participation:
1. Participants must be employed by the Company on the
last day of the Plan year in order to receive a bonus
for that year. However, once earned, a bonus will be
paid to a participant regardless of whether he/she is
employed by the Company on the date payment is made.
2. Awards for part year participants will be pro-rated
based on the proportion of the year that the
participant was in the Plan. This includes
participants who terminate employment due to death,
disability or retirement.
3. Participants who terminate employment with the Company
prior to the last day of the Plan year shall forfeit
all rights to an incentive award payment under the Plan
except for terminations due to death, retirement or
disability.
4. A participant is deemed to be disabled if he/she
becomes eligible for benefits under the Company's Long
Term Disability Plan.
<PAGE>
<PAGE> 6
Exhibit 10.9a
Wisconsin Gas Company
Incentive Compensation Plan
Formula Performance Goals
1994
Performance Plus*
-----------------
Maximum
Points
----------
1. Customer Service
Favorability/Customer Satisfaction 10
2. Safety
On-the-Job Injuries 5
Claims 5
3. Cost Effectiveness
Operation & Maintenance Expense 5
Change in Residential Rates 5
-------------
Maximum Total Points (Target = 20 points) 30
=============
4. Multiplier
Net Income as % of Budget Multiplier
------------------------- ----------
Less than 87% 0.0000
87% 0.0100
90% 0.2385
95% 0.6192
100% 1.0000
110% 1.1667
120% 1.3333
* This is a summarization of the Performance Plus Plan which
will govern the actual calculation of the payout amounts.
<TABLE>
<CAPTION>
NET INCOME AS A % OF BUDGET
<S> <C> <C>
Minimum (87%) $19,819,000
Target (100%) $22,780,000
Maximum (120%) $27,336,000
/TABLE
<PAGE>
<PAGE>
<PAGE> 1
Exhibit 10.14
Sta-Rite Industries, Inc.
Officers' Incentive Compensation Plan
1994
I. Objectives
The principal objectives of the Plan are:
A. To motivate and to provide incentive for key officers of
Sta-Rite to achieve superior operating results for the
benefit of both customers and stockholders.
B. To assist in the retention of quality senior management.
C. To yield competitive total compensation levels when
performance goals are attained.
II. ELIGIBILTY
Participation in the Plan is limited to designated officers of
Sta-Rite Industries, Inc. The Chief Executive Officer, WICOR
will be responsible for recommending eligibility changes to
the Compensation Committee of the Board of Directors of WICOR,
Inc.
III. AMOUNT OF POTENTIAL AWARD
A. The minimum, target and maximum award opportunities for
each officer level position, as a percentage of base
salary, are as follows:
<TABLE>
CAPTION>
Award as Percent of Base Salary
-----------------------------------------
Position Minimum Target Maximum
----------------- ----------- ------------ ------------
<S> <C> <C> <C>
President and COO 0% 40% 60.0%
VP 0% 30% 45.0%
</TABLE>
B. Only 50% of the President and COO's award opportunity will
be determined according to the provisions of this Plan.
Of that 50%, 67% will be determined by Net Income and 33%
will be determined by Return on Assets. The remaining 50%
will be determined based on the WICOR Officers' Incentive
Compensation Plan.<PAGE>
<PAGE> 2
IV. PERFORMANCE CRITERIA AND OBJECTIVE SETTING
A. Participants' bonus opportunity is based on consolidated
Company performance.
B. Total bonus opportunity is further based on the following:
- 50% net earnings (dollars)
- 25% return on total assets
- 25% individual
Therefore, 75% of the total bonus opportunity is based on
financial results (formula); and 25% is based on
individual performance.
The individual portion of the incentive payout will be
based on the individual's overall performance as measured
against previously identified and agreed upon goals and
objectives. The award may vary up to 150% of the
individual performance portion of the target award, and
will be determined and paid independently of Company
financial performance.
C. If the Compensation Committee of WICOR, Inc. determines
that corporate performance was inadequate, it may exercise
discretion to reduce or eliminate any or all bonus
payments.
D. Formula bonus objectives are:
1. Total Company
A. Net earnings: defined as absolute dollars of
reported net earnings (after-tax) of the Company
for the Plan year.
B. Return on total assets: defined as reported net
earnings (after-tax) divided by average (twelve
months) total assets (both current and non-current)
of the Company for the Plan year.
2. The specific target levels will be changed from year to
year to reflect the changing emphasis of the business
plan. Specific target levels for 1994 are set forth on
Exhibit 14.a.
V. PERFORMANCE PERIOD
Company performance goals will be for the 1994 calendar year.
<PAGE>
<PAGE> 3
VI. BONUS AWARD DETERMINATION
A. Each year management will establish appropriate formula
performance levels for minimum, target and maximum bonus
awards.
B. As noted in Section III A, the target bonus amount for the
President and COO is 40% of salary and the target bonus
for all other officers is 30% of salary.
C. Bonus awards for formula and discretionary portions will
be evaluated and computed separately.
1. Formula bonus awards will be determined based on
achieving the performance levels indicated in the
following schedule:
<TABLE>
<CAPTION>
Level of
Performance Objective Percent of
Level Achieved Target Awarded
------------------------ ----------------- ----------------
<S> <C> <C>
Less than Threshold Less than 75% 0.0%
Threshold 75% 1.0%
Target 100% 100.0%
Maximum 120% 150.0%
</TABLE>
For performance between Threshold and Target or between
Target and Maximum, award calculations will be pro-rated
on a linear basis.
VII. FORM AND TIMING OF AWARD PAYMENTS
A. Awards will be determined and paid as soon as practical
after the close of the Plan year.
B. At each participant's discretion and with the concurrence
of the Compensation Committee of WICOR, Inc., awards may
be paid in one of three ways:
1. Lump sum.
2. Partly in lump sum, and the remainder in deferred
annual installments.
3. Completely in deferred annual installments.
C. The Company will offer a deferred payment option to those
officers who prefer not to receive their awards in current
cash, following these guidelines:<PAGE>
<PAGE> 4
1. Deferred incentive award payments will be carried as an
accrued liability with an interest rate (three-year
treasury bill rate) credited each year.
2. Deferral elections must be made prior to the end of the
performance period, and a definite time period for
deferral must be specified.
VIII. PLAN ADMINISTRATION
A. Compensation Committee:
1. The Plan will be administered by the Compensation
Committee of the Board of Directors of WICOR, Inc.
("Committee").
2. The Committee's administration is subject to approval
of the Board of Directors of WICOR, Inc.
3. The decisions of the board are final and binding on all
participants.
4. The Board retains the right to terminate or amend the
Plan as it may deem advisable.
B. Partial Year Participation:
1. Participants must be employed by the Company on the
last day of the Plan year in order to receive an
incentive award for that year. However, once earned,
the award will be paid to a participant regardless of
whether he/she is employed by the Company on the date
payment is made.
2. Awards for part year participants will be pro-rated
based on the proportion of the year that the
participant was in the Plan. This includes
participants who terminate employment due to death,
disability or retirement.
3. Participants who terminate employment with the Company
prior to the last day of the Plan year shall forfeit
all rights to an incentive award payment under the Plan
except for terminations due to death, retirement or
disability.
4. A participant is deemed to be disabled if he/she
becomes eligible for benefits under the Company's Long
Term Disability Plan.
<PAGE>
<PAGE> 5
Exhibit 10.14a
Sta-Rite Industries, Inc.
Incentive Compensation Plan
Formula Performance Goals - 1994
<TABLE>
<CAPTION>
Performance Goal: Net Earnings ($000) Return on Assets
----------------- ------------------- ----------------
<S> <C> <C>
Minimum $ 7,500 4.50%
Target $ 10,000 6.00%
Maximum $ 12,000 7.20%
</TABLE>
<PAGE>
<PAGE> 1
EXHIBIT 13
GENERAL OVERVIEW
WICOR has two significant business segments: gas distribution
and manufacturing. Gas distribution is the primary business as it
accounted for 68% of consolidated revenues and 72% of consolidated
operating income in 1993 with manufacturing contributing the
balance. The manufacturing segment has grown significantly through
the 1993 acquisition of SHURflo Pump Manufacturing Co. (Shurflo),
a manufacturer of small pumps for the food service and
recreational markets. The acquisition was accounted for as a
pooling of interests. As a result, prior years have been restated.
Shurflo added $46.6 million of revenues and $5.0 million of
operating income to consolidated results in 1993. During the
second quarter the Company sold all of its oil and gas properties
held by its subsidiary, Wexco of Delaware, Inc. at approximately
book value for $4.0 million.
WICOR earnings were $29.3 million in 1993, or $1.82 per share
of common stock, compared with $22.8 million, or $1.47 per share
in 1992 ($14.8 million, or $.96 per share after the cumulative
effect of accounting changes) and $23.0 million, or $1.54 per
share in 1991.
Gas sales increased in 1993 as a result of colder weather and
customer additions in 1992 and 1993. Manufacturing operations
showed significant improvement as a result of an improved
competitive domestic position, continuing strong international
sales, and the recovering residential construction market.
Net cash flows from operations for the years 1991 through
1993 totalled $90.8 million. Cash proceeds of $24.4 million
received in 1991 from the sale of discontinued operations and a
$129.5 million net increase in long-term debt, common stock and
short-term debt, along with the net cash flows from operations
provided the funding for $168.9 million of capital expenditures
and $59.2 million of dividends for the three years. Segment data
for WICOR's operations are summarized below.
<TABLE>
<CAPTION>
Operating Revenues (Millions of Dollars) 1993 1992 1991
- ---------------------------------------- -------- -------- --------
<S> <C> <C> <C>
Gas Distribution $ 574.8 $ 495.4 $ 474.7
Manufacturing 274.7 252.0 242.1
-------- -------- --------
$ 849.5 $ 747.4 $ 716.8
======== ======== ========
Depreciation, Depletion and Amortization
(Millions of Dollars)
- ----------------------------------------
Gas Distribution $ 34.8 $ 30.5 $ 28.3
Manufacturing 8.9 9.7 8.0
-------- -------- --------
$ 43.7 $ 40.2 $ 36.3
======== ======== ========
Operating Income (Millions of Dollars)
- ----------------------------------------
Gas Distribution $ 46.2 $ 43.3 $ 39.5
Manufacturing 17.8 10.0 11.7
-------- -------- --------
$ 64.0 $ 53.3 $ 51.2
======== ======== ========
/TABLE
<PAGE>
<PAGE> 2
<TABLE>
<CAPTION>
Actual
Capital Expenditures Estimated ------------------------------
(Millions of Dollars) 1994 1993 1992 1991
- ------------------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
Gas Distribution $ 57.4 $ 42.3 $ 62.1 $ 34.6
Manufacturing 13.9 9.6 9.8 10.5
-------- -------- -------- --------
$ 71.3 $ 51.9 $ 71.9 $ 45.1
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Identifiable Assets at December 31
(Millions of Dollars) 1993 1992 1991
- ---------------------------------- -------- -------- --------
<S> <C> <C> <C>
Gas Distribution $ 737.2 $ 634.6 $ 486.2
Manufacturing 196.5 191.2 184.1
-------- -------- --------
$ 933.7 $ 825.8 $ 670.3
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
VERTICAL BAR GRAPH OF WICOR OPERATING INCOME
millions of dollars 1989 1990 1991 1992 1993
- -------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Gas Distribution $ 53.8 $ 34.9 $ 39.5 $ 43.3 $ 46.2
Manufacturing 16.9 9.7 11.7 10.0 17.8
-------- -------- -------- -------- --------
$ 70.7 $ 44.6 $ 51.2 $ 53.3 $ 64.0
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
VERTICAL BAR GRAPH OF WICOR'S RETURN ON AVERAGE COMMON EQUITY
BEFORE CUMULATIVE EFFECTS OF ACCOUNTING CHANGES
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
percent 14.3% 6.8% 9.5% 9.2% 11.2%
<FN>
Note: 1989 and 1990 are based on income from continuing operations
/TABLE
<PAGE>
<PAGE> 3
RESULTS OF OPERATIONS
Gas Distribution
- ----------------
Increased sales margins in 1993 and 1992 were sufficient to
offset higher levels of operating expenses, resulting in increases
in operating income. Margins benefited in 1993 from rate increases
effective in November 1992 and November 1993. The 1993 earnings
reflect an 11.3% return on weighted average common equity. A $12.3
million or 2.9% annual rate increase, effective on November 12,
1993, included a reduction in the authorized return on common
equity to 11.8% from the previously authorized 12.75%.
Revenues, margins and volumes are summarized below. Margin,
defined as revenues less cost of gas, is a better comparative
performance indicator than revenues. Transportation service
revenues are recorded at margin with no corresponding cost of gas
amount. Therefore, for a given rate class, the volume mix between
sales and transportation service affects revenues but not margin.
In addition, changes in cost of gas are flowed through to revenue
under a gas adjustment clause, with no effect on margin.
<TABLE>
<CAPTION>
(Millions of Dollars) 1993 1992 1991
- ------------------------------- -------- -------- --------
<S> <C> <C> <C>
Gas sales revenue $ 565.1 $ 485.3 $ 465.4
Gas purchase costs 382.0 319.4 303.4
-------- -------- --------
Gas sales margin 183.1 165.9 162.0
Gas transportation margin 9.7 10.1 9.3
-------- -------- --------
Total margin $ 192.8 $ 176.0 $ 171.3
======== ======== ========
(Millions of Therms)
- -------------------------------
Sales volumes
Firm 823 782 792
Interruptible 208 174 174
Transportation volumes 174 214 197
-------- -------- --------
Total throughput 1,205 1,170 1,163
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
VERTICAL BAR GRAPH OF ANNUAL DEGREE DAYS
% COLDER (WARMER) THAN 20-YEAR AVERAGE
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
% colder (warmer) 1.5% (16.0%) (10.8%) (6.4%) (4.1%)
</TABLE>
Total gas margin increased by 10% and 3% for 1993 and 1992,
respectively. Weather in 1993 was 1% colder than 1992. Weather in
1992 was 4% colder than 1991. The number of residential customers
increased by 3% in 1993 and 2% in 1992 due to expansion into rural
markets. Industrial throughput remained at the same approximate
level in 1993 and 1992. Much of the industrial market has dual
fuel capability and as such is sensitive to changing prices of
natural gas and alternate fuels.<PAGE>
<PAGE> 4
Operation and maintenance expenses increased by $10.9 million
or 11% in 1993. In addition to normal inflation, the increase was
due to higher costs for employee benefits, business systems
software amortization, conservation programs, and uncollectible
receivables. Operation and maintenance expenses decreased by $0.9
million or 1% in 1992. The reduction was in large measure due to
decreases in employee benefits and other operating costs.
Manufacturing Operations
- ------------------------
Manufacturing operating income in 1993 was $17.8 million
compared with $10.0 million in 1992 and $11.7 million in 1991.
Sales in 1993 were $274.7 million, an increase of 9% over
1992 sales of $252.0 million. Improvements were noted in sales of
water systems, drainers and environmental pumps as well as pumps
for the food service, marine, water purification and industrial
markets. The improved economy and favorable weather conditions
were significant factors contributing to the increase.
Sales in 1992 were $252.0 million, an increase of 4% over
1991 sales of $242.1 million. International and export sales
increases were somewhat offset by decreases in domestic markets.
International and export sales represented 34% of
manufacturing sales in both 1993 and 1992. Significant growth has
occurred in the Australian and European markets, despite a weak
European economy.
<TABLE>
<CAPTION>
VERTICAL BAR GRAPH OF MANUFACTURING
INTERNATIONAL AND EXPORT SALES
1989 1990 1991 1992 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
millions of dollars $63.3 $64.9 $75.5 $85.9 $93.8
</TABLE>
As a result of continuing efforts to control costs, operating
expenses decreased by 2% in 1993, despite the 9% increase in
sales. This is a significant improvement over the 6% increase in
1992. Much of the 1993 savings was generated through
administrative personnel reductions in 1992 and 1993.
Other Income (Deductions) and Income Taxes
- ------------------------------------------
Other net deductions increased by less than 1% in 1993. Both
interest income and interest expense declined as a result of lower
interest rates. In September 1993 the utility refinanced $45
million of long-term debt to take advantage of lower interest
rates. The 1992 increase in other net deductions was due to a
higher interest expense as increased borrowings were used to
finance higher utility capital expenditures.
Income tax expense increased in 1993 primarily as a result of
higher pre-tax book income and a 1% increase in the federal tax
rate effective January 1, 1993. Income tax expense increased in
1992 as both pre-tax book income and the effective tax rate
increased.<PAGE>
<PAGE> 5
Accounting Changes
- ------------------
The cumulative effect of accounting changes related to the
recording of income taxes and postretirement benefits totaled $8.0
million in 1992 . The impact of adopting these two accounting
changes, effective January 1, 1992, is discussed in Notes 3 and
10.
Effects of Changing Prices
- --------------------------
It is management's view that changes in the rate of inflation
have not had a significant effect on income over the past three
years. Utility operating cost increases due to inflation are
generally recoverable through increased revenues due to the
utility's forward looking test year. Wisconsin Gas has proposed to
the Public Service Commission of Wisconsin (PSCW) an alternative
method of ratemaking that may have an impact on how inflationary
costs are recovered. This alternative method is discussed in the
following section.
LIQUIDITY AND CAPITAL RESOURCES
Over the last three years, the Company has generated
sufficient cash flows from operations to cover operating expenses,
dividends, and a portion of investment activities. Cash flow from
operations decreased to $3.4 million in 1993, compared with $37.0
million in 1992 and $50.4 million in 1991. The 1993 decrease is
primarily due to funds used by the utility to purchase gas held in
storage. As discussed under regulatory matters, one of the impacts
of Federal Energy Regulatory Commission (FERC) Order No. 636 is
that utilities such as Wisconsin Gas must assume the
responsibility for purchasing gas supplies and maintaining gas in
storage. Previously, the pipelines performed those functions.
Accordingly, Wisconsin Gas is now required to finance its own gas
in storage. In the future, Wisconsin Gas does not expect to
experience increases of gas in storage as large as that of 1993.
Investment Activities
- ---------------------
Capital expenditures decreased by $20.0 million in 1993 after
increasing by $26.8 million in 1992. Utility expenditures returned
to more normal levels in 1993 following completion of a major
expansion project in 1992. Utility capital expenditures are
expected to increase substantially in 1994 as several expansion
projects are anticipated.
In July 1993, WICOR merged with Shurflo by exchanging
approximately $27 million of WICOR stock for the outstanding
common stock of Shurflo. See Note 2 for a further discussion of
this transaction. The Company, either directly or through its
subsidiaries, has invested $2.1 million, $9.8 million and $4.2
million in 1993, 1992 and 1991, respectively, in other acquisition
activity.
In January 1992, the PSCW issued an order prescribing an
equity-based formula for determining the limitation on non-utility
investments. As of December 31, 1993, WICOR would be permitted to
invest an additional $77.8 million in nonutility investments under
this order. Nonutility subsidiaries can also borrow additional
amounts for acquisitions within certain PSCW guidelines (See Note
6).<PAGE>
<PAGE> 6
<TABLE>
<CAPTION>
VERTICAL BAR GRAPH OF WICOR CAPITAL EXPENDITURES
1994
millions of dollars 1989 1990 1991 1992 1993 Est
- ------------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Gas distribution $25.8 $28.0 $34.6 $62.1 $42.3 $57.4
Manufacturing 9.1 8.3 10.5 9.8 9.6 13.9
------ ------ ------ ------ ------ ------
$34.9 $36.3 $45.1 $71.9 $51.9 $71.3
====== ====== ====== ====== ====== ======
</TABLE>
Funds from Financing
- --------------------
During 1993, the utility issued $45 million of 6.6% Notes due
in 2013, the proceeds of which were used to refinance $45 million
of outstanding higher cost first mortgage bonds due in 1994 and
1995. There were no issues of long-term debt in 1992. The Company
does not anticipate the need to issue any long-term debt in 1994.
The Company's debt portion of capitalization decreased to 38% in
1993 as compared to 40% in 1992 and 41% in 1991. The utility's
embedded cost of long-term debt decreased from 9.2% at December
31, 1992 to 8.9% at December 31, 1993.
WICOR raised its dividend by 3% in both 1993 and 1992. The
annual rate is now $1.56 per share. At December 31, 1993 the
company had $35.4 million of unrestricted retained earnings
available for dividend payments to shareholders.
In October 1992, the Company established the WICOR Plan which
allows customers, shareholders, employees and Wisconsin residents
to purchase WICOR common stock directly and through dividend
reinvestment without paying fees or service charges. During 1993,
685,000 shares of common stock were issued through the WICOR Plan
and by the exercise of employee stock options. These stock sales
provided funds to the Company of $16.7 million.
The holding company structure provides the Company with the
flexibility to maintain its financial strength in a changing
business environment while insulating Wisconsin Gas from
nonutility risk. Centralized equity financing is available whereby
equity capital raised may be reinvested by the Company in its
subsidiaries.
As described in Note 6, a November 1993 PSCW rate order
updated certain limitations with respect to equity levels and
dividend payments of Wisconsin Gas. Under the order, the equity
floor was lowered to reflect the need for increased short-term
debt financing for seasonal gas storage. The limitations on
dividend payments were unchanged from prior years.
<TABLE>
<CAPTION>
VERTICAL BAR GRAPH OF WICOR'S CAPITALIZATION
percent 1989 1990 1991 1992 1993
- ------------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
long-term debt 33.4% 35.4% 40.9% 40.1% 37.9%
common stock 66.6 64.6 59.1 59.9 62.1
/TABLE
<PAGE>
<PAGE> 7
Restrictions imposed by the PSCW are not expected to have any
material effect on WICOR's ability to meet its cash obligations.
WICOR invested $12 million and $15 million in Wisconsin Gas during
1993 and 1992, respectively.
The utility's ratio of pre-tax earnings to fixed charges
increased to 2.9 in 1993 due to higher earnings and lower interest
rates compared with 2.8 in 1992. The decrease in 1992 from 3.0 in
1991 was due to higher debt levels in 1992.
Access to securities markets can be correlated to credit
quality. The utility's unsecured bond rating was increased in 1993
by Moody's Investors Service from A1 to Aa3. The rating from
Standard & Poor's Corporation remained at AA-. Commercial paper
carrying an A-1+ rating by Standard & Poor's Corporation and P-1
by Moody's Investors Service is routinely issued by the utility as
needed to finance seasonal working capital needs, principally
customer receivables and gas in storage.
In March 1993, WICOR and its subsidiaries renewed a
three-year revolving credit agreement, including separate
agreements for $25 million for the WICOR parent company, $30
million for Wisconsin Gas, and $15 million for Sta-Rite. In 1993,
Sta-Rite renewed a $25 million commercial paper issuance facility.
Commercial paper outstanding at December 31, 1993 and 1992 was
$117.1 million and $56.3 million, respectively. The increase was
due, primarily, to financing of higher levels of gas in storage.
Regulatory Matters
- ------------------
In 1993, the PSCW adopted a biennial rate case process to
replace the existing annual process. The biennial process utilizes
a traditional cost based rate of return regulatory procedure with
the resulting rates made effective for two years. As an
alternative, Wisconsin Gas has proposed to the PSCW the adoption
of a Productivity-based Alternative Ratemaking Mechanism (PARM).
Developed as a four year pilot program, the PARM would feature an
inflation-based rate cap and a weather adjustment mechanism. The
PARM is designed to focus management's attention on long-term
productivity improvements rather than on responding to
uncontrollable weather variations. This will provide Wisconsin Gas
with appropriate incentives to control costs and to prepare for
the competitive environment that is resulting from the
deregulation and restructuring of the gas industry. The PARM
proposal is currently being reviewed by the PSCW. Management is
not able to assess the ultimate outcome of the proposal.
In April 1992, the FERC issued Order 636 requiring interstate
pipelines to "unbundle" their services. As a result, gas supplies
are sold separately from interstate transportation services.
Distribution companies such as Wisconsin Gas contract separately
with gas suppliers to buy gas to be delivered to the pipelines and
contract with the pipelines for transportation from gas production
areas to utility market areas. While Wisconsin Gas has been buying
a portion of its supply requirements in this manner for several
years, as FERC policies have evolved, it is now required to
purchase all of its supplies in this manner. As a result, the
utility has greater responsibility for managing its gas supply in
a more competitive market. Variable-term market sensitive
contracts and the increased use of gas in storage are being used
to assure future supply.<PAGE>
<PAGE> 8
Pipelines have been allowed to pass through to local gas
distributors such as Wisconsin Gas various costs incurred in the
transition to Order 636. The PSCW has authorized that such costs
that have been passed through to Wisconsin Gas be recovered in
rates charged to customers. Although complete assurance cannot be
given, it is believed that any additional future transition costs
will also be recoverable from customers.
Environmental Matters
- ---------------------
Wisconsin Gas has investigated its past gas manufacturing
practices to determine the environmental remediation efforts that
will be required. Wisconsin Gas has identified two previously
owned sites on which it operated manufactured gas plants where
contaminated soils are present. Wisconsin Gas is in the process of
reviewing investigative reports and developing a feasibility study
for presentation to and discussion with the Wisconsin Department
of Natural Resources. The utility anticipates that the costs
incurred in this effort will be recoverable from insurers or
through rates. (See Note 7 for a more detailed discussion of this
matter.)
The manufacturing segment has provided reserves believed
sufficient to cover its estimated costs related to contamination
associated with Sta-Rite's manufacturing facilities.
<PAGE>
<PAGE> 9
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of WICOR, Inc.:
We have audited the accompanying consolidated balance sheets
and statements of capitalization of WICOR, Inc. (a Wisconsin
corporation) and subsidiaries as of December 31, 1993 and 1992,
and the related consolidated statements of income, common equity
and cash flows for each of the three years in the period ended
December 31, 1993. These financial statements are the
responsibility of WICOR, Inc.'s management. Our responsibility is
to express an opinion on these statements 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 WICOR, Inc. and subsidiaries as of December 31, 1993 and 1992,
and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1993, in
conformity with generally accepted accounting principles.
As discussed in Notes 3 and 10 to the Consolidated Financial
Statements, effective January 1, 1992, WICOR, Inc. changed its
methods of accounting for income taxes and postretirement benefits
other than pensions.
Milwaukee, Wisconsin, ARTHUR ANDERSEN & CO.
February 11, 1994.<PAGE>
<PAGE> 10
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
(Thousands of Dollars, Except
per Share Amounts) Year Ended December 31, 1993 1992* 1991*
---------- ---------- ----------
<S> <C> <C> <C>
Operating Revenues
Gas distribution $ 574,835 $ 495,415 $ 474,702
Manufacturing and other 274,693 251,994 242,065
---------- ---------- ----------
849,528 747,409 716,767
---------- ---------- ----------
Operating Costs and Expenses
Purchased gas 382,027 319,377 303,441
Manufacturing cost of sales 197,297 180,388 173,014
Operations and maintenance 169,068 159,009 156,015
Depreciation, depletion and amortization 28,044 26,650 24,759
Taxes, other than income taxes 9,141 8,670 8,360
---------- ---------- ----------
785,577 694,094 665,589
---------- ---------- ----------
Operating Income 63,951 53,315 51,178
---------- ---------- ----------
Other Income (Deductions)
Interest expense (17,428) (18,126) (16,804)
Interest income 590 1,084 1,575
Other, net (324) 40 (307)
---------- ---------- ----------
(17,162) (17,002) (15,536)
---------- ---------- ----------
Income Before Income Taxes 46,789 36,313 35,642
Income taxes 17,476 13,549 12,676
---------- ---------- ----------
Income Before Cumulative Effects
of Accounting Changes 29,313 22,764 22,966
Cumulative effects of accounting changes:
Postretirement benefits other than pensions
(net of $4.1 million income tax benefit) - (6,165) -
Income taxes - (1,800) -
---------- ---------- ----------
Net Income $ 29,313 $ 14,799 $ 22,966
========== ========== ==========
Per Share of Common Stock Income before
cumulative effects of accounting changes $ 1.82 $ 1.47 $ 1.54
Cumulative effect of accounting change
for postretirement benefits - (0.40) -
Cumulative effect of accounting change
for income taxes - (0.11) -
---------- ---------- ----------
Net Income $ 1.82 $ 0.96 $ 1.54
========== ========== ==========
Cash dividends $ 1.54 $ 1.50 $ 1.46
Average Common Shares Outstanding (thousands) 16,096 15,490 14,890
========== ========== ==========
<FN>
*Restated to reflect the merger with Shurflo, which has been accounted for as a
pooling of interests (see Note 2).The accompanying notes are an integral part of
this statement.
/TABLE
<PAGE>
<PAGE> 11
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31,
-------------------------
1993 1992*
---------- ----------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 22,953 $ 16,632
Accounts receivable, less allowance for
doubtful accounts of $9,351 and
$7,344, respectively 111,408 103,063
Accrued utility revenues 53,483 48,029
Manufacturing inventories 58,079 54,873
Gas in storage, at weighted average cost 44,697 6,647
Deferred income taxes 10,005 6,829
Prepayments and other 13,969 13,339
---------- ----------
314,594 249,412
---------- ----------
Property, Plant and Equipment, at cost
Gas distribution 679,968 642,863
Manufacturing 97,736 90,139
Oil and gas - 32,838
---------- ----------
777,704 765,840
Less accumulated depreciation,
depletion and amortization 377,004 374,293
---------- ----------
400,700 391,547
---------- ----------
Deferred Charges and Other
Deferred systems development costs 38,808 36,265
Other regulatory assets 57,211 58,973
Deferred environmental costs 41,641 -
Prepaid pension costs 29,580 28,158
Gas transition costs 15,485 25,329
Other 35,707 36,090
---------- ----------
218,432 184,815
---------- ----------
$ 933,726 $ 825,774
========== ==========
<FN>
* Restated to reflect the merger with Shurflo, which has been accounted for as a
pooling of interests (see Note 2). The accompanying notes are an integral part
of this statement.
</TABLE>
<PAGE>
<PAGE> 12
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31,
-------------------------
1993 1992*
---------- ----------
<S> <C> <C>
Liabilities and Capitalization
Current Liabilities
Accounts payable $ 62,683 $ 73,785
Short-term borrowings 134,918 73,100
Refundable gas costs 15,596 13,641
Current portion of long-term debt 2,847 5,829
Accrued taxes 10,089 920
Accrued payroll and benefits 14,656 12,087
Other 15,199 19,135
---------- ----------
255,988 198,497
---------- ----------
Deferred Credits and Other
Environmental remediation costs 40,000 -
Unamortized investment tax credit 8,654 9,128
Deferred income taxes 45,878 46,671
Gas transition costs 15,485 25,329
Other regulatory liabilities 50,179 52,544
Postretirement benefit obligation 67,510 67,938
Other 14,526 16,209
---------- ----------
242,232 217,819
---------- ----------
Commitments and Contingencies (Note 7)
Capitalization (See accompanying statement)
Long-term debt 165,230 164,171
Redeemable preferred stock - -
Common equity 270,276 245,287
---------- ----------
435,506 409,458
---------- ----------
$ 933,726 $ 825,774
========== ==========
<FN>
* Restated to reflect the merger with Shurflo, which has been accounted for as a
pooling of interests (see Note 2). The accompanying notes are an integral part
of this statement.
/TABLE
<PAGE>
<PAGE> 13
CONSOLIDATED STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
(Thousands of Dollars)
Year Ended December 31, 1993 1992* 1991*
--------- --------- ---------
<S> <C> <C> <C>
Operations
Net income $ 29,313 $ 14,799 $ 22,966
Adjustments to reconcile net income to
net cash flow from operating activities:
Cumulative effect of changes in
accounting principles, net of $4,110
income tax benefit - 7,965 -
Depreciation, depletion and amortization 43,738 40,200 36,282
Deferred income taxes (3,969) (2,958) 2,953
Changes in:
Receivables (13,993) (8,627) (7,056)
Manufacturing inventories (2,590) (839) 9,384
Gas in storage (38,050) (6,252) 4,754
Other current assets (569) 6,016 (261)
Systems development costs (6,530) (9,976) (10,174)
Accounts payable (11,055) (2,259) 270
Refundable gas costs 1,955 5,633 (3,884)
Accrued taxes 9,169 (2,098) (1,567)
Other current liabilities (292) (1,754) (136)
Other noncurrent assets and liabilities (3,726) (2,838) (1,293)
Net assets of discontinued operations - - (1,825)
--------- --------- ---------
Cash provided by operating activities 3,401 37,012 50,413
--------- --------- ---------
Investment Activities
Capital expenditures (51,906) (71,873) (45,113)
Net proceeds from sale of assets 5,328 761 -
Net proceeds from sale of
discontinued operations - - 24,395
Acquisitions (2,120) (9,776) (4,152)
Other, net 541 274 994
--------- --------- ---------
Cash (used in) investing activities (48,157) (80,614) (23,876)
--------- --------- ---------
Financing Activities
Change in short-term borrowings 59,603 35,726 (5,729)
Issuance of long-term debt 47,446 173 40,023
Reduction of long-term debt (50,982) (8,674) (22,691)
Issuance of common stock 16,682 6,079 11,844
Dividends paid on common stock,
less amounts reinvested (21,450) (19,459) (18,304)
Other (222) (734) (710)
--------- --------- ---------
Cash provided by financing activities 51,077 13,111 4,433
--------- --------- ---------
Change in Cash and Cash Equivalents 6,321 (30,491) 30,970
Cash and cash equivalents at
beginning of year 16,632 47,123 16,153
--------- --------- ---------
Cash and Cash Equivalents at End of Year $ 22,953 $ 16,632 $ 47,123
========= ========= =========
<FN>
*Restated to reflect the merger with Shurflo, which has been accounted for as a
pooling of interests (see Note 2). The accompanying notes are an integral part
of this statement.
/TABLE
<PAGE>
<PAGE> 14
CONSOLIDATED STATEMENT OF CAPITALIZATION
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31, 1993 1992*
- ------------------------------------------- ---------- ----------
<S> <C> <C>
Long-Term Debt, Excluding Current Portion
Wisconsin Gas:
First mortgage bonds
8-1/2% Series due 1994 $ - $ 9,560
9-3/4% Series due 1995 - 35,000
Adjustable Rate Series, 8.1% and 8.8%,
respectively, due 2002 14,000 16,000
9-1/8% Notes due 1997 50,000 50,000
7-1/2% Notes due 1998 40,000 40,000
6.6% Notes due 2013 45,000 -
Sta-Rite:
First mortgage bonds, adjustable rate, 7.8%
to 8.1%, due semi-annually through 2000 1,431 2,107
Industrial revenue bonds, 7-7/8%,
payable through 2000 2,575 2,935
Commercial paper under multi-year credit agreement 4,758 -
Capital lease obligations and other 1,338 1,041
Unamortized (discount), net (1,356) (1,073)
ESOP loan guarantee 7,484 8,601
---------- ----------
165,230 164,171
---------- ----------
Redeemable Preferred Stock
WICOR:
$1.00 par value; authorized 1,500,000 shares - -
Wisconsin Gas:
Without par value, cumulative;
authorized 1,500,000 shares - -
---------- ----------
- -
---------- ----------
Common Equity
Common stock, $1.00 par value, authorized
60,000,000 shares; outstanding 16,407,000 and
15,722,000 shares, respectively 16,407 15,722
Other paid in capital 166,710 148,064
Retained earnings 94,643 90,102
Unearned compensation-ESOP (7,484) (8,601)
---------- ----------
270,276 245,287
---------- ----------
Total Capitalization $ 435,506 $ 409,458
========== ==========
<FN>
* Restated to reflect the merger with Shurflo, which has been accounted for as a
pooling of interests (see Note 2).The accompanying notes are an integral part
of this statement.
/TABLE
<PAGE>
<PAGE> 15
CONSOLIDATED STATEMENT OF COMMON EQUITY
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31, 1993 1992* 1991*
---------- ---------- ----------
<S> <C> <C> <C>
Common Stock
Balance at beginning of year* $ 15,722 $ 15,366 $ 14,731
Issued in connection with dividend
reinvestment, customer stock purchase
and employee benefit plans 685 356 635
---------- ---------- ----------
Balance at end of year 16,407 15,722 15,366
---------- ---------- ----------
Other Paid-in Capital
Balance at beginning of year* 148,064 139,931 126,589
Received in connection with dividend
reinvestment, customer stock purchase
and employee benefits plans 18,646 8,133 13,342
---------- ---------- ----------
Balance at end of year 166,710 148,064 139,931
---------- ---------- ----------
Retained Earnings
Balance at beginning of year* 90,102 97,906 96,087
Net income 29,313 14,799 22,966
Dividends on common stock (24,099) (21,869) (20,437)
Other (673) (734) (710)
---------- ---------- ----------
Balance at end of year 94,643 90,102 97,906
---------- ---------- ----------
Unearned Compensation-ESOP
Balance at beginning of year (8,601) (9,750) -
Loan for ESOP shares purchased - - (10,000)
Loan payments 1,117 1,149 250
---------- ---------- ----------
Balance at End of Year (7,484) (8,601) (9,750)
---------- ---------- ----------
Total Common Equity at End of Year $ 270,276 $ 245,287 $ 243,453
========== ========== ==========
<FN>
* Restated to reflect the merger with Shurflo, which has been accounted for as a
pooling of interests (see Note 2). The accompanying notes are an integral part
of this statement.
/TABLE
<PAGE>
<PAGE> 16
QUARTERLY FINANCIAL DATA (UNAUDITED)
Because seasonal factors significantly affect Wisconsin Gas
operations, the following data is not comparable between quarters:
<TABLE>
<CAPTION>
(Thousands of Dollars, Except
per Share Amounts) Quarters: First Second Third Fourth
- ----------------------------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1993 (b)
Operating revenues $272,660 $190,223 $152,801 $233,844
Operating income 41,689 5,881 (8,406) 24,787
Income available for common stock 23,935 576 (8,597) 13,399
Net income per common share (a) 1.51 0.04 (0.53) 0.82
- -------------------------------------------------------------------------------
1992 (b)
Operating revenues $242,271 $155,514 $125,295 $224,329
Operating income 32,266 5,221 (8,532) 24,360
Income before cumulative effect
of changes in accounting 17,629 367 (8,253) 13,021
Income available for common stock 9,664 367 (8,253) 13,021
Income per common share before
cumulative effect (a) 1.14 0.02 (0.53) 0.83
Net income per common share (a) 0.63 0.02 (0.53) 0.83
- -------------------------------------------------------------------------------
<FN>
(a) Quarterly earnings per share may not total to the amounts reported for the
year since the computation is based on weighted average common shares
outstanding during each quarter.
(b) Restated all quarters of 1992 and first and second quarters of 1993 to reflect
the merger with Shurflo, which has been accounted for as a pooling of
interests (see Note 2).
/TABLE
<PAGE>
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
a. Principles of Consolidation
The consolidated financial statements include the accounts of
WICOR, Inc., and its wholly-owned subsidiaries (WICOR or the
Company): Wisconsin Gas Company (Wisconsin Gas), Sta-Rite
Industries, Inc. (Sta-Rite), and SHURflo Pump Manufacturing Co.
(Shurflo). All appropriate intercompany transactions have been
eliminated.
b. Business
Wisconsin Gas is a public utility engaged in the distribution
of natural gas throughout Wisconsin. Most of its revenues,
however, are derived from gas delivered in southeastern Wisconsin.
Wisconsin Gas is subject to regulation by the Public Service
Commission of Wisconsin (PSCW) and gives recognition to ratemaking
policies substantially in accordance with the Federal Energy
Regulatory Commission (FERC) System of Accounts. Statement of
Financial Accounting Standards (SFAS) No. 71 "Accounting for the
Effects of Certain Types of Regulation" provides that
rate-regulated public utilities such as Wisconsin Gas record
certain costs and credits allowed in the ratemaking process in
different periods than for the unregulated subsidiaries. These
costs and credits are deferred as regulatory assets or regulatory
liabilities and are recorded on the income statement at the time
they are recognized in rates.
Sta-Rite manufactures pumps and water processing equipment
and sells its products in approximately 110 countries.
Shurflo, which merged with the Company during the third
quarter of 1993 (See Note 2), manufactures pumps for the food
service, recreational vehicle, marine, industrial and water
purification markets.
c. Gas Distribution Revenues and Purchased Gas Costs
Utility billings are rendered on a cycle basis. Revenues
include estimated amounts accrued for service provided but not yet
billed.
Wisconsin Gas' rate schedules contain purchased gas
adjustment (PGA) provisions which permit the recovery of actual
purchased gas costs incurred. The difference between actual gas
costs incurred and costs recovered through rates, adjusted for
inventory activity, is deferred as a current asset or liability.
The deferred balance is returned to or recovered from customers at
intervals throughout the year and any residual balance at the
annual October 31 reconciliation date is subsequently refunded to
or recovered from customers.
The PSCW is currently permitting Wisconsin Gas to recover
pipeline supplier take-or-pay settlement costs, allocating a
portion of the direct-billed costs to each customer class,
including transportation customers (See Note 8).<PAGE>
<PAGE> 18
d. Plant and Depreciation
Gas distribution property, plant and equipment is stated at
original cost, including overhead allocations. Upon ordinary
retirement of plant assets, their cost plus cost of removal, net
of salvage, is charged to accumulated depreciation, and no gain or
loss is recognized.
Wisconsin Gas depreciation is computed using straight-line
rates established by the PSCW equivalent to composite rates of
4.7% for each of the years 1993, 1992 and 1991.
Depreciation of manufacturing property is calculated under
the straight-line method over the estimated useful lives of the
assets (3 to 10 years for equipment and 30 years for buildings)
and is primarily reported as a cost of sales.
e. Deferred Charges
Consistent with PSCW regulation, Wisconsin Gas has deferred
computer systems development costs which are to be amortized over
a five to ten year period, generally as the respective systems
become operational.
Wisconsin Gas is precluded from discontinuing service to
residential customers within its service area during a certain
portion of the heating season. Any differences between doubtful
account provisions based on actual experience and provisions
allowed for ratemaking purposes by the PSCW are deferred for later
recovery in rates as a cost of service. The most recent PSCW rate
order provides for a $16.1 million allowable annual provision for
doubtful accounts, including amortization of prior deferred
amounts. See Notes 7, 8 and 10 for discussion of additional
deferred charges.
f. Income Taxes
The Company files a consolidated Federal income tax return
and allocates Federal current tax expense or credits to each
subsidiary based on its respective separate tax computation.
Beginning with 1992, the Company has provided deferred income
taxes in accordance with SFAS 109 "Accounting for Income Taxes,"
to reflect tax effects of reporting book and taxable income in
different periods (See Note 3).
For Wisconsin Gas, investment tax credits were recorded as a
deferred credit on the balance sheet and are being amortized to
income over the applicable service lives of the related properties
in accordance with regulatory treatment.
g. Net Income per Common Share
Net income per common share is based on the weighted average
number of shares. Employee stock options are not recognized in the
computation of earnings per common share as they are not
materially dilutive.
h. Manufacturing Inventories
Approximately 54% and 57% of manufacturing inventories, in
1993 and 1992 respectively, are priced using the last-in,
first-out (LIFO) method (not in excess of market), with the
remaining inventories priced using first-in, first-out (FIFO).<PAGE>
<PAGE> 19
If the (FIFO) method had been used entirely, manufacturing
inventories would have been $8.0 million and $8.3 million higher
at December 31, 1993 and 1992, respectively.
i. Cash Flows
The Company considers all highly liquid debt instruments
purchased with an original maturity of three months or less to be
cash equivalents. Due to the short maturity of these instruments,
market value approximates cost.
In connection with the sale of discontinued operations,
Sta-Rite received $1.4 million in notes receivable in 1991.
The Company's dividends reinvested (pursuant to its dividend
reinvestment plan) totalled $2.6 million, $2.4 million and $2.1
million for 1993, 1992, and 1991, respectively.
For purposes of the Consolidated Statement of Cash Flows,
income taxes paid (net of refunds) and interest paid (excluding
capitalized interest) were as follows for each of the years ended
December 31, 1993, 1992 and 1991:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1993 1992 1991
- ---------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Income taxes paid $ 16,106 $ 8,805 $ 11,418
Interest paid $ 17,678 $ 17,404 $ 16,827
</TABLE>
j. Reclassifications
Certain prior year financial statement amounts have been
reclassified to conform to their current year presentation.
2. MERGERS AND ACQUISITIONS
On July 28, 1993, a subsidiary of the Company completed its
merger with Carr-Griff, Inc. which became SHURflo Pump
Manufacturing Co., a wholly-owned subsidiary of WICOR, Inc.
Shurflo designs, manufactures and sells pumps to the food service,
recreational vehicle, marine, industrial and water purification
markets. The Company issued approximately 0.9 million shares of
common stock, valued at approximately $27 million, for all the
outstanding common stock of Shurflo. This transaction was
accounted for as a pooling of interests; therefore, prior
financial statements have been restated to reflect this merger.<PAGE>
<PAGE> 20
Net sales and net income included in the Company's
Consolidated Statements of Income are as follows:
<TABLE>
<CAPTION>
(Thousands of Dollars)
Year Ended December 31, 1992 1991
- -------------------------------- ---------- ----------
<S> <C> <C>
Net sales:
WICOR $ 704,905 $ 681,708
Shurflo 42,504 35,059
---------- ----------
$ 747,409 $ 716,767
========== ==========
Net income before accounting changes:
WICOR $ 20,469 $ 21,527
Shurflo 2,295 1,439
---------- ----------
$ 22,764 $ 22,966
========== ==========
</TABLE>
3. INCOME TAXES
In the fourth quarter of 1992, the Company adopted SFAS No.
109, "Accounting for Income Taxes," retroactive to January 1,
1992. Under the liability method prescribed by SFAS No. 109,
deferred taxes are provided based upon enacted tax laws and rates
applicable to the periods in which the taxes became payable. This
adoption resulted in a net loss from the cumulative effect of the
change in accounting principle of $1.8 million for the
nonregulated subsidiaries. Changes in Wisconsin Gas's deferred
income taxes arising from the adoption represent amounts
recoverable or refundable through future rates and have been
recorded as regulatory assets totalling $4.6 million and
liabilities totalling $29.7 million on the balance sheet for 1992.
The current and deferred components of income tax expense from
continuing operations are as follows:
<TABLE>
<CAPTION>
(Thousands of Dollars) Year ended December 31, 1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Current
Federal $18,576 $ 3,818 $ 6,706
State 4,742 1,405 1,788
Foreign 834 800 266
-------- -------- --------
Total Current 24,152 6,023 8,760
-------- -------- --------
Deferred
Federal (6,432) 5,974 3,725
State (961) 1,588 618
Foreign 717 (36) (427)
-------- -------- --------
Total Deferred (6,676) 7,526 3,916
-------- -------- --------
Total Provision $17,476 $13,549 $12,676
======== ======== ========
/TABLE
<PAGE>
<PAGE> 21
The components of deferred income tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31 1993 1992
-------- --------
<S> <C> <C>
Deferred Income Tax Assets
Recoverable gas costs $ 5,928 $ 1,267
Inventory (2,052) (2,036)
Deferred compensation 1,873 1,711
Other 4,256 5,887
-------- --------
$10,005 $ 6,829
======== ========
Deferred Income Tax Liabilities
Property related $37,496 $37,617
Systems development costs 15,576 14,268
Investment tax credit (5,725) (5,896)
Gas transition costs 5,633 9,765
Postretirement benefits (5,503) (4,509)
Deferred compensation (2,747) (2,459)
Pension benefits 2,249 1,469
Recoverable gas costs - (3,400)
Other (1,101) (184)
-------- --------
$45,878 $46,671
======== ========
The provision for income taxes differs from the amount of
income tax determined by applying the applicable U.S. statutory
federal income tax rate to pretax income as a result of the
following differences:
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
-------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Statutory U.S. tax rates $16,376 35.0% $12,346 34.0% $12,118 34.0%
State income taxes, net 2,326 5.0 1,841 5.1 1,795 5.0
Excess of foreign over U.S.
statutory tax rate 886 1.9 843 2.3 (336) (0.9)
Investment credit restored (473) (1.0) (502) (1.4) (481) (1.4)
Excess deferred tax amortization (532) (1.1) (507) (1.4) (474) (1.3)
Other, net (1,107) (2.4) (472) (1.3) 54 0.2
-------- ----- -------- ----- -------- -----
Effective Tax Rates $17,476 37.4% $13,549 37.3% $12,676 35.6%
======== ===== ======== ===== ======== =====
</TABLE>
Under SFAS No. 109, assets and liabilities acquired in
purchase business combinations are assigned their fair values
assuming equal bases, and deferred taxes are provided for lower or
higher tax bases. Under previous accounting rules, values
assigned were net-of-tax. In adopting SFAS No. 109, the Company
adjusted the carrying amount of various WICOR, Inc. acquisitions
made in prior years.<PAGE>
<PAGE> 22
4. SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
(Thousands of Dollars) December 31 1993 1992
- ---------------------------------- ---------- ----------
<S> <C> <C>
Notes payable to banks
U.S. subsidiaries $ 3,600 $ 1,410
Non U.S. subsidiaries 14,218 15,415
Commercial paper - U.S. 117,100 56,275
---------- ----------
$ 134,918 $ 73,100
========== ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Weighted average interest rates
on debt outstanding at end of year:
Notes payable to banks
U.S. subsidiaries 4.1% 5.1%
Non-U.S. subsidiaries 5.3% 8.9%
Commercial paper - U.S. 3.4% 3.6%
</TABLE>
As of December 31, 1993 and 1992, the Company had total
unsecured lines of credit available from banks of $183.4 million
and $95.8 million, respectively. These borrowing arrangements may
require the maintenance of average compensating balances, which
are generally satisfied by balances maintained for normal business
operations, and may be withdrawn at any time.
5. LONG-TERM DEBT
In September 1993, Wisconsin Gas issued $45 million of 6.6%
Notes due in 2013, the proceeds of which were used to refinance
$45 million of outstanding higher cost first mortgage bonds due in
1994 and 1995. There were no issuances of long-term debt in 1992.
In November 1991, Wisconsin Gas issued $40 million of 7-1/2%
Notes due in 1998. A portion of the proceeds was used to redeem
the remaining $10.4 million of 6-5/8% First Mortgage Bonds at
their maturity dates.
Substantially all gas distribution and certain manufacturing
property and plant is subject to first mortgage liens. Maturities
and sinking fund requirements during the succeeding five years on
all long-term debt total $3.0 million, $3.0 million, $7.6 million,
$53.4 million and $43.0 million in 1994, 1995, 1996, 1997 and
1998, respectively.
6. RESTRICTIONS
A November 1993 rate order sets an equity range of 43% to 50%
for the utility and also requires Wisconsin Gas to request PSCW
approval prior to the payment of dividends on its common stock to
WICOR if the payment would reduce its common equity (net assets)
below 43% of total capitalization (including short-term debt).<PAGE>
<PAGE> 23
Under this requirement, $8.1 million of Wisconsin Gas's net assets
at December 31, 1993, plus future earnings, were available for
such dividends without PSCW approval. In addition, the PSCW
imposes certain limitations on the ability of Wisconsin Gas to pay
dividends to WICOR in excess of the level indicated in the
projected test year if such dividends would dilute Wisconsin Gas's
total equity below 48.43% of its total capitalization. The utility
dividend payout indicated in the projected test year ending
October 31, 1994 is $16 million of which $4 million was paid in
November, 1993.
In connection with its long-term debt agreements, Sta-Rite is
subject to restrictions on working capital, shareholder's equity
and debt. These agreements also limit the amount of retained
earnings available for the payment of cash dividends to WICOR and
for certain investments. At December 31, 1993, $8.6 million of
Sta-Rite net assets plus 50% of its future retained earnings were
available for payment of dividends to WICOR.
Combined restricted common equity of the Company's
subsidiaries totaled $234.8 million under the most restrictive
provisions as of December 31, 1993; accordingly, $35.5 million of
consolidated retained earnings is available for payment of
dividends.
Historically, the PSCW has imposed restrictions on public
utility holding companies, including WICOR, relating to future
nonutility investments. In January 1992, the PSCW approved
amendments to limitations set on the Company. The PSCW order
states that the utility should remain the predominant business,
generally as measured by equity, within the holding company
system. The amount allowable for such future investment at
December 31, 1993 was $77.8 million. Also, nonutility subsidiaries
can borrow additional amounts for acquisitions; however, if debt
for the consolidated nonutility entities exceeds 40% of total
capitalization for these entities, further PSCW actions may be
necessary.
7. COMMITMENTS AND CONTINGENCIES
Certain commitments have been made in connection with 1994
capital expenditures. Wisconsin Gas capital expenditures for 1994
are estimated at $57.4 million. Manufacturing capital expenditures
for 1994 are estimated at $13.9 million.
Wisconsin Gas has variable-term contracts with its interstate
pipeline and gas suppliers to purchase transportation capacity and
natural gas. PGA provisions permit the recovery of actual
purchased capacity and gas costs incurred.
Wisconsin Gas has identified two previously owned sites on
which it operated manufactured gas plants that are of
environmental concern. Such plants ceased operations prior to the
mid-1950's. Wisconsin Gas has engaged an environmental consultant
to help determine the nature and extent of the contamination at
these sites. Based on the test results obtained and the possible
remediation alternatives available, the Company has estimated that
cleanup costs could range from $22 million to $75 million. As of
December 31, 1993 the Company has accrued $40 million for cleanup
costs in addition to $1.6 million of costs already incurred. These
estimates are based on current undiscounted costs. It should also
be noted that the numerous assumptions such as the type and extent
of contamination, available remediation techniques, and regulatory
requirements which are used in developing these estimates are
subject to change as new information becomes available.<PAGE>
<PAGE> 24
Any such changes in assumptions could have a significant impact on
the potential liability.
A formal remediation plan is currently being developed for
presentation to the Wisconsin Department of Natural Resources.
Following plan approval and pilot studies, remediation will
commence. Barring unforeseen delays, expenditures by Wisconsin Gas
on this remediation work will commence in 1994 and increase in
future years as plan approvals are obtained. Expenditures over the
next three years are expected to total approximately $20 million.
Although most of the work and costs will be incurred in the first
few years of the plan, monitoring of the sites and other necessary
techniques may last up to 30 years.
Wisconsin Gas is pursuing recovery of these costs from
insurance carriers. Any amounts not recoverable from insurance
carriers will be allowed full recovery in rates based on recent
PSCW orders. Accordingly, the accrual has been offset by a
deferred charge to a regulatory asset. Certain related
investigation costs incurred to date are currently being recovered
in utility rates. However, any incurred costs not yet recovered in
rates are not allowed by the PSCW to earn a return. As of December
31, 1993 $1.6 million of such costs have been incurred.
During 1990, Sta-Rite contracted with the Wisconsin Department
of Natural Resources to complete the investigation and remediation
phases of the federal Superfund environmental process for
contaminants associated with one of Sta-Rite's manufacturing
facilities. Management believes the amounts reserved will be
adequate to remedy the problem.
The Company is party to various legal proceedings arising in
the ordinary course of business which are not expected to have a
material effect on the financial statements of the Company.
8. FERC ORDER NO. 636
On April 8, 1992, the FERC issued Order No. 636 which
restructured the interstate natural gas pipeline business.
Pipeline suppliers will be allowed to recover significant
transition costs from Wisconsin Gas necessary to implement
"unbundled" services such that gas supplies would be sold
separately from interstate transportation services. Wisconsin Gas'
liability for certain of these costs is being contested at FERC
and in court. The extent of this future liability is not estimable
at this time due to a number of factors including the future cost
of gas and the outcome of ongoing litigation. However, on the
basis of previous PSCW ratemaking relative to the recovery of gas
purchased and related costs, Wisconsin Gas anticipates that
pipeline transition cost billings will also be recoverable from
ratepayers.
9. COMMON STOCK AND OTHER PAID-IN CAPITAL
As of December 31, 1993, 16,407,234 shares were issued and
outstanding and 2,813,538 shares are reserved for issuance under
the Company's dividend reinvestment, stock option and 401(k)
plans. In addition, 19,221,072 shares are reserved pursuant to the
Company's shareholder rights plan.
Under certain circumstances, each right entitles the
shareholder to purchase one common share at an exercise price of
$75, subject to adjustment. The rights are not exercisable until
ten business days after a person or group announces a tender offer<PAGE>
<PAGE> 25
or exchange offer which would result in their acquiring ownership
of 20% or more of the Company's outstanding common stock or after
a person or group acquires at least 20% of the Company's
outstanding common shares. If, after 20% or more of the
outstanding shares of WICOR common stock is acquired by a person
or group and the Company is then acquired by that person or group,
rights holders would be entitled to purchase shares of common
stock of the acquiring person or group having a market value of
two times the exercise price of the rights. The rights do not have
any voting rights and may be redeemed at a price of $.01 per
right. The rights expire on August 29, 1999.
During the first, third and fourth quarters of 1993, the
Company invested $2 million, $8 million and $2 million,
respectively, in Wisconsin Gas. In the first and third quarters of
1992, the Company invested $5 million and $10 million,
respectively, in Wisconsin Gas.
10. BENEFIT PLANS
a. Pension Plans
The Company's subsidiaries have non-contributory pension plans
which cover substantially all their employees and include benefits
based on levels of compensation and years of service. Employer
contributions and funding policies are consistent with funding
requirements of Federal law and regulations. Commencing on
November 1, 1992, Wisconsin Gas pension costs or credits are
calculated in accordance with SFAS No. 87 and are recoverable from
or refunded to customers. Prior to this date, pension costs were
recoverable in rates as funded.
The following table sets forth the funded status of pension
plans, including minor underfunded plans, at December 31, 1993 and
1992. The recorded cumulative adjustment to the utility funded
amount was $21.3 million and was offset by a regulatory liability.<PAGE>
<PAGE> 26
<TABLE>
<CAPTION>
Assets Exceed Accumulated Benefits
Accumulated Benefits Exceed Assets
--------------------- ---------------------
(Thousands of Dollars) December 31, 1993 1992 1993 1992
- ----------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Accumulated benefit obligation
Vested benefits $(103,260) $(101,717) $ (6,471) $ (4,971)
Nonvested benefits (11,198) (6,119) (87) (81)
---------- ---------- ---------- ----------
(114,458) (107,836) (6,558) (5,052)
Effect of projected future
compensation levels (49,961) (38,121) (537) (364)
---------- ---------- ---------- ----------
Projected benefit obligation (164,419) (145,957) (7,095) (5,416)
Plan assets at fair value 228,091 212,463 176 177
---------- ---------- ---------- ----------
Plan assets greater (less) than
projected benefit obligation 63,672 66,506 (6,919) (5,239)
Unrecognized net (asset) liability
at September 30, 1985 being
recognized over approximately
16 years (21,185) (23,191) 1,104 1,074
Unrecognized prior service costs 6,166 4,518 - 1
Unrecognized net (gain) loss (19,073) (19,675) 348 -
Additional minimum liability recorded - - (1,037) (890)
---------- ---------- ---------- ----------
Accrued pension asset (liability) $ 29,580 $ 28,158 $ (6,504) $ (5,054)
========== ========== ========== ==========
</TABLE>
The weighted average discount rate assumptions used in
determining the actuarial present value of the projected benefit
obligation were 7.5%, 7.75% and 7.75% for 1993, 1992 and 1991,
respectively. For 1991 through 1993, the expected long-term rate
of return on assets and long-term rate of compensation growth were
8.2% and 6.0%, respectively.
Net pension costs include the following (income) expense:
<TABLE>
<CAPTION>
(Thousands of Dollars)
Year Ended December 31 1993 1992 1991
- -------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Service costs $ 5,658 $ 5,189 $ 4,695
Interest costs on projected
benefit obligations 11,807 10,977 10,255
Actual return on assets (18,016) (16,085) (31,029)
Net amortization and deferral (69) (1,127) 14,326
Adjustment to utility funded amount - 1,513 2,029
---------- ---------- ----------
Net pension (income) cost $ (620) $ 467 $ 276
========== ========== ==========
/TABLE
<PAGE>
<PAGE> 27
The decrease in pension cost from 1992 to 1993 was due to the
adoption by the PSCW of SFAS No. 87 for ratemaking purposes,
effective November 1, 1992.
b. Postretirement Health Care and Life Insurance
In addition to providing pension benefits, the Company
provides certain health care and life insurance benefits for
retired employees when they reach normal retirement age while
working for the Company.
Wisconsin Gas funds the accrual annually based on the maximum
tax deductible amount. For Sta-Rite, until 1992, the cost of these
retiree benefits has been recognized as an expense as claims were
incurred. Company expenses recorded totalled $8.4 million for
1991.
Effective January 1, 1992, the Company adopted SFAS No. 106,
"Employers Accounting for Postretirement Benefits Other Than
Pensions", for its retiree benefit plans. Under SFAS No. 106, the
Company is required to accrue the estimated cost of retiree
benefit payments, other than pensions, during the employees'
active service period. Wisconsin Gas, as mandated by the PSCW,
recognized the accumulated benefit obligation and a related
regulatory asset of $54.1 million at adoption. Amortization of the
regulatory asset is recoverable in its rates over a 20-year
period. Sta-Rite recognized such amounts as a cumulative effect.
Accordingly, the cumulative effects for the Company of adopting
SFAS No. 106 as of December 31, 1992, were an increase in the
accumulated postretirement benefit obligation (APBO) of $65.0
million and a decrease in 1992 net earnings of $6.2 million ($0.40
per share).
Net postretirement health care and life insurance costs
consisted of the following components:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1993 1992
- -------------------------------------- ---------- ----------
<S> <C> <C>
Service cost $ 2,813 $ 2,711
Interest cost on projected
benefit obligation 6,495 6,181
Return on plan assets (1,414) (895)
Amortization of transition obligation 2,651 2,778
Adjustment to utility funded amount - (2,108)
---------- ----------
Net postretirement benefit cost $ 10,545 $ 8,667
========== ==========
</TABLE>
The increase in postretirement benefit cost from 1992 to 1993
was due to the adoption by the PSCW of SFAS No. 106 for ratemaking
purposes, effective November 1, 1992.<PAGE>
<PAGE> 28
The following table sets forth the plans' funded status,
reconciled with amounts recognized in the Company's Statement of
Financial Position at December 31, 1993 and 1992, respectively.
<TABLE>
<CAPTION>
Accumulated benefit obligation
(Thousands of Dollars) 1993 1992
- ------------------------------------- ---------- ----------
<S> <C> <C>
Retirees $ (43,548) $ (42,313)
Active employees (52,327) (44,141)
---------- ----------
Accumulated benefit obligation (95,875) (86,454)
Plan assets at fair value 25,753 19,139
---------- ----------
Accumulated benefit obligation
in excess of plan assets (70,122) (67,315)
Unrecognized actuarial loss/(gain) 2,612 (623)
---------- ----------
Accrued postretirement benefit $ (67,510) $ (67,938)
========== ==========
</TABLE>
The postretirement benefit cost components for 1993 were
calculated assuming health care cost trend rates ranging up to 13%
for 1993 and decreasing to 6% over 10 to 25 years. The health care
cost trend rate has a significant effect on the amounts reported.
Increasing the assumed health care cost trend rates by one
percentage point in each year would increase the APBO as of
December 31, 1993 by $14.7 million and the aggregate of the
service and interest cost components of postretirement expense by
$1.8 million.
The assumed discount rate used in determining the actuarial
present value of the accumulated postretirement benefit obligation
was 7.50% and 7.75% in 1993 and 1992, respectively. Plan assets
are primarily invested in common stock and fixed income
securities.
c. Retirement Savings Plans
Wisconsin Gas and Sta-Rite maintain various employee savings
plans, which provide employees a mechanism to contribute amounts
up to 16% of their compensation for the year. Company matching
contributions may be made up to 5% of eligible compensation
including 1% for the ESOP. Total contributions were valued at $1.8
million in 1993, $1.6 million in 1992 and $1.4 million in 1991.
d. Employee Stock Ownership Plan
In November 1991, WICOR established an Employee Stock
Ownership Plan (ESOP) covering non-union employees of Wisconsin
Gas. The ESOP funds employee benefits of up to 1% of compensation
with Company common stock distributed through the ESOP.<PAGE>
<PAGE> 29
The ESOP used the proceeds from a $10 million, 3-year
adjustable rate loan with a 3.98% interest rate at December 31,
1993, guaranteed by the Company, to purchase 431,266 shares of
original issue WICOR common stock. Because the Company has
guaranteed the loan, the unpaid balance is shown as long-term debt
with a like amount of unearned compensation being recorded as a
reduction of common equity on the Company's balance sheet.
The ESOP trustee is repaying the $10 million loan with
dividends on shares of WICOR common stock in the Employee Stock
Ownership Plan and with Wisconsin Gas contributions to the ESOP.
e. Stock Options
The Company has a total of 151 employees participating in one
or more of its common stock option plans. Changes in stock options
outstanding for all plans were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Outstanding at January 1 763,342 712,392 703,562
Granted 180,350 178,900 143,700
Exercised/Canceled (148,767) (127,950) (134,870)
---------- ---------- ----------
Outstanding at December 31 794,925 763,342 712,392
========== ========== ==========
Exercise price per share $10.38- $10.38- $10.38-
$27.31 $24.44 $23.06
========== ========== ==========
Available for future grant at year-end 783,116 261,000 433,200
</TABLE>
All options, except for 45,333 and 46,850 granted in 1993 and
1992, respectively, which may vest in 1996 and 1995, respectively,
are currently exercisable at prices not less than the fair market
value on the date of grant and expire not later than eleven years
from the date of grant.
f. Postemployment Benefit Plans
The FASB has issued statement SFAS No. 112, "Employers
Accounting for Postemployment Benefits," to be adopted no later
than January 1, 1994, which requires accrual for all other
postemployment benefits. In management's opinion, any unrecorded
liabilities are expected to be recoverable in future rates for
utility operations and are not significant.<PAGE>
<PAGE> 30
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company's long-term debt is estimated
based on the quoted market prices of U.S. Treasury issues having
a similar term to maturity, adjusted for the Company's bond rating
and the present value of future cash flows.
Because Wisconsin Gas operates in a regulated environment,
shareholders would probably not be affected by realization of
gains or losses on extinguishment of its outstanding fixed-rate
debt. Realized gains would be refunded to and losses would be
recovered from customers through gas rates.
The estimated fair value of WICOR's long-term debt at
December 31, is as follows:
<TABLE>
<CAPTION>
(Thousands of Dollars) 1993 1992
- ----------------------------------- ---------- ----------
<S> <C> <C>
Carrying amount $ 165,230 $ 164,171
Fair value $ 175,213 $ 175,411
</TABLE>
12. OTHER FINANCIAL INFORMATION
See page 22 for unaudited quarterly financial data. See
Financial Review on page 13 for industry segment data.<PAGE>
<PAGE> 31
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
(Thousands of Dollars, Except
Per Share Amounts) 1993 1992 1991 1990
- ----------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
INCOME STATEMENT (2)(4)
Operating revenues $849,528 $747,409 $716,767 $696,023
Net income $ 29,313 $ 14,799 $ 22,966 $ 16,651
Net income per common share (1) $ 1.82 $ 0.96 $ 1.54 $ 1.14
========= ========= ========= =========
BALANCE SHEET (4)
Capitalization at year-end
Long-term debt $165,230 $164,171 $168,366 $130,215
Redeemable preferred stock - - - -
Common equity 270,276 245,287 243,453 237,407
--------- --------- --------- ---------
$435,506 $409,458 $411,819 $367,622
========= ========= ========= =========
Total assets at year-end (2) $933,726 $825,774 $670,250 $651,559
========= ========= ========= =========
COMMON STOCK DATA
Dividends per common share (1) $ 1.54 $ 1.50 $ 1.46 $ 1.42
Book value per common share (1)(4) $ 16.47 $ 15.60 $ 15.84 $ 16.12
Market-to-book at year-end (%)(4) 191 175 153 122
Dividend payout ratio (%)(2)(3)(5) 82.2 96.1 89.0 117.2
Yield at year-end (%) 5.0 5.6 6.1 7.3
Return on average common
equity(%)(2)(3)(6) 11.2 9.2 9.5 6.8
P/E ratio at year-end (2)(3)(4) 17.3 18.5 15.7 17.2
Price range $ 25-5/8- $ 22-7/8- $ 18-5/8- $ 18-1/4-
$ 32-7/8 $ 27-3/8 $ 24-3/8 $ 25-1/4
Shareholders at year-end 17,091 17,780 18,503 19,463
========= ========= ========= =========
OTHER GENERAL DATA (2)(4)
Cash flow from operations $ 3,401 $ 37,012 $ 50,413 $ 10,022
Capital expenditures $ 51,906 $ 71,873 $ 45,113 $ 37,529
Debt/equity ratio at year-end 38/62 40/60 41/59 35/65
Employees at year-end 3,222 3,178 3,196 3,152
========= ========= ========= =========
GAS DISTRIBUTION OPERATIONS
Gas sold and transported (thousands
of dekatherms-MDth)
Residential 47,964 45,905 45,614 43,020
Commercial 19,060 17,840 17,861 16,319
Industrial firm 15,246 14,488 15,690 15,106
Industrial interruptible 20,849 17,388 17,440 16,620
Transported 17,408 21,379 19,658 16,565
--------- --------- --------- ---------
120,527 117,000 116,263 107,630
========= ========= ========= =========
Customers at year-end 485,103 470,956 460,549 452,906
Customers served per employee 359 331 323 321
Average cost of gas per Dth purchased $ 3.76 $ 3.34 $ 3.18 $ 3.30
Average annual residential bill $ 779 $ 712 $ 677 $ 670
Average use per residential
customer (Dth) 116 115 117 113
Degree days 6,775 6,683 6,416 6,103
% colder (warmer) than normal (4.1) (6.4) (10.8) (16.0)
========= ========= ========= =========
MANUFACTURING OPERATIONS (2)(4)
Operating revenues $274,693 $251,994 $242,065 $238,484
International and export sales
as a % of total sales 34 34 31 27
========= ========= ========= =========
DATA FOR CONTINUING OPERATIONS (3)(4)
Operating revenues $849,528 $747,409 $716,767 $696,023
Net income $ 29,313 $ 22,764 $ 22,966 $16,651
Net income per common share (1) $ 1.82 $ 1.47 $ 1.54 $ 1.04
<FN>
(1) Adjusted for a two-for-one stock split in March 1989.
(2) Includes continuing operations and discontinued operations up to the year
disposition was authorized.
(3) Before effects of 1992 accounting changes (See Note 2).
Adjusted for merger with Shurflo through (4) 1984, (5) 1988 and (6) 1989.
/TABLE
<PAGE>
<PAGE> 32
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
(Thousands of Dollars, Except
per Share Amounts) 1989 1988 1987 1986
- ---------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
INCOME STATEMENT(2)(4)
Operating revenues $741,218 $780,633 $699,418 $761,104
Net income $ 33,881 $ 34,163 $ 19,682 $ 19,780
Net income per common share(1) $ 2.33 $ 2.38 $ 1.39 $ 1.53
========= ========= ========= =========
BALANCE SHEET(4)
Capitalization at year end
Long-term debt $122,639 $133,034 $127,833 $144,495
Redeemable preferred stock - - 8,000 14,267
Common equity 244,351 227,080 207,658 203,477
--------- --------- --------- ---------
$366,990 $360,114 $343,491 $362,239
========= ========= ========= =========
Total assets at year end(2) $620,548 $565,967 $536,998 $542,036
========= ========= ========= =========
COMMON STOCK DATA
Dividends per common share(1) $ 1.37 $ 1.32 $ 1.30 $ 1.28
Book value per common share(1)(4) $ 16.83 $ 15.82 $ 14.68 $ 15.74
Market-to-book at year-end(%)(4) 148 123 117 134
Dividend payout ratio(%)(2)(3)(5) 55.0 52.0 91.1 79.9
Yield at year-end(%) 5.6 6.9 7.6 6.1
Return on average common
equity(%)(2)(3)(6) 14.3 15.3 9.3 10.5
P/E ratio at year-end(2)(3)(4) 10.7 8.2 12.4 13.8
Price range $ 19-3/8- $ 15-5/8- $ 13-3/8- $ 14-3/4-
$ 25-3/8 $ 20-7/8 $ 21-7/8 $ 23
Shareholders at year end 20,509 21,611 23,010 23,987
========= ========= ========= =========
OTHER GENERAL DATA(2)(4)
Cash flow from operations $ 94,623 $ 73,526 $ 41,237 $ 63,583
Capital expenditures $ 40,944 $ 48,295 $ 34,264 $ 36,498
Debt/equity ratio at year end 33/67 37/63 37/63 40/60
Employees at year end 3,696 3,927 4,040 3,932
========= ========= ========= =========
GAS DISTRIBUTION OPERATIONS
Gas sold and transported (thousands
of dekatherms-MDth)
Residential 48,154 46,769 39,369 42,837
Commercial 18,089 17,012 14,510 15,292
Industrial firm 16,915 16,808 16,106 19,379
Industrial interruptible 5,475 3,752 4,714 22,403
Transported 29,158 29,639 26,129 5,502
--------- --------- --------- ---------
117,791 113,980 100,828 105,413
========= ========= ========= =========
Customers at year-end 445,771 439,063 432,509 426,481
Customers served per employee 319 311 288 277
Average cost of gas per Dth purchased $ 3.15 $ 3.68 $ 3.74 $ 3.75
Average annual residential bill $ 758 $ 770 $ 660 $ 761
Average use per residential
customer (Dth) 129 127 108 120
Degree days 7,382 7,124 6,185 6,788
% colder (warmer) than normal 1.5 (2.0) (14.8) (7.3)
========= ========= ========= =========
MANUFACTURING OPERATIONS(2)(4)
Operating revenues $298,791 $303,071 $274,335 $228,306
International and export sales as
a % of total sales 24 22 20 16
========= ========= ========= =========
DATA FOR CONTINUING OPERATIONS(3)(4)
Operating revenues $684,900 $717,081
Net income $ 33,359 $ 30,400
Net income per common share(1) $ 2.30 $ 2.12
<FN>
(1) Adjusted for a two-for-one stock split in March 1989.
(2) Includes continuing operations and discontinued operations up to the year
disposition was authorized.
(3) Before effects of 1992 accounting changes (See Note 2).
Adjusted for merger with Shurflo through (4) 1984, (5) 1988 and (6) 1989.
/TABLE
<PAGE>
<PAGE> 33
<TABLE>
<CAPTION>
(Thousands of Dollars, Except
Per Share Amounts) 1985 1984 1983
- ---------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
INCOME STATEMENT(2)(4)
Operating Revenues $853,175 $839,965 $789,847
Net income $ 24,900 $ 24,145 $ 16,837
Net income per common share(1) $ 1.98 $ 1.95 $ 1.49
========= ========= =========
BALANCE SHEET(4)
Capitalization at year-end
Long-term debt $154,159 $131,750 $153,052
Redeemable preferred stock 18,200 19,000 19,800
Common equity 173,941 160,690 143,626
--------- --------- ---------
$346,300 $311,440 $316,478
========= ========= =========
Total assets at year-end(2) $531,192 $499,734 $483,174
========= ========= =========
COMMON STOCK DATA
Dividends per common share(1) $ 1.18 $ 1.11 $ 1.07
Book value per common share(1)(4) $ 13.81 $ 12.97 $ 12.60
Market-to-book ratio at year-end(%)(4) 112 104 84
Dividend payout ratio(%)(2)(3)(5) 57.0 54.0 71.6
Yield at year-end(%) 7.6 8.3 10.1
Return on average common
equity(%)(2)(3)(6) 14.6 15.1 11.9
Price/earnings ratio at year-end(2)(3)(4) 7.8 6.9 7.1
Price range $ 13- $10-1/8- $ 9-3/8-
$ 15-3/4 $ 13-7/8 $ 11-5/8
Shareholders at year-end 26,083 28,581 31,077
========= ========= =========
OTHER GENERAL DATA
Cash flow from operations $ 46,342 $ 45,801 $ 36,249
Capital expenditures $ 32,381 $ 32,273 $ 22,962
Debt/equity ratio at year-end 45/55 42/58 48/52
Employees at year-end 3,641 3,513 3,228
========= ========= =========
GAS DISTRIBUTION OPERATIONS
Gas sold and transported (thousands
of dekatherms-MDth)
Residential 44,813 43,961 44,611
Commercial 16,394 15,007 14,769
Industrial firm 22,541 22,969 23,350
Industrial interruptible 31,675 34,056 31,262
Transported 1,716 - -
--------- --------- ---------
117,139 115,993 113,992
========= ========= =========
Customers at year-end 420,967 415,297 411,070
Customers served per employee 279 268 265
Average cost of gas per Dth purchased $ 4.13 $ 4.16 $ 4.36
Average annual residential bill $ 838 $ 849 $ 856
Average use per residential
customer (Dth) 128 127 131
Degree days 7,325 6,844 7,203
% colder(warmer) than normal (0.5) (7.0) (2.3)
========= ========= =========
MANUFACTURING OPERATIONS(2)(4)
Operating revenues $214,644 $197,737 $152,929
International and export sales as a
% of total sales 12 14 15
<FN>
(1) Adjusted for a two-for-one stock split in March 1989.
(2) Includes continuing operations and discontinued operations up to the year
disposition was authorized.
(3) Before effects of 1992 accounting changes (See Note 2).
Adjusted for merger with Shurflo through (4) 1984, (5) 1988 and (6) 1989.
/TABLE
<PAGE>
<PAGE> 34
INVESTOR INFORMATION
Common Stock Dividends
Dividends on common stock are normally paid in February, May,
August and November. The following table shows cash dividends
paid per share in 1993 and 1992:
<TABLE>
<CAPTION>
Quarter 1993 1992
- ------------------- -------- --------
<S> <C> <C>
first $ .380 $ .370
second .380 .370
third .390 .380
fourth .390 .380
</TABLE>
VERTICAL BAR CHART OF WICOR'S HIGH AND LOW
COMMON STOCK PRICE PER SHARE BY QUARTER
<TABLE>
<CAPTION>
Year/Quarter
--------------------------------------
93/1 93/2 93/3 93/4
-------- -------- -------- --------
<S> <C> <C> <C> <C>
high $ 29 $31-3/8 $32-3/4 $32-7/8
low $25-5/8 $27-3/4 $29-3/8 $ 28
</TABLE>
<TABLE>
<CAPTION>
Year/Quarter
--------------------------------------
92/1 92/2 92/3 92/4
-------- -------- -------- --------
<S> <C> <C> <C> <C>
high $26-1/8 $24-5/8 $27-1/4 $27-3/8
low $ 23 $22-7/8 $ 23 $24-3/8
</TABLE>
WICOR's stock price reached a record high of $32-7/8 during
the last quarter of 1993.<PAGE>
<PAGE>
<PAGE> 1
Exhibit 21
WICOR, Inc.
Subsidiaries of the Registrant
<TABLE>
<CAPTION>
Percent Voting
Subsidiaries of WICOR, Inc. State of Incorporation Stock Owned
- ---------------------------- ---------------------- ---------------
<S> <C> <C>
Wisconsin Gas Company Wisconsin 100%
Sta-Rite Industries, Inc. Wisconsin 100%
SHURflo Pump Manufacturing Co. California 100%
WEXCO of Delaware, Inc. Delaware 100%
Filtron Technology Corporation Massachusetts 21%
</TABLE>
<TABLE>
<CAPTION>
Subsidiaries of Sta-Rite State or Country Percent Voting
Industries in which Incorporated Stock Owned
- ------------------------ --------------------- --------------
<S> <C> <C>
WICOR Canada Inc. Canada 100%
Sta-Rite Foreign Sales Virgin Islands 100%
Corporation
Sta-Rite Industries GmbH Germany .5%
Europa
WICOR Industries
(Australia) Pty. Ltd. Australia 100%
Onga (New Zealand) Pty. Ltd. New Zealand 100%
Sta-Rite Holdings, B.V. Netherlands 100%
Nocchi Pompe S.p.A. Italy 47%
Webster Electric Co. Delaware 100%
</TABLE>
<TABLE>
<CAPTION>
Subsidiary of WICOR Country in Which Percent Voting
(Australia) Pty. Ltd. Incorporated Stock Owned
- -------------------------- --------------------- --------------
<S> <C> <C>
Onga Pty. Ltd. Australia 100%
</TABLE>
<TABLE>
<CAPTION>
Subsidiaries of Sta-Rite Country in Which Percent Voting
Holdings, B.V. Incorporated Stock Owned
- -------------------------- --------------------- --------------
<S> <C> <C>
Sta-Rite Industries Germany 95.5%
GmbH Europa
Nocchi Pompe S.p.A. Italy 30%
</TABLE>
<TABLE>
<CAPTION>
Subsidiary of Nocchi Pompe, Country in Which Percent Voting
S.p.A. Incorporated Stock Owned
- ------------------------------ --------------------- --------------
<S> <C> <C>
Midi Pompes S.a.r.l. France 100%
</TABLE>
<TABLE>
<CAPTION>
Subsidiary of SHURflo Pump Country in Which Percent Voting
Manufacturing Company Incorporated Stock Owned
- ------------------------------ --------------------- --------------
<S> <C> <C>
SHURflo Ltd. England 100%
/TABLE
<PAGE>
<PAGE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the
incorporation of our reports included in and incorporated by
reference in this Form 10-K, into the Company's previously filed
Registration Statements on Form S-8 (Nos. 2-93964, 2-93963, 2-91073,
2-87076, 2-83206, 2-72454, 33-16489, 33-36457, 33-43645, 33-67132 and
33-67134) and Form S-3 (Nos. 33-28289, 33-50682 and 33-50781).
ARTHUR ANDERSEN & CO.
Milwaukee, Wisconsin,
March 28, 1994.<PAGE>
<PAGE> 1
WICOR
626 East Wisconsin Avenue
P.O. Box 334
Milwaukee, WI 53201
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 28, 1994
To the Shareholders of
WICOR, Inc.:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of
WICOR, Inc. will be held Thursday, April 28, 1994, at 2:00 P.M. (local
time), at the Italian Community Center, 631 East Chicago Street, Milwaukee,
Wisconsin, for the following purposes:
1. To elect four directors to hold office until the 1997 Annual
Meeting of Shareholders and until their successors are duly
elected and qualified.
2. To consider and approve the WICOR, Inc. 1994 Long-Term
Performance Plan.
3. To consider and act upon any other business which may be
properly brought before the Annual Meeting or any adjournment
thereof.
The close of business Tuesday, February 22, 1994, has been fixed as
the record date for the determination of shareholders entitled to receive
notice of, and to vote at, the Annual Meeting and any adjournment thereof.
A proxy and Proxy Statement are enclosed herewith.
By Order of the Board of Directors
ROBERT A. NUERNBERG
Secretary
March 10, 1994
YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION AT THE MEETING,
PLEASE DATE THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF
DIRECTORS, SIGN EXACTLY AS YOUR NAME APPEARS, AND RETURN IMMEDIATELY.<PAGE>
<PAGE> 2
WICOR
626 East Wisconsin Avenue
P.O. Box 334
Milwaukee, Wisconsin 53201
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 28, 1994
This Proxy Statement is being furnished to shareholders by the Board
of Directors of WICOR, Inc. (the "Company") beginning on or about March 10,
1994, in connection with a solicitation of proxies by the Board of Directors
of the Company (the "Board") for use at the Annual Meeting of Shareholders
(the "Annual Meeting") to be held on Thursday, April 28, 1994, at 2:00
P.M.(local time), at the Italian Community Center, 631 East Chicago Street,
Milwaukee, Wisconsin, and at all adjournments thereof, for the purposes set
forth in the attached Notice of Annual Meeting of Shareholders.
Execution of a proxy given in response to this solicitation will not
affect a shareholder's right to attend the Annual Meeting and to vote in
person. Presence at the Annual Meeting of a shareholder who has signed a
proxy does not in itself revoke a proxy. Any shareholder giving a proxy may
revoke it at any time before it is exercised by giving notice thereof to the
Company in writing or in open meeting. Unless so revoked, the shares
represented by proxies received by the Board will be voted at the Annual
Meeting and at any adjournment thereof. A properly executed proxy will be
voted as directed therein by the shareholder.
Only holders of record of the Company's Common Stock, $1 par value
("Common Stock"), at the close of business on February 22, 1994, are
entitled to vote at the Annual Meeting and at any adjournment thereof. On
that date, the Company had outstanding and entitled to vote 16,474,394
shares of Common Stock. The record holder of each outstanding share of
Common Stock is entitled to one vote per share.
The Company is a holding company. Its subsidiaries include Wisconsin
Gas Company ("Wisconsin Gas"), Sta-Rite Industries, Inc. ("Sta-Rite") and
SHURflo Pump Manufacturing Co. ("SHURflo").
ITEM NO. 1: ELECTION OF DIRECTORS
The Board consists of 11 directors. The Company's By-laws provide
that the directors shall be divided into three classes, with staggered terms
of three years each. At the Annual Meeting, shareholders will elect four
directors to hold office until the 1997 Annual Meeting of Shareholders and
until their successors are duly elected and qualified. Directors are
elected by a plurality of the votes cast (assuming a quorum is present at
the Annual Meeting). Consequently any shares not voted, whether due to
abstentions, broker non-votes or otherwise, have no impact on the election
of directors.
Unless shareholders otherwise specify, the shares represented by the
proxies received will be voted "FOR" the indicated nominees for election as
directors. The Board has no reason to believe that any of the listed
nominees will be unable or unwilling to continue to serve as a director if
elected. However, in the event that any nominee should be unable or for
good cause unwilling to serve, the shares represented by proxies received
will be voted for another nominee selected by the Board.
The following tabulation sets forth information regarding the four
nominees for election as directors and the seven continuing directors.
Except as otherwise noted, each such person has engaged in the principal
occupation or employment and held the offices shown for more than the past
five years.
A photograph of each nominee and director continuing in office appears
adjacent to the nominee's/director's name and personal information.
<PAGE>
<PAGE> 3
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
For Three-Year Terms Expiring April, 1997
<TABLE>
<CAPTION>
<S> <C>
WILLIE D. DAVIS Mr. Davis, 59, is President, Chief
Audit and Nominating Executive Officer and a director of
Committees All Pro Broadcasting, Inc., which owns
Director since 1990 and operates radio stations in Los
Angeles and Milwaukee. Mr. Davis is a
director of Alliance Bank, The Dow
Chemical Co., Johnson Controls, Inc.,
Kmart Corp., L.A. Gear Inc., MGM Grand
Inc. and Sara Lee Corporation.
JAMES L. FORBES Mr. Forbes, 61, is President and Chief
Audit and Compensation Executive Officer and a director of
Committees Badger Meter, Inc., a manufacturer and
Director since 1990 marketer of flow measurement products.
Mr. Forbes joined Badger Meter in
1979. He was elected President in
1982 and Chief Executive Officer in
1987. He is a director of Blue Cross
& Blue Shield United of Wisconsin,
Firstar Corporation, Firstar Trust
Company, United Wisconsin Services,
Inc., and Universal Foods Corporation.
GUY A. OSBORN Mr. Osborn, 58, is Chairman, Chief
Audit (Chairman) and Executive Officer and a director of
Compensation Committees Universal Foods Corporation, an inter-
Director since 1987 national manufacturer and marketer of
value-added food products. He joined
Universal Foods in 1971 and held
several executive positions before
becoming President and Chief Operating
Officer in 1984. He was elected
President and Chief Executive Officer
in 1988 and assumed his current
position in 1990. He is a director of
Firstar Corporation, Firstar Bank
Milwaukee, N.A., and Fleming
Companies, Inc.
WILLIAM B. WINTER Mr. Winter, 65, is Chairman, Chief
Nominating and Retirement Executive Officer and a director of
Plans Investment Bucyrus-Erie Company, a manufacturer
(Chairman) Committees of mining machinery, and its parent
Director since 1980 corporation B-E Holdings Inc. (1). He
joined Bucyrus-Erie in 1953, became a
Vice President in 1965, and was named
President and Chief Operating Officer
in 1978. In 1988 a group of the
corporation's senior management,
including Mr. Winter, and outside in-
vestors acquired all of the common
stock of B-E Holdings Inc., and Mr.
Winter assumed his current positions.
/TABLE
<PAGE>
<PAGE> 4
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Terms Expiring April, 1995
<TABLE>
<CAPTION>
<S> <C>
WENDELL F. BUECHE Mr. Bueche, 63, is the President, Chief
Compensation (Chairman) Executive Officer and a director of
and Retirement Plans IMC Fertilizer Group, Inc., a producer
Investment Committees of fertilizers. He was named to that
Director since 1984 position in 1993. Mr. Bueche
previously was Chairman, President and
Chief Executive Officer of Allis-
Chalmers Corporation until his
retirement in 1988. Mr. Bueche is a
director of Marshall & Ilsley
Corporation.
DANIEL F. McKEITHAN, JR. Mr. McKeithan, 58, is President, Chief
Compensation and Retirement Executive Officer and a director of
Plans Investment Committees Tamarack Petroleum Co., Inc., an
Director since 1989 operator of producing oil and gas
wells. He has held that position since
1981. He is also President and Chief
Executive Officer of Active Investor
Management, Inc., a manager of oil and
gas wells. He has held that position
since 1984. From 1976 to 1982 he was
Chairman of Jos. Schlitz Brewing Co.
He is a director of Firstar Corporation
and The Marcus Corporation, and is a
trustee of The Northwestern Mutual Life
Insurance Company.
GEORGE E. WARDEBERG Mr. Wardeberg, 58, is President and
Nominating Committee Chief Executive Officer of the Company,
Director since 1992 Chairman of Wisconsin Gas and SHURflo,
and Chairman and Chief Executive
Officer of Sta-Rite. He has held these
positions since February 1994.
Previously, he was President and Chief
Operating Officer of the Company from
1992 to 1994; Vice Chairman of
Wisconsin Gas and SHURflo from 1993 to
1994; Vice Chairman and Chief Executive
Officer of Sta-Rite from 1993 to 1994;
Vice President - Water Systems of Sta-
Rite from 1989 to 1992; and Vice
Chairman and Chief Operating Officer of
Whirlpool Corporation from 1985 to
1989. He is a director of M&I Marshall
& Ilsley Bank.
ESSIE M. WHITELAW Ms. Whitelaw, 45, is President and
Audit and Retirement Chief Operating Officer of Blue
Plans Investment Committees Cross & Blue Shield United of
Director since 1992 Wisconsin, a comprehensive health
insurer. She has held that position
since 1992. Prior thereto, she was
Vice President - Southeastern Region
from 1988 to 1992, Vice President -
Claims from 1987 to 1988, and Vice
President - Customer Service from 1986
to 1987 of Blue Cross & Blue Shield
United of Wisconsin. She is a director
of Universal Foods Corporation.
/TABLE
<PAGE>
<PAGE> 5
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Terms Expiring April, 1996
<TABLE>
<CAPTION>
<S> <S>
JERE D. McGAFFEY Mr. McGaffey, 58, is a partner in the
Nominating (Chairman) and law firm of Foley & Lardner. (2) He has
Retirement Plans Investment been in practice with that firm since
Committees 1961 and has been a partner since 1968.
Director since 1980 Mr. McGaffey is a director of Smith
Investment Company.
THOMAS F. SCHRADER Mr. Schrader, 44, is President and
Director since 1988 Chief Executive Officer of Wisconsin
Gas and Vice President of the Company.
He has been with Wisconsin Gas since
1978, serving as Vice President from
1983 to 1986, Executive Vice President
from 1986 to 1988 and President and
Chief Operating Officer from 1988 to
1990. He assumed his current position
with Wisconsin Gas in 1990. He was
elected Vice President of the Company
in 1988. Mr. Schrader is a director of
Firstar Trust Company.
STUART W. TISDALE Mr. Tisdale, 65, served as Chairman
Audit and Nominating and Chief Executive Officer of the
Committees Company until his retirement in
Director since 1980 February 1994. Mr. Tisdale joined Sta-
Rite as President and Chief Executive
Officer in 1976. After Sta-Rite merged
with the Company in 1982, Mr. Tisdale
became Vice President of the Company in
1983, President in 1984, President and
Chief Executive Officer in 1986, and
Chairman and Chief Executive Officer in
1992. Mr. Tisdale is a director of
Marshall & Ilsley Corporation, Modine
Manufacturing Co. and Twin Disc Inc.
</TABLE>
(1) On February 18, 1994, B-E Holdings, Inc. and Bucyrus-Erie Company filed
a voluntary prepackaged joint plan of reorganization in the United
States Bankruptcy Court.
(2) Foley & Lardner was retained in 1993 by the Company and its
subsidiaries to provide legal services and has been similarly retained
in 1994.<PAGE>
<PAGE> 6
THE BOARD OF DIRECTORS
The Board held nine meetings in 1993. Each director attended at least
75% of the total of such meetings and meetings of any committees on which
such director served. The Board maintains standing Audit, Nominating and
Compensation Committees.
The Audit Committee held two meetings in 1993. The committee's func-
tions include recommending the selection of the independent auditors each
year; consulting with the independent auditors regarding the scope and plan
of audit, internal controls, fees, non-audit services (including the
possible effect of such services on the independence of the auditors), the
audit report and related matters; reviewing other accounting, internal audit
and financial matters; investigating accounting, auditing or financial
exceptions which may occur; and overseeing the corporate compliance programs
of the Company and its subsidiaries.
The Nominating Committee held two meetings in 1993. The committee's
functions include recommending those persons to be nominated by the Board
for election as directors of the Company at the next Annual Meeting of
Shareholders and recommending the person to fill any unexpired term on the
Board which may occur. The committee will consider nominees recommended by
shareholders, but has no established procedures which must be followed to
make recommendations.
The Compensation Committee held two meetings in 1993. The committee's
functions include reviewing and recommending adjustments to the salaries of
the officers of the Company and its subsidiaries and administering the 1981
Stock Option Plan, the 1987 Stock Option Plan, the 1992 Director Stock
Option Plan, and the incentive compensation plans of the Company and its
subsidiaries.
The Company pays its directors who are not officers of the Company,
Wisconsin Gas, Sta-Rite or SHURflo an annual retainer fee of $10,000, plus
$600 for each meeting they attend of the Board and committees of the Board
on which they serve. Committee chairmen are paid an additional annual
retainer fee of $1,000. Committee chairmen receive meeting fees for
meetings with the Chief Executive Officer of the Company in preparation for
regular committee meetings. Wisconsin Gas pays its directors who are not
officers of the Company, Wisconsin Gas, Sta-Rite or SHURflo an annual
retainer fee of $7,000, plus $600 for each meeting of the Wisconsin Gas
board they attend. Directors who are also officers of the Company,
Wisconsin Gas, Sta-Rite or SHURflo receive no fees for service as directors
of those companies. Presently, all directors of the Company are also
directors of Wisconsin Gas.
Non-employee directors participate in the 1992 Director Stock Option
Plan, pursuant to which options to purchase 2,000 shares of Common Stock are
automatically granted annually on the fourth Tuesday in February to each
non-employee director. The exercise price per share for options granted
under the 1992 Director Stock Option Plan is equal to the fair market value
of a share of Common Stock on the date of grant. On February 23, 1993,
Messrs. Bueche, Davis, Forbes, McGaffey, McKeithan, Osborn and Winter and
Ms. Whitelaw each received an option to purchase 2,000 shares of Common
Stock at a per-share exercise price of $27.3125. Options granted under the
1992 Director Stock Option Plan are immediately exercisable and have a ten-
year term; provided, however, that no option may be exercised after 24
months have elapsed from the date the optionee ceased being a director. On
February 22, 1994, options to purchase an additional 2,000 shares of Common
Stock were granted to the non-employee directors at a per-share exercise
price of $30.4375.
The Company and Wisconsin Gas each maintain a deferred compensation
plan for active directors which entitles a director of the respective
corporation to defer directors' fees until the director ceases to be an
active director. All amounts deferred are unsecured and accrue interest
at the prevailing announced prime interest rate of a major commercial bank.
<PAGE> 7
The Company and Wisconsin Gas maintain retirement plans for directors
who are not officers of the Company or its subsidiaries, have reached the
age of 65, and have served at least five years as a director of the Company
or Wisconsin Gas. Retired directors receive essentially the same annual
compensation as active directors receive ($16,000 from the Company and
$11,200 from Wisconsin Gas for 1994). Retirement benefits are payable for a
period equal to the director's service as a director, up to 10 years, or
until the death of the retired director, whichever occurs earlier.
SECURITY OWNERSHIP OF MANAGEMENT
The following tabulation sets forth the number of shares of Common
Stock beneficially owned, as of February 28, 1994, by each director and
nominee, each executive officer named in the Summary Compensation Table, and
all directors and executive officers as a group.
<TABLE>
<CAPTION>
Title of
Class
- ----------------
<S>
Common Stock<PAGE>
Name of
Beneficial Owner
- ----------------------
<C>
Wendell F. Bueche
Willie D. Davis
James C. Donnelly
James L. Forbes
Jere D. McGaffey
Daniel F. McKeithan, Jr.
Guy A. Osborn
Thomas F. Schrader
Stuart W. Tisdale
George E. Wardeberg
Joseph P. Wenzler
Essie M. Whitelaw
William B. Winter
All directors and executive
officers as a group (14 persons).<PAGE>
Amount and Nature
of Beneficial
Ownership (1)(2)
- -------------------
<C>
6,356
4,500
46,394
5,000
6,798
5,000
6,000
95,862
211,492 (4)
23,799
106,187 (5)
4,000
6,420
573,423
<PAGE>
Percent of
Class (3)
- ----------
<C>
-
-
-
-
-
-
-
-
1.3%
-
-
-
-
-
-
-
3.4%
</TABLE>
(1) Each beneficial owner exercises sole voting and investment power with
respect to the shares shown as owned beneficially, except as noted in
footnotes (4) and (5).
(2) Includes the following numbers of shares covered under options
exercisable as of or within 60 days of February 28, 1994: Mr.
Donnelly, 45,200; Mr. Schrader, 73,400; Mr. Tisdale, 135,692; Mr.
Wenzler, 69,800; Messrs Bueche, Davis, Forbes, McGaffey, McKeithan,
Osborn and Winter and Ms. Whitelaw, 4,000 each.
(3) Where no percentage figure is set out in this column, the person owns
less than 1% of the outstanding shares.
(4) Includes 4,852 shares owned by Mr. Tisdale's spouse.
(5) Includes 526 shares owned by Mr. Wenzler's spouse.
EXECUTIVE COMPENSATION
The following tabulation is a three-year summary of the compensation
awarded or paid to, or earned by, the Company's chief executive officer and
its four most highly compensated executive officers whose total cash
compensation exceeded $100,000 in 1993.<PAGE>
<PAGE> 8
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compen-
Annual Compensation sation
--------------------------------------------- ----------
Awards
----------
Securities
Other Annual Underlying All Other
Name and Principal Compensation Options/ Compensation
Position Year Salary($) Bonus($) ($) (1) SARs(#) ($) (2)
- ------------------------------- ---- --------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Stuart W. Tisdale, Chairman and 1993 $488,750 $244,375 26,100 $19,533
Chief Executive Officer of 1992 470,000 145,000 25,000 14,574
the Company and Chairman of 1991 435,000 180,000 18,000 9,112
Wisconsin Gas, Sta-Rite
and SHURflo (3)
George E. Wardeberg, President and 1993 272,000 150,000 $52,459 18,000 16,257
Chief Operating Officer of the 1992 220,567 37,825 6,000 4,364
Company, Vice Chairman and 1991 185,000 0 4,000 2,456
Chief Executive Officer of
Sta-Rite and Vice Chairman of
Wisconsin Gas and SHURflo (4)
Thomas F. Schrader, Vice President 1993 260,000 142,881 10,500 15,192
of the Company and President and 1992 248,500 75,000 13,200 13,776
Chief Executive Officer of 1991 226,125 100,000 12,000 10,966
Wisconsin Gas
James C. Donnelly, Vice President 1993 236,250 110,174 7,950 15,203
of the Company and President and 1992 208,725 35,163 8,850 13,011
Chief Operating Officer of 1991 182,500 47,750 9,000 10,224
Sta-Rite
Joseph P. Wenzler, Vice President, 1993 245,300 100,629 9.750 15,131
Treasurer and Chief Financial 1992 245,300 33,695 13,200 6,171
Officer of the Company; Vice 1991 231,023 50,000 12,000 3,753
President and Chief Financial
Officer of Wisconsin Gas; and
Secretary and Treasurer of
SHURflo (5)
</TABLE>
(1) Of the amount reported in this column for Mr. Wardeberg, $43,255
represents a one-time club membership fee. The aggregate amount of
personal benefits provided by the Company and its subsidiaries to the
other executive officers named in this table in any year, and for Mr.
Wardeberg in 1991 and 1992, did not exceed the lesser of $50,000 or 10%
of each executive officer's annual salary and bonus reported in the
table for any of the years indicated.
(2) The amounts shown in this column for 1993 are comprised of the
following items: Company contributions to 401(k) and supplemental
savings plans: Mr. Tisdale $16,667; Mr. Wardeberg $13,391; Mr.
Schrader $12,326; Mr. Donnelly $11,743; and Mr. Wenzler $12,265.
Supplemental medical insurance premium: Mr. Tisdale $2,866; Mr.
Wardeberg $2,866; Mr. Schrader $2,866; Mr. Donnelly $2,866; and Mr.
Wenzler $2,866. Above market earnings on deferred compensation: Mr.
Donnelly $594.
(3) Mr. Tisdale retired February 1, 1994.
(4) On February 1, 1994, Mr. Wardeberg was elected President and Chief
Executive Officer of the Company; Chairman of Wisconsin Gas and
SHURflo; and Chairman and Chief Executive Officer of Sta-Rite.
(5) Mr. Wenzler was elected Secretary and Treasurer of SHURflo on July 28,
1993.
Stock Option Information
- ------------------------
The Company has in effect the 1987 Stock Option Plan pursuant to which
options to purchase Common Stock may be granted to key employees (including
executive officers) of the Company and its subsidiaries. The following
tabulation sets forth information regarding grants of options made by the
Company in 1993 to the executive officers named in the Summary Compensation
Table. No SARs have been awarded under the 1987 Plan.<PAGE>
<PAGE> 9
OPTION/SAR GRANTS IN 1993 FISCAL YEAR
<TABLE>
<CAPTION>
Grant
Individual Grants Date Value
- ------------------------------------------------------------------------------------------ ------------
Percent of
Total Options
Number of Sec. Granted to Exercise or Grant
Under. Opt./SARs Employees in Base Price Expiration Date Present
Name Granted (#) Fiscal Year ($/sh.) Date Value(3)
- ---------------------- ---------------- -------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Stuart W. Tisdale 26,100 (1) 21.9% $27.3125 2/23/04 $ 88,479
George E. Wardeberg 12,000 (1) 10.0 27.3125 2/23/04 40,680
6,000 (2) 27.3125 2/23/04 20,340
Thomas F. Schrader 7,000 (1) 5.9 27.3125 2/23/04 23,730
3,500 (2) 27.3125 2/23/04 11,865
James C. Donnelly 5,300 (1) 4.4 27.3125 2/23/04 17,967
2,650 (2) 27.3125 2/23/04 8,984
Joseph P. Wenzler 6,500 (1) 5.5 27.3125 2/23/04 22,035
3,250 (2) 27.3125 2/23/04 11,018
</TABLE>
(1) These options are nonstatutory stock options for purposes of the
Internal Revenue Code. The options became exercisable on February 23,
1993.
(2) These options are not immediately exercisable. They will become
exercisable on February 23, 1996, provided a specified total return
to shareholders objective for the period 1993 to 1995 is achieved.
These options are nonstatutory stock options for purposes of the
Internal Revenue Code.
(3) Amounts in this column were calculated using the Black-Scholes option
pricing model. The model assumes: (a) an option term of 11 years;
(b) a risk-free interest rate of 7.0%; (c) volatility (variance of
rate of return) of .2038; and (d) a dividend yield of 6.5%.
The following tabulation sets forth information regarding the exercise
of stock options during 1993 and the unexercised options held at December
31, 1993, by each of the executive officers named in the Summary
Compensation Table.
AGGREGATED OPTION/SAR EXERCISES IN 1993 FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
Numbers of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/
Options/SARs at FY-End (#) SARs at FY-End ($)
Shares Acquired Value --------------------------------------------------------------
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stuart W. Tisdale 5,000 $ 82,188 133,692 0 $1,280,732 $ 0
George E. Wardeberg 12,000 27,750 0 8,000 0 39,250
Thomas F. Schrader 2,000 27,625 75,400 7,900 810,124 45,731
James C. Donnelly 0 0 45,200 5,600 453,956 31,931
Joseph P. Wenzler 2,100 33,272 69,800 7,650 753,655 44,684
/TABLE
<PAGE>
<PAGE> 10
Pension and Retirement Plans
- ----------------------------
The Company and its subsidiaries maintain pension and retirement plans
in which the executive officers and other employees participate. The
companies also maintain supplemental retirement plans for officers and
certain other employees to reflect certain compensation that is excluded
under the retirement plans and to provide benefits that otherwise would have
been accrued or payable except for the limitations imposed by the Internal
Revenue Code.
The following tabulation sets forth the annual retirement benefits
payable under the pension plans, as supplemented, for the indicated levels
of final average earnings with various periods of credited service.
Benefits reflected in the table are based on an assumed retirement age of
65.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
------------------------------------------------
Remuneration 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 200,000 $ 58,616 $ 78,155 $ 89,424 $ 92,424 $ 95,424
250,000 73,466 97,955 112,074 115,824 119,474
300,000 88,316 117,755 134,724 139,224 143,724
350,000 103,166 137,555 157,374 162,624 167,874
400,000 118,016 157,355 180,024 186,024 192,024
450,000 132,866 177,155 202,674 209,424 216,174
500,000 147,716 196,955 225,324 232,824 240,324
550,000 162,566 216,755 247,974 256,224 264,474
600,000 177,416 236,555 270,624 279,624 288,624
</TABLE>
The compensation covered by the pension plan, as supplemented, for the
named executive officers includes all compensation reported for each
individual as salary and bonus in the Summary Compensation Table. Messrs.
Tisdale, Wardeberg, Schrader, Donnelly and Wenzler have 30, 4, 15, 6 and 20
years, respectively, of credited service under the pension plan. Pursuant
to the supplemental retirement plan, Mr. Tisdale, who retired February 1,
1994, receives supplemental retirement benefits computed under the benefit
formula, but with the years of credited service from 1986 through 1994
deemed to be 2-1/2 years for each year of actual credited service. The
effect of this supplemental program is to provide Mr. Tisdale, commencing at
age 65, with approximately the same aggregate retirement benefit under the
pension plan, as supplemented, as he would have received at that age under
the pension plan if he had 30 years of credited service. Pursuant to a
supplemental retirement plan, Mr. Schrader will receive a supplemental
retirement benefit of $25,000 per year for 15 years beginning at age 65,
payable in monthly installments.
<PAGE>
<PAGE> 11
A retired executive officer who is married at the time of retirement
and selects one of the available joint and surviving spouse annuity payment
options will also receive the difference between the monthly benefits
payable under the single life annuity payment option and the 50% joint and
surviving spouse annuity payment option for the lives of the retired officer
and spouse. Upon the death of the retired officer, the surviving spouse
will receive 50% of the supplemental benefit for life.
The retirement benefits set out in the above table are based on a
straight life annuity. The election of other available payment options
would change the retirement benefits shown in the table. The plan does not
provide for reduction of retirement benefits to offset Social Security or
any other retirement benefits.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board. The Compensation Committee is
comprised of four independent, non-employee directors. Following
Compensation Committee review and approval, matters relating to executive
compensation (other than the grant of stock options) are submitted to the
full Board for approval. The Compensation Committee utilizes an independent
compensation consultant. The consultant provides advice to the Committee on
compensation-related issues, including incentive plan design and competitive
compensation data for officer positions.
Compensation Policies
- ---------------------
Policies are used to set a general direction and as a backdrop against
which specific compensation decisions are made.
- Design of executive pay programs is intended to attract and retain
top talent, motivate and reward performance.
- Differences in pay practices and performance measures between the
Company's primary lines of business are recognized.
- Compensation opportunities, by component and in the aggregate, are
targeted at the median (50th percentile) of competitive practice.
- Achievement of incentive compensation levels is dependent on
attainment of performance goals as agreed to by the Board annually.
These goals relate to the achievement of the Company's operating and
financial plan, individual objectives and milestones in the Company's
longer-term strategic plan.
- In business units where an all-employee bonus or profit-sharing
program exists, a portion of each executive's incentive compensation
is determined on the same criteria.
- The focus on enhancement of shareholder value is accomplished by
tying a significant portion of total pay to performance of the
Company's stock.
In assessing executive performance and pay, the members of the
Compensation Committee consider factors outside the formal incentive plans.
These factors include operational and financial measures not specifically
incorporated in the incentive plans, and actual performance in dealing with
unanticipated business conditions during the year. The Compensation
Committee believes such factors should be considered in addition to the more
formalized factors to assess and reward executive performance properly.
<PAGE>
<PAGE> 12
Components of Compensation
- --------------------------
Base salary --- The Compensation Committee uses comparison information
to target salary ranges for its officers in both its utility and
manufacturing businesses. Competitive data sources vary by business unit.
Salary range midpoints for gas utility positions are set relative to a
comparison of other relevant gas utilities; a substantial number (more than
75%) of the proxy peer group companies comprising the Kidder, Peabody Gas
Distribution Utility Index are included in this survey sample. Salary range
midpoints for the Company's non-utility positions are set relative to a
comparison to other relevant manufacturing organizations. In both cases,
salary ranges are targeted at or near the 50th percentile of the competitive
data.
Annual Incentive Plan --- The Company and each subsidiary has an annual
incentive compensation plan tailored to that company. The Company's
officers hold executive positions with the Company and one or more of its
operating subsidiaries. As a result, they also participate in the incentive
plans of each subsidiary of which they serve as an officer on a pro rated
basis. The plans set incentive targets for each officer ranging from 25% to
50% of base salary. The Company's annual incentive plan is entirely
discretionary, but awards generally are based on overall corporate financial
performance and achievement of non-financial and individual performance
objectives. The annual incentive plans of the operating subsidiaries are
designed to compensate the officers of each subsidiary primarily on a
formula basis. The formula for the gas utility bases 75% of the targeted
award on financial, customer service and safety factors. The formula for
the manufacturing company bases 67% of the targeted award on financial
factors. The balance of the targeted awards for each subsidiary company is
based upon non-financial and individual objectives. These factors include
product leadership, market leadership, asset management, personnel
management and development, customer service, safety, and achievement of
personal objectives.
Long-term incentive plan --- The Company's long-term incentive
compensation plan provides for annual awards of stock options under the
Company's 1987 Stock Option Plan. Both "standard" and "performance" non-
statutory stock options are granted under the plan. Standard options are
immediately vested and exercisable. Performance options vest and become
exercisable after three years, provided that a specified three-year total
return to shareholder objective is achieved. The targets for standard
option awards are established as percentages of salary, which are converted
into option awards based on the value of a share of the Common Stock on the
date of grant. Performance option awards equal approximately 50% of the
standard option awards. The plan, which was developed for the Company by a
nationally-recognized compensation consulting firm, targets each officer's
long-term incentive opportunity at the 75th percentile of competitive
practice for outstanding performance.
Compensation for 1994 --- During late 1993 and early 1994, the
Compensation Committee and management have been working with an outside
consultant to refine the approach to incentive compensation for the
Company's top officers. This approach, which is implemented for 1994, is
consistent with the overall compensation policies stated earlier. The
revised compensation approach provides for:
- Specific performance measures and standards for the annual incentive
plan for the Company and operating subsidiary officers. For Company
officers, this replaces a more discretionary approach used in prior
years. Holding company officers will have their incentives based
entirely on the Company's earning per share (EPS) performance
relative to pre-established standards. Operating subsidiary
presidents will have their incentives based upon a combination of the
operating company's income performance, other key subsidiary
objectives, and Company EPS performance (75% weight will be on the
operating company measures).
<PAGE>
<PAGE> 13
- A long-term incentive that will be split 50%/50% (based on value)
between stock options and a new performance share plan. Stock
options will be granted annually. Performance shares will be granted
bi-annually and will be earned-out based upon the Company's three-
year total shareholder return performance relative to the proxy peer
group for holding company officers and subsidiary presidents.
Selected subsidiary officers will also participate in this plan; for
these individuals shares will be earned-out based strictly upon a
specific three-year financial performance goal for the subsidiary
company.
Compensation of Officers
- ------------------------
The Compensation Committee sets base salaries of officers within the
established ranges. The Compensation Committee considers specified financial
measures tailored to the Company and each subsidiary, each officer's
contribution to achieving corporate goals, and such officer's achievement of
personal performance objectives. Examples of financial measures are net
income earned relative to budget, return on total assets, return on sales,
and rate of return earned versus allowed. Examples of personal performance
objectives are set out below in the discussion of the chief executive
officer's compensation.
Since the Company's principal subsidiaries operate in different
industries with different compensation practices, and since each officer's
duties differ, the Compensation Committee weighs the financial factors
differently for each officer. For example, the rate of return earned versus
that nominally allowed by state regulatory authorities having jurisdiction
over the gas utility subsidiary is applicable only to officers of the
utility company, whereas return on total assets and return on sales are
applicable primarily to officers of the manufacturing subsidiaries.
As stated above, a portion of each officer's annual incentive award, if
any, is formula-based. The Compensation Committee has generally based the
individual portion of incentive awards on achievement of the overall
corporate financial, subsidiary non-financial and individual performance
objectives. During the last three years, incentive awards to officers,
other than the chief executive officer, have ranged from zero to 110% of
target.
The range of standard stock option awards to all officers is prescribed
by the long-term incentive plan approved by the Compensation Committee. The
specific number of standard options awarded within the range is determined
by the Compensation Committee based on the number of options to be awarded
to all key employees of the Company and its subsidiaries, the number of
options previously granted and outstanding, overall corporate performance
and personal performance. As stated, generally the number of performance
options awarded equals 50% of the number of standard options awarded.
However, the Compensation Committee may exercise its discretion in
determining the precise grant to each officer.
Compensation of the Chief Executive Officer
- -------------------------------------------
For 1993, the Compensation Committee increased the base salary of
Stuart W. Tisdale, the Company's Chief Executive Officer, by $25,000, or
5.3% effective April 1, 1993. The increase was based on his overall
performance, as demonstrated by the increase in the Company's total return
to shareholders in 1992 compared to the peer group which is shown in the
graph in the Performance Presentation section below, and his position in the
salary range. The increase sets Mr. Tisdale's salary in the fourth quartile
of the range targeted by the Compensation Committee.
The Compensation Committee awarded Mr. Tisdale 26,100 standard options
in 1993. The total number of options awarded was at the targeted number
established in the long-term incentive compensation plan and reflects the
fact that the Compensation Committee began the practice of granting the
additional performance options in 1992. However, recognizing both Mr.
Tisdale's pending retirement in February 1994, and the fact that performance
options vest in 1996 if the financial objective for the period 1993 to 1995
is met, the Compensation Committee granted Mr. Tisdale only standard
options.
<PAGE>
<PAGE> 14
The incentive awarded to Mr. Tisdale for 1993 was $244,375, or 50% of
his salary as compared to a target of 50% of salary. This award reflects
Mr. Tisdale's significant contributions to the Company during 1993. The
Company's financial objectives were met with net earnings and earnings per
share increasing 29% and 24%, respectively. The total return to
shareholders was 22% for 1993 as compared to the total return of the
Standard & Poor's stock index and industry peer group index of 10% and 13%,
respectively. In addition, Mr. Tisdale accomplished his personal objectives
in the areas of executive succession planning, strategic planning and
acquisitions.
Compliance with New Tax Regulations
- -----------------------------------
The Company has considered the implications of the new Section 162(m)
tax rules regarding deductibility of annual executive compensation over $1
million. The cash compensation levels for Company officers fall well below
this level and, hence, no specific changes are proposed to the cash
compensation program. However, it is important to note that many of the
changes described above are consistent with the new tax rules regarding
performance-based compensation incentives.
The Compensation Committee does, however, intend to seek qualification
of the stock components of the program as "performance-based compensation"
plans pursuant to these tax rules. To that end, proposals are included in
this Proxy Statement establishing a per-person limitation for stock option
and restricted stock awards, and details of the new performance share plan
are disclosed and submitted for shareholder approval.
Wendell F. Bueche, Chairman
James L. Forbes
Daniel F. McKeithan, Jr.
Guy A. Osborn
Members of the Compensation Committee
PERFORMANCE PRESENTATION
The following graph compares the yearly percentage change in the
Company's cumulative total shareholder return (dividends declared plus share
appreciation) to the S&P 500 Stock Index and the Kidder, Peabody Gas
Distribution Utility Index, comprised of 35 U.S. natural gas distribution
utilities. The information presented assumes that all dividends were
reinvested.
[Performance graph will appear here.]
Comparison of Five-Year Cumulative Return
Among WICOR, Inc., S&P 500 Index
and Kidder, Peapody Gas Distribution Utility Index
<TABLE>
<CAPTION>
Measurement Period - FYE
Measurement Point - December 31, 1988
----------------------------------------------------
1988 1989 1990 1991 1992 1993
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
WICOR $ 100 $ 135 $ 114 $ 151 $ 180 $ 218
S & P 500 $ 100 $ 132 $ 128 $ 166 $ 179 $ 197
Kidder $ 100 $ 134 $ 130 $ 149 $ 175 $ 199
</TABLE>
<PAGE>
<PAGE> 15
ITEM NO. 2: APPROVAL OF THE
1994 LONG-TERM PERFORMANCE PLAN
General
- -------
The purpose of the WICOR, Inc. 1994 Long-Term Performance Plan (the
"1994 Plan") is to enhance the ability of the Company and its affiliates to
attract, retain and motivate key salaried employees upon whom, in large
measure, the sustained growth and profitability of the Company depend, and
to provide incentives to those key salaried employees that are more directly
linked to the profitability of the Company's businesses and increases in
shareholder value.
The Company currently has in effect the 1987 Stock Option Plan. The
Company also has a 1981 Stock Option Plan which expired on December 16,
1991, except as to outstanding options. As of March 1, 1994, approximately
643,900 shares of Common Stock were available for grant under the 1987 Stock
Option Plan. However, if the 1994 Plan is approved and adopted by the
shareholders at the Annual Meeting, no additional options will be granted
under the 1987 Stock Option Plan. To allow for various equity-based
compensation awards to be made by the Company, the 1994 Plan was adopted by
the Board on March 1, 1994, and is effective as of that date, subject to
approval by the shareholders at the Annual Meeting.
The following summary description of the 1994 Plan is qualified in its
entirety by reference to the full text of the 1994 Plan which is attached to
this Proxy Statement as Appendix 1.
Administration
- --------------
The 1994 Plan is administered by the Compensation Committee (the
"Committee") of the Board of Directors consisting of four non-employee
directors who are "disinterested persons" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934 (the "Exchange Act"). Subject to
the terms of the 1994 Plan, the Committee has authority to interpret the
1994 Plan, prescribe, amend and rescind rules and regulations relating to
the 1994 Plan, and make all other determinations necessary or advisable for
the administration of the 1994 Plan.
Participation
- -------------
The Committee will select participants in the 1994 Plan from among key
salaried employees of the Company and its affiliates. The Committee will
solicit and consider recommendations of the Chief Executive Officer in
determining those key salaried employees who will be eligible to participate
in the 1994 Plan. Approximately 90 employees are currently eligible to
participate in the 1994 Plan.
Stock Subject to the 1994 Plan
- ------------------------------
The 1994 Plan provides for the issuance of up to 820,000 shares of
Common Stock, subject to adjustment as described below. Awards may be
granted as options (either incentive stock options or non-qualified stock
options), stock appreciation rights or restricted stock. No participant can
be granted awards that could result in such participant exercising options
for, or stock appreciation rights with respect to, more than 125,000 shares
of Common Stock or receiving restricted stock awards for more than 25,000
shares of restricted stock under the 1994 Plan. If an option granted under
the 1994 Plan expires, is forfeited, is canceled or is terminated
unexercised as to any shares, such shares will again be available for
issuance under the 1994 Plan, provided that if a new award for additional
shares is granted to a participant in connection with such an expiration,
forfeiture, cancellation or termination, then the shares subject to the
expiration, forfeiture, cancellation or termination will reduce the number
of shares that can otherwise be issued under the 1994 Plan. Shares to be
issued under the 1994 Plan may be either authorized but unissued or treasury
shares.
In the event of any change in the outstanding shares of Common Stock by
reason of a stock dividend or split, recapitalization, merger,
consolidation, combination, spin-off, exchange of shares or other similar
corporate change, the number of shares subject to outstanding options and
their stated option prices, and the number of shares subject to the 1994
<PAGE> 16
Plan, will be adjusted equitably by the Committee. In such event, the
Committee will also adjust equitably the number of shares subject to
restricted stock grants and the number of outstanding stock appreciation
rights and related grant values.
Options
- -------
Options may be granted to participants at such times as determined by
the Committee. The Committee will also determine the number of options
granted and whether an option is to be an incentive stock option or non-
qualified stock option. Pursuant to the Internal Revenue Code of 1986, as
amended (the "Code"), the aggregate fair market value of Common Stock with
respect to which incentive stock options are exercisable for the first time
by a participant during any calendar year shall not exceed $100,000. The
option price per share of Common Stock will be fixed by the Committee, but
will not be less than the fair market value of the Common Stock on the date
of grant and cannot be subsequently changed except as noted above. No
option shall be granted, directly or indirectly, in connection with the
expiration, forfeiture, cancellation or termination of an option previously
granted under the 1994 Plan prior to its normal expiration date if such
expired, forfeited, cancelled or terminated option had an exercise price
higher than the exercise price of the option proposed to be granted. The
Committee will determine the expiration date of each option, but the
expiration date will not be later than the tenth anniversary of the grant
date. Options will be exercisable at such times and be subject to such
restrictions and conditions as the Committee deems necessary or advisable.
No options will be assignable or transferable by a participant, except by
will or the laws of descent and distribution and may be exercised during the
life of the participant only by the participant. The Committee may impose
other restrictions on transferability and exercisability of awards granted
under the 1994 Plan to ensure compliance with Rule 16b-3 under the Exchange
Act.
At the time of exercise, the option price must be paid in full. The
Committee will determine the form of payment, which may include either (i)
cash; (ii) tendering shares of stock having a fair market value at the time
of exercise equal to the option price; (iii) electing to have the Company
withhold from shares of stock otherwise issuable upon exercise that number
of shares of stock having a fair market value at the time of exercise equal
to the option price; (iv) a combination of (i), (ii) and (iii); or (v) such
other form of payment as the Committee determines. The Committee may permit
the practice known as "pyramiding" whereby shares of stock acquired upon
exercise of an option are simultaneously surrendered in exchange for all or
part of the remaining shares subject to the option.
Stock Appreciation Rights
- -------------------------
The Committee may also grant stock appreciation rights under the 1994
Plan, independently or in tandem with, a related option. Stock appreciation
rights give the participant the right to receive a payment (in cash, shares
of Common Stock, or a combination thereof as the Committee shall determine)
equal to the excess of the fair market value of a share of Common Stock at
the date of exercise over the option exercise price.
Stock appreciation rights will be exercisable at such times, and on
such conditions as the Committee shall determine. Stock appreciation rights
granted to officers must be exercised in compliance with Rule 16b-3 under
the Exchange Act, and the Committee may impose such conditions on exercise
as may be required to satisfy the requirements of Rule 16b-3.
When a stock appreciation right granted in tandem with a related option
is exercised, the number of shares issuable under the related option will be
reduced by the number of shares covered by the stock appreciation right, and
such shares cannot be granted again under the 1994 Plan. The exercise of an
option will result in an equivalent reduction in the number of shares
covered by the related stock appreciation right, except that if a stock
appreciation right is granted for less than all of the shares covered by the
related option, no such reduction will be made until such time as the number
of shares exercised under the option exceeds the number of shares not
covered by the stock appreciation right.<PAGE>
<PAGE> 17
Under generally accepted accounting principles, outstanding stock
appreciation rights (whether granted independently or in tandem with stock
options) require a charge against Company income equal to the increase in
the value of such stock appreciation rights. No comparable charge against
Company income is required for outstanding stock options.
Restricted Stock
- ----------------
The Committee may grant shares of restricted stock to participants in
such amounts and at such times as it will determine. Restricted stock
awards to Company officers and the Chairman and President of each Company
subsidiary will be based on attaining, over a period of at least three
years, a specified compounded annual total shareholder return (stock price
appreciation plus Company cash dividends paid and assumed to be reinvested
in Common Stock) compared to a specified group of gas distribution
utilities. Shares of restricted stock may not be transferred in any way,
other than by will or by the laws of descent and distribution, for the
period of restriction. The restrictions applicable to the participants will
be set by the Committee. After the period of restriction, the shares of
restricted stock become freely transferable.
The Committee may impose such restrictions on restricted stock as it
may deem appropriate. If any dividends or distributions are paid in shares
of capital stock, the shares will be subject to the same restrictions on
transferability as the shares on which the dividends or distributions are
paid.
Under generally accepted accounting principles, the compensation
expense for restricted stock will be recognized on a current basis by the
Company throughout the performance period.
Tax Withholding
- ---------------
Whenever shares of Common Stock are to be issued under the 1994 Plan,
the Company may withhold from any cash otherwise payable to the participant
or require the participant to remit to the Company an amount sufficient to
satisfy federal, state and local withholding taxes. Unless the Committee
determines otherwise, and subject to the requirements of Rule 16b-3 under
the Exchange Act, a participant may satisfy such withholding requirements by
tendering already owned shares of Common Stock or requiring the Company to
withhold shares of Common Stock from the exercised option stock.
Certain Federal Income Tax Consequences
- ---------------------------------------
Stock Options --- The grant of a stock option under the 1994 Plan will
create no income tax consequences to the employee or the Company. An
employee who is granted a non-qualified stock option will generally
recognize ordinary income at the time of exercise in an amount equal to the
excess of the fair market value of the Common Stock at such time over the
exercise price. The Company will be entitled to a deduction in the same
amount and at the same time as ordinary income is recognized by the
employee. A subsequent disposition of the Common Stock will give rise to
capital gain or loss to the extent the amount realized from the sale differs
from the tax basis, i.e., the fair market value of the Common Stock on the
date of exercise. This capital gain or loss will be a long-term capital
gain or loss if the Common Stock has been held for more than one year from
the date of exercise.
In general, an employee will recognize no income or gain at the time of
exercise of an incentive stock option (except that the alternative minimum
tax may apply). If the employee holds the shares of Common Stock acquired
pursuant to the exercise of an incentive stock option for at least two years
from the date of grant and one year form the date of exercise, any gain or
loss realized by the employee on disposition of the Common Stock will be
treated as a long-term capital gain or loss. No deduction will be allowed
to the Company. If these holding period requirements are not satisfied, the
employee will recognize ordinary income at the time of the disposition equal
to the lesser of (i) the gain realized on the disposition; or (ii) the
difference between the exercise price and the fair market value of the
shares of Common Stock on the date of exercise. The Company will be
entitled to a deduction in the same amount and at the same time as ordinary
income is recognized by the employee. The Committee may provide for a
<PAGE> 18
sharing between the Company and the participant of any tax benefits to the
Company arising from such disqualifying disposition. Any additional gain
realized by the employee over the fair market value at the time of exercise
will be treated as a capital gain. This capital gain will be a long-term
capital gain if the Common Stock has been held for more than one year from
the date of exercise.
Stock Appreciation Rights --- The grant of a stock appreciation right
will create no income tax consequences for the employee or the Company.
Upon exercise of a stock appreciation right, the employee will recognize
ordinary income equal to the amount of any cash and the fair market value of
any shares of Common Stock or other property received, except that if the
employee receives stock upon exercise of a stock appreciation right,
recognition of income may be deferred in accordance with the rules
applicable to such an award. The Company will be entitled to a deduction in
the same amount and at the same time as income is recognized by the
employee.
Restricted Stock --- An employee will not recognize income upon the
award of restricted stock under the 1994 Plan unless the election described
below is made. However, an individual who has not made such an election
will recognize ordinary income at the end of the applicable restriction
period in an amount equal to the fair market value of the restricted stock
at such time. The Company will be entitled to a corresponding deduction in
the same amount and at the same time as the participant recognizes income.
Any otherwise taxable disposition of the restricted stock after the end of
the applicable restriction period will result in capital gain or loss (long-
term or short-term depending on the length of time the restricted stock is
held after the end of the applicable restriction period). Dividends paid in
cash and received by a participant prior to the end of the applicable
restriction period will constitute ordinary income to the participant, and
the Company will be entitled to a corresponding deduction for such
dividends. Any dividends paid in stock will be treated as an award of
additional restricted stock subject to the tax treatment described above.
An employee may, within 30 days after the date of the award of
restricted stock, elect to recognize ordinary income as of the date of the
award in an amount equal to the fair market value of such restricted stock
on the date of the award. The Company will be entitled to a corresponding
deduction in the same amount and at the same time as the participant
recognizes income. If the election is made, any cash dividends received
with respect to the restricted stock will be treated as dividend income to
the participant in the year of payment and will not be deductible by the
Company. Any otherwise taxable disposition of the restricted stock (other
than by forfeiture) will result in capital gain or loss (long-term or short-
term depending on the holding period). If the participant who has made an
election subsequently forfeits the restricted stock, the participant will
not be entitled to deduct the amount previously included in income as a
loss. The Company would then be required to include as ordinary income the
amount of the deduction it originally claimed with respect to such shares.
Outstanding Awards
- ------------------
As of date hereof, 137,200 non-qualified stock options and 23,000
shares of restricted stock have been granted under the 1994 Plan to 81
participants, subject to approval of the 1994 Plan by the shareholders.
Duration of Plan
- ----------------
The 1994 Plan will remain in effect until all Common Stock subject to
it has been purchased or acquired, unless terminated earlier by the Board of
Directors. However, no option, stock appreciation right or restricted stock
may be granted after March 1, 2004.
Amendment, Modification and Termination
- ---------------------------------------
The Board of Directors may amend, modify or terminate the 1994 Plan at
any time, provided that no such action of the Board, without approval of the
shareholders, may (i) increase the maximum number of shares issuable under
the 1994 Plan or the maximum number of shares which can be awarded to any
participant; (ii) modify the performance criteria pursuant to which
restricted stock vests; (iii) materially modify the eligibility requirements
<PAGE> 19
for participation in the 1994 Plan; or (iv) materially increase the benefits
to participants under the 1994 Plan. Termination, amendment or modification
of the 1994 Plan will not adversely affect the right of participants under
options, stock appreciation rights or restricted stock previously granted,
without the consent of the participant.
Vote Required
- -------------
The affirmative vote of a majority of the votes cast on the proposal by
shareholders is required for approval of the 1994 Plan, provided that a
majority of the outstanding shares of the Company's Common Stock are voted
on the proposal. Assuming such proviso is met, any shares not voted
(whether by broker nonvote or otherwise, except abstention) have no impact
on the vote.
Shares as to which holders abstain from voting will be treated as votes
against the proposal. The shares represented by the proxies received will
be voted FOR approval of the adoption of the 1994 Plan, unless a vote
against such approval or to abstain from voting is specifically indicated on
the proxy.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE
WICOR, INC. 1994 LONG-TERM PERFORMANCE PLAN
SHAREHOLDER PROPOSALS
Proposals which shareholders of the Company intend to present at the
1995 Annual Meeting of Shareholders must be received by the Company by the
close of business on November 10, 1994.<PAGE>
<PAGE> 20
OTHER MATTERS
Arthur Andersen & Co. was retained as the Company's independent
auditors for the year ended December 31, 1993 and, upon the recommendation
of the Audit Committee, the Board has reappointed Arthur Andersen & Co. as
independent public accountants for the Company for the year ending December
31, 1994. A representative of Arthur Andersen & Co. is expected to be
present at the Annual Meeting with the opportunity to make a statement if
such representative desires to do so, and it is expected that such
representative will be available to respond to appropriate questions.
The Company will file with the Securities and Exchange Commission on or
before March 31, 1994, an annual report on Form 10-K for the fiscal year
ended December 31, 1993. The Company will provide without charge a copy of
this Form 10-K (including financial statements and financial statement
schedules, but not including exhibits thereto) to each person who is a
record or beneficial holder of shares of Common Stock as of the record date
for the Annual Meeting and who submits a written request for it. A request
for a Form 10-K should be addressed to Robert A. Nuernberg, Secretary,
WICOR, Inc., P.O. Box 334, Milwaukee, Wisconsin 53201.
Management does not intend to present to the Annual Meeting any matters
other than the matters described in this Proxy Statement. Management knows
of no other matters to be brought before the Annual Meeting. However, if
any other matters are properly brought before the Annual Meeting, it is the
intention of the persons named in the enclosed form of proxy to vote thereon
in accordance with their best judgment.
The cost of soliciting proxies will be borne by the Company. The
Company expects to solicit proxies primarily by mail. Proxies may also be
solicited personally and by telephone by certain officers of the Company and
regular employees of its subsidiaries. The Company has also retained D.F.
King and Company, Inc. to solicit proxies. The estimated cost of such proxy
solicitation is $4,500, plus out-of-pocket expenses. The Company may
reimburse brokers and other nominees for their expenses in communicating
with the persons for whom they hold Common Stock.
By Order of the Board of Directors
Robert A. Nuernberg
Secretary
March 10, 1994<PAGE>
<PAGE> 21
APPENDIX 1
WICOR, INC.
1994 LONG-TERM PERFORMANCE PLAN
Section 1. Purpose
- -------------------
The purpose of the WICOR, Inc. 1994 Long-Term Performance Plan (the
"Plan") is to enhance the ability of WICOR, Inc. (together with any
successor thereto, the "Company") and its Affiliates (as defined below) to
attract, retain and motivate key salaried employees upon whom, in large
measure, the sustained growth and profitability of the Company depend and to
provide incentives to such key salaried employees which are more directly
linked to the profitability of the Company's businesses and increases in
shareholder value.
Section 2. Definitions
- -----------------------
As used in the Plan, the following terms shall have the respective
meanings set forth below:
(a) "Affiliate" shall mean any entity that, directly or through one or
more intermediaries, is controlled by, controls, or is under common control
with, the Company.
(b) "Award" shall mean any Option, Stock Appreciation Right or
Restricted Stock granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract, or
other instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(e) "Commission" shall mean the United States Securities and Exchange
Commission or any successor agency.
(f) "Committee" shall mean a committee of the Board of Directors of
the Company designated by such Board to administer the Plan and composed of
not less than two directors, each of whom is a "disinterested person" within
the meaning of Rule 16b-3.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(h) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair
market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee.
(i) "Incentive Stock Option" shall mean an Option granted under
Section 6(a) of the Plan that is intended to meet the requirements of
Section 422 of the Code, or any successor provision thereto.
(j) "Key Salaried Employee" shall mean any officer or other key
salaried employee of the Company or of any Affiliate who is responsible for
or contributes to the management, growth or profitability of the business of
the Company or any Affiliate as determined by the Committee.
(k) "Non-Qualified Stock Option" shall mean an Option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock
Option.
(l) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
(m) "Participant" shall mean a Key Salaried Employee designated to be
granted an Award under the Plan.<PAGE>
<PAGE> 23
(n) "Person" shall mean any individual, corporation, partnership,
association, limited liability company, joint-stock company, trust,
unincorporated organization, or government or political subdivision thereof.
(o) "Released Securities" shall mean Shares of Restricted Stock with
respect to which all applicable restrictions have expired, lapsed, or been
waived.
(p) "Restricted Securities" shall mean Awards of Restricted Stock or
other Awards under which issued and outstanding Shares are held subject to
certain restrictions.
(q) "Restricted Stock" shall mean any Shares granted under Section
6(c) of the Plan.
(r) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the
Commission under the Exchange Act, or any successor rule or regulation
thereto.
(s) "Shares" shall mean shares of common stock of the Company and such
other securities or property as may become subject to Awards pursuant to an
adjustment made under Section 4(b) of the Plan.
(t) "Stock Appreciation Right" shall mean any right granted under
Section 6(b) of the Plan.
(u) "Total Shareholder Return" shall mean the appreciation of the
price of a share of common stock of the Company, plus the value of dividends
paid thereon assuming reinvestment in common stock of the Company.
Section 3. Administration
- --------------------------
The Plan shall be administered by the Committee; provided, however,
that if at any time the Committee shall not be in existence, the functions
of the Committee as specified in the Plan shall be exercised by those
members of the Board of Directors of the Company who qualify as
"disinterested persons" under Rule 16b-3. Subject to the terms of the Plan
and applicable law, the Committee shall have full power and authority to:
(i) designate Participants; (ii) determine the type or types of Awards to be
granted to each Participant under the Plan; (iii) determine the number of
Shares to be covered by (or with respect to which payments, rights, or other
matters are to be calculated in connection with) Awards granted to
Participants; (iv) determine the terms and conditions of any Award granted
to a Participant; (v) determine whether, to what extent, and under what
circumstances Awards granted to Participants may be settled or exercised in
cash, Shares, other securities, other Awards, or other property, or
canceled, forfeited, or suspended to the extent permitted in Section 7 of
the Plan, and the method or methods by which Awards may be settled,
exercised, canceled, forfeited, or suspended; (vi) determine whether, to
what extent, and under what circumstances cash, Shares, other securities,
other Awards, other property, and other amounts payable with respect to an
Award granted to Participants under the Plan shall be deferred either
automatically or at the election of the holder thereof or of the Committee;
(vii) interpret and administer the Plan and any instrument or agreement
relating to, or Award made under, the Plan (including, without limitation,
any Award Agreement); (viii) establish, amend, suspend, or waive such rules
and regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and (ix) make any other determination and
take any other action that the Committee deems necessary or desirable for
the administration of the Plan. Unless otherwise expressly provided in the
Plan, all designations, determinations, interpretations, and other decisions
under or with respect to the Plan or any Award shall be within the sole
discretion of the Committee, may be made at any time, and shall be final,
conclusive, and binding upon all Persons, including the Company, any
Affiliate, any Participant, any holder or beneficiary of any Award, any
shareholder, and any employee of the Company or of any Affiliate.
The Committee shall solicit and consider the recommendations of the
Chief Executive Officer of the Company with regard to, among other things,
the designation of Participants, the type of Awards to be granted under the
Plan to such Participants and the number of Shares to be subject thereto,
and the other terms and conditions of Awards granted to Participants,
subject to the limitations of Rule 16b-3.<PAGE>
<PAGE> 24
Section 4. Shares Available for Award
- --------------------------------------
(a) Shares Available --- Subject to adjustment as provided in Section
4(b):
(i) Number of Shares Available --- The total number of Shares with
respect to which Awards may be granted under the Plan shall be 820,000. If,
after the effective date of the Plan, any Shares covered by an Award granted
under the Plan, or to which any Award relates, are forfeited or if an Award
otherwise terminates, expires or is canceled prior to the delivery of all of
the Shares or of other consideration issuable or payable pursuant to such
Award and if such forfeiture, termination, expiration or cancellation occurs
prior to the payment of dividends or the exercise by the holder of other
indicia of ownership of the Shares to which the Award relates, then the
number of Shares counted against the number of Shares available under the
Plan in connection with the grant of such Award, to the extent of any such
forfeiture, termination, expiration or cancellation, shall again be
available for granting of additional Awards under the Plan; provided,
however, that if an Award covering additional Shares is granted to a
Participant in connection with such forfeiture, termination, expiration or
cancellation, then the Shares subject to the forfeiture, termination,
expiration or cancellation shall be counted against the total number of
Shares with respect to which Awards may be granted under the Plan and the
maximum number of Shares that may be the subject of Awards granted to
individual Participants under the Plan in an amount equal to the number of
Shares to which such additional grant relates.
(ii) Limitation on Awards to Individual Participants --- No
Participant shall be granted Awards that could result in such Participant
exercising Options for, or Stock Appreciation Rights with respect to, more
than 125,000 Shares or receiving more than 25,000 Shares of Restricted Stock
under the Plan.
(iii) Accounting for Awards --- The number of Shares covered by an
Award under the Plan, or to which such Award relates, shall be counted on
the date of grant of such Award against the number of Shares available for
granting Awards under the Plan; provided, however, that if Options and Stock
Appreciation Rights are granted in tandem and the exercise of either an
Option or Stock Appreciation Right results in an offsetting reduction in the
number of Options or Stock Appreciation Rights subject to the Award, then
the number of Shares to which such Award relates shall only be counted
against the number of Shares available for granting Awards under the Plan to
the extent of the aggregate number of Shares as to which such Award may be
exercised.
(iv) Sources of Shares Deliverable Under Awards --- Any Shares
delivered pursuant to an Award may consist, in whole or in part, of
authorized and unissued Shares or of treasury Shares.
(b) Adjustments --- In the event that the Company shall pay a dividend
on its common stock in Shares, effect a stock split, or effect a similar
corporate transaction or event that affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the number of Shares
subject to the Plan and which thereafter may be made the subject of Awards
and the number of Shares subject to outstanding Awards under the Plan, and
the exercise and grant prices thereof, shall be equitably adjusted by the
Committee/such that the number of Shares, as adjusted, shall bear the same
relation to the total number of outstanding shares of common stock of the
Company following the transaction or event as immediately prior to such
transaction or event; provided, however, in each case, that with respect to
Awards of Incentive Stock Options no such adjustment shall be authorized to
the extent that such authority would cause the Plan to violate Section
422(b)(1) of the Code or any successor provision thereto; and provided
further, however, that the number of Shares subject to any Award payable or
denominated in Shares shall always be a whole number.
Section 5. Eligibility
- -----------------------
Any Key Salaried Employee, including any executive officer or employee
who is also a director of the Company or of any Affiliate, who is not a
member of the Committee shall be eligible to be designated a Participant.
<PAGE> 25
Section 6. Awards
- ------------------
(a) Options --- The Committee is hereby authorized to grant Options to
Participants with the terms and conditions as set forth below and with such
additional terms and conditions, in either case not inconsistent with the
provisions of the Plan, as the Committee shall determine; provided, however,
that no Option shall be granted, directly or indirectly, in connection with
the forfeiture, termination, cancellation or expiration of an Option
previously granted under the Plan prior to its normal expiration date if
such forfeited, terminated, canceled or expired Option has an exercise price
higher than the Option proposed to be granted.
(i) Exercise Price --- The exercise price per Share under an Option
shall be determined by the Committee; provided, however, that such exercise
price shall not be less than 100% of the Fair Market Value of a Share on the
date of grant of such Option; and provided further, that such exercise price
shall not be adjusted following the date of grant of such Option except as
provided in Section 4(b) hereof.
(ii) Option Term --- The term of each Option shall be fixed by the
Committee; provided, however, that in no event shall the term of any Option
exceed a period of ten years from the date of its grant.
(iii) Exercisability and Method of Exercise --- An Option shall
become exercisable in such manner and within such period or periods and in
such installments or otherwise as shall be determined by the Committee. The
Committee also shall determine the method or methods by which, and the form
or forms, including, without limitation, cash, Shares, other securities,
other Awards, or other property, or any combination thereof, having a Fair
Market Value on the exercise date equal to the relevant exercise price, in
which payment of the exercise price with respect to any Option may be made
or deemed to have been made.
(iv) Incentive Stock Options --- The terms of any Incentive Stock
Option granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code, or any successor provision thereto,
and any regulations promulgated thereunder.
(b) Stock Appreciation Rights --- The Committee is hereby authorized
to grant Stock Appreciation Rights to Participants. Subject to the terms of
the Plan and any applicable Award Agreement, a Stock Appreciation Right
granted under the Plan shall confer on the holder thereof a right to
receive, upon exercise thereof, the excess of (i) the Fair Market Value of
one Share on the date of exercise over (ii) the grant price of the right as
specified by the Committee, which shall not be less than the Fair Market
Value of one Share on the date of grant of the Stock Appreciation Right.
Subject to the terms of the Plan, the grant price, term, methods of
exercise, methods of settlement (including whether the Participant will be
paid in cash or Shares, or a combination thereof), and any other terms and
conditions of any Stock Appreciation Right shall be as determined by the
Committee; provided, however, that the grant price of a Stock Appreciation
Right may not be adjusted following the date of grant of such Stock
Appreciation Right except as provided in Section 4(b) hereof. The Committee
may impose such conditions or restrictions on the exercise of any Stock
Appreciation Right as it may deem appropriate, including, without
limitation, restricting the time of exercise of the Stock Appreciation Right
to specified periods as may be necessary to satisfy the requirements of Rule
16b-3.
(c) Restricted Stock Awards ---
(i) Issuance --- The Committee is hereby authorized to grant Awards
of Restricted Stock to Participants.
(ii) Restrictions --- Shares of Restricted Stock granted to
Participants shall be subject to such restrictions as the Committee may
impose, which restrictions may lapse separately or in combination at such
time or times, in such installments or otherwise, as the Committee may deem
appropriate.<PAGE>
<PAGE> 26
(iii) Performance Criteria --- The restrictions applicable to
Company executives and the Chairman and President of each subsidiary of the
Company shall be based on the criteria of attaining over a period of at
least three years a compounded annual percentage rate of Total Shareholder
Return compared to a specified group of gas distribution utilities. The
restrictions applicable to other executives of the subsidiaries shall be as
determined by the Committee.
(iv) Registration --- Any Restricted Stock granted under the Plan
to a Participant may be evidenced in such manner as the Committee may deem
appropriate. In the event any stock certificate is issued in respect of
Shares of Restricted Stock granted under the Plan to a Participant, such
certificate shall be registered in the name of the Participant and shall
bear an appropriate legend (as determined by the Committee) referring to the
terms, conditions, and restrictions applicable to such Restricted Stock.
(v) Payment of Restricted Stock --- At the end of the applicable
restriction period relating to Restricted Stock granted to a Participant,
one or more stock certificates for the appropriate number of Shares, free of
restrictions, shall be delivered to the Participant, or, if the Participant
received stock certificates representing the Restricted Stock at the time of
grant, the legends placed on such certificates shall be removed.
(vi) Forfeiture --- Except as otherwise determined by the
Committee, upon termination of employment of a Participant (as determined
under criteria established by the Committee) for any reason during the
applicable restriction period, all Shares of Restricted Stock still subject
to restriction shall be forfeited by the Participant and reacquired by the
Company.
(d) General ---
(i) No Consideration for Awards --- Awards shall be granted to
Participants for no cash consideration unless otherwise determined by the
Committee.
(ii) Award Agreements --- Each Award granted under the Plan shall
be evidenced by an Award Agreement in such form (consistent with the terms
of the Plan) as shall have been approved by the Committee.
(iii) Awards May Be Granted Separately or Together --- Awards to
Participants under the Plan may be granted either alone or in addition to,
in tandem with, or in substitution for any other Award or any award granted
under any other plan of the Company or any Affiliate. Awards granted in
addition to or in tandem with other Awards, or in addition to or in tandem
with awards granted under any other plan of the Company or any Affiliate,
may be granted either at the same time as or at a different time from the
grant of such other Awards or awards.
(iv) Limits on Transfer of Awards --- No Award (other than Released
Securities), and no right under any such Award, shall be assignable,
alienable, saleable, or transferable by a Participant otherwise than by will
or by the laws of descent and distribution (or, in the case of an Award of
Restricted Securities, to the Company); provided, however, that a
Participant at the discretion of the Committee may be entitled, in the
manner established by the Committee, to designate a beneficiary or
beneficiaries to exercise his or her rights, and to receive any property
distributable, with respect to any Award upon the death of the Participant.
Each Award, and each right under any Award, shall be exercisable, during the
lifetime of the Participant, only by such individual or, if permissible
under applicable law, by such individual's guardian or legal representative.
No Award (other than Released Securities), and no right under any such
Award, may be pledged, alienated, attached, or otherwise encumbered, and any
purported pledge, alienation, attachment, or encumbrance thereof shall be
void and unenforceable against the Company or any Affiliate.
(v) Term of Awards --- Except as otherwise provided in the Plan,
the term of each Award shall be for such period as may be determined by the
Committee.<PAGE>
<PAGE> 27
(vi) Rule 16b-3 Six-Month Limitations --- To the extent required in
order to comply with Rule 16b-3 only, any equity security offered pursuant
to the Plan may not be sold for at least six months after acquisition,
except in the case of death or disability, and any derivative security
issued pursuant to the Plan shall not be exercisable for at least six
months, except in case of death or disability of the holder thereof. Terms
used in the preceding sentence shall, for the purposes of such sentence
only, have the meanings, if any, assigned or attributed to them under Rule
16b-3.
(vii) Share Certificates; Representation by Participants --- In
addition to the restrictions imposed pursuant to Section 6(c) hereof, all
certificates for Shares delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the Commission, any stock
exchange or other market upon which such Shares are then listed or traded,
and any applicable federal or state securities laws, and the Committee may
cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions. The Committee may require each
Participant or other Person who acquires Shares under the Plan by means of
an Award originally made to a Participant to represent to the Company in
writing that such Participant or other Person is acquiring the Shares
without a view to the distribution thereof.
Section 7. Amendment and Termination; Waiver of Conditions
- -----------------------------------------------------------
(a) Amendments to the Plan --- The Board of Directors of the Company
may amend, alter, suspend, discontinue, or terminate the Plan at any time;
provided, however, that no amendment, alteration, suspension,
discontinuation or termination of the Plan shall in any manner (except as
otherwise provided in this Section 7) adversely affect any Award granted and
then outstanding under the Plan without the consent of the Participant;
provided further that, notwithstanding any other provision of the Plan or
any Award Agreement, without the approval of the shareholders of the
Company, no amendment, alteration, suspension, discontinuation, or
termination of the Plan shall be made that would:
(i) increase the total number of Shares available for Awards under
the Plan or the maximum number of Shares with respect to which Awards may be
made to individual Participants, except as provided in Section 4(b) hereof;
(ii) modify the performance criteria pursuant to which Restricted
Stock vests;
(iii) materially increase the benefits accruing to Participants
under the Plan; or
(iv) materially modify the requirements as to eligibility for
participation in the Plan.
(b) Adjustments of Awards Upon Certain Acquisitions --- In the event
the Company or any Affiliate shall assume outstanding employee awards or the
right or obligation to make future such awards in connection with the
acquisition of another business or another corporation or business entity,
the Committee may make such adjustments, not inconsistent with the terms of
the Plan, in the terms of Awards granted to Participants as it shall deem
appropriate in order to achieve reasonable comparability or other equitable
relationship between the assumed awards and the Awards granted under the
Plan to Participants as so adjusted.
(c) Correction of Defects, Omissions, and Inconsistencies --- The
Committee may correct any defect, supply any omission, or reconcile any
inconsistency in any Award or Award Agreement in the manner and to the
extent it shall deem necessary or desirable to carry the Plan into effect.
Section 8. General Provisions
- ------------------------------
(a) No Rights to Awards --- No Key Salaried Employee, Participant or
other Person shall have any claim to be granted any Award under the Plan,
and there is no obligation for uniformity of treatment of Key Salaried
Employees, Participants, or holders or beneficiaries of Awards under the
<PAGE> 28
Plan. The terms and conditions of Awards need not be the same with respect
to each Participant.
(b) Withholding --- No later than the date as of which an amount first
becomes includible in the gross income of a Participant for federal income
tax purposes with respect to any Award under the Plan, the Participant shall
pay to the Company, or make arrangements satisfactory to the Company
regarding the payment of, any federal, state, local or foreign taxes of any
kind required by law to be withheld with respect to such amount. Unless
otherwise determined by the Committee, withholding obligations arising with
respect to Awards to Participants under the Plan may be settled with Shares
(other than Restricted Securities), including Shares that are part of, or
are received upon exercise of, the Award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company and any
Affiliate shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment otherwise due to the Participant. The
Committee may establish such procedures as it deems appropriate for the
settling of withholding obligations with Shares, including, without
limitation, the establishment of such procedures as may be necessary to
satisfy the requirements of Rule 16b-3.
(c) No Limit on Other Compensation Arrangements --- Nothing contained
in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in
specific cases.
(d) Rights and Status of Recipients of Awards --- The grant of an
Award shall not be construed as giving a Participant the right to be
retained in the employ of the Company or any Affiliate. Further, the
Company or any Affiliate may at any time dismiss a Participant from
employment, free from any liability, or any claim under the Plan. Except
for rights accorded under the Plan and under any applicable Award Agreement,
Participants shall have no rights as holders of Shares as a result of the
granting of Awards hereunder.
(e) Unfunded Status of the Plan --- Unless otherwise determined by the
Committee, the Plan shall be unfunded and shall not create (or be construed
to create) a trust or a separate fund or funds. The Plan shall not
establish any fiduciary relationship between the Company and any Participant
or other Person. To the extent any Person holds any right by virtue of a
grant under the Plan, such right (unless otherwise determined by the
Committee) shall be no greater than the right of an unsecured general
creditor of the Company.
(f) Governing Law --- The validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan shall be determined
in accordance with the internal laws of the State of Wisconsin and
applicable federal law.
(g) Severability --- If any provision of the Plan or any Award
Agreement or any Award is or becomes or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction, or as to any Person or Award, or would
disqualify the Plan, any Award Agreement or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan, any Award Agreement or the Award, such
provision shall be stricken as to such jurisdiction, Person, or Award, and
the remainder of the Plan, any such Award Agreement and any such Award shall
remain in full force and effect.
(h) No Fractional Shares --- No fractional Shares or other securities
shall be issued or delivered pursuant to the Plan, any Award Agreement or
any Award, and the Committee shall determine (except as otherwise provided
in the Plan) whether cash, other securities, or other property shall be paid
or transferred in lieu of any fractional Shares or other securities, or
whether such fractional Shares or other securities or any rights thereto
shall be canceled, terminated, or otherwise eliminated.<PAGE>
<PAGE> 29
(i) Headings --- Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
Section 9. Effective Date of the Plan
- --------------------------------------
The Plan shall be effective as of March 1, 1994, subject, however, to
the approval of the Plan by the shareholders of the Company at the next
annual meeting of shareholders, or any adjournment thereof, within twelve
months following the date of adoption of the Plan by the Board of Directors
of the Company.
Section 10. Term of the Plan
- -----------------------------
No Award shall be granted under the Plan after March 1, 2004. However,
unless otherwise expressly provided in the Plan or in an applicable Award
Agreement, any Award theretofore granted may extend beyond such date, and,
to the extent set forth in the Plan, the authority of the Committee to
amend, alter, adjust, suspend, discontinue, or terminate any such Award, or
to waive any conditions or restrictions with respect to any such Award, and
the authority of the Board of Directors of the Company to amend the Plan,
shall extend beyond such date.<PAGE>
<PAGE> 30
[X] Please mark your
votes as this
WICOR
VOTING AUTHORIZATION
- ----------------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees in Item 1 and
FOR Item 2.
- ----------------------------------------------------------------------------
1. Election of the following nominees 2. To approve and adopt the
as WICOR, directors for three-year terms: WICOR Inc. 1994 Long-Term
Performance Plan
Willie D. Davis, James L. Forbes,
Guy A. Osborn, and William B. Winter
FOR all nominees WITHHOLD
(except as marked AUTHORITY
to the contrary) to vote for all nominees FOR AGAINST ABSTAIN
/ / / / / / / / / /
(Instruction: To withhold authority to vote for
any nominee write the name below)
-----------------------------------------------
. . . . . . . . . . . . . . . . . . . . . . . . Please check this box if
. . you plan to attend the
. . annual meeting
. . / /
. .
. . This Voting Authoriza-
. . tion is Solicited by the
. . Board of Directors
. . . . . . . . . . . . . . . . . . . . . . . .
Signature(s) _________________________________ Date __________________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
March 10, 1994
Dear WICOR Shareholder:
Enclosed is a notice of WICOR's annual shareholders meeting, coming up April
28, 1994, in Milwaukee. Also enclosed is a proxy statement and voting
authorization card. You have already
received a copy of the 1993 WICOR annual report.
It's important that you fill out and return the authorization card as soon
as possible. It entitles you, as an owner of WICOR common stock through our
company's savings plan, to vote your interest at the annual meeting.
Filing out the card directs Citibank, N.A., as Trustee of your shares held
in the savings plan as of February 22,1994, to vote them on your behalf.
You must return your marked and signed card in order to have the Trustee
vote your shares.
The WICOR Board of Directors urges you to exercise this right to vote. To
make sure your vote counts, and to prevent the expense of WICOR sending
further reminder notices, please mark and sign your voting authorization
card now and return it to Citibank in the enclosed envelope.
Thank you.
Sincerely,
Robert A. Nuernberg
Secretary
YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION AT THE WICOR
SHAREHOLDERS ANNUAL MEETING, MARK YOUR VOTES ON THE ENCLOSED VOTING
AUTHORIZATION CARD, DATE IT, SIGN IT EXACTLY AS YOUR NAME APPEARS AND RETURN
IT TODAY IN THE ENCLOSED ENVELOPE.<PAGE>
<PAGE> 31
WICOR
VOTING AUTHORIZATION
The undersigned acknowledges receipt of the WICOR, Inc. Annual Report for
1993 and the proxy solicitation material relative to the Annual Meeting of
Shareholders of WICOR, Inc. to be held April 28, 1994. As to my interest in
the Common Stock of WICOR, Inc. held by Citibank, N.A., the Trustee under
the Wisconsin Gas Company Non-Union Employees' Savings Plan, Wisconsin Gas
Company Local 6-18 Savings Plan and Wisconsin Gas Company Local No. 1
Savings Plan, I hereby instruct the Trustee to vote as indicated on the
reverse side.
The shares represented by this authorization will be voted as directed by
the undersigned. If no direction is given when the duly executed
authorization is returned, the Trustee cannot vote such shares.
THIS VOTING AUTHORIZATION IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT
THE ANNUAL MEETING OF SHAREHOLDERS OF WICOR, INC., APRIL 28, 1994.
(continued on the reverse side)
<PAGE>
<PAGE> 32
/X/ Please mark your
votes as this
WICOR
PROXY
______________
Account Number
- ----------------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees in Item 1 and FOR
Item 2.
- ----------------------------------------------------------------------------
1. Election of the following nominees 2. To approve and adopt the
directors for three-year terms: WICOR, Inc. 1994 Long-Term
Willie D. Davis, James L. Forbes, Performance Plan
Guy A. Osborn, and William B. Winter
FOR all nominees WITHHOLD
(except as marked AUTHORITY
to the contrary) to vote for all nominees FOR AGAINST ABSTAIN
/ / / / / / / / / /
(Instruction: To withhold authority to vote for
any nominee write the name below)
-----------------------------------------------
. . . . . . . . . . . . . . . . . . . Please check this box if you plan
. . to attend the annual meeting
. . [ ]
. .
. . This Proxy is Solicited by the
. . Board of Directors
. . . . . . . . . . . . . . . . . . .
Signature(s) ____________________________________ Date __________________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - -
FOLD AND DETACH HERE
March 10, 1994
Dear WICOR Shareholder:
We're pleased to send you the enclosed 1993 annual report and proxy
materials. I hope you'll find the annual report interesting and
informative, and that you'll exercise your right to vote at the annual
meeting by returning your proxy card promptly.
I'd also like to invite you to attend WICOR's Annual Meeting of Shareholders
on Thursday, April 28, 1994. This year's meeting will be held a the Italian
Community Center, 631 East Chicago Street, Milwaukee, Wisconsin, beginning
at 2:00 p.m. (Central Time). A map with directions to the center is on the
reverse side of this letter. Free parking is available in a lot on the
south side of the building.
At the meeting, we will elect directors and consider a proposal to adopt a
long-term performance plan for key employees. As an investor in WICOR, you
have a right and a responsibility to vote on issues affecting your company.
Regardless of whether you plan to attend the annual meeting, please mark the
appropriate boxes on the proxy form, and then date, sign and promptly return
the form in the enclosed, postage-paid envelope. If you sign and return
the proxy form without specifying your choices, your shares will be voted
according to the recommendations of your board of directors.
If you plan to attend the annual meeting, please check the appropriate box
on the proxy card. We welcome your comments and suggestions, and we will
provide time during the meeting for questions from shareholders. I hope to
see you on April 28.
Sincerely,
George E. Wardeberg
President and Chief Executive Officer<PAGE>
<PAGE> 33
WICOR
COMMON SHAREHOLDER PROXY
The undersigned hereby appoints George E. Wardeberg and Joseph P. Wenzler,
and each of them, as proxy with the power of substitution (to act by a
majority present or if only one acts then by that one) to vote for the
undersigned as indicated on the reverse side and in their discretion on such
other matters as may properly be considered at the Annual Meeting of
Shareholders of WICOR, Inc. to be held Thursday, April 28, 1994, at 2:00
P.M., at the Italian Community Center, 631 E. Chicago Street, Milwaukee,
Wisconsin, and at any adjournments thereof.
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is
returned, such shares will be voted "FOR" all nominees in Item 1 and "FOR"
Item 2 described on the reverse side.
Please mark, date and sign on the reverse side exactly as name appears and
return in the enclosed postage-paid envelope. If shares are held jointly,
each shareholder named should sign. If signing as attorney, administrator,
executor, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by duly authorized officer.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL
MEETING OF SHAREHOLDERS OF WICOR, INC., APRIL 28, 1994.
(continued on the reverse side)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Map of downtown Milwaukee, Wisconsin, showing
location of annual meeting
<PAGE>
