<PAGE>
RULE NO. 424(b)(4)
REGISTRATION NO. 33-63565
PROSPECTUS
1,100,000 SHARES
LOGO
COMMON STOCK
----------------
WICOR, Inc. (the "Company") is offering hereby 1,100,000 shares of its
common stock, $1.00 par value (the "Common Stock"). The Common Stock is listed
on the New York Stock Exchange under the symbol WIC. On December 5, 1995, the
last reported sale price of the Common Stock on the New York Stock Exchange
was $31 7/8 per share.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HASTHE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.................................. $31.875 $1.085 $30.79
- --------------------------------------------------------------------------------
Total(3)................................... $35,062,500 $1,193,500 $33,869,000
</TABLE>
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- -------------------------------------------------------------------------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $175,000.
(3) The Company has granted the Underwriters an option, exercisable for 30
days after the date of this Prospectus, to purchase up to an additional
165,000 shares of Common Stock to cover over-allotments, if any. If all of
such additional shares are purchased, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $40,321,875,
$1,372,525 and $38,949,350, respectively. See "Underwriting."
----------------
The shares of Common Stock offered hereby are offered by the Underwriters,
subject to prior sale, when, as and if issued to and accepted by them and
subject to approval of certain legal matters by counsel for the Underwriters
and to certain other conditions. The Underwriters reserve the right to
withdraw, cancel or modify such offer and to reject orders in whole or in
part. It is expected that delivery of the Common Stock will be made in New
York, New York, on or about December 11, 1995.
----------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
ROBERT W. BAIRD & CO.
INCORPORATED
----------------
The date of this Prospectus is December 5, 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-
COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company under the Exchange Act
can be inspected and copied at the public reference facilities maintained by
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: Northeast Regional
Office, 7 World Trade Center, 13th Floor, New York, New York 10048, and
Midwest Regional Office, Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material also may be
obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, such
reports, proxy statements and other information concerning the Company can be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto referred to herein as
the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Common Stock offered hereby. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement which may be inspected
and copied in the manner and at the sources described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
1-7951) pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1994.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of shares which is the subject hereof shall
be deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated herein by reference shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained in this Prospectus or in any subsequently
filed document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The information relating to the Company contained in this Prospectus
summarizes, is based upon, or refers to, information and financial statements
contained in one or more of the documents incorporated herein by reference;
accordingly, such information contained herein is qualified in its entirety by
reference to such documents incorporated herein by reference and should be
read in conjunction therewith.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, UPON THE
WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY AND ALL OF THE DOCUMENTS
THAT HAVE BEEN OR MAY BE INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS
THERETO, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO
THE INFORMATION THAT THIS PROSPECTUS INCORPORATES). REQUESTS SHOULD BE
DIRECTED TO WICOR, INC., 626 EAST WISCONSIN AVENUE, MILWAUKEE, WISCONSIN
53202, ATTENTION: ROBERT A. NUERNBERG, SECRETARY (TELEPHONE: (414) 291-7026).
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements appearing elsewhere in this
Prospectus or in the documents incorporated in this Prospectus by reference.
All references to the Company herein include the Company and all of its
subsidiaries, except where the context otherwise indicates. Unless otherwise
indicated, the information contained in this Prospectus assumes that the
Underwriters' over-allotment option is not exercised.
THE OFFERING
<TABLE>
<S> <C>
Company............................. WICOR, Inc.
Common Stock Offered................ 1,100,000 shares
Common Stock to be Outstanding after
the Offering....................... 18,067,094 shares
Use of Proceeds..................... To finance a portion of the purchase price
of the Company's July 1995 acquisition of
Hypro Corporation. See "Use of Proceeds."
New York Stock Exchange Symbol...... WIC
Price Range on the New York Stock
Exchange from January 1, 1995
through December 5, 1995........... High: $31.875Low: $26.625
Last Reported Sale Price on the New
York Stock Exchange on December 5,
1995............................... $31.875
Current Indicated Annual Dividend
Rate............................... $1.64
</TABLE>
THE COMPANY
The Company is a diversified holding company with two principal business
groups: natural gas distribution and related services, and manufacturing of
pumps and processing equipment used to pump, control, transfer, hold and filter
water and other fluids. The Company engages in natural gas distribution through
its Wisconsin Gas Company subsidiary ("Wisconsin Gas"). Wisconsin Gas is the
oldest and largest natural gas distribution utility in Wisconsin. For the year
ended December 31, 1994, Wisconsin Gas served approximately 495,000 customers
in 496 communities. Wisconsin Gas generated $556.6 million or 64.1% of the
Company's 1994 operating revenues and $18.9 million or 57.0% of the Company's
1994 net income. Through several nonutility subsidiaries, the Company also
engages in the manufacture and sale of pumps and processing equipment. The
Company's products primarily have water system, pool and spa, agricultural,
recreational vehicle ("RV")/marine and beverage/food service applications. The
Company markets its manufactured products in 100 countries. The Company's
manufacturing subsidiaries generated $311.2 million or 35.9% of the Company's
1994 operating revenues and $14.3 million or 43.0% of the Company's 1994 net
income.
3
<PAGE>
SUMMARY OF CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------- --------------------------
1995 1994 1994 1993 1992
-------- -------- -------- -------- --------
INCOME STATEMENT DATA: (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating Revenues:
Gas Distribution............. $357,553 $418,172 $556,587 $574,835 $495,415
Manufacturing................ 253,688 239,569 311,168 274,693 251,994
-------- -------- -------- -------- --------
Total Operating Revenues... 611,241 657,741 867,755 849,528 747,409
Operating Income............... 48,271 46,276 66,610 63,951 53,315
Net Income..................... 22,523 21,131 33,174 29,313 14,799(1)
Weighted Average Number of
Shares
Outstanding (000)............. 16,941 16,650 16,708 16,096 15,490
Earnings Per Common Share...... $ 1.33 $ 1.27 $ 1.99 $ 1.82 $ .96(1)
Cash Dividends Per Share of
Common Stock.................. 1.21 1.18 1.58 1.54 1.50
OPERATING DATA:
Degree Days.................... 4,251 4,577 6,431 6,775 6,683
Gas Sold and Transported
(Millions of Therms)
Sold......................... 789 779 1,077 1,031 956
Transported.................. 88 86 119 174 214
-------- -------- -------- -------- --------
Total...................... 877 865 1,196 1,205 1,170
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1995
------------------------------
AS
ACTUAL ADJUSTED(2)(3)
-------------- --------------
BALANCE SHEET DATA: (UNAUDITED)
<S> <C> <C> <C> <C>
Total Assets.................................... $919,610 $919,610
Short-Term Debt ................................ 102,916 55,052
CAPITALIZATION:
Long-Term Debt.................................. $168,488 36.3% $183,488 35.8%
Common Stock Equity............................. 295,301 63.7% 328,995 64.2%
-------- ----- -------- -----
Total Capitalization........................ $463,789 100.0% $512,483 100.0%
======== ===== ======== =====
</TABLE>
- --------
(1) Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standard Nos. 106 and 109, resulting in a $6.2 million ($.40 per
share) and a $1.8 million ($.11 per share) charge, respectively, to net
income for the year ended December 31, 1992.
(2) On November 13, 1995, Wisconsin Gas sold $65 million aggregate principal
amount of its 6 3/8% Notes due 2005 in an underwritten public offering. The
$64.2 million net proceeds of such offering were used (i) to redeem, on
December 1, 1995, $50 million aggregate principal amount of Wisconsin Gas'
9 1/8% Notes due 1997 and (ii) to repay short-term debt. The adjusted
financial information in the table above at September 30, 1995 reflects
such offering and the application of the net proceeds therefrom.
(3) Adjusted to reflect the sale of 1,100,000 shares of Common Stock offered by
the Company hereby and assuming the application of the net proceeds
(approximately $33.7 million) therefrom to repay short-term debt. See "Use
of Proceeds."
4
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Common Stock, approximately $33.7
million, will be contributed to Hypro Corporation ("Hypro"), a wholly-owned
subsidiary of the Company, and will be used to repay a portion of the
borrowings under the credit facility entered into in connection with the July
1995 acquisition of Hypro. See "Recent Development." Amounts borrowed under
this credit facility accrued interest at an annual rate of approximately 6.0%
as of December 5, 1995, and mature in July 1996.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Company's Common Stock is traded on the New York Stock Exchange under
the symbol WIC. The closing price for the Common Stock on December 5, 1995 was
$31.875. The following table sets forth the quarterly high and low closing
prices per share of the Common Stock as reported on the New York Stock
Exchange and the dividends declared per share of Common Stock for the periods
indicated.
<TABLE>
<CAPTION>
STOCK PRICE CASH
--------------- DIVIDENDS
HIGH LOW DECLARED
------- ------- ---------
<S> <C> <C> <C>
Fiscal Period
- -------------
1993:
First Quarter..................................... $29.000 $25.625 $0.38
Second Quarter.................................... 31.375 27.750 0.38
Third Quarter..................................... 32.750 29.375 0.39
Fourth Quarter.................................... 32.875 28.000 0.39
1994:
First Quarter..................................... $32.625 $27.000 $0.39
Second Quarter.................................... 31.125 25.500 0.39
Third Quarter..................................... 31.125 28.125 0.40
Fourth Quarter.................................... 29.500 25.875 0.40
1995:
First Quarter..................................... $30.500 $27.250 $0.40
Second Quarter.................................... 29.750 26.625 0.40
Third Quarter..................................... 30.875 27.125 0.41
Fourth Quarter (through December 5, 1995)......... 31.875 29.500 0.41
</TABLE>
Certain of the Company's subsidiaries are subject to limitations or
restrictions on their ability to declare and pay dividends to the Company. A
November 1993 rate order of the Public Service Commission of Wisconsin
("PSCW") requires Wisconsin Gas to request PSCW approval prior to payment of
dividends on its common stock to the Company if the payment would reduce its
common equity (net assets) below 43% of total capitalization (including short-
term debt). Under this requirement, $29.3 million of Wisconsin Gas' net assets
at September 30, 1995 were available for such dividends without PSCW approval.
In addition, the PSCW must also approve any dividends in excess of $16 million
for the 12 month period beginning November 1 of each year if such dividends
would dilute Wisconsin Gas' total equity below 48.43% of its total
capitalization. Wisconsin Gas paid $16 million in dividends for the 12 months
ending October 31, 1995, and its ratio of equity to total capitalization as of
September 30, 1995 was 50.93%.
In connection with its long-term debt agreements, Sta-Rite Industries, Inc.
("Sta-Rite"), a manufacturing subsidiary of the Company, 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 the Company and for certain investments. At
September 30, 1995, $6.8 million of Sta-Rite's net assets were available for
payment of dividends to the Company.
5
<PAGE>
Future dividends will depend on future earnings, future rates allowed
Wisconsin Gas, the cash position and financial condition of the Company and
its subsidiaries and other factors. At current dividend rates, after giving
effect to the issuance of the shares in this offering (assuming the
Underwriters' over-allotment option is not exercised), the Company's quarterly
dividend payments on its outstanding Common Stock will be approximately $7.4
million.
THE COMPANY
The Company is a diversified holding company with two principal business
groups: natural gas distribution and related services, and manufacturing of
pumps and processing equipment used to pump, control, transfer, hold and
filter water and other fluids. The Company engages in natural gas distribution
through Wisconsin Gas, the oldest and largest natural gas distribution utility
in Wisconsin. At December 31, 1994, Wisconsin Gas served approximately 495,000
customers in 496 communities. Wisconsin Gas generated $556.6 million or 64.1%
of the Company's 1994 operating revenues and $18.9 million or 57.0% of the
Company's 1994 net income. Through several nonutility subsidiaries, the
Company also engages in the manufacture and sale of pumps and processing
equipment. The Company's products primarily have water system, pool and spa,
agricultural, RV/marine and beverage/food service applications. The Company
markets its manufactured products in 100 countries. The Company's
manufacturing subsidiaries generated $311.2 million or 35.9% of the Company's
1994 operating revenues and $14.3 million or 43.0% of the Company's 1994 net
income. The principal executive offices of the Company are located at 626 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202, and its telephone number is
(414) 291-7026. The Company is incorporated under the laws of the State of
Wisconsin and is exempt from registration as a holding company under the
Public Utility Holding Company Act of 1935, as amended.
NATURAL GAS DISTRIBUTION AND RELATED SERVICES BUSINESS
The Company's primary energy business is the distribution of natural gas
through its Wisconsin Gas subsidiary, which is a regulated public utility. In
response to regulatory changes in the natural gas industry, the Company also
has recently begun to expand its natural gas related business to include
selling natural gas supply services and marketing energy related retail
products and services, as well as marketing the Company's expertise in
managing meter reading and billing services for gas, water and electric
utilities.
Distribution of Natural Gas. At December 31, 1994, Wisconsin Gas distributed
gas to approximately 495,000 residential, commercial and industrial customers
in 496 communities throughout Wisconsin with an estimated population of
1,954,000 based on the State of Wisconsin's estimates for 1994. During 1994,
Wisconsin Gas added more than 10,000 new customers.
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. 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 actively
assists customers in buying gas, arranging transportation and managing other
aspects of acquisition, transportation and use of natural gas in order to
facilitate customers' decision to use natural gas rather than alternate fuels.
For the year ended December 31, 1994, Wisconsin Gas delivered 1,196 million
therms of natural gas to its customers (1 therm equals 100,000 BTU's). Of this
total, residential customers accounted for approximately 38.8%, commercial
customers approximately 15.5%, large volume commercial and industrial
customers approximately 12.2%, commercial and industrial interruptible
customers approximately 23.6%, and transportation-only customers approximately
9.9%. Wisconsin Gas earns the same margin (difference between revenue and cost
of natural gas) whether it sells natural gas to customers or transports
customer-owned gas.
Wisconsin Gas is subject to the jurisdiction of the PSCW as to various
phases of its operations, including rates, service and issuance of securities.
The PSCW has instituted a generic proceeding to consider how its
6
<PAGE>
regulation of gas distribution utilities should change to reflect the changing
competitive environment in the gas industry. To date, the PSCW has made a
policy decision to deregulate gas costs for customer segments with workably
competitive market choices. Hearings are scheduled to begin in January 1996,
with the expectation that the general policy decisions defining the scope of a
new regulatory framework will be made by the end of 1996. The Company is
unable to determine what impact this proceeding may have on Wisconsin Gas'
future operations.
Other Natural Gas Related Businesses. In the spring of 1995, the Company
formed two non-regulated energy services-related businesses, WICOR Energy
Services Company, a wholly owned subsidiary of the Company, and FieldTech, a
division of Wisconsin Gas. These businesses offer a variety of services,
including natural gas supply and related services; energy and risk management;
and contract meter reading, field management and billing services for public
and municipal gas, water and electric utilities. The Company views these
businesses as important elements in meeting increasing competitive challenges
in the natural gas industry and as a new source of growth for its energy
related operations. The revenues derived from these businesses are not,
however, material to the Company at the present time.
Business Strategy. The Company's strategy for growing its natural gas
distribution business is to add new customers through on-main additions and,
when appropriate, to expand its distribution system to serve more communities.
In addition, the Company intends to expand its existing gas equipment leasing
program and offer pipe construction and maintenance service to municipal
utilities. Finally, as deregulation continues to open natural gas markets, the
Company intends to provide additional services, such as load forecasting and
information services, to natural gas consumers, marketers and shippers.
The Company's strategy for growing its non-regulated natural gas related
business is to offer new services to existing customers and to seek to exploit
opportunities in the developing market for non-regulated energy services.
These growth opportunities include providing natural gas supply and related
services; offering energy and risk management services for large customers;
developing and marketing energy products and services for residential and
small commercial customers; selling other forms of energy (such as oil and
electricity); and providing contract meter reading, field management, and
turnkey automated meter reading programs for public and municipal gas, water
and electric utilities.
MANUFACTURING BUSINESS
Through its manufacturing subsidiaries, the Company manufactures and sells
pumps and processing equipment used to pump, control, transfer, hold and
filter water and other fluids for a wide array of specialized applications and
markets. The Company operates fourteen manufacturing plants in six countries,
including seven plants in the United States, and has twenty-four
sales/distribution centers in ten countries, including ten centers in the
United States.
Products and Markets. The Company's water and fluid pumping and processing
products are sold in five major markets and several smaller markets. The five
major markets below accounted for approximately 91% of the Company's 1994
manufacturing operating revenues (adjusted on a pro forma basis to include
Hypro's revenues for such period), with the water systems, pool/spa and
agricultural markets providing 49%, 19% and 12% of such revenues,
respectively. Products are distributed through professional well drillers and
plumbers (62%), retail stores (21%) and original equipment manufacturers
(17%).
Water Systems Market: The Company manufactures and sells pumps, water
storage and pressure tanks, and filters used to supply groundwater for
residential, commercial and farm use in areas not served by municipal water
systems.
Pool/Spa Market: The Company manufactures and sells pumps, filters and
accessories used in private and public swimming pools, spas and hot tubs.
Agricultural Market: The Company manufactures and sells pumps for
agricultural and spot spraying and irrigation. Primary uses include crop,
turf and lawn spraying, irrigation and pest control.
7
<PAGE>
RV/Marine Market: The Company manufactures and sells pumps used in
potable water systems in motor homes, travel trailers and boats, and bilge
pumping systems, live well pumping systems and wash down systems for marine
applications. The Company also manufactures and sells pumps used in engine
cooling systems for marine applications.
Beverage/Food Service Market: The Company manufactures and sells pumps
used for pumping soft drinks, condiments and other food service products in
restaurants and cafeterias.
Other Markets: The Company manufactures and sells a variety of other
pumps and accessories used in industrial, water purification, high-pressure
cleaning, fire protection, sewage removal, and water fountain systems.
Certain of the Company's products hold a significant share of the markets in
which they are sold. The Company believes it has the number one or number two
position in certain segments of the pump market for water systems,
agricultural, pool, recreational vehicle and beverage applications. The
Company's products are marketed under various brand names, including Sta-
Rite(R), Berkeley(R), Flotec(R), Onga, Nocchi, AquaTools, SHURflo(R),
Hypro(R), SherTech(R) and FoamPro(R).
International Operations. The Company manufactures and sells the products
identified above to international markets through its international
subsidiaries and exports from the United States. The Company has manufacturing
facilities in Australia, Germany, Italy, New Zealand and Russia, and
sales/distribution centers in Australia, France, Canada, England, Italy,
Mexico, New Zealand and Singapore. Products are sold in approximately 100
countries. Of the Company's 1994 manufacturing operating revenues (adjusted on
a pro forma basis to include Hypro's revenues for such period), sales in North
America accounted for 74%; Australia accounted for 11%; Europe accounted for
11%; and Asia accounted for 4%.
International and export sales have grown steadily over the past decade,
increasing from $20 million in 1985 to $114 million in 1994 and accounted for
37% of 1994 manufacturing revenues.
Business Strategy. The Company's strategy for growing its manufacturing
business is based on making strategic acquisitions, introducing new products
to existing or related markets, continuing international expansion and
expanding its product distribution network. Management believes that
international markets offer the Company its greatest opportunities for growth.
The pump and fluid processing equipment industry in which the Company
competes is generally fragmented, and acquisitions are a key part of the
Company's manufacturing business growth strategy. Beginning with Sta-Rite in
1982, the Company has made twelve acquisitions related to the pump and water
processing equipment business. The 1993 acquisition of SHURflo Pump
Manufacturing Co. and the 1995 acquisition of Hypro were strategic
transactions intended to improve the Company's market balance. The two
acquisitions expanded the Company's market mix by adding new products that are
sold principally to original equipment manufacturers in the agricultural,
RV/marine and the beverage/food service markets and added higher-margin
products to the Company's product mix.
The Company believes that new products are essential to the growth of its
manufacturing business, and intends to continue its commitment to new product
development. Investment in the business, primarily capital expenditures and
product research and development, exceeded $50 million in the aggregate over
the past five years. Management believes that promising areas for new product
development include water purification systems, pumps for above-ground
swimming pools and garden pools, fire protection pump systems and food service
pumps.
Historically, the PSCW has imposed restrictions on public utility holding
companies in Wisconsin, including the Company, relating to future nonutility
investments. The PSCW has ordered that Wisconsin Gas remain the predominant
business, as measured by equity, within the Company's holding company system.
In addition, the debt of the Company's non-utility subsidiaries is not
permitted to exceed 40% of the total capitalization of such
8
<PAGE>
subsidiaries pursuant to an order of the PSCW. After giving effect to the sale
of the Common Stock offered hereby and the application of the net proceeds of
approximately $33.7 million therefrom as described in "Use of Proceeds," the
amount allowable for future nonutility investment would be $100.9 million as
of September 30, 1995.
RECENT DEVELOPMENT
On July 19, 1995, the Company acquired Hypro in a merger for $58 million in
cash and the assumption of $13.3 million in operating liabilities. The
acquisition was financed with borrowings under a credit facility entered into
in connection with the acquisition. The Company intends to use the proceeds of
the offering of the Common Stock to repay a portion of the borrowings under
this credit facility. See "Use of Proceeds." Hypro designs, manufactures and
markets pumps and water processing equipment for the agricultural, high-
pressure cleaning, marine, industrial and fire protection markets. The
acquisition of Hypro was accounted for using the purchase method of
accounting. The cost in excess of net assets acquired was approximately $58
million and is being amortized over forty years. For the year ended September
30, 1994, Hypro had revenues of $41.1 million and operating income of $5.7
million.
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED SHARES
The authorized capital stock of the Company consists of 60,000,000 shares of
Common Stock and 1,500,000 shares of Cumulative Preferred Stock, $1.00 par
value (the "Cumulative Preferred Stock"). The Cumulative Preferred Stock is
issuable in series, for such consideration and with such designations,
dividend rates, redemption prices, liquidation rights and preferences,
conversion rights, if any, sinking fund provisions, if any, and voting rights,
if any, as may be determined by the Board of Directors of the Company. As of
December 5, 1995, there were 16,967,094 shares of Common Stock issued and
outstanding. No shares of Cumulative Preferred Stock were issued and
outstanding as of such date.
DIVIDEND RIGHTS AND RESTRICTIONS
After all cumulative dividends have been paid or declared and set apart for
payment on any shares of Cumulative Preferred Stock that are outstanding, the
Common Stock is entitled to such dividends as may be declared from time to
time by the Board of Directors in accordance with applicable law. The
Company's ability to pay dividends is dependent to a great extent on the
ability of its subsidiaries to pay dividends. See "Price Range of Common Stock
and Dividends."
VOTING RIGHTS
Except as provided under Wisconsin law and except as may be determined by
the Board of Directors of the Company with respect to any series of Cumulative
Preferred Stock, only the holders of Common Stock shall be entitled to vote
for the election of directors of the Company and on all other matters. Subject
to the limitations imposed by Wisconsin law as described below, upon any such
vote the holders of Common Stock shall be entitled to one vote for each share
of Common Stock held by them. Shareholders have no cumulative voting rights in
connection with the election of directors, which means that holders of shares
entitled to exercise more than 50% of the voting power represented at any
meeting of shareholders are entitled to elect all of the directors to be
elected at any such meeting. The Company's Restated Articles of Incorporation
and By-Laws provide that the Board of Directors is to be divided into three
classes, with staggered terms of three years each. The terms of the Common
Stock generally may be modified by the affirmative vote of the holders of a
majority of the shares of Common Stock voted at a meeting of shareholders at
which a quorum is present.
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<PAGE>
Section 180.1150 of the Wisconsin Statutes provides that the voting power of
shares of Wisconsin corporations such as the Company held by any person or
persons acting as a group in excess of 20% of the voting power in the election
of directors is limited to 10% of the full voting power of those shares. This
restriction does not apply to shares acquired directly from the Company or in
certain specified transactions or shares for which full voting power has been
restored pursuant to a vote of shareholders.
Sections 180.1140 to 180.1144 of the Wisconsin Statutes contain certain
limitations and special voting provisions applicable to specified business
combinations involving Wisconsin corporations such as the Company and a
significant shareholder, unless the board of directors of the corporation
approves the business combination or the shareholder's acquisition of shares
before such shares are acquired. Similarly, Sections 180.1130 to 180.1133 of
the Wisconsin Statutes contain special voting provisions applicable to certain
business combinations, unless specified minimum price and procedural
requirements are met. Following commencement of a takeover offer, Section
180.1134 of the Wisconsin Statutes imposes special voting requirements on
certain share repurchases effected at a premium to the market and on certain
asset sales by the corporation, unless, as it relates to the potential sale of
assets, the corporation has at least three independent directors and a
majority of the independent directors vote not to have the provision apply to
the corporation.
Section 196.795(3) of the Wisconsin Statutes provides that no person may
hold or acquire directly or indirectly more than 10% of the outstanding
securities of a public utility holding company such as the Company without
approval of the PSCW.
OTHER RIGHTS AND LIMITATIONS
All shares of Common Stock are entitled to participate equally in
distributions in liquidation, subject to the prior rights of any shares of
Cumulative Preferred Stock which may be outstanding. Except as the Board of
Directors may in its discretion otherwise determine, holders of Common Stock
have no preemptive rights to subscribe for or purchase shares of the Company.
There are no conversion rights, or sinking fund or redemption provisions
applicable to the Common Stock.
The Restated Articles of Incorporation of the Company provide that any
director may be removed from office but only for cause by the affirmative vote
of holders of at least a majority of the voting power of the then outstanding
shares entitled to vote in the election of directors. However, if at least the
number of directors in the two largest classes of directors plus one director
vote to remove a director, such director may be removed without cause by the
affirmative vote of holders of at least a majority of the voting power of the
then outstanding shares of the Company entitled to vote thereon. The Restated
Articles of Incorporation of the Company also provide that the provisions of
the Company's By-Laws regarding the classification, number, tenure and
qualifications of directors may only be amended, altered, changed or repealed
by the affirmative vote of holders of at least 75% of the voting power of the
then outstanding shares entitled to vote in the election of directors.
The shares of Common Stock offered hereby when issued and paid for in the
manner described herein will be fully paid and nonassessable, except as
provided by Section 180.0622(2)(b) of the Wisconsin Statutes regarding
personal liability of shareholders for all debts owing to employees of the
Company for services performed but not exceeding six months' service in any
one case.
COMMON STOCK PURCHASE RIGHTS
The Company has entered into a Rights Agreement (the "Rights Agreement"),
dated as of August 29, 1989, with Chemical Bank, as Rights Agent. Pursuant to
the Rights Agreement, each outstanding share of Common Stock has attached
thereto one Common Stock Purchase Right ("Right") and each share subsequently
issued by the Company prior to the expiration of the Rights Agreement,
including the shares sold in this offering, will likewise have attached
thereto one Right. Under certain circumstances described below, the Rights
will entitle the holder thereof to purchase additional shares of Common Stock.
In this Prospectus, unless the context otherwise requires, all references to
the Common Stock include the accompanying Rights.
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<PAGE>
Currently, the Rights are not exercisable or separable and trade with the
Common Stock. In the event the Rights become exercisable, each Right (unless
held by a person or group which beneficially owns more than 20% of the
outstanding Common Stock) will initially entitle the holder to purchase one
share of Common Stock at a price of $75 per share, subject to adjustment. The
Rights will only become exercisable if a person or group has acquired, or
announced an intention to acquire, 20% or more of the outstanding shares of
Common Stock. Under certain circumstances, including the existence of a 20%
acquiring party, each holder of a Right, other than the acquiring party, will
be entitled to purchase at the exercise price Common Stock having a market
value of two times the exercise price. In the event of the acquisition of the
Company by another corporation subsequent to such corporation or an affiliated
party acquiring 20% or more of the Common Stock, each holder of a Right will
be entitled to receive the acquiring corporation's common shares having a
market value of two times the exercise price. The Rights may be redeemed at a
price of $.01 per Right prior to the existence of a 20% acquiring party, and
thereafter may be exchanged for one share of Common Stock per Right prior to
the existence of a 50% acquiring party. The Rights will expire on August 29,
1999. Under the Rights Agreement, the Board of Directors of the Company may
reduce the thresholds applicable to the Rights from 20% to not less than 10%.
The Rights do not have voting or dividend rights and, until they become
exercisable, have no dilutive effect on the earnings of the Company.
UNDERWRITING
Subject to the terms and conditions set forth in the Purchase Agreement, the
Company has agreed to sell to each of the Underwriters named below (the
"Underwriters") and each of the Underwriters has severally agreed to purchase,
the aggregate number of shares of Common Stock set forth opposite their
respective names:
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
----------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................... 208,334
Dean Witter Reynolds Inc........................................ 208,333
Robert W. Baird & Co. Incorporated.............................. 208,333
A. G. Edwards & Sons, Inc....................................... 50,000
PaineWebber Incorporated........................................ 50,000
Prudential Securities Incorporated.............................. 50,000
Smith Barney Inc................................................ 50,000
Cleary Gull Reiland & McDevitt Inc.............................. 25,000
Dain Bosworth Incorporated...................................... 25,000
EVEREN Securities, Inc.......................................... 25,000
First of Michigan Corporation................................... 25,000
Frederick & Company, Inc. ...................................... 25,000
Edward D. Jones & Co............................................ 25,000
Ladenburg, Thalmann & Co. Inc................................... 25,000
J. E. Liss Company, Inc. ....................................... 25,000
Piper Jaffray Inc............................................... 25,000
Raymond James & Associates, Inc................................. 25,000
Stifel, Nicolaus & Company, Incorporated........................ 25,000
---------
Total...................................................... 1,100,000
=========
</TABLE>
In the Purchase Agreement, the several Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all of the shares of
Common Stock if any shares of Common Stock are purchased.
The Underwriters have advised the Company that they propose initially to
offer the Common Stock to the public at the public offering price set forth on
the cover page of this Prospectus, and to certain dealers at such
11
<PAGE>
price less a concession not in excess of $.60 per share. The Underwriters may
allow, and such dealers may reallow, a discount not in excess $.10 per share
to certain other dealers. After the initial public offering, the public
offering price, concession and discount may be changed.
The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus to purchase up to an aggregate of 165,000
additional shares of Common Stock at the public offering price set forth on
the cover page of this Prospectus, less the underwriting discount. The
Underwriters may exercise this option only to cover over-allotments, if any,
made on the sale of the Common Stock offered hereby.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended, or in certain circumstances, to contribute to payments which the
Underwriters may be required to make in respect thereof.
Robert W. Baird & Co. Incorporated acted as financial advisor to the Company
in connection with the July 1995 acquisition of Hypro. See "Recent
Development."
LEGAL MATTERS
Certain legal matters in connection with the sale of the Common Stock
offered hereby will be passed upon for the Company by Foley & Lardner,
Milwaukee, Wisconsin and for the Underwriters by Winthrop, Stimson, Putnam &
Roberts, New York, New York. Jere D. McGaffey, a partner of Foley & Lardner,
is a director of the Company. As of September 30, 1995, Foley & Lardner
attorneys who participated in the preparation of this Prospectus beneficially
owned an aggregate of 9,045 shares of Common Stock.
EXPERTS
The consolidated financial statements and schedules included in the
Company's Annual Report on Form 10-K, for the year ended December 31, 1994,
incorporated by reference in this Prospectus and in the Registration
Statement, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
12
<PAGE>
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPO-
RATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY JURISDIC-
TION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SO-
LICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN
ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Incorporation of Certain Documents By Reference............................ 2
Prospectus Summary......................................................... 3
Use of Proceeds............................................................ 5
Price Range of Common Stock and Dividends.................................. 5
The Company................................................................ 6
Recent Development......................................................... 9
Description of Capital Stock............................................... 9
Underwriting............................................................... 11
Legal Matters.............................................................. 12
Experts.................................................................... 12
</TABLE>
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1,100,000 SHARES
LOGO
COMMON STOCK
----------------
PROSPECTUS
----------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
ROBERT W. BAIRD & CO.
INCORPORATED
DECEMBER 5, 1995
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